§9.6 Analysis

JurisdictionWashington

§9.6ANALYSIS

This section will discuss the various requirements of CR 9 and how they have been construed and applied.

(1) Capacity

CR 9(a) eliminates the need to specially plead capacity or authority to sue. CR 9(a) does not govern allegations of representation in a class action suit. See CR 23. See also Chapter 23 (Rule 23. Class Actions) of this deskbook.

(a) Alleging capacity of a party

Generally, a plaintiff is not required to allege its capacity to sue in the complaint. RTC Transp., Inc. v. Walton, 72 Wn.App. 386, 391-92, 864 P.2d 969 (1994). Rather, the defendant is required to assert lack of capacity in its answer. Id.

A close reading of the rule suggests a difference between a defendant's raising an issue regarding a plaintiff's capacity or the legal existence of a corporate plaintiff on the one hand and a defendant's raising an issue regarding its own capacity to be sued or its legal existence on the other. A specific denial should be sufficient to deny capacity of an opposing party. Reese Sales Co. v. Gier, 16 Wn.App. 664, 667, 557 P.2d 1326 (1977). However, to deny its own capacity, a party is required to include "such supporting particulars as are peculiarly within the pleaders [sic] knowledge." CR 9(a); see Geschwind v. Flanagan, 65 Wn.App. 207, 211, 828 P.2d 603 (1992), aff'd in part, rev'd in part, 121 Wn.2d 833 (1993) ("CR 9(a) provides that a party desiring to raise an issue as to the authority of a party to be sued in a representative capacity shall do so by specific negative averment with supporting particulars." (footnote omitted)); see also 3A Karl B. Tegland, WASHINGTON PRACTICE 227 (6th ed. 2013); CR 17. See also Chapter 17 (Rule 17. Parties Plaintiff and Defendant; Capacity) of this deskbook.

Neither CR 9(a) nor CR 10(a) explicitly requires that representative capacity be stated in the caption. However, there is some out-of-state authority indicating this is required. See Spanner v. Brandt, 1 F.R.D. 555 (S.D.N.Y. 1941). No Washington court has addressed the issue.

Caveat: To be safe, practitioners should state a party's representative capacity in the caption.

(b) Raising the issue of capacity

The issue of capacity should be raised in the preliminary pleadings or the answer; otherwise, it may be deemed waived. Hale v. City Cab, Carriage & Transfer Co., 66 Wash. 459, 462, 119 P. 837 (1912); Dearborn Lumber Co. v. Upton Enters., Inc., 34 Wn.App. 490, 493, 662 P.2d 76 (1983). But see Roth v. Drainage Improvement Dist., 64 Wn.2d 586, 587, 392 P.2d 1012 (1964) (finding failure to raise the issue of capacity in the answer did not constitute a waiver when defendant brought a timely motion and the parties stipulated that the issue of capacity be considered by the court upon motion before trial); Foothills Dev. Co. v.Clark Cnty. Bd. of Cnty. Comm'rs, 46 Wn.App. 369, 378, 730 P.2d 1369 (1986) (same) (citing Roth), review denied, 108 Wn.2d 1004 (1987). A motion to amend an answer to allege lack of capacity must be timely. Such a motion is untimely if sufficient time passes after commencement of the action and "when the normal course of the proceedings would be disrupted and the trial court required to retrace its steps ...." Trust Fund Servs. v. Glasscar, Inc., 19 Wn.App. 736, 745, 577 P.2d 980 (1978) (motion untimely when made orally at time of presentation of an order regarding summary judgment); Hale, 66 Wash. at 462 (motion after order granting new trial is untimely).

(c) Alleging payment of corporate license fee is not required

The former license fee requirement statute, RCW 23A.44.120, was repealed by Laws of 1989, ch. 165, §204, effective July 1, 1990. Prior to that date, courts held that, notwithstanding CR 9(a), RCW 23A.44.120 required that a corporation allege and prove that it had paid all required license fees to the state before it could maintain or commence an action. See, e.g., Reese Sales, 16 Wn.App. at 667; see also Draper Mach. Works v. Hagberg, 34 Wn.App. 483, 488, 663 P.2d 141 (1983) (defendant waived issue of RCW 23A.44.120 license fee requirement by failing to raise it in its answer or by motion).

The question of whether any such statutory requirements remain is unresolved by Washington case law. However, in William A. Eastman & Co. v. Watson, 72 Wash. 522, 524-25, 130 P. 1144 (1913), the Washington Supreme Court reasoned that the license fee statute was a revenue requirement and the rule was intended solely as a measure to enforce payment. Thus, it appears that the legislature ultimately agreed with the Eastman court's analysis, and pleading payment of license fees is no longer required.

(d) Capacity and CR 17

Practice
Tip:
Although capacity is rarely an issue, you should be familiar with CR 17 and the statutes cited therein regarding real parties in interest, infants, incompetent persons, public corporations, torts against the state, and actions on assigned choses in action. See Chapter 17 (Rule 17. Parties Plaintiff and Defendant; Capacity) of this deskbook. See generally Ch. 4.08 RCW; 3A Karl B. Tegland, WASHINGTON PRACTICE, CIVIL RULE 17 (6th ed. 2013).

