In re Rapid Settlements, LTD's Application for Approval of Transfer , 189 Wash. App. 584 ( 2015 )

FILED
AUGUST 18, 2015
In the Office of the Clerk of Court
WA State Court of Appeals, Division III
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION THREE
)
In the Matter of RAPID SETTLEMENTS, ) No. 31435-9-111
LTD'S APPLICATION FOR )
APPROVAL OF TRANSFER OF )
STRUCTURED SETTLEMENT )
PAYMENT RIGHTS )
) PUBLISHED OPINION
I SIDDOWAY, C.J. - Symetra Life Insurance Company and Symetra Assigned
Benefit Services Company (Symetra) obtained an antisuit temporary restraining order
(TRO) enjoining RSL-3B-IL, Ltd. (3B) from collaterally attacking Symetra's final
Washington order against 3B in Texas courts. When 3B violated the TRO, Symetra filed
a motion for contempt against 3B and its Texas lawyer, John Gorman.
As a result of removal of the Washington action to federal court, its remand, and a
continuance, Symetra's motion for contempt was not heard by the Benton County court
for four months. By that time, 3B's collateral attack on Symetra's final order had been
removed by Symetra to federal district court in Texas.
The superior court found 3B and Mr. Gorman in contempt, ordered Mr. Gorman to
pay a one-time forfeiture of$I,OOO and ruled that to purge themselves of the contempt
charge, 3B and Mr. Gorman must strike all pending motions in the "Harris County,
No. 31435-9-111
In re Rapid Settlements
Texas, action" and agree not to take further action in that case as long as they were
subject to a Benton County court injunction. Clerk's Papers (CP) at 526. The court also
awarded Symetra substantial attorney fees and costs. 3B and Mr. Gorman appeal,
arguing that the forfeiture amount and fees and costs awarded are punitive sanctions that
could not be imposed in a civil contempt proceeding and, for the first time on appeal, that
the purge condition was not possible to perform and was therefore invalid.
We conclude that only part ofSymetra's fees and costs were properly awarded.
But where 3B and Mr. Gorman committed clear acts of contempt and failed in the trial
court to assert and support what they now contend was their inability to perform the
purge condition, the relief ordered by the court was largely proper. We reverse the award
of loss and costs, remand for further review and recalculation by the court, and otherwise
affirm.
FACTS AND PROCEDURAL BACKGROUND
Symetra and 3B are both engaged in businesses involving structured settlements.
As explained in a legislative report on what became Washington's Structured Settlement
Protection Act (SSPA), chapter 19.205 RCW:
In the settlement of large tort claims, damages are often paid by a
defendant to a plaintiff in the form of a structured settlement. In its
simplest form, a structured settlement typically involves the initial payment
of a lump sum, followed by a series of subsequent smaller payments that
are made at specified intervals over a period of years (an annuity).
2
No. 31435-9-II1
In re Rapid Settlements
... Structured settlements are usually paid by an insurance company
(the obligor), that obtains a benefit by paying off the obligation in
installments over a long period of time, rather than as a single lump sum.
The recipient of the structured settlement proceeds (the payee) can benefit
as well, since the annuity payments are not subject to federal income tax
and the receipt of payments over the long term can provide financial
security.
FINAL BILL REp. ON ENGROSSED H.B. 1347, at 1, 57th Leg., Reg. Sess. (Wash. 2001).
The legislature enacted the SSP A after it became common for injured persons to be
offered discounted payments in exchange for their entitlements under a structured
settlement, by companies that hoped to profit from the investment. The SSPA reflected
the legislature's concern that payees not be permitted to sell annuity rights until a court
had reviewed the proposed transfer for adequate disclosure and determined that a transfer
was in the best interest of the injured person, taking into account the welfare and support
of his or her dependents. See RCW 19.205.030 (requiring court or agency approval).
Symetra is engaged in the business of assuming the obligation to pay a tort
liability and then fulfilling it through structured settlement payments. 3B and at least one
of its affiliates, Rapid Settlements, Ltd. (RSL)I are engaged in the business of buying
injured persons' future payment rights at a discount.
I RSL is now known as Liquidated Marketing, Ltd. This fact and others relating
to Washington proceedings taking place before February 2012 are drawn from this
court's earlier decision in In re Rapid Settlements, Ltd., 166 Wn. App. 683,271 P.3d 925
(2012).
3
No. 31435-9-III
In re Rapid Settlements
In July 2004, a structured settlement payee agreed to sell a future payment due
him from Symetra to RSL. As the investor, RSL was required by the SSPA to seek
approval of the transfer in superior court. Symetra opposed RSL's application as
violating requirements of the SSPA. The court agreed, dismissed RSL's application, and
awarded Symetra its reasonable attorney fees and costs under RCW 19.205.040(2)(b).2
RSL unsuccessfully appealed the award of fees to the Court of Appeals and
unsuccessfully sought review by our Supreme Court. Rapid Settlements, Ltd. v. Symetra
Life Ins. Co., 134 Wash. App. 329, 332,139 P.3d 411 (2006), review denied, 160 Wash. 2d
1015, (2007)). Additional fees and costs were awarded to Symetra at both levels of
appeal. In 2008, the King County Superior Court entered an amended judgment of
$39,287.04 against RSL reflecting the cumulative fees and costs.
Symetra unsuccessfully attempted to collect the judgment in both Washington and
Texas. Efforts to collect in Washington proved unsuccessful because only RSL's
affiliates, not RSL, maintain bank accounts in Washington. Symetra's efforts to collect
the judgment in Texas were met with RSL's response to post-judgment discovery that it
owned no property, even in its home state.
2RCW 19.205.040(2) provides in relevant part that a transferee "shall be liable to
the structured settlement obligor and the annuity issuer ... (b) For any other liabilities or
costs, including reasonable costs and attorneys' fees ... arising as a consequence of the
transferee's failure to comply with this chapter."
4
No. 31435-9-III
In re Rapid Settlements
In a then unrelated proceeding, RSL had applied in Benton County in November
2004 for approval of a transfer agreement under which Nicholas Reihs would sell a future
payment from Symetra (payable in September 2012) in exchange for a discounted
payment. Over Symetra's objection, the court approved the transfer. Although RSL's
transfer application listed itself as the transferee, the order approving the transfer stated
that the designated beneficiary had been changed to 3B.
Five years after the court order approving transfer of the Reihs payment but before
it came due, Symetra moved to modify the order to allow it to apply the amount
otherwise payable to 3B to its King County judgment against RSL. Over the objection of
3B, which was allowed to intervene, the superior court found that 3B was the alter ego of
RSL and modified the transfer order to recognize a right of setoff in Symetra. 3B
appealed. We affirmed the superior court's modified order in February 2012. In re
Rapid Settlements, Ltd., 166 Wash. App. at 696.
