Bank Of India v. Sj Consignment Venture Et Ano ( 2021 )

IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON
BANK OF INDIA, SAN FRANCISCO ) No. 80880-0-I
AGENCY, )
) DIVISION ONE
Respondent, )
) UNPUBLISHED OPINION
v. )
)
SHRENUJ USA, LLC, a Delaware limited )
liability company; SJ CONSIGNMENT )
VENTURE, LLC, a Delaware limited )
liability company, )
)
Appellant. )
)
ANDRUS, A.C.J. — SJ Consignment Venture LLC (SJC) purchased $5
million of jewelry from Shrenuj USA LLC (Shrenuj) shortly before Shrenuj went out
of business. Bank of India, San Francisco Agency (Bank), Shrenuj’s secured
creditor, successfully obtained a judgment against SJC for conversion of this
inventory after establishing on summary judgment that SJC was not a buyer in the
ordinary course. SJC challenges the summary judgment, arguing the trial court
erred in concluding it was not a buyer in the ordinary course and the Bank did not
waive its security interest in the collateral, denying SJC’s CR 56(f) continuance,
certifying the judgment against SJC as final under CR 54(b), and miscalculating
the judgment amount. We affirm.
Citations and pin cites are based on the Westlaw online version of the cited material.
No. 80880-0-I/2
FACTS
Shrenuj supplied diamond rings, loose diamonds, gemstones, and other
supplies to jewelers and jewelry retailers. Established in 2005, Shrenuj was a
subsidiary of a leading India diamond conglomerate, the Shrenuj Group. Shrenuj
shared office space in Tukwila, Washington, with another Shrenuj Group
subsidiary, Simon Golub & Sons, Inc.
When Shrenuj sought to establish business relationships with major
retailers in the United States, the Bank extended Shrenuj a $4 million operating
line of credit. Shrenuj’s major retail customer, Signet Jewelers 1 (Signet), regularly
purchased jewelry from Shrenuj on consignment. Under the consignment
structure, Shrenuj sent Signet specifically identified jewelry which had a
“databased contract purchase price.” Signet marked up the jewelry, sold it to its
retail customers, retained the mark-up, and paid the contract purchase price to
Shrenuj.
The Bank and Shrenuj entered into a revolving credit agreement, a
revolving credit note, and a security agreement. Under the security agreement,
Shrenuj granted to the Bank “a continuing security interest in all of the personal
property of Borrower and any and all proceeds and products thereof . . . including
without limitation: . . . (b) Inventory . . . .” The Bank filed a UCC financing statement
to perfect its security interest in this collateral. The financing statement, like the
security agreement, identified the collateral as “[a]ll assets of [Shrenuj], whether
now owned or hereafter acquired and wherever located.”
1
Signet Jewelers is a group of jewelry retailers which includes Sterling Jewelers Inc., Sterling Inc.,
Sterling Jewelers LLC, Zale Delaware Inc., TXDC L.P., and Zale Canada Co.
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No. 80880-0-I/3
Shrenuj maintained a substantial balance on its line of credit, which peaked
in November 2014 at almost $3.5 million. The Bank and Shrenuj amended their
loan agreements in 2015, at which time Shrenuj agreed to make monthly payments
of all accrued interest and an additional monthly payment of $35,000 to reduce the
account balance. Shrenuj complied with these terms until February 2016, by which
time it reduced its balance to just over $2.9 million. But in March 2016, Shrenuj
defaulted on its obligations by failing to make its monthly payment. It made a
delinquent interest payment on April 21, 2016, but made no further payments to
the Bank.
On April 18, 2016, Shrenuj and SJC sent Signet a “Joint Letter of Direction
to Consignment Customers.” This letter notified Signet that as of April 1, 2016,
Shrenuj had sold and assigned to SJC all merchandise Shrenuj had sent to Signet
and all rights to payment with respect to that consigned merchandise. Shrenuj and
SJC directed Signet to send any payments for sales of consigned merchandise on
or after April 1 directly to SJC.
SJC paid Shrenuj a total of $5,087,036 for the inventory held by Signet
through four payments of amounts ranging from $489,000 to $800,000 between
May 4 and June 3, 2016. Shrenuj did not use any of the proceeds to pay off its
debt to the Bank.
