Opinion
No. 26950-7-III.
November 5, 2009
Appeal from the Superior Court, Ferry County, No. 06-2-00067-0, Allen Nielson, J., entered February 8, 2008.
Affirmed by unpublished opinion per Brown, J., concurred in by Schultheis, C.J., and Korsmo, J.
UNPUBLISHED OPINION.
Ray and Barbara Steinbock appeal the summary judgment dismissal of their tort and contract suit against Ferry County Public Utility District (PUD), which disconnected power to their business and home. The Steinbocks contend the trial court improperly considered the PUD's late-asserted affirmative defense under the claim filing requirements of RCW 4.96.020(4) when dismissing their tort claims, and improperly considered certain PUD declaration-attachments as business records when dismissing their contract claims. We disagree with the Steinbocks, and affirm.
FACTS
The PUD provides power to Ferry County residents. On September 2, 2005, the PUD opened an account for electrical services for the Hitch-n-Post Restaurant and Lounge in Mrs. Steinbock's name. The PUD also maintained accounts for the Steinbocks' residence and other rental properties in Park Place Mobile Home Estates. By November, the accounts had become delinquent. By March 31, 2006, the amount owing was $9,355.71. The PUD contacted Mrs. Steinbock and advised her that she needed to pay at least $1,822.61 to continue service. She failed to pay this amount and service was disconnected.
In May 2006, the Steinbocks arranged a payment plan with the PUD for service to the Hitch-n-Post (several rental property accounts were already closed because the tenants secured service in their own names). The Steinbocks defaulted and service was again terminated. The Steinbocks later lost their residence and the Hitch-n-Post in unrelated foreclosures.
The Steinbocks sued for damages, alleging the PUD negligently disconnected their electricity, breached their agreement, and tortiously interfered with their business, causing the Hitch-n-Post to fail. The PUD answered the complaint on September 6, 2006, reserving the right to raise affirmative defenses in the future.
On August 1, 2007, the PUD moved to dismiss for failure to comply with RCW 4.96.020(4), which requires tortious conduct claims to first be presented to the governmental entity 60 days prior to filing suit with the court. Agreeing, the trial court dismissed the tort claims without prejudice. The PUD then successfully requested summary judgment dismissal of the breach of contract claim. During the summary judgment hearing, the Steinbocks objected to attachments to PUD General Manager, Roberta Weller's declaration. The court allowed the challenged documents, ruling they were properly authenticated business records. The Steinbocks appeal.
ANALYSIS A. Tort Claims Dismissal
The issue is whether, considering the PUD's failure to initially plead an affirmative defense under the claim-filing requirements of RCW 4.96.020(4), the trial court erred in dismissing the Steinbocks' tort claims without prejudice.
We review de novo an appeal of a trial court's grant of summary judgment dismissal, drawing all factual inferences in favor of the plaintiffs. Brundridge v. Fluor Fed. Servs. Inc., 109 Wn. App. 347, 352, 35 P.3d 389 (2001) (citing In re Estate of Peterson, 102 Wn. App. 456, 462, 9 P.3d 845 (2000)).
Generally, a party must raise any "matter constituting an avoidance or affirmative defense" in the answer. CR 8(c). For example, failing to timely raise the statute of limitations can result in a waiver of that affirmative defense. Davis v. Nielson, 9 Wn. App. 864, 876, 515 P.2d 995 (1973). "[W]aiver of affirmative defenses can occur under certain circumstances in two ways: if the defendant's assertion of the defense is inconsistent with the defendant's previous behavior and if defendant's counsel has been dilatory in asserting the defense." Oltman v. Holland Am. Line USA, Inc., 163 Wn.2d 236, 246, 178 P.3d 981 (2008). "The doctrine of waiver is sensible and consistent with . . . our modern day procedural rules, which exist to foster and promote 'the just, speedy, and inexpensive determination of every action.'" Lybbert v. Grant County, 141 Wn.2d 29, 39, 1 P.3d 1124 (2000) (quoting CR 1)).
While defenses are usually raised in an answer, "a defendant may assert lack of subject matter or personal jurisdiction, improper venue, insufficient process, insufficient service, failure to state a claim, or failure to join a party in a motion." Oltman, 163 Wn.2d at 244. The Oltman court noted there is no Washington legal authority, "holding that an affirmative defense is waived if not asserted in the answer." Id. at 244.
"A properly commenced action endows the superior court with subject matter jurisdiction." Young v. Clark, 149 Wn.2d 130, 133 n. 4, 65 P.3d 1192 (2003) (citing Russell v. Marenakos Logging Co., 61 Wn.2d 761, 766, 380 P.2d 744 (1963)). When claim-filing requirements are not properly followed, an action is not properly commenced. In this sense, the PUD is challenging the court's subject matter jurisdiction. A matter our Supreme Court has held may be raised by motion. Oltman, 163 Wn.2d at 244.
Here, the claim-filing deficiency was raised less than one year after the complaint was filed. Compare Miotke v. City of Spokane, 101 Wn.2d 307, 337, 678 P.2d 803 (1984), where our Supreme Court held the same defense was waived because it was not raised until three years after the litigation began and after substantial litigation progress. While the PUD should have verified compliance with RCW 4.96.020 earlier, substantial litigation effort had not yet occurred before it raised the affirmative defense. Further, "[a]ll pleadings shall be so construed as to do substantial justice." CR 8(c). Notably, the trial court dismissed the tort claims without prejudice, allowing the Steinbocks time to file their claim in accordance with RCW 4.96.020 before the expiration of the three-year statute of limitations. Given all, the trial court did not err in deciding the PUD did not waive its affirmative defense under RCW 4.96.020.
