Haidar Falah Alshamaa, V. Hussain Kadim Khadem Alshafei

• Court: Court of Appeals of Washington
• Decided: June 17, 2024
• Docket: 85646-4
• Status: Unpublished

Opinion

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

HAIDAR FALAH ALSHAMAA, aka: HAIDAR FALAH ALSHAMA, aka: DIVISION ONE HAIDAR FALAH AL-SHAMAA, aka: HAIDER FALAH ALSHAMAA, aka: No. 85646-4-I HAIDER FALAH ALSHAMA, aka: HAIDER FALAH AL-SHAMAA, UNPUBLISHED OPINION

Respondent,

v.

HUSSAIN KADIM KHADEM ALSHAFEI and JANE/JOHN DOE KADIM KHADEM ALSHAFEI, husband and wife and their marital community; and QUICK TIME SERVICES, INC., a Washington corporation; and QTS SERVICES, LLC, dba: QTS, a Washington limited liability company,

Appellants.

DWYER, J. — Hussain Alshafei appeals from an order granting summary

judgment against him for an unpaid loan. Alshafei contends that summary

judgment was improperly granted because there existed genuine issues of

material fact. He asserts that (1) there was no evidence that the loan transaction

actually occurred and that Alshafei received the money, (2) there was no

evidence that Alshafei still owed the money because he was owed a larger No. 85646-4-I

amount of money from Haidar Alshamaa,1 and (3) the court did not view the

evidence in Alshafei’s favor.

We conclude that there was no issue of material fact that the loan was

made and received based on evidence in the record. The signed and notarized

loan agreement as well as a demand letter stating that the loan must be repaid in

60 days confirmed that the money was actually owed. Alshafei breached the

agreement when he did not repay the loan.2

Confining our review to matters properly put at issue in the trial court, we

also consider the fact that Alshafei never filed an answer to Alshamaa’s

complaint. Accordingly, no other loans, payments or potential setoffs were

pertinent to the trial court’s decision because they were never put at issue by the

pleadings in this cause.

We affirm the trial court’s grant of summary judgment on the breach of the

loan agreement.

I

In 2014, Haidar Alshamaa resided in Iraq and Hussain Alshafei resided in

Mountlake Terrace, Washington. Alshamaa and Alshafei each owned a business

that specialized in foreign money transactions, especially between the United

States and Iraq, and they often assisted each other in these transactions.

1 The respondent’s first name, “Haidar,” is spelled differently throughout the Clerk’s Papers

and also in the parties’ own loan agreement and trustee receipt. The alternate spelling is “Haider.” Where quoted in this opinion, the original spellings have been maintained. 2 Alshamaa’s motion for summary judgment points to authority that a “payable upon

demand” promissory note is enforceable under Washington law. Allied Sheet Metal Fabricators, Inc. v. People’s Nat’l Bank of Wash., 10 Wn. App. 530, 533-34, 518 P.2d 734 (1974).

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On February 1, 2014, Alshamaa made a $400,000 cash loan to Alshafei.

On or about March 25, 2014, the parties signed a “Trustee Receipt” agreement,

which stated that the cash loan had been made to Alshafei in his capacity as

business partner, for the purpose of investment and for working capital. The

Trustee Receipt was written in English and translated into Arabic. Three

signatures were affixed to the Arabic version. The document read as follows:

I, Hussain Kadim Khadem Alshafei, have received the sum of Four Hundred Thousand ($400,000) Dollars from Mr. Haidar Falah Alshamaa for the purpose of being a partner in the US based company called QTS and for investment and working capital . . . .... For this I hereby sign my name and I am committed to return the above sum upon request.

