Opinion
No. 50558-1-I, 50593-9-I (Consolidated).
Filed: September 15, 2003. DO NOT CITE. SEE RAP 10.4(h). UNPUBLISHED OPINION
Appeal from Superior Court of King County. Docket No: 00-2-23766-9. Judgment or order under review. Date filed: 05/16/2002.
Counsel for Appellant(s), William Tracy Grimm, Davis Grimm Payne Marra Berry, 1111 3rd Ave Ste 1865, Seattle, WA 98101-3278.
Counsel for Respondent(s), James Ralph Dickens, Attorney at Law, 4400 Two Union Sq, 601 Union St, Seattle, WA 98101-2341.
Harbor Development Services, LLC (HDS) appeals the court — ordered dissolution of Harbor Development Services III, LLC (HDS III), a limited liability corporation owned 50 percent by HDS and 50 percent by Dave and Sandra Forman, contending that substantial evidence does not support the trial court's findings (1) that a high degree of animosity exists between the co-managers of HDS III (James Lindsay and Mr. Forman) such that they can no longer act together to make reasonable business decisions relating to the company in conformity with its purpose, and (2) that it is reasonable, practical and equitable to dissolve HDS III because of the existing conflict. Dave and Sandra Forman and Pacific Topsoils, Inc., cross-appeal the trial court's judgment against Dave Forman individually, the Forman marital community, and Pacific Topsoils, Inc., awarded on the jury verdict in favor of James Lindsay on his claims for wrongful discharge from employment in violation of public policy, breach of contract, promissory estoppel, and negligent misrepresentation in the sum of $2,028,088 plus attorney fees. The cross-appellants raise numerous assignments of error that we will discuss in the course of this opinion.
We affirm the trial court's rulings in all respects, and award James Lindsay his reasonable attorney fees and costs for defending the cross — appeal.
FACTS
James Lindsay is an experienced real estate developer with formal training in rural interurban planning. From 1976 to March 31, 1997, he owned and operated a successful consulting business that provided clients with real estate development expertise, feasibility and environmental assessments, permitting analysis, and assistance with code compliance. Dave and Sandra Forman are the sole owners of Pacific Topsoils, Inc., a company that recycles inert and organic material and distributes these materials to landscape supply companies, landscapers, and homeowners in King, Pierce, and Snohomish Counties. In 1995, Pacific Topsoils, Inc., sought Lindsay's expertise to handle a zoning issue at one of its Kenmore properties. Following this initial project, Lindsay helped the company with a variety of permitting and zoning problems that had adversely impacted the business. He also helped the company to repair and strengthen its relationships with local government agencies.
In late 1996, Forman and Lindsay began to discuss the possibility of Lindsay working for Pacific Topsoils, Inc., as an employee rather than a consultant. Forman told Lindsay that he planned to expand Pacific Topsoil's business by adding 50 new facilities over the next 10 years, and he offered Lindsay a position dedicated to locating, analyzing, and developing the company's new retail and processing centers. Despite the success of his consulting business, Lindsay was intrigued by Forman's offer. It would permit him to assist a single entity rather than multiple clients, the volume of proposed projects was significant, and Forman's proposal included an opportunity to make a substantial income through co-investment and profit-sharing. From November 1996 to March 1997, Lindsay and Forman met several times to discuss the terms of Lindsay's prospective employment by Pacific Topsoils. Lindsay's calendars and notes, which he saved, recorded the topics of discussion at those meetings, including discussions of bonuses and investment opportunities that would make up for the fact that Lindsay's base salary would be lower than what he was earning with his consulting business. Lindsay subsequently testified that Dave Forman, who was not in the habit of taking notes or writing things down, asked him to prepare a written memorandum of understanding setting out his employment terms.
On February 7, 1997, Lindsay prepared a draft memorandum of understanding outlining the terms on which he and Forman had reached tentative agreement. Lindsay testified that he and Forman then reviewed the draft point-by-point and discussed several revisions, one of which was that Lindsay would commit to 10 years of employment so that Forman's 10-year expansion plan could be completed. Lindsay testified that Forman authorized him to add that provision to the final memorandum of understanding. Forman testified that he gave no such authorization. On March 18, 1997, Lindsay revised the February 7 memorandum to reflect what he believed was the final agreement on the terms of employment, except for the subject of 'tipping fees.' The March 18 memorandum states that Lindsay's minimum annual salary will be $120,000, that he will receive full medical/dental coverage and a $400 per month auto allowance, and that he will participate in Pacific Topsoil's 401-K, vacation and sick leave plans all of these provisions to be reviewed annually.
The memorandum also states that Lindsay will receive 25 percent of profits after costs for those real estate development projects for Pacific Topsoils as to which he creates additional value through changing land use designations, such as rezoning, platting and permitting, together with the opportunity, on a project by project basis, to invest as one of the principals for other real estate opportunities that might become available through Pacific Topsoils the percentage of his participation in such other projects to be determined on a case by case basis, 'equitably and in fairness to all parties.' Exhibit 8. The memorandum also provides: 'This employment agreement will be in effect for ten years (from March 31, 1997) unless terminated or modified by mutual agreement.' Id. And the memorandum ends with these words: 'This concludes {our} negotiations; if I have misstated anything please advise prior to my joining {Pacific Topsoils, Inc.} Otherwise, I shall see you on 3-31-97.' Id. Lindsay testified that he initialed this memorandum and provided a copy to Forman, who never gave any indication that he did not agree that the memorandum properly set down the terms of Lindsay's employment. Forman testified that he never saw the March 18 memorandum until it was produced during pretrial discovery, following the commencement of Lindsay's lawsuit. It is undisputed that Forman never signed or initialed the memorandum.
Lindsay shut down his consulting business and went to work for Pacific Topsoils, Inc., on March 31, 1997. He testified that late in 1997, he and Forman agreed that in addition to the salary, benefits and opportunities provided in the March 18 memorandum, Lindsay would receive a $0.25 per yard 'tipping fee' for tipping business that he generated. Tipping fees are payments made by entities using Pacific Topsoil's facilities to dump materials. Lindsay testified that the tipping fee agreement was not included in the March 18 memorandum because the parties had not yet agreed to the precise amount that Lindsay would receive from the tipping fees, but that the word 'minimum' was inserted in front of 'annual salary' to reflect the ongoing negotiations regarding tipping fees. He also testified that tipping fees were an extremely important consideration in his decision to accept Pacific Topsoil's offer of employment. Lindsay, together with his three sons, owned a company called Harbor Development Services, LLC (HDS) which company Lindsay managed. On July 23, 1997, HDS and Pacific Topsoils, Inc., formed Harbor Development Services III, LLC (HDS III), with each entity owning half the shares. On that same day, Pacific Topsoils transferred its half interest in HDS III to Dave and Sandra Forman. HDS III's only managers are James Lindsay and Dave Forman.
The business of HDS III is:
(a) to acquire, operate, maintain and lease the Company's Property; and (b) to exercise all other powers necessary to or reasonably connected with the Company's business which may be legally exercised by limited liability companies under the Act.
Exhibit 20, at 6. The 'Act' referred to is Ch. 25.15 RCW, Washington's limited liability company statute.
