Bishop of Victoria Corporation Sole v. Finley, No. 29321-8-II (WA 5/11/2004)
| Decision Date | 11 May 2004 |
| Docket Number | No. 29321-8-II,29321-8-II |
| Parties | BISHOP OF VICTORIA CORPORATION SOLE, a British Columbia, Canada, corporation, Respondent, v. JOSEPH C. FINLEY, an individual, and the marital community composed of JOSEPH C. FINLEY and JANE DOE FINLEY, Appellants, CORPORATE BUSINESS PARK, LLC, a Washington limited liability company, Defendant. JOSEPH C. FINLEY, Appellant, v. BISHOP OF VICTORIA CORPORATION SOLE, a Canadian corporation; UNITED HOMES VICTORIA, LTD., a Canadian corporation, Respondents, CORPORATE BUSINESS PARK LLC, a Washington limited liability company; VICTORIA PROPERTIES, INC., a Canadian corporation; NORMAN ISHERWOOD, individually and as a marital community with JANE DOE ISHERWOOD; DAVID OSMOND, individually and as a marital community with JANE DOE OSMOND, Defendants. |
| Court | Washington Supreme Court |
Appeal from Superior Court of Thurston County, Docket No: 00-2-01783-6. Judgment or order under review. Date filed: 09/06/2002. Judge signing: Hon. Daniel J Berschauer.
Counsel for Appellant(s), Cleveland Stockmeyer, Cleveland Stockmeyer PLLC, 18010 Southcenter Pkwy, Tukwila, WA 98188-4630.
Counsel for Respondent(s), Gayle Edward Bush, Attorney at Law, Bush Strout & Kornfeld, 601 Union St Ste 5500, Seattle, WA 98101-2373.
Richard M Clinton, Dorsey & Whitney LLP, 1420 5th Ave Ste 3400, Seattle, WA 98101-4010.
Todd Stuart Fairchild, Dorsey & Whitney LLP, Us Bank Center, 1420 5th Ave Ste 3500, Seattle, WA 98101-4087.
Kenneth Wendell Masters, Attorney at Law, 241 Madison Ave N, Bainbridge Island, WA 98110-1811.
Katriana Louise Samiljan, Bush Strout & Kornfeld, 601 Union St Ste 5500, Seattle, WA 98101-2373.
Charles Kenneth Wiggins, Attorney at Law, 241 Madison Ave N, Bainbridge Island, WA 98110-1811.
Following the trial court's entry of CR 54(b) findings, Joseph C. Finley, a member of a limited liability company in receivership, appeals a trial court order canceling his lis pendens and the trial court's corresponding award of fees and costs to the holder of the deed to the property against which the lis pendens was filed. Finley also appeals an order dismissing his claims against the holder of the deed, the assignee of a money judgment against the company, and the members personally. He further appeals `all . . . related, interlocutory orders' (7 Clerk's Papers (CP) at 1217), including the trial court's order authorizing partial settlement between the receiver and the judgment assignee authorizing sale of the property and the trial court's denial of his motions to treat judgment as satisfied and to prevent transfer of the deed to the assignee.
Finley claims that the judgment against the company and its members was satisfied by operation of law when it was transferred to the assignee, which he characterizes as a `straw man' for his company co-member. Viewing all issues in the light most favorable to Finley, there is no evidence that the assignee is his co-member's agent or `straw man' or that the claims Finley made against his company co-member apply to the assignee.
Finley also claims that he did not waive his claim to the company's only asset, property in Lacey, Washington. The trial court approved a settlement between the company's receiver and the judgment assignee authorizing the receiver to sell the property within one year or, if unable to do so, to deliver the deed for the property to the assignee. Finley, believing that the parties had found a buyer for the property, acquiesced in the settlement and his attorney even drafted an order to this effect. But when the receiver was unable to sell the property, Finley tried to stop delivery of the deed, claiming that he had an interest in the property and had not consented to its transfer. The record is to the contrary and shows that Finley actually consented to the settlement, thereby waiving any claim he might have had to the title to the property; the court's removal of lis pendens was appropriate.
We affirm the trial court. But we reject the respondents' contentions that the appeal is frivolous and decline to award attorney fees on appeal.
Bishop of Victoria Corporation Sole (BV), holds real property assets of the Roman Catholic Diocese of Victoria, British Columbia, Canada. In 1997, Bishop Remy DeRoo, head of BV, entered into partnership with Finley, and together they created Corporate Business Park, LLC (CBP) in order to purchase a 160-acre parcel of land in Lacey, Washington. The Bishop hoped that sale of the Lacey property would generate proceeds to repay money the Bishop had previously loaned to Finley. CBP obtained a $5.25 million loan to purchase the property. BV, Finley, and CBP each co-signed a promissory note to the lender, and BV agreed to pay debt service after loan reserves ran out. CBP listed the property for sale in July 1997 for $18 million.
