Clarity Capital Management Corp. v. Ryan

• Decision Date: 26 July 2021
• Docket Number: 82022-2-I
• Court: Court of Appeals of Washington
• Parties: CLARITY CAPITAL MANAGEMENT CORPORATION, a Washington corporation, Appellant, v. ARETHA RYAN, an individual; TEDDY J. NEWMAN, an individual; and SALISH WEALTH MANAGEMENT, INC., a Washington corporation, Respondents.

CLARITY CAPITAL MANAGEMENT CORPORATION, a Washington corporation, Appellant, v. ARETHA RYAN, an individual; TEDDY J. NEWMAN, an individual; and SALISH WEALTH MANAGEMENT, INC., a Washington corporation, Respondents.

No. 82022-2-I

Court of Appeals of Washington, Division 1

July 26, 2021

UNPUBLISHED OPINION

Smith J.

Clarity Capital Management Corporation appeals the trial court's order granting summary judgment in favor of Aretha Ryan, Teddy Newman, and Salish Wealth Management Inc. Clarity claims that the court erred by granting summary judgment on all of its claims, by denying its motion to continue the summary judgment hearing, by denying its motion for reconsideration, and in its award of attorney fees to the respondents. Finding no error, we affirm.

FACTS

Multop Financial was a financial planning company in Bellingham Washington, owned by Phillip Multop. Matthew Bumstead is the president and owner of Clarity, a financial services firm which sought to acquire Multop Financial's assets. In October 2019, Clarity and Phillip Multop executed a purchase and sale agreement (PSA). The PSA sold Multop Financial's client accounts and related assets to Clarity and gave Clarity the right to use the name "Multop Financial" for two years. It also assigned a contract between Multop Financial and a separate consulting firm to Clarity.

Ryan and Newman were financial advisors at Multop Financial. As employees, they each signed an employee manual that detailed employment policies and benefits. On the first page of each manual, in a section labeled "Introduction," the manual stated, "The contents of this Manual shall not constitute nor be construed as . . . a contract between Multop Financial and any of its employees. The Manual is a summary of our policies, which are presented here only as a matter of information." The manuals contained provisions barring employees from disclosing any information provided by clients and stating that an employee's obligation of confidentiality would continue for three years after employment. Newman also signed a personnel policies document that contained an agreement not to compete for financial work within 50 miles for three years after his employment with Multop Financial. Throughout their time at Multop Financial Ryan and Newman each signed various other agreements including an agreement to sell Newman's client interests to Multop and various confidentiality agreements that contained similar provisions.

When Clarity bought Multop Financial, Newman and Ryan met with Bumstead and expressed that they would continue to work for the firm. As part of the transfer, Ryan signed a new employee manual with Clarity that contained the same disclaimer that it was not a contract, as well as confidentiality and noncompete provisions. About a month later, on November 4 Ryan and Newman gave notice of their resignation and quickly began working at Salish Wealth Management, which is 0.1 miles away from Clarity's Bellingham offices. According to Bumstead, they immediately began contacting Clarity's clients to convince them to move to Salish and made false statements to convince them to do so. These clients left Clarity for Salish and took with them assets worth over $40, 000, 000.

Clarity sued Ryan, Newman, and Salish. It alleged that Ryan and Newman had breached their contracts and alleged that Clarity had justifiably relied on Ryan's and Newman's agreements to the employee manuals. It also accused Ryan, Newman, and Salish of intentional interference with business expectancy and defamation.

Salish, Ryan, and Newman moved for summary judgment, claiming that Clarity's claims failed because it was not a party to the majority of the contracts it was seeking to enforce, that it was estopped from claiming the employee manual was a contract because of the disclaimer that it was not a contract, and that Washington law does not allow an employer to pursue a claim for a violation of its own noncontractual employee handbook. The motion also challenged Clarity's defamation claim in passing, asserting that the claim was "derivative and not supported."

Clarity moved to continue the summary judgment hearing so that it could depose Ryan, Newman, and a representative of Salish to learn more about their intent and actions after leaving Clarity. It also responded to the motion for summary judgment, but it did not address the defamation claim except to assert that respondents had not made any substantive reference to the claim beyond stating that it was derivative.

The trial court denied the motion for a continuance and granted the motion for summary judgment on all of Clarity's claims. Clarity moved for reconsideration, contending that the court had misapplied the law. The court denied the motion for reconsideration and granted attorney fees to Ryan, Newman, and Salish, based on attorney fee provisions in the employee manuals and Multop Financial confidentiality agreements.

Clarity appeals.

