Opinion
No. 35885-9-II.
November 6, 2007.
Appeal from a judgment of the Superior Court for Pierce County, No. 06-2-05122-5, Beverly Grant, J., entered January 5, 2007.
Reversed and remanded by unpublished opinion per Bridgewater, J., concurred in by Houghton, C.J., and Penoyar, J.
Alice A. Bauer appeals from a summary judgment holding her liable for debts of Scott Bauer, "dba Wholesale Tool Outlet," relative to a lease agreement with Jack and Vivian Walter. We hold that the trial court did not abuse its discretion in its order regarding Alice's admissions. But we hold that there were genuine issues of fact regarding Alice's legal relationship with Wholesale Tool Outlet and the lease. We reverse the summary judgment order against Alice and remand for trial.
FACTS
To avoid confusion, we refer to each of the Bauers by their first names. We intend no disrespect.
Kenneth A. Bauer and Alice Bauer (the Bauers) are married and both residents of Arizona. They started a wholesale tool business in Arizona in 1990. They conducted their operation through an unincorporated business entity, Wholesale Tool Outlet. In 1996, Alice registered the trade name "Wholesale Tool Outlet" with the Arizona Secretary of State. She renewed this initial registration in 2001 for another five years.
The "Wholesale Tool Outlet" trade name registration expired on November 19, 2006. The parties did not provide this court with an updated trade name record for "Wholesale Tool Outlet."
In 1999, the Bauers, together with their son, Kenneth H. Bauer (Kenneth Jr.), formed Wholesale Tool Outlet, LLC in Arizona. They amended Wholesale Tool Outlet, LLC's articles in 2002, to reflect its new membership, as Kenneth Jr. ceased to be a member. In May 2002, the Bauers sold the assets of Wholesale Tool Outlet, LLC to another son, Scott Bauer (Scott).
We refer to Kenneth H. Bauer as "Jr." for clarity in identification only.
Although the parties have not provided a copy of the sale agreement to the court, the Walters do not deny its existence. But it is unclear what exactly has been sold. The Bauers contend that they sold the trade name "Wholesale Tool Outlet" together with the other assets of the business. The Walters, however, contend that the Bauers, through their unincorporated business entity, continued to use the "Wholesale Tool Outlet" trade name.
On July 1, 2004, Scott entered into a three-year lease agreement with Jack and Vivian Walter regarding a commercial property of 7,700 square feet situated at 15011 Meridian East, Puyallup, Washington. The lease agreement described the Walters as the "Landlord," and Scott, "dba Wholesale Tool Outlet," as the "Tenant." CP at 40. Scott intended to use the leased premises as a retail tool store, warehouse, and office. The rent due was set forth in an attachment to the lease agreement, a document called "Rent Rider." CP at 52.
Scott defaulted on the December 2004 rent payment, and he abandoned the leased premises soon thereafter. In an effort to mitigate their damages, the Walters rented 1,500 square feet of the abandoned premises to Gary Frye on February 10, 2005, and the remaining 6,200 square feet to K.L.Q. Enterprises, Inc., and Kevin L. Quinn on April 5, 2005.
In an amended complaint, the Walters sued Scott Bauer, "Jane Doe" Bauer, their marital community, and Alice Bauer, "DBA Wholesale Tool Outlet," for breaching the lease agreement. In this amended complaint, the Walters alleged that Scott executed the lease agreement: (1) in his individual capacity and (2) as the undisclosed agent of his mother, Alice, doing business as Wholesale Tool Outlet. Specifically, the Walters alleged that:
As the Walters concede in their appellate brief, Alice operated the wholesale tool operation through the unincorporated business entity together with her husband, and not by herself. Nevertheless, the Walters explained that they joined only Alice as a defendant "since Mr. Bauer does not show on the Secretary of State records as having an interest in this particular business." CP at 174.
Alice A. Bauer is a resident of the State of Arizona, and according to the records of the office of the Secretary of State for Arizona, is the owner of the business known as Wholesale Tool Outlet. All actions set forth in this complaint by defendant Scott Bauer were for his personal benefit, the benefit of his marital community and on behalf of Alice A. Bauer and as an agent of Alice A. Bauer, as the owner of the business known as Wholesale Tool Outlet.
