CAM v. CAM, 148 Wn. App. 1007 (2009)

No. 36168-0-II.The Court of Appeals of Washington, Division Two.
January 13, 2009.

Appeal from a judgment of the Superior Court for Skamania County, No. 03-2-00139-4, Brian P. Altman, J. Pro Tem., entered March 14, 2007.

Reversed and remanded by unpublished opinion per Hunt, J., concurred in by Van Deren, C.J., and Quinn-Brintnall, J.

UNPUBLISHED OPINION
HUNT, J.

Ivan Cam appeals the trial court’s denial of his CR 60(b) motion to vacate the adverse judgment in his lawsuit against Perfil (“Pete”) and Elena Cam Ivan sued Pete and Elena[1] to recover unpaid compensation for his investment in their Bonneville Hot Springs Resort. Ivan argues that the trial court improperly entered the judgment through an irregular procedure, in part as a result of his attorney’s excusable neglect, by (1) denying his request for a continuance, thus requiring him to appear in court while incarcerated; (2) failing to provide him with notice of whether or when the trial court would conduct a presentment hearing, despite his attorney’s reliance on a promise of notification; (3) ignoring his attorney’s “excusable neglect” in failing to track the status of the presentment hearing;[2] and (4) refusing to grant Ivan’s motion to stay this proceeding after he filed for bankruptcy in Oregon. Holding that the trial court erroneously entered judgment without proper notice to Ivan, we reverse the trial court’s denial of Ivan’s motion to vacate the judgment and remand.

FACTS I. Underlying Dispute
In 1997, Ivan Cam joined a venture started by his half-brother, Pete Cam, to develop the Bonneville Hot Springs Resort on property Pete and his wife, Elena, owned. From 1997 to 2003, Ivan invested money and labor in Pete’s construction of the resort. In exchange, Ivan received a 10 percent share of the resort’s profits. Ivan lived almost full time on the property and routinely performed services for the resort, including painting, building, and repair work. Pete approved of Ivan’s involvement in the business from 1998 to 2003.

In October 2003, however, Pete became concerned about Ivan’s alleged involvement with illegal drugs and evicted Ivan from the resort property. Pete refused to compensate Ivan for his work or to reimburse Ivan for his investment in the resort, claiming that Ivan had caused substantial losses to the business, which off-set what Pete might otherwise owe him.

II. Procedure
On November 5, Ivan sued the defendants in Skamania County Superior Court, asking the trial court to grant the following relief: (1) to declare the existence of a constructive trust, (2) to order specific performance of the land sale contract on the resort property to make Ivan a tenant-in-common with the defendants, (3) to find that Pete breached his fiduciary duty for failing to safeguard Ivan’s financial interest in the resort property, and (4) to conduct an accounting to determine the amount of damages Pete owed to Ivan. CP at 1. As part of this fourth claim for damages relief, Ivan requested $12,000,000 to compensate for his labor and investment in the property.

A. Partial Summary Judgment
In January 2005, Ivan’s counsel withdrew and Ivan sought new representation. Meanwhile, on April 14, Pete and Elena moved for partial summary judgment, asking the trial court to dismiss Ivan’s claims for a constructive trust and specific performance and to cancel the lis pendens on the property.[3] Pete and Elena also filed a note for trial setting and an affidavit to support their motion.[4]

On June 2, Ivan obtained new counsel from Spokane. Ivan’s new attorney immediately moved for additional time to respond to the Pete and Elena’s partial summary judgment motion, but the trial court denied the motion. On June 23, the trial court granted the defendants’ request for partial summary judgment and dismissed Ivan’s constructive trust and the specific performance claims.[5] The trial court also cancelled the lis pendens on the property, concluding that the outcome of Ivan’s lawsuit did not affect the resort’s real property. The trial court then set a bench trial for August 22 to hear Ivan’s remaining claims.

Ivan moved to continue the trial date, but the trial court denied this motion. On July 22, Ivan moved to stay the proceedings because he had filed for bankruptcy in Oregon. The trial court granted this motion in part.

On August 16, Pete and Elena moved to dismiss Ivan’s remaining claims or, alternatively, for summary judgment. The trial court waited until the August 22 trial date to hear this motion and ultimately denied the motion to dismiss.

B. Bench Trial
Meanwhile, several days before trial, law enforcement arrested Ivan on an unrelated criminal matter in Oregon. Ivan filed an emergency motion in the Skamania Superior Court to continue the August 22 trial date. But the trial court denied the request and instead ordered Ivan to be transported to Skamania in confinement and to attend trial while in the Sheriff’s custody, which he did. The bench trial concluded on September 9, 2005, after the parties submitted closing arguments in writing.

