Skilcraft Fiberglass, Inc. v. Boeing Co., 30961-7-I
| Decision Date | 13 December 1993 |
| Docket Number | No. 30961-7-I,30961-7-I |
| Citation | 72 Wn.App. 40,863 P.2d 573 |
| Parties | SKILCRAFT FIBERGLASS, INC., Plaintiff, v. The BOEING COMPANY, a Delaware corporation, Respondent, Joan Carol Wadsworth, Sharon Ann Wadsworth as Administratrix of the estate of Lawrence Kirby Wadsworth, Gary W. Gage, Equal Employment Opportunity Commission, Gordon Richardson, Pacific Erectors, Inc., United Structures of America, Inc., Defendants, Hermanson Corporation, Respondent, Roy Lee Long and Roy Lee Long, Jr., Defendants, Roland O. Balloun, Appellant. Division 1 |
| Court | Washington Court of Appeals |
Roland O. Balloun, Bellingham, Karen F. Jones, Riddell Williams Bullitt & Walkinshaw, Bellevue, for appellant.
Arthur Daniel McGarry, Bellingham, Oles, Morrison & Rinker; Kandice Gene Tezak, Ryan, Swanson & Cleveland, Seattle, for respondent(s).
Roland O. Balloun appeals the trial court's judgment imposing CR 11 sanctions, arguing that neither Boeing nor Hermanson Corporation was entitled to be served with his default motion against Boeing and that deficiencies in the bond recorded by Hermanson justified his actions in seeking the default judgment. We affirm.
In October 1990, Hermanson Corporation, the primary contractor on a construction project for the Boeing Company, entered into an agreement with Skilcraft Fiberglass, Inc., under which Skilcraft was to provide ducting materials for the project. Subsequently, Hermanson concluded that Skilcraft's performance was deficient and replaced Skilcraft with another supplier.
In mid-1991, Skilcraft filed a claim of lien for approximately $150,000 against Boeing's property, where the construction project had taken place. Skilcraft claimed that Hermanson owed it that amount for materials Skilcraft had delivered pursuant to the agreement. On February 13, 1992, Skilcraft filed a complaint against Hermanson for breach of contract. Included in the complaint was a lien foreclosure claim against Boeing's property.
On February 18, 1992, Hermanson filed a notice of appearance in the lawsuit. On February 20, 1992, to release the lien against Boeing's property, Hermanson filed a bond in the amount of $300,754, replacing an earlier, deficient, bond that Hermanson had filed. Upon receiving notice of Hermanson's intent to file this second bond, Skilcraft's attorney, Roland O. Balloun, sent Hermanson a letter requesting that Hermanson send documentation to verify that the bond issuer was financially able to meet its guarantees. This letter also stated: "If Hermanson fails to comply with RCW 60.04.115 [Release of Lien Bond Statute], Skilcraft will move for default judgments against any and all defendants that fail to timely answer Skilcraft's complaint." Brief of Respondent, Appendix A, at 17. Hermanson immediately sent Balloun the requested documentation. The next day, Hermanson spoke with Balloun on the telephone, asking whether Skilcraft, having received a copy of the bond and the requested documentation regarding the insurer, would now release its lien against Boeing's property. Balloun replied that "he anticipated he would because, in view of RCW 60.04.115, he did not have much choice." In late February 1992, Hermanson left a message on Balloun's answering machine, asking again whether Skilcraft intended to amend its complaint to drop its claim against Boeing. In a letter dated March 11, 1992, Balloun replied that amending the complaint was unnecessary and not required by RCW 60.04.115.
On March 11, 1992, Balloun, without notifying Boeing or Hermanson, filed a motion and affidavit for order of default against Boeing, and Skilcraft was awarded a $150,000 default judgment against Boeing. When Boeing demanded that Balloun vacate the default judgment, Balloun replied that the judgment was proper because the bond filed by Hermanson was deficient under RCW 60.04.115.
On March 26, 1992, Boeing and Hermanson filed a motion to vacate the default judgment and for terms against Balloun and Skilcraft. The trial court concluded that Balloun had obtained the default judgment against Boeing improperly because Hermanson's bond had released the lien on Boeing's property. The trial court also concluded that Balloun violated CR 5 by not serving Hermanson with the default motion against Boeing. 1 The trial court ordered Balloun and Skilcraft to pay Hermanson and Boeing approximately $22,000 in attorney's fees. Balloun appeals. 2
We first determine whether Balloun's misconduct warranted sanctions under CR 11.