By its terms, the agreement establishing HDS III was to expire on December 21, 2025, 'unless the Company is earlier dissolved in accordance with either Article 13 or the Act.' Id. Article 13 of the agreement states:
13.1 Dissolution. The Company shall be dissolved upon the occurrence of any of the following events:
(a) upon expiration of the term specified in Section 2.5;
(b) by the written agreement of all Members; or
(c) a Person ceases to be a Member upon the occurrence of any of the events specified in RCW 25.15.130(1)(d) through (i) of the Act, unless the business of the Company is continued with the consent of all of the remaining Members within ninety (90) days following the occurrence of such event.
Exhibit 20, at 23.
Shortly after HDS III was formed, it purchased a 141-acre site known as the Maple Valley Property. HDS III was able to finance the entire $450,000 purchase price without any monetary contribution from HDS, Pacific Topsoils, Inc., HDS III, Lindsay, or the Formans. HDS III purchased the property for its long-term investment potential as well as its rental value.
On August 11, 1997, HDS III and Pacific Topsoils, Inc., entered into a lease agreement for the Maple Valley Property. Pacific Topsoils leased the property in order to operate a processing plant on a portion of the property. The lease is effective for a term of 10 years, beginning on September 10, 1997, and is scheduled to terminate 120 days after the end of the 10-year term. At that time, Pacific Topsoils has an option to renew the lease for a 5-year period. As lessee, Pacific Topsoils is required to pay all property taxes, as well as all taxes generated by its business that would apply to the site, and is responsible for obtaining all permits. Since commencement of the lease, Pacific Topsoils has made the mortgage payments in lieu of rent payments. Lindsay contends that after he went to work for Pacific Topsoils, he and Forman got along well, and that Forman often remarked that he and Lindsay made a great team.
They even bought a boat and moorage space together. During his employment with Pacific Topsoils, Lindsay identified new retail and processing locations, conducted feasibility studies, and analyzed permitting arrangements. Lindsay also helped to expand the company's business by eleven new sites. On six of these sites, Lindsay increased property values by working with the land use designations, handling permitting and environmental assessment issues with the regional governmental authorities, and obtaining changes in permitted uses. Forman was pleased with Lindsay's work, and Pacific Topsoil's annual sales doubled from 1996 to 2000. In August of 1999, Lindsay's annual base salary was increased to $140,000. Lindsay testified that he generated tipping fees on Pacific Topsoil's properties, and that although he requested his portion of the tipping fees on numerous occasions, and Forman never disputed that he owed Lindsay these fees, Forman gave various excuses for delaying payment, and ultimately never paid Lindsay his share of the fees. Lindsay also testified that with respect to his 25 percent share of the profits earned by his work in increasing the value of the six properties, he expected to be paid when the properties were sold or at the end of his 10-year employment commitment, whichever came first. But his employment was terminated, and he never received any payments.
In 2000, Pacific Topsoils began to lay off employees because its business was deteriorating. In May of 2000, Forman told Lindsay that the real estate department, in which Lindsay worked, along with the construction division, would be discontinued. Forman gave Lindsay notice that he would be laid off at the end of October 2000. Lindsay testified that, after recovering from his initial shock, he asked Forman to honor his financial commitments to him but that Forman refused to engage in any discussion with him regarding their employment agreement. Lindsay then sought legal advice, and on August 24, 2000, Lindsay's attorney wrote a letter to Forman requesting to open amicable settlement negotiations to address outstanding economic issues arising from Forman's decision to terminate Lindsay's employment, and advising that Lindsay would bring a lawsuit if Forman were unwilling to discuss the matter.
When he received the letter, Forman flew into a rage. He confronted Lindsay, shouted epithets and profanities at him, fired him on the spot, and ordered him to leave the premises immediately, with no opportunity to remove any of his personal belongings from his office, and without the use of the company car which Lindsay had driven to work that day. Lindsay, who was shaken and upset, arranged for a ride home with a company employee, but when Forman learned this, he ordered the employee to bring Lindsay back.
The employee did so, and Lindsay was subjected to another angry tirade. In fear for his personal safety, Lindsay left the premises on foot and walked a mile to a location where he could arrange for a ride home. On September 14, 2000, Lindsay filed a lawsuit against Pacific Topsoils, Inc., and 'Dave and Sandra Forman, a marital community' claiming, insofar as is relevant to the cross-appeal, that he had been wrongfully discharged in violation of public policy (in retaliation for having sought to recover unpaid wages), that the defendants' actions breached his employment contract, that the defendants were also liable under the theory of promissory estoppel, and that the defendants' actions constituted negligent misrepresentation.
The Formans filed an answer denying Lindsay's claims, and a third-party claim against Lindsay and HDS seeking dissolution of HDS III. Lindsay's claims were tried to a jury. The third-party dissolution claim was tried to the court simultaneously. Lindsay called a number of witnesses at trial to testify about Dave Forman's history of making promises to employees regarding bonuses and ownership interests, and then reneging. For example, Pacific Topsoil's former general manager, Steven Steiger, testified that he never received a 10 percent share of the business as he had been promised. Another former manager, Bruce Faldborg, who worked for Pacific Topsoils for over 20 years, described the never-materializing carrot that Forman dangled in front of him for years, promising him a 10 percent share of the business and an employee buy-out plan. Two other employees testified that they were given promised bonuses only after walking off the job, and one of them had to sue in order to get the bonus.
The former employees also testified about their knowledge of the terms of Lindsay's employment compensation package, and three of them testified that they did not consider Forman honest or trustworthy, but that Lindsay had a reputation for honesty and integrity. Immediately following his termination, Lindsay tried to restart his consulting practice. The process was difficult, however, because his established clients had retained other consultants in the three-plus years that Lindsay had been working exclusively for Pacific Topsoils Lindsay's unpaid salary for the remainder of his alleged 10-year employment contract was $886,668. Lindsay also calculated that he was owed $2,111,000 for his 25 percent share of the profits on real estate development projects, and unpaid tipping fees of over $200,000. He sought total damages of $3,409,550. After Lindsay rested his case, the defendants brought a motion to amend their pleadings to assert the statute of frauds as an affirmative defense, and for dismissal of Lindsay's contract, promissory estoppel and negligent misrepresentation claims based on the statute of frauds. The trial court denied this motion, but granted another motion for dismissal of Lindsay's claims against Sandra Forman individually. The remaining defendants then presented their case to the jury.
The parties disagreed at trial as to whether, since August of 2000, they have been able to work together to properly manage HDS III. Lindsay testified that there had been no problems because HDS III basically managed itself, in that by the terms of the parties' agreement Pacific Topsoils paid the mortgage and the real estate taxes, and handled its own business and operations taxes and permits for its business operations on the premises. Because Sandra Forman took care of the mortgage payments and the taxes, Lindsay was not required to communicate with Dave Forman. Lindsay testified that he was capable of separating his anger over the termination of his employment from the kind of business judgments he might have to make in the future regarding the Maple Valley Property. But Dave Forman testified that it was not possible for the parties to work together on decisions regarding HDS III because of the hostility between him and Lindsay.
