Opinion
No. 29991-7-II.
Filed: March 2, 2004. UNPUBLISHED OPINION
Appeal from Superior Court of Pierce County. Docket No: 00-4-00718-6. Judgment or order under review. Date filed: 02/07/2003. Judge signing: Hon. Stephanie a Arend.
Counsel for Appellant/Cross-Respondent, Jill Diane Bowman, Stoel Rives LLP, 600 University St. Ste 3600, Seattle, WA 98101-1176.
Counsel for Respondent/Cross-Appellant, Guy Jeffrey Sternal, Attorney at Law, 1201 Pacific Ave Ste 1200, Tacoma, WA 98402-4395.
General Metals of Tacoma, Inc. appeals the trial court's dismissal of its creditor's claim against Leslie Sussman's estate. General Metals argues that (1) because it was a 'reasonably ascertainable creditor' under RCW 11.40.040 that did not receive actual notice of the probate proceedings, it had two years to file and to serve its creditor's claim; and (2) it timely mailed notice of its claim to the 'personal representative's attorney' as required by the statute. The Estate cross-appeals the trial court's denial of attorney fees below and requests an award of attorney fees on appeal.
We affirm the trial court's dismissal of General Metals' claim for failure to serve the Estate's personal representative or the personal representative's attorney. Finding that the trial court did not consider whether to award the Estate attorney fees and costs under the applicable statute, RCW 11.96A.150, we reverse denial of attorney fees and costs below and remand
FACTS I. Background A. General Metals
Leslie and Sophie Sussman, husband and wife, were joint owners of General Metals with several others, primarily members of the Sussman family. General Metals operated a scrap metal recovery business that included stripping the interiors from junk cars, crushing them, and loading them onto freighters bound for scrap metal markets. Surface water runoff from the General Metals property released metals, waste oil, and polychlorinated biphenyls (PCBs) into the Hylebos Waterway.
In 1981, prior to discovery of the contamination, the Sussmans sold their interest in the company to Acme Trading Supply Co. The contract of sale included a provision absolving the Sussmans of liability for environmental violations occurring after the sale. The parties also entered into a Settlement Agreement and Release of liability for the Sussmans in exchange for their reducing the selling price of the business.
Section 9.2 of the contract of sale provided:
With respect to any claim of Loss arising from an alleged violation of environmental protection or pollution control laws or regulations, the liability of the Shareholders shall be limited to only such instances, not disclosed in writing to Acme pursuant to this Agreement, where, to the knowledge of the Shareholders, (i) there have been claims or demands raised by or notices of violation issued by appropriate regulatory authorities, (ii) an act or omission committed prior to the Closing Date was in violation of such laws or regulations, and in either case, would have a material adverse effect on the business or financial condition of Metals or GMEC. Except as contemplated by clause (i) above, the Shareholders shall have no liability for any claim of Loss based upon an allegation that an act or omission after the Closing Date, even though consistent with past practice, is in violation of pollution control laws or regulations.
In determining the amount of any Loss, the method of computation of the Total Purchase Price shall be taken into account and, in an appropriate case, the amount of Loss shall be determined with reference to the net difference in the Total Purchase Price which would have resulted had the existence of such Loss been known on the Closing Date together with an appropriate adjustment for the time value of money.
Clerk's Papers (CP) at 945-46.
The agreement released 'any and all claims known or unknown . . . which could hereafter be asserted against the former shareholders.' CP at 1048. The Sussmans' attorney contended that this language released the Sussmans from any liability, including claims for reimbursement from the environmental problems.
In 1989, the Environmental Protection Agency (EPA) identified the Sussmans and General Metals as potentially responsible parties for environmental contamination at the Commencement Bay Nearshore/Tideflats Superfund Site. The Sussmans and General Metals received notice of General Metals' potential liability for clean-up costs under the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 (CERCLA). On February 10, 1989, the Sussmans' attorney asserted by letter that these violations had occurred in 1987, after the Sussmans sold their interest in General Metals, and, therefore, the Sussmans were not liable.
