2010, Northgate Ventures LLC (Northgate) entered an
eight-year commercial lease agreement with the law firm
Geoffrey H. Garrett PLLC. In 2016, Geoffrey H. Garrett PLLC
asked Northgate to terminate its lease. After Northgate
declined, Geoffrey H. Garrett PLLC stopped making monthly
rental payments and vacated the premises. Shortly thereafter
Geoffrey H. Garrett PLLC was dissolved and placed into
receivership. Its principal, Geoffrey Garrett, then formed a
new law firm, Geoff Garrett PLLC and continued to practice
sued for breach of the lease and sought to hold Garrett
personally liable as a member of Geoffrey H. Garett PLLC, and
Geoff Garrett PLLC liable as a successor entity. Northgate
appeals the trial court's decision granting summary
judgment and dismissing its claims against Garrett and Geoff
Garrett PLLC. Northgate contends that Garrett and Geoff
Garrett PLLC are mere continuations of Geoffrey H. Garrett
PLLC and fraudulently transferred goodwill from Geoffrey H.
Garrett PLLC to Geoff Garrett PLLC. We disagree and affirm.
is an attorney practicing law in Washington, focusing
primarily on estate and financial planning. In 2007, Garrett
purchased the law firm Stanley R. Byrd, Inc., P.S. (Stanley
R. Byrd), an estate planning law firm. Garrett then changed
the firm name to Byrd Garrett PLLC, and later to Geoffrey H.
Garrett, PLLC. Garrett purchased Stanley R. Byrd, Inc., P.S.
for $600, 000. $539, 497.10 of the purchase price was
allocated to goodwill, or "the value of clients."
August 2010, Northgate and Geoffrey H. Garrett PLLC entered
an eight-year commercial lease for office space in Seattle.
The lease was between Geoffrey H. Garrett PLLC and Northgate.
Garrett did not sign a personal guaranty for the
lease.On August 25, 2016, Garrett notified
Northgate that he was significantly changing his law
practice, no longer required the office space and requested
to terminate the lease or in the alternative, sublet the
office space. Northgate declined the request. Garrett was
unable to find a tenant to sublet and Geoffrey H. Garrett
PLLC stopped making monthly rental payments of $6, 912.00 in
October 2016 and vacated the premises in November 2016.
H. Garrett PLLC was not a profitable law firm and reported
losses for the last seven years of its
existence. Garrett subsidized the firm from 2013 to
2016 by using his personal 401 (k) retirement account, which
totaled $1 million. Garrett also used almost the entirety of
a $300, 000 home equity line of credit from Chase (Chase
HELOC) to remain current on Geoffrey H. Garrett PLLC's
November 23, 2016, Geoffrey H. Garrett PLLC executed a
general assignment for the benefit of creditors assigning all
property to attorney Nathan Riordan. The assignment granted
interest in "all of Assignor's property ...
including, but not limited to, all real property, fixtures,
goods, interests, stock, inventory, equipment, furniture,
furnishing, accounts receivable, general intangibles, bank
deposits, cash, promissory notes, cash value and proceeds of
insurance policies, claims, and damages belong to the
Assignor." Geoffrey H. Garrett PLLC then petitioned
i the court to appoint a receiver and the
court appointed Riordan. Northgate participated in the
receivership filing a proof of claim.
operating, Geoffrey H. Garrett PLLC charged a flat fee for
its estate planning clients and the clients paid a 75 percent
down payment at the start of projects. Estate settlement
clients also paid a flat fee, paying 60 percent up front,
then 15 percent in the second month, 15 percent in the third
month, and then the remaining balance when the work was
completed. Because of Geoffrey H. Garrett PLLC's fee
structure, there were rarely unpaid receivable accounts.
property of Geoffrey H. Garrett PLLC was administered by the
receiver. Office furniture of Geoffrey H. Garrett PLLC was
sold to Garrett for $4, 705.00. After Geoffrey H. Garrett
PLLC was liquidated, the receiver moved for approval of the
final report and accounting, authority to make disbursements,
discharge of the receiver, termination of the receivership,
and exoneration of the bond. The trial court granted the
receiver's motion. The final report included the receipts
and disbursements of the receiver and the expenses the
receiver incurred. The receiver surrendered Geoffrey H.
