Hockley v. HargittHockley v. Hargitt
On a September Sunday in 1971 the plaintiff not only bought himself a franchise but, as it turned out, he acquired a lawsuit of staggering complexity. After a single sales presentation, plaintiff agreed to pay $18,000 for a Tacoma franchise to provide the public with a total divorce service by providing legal and financing services. Within a few days he had paid the entire fee, including the delivery of $10,000 in cash.
Within a month, second thoughts — as well as substantial legal doubts — had set in and a flurry of legal activity began with plaintiff’s two lawsuits against 14 defendants.
At this stage of this litigation, only procedural issues are before us. The substantive merits have yet to be reached-. The petitioners, defendants Hargitt and Divorce, Inc., seek review, by writ of certiorari, and allege 19 assignments of error, contending that the trial court erred in 13 separate matters. Though limited to procedural questions, the parties cite some 20 statutes, 12 court rules and 67 cases to support their respective positions.
Before examining the procedural steps which causе this review, a brief summary of plaintiff’s complaint is appropriate. Plaintiff alleges that he purchased from one or more of the numerous defendants a franchise to be operated in the state of Washington, under the name Divorce, Inc. He
With that background, we set forth the sequence of events.
(1) Octоber 29, 1971: Plaintiff, as an individual, sued the named defendants alleging claims bottomed on: (a) fraud; (b) negligent misrepresentation; (c) consumer fraud under the Consumer Protection Act,
(2) October 29, 1971: Plaintiff, in a class action on behalf of himself and all persons similarly situated, sued the named defendants on the same grounds as in (1) above.
(3) October 29, 1971: Plaintiff secured a temporary restraining order restraining defendant Hargitt and defendant Wasserman from conducting the business of Divorce, Inc., within the state of Washington, and ordering Hargitt and Wasserman to personally appear and show cause why the temporary retraining order should not be made permanent. Plaintiff posted a $1,000 bond in accordance with the order of the court commissioner.
(4) November 8, 1971: On the show cause date, defendants Hargitt and Divorce, Inc., appeared through counsel and by stipulation the show cause hearing was continued until the next day, November 9,1971.
(5) November 8, 1971: Defendants moved to quash the temporary restraining order and sought a $500,000 bond. By stipulation the temporary restraining order was continued in effect until the hearing on the next day.
(6) November 8, 1971: Plaintiff obtained an order that defendant Hargitt should appear personally at the show cause hearing on November 9th.
(7) November 9, 1971: At 9:30 a.m. the King County Prosecutor served the defendants’ attorney with a complaint in intervention on behalf of King County and a
(8) November 9, 1971: Defendant Hargitt filed twо affidavits, referred to hereafter.
(9) November 9, 1971: At 1:30 p.m. arguments on all of the motions were heard and argument continued until November 10,1971.
(10) November 9,1971: State Attorney General appeared •amicus curiae.
(11) November 10, 1971: Plaintiff moved for a contempt order for failure of Hargitt to appear as ordered.
(12) November 10, 1971: After extensive argument the trial court granted the following relief: (a) motion to quash the restraining order and order to show cause was denied; (b) defendant Wasserman’s motion to dismiss was dеnied; (c) King County Prosecuting Attorney’s motion for intervention was granted;, (d) the motion to hold defendant Hargitt and Divorce, Inc., in contempt and to limit further proceedings on their behalf was granted in part. Defendant Hargitt was ordered to personally appear in Seattle for discovery proceedings within 30 days but further ruling on the motion for contempt was stayed subject to reassertion by the plaintiff upon defendants’ failure to comply with the terms' of the order; (e) motions for a preliminary injunction were granted. Defendants were restrained from engaging in any acts calculated to solicit future purchasers of the franchise of Divorce, Inc., from advertising for the purchase of franchises, from distributing to individuals and the public any and all materials relating to the operations of Divorce, Inc., Universal Divorce Financing Limited and Universal Legal Services Corp., from carrying on all activities relating to the starting up of franchises of Divorce, •Inc., and from any and all publication or advertising relating, either directly оr indirectly, to the facilitation of obtaining or assisting in the procurement of a divorce in the state of Washington; (f) the defendants were ordered to páy into court all money collected from Washington resi
(13) November 15,1971: Defendants moved for reconsideration and vacation of the temporary injunction, based on 18 alleged errors.