As an example of the dysfunctional relationship, Forman provided evidence that the Formans had received two different offers to purchase the Maple Valley Property, sometime between late August 2000 and the time of trial, that Forman had communicated these offers to Lindsay (through his attorney), but that Lindsay had provided no response whatsoever. Instead, Lindsay contacted the proposed purchasers directly, leaving Forman out of the discussions. On a special verdict form, the jury answered 'yes' to each of four interrogatories, and in so answering found that (1) the 'defendants' wrongfully discharged Lindsay on August 25, 2000, because of his wage claims; (2) Pacific Topsoils, Inc., breached its employment contract with Lindsay; (3) Pacific Topsoils, Inc., and Dave Forman failed to fulfill promises made at the time of his hire that Lindsay reasonably relied upon; and (4) Pacific Topsoils, Inc., and Dave Forman negligently misrepresented the terms of employment to Lindsay, which caused him damages. The jury then entered a single verdict in favor of Lindsay in the sum of '$2,028,088.00 Plus Attorney Fees.' Clerk's Papers at 627.
The trial court granted the Formans' request for dissolution of HDS III and ordered that a special master be appointed to sell the Maple Valley Property and divide the assets of the company between the owners. Following trial, Pacific Topsoils and the Formans retained new counsel (their current counsel on appeal) and requested reconsideration of the trial court's mid-trial ruling denying their request to raise the statute of frauds as an affirmative defense. They also requested remittitur or a new trial. The trial court denied these requests and entered judgment in Lindsay's favor for $2,028,088 on the verdict, plus costs of $5,186 and attorney fees of $109,794.75. These judgments were entered against Pacific Topsoils, Inc., Dave Forman, and the marital community of Dave and Sandra Forman. Following the trial court's decision regarding the dissolution of HDS III, Lindsay brought a motion for reconsideration, which the trial court denied. This appeal and cross-appeal followed. A commissioner of this court stayed the dissolution of HDS III pending the outcome of the appeal.
ANALYSIS
Issue 1: Did the trial court abuse its discretion when it denied the defendants' mid-trial motion to amend their answer to include the statute of frauds as an affirmative defense?
We will discuss the cross-appeal first. The cross-appellants' first argument is that the trial court erred when it denied their motion, made after Lindsay had rested the plaintiff's case, to amend their answer to assert the statute of frauds as an affirmative defense. Civil Rule 8(c) states that the statute of frauds is an affirmative defense that must be raised by answer and not by motion. The purpose of this is to give the plaintiff an opportunity to raise and try all factual issues related to the defense. 1 Kelly Kunsch, Washington Practice: Methods of Practice § 5.4, at 72 (1997); see also Mahoney v. Tingley, 85 Wn.2d 95, 100, 529 P.2d 1068 (1975) (certain defenses are required to be pleaded affirmatively in order to avoid surprise). In general, affirmative defenses are waived unless they are (1) affirmatively pleaded, (2) asserted in a motion under CR 12(b), or (3) tried by the express or implied consent of the parties. Henderson v. Tyrrell, 80 Wn. App. 592, 624, 910 P.2d 522 (1996).
A trial court's denial of a defendant's motion to amend the answer to add the statute of frauds as an affirmative defense will not be set aside 'except on a clear showing of abuse of discretion, that is, discretion manifestly unreasonable, or exercised on untenable grounds or for untenable reasons.' Wilson v. Horsley, 137 Wn.2d 500, 505, 974 P.2d 316 (1999). The touchstone for the denial of a motion to amend is the prejudice such an amendment would cause to the nonmoving party, and relevant facts to consider include undue delay, unfair surprise, and jury confusion. Id. at 505-06.
The cross-appellants contend that they were unaware that Lindsay was claiming to have entered into a 10-year employment contract with Pacific Topsoils until they read his trial brief, which was delivered on Thursday, January 30, 2002, five days before the start of trial on Monday, February 4, 2002. Before that, they assert, they believed that Lindsay was only claiming to have entered into an oral one-year contract. In arguing that their belief was justified, defendants point to the complaint and to the letter sent to Dave Forman by Lindsay's attorney on August 24, 2000. In the complaint, Lindsay asserts that 'Forman approached {him} in November of 1996 and offered him . . . {a} year-to-year agreement {that} would be reviewed and renewed annually, but {that} could be terminated or modified during the year by mutual agreement.' Complaint, paragraph 2.2, Clerk's Papers at 244. But the Complaint also avers that 'Forman also requested the Plaintiff provide a ten-year commitment to him and {Pacific Topsoils, Inc.,} to achieve the expansion goals for the Company and himself' and that '{i}n reliance {on} Forman's and {Pacific Topsoils'} promises and representations, Plaintiff gave up his consulting business and accepted {Pacific Topsoils'} employment offer.'
Complaint, paragraphs 2.5 and 2.6, Clerk's Papers at 245. The complaint then states causes of action for including wrongful discharge in violation of public policy, breach of contract, negligent misrepresentation, and promissory estoppel. Counsel's letter to Dave Forman states in relevant part:
Your oral agreement with {Jim Lindsay} provided for an annual salary which would be adjusted yearly. This one year employment agreement was renewed annually, but could be terminated or modified during the year by mutual agreement. . . . Finally, you requested that Jim provide a 10-year commitment to you and Pacific Topsoils, Inc. to achieve your expansion goals, both personal and business.
Exhibit 11. The letter also states:
Since you have determined to terminate Jim's annual employment agreement prior to the end of the year without mutual agreement, you are obligated to pay him the remainder of the year's salary from the date of termination.
In other words, you will owe him the balance of his $140,000 base salary plus benefits through March 31, 2001.
Id. The letter goes on to state:
When Jim gave up his highly successful consulting business to come to work for you, he undertook a substantial cut in compensation in anticipation of your promised opportunities for profits and investment opportunities. You also promised Jim this would be a long-term relationship. Now that you have unilaterally decided to end the relationship, it is incumbent upon you to fulfill your promises and obligations. Jim is agreeable to work out a mutually acceptable compromise despite the significant disappointment in finding out your plans to prematurely terminate the relationship.
If your plan is to not properly compensate Jim as described above, you should reconsider this position. . . . Your failure to pay him wages owed would result in damages for that amount plus interest and attorney's fees and double damages for willful violation of the state wage and hour laws. Jim's entitlement to monies for tipping fees and a portion of the profits on projects he improved are supported under oral contract, promissory estoppel and negligent misrepresentation doctrines, all of which are recognized under Washington state law. Similarly, his lost entitlements to potential investment opportunities would be recoverable under oral contract, promissory estoppel, and negligent misrepresentation.
Again, I would like to stress that Jim wants to work these issues out amicably with you short of litigation.
Id.
On September 8, 2000, the cross-appellants' attorney replied to Lindsay's demand letter, stating: "Pacific Topsoils, Inc. disputes the assertion that there was either a one year or ten year employment contract in place and, therefore, will not be paying Mr. Lindsay any post termination salary or benefits." Clerk's Papers at 456. This letter explicitly acknowledges the cross-appellants' understanding from the outset that Lindsay claimed to have a 10-year employment contract. Moreover, when Lindsay responded to interrogatories regarding the factual basis for the negligent misrepresentation claim, Lindsay referred to 'promises included a promise of a ten (10) year employment relationship.' Clerk's Papers at 449. And in response to a request for production of documents, Lindsay produced the memoranda of understanding dated February 7, 1997, and March 18, 1997.
