DIVISION ONE
SOUNDVIEW INVESTMENT UNPUBLISHED OPINION GROUP, LLC
Respondent. FILED: January 11, 2016
Spearman, C.J. — The superior court rejected Mary Mitchell's appeal of a
small claims court judgment in favor of Soundview Investment Group, LLC
(Soundview). Mitchell appeals, claiming that Soundview committed fraud by
falsely stating that it was a licensed and bonded contractor and that she was
denied her right to a fair trial because she was not properly served with
Soundview's counterclaim. Finding no error, we affirm the superior court.
FACTS
Mary Mitchell and Stanley Johnson are investors who purchase
properties, remodel them, and sell them for a profit. Johnson is also a licensed
general contractor who hires subcontractors such as Art by Ara, Inc. (Art) to
perform the remodeling work. Art is a licensed and bonded contractor. In early
2013, Mitchell and Johnson began to talk about potentially working together. No. 71165-2-1/2
Mitchell was interested in having the floors refinished in one of her
investment properties. Johnson showed her some examples of work that Art had
done, and Art gave Mitchell a bid of $2,300 to perform the floor work. ]d. Mitchell
told Johnson that her budget was only $1,600. Art agreed to do the work for
$1,600 in anticipation of receiving future contracts through Johnson and Mitchell.
Art and Soundview, of which Johnson was the operations manager,
submitted a bid for the project on April 2, 2013. Mitchell accepted the bid and
gave them a deposit for $825. Art and Soundview had previously worked
together on a number of investment projects, and Art agreed to take the job if
Soundview acted as the middleman for the relationship and handled
communication and billing. Johnson agreed on behalf of Soundview and assured
Art about the potential for an ongoing relationship with Mitchell.
Mitchell asked for bids for some additional painting and mirror work. Art
agreed to do the requested work on the mirrors for a low additional cost. Art
removed the old stain and seal and sanded and sealed the floor. The floor
treatment needed at least eight to twelve hours minimum drying time in order for
it to cure properly. If the floor is walked on before it is dry, it will cause the
treatments to bond together and create a "kind of white ash effect." Verbatim
Report of Proceedings (VRP) at 28. In order to remove that effect, the floor must
be resanded and resealed.
According to Mitchell, the floors were not done properly because there
was visible dust, and "marks, white marks, and part of the floor was black", and
there "was dirt under the varnish." VRP at 12. Art had to resand the floor twice No. 71165-2-1/3
after the original application, because the floor had been walked on before it was
dry. Soundview had notified Mitchell that the floor was being walked on and
asked her to '"take the key out of the key box'" in order to prevent people from
walking on the floor. Jd. at 41. Mitchell denied that there were ever people
walking on the floor and argued that the damage was a result of Soundview and
Art failing to sand the floor properly.
Mitchell brought in another contractor and decided she wanted to change
the floor color and gloss finish. Soundview informed her that it would cost more,
because it would require resanding the entire floor again and purchasing new
products. At that time, the floor was still drying and the final coat of finish was
scheduled to be applied that day. Mitchell canceled the appointment, telling
Soundview that she was not going to pay any more and that they had to redo it or
she was going to hire another contractor.
Soundview and Art did not do any more work for Mitchell and submitted a
final invoice for $1,556.64, which was the total of all charges including the mirror
work, minus Mitchell's initial deposit. Mitchell did not pay and Soundview and Art
filed a lien on the property for the amount due. The property was sold on June
20, 2014 and the lien was not reconciled.
Mitchell filed an action against Soundview and Art in the small claims
department of King County District Court on July 12, 2013. Soundview and Art
filed a counterclaim for the balance of the contract and other damages. The
counterclaim was mailed to Mitchell at her post office box on August 7, 2013. Art
submitted a letter explaining the relationships between the two companies and No. 71165-2-1/4
how Soundview did not do any of the finishing work but was responsible for
communicating with the customer and handling the billing.
The small claims court entered judgment on August 23, 2013, in favor of
Soundview and Art in the total amount of $2,085.07, finding that Art was a
registered contractor, as was Johnson. The court also found that Soundview and
Art performed their contractual obligations in a workmanlike manner and made
good faith efforts to satisfy Mitchell's complaints.
