Court Opinion

ID: 4681359
Source: CourtListenerOpinion
Date Created: 2021-04-27 18:20:27.28871+00
Date Added: 2024-06-11T08:04:00.646402
License: Public Domain

Filed
                                                                                      Washington State
                                                                                      Court of Appeals
                                                                                       Division Two

                                                                                       April 27, 2021

    IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

                                        DIVISION II
 CLARK COUNTY, a Washington municipal                             No. 53799-1-II
 corporation,

                              Respondent,

        v.                                                    PUBLISHED OPINION

 PORTLAND VANCOUVER JUNCTION
 RAILROAD, LLC, a Washington limited
 liability company,

                              Petitioner.

 PORTLAND VANCOUVER JUNCTION
 RAILROAD, LLC, a Washington limited
 liability company,

                              Petitioner,

        v.

 CLARK COUNTY, a Washington municipal
 corporation,

                              Respondent.

       MAXA, J. – The Portland Vancouver Junction Railroad, LLC (PVJR) seeks review of the

trial court’s order denying PVJR’s motion to change venue of consolidated lawsuits filed in

Clark County Superior Court by Clark County against PVJR and by PVJR against the County.

The lawsuits involve a dispute regarding a long-term lease between PVJR and the County
No. 53799-1-II

concerning the operation and maintenance of the County’s short-line railroad. PVJR is a limited

liability company (LLC) with its principal office located in King County.

       The County filed its complaint against PVJR first. Four days later PVJR filed its

complaint against the County. PVJR then filed a motion to change venue in the County’s

lawsuit. The court denied PVJR’s motion.

       RCW 36.01.050(1) states, “All actions by any county shall be commenced in the superior

court of the county in which the defendant resides, or in either of the two judicial districts nearest

to the county bringing the action.” (Emphasis added.) However, the legislature has provided no

explanation of where an entity like an LLC “resides” for purposes of this statute.

       We hold that for purposes of RCW 36.01.050(1), PVJR resides in Clark County because

it transacts business there, and therefore that venue was proper in Clark County for the County’s

lawsuit against PVJR. Accordingly, we affirm the trial court’s order denying PVJR’s motion to

change venue.1

                                               FACTS

       In 2004, Columbia Basin Railroad Company, Inc. (CBRC) and the County entered into a

lease whereby CBRC would provide common carrier freight service and maintenance on part of

the County’s short-line railroad. In 2012, CBRC assigned its rights under the lease to PVJR.

       In March 2019, the County filed a lawsuit against PVJR in Clark County Superior Court.

In the complaint, the County sought declaratory judgment that the lease was invalid and

unenforceable on multiple grounds, alleged that PVJR had breached the lease and sought

injunctive relief to allow it access to the leased premises and PVJR’s records. The complaint

1
  Because we affirm based on RCW 36.01.050(1), we do not address the County’s argument that
the venue provisions applicable to corporations under RCW 4.16.025(3) also should be applied
to LLCs.

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No. 53799-1-II

alleged that “[v]enue is proper pursuant to RCW 36.01.050 and RCW 4.12.025 because PVJR

transacts business in Clark County.” Clerk’s Papers (CP) at 2.

       Four days later, PVJR filed a separate but related complaint against the County in Clark

County Superior Court. In the complaint, PVJR sought declaratory judgment that the lease was

valid and that any attempt to invalidate the lease violated federal law. The complaint alleged that

“[v]enue is appropriate pursuant to RCW 4.12.025 because the subject of this action originated in

Clark County and the defendant is located in Clark County.” CP at 174.

       PVJR moved for an order changing venue in the County’s lawsuit from Clark County to

Skamania County. PVJR argued that venue in Clark County was improper under RCW

36.01.050(1) because as an LLC, PVJR resided in King County and not in Clark County.2 PVJR

asserted that venue was proper in Skamania County under RCW 36.01.050(1) because it was one

of the two judicial districts closest to Clark County. In response, the County argued that venue

of its lawsuit was proper under RCW 36.01.050(1) because PVJR resided in Clark County.

       While the motion to change venue was pending, the County and PVJR filed a joint

motion to consolidate the two lawsuits. The trial court entered the stipulated order, which stated

that PVJR’s amended complaint would be treated as a counterclaim. The trial court

subsequently denied PVJR’s motion to change venue.

       This court granted PVJR’s motion for discretionary review of the trial court’s order

denying its motion to change venue.

2
 PVJR also argued that a change of venue was appropriate under RCW 4.12.030(2) because it
had reason to believe than an impartial trial could not occur in Clark County because the County
was the plaintiff. PVJR does not make this argument on appeal.

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No. 53799-1-II

                                              ANALYSIS

A.        LEGAL PRINCIPLES – VENUE

          Venue in Washington is governed by statute. Ralph v. Weyerhaeuser Co., 187 Wn.2d

326, 338, 386 P.3d 721 (2016). Although the initial choice of venue lies with the plaintiff, the

venue selected must be statutorily authorized. Id. RCW 4.12.030(1) allows a defendant to

change venue if “the county designated in the complaint is not the proper county.” Therefore,

“[i]f the plaintiff files in an improper venue and the defendant does not waive the objection, the

defendant has the right to have the matter transferred to a proper venue.” Ralph, 187 Wn.2d at

338.

