In The Receivership Of: Applied Restoration, Inc. ( 2023 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
In the Matter of the Receivership of:
No. 84320-6-I
APPLIED RESTORATION, INC.
DIVISION ONE
ANDERSEN CONSTRUCTION PUBLISHED OPINION
COMPANY,
Appellant,
v.
REVITALIZATION PARTNERS, LLC,
Respondent.
HAZELRIGG, A.C.J. — Andersen Construction Company appeals two
separate orders for turnover issued by a court commissioner in favor of receiver
Revitalization Partners, LLC, and challenges the superior court’s denial of its
motion for revision. Andersen also argues the commissioner erred when they
disallowed its claims against Applied Restoration, Inc. and entered final judgment
in favor of the receiver. Because the record establishes that Andersen repeatedly
refused to comply with the court orders pursuant to the receivership statute and
because Andersen fails to demonstrate any error arising from the decisions of
either the commissioner or judge in this matter, we affirm.
No. 84320-6-I/2
FACTS
In May 2019, Applied Restoration, Inc. (ARI) and Andersen Construction
Company entered into an agreement (subcontract) for ARI to perform work on the
construction of the Quil Ceda Creek Casino (project), owned by the Tulalip Tribes
of Washington (owner). ARI served as a subcontractor for Andersen, the general
contractor on the project. In accordance with the agreement, ARI employed nine
to ten laborers per day who worked directly on the project and also subcontracted
with third parties (sub-tier subs) who provided further labor and materials for ARI’s
work on the project. Through March 2020, Andersen paid ARI for the work that it
had performed pursuant to the billing process and terms set out in the subcontract
and prime contract. 1 On March 31, due to ongoing financial difficulties, ARI
assigned all of its assets to Revitalization Partners, LLC and, on April 2, the trial
court entered an order appointing Revitalization as the general receiver of ARI’s
property and assets. At the time of the assignment, ARI had not paid all sub-tier
subs for their work on the project, in violation of the subcontract. On April 6,
Revitalization contacted Andersen, explained that ARI had been placed into
receivership and identified itself as the receiver. 2 Revitalization assured Andersen
that it would continue to operate ARI and fulfill its obligations on the project as
previously agreed.
1 The subcontract expressly incorporated various terms and provisions set out in the prime
contract between Andersen and the owner.
2 “Receivership” simply means “the case in which the receiver is appointed.” RCW
7.60.005(11). A “general receivership” is “a receivership in which a general receiver is appointed”
and a “custodial receivership” is “a receivership in which a custodial receiver is appointed.” Id.
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Thereafter, Andersen stopped paying ARI and did not pay Revitalization for
the work performed post-assignment. Revitalization demanded assurance from
Andersen that it would pay ARI for the work, but Andersen refused absent certain
conditions: “If the Receiver cannot guarantee that it will pay all pre-receivership
claims related to this Project, then Andersen cannot issue April’s payment, the
Receiver must reject the subcontract agreement and Andersen will find another
subcontractor.” According to Andersen, Revitalization was not entitled to payment
from Andersen because the “unequivocal language of the Subcontract between
Andersen and ARI . . . control[led] the terms of payment to ARI and/or the
Receiver.” Revitalization had paid sub-tier subs $42,467.25 for post-assignment
work and ARI extended over $200,000.00 on work and materials for the project
during that time.
Between May and July 2020, Revitalization filed three motions against
Andersen for turnover of the subcontract funds pursuant to RCW 7.60.005(9) and
.070. On May 15, Revitalization filed its first motion, seeking $157,342.97, but that
motion was denied as the project owner had not yet paid Andersen, accordingly it
had neither possession or control of the funds. The statute requires either
possession or control of funds as a prerequisite to turnover. RCW 7.60.070.
Roughly two weeks later, the owner issued payment to Andersen for work ARI had
completed in April 2020. Revitalization then requested confirmation from
Andersen that it would pay ARI for post-assignment work but, on June 3, Andersen
again refused to do so unless Revitalization guaranteed that it would pay all pre-
assignment claims related to the project.
