Summary
In Cruz, neither the trial court nor we decided whether Fairmont had a civil cause of action against Pierce County for its actions in remitting the funds to Metro City. Regan, Fairmont, and Pierce County were not parties to the Cruz criminal case.
Summary of this case from Regan v. McLachlanOpinion
No. 36568-5-II.
July 22, 2008.
Appeal from a judgment of the Superior Court for Pierce County, No. 06-1-01992-1, Katherine M. Stolz, J., entered June 20, 2007.
Reversed by unpublished opinion per Van Deren, C.J., concurred in by Bridgewater and Quinn-Brintnall, JJ .
UNPUBLISHED OPINION
Melissa McLachlan, pro se, appeals the superior court's May 23, 2007, order requiring that she or Metro City Bail Bonds, LLC (Metro City) redeposit remitted bail bond money into the court registry pending further action on a dispute over which corporate entity is entitled to the remitted funds. She contends that the superior court lacked jurisdiction over this civil matter in the criminal case for which the bail was posted and that it erred in denying her motion for reconsideration. Finding no allegation of error with the August 25, 2006, remittance order and, therefore, no jurisdiction by the superior court sitting in the criminal matter, we vacate the May 23, 2007, order.
FACTS
McLachlan was a member of Metro City, a Washington limited liability company, which was authorized to conduct business on behalf of Fairmont Specialty Insurance Company (Fairmont). Both Fairmont and United States Fire Insurance Company (Fire Insurance Co.) are owned by Fairfax Financial Holdings, headquarted in New Jersey. Although the record before this court is unclear, Rex Hawkins was also affiliated with Metro City.
Metro City issued a bail bond for $50,000.00 to secure the appearance of Javier Quiroz Cruz. On July 24, 2006, the trial court forfeited Cruz's bail. Apparently, on July 31, 2006, a Pierce County deputy prosecuting attorney contacted Fairmont's bail operations division in Houston, Texas about the bail forfeiture and the bond. In response, on August 11, 2006, Fairmont issued a check to the Pierce County court clerk for $50,000.00, drawn from the account of its affiliate, Fire Insurance Co. In an accompanying letter to the clerk's office, Fairmont requested that "any refunds or remissions" be returned to Fire Insurance Co. Clerk's Papers (CP) at 22. This request was also handwritten on the check.
Meanwhile, Metro City returned Cruz to custody and, on August 25, 2006, the forfeited bail, minus costs and post-judgment interest, was remitted to the issuer of the bond and Fairmont's agent — Metro City. The trial court record on appeal does not include evidence that Metro City was dissolved in 2006, but both Fairmont and McLachlan refer to this fact. Fairmont asserts that on January 16, 2007, it informed the Washington State Insurance Commissioner licensing section that it revoked "any authorities previously granted to Rex Hawkins [and] Metro City . . . including . . . executing bond powers, collecting premiums, and/or filing for remissions on bail bonds paid." CP at 26. But according to the State, as of May 14, 2007, Fairmont had not properly revoked its power of attorney to Metro City.
On April 30, 2007, John C. Cain, as attorney for Fairmont and Fire Insurance Co., filed a "Motion for Order Requiring Payment of Funds" in the criminal case between the State and Cruz. Fairmont and Fire Insurance Co. asked the trial court to order "Pierce County and/or Melissa J. McLachlan d/b/a Metro City . . . to pay $49,250.00 to [Fire Insurance Co.] and that it also order that Melissa J. McLachlan, d/b/a Metro City . . . deposit with the Clerk of Court the sum of $49,250.00." CP at 37. Our record shows that the motion relied solely on the declaration of Michael P. Ziemer, "Assistant Vice President" and "Custodian of Records" for Fairmont. CP at 34. Fairmont and Fire Insurance Co. also filed a "Motion for Order Requiring Personal Appearance of Melissa J. McLachlan" in the criminal case, asking the court to order McLachlan "to appear and show cause why [Metro City] should not deposit" the $49,250.00 with the Clerk of Court. CP at 35.
