United States District Court, W.D. Washington
JENNIFER P. SCHWEICKERT, Plaintiff,
HUNTS POINT VENTURES, INC.; HUNTS POINT VENTURE GROUP, LLC; CHAD and ELIZABETH RUDKIN, and their marital community comprised thereof; JOHN DU WORS; and DOES 1-4, Defendants.
ORDER ON MOTIONS
RICARDO S. MARTINEZ, District Judge.
This matter comes before the Court upon Motion for Judgment on the Pleadings by Defendants Chad and Elizabeth Rudkin (Dkt. #27), Motion for Leave to Amend Complaint by Plaintiff (Dkt. #29), as well as numerous discovery-related motions by the parties (Dkt. ## 30, 54, 60, 61, 63, 67). Also pending in this case is a motion for summary judgment by Defendant John Du Wors, as well as related motions, which shall be the subject of a separate order. Having considered the pleadings, the parties' moving papers and opposition thereto, and the remainder of the record, the Court grants Defendants' Motion for Judgment on the Pleadings and denies Plaintiff's request for leave to amend. The Court further rules on the various discovery orders as provided herein.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff Jennifer Schweickert filed this lawsuit on March 15, 2013 under this Court's diversity jurisdiction, seeking monetary damages and declaratory judgment for various state law claims arising out of a loan made by Plaintiff to Defendant Hunt Point Ventures, Inc. ("HPV"). HPV was incorporated on or about May 3, 2010 by various friends of Mark Phillips, a non-party who was convicted in a separate criminal proceeding on counts of wire fraud, mail fraud, and money laundering arising out of theft from his former company MOD Systems, Inc. As Phillips became involved in civil litigation with Mod Systems, Inc. in 2009 and 2010, as well as the subject of criminal investigation, he contacted friends including Defendants Chad and Elizabeth Rudkins (the "Rudkins") for assistance in financing his litigation costs and protecting his intellectual property. Dkt. #15, First Amended Complaint ("FAC), ¶¶ 9, 10. Phillips subsequently licensed his intellectual property ("IP") to HPV, which was to raise funds by prosecuting violations of the IP. Id. at ¶ 11. Plaintiff believes that the initial shares of HPV were divided between Chad Rudkin as well as non-parties Stephen Schweickert, Doug Lower, and Mark Phillips. Id.
Desiring to help Phillips and further efforts to monetize his IP, Plaintiff allegedly made arrangements in April 2011 with then HPV C.E.O. Stephen Schweickert to loan $200, 000 to HPV. Id. at p. 3 & ¶ 15. Plaintiff alleges that HPV's counsel, Defendant John Du Wors, who was also simultaneously serving as personal attorney for Phillips, made deliberate misrepresentations to her in order to induce her investment. Id. at ¶¶ 16-18. She asserts that Du Wors prepared the promissory note on behalf of HPV, which stated that "the Lender has been induced to enter this agreement with the mutual understanding and stipulation that an 8% fully paid passive membership participation in that venture entity known as Hunts Point Venture Group, LLC ["HPVG"] shall be granted." Id. at ¶ 19. Plaintiff further asserts that she was told by Stephen Schweickert that her loan would allow HPV to form HPVG and that she would be given an "8% passive membership" without regard to HPV's obligation on the note. Id. at ¶ 26. Plaintiff wired $200, 000 to an HPV account on April 26, 2011 upon receiving a signed copy of the Promissory Note and Joint Participation Agreement from HPV and HPVG. Id. at ¶ 27; see also id. at Ex. A.
