STATE OF WASHING"*.',1-
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IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
SHUMET MEKONEN, WONDWOSSEN MERSHA; TIGABU LAKEW; TEKEBA TIGABIE; HABTAMU ABOYE; YIRGA BELETE; SELAMNEH AMBAW; and NO. 69278-0-1
Appellants/Cross Respondents, DIVISION ONE
GREEN CAB TAXI AND DISABLED SERVICE ASSOCIATION, LLC, a Washington limited liability company,
Plaintiffs,
DESSIE ZEWDU, JANE DOE ZEWDU, husband and wife, and the marital community comprised thereof; WORKU ASMARE, JANE DOE ASMARE, husband and wife, and the marital community comprised thereof; WORKU MELESE; BAZEZEW BIRHAN; MOTBAYNER TEBEJE; ENDALE ANDENO; MELAKU KEBEDE; NEGA WONDIMAGEGN; KASSA DERAR; ALBA ANDREA MIRELES-FLORES, UNPUBLISHED OPINION JOHN DOE MIRELES-FLORES, husband and wife, and the marital FILED: March 3, 2014 community comprised thereof; and
Respondents/Cross Appellants. 69278-0-1/2
Lau, J. — This case involves a dispute between two member groups over control
of Green Cab Taxi and Disabled Service Association LLC (Green Cab), a taxicab
transportation company. Plaintiffs appeal aspects of the trial court's injunctive relief
order, including the court's buyout remedy and valuation of their membership interests.1
Defendants cross appeal the jury's award of damages to individual plaintiffs on their
breach of contract and tortious interference claims. We affirm the trial court's injunctive
relief determination as well within the court's discretion. We reverse the breach of
contract and tortious interference verdicts and judgments in favor of plaintiffs because
plaintiffs lacked standing to sue on the King County contract and the court's erroneous
breach of contract instruction adversely affected the jury's tortious interference verdict.
We remand for a new trial on liability and damages and without prejudice to the parties
to conduct further discovery.
FACTS
Green Cab is a taxi service formed in 2007 in response to a contract awarded
under a King County Request for Proposal (RFP) entitled "Alternative Way to Structure
a Taxicab Association—Test." Ex. 2. The RFP envisioned a taxicab association in
which the drivers would be employees governed by collective bargaining and workers'
compensation insurance, all vehicles would be hybrid electric vehicles covered by one
liability insurance policy, and 10 percent of vehicles would be wheelchair accessible.
King County planned to issue 50 taxicab licenses to the successful bidder. The licenses
remained the property of King County and were nontransferable except under special
1 Plaintiffs do not appeal the tortious interference damages award in favor of defendants. 69278-0-1/3
circumstances authorized by the county.2 Each of Green Cab's founding members,3 including Shumet Mekonen, contributed $75,000 in capital to start the company. In
exchange, each founding member received two "units" in the company, meaning each
would get two taxi licenses.
The contract was awarded in the name of Green Cab Taxi and Disabled Services
Association by letter dated September 21, 2007, addressed to its president, Tigabie
Tekeba.4 Green Cab is governed by the June 2008 operating agreement. Under the
operating agreement, Green Cab's board of directors was responsible for, among other
things, "ensuring compliance with King County and other governmental rules,
regulations and requirements applicable to the Company or its business." Ex. 1 at 6.
A lawsuit filed against King County by competing taxicab companies delayed
issuance of the 50 licenses Green Cab expected to receive. The delay also prevented
Green Cab from doing business until August 2008. Green Cab suffered great financial
strain and hardship during this time. To help keep Green Cab afloat, in 2008 the board
of directors instituted a requirement that members pay weekly dues.
After the competitors' lawsuit settled in 2008, King County awarded the RFP
contract to Green Cab by letter to Green Cab's board chairman, Worku Asmare.
However, the county issued Green Cab only 20 licenses. The county issued Green Cab
additional licenses in 2009 or 2010, but never 50 licenses as was originally planned.
2The licenses were only for King County pick up, not the more lucrative city of Seattle or Sea-Tac airport pick up.
3Testimony and exhibits established there were originally 23 founding members, later possibly expanded to 25.
4 Tekeba, deceased at the time of trial, was plaintiff Shumet Mekonen's brother. -3- 69278-0-1/4
King County retained ownership and had the power to revoke the licenses if Green Cab
violated any provisions of its agreement with the county. Because of the financial strain
resulting from the delays, Green Cab operated its business on a traditional taxicab
model where drivers owned the vehicles and retained the fares earned rather than the
business model envisioned under the King County RFP contract. By 2009, lingering
financial problems caused many Green Cab drivers to default on their car payments
and/or their dues owed to Green Cab. In 2009, Green Cab's membership unanimously
approved a policy prohibiting a member from serving on the board of directors if dues
remained unpaid.