On October 21, 2016, the Bank called Shrenuj’s loan and demanded
payment of $2,953,361, the outstanding balance on the credit note. When Shrenuj
failed to pay, the Bank filed a complaint in superior court for the appointment of a
receiver. On November 23, 2016, the superior court appointed the Stapleton
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Group Inc. as the general receiver (Receiver), authorizing it to take control of the
Shrenuj property, including its inventory and accounts receivable, wherever
located. By the time the court appointed the Receiver, Shrenuj was no longer in
business and had no employees performing any tasks for the company.
The same Receiver was acting as a court-appointed receiver for Shrenuj’s
sister company, Simon Golub & Sons, and through that appointment had become
familiar with Shrenuj’s operations. The Receiver took control of Shrenuj's bank
account and obtained a backup of the accounting system with which the Receiver
performed a forensic accounting. The Receiver discovered Shrenuj had a large
receivable from Signet and notified that company of the receivership. Signet,
which held a significant amount of Shrenuj’s jewelry inventory on consignment,
informed the Receiver of the Letter of Direction it had received from Shrenuj and
SJC. At the Receiver’s request, Signet ceased making payments to SJC and
retained the funds it owed to Shrenuj.
The Receiver, the Bank, and Signet negotiated an agreement under which
Signet would pay the Receiver all monies it held on account of the sale of Shrenuj
inventory and would pay the Receiver any money owed as the result of ongoing
sales of the remaining jewelry. When the Receiver sought court approval for this
agreement, SJC objected, contending it owned the inventory free and clear of the
Bank’s security interest.
The parties thereafter agreed Signet would pay the Receiver any funds
owed to Shrenuj for the sale of jewelry before April 1, 2016, and Signet would hold
all funds from post-April 1 sales pending a judicial determination of the Bank’s and
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No. 80880-0-I/5
SJC’s competing interest in the money and jewelry. The court approved this
agreement on February 5, 2018. By the time the court entered this order, Signet
had already sent SCJ sales proceeds of $1,095,486 and returned inventory worth
$2,757,641. Signet held another $235,340 from additional sales and retained
inventory with a book value of $929,623.
In March 2018, the Bank amended its complaint against Shrenuj to allege
a claim of conversion against SJC, alleging the inventory Shrenuj sold to SJC was
subject to the Bank’s security interest. It sought to foreclose on the cash and
inventory held by Signet and sought judgment against SJC for conversion of the
sale proceeds and inventory SJC had received from Signet.
Over 15 months later, the Bank moved for summary judgment, asking the
court to declare that the Bank held a first position security interest in all of Shrenuj’s
inventory consigned to Signet and the proceeds from the sale of that inventory, to
authorize Signet to release sales proceeds and the remaining inventory to the
Bank, and to hold SCJ liable for conversion for the amount Shrenuj still owed the
Bank. By that point, the Bank had recovered, through the Receiver’s collection
efforts, $982,497.05, and Shrenuj’s outstanding balance was $2,636,638.12.
The Bank argued SJC acquired Shrenuj’s inventory subject to its perfected
security interest because SJC was not a “buyer in the ordinary course of business”
under RCW 62A.1-201(9). It maintained SJC acquired the goods in a “transfer in
bulk,” a type of transaction explicitly excluded from the statutory definition of “buyer
in ordinary course of business.” The trial court agreed. It found no dispute that
SJC had purchased the entire inventory consigned to Signet, which was
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No. 80880-0-I/6
substantially all of Shrenuj’s merchandise. The court also determined, based on
undisputed evidence, that:
Shrenuj ceased doing business after the sale to SJ Consignment,
and it defaulted on its line of credit payments, which Shrenuj had
never done before the sale to SJ Consignment. While there is
evidence in the record that Shrenuj had made large sales of jewelry
in the past to others, there was no evidence before this court that
suggests that Shrenuj had ever before sold approximately $5 million
in inventory in what was essentially a single transaction before the
sale to SJ Consignment. Nor was there evidence that any of
Shrenuj’s prior sales were for Shrenuj’s entire “stock of good[s],
wares or merchandise” as was the sale to SJ Consignment.
The trial court concluded there were no material facts in dispute that would allow
a reasonable trier of fact to conclude the sale of Shrenuj’s inventory “was anything
other than a bulk sale,” which prevented SJC from being considered a buyer in the
ordinary course of business.
