Opinion
No. 54781-0-I
Filed: May 31, 2005 UNPUBLISHED OPINION
Appeal from Superior Court of King County. Docket No: 03-2-08469-7. Judgment or order under review. Date filed: 07/14/2004. Judge signing: Hon. Deborah Fleck.
Counsel for Appellant(s), Carroll Guy Jr Rusk, Attorney at Law, 5031 N Whitman St, Tacoma, WA 98407-1336.
Philip Albert Talmadge, Talmadge Law Group PLLC, 18010 Southcenter Pkwy, Tukwila, WA 98188-4630.
Counsel for Respondent(s), David Ira Matlick, Attorney Generals Office, PO Box 2317, Tacoma, WA 98401.
Under former RCW 51.32.240(5), the Department of Labor and Industries may recover payments made under the Industrial Insurance Act if those payments were fraudulently induced. Here, Cherie Gutierrez-Erickson filed for benefits as the widow of Gary Erickson. Cherie's marriage to Erickson, however, was void because she was married to another man. We affirm the trial court's decision allowing the Department to recoup the fraudulently induced payments because the trial court did not abuse its discretion in admitting the affidavit of George Gutierrez, the Board of Industrial Appeals had jurisdiction to determine Cherie's eligibility under the Industrial Insurance Act, the Department was not barred from challenging Cherie's eligibility under the doctrine of res judicata, and the Department proved the elements of fraud.
FACTS
Cherie Gutierrez-Erickson was married several times. At issue is Cherie's marriage to George Gutierrez in June 1984. In 1990, Cherie attempted to dissolve her marriage to Gutierrez. Cherie purchased a book on divorce and filed a dissolution petition with the court on February 13, 1990. On August 2, 1990, the trial court entered an order directing Cherie to serve Gutierrez and stating, the 'Court shall review this matter on October 2nd of 1990.' Certified Board Record (CBR), Deposition at 33. Cherie unsuccessfully attempted to reach him by letters and phone calls. Cherie did not return to court regarding the dissolution. On October 22, 1990, the trial court issued an order dismissing Cherie's dissolution petition.
In 1993, Cherie filed child support paperwork with the Department of Social and Health Services (DSHS) Office of Support Enforcement. As part of the paperwork, Cherie was asked about her relationship to Gutierrez. She was presented with several boxes to check to describe her marital status. Cherie checked the box indicating that she was separated from Gutierrez. She did not check the box indicating that she was divorced from him or the box indicating that a divorce was pending.
In April 1996, Gary Erickson moved in with Cherie. The couple went through a marriage ceremony in July 1996 in Reno, Nevada.
Six months later, Cherie applied for benefits from DSHS under the name Cherie Gutierrez, characterizing her marital relationship as 'separated' and listing Erickson as a 'friend.'
In September 1997, Cherie filed more paperwork with DSHS under the name Cherie Gutierrez. Here, she listed Erickson as a 'roommate.'
On March 20, 1998, Erickson died. On April 30, 1998, Cherie applied for widow's benefits under RCW 51.32.050(2). After initially rejecting the claim, for reasons not relevant here, the Department paid widow's benefits to Cherie. Later, the Department commenced proceedings against Cherie, alleging that she defrauded the Department. In April 2002, the Department issued two orders demanding that Cherie repay the amounts paid to her, along with statutory penalties. The Board affirmed the orders, finding that Cherie 'fraudulently induced the Department to pay spousal time loss and pension benefits[.]' CBR at 3.
Cherie appealed to the King County Superior Court. The trial court found in favor of the Department and Cherie appeals.
STANDARD OF REVIEW
Before this court, "review is limited to examination of the record to see whether substantial evidence supports the findings made after the superior court's de novo review, and whether the court's conclusions of law flow from the findings." Young v. Dep't of Labor Indus., 81 Wn. App. 123, 128, 913 P.2d 402 (1996)
ANALYSIS
The first issue we address is whether the trial court erred in refusing to exclude the affidavit of George Gutierrez. We review a trial court's decision to admit evidence for an abuse of discretion. Havens v. CD Plastics, Inc., 124 Wn.2d 158, 168, 876 P.2d 435 (1994). Generally, out-of-court statements offered for the truth of the matter asserted are not admissible. ER 802. There are, however, several exceptions to the general rule. The Department argues that the Gutierrez affidavit falls under the hearsay exception in ER 804(b)(4). Under this exception, '[a] statement concerning the declarant's own birth, adoption, marriage, divorce, legitimacy, relationship by blood, adoption, or marriage, ancestry, or other similar fact of personal or family history, even though declarant had no means of acquiring personal knowledge of the matter stated,' is 'not excluded by the hearsay rule if the declarant is unavailable as a witness.' ER 804(b)(4). A witness is 'unavailable' for the purpose of this rule if, among other things, the witness '[i]s absent from the hearing and the proponent of the statement has been unable to procure the declarant's attendance . . . by process or other reasonable means.' ER 804(a)(5).
