Court Opinion

ID: 9897981
Source: CourtListenerOpinion
Date Created: 2023-11-14 19:27:33.38509+00
Date Added: 2024-06-11T09:14:50.309165
License: Public Domain

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                 IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

          CALLUM HERDSON, an individual,
                                                               No. 83701-0-I
                               Respondent,
                                                               DIVISION ONE
                        v.
                                                               PUBLISHED OPINION
          RICHARD FORTIN, ROBERT
          ENSLEN, XCAR, INC., FTW
          SERVICES, INC., XCAR
          REMARKETING, INC.,
          CROSSBORDER VEHICLE
          SERVICES, INC., and
          CROSSBORDER VEHICLES SALES,
          LTD.,

                               Appellants.

                 HAZELRIGG, A.C.J. — Richard Fortin, Robert Enslen, XCar, Inc., FTW

          Services, Inc., XCar Remarketing, Inc., Crossborder Vehicle Services, Inc., and

          Crossborder Vehicle Sales, Ltd. appeal from findings of fact and conclusions of

          law entered after a bench trial, as well as an order appointing special fiscal

          agents and a forensic auditor.      Because the court’s findings as to minority

          shareholder oppression are supported by substantial evidence and the court did

          not abuse its discretion in fashioning an equitable remedy, we affirm. However,

          we reverse the court’s order appointing special fiscal agents and a forensic

          auditor due to its failure to comply with RAP 7.2.
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                                                      FACTS

                  Callum Herdson was hired as president of XCar, Inc. in 2014 and given

          one-third of its stock as common, non-voting shares. Richard Fortin and Robert

          Enslen own the remaining preferred, voting shares equally. Herdson received a

          share of profits in addition to his salary, as did several other employees. 1 Fortin

          and Enslen also own and operate several other related companies: Crossborder

          Vehicle Services, Inc., Crossborder Vehicle Sales, Ltd., XCar Remarketing, Inc.,

          and FTW Services, Inc. (collectively, “Crossborder-owned companies”). XCar is

          not a subsidiary of any of these companies.

                  Herdson was terminated from XCar in February 2017 but retained his

          shares. Herdson subsequently filed suit against Fortin, Enslen, and their various

          other business entities (collectively, Fortin), and alleged a number of claims,

          including failure to distribute dividends to which he was entitled, breach of

          fiduciary duties, and minority shareholder oppression. Herdson sought monetary

          damages, and several forms of injunctive relief, including an order to require

          either the purchase of Herdson’s shares or the dissolution of XCar.                        After

          Herdson abandoned some of his original claims, the parties proceeded to a

          bench trial. On January 13, 2022, the court entered extensive findings of fact

          and conclusions of law (FFCL).            The Court expressly found Herdson proved

          Fortin and Enslen had engaged in minority shareholder oppression, dismissed all

                   1 Herdson testified that he was paid dividends that ceased after his termination from

          XCar, while evidence submitted by Fortin suggested Herdson was only paid profit sharing during
          his employment, in addition to his salary, which then ceased after he was terminated, and XCar in
          fact never declared dividends. The trial court found that “[t]he agreement between Herdson,
          Fortin, and Enslen, included an agreement that each owner would receive 1/3 of XCar’s after-tax
          net profits” but the court never explicitly characterized these profits as dividends.

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          of Herdson’s remaining claims except regarding minority shareholder oppression,

          rejected Herdson’s desired remedy of the judicial dissolution of XCar, and

          appointed a receiver in lieu of dissolving the company.

                 Fortin appealed on February 11, 2022, and a perfection letter was issued

          by this court on February 18, 2022.       On February 25, 2022, after this court

          accepted review, the trial court entered an order appointing special fiscal agents

          and a forensic auditor “in lieu of appointing a traditional receiver” as an

          “exercise[] [of] its discretion.”   Fortin filed an amended notice of appeal

          designating the February 25 order along with the FFCL.

                                              ANALYSIS

          I.     Appealability

                 Herdson contends that this appeal should be dismissed as there is no

          basis for an appeal as a matter of right or for discretionary review. Parties may

          appeal from “[t]he final judgment entered in any action or proceeding.” RAP

          2.2(a)(1). Additionally, under RAP 2.2(a)(3), “[a]ny written decision affecting a

          substantial right in a civil case that in effect determines the action and prevents a

          final judgment or discontinues the action” may be appealed. “We look to the

          effect of a judgment to determine whether it is appealable,” and the substance of

          a document, rather than the title, controls. Wachovia SBA Lending, Inc. v. Kraft,

          165 Wn.2d 481, 487, 200 P.3d 683 (2009); Rhodes v. D & D Enters., Inc., 16

          Wn. App. 175, 177, 554 P.2d 390 (1976). “[D]etermination of finality is a matter

          of substance and not form.” Gazin v. Hieber, 8 Wn. App. 104, 113, 504 P.2d

          1178 (1972). “A final judgment is a judgment that ends the litigation, leaving

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          nothing for the court to do but execute the judgment.” Anderson & Middleton

          Lumber Co. v. Quinault Indian Nation, 79 Wn. App. 221, 225, 901 P.2d 1060

          (1995). It “concludes the action by resolving the plaintiff’s entitlement to the

          requested relief.” Bank of Am., NA v. Owens, 153 Wn. App. 115, 126, 221 P.3d

          917 (2009), rev’d in part on other grounds, 173 Wn.2d 40, 266 P.3d 211 (2011).

