Stewart Title Guaranty Company v. Vitruvian Design LLC et al.

• Court: District Court, W.D. Washington
• Decided: June 5, 2026
• Docket: 2:26-cv-00543
• Status: Unknown

Opinion

1 2 3

4 5 UNITED STATES DISTRICT COURT 6 WESTERN DISTRICT OF WASHINGTON AT SEATTLE 7 STEWART TITLE GUARANTY CASE NO. 2:26-cv-00543-JHC 8 COMPANY, ORDER 9 Plaintiff, 10 v. 11 VITRUVIAN DESIGN LLC ET AL., 12 Defendants. 13

14 I INTRODUCTION 15

This matter comes before the Court on Defendants’ Rule 12(b)(6) Motion to Dismiss. 16 Dkt. # 7. The Court has considered the materials filed in support of and in opposition to the 17 motion, the rest of the file, and the governing law. Being fully advised, for the reasons below, 18 the Court GRANTS IN PART and DENIES IN PART the motion. 19 II 20 BACKGROUND

21 The Court takes as true the facts alleged in the Complaint. See Ashcroft v. Iqbal, 556 22 U.S. 662, 678 (2009). It also takes judicial notice of the docket and filings in the King County 23 Superior Court foreclosure action—Lea Hill Owners Association v. Andrew Philips Joseph et al., 24 1 No. 22-2-14300-2—and the fact of the parties’ July 2025 correspondence, attached to the 2 declarations of Joseph McIntosh and Jon S. Bogdanov (Dkt. ## 8 & 10). See Logg v. TIG Ins. 3 Co., 2022 WL 3042277, at *3 (W.D. Wash. Aug. 2, 2022).

4 The instant action concerns an apartment at 31412 106th Pl. SE, Apt. L2, Auburn, WA 5 98092 (the Property). Dkt. # 1 at 2. In December 2021, Andrew Philips Joseph obtained a loan 6 from Banner Bank (Banner) to purchase the Property. Id. Joseph’s loan was secured by a Deed 7 of Trust (the DOT). Id. 8 It is undisputed that after the sale of the Property to Joseph, the DOT encumbered the 9 Property. See id.; see also Dkt. # 7 at 2. It is also undisputed that the DOT appointed the 10 Mortgage Electronic Registration Systems, Inc. (MERS) as the nominee for Banner’s loan and 11 included a MERS Rider, “which further describes the relationship between [Banner] and MERS, 12 and which is incorporated into and amends and supplements [the DOT].” Dkt. # 8 at 6; see also 13 Dkt. The MERS Rider provides, among other things, that: (1) MERS is appointed as “the 14 Nominee for [Banner] to exercise the rights, duties and obligations of [Banner] as [Banner] may 15 from time to time direct, including but not limited to appointing a successor trustee, assigning, or 16 releasing, in whole or in part [the DOT]”; (2) Banner is “the beneficiary under [the DOT]”; and 17 (3) “[a]ny notice required by Applicable Law or [the DOT] to be served on [Banner] must be 18 served on MERS as the designated Nominee for [Banner].” Dkt. # 8 at 6–7.1 19 On September 6, 2022, the Lea Hill Owners Association sued Joseph and MERS in King 20 County Superior Court, alleging that Joseph owed it $11,482.70 in assessments, late fees, interest 21 charges, and attorneys’ fees. Dkt. # 1 at 2; see also Lea Hill Owners Association v. Andrew 22 Philips Joseph et al., No. 22-2-14300-2, Dkt. # 1. Banner was not named as a defendant in the 23

1 Neither party has provided the Court with a copy of the DOT. See generally Dkt. The Court 24 thus relies on the purported excerpts of this document in the parties’ filings. 1 action. See generally id. The Lea Hill Owners Association then recorded a lien against the 2 Property in King County under Auditor’s File No. 20220518001179. Dkt. # 1 at 2. Joseph and 3 MERS did not appear in the action, so the court entered an Order of Default and Default

