State v. Brelvis Consulting LLC

• Decision Date: 20 November 2018
• Docket Number: No. 50235-6-II,50235-6-II
• Citation: 430 P.3d 685
• Court: Washington Court of Appeals
• Parties: STATE of Washington, Respondent, v. BRELVIS CONSULTING LLC, Appellant.

430 P.3d 685

STATE of Washington, Respondent,

v.BRELVIS CONSULTING LLC, Appellant.

No. 50235-6-II

Court of Appeals of Washington, Division 2.

Filed November 20, 2018

Peter Alan Offenbecher, Skellenger Bender PS, 1301 5th Ave. Ste. 3401, Seattle, WA, 98101-2630, for Appellant.

John Nelson, WA State Attorney General's Office, 800 Fifth Ave. Ste. 2000, Seattle, WA, 98104-3188, for Respondent.

PUBLISHED OPINION

Bjorgen, J.

¶ 1 Brelvis Consulting LLC (Brelvis) appeals from the superior court’s order requiring it to comply with the civil investigative demand (CID) issued and served on Brelvis by the Attorney General’s Office (AGO) pursuant to RCW 19.86.110. Brelvis argues that the superior court erred by compelling it to comply with the CID because it violates Brelvis’ (1) right against self-incrimination, (2) right against intrusion into its private affairs, and (3) right against unreasonable search and seizure. Brelvis also argues that the CID is directed at the managing member of Brelvis, Bruce Mesnekoff, in his personal capacity.

¶ 2 We hold that the superior court properly required Brelvis to comply with the CID and consequently affirm its decision.

FACTS

¶ 3 On August 3, 2016, the AGO received a complaint regarding an entity known as the Student Loan Help Center LLC. Although the complaint identified the "National Student Loan Help Center" as its subject, it included an Internet address for the "Student Loan Help Center." Clerk’s Papers (CP) at 159-60. The complaint also included a link to the Better Business Bureau’s (BBB) Internet complaint page regarding the Student Loan Help Center. The BBB webpage for the Student Loan Help Center included the following information:

Pattern of Complaints

BBB files indicate that The Student Loan Help Center has a pattern of complaints stating that the business does not consolidate loans after the consumer pays an initial fee. Complaints further show that consumers[’] request for refunds go unanswered by the business.

In September 2014, July 2015, and December 2016, BBB sent a request to The Student Loan Help Center to address this pattern and what actions the business has taken to help eliminate the causes of complaints. As of today’s date, BBB has not received a response from the business.

CP at 164.

¶ 4 The Student Loan Help Center also does business under the name Brelvis Consulting LLC. Mesnekoff owns and operates Brelvis and is its registered agent. On October 21, the AGO sent a CID to Brelvis pursuant to RCW 19.86.110 as part of its investigation into whether Brelvis had engaged in unfair or deceptive business practices in violation of RCW 19.86.020.¹ The CID was addressed to Brelvis, in care of Mesnekoff. The AGO’s investigation related to possible misrepresentations about student loan forgiveness and other possible violations of Washington’s Debt Adjusting Act, chapter 18.28 RCW, and Consumer Protection Act, chapter 19.86 RCW, based on the August 3 complaint. The CID included 12 interrogatories and 13 requests for production. The CID requested several categories of documents and responses from Brelvis regarding matters such as advertisements, payment records, customer complaints, client intake and communication records, and other information about Brelvis’ business, its employees, and any litigation against the company.

¶ 5 On November 22, counsel for Brelvis contacted the AGO requesting additional time to respond to the CID. On December 29, after multiple e-mail communications, the AGO informed Brelvis that if it did not respond to the CID by January 5, 2017, the AGO would file a motion to enforce the CID. Brelvis retained new counsel who, on January 12, e-mailed the AGO requesting additional time to respond to the CID. Then, on January 27, counsel informed the AGO that Brelvis was again seeking new counsel with regard to the CID. On January 30, the new counsel for Brelvis contacted the AGO to confirm that it had taken over representation for Brelvis. On February 3, the AGO told Brelvis that it would give it until February 10 to respond to the CID. Brelvis did not respond to the interrogatories and requests for production.

¶ 6 On February 14, the AGO filed a petition to enforce the CID, which the superior court granted. Brelvis filed a motion for reconsideration of the order enforcing the CID, which the superior court denied. Brelvis appealed both the superior court’s order enforcing the CID and its order denying reconsideration to our court. On April 21, Brelvis filed a motion to stay the superior court’s March 24 order, which the superior court granted.

ANALYSIS

¶ 7 Brelvis argues that the superior court’s order compelling compliance with the CID is erroneous because it violates Brelvis’ (1) right against self-incrimination, (2) right against unlawful intrusion into its private affairs, and (3) right against unreasonable search and seizure. We disagree.

I. SCOPE OF CID

¶ 8 As an initial matter, Brelvis argues that Mesnekoff’s individual rights against self-incrimination, unlawful intrusion into his private affairs, and unreasonable search and seizure are implicated. We disagree.