The trial court also held SJC liable for conversion of the Bank’s secured
collateral and the proceeds generated from the sale of that collateral. It entered
judgment against SJC in the amount of $1,627,833.50, giving SJC credit for
Signet’s interim payments, proceeds Signet held, and the value of the inventory
still in Signet’s possession. The trial court rejected SJC’s request for a credit of
approximately $40,000 that the Receiver held and that SJC alleged would be paid
to the Bank.
ANALYSIS
SJC raises three main issues on appeal. First, it argues there are genuine
issues of fact as to whether SJC was a buyer in the ordinary course entitled to take
Shrenuj’s inventory free and clear of the Bank’s security interest. Second, it
contends the trial court erred in denying its request for a CR 56(f) continuance
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No. 80880-0-I/7
because it had not completed discovery and the Bank had withheld pertinent
records. Finally, it maintains the trial court erred in entering a final judgment
against SJC under CR 54(b) before the Bank had resolved its claim against
Shrenuj and erred in calculating the amount of the judgment against SJC.
A. Buyer in Ordinary Course of Business
SJC first argues it was a buyer in the ordinary course and its purchase of
Shrenuj’s inventory did not constitute a “transfer in bulk.” SJC further contends the
Bank waived its security interest by impliedly consenting to this transaction. The
undisputed evidence, however, supports neither proposition.
Under RCW 62A.9A-320(a), a “buyer in ordinary course of business . . .
takes free of a security interest created by the buyer’s seller, even if the security
interest is perfected and the buyer knows of its existence.” A “buyer in ordinary
course of business” is
a person that buys goods in good faith, without knowledge that the
sale violates the rights of another person in the goods, and in the
ordinary course from a person . . . in the business of selling goods of
that kind. A person buys goods in the ordinary course if the sale to
the person comports with the usual or customary practices in the kind
of business in which the seller is engaged or with the seller’s own
usual or customary practices. . . . "Buyer in ordinary course of
business" does not include a person that acquires goods in a transfer
in bulk or as security for or in total or partial satisfaction of a money
debt.
RCW 62A.1-201(b)(9) (emphasis added).
The undisputed evidence establishes that Shrenuj’s transaction with SJC
was not in the ordinary course of the wholesale jeweler’s business. Chad Wilson,
the Receiver’s representative, testified that Shrenuj’s “primary business was the
sale of piecemeal jewelry to US retailers.” He explained that Shrenuj’s business
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No. 80880-0-I/8
dealings involved domestic retailers ordering jewelry from Shrenuj and Shrenuj
selling pieces to those retailers on consignment at wholesale prices.
SJC is not a retailer of jewelry, like Signet. In fact, SJC did not exist prior
to its transaction with Shrenuj. 2 According to Parag Vora, SJC’s managing
member, he and his business associate, Abhay Javeri, learned of the opportunity
to purchase Shrenuj’s inventory, already on consignment to Signet, and believed
buying that inventory “presented an opportunity to build a new consignment-sales
business in the fashion-jewelry segment” and to “further develop the relationship
with Sterling Jewelers and Zale Corporation.” Vora had an existing but
nonoperational company that he renamed for the sole purpose of paying Shrenuj
for its consignment inventory. SJC, by its own admission, was looking to take over
Shrenuj’s entire business and to essentially step into its shoes. Such a transaction
is by definition outside of the ordinary course of Shrenuj’s business. The sale to
SJC was akin to a liquidation sale or going-out-of-business sale, and not a
transaction with a large retail client with whom Shrenuj intended to continue to do
business.
Furthermore, the record does not support SJC’s contention that Shrenuj
ordinarily made similar large jewelry sales to another competing wholesale jewelry
seller. After reviewing Shrenuj’s accounting system, Wilson testified that he
identified only one other domestic sale, to the retailer Zales, that was in excess of
one million dollars. Wilson explained that while Shrenuj did have annual
2
At the time the sale between Shrenuj and SJC occurred on April 1, SJC did not yet exist as a
company operating under that name. On April 6, 2016, Lois Hill Holdings LLC changed its name
to SJ Consignment Venture LLC.
