Opinion
65544-2-I
12-19-2011
ALASKA CASCADE FINANCIAL SERVICES, INC., Appellant, v. THOMAS WATERER and JANE DOE WATERER, husband and wife, d/b/a WATERKIST CORPORATION, d/b/a NAUTILUS FOODS, Respondent.
UNPUBLISHED OPINION
APPELWICK, J.
The trial court found that Izykowski and Waterer formed an oral contract for the purchase of red sea urchin. Pursuant to the contract, Izykowski made 19 shipments of urchin over the course of 27 days. Waterer eventually instructed Izykowski to stop and refused to pay for any of the urchin. Izykowski assigned his claim to Alaska Cascade for collection. The court entered judgment against Waterer personally as an agent for a partially disclosed principal. Finding no error, we affirm.
FACTS
There are four distinct phases to the urchin harvesting process: a diver harvests the urchin, a packer boat collects the urchin and takes it to shore, a refrigerated truck transports the urchin overland, and a buyer processes the urchin. The diver gathers urchin on the ocean floor and a deckhand on the dive boat uses a winch to bring the urchin to the surface. Once a day, the dive boat transfers the urchin to a packer boat. The packer boat weighs the urchin, and transports it to shore. The packer boat is met at shore by a monitoring company that works on behalf of the Canadian government. The company weighs and records the urchin's weight. After it is weighed, the urchin is placed on a refrigerated truck and sent to a processing plant. The processing plant typically receives the urchin approximately four days after harvest. At that point, the processor determines the quality of the urchin. The processor harvests the roe from the live urchin and sends the roe to market.
Edward Izykowski is a commercial seafood diver. Michael Thomas Waterer is in the business of processing seafood. He owns Waterkist Corporation and Nautilus Marine Enterprises, Inc. (NME).
Waterkist is an Alaska corporation. It is not registered with the Washington Secretary of State. Waterer sometimes represents himself as president of Nautilus Foods, and asserts that Nautilus Foods is a licensed trade name of Waterkist. But, Nautilus Foods is not a registered trade name of Waterkist in Alaska or Washington. In contrast, NME is a Washington corporation. It operates a seafood processing plant in Tacoma, but does not do business as Nautilus Foods.
In October 2007, someone informed Izykowski that there was a new urchin buyer named Nautilus Foods and gave Waterer's name and phone number to Izykowski. Izykowski called Waterer and discussed whether Waterer wanted to purchase urchin. They talked twice more over the phone. In their last call, Waterer told Izykowski to go fishing. In reliance on their phone calls, Izykowski provisioned his crew, went to British Columbia, and made a total of 19 deliveries from November 13 through December 9. Waterer's Tacoma processing plant received and processed the urchin. On December 10, Waterer told Izykowski to stop fishing. By that point, Izykowski had shipped 66, 785 pounds of urchin.
It is unknown how many of the 19 shipments had actually arrived at the processing plant at the time Waterer told Izykowski to stop.
Izykowski was unable to obtain payment. He assigned his claim to Alaska Cascade Financial Services Inc. After Alaska Cascade won at arbitration, Waterer appealed for a trial de novo. The trial court entered findings that the parties had formed an oral contract, that Waterer breached by failing to pay, and that Izykowski was personally liable because he failed to adequately disclose the identity of the business for which he was acting. It entered a specific finding that Waterer's memory and credibility were poor. The trial court awarded $37, 258.99 against Waterer, his wife, and their marital community.
DISCUSSION
Waterer asserts that there is not substantial evidence to support a finding that he formed a contract with Izykowski. Further, he claims the alleged agreement does not satisfy the statute of frauds. He argues that, if there was a contract, then the trial court erred by holding him personally liable as an agent for a partially disclosed principal. Finally, he argues that the trial court abused its discretion by excluding relevant evidence about the quality and value of Izykowski's urchin.
