Opinion
41931-9-II 41981-5-II
10-02-2012
JAMES and DEBORAH SHARBONO, individually and the marital community composed thereof; CASSANDRA SHARBONO, Appellants, v. UNIVERSAL UNDERWRITERS INSURANCE COMPANY, a foreign insurer; LEN VAN DE WEGE and jane= van= de= husband= wife= clinton= personal= representative= estate= cynthia= l.= as= of= nathan= aaron= christian= minor= v.= cassandra= james= deborah= individually= and= the= marital= community= composed=
UNPUBLISHED OPINION
Penoyar, J.
In 1998, Cynthia Tomyn was killed in a car accident when Cassandra Sharbono collided with Cynthia's car. Cynthia's family brought a lawsuit against Cassandra and her parents, James and Deborah Sharbono. Ultimately, the Tomyns and the Sharbonos settled; the Sharbonos agreed to initiate a lawsuit against their insurance provider, Universal Underwriters Insurance Company, and to give certain awards against Universal to the Tomyns; and a judgment by confession, with a principal judgment in the amount of $4,525,000, was entered in the Pierce County Superior Court.
In 2011, after more than a decade of various legal proceedings, the trial court entered a partial satisfaction of the judgment by confession in the Tomyn-Sharbono case. The trial court also entered a full satisfaction of the judgment in the Sharbonos' lawsuit against Universal. The Sharbonos now appeal the trial court's entry of (1) the partial satisfaction of the judgment by confession and (2) the full satisfaction of the Universal-Sharbono judgment.
At issue is whether the judgment by confession in the Tomyn-Sharbono case has been fully satisfied rather than partially satisfied. The Tomyns have received the amount owed to them under the judgment, $4,525,000, plus interest; however, the Tomyns allege that the Sharbonos breached the covenant of good faith and fair dealing and that a full satisfaction of the judgment by confession would preclude the Tomyns from bringing such a claim against the Sharbonos. The Sharbonos contend that the Universal-Sharbono judgment cannot be deemed fully satisfied if the Tomyn-Sharbono judgment is judged to be only partially satisfied. Because the Tomyns have received payment in the amount owed to them under the judgment by confession, we reverse the trial court's entry of partial satisfaction of judgment. We also affirm the trial court's entry of a full satisfaction of judgment in the Universal-Sharbono case.
FACTS
In 1998, Cynthia Tomyn was killed in a car accident when Cassandra Sharbono, who was a minor at the time, swerved her car into oncoming traffic and struck Cynthia's car head-on. Sharbono v. Universal Underwriters Ins. Co., 139 Wn.App. 383, 390, 161 P.3d 406 (2007). Cynthia was survived by her husband, Clinton Tomyn, and their three minor children. Sharbono, 139 Wn.App. at 390. The Tomyns filed a lawsuit against Cassandra and her parents for damages suffered from the car accident. Sharbono, 139 Wn.App. at 390.
The plaintiffs are Clinton; Cynthia's estate, by and through its personal representative, Clinton; and Clinton and Cynthia's three children, by and through their individual guardian ad litems.
In 2001, the parties entered into a settlement agreement. In the settlement agreement, the Sharbonos confessed judgment in the amount of $4,525,000. The Sharbonos agreed to initiate a lawsuit against Universal, one of the Sharbonos' insurers, and to give certain awards against Universal to the Tomyns if the Sharbonos prevailed. The Sharbonos retained their rights to other recoveries.
The Sharbonos owned three transmission shops that Universal insured under separate policies. Sharbono, 139 Wn.App. at 389-90. In 1997, the Sharbonos asked their Universal sales agent to transfer their personal umbrella coverage to Universal. Sharbono, 139 Wn.App. at 390. After the car accident, Universal disputed that the umbrella coverage provided the Sharbonos with coverage for Cassandra's personal use of a family vehicle. Sharbono, 139 Wn.App. at 395.
Specifically, the settlement agreement reads:
The [Sharbonos] assign to [the Tomyns] all amounts awarded against or obtained from Universal for the following:
A. The benefits payable under any liability insurance policy in which Defendants have any interest for a covered loss that Universal has breached with respect to claims arising out of the December 11, 1998 motor vehicle accident.
B. The benefits payable under any liability insurance policy which, because of an act of bad faith, Universal is estopped to deny or deemed to have sold to Defendants.
. . . .
