Sawyer Falls Co. v. Capri Invs.
| Docket Number | 55811-4-II |
| Decision Date | 14 June 2022 |
| Parties | SAWYER FALLS CO., L.L.C., a Washington Limited liability company, Appellant, v. CAPRI INVESTMENTS, L.L.C., a Washington limited liability company; RENAISSANCE UNITED LIMITED, a Singapore exchange-listed entity; and any other individual/entity claiming any right, title, lien or other interest in the real property described herein, Respondents, v. WONG CHIN YONG; LEONARD TEOH HOOI LEONG, Third-Party Defendants. |
| Court | Washington Court of Appeals |
UNPUBLISHED OPINION
Sawyer Falls Co., LLC (SFC) appeals the superior court's entry for summary judgment for Capri Investments, LLC (Capri) and Renaissance United Limited with regard to SFC's breach of contract claims. On appeal, SFC argues that: (1) the agreement tolling the statute of limitations was valid when it was entered into, (2) Capri's agreement to pay under the Indeterminate Amount is a valid written contract subject to the six-year statute of limitations, and (3) Capri is the "alter ego" of Renaissance Untied Limited and therefore, SFC can pierce the corporation veil and include Renaissance United Limited in its claims for breach of contract. We agree with SFC regarding its first two arguments but disagree regarding the third. Accordingly, we reverse in part and affirm in part.
SFC, a Washington limited liability company (LLC), owned a large, 450+ acre parcel of property for residential development. The LLC members were Newton Centre Development, Ltd., [1] a British Virgin Islands (BVI) company and Innopac Holdings Limited, headquartered in Singapore.
In 2002, SFC sold the property to Capri, also a Washington LLC. Capri's sole owner was Renaissance United Limited (RUL), a Singapore entity.
To secure the purchase of the property, Capri executed a promissory note on July 22, 2002, in favor of SFC. The promissory note anticipated that Capri would engage in phased construction on the property and outlined two separate payment obligations, one for a "Fixed Amount" and one for an "Indeterminate Amount." Payment under the Fixed Amount was due in 2014, 12 years following the date of the note. Payment under the Indeterminate Amount was due in 2016, 14 years following the date of the note. Assuming a six-year statute of limitations applied to the Fixed Amount agreement, the statute of limitations for a failure to pay claim would run in 2020. See RCW 4.16.040(1).
During this time, SFC had internal complications with its membership. SFC's LLC agreement gave its member, Newton, a BVI entity, the sole authority to appoint the managers of SFC. But unbeknownst to SFC, Newton was stricken from the Registry of Companies of the British Virgin Islands in 2017 for its inadvertent failure to pay its annual licensing fees. However, it was not dissolved, meaning it was eligible for restoration under BVI law.
In 2018, during the time that Newton was stricken from the BVI registry, Newton continued to be active. For example, it agreed to amend the LLC agreement to give SFC's other member, Innopac, the right to appoint and remove managers of SFC. The amendment removed all current SFC managers and replaced them with Innopac's chosen managers, Wong Chin Yong and Phillip Leng Yew Chee.
Meanwhile, Capri failed to complete the construction phases and failed to make payment under either of its obligations. The new SFC manager, Wong, was subsequently given authority to act on behalf of SFC with regard to its potential claims against Capri for these failures. On July 16, 2020, SFC informed Capri that it intended to pursue claims under the promissory note.
The parties engaged in negotiations. Because the six-year statute of limitations deadline for the Fixed Amount (July 22, 2020) was quickly approaching, Wong entered into an agreement with Capri tolling the statute of limitations for the promissory note until September 30, 2020. The agreement stated, "This Agreement shall be interpreted and enforced according to the laws of the State of Washington." Clerk's Papers (CP) at 21. Wong also entered into additional agreements to amend the initial tolling agreement so as to further extend the deadline to October 21, 2020 and November 31, 2020.
After the parties were apparently unable to reach a resolution, SFC brought an action against Capri and RUL (collectively referred to as Respondents) raising various claims including breach of contract for Capri's failure to make payment under the promissory note. SFC argued that RUL, as the sole owner and "alter ego" of Capri, should also be liable. CP at 2.
