R.N. v. Kiwanis Int'l

Decision Date12 October 2021
Docket NumberNo. 53957-8-II,53957-8-II
Citation496 P.3d 748
Parties R.N., individually, J.W., individually, and S.C., individually, Appellants, v. KIWANIS INTERNATIONAL, a non-profit entity; Kiwanis Pacific Northwest District, a non-profit entity; Kiwanis of Tumwater, a non-profit corporation; Kiwanis of Chehalis, a non-profit entity; Kiwanis of Grand-Mound Rochester, a non-profit entity; Kiwanis of Grand-Mound, a non-profit entity; Kiwanis of Rochester, a non-profit entity; Kiwanis of Centralia, a non-profit entity; Kiwanis of Centralia-Chehalis, a non-profit entity; Charles Mccarthy, an individual; Guy Cornwell, an individual; Lee Coumbs, an individual; Sam C. Morehead, an individual; Edward J. Hopkins, an individual; Lewis Patton, an individual; Henry Meister, an individual; B. Dale Shannon, an individual; Kiwanis of Chehalis, a non-profit corporation, Respondents.
CourtWashington Court of Appeals

PUBLISHED OPINION

Worswick, J.

¶ 1 RN, JW, and SC allege they were sexually abused as children in a group home in Centralia between 1989 and 1991. Lewis County Youth Enterprises (LCYE), a non-profit corporation doing business as Kiwanis Vocational Homes for Youth (KVH), operated the group home. LCYE was administratively dissolved in 2010.

¶ 2 Between 2015 and 2018, RN, JW, and SC sued LCYE, Kiwanis International and other related Kiwanis corporate entities, Washington State, and several corporate directors and officers, alleging negligence and asserting that their claims were not barred by the statute of limitations under the special discovery rule for victims of sexual abuse. In separate motions, the trial court granted summary judgment dismissals of all claims against LCYE and the individually named directors and officers of LCYE, ruling that RCW 23B.14.340, the corporate survival statute, barred all claims against them.

¶ 3 We hold that the corporate survival statute bars RN, JW, and SC's claims against LCYE, and affirm summary judgment dismissal as to the dissolved corporation, but we remand to the trial court to review liability as to the individual defendants.

FACTS
I. BACKGROUND

¶ 4 Lewis County Youth Enterprises (LCYE) was a Washington non-profit corporation, doing business as Kiwanis Vocational Homes for Youth (KVH). LCYE was incorporated in 1986. KVH operated a group care facility for boys in Centralia, which received state funding for the boys placed there. Charles McCarthy was the executive director of KVH. Lewis Patton, Sam Morehead, Lee Coumbs and Edward Hopkins were all on the board of directors of LCYE. B. Dale Shannon was a lieutenant governor of Kiwanis Pacific Northwest District, a Kiwanis related entity. Guy Cornwell was executive director of KVH for a short period in 1991, and was employed by KVH as "Director of Youth Care" between 1986 and 1991. Clerk's Papers (CP) at 1911.

¶ 5 In addition to their positions on the board of directors at LCYE, Coumbs, and Hopkins were also employees of KVH. Coumbs was a head teacher and principal for a period of five years at the private school operating on the KVH campus. In 1990, Hopkins was employed as a janitor, and also volunteered as principal at the private school. Hopkins lacked any qualifications to teach primary or secondary education. Hopkins also worked as a contractor for the Department of Labor & Industries (DLI) where he was responsible for finding alternative work for DLI recipients. Hopkins stopped working at KVH when he was arrested and charged with conspiracy to commit murder in 1990. LCYE was administratively dissolved in 2010.

II. ALLEGATIONS OF ABUSE 1

¶ 6 In 1987, McCarthy hired John and Peggy Halverson as independent contractors to "look to the physical and emotional needs of the youths" and to act as "teaching family parents on a daily basis" at the KVH campus. CP at 3011-12. As part of their job as teaching family parents, the Halversons lived on the property with the boys in their care. John was responsible for caring for the youths who were assaultive or who engaged in "more acting out."2 CP at 3944. McCarthy hired the Halversons despite the fact that Peggy had a documented history of abusing her own minor child in 1982. Peggy had lost custody of her child, and her visitation plan required her to attend therapy to learn parenting skills and practices focusing on non-physical parenting modalities. Peggy discontinued therapy in 1984 against clinical advice.

¶ 7 Between 1988 and 1990, there were numerous reports that John physically assaulted boys at KVH. In 1989, John became intoxicated and physically assaulted a boy. Despite these reports, McCarthy did not terminate John's employment.

¶ 8 The Halversons assaulted multiple children who were assigned to live with them at KVH. In 1989, the Halversons repeatedly sexually abused and raped RN. In 1989, the Halversons sexually abused and raped JW. From 1988 to 1989, the Halversons repeatedly sexually abused and raped SC and his younger brother.

¶ 9 In 1990, John physically assaulted another boy, which resulted in an investigation by the Department of Social and Health Services (DSHS), Child Protective Services (CPS) and a criminal referral to the Lewis County Sheriff's office. After the 1990 assault allegation came to the attention of CPS, McCarthy removed John as a teaching family parent and made him the director of the school. CPS concluded that the allegations of assault were substantiated, and ordered that John immediately vacate the premises and cease all participation with the group home. McCarthy then purportedly terminated John, but John remained on KVH's payroll and continued to work offsite.

¶ 10 In 1991, the DSHS Office of Special Investigations opened an investigation of KVH after receiving an anonymous tip. That investigation found that McCarthy had physically abused boys in his care, ordered staff to falsify documents and records, altered credentials of staff to appear in compliance with state law, misappropriated funds from and defrauded state and federal programs, and failed to report numerous criminal acts to law enforcement including a rape of a child. The report also found that Hopkins was responsible for placing DLI recipients at KVH in a conflict of interest with his contract at DLI, and that none of the DLI recipients placed at KVH received any promised training and were not qualified to work at the group home. Shortly thereafter, John Halverson was terminated and McCarthy resigned.

III. LAWSUIT AND MOTIONS FOR SUMMARY JUDGMENT
A. 2015 Complaint and First Amended Complaint

¶ 11 In 2015, RN sued LCYE, other related corporate entities,3 and the State. RN alleged that LCYE and the related entities had engaged in (1) negligent supervision and monitoring of care of the boys; (2) negligent failure to investigate, intervene, and report misconduct to authorities; (3) negligent failure to provide basic services, including simple support, care, education, and protection for the boys from emotional and physical injuries and sexual exploitation, and (4) negligent hiring, retention, and supervision of employees and agents. JW and SC joined the lawsuit in the first amended complaint. RN, JW, and SC alleged that LCYE and the other Kiwanis related entities’ negligence proximately and directly caused permanent emotional, mental, and physical injuries to them.

¶ 12 LCYE moved for summary judgment, arguing that the claims against them were barred under RCW 23B.14.340 because the claims were not brought within three years of its corporate dissolution as required by that statute. In response, RN, JW, and SC argued that the court should harmonize RCW 23B.14.340 with the statute of limitations and the discovery rule applicable to childhood sexual abuse claims. On April 7, 2017, the trial court granted LCYE's motion for summary judgment dismissal, ruling that RCW 23B.14.340 barred the claims because they were filed more than three years after the corporate dissolution.

B. 2018 Second Amended Complaint

¶ 13 In 2018, RN, JW, and SC filed a second amended complaint that added individual defendants McCarthy, Cornwell, Coumbs, Morehead, Hopkins, Patton, Meister, and Shannon. The second amended complaint included negligence claims based on the defendants’ duty arising out of a special relationship with the children. The complaint included allegations that the defendants negligently hired, trained and supervised its caseworkers and employees. The complaint also alleged new causes of action of outrage, negligent infliction of emotional distress, and intentional infliction of emotional distress.

¶ 14 On September 4, Patton moved for...

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    ... ... tort,” R.N. v. Kiwanis Int'l, 496 P.3d ... 748, 762 (Wash.Ct.App. 2021), which supports Justice Yu's ... ...
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    ...barred under current Washington law. This is consistent with other Washington decisions post-Keodalah. See R.N. v. Kiwanis Int'l, 496 P.3d 748, 762 (Wash.Ct.App. 2021) ("Because our Supreme Court's decision in that case was based solely on an issue of statutory construction and not on wheth......
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