Plaintiff asserts that she has not received any scheduled payments from HPV on her note or any written documentation concerning her ownership of shares in HPVG. Id. at pp. 12, 13. She filed the instant lawsuit seeking to recover her damages from this alleged breach. Plaintiff's First Amended Complaint asserts four causes of action: (1) breach of contract against Defendants HPV and the Rudkins, (2) fraud in the inducement against Defendant John Du Wors, (3) conspiracy against Defendants Rudkins and Du Wors, and (4) negligent misrepresentation against Defendant Du Wors. The Court entered a Scheduling Order on September 13, 2013, setting a deadline for joinder of parties of October 11, 2013. Dkt. #24. On November 25, 2013, this action was automatically stayed for 60 days upon the appointment of a general receiver on behalf of Defendant HPV in Case No. 13-2-40014-6 (King Co. Sup.Ct.). See Dkt. #26. Plaintiff has since filed a proof of claim in the receivership action seeking to recover principal and interest on her loan directly from HPV. See Dkt. #28, Ex. 1.
Upon lifting of the automatic stay, the Rudkins filed the instant Motion for Judgment on the Pleadings as to all claims asserted against them or, in the alternative, for summary judgment to the extent that Plaintiff seeks to assert derivative claims as a shareholder of HPV. See Dkt. #27. Plaintiff opposes judgment on the pleadings and also seeks the Court's permission to file a Second Amended Complaint adding Elizabeth Rudkin's mother, Sandra Hoover, as a named Defendant, adding new factual allegations with respect to Hoover and the Rudkins, adding new claims against the Rudkins. See Dkt. ##28, 29. In addition, Plaintiff moves the Court to compel Defendants HPV, HPVG, and the Rudkins to respond to discovery requests. Dkt. #30.
The remaining discovery motions relate to Defendant Du Wors. Du Wors moves the Court to compel Plaintiff to respond to his interrogatories and requests for production (Dkt. # 54), while Plaintiff moves the Court to compel Du Wors to respond to her second set of discovery requests served on June 11, 2014 (Dkt. #60). Prior to the September 15, 2014 deadline for discovery, Du Wors filed a motion seeking to complete two discovery events beyond this deadline: the depositions of Stephen and Joyce Schweickert and obtainment of documents pursuant to third-party subpoenas on email service providers. Dkt. #61. Du Wors proceeded to serve Subpoenas Duces Tecum on Apple, Inc. and Google, Inc., which Plaintiff as well as interested non-parties Joyce Schweickert and her attorney Jeffrey Keane move to quash. See Dkt. ##63, 67. Du Wors has since filed a motion for summary judgment, which shall be the subject of a forthcoming order. The instant Order considers all other pending motions in turn.
I. Motion for Judgment on the Pleadings (Dkt. #27)
A. Legal Standard
"After the pleadings are closed -but early enough not to delay trial-a party may move for judgment on the pleadings." Fed.R.Civ.P. 12(c). A Rule 12(c) motion is functionally equivalent to a Rule 12(b)(6) motion. See Dworkin v. Hustler Magazine Inc., 867 F.2d 1188, 1192 (9th Cir. 1989). The principal difference is one of timing: in the former an answer has been filed while in the latter, the motion is filed in lieu of an answer. See id.; Cascade Yarns, Inc. v. Knitting Fever, Inc., 2012 WL 2565067, *2 n. 2 (W.D. Wash. 2012). Accordingly, a motion for judgment on the pleadings is analyzed under the standard applicable to a motion to dismiss for failure to state a claim upon which relief could be granted. Id.
Judgment on the pleadings is appropriate if, assuming the truth of all material facts pled in the complaint, the moving party clearly establishes that it is entitled to judgment as a matter of law. Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1550 (9th Cir. 1989); Cascade Yarns, 2012 WL 2565067 at *2. While the court must accept all alleged facts as true, it is not required to accept as true a "legal conclusion couched as a factual allegation." Aschroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In general, the court may not look beyond the pleadings to resolve an issue without transforming the motion into one for summary judgment under Rule 56. Hal Roach, 896 F.2d at 1550. The court may, however, take into account matters to which it can take judicial notice without converting a Rule 12(c) motion. Heliotrope Gen., Inc. v. Ford Motor Co., 189 F.3d 971, 981 (9th Cir. 1999). The court may also consider material properly submitted as part of the complaint, such as, in this instance, the Promissory Note and Joint Participation Agreement (FAC at Ex. 1). See Hal Roach, 89 F.2d at 1555 n. 19. A defendant's Rule 12(c) motion on the pleadings may consequently be granted if, after assessing the complaint and any matters for which judicial notice is proper, it appears "beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Enron Oil Trading & Transp. Co. v. Walbrook Ins. Co., Ltd., 132 F.3d 526, 529 (9th Cir. 1997) (internal citations and quotations omitted).