I. Contract Formation
Where findings of fact and conclusions of law are challenged, the court limits its review to determining whether substantial evidence supports the findings and whether those findings, in turn, support the legal conclusions. Panorama Vill. Homeowners Ass'n v. Golden Rule Roofing, Inc., 102 Wn. App 422, 425, 10 P.3d 417 (2000). Evidence is substantial if it is sufficient to persuade a fair-minded, rational person of the declared premise. Merriman v. Cokeley, 168 Wn.2d 627, 631 230 P.3d 162 (2010). A reviewing court may not disturb findings of fact supported by substantial evidence even if there is conflicting evidence. Id. Credibility determinations are not subject to appellate review. Fisher Props., Inc. v. Arden-Mayfair, Inc., 115 Wn.2d 364, 369-70, 798 P.2d 799 (1990). In evaluating the persuasiveness of the evidence and the credibility of witnesses, we must defer to the trier of fact. Burnside v. Simpson Paper Co., 123 Wn.2d 93, 108, 864 P.2d 937 (1994).
For a contract to exist there must be a mutual intention or "'meeting of the minds'" on the essential terms of the agreement. McEachern v. Sherwood & Roberts, Inc., 36 Wn.App. 576, 579, 675 P.2d 1266 (1984) (quoting Peoples Mortg. Co. v. Vista View Builders, 6 Wn.App. 744, 496 P.2d 354 (1972)). "Mutual assent generally takes the form of an offer and an acceptance." Pac. Cascade Corp. v. Nimmer, 25 Wn.App. 552, 556, 608 P.2d 266 (1980). A contract for the sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract. RCW 62A.2-204. But, preliminary negotiations or price quotations do not give rise to a contract. Pac. Cascade Corp., 25 Wn.App. at 556. The burden of proving a contract is on the party asserting it, and it must prove each essential fact, including the existence of a mutual intention. Cahn v. Foster & Marshall, Inc., 33 Wn.App. 838, 840, 658 P.2d 42 (1983).
Izykowski testified that he and Waterer agreed on a beginning price of $.60 per pound. Izykowski understood that the price could be renegotiated later based on urchin quality or market conditions. Further, Izykowski understood that Waterer would stay in contact to transmit quantity requests. After initial conversations, Waterer called Izykowski and told him to go fishing.
Izykowski's account of the contract is confirmed by the parties' conduct. In reliance on Waterer's instructions, Izykowski provisioned a crew and went to British Columbia. Waterer stayed in contact to tell Izykowski how much urchin to harvest. On one occasion, Waterer reached Izykowski and asked him to lower production. Izykowski made 19 shipments over the course of 27 days. Each shipment arrived at the processing plant about 4 days after being harvested, and the Tacoma processing plant received and processed the steady stream of urchin without telling Izykowski to stop.
Izykowski used a packer boat operated by James Gale to make those shipments. Gale testified that he used a phone on his boat to communicate with Waterer. He stated that he normally spoke with buyers on a daily basis, and that he would not have accepted urchin from Izykowski if he was not instructed to do so by Waterer.
Although Waterer offered some contradictory testimony, it was within the province of the trial court to weigh competing evidence and make credibility determinations. The trial court determined Waterer's testimony lacked credibility. We hold that there is substantial evidence to support the trial court's findings that an oral contract was formed.
II. Statute of Frauds
A contract for the sale of goods for the price of $500 or more is not enforceable unless there is a writing sufficient to indicate that a contract has been made. RCW 62A.2-201. No writing is required, however, when the goods have been received and accepted by the buyer. RCW 62A.2-201(3)(c). Acceptance occurs when a buyer has had a reasonable opportunity to inspect the goods and fails to make an effective rejection. RCW 62A.2-606(1)(b).
It is undisputed that there was no writing. But, it is also undisputed that the Tacoma processing plant received and processed Izykowski's urchin. Waterer only argues that he could not have rejected the urchin without committing criminal waste and that he attempted to tell Izykowski to stop but could not find him.
Waterer's argument fails because there is substantial evidence to support the trial court's finding that Waterer did not attempt to tell Izykowski to stop. Izykowski did not have a satellite phone on his boat, but Gale did. Waterer was in regular contact with Gale, and Gale was in regular contact with Izykowski. Despite receiving regular shipments from Izykowski, Waterer did not specifically communicate to Izykowski that any shipment received was being rejected and did not instruct Izykowski to stop shipping urchin until he had already been fishing for 27 days. By that time, tens of thousands of pounds had arrived in Tacoma at regular intervals over the course of several weeks. Waterer failed to effectively reject any of the urchin received. His failure to reject and his processing of the urchin constituted acceptance of the urchin and satisfied the statute of frauds.
