Town of Skykomish, Corp. v. Karl Benz & Catherine Riley
| Decision Date | 04 April 2016 |
| Docket Number | C/w No. 73030-4-I,No. 72735-4-I,72735-4-I |
| Parties | TOWN OF SKYKOMISH, A MUNICIPAL CORPORATION, Respondent, v. KARL BENZ and CATHERINE RILEY, Appellants, INVESTORS PROPERTY SERVICES LLC, WHICH ACQUIRED TITLE AS INVESTOR'S PROPERTY SERVICE, LLC AND ALSO dba SKYKOMISH HOTEL LLC, and SKYKOMISH HOTEL LLC, and EVERGREEN PROPERTIES, INC., Defendants. |
| Court | Washington Court of Appeals |
UNPUBLISHED OPINION
SCHINDLER, J. — Pro se litigants Karl Benz and Catherine Riley appeal (1) the order denying their CR 60(b)(11) motion to vacate a judgment for CR 11 sanctions, (2) the order finding them in contempt for providing incomplete and untruthful answers to interrogatories and requests for production, and (3) the order finding they are vexatious litigants and prohibiting filing lawsuits related to the same facts or cause of action without prior court approval. We affirm in all respects.
FACTS
Following an administrative hearing in 2011, the Skykomish Building Inspector concluded the Skykomish Hotel (Hotel) "constitutes an unfit building" that violated the Skykomish Municipal Code.
The condition of the property is such that it constitutes an unfit building per Town Code Section 15.25.040 as it is in disrepair, contains structural defects, is dilapidating and of a substandard condition. Further, the defects increase the hazard of fire, accidents, and the likelihood to cause damage or injury.
In February 2012, the town of Skykomish (Skykomish) filed a complaint in King County Superior Court against Skykomish Hotel LLC, Investors Property Services LLC, and Evergreen Properties Inc. to abate the Hotel as a public nuisance. Karl Benz is the sole member of Skykomish Hotel LLC. Catherine Riley is the sole member of Investors Property Services LLC and the sole shareholder of Evergreen Properties Inc. Benz and Riley are married.
On August 23, 2012, Benz and Riley on behalf Skykomish Hotel LLC, Investors Property Services LLC, and Evergreen Properties Inc. filed an answer, affirmative defenses, and counterclaims. Benz and Riley asserted that because "Evergreen Florida" loaned money to Skykomish Hotel LLC, it was "a bona fide lender of record" entitled to notice of the administrative proceedings against the Hotel and an indispensable party to the lawsuit.
In August 2013, the president of Evergreen Florida filed a declaration unequivocally stating that "Evergreen Florida never loaned any money to Skykomish Hotel, LLC."
Skykomish filed a motion for CR 11 sanctions against Benz and Riley and the attorney representing Investors Property Services LLC, Skykomish Hotel LLC, and Evergreen Properties Inc. Skykomish alleged Benz and Riley "knew or certainly should have known" that Evergreen Florida had never loaned any money to Skykomish Hotel LLC and the attorney "certainly knew that there was no bona fide debtor/creditor relationship" between Evergreen Florida and Skykomish Hotel LLC.
On September 13, 2013, the court entered an order granting the motion for CR 11 sanctions. The court found that Benz and Riley filed a verified answer, affirmative defenses, and counterclaims that "contained contentions and affirmative defenses that in fact were untrue" and filed affidavits that contained assertions that were not true. The court found the attorney filed pleadings that contained assertions that were not true and "failed to make a reasonable inquiry into the facts." The court concluded that Benz and Riley and the attorney "engaged in actions, filed pleadings and made representations that are not factually supported," and that "[t]he actions taken appear to have been . . . for the purpose of delaying the administration of the case and for the purpose of harassing and intimidating" Skykomish. The court entered a judgment for the CR 11 sanctions against Benz and Riley and the attorney for $37,661.18 "jointly and severally."
In March 2014, the attorney filed a motion to withdraw nunc pro tunc effective May 5, 2013 and vacate the CR 11 sanctions and judgment entered against him. The court held an in camera hearing to allow the attorney and another witness to testify. Following the in camera hearing, the court entered an order granting the attorney's motion to withdraw. The court entered an order vacating the CR 11 sanctions andjudgment entered against the attorney. Because of the in camera testimony, the judge recused and another superior court judge assumed responsibility for the case.
On September 15, 2014, Benz and Riley filed a motion to vacate the judgment for CR 11 sanctions under CR 60(b)(11). The court denied the motion to vacate the judgment.