Between April and May of 2014, Alshamaa requested repayment of the

loan, but he received no payment from Alshafei. In May 2014, Alshamma

traveled from Iraq to Seattle to meet with Alshafei regarding the loan. They met

on May 12, at which time Alshafei signed a loan agreement, promising to repay

$350,000 within 60 days of written notice from Alshamaa. Alshafei signed the

agreement on his own letterhead. The agreement reads as follows:

I, HUSSAIN ALSHAFEI, HAVE BORROWED $350,000 FROM MR. HAIDER FALAH AL-SHAMAA WITHOUT INTEREST. I WILL RETURN THE MONEY TO HIM UPON 60 DAYS WRITTEN NOTICE FROM HIM. NOTICE NEED TO BE SENT TO ME, WITH A COPY TO MY ATTORNEY, C. MICHAEL KVISTAD, AT THE BELOW ADDRESSES.

The signing of the agreement was witnessed by notary Clare Nordquist,

who, in conjunction with the summary judgment motion, later provided a copy of

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her notary log to the court. Nordquist’s notary log contained a line with Alshafei’s

name, driver’s license number, signature, and date of signing.

On December 3, 2014, Alshamaa’s attorney, Marshal Garmo, sent written

notice to Alshafei and demanded that he repay the $350,000 to Alshamaa within

60 days by a wire transfer to Garmo’s bank account. Alshafei did not repay the

loan within 60 days, nor did he provide evidence to the trial court that he has ever

repaid the loan.

In June 2015, Alshamaa filed a complaint in the Snohomish County

Superior Court seeking repayment. The summons included the following

statement, informing Alshafei that he was required to respond to the complaint:

In order to defend against his lawsuit, you must respond to the complaint by stating your defense in writing, and by serving a copy upon the person signing this Summons within 20 days after the service of this Summons, excluding the day of service, or a default judgment may be entered against you without notice. A default judgment is one where plaintiff is entitled to what he asks for because you have not responded.

Alshamaa moved for summary judgment on September 2, 2015. Alshafei

then moved for a temporary stay of proceedings on September 15, 2015, due to

pending criminal charges against him in federal court. The stay was granted on

September 24. During this time, separate criminal proceedings were pending

against Alshafei in the United States District Court based on financial

transactions characterized as money laundering and other unlawful activities.

Alshafei settled the federal case against him, paying restitution of $10,000. The

stay in this case was lifted in June 2018. Thereafter, in August 2020, Alshamaa

filed another motion for summary judgment.

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On September 14, 2020, Alshafei responded.3 He first denied having

signed the notarized loan agreement. Alshafei also claimed that he had made

payments to Alshamaa in a series of small and large lump sums, totaling

$488,455. Alshafei asserted that he, like Alshamaa, had not yet been repaid.

Alshafei provided bank receipts that, he asserted, recorded the payments.

In October 2020, the court denied Alshamaa’s motion for summary

judgment in light of perceived unresolved issues, pointing to uncertainty of loan

payment and whether the deals were separate or if part of the original loan had

been paid back through these transactions. After the court’s ruling, Alshamaa

tendered Alshafei discovery requests for specific documents pertaining to any

loans between the parties. Alshafei did not comply. In April 2022, the superior

court entered an order to compel discovery.

On June 2, 2023, Alshamaa filed a new motion for summary judgment and

argued that because Alshafei had not provided any documents to support his

allegations after being compelled by the court to do so, summary judgment was

now appropriate.

Alshamaa’s attorney testified by declaration that he had spoken with

Alshafei on the phone. During the call, Alshafei acknowledged that he had

received the motion for summary judgment and that he planned to file one or

more lawsuits in return. However, as of July 3, 2023, Alshamaa still had not

3 The response is handwritten and is not accompanied by a memorandum or brief. In the

denial of the motion for summary judgment, the judge comments that, “[a]lthough the Defendant’s response declaration is inartful, it does claim the written agreement/contract to repay loan is forged and therefore fraudulent.” The trial judge also referenced other payments claimed to have been made by Alshafei to Alshamaa.

5 No. 85646-4-I

received any response to the motion for summary judgment, nor did the court

docket show that any response had been filed.

CR 56(e) instructs: “If the adverse party does not so respond, summary

judgment, if appropriate, shall be entered against the adverse party.”