III. Personal Liability
Waterer essentially states three reasons why the trial court erred by holding him personally liable. First, that the trial court applied the wrong rule for agent liability. Second, that the trial court used the wrong burden of proof to determine if Waterer disclosed his principal. Third, that there was not substantial evidence of nondisclosure.
A. Agent Liability Rule
"Unless otherwise agreed, a person purporting to make a contract with another for a partially disclosed principal is a party to the contract." Restatement (Second) Agency § 321 (1958). Disclosure of a trade name is insufficient disclosure of a principal. Crown Controls v. Smiley, 47 Wn.App. 832, 839-41, 737 P.2d 709 (1987), overruled on other grounds by, 110 Wn.2d 695, 699, 756 P.2d 717 (1988) (concluding that the court of appeals fully and properly analyzed whether the defendant adequately disclosed his principal's identity and adopting that portion of the court of appeals' opinion). Waterer argues for a contrary rule that a person who contracts in the name of a principal and has capacity to contract is not liable on the contract so long as he or she fully or partially discloses the principal and has authority to contract. His assertion erroneously relies on a series of cases in which disclosure of a partially disclosed principal was not at issue, which in turn rely on Restatement § 328. See, eg., Rho Co., Inc. v. Dep't of Revenue, 113 Wn.2d 561, 587, 782 P.2d 986 (1989) (Dore, J., dissenting); Griffiths & Sprague Stevedoring Co. v. Bayly, Martin & Fay, Inc., 71 Wn.2d 679, 686, 430 P.2d 600 (1967). Absent explicit agreement, section 328 does not change the rule from section 321 that an agent of a partially disclosed principal is a party to the contract. Restatement § 328, cmt. c. No explicit agreement here limited liability only to the partially disclosed principal.
B. Burden of Proof
Relying on Matsko v. Dally, the trial court placed the burden on Waterer to prove he acted solely as an agent. 49 Wn.2d 370, 301 P.2d 1074 (1956). In Matsko, the court noted that once a plaintiff meets its burden of proving the defendant was a party to the contract, the burden shifts to the defendant to prove he acted solely in the capacity of agent for a disclosed principal. Id. at 373.
This court considered the issue in the context of a partially disclosed principal in Crown Controls. In Crown Controls, the defendant disclosed a trade name of his company that was validly registered in Oregon. 47 Wn.App. at 834-35. The defendant also provided two bank references, one of which would have revealed the principal's true identity had the plaintiff checked it. Id. at 840. We noted that "[t]he parties do not cite any Washington authority, and our research has revealed none, addressing whether disclosure of a trade name is sufficient disclosure of a principal." Id. at 839-40. However, we indicated that other jurisdictions have held that the agent has a duty to disclose the true name of the principal, and that the burden of disclosure is on the agent. Id. at 840. We determined that it is not unreasonable to place upon the agent the burden to fully disclose his principal's identity. Id. at 841.
C. Substantial Evidence
Whether an agent has sufficiently disclosed the identity of his principal is a question of fact. Id. at 839. Izykowski testified that the only corporate identity he ever knew of was Nautilus Foods. That testimony is corroborated by the record. The majority of the harvest records, created during the shipping process to identify a legal buyer, indicate that Nautilus was the buyer. When Izykowski assigned his claim to Alaska Cascade, he identified the debtor as Nautilus Foods. Gale testified that he, too, only knew of Nautilus or Nautilus Foods. Waterer's business card simply says Nautilus Foods.
Waterer testified that he disclosed the company's name, and that the receptionist should have disclosed the company's name. But, we defer to the trial court's finding that Waterer's memory and credibility are poor. Further, Waterer's statement that Nautilus Foods is a trade name of Waterkist is not supported by evidence, and Waterkist is not registered to do business in the state of Washington. There is substantial evidence to support the trial court's finding that Waterer did not disclose his principal's true identity.
The trial court applied the correct rule of law, properly applied the burden of proof and entered findings supported by substantial evidence. We affirm that Waterer is personally liable as an agent for a partially disclosed principal.