When defendants took Lindsay's deposition on August 14, 2001, the following took place:
Q: Referring to the last sentence of that paragraph {referring to the March 18, 1997 memorandum as compared to the February 7, 1997 version}, 'This employee agreement will be in effect for ten years{.}' How did that change come about.
A: Dave was adamant that I commit to him for a ten year period, a minimum of ten years, in order to implement what he saw as the expansion of his firm and that's something that we discussed from time to time. He said, 'I can't start something and stop it, I need to know that you're going to be here for ten years.' So that's how that got in there.
Q: Referring to paragraph 2.5 {of Lindsay's complaint}. Again it uses the term: A 10 year commitment to him, Mr. Forman had requested that you provide a 10 year commitment. What does that refer to? A That he wanted to make sure that I was going to be there at least 10 years. He wanted me to agree and he also would agree that we would have this relationship for at least 10 years because that's how long he felt it would take to do what he wanted to get done. And that was something that he was adamant about.
Clerk's Papers at 459-60. Then, in his trial brief Lindsay averred that Forman 'promised' him a 10-year commitment, and that he relied on 'the promises' of various inducements and 'financial security over a ten-year period.' Clerk's Papers at 270-71.
We agree with the trial court that regardless of the fact that Lindsay said in his attorneys' letter of August 24, 2000 that he would be willing to settle for being paid the remainder of his salary from the date of termination to March 31, 2001, together with some amicable resolution of the remaining compensation issues, he was claiming to have a 10-year employment agreement which he would seek to enforce in the event of litigation. That the cross-appellants understood this from the outset is clear from defense counsel's letter written in response to Lindsay's demand letter. To the extent that there could have been any need for further clarification, Lindsay's answers to interrogatories and deposition provided such clarification. And finally, with 5 days remaining before trial, Lindsay's trial brief reiterated his position if any further notice was due in time for defense counsel to move on shortened time to amend the answer at the outset of trial. Instead, defendants waited until Lindsay had rested his case. If any party was 'lying in the weeds' intent upon a trial by ambush, it was cross-appellants, not Lindsay. The trial court did not abuse its discretion in ruling that the statute of frauds was waived as an affirmative defense for failure to timely move to amend the answer in order to raise the defense.
We decline to review the cross-appellants' contention that Lindsay would not have been prejudiced because he had already presented evidence to the jury with the statute of frauds in mind. This bald assertion is made without reference to the report of proceedings, and without any summary of just what evidence the cross-appellants may be referring to. See Brief of Pacific Topsoils, Inc., and Dave and Sandra Forman as Cross-Appellants, at 19. See also RAP 10.3(a)(4) and (5) (Reference to the record must be included for each factual statement contained in sections of the brief devoted to the Statement of the Case and to Argument). We also reject the contention that because Lindsay's counsel did some research on the statute of frauds prior to trial as reflected by counsel's declaration in support of the attorney fee award there would have been no prejudice if the trial court had permitted the amendment. Counsel's research would have led him to conclude that the issue had been waived, in that it had not been pleaded as an affirmative defense. See Henderson v. Tyrell, 80 Wn. App. at 624.
Because the statute of frauds was waived as an affirmative defense, we decline to reach the cross-appellants' contention that if they had been permitted to amend their answer, they would have prevailed with respect to all of the plaintiff's causes of action with the exception of the unlawful discharge in violation of public policy claim.
Issue 2: Should Lindsay's negligent misrepresentation claims against the defendants have been dismissed as a matter of law?
The defendants next argue that the jury's verdict for Lindsay on the claim of negligent misrepresentation should be reversed because a negligent misrepresentation claim 'requires a false representation as to a presently existing fact' and cannot be premised on 'a failure to perform a promise of future conduct.' Washington has adopted the negligent misrepresentation standards set by the Restatement (Second) of Torts § 552(1) (1977):
One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.
ESCA Corp. v. KPMG Peat Marwick, 135 Wn.2d 820, 826, 959 P.2d 651 (1998). While the elements of proof for misrepresentation include misrepresentation of an existing fact, 'if a promise is made for the purpose of deceiving and with no intention of performing' it may be actionable. Sprague v. Sumitomo Forestry Co., Ltd., 104 Wn.2d 751, 762, 709 P.2d 1200 (1985), citing Markov v. ABC Transfer Storage Co., 76 Wn.2d 388, 396, 457 P.2d 535 (1969). It was this kind of promise, one 'for the purpose of deceiving and with no intention of performing' that Lindsay alleged.
Lindsay provided substantial evidence in support of his theory, through the testimony of several former employees of Pacific Topsoils who had received similar promises that were broken by Forman. The jury was entitled to infer, and by the verdict clearly did infer, that Forman had no intention of keeping his promises to Lindsay. Moreover, a plaintiff may properly base his claim of negligent misrepresentation on the terms of the defendant-employer's job offer. See Chapman v. Marketing Unlimited, Inc., 14 Wn. App. 34, 36, 539 P.2d 107 (1975) (plaintiff proved his claim of negligent misrepresentation by showing that he relied upon the employer's false valuation of company stock when he quit his job and went to work for the defendant, who had promised him the opportunity to purchase the stock at a favorable price).
Issue 3: Do the record and the law support the individual liability of Dave Forman and the marital community?
The cross-appellants next argue that Dave Forman was improperly held individually liable because (1) neither he nor his wife was named individually in the caption of the Complaint, which named 'Dave and Sandra Forman, a marital community'; thus only their marital community was sued and not the spouses individually; and (2) when Sandra Forman was dismissed as a defendant, the marital community was also dismissed, automatically and as a matter of law, so that the claims against Dave Forman and the marital community never should have been submitted to the jury. The cross — appellants cite no authority whatsoever for either of these propositions. Accordingly, we decline to review them. See Bohn v. Cody, 119 Wn.2d 357, 368, 832 P.2d 71 (1992) (an argument will not be considered if it is inadequately briefed); see also RAP 10.3(a)(5) (argument must be supported by citation to the record and authority).
The cross-appellants also argue that Dave Forman cannot be individually liable for Lindsay's claims of wrongful discharge in violation of public policy, promissory estoppel, or negligent misrepresentation because Pacific Topsoils, Inc., not Dave Forman, was Lindsay's employer, and there is no evidence that Dave Forman acted on his own behalf; rather, he clearly acted as an agent of the employer. But wrongful discharge in violation of public policy and negligent misrepresentation are tort claims. Corporate officers who directly act or 'knowingly participate' may be held personally liable for torts committed in the course of and within the scope of their official duties to the corporation. See Johnson v. Harrigan-Peach Land Dev. Co., 79 Wn.2d 745, 753, 489 P.2d 923 (1971). Moreover, Dave Forman's personal liability for the wrongful discharge claim is the law of the case.
