Banowsky v. Guy Backstrom, D.C.

• Decision Date: 16 July 2018
• Docket Number: No. 76360-1-I,76360-1-I
• Citation: 421 P.3d 1030
• Parties: Teresa BANOWSKY, Appellant, v. GUY BACKSTROM, D.C., d/b/a Bear Creek Chiropractic Center, Respondent.
• Court: Washington Court of Appeals

421 P.3d 1030

Teresa BANOWSKY, Appellant,

v.GUY BACKSTROM, D.C., d/b/a Bear Creek Chiropractic Center, Respondent.

No. 76360-1-I

Court of Appeals of Washington, Division 1.

FILED: July 16, 2018

James R. Banowsky, Han Santos, PLLC, 500 Union St. Ste. 800, Seattle, WA, 98101-4051, Paul Fogarty, Fogarty Law Group PLLC, 2101 4th Ave. Ste. 1900, Seattle, WA, 98121-2315, for Petitioner.

Jennifer D. Koh, Eron Zachary Cannon, Mark Brandon Melter, Fain Anderson Vanderhoef Rosendahl O'Hal, 701 5th Ave. Ste. 4750, Seattle, WA, 98104-7089, for Respondent.

PUBLISHED OPINION

Verellen, J.

¶ 1 "Jurisdiction over the subject matter of an action is an elementary prerequisite to the exercise of judicial power."¹ If a court lacks subject matter jurisdiction, it is compelled to dismiss the action. District courts in Washington have subject matter jurisdiction limitations both as to types of controversies and the amount in controversy. The amount-in-controversy limit is grounded in the Washington State Constitution. When a plaintiff invokes the jurisdiction of the district court by filing a complaint expressly seeking damages in an amount exceeding the amount-in-controversy ceiling, the court lacks subject matter jurisdiction and must dismiss the action. A court rule such as CRLJ 14A(b) may not expand the authority of the court to take any action other than dismissal.

¶ 2 We affirm the superior court’s decision on RALJ appeal affirming the district court’s dismissal of the action filed by Teresa Banowsky expressly seeking damages in excess of $100,000.

FACTS

¶ 3 Banowsky, representing herself, filed her chiropractic malpractice lawsuit against Dr. Guy Backstrom in district court expressly seeking "actual compensatory damages in an amount exceeding $100,000.00 together with attorney’s fees, court costs, and whatever other damages deemed appropriate by the Court."² She filed her complaint on the last day of the statute of limitations period.

¶ 4 Seven weeks later, attorney James Banowsky appeared on behalf of Theresa Banowsky and filed a motion to transfer the lawsuit to superior court based on CRLJ 14A(b). The motion alleged that when the complaint was filed, the plaintiff was unaware of the limitation of damages in district court. The motion also confirmed that "Plaintiff’s claim exceeds the $100,000.00 District Court Limit."³

¶ 5 The district court denied the motion to transfer and dismissed the case. On RALJ appeal, the superior court affirmed the district court’s dismissal for lack of subject matter jurisdiction.

¶ 6 A commissioner of this court granted discretionary review.

ANALYSIS

¶ 7 Banowsky argues that CRLJ 14A(b) required the district court to transfer her case to superior court even though her complaint alleged damages that exceeded the district court’s amount-in-controversy limit. Because the district court did not have subject matter jurisdiction over the controversy as alleged by Banowsky in her original complaint, we disagree.

¶ 8 We review an order of dismissal for lack of subject matter jurisdiction de novo.⁴ The consequences of a court acting without subject matter jurisdiction are " ‘draconian and absolute.’ "⁵ "A judgment entered by a court that lacks subject matter jurisdiction is void. There is no time limit for attacking a void judgment."⁶ Because of these weighty consequences,⁷ great caution is warranted to avoid confusing the broad term "jurisdiction" with the specific term "subject matter jurisdiction."⁸ " ‘When a court lacks subject matter jurisdiction in a case, dismissal is the only permissible action the court may take.’ "⁹

¶ 9 Generally, a court has subject matter jurisdiction if it has authority to adjudicate the type of controversy involved in the action.¹⁰ The "type of controversy" refers to the nature of the case or the relief sought.¹¹ But an amount-in-controversy limitation may also be a component of subject matter jurisdiction.¹² The parties agree that the district court’s amount-in-controversy limitation is a component of subject matter jurisdiction. That limitation is grounded in article IV, section 10 of the Washington Constitution, which states in relevant part:

Justices of the peace shall have original jurisdiction in cases where the demand or value of the property in controversy is less than three hundred dollars or such greater sum, not to exceed three thousand dollars or as otherwise determined by law, as shall be prescribed by the legislature.