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No. 80880-0-I/9
consignment sales of jewelry to Zales in 2015 totaling more than $7.7 million, these
sales consisted of 889 individual invoices, rather than a “single bulk sale of almost
all of Shrenuj’s existing inventory.”
Unlike Zales, SJC did not take Shrenuj’s jewelry on consignment and did
not intend to sell that jewelry in a retail setting. Instead, SJC purchased almost all
of Shrenuj’s inventory over a period of 30 days, after which Shrenuj went out of
business. No reasonable trier of fact could conclude that the transactions with
Signet or Zales were the same as or similar to the transaction with SJC.
SJC argues that Wilson’s testimony should be disregarded because his
opinions lack adequate foundation to be admissible and contain improper legal
conclusions of what constitutes a “bulk sale” under the law. 3 We disagree. First,
Wilson’s opinions about Shrenuj’s business practices and transactions were based
on his personal knowledge obtained from reviewing extensive documents relating
to Shrenuj’s accounting system and business. Wilson explained that, at the time
the trial court appointed the Receiver, he was familiar with Shrenuj’s operations
because his company was the general receiver for Simon Golub & Sons, which
shared operations with Shrenuj. Wilson testified that the Receiver took control of
Shrenuj’s “bank account and obtained a back-up of the accounting system in order
to perform a forensic accounting.” Wilson “reviewed purchase and sale reports
3
SJC argues the trial court erred in considering inadmissible evidence when ruling on the Bank’s
summary judgment motion. But our review of the trial court’s summary judgment decision, including
its evidentiary rulings, is de novo. Lybbert v. Grant County, 141 Wn.2d 29, 34, 1 P.3d 1124 (2000);
American. Express Centurion Bank v. Stratman, 172 Wn. App. 667, 674-75, 292 P.3d 128 (2012).
The fact that inadmissible evidence was presented to the trial court does not require reversal of
summary judgment. Cano-Garcia v. King County, 168 Wn. App. 223, 249, 277 P.3d 34 (2012)
(“We presume the trial court disregarded any inadmissible evidence.”). We will disregard
inadmissible evidence in assessing SJC’s arguments on appeal. A significant amount of the
challenged evidence is simply not relevant to the bulk sale analysis.
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No. 80880-0-I/10
directly from the Shrenuj USA accounting system for the years 2012 through
2016.” From his knowledge of Shrenuj’s accounting, Wilson opined that Shrenuj’s
“primary business was the sale of piecemeal jewelry to US retailers.” Wilson’s
testimony is supported by an adequate foundation and personal knowledge.
Second, Wilson’s opinion that Shrenuj was not in the business of making
bulk transfers of jewelry is not an impermissible legal conclusion. Under ER 704,
a witness may testify in the form of an opinion or inferences even if it embraces an
ultimate issue to be decided by the trier of fact, but that witness may not testify as
to what law applies to a case, what the law means, or what the law obligated a
party to do. Hyatt v. Sellen Constr. Co., Inc., 40 Wn. App. 893, 899, 700 P.2d 1164(1985). Here, Wilson did not testify as to what the law is or how that law should
be applied to this case. Instead, Wilson offered an opinion of fact—that Shrenuj
did not ordinarily sell jewelry in bulk transactions like the transaction with SJC.
Wilson’s testimony is thus not inadmissible.
Next, SJC argues there are questions of fact whether the Bank waived its
security interest in the inventory by consenting to Shrenuj’s bulk sale to SJC.
Under RCW 62A.9A-315(a)(1), the Bank’s security interest continues in the
secured collateral “notwithstanding sale, . . . or other disposition thereof unless the
secured party authorized the disposition free of the security interest.” A secured
party may waive its right to the security interest in the collateral in the hands of
third parties. Cent. Wash. Bank v. Mendelson-Zeller, Inc., 113 Wn.2d 346, 352,
779 P.2d 697 (1989). A waiver is the intentional relinquishment of a known right.
Id. at 353 (quoting Wagner v. Wagner, 95 Wn.2d 94, 102, 621 P.2d 1279 (1980)).
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No. 80880-0-I/11
To constitute an implied waiver, there must be “unequivocal acts or conduct
evidencing an intent to waive; waiver will not be inferred from doubtful or
ambiguous factors.” Id. at 354 (quoting Wagner, 95 Wn. 2d at 102). SJC
presented no evidence of any such unequivocal act.