Garrett PLLC's $7, 300 deposit, abandoned the remaining
office assets, and disbursed $1, 120.13 to Northgate.
Northgate did not appeal the order approving the final
appointment of the receiver, but before the court terminated
the receivership, Garrett incorporated a new law firm, Geoff
Garrett, PLLC. Garrett mailed all of the former Geoffrey H.
Garrett PLLC clients a letter informing them of his new firm
and his desire to continue serving as their estate planning
attorney. Garrett continued representing 33 clients.
sued Geoffrey H. Garrett PLLC for breach of its lease and
damages of $129, 733.66. Northgate alleged Garrett and Geoff
Garrett PLLC were successors of Geoffrey H. Garrett PLLC,
making them liable to Northgate under the lease. Northgate
also alleged violations of the Uniform Fraudulent Transfer
Act and justifications for piercing the corporate veil and
claims of improper windup.
parties filed motions for summary judgment. The trial court
granted summary judgment for Garrett and Geoff Garret PLLC
and dismissed Northgate's successor and personal
liability claims. The court found, however, that Geoffrey H.
Garrett PLLC was liable to Northgate for its breach of lease.
The court awarded attorney fees and costs to Garrett and
Geoff Garrett PLLC under the terms of the lease.
first contends that the trial court erred in granting summary
judgment and dismissing its claims against Garrett and Geoff
Garrett PLLC because Northgate was entitled to a
determination of successor liability as a matter of law. We
review summary judgment orders de novo, engaging in the same
inquiry as the trial court. Summary judgment is warranted
only when there is no genuine dispute of material fact and
the moving party is entitled to judgment as a matter of law.
CR56(c). The facts and all reasonable inferences are viewed
in the light most favorable to the nonmoving party. Young
v. Key Pharmaceuticals. Inc.. 112 Wn.2d 216, 225-26,
person or group of persons licensed or legally authorized to
render professional services within Washington may form and
become members of a professional limited liability company
(PLLC). RCW 25.15.046. As a general rule, unless a member of
a PLLC agrees to be obligated personally,  members of a PLLC
are not liable for the liabilities of the PLLC.
The debts, obligations, and liabilities of a limited
liability company, whether arising in contract, tort or
otherwise, are solely the debts, obligations, and liabilities
of the limited liability company; and no member or manager of
a limited liability company is obligated personally for any
such debt, obligation, or liability of the limited liability
company solely by reason of being or acting as a member or
manager respectively of the limited liability company.
RCW 25.15.126. Similarly, Washington "adheres to the
general rule that a corporation purchasing the assets of
another corporation does not become liable for the debts and
liabilities of the selling corporation." Cambridge
Townhomes, LLC v. Pac. Star Roofing, Inc.. 166 Wn.2d
475, 481-82, 209 P.3d 863 (2009).
is no dispute that Northgate contracted with Geoffrey H.
Garrett PLLC and did not require Garrett to personally
guarantee the commercial lease contract. Thus, in order to
prevail in its claim against Garrett personally, or Geoff
Garrett PLLC, Northgate must demonstrate that an exception to
the general rule applies. Recognized exceptions include where
the "purchaser is a mere continuation of the
seller" or where the transfer is for "fraudulent
purpose of escaping liability." Columbia State Bank
v. Invicta Law Grp. PLLC. 199 Wn.App. 306, 320, 402 P.3d
330 (2017) (quoting Cambridge. 166 Wn.2d at 482);
RCW 25.15.061 (recognizing limited application of common law
piercing the corporate veil doctrine to PLLCs).
first argues that Geoff Garrett PLLC is a successor entity of
Geoffrey H. Garrett PLLC because it is a mere ...