Court Opinion

ID: 2783356
Source: CourtListenerOpinion
Date Created: 2015-03-02 22:07:49.63844+00
Date Added: 2024-06-11T11:28:27.168970
License: Public Domain

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

TBF FINANCIAL, LLC,
                                                 DIVISION ONE
                     Respondent,                                                     I
                                                 NO. 70662-4-

                                                                                 »\>
STAY IN HOME MORTGAGE, INC.,
a Washington corporation; MARTIN                 UNPUBLISHED OPINION            °
                                                                                en

TAYLOR and JUDY TAYLOR, and
their marital community,

                     Defendants,

BORIS PETRENKO,

                     Appellant.
                                                 FILED: March 2, 2015

       Dwyer, J. —Attorney Boris Petrenko appeals a trial court order imposing

sanctions against him pursuant to Civil Rule 11 for filing a baseless and frivolous
motion on behalf of his client. Because Petrenko fails to establish that the trial

court abused its discretion in determining to impose sanctions, we affirm.

       In 2006, Stay In Home Mortgage, Inc. leased business equipment from

CIT Technology Financing Services, Inc. In 2011, CIT assigned the lease to TBF
Financial, LLC. When Stay In Home Mortgage failed to make its lease

payments, TBF sued for breach of contract. TBF is a limited liability company
(LLC) organized and registered in Illinois. It is undisputed that TBF is not
registered to transact business in Washington.
70662-4-1/2

       Petrenko filed a notice of appearance for Stay In Home Mortgage. On

February 7, 2013, Petrenko filed a motion to dismiss, contending that TBF was

barred from bringing suit in Washington pursuant to RCW 19.80.040, which

provides that "[n]o person or persons carrying on, conducting, or transacting

business under any trade name shall be entitled to maintain any suit in any of the

courts of this state" without registering in Washington.

       On April 5, TBF sent a letter to Petrenko stating that RCW 19.80.040 did

not apply because TBF did not operate under a trade name and never had done

so. TBF stated it would move for sanctions under CR 11 if Petrenko did not

withdraw the motion by April 15. On April 8, TBF sent an e-mail to Petrenko

reiterating its intention to request sanctions.

        Petrenko did not withdraw the motion. TBF filed a response explaining

that it did not operate under a trade name and that "TBF Financial, LLC" was its
true and real name. TBF provided a copy of its registration with the Illinois

Secretary of State showing the entity name registered as "TBF Financial, LLC,"
as well as a declaration from a manager stating that TBF "only uses its true and

legal name TBF Financial, LLC." TBF also asserted that even if it did operate
under a trade name, RCW 19.80.040 did not apply because TBF was not

"transacting business" in Washington as defined by RCW 25.15.350.1 TBF

        1RCW 25.15.350 provides examples of activities that "do not constitutetransacting
business" for the purpose of requiring a foreign LLC to register in Washington. These include
"[m]aintaining or defending any action or suit" and "[s]ecuring or collecting debts or enforcing
mortgages and security interests in property securing the debts." RCW 25.15.350(a), (h). TBF
offered the affidavit of one of its managers stating, "[t]he only business that TBF transacts in the
State of Washington relates to the collection of debts."
                                                 -2-
70662-4-1/3

requested the trial court impose sanctions against Petrenko under CR 11 for

filing a frivolous motion.

          In reply, Petrenko asserted a new theory that TBF was "transacting

business" in Washington because the complaint sought the residual value of the

leased equipment in damages.2 Without any relevant supporting evidence,

Petrenko claimed that TBF sold business equipment for its residual value and

that TBF's "numerous litigations brought in various counties of the State of

Washington clearly indicate commercial nature of TBF Financial, LLC claims

[sic]."

          On June 21, the trial court denied Petrenko's motion. The trial court found

that "TBF does not use a trade name [and] is not required to register its name

with the Washington Secretary of State." The trial courtfound that the motion
was "not well grounded in fact or warranted by existing law and is frivolous," and
that Petrenko "received adequate notice that his motion was frivolous and that

TBF would move for sanctions and request[] terms should [he] fail to withdraw his

frivolous motion." The trial court imposed sanctions against Petrenko pursuant to

CR 11, reserving the amount for a future ruling after the parties submitted

briefing on the issue.3 Petrenko appeals the order of sanctions.