3B then revived an action it had commenced in Texas two years earlier (shortly
after Symetra asked the Benton County court to authorize setoff) in which it challenged
Symetra's ability to collect its judgment through a setoff taking place in Washington. At
Symetra's request, the Texas court had stayed the action-"abated" it, in Texas terms-
pending disposition of3B's appeal in Washington.
Following our decision on the appeal, John Craddock, one of Mr. Gorman's law
partners, wrote Symetra's lawyers, stating that 3B continued to assert a right to receive
5
No. 31435-9-111
In re Rapid Settlements
the upcoming September 2012 Reihs payment and that two creditors, FinServ Casualty
Corporation and A.M.Y. Property & Casualty Corporation, asserted prior secured
interests in the payment. On August 9, Mr. Craddock notified Symetra's lawyers that 3B
would move to vacate the abatement order in the Texas action and would seek an order
requiring Symetra to deposit the September Reihs payment in the Texas court. Symetra
responded by moving the Benton County court on August 10 to issue an anti suit TRO in
the Reihs transfer action.
On August 14 and 15, 3B filed an amended petition in the Texas action naming
FinServ and A.M.Y. as additional plaintiffs. FinServ and A.M.Y. purported to join in
3B's motion to vacate the stay and reinstate the Texas case to the active docket. Mr.
Craddock, Mr. Gorman, and their law firm submitted all materials filed with the Texas
court as "Counsel for Plaintiffs." CP at 1492, 1517. Both motions were eventually set
for an August 24 hearing date.
On August 17, the Benton County court heard Symetra's motion for a TRO.
Based on findings that 3B's Texas action was "an attempt to undermine this Court's 2010
Order in this matter," and "an attempt to undermine this Court's jurisdiction over the
structured settlement payment," the court issued a TRO enjoining 3B, in relevant part,
from taking further action "in Harris County District Court Case No. 2010-41653" and to
strike any and all pending motions in that case. CP at 119. The order set a hearing on
Symetra's request for a permanent injunction for the afternoon of August 31.
6
No. 31435-9-III
In re Rapid Settlements
3B's chief executive officer was personally served with the TRO on August 20.
The following day, Symetra filed an emergency motion asking the Texas court to cancel
the impending Texas hearings based on the TRO's dictate that 3B strike pending motions
and take no further action in the Texas case. Despite 3B's having been served with the
TRO, it did not strike its motions; instead, Mr. Craddock filed a brief in opposition to
Symetra's motion on August 22, on behalf of "[a] II three plaintiffs." CP at 170. While
the brief argued that "[n]othing can stop FinServ and A.M.Y. from moving forward in
this [Texas] Court" because the TRO did not apply to them, the order of abatement had
not been lifted and as of August 22, FinServ and A.M.Y. were not parties to the Texas
action. CP at 170-71.
A hearing on Symetra's motion was held before the Texas court on August 23.
Mr. Gorman appeared on behalf of 3B and argued that-contrary to this court's decision
on appeal-the offset order had been obtained without due process and was invalid. The
Texas court reset the hearing on 3B's motions for August 28.
In light of3B's post August 20 acts and failures to act, Symetra moved in the
Benton County court on August 24 for an order finding 3B in contempt. It asked that it
be awarded its costs and attorney fees in bringing the contempt motion and in having to
participate in the Texas action after service of the TRO. It also asked for a one-time
forfeiture of$I,OOO against Mr. Gorman. Symetra set the contempt motion to coincide
with the permanent injunction hearing set for August 31.
7
No. 31435-9-111
In re Rapid Settlements
Mr. Gorman and 3B were not deterred. 3B still did not strike its motions and Mr.
Gorman appeared at the August 28 hearing in the Texas court, where he argued that the
stay should be lifted so that 3B could pursue its challenge to the Washington court orders.
The Texas court was persuaded to lift the stay for the limited purpose of adding FinServ
and A.M.Y. as parties but explained that the suit would otherwise "remain abated, and
let's see what happens in Washington on Friday [the August 31 hearing date in
Washington], and then we will go from there." CP at 899.
What happened in Washington on Friday was that a lawyer representing FinServ
appeared at the time set for the hearings and presented FinServ's notice of removal to
federal court, filed earlier in the day. The notice of removal represented that FinServ "is
being joined as a party to this lawsuit." CP at 193. While Symetra had filed a motion to
add FinServ and A.M.Y. as parties, the court had not yet done so, and the removal was
later determined to be defective on multiple grounds. 3 The removal nonetheless derailed
3 The federal court granted Symetra's motion for remand to state court "based on
the following:"
FinServ's non-party status in the underlying litigation; the passage of more
than one year since the original litigation which was commenced in
approximately 2004 was filed; the non-joinder by other similarly affected
entities in FinServ's Notice Of Removal; the failure of FinServ to show that
$75,000.00 or more is in controversy; and the apparent ancillary nature of
the action which is pending in the Superior Court of Benton County,
Washington.
CP at 856-57.
8
No. 31435-9-III
In re Rapid Settlements
Symetra's request for a permanent injunction to replace the expiring TRO and its motion
for contempt, which were necessarily stricken.
In granting Symetra's motion to remand the case to state court in early November,
the federal court denied Symetra's request for fees and costs, but observed:
[T]his court takes notice that state court proceedings both in Washington
and Texas will allow an ample opportunity for the prevailing party to
pursue monetary and equitable relief against FinServ (and possibly others).
Under these circumstances, attorney fees and costs are DENIED.
CP at 857.
Within two weeks of the order remanding the Washington case to Benton County,
Symetra moved for an extension of the TRO and noted its previously filed motions for
November 30. On November 29, 3B requested a continuance. It emphasized that
Symetra would not be prejudiced because the insurer had already applied the Reihs
payment to its judgment against RSL, and the Texas action-in which 3B, FinServ and
A.M.Y. were trying to recover the Reihs payment-had been removed to federal court by
Symetra on September 10 and was "on hold" pending 3B's motion for remand. CP at
293. The Benton County court granted 3B's request in part; it entered Symetra's
proposed order continuing temporary injunctive relief but continued the motions for a
permanent injunction and contempt to December 28.
The hearing proceeded on December 28, and at its conclusion the court entered the
permanent injunction requested by Symetra. It took the proposed contempt order under
9
No. 31435-9-III
In re Rapid Settlements
advisement. While 3B filed no brief in opposition to the motion for contempt, its lawyer
informed the court during the hearing that it relied for its opposition on the declaration
filed with its request for a continuance in November. Unsure that it had reviewed the
continuance materials in preparing for the December 28 hearing, the court indicated it
wanted to be "fully briefed" before ruling. Report of Proceedings (RP) (Dec. 28, 2012) at
17. Two weeks later, it granted Symetra's motion and entered an order of contempt.
The court's order found 3B and Mr. Gorman in contempt for failing to strike 3B's
motions after service of the TRO on August 20 and for appearing and participating in the
hearings on August 23 and 28. Based on its findings, the court ordered the following
relief:
1. 3B is ordered to pay Symetra for its costs and attorneys' fees
incurred in bringing this motion for contempt and all costs and attorneys'
fees incurred by Symetra in the Harris County, Texas, action between
August 20,2012, when the Court's Temporary Restraining Order was
served on 3B, and the date of this Order of Contempt. Symetra has
submitted a cost and fee bill showing the amount of these costs and fees is
$47,024.50.