In June 1998, CBP refinanced the debt through AG Capital Funding Partners, L.P. (AGC). CBP, BV, and Finley each signed a $7.5 million promissory note and executed a deed of trust for the Lacey property as security. When loan reserves ran out in November 1998, BV resumed making mortgage payments.1 In April 1999, after Raymond Roussin replaced DeRoo as Bishop, BV stopped making monthly payments on the property, and CBP defaulted on the loan. Apparently, BV refused to make further payments unless Finley agreed to sign an `addendum' to the company agreement, which he did in May 1999.2 According to Finley, BV concurrently promised to resume payment of the debt service, although the addendum does not mention this.
BV did not make the mortgage payments, and on May 27, 1999, AGC sued for foreclosure in the Thurston County Superior Court. In response to the AGC lawsuit, BV negotiated a series of forbearance agreements with AGC while it tried to obtain new financing. BV brought interest payments on the loan current through the end of 1999, but again stopped paying after December 31, 1999. On March 17, 2000, AGC obtained a judgment for $8,154,895.83 against CBP and individually against BV and Finley, which included an order to apply the proceeds from a sheriff's sale of the property toward payment of the judgment. The AGC judgment accrued interest at a yearly rate of 18 percent, based on the contract rate of 13 percent, plus five percent `default interest' under the promissory note. In order to protect its other Canadian assets (including hospitals, churches, and schools), BV issued an Offering Statement in which it proposed to issue debentures to Victoria Diocese parishioners who raised money to purchase the judgment from AGC. Under a June 1, 2000 Deed of Trust and Mortgage between BV and United Homes Victoria, Ltd. (UHV),3 BV agreed to issue and be held liable on the debentures, and UHV would act as trustee under Canadian law for the parishioner debenture holders. The debentures, issued to 2,100 parishioners, were to pay simple interest at a rate of six percent per year, due on maturity. BV arranged for UHV to purchase the AGC judgment, and any proceeds from the judgment were to act as security for the debenture holders. BV also pledged its Canadian lands to UHV as collateral to secure repayment. In August 2000, UHV acquired the AGC judgment for $8.296 million.4 And on January 9, 2001, UHV obtained a writ of execution and order of sale for the Lacey property.
In September 2000, over Finley's objections, BV filed a petition seeking appointment of a receiver for CBP. On November 17, 2000, Finley, acting for CBP, filed for bankruptcy protection under Chapter 11 of the Bankruptcy Code (). On April 11, 2001, after the bankruptcy court had dismissed Finley's bankruptcy case for the second time, Finley filed claims against BV, UHV, and others, in the Thurston County Superior Court. He sought damages, a declaration that the judgment was satisfied when UHV purchased it, and a declaration that BV's and UHV's claims to CBP profits should be subordinated to those of all unsecured creditors.
On April 13, 2001, the trial court appointed a receiver for CBP and authorized him to sell the Lacey property. Soon after, the receiver and UHV agreed that UHV would cancel its execution sale and give the receiver one year to sell the property. If the property failed to sell within the year, then the receiver would tender a deed in lieu of foreclosure on April 27, 2002. Barclay's North, Inc. had approached the receiver and begun the process of negotiating the final price of the sale and, on May 3, 2001, the receiver moved that the court authorize the partial settlement and sale of the property.
On May 16, 2001, Finley filed a response to the receiver's motion, stating that he would not object to the proposed sale at the agreed price but that he did not `impliedly or expressly waive any claims against BV and/or the other cross-claim defendants in this matter.' 1 Clerk's Papers (CP) at 29. Finley also asked that any sales proceeds be deposited into the court registry pending resolution of his claims.
At the May 25, 2001 oral argument, the trial court stated that it would not include an express written reservation in the order, but it `indicated, at least orally, {Finley} would always have the right to raise some issue before {the receiver} runs the money over to {UHV}.' Report of Proceedings (RP) (May 25, 2001) at 20. The court explained that putting this type of reservation in a written order would dissuade prospective buyers, and `it would be in everybody's interest to be silent.' RP (May 25, 2001) at 20. The court confirmed that nothing in the order would prohibit Finley from seeking to bar transfer of any proceeds from a sale to UHV.
Following oral argument, the court orally authorized the sale of the property to Barclay's5 and authorized the partial settlement agreement between UHV and the receiver. The court's written order authorized the receiver's settlement and specified that `{UHV} will not proceed with its...
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