Luken v. Christensen Group Inc.

247 F. Supp. 3d 1158, 2017 WL 1022812, 2017 U.S. Dist. LEXIS 38187
CourtDistrict Court, W.D. Washington
DecidedMarch 16, 2017
DocketCASE NO. C16-5214RBL
StatusPublished

This text of 247 F. Supp. 3d 1158 (Luken v. Christensen Group Inc.) is published on Counsel Stack Legal Research, covering District Court, W.D. Washington primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Luken v. Christensen Group Inc., 247 F. Supp. 3d 1158, 2017 WL 1022812, 2017 U.S. Dist. LEXIS 38187 (W.D. Wash. 2017).

Opinion

ORDER

Ronald B. Leighton, United States District Judge

THIS MATTER is before the Court on the Christensen Defendants’ Motion for Partial Judgment on the Pleadings. [Dkt. #59]

This is the second motion seeking to streamline the allegations and claims in this complicated case. Plaintiff Luken was both a shareholder in and a customer of Christensen1 Shipyards, LTD., a Vancouver builder of (very) high end yachts. The arrangement was unsuccessful on all levels. The company went into receivership and Luken ultimately purchased its assets. This litigation involves claims between Luken and CSL and its owners and officers, trading allegations about why it all went wrong and who is financially responsible, to whom.

Luken alleges that CSL (aided and abetted by the Christensen defendants) breached its fiduciary duties to him (and to another yacht buyer, Indian Marine2) [1161]*1161when it failed to build and deliver two yachts for which they had paid substantial progress payments ($21 million and $8.5 million, respectively).

Christensen seeks dismissal of Luken’s breach of fiduciary duty claim, arguing that there is no viable claim that a corporation owes its customers any sort of fiduciary duty, as a matter of law.

Luken also claims that CSL and the Christensen defendants violated the Washington Fraudulent Transfers Act by acting to “hinder delay or defraud” him and other creditors. Generally, he claims they diverted all but $5 million of his deposit (and all of Indian Marine’s deposit), but as the defendants point out, at the time he filed he was not able to identify where the money went.

Christensen seeks dismissal of this claim because it requires an allegation of “actual intent,” and because any fraud claim must be pled with specificity under Fed. R. Civ. P. 9(b).

Finally, Luken asserts a Washington Consumer Protection Act Claim, alleging that Christensen’s unfair business practices deceived him. Christensen argues that CSL’s relationship with Luken was unique and even if the other elements were met, Luken cannot plausibly allege that its conduct toward Luken had the “capacity to deceive a substantial portion of the public.”

Christensen seeks dismissal of these three claims on the pleadings, without leave to amend. Luken opposes dismissal on the merits of each claim, but primarily seeks leave to amend to cure any defects in his claims. He emphasizes the lack of discovery and information available to him when he filed the complaint in state court.

A. Legal Standard.

Dismissal under Rule 12(b)(6) may be based on either the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory. Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1988). A plaintiff’s complaint must allege facts to state a claim for relief that is plausible on its face. See Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). A claim has “facial plausibility” when the party seeking relief “pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. Although the Court must accept as true the Complaint’s well-pled facts, conclusory allegations of law and unwarranted inferences will not defeat a Rule 12(c) motion. Vasquez v. L. A. County, 487 F.3d 1246, 1249 (9th Cir. 2007); Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). “[A] plaintiffs obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (citations and footnotes omitted). This requires a plaintiff to plead “more than an unadorned, the-defendant-unlawfully-harmed-me-accusation.” Iqbal, 129 S.Ct. at 1949 (citing Twombly).

Although Iqbal establishes the standard for deciding a Rule 12(b)(6) motion, Rule 12(c) is “functionally identical” to Rule 12(b)(6) and “the same standard of review” applies to motions brought under either rule. Cafasso, U.S. ex rel. v. General Dynamics C4 Systems, Inc., 637 F.3d 1047 (9th Cir. 2011), citing Dworkin v. Hustler Magazine Inc., 867 F.2d 1188, 1192 (9th Cir. 1989); see also Gentilello v. Rege, 627 F.3d 540, 544 (5th Cir. 2010) (applying Iqbal to a Rule 12(c) motion).

[1162]*1162On a 12(b)(6) motion, “a district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the plead-, ing could not possibly, be cured by. the allegation of other facts.” Cook, Perkiss & Liehe v. N. Cal. Collection Serv., 911 F.2d 242, 247 (9th Cir. 1990). However, where the facts are not in dispute, and the sole issue is whether there is liability as.a matter of substantive law, the court may deny leave to amend. Albrecht v. Lund, 845 F.2d 193, 195-96 (9th Cir. 1988).

B. Breach of fiduciary duty claim.

Luken’s complaint broadly alleges breach of fiduciary duty claims under RCW 23B.08.300 and .420. His Response to Defendants’ Motion describes multiple sets of fiduciary duties, and breaches: First, he claims that CSL became his agent (and thus a fiduciary) when it accepted his deposit and agreed to use it only for the construction of his yacht. He similarly claims that the director defendants became his agents (and thus fiduciaries) when he placed trust and confidence in them, individually, to take care of and properly apply his deposit. Luken also claims that ,CSL„ acting through the defendant corporate officers, “fraudulently over-billed Indian Marine and misappropriated roughly $4 million of its payments.”

Luken’s Response also asserts that the corporate officers owed “statutory fiduciary duties” (presumably, to him, as a. customer or a shareholder) but that the assertion is not supported by a citation- to any such statute. Similarly unsupported, is his allegation that as legal “persons,” all corporations “owe fiduciary duties.” Luken seeks leave to amend in lieu of dismissal of his fiduciary duty claims, under his revised common law. “agent” or “trust” fiduciary claims, described above.

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Bluebook (online)
247 F. Supp. 3d 1158, 2017 WL 1022812, 2017 U.S. Dist. LEXIS 38187, Counsel Stack Legal Research, https://law.counselstack.com/opinion/luken-v-christensen-group-inc-wawd-2017.