2. Attorney Gorman, as attorney and agent for 3B, is ordered to pay
Symetra a one-time forfeiture pursuant to RCW 7.21.030( 1)(b) of One
Thousand Dollars ($1,000.00).
3. In order to purge themselves of this contempt charge, 3B and its
attorney Gorman must strike all pending motions in the Harris County,
Texas, action, and agree not to file any motion or take any other action in
said case while an injunction from this Court restraining them from doing
so is in effect.
CP at 526. 3B and Mr. Gorman appeal.
10
No. 3 I 435-9-III
In re Rapid Settlements
ANALYSIS
3B and Mr. Gorman assign error to the superior court's order holding them in
contempt, identifying seven issues. We will first address their challenges to the court's
findings of contempt. (Appellant's issues A, C, D, and E). We will then tum to their
partially viable challenges to the relief ordered by the court. (Appellant's issues B, F and
I. The court hadjurisdiction over Mr. Gorman and its findings of
contempt are both sufficient and supported by substantial evidence
Mr. Gorman argues that because he had not appeared in the Benton County action
and was not served with an order to show cause, the court violated his right to due
process by entering relief against him. He also argues that his conduct was not
sanctionable given "competing duties to his clients." Br. of Appellant at 3. Both Mr.
Gorman and 3B contend that substantial evidence does not support the court's contempt
findings and that the court erred by granting relief for contempt without finding that they
violated the TRO "intentionally."
Due process as to Mr. Gorman
Mr. Gorman, a Texas resident, argues that Symetra never served him with process
4 Symetra raises a threshold objection that 3B and Mr. Gorman are raising several
arguments for the first time on appeal and asks that we refuse to consider them. Apart
from a new challenge to the validity of the purge condition, which we discuss below, we
conclude that the appellants' issues were adequately raised in the superior court.
11
No.31435-9-III
In re Rapid Settlements
making him a party and that it never obtained an order to show cause, with the result that
the court lacked jurisdiction to issue a contempt order against him. He relies on
Burlingame v. Consolidated Mines and Smelting Company, Ltd., 106 Wash. 2d 328, 722
P.2d 67 (1986).
The Burlingame case does not help Mr. Gorman. He focuses on the court's
holding in that case that a trial court's order to show cause issued under former RCW
7.20.040 (1881) was adequate notice, and then contrasts that with the contempt
proceeding against him, which was initiated, instead, by motion. When Washington's
contempt statutes were substantially modified in 1989, a motion procedure was
substituted for proceedings on an order to show cause. See RCW 7 .21.030( 1) (court
initiates a contempt proceeding on its own motion or the motion of a person aggrieved).
The court in Burlingame did not hold that an order to show cause is required by due
process; it held only that the order to show cause that was statutorily required at the time
sufficed under the "minimal notice" that traditionally has satisfied due process
requirements for a valid judgment of contempt. Burlingame, 106 Wash. 2d at 332. The
requirements of a valid contempt order are notice and an opportunity to be heard, with the
opportunity to be heard being the most significant. "The notice requirement is important
only because it protects an individual's right to be heard." Id. (citing Hovey v. Elliott,
167 U.S. 409,414-15, 17 S. Ct. 841,42 L. Ed. 215 (1897)). Burlingame requires only
12
No. 31435-9-III
In re Rapid Settlements
that we consider whether the motion procedure followed below provided notice sufficient
to protect Mr. Gorman's right to be heard.
Symetra moved the court to "enter an order finding 3B and its agent, attorney
Gorman, in contempt." CP at 156. There can be no question that Mr. Gorman was aware
of Symetra's motion. During the hearing in Texas on August 23, Symetra's lawyer
mentioned that his client viewed 3B as being in contempt of the TRO, to which Mr.
Gorman responded, "Contempt, I just heard contempt. You know, we want to be in
Texas. We want a forum that's going to hear us." CP at 511. During the August 28
hearing in Texas, Mr. Gorman told the court that "as forewarned the other day ...
[Symetra has] now filed a motion for contempt seeking to hold me personally in
contempt of court up in Washington for pursuing this action in a Texas court." CP at
485. A certificate of service establishes service by mail of the motion for contempt and
proposed order on Mr. Gorman at least as early as November 19,2012. In granting the
continuance requested by 3B on November 30, the Benton County court created its
order-which clearly indicated the time and place of the December 28 hearing-by
modifying Symetra's proposed "Order of Contempt Against RSL-3B-IL, Ltd. and
Attorney Gorman." CP at 310-12. The order was signed "approved as to form" by 3B's
13
No.31435-9-II1
In re Rapid Settlements
lawyer. The notice provided was more than sufficient to protect Mr. Gorman's right to
be heard. 5
Substantial evidence supports the findings ofcontempt
The court's contempt order included the following findings of violations of the
TRO after it was served on 3B, and thereby contempt: that 3B and Mr. Gorman continued
to pursue the Texas action (finding 1), that 3B failed to strike the motions in that lawsuit
that were pending at the time of the TRO (finding 2), that 3B opposed Symetra's motion
to extend the time for hearing those motions (finding 2), and that Mr. Gorman presented
argument at the August 23 and August 28 hearings (finding 2).
5 For the first time in the reply brief, Mr. Gorman recasts his argument as one
challenging a second requirement of due process: an alleged lack of personal jurisdiction
over him for lack of minimum contacts with the State. See Mullane v. Central Hanover
Bank & Trust Co., 339 U.S. 306, 70 S. Ct. 652, 94 L. Ed. 865 ( 1950) (due process
requires that a defendant be given notice and be subject to the personal jurisdiction of the
court.) Under RAP 10.3( c), "a contention presented for the first time in the reply brief
will not receive consideration on appeal." Fosbre v. State, 70 Wash. 2d 578, 583, 424 P.2d
901 (1967). This rule applies even to challenges regarding personal jurisdiction. See,
e.g., State ex reI. Pub. Disclosure Comm 'n v. Permanent Ojftnse, 136 Wash. App. 277,
294, 150 P.3d 568 (2006). Even so, under our long-arm statute, RCW 4.28.185,
Washington courts may assert jurisdiction over nonresident individuals to the extent
permitted by the due process clause of the United States Constitution, except as limited
by the terms of the statute. Deutsch v. West Coast Mach. Co., 80 Wash. 2d 707, 711, 497
P.2d 1311 (1972). Mr. Gorman had been admitted pro hac vice by this court in 2011 and
appeared in Spokane to argue the first appeal. We have no doubt that Mr. Gorman's
appearance in Washington in a legal proceeding whose outcome he then collaterally
attacks elsewhere, in contempt of court, is a contact of such character that maintenance of
the contempt action does not offend traditional notions of fair play and substantial justice.
