Craig Frost v. Mark H. Brooks, Et ux

FILED
JULY 17,2014
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
CRAIG FROST, REBECCA FROST and )
AIR CHARTER PROFESSIONALS, ) No. 31328-0-111
INC., )
)
Respondents, )
)
v. )
)
MARK H. BROOKS, JANE DOE )
BROOKS and JOHN and JANE DOE 1- )
10, ) UNPUBLISHED OPINION
)
Petitioners. )
SIDDOWAY, C.J. - We granted discretionary review of this interlocutory
challenge by Mark Brooks, a resident of Arizona, to an order of default obtained against
him by Craig and Rebecca Frost and Air Charter Professionals Inc. While Mr. Brooks
raises several challenges to the order of default, we find that the absence of minimum
contacts with Washington State to support personal jurisdiction is dispositive. This
intriguing dispute will have to be resolved in a forum having jurisdiction over Mr.
Brooks. We reverse the order of default and remand with directions to dismiss the
complaint.
No. 31328-0-III
Frost v. Brooks
FACTS AND PROCEDURAL BACKGROUND
In January 2012, Craig Frost used a forum on the Internet to advertise a rare,
custom built motorcycle for sale. I In response to the advertisement, Mark Brooks
telephoned Mr. Frost, whose telephone number includes an area code assigned to the
state of Florida, but who claims he was in Spokane at the time. Mr. Brooks offered to
purchase the motorcycle for $160,000. Mr. Frost agreed to a sale at that price and to
transport the motorcycle to Arizona, where Mr. Brooks lives and where Mr. Frost also
owns a home.
Mr. Frost promptly traveled to Arizona with the motorcycle. Shortly after Mr.
Frost arrived at his home in Lake Havasu City, Mr. Brooks came to the Frost home with a
companion and asked to take the motorcycle for a test drive. About 10 minutes after Mr.
Brooks took off for the test drive, his companion-who had stayed at the home with Mr.
Frost-received a call from Mr. Brooks, who asked his companion to let Mr. Frost know
he would not be returning. According to Mr. Brooks, the motorcycle actually belonged
to him. He had used his offer to purchase the motorcycle as a ruse to get it back. Mr.
1 The motorcycle is known as a "Y2K Turbine," and was manufactured in
Louisiana by Marine Turbine Technologies LLC (MTT) in 2004. The Y2K Turbine is
apparently very rare-MTT has manufactured less than 20 of them over the past 12
years. Among other claims to fame, the motorcycle was named the most powerful in the
world by Guinness World Records. For more information, see
http://www.marineturbine.comldownloadsIMTT%20Turbine%20Bike%20BROCHURE.
pdf (last visited July 14,2014).
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Brooks's companion provided Mr. Frost with documents purporting to establish title to
the motorcycle in Mr. Brooks's name and then left.
Mr. Brooks refused Mr. Frost's telephoned demand to pay the agreed price or
return the motorcycle, so Mr. Frost called local police. He provided them with a receipt
showing that he had purchased the motorcycle from Lake Cumberland Marine LLC in
2006 for $185,000. But a title search performed by the officers revealed title to be in Mr.
Brooks's name. 2
Mr. Frost; his wife, Rebecca; and their air charter business, Air Charter
Professionals Inc., then commenced a lawsuit in Spokane County Superior Court against
Mr. Brooks, claiming breach of contract, conversion, and fraud. Although Mr. Brooks
was properly served at his home in Arizona, he failed to file an answer or file a notice of
appearance within the 60 days provided by RCW 4.28.180.
2 The history of the motorcycle's ownership is clouded. The record on appeal
indicates that MTT first sold the motorcycle to Roger Bourget in Phoenix, Arizona, who
later transferred it-without a change in title-to Lake Cumberland Marine LLC. Mr.
