Opinion ID: 2635352
Heading Depth: 2
Heading Rank: 1

Heading: Plain language analysis supplies the meaning of account receivable as used in RCW 4.16.040(2).

Text: ¶ 8 A court's objective in construing a statute is to determine the legislature's intent. State v. Jacobs, 154 Wash.2d 596, 600, ¶ 7, 115 P.3d 281 (2005). `[I]f the statute's meaning is plain on its face, then the court must give effect to that plain meaning as an expression of legislative intent.' Id. (quoting Dep't of Ecology v. Campbell & Gwinn, L.L.C., 146 Wash.2d 1, 9-10, 43 P.3d 4 (2002)). A statutory provision's plain meaning is to be discerned from the ordinary meaning of the language at issue, the context of the statute in which that provision is found, related provisions, and the statutory scheme as a whole. Id. A provision that remains susceptible to more than one reasonable interpretation after such an inquiry is ambiguous and a court may then appropriately employ tools of statutory construction, including legislative history, to discern its meaning. Campbell & Gwinn, 146 Wash.2d at 12, 43 P.3d 4. ¶ 9 Prior to 1989, an action upon an oral contract was subject to the former RCW 4.16.080(3) (1937) three-year statute of limitations. [4] This limitation encompassed a claim for attorney fees where there was no written fee agreement. Hart v. Day, 17 Wash.App. 407, 413, 563 P.2d 227 (1977). In 1989 the legislature amended RCW 4.16.040, the six-year statute of limitations, adding as a new category, action[s] upon an account receivable incurred in the ordinary course of business. [5] Laws of 1989, ch. 38, § 1. The legislature simultaneously amended RCW 4.16.080(3), creating an exception to the three-year limitation on oral contracts for actions upon accounts receivable. [6] Laws of 1989, ch. 38, § 2. In making these changes the legislature did not define account receivable. [7] ¶ 10 When a term has a well-accepted, ordinary meaning, a regular dictionary may be consulted to ascertain the term's definition. City of Spokane ex rel. Wastewater Mgmt. Dep't v. Dep't of Revenue, 145 Wash.2d 445, 454, 38 P.3d 1010 (2002). When a technical term is used in its technical field, the term should be given its technical meaning by using a technical rather than a general purpose dictionary to resolve the term's definition. City of Spokane, 145 Wash.2d at 454, 38 P.3d 1010. ¶ 11 The legislature modified account receivable with incurred in the ordinary course of business. RCW 4.16.040(2). This statutory context suggests that the legislature intended to use the term in a technical business sense. Used as a term of art in the accounting and finance sectors, accounts receivable means amounts due [a business] on account from customers who have bought merchandise or received services. JOEL G. SEIGEL & JAE K. SHIM, DICTIONARY OF ACCOUNTING TERMS 11 (3d ed.2000). Consistent with the legislature's usage, the Dictionary of Accounting Terms' technical definition of accounts receivable is likewise restricted to a business setting. ¶ 12 The term account receivable appears elsewhere in the Revised Code of Washington more than 10 times and is nowhere defined. [8] The legislature makes it apparent through this pattern of use that it considers the term account receivable to have a plain meaning. Obtaining the definition of account receivable from a technical business dictionary is consistent with plain meaning analysis. The technical definition for account receivable, as an amount due a business on account from a customer who has bought merchandise or received services, is the appropriate definition to read into RCW 4.16.040(2). The attorney fees owed to Tingey, for which he regularly invoiced Haisch, satisfy this meaning of account receivable. ¶ 13 The dissent states that under our definition all oral contracts for goods and services in the ordinary course of business have a six-year statute of limitation. Dissent at 1028. The dissent suggests, therefore, that our definition renders the term account receivable superfluous, contrary to established principles of statutory interpretation. Id. However, our definition of account receivable is considerably more narrow than the dissent represents. Our definition identifies the parties to the contract (a customer and a business) and the character of the transaction (a purchase by the customer). It requires the business to have completed performance (customer has bought or received the merchandise or services). It specifies the monetary nature of the remaining obligation (an amount due). Only oral contracts exhibiting all of these characteristics garner the account receivable six-year limitation. [9] ¶ 14 Both the Court of Appeals and the dissent deem the term account receivable to be ambiguous. Tingey, 129 Wash.App. at 114-15, ¶ 11, 117 P.3d 1189; dissent at 1028. The Court of Appeals based its determination in part on the fact that account receivable appears in a variety of contexts, from which it concluded that the term has different meanings depending upon the context. [10] Tingey, 129 Wash.App. at 114, ¶ 10, 117 P.3d 1189. However, while