Kortney Schaaf v. Retriever Medical/dental Payments Inc. ( 2017 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
KORTNEY SCHAAF, a single )
individual, ) No. 75335-5-1
)
Appellant, ) DIVISION ONE
)
v. )
) UNPUBLISHED OPINION
RETRIEVER MEDICAL/DENTAL )
PAYMENTS INC., a New York )
corporation, )
)
Respondent. ) FILED: July 3, 2017
LEACH, J. — After a contract dispute about compensation, Retriever
Medical/Dental Payments Inc. filed an action against Kortney Schaaf in New York
state. Schaaf later filed an action against Retriever in Washington. Schaaf
appeals the trial court's dismissal of her Washington action under the priority of
action rule. Because adjudication of Retriever's claims would bar as res judicata
Schaafs claims, the trial court properly dismissed her claims under the priority of
action rule. We affirm.
FACTS
In March 2011, Retriever, a New York corporation, hired Schaaf, a
resident of the state of Washington, to work as a sales representative. In
connection with her position, Schaaf signed a number of representative
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agreements and confidentiality and noncompetition agreements. Some of those
agreements contained a choice of forum clause that chose either New York or
Texas as the designated forum.
In September 2015, Schaaf violated a Retriever policy, and Retriever took
disciplinary action against her. Retriever later terminated their contractual
relationship.
On October 13, 2015, Retriever started a lawsuit against Schaaf in the
state of New York by filing a summons with notice. On December 18, Schaaf
started a lawsuit against Retriever by filing a complaint in Snohomish County
Superior Court. On December 23, Retriever filed a complaint in its New York
action.
Retriever's New York lawsuit asserts three causes of action. First, it
claims "Schaaf was in breach of the terms of the Agreements resulting in
damages to Retriever." Second, it seeks return of compensation that Retriever
claims it mistakenly paid to Schaaf. Third, it asks for a declaratory judgment that
Schaaf was an independent contractor and not an employee of Retriever.
Schaaf's Washington lawsuit asserts six causes of action: (1) failure to
comply with RCW 49.48.210 in withholding payments due, (2) retaliation,
(3) wrongful termination in violation of Washington public policy, (4) violation of
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Washington's Consumer Protection Act (CPA),1 (5) equitable estoppel, and
(6) declaratory judgment that she was an employee of Retriever and not an
independent contractor.
In March 2016, Retriever moved to dismiss Schaaf's Washington action
under the priority of action rule and for lack of jurisdiction. The superior court
rejected Retriever's jurisdiction argument but agreed with its priority of action
argument. Thus, it dismissed Schaaf's action subject to the following condition:
The Court will stay these proceedings pending the outcome of
Plaintiffs (Schaaf's) Motion to Dismiss for forum non conveniens in
New York. If the court in New York denies that motion, it is the
ruling of this Court that the action in this cause should not proceed
under the doctrine of Priority of Action. If the N.Y. Court grants the
motion to dismiss for forum non conveniens, the action may
proceed under this cause [number].
The New York court later denied Schaaf's motion to dismiss for forum non
conveniens.
Schaaf challenges the trial court's decision to dismiss her appeal under
the priority of action rule.
ANALYSIS
Schaaf claims that the trial court should not have dismissed her claims
under the priority of action doctrine. We disagree.
1 Ch. 19.86 RCW.
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Under the priority of action doctrine, the court that "first gains jurisdiction of
a cause retains the exclusive authority to deal with the action until the
controversy is resolved."2 Because the trial court's application of the priority of
action doctrine presents a question of law, this court reviews the trial court's
decision de novo.3
Before a court applies the priority of action rule, it decides whether the
actions possess identity of subject matter, relief, and parties.4 In practice, courts
do not apply these elements inflexibly.5 "Rather, courts have looked beyond
these elements and to the policy behind the doctrine."6 Washington courts have
stated that the rule's purpose is "to determine whether the 'identity' of the actions
is 'such that a decision in one tribunal would bar proceedings in the other tribunal
2 Sherwin v. Arveson, 96 Wash. 2d 77, 80, 633 P.2d 1335 (1981).
3 Atl. Cas. Ins. Co. v. Or. Mut. Ins. Co., 137 Wash. App. 296, 302, 153 P.3d
211(2007) ("As the priority of action rule involves jurisdiction and res judicata
principles, de novo review is appropriate."); State ex rel. Evergreen Freedom
Found. v. Wash. Educ. Ass'n, 111 Wash. App. 586, 605, 49 P.3d 894 (2002)
(applying de novo review to the trial court's decision not to allow a party to
amend its complaint, which appellate courts normally review for abuse of
discretion, because the trial court based its decision on the priority of action legal
doctrine).
