Court Opinion

ID: 2715090
Source: CourtListenerOpinion
Date Created: 2014-08-06 17:15:21.40389+00
Date Added: 2024-06-11T15:12:23.444513
License: Public Domain

FILED
                                                                          CGURT OP APPEALS
                                                                             DIVISION H

                                                                         2014 JUN - 3   AM 8: 314
    IN THE COURT OF APPEALS OF THE STATE
                                                                         05,
                                                                           FAVIME9jj
                                             DIVISION II                 BY
                                                                                 DE

EAGLE        SYSTEMS,      INC.,   a   Washington                    No. 44635- 9- II
corporation;   GORDON TRUCKING, INC.,            a

Washington     corporation;    HANEY         TRUCK
LINE,    INC.,    a   Washington       corporation;

JASPER TRUCKING,            INC., a Washington
corporation; KNIGHT TRANSPORTATION,
INC.,    an      Arizona      corporation;    PSFL
LEASING, INC., a Washington corporation;
and  SYSTEM- TWT     TRANSPORT,        a

Washington corporation,
                                                            ORDER CORRECTING CAPTION
                 Respondents/ Cross- Appellants,

        v.

STATE OF WASHINGTON EMPLOYMENT
SECURITY DEPARTMENT,

                 Appellant/Cross-Respondent.

        On May 28, 2014, this court issued its published opinion inthe above matter. The
caption contained atypographica1 error in a respondent' s/ cross- appellant' s name. It is hereby
                                                                                           '

        ORDERED that said respondent' s/ cross appellant' s name is changed to:

        SYSTEM-TWT TRANSPORT, a Washington corporation.

        Dated this         3t,4                  day   of   0,4,,, t_e                      2014.

                                                                Presiding   fudge
                                                                                                                FILED
                                                                                                          COOT OF APPEALS
                                                                                                             DIVISION 1I

                                                                                                      2014 MAY 28      API 8: 31
      IN THE COURT OF APPEALS OF THE STATE OF WAS

                                                 DIVISION II

EAGLE        SYSTEMS,         INC.,     a    Washington                              No. 44635 -9 -II
corporation;    GORDON TRUCKING, INC.,                     a

Washington       corporation;       HANEY       TRUCK
LINE,    INC.,      a     Washington        corporation;

JASPER TRUCKING, INC., a Washington
corporation; KNIGHT TRANSPORTATION,
INC.,      an     Arizona       corporation;         PSFL
LEASING, INC., a Washington corporation;
and            TWIT
        SYSTEM -                   TRANSPORT,              a

Washington corporation,
                                                                               PUBLISHED OPINION
                  Respondents /Cross -
                                     Appellants,

        v.

STATE OF WASHINGTON EMPLOYMENT
SECURITY DEPARTMENT,

                  Appellant /Cross- Respondent.

        MELNICK, J. —          The Department         of   Employment           Security (   Department) appeals the

superior court' s finding that e -mails between the parties were sufficient to form a settlement

agreement.       The Department assessed unpaid unemployment insurance taxes against eight

                          Carriers),                 which          are   involved in this     appeal.        The   Carriers
trucking     carriers (                seven    of

                        appealed    the     assessments        to    an    Administrative     Law     Judge ( ALJ)      and
administratively

commenced        settlement    negotiations     with the        Department.       The Carriers believed they had

reached. an agreement to settle the matter, but negotiations broke down before the parties could

 execute a formal agreement. The Carriers filed a motion to enforce the agreement, but the ALJ

 concluded      that he did   not   have that authority.             With a hearing pending before the ALJ, the

 Carriers obtained      an ex parte    show   cause order      in   superior court   to   enforce   the   agreement.
44635 -9 -11

          The Department argues that ( 1) the superior court lacked personal jurisdiction to hear the

matter   and ( 2)   no settlement agreement existed.          The Carriers cross appeal, contending that the

superior court should have imposed sanctions on the Department and that this appeal is frivolous.

Because the superior court lacked personal jurisdiction, we reverse its ruling enforcing the

settlement agreement.          We further affirm the superior court' s denial of sanctions against the

Department because the court lacked jurisdiction, and we deny the Carrier' s request for fees on

appeal.

                                                          FACTS

          The Department assessed unpaid unemployment insurance taxes against the Carriers, .

asserting that the owner /operator truck drivers working for the Carriers were employees under
the Employment          Security   Act, title 50 RCW.             The Carriers administratively appealed the

assessments     and     moved      for    summary judgment,         arguing that federal law preempts the

Employment          Security   Act in these      cases.   The ALJ denied the Carriers' summary judgment

motion, but remanded the cases to the Department to review and reconsider the assessments.

