Tbf Financial, Llc, Resp V. Stay In Home Mortgage, Inc., Et Al, Defs

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
TBF FINANCIAL, LLC,
Respondent,
STAY IN HOME MORTGAGE, INC.,
a Washington corporation; MARTIN
TAYLOR and JUDY TAYLOR, and
their marital community,
Defendants,
BORIS PETRENKO,
Appellant.
DIVISION ONE
NO. 70662-4- I
»\>
UNPUBLISHED OPINION 	°en
FILED: 	March 2, 2015
Dwyer, J. —Attorney Boris Petrenko appeals a trial court order imposing
sanctions against him pursuant to Civil Rule 11 for filing a baseless and frivolous
motion on behalf of his client. 	Because Petrenko fails to establish that the trial
court abused its discretion in determining to impose sanctions, we affirm.
In 2006, Stay In Home Mortgage, Inc. leased business equipment from
CIT Technology Financing Services, Inc. 	In 2011, CIT assigned the lease to TBF
Financial, LLC. When Stay In Home Mortgage failed to make its lease
payments, TBF sued for breach of contract. TBF is a limited liability company
(LLC) organized and registered in Illinois. 	It is undisputed that TBF is not
registered to transact business in Washington.

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Petrenko filed a notice of appearance for Stay In Home Mortgage. 	On
February 7, 2013, Petrenko filed a motion to dismiss, contending that TBF was
barred from bringing suit in Washington pursuant to RCW 19.80.040, which
provides that "[n]o person or persons carrying on, conducting, or transacting
business under any trade name shall be entitled to maintain any suit in any of the
courts of this state" without registering in Washington.
On April 5, TBF sent a letter to Petrenko stating that RCW 19.80.040 did
not apply because TBF did not operate under a trade name and never had done
so. 	TBF stated it would move for sanctions under CR 11 if Petrenko did not
withdraw the motion by April 15. On April 8, TBF sent an e-mail to Petrenko
reiterating its intention to request sanctions.
Petrenko did not withdraw the motion. 	TBF filed a response explaining
that it did not operate under a trade name and that "TBF Financial, LLC" was its
true and real name. 	TBF provided a copy of its registration with the Illinois
Secretary of State showing the entity name registered as "TBF Financial, LLC,"
as well as a declaration from a manager stating that TBF "only uses its true and
legal name TBF Financial, LLC." TBF also asserted that even if it did operate
under a trade name, RCW 19.80.040 did not apply because TBF was not
"transacting business" in Washington as defined by RCW 25.15.350.1 	TBF
1 RCW 25.15.350 provides examples of activities that "do not constitutetransacting
business" for the purpose of requiring a foreign LLC to register in Washington. These include
"[m]aintaining or defending any action or suit" and "[s]ecuring or collecting debts or enforcing
mortgages and security interests in property securing the debts." RCW 25.15.350(a), (h). TBF
offered the affidavit of one of its managers stating, "[t]he only business that TBF transacts in the
State of Washington relates to the collection of debts."
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requested the trial court impose sanctions against Petrenko under CR 11 for
filing a frivolous motion.
In reply, Petrenko asserted a new theory that TBF was "transacting
business" in Washington because the complaint sought the residual value of the
leased equipment in damages.2 Without any relevant supporting evidence,
Petrenko claimed that TBF sold business equipment for its residual value and
that TBF's "numerous litigations brought in various counties of the State of
Washington clearly indicate commercial nature of TBF Financial, LLC claims
[sic]."
On June 21, the trial court denied Petrenko's motion. The trial court found
that "TBF does not use a trade name [and] is not required to register its name
with the Washington Secretary of State." The trial court found that the motion
was "not well grounded in fact or warranted by existing law and is frivolous," and
that Petrenko "received adequate notice that his motion was frivolous and that
TBF would move for sanctions and request[] terms should [he] fail to withdraw his
frivolous motion." The trial court imposed sanctions against Petrenko pursuant to
CR 11, reserving the amount for a future ruling after the parties submitted
briefing on the issue.3 Petrenko appeals the order of sanctions.
2 It is clear that Petrenko was attempting to claim TBF was barred from bringing suit
pursuant to RCW 19.80.040 because it was "transacting business" under a "trade name" without
registering in Washington. Petrenko did not argue to the trial court that TBF was barred from
bringing suit pursuant to RCW 25.15.340(1), which prohibits "[a] foreign limited liability company
doing business" in Washington from bringing suit unless it has registered in Washington.
3 TBF and Stay In Home Mortgage ultimately agreed on settlement terms and the suit
was dismissed. The trial court retained jurisdiction over the case for the limited purpose of
enforcing judgment against Petrenko. A review of the record shows that the trial court has yet to
rule on the amount of sanctions.
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The signature of a party or attorney on a pleading constitutes a certificate
by that party or attorney that the pleading is well grounded in fact, warranted by
existing law or a good faith argument for a change in existing law, is not
interposed for an improper purpose, and contains only factual contentions or
denials warranted by the evidence. CR 11(a). Where a pleading is signed in
violation of the rule, "the court, upon motion or upon its own initiative, may
impose upon the person who signed it, a represented party, or both, an
appropriate sanction," which may include reasonable attorney fees and
expenses. 	CR 11(a). We review an award of sanctions under CR 11 for an
abuse of discretion. 	Biggs v. Vail, 124 Wn.2d 193, 197, 876 P.2d 448 (1994).
The trial court's decision to impose CR 11 sanctions against Petrenko was
well within its discretion. 	There was no factual or legal basis for Petrenko's
continued assertion—in the face of repeated explanations to the contrary—that
TBF operated under a trade name. "Trade name" is defined as
a word or name, or any combination of a word or name, used by a
person to identify the person's business which:
(a) Is not, or does not include, the true and real name of all
persons conducting the business; or
(b) Includes words which suggest additional parties of
interest such as "company," "and sons," or "and associates."
RCW 19.80.005(4) (emphasis added). 	RCW 19.80.005(3) defines "person" as
"any individual, partnership, limited liability company, or corporation conducting
or having an interest in a business in the state." (Emphasis added.) Thus, a