4 Judgment against all defendants in the action. Id. at 3; see also Lea Hill Owners Association v. 5 Andrew Philips Joseph et al., No. 22-2-14300-2, Dkt. # 17. The court then issued an order of 6 sale, and Defendant Vitruvian Design LLC (Vitruvian) purchased the Property via a sheriff’s 7 deed, recorded in King County under Auditor’s File No. 20240521000425. Dkt. # 1 at 3; see 8 also Lea Hill Owners Association v. Andrew Philips Joseph et al., No. 22-2-14300-2, Dkt. ## 18 9 & 26. 10 On July 29, 2024, Vitruvian entered into a Purchase and Sale Agreement with Lorenzo 11 Deon Williams for the sale of the Property. Dkt. # 1 at 3. The transaction was facilitated by 12 Defendants Matthew Toth and Danielle Gore—two individuals who “acted on behalf of

13 Vitruvian” at all relevant times. Id. at 2–3.2 The sale closed on August 25, 2024, with Williams 14 receiving a statutory warranty deed to the Property recorded in King County under Auditor’s File 15 No. 20240828000309. Id. at 3. 16 Before the sale closed, however, Banner filed a motion on the King County Superior 17 Court foreclosure action docket, requesting that the court vacate the Order of Default and Default 18 Judgment against Banner pursuant to CR 60. See id.; see also Lea Hill Owners Association v. 19 Andrew Philips Joseph et al., No. 22-2-14300-2, Dkt. # 33. Vitruvian was served with a copy of 20 the motion on August 21, 2024, and filed an opposition brief on September 13, 2024. See Dkt. 21 ## 1 at 3, 8 at 8; see also Lea Hill Owners Association v. Andrew Philips Joseph et al., No. 22-2- 22

23 2 The Complaint does not specify the relationship between Toth and Gore and Vitruvian. See generally Dkt. # 1. Defendants’ filings, however, suggest that Toth and Gore are both members and 24 agents of Vitruvian. See Dkt. ## 7 at 8, 11 at 6. 1 14300-2, Dkt. ## 42 & 52. According to the Complaint, “[a]t no point prior to delivering the 2 statutory warranty deed to Williams did Defendants . . . notify Williams of Banner Bank’s 3 motion and claims.” Dkt. # 1 at 3.

4 On October 4, 2024, the King County Superior Court denied Banner’s motion. See Dkt. 5 # 8 at 10; see also Lea Hill Owners Association v. Andrew Philips Joseph et al., No. 22-2-14300- 6 2, Dkt. # 57. This order (the October 4 Order) did not discuss the substance of Vitruvian’s or 7 Banner’s arguments; it merely stated that Banner “does not have standing to bring this action 8 under CR 60” because it “is not a party to this action.” See id. The Complaint is silent as to 9 whether there was any communication between Defendants and Williams after the October 4 10 Order was issued. See generally Dkt. # 1. Instead, it skips ahead to December 3, 2024—the day 11 that Banner “sent a Notice of Default to Williams, in which it informed him that Banner Bank 12 had declared Joseph in default on the loan secured by the DOT.” Id. at 3. Banner then recorded

13 a Notice of Trustee’s Sale in King County under Auditor’s File No. 20250121000002, and 14 informed Williams that it was seeking to sell the Property in a trustee’s sale to be held on June 15 20, 2025. Id. at 4. 16 On June 20, 2025, Banner purchased the Property at the trustee’s sale and recorded a 17 trustee’s deed in King County under Auditor’s File No. 20250701001022. Id. Around the same 18 time, Banner also mailed notice to the Property’s occupants indicating that it had “purchased the 19 Property at a trustee’s sale, and claiming it was entitled to possession of the Property on July 10, 20 2025.” Id. At this point, Williams contacted his insurer—Plaintiff Stewart Title—“and informed 21 it of Banner Bank’s threats to sell his property at a foreclosure sale.” Id. Williams’s counsel 22 then sent a letter to Defendants informing them of the situation. See id.; see also Dkt. # 8 at 12–

23 13. 24 This letter to Defendants from Williams’s counsel, dated July 8, 2025, states: 1 On June 20, 2025, Banner Bank sent to Mr. Williams a Notice, purporting to notify Mr. Williams of the sale of his Property by Banner Bank pursuant to a deed of trust 2 recorded against the Property on 12/06/2021, and further directing Mr. Williams to vacate the Property by July 10, 2025. The deed of trust is an encumbrance against 3 the Property. The purported sale and Notice constitute a challenge to Mr. Wiliams’ right to possess and quietly enjoy the Property. Therefore, Vitruvian is in breach of 4 the statutory warranty deed you provided to Mr. Williams, including the covenants of freedom from all encumbrances and the quiet and peaceable possession of such 5 premises.

