Opinion
No. 64826-8-I.
March 28, 2011. UNPUBLISHED OPINION
Appeal from a judgment of the Superior Court for King County, No. 09-2-27624-2, Michael J. Fox, J., entered December 18, 2009.
Affirmed by unpublished opinion per Spearman, J., concurred in by Leach, A.C.J., and Lau, J.
At issue in this case is whether Washington law applies, and therefore, whether Hillcrest Media, LLC was precluded by former RCW 18.85.100 (2008) from suing for a commission for a real estate transaction where Hillcrest was not a licensed real estate broker in Washington. Because the state "having the most significant relationship with the contract" at issue here was Washington, the trial court correctly concluded Washington law applies and properly dismissed Hillcrest's claims. We affirm.
FACTS
Hillcrest Media is an Arkansas limited liability company, and its agent, Larry Morton, is an Arkansas resident and Arkansas-licensed real estate broker. Neither Hillcrest nor Morton is a licensed real estate broker in Washington. Fisher Broadcasting Company and its parent corporation, Fisher Communications (hereinafter collectively "Fisher"), are both Washington corporations whose principal places of business are in Washington state.
Fisher sought to purchase KWOG, a Bellevue, Washington television station. KWOG was owned by African-American Broadcasting of Bellevue, Inc. ("AAB"), a Washington corporation. Hillcrest alleges that in a letter dated March 24, 2006, Fisher authorized Hillcrest to act as its agent in negotiating this purchase. The letter states its purpose was "to outline the terms of our understanding" and notes that "[t]hese terms may need to be documented in a more formal agreement[.]" The letter goes on to detail the terms and obligations of the parties:
The letter is addressed to Larry Morton at Equity Broadcasting Corporation, but it authorizes either Equity or an "affiliated entity" to act as Fisher's agent. According to the complaint, Hillcrest was an affiliated entity of Equity
1. You previously entered into a letter of intent with African-American Broadcasting in January 2006 to purchase all of the shares of that company for $16 million, and we understand that the letter of intent has expired. We request that you execute a new letter of intent with African-American Broadcasting Co. that includes the following terms:
a. Revised terms for a transaction structured as an asset purchase (instead of a stock purchase)
b. Due diligence period of 45 days
c. Exclusive dealing clause that begins with the signing of the letter of intent and runs through the due-diligence period
d. No prohibitions on sharing information with others (i.e., similar to the initial letter of intent)
2. We intend to work together on performing due diligence procedures. For general due diligence, we anticipate that Joe Lovejoy and I would be involved in reviewing the information that you obtain. For technical due diligence, Kelly Alford would provide due diligence support to Equity Broadcasting (or affiliated entity) and interface directly with African-American Broadcasting Co.
3. We intend to provide you with a draft asset purchase agreement that would allow Equity Broadcasting (or affiliated entity) to assign its rights to another entity (i.e., Fisher Communications or subsidiary). Upon execution of the asset purchase agreement, the purchase rights would be assigned to Fisher.
4. As we have discussed, Fisher agrees to pay Equity Broadcasting (or affiliated entity) a fee associated with your services upon successfully closing the purchase of KWOG. The fee is based on the negotiated final purchase price, as shown below:Purchase Fee Fee Notes Price rate 19,000,000 1.5% 285,00 Sliding scale down 18,000,000 2.0% 0 2% fee at this price double "finders" role 17,000,000 2.6% 360,00 Calculated between maximum rate and 2% 16,000,000 3.1% 0 Maximum fee 435,82 5 500,00 0 If the foregoing represents your understanding, please sign and return a copy to me. We can then discuss the preparation of a more definitive document. We look forward to working with you on this transaction.
Fisher began negotiating directly with AAB, without Morton's assistance, and on June 26, 2006, it entered into a stock purchase agreement whereby Fisher acquired from AAB's sole owner, Christopher Racine, all shares of stock in AAB. Hillcrest asked Fisher to pay a commission under the March 24, 2006 letter, and Fisher declined to do so. In January 2009, Hillcrest filed suit against Fisher in Arkansas state court for recovery of the commission. The complaint attached several documents, including the March 24, 2006 letter, the stock purchase agreement between Fisher and Racine, and a draft asset purchase agreement. Fisher removed to federal district court, and the district court granted Fisher's motion to dismiss for lack of personal jurisdiction.
Hillcrest then filed suit in King County Superior Court. After answering the complaint, Fisher filed a CR 12(c) motion for judgment on the pleadings, arguing that former RCW 18.85.100 precluded Hillcrest from suing for a commission because Morton was not a licensed real estate broker in Washington. Counsel for Fisher submitted a declaration attaching several of the documents included with Hillcrest's Arkansas complaint, and asked the trial court to take judicial notice of those documents. The trial court took judicial notice of the documents, and granted Fisher's motion to dismiss. Hillcrest appeals.
