THE HONORABLE JOHN C. COUGHENOUR 1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 WESTERN DISTRICT OF WASHINGTON 8 AT SEATTLE 9 LARENA HATLEY, CASE NO. C21-0820-JCC 10 Plaintiff, ORDER 11 v. 12 JOYCE L. MULLAN, 13 Defendant. 14 15 This matter comes before the Court on the Plaintiff’s motion for partial summary 16 judgment (Dkt. No. 63) and Defendant’s Rule 12(h)(3)1 motion (Dkt. No. 67). Having 17 thoroughly considered the record, the parties’ briefing, and finding oral argument unnecessary, 18 the Court hereby GRANTS Defendant’s motion (Dkt. No. 67) and DENIES Plaintiffs’ motion 19 (Dkt. No. 63) as moot for the reasons explained herein. 20 I. BACKGROUND2 21 Defendant is a longstanding member of the American Kennel Club. (Dkt. No. 1 at 3.) 22 Through her business, Castlewood Standard Schnauzers, she breeds and sells show-quality 23 Standard Schnauzer puppies. In 2017, Defendant agreed to sell Plaintiff a Standard Schnauzer 24
1 Defendant captions his motion as seeking summary judgment. (See Dkt. No. 67 at 1.) In 25 substance, it is a factual attack on this Court’s subject matter jurisdiction. See Arbaugh v. Y&H 26 Corp., 546 U.S. 500, 506 (2006). Therefore, the Court will address it before turning to Plaintiff’s motion. See Fed. R. Civ. P. 12(h)(3). 2 Unless otherwise indicated, the facts described below are undisputed. 1 puppy for $2,500, to be bred by Defendant’s dam Rosie. (Dkt. Nos. 63 at 3, 67 at 3; see Dkt. No. 2 63-1 at 1.) In May 2018, Rosie whelped Starr, the puppy at issue. (Dkt. No. 63 at 3.) But 3 Defendant elected to keep Starr and attempted to return the funds received. (Dkt. Nos. 63 at 3, 67 4 at 3–5.) Plaintiff, not happy with this development and unable to convince Defendant to 5 reconsider, sued Defendant in Contra Costa County Superior Court, seeking, inter alia, specific 6 performance of their agreement. (See Dkt. No. 17-1.) Prior to judgment issuing in that matter, the 7 parties decided to dismiss the case without prejudice. (Dkt. No. 1 at 3.) 8 Plaintiff later refiled her case in this Court, based on diversity jurisdiction. (Id. at 2–3.) 9 She initially sought a writ of replevin (a demand she later dropped), (see Dkt. No. 53 at 2), along 10 with damages and penalties for breach of contract, tort-based claims, and violations of 11 Washington’s Consumer Protection Act (“CPA”). (Dkt. No. 1 at 10–19.) After the Court denied 12 Plaintiff’s preliminary motion for a writ of replevin, (Dkt. No. 44), it instructed the parties to 13 provide it with summary judgment briefing before proceeding to trial. (Dkt. No. 54.) The parties 14 then filed the instant motions (Dkt. Nos. 63, 67). 15 Plaintiff seeks partial summary judgment on certain factual issues and legal arguments. 16 (See Dkt. No. 63 at 2.) Whereas Defendant challenges this Court’s subject matter jurisdiction, 17 specifically, the amount in controversy. (See Dkt. No. 67 at 5–15.) Because, as described below, 18 the Court FINDS that, in fact, it lacks subject matter jurisdiction to adjudicate Plaintiff’s claims, 19 it need not and cannot address Plaintiff’s motion for summary judgment. 20 II. DISCUSSION 21 When Plaintiff filed the instant complaint, she asserted that the Court had jurisdiction 22 based on the diversity of the parties and the amount in controversy, which she claimed exceeded 23 $75,000. (See Dkt. No. 1 at 2.) Defendant initially challenged this assertion on a facial basis 24 through a Rule 12(b)(1) motion to dismiss, which Judge Peterson recommend be denied. (Dkt. 25 No. 29.) The Court adopted Judge Peterson’s unobjected-to Report and Recommendation on the 26 motion. (Dkt. No. 32.) Defendant again challenges this assertion—this time on a factual basis. (See Dkt. No. 67 at 5–13.) 