Mitchell first moved for relief from judgment on August 26, 2013, arguing
procedural errors, including that she had no knowledge of any counterclaim until
trial and had objected to its introduction. She then appealed the district court's
judgment to King County Superior Court on September 20, 2013, arguing only
that the contract was invalid on its face because Soundview was not a licensed
contractor. The small claims court did not rule on her motion for relief from
judgment but forwarded it to the superior court.
The superior court affirmed the district court's decision on November 7,
2013, modifying the judgment amount to $1,556.64, the amount due under the
contract. The court found that Johnson was authorized to act as an agent for Art,
a licensed and bonded contractor. The court also found that "[rjather than
deficiencies in the defendants' work, it seems that any problems with the finished
product were apparently the result of 3rd parties walking on the floor too soon."
Clerk's Papers (CP) at 116. Mitchell appeals the decisions of both the small
claims and superior courts. Soundview did not file an appellate brief. No. 71165-2-1/5
DISCUSSION
An appeal from a small claims judgment or decision is de novo upon the
record of the case, as entered by the district court. RCW 12.36.055. Under CRLJ
72, an appeal from a decision of a small claims court operating under chapter
12.40 RCW shall be a trial de novo on the record from the court of limited
jurisdiction. The procedures for a trial de novo are defined by CRLJ 73 and CRLJ
75. Under the standard set forth in RCW 12.36.055, this court also reviews de
novo the record of the small claims court proceeding.
Mitchell first claims that she is entitled to a new trial because she was not
properly served with Soundview's answer and counterclaim. She argues that the
small claims court "failed to require proof that she "had signed for receipt of the
answer, counterclaim and discovery," resulting in an unfair trial. Br. of Appellant
at 10.
Under RAP 2.5(a), a party generally waives the right to appeal an error
unless there is an objection at trial. The rule serves to encourage parties to make
timely objections and gives the trial judge opportunity to address issues as they
occur. State v. Kalebaugh, 183 Wn.2d 578, 583, 355 P.3d 253 (2015). While
Mitchell argued to the small claims court, both at trial and in her motion for relief
from judgment, that she did not receive the counterclaim, she failed to raise the
issue in her appeal to the superior court. An issue cannot be raised on a second
appeal if it could have been raised on the first appeal. State v. Sauve, 100 Wn.2d
84, 87, 666 P.2d 894 (1983). No. 71165-2-1/6
Mitchell argues that "[i]n a small claims trial... [t]he parties are not
required to make formal objections on the record to preserve them for appeal."
Br. of Appellant at 9. She cites no authority for this argument, however. RAP
2.5(a) contains no exception for review of small claims judgments or decisions.
Under RCW 12.36.055, the appeal from a small claims judgment shall be de
novo upon the record of the case, as entered by the district court. Itwould be
difficult, if not impossible, for an appellate court to review an issue that was not
part of the district court's record. Mitchell also argues that service is a
jurisdictional issue that may be raised for the first time on appeal. But as the
plaintiff, she has already submitted to the jurisdiction of the district court. There
are no jurisdictional issues that would enable Mitchell to raise the issue of service
of a counterclaim for the first time on appeal.
Even if Mitchell had properly preserved the issue for appeal, we would find
no error. The record contains evidence that Soundview complied with the court
rule and attempted to serve Mitchell with the counterclaim. Under CRLJ
5(a)(b)(1), "every pleading subsequent to the original complaint" shall be served
on an attorney or party "by delivering a copy to him or by mailing it to him at his
last known address...." If service is made by mail, "the papers shall be deposited
in the post office addressed to the person on whom they are being served, with the postage prepaid. The service shall be deemed complete upon the third day following the day upon which they are placed in the mail...." CRLJ 5(b)(2)(i). Proof of service of all papers permitted to be mailed may be made by
written acknowledgment of service, by affidavit of the person who mailed the No. 71165-2-1/7
papers, or by certificate of an attorney. CRLJ 5(b)(2)(ii). Here, the record
contains a certified mail receipt dated August 7, 2013, and testimony from
Johnson that he mailed the claim to the post office box listed on the notice of
small claim. Upon proof of mailing, it is presumed that the mail proceeds in due
course and the letter is received by the person or entity to whom it is addressed.
Olson v. The Bon, Inc.. 144 Wn. App. 627, 634, 183 P.3d 359 (2008).
