Pacific Marine Ins Co Robert Bell, V State Of Wa Irs ( 2014 )

FILED
C0<: _ ?
OE APPEALS
DIVISION 11
2014 JUN 10
Ali 8: 39
IN THE COURT OF APPEALS OF THE STATE OF WASHIN
DIVISION II
MARINE INSURANCE No. 43719 -8 - II
COMPANY; and ROBERT A. BELL,
Appellants,
v.
STATE OF WASHINGTON, through its
Divisions, Department of Revenue and
The Insurance Commissioner, PUBLISHED OPINION
Respondents.
WoRSwIcx, J. — Robert Bell and the Pacific Marine Insurance Company (PacMar) made
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a claim under the Washington Uniform Unclaimed Property Act (WUUPA) for property being
held by the State Department of Revenue ( DOR). They filed this action in Thurston County
Superior Court after the DOR refused to release the funds. They now appeal the superior court' s
denial of their summary judgment motion and its grant of summary judgment to the State.
After PacMar entered receivership and was liquidated under chapter 48. 31 RCW, funds
from the PacMar estate were transferred to the State treasury in 2000 and 2002, subject to
escheat to the State after six years. Bell and PacMar argue that the funds could not legally
escheat under RCW 48. 31. 155 because the PacMar funds did not fall within that statute' s scope,
and because the State violated WUUPA and violated Bell and PacMar' s due process rights when
it failed to provide them adequate notice about the transfer of the funds to the State prior to
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Chapter 63. 29 RCW.
No. 43719 -8 -II
escheat. We hold that the superior court had jurisdiction to determine whether the DOR' s
decision was correct, and that because Bell and PacMar had no legal interest in the funds, they
had no standing to challenge that DOR decision. We affirm the Thurston County Superior
Court.
FACTS
Bell owned the Pacific Marine Holdings Corporation (PacHold), which was incorporated
in California. PacHold was the sole shareholder of PacMar, which was incorporated in
Washington State. The King County Superior Court affirmed the state insurance commissioner
as the PacMar estate' s receiver for the purpose of liquidation in 1989. Although PacMar was
fully liquidated, it has never been legally dissolved.
A. Distribution ofthe PacMar Estate' s Funds
The King County Superior Court set August 1, 1996, as the final deadline for creditors to
file claims against the PacMar estate. In 1999, the superior court entered an order approving the
receiver' s ( Commissioner' s) plan to close the PacMar estate and an order approving the
Commissioner' s plan for final distribution of the PacMar estate' s funds. The Commissioner' s
court- approved plan for final distribution divided the creditors' claims into five classes, ranked A
2
through. F. The plan paid the claims in classes A through D in full. But after retaining
51, 450. 00 for administrative costs, insufficient funds remained in the PacMar estate to pay any
2 The record before us does not describe or name the members of classes E or F. Classes A, C,
and D were consistent with the classes listed in former RCW 48. 31. 280 ( 1975 -76) ( no claims fell
into class B and the record never defined class B). Former RCW 48. 31. 280 stated that class E
claims were "[ a] 11 other claims." But former RCW 48. 31. 280 does not list a class F. Former
RCW 48. 31. 280 ( 1993) completely overhauled the classes, turning them into eight classes listed
by number rather than letter. The State asserts that the class E claims are " general creditor
claims." Clerk' s Papers ( CP) at 18.
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amount to the claims in classes E or F. Class E' s claims totaled $916, 820. 43 and class F' s
claims totaled $213, 427.29.
In 2000, the King County Superior Court discharged the receiver and closed the PacMar
estate. The superior court' s order transferred the PacMar estate' s remaining funds to the State
treasury in the following amounts:
1. Unclaimed funds of $22, 958. 56, meant to pay issued checks that were either
outstanding or returned, and to pay claimants who were identified but could
not be found.