In their answer, Respondents raised several affirmative defenses including the statute of limitations, fault of plaintiff, and mutual mistake. Respondents also brought counterclaims for equitable modification, reformation of the promissory note, and equitable rescission of the tolling agreement.
Following the initiation of the lawsuit, all parties became aware, for the first time, that Newton had not been validly registered in BVI since 2017. Quickly thereafter, Newton reinstated its administrative status and was restored to the BVI registry on February 25, 2021. SFC argued that this restoration retroactively cured any deficiency.
On February 8, 2021, SFC moved for partial summary judgment against the Respondents solely on the issue of Capri's failure to make payment on its obligations under the promissory note for both the Fixed Amount and the Indeterminate Amount.
Respondents cross-moved for partial summary judgment on February 26, 2021. Respondents argued that since Newton was unregistered when it agreed to amend SFC's LLC agreement, all of SFC's actions under the amended LLC agreement were invalid, including appointing Wong as a manager and executing the agreement tolling the statute of limitations. Therefore, SFC's claims were barred by the statute of limitations.
Respondents also argued that the Indeterminate Amount agreement was insufficiently certain in its terms to be a "written contract" and, therefore, any claims related to it would be subject to a three-year statute of limitations, not the typical six-year statute applicable to written contracts. CP at 95-98. As such, SFC's claim under the Indeterminate Amount was barred regardless of the validity of the tolling agreement. Finally, Respondents argued that RUL was not the "alter ego" of Capri, and therefore, SFC's claims against RUL should be dismissed.
In response, SFC provided a certificate from the BVI registrar that stated that, as of March 8, 2021, Newton was in "good standing" and listed on the BVI registry. CP at 811. SFC also produced a declaration from a former manager of SFC explaining that Newton had been stricken from the registry "due to its inadvertent failure to comply with the BVI's annual licensing renewal requirements but has since been restored to the BVI Registry as of February 25, 2021." CP at 808. SFC also argued that the terms of the Indeterminate Amount agreement were sufficiently certain to be considered a written agreement. And, finally, SFC defended its inclusion of RUL in the lawsuit by arguing that Capri and RUL commingled their assets to such an extent that RUL's corporate veil should be pierced.
The superior court granted Respondents' motion for partial summary judgment, dismissing SFC's claim for breach of contract on statute of limitations grounds. SFC filed a motion for reconsideration that the superior court also denied.
SFC appeals.
We review summary judgment motions de novo. M.E. through McKasy v. City of Tacoma, 15 Wn.App. 2d 21, 31, 471 P.3d 950 (2020), review denied, 196 Wn.2d 1035 (2021). "Summary judgment is appropriate if the pleadings, affidavits, depositions, and admissions demonstrate the absence of any genuine issue of material fact and the moving party is entitled to judgment as a matter of law." Id.; CR 56(c). A fact is material if it affects the outcome of the litigation. Id.
Under BVI law, when a company has been struck from the register but not dissolved, it may be reinstated:
Where a company has been struck off the Register, but not dissolved, the Registrar may, upon receipt of an application in the approved form and upon payment of the restoration fee and all outstanding fees and penalties, restore the company to the Register and issue a certificate of restoration to the Register.
CP at 172 (The BVI Business Companies Act of 2004 § 217(1)). "Where a company is restored to the Register under this section, the company is deemed never to have been struck off the Register." CP at 172 (§ 217(6)) (emphasis added).
Similarly, Washington law allows for reinstatement of an LLC that has been administratively dissolved for failure to pay its fees to the secretary of state. RCW 23.95.615(1), 23.95.610, 23.95.605(1). Reinstatement "relates back to and takes effect as of the effective date of the administrative dissolution." RCW 23.95.615(4)(a). Furthermore:
The domestic entity resumes carrying on its activities and affairs as if the administrative dissolution had never occurred, except for the rights of a person arising out of an act or omission in reliance on the dissolution before the person knew or had reason to know of the reinstatement.
RCW 23.95.615(4)(b) (emphasis added). Washington law also has identical provisions that apply to corporations. See RCW 23.95.605(1), .610(1), .615(1) and (4). BVI and Washington both share what has been characterized as the majority rule. See Fairbanks Arctic Blind Co. v. Prather & Assoc., Inc., 198 S.W.3d 143, 144 (Ky. 2005) ().
The purpose of these reinstatement...
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