                 Here, the court resolved all of Herdson’s claims on the merits.              It

          concluded that Herdson met his burden to demonstrate minority shareholder

          oppression as a matter of law and dismissed all other claims. The trial court

          determined that Fortin was not entitled to immunity under the business judgment

          rule, and that Herdson was entitled to relief because he had “established a

          probable right in the XCar profits from the time [he] became an owner . . .

          through the present.”      This concluded the action by resolving Herdson’s

          entitlement to relief, leaving nothing for the court to do but execute its judgment

          after calculating the amount owed to Herdson as the remedy.            As such, the

          document entered at the conclusion of trial, captioned “Court’s Findings of Fact

          and Conclusions of Law,” is appealable as a matter of right.

                 After we accepted review of the FFCL, Fortin filed an amended notice of

          appeal in this case that added the February 25 order, appointing special fiscal

          agents and a forensic auditor in lieu of the receiver previously ordered, to the

          orders on review. While the February 25 order is not appealable as a matter of

          right, we exercise our authority to grant discretionary review as it is related to and

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          impacts the FFCL under RAP 2.3(b)(2).2 See City of Bothell v. Barnhart, 156

          Wn. App. 531, 538 n.2, 234 P.3d 264 (2010) (explaining that the appellate court

          has the authority to determine the scope of discretionary review), aff'd, 172

          Wn.2d 223, 257 P.3d 648 (2011).

          II.     Substantial Evidence

                  In this appeal, Fortin assigns error to numerous findings of fact. When

          considering such a challenge, we “review findings of fact for substantial

          evidence” and “conclusions of law de novo.” Blackburn v. Dep’t of Soc. & Health

          Servs., 186 Wn.2d 250, 256, 375 P.3d 1076 (2016). “Substantial evidence to

          support a finding of fact exists where there is sufficient evidence in the record ‘to

          persuade a rational, fair-minded person of the truth of the finding.’” Hegwine v.

          Longview Fibre Co., Inc., 162 Wn.2d 340, 353, 172 P.3d 688 (2007) (quoting In

          re Est. of Jones, 152 Wn.2d 1, 8, 93 P.3d 147 (2004)). We “view the evidence in

          the light most favorable to the prevailing party” and do not “reassess the

          credibility of trial court witnesses.” Garza v. Perry, __ Wn. App. 2d __, 523 P.3d

          822, 834 (2023).

                  As a preliminary matter, Fortin urges this panel to look to the trial court’s

          oral ruling, rather than its written order.          “When findings are incomplete” or

          ambiguous, “appellate courts may look to the trial court’s oral decision to interpret

          the judgment.” City of Lakewood v. Pierce County, 144 Wn.2d 118, 127, 30 P.3d

          446 (2001). Fortin raises this issue for the first time in its reply brief, does not

                  2 “A notice of appeal of a decision which is not appealable will be given the same effect

          as a notice for discretionary review.” RAP 5.1(c).

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          cite any authority in support, and does not explain how the oral ruling sheds light

          on the allegedly contradictory conclusions of law. Accordingly, we decline that

          invitation and focus our analysis on the court’s written ruling.

                 Several    of   the   findings   Fortin   challenges    are   solely   credibility

          determinations made by the trial court, or explicitly rest on the court’s findings on

          credibility; we do not review such determinations.            As such, we decline to

          evaluate findings: 16, 19, 22, 39-45, 52, 60, 62, and 70-71.            Several other

          findings are set out in Fortin’s assignments of error but no further argument is

          provided in briefing. These challenges are abandoned3 and, as such, we decline

          to reach findings: 26-29, 36, and 53-58. We further decline to review finding 37

          as the nature of Fortin’s challenge is unclear—the assignment of error merely

          states, “this finding fails to acknowledge that XCar’s accounting practices.”

                 The remaining findings Fortin sets out in the assignments of error (38, 47,

          50-51, 59, 61, 63-64, 67-69, 72-74) are each supported by substantial evidence.

          Finding 38, that Fortin failed to ensure XCar received market rate fees for arms-

          length transactions, is supported by Fortin’s admission in his deposition. Finding

          47, that Fortin obscured XCar’s profitability and shifted profits away, is supported

          by Exhibit 18 and trial testimony by Nick Nicholson, chief financial officer for all

          the Crossborder-owned companies and XCar. Finding 50, that Fortin and Enslen

          continue to receive management fees to draw profits from XCar is supported by

          Nicholson’s and Fortin’s testimony at trial. Viewing the evidence adduced at trial

          in the light most favorable to Herdson, Fortin fails to meet its burden to

                 3 An assignment of error not argued in a party’s brief is abandoned.   Pappas v.
          Hershberger, 85 Wn.2d 152, 153, 530 P.2d 642 (1975).

