Court Opinion

ID: 4678658
Source: CourtListenerOpinion
Date Created: 2021-04-19 20:36:41.644087+00
Date Added: 2024-06-11T08:03:45.740413
License: Public Domain

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

 GEORGE CHRISTENSEN,
                                            No. 82061-3-I
                      Respondent,
                                            DIVISION ONE
               v.
                                            UNPUBLISHED OPINION
 T & L COMMUNICATIONS, INC.,
 a Washington corporation;
 PACIFIC TECH CONSTRUCTION
 INC., a Washington corporation;
 KENNETH FORTENBERRY, an
 individual; and OLD REPUBLIC
 SURETY COMPANY, a foreign
 corporation

                      Defendants,

 LARRY E. BUSHAW,

                      Appellant.

      SMITH, J. — Larry Bushaw, the president of T & L Communications Inc.,

appeals the trial court’s imposition of contempt sanctions on Bushaw individually.

After George Christensen was awarded damages against T & L in a wrongful

discharge case, Bushaw appeared on behalf of T & L at a supplemental

proceeding to answer questions about T & L’s finances. Bushaw was ordered to

bring T & L’s financial statements and records of bank accounts to the

supplemental proceeding. However, when asked under oath to list all of T & L’s

bank accounts, he failed to disclose several active checking and savings

accounts. After discovering the concealment, Christensen moved to impose

 Citations and pin cites are based on the Westlaw online version of the cited material.
No. 82061-3-I/2

contempt sanctions against T & L and against Bushaw personally. While

Christensen served T & L’s attorney with the motion for sanctions, he did not

serve the motion on Bushaw, who was not a party to the underlying action. At

the contempt hearing, Bushaw was not represented and was not given an

opportunity to argue against the sanctions. The trial court imposed contempt

sanctions against Bushaw amounting to the entire judgment on T & L, and

Bushaw appeals.

       We conclude that because Bushaw was not given notice and an

opportunity to be heard, the contempt order must be vacated.

                                      FACTS

       In 2013, George Christensen sued T & L and three other defendants for

unpaid wages, wrongful termination, tortious interference with business

relationships, statutory discrimination/retaliation, and assault and battery. In

September 2016, the court granted partial summary judgment to Christensen,

finding that he had established T & L’s liability for unpaid prevailing wages. All of

the other defendants were dismissed, and the remainder of Christensen’s claims

against T & L went to trial. In January 2018, the jury found that T & L wrongfully

terminated Christensen, and it awarded Christensen $76,581.92 in damages. In

May 2018, the court awarded Christensen an additional $90,963.80 in attorney

fees and costs.

       T & L did not voluntarily pay any of this amount, but Christensen was able

to collect a small portion through bank garnishments. On September 21, 2018,

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No. 82061-3-I/3

the court ordered Larry Bushaw, T & L’s president, or Cathryn 1 Bushaw, T & L’s

vice president, to appear in court for supplemental proceedings and testify

regarding T & L’s finances. Larry and Cathryn Bushaw are the only officers and

the only shareholders of T & L. The order required whomever appeared on

behalf of T & L to bring all of T & L’s financial statements from the past two years

and records of all savings and checking accounts that had not already been

provided to Christensen. On the same date, the court issued an order for Larry

or Cathryn Bushaw to appear and show cause why the court should not order

T & L to deliver funds to the sheriff.

          On October 12, 2018, Larry Bushaw appeared for the supplemental

proceeding with T & L’s attorney, Timothy Dack, and was examined under oath

regarding T & L’s assets. As part of this examination, Bushaw filled out a form

which asked him to list “all banks” in which T & L had a checking or savings

account. Bushaw listed only “Columbia CU.” After the examination, the court

ordered Larry or Cathryn Bushaw to deliver T & L’s vehicles and the assets in

T & L’s Columbia Credit Union (Columbia) account to the Clark County Sheriff’s

Office.

          On December 11, 2018, T & L disclosed two October 2018 bank

statements from HAPO Community Credit Union to Christensen. These

statements listed three savings and two checking accounts that T & L had not

previously disclosed to Christensen. The statements showed that T & L was

         The court refers to Bushaw’s wife as “Catherine” throughout the record,
          1

but this appears to be a misspelling. “Bushaw” in this opinion refers to Larry
Bushaw.

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No. 82061-3-I/4

actively using the HAPO checking accounts both before and after the

supplemental proceeding. Over $138,000 was deposited in the two accounts in

the month of October, including more than $55,000 before the date of the

supplemental proceeding. 2

       On March 7, 2019, Christensen asked the court to find both T & L and

Larry Bushaw in contempt and to hold Bushaw personally liable for remedial

sanctions up to the whole value of the judgment against T & L. Christensen

argued that the failure to disclose any information about the HAPO accounts, as

well as the failure to surrender T & L’s vehicles and the money in T & L’s

Columbia account to the sheriff, constituted contempt of court. He asked the

court to impose compensatory and coercive remedial sanctions on Bushaw. 3

Alternatively, Christensen asked the court to disregard the corporate entity and

hold Larry and Cathryn Bushaw, as T & L’s shareholders, liable for the judgment

against T & L. Christensen contended that because Larry Bushaw exercised

control over payment of T & L funds and was using that control to increase T & L

expenditures, pay himself substantial compensation, and hide T & L’s assets,

personal liability was appropriate.

       T & L’s attorney objected to this motion. He asserted that T & L had been

unable to comply with the order to transfer vehicles to the sheriff and that the

court could not hold Larry or Cathryn Bushaw liable when they were not parties

       2 Both bank statements appear to be cut off at different points, with each
statement failing to account for about $17,000 of the total month’s deposits.
       3 Compensatory sanctions “compensate the complainant for losses

sustained” while coercive sanctions “coerce the defendant into compliance with
the court’s order.”

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No. 82061-3-I/5

to the underlying action and had not been served with the motion to hold them

liable.

          At the hearing, although T & L’s attorney advocated against the sanctions,

Bushaw was not personally represented either by an attorney or pro se. 4

Nonetheless, the court ordered the sanctions and held Bushaw personally liable

for the full amount of the judgment against T & L. Bushaw appeals.

                                      ANALYSIS

          Bushaw contends that the court did not have the authority to enter

sanctions against him when he was not a party to the underlying lawsuit and had

not been served with the motion for sanctions. He also contends that the court

erred by entering a finding that Bushaw was represented at the supplemental

proceeding by his attorney. We agree.

                                  Standard of Review

          We generally “review a trial court’s decision in a contempt proceeding for

an abuse of discretion.” In re Marriage of Eklund, 143 Wn. App. 207, 212, 177

P.3d 189 (2008). However, the “‘court’s authority to impose sanctions for

contempt is a question of law, which we review de novo.’” State v. Dennington,

12 Wn. App. 2d 845, 850, 460 P.3d 643 (quoting In re the Interest of Silva, 166

Wn.2d 133, 140, 206 P.3d 1240 (2009)), review denied, 196 Wn.2d 1003 (2020).

Furthermore, we review the court’s findings of fact underlying the contempt order

for substantial evidence. In re Marriage of Eklund, 143 Wn. App. at 212.

       T & L’s attorney informed the trial court at the hearing that he did not
          4

represent Bushaw, and he only briefly addressed the issues concerning Bushaw
personally in general terms.

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No. 82061-3-I/6

“Evidence is substantial where it is ‘sufficient to persuade a rational fair-minded

person the premise is true.’” Braatz v. Braatz, 2 Wn. App. 2d 889, 899, 413 P.3d

612 (2018) (quoting Sunnyside Valley Irr. Dist. v. Dickie, 149 Wn.2d 873, 879, 73

P.3d 369 (2003)).

                    Scope of Attorney for T & L’s Representation

       As an initial matter, Bushaw contends that the court erred in finding that at

the supplemental proceeding on October 12, “Bushaw appeared as ordered with

his attorney, Timothy Dack.” Bushaw asserts that Dack was T & L’s attorney, not

Bushaw’s. The record supports this conclusion: Dack is described exclusively as

T & L’s attorney throughout the record, and Dack clarified at the contempt

hearing that he did not represent Bushaw personally. Christensen agrees that

this finding is not supported by substantial evidence. We conclude that this

finding was entered in error.

                     Sufficiency of Notice for Contempt Motion

       Bushaw next contends that the trial court did not have the authority to

enter the findings of fact, conclusions of law, and order for sanctions against him

when he had not been served with the motion for sanctions. We agree.

       “A person who refuses, or without sufficient excuse neglects, to obey an

order” in a supplemental proceeding under chapter 6.32 RCW “may be

punished . . . as for contempt.” RCW 6.32.180. The court may “initiate a

proceeding to impose a remedial sanction . . . in the proceeding to which the

contempt is related.” RCW 7.21.030(1). RCW 7.21.030(1) requires that, except

where the court imposes sanctions after directly observing contempt in the

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No. 82061-3-I/7

courtroom under RCW 7.21.050, sanctions may only be imposed “after notice

and hearing.” RCW 7.21.050. Notice in a contempt proceeding must at a

minimum “inform[ ] the accused of the time and place of the hearing and the

nature of the charges pending.” Burlingame v. Consol. Mines & Smelting Co.,

106 Wn.2d 328, 335, 722 P.2d 67 (1986). The right to notice is important

because it protects the individual’s right to be heard, which is the most significant

protection in a contempt proceeding and includes the right to produce witnesses

or other evidence. In re Rapid Settlements, Ltd., 189 Wn. App. 584, 598, 359

P.3d 823 (2015); State v. Hatten, 70 Wn.2d 618, 621, 425 P.2d 7 (1967).

       In this case, the court imposed sanctions under RCW 7.21.030, which

requires notice and hearing. Christensen served T & L’s attorney with the motion

to hold Bushaw in contempt, but he does not claim that he served Bushaw with

notice. Therefore, the record does not establish that Bushaw was informed of

the hearing and nature of the charges against him, as required by Burlingame.

106 Wn.2d at 335. The fact that the notice provided to Bushaw was insufficient

is illustrated by the fact that it did not protect Bushaw’s right to be heard. See

Rapid Settlements, 189 Wn. App. at 598 (“‘The notice requirement is important

only because it protects an individual’s right to be heard.’” (quoting Burlingame,

106 Wn.2d at 332)). Indeed, Bushaw was not given the opportunity to advocate

for his interests at the contempt hearing, either on his own behalf or through an

attorney. We hold that at a minimum, Bushaw was entitled to receive notice of

the contempt hearing personally when sanctions were sought against him

personally.

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No. 82061-3-I/8

       Christensen disagrees and claims that notice in this case was “‘reasonably

calculated’” to inform Bushaw of the motion against him. Christensen contends

that Bushaw was an officer of T & L and therefore would presumably learn of the

motion from T & L’s attorney. However, even in the cases cited by Christensen

in support of this proposition, notice was at least mailed to the person who

required the notice. See State v. Nelson, 158 Wn.2d 699, 705, 147 P.3d 553

(2006) (Department of Licensing mailed notice of license revocation to party’s

address of record); Jones v. Flowers, 547 U.S. 220, 226, 126 S. Ct. 1708, 164 L.

Ed. 2d 415 (2006) (State informed party of impending tax sale by mailing him a

certified letter). Christensen cites no case where notice for a contempt

proceeding could properly be served to a different entity than the entity against

whom sanctions were sought.

       Christensen also contends that the notice to T & L in this case was, in fact,

sufficient to protect Bushaw’s right to be heard, because it is likely that T & L’s

attorney informed Bushaw of the pending motion. Christensen asserts that

“whether [Bushaw] retained counsel and noted his objection at the hearing was

up to” Bushaw. However, the protections of due process should not be permitted

to rest on the expected actions of private third parties. Without a record that

Bushaw received personal notice of the contempt proceeding, there is not a

sufficient basis to conclude that Bushaw had a reasonable opportunity to prepare

evidence to defend himself. Moreover, even if we concluded that Bushaw had

actual notice of the hearing, we would still conclude that Bushaw’s procedural

rights were not enforced because the court did not give Bushaw an opportunity to

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No. 82061-3-I/9

be heard at the contempt hearing. Hatten, 70 Wn.2d at 621. Because he did not

receive sufficient notice of the contempt proceeding, the court erred in imposing

sanctions on Bushaw. 5

      Although the record in this case appears to confirm that Bushaw failed to

disclose all of T & L’s bank accounts as ordered, due process requires that he be

given notice and an opportunity to be heard prior to a finding of contempt and

entry of sanctions. We reverse and remand to vacate the order imposing

sanctions on Larry Bushaw.

WE CONCUR:

      5  Christensen also characterizes Bushaw’s argument as claiming that he
could not be found to be in contempt when he was not a party to the underlying
case. Bushaw does not appear to make this argument. Rather, he claims only
that the court did not have authority to impose sanctions on a nonparty without
notice. Thus, while Christensen is correct that sanctions must be imposed “in the
proceeding to which the contempt is related,” regardless of whether the
sanctioned entity is a party, we need not address this issue. See
RCW 7.21.030(1).

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