ANALYSIS

Clarity challenges the trial court's entry of summary judgment on its breach of contract, equitable reliance, tortious interference with business expectancy, and defamation claims. It also claims the trial court abused its discretion by denying its motion for continuance and motion for reconsideration and by awarding attorney fees to the respondents. We affirm on all counts.

Standard of Review

We review an order on summary judgment de novo. Strauss v Premera Blue Cross, 194 Wn.2d 296, 300, 449 P.3d 640 (2019). We consider "the evidence and all reasonable inferences from the evidence in the light most favorable to the nonmoving party." Keck v. Collins, 184 Wn.2d 358, 370, 357 P.3d 1080 (2015). "Summary judgment is appropriate only when no genuine issue exists as to any material fact and the moving party is entitled to judgment as a matter of law." Keck, 184 Wn.2d at 370 (footnote omitted). A court's decision on a motion to continue or a motion for reconsideration is reviewed for abuse of discretion. Tellevik v. 31641 W. Rutherford St., 120 Wn.2d 68, 90, 838 P.2d 111, 845 P.2d 1325 (1992) (motion to continue); Weems v. N. Franklin Sch. Dist., 109 Wn.App. 767, 777, 37 P.3d 354 (2002) (motion for reconsideration), abrogated on other grounds by Fed. Way Sch. Dist. No. 210 v. Vinson, 172 Wn.2d 756, 261 P.3d 145 (2011). The court abuses its discretion "if its decision is based on untenable grounds or untenable reasons." Briggs v. Nova Servs., 135 Wn.App. 955, 961, 147 P.3d 616 (2006), aff'd, 166 Wn.2d 794, 213 P.3d 910 (2009).

Contract Claims

Clarity asserts that the court erred by dismissing its contract claims. Because Clarity had no contract with Ryan or Newman to enforce, we disagree.

1. Multop Documents

First, Clarity is not a party to any contracts between Ryan or Newman and Multop Financial, and therefore it may not seek to enforce them.^[1] Generally, someone who is not a party to a contract cannot seek to enforce the contract. Trane Co. v. Brown-Johnston, Inc., 48 Wn.App. 511, 520, 739 P.2d 737 (1987). However, if an owner of contract rights assigns its rights to a third party, the assignee "'steps into the shoes of the assignor, and has all the rights of the assignor.'" Carlile v. Harbour Homes, Inc., 147 Wn.App. 193, 208, 194 P.3d 280 (2008) (quoting Puget Sound Nat'l Bank v. Dep't of Revenue, 123 Wn.2d 284, 292, 868 P.2d 127 (1994)), review granted and dismissed, 166 Wn.2d 1015 (2009). But contracts for professional services are personal and therefore not assignable. Kim v. Moffett, 156 Wn.App. 689, 704, 234 P.3d 279 (2010).

Here, while the PSA explicitly assigned Multop's consulting contract with a nonparty to Clarity, it did not attempt to assign or even make reference to any employee contracts. The only evidence that Clarity cites to support its claim that Multop's noncompete agreements were assigned to Clarity is an excerpt from Phillip Multop's declaration, which provides:

I am informed that Aretha Ryan and Teddy Newman have alleged that it was not part of [the sale of assets to Clarity] that their agreements with my firm would transfer to Clarity as part of this transaction.

. . . That is not true. They both understood that their agreements were transferring to Clarity as part of our transaction. In fact, they requested that specifically of me, to make sure they had job security after a new owner took over. They clearly understood that Matt Bumstead's purchase of the assets under management was intended with them to continue as part of the team; hence Matt's multiple meetings with them prior to the sale. . . .

. . . It would make no sense for me to not transfer my agreements with my staff as part of the deal. That was intended all along. In fact, that is a main reason as to why I chose Matt Bumstead as the successor-because he fully intended to keep all staff in place.

This declaration focuses on the parties' intention that Ryan's and Newman's employment would continue with Clarity but fails to establish that any confidentiality or noncompete agreements were assigned or even discussed. Furthermore, Multop's claim that Ryan's and Newman's noncompete agreements were assigned to Clarity "as part of" the sale of Multop Financial's assets to Clarity is contradicted by the plain language of the PSA, which explicitly states: "This Agreement constitute[s] the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein, and supersede[s] all prior and contemporaneous understandings and agreements." The PSA does not purport to assign any agreements with Ryan or Newman to Clarity. Even if it did, such agreements for Ryan's and Newman's professional financial services would not be assignable. Kim, 156 Wn.App. at 704-05. The court therefore did not err by...