Int'l Shoe Co. v. Washington, 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945).
14
No. 31435-9-111
In re Rapid Settlements
The United States Supreme Court decided 125 years ago that the court of one state
may enjoin parties to a case before it from engaging in vexatious litigation in another
state for the purpose of evading the rulings of the first court. Cole v. Cunningham, 133
U.S. 107, 111, 10 S. Ct. 269, 33 L. Ed. 538 (1890). Such injunctions may not control the
second court's actions regarding the litigation in that court, but they are effective against
the parties, with sanctions generally administered only by the court issuing the injunction.
Baker v. Gen. Motors Corp., 522 U.S. 222,236, 118 S. Ct. 657, 139 L. Ed. 2d 580 (1998)
(citing, e.g., James v. Grand Trunk Western R. Co., 14 Ill. 2d 356,372, 152 N.E.2d 858
(1958); Stiller v. Hardman, 324 F.2d 626,628 (2d Cir. 1963».
In this case, the Benton County court issued the TRO on August 17 and it was
served on 3B on August 20. The TRO ordered 3B "to strike any and all pending motions
in [Harris County District Court Case No. 2010-41653]." CP at 119. 3B had pending
motions in the case at the time. It did not strike them.
The TRO enjoined 3B "from taking any further action" in the Texas case. Id.
Two days after being served with the TRO, on August 22, 3B filed a response in the
Texas court opposing Symetra's emergency motion.
A temporary restraining order is binding upon "the parties to the action, their
officers, agents, servants, employees, and attorneys, and upon those persons in active
concert or participation with them who receive actual notice of the order by personal
service or otherwise." CR 65(d). Days after service of the TRO on 3B, Mr. Gorman
15
No. 31435-9-111
In re Rapid Settlements
appeared in the Texas court on August 23 and 28 to advocate on behalf of 3B and in
opposition to Symetra. The existence of the Washington TRO was a subject matter of his
argument on both occasions.
While chapter 7.21 RCW provides that a court may find a person in contempt and
impose a coercive sanction only upon "[a] person [who] has failed ... to perform an act
that is yet within the person's power to perform," RCW 7.21.030(2), a court may find a
person in contempt whether or not it is possible to coerce future compliance. Any
"intentional ... [d]isobedience of any lawful judgment, decree, order or process of the
court" is a contempt of court as defined by RCW 7.21.010(l)(b). RCW 7.21.030(3)
allows the court to order a contemnor to pay losses suffered as a result of the contempt
and costs incurred in the contempt proceedings for any "person found in contempt of
court" without regard to whether it is possible to craft a coercive sanction. See State ex
reI. Chard v. Androw, 171 Wash. 178, 17 P.2d 874 (1933) (affirming judgment for
$3,000 loss imposed on contemnor for violating court order; no coercive sanction
imposed due to contemnor's inability to perform).6
A trial court's finding of contempt will not be disturbed on appeal as long as it is
supported by substantial evidence in the record. In re Marriage ofFarr, 87 Wash. App.
6 While not an issue in this case, punitive sanctions can be imposed for a past
contempt of court through a criminal contempt proceeding whether or not it is continuing.
See RCW 7.21.050. A completed intentional act ofa type identified by RCW 7.21.010
falls within the definition of "contempt of court."
16
No. 31435-9-111
In re Rapid Settlements
177, 184,940 P.2d 679 (1997); Ramstead v. Hauge, 73 Wash. 2d 162, 167,437 P.2d 402
(1968). Where, as in this case, "the superior court bases its contempt finding on a court
order, 'the order must be strictly construed in favor of the contemnor,' and '[t]he facts
found must constitute a plain violation of the order.'" Dep't ofEcology v. Tiger Oil
Corp., 166 Wash. App. 720, 768, 271 PJd 331 (2012) (emphasis omitted) (citations
omitted).
The record unquestionably supports the violations found by the court. Since they
occurred after service on 3B of the TRO, they would appear to support the court's
findings of contempt. But 3B and Mr. Gorman argue that their literal violations were not
contumacious for several reasons.
First, they emphasize that it was Symetra's emergency motion in Texas that
precipitated the need for 3B's opposition. But if 3B had stricken its motions as ordered,
Symetra would have had no need to file its emergency motion. Moreover, the relief that
Symetra was seeking through its emergency motion was entirely consistent with the
Benton County court's TRO. Consistent with the TRO, 3B should not have opposed it.
3B and Mr. Gorman argue that the two hearings at which Mr. Gorman appeared
while the TRO was in effect were set by the Harris County court. Again, if 3B had
stricken its motions as required by the TRO, the hearings would presumably have been
stricken by the court. If they weren't, then consistent with the TRO, 3B should have
done no more than explain to the court why it could not participate.
17
No. 31435-9-II1
In re Rapid Settlements
3B and Mr. Gorman argue that FinServ and A.M.Y. were interested parties and
would have been free to take action in the Texas proceeding. But until FinServ and
A.M.Y. were joined-which was not acted upon by the court until it vacated the
abatement order for that limited purpose on August 28-only 3B was a party to the
proceeding. And even if FinServ and A.M. Y. could be viewed as parties to the
proceeding before the limited lifting of the abatement order on August 28, that does not
excuse 3B's own participation in violation of the TRO or Mr. Gorman's appearance on
3B's behalf.
Finally, 3B argues that it acted on its lawyer's advice and Mr. Gorman argues that
he was duty bound to advance the wishes of his client. Neither rationale excuses them
from responsibility for contempt. Acting on advice of counsel in refusing to obey a TRO
is not a defense to a civil contempt proceeding. Ramstead, 73 Wash. 2d at 166; Rekhi v.
Olason, 28 Wn. App. 751,757,626 P.2d 513 (1981). Because the TRO did not require
Mr. Gorman to violate any privilege, the limited defense recognized in assertion of
privilege cases does not apply. Cf Dike v. Dike, 75 Wash. 2d 1, 5-9,448 P.2d 490 (1968)
(where lawyer is ordered by the court to reveal privileged information and is held in
contempt for refusal to do so, the proper procedure is to stay all sanctions for contempt
pending appellate review). While Mr. Gorman argues that he could not take action
against his client's wishes, he had the options of encouraging his client to comply with
the TRO or, if3B could not be persuaded to comply, then of withdrawing from the
18
No. 31435-9-111
In re Rapid Settlements
representation rather than commit contempt. See TEX. DISCIPLINARY R. PROF'L
CONDUCT 3.04(d) ("A lawyer shall not ... knowingly disobey, or advise the client to
disobey ... a ruling by a tribunal except for an open refusal based either on an assertion
that no valid obligation exists or on the client's willingness to accept any sanctions
arising from such disobedience") and 1.I5(b)(4) (providing that a lawyer may withdraw
from representing a client who "insists upon pursuing an objective that the lawyer
considers repugnant or imprudent or with which the lawyer has fundamental
disagreement").