On July 11, 2023, the motion for summary judgment was granted. A

corrected order was filed in February 2024 to address a scrivener’s error in the

judgment balance. In the order, and pursuant to CR 56(h),4 the trial court

designated the documents and other evidence that had been called to its

attention before the motion for summary judgment was entered, including:

1) Plaintiff’s Motion for Summary Judgment; 2) Declarations of Alshamaa’s attorney, Benjamin Kelly, with exhibits; 3) Declaration of Alshamaa, with exhibits; 4) Declaration of the notary, Claire Nordquist; 5) exhibits included with the declarations a. 2014 notarized document showing $350,000 loan from plaintiff to defendant; b. May 12, 2014 notary journal showing entries; c. 2014 written notice for repayment from plaintiff's attorney to defendant’s attorney; d. 2022 Order Granting Plaintiff's Motion to Compel. 6) Reply in Support of Plaintiff's Motion for Summary Judgment;

Directly below the list of documents considered, the trial court also wrote:

Respondent did not submit a written answer to Plaintiff's Motion for Summary Judgment: Based on the above evidence, this Court hereby ORDERS: 1) Defendant’s oral request to continue is DENIED. Defendant has not indicated that he would pay attorney fees to Plaintiff due to requested continuances. 2) Plaintiff’s Motion for Summary Judgment is GRANTED. Defendant’s own notarized statements acknowledge he received the funds at issue. The present motion is

4 CR 56(h) provides: “Form of Order. The order granting or denying the motion for summary judgment shall designate the documents and other evidence called to the attention of the trial court before the order on summary judgment was entered.”

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essentially identical to the 2020 summary judgment motion. That previous motion was denied and continued for the purpose of developing discovery. Since then Defendant has not produced any additional documentation despite this Court’s motion to compel.

The trial court entered judgment in favor of Alshamaa in the principal

amount of $350,000 together with $525.00 in court costs and statutory attorney

fees.

Alshafei appeals.

II

We review summary judgment orders de novo and engage in the same

inquiry as the trial court. Folsom v. Burger King, 135 Wn.2d 658, 663, 958 P.2d

301 (1998). A motion for summary judgment is properly granted if the pleadings,

affidavits, depositions, and admissions on file demonstrate the absence of any

genuine issues of material fact and the moving party is entitled to judgment as a

matter of law. CR 56(c); Wilkinson v. Chiwawa Comtys. Ass’n, 180 Wn.2d 241,

249, 327 P.3d 614 (2014). “ʻA material fact is one that affects the outcome of the

litigation.’” Elcon Constr., Inc. v. E. Wash. Univ., 174 Wn.2d 157, 164, 273 P.3d

965 (2012) (quoting Owen v. Burlington N. Santa Fe R.R., 153 Wn.2d 780, 789,

108 P.3d 1220 (2005)).

“A summary judgment motion should be granted only if a reasonable

person could reach but one conclusion from all the evidence.” Malo v. Alaska

Trawl Fisheries, Inc., 92 Wn. App. 927, 928, 965, P.2d 1124 (1998). A genuine

issue of material fact exists when reasonable minds could differ on the facts

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controlling the outcome of the case. Dalen v. St. John Med. Ctr., 8 Wn. App. 2d

49, 57-58, 436 P.3d 877 (2019).

As then-Judge Cardozo once pronounced: “ʻThe very object of a motion

for summary judgment is to separate what is formal or pretended in denial or

averment from what is genuine and substantial, so that only the latter may

subject a suitor to the burden of a trial.’” Preston v. Duncan, 55 Wn.2d 678, 684,

349 P.2d 605 (1960) (quoting Richard v. Credit Suisse, 242 N.Y. 346, 152 N.E.

110, 45 A.L.R. 1041 (1926)).

A

The moving party bears the initial burden of establishing that no genuine

issue of material fact exists and that it has a right to judgment as a matter of law.

Once satisfied, the burden then shifts to the nonmoving party to prove that a

triable issue exists. Geer v. Tonnon, 137 Wn. App. 838, 843, 155 P.3d 163

(2007). We construe all reasonable inferences from the evidence in favor of the

nonmoving party. Green v. Normandy Park, Riviera Section Cmty. Club, Inc.,

137 Wn. App. 665, 681, 151 P.3d 1038 (2007).

Alshamaa’s lawsuit was for the breach of the loan agreement, which was

a contract requiring Alshafei to repay money upon demand. “When performance

of a duty under a contract is due, any non-performance is a breach.”

