Covington 18 Partners LLC v. Lakeside Industries Inc et al, No. 2:2019cv00253 - Document 100 (W.D. Wash. 2020)
Court Description: ORDER granting Covington Land's 60 Motion for Summary Judgment signed by Judge Barbara J. Rothstein. (TH)
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Covington 18 Partners LLC v. Lakeside Industries Inc et al Doc. 100 Case 2:19-cv-00253-BJR Document 100 Filed 08/03/20 Page 1 of 8 1 2 3 4 5 UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WASHINGTON AT SEATTLE 6 7 8 9 10 11 12 13 14 15 16 ) COVINGTON LAND, LLC, a Washington ) Limited Liability Company, ) ) Third Party Plaintiff, ) ) v. ) ) ATTU, LLC, a Washington Limited ) Liability Company, and JOHN SINCLAIR ) ) and Wife and the marital community ) comprised thereof, ) ) Third Party Defendants. ) 17 18 19 20 21 22 23 24 25 I. CASE NO. 2:19-cv-00 -BJR ORDER GRANTING COVINGTON JUDGMENT INTRODUCTION Before the Court is 0. Having reviewed the Motion, the opposition thereto, the record of the case, and the relevant legal authorities, the Court will grant Covington Land follows. II. BACKGROUND The Court set forth the facts of this case in both its Orde Summary Judgment, Dkt. No. 50 at 2 1 Dockets.Justia.com Case 2:19-cv-00253-BJR Document 100 Filed 08/03/20 Page 2 of 8 1 2 Reconsideration, Dkt. No. 59 at 2 3. In brief, Attu, at different times, sold two adjoining parcels of land located in Covington, Washington to two distinct 3 entities. First, in 2012, Attu sold Covington 18 Parcel B. See Dkt. No. 50 at 4 5. Attu claims that 4 when it effectuated the sale, it intended to withhold several access and utility easements. See id. 5 at 3 4. 6 7 8 9 Next, in 2017, Attu sold Parcel A to Covington Land. See Dkt. No. 50 at 5. Covington 18 and Covington Land are distinct legal entities with no documented relationship. Id. at 5 n.5. Since the sale of Parcel B to Covington 18, a dispute arose between Covington 18 and Attu as to 10 ownership of the access and utility easements. Since these easements concerned Parcel A, 11 Covington Land claims it knew when it purchased its parcel that it would owe certain rights to 12 either Covington 18 or Attu, depending on the outcome of their dispute. Thus, Covington Land 13 insisted on including two indemnification provisions in its Purchase and Sales Agreement with 14 15 16 17 Attu. Dkt. No. 60 at 4 6; see also Dkt. No. Dkt. No. 60-1 (Attu-Covington Land Purchase and Sales Agr The first provision was included in the body of the agreement, and reads as follows: 22 Seller, and John Sinclair personally, agree to indemnify and hold Purchaser harmless for any legal actions resulting or arising any way out of the subject matter of either of the two pending lawsuits involving the property referenced herein, and to indemnify and hold Purchaser harmless from any lawsuit which may arise as a result of said litigation. Such indemnity would include any monetary loss or damage to the value of the property resulting from the litigation, such as subsequent action for a private way of necessity over the subject property, and shall include any reasonable attorney fees and costs incurred by Purchaser. 23 Dkt. No. 61-1 at 5, ¶ 11. 24 The second, which was included in an addendum to the PSA, specifically addressing the 18 19 20 21 25 easement dispute between Attu and Covington 18, reads as follows: 2 Case 2:19-cv-00253-BJR Document 100 Filed 08/03/20 Page 3 of 8 1 2 3 4 5 6 7 License to Seller, Indemnification. Under paragraph 7 of the Agreement, Seller has provided Purchaser with a copy of the Reciprocal Easement (Exhibit C) and the BPA Easements (Exhibits D and E). The Reciprocal Easement and the BPA Easements are appurtentant to the property and to transfer to Purchaser with the sale, subject to a temporary license to Seller to negotiate and retain proceeds from the issuance of easements as described in paragraph 7, and are referred to herein as the Easements. At time of closing, Purchaser will be assigned all rights in the Easements, but this assignment shall specifically license Seller to negotiate and retain funds arising out of a grant in the Easements to provide access and utilities to King County parcel number 352205-9215. Seller shall indemnify and hold harmless Purchaser from any and all claims that arise as a result of this withholding 8 warrant and guarantee such indemnification, as referenced in paragraph 11 of the agreement. 9 Id. at 26 ¶ 1. 