Court Opinion

ID: 2715469
Source: CourtListenerOpinion
Date Created: 2014-08-06 17:24:09.009442+00
Date Added: 2024-06-11T13:26:42.030880
License: Public Domain

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
                       DIVISION ONE

NORTHWEST HUNTER TV, LLC, a                       No. 71668-9-
Washington limited liability company

                     Appellant,
                                                                                 x».   com-

RIVERS WEST APPAREL, INC., a
Washington corporation,                           UNPUBLISHED OPINION

                     Respondent.                   FILED: June 30, 2014

       Verellen, J. —A trial court has the authority to revise a partial summary

judgment at any time before the entry of final judgment as to all claims and all parties,

and may do so by approving a settlement that contemplates the continued existence

of a limited liability company, despite a prior partial summary judgment that the

company is dissolved.

       A member of Northwest Hunter TV, LLC (NWH) obtained a partial summary

judgment that the limited liability company be dissolved. Prior to any final judgment

in that litigation, the parties agreed to and the trial court approved a settlement of all

claims. There is some evidence that the settlement included NWH's continued

existence.

       In the lawsuit on appeal, Rivers West Apparel, Inc. (Rivers West) relied upon

that partial summary judgment to argue that NWH is dissolved and therefore lacks
No. 71668-9-1/2

standing to pursue its claims against Rivers West. There is a genuine issue of

material fact whether the approved settlement included NWH's continued existence

rather than its dissolution.

       Because there is a genuine issue of material fact, we reverse and remand to

the trial court for further proceedings.

                                           FACTS

       In 2004, Rick Young and Sundance Magnetics, Inc. formed NWH. NWH films,

edits, and produces weekly television shows and videos for hunting and outdoor

enthusiasts. Young owned 35 percent of NWH and Sundance Magnetics owned 65

percent. Patrick Boyer is both the president of Sundance Magnetics and the manager

of NWH.

       Also in 2004, NWH entered into a contract with Rivers West that required

NWH to provide television advertisements from September 2004 through September

2007. Under the contract, Rivers West would pay NWH $15,000 in November 2004,

$15,000 in April 2005, $30,000 in November 2005, and $30,000 in November 2006.

       On January 10, 2006, Young informed Boyer that he no longer intended to

perform certain video editing, video production, and hosting of the show that he had

previously agreed to perform. Young also stated that he intended to resign from

NWH and effectuate a dissolution of the limited liability company unless NWH agreed

to his demands. The next day, NWH sued Young for alleged misconduct and other

claims (the Young lawsuit). Young counterclaimed and filed a third party complaint

against Boyer, his wife, and other companies owned by the Boyers.
No. 71668-9-1/3

       In June 2006, NWH sued Rivers West alleging breach of the advertising

contract (the Rivers West lawsuit), which is the lawsuit before us in this appeal.

      Almost a year later, in May 2007, Young tendered notice to NWH of his

resignation and withdrawal as a member. In his letter, Young recited that the

operating agreement requires that the limited liability company must be dissolved and

terminated with his resignation. He requested that winding up commence pursuant to

the operating agreement.

       Young filed a motion for partial summary judgment. In August 2007, the trial

court granted partial summary judgment for Young, ordering that NWH is dissolved

per the operating agreement and that winding up must begin "immediately."1

       In December 2007, the trial court in the Young lawsuit entered an order setting

timeline and deadlines for the sale of assets as part of the winding up of NWH. Per

the order, if the assets were not sold by January 27, 2008, they would be publicly

auctioned off by March 27, 2008. In February 2008, Boyer signed a bill of sale for his

purchase of all of the assets of NWH, except cash and accounts receivable.

      Then the parties to the Young lawsuit reached a settlement. In May 2008,

Young moved to enter a stipulation and settlement agreement between Young and

NWH. In July 2008, the trial court approved the stipulation and settlement agreement

and entered the following dismissal with prejudice in the Young lawsuit:

             ORDERED and adjudged that all causes herein including all
      claims, counterclaims, and third party Complaints and all related
      matters and claims of whatever kind be and the same are hereby

       1 Clerk's Papers at 80.
No. 71668-9-1/4

      dismissed with prejudice and without attorney fees, reasonable or
      statutory, or costs to any party.121

The record contains a one-page settlement agreement that includes a typewritten list

of items and several handwritten interlineations. Although the exact terms of the

parties' settlement agreement are not clear, in a declaration filed by Boyer in the

Rivers West lawsuit, he explained that NWH bought out Young's membership interest

in NWH, leaving Sundance Magnetics as the only member. Boyer also stated that

the parties intended that NWH continue to conduct business after the settlement

agreement, that NWH did continue to do business, and that dissolution was no longer

required or demanded.