Instruction 21 told the jury:
Washington state law provides that any employee, officer, vice principal or agent of any employer who willfully and with intent to deprive the employee of any part of his wages, shall pay any employee a lower wage than the wage such employer is obligated to pay such employee by any statute, ordinance or contract shall be guilty of a misdemeanor. Washington law also provides that any employer and any officer, vice principal or agent of any employer who shall violate the provisions of the foregoing paragraph shall be liable in a civil action by the aggrieved employee or his assignee to judgment for twice the amount of the wages unlawfully rebated or withheld by way of exemplary damages, together with the costs of suit and a reasonable sum for attorneys' fees, provided, however, that the benefits of this section shall not be available to any employee who has knowingly submitted to such violations.
Instruction 21, Clerk's Papers at 380. The cross-appellants did not object to this instruction during trial. Neither have they assigned error to it in this appeal.
In a footnote to the Statement of the Case section of their opening brief, the cross-appellants admit that they did not except to Instruction 21 at the trial. They nevertheless contend that the trial court sua sponte should have declined to give the instruction because it states that agents of employers who willfully and with intent to deprive the employee pays him less than the wage to which he is entitled is guilty of a misdemeanor, and because it also tells the jury that such an agent is liable in a civil suit for double the amount of the withheld wages together with an award of attorney fees. The defendants contend that Instruction 21 is so prejudicial that they ought to be permitted to raise a claim of error for the first time on appeal for manifest constitutional error that violated their rights to due process. Cross-Appellants' Opening Brief at 13, n. 3.
In their reply brief, they assert that the 'improper submission' of Instruction 21 should warrant a new trial. Cross-appellants' reply brief at 24-25. These cryptic references constitute the sum-total of the cross — appellants' 'briefing' with respect to Instruction 21. "{N}aked castings into the constitutional sea are not sufficient to command judicial consideration and discussion." In re Rosier, 105 Wn.2d 606, 616, 717 P.2d 1353 (1986), quoting United States v. Phillips, 433 F.2d 1364, 1366 (5th Cir. 1970). Moreover, placing an issue of this nature in a footnote to the Statement of the Case section of an appellant's brief is, at best, ambiguous or equivocal as to whether the issue is truly intended to be part of the appeal particularly where the sections of the brief devoted to assignments of error and corresponding issue statements make no mention of the issue, and the only argument provided is contained in the reply brief with no citation to authority. Even if cross-appellants intended to assign constitutional error to Instruction 21, we decline to consider the matter. See State v. Johnson, 69 Wn. App. 189, 194 n. 4, 847 P.2d 960 (1993).
The cross-appellants also argue that even if he is individually liable for the tort claims, Dave Forman cannot be held individually liable for Lindsay's emotional distress. Cross-appellants provide no authority for this dubious proposition; accordingly, we decline to consider it. With respect to the promissory estoppel claim, Instruction 15 told the jury: 'Promissory estoppel means that when justice requires it, a person will be prevented (estopped) from denying a contract based on his or her promise, when another person reasonably relied upon that promise{.}' In explaining what a plaintiff asserting a contract based on promissory estoppel has the burden of proving, this instruction referred to 'defendants' in the plural, as did the special verdict form, which asked the jury whether 'defendants Pacific Topsoils, Inc., and Dave Forman fail{ed} to fulfill promises made at the time of his hire that plaintiff reasonably relied upon in accepting employment?' To this inquiry, the jury answered, 'Yes.' Instruction 15; Clerk's Papers at 374; Special Verdict Form, Question and Answer Number 3, Clerk's Papers at 627.
Without citation to the record to show that they objected to Instruction 15 and the special verdict form, and without citation to authority, cross — appellants argue that Dave Forman should not have been held individually liable on the claim for promissory estoppel, in that he acted as an agent of Pacific Topsoils, Inc., and not on his own behalf or that of the marital community. Because they have failed to brief the issue of whether the co — owner of a closely-held corporation that is held as a community asset who makes promises that are enforceable under the doctrine of promissory estoppel did not incur the obligation in the management of community assets for the benefit of the community, we decline to address the issue.
The cross-appellants also contend that because the trial court dismissed Dave Forman from the plaintiff's breach of contract claim for 25 percent of the increased value of selected real properties attributable to his work, and because neither the jury instructions nor the verdict form informed the jury of this fact, and because the verdict form did not require the jury to segregate damages among the various claims and defendants, the trial court erred in entering judgment against Dave Forman and the marital community. They also contend that the jury award cannot be related to lost wages because, at most, Lindsay's lost future salary was $910,000 not $2 million therefore, the damages award must be based on Lindsay's 'lost investment' claim, for which the court had ruled that Dave Forman could not be held individually liable. Cross-Appellant's Opening Brief at 30-31.
We first observe that cross-appellants fail to cite to any place in the record showing that they objected to the verdict form or offered a special verdict form of their own and took exception to the court's failure to utilize it. A party's failure to object to the form of a special verdict while the trial court still has control over the form precludes consideration of the issue on appeal. Lahmann v. Sisters of St. Francis of Philadelphia, 55 Wn. App. 716, 723, 780 P.2d 868 (1989), citing J.C. Motor Lines, Inc., v. Trailways Bus Sys., Inc., 689 F.2d 599 (5th Cir. 1982). Moreover, if a party is dissatisfied with a verdict form, he has a duty to propose an appropriate form. Wickswat v. Safeco Ins. Co., 78 Wn. App. 958, 966-67, 904 P.2d 767 (1995) (citing Queen City Farms v. Central Nat'l Ins., 126 Wn.2d 50, 882 P.2d 703 (1994) for the proposition that while there is no specific rule for properly objecting to special jury verdict forms, the rules governing preservation of instructional error apply by analogy). Thus we conclude that cross-appellants may not now complain that the special verdict form did not require the jury to segregate damages amongst the various claims and defendants.
We next observe that the verdict form did indicate to the jury that the breach of contract claim was against Pacific Topsoils, Inc., and not against Dave Forman. Question Number 2 asked the jury whether Pacific Topsoils breached the terms of its employment agreement with Lindsay. It did not, as did the other questions, including the question regarding promissory estoppel, refer either to 'the defendants' collectively or to 'Pacific Topsoils, Inc., and Dave Forman.' And the form asked the jury, if it should reach the final question, to render a general verdict for the plaintiff 'against the defendants.' Clerk's Papers at 626-27. Moreover, although Lindsay tried his case utilizing four theories and prevailed on all of them, lost wages were an appropriate measure of damages with respect to all of them. See Gaglidari v. Denny's Restaurants, Inc., 117 Wn.2d 426, 450, 815 P.2d 1362 (1991) (lost wages are recoverable as damages for breach of employment contract); Klinke v. Famous Recipe Fried Chicken, Inc., 94 Wn.2d 255, 257, 616 P.2d 644 (1980) (oral contract for grant of a 10-year franchise not enforceable under statute of frauds, but enforceable on a theory of promissory estoppel, which will support a claim for damages, including lost earnings); Cagle v. Burns Roe, Inc., 106 Wn.2d 911, 916, 726 P.2d 434 (1986) (lost wages and benefits and damages for emotional distress are all recoverable for the tort of wrongful discharge in violation of public policy); Chapman, 14 Wn. App. at 40 (employee who gave up existing employment to accept at-will position with another employer in reliance upon negligent misrepresentation regarding value of employment benefits, and who would not have given up his old job if he had known the true facts, and who was terminated by new employer 4 months later and remained unemployed for a considerable period of time entitled to recover the value of his lost earnings from negligent employer, that being the difference between what he would have earned if he had remained with his former employer and his actual earnings, for a reasonable period of time while he became reestablished in employment).