Mitchell argues that the small claims court erred by overlooking
Soundview's failure to have obtained a return receipt. But failure to make proof of
service does not affect the validity of the service, even for service of a summons
and complaint. CRLJ 4(h)(7); Jones v. Stebbins, 122 Wn.2d 471, 482, 860 P.2d
1009 (1993). Soundview has presented unrebutted evidence of mailing the
counterclaim; mere denials are insufficient to rebut the presumption of receipt.
Wash. Fed. Savings v. Klein. 177 Wn. App. 22, 28, 311, P.3d 53 (2013), review
denied, 179 Wn.2d 1019 (2014).
Furthermore, even if Mitchell were able to prove insufficient service of the
counterclaim, she cannot show that she was prejudiced. She argues that she
"could not prepare argument for court" against Soundview's argument that it
properly sanded the floor before treating it. Br. of Appellant at 13. Her claims
against Soundview, however, included breach of contract and filing of a false lien. These claims required her to prove that Soundview did not fulfill its
expectations under the contract and that it had no basis to file a lien for amounts
owed for labor performed on April 3, 2013. Mitchell was not required to provide No. 71165-2-1/8
any new or additional arguments or evidence in order to defend against the
counterclaim.
Next, Mitchell argues that the district and superior courts erred in failing to
find that Soundview had made fraudulent misrepresentations based on its work
and/or its status as a contractor. According to Mitchell, Soundview denied its
failure to properly sand the floor before treating it, and also stated that it was a
bonded contractor when it was not.
Fraudulent misrepresentation requires proof by clear, cogent, and
convincing evidence of the nine elements of fraud: (1) representation of an
existing fact; (2) materiality; (3) falsity; (4) speaker's knowledge of its falsity; (5)
intent of the speaker that it should be acted upon by the plaintiff; (6) plaintiff's
ignorance of its falsity; (7) plaintiff's reliance on the truth of the representation; (8)
plaintiff's right to rely upon it; and (9) damages suffered by the plaintiff. Stilev v.
Block, 130 Wn.2d 486, 505, 925 P.2d 194 (1996).
Mitchell argues that Soundview, via Johnson, represented that it was a
contractor and that it would do the work on the floor. She also argues that
Johnson misrepresented his own status as a contractor to the small claims court.
The record contains no evidence that Johnson or anyone represented to Mitchell
that Soundview was a licensed general contractor, only Mitchell's testimony that
Johnson told her that he was a contractor. Even if such misrepresentations had
been made, Mitchell cannot demonstrate that either Soundview's or Johnson's
status was material to the contract. The purpose of the Contractor's Registration
Act is "to afford protection to the public including all persons, firms, and
8 No. 71165-2-1/9
corporations furnishing labor, materials, or equipment to a contractor from
unreliable, fraudulent, financially irresponsible, or incompetent contractors." RCW
18.27.140. The act requires all contractors to provide the customer with proof of
registration with the Department of Labor and Industries, which includes
evidence of bonding and liability insurance. RCW 18.27.114.
Both Art and Soundview were parties to the contract with Mitchell; the
record contains undisputed evidence that Art did the work and was a licensed
and bonded contractor. Johnson was not a party to the contract. Mitchell could
therefore have filed a claim for substandard performance under the contract and
she would be protected by Art's bond. It is not required for Soundview or
Johnson to also be registered as a contractor, especially when there is no
dispute that Johnson was not a party and Soundview did not perform any work.
Mitchell argues that she spoke with Art personally and that a
representative told her that they "'had nothing to do with that contract'" and only
did the mirrors. Br. of Appellant at 14 (quoting VRP at 18). This testimony,
without more, is insufficient to establish that Soundview, not Art, performed the
work on the floors as an unlicensed contractor. The record contains a letter from
Art specifically stating that Soundview did none of the work and that Art agreed to
do the work for Mitchell as long as Soundview was involved in the billing and
customer communication. Mitchell's testimony about conversations she had with
other representatives of Art do not prove otherwise.
Mitchell also argues that Soundview committed fraud by claiming that it
properly sanded the floor. Again, the record contains no evidence that suggests No. 71165-2-1/10
that Soundview and Art failed to perform the work specified in the contract in a
workmanlike manner. Mitchell has not carried her burden of showing that
Soundview made any false representation when it claimed to have fulfilled its
obligations under the contract.
We affirm the superior court, and decline to award fees to either party on
appeal.
Affirm.
V)^Y/W/ ~j v> O - WE CONCUR: