[WSBARP] Partial Satisfaction of Judgment

Thu Nov 8 12:26:55 PST 2018

The latest word, I think, which is not entirely clear around the edges:

          ¶ 22 Both parties rely on principles from our payment application
jurisprudence to support their respective positions. As a general rule, we
have held that “ ‘when a debtor fails to direct how a payment is to be
applied the creditor may make the application as he may see fit.’ ” United
States Fid. & Guar. Co. v. E.I. Dupont De Nemours & Co., 197 Wash. 569, 579,
85 P.2d 1085 (1939) (quoting 21 Ruling Case Law 90, § 95). Where neither
creditor nor debtor appropriates the payment, a court will apply the payment
“ ‘according to its own notion of the intrinsic equity and justice of the
case.’ ” Post–Intelligencer Publ'g Co. v. Harris, 11 Wash. 500, 502, 39 P.
965 (1895) (quoting Cremer v. Higginson, 1 Mason 323, 6 F. Cas. 797, 802
(C.C.D.Mass.1817)). Tyko relies on *744 these rules in arguing that we
should conclude that the payments it received were applied to both the
materials and labor portions of its contract. However, at least one court
has concluded that the payment application rules operate only where there is
an established debtor/creditor relationship. See Oakes Logging, Inc. v.
Green Crow, Inc., 66 Wash.App. 598, 603, 832 P.2d 894 (1992) (where no
contractual relationship existed, owner became subcontractor's debtor only
by virtue of an enforceable logger's lien).

          ¶ 23 The Oakes Logging court's recognition that a valid
debtor/creditor relationship is necessary to implicate the payment
application rules is correct. The rules exist to allow parties with legal
obligations to one another to plan their behavior according to reasonably
certain outcomes. Where no relationship exists, the payment application
default rules have no effect. When Hamre issued the $7,000 jointly payable
check to C & R and Tyko, Tyko had no contractual or statutory right to
payment from Hamre on its materials claim. On point of fact, the materials
claim was permanently barred for failure to provide preclaim notice. Tyko
did, however, maintain a right to payment for the labor portion of its work
against Hamre, which requires no preclaim notice. While Tyko could sustain
the argument that it applied the payments on a pro rata basis to its claim
against C & R—because it maintained a contractually based right to payment
for both labor and materials against C & R—we are concerned here only with
the relationship between Hamre and Tyko. Thus, with regard to its pursuit of
recovery against Hamre, Tyko could have applied payments received only to
the valid labor claim. The labor portion of Tyko's contract amounted to
$7,483. Tyko received $9,628.22. Therefore, Tyko's labor claim against the
contractor's bond and retained percentage has been fully satisfied.

LRS Elec. Controls, Inc. v. Hamre Const., Inc., 153 Wash. 2d 731, 743–44
(2005)

Rob

Robert D. Wilson-Hoss 

Hoss & Wilson-Hoss, LLP 

236 West Birch Street 

Shelton, WA 98584 

360 426-2999

www.hossandwilsonhoss.com

rob at hctc.com

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-----Original Message-----
From: wsbarp-bounces at lists.wsbarppt.com
[mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Kathryn R. McKinley
Sent: Thursday, November 08, 2018 12:05 PM
To: 'WSBA Real Property Listserv'
Subject: Re: [WSBARP] Partial Satisfaction of Judgment

Assuming your judgment includes attorneys' fees and costs incurred for
collection of the judgment, I would apply the funds first to unpaid interest
on the judgment, then to costs and fees incurred in collection since the
judgment was entered, and then to principal.

Kathryn R. McKinley

Partner

717 W Sprague Ave, Ste 1200 

Spokane, WA 99201-3505 

509.455.6017

kathryn.mckinley at painehamblen.com

This message is private or privileged. If you are not the person for whom
this message is intended, please delete it and notify me immediately, and
please do not copy or send this message to anyone else.

-----Original Message-----

From: wsbarp-bounces at lists.wsbarppt.com
[mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Paul Neumiller

Sent: Thursday, November 8, 2018 11:29 AM

To: wsbarp at lists.wsbarppt.com

Subject: [WSBARP] Partial Satisfaction of Judgment

Listmates, a little litigator help would be appreciated here.  I won a
monetary judgment on behalf of a client.  Judgment Debtor has delivered a
check to me as a partial payment, wants me to prepare the partial
satisfaction of judgement, and wants me to tell them the balance due.  Is
there any guidance on how to apply the payment?  Twelve percent interest is
owed on the judgment so can I apply the payment to accrued interest first
and then to principal reduction?  Thanks for your assistance.  -Paul
Neumiller 

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