Moreover, the trial court instructed the jury with respect to measurement of damages as to each of Lindsay's theories of recovery. Those instructions are the law of the case, in that no error has been assigned to them in the cross-appeal. As to the breach of contract and promissory estoppel claims, the jury was told that if its verdict was for Lindsay, the measure of actual damages would be those losses that were reasonably foreseeable at the time the contract was made, as a probable result of the breach, and that the jury should determine the sum of money that would put the plaintiff in as good a position as he would have been if defendants had performed all of their promises under the contract. Instruction 19, Clerk's Papers at 378. Although the trial court dismissed Dave Forman as a defendant with respect to the breach of contract claim, it did not release him with respect to the promissory estoppel claim. Instruction 15 told the jury that '{p}romissory estoppel means that when justice requires it, a person will be prevented (estopped) from denying a contract based on his or her promise, when another person reasonably relied upon that promise. The same instruction told the jury that Lindsay had the burden of proving, inter alia, that defendants made promises to plaintiff of one or more of the following: 'a ten year employment term; a twenty-five percent split of the profits of the increased value on projects that plaintiff worked on; that plaintiff would be offered real estate investment opportunities; and that plaintiff would receive a portion of the tipping fees charged to customers.' Instruction 15, Clerk's Papers at 374.
As for the negligent misrepresentation claim, the jury was told that the defendants were liable for the monetary loss caused to plaintiff by his justifiable reliance on the information provided by defendants, if it found that the defendants failed to exercise reasonable care or competence in communicating the information. Instruction 16, Clerk's Papers at 375. And as to the wrongful discharge claim, the jury was instructed that if its verdict were to be for the plaintiff, in determining damages it should consider the reasonable value of lost past earnings and fringe benefits from the date of his wrongful discharge to the date his position at Pacific Topsoils, Inc., would have been eliminated for other reasons, and any emotional harm to the plaintiff caused by the defendants' wrongful conduct. Instruction 20, Clerk's Papers at 379. In addition, Instruction 21, which we quoted earlier in this opinion, not only informed the jury of Dave Forman's personal liability for any wrongful discharge in violation of public policy, but also that such a discharge would make him liable in a civil suit for twice the amount of wages unlawfully withheld, by way of exemplary damages, together with a reasonable sum for attorney fees. Cross — appellants reluctantly concede that Lindsay may have a legally cognizable claim for wrongful discharge in violation of public policy.
Since the jury explicitly included an award of attorney fees in its verdict, and it could only have done so by referencing Instruction 21, it is also possible that it doubled the portion of its verdict that related to lost past earnings and fringe benefits, including tipping fees, from the date of Lindsay's wrongful discharge to the date that his position at Pacific Topsoils, Inc., would have been eliminated for other reasons. Although the jury heard evidence that the position was going to be eliminated in the coming fall, the verdict on the negligent misrepresentation claim clearly indicates that the jury believed that Dave Forman never intended to keep his promises to Lindsay and that the loss of business during 2000 was merely an excuse to get rid of Lindsay in order to avoid keeping his promises with regard to compensation over and above Lindsay's base salary, and that there were no 'other reasons' for eliminating his position before the end of the 10-year promise of employment. Cross-appellants have stated that, at most, the jury could have found Lindsay's lost future earnings to be $910,000 (Lindsay calculated his lost future earnings to be $886,668). From this they conclude that the damages awarded 'cannot be related to lost wages,' and that '{t}he damages awarded must have been based on Lindsay's 'lost investment' claim, for which the court had ruled Dave Forman could not be liable.' Cross-Appellant's Opening Brief at 31. But if the jury found that Dave Forman would not have eliminated Lindsay's position during the remainder of the 10-year period of promised employment but for the fact that Lindsay was by then pressing to be paid his share of the tipping fees by then worth some $200,000 in value and never intended to keep his promises to Lindsay anyhow, just as he never kept his promises to his former employees who testified at trial, the jury could have read instructions 20 and 21 together and simply doubled the sums owed to Lindsay for past and future lost earnings.
Finally, although the court dismissed Dave Forman from individual liability on the breach of contract claim, it did not do so with respect to the promissory estoppel claim. The contract claim and the promissory estoppel claim are effectively the same claim indeed, all of Lindsay's theories of recovery are essentially the same claim in that they rest on the same evidence, albeit with differing underlying theoretical bases.
Issue 4: Did the trial court err by permitted Lindsay to testify 'as an expert' regarding the increased value of Pacific Topsoils' properties?
The cross-appellants next argue that the trial court erred when it permitted Lindsay to testify 'as an expert' on the value of Pacific Topsoils' properties. They objected at trial to 'any opinion testimony or hearsay testimony about valuation based on lack of foundation and no showing that there is any specialized training in valuation.' Report of Proceedings at 111-12. The trial court then requested establishment of a foundation. Lindsay testified that his job included evaluating parcels, purchasing new properties, and expanding the permitted uses of and thereby enhancing the value of Pacific Topsoils' properties. The court permitted Lindsay to give his opinion regarding the value and enhanced value of various properties attributable to his work. It is unclear from the record whether the court intended to permit Lindsay to testify 'as an expert.'
The cross-appellants did not state that they were objecting to Lindsay testifying 'as an expert' and the court did not use that term when permitting the testimony. The cross-appellants point to no place in the record showing that Lindsay was permitted to base his opinions on hearsay or specialized training. Nor do they point to any jury instruction regarding expert testimony. We think it more likely that the court found the foundation testimony adequate to permit Lindsay to testify as a lay witness and cross-appellants do not challenge the adequacy of the foundation for that purpose. Courts permit lay witnesses with some knowledge of the real estate in question to give an opinion regarding value. See Pacific NW Pipeline Corp. v. Myers, 50 Wn.2d 288, 292, 311 P.2d 655 (1957); Cunningham v. Town of Tieton, 60 Wn.2d 434, 436, 374 P.2d 375 (1962) (an owner of property may testify as to its value); Wilson v. Pacific Power Light Co., 171 Wn. 232, 234, 17 P.2d 846 (1933) (neighboring rancher may give his opinion as to the value of property). Lindsay's foundation testimony was certainly adequate to permit his opinion testimony as a lay witness. Moreover, Dave Forman was permitted to give similar testimony regarding his opinions as to value. We see no abuse of discretion here, and no prejudice to the cross-appellants. It is for the trier of fact to determine how much weight to give to opinion testimony. Worthington v. Worthington, 73 Wn.2d 759, 763, 440 P.2d 478 (1968); Pacific NW Pipeline Corp., 50 Wn.2d at 292.
Issue 5: Did the trial court err when it denied the motion for remittitur or a new trial?