2. Residual funds of $39, 862.78, meant to pay any late presented bills.
In 2001, after the PacMar estate' s closure, the PacMar estate acquired $38, 907.48 in new
funds from creditors. The Commissioner petitioned the superior court to transfer the new funds
to the treasury, rather than reopen the estate and distribute these funds. The Commissioner
explained that during the original, final distribution of the PacMar estate' s funds, the
Commissioner never expected to have funds available for distribution towards claims in class E,
and thus, never adjudicated the individual claims in class E for their validity or amount. The
Commissionerrarguedthat the administrative costs ofadjudicating the-numerous class E-claims
would consume all of the PacMar estate' s funds, leaving no funds to pay the class E claims,
which were next in line to receive distributions from the PacMar estate. The superior court
ordered that the PacMar estate would remain closed, and transferred the new funds to the
treasury " in accordance with RCW 48. 31. 155." Clerk' s Papers ( CP) at 228.
After the new funds were transferred to the treasury, the treasury had custody of the
following PacMar estate' s funds:
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No. 43719 -8 -II
1. Unclaimed funds of $22, 958. 56, transferred to the treasury in 2000 upon the
PacMar estate' s closure, meant to pay issued checks that were outstanding or
returned, and to pay claimants who were identified but could not be found.
2. Residual funds 39, 862. 78, transferred to the treasury in 2000 upon the
of $
PacMar estate' s closure, meant to pay any late presented bills.
3. New funds of $33, 751. 97, transferred to the treasury in 2002 approximately
two years after the PacMar estate' s closure, representing funds acquired from
insurance companies.
B. Bell and PacMar' s Claims
Bell, a British national, moved to New Zealand in 1987, and stopped following PacMar' s
liquidation in 1988. In 2010, Bell asked the Commissioner whether any funds remained in the
PacMar estate. The Commissioner told Bell to ask the DOR. The DOR informed Bell that the
treasury had received the remaining PacMar estate' s funds as unclaimed property, and that Bell
had 90 days to produce a court order entitling him to the PacMar estate' s funds, or those funds
would permanently escheat:
You recently inquired about excess proceeds from the liquidation of [the PacMar
estate]... .
The fluids currently held as unclaimed property were transferred to the state in
response to a King County Court order. According to [ RCW] 48. 31. 155, the
funds were to be held in trust for six years and then escheat to the state.
The Unclaimed Property section did not receive information as to whom the
proceeds belong; therefore, we require a court order directing disbursement of the
funds. Unless we are served with a notice of a court proceeding with respect to
these funds within 90 days from the date of this letter the funds will permanently
escheat to the state as directed in RCW 48. 31. 155.
CP at 127.
In Thurston County Superior Court, Bell and PacMar sued the State of Washington,
through its divisions, the DOR and the State Insurance Commissioner. Bell and PacMar
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No. 43719 -8 -II
petitioned the superior court to order the State to provide an accounting and to pay them the
funds.
Both parties moved for summary judgment. In their motion for summary judgment, Bell
and PacMar clarified that they were suing under RCW 63. 29.260 of WUUPA. In its motion for
summary judgment, the State argued that the funds had already escheated because more than six
years had passed since the funds were transferred to the treasury. The State also argued that the
Thurston County Superior Court had no subject matter jurisdiction over Bell and PacMar' s
claims because they were related to the PacMar receivership proceedings.
The superior court denied Bell and PacMar' s motion for summary judgment and granted
the State' s motion for summary judgment. The superior court issued an opinion letter explaining
its order:
The parties agree that the issue before this court is simple —who has
ownership of the unclaimed property currently held by the Washington State
Treasurer in the amount 73, 614. 75 or, alternatively stated, did the State
of $
properly deny plaintiffs' request to return the money to them as rightful owners.
Plaintiffs made a number of procedural arguments related to the lack of
notice of the receivership and final distributions, which they claim they did not
know about during the receivership process. Plaintiffs also claim that such lack of
notice constitutes a violation of due process that precludes the State from denying
plaintiffs' request to return the property to them under the escheat statute, RCW
63. 29.260. E31
This court has no subject matter jurisdiction over the King County
receivership nor any ability to order any additional remedies as a result of any
deficiencies ( if any) in that process. The only issue before this court is the
application of RCW 63. 29. 260 with respect to the $ 73, 614.75 held by the State.