CP at 34.
During discovery, the Walters submitted interrogatories and requests for admission to Alice and Scott on September 11, 2006. Among other matters, the Walters asked them to admit Page 4 that: (1) "Alice A. Bauer is shown by the records of the Arizona Secretary of State and registered with the Secretary of State to be the owner of the business known as Wholesale Tool Outlet"; (2) "the registration of the trade name, Wholesale Tool Outlet, for which Alice A. Bauer is shown as the owner, has been in effect since October 16, 2001, and is not due to expire until November 19, 2006"; (3) "the document appended . . . as Exhibit 'A', is a true and correct printout from the records of the Arizona Secretary of State for a trade name search, showing the registered name of Wholesale Tool Outlet with Alice A. Bauer reflected as the owner"; and (4) "on July 1, 2004, Scott Bauer executed the Lease Agreement appended . . . as Exhibit 'B' as an agent for Wholesale Tool Outlet." CP at 76.
After Alice and Scott failed to timely respond to these requests, the Walters asked the trial court to deem the matters set forth in the requests as admitted under CR 36(a). The trial court granted the Walters' motion.
Thereafter, the Walters moved for summary judgment. The trial court, finding that "there [were] no issues of material fact raised by the defendants in response to plaintiff's motion, and that plaintiff is entitled to judgment against the defendants," granted the Walters' motion and entered judgment against Scott and Alice, jointly and severally. CP at 304. The trial court subsequently denied Alice's motion to vacate.
ANALYSIS I. THE DISCOVERY ORDER
First, Alice argues that the Walters did not properly serve their requests for admission when they served only one set of the requests with the attorney who was representing both Scott and Alice. But, because Alice did not object during the trial, we do not review this alleged error. See RAP 2.5(a) (the appellate court may refuse to review any claim or error the party did not raise in the trial court); State v. Hammond, 64 Wn.2d 591, 593, 392 P.2d 1010 (1964) (the rule expresses the policy that trial courts must be given a chance to view and correct the claimed error before the appellate court can review).
Second, Alice argues that the trial court erred in not allowing a late response to the requests for admission. She claims that the submission of the late answers "was in effect a request for an extension of the original deadline for the response." Br. of Appellant 12. We disagree.
Alice never asked the trial court for permission to answer the requests for admission after the 30-day statutory period had lapsed. Instead, she simply submitted the late answers before the trial court held its hearing on whether to deem the matters set forth in the requests as admitted. And her claim is simply untenable. See CR 7(b) ("An application to the court for an order shall be by motion which, unless made during a hearing or trial, shall be made in writing, shall state with particularity the grounds therefor, and shall set forth the relief or order sought."). In other words, Alice never asked the trial court to invoke its discretion. Alice never made a motion or requested a ruling from the trial court regarding the requests for admission. And because the trial court did not rule on the timeliness of her responses, there is no error for this court to review.
Had Alice requested a ruling from the trial court regarding the requests for admission, we would have reviewed that ruling for abuse of discretion. Doe v. Puget Sound Blood Ctr., 117 Wn.2d 772, 778, 819 P.2d 370 (1991).
Finally, Alice argues that the trial court abused its discretion in making the deemed admissions by "allowing and construing the Requests for Admission to go to the heart of the dispute in this lawsuit in so far as it concerns Alice Bauer." Br. of Appellant at 14. Specifically, Alice objects to deeming as admitted the matters set forth in request for admission No. 2, which requested admission that "Alice A. Bauer is shown by the records of the Arizona Secretary of State and registered with the Secretary of State to be the owner of the business known as Wholesale Tool Outlet." CP at 76.