In 2010, Shumet Mekonen, an original LLC member and a plaintiff in this case,
grew dissatisfied with Green Cab's management for various reasons, including
perceived violations of the RFP. At that time, defendant Dessie Zewdu was board
chairman and several other defendants were board members. Mekonen felt that Zewdu
and others were running the company improperly. Mekonen called for an election held
September 4, 2010, to elect a new board of directors. Mekonen was elected to the
board and named chairman, and several others elected to the board on September 4
were not current in their dues owed to Green Cab.5
5The candidates receiving the most votes at the September 4 election were Worku Melese, Bazezew Birhan, Wondwossen Mersha, Tebeje Motbayner, Shumet Mekonen, Endalkachew Lakew, Yirga Belete, and Yonathan Worku. Mersha, Lakew, Belete, and Worku were not current in the payment of weekly fees on the date of this election. According to unchallenged findings in special verdict form A, only members current in the payment of capital contributions, including weekly fees and insurance premiums, were eligible to vote in a board election. However, this requirement was waived by the members, and members who were not current in their weekly fee payments voted for directors. Only members who were current in the payment of capital contributions were eligible to serve as members of the board of directors. This 69278-0-1/5
On September 13, a majority of members petitioned to dissolve the board elected
on September 4 and to conduct a new election because "defaulting" members (those
who owed weekly fees to Green Cab) were inappropriately elected to the board. Three
of the seven board members—Motbayner, Birhan, and Melese—resigned in protest on
September 20.
A members' meeting was called to conduct a new board election on
September 25. At this meeting, the board members elected were defendants Worku
Melese (chairman), Nega Wondimagegn, Bazezew Birhan, Montbankdore Tebede,
Melaku Kebede, Endale Andeno, and Kassa Derar. Plaintiffs Mekonen group6 refused to participate in the September 25 election and disputed the results.
In October 2010, members of the two sides each initiated litigation seeking
damages and asking the court to determine who had the right to manage Green Cab.
Plaintiffs filed a complaint, amended complaint, and an answer with counterclaims in the
two suits. Defendants filed a complaint and an answer and counterclaims. The two
cases were consolidated for trial.
Plaintiffs advanced five claims to verdict, including breach of fiduciary duty,
tortious interference, breach of contract, unjust enrichment, and permanent injunction.
Defendants advanced six claims, including breach of contract, breach of fiduciary duty,
tortious interference, unjust enrichment, conversion, and injunctive relief. Through the
requirement was not waived by the membership, and ineligible members were elected to the board at the September 4 election.
6 As discussed below, each side sued the other in separate lawsuits, meaning each was both a plaintiff and a defendant. The cases were consolidated for trial, but the court and parties continued to call Mekonen's group "plaintiffs" and Zewdu's group "defendants" for clarity. We adopt those references here. -5- 69278-0-1/6
date of trial, Green Cab existed under two separate management groups, each
competing for the right to call itself Green Cab Taxi and Disabled Service Association
LLC and to claim the rights under the taxi licenses and King County RFP award. The
record demonstrates conflicts between the two groups indicating they are unable or
unwilling to work together.
Plaintiffs failed to answer requests for admission served on them in discovery,
resulting in the deemed admission of two key defaults under the operating agreement.
The trial court instructed the jury on these admissions:
3. Under article 8.1(b)(i), (b)(ii), and [(c)(5)] of the Green Cab operating agreement and the laws relating to limited liability companies all the plaintiffs and defendants must pay capital contributions in a timely manner including but not limited to weekly fees and insurance premiums. A failure to make these contributions constitutes a default and any defaulting party is subject to the relevant defaulting provisions of the operating agreement. 4. Each plaintiff has not paid their capital contributions in a timely manner including but not limited to weekly fees and insurance premiums. 5. Under article 5.6 of the Green Cab operating agreement no member may disassociate or withdraw from the LLC because a dissociation or withdrawal would violate the terms of the taxi license program. 6. Each plaintiff has disassociated or withdrawn from the Green Cab LLC.
RP (July 31, 2012) at 109-10. Plaintiffs did not object to these instructions other than to
ask for a minor change in wording, which the court granted prior to reading the above
instructions.
The jury found in plaintiffs Mekonen, Mersha, Aboye, and Belete's favor on the
breach of contract, tortious interference, and breach of fiduciary duty claims. The jury
awarded damages as follows: (1) to Mekonen, $95,000 on the breach of contract claim
and $38,000 on the tortious interference claim; (2) to Mersha, $8,500 on the tortious
interference claim and $14,000 on the breach of fiduciary duty claim; and (3) to Belete,
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$26,600 on the tortious interference claim. The jury also found in defendants' favor on
their tortious interference claim, awarding them $18,600 in damages.7 Based on the jury's answers on special verdict form A discussed below, the court
issued a memorandum decision on August 24, 2012. The court found in defendants'
favor regarding the board election's validity and the right of management and control
over Green Cab. Itfound plaintiffs had no right to represent themselves as part of
Green Cab's management or to operate under Green Cab's name. Regarding plaintiffs'
taxicab licenses, the court explained:
According to Paragraph 6.4 of the LLC Operating Agreement, "[t]he Company shall hold all rights to any taxi and other licenses and permits necessary to operate its vehicles." The Plaintiffs have no right to use the taxi cab licenses unless they are members of Green Cab LLC in good standing and are making any contributions toward the company's operating expenses that the board of directors deems necessary. Plaintiffs admit that they withdrew their membership from Green Cab LLC and that they have paid no weekly fees since January 2011. As a result, the Plaintiffs have no legal right to retain the King County taxi cab licenses currently in their possession. Plaintiffs are hereby ordered to return to Green Cab LLC any King County taxi cab licenses in their possession within 5 days of this decision.