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On June 4, Revitalization told Anderson that ARI’s employees would not be
working on the project that day due to “Andersen’s unwillingness to commit to
paying [ARI] for the work being done, as well as the completed work.” That same
day, Andersen forwarded a letter to Revitalization from the owner to demand return
of its $113,480.89 payment to Andersen for the work on the project in April. On
June 5, Revitalization demanded Andersen turn over the subcontract funds for the
May billing and provided notice of another action for turnover, but Andersen
refused and, further, remitted the April funds to the owner.
On June 11, Revitalization filed a second motion for turnover for the April
billing. On July 7, after reviewing the motion, accompanying declarations, and
exhibits, the superior court commissioner granted the motion and ordered
Andersen to pay the subcontract funds to Revitalization for both April and May
2020. The order required Andersen to pay Revitalization for labor, materials, and
vendor costs directly related to the project and to place the balance of the amount
set out in each month’s billing into the court registry. Further, the court ordered
Andersen to follow the same payment pattern for the month of June, due on
August 20. Andersen then filed a motion for reconsideration of the order, but the
commissioner rejected Andersen’s arguments and denied reconsideration.
Subsequently, Andersen filed a motion for revision of the commissioner’s denial of
reconsideration by a superior court judge. The court denied the motion for revision.
On July 29, as Andersen had not complied with the commissioner’s
previous turnover order regarding payment for the month of May, Revitalization
filed a third motion for turnover. Though Andersen had placed most of the funds
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for the May billing into the court registry pending outcome of the motion, the
previous order required Anderson pay those funds directly to Revitalization. On
November 3, the commissioner granted the third motion for turnover, in part, and
ordered the funds for the May billing to be released to Revitalization. 3
On February 26, 2021, Andersen filed an amended proof of claim wherein
it asserted an unsecured debt of $941,444.45 against ARI and Revitalization based
on the following: “(i) alleged incomplete work by ARI ($664,146), (ii) cost to repair
north exterior ($45,339), (iii) amounts to be retained for subcontractor payments
($18,139.82), (iv) amounts paid by Andersen to subcontractors Salmon Bay and
PCI [(Performance Contracting, Inc.)] ($302,098.92), and (v) insurance costs
($13,096.40).” Andersen additionally sought $76,483.24 as reimbursement for its
direct payment to PCI. Though the foregoing amounts total $1,119,303.38,
Andersen still owed $177,858.93 to Revitalization for work completed post-
assignment and sought to offset that amount by reducing the claim to $941,444.45.
On April 21, 2021, Revitalization filed a motion to authorize rejection of the
executory contract with Andersen pursuant to RCW 7.60.130. The motion
expressly requested that the court authorize Revitalization’s rejection of the
subcontract between ARI and Andersen. On May 14, the commissioner granted
the motion and authorized Revitalization to reject the subcontract. 4
3 Andersen filed a motion for discretionary review of the July 7 and November 3 orders
granting turnover, which this court denied. Ruling Den. Rev., Andersen Constr. Co., v.
Revitalization Partners, LLC, No. 82096-6-I (Wash. Ct. App. May 7, 2021).
4 In briefing, Revitalization asserts that Andersen did not seek rejection damages under
RCW 7.60.130(2) within the statutorily proscribed timeframe, thus waiving any such recovery on
that basis. Andersen has not responded to that contention.
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On February 3, 2022, Revitalization filed an objection to Andersen’s claim
and sought leave of the court to disallow a portion of the unsecured claim. A
hearing on the motion was conducted on March 16, at the conclusion of which the
court entered an order disallowing Andersen’s claims. Specifically, the order
disallowed $1,006,023.09 of Andersen’s claim, allowed $113,340.29 as an
unsecured claim, and prohibited the $177,858.93 offset sought by Andersen.
Andersen was ordered to pay Revitalization that amount due under the subcontract
directly. However, despite repeated requests from Revitalization, Andersen did
not make the payment and Revitalization filed a motion seeking a contempt finding
for Andersen’s failure to remit payment. Though the court did not hold Andersen
in contempt, it entered an order providing that the remedy for further
noncompliance would be to “reduce the obligation to a judgment.”
