4501 38th W. Seattle, LLC v. Hansen
| Decision Date | 12 September 2022 |
| Docket Number | 83454-1-I |
| Parties | 4501 38th WEST SEATTLE, LLC, a Washington Limited Liability Company RUN YONG USA, LLC, an Oregon Limited Liability Company; 5229 UNIVERSITY, LLC, a Washington Limited Liability Company, and; Z REAL ESTATE, INC., a Washington corporation, Appellants, v. CRAIG JONATHAN HANSEN, Individually and on Behalf of the Marital Community of CRAIG JONATHAN HANSEN and JANE DOE HANSEN, and; HANSEN LAW GROUP, P.S., a Washington Professional Services Corporation Respondents. |
| Court | Washington Court of Appeals |
UNPUBLISHED OPINION
4501 38th West Seattle LLC, Run Yong USA LLC, 5229 University LLC and Z Real Estate, Inc. (the Entities) appeal the trial court's order granting summary judgment and dismissing their claims against attorney, Craig Jonathan Hansen, for filing marital liens and a garnishment during a separate dissolution proceeding. The Entities argue that: (1) Hansen unlawfully recorded notices of marital lien claims against the real estate Entities, (2) Hansen unlawfully garnished a bank account without notice and an opportunity for a hearing, and (3) Hansen violated the Washington Consumer Protection Act (CPA), ch. 19.86 RCW.
We conclude that the Entities' claims for abuse of process in the recording of the marital liens and garnishment are collaterally estopped by our recent unpublished decision in 5229 University, LLC v. Jialin Li, No. 81571-7-I (Wash.Ct.App. Oct. 4, 2021) (unpublished) https://www.courts.wa.gov/opinions/pdf/815717.pdf. We also conclude that the Entities failed to prove that Hansen's actions were an unfair or deceptive act or practice in violation of the CPA.
We affirm.
Jialin Li and Haolin Zheng married in China in 2011 and later moved to Washington. They have two children. Zheng controlled several limited liability companies (LLCs) related to real estate investing, including the Entities. Zheng's parents gave him money to purchase properties in the United States, and Zheng kept this money in bank accounts in his name before purchasing the properties. Zheng took title to the properties in his name. Li was unaware of Zheng's business ventures and investments. After an assault, Li filed for dissolution in May 2018. Hansen represented Li in the King County Superior Court dissolution proceedings.[1] Hansen is an experienced family law attorney having practiced for over 25 years.
After Li filed for dissolution, Zheng drained the only bank account to which Li had access to and cut off her credit card. In June 2018, a trial court order restrained Zheng from liquidating or transferring assets and requiring him to pay spousal support to Li. In November 2018, Zheng sold an Olive Way property for a little over $10 million in violation of the June 2018 court order. Zheng placed the proceeds in a bank account, in his name, for Z Real Estate, Inc. and ZN Properties LLC, which he owned and controlled. Zheng moved to China at the end of 2018 and failed to pay court ordered support to Li and the children's tuition.
After realizing Zheng had left the country, Hansen recorded marital liens on Li's behalf against real estate owned by 4501 38th West Seattle LLC, 5229 University LLC, and Run Yong USA LLC. On January 2, 2019, Hansen obtained a restraining order preventing Zheng from transferring, liquidating, or selling any assets belonging to 4501 38th West Seattle LLC, and any assets belonging to 5229 University LLC.
On February 14, 2019, a superior court commissioner in the dissolution case ordered Zheng to pay $25,000 in attorney fees, and other amounts totaling $41,579, by January 30, 2019. The order also restrained Zheng "from transferring any funds from . . . all accounts in the name of . . . Z Real Estate, Inc." The order stated that the assets and property listed in the order were
On April 4, 2019, the trial court granted Li a writ of garnishment over Zheng's U.S. Bank account to ensure payment of the February 14, 2019, judgment.
In response to the liens and garnishment, the Entities sued Li in King County Superior Court.[2] The complaint alleged causes of action against Li for frivolous liens, slander of title, and declaratory judgment. The trial court linked the Entities action with the dissolution action.
