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Northwest Cascade, Inc. v. Unique Construction, Inc.

Court of Appeals of Washington, Division 2

May 19, 2015

Northwest Cascade, Inc., Respondent,
v.
Unique Construction, Inc., et al., Defendants, William Rehe et al., Appellants

Oral Argument February 19, 2015.

Page 173

[Copyrighted Material Omitted]

Page 174

Appeal from Pierce County Superior Court. Docket No: 08-2-10045-1. Judge signing: Honorable Stephanie a Arend. Judgment or order under review. Date filed: 08/02/2013.

Martin Burns (of Burns Law PLLC ), for appellants.

William J. Crittenden ; and Michael J. Murphy and Allison L. Murphy (of Groff Murphy PLLC ), for respondent.

Authored by Lisa Worswick. Concurring: Thomas R Bjorgen, Lisa Sutton.

OPINION

Lisa Worswick, J.

Page 175

[187 Wn.App. 689] ¶ 1 Northwest Cascade Inc. (NWC) secured a judgment against Unique Construction Inc., a corporation owned by William and Suzanne Rehe. In an earlier appeal, Division One of this court held that Unique's corporate veil could be pierced, paving the way for NWC to collect its judgment against the Rehes. The Rehes filed a homestead declaration on Unique's " 89th Street Property," which the trial court quashed.

¶ 2 The Rehes now appeal the trial court's order quashing the homestead declaration, arguing that (1) the trial court lacked personal jurisdiction over them, (2) the trial court violated RAP 7.2 by considering NWC's motion to quash while the appeal was pending in Division One of this court, (3) a claimant is an owner of a property under the homestead statutes if they possess and use that property, even if they have no legal or equitable interest in it, and (4) they have a legal or equitable interest in the 89th Street Property because either their contributions and residence [187 Wn.App. 690] at the property give them a legal or equitable interest or piercing the corporate veil gave them Unique's interest in the property.

¶ 3 NWC cross appeals the trial court's denial of its request for attorney fees and costs incurred to litigate its motion to quash, arguing that it is entitled to attorney fees and costs as the prevailing party because litigating its motion to quash was a " collection proceeding" that fell within the attorney fees and costs provision of NWC's contract with Unique.

¶ 4 We affirm the trial court's order quashing the homestead declaration, holding that (1) the Rehes waived personal jurisdiction by failing to timely raise it, (2) the trial court had authority under RAP 7.2 to consider NWC's motion to quash, (3) a claimant must have either a legal or an equitable interest in a property to be an owner of it under the homestead statutes, (4) Unique held all legal and equitable interest in the 89th Street Property, and (5) piercing of the corporate veil does not allow the Rehes to claim a

Page 176

homestead exemption in Unique's property. However, we reverse the trial court's denial of NWC's attorney fees and costs by holding that litigating NWC's motion to quash falls within the contract's attorney fees and costs provision. We remand for a determination of NWC's reasonable attorney fees consistent with this opinion.

FACTS

A. Background

¶ 5 The Rehes are Unique's sole shareholders. William Rehe is Unique's president. In 2004 and 2005, Unique began acquiring lots for the development of a 34-lot residential real estate project in Tacoma.[1] On March 27, 2006, Unique entered into a contract with NWC to build the plat's [187 Wn.App. 691] infrastructure. The contract contained an attorney fees and costs provision that stated:

If the contract price is not paid as agreed and if collection proceedings or a suit is started, then [Unique] agree[s] to pay all costs incurred by [NWC], including all costs of suit and a reasonable attorneys' fee as determined by the court.

Clerk's Papers (CP) at 302.

¶ 6 In 2006, the Rehes moved into Unique's 89th Street Property, which was a lot with a house built by Unique. Without paying Unique rent, the Rehes continued to reside at the 89th Street Property through this litigation except for an 18-month period when they temporarily moved out.

B. Unique's Breach of Contract, NWC's Suit, and Unique's Transfer of the 89th Street Property

¶ 7 Unique stopped paying NWC on the contract. On July 7, 2008, NWC sued Unique for breach of contract.

¶ 8 On July 29, 2009, Unique recorded a quitclaim deed transferring the 89th Street Property to a Nevada limited liability company (LLC) named Black Point Management. On December 16, 2010, Black Point transferred the 89th Street Property by quitclaim deed to an LLC controlled by a limited liability limited partnership that was formed at the Rehes' direction. The transfers of the 89th Street Property were identified as tax exempt and no consideration was paid for them. The transfers of the 89th Street Property left Unique insolvent.

¶ 9 On October 30, 2009, NWC amended its complaint to add the Rehes as defendants and to add two additional claims: a claim seeking to pierce Unique's corporate veil to hold the Rehes personally liable and a claim under the Uniform Fraudulent Transfer Act[2] (UFTA) for fraudulent conveyance of the 89th Street Property.

[187 Wn.App. 692] C. Bifurcated Trial

¶ 10 The breach of contract and UFTA claims were tried to a jury. The jury returned a verdict in favor of NWC on both claims, and made a special finding that Unique transferred the 89th Street Property with the actual intent to hinder, delay, or defraud creditors. The veil piercing claim then went to a bench trial after which the trial court ruled that Unique's corporate veil could not be pierced.

¶ 11 The trial court entered a judgment against Unique for $216,505.46. The trial court also voided the transfer of the 89th Street Property and quieted title to Unique. The trial court awarded attorney fees and costs to NWC for the breach of contract and UFTA claims, and awarded attorney fees to the Rehes for the veil piercing claim. The trial court dismissed the Rehes with prejudice.

D. First Appeal

¶ 12 NWC appealed the trial court's denial of the veil piercing claim and its award of attorney fees to the Rehes. Unique cross appealed the attorney fees and costs award. This appeal was heard by Division One of this court. SeeNw. Cascade, Inc. v. Unique Constr., noted at 180 Wn.App. 1017, ...


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