RESTATEMENT (SECOND) OF CONTRACTS §235(2) (AM. LAW INST. 1981). To prevail

in his case, Alshamaa was required to prove the following elements:

1) That the defendant entered into a contract with plaintiff [loan agreement]; 2) That the terms of the contract included: [loan was to repaid in 60 days upon demand letter];

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3) That defendant breached the contract as claimed by plaintiff [by not repaying the loan in 60 days after demand letter received]; 4) That plaintiff had performed its obligations under the contract [loaned defendant money]; 5) That the condition precedent had occurred [demand letter]; and 6) That plaintiff was damaged as a result of defendant’s breach [loss of $350,000].

See 6A W ASHINGTON PRACTICE: W ASHINGTON PATTERN JURY INSTRUCTIONS: CIVIL

300.02 (7th ed. 2019) (WPI).5

To prove that a loan had been made and that there was an enforceable

promise to repay it, Alshamaa produced various items of evidence, including the

signed and notarized loan agreement on Alshafei’s letterhead for repayment of

$350,000. The agreement clearly stated both receipt of the funds and the terms

of repayment. This document was accompanied by the notary’s declaration and

notary log proving that she had witnessed Alshafei signing the agreement in her

presence. Initially, Alshafei denied that he had signed the agreement, which was

the basis for the denial of the 2020 motion for summary judgment. However,

Alshafei did not deny having signed it during the 2023 summary judgment

proceedings.

To prove that Alshamaa had caused to be sent to Alshafei a demand for

payment, triggering the 60-day repayment period, Alshamaa produced the

December 3, 2014 letter. Alshafei’s receipt of the letter was then corroborated by

Alshamaa’s attorney, who attested that he had spoken to Alshafei on the phone

and obtained confirmation that the letter had arrived. That the loan was never

repaid was also confirmed. As a result of this breach, Alshamaa proved a loss of

5 See also the comments to WPI 302.03 (Material Breach—Definition) and WPI 300.02

(Burden of Proof on the Issues—Breach of Contract—No Affirmative Defense).

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$350,000. Therefore, the record indicates that all of the elements of the claim at

issue were established. Alshamaa met his initial burden of proof. Thereafter, the

burden shifted to Alshafei.

B

Alshafei first asserts that there exists a genuine issue of material fact.

This is so, he argues, because Alshamaa did not produce evidence in the form of

bank transfers or receipts that Alshafei actually received the $350,000 from

Alshamaa. Alshafei alleges that the only evidence of the loan payment was

Alshamaa’s “self-serving” declaration, which could not be considered as

evidence.

We first consider the question of the self-serving declaration and then

decide whether there existed an issue of material fact.

Alshafei’s contention that a self-serving declaration cannot act as

admissible evidence fails. The court must consider all admissible evidence

presented to it in order to rule on a summary judgment motion, including

statements that appear to serve the interests of the declarant. Haley v.

Amazon.com Servs., LLC, 25 Wn. App. 2d 207, 220, 522 P.3d 80, 87 (2022).

Haley holds that such declarations are competent evidence.

In accordance with these rules, a court may not disregard a party’s declaration simply because it believes the testimony to be “self- serving.” Indeed, classifying a party’s declaration as “self-serving” is essentially meaningless. All evidence submitted by a party should be self-serving. That is the purpose of introducing evidence: to lend credence to the party’s theory of the case.

