T-mobile Usa, Inc. v. Platinumtel Communications, Llc

• Court: Court of Appeals of Washington
• Decided: September 18, 2017
• Docket: 75208-1
• Status: Unpublished

Opinion

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON., T-MOBILE USA, INC., a Delaware ) rn corporation, ) No. 75208-1-1 ) Appellant, ) DIVISION ONE ) V. ) ) PLATINUMTEL COMMUNICATIONS, ) UNPUBLISHED OPINION LLC, a Delaware corporation, ) ) FILED: September 18, 2017 Respondent. ) ) BECKER, J. —After declaring respondent Platinumtel in default for failing to

pay amounts owed under a contract, T-Mobile filed an action for replevin and

injunctive relief to secure collateral in which it claimed a security interest. The

trial court denied the requested relief and entered a judgment for attorney fees in

favor of Platinumtel. On appeal, T-Mobile contends the trial court erred in

entering a judgment on attorney fees while the parties' underlying dispute

remained pending in arbitration. Because T-Mobile fails to establish any

reversible error, we affirm.

FACTS

Appellant T-Mobile USA Inc. is a Delaware corporation with corporate

headquarters in Bellevue. Respondent Platinumtel Communications LLC (Ptel) No. 75208-1-1/2

is a prepaid wireless service provider with its principal place of business in

Illinois.

In 2012, T-Mobile and Ptel executed a Wholesale Supply Agreement

(Agreement). Under the Agreement, T-Mobile supplied Ptel with wireless cellular

network services that Ptel resold to its prepaid wireless customers around the

country.

The Second Amendment to the Agreement granted T-Mobile a security

interest in specified collateral, including all of Ptel's equipment, supplies, fixtures,

and tangible property. The collateral also included all of Ptel's interest "in the

right to receive payment of money... all accounts, contract rights, chattel paper,

documents of title, letters of credit,... securities, deposits, insurance policies,

licenses, leases, contracts, judgments,.. . and .. . any and all funds in each

bank account owned or controlled by Platinumtel." Upon default, which included

Ptel's "failure to make any payment due" under the Agreement, T-Mobile could

foreclose on the collateral and "take possession of the collateral pursuant to

judicial process."

Section 14.12(a) of the Agreement required the parties to submit "disputes

related to the Service, Network, Invoices or billing" to arbitration. Section 14.13

provided that "the prevailing party in any dispute under this Agreement will be

entitled to recover its costs, including reasonable attorneys' fees."

In 2015, T-Mobile alleged that Ptel was in default for failing to make more

than $3 million in payments for network services. At some point, T-Mobile cut off

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services to Ptel, which then announced to its customers that it was going to

discontinue offering wireless services.

On February 1, 2016, T-Mobile filed a Complaint for Replevin and

Injunction, seeking an order of replevin putting T-Mobile "in immediate

possession of the Collateral" and a temporary restraining order and further

injunctive relief preventing Ptel "from using, damaging or disposing of the

Collateral" before T-Mobile could gain possession. T-Mobile also filed a Motion

for Order to Show Cause regarding the replevin and injunction claims.

Simultaneously, T-Mobile commenced an arbitration proceeding under the terms

of the Agreement to address Ptel's failure to pay.

On February 2, 2016, the trial court issued a temporary restraining order

directing Ptel to protect and preserve the collateral and an order to show cause

why a writ of replevin should not be issued.

In support of its motion for an order to show cause, T-Mobile asserted that

the replevin statute, chapter 7.64 RCW, provided the judicial process for a

secured party to take possession of the collateral identified in the Agreement. 1-

Mobile further contended that under the Uniform Commercial Code, Ptel was

required to identify and assemble the collateral and make it available to T-Mobile.

T-Mobile asserted that it was unsure of the value of the collateral but estimated it

"may exceed $10,000.00" and posted a $10,000 bond.

In response, Ptel raised several procedural challenges to T-Mobile's

replevin claim and to the issuance of the temporary restraining order. Ptel

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suggested that T-Mobile's request for an order of replevin and "a judgment in an

amount to be proven at trial" indicated an improper attempt to litigate the financial

dispute simultaneously in two forums.

Ptel disputed T-Mobile's allegations that it was going out of business. Ptel

acknowledged that T-Mobile had forced it to discontinue service from T-Mobile

but claimed that it retained several employees and was actively seeking another

carrier. Ptel maintained that in any event, T-Mobile had failed to establish that

Ptel was attempting to place its assets out of the reach of creditors.

