Oral Argument: April 11, 2014.
Appeal from Thurston Superior Court. Docket No: 11-2-00655-4. Date filed: 06/22/2012. Judge signing: Honorable Lisa L Sutton.
Kevin P. Sullivan and Michael T. Schein (of Sullivan Law Firm ), for appellants.
Robert W. Ferguson, Attorney General, and Rosann Fitzpatrick, Assistant, for respondents.
AUTHOR: Lisa Worswick, J. We concur: J. Robin Hunt, P.J., Rich A. Melnick, J.
[181 Wn.App. 732] ¶ 1 Robert Bell and the Pacific Marine Insurance Company (PacMar) made a claim under the Washington Uniform Unclaimed Property Act (WUUPA) for property being held by the state Department of Revenue (DOR). They filed this action in Thurston County Superior Court after the DOR refused to release the funds. They now appeal the superior court's denial of their summary judgment motion and its grant of summary judgment to the State.
¶ 2 After PacMar entered receivership and was liquidated under chapter 48.31 RCW, funds from the PacMar estate were transferred to the State treasury in 2000 and 2002, subject to escheat to the State after six years. Bell and PacMar argue that the funds could not legally escheat under RCW 48.31.155 because the PacMar funds did not fall within that statute's scope, and because the State violated WUUPA and violated Bell and PacMar's due process rights when it failed to provide them adequate notice about the transfer of the funds to the State prior to escheat. We hold that the superior court had jurisdiction to determine whether the DOR's decision was correct and that because Bell and PacMar had no legal interest in the funds, they had no standing to challenge that DOR decision. We affirm the Thurston County Superior Court.
¶ 3 Bell owned the Pacific Marine Holdings Corporation (PacHold), which was incorporated in California. PacHold was the sole shareholder of PacMar, which was incorporated in Washington State. The King County Superior Court affirmed the state insurance commissioner as the PacMar estate's receiver for the purpose of liquidation in 1989. Although PacMar was fully liquidated, it has never been legally dissolved.
[181 Wn.App. 733] A. Distribution of the PacMar Estate's Funds
¶ 4 The King County Superior Court set August 1, 1996, as the final deadline for creditors to file claims against the PacMar estate. In 1999, the superior court entered an order approving the receiver's (Commissioner's) plan to close the PacMar estate and an order approving the Commissioner's plan for final distribution of the PacMar estate's funds. The Commissioner's court-approved plan for final distribution divided the creditors' claims into five classes, ranked A through F. The plan paid the claims in classes A through D in full. But after retaining $51,450.00 for administrative costs, insufficient funds remained in the PacMar estate to pay any amount to the claims in classes E or F. Class E's claims totaled $916,820.43 and class F's claims totaled $213,427.29.
¶ 5 In 2000, the King County Superior Court discharged the receiver and closed the PacMar estate. The superior court's order transferred the PacMar estate's remaining funds to the State treasury in the following amounts:
1. Unclaimed funds of $22,958.56, meant to pay issued checks that were either outstanding or returned, and to pay claimants who were identified but could not be found.
2. Residual funds of $39,862.78, meant to pay any late presented bills.
¶ 6 In 2001, after the PacMar estate's closure, the PacMar estate acquired $38,907.48 in new funds from creditors. The Commissioner petitioned the superior court to transfer the new funds to the treasury, rather than reopen the estate and distribute these funds. The Commissioner [181 Wn.App. 734] explained that during the original, final distribution of the PacMar estate's funds, the Commissioner never expected to have funds available for distribution toward claims in class E, and thus, never adjudicated the individual claims in class E for their validity or amount. The Commissioner argued that the administrative costs of adjudicating the numerous class E claims would consume all of the PacMar estate's funds, leaving no funds to pay the class E claims, which were next in line to receive distributions from the PacMar estate. The superior court ordered that the PacMar estate would remain closed and transferred the new funds to the treasury " in accordance with RCW 48.31.155." Clerk's Papers (CP) at 228.
¶ 7 After the new funds were transferred to the treasury, the treasury had custody of the following PacMar estate's funds:
1. Unclaimed funds of $22,958.56, transferred to the treasury in 2000 upon the PacMar estate's closure, meant to pay issued checks that were outstanding or returned, and to pay ...