The court found that under article 8.1(c)(v) of the operating agreement, Green Cab must
pay the plaintiffs the net book value of their percentage interest in the company, as
calculated by the company accountant at $5,078.57 per unit.8 The court entered a permanent injunction against plaintiffs enjoining them from
representing themselves as part of Green Cab's management or operating under Green
7The jury rejected defendants' breach offiduciary duty and conversion claims and rejected both parties' unjust enrichment claims. As noted above, plaintiffs do not appeal the tortious interference damages award in defendants' favor. 1As discussed below, Green Cab's accountant Tesfaye Temesgen testified in his 8
declaration that the current net book value of a defaulting member's percentage interest in Green Cab was $5,078.57. 69278-0-1/8
Cab's name. The injunction also required plaintiffs to return their taxi licenses to Green
Cab.
Both parties moved unsuccessfully for reconsideration. Both parties appeal.
ANALYSIS
Plaintiffs' Appeal: Injunctive Relief
Plaintiffs do not contest any of the jury verdicts, judgments, or the trial court's
determination that defendants are entitled to manage and operate Green Cab.
Plaintiffs' appeal pertains to the court's injunctive relief.
Relevant Facts
Both parties requested injunctive relief in their complaints. The defendants'
complaint specifically asked for an injunction enjoining plaintiffs from conducting
business on behalf of Green Cab or taking any of Green Cab's property from its offices
or premises other than a taxi vehicle. The parties agreed the jury would decide by
special interrogatories the facts related to injunctive relief and leave for the court to
decide the proper injunctive relief. In response to the court's question whether any
claims would be "tried to the Court as opposed to the jury," plaintiffs' counsel stated, "I
would just say the equitable claim of the permanent injunction." RP (July 18, 2012) at
20-21. Control over Green Cab depended on the validity of the September 4 election.
The parties and the court drafted a set of special interrogatories to submit to the jury to
answer disputed factual questions about the election. Neither party objected to the final
verdict forms submitted to the jury. The jury returned the following special verdict form
A in relevant part: 69278-0-1/9
1. In September 2010, was there a requirement that only members current in the payment of capital contributions, including weekly fees and insurance premiums, could vote in a board election? YES 2. Ifthe answer to Question No. 1 is "YES," were any of [the] members who voted in the September 4, 2010 election not current in the payment of capital contributions, including weekly fees and insurance premiums? YES 3. Did the Members of Green Cab LLC agree to waive the requirement that voting Members be current on the payment of capital contributions, including weekly fees and insurance premiums, in order to vote in the September 4, 2010 election? YES 4. In September 2010, was there a requirement that only members current in the payment of capital contributions, including weekly fees and insurance premiums, could serve as a member of the board of directors? YES 5. If your answer to Question No. 4 was "Yes," in the September 4, 2010 election, were members not current in the payment of capital contributions, including weekly fees and insurance premiums, elected to the board of directors? YES 6. For the September 4, 2010 election, did the Members of Green Cab LLC agree to waive the requirement that Members be current on the payment of capital contributions, including weekly fees and insurance premiums, in order to serve on the board of directors? NO
(Formatting omitted.) The court concluded, based on the special verdicts and its own
independent review of the evidence, that the September 4 election was invalid and the
September 25 election was valid. Accordingly, defendants prevailed on the key issue of
control over Green Cab. Plaintiffs do not dispute that ruling on appeal.
After trial and before the court issued its memorandum opinion, defendants
submitted a "brief in support of equitable relief requesting the court to find that plaintiffs
"automatically forfeited all rights associated with their Membership interests, and have
offered for sale their Membership units Per § 8.1(c)(v)(ii) of the Operating Agreement."
Defendants also requested the court to order plaintiffs to cease operations as Green
Cab and return their King County license plates to Green Cab. Defendants submitted
the declaration of Green Cab accountant Tesfaye Temesgen, who stated, among other
things, that the current net book value of a defaulting member's percentage interest in 69278-0-1/10
Green Cab was $5,078.57. This declaration was never offered or admitted into
evidence at trial, and Temesgen was not identified as a witness on the defendants'
witness list.
Plaintiffs submitted a brief on injunctive relief. They argued that defendants
failed to meet the legal requirements for a permanent injunction. Plaintiffs requested
the court to order the parties to operate Green Cab "as one Company within which two
groups of drivers, Group A and Group B drive the taxi cabs." Plaintiffs also filed a
response and objections to defendants' request for injunctive relief. While they did not
specifically dispute Temesgen's valuation of the current net book value of a defaulting
member's percentage interest in Green Cab, plaintiffs moved to strike Temesgen's
declaration on hearsay and relevancy grounds, arguing, "This witness never testified at
the trial and the jury already found the facts in the case." Plaintiffs also claimed special
verdict form A did not support defendants' request for a permanent injunction.