6 Id. It also states that Williams “tenders to Vitruvian the defense of this matter, and demands that 7 Vitruvian immediately take all necessary steps to protect and preserve [his] right to occupy the 8 Property, including but not limited to retaining legal counsel to respond to the notice, engaging 9 with the issuing party, and bearing all costs associated with resolution of this dispute.” Id. And 10 it requests that Defendants “[p]lease confirm in writing by July 14, 2025, whether [they] accept 11 the tender and what steps [they] intend to take[,]” noting that failure to respond or accept tender 12 may result in Williams taking legal action to enforce his rights under the statutory warranty deed. 13 Id. 14 Two days after this letter was sent, Banner filed suit against Williams in King County 15 Superior Court seeking restitution of the Property. Dkt. # 1 at 4; see also Banner Bank v. 16 Lorenzo Deon Williams et al., No. 25-2 20174-1, Dkt. # 1. The Complaint describes this action 17 as an “unlawful detainer action” and states that a show cause hearing was scheduled for July 29, 18 2025. See id. at 4. It does not provide any other details about the action. See generally id. 19 On July 16, 2025, Vitruvian sent a letter to Plaintiff accepting tender subject to a “full 20 reservation of rights[,]” particularly with respect to the timeliness of the tender. See Dkt. # 8 at 21 14–15. The letter also states that it is Vitruvian’s position that “[t]he underlying foreclosure 22 decree extinguished the deed of trust interest of Banner Bank, which had designated MERS as its 23 nominee” and thus “the trustee’s deed is a nullity.” Id. That same day, Williams’s counsel 24 responded to Vitruvian’s letter, informing Defendants that “facing a pending unlawful detainer 1 action, with a Show Cause hearing scheduled for July 29, 2025, and facing imminent eviction, 2 Williams was forced to negotiate and accept Banner Bank’s demand to pay it $243,886.59 in 3 exchange for Banner Bank dismissing the unlawful detainer action and quitclaiming any interest

4 it may claim in the Property.” Dkt. # 1 at 4–5; see also Dkt. # 10 at 5. Williams’s counsel also 5 formally demanded that Vitruvian agree to make the settlement payment to Banner, and to 6 compensate Williams for the attorneys’ fees and costs incurred during the settlement 7 negotiations. See id. Vitruvian refused, and so Plaintiff, acting on behalf of its insured, was 8 purportedly “forced to defend title to the Property” and “pay Banner Bank $243,886.59 to clear 9 title.” See Dkt. # 1 at 5. 10 Plaintiff3 now brings this action against all Defendants, alleging breach of statutory 11 warranty deed and seeking an award of $243,886.59 plus interest, attorney fees, and costs. See 12 id. at 5–6. 13 III DISCUSSION 14 Defendants move to dismiss Plaintiff’s claims for failure to state a claim under Rule 15 12(b)(6). See generally Dkt. # 7. To survive a Rule 12(b)(6) motion, “a complaint must contain 16 sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” 17 Iqbal, 556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)); see also 18 Fed. R. Civ. P. 8(a) (a complaint must contain “a short and plain statement of the claim showing 19 that the pleader is entitled to relief”). “A claim has facial plausibility when the plaintiff pleads 20 21 22

3 According to the Complaint, Plaintiff is entitled to bring this action because it is “the assignee of 23 its insured claimant, Lorenzo Deon Williams, and is subrogated pursuant to the rights, claims, and causes of action of its insured pursuant to the express terms of the applicable title insurance policy and principles 24 of subrogation.” Dkt. # 1 at 1. 1 factual content that allows the court to draw the reasonable inference that the defendant is liable 2 for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). 3 “When evaluating a Rule 12(b)(6) motion, the district court must accept all material

4 allegations in the complaint as true, and construe them in the light most favorable to the non- 5 moving party.” Chubb Custom Ins. Co. v. Space Sys./Loral, Inc., 710 F.3d 946, 956 (9th Cir. 6 2013). It may also consider “documents incorporated into the complaint by reference, and 7 matters of which a court may take judicial notice.” Tellabs, Inc. v. Makor Issues & Rts., Ltd., 8 551 U.S. 308, 322 (2007). But “[t]hreadbare recitals of the elements of a cause of action, 9 supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678 (citing 10 Twombly, 550 U.S. at 555). And a court can (and should) dismiss a complaint if it lacks a 11 “cognizable legal theory” or “sufficient facts alleged to support a cognizable legal theory.” 12 Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001).