On June 10, 2022, Revitalization filed a motion to enter final judgment
against Andersen. The motion was heard on June 27 and, despite filing a written
objection to the judgment, Andersen failed to appear for the hearing. The
commissioner entered judgment in favor of Revitalization in the amount of
$177,858.93.
Andersen timely appealed.
ANALYSIS
I. Procedural Posture and Standard of Review
Andersen first assigns error to the commissioner’s orders that granted the
receiver’s second and third motions for turnover. According to Andersen, under
RCW 7.60.070, the orders of turnover for April and May billings were erroneous
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because Andersen did not have possession or control over those funds when the
turnover was demanded. However, because of the manner by which Andersen
has pursued review in this case, neither the commissioner’s July 7 order on the
second motion for turnover concerning the April billings nor the July 17 denial of
Andersen’s motion for reconsideration of that order are directly before this court.
On July 7, 2020, the commissioner granted Revitalization’s second motion
for turnover in part and, on July 17, 2020, denied Andersen’s motion for
reconsideration of that order. Andersen then filed a motion for revision of the
commissioner’s July 17 order, but the superior court judge denied that motion.
Because Andersen challenges the superior court’s denial of revision in its notice
of appeal to this court, the commissioner’s two previous orders upon which that
denial of revision was based are outside the scope of our review. “Once the
superior court makes a decision on revision, the appeal is from that decision.”
Faciszewski v. Brown, 187 Wn.2d 308, 313 n.2, 386 P.3d 711 (2016). Accordingly,
“this court reviews the superior court’s ruling, not the commissioner’s.” Maldonado
v. Maldonado, 197 Wn. App. 779, 789, 391 P.3d 546 (2017). The superior court’s
denial of a motion for revision “constitutes an adoption of the commissioner’s
decision, and the court is not required to enter separate findings and conclusions.”
Id. We review the denial of a motion for revision for an abuse of discretion, which
exists when the court’s decision is “exercised on untenable grounds or for
untenable reasons, or if its decision was reached applying the wrong legal
standard.” River House Dev., Inc. v. Integrus Architecture, P.S., 167 Wn. App.
221, 231, 272 P.3d 289 (2012); Maldonado, 197 Wn. App. at 789.
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Receiverships are an equitable remedy and trial courts are “accorded great
flexibility in fashioning relief under [their] equitable powers.” Bero v. Name Intel.,
Inc., 195 Wn. App. 170, 179, 381 P.3d 71 (2016); Friend v. Friend, 92 Wn. App.
799, 803, 964 P.2d 1219 (1998). In matters of equity, trial courts have inherent
authority beyond that expressly granted by the legislature. See Allen v. Am. Land
Rsch., 95 Wn.2d 841, 852, 631 P.2d 930 (1981) (“The superior court’s inherent
authority to enforce orders and fashion judgments is not dependent on the
statutory grant.”). Thus, “[w]e review the authority of a trial court to fashion
equitable remedies under the abuse of discretion standard.” In re Foreclosure of
Liens, 123 Wn.2d 197, 204, 867 P.2d 605 (1994).
Chapter 7.60 RCW also provides trial courts with broad discretion over
receiverships. Bero, 195 Wn. App. at 175. For example, courts have discretion to
appoint and terminate receivers and to “manage the duration of the extraordinary
remedy.” Mony Life Ins. Co. v. Cissne Fam., LLC, 135 Wn. App. 948, 952, 148
P.3d 1065 (2006); Bero, 195 Wn. App. at 178. Once the trial court appoints a
receiver, that person becomes an agent of the court and retains “broad powers to
manage the receivership property, liquidate assets, and satisfy creditors.” Bero,
195 Wn. App. at 175.
With these equitable and statutory powers in mind, we review the trial
court’s rulings regarding the receivership that order turnover, disallow claims, and
enter judgment, for an abuse of discretion. Again, an abuse occurs when a
decision is “‘manifestly unreasonable, or exercised on untenable grounds, or for
untenable reasons.’” Mony Life Ins., 135 Wn. App. at 952-53 (internal quotation
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No. 84320-6-I/9
marks omitted) (quoting T.S. v. Boy Scouts of Am., 157 Wn.2d 416, 423, 138 P.3d
1053 (2006)). The trial court’s findings of fact are reviewed for substantial
evidence, which exists when there is “a sufficient quantum of evidence in the
record to persuade a reasonable person that the declared premise is true.”
