Smokiam RV Resort LLC v William Jordan Capital Inc et al, No. 2:2017cv00885 - Document 31 (W.D. Wash. 2017)
Court Description: ORDER denying Defendants' 25 Motion to Dismiss. The Court GRANTS Plaintiff leave to amend its First Amended Complaint, as proposed (Dkt. No. 27 at 24-31) and DIRECTS Plaintiff to file its proposed Second Amended Complaint within ten (10) days of this order. Signed by U.S. District Judge John C Coughenour. (TH)
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Smokiam RV Resort LLC v William Jordan Capital Inc et al Doc. 31 THE HONORABLE JOHN C. COUGHENOUR 1 2 3 4 5 6 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 7 8 9 SMOKIAM RV RESORT LLC, 10 Plaintiff, CASE NO. C17-0885-JCC ORDER v. 11 WILLIAM JORDAN CAPITAL, INC., et al., 12 13 Defendants. 14 15 This matter comes before the Court on Defendants’ motion to dismiss Plaintiff’s First 16 17 18 19 20 21 22 23 24 25 26 Amended Complaint (Dkt. No. 25). Having thoroughly considered the parties’ briefing and the relevant record, the Court finds oral argument unnecessary, hereby DENIES the motion (Dkt. No. 25) for the reasons explained herein, and DIRECTS Plaintiff to file its proposed Second Amended Complaint (Dkt. No. 27 at 24–31) within ten (10) days of this order. I. BACKGROUND The Court described the underlying facts of this case in a previous order (Dkt. No. 20) and will not repeat them here. The Court previously dismissed Plaintiff’s claims with prejudice, except for claims Plaintiff brought under the Washington Consumer Protection Act (“WCPA”), Wash. Rev. Code § 19.86. et seq., which the Court dismissed without prejudice and with leave to amend. (Dkt. No. 20.) Plaintiff has since filed a First Amended Complaint (Dkt. No. 23). ORDER C17-0885-JCC PAGE - 1 Dockets.Justia.com 1 Defendants again move to dismiss (Dkt. No. 25). Plaintiff, in opposing Defendants’ motion, 2 includes a proposed Second Amended Complaint. (Dkt. No. 27 at 24–31.) 3 II. DISCUSSION 4 Defendants move to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) and 5 12(b)(6). (Dkt. No. 25.) Defendants assert the Court lacks subject matter jurisdiction over this 6 case pursuant to 28 U.S.C. § 1332 because Plaintiff, a limited liability company (“LLC”), does 7 not properly plead the citizenship of its member and is unable to satisfy the amount in 8 controversy. (Id. at 8) Defendants further assert an LLC cannot bring a WCPA claim and even if 9 it could, Plaintiff fails to allege sufficient facts to show the required elements of injury or 10 causation. (Id. at 11.) 1 11 A. 12(b)(1) Motion 12 A motion to dismiss brought under Federal Rule of Civil Procedure 12(b)(1) asserting 13 lack of subject matter jurisdiction may be a facial or factual challenge. See White v. Lee, 227 14 F.3d 1214, 1242 (9th Cir. 2000). In a facial attack, the defendant asserts that the plaintiff’s 15 allegations are insufficient on their face to confer federal jurisdiction. In reviewing such an 16 attack, the Court assumes all material allegations in the complaint are true. Thornhill Publ’g Co. 17 v. General Tel. Elec., 594 F.2d 730, 733 (9th Cir. 1979). Here, Defendants facially attack 18 Plaintiff’s First Amended Complaint, asserting that it does not identify the citizenship of 19 Plaintiff’s members. (Dkt. No. 25 at 9–10.) Defendants are correct. A complaint containing 20 claims by an LLC must identify the citizenship of its members in order to establish the Court’s 21 22 23 24 25 26 1 Defendants also assert that Plaintiff fails to allege facts supporting the unfair or deceptive act element for a WCPA claim. (Dkt. No. 13.) But the Court already ruled on this issue when considering Defendants’ first motion to dismiss (Dkt. No. 20 at 8) and Plaintiff’s First Amended Complaint contains the same facts supporting this element as did Plaintiff’s original Complaint (Compare Dkt. No. 1 at 3, with Dkt. No. 23 at 3). The Court need not reconsider Defendants’ assertion, absent a demonstration of manifest error or new facts or legal authority which could not have been brought to the Court’s attention earlier with reasonable diligence. W.D. Wash. Local Civ. R. 