SJC contends the Bank authorized Shrenuj to sell its inventory in the
security agreement. Section 6 of the security agreement provides that Shrenuj
shall not
(a) Sell . . . the Collateral, except that prior to the exercise of rights
by [the Bank] during the continuance of an Event of Default
hereunder, [Shrenuj] may sell Collateral consisting of furniture,
furnishings, inventory and obsolete equipment in the ordinary course
of its business and in accordance with its past practices….
(Emphasis added.) But SJC’s reliance on this provision of the security agreement
is simply a reprise of its “buyer in the ordinary course of business” argument. The
Bank did agree that Shrenuj could make sales of inventory in the ordinary course
of its business. It did not agree that Shrenuj could sell substantially all of its
inventory to a company that wanted to take over its entire business. This
transaction was neither a sale in the ordinary course of Shrenuj’s business nor a
sale in accordance with its past practices. SJC presented no evidence to the
contrary.
SJC also maintains the Bank, through its course of performance in
extending credit to Shrenuj, “approved and expected sales of large lots of
inventory.” But there is no evidence that the Bank, by extending credit to Shrenuj,
agreed Shrenuj could conduct a liquidation sale to a company that planned to take
over its pre-existing customer relationships and effectively step into Shrenuj’s
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No. 80880-0-I/12
shoes. Evidence that the Bank expected Shrenuj to make large sales to Signet,
on an ongoing basis, in order to generate profits with which to pay down its debt
to the Bank does not support the inference that the Bank expected Shrenuj to sell
off its entire inventory to SJC so that SJC could take over Shrenuj’s place as a
wholesaler of fine jewelry.
Summary judgment was appropriate because the undisputed evidence
demonstrates the sale of inventory from Shrenuj to SJC was not in the ordinary
course of Shrenuj’s business and the Bank did not waive its security interest in that
inventory.
B. SJC’s CR 56(f) motion
SJC next contends summary judgment should be reversed because the
Bank wrongly withheld documents in discovery. We conclude the court did not
abuse its discretion in rejecting this argument.
CR 56(f) provides:
Should it appear from the affidavits of a party opposing the motion
that for reasons stated, [they] cannot present by affidavit facts
essential to justify [their] opposition, the court may refuse the
application for judgment or may order a continuance to permit
affidavits to be obtained or depositions to be taken or discovery to be
had or may make such other order as is just.
A court may deny a CR 56(f) motion if “(1) the moving party does not offer
a good reason for the delay in obtaining the evidence; (2) the moving party does
not state what evidence would be established through the additional discovery; or
(3) the evidence sought will not raise a genuine issue of fact.” West v. Seattle Port
Comm’n, 194 Wn. App. 821, 833-34, 380 P.3d 82 (2016).
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No. 80880-0-I/13
We review a trial court's CR 56(f) ruling for abuse of discretion. Mut. of
Enumclaw Ins. Co. v. Patrick Archer Constr., Inc., 123 Wn. App. 728, 743, 97 P.3d
751 (2004). A trial court abuses its discretion if it bases its decision on untenable
grounds or for untenable reasons. West, 194 Wn. App. at 834.
The trial court did not explicitly rule on SJC’s CR 56(f) motion. But in the
absence of a reason for a discretionary ruling, this court may affirm if it is apparent
from the record that there was a tenable reason for denying the motion. See
Snohomish Reg'l Drug Task Force v. 414 Newberg Rd., 151 Wn. App. 743, 761,
214 P.3d 928 (2009) (where it is obvious from the record why amendment would
have been futile, the trial court does not abuse its discretion by failing to explain its
denial of leave to amend); Rodriguez v. Loudeye Corp., 144 Wn. App. 709, 730,
189 P.3d 168 (2008) (“Thus, the case law permits us to affirm without an explicit
explanation for the denial in some circumstances.”).
The record reveals a tenable reason for denying SJC’s CR 56(f) motion—
SJC failed to demonstrate that the Bank withheld documents that would have
raised a genuine issue of material fact.
SJC contends the Bank wrongfully withheld internal bank emails and other
transaction records that would show a course of performance between the Bank
and Shrenuj which might demonstrate the Bank knew of and agreed to large
inventory sales to Shrenuj customers. The record does not support this argument.