account receivable is used in a wide variety of settings, close examination reveals that our definition encompasses the meaning of the term in those contexts. [11] Moreover, the use of account receivable in a broad range of business-related contexts supports the term having a well-accepted technical meaning. ¶ 15 The Court of Appeals also identified that whether or not a particular debt constitutes an account receivable may be a factual question. Id. at 114, ¶ 10, 117 P.3d 1189. While accurate, this observation is not relevant to a plain language analysis of account receivable. The meaning of account receivable as used in RCW 4.16.040 is a question of law. It must be resolved before applying the definition to a particular set of facts to determine whether a specific debt constitutes an account receivable. ¶ 16 Having found account receivable to be ambiguous, the Court of Appeals and the dissent resort to legislative history, from which they determine the intended meaning of account receivable to be an open account. Tingey, 129 Wash.App. at 117, ¶ 18, 117 P.3d 1189; dissent at 1029-30. Although we do not find account receivable to be ambiguous, we examine the legislative history of RCW 4.16.040(2) [12] to demonstrate that it is inconsistent with the legislature's intending the term account receivable to mean open account. ¶ 17 The dissent derives from the legislative history that the bill was passed with the intent of limiting the definition of account receivable to open accounts. Dissent at 1029-30. This assertion is inconsistent with revision of the bill's language from balance due upon a mutual, open, and current account, the items of which are in writing, S.B. 5213, 51st Leg., Reg. Sess. (Wash.1989), to [a]n action upon an account receivable incurred in the ordinary course of business. Substitute S.B. 5213, 51st Leg., Reg. Sess. (Wash.1989). We agree with the dissent that by replacing  `the items of which are in writing' with `in the ordinary course of business,' the legislature intended to expand the scope . . . to instances where a business' ordinary practices may not include writing down the terms of the account. Dissent at 1030 (quoting S.B. 5213, supra; Substitute S.B. 5213, supra). But we find implausible the dissent's contention that substituting account receivable for  `mutual, open, and current account' do[es] not suggest . . . inten[t] to expand the six-year statute of limitations beyond open accounts. Dissent at 1030 (quoting S.B. 5213, supra). Retaining the open account language would be consistent with intending to limit the statute's scope to open accounts. Replacing that language with account receivable indicates intent to expand the scope of the statute beyond open accounts. ¶ 18 The dissent, relying on a floor debate excerpt, additionally states, Senator Smitherman explained the term account receivable meant just an open account, and the bill passed following his explanation. [13] Dissent at 1030. However, the full context of the exchange reveals that after Senator Bill Smitherman provided his definition of account receivable, Senator Philip A. Talmadge proceeded to make further remarks. See dissent at 1030 n. 1; see also SENATE JOURNAL, 51st Leg., Reg. Sess., at 509 (Wash. 1989). Subsequently, [f]urther debate ensued. SENATE JOURNAL, supra, at 509. That the bill was not put directly to a vote following Senator Smitherman's definition undermines the dissent's implication that the Senate responded to Senator Smitherman's definition by passing the bill. One senator's eight words during floor debate form a thin thread upon which to hang a legislative history analysis. ¶ 19 The bill's revision supports the conclusion that the legislature intended the bill to broaden the circumstances under which business debt was subject to a six-year statute of limitations. Senator Talmadge expounded on how the account receivable language would affect oral contracts to which businesses were a party, and the bill nevertheless passed the Senate later that day. [14] , [15] The legislature's intent is further evidenced by the evolution of the Senate Bill Report language. [16] The legislative history supports the legislature's intending account receivable to have a broader meaning than open account. ¶ 20 The plain meaning of account receivable in RCW 4.16.040(2) is an amount due a business on account from a customer who has bought merchandise or received services. Tingey seeks to collect a balance owed to his legal business by a client for legal services performed on behalf of that client. Tingey performed the services on an hourly fee basis at the request of the client, and the client was regularly invoiced for the amount owed in accordance with ordinary business practice. The term account receivable encompasses the balance which Tingey seeks to collect, an amount owed to him for legal services performed in the ordinary course of his business. The six-year limitation of RCW 4.16.040(2) for [a]n action upon an account receivable incurred in the ordinary course of business provides the statute of limitations in this action.