Kimberly Quality Care v. Eastern Star Nursing Home, 26347-1-I

• Decision Date: 29 July 1991
• Docket Number: No. 26347-1-I,26347-1-I
• Citation: 813 P.2d 163,62 Wn.App. 145
• Parties: , 16 UCC Rep.Serv.2d 478 KIMBERLY QUALITY CARE, a Division of Lifetime Corporation, Appellant, v. EASTERN STAR NURSING HOME, a Washington non-profit corporation, Respondent.
• Court: Washington Court of Appeals

Page 145

62 Wn.App. 145

813 P.2d 163, 16 UCC Rep.Serv.2d 478

KIMBERLY QUALITY CARE, a Division of Lifetime Corporation, Appellant, v. EASTERN STAR NURSING HOME, a Washington non-profit corporation, Respondent.

No. 26347-1-I.

Court of Appeals of Washington Division 1.

July 29, 1991.

Siderius Lonergan & Crowley, William Crowley, Seattle, for appellant.

O'Shea Straight Barnard & Martin, Randy Barnard and Christine Maddox, Bellevue, for respondent.

BAKER, Judge.

Kimberly Quality Care appeals a summary judgment dismissing its action against Eastern Star

                Nursing Home for the collection of unpaid bills.   It alleges that genuine issues of material fact exist as to:  (1) whether UCC Article 6 on Bulk Transfers applies to the sale of a nursing home;  and (2) if Article 6 does apply, was the statute of limitations of that article tolled.   Since we affirm the summary judgment on issue 1, we need not reach issue 2
                

FACTUAL AND PROCEDURAL BACKGROUND

Appellant Kimberly Quality Care, a division of Lifetime Corporation ("Kimberly"), provided temporary nursing services to the Fountains Convalescent Center ("the Fountains"), a nursing home in Yakima. The Fountains was owned and operated by International Care Centers of Washington, Inc. ("ICC"). When the Fountains' account became overdue, Kimberly brought suit against ICC. ¹

Shortly thereafter, ICC entered into an agreement to sell the Fountains to respondent Eastern Star Nursing Home, a Washington non-profit corporation ("Eastern"). The sale included all of ICC's right, title and interest in all drugs, medicines, foods, linens or other supplies used in connection with the operation of the Fountains. The sales agreement provided that all liabilities, including accounts payable, would remain the responsibility of ICC. All services provided by Kimberly to the Fountains were provided prior to the closing date of the sale.

Kimberly then filed suit against Eastern for the debts incurred to it while the Fountains was owned by ICC. Eastern moved for a summary judgment of dismissal. In opposition to this motion, Kimberly filed the declarations of Darla Luckett, a certified nursing assistant at the Fountains, and Moe Chaudry, the administrator of the facility. Both declared that the Fountains purchased and maintained an inventory of personal and cosmetic items for sale to its patients. Based on these declarations, Kimberly

                argued that the Fountains was engaged in the buying and selling of goods within the meaning of UCC Article 6 on Bulk Transfers ("Article 6" or "the Article").   Since Eastern did not comply with the creditor protection provisions of Article 6, Kimberly contended, Eastern was not shielded from liability to ICC's creditors.   The court granted Eastern's motion for summary judgment and dismissed the action, holding that Article 6 did not apply to this transaction.   This appeal followed
                

ANALYSIS

We first note appellant's argument that the trial court impermissibly weighed the sufficiency of the evidence on summary judgment by finding insufficient evidence of retail sales. The court's minute entry states: "nursing homes, where retail sales activities are so few don't fall under bulk sales law under UCC." Although the minute entry is sparse, it does not indicate that the court found the declarations of Luckett and Chaudry to be insufficient evidence of retail sales, but rather that even crediting those declarations, the level of retail sales described therein was insufficient to create coverage under the bulk sales law. Thus, the court's ruling appears to be a ruling of law, not an impermissible weighing of the evidence.

The Washington version of UCC Article 6 contains the following pertinent definitions:

(1) A "bulk transfer" is any transfer in bulk and not in the ordinary course of the transferor's business of a major part of the materials, supplies, merchandise or other inventory (RCW 62A.9-109) of an enterprise subject to this Article.

. . . . .

(3) The enterprises subject to this Article are all those of a vendor engaged in the business of buying and selling and dealing in goods, wares or merchandise, of any kind or description, or in the business of operating a restaurant, cafe, beer parlor, tavern, hotel, club or gasoline service station.

RCW 62A.6-102(1) and (3). Eastern does not dispute that the sale of the Fountains included all of its materials, supplies and other inventory, and therefore it would be a "bulk transfer" within the meaning of subsection (1) if the Fountains is a covered enterprise under subsection (3).

No Washington case has addressed the question of whether a service enterprise that buys and sells goods incidental to its delivery of services is covered by Article 6. Respondent cites several cases from other jurisdictions holding that such enterprises are not covered. H.P.S., Inc. of Florida v. Willis, 483 So.2d 767 (Fla.App.), review denied, 492 So.2d 1332 (Fla.1986) (print shop); Allsbrook v. Azalea Radiator Serv., Inc., 227 Va. 600, 316 S.E.2d 743 (1984) (radiator repair); All Nite Garage, Inc. v. A.A.A. Towing, Inc., of Reno, 85 Nev. 193, 452 P.2d 902 (1969) (towing service); Film Marketing Servs., Inc. v. Homer Photo Labs, Inc., 5 UCC Rep.Serv. 201 (Pa.Com.Pl.1966), affirmed 425 Pa. 409, 229 A.2d 573 (1967) (photo processing). However, the state statutes at issue in each of these cases follow the official UCC definition of a covered enterprise as one whose "principal business" is the sale of merchandise from stock. Washington has not adopted the official UCC definition of a covered enterprise, but instead has retained its pre-UCC definition, which does not contain the "principal business" restriction. ² Therefore, the decisions of jurisdictions adopting the official UCC text are of limited relevance, while Washington case law under the pre-UCC Bulk Sales Act remains authoritative on the question of what is a covered enterprise. See Washington Commercial Law Deskbook § 12.4(2) (Washington State Bar Association 1982 and 1987 Supp.) at 12-11.

Although no pre-UCC Washington case addressed the exact question presented here, one case held that the ...