SJC appeared in this case in January 2018, yet it waited some 15 months,
when the Bank noted a motion for summary judgment, to issue discovery to the
Bank and the Receiver. The Bank responded to the discovery requests within 30
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days and produced almost 15,000 pages of documents, including bank transaction
records, Shrenuj financial documents, communications between the Bank and
Shrenuj, and internal memoranda and loan approval documents.
During a CR 30(b)(6) deposition of Manas Jha, the Bank’s Vice President,
SJC asked if the Bank had produced “all documents” relating to Shrenuj. Jha
testified he had produced “most of the communications” between the Bank and
Shrenuj, but he had not produced individual “transaction vouchers” because each
transaction reflected in these vouchers was identified in a bank ledger that he had
produced. He explained to the court that the Bank uses the withheld vouchers for
internal purposes to track all transactions but they are merely “back-up slips”
documenting information otherwise reflected on bank statements and are
unrelated to Shrenuj’s assets or liabilities. Jha also explained that he had not
produced internal emails between the Bank’s San Francisco agency and its parent
offices in New York and India. He provided the court with a sample copy of the
withheld emails, the contents of which he described as being duplicative of what
was included in official credit memos in the bank file that he had produced.
Although the back-up documents and emails appear responsive to SJC’s
discovery requests, and should have been produced regardless of their duplicative
nature or Jha’s own evaluation of their relevance, SJC has failed to demonstrate
that these internal documents would have raised an issue of material fact. The
Receiver produced all records relating to Shrenuj’s ordinary business practices
and its transaction history. The Bank produced all of the documents describing its
course of performance with Shrenuj. SJC cannot explain how internal vouchers or
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No. 80880-0-I/15
duplicative emails could have manifested a waiver of its rights in Shrenuj’s
collateral. Had the Bank actually waived such rights, the waiver would necessarily
have had to be communicated to Shrenuj. Based on our reading of Jha’s
deposition and declaration, the Bank produced all communications with Shrenuj.
Aside from making bald assertions that the withheld documents will raise an issue
of material fact, SJC has not explained what specific information the transaction
vouchers or emails between the Bank and its parent company will demonstrate.
SJC relies on Tellevik v. 31641 W. Rutherford St., 120 Wn.2d 68, 90, 838
P.2d 111 (1992) to support its position that the trial court abused its discretion in
denying the continuance. But Tellevik is factually distinguishable. In that case,
the State sought the forfeiture of real property allegedly involved in an illegal
marijuana grow operation. Id. at 72. An owner, Janet Pearson claimed she was
an innocent owner with no knowledge of the illegal activity conducted on her
property. Id. at 75, 87. The State moved to continue Pearson’s summary
judgment, requesting time to gather evidence of Pearson’s knowledge and consent
to the drug operation. Id. at 89. The trial court rejected the continuance motion.
The Supreme Court reversed for three reasons. First, the State identified
the specific evidence it sought: evidence that Pearson lived in the house, shared
in the control of the family finances, and was involved in drying and packaging the
marijuana. Id. at 89-90. Second, the State had attempted to obtain some of this
same evidence from Pearson directly through both informal and formal discovery
but counsel had not responded to any production requests. 120 Wn.2d at 90.
Finally, shortly before the State received Pearson’s motion for summary judgment,
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it learned the identity of the confidential informant who could corroborate the
information sought in discovery, but was unable to locate that informant until more
than a month after the motion was filed. Id. at 90-91. The Supreme Court
concluded that, under these circumstances, the trial court should have continued
the hearing to allow the State to complete discovery because the evidence sought
would have raised a genuine issue of fact as to Pearson’s knowledge of and
acquiescence in the illegal activity and the “necessary information was not
obtained because defendants’ counsel did not provide the requested documents
when asked informally nor when served with requests for production.” Id.
Here, SJC waited over a year to begin discovery. And once the Bank
received formal discovery requests, it promptly produced a significant amount of
documentation in a short amount of time. It did not refuse to respond to SJC’s
discovery requests. Furthermore, the internal documents SJC sought are distinct
from what the State sought in Tellevik. The State had a good-faith basis to believe
that the informant’s testimony would directly contradict Pearson’s evidence and
establish she had direct knowledge of drug activities on her property. In contrast,
SJC’s argument that the internal bank documents could establish implied consent
to the transaction is speculative at best.