1 As Judge Peterson previously discussed, the Court applies the legal certainty test to 2 determine whether the amount in controversy is satisfied. (See Dkt. No. 29 at 3 (citing Naffe v. 3 Frey, 789 F.3d 1030, 1039 (9th Cir. 2015)).) Under this standard, the Court must accept the 4 amount in controversy claimed by a plaintiff unless it can declare to a legal certainty that the 5 case is worth less. See St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289 (1938). 6 But on a factual challenge, such as this one, the Court is not limited to the face of the 7 pleadings—it may review any evidence concerning the existence of jurisdiction. See McCarthy v. 8 United States, 850 F.2d 558, 560 (9th Cir. 1988). Although the burden of establishing subject 9 matter jurisdiction falls on Plaintiff—as she is the party seeking federal adjudication of her 10 claims, see Indus Tectonics, Inc. v. Aero Alloy, 912 F.2d 1090, 1092 (9th Cir. 1990), her burden 11 is not particularly high, as factual issues must be resolved in her favor. See Edison v. U.S., 822 12 F.3d 510, 517 (9th Cir. 2016). This is far less than a preponderance standard. Naffe, 789 F.3d at 13 1040. 14 A. The CPA is Inapplicable 15 In arguing that she satisfies the amount in controversy, Plaintiff relies in large part on 16 attorney fees3 incurred to date in this case and other damages recoverable through a successful 17 CPA claim. (Dkt. No. 82 at 4–7, 11–12.) But she gives short-shrift to the notion of whether the 18 regime even applies here. The CPA’s purpose is to protect the public from unscrupulous 19 businesses. See Lightfoot v. MacDonald, 544 P.2d 88, 89 (Wash. 1976). It is not intended to 20 provide an aggrieved plaintiff with a backdoor ticket to federal court. 21 To bring a successful CPA claim, Plaintiff must establish, at a minimum, that the conduct 22 complained of has the potential to impact the public interest in a meaningful way. See Hangman 23 3 Because, per below, the Court finds that the CPA is not implicated by the conduct at 24 issue here, it need not make a determination as to the reasonableness of those fees. See RCW 19.86.090 (providing a mechanism for the recovery of “reasonable attorney’s fees”); see 25 Nordstrom, Inc. v. Tampourlos, 733 P.2d 208, 212 (Wash. 1987) (remanding as unreasonable a 26 $40,000 fee request). But the Court notes that, on its face, spending 356 hours of Plaintiff’s counsels’ time and 57.9 hours of their paralegal’s time, to date, (see Dkt. No. 78 at 3), on a suit involving a failed $2,500 sale, appears unreasonable, excessive, and unwarranted. 1 Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 719 P.2d 531, 533 (Wash. 1986). In 2 determining whether unlawful conduct could implicate the public interest, the Court applies four 3 factors:
4 (1) whether the alleged acts were committed in the course of defendant’s business; (2) whether the defendant advertised to the public in general; (3) whether the 5 defendant actively solicited this particular plaintiff, indicating potential solicitation 6 of others; (4) whether the plaintiff and defendant have unequal bargaining positions. Eye Care Ctr. of Snohomish v. Chemat Tech., Inc., 2012 WL 12941686, slip op. at 3 (W.D. 7 Wash.
