Ten Bridges LLC v. Hofstad et al, No. 2:2019cv01134 - Document 49 (W.D. Wash. 2022)
Court Description: ORDER granting in part and denying in part Defendant Justin Thomas's 35 Motion for Summary Judgment. The Court GRANTS summary judgment on Defendant's counterclaim for declaratory relief, concluding that the quitclaim deed is unenforc eable, in violation of RCW 63.29.350, and DISMISSES all of Plaintiff's claims with prejudice. The Court DENIES partial summary judgment on Defendant's WCPA claim. The disposition of the contested funds currently held in the custody of the Snohomish County Superior Court will be left to the discretion of that court. Signed by Judge Richard A. Jones. (SR)
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Ten Bridges LLC v. Hofstad et al Doc. 49 Case 2:19-cv-01134-RAJ Document 49 Filed 06/30/22 Page 1 of 8 1 HONORABLE RICHARD A. JONES 2 3 4 5 6 7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 8 9 10 11 12 13 14 TEN BRIDGES LLC, No. 2:19-cv-01134-RAJ Plaintiff, v. SUSAN D. HOFSTAD; JUSTIN THOMAS; ORDER THE ESTATE OF BENJAMIN H. THOMAS; AND JOHN DOES 1-10, 15 Defendants. 16 17 18 I. INTRODUCTION This matter comes before the Court on Defendant Justin Thomas’s Motion to Lift 19 Stay and for Partial Summary Judgment. Dkt. # 35. Defendants Susan Hofstad and the 20 Estate of Benjamin Thomas both join the motion in seeking to lift the stay and obtain 21 partial summary judgment against Defendant Ten Bridges. Dkt. ## 37, 38. Ms. Hofstad 22 and the Estate additionally request that the funds in dispute, currently in the custody of 23 the Snohomish County Superior Court, be left to the discretion of the Snohomish County 24 Superior Court. Id. Plaintiff Ten Bridges does not oppose the motion to lift the stay but 25 opposes the motion for partial summary judgment. Dkt. # 39. Having reviewed the 26 parties’ briefing, applicable law, and remaining record, the Court finds that oral 27 arguments are unnecessary. For the reasons below, the Court GRANTS the request to 28 ORDER – 1 Dockets.Justia.com Case 2:19-cv-01134-RAJ Document 49 Filed 06/30/22 Page 2 of 8 1 lift the stay and GRANTS in part and DENIES in part the motion for partial summary 2 judgment. II. BACKGROUND 3 4 The Court recounts the facts set forth in its prior order as relevant here. On June 5 13, 2010, Mr. Benjamin Thomas, Jr. died intestate, leaving two heirs, Defendant Susan 6 D. Hofstad (“Ms. Hofstad”) and Raymond Thomas. Dkt. # 1 ¶¶ 1.4, 2.3. Subsequently, 7 Raymond also died, intestate, leaving his son, Justin Thomas (“Mr. Thomas”), as his one 8 heir. Dkt. # 26 at 2. Benjamin Thomas Jr.’s home was sold at a sheriff’s foreclosure 9 sale, later confirmed by the Snohomish County Superior Court in a judicial foreclosure 10 action. Dkt. # 1 ¶ 2.2. After foreclosure, about $156,490.44 in surplus proceeds 11 remained. Dkt. # 1 ¶ 2.5. These funds are currently on deposit in the Snohomish County 12 Superior Court registry. Id. 13 In May 2019, Plaintiff Ten Bridges, LLC (“Plaintiff” or “Ten Bridges”) contacted 14 Mr. Thomas and offered to purchase his interest in the property for $9,500. Mr. Thomas 15 agreed and executed a quitclaim deed in favor of Ten Bridges. Dkt. # 1 ¶¶ 2.6–2.8. 16 Although not a named party in the foreclosure action, Ten Bridges subsequently filed a 17 motion to disburse the surplus proceeds from the foreclosure sale to Ten Bridges based 18 on the quitclaim deed. Dkt. # 1 ¶ 2.9. Ten Bridges alleged that the only other remaining 19 heir, Ms. Hofstad, had disclaimed any interest in the property in November 2012. Id. 20 The state court denied Ten Bridges’ motion without prejudice, holding that the motion 21 was not appropriate for the “civil motions calendar” and that the surplus proceeds could 22 not be disbursed until the parties’ respective rights were adjudicated in a “separate 23 action.” Dkt. # 8-1 at 10. 24 Turning to federal court, Ten Bridges filed this suit against Defendants, asserting 25 claims for declaratory judgment, promissory estoppel, breach of contract, and unjust 26 enrichment. Dkt. # 1. Mr. Thomas filed an answer asserting several affirmative defenses 27 and counterclaims. Dkt. # 19 at 5-6. Specifically, Mr. Thomas’s counterclaims include: 28 ORDER – 2 Case 2:19-cv-01134-RAJ Document 49 Filed 06/30/22 Page 3 of 8 1 (1) declaratory action for violation of RCW 63.29.350, (2) fraud in the inducement, (3) 2 negligent misrepresentation, (4) substantive unconscionability, and (5) violation of the 3 Washington Consumer Protection Act (“WCPA”). Id. at 9-12. 