Frost contends that he purchased the motorcycle from Lake Cumberland Marine in 2005
in exchange for flight time and training. Mr. Brooks claims that he, not Mr. Frost,
purchased the motorcycle from Lake Cumberland Marine. A principal of Lake
Cumberland Marine filed an affidavit in proceedings below stating that Mr. Frost failed
to complete terms of the purchase and that the buyer's order Mr. Frost attached to his
complaint was altered.
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Frost v. Brooks
Sixty-one days after service, the Frosts 3 obtained both an order of default and a
default judgment against Mr. Brooks in the amount of $160,000, plus interest, attorney
fees, and costs. Five days later, Mr. Brooks filed a motion to dismiss on the grounds of
lack ofjurisdiction, forum non conveniens, and failure to join a necessary party under
CR 19. He later filed a motion to set aside the order of default and default judgment,
asserting a defense to the complaint and again objecting to personal jurisdiction. The
court denied both motions as well as a motion for reconsideration. Mr. Brooks filed an
appeal in December 2012.
While the appeal was pending, and in response to collection activity in the
superior court, Mr. Brooks moved for an order to show cause why the court should not
vacate the judgment, arguing for the first time that the default judgment had awarded the
Frosts remedies of replevin and an order requiring that he transfer title, despite the fact
that their complaint had not included a claim requesting that relief. The court entered the
order to show cause and, after a hearing, vacated the judgment on the basis that it
exceeded the relief requested in the complaint. It left the order of default in place.
After this court learned of the postappeal developments, we sought input from the
parties on the status of the appeal and eventually set the case for a hearing under
3 We refer to Mr. and Ms. Frost and Air Charter Professionals Inc. collectively as
"the Frosts," for simplicity, and note that the trial court's original judgment was in favor
of the corporation.
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No. 31328-0-111
Frost v. Brooks
RAP 6.2(b), in order to determine whether the case remained reviewable as a matter of
right, and if not, whether we should accept discretionary review. See Meade v. Nelson,
174 Wn. App. 740, 749 nJ, 300 PJd 828 (an order of default is subject to discretionary
review and not appealable of right), review denied, 178 Wn.2d 1025 (2013). Our
commissioner granted discretionary review, finding it appropriate "given the issue of
whether the trial court had specific personal jurisdiction of Mr. Brooks."
Commissioner's Ruling, Frost v. Brooks, No. 31328-0-111 (Wash. Ct. App. Dec. 12,
2013).
ANALYSIS
Mr. Brooks contends that the trial court erred in refusing to vacate the order of
default, both because he had substantially complied with the appearance requirement and
because all of the factors identified in White v. Holm, 73 Wn.2d 348,438 P.2d 581 (1968)
as weighing in favor of relieving a defendant from default are met in his case. He also
argues that the trial court lacked personal jurisdiction over him. We need not reach the
trial court's refusal to vacate the order of default because we conclude that the trial court
lacked personal jurisdiction over Mr. Brooks.
I. The defense oflack ofpersonal jurisdiction was not waived
Mr. Frost contends that Mr. Brooks waived the defense of personal jurisdiction.
He relies on CR 12(h)(l), which provides that "[a] defense oflack ofjurisdiction over the
person ... is waived ... if it is neither made by motion under this rule nor included in a
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No. 31328-0-III
Frost v. Brooks
responsive pleading or an amendment thereof permitted by rule 15(a) to be made as a
matter of course." Based on that language, he contends that entry of the order of default
meant that there could never be a motion or answer under CR 12; hence, waiver of the
jurisdiction defense was automatic upon entry of the default order.
The same argument made under substantially similar Rule 12(h) of the Federal
Rules of Civil Procedure has been characterized by one circuit court as "against all
federal authority." Jackson v. FIE Corp., 302 F.3d 515,523 (5th Cir. 2002). Our civil
rules at issue are based on and substantially correspond to the Federal Rules of Civil
Procedure, so we may look to federal cases interpreting federal discovery provisions for
guidance. Bryant v. Joseph Tree, Inc., 119 Wn.2d 210,218-19,829 P.2d 1099 (1992).
