Opinion
42627-7-II
01-29-2013
COLUMBIA STATE BANK, a Washington banking corporation, Respondent, v. TOM C. GIRARD and DEBORAH L. MONTALVO, individually and as husband and wife, Appellants, ELECTRONIC SERVICE PROVIDER, INC., a Washington corporation, Defendant.
UNPUBLISHED OPINION
Hunt, J.
Tom C. Girard and Deborah L. Montalvo appeal the superior court's grant of summary judgment to Columbia State Bank in a breach of guaranty proceeding following their company, Electronic Service Provider, Inc.'s (ESP), default on a $1,000,000 Small Business Administration loan. Girard and Montalvo argue that the trial court erred (1) in determining that a choice of venue clause in a commercial security agreement, which they signed as ESP's officers, did not require the Bank to file its claims in King County; and (2) in denying their motion to strike an affidavit filed with the Bank's motion for summary judgment because the affidavit was not properly supported. We affirm.
ESP, the company, is not a party to this appeal.
FACTS
I. Loan Agreements; Breach
ESP is a Washington corporation located in King County. ESP's president Tom C. Girard and vice president Deborah L. Montalvo reside in Pierce County. In 2005, ESP received a $1,000,000 Small Business Administration loan secured by a promissory note held by Columbia State Bank. Girard and Montalvo signed the promissory note in their corporate capacities.
Although the note does not contain a choice of venue clause, the Corporate Security Agreement (Agreement) securing the note with ESP's assets contains the following venue clause:
Choice of Venue. If there is a lawsuit, Grantor [ESP] agrees upon Lender's [the Bank's] request to submit to the jurisdiction of the courts of KING County, State of Washington.
Clerk's Papers (CP) at 33 (second emphasis added). Girard and Montalvo signed the Agreement in their corporate capacities.
In addition, Girard and Montalvo each signed commercial loan guaranties in their individual capacities. These guaranties did not include choice of venue clauses. When ESP defaulted on the loan, Girard and Montalvo failed to pay on their guaranties.
II. Procedure
The Bank brought suit in Pierce County, suing for replevin of collateral under the Agreement, seeking judgment against ESP for breach of the promissory note; and suing Girard and Montalvo, in their individual capacities, for failure to pay on the guaranties. In their answer, ESP, Girard, and Montalvo (collectively, Defendants) objected to the Pierce County venue. The Bank moved for summary judgment.
Defendants moved to dismiss, arguing that venue in Pierce County was improper under the Agreement's choice of venue clause. Defendants asserted that the Agreement's venue clause specifying King County was enforceable because the Bank had not shown that enforcing this clause would be "unreasonable and unjust." CP at 59. The Bank responded that (1) venue in Pierce County was proper under RCW 4.12.025(1) because at least one of the defendants resided in Pierce County; (2) the choice of venue clause language allowed the Bank to request venue in King County if it so chose; and (3) even if the choice of venue clause applied, it would be unreasonable to enforce the clause because Girard and Montalvo lived in Pierce County and the Bank had already moved for summary judgment.
RCW 4.12.025(1) provides in part, "An action may be brought in any county in which the defendant resides, or, if there be more than one defendant, where some one of the defendants resides at the time of the commencement of the action."
Defendants replied that (1) the venue clause language established that the parties had agreed that any suit would be brought in King County; (2) the clause was, at best, ambiguous and the superior court should therefore construe the clause in their favor; and (3) RCW 4.12.080required the trial court to recognize the choice of venue clause, regardless of RCW 4.12.030's requirements for changing venue. The superior court (1) concluded that the "upon Lender's request" language in the Agreement meant that the choice of venue clause was triggered only if the Bank first requested the King County venue, (2) denied Defendants' motion to change venue, and (3) continued the hearing on the Bank's motion for summary judgment to allow for discovery. CP at 33.
RCW 4.12.080 provides: "Notwithstanding the provisions of RCW 4.12.030 all the parties to the action by stipulation in writing or by consent in open court entered in the records may agree that the place of trial be changed to any county of the state, and thereupon the court must order the change agreed upon."