IV. Evidentiary Issues
"Relevant evidence" is any evidence that tends to make a material fact more or less probable than it would be without the evidence. ER 401. We review a trial court's decision to admit or refuse evidence for an abuse of discretion. Sintra, Inc. v. City of Seattle, 131 Wn.2d 640, 662-63, 935 P.2d 555 (1997). A trial court abuses its discretion when discretion is exercised on untenable grounds or for untenable reasons. Davidson v. Mun. of Metro. Seattle, 43 Wn.App. 569, 572, 719 P.2d 569 (1986). Facts that tend to establish a party's theory or disprove an opponent's evidence are relevant and should be admitted. Fenimore v. Donald M. Drake Constr. Co., 87 Wn.2d 85, 89, 549 P.2d 483 (1976). Excluding evidence that prevents a party from presenting a crucial element of its case constitutes reversible error. See Grigsby v. City of Seattle, 12 Wn.App. 453, 457, 529 P.2d 1167 (1975).
Waterer argues that the trial court erred by excluding evidence and testimony regarding the quality and value of the urchin actually delivered by Izykowski. Waterer argued at trial that, if the trial court determined that the parties entered into a contract with an open price term, then evidence of urchin quality and value would be necessary to establish a reasonable price. Waterer's theory was that no contract was made. Izykowski's theory was that an oral contract at a specific starting price was entered, subject to later renegotiation. Based on those arguments, the trial court reasoned that it could find that a contract existed at the price term testified to by Izykowski, or that there was no contract at all. It determined there was no evidence to support a finding that the parties agreed to a contract with an open price term. Therefore, evidence offered to establish an open price term would not be relevant.
Evidence of the urchin's quality and value could have been used for four conceivable purposes. Waterer declined to argue the first, and the other three were irrelevant to the issues before the trial court.
First, the evidence could have been used to establish a price within the range agreed to by Izykowski. Izykowski testified that the parties could renegotiate as the market price moved up or down. An industry expert testified that the market price during the 2007 season was between $.50 per pound and $.70 per pound. Waterer specifically declined to offer testimony that the price should have been on the low-end of that range. No testimony was offered that the parties in fact renegotiated.
Second, it could have been used to show that the urchin was of bad quality and that Waterer took a loss in the deal. Whether the deal was profitable is not probative of whether or not a contract or contract terms existed.
Third, if the trial court determined that the parties formed a contract with an open price term, it could have been used to fill the price term. But, the trial court correctly determined that no one had advanced that theory of the case. Izykowski was the only witness to testify to a price term. He acknowledged that the price term could be renegotiated later, but Waterer did not testify that he attempted to renegotiate. If the trial court determined that the parties reached a contract, the only price term supported by evidence was the one Izykowski testified to. The quality or value of the urchin had no tendency to prove or disprove the existence of an open price term.
Fourth, Waterer argues for the first time on appeal that the excluded evidence could have been used to show that the urchin were nonconforming goods. Waterer did not plead nonconformance and it was not an issue raised at trial. Regardless, his argument is substantively unpersuasive. A buyer is entitled to reject nonconforming goods. RCW 62A.2-601. When goods are accepted without knowledge of their nonconforming nature, the buyer must notify the seller within a reasonable time after he discovers or should have discovered the breach. RCW 62A.2-607(3). Despite receiving the first shipment approximately four days after it was harvested on November 13, Waterer did not tell Izykowski to stop fishing until December 10. Nineteen shipments were made before this termination was communicated. Nonconformance would have given Waterer the right to reject the urchin or revoke acceptance. He did not do so.
We hold that the trial court did not abuse its discretion. The proffered evidence was not relevant to any issue raised at trial,
V. Attorney Fees
After the arbitrator found in favor of Alaska Cascade, Waterer appealed to superior court for a trial de novo. MAR 7.3 provides, "the court shall assess costs and reasonable attorney fees against a party who appeals the award and fails to improve the party's position on the trial de novo." Waterer failed to improve his position, and the trial court awarded Alaska Cascade reasonable attorney fees. On appeal, Waterer did not articulate an argument against the award of attorney fees. Alaska Cascade is awarded reasonable attorney fees for this appeal pursuant to MAR 7.3 and RAP 18.1.
We affirm.