DISCUSSION
Hillcrest concedes that if Washington law applies, former RCW 18.85.100 would preclude him from suing for a commission under the March 24, 2006 letter agreement. That statute expressly barred suits by an unlicensed broker seeking compensation:
No suit or action shall be brought for the collection of compensation as a real estate broker . . . without alleging and proving that the plaintiff was a duly licensed real estate broker . . . prior to the time of offering to perform any such act or service or procuring any promise or contract for the payment of compensation for any such contemplated act or service.
Former RCW 18.85.100.
A "real estate broker" was defined as:
[A] person, while acting for another for commissions or other compensation or the promise thereof, or a licensee under this chapter while acting in his or her own behalf, who:
(a) Sells or offers for sale, lists or offers to list, buys or offers to buy real estate or business opportunities, or any interest therein, for others;
(b) Negotiates or offers to negotiate, either directly or indirectly, the purchase, sale, exchange, lease, or rental of real estate or business opportunities, or any interest therein, for others . . .
Former RCW 18.85.010(1) (2008).
"Business opportunity" was defined as "business, business opportunity and good will of an existing business or any one or combination thereof. . . ." Former RCW 18.85.010(5) (2008).
Thus, if Washington laws applies, Hillcrest must be a real estate broker licensed in Washington before it can sue in a Washington court to collect compensation on its agreement with Fisher. Hillcrest does not contend otherwise, but it argues that on the facts of this case, Arkansas law should apply. We reject this argument for the reasons described herein.
Since 1967, Washington courts have applied the "most significant relationship test" to contract choice of law issues. Mulcahy v. Farmers Ins. Co. of Washington, 152 Wn.2d 92, 100, 95 P.3d 313 (2004) (citingBaffin Land Corp. v. Monticello Motor Inn, Inc., 70 Wn.2d 893, 425 P.2d 623 (1967)). "'In the absence of an effective choice of law by the parties, the validity and effect of a contract are governed by the law of the state having the most significant relationship with the contract.'" Id. (quoting Pac. Gamble Robinson Co. v. Lapp, 95 Wn.2d 341, 343, 622 P.2d 850 (1980)); restatement of law (second) § 188 (1971) (hereinafter "Restatement").
As a preliminary matter, Hillcrest contends that underIn re Stoddard's Estate, 60 Wn.2d 263, 373 P.2d 116 (1962), no conflicts of law analysis is required where the broker's performance of the contract occurs entirely in another forum. Hillcrest is mistaken. In Stoddard, a broker located in Oregon and unlicensed in Washington negotiated the sale of Washington real estate to a party who also resided in Oregon. Although the broker's entire performance took place in Oregon, the Stoddard Court nonetheless engaged in a conflict of laws analysis. See Stoddard, 60 Wn.2d at 265 ("[t]his appeal presents a problem in conflicts of law. . . .) But because the buyer was located in Oregon, all of the negotiations took place in Oregon, and the contract was executed entirely in Oregon, the Supreme Court concluded that former RCW 18.85.100 did not preclude the broker from suing in Washington courts. We also note that Stoddard was decided five years before the Supreme Court adopted the Restatement conflicts of law factors in Baffin. Baffin, 70 Wn.2d at 896.
Section 188 of the Restatement sets forth the factors courts consider as part of the "most significant relationship" test:
'(1) The rights and duties of the parties with respect to an issue in contract are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the transaction and the parties under the principles stated in § 6.
'(2) In the absence of an effective choice of law by the parties (see § 187), the contacts to be taken into account in applying the principles of § 6 to determine the law applicable to an issue include:
'(a) the place of contracting,
'(b) the place of negotiation of the contract,
'(c) the place of performance,
'(d) the location of the subject matter of the contract, and
'(e) the domicil, residence, nationality, place of incorporation and place of business of the parties.
'These contacts are to be evaluated according to their relative importance with respect to the particular issue.'"
Mulcahy, 152 Wn.2d at 100-01 (quoting Restatement § 188). In determining the weight to be given to these factors, "[t]he approach is not to count contacts, but rather to consider which contacts are most significant[.]" Baffin, 70 Wn.2d at 900. Hillcrest contends an analysis of the factors shows Arkansas law should apply. We disagree.
Place of contracting. Contrary to Hillcrest's argument, the place of contracting did not occur solely within Arkansas. Indeed, although the letter was signed by Morton in Arkansas, it was drafted and signed by Fisher in Washington. Moreover, "[s]tanding alone, the place of contracting is a relatively insignificant contact." Restatement § 188 cmt. e. As such, this factor does not weigh in favor of application of Arkansas law.
Place of negotiation. As was the case with the place of contracting, negotiations for the contract occurred in both Washington and Arkansas, as representatives for Fisher communicated with Morton from Washington, and Morton communicated with Fisher from Arkansas. Hillcrest alleged in its complaint that the negotiations occurred "in substantial part" in Arkansas. Even assuming this is true, the place of negotiation "is of less importance when there is no one single place of negotiation and agreement, as, for example, when the parties do not meet but rather conduct their negotiations from separate states by mail or telephone." Restatement § 188 cmt. e. As such, this factor is not dispositive, and does not weigh in favor of application of Arkansas law.