As the Fifth Circuit explained well-settled federal law:
True, a party's right to object to personal jurisdiction certainly is waived
under Rule 12(h) if such party fails to assert that objection in his first
pleading or general appearance. But a party's right to contest personal
jurisdiction is not waived by his failure to appear at all.
Jackson, 302 F.3d at 523 (footnote omitted).
The same construction applies to CR 12(h), as recognized in Allstate Insurance
Co. v. Khani, 75 Wn. App. 317, 326-27, 877 P.2d 724 (1994):
Where a defendant appears in a case and files responsive pleadings
or engages in discovery prior to the entry of a final judgment, that
defendant is subject to the requirements ofCR 12(b) and (h)(1).
In contrast, when a default judgment is entered against a defendant
and is void for lack of personal jurisdiction over him, he may challenge the
void default judgment at any time. A party will not be deemed to have
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No. 31328-0-III
Frost v. Brooks
waived the right to challenge a default judgment void for lack of personal
jurisdiction merely because time has passed since the judgment was
entered. Under such circumstances, the trial court must vacate that
judgment and has no discretion to do otherwise.
(Citation omitted.) See also In re Marriage ofMarkowski, 50 Wn. App. 633, 636, 749
P.2d 754 (1988) ("[A] default judgment entered without proper jurisdiction is void.");
CR 60(b)(5) (authorizing courts to relieve a party from a judgment on the grounds that
the judgment is void).
The defense of the court's lack of personal jurisdiction was not waived.
11. The trial court lacked personal jurisdiction
Personal jurisdiction over a nonresident defendant may be general or specific.
General jurisdiction over a nonresident defendant exists when the defendant's actions in
the state are so substantial and continuous that justice allows the exercise ofjurisdiction
even for claims not arising from the defendant's contacts within the state. Raymond v.
Robinson, 104 Wn. App. 627, 633, 15 P.3d 697 (2001) (citing Precision Lab. Plastics,
Inc. v. Micro Test, Inc., 96 Wn. App. 721, 725, 981 P.2d 454 (1999». No argument is
made that Mr. Brooks has contacts with Washington that would support general
jurisdiction.
Specific jurisdiction over a nonresident defendant may exist where a defendant has
"purposefully established 'minimum contacts' in the forum State." Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 474,105 S. Ct. 2174,85 L. Ed. 2d 528 (1985). The "minimum
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No. 31328-0-111
Frost v. Brooks
contacts" requirement flows from the due process clause of the Fourteenth Amendment to
the United States Constitution, which protects an individual's liberty interest in not being
subject to the binding judgments of a forum with which he or she has established no
meaningful contacts, ties, or relations. ld. at 471-72. The Washington Legislature has
prescribed the scope of specific jurisdiction that it authorizes Washington courts to assert
in its long-arm statute, RCW 4.28.185(1), which provides that an out-of-state defendant
subjects itself to personal jurisdiction in the State by engaging in any of the following
acts:
(a) The transaction of any business within this state;
(b) The commission of a tortious act within this state;
(c) The ownership, use, or possession of any property whether real
or personal situated in this state.
The statute has been construed to permit Washington courts to assert jurisdiction over
nonresidents 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. W. Coast Mach.
Co., 80 Wn.2d 707,711,497 P.2d 1311 (1972).
Mr. Frost argued below and argues on appeal that "specific personal jurisdiction
exists over Brooks based upon his contacts with Craig Frost over the motorcycle." Br. of
Resp't at 34. He points to the fact that Mr. Brooks saw the online advertisement and
contacted Mr. Frost, who "was located in the State of Washington at the time of the
contact as was the motorcycle." ld. He argues that the two men "contracted for the sale
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No. 31328-0-III
Frost v. Brooks
of the motorcycle while Mr. Frost was in Washington," and that following their
conversation, Mr. Frost registered the motorcycle in Washington before transporting it to
Arizona. Id. at 34-35. Several of Mr. Frost's allegations of his dealings from
Washington and Mr. Brooks's awareness of events taking place in Washington are
disputed by Mr. Brooks.
