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IN THE COURT OFAPPEALS OF THE STATE OF WASHINGTON NO. 69156-2-1 MARK CALVERT, as Liquidating Trustee ofMeridian Mortgage InvestorFund I, LLC, and Individual Investors, Appellants,

v. FREDERICK DARREN BERG, an individual, MOSS ADAMS, LLP; and DOES 1 through 50, inclusive, Respondents. (Consolidated with Nos. 69350-6-1 and 69351-4-1) DIVISION ONE

PUBLISHED OPINION

FILED: November4, 2013 Leach, C.J.

— Mark Calvert and over 600 individual investors appeal a trial court's imposition of sanctions for failure to comply with court orders to 

### provide certain information toMoss Adams.1 The investors claim that thetrial court erred when it delayed granting their CR 41(a)(1)(B) motion for voluntary dismissal until after the deadline for compliance with the court orders. Because the courterred when it did not grantthe investors' motion promptly, measured by the posture ofthe case atthetimethe motion wasfiled, we reverse.



### 1This case involves the claims ofapproximately 600 parties. The case caption contains each party's name. Including each name in the caption of this opinion would take several pages. In the interest of publishing economy, we order the abbreviation of the caption to that set forth above for purposes ofthis opinion and any post-opinion pleadingsfiled inan appellate courtonly.No. 69156-2-1 (consol. with Nos. 69350-6-1 and 69351-4-1) / 2

FACTS Frederick Darren Berg defrauded hundreds of investors through a Ponzi scheme. Moss Adams, acting as an independent outside auditor, audited some ofBerg's investmentfunds. Mark Calvert, a court-appointed bankruptcytrustee, seeks to recover money for over 600 individual investors allegedly victimized in Berg's Ponzi scheme. On December 7, 2011, Calvert and the investors sued Moss Adams for 

### fraud, negligent misrepresentation, negligence, and violations ofthe Consumer Protection Act, chapter 19.86 RCW. Law firms Luvera, Barnett, Brindley, 

### Beninger &Cunningham and Eagan Avenatti LLP represented the investors in 

### this action.2 On January 17,2012, Moss Adams filed a CR 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted or, alternatively, underCR 12(e)for a more definite statement. 

### Atthe hearing on Moss Adams's motion, the trial court stated, "I do think that's not unreasonableto askyou to tellthem which funds, which plaintiffs,what 

### 2Luvera, Barnett, Brindley, Beninger &Cunningham and EaganAvenatti LLP filed separate notices of appeal. These appeals, No. 69351-4-1 and No. 69350-6-1, are consolidated under No. 69156-2-1. Luvera, Barnett, Brindley, 

### Beninger & Cunningham filed a separate brief adopting "by reference the 

### assignments of error, statementofissues, statement of the case, argument and conclusion, made inthatbrief." Eagan Avenatti LLP filed a separate brief to "join 

### in, and adopt as their own as ifsetforthfully herein, the legal argumentsetforth in the Brief ofAppellants Calvert, Edwards, and Eagan Avenatti LLP filed with this Court." -2-No. 69156-2-1 (consol. with Nos. 69350-6-1 and 69351-4-1) / 3
periods oftime." The investors' counsel told the court, "[l]fwe can get past this pleading stage, we'll stipulate to provide this information to counsel." Atthe end ofthe hearing, the courtexplained, Ialso thinkthatthe defendants are, mostcertainly, entitledto a lotmore information than they're getting from this complaint right now. And Ireally wantthem to get that information now, not down the line with formal discovery. Iagree thatyou may well be moving forward withformal discovery as to MossAdams, Idon't know. But I think now is [a] good time for everybody to figure out who's claiming against MossAdams and based on what. Iwill accept the plaintiffs offer, provided that it's done within the next 30 days. Okay? To tellthe defendants, specifically, as to your 600 plaintiffs: Who invested in which fund, when they invested, how much they invested, what audit, if any, by Moss Adams they looked at or relied upon? And when I say, "what 

### audit," Imean you need to specify as to which fund didthey lookat orrely on MossAdams' audit. 

### On February 17, 2012, thetrial courtdenied Moss Adams's motion except
as to the Consumer Protection Act claim, which it dismissed without prejudice. The court's order stated, Plaintiffs are ordered to provide to Defendants within thirty (30) 

### days the following information: as to each Plaintiff (a) who invested in which fund; (b) when they invested; (c) how much they invested; and (d) what auditthey looked at or relied upon. If this information is not providedthe Courtwill considerdirecting a Bill ofParticulars. After the investors failed to provide the required information by the 

### specified deadline, Moss Adams moved for sanctions against the investors on

-3-No. 69156-2-1 (consol. with Nos. 69350-6-1 and 69351-4-1) / 4 

### April 9, 2012. On May 1, the court entered an ordergranting this motion, which stated,

• Plaintiffs are ordered to produce materials fully compliant with this Court's Order of February 17, 2012 ("February Order") within thirty (30) days ofthis order;

• Plaintiffs shall not issue any discovery to Moss Adams for 30 days from thedate ofthis order;

• The deadlines for any discovery already issued by Plaintiffs to Moss Adams shall be stayed and tolled for 30 days from the date ofthis order; and

• Plaintiffs shall provide a full Bill of Particulars which at a minimum makes the disclosures required by this Court's 2/17/12 order by 45 days from the date of this order (unless the disclosure required by this Court on 2/17/12 is provided within 30 days ofthe date ofthis order).



### • Failure to eithercomply infull with this Court's 2/17/12 order or the Bill ofParticulars required in this orderby the relevant deadline set forth in this order will result in an award of sanctions for, at a minimum, all Moss Adams' fees and costs forpursuing this information. 

### The court granted no monetary relief to Moss Adams. Moss Adams makes no claim that the trial court reserved for later decision any issue it raised in its
motion. 

### Before providing any materials responsive to the court's May 1 order, the investors filed a CR 41(a)(1)(B) motion for voluntary dismissal without prejudice 

### on May 21 and noted it for hearing on May 30. In response, Moss Adams asked

-4-No. 69156-2-1 (consol. with Nos. 69350-6-1 and 69351-4-1) / 5

the court to dismiss the investors' claims with prejudice, compel the investors to 

### comply with the February 17 and May 1 orders, and impose sanctions. Moss Adams also filed motions to strike the investors' reply on the motion to dismiss, for sanctions, to revoke Eagan Avenatti's pro hac vice admission, and to shorten
time. On June 15, 2012, the investors filed a bill of particulars. On June 18, 

### Moss Adams filed a supplemental submission regarding plaintiffs' continued 

### noncompliance with court orders, requesting that the court dismiss the investors' claims with prejudice, strike the investors' reply, sanction Eagan Avenatti by ordering it to pay Moss Adams's costs and attorney fees, and revoke Eagan 

### Avenatti's pro hac vice status. The investors moved to strike this supplemental submission, and Moss Adams opposed the motion to strike and again requested
sanctions. 

### On July 3, 2012, the trial court entered an order denying Moss Adams's motion to strike the investors' reply and for other sanctions, denying as moot 

### Moss Adams's motion to shorten time, denying Moss Adams's motion to revoke 

### counsel's pro hac vice status, and denying the investors' motion to strike Moss Adams's supplemental submissionforsanctions. In the order, the court directed
Moss Adams

-5-No. 69156-2-1 (consol. with Nos. 69350-6-1 and 69351-4-1) / 6
to file a pleading which notifies this Courtwhat information ordered 

### by this Court on February 17, 2012 and May 1, 2012 has allegedly not been provided, documents what costs and fees Moss Adams 

### has expended to obtain that information, and provides a proposed judgment for any requested monetary sanction. Plaintiffs may respond to this pleading and Moss Adams may reply. Ifthese submissions are complete before July 31, 2012, the Court will rule on them before issuing its order on the motion for voluntary 

### dismissal. Ifthe Court again receives pleadings on other matters, they will timely be considered, but the court will rule on the voluntarydismissal no laterthan July 31, 2012. In response to this order, Moss Adams filed a motion for judgment awarding monetary sanctions. The investors opposed this motion. On July 26, 2012, the trial court entered a judgment against the investors and their counsel 

### for $74,086.50 in sanctions for "fees and costs incurred by Moss Adams in 

### attemptingtoobtaintheordered information."3 OnJuly27, thecourtgrantedthe investors' CR 41(a)(1)(B) motion forvoluntary dismissal withoutprejudice. The investors appeal.



### 3Theinvestors satisfiedthis judgmenton July 30, 2012. -6-No. 69156-2-1 (consol. with Nos. 69350-6-1 and 69351-4-1) / 7

STANDARD OF REVIEW We review de novo the trial court's application of CR 41(a)(1)(B) to the facts.4
ANALYSIS The investors claim that they had a right to an immediate order of dismissal without prejudice under CR 41(a)(1)(B). They also assert thatthe trial court erred in imposing sanctions because the court lacked authority to require them to produce the specified information, they did not violate the court's February 17 and May 1 orders, the court failed to articulate the legal or factual basis for imposing the sanctions, and the possible legal grounds for sanctions do not apply here. Additionally, the investors contend that the sanction award was excessive. We reverse the court's judgment awarding monetary sanctions to Moss Adams. The investors argue, "Under CR 41(a)(1)(B), the investors had a mandatory, absolute right to dismissal of its action withoutprejudice, fixed on the 

### day ofthe filing ofthe motion. Anypending matters were rendered a nullityonce that dismissal motion was filed." We agree that the investors were entitled to

