Owl Transfer Building Limited Partnership, Res. v. Wah Louie, App. ( 2014 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
OWL TRANSFER BUILDING LLP, a No. 70018-9-1
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Appellant,
HUA YUEN INTERNATIONAL
TRADING GROUP, INC., a Washington
corporation, and KWONG YIN LOUIE,
Defendants. FILED: March 10,2014
Schindler, J. —Wah Louie appeals the order denying her motion to vacate the
default judgment entered against Hua Yuen International Trading Group Inc. and Wah
Louie. Because the court erred in denying her motion to vacate under CR 60(b)(5), we
reverse.
FACTS
In 2004, Kwong Yin Louie formed Hua Yuen International Trading Group Inc.
(Hua Yuen Group). In the Washington Secretary of State Corporations and Charities
Division directory, Kwong Louie is designated as the president ofthe Hua Yuen Group.
No. 70018-9-1/2
Owl Transfer Building Limited Liability Partnership (Owl Transfer LLP) owns a
warehouse located at 3623 6th Avenue South in Seattle, Washington. In June 2004,
Owl Transfer LLP and the Hua Yuen Group entered into a five-year lease agreement.
The Hua Yuen Group agreed to lease 13,600 square feet of warehouse and office
space at the warehouse. Kwong Louie signed the lease as president of the Hua Yuen
Group. Kwong Louie's spouse Wah Louie signed the lease as the guarantor.
In March 2007, the Hua Yuen Group vacated the warehouse space. On June 11,
Owl Transfer LLP filed a lawsuit against the Hua Yuen Group and Wah Louie,
"individually, and his marital community." Owl Transfer LLP alleged the Hua Yuen
Group owed past due rent from November 2006 to May 2007 and was liable for other
costs, including the cost to repair the roof. Owl Transfer LLP sought $76,852.52 in
damages and attorney fees and costs. On August 28, Owl Transfer LLP mailed a copy
of the summons and complaint to 5235 Columbia Drive South in Seattle.
On August 29, Owl Transfer LLP filed a motion for an order permitting service by
publication. The Owl Transfer LLP attorney submitted a declaration stating that Owl
Transfer LLP attempted service on "Hua Yuen International Trading Group, care of Wah
Louie, and Wah Louie individually," at two different Seattle addresses: 8501 39th
Avenue South and 5235 Columbia Drive South. The attorney states that the process
server attempted service at 8501 39th Avenue South two times but "[o]n June 4, 2007, it
was determined that Mr. Louie had sold" the property at 8501 39th Avenue South
sometime in 2003, and the business license for the Hua Yuen Group had been inactive
since June 2006. The declaration states that "[u]pon further investigation," the process
server attempted to serve Wah Louie at 5235 Columbia Drive South in Seattle but
No. 70018-9-1/3
"[ejvery attempt failed and Mr. Louie was never served." According to the attorney, "Mr.
Louie sold [the 5235 Columbia Drive South] property to his children in 2005, but still
registers his vehicle to this address."
The declaration of process server ABC Legal Services Inc. states that it "verified
with the Washington Secretary of Stated [sic] Corporations division that Rodney Wong
was the listed registered agent" for the Hua Yuen Group but "[t]he license expired 06-
30-06." Owl Transfer LLP also submitted a "Confidential Investigation Report" from
ABC Legal Services stating that "Louie, Wah Shuck" sold the 5235 Columbia Drive
South property to "his" children in April 2005 but "Louie, Wah Shuck" registered a
vehicle at that address.
The court granted the motion for service by publication. The court entered an
order allowing Owl Transfer LLP to serve the Hua Yuen Group and Wah Louie "and his
marital community" by publication. In September and October, The Daily Journal of
Commerce published a "Summons By Publication."
On December 18, Owl Transfer LLP filed a motion for an order of default and
default judgment against the Hua Yuen Group and "Wah Louie and his marital
community, jointly and severally."1 On January 15, 2008, the court entered an order of
default and default judgment against the Hua Yuen Group and Wah Louie and "his
marital community" in the amount of $79,088.12.
