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Calvert v. Berg

Court of Appeals of Washington, Division 1

November 4, 2013

Mark Calvert, as Liquidating Trustee, et al., Appellants,
v.
Frederick Darren Berg et al., Respondents

Appeal from Superior Court King County. Superior Court Cause No: 11-2-41738-7.Sea. Date filed in Superior Court: July 26, 2012. Superior Court Judge Signing: Catherine D. Shaffer.

Frederick Darren Berg, pro se.

Philip A. Talmadge (of Talmadge / Fitzpatrick ); Joel D. Cunningham, John E. Gagliardi, David M. Beninger, and J. Andrew Hoyal II (of Luvera Law Firm ); and Simeon Osborn (of Osborn Machler ) ( Michael J. Avenatti of Eagan Avenatti LLP, of counsel), for appellants.

Kelly P. Corr, Steven W. Fogg, Paul R. Raskin, and Thomas J. Bone (of Corr Cronin Michelson Baumgardner & Preece LLP ), for respondents.

AUTHOR: Leach, C.J. WE CONCUR: Dwyer, J., Schindler, J.

OPINION

Leach, C.J.

[177 Wn.App. 467] ¶ 1 Mark Calvert and over 600 individual investors appeal a trial court's imposition of sanctions for failure to comply with court orders to provide certain information to Moss Adams. [1] The investors claim that the trial

Page 684

court erred when it delayed granting their CR 41(a)(1)(B) motion for voluntary dismissal until after the [177 Wn.App. 468] deadline for compliance with the court orders. Because the court erred when it did not grant the investors' motion promptly, measured by the posture of the case at the time the motion was filed, we reverse.

FACTS

¶ 2 Frederick Darren Berg defrauded hundreds of investors through a Ponzi scheme. Moss Adams, acting as an independent outside auditor, audited some of Berg's investment funds. Mark Calvert, a court-appointed bankruptcy trustee, seeks to recover money for over 600 individual investors allegedly victimized in Berg's Ponzi scheme.

¶ 3 On December 7, 2011, Calvert and the investors sued Moss Adams for fraud; negligent misrepresentation; negligence; and violations of the Consumer Protection Act, chapter 19.86 RCW. Law firms Luvera, Barnett, Brindley, Beninger & Cunningham and Eagan Avenatti LLP represented the investors in this action. [2] On January 17, 2012, Moss Adams filed a CR 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted or, alternatively, under CR 12(e) for a more definite statement.

¶ 4 At the hearing on Moss Adams's motion, the trial court stated, " I do think that's not unreasonable to ask you to tell them which funds, which plaintiffs, what periods of time." The investors' counsel told the court, " [I]f we can get past this pleading stage, we'll stipulate to provide this information to counsel." At the end of the hearing, the court explained,

I also think that the defendants are, most certainly, entitled to a lot more information than they're getting from this [177 Wn.App. 469] complaint right now. And I really want them to get that information now, not down the line with formal discovery. I agree that you may well be moving forward with formal discovery as to Moss Adams, I don't know. But I think now is [a] good time for everybody to figure out who's claiming against Moss Adams and based on what.
I will accept the plaintiff's offer, provided that it's done within the next 30 days. Okay? To tell the defendants, specifically, as to your 600 plaintiffs: Who invested in which fund, when they invested, how much they invested, what audit, if any, by Moss Adams they looked at or relied upon? And when I say, " what audit," I mean you ...

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