The cross-appellants challenge the trial court's denial of their motion for remittitur or a new trial, contending that (1) the damages awarded by the jury are not supported by the evidence presented in the wrongful discharge claim, and (2) that the amount of the damage awarded is not supported by the evidence, and thus the jury was improperly motivated. A court may only grant a remittitur if the damages are 'so excessive as to manifestly have been the result of passion or prejudice, or if the verdict is unsupported by substantial evidence.' Green v. McAllister, 103 Wn. App. 452, 462, 14 P.3d 795 (2000). We review trial court decisions regarding motions for remittitur or a new trial for abuse of discretion. Sofie v. Fibreboard Corp., 112 Wn.2d 636, 667, 771 P.2d 711, 780 P.2d 260 (1989) (remittitur); Sommer v. Department of Soc. Health Servs., 104 Wn. App. 160, 172, 15 P.3d 664, review denied, 144 Wn.2d 1007 (2001) (motion for new trial).
The record, as discussed at length already, contains substantial evidence in support of Lindsay's economic damages arising from the wrongful discharge claim as well as the other theories of recovery. The record also contains substantial evidence to support an award for emotional damages arising from the tort claims. Because the jury never was requested to segregate damages, we will not speculate regarding the amount of the total award that may have been attributable to emotional distress, but we observe that the jury heard evidence that Dave Forman yelled and cursed at Lindsay in the course of firing him, refused to permit him to remove his personal property from his office, refused to permit another employee to drive him home, subjected him to a second diatribe, and left him to flee the premises on foot out of fear for his personal safety. After giving up his own business and devoting several years to Pacific Topsoils, Inc., Lindsay had a difficult time reestablishing himself in business because his clientele had found other consultants to take his place.
Dave Forman also sent a letter to various members of the business community announcing Lindsay's separation from Pacific Topsoils, adding to Lindsay's humiliation. In Herring v. Department of Soc. Health Servs., 81 Wn. App. 1, 13, 914 P.2d 67 (1996) the court upheld an award of $550,000 for emotional distress arising from a wrongful discharge in violation of public policy. In Passantino v. Johnson Johnson Consumer Prods., Inc., 212 F.3d 493, 513 (9th Cir. 2000) the court upheld a $1 million award for emotional distress arising from a wrongful discharge. Although Lindsay sought over $3 million in economic damages alone, the jury awarded substantially less than that and may have awarded little if any for emotional damages. The trial court did not err in refusing to second-guess the jury. Courts start with the presumption that a jury's award of damages is correct. Green, 103 Wn. App. at 461. The cross-appellants failed to overcome that presumption.
Issue 6: Did the trial court properly grant Lindsay's post-trial request for attorney fees?
The cross-appellants next seek to strike the trial court's award of attorney fees to Lindsay, on the basis that only his wrongful discharge in violation of public policy claim would allow for recovery of lost wages, and therefore attorney fees. RCW 49.48.030 allows recovery of attorney fees when the plaintiff recovers lost wages. Gaglidari, 117 Wn.2d at 448. But as we have already noted, all of Lindsay's claims included lost wages as an element of damages, and recovery of attorney fees does not depend upon the legal theory under which lost wages are awarded in any event. Nevertheless, because the jury was instructed that only the wrongful discharge claim warranted an award of attorney fees, and because the jury specifically included an award of attorney fees in addition to the monetary verdict, it seems clear that the jury based the award of attorney fees on the wrongful discharge claim.
We review an award of attorney fees for abuse of discretion. Gaglidari, 117 Wn.2d at 450. The trial court did not abuse its discretion by setting the amount of attorney fees to be awarded. Cross-appellants do not challenge the trial court's calculation of what award of attorney fees was reasonable under the circumstances of this case in which all of the evidence that supported the wrongful discharge claim also supported Lindsay's other theories of recovery, so that segregation of attorney fees among the various claims would be difficult in any event. Cross-appellants take instead the position that no award of attorney fees should have been granted because plaintiff drafted the verdict form and failed to request the jury to segregate damages among the various claims and among the various elements of each claim for example, lost wages. But as we have already noted, there was no objection to the verdict form while the trial court still had control over it, and cross-appellants did not request a different verdict form, which they needed to do in order to preserve the issue for appeal.
The present challenge to attorney fees appears, at least in part, to be a backdoor effort to revisit an issue that was not preserved for appeal, namely, the special verdict form. Moreover, where claims are so closely related that no segregation can be made, there need be no segregation of attorney fees. See Pannell v. Food Servs, of Am., 61 Wn. App. 418, 447, 810 P.2d 952, 815 P.2d 812 (1991). And finally, Washington courts have broadly defined the scope of attorney fees recoverable for 'wages or salary owed' under RCW 49.48.030 to include 'any type of compensation due by reason of employment.' Bates v. City of Richland, 112 Wn. App. 919, 940, 51 P.3d 816 (2002). In the absence of any effort to show that the trial court abused its discretion in setting the amount of attorney fees, we decline to review the issue further.
Issue 7: Is Lindsay entitled to attorney fees and costs expended to defend against the cross-appeal?
Lindsay asks, pursuant to RAP 18.1 and RCW 49.48.030, that this court award his attorney fees and costs expended on this appeal. We award Lindsay his reasonable attorney fees and costs for defending against the cross-appeal, though not for his appeal of the trial court's order dissolving HDS III. See, e.g., Kohn v. Georgia-Pac. Corp., 69 Wn. App. 709, 727, 850 P.2d 517 (1993) (breach of employment contract plaintiff, who successfully defended judgment in her favor on appeal, was entitled to attorney fees on appeal).
The cross-appellants provided no argument on this issue.
Issue 8: Did the trial court err in finding that there was animosity between the co-managers of HDS III, and that HDS III should be dissolved because it was not reasonably practical to carry on the business; and did the court err by appointing a special master to deal with the sale of HDS III's property?
We turn now to HDS's appeal of the trial court's rulings regarding the dissolution of HDS III.
(a) Standing
Bohn v. Cody, 119 Wn.2d 357, 368, 832 P.2d 71 (1992) (an argument won't be considered if it's inadequately briefed); see also RAP 10.3(a)(5) (argument should be supported by citation of authority).
At the outset, the respondents argue that HDS is precluded from seeking review of the dissolution judgment because, after HDS was made a third — party defendant by delivery of the third-party complaint to Lindsay (the managing agent of HDS), only Lindsay entered an appearance and answered the third-party complaint. While this issue was not raised below, lack of standing to pursue an appeal is a jurisdictional issue that may be raised for the first time in the appellate court. International Ass'n of Firefighters v. Spokane Airports, 103 Wn. App. 764, 768, 14 P.3d 193 (2000), aff'd, 146 Wn.2d 207 (2002).
We hold that HDS has standing to proceed in this appeal. Individuals or entities that 'seek review by the appellate court' must be 'aggrieved part{ies}.' RAP 3.1. An 'aggrieved party' is one 'whose proprietary, pecuniary, or personal rights are substantially affected.' Aguirre v. AT T Wireless Servs., 109 Wn. App. 80, 85, 33 P.3d 1110 (2001), review denied, 146 Wn.2d 1017 (2002). HDS owns 50 percent of HDS III, and thus the trial court's dissolution of HDS III clearly affected HDS's 'proprietary, pecuniary, or property rights.' The respondents' key contention on this issue, however, is that HDS was not a party below.