Plaintiffs will apply the proceeds, if any, they obtain by virtue of this assignment towards the judgment referred to in paragraph 1. above, and execute full or partial satisfaction of said judgment as is thereby appropriate.
Except as set forth in paragraphs 2A, 2B and 2C above, defendants retain unto themselves and do not assign any other rights, claims, causes of action or awards against Universal or any other person or entity, including but not limited to claims or awards for bad faith, violation of Washington's Consumer Protection Act, misrepresentation, fraud, breach of fiduciary duty, negligence, non-feasance, misfeasance, malfeasance, or similar conduct.Clerk's Papers (CP) at 210-11.
On March 30, 2001, a judgment by confession, with a principal judgment in the amount of $4,525,000, was entered in the Pierce County Superior Court. The judgment "fully and finally resolves all claims among all the parties to this action arising out of the motor vehicle accident of December 11, 1998." CP at 222.
The Sharbonos then sued Universal. Sharbono, 139 Wn.App. at 392. The Sharbonos filed two motions for summary judgment: In the first, the Sharbonos sought to establish $3,000,000 of coverage under each of their commercial insurance policies. Sharbono, 139 Wn.App. at 392. In the second, the Sharbonos moved for summary judgment on its claims that Universal had acted in bad faith and violated the Consumer Protection Act (CPA). Sharbono, 139 Wn.App. at 393. The trial court granted both motions. Sharbono, 139 Wn.App. at 392-93. At trial, the court directed a verdict for the Sharbonos in the amount of the unpaid balance of the consent judgment, $3,275,000. Sharbono, 139 Wn.App. at 393. In addition, a jury awarded the Sharbonos $4,500,000 for damages suffered due to Universal's bad faith. Sharbono, 139 Wn.App. at 393. The trial court instructed the jury, however, that it could consider Universal's CPA violation in awarding damages, and the jury verdict form did not ask the jury to apportion damages between bad faith and the CPA violation. Sharbono, 139 Wn.App. at 415.
The Tomyns were immediately paid the undisputed liability coverages from the Sharbonos' insurance carriers-$250,000.00 from State Farm and $1,000,000 from Universal.
On May 20, 2005, the trial court entered a judgment against Universal; with regard to the directed verdict, the trial court included the following terms:
1. Judgment is hereby entered in favor of [the Sharbonos] and against
[Universal] in the amount of the unpaid balance of the Judgment by Confession entered against plaintiffs in the matter of Tomyn v. Sharbono, Pierce County Cause No. 99-2-12800-7, to wit $3,275,000.00, together with interest that has accrued thereon since the date of entry, March 30, 2001, which, as of May 13, 2005, (four years, 43 days @ 12%/yr.) totals $1,618,298.63, and together with interest that continues to accrue thereon as set forth in said judgment until said judgment is paid.
. . . .
7. Amounts awarded pursuant to paragraph 1 shall bear post-judgment interest pursuant to RCW 4.56.110(4) and RCW 19.52.020 at the rate of 12 percent per annum.CP at 13.
Universal appealed, and we vacated the $4,500,000 jury award. Sharbono, 139 Wn. App at 424. Although we affirmed the trial court's order granting the Sharbonos summary judgment on their claim that Universal acted in bad faith, we reversed the trial court's order granting summary judgment to the Sharbonos on their claim that Universal violated the CPA. Sharbono, 139 Wn.App. at 424. Because we could not determine the amount the jury awarded as CPA damages, we vacated the jury verdict. Sharbono, 139 Wn.App. at 415. As Universal did not assign error to the directed verdict, we affirmed that judgment. Sharbono, 139 Wn.App. at 424.
On remand in October 2008, the trial court granted the Sharbonos' motion to execute on Universal's appeal bond, ordering Universal's appeal bond surety to pay $6,240,265.75 under paragraph 1 and $2,353,956.28 under paragraph 7 of the May 2005 judgment. Sharbono v. Universal Underwriters Ins. Co., 158 Wn.App. 963, 968, 247 P.3d 430 (2010). In determining these amounts, the trial court (1) calculated 12 percent interest on the original $3.275 million March 30, 2001 judgment, accruing from March 30, 2001, until October 15, 2008, for a total of $6,240,265.75; and (2) applied 12 percent post-judgment interest, under paragraph 7 of the May 2005 judgment, to the paragraph 1 total of $6,240,265.75, for an additional sum of $2,353,956.28. Sharbono, 158 Wn.App. at 968.