Ptel also claimed that T-Mobile had not demonstrated any right to

foreclose judicially on the collateral while the disputed question of whether a debt

was owed would be contested in the arbitration proceeding. Ptel contended that

much of the collateral that T-Mobile was seeking, such as Ptel's "right, title, and

interest in the right to receive payment of money," did not involve assets that

could be placed into T-Mobile's possession by means of a writ of replevin. Ptel

argued that by requesting in its proposed replevin order that Ptel also turn over

financial statements, credit statements, checking accounts and activities—

essentially all of Ptel's corporate records—T-Mobile was not seeking relief

properly available through replevin, but rather was attempting to undertake

prejudgment discovery for purposes of collection in the event that it eventually

obtained a judgment.

Both parties appeared at the show cause hearing on March 31, 2016, the

day that the temporary protection order expired. T-Mobile maintained that Ptel's No. 75208-1-1/5

undisputed default of nonpayment "triggers the right to replevin" and "entitles us

to marshal and hold that collateral" pending any determination in the arbitration of

whether either party had breached the Agreement. T-Mobile argued that it was

also entitled to injunctive relief in conjunction with a writ of replevin in order to

prevent Ptel from dissipating its assets during the arbitration. T-Mobile claimed

that without an injunction, Ptel might "siphon[]away [incoming funds from

customers] either for personal use [or]for other business operations or whatever

they want to do." In response to the court's question about what it expected the court to do

with assets such as Ptel's bank accounts and accounts receivable, T-Mobile

acknowledged "you can call it impounding" and explained that "pending an award

by the arbitrator, we are looking to replevin [sic] those assets to have them in a

safe place and to prevent, via an injunction, them from dissipating those assets."

Among other things, Ptel disputed T-Mobile's claimed right to immediate

possession of collateral, arguing that it was entitled to raise defenses and claim

offsets as to the alleged default and that those issues involved disputes about

billing and invoicing that the arbitrator had to decide. Ptel also maintained that T-

Mobile had failed to demonstrate irreparable harm that would warrant entry of a

preliminary injunction.

On April 1, 2016, the court denied T-Mobile's motion for replevin and a preliminary injunction. No. 75208-1-1/6

The court concluded that T-Mobile had failed to meet its burden of

demonstrating a well-grounded fear of immediate invasion of its rights under the

Agreement that would result in actual and substantial injury. The court found no

evidence of Ptel's "current or imminent or likely future dissipation of the collateral

as identified in the pleadings."

In denying an order of replevin, the court noted that replevin generally

requires the location of property to be specified so that the sheriff can take

possession of it. See RCW 7.64.035(2)(b), (c). The court further observed that

"money is not subject to replevin unless marked or designated in some manner

so as to become specific" and that funds in a bank account are not a tangible

asset subject to replevin.' Under the circumstances, the court concluded that the

collateral T-Mobile specified in its proposed order was not subject to replevin:

Here, the collateral described in Exhibit A to T-Mobile's proposed order to be seized by the Sheriff includes funds in bank accounts, the right to receive money and consideration related to the sale of products and services, i.e., accounts, contract rights, commercial paper, leases, insurance policies, and any proceeds therefrom or from goods or personal property. Even if considered tangible property, the above items are not sufficiently identified to allow the Sheriff to take possession of them. Nor is the location provided of any of the collateral, including the tangible assets, such as furniture. For the above reasons replevin is not available.

1 Clerk's Papers at 439(order denying show cause), quoting 66 Am. JUR. 2D Replevin §§ 9-10, at 504-05 (2001).

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On April 5, 2016, Ptel filed a Motion to Fix Fees, Costs, and Enter

Judgment. Ptel contended that the trial court had denied the sole relief T-Mobile

requested in its complaint, effectively ending the proceeding. Ptel asked the

court to enter a judgment for attorney fees under the provision in the Agreement

for "the prevailing party in any dispute."

Three days later, on April 8, 2016, T-Mobile filed an amended complaint

raising additional claims and requests for relief related to its alleged security

interests. On April 11, 2017, T-Mobile filed its opposition to Ptel's motion to fix

fees. T-Mobile argued that there could be no "final judgment" and therefore no

"prevailing party" for purposes of an attorney fee award, until all claims in court

and in the arbitration were resolved. T-Mobile did not discuss the amended

complaint.