4 Mr. Thomas moved to stay proceedings pending the decision in either or both of 5 two appeals filed by Ten Bridges that had been before the Washington State Court of 6 Appeals at the time. Dkt. # 23 at 1. In both cases, Pinehurst Lane Cond. Assoc. v. 7 Guandai, et al., King County Sup. Ct. No. 15 2 26658 6 SEA (“Guandai”) and Carlyle 8 Cond. Owners Assoc. et al. v. Asano et al., King County Sup. Ct. No. 15 2 26658 6 SEA 9 (“Asano”), King County Superior Court concluded that RCW 63.29.350 bans Ten 10 Bridges from obtaining surplus foreclosure proceeds in the court registry based on the 11 quitclaim deeds it obtained from two separate parties under substantially similar 12 circumstances at issue here. Id. Ten Bridges appealed both decisions, and the 13 Washington State Court of Appeals, Division 1, held oral arguments. Dkt. # 25 at 1. 14 Having determined that the deeds in Guandai and Asano “are fundamentally the same as 15 the Quit Claim Deed issued by Mr. Thomas to Ten Bridges here,” the Court stayed action 16 pending appeal in state court. Dkt. # 33. 17 The Washington Court of Appeals, Division One, subsequently affirmed the 18 Superior Court’s orders in both cases. Ten Bridges, LLC v. Guandai, 474 P.3d 1060 (Ct. 19 App. 2020), review denied, 487 P.3d 515 (Wash. 2021), and review denied sub nom. Ten 20 Bridges v. Asano, 487 P.3d 517 (Wash. 2021). Specifically, the Court held that both 21 quitclaim deeds were “in substance, [] agreement[s] to a fee for having located and 22 obtained surplus funds that far exceeds the statutory 5 percent limit.” Id. at 1070. The 23 court concluded that “[b]ecause Ten Bridges sought more than 5 percent of the value of 24 the surplus funds as a fee for, in substance, locating and obtaining those funds, the 25 quitclaim deed violated RCW 63.29.350 and was void.” Id. at 1070-71. 26 Ten Bridges moved for reconsideration of the Court of Appeals’ decision. Dkt. 27 # 36-10. That motion was denied. Id. Ten Bridges then petitioned for review by the 28 ORDER – 3 Case 2:19-cv-01134-RAJ Document 49 Filed 06/30/22 Page 4 of 8 1 Washington Supreme Court. Guandai, 487 P.3d 515. The petitions were denied. Id. 2 Consequently, Mr. Thomas moved this Court to lift the stay and grant partial summary 3 judgment on his counterclaims for declaratory action for violation of RCW 63.29.350 and 4 for damages under the WCPA. Dkt. # 35 at 1. III. LEGAL STANDARD 5 6 Summary judgment is appropriate if there is no genuine dispute as to any material 7 fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 8 56(a). The moving party bears the initial burden of demonstrating the absence of a 9 genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). 10 Where the moving party will have the burden of proof at trial, it must affirmatively 11 demonstrate that no reasonable trier of fact could find other than for the moving party. 12 Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007). If the moving 13 party meets the initial burden, the opposing party must set forth specific facts showing 14 that there is a genuine issue of fact for trial to defeat the motion. Anderson v. Liberty 15 Lobby, Inc., 477 U.S. 242, 250 (1986). On an issue where the nonmoving party will bear 16 the burden of proof at trial, the moving party can prevail merely by pointing out to the 17 district court that there is an absence of evidence to support the non-moving party’s case. 18 477 U.S. at 325. 19 The court must view the evidence in the light most favorable to the nonmoving 20 party and draw all reasonable inferences in that party’s favor. Reeves v. Sanderson 21 Plumbing Prods., 530 U.S. 133, 150–51 (2000). The nonmoving party must, however, 22 present significant and probative evidence to support its claim or defense. Intel Corp. v. 23 Hartford Accident & Indem. Co., 952 F.2d 1551, 1558 (9th Cir. 1991). Uncorroborated 24 allegations and “self-serving testimony” will not create a genuine issue of material fact. 25 Villiarimo v. Aloha Island Air, Inc., 281 F.3d 1054, 1061 (9th Cir. 2002); T.W. Elec. Serv. 26 v. Pac Elec. Contractors Ass’n, 809 F. 2d 626, 630 (9th Cir. 1987). 