701^ OCT 20 &';•; S- 20
IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON
RADIANCE CAPITAL, LLC, No. 71042-7-1 Respondent, DIVISION ONE v.
NICHOLAS W. BARTZ, UNPUBLISHED OPINION
Appellant. FILED: October 20, 2014
Spearman, C.J. —Nicholas Bartz appeals the trial court's denial of his
motion to dismiss for lack of personal jurisdiction under CR 12(b)(2). Finding no
error, we affirm.
FACTS
Nicholas Bartz is a resident of Michigan. He was the managing member of
Health Pro Solutions, LLC (HPS), a now defunct Nevada LLC. HPS was doing
business in Arizona when it sought financing from an Arizona broker to purchase
equipment. The broker found financing through Radiance Capital, LLC
(Radiance), a Washington limited liability company. In May 2008, HPS and
Radiance entered into an Equipment Financing Agreement (Agreement).
According to the terms of the Agreement, Radiance advanced $43,466.18 to
HPS for the purchase of office furniture and electronic equipment. HPS was the No. 71042-7-1/2
sole debtor; Bartz signed the Agreement on behalf of HPS in his capacity as
Managing Member. Bartz also signed a Personal Guarantee (Guarantee) in
which he "promise[d] to make all of the payments and perform all Debtors'(sic)
obligations as specified" in the Agreement. Clerk's Papers (CP) at 55.
The Agreement contained a clause in which the parties agreed to submit
to personal jurisdiction of the King County Superior Court. Paragraph 26 of the
Agreement, titled "Choice of Law; Waiver of Jury Trial," reads:
THIS AGREEMENT SHALL BE DEEMED FULLY EXECUTED AND PERFORMED IN THE STATE OF WASHINGTON AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS THEREOF WITHOUT REGARD TO THE CONFLICTS OF LAWS RULES OF SUCH STATE. DEBTOR AGREES TO SUBMIT TO THE JURISDICATION (sic) OF THE STATE OF WASHINGTON IN KING COUNTY. EACH CREDITOR AND DEBTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY ACTION INVOLVING THIS AGREEMENT. CP at 59.
The Agreement also included a "Schedule 'A' to the Equipment Financing
Agreement" (Schedule A) that listed payment terms and information about the
collateral. The Guarantee was located on the same page as Schedule A, but did
not contain any reference to jurisdiction, venue or dispute resolution.
HPS defaulted on the Agreement and Radiance filed suit in King County,
Washington against HPS and Bartz under the Agreement and the Guarantee.
Radiance filed a motion for summary judgment on the amount owed and Bartz
moved to dismiss for lack of personal jurisdiction. The trial court granted
Radiance's motion for summary judgment and denied Bartz's motion to dismiss.
Bartz appeals. No. 71042-7-1/3
DISCUSSION
If, as in this case, the trial court has ruled on personal jurisdiction based
on the pleadings and the undisputed facts, its determination is a question of law
that we review de novo.1 Outsource Srvcs. Mqmt., LLC v. Nooksack Bus. Corp.,
172 Wn. App. 799, 807, 292 P.3d 147 (2013) rev, granted, 177Wn.2d 1019
(2013) affd, 2014 WL 4108073, _ P.3d._ (2014). Similarly, contract
interpretation that does not depend on the use of extrinsic evidence is also a
question of law reviewed de novo. State v. R.J. Reynolds Tobacco Co., 151 Wn.
App. 775, 783, 211 P.3d 448 (2009).
Consent to Jurisdiction
Bartz contends that the trial court erred in denying his motion to dismiss
because he did not personally agree to submit to jurisdiction of the Washington
courts. He points out that only the Agreement, which he signed solely in his
official capacity as managing member of HPS, contained language agreeing to
jurisdiction. The Guarantee, which he signed in his personal capacity, contained
no such language. Radiance argues that the Guarantee is part of the Agreement
and all of the terms of the Agreement apply to the guarantor.
