Deveny v. Hadaller

161 P.3d 1059
Court of Appeals of Washington·Decided July 10, 2007·No. 35028-9-II·Published·Cited by 11 cases

Opinion

161 P.3d 1059 (2007)

Deborah DEVENY, Appellant,
v.
Collette HADALLER and John Doe Hadaller, wife and husband, and the marital community composed thereof, and Debbie Simons and John Doe Simons, wife and husband, and the marital community composed thereof, Healthy Foundations, Inc., a Washington corporation, dba Curves, and Life and Goodness, Inc., a Washington corporation, Respondents.

No. 35028-9-II.

Court of Appeals of Washington, Division 2.

July 10, 2007.

*1060 Rand L. Koler, Patrick Leo McGuigan, Rand L. Koler and Associates PS, Seattle, WA, for Appellant.

Paul Francis Cane, Dana Copstead Hoerschelmann, Russell Charles Love, Thorsrud Cane & Paulich, Patrick Joon Kang, Premier Law Group, Seattle, WA, for Respondents.

VAN DEREN, A.C.J.

¶ 1 Deborah DeVeny appeals the trial court's order granting summary judgment to Collette and John Doe Hadaller, Debbie and John Doe Simons, Healthy Foundations, Inc., and Life and Goodness, Inc.[1] on her claims for breach of contract, intentional misrepresentation, violation of the Washington Uniform Trade Secrets Act (UTSA),[2] tortious interference with business relations, and misappropriation of trade name arising from a disputed sale of her tanning business, Tropic Tanz. DeVeny argues that the trial court erred in ruling that she lacked legal capacity to enter into a contract to sell her business because its assets belonged to her bankruptcy estate and that the bankruptcy code's automatic stay[3] barred her from selling them. We reverse and remand for trial, holding that (1) DeVeny had the legal capacity to enter into the alleged contract, (2) the automatic stay provision did not bar her ability to administer business assets, and (3) judicial estoppel does not bar her claims.

FACTS

¶ 2 Deborah DeVeny owned and operated Tropic Tanz, a tanning salon, in Winlock, Washington.[4] Tropic Tanz occupied half of the 2,500 sq. ft. space that DeVeny rented from Bill Allegre under a month-to-month oral lease. Its assets, other than the lease, *1061 goodwill, or customer lists, comprised four tanning beds and miscellaneous office equipment. DeVeny had no employees but she sublet a part of the space to Jennifer Serl, a hairdresser, and "supplied all of her equipment —chairs, mirrors, sink, all of that." Clerk's Papers (CP) at 303.

¶ 3 On April 10, 2003, DeVeny and her husband, Charles DeVeny, filed for personal bankruptcy under chapter 7 of the United States Bankruptcy Code.[5] Their section 341 hearing[6] was held on May 21, 2003 and the final bankruptcy discharge occurred on July 22, 2003, under former 11 U.S.C. § 727 (1986).[7]

¶ 4 Hadaller and Simons were shareholders of Healthy Foundations, Inc. Healthy Foundations owned several "Curves for Women" franchises, women's fitness clubs. CP at 336. On June 26 or 27, 2003, Allegre told Hadaller that Tropic Tanz had unused space available. Hadaller and Simons visited DeVeny and asked about subleasing DeVeny's unused space. DeVeny declined to sublet any space, but offered to sell Tropic Tanz and her leasehold interest to Hadaller and Simons for $35,000. DeVeny claims that Hadaller and Simons accepted her offer to sell. Hadaller says that they did not reach an agreement because she requested DeVeny's financial records to determine the Tropic Tanz value. According to Hadaller, she did not receive DeVeny's financial records until "after July 11."[8] CP at 338.

¶ 5 On June 27, 2003, Hadaller and Simons executed a five-year lease with Allegre on behalf of Healthy Foundations for DeVeny's entire space. "This lease [was] contingent on the sale of Tropic Tan[z] from Debbie DeVeny." CP at 347. According to DeVeny, Hadaller and Simons started to "paint the premises" the next day. CP 191. DeVeny "tentatively agreed" to move out by July 21, 2003, but "they had not discussed the specifics of [Hadaller and Simons] taking over Tropic Tanz sooner than September 1, 2003." CP at 191. DeVeny had to leave the area to look after her mother who had suffered a heart attack and left Jennifer Serl "to look after things while [she] was away." CP at 191. Due to this delay, Healthy Foundations and Allegre voided the June 27 lease and entered into a month-to-month lease for two-thirds of the space on July 11. The second lease agreement states that "[Healthy Foundations] will be sharing lease space temporarily with Debbie DeVeny of Tropic Tanz." CP 294.

¶ 6 On July 18, 2003, DeVeny left to care for her mother and, on the same day, asked Serl to take care of Tropic Tanz while she was away and closed her Tropic Tanz business account with the Department of Revenue. Thereafter, Serl, Hadaller, and Simons serviced DeVeny's tanning clients as they came into Tropic Tanz. According to Serl, she was not aware of any restriction that prohibited her from using the information in DeVeny's client cards. Amanda Whisler, a former employee of Tropic Tanz/Curves for Women,[9] stated that Hadaller and Simons used DeVeny's client cards containing the client's name, address, phone number, history of using Tropic Tanz, skin type, hair color, and history of sun exposure. Whisler was later instructed to enter the information from DeVeny's client cards into Hadaller and Simons' new client database.

¶ 7 Hadaller and Simons subsequently learned that their franchise agreement with Healthy Foundations barred them from operating the Curves franchise with other businesses, including tanning salons, so they formed a new corporation, Life & Goodness, Inc. on July 30 to purchase Tropic Tanz. Then on August 4, 2003, after the Curves fitness club opened, Allegre and Hadaller *1062 signed a third lease that cancelled the second July 11 lease and affirmed the June 27 lease for DeVeny's entire space. This third amended lease removed the contingency clause that referred to the purchase of Tropic Tanz from DeVeny. As Tropic Tanz and Curves had the same entry door, Hadaller and Simons changed the lock. And because Allegre "had not received rent from [DeVeny] in quite some time," he removed her tanning beds and other furniture and stored them at an off-site location. CP at 285.

¶ 8 On August 13, DeVeny, Hadaller, and Simons met to further negotiate the purchase and sale of DeVeny's business. Later, DeVeny accepted their final offer of $9,893.95, over the telephone, with no discussion of a payment due date. DeVeny then sent them a letter, specifying a payment due date of August 22. Hadaller and Simons responded: "This letter is to inform you that we have been advised to allow your letter of acceptance to expire in accordance with your stated dated of expiration of August 22, 2003[,] and hereby withdraw all offers to purchase." CP at 364. They further stated:

It becomes necessary for us, as leaseholders, to ask you [to] remove your remaining business equipment from the premises. Supervised arrangements have been made for you to do so on Saturday, the sixth of September, 2003, between 1:00[pm] and 6:00[pm], to avoid any business disruption or customer inconvenience. If for any reason the equipment is not removed during this arranged day and time or [sic] have made other agreed arrangements prior to that date, the remaining equipment will be moved into storage at the sole cost to you until retrieved.

CP at 364. Finally, after having taken possession of DeVeny's business premises, Hadaller and Simons told DeVeny that unless she removed her belongings by November 1, they would sell them at her expense.

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Deveny v. Hadaller, 161 P.3d 1059 (Wash. Ct. App. 2007).

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