Wenatchee Sportsmen Ass’n v. Chelan County, 141 Wn.2d 169, 176, 4 P.3d 123(2000).
II. Turnover Orders
A “[r]eceiver” is a “person appointed by the court as the court’s agent, and
subject to the court’s direction, to take possession of, manage, or dispose of
property of a person.” RCW 7.60.005(10). Pursuant to RCW 7.60.070, “Upon
demand by a receiver . . . any person shall turn over any property over which the
receiver has been appointed that is within the possession or control of that person
unless otherwise ordered by the court for good cause shown.” Property is defined
in this chapter as “all right, title, and interests, both legal and equitable, and
including any community property interest, in or with respect to any property of a
person with respect to which a receiver is appointed, regardless of the manner by
which the property has been or is acquired.” RCW 7.60.005(9). 5 Further, once a
trial court enters an order appointing a receiver, an automatic stay that is applicable
to all persons arises of “[a]ny act to obtain possession of estate property from the
5 Andersen argues in its brief that the trial court erred in entering both orders for turnover
because “Andersen did not have property belonging to ARI” as defined by the subcontract. Its
argument largely relies on the contention that the terms of the subcontract supersede the provisions
of the receivership statute, such as RCW 7.60.070 and .110(c). However, as set out in detail herein,
Andersen offers no authority in support of this position which is clearly at odds with both the court’s
equitable powers and general public policy considerations.
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No. 84320-6-I/10
receiver, or to interfere with, or exercise control over, estate property.” RCW
7.60.110(1)(c).
A. April Billing
The April billing funds were addressed in the order granting the second
motion for turnover, the order denying reconsideration of that turnover order, and
the superior court’s order denying revision of the order denying reconsideration.
Though we elect to address the arguments of the parties regarding this assignment
of error and go to the original ruling by the commissioner, we note that Andersen
offers no argument as to how the judge’s order denying revision was an abuse of
discretion.
When it granted the second motion for turnover, the trial court found that
Andersen was withholding the April billing, which amounted to $113,481.00, and
that Andersen’s claim for an offset of $272,236.83 against that billing was not
appropriate. Andersen was ordered to pay $113,481.00 of the subcontract funds
as follows: $84,164.54 to Revitalization for costs directly related to the project and
$29,313.46 to be placed in the court registry for the balance of the April billing.
Those payments were due on July 15, 2020.
First, Andersen’s argument that it did not have any property belonging to
Revitalization for the April billing under the terms of the subcontract is irrelevant.
Andersen offers no authority for its bald assertion that the terms of the subcontract
control over those of the receivership statute. Again, under RCW 7.60.006(9),
property belonging to the receiver includes “all right, title, and interests, both legal
and equitable, and including any community property interest, in or with respect to
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any property of a person with respect to which a receiver is appointed, regardless
of the manner by which the property has been or is acquired.” Because there is
no dispute that the work addressed in the April billing was performed,
Revitalization, as the receiver, had a right to payment for that work; the funds
belonged to Revitalization.
Second, Andersen cites to United States v. Aubrey, in support of its
argument that the April funds were Tribal property and Andersen never had control
of them. 800 F.3d 1115 (9th Cir. 2015). Andersen’s reliance on Aubrey is
misplaced. In that case, the United States was prosecuting a contractor who had
contracted directly with a Tribal organization and the dispute concerned federal
funds that had been transferred to the Tribal organization. The case is materially
distinguishable on those facts alone.
Here, the court’s finding that Andersen was in possession or control of the
property is supported by substantial evidence. As the commissioner explained
after reviewing the correspondence from both the owner and Andersen, it was
clear “that Andersen was paid by the [owner] and Andersen took affirmative action
to cause the [owner] to cancel payment.” This was confirmed by the content and
timing of e-mails between the parties, Andersen’s own declaration, and the letter
from the owner that Andersen forwarded to Revitalization.