The plaintiff bears the burden of establishing personal jurisdiction. Byron Nelson
Co. v. Orchard Mgmt. Corp., 95 Wn. App. 462, 465, 975 P.2d 555 (1999). Where facts
bearing on personal jurisdiction are in dispute, we review the trial court's findings of fact
for substantial evidence. Harvey v. Obermeit, 163 Wn. App. 311, 261 P.3d 671 (2011).
The absence of a finding of fact on a disputed issue in favor of the party with the burden
of proof is the equivalent of a finding against that party on that issue. State v. Haydel,
122 Wn. App. 365, 373, 95 P.3d 760 (2004). Accordingly, we treat the findings of fact as
the only material disputed facts that the trial court found both supported personal .
jurisdiction and were supported by the evidence.
The court made two findings in support of its conclusion that it had personal
jurisdiction over Mr. Brooks:
1.13 Plaintiff Frost, in uncontradicted testimony, has established that he is
a Spokane County resident and has owned and possessed the subject
motorcycle in the State of Washington for six years.
1.14 Plaintiff Frost has testified phone contacts and testimony [sic]
regarding the sale and purchase of this motorcycle took place while
he was physically in Spokane.
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No. 31328-0-II1
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Clerk's Papers (CP) at 191-92.
We review de novo whether the trial court's findings of a nonresident defendant's
contacts with the state support its conclusion of law that personal jurisdiction exists. See
Sunnyside Valley Irrigation Dist. v. Dickie, 149 Wn.2d 873, 880, 73 P.3d 369 (2003)
(conclusions of law are reviewed de novo).
We begin by addressing two of Mr. Frost's claims that are torts: conversion and
fraud. Whether they subject Mr. Brooks to jurisdiction for the "commission of a tortious
act within this state" is readily resolved. Jurisdiction under RCW 4.28.l85(1)(b) has
been construed to depend upon whether the "last event necessary to make the defendant
liable" occurred in Washington State. MBM Fisheries, Inc. v. Bollinger Mach. Shop &
Shipyard, Inc., 60 Wn. App. 414, 425,804 P.2d 627 (1991). Here, the last event giving
rise to Mr. Frost's claims occurred in Arizona, where Mr. Brooks took the motorcycle for
a test drive and never retumed. 4 The superior court did not have personal jurisdiction
over Mr. Brooks based on the "commission of a tort" provision of the long-arm statute.
Mr. Frost must rely, then, on the long-arm statute's provision that Washington
courts have jurisdiction over the "transaction of any business within this state." RCW
4 For purposes of determining jurisdiction under the long-arm statute, we do not
consider evidentiary support for the merits of the plaintiff s claims for relief. Whether a
tortious act was actually committed must be determined by trier of fact. For this purpose
alone, a court must treat the allegations in the complaint as established. Lewis v. Bours,
119 Wn.2d 667,670,835 P.2d 221 (1992).
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Frost v. Brooks
4.28. 185(1)(a). The factual scenario ofa seller in one state who advertises on the
Internet, receives an order or agreement to buy from a buyer in another state, and then
delivers the purchased goods to the buyer in the buyer's home state is an increasingly
common one. Well settled principles compel the conclusion that without more, a
nonresident buyer's isolated acceptance of an offer directed to him in his home state
cannot subject him or her to the jurisdiction of Washington courts.
In Tyee Construction Co. v. Dulien Steel Products, Inc., 62 Wn.2d 106, 115-16,
381 P.2d 245 (1963), our Supreme Court set out three criteria that should be applied in
viewing the facts of a case where personal jurisdiction is challenged against the rights of
a nonresident:
(1) The nonresident defendant ... must purposefully do some act or
consummate some transaction in the forum state; (2) the cause of action
must arise from, or be connected with, such act or transaction; and (3) the
assumption ofjurisdiction by the forum state must not offend traditional
notions of fair play and substantial justice, consideration being given to the
quality, nature, and extent of the activity in the forum state, the relative
convenience of the parties, the benefits and protection of the laws of the
forum state afforded the respective parties, and the basic equities of the
situation.