13 Defendants’ primary argument is that the Complaint fails to state a claim for relief 14 because Plaintiff’s claims are premised upon an omission of material fact—that the DOT was 15 “judicially extinguished by a final state superior court foreclosure judgment” before Defendants 16 sold the Property to Williams—and so there was no breach of the warranty against 17 encumbrances. Dkt. # 7 at 7. Defendants also argue that they did not breach the warranty of 18 defense because: (1) Vitruvian “successfully” defended Williams’s title against Banner in the 19 King County Superior Court foreclosure action; (2) Defendants did not fail to defend in the non- 20 judicial foreclosure proceedings because they were unaware that Banner was attempting to 21 foreclose on the Property before July 2025; and (3) despite Williams’s waiver of remedies, 22 Vitruvian still accepted tender and proposed a potential post-sale defense to Williams’s counsel.

23 See id. And they say that Plaintiff’s claims against Toth and Gore are without merit, as the 24 statutory warranty deed was given to Williams by Vitruvian—a LLC—and thus Toth and Gore 1 cannot be held personally responsible for any damages to Plaintiff as a result of Vitruvian’s 2 purported breach. Id. at 8. 3 The Court addresses each argument in turn.

4 A. Did the King County Superior Court foreclosure action “judicially extinguish” the DOT?

5 It is undisputed that a party having an interest in a property, such as Banner, generally 6 must be joined in a foreclosure action for the action to affect their interests. See generally Dkt. 7 ## 7 & 9; see also Valentine v. Portland Timber & Land Holding Co., 15 Wn. App. 124, 128, 8 547 P.2d 912 (1976) (“[J]oinder of any person having an interest in the property is essential in 9 that, if not joined, [their] interest will not be affected by the foreclosure.”); MB Const. Co. v. 10 O’Brien Com. Ctr. Assocs., 63 Wash. App. 151, 158, 816 P.2d 1274 (1991) (“[A] mortgagee’s 11 interest cannot be affected by a lien foreclosure unless the foreclosing party joins the mortgagee 12 as a party to the foreclosure action.”). What is disputed, however, is whether joining MERS— 13 the beneficiary’s nominee—automatically extinguishes the interests of the beneficiary in the 14 property under Washington law. The Court concludes that it does not. 15 Although neither party has provided a case that is directly on point, see generally Dkt., 16 the Court finds that the principles and dicta from Plaintiff’s cited cases are more apposite. As 17 held by the Supreme Court of Washington, MERS is not the automatic “beneficiary” under a 18 deed of trust, nor can it be characterized as the indisputable “holder” of the deed by statute or as 19 the proper beneficiary by way of contract or agency principles. Bain v. Metro. Mortg. Grp., Inc., 20 175 Wash. 2d 83, 99–101, 108, 285 P.3d 34 (2012). Instead, if the deed names MERS as the 21 nominee (and MERS does not hold the promissory note), MERS lacks certain powers, including 22 the power to appoint a trustee to carry out a nonjudicial foreclosure. Id. at 89. Other

23 Washington courts have similarly reiterated that it is the “actual holder of the note,” not MERS, 24 who has the authority to enforce it “regardless of MERS’s identification in the deed of trust.” 1 Ortega v. Nw. Tr. Servs., Inc., 179 Wash. App. 1033, at *7 (2014).4 And while the Court agrees 2 with Defendants that these cases do not conclusively hold that MERS cannot serve as the 3 beneficiary’s nominee for other purposes, such as legal process, Defendants cite no case that 4 conclusively holds that MERS can serve in this role. See generally Dkt. ## 7 & 11.5 Defendants 5 also fail to persuasively explain why the MERS system inherently overrides the general principle 6 that a party having an interest in a property must be joined in a foreclosure action before its 7 interests can be affected. See generally id. 8 The Court thus finds no basis to assume that joinder of MERS in a foreclosure action, 9 where MERS is the beneficiary’s nominee and not the actual noteholder, is legally equivalent to 10 naming the beneficiary in the action. And so the Court cannot conclude that the default 11 judgment in the King County Superior Court foreclosure action conclusively extinguished 12 Banner’s interests in the Property under Washington law. The Court also does not find anything 13 in that docket6 or the excerpted portions of the DOT that would suggest otherwise. And while 14 Defendants attempt to characterize Banner’s initiation of a non-judicial foreclosure of the 15