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          demonstrate that the trial court’s finding that these management fees were used

          to draw profits, is unsupported by substantial evidence. Our sole inquiry when

          presented with this sort of appellate challenge is whether substantial evidence

          supports the findings made by the trial court; “we will not substitute our judgment

          for the court’s” even if this court might have reached a different result. Parkridge

          v. City of Seattle, 89 Wn.2d 454, 464, 573 P.2d 359 (1978). Findings 51 and 59,

          that Fortin did not conduct a transfer pricing analysis to ensure that the

          management fees were market rate, as required, are both supported by Exhibit

          45 and Nicholson’s deposition testimony.       Findings 61, 63, and 64, that, by

          avoiding a transfer pricing analysis, Fortin failed to ensure XCar’s profits were

          accurately captured and failed to ensure transactions were at arm’s length, are

          supported by Nicholson’s and Fortin’s deposition testimony. Findings 67-69, that

          Fortin applied for a Paycheck Protection Program (PPP) loan and falsely claimed

          the ownership of XCar was held equally by only Fortin and Enslen, are supported

          by Exhibit 59. Finding 72, that XCar’s profitability was clouded by obscuring

          profits, is a factual conclusion supported by evidence set out in testimony and

          exhibits that Fortin retroactively changed costs between companies to shift

          taxable net income, as reported to the Internal Revenue Service (IRS), and thus

          drastically changed the profits (and, therefore, tax liability). The court further

          found that Fortin purposefully concealed XCar’s profits and financially

          manipulated XCar’s accounting records in a later, unchallenged, finding. Finding

          73, that some of XCar’s profits were shifted to Crossborder-owned companies

          and withdrawn by Fortin and Enslen, is supported by Exhibits 12, 18, and

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          Enslen’s testimony at trial. Finding 74, that Fortin and Enslen paid themselves

          constructive dividends, is supported by testimony at trial by Herdson, Fortin, and

          Enslen. While there is conflicting testimony as to whether the management fees

          were constructive dividends, the court found the defense witnesses to not be

          credible in this regard, and we do not reweigh the evidence on appeal.4 Without

          a more specificity from Fortin’s challenge, this finding is sufficiently supported. In

          turn, the challenged findings discussed herein support the trial court’s broader

          conclusions of law that Herdson demonstrated minority shareholder oppression.

          III.   Minority Shareholder Oppression and Statutory Remedies

                 Fortin asserts the court erred in a variety of ways with regard to its

          ultimate conclusion that Herdson demonstrated minority shareholder oppression

          and to the remedy applied.5 We disagree and affirm the trial court.

                 “It is a recognized principle that majority shareholders ‘must, at all times,

          exercise good faith toward the minority stockholders.’”               Real Carriage Door

          Company, Inc. ex rel. Rees v. Rees, 17 Wn. App. 2d 449, 458, 486 P.3d 955

          (quoting Hay v. Big Bend Land Co., 32 Wn.2d 887, 897, 204 P.2d 488 (1949)),

          review denied, 198 Wn.2d 1025 (2021).               One potential remedy for wronged

          minority shareholders authorized under our statutory scheme is for the superior

          court to dissolve a corporation “[i]n a proceeding by a shareholder if it is

          established that . . . [t]he directors or those in control of the corporation have

                 4 Mangan v. Lamar, 18 Wn. App. 2d 93, 95, 496 P.3d 1213 (2021).
                   5 At oral argument before this court, Fortin appears to have conceded that minority

          shareholder oppression occurred. Wash. Court of Appeals oral argument, Herdson v. Fortin, No.
          83701-0-I (Mar. 9, 2023), at 6 min., 15 sec., video recording by TVW, Washington State’s Public
          Affairs Network, https://tvw.org/video/division-1-court-of-appeals-2023031240.

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          acted, are acting, or will act in a manner that is illegal, oppressive, or fraudulent.”

          RCW 23B.14.300(2)(b). Because courts are reluctant to dissolve corporations,

          courts “rigorously require[] that plaintiffs meet their burden.” Scott v. Trans-Sys.,

          Inc., 148 Wn.2d 701, 712, 64 P.3d 1 (2003). Once the plaintiff demonstrates

          illegal, oppressive, or fraudulent conduct, “the burden shifts to the majority

          shareholder or shareholders to show there were legitimate business justifications

          for the conduct.” Id. at 709. In addition to dissolving a company, “courts also

          may consider alternative remedies that are less severe than dissolution.” Real

          Carriage Door, 17 Wn. App. 2d at 458.

                 A.     Determining Whether Minority Shareholder Oppression Occurred

                 “Courts have adopted two tests for determining oppressive conduct toward

          minority shareholders under RCW 23B.14.300(2)(b).” Real Carriage Door, 17

          Wn. App. 2d at 458. The “tests are not mutually exclusive and one or both may

          be used in the same case.” Scott, 148 Wn.2d at 711. The first test focuses on

          the reasonable expectations of the minority shareholder; oppressive conduct is

          that which violates “‘those spoken and unspoken understandings on which the

          founders of a venture rely when commencing the venture.’” Real Carriage Door,

          17 Wn. App. 2d at 458 (internal quotation marks omitted) (quoting Scott, 148

          Wn.2d at 711). This test “is most appropriate in situations where the complaining

          shareholder was one of the original participants in the venture—one who would

          have committed capital and resources.” Scott, 148 Wn.2d at 711. The second

          test analyzes whether there was:

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                 “burdensome, harsh and wrongful conduct; a lack of probity and fair
                 dealing in the affairs of a company to the prejudice of some of its
                 members; or a visible departure from the standards of fair dealing,
                 and a violation of fair play on which every shareholder who entrusts
                 his money to a company is entitled to rely.”

