Court Opinion

ID: 9962483
Source: CourtListenerOpinion
Date Created: 2024-04-23 18:22:01.102646+00
Date Added: 2024-06-11T08:21:18.308114
License: Public Domain

Filed
                                                                                         Washington State
                                                                                         Court of Appeals
                                                                                          Division Two

                                                                                           April 23, 2024

      IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

                                         DIVISION II
    KAISER FOUNDATION HEALTH PLAN OF                                 No. 58280-5-II
    WASHINGTON, a Washington public benefit
    corporation; and KAISER FOUNDATION
    HEALTH PLAN OF WASHINGTON
    OPTIONS, INC., a Washington profit
    corporation,

                                Appellants,
                                                              UNPUBLISHED OPINION
          v.

    STATE OF WASHINGTON DEPARTMENT
    OF REVENUE,

                                Respondent.

         VELJACIC, A.C.J. — Kaiser Foundation Health Plan of Washington sought review in

Thurston County Superior Court of the Department of Revenue’s (DOR) denial of a refund for

real estate excise taxes (REET) it paid as a result of its acquisition of Group Health Cooperative

(GHC) and Group Health Options (GHO). The superior court granted summary judgment in the

DOR’s favor. Kaiser argues that former RCW 82.45.033(1) (2010),1 which addresses controlling

interests related to sales of real property, does not contemplate transfers involving nonprofit

corporations, and that the transaction did not amount to a “controlling interest” transfer subject to

the REET.

1
  The legislature amended RCW 82.45.033 in 2019. See LAWS OF 2019, ch. 424, § 4. Except
where otherwise indicated, references to RCW 82.45.033(1) refer to the statutory language in
effect at the time of Kaiser’s acquisition in 2017.
58280-5-II

       We reverse the summary judgment order in the DOR’s favor and hold that RCW

82.45.033(1) is ambiguous regarding the imposition of REET on when a controlling interest in a

nonprofit corporation is transferred, and that ambiguity must be resolved in Kaiser’s favor.2

                                             FACTS

I.     THE ACQUISITION

       In 2017, Kaiser acquired GHC and its subsidiaries, including GHO. Subsidiaries aside,

three nonprofit organizations were involved in the transaction: GHC, Kaiser, and Group Health

Community Foundation (GHCF). GHC was a health care services provider. Kaiser operated a

“nonprofit . . . health care plan.” Clerk’s Papers (CP) at 340. GHCF was a nonprofit corporation

addressing health-related needs. GHCF was formed in 2015 in contemplation of Kaiser acquiring

GHC.

       The acquisition was governed by the Acquisition Agreement (Agreement). Pursuant to the

Agreement, GHC would terminate its outstanding membership interests and Kaiser would become

the sole voting member. The Agreement also required Kaiser to pay GHCF the purchase price of

$1.8 billion, less a refund of dues returned to the former GHC voting members. Pursuant to the

Agreement, GHC changed its name to Kaiser Foundation Health Plan of Washington (KFHPWA)

and Kaiser change its name to Kaiser Foundation Health Plan of Washington (KFHPWA

Holdings), and Kaiser would pay all transfer taxes.

2
 Kaiser also argues that the acquisition was not a sale subject to REET because it was exempt
under RCW 82.45.010(3)(q). Because of our holding, we need not address this argument.

                                                2
58280-5-II

II.    PAYMENT OF REAL ESTATE EXCISE TAXES (REET)

       At the time of acquisition, GHC and GHO3 owned real property in Washington. In 2017,

GHC (nka KFHPWA) and GHO (nka Kaiser Foundation Health Plan of Washington Options, Inc.

(KFHPWAO)) filed REET returns with the DOR reporting a change in controlling interest in GHC

from the voting membership of GHC to Kaiser. The forms listed the Washington real property

held by GHC or GHO at the time of transfer. As required in order to challenge a tax, Kaiser

reported and paid $6,605,516.27 in REET on the GHC property and $73,187.55 on the GHO

property, for a total of $6,678,703.82.

