United States District Court, W.D. Washington, Seattle
ORDER DENYING MOTION TO DISMISS
JAMES L. ROBART, District Judge.
Before the court is Defendant Marine Systems, Inc.'s ("MSI") motion to dismiss. (Mot. (Dkt. #8).) This action was brought by Plaintiff Aqua-Chem, Inc. ("Aqua-Chem") against MSI under Washington's version of the Uniform Fraudulent Transfer Act ("UFTA"), Chapter 19.40 RCW. Aqua-Chem asks the court to set aside an allegedly fraudulent transfer made to MSI from a third party, Alfa-Tec, Inc. ("Alfa-Tec"). ( See Compl. (Dkt. #1-1).) MSI now moves to dismiss Aqua-Chem's complaint, arguing that it is statutorily barred by Washington's receivership laws, does not state a cognizable claim for fraudulent transfer, and does not meet the required pleading standards. ( See Mot.) The court has examined the submissions of the parties, the complaint, and the relevant law, and, considering itself fully advised, DENIES the motion. None of MSI's arguments warrant dismissal of Aqua-Chem's complaint.
This case involves three different companies doing business in the marine sector. Plaintiff Aqua-Chem develops, engineers, and manufactures technology related to water processing systems, among other things. (Compl. ¶ 2.1.) Defendant MSI provides service and parts for a variety of marine applications. ( Id. ¶ 2.2.) The dispute between these two parties arises largely out of the actions of third-party Alfa-Tec. ( See id. ¶¶ 3.1-3.17.) Alfa-Tec is a Washington Corporation that, before it ceased doing business, provided equipment, parts, and services to a variety of business focusing on the marine sector. ( Id. ¶ 3.4.)
The dispute arose after Alfa-Tec failed to pay $864, 012.21 that it owed to Aqua-Chem. In February 2010, Aqua-Chem agreed to make Alfa-Tec a distributor of its equipment. ( Id. ¶ 3.5.) Alfa-Tec began to purchase parts and equipment from Aqua-Chem, but failed to pay for many of the items it purchased. ( Id. ¶ 3.6.) Evidently, Alfa-Tec was also behind in its payments to another creditor, Seattle Bank. ( Id. ¶ 3.8.) In January 2012, Alfa-Tec received a large payment from the sale of a valuable Aqua-Chem product-a 450 metric ton reverse osmosis water maker and associated spare parts. ( Id. ¶¶ 3.9, 3.13.) However, Alfa-Tec chose to pay Seattle Bank instead of Aqua-Chem. ( Id. ¶ 3.14.) In July 2012, Alfa-Tec ceased doing business without paying Aqua-Chem the amount due. ( Id. ¶ 3.17.)
At that time, Alfa-Tec still had valuable assets. Indeed, around that time, Alfa-Tec was in discussions to sell its operation to MSI for a purchase price of approximately $2.8 million. ( Id. ¶ 3.18.) According to Aqua-Chem, much of that value arose from a distributorship agreement Alfa-Tec had with a Swedish company called Alfa Laval, a "valuable service department, " and trade secrets in the form of customer lists, customer data, history, and goodwill in the form of ongoing business relationships. ( Id. ¶¶ 3.19-21.) Aqua-Chem alleges that these assets made up approximately $2.4 million of the estimated $2.8 million in value Alfa-Tec enjoyed. ( Id. ¶ 3.21.)
The alleged fraud involved these assets. Aqua-Chem alleges that MSI was particularly interested in acquiring the Alfa Laval distributorship. ( Id. ¶ 3.22-23.) However, MSI and Alfa-Tec never signed a contract involving the distributorship or related assets. ( Id. ¶ 3.24.) Instead, in February 2012, MSI met with Alfa Laval, Alfa-Tec general manager Troy Bills, and Alfa-Tec president Kevin Oakley. ( Id. ) It is unclear exactly what occurred at the meeting, but afterwards, all negotiations for MSI to purchase Alfa-Tec ceased. ( Id. ¶ 3.25.) The parties agreed that MSI would become Alfa Laval's new distributor, and the distributorship agreement between Alfa-Tec and Alfa Laval was replaced by a similar agreement between Alfa Laval and MSI. ( Id. ¶ 3.25-3.27.) MSI never paid any purchase price to Alfa-Tec, but nevertheless received Alfa-Tec's trade secrets, customer lists, and customer data. ( Id. ¶¶ 3.25, 3.30.) Not long after, MSI hired both Mr. Bills and Mr. Oakley to work at MSI. ( Id. ¶¶ 3.28-29.) Aqua-Chem alleges that, in effect, MSI acquired all of the most valuable assets from Alfa-Tec without paying for them. ( See id. ¶¶ 3.18-34.) Aqua-Chem also alleges that, as a result, Alfa-Tec avoided paying its debts to Aqua-Chem. ( See id. )
In December 2012, Alfa-Tec filed a Petition for Receivership in King County Superior Court. ( Id. ¶ 3.32.) Several assets were notably absent from the estate, including the distributorship agreement, trade secrets, customer lists, and customer data. ( Id. ¶ 3.33.) Instead, the estate included only $87, 841.00 worth of equipment and inventory, which was described as "all property of the Estate." ( Id. ¶ 3.32.) In March 2013, King County Superior Court approved a sale of all remaining Alfa-Tec assets to MSI for $165, 000.00. ( Id. ¶ 3.34.)
Aqua-Chem brought this complaint in King County Superior Court, alleging violations of UFTA and asking the court to set aside the non-receivership transfers from Alfa-Tec to MSI. ( See Not. of Removal (Dkt. #1).) MSI removed to this court ( id. ), and promptly filed this motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) ( see Mot.).
A. Standard on a Motion to Dismiss
Under Federal Rule of Civil Procedure 12(b)(6), a court should dismiss a complaint if it fails to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). In determining whether to grant a Rule 12(b)(6) motion, the court must accept as true all "well-pleaded factual allegations" in the complaint. Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). Dismissal under Rule 12(b)(6) is appropriate where the complaint lacks sufficient facts to support a cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). To sufficiently state a claim and survive a motion to dismiss, the complaint "does not need detailed factual allegations" but the "[f]actual allegations must be enough to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). The complaint must contain "sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Iqbal, 556 U.S. at 663 (internal quotation marks omitted); see also Telesaurus VPC, LLC v. Power, 623 F.3d 998, 1003 (9th Cir. 2010). The court is not bound to accept as true labels, conclusions, formulaic recitations of the elements, or legal conclusions couched as factual allegations. Twombly, 550 U.S. at 555 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). As the Supreme Court said in Iqbal, a complaint must do more than tender "naked assertions' devoid of further factual enhancement.'" Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557).
MSI has made three separate arguments for Rule 12(b)(6) dismissal, and the court ...