Appellants cite State ex reI. Nicomen Boom Co. v. North Shore Boom & Driving
Co., 55 Wash. 1, 13, 103 P. 426 (1909), modified on reh'g, 107 P. 196 (1910) (Mount, J.,
dissenting) for the proposition that "[t]here is nothing in the [contempt] statute to indicate
that it was intended to include one who in good faith advises the wrong." But that case
dealt with a lawyer, Mr. Abel, who did not himself violate the court's order as Mr.
Gorman did here. Id. at 14. Mr. Abel "advised the officers to do the things complained
of," but "did not directly participate therein himself." Id. at 17. As observed by the
majority opinion, "An offending attorney would be liable . .. for a willful disregard of
the orders ofthe court, but it would require a forced construction of the statute to make
him subject to civil liability because of his advice honestly given." Id. at 14 (emphasis
added). Mr. Gorman was not found in contempt for his advice, but for his actions.
19
No. 31435-9-III
In re Rapid Settlements
Appellants are correct that the TRO expired on August 31. CR 65(b) (temporary
restraining orders expire within 14 days unless extended). But the acts of contempt found
by the court all occurred on or before August 31. The findings of contempt are supported
by substantial evidence of violations of the court's order during the two weeks it was in
effect.
No "finding" ofintentional conduct was required
The superior court's contempt order did not include an explicit finding that 3B's
and Mr. Gorman's violations of the TRO were intentionaL Relying on the statement in
Holiday v. City ofMoses Lake, 157 Wash. App. 347, 355, 236 P.3d 981 (2010) that "a
finding that a violation of a previous court order was intentional is required for a finding
of contempt," 3B and Mr. Gorman argue that absent an explicit finding of intentional
conduct, the trial court's order is insufficient. As further support, they cite In re Estates
ofSmaldino, 151 Wn. App 356,365,212 P.3d 579 (2009), in which a lawyer was found
in contempt for violating the terms of a TRO prohibiting his client from transferring her
real property, after he caused her to grant him a deed of trust to secure payment of his
legal fees and then recorded it. On appeal, the lawyer argued that the court's finding that
he intentionally disobeyed the TRO was contradicted by its finding that he had chosen
not to read the TRO. Id. at 362. The court held that knowledge could be imputed. It also
held that because the lawyer's acquisition of a security interest in the property "was an
intentional act," his act in disobedience of the order was intentional. Id. at 365.
20
No. 31435-9-111
In re Rapid Settlements
The two decisions hold only that an individual must act intentionally to be found
in contempt of court. Under RCW 7.21.01 O( 1)(b), "contempt of court" is defined, in
relevant part, as "intentional . .. [d]isobedience of any lawful judgment, decree, order, or
process of the court." (Emphasis added.) But given that definition, the Benton County
court's finding of contempt reflects an implicit finding that 3B's and Mr. Gorman's acts
and omissions were intentional.
When the Washington legislature intends to require that an explicit finding must
be made for a court to act, it says so. See, e.g., RCW 13.34.155 ("dependency court ...
must make a written finding" that parenting plan is in a child's best interest); RCW
13.40.193 Uuvenile found to have been unlawfully in possession of a firearm must
receive a disposition that includes program participation "unless the court makes a
written finding ... that participation ... would not be appropriate"); RCW 4.84.185
(court may award expenses of suit "upon written findings by the judge that the action ...
was frivolous"). Nothing in chapter 7.21 RCW requires that the court make a written
finding of intentional conduct.
All of3B's and Mr. Gorman's acts and omissions identified by the contempt order
as violations were supported by evidence that established their inherently intentional
character. The court was not required to explicitly find that they were intentional.
21
No. 31435-9-111
In re Rapid Settlements
II. The relieforderedfor the contempt was largely although not entirely
appropriate, given the civil character ofthe contempt proceeding
Having determined that the trial court properly found 3B and Mr. Gorman in
contempt, we tum to the propriety of the relief awarded in what was initiated and
conducted as a civil contempt proceeding. 7 The relief awarded consisted of attorney fees
and costs incurred in the contempt proceeding; attorney fees and costs incurred in the
Texas proceeding; and the $1,000 onetime sanction against Mr. Gorman.
Costs incurred in the contempt proceeding
RCW 7.21.030(3) provides in relevant part that in addition to imposing remedial
sanctions authorized elsewhere in the statute, "[t]he court may ... order a person found in
contempt of court to pay a party for ... any costs incurred in connection with the
contempt proceeding, including reasonable attorney's fees." 3B and Mr. Gorman do not
contend that Symetra was not entitled to costs, including attorney fees; they argue that
Symetra was awarded costs that were not incurred in the contempt proceeding. They
specifically complain of
7 3B and Mr. Gorman argue that some of the relief awarded was in the nature of
punishment, making the proceeding below a criminal contempt proceeding; from that,
they argue that because it was not conducted as a criminal contempt proceeding, all of the
relief ordered by the court fails. The proceeding was initiated and conducted as a civil
contempt proceeding. To the extent that relief ordered by the court was improper, it will
be reversed. We reject the appellants' effort to have us analyze the proceeding as
something it was not.
22
No. 31435-9-111
In re Rapid Settlements
[t]he costs and fees awarded for the removal and remand filings in both the
Texas and Washington federal courts, the filings related to RSL-3B's
Motion for Vacate the Abatement and the Motion to Deposit, and
responding to RSL-3B's Motion to Transfer to [Texas federal district court]
Judge Lake's Court.
Br. of Appellant at 27.
Symetra responds that fees for the Texas proceeding were recoverable not as costs,
but as losses suffered as a result of the contempt. .Losses are separately recoverable and
are addressed below.
As to costs, Symetra submitted declarations documenting $14,890.50 in attorney
fees incurred in the Washington action between August 18, the day after the TRO was
obtained, and December 12,2012, including those incurred while the action was
temporarily in federal court. The declarations did not segregate fees for services directly
related to the motion for contempt from other fees incurred during that time frame.
We review a trial court's award of attorney fees for an abuse of discretion.
Rettkowski v. Dep't ofEcology, 128 Wash. 2d 508, 519, 910 P.2d 462 (1996). Ifthe record
proves inadequate for us to review the fee award, we must remand for further
proceedings. Just Dirt, Inc. v. Knight Excavating, Inc., 138 Wash. App. 409, 157 P.3d 431
(2007).