Thus, the final orders entered in the receivership control. Whether or not Mr. Bell
was properly a " claimant" in the PacMar estate, or not, is not an issue this Court
3 The Thurston County Superior Court erroneously referred to RCW 63. 29. 260. The escheat
statute is RCW 48. 31. 155.
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No. 43719 -8 -II
can or should decide. Nor should this court decide the nature of any notice, or not,
PacMar or Mr. Bell should have received in the receivership matter.
Plaintiffs' argument that the State' s internal communications bind the
State] is not well taken under the case law relating to when estoppel applies to the
State, or whether the State' s denial of plaintiffs' claimed ownership interest is
proper, which is the only issue now before this Court.
Under the summary judgment standard, CR 56, plaintiffs have failed to
meet their burden to establish that they are entitled as a matter of law to recover
the remaining property held by the State, payment of interest, or any order
allowing plaintiffs to recover additional funds received after the closing of
PacMar' s liquidation proceedings. For these reasons, plaintiffs' motion for
summary judgment is denied and their complaint is dismissed with prejudice.
CP at 341 -42 ( citation omitted). Bell and PacMar appeal the superior court' s denial of summary
judgment to them, and its grant of summary judgment to the State.
ANALYSIS
We review summary judgment de novo, engaging in the same inquiry as the superior
court. Staples v. Allstate Ins. Co., 176 Wn.2d 404, 410, 295 P. 3d 201 ( 2013). We affirm a
summary judgment decision when no issue of material fact exists and the moving party is
entitled to judgment as a matter of law. Staples, 176 Wn.2d at 410; see CR 56. We may affirm
the superior court' s summary judgment decision on any ground supported by the record. LaMon
v. Butler, 112 Wn.2d 193, 200 -01, 770 P. 2d 1027 ( 1989).
Our fundamental objective in statutory interpretation is to give effect to the legislature' s
intent. Dep' t of Ecology v. Campbell & Gwinn, LLC, 146 Wn.2d 1, 9 - 10, 43 P. 3d 4 ( 2002). If a
statute' s meaning is plain on its face, then we give effect to that plain meaning as an expression
of legislative intent. Wash. Pub. Ports Ass 'n v. Dep' t ofRevenue, 148 Wn.2d 637, 645, 62 P. 3d
462 ( 2003). We discern plain meaning not only from the provision in question but also from
related statutes and the underlying legislative purposes. Wash. Pub. Ports Ass 'n, 148
closely
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No. 43719 -8 -I1
Wn.2d at 645. If a statute is susceptible to more than one reasonable interpretation after this
inquiry, then the statute is ambiguous and we may resort to additional canons of statutory
construction or legislative history. Campbell & Gwinn, 146 Wn.2d at 12.
I. THE THURSTON COUNTY SUPERIOR COURT' S SUBJECT MATTER JURISDICTION
Bell and PacMar argue that the Thurston County Superior Court erred by ruling that it
lacked subject matter jurisdiction over their claims. We hold that the superior court had subject
matter jurisdiction to determine the propriety of the DOR' s escheat decision, and that the King
County receivership orders control.
We review a superior court' s subject matter jurisdiction de novo. Cole v. Harveyland,
LLC, 163 Wn. App. 199, 205, 258 P. 3d 70 ( 2011). A party may raise a lack of subject matter
jurisdiction at any time during a proceeding. Skagit Surveyors & Eng' rs, LLC v. Friends of
Skagit County, 135 Wn. 2d 542, 556, 958 P. 2d 962 ( 1998). " Subject matter jurisdiction governs
the court' s authority to hear a particular type of controversy." Ralph v. Dep' t. ofNatural Res.,
171 Wn. 262, 267, 286 P. 3d 992 ( 2012), review granted, 176 Wn.2d 1024 ( 2013). RCW
App.
4831. 111( 2) limits Washington courts' jurisdictionover matters-related to insurance
receivership proceedings:
No court of this state has jurisdiction to entertain a complaint praying for the
dissolution, liquidation, rehabilitation, sequestration, conservation, or receivership
of an insurer, or praying for an injunction or restraining order or other relief
incidental to, relating to the proceedings, other than in
preliminary to, or
accordance with this chapter.