7(h). Defendants demonstrate neither. ORDER C17-0885-JCC PAGE - 2 1 jurisdiction. W.D. Wash Local Civ. R. 8. In response, Plaintiff submits a proposed Second 2 Amended Complaint that cures this facial deficiency. (See Dkt. No. 27 at 24 ¶ 1) (declaration 3 from Bradley Ellis that he is a citizen of Washington and is the sole member of Plaintiff 4 Smokiam RV Resort, LLC). Pursuant to Federal Rule of Civil Procedure 15(a)(2), the Court 5 GRANTS Plaintiff leave to amend its First Amended Complaint, as proposed. Plaintiff is 6 DIRECTED to docket the Second Amended Complaint, as proposed, within ten (10) days of this 7 order. This amendment resolves Defendants’ first challenge. 8 9 Defendant also brings a factual challenge, asserting Plaintiff fails to plausibly allege that the amount in controversy exceeds $75,000. (Dkt. No. 25 at 10.) Normally, once the moving 10 party factually attacks a district court’s subject matter jurisdiction, the non-moving party must 11 put forward “evidence necessary to satisfy its burden of establishing subject matter jurisdiction.” 12 Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). But for purposes of the 13 amount in controversy, “[t]he sum claimed by the plaintiff controls so long as the claim is made 14 in good faith.” Crum v. Circus Circus Enters., 231 F.3d 1129, 1131 (9th Cir. 2000). “To justify 15 dismissal, it must appear to a legal certainty that the claim is really for less than the jurisdictional 16 amount.” Id. (internal quotation marks and citation omitted). Defendants argue that the only 17 damages Plaintiff plausibly asserts is $15,000 in additional interest accrued as a result of 18 Defendants’ alleged errors in processing Plaintiff’s payments, related attorney fees, and punitive 19 damages. (Dkt. No. 30 at 8.) In making its argument, Defendants dismiss Plaintiff’s allegations 20 of “substantial additional costs to obtain permanent financing” resulting from Defendants’ 21 actions, which Plaintiff asserts exceeds $660,000. (Dkt. No. 23 at 6). Plaintiff supports its 22 allegations with declarations from Plaintiff’s sole member and Plaintiff’s banker. (See Dkt. Nos. 23 28, 29.) The Court may consider materials beyond the complaint in reviewing a factual attack on 24 subject matter jurisdiction. McCarthy v. U.S., 850 F.2d 558, 560 (9th Cir. 1988). Given 25 Plaintiff’s assertions and related evidence, the Court concludes that it is far from a legal certainty 26 ORDER C17-0885-JCC PAGE - 3 1 that the amount of Plaintiff’s claim is less than $75,000. Plaintiff sufficiently alleges an amount 2 in controversy in excess of the jurisdictional minimum. 3 On this basis, Defendants’ 12(b)(1) motion to dismiss is DENIED. 4 B. 5 A court must dismiss an action if a plaintiff “fails to state a claim upon which relief can 12(b)(6) Motion 6 be granted.” Fed. R. Civ. P. 12(b)(6). Under Rule 12(b)(6), the Court accepts all factual 7 allegations in the complaint as true and construes them in the light most favorable to the 8 nonmoving party. Vasquez v. L.A. County, 487 F.3d 1246, 1249 (9th Cir. 2007). However, to 9 survive a motion to dismiss, a plaintiff must cite facts supporting a “plausible” cause of action, 10 consistent with Federal Rule of Civil Procedure 8(a)(2). Bell Atlantic Corp. v. Twombly, 550 11 U.S. 544, 555–56 (2007). A claim has “facial plausibility” when the party seeking relief “pleads 12 factual content that allows the Court to draw the reasonable inference that the defendant is liable 13 for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 672 (2009) (quotations omitted). 14 Although the Court must accept as true a complaint’s well-pleaded facts, “conclusory allegations 15 of law and unwarranted inferences will not defeat an otherwise proper motion to dismiss.” 16 Vasquez, 487 F.3d at 1249 (quotation omitted). 