General Metals acknowledges that the Sussmans' liability for contamination cleanup costs 'has not yet been asserted or established with certainty.' Reply Brief at page 16.
In 1991, the Washington State Department of Ecology (DOE) named the Sussmans and General Metals as potentially liable parties in a complaint filed under the Washington Model Toxics Control Act, chapter 70.105D RCW (MTCA). The DOE's and the EPA's claims under 42 U.S.C. § 9613(f) and RCW 70.105D.080, respectively, established joint responsibility between General Metals and the Sussmans for the contamination and created potential, but unrealized, rights of contribution against each other. Guy Sternal and his law firm, Eisenhower Carlson, represented the Sussmans in the environmental litigation.
42 U.S.C. § 9613(f)(1) provides:
Any person may seek contribution from any other person who is liable or potentially liable under section 9607(a) of this title, during or following any civil action under section 9606 of this title or under section 9607(a) of this title. Such claims shall be brought in accordance with this section and the Federal Rules of Civil Procedure, and shall be governed by Federal law. In resolving contribution claims, the court may allocate response costs among liable parties using such equitable factors as the court determines are appropriate. Nothing in this subsection shall diminish the right of any person to bring an action for contribution in the absence of a civil action under section 9606 of this title or section 9607 of this title.
RCW 70.105D.080 provides: 'Except as provided in RCW 70.105D.040(4)(d) and (f), a person may bring a private right of action, including a claim for contribution or for declaratory relief, against any other person liable under RCW 70.105D.040 for the recovery of remedial action costs.'
In 1993, the EPA sent a 'Special Notice' to General Metals, setting the timeframe for negotiations with the EPA and demanding reimbursement for clean-up costs. In September 1993, the EPA released its report entitled, 'Hylebos Waterway Problem Area Status Report,' identifying Leslie Sussman and General Metals as potentially responsible parties for the contamination.
B. Leslie Sussman's Estate
After Leslie Sussman died on April 23, 2000, Sophie Sussman was named the personal representative for his estate. The environmental contamination litigation continued between the governmental agencies and Sophie Sussman, Leslie Sussman's estate, and General Metals. Sternal continued to represent Sophie Sussman and the Estate in the environmental litigation. M. Edward Spring of Oseran Hahn Spring Watts, however, was named attorney for the Estate in the notice of the Estate's probate proceedings to creditors filed with the court and published in the Tacoma Daily Index commencing on May 17, 2000 and ending on May 31, 2000.
In her capacity as the Estate's personal representative, Sophie Sussman thoroughly reviewed her husband's correspondence and files in an effort to identify creditors. Based on her review, she did not send a creditor's notice to General Metals.
II. General Metals' Creditor Claim
Two years later, on April 22, 2002, General Metals filed a creditor's claim against the Estate for recovery of present and future costs of resolving the environmental claims arising from General Metals' contamination of Commencement Bay. General Metals mailed notice of its claim to Sophie Sussman, in care of Sternal at his law firm's address. Although General Metals had the Estate's probate cause number, it did not serve the Estate's designated probate attorney, Spring; nor did it serve Sophie Sussman at her home address listed in the probate documents.
The Estate filed a petition challenging General Metals' creditor's claim as untimely under RCW 11.40.051. The superior court commissioner denied the Estate's petition to bar General Metals' claim, but it granted attorney fees to the Estate under RCW 11.48.210, one of two statutes under which the Estate had requested fees.
The Estate moved to revise the commissioner's ruling, and General Metals cross-moved to reconsider the attorney fee award. The superior court revised the Commissioner's ruling, dismissed General Metals' claim against the Estate as time barred, and reversed the attorney fee award. The superior court did not consider the Estate's alternative basis for an attorney fee award under RCW 11.96A.150.
General Metals appeals dismissal of its creditor's claim against the Estate. The Estate cross-appeals denial of attorney fees below.