4 Am. Mobile Homes of Wash., Inc. v. Seattle-First Nat'l Bank, 115 Wash. 2d
307, 317, 796 P.2d 1276 (1990).
5 Bunch v. Nationwide Mut. Ins. Co., 180 Wash. App. 37, 41, 321 P.3d 266
(2014).
6 Bunch, 180 Wash. App. at 41-42.
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because of res judicata."7 The doctrine "tends to prevent unseemly, expensive,
and dangerous conflicts of jurisdiction and of process."8
First, Schaaf claims that because she filed her complaint in Washington
before Retriever filed its complaint in New York, Washington first gained
jurisdiction. But she does not dispute that Retriever filed a summons with notice
in New York before she started her Washington action. In New York, a party can
start a lawsuit by filing a summons with notice.8 Thus, Retriever started its
lawsuit in New York before Schaaf filed hers in Washington. This means that
New York first gained jurisdiction.
Next, Schaaf asserts that the priority of action rule does not bar her
claims. Retriever contends that the priority of action rule bars Schaafs claims
because they are compulsory counterclaims to Retriever's claims. Federal
7 Bunch, 180 Wash. App. at 42 (quoting Evergreen Freedom Found., 111
Wash. App. at 607); see also Sherwin, 96 Wash. 2d at 80 (stating that the doctrine "is
generally applicable only when the cases involved are identical as to subject
matter, parties and relief. This identity must be such that a final adjudication of
the case by the court in which it first became pending would, as res judicata, be a
bar to further proceedings in a court of concurrent jurisdiction.").
8 Sherwin, 96 .Wn.2d at 80.
9 N.Y. C.P.L.R. § 304(a) ("An action is commenced by filing a summons
and complaint or summons with notice."); see also Martin v. Martin, 38 Misc. 2d
836, 837, 238 N.Y.S.2d 749 (Sup. Ct. 1963) ("The summons 'is always of prime
importance,' being 'the effective paper upon which jurisdiction is founded."
(quoting Mishkind-Feinberg Realty v. Sidorsky, 189 N.Y. 402, 407, 82 N.E. 448
(1907))).
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courts have used this logic in applying a similar priority rule.1° And, while no
Washington court has yet applied the compulsory counterclaim rule in a priority
of action analysis, we agree with this approach because it furthers the purpose of
the doctrine.11
Unlike Washington, New York does not have a codified compulsory
counterclaims rule. But the principle does exist in New York common law.12 In
New York, "once a claim is brought to a final conclusion, all other claims arising
out of the same transaction or series of transactions are barred, even if based
upon different theories or if seeking a different remedy."13
Here, all of Retriever's and Schaaf's claims arise out of the same
transaction or series of transactions because they all relate to their contractual
relationship. Retriever's claims allege breach of contract, relate to payment of
compensation under the contract, and ask the court to clarify the parties'
relationship under the contract. Schaaf's claims likewise relate to the contract.
10 Computer Assocs. Intl, Inc. v. Altai Inc., 893 F.2d 26, 28-29 (2d Cir.
1990).
11 SeeEvergreen Freedom Found., 111 Wash. App. at 607.
12 Henry Modell & Co. v. Minister, Elders & Deacons of Reformed
Protestant Dutch Church of City of N.Y., 68 N.Y.2d 456, 461, 502 N.E.2d 978,
510 N.Y.S.2d 63 (1986) ("While New York does not have a compulsory
counterclaim rule, a party is not free to remain silent in an action in which he is
the defendant and then bring a second action seeking relief inconsistent with the
judgment in the first action by asserting what is simply a new legal theory."
(citation omitted)).