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limited liability company that operates under its true name is not operating under
a trade name.
There is no evidence in the record that TBF operated under anything other
than its true and real name, which is TBF Financial, LLC. Petrenko appears to
be laboring under the misconception that no LLC can have a true and real name.
This view is plainly contrary to the words of the statute. 	Moreover, as the trial
court noted, such an interpretation would lead to the nonsensical result that all
LLCs must register their true and real name as a trade name. This is
inconsistent with the stated purpose of chapter 19.80 RCW, which is "[t]o require
each person who is conducting business in the state ofWashington under a
trade name to disclose the true and real name of each person conducting that
business, and ... to provide a central registry of businesses operating under a
trade name in the state of Washington." 	RCW 19.80.001. It is also inconsistent
with RCW 25.15.350, which exempts LLCs that engage in certain activities from
the requirement to register in Washington. When construing statutes, we avoid
interpretations "that yield unlikely, absurd or strained consequences." 	Kilian v.
Atkinson, 147 Wn.2d 16, 21, 50 P.3d 638 (2002). We also examine the '"words
ofa particular provision in the context ofthe statute in which they are found,
together with related statutory provisions, and the statutory scheme as a whole.'"
Tesoro Ref. & Mkto. Co. v. Dep't of Revenue. 164 Wn.2d 310, 319,190 P.3d 28
(2008) (quoting Burns v. City of Seattle, 161 Wn.2d 129, 140, 164 P.3d 475
(2007)).

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Because the trial court did not abuse its discretion in determining that
Petrenko's claim that TBF operated under a trade name was "not well grounded
in fact or warranted by existing law and is frivolous," we need not address the
merits of Petrenko's claim that TBF was "transacting business" in Washington.
TBF requests attorney fees incurred in defending this appeal, arguing that
the appeal is frivolous. 	RAP 18.9. An appeal is frivolous ifit is so totally devoid
of merit that there is no reasonable possibility of reversal. 	Green River Cmtv.
Coll. Dist. No. 10 v. Higher Educ. Pers. Bd.. 107 Wn.2d 427, 443, 730 P.2d 653
(1986). This appeal is frivolous because Petrenko presents no new issues or
arguments on appeal and the motion was frivolous below. 	TBF is entitled to an
award of fees and costs on appeal. 	Upon compliance with RAP 18.1, a
commissioner of this court will enter an appropriate order.
Affirmed.4
We co
4 On July 31, 2014, Petrenko filed a motion to supplement the record with pleadings from
a separate lawsuit that TBF filed against Petrenko's law firm for breach ofan equipment lease. A
commissioner of this court referred Petrenko's motion to this panel. Because these documents
do not satisfythe strictcriteria set forth in RAP 9.11, we deny the motion.
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