State v. Ralph Williams' North West Chrysler Plymouth, Inc.

• Decision Date: 22 July 1976
• Docket Number: Nos. 43644,43745,s. 43644
• Citation: 553 P.2d 423,87 Wn.2d 298
• Parties: STATE of Washington, Respondent, v. RALPH WILLIAMS' NORTH WEST CHRYSLER PLYMOUTH, INC., et al., Appellants, Robert Friedman et al., Defendants (two cases).
• Court: Washington Supreme Court

Page 298

87 Wn.2d 298

553 P.2d 423

STATE of Washington, Respondent, v. RALPH WILLIAMS' NORTH WEST CHRYSLER PLYMOUTH, INC., et al., Appellants Robert Friedman et al., Defendants (two cases).

Nos. 43644, 43745.

Supreme Court of Washington, En Banc.

July 22, 1976.

Rehearing Denied Sept. 16, 1976.

James C. Young, Young & Cole, Seattle, Caidin, Kalman, Hartman & Sampson, Ronald L. Hartman, Beverly Hills, Cal., for appellants.

Slade Gorton, Atty., Gen., Thomas L. Boeder, Barbara J. Rothstein, John R. Ellis, Asst. Attys., Gen., Seattle, for respondent.

HAMILTON, Associate Justice.

Appellants are Ralph Williams' North West Chrysler Plymouth, Inc. (North West), a Washington corporation, Ralph Williams, Inc. (RWI), a California corporation, and Ralph Williams, individually and as corporate president of North West and RWI. They appeal from an order imposing terms upon the granting of a continuance and from a judgment assessing civil penalties for unfair and deceptive practices in the operation of an automobile business. The appeals from the respective orders were consolidated and will be considered seriatim. We affirm both the order and the judgment.

In May of 1968, North West opened its automobile dealership in North Seattle. In October 1970, respondent, the State of Washington, brought an action against appellants claiming violations of the consumer protection act (RCW 19.86), the retail sales installment act (RCW 63.14), and the unfair motor vehicles practices act (RCW 46.70). Respondent also sought civil penalties, restitution of consumers' property in appellants' possession, and an order permanently enjoining appellants from engaging in any future deceptive acts and practices. The dealership continued to operate until December 1970. The State Department of Revenue closed North West because it failed to pay certain excise taxes which it had collected from its customers.

Initially, the trial court concluded there was no possibility North West would conduct future business in Washington State. The court declared the entire case moot and granted appellants' motion to dismiss. In State v. Ralph Williams' North West Chrysler Plymouth, Inc., 82 Wash.2d 265, 268, 510 P.2d 233 (1973), we reversed the trial court's judgment on all grounds and remanded the case for a trial on the merits.

In November 1973, the trial judge set trial for March 11, 1974. Three days before the scheduled trial date appellants' then attorney filed a motion to withdraw. A continuance of the trial date was also requested. The withdrawing attorney initially represented appellants and Mr. Robert Friedman, the general manager of North West. In February 1974, Mr. Friedman dismissed the attorney as his counsel. Mr. Friedman and his new counsel commenced settlement negotiations with respondent. Respondent and Mr. Friedman negotiated a consent decree dismissing the amended complaint as it applied to Mr. Friedman. The decree also enjoined Mr. Friedman from engaging in future deceptive practices. Respondent then took another deposition from Mr. Friedman. His depositions supported respondent's position. Original counsel claimed he had an ethical duty to withdraw because of the conflict between appellants and his former client. ¹ The trial court denied the motion to withdraw and granted a continuance, if appellants paid $10,000 to respondent for costs of delay and posted a $75,000 bond to protect respondent's potential judgment. The court also found that appellants and their attorney should have reasonably anticipated the ethical difficulties. Appellants appealed the trial court's order.

The Court of Appeals issued an amended order allowing the withdrawal of counsel and quashed the $10,000 terms deposit and the $75,000 bond. However, the court remanded the case to the trial court for a hearing to allow respondent

an opportunity to make an adequate showing of the actual additional costs, fees and expenses to the State of Washington necessitated by reason of the continuance and following such a hearing the Superior Court may enter an order requiring the above-named petitioners to immediately pay an amount which would compensate the State of Washington for any costs, fees and expenses the court finds reasonably and justly incurred by reason of the continuance; . . .

On April 12, 1974, the trial court conducted a hearing to decide the terms for a continuance. Respondent's attorneys and office personnel filed affidavits concerning the cost of the continuance. Appellants took the depositions of each person who filed an affidavit in support of the allowance of terms. Appellants were given access to relevant documents in respondent's possession. Each affiant also testified at the hearing. The affidavits, depositions, and testimony established the amount of time required to repeat the trial preparation. The court, however, rejected the hourly rates because they were not respondent's actual costs. Respondent based its costs on reasonable fees for similar services in the community. The court directed respondent to submit proof of the actual salaries of each person involved in the trial preparation. The court also requested respondent to offer proof of any overhead costs. Respondent submitted additional affidavits establishing the actual per-hour cost of the delay. Appellants were given an opportunity to refute the additional affidavits. The court entered an order awarding respondent $13,638.79 in terms. An appeal was taken from this judgment.

Appellants challenge the trial court's decision to award terms for the continuance. CR 40(d) provides:

(d) Trials. When a cause is set and called for trial, it shall be tried or dismissed, unless good cause is shown for a continuance. The court may in a proper case, and Upon terms, reset the same.

(Italics ours.) This rule vests the trial court with the power to impose terms as the condition for granting a continuance. The amended order of the Court of Appeals also recognized this power when it remanded the case to the trial court for a hearing to determine the actual costs of the continuance. The decision to impose terms is within the discretion of the trial court. We will overturn the court's decision only if there exists a manifest abuse of discretion. See Peterson v. David, 69 Wash.2d 566, 569, 419 P.2d 138 (1966).

Appellants contend they did not cause a conflict of interest. Appellants claim the negotiated consent decree caused the conflict. We disagree. The Court of Appeals quoted with approval the original trial court order, which ruled that appellants and their attorney should have reasonably anticipated the ethical difficulty. On remand, the trial court did not reopen this issue. The record clearly supports the conclusion that appellants were responsible for the postponement. Mr. Friedman gave a number of depositions concerning his employment with North West. A simple examination of these depositions would have uncovered the future conflict of interest. Appellants waited until 3 days before the trial date to bring this matter to the trial court's attention. We therefore approve of the imposition of terms as a condition for granting appellants' motion for a continuance.

Appellants also challenge the procedure utilized by the trial court to resolve their continuance motion. CR 43(e)(1) states:

(1) Generally. When a motion is based on facts not appearing of record the court may hear the matter on affidavits presented by the respective parties, but the court may direct that the matter be heard wholly or partly on oral testimony or depositions.

Respondent's counsel and office personnel submitted affidavits of the actual cost of the delay. The cost included overhead, mailing charges, transportation costs, and lodging for witnesses. The affidavits also established the actual costs for attorneys, investigators, and an accountant. The affiants were the individuals who actually prepared the case for trial. Appellants took the depositions of these affiants and also examined the relevant documents. Further, the trial court conducted two hearings on the matter. Appellants examined each of the respondent's affiants at one of these hearings. Appellants were given every opportunity to refute the affidavits, depositions, and testimony. The procedure is consistent with the guidelines of CR 43(e). We consider the amount of terms reasonable in light of the complexity of the case and the burdensome cost of duplicating the trial preparation. We therefore find no abuse of discretion by the trial court. ²

The trial on the merits finally began on September 10, 1974. The trial court found numerous violations of RCW 19.86, RCW 63.14, and RCW 46.70. Following is a summary of these violations.

Appellants claimed they sold cars at prices lower than other area car dealers. Appellants also featured automobiles as specific illustrations of their low prices. Appellants' prices were, to the contrary, substantially higher than competitors' prices. In fact, the advertised illustrations were not even representative of their own prices. Appellants stated they could sell automobiles for lower prices, because they received volume discounts. An automobile industry witness testified each dealer pays the same invoice price for a car, and no dealer receives volume discounts.

Appellants represented in their advertisements that each purchaser received warranties on certain cars purchased from them. Many of appellants' automobiles came with a '12 by 12' warranty. This warranty provided a '12-month warranty at 10% Over cost on all parts and labor or 12,000 miles, whichever occurs first.' Appellants advertised they would perform any warranty repairs in their 'huge factory-type reconditioning plant.' The evidence revealed 12-by-12 warranty repairs were rarely available and when the warranty applied, the cost of the warranty repairs equaled or exceeded the repair costs at other reliable dealerships without any warranty whatsoever. Appellants...