The court entered a permanent injunction enjoining plaintiffs from representing
themselves as part of Green Cab. As part of its injunction, the court ordered plaintiffs to
return their King County taxicab licenses to Green Cab. The court also required Green
Cab to "pay to each person within the Plaintiffs Group the current net book value of their
membership interests, set out above, sum within 30 days of this decision."
Plaintiffs moved for reconsideration, arguing that "the taxi license value is
anywhere from $37,500.00 to $300,000.00" and "[t]he amount now being entered in the
final judgment, $5,087.00, is simply not an accurate estimate of the true value of a taxi
license." Plaintiffs submitted Mekonen's declaration that claimed a license was worth
$37,500 when Green Cab was formed ($75,000 initial capital contribution divided into
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two units) and claimed the licenses had increased in value since that time. However,
Mekonen phrased his objection in terms of market value and provided no competing
book value valuation.
In denying plaintiffs' motion for reconsideration, the court explained:
No party has suggested that any dispute regarding the valuation of a membership interest should be decided by the jury and this Court understood that all parties to this lawsuit submitted the issue of the valuation of the membership to the Court for resolution based on the evidence presented prior to the August 24, 2012 hearing. The Court considered the terms of the Operating Agreement, which calls for the net book membership valuation to be determined by the company accountant and the accountant's declaration as to this valuation. But the Court also considered other evidence, including the business interruption that this lawsuit and the activities of all the parties have caused to the company (which impacts its overall value) and the evidence submitted by Plaintiffs at trial as to the amount of money invested into the company and the amount of revenue they generated as cab drivers. Although the taxi cab licenses may have a market value greater than the net book value of a membership interest in the company, it is the membership interest that is at issue and not the fair market value of a King County taxi cab license. Based on the Court's evaluation of all the evidence, the Court concludes that the valuation provided by the Defendants is the most reasonable based on a review of all the evidence presented during and after trial.
(Emphasis added.)
Buyout Remedy and License Surrender
The trial court has discretion to provide injunctive relief if a party demonstrates
that (1) it has a clear legal or equitable right, (2) it has a well grounded fear of
immediate invasion of that right, and (3) the acts it complains of are either resulting in or
will result in actual and substantial injury. Kucera v. Dep't of Transp., 140 Wn.2d 200,
209, 995 P.2d 63 (2000). We review a trial court's decision to grant an injunction and
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the terms contained in the injunction for abuse ofdiscretion.9 Kucera, 140 Wn.2d at 209. The trial court has broad discretionary power to fashion injunctive relief to fit the
particular facts, circumstances, and equities of the case before it. Brown v. Voss, 105
Wn.2d 366, 372, 715 P.2d 514 (1986); Rupert v. Gunter. 31 Wn. App. 27, 30, 640 P.2d
36 (1982). "Appellate courts give great weight to the trial court's exercise of that
discretion." Brown, 105 Wn.2d at 372. A trial court abuses its discretion only when its
decision is manifestly unreasonable or based on untenable grounds or reasons. State
ex rel. Carroll v. Junker, 79 Wn.2d 12, 26, 482 P.2d 775 (1971).
Plaintiffs first contend the trial court erred "in deciding issues other than those
pleaded and submitted to the court for determination." Appellants' Br. at 2. Plaintiffs
present no argument regarding failure to plead the buyout remedy, mentioning it only in
their statement of the case. See Appellants' Br. at 7-8. An issue not briefed is deemed
waived. Kadoranian bv Peach v. Bellingham Police Dep't, 119Wn.2d 178, 191, 829
P.2d 1061 (1992). Regardless, defendants requested injunctive relief in their complaint
as noted above. "Washington is a notice pleading state and merely requires a simple,
concise statement of the claim and the relief sought." Pacific Nw. Shooting Park Ass'n.
v. CitvofSeguim, 158 Wn.2d 342, 352, 144 P.3d 276 (2006); CR 8(a). Plaintiffs cite no
authority requiring claimants to plead every form of injunctive relief possible under the
circumstances. Further, in their brief supporting equitable relief, defendants specifically
9Citing several distinguishable cases, plaintiffs contend that because "[t]he trial court did not act as a finder of fact on any of the claims, including the requested injunctive relief and "simply ruled based on the jury's findings and the undisputed facts," we should "review the trial court's decision to force the sale of [their] membership interests de novo." Appellants' Br. at 10; Appellants' Reply Br. at 6. Plaintiffs' cited authorities do not control. Under well-settled law discussed above, the standard is abuse of discretion.
-12- 69278-0-1/13
requested the court to find that plaintiffs had offered their interests for sale under the
operating agreement. The issue was properly before the trial court.
The operating agreement specifies the remedies for default in payment of
monetary obligations under article 8.1(c), and for "other defaults" under article 5.8(b).
Ex. 1 at 5, 12-13. Article 5.8(b)'s provisions merge into article 8.1(c) because article
5.8(b)(iii) permits, as a remedy for "other defaults," that "the Company may . . . Remove
the defaulting Member upon a purchase of his or her Membership Interest pursuant to
Section 8.1(c)(v)." Ex. 1 at 5. Article 8.1(c)(v) provides the following remedy against a
defaulting member:
If a Defaulting Member fails to make a Capital Contribution for more than 30 days from the due date, then cause the Defaulting Member to: . .. (ii) be deemed to have offered for sale to the Company all of the Units and any other associated rights then held by the Defaulting Member for a purchase price determined by the Company's accountant to be the net book value of the Defaulting Member's Percentage Interest in the Company represented by the Units. . ..