Once the owner issued payment to Andersen for work ARI had completed
in April, Revitalization requested confirmation from Andersen that it would pay for
the post-assignment work. However, on June 3, Andersen refused to do so without
express agreement that Revitalization would pay all pre-assignment claims from
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the sub-tier subs. On June 4, in response to this refusal, Revitalization told
Anderson that its employees would not be working on the project that day.
Andersen responded by accusing Revitalization of breaching the subcontract and,
later that same day, forwarded a letter to Revitalization from the owner that
demanded return of the April billing funds from Andersen. The commissioner
expressly found the timing of the e-mails and the word choice in the owner’s letter
stating, “[i]t has come to the [owner’s] attention . . .,” established that Andersen
had possession of the April funds, even if temporarily, and withheld them. On June
5, Revitalization demanded Andersen turn over the funds, but Andersen refused
and instead returned them to the owner.
Pursuant to RCW 7.60.070, Andersen was required to “turn over any
property over which the receiver ha[d] been appointed that [was] within [its]
possession or control.” Because substantial evidence supports the trial court’s
finding that “Andersen had possession of the funds owed to ARI” and “withheld
those funds,” this finding was proper. Moreover, as Revitalization correctly asserts
in briefing, “If a party could simply avoid the consequences of a receivership by
transferring estate property, the statute would be useless in effectuating its goals—
achieving equity for all creditors.”
Accordingly, the commissioner’s order on turnover as to the April billing was
not an abuse of discretion and, therefore, the superior court did not abuse its
discretion in denying Andersen’s motion for revision of the commissioner’s order
denying reconsideration of the order for turnover.
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B. May Billing
Regarding the order granting the third motion for turnover, Andersen again
argues that the terms of the subcontract are controlling and asserts that it never
had possession or control of the May billing funds. Neither argument holds merit;
the former lacks any supporting authority and the latter is refuted by the fact the
Andersen placed $81,179.70 into the court registry for the May billing, at least a
rebuttable demonstration of control over the funds. 6 The commissioner’s order
granting the second motion for turnover set out the specific procedure Andersen
was to follow for the funds relating to the April and May billings. When Andersen
failed to comply with the court’s requirements as to the May billing, the
commissioner granted the third motion for turnover, which ordered the release of
funds that Andersen had placed into the court registry for that billing.
Andersen further argues that both turnover orders were erroneous “due to
a bona fide dispute over the funds.” We disagree. Under RCW 7.60.070,
Andersen was required to turn over the property to Revitalization “unless there
exist[ed] a bona fide dispute with respect to the existence or nature of the receiver’s
interest in the property, in which case turnover shall be sought by means of an
action under RCW 7.60.160.” Andersen cites to the commissioner’s order granting
the receiver’s second motion for turnover and argues that, because “portions of
the funds related to the April Billing were to be placed in the court registry,” RCW
6 While Andersen asserts that these funds did not constitute the May billing because
Andersen paid them out of pocket without first being paid by the owner, that alone does not
establish an abuse of discretion on the part of the trial court. Rather, this order was a clear example
of the trial court exercising its equitable powers and, considering Andersen’s continued refusal to
abide by the court’s previous orders under the receivership statute, the trial court’s order was not
beyond its authority. See Friend, 92 Wn. App. at 803-04.
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No. 84320-6-I/14
7.60.160 should have governed the action. However, Andersen fails to understand
that the funds that it was ordered to pay directly to the receiver, $84,164.54 for
demonstrable costs for labor, materials, and vendor costs related to the project,
were not disputed. As there was no bona fide dispute, there was no abuse of the
discretion by the commissioner or the superior court on revision.
Andersen next contends that the turnover orders were erroneous because
they conflicted with the court’s previous orders in the “Foushee matter.” That
matter, which involved ARI and a different owner, is distinguishable and
immaterial. While Andersen argues that the facts are “nearly identical,” it ignores
the key distinction that Foushee had neither control nor possession of the funds
the receiver demanded but, as established here, Andersen did. More critically,
despite Andersen’s argument to the contrary, a different ruling based on distinct
facts in a tangentially related matter involving the same receivership does not
trigger application of the law of the case doctrine. “Except in the case of jury
instructions, the law of the case doctrine requires a prior appellate court decision
in the same case.” In re Est. of Jones, 170 Wn. App. 594, 605, 287 P.3d 610(2012). Because the commissioner’s orders in the Foushee matter constitute
neither jury instructions nor the decision of an appellate court, the rule of the case
doctrine is inapplicable here.