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THE HONORABLE JOHN C. COUGHENOUR 1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 WESTERN DISTRICT OF WASHINGTON 8 AT SEATTLE 9 LARENA HATLEY, CASE NO. C21-0820-JCC 10 Plaintiff, ORDER 11 v. 12 JOYCE L. MULLAN, 13 Defendant. 14 15 This matter comes before the Court on the Plaintiff’s motion for partial summary 16 judgment (Dkt. No. 63) and Defendant’s Rule 12(h)(3)1 motion (Dkt. No. 67). Having 17 thoroughly considered the record, the parties’ briefing, and finding oral argument unnecessary, 18 the Court hereby GRANTS Defendant’s motion (Dkt. No. 67) and DENIES Plaintiffs’ motion 19 (Dkt. No. 63) as moot for the reasons explained herein. 20 I. BACKGROUND2 21 Defendant is a longstanding member of the American Kennel Club. (Dkt. No. 1 at 3.) 22 Through her business, Castlewood Standard Schnauzers, she breeds and sells show-quality 23 Standard Schnauzer puppies. In 2017, Defendant agreed to sell Plaintiff a Standard Schnauzer 24
1 Defendant captions his motion as seeking summary judgment. (See Dkt. No. 67 at 1.) In 25 substance, it is a factual attack on this Court’s subject matter jurisdiction. See Arbaugh v. Y&H 26 Corp., 546 U.S. 500, 506 (2006). Therefore, the Court will address it before turning to Plaintiff’s motion. See Fed. R. Civ. P. 12(h)(3). 2 Unless otherwise indicated, the facts described below are undisputed. 1 puppy for $2,500, to be bred by Defendant’s dam Rosie. (Dkt. Nos. 63 at 3, 67 at 3; see Dkt. No. 2 63-1 at 1.) In May 2018, Rosie whelped Starr, the puppy at issue. (Dkt. No. 63 at 3.) But 3 Defendant elected to keep Starr and attempted to return the funds received. (Dkt. Nos. 63 at 3, 67 4 at 3–5.) Plaintiff, not happy with this development and unable to convince Defendant to 5 reconsider, sued Defendant in Contra Costa County Superior Court, seeking, inter alia, specific 6 performance of their agreement. (See Dkt. No. 17-1.) Prior to judgment issuing in that matter, the 7 parties decided to dismiss the case without prejudice. (Dkt. No. 1 at 3.) 8 Plaintiff later refiled her case in this Court, based on diversity jurisdiction. (Id. at 2–3.) 9 She initially sought a writ of replevin (a demand she later dropped), (see Dkt. No. 53 at 2), along 10 with damages and penalties for breach of contract, tort-based claims, and violations of 11 Washington’s Consumer Protection Act (“CPA”). (Dkt. No. 1 at 10–19.) After the Court denied 12 Plaintiff’s preliminary motion for a writ of replevin, (Dkt. No. 44), it instructed the parties to 13 provide it with summary judgment briefing before proceeding to trial. (Dkt. No. 54.) The parties 14 then filed the instant motions (Dkt. Nos. 63, 67). 15 Plaintiff seeks partial summary judgment on certain factual issues and legal arguments. 16 (See Dkt. No. 63 at 2.) Whereas Defendant challenges this Court’s subject matter jurisdiction, 17 specifically, the amount in controversy. (See Dkt. No. 67 at 5–15.) Because, as described below, 18 the Court FINDS that, in fact, it lacks subject matter jurisdiction to adjudicate Plaintiff’s claims, 19 it need not and cannot address Plaintiff’s motion for summary judgment. 20 II. DISCUSSION 21 When Plaintiff filed the instant complaint, she asserted that the Court had jurisdiction 22 based on the diversity of the parties and the amount in controversy, which she claimed exceeded 23 $75,000. (See Dkt. No. 1 at 2.) Defendant initially challenged this assertion on a facial basis 24 through a Rule 12(b)(1) motion to dismiss, which Judge Peterson recommend be denied. (Dkt. 25 No. 29.) The Court adopted Judge Peterson’s unobjected-to Report and Recommendation on the 26 motion. (Dkt. No. 32.) Defendant again challenges this assertion—this time on a factual basis. (See Dkt. No. 67 at 5–13.) 1 As Judge Peterson previously discussed, the Court applies the legal certainty test to 2 determine whether the amount in controversy is satisfied. (See Dkt. No. 29 at 3 (citing Naffe v. 3 Frey, 789 F.3d 1030, 1039 (9th Cir. 2015)).) Under this standard, the Court must accept the 4 amount in controversy claimed by a plaintiff unless it can declare to a legal certainty that the 5 case is worth less. See St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289 (1938). 