Ex. 1 at 13. The trial court ordered the remedy provided for in this provision governing a
defaulting member.10
10 Plaintiffs contend, "None of the remedies in the Operating Agreement implement themselves; they all require written notice from the Chairman, then pursuit of one or more of the 6 remedies as determined by the Board." Appellants' Br. at 13. Plaintiffs contend that no written notice of default ever occurred and claim "the court was not tasked with making [the decision to designate plaintiffs as defaulting members] for Green Cab." Appellants' Br. at 13. Plaintiffs failed to raise their notice argument below. An appellate court "may refuse to review any claim of error which was not raised in the trial court. . . ." RAP 2.5(a); Roberson v. Perez, 156 Wn.2d 33, 39, 123 P.3d 844 (2005). Further, plaintiffs cite no authority limiting the trial court's broad discretion to the exact remedies set forth in the parties' contractual agreement. Their argument fails. Throughout their briefing and below, plaintiffs confuse the surrender of their taxi licenses with the buyout of their membership interests. The operating agreement addresses taxi licenses as distinguished from membership interests. Article 6.4 of the operating agreement provides, "The Company [Green Cab] shall hold all rights to any taxi and other licenses and permits necessary to operate its vehicles.. . ." The court referenced that article when it required plaintiffs to return the licenses: -13- 69278-0-1/14
Plaintiffs repeatedly contend, "By finding the [plaintiffs] to be in breach (or
default) under the contract, determining the appropriate remedy, and making a
determination of fact about the value of the [plaintiffs'] units to be awarded to plaintiffs,
the court was adjudicating a contract claim, not fashioning injunctive relief." Appellants'
Reply Br. at 6. Separate from the various breach of contract claims, the undisputed
record shows the jury was instructed to decide the facts that the court relied on to
determine which competing group had the right to control the company. See CP 764
(defendants' trial brief stating "The core dispute here is which group has the right to
control Green Cab"); RP (July 31, 2012) at 70 (court's question to the parties while
discussing the special verdict forms: "What findings of fact need to be made in order to
determine who has the right to run this company?"). Plaintiffs do not challenge the
court's conclusion, based on unchallenged jury findings regarding the validity of various
elections, that defendants are entitled to control Green Cab. Given the parties'
contentious multiyear history—amply demonstrated in the record—the court acted well
within its broad discretion to treat the plaintiffs as defaulting members under the
Plaintiffs seek to retain the taxi cab licenses affixed to the cars they own. According to Paragraph 6.4 of the LLC Operating Agreement, "[t]he Company shall hold all rights to any taxi and other licenses and permits necessary to operate its vehicles." The Plaintiffs have no right to use the taxi cab licenses unless they are members of Green Cab LLC in good standing and are making any contributions toward the company's operating expenses that the board of directors deems necessary. Plaintiffs admit that they withdrew their membership from Green Cab LLC and that they have paid no weekly fees since January 2011. As a result, the Plaintiffs have no legal right to retain the King County taxi cab licenses currently in their possession. Given that the court deemed the members "defaulting members" who had offered their membership interests for sale, it did not abuse its discretion in requiring them to return the licenses—which are actually the property of King County and the use of which is governed by Green Cab's agreement with the county—to Green Cab. See Ex. 67 (King County's award letter to Green Cab describing license issuance and allowing county to revoke licenses for a number of reasons). -14- 69278-0-1/15
operating agreement. Defaulting members under the agreement are deemed to have
offered their interests for sale as described above.11
Plaintiffs acknowledge that "a member can lose his interest in Green
Cab . .. pursuant to the remedies under paragraph 8.1(c) [of the operating agreement],
if he is a Defaulting Member." Appellants' Br. at 12. As noted above, the jury was
instructed regarding admitted defaults by the plaintiffs. Plaintiffs admitted to default
both in failing to make weekly payments and in withdrawing from the company in
violation of article 5.6 of the operating agreement. That article states, "A Member may
not withdraw as a Member prior to dissolution and commencement of winding up of the
Company pursuant to Article 14 without the written consent of all the other Members."
Ex. 1 at 3. The trial court imposed relief that was reasonably calculated to install
defendants as the proper group to manage Green Cab and to preserve their interests in
operating the company according to their agreement with King County. Given the
11 Regarding the operating agreement, plaintiffs claim that the agreement does not support the court's injunctive relief because "[t]he jury found that [plaintiffs] had not breached the Operating Agreement. . . ." Appellants' Br. at 12. Plaintiffs claim that the buyout remedy is thus inconsistent with the jury verdict on breach of contract. However, the jury merely found plaintiffs were not liable for breach of contract under instruction 15. Instruction 15 allowed the jury to reject defendants' breach of contract claim against the plaintiffs in ways that are not necessarily inconsistent with the trial court's grant of injunctive relief. See RP (July 31, 2012) at 116-17 (jury instruction). The court instructed the jury regarding admitted defaults by the plaintiffs. RP (July 31, 2012) at 109-10. Further, special verdict form A contains two specific findings of default: (1) weekly fees were required, but some members who voted on September 4 were not current in payment of weekly fees and (2) members elected to the board on September 4 were not current in the required payments. In addition to the jury findings, the admissions and record evidence indicated that weekly fees were required, that plaintiffs defaulted on their payments, and that plaintiffs further defaulted by withdrawing from Green Cab, moving to a new office, purchasing separate insurance, and ceasing or cutting back on driving the licensed vehicles. These defaults did not necessarily require the jury to find a breach of contract, but they were enough for the trial court, acting in equity, to grant the injunction. -15- 69278-0-1/16
relative interests of the parties and the LLC, the trial court acted well within its discretion
to order plaintiffs to return their taxi licenses and sell their membership interests back to
Green Cab.