We conclude that all of the fees for services performed in obtaining a remand of
the case from the federal court were properly awarded. Symetra was a victim, not the
cause, of the improper removal to federal court. A clear objective of the remand was to
23
No. 31435-9-II1
In re Rapid Settlements
get the proceeding back before the Benton County court so that Symetra's earlier-filed
motion for contempt could be heard. Obtaining the remand was necessary and
appropriate to that end.
Other fees included in the $14,890.50 figure were not incurred in connection with
the contempt proceeding, however. Just as Symetra's fees incurred in obtaining the TRO
are not recoverable under RCW 7.21.030(3), its fees incurred in obtaining the extension
of the TRO and the permanent injunction are not recoverable. Nor can Symetra recover
its fees incurred in moving to add FinServ and A.M.Y. as parties to the Benton County
action.
Because the declarations submitted are inadequate to segregate fees that were
recoverable as costs, the case must be remanded for further submissions by Symetra and
a second review by the court.
Loss suffired as a result ofthe contempt
As to loss, RCW 7.21.030(3) provides in relevant part that in addition to other
relief available in the contempt proceeding, "[t]he court may ... order a person found in
contempt of court to pay a party for any losses suffered by the party as a result ofthe
contempt. "
The seminal decision in Gompers v. Buck's Stove & Range Co., 221 U.S. 418,
441,31 S. Ct. 492,55 L. Ed. 797 (1911) observed that "[c]ontempts are neither wholly
civil nor altogether criminal," and that in either event, there is "an allegation that in
24
No. 31435-9-III
In re Rapid Settlements
contempt of court the defendant has disobeyed the order, and a prayer that he be attached
and punished therefor." As a result, a defendant may be "punished" even in a civil
contempt proceeding if the purpose is to compensate the complainant:
It is not the fact of punishment, but rather its character and purpose, that
often serve to distinguish between the two classes of cases. If it is for civil
contempt the punishment is remedial, andfor the benefit ofthe
complainant. But if it is for criminal contempt the sentence is punitive, to
vindicate the authority of the court. It is true that punishment by
imprisonment may be remedial as well as punitive, and many civil contempt
proceedings have resulted not only in the imposition ofa fine, payable to
the complainant, but also in committing the defendant to prison.
Id. at 441-42 (emphasis added).
In United States v. United Mine Workers ofAmerica, the United States Supreme
Court again recognized that there are two types of remedial sanctions imposed in civil
contempt proceedings, holding that "[j]udicial sanctions in civil contempt proceedings
may ... be employed for either or both of two purposes; to coerce the defendant into
compliance with the court's order, and to compensate the complainant for losses
sustained." 330 U.S. 258, 303-04, 67 S. Ct. 677, 91 L. Ed. 884 (1947) (citing Gompers,
221 U.S. at 448-49).
Where compensation is intended, a fine is imposed, payable to the
complainant. Such fine must of course be based upon evidence of
complainant's actual loss, and his right, as a civil litigant, to the
compensatory fine is dependent upon the outcome of the basic controversy.
But where the purpose is to make the defendant comply, the
court's discretion is otherwise exercised. It must then consider the
character and magnitude of the harm threatened by continued contumacy,
25
No. 31435-9-111
In re Rapid Settlements
and the probable effectiveness of any suggested sanction in bringing about
the result desired.
Id. (footnotes omitted).
In his treatise on remedies, Professor Dobbs writes:
The Supreme Court has long recognized that one appropriate kind
of sanction for civil contempt is remedial rather than coercive. That is, the
sanction provides the plaintiff with a substitute for the defendant's
obedience without compelling that obedience itself. The most
straightforward version of the remedial sanction is the compensatory fine,
paid to the plaintiff as compensation. If the fine is to be justified because it
is remedial, courts have said that it must be based on evidence, either of the
plaintiffs loss or the defendant's gains.
1 DAN B. DOBBS, DOBBS LAW OF REMEDIES 194 (2d ed. 1993) (footnotes omitted).
Federal courts and a clear majority of state courts allow compensatory damages or
fines payable to the injured party as relief in a civil contempt proceeding. Annotation,
Right ofInjured Party to Award ofCompensatory Damages or Fine in Contempt
Proceedings, 85 A.L.R.30 895, § 2[a] (1978). In State ex rei. Lemon v. Coffin, 52 Wn.2d
894,896,332 P.2d 1096 (1958), the Washington Supreme Court held that the purpose of
the provision for recovery of loss under former RCW 7.20.100 (1880)8 was "to provide
8 Former RCW 7.20.100 (1881) provided:
If any loss or injury to a party in an action, suit or proceeding prejudicial to
his rights therein, have been caused by the contempt, the court or judicial
officer, in addition to the punishment imposed for the contempt, may give
judgment that the party aggrieved recover of the defendant a sum of money
sufficient to indemnify him, and to satisfy his costs and disbursements.
26
No. 31435-9-111
In re Rapid Settlements
complete relief in the original action and to eliminate the necessity of a second suit to
recover the expense caused by such contempt."
Compensatory fines have been imposed in Washington contempt proceedings to
address many types of loss and damage caused by a party's contumacious acts. E.g.,
Premium Distrib. Co., Inc. v. Int'! Bhd. o/Teamsters, 35 Wash. App. 36, 39, 664 P.2d 1306
(1983) (affirming award of$15,000 for property damage and business loss caused by
violations of an injunction); Ramstead, 73 Wash. 2d at 167 (affirming award of expenses
incurred where defendant prevented moving of home in violation ofTRO); McFerren v.
McFerren, 55 Wn.2d 471,476,348 P.2d 222 (1960) (affirming award of repair expense
and loss of use for husband's violation of divorce decree); Chard, 171 Wash. at 180
(affirming award of damages for lost property value for purchaser's violation ofjudicial
order of sale); Nicomen, 55 Wash. at 11, (plaintiff was entitled to be awarded damages
for lost profits attributable to interference with its booming privileges in violation of
judgment).
Where a party violates an anti suit injunction, the most obvious "loss suffered ...
as a result of the contempt" is the cost of answering to proceedings in the foreign court
that would not have occurred had the injunction been complied with. Symetra submitted
declarations documenting $32,134 in attorney fees incurred in the Texas action between
August 18 and December 12,2012. 3B and Mr. Gorman argue that even if some fees in
the Texas proceeding are recoverable, they ceased to be recoverable after the TRO
27
No. 31435-9-111
In re Rapid Settlements
expired on August 31 or, at the latest, after Symetra removed the Texas action to federal
court on September 10. They also argue that Symetra cannot claim to have suffered loss
from its actions in the Texas litigation since FinServ and A.M.Y., who were not subject
to injunction, were asserting their own challenge to Symetra's offset of the Reihs transfer
payment.
