Halsey et al v. Croskrey et al, No. 2:2020cv00371 - Document 85 (E.D. Wash. 2021)
Court Description: ORDER DENYING 57 PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT. Signed by Judge Salvador Mendoza, Jr. (AY, Case Administrator)
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Halsey et al v. Croskrey et al Doc. 85 Case 2:20-cv-00371-SMJ ECF No. 85 filed 12/22/21 PageID.1111 Page 1 of 6 1 FI LED I N THE U.S. DI STRI CT COURT EASTERN DI STRI CT OF WASHI NGTON 2 Dec 22, 2021 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WASHINGTON 3 SEAN F. MCAVOY, CLERK 4 5 6 GERALD HALSEY, BETTY HALSEY, GERALD R HALSEY and/or BETTY J HALSEY LIVING TRUST, MICHAEL CESKE, IRIS MALLORY, and LUCIAN LYONS, 7 No. 2:20-cv-00371-SMJ ORDER DENYING PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT Plaintiffs, 8 9 10 11 v. STEPHEN CROSKREY and BONASA BREAKS RANCH LLC, a Florida limited liability corporation, Defendants. 12 Before the Court is Plaintiffs’ Motion for Summary Judgment Dismissal of 13 Affirmative Defense No. 10 (Business Judgment Rule), ECF No. 57. Because 14 Plaintiffs essentially seek a ruling on the applicable legal standard, the Court finds 15 this issue inappropriate for resolution on summary judgment. Accordingly, for the 16 reasons set forth below, the Court denies the motion. 17 BACKGROUND 18 This case centers on catastrophic damage to real property allegedly caused 19 by the negligent construction of a raised dam. See generally ECF No. 9. Defendant 20 Bonasa Breaks Ranch, LLC, a Florida limited liability corporation (“the ORDER DENYING PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT – 1 Dockets.Justia.com Case 2:20-cv-00371-SMJ ECF No. 85 filed 12/22/21 PageID.1112 Page 2 of 6 1 Corporation”), owns a parcel of land in Asotin County that is at the headwaters of 2 Rattlesnake Creek—a tributary to the Grande Ronde River. Id. at 3. SEC Holdings, 3 LLC (“SEC Holdings”) owned the Corporation at all relevant times to this action, 4 and Stephen Croskrey was the managing member of SEC Holdings at all relevant 5 times. ECF No. 74 ¶ 3–4. SEC Holdings was, at all relevant times, the sole member 6 of the Corporation. Id. ¶ 16. It is undisputed that Defendant Croskrey supplies the 7 capital for SEC Holdings, which in turn supplies the capital for the Corporation. Id. 8 ¶ 5. 9 The Corporation purchased the parcel of land in 2004, which at the time 10 featured a small pond. Id. ¶ 8. Defendant Croskrey, as managing member of SEC 11 Holdings, hired Tommy Mullins—an equipment operator—to repair and raise the 12 earthen walls of the pond (i.e., the dam). Defendant Croskrey also hired Kenneth 13 Thornton—a foreman—to supervise the property and perform pond improvement 14 work. Id. ¶ 18. Mr. Mullins and Mr. Thornton then raised the dam; Mr. Mullins 15 operated the earth moving equipment and Mr. Thornton leveled the dam walls. 16 The dam failed in April of 2017, releasing approximately ten million gallons 17 of water and causing catastrophic flooding and damage to Plaintiffs’ properties. 18 Plaintiffs, each owners of real property along Rattlesnake Creek, sued both the 19 Corporation and Croskrey for trespass, negligence, negligence per se, nuisance, 20 negligent infliction of emotional distress (NEID), and strict liability. ECF No. 9 ORDER DENYING PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT – 2 Case 2:20-cv-00371-SMJ 1 ECF No. 85 filed 12/22/21 PageID.1113 Page 3 of 6 at 7. 2 After the Court granted Defendants leave to amend, Defendants filed a 3 fifteen-page answer, raising eleven affirmative defenses. Relevant here, 4 Defendants’ Tenth Affirmative Defense asserts that Croskrey is immunized from 5 liability for actions taken on behalf of the corporation under the business judgment 6 rule (“BJR”). ECF No. 59 at 13. Specifically, Defendants submit that: 7 8 9 10 11 Defendant Stephen Croskrey alleges that he is immunized from liability for actions on behalf of the corporation under the business judgment rule, because any causally relevant actions he took relating to the events alleged in this complaint were made within the power of the corporation and within Mr. Croskrey’s authority as management. Furthermore, Mr. Croskrey’s exercises of business judgment were done in good faith. Id. (citations omitted). 12 Plaintiffs dispute the legal standard cited in this affirmative defense, arguing 13 that the BJR does not protect a defendant who did not exercise reasonable care. ECF 14 No. 57 at 12. Because Plaintiff’s negligence claim requires them to prove a lack of 15 reasonable care, and because the business judgment rule incorporates that standard, 16 Plaintiffs submit that Defendant’s tenth affirmative defense should be dismissed as 17 a “nullity.” Id. at 13. 18 LEGAL STANDARD 19 The Court must grant summary judgment if “the movant shows that there is 20 no genuine dispute as to any material fact and the movant is entitled to judgment as ORDER DENYING PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT – 3 Case 2:20-cv-00371-SMJ ECF No. 85 filed 12/22/21 PageID.1114 Page 4 of 6 1 a matter of law.” Fed. R. Civ. P. 56(a). A fact is “material” if it “might affect the 2 outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 3 U.S. 242, 248 (1986). A dispute about a material fact is “genuine” if “the evidence 4 is such that a reasonable jury could return a verdict for the nonmoving party.” Id. 5 In ruling on a summary judgment motion, the Court must view the evidence 6 in the light most favorable to the nonmoving party. See Tolan v. Cotton, 572 7 U.S. 650, 657 (2014). Thus, the Court must accept the nonmoving party’s evidence 8 as true and draw all reasonable inferences in its favor. See Anderson, 477 U.S. at 9 255. The Court may not assess credibility or weigh evidence. See id. Nevertheless, 10 the nonmoving party may not rest upon the mere allegations or denials of its 11 pleading but must instead set forth specific facts, and point to substantial probative 12 evidence, tending to support its case and showing a genuine issue requires 13 resolution by the finder of fact. See Anderson, 477 U.S. at 248–49. 14 DISCUSSION 15 Plaintiffs admit they are not seeking a ruling that Defendant Croskrey was 16 negligent. Instead, they are seeking a ruling on the applicable legal standard for the 17 BJR. See ECF No. 69 at 4 (“Our motion seeks to establish that under the BJR, Mr. 18 Croskrey’s actions are judged by the traditional negligence due care standard.”). 19 But summary judgment is reserved for cases where the moving party can show there 20 ORDER DENYING PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT – 4 Case 2:20-cv-00371-SMJ ECF No. 85 filed 12/22/21 PageID.1115 Page 5 of 6 1 are no genuine issues of material fact on a particular issue. Here, Plaintiff fails to 2 make such an argument. 3 The question presently before the Court is not whether there are no genuine 4 issues of material fact as to whether Defendant Croskrey acted in good faith and 5 with proper care, skill, and diligence. See Montclair United Soccer Club v. Count 6 Me In Corp., No. C08-1642-JCC, 2009 WL 2985475 at *4 (W.D. Wash. Sept. 14, 7 2009). Instead, Plaintiffs ask this Court to strip Defendant Croskrey of the BJR 8 defense because the legal standard reiterates the negligence standard and renders 9 the defense illusory. 10 But summary judgment is not an opportunity to argue about what legal 11 standard applies. This issue is more appropriately taken up when the Court 12 addresses the jury instructions for trial, as the parties will have an opportunity to 13 submit and brief proposed jury instructions. Although the Court finds that 14 Defendants may have stated the business judgment rule too narrowly in their Tenth 15 Affirmative Defense, the Court declines to summarily bar them from raising the 16 defense at all. And to the extent Plaintiffs seek a ruling that the BJR does not apply 17 to Defendant Croskrey, the Court declines to make such a ruling when there remain 18 issues of material fact regarding his conduct. 19 // 20 // ORDER DENYING PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT – 5 Case 2:20-cv-00371-SMJ 1 // 2 // ECF No. 85 filed 12/22/21 3 Accordingly, IT IS HEREBY ORDERED: 4 1. PageID.1116 Page 6 of 6 Plaintiffs’ Motion for Summary Judgment Dismissal of Affirmative 5 Defense No. 10 (Business Judgment Rule), ECF No. 57, is DENIED. 6 IT IS SO ORDERED. The Clerk’s Office is directed to enter this Order and 7 8 provide copies to all counsel. DATED this 22nd day of December 2021. 9 10 11 _________________________ SALVADOR MENDOZA, JR. United States District Judge 12 13 14 15 16 17 18 19 20 ORDER DENYING PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT – 6
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