The Steinbocks next contend the court's dismissal of their tort claims wrongly forced them to elect remedies. Relying on Anderson Feed Produce Co. v. Moore, 66 Wn.2d 237, 401 P.2d 964 (1965), they argue the tort theories complemented the contract theories. In Anderson Feed, the court held a plaintiff cannot be compelled "'to choose at his peril the theory upon which he intends to rely and thereby possibly defeat a recovery where two consistent, concurrent or cumulative theories can be urged without prejudice to the defendant's ability to defend.'" 66 Wn.2d at 242 (quoting Senter v. B. F. Goodrich Co., 127 F. Supp. 705 (D. Colo. 1954)). Here, unlike in Anderson Feed, the court dismissed the tort claims for failure to comply with RCW 4.96.020 and did not force an election. Thus, Anderson Feed is distinguishable. Finally, the Steinbocks contend the PUD violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1691. Since the tort claims were properly dismissed, we do not address the Steinbocks' Fair Debt Collection Practices Act arguments.
B. Business Records Admissibility The issue is whether the trial court erred in allowing and considering as business records exhibits A, B, D, E, and G attached to Ms. Weller's declaration.
Although a ruling on a motion to strike is discretionary, a court may not consider inadmissible evidence when ruling on a motion for summary judgment. King County Fire Prot. Dists. No. 16, No. 36 No. 40 v. Hous. Auth., 123 Wn.2d 819, 826, 872 P.2d 516 (1994). We will not overturn evidentiary rulings unless the trial court has manifestly abused its discretion. Id.
Hearsay is inadmissible unless it falls under one of the exceptions to the hearsay rule. ER 802. The business records exception to hearsay is codified in RCW 5.45.020 and provides that a record may be admissible, "if the custodian or other qualified witness testifies to its identity and the mode of its preparation, and if it was made in the regular course of business, at or near the time of the act, condition or event, and if, in the opinion of the court, the sources of information, method and time of preparation were such as to justify its admission." RCW 5.45.020 does not require the examination of the person who actually made the record. State v. Iverson, 126 Wn. App. 329, 339-40, 108 P.3d 799 (2005). Hearsay satisfying the business records exception is inherently reliable because of the process used to prepare the records. State v. Hines, 87 Wn. App. 98, 101, 941 P.2d 9 (1997).
Here, Ms. Weller attached to her October 2007 declaration the Steinbocks' payment history (Exhibit A), a letter from Ms. Weller regarding minimum amount owed to maintain service (Exhibit B), the PUD's service policies (Exhibit D), the PUD's disconnect reading information sheet (Exhibit E), and the PUD's calendar to track payment on delinquent accounts (Exhibit G). The following month, Ms. Weller filed another declaration, declaring "Everything that I attached as exhibits to my first declaration are records that I drafted, helped draft, or which are kept by me as business records in the ordinary course of business." Clerk's Papers (CP) at 140.
Ms. Weller, the business manager, established the identity and the mode of the documents' preparation and that they were made in the regular course of business. The trial court found the documents were properly authenticated and fell within the hearsay exception. Ms. Weller's declarations satisfy the reliability requirement of the business records exception to the hearsay rule. The trial court had tenable grounds to admit the attachments and did not abuse its discretion.
C. Contract Claim Dismissal
The issue is whether the trial court erred in summarily dismissing the Steinbocks' contract claims. The Steinbocks contend the trial court failed to recognize that the PUD breached their agreement first by terminating their power without notice.
We review de novo a trial court's summary judgment grant. Hubbard v. Spokane County, 146 Wn.2d 699, 706, 50 P.3d 602 (2002). Summary judgment is proper if no genuine issue of material fact remains and the moving party is entitled to judgment as a matter of law. CR 56(c); Hubbard, 146 Wn.2d at 707. A grant of summary judgment is proper if reasonable persons could reach but one conclusion from the evidence presented. Id. Facts and reasonable inferences therefrom are construed in favor of the nonmoving party. Id.
For their contract claim to succeed, the Steinbocks must demonstrate (1) the existence of a valid and enforceable contract, (2) the parties' rights and obligations under the contract, (3) violation of the contract by the PUD, and (4) damages proximately caused by the breach. Citoli v. City of Seattle, 115 Wn. App. 459, 476, 61 P.3d 1165 (2002). Crucial here is whether the PUD violated the contract.
The Steinbocks argue their service policy with PUD was breached because they did not have notice before service was disconnected. When initiating service, Mrs. Steinbock signed a service application which provided that she was "subject to all provisions of PUD Rules, Regulations Rate Schedules now existing or hereafter adopted." CP at 81. She further agreed to pay all charges. The service policy states that the PUD, "may discontinue service, for violation of any of its Service Policies, or for failure to pay charges for electric service when due, or for violation of rate schedule or contract provision." CP at 63.
The Steinbocks received notice when they initially applied for service from the PUD that failure to pay would result in termination of service. They were notified during subsequent negotiations regarding the consequence if back payments were not made. In May 2006, they were again notified that if they did not fulfill their modified financial responsibilities, service would be discontinued. Reasonable minds could reach but one conclusion; the PUD did not fail to notify the Steinbocks of the possibility of service discontinuance for nonpayment.
The Steinbocks next argue a later oral agreement between Mrs. Steinbock and the PUD altered the original agreement, and that the PUD imposed an excessive security deposit. Both issues are raised for the first time on appeal and not properly before this court. RAP 2.5(a). Our conclusion obviates the need to discuss the Steinbocks' request for a remand hearing before a new judge.
Affirmed.
A majority of the panel has determined this opinion will not be printed in the Washington Appellate Reports, but it will be filed for public record pursuant to RCW 2.06.040.
BROWN, J., SCHULTHEIS, C.J. and KORSMO, J., concur.