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Haley, 25 Wn. App. 2d at 220. Additionally, “a party’s declaration is enough to

create a question of fact where [the declarant’s] . . . testimony was based on [the

declarant’s] personal observations.” Reagan v. Newton, 7 Wn. App. 2d 781, 806,

436 P.3d 411 (2019).

Here, Alshamaa’s declaration was based on his personal observations

and experiences with Alshafei and the acts of negotiating and signing their loan

agreement. Alshamaa’s declaration was not a “mere assertion.” Instead, it was

direct evidence of that which he had perceived through his senses. Therefore, it

was based on his personal knowledge. ER 602. In addition, it was accompanied

by two exhibits that were direct evidence of the loan made to Alshafei: the signed

and notarized May 12, 2024 loan agreement and the letter demanding

repayment. Alshamaa’s declaration was also corroborated by the notary’s

declaration and related exhibits, including the notary log. In confirming that

Alshafei had indeed signed the document the notary notarized, Nordquist stated:

“I would not have notarized Exhibit 1 without first confirming Mr. Alshafei’s

identity.” This confirmed Alshamaa’s version of the event.

Alshafei next contends that there exists an issue of material fact because

there was no proof that he received the funds mentioned in the loan agreement.

However, Alshafei produced no evidence to show that he did not receive the

$350,000 (or $400,000) and he did not affirmatively deny it. On the contrary, the

Trustee Receipt states: “I, Hussain Kadim Khadem Alshafei, have received the

sum of Four Hundred Thousand ($400,000) Dollars from Mr. Haidar Falah

11 No. 85646-4-I

Alshamaa.” (Emphasis added.) The notarized loan agreement similarly states:

“I, HUSSAIN ALSHAFEI, HAVE BORROWED $350,000 FROM MR. HAIDER

FALAH AL-SHAMAA WITHOUT INTEREST.” (Emphasis added.) Having

received the money is attested to in the past tense. Further, he has never

directly denied that he received the funds or that he has not repaid Alshamaa

pursuant to the loan agreement.

The evidence is uncontested that Alshafei received the funds and did not

repay as agreed. The trial court correctly determined that there is no issue of

material fact in these regards.

C

Alshafei next contends that even if he did receive the loan money,

Alshamaa owed him money as well. In an attempt to prove this to the trial court,

Alshafei submitted receipts and documentation of purported money transfers

from him to Alshamaa. Alshafei argues that he should not be required to repay

the loan because he made $488,455 of payments to Alshamaa and this sum is

greater than $350,000.

This claim fails for a simple reason: Alshafei failed to properly put the

claim at issue in the trial court. Alshafei never filed an answer. This failure is

fatal to his present claim.

Two statutes control our analysis. The first statute, RCW 12.08.120,

instructs that a defendant must proclaim entitlement to a setoff by asserting the

setoff in the defendant’s answer:

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To entitle a defendant to any setoff he or she may have against the plaintiff, he or she must allege the same in his or her answer; and the statutes regulating setoffs in the superior court, shall in all respects be applicable to a setoff in a justice’s court, if the amount claimed to be setoff, after deducting the amount found due to the plaintiff, be within the jurisdiction of the justice of the peace; judgment may, in like manner, be rendered by the justice in favor of the defendant, for the balance found due the plaintiff.

The second statute also requires that a setoff be pleaded:

To entitle a defendant to a setoff he or she must set the same forth in his or her answer.

RCW 4.32.150.6

Here, Alshafei never filed an answer at all. Thus, his claim of setoff was

not put at issue in the case. Consequently, the trial court rightly did not consider

the purported issue.7

D

Finally, Alshafei argues that the trial court did not consider his case in the

light most favorable to him. He does not establish this. The trial judge was not

required to discount uncontested evidence. Neither was the judge required to

credit evidence pertaining to matters that were never properly put at issue in the

case. Alshafei’s litigation failings are solely of his own making.

6 A setoff is “[a] debtor’s right to reduce the amount of a debt by any sum the creditor

owes the debtor; the counterbalancing sum owed by the creditor.” BLACK’S LAW DICTIONARY 1648 (11th ed. 2019). 7 Alshafei attempts to argue that the payments made to Alshamaa suffice to demonstrate

evidence of payment of his debt. However, these payments predated the December 3, 2014 written demand letter for repayment. Moreover, no document submitted to the trial court indicated that the loan at issue was connected in any way with other dealings between the parties. The trial court was not required to review issues that were not part of the case.

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The trial court did not err by granting summary judgment to Alshamaa.

We affirm.

WE CONCUR: