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

Heading: The plain meaning of account receivable is corroborated by the absence of an absurd result produced in RCW 4.16.040(2).

Text: ¶ 21 The Court of Appeals supported its finding that account receivable was ambiguous with the assertion that defining the term broadly produced an absurd result. Where the legislature provides no statutory definition and a court gives a term its plain and ordinary meaning by reference to a dictionary, the court will avoid literal reading of a statute which would result in unlikely, absurd, or strained consequences. Fraternal Order of Eagles, Tenino Aerie No. 564 v. Grand Aerie of Fraternal Order of Eagles, 148 Wash.2d 224, 239, 59 P.3d 655 (2002). A reading that produces absurd results must be avoided because `it will not be presumed that the legislature intended absurd results.' State v. J.P., 149 Wash.2d 444, 450, 69 P.3d 318 (2003) (quoting State v. Delgado, 148 Wash.2d 723, 733, 63 P.3d 792 (2003) (Madsen, J., dissenting)). The outcome of plain language analysis may be corroborated by validating the absence of an absurd result. Where an absurd result is produced, further inquiry may be appropriate. ¶ 22 The Court of Appeals concluded that interpreting account receivable to encompass all business debt produced absurd results. Tingey, 129 Wash.App. at 115, ¶ 12, 117 P.3d 1189. The court suggested that the account receivable exception to the RCW 4.16.080(3) three-year limitation on oral contracts would swallow[] the remainder of the statute. Business owners would no longer need to enter into written contracts to benefit from a six-year statute of limitations because RCW 4.16.040(2) would essentially convert all of their business debt into accounts receivable. Id. ¶ 23 As the Court of Appeals noted, the impact on actions to collect business debt is significant, but substantial effect is not equivalent to an absurd result. Incorporating the technical definition of account receivable does except from the three-year limitation any action brought by a business to collect an amount due on account from a customer who has bought merchandise or received services, in the ordinary course of business. The exception does not swallow the rule, however, because oral contracts between two private parties are still governed by the three-year limitation of RCW 4.16.080(3). Moreover, it is clear that the legislature considered the impact of the account receivable provision on the oral contract limitation because it amended that provision of former RCW 4.16.080(3) when it amended RCW 4.16.040(2). ¶ 24 By contrast, as noted by Tingey, a more narrow definition of account receivable would produce a truly absurd, unworkable result. The appropriate statute of limitation in a collection action for attorney fees cannot reasonably turn on a fact-specific inquiry into the accounting and billing practices of the attorney, the transactional characterization of the legal services provided, and the client's history of payments on the account. Such a definition would produce a significant volume of litigation as parties attempted to determine precisely what accounting practices were required to benefit from the six-year limitation. The ramifications would extend well beyond attorney-client fee collection actions to other professional service providers as well as general businesses. ¶ 25 Defining account receivable as an amount due a business on account from a customer who has bought merchandise or received services does not produce an absurd result. A more limiting definition of account receivable would. The absurd result test corroborates the meaning of account receivable arrived at through plain meaning analysis.