We disagree with Radiance and find that the Guarantee and the
Agreement are separate contracts. "[A] guaranty is a separate legal undertaking
1We reject Radiance's contention that the appropriate standard of review is whether the trial court abused its discretion. The argument assumes that the issue before us is the validity of the forum selection clause. This case turns on whether Bartz consented to jurisdiction under the terms of the Agreement and the Guarantee, notwhetherthe forum selection clause is enforceable. Although on appeal, Bartz initially challenged the validity of the forum selection clause, in his reply, he appears to acknowledge that the language ofthe Guarantee and the Agreement's consent to jurisdiction clause are the dispositive issues. No. 71042-7-1/4
from the principal obligor's undertaking on a note." Freestone Capital Partners
L.P. v. MKA Real Estate Opportunity Fund I, LLC, 155 Wn. App. 643, 660, 230
P.3d 625 (2010). In Freestone, we found that the out-of-state guarantors were
not bound by a choice of law provision contained only in the promissory notes
and amendments. ]d at 661. The guarantees did not incorporate any of the terms
of the notes, nor did they mention a choice of law. ]d. The trial court apparently
bound the guarantors to the choice of law provisions based solely on the fact that
the guarantees were subjoined to the notes. Id. at 660. This court reversed,
indicating that they "ha[d] found no persuasive authority" for extending the terms
of the notes to the guarantees, just because they were located on the same
page. IcTWe held that:
The debtor is not a party to the guaranty, and the guarantor is not a party to the principal obligation. The undertaking of the former is independent of the promise of the latter; and the responsibilities which are imposed by the contract of guaranty differ from those which are created by the contract to which the guaranty is collateral. The fact that both contracts are written on the same paper or instrument does not affect the independence or separateness of the one from the other.'
Id,, quoting Robev v. Walton Lumber Co., 17 Wn.2d 242, 255, 135 P.2d
95 (1943). The guarantees and the notes were "two separate obligations
were undertaken by different parties." Freestone, 155 Wn. App. at 661.
Applying similar reasoning, the Ninth Circuit found a guarantees to be separate from the underlying contract and declined to apply a guarantee's choice No. 71042-7-1/5
of law provision to the corporate debtor's underlying note.2 Shannon-Vail Five
Inc. v. Bunch, 270 F.3d 1207, 1211 (9th Cir. 2001). The circuit court stated that
"a guarantee is a separate undertaking in which the principal obligor does not
join, and a guarantee exists independent of the original obligations between the
principal obligor and the obligee." \&,
The Guarantee that Bartz signed is located on the bottom of the page
containing Schedule A. Schedule A includes terms that apply only to the creditor
and the debtor. The Agreement only refers to Schedule A in the sections
addressing the debtor's terms of repayment and the collateral. There is no
mention of the Guarantee or the existence of any guarantors in the Agreement or
in Schedule A.
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701^ OCT 20 &';•; S- 20
IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON
RADIANCE CAPITAL, LLC, No. 71042-7-1 Respondent, DIVISION ONE v.
NICHOLAS W. BARTZ, UNPUBLISHED OPINION
Appellant. FILED: October 20, 2014
Spearman, C.J. —Nicholas Bartz appeals the trial court's denial of his
motion to dismiss for lack of personal jurisdiction under CR 12(b)(2). Finding no
error, we affirm.
FACTS
Nicholas Bartz is a resident of Michigan. He was the managing member of
Health Pro Solutions, LLC (HPS), a now defunct Nevada LLC. HPS was doing
business in Arizona when it sought financing from an Arizona broker to purchase
equipment. The broker found financing through Radiance Capital, LLC
(Radiance), a Washington limited liability company. In May 2008, HPS and
Radiance entered into an Equipment Financing Agreement (Agreement).
According to the terms of the Agreement, Radiance advanced $43,466.18 to
HPS for the purchase of office furniture and electronic equipment. HPS was the No. 71042-7-1/2
sole debtor; Bartz signed the Agreement on behalf of HPS in his capacity as
Managing Member. Bartz also signed a Personal Guarantee (Guarantee) in
which he "promise[d] to make all of the payments and perform all Debtors'(sic)
obligations as specified" in the Agreement. Clerk's Papers (CP) at 55.
The Agreement contained a clause in which the parties agreed to submit
to personal jurisdiction of the King County Superior Court. Paragraph 26 of the
Agreement, titled "Choice of Law; Waiver of Jury Trial," reads:
THIS AGREEMENT SHALL BE DEEMED FULLY EXECUTED AND PERFORMED IN THE STATE OF WASHINGTON AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS THEREOF WITHOUT REGARD TO THE CONFLICTS OF LAWS RULES OF SUCH STATE. DEBTOR AGREES TO SUBMIT TO THE JURISDICATION (sic) OF THE STATE OF WASHINGTON IN KING COUNTY. EACH CREDITOR AND DEBTOR HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY ACTION INVOLVING THIS AGREEMENT. CP at 59.
The Agreement also included a "Schedule 'A' to the Equipment Financing
Agreement" (Schedule A) that listed payment terms and information about the
collateral. The Guarantee was located on the same page as Schedule A, but did
not contain any reference to jurisdiction, venue or dispute resolution.