The civil division of the prosecuting attorney's office responded and asked the court to strike the April 30 motion, arguing, among other things, that Fairmont and Fire Insurance Co. did "not assert any factual errors in either the form or content of the motion," and Pierce County had no duty to follow Fairmont's remission instructions. CP at 3.
At the hearing, Fairmont and Fire Insurance Co. asserted that they had a right to bring the motion under a criminal cause number and that, in view of Fairmont's remission instructions, Metro City was improperly paid the forfeiture money. The prosecutor's position was that, to pursue a claim against the clerk, Fairmont and Fire Insurance Co. needed to file a civil suit. McLachlan, appearing as ordered, objected to Cain's representation of Fairmont and Fire Insurance Co., asserting that he was Metro City's former counsel and it, as a former client under Washington State Court Rules of Professional Conduct, Rule 1.9, had not agreed to allow him to represent Fairmont and Fire Insurance Co. in this matter, but she waived the objection for purposes of the hearing.
The following exchange occurred between the court and McLachlan at the conclusion of the hearing:
THE COURT: Right now, I'm not sure who's supposed to have this money. I want the money returned to the registry of the court, and we will have a hearing at another date about where the money is to go on another calendar after everybody that's got an interest has been served; so at this point, the money needs to be returned to the registry of the court within ten days; and then we will deal with it after that
. . . .
MS. MCLACHLAN: . . . Metro City Bonds is an LLC and . . . the order should reflect that; and I offered [Fairmont and Fire Insurance Co.'s counsel] a copy of the corporate registration which he wasn't interested in; and as the funds were disbursed to Metro City Bonds, that the order for repayment of those funds should reflect that it should be repaid by the limited liability corporation, not to me personally.
. . . .
THE COURT: That's why I want the money back in the registry of the court. Now, whether you have it or Metro City Bail Bonds which, apparently, you own and presumably cashed the check, you or your partner cashed the check and deposited it to their account wherever it's gone, it's coming back to the registry of the court within ten days. . . . There does appear to be an issue that you are not entitled to the money.
MS. MCLACHLAN: I have a civil contract with [Fairmont] that says otherwise and talks about exactly
THE COURT: Well, I'm not going to
MS. MCLACHLAN: — how matters are to be litigated.
THE COURT: I understand that, but this is a criminal calendar. I have criminal matters.
Report of Proceedings (RP) (May 23, 2007) at 8-12. The handwritten order, which contains no findings of fact or conclusions of law, orders Metro City "and or" McLachlan to deposit $49,250.00 with the clerk of court within ten days. CP at 6.
McLachlan unsuccessfully moved for reconsideration. The court ruled:
[Fairmont and Fire Insurance Co.] do? need to file a civil case; but in the interim . . . I am simply attempting to restore this to where it was before the Clerk's office was involved and sent the money out; and the actual ownership of those funds can be determined in another suit, but they are to be paid back to the registry of the court.
RP (June 20, 2007) at 7.
McLachlan appeals.
ANALYSIS
McLachlan assigns error to the superior court's order requiring her to pay money into the court registry and its order denying her motion for reconsideration. She contends that the superior court (1) "lacked subject matter jurisdiction to enter orders in a criminal case purporting to adjudicate contract rights between non-parties," (2) lacked personal jurisdiction over McLachlan, and (3) "erred in hearing a civil dispute in the context of a criminal case." Br. of Appellant at 1. McLachlan further asserts that "[t]here simply is no procedure known to [her] whereby a potential defendant in a civil suit on an alleged unsecured debt must pay money into the court, just in case the suit might be brought at a later time." Reply Br. of Appellant at 3. She argues that the superior court sought "to recreate a status quo which had ceased to exist months before." Br. of Appellant at 1. She asks us to reverse and vacate the superior court's order and direct the superior court "to refrain from further action in this criminal case." Reply Br. of Appellant at 4.
McLachlan also contends that the superior court erred in refusing to disqualify Cain as counsel for Fairmont and Fire Insurance Co. But the record shows that she waived any objection to Cain as Fairmont and Fire Insurance Co.'s counsel for purposes of the hearing and raised no further objection; therefore; we do not further consider this issue.
