Court Opinion

ID: 4746664
Source: CourtListenerOpinion
Date Created: 2021-08-12 17:41:02.389375+00
Date Added: 2024-06-11T08:08:35.481783
License: Public Domain

¶33 (concurring) — I concur in the result the majority reaches: the defenses of estoppel and waiver are not available to the defendant in this case. But the broader question of what, if any, equitable defenses should be allowed under the Washington State Securities Act (WSSA) is a complex policy question best left to the legislature to decide.
Cox, C.J.
*784¶34 The general rule is that the doctrine of estoppel is not available to a seller who violates securities laws except when the rights of creditors or third parties intervene, or where the purchaser has a special duty to ensure compliance with securities regulations.4 Here, Molino does not contend that either of these two exceptions applies. Thus, the trial court properly decided under the general rule that the defenses of waiver and estoppel were not available in this case. Affirming the trial court on this ground is all that is necessary for this court to decide.
¶35 Whether equitable defenses of any type should be allowed under the WSSA is, of course, ultimately a legislative decision. The current wording of the civil liability section of the WSSA is silent on this point. This carefully worded and comprehensive statute, which is based on a uniform law adopted in many states, expressly provides that a plaintiff “may sue either at law or in equity” to recover.5 There is nothing in the plain wording of the statute that bars either legal or equitable defenses.6 Moreover, the same section lays out the alternative measures of recovery for the successful plaintiff:
the consideration paid for the security, together with interest at eight percent per annum from the date of payment, costs, and reasonable attorneys’ fees, less the amount of any income received on the security, upon the tender of the security, or for damages if he or she no longer owns the security.[7]
(Emphasis added.)
Nothing in this language suggests any limitations as to defenses.
¶36 The majority extensively discusses its rationale for rejecting the federal approach that permits the assertion of *785equitable defenses under federal securities laws.8 Like the WSSA, the federal law also has the purpose of protecting the innocent investor.9 The majority correctly notes that we are not bound to parallel the federal approach. Yet, the majority’s analysis rejecting that approach is unsupported by any evidence that effectuation of the protective purpose of securities laws is hampered by allowing the assertion of equitable defenses in a proper case. In the absence of such evidence, it is difficult to understand why permitting proper equitable defenses under the WSSA would not also promote the primary goal of protecting investors.
¶37 There is a final point. The majority cites a Cornell Law Review article, Estoppel and In Pari Delicto Defenses to Civil Blue Sky Law Actions,10 to support its conclusion that equitable defenses should not be allowed. I find the article unpersuasive.
¶38 Without the benefit of empirical data, the author proposes a rule that would bar estoppel as a defense, but would allow the defense of in pari delicto. This selective barring of defenses is not, in my view, an argument for the barring of equitable defenses in all cases. Rather, it is an indication that whether such defenses should be barred in all cases is more complex than a simple “yes” or “no” answer. This is a further indication that the legislature, not this court, should decide this important and complex policy question.
¶39 To summarize, application of the general rule to the facts of this case is sufficient to support the bar of the assertion of equitable defenses in this case. Neither of the two exceptions applies here, and we need not decide anything more. The more general question of whether all, or only some, equitable defenses should be allowed under the *786WSSA is a complex policy question best left to the legislature to decide.
¶40 For these reasons, I concur in the result and would affirm the trial court on the more narrow basis of the general rule.
Reconsideration granted in part and opinion modified June 30, 2005.

 W.M. Moldoff, Annotation, Purchaser’s Right To Set Up Invalidity of Contract Because of Violation of State Securities Regulation As Affected By Doctrines of Estoppel or Pari Delicto, 84 A.L.R.2d 479, 485-86 (1962).

 RCW 21.20.430 (emphasis added).

 See Dunlap v. Wild, 22 Wn. App. 583, 591, 591 P.2d 834 (1979) (permitting the defense of collateral estoppel to bar a WSSA action).

 RCW 21.20.430(1) (emphasis added).

 Royal Air Props., Inc. v. Smith, 312 F.2d 210, 213 (9th Cir. 1962).

 Royal Air, 312 F.2d at 213; see also McClellan v. Sundholm, 89 Wn.2d 527, 533, 574 P.2d 371 (1978).

 Charles G. Stinner, Note, Estoppel and In Pari Delicto Defenses to Civil Blue Sky Actions, 73 Cornell L. Rev. 448 (1988).