          Real Carriage Door, 17 Wn. App. at 458-59 (internal quotations marks omitted)

          (quoting Scott 148 Wn.2d at 711). In Scott, our State Supreme Court quoted an

          Oregon case that defined oppressive conduct as an “‘abuse of corporate position

          for private gain at the expense of the stockholders,’” and “‘the plundering of a

          close corporation by the siphoning off of profits by excessive salaries or bonus

          payments.’” Scott, 148 Wn.2d at 713 (internal quotation marks omitted) (quoting

          Baker v. Com. Body Builders, 264 Or. 614, 629-30, 507 P.2d 387 (1973)). Here,

          we apply the second test as it is undisputed that Herdson was not an original

          founder of XCar and that he did not commit any significant capital into the

          venture, paying just one dollar as his “initial contribution.”6

                 The trial court concluded that Fortin engaged in oppressive conduct

          toward Herdson by hiding financial information related to XCar, “subordinating

          XCar’s independent interests to . . . the interests of their wholly-owned

          companies” and the personal interests of Fortin and Enslen, “manipulating

          XCar’s finances” through “obscuring XCar’s profitability” and “shifting profits from

          XCar to Crossborder-owned companies,” “withdrawing profits from XCar vis-à-vis

                 6 Fortin urges this panel to follow Roil Energy, LLC v. Edington in our consideration of the

          issues presented on appeal. 195 Wn. App. 1030 (2016) (unpublished).
                   However, in addition to the fact that it is an unpublished opinion and, therefore, not
          controlling authority, Roil Energy considered minority shareholder oppression under Nevada law.
          Roil Energy, LLC v. Edington, No. 32577-6-III, slip op. at 43 (Wash. Ct. App. Aug. 2, 2016)
          (unpublished), https://www.courts.wa.gov/opinions/pdf/325776.unp.pdf; see also GR 14.1(a)
          (stating that unpublished opinions of the Court of Appeals are not binding). For both of these
          reasons, we reject Roil Energy as inapplicable and instead follow the published cases from our
          Court of Appeals and Supreme Court that analyze Washington law.

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          management fees,” “not accounting and not distributing 1/3 of XCar’s net profits

          to Herdson,” “knowingly and intentionally failing to conduct a transfer pricing

          analysis,” and intentionally misrepresenting information on a PPP loan

          application “which was done under penalty of perjury.”

                  Fortin argues its acts in managing XCar were not oppressive because it

          had no duty to pay dividends and no duty to include Herdson in corporate

          decision-making. While the court did find that Fortin and Enslen had excluded

          Herdson from decision-making after he was terminated,7 the court never tied this

          finding to breach of any fiduciary duty or considered it as a basis for its

          conclusion on minority shareholder oppression.       None of the court’s FFCL

          specific to minority shareholder oppression mention the exclusion of Herdson

          from decisions, rather it appears in the general findings of fact as finding 27.

          Fortin concedes the underlying facts in finding 27 and, as such, substantial

          evidence supports it. No error of law occurred.

                  Fortin further alleges the court erred in finding oppression based on its

          refusal to produce financial statements to Herdson after his termination.      It

          contends Herdson failed to follow the proper procedure to request documents

          under RCW 23B.16.200 and, therefore, it was not oppressive to decline to

          produce the statements. As a preliminary matter, Fortin relies on an incorrect

          version of RCW 23B.16.200. Herdson made his requests for records in July

          2017, while Fortin relies on the version of the statute that became effective in

          2020.

                  7 Herdson held non-voting shares.

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                 The version of RCW 23B.16.200 in effect at the time of Herdson’s request

          required a corporation to deliver “a copy of the most recent balance sheet and

          income statement” to a shareholder upon request. Former RCW 23B.16.200(2)

          (2002). Fortin’s other argument, that Herdson failed to comply with subsection

          (1) of RCW 23B.16.200, is unsupported by law because that procedure was not

          mandated until the 2020 version of the statute.8

                 In response, Herdson contends he was entitled to the financial documents

          under RCW 23B.16.020. At the time of Herdson’s request, RCW 23B.16.020

          permitted a shareholder to inspect and copy certain corporate records, including

          accounting records, so long as:

                 (a) The shareholder’s demand is made in good faith and for a
                 proper purpose;
                 (b) The shareholder describes with reasonable particularity the
                 shareholder’s purpose and the records the shareholder desires to
                 inspect; and
                 (c) The records are directly connected with the shareholder’s
                 purpose.

          Former RCW 23B.16.020(3) (2009).

                 Fortin argues Herdson was not entitled to specific types of financial

          documents, but cites no authority for this contention. While Fortin asserts a

          shareholder has a right to inspect only “certain records,” the language of the

          applicable statute made no such qualification. The express statutory language

          reflected that a shareholder may inspect “any of the following records . . .

          [a]ccounting records of the corporation.” Former RCW 23B.16.020(2)(b). The

          statutory scheme did not provide a definition for “accounting records.” Black’s

                 8 It is unclear if Fortin’s argument that relies on RCW 23B.16.200(1) is a typo, as the

          attributed quote is found not in RCW 23B.16.200(1) but in RCW 23B.16.020(1).