27 28 ORDER – 4 Case 2:19-cv-01134-RAJ Document 49 Filed 06/30/22 Page 5 of 8 IV. DISCUSSION 1 2 The Court granted the stay in this case until the principal issue here—a question of 3 state law—was resolved in state court proceedings. Now that the cases have been 4 concluded and the validity of the quitclaim deeds under state law has been resolved, the 5 Court finds no basis to further stay proceedings. The request to lift the stay is granted. 6 The court next considers Mr. Thomas’s motion for summary judgment on his 7 counterclaims for declaration action for violation of RCW 63.29.350 and for damages 8 under the WCPA. 9 A. Declaratory Action for Violation of RCW 63.29.350 10 As already held in the prior motion granting a stay, the Court finds that the 11 quitclaim deed at issue here is substantially similar to the quitclaim deeds in Asano and 12 Guandai. Based on the state court’s ruling that the Asano and Guandai quitclaim deeds 13 are not valid under RCW 63.29.350, the Court finds that the quitclaim deed here is 14 similarly invalid. 15 Ten Bridges thus has no interest in the surplus proceeds it allegedly obtained from 16 Mr. Thomas and its counter arguments fail. Because the deed is invalid, Ten Bridges’ 17 argument that Mr. Thomas had an attorney in Idaho review the deed is irrelevant, as is the 18 contention that Ten Bridges acted “in good faith.” Dkt. # 39 at 6, 8. Ten Bridges’ belief 19 that the statute does not apply to “surplus process of the kind at issue in this case and the 20 other cases Ten Bridges has been involved in” has been rejected in state court and will 21 not be reconsidered here. Id. at 7. Ten Bridges’ contention that various individuals 22 induced Defendants to breach their agreements with Ten Bridges is irrelevant to the 23 question of whether the quitclaim deed is void. See Dkt. # 39 at 5. 24 Ten Bridges further argues that Mr. Thomas’s motion for summary judgment is 25 premature because Ten Bridges has yet to file an answer and affirmative defenses to 26 counterclaims, and the parties have not yet conducted discovery in this case. Dkt. # 39 at 27 8. Ten Bridges fails, however, to provide an affidavit or declaration indicating why “it 28 ORDER – 5 Case 2:19-cv-01134-RAJ Document 49 Filed 06/30/22 Page 6 of 8 1 cannot present facts essential to justify its opposition,” warranting a deferral under Fed. 2 R. Civ. P. 56(d). Indeed, Ten Bridges does not identify any facts in dispute that would 3 preclude the Court from deciding the motion for summary judgment with respect to this 4 claim. In the absence of a genuine dispute of material fact, the Court can rule on this 5 claim as a matter of law. 6 Finally, Ten Bridges’ argument that the recent revision of the statute is dispositive 7 fails for two reasons. First, the revised statute does not take effect until January 1, 2023. 8 2022 Wash. Sess. Laws 1578. Second, even if the revised statute had taken effect, in 9 Washington, “[s]tatutory amendments are presumed to operate prospectively. The 10 presumption is overcome only when the legislature explicitly provides 11 for retroactive application or the amendment is curative or remedial.” In re Flint, 277 12 P.3d 657, 661 (Wash. 2012) (internal citations omitted). The revised statute does not 13 apply to the quitclaim deed at issue and need not be considered. 14 The Court thus GRANTS summary judgment on Mr. Thomas’s request for 15 declaratory action and concludes that the quitclaim deed executed by Mr. Thomas and 16 Ten Bridges is in violation of RCW 63.29.350 and thereby void and unenforceable. Ten 17 Bridges’ claims for declaratory judgment, promissory estoppel, breach of contract, and 18 unjust enrichment are DISMISSED. 