RCW 4.12.030 provides:
The court may, on motion, in the following cases, change the place of trial when it appears by affidavit, or other satisfactory proof:
(1) That the county designated in the complaint is not the proper county; or,
(2) That there is reason to believe that an impartial trial cannot be had therein; or,
(3) That the convenience of witnesses or the ends of justice would be forwarded by the change; or,
(4) That from any cause the judge is disqualified; which disqualification exists in either of the following cases: In an action or proceeding to which he or she is a party, or in which he or she is interested; when he or she is related to either party by consanguinity or affinity, within the third degree; when he or she has been of counsel for either party in the action or proceeding.The legislature amended this statute in 2011 to insert gender neutral language. Laws of 2011, ch. 336, § 79. Because this amendment was not substantive, we cite the current version of the statute.
In support of its summary judgment motion, the Bank included an affidavit from Alana Rouff, the Bank's vice president of "Special Credits, " establishing the amount owed on the note. CP at 17. Rouff's affidavit, signed March 16, 2011, stated:
. . . With the aid of Plaintiff's computer software and records, I have determined Plaintiff was owed $609,621.20 under the Note as of March 14, 2011, exclusive of the attorney's fees and costs incurred by Plaintiff in connection with this case. The aforesaid sum is comprised of $590,800.50 in principal, $7,919.16 in accrued interest, $10,601.54 in late charges, and a $300.00 appraisal fee.CP at 18 (first emphasis added).
In June 2011, the Bank responded to Defendants' interrogatories and requests for production by providing them with "a loan transaction history concerning the subject loan" and a copy of its "loan file." CP at 131, 133. A printed "[l]oan [i]nquiry" indicated that as of June 7, 2011, the loan balance was $590,800.50, the interest due was $14,453.27, and the charges/fees due were $18,743.45, for a "Payoff Amount" of $624,075.22. CP at 139. The discovery materials also included an itemized statement of the account, showing that the outstanding loan balance had been $590,800.50 since December 11, 2009.
These amounts appear to differ from the amounts stated in Rouff's affidavit because of additional interest, charges, and fees accrued between March 21 and June 7, 2011.
In an August 12 declaration opposing the Bank's summary judgment motion, Girard argued that there were existing factual issues because the Bank had not included with its motion any documents supporting Rouff's affidavit. Defendants also moved to strike Rouff's "testimony, " arguing that it was inadmissible hearsay because Rouff did not provide any documentation to support her affidavit's assertions. CP at 111. In a second declaration supporting the Bank's summary judgment reply, Rouff attached the documents the Bank had provided to Defendants during discovery. The superior court denied Defendants' motion to strike.
The superior court granted the Bank's summary judgment motion, awarding the Bank $590,800.50 in principal, prejudgment interest, attorney fees, costs, and late fees, for a total of $625,430.31. It also awarded the Bank possession of the property subject to the Agreement.
ESP does not join this appeal.
ANALYSIS
I. Venue
Girard and Montalvo first argue that the superior court erred when it denied Defendants' motion to dismiss for improper venue. They argue that (1) the Agreement's choice of venue clause stated that the parties had agreed to venue in King County and that venue was not dependent on the Bank's later choosing to file its action in King County; (2) the Bank failed to show that the choice of venue clause should not be enforced; and (3) the superior court should have honored the choice of venue clause specifying King County, even though the Pierce County venue was otherwise proper.
Before addressing these arguments, however, we must first determine (regardless of whether the Agreement's venue selection clause required the Bank to file in King County) if the superior court was obligated to enforce the choice of venue clause automatically, even though the clause did not, on its face, apply to Girard and Montalvo in their individual capacities or to the guaranties they signed. We conclude that the trial court had no such obligation.