          Because changing venue when the plaintiff has filed a lawsuit in an improper venue is a

matter of right, the trial court has no discretion in this situation. Id. As a result, we review de

novo a motion to change venue based on a claim that a lawsuit was filed in an improper venue.

See id.

          In some cases, two different venue statutes potentially apply to a lawsuit. In that

situation, we apply “mandatory statutes to the exclusion of permissive ones and specific statutes

to the exclusion of general ones.” Id. However, those rules do not apply when two statutes are

equally specific. Id. at 338, 340. “[W]hen confronted with two equally applicable venue

statutes, we have held that they may be interpreted as ‘complementary,’ giving plaintiffs the

option of which statute to proceed under.” Id. at 338.

B.        PROPER VENUE UNDER RCW 36.01.050(1)

          RCW 36.01.050(1) states, “All actions by any county shall be commenced in the superior

court of the county in which the defendant resides, or in either of the two judicial districts nearest

to the county bringing the action.” (Emphasis added.) PVJR is an LLC. Neither RCW

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No. 53799-1-II

36.01.050(1) nor any other venue statute addresses where an LLC resides for venue purposes.

The Washington Limited Liability Act, chapter 25.15 RCW, contains no provision specifically

addressing this issue.

       PVJR argues that under RCW 36.01.050(1), venue is not proper in Clark County because

PVJR does not reside there. PVJR claims that an LLC resides where its principal office is

located. The County contends that venue is proper in Clark County under RCW 36.01.050(1)

because an LLC resides in the same place as a corporation resides, which under RCW

4.12.025(2) includes where a corporation transacts business.

       We hold that PVJR resides in Clark County and therefore that venue was proper in Clark

County for the County’s lawsuit against PVJR.3

       1.   Parties’ Arguments

       PVJR claims that an LLC resides where its principal office is located. But PVJR

provides no authority that specifically supports this contention. PVJR cites to RCW

25.15.071(1)(c), which states that a certification of formation of an LLC must include the

address of the LLC’s principal office. But just because a certificate of formation must list a

principal address does not mean the LLC resides at that address for venue purposes.

       PVJR also analogizes an LLC to a partnership, noting a statement in Koh v. Inno-Pacific

Holdings, Ltd., that the Washington Limited Liability Act was indirectly based on the Uniform

Partnership Act, chapter 25.05 RCW. 114 Wn. App. 268, 271, 54 P.3d 1270 (2002). PVJR

claims that venue for a partnership is where a partner resides or the partnership’s principal place

3
 Initially, the County argues that PVJR waived its objection to improper venue by filing its own
action in Clark County and affirmatively alleging that venue was proper there. Because we
affirm on the merits, we do not address this issue.

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No. 53799-1-II

of business. But no Washington case has held that venue for a partnership is its principal place

of business.

       The County claims that an LLC resides where it transacts business. To support this

position, the County relies on RCW 4.12.025(1), the general venue statute providing that an

action may be brought in any county where the defendant resides. RCW 4.12.025(1) establishes

where a corporation resides for purposes of that statute: “For the purpose of this section, the

residence of a corporation defendant shall be deemed to be in any county where the corporation:

(a) Transacts business.” The County argues that an LLC is most similar to a corporation, and

therefore we should apply RCW 4.12.025(1) by analogy to conclude that an LLC resides in the

county where it transacts business.

       However, RCW 4.12.025(1) expressly states that the definition of corporate residence is

only for purposes of that section. Therefore, that definition does not directly apply to RCW

36.01.050(1), even for determining venue for an action against a corporation. And the County

cites no Washington authority that specifically supports its contention that an LLC resides in any

county where it transacts business.

       2.      Statutory Interpretation

       Addressing the parties’ arguments requires us to interpret RCW 36.01.050(1).

Interpreting a statute is a question of law that we review de novo. Wright v. Lyft, Inc., 189

Wn.2d 718, 722, 406 P.3d 1149 (2017). The primary goal of statutory interpretation is to

determine and give effect to the legislature’s intent. Id. This intent is evidenced by the language

of the statutory provision, the context of the statute, and related statutes. Jametsky v. Olsen, 179

Wn.2d 756, 761, 317 P.3d 1003 (2014).

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No. 53799-1-II

       RCW 36.01.050(1) does not define the term “resides.” We give undefined words in

statutes their plain and ordinary meaning. Seattle Hous. Auth. v. City of Seattle, 3 Wn. App. 2d

532, 538, 416 P.3d 1280 (2018). We may consult the dictionary to determine a term’s plain

meaning. Id.

       If the term is susceptible to two reasonable meanings it is ambiguous. Jametsky, 179

Wn.2d at 762. We resolve ambiguities by considering other indications of legislative intent,

including principles of statutory construction, the legislative history of the statute, and relevant

case law. Id. “Where two interpretations of statutory language are equally reasonable, our

canons of construction direct us to adopt ‘the interpretation which better advances the overall

legislative purpose.’ ” Wright, 189 Wn.2d at 729 (quoting Weyerhaeuser Co. v. Dep’t of

Ecology, 86 Wn.2d 310, 321, 545 P.2d 5 (1976)).