16 4 See also Larson v. Snohomish Cnty., 20 Wash. App. 2d 243, 278, 499 P.3d 957 (2021) (concluding that the bank “was not barred from foreclosing on the [property] simply because MERS was listed as the original beneficiary under the deed of trust” because “[i]t is undisputed that [the bank] holds 17 the [note] and was entitled to enforce the deed of trust”). 5 Defendants’ reply cites two cases in support of “the appropriateness of joining MERS as 18 nominee to a title action” instead of the beneficiary—Jackson v. Quality Loan Services Corporation, 186 Wash. App. 838, 347 P.3d 487 (2015) and Summerhill Village Homeowners Association v. Roughley, 289 19 P.3d 645 (Wash. Ct. App. 2012). Dkt. # 11 at 2. But neither case holds that a beneficiary’s interest in a property can be extinguished simply by joining MERS, the beneficiary’s nominee, in the action. See 20 Jackson, 186 Wash. App. at 842 (stating that MERS “terminated its agency interest when it assigned its nominee interest in the deed of trust back to its principal, U.S. Bank as trustee”); Summerhill, 289 P.3d at 21 646 (concluding that a deed of trust was extinguished by a foreclosure action where MERS was joined and the loan was “secured by a deed of trust in favor of [MERS]”). 22 6 Defendants’ argument—that the October 4 Order is evidence that the DOT was judicially extinguished, see Dkt. ## 7 at 3, 11 at 4—overlooks the fact that the Order’s denial was based solely on Banner lacking standing to bring the motion because it was not a party to the action; the Order did not 23 adjudicate the merits of the parties arguments nor reach a conclusion about the status of the DOT. See generally Dkt. # 8 at 10; see also Lea Hill Owners Association v. Andrew Philips Joseph et al., No. 22-2- 24 14300-2, Dkt. # 57. 1 Property as an act of “poor judgment or communication[,]” see Dkt. ## 7 at 3, 11 at 4, the Court 2 believes that there may be a simpler explanation: Banner initiated a non-judicial foreclosure 3 action because it believed that its interests were not affected by a foreclosure action to which it

4 was not a party. Accordingly, the Court finds no basis to conclude that the DOT was 5 unequivocally extinguished by the King County Superior Court foreclosure action, and so it 6 rejects Defendants’ request to acknowledge this purportedly missing “fact.”7 7 B. Has Plaintiff plausibly pleaded breach of statutory warranty deed by Vitruvian? 8 It is undisputed that Vitruvian sold the Property to Williams via a statutory warranty 9 deed. See generally Dkt. ## 1 & 7. It is also undisputed that under Washington law, a statutory 10 warranty deed contains certain express covenants, including a warranty against encumbrances, a 11 warranty of quiet enjoyment and possession, and a warranty of defense. Id.; see also RCW 12 64.04.030. What is disputed, however, is whether the Complaint plausibly alleges a breach of 13 any of these covenants. See generally Dkt. ## 7 & 9. The Court concludes that it does. 14 Breach of warranty against encumbrances. A warranty against encumbrances covenants 15 that title is conveyed “free of encumbrances.” Sadr v. Oney, 2025 WL 3551398, at *2 (W.D. 16 Wash. Dec. 11, 2025). In Washington, “‘[e]ncumbrance’ means a right, other than an ownership 17 interest, in real property” and “includes mortgages and other liens on real property.” RCW 18 62A.9A-102(a)(32); see also Cranwell v. Mesec, 77 Wash. App. 90, 109 n.20, 890 P.2d 491 19 (1995) (“An ‘encumbrance’ is a ‘claim, lien, charge, or liability attached to and binding real 20 property[.]”) (citing Black’s Law Dictionary 527 (6th ed. 1990)). And breach occurs when a 21