Four years later, Owl Transfer LLP filed an "Application for Writ ofGarnishment"
against the Hua Yuen Group and Wah Louie and "his marital community," Bank of
America, and Washington Federal Savings. On October 19, 2012, the court entered
1Owl Transfer LLP also requested $1,390.50 in fees and $845.10 in costs.
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No. 70018-9-1/4
"Amended Judgments] on Answer and Order[s] to Pay" against "Garnishment
Judgment Debtor[s]" Bank of America and Washington Federal Savings in the amount
of $9,889.98 and $76,078.94. On October 29, Washington Federal Savings and Bank
of America transferred funds in the amount of $85,958.92 to the attorney for Owl
Transfer LLP.
On November 1, Wah Louie filed a motion to vacate the default judgment and
quash the writ of garnishment. In her declaration, Wah Louie states she was unaware
of the lawsuit until her bank notified her that Owl Transfer LLP had applied for a writ of
garnishment. Wah Louie argued the service of process on the Hua Yuen Group, Kwong
Louie, and Wah Louie was deficient because "public records showed the then-and-still
current address of Hua Yuen Group's registered agent, Attorney Rodney Wong." Wah
Louie also argued that Owl Transfer LLP attempted service on first "an outdated
address" and then "at a property that [the Louies] never owned or possessed."
Wah Louie submitted a copy of the Washington Secretary of State Corporations
and Charities Division directory entry for the Hua Yuen Group, a declaration from her
spouse Kwong Louie, and a copy of the Washington State Bar Association lawyer
directory. The Secretary of State directory entry for the Hua Yuen Group lists Rodney
Wong as the registered agent for the corporation at 318 6th Avenue South Suite 110,
Seattle, Washington. The October 2012 Washington State Bar Association lawyer
directory entry for Rodney Wong also lists his office address as 318 6th Avenue South
Suite 110. The Secretary of State directory also states that Kwong Louie is the
president of the Hua Yuen Group and lists his address at 525 Maynard Avenue No. 204,
Seattle, Washington.
No. 70018-9-1/5
In his declaration, Kwong Louie states that the addresses listed with the
Secretary of State are correct and that neither the address of his attorney Rodney Wong
at 318 6th Avenue South nor his own residential address at 525 Maynard Avenue has
changed since Owl Transfer LLP filed the lawsuit. Kwong Louie states that he and his
spouse Wah Louie sold the 8501 39th Avenue property in 2003, one year before the
Hua Yuen Group was incorporated and the Hua Yuen Group entered into the lease with
Owl Transfer LLP. Kwong Louie also states, "My wife and I never owned or resided at
5235 Columbia Drive South, Seattle, WA, where Plaintiff attempted service." Wah
Louie submitted a copy of the statutory warranty deed transferring the 8501 39th
Avenue South property to Suzante and Imelda Gumiran on January 10, 2003.
In opposition, Owl Transfer LLP asserted that the motion to vacate was untimely
under the service by publication statute, RCW 4.28.200.
In reply, Wah Louie argued the motion was not barred by the one-year time limit
under RCW 4.28.200. In the alternative, Wah Louie argued a motion to vacate a default
judgment based on insufficient service of process under CR 60(b)(5) is not subject to a
one-year time limit. Wah Louie submitted another declaration stating she and her
husband have resided at 525 Maynard Avenue No. 204, Seattle, Washington, since
2003 and "[t]his is the address correctly listed with the Secretary of State." Wah Louie
also states she never owned property at 5235 Columbia Drive South and never
registered a car at the 5235 Columbia Drive South address.
The court granted the motion to vacate because service of process was
insufficient, and entered an order vacating the default judgment and quashing the writ of
garnishment.