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          Law Dictionary defines “accounting,” in part, as “[t]he act, practice, or system of

          establishing or settling financial accounts; esp., the process of recording

          transactions in the financial records of a business and periodically extracting,

          sorting, and summarizing the recorded transactions to produce a set of financial

          records.” BLACK’S LAW DICTIONARY 25 (11th ed. 2019). Webster’s Third New

          International Dictionary defines “accounting” as “the system of classifying,

          recording, and summarizing business and financial transactions in books of

          account and analyzing, verifying, and reporting the results.” W EBSTER’S THIRD

          NEW INTERNATIONAL DICTIONARY 13 (2002). Neither definition supports Fortin’s

          narrow reading of “accounting records.”              Without authority to support its

          interpretation of former RCW 23B.16.020, Fortin’s claim as to this aspect of the

          trial court’s ruling fails on this basis.

                 Next, Fortin argues the fact that Herdson is the only shareholder who

          owns stock in XCar but not in the other Crossborder-owned companies is not in

          itself oppression.     Fortin fails to tie this argument to any specific finding or

          conclusion by the trial court. Nowhere in the FFCL does the trial court find

          oppression based only on the fact that Herdson did not own stock in the other

          Crossborder-owned companies. Rather, it finds oppressive conduct based on

          Fortin’s use of the other Crossborder-owned companies to funnel profits to only

          Fortin and Enslen, and on Fortin’s failure to consider XCar’s legal independence

          from the other Crossborder-owned companies. Fortin’s challenges to the court’s

          conclusion that it engaged in minority shareholder oppression against Herdson

          on this basis fails.

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                Fortin also alleges Herdson failed to submit evidence that XCar did not

          comply with relevant transfer pricing regulations. IRS “regulations require that

          arm’s length prices be charged” for intercompany transactions. U.S. Tobacco

          Sales & Marketing Co., Inc. v. Dep’t of Revenue, 96 Wn. App. 932, 942 n.17, 982

          P.2d 652 (1999). “A price is arm’s length if ‘the results of the transaction are

          consistent with the results that would have been realized if [unaffiliated]

          taxpayers had engaged in the same transaction under the same circumstances.’”

          Id. (alteration in original) (quoting 26 C.F.R. § 1.482-1(b)).   A taxpayer must

          conduct an analysis to provide “the most reliable measure of an arm’s length

          result.” 26 C.F.R. § 1.482-1(c).

                The trial court found that Fortin “failed to ensure that XCar received fees

          commensurate with market rates for arms-length transactions.” It also found that

          “[t]here was no credible evidence that showed how the transactions between

          XCar and Fortin’s and Enslen’s other companies were conducted at arms-

          length,” and that Fortin “fail[ed] to follow rules regarding transfer pricing.” The

          court largely relied on concessions from Nicholson that XCar had not done a

          transfer pricing analysis or any other review to determine whether its transactions

          were conducted at arm’s length. The court also relied on Exhibit 8, an email from

          CPA Gary Traher to Nicholson, that explained what was required in a transfer

          pricing analysis.   Nicholson conceded in his deposition and at trial that he

          understood the failure to do a transfer pricing analysis was “a risk concerning

          [XCar’s] tax status in the United States.” He also stated “it’s important that we

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          have our documentation and methodology in place” in regard to transfer pricing

          analyses.

                This testimony and exhibit are sufficient to support the trial court’s findings

          that XCar failed to ensure it was conducting arm’s-length transactions and

          complying with regulations for transfer pricing analyses.       Fortin provides no

          authority for the contention that Herdson was required to submit particular

          evidence of what the prices should be—substantial evidence demonstrates that

          Fortin was required to conduct a transfer pricing study, and did not do so.

                Substantial evidence supports the court’s findings, which in turn support

          the court’s conclusion that Herdson met his burden to prove minority shareholder

          oppression.

                        1.    Types of Wrongful Acts That May Prove Oppression

                Fortin next contends the court erred because Herdson alleged

          “generalized courses of conduct rather than identifying” specific interactions that

          were wrongful and/or contested. But Fortin again fails to provide any authority

          that suggests a plaintiff in a minority shareholder oppression claim must bring

          forth evidence of specific transactions rather than relying on wrongful “courses of

          conduct.” Fortin’s argument is directly contradicted by Scott, which relied on a

          statement by the Oregon Supreme Court that explained a single act breaching a

          fiduciary duty must be “‘extremely serious in nature’” in order to constitute

          oppressive conduct. Scott, 148 Wn.2d at 716 (quoting Baker, 264 Or. at 630). In

          contrast, a plaintiff relying on a “‘continuing course of oppressive conduct’” faces

          a lower bar of demonstrating the conduct results in “‘a disproportionate loss to

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          the minority or that those in control of the corporation are so incorrigible that they

          can no longer be trusted to manage it fairly.’”       Id. (internal quotation marks

          omitted). Thus, a course of conduct can properly serve as the basis for minority

          shareholder oppression.

                 Fortin next alleges Herdson did not prove illegal conduct. It argues that

          the findings “do not identify any actual illegal conduct and do not point with

          specificity to any act except possibly Defendants not listing Herdson . . . on

          XCar’s PPP loan.” Fortin contends that because Herdson identified no harm as a

          result of this arguably illegal act, it cannot serve as evidence of oppressive

          conduct.   RCW 23B.14.300(2)(b) permits dissolution of a corporation if the

          majority shareholders “have acted, are acting, or will act in a manner that is

          illegal, oppressive or fraudulent.” Here, the court found that Fortin and Enslen’s

          conduct was “oppressive, fraudulent, and possibly illegal.” This finding of fact is

          not challenged. The court also found that Fortin “intentionally misrepresented

          their [PPP] loan application which was done under penalty of perjury” “[b]y

          knowingly omitting information about Herdson’s ownership.” This finding is also

          not challenged. Unchallenged findings of fact are verities on appeal. Pierce v.

          Bill & Melinda Gates Foundation, 15 Wn. App. 2d 419, 429, 475 P.3d 1011

          (2020).

                 Under the plain language of the statute, a plaintiff can succeed on a

          minority shareholder oppression claim by demonstrating “illegal, oppressive, or

          fraudulent” conduct. RCW 23B.14.300(2)(b). “‘Or’ is most commonly used in the

          disjunctive and employed to indicate an alternative.” Black v. Nat’l Merit Ins. Co.,

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          154 Wn. App. 674, 688, 226 P.3d 175 (2010). Based on the plain language of

          the statute, a plaintiff may prove a minority shareholder oppression claim by

          demonstrating illegal conduct or oppressive conduct or fraudulent conduct. Here,

          the unchallenged findings of fact demonstrate that Fortin knowingly omitted

          information in a government loan application, made under penalty of perjury

          under 18 U.S.C. § 1001 and 15 U.S.C. § 645. This conclusion of law flows

          directly from the unchallenged findings.

                        2.     Immunity Under the Business Judgment Rule

                 Fortin next argues that, “The trial court erred by finding Defendants’ failed

          to justify every allocation of cost and expense across the group of companies,

          and by concluding Defendants’ trial testimony regarding financial statements

          were not sufficient.” It avers the court improperly shifted the burden to Fortin or,

          alternatively, that Fortin provided a reasonable explanation for its transactions

          and therefore the court’s findings to the contrary are unsupported.

                 Once a plaintiff meets their “burden to prove oppressive conduct by a

          preponderance of the evidence,” the burden then “‘shifts to the majority

          shareholder . . . to show there were legitimate business justifications for the

          conduct.’” Real Carriage Door, 17 Wn. App. 2d at 459 (quoting Scott, 148 Wn.2d

          at 709). The defendant can avoid liability by demonstrating “‘legitimate business

          justifications for the conduct,’” or that the “decision was reasonable and made in

          good faith.” Id. at 462 (quoting Scott, 148 Wn.2d at 709).

                 Here, Fortin alleges the trial court improperly shifted the burden, and

          required it to justify business decisions, but that is exactly what the law required

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          after the court determined that Herdson had met his burden to show oppressive

          conduct. After finding Herdson had demonstrated oppression, the court then

          analyzed whether Fortin was “entitled to immunity under the business judgment

          rule.”9 The court found Fortin had not “exercised good faith,” “proper care, skill,

          or diligence in the management or operation of XCar.” These findings were

          largely rooted in the court’s determinations that Fortin, Enslen, and Nicholson

          were not credible in their testimony. We do not disturb the trial court’s credibility

          determinations, and the record establishes that there was substantial evidence to

          support the factual findings in this regard. The trial court did not err with regard

          to its application of the business judgment rule and conclusion that Fortin was not

          entitled to immunity.

                  B.       Proof of Damages and Available Remedies

                  Fortin argues the court erred by finding minority shareholder oppression

          despite dismissing Herdson’s separate claim for breach of fiduciary duty based

          on Herdson’s failure to produce sufficient evidence as to damages.                             Fortin

          contends that damages are a necessary element of Herdson’s minority

          shareholder oppression claim because they are a necessary element of a breach

          of fiduciary duty claim.10 In reply, Fortin concedes that proving damages is not

          necessary in all minority shareholder oppression claims, but asserts that, in this

                  9 “Under the ‘business judgment rule,’ corporate management is immunized from liability

          in a corporate transaction where (1) the decision to undertake the transaction is within the power
          of the corporation and the authority of management, and (2) there is a reasonable basis to
          indicate that the transaction was made in good faith.” Scott, 148 Wn.2d at 709 (quoting Nursing
          Home Bldg. Corp. v. DeHart, 13 Wn. App. 489, 498, 535 P.2d 137 (1975)).
                   10 The elements of a claim for breach of fiduciary duty are: (1) duty, (2) breach, (3) injury,

          and (4) proximate cause. Miller v. U.S. Bank of Wash., N.A., 72 Wn. App. 416, 426, 865 P.2d
          536 (1994).

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          case, because the trial court’s basis for finding minority shareholder oppression

          was a breach of fiduciary duties, a finding of damages was required. It contends

          that Herdson failed to identify a transaction or expert opinion demonstrating harm

          to XCar’s profitability or to him as a shareholder.

                 Fortin overstates the extent to which the court’s finding, that it engaged in

          minority shareholder oppression, rests on a claim of breach of fiduciary duty.

          Fortin is correct that oppressive conduct constituting minority shareholder

          oppression “is closely related to the fiduciary duty of good faith and fair dealing”

          owed by majority shareholders to minority shareholders. Scott, 148 Wn.2d at

          711. However, a common law claim for breach of fiduciary duty is distinct from

          the statutory claim for minority shareholder oppression. The court appears to

          rely on the actions by Fortin that constitute a breach of fiduciary duty as evidence

          of oppressive conduct; this is proper under Scott. Id. at 716 (“‘[A] single act in

          breach of such a fiduciary duty may not constitute such oppressive conduct as to

          authorize the dissolution of a corporation unless extremely serious in nature.’”

          (Alteration in original) (internal quotation marks omitted) (quoting Baker, 264 Or.

          at 630)).

                 Fortin further avers that Herdson did not specify any amounts or charges

          to which he objected and which caused “calculable harm.”          It concedes that

          Herdson “objected to certain areas of alleged mismanagement, including

          accounting costs, service fees, and lost profits” but faults Herdson for not

          specifying amounts related to this alleged misconduct. Fortin cites no authority

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          to support the contention that Herdson had this specific burden at trial;11 in fact

          Fortin does not even allege that Herdson was required to do so.                        As the

          appellant, Fortin bears the burden to demonstrate the trial court erred and that

          the findings of fact are unsupported by substantial evidence. It fails to tie this

          allegation to any purported legal error or unsupported finding. As such, Fortin

          has failed to meet its burden as to this challenge.

                 Contrary to Fortin’s assertion at oral argument before this court, Herdson

          did seek an equitable remedy under the statute.12                This argument is further

          undercut by the plain language of Herdson’s complaint, particularly items 6-8 in

          his prayer for relief, that explicitly ask the following of the trial court:

                       6. For an injunction prohibiting any transfer of assets from
                 XCar to XCar Remarketing or any other third parties;
                       7. For an injunction requiring Defendants to return any assets
                 improperly taken from XCar;
                       8. For an order requiring either a buy-back of Mr. Herdson’s
                 shares in XCar at a fair value or dissolution of XCar pursuant to
                 RCW 23B.14.300.

          (Emphasis added.)        An injunction is an order to act (or refrain from acting).

          Garland v. Aleman Gonzalez, ___ U.S. ___, 142 S. Ct. 2057, 2063-64, 213 L.

          Ed. 2d 102 (2022). Each of these remedies in the prayer for relief is injunctive in

          nature. To put a finer point on it, item 8 expressly seeks judicial dissolution of

          XCar as an alternate remedy available to the court under the statute.

                 Our State Supreme Court was clear in Scott that “[d]issolution suits under

          Washington’s dissolution statute are fundamentally equitable in nature.”                   148

                 11 At oral argument, Fortin asserted that Interlake Porsche & Audi, Inc. v. Bucholz, 45

          Wn. App. 502, 728 P.2d 597 (1986) controls here and requires a plaintiff to make such a showing.
          Wash. Court of Appeals oral argument, supra, at 8 min., 4 sec.
                 12 Wash. Court of Appeals oral argument, supra, at 9 min., 47 sec.

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          Wn.2d at 716. Scott quoted from a summary of equitable remedies available in

          such suits, as set out in Baker, but qualified that it listed only those remedies

          “most relevant” to the facts of the case before it. 148 Wn.2d at 717 (quoting

          Baker, 264 Or. at 632-33).          The full list in Baker additionally includes “[t]he

          ordering of affirmative relief by the required declaration of a dividend or a

          reduction and distribution of capital,” and “entry of an order requiring the

          corporation or a majority of its stockholders to purchase the stock of the minority

          stockholders.” 264 Or. at 633. Herdson sought “an order requiring either a buy-

          back of Mr. Herdson’s shares in XCar at a fair value or dissolution of XCar

          pursuant to RCW 23B.14.300.”               Herdson presented expert testimony from

          certified public accountant (CPA) Laura Lee White who conducted a valuation of

          Herdson’s interest in XCar. She ultimately valued Herdson’s shares at $4.23

          million at the time of trial. The court further found that “Herdson has established

          a probable right in the XCar profits” that “have been taken by the Defendants,

          which has materially impaired Herdson’s rights to his portion of such profits.”

          This was sufficient evidence to support the relief requested.

                 Fortin provides no authority for its contention that utilizing the act of

          breach of a fiduciary duty as evidence of oppressive conduct imposes all

          elements of a common law fiduciary duty claim into the statutory claim of minority

          shareholder oppression.13         Further, Herdson met his burden to demonstrate

          entitlement to an equitable remedy under the statute based on his showing of

          minority shareholder oppression. As such, the court did not err.
                 13 “Where no authorities are cited in support of a proposition, the court is not required to

          search out authorities, but may assume that counsel, after diligent search, has found none.”
          DeHeer v. Seattle Post-Intelligencer, 60 Wn.2d 122, 126, 372 P.2d 193 (1962).

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          IV.     Post-Trial Order Appointing Special Fiscal Agent in Lieu of Receivership

                  Fortin filed an amended notice of appeal in order to include the trial court’s

          order that appointed special fiscal agents and a forensic auditor, asserting such

          action is contrary to law. It alleges the court is improperly permitting a “second

          bite at the apple” for Herdson to demonstrate damages after failing to do so

          during trial.     It also contends the trial court “will not permit Defendants to

          challenge any findings” from the forensic audit.14                   Finally, it argues Herdson

          cannot benefit from an equitable remedy under the unclean hands doctrine. 15

          This court reviews “the fashioning of equitable remedies for an abuse of

          discretion,” while “‘the question of whether equitable relief is appropriate is a

          question of law’” and therefore reviewed de novo.                       Borton & Sons, Inc. v.

          Burbank Props., LLC, 196 Wn.2d 199, 206, 471 P.3d 871 (2020) (quoting

          Niemann v. Vaughn Cmty. Church, 154 Wn.2d 365, 374, 113 P.3d 463 (2005)).

                  Here, the trial court appointed a receiver in the FFCL issued after the

          conclusion of trial. This is a remedy plainly permitted under Scott. 148 Wn.2d at

          717 (quoting Baker, 264 Or. at 632-33).                  However, when the court changed

          course,16 it abandoned the order appointing a receiver and instead appointed

                   14 Fortin also assigns error to the trial court’s later decision to appoint a special master to

          manage the receivership. This order is not designated in the Notice of Appeal at issue here and is
          the subject of the subsequent case before this court (No. 84800-3-I) that is pending a ruling on
          discretionary review. As such, we disregard Fortin’s numerous arguments about the order.
                   15 We likewise decline to reach Fortin’s argument regarding unclean hands. “Unclean

          hands” is an equitable defense. Crafts v. Pitts, 161 Wn.2d 16, 24 n.4, 162 P.3d 382 (2007).
          Fortin brought forward no evidence regarding unclean hands during trial, simply arguing once in
          closing that “Mr. Herdson does not have clean hands.” This is not sufficient to raise the defense,
          much less preserve the issue for appeal. Accordingly, the argument is waived.
                   16 This panel finds it noteworthy that while Fortin filed an amended notice of appeal to

          include this order, and assigned error in briefing, the challenged order was originally entered at
          Fortin’s request. At oral argument before the trial court, Fortin contended that appointing the

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          special fiscal agents “in lieu of appointing a traditional receiver.”                   The court

          lacked authority to do so. Once this court accepts review of a decision, a trial

          court may only modify that decision after receiving permission from this court.

          See RAP 7.2(e).

                   The record establishes that no party brought a motion seeking permission

          from this court. Fortin timely appealed the court’s FFCL on February 11, and a

          perfection letter was issued by the clerk of this court on February 18. The trial

          court issued an order appointing special fiscal agents on February 25, after

          review was accepted by this court. Where an order is entered in violation of RAP

          7.2, the order is voidable. See State v. Edwards, 23 Wn. App. 2d 118, 121-22,

          514 P.3d 692 (2022) (citing Tinsley v. Monson & Sons Cattle Co., 2 Wn. App.

          675, 677, 472 P.2d 546 (1970)).

                   While the court generally enjoys broad discretion as to the fashioning of

          equitable remedies, and the manner by which those remedies are identified, that

          discretion is not without procedural limitations when an appeal has been initiated

          and accepted.        Accordingly, we do not reach the propriety of the choice to

          appoint special fiscal agents and a financial auditor over a receiver, but rather

          conclude that the order before us is void based on the failure to comply with RAP

          7.2.17

                   Because the court lacked authority to enter the February 25 order, we

          reverse on this issue. We further note that our authority in this case terminates

          accounting firm Ernst & Young in lieu of a traditional receiver would allow the company to
          continue operating while still providing financial transparency.
                  17 This issue was not raised in the parties’ briefing. Prior to oral argument, they submitted

          supplemental briefing on the applicability of RAP 7.2 to the February 25 order at the direction of
          the panel.

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          upon issuance of the mandate. At that point, the trial court has the authority to

          order a remedy it deems equitable based on the record before it.

          V.     Trial Court Management of Proceedings and Due Process

                 As a final assignment of error, Fortin claims the trial court violated its

          constitutional right to due process by imposing a strict trial schedule limiting the

          number of witnesses. While it is true that parties to litigation are entitled to due

          process, it is also true that trial courts enjoy significant discretion as to the

          management of proceedings. In re Marriage of Zigler, 154 Wn. App. 803, 815,

          226 P.3d 202 (2010).

                 Fortin fails to provide any legal authority at all in the two paragraphs of its

          opening brief dedicated to this assignment of error.        It does not identify the

          appropriate constitutional test for us to apply, or suggest a remedy should we

          agree with this challenge.     Further, Fortin does not even argue, much less

          demonstrate, how its case was prejudiced by the judge’s management of

          proceedings, describe what evidence it was prevented from introducing, or note

          any offers of proof it made to the trial court. Ultimately, Fortin offers nothing

          more than “naked castings into the constitutional sea.” In re Rosier, 105 Wn.2d

          606, 616, 717 P.2d 1353 (1986) (quoting United States v Phillips, 433 F.2d 1364,

          1366 (8th Cir. 1970)). Without more, we decline to reach this issue.

          VI.    Conclusion

                 The court’s findings after trial are supported by substantial evidence, or

          are credibility determinations that will not be disturbed on appeal, and its

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          conclusions of law logically flow from the findings.               The court did not err by

          pursuing an equitable remedy short of judicial dissolution after concluding Fortin

          engaged in minority shareholder oppression.                   However, because it lacked

          authority to enter the February 25 order, we reverse on that sole issue.

                  Affirmed in part, reversed in part, and remanded.18

          WE CONCUR:

                  18 On March 7, 2023, Fortin filed a supplemental designation of Clerk’s Papers. On March

          8, Herdson filed a motion to strike it. The motion is rendered moot by the issuance of this opinion
          and is denied.
                  On February 27, 2023, Fortin moved to modify the January 26, 2023 ruling by a
          Commissioner of this court that denied its second motion for an emergency stay. Herdson filed
          an answer in opposition to the motion to modify on March 15. Fortin filed a reply on March 20.
          The motion to modify is denied.

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