(Footnotes omitted.) The first two criteria reflect provisions of the long-arm statute,5
while the third is an attempt to clarifY the factual considerations bearing on the
5 Specifically, "[c]riterion (1) is a capsulized statement of the statutory
requirements set out in RCW 4.28.1 85(1)(a) and (b)," while "[c]riterion (2) expresses the
limitation set out in RCW 4.28.185(1) and (3)." Callahan v. Keystone Fireworks Mfg.
Co., 72 Wn.2d 823, 835,435 P.2d 626 (1967).
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I No. 31328-0-III
Frost v. Brooks
nonresident defendant's right to due process. Callahan v. Keystone Fireworks Mfg. Co.,
72 Wn.2d 823,835,435 P.2d 626 (1967).
The first requirement for "transacting business" jurisdiction is that the defendant
purposefully do some act or consummate some transaction in the forum state. A number
of cases have dealt with nonresident buyers, which, according to Professor Tegland,
"have proved to be more troublesome than case[s] involving nonresident sellers." 14
KARL B. TEGLAND, WASHINGTON PRACTICE: CIVIL PROCEDURE § 4:8, at 74 (2d ed.
2009). Tegland makes the following observations about the cases:
If a nonresident buyer (having no other contacts with Washington)
transmits an order to a Washington firm by mail, delivery to be made in the
state of the buyer's residence, and thereafter the buyer fails to pay for the
goods, the buyer should perhaps not be held to have submitted himself or
herself to the jurisdiction of the Washington courts for the purposes of an
action for the purchase price.
Some Washington cases have found long-arm jurisdiction over
nonresident buyers when there has been a series of purchases. In one case,
the court relied heavily upon the fact that the buyer had taken the initiative
in soliciting the seller-buyer relationship. In a subsequent case, however,
the court found jurisdiction through the nonresident defendant buyer's
purposeful availment of the benefit and protection of Washington laws,
despite the fact that the nonresident did not initiate the buyer-seller
relationship. Still later, another opinion reinforced the latter view. In some
cases, however, the courts have refused to find jurisdiction when the
buyer's contacts with Washington were insignificant.
ld. at 74-75 (footnotes omitted).
The last reference to cases where "the buyer's contacts with Washington were
insignificant" is to this court's decision in Washington Equipment Manufacturing Co. v.
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No. 31328-0-111
Frost v. Brooks
Concrete Placing Co., 85 Wn. App. 240, 931 P .2d 170 (1997). In Concrete Placing, this
court observed that the purposeful availment standard "is not a mechanical standard" and
that "[w]e consider the quality and nature of the defendant's activities." 85 Wn. App. at
246 (emphasis added). We noted that whether a contracting party has purposefully
availed itself of the benefits of this state frequently turns on which party solicited the
agreement and where. In Concrete Placing, the Idaho defendant had several contacts
with Washington during the course of a business transaction including several telephone
calls, arranging for delivery "'F.O.B.'" Spokane, and having several of its employees
visit a Spokane plant to inspect its manufacturing process and arrange shipment. Id. at
247.
Here, Mr. Brooks made a telephone call in response to a solicitation directed to
him and other online forum viewers by Mr. Frost. The call was made to Mr. Frost's
Florida-based telephone number although the court found that Mr. Frost was in Spokane
at the time he received the call. Although the trial court found that telephone "contacts"
(plural) were made with Mr. Frost located in Spokane, such contacts still fall short of
defense contacts we found insufficient in Concrete Placing. And the court's finding that
Mr. Frost had possessed the motorcycle in Spokane for six years does not factor into the
analysis: The court's focus "is on the acts of the defendant, not the plaintiff." Byron, 95
Wn. App. at 465. Mr. Brooks did not purposefully avail himself of the benefits and
protections of Washington law.