Heightened pleading standards apply where a plaintiff states a claim for fraud. Rule 9(b) requires that the plaintiff "state with particularity the circumstances constituting fraud." Fed.R.Civ.P. 9(b). "Rule 9(b) demands that the circumstances constituting the alleged fraud be specific enough to give defendants notice of the particular misconduct so that they can defend against the charge and not just deny that they have done anything wrong." Sanfrod v. MemberWorks, Inc., 624 F.3d 550, 558 (9th Cir. 2010) (quoting Kearns v. Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009) (internal alterations omitted). To avoid dismissal for failing to comply with Rule 9(b), the complaint must state with particularity "the time, place, and specific content of the false representations as well as the identities of the parties to the misrepresentation." Id. (internal quotation and citation omitted); see also Kearns, 567 F.3d at 1124 ("Averments of fraud must be accompanied by the who, what, when, where, and how of the misconduct alleged.") (internal quotations and citations omitted).
As an initial matter, the Court denies Plaintiff's request to take judicial notice of "the facts noted" in her opposition brief. See Dkt. #31, p. 7. Plaintiff asks that the Court take notice of a declaration by Stephen Schweickert filed in a state court case initiated by Mark Phillips, as well as the complaints filed by Plaintiff in two separate cases in state court against the Rudkins and HPV, respectively. See id.; Dkt. #32, Exs. A-C. Matters that are properly the subject of judicial notice include proceedings in courts within and without the federal system that are directly related to issues at hand. See U.S. ex rel. Robinson Rancheria Citizens Council v. Borneo, Inc., 971 F.2d 244, 248 (9th Cir. 1992). While a court may take judicial notice of these matters of public record, it "may not take judicial notice of a fact that is subject to reasonable dispute.'" Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2011) (quoting Fed.R.Evid. 201(b)). Thus, the Court may take notice of the filing of a declaration and complaints in these three state court actions but, contrary to Plaintiff's request, it may not accept the truth of the contested factual assertions in each of these documents. See NuCal Foods, Inc. v. Quality Egg LLC, 887 F.Supp.2d 977, 984-85 (E.D. Cal. 2012) ("While the court cannot accept the veracity of the representations made in the documents, it may properly take judicial notice of the existence of those documents."). Plaintiff has also attached and relied on, for her opposition, several extensive exhibits for which no judicial notice has been requested, including HPVG's 2011 annual reports, corporate notes, and a billing statement by Du Wors. See Dkt. #32, Exs. D-G. As no judicial notice of these materials is requested and as they are outside of and not relied on in the pleadings, the Court disregards these exhibits as well as Plaintiff's reliance on them in her response.
On the merits, the Court agrees with the Rudkins that each of Plaintiff's claims asserted against them in her First Amended Complaint fail as a matter of law and is therefore subject to a judgment of dismissal under Rule 12(c). First, Plaintiff's breach of contract claim against the Rudkins fails because no contract is alleged to exist between Plaintiff and the Rudkins. "A breach of contract is actionable only if the contract imposes a duty, the duty is breached, and the breach proximately caused damage to the claimant." Nw. Indep. Forest Mfrs. v. Dep't of Labor & Indus., 78 Wn.App. 707, 712, 899 P.2d 6 (1995) (internal citation omitted). The sole contract alleged in the FAC was entered into between Plaintiff and HPV. The Promissory Note and Joint Participation Agreement that Plaintiff asserts manifests the breached contract was signed by Stephen Schweickert on behalf of Borrower HPV. There are no further parties to this contract beyond Borrower (HPV), ...