17 Plaintiff alleges Defendants violated WCPA based on the manner in which they serviced 18 Plaintiff’s loan. (Dkt. No. 23 at 6–8.) A properly plead WCPA claim requires facts 19 demonstrating the following elements: (1) an unfair or deceptive act or practice, (2) occurring in 20 trade or commerce, (3) that impacts the public interest, (4) that causes injury to the Plaintiffs’ 21 business or property, and (5) causation. Hangman Ridge Training Stables v. Safeco Title Ins. Co., 22 719 P.2d 531, 533 (Wash. 1986). Defendants assert Plaintiff, as an LLC, lacks standing to bring 23 a WCPA claim. (Dkt. No. 25 at 12–15.) Moreover, Defendants assert that even if an LLC has 24 standing, Plaintiff failed to adequately plead the fourth and fifth elements for a WCPA claim: 25 injury and causation. 2 (Id.) 26 2 See supra note 1. ORDER C17-0885-JCC PAGE - 4 1 Defendants’ standing argument is based on an unnecessarily narrow reading of the 2 statute. According to Revised Code of Washington § 19.86.090, an injured “person” meeting the 3 requirements of WCPA can bring a claim for recovery. For WCPA purposes, “person” is defined 4 as “natural persons, corporations, trusts, unincorporated associations and partnerships.” Wash. 5 Rev. Code § 19.86.010. Defendants point out that LLCs are noticeably absent from this list. But 6 that is because the list was promulgated in 1961, well before LLCs were established in 7 Washington. See WASHINGTON LAWS OF 1961, ch. 216, § 1 (defining “person” for purposes of an 8 LLC); WASHINGTON LAWS OF 1994, ch. 211 § 101 et seq. (establishing limited liability 9 companies in Washington). It seems that Washington’s legislature simply failed to update the 10 language of § 19.86.010 when it established LLCs. Regardless, Revised Code of Washington 11 § 1.16.080 provides that a “person, firm, or corporation” as used elsewhere in the Code includes 12 a “limited liability company.” See State v. Jeffries, 709 P.2d 819, 821 (Wash. App. 1985) (“RCW 13 1.16.080 defines ‘person’ for purposes of the entire code.”). Plaintiff, as an LLC, has standing to 14 bring a WCPA claim. 15 Plaintiff asserts that it was unable to refinance the short-term financing serviced by 16 Defendants with permanent financing through Old West Federal Credit Union at a lower interest 17 rate because of Defendants’ actions. (Dkt. No. 23 at 5–6.) As a result, Plaintiff alleges that it has 18 been unable to complete the purchase of cabin units for which it had made down payments, 19 resulting in lost down payments and lost rental revenue. (Id. at 6.) Defendants counter these 20 allegations are insufficient to satisfy demonstrate injury and causation under WCPA. (Dkt. No. 21 25 at 14–15.) 22 Defendants base their injury argument on the fact that Plaintiff is not a “person” and only 23 “persons” may assert an injury in a WCPA claim. (Id.) (citing Wash. Rev. Code. § 19.86.090). 24 But, as discussed above, Plaintiff is a “person” for purposes of its WCPA claim. As to causation, 25 Defendants do not directly allege that Plaintiff fails to plead sufficient facts to establish a causal 26 link between the unfair or deceptive practice allegedly engaged in by Defendants. (See generally ORDER C17-0885-JCC PAGE - 5 1 Dkt. No. 25 at 15.) Instead, Defendants assert the following counterfactuals: (1) Plaintiff’s own 2 actions led to its injuries, (2) Plaintiff failed to mitigate, and (3) an intervening action by a third 3 party caused Plaintiff’s injuries. (Id.) Such assertions are not appropriate for the Court to 4 consider in a 12(b)(6) motion, where the focus is on the sufficiency of Plaintiff’s allegation—not 5 Defendants’ defenses. See Vasquez, 487 F.3d at 1249 (the Court accepts a plaintiff’s factual 6 allegations contained in the complaint as true and construes them in the light most favorable to 7 Plaintiff). Plaintiff states a valid WCPA claim. 8 9 10 For these reasons, Defendants’ 12(b)(6) motion to dismiss is DENIED. III. CONCLUSION Defendants’ motion to dismiss (Dkt. No. 25) is DENIED. The Court GRANTS Plaintiff 11 leave to amend its First Amended Complaint, as proposed (Dkt. No. 27 at 24–31) and DIRECTS 12 Plaintiff to file its proposed Second Amended Complaint within ten (10) days of this order. 13 14 DATED this 27th day of December 2017. 15 16 19 A 20 John C. Coughenour UNITED STATES DISTRICT JUDGE 17 18 21 22 23 24 25 26 ORDER C17-0885-JCC PAGE - 6
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