Justia Washington Supreme Court Opinion Summaries

Articles Posted in Business Law
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The United States Federal District Court for the Western District of Washington certified a question of law to the Washington Supreme Court. Cox Construction was the general contractor of a remodeling project. Cox hired Baker & Son Construction, Inc. as a subcontractor. A Baker employee allegedly caused a two-by-four to fall from a railing and strike Ronnie Cox, owner of Cox Construction, who later died from his injury. Baker allegedly called an insurance agent to alert them of the incident. The agent told Baker that no action needed to be taken because at that time, no claim existed. A few months later, Baker received a wrongful death claim from an attorney representing Cox’s widow. Baker notified its insurer, Preferred Contractors Insurance Company (PCIC) of the claim. PCIC denied coverage, but agreed to defend Baker under a reservation of rights. The certified question to the Washington Supreme Court related to the “claims-made” nature of the policy and the timing of Baker’s tender of Ms. Cox’s claim. The Supreme Court replied to the certified question that in light of RCW 18.27, a contractor’s commercial general liability insurance policy that requires the loss to occur and be reported within the same policy year, and provides neither neither prospective nor retroactive coverage violates Washington’s public policy. View "Preferred Contractors Ins. Co. v. Baker & Son Constr., Inc." on Justia Law

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The issue this case presented for the Washington Supreme Court's review was whether the penalty for intentionally concealing the source of political contributions could be based on the amount concealed. Washington voters proposed and passed Washington’s Fair Campaign Practices Act (FCPA or act), ch. 42.17A RCW. The FCPA compels disclosure and “compelled disclosure may encroach on First Amendment rights by infringing on the privacy of association and belief.” In 2012, California voters were presented with Proposition 37, which would have required some manufacturers to disclose whether packaged food contained genetically modified organisms (GMO). The Grocery Manufacturer’s Association (GMA) and many of its member companies successfully campaigned against Proposition 37, and some received negative responses from the public for doing so. In the wake of the Proposition 37 campaign, Washington sponsors filed Initiative 522, which also would have required GMO labels on packaged food. And like Proposition 37, GMA opposed it. GMA raised more than $14 million to oppose GMO labeling efforts. GMA in turn contributed $11 million to the “No on 522” campaign from the Defense of Brands strategic account. Despite its political activities in Washington, GMA did not register as a political committee with the Public Disclosure Commission (PDC) and did not make any PDC reports until after this lawsuit was filed. In response to the suit, GMA registered “under duress” but, as of the time of trial, still had not filed all of the required reports. The State sued, contending that GMA intentionally, flagrantly, and repeatedly violated the FCPA. The trial court specifically rejected testimony from GMA officers that they had not intended to violate the law, finding “it is not credible that GMA executives believed that shielding GMA’s members as the true source of contributions to GMA’s Defense of Brands Account was legal.” A majority of the Washington Supreme Court concluded GMA did not show that the trial court erred in imposing a punitive sanction under the FCPA based on the amount intentionally concealed. The Court thus affirmed the courts below and remanded for any further proceedings necessary. View "Washington v. Grocery Mfrs. Ass'n" on Justia Law

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This case involves the constitutionality of a business and occupation (B&O) tax. In 2019, the Washington state legislature imposed an additional 1.2 percent B&O tax on financial institutions with a consolidated net income of at least $1 billion. The tax applied to any financial institution meeting this threshold regardless of whether it was physically located in Washington, and it was apportioned to income from Washington business activity. The Washington Supreme Court found that because the tax applied equally to in- and out-of-state institutions and was limited to Washington-related income, it did not discriminate against interstate commerce. The Court therefore reversed the trial court and upheld the constitutionality of the tax. View "Washington Bankers Ass'n v. Dep't of Revenue" on Justia Law

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Lowe's Home Centers sought reimbursement of state sales taxes and Business and Occupation ("B&O") taxes from the Washington Department of Revenue ("DOR") because it contracted with banks to offer private-label credit cards to its customers, and agreed to repay the banks for losses it sustained when customers defaulted on their accounts. RCW 82.08.050 provided that a seller must collect and remit sales taxes to the State; for sellers unable to recoup sales taxes from buyers, RCW 82.08.037(1) provided that sellers could claim a deduction "for sales taxes previously paid on bad debts." In a split decision, the Court of Appeals affirmed the trial court's denial of reimbursement. After its review, the Washington Supreme Court held that although banks were involved in the credit transaction, Lowe's was still the seller burdened with the loss from its customers' defaults, including their nonpayment of the sales taxes. Accordingly, the Supreme Court reversed the Court of Appeals. View "Lowe's Home Ctrs., LLC v. Dep't of Revenue" on Justia Law

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At issue was the promulgation of a novel rule by the Washington Department of Ecology addressing climate change. Specifically, the Washington Supreme Court was asked to determine whether the Washington Clean Air Act granted the Department broad authority to establish and enforce greenhouse gas emission standards for businesses and utilities that did not directly emit greenhouse gases, but whose products ultimately did. The Department claimed and exercised such authority in promulgating the rule at issue. The Supreme Court held that by its plain language and structure, the Act limited the applicability of emissions standards to actual emitters. "Ecology's attempt to expand the scope of emission standards to regulate nonemitters therefore exceeds the regulatory authority granted by the Legislature." The Court invalidated the Rule to the extent that it exceeded the Department's regulatory authority, while recognizing the Department could continue to enforce the Rule in its authorized applications to actual emitters. View "Ass'n of Wash. Bus. v. Dep't of Ecology" on Justia Law

