A & W FARMS v. Cook

277 P.3d 67
CourtCourt of Appeals of Washington
DecidedMay 22, 2012
Docket29672-5-III, 29673-3-III
StatusPublished
Cited by3 cases

This text of 277 P.3d 67 (A & W FARMS v. Cook) is published on Counsel Stack Legal Research, covering Court of Appeals of Washington primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
A & W FARMS v. Cook, 277 P.3d 67 (Wash. Ct. App. 2012).

Opinion

277 P.3d 67 (2012)

A & W FARMS, William Guhlke and Alex Guhlke, Respondents,
v.
Raymond E. COOK, Jr. and Arlene Cook, husband and wife; and Adeline Johnson, Appellants.
Sunshine Lend Lease, Inc. a Nevada Corporation, Hard Rock Control, LLC, a West Indies Limited Liability Company; and Eldon Soresen, Defendants.

Nos. 29672-5-III, 29673-3-III.

Court of Appeals of Washington, Division 3.

May 22, 2012.

*69 Timothy W. Durkop, Attorney at Law, Spokane Valley, WA, Joseph Paul Delay, Delay Curran Thompson Pontarolo & Walker, Spokane, WA, for Appellant.

Shay S. Scott, Haglund Kelley Jones & Wilder LLP, Portland, OR, for Respondent.

BROWN, J.

¶ 1 In this consolidated appeal, Raymond E. Cook, Jr., and Arlene Cook, (collectively Mr. Cook) and Adeline Johnson assert the trial court erred in its supplemental proceedings order concluding they engaged in a fraudulent property transfer to avoid paying judgment creditor A & W Farms, a joint venture of William and Alex Guhlke. Mr. Cook contends (1) the court lacked subject matter jurisdiction, (2) the action was barred by the statute of limitations, and (3) sealed evidence was wrongly entered ex parte. Ms. Johnson contends (1) she was a vulnerable adult unable to participate in a fraudulent transfer, and (2) the court erred in quieting title in Mr. Cook's name when she was the purchaser of the property. We reject all contentions, and affirm.

BACKGROUND

¶ 2 Generally, in 2000 in Spokane County, A & W Farms successfully sued Sunshine Lend Lease, Inc., one of Mr. Cook's logging businesses.[1] Mr. Cook withheld logging payments beginning in 1997 that involved falsified *70 logging receipts. Mr. Cook did not challenge venue. In 2001, the court awarded A & W Farms $129,204 as an additional judgment for attorney fees for Mr. Cook's misconduct during prejudgment garnishment proceedings. He appealed the judgments and this court affirmed. See A & W Farms v. Sunshine Lend and Lease, Inc., 2003 WL 21513626, No. 20504-5-III (July 3, 2003 Wash.App.) (unpublished). On remand, the trial court acknowledged evidence of fraud in the 1997 logging transactions and further found Mr. Cook had offered altered trial documents, including three $10,000 checks written to Ms. Johnson. The court found Mr. Cook refused to cooperate, stonewalled, and hid documents. The court found both Mr. Cook and Ms. Johnson lacked credibility.

¶ 3 During the A & W Farms litigation, Mr. Cook purchased a 60-acre ranch in Stevens County, Washington, for $230,000 cash in April 1999. He paid $30,000 down and the remaining money was paid in two payments: $80,000 and $120,000. Mr. Cook paid $80,000 personally to the seller by cashier's check. He received the money as a personal check from Ms. Johnson and deposited it in his personal bank account. The $120,000 was paid at the April 1999 closing with a cashier's check made out to him from Ms. Johnson that he endorsed over to the seller. At closing, Mr. Cook put title in Ms. Johnson's name as the record owner instead of in his name. Ms. Johnson has never lived on the ranch, nor has she ever received any rent payments from Mr. Cook. Mr. Cook and his wife have lived on the ranch since 1999. Mr. Cook gave Ms. Johnson a promissory note for $200,000. The seller of the ranch testified Mr. Cook told him that he was arranging "financing" through Ms. Johnson for the purchase of the ranch. Report of Proceedings (Aug. 2, 2010) at 189.