¶ 9 The CID noted that it was directed to "Brelvis Consulting LLC" and to Mesnekoff as its registered agent for service. CP at 18. The interrogatories and requests for production defined "You," "Your," and "Brelvis" as referring to Brelvis Consulting LLC, including any principals, owners, employees, officers, agents, and "any other persons or entities acting on behalf of or under the direction, authorization or control of Brelvis." CP at 18, 20. Brelvis argues that because the definition of "You," "Your," and "Brelvis" encompasses Mesnekoff, "the CID applies to him personally." Reply Br. of Appellant at 10-11. Brelvis asserts that

[t]he plain language of the CID equates Mr. Mesnekoff individually and personally with the word "Brelvis." Mr. Mesnekoff is therefore required by the terms of this CID to answer the interrogatories under oath.

Reply Br. of Appellant at 11. Brelvis also argues that Mesnekoff is personally implicated because the CID was addressed to Brelvis in care of him.

¶ 10 A corporation is "artificial, invisible, intangible," and it exists only in law. Diaz v. Wash. State Migrant Council , 165 Wash. App. 59, 76-77, 265 P.3d 956 (2011) ; Broyles v. Thurston County , 147 Wash. App. 409, 428, 195 P.3d 985 (2008). Our case law recognizes that

[t]he invisible, intangible object of our legal contemplation cannot answer discovery or be effectively sanctioned if it does not. By necessity it acts through its officers, directors, employees, and other agents. As with a corporation’s duties in every other sphere in which it operates, it is the corporate officers, directors, and other agents who must discharge its duties in a lawsuit.

Diaz , 165 Wash. App. at 76-77, 265 P.3d 956 (internal citation omitted). Further, a " ‘corporation exists as an organization distinct from ... its shareholders.’ " State v. Chase , 1 Wash. App. 2d 799, 805, 407 P.3d 1178 (2017), review denied , 190 Wash.2d 1024, 418 P.3d 802 (2018) (quoting Grayson v. Nordic Constr. Co. , 92 Wash.2d 548, 552, 599 P.2d 1271 (1979) ). Accordingly, corporations acting through corporate officers and corporate officers acting in their personal capacity "maintain distinct legal obligations and interests." Id . A corporation’s separate legal identity is not lost because it is owned by one person or members of a single family. Id .

¶ 11 Brelvis’ claim that the CID targets Mesnekoff in his personal capacity is belied by case law and the record. The United States Supreme Court has held that

without regard to whether the subpoena is addressed to the corporation, or as here, to the individual in his capacity as a custodian, ... a corporate custodian such as petitioner may not resist a subpoena for corporate records on Fifth Amendment grounds.

Braswell v. United States , 487 U.S. 99, 108-09, 108 S.Ct. 2284, 101 L.Ed.2d 98 (1988) (internal citations omitted).² Nevertheless, the "privilege against self-incrimination includes the right of a witness not to give incriminatory answers in any proceeding—civil or criminal, administrative or judicial, investigatory or adjudicatory." Eastham v. Arndt , 28 Wash. App. 524, 527, 624 P.2d 1159 (1981) (citing Kastigar v. United States , 406 U.S. 441, 92 S.Ct. 1653, 32 L.Ed.2d 212 (1972) ).

¶ 12 Thus, Mesnekoff, in his capacity as Brelvis’ custodian, may not resist a request for production of Brelvis’ records on Fifth Amendment grounds. See Braswell , 487 U.S. at 108-09, 108 S.Ct. 2284. However, where the interrogatories propounded by the AGO might tend to incriminate Mesnekoff in future criminal proceedings, the Fifth Amendment privilege against self-incrimination permits Mesnekoff to refuse to answer official questions asked in the context of the CID. See King v. Olympic Pipeline Co. , 104 Wash. App. 338, 351, 16 P.3d 45 (2000), which held that the "Fifth Amendment privilege permits a person to refuse to testify at a criminal trial, or to refuse to answer official questions asked in any other proceeding, where the answer might tend to incriminate him or her in future criminal proceedings."

¶ 13 For these reasons, we limit our review to Brelvis’ assignments of error as they apply to Brelvis, and we also address whether Mesnekoff properly invoked his Fifth Amendment privilege against self-incrimination.

II. GENERAL LEGAL STANDARDS

¶ 14 We review constitutional issues de novo. City of Seattle v. Evans , 184 Wash.2d 856, 861, 366 P.3d 906 (2015), cert. denied , ––– U.S. ––––, 137 S.Ct. 474, 196 L.Ed.2d 384 (2016). We also review issues of statutory interpretation de novo. Jongeward v. BNSF R. Co. , 174 Wash.2d 586, 592, 278 P.3d 157 (2012). Our fundamental objective in statutory interpretation is to give effect to the legislature’s intent. Id . If a statute’s meaning is plain on its face, then we give effect to that plain meaning as an expression of legislative intent. Id . at 594, 278 P.3d 157. We discern plain meaning not...