Opinion
No. 54792-5-I
Filed: June 6, 2005 UNPUBLISHED OPINION
Appeal from Superior Court of Snohomish County. Docket No: 04-2-06906-6. Judgment or order under review. Date filed: 07/22/2004. Judge signing: Hon. James H Allendoerfer.
Counsel for Appellant(s), Tracy Montgomery Shier, Attorney at Law, Ste 3140, 900 4th Ave, Seattle, WA 98164-1014.
Counsel for Respondent(s), Patrick F. Hussey, Anderson Hunter Law Firm PS, 2707 Colby Ave Ste 1001, Everett, WA 98201-3566.
A defendant who fails to raise an affirmative defense in the answer waives the defense. Datamarine International Inc. did not raise the issue of the prematurity of David Crosby's action against it in its answer, and has thereby waived this defense. Under the clear terms of the promissory note between the parties, the loan was in default on the date of the summary judgment hearing. The trial court did not abuse its discretion in entering the order amending the order on reconsideration and reinstating that part of the order on summary judgment providing for money judgment, attorney fees and costs. We affirm.
FACTS
In September 1997, David Crosby made a $100,000 loan to Datamarine International, Inc. Datamarine executed a promissory note in Crosby's favor. The note provided that Datamarine would pay to Crosby the $100,000 plus interest at 10 percent per annum. In consideration for the loan, Datamarine engaged to issue and deliver to Crosby a Common Stock Purchase Warrant for 1,680 shares of Datamarine's common stock.
The note stated that Datamarine would pay interest only on a quarterly basis beginning on December 23, 1997, and that the entire principal and all accrued but unpaid interest would be paid on March 23, 1998, provided, that unless the note is in default, the Maker may at its option extend the Maturity Date until September 23, 1998 by written notice to Holder delivered, together with the Extension Warrant, at any time prior to March 23, 1998 (the `Extension Option').
The note also stated that
as a condition to Maker's exercise of the Extension Option . . . Maker shall issue and deliver to Holder an additional Common Stock Purchase Warrant . . . for 1,680 shares of Common Stock of Maker.
In addition, Datamarine issued a security interest in all of its assets in favor of Crosby.
In February 1998, Crosby agreed to release his security interest in Datamarine's assets because Datamarine was attempting to obtain new capital. Crosby also agreed to extend the maturity date of the promissory note until March 23, 1999. Datamarine agreed to issue a Common Stock Purchase Warrant for 5,000 shares of its common stock in exchange for extending the maturity date.
Five months after the extended maturity date of March 23, 1999, Datamarine sent Crosby a stock purchase warrant and a letter indicating that the warrant was issued `in exchange for extending the maturity date of your loan to Datamarine from March 23, 1999 to September 23, 1999.' On November 3, 1999, approximately five weeks after the new extended maturity date, Datamarine sent Crosby another letter and stock warrant `in exchange for extending the maturity date of [the loan] to . . . March 23, 2000.' On March 23, 2000, Datamarine issued a stock warrant for 1,680 shares of common stock-no letter was included with this warrant. On November 21, 2000, Datamarine sent Crosby a letter and a stock warrant `in exchange for extending the maturity date of your loan from September 23, 2000 to March 23, 2001.' Datamarine issued six additional warrants at six month intervals-no letter was sent with any of them. As none of these warrants was accompanied by a letter regarding the maturity date, Crosby understood that they were issued in lieu of interest payments.
On May 15, 2002, Datamarine issued a security interest in Crosby's favor in all its assets. On December 18, 2003, Crosby sent a letter to Datamarine demanding repayment of the loan. Crosby received no response, and filed this action on January 20, 2004.
Crosby filed a motion for summary judgment, and Datamarine filed a response. Neither party mentioned the stock warrants or the alleged extensions of the maturity date in their pleadings. The trial court granted Crosby's motion and entered a judgment for the amount of the loan plus interest. On May 25, 2004, the trial court further decreed that Crosby was entitled to enforce his security interest in Datamarine's assets in order to enforce the judgment.
On June 4, 2004 Datamarine filed a motion for reconsideration. Citing the stock warrants as newly discovered evidence, Datamarine argued that Crosby received the warrants as consideration for forbearing on the note, that Datamarine received no consideration for the May 15, 2002 security agreement, and that summary judgment would not provide substantial justice. In his response, Crosby argued that the warrants were not newly discovered evidence and were not material. The trial court granted Datamarine's motion for reconsideration and vacated the summary judgment order, finding that the warrants constituted newly discovered evidence that raised a genuine issue of material fact as to whether the promissory note was in default when the May 2002 security agreement was executed.
On July 7, 2004, Crosby filed a motion to amend the order on reconsideration, seeking to reinstate that part of the order on summary judgment granting money judgment, attorney fees and costs. Crosby argued that even if the warrants had extended the maturity date, the note was in default as of March 23, 2004, because no extension was sought or obtained for an extension after that date. Because the summary judgment hearing occurred after that date, the trial court's order granting a money judgment on the note was proper. The trial court granted the motion and reinstated those portions of the original order providing for money judgment, attorney fees and costs. Datamarine appeals.
DISCUSSION
Datamarine contends the trial court erred in reinstating the summary judgment provision for money judgment and attorney fees. Because the order amending the order on reconsideration was essentially a second motion for reconsideration, we will review it for an abuse of discretion. Go2Net, Inc. v. C I Host, Inc., 115 Wn. App. 73, 88, 60 P.3d 1245 (2003).
In its argument, Datamarine argues that review of one order calls into question all other orders in a case. RAP 2.4(b) provides that this court may review a trial court order not designated in the notice of appeal if it prejudicially affects the decision designated in the notice of appeal and was entered before this court accepted review.
Datamarine contends that the newly discovered evidence of the stock warrants, viewed in the light most favorable to it as the non-moving party, show that the maturity date could have been extended to March 23, 2004. Crosby's action on the note would then have been premature, as it was filed on January 20, 2004. But as Crosby points out, Datamarine did not raise this affirmative defense in its answer, and thereby waived it. Alexander v. Food Services of Am., 76 Wn. App. 425, 428-29, 886 P.2d 231 (1994), citing Davis v. Nielson, 9 Wn. App. 864, 876, 515 P.2d 995 (1973). The terms of the note are clear, and the modification whereby Crosby released his security interest did not modify the terms affecting the maturity date. Under its terms, the maturity date could not be extended unless Datamarine requested the extension in writing before the loan was in default; but Datamarine waited for approximately five months after the maturity date to seek the first extension. In any event, there is no evidence in the record that the maturity date of the note was extended past March 23, 2004. Even if the original maturity date was extended, the note was in default as of the date of the summary judgment hearing. The trial court did not abuse its discretion in granting Crosby's motion to amend the order on reconsideration and reinstate the summary judgment provisions for money judgment on the note and attorney fees and costs.
CONCLUSION
Affirmed.
APPELWICK, GROSSE, and BECKER, JJ., Concur.