Membership Interest Valuation
As noted above, the parties agreed to reserve the issue of injunctive relief to the
trial court for determination after the jury rendered verdicts on damages. The court
addressed the injunction issue on August 24 based on the parties' written briefs and the
trial record. As the court stated in its order denying plaintiffs' motion for reconsideration:
No party has suggested that any dispute regarding the valuation of a membership interest should be decided by the jury and this Court understood that all parties to this lawsuit submitted the issue of the valuation of the membership to the Court for resolution based on the evidence presented prior to the August 24, 2012 hearing.
Plaintiffs object to the trial court's reliance on Green Cab accountant Tesfaye
Temesgen's declaration in determining the net value of their membership interests.
They challenge the declaration on various grounds, including lack of disclosure,
hearsay, foundation, and conclusory opinion. They argue, "By making a determination
after the close of trial based on material that was never admitted into evidence, on a
hearsay, conclusory declaration by an undisclosed witness, the court violated basic
rights of due process." Appellants' Br. at 15.
"In cases involving both legal and equitable issues, as this one does, the trial
court has a broad discretion in allowing a jury to determine some, none or all of the
factual issues presented." Rao v. Auburn Gen. Hosp., 19 Wn. App. 124, 129, 573 P.2d
834 (1978). Here, the parties agreed to submit the question of the appropriate
injunctive relief to the trial court for determination. The court can hardly be faulted for
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resolving both the factual and legal issues relevant to the appropriate injunctive relief
given the parties' undisputed agreement. Determining the proper relief required the
court to determine the value of the plaintiffs' membership interests. Plaintiffs do not
dispute that they signed the operating agreement, which provides for sale of a
member's membership interest "for a purchase price determined by the Company's
accountant to be the net book value of the Defaulting Member's Percentage Interest in
the Company represented by the Units." Ex. 1 at 13. The agreement governs who
determines membership value—Green Cab's accountant.
The court considered the operating agreement, the accountant's opinion
regarding book value, and other evidence, including the substantial evidence of
business interruption due to the ongoing management conflict and litigation. The trial
record testimony indicates that in March 2011, Yirgalem Gebremichael purchased one
unit in Green Cab for $6,000. That taxicab licenses may trade in the open market at a
higher value is irrelevant. As the court properly noted in its order denying
reconsideration, "[l]t is the membership interest that is at issue and not the fair market
value of a King County taxi cab license." The relevant valuation question is the
membership interests' unit value. Plaintiffs never questioned the authenticity of the
accountant's declaration. Record evidence also showed that the membership interests
in question were of diminished value. Green Cab's accountant provided a book value
number and plaintiffs failed to rebut that number. The court's valuation is consistent
with the trial evidence.
We find no abuse of discretion in the court's membership value determination.
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Defendants' Cross Appeal
Lack of Standing
Over defendants' repeated standing objections, the trial court permitted individual
plaintiffs to assert a breach of contract claim premised on the Green Cab-King County
RFP contract and grounded in an alleged oral agreement among Green Cab members
to comply with the RFP.12 Defendants argued that plaintiffs lacked standing to assert a breach of the RFP contract because it was a contract between Green Cab and King
County, not between the plaintiffs and defendants. The court nonetheless instructed the
jury that it could find that defendants breached a contract if it found that the terms of the
contract included obligations (1) to implement an employer-employee relationship with
member drivers, (2) to pay a salary or wage for work performed, (3) to comply with
workers' compensation, and (4) to provide health insurance benefits. It is the RFP
agreement that imposes these duties on Green Cab. Defendants contend the trial court
erred by allowing plaintiffs to assert a breach of the RFP contract claim.