3B's failure and refusal to comply with the TRO and strike all of its motions in the
Texas action produced the fees incurred by Symetra in the post August 31 and post
September 10 Texas proceedings against 3B, both state and federal. If the losses were
incurred over a matter of months, it was because Symetra's ability to obtain relief was
delayed through no fault of its own. In McFerrin, the complainant was awarded an
amount for lost use of a home over a number of months even though the lost use was only
an indirect result of her husband's failure to make court ordered repairs to her home. In
Chard, the complainant was awarded damages for a decline in value of its property
following the date on which a purchaser failed to honor the judicial order of sale of the
complainant's home. In both cases, damages were not limited according to the time
frame within which the contemnor had been ordered to act. They were based on the loss
that, at the time of hearing, the complainant could demonstrate had resulted from the
contempt.
28
No. 31435-9-111
In re Rapid Settlements
Although the August 31 and September IOdates are significant for other
purposes,9 they are artificial cutoff points for purposes of determining the amount of loss
Symetra had suffered as a result of the contempt by the time of its first opportunity to
have its motion heard.
Symetra's expenses incurred litigating with FinServ and A.M.Y. after August 28
are another matter. The preexisting perfected security interests that FinServ and A.M.Y.
claim to have in the Reihs payment were not addressed in the Benton County transfer
action. It appears that Symetra was unaware of the existence of any competing security
interests. If and to the extent that FinServ and A.M.Y. held viable security interests, or at
least interests they believed in good faith were viable, then those two entities were
entitled to assert their legal rights, and 3B's August 2012 acts of contempt do not provide
a reasonable basis for imposing Symetra's cost of fighting that priority issue with FinServ
and A.M.Y on 3B.IO
9 For example, the superior court could not find acts or omissions enjoined by the
terms of the TRO but that took place after August 31 to be contempt. It did not. Under
the United States Supreme Court's decision in Donovan v. City a/Dallas, 377 U.S. 408,
84 S. ct. 1579, 12 L. Ed. 2d 409 (1964), the superior court could not exercise authority
over 3B's conduct in the federal case in Texas following removal. Here, we are not
dealing with that limitation; we are determining the losses that resulted from the August
acts of contempt.
\0 To be clear, to the extent 3B was asserting FinServ's and A.M.Y.'s priority,
Symetra's legal expense in responding should be recoverable from 3B as loss. Insofar as
3B asserts an interest in having its creditors' security interests recognized, it should have
asserted that interest in the 2010 proceedings in Benton County. Res judicata, or claim
29
No. 3 I 435-9-III
In re Rapid Settlements
Symetra should have segregated the attorney fees incurred in the Texas action
against 3B, offensively or defensively, from the attorney fees incurred in that action,
against FinServ and A.M.Y, offensively or defensively. Cf Manna Funding, LLC v.
Kittitas County, 173 Wn. App. 879,295 P.3d 1197, review denied, 178 Wash. 2d 1007
(2013) (requiring segregation of fees between claims where fees are recoverable only as
to some claims); Seattle-First Nat. Bank v. Washington Ins. Guar. Ass 'n., 94 Wn. App.
744,972 P.2d 1282 (1999) (requiring a reasonable allocation of fees among multiple
clients, where fees were recoverable only by some clients). To the extent that 3B,
FinServ, and A.M.Y.joined in the same submissions and appeared through the same
counsel, the superior court must arrive at some reasonable basis for allocating fees. In
the Seattle-First case, the court suggested looking to the law firm's fee agreement with its
clients as a basis for allocation. Id. at 763. Another approach would be for Symetra to
determine, through discovery, what percentage of the cost of representation in the Texas
action was being borne by each of the three entities. The allocation need not be precise,
but it must be examined and be reasonable. Id.
preclusion, prohibits the relitigation not only of claims and issues that were litigated but
also those that could have been litigated in a prior action. Pederson v. Potter, 103 Wn.
App. 62, 67, II P.3d 833 (2000).
30
No. 31435-9-111
In re Rapid Settlements
The $1,000 onetime sanction against Mr. Gorman
The final relief awarded by the court was its $1,000 onetime forfeiture against Mr.
Gorman. The provision describing the forfeiture and the clause describing action
required to purge the contempt provide in their entirety:
2. Attorney Gorman, as attorney and agent for 3B, is ordered to pay
Symetra a one-time forfeiture pursuant to RCW 7.21.030(1)(b) of One
Thousand Dollars ($1,000.00).1l
3. In order to purge themselves of this contempt charge, 3B and its
attorney Gorman must strike all pending motions in the Harris County,
Texas, action, and agree not to file any motion or take any other action in
said case while an injunction from this Court restraining them from doing
so is in effect.
CP at 526.
"An order of remedial civil contempt must contain a purge clause under which a
contemnor has the ability to avoid a finding of contempt and/or incarceration for non­
compliance." State ex reI. Shafer v. Bloomer, 94 Wash. App. 246, 253, 973 P.2d 1062
(1999). Because a sanction "loses its coercive character and becomes punitive where the
contemnor cannot purge the contempt," there "must be a showing that the contemnor has
the means to comply" with the purge condition. Britannia Holdings Ltd. v. Greer, 127
IIThe forfeiture provision (language proposed by Symetra) would more clearly
have been a remedial coercive sanction had it made clear, as provided by RCW
7.21.030(1)(b), that Mr. Gorman had a day within which to comply with the purge
condition and thereby avoid any forfeiture. Because the order describes the forfeiture as
"pursuant to RCW 7 .21.030( 1)(b )," we construe the one-day purge period as incorporated
by reference.
31
No. 31435-9-111
In re Rapid Settlements
Wn. App. 926, 933, 113 P.3d 1041 (2005) (footnote omitted). "Whether a purge
condition exceeded the court's authority or violated a contemnor's due process rights ...
[are] question[s] of law, which [are] reviewed de novo." In re MB., 101 Wn App. 425,
454,3 P.3d 780 (2000); In re Silva, 166 Wash. 2d 133, 140,206 P.3d 1240 (2009).
Mr. Gorman first challenges the purge condition as exceeding the scope of the
original order, something he claims a civil contempt sanction can never do. He relies on
the statement in State v. Buckley, 83 Wash. App. 707, 711, 924 P .2d 40 (1996) that a
sanction is punitive "if it is imposed to punish a past contempt of court ... and does not
afford the defendant an opportunity to purge the contempt by performing the acts
required in the original order." (Emphasis added) (footnote omitted). He asserts that the
contempt order in this case could, at most, have required him to "undo" acts or omissions
occurring between August 17 and 31, while the TRO was in effect-an impossibility in
this case. The argument was addressed and rejected in ME., in which the court rejected
an appellant's attempt to "seize upon" the same language in Buckley to argue that a court
may not impose a purge condition that was not required by the court order that was
violated. MB. holds that a trial court has inherent authority to impose purge conditions
beyond the four corners of the violated order, as long as the condition serves remedial
aims and the condition is "reasonably related to the cause or nature of the contempt."