Cherie argues that the Department did not establish Gutierrez's unavailability. The Department provided an affidavit stating that Gutierrez initially agreed to participate in the hearing via telephone, but later changed his mind and refused to participate. The affidavit further stated that Gutierrez lived in Nevada and that the Department was unable to serve him while he was briefly in Washington. Cherie argues that this was not sufficient to show unavailability, in part because the Department did not subpoena Gutierrez. Because Gutierrez resides outside of Washington, neither the Department nor the court could, by subpoena, compel his attendance at the hearing. Young v. Key Pharmaceuticals, Inc., 63 Wn. App. 427, 432, 819 P.2d 814 (1991). While this fact alone does not render Gutierrez an unavailable witness, there are additional facts here supporting a finding of unavailability. See Young, 63 Wn. App. at 432.
Here, Gutierrez initially agreed to testify at the hearing. On January 15, 2003, Gutierrez told the Department that he would not participate in the January 28, 2003 hearing. He further refused to attend a deposition. Gutierrez told the Department that he was leaving Nevada and going to California and refused to give the Department an address or phone number to reach him. Thus, assuming that the Department could obtain the assistance of Nevada or California to issue an order compelling attendance at a deposition outside of Washington, the Department did not know where to reach Gutierrez. Under these circumstances, the trial court did not abuse its discretion in determining that Gutierrez was an unavailable witness.
Cherie also argues that ER 804(a) and 804(b)(4) are unconstitutional under Crawford v. Washington, 541 U.S. 36, 124 S. Ct. 1354, 158 L. Ed. 2d 177 (2004). While recognizing that Crawford applies to criminal cases, Cherie argues that it also applies to her situation since she was ordered to pay a penalty. Cherie's argument, however, is unpersuasive. Crawford hinges on the confrontation clause, which is inapplicable in civil cases. Additionally, when the 'interest at stake is only a financial one, the right which is threatened is not considered 'fundamental' in a constitutional sense.' In re Dependency of Grove, 127 Wn.2d 221, 238, 897 P.2d 1252 (1995). Thus, even though Cherie was ordered to pay a monetary penalty, this does not rise to the level of criminal punishment triggering the application of Crawford.
Additionally, Cherie argues that the affidavit was inadmissible because portions of the affidavit did not fall within the limited scope of the exception. The primary purpose of the affidavit, however, was to show that Gutierrez believed that he and Cherie were still married and was thus a statement about his personal history and falls within the hearsay exception. But even if we accept Cherie's argument that the affidavit was inadmissible, any error was harmless. The superior court dismissed Cherie's divorce petition because she failed to serve Gutierrez and did not return to court. This evidence was sufficient to show that Cherie was not legally divorced from Gutierrez.
Cherie also argues that the Board did not have the authority to determine the validity of her marriage to Erickson because that function is exclusively for the superior court, citing article IV, section 6 of the Washington Constitution and RCW 26.09.040. She also argues, citing RCW 26.09.040(1), that the Department did not have standing to attack the marriage because only the parties to the marriage, while they are both living, can attack the validity of the marriage. The Department, on the other hand, argues that the Board determination does not constitute a collateral attack on the Erickson marriage nor was it a 'proceeding to declare a marriage invalid.' This is a worker's compensation case, and the Board's determination was regarding benefit eligibility. The determination by the Board does not invalidate the Erickson marriage; it simply determines whether Cherie is eligible for benefits under the Industrial Insurance Act. Thus, the Board had jurisdiction to determine Cherie's eligibility for benefits and the Department had standing to challenge her eligibility.