Requests for admissions as to central facts in dispute are beyond the proper scope of CR 36 because they, in effect, request an adversary to admit the truth of the assertion that he should lose the lawsuit. See Thompson v. King Feed Nutrition Serv., Inc., 153 Wn.2d 447, 460-61, 105 P.3d 378 (2005). Alice concedes that "[o]n its face, . . . [request for admission no. 2] is not equivalent to asking her 'to admit . . . the truth of the assertion that [s]he should lose the lawsuit." Br. of Appellant at 12. Nevertheless, she argues that the trial court implicitly treated the request for admission no. 2 as requiring her to admit that she lose the lawsuit "by deeming her to have admitted that she is in fact the owner of the Wholesale Tool Outlet." Br. of Appellant at 12. "Had [the trial court] not done so, there would have been no basis for its judgment that Alice Bauer was Scott Bauer's undisclosed principal." Br. of Appellant at 12. This argument goes to the propriety of the summary judgment disposition of the case, and not to the propriety of request for admission no. 2, and we therefore reject it.
We hold that Alice did not raise or preserve a valid objection as to the order regarding discovery. But the admission in no. 2 is one that reflects what is in the records in Arizona, not that Alice was the owner of Wholesale Tool Outlet doing business in Washington.
II. THE SUMMARY JUDGMENT ORDER
Alice next argues that the trial court erred in granting summary judgment for the Walters. She claims that a genuine issue of material fact exists as to the ownership of the Wholesale Tool Outlet business and the existence of an agency relationship between her and her son Scott. We agree.
We review summary judgment orders de novo, engaging in the same inquiry as the trial court. Nivens v. 7-11 Hoagy's Corner, 133 Wn.2d 192, 197, 943 P.2d 286 (1997). We consider all facts and reasonable inferences in favor of the nonmoving party. Weyerhaeuser Co. v. Aetna Cas. Sur. Co., 123 Wn.2d 891, 897, 874 P.2d 142 (1994). We affirm summary judgment orders only if the pleadings, affidavits, depositions, and admissions demonstrate that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Christen v. Lee, 113 Wn.2d 479, 488, 780 P.2d 1307 (1989); see also CR 56(c). The nonmoving party may not rest on allegations or denials from the pleadings. The response, by affidavits or as otherwise provided under CR 56, must set forth specific facts that reveal a genuine issue for trial. Grimwood v. Univ. of Puget Sound, Inc., 110 Wn.2d 355, 359, 753 P.2d 517 (1988). "[C]onclusory statements of fact will not suffice." Grimwood, 110 Wn.2d at 360.
Here, the Walters made two arguments in support of their summary judgment. First, the Walters contended, without offering proof, that the Bauers acknowledged their business relationship with Scott when telling the Walters that they expected to be joined as parties if litigation resulted from the breach of the lease agreement. Second, they argued that "[t]he records of the Arizona Secretary of State conclusively establish that Wholesale Tool Outlet is the trade name of the business owned by defendant, Alice A. Bauer"; therefore, "the Court can draw the inference that business conducted in the name Wholesale Tool Outlet by Scott Bauer is performed for the benefit of his mother." CP at 173.
On appeal, the Walters assert that the "proprietorship" doing business under the trade name "Wholesale Tool Outlet" continued to exist after the incorporation of the Wholesale Tool Outlet, LLC. As proof of this assertion, the Walters note that the Arizona Secretary of State records list Alice as the owner of the trade name "Wholesale Tool Outlet" contemporaneously with the functioning of Wholesale Tool Outlet, LLC. According to the Walters, Scott was operating for the unincorporated business entity Wholesale Tool Outlet when he entered the lease agreement with the Walters.
It is true, as the Walters point out, that Alice renewed the registration of the trade name "Wholesale Tool Outlet" with the Arizona Secretary of State in 2001, despite incorporating the Wholesale Tool Outlet, LLC in 1999. But this renewal is not tantamount to the Walters' assertion that "[t]he records of the Arizona Secretary of State conclusively establish that Wholesale Tool Outlet is the trade name of the business owned by defendant, Alice A. Bauer." CP at 173. After all, Arizona Revised Statute § 44-1460.01 merely requires the Arizona Secretary of State to issue certificates of trade name registration to applicants who supply the information set forth in Arizona Revised Statute § 44-1460.