On April 14,2017, the trial court entered an order fixing fees and

judgment, awarding Ptel attorney fees and costs totaling $32,544.92 and

dismissing the claims in T-Mobile's complaint with prejudice. T-Mobile appealed.

After the trial court entered the order fixing fees, the arbitration proceeded.

In July 2016, during the course of arbitration, counsel for Ptel withdrew.

According to T-Mobile, the arbitration concluded without the participation of Ptel.

T-Mobile expects entry of an award in its favor in excess of $4 million.

On appeal, Ptel did not appear or submit a response to T-Mobile's

opening brief. Ptel's former counsel, Williams Kastner & Gibbs PLCC, advised

the court that they have not represented Ptel since July 2016. Where a

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respondent does not file an opening brief, an appellate court "is entitled to make

its decision based on the argument and record before it." Adams v. Dep't of

Labor & Indus., 128 Wn.2d 224, 229, 905 P.2d 1220(1995)(rejecting continuing

validity of the prima facie case rule when respondent fails to file a brief); see also

RAP 11.2(a)(only a party who submits a brief may present oral argument).

On appeal, T-Mobile has raised two assignments of error: (1)the trial

court erred in dismissing the case with prejudice "when the claims set forth in the

Amended Complaint were still unanswered and unresolved" and (2) the trial court

erred in concluding that "replevin is not available unless the secured creditor can

identify and locate the collateral with specificity."

Final Judgment

T-Mobile contends the trial court erred by entering a final judgment

dismissing T-Mobile's claims with prejudice and awarding Ptel attorney fees.

T-Mobile argues that the order denying its motion for replevin and injunctive

relief was an interlocutory order and that the trial court could not enter a final

judgment and award attorney fees to the "prevailing party" until it had

resolved "all of the issues in the lawsuit." Whether a specific statute or

contractual provision authorizes an award of attorney fees is a question of law

that we review de novo. Kaintz v. PLG, Inc., 147 Wn. App. 782, 785-86, 197

P.3d 710 (2008).

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Under the terms of the Agreement, the "prevailing party in any dispute"

was entitled to recover costs and attorney fees.2 T-Mobile's arguments rest in

part on the erroneous assumption that the definition of "prevailing party" in

RCW 4.84.330 necessarily applied to the parties' contractual attorney fee

provision.

"By its terms, RCW 4.84.330 applies only to contracts with unilateral

attorney fee provisions." Kaintz, 147 Wn. App. at 786. Where, as here, the

parties' agreement already contains a bilateral attorney fees provision,

"RCW 4.84.330 is generally inapplicable." Hawk v. Branies, 97 Wn. App. 776,

780, 986 P.2d 841 (1999); see also Walii v. Candyco, Inc., 57 Wn. App. 284,

288, 787 P.2d 946(1990)(statutory "prevailing party" provision of RCW 4.84.330

does not control over plain language of a contract that contains a bilateral

attorney fee clause); Wachovia SBA Lending, Inc. v. Kraft, 165 Wn.2d 481, 494,

200 P.3d 683(2009)(RCW 4.84.330 is designed to make a unilateral attorney

fees provision bilateral when the contracting party receives a final judgment).

T-Mobile does not allege that the parties intended to incorporate the

statutory definition of "prevailing party" into the Agreement's attorney fee

provision. Given the limited purpose of the proceeding and the trial court's

resolution of T-Mobile's claims, a commonsense interpretation supports a

2(Emphasis added.)

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determination that Ptel was the "prevailing party" in this dispute. See Wal'i v.

Candyco, 57 Wn. App. at 288-89.

In any event, T-Mobile's arguments regarding the trial court's authority to

enter a final judgment are also unavailing. A final judgment is'a court's last

action that settles the rights of the parties and disposes of all issues in

controversy, except for the award of costs (and, sometimes, attorney's fees) and

enforcement of the judgment." State v. Taylor, 150 Wn.2d 599,602,80 P.3d

605 (2003), quoting BLACK'S LAW DICTIONARY 847(7th ed. 1999). Substance

controls over form in the determination of a final judgment. Nestegard v. Inv.

Exch. Corp., 5 Wn. App. 618, 489 P.2d 1142(1971). T-Mobile maintains that the

order denying its request for replevin and a preliminary injunction was not a final

judgment because it did not "resolve all of the issues in the lawsuit" and did not

"represent a final determination of the parties' rights." But these contentions

elevate form over substance.

In its "Complaint for Replevin and Injunction," T-Mobile alleged two claims

and requested an order of replevin and a temporary injunction. The trial court

rejected both claims and denied the relief that T-Mobile requested. T-Mobile

acknowledged that the merits of Ptel's default would be determined in the

pending arbitration that T-Mobile had initiated. Under the circumstances, the trial

court reasonably could have concluded that it had resolved all of the issues in the

limited, ancillary proceeding before it, warranting entry of a final judgment.

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T-Mobile also contends the trial court erred by failing to adjudicate the

claims that it raised in an amended complaint. Three days after Ptel filed its

motion to fix fees, T-Mobile filed an amended complaint. The amended

complaint, now retitled Amended Complaint for Enforcement of Security Interest

Pursuant to Uniform Commercial Code, including Taking Possession of Collateral

by Replevin and Injunction, removed the independent claim for replevin in the

original complaint and specified at least six additional forms of relief related to the

alleged collateral. On appeal, T-Mobile asserts that it had an absolute right to file

the amended complaint because Ptel never answered the original complaint.

See CR 15(a).

Three days after filing the amended complaint, T-Mobile filed its opposition

to Ptel's motion to fix fees. Although T-Mobile asserted that it had "ongoing

claims for injunctive relief before this Court," T-Mobile's primary argument was

that the trial court could not enter a final judgment in the current proceeding while

"the central dispute between the parties" remained pending in arbitration: "No

final judgment can be entered, and no prevailing party can be identified, until all

of these claims have been finally determined."

T-Mobile did not specifically refer to the amended complaint or identify any

new claims that remained pending before the trial court. In its reply, Ptel referred

to the amended complaint and cited authority for the proposition that absent

extraordinary circumstances, a party loses the automatic right to amend the

complaint after losing a dispositive ruling. But T-Mobile made no effort to

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respond to Ptel's arguments regarding the amended complaint. Nor did T-Mobile

call the trial court's attention to any of the specific "live claims" it now asserts the

trial court was required to adjudicate before entering a judgment, even though it

submitted a responsive pleading after filing the amended complaint. Under the

circumstances, we conclude that T-Mobile's vague, passing reference to

"ongoing claims for injunctive relief before this Court" was insufficient to preserve

the alleged error for review. See Roberson v. Perez, 156 Wn.2d 33, 39, 123

P.3d 844(2005)(appellate courts generally decline to review issues raised for

the first time on appeal).

Replevin

T-Mobile contends that the trial court erred when it denied an order of

replevin because it failed to describe the collateral and its location with

particularity. T-Mobile asserts that "when a debtor like Ptel is concealing

property that rightfully belongs in possession of a secured party like T-Mobile, the

secured party is in no position to describe the property and location with exact

particularity." T-Mobile cites no authority for this proposition, and the trial court

entered no findings to support T-Mobile's factual allegations.

"A replevin action is essentially one to determine title to, or right of

possession of, personal property." Apgar v. Great Am. lndem. Co., 171 Wash.

494, 498, 18 P.2d 46(1933). Chapter 7.64 RCW,Washington's replevin

statute, permits a plaintiff to recover possession of personal property after

demonstrating, among other things, that "the plaintiff is the owner of the property

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or is lawfully entitled to the possession of the property by virtue of a special

property interest, . . specifically describing the property and interest." RCW

7.64.020(2)(a). A security interest is a special property interest that may support

replevin. RCW 7.64.020(2)(a).

But as the trial court noted, the statute also generally contemplates that

the replevin order shall "describe the property and its location" and "direct the

sheriff to take possession of the property and put the plaintiff in possession."

RCW 7.64.035(2); see also RCW 7.74.047 (sheriff's duties upon taking

possession of property). The trial court concluded that T-Mobile had failed to

describe the collateral sufficiently to permit an order of replevin.

On appeal, T-Mobile does not address the basis for the trial court's

replevin analysis or the authority that the trial court relied on. Nor has it

presented any meaningful legal analysis or cited any authority to support its

conclusory allegations. We therefore decline to consider them. See Saunders v.

Lloyd's of London, 113 Wn.2d 330, 345, 779 P.2d 249(1989)(appellate court will

decline to consider issues unsupported by cogent legal argument and citation to

relevant authority).

In light of our decision, we deny 1-Mobile's request for attorney fees on

appeal.

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Affirmed.

WE CONCUR:

Joe‘cA•Cey,

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