When a defendant does not challenge the capacity of an individual to be sued as a personal representative of an estate, CR 9(a) does not apply in an analysis of whether an amended complaint identifying the personal representative relates back to the filing of the original complaint. Geschwind, 65 Wn.App. 207 at 211.

(2) Fraud, mistake, condition of the mind

CR 9(b) requires that when a plaintiff alleges fraud or mistake, the circumstances constituting fraud or mistake shall be stated "with particularity." The requirement also applies to counterclaims. Aureflam Corp. v. Pho Hoa Phat I, Inc., 375 F.Supp.2d 950 (N.D. Cal. 2005). Because the requirement is contrary to the general approach to simplified pleading, it has been held that it should be construed narrowly. Generadora de Electricidad del Caribe, Inc. v. Foster Wheeler Corp., 92 F. Supp.2d 8, 20 (D. P.R. 2000).

"CR 9(b), like its federal counterpart, FED. R. CIV. P. 9(b), ensures that plaintiffs seek redress for a wrong rather than use lawsuits as pretexts to discover unknown wrongs, protects defendants from unnecessary harm to their reputation, and gives defendants sufficient notice to enable them to prepare a defense." Haberman v. Wash. Pub. Power Supply Sys., 109 Wn.2d 107, 165, 744 P.2d 1032 (1987), as amended, 750 P.2d 254 (1988), appeal dismissed, 488 U.S. 805 (1988). See generally 5A Charles A. Wright & Arthur R. Miller, FEDERAL PRACTICE AND PROCEDURE §1296 (2004 & Supp. 2013).

Under Washington law the essential elements of fraud are (1) the representation of an existing fact (2) that is material and (3) false (4) by a person with knowledge of its falsity or ignorance of its truth and (5) with the intent that it be acted upon by a person who (6) reasonably (7) relies on the misrepresentation (8) in ignorance of its falsity (9) to his or her detriment. Sigman v. Stevens-Norton, Inc., 70 Wn.2d 915, 920, 425 P.2d 891 (1967). The complaining party must plead both the elements and circumstances of fraudulent conduct. Haberman, 109 Wn.2d at 165. Although the time, place, identity, and content of the false representations should be pleaded specifically, knowledge and fraudulent intent under the latter part of FED. R. CIV. P. 9(b) may be averred generally. E.I. Du Pont De Nemours & Co. v. Dupont Textile Mills, 26 F. Supp. 236, 237 (M.D. Pa. 1939).

The particularity requirement of CR 9(b) is satisfi if the complainant identifies the transaction in which fraud is alleged and clearly describes the transaction as nonconsensual and void. Pedersen v. Bibioff, 64 Wn.App. 710, 721-22, 828 P.2d 1113 (1992). The word "fraud" does not even have to be used if the facts as alleged in the complaint show fraud. Pedersen, 64 Wn.App. at 721-22 (citing Harstad v. Frol, 41 Wn.App. 294, 301, 704 P.2d 638 (1985)).

The particularity requirement must be met in the complaint; a party cannot supplement a complaint with later statements setting forth the particular facts surrounding the alleged fraud or mistake. Denny's Restaurants, Inc. v. Sec. Union Title Ins. Co., 71 Wn.App. 194, 211-12, 859 P.2d 619 (1993); Haberman, 109 Wn.2d at 165. Nonetheless, the failure to plead fraud or mistake with particularity need not result in a dismissal if the omission can be corrected through a motion for a more definite statement or the use of discovery procedures. Fondrenv. Klickitat County, 79 Wn.App. 850, 858 n.4, 905 P.2d 928 (1995).

Practice
Tip:
The pleading requirements for negligent misrepresentation have historically been less stringent than those for fraud or mistake. However, there is a trend among the district courts within the Ninth Circuit, including those in Washington, requiring that negligent misrepresentation be pleaded with particularity under FED. R. CIV. P. 9(b). See, e.g., Keybank Nat'l Ass'n v. Moses Lake Indus., No. CV-09-162-EFS, 2010 WL 933973, 2010 U.S. Dist. LEXIS 22386, *9-10 (E.D. Wash. Mar. 11, 2010) (collecting district court cases within the Ninth Circuit holding that negligent misrepresentation claims must be pleaded with particularity). Because Washington CR 9(b) is based on FED. R. CIV. P. 9(b), it is advisable to plead negligent misrepresentation with particularity in state courts, generally averring negligence instead of willful intent required for fraud.
Practice
Tip:
In deciding whether to plead fraud or negligent misrepresentation, consider the potential impact on insurance coverage for the target defendant as well as the effect on potential defendants. Fraud is commonly excluded from coverage under general liability policies. Additionally, proving all the individual elements of fraud can be difficult. On the other hand, the pool of potential defendants may be significantly
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