6 But on a factual challenge, such as this one, the Court is not limited to the face of the 7 pleadings—it may review any evidence concerning the existence of jurisdiction. See McCarthy v. 8 United States, 850 F.2d 558, 560 (9th Cir. 1988). Although the burden of establishing subject 9 matter jurisdiction falls on Plaintiff—as she is the party seeking federal adjudication of her 10 claims, see Indus Tectonics, Inc. v. Aero Alloy, 912 F.2d 1090, 1092 (9th Cir. 1990), her burden 11 is not particularly high, as factual issues must be resolved in her favor. See Edison v. U.S., 822 12 F.3d 510, 517 (9th Cir. 2016). This is far less than a preponderance standard. Naffe, 789 F.3d at 13 1040. 14 A. The CPA is Inapplicable 15 In arguing that she satisfies the amount in controversy, Plaintiff relies in large part on 16 attorney fees3 incurred to date in this case and other damages recoverable through a successful 17 CPA claim. (Dkt. No. 82 at 4–7, 11–12.) But she gives short-shrift to the notion of whether the 18 regime even applies here. The CPA’s purpose is to protect the public from unscrupulous 19 businesses. See Lightfoot v. MacDonald, 544 P.2d 88, 89 (Wash. 1976). It is not intended to 20 provide an aggrieved plaintiff with a backdoor ticket to federal court. 21 To bring a successful CPA claim, Plaintiff must establish, at a minimum, that the conduct 22 complained of has the potential to impact the public interest in a meaningful way. See Hangman 23 3 Because, per below, the Court finds that the CPA is not implicated by the conduct at 24 issue here, it need not make a determination as to the reasonableness of those fees. See RCW 19.86.090 (providing a mechanism for the recovery of “reasonable attorney’s fees”); see 25 Nordstrom, Inc. v. Tampourlos, 733 P.2d 208, 212 (Wash. 1987) (remanding as unreasonable a 26 $40,000 fee request). But the Court notes that, on its face, spending 356 hours of Plaintiff’s counsels’ time and 57.9 hours of their paralegal’s time, to date, (see Dkt. No. 78 at 3), on a suit involving a failed $2,500 sale, appears unreasonable, excessive, and unwarranted. 1 Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 719 P.2d 531, 533 (Wash. 1986). In 2 determining whether unlawful conduct could implicate the public interest, the Court applies four 3 factors:
4 (1) whether the alleged acts were committed in the course of defendant’s business; (2) whether the defendant advertised to the public in general; (3) whether the 5 defendant actively solicited this particular plaintiff, indicating potential solicitation 6 of others; (4) whether the plaintiff and defendant have unequal bargaining positions. Eye Care Ctr. of Snohomish v. Chemat Tech., Inc., 2012 WL 12941686, slip op. at 3 (W.D. 7 Wash. 2012) (citing Michael v. Mosquera-Lacy, 200 P.3d 695, 700 (Wash. 2009).) Here, only 8 the first factor implicates the CPA—it is undisputed that Defendant’s failure to tender Starr was 9 in the course of Defendant’s business. 10 Based on the remaining factors, the evidence before the Court supports a finding of no 11 public interest impact. This is because Defendant did not advertise her breeding business to the 12 public, did not solicit Plaintiff, and was not in a superior bargaining position relative to Plaintiff. 13 (See Dkt. No. 63-3 at 5–6 (Defendant’s deposition testimony submitted by Plaintiff indicating 14 she sought Defendant out and agreed to wait “at least a couple years” for a puppy from 15 Defendant), 63-2 at 1 (text thread submitted by Plaintiff describing a discussion where Plaintiff 16 informs Defendant she intends to “wait for you and Rosie” rather than purchase a puppy from 17 another breeder, even though they presently have an available “show quality female”), 63-10 at 2 18 (Defendant’s deposition testimony submitted by Plaintiff indicating that Defendant does not 19 advertise), 63-9 at 13–17 (text strings submitted by Plaintiff from Chance Daniels, Plaintiff’s 20 spouse, to Defendant threatening legal action), 80 at 2 (recorded conversation submitted by 21 Plaintiff where Mr. Daniels informs Defendant that he can “do things” including “throw[ing] 22 money at any problem and make it go away,” and will do “whatever it takes” to ensure 23 Defendant delivers Starr to Plaintiff, including forcing her to pay “$50,000 in legal expenses” if 24 necessary), 63-9 at 21–22 (alleged derogatory social media messages submitted by Plaintiff from 25 Mr. Daniels directed at Defendant’s business).) 