       Four and one half years later, in January 2013, Rivers West moved for

summary judgment against NWH in the Rivers West lawsuit. It argued that NWH

was dissolved in the Young lawsuit and, as a result, had no standing to pursue its

claim against Rivers West. It also argued that NWH could not perform its part of the

contract with Rivers West because it had no legal authority to conduct business while

winding up. NWH opposed summary judgment, arguing that it was not dissolved and

could pursue the claim.

       In a decision granting defendant's motion for summary judgment, the trial court

explained that the partial summary judgment order in the Young lawsuit was

sufficiently final to collaterally estop NWH from arguing that it was not dissolved. The

trial court concluded that, as a dissolved company, NWH was required to proceed

with collection activities within a reasonable time and that "seven years is not a

       2 Id. at 125.
No. 71668-9-1/5

reasonable time for winding up a LLC."3 The trial court then entered an order

granting summary judgment to Rivers West.

       The trial court denied NWH's motion reconsideration. NWH appeals.

                                       DISCUSSION

       NWH argues that the trial court erred when it granted Rivers West's motion for

summary judgment. We agree.

       We review a superior court's summary judgment order de novo.4 Summary

judgment is appropriate only if the pleadings, affidavits, depositions, and admissions

on file demonstrate the absence of any genuine issues of material fact, and the

moving party is entitled to judgment as a matter of law.5 "A material fact is one upon

which the outcome of the litigation depends in whole or in part."6

       Absent a proper CR 54(b) certification of finality, "an order which adjudicates

fewer than all claims or the rights and liabilities of fewer than all parties is subject to

revision at any time before entry of final judgment as to all claims and the rights and

liabilities of all parties."7 Rivers West acknowledges that a trial court can revisit a

partial summary judgment if properly raised before the trial court. In addition to a

motion to vacate or for reconsideration, a trial court has the flexibility to approve a

       3 Id at 248.
       4 Torqerson v. One Lincoln Tower, LLC, 166 Wash. 2d 510, 517, 210 P.3d 318
(2009).
       5 CR 56(c).
       6 Atherton Condo. Apartment-Owners Ass'n Bd. of Dirs. v. Blume Dev. Co.,
115 Wash. 2d 506, 516, 799 P.2d 250 (1990).
       7 Washburn v. Beatt Equip. Co., 120 Wash. 2d 246, 300, 840 P.2d 860 (1992).
No. 71668-9-1/6

settlement that deals with all claims between the parties.8 Rivers West provides no

compelling authority that a trial court is precluded from approving a settlement that

contemplates that a business entity is not dissolved, especially when the settlement is

arrived at and approved prior to any final judgment.

       Rivers West relies upon the Young lawsuit partial summary judgment that

NWH was dissolved, but that order was subject to revision at any time before the

entry of final judgment. Taken in the light most favorable to NWH, the settlement

agreement arguably incorporated an agreement between Young and Sundance

Magnetics that NWH would continue in business and not be dissolved. Boyer's

declaration expressly recites that continuance of NWH was part of the settlement

agreed to by the parties and approved by the trial court. Rivers West argues that

Boyer's declaration is self-serving, but he was the manager of NWH and the

president of Sundance Magnetics at the time the settlement was reached. If the

settlement agreement allowed NWH to continue its operations, notwithstanding the

prior partial summary judgment of dissolution, then the trial court's approval of the

settlement necessarily revises the partial summary judgment, which would no longer

be a final and binding adjudication.9 Because a genuine issue of material fact exists

       8 See generally Shepherd v. Cont'l Bank, 28 Wash. App. 346, 350, 622 P.2d
1310 (1981) (a CR 41(a)(1)(A) voluntary dismissal pursuant to agreement of the
parties constitutes a decision adjudicating all the claims, rights, and liabilities of all
the parties).
       9 See Washburn, 120 Wash. 2d at 300 ("Absent a proper certification, an order
which adjudicates fewer than all claims or the rights and liabilities of fewer than all
parties is subject to revision at any time before entry of final judgment as to all claims
and the rights and liabilities of all parties."); Simmons v. Brier Bros. Co., 258 U.S. 82,
42 S. Ct. 196, 66 L. Ed. 475 (1922) (a court has complete power over interlocutory
No. 71668-9-1/7

as to whether the approved settlement included NWH's continued existence,

summary judgment in favor of Rivers West was improper.

