FILED MARCH 24, 2022 In the Office of the Clerk of Court WA State Court of Appeals Division III
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON DIVISION THREE
JOHN K. TORMINO, an individual, ) ) No. 37926-4-III Appellant, ) ) v. ) ) TORMINO SASH & GLASS, INC., a ) UNPUBLISHED OPINION Washington Corporation, NORTHWEST ) TRUSTEE & MANAGEMENT ) SERVICES, LLC, a Washington limited ) liability company ) ) Respondents. )
FEARING, J. — We face the unusual, if not singular, situation where corporate
shareholders appointed a limited liability company by and through one of the company’s
agents as director of the corporation. We hold that under the bylaws of the corporation,
the company by and through an agent cannot serve as director.
FACTS
John J. Tormino Sr. founded Tormino Sash & Glass Inc. (TSG), a Washington
corporation, a successful Spokane business. At his death, Tormino Sr. held 42.4 percent
of the corporate stock. His children, John K. Tormino Jr., Patricia Thayer, and Nancy
Taormina, each owned 19.2 percent of the corporate stock. No. 37926-4-III Tormino v. Tormino Sash & Glass, Inc.
John J. Tormino Sr. died on May 2, 2017. The superior court appointed Northwest
Trustee & Management Services LLC (Northwest Trustee), a Washington state trust
company and limited liability company, as personal representative of Tormino Sr.’s
estate. Cam McGillivray, a trust officer and in-house counsel for Northwest Trustee,
acted as the trust company’s agent in administering Tormino Sr.’s estate.
On June 8, 2018, TSG’s shareholders elected John K. Tormino Jr. as its sole
director. CP 48. At the same meeting, the shareholders adopted a bylaw that read:
3.1 Number, Tenure, and Qualifications. The business affairs and property of the Corporation shall be managed by a Board of not less than one (1) Director nor more than nine (9) Directors, who are individuals. . . . Directors shall be twenty-one (21) years of age, or older.
Clerk’s Papers (CP) at 15. The shareholders also approved the sale of “substantially all”
of TSG’s assets. CP at 11.
While serving as director, John K. Tormino Jr. withdrew $198,000 from TSG’s
corporate bank account. The shareholders called a special meeting on April 13, 2020 to
discuss the withdrawal of funds. At the meeting, Tormino Jr. declared that he withdrew
the $198,000 for payment of wages to himself for the time window of October 2012 to
February 2020. Tormino Jr. added that, in May 2019, he had formed the new
corporation, Torminos Glass Inc. that leased property in Gig Harbor at a site formerly
used by TSG. Northwest Trustee and Taormina, with control of the majority of shares of
the company, voted to remove Tormino Jr. from his position as director.
2 No. 37926-4-III Tormino v. Tormino Sash & Glass, Inc.
One week later, on April 20, 2020, the shareholders conducted another special
meeting and appointed “NWT [Northwest Trustee] by and through Mr. Cam McGillivray
to the position of Director.” CP at 31. The adopted motion required Northwest Trustee
to provide the shareholders five days’ advance written notice of any expenditures in
excess of $2,500. The motion passed with the votes of Northwest Trustee and Nancy
Taormina, together controlling 61.6 percent of the voting shares. Patricia Thayer and
John K. Tormino Jr., exercising all remaining shares, voted against the motion.
During the April 20 special meeting, John K. Tormino Jr. announced that he
would not return the $198,000 to the corporate account. Northwest Trustee and Nancy
Taormina voted for TSG to sue Tormino Jr. for a return of the money.
After the April 20 TSG special meeting, Cam McGillivray and/or Northwest
Trustee acted as TSG’s director. During some actions, McGillivray avowed he served as
TSG’s director. During other actions, McGillivray proclaimed Northwest Trustee to be
the director. Sometimes, TSG has proclaimed that the estate of John K. Tormino Sr.,
rather than Northwest Trustee, serves as its director. Even other times, Steve Trefts, as
president of Northwest Trustee, has sent notices for TSG meetings.
At the direction of Northwest Trustee or Cam McGillivray, TSG issued four
individual payments over $2,500. Northwest Trustee did not afford shareholders advance
notice of the payments.