After a bench trial and detailed tracing of assets, the court determined that Li and the marital community did not have an ownership interest in the subject assets. The court found that Zheng's moving, hiding, and obfuscation of assets made it difficult to determine who really owned the property or money at issue. The court also concluded that Zheng's lack of credibility made it reasonable for Li and Hansen to doubt the ownership of the LLCs. While the liens were meritless, the court found that they were not frivolous and did not award damages or attorney fees to the Entities. The Entities appealed. See 5229 Univ., LLC, slip op. at 1.
While the companion case was pending appeal, on March 25, 2021, the Entities sued Hansen. The Entities claimed that Hansen and his law firm were liable for abuse of process, "unconstitutional taking without due process," and breach of the CPA in relation to the liens and the garnishment. On August 12, 2021, the trial court granted the Entities' motion for partial summary judgment.
On October 4, 2021, this court affirmed the trial court's refusal to award fees or costs in the companion case, holding that the liens and garnishment "were filed with substantial justification" and declined to overlook Zheng and his family's actions leading to the justification for the liens and garnishment. 5229 Univ., LLC, slip op. at 1. We held that because Li and Hansen reasonably believed the assets belonged to the community, the liens were substantially justified both as lis pendens claims and community property liens under RCW 26.16.100, and that the garnishment was proper under RCW 6.27.060. 5229 Univ., LLC, slip op. at 3-8.
In light of our decision in 5229 Univ., LLC, the trial court, sua sponte, called for a show cause hearing to reconsider its order granting partial summary judgment. On November 1, 2021, after briefing and oral argument, the trial court reversed its August 12, 2021, order and denied the Entities' motion for partial summary judgment. On December 3, 2021, the trial court granted Hansen's motion for summary judgment, dismissing the Entities' claims with prejudice.
The Entities appeal.
"On appeal of summary judgment, the standard of review is de novo, and the appellate court performs the same inquiry as the trial court." Martin v. Gonzaga Univ., 191 Wn.2d 712, 722, 425 P.3d 837 (2018) (quoting Lybbert v. Grant County, 141 Wn.2d 29, 34, 1 P.3d 1124 (2000)). This court will affirm an order granting summary judgment if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. CR 56(c); Keck v. Collins, 184 Wn.2d 358, 370, 357 P.3d 1080 (2015).
The Entities argue that the court's decision in 5229 Univ., LLC, does not bar the claims in this case because there is no identity of issues. We disagree.
Collateral estoppel is an affirmative defense. CR 8(c). The elements of collateral estoppel include: (1) the issue decided in the prior case was identical to the issue presented in the later case, (2) the prior case resulted in a final judgment on the merits, (3)the party to be estopped was a party or in privity with a party in the prior action, and (4)application of the doctrine would not work an injustice. Weaver v. City of Everett, 194 Wn.2d 464, 473, 450 P.3d 177 (2019). The proponent of collateral estoppel bears the burden of proving each element. Behr v. Anderson, 18 Wn.App. 2d 341, 376, 491 P.3d 189 (2021).
"When an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim." Nielson By and Through Nielson v. Spanaway Gen. Med. Clinic, Inc., 135 Wn.2d 255, 262, 956 P.2d 312 (1998) (citing Restatement (Second) of Judgments § 27 (1982)). "[A]pplication of collateral estoppel is limited to situations where the issue presented in the second proceeding is identical in all respects to an issue decided in the prior proceeding, and 'where the controlling facts and applicable legal rules remain unchanged."' Lemond v. State, Dep't of Licensing, 143 Wn.App. 797, 805, 180 P.3d 829 (2008) (quoting Standlee v. Smith, 83 Wn.2d 405, 408, 518 P.2d 721 (1974)). We review de novo whether collateral estoppel bars relitigation of a particular legal claim. Christensen v. Grant County Hosp. Dist. No. 1, 152 Wn.2d 299, 305, 96 P.3d 957 (2004).
The Entities cite several cases for the proposition that the issues raised in the case against Li are not identical with its claims against Hansen. The cases are readily distinguished. For example, Fite v. Lee, 11 Wn.App 21, 29, 521 P.2d 964 (1974), involved claims of abuse of legal process brought against a former wife and the attorneys that had represented her in a dissolution action. The claims concerned whether, during the dissolution proceeding, writs of garnishment were improperly issued against the husband's assets. The court dismissed the claims against the wife on summary judgment after she testified that she was not informed of the writs, did not consent to the writs, and would not have consented if she had known. Fite, 11 Wn.App. at 24. The court of appeals...
To continue reading
Request your trial