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The second requirement for "transacting business" jurisdiction is that the cause of
action arise from, or be connected with, the defendant's act or transaction in Washington.
Because Washington courts apply a "but for" test and the alleged theft of the motorcycle
would not have occurred "but for" Mr. Brooks's call and agreement to purchase the
motorcycle, this criterion is met in this case. See Raymond, 104 Wn. App. at 640 ("The
'but for' test preserves the requirement that there be some nexus between the cause of
action and the defendant's activities in the forum.").
The third and final requirement is that the exercise ofjurisdiction must not offend
traditional notions of fair play and substantial justice. This requires consideration of"the
quality, nature and extent of the defendant's activity in Washington," DiBernardo-
Wallace v. Gullo, 34 Wn. App. 362,366,661 P.2d 991 (1983), as well as "the relative
convenience of the parties, the benefits and protection of the laws of the forum state
afforded the parties, and the 'basic equities' of the situation." Sorb Oil Corp. v. Batalla
Corp., 32 Wn. App. 296, 301, 647 P.2d 514 (1982).
Applying this analysis, this court in DiBernardo-Wallace refused to find
jurisdiction where "[t]he allegedly fraudulent transaction was a single, isolated incident
with an effect in Washington only because [the plaintiff] had chosen to reside in this
state." 34 Wn. App. at 366. The court noted that the "foreseeability" of an effect in
Washington has never been sufficient to establish minimum contacts, nor has "the
unilateral activity of the plaintiff who claims some relationship with the nonresident
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No. 31328-0-III
Frost v. Brooks
defendants." ld.; see also Quad Metals Corp. v. El Capitan Mercury Co., 8 Wn. App.
435,506 P.2d 1332 (1973) (holding that it would offend fair play and substantial justice
to find jurisdiction where the only acts taking place in Washington were the telephone
conversations between California and Washington, the approval of a lease, and the
subsequent claimed out-of-state losses which affected its Washington bank accounts).
Here, Mr. Frost advertised the motorcycle on a forum that reached residents of
Arizona, delivered the motorcycle to Arizona, met the buyer to deliver the motorcycle in
Arizona, and suffered the alleged theft in Arizona. Mr. Brooks's contact with
Washington was limited to telephone calls placed to and perhaps received from
Washington. It would offend traditional notions of fair play and substantial justice to
find jurisdiction over Mr. Brooks based on this isolated transaction initiated by Mr. Frost.
111. Attorney fees
Both parties request attorney fees.
Mr. Frost requests attorney fees under RAP 18.1, RCW 4.84.010, and RCW
4.84.185. We have jurisdiction to award costs, including attorney fees, even where we
determine that Washington courts lack personal jurisdiction over a party, as long as a
statute authorizes the award. Katich v. Clark, 152 Wn. App. 544, 550, 215 P.3d 1049(2009). Here, however, no statute does. RAP 18.1 permits recovery of reasonable
attorney fees or expenses on review if applicable law grants that right. RCW 4.84.010
governs costs to the prevailing party and provides for statutory attorney fees. RCW
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No. 31328-0-III
Frost v. Brooks
4.84.185 allows the prevailing party to recover attorney fees from the nonprevailing party
for frivolous actions. Mr. Frost is not the prevailing party.
Mr. Brooks does not devote a section of his brief to attorney fees but does ask, in
the conclusion of his brief, that the court award fees and costs pursuant to RAP 14.2. The
rule deals only with costs, which we award. Fees are denied. See RAP 18.1(b)
(providing that a party requesting attorney fees "must devote a section of its opening brief
to the request").
We reverse the order of default and remand with directions to the trial court to
dismiss the complaint.
A majority of the panel has determined that this opinion will not be printed in the
Washington Appellate Reports but it will be filed for public record pursuant to RCW
2.06.040.
siCfdo~"
WE CONCUR:
Fearing, 1.
16