¶ 4 The ranch was allegedly sold less than two years later in December 2001 for $100,000 to Hard Rock, LLC, a West Indies company without any money transfer to Ms. Johnson. Shortly thereafter, the property was transferred to Hard Rock's manager, Eldon Sorensen. Mr. Sorensen did not pay or exchange anything to Hard Rock for the property. Mr. Sorensen and Mr. Cook were acquaintances who had prior business dealings. Mr. Cook continued to live on the property the entire time.

¶ 5 In March 2002 supplemental proceedings, again without any Spokane County venue challenge, A & W Farms sought to set aside the April 1999 ranch purchase as a fraudulent transfer to Ms. Johnson, together with the other transfers under the Uniform Fraudulent Transfer Act (UFTA), chapter 19.40 RCW. At this time, Mr. Cook faced approximately $1 million in creditors. A & W Farms recorded lis pendens notice with the Stevens County recorder's office to prevent further fraudulent transfer of the property pending trial. The trial court noted that since the underlying judgment was entered on A & W Farms' fraud claim back in 2001, Mr. Cook had "evaded personal service approximately twenty times." Clerk's Papers (CP) at 1227 n. 7.

¶ 6 A & W Farms sought to depose Ms. Johnson about Mr. Cook's assets. Dr. Husky, Ms. Johnsons' family physician, opined Ms. Johnson was not capable of being truthful in an adversarial proceeding. He related she would become too nervous and anxious and be unable to reliably answer questions. Dr. Husky opined, however, that Ms. Johnson would be capable of safely answering questions in a supportive, nonadversarial environment. The trial court determined without appeal that Ms. Johnson was capable of participating in a deposition. Ms. Johnson appeared for her deposition and her testimony was used at trial.

¶ 7 Clark Ashworth, PhD evaluated Ms. Johnson at the request of her children. As a part of his October 2008 report, he discussed financial transactions, indicating she understood all of the financial transactions discussed. A primary care physician for Ms. Johnson reported she was able to manage her finances.

¶ 8 A & W Farms attempted discovery, but had extreme difficulty in serving Mr. Cook. In July 2008, A & W Farms finally succeeded in serving him with an amended subpoena duces tecum and document request, which required him to appear on July 29 for a debtor examination; he failed to appear. In August 2008, A & W Farms moved for Mr. *71 Cook to appear at a show cause hearing and respond to their request for a finding of contempt and a bench warrant. In September 2008, the court ordered Mr. Cook to appear on October 9 for examination regarding his real and personal property; he failed to appear. In March 2009, A & W Farms duly moved for a bench warrant, sanctions, and supplemental examination. In May 2009, the court issued an order to show cause why a bench warrant should not be issued. Mr. Cook finally appeared through counsel.

¶ 9 At the 2010 trial, A & W Farms asked the court to unwind the transfers that left the ranch out of Mr. Cook's name. Ms. Johnson's son, Kenneth Johansson, offered otherwise unsupported claims his mother began suffering from mental deficiencies and depression after a stroke in 1994 or 1995, and her condition worsened with later mini-strokes. The court noted Mr. Johansson was a potentially biased witness because he could benefit if Ms. Johnson were to receive money from the execution sale of the ranch.

¶ 10 The court found Ms. Johnson participated in the transactions to assist Mr. Cook with severe creditor problems and she later participated in covering up the transactions when they were investigated. The court noted Ms. Johnson claimed the property was an investment, but she never attempted to obtain rent from Mr. Cook for living on the property, and the property was sold for less than one-half of the purchase price only two years after Mr. Cook obtained it without payment evidence.

¶ 11 The court concluded the initial transaction of deeding the ranch to Ms. Johnson, instead of Mr. Cook's name, was a fraudulent transaction.

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Bluebook (online)
277 P.3d 67, Counsel Stack Legal Research, https://law.counselstack.com/opinion/a-w-farms-v-cook-washctapp-2012.