A. Standard of Review
Choice of venue lies in the first instance with the plaintiff. Baker v. Hilton, 64 Wn.2d 964, 965, 395 P.2d 486 (1964). If the defendant seeks to change venue, the matter generally rests within the sound discretion of the trial court. Baker, 64 Wn.2d at 965; Corbin v. Madison, 12 Wn.App. 318, 322, 529 P.2d 1145(1974), review denied, 85 Wn.2d 1005 (1975). We review a trial court's venue decision for abuse of discretion. Baker, 64 Wn.2d at 965; see also Corbin, 12 Wn.App. at 322. We find no such abuse here.
B. Lack of Agreement
The Bank argues that the superior court was not required to enforce the choice of venue clause automatically because the agreement was between some, but not all, of the parties. The Bank cites American Mobile Homes of Washington, Inc. v. Seattle-First National Bank, 115 Wn.2d 307, 796 P.2d 1276 (1990), and Oltman v. Holland American Line USA, Inc., 163 Wn.2d 236, 178 P.3d 981 (2008). Agreeing, we affirm the superior court's venue ruling.
Regardless of the ground on which the superior court decided the motion, we may affirm on any ground the record supports. State v. Costich, 152 Wn.2d 463, 477, 98 P.3d 795 (2004) (citing In re Marriage of Rideout, 150 Wn.2d 337, 358, 77 P.3d 1174 (2003)).
"A forum selection clause is not binding on a third party who did not agree to the contract in which the clause is found." Oltman, 163 Wn.2d at 250. When "not all the parties to the action are parties to the agreement, the agreement will not be subject to mandatory application but instead the partial agreement will be one of several factors" the trial court considers in determining venue. Am. Mobile Homes of Wash., Inc., 115 Wn.2d at 322.
Citing Am. Mobile Homes of Wash. Inc., 115 Wn.2d at 321-22; State ex rel. Elec. Prods. Consol. v. Superior Court, 11 Wn.2d 678, 679, 120 P.2d 484 (1941); State ex rel Lund v. Superior Court, 173 Wash. 556, 558, 24 P.2d 79 (1933)).
Even assuming, without deciding, that the Agreement's choice of venue clause demonstrates that the Bank and ESP agreed to a King County venue for any action on the Agreement, the superior court did not err in allowing the Bank's lawsuit to proceed in Pierce County for the following reasons: The Bank never agreed to bring suit against Girard and Montalvo in their individual capacities in King County. Girard and Montalvo, in their individual capacities, were not parties to any agreement containing a choice of venue clause. The Bank's suit on the guaranties was not derivative of the Agreement because nothing in the Agreement required the Bank to pursue its claim on the Agreement through Girard and Montalvo individually. And the guaranties did not require the Bank to proceed against ESP under the Agreement before demanding payment from Girard and Montalvo on their guaranties.
The guarantees provided: "Lender may proceed directly against Guarantor in the event of any default by Borrower without resorting to any other persons, to the assets of Borrower, to any collateral security granted by Borrower to Lender, or the liquidation of any collateral security given hereunder to secure this Guaranty." CP at 45, 47.
Citing no authority, Girard and Montalvo argue that they "guarantee[d]" the Agreement; thus, they are personally involved in the matter and entitled to rely on the Agreement's choice of venue clause. Because Girard and Montalvo were not parties to the Agreement's choice of venue clause and their guaranties contained no choice of venue clause, we hold that under American Mobile Homes and Oltman, the superior court was not required to dismiss this case for improper venue. Furthermore, although the choice of venue clause is a factor in determining venue, and although ESP and its assets were located in King County, Girard and Montalvo presented no evidence that any witnesses would be inconvenienced or other factors that would potentially weigh in favor of King County being the more appropriate venue. Thus, we hold that the trial court did not abuse its discretion in denying Defendants' motion to dismiss for improper venue.
