                                                                                    FILED 


                                                                               May 28,2013 


                                                                       In the Office of the Clerk of Court 

                                                                     W A State Court of Appeals, Division III 





            IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON 

                               DIVISION THREE 


RICHARD L. HARWOOD, and THE                      )
HARWOOD GROUP, LLC,                              )             No. 30679-8-III
                                                 )
                      Appellants,                )
                                                 )
       v.                                        )
                                                 )             UNPUBLISHED OPINION
WELLS FARGO BANK N.A.,                           )
                                                 )
                      Respondent.                )

       SIDDOWAY, 1. -      In 2009, The Harwood Group LLC (Harwood), the owner of a

residential property, attempted to forestall foreclosure of a first deed of trust against the

property by promising Wells Fargo Bank NA that it would make payment. In the

complaint filed below, it alleges that representatives of Wells Fargo promised to postpone

an impending trustee's sale of the property and provide a payoff amount to Harwood but

then breached its agreement, explaining later that it had "dropped the ball." Harwood

asserted a claim for promissory estoppel, which the trial court dismissed for failure to

state a claim in light of the real estate statute of frauds.

       On appeal, Wells Fargo argues an even more compelling basis for dismissal: the

statute of frauds for credit agreements. Because it is evident that Harwood and Richard
No. 30679-8-III
Harwood v. Wells Fargo Bank


Harwood 1 can prove no set of facts consistent with the complaint that would satisfy or

avoid the statute of frauds, we affinn.

                      FACTS AND PROCEDURAL BACKGROUND

       Harwood assigns error to the trial court's dismissal of its complaint for failure to

state a claim upon which relief can be granted. CR 12(b)(6). The following statement of

facts therefore accepts as true the allegations of the complaint. See, e.g., Reid v. Pierce

County, 136 Wn.2d 195,201,961 P.2d 333 (1998). We confine our discussion of the

facts to matters alleged in the complaint, even though argument below and the parties'

appellate briefing provide more detail and more precise characterizations of the roles of

the respective parties.

        In March 2009, Wells Fargo initiated foreclosure ofa first deed of trust on a

residential property on North Andrew Street in Spokane. Harwood had loaned money to

the fonner owner of the residence secured by a second deed of trust. By March 2009, it

had taken title to the property in lieu of foreclosing its own lien.

        In an effort to protect its investment, Harwood contacted Wells Fargo, which

thereafter agreed to postpone the trustee's sale three times. Its third and final

postponement was to a sale date of November 30, 2009. Wells Fargo representatives




        1 We   speak primarily of Harwood; the entity appears to be the real party in
interest.

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No.30679-8-III
Harwood v. Wells Fargo Bank


continually acknowledged that Harwood had a substantial interest in the property and that

Wells Fargo would permit it to cure the defaulted obligation.

        On November 24, Richard Harwood spoke with employees in Wells Fargo's loss

mitigation department and told them that Harwood had funds to cure the existing default.

He offered to tender them, immediately, to any location. In response, a Wells Fargo

employee named Adam stated "he would call Mr. Harwood on November 30, 2009 with

the exact payoff and that he would simply postpone the sale again." Clerk's Papers (CP)

at 5 (Complaint ~ 9). No one called Mr. Harwood on November 30. Harwood later

learned from the trustee that the property had been sold on November 30. Another Wells

Fargo employee, Raina, explained that '''they had dropped the ball.'" CP at 6 (Complaint

~   10). Although Harwood followed the employee's directions to send funds to Northwest

Trustee Services, the trustee, with a copy to Wells Fargo, it became apparent after several

more calls that Wells Fargo could not or would not rescind the sale.

        Harwood and Richard Harwood initiated the action below with a "Complaint for

Reliance and Violation ofthe Consumer Protection Act." CP at 3-7. The claim for

reliance alleged that Harwood reasonably relied upon Wells Fargo's promises and

representations, that Wells Fargo did not do what it had promised, and that Harwood was

injured as a result.

        Wells Fargo moved the court to dismiss the complaint for failure to state a cause

of action. The motion was granted. Harwood's claim for violations of the Consumer

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No.30679-8-III
Harwood v. Wells Fargo Bank


Protection Act, chapter 19.86 RCW, was later dismissed on summary judgment.

Harwood appeals only the dismissal of its claim for reliance or, as characterized on

appeal, promissory estoppel.