3 No. 37926-4-III Tormino v. Tormino Sash & Glass, Inc.
PROCEDURE
John K. Tormino Jr. initiated this suit against TSG and Northwest Trustee.
Tormino Jr. requested declaratory rulings that (1) the Washington Business Corporation
Act, Title 23B RCW, precluded Northwest Trustee by and through Mr. Cam McGillivray
from acting as a director of TSG because only a natural person may serve, (2) TSG’s
bylaws prevented Northwest Trustee from serving as director because the bylaws
demanded that the director be twenty-one years of age or older, (3) the Washington Trust
Institution Act, (WTIA), Title 30B RCW, precludes a trust company from serving as a
director of a Washington corporation, and (4) Northwest Trustee forfeited any right to
serve as a director because of its approval of expenditures exceeding $2,500. Tormino Jr.
requested a declaratory ruling and an injunction prohibiting Northwest Trustee and its
agents from acting as director.
John K. Tormino Jr. sought partial summary judgment. Patricia Thayer then
intervened as a plaintiff and joined Tormino Jr.’s motion. TSG and Northwest Trustee
filed cross-motions for summary judgment, by which they sought affirmation of the
appointment of Northwest Trustee by and through Cam McGillivray as director. The
superior court ruled in favor of Northwest Trustee and TSG.
LAW AND ANALYSIS
On appeal, John K. Tormino Jr. repeats his request for a declaratory ruling that
Northwest Trustee by and through Mr. Cam McGillivray cannot serve as the director of
4 No. 37926-4-III Tormino v. Tormino Sash & Glass, Inc.
TSG. He forwards the same four arguments. Tormino Jr. asks that we direct the superior
court to afford him declaratory and injunctive relief. Patricia Thayer has not appeared in
the appeal.
Under RCW 23B.08.030(1), a Washington corporation’s “board of directors must
consist of one or more individuals.” (Emphasis added). According to
RCW 23B.01.400(24):
“Individual” includes the estate of an incompetent or deceased individual.
The parties dispute whether a limited liability company constitutes an individual under
the statutes.
The anomaly that shareholders appointed Northwest Trustee by and through Mr.
Cam McGillivray, rather than simply Northwest Trustee, as the director of TSG
complicates resolution of this appeal. We find no instance in the law or other literature of
a company, through a particular agent, being appointed a director of a corporation.
Neither party cites to a decision in which an agent on behalf of a principal became a
corporate director. TSG does not enlighten us as to the reasoning behind this unusual and
extended designation of its director.
We decline to decide whether RCW 23B.08.030(1), which demands a director be
an “individual,” permits a limited liability company to serve as a director. We also
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FILED MARCH 24, 2022 In the Office of the Clerk of Court WA State Court of Appeals Division III
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON DIVISION THREE
JOHN K. TORMINO, an individual, ) ) No. 37926-4-III Appellant, ) ) v. ) ) TORMINO SASH & GLASS, INC., a ) UNPUBLISHED OPINION Washington Corporation, NORTHWEST ) TRUSTEE & MANAGEMENT ) SERVICES, LLC, a Washington limited ) liability company ) ) Respondents. )
FEARING, J. — We face the unusual, if not singular, situation where corporate
shareholders appointed a limited liability company by and through one of the company’s
agents as director of the corporation. We hold that under the bylaws of the corporation,
the company by and through an agent cannot serve as director.
FACTS
John J. Tormino Sr. founded Tormino Sash & Glass Inc. (TSG), a Washington
corporation, a successful Spokane business. At his death, Tormino Sr. held 42.4 percent
of the corporate stock. His children, John K. Tormino Jr., Patricia Thayer, and Nancy
Taormina, each owned 19.2 percent of the corporate stock. No. 37926-4-III Tormino v. Tormino Sash & Glass, Inc.
John J. Tormino Sr. died on May 2, 2017. The superior court appointed Northwest
Trustee & Management Services LLC (Northwest Trustee), a Washington state trust
company and limited liability company, as personal representative of Tormino Sr.’s
estate. Cam McGillivray, a trust officer and in-house counsel for Northwest Trustee,
acted as the trust company’s agent in administering Tormino Sr.’s estate.
