IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON DBM CONSULTING ENGINEERS, INC., a Washington corporation, Respondent,

JOSEPH D. SANDERS and the marital 

### community composed ofJoseph D. Sanders and Jane Doe Sanders; SOOS CREEKVISTA, INC., a Washington corporation, Appellants, CHRISTINE POLLOCK and the marital 

### community composed ofChristine Pollock and John Doe Pollock; POLLOCK INVESTMENT CO., LLC, a Washington limited liabilitycompany, Defendants. No. 72053-8-1 DIVISION ONE UNPUBLISHED OPINION

CXI

FILED: November 2, 2015 

### Appelwick, J. — Sanders and SCV challenge the trial court's order granting 

### summaryjudgment. Thetrial courtordered Sanders toreturn promissorynotes and cash fraudulently transferred by SCV in order to make them available in supplemental proceedings initiatedbyDBM. SCVargues that thetrialcourtlackedtheauthorityto grant relief under the Uniform Fraudulent Transfer Act1 for two reasons: the transferred Chapter 19.40 RCW.No. 72053-8-1/2 

### promissory notes and cash were fully secured pursuant to an antecedent debt and not subject to the UFTA, and because the insider transfer claim was time barred under 

### UFTA's one year extinguishment statute. Atransferee is a necessary party in an UFTA fraudulent transfer action. Sanders was not joined within the one year period. We

reverse. FACTS This is the third appeal involving DBM Consulting Engineers, Inc.'s attempt to collect ajudgmentfrom Soos CreekVista, Inc. (SCV). See DBM Consulting Eng'rs, Inc. v. U.S. Fid. & Guar. Co.. 142 Wn. App. 35, 37-38, 170 P.3d 592 (2007) (DBM I); DBM Consulting Eng'rs. Inc. v. Sanders, noted at 157 Wn. App. 1051, 2010 WL 3490240, at *1 

### (DBM II). In 2005, DBM attempted to garnish promissory notes2 to satisfy itsjudgment against SCV. DBMII, 2010 WL 3490240, at *1. When DBM did so, itdiscovered that, in 

### June 2005, the promissory notes were transferred from SCV to its owner and officer, Joseph Sanders. Id. In October 2005, DBM initiated supplemental proceedings to levy 

### execution on the transferred promissory notes,3 alleging the transfers were preferential payments to an insider in violation ofthe UniformFraudulentTransferAct, chapter 19.40 RCW (UFTA). jd. The trial court determined SCV had made fraudulent transfers to Sanders, and ordered Sanders to return the promissory notes to SCV. Id. Sanders had not been made a party in his personal capacity. Seejd. at *3.



### 2SCV generated its income from the sale of property. The promissory notes at issue represent notes from three different sales of lots to three different buyers. Joseph Sanders, as president of SCV, assigned the promissory notes to himself, personally, on June 2, 2005. 

### 3Although DBM also seeks return ofcash Sanders transferred from SCV's bank account, that cash was not subjectto the trial court's order discussed in DBM II.No. 72053-8-1/3



### Two questions were raised inDBM II: (1) whethera party must raise a UFTAclaim in a new, separate action or if it may do so in a supplemental proceeding via a 

### postjudgment motion and (2)whether a transferee of the allegedly transferred asset is a necessaryparty to the proceeding. Id. at *2. This court determined that a separate action 

### was not required; an UFTA claim could be asserted in a supplemental proceeding. Id. We also determined that the transferee of assets was a necessary party to an UFTA 

### claim, id. Because Sanders, the transferee, had not been added as a party, the trial court's orderwas voided and the matter remanded forfurther proceedings. Id at *3. The mandate in DBM II issued on March 8, 2011. 

### Upon remand, DBM'sfirst motion sought an order to showcausedirecting Sanders 

### to appear on March 5, 2012. DBM was unable to serve that order on Sanders. DBM obtained an amended orderto show cause on June 20, 2012 for an August hearing date. 

### The superiorcourtmade aclericalerrorandtheAugusthearing datewaslost. On March 3,2014—-almostthree years aftertheCourtofAppeals' mandate—DBM obtained athird orderto showcause making Sanders aparty. Sanders accepted serviceofthethird order to show cause on March 6, 2014.4 Then, Sanders moved for summaryjudgmentarguing 

### thatDBM's UFTA claim againsthim was untimely and that the transfer ofthe promissory notes did not constitute a fraudulent transfer under the statute, because he had a



### 4DBM refersto the process ofobtaining an orderto showcause as a "rockyone." After the case was remanded, DBM cites to many differentreasons for delay and for the 

## gaps in time between the orders to show cause: DBM tendering the prosecution ofthe fraudulentconveyanceclaimtoDBM'sformerattorneys andtheirinsurancecarrier, DBM 

### reaching asettlementwiththeformerattorneys, Sandersallegedly avoiding serviceofan order to show cause, the superior courtlosing track of the case and making a clerical error, and the death of DBM's president.No. 72053-8-1/4 

### preexisting security interest in the promissory notes at issue. DBM also moved for summaryjudgment. 

### OnJune 2, 2014, the trial court granted DBM's motion forsummaryjudgment. CP 906. Itconcluded that the transfers ofSCV's promissory notes and cash to Sanders in June 2005 were fraudulent transfers forbidden by RCW 19.40.051. Itfurther stated that Sanders was to convey the promissory notes to SCV and return cash that Sanders had transferred out ofSCV's bank account. Italso ordered that SCV and Sanders respond to DBM's interrogatories and appearfor examination pursuant to RCW 6.32.010 and RCW 6.32.030. And, itawarded DBM attorneyfees incurred pursuing SCVfrom March 4, 2011 through the entry of the supplemental judgment. Sanders and SCV (together "SCV") appeal. DISCUSSION SCV argues that the trial court erred when itgranted DBM's motion for summary judgment. First, itargues that the transfers of the promissory notes and cash were not subjectto the UFTA, because they were property encumbered by a valid lien. Secondly, it argues that because DBM failed to make Sanders a party to the supplemental proceedings within the time required under RCW 19.40.091, that its UFTA action is time 

### barred.5 SCV also claims that if it prevails in this appeal, it is entitled to an award of attorney fees incurred inthe supplemental proceedings below and on appeal. 5DBM argues that SCV should have brought its statute of limitations argument in the prior appeal. Itargues this is so, because the statute began to run in 2005 when the transfers were made and, as a result, this argument was available during the first action. DBM cites to Bank ofAm.. N.A. v. Owens. 177 Wn. App. 181, 193,311 P.3d 594 (2013), review denied. 179Wn.2d 1027, 320 P.3d 718 (2014), for the assertion thatallowing SCV to sit on this theory and wait until it did not prevail, flies inthe face ofthe policy against allowing piecemeal appeals. But, the issue was not argued to the trial courtand was notNo. 72053-8-1/5

I. Standard of Review 

### This court reviews summaryjudgment orders de novo. Hadlev v. Maxwell. 144 

### Wn.2d 306, 310-11, 27 P.3d 600 (2001). Summaryjudgment is appropriateonly where there are no genuine issues ofmaterial fact and the moving party isentitled tojudgment

as a matter of law. CR 56(c); Peterson v. Groves. 111 Wn. App. 306, 310, 44 P.3d 894 (2002).

II. UFTA Statute of Limitations on Insider Transfers RCW 19.40.051(b) governs transfers made to insiders. Itstates, Atransfermade by a debtor is fraudulent as to a creditorwhose claim arose before the transfer was made ifthe transfer was made to an insider for an antecedent debt, the debtor was insolvent at that time, and the insider had reasonable cause to believe that the debtor was insolvent. Here, there is no question that a transferfrom SCV, a corporation, to Sanders, its owner and officer, was a transfer to an insider as contemplated by the statute. Similarly, there is no question that the transfers rendered SCV insolvent. And, it is clear that Sanders made the transfers to compensate himself for an antecedent debt—an initial loan he 

### made to SCV thatwas memorialized in a promissory note. Therefore, the only remaining issues arethetwo arguments SCVadvances as to why summaryjudgmentwas improper. UFTA provides a four year period in which to bring a claim based on a fraudulent 

### transfer. RCW 19.40.091(a), (b). RCW 19.40.091(c) provides a more limited one year

ripe until after SCV prevailed in establishing Sanders was a necessary party. See DBM II, WL 3490240, at *2. The DBM II decision demonstrates that this court thought there was time remaining to add Sanders under the extinguishment statute. Otherwise, we would not have remanded. DBM's argument about piecemeal appeals is notwell taken.No. 72053-8-1/6 

### period in which to bring a claim based specifically on a fraudulent transfer to an insider for an antecedent debt: 

### A cause of action with respect to a fraudulent transfer or obligation under this chapter is extinguished unless action is brought:
. (a) Under RCW 19.40.041(a)(1), within four years after the 

### transferwas made orthe obligation was incurred or, if later, withinone year after the transfer or obligation was or could reasonable have been discovered by the claimant; (b) Under RCW 19.40.041(a)(2) or 19.40.051(a), within four years afterthe transferwas made or the obligation was incurred; or (c) Under RCW 19.40.051(b), within one year after the transfer was made or the obligation was incurred. RCW 19.40.091. Although the statute is known as an extinguishment provision, the Washington Supreme Court has referred to itas a statute of limitations provision for the UFTA. See Freitag v. McGhie. 133 Wn.2d 816, 817, 820, 947 P.2d 1186 (1997). 

### DBM argues thatthis courtalreadydecided that DBM's2005 postjudgmentmotion to levy on assets was "brought" within the one year period and satisfied the insider provision ofthe extinguishmentstatute. Two questions were raised inDBM II: (1)whether a party must raise an UFTA claim in a new, separate action or if it may do so in a supplemental proceeding via a postjudgment motion and (2) whether a transferee ofthe 

### allegedly transferred asset is a necessary party to the proceeding. DBM II, 2010 WL 3490240, at *2. We concluded that a postjudgment "motion to levy on assets was an 

### appropriate way to gain reliefunder the UFTA. And, since the motion was made within

one year afterthe transfer, DBM's claim was not extinguished." ]d. 

### DBM implicitly argues this language means that the filing of its 2005 motion permanently tolled the one year statute of limitations period. But, the reference to theNo. 72053-8-1/7 extinguishment statute in DBM II was meant to address SCV's argument that DBM's 

### failure to commence a separate lawsuit for its UFTA claim within a one yearperiod, rather than a supplemental proceeding within a one year period, extinguished the claim. DBM 

### II, 2010WL3490240, at *1. The issue was the propriety ofthe type ofproceeding forthe adjudication of an UFTA claim. A new UFTA action had not been commenced at all. Thus, we were not asked to considerwhat steps were required to "bring" an UFTA action under the language of RCW 19.40.091(c). DBM II does not hold that the mere filing of DBM's 2005 motion to levy on assets satisfied and permanently tolled the statute of limitations on that claim. RCW 19.40.091(c) requires that an UFTAaction be broughtwithin one yearofthe alleged transfer. We held inthe previous appeal that a transferee is a necessary partyto 

### an action seeking to set aside an alleged fraudulent transfer. DBM II WL3490240, at *2. We now hold that an action has not been "brought" via supplemental proceedings under RCW 19.40.091(c) unless the motion to levy on assets has been filed and all necessary 

### parties have been served within the one year period.6 Having squarely addressed this question, we conclude that Sanders was not served within the statutory period. Assuming some portion of the statutory period remained at the time of remand in DBM II, itwas necessarily less than one year. The 

### 6 Under RCW 4.16.170, either serving the summons or filing the complaint commences an action and tolls an expiring statute of limitations as long as both occur 

### within a 90 day period. Wothers v. Farmers Ins. Co., 101 Wn. App. 75, 79, 5 P.3d 719 (2000). The filing of a complaint may toll the statute of limitations for a period of time to effectuate service, but ifservice is not made within the statutorily proscribed period, any 

### tolling that has occurred under the statute of limitations is lost. Neither party here has cited to any authority that suggests there is a specific tolling period underwhichDBM was afforded additional timeto serve Sanders afterfiling the motion initiatingthe supplemental 

### proceeding. IfRCW4.16.170 applies here, it had no effect on the outcome.No. 72053-8-1/8



### record is clear that DBM only successfully served Sanders with its third order to show

cause on March 6, 2014, nearly three years afterthe mandate. DBM's UFTA claim was extinguished as a matter of law pursuant to RCW 19.40.091(c) before the time DBM successfully served Sanders. Therefore, the trial court lacked authority to enteran order granting DBM's motion for summaryjudgment. In light of this holding, we need not address whether the promissory notes and cash at issue were secured and thus not subject to the UFTA.

III. Attorney Fees 

### SCV argues that it is entitled to attorney fees incurred in the supplemental 

### proceedings below and those incurred on appeal. It contends this is so, because this courtalreadyawarded itattorneyfees underthe contractit had withDBM inDBM II. DBM 

### appears to concedethat the prevailing party is entitled to attorney fees based on the prior
fee awards in the case. 

### This court will award attorney fees to the prevailing party only on the basis of a private agreement, statute, or a recognized ground of equity. Eouitable Life Leasing Corp. v. Cedarbrook. Inc.. 52 Wn. App. 497, 506, 761 P.2d 77 (1988). The underlying contract between DBM and SCV is not in the record. But, the DBM II court recited the 

### relevant language: " 'In the event that Consultant prevails in any action between Client and Consultant, Client should pay Consultant's legalexpenses, including attorney's fees, courtcosts and experts' fees.'" DBM II, 2010WL 3490240, at *3. Under RCW4.84.330, such provisions are deemed a bilateral entitlementto fees and costs. Because we conclude that DBM's fraudulent transfer claims are time barred, SCV 

### is the prevailing party on appeal. We reverse the trial court's order awarding DBM

8No. 72053-8-1/9 

### attorney fees for the period of March 4, 2011 to the date of the entry of the supplemental judgment. Based on the language ofthe underlying contract and RAP 18.1, we remand to the trial court for an award of attorney fees from the date of the mandate in DBM II 

### forward, including fees on appeal. See RAP 18.1 (i) (stating thatthe appellate court may direct that the amount of fees and expenses be determined by the trial court after remand). We reverse and remand to the trial courtfor an award of attorney fees to SCV.

WE CONCUR: 

# tox.J •