The legislature later renamed justices of the peace as district courts.¹³ The legislature currently authorizes district courts to hear civil claims where "the value of the claim or the amount at issue does not exceed one hundred thousand dollars, exclusive of interest, costs, and attorneys’ fees."¹⁴

¶ 10 Similarly, amount-in-controversy limitations also govern the appellate courts. The Washington Supreme Court may not consider civil claims for the recovery of money or personal property when the "original amount in controversy" is $200 or less (with limited exceptions).¹⁵ Under RCW 2.06.030, the Washington Court of Appeals has a similar amount-in-controversy floor. An appellate court " ‘must dismiss an appeal when the lack of jurisdiction is apparent because the amount claimed does not reach the statutory amount of $200.’ "¹⁶

¶ 11 One question presented in this appeal is how a court should measure the amount in controversy in a district court matter. Article IV, section 10 ’s reference to "the demand" indicates the amount in controversy is the amount stated in the prayer for relief in the initial complaint.¹⁷ This is consistent with our Supreme Court’s holding that the amount-in-controversy floor for appeals under article IV, section 4 is determined by the initial pleadings, not the amount ultimately requested for judgment or the amount of judgment.¹⁸

¶ 12 Here, Banowsky’s initial complaint expressly demanded damages in excess of $100,000. Because the amount demanded exceeded the constitutionally based amount-in-controversy limitation for district court, the district court lacked subject matter jurisdiction and its only permissible action was dismissal.

¶ 13 Banowsky argues that the $100,000 limit on the district court’s subject matter jurisdiction must yield to CRLJ 14A(b), which states, "When any party in good faith asserts a claim in an amount in excess of the jurisdiction of the district court or seeks a remedy beyond the jurisdiction of the district court, the district court shall order the entire case removed to superior court."¹⁹ Banowsky contends this rule compels the district court to transfer her case to superior court.

¶ 14 On its face, the rule purports to compel a transfer when "any party" asserts a claim beyond the amount-in-controversy limit, which would include the plaintiff’s initial complaint.²⁰ But such an application of CRLJ 14A(b) expressly and absolutely conflicts with CRLJ 12(h)(3), which states that "[w]henever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction of the subject matter, the court shall dismiss the action."²¹

¶ 15 Banowsky cites no authority supporting her premise that a court rule may carve out an exception to the district court subject matter jurisdiction amount-in-controversy ceiling. "The civil rules are ‘procedural rules applicable only after the commencement of any action.’ "²² They "do not purport to extend subject matter jurisdiction of the court."²³ Therefore, a court rule may only provide relief in circumstances that arise after the district court acquires subject matter jurisdiction; that is, when the original complaint invokes jurisdiction within the amount-in-controversy limitation. The constitutionally grounded amount-in-controversy limitation on subject matter jurisdiction cannot be eliminated or altered by means of a court rule. For this reason, the district court is prohibited from transferring a case to superior court under CRLJ 14A(b) where the original complaint demanded damages in excess of the court’s amount-in-controversy limitation.

¶ 16 Public policy also favors this result. The clear policy of our state constitution is that the superior court is the court of almost "universal" subject matter jurisdiction.²⁴ The other Washington trial courts necessarily have limited jurisdiction. It would greatly undercut that intentional divide to allow a plaintiff to ignore the district court amount-in-controversy limitation and force a transfer even though she demanded an amount over the district court limit.

¶ 17 In her reply at the trial court level, Banowsky requested, alternatively, that the district court allow her to amend her complaint to seek damages of $100,000 or less, or to allow her to proceed in district court without amending her complaint and simply limit the recoverable damages to $100,000. But a midstream request to amend the amount requested or limit damages to comply with the ceiling must fail. The amount-in-controversy limitation is part of the district court’s constitutionally-grounded subject matter jurisdiction. Banowsky alleges a single claim greater than $100,000. The court cannot not split that claim to retain subject matter jurisdiction over the first $100,000 and ignore the excess.²⁵ Allowing subject matter jurisdiction to be manipulated in this way would erode material differences between the superior courts and the district courts and open the door to potential abuse. Where the entire claim exceeds the amount-in-controversy limit, the district court does not have subject matter jurisdiction and is required to dismiss the case.

¶ 18 Although Banowsky agrees that the amount in controversy is a component of the district court’s subject matter jurisdiction, she also contends that the amount in controversy is only a limit on the amount of judgment. Banowsky cites Silver Surprize, Inc. v. Sunshine Mining Co. for the proposition that a plaintiff who seeks more than the law permits does not destroy jurisdiction but only limits her effective relief.²...