ANALYSIS I. Dismissal of Creditor's Claim A. Standard of Review
We review de novo a trial court's dismissal of a case barred by the statute of limitations. Ellis v. Barto, 82 Wn. App. 454, 457, 918 P.2d 540 (1996), review denied, 130 Wn.2d 1026 (1997). As with summary judgment, we consider all facts and reasonable inferences in the light most favorable to the non-moving party. Ellis, 82 Wn. App. at 457. The meaning of a statute is a question of law, which we also review de novo. Washington Pub. Ports Ass'n v. Dep't of Revenue, 148 Wn.2d 637, 645, 62 P.3d 462 (2003).
B. Service on Personal Representative's Attorney
We assume for purposes of this decision, without deciding, that General Metals was a 'reasonably ascertainable creditor' under RCW 11.40.040 and that it did not receive actual notice of Leslie Sussman's death. Therefore, General Metals had two years from the date of Leslie Sussman's death to file and to serve its creditor's claim against the Estate. RCW 11.40.051(1)(b)(ii).
RCW 11.40.070(3) provides that creditors' claims must be presented . . . by: (a) Serving on or mailing to, by regular first class mail, the personal representative or the personal representative's attorney a copy of the signed claim; and (b) filing the original of the signed claim with the court. (emphasis added). There is no dispute that General Metals timely filed its claim with the probate court one day before the two-year statutory deadline. RCW 11.40.070(3)(b). What is disputed, however, is whether it timely served the Estate's personal representative or the personal representative's attorney. RCW 11.40.070(3)(a). We agree with the trial court and hold that it did not.
General Metals mailed notice of its creditor's claim to Sternal, Sophie Sussman's attorney, on April 22, 2002, one day before the two-year deadline. The Estate advances two separate arguments that General Metals did not properly present its claim within the two-year deadline: (1) Although General Metals mailed notice of the claim on April 22, 2002, it did not show on the record that it was postmarked by April 22, 2002; and (2) General Metals did not mail its claim to the 'personal representative or the personal representative's attorney' as required under the statute. We agree with the Estate's second argument and, thus, do not address the first.
RCW 11.40.070(3)(a) requires that creditors' claims against an estate in probate be served on or mailed to 'the personal representative or the personal representative's attorney.' We reject General Metals' assertion that it complied with the statute because Sophie Sussman was the personal representative for the Estate, Sternal was both her attorney and the attorney for the Estate in the General Metals' environmental litigation, and, therefore, Sternal was the personal representative's attorney.
Instead, we agree with the trial court that there is no evidence that Sternal was representing the personal representative before General Metals filed its claim. First, the record does not show that Sternal represented Sophie Sussman in her capacity as the personal representative for the Estate in the probate proceedings before April 23, 2002, the last day of the two-year period. Moreover, Sternal copied the designated personal representative's attorney, Spring, with various communications connected with the environmental litigation. Consistently, it was Spring, not Sternal, who filed the petition for probate and the notice of appointment and pendency of probate proceedings. Second, that Sternal represented Sophie Sussman and the Estate in the environmental matters does not establish that Sternal represented the personal representative for purposes of RCW 11.40.070(3)(a).
We also reject General Metals' related argument that a 1997 change in the probate code supports its assertion that it could serve any attorney who represented Sophie Sussman, regardless of the scope or purpose of that representation.
In 1997, the Legislature 'update[d] and modernize[d] the state probate code.' 1997 Final Legislative Report, 55th Wash. Leg., at 226. It revised RCW 11.40.010 to require that creditors' claims be served on 'the personal representative's attorney' rather than 'the estate's attorney of record.' RCW 11.40.070(3)(a) (emphasis added). General Metals argues that deletion of the words 'of record' demonstrates the Legislature's intent to include any attorney representing a person who is a personal representative for an estate, not just those attorneys 'representing the personal representative 'for purposes of accepting creditor's claims." Br. of Appellant at 26. Such a reading of the statute would lead to absurd results. Martin v. Dep't of Soc. Sec., 12 Wn.2d 329, 331, 121 P.2d 394 (1942).
See Laws of 1997, ch. 252.