19 B. Washington Consumer Protection Act Claim 20 With respect to Mr. Thomas’s CPA claim, Mr. Thomas must establish the 21 following elements: (1) an unfair or deceptive act or practice (2) in trade or commerce 22 (3) which affects the public interest, and (4) injury to plaintiff’s “business or property” 23 (5) proximately caused by the unfair or deceptive act or practice. Hangman Ridge 24 Training Stables, Inc. v. Safeco Title Ins. Co., 719 P.2d 531, 535-39 (Wash. 1986). The 25 first two elements may be established if a party can show that the act or practice 26 constitutes a per se unfair trade practice. Id. at 535. “A per se unfair trade practice 27 exists when a statute which has been declared by the Legislature to constitute an unfair or 28 ORDER – 6 Case 2:19-cv-01134-RAJ Document 49 Filed 06/30/22 Page 7 of 8 1 2 deceptive act in trade or commerce has been violated.” Id. An injury to one’s business or property under the CPA excludes personal injury, 3 such as “mental distress, embarrassment, and inconvenience.” Panag v. Farmers Ins. Co. 4 of Washington, 204 P.3d 885, 899 (Wash. 2009). Injury can be established, however, “if 5 the consumer’s property interest or money is diminished because of the unlawful conduct 6 even if the expenses caused by the statutory violation are minimal.” Mason v. Mortg. 7 Am., Inc., 792 P.2d 142, 148 (Wash. 1990) (en banc). A “loss of use of property which is 8 causally related to an unfair or deceptive act or practice” constitutes an injury under the 9 WCPA. Id. Under Washington law, “proximate cause is defined in WPI 310.07 as a 10 “cause which in direct sequence [unbroken by any new independent cause] produces the 11 injury complained of and without which such injury would not have happened.” Indoor 12 Billboard/Washington, Inc. v. Integra Telecom of Washington, Inc., 170 P.3d 10, 21 13 (Wash. 2007) (en banc). “Proximate cause is a factual question to be decided by the trier 14 of fact.” Id. 15 16 17 18 19 20 21 The Court finds that the quitclaim deed at issue is a per se unfair trade act under RCW 63.29.350. The statute provides the following: The legislature finds that the practices covered by this section are matters vitally affecting the public interest for the purpose of applying the consumer protection act, chapter 19.86 RCW. Any violation of this section is not reasonable in relation to the development and preservation of business. It is an unfair or deceptive act in trade or commerce and an unfair method of competition for the purpose of applying the consumer protection act, chapter 19.86 RCW. Remedies provided by chapter 19.86 RCW are cumulative and not exclusive. 22 23 24 25 26 27 28 RCW 63.29.350(2). Based on the statutory language, the quitclaim deed is a per se violation that affects the public interest, establishing the first three elements. The Court next considers whether Mr. Thomas sustained an injury to his “business or property” under the WCPA and if so, whether the injury was proximately caused by the quitclaim deed. 719 P.2d at 539. Mr. Thomas alleges that “he incurred injury and ORDER – 7 Case 2:19-cv-01134-RAJ Document 49 Filed 06/30/22 Page 8 of 8 1 expenses related to the execution and delivery of the Quit Claim Deed, including without 2 limitation expenses for travel, telephone, and postage.” Dkt. # 19 ¶ 9.30. He also argues 3 that “but for Ten Bridges’ violation . . . [he] would have obtained an order authorizing 4 disbursement of his share of the Surplus Proceeds on July 2, 2019 and would not have 5 been required to suffer over a two-year delay in obtaining his share of the Surplus 6 Proceeds.” Dkt. # 35 at 22. It is unclear from the facts in the record, however, if Mr. 7 Thomas would have received his share of the surplus proceeds in July 2019 but for the 8 execution of the quitclaim deed with Ten Bridges. The Court finds that the elements of 9 injury and proximate cause require a factual analysis that must be reserved for a jury. See 10 170 P.3d at 22. The Court therefore DENIES summary judgment on Mr. Thomas’s 11 WCPA claim. V. CONCLUSION 12 13 Based on the foregoing reasons, the Court GRANTS Defendant Justin Thomas’s 14 request to lift the stay in this action. Dkt. # 35. The Court GRANTS summary judgment 15 on Defendant’s counterclaim for declaratory relief, concluding that the quitclaim deed is 16 unenforceable, in violation of RCW 63.29.350, and DISMISSES all of Plaintiff’s claims 17 with prejudice. The Court DENIES partial summary judgment on Defendant’s WCPA 18 claim. The disposition of the contested funds currently held in the custody of the 19 Snohomish County Superior Court will be left to the discretion of that court. 20 21 DATED this 30th day of June, 2022. A 22 23 The Honorable Richard A. Jones United States District Judge 24 25 26 27 28 ORDER – 8
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