26 Moreover, even if the Court were to find a public interest impact, this is not the end of the 1 story. Plaintiff must establish unfair or deceptive conduct. RCW 19.86.020. And while Plaintiff 2 argues that Defendant’s conduct was unfair or deceptive “on its face,” (Dkt. No. 63 at 2; see Dkt. 3 No. 81 at 5–6), Plaintiff provides no authority for this proposition. (See generally id.); see, e.g., 4 Myrick v. U.S., 217 F. Supp. 2d 979, 982 (D. Ariz. 2002), aff’d, 70 F. App’x 956 (9th Cir. 2003) 5 (declining to “consider arguments made without legal support”). From the Court’s perspective, a 6 breach of contract may be unlawful, but it is not per se unfair or deceptive. This is particularly so 7 here, where Defendant attempted to return the amount paid—an offer Plaintiff seemingly refused 8 to accept. (See Dkt. No. 80-1 at 1.) 9 B. No Reliable Evidence Suggests Consequential Damages Exceed $75,000 10 Without the benefit of a viable CPA claim, Plaintiff must provide evidence that her actual 11 damages exceed $75,000. 28 U.S.C. § 1332(a). To do so, she relies on consequential damages, 12 particularly lost profits. (Dkt. No. 82 at 7–11.) Whether such damages are even appropriate in 13 this, a breach of contract case, is an issue the Court need not address. See Larsen v. Walton 14 Plywood Co., 390 P.2d 677, 686 (Wash. 1964) (lost profits are only recoverable when “(1) they 15 are within the contemplation of the parties at the time the contract was made, (2) they are the 16 proximate result of defendant’s breach, and (3) they are proven with reasonable certainty”). This 17 is because Plaintiff fails to present any reliable evidence that, to the extent lost profits are 18 recoverable here, they could come anywhere near $75,000. See Milgard Tempering, Inc. v. Selas 19 Corp. of Am., 902 F.2d 703, 711 (9th Cir. 1990) (requiring “tangible evidence rather than mere 20 speculation or hypotheses”). 21 Plaintiff offers her own self-serving declaration, indicating she could have generated 22 between $57,795 and $93,795 in profits over Starr’s life, had she bred her. (Dkt. No. 79 at 8–9.) 23 But Plaintiff provides no evidence to suggest that Plaintiff previously bred show puppies or has 24 the expertise to opine on Starr’s value. And while she does include a report from Jill Kellser- 25 Miller estimating possible gross revenue from Starr over her life between $30,000–$84,000, (see 26 Dkt. No. 78-1 at 13), even if the Court were to credit Ms. Kellser-Miller as an expert on the issue, which is not entirely clear given her reliance on Plaintiff’s counsel for the numbers that 1 went into her estimate, (see Dkt. No. 86-1 at 2–3), Ms. Kellser-Miller’s report indicates that it 2 cannot be relied on to establish value. (See Dkt. No. 78-1 at 12–13.) This is because of the 3 speculative nature of veterinary and other expenses. (Id.) However, Plaintiff herself estimates 4 those expenses to be $32,205. (Dkt. No. 79 at 9.) So, at best, applying the high end of the gross 5 revenue estimated by Ms. Kellser-Miller to the expenses estimated by Plaintiff results in net lost 6 profits of $51,795 ($84,000 less $32,205)—far less than $75,000. Moreover, as Ms. Kellser- 7 Miller later indicated in her deposition, these numbers must be taken “with a grain of salt.” (Dkt. 8 No. 2.)4 9 Finally, Plaintiff argues that legal fees incurred prior to filing this case should be 10 considered as consequential damages. (Dkt. No. 82 at 11.) Her argument is that, if not for 11 incurring those fees, Plaintiff would not have discovered the fraudulent and deceptive nature of 12 Defendant’s conduct. (Id.) But as the Court noted above, see supra Part II.A., it is not clear to the 13 Court how the allegations in this case rise to the level of a fraudulent and deceptive business 14 practice, rather than simply a change of heart. Regardless, Plaintiff’s argument strains this 15 Court’s credulity. While she provides citation supporting the notion that past legal fees may be 16 recoverable in a RICO context, (id. (citing Bankers Tr. Co. v. Rhoades, 859 F.2d 1096, 1105 (2d 17 Cir. 1988)), she provides no citation to support the notion that they are recoverable in a breach of 18 contract case governed by Washington law. 19 Therefore, the Court FINDS, to a legal certainty, that this case is worth far less than 20 $75,000. 21 III. CONCLUSION 22 For the foregoing reasons, Defendant’s Rule 12(h)(3) motion (Dkt. No. 67) is 23 GRANTED and Plaintiff’s summary judgment motion (Dkt. No. 63) is DENIED as moot. This 24 case is DISMISSED without prejudice. 25
26 4 Nor is it lost on the Court that, in Ms. Kellser-Miller’s opinion, (1) Starr is not show quality, (2) it is unclear if she ever could have been show quality, (3) and based on her current condition, Starr’s current breeding value is “zero.” (Dkt. No. 78-1 at 13–16.) DATED this 15th day of June 2023. 1 2 A 3 4 John C. Coughenour 5 UNITED STATES DISTRICT JUDGE 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26