Under General Metals' interpretation, for example, a criminal or divorce attorney representing a person in a matter totally unrelated to the probate proceedings could accept service of a creditor's claim against an estate simply because that attorney's client also happened to be the estate's personal representative. Such attorney who accepted the claim would do so without authorization by the client and without specific statutory accountability to the probate court and without established procedures for the timely processing of estates. This would be an absurd result, contrary to well-settled principles of statutory construction.
'A statute should not be given an interpretation which would make it an absurdity when it is susceptible of a reasonable interpretation which would carry out the manifest intent of the legislature.' Martin, 12 Wn.2d at 331.
Instead, where a statute's meaning is plain on its face, we must give effect to that plain meaning. Washington Pub. Ports Ass'n, 148 Wn.2d at 645. Here, the statute plainly states that service must be made on 'the personal representative's attorney.' RCW 11.40.070(3)(a). Sternal was not the personal representative's attorney when General Metals delivered to him its creditor claim against the Estate on April 22, 2002. That Sternal represented Sophie Sussman and her late husband in another capacity in the environmental litigation is meaningless in this context.
Accordingly, we hold that General Metals failed to serve the personal representative's attorney under RCW 11.40.070(3)(a).
As previously noted, General Metals never claimed to have served Sophie Sussman at her home address, the alternate method provided by statute and noted in the probate notice to creditors for the Estate.
II. Attorney Fees and Costs A. At Trial
In its cross-appeal, the Estate argues that the trial court should have awarded it attorney fees and costs under RCW 11.96A.150. RCW 11.96A.150 provides that in probate matters the trial court may exercise its discretion to award attorney fees and costs that it determines to be equitable. This provision has been interpreted to allow fees and costs to an estate that successfully defends against a creditor's claim that did not comply with RCW 11.40.070. Villegas v. McBride, 112 Wn. App. 689, 697, 50 P.3d 678 (2002), review denied, 149 Wn.2d 1005 (2003). We have held that General Metals failed to comply with RCW 11.40.070. Therefore, the trial court had authority to award attorney fees and costs to the Estate under RCW 11.96A.150.
We will not reverse a trial court's decision to deny statutorily authorized attorney fees in a probate matter absent a manifest abuse of discretion. In re Estate of Black, 116 Wn. App. 476, 489, 66 P.3d 670 (2003). Discretion is abused when it is exercised in a manner that is manifestly unreasonable, on untenable grounds, or for untenable reasons. Black, 116 Wn. App. at 489. A decision is based on untenable reasons if it is based on an incorrect standard. In re Marriage of Littlefield, 133 Wn.2d 39, 47, 940 P.2d 1362 (1997). Such is the case here.
Here, the trial court properly reversed the commissioner's erroneous award of costs and fees to the Estate under RCW 11.48.210, a different statute, which authorizes payment to the personal representative or attorney for his or her services performed on behalf of an estate. But in reversing the commissioner's award under this inapplicable statute, the trial court failed to consider the Estate's alternative request for fees and costs under RCW 11.96A.150, which does authorize reasonable fees and costs to an estate. Thus, the trial court exercised its discretion to deny attorney fees based solely on RCW 11.48.210, an incorrect standard, which was reversible error.
Accordingly, we reverse the trial court's denial of attorney fees and costs to the Estate and remand for the trial court to exercise its discretion as to whether it should award costs and attorney fees under RCW 11.96A.150.
B. On Appeal
We hold that as the prevailing party, the Estate is entitled under RAP 18.1 to fees and costs on appeal. We also exercise our discretion under RCW 11.96A.150(1) to award reasonable attorney fees and costs on appeal to the Estate in an amount to be determined by a commissioner of this court upon proper showing. Villegas, 112 Wn. App. at 696-97.
Affirmed in part and remanded for consideration of an award of attorney fees and costs below to the Estate under RCW 11.96A.150.
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 pursuant to RCW 2.06.040, it is so ordered.
MORGAN, J., QUINN-BRINTNALL, J., concur.