On June 8, 2018, TSG’s shareholders elected John K. Tormino Jr. as its sole
director. CP 48. At the same meeting, the shareholders adopted a bylaw that read:
3.1 Number, Tenure, and Qualifications. The business affairs and property of the Corporation shall be managed by a Board of not less than one (1) Director nor more than nine (9) Directors, who are individuals. . . . Directors shall be twenty-one (21) years of age, or older.
Clerk’s Papers (CP) at 15. The shareholders also approved the sale of “substantially all”
of TSG’s assets. CP at 11.
While serving as director, John K. Tormino Jr. withdrew $198,000 from TSG’s
corporate bank account. The shareholders called a special meeting on April 13, 2020 to
discuss the withdrawal of funds. At the meeting, Tormino Jr. declared that he withdrew
the $198,000 for payment of wages to himself for the time window of October 2012 to
February 2020. Tormino Jr. added that, in May 2019, he had formed the new
corporation, Torminos Glass Inc. that leased property in Gig Harbor at a site formerly
used by TSG. Northwest Trustee and Taormina, with control of the majority of shares of
the company, voted to remove Tormino Jr. from his position as director.
2 No. 37926-4-III Tormino v. Tormino Sash & Glass, Inc.
One week later, on April 20, 2020, the shareholders conducted another special
meeting and appointed “NWT [Northwest Trustee] by and through Mr. Cam McGillivray
to the position of Director.” CP at 31. The adopted motion required Northwest Trustee
to provide the shareholders five days’ advance written notice of any expenditures in
excess of $2,500. The motion passed with the votes of Northwest Trustee and Nancy
Taormina, together controlling 61.6 percent of the voting shares. Patricia Thayer and
John K. Tormino Jr., exercising all remaining shares, voted against the motion.
During the April 20 special meeting, John K. Tormino Jr. announced that he
would not return the $198,000 to the corporate account. Northwest Trustee and Nancy
Taormina voted for TSG to sue Tormino Jr. for a return of the money.
After the April 20 TSG special meeting, Cam McGillivray and/or Northwest
Trustee acted as TSG’s director. During some actions, McGillivray avowed he served as
TSG’s director. During other actions, McGillivray proclaimed Northwest Trustee to be
the director. Sometimes, TSG has proclaimed that the estate of John K. Tormino Sr.,
rather than Northwest Trustee, serves as its director. Even other times, Steve Trefts, as
president of Northwest Trustee, has sent notices for TSG meetings.
At the direction of Northwest Trustee or Cam McGillivray, TSG issued four
individual payments over $2,500. Northwest Trustee did not afford shareholders advance
notice of the payments.
3 No. 37926-4-III Tormino v. Tormino Sash & Glass, Inc.
PROCEDURE
John K. Tormino Jr. initiated this suit against TSG and Northwest Trustee.
Tormino Jr. requested declaratory rulings that (1) the Washington Business Corporation
Act, Title 23B RCW, precluded Northwest Trustee by and through Mr. Cam McGillivray
from acting as a director of TSG because only a natural person may serve, (2) TSG’s
bylaws prevented Northwest Trustee from serving as director because the bylaws
demanded that the director be twenty-one years of age or older, (3) the Washington Trust
Institution Act, (WTIA), Title 30B RCW, precludes a trust company from serving as a
director of a Washington corporation, and (4) Northwest Trustee forfeited any right to
serve as a director because of its approval of expenditures exceeding $2,500. Tormino Jr.
requested a declaratory ruling and an injunction prohibiting Northwest Trustee and its
agents from acting as director.
John K. Tormino Jr. sought partial summary judgment. Patricia Thayer then
intervened as a plaintiff and joined Tormino Jr.’s motion. TSG and Northwest Trustee
filed cross-motions for summary judgment, by which they sought affirmation of the
appointment of Northwest Trustee by and through Cam McGillivray as director. The
superior court ruled in favor of Northwest Trustee and TSG.
LAW AND ANALYSIS
On appeal, John K. Tormino Jr. repeats his request for a declaratory ruling that
Northwest Trustee by and through Mr. Cam McGillivray cannot serve as the director of
4 No. 37926-4-III Tormino v. Tormino Sash & Glass, Inc.
TSG. He forwards the same four arguments. Tormino Jr. asks that we direct the superior
court to afford him declaratory and injunctive relief. Patricia Thayer has not appeared in
the appeal.