          2 It is clear that Petrenko was attempting to claim TBF was barred from bringing suit
pursuant to RCW 19.80.040 because it was "transacting business" under a "trade name" without
registering in Washington. Petrenko did not argue to the trial court that TBF was barred from
bringing suit pursuant to RCW 25.15.340(1), which prohibits "[a] foreign limited liability company
doing business" in Washington from bringing suit unless it has registered in Washington.
         3TBF and Stay In Home Mortgage ultimately agreed on settlement terms and the suit
was dismissed. The trial court retained jurisdiction over the case for the limited purpose of
enforcing judgment against Petrenko. Areview ofthe record shows that the trial court has yet to
rule on the amount of sanctions.
                                                 -3-
70662-4-1/4

      The signature of a party or attorney on a pleading constitutes a certificate

by that party or attorney that the pleading is well grounded in fact, warranted by

existing law or a good faith argument for a change in existing law, is not

interposed for an improper purpose, and contains only factual contentions or

denials warranted by the evidence. CR 11(a). Where a pleading is signed in

violation of the rule, "the court, upon motion or upon its own initiative, may

impose upon the person who signed it, a represented party, or both, an

appropriate sanction," which may include reasonable attorney fees and

expenses. CR 11(a). We review an award of sanctions under CR 11 for an

abuse of discretion. Biggs v. Vail, 124 Wash. 2d 193, 197, 876 P.2d 448 (1994).

       The trial court's decision to impose CR 11 sanctions against Petrenko was

well within its discretion. There was no factual or legal basis for Petrenko's

continued assertion—in the face of repeated explanations to the contrary—that

TBF operated under a trade name. "Trade name" is defined as

       a word or name, or any combination of a word or name, used by a
       person to identify the person's business which:
              (a) Is not, or does not include, the true and real name of all
       persons conducting the business; or
              (b) Includes words which suggest additional parties of
       interest such as "company," "and sons," or "and associates."

RCW 19.80.005(4) (emphasis added). RCW 19.80.005(3) defines "person" as
"any individual, partnership, limited liability company, or corporation conducting
or having an interest in a business in the state." (Emphasis added.) Thus, a
70662-4-1/5

limited liability company that operates under its true name is not operating under

a trade name.

       There is no evidence in the record that TBF operated under anything other

than its true and real name, which is TBF Financial, LLC. Petrenko appears to

be laboring under the misconception that no LLC can have a true and real name.

This view is plainly contrary to the words of the statute. Moreover, as the trial

court noted, such an interpretation would lead to the nonsensical result that all

LLCs must register their true and real name as a trade name. This is

inconsistent with the stated purpose of chapter 19.80 RCW, which is "[t]o require

each person who is conducting business in the state ofWashington under a

trade name to disclose the true and real name of each person conducting that

business, and ... to provide a central registry of businesses operating under a

trade name in the state of Washington." RCW 19.80.001. It is also inconsistent

with RCW 25.15.350, which exempts LLCs that engage in certain activities from

the requirement to register in Washington. When construing statutes, we avoid
interpretations "that yield unlikely, absurd or strained consequences." Kilian v.
Atkinson, 147 Wash. 2d 16, 21, 50 P.3d 638 (2002). We also examine the '"words

ofa particular provision in the context ofthe statute in which they are found,
together with related statutory provisions, and the statutory scheme as a whole.'"
Tesoro Ref. & Mkto. Co. v. Dep't of Revenue. 164 Wash. 2d 310, 319,190 P.3d 28

(2008) (quoting Burns v. City of Seattle, 161 Wash. 2d 129, 140, 164 P.3d 475
(2007)).
70662-4-1/6

        Because the trial court did not abuse its discretion in determining that

Petrenko's claim that TBF operated under a trade name was "not well grounded

in fact or warranted by existing law and is frivolous," we need not address the

merits of Petrenko's claim that TBF was "transacting business" in Washington.

        TBF requests attorney fees incurred in defending this appeal, arguing that

the appeal is frivolous. RAP 18.9. An appeal is frivolous ifit is so totally devoid

of merit that there is no reasonable possibility of reversal. Green River Cmtv.

Coll. Dist. No. 10 v. Higher Educ. Pers. Bd.. 107 Wash. 2d 427, 443, 730 P.2d 653

(1986). This appeal is frivolous because Petrenko presents no new issues or

arguments on appeal and the motion was frivolous below. TBF is entitled to an

award of fees and costs on appeal. Upon compliance with RAP 18.1, a

commissioner of this court will enter an appropriate order.

        Affirmed.4

We co

        4On July 31, 2014, Petrenko filed a motion to supplement the record with pleadings from
a separate lawsuit that TBF filed against Petrenko's law firm for breach ofan equipment lease. A
commissioner of this court referred Petrenko's motion to this panel. Because these documents
do not satisfythe strictcriteria set forth in RAP 9.11, we deny the motion.
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