22 7 For the avoidance of any doubt, the Court clarifies that, although it is rejecting Defendants’ argument that the DOT was automatically extinguished by the foreclosure action, it is not holding that the 23 DOT remained intact at the time the Property was sold to Williams: it is simply holding that, based on the present record, it cannot conclude that Banner’s interests were conclusively extinguished by the default 24 judgment or the October 4 Order. 1 property is conveyed with an undisclosed encumbrance. See Drake v. Burgess, 136 Wash. App. 2 1021, at *9 (2006). 3 Defendants argue that Plaintiff’s claim fails because the DOT was “judicially

4 extinguished” by the King County Superior Court foreclosure action and so it did not encumber 5 the Property at the time of conveyance. Dkt. # 7 at 7. But as explained in part III(A) above, the 6 DOT was not conclusively extinguished by the King County Superior Court foreclosure action. 7 And Defendants offer no argument for why the DOT, if not conclusively extinguished by that 8 action, would not still encumber the Property at the time of sale to Williams. See generally Dkt. 9 ## 7 & 11. The Court thus finds that the Complaint plausibly alleges that Vitruvian breached the 10 warranty against encumbrances, and so it declines to dismiss this claim 11 Breach of the warranty of quiet enjoyment and possession. A warranty of quiet 12 possession and enjoyment “warrants to the grantee, [their] heirs and assigns, the quiet and

13 peaceable possession of the property conveyed.” Haley v. Hume, 10 Wash. App. 2d 484, 494– 14 95, 448 P.3d 803 (2019) (quoting Rowe v. Klein, 2 Wash. App. 2d 326, 335, 409 P.3d 1152 15 (2018)). The warranty is “breached when the buyer of land is actually or constructively evicted 16 by one who holds a paramount title that existed at the time of the conveyance.” Id. 17 Apart from the rejected argument on the extinguishment of the DOT, Defendants make 18 no argument for dismissal of this claim. See generally Dkt. ## 7 & 11. And the facts in the 19 Complaint, when viewed in the light most favorable to Plaintiff, appear to support a claim 20 against Vitruvian for breach of the warranty of quiet enjoyment and possession. See generally 21 Dkt. ## 1 & 9. The Court thus finds no basis to dismiss this claim. 22 Breach of the warranty of defense. A warranty of defense “requires that the grantor

23 provide a good faith defense to title.” Edmonson v. Popchoi, 172 Wash. 2d 272, 283, 256 P.3d 24 1223 (2011). To establish breach, a plaintiff must show that: (1) a third party “assert[ed] a 1 superior right to the property, usually through a lawsuit that results in the grantee’s actual or 2 constructive eviction;” (2) the grantee made an effective tender of defense to the grantor; and (3) 3 the grantor actually refused the tender. Erickson v. Chase, 156 Wash. App. 151, 158–59, 231

4 P.3d 1261 (2010). 5 Defendants first contend that there was no breach because they “successfully” opposed 6 Banner’s attempts to vacate the default judgment in the King County Superior Court foreclosure 7 action, thereby “successfully defending Williams’s title” against Banner. Dkt. # 7 at 7. But as 8 discussed in part III(A) above, Banner was not a party to the King County Superior Court 9 foreclosure action, and so Vitruvian’s opposition did not necessarily defend Williams’s title 10 against Banner. 11 Defendants next contend that they did not breach the warranty of defense because: (1) 12 they were unaware of Banner’s foreclosure attempts until after the foreclosure was completed;

13 and (2) upon learning of the foreclosure, Defendants accepted tender and proposed a post-sale 14 title defense to Williams’s counsel. Id. The Court notes that given the late notice to Defendants, 15 it has serious doubts about whether Plaintiff will be able to prevail on this claim at trial. Yet 16 Plaintiff need not establish that it will prevail to survive a motion to dismiss—it need only plead 17 sufficient facts to support a cognizable theory that Defendants breached the warranty of defense. 18 Here, Plaintiff has met this standard. The Complaint states that: (1) Williams’s counsel tendered 19 defense to Vitruvian before any settlement payment was made to Banner; and (2) Vitruvian did 20 not accept tender on or before July 14, 2025—the deadline provided by Williams’s counsel to 21 accept such tender. See Dkt. # 1 at 4. The Court thus concludes that the Complaint plausibly 22 alleges a claim against Vitruvian for breach of the warranty of defense, and so it declines to

