Skinner v. Holgate

• Citation: 141 Wn. App. 840,173 P.3d 300
• Decision Date: 27 November 2007
• Docket Number: No. 35506-0-II.,35506-0-II.
• Parties: Matthew SKINNER, an individual, Appellant/Cross-Respondent, v. Gary D. HOLGATE and Judy Holgate, individually and the marital community comprised thereof; Adam Holgate and Jane Doe Holgate, individually and the marital community comprised thereof; Westlands Resources Corporation, a Washington corporation; Westlands Holding Company, Inc., a Washington corporation, Respondents/Cross-Appellants.
• Court: Court of Appeals of Washington

173 P.3d 300

141 Wn. App. 840

Matthew SKINNER, an individual, Appellant/Cross-Respondent, v. Gary D. HOLGATE and Judy Holgate, individually and the marital community comprised thereof; Adam Holgate and Jane Doe Holgate, individually and the marital community comprised thereof; Westlands Resources Corporation, a Washington corporation; Westlands Holding Company, Inc., a Washington corporation, Respondents/Cross-Appellants.

No. 35506-0-II.

Court of Appeals of Washington, Division 2.

November 27, 2007.

Bradley Judson Woodworth, Attorney at Law, Portland, OR, for Appellant/Cross-Respondent.

Richard Antoine Paroutaud, Mano McKerricher Paroutaud, Chehalis, WA, Philip Albert Talmadge, Talmadge Law Group PLLC, Tukwila, WA, for Respondent/Cross-Appellant.

BRIDGEWATER, J.

¶ 1 Matthew Skinner appeals from a summary judgment wherein the trial court applied the doctrine of judicial estoppel and granted summary judgment against Skinner. Skinner filed for bankruptcy but failed to disclose an estimated $1,000,000 claim against Holgate and received a discharge in bankruptcy, finding that there were no assets. Judicial estoppel is an equitable doctrine precluding a party from asserting one position in a court proceeding and later seeking advantage by taking an inconsistent position. We hold that the trial court wherein Skinner later made a claim against Holgate, after his discharge, did not abuse its discretion in granting summary judgment against Skinner. We also affirm the trial court's refusal to impose attorney fees and do not grant fees to Holgate on appeal.

FACTS

¶ 2 Matthew Skinner is a professional businessman. In 1998, he began negotiating for the sale of the Capitol Theater building in Olympia, Washington, with owner Andrew Crow. Although Skinner negotiated the sale, he did not have the financial means to complete the transaction. Skinner then approached Gary Holgate about joining him in purchasing the building.

¶ 3 Holgate is a real estate businessman in southwest Washington and owner of the Westlands Resources Corporation (Westlands). Holgate agreed to form a joint venture with Skinner called GM Properties. Holgate and Skinner opened a checking account under Westlands, d/b/a GM Properties. Skinner, Holgate, and Holgate's son, Adam Holgate, were signatories on the account.

¶ 4 Crow and Westlands executed a five-and-one-half-year lease option on the theater. The lease terms included rent of $4,500 per month and an option price of $374,173.50, which could be exercised at the end of the lease term on January 31, 2004. Immediately thereafter, Skinner circulated a letter to the existing tenants of the Capitol Theater building informing them that he and Westlands had leased the theater from Crow.

¶ 5 GM Properties took possession of the Capitol Theater building, and Holgate and Skinner began managing the various subtenant rentals, making necessary repairs on the building. From 1999-2002, Skinner received draws or loans totaling $13,212.80 from the GM Properties checking account.

¶ 6 On May 2, 2001, Skinner formed a new corporation, Washington Retailtainment Corporation (Retailtainment). He was the only shareholder, officer, and director of Retailtainment.

¶ 7 At about the same time that Skinner formed Retailtainment, Westlands acquired title to a chiropractor's office building (South Gold Property). Westlands then sold the building to Crow for $110,000. Skinner claims that this building was acquired for the benefit of GM Properties, in joint venture with Crow. The purpose of the South Gold Property was to develop an adult video store.

¶ 8 Holgate later decided not to participate in the adult video store and left all dealings related to the store to Skinner and Crow. From April 27, 2001 through June 25, 2002, Crow gave Skinner and/or Retailtainment 26 checks totaling $67,000. Skinner claims the funds were used to either remodel the building or were reimbursements for funds he personally spent on the Capitol Theater building.

¶ 9 In addition, Crow and GM Properties gave Skinner a $30,000 loan. The handwritten loan agreement provided that Skinner begin repaying the loan on January 1, 2002. The loan agreement further provided that in the event of any default, Skinner agreed to relinquish one percent of his interest in the Capitol Theater building for each $3,000 lost. Skinner never began repaying the loan.

¶ 10 On April 3, 2002, a confession of judgment against Skinner was entered in unrelated state court litigation. Holgate then took Skinner off of the GM Properties checking account. In May 2002, Skinner and his partners met to discuss his interest in the Capitol Theater building.

