A & W Farms (“A&W”) sued Raymond Cook and got a judgment against him (well, against his business). During that litigation, Cook purchased a ranch, but arranged the transaction so that it was placed in the name of Adeline Johnson (another defendant in this action). A&W then moved, in a supplemental proceeding, to set aside the purchase as a fraudulent transfer to Johnson. There were lots of problems with discovery in the fraudulent transfer action: Johnson was not amenable to deposition; Cook avoided service and, for some time, refused to appear; &c.
In the end, the trial court concluded that the purchase of the ranch in Johnson’s name, instead of Cook’s name, was a fraudulent transfer. The court therefore quieted title to the ranch in Cook’s name, which meant it was subject to A&W’s judgment.
So what’s the problem? Well, this is another case about subject matter jurisdiction! Cook argued in the Court of Appeals that the trial court lacked jurisdiction over A&W’s fraudulent transfer claim because it “should have been brought in the county where the property is located.” Having just read MHM&F, LLC v. Edward Pryor, Jr. (Division 1, May 21, 2012) (or perhaps the Ziff Blog summary!) you’re probably thinking to yourself, “Of course there was subject matter jurisdiction! The Washington Constitution grants broad SMJ to the superior courts that is not subject to statutory whittling!” At least, that’s what I thought.
Well, MHM&F was a District 1 case, and this is a District 3 case. District 3 appears to see it differently. Here, the Court of Appeals started by stating (1) “RCW 4.12.010 provides for trial of real property disputes in the county where the real property is situated,” and (2) the statute “is jurisdictional in nature.” That “jurisdictional” quote is from a 1999 case, before the more recent cases discussed in MHM&F. Ugh.
Well, why does this matter? The Court of Appeals noted at the outset that Cook never challenged venue in the initial proceeding or the proceeding regarding the transfer. So it would have been much easier for the Court to just say the issue wasn’t jurisdictional and therefore it was waived.
But they don’t do that. Instead, the Court looked to another statute, RCW 6.32.240, which grants jurisdiction to superior courts for supplemental proceedings. Since the initial action was commenced in the proper court, the supplemental proceeding regarding the property was therefore also properly continued in the same court, despite the fact that the property was in a different county. Then, the Court reframed Cook’s challenge as a venue challenge, which is not jurisdictional, and is therefore waived. So that’s that.
The Court addressed some other issues, neither of which warrant much discussion:
- A&W’s fraudulent transfer claim was well within the statute of limitations. Cook’s claim to the contrary was based not on the timing of A&W’s claim, but on the timing of a deposition order. Weird.
- Cook also argued, for the first time on appeal, that the trial court violated GR 15 in sealing certain documents. But if he had a problem he should have moved to unseal the record in the trial court (which he never did), not challenge it in the Court of Appeals for the first time.
- Johnson argued that the trial court erroneously determined she was not a “vulnerable adult” at the time of the transfer (which would have defeated a finding of fraudulent intent). But the Court of Appeals refused to upset the trial courts factual findings, including credibility findings.
- Moreover, since Johnson was not a good-faith transferee, she was not entitled to a proportional interest in the property.