       3.    Analysis

             a.   Ambiguous Term

       Arguably, the term “resides” may have a plain meaning when referring to an individual:

where the individual lives. However, the meaning is not clear when referring to an entity that is

not an individual like an LLC because an LLC does not “live” anywhere. And the dictionary

definition of “resides” is not helpful because that definition addresses where an individual

resides, not where an entity like an LLC resides. See WEBSTER’S THIRD NEW INTERNATIONAL

DICTIONARY 1931 (2002).

       The term “resides” in RCW 36.01.050(1) is ambiguous as applied to LLCs because it is

subject to two reasonable interpretations: the location of the LLC’s principal place of business –

as PVJR contends – or the place of business plus anywhere the LLC transacts business – as the

County contends.

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No. 53799-1-II

              b.   Legislative History

          The legislative history of RCW 36.01.050(1) is not helpful. The clause at issue here

allowing a county to file an action in the county where the defendant resides essentially has

remained unchanged since its adoption in 1854. See LAWS OF 1854, §6, at 329. There is no 1854

legislative history regarding the adoption of this section.

          PVJR notes that before the enactment of RCW 4.12.025(1), a corporation resided for

venue purposes at its principal office or place of business. First Nat’l Bank of Everett v. Wilcox

N. Coast Dry Kiln Co., 72 Wash. 473, 477, 130 P. 756 (1913). PVJR suggests that as a result, in

1854 the territorial legislature must have intended that a corporation resided in the principal

place of business for purposes of the predecessor to RCW 36.01.050(1). However, we decline to

speculate regarding the intent of the 1854 territorial legislature regarding the residence of a

corporation or of a type of business organization – like an LLC – that had not yet been invented.

              c.   Relevant Case Law

          As noted above, no Washington court has addressed where an LLC (or a corporation)

resides for purposes of RCW 36.01.050(1). In King County v. Frank Coluccio Construction

Company, the court held that venue of the County’s lawsuit was proper in King County because

the defendant resided in King County. 3 Wn. App. 2d 504, 517, 416 P.3d 756 (2018). However,

in that case the defendant both had its home office and transacted business in King County. Id.

at 512.

          The County cites a few cases from other jurisdictions and a federal secondary source.

However, these cases primarily involve federal venue law and we do not find them particularly

persuasive. The County cites one state law case addressing venue of an LLC under a rule stating

that a corporation may be sued where it is doing business. Crepy v. Reckitt Benckiser, LLC, 448

                                                  8
No. 53799-1-II

N.J. Super. 419, 427-29, 153 A.3d 968 (2016). The court held that “an LLC may be sued, like

the analogous corporate entity, wherever it actually does business.” Id. at 429. This case

indicates that corporations and LLCs should be treated the same for venue purposes, but

obviously does not address the term “resides” in RCW 36.01.050(1).

            d.   Statutory Construction

       There are legitimate reasons why the positions of each party could be adopted. From the

perspective of a defendant being sued by a county, a defendant may prefer not to litigate in what

literally is the county’s home court. From the perspective of a county, an entity that transacts

business in the county should be subject to suit in that county regarding a dispute involving that

business.

       Faced with two reasonable proposed constructions of RCW 36.01.050(1), we ultimately

must choose the construction that reflects the plain and ordinary meaning of “resides” and the

one that we believe is most reasonable. We conclude that where an LLC “resides” for purposes

of RCW 36.01.050(1) includes where the LLC transacts business. We can articulate at least

three reasons supporting this conclusion.

       First, if the legislature had intended to completely eliminate a county’s “home court

advantage,” RCW 36.01.050(1) would not have allowed the county to file suit where the

defendant resides as an option. That same advantage would apply if an LLC’s principal place of

business was in that county.

       Second, we see no reason to distinguish between where an LLC has its principal place of

business and where an LLC transacts business. It is unclear why it would be fair for a county to

sue an LLC in its own county where an LLC has its principal place of business in that county but

not when the LLC transacts business in that county.

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No. 53799-1-II

       Third, an LLC that transacts business in a county should expect and understand that it

might be sued in that county, particularly when the lawsuit involves those same business

activities. An LLC that does business in a county has a tangible presence in that county and

therefore should be subject to that county’s courts.

       Here, it is undisputed that PVJR transacted business in Clark County. PVJR operated a

short line railroad within Clark County pursuant to a long-term lease of property in Clark

County. Therefore, PVJR resides in Clark County and RCW 36.01.050(1) allowed the County to

file suit against PVJR there.

       We hold that the trial court did not err in denying PVJR’s motion to change venue.

                                         CONCLUSION

       We affirm the superior court’s order denying PVJR’s motion to change venue based on

RCW 36.01.050(1).

                                                       MAXA, J.

 We concur:

SUTTON, A.C.J.

GLASGOW, J.

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