Plaintiffs' response consists of one paragraph of unsupported conclusory
arguments. They argue: (1) defendants orally promised plaintiffs to comply with the
RFP and the Green Cab board is responsible to ensure contract compliance, (2) the
King County RFP imposed obligations on Green Cab, (3) unjustified noncompliance
12 The record shows this oral agreement claim first surfaced on July 31, 2012, the same day the parties lodged objections and exceptions to the court's proposed jury instructions and made closing arguments. -18- 69278-0-1/19
with any provision constitutes a breach, (4) plaintiffs asserted no derivative claim,13
(5) defendants misunderstood plaintiffs' breach of contract claim, and (6) defendants
failed to appeal the oral agreement or the related jury instruction.14 Plaintiffs fail to cite any authority to support their arguments and make only
minimal reference to the record. Assignments of error unsupported by reference to the
record or argument will not be considered on appeal. RAP 10.3(a)(6); Cowiche Canyon
Conservancy v. Boslev, 118 Wn.2d 801, 809, 828 P.2d 549 (1992). '"Where no
authorities are cited in support of a proposition, the court is not required to search out
authorities, but may assume that counsel, after diligent search, has found none.'" State
v. Logan, 102 Wn. App. 907, 911 n. 1, 10 P.3d 504 (2000) (quoting DeHeer v. Seattle
Post-Intelligencer, 60 Wn.2d 122, 126, 372 P.2d 193 (1962)). Nonetheless, our review
shows no authority exists to support plaintiffs' assertions.
It is well settled that "[a] party to a contract is entitled to enforce it and to sue in
his own name." Kim v. Moffett, 156 Wn. App. 689, 700, 234 P.3d 279 (2010). Standing
is a common law doctrine that prohibits a plaintiff from asserting the legal rights of
another. Grant County Fire Prot. Dist. No. 5 v. City of Moses Lake, 150 Wn.2d 791,
802, 83 P.3d 419 (2004). Generally, "a stockholder cannot sue as an individual, as
distinguished from a representative of the corporation, where the basis of the cause of
action is a contract between the corporation and a third person, even though he
personally negotiated and executed the contract on behalf of the corporation."
Hunter v. Knight, Vale & Gregory, 18 Wn. App. 640, 644-45, 571 P.2d 212 (1977) (citing
13 Plaintiffs do not contend this was a derivative action.
14 Defendants' repeated lack of standing objections are obvious in our record. Defendants properly and timely preserved this claim. -19- 69278-0-1/20
13 William Meade Fletcher, Cyclopedia of the Law of Private Corporations § 5927
(perm. ed. rev. 1970)).
Under this well-settled case authority, we conclude plaintiffs lack standing to
enforce Green Cab's contract with King County. We conclude the trial court erred by
allowing plaintiffs to pursue their breach of contract claim against defendants premised
on the Green Cab-King County RFP contract and grounded on an unproven oral
agreement.15 Plaintiffs' alleged oral agreement is unsupported by the record, the law, and logic.
Remedy
As noted above, the court's breach of contract instruction 14 misinformed the jury
that an essential element of plaintiffs' claim required proof "[t]hat the defendants entered
into a contract or contracts with the plaintiffs." RP (July 31, 2012) at 114.
Compounding this error, the court also gave an erroneous "summary of the claims"
instruction:
Breach of contract. Plaintiffs allege that the defendants entered into contracts with them to form Green Cab LLC. One of the contracts is called the operating agreement. Plaintiffs also allege that the defendants orally promised the plaintiffs that they would comply with the terms of the King County RFP and award letter. Plaintiffs contend that the operating agreement and the RFP award letter set forth requirements that Green Cab LLC was to follow. Plaintiffs claim that the defendants breached these contracts and as a result of this breach of contract they personally sustained monetary damages.
15 The oral agreement theory also fails on multiple grounds. It is unclear how the oral agreement among Green Cab members creates an individual or collective right to sue on the Green Cab—King County RFP agreement. Plaintiffs never alleged an oral agreement and presented no evidence at trial to establish an oral agreement. The alleged agreement fails for lack of consideration because the agreement, if it exists, binds plaintiffs to do what they were already obligated to do. "An agreement to do that which one is already obligated to do does not constitute consideration to support a contract." Crown Plaza Corp. v. Synapse Software Svs, Inc., 87 Wn. App. 495, 501, 962 P.2d 824 (1997). -20- 69278-0-1/21
RP (July 31, 2012) at 106. Because we are unable to determine from the jury
instructions, special verdicts, and the trial record the contracts on which the jury relied to
reach its breach of contract verdict, we reverse the breach of contract verdict and
judgment and remand for new trial on liability and damages and without prejudice to
conduct further discovery.
Plaintiffs' Tortious Interference Claims
Defendants also challenge plaintiffs' tortious interference awards, arguing
insufficient evidence to support the damages awarded. We conclude that the court's
error in allowing the jury to consider the RPF contract also warrants reversal of plaintiffs'
tortious interference awards. See Falkv. KeeneCorp., 113 Wn.2d 645, 659, 782 P.2d
974 (1989) ("An appellate court has inherent authority to consider issues which the
parties have not raised if doing so is necessary to a proper decision."); Wills v.
Kirkpatrick, 56 Wn. App. 757, 758 n.1, 785 P.2d 834 (1990) (same).