Emphasis added.) We analyzed RCW 48. 31. 111 to determine the meaning of "relating to the
proceedings" in St. John Medical Center v. Department ofSocial and Health Services, 110 Wn.
App. 51, 60, 38 P. 3d 383 ( 2002). There, we applied a federal test used to determine whether
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No. 43719 -8 -II
requested relief "related to" a bankruptcy proceeding to analyze whether a requested relief
related to" an insurance company receivership proceeding under chapter 48. 31 RCW. 110 Wn.
App. at 62. The adopted federal test asks
whether the outcome of [the current] proceeding could conceivably have any
effect onthe estate being administered in bankruptcy. [ T] he proceeding need not
the debtor the debtor' s property "; instead, the
necessarily be against or against
action is related to the bankruptcy proceeding if the outcome of the action could
alter the " debtor' s rights, liabilities, options, or freedom of action ( either
positively or negatively)" or in any way impact the handling and administration of
the bankruptcy estate.
110 Wn. App. at 62 ( emphasis added) ( some alterations in original) ( citation omitted) ( quoting
Pacor, Inc. v. Higgins, 743 F. 2d 984, 994 ( 3rd Cir. 1984)).
Here, Bell and PacMar sued under the authority granted by RCW 63. 29.260 of WUUPA
to challenge the DOR' s decision. CP at 4; see CP at 32. RCW 63. 29. 260 states:
A person aggrieved by a decision of the [ DOR][41 or whose claim has not been
acted upon within ninety days after its filing may bring an action to establish the
claim in the superior court of Thurston County naming the [ DOR] as a defendant.
The action must be brought within ninety days after the decision of the [ DOR] or
within one hundred eighty days after the filing of the claim if the [ DOR] has
failed to act on it.
We hold that when a litigant sues under RCW 63. 29.260 to challenge a DOR decision
that the funds of a liquidated insurance company will escheat to the State, the superior court has
subject matter jurisdiction to review the DOR' s decision, but must allow the receivership orders
to control its review. If such a superior court were to look beyond the receivership orders, its
decision would " relate to" the receivership because it ' could conceivably have any effect on the
4
See RCW 63. 29. 010( 5).
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No. 43719 -8 -II
estate being administered in bankruptcy. "' St. John Med: Ctr., 110 Wn. App. at 62 ( quoting
Pacor, Inc., 743 F. 2d at 994).
Thus, the Thurston County Superior Court had subject matter jurisdiction over the limited
issue of whether the DOR' s decision, that the funds would escheat to the State, was erroneous.
But the receivership orders control its review. In light of the superior court' s limited review, we
next consider whether Bell and PacMar had standing to assert their claim that the DOR' s
decision was erroneous.
II. STANDING To CHALLENGE THE DOR' S DECISION UNDER WUUPA
Bell and PacMar argue that they had standing to challenge the DOR' s decision because
they had a legal interest in the PacMar estate' s funds. The State argues that Bell and PacMar had
no standing to assert their claim because they had no legal interest in the funds. We agree with
the State.5
Standing is a threshold issue that we review de novo as a question of law. See In re
Estate of Becker, 177 Wn.2d 242, 246, 298 P. 3d 720 ( 2013). Without standing, a court lacks the
5 In 1993, the legislature significantly amended RCW 48. 31. 280. Compare former RCW
48. 31. 280 ( 1975 -76) with former RCW 48. 31. 280 ( 1993). The King County Superior Court
entered orders appointing a receiver for liquidation prior to 1993, but made all of its other orders
years after the 1993 amendments.
We apply former RCW 48. 31. 280 ( 1993) for two reasons. First, both parties argue from
former chapter 48. 31 RCW ( 1993) on appeal. Second, "[ a] statute applies `` when the
precipitating event for the application of the statute occurs after the effective date of the statute,
even though the precipitating event had its origin in a situation existing prior to the enactment of
the Myles v. Clark County, 170 Wn. App. 521, 532, 289 P. 3d 650 ( 2012), review
statute. "'
denied, 176 Wn.2d 1015 ( 2013) ( quoting Aetna Life Ins. Co. v. Wash. Life & Disability Ins.