10 11 12 13 Thus, the PSA set up a scheme by which Attu would retain the right to conclude its dispute with Covington 18 over the easements. Under the PSA, Attu was granted a license to negotiate a settlement with Covington 18 and retain any proceeds. If the matter went to trial and Attu won, 14 Covington 18 would have to pay Attu to purchase the easements. If, however, Covington 18 won, 15 it would owe Attu nothing. Either way, according to both indemnification provisions, if Covington 16 Land was drawn into the dispute, Attu, and its principle John Sinclair, agreed to indemnify 17 18 19 20 21 Covington Land from any and all claims arising out of the easement dispute. Covington 18 then initiated the present quiet title action against Attu to determine whether it gained ownership over the easements when Attu sold it Parcel B. In its initial complaint, Covington 18 named Covington Land as a necessary party given that Parcel A was burdened by 22 counter-claimed against Covington 23 18, it also asserted a cross-claim against Covington Land for tortious interference with a business 24 expectancy. Dkt. No. 11 at ¶¶ 8.1 8.5. Covington Land, in response, cross-claimed against Attu 25 and submitted a third party complaint against Defendant Sinclair for indemnification based on the 3 Case 2:19-cv-00253-BJR Document 100 Filed 08/03/20 Page 4 of 8 1 2 contractual provisions mentioned above. Dkt. No. 20 at ¶¶ 3.23 3.28. Covington 18 then moved for summary judgment on its quiet title claim. Dkt. No. 15. This 3 Court granted the motion on August 1, 2019. Dkt. No. 50. Specifically, in its Order, this Court 4 found that the easements in question had passed from Attu to Covington 18 upon purchase as they 5 6 7 8 9 presumption that appurtenant easements pass with ownership. Id. at 10 16. The Court went further, however. Based on its inherent power to dismiss claims sua sponte that are legally insufficient under Federal Rule of Civil Procedure 12(b)(6) - 10 claim against Covington Land because Covington Land could not have interfered with a business 11 expectancy Attu could never have maintained since it did not retain the rights over the easements 12 in question. Id. at 22 23. Attu moved the Court to reconsider this holding, Dkt. No. 51 at 2 3, 13 14 15 16 17 of selling the easements to Covington 18 . . . because the easements had already passed to 5. On January 24, 2020, Covington Land moved for summary judgment on its 18 indemnification claim. Dkt. No. 60. Through the briefing on summary judgment, the Court 19 learned that Attu and Covington Land were already engaged in litigation in King County Superior 20 Court over the same claims presented in this Court and that there was a motion for summary 21 22 judgment brought by Covington Land pending in that case. See Attu v. Kemp, No. 18-2-22130-7 KNT. The Court, therefore, stayed its consideration 23 24 25 Judgment while the Superior Court considered summary judgment in its case. Dkt. No. 67. On July 16, 2020, Covington Land informed this Court that the Superior Court had granted y Judgment on July 15, 2020. Dkt. No. 90. A copy of the 4 Case 2:19-cv-00253-BJR Document 100 Filed 08/03/20 Page 5 of 8 1 2 3 Superior Order See id. at 5 7. In the Order, the Superior Court found that Attu and Defendant Sinclair had breached their contractual agreement to indemnify Covington Land. Id. at 6. The Superior Court ruled that 4 5 6 7 8 9 Id. at 6 7. In order to avoid duplication of fees between the state and federal action, that Court stated that it would permit Covington Land to submit for its consideration an affidavit or declaration of attorneys fees and costs but that consideration would Id. 10 11 Appended to the Order, the Superior Court Judge included a Supplement to Order of 12 Id. at 8 9. The Supplement 13 14 makes clear that the Superior Court to be res judicata and dismissed tortious interference with business expectancy claim. Id. at 8 ¶ 3 8. The Supplement 15 16 17 into litigation of the access easement as a named party. Covington Land thus participated in the 18 US District Court litigation and incurred expenses there as well. These expenses were related to 19 Id. at 9 ¶ 17. As in this case 20 where Attu argues that the Court should disregard the indemnification provisions based on 21 22 alleged bad faith negotiation of the PSA, see Dkt. No. 64 at 10 12, that Court -pled assertion [of fraud] presents multiple 23 24 25 specificity summary judgment. Dkt. No. 90 at ¶ 18 25. The Court implied, however, that a trier of fact id. at 9 ¶¶ 20 23, but it also found, in no uncertain 5 Case 2:19-cv-00253-BJR Document 100 Filed 08/03/20 Page 6 of 8 Id. at 9 ¶ 26. It 1 2 ] to [the] Federal Court for the ruling on the costs and fees associated with 3 4 Id. at ¶¶ 26 27. 