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Eagle Sys., Inc. v. Employment Sec. Dep't

Court of Appeals of Washington, Division 2

May 28, 2014

Eagle Systems, Inc., et al., Respondents ,
v.
The Employment Security Department, Appellant

Oral Argument April 8, 2014.

Appeal from Pierce County Superior Court. Docket No: 13-2-05940-7. Date filed: 03/06/2013. Judge signing: Honorable Stanley J Rumbaugh.

Robert W. Ferguson, Attorney General, Eric D. Peterson, Managing Assistant, and Leah E. Harris, Assistant, for appellant.

Thomas M. Fitzpatrick and Philip A. Talmadge (of Talmadge / Fitzpatrick ); and Emmelyn Hart (of Lewis Brisbois Bisgaard & Smith ), for respondents.

AUTHOR: Rich A. Melnick, J. We concur: J. Robin Hunt, J., Lisa Worswick, J.

OPINION

Page 765

Melnick, J.

[181 Wn.App. 457] ¶ 1 The Employment Security Department (Department) appeals the superior court's finding tat e-mails between the parties were sufficient to form a settlement agreement. The Department assessed unpaid unemployment insurance taxes against eight trucking carriers (Carriers), seven of which are involved in this appeal. The Carriers administratively appealed the assessments to an administrative law judge (ALJ) and commenced settlement negotiations with the Department. The Carriers believed they had reached an agreement to settle the matter, but negotiations broke down before the parties could execute a formal agreement. The Carriers filed a motion to enforce the agreement, but the ALJ concluded that he did not have that authority. With a hearing pending before the ALJ, the Carriers obtained an ex parte show cause order in superior court to enforce the agreement.

¶ 2 The Department argues that (1) the superior court lacked personal jurisdiction to hear the matter and (2) no settlement agreement existed. The Carriers cross appeal, contending that the superior court should have imposed sanctions on the Department and that this appeal is frivolous. Because the superior court lacked personal jurisdiction, we reverse its ruling enforcing the settlement agreement. We further affirm the superior court's denial of sanctions against the Department because the court lacked jurisdiction, and we deny the Carrier's request for fees on appeal.

FACTS

¶ 3 The Department assessed unpaid unemployment insurance taxes against the Carriers, asserting that the owner/operator truck drivers working for the Carriers were employees under the Employment Security Act, Title 50 RCW. The Carriers administratively appealed the assessments and moved for summary judgment, arguing that federal law preempts the Employment Security Act in these [181 Wn.App. 458] cases. The ALJ denied the Carriers' summary judgment motion but remanded the cases to the Department to review and reconsider the assessments. The ALJ also

Page 766

ordered the parties to attempt settlement negotiations.

¶ 4 Over the next few months, counsel exchanged drafts of an agreement. A dispute arose as to whether the parties agreed to a settlement. The parties met for a prehearing conference in December 2012, during which the ALJ set a February 20-21, 2013 hearing date for the first of the Carriers' cases. That same day, the Carriers filed a motion with the ALJ to enforce the terms of what they believed to be an ...


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