HPS defaulted on the Agreement and Radiance filed suit in King County,
Washington against HPS and Bartz under the Agreement and the Guarantee.
Radiance filed a motion for summary judgment on the amount owed and Bartz
moved to dismiss for lack of personal jurisdiction. The trial court granted
Radiance's motion for summary judgment and denied Bartz's motion to dismiss.
Bartz appeals. No. 71042-7-1/3
DISCUSSION
If, as in this case, the trial court has ruled on personal jurisdiction based
on the pleadings and the undisputed facts, its determination is a question of law
that we review de novo.1 Outsource Srvcs. Mqmt., LLC v. Nooksack Bus. Corp.,
172 Wn. App. 799, 807, 292 P.3d 147 (2013) rev, granted, 177Wn.2d 1019
(2013) affd, 2014 WL 4108073, _ P.3d._ (2014). Similarly, contract
interpretation that does not depend on the use of extrinsic evidence is also a
question of law reviewed de novo. State v. R.J. Reynolds Tobacco Co., 151 Wn.
App. 775, 783, 211 P.3d 448 (2009).
Consent to Jurisdiction
Bartz contends that the trial court erred in denying his motion to dismiss
because he did not personally agree to submit to jurisdiction of the Washington
courts. He points out that only the Agreement, which he signed solely in his
official capacity as managing member of HPS, contained language agreeing to
jurisdiction. The Guarantee, which he signed in his personal capacity, contained
no such language. Radiance argues that the Guarantee is part of the Agreement
and all of the terms of the Agreement apply to the guarantor.
We disagree with Radiance and find that the Guarantee and the
Agreement are separate contracts. "[A] guaranty is a separate legal undertaking
1We reject Radiance's contention that the appropriate standard of review is whether the trial court abused its discretion. The argument assumes that the issue before us is the validity of the forum selection clause. This case turns on whether Bartz consented to jurisdiction under the terms of the Agreement and the Guarantee, notwhetherthe forum selection clause is enforceable. Although on appeal, Bartz initially challenged the validity of the forum selection clause, in his reply, he appears to acknowledge that the language ofthe Guarantee and the Agreement's consent to jurisdiction clause are the dispositive issues. No. 71042-7-1/4
from the principal obligor's undertaking on a note." Freestone Capital Partners
L.P. v. MKA Real Estate Opportunity Fund I, LLC, 155 Wn. App. 643, 660, 230
P.3d 625 (2010). In Freestone, we found that the out-of-state guarantors were
not bound by a choice of law provision contained only in the promissory notes
and amendments. ]d at 661. The guarantees did not incorporate any of the terms
of the notes, nor did they mention a choice of law. ]d. The trial court apparently
bound the guarantors to the choice of law provisions based solely on the fact that
the guarantees were subjoined to the notes. Id. at 660. This court reversed,
indicating that they "ha[d] found no persuasive authority" for extending the terms
of the notes to the guarantees, just because they were located on the same
page. IcTWe held that:
The debtor is not a party to the guaranty, and the guarantor is not a party to the principal obligation. The undertaking of the former is independent of the promise of the latter; and the responsibilities which are imposed by the contract of guaranty differ from those which are created by the contract to which the guaranty is collateral. The fact that both contracts are written on the same paper or instrument does not affect the independence or separateness of the one from the other.'
Id,, quoting Robev v. Walton Lumber Co., 17 Wn.2d 242, 255, 135 P.2d
95 (1943). The guarantees and the notes were "two separate obligations
were undertaken by different parties." Freestone, 155 Wn. App. at 661.
Applying similar reasoning, the Ninth Circuit found a guarantees to be separate from the underlying contract and declined to apply a guarantee's choice No. 71042-7-1/5
of law provision to the corporate debtor's underlying note.2 Shannon-Vail Five
Inc. v. Bunch, 270 F.3d 1207, 1211 (9th Cir. 2001). The circuit court stated that
"a guarantee is a separate undertaking in which the principal obligor does not
join, and a guarantee exists independent of the original obligations between the
principal obligor and the obligee." \&,
The Guarantee that Bartz signed is located on the bottom of the page
containing Schedule A. Schedule A includes terms that apply only to the creditor
and the debtor. The Agreement only refers to Schedule A in the sections
addressing the debtor's terms of repayment and the collateral. There is no
mention of the Guarantee or the existence of any guarantors in the Agreement or
in Schedule A.
