Nakata v. Blue Bird, Inc.

191 P.3d 900
Court of Appeals of Washington·Decided September 4, 2008·No. 26434-3-III·Published·Cited by 19 cases

Opinion

191 P.3d 900 (2008)

Elsie NAKATA, an individual, and Nakata Orchards, Inc., a Washington corporation, Appellants,
v.
BLUE BIRD, INC., a Washington corporation, Respondent.

No. 26434-3-III.

Court of Appeals of Washington, Division 3.

July 3, 2008.
Publication Ordered September 4, 2008.

*902 Stanley Allen Bastian, Jeffers Danielson Sonn & Aylward PS, Wenatchee, WA, for Appellants.

Thomas Andrew Lerner, Aviva Kamm, Stokes Lawrence PS, Seattle, WA, for Respondent.

SWEENEY, J.

¶ 1 This is a suit by a member of an agricultural cooperative to recover damages because the cooperative refused her demand to repay personal or business "equity accounts." The trial court summarily dismissed the suit after ordering the cooperative to produce records and respond to other discovery requests. We conclude that the court did not abuse its discretion by limiting discovery and refusing to allow the plaintiff to amend her complaint. And we conclude that the trial court properly dismissed the complaint because the plaintiff failed to make out a cause of action in either law or equity.

FACTS

¶ 2 Elsie Nakata is the president of Nakata Orchards, Inc. The company owns and operates apple, pear, and cherry orchards in Douglas County. Blue Bird, Inc., is a cooperative association. It is organized and operates under chapter 23.86 RCW (cooperative associations act).

¶ 3 Skookum, Inc., was also a cooperative association. It packed, stored, marketed, and sold Nakata's fruit. Ms. Nakata set up a personal equity account with Skookum in 1977 and a business equity account in 1980. Skookum held a portion of the grower's earnings in these accounts to provide working capital for the cooperative. The cooperative would then distribute the accounts to the grower at the discretion of the directors.

*903 ¶ 4 Skookum merged into Blue Bird in 1995. Blue Bird returned a portion of Ms. Nakata's equity account pursuant to the plan of merger and its articles of incorporation and bylaws.

¶ 5 Ms. Nakata requested business records from Blue Bird. And Blue Bird ultimately complied with some of Ms. Nakata's requests. Ms. Nakata sued Blue Bird for damages and attorney fees. She claimed violations of the cooperative associations act and the Consumer Protection Act (CPA) (chapter 19.86 RCW) and prayed for other equitable relief.

¶ 6 Blue Bird moved for summary judgment. Ms. Nakata then moved to amend her complaint to add other equitable causes of action and to compel discovery. The trial court granted Ms. Nakata's motion to compel, with some restrictions. It limited the scope of discovery to evidence that is available under RCW 23B.16.010-.020 (essentially financial information that a corporation must maintain). And it limited Blue Bird's obligation to produce records to those that implicated the "business judgment rule." The court also gave Ms. Nakata 90 days to complete discovery but later extended the deadline by an additional 80 days.

¶ 7 The court denied Ms. Nakata's motion to amend to add causes of action for unconscionable contract, breach of fiduciary duties, breach of an implied covenant of good faith, and for declaratory judgment. But the court did so with the proviso that it would entertain the motion further if Ms. Nakata produced facts that supported any of the proposed causes of action. The court denied Ms. Nakata's motion for attorney fees. It concluded that "Blue Bird had a reasonable basis for doubt as to Plaintiffs' right of access to inspect the records demanded." Clerk's Papers (CP) at 17.

¶ 8 The court granted Blue Bird's motion for summary judgment but conditioned any final order of dismissal on completion of Ms. Nakata's discovery. The court later dismissed the case.

DISCUSSION

SUMMARY JUDGMENT

¶ 9 Ms. Nakata complains that Blue Bird failed to pay her equity accounts for over 25 years and that this is not fair and should not be allowed. But she concedes, as she must, that Blue Bird has no legal obligation to pay, either under any agreement with her, or under any bylaw of the cooperative or under any statute. So she argues, instead, that the court should order reimbursement based on some theory in equity. She argues that she was entitled to have a trier of fact resolve a number of factual questions, specifically whether Blue Bird: (1) properly balanced the interests of current growers against those of former growers and equity owners; (2) has a written equity retention and/or redemption policy; (3) has or should have a policy regarding retaining new equity and retiring old equity; (4) set its "charges" too low; and (5) has accumulated excessive reserves. And while these may well be issues of fact, there is no showing here that they are material issues of fact. Balise v. Underwood, 62 Wash.2d 195, 199, 381 P.2d 966 (1963) (material fact is one upon which the litigation depends).

¶ 10 We review an order granting summary judgment de novo. Seybold v. Neu, 105 Wash.App. 666, 675, 19 P.3d 1068 (2001). There is no showing on this record that Blue Bird did or failed to do any of the things that Ms. Nakata claims. And even if Blue Bird did, or failed to do, all or any of these, there is no showing that it was obligated legally or in equity to do, or not do, any of the things she claims. Blue Bird was run by a board of directors as required by statute. RCW 23B.08.010. And the cooperative members have the authority to vote those directors out if they believe that the cooperative is not being run properly. See RCW 23B.08.030, RCW 23B.07.280. There is no showing here that Ms. Nakata was treated differently than any other member of the Blue Bird cooperative or, for that matter, that the cooperative did anything other than act in the best interests of its members. Riss v. Angel, 131 Wash.2d 612, 632, 934 P.2d 669 (1997) (no cause of action against directors absent a showing of fraud, dishonesty, or incompetence). The simple assertion that an equity account has not been paid after a lengthy *904 period of time is not enough to support a cause of action in law or equity. See id.; see also Spokane Concrete Prods., Inc. v. U.S. Bank, 126 Wash.2d 269, 279, 892 P.2d 98 (1995). Simply put, Ms. Nakata presents no evidence that Blue Bird was required to repay her equity accounts within a specific time frame, that it must create a redemption plan, or that it must annually address whether or not it should issue payments to redeem equity accounts.

¶ 11 The court may dissolve a cooperative association if a minority shareholder establishes that the directors or those in control of the association acted, are acting, or will act in an oppressive manner. RCW 23B.14.300(2)(b).

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Nakata v. Blue Bird, Inc., 191 P.3d 900 (Wash. Ct. App. 2008).

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