Seth Burrill Productions, Inc. v. Rebel Creek Tackle, Inc.
34401-1
| Wash. Ct. App. | Apr 11, 2017Background
- Burrill obtained an arbitration award (confirmed by the trial court in 2013) against Rebel Creek for breach of an exclusive license for the patented "Bud's Diver" lure and an order to deliver the production molds; Rebel refused and was found in contempt on remand.
- Burrill's confirmed judgment (now > $100,000) remained largely unsatisfied despite offers to accept patent/molds or reduced payment; Burrill pursued supplemental proceedings to discover Rebel's assets.
- Rebel disclosed it had no cash, insurance, corporate records, or recent profits and identified its primary assets as the Bud's Diver molds, patent, and patent application.
- Burrill alleged risk to the patent's value (abandoned application notice, missed maintenance fees) and moved to appoint a receiver to preserve and, if necessary, sell Rebel's intellectual property to satisfy the judgment.
- The trial court appointed a receiver; Rebel deposited $103,000 into court and sought a stay and review. The Court of Appeals affirmed the receivership and denied Rebel’s requests to litigate postjudgment setoffs or stay the receivership.
Issues
| Issue | Burrill's Argument | Rebel's Argument | Held |
|---|---|---|---|
| Whether a receiver could be appointed to preserve/sell Rebel's IP to satisfy the judgment | Receivership authorized under RCW 7.60.025(1)(c),(e),(g),(nn); other remedies inadequate; patent/molds are only significant assets and at risk | No abuse of discretion; argued no prerequisite actions to execute judgment were taken and post-filing revival of application mooted urgency | Court affirmed: appointment not an abuse of discretion; sale by receiver reasonable to protect interests |
| Whether the trial court could consider Rebel's prior contempt and appellate history when deciding receivership | History of noncompliance is relevant to need for extraordinary relief | Argued court improperly relied on this court's prior unpublished contempt opinion beyond the record | Court may take judicial notice of related proceedings; prior contempt was a permissible factor |
| Whether Rebel's offer to tender the judgment minus asserted setoffs required the court to delay or litigate setoffs before appointing a receiver | Tendered to pay the differential if in Burrill's favor; asked for discovery and hearings on setoffs | Burrill argued setoffs are subject to the parties' arbitration clause and postjudgment receivership is a separate remedy | Court rejected requiring litigation of postjudgment setoffs as untimely and unnecessary; did not err in declining to entertain that procedure |
| Whether the receivership order should have been stayed pending these disputes | Rebel sought stay pending disclosure, discovery, and setoff hearings; posted cash supersedeas | Burrill opposed further delay; argued supersedeas was unrelated to receivership relief | Court did not abuse discretion in refusing stay; cash deposit stayed enforcement but did not bar receivership; appellate stay was limited |
Key Cases Cited
- Hendricks & Lewis PLLC v. Clinton, 766 F.3d 991 (9th Cir. 2014) (federal court affirmed appointment of receiver to manage/sell copyrights to satisfy judgment under Washington law)
- Union Boom Co. v. Samish Boom Co., 33 Wash. 144 (Wash. 1903) (receivership review requires sound judicial discretion considering all facts and circumstances)
- Roberts v. Washington National Bank, 9 Wash. 12 (Wash. 1894) (appointment of receiver reviewed for abuse of discretion)
- Many Life Ins. Co. v. Cissne Family LLC, 135 Wn. App. 948 (Wash. Ct. App. 2006) (principles governing receivership appointment and review)
- Sherry v. Financial Indemnity Co., 160 Wn.2d 611 (Wash. 2007) (distinguishable: insurer sought setoff within same proceeding and issues were litigated prior to judgment)
- Reichlin v. First National Bank, 184 Wash. 304 (Wash. 1935) (setoff allowed where it was a final judgment pleaded as a setoff)