Girard and Montalvo, however, do cite Keystone Masonry, Inc. v. Garco Const., Inc., 135 Wn.App. 927, 933, 147 P.3d 610 (2006), for the general premise that public policy favors enforcement of forum-selection clauses. In Keystone, we held that a defendant's surety could rely on a forum-selection clause in the contract that the surety had secured but to which it was not a party. 135 Wn.App. at 935-36. We concluded that the surety's joinder in a motion to change venue satisfied "the consent requirement of RCW 4.12.080, " and, therefore, the RCW 60.28.030 venue requirement (which addresses venue issues in actions that involve liens for public works) was waived. 135 Wn.App. at 936. But we decided Keystone on a "waiver" basis not argued here; and we did not address American Mobile Homes. For these reasons, we find Keystone unpersuasive.
II. Motion To Strike Rouff's Affidavit
Citing CR 56(e), Girard and Montalvo next argue that the superior court erred in refusing to strike Rouff's March 16, 2011 affidavit in support of the Bank's motion for summary judgment. Again, we disagree.
We generally review for abuse of discretion an order on a motion to strike. Southwick v. Seattle Police Officer John Doe No. 1-5, 145 Wn.App. 292, 297, 168 P.3d 1089 (2008). But we review de novo rulings affiliated with a summary judgment motion. Davis v. Baugh Indus. Contractors, Inc., 159 Wn.2d 413, 416, 150 P.3d 545 (2007) (citing Folsom v. Burger King, 135 Wn.2d 658, 663-64, 958 P.2d 301 (1998)).
CR 56(e) provides in part:
Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein. Sworn or certified copies of all papers or parts thereof referred to in an affidavit shall be attached thereto or served therewith. The court may permit affidavits to be supplemented or opposed by depositions, answers to interrogatories, or further affidavits.(Emphasis added). Girard and Montalvo are correct that the Bank was required to support its summary judgment motion with "[s]worn or certified copies of all papers or parts thereof referred to in an affidavit"; but they ignore the rule's next sentence, which allows the superior court to permit a party to supplement affidavits with additional information obtained through depositions, answers to interrogatories, or further affidavits. CR 56(e).
Girard and Montalvo cite Charbonneau v. Wilbur Ellis, Co., 9 Wn.App. 474, 512 P.2d 1126 (1973), to support their argument that hearsay evidence within an affidavit is not sufficient to support a summary judgment motion. The Charbonneau court held that an affidavit containing unsupported hearsay evidence was not sufficient to establish a question of fact. 9 Wn.App. at 477. But Charbonneau does not address whether a party can cure such insufficiencies by providing the required support during the discovery process or in a responsive pleading, which is the situation here. Thus, Charbonneau does not apply.
To the extent Rouff's original affidavit was unsupported by documentation, the Bank clearly cured any such defect with its June 2011 responses to Defendants' discovery requests and Rouff's August 22, 2011 supplement to her original affidavit, which was attached to the Bank's August 22, 2011 summary judgment reply. Furthermore, Defendants had the relevant discovery materials in June, several weeks before the August 26, 2011 summary judgment hearing; thus, they were not disadvantaged by the Bank's having failed to provide these documents with their original summary judgment motion. Accordingly, we hold that the superior court did not err in denying Defendants' motion to strike Rouff's original affidavit.
Although Girard and Montalvo note that Rouff did not supply the additional documentation until the Bank filed its reply, they do not show that the Bank failed to supply them with these documents in its discovery responses; nor do they argue that the Bank failed to comply with CR 56(c)'s requirements.
III. Attorney Fees and Costs
The Bank requests attorney fees and costs under RAP 18.1, the promissory note, the Agreement, and Girard and Montalvo's guaranties. Although Girard and Montalvo did not sign the note or the Agreement in their individual capacities, the guaranties they signed provided: "The Guarantor also agrees to pay all interest, fees, charges, attorney fees, and collection costs." CP at 45, 47. Thus, as guarantors they are liable to the Bank for fees and costs on appeal.
We affirm the superior court's grant of summary judgment to the Bank and award the Bank attorney fees and costs incurred in this appeal in an amount to be set by our commissioner upon the Bank's compliance with RAP 18.1(d).
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.
We concur: Worswick, C.J., Bjorgen, J.