                                        ANALYSIS

       CR 12(b)(6) allows a defendant to move for dismissal where the pleadings do not

state a claim for which a court may grant relief. We review de novo a trial court's

decision to grant a CR 12(b)(6) motion. San Juan County v. No New Gas Tax, 160

Wn.2d 141, 164, 157 P.3d 831 (2007). We will affirm the trial court's decision where "it

appears beyond doubt that the claimant can prove no set of facts, consistent with the

complaint, which would justify recovery." Id.

       In moving for dismissal of the promissory estoppel claim, Wells Fargo argued that

its alleged promise did not satisfy Washington's real estate statute of frauds, RCW

64.04.010. In Washington, the statute of frauds applies to promissory estoppel claims.

Greaves v. Med. Imaging Sys., Inc., 124 Wn.2d 389, 879 P.2d 276 (1994) (rejecting

Restatement (Second) ofContracts § 139 (1981), which would allow enforcement of an

oral promise despite the statute of frauds if reliance is foreseeable and injustice can be

avoided only by enforcement). RCW 64.04.010 provides that "[e]very conveyance of

real estate, or any interest therein, and every contract creating or evidencing any

encumbrance upon real estate, shall be by deed." Wells Fargo argued that the alleged




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No.30679-8-III
Harwoodv. Wells Fargo Bank


promise to postpone the trustee sale created an encumbrance on the bank's deed of trust

by restricting alienability.

       Not every agreement that affects real property is subject to RCW 64.04.010. By

its plain language, the statute applies only to (1) actual conveyances of title or interests in

real property and (2) agreements that create or evidence an encumbrance of real property.

"If an agreement falls into either of these categories, it is enforceable only if executed in

the form of a deed. Conversely, if an agreement does not fall within any of these three

categories, RCW 64.04.010 does not apply and the agreement may be enforced even if

not executed by a deed." Firth v. Hefu Lu, 146 Wn.2d 608, 614-15, 49 P.3d 117 (2002)

(citations omitted).

       RCW 64.04.010 must be narrowly construed and not applied to agreements that

are not "'strictly within its terms.'" Id. at 614 (quoting Chambers v. Kirkpatrick, 145

Wash. 277, 280,259 P. 878 (1927)). The real estate statute of frauds does not apply, for

example, to an agreement to sell shares in a cooperative association even though the

shares carry with them the right to a lease from the association of the coop apartment

associated with the shares. Id. at 615-17. It does not apply to the grant of a right of first

refusal, which affects only personal rights. Old Nat 'I Bank of Wash. v. Arneson, 54 Wn.

App. 717, 721, 776 P.2d 145 (1989).

       We need not decide whether the real estate statute of frauds applies to Wells

Fargo's alleged promise because it points on appeal to the statute of frauds for credit

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No. 30679-8-III
Harwood v. Wells Fargo Bank


agreements appearing in RCW 19.36.110, which clearly applies. Although the trial court

did not base its decision upon RCW 19.36.110, we may affirm on any ground supported

by the record whether or not the trial court considered that ground. LaMon v. Butler, 112

Wn.2d 193, 200-01, 770 P .2d 1027 (1989).

      RCW 19.36.110 provides that "[a] credit agreement is not enforceable against the

creditor unless the agreement is in writing and signed by the creditor." "Credit

agreement" is defined to include "an agreement, promise, or commitment ... to forbear

with respect to the repayment of any debt or the exercise of any remedy ... or to make

any other financial accommodation pertaining to a debt or other extension of credit."

RCW 19.36.100. Wells Fargo's promise and representation alleged by Harwood's

complaint was one to forbear with respect to the exercise of a remedy as well as to make

a financial accommodation pertaining to a debt. See Brisbin v. Aurora Loan Servs. LLC,

679 F.3d 748, 752 (8th Cir. 2012) (holding that a promise to postpone foreclosure was

barred by Minnesota's similar statute of frauds for credit agreements).

       Because the credit agreement statute of frauds was a sufficient basis for dismissal,

we need not reach the parties' remaining arguments.




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No. 30679-8-III
Harwood v. Wells Fargo Bank


       Affirmed.

       A majority of the panel has determined that this opinion will not be printed in the

Washington Appellate Reports but it will be filed for public record pursuant to RCW

2.06.040.



                                              Sidd~':;;'
WE CONCUR:



Korsmo, C.J.



Kulik, J.




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