Opinion
No. 61351-1-I.
January 20, 2009.
Appeal from a judgment of the Superior Court for Snohomish County, No. 06-2-06898-8, Richard J. Thorpe, J., entered February 7, 2008.
Affirmed by unpublished per curiam opinion.
UNPUBLISHED OPINION
This is appellant Marvin Behar's fourth lawsuit arising from his sale of a business in 1998. In a prior proceeding the trial court determined that respondent City Bank's security interestx in the business' equipment and inventory took priority over Behar's. In this case Behar argues that he is entitled to damages because the Bank's UCC-1 financing statement was filed by fax at a time when fax filings were not permitted. We affirm the trial court's summary judgment dismissal of Behar's suit because it is barred by CR 60, the doctrine of res judicata, and relevant statutes of limitation.
Behar sold his marketing business, J.R. Marketing, to John Poppy in April 1998 for $670,000. Poppy made a $200,000 down payment and Behar agreed to finance the remaining $470,000. In exchange, he took a security interest in the company's equipment and inventory.
A few days after the sale, Poppy and J.R. Marketing borrowed $100,000 from City Bank. The loan documents included a commercial security agreement and a UCC-1 financing statement. The Bank took a security interest in the company's inventory, chattel paper, accounts, equipment, and general intangibles.
The Bank recorded its UCC-1 financing statement with the Department of Licensing on April 7, 1998. The Bank's financing statement was filed by fax. The next day — April 8, 1998 — Behar's UCC-1 financing statement was filed with the Department.
Poppy defaulted on his loans from Behar and the Bank in November 2000. Behar sued the company, then operating under the name Spec-Gard, Inc., and the Bank. He sought to foreclose on the company's equipment and inventory. The Bank claimed its security interest took priority over Behar's because it was filed earlier. Behar filed a motion to determine the priority interest. Because the Bank had perfected its security interest first, the trial court issued a final order stating that the Bank held the priority interest.
After the order issued, the Bank foreclosed on the company's property and prepared to sell the goods at public auction. Before that happened, Behar and the Bank entered into an agreement. The Bank agreed to release its security interest in the equipment and inventory, and Behar agreed to pay $45,660 to the Bank. Behar then took possession of the equipment and inventory and began operating the business.
Two years later Behar sued City Bank again. This time Behar alleged breach of the duty of good faith, fraud, and breach of the Washington's Consumer Protection Act. The Bank moved successfully for summary judgment, arguing that Behar's claims were barred by the statute of limitations and res judicata. This court affirmed the trial court's ruling in an unpublished opinion filed in July 2004. Behar v. City Bank, noted at 122 Wn. App. 1026 (2004).
Behar filed his third lawsuit against City Bank in December 2004. He appeared pro se. The trial court dismissed the third suit in February 2006 for failure to prosecute.
Behar filed the lawsuit giving rise to this appeal in March 2006. In this suit, he claims City Bank's security instrument was defective because it was filed by fax at a time when the Uniform Commercial Code as enacted in Washington did not contain any language that allowed filing by fax. Behar alleges that he was unable to discover that the filing was by fax until after the trial court granted City Bank's order on summary judgment in the second lawsuit. Behar also asserts a new claim, that City Bank did not deliver all of the equipment and inventory to him after foreclosure. Behar seeks damages incurred as a result of the illegal fax filing and the reasonable value of the equipment he purchased but did not receive.
City Bank moved for summary judgment in December 2007. The trial court granted the motion and dismissed the suit in February 2008. The court held that the lawsuit involves the "same nucleus of facts and seeks essentially the same remedy as the earlier actions," and that it could have, and with due diligence should have, been included in the earlier actions. The court also concluded that Behar's fax filing claim was barred by CR 60. With regards to Behar's new claim, the court determined that it was barred under the three year limitation provided in RCW 4.16.080. Behar appeals.
Security Interest
The first lawsuit ended in November 2001 with a ruling declaring that the Bank held the priority security interest in the equipment and inventory. A court may vacate a judgment on the basis of newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under CR 59(b). CR 60(b)(3). A CR 60(b)(3) motion must be made "not more than 1 year after the judgment, order, or proceeding was entered or taken." CR 60(b). The fax filing claim is not based on newly discovered evidence because the face of the financing statement reveals that it was filed by fax. It is untimely under CR 60(b) because it was filed more than one year after entry of the final order.
Not only does Behar's present lawsuit fail to satisfy CR 60, it is also barred by res judicata. Res judicata encompasses the idea that when the parties to two successive proceedings are the same, and the prior proceeding culminated in a final judgment, a matter may not be re-litigated, or even litigated for the first time, if it could have been raised, and in the exercise of reasonable diligence should have been raised, in the prior proceeding. Kelly-Hansen v. Kelly-Hansen, 87 Wn. App. 320, 328-29, 941 P.2d 1108 (1997). Res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at that time. Kelly-Hansen, 87 Wn. App. at 329. Whether res judicata bars an action is a question of law we review de novo. Kuhlman v. Thomas, 78 Wn. App. 115, 120, 897 P.2d 365 (1995).
Behar has not presented a valid excuse for failing to assert the fax filing claim in his earlier lawsuits. The upper left corner of the financing statement includes the date and time stamp for the fax transmission. Because Behar should have, with reasonable diligence, asserted this claim earlier, the exception for newly discovered evidence does not apply.
Behar attempts to avoid the bar of res judicata by characterizing the present lawsuit as raising a new and independent claim or theory. But Behar continues to attack the same transaction using the same set of facts and the same evidence considered in the first two lawsuits. Again, the primary document under review is the Bank's UCC-1 financing statement. The present lawsuit is merely an alternative theory of recovery or a request for an alternative remedy, not a new and independent claim. Kelly-Hansen, 87 Wn. App. at 331.
Not only is this proceeding virtually identical to the earlier ones, but the priority interest rights established in the trial court's final order in the first lawsuit would be impaired if this current claim were allowed to proceed. See Kelly-Hansen, 87 Wn. App. at 330. Res judicata bars Behar from re-litigating the priority of his security interest.
New Claim
Behar's new claim alleges that City Bank failed to deliver some of the equipment the Bank received after the buyer defaulted and the Bank repossessed the company's equipment and inventory. Behar seeks the replacement value of the two pieces of equipment he says he did not receive.
When Behar agreed to pay $45,660, City Bank agreed to release its security interest and discontinue its public sale of the equipment and inventory. The release agreement is dated January 19, 2001. The equipment changed hands shortly thereafter. Actions for taking, detaining, or injuring personal property, including an action for the specific recovery thereof, must be commenced within three years. RCW 4.16.080(2). This lawsuit was filed in March 2006, more than five years after the Bank released the property. Under these circumstances, the court did not err when it dismissed Behar's new claim as time barred.
Attorney Fees on Appeal
City Bank seeks attorney fees on appeal. Under RAP 18.9(a), an ppellate court may impose sanctions for a frivolous appeal. An appeal is frivolous if there are no debatable issues upon which reasonable minds might differ and it is so totally devoid of merit that there is no reasonable possibility of reversal. Tiffany Family Trust Corp. v. City of Kent, 155 Wn.2d 225, 241, 119 P.3d 325 (2005). This standard is met. City Bank is entitled to attorney fees on appeal, subject to compliance with RAP 18.1.
Affirmed.