Jonathan D. Clausen v. WBL SPO I, LLC

CourtCourt of Appeals of Washington
DecidedOctober 14, 2025
Docket40591-5
StatusPublished

This text of Jonathan D. Clausen v. WBL SPO I, LLC (Jonathan D. Clausen v. WBL SPO I, LLC) is published on Counsel Stack Legal Research, covering Court of Appeals of Washington primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Jonathan D. Clausen v. WBL SPO I, LLC, (Wash. Ct. App. 2025).

Opinion

FILED OCTOBER 14, 2025 In the Office of the Clerk of Court WA State Court of Appeals, Division III

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

DIVISION THREE

JONATHAN D. CLAUSEN and LILAC ) CITY, LLC, a Washington Limited ) No. 40591-5-III Liability Company, dba LILAC CITY ) PAINTING, ) ) Appellant, ) ) PUBLISHED OPINION v. ) ) WBL SPO I, LLC, a Delaware Limited ) Liability Company, and WORLD ) BUSINESS LENDER, LLC, a NEW ) YORK Limited Liability Company, ) ) Respondent. )

STAAB, A.C.J. — In this appeal, we interpret the term “borrower” as used in the

Washington Consumer Loan Act (CLA), chapter 31.04 RCW. The CLA applies to

various loans made to Washington residents but does not apply to loans made “primarily

for business, commercial, or agricultural purposes unless the loan is secured by a lien on

the borrower’s primary dwelling.” RCW 31.04.025(4)(e).

World Business Lender (WBL) made a business loan to Lilac City LLC, a

company owned by Jonathan Clausen. Clausen personally guaranteed the loan, and the

guaranty was secured by a deed of trust on the personal residence he owned with his No. 40591-5-III Clausen, et al. v. WBL Spo I, LLC, et al.

wife. After Lilac City defaulted, WBL initiated a nonjudicial foreclosure on the

residence. In response, Clausen and Lilac City filed suit against WBL, asserting claims

under the CLA, the Consumer Protection Act (CPA), chapter 19.86 RCW, and

Washington’s usury statutes. On summary judgment the superior court dismissed

Clausen’s claims, holding that the CLA did not apply because Clausen was not a

“borrower” under the CLA.

We affirm. The plain language and legislative intent of the CLA support the trial

court’s conclusion that Clausen was not a borrower and therefore the CLA licensing

requirements did not apply to WBL’s loan. Accordingly, Clausen’s usury and CPA

claims, which are premised on his alleged CLA violations, likewise fail.

BACKGROUND

Because this case was resolved on summary judgment, we consider the evidence

in a light most favorable to Clausen as the nonmoving party. Jonathan and Jodi Clausen

own property located on Norman Road in Spokane, Washington, which they have used as

their principal residence. In June 2022, Jonathan Clausen, acting on behalf of his

company, Lilac City LLC, submitted a “Business Financing Application” to Big Think

Capital, an independent loan broker. The application identified Lilac City as the

applicant. The application stated that the loan proceeds would be used for “[t]emporary

2 No. 40591-5-III Clausen, et al. v. WBL Spo I, LLC, et al.

working capital, equipment and inventory until SBA[1] funds. looking to build.” Clerk’s

Papers (CP) at 73. Mr. Clausen indicated on the application that he was the “Primary

Owner” of Lilac City and listed an address on Hogan Street in Spokane for the business.

He signed below a paragraph acknowledging that Lilac City authorized Big Think Capital

to acquire a commercial loan.

Big Think Capital referred Lilac City to WBL, which agreed to loan Lilac City

$400,000, plus interest. As part of the transaction, Lilac City executed a “Business

Promissory Note and Security Agreement” (the Note), with Clausen signing as the chief

executive officer (CEO). The note expressly refers to Lilac City as the borrower and

states that the loan proceeds would be used exclusively for business purposes. In

connection with the loan, Mr. Clausen also signed a “Business Loan Purpose Affidavit”

affirming that the funds would not be used for personal, consumer, or household

purposes. The parties also executed an agreement authorizing direct deposit of funds into

an account held in the name of Lilac City.

To secure the loan obligations of Lilac City, Clausen signed a “Continuing

Guaranty Personal (Unlimited)” the (Guaranty) in his individual capacity, and not in his

capacity as CEO of Lilac City. To secure the payment obligations under the Guaranty,

Clausen and his wife signed a “Deed of Trust, Assignment of Leases and Rents and

1 Small Business Administration.

3 No. 40591-5-III Clausen, et al. v. WBL Spo I, LLC, et al.

Security Agreement” the “Deed of Trust” dated August 9, 2022, granting WBL a security

interest in their Norman Road residence. The recitals to the Deed of Trust reiterate the

loan structure: Lilac City was the “‘borrower,’” and the Clausens, as “Trustor[s],” were

signing the Deed of Trust to guarantee the loan to Lilac City.

WBL then partially funded the loan in August 2022, by paying off Lilac City’s

preexisting business debts. WBL and Lilac City also executed two “Holdback”

agreements. WBL ultimately applied the Holdback funds to loan payments after Lilac

City defaulted. Following Lilac City’s default, WBL initiated nonjudicial foreclosure

proceedings on the Clausens’ Norman Road residence.

In February 2024, Mr. Clausen and Lilac City filed a complaint in Spokane

County Superior Court against WBL asserting violations of the CLA, Washington’s

usury statute,2 and the CPA. They concurrently moved for a temporary restraining order

and preliminary injunction to stop the trustee’s sale of their Norman Road residence. The

court granted a preliminary injunction, restraining the sale pending the outcome of the

case.

WBL subsequently moved to dismiss the case under CR 12(b) and CR 56. The

court issued a written decision granting WBL’s motion, dismissing the complaint.

Clausen and Lilac City appeal.

2 RCW 19.52.020.

4 No. 40591-5-III Clausen, et al. v. WBL Spo I, LLC, et al.

ANALYSIS

1. CONSUMER LOAN ACT

Clausen argues that the trial court erred by concluding he and his spouse were not

“borrowers” under former RCW 31.04.025(2)(e) (2023),3 and that the CLA licensing

requirements did not apply to WBL. He contends that the CLA’s broad definition of

“borrower” includes any individual who seeks information about a loan and pledges liens

against their primary dwellings, even when the loan is made to a separate business entity

for business purposes. He further asserts that WBL’s conduct triggered the CLA’s

protections, and that the trial court’s interpretation undermines the legislature’s stated

goal of protecting Washington homeowners. We disagree and affirm the trial court’s

dismissal of Clausen’s claims on summary judgment.

Our review of the trial court’s order on summary judgment is de novo. Hisle v.

Todd Pac. Shipyards Corp., 151 Wn.2d 853, 860, 93 P.3d 108 (2004). When reviewing

an order granting summary judgment, we engage in the same inquiry as the trial court,

considering all facts and reasonable inferences in the light most favorable to the

nonmoving party. Kahn v. Salerno, 90 Wn. App. 110, 117, 951 P.2d 321 (1998).

3 While this case was pending, the legislature amended RCW 31.04.025, effective June 6, 2024. LAWS OF 2024, ch. 249, § 2.

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