Nw. Bus. Fin., LLC v. Able Contractor, Inc., 383 P.3d 1074 (Wash. App. 2016).
After Northwest Business Finance (“Northwest”) provided Able Contractors (“Able”) with short-term financing, Able executed an assignment of proceeds notification agreement in August 2007, naming Northwest as the assignee of all account payments due to Able. The notification indicated that Able had “sold and assigned the proceeds of accounts” to Northwest and directed its customers “to remit any and all future payments due Able” directly to Northwest (the “Assignment Notice”). Able then provided notice of this assignment to its customers on invoices factored by Northwest. Additionally, a UCC Financing Statement (the “Financing Statement”) was filed, providing that all accounts and accounts receivable, as well as all other assets, were collateral for Northwest’s loans to Able.
After Able began factoring some of its accounts with Western Construction Services (“Western”), Western would pay Able or Northwest depending on whether the invoice from Able carried a notice sticker requiring that it be paid to Northwest. While Able submitted several invoices to Western for a new project (the “Project”), a few of those invoices lacked the sticker, and as a result, Western paid them directly to Able.
When Able defaulted on its obligations to Northwest, Northwest subsequently brought suit against Able and Western. Northwest argued that the Assignment Notice and the Financing
Statement entitled it to all money Western owed to Able. Western argued that it was only required to pay Northwest those accounts that were identified as having been assigned to Northwest. The trial court determined that summary judgment was precluded due to there being material questions of fact concerning the past practices of the parties and the notice given to Western. The case then proceeded to jury trial. Since Able did not appear and defend, an order of default was entered against it. The jury subsequently returned a verdict in favor of Western. Northwest then appealed, solely challenging the trial court’s denial of its motion for summary judgment.
The Court of Appeals (the “Court”) rejected Western’s argument that the trial superseded the ruling on the summary judgment motion, precluding the Court’s review of that issue. Due to the fact that denial of summary judgment turned on a substantive legal issue rather than a factual dispute, the Court was able to review the ruling despite entry of a final judgment.
Northwest argued that under Wash. Rev. Code § 62A.9A-406(a), Western was given sufficient notice by the Financing Statement and the Assignment Notice, and that all payments owed Able that lacked individual assignment statements should have gone to Northwest. However, taken in its totality, the Court determined that Wash. Rev. Code § 62A.9A-406 established that each invoice needed to have reasonably identified the rights assigned. Other jurisdictions had also confirmed that the plain language of the statute supported the point that a general notification is insufficiently specific to satisfy the requirements of the statute. Moreover, the documents and course of dealing reasonably could have lead Western to understand the notices given to it as requiring payment to either Northwest or Able on a case-by-case basis (depending on the whether an invoice carried a notice sticker indicating it be paid to Northwest). Whether Northwest had reasonably identified the accounts assigned to it presented a question for the trier of fact to resolve at trial. Therefore, the Court determined that the trial court had correctly concluded that material factual disputes required trial on this claim.