III. Rejection of Andersen’s Claims
Andersen avers the trial court erred in rejecting its claims and ordering it to
pay the subcontract balance to the receiver. Specifically, Andersen challenges the
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rejection of claims for the “retention balance ($18,139.81),”7 costs it asserted were
required to repair ARI’s “defective work ($45,339.00),” and costs of completing
ARI’s “abandoned work ($664,146.00).”
The receivership statute is instructive and controlling 8 here; according to
the relevant provisions, Andersen had 30 days following Revitalization’s rejection
of the subcontract to file a claim for damages on that basis. A general receiver
may “reject any executory contract or unexpired lease of the person over whose
property the receiver is appointed upon order of the court following notice to the
other party to the contract or lease upon notice and a hearing.” RCW 7.60.130(1).
Such a rejection “shall be treated as a breach of the contract or lease occurring
immediately prior to the receiver’s appointment” and any claim of a party to the
contract or lease, based on the receiver’s rejection of it, “shall be served upon the
receiver in the manner provided for by RCW 7.60.210 within thirty days following
the rejection.” RCW 7.60.130(2). Because Andersen failed to file a claim for
damages within the 30 days after the court permitted Revitalization to reject the
subcontract, those claims were properly barred.
7 In construction contracts, “retainage” refers to the percentage that the owner or general
contractor may withhold from each progress payment to the contractor or subcontractor until final
completion of the project. Steven Walt & Emily L. Sherwin, Contribution Arguments in Commercial
Law, 42 EMORY L.J. 897, 907-08 (1993).
Andersen explicitly asserts that it is entitled to the “reimbursement” of $18,138.81 for the
retention of three sub-tier subs that Revitalization had not paid, however, it fails to provide any
statutory basis that would entitle it to such a “reimbursement.”
8 The majority of Andersen’s argument, once again, focuses on the terms of the subcontract
rather than those found in the receivership statute and argues, without authority, that the former is
controlling. The commissioner correctly disagreed.
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Andersen next challenges the commissioner’s order disallowing claims for
completion damages9 based on its determination that Andersen anticipatorily
breached the subcontract. According to Andersen, it did not anticipatorily breach
the subcontract and ARI breached the subcontract first by abandoning the work.
An anticipatory breach is a “‘positive statement or action by the promisor
indicating distinctly and unequivocally that [they] either will not or cannot
substantially perform any of [their] contractual obligations.’” Olsen Media v. Energy
Scis., Inc., 32 Wn. App. 579, 585, 648 P.2d 493 (1982) (quoting Lovric v. Dunatov,
18 Wn. App. 274, 282, 567 P.2d 678 (1977)). “A party’s intent not to perform may
not be implied from doubtful and indefinite statements that performance may or
may not take place.” Wallace Real Est. Inv., Inc. v. Groves, 124 Wn.2d 881, 898,
881 P.2d 1010 (1994). However, when a party makes repeated conditional threats
to withhold payment due under a contract, such conduct may qualify as repudiation
of the contract and an anticipatory breach that justifies the other party walking
away. See CKP, Inc. v. GRS Constr. Co., 63 Wn. App. 601, 620, 821 P.2d 63(1991).
Here, Andersen expressly, directly, and repeatedly told Revitalization that it
would not provide further payments unless Revitalization guaranteed it would pay
the “outstanding amounts owed” to the sub-tier subs under the terms of the
subcontract. Although Revitalization explained to Andersen that it was prohibited
9 Completion damages are those “incurred to complete the contract following the owner’s
just termination of the contract for default or the contractor’s wrongful repudiation of the contract or
wrongful abandonment of the project.” 6 PHILIP L. BRUNER & PATRICK J. O'CONNOR, JR., BRUNER &
O'CONNOR ON CONSTRUCTION LAW § 19:78 (2023). Typically, they are measured by “the reasonable
cost to complete the contract in conformance with its terms, less unpaid contract funds.” Id.