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The federal district court for the Western District of Washington certified a question of state law to the Washington Supreme Court. Money Mailer, LLC and Wade Brewer entered into a franchisor/franchisee relationship. In 2015, Money Mailer sued Brewer alleging breach of contract and for nearly $2 million in damages. Brewer counterclaimed, arguing among other things that Money Mailer violated the Franchise Investment Protection Act (FIPA) by selling him "products and services ... at more than a fair and reasonable price," contrary to RCW 19.100.180(2)(d). Brewer moved for partial summary judgment on the alleged FIPA violation. The district court found undisputed Money Mailer sold printed advertisements to Brewer at twice the price at which Money Mailer obtained and/or produced them. The court determined this markup violated RCW 19.100.180(2)(d) as a matter of law, and on this ground, granted in part Brewer's motion. In concluding Money Mailer's behavior violated the FIPA, the district court relied on two conclusions regarding Washington law: (1) the Court impliedly found that a franchisee may generally rely on the price at which a franchisor purchased a particular good or service to show what the "fair and reasonable price" for that service is; and (2) that selling a franchisee a particular good or service for twice what it cost the franchisor was not a "fair and reasonable price" and violated FlPA as a matter of Washington law. The federal court certified those conclusions as questions, asking the Washington Supreme Court to clarify whether those two rules of law were correct. After review, the Supreme Court answered "no" to both. A "fair and reasonable price" in RCW 19.100.180(2)(d) was a question of fact involving what prudent franchisors and franchisees in similar circumstances would regard as an appropriate price. "The circumstances must take into account the forces of the marked...whether Money Mailer violated the FIPA remains a question of fact to be determined by the district court." View "Money Mailer, LLC v. Brewer" on Justia Law

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The Washington Supreme Court was presented an issue of first impression: whether Washington should adopt the "apparent manufacturer" doctrine for common law product liability claims predating the 1981 product liability and tort reform act (WPLA). By this opinion, the Court joined the clear majority of states that formally adopted the apparent manufacturer doctrine. Applying that doctrine to the particular facts of this case, the Court held genuine issues of material fact existed as to whether a reasonable consumer could have believed Pfizer was a manufacturer of asbestos products that caused Vernon Rublee's illness and death. The Court reversed the court of appeals and remanded this case for further proceedings. View "Rublee v. Carrier Corp." on Justia Law

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FutureSelect Portfolio Management Inc. sought to challenge a 2011 Superior Court order granting KPMG LLP's motion to compel arbitration. Lead plaintiff FutureSelect was headquartered in Washington state, and managed a number of investment funds. The second named defendant, Tremont Partners Inc., was headquartered in New York and served as the general partner to the Rye Funds, whose status as feeder funds to Bernard L. Madoff Investment Securities LLC (BMIS) was at the heart of this dispute. Tremont allegedly offered FutureSelect a valuable opportunity to invest with BMIS, and made assurances regarding its oversight and understanding of BMIS's operation. Relying on these assurances and the audit opinions of the accounting firm hired by Tremont, FutureSelect decided to invest in the Rye Funds in 1998. Between 1998 and late 2008, when BMIS's Ponzi scheme finally came to light, FutureSelect continued investing additional funds in the Rye Funds allegedly based on the representations it regularly received from Tremont and its auditors. In all, FutureSelect invested $195 million with Tremont. FutureSelect argued that the Court of Appeals erred by dismissing its appeal as untimely because either the relevant law changed after 2011 in the Washington Supreme Court’s decision in Hill V. Garda CL Northwest, Inc., 308 P.3d 635 (2013), the 2016 appeal followed entry of a final judgment against another defendant, or discretionary review was appropriate. Because none of these rationales provided a basis for FutureSelect's untimely appeal, the Washington Court upheld the Court of Appeals' order of dismissal. View "Futureselect Portfolio Mgmt., Inc. v. Tremont Grp. Holdings, Inc." on Justia Law

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This case involved an issue of whether the purchaser of a lien release bond was an indispensable party in an action under chapter 60.04 RCW by a lien claimant against the surety of the release bond. Inland Empire Dry Wall Supply Company entered into an agreement to supply drywall materials to Eastern Washington Drywall & Paint (EWD&P). EWD&P contracted with Fowler General Construction to work on an apartment complex in Richland, Washington. Inland Empire claims EWD&P never paid it for the materials supplied. To pursue payment, Inland Empire filed a preclaim notice and timely recorded a mechanics' lien against the construction project under RCW 60.04.091. To release the project property from the lien. Fowler obtained a lien release bond in the amount of $186,979.57 from Western Surety Company. The lien release bond identified Fowler as the "Principal," Western as the "Surety," and Inland Empire as the "Obligee." The Court of Appeals, in a divided opinion, reversed the trial court's grant of summary judgment in favor of the surety and held that a claim against a lien release bond could be pursued solely against the surety. Finding no reversible error in that decision, the Washington Supreme Court affirmed. View "Inland Empire Dry Wall Supply Co. v. W. Sur. Co." on Justia Law

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Weyerhaeuser Company challenged an award of industrial insurance benefits to its former employee, Roger Street, for his low back condition, a claimed occupational disease. Weyerhaeuser argued that a worker must present expert medical testimony that the disease "arises naturally" out of employment. The Court of Appeals rejected Weyerhaeuser's argument, holding that the controlling case law required Street to present expert medical testimony to show that his back condition "arose naturally" from employment. Because there was medical testimony supporting the "arises proximately" requirement and lay testimony supporting the "arises naturally" requirement, the appeals court held that Street proved his low back condition was an occupational disease and affirmed the jury award of benefits. Finding no reversible error in the Court of Appeals’ decision, the Washington Supreme Court affirmed. View "Street v. Weyerhaeuser Co." on Justia Law