On remand, the Tomyns also moved to intervene as a party in the action. Sharbono v. Universal Underwriters Ins. Co., noted at 160 Wn.App. 1036, 2011 WL 986043, at *1. The trial court allowed the Tomyns to intervene to protect their interest in the affirmed judgment. Sharbono, 2011 WL 986043, at *1.
Universal appealed the trial court's calculation of post-judgment interest. Sharbono, 158 Wn.App. at 969. We reversed and remanded to the trial court (1) to recalculate the interest under paragraph 1 using an annual rate of 12 percent simple interest from March 30, 2001 to May 20, 2005 ("prejudgment interest"); (2) to combine that pre-judgment interest with the $3.275 million principal to form a new 2005 judgment principal; and (3) to calculate the post-judgment interest on the new 2005 judgment principal using an annual rate of 12 percent simple interest from May 20, 2005, until Universal pays in full. Sharbono, 158 Wn.App. at 973. On cross-appeal, the Sharbonos argued that they were entitled to the post-2005 judgment interest accruing on the judgment against Universal. Sharbono, 158 Wn.App. at 973. We affirmed the trial court's designation of the Tomyns as the recipients of all judgment interest. Sharbono, 158 Wn.App. at 973.
In 2009, the Sharbonos and Universal entered into a settlement agreement, after participating in a mediation separate from the Tomyns. Sharbono, 2011 WL 986043, at *1. The Sharbonos received $2,350,000 in their settlement with Universal. Sharbono v. Universal Underwriters Ins. Co., noted at 162 Wn.App. 1050, 2011 WL 2848801, at *3.
This settlement related to the claims retained by the Sharbonos.
In 2011, the Tomyns filed a motion to disburse funds in the court's registry, Universal filed a motion to disburse funds in the court's registry, and the Sharbonos filed a motion to satisfy the judgment by confession. The parties agreed on the balance due and that the funds should go to the Tomyns. In response to the Sharbonos' motion, the Tomyns argued that the trial court could enter a partial satisfaction of judgment against the Sharbonos. The Tomyns maintained, however, that full satisfaction of the judgment was not appropriate because the Sharbonos had allegedly not complied with their duty to abide by the implied covenant of good faith and fair dealing under the terms of the Sharbono-Tomyn settlement agreement.
Specifically, the Tomyns argued that the Sharbonos breached their duty "by filing a cross-appeal and not maintaining a united front with the Tomyns[;] the actions of the Sharbonos created a scenario where there was far greater likelihood that the appellate court would scrutinize the method and manner in which the court had calculated interest in the October 3, 2008 Order." CP at 287. The Tomyns were also "extremely troubled by the method and manner in which the Sharbonos went about settling claims with Universal, by way of a mediation which was originally kept secret from the [Tomyns]." CP at 288. Apparently, the Tomyns were concerned "that should a satisfaction of judgment be entered in the Tomyn/Sharbono matter, that it would provide an argument to the Sharbonos that the entry of such satisfaction has preclusive impact on otherwise meritorious issues. . . ." CP at 289.
At the hearing on the motion for satisfaction of judgment by confession, the Sharbonos' counsel stated:
If the Tomyns think they have a claim against me, it's certainly not dependent on satisfying the judgment. It's an independent claim that they think they have got against me personally. If they think that they have got a claim against the Sharbonos for breach of the settlement agreement, they have a claim against Sharbonos for the breach of the settlement agreement, but the judgment isn't the damages, because that judgment has been satisfied. If they claim that they were entitled to some interest that the Sharbonos deprived them of in addition to the judgment amount, they will sue us for breach of the settlement agreement. [The Tomyns' attorney] has threatened us with that several times, and I'm assuming he is good on his word. But the bottom line is that Universal on this judgment was ordered to pay the unpaid balance of the Tomyn-Sharbono judgment. They are doing that. That judgment should be satisfied.Report of Proceedings (RP) at 13-14.
The trial court entered a full and complete satisfaction of judgment against Universal in the Universal-Sharbono lawsuit. The trial court also issued an order directing the Tomyns to partially satisfy the judgment in the Tomyn-Sharbono lawsuit. The trial court entered a partial satisfaction of judgment against the Sharbonos in the Tomyn-Sharbono lawsuit. The partial satisfaction of judgment reads, in part:
Such payments, and the giving of the partial satisfaction shall not be construed as indicating that here has been full compliance with the Settlement Agreement between the parties, or in any way resolving any dispute or claims between the parties arising in the execution of the parties' Settlement Agreement.