Place of performance. Hillcrest contends the place of performance factor weighs toward application of Arkansas law. Hillcrest reaches this conclusion, however, only by entirely omitting Fisher's required performance under the contract, and by claiming that Morton "could have" plausibly carried out all of his duties in Arkansas. Performance of the contract, however, contemplated communication with two Washington corporations to complete a transfer of Washington-based assets (including real estate used in the operation of a Washington television station) from one Washington corporation to another Washington corporation. The contract called for a due diligence examination of the Washington corporation that owned the Washington television station, and it required the Washington-based Fisher to draft the asset purchase agreement. The "place of performance" factor thus weighs heavily in favor of application of Washington law.
Moreover, where the contract is for the rendition of services, the most significant contact is the location where the contract requires performance. Nelson v. Kaanapali Properties, 19 Wn. App. 893, 897, 578 P.2d 1319 (1978) (citingBaffin, 70 Wn.2d at 902; Restatement § 196). Under section 196 of the Restatement, "in personal service contracts the local law of the place of performance should be applied 'unless, with respect to a particular issue, some other state has a more significant relationship[.]'" Nelson, 19 Wn. App. at 897 (quoting Restatement § 196).
Citing Nelson, Hillcrest contends Arkansas has a greater policy interest in regulating the type of transaction entered into by Hillcrest and Fisher. We disagree. InNelson, Kaanapali Properties, which was a joint venture between a Washington corporation and a Hawaiian corporation, contracted with Nordic Tile, a Washington corporation, to provide flooring in condominiums being built in Maui. The King County Superior Court dismissed on grounds that although Nordic Tile was a licensed contractor in Washington, it was not a licensed contractor in Hawaii. This court reversed, holding that, given both Hawaii and Washington have similar interests in protecting the public from unlicensed contractors, the Washington policy of "providing Washington residents a forum for the resolution of an adjudicable issue" was a more important consideration. Nelson, 19 Wn. App. at 899. In other words, given both states had similar public policy interests, the law of the forum applied. Id. at 899-900. Here, unlikeNelson, the trial court did not seek to improperly apply Arkansas law; rather, it properly applied the law of the forum: Washington law.
Location of subject matter. As was the case with place of performance, the location of subject matter of the contract strongly favors application of Washington law. Again, the subject matter of the contract was entirely about Washington corporations. The contract required Hillcrest to communicate with two Washington corporations to complete a transfer of Washington-based assets from one Washington corporation to another Washington corporation.
Domicile of the parties. Hillcrest is an Arkansas company, whereas Fisher is a Washington corporation. This factor is thus neutral and does not weigh in favor of application of Arkansas law.
In sum, the location of negotiation and contracting, and the domicile of the parties are neutral and do not weigh in favor of application of Arkansas law. Place of performance and location of subject matter, however, weigh heavily in favor of application of Washington law. Where, as here, the contract is for the rendition of services, the most significant contact is the location where the contract requires performance.Nelson, 19 Wn. App. at 897. The most significant contacts at issue in this case thus were with Washington State. As such, the trial court properly applied Washington law in dismissing Hillcrest's claims.
Hillcrest next argues that the trial court improperly took judicial notice of documents attached to counsel for Fisher's declaration in support of Fisher's motion for judgment on the pleadings. In general, when ruling on a CR 12(b)(6) or 12(c) motion to dismiss, the trial court may only consider the allegations contained in the complaint and may not go beyond the face of the pleadings. Brown v. MacPherson's, Inc., 86 Wn.2d 293, 297, 545 P.2d 13 (1975). But the trial court may take judicial notice of public documents if the authenticity of those documents cannot be reasonably disputed. Berge v. Gorton, 88 Wn.2d 756, 763, 567 P.2d 187 (1977). ER 201(b)(2) authorizes the court to take judicial notice of a fact that is "not subject to reasonable dispute in that it is . . . capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned."
Additionally, where a plaintiff founds allegations in a complaint on specific documents, but does not physically attach those documents to the complaint, said documents may be considered in ruling on a CR 12(b)(6) or CR 12(c) motion for judgment on the pleadings. See, e.g., In re Stac Elecs. Sec. Litig., 89 F.3d 1399, 1405 n. 4 (9th Cir. 1996) (appropriate for trial court to consider other portions of a document referenced in a complaint in a motion to dismiss and doing so does not convert the motion into one for summary judgment).
Here, Hillcrest's complaint was based on Fisher's alleged breach of the March 24, 2006 letter agreement, and as such, it was appropriate for the trial court to consider this document even though it was not attached to Hillcrest's complaint. Regarding the stock purchase agreement between Fisher and Racine and the draft asset purchase agreement, both were attached to the declaration of Fisher's counsel in support of the motion to dismiss. Given Hillcrest attached both of these documents to its Arkansas complaint, they were public documents available on the federal district court electronic docket, and Hillcrest cannot challenge their authenticity.
As such, the trial court did not err in taking notice of these documents when considering the motion to dismiss.
Affirmed.