III.   PROCEDURAL HISTORY

       After Kaiser paid REET, it petitioned the DOR for a refund. The DOR denied Kaiser’s

refund request, and Kaiser made an administrative appeal, in which the DOR affirmed its decision.

       Kaiser then brought this action in Thurston County Superior Court under RCW 82.32.180,

alleging that the acquisition was not subject to REET. Kaiser and the DOR brought cross-motions

for summary judgment. The superior court granted the DOR’s motion.

       Kaiser appeals the summary judgment order.

                                          ANALYSIS

I.     STANDARD OF REVIEW

       We review the superior court’s order on a motion for summary judgment de novo.

Bangerter v. Hat Island Cmty. Ass’n, 199 Wn.2d 183, 188, 504 P.3d 813 (2022); Wilkinson v.

Chiwawa Cmtys. Ass’n, 180 Wn.2d 241, 249, 327 P.3d 614 (2014). A superior court may grant

summary judgment if the evidence, viewed in the light most favorable to the nonmoving party,

3
 GHO nka KFHPWAO was not a party to the Agreement. It is a Washington for-profit corporation
wholly owned by GHC (nka KFHPWA) that owned real property in Washington. CP 226.

                                               3
58280-5-II

establishes that there is no genuine issue of any material fact and that the moving party is entitled

to judgment as a matter of law. CR 56(c); Bangerter, 199 Wn.2d at 188; Wilkinson, 180 Wn.2d at

249. A material fact is one that affects the outcome of the litigation. Owen v. Burlington N. &

Santa Fe R.R. Co., 153 Wn.2d 780, 789, 108 P.3d 1220 (2005).

       Here, the material facts are not in dispute. Rather, the dispute in this case involves the

application of statutes to the facts, which is a question of law.

II.    APPLYING REET TO NONPROFIT ORGANIZATIONS

       Kaiser argues that it owes no REET in relation to the acquisition because the controlling

statute (RCW 82.45.033(1)(a) & (b)) does not contemplate the imposition of REET for the transfer

of a controlling interest in nonprofit organizations. We conclude that RCW 82.45.033(1) is

ambiguous, and that ambiguity must be resolved in Kaiser’s favor.

       A.       Statutory Interpretation

       We review questions of statutory interpretation de novo. Ekelmann v. City of Poulsbo, 22

Wn. App. 2d 798, 807, 513 P.3d 840 (2022). Our fundamental objective in construing a statute is

to ascertain and carry out the legislature’s intent. Id. In making this determination, “[w]e consider

the language of the statute, the context of the statute, related statutes, and the statutory scheme as

a whole.” Id.

       If the statute’s plain language is unambiguous, no further interpretation is necessary.

Dzaman v. Gowman, 18 Wn. App. 2d 469, 479, 491 P.3d 1012 (2021). However, a statute is

ambiguous if the language is subject to more than one reasonable interpretation. Id. We can

attempt to resolve an ambiguity by considering other sources that may show legislative intent,

including principles of statutory construction, legislative history, and relevant case law. Id.

                                                  4
58280-5-II

       If there is any doubt as to the meaning of a taxation statute, the statute must be construed

most strongly against the DOR and in the taxpayer’s favor. Agrilink Foods, Inc. v. Dep’t of

Revenue, 153 Wn.2d 392, 396-97, 103 P.3d 1226 (2005). Conversely, tax exemptions are

construed strictly against the taxpayer. Green Collar Club v. Dep’t of Revenue, 3 Wn. App. 2d 82,

94, 413 P.3d 1083 (2018).

       B.      REAL ESTATE EXCISE TAX (REET)

       The REET is due on each sale of real property in Washington. RCW 82.45.060. The

definition of “sale” under the REET statutory scheme includes “the transfer or acquisition . . . of a

controlling interest in any entity with an interest in real property” located in Washington. RCW

82.45.010(2)(a). REET is calculated based on the “selling price” of the real property, meaning

“the true and fair value of the property conveyed.” RCW 82.45.030(1). If what is transferred is a

controlling interest, the selling price is “the true and fair value of the real property owned by the

entity and located in this state.” RCW 82.45.030(2).

       RCW 82.45.033(1) provides the definition of “controlling interest”:

               (1) As used in this chapter, the term “controlling interest” has the following
       meaning:
               (a) In the case of a corporation, either fifty percent or more of the total
       combined voting power of all classes of stock of the corporation entitled to vote, or
       fifty percent of the capital, profits, or beneficial interest in the voting stock of the
       corporation; and
               (b) In the case of any other corporation, or a partnership, association, trust,
       or other entity, fifty percent or more of the capital, profits, or beneficial interest in
       such corporation, partnership, association, trust, or other entity.

       C.      RCW 82.45.033(1) is Ambiguous Regarding Nonprofit Corporations

       Kaiser argues that RCW 82.45.033(1)(a) unambiguously does not contemplate a nonprofit

corporation. The DOR argues that RCW 82.45.033(1)(b) unambiguously includes a nonprofit

                                                  5
58280-5-II

corporation. We conclude that the language in RCW 82.45.033(1) is ambiguous regarding

nonprofit corporations.

       Kaiser’s interpretation of RCW 82.45.033(1) is that subsection (a) expressly applies to

corporations and therefore subsection (b) applies to entities other than corporations. Kaiser points

out that the definition given for “controlling interest” in corporations involves stock and that the

Washington Nonprofit Corporation Act forbids a nonprofit corporation from issuing shares of

stock. See former RCW 24.03.030(1) (1986) (“A corporation subject to this chapter: (1) Shall not

have or issue shares of stock.”). Based on its plain language, Kaiser asserts, subsection (a) can

only be used to determine whether a controlling interest has been conveyed when dealing with a

corporation with voting stock. A nonprofit corporation is not contemplated in this subsection

because a nonprofit corporation cannot issue stock. Former RCW 24.03.030(1).

       Kaiser emphasizes that subsection (b) necessarily does not apply to corporations. Because

subsection (a) addresses corporations, the term “other entity” in subsection (b) must apply to

entities other than corporations.

       This is a reasonable interpretation. Subsection (a) expressly applies “[i]n the case of a

corporation.” This language suggests an intent by the legislature that subsection (a) will govern

the transfer of a controlling interest in any corporation.

       The DOR relies on RCW 82.45.010(2)(a), which states that a sale includes the transfer of

a controlling interest in “any entity” with an interest in property. “Any entity” would include a

nonprofit corporation. Therefore, the DOR asserts that the phrase “other entity” in subsection (b)

serves as a catchall, applying to any type of entity other than a corporation with voting stock. This

would include a nonprofit corporation.

                                                  6
58280-5-II

        This, too, is a reasonable interpretation. RCW82.45.010(2)(a) expressly refers to the

transfer of a controlling interest in any entity. This language suggests an intent by the legislature

to tax the transfer of a controlling interest in all entities, including nonprofit corporations.

        However, a statute is ambiguous if the language is subject to more than one reasonable

interpretation. Gowman, 18 Wn. App. 2d at 479. To resolve this ambiguity, we can consider

other sources that may show legislative intent. Id. Principles of statutory construction are not

dispositive here, and there is no pertinent legislative history or cases interpreting RCW

82.45.033(1).

        However, subsequent amendments to RCW 82.45.033(1) are instructive. In 2019 the

legislature amended the statutory definition of the term “controlling interest” as follows (changes

emphasized):

                (1) As used in this chapter, the term “controlling interest” has the following
        meaning:
                (a) In the case of a profit corporation, either fifty percent or more of the total
        combined voting power of all classes of stock of the corporation entitled to vote, or
        fifty percent of the capital, profits, or beneficial interest in the voting stock of the
        corporation; and
                (b) In the case of any other corporation, or a partnership, association, trust,
        or other entity, fifty percent or more of the capital, profits, or beneficial interest in
        such corporation, partnership, association, trust, or other entity.

LAWS OF 2019, ch. 424, § 4. The legislature’s amendments expressly stated that subsection (a)

applies only to for-profit corporations and subsection (b) applies to all other corporations, which

would include nonprofit corporations. In other words, the legislature by amendment implemented

the interpretation the DOR argues in this case.

        A similar situation occurred in Vita Food Prods., Inc. v. State, 91 Wn.2d 132, 587 P.2d 535

(1978). In Vita Food Products, the taxation statute at issue was also subsequently amended to

match the interpretation the state urged the court to adopt. Id. at 134. The court in that case

                                                    7
58280-5-II

declared that the state could not have it both ways; it could not contend that the prior statute

“imposed a tax and then argue that the amendment . . . was meaningless. That is inconsistent.”

Id. The court stated,

        The presumption is that every amendment is made to effect some material purpose.
        An amendment of an unambiguous statute clearly indicates that the change is
        material. The State cannot have it both ways. It contends that the prior statute was
        clear and imposed a tax and then argues that the amendment, made at its request,
        was meaningless. That is inconsistent.

Id. (citations omitted).

        This case is different because we have concluded that RCW 82.45.033(1) is ambiguous

while the statute in Vita Food Products was unambiguous. But the principle is the same. If RCW

82.45.033(1) was unambiguous as the DOR claims, there would have been no need for the 2019

amendments. And if we were to adopt the DOR’s interpretation of the pre-2019 statute, the

amendments would be meaningless.

        Ultimately, we conclude the meaning of this taxation statute is unclear.4 Therefore, the

statute must be construed most strongly against the DOR and in Kaiser’s favor. See Agrilink

Foods, 153 Wn.2d at 396-97. We adopt Kaiser’s interpretation of former RCW 82.45.033(1), and

hold that the REET cannot be imposed on the transfer of a controlling interest in a nonprofit

corporation.

                                         CONCLUSION

        We reverse the superior court’s grant of summary judgment in the DOR’s favor and remand

for further proceedings consistent with this opinion.

4
 The DOR argues that RCW 82.45.033(1) represents a tax exemption rather that a taxation
imposition. But RCW 82.45.010(2)(a), to which RCW 82.45.033(1) applies, clearly is a tax
imposition statute.

                                                 8
58280-5-II

        A majority of the panel having determined that this opinion will not be printed in the

Washington Appellate Reports, but will be filed for public record in accordance with RCW 2.06.040,

it is so ordered.

                                                            Veljacic, A.C.J.

I concur:

        Maxa, J.

                                                9
58280-5-II

       LEE, J. (dissenting) — I disagree with the majority that RCW 82.45.033(1)5 is ambiguous

as it relates to nonprofit corporations. RCW 82.45.033(1)(a) plainly applies to corporations that

issue stock and RCW 82.45.033(1)(b) plainly captures all other entities, including nonprofit

corporations like Kaiser, with its catchall phrase “or other entity.” For this reason, I dissent.

A.     PRINCIPLES OF STATUTORY CONSTRUCTION

       We review issues of statutory interpretation de novo. Dzaman v. Gowman, 18 Wn. App.

2d 469, 478, 491 P.3d 1012 (2021). Our goal in interpreting a statute is to determine and give

effect to the legislature’s intent. Associated Gen. Contractors of Wash. v. State, ___ Wn.3d ___,

544 P.3d 486, 492 (2024). We derive legislative intent solely from the plain language of the

statute, considering the text of the provision, the context of the statute, related provisions,

amendments, and the statutory scheme as a whole. Id.

       In interpreting the legislature’s intent, we avoid “strained, unlikely, or unrealistic

interpretations.” First Student, Inc. v. Dep’t of Revenue, 194 Wn.2d 707, 711, 451 P.3d 1094

(2019). A statute is ambiguous if it is susceptible to two or more reasonable interpretations;

however, “‘a statute is not ambiguous merely because different interpretations are conceivable.’”

Aventis Pharms., Inc. v. Dep’t of Revenue, 5 Wn. App. 2d 637, 642, 428 P.3d 389 (2018) (internal

quotation marks omitted) (quoting HomeStreet, Inc. v. Dep’t of Revenue, 166 Wn.2d 444, 452, 210

P.3d 297 (2009)).

       Statutory amendments are presumed to “effect some material purpose,” and generally,

“amendment of an unambiguous statute clearly indicates that the change is material.” Vita Food

Prods., Inc. v. State, 91 Wn.2d 132, 134, 587 P.2d 535 (1978). However, this presumption may

5
  The legislature amended RCW 82.45.033 in 2019. See LAWS OF 2019, ch. 424, § 4. As in the
majority opinion, except where otherwise indicated, references to RCW 82.45.033(1) refer to the
statutory language in effect at the time of Kaiser’s acquisition of GHC in 2017.

                                                 10
58280-5-II

be rebutted “by clear evidence that the legislature intended an interpretive clarification.” Roe v.

TeleTech Customer Care Mgmt. (Colorado) LLC, 171 Wn.2d 736, 751, 257 P.3d 586 (2011). “The

statements of individual lawmakers, especially bill sponsors, can . . . be instructive in discerning

the reasons for changes in legislation.” Headspace Int’l LLC v. Podworks Corp., 5 Wn. App. 2d

883, 896, 428 P.3d 1260 (2018), review denied, 192 Wn.2d 1027 (2019).

B.      REAL ESTATE EXCISE TAX (REET)

        1.      RCW 82.45.033(1) is Unambiguous and Applies to Nonprofit Corporations

        Washington imposes a tax, known as the real estate excise tax (REET), on each sale of real

property. RCW 82.45.060(1).6 A taxable “sale” includes the “transfer or acquisition . . . of a

controlling interest in any entity with an interest in real property located in this state for a valuable

consideration.” RCW 82.45.010(2)(a)7 (emphasis added). A seller is defined as “any individual,

receiver, assignee, . . . corporation, association, society, or any group of individuals acting as a

unit, whether mutual, cooperative, fraternal, nonprofit or otherwise; but it shall not include the

United States or the state of Washington.” RCW 82.45.020 (emphasis added).

        In the statutory provision at issue here, “controlling interest” is defined as:

        (1) As used in this chapter, the term “controlling interest” has the following
        meaning:

                (a) In the case of a corporation, either fifty percent or more of the total
        combined voting power of all classes of stock of the corporation entitled to vote, or
        fifty percent of the capital, profits, or beneficial interest in the voting stock of the
        corporation; and

6
 RCW 82.45.060 was amended in 2019, but there were no substantive changes affecting this
opinion, so we cite to the current statute.
7
  RCW 82.45.010(2)(a) was amended in 2018, 2019, and 2022, but there were no substantive
changes affecting this opinion, so we cite to the current statute.

                                                   11
58280-5-II

              (b) In the case of a partnership, association, trust, or other entity, fifty
       percent or more of the capital, profits, or beneficial interest in such partnership,
       association, trust, or other entity.

RCW 82.45.033(1) (emphasis added).

       Kaiser argues that RCW 82.45.033(1)(a) does not apply to nonprofit corporations. The

majority appears to agree that the plain language of subsection (a) clearly applies to corporations

with voting stock. See former RCW 24.03.030(1) (1986). On this, I agree. The plain language of

RCW 82.45.033(1)(a) discusses a corporation in relation to its voting stock; therefore, RCW

82.45.033(1)(a) plainly captures only corporations that issue stock and is not applicable to

nonprofit corporations.

       However, I disagree with the majority that subsection (a) can be reasonably interpreted as

the legislature intending to include in subsection (a) the transfer of a controlling interest in “any

corporation.” Majority at 6 (emphasis in original). Interpreting RCW 82.45.033(1)(a) as applying

to “any corporation” requires changing the statutory language from “a corporation” to “any

corporation.” We cannot do that under the guise of statutory construction. McColl v. Anderson,

6 Wn. App. 2d 88, 91, 429 P.3d 1113 (2018); see also Univ. of Wash. v. City of Seattle, 188 Wn.2d

823, 832, 399 P.3d 519 (2017) (when the language is clear, we must “‘assume the Legislature

meant exactly what it said and apply the statute as written.’” (internal quotation marks omitted)

(quoting Town of Woodway v. Snohomish County, 180 Wn.2d 165, 174, 322 P.3d 1219 (2014))).

       The plain language of RCW 82.45.033(1)(a) applies to corporations that issue stock; the

statute is silent as to other types of corporations and entities.      Instead, entities other than

corporations that issue stock are clearly captured under RCW 82.45.033(1)(b) by the statute’s

inclusion of the catchall phrase “or other entity.”

                                                 12
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       Kaiser argues that RCW 82.45.033(1) is ambiguous because if subsection (1)(b)’s

reference to “or other entity” includes nonprofit corporations, any reference to “corporation” in

subsection (a) is superfluous. The Department of Revenue (DOR) argues that RCW 82.45.033(1)

is ambiguous because neither subsection (a) nor (b) expressly mention nonprofit corporations and

the superior court correctly interpreted subsection (b) to include nonprofit corporations after

conducting statutory analysis.

       The majority agrees with the parties that RCW 82.45.033(1) is ambiguous because both

parties have “reasonable” interpretations. Majority at 6-7. I depart from the majority on this point.

Instead, I would hold that RCW 82.45.033(1) is not ambiguous. RCW 82.45.033(1)(a) applies to

stock corporations and RCW 82.45.033(1)(b) applies to all other types of entities. The plain

language of RCW 82.45.033(1)(b) unambiguously captures all other entities, including nonprofit

corporations, with the catchall phrase “or other entity.”

       The goal of statutory interpretation is to give effect to legislative intent, and we derive that

intent by considering the plain language of the statute in addition to the context of the statute,

related provisions, and the statutory scheme as a whole. Associated Gen. Contractors, 544 P.3d

at 492. In other words, RCW 82.45.033(1) cannot be read in a vacuum.

       Looking to the broader statutory scheme, Washington imposes REET on each sale of real

property. RCW 82.45.060(1). A sale is explicitly defined as the transfer or acquisition of a

controlling interest in any entity with an interest in real property. RCW 82.45.010(2)(a). “Any

entity” would include nonprofit corporations. Indeed, the statute defining “seller” expressly

includes nonprofits. RCW 82.45.020.

       To say, as the majority does, that the language of RCW 82.45.033(1) “suggests an intent

by the legislature that subsection (a) will govern the transfer of a controlling interest in any

                                                 13
58280-5-II

corporation,” thereby implicitly excluding nonprofit corporations that have no voting stock,

changes the plain language in subsection (a), ignores the phrase “or other entity” in subsection (b),

and makes little sense in light of the plain language of the statute, context of the statute, related

provisions, and the statutory scheme as a whole. Majority at 6 (emphasis in original). In

interpreting the legislature’s intent, we avoid “strained, unlikely, or unrealistic interpretations.”

First Student, 194 Wn.2d at 711.

       Because the majority’s interpretation of RCW 82.45.033(1) changes the language in

subsection (a), and is strained and unreasonable in light of the context of the statute, related

statutes, and the statutory scheme as a whole, I cannot agree with the majority that RCW

82.45.033(1) is ambiguous. Instead, I would hold that RCW 82.45.033(1) is unambiguous, and

RCW 82.45.033(1)(b) is applicable to the transfer of a controlling interest in nonprofit corporations

such as Kaiser.