The trial court did not abuse its discretion in denying the CR 56(f) motion
because it is apparent from the record that there was a tenable reason for doing
so—SJC did not demonstrate that additional discovery would have raised a
genuine issue of material fact.
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C. Trial Court’s Entry of Final Judgment
SJC argues that the trial court erred in entering final judgment against SJC
under CR 54(b) before the Bank obtained a judgment against Shrenuj and the
court miscalculated the judgment amount because it did not offset funds the
Receiver possessed and might release to the Bank. We reject both arguments.
Pursuant to CR 54(b), when a case involves multiple parties, the trial court
may enter final judgment against fewer than all of the parties “only upon an express
determination in the judgment, supported by written findings, that there is no just
reason for delay and upon an express direction for the entry of judgment.” We
review a trial court’s decision to enter judgment under CR 54(b) for abuse of
discretion. Hurlbert v. Port of Everett, 159 Wn. App. 389, 404, 245 P.3d 779(2011). The trial court should consider several factors when determining whether
there is no just reason for delaying the entry of judgment
(1) [T]he relationship between the adjudicated and the unadjudicated
claims, (2) whether questions which would be reviewed on appeal
are still before the trial court for determination in the unadjudicated
portion of the case, (3) whether it is likely that the need for review
may be mooted by future developments in the trial court, (4) whether
an immediate appeal will delay the trial of the unadjudicated matters
without gaining any offsetting advantage in terms of the simplification
and facilitation of that trial, and (5) the practical effects of allowing an
immediate appeal.
Id. at 406 (quoting Lindsay Credit Corp. v. Skarperud, 33 Wn. App. 766, 772, 657
P.2d 804 (1983)).
The trial court entered written findings of fact supporting its CR 54(b) entry
of judgment. It found the Bank’s claims against Shrenuj and SJC are “separate
and distinct.” It further found Shrenuj had never appeared in defense of the case,
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had been placed into receivership by the court, and was a defunct entity with no
viable assets to pay the Bank. Finally, it found it was unlikely that the judgment
against SJC would be mooted by any future developments at the trial court level.
It concluded that these circumstances warranted entry of final judgment against
SJC under CR 54(b). SJC did not assign error to any of the trial court’s findings of
fact and the findings support entry of judgment under CR 54(b). We see no abuse
of discretion in entering a final judgment against SJC under these circumstances.
SJC next contends the trial court erred in computing the Bank’s conversion
damages. In cases where a perfected security interest survives the disposition of
the collateral, such as here, the secured party may maintain an action against the
purchaser for conversion. Western Farm Service, Inc. v. Olsen, 151 Wn.2d 645,
648, n. 1, 90 P.3d 1053 (2004). The measure of damages in conversion is the
value of the article converted at the time of the taking. Washington State Bank v.
Medalia Healthcare LLC, 96 Wn. App. 547, 554, 984 P.2d 1041 (1999).
The trial court entered judgment against SJC in the amount of
$1,627,833.50. The court calculated this amount by taking the outstanding
principle owed by Shrenuj as of June 10, 2016, then subtracting the interim
payments Signet made through March 7, 2018, and adding interest accrued
through November 1, 2019. From this subtotal, the court deducted the amount of
proceeds and inventory left on hand with Signet. The evidence supporting these
calculations was undisputed.
SJC does not challenge the method by which the court determined the
judgment amount. Instead, it argues the court erred in failing to reduce the
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No. 80880-0-I/19
judgment amount by the amount of funds the Receiver still held at the time the
court entered judgment. According to the September 2019 Receiver report, it had
an estimated $40,875 in cash on hand after liquidating Shrenuj’s assets and paying
the Receiver’s fees and the fees of the Receiver’s counsel. But that report also
indicated the Receiver still had work to do—it had to collect the proceeds and
inventory in Signet’s possession. The Receiver indicated it would continue to
retain counsel to assist with this process. Thus, at the time the court entered
judgment against SJC, it was unclear whether any cash then in the possession of
the Receiver would be available to the Bank or to any other creditor.
The trial court did not abuse its discretion in entering final judgment against
SJC under CR 54(b) and SJC fails to demonstrate the court improperly calculated
the judgment amount.
We affirm.
WE CONCUR:
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