13 O'Brien v. City of Syracuse, 54 N.Y.2d 353, 357, 429 N.E.2d 1158, 445
N.Y.S.2d 687 (1981).
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Her wrongful termination and retaliation claims involve termination of their
contractual relationship. Her equitable estoppel and RCW 49.48.210 claims
relate to payment of compensation under the contract.14 Her declaratory
judgment claim relates to her status under the contract. Finally, her CPA claim
alleges that Retriever wrongfully required Schaaf to sign a contract that required
her to identify herself as an independent contractor. Because the claims of both
parties arise out of the same transaction, under New York law, Schaaf's claims
are effectively compulsory counterclaims in the New York lawsuit.15 Thus, a
decision by the New York court would bar Schaafs Washington claims.16
Schaaf asserts that the convenience of witnesses makes Washington a
better location for litigating this dispute. Courts have considered such factors
relevant to equitable application of the doctrine but only where the res judicata
effect of the first action on the second is uncertain because the identity of parties
is not exact.17 Here, Schaaf and Retriever agree that the identity of the parties is
14 RCW 49.48.210 provides notification requirements when an employer
decides to withhold wages due to overpayment.
15 See O'Brien, 54 N.Y.2d at 357.
16 Cf. Chew v. Lord, 143 Wash. App. 807, 181 P.3d 25 (2008) (holding that
summary dismissal of claims brought in Washington was proper because they
arose from the same transaction or occurrence as claims that had been
previously litigated in Nevada and were thus compulsory counterclaims in that
action).
17 Am. Mobile Homes, 115 Wash. 2d at 321-22 (considering the existence of
any forum agreement between the parties, the convenience of witnesses, and
the general interests of justice because there was not identity of parties); Atl.
Cas. Ins. Co., 137 Wash. App. at 302.
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the same in both actions. Thus, because the res judicata effect of the New York
case warrants dismissal, we need not look to this factor to determine whether the
rule should apply here.18
Schaaf also asserts that the parties should litigate her claims in
Washington because this state has a greater interest in the matter. She cites no
authority to support this argument, however. None of the cases she cites discuss
states' interests. She does not show that state interest is a relevant factor in
considering whether to apply the priority of action rule. Similarly, she asserts that
the interests of justice require litigation of at least her CPA claim in Washington
because public interest impact is an element of a CPA claim." She argues that
because the CPA claim alleges that Retriever might harm other Washington
residents in a similar fashion, agreement that New York law governs their
relationship cannot preclude her Washington CPA claim. Again, she cites no
authority for this argument. This court need not consider issues that a party does
not support with citation to legal authority.20 We decline to consider these
arguments.
18 Cf. Am. Mobile Homes, 115 Wash. 2d at 321 (considering other factors in
addition to the identities because the res judicata effect was questionable due to
the fact that the parties to the actions were not identical).
19 Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105
Wash. 2d 778, 784, 719 P.2d 531 (1986).
20 Cowiche Canyon Conservancy v. Bosley, 118 Wash. 2d 801, 809, 828
P.2d 549 (1992).
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Finally, Schaaf asserts that the priority of action rule should not apply here
because Retriever filed its lawsuit in New York as a "preemptive strike." To
support this argument, she cites American Mobile Homes of Washington, Inc. v.
Seattle-First National Bank.21 But we distinguish that case. In American Mobile
Homes, the court did consider it likely that the first action was filed as a so-called
preemptive strike to avoid the venue named in the parties' agreement.22 But in
this case, the most current agreements either contain no choice of forum clause
or identify New York as the chosen forum. Thus, it is unlikely that Retriever filed
in New York as a preemptive strike to avoid a choice of forum clause. Schaaf
provides no evidence to show that Retriever had any improper motive for filing its
New York action that might justify modifying our priority of action analysis.
CONCLUSION
Because Schaaf's claims arise out of the same transaction as Retriever's
claims, resolution of Retriever's case would have a preclusive effect on Schaafs
21 115Wn.2d 307, 796 P.2d 1276 (1990).
22 Am. Mobile Homes, 115 Wash. 2d at 320-21.
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claims. Thus, the trial court properly dismissed them under the priority of action
rule. We affirm.
WE CONCUR:
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