Firegang, Inc. v. Heritage Oak Management, LLC
| Decision Date | 26 July 2021 |
| Docket Number | 82012-5-I |
| Court | Washington Court of Appeals |
| Parties | FIREGANG, INC., a Washington corporation, Respondent, v. HERITAGE OAK MANAGEMENT, LLC, a California limited liability company, and SHANE DOUGLAS, an individual, Appellant. |
UNPUBLISHED OPINION
A Washington court can exercise personal jurisdiction over an out-of-state defendant when Washington's long arm statute applies or when a defendant consents. Because Californian Dr Shane Douglas consented by agreeing to a contract that contained a forum selection clause for Washington, the trial court did not err by denying a motion to vacate a judgment for lack of personal jurisdiction. But because the record shows Douglas's codefendant, Heritage Oak Management, a California limited liability company, neither consented nor had any contacts with Washington, the court erred by denying the motion to vacate as to it.
Therefore we affirm in part, reverse in part, and remand for further proceedings consistent with this opinion.
Firegang Inc., is a Washington corporation that provides online dental marketing services. In May of 2016, Shane Douglas, a dentist in California, signed a contract for Firegang's services. The contract required a monthly payment of $2, 750 for a one-year contract with automatic renewals every six months. In March of 2018, Douglas wrote to Firegang, stating, [1] Firegang asked how it could "make these last three months with Firegang better for you (if you'd still like to leave in July)."[2] It did not hear from him again and did not cancel services. In January of 2019, Douglas contacted his credit card company to initiate chargebacks for six months of services. The chargebacks totaled $16, 500.
That March, Firegang filed a complaint in King County Superior Court naming Douglas and Heritage Oak Management, LLC as defendants in a breach of contract action. Douglas is the president of Heritage Oak Management, which manages a commercial property and "has nothing to do with" Douglas's dental practice.[3] Douglas was personally served a summons and complaint in California, both in his personal capacity and as representative for Heritage Oak Management.
Neither Douglas nor Heritage Oak Management appeared in King County Superior Court. In May, Firegang obtained a default judgment for $29, 200.88, including $16, 500 in damages and $11 633.50 in attorney fees. Firegang registered the judgment in California and served it on Douglas personally. Douglas and Heritage Oak Management filed a motion in that court to dismiss the sister-state judgment, and the California court denied the motion.
Douglas and Heritage Oak Management then moved under CR 60(b) in King County Superior Court to vacate the default judgment, arguing neither was a party to the Firegang contract. The court denied the motion.
Douglas and Heritage Oak Management appeal.
Douglas and Heritage Oak Management argue the default judgment must be vacated as void because the Washington court lacked personal jurisdiction when the judgment was entered.[4] Whether a trial court possessed jurisdiction is a question of law, [5] so we review de novo whether a court had personal jurisdiction over a party when the default judgment was entered.[6] We presume a default judgment is supported by substantial evidence, so the party seeking vacation of the default judgment has the burden of demonstrating the court lacked personal jurisdiction.[7] But default judgments are not favored, [8] and evidence submitted by the movant is viewed in a light most favorable to it.[9]
A Washington court can exercise personal jurisdiction over an out-of-state defendant when the defendant consents.[10] A defendant can consent by agreeing to a forum selection clause.[11] A forum selection clause "is one in which the parties agree on a presiding tribunal."[12] "Forum selection clauses are prima facie valid."[13]The party challenging the clause bears "'a heavy burden of proof'"[14] and "must present evidence to justify nonenforcement."[15]
The Firegang contract incorporates terms and conditions.[16] Those terms provide that "[a]ny disputes arising from this contract are to be arbitrated, and done so within the state of Washington."[17] Neither Douglas nor Heritage Oak Management challenge this provision as invalid or as insufficient to allow an exercise of personal jurisdiction over a party consenting to it.