Generally, the aggrieved party on appeal must have been a party in the action below. See Sheets v. Benevolent Protective Order of Keglers, 34 Wn.2d 851, 210 P.2d 690 (1949). But see Task Force Comments to RAP 3.1, stating:
A person may be an aggrieved party even though that person was not a party to the proceedings below. For example, a complainant mother may be an aggrieved party in a filiation proceeding brought in the name of the State, as in State v. Casey, 7 Wn.App. 923, 503 P.2d 1123 (1972).
Additionally, although HDS did not formally appear below, it appeared informally, in that Lindsay, as managing partner and partial owner of HDS, appeared and sought relief on behalf of HDS. See Batterman v. Red Lion Hotels, Inc., 106 Wn. App. 54, 62, 21 P.3d 1174 (2001) (agent's acts constituted an informal appearance on behalf of the defendant).
(b) Dissolution of HDS III
On application by or for a member or manager, a superior court may dissolve a limited liability company if (1) it is not reasonably practicable to carry on the business in conformity with the agreement; or (2) other circumstances render dissolution equitable. RCW 25.15.275. Dave Forman, a co-owner and co-manager of HDS III, applied to the court with his wife for the dissolution of HDS III. They claimed that it was not reasonably practicable to continue carrying on the business and that other circumstances rendered dissolution equitable, and the trial court agreed. HDS argues on appeal that the trial court erred in dissolving HDS III.
HDS challenges the sufficiency of the evidence in support of the trial court's findings of fact number 2.7 and 2.8, stating:
2.7 A high degree of animosity now exists between both the members and co-managers (Mr. Lindsay and Mr. Forman) of Harbor Development III such that they no longer can act together to make reasonable business decisions relating to Harbor Development III in conformity with its purpose.
2.8 It is reasonable, practical and equitable to dissolve Harbor Development III because of the existing conflicts between the members and co-managers.
Clerk's Papers at 156-57. The court also entered conclusion of law number 3.2, stating: 'Consistent with RCW 25.15.275, Harbor Development Services III, L.L.C., should be dissolved immediately.' Id. at 157. The court appointed a special manager to handle the sale of HDS III's assets and to distribute the assets among the co-owners.
Substantial evidence supports the challenged findings. The history of the bad blood between Lindsay and Dave Forman is amply covered in the section of this opinion covering the cross-appeal and need not be repeated here. Although Lindsay testified that he could separate his anger at how he was treated at the termination of his employment with Pacific Topsoils from the kinds of business judgments he needed to make regarding HDS III, Dave Forman gave no such testimony. The trial court was entitled to infer that Dave Forman could not keep from letting animosity govern his business judgments when it come to dealing with James Lindsay. The court also noted, and aptly so, that the jury's verdict in favor of Lindsay was not likely to improve Dave Forman's ability to get along with Lindsay. These parties' inability to work together was further evidenced by the events surrounding the two separate offers made by outside parties to purchase the Maple Valley Property, the principal asset owned by HDS III. Dave Forman communicated the offers to Lindsay through Lindsay's attorney, rather than to Lindsay, and Lindsay never responded at all to Forman, either directly or through Forman's attorney. Instead, he communicated with the prospective purchasers without including Dave Forman in the communications. Notwithstanding Lindsay's testimony to the contrary, this does not demonstrate an ability or willingness on his part to work together with Dave Forman the only other co-manager of HDS III.
'Substantial evidence' is evidence of 'sufficient quantity to persuade a fair-minded, rational person of the truth of the declared premise.' World Wide Video, Inc. v. City of Tukwila, 117 Wn.2d 382, 387, 816 P.2d 18 (1991).
Although the Maple Valley Property was purchased in part for its long-term investment value and it may be worth more in the future than it is now, there is evidence in the record that the property has already appreciated substantially. Moreover, Lindsay is a sophisticated investor who can find other profitable uses for HDS's share of the proceeds of sale.
We reject HDS's argument that the trial court erred by relying on the Act rather than on the dissolution provisions contained in the parties' agreement establishing HDS III, in reaching its decision. Specifically, HDS objects to the appointment of the special master, a subject that is not covered by the agreement. But the agreement specifically states that the company can be dissolved either in accord with the terms of the agreement or under the Act referring to the limited liability company statute. Substantial evidence supports the trial court's findings of fact. The findings, in turn, support the conclusions of law. There was no error here, with respect to the dissolution decision or with respect to the appointment of a special master. From the evidence, it appears that there may be problems selling the Maple Valley Property until it resolves a code violation and receives a letter from the Environmental Protection Agency regarding any need for clean-up of the property. Although these are subjects of Lindsay's expertise, he points to no evidence showing that he has been willing to address these potential problems. We think that the trial court's decision to appoint a special master to deal with issues attendant to sale of the property was wise.
Issue 10: Should the respondents be sanctioned for citing to an unpublished out of state opinion?
In a final matter, HDS asks that this court sanction the respondents for relying on an unpublished Connecticut opinion in their brief responding to HDS's appeal. Unpublished opinions have no precedential value and are not to be cited or relied upon. Skamania County v. Woodall, 104 Wn. App. 525, 536 n. 11, 16 P.3d 701, review denied, 144 Wn.2d 1021 (2001) (citing RAP 10.4(h) and imposing $500 in sanctions against counsel who cited and discussed at length an unpublished opinion of this court).
The unpublished opinion cited by the Respondents was not from within this state. In a recent opinion, Mendez v. Palm Harbor Homes, Inc., 111 Wn. App. 446, 45 P.3d 594 (2002), another division of this court declined to impose sanctions when an out of state unpublished opinion was cited. After noting its 'disapproval' of the usage 'for future guidance,' the court held:
{W}e will not impose sanctions in this case because we believe the rules require clarification. RAP 10.4(h) limits its citation prohibition to unpublished opinions of "the Court of Appeals." 'Unpublished opinions of the Court of Appeals are those opinions not published in the Washington Appellate Reports." RAP 10.4(h). Thus, RAP 10.4(h) does not expressly prohibit citation to unpublished opinions of other jurisdictions. For clarification, RAP 10.4(g) states a party "should" cite to both state and national reporters for state cases and "should" cite to the federal reporters for federal cases other than the United States Supreme Court. For the United States Supreme Court, the party "should" cite to "the United States Reports, the United States Supreme Court Reports Lawyers' Edition, and the Supreme Court Reporter." RAP 10.4(g).
111 Wn. App. 446, 471-73, 45 P.3d 594 (2002) (emphasis added).
This division has not ruled on the matter of citing unpublished opinions from out of state, and we see no need to do so now. We do not believe that the respondents exercised bad faith in resorting to the citation, in that there is little case law, in Washington or elsewhere around the country, addressing court-ordered dissolutions of limited liability companies. We elect to deny the request for sanctions in favor of simply ignoring the citation, which contains nothing that has influenced our disposition of this appeal, and which was not cited in bad faith.
We affirm the trial court's rulings in all respects, both as to the appeal and the cross-appeal. The respondents are entitled to recover costs on appeal for defending the trial court's dissolution order, though not for bringing the cross-appeal.
BECKER and COX, JJ., concur.