23 dismiss this claim. 24 1 Accordingly, Plaintiff has plausibly stated a claim for relief based on Vitruvian’s alleged 2 breach of three covenants in the statutory warranty deed—the warranty against encumbrances, 3 the warranty of quiet enjoyment and possession, and the warranty of defense.8 The Court thus 4 DENIES Defendants’ Motion (Dkt. # 7) as to Plaintiff’s claims against Vitruvian. 5 C. Has Plaintiff plausibly pleaded breach of statutory warranty deed by Toth and Gore? 6 Because the statutory warranty deed was issued by Vitruvian, not Toth or Gore, the 7 ability for Plaintiff to state a claim for relief against Toth and Gore depends on whether these 8 individuals can be held personally liable for the acts of Vitruvian—an LLC for which they were 9 acting on behalf of. Under Washington law, the general rule is that members and managers of an 10 LLC cannot be held personally liable for the LLC’s debts, obligations, and liabilities. See RCW 11 25.15.126; see also Humphrey Indus., Ltd. v. Clay St. Assocs., LLC, 176 Wash. 2d 662, 674, 295 12 P.3d 231 (2013). A court can, however, “pierce the corporate veil,” i.e., disregard the corporate

13 form and hold the individual defendants liable for any alleged misconduct, in “exceptional” 14 circumstances. See Mika v. JBC Ent. Holdings, Inc., 195 Wash. App. 1052, at *5 (2016). But 15 before doing so, a plaintiff must first convince the court that: (1) “the corporate form was used to 16 violate or evade a duty”; and (2) disregarding the corporate form is necessary “to prevent loss to 17 an innocent party.” Washington Water Jet Workers Ass’n v. Yarbrough, 151 Wash. 2d 470, 503, 18 90 P.3d 42 (2004), as amended (May 27, 2004). This requires more than a showing by plaintiff 19 that they were harmed by a corporate entity and that they may be unable to recover due to the 20 corporate entity’s limited liability structure; it requires a showing of some sort of intentional 21

22 8 To the extent that Defendants are also arguing for dismissal based on failure to plead proximate cause, such an argument is not fully developed in the motion nor is it mentioned in the reply. See Dkt. # 7 23 at 8; see also Dkt. # 11. The Court thus declines to address it. See, e.g., Regan v. Berryhill, 2018 WL 1523993, at *10 n.3 (N.D. Cal. Mar. 28, 2018) (declining to address an argument that was “abandoned” in 24 the reply brief). 1 fraud, misrepresentation, or other misconduct by the entity’s owners to their benefit and to the 2 creditor’s detriment. See Meisel v. M & N Mod. Hydraulic Press Co., 97 Wash. 2d 403, 410–11, 3 645 P.2d 689 (1982).

4 Here, the Complaint pleads no facts that would allow the Court to disregard Vitruvian’s 5 corporate form. Per Plaintiff, the Court should pierce the corporate veil because the Complaint: 6 (1) plausibly alleges that Toth and Gore “acted on behalf of Vitruvian”; (2) “it is plausible that 7 the individual defendants used Vitruvian to violate or evade their seller duties to Williams”; and 8 (3) “the corporate form of Vitruvian must be disregarded to prevent loss to Stewart Title, an 9 innocent party.” Dkt. # 9 at 11–12. But the Complaint pleads no facts that, if believed, would 10 indicate that Toth and Gore engaged in any kind of wrongful or fraudulent corporate activity: the 11 Complaint merely pleads that Toth and Gore conducted business on behalf of an LLC. See 12 generally Dkt. # 1. As that is not a valid reason to pierce the corporate veil, the Court declines to

13 do so. 14 Because the Court finds no basis to disregard Vitruvian’s corporate form, it also finds no 15 basis to hold Toth and Gore personally liable for the acts of Vitruvian. It thus concludes that the 16 Complaint fails to plausibly allege breach of statutory warranty deed against Toth and Gore, and 17 so it GRANTS Defendants’ Motion (Dkt. # 7) as to these claims. 18 IV CONCLUSION 19 For these reasons, the Court GRANTS IN PART and DENIES IN PART Defendants’ 20 Motion to Dismiss (Dkt. # 7). Plaintiff’s claims against Toth and Gore are DISMISSED 21 WITHOUT PREJUDICE. The motion is otherwise denied. 22 // 23

24 1 Dated this 5th day of June, 2026.

3 John H. Chun United States District Judge 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24