On February 13, 2006, the trial court issued its memorandum ruling, awarding Ivan $734,051, a fraction (six percent) of the $12 million he sought in his complaint. The trial court explained that Ivan’s estimate of the damages amount lacked supporting evidence, whereas the defendants’ accounting offered a precise and credible estimate of the damages amount. The trial court also dismissed Ivan’s third and fourth causes of action for breach of fiduciary duty and an accounting, respectively. Finally, the trial court ordered Pete and Elena to draft a proposed final judgment and findings of fact and conclusions of law in accord with its memorandum ruling.

C. Entry of Judgment, Findings, and Conclusions Without Notice of Presentment Date
On March 9, Pete and Elena submitted the proposed judgment and findings of fact and conclusions of law, along with a note for presentation, directing the trial court clerk to set a date and time for the presentment hearing.[6] Ivan’s attorney also received a copy of these documents, but he did not sign them.

Instead, on April 3, Ivan’s attorney served opposing counsel with an objection to the proposed documents, arguing that the trial court’s damages award to Ivan was too low.[7] His objection also stated that (1) he did not object to entry of the proposed documents “subject to reservation of his right to appeal and/or pursue appropriate post-judgment motions,” and (2) “[o]ral argument [was] not requested.” Clerk’s Papers (CP) at 1143.

The record on appeal does not contain a signed waiver of presentment. Nor does the record show that Ivan’s attorney otherwise waived his right to know whether or when the trial court would hold a presentment hearing and sign and enter the judgment. The record does show that Ivan’s counsel exchanged emails with Pete and Elena’s attorney, stating that Ivan intended to appeal the inadequate damages award.

Ivan’s attorney phoned the Skamania County Court Administrator, Beth McComas, to ask about the status of the case. McComas advised Ivan’s attorney that she did not know whether there would be a presentment hearing and that she needed to ask the judge. Ivan’s attorney then asked McComas to notify him if the trial court judge decided to sign the papers. According to Ivan’s attorney, McComas assured him that she would provide him with notice when the trial court made its decision.

On April 17, Pete and Elena’s counsel sent a letter to the trial court, with a copy to Ivan’s counsel, asking the judge to sign the documents ex parte. Ivan’s counsel received this letter, but interpreted it as a mere request, because he still expected to hear from McComas about how the trial court intended to proceed. He also expected the trial court to conduct any further proceedings face-to-face in front of the trial court because almost all the previous proceedings had occurred in person.[8] But Ivan’s counsel never received notice from McComas or anyone else about whether the trial court had decided to sign and to enter the judgment without first conducting a presentment hearing, or about whether it had actually signed and entered the judgment ex parte in Ivan’s attorney’s absence.

On May 1 the trial court signed the final order and judgment without Ivan’s attorney’s knowledge. The record does not show that anyone sent a copy of the signed documents to Ivan’s attorney or otherwise notified him that the trial court had signed the documents or the date of the signing, not even after the court filed the documents on May 3.

D. Motion To Vacate Judgment
About a month later, on June 6, Ivan’s attorney emailed Pete and Elena’s attorney to ask about the status of the presentment. Ivan’s counsel learned, for the first time, that the trial court had already signed and entered the judgment on May 3, without Ivan’s knowledge. Because the 30-day appeal period had begun to run when the trial court entered the judgment on May 3, Ivan’s attorney had missed the RAP 5.2(a) appeal filing deadline by three days.

Ivan moved to vacate the judgment under CR 60(b), asserting that the trial court had entered judgment without his knowledge, which deprived him of the opportunity to file a timely notice of appeal. The trial court rejected this argument and denied the motion.

Ivan appeals.

ANALYSIS
Ivan argues that the trial court abused its discretion by denying his CR 60(b) motion to vacate the judgment, which the court entered without providing him with proper notice of the fact or date of presentation as required under CR 52(c) and CR 54(f)(2). Ivan asserts that this omission constitutes an “irregular procedure” requiring reversal of the trial court’s denial of his motion to vacate the judgment. We agree.