Guar. Ass 'n, 83 Wn. 2d 523, 535, 520 P. 2d 162 ( 1974)). Here, the precipitating event for the
distribution statute' s application is the entry of the King County Superior Court' s orders
occurring after the 1993 amendments, not its orders appointing the receiver before 1993.
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necessary jurisdictional power to entertain a party' s claim. High Tide Seafoods v. State, 106
Wn.2d 695, 702, 725 P. 2d 411 ( 1986).
To have standing, a claimant must establish that injury has occurred to a legally protected
right. Sprague v. Sysco Corp., 97 Wn. App. 169, 176 n. 2, 982 P. 2d 1202 ( 1999). A party has
standing to raise an issue if that party "`` has a distinct and personal interest in the outcome of the
case. "' Timberlane Homeowners Ass 'n, Inc. v. Brame, 79 Wn. App. 303, 307, 901 P. 2d 10741995) ( quoting Erection Co. v. Dep' t of Labor & Indus., 65 Wn. App. 461, 467, 828 P. 2d 6571992)).
At the beginning of a delinquency proceeding, the superior court appoints the
Commissioner as the receiver and grants the Commissioner title to the delinquent insurance
company' s assets. When the Commissioner is ready to distribute the delinquent insurance
company' s post -liquidation funds to fulfill creditors' claims, former RCW 48.31. 280 ( 1993)
states:
The priority of distribution of claims from the insurer' s estate is as follows: Every
claim in a class must be paid in full or adequate funds retained for payment
before the members of the next class receive any payment no subclasses maybe
established within a class; and no claim by a shareholder, policyholder, or other
creditor may circumvent the priority classes through the use of equitable
remedies.
Emphasis added.) Former RCW 48. 31. 280 then divides creditors' claims into prioritized
classes. Under former RCW 48. 31. 280, shareholders fall within the lowest priority class, and the
liquidated insurance company does not fall within any class.
Here, the record makes clear that the class E claims were next in line to receive payment
from the PacMar estate. The PacMar estate has not paid the class E claims, due to the
administrative costs of adjudicating those claims. The PacMar estate does not have adequate
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No. 43719 -8 -II
funds retained for payment of the class E claims because only $73, 614.75 is available for
distribution, and the class E claims total $ 916, 820. 43. Until the PacMar estate pays the class E
claims in full, or has adequate funds retained for their payment, former RCW 48. 31. 280 forbids
payment to any other creditors.
Bell and PacMar do not assert that their claims are class E claims, nor do they assert that
former RCW 48. 31. 280 gives their claims ( claims of the liquidated insurance company and its
indirect shareholder) a higher priority to the funds than the class E claims. Thus, we hold that
the King County receivership orders established that Bell and PacMar had no legal interest in the
PacMar estate' s funds because the receivership orders established that the class E claims are next
in line to receive payment, and the PacMar estate has neither paid nor retained adequate funds
for the payment of these claims.
Because the receivership orders established that Bell and PacMar had no legal interest in
the PacMar estate' s funds, Bell and PacMar would never have had any entitlement to the funds.
Because they would never have had any entitlement to the funds, Bell and PacMar had no
distinct and personal interest in the outcome of the case, and thus, they lacked standing to
challenge the DOR' s decision. To assert a legal interest in the funds, Bell and PacMar must
move to reopen the King County receivership for a new determination as to their legal interest in
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those funds.
6 Because Bell and PacMar had no legal interest in the liquidated PacMar estate' s funds, they had
no legitimate claim of entitlement to a vested property right in those funds, and thus, had no due
process right as to those funds. See U. S. CONST. amend. XIV, § 1; WASH. CONST. art. 1, § 3;
Dellen Wood Prods., Inc. v. Dep' t of Labor & Indus., Wn. App. , 319 P. 3d 847, 860
2014).
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We affirm the Thurston County Superior Court because Bell and PacMar had no standing
to assert their claim under WUUPA because they had no legal interest in the liquidated PacMar
estate' s funds. We do not consider the parties' remaining arguments because such consideration
is unnecessary to resolve this case, given Bell and PacMar' s lack of standing.
We concur:
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