Pierce County, as corespondent, asserts that it has no stake in the appeal and admits that "[w]hile it would be administratively convenient for the money to be paid into the registry of the court, Pierce County must concede that? McLachlan is a non party and cannot and should not be bound by the order of the Superior Court acting in its criminal capacity." Br. of Resp't (State) at 1.
Fairmont and Fire Insurance Co. respond that (1) the superior court generally has subject matter jurisdiction over bail bond matters, (2) the superior court has personal jurisdiction over McLachlan because she is the "alter ego" of Metro City, and (3) Deuteronomy 5:17 provides authority supporting the superior court's order. Br. of Resp't (Fairmont and Fire Insurance Co.) at 11.
Jurisdiction is a question of law that we review de novo. Crosby v. Spokane County, 137 Wn.2d 296, 301, 971 P.2d 32 (1999); State v. Leffingwell, 106 Wn. App. 835, 841, 25 P.3d 484 (2001). Generally, the superior court has continuing jurisdiction over issues involving the forfeiture and remittance of bail bonds in a criminal matter. ch. 10.19 RCW. But Fairmont and Fire Insurance Co. did not allege that the remittance order returning the forfeited bail to the bond issuer, Metro City, was in any way defective under RCW 10.19.140. Rather, Fairmont and Fire Insurance Co. moved in the Cruz criminal case to require either Pierce County or McLachlan to redeposit remitted bail money, asserting that the remission instructions on its check required the return of the bail money.
RCW 10.19.140 states:
If a forfeiture has been entered against a person in a criminal case and the person is returned to custody or produced in court within twelve months from the forfeiture, then the full amount of the bond, less any and all costs determined by the court to have been incurred by law enforcement in transporting, locating, apprehending, or processing the return of the person to the jurisdiction of the court, shall be remitted to the surety if the surety was directly responsible for producing the person in court or directly responsible for apprehension of the person by law enforcement.
Moreover, the uncontested remittance order of August 24, 2006, directs that Metro City — not McLachlan — receive the funds. And it is undisputed that Metro City is, or was, a limited liability company. And no limited liability company member, such as McLachlan, is personally obligated to a third party on any debt or liability of the member's limited liability company solely for being a member.
[T]he debts, obligations, and liabilities of a limited liability company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations, and liabilities of the limited liability company; and no member or manager of a limited liability company shall be obligated personally for any such debt, obligation, or liability of the limited liability company solely by reason of being a member or acting as a manager of the limited liability company.
RCW 25.15.125(1).
RCW 25.15.060 does permit "[p]iercing the veil" and, generally, the intentional use of the corporate form to violate a duty may permit a member to be held personally liable where required to prevent unjustified loss. See Meisel v. M N Modern Hydraulic Press Co., 97 Wn.2d 403, 410, 645 P.2d 689 (1982). But Fairmont and Fire Insurance Co. did not file a claim under RCW 25.15.060. And even if the court exercised its continuing jurisdiction under chapter 10.19 RCW, which it was not asked to do, McLachlan — solely as a member of Metro City — was not a proper party to any action under that chapter.
Here, it is undisputed that the remittance order complied with RCW 10.19.140 and properly listed Metro City as the issuer of the bail bond. And the record shows that until January 16, 2007, Fairmont and Fire Insurance Co. made no attempt to revoke Metro City's authority to conduct business on their behalf in the State of Washington.
Whether Fairmont and Fire Insurance Co. otherwise have a claim against the clerk, Metro City, or McLachlan is not before us. Because there was no issue of improper forfeiture or remittance before it, the superior court erred in hearing Fairmont's motion. Therefore, we vacate the order requiring McLachlan or Metro City to remit funds to the clerk of the court in the criminal case involving the State and Cruz.
Because we vacate the superior court's order, we do not reach McLachlan's contention that her motion for reconsideration was improperly denied.
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.
BRIDGEWATER, J. and QUINN-BRINTNALL, J., concur.