No. 70018-9-1/6
On December 11, 2012, Owl Transfer LLP filed an amended complaint naming
Kwong Yin Louie as an additional defendant. On January 8, 2013, Owl Transfer LLP
personally served Kwong Louie and Wah Louie at the Maynard Avenue address. Owl
Transfer LLP then filed a motion for a prejudgment writ of attachment. The court
granted Owl Transfer LLP's motion for a prejudgment writ and entered an order allowing
Owl Transfer LLP to attach the $85,958.84 previously held in the bank accounts. The
court also stated it would reconsider the order vacating the default judgment and asked
the parties to submit briefing on the one-year time limit under RCW 4.28.200.
In supplemental briefing, Owl Transfer LLP argued that the one-year time limit
under RCW 4.28.200 barred the motion to vacate. Wah Louie argued that RCW
4.28.200 "merely states that a defendant mav apply within one year" to vacate a default
judgment but does not require motions to be filed within one year.2 In the alternative,
Wah Louie asserted the court had the authority to vacate the judgment under CR
60(b)(5) for insufficient service of process because Owl Transfer LLP did not "perform a
reasonable search for Defendants."
The court ruled Wah Louie did not timely file a motion to vacate under RCW
4.28.200 and vacated the order vacating the default judgment. The "Order on
Reconsideration Motion" states, in pertinent part:
Having reviewed RCW 4.28.200, the right to challenge a judgment
obtained after service by publication is one year. The Court sees no
exceptions available. The Court's Order Vacating the Default Judgment is
VACATED.
(Emphasis in original.)
No. 70018-9-1/7
ANALYSIS
Wah Louie contends the court erred in concluding her motion to vacate was time
barred by the one-year time limit under RCW 4.28.200. In the alternative, Wah Louie
asserts the motion to vacate was timely under CR 60(b)(5).
We review a trial court's decision on a motion for reconsideration for an abuse of
discretion. Rivers v. Wash. State Conference of Mason Contractors, 145 Wash. 2d 674,
685, 41 P.3d 1175 (2002). "A ruling based on an error of law constitutes an abuse of
discretion." King v. Olympic Pipeline Co.. 104 Wash. App. 338, 355, 16 P.3d 45 (2000).
Vacating a default judgment is governed by CR 55 and CR 60. Morin v. Burris.
160 Wash. 2d 745, 754,161 P.3d 956 (2007). CR 55(c) authorizes the court to set aside a
default judgment under CR 60(b). CR 60(b) sets out 11 specific grounds that justify
vacating a default judgment. CR 60(b)(5) provides that a court may vacate a default
judgment if "[t]he judgment is void." CR 60(b)(7) provides, "If the defendant was served
by publication, relief may be granted as prescribed in RCW 4.28.200."
First, Wah Louie claims the court erred in concluding her motion to vacate the
default judgment was time barred under RCW 4.28.200. Wah Louie contends that
because RCW 4.28.200 uses the word "may" rather than "shall" in connection with the
one-year time limit, the one-year time limit to file a motion to vacate is not mandatory.
We disagree. The plain language ofthe statute requires a defendant to file a motion
within one year:
Ifthe summons is not served personally on the defendant in the cases
provided in RCW 4.28.110 and 4.28.180, he or she or his or her
representatives, on application and sufficient cause shown, at any time
before judgment, shall be allowed to defend the action and, except in an
action for divorce, the defendant or his or her representative mav in like
manner be allowed to defend after judgment, and within one year after the
No. 70018-9-1/8
rendition of such judgment, on such terms as mav be just: and if the
defense is successful, and the judgment, or any part thereof, has been
collected or otherwise enforced, such restitution may thereupon be
compelled as the court directs.
RCW4.28.200.3
Interpretation of a statute is a question of law that we review de novo. Dep't of
Ecology v. Campbell & Gwinn, LLC. 146 Wash. 2d 1, 9, 43 P.3d 4 (2002). Our objective is
to carry out the legislature's intent. Arborwood Idaho. LLC v. City of Kennewick. 151
Wash. 2d 359, 367, 89 P.3d 217 (2004). In giving effect to the language of the statute, we
must not render any portion meaningless. Prison Legal News. Inc. v. Dep't of Corr.. 154
Wash. 2d 628, 644, 115 P.3d 316 (2005). If a statute is unambiguous, the court's inquiry is
at an end. Lake v. Woodcreek Homeowners Ass'n. 169 Wash. 2d 516, 526-27, 243 P.3d
1283(2010).