Said Partial Satisfaction of Judgment is or may be entered in the execution docket of the Superior Court of the State of Washington for the County of Pierce under cause number 99-2-12800-7. The Clerk is directed to note upon the record in the execution docket the partial satisfaction of said Judgment, giving the date thereof.CP at 8. The trial court ordered the clerk of court to disburse (1) $2,879,936.30 to the Tomyns and (2) the remaining balance of the funds on deposit in the court's registry to Universal. The Sharbonos appeal.
ANALYSIS
Satisfaction of Judgment
The only issue on appeal is whether the trial court erred by concluding that the Tomyn-Sharbono judgment was partially satisfied, not fully satisfied. The Sharbonos argue that (1) the Tomyn-Sharbono settlement agreement required that the Tomyns satisfy the judgment in full when they received payments sufficient to do so; (2) the Sharbonos are entitled to full satisfaction of the Tomyn-Sharbono judgment because the full amount of the money judgment against them has been paid; and (3) the Tomyns' desire to preserve future claims against the Sharbonos did not justify denying full satisfaction of the Tomyn-Sharbono judgment. Because the Tomyns have received the amount specified in the Tomyn-Sharbono judgment, we hold that the trial court erred when it concluded that the Tomyn-Sharbono judgment had been only partially satisfied.
"A judgment represents a judicial declaration that a judgment debtor is personally indebted to a judgment creditor for a sum of money." 46 Am. Jur. 2d Judgments § 10 (2006). "A satisfaction of judgment is the discharge of an obligation under a judgment by payment of the amount due. Courts have inherent power to entertain an action to determine whether a judgment has been carried out and satisfied." 47 Am. Jur. 2d Judgments § 804 (2006).
RCW 4.56.100(1), which governs the satisfaction of judgments for payment of money, reads, in pertinent part:
When any judgment for the payment of money only shall have been paid or satisfied, the clerk of the court in which such judgment was rendered shall note upon the record in the execution docket satisfaction thereof giving the date of such satisfaction upon either the payment to such clerk of the amount of such judgment, costs and interest and any accrued costs by reason of the issuance of any execution, or the filing with such clerk of a satisfaction entitled in such action and identifying the same executed by the judgment creditor or his or her attorney of record in such action or his or her assignee acknowledged as deeds are acknowledged. . . . Every satisfaction of judgment and every partial satisfaction of judgment which provides for the payment of money shall clearly designate the judgment creditor and his or her attorney if any, the judgment debtor, the amount or type of satisfaction, whether the satisfaction is full or partial, the cause number, and the date of entry of the judgment.
Under the terms of the settlement agreement, the Tomyns were to apply the proceeds, if any, that they obtained by virtue of the assigned claims, and "execute full or partial satisfaction of said judgment as is thereby appropriate." CP at 211. Here the judgment in question was a simple money judgment. The specified sum in the judgment by confession and the settlement agreement, $4,525,000, plus interest, has been paid in full. Accordingly, the Sharbonos are no longer personally indebted to the Tomyns for the specific sum of money due to them under the judgment by confession. The trial court erred by entering a partial satisfaction of judgment, as the amount due has been fully paid to the Tomyns. Because we hold that the trial court erred by concluding that the judgment by confession was only partially satisfied, we need not address the Sharbonos' argument that the trial court should not have allowed the judgment in its lawsuit against Universal to be fully satisfied without requiring full satisfaction of the judgment by confession against the
The parties dispute the effect a full satisfaction of judgment would have on the Tomyns' ability to bring a lawsuit against the Sharbonos for breach of the settlement agreement. We decline to address the effect of the judgment, as the only issue before us is whether the trial court erred by entering a partial satisfaction of judgment instead of a full satisfaction of judgment.
Sharbonos.
Because the Tomyns have received payment in the amount owed to them under the judgment by confession, we reverse the trial court's entry of partial satisfaction of judgment and remand for the trial court to enter a full satisfaction of $4,525,000 including all interest due on the judgment. We affirm the trial court's entry of a full satisfaction of judgment in the Universal-Sharbono case.
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: Armstrong, J., Hunt, J.