Some of the information to be supplied includes: the name and business address of the applicant for such registration; the name, title or designation to be registered; the general nature of the business conducted by the applicant; and the length of time during which the name, title or designation has been used by the applicant in his business operations in the Arizona state. See Former Ariz. Rev. Stat. § 44-1460 (Laws of 1999, ch. 297, § 41).
In construing this statute, the Arizona Attorney General has said:
The Secretary is relieved from this duty only when the trade name "might mislead the public, or is not readily distinguishable from names, titles or designations previously registered under the provisions of this notice, and which are still in effect." Ariz. Rev. Stat. § 44-1460.01.
Nothing in [Ariz. Rev. Stat.] § 44-1460 et seq. requires the Secretary of State to investigate the propriety of issuing a registration certificate outside the confines of the Office. It should be the policy of the Secretary of State to accept and register trade name applications which on their face comply with the requirements of Section 44-1460 et seq. . . .
This interpretation accords with the purpose of registry established by statute. [Ariz. Rev. Stat.] § 44-1460.05 provides that the statutory provisions shall not "affect the rights or the enforcement of rights and trade names acquired in good faith at any time at common law." Registration entitlement may be questioned collaterally by a challenging party in a judicial proceeding.
Ariz. Atty. Gen. Op. No. I78-112 (June 15, 1978) at 1.
Furthermore, Alice declared in her affidavit that the business she and her husband had operated under the trade name "Wholesale Tool Outlet" between 1990 and 1999 ceased to exist after the incorporation of Wholesale Tool Outlet, LLC in 1999. CP at 252-53. She also declared that she and her husband sold the assets of the Wholesale Tool Outlet, LLC, including the trade name "Wholesale Tool Outlet," to Scott in May 2002, and "have had no involvement with Scott Bauer's operation of his business since the assets were sold to him." CP at 253. Finally, the attorney who assisted [the Bauers] with incorporating Wholesale Tool Outlet, LLC declared that he witnessed the execution of the sale transaction between the Bauers and Scott and that he was "personally aware that [the Bauers] were not involved in the business previously conducted by Wholesale Tool Outlet, LLC, after [May 2002]." CP at 241.
Nevertheless, Mrs. Bauer states, "[t]he limited liability company remains active and in good standing in the state of Arizona for tax reasons." CP at 253.
Walters contends that all these declarations create a genuine issue of material fact in relation to Wholesale Tool Outlet, LLC, not Wholesale Tool Outlet. But, Alice gives a detailed history of the business; both she and Scott refer to the business he was operating and the fact that she had no hand in operating it. The distinction the Walters raise is one without a difference.
Here, we consider all facts and reasonable inferences in favor of Alice. And she did more than rest on allegations or denials from the pleadings. Her affidavits set forth specific facts that, despite being registered in Arizona as the owner of the trade name, "Wholesale Tool Outlet," there is a genuine issue of fact as to whether she, alone, or with her husband, is still the owner of an unincorporated business entity doing business as Wholesale Tool Outlet in the State of Washington that entered into a lease, as the Walters contend. Her affidavits also set forth specific facts showing that a genuine issue of fact exists as to whether Scott acted as an agent of this "proprietorship" when he entered the lease agreement with the Walters. Thus, the trial court erred in granting summary judgment for the Walters.
III. ATTORNEY FEES
Contrary to the position argued above, Alice requests that, in the event she prevails on this appeal, this court award her reasonable attorney fees according to the lease agreement, which provides that a party to the lease agreement may recover attorney fees if it prevails in an action arising out of the lease agreement. But her request is premature to identify Alice as a party to the lease agreement. And until the trier of fact determines that Alice is Scott's undisclosed principal, she is not a party to the lease agreement and, consequently, not entitled to contractual attorney fees. See Watkins v. Restorative Care Ctr., Inc., 66 Wn. App. 178, 195, 831 P.2d 1085, review denied, 120 Wn.2d 1007 (1992).
We hold that the trial court erred when it summarily disposed of the claim against Alice. We reverse the trial court's summary judgment order as it pertains to Alice and remand the case for a full determination of her liability.
Reversed and remanded for trial.
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.
HOUGHTON, CJ., PENOYAR, J., concur.