Opinion
No. 28628-2-III.
December 16, 2010. UNPUBLISHED OPINION
Appeal from a judgment of the Superior Court for Benton County, No. 08-2-03089-7, Cameron Mitchell, J., entered November 16, 2009.
Affirmed by unpublished opinion per Brown, J., concurred in by Sweeney and Siddoway, JJ.
Stephen Anderson appeals the summary dismissal of his suit alleging a partnership with Kevin Hanlon, the sole shareholder in Hanlon Group, Inc. (HGI). Mr. Anderson contends material facts remain regarding his employment status and should have precluded summary judgment. Further he contends the trial court erred in striking late supplemental affidavits. We disagree with Mr. Anderson, and affirm.
FACTS
In February 2002, Kevin Hanlon and Darwin Perkins established a business, Hanlon-Perkins Group, Inc. (HPGI), and incorporated in the state of Washington. Mr. Hanlon and Mr. Perkins were each then issued 35,000 shares of stock in HPGI.
In November 2003, HPGI contracted with Puget Sound Energy (PSE), an electrical and gas utility company, to provide cost-estimating consulting and support services. The contract was extended in May 2004, December 2004, and June 2005.
Mr. Hanlon and Mr. Anderson were Prosser neighbors. Mr. Anderson is a licensed professional engineer with expertise in electrical engineering. The parties dispute their initial encounters regarding Mr. Anderson's eventual corporate relationship. In any event, the record contains a letter showing Mr. Anderson was employed at-will, a fact he disputes. Mr. Anderson assigned his professional engineering license to HGI on April 1, 2005. The certificate application signed by Mr. Anderson partly reads, "On April 1, 2005, I was named as the Electrical Engineer in responsible charge by a resolution of the Board of Directors, or company manager(s) of, Kevin Hanlon," and "I am an employee of said firm." Clerk's Papers (CP) at 67. The Washington Department of Licensing then issued a certificate to HPGI on April 21, 2005. This facilitated corporate ability to do more work for PSE because Mr. Hanlon is not a professional engineer.
On May 5, 2005, Mr. Perkins redeemed his shares in HPGI, leaving Mr. Hanlon as the sole director, officer, and shareholder of the corporation. HPGI then became Hanlon Group, Inc. Mr. Anderson then worked for HGI even though his 2005 W-2 wage and tax statement identifies his employer as HPGI. In November 2005, HGI amended its contract with PSE to include additional work on 2005 and 2006 projects. The contract heading correctly reflects HGI while the signature line identifies the contractor as HPGI. The contract extensions in 2006 and 2007 correctly identify HGI.
Mr. Anderson provided the electrical engineering services to PSE under the amended contract. Mr. Hanlon continued to provide cost-estimating consulting and support services under the contract. The gross receipts from the PSE contract were paid to HGI's business account. From these gross profits, all business expenses were paid. Mr. Anderson and Mr. Hanlon received hourly wages and per diem payments from the business account. Mr. Hanlon was the sole signatory on HGI bank accounts. Mr. Anderson was never issued any HGI stock and he did not receive HGI distributions. HGI's tax returns show Mr. Hanlon held 100 percent of the HGI stock and was the sole recipient of company profits. In 2007, HGI purchased a Prosser office building with Mr. Hanlon's personal guarantee. That year, PSE asked HGI to hire another professional engineer who could perform the same work as Mr. Anderson. HGI hired Charles Isley; he was compensated based upon an hourly rate plus per diem like Mr. Anderson.
In December 2007, Mr. Anderson and Mr. Isley approached Mr. Hanlon regarding partnership. Mr. Hanlon responded that Mr. Anderson and Mr. Isley were employees of HGI, his sole corporation. The relationship between the parties deteriorated. Mr. Anderson and Mr. Isley resigned from HGI on April 4, 2008. Mr. Anderson's resignation letter reads: "I am resigning my position with Hanlon Group, Inc. Thank you for the opportunity to work in a field of endeavor that I enjoy. However, I feel that it is time for me to move on." CP at 301. After the pair resigned, Mr. Hanlon learned they had formed a competing company in February 2008 and had at some point competed successfully for a PSE contract.
In November 2008, Mr. Anderson sued to dissociate from an alleged partnership with Mr. Hanlon and HGI. Mr. Hanlon and HGI successfully moved for summary judgment. The trial court struck Mr. Anderson's supplemental affidavits filed the day before hearing. The trial court denied reconsideration. Mr. Anderson appealed.
ANALYSIS A. Summary Judgment
The issue is whether the trial court erred in granting summary judgment dismissal of Mr. Anderson's partnership claims.
We review a trial court's grant of summary judgment de novo, engaging in the same inquiry as the trial court. Lybbert v. Grant County, 141 Wn.2d 29, 34, 1 P.3d 1124 (2000). Summary judgment is proper if genuine issues of material fact remain and the moving party is entitled to judgment as a matter of law. CR 56(c). "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). When considering a summary judgment motion, the court must construe all facts and reasonable inferences in the light most favorable to the nonmoving party. Lybbert, 141 Wn.2d at 34. The moving party bears the initial burden of showing the absence of an issue of material fact; once the defendant meets this initial showing, the inquiry shifts to the plaintiff. Young v. Key Pharm., Inc., 112 Wn.2d 216, 225, 770 P.2d 182 (1989). The plaintiff bears the burden of showing sufficient facts to establish the existence of every element essential to the case and upon which that party will bear the burden of proof at trial. Id. In making a responsive showing, the nonmoving party cannot rely on the allegations made in his pleadings. Id.