Douglas contends the court lacked personal jurisdiction over him because he signed the contract with Firegang in only a representative capacity as president of his dental practice, Shane Douglas DDS PC. Heritage Oak Management argues it was not party to the Firegang contract and did not transact any business in Washington. Because "'[e]ach defendant's contacts with the forum [s]tate must be assessed individually'" when multiple parties challenge personal jurisdiction, [18]we begin with Douglas.
The question is whether Douglas consented to the contract individually or only in his representative capacity. Washington uses the objective manifestation theory for contracts.[19] To form a contract, the parties must objectively manifest mutual assent to its terms.[20] A person's signature on a contract can be an objective manifestation of his intent to be bound by the contract's terms.[21]"[W]here an agreement contains language binding the individual signer, 'additional descriptive language added to the signature does not alter the signer's personal obligation.'"[22]
In Losh Family, LLC v. Kertsman, this court held a signatory was personally liable for a judgment despite adding his title to his signature.[23] Losh Family owned a warehouse, which it leased to an international food business.[24] A married couple formed a limited liability company and used it to purchase the food business, including the lease.[25] The husband signed the lease assignment as "Grover International, LLC, by William Grover member," and the food business assigned its lease to "William and Teresa Grover as individuals dba Grover
International, LLC."[26] The couple later sold the lease to someone who defaulted.[27]Losh Family sued the food business and its owner, the couple and their company, and the defaulting party.[28] The trial court granted summary judgment for Losh Family, concluding the husband was individually liable for the breach and had to indemnify the food business and its owner.[29]
The husband argued his signature was intended to bind only the company owned by him and his wife, rather than binding him personally.[30] But because the food business signed over the lease to the couple "as individuals" and the husband signed the assignment, he was individually liable.[31] "If [the husband] did not want to be personally bound on the assignment, he should have insisted on the elimination of the language within the agreement that designated the assignee as 'William and Teresa Grover as individuals.'"[32]
Similarly, in Wilson Court Limited Partnership v. Tony Maroni's, Inc., the court held the president of a corporation operating a pizza parlor was personally liable as a guarantor despite using his title after his signature on the guaranty.[33]The pizza parlor leased a retail space, and the landlord required a guaranty as a lease condition.[34] The guaranty referred to the pizza parlor as "Tenant," the landlord as "Landlord," and the president as "Guarantor."[35] When signing the guaranty, the president signed "Anthony L. Riviera President" beneath the word "Guarantor."[36] The lease's signature block identified the pizza parlor as the tenant and Riviera as its president.[37] After the pizza parlor declared bankruptcy and its lease assignee defaulted, the landlord obtained a judgment against the pizza parlor president personally.[38] On appeal, the president argued he signed the guaranty only in a representative capacity, making the guaranty unenforceable against him personally.[39]
The court held the president was personally liable.[40] Although "a signature with additional descriptive language may create an ambiguity requiring judicial construction of the agreement to determine who is bound by its terms, "[41] the unambiguous language of the guaranty identified the president as the "Guarantor," distinct from the pizza parlor as "Tenant."[42]
Here, Douglas is identified in the name and signature blocks of the contract, as appear below:
(Image Omitted)
Like the pizza parlor president in Wilson Court, Douglas's name appears near his title without stating he signed in his representative capacity. Despite identifying a company and title, Douglas signed his name only and did not indicate he was signing as a company representative.[43]
Also like Wilson Court and like Losh Family, the contract's terms show Douglas signed individually. Throughout the contract, it refers to what the "Client" must do but does not use the terms "Company Name" or "Client's Title." Next to the "Client Signature" line, Douglas signed his name without adding any title or reference to a representative position. And Douglas wrote only "SD" on the initial line to confirm "I have read, accept, and agree to the terms & conditions outlined" on the Firegang website.[44]
Like the contract document, the terms and conditions use the term "Client" to define one party's duties and do not use the term "Company." For example, "[i]n the event client chooses to engage with Firegang, Client agrees to contract with Firegang as outlined per the terms above."[45] The termination terms specify ...
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