                                                            FILED
                                                        DECEMBER 17, 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

COLLEEN KELL Y, an individual,                )         No. 31091-4-111
                                              )
                     Appellant,               )
                                              )
              v.                              )         PUBLISHED OPINION
                                              )
ALLIANZ LIFE INSURANCE                        )

COMPANY OF NORTH AMERICA, a                   )

corporation organized pursuant to the laws    )

of Minnesota,                                 )

                                              )

                     Respondent.              )


       KULIK, 1. -   Colleen Kelly appeals summary judgment dismissal of her lawsuit

against Allianz Life Insurance Company. She contends the trial court erred in deciding

her claims were time barred under the six-year statute of limitations applicable to contract

based claims. Ms. Kelly additionally contends that she was entitled to 12 percent interest

on the principal repayment rather than the 3 percent interest Allianz paid her when it

returned her investment. We review a challenge to the statute of limitations de novo.

Here, we agree that Ms. Kelly's action is time barred because she did not file within the

six-year statute oflimitations, which began to run on June 27, 2005, if not earlier when
No. 31 091-4-III 

Kelly v. Allianz Life Ins. Co. 



she purchased the annuities in 2004. Ms. Kelly filed her lawsuit on August 19,2011.

       We affirm the trial court's summary judgment dismissaL

                                       FACTS

       In 2004, Colleen Kelly purchased three annuity contracts from Curtis Horton, an

Allianz Life Insurance Company insurance agent. On June 27, 2005, the Washington

State Office of Insurance Commissioner informed Ms. Kelly that the annuities were not

authorized for sale in Washington State. On August 5, 2005, Ms. Kelly then requested

that Allianz terminate the contracts "at their current value, without penalty." Clerk's

Papers (CP) at 104. She did not mention interest.

       On September 13,2005, Allianz notified Ms. Kelly that it agreed to cancel the

three policies and return the premiums with 3 percent interest. With the cancellation

letter, it included three checks for the premium money, plus 3 percent interest, for a total

of $141 ,221.69. Ms. Kelly deposited the checks in her bank account and the funds

cleared.

       On March 20,2006, Ms. Kelly contacted Allianz, stating that an attorney had

advised her that she should have received a refund based on a 12 percent rate of interest.

Over the next several years, Ms. Kelly and her attorney sporadically discussed the added

interest Ms. Kelly claimed she was owed.


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No.31091-4-III 

Kelly v. Allianz Life Ins. Co. 



       Ms. Kelly filed a lawsuit against Allianz on August 19, 20 11, asserting a cause of

action for unpaid interest in the amount of $14,544 under RCW 19.52.010. 1 Allianz filed

a CR 12(b)(6) motion to dismiss, arguing that Ms. Kelly failed to allege any cause of

action. The trial court denied the motion, but ordered Ms. Kelly to submit an amended

complaint making a more definite statement under CR 12(e).

       Ms. Kelly filed an amended complaint on December 19,2011, asking for a

declaratory judgment and asserting causes of action for rescission and restitution. She

claimed that a 12 percent interest rate under RCW 19.52.010 applied to her restitution

claim and asked for a judgment of$14,354, which represented the "remaining portion of

full restitution which Allianz Life has not made." CP at 8.

       Allianz moved for summary judgment, arguing that Ms. Kelly's causes of action

were barred by the six-year statute of limitations for actions on contracts under

RCW 4.16.040. Allianz also argued that even if Ms. Kelly's claims were not time barred,

RCW 19.52.010 was inapplicable because the statute does not apply to private

agreements between parties where those parties do not seek judicial relief. It also argued

if Ms. Kelly's claims arose out of the rescission of the annuities, Allianz had properly


       1 RCW    19.52.0 I 0 states in relevant part: "( I) Every loan or forbearance of money,
goods, or thing in action shall bear interest at the rate of twelve percent per annum where
no different rate is agreed to in writing between the parties."

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No. 31091-4-III
Kelly v. Allianz Life Ins. Co.


paid 3 percent interest, as agreed to by the parties. Allianz pointed out that

RCW 19.52.010 applies only where no different rate is agreed to in writing by the parties.

       Ms. Kelly responded that she was entitled to 12 percent interest because, upon

rescission of the contracts, she had a common law right to restitution under

RCW 19.52.010. She argued, "Allianz rescinded the Annuities, but its fulfillment ofits

rescission duties are not complete, and proper restitution including the proper applicable

interest has yet to be made to Ms. Kelly." CP at 151. She also argued that her claims

were not barred by the statute of limitations because her claim did not accrue until

September 13,2005, when Allianz paid 3 percent interest, rather than the statutory 12

percent.

       The trial court granted Allianz's motion for summary judgment, ruling that Ms.

Kelly's claims were time barred. It rejected Ms. Kelly's argument regarding the accrual

date, stating: "I disagree that it's-that in this particular set of facts that it would be six

years from September 13th of2005." Report of Proceedings at 15. The trial court did not

reach the other issues in its ruling. Ms. Kelly appeals.

                                         ANALYSIS

       Summary Judgment-Statute o(Limitations. The issue is whether the trial court

erred in summarily dismissing Ms. Kelly's claims as time barred under RCW 4.16.040(1).



                                               4

No. 31091-4-II1 

Kelly v. Allianz Life Ins. Co. 



We review a grant of summary judgment de novo, engaging in the same inquiry as the

trial court. Auto. United Trades Org. v. State, 175 Wn.2d 537, 541,286 P.3d 377 (2012).