(14) November 18, 1971: Defendants moved to increase plaintiff’s bond to $150,000.
(15) November 23, 1971: The trial court reheard the entire matter and made minor modifications in the order entered on November 10th.
(16) November 30, 1971: The trial court signed a formal order denying the motion to vacate, denying the increased bond and setting forth the minor modifications ruled on in the November 23rd hearing.
(17) January 11, 1972: Motions to intervene by two other franchise purchasers were granted.
From the foregoing activity the petitioners make 19 assignments of error which we group into six major issues. However, before considering these contentions, we must examine the evidentiary matters before the trial court which arise from the affidavit of the plaintiff, plus those of three other franchise purchasers. Plaintiff’s affidavit stated: (1) that in September, 1971, he responded to an advertisement for a business opportunity which appeared in a Sеattle newspaper, representing that an individual could earn up to $55,000 per year by investing in the defendants’ enterprise; (2) that one of the defendants made a sales presentation to him “proposing my purchase from his principals of a franchise whose purpose 'and function would be to provide to the public a total divorce service which would expedite the acquisition of a divorce by providing attorney and financing services”; (3) that advertising of the services would be a primary and essential part of the franchise operation, with the defendants to provide the copy for such
The affidavit of intervenor Kennedy was in substance the same as that of the plaintiff. He, too, paid $18,000 fоr a franchise covering the downtown Seattle area. He received the same materials, including the same testimonial letters. His affidavit alleges that one of the defendants admitted that he, the defendant, was in fact the author of two of the letters.
The affidavits of .the intervenors Wisniewski, purchasers of the Olympia franchise, were likewise substantially the same as the plaintiff’s affidavit. They made a cash payment of $9,000 for that franchise and pursuant to direction of defendant Hargitt published an advertisеment in .the Daily Olympian, the content of which was furnished by Hargitt. In substance it stated as follows: “Divorce is never easy but Divorce, Inc., can make it easier.”
The essential allegations of the affidavit of Dennis Cox were similar to that of the plaintiff. He purchased the south Seattle franchise for $18,000. He received the same testimonial letters. His affidavit asserts that his territory was to include Auburn, Washington, which was also included in the Hockley franchise.
Despite the filing of three affidavits by defendant Hargitt, the material allegations of the foregoing affidavits were
Thus at the time of the hearing on the motion for preliminary injunction and at the rehearing, the triаl court had before it five affidavits from four franchise purchasers alleging (1) the representations as to the nature of the franchise business; (2) that advertising was represented as a primary and essential part thereof; (3) that payment in severed instances was made in cash to the defendant Har-gitt; (4) that the proposed operation was represented to be legal, valid, feasible and likely to be a financial success; (5) that defendant Hargitt had collected $280,000 from franchise sales; (6) that two of the “unsolicited” testimonial letters were authored by one of the defendants. Incidentally, the testimonial letters include such comments as “good luck and God speed”; “it is this type of ‘pioneering’ that has helped make America a great place to live”; “God bless you for the thousands of people who will not have to be financially and emotionally throttled now to get a divorce.”
In addition to the advertising materials referred to above, the franchise holders were furnished the following copy:
(Offices throughout Canada and the United States) “Divorce Incorporated”
Our Clients Receive . „ .
*The Services of an Attorney
*The Convenience of Low Monthly Payments (As low as $29 per month)
*No Client Turned Down Regardless of Credit
“‘Fast Personalized Service
* All Inquires Held in Strictest Confidence
For Information and Appointment Please Contact: “Divorce Incorporated”
62.2 Securities Building 915% Pacific Avenue.
Tacoma, Washington 98402
Telephone FU 3-3781
Raymond T. Hockley Domestic Service Consultant
Copyright 1971 by Universal Divorce Financing Ltd.
The defendants first attack the validity of the temporary restraining order and order to show cause. When plaintiff filed his complaint, he also moved for a temporary restraining order and an order to show cause, based on his affidavit and that of his attorney. The- attornеy’s affidavit, stated to be on firsthand knowledge, alleged that he had reason to believe that the defendants were about to publish advertising in Seattle newspapers to advertise and promote the obtaining of divorces through the plaintiff’s franchise, placing the plaintiff in criminal jeopardy for violation of
Petitioners contend that plaintiff in obtaining the temporary restraining order failed to comply with the King County local rule 65(b)(1) which requires notice of such request to the opponent or his counsel and a showing of good cause if such notice is not given. Further, violation of CR 65 is urged for failure (1) to endorse the order with the date and hour of issuance and (2) to define the injury and state why it is irreparable and why the order was granted without' notice. We agree that the plaintiff failed to comply with the applicable rules, especially as to the requirements of CR 65. However, petitioners did-not move to quash the temporary restraining order until the very day of its expir
Petitioners concede that the issue of quashing the temporary restraining order is moot but сontend that their right to recover on the bond is still viable if the order was improperly issued. No argument beyond the assertion of the conclusion itself or authority therefor is made or cited. We, therefore, will not consider the point.
In re Cassel,
The second issue involves defendants’ contention that a $1,000 bond was inadequate and the result of arbitrary and capricious action by the trial court. Petitioners originally sought a bond of $500,000 but subsequently moved for a bond of $150,000. The only supporting affidavit is from defendant Hargitt who alleged thаt Divorce, Inc., has a sizable investment in supplies, that it would have been earning a percentage of the franchisees’ volume if the injunction had not been issued, that the franchisees are losing money and that Divorce, Inc., and its franchise holders have suffered great and irreparable damage, total-ling at least $100,000 for Divorce, Inc., and at least $50,000 for the franchise holders. The able trial judge did not issue the order and preliminary injunction in any hasty manner. He listened to extensive and repeated arguments — arguments which transcribe into a statement 172 pages in length. The setting of a bond is a matter solely within the discretion of. the trial court,
The third major point is the propriety of allowing intervention by King County, coupled with the ruling that the county need not post a bond. On the morning of November 9, 1971, the King County Prosecutor served on defendants’ counsel a complaint in intervention and later in the day served a motion to intervene and notice of presentation on the same day. The complaint in intervention was based on
Petitioners contend that the prosecutor failed to comply with the civil rules in three respects: (1) that the motion did not state the grounds for intervention as required by CR 24(c); (2) that it was not served on all parties (not just their attorneys) (CR 24 (c) and CR 5); and (3) that it was not served 5 days before the hearing as provided in CR 6(d).
While the motion for intervention did not state the grounds for intervention, the accompanying complaint set forth the alleged violation of a specific statute and the specific statutory authority by which thé prosecutor was proceeding. The defendants have made no claim of prejudice by failure to repeat in the motion the specific grounds alleged in the complaint. We do not want to encourage noncompliance with the court rules, but dismissal of the intervention on this ground would serve no purpose where the defendants have not been misled or prejudiced. Petitioners further argue that CR 5(a) requires service upon the parties rather than their counsel if the plеadings assert new or additional claims for relief. That .portion of CR
The petitioners are correct that they were not given the 5 days’ notice required by CR 6, but that procedural error was cured by petitioners’ opportunity to be heard on this issue on November 23rd, 14 days after the matter was first noted. Petitioners never sought a continuance. Again compliance with the rule would have been preferable, but in this particular instance, no prejudice is shown when petitioners were given ample time to present countervailing arguments and affidavits.
The trial court correctly held that King County need not post a bond since
The petitioners next allege that the court exceeded its jurisdiction in finding Hargitt to be in contempt of сourt and, indeed, even in ordering him to appear personally. The show cause order did order Hargitt personally. When he failed to appear in person, the court entered a second order commanding appearance in person. While the court did enter a finding that Hargitt had defied these two orders, it stayed ruling upon the contempt issue and ordered Hargitt to appear within 30 days for discovery purposes. We need
Any issue as to the validity and meaning of the show cause order was superseded by the specific order of November 10th, directing personal appearance. A superior court has inherent power to enter a conditional order as it did here after a violation of its earlier order.
Keller
v.
Keller,
The fifth major contention stems from the superior court’s post-hearing order that:
[Defendants shall within 60 days from the date hereof or within 10 days before the final hearing of the merits of this cause, whichever period is shorter, cause the payment into this court of all sums of money collected from Washington residents for the purchase of franchises of Divorce, Inc., to be held pending further order of this court..
This, petitioners argue, is equivalent to imprisonment for debt in violation of Const, art. 1, § 17. However, cases involving imprisonment for debt such as
In re Van Alstine,
CR 64 provides the superior courts with a broad array of provisional remedies for seizing persons or property:
At the commencement of and during the course of an action, all remedies providing for seizure of person or property for the purpose of securing satisfaction of the judgment ultimately to be entered in the action are available under the circumstances and in the mannerprovided by- the law existing at the time the remedy is sought. The remedies thus availаble include arrest, attachment, garnishment, replevin, sequestration, and other corresponding or equivalent remedies, however designated and regardless of whether the remedy is ancillary to an action or must be obtained by an independent action.
A superior court has the inherent power of sequestration to preserve property pending the outcome of the litigation and to aid the court in carrying into effect future orders in reference to that property.
Cf. Ippolito v. Ippolito,
The affidavits considered by the superior court allege payment of substantial sums to the defendants, portions in cash; they allege a scheme of advertising which, on its face, the court concluded to be in violation of a criminal statute,
The final question arises under the Consumer Protection Act,
Any person who is injured in his business or property by a violation of RCW 19.86.020 , 19.86.030, 19.86.040, 19.86.050, or 19.86.060 . . . may bring a civil action in the superior court to enjoin further violations, to recover the actual damages sustained by him, or both, together with the cоsts of the suit, including a reasonable attorney’s fee, and the court may in its discretion, increase the award of damages to an amount not to exceed three times the actual damages sustained . . .
(Italics ours.)
By the very language of the statute, plaintiff may obtain injunctive relief in addition to recovering actual damages. However, defendants further argue that plaintiff may enjoin future violations only as to himself, thus protecting his own interests, but that he may not protect the public interest as well. Such a constriction of the scope of injunctive relief provided to the individual by
Our interpretation is strengthened by
[T]he purpose of this [consumer protection] act is . . . to protect the public and foster fair and honest competition. ... To this end this act shall be liberally construed that its beneficial purposes may be served.
This broad public policy is best served by permitting an injured individual to enjoin future violations of
If each consumer victim were limited to injunctive relief tailored to his own individual interest, the fraudulent practices might well continue unchecked while a multiplicity of suits developed. On the other hand, if a single litigant is
Much attention has been focused on the inadequacy of remedies in the consumer protection field, whether individual or governmental.
See
Travers and Landers,
The Consumer Class Action,
18 U. Kan. L. Rev. 811 (1970); Rice,
Uniform Consumer Sales Practices Act—Damages
Reme
dies,
67 Nw. U.L. Rev. 369 (1972);
Private Remedies Under the Consumer Fraud Acts,
67 Nw. U.L. Rev. 413 (1972). The necessity for broadened private remedies is recognized in
Rice v. Snarlin, Inc.,
We hold that under
We emphasize that we have not reached the substantive merits of any of the issues, but rather conclude that the trial court acted within its discretion and authority with respect to each of the foregoing matters.
Hale, C.J., Finley, Rosellini, Hunter, Hamilton, Stafford, Wright, and Utter, JJ., concur.