       Rivers West argues that NWH is collaterally estopped from arguing that it was

not dissolved under the partial summary judgment order because the order resulted

in a final adjudication on the merits. But under Cunningham v. State, whether a

partial summary judgment order is sufficiently final for purposes of collateral estoppel,

even after a settlement, "turns on the circumstances of each case."10 Here, under

the facts of this case, there is a genuine issue of material fact as to whether the

approved settlement included NWH's continued existence. No such issue existed in

Cunningham. Because it is unresolved whether the partial summary judgment

ordering dissolution was modified by the trial court's approval of the settlement,

collateral estoppel does not bar NWH's argument.

       Rivers West also contends that summary judgment was proper because NWH

automatically dissolved under its operating agreement. But according to NWH's

operating agreement, the members of NWH may elect to continue the business

despite the occurrence of an event triggering dissolution. The operating agreement

states that NWH "shall dissolve and wind up its affairs, upon the first to occur of the

following events, unless the Members unanimously agree to continue the

business."u Although there is evidence in the record that Young resigned and NWH

signed a bill of sale of most of its assets, both events potentially triggering

orders made therein and has authority to revise them when it is "consonant with
equity" to do so).
       10 61 Wash. App. 562, 567-68, 811 P.2d 225 (1991).
       11 Clerk's Papers at 52 (emphasis added).
No. 71668-9-1/8

dissolution, Boyer's declaration states that the parties agreed to continue the

business. Therefore, taking this evidence in the light most favorable to NWH, the

company was not automatically dissolved under its operating agreement.

       We do not rely upon NWH's argument that a dismissal with prejudice

automatically renders all prior proceedings a nullity. The cases relied upon by NWH

deal with dismissals without prejudice and Land Use Petition Act appeals.12 NWH

has not demonstrated that the cases it cites apply here. And NWH's "always a

nullity" argument is inconsistent with Cunningham, which clearly contemplates the

possibility that even after a settlement, a partial summary judgment may be
sufficiently final for purposes of collateral estoppel, depending on the circumstances.

Cunningham also rejected the argument now advanced by NWH that the test for
determining whether a judgment is final for collateral estoppel purposes is the same
as the test for determining appealability under CR 54.13 Therefore, reversal is not

warranted on either of these bases.

       12 See Beckman v. Wilcox, 96 Wash. App. 355, 359, 979 P.2d 890 (1999) (citing
federal case law that a voluntary dismissal renders all proceedings a nullity but
holding that attorney fees may be available to a party after a voluntary dismissal
without prejudice depending upon the language of the statute authorizing attorney
fees); Wachovia SBA Lending v. Kraft, 138 Wash. App. 854, 862, 158 P.3d 1271 (2007)
(attorney fees not available under RCW 4.84.330 because voluntary dismissal
without prejudice is not a "final judgment" because plaintiff free to file a new action
against the defendant); Spice v. Pierce County, 149 Wash. App. 461, 467, 204 P.3d
254 (2009) (court could not address appellant's motion to vacate a voluntary
dismissal of a LUPA petition because petitioners failed to refile petition within 21 days
after hearing examiner's decision and voluntary dismissal resulted in prior petition
becoming a nullity).
       13 Cunningham, 61 Wash. App. at 566 ("such a rigorous finality requirement does
not implement the purposes of collateral estoppel: to protect prevailing parties from
relitigating issues already decided in their favor, and to promote judicial economy").

                                            8
No. 71668-9-1/9

       Ifthe parties agreed to settle the Young litigation on the basis that NWH would

continue in existence rather than be dissolved, then the trial court had the authority to

approve that settlement and allow NWH to continue in existence. A genuine issue of

fact exists. We reverse the trial court and remand for proceedings consistent with

this opinion.

WE CONCUR:

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