While the statute uses the word "may" rather than "shall," the one-year
requirement is not discretionary. RCW 4.28.200. RCW 4.28.200 unambiguously states
the defendant "may ... be allowed to defend after judgment, and within one year after
the rendition of such judgment." If the "one year" language were not a requirement, that
language would be superfluous. Case law also supports our interpretation that under
RCW 4.28.200, a motion to vacate must be filed within one year of the judgment.
Corporate Loan & Sec. Co. v. Peterson. 64 Wash. 2d 241, 243, 391 P.2d 199 (1964)
(RCW 4.28.200 is " 'restricted to those instances in which service is by publication.'
And it has its own one year statute of limitations.") (Quoting Philip A. Trautman,
Vacation and Correction of Judgments in Washington. 35 Wash. L. Rev. 505, 527
3(Emphasis added.) We note the legislature amended RCW 4.28.200 in 2011 to add thewords
"orher" after "his" and "orshe" after "him" throughout the statute. Lawsof 2011, ch. 336, § 101. We
refer to the current version of the statute.
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No. 70018-9-1/9
(1960)).); Chanev v. Chanev. 56 Wash. 145,150-51, 105 P. 229 (1909) (the statute's
purpose is to give defendants served by publication "an opportunity to appear and
defend at any time within one year thereafter, when they can show any sufficient cause
within the discretion of the court"); 15A Karl B. Tegland & Douglas J. Ende,
Washington Practice: Washington Handbook on Civil Procedure § 24.9, at 279
(2013-14 ed.) ("RCW 4.28.200 allows the defendant to move to have the default
judgment vacated within one year after the judgment was entered").
In the alternative, Wah Louie asserts the court erred in reconsidering the order
vacating the default judgment under CR 60(b)(5).4 Owl Transfer LLP does not attempt
to argue service was sufficient. Owl Transfer LLP argues that because the court
authorized service by publication, Wah Louie may file a motion to vacate only under
RCW 4.28.200.
Under CR 60(b)(5), a court may vacate a void judgment. Whenever a trial court
lacks personal jurisdiction over a party, any judgment entered by the court against that
party is void. Marlev v. Dep't of Labor &Indus.. 125 Wash. 2d 533, 541, 886 P.2d 189
(1994). "'Proper service ofthe summons and complaint is essential to invoke personal
jurisdiction over a party, and a default judgment entered without proper jurisdiction is
void.'" Ahten v. Barnes. 158 Wash. App. 343, 349, 242 P.3d 35 (2010) (quoting in_re
Marriage of Markowski. 50 Wash. App. 633, 635-36, 749 P.2d 754 (1988)). "Because
courts have a mandatory, nondiscretionary duty to vacate void judgments, a trial court's
decision to grant or deny a CR 60(b) motion to vacate a default judgment for want of
4Wah Louie does not explicitly identify CR 60(b)(5) as the grounds for vacating the default
judgment. CR 60(b)(5) provides grounds for vacating a default judgment that is "void." But Wah Louie
clearly argues that the judgment is void based on insufficient service, and cites case law which relies on
CR 60(b)(5).
No. 70018-9-1/10
jurisdiction is reviewed de novo." Dobbins v. Mendoza. 88 Wash. App. 862, 871, 947 P.2d
1229 (1997). "Motions to vacate under CR 60(b)(5) may be brought at any time after
entry ofjudgment." Markowski. 50 Wash. App. at 635.5
RCW 4.28.200 does not prescribe a procedure that must be followed where a
defendant is served by publication. Rather, RCW 4.28.200 provides " 'additional
rights.'" Caouette v. Martinez. 71 Wash. App. 69, 75, 856 P.2d 725 (1993) (quoting
Chanev. 56 Wash, at 151).6 RCW 4.28.200 gives a defendant served by publication an
additional ground to vacate a default judgment, and gives the court greater discretion to
vacate a default judgment than where the defendant is personally served. Caouette. 71
Wash. App. at 75-76 (citing Chanev. 56 Wash, at 150-51).