Under RCW 23B.08.030(1), a Washington corporation’s “board of directors must
consist of one or more individuals.” (Emphasis added). According to
RCW 23B.01.400(24):
“Individual” includes the estate of an incompetent or deceased individual.
The parties dispute whether a limited liability company constitutes an individual under
the statutes.
The anomaly that shareholders appointed Northwest Trustee by and through Mr.
Cam McGillivray, rather than simply Northwest Trustee, as the director of TSG
complicates resolution of this appeal. We find no instance in the law or other literature of
a company, through a particular agent, being appointed a director of a corporation.
Neither party cites to a decision in which an agent on behalf of a principal became a
corporate director. TSG does not enlighten us as to the reasoning behind this unusual and
extended designation of its director.
We decline to decide whether RCW 23B.08.030(1), which demands a director be
an “individual,” permits a limited liability company to serve as a director. We also
decline to resolve whether, under RCW 30B.08.080, a section of the WTIA, bars a trust
5 No. 37926-4-III Tormino v. Tormino Sash & Glass, Inc.
institution from serving as a director of a corporation. Finally, we demur from
determining whether Northwest Trustee forfeited the right to serve because of
expenditures. Regardless, the TSG bylaw requires that a director be twenty-one years of
age. TSG agrees that Northwest Trustee is not twenty-one years of age and that, under
this bylaw, the director must be a natural person.
TSG contends that the inclusion of Cam McGillivray as the agent of Northwest
Trustee serving as the director satisfies the bylaw’s age requirement, since McGillivray
has achieved the age of majority. We disagree. The shareholders appointed only one
director, not two directors. The acts of the agent are the acts of the principal. Smith v.
Gray, 52 Wash. 255, 256-57, 100 P. 339 (1909); RESTATEMENT (SECOND) OF AGENCY §
1 (AM. L. INST. 1958). When acting as a director, McGillivray has conducted himself on
behalf of and in fulfillment of his fiduciary duties to Northwest Trustee, the director, not
on behalf of TSG.
TSG inconsistently argues that Northwest Trustee may, under RCW 23B.08.030,
serve as the director since it is the personal representative of the estate, but, for purposes
of the bylaw, Northwest Trustee contends McGillivray serves as the director. Again,
TSG shareholders only appointed one director. Sometimes, TSG even contends that its
shareholders anointed the estate of John K. Tormino Sr., rather than Northwest Trustee,
as the director, despite the written motion designating “NWT [Northwest Trustee] by and
6 No. 37926-4-III Tormino v. Tormino Sash & Glass, Inc.
through Mr. Cam McGillivray” as director. We do not value TSG changing positions as
to who functions as director depending on the legal issue.
A party is entitled to summary judgment when there is no genuine issue as to any
material fact and the moving party is entitled to a judgment as a matter of law. CR 56(c).
John K. Tormino Jr., not TSG, deserves summary judgment. Tormino Jr. is entitled to
declaratory relief.
TSG and Northwest Trustee complain that John K. Tormino Jr. initiated this
declaratory judgment action from spite because of the challenge to his removing funds
from TSG. We make no comment about the validity of Tormino Jr.’s conduct.
We issue no ruling as to whether past acts of Northwest Trustee by and through
Mr. Cam McGillivray as a director are valid. We issue no ruling as to whether Northwest
Trustee must refund expenditures above $2,500.
John K. Tormino Jr. requests that this court direct the superior court to issue an
injunction precluding Northwest Trustee from acting in the future as director of TSG.
We question the need for an injunction in addition to declaratory relief. Nevertheless,
Tormino Jr., on remand, may apply to the superior court for an injunction if he wishes.
The superior court lies in a better position than this appeals court to address the utility
and validity of an injunction.
7 No. 37926-4-III Tormino v. Tormino Sash & Glass, Inc.
CONCLUSION
We remand to the superior court to enter a declaratory ruling that Northwest
Trustee by and through Mr. Cam McGillivray may not serve as the director of TSG.
A majority of the panel has determined this opinion will not be printed in the
Washington Appellate Reports, but it will be filed for public record pursuant to RCW
2.06.
_________________________________ Fearing, J.
WE CONCUR:
______________________________ Lawrence-Berrey, A.C.J.
______________________________ Staab, J.