       2.      2019 Amendments

       The majority points to subsequent amendments of RCW 82.45.033(1) as indicative of the

statute’s ambiguity. In 2019, the legislature amended the definition of controlling interest:

       (1) As used in this chapter, the term “controlling interest” has the following
       meaning:

               (a) In the case of a profit corporation, either fifty percent or more of the total
       combined voting power of all classes of stock of the corporation entitled to vote, or
       fifty percent of the capital, profits, or beneficial interest in the voting stock of the
       corporation; and

               (b) In the case of any other corporation, or a partnership, association, trust,
       or other entity, fifty percent or more of the capital, profits, or beneficial interest in
       such corporation, partnership, association, trust, or other entity.

LAWS OF 2019, ch. 424, § 4 (amendments underlined).

                                                  14
58280-5-II

       As the majority notes, the amendments clarify that subsection (a) applies only to profit

corporations and subsection (b) captures all other corporations, including nonprofit corporations.

However, the majority then cites to Vita Food Products for the argument that if “RCW

82.45.033(1) was unambiguous as the DOR claims, there would have been no need for the 2019

amendments.” Majority at 8. Further, the majority asserts, if we adopt the DOR’s interpretation

of the pre-2019 statute, the amendments would be meaningless. I disagree.

       The majority prematurely halts its analysis and assumes that RCW 82.45.033(1) is

ambiguous by the mere existence of the 2019 amendments. The majority fails to assess whether

the legislature intended an interpretative clarification before cursorily concluding that if we

adopted the DOR’s interpretation of the pre-2019 statute, the amendments would have been

meaningless.

       Generally, statutory amendments are presumed to effect some material purpose and “[a]n

amendment of an unambiguous statute clearly indicates that the change is material.” Vita Food

Prods., 91 Wn.2d at 134. But, this presumption is rebuttable “by clear evidence that the legislature

intended an interpretive clarification.” Roe, 171 Wn.2d at 751. Here, we have clear evidence that

the legislature intended an interpretative clarification.

       Representations by individual lawmakers can “be instructive in discerning the reasons for

changes in legislation.” Headspace Int’l, 5 Wn. App. 2d at 896. A senate bill report regarding the

amendments to RCW 82.45.033(1) clarified that “[t]he definition of ‘controlling interest’ applies

to any corporation,” and under a section in the report titled, “Effect of Changes Made,” stated that

the amendments “[c]larifie[d] [that] the definition of ‘controlling interest’ applie[d] to any

corporation.” S.B. REP. ON S.B. 5998, 66th Leg., Reg. Sess. (Wash. 2019) (emphasis added).

                                                  15
58280-5-II

        Kaiser urged, and the majority agreed, that this senate bill report should be disregarded

because the final bill report removed any reference to the “‘clarification’” as it pertained to

“controlling interest.” See Reply Br. of Appellant at 32. However, in comparing the original bill

report with the final bill report, it is evident that the final bill report simply did not reproduce the

“effects” section from the original report. See FINAL. B. REP. ON ENGROSSED SUBSTITUTE S.B.

5998, 66th Leg., Reg. Sess. (Wash. 2020). Thus, none of the “effects” of the amendments, not just

references to “clarification,” were listed.      Indeed, the purported removal of references to

“clarification” does not appear so much to be a specific or deliberate removal rather than part of a

wholesale cut from the final bill report for the sake of brevity. Therefore, Kaiser’s argument is

unpersuasive, and I would hold that there is clear evidence the 2019 amendments were an

interpretative clarification.

                                           CONCLUSION

        For the reasons stated above, I dissent from the majority and would hold that RCW

82.45.033(1) is unambiguous and that RCW 82.45.033(1)(b) is applicable to the transfer of a

controlling interest in nonprofit corporations such as Kaiser.

                                                       Lee, J.

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