The ALJ also ordered the parties to attempt settlement negotiations.

          Over the net few months, counsel exchanged drafts of an agreement. A dispute arose as

to   whether   the    parties agreed     to   a settlement.   The parties met for a prehearing conference in

 December 2012, during which the ALJ set a February 20 -21, 2013 hearing date for the first of
 the Carriers' cases. That same day, the Carriers filed a motion with the ALJ to enforce the terms

 of what they believed to be an agreement. The ALJ concluded that he did not have authority to
 enforce the agreement and denied the motion.

           With an administrative hearing set one month away, the Carriers obtained an ex parte

 show cause order from the Pierce County Superior Court directing the Department to show cause
                                                              2
why the   court should not enforce       the settlement agreement.           The Carriers also sought sanctions

against the Department for bad faith conduct, arguing that the Department failed to follow the

ALJ' s order to issue revised assessments. The Carriers neither filed nor served the summons and

complaint.   The Department learned of the show cause hearing from the Carriers' counsel, who

sent e -mails attaching the show cause order and memorandum in support of enforcing the

agreement.    In its written response to the Carriers' motion to enforce the agreement and during

oral argument at the show cause hearing,' the.Department argued that the superior court lacked

personal jurisdiction because the Carriers did not properly commence a lawsuit. The Department

alternatively argued that the alleged settlement agreement was not enforceable.

        After a hearing, the superior court concluded that it had jurisdiction " pursuant to its
general jurisdiction to hear cases and controversies relating to contracts and pursuant to the

                                      to [ it]              to RCW 34. 05. 510( 2)."         Clerk' s Papers ( CP) at
ancillary jurisdiction   provided                pursuant

441.   It also concluded that a show cause proceeding was appropriate because the ALJ had ruled

that he did not have authority to consider a motion to enforce the settlement agreement and

because both   parties   had   an   opportunity to brief         and argue   the   issues.   The superior court then

found that the parties had reached an agreement and entered an order enforcing it. The superior

court denied the Carriers' request for sanctions. The Department appeals.

                                                    ANALYSIS

I.        JURISDICTION

          The Department contends that the superior court lacked personal jurisdiction because the

 Carriers improperly initiated this action through an ex parte show cause motion. Because show
 cause proceedings are not independent actions and the Carriers did not properly commence a

 lawsuit in the superior court, we agree.

                                                             3
44635 -9 -II

         Due process requires that a Washington court may not assert personal jurisdiction over a

defendant       unless   the defendant is          given adequate notice and            opportunity to be heard.        Wichert v.

Cardwell, 117 Wash. 2d 148, 151, 812 P.2d 858 ( 1991) ( " The fundamental requisite of due process

of   law is the opportunity to be heard(,]"                    which, in turn, depends on notice the suit is being

commenced) ( citations omitted).                   When the trial court lacks personal jurisdiction, any judgment

entered is void. Prof'l Marine Co. v. Those Certain Underwriters at Lloyd's, 118 Wash. App. 694,
703, 77 P.3d 658 ( 2003).

          The    commencement           of   a civil action      is    governed   by    court rule. "   Except as provided in

rrale 4:1- ;-a. civil-action is commenced by service of a copy of a summons together with._ copy, of
                                                                                          a.

a complaint, as provided           in   rule   4   or   by filing    a complaint."      CR 3( a).   Here, the Carriers sought

to   enforce a contract,      i.e.,   a settlement agreement,               but they failed to comply        with   CR 3.     Rather

than serving the Department or the attorney general with a summons and complaint or filing a
complaint with the court, the Carriers e- mailed the Department . a show cause order.

Accordingly, the superior court lacked personal jurisdiction to proceed.

          Despite their failure to serve the Department and file a complaint, the Carriers claim that

the superior court can obtain personal jurisdiction through an ex parte show cause proceeding.

                      RCW 2. 28. 150                their     need    for   an expedited    decision    on   the   merits'.    RCW
They     rely    on                          and

 2. 28. 150 does'      not confer     jurisdiction       on   the superior     court.    It specifically states that when the

 court has jurisdiction. but "the course of proceeding is not specifically pointed out by statute, any

 suitable process or mode of proceeding may be adopted which may appear most conformable to

 the   spirit   of    the laws."      RCW 2.28. 150.            Thus, the statute presupposes personal jurisdiction,

 1
     At oral argument the Carriers stated the only reason for expedition was the upcoming hearing
 date.
                                                                       4
44635 -9 -II

which   the    superior      court      did   not   have here.         Additionally, there are statutes prescribing the

procedures for filing a contract claim: so the situation here is not one in which " the course of

proceeding is        not    specifically      pointed out        by   statute."   RCW 2. 28. 150; See also CR 3; RCW

4. 28. 020.