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from doing so by the plain language of the receivership statute, Andersen would
not yield and reiterated its refusal to pay the funds unless Revitalization satisfied
its condition. In an e-mail to Revitalization, Andersen explicitly stated that “[i]f the
Receiver cannot guarantee that it will pay all pre-receivership claims related to this
Project, then Andersen cannot issue April’s payment, the Receiver must reject the
subcontract agreement and Andersen will find another subcontractor.” According
to Andersen, Revitalization was not entitled to payment from Andersen as the
“unequivocal language of the Subcontract between Andersen and ARI . . .
control[led] the terms of payment to ARI and/or the Receiver.” 10
Based on its continuous threats and, as the commissioner noted, the fact
that “[t]hroughout this matter Andersen has been obstructive to the receivership
process,” we conclude that substantial evidence supports the commissioner’s
implicit finding that Andersen anticipatorily breached the subcontract before the
court granted Revitalization permission to reject it. Because Andersen
anticipatorily breached the subcontract and was thus not entitled to completion
damages, the trial court did not err in disallowing this portion of its claim.
Andersen further contends that the trial court erred by ordering payment of
the “subcontract balance,” i.e., the $177,858.93 that Andersen sought as an
10 As Andersen had posted a payment bond on the project, it faced liability under the
subcontract in the event that Revitalization failed to pay its sub-tier subs in full. In order to avoid
its own liability under the terms of the subcontract, Andersen chose to pay the sub-tier subs
pursuant to the subcontract and in violation of the receivership statute.
It is unclear whether compliance with the requirements of the receivership statute would
constitute a defense to any claims against Andersen for breach of the payment terms set out in the
contract with the project owner, and the parties have made no such argument. In other words,
while Andersen insists that it had no choice but to withhold payment to Revitalization, Andersen
may have made a strategic choice to prioritize the subcontract above the receivership statute.
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offset. 11 Strangely, Andersen asserts there is “no evidence in the record” that the
subcontract balance was owed to Revitalization. However, at the contempt
hearing on Andersen’s failure to comply with its payment obligations, Andersen
confirmed that it sought to “offset” the $177,858.93 from the amount it owed to
Revitalization because it had already paid the subcontractor PCI in full. The trial
court rejected Andersen’s attempted offset and explained that the payment to the
subcontractor PCI was wrongful. The court concluded that Andersen was only
entitled to an offset in an amount equal to a pro-rata share. In the order disallowing
Andersen’s claims, the court reiterated that “Andersen paid the subcontractor
(wrongfully) PCI in full. PCI should only have pro-rata share as other unsecured
creditors will. Andersen is entitled to PCI’s pro-rata share once that pro-rata share
is determined.” Accordingly, the trial court prohibited “the offset sought by
Andersen in its [c]laim in the amount of $177,858.93” and required Andersen to
pay that amount directly to Revitalization.
Under RCW 7.60.210, the submission of all claims in general receiverships
“arising prior to the receiver’s appointment, must be served in accordance with this
chapter, and any claim not so filed is barred from participating in any distribution
to creditors in any general receivership.” RCW 7.60.230 provides the priorities for
distribution of payment to creditors for the allowed claims in a general receivership.
Pursuant to the statutory priorities, creditors with general unsecured claims are
paid on a pro-rata basis after all other claims have been distributed. RCW
11 Again, Andersen relies on its position that it did not anticipatorily breach the subcontract
and insists that Revitalization abandoned the project. As we have explained, this argument is
belied by the record.
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7.60.230(1)(h). Because Andersen’s claim is unsecured and does not fall within
any exception to the priority scheme, Andersen shall receive distribution for that
claim on a pro-rata basis along with any other unsecured creditors. Andersen
chose to pay its subcontractors for claims that arose before ARI was placed into
receivership and sought reimbursement of those payments in full as an offset. Its
arguments on appeal are as unpersuasive as they were in the trial court; Andersen
cannot circumvent the receivership statute and, though it paid its subcontractors
in full, it is only entitled to a pro-rata distribution of its claim.
Andersen’s final challenge to the award of the subcontract balance to
Revitalization is the assertion that it is barred by the law of the case doctrine
because it conflicts with the commissioner’s turnover order. As already
established, that doctrine has no bearing in this context.