CR 11 provides that every pleading, motion, and legal memorandum submitted by an attorney on behalf of a party shall be signed by the attorney and that
[t]he signature of a party or of an attorney constitutes a certificate by the party or attorney that the party or attorney has read the pleading, motion, or legal memorandum; that to the best of the party's or attorney's knowledge, information, and belief, formed after reasonable inquiry it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, and that it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.
...
CR 11 further provides that a court may order sanctions against any party or attorney who signs a document in violation of the rule. A reviewing court will not reverse CR 11 sanctions absent an abuse of discretion. Harrington v. Pailthorp, 67 Wash.App. 901, 841 P.2d 1258 (1992) (citing Clarke v. Equinox Holdings, Ltd., 56 Wash.App. 125, 132, 783 P.2d 82, review denied, 113 Wash.2d 1001, 777 P.2d 1050 (1989)), review denied, 121 Wash.2d 1018, 854 P.2d 41 (1993).
In the present case, the trial court sanctioned Balloun for the representations in his affidavit in support of the default motion, which stated that Skilcraft was entitled to a default judgment against Boeing. Balloun argues that his actions were reasonable because (1) he was not required to serve Boeing or Hermanson with the default motion and (2) defects in Hermanson's bond justified his actions in seeking a default judgment against Boeing. For the reasons below, we conclude that neither of these arguments has any merit.
CR 55(a)(3) provides:
Notice. Any party who has appeared in the action for any purpose shall be served with a written notice of motion for default and the supporting affidavit at least 5 days before the hearing on the motion. Any party who has not appeared before the motion for default and supporting affidavit are filed is not entitled to a notice of the motion, except as provided in rule 55(f)(2)(A).
RCW 4.28.210 provides that a defendant appears in an action when he "answers, demurs, makes any application for an order therein, or gives the plaintiff written notice of his appearance." However, these methods of appearing are not exclusive, and "courts have recognized various informal acts as sufficient to constitute an appearance." Shreve v. Chamberlin, 66 Wash.App. 728, 732, 832 P.2d 1355 (1992), review denied, 120 Wash.2d 1029, 847 P.2d 481 (1993).
In Gage v. Boeing Co., 55 Wash.App. 157, 776 P.2d 991, review denied, 113 Wash.2d 1028, 784 P.2d 530 (1989), Gage appealed two decisions by the Board of Industrial Insurance Appeals in which Boeing had prevailed. When Boeing failed to file any notices of appearance, Gage obtained default judgments without notifying Boeing. The trial court granted Boeing's motions to vacate the judgments, and Gage appealed. Gage, 55 Wash.App. at 158-59, 776 P.2d 991.
The Court of Appeals reiterated the general rule that default judgments are not favored in the law and "must normally be viewed as available only when the adversary process has been halted because of an essentially unresponsive party." Gage, at 160-61, 776 P.2d 991 (quoting H.F. Livermore Corp. v. Aktiengesellschaft Gebruder Loepfe, 432 F.2d 689, 691 (D.C.Cir.1970)). Because of this rule, the court reasoned that the concept of appearance, for purposes of CR 55 (default judgments), must be construed broadly. Gage, 55 Wash.App. at 161, 776 P.2d 991. The court stated:
Whether a party has "appeared" for purposes of the rule requiring notice prior to an entry of default is generally a question "of intention, as evidenced by acts or conduct, such as the indication of a purpose to defend or a request for affirmative action from the court, constituting a submission to the court's jurisdiction."
Gage, at 161, 776 P.2d 991 (). The court then cited several cases in which a defendant's informal actions have been held to constitute an appearance for purposes of CR 55. Gage, at 162, 776 P.2d 991. Finally, the court concluded that because Boeing had vigorously contested all of Gage's claims through the administrative level, Gage could "have entertained no illusions regarding respondent's intentions to contest the claims." Gage, at 162, 776 P.2d 991.
Balloun argues that he was not required...
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