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Washington v. A.N.W. Seed Corp.

January 10, 1991

THE STATE OF WASHINGTON, PETITIONER,
v.
A.N.W. SEED CORPORATION, ET AL, RESPONDENTS



En Banc. Brachtenbach, J. Callow, C.j., and Dolliver, Dore, Andersen, Durham, Smith, and Guy, JJ., concur. Utter, J., did not participate in the disposition of this case.

Author: Brachtenbach

Three issues are presented:

1. When a plaintiff executes on an unsuperseded judgment which is later reversed on appeal, what is the measure of restitution to be made by the judgment creditor -- proceeds of the sheriff's sale or fair market value of the property sold?

2. Under the Consumer Protection Act, RCW 19.86, where the trial court found no intent to deceive and the

consumers who testified were not deceived, was it error for the court to find the defendant's conduct had a tendency to mislead or deceive?

3. In reviewing a trial court's determination of who is a prevailing party, what is the proper standard of review?

This litigation began with an action brought by the State against defendant, A.N.W. Seed Corporation, alleging violation of RCW 19.86, the Consumer Protection Act (CPA) based on defendants' alleged misrepresentations with regard to the growing and marketing of Jerusalem artichokes. Defendants appeared, but counsel withdrew and a default judgment was granted. Denial of defendants' motion to vacate was followed by an appeal. Defendants did not post a supersedeas bond.

Three months after notice of appeal, the State, the judgment creditor, obtained a writ of execution. The sheriff seized and ultimately sold farm machinery, vehicles, and other personal property of defendants. The sales proceeds were $16,588.50. The sales were conducted in accordance with the statute.

About 6 months later the Court of Appeals vacated the default judgment. State v. A.N.W. Seed Corp., 44 Wash. App. 604, 722 P.2d 815 (1986) (A.N.W. Seed I).

Defendants moved, pursuant to RAP 12.8, for an order of restitution to restore the property sold at execution, or, in the alternative, to restore the reasonable market value of the property and to reimburse defendants for lost income resulting from the seizure and sales. (Clerk's Papers of Respondents, at 241-43). The trial court entered an order of restitution for the fair market value of the property. (Clerk's Papers of Appellant, at 8-9). After a hearing, the court set the value at $57,631.50.

After trial on the merits the court entered the following relevant finding of fact:

3. The court finds that there was no actual intent on the part of the Defendants, nor actual deception of the local farmers. The court finds, however, that the overall promotional and

sales program carried out by Defendants A.N.W. Seed Corporation, Lyle Kilthau and Tim Kilthau, did have a tendency to mislead or deceive.

Finding of fact 3. Clerk's Papers of Appellant, at 5.

That finding led to these conclusions of law:

2. An unfair or deceptive business practice does not require any showing of intent on the part of Defendants, nor any showing of consumer reliance, but simply a showing that Defendants' conduct had the capacity or tendency to mislead or deceive.

3. The court has found as a matter of fact that the overall sales and promotional program carried out by Defendants A.N.W. Seed Corporation, Lyle Kilthau and Tim Kilthau, did have a tendency to mislead or deceive. Therefore, those Defendants' conduct constitutes an unfair or deceptive practice under the Consumer Protection Act, RCW Chapter 19.86.

Conclusions of law 2, 3. Clerk's Papers of Appellant, at 5-6. The court held that the State was the prevailing party, but exercised its discretion under RCW 19.86.080 and denied an award of attorney fees.

The State appealed the trial court's holding that restitution was to be fair market value of the seized property rather than the proceeds of the sheriff's sales. Defendants cross-appealed the denial of lost profits, the court's determination of value of the seized property, and the finding that defendants' conduct violated the CPA.

The Court of Appeals affirmed the fair market value measure of restitution, reversed the finding of a CPA violation, reversed the determination that the State was the prevailing party, and remanded for a discretionary determination of whether defendants were entitled to attorney fees. State v. A.N.W. Seed Corp., 56 Wash. App. 763, 785 P.2d 838 (1990) (A.N.W. Seed II). The State's petition for review raises the issues identified above. Defendants did not raise any additional issues in their answer. RAP 13.4(d). We reverse the Court of Appeals.

The first issue: When a plaintiff executes on an unsuperseded judgment which is later reversed on appeal, what is the measure of ...


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