III. Entry of Judgment against Andersen
When Andersen failed to comply with the court’s order on the turnover
motions, Revitalization moved for a finding of contempt. While the court declined
to find that Andersen was in contempt, it expressly noted that a remedy for
Andersen’s continued failure to comply could be entry of judgment. After payment
had still not been made, Revitalization moved for entry of judgment, to which
Andersen objected in writing. However, despite filing formal opposition to
Revitalization’s action, Andersen failed to appear for the hearing on the motion and
the trial court entered judgment in favor of Revitalization.
Andersen argues that the trial court erred in entering judgment against it for
the same reasons it asserts that the court erred with regard to the order disallowing
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its claims. These arguments have been addressed herein and need not be
repeated. Andersen further avers that the court erred by refusing the request in
its written opposition to “enter express findings of fact linking the judgment amount
to documents in the record.” Revitalization contends that the trial court did not err
as to the form of the judgment because the trial court had already addressed the
issues, did not require additional proceedings, and made oral findings of fact.
As it did in its written objection to the entry of judgment, Andersen cites
Pacific Marine Insurance Co. v. Department of Revenue, 181 Wn. App. 730, 737,
329 P.3d 101 (2014) in its opening brief and claims the case stands for the
proposition Andersen characterized, in both its pleading in the trial court and
appellate briefing, as an “[a]ppellate court cannot affirm a superior court’s entry of
judgment if the grounds are not supported by the court record.” No such rule
statement lives in that opinion. In Pacific Marine, the court simply provided the
common rule that an appellate court “may affirm the superior court’s summary
judgment decision on any ground supported by the record.” Id.Beyond the mischaracterization of the language in Pacific Marine, Andersen
cites no authority for its assertion that the trial court was required to provide explicit
written findings of fact. This court need not consider arguments for which a party
has not cited authority. Norcon Builders, LLC v. GMP Homes VG, LLC, 161 Wn.
App. 474, 486, 254 P.3d 835 (2011). Moreover, the trial court made oral findings.
The commissioner found that awarding Andersen what it sought would have
provided Andersen an amount close to its pre-filing, rather than post-filing, claim.
The trial court clearly stated, “That’s not appropriate.” Andersen does not
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challenge the court’s oral findings. Unchallenged findings are treated as verities
on appeal. Tapper v. Emp’t Sec. Dep’t, 122 Wn.2d 397, 407, 858 P.2d 494 (1993).
Absent any authority to the contrary, the trial court did not err by not entering written
findings of fact in this case.
IV. Attorney Fees
Andersen requests attorney fees, costs, and expenses incurred herein
pursuant to article 11.5 of the subcontract which provides that the prevailing party
shall be entitled to such an award. Because Andersen has not prevailed, we reject
its request for fees and costs.
Revitalization also seeks an award of attorney fees pursuant to RCW
7.60.080 and RAP 18.9(a). Under RAP 18.9(a), this court may order a party who
files a frivolous appeal “‘to pay terms or compensatory damages to any other party
who has been harmed by the delay or the failure to comply or to pay sanctions to
the court.’” Kinney v. Cook, 150 Wn. App. 187, 195, 208 P.3d 1 (2009) (quoting
RAP 18.9(a)). Such sanctions include “‘an award of attorney fees and costs to the
opposing party.’” Id. (quoting Yurtis v. Phipps, 143 Wn. App. 680, 696, 181 P.3d
849 (2008)). “[A]n appeal is frivolous if there are no debatable issues upon which
reasonable minds might differ, and it is so totally devoid of merit that there was no
reasonable possibility of reversal.” Streater v. White, 26 Wn. App. 430, 435, 613
P.2d 187 (1980). While we reject Andersen’s arguments, they were not frivolous.
Accordingly, we decline to award fees as a sanction.
Revitalization further asserts Andersen’s repeated opposition to the
cooperation required under RCW 7.60.080 resulted in frivolous litigation and
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excessive legal fees. However, the plain language of the statute is devoid of any
mention of attorney fees and we similarly decline to award them on that proffered
basis.
Affirmed.
WE CONCUR:
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