Skykomish initiated supplemental proceedings against Benz and Riley to enforce the CR 11 judgment and other outstanding judgments against Skykomish Hotel LLC. Skykomish propounded interrogatories and requests for production to Benz and Riley and Skykomish Hotel LLC to identify the assets and income available to satisfy the judgments. Benz and Riley objected to many of the interrogatories and requests for production, asserting the documents needed to respond were in the "exclusive possession and control" of Skykomish. On behalf of Skykomish Hotel LLC, Benz states in the response to interrogatories that the Hotel received "no income" in the past six years.
Skykomish filed a motion for CR 37 sanctions for failure to provide truthful answers to the interrogatories and requests for production. Skykomish asserted Benz and Riley had not disclosed substantial amounts of money received between 2008 and 2010. The attorney representing Skykomish submitted a declaration attaching a number of canceled checks payable to Skykomish Hotel LLC and Investors Property Services LLC.
The court found Benz and Riley in contempt for providing "incomplete and false" answers to the interrogatories and requests for production. The court reservedimposing sanctions and ordered Benz and Riley to provide updated and truthful answers to the interrogatories.
On November 20, Benz and Riley submitted supplemental answers to the interrogatories. Benz and Riley continued to assert Skykomish is in "exclusive possession and control" of the documents necessary to answer the discovery.
On December 17, Skykomish filed a motion to impose sanctions for "failure to completely and truthfully answer the interrogatories and requests for production as ordered on October 31, 2014." Skykomish also requested the court find Benz and Riley are "vexatious litigants" and require "court approval prior to filing additional court actions related to the current set of facts." Skykomish asserted, "[M]onetary sanctions do not deter the litigants' [sic] from vexatious litigation and from continuing to file claims both in court and outside of court against the plaintiff, the plaintiff's attorneys, and various other innocent third parties." In support, Skykomish listed several examples "of the vexatious litigation in this case."
On January 2, 2015, the court found Benz and Riley in contempt and entered an order imposing sanctions of $10,000. The court found Benz and Riley were vexatious litigants and entered an order prohibiting them from filing a suit "in any court of law in the state of Washington without first being represented by an attorney" and "arising out of or related to the same facts."
The Court hereby orders that Karl Benz and Cate Riley, on behalf of the above named LLC defendants, are prohibited from filing a suit in any court of law in the state of Washington without first being represented by an attorney licensed to practice in the State of Washington.
. . .
The Court orders that Karl Benz and Catherine Riley, as individuals or on behalf of the above named LLC defendants, are prohibited from filing a suit arising out of or related to the same facts or causeof action as those herein or against the Town of Skykomish, Carson Law Group, P.S. or any attorneys employed therein, without first seeking permission of the court by filing an affidavit stating why the claim has merit and does not arise out of the same facts or is against the same parties, and providing a copy of this order to the court for review.
ANALYSIS
Benz and Riley argue the court abused its discretion by (1) denying their CR 60(b)(11) motion to vacate the judgment for CR 11 sanctions, (2) entering the order finding them in contempt for discovery violations, and (3) finding they are vexatious litigants and imposing prefiling restrictions.
Order Denying CR 60(b)(11) Motion to Vacate
Benz and Riley assert the court erred in denying the motion to vacate the judgment for CR 11 sanctions under CR 60(b)(11).
We review a trial court's decision to deny a motion to vacate under CR 60(b) for manifest abuse of discretion. Haley v. Highland, 142Wn.2d 135, 156, 12 P.3d 119 (2000). A trial court abuses its discretion if its decision is manifestly unreasonable or based on untenable grounds. Dix v. ICT Grp., Inc., 160 Wn.2d 826, 833, 161 P.3d 1016 (2007). Review of a decision on a motion to vacate is limited to the decision on the motion, not the underlying judgment. Wright v. B&L Props., Inc., 113 Wn. App. 450, 456, 53 P.3d 1041 (2002). "The exclusive procedure to attack an allegedly defective judgment is by appeal from the judgment, not by appeal from a denial of a CR 60(b) motion." Biurstrom v. Campbell, 27 Wn. App. 449, 451, 618 P.2d 533 (1980).
CR 60(b)(11) is a catchall provision that allows a court to vacate a judgment for "[a]ny other reason justifying relief." CR 60(b)(11) is " 'confined to situations involving extraordinary circumstances not covered by any other section of the rule.' " Barr v.MacGugan, 119 Wn. App. 43, 46, 78 P.3d 660 (2003) (quoting Gustafson v. Gustafson, 54 Wn. App. 66, 75, 772 P.2d 1031 (1989)). Extraordinary circumstances involve " 'irregularities which are extraneous to the action of the court or go to the question of the regularity of its proceedings.' " Tatham v. Rogers, 170 Wn. App. 76, 100, 283 P.3d 583 (2012) (quoting In re Marriage of Flannagan, 42 Wn. App. 214,...
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