         The Carriers also rely on Minnesota ex rel. Burleigh v. Johnson, 31 Wash. App. 704, 644
P.2d 732 ( 1982),         and argue that a party may commence an action through a show cause hearing.

Burleigh is distinguishable from the present case. In Burleigh, the defendant' s ex -
                                                                                    wife obtained

a child support order against the defendant in a Minnesota court and sought to enforce it through
                                                                                                2. -
the Uniform Reciprocal Enforcement. of Support Act ( URESA).                                           31. Wn.. App
                                                                                                                _     .at   705.   The

Minnesota court forwarded the order to the state of Washington, which served the defendant with

an order to appear and show cause why a child support order should not be entered against him.

Burleigh, 31 Wn.            App.   at   706.    The defendant moved to dismiss, arguing that " the State could

not acquire jurisdiction by means of a show cause order instead of by summons and petition."
Burleigh, 31 Wash. App. at 706. The superior court denied the motion to dismiss and the appellate
court affirmed. Burleigh, 31 Wash. App. at 706, 710.

         In Burleigh, the superior court had jurisdiction pursuant to the URESA action because a

valid court order from Minnesota existed, but procedures for its enforcement were not specified.

 31 Wn.       App.    at   707.    A URESA            action required        the State to "'           take all action necessary in

 accordance with the laws of this state. [ including arrest] to give the court jurisdiction of the

                      Burleigh, 31 Wash. 707 ( quoting former RCW 26. 21. 110).                In the absence
 respondent.'"                                      App.   at

 of statutory procedures and pursuant to RCW 2.28. 150, the superior court is authorized to use
 any suitable process or mode of proceeding to exercise its existing jurisdiction if the course of
 2
     Former    ch.   26.21 RCW ( 1963),             repealed     by LAWS OF       1993,   ch.   318, § 907.
                                                                        5
44635 -9 -II

                                                         in the              Burleigh, 31 Wn.     App.        707.   The
proceeding is     not                  pointed out                statute.                               at
                        specifically

appellate      court   reasoned    that    a    show     cause     hearing " complements URESA' s statutory

requirements"      and offers a quick way of resolving support obligation disputes while still

comporting with due process. Burleigh, 31 Wash. App. at 708 -09.

        Burleigh is       unlike   the    present   case.         In Burleigh, the superior court already had

jurisdiction based on URESA and a valid Minnesota court order. Here, the superior court did not

have jurisdiction because a lawsuit for enforcement or breach of a contract had not been properly

filed; therefore, RCW 2. 28. 150 is inapplicable.                 The Carriers improperly sought a show cause

order in the abs.ence.of an existing superior court . ction. ._ -:...
                                                    a

        Because the       superior court       lacked   personal    jurisdiction,   we reverse.   Thus, we need not

address whether or not a valid contract ( i.e., a settlement agreement) existed. .

II.     CARRIERS' CROSS APPEAL

         The Carriers cross appeal and argue that the superior court erred when it failed to

sanction the Department for            procedural       bad faith.     Because the superior court did not have

personal jurisdiction to hear this matter, any judgment regarding sanctions would be void.

Therefore, the Carrier' s cross appeal fails. .

III.     ATTORNEY FEES

         The Carriers      request     fees    on appeal under       RAP 18. 9( a),    arguing that this appeal was

 frivolous. An appeal is frivolous if it presents no debatable issues upon which reasonable minds

 could differ and is so lacking in merit that there is no possibility of reversal. In re Marriage of

 Foley, 84 Wash. App. 839, 847,             930 P.2d 929 ( 1997).       Here, the Department successfully argued

 that the superior court lacked jurisdiction.             This appeal was not lacking in merit or filed for an

 improper purpose; therefore, we deny the Carriers' sanctions request.
                                                              6
44635- 9- 11

        We reverse the superior court' s determination that it had personaljurisdiction to consider

the Carriers' show cause request and its order enforcing the purported settlement agreement. We

further affirm the superior court' s denial of sanctions against the Department because the court

lacked jurisdiction, and we deny the Carrier' s request for fees on appeal.

We concur:

                                                   7