¶ 11 On July 12, 2002, Skinner, assisted by a paralegal, filed for bankruptcy. In his schedule of assets, Skinner did not disclose: (a) his interest in GM properties; (b) his claimed interest in Capitol Theater building; (c) his claims against Crow, Holgate, Westlands, or any of the other defendants, regarding any joint ventures; (d) any of the income, draws, or loan proceeds Skinner had received from GM Properties; (e) the loan Skinner owed to Crow or GM Properties; or (f) any of the sums Crow paid to Retailtainment and Skinner.

¶ 12 The bankruptcy trustee held the first meeting of creditors in August 2002. Skinner testified under oath that he had no assets, claims, or income that was not already set forth in the bankruptcy schedules. Skinner also testified that no one owed him money. The trustee then filed a No Assets Report on August 19, 2002.

¶ 13 Meanwhile, Skinner attempted to negotiate a resolution and final accounting as to the Capitol Theater building and South Gold Property. Skinner wrote three settlement letters to Holgate between September 17 and October 6, 2002. On October 16, 2002, Skinner received his bankruptcy discharge and on October 30, 2002, the case was closed by court order. Between December 4, 2002 and February 2, 2003, Skinner wrote three more letters demanding valuations for the theater and other "properties." CP at 196.

¶ 14 In February 2004, Skinner sued Holgate, Crow, and Westlands. Two months later, the bankruptcy trustee discovered Skinner's lawsuit and promptly filed a Notice of Removal, at which point it became part of the bankruptcy estate. Both Westlands and Crow filed proofs of claim.

¶ 15 Holgate, Crow, and Westlands intended to settle the claim by paying the trustee $35,000, whereby the trustee would dismiss the superior court case against them with prejudice. Several other filings took place before a second settlement was proposed. The second settlement agreement provided that a third party would purchase the claim against Holgate for $45,000, thereby preserving Skinner's claim. Skinner would also purchase the South Gold Property from Crow, who would then withdraw his proof of claim.

¶ 16 The bankruptcy court approved the second settlement and noted that Skinner should be allowed his day in court. The case was then remanded to Thurston County Superior Court.

¶ 17 Skinner filed a second amended complaint in Thurston Country Superior Court and Holgate, Crow, and Westlands (hereinafter Holgate) moved for summary judgment on grounds of judicial estoppel. The trial court found that Skinner failed to disclose his "significant partnership relationship [with Holgate] in this matter, his interest in GM Properties, his many business transactions, perhaps assets that he owned jointly or debts that he owed to these business partners." RP (July 14, 2006) at 14. The trial court went on to say that there is "nothing in the record to suggest he didn't know that he had some interest in the partnership", RP (July 14, 2006) at 14, and that Skinner was "required at every step of the way to disclose both his assets and his debts." RP (July 14, 2006) at 14.

¶ 18 The trial court granted summary judgment. Holgate filed a motion for attorney fees on alternate grounds. The trial court denied the motion for attorney fees. Skinner appeals and Holgate cross-appeals the trial court's attorney fees ruling.

ANALYSIS

I. Standard of Review

¶ 19 Thurston County Superior Court granted summary judgment in favor of Holgate. We review a summary judgment de novo, engaging in the same inquiry as the trial court. City of Sequim v. Malkasian, 157 Wash.2d 251, 261, 138 P.3d 943 (2006). Summary judgment is appropriate when "there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law." CR 56(c). All facts are considered in the light most favorable to the nonmoving party. Vallandigham v. Clover Park Sch. Dist. No. 400, 154 Wash.2d 16, 26, 109 P.3d 805 (2005) (citing Atherton Condo. Apartment-Owners Ass'n Bd. of Dirs. v. Blume Dev. Co., 115 Wash.2d 506, 516, 799 P.2d 250 (1990)).

II. Judicial Estoppel

¶ 20 "Judicial estoppel is an equitable doctrine that precludes a party from asserting one position in a court proceeding and later seeking an advantage by taking a clearly inconsistent position." Arkison v. Ethan Allen, Inc., 160 Wash.2d 535, 538, 160 P.3d 13 (2007) (citing Bartley-Williams v. Kendall, 134 Wash.App. 95, 98, 138 P.3d 1103 (2006)). The doctrine serves three purposes: (1) to preserve respect for judicial proceedings; (2) to bar as evidence statements by a party that would be contrary to sworn testimony the party gave in prior judicial proceedings; and (3) to avoid inconsistency, duplicity, and waste of time. Cunningham v. Reliable Concrete Pumping, Inc., 126 Wash. App. 222, 225, 108 P.3d 147 (2005). We review a trial court's decision to apply the equitable doctrine of judicial estoppel for abuse of discretion. Arkison, 160 Wash.2d at 538-39, 160 P.3d 13. Although Arkison sets forth basic concepts concerning judicial estoppel, it is inapposite because it held that the court erred when it applied judicial estoppel against the bankruptcy trustee; Arkison did not concern the application against a debtor. Cunningham, however is directly on point because it...