Summary judgment is proper when there are no genuine issues of material fact and the

moving party is entitled to judgment as a matter of law. CR 56(c); Huff v. Budbill, 141

Wn.2d 1, 7, 1 P.3d 1138 (2000). We construe facts and reasonable inferences from those

facts in the light most favorable to the nonmoving party. Michak v. Transnation Title Ins.

Co., 148 Wn.2d 788, 794, 64 P.3d 22 (2003). Summary judgment is appropriate if

reasonable persons could reach but one conclusion. Wilson v. Steinbach, 98 Wn.2d 434,

437,656 P.2d 1030 (1982).

       Whether a claim is time barred is a legal question we review de novo. Goodman v.

Goodman, 128 Wn.2d 366, 373, 907 P.2d 290 (1995); Wilson, 98 Wn.2d at 437. A

statute of limitations is designed to protect individuals and courts from stale claims.

Burns v. McClinton, 135 Wn. App. 285, 293, 143 P.3d 630 (2006). A statutory period

begins to run when the plaintiffs cause of action accrues. Malnar v. Carlson, 128 Wn.2d

521,529,910 P.2d 455 (1996). A cause of action accrues when the party has the right to

apply to a court for relief. Id. Accrual of contract claims occurs on breach. 1000

Virginia Ltd. P'ship v. Vertecs Corp., 158 Wn.2d 566, 576, 146 P.3d 423 (2006).




                                              5

No. 31091-4-III 

Kelly v. Allianz Life Ins. Co. 



Generally, the discovery rule does not apply to an action for breach of contract. See 1000

Virginia Ltd., 158 Wn.2d at 576.

       RCW 4.16.040(1) provides that contract based claims are subject to a six-year

statute of limitations. The parties do not dispute the applicable statutory period, but

disagree on the accrual date of Ms. Kelly's claims. Ms. Kelly contends that the six-year

statute of limitations did not begin to run until September 13,2005, when Allianz

underpaid her by adding only 3 percent interest to her principal repayment. She contends

that before that date, she had no actual dispute with Allianz regarding the amount of

interest and, therefore, no basis to apply to a court for relief.

       Allianz responds that Ms. Kelly is attempting to avoid dismissal under the statute

of limitations by mischaracterizing her breach of contract claim as one for'" wrongful

payment of interest.'" Resp't's Br. at 11. It argues that Ms. Kelly's claim accrued when

she learned of the annuities' purported illegality on June 27,2005, and that she could

have asserted her claim for 12 percent interest at any time after the annuities were issued,

including her request for rescission.

       Arguably, if accrual of a contract claim occurs on breach, then Ms. Kelly's right to

rescission accrued upon issuance of the unauthorized annuities in 2004. The contract was

essentially breached at its inception, entitling Ms. Kelly to immediate restitution. Noel v.


                                                6

No. 31091-4-111 

Kelly v. Allianz Life Ins. Co. 



Cole, 98 Wn.2d 375, 383, 655 P.2d 245 (1982). In fact, Ms. Kelly acknowledges as

much, stating "she had a right to the money from the moment she paid for the illegal

investment Annuities." Appellant's Br. at 10. Nevertheless, if the claim accrued upon

discovery of the illegality, Ms. Kelly had a cause of action on June 27,2005, when the

Office of Insurance Commissioner informed her the annuities were unauthorized for sale.

       Ms. Kelly argues that she did not have an "actual dispute" with Allianz regarding

the amount of interest to be paid on her principal amounts until September 13, 2005,

when Allianz paid the 3 percent interest on the principal repayments. 2 Appellant's Br. at

19. But her argument ignores the central fact that she was put on notice of the annuities'

illegality in June 2005, more than six years before she filed her lawsuit. At that point, the

elements for a cause of action on the contract were existent and known to Ms. Kelly. Ms.

Kelly's failure to demand 12 percent interest did not delay or extend the statutory period.



       2 Ms. Kelly also argues that Allianz's "partial payment" tolled the statute of
limitations under RCW 4.17.270, which provides that when partial payment is made on an
existing contract, the statute of limitations commences from the time the last payment was
made. Ms. Kelly did not raise this argument below; therefore, we need not reach this
contention. However, even if we address the argument, it fails. '" Where circumstances
are relied upon to toll the running of the statute of limitations, they must show a clear and
unequivocal intention on the part of the obligor to keep alive the debt.'" Walker v. Sieg,
23 Wn.2d 552,561, 161 P.2d 542 (1945) (quoting Stockdale v. Horlacher, 189 Wash.
264,267,64 P.2d 1015 (1937)). Nothing in the record suggests that Allianz had any
intention to renew a debt or pay more in the future. Where no reasonable juror could find
for the nonmoving party, summary judgment is proper. If Ms. Kelly had presented this

                                             7

No. 31091-4-111 

Kelly v. Allianz Life Ins. Co. 



It is the fact of damage, not the amount, that is critical in determining when her claim

accrued. In short, Ms. Kelly had grounds to sue Allianz in 2005, if not earlier. She did

not file a lawsuit until over six years later. Accordingly, the trial court did not err in

ruling that her claims were time barred under RCW 4.16.040(1).

       The trial court did not reach the issue of what interest rate would apply. We affirm

the trial court's summary judgment dismissal.




                                                   Kulik, J.

WE CONCUR:




    1z'
    ~c4t~1
Siddoway, A.C.J.




Fearing, J.     .




argument, it would not have prevented summary judgment dismissal.

                                               8