I. Standard of Review
We review the superior court’s denial of a CR 60(b) motion to vacate judgment for an abuse of discretion. DeYoung v. Cenex Ltd., 100 Wn. App. 885, 1 P.3d 587 (2000), review denied, 146 Wn.2d 1016
(2002); State ex rel. Turner v. Briggs, 94 Wn. App. 299, 302, 971 P.2d 581 (1999). The trial court abuses its discretion by acting on untenable grounds for untenable reasons. DeYoung, 100 Wn. App. at ___
(citing State ex rel. Campbell v. Cook, 86 Wn. App. 761, 766, 938 P.2d 345, review denied, 133 Wn.2d 1019 (1997)). We may vacate judgments only in those cases in which the alleged ground contains something extraneous to the action of the trial court or something that concerns only the regularity of the court’s proceedings. Bjurstrom v. Campbell, 27 Wn. App. 449, 618 P.2d 533 (1980) (citing Kern v. Kern, 28 Wn.2d. 617, 183 P.2d 811 (1947)). Such is the case here, where the irregularity of the trial court’s proceedings requires us to vacate the judgment.[9]

II. CR 60(b) — Irregular Procedure in Entering Judgment
CR 60(b)(1) provides:

On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding for the following reasons:
(1) Mistakes, inadvertence, surprise, excusable neglect or irregularity in obtaining a judgment or order.

(Emphasis added).

A. Required Notice of Date and Place of Submission
The rule governing presentation of findings of fact and conclusions of law provides:

Presentation. Unless an emergency is shown to exist, or a party has failed to appear at a hearing or trial, the court shall not sign findings of fact or conclusions of law until the defeated party or parties have received 5 days’ notice of the time and place of the submission, and have been served with copies of the proposed findings and conclusions. Persons who have failed to appear at a hearing or trial after notice, may, in the discretion of the trial court, be deemed to have waived their right to notice of presentation or previous review of the proposed findings and conclusions.

CR 52(c) (emphasis added).

The rule governing presentation of judgments provides:

Notice of Presentation. No order or judgment shall be signed or entered until opposing counsel have been given 5 days’ notice of presentation and served with a copy of the proposed order or judgment unless:
(A) Emergency. An emergency is shown to exist.
(B) Approval. Opposing counsel has approved in writing the entry of the proposed order or judgment or waived notice of presentation.
(C) After Verdict, etc. If presentation is made after entry of verdict or findings and while opposing counsel is in open court.

CR 54(f)(2) (emphasis added).

Under CR 54(f)(2), opposing counsel (the non-prevailing party) must receive notice of presentation at least five days before the court signs or enters its judgment. Additionally, under CR 52(c), the trial court cannot sign findings of fact or conclusions of law until opposing counsel receives five days notice of the time and place of presentation. CR 52(c) (emphasis added). As the non-prevailing party, Ivan must have received notice of presentation and notice of the specific time and the place of presentation before the trial court could properly enter the judgment. Here, however, opposing counsel apparently failed to provide Ivan with notice of both the time and place of presentation; yet the trial court entered the judgment without such notice or waiver and without Ivan or his counsel present.

B. Procedural Irregularities
Pete and Elena’s contention that no irregular procedure occurred here[10] ignores that Ivan received no notice of the fact or date of presentation. Contrary to their assertion, Ivan’s failure to object to the trial court’s entry of judgment without oral argument did not waive his right to receive notice of the date and time of presentation as required under CR 52(c) and CR 54(f)(2). Pete and Elena’s attorney was well aware of Ivan’s intent to appeal what he considered to be inadequate damages and that, although waiving oral argument during presentation of the documents for signing by the trial court, Ivan fully intended to preserve his right to appeal.

Without proper notice, Ivan’s attorney could not reasonably predict whether the trial court would conduct a presentment hearing or when it would enter the judgment. Based on McComas’s assurances that she would notify Ivan’s attorney once the judge decided whether to hold a presentment hearing, Ivan’s attorney reasonably believed that he would receive this notification. At no time, however, did Ivan receive notice from Pete and Elena’s attorney that the trial court would enter the judgment on a particular date; not did Ivan receive notice from McComas that the judge had struck the presentment hearing, signed the papers, or entered the judgment.

We hold, therefore, that the trial court’s entry of the judgment without with notice to Ivan of the date and place of presentation constitutes an irregular procedure for purposes of CR 60(b)(1) relief. We further hold that the trial court abused its discretion by denying Ivan’s motion to vacate this irregularly entered judgment. Accordingly, we reverse the superior court’s denial of Ivan’s CR 60 (b) motion to vacate the judgment and remand.[11]

A majority of the panel having determined that this opinion will not be printed in the Washington Appellate Reports, but will be filed for public record pursuant to RCW 2.06.040, it is so ordered.

QUINN-BRINTNALL, J. and VAN DEREN, C.J., concur.

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