Because service by publication is "in derogation of the common law," strict
compliance with the statute authorizing service by publication is required. Dobbins, 88
Wash. App. at 871. Under RCW 4.28.100, service by publication is permissible only if the
"defendant cannot be found within the state." To obtain an order allowing service by
publication, the plaintiff must establish an honest and reasonable effort to locate the
defendant before seeking service by publication. Dobbins. 88 Wash. App. at 871. "While
reasonable diligence does not require the plaintiff to employ all conceivable means to
locate the defendant, it does require the plaintiff to follow up on any information
possessed that might reasonably assist in determining the defendant's whereabouts."
Pascua v. Heil. 126 Wash. App. 520, 529, 108 P.3d 1253 (2005). Washington courts have
held service by publication improper where the plaintiff did notfollow up on information
5(Footnote omitted.)
6 Chanev cites Bal. Code section 235, the predecessor of RCW 4.28.200.
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No. 70018-9-1/11
regarding third parties who may have been useful in determining a defendant's
whereabouts.7
As the trial court's original order explicitly found, service of process was
insufficient. The order states, in pertinent part:
The Court, having examined the pleadings, declarations, and
memorandum of law in support of the motion, against the motion, and
reply, finds that said Order of Default and Default Judgment were obtained
based on Plaintiffs insufficient service of process on the Defendants.[8]
CR 60(b)(5) is an alternative ground for a motion to vacate a default judgment.
The one-year time limit under RCW 4.28.200 does not apply to motions to vacate under
CR 60(b)(5). See Allstate Ins. Co. v. Khani. 75 Wash. App. 317, 323-24, 877 P.2d 724
(1994) ("Void judgments may be vacated regardless of the lapse of time."). Because
the undisputed record establishes service of process was insufficient and Wah Louie
was entitled to relief under CR 60(b)(5), we hold the trial court erred in ruling that the
motion to vacate under CR 60(b)(5) was time barred.
7See Pascua, 126Wn. App. at 529 (plaintiff used information in police report to call phone
number, speak to apartment manager, and search public records but did not attempt to locate defendant
by contacting registered owner of vehicle involved in accident); Charboneau Excavating. Inc. v.
Turnipseed, 118 Wash. App. 358, 363, 75 P.3d 1011 (2003) (despite knowing the defendant's wife and
daughter, plaintiff did not contact them or check assessor's records to learn the defendant's address);
Parkash v. Perry. 40 Wash. App. 849, 851-52, 700 P.2d 1201 (1985) (mere search of telephone records
and attempt to serve at old address was insufficient to justifyservice by publication where plaintiff did not
follow up on information in his possession regarding defendant's employment or where defendant may
have moved).
Here, Owl Transfer LLP knew that the registered agent for Hua Yuen Group was Rodney Wong.
But there is no indication in the record that Owl Transfer LLP ever contacted Rodney Wong in its attempts
to serve either Hua Yuen Group or Wah Louie. Wong's address is listed with the Washington Secretary
of State and the Washington State Bar Association and his address has not changed since the lawsuit
was filed. Further, Owl Transfer LLP never attempted service on the Louies' publicly-listed residential
address. Owl Transfer LLP only attempted to serve Wah Louie at an address that Owl Transfer LLP
knew Wah Louie sold in 2003 and at a property Wah Louie contends she never resided at or owned.
8(Emphasis added.)
11
No. 70018-9-1/12
We reverse denial of the motion to vacate under CR 60(b)(5) and the order on
reconsideration.9
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WE CONCUR:
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9We deny Owl Transfer LLP's request for attorney fees.
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