Radiance cites no authority for its position that either Schedule A or the
Agreement includes the Guarantee. The Guarantee happens to be printed on the
same page as Schedule A. Bartz, as personal guarantor, "guarantee^] and
promise[d] to make all of the payments and perform all Debtors'(sic) obligations
as specified in this Equipment Financing Agreement." CP at 61. The terms of the
Agreement are not incorporated into the Guarantee by any reference. Only
Schedule A incorporates the terms of the Agreement by reference. Schedule A is
part of the Agreement; the Guarantee is a separate legal undertaking from both
the Agreement and its appurtenant Schedule A.
2 The Shannon-Vail guarantees contained an express provision stating that "[guarantor acknowledges that its obligations hereunder are independent of the obligations of the Borrower," and the choice of law provision contained limiting language - "[tjhis Guarantee shall be governed by and construed in accordance with the law of the state of Nevada." Id, No. 71042-7-1/6
Next, we look to the language of the Guarantee to determine whether
Bartz is subject to the Agreement's consent to jurisdiction clause. It is undisputed
that Bartz promised to "make all payments and perform all Debtors'(sic)
obligations as specified" in the Agreement. CP at 61. The parties disagree about
what "obligations" Bartz assumed by signing the Guarantee. The term
"obligation" is not defined in either the Agreement or the Guarantee. Bartz argues
that his obligations under the Guarantee include only the tasks or debts related to
the advance and the collateral. Radiance argues that ajl of the terms of the
Agreement, not just the terms related to payments and collateral, are Bartz's
obligations under the language of the Guarantee.
As a matter of law, however, the language of the Guarantee established
an affirmative duty and an "obligation" of the debtor to submit to the jurisdiction of
King County and the State of Washington. See Republic Int'l. Corp. v. Amco
Engineers, lnc.,516F.2d 161, 168, n.11 (9th Cir. 1975). In that case the ninth
circuit found that assignees of a contract, who agreed to "'do every act and thing
necessary to perform all of the conditions of said contracts,'" were bound by the
original contract's consent-to-jurisdiction clause. Id. The original contract's clause
stated that "[f]or the purposes of this contract, the contracting parties place
themselves under the jurisdiction and competence of the courts of the Republic
of Uruguay." Id., at n.11. The assignees claimed that their assignment contract
changed the forum by requiring disputes to be decided under Delaware law. The
circuit court disagreed and held that the assignees had "agreed to assume
[assignor's] obligations under the contracts; among those obligations was the No. 71042-7-1/7
promise to submit to the jurisdiction of the Uruguayan courts." jd. at 169. The
assignment contract's Delaware forum selection clause applied only to disputes
between the assignor and assignee, id.
We agree with the Ninth Circuit's reasoning and find that Bartz's
guarantee of "all Debtors' obligations" included the duty to submit to jurisdiction.
In a stand-alone sentence, without any limiting language, the Agreement states
"DEBTOR AGREES TO SUBMIT TO THE JURISDICATION (sic) OF THE
STATE OF WASHINGTON IN KING COUNTY." CP at 59. The language of the
Guarantee specifically refers to making "all of the payments and perform[ing] all
Debtors' obligations" (emphasis added), indicating that the Guarantor is
responsible for additional obligations as well as making payments under the
Agreement. CP at 59. Among those obligations was the promise to submit to
jurisdiction in King County, Washington. By signing the Guarantee, Bartz
consented to the jurisdiction of the King County Superior Court.
Bartz directs the court to other language in the Agreement as evidence
that his "obligations" do not include submitting to jurisdiction. He cites paragraph
14, which reads "If Debtor fails to perform any of its obligations hereunder,
Creditor may perform such obligations . . .." CP at 58. Based on this provision,
Bartz argues consenting to jurisdiction is not an "obligation" he agreed to
undertake because it would make no sense for the creditor to consent to
jurisdiction on behalf of the debtor. We disagree. Paragraph 14 sets forth the
creditor's right to perform any obligations upon the debtor's failure and demand
reimbursement and costs. It does not serve to define "obligations" by implication, No. 71042-7-1/8
nor does it create an inconsistency that would limit the debtor's duties to those
tasks that can be performed by the creditor to protect the collateral. Bartz
guaranteed all of the debtor's obligations as specified in the agreement, including
the promise to consent to jurisdiction.
We affirm the trial court's denial of Bartz's motion to dismiss.3 As the
prevailing party in this appeal, Radiance is entitled to fees and costs under RAP
18.1 and the Guarantee.
Affirmed.
dMMr^^^A ,±J WE CONCUR:
[/1 i'k p j , T~
3 The parties also argued for and against jurisdiction under the Washington long-arm statute. Because we affirm the trial court's decision based on the contracts, we do not reach the question of statutory jurisdiction.