5 to this Court requested that this Court take up its 6 7 8 Id. at 2. Based on this it now contests 9 10 91. Attu responds that it 11 12 amended complaint alleging a cause of action for fraud. Dkt. No. 93 at 2. 13 III. LEGAL STANDARD 14 15 16 17 18 judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is e FED. R. CIV. P. 56(a). To avoid summary judgment 19 Monzon v. City of Murrieta, No. 19-55164, 2020 WL 4197746, at *3 (9th Cir. July 22, 20 2020) (quoting Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 585 (1986)). 21 22 23 IV. DISCUSSION Here, the Court need not go further than the doctrine of res judicata and the Superior Covington Land is entitled to summary judgment. Res judicata 24 25 is composed of two constituent concepts, claim preclusion and issue preclusion. See United States v. Bhatia, 545 F.3d 757, 759 n.2 (9th Cir. 2008) (quoting Taylor v. Sturgell, 553 U.S. 880, 892 6 Case 2:19-cv-00253-BJR Document 100 Filed 08/03/20 Page 7 of 8 he Supreme Court recently clarified that the terms claim preclusion and issue 1 2 3 preclusion are collectively referred to as which ims that were raised or could have 4 -in-Aid Cap 5 Antitrust Litig., 958 F.3d 1239, 1255 (9th Cir. 2020) (quoting Media Rights Techs., Inc. v. 6 7 8 9 Microsoft Corp., 922 F.3d 1014, 1020 (9th Cir. 2019)). State law governs when state court judgments are afforded preclusive effect in federal court. , 950 F.3d 610, 637 (9th Cir. 2020) (citing Hiser v. Franklin, 94 F.3d 1287, 1290 (9th Cir. 10 1996); see also Migra v. Warren City Sch. Dist. Bd. of Educ., 465 U.S. 75, 81 (1984) ( It is now 11 settled that a federal court must give to a state-court judgment the same preclusive effect as would 12 be given that judgment under the law of the State in which the judgment was rendered. . 13 14 15 16 17 18 19 20 Pursuant to [r]es judicata precludes relitigation of an entire claim when a prior proceeding involving the same parties and issues culminated in a judgment on the merits. Weaver v. City of Everett, 450 P.3d 177, 185 (Wash. 2019) (citing Bordeaux v. Ingersoll Rand Co., 429 P.2d 207, 209 10 (Wash. 1967)); , 376 P.3d 430, 436 (Wash. iling two separate lawsuits based on the same event is precluded under There is no dis and the same claims. Attu argues only that res judicata is inapplicable because the Superior 21 22 cause of action for fraud. Dkt. No. 93 at 2 4. 23 24 25 Emeson, 376 P.3d at 436 (citing DeYoung v. Cenex Ltd., 1 P.3d 587, 591 (Wash. Ct. App. 2000)); see also In re Estate of Black, 102 P.3d 796, 806 (Wash. 2004) 7 an unappealed summary Case 2:19-cv-00253-BJR Document 100 Filed 08/03/20 Page 8 of 8 1 judgment is res judicata as to rights determined during summary judgment). Order conclusively determined the only 2 3 remaining claim in this case, indemnification. That Court granted summary judgment on 4 5 6 7 8 9 Covington Land to submit proof of its fees and costs for consideration. Attu to amend its complaint in that case to add a separate claim does not alter the finality of the Superior Courts claim as to indemnification. Adding such a claim also does not affect the claims in this case, as Attu has similarly not pled a claim of fraud before this Court. Further, given the length of time 10 this case has been pending, and given every opportunity Attu has had to amend its complaint to 11 add such a claim, this Court would not entertain such a motion at this late stage. See Dkt. No. 37 12 (amended pleadings due June 28, 2019); FED. R. CIV. P. 16(b)(4) 13 only for good cause and with the judge s consent DRK Photo v. McGraw-Hill Glob. Educ. Holdings, LLC here . . . a party seeks leave to amend after 14 15 16 17 the deadline set in the scheduling order has passed, the party s request is judged under [FRCP] 16 s good cause standard rather than the liberal amendment policy of FRCP 15(a) V. 18 19 20 A schedule may be modified CONCLUSION For the forgoing reasons, the Court hereby GRANTS Covington Land Summary Judgment. Dkt. No. 60. 21 22 DATED this 3rd day of August, 2020. 23 24 _______________________________ BARBARA J. ROTHSTEIN UNITED STATES DISTRICT JUDGE 25 8
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