MB., 101 Wash. App. at 450 (emphasis omitted) (citing In re Marriage ofLarson, 165
Wis. 2d 679, 478 N.W.2d 18 (1992». The purge condition here satisfies those criteria.
32
No. 31435~9-III
In re Rapid Settlements
38 and Mr. Gorman next contend that the trial court erred in failing to make a
threshold finding that they were able to comply with the purge condition at the time the
contempt order issued. They argue for the first time on appeal that they were not able to
comply because the Texas state court action had been removed to federal court by the
time of the contempt hearing, and after a case is removed to federal court, "the state court
loses jurisdiction to proceed further, and all subsequent proceedings therein are void."
Iowa Cent. Ry. Co. v. Bacon, 236 U.S. 305, 310, 35 S. Ct. 357, 59 L. Ed. 591 (1915).
Alternatively, if the reference to "the Harris County, Texas, action" in the purge
condition means or includes the federal action (as Symetra contends), then 38 and Mr.
Gorman reply that the court could not impose such a purge condition consistent with
Donovan v. City o/Dallas, 377 U.S. 408,84 S. Ct. 1579, 12 L. Ed. 2d 409 (1964).
"In the context of civil contempt, the law presumes that one is capable of
perfonning those actions required by the court." In re Pers. Restraint o/King, 110
Wash. 2d 793, 804, 756 P .2d 1303 (1988). "Thus, inability to comply is an affinnative
defense. A contemnor has both the burden of production on ability to comply ... as well
as the burden of persuasion." Id.; Moreman V. Butcher, 126 Wn.2d 36,40, 891 P.2d 725
(1995). "The contemnor must offer evidence as to his inability to comply and the
evidence must be ofa kind the court finds credible." King, 110 Wash. 2d at 804.
38's and Mr. Gonnan's argument that they were unable to comply with the purge
condition comes too late. As pointed out by Symetra, the argument was not made in the
33
No. 31435-9-111
In re Rapid Settlements
superior court. While 3B represents that it did make the argument or, alternatively, that
its inability to comply "only ripened into a real controversy once the trial court signed the
Contempt Order," Reply Br. at 18, neither contention is supported by the record.
The record reveals that Symetra's proposed contempt order, with its proposed
purge condition, was served on 3B and Mr. Gorman at least as early as November 19.
Moreover, when the superior court granted a continuance on November 30, it adapted the
proposed contempt order to grant the continuance. As adapted, the order of continuance
(including the proposed purge condition) is signed "approved as to form" by 3B's
Washington lawyer. Since 3B and Mr. Gorman had ample advance notice of the
proposed purge condition, any inability to comply with it was an affirmative defense that
they needed to raise before the contempt order was entered, not after.
The record also belies 3B's and Mr. Gorman's contention that they raised the issue
of inability to comply with the purge condition during or before the hearing on the
motion for contempt. The only briefing they submitted-3B's motion for a
continuance-was filed at a time when 3B had moved to remand the Texas case to state
court. Accordingly, the briefing contemplated future state litigation, not federal
litigation. On the merits of the motion for contempt, 3B's continuance briefing argued
only that (1) the Benton County court issued the TRO after 3B, FinServ and A.M.Y. filed
their motion to vacate the Texas stay and their first amended petition, (2) the TRO did not
apply to FinServ or A.M.Y., and (3) Symetra's application for a permanent injunction
34
No.3l435-9-III
In re Rapid Settlements
was not heard because FinServ removed the Washington action to federal court. The
only reference in the briefing to the fact that the Texas action had been removed to
federal court was in the context of explaining why Symetra would not be prejudiced by
the requested continuance.
Nor did 3B's lawyer argue inability to comply with the purge condition at oral
argument of the motion for contempt. Instead, he argued that there was no intentional
violation of the TRO because (1) the lawyer representing 3B had also been representing
FinServ and A.M.Y., (2) the abatement order remained in place in relevant respects
during the 14 days the TRO was in effect, (3) the "violations" complained of predated the
TRO, and (4) appearing at a hearing that had already been set "on behalf of FinServ and
A.M.Y." was not contumacious. RP (Dec. 28, 2012) at 6-7. The one reference to
removal of the Texas action to federal court was not in connection with any inability to
perform the purge condition but in the context, instead, of arguing that the Benton County
court no longer had jurisdiction to deal with the parties' disputes because Symetra had
moved the Texas action to federal court "because they wanted it there.,,12 Id. at 7.
12 3B and Mr. Gorman also cite to portions of the record that postdate the order of
contempt, including a motion for new trial and reconsideration filed on January 23, 2013,
in which they challenged the validity of the purge clause for the first time. CP at 692.
The reconsideration motion was summarily denied. CP at 1753. Since they have not
assigned error or presented any argument or authority regarding any mishandling of their
post order submissions, we will not consider them. RAP 10.3(a)(4), (6).
35
No. 31435-9-111
In re Rapid Settlements
RAP 2.5(a) "reflects a policy of encouraging the efficient use ofjudicial resources
and refusing to sanction a party's failure to point out an error that the trial court, if given
the opportunity, might have been able to correct to avoid an appeal." In re Guardianship
ofCornelius, 181 Wash. App. 513, 533,326 P.3d 718 (2014). We follow the general
policy provided by the rule of refusing to entertain this issue, which is raised for the first
time on appeal.
Attorney fees on appeal
Both parties request attorney fees on appeal. 3B and Mr. Gorman seek fees and
ask the court to deny Symetra's request for fees on the grounds that "Symetra sought and
utilized the trial courts [sic] jurisdiction to obtain the contempt order in derogation of
Washington law." Br. of Appellant at 29-30. They fail to show entitlement based on a
contract, statute, or recognized ground of equity. Hsu Ying Li v. Tang, 87 Wash. 2d 796,
797-98, 557 P.2d 342 (1976).
Symetra seeks its fees on appeal under RAP 18.l(a) and RCW 7.2l.030(3). RAP
18.1 permits recovery of reasonable attorney fees or expenses on review if applicable law
grants that right. RCW 7.21.030(3) permits an award of attorney fees incurred by a party
in defending the appeal of a contempt order. R.A. Hanson Co. v. Magnuson, 79 Wn.
App. 497, 505,903 P.2d 496 (1995). Symetra is awarded its fees and costs on appeal
subject to compliance with RAP 18.1(d).
36
No. 31435-9-111
In re Rapid Settlements
The superior court's award of costs and loss is reversed and remanded for further
proceedings consistent with this opinion. The order of contempt is otherwise affirmed.
WE CONCUR:
Brown, 1.
37