The trial court's erroneous breach of contract instruction discussed above casts
doubt on the jury's tortious interference finding and damages awards. This instruction
invited the jury to consider tortious interference claims as part of the breach of contract
claim. For example, the instruction permitted the jury to find breach of the RFP contract
if it determined the defendants excluded plaintiffs from the dispatch system, excluded
them from the company offices, or prevented them from picking up fares at the lucrative
Bellevue location—the identical theories on which plaintiffs based their tortious
interference claims. Indeed, the court questioned plaintiffs' counsel about the improper
purpose and improper means element of their tortious interference claim:
-21- 69278-0-1/22
[THE COURT]: What was the evidence of improper purpose and improper means? [PLAINTIFFS' COUNSEL]: The evidence of improper purpose and improper means was these defendants are - - [THE COURT]: - - weren't sent dispatches? [PLAINTIFFS' COUNSEL]: Well, there's a couple. Everything [defendants] seemed to do was improper, starting with the way the company was never really gotten off to what the agreements were between the county and the members, and then how it was in this period of disarray. The operating agreements, the multiple operating agreements; the not operating the operating agreements or following them when you want to follow them; and then saying we can interfere with your business relationships because we're following some un agreed operating agreement. That's one improper purpose. The other improper purpose is, essentially after the lawsuit, they would not give dispatches to the other side. There was testimony to that. The other improper purpose is [plaintiffs] were locked out of the Bellevue- locked out of the Bellevue lucrative taxi location. There was testimony about that. There was testimony that [plaintiffs] were locked out of their own offices and denied access to the dispatch system. They were denied access to the phone numbers. And so the improper purpose was to put [plaintiffs] out of business so then [defendants] would just get the business by default.
RP (July 26, 2012) at 54-55 (emphasis added).
The comments of plaintiffs' counsel and the erroneous breach of contract
instruction make clear that the jury likely relied on the RFP contract to determine both
claims—breach of contract and tortious interference. Given the magnitude of this error,
we conclude the error adversely affected the tortious interference verdicts. See Herring
v. Dep't of Soc. & Health Servs., 81 Wn. App. 1, 23, 914 P.2d 67 (1996) (an error is
prejudicial if it presumably affects the outcome of trial); O'Neill v. Dep't of Licensing, 62
Wn. App. 112, 120, 813 P.2d 166 (1991) ("Erroneous instructions given on behalf of a
party in whose favor the verdict is returned are presumed prejudicial unless it is
affirmatively shown that they are harmless."). We also note that the trial evidence
supporting tortious interference liability was scant at best. Our review of Mersha's
testimony indicates he never testified about facts supporting his tortious interference
-22- 69278-0-1/23
claim. See RP (July 25, 2012) at 73-139; RP (July 26, 2012) at 8-26. Belete testified
that the defendants made a "false criminal accusation" against him that resulted in his
arrest but testified about no other facts supporting his claim. RP (July 26, 2012) at 35.
We reverse the tortious interference verdicts and judgments and remand for new
trial on liability and damages and without prejudice to conduct further discovery.
Discovery
Finally, we are troubled by the contentious discovery history in this case that
resulted in a complete failure of meaningful discovery production as this record amply
demonstrates. Although we refrain from assigning blame, unjustified and unreasonable
resistance to production of any documents supporting damages is only one such
example in this record.
Washington courts have repeatedly addressed the need for parties to cooperate
in the discovery phase of litigation:
The concept that a spirit of cooperation and forthrightness during the discovery process is necessary for the proper functioning of modern trials is reflected in decisions of our Court of Appeals. In Gammon v. Clark Eguip. Co., 38 Wn. App. 274, 686 P.2d 1102 (1984), affd, 104 Wn.2d 613, 707 P.2d 685 (1985), the Court of Appeals held that a new trial should have been ordered because of discovery abuse by the defendant. Then Court of Appeals Judge Barbara Durham wrote for the court: The Supreme Court has noted that the aim of the liberal federal discovery rules is to "make a trial less a game of blindman's b[l]uff and more a fair contest with the basic issues and facts disclosed to the fullest practicable extent." The availability of liberal discovery means that civil trials no longer need be carried on in the dark. The way is now clear... for the parties to obtain the fullest possible knowledge of the issues and facts before trial. This system obviously cannot succeed without the full cooperation of the parties. Accordingly, the drafters wisely included a provision authorizing the trial court to impose sanctions for unjustified or unexplained resistance to discovery. (Citations omitted.) Gammon, 38 Wn. App. at 280.
-23- 69278-0-1/24
Wash. State Physicians Ins. Exch. & Ass'n v. Fisons Corp., 122 Wn.2d 299, 342, 858
P.2d 1054 (1993). The discovery missteps here arguably denied the parties a fair
contest and undermined the truth seeking process.
Fees and Costs
In their conclusion, defendants request "an award of their costs" on appeal.
Resp't's Br. at 50. RAP 18.1(b) requires a party to devote a section of its brief to the
request for fees or expenses. Defendants failed to do so. Nor do they cite any authority
as a basis for fees and costs on appeal. See RAP 18.1(a); In re Marriage of Hoseth,
115 Wn. App. 563, 575, 63 P.3d 164 (2003) (party citing no authority for appellate
attorney fees not entitled to fees). We deny their request.
CONCLUSION16
For the reasons discussed, we reverse the breach of contract and tortious
interference verdicts and judgments in favor of plaintiffs and remand for a new trial on
liability and damages and without prejudice to the parties to conduct further discovery.
We otherwise affirm the trial court's injunctive relief order.
WE CONCUR:
Jc*J, iW*^ 16 Given our disposition, we do not address the parties' remaining contentions. -24-