Under the Revised Uniform Partnership Act (RUPA), "[a]n association formed under a statute other than this chapter, a predecessor statute, or a comparable statute of another jurisdiction is not a partnership under this chapter." RCW 25.05.055(2). In Washington, corporations are formed under Title 23B RCW, the Washington Business Corporation Act. RCW 23B.02.030(1). The parties agree HGI is a valid Washington corporation, not a partnership. However, Mr. Anderson contends the alleged partnership was between him and Mr. Hanlon separately from HGI. He argues he formed a partnership with Mr. Hanlon also named HGI. Mr. Anderson relies on two cases to support this claim.
First, in Stipcich v. Marinovich, 13 Wn.2d 155, 124 P.2d 215 (1942), the parties contracted for Marinovich to sell Stipcich a one-half interest in his business. Marinovich owned a corporation mentioned in the contract. Id. at 156. But the contract did not specify the nature of the business relationship between Stipcich and Marinovich. Id. at 162. The appeal issue was whether or not Stipcich was purchasing shares in Marinovich's corporation or whether the two formed a partnership. The court held the relationship of the parties is not controlled by the name of the arrangement, but rather should be based upon the intent and conduct of the parties. Id. at 161.
Mr. Anderson argues the parties' intent and conduct establishes a partnership here. In McCormick v. Dunn Black, 140 Wn. App. 873, 167 P.3d 610 (2007), review denied, 163 Wn.2d 1042 (2008), the court held reliance on Stipcich would be misplaced because it predated the adoption of RUPA that provides an incorporated business cannot be a partnership. See RCW 25.05.055(2). Mr. Anderson's argument is similar to Mr. McCormick's rejected argument. McCormick, 140 Wn. App. at 883. Even so, the McCormick court noted the existence of Mr. Marinovich's separate corporation did not prevent the existence of a partnership between the parties. Id. (citing Stipcich, 13 Wn.2d at 161).
Second, Mr. Anderson relies on Simpson v. Thorslund, 151 Wn. App. 276, 211 P.3d 469 (2009). Mr. Thorslund had a construction company and Simpson was a longtime employee. Id. at 279. When the company became insolvent, Thorslund dissolved it and formed a new business with Simpson. Id. at 280. Simpson and Thorslund agreed to become equal owners of the new business, but the documents giving Simpson 50 percent ownership were never completed or filed. Id. The trial court found the pair formed a partnership when their attempt to form a corporation failed. Id. at 282. The Simpson court cited to the partnership definition in RCW 25.05.055(1), "the association of two or more persons to carry on as co-owners a business for profit forms a partnership, whether or not the persons intend to form a partnership." Id. at 852.
Mr. Anderson argues under Simpson he and Mr. Hanlon formed a partnership, intended or not. But the first part of RCW 25.05.055(1) reads: "Except as otherwise provided in subsection (2) of this section," and RCW 25.05.055(2) reads: "An association formed under a statute other than this chapter, a predecessor statute, or a comparable statute of another jurisdiction is not a partnership under this chapter." That section, Mr. Hanlon aptly responds, is precisely what prevents HGI from being a partnership.
The undisputed facts undermine Mr. Anderson's arguments. His 2005 W-2 lists HPGI as his employer. HGI succeeded HPGI in the PSE contracts and amendments with the same contract number. When Mr. Anderson left HGI, his resignation letter did not mention a partnership. Mr. Anderson's assertions do not create a genuine issue of material fact that HGI is also the name of a separate partnership formed between him and Mr. Hanlon. Accordingly, HGI cannot, as a matter of law, be a partnership since it is a corporation. RCW 25.05.055(2). It follows that reconsideration was properly denied.
B. Supplemental Pleadings
The issue is whether the trial court erred in striking Mr. Anderson's supplemental pleadings. Mr. Anderson contends the trial court should have granted a continuance rather than strike its supplemental affidavits.
The decision to admit or exclude untimely filed affidavits for consideration on summary judgment lies within the trial court's sound discretion. Garza v. McCain Foods, Inc., 124 Wn. App. 908, 917, 103 P.3d 848 (2004); O'Neill v. Farmers Ins. Co. of Wash., 124 Wn. App. 516, 521-22, 125 P.3d 134 (2004). Likewise, motions for reconsideration are addressed to the trial court's sound discretion. Perry v. Hamilton, 51 Wn. App. 936, 938, 756 P.2d 150 (1988).
Here, Mr. Anderson filed supplemental affidavits with the court on the day before the summary judgment hearing and faxed them to Mr. Hanlon's counsel at 4:58 p.m. that afternoon. Mr. Hanlon's counsel did not receive the affidavits until the next morning. The trial judge found it would not be fair to Mr. Hanlon to consider the information because he was not provided time to respond. It reasoned Mr. Anderson had no right to file further responsive pleadings. The court reaffirmed its decision to strike the affidavits on reconsideration. The supplemental materials were largely a reiteration of earlier argumentative assertions. Notably, Mr. Anderson failed to persuade the trial court he had a good reason why the materials were not earlier submitted or should be received in the interests of justice; the trial court had tenable grounds for refusing to allow the late materials. Coggle v. Snow, 56 Wn. App. 499, 507, 784 P.2d 554 (1990).
In sum, the trial court did not abuse its discretion in striking the pleadings and in denying reconsideration.
Affirmed.
A majority of the panel has determined this opinion will not be printed in the Washington Appellate Reports, but it will be filed for public record pursuant to RCW 2.06.040.
SWEENEY, J., SIDDOWAY, J., concur.