4League ofWomenVoters ofWash, v. KingCounty Records, Elections & Licensing Servs.Div.. 133Wn. App. 374, 378, 135 P.3d 985 (2006). -7-No. 69156-2-1 (consol. with Nos. 69350-6-1 and 69351-4-1) / 8

dismissal without prejudice and without delay, measured by the posture of the
case atthe time theyfiled theirmotion. CR 41(a)(1)(B) states, (a) Voluntary Dismissal. (1) Mandatory. Subjectto the provisions of rules 23(e) and 23.1, any action shall be dismissed by the court: (B)
.... Upon motion of the plaintiff at any time before plaintiffrests atthe conclusion ofhis opening case. A plaintiffs right to a voluntary nonsuit must be measured by the posture ofthe case atthe precise time the motion is made becausethe right to dismissal, 

### ifany, becomesfixed at thatpoint.5 In Paulson v. Wahl,6thecourtheldthat the plaintiff had a right to a voluntary dismissal when he filed a motion to dismiss instead of responding to the merits of a defendant's motion for summary judgment. Although a voluntary dismissal under CR 41(a)(1)(B) generally deprives a court of authority to decide a case on the merits, "the court retains jurisdiction for the limited purpose ofconsidering a defendant's motion for fees," 

### whichiscollateralto theunderlyingproceeding.7

5 Paulson v. Wahl. 10 Wn. App. 53, 57, 516 P.2d 514 (1973) (citing Krause v. Boriessan. 55 Wn.2d 284, 285, 347 P.2d 893 (1959)). 

### 610Wn.App. 53,57,516 P.2d 514 (1973). 7Hawkv. Branies. 97 Wn.App. 776, 782-83, 986 P.2d 841 (1999). -8-No. 69156-2-1 (consol. with Nos. 69350-6-1 and 69351-4-1) / 9

The investors fixed theirright to dismissal when they filed a CR 41 motion 

### on May 21. Here, the first four provisions ofthe court's May 1 order suspended the investors' ability to conduct discovery as a sanction for violation of the February 17 order and required their compliance with the order by producing materials within 30 days and filing a bill ofparticulars within 45 days. The fifth 

### paragraph of the May 1 order provided that the investors' failure to comply with these provisions would "result in an award of sanctions." As of May 21, the investors had not defaulted in performance of their May 1 order obligations. 

### Thus, theyhad nottriggeredthe order'seconomic sanctions provision. Under Paulson, the investors had the right to respond to the May 1 order with a CR 41 motion that fixed their rights as of its filing date. Because the 

### deadline to comply with the court's May 1 order did not expire until after the investors filed their CR 41(a)(1)(B) motion, the investors had the right not to 

### complywith that order and to avoid any consequences for their noncompliance. Because the trial court's May 1 orderresolved Moss Adams's earlier requestfor sanctions for violation of the February 17 order, no motion for sanctions was 

### pending at the time the investorsfiled their CR41(a)(1)(B) motion. Thetrial court should have granted the motion measured by that posture of the case. Moss

-9-No. 69156-2-1 (consol. with Nos. 69350-6-1 and 69351-4-1)/10 

### Adams, by filing additional motions, could not deprive the investors of the right thatbecamefixed whentheyfiledtheirCR 41(a)(1)(B) motion. 

### The investors also claim that the trial court did not have authority to require them to produce the specified information. Because they do not appeal 

### the February 17 or May 1 orders that imposed this requirement, we do not address this issue.8 Additionally, the investors contend that they complied with the court's February 17 order. Their argument hinges on the bill of particulars that they provided after they moved to dismiss on May 21. Because the trial court determined on May 1 that the investors did not comply with the February order and the investors do not appeal the May 1 order, we decline to address this 

### issue.9 Also, inview of our decision, the issue ismoot. The investors further allege thatthe trial courterred inimposing sanctions because the court "entered no findings of fact or conclusions of law. It did not cite to CR 11, CR 37, or some other basis for sanctions." They also assert that the cost award was excessive. Because we hold that the trial court should have granted the investors' CR 41(a)(1)(B) motion measured by the posture of the


### 8 See RAP 2.4(a) ("The appellate court will, at the instance of the appellant, review the decision or parts ofthe decision designated inthe notice of appeal."). 

### 9SeeRAP2.4(a). -10-No. 69156-2-1 (consol. with Nos. 69350-6-1 and 69351-4-1)/11

case at the time the motion was filed and the sanction award was based upon the investors' conductaftertheyfiledtheirmotion, we reversethe court's July25, 2012, orderawarding monetary sanctions to MossAdams.
CONCLUSION Because the investors had a right to a nonsuit when they moved for voluntary dismissal under CR 41(a)(1)(B) and Moss Adams was entitled to no monetary sanctions at that time, we reverse the trial court's order awarding monetary sanctions to Moss Adams. 

# LJi e./ —? T? / WE CONCUR: 

# •IT^PJU ,

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