Additionally, Cherie argues that because the Department previously found that she was entitled to widow's benefits, it is now precluded from attacking the validity of the marriage. Cherie relies heavily on Marley v. Dep't of Labor Indus., 125 Wn.2d 533, 886 P.2d 189 (1994) and Weyerhaeuser Co. v. Bradshaw, 82 Wn. App. 277, 918 P.2d 933 (1996). In Marley, the Board determined that Marley was not entitled to widow's benefits because she was separated from her husband at the time of his death. Marley did not appeal this decision within the 60-day appeal period. Nearly seven years later, Marley attempted to appeal the decision, arguing that the decision was void and therefore not final and binding. The Supreme Court concluded that in order to show that an order is void, the party must show that the tribunal lacked jurisdiction over the party or the claim. Because the Department had jurisdiction over Marley's claim, the order was not void and therefore Marley could not challenge it outside the appeal period.
In Weyerhaeuser, John Bradshaw suffered an electric shock in the course of his employment at Weyerhaeuser. Weyerhaeuser, a self-insured employer, paid him time loss compensation. Weyerhaeuser investigated Bradshaw's injury and claim and determined that he fraudulently obtained benefits. Weyerhaeuser asked the Department of Labor and Industries to issue a recoupment order, which the Department did. Bradshaw appealed the order one month after the 60-day appeal period expired. The Board dismissed the appeal as time barred. Bradshaw did not appeal the Board's decision, but 15 months later, he moved the Board for relief under CR 60(b)(5). The Board denied Bradshaw's motion for relief, and he appealed to the superior court. The superior court entered judgment in favor of the Department. Bradshaw appealed, arguing that the Department lacked subject matter jurisdiction to enter its original recoupment order and therefore all of its proceedings were void. The court of appeals affirmed the decision of the trial court and Board, determining that the Board did have jurisdiction and that Bradshaw could not collaterally attack the order.
Cherie argues that under these cases, the Board cannot challenge the initial determination of benefits absent a showing that the Board did not have personal and subject matter jurisdiction in making its original benefits determination. These cases, however, are inapposite. Both Marley and Weyerhaeuser involved a claimant attempting to challenge the Board's decision after the statutory time for appeal had passed. That is not the situation we have here. Here, the Board made a finding of fraud under RCW 51.32.240(5). Moreover, Marley and Weyerhaeuser recognize that the legislature has given the Department broad powers to determine if benefits are due and to recoup fraudulently induced payments.
The doctrine of res judicata is not applicable here. The parties did not previously litigate the validity of the Erickson marriage, and there does not appear to be any reason for the Department to have questioned the marriage at the time the claim was made. The Department is not required to challenge the validity of a marriage at the time the claim is made in every instance. Rather, the Department may accept the claimant's assertions regarding the existence of the marriage at face value, absent some other facts known at the time to bring the validity into question. Accepting Cherie's res judicata argument would, in fact, render the fraud provision of the Industrial Insurance Act virtually meaningless. The statute provides the Department with the authority to recoup payments that were made in the case of fraud, which assumes that an initial determination of eligibility was made. Under Cherie's argument, the Department would not be allowed to attack eligibility at a later date, even in the case of fraud. This is contrary to the plain language of the statute. Clearly, the Department is entitled to challenge eligibility if it finds that the recipient of funds fraudulently induced payment of those funds. Therefore, the trial court did not err in determining that the Department was not precluded from challenging the validity of the Erickson marriage.
The next issue we address is whether the trial court erred in determining that the Department proved fraud. Under former RCW 51.32.240(5) (1999).
Whenever any payment of benefits under this title has been induced by fraud the recipient thereof shall repay any such payment together with a penalty of fifty percent of the total of any such payments and the amount of such total sum may be recouped from any future payments due to the recipient on any claim with the state fund or self-insurer against whom the fraud was committed, as the case may be, and the amount of such penalty shall be placed in the supplemental pension fund. Such repayment or recoupment must be demanded or ordered within three years of the discovery of the fraud.
In order to prove fraud under former RCW 51.32.240(5), the Department must prove all nine elements of common law fraud by clear, cogent, and convincing evidence. The elements of fraud are: (1) representation of an existing fact; (2) materiality of the fact; (3) falsity of the fact; (4) the speaker's knowledge of the falsity of the fact; (5) the speaker's intent that the fact should be acted on by the person to whom the fact was represented; (6) ignorance of the fact's falsity on the part of the person to whom it is represented; (7) reliance on the truth of the factual representation; (8) the right of the person to rely upon the factual representation; and (9) the person's consequent damage from the false factual representation. Sigman v. Stevens-Norton, Inc., 70 Wn.2d 915, 920, 425 P.2d 891 (1967).
Cherie argues that the Department failed to prove several elements of fraud by clear, convincing, and cogent evidence. First, Cherie argues that she did not make a representation of fact because marriage is a legal status. While marriage is a legal concept, Cherie's representation that she was married to Gary was a representation of fact.
Next, Cherie argues that the Department did not prove that her representation about her marriage was false. Cherie argues that because there is a strong presumption favoring the validity of a marriage, the Department had to prove that the Gutierrez marriage was legally valid to show that her marriage to Erickson was invalid. Cherie cites several cases discussing the presumption of validity of the second marriage. For example, in Donofrio v. Donofrio, 167 Wash. 80, 84, 8 P.2d 966 (1932) (quoting 18 Ruling Case Law, at 427), the court stated:
'Thus if it is claimed that at the time of the marriage, one of the parties had a living spouse, it is incumbent upon him who attacks the marriage upon this ground to overcome the presumption of its validity, by establishing the former marriage, in all respects in conformity to law, and that the former spouse was living at the time that the second marriage was entered into, and undivorced.'
While there is a presumption in favor of finding a marriage valid, that presumption may be rebutted.
In Lewis v. Dep't of Labor Indus., 190 Wash. 620, 70 P.2d 298 (1937), the court addressed a situation similar to the situation here. There, William Lewis was killed on the job. Florence Lewis filed for widow's benefits. Before his death, Florence and William participated in a marriage ceremony. At the time of the ceremony, however, William's divorce to his first wife, Nellie, was not final. Florence challenged the Department's decision denying her benefits and in part argued that William's marriage to Nellie was never valid because Nellie was married to another man at the time. Nellie testified that she had been married previously but that she was told that her previous husband had died. The court found that the evidence rebutted the presumption of validity to the William and Florence marriage. It also held that 'the presumption of regularity which the claimant invokes to sustain her own marriage applies, if in a lesser degree, to support the marriage of Nellie with the deceased as against the earlier marriage with Cox.' Lewis, 190 Wash. at 626.
Here, the Department presented sufficient evidence to show that the Gutierrez marriage prevented Cherie from legally marrying Erickson. Cherie admitted that she was divorced from her previous husband before marrying Gutierrez. The Department showed that Cherie married Gutierrez and that while Cherie sought to dissolve her marriage to Gutierrez, the court dismissed the petition because Cherie failed to serve Gutierrez. This is sufficient to rebut the presumption of validity of her marriage to Erickson because Cherie was married to Gutierrez at the time she attempted to marry Erickson. If Cherie wanted to contest the validity of her marriage to Gutierrez, the burden of proof shifted to her to show that the marriage was not valid. Cherie did not present evidence challenging her marriage to Gutierrez. Thus, the Department presented sufficient evidence to support the finding that Cherie's representation was false.
Cherie also argues that the Department failed to prove that she knew the representation she made was false. Cherie testified that she thought that she was 'free and clear' after 90 days. Cherie, however, knew that the court ordered her to serve Gutierrez and set a court date to review the petition. Cherie did not serve Gutierrez and did not return to court regarding the dissolution. This belies her assertion that she thought that she was legally divorced from Gutierrez. Furthermore, using the name Cherie Gutierrez, she made several representations to DSHS, under the penalty of perjury, that she was separated from Gutierrez, not that she was divorced from him or that a divorce was pending. Additionally, Cherie characterized Erickson as a 'friend' and a 'roommate,' not as her husband. This evidence clearly supports a finding that Cherie knew that her representation was false.
Cherie argues that the Department has not proven why she would have entered into a sham marriage with Erickson given his financial situation. This, however, does not affect the analysis. The issue is whether Cherie knew that she was not legally married to Erickson, not her possible motives for entering into an invalid marriage.
Finally, Cherie argues that the Department failed to prove that it relied on her representation. Cherie argues that the Department relied on a determination by the Board, not her representation. Additionally, Cherie argues that the Department relied upon the marriage certificate to prove the marriage and not any representation by Cherie about her marriage. The Department clearly relied on Cherie's representation that she was married to Erickson in reviewing and processing her claim for widow's benefits. Cherie provided the marriage certificate to support her representation.
Thus, the Department sufficiently proved the elements of fraud and we affirm the trial court's decision.
Cherie also argues that she is entitled to attorney fees on appeal. Because Cherie does not prevail in her appeal, she is not entitled to fees.
Affirmed.
KENNEDY and BECKER, JJ., Concur.