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Schweickert v. Hunts Point Ventures, Inc.

United States District Court, W.D. Washington

January 5, 2015

JENNIFER P. SCHWEICKERT, Plaintiff,
v.
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 GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

RICARDO S. MARTINEZ, District Judge.

This matter comes before the Court upon Motion for Summary Judgment by Defendant John Du Wors ("Du Wors"). Dkt. # 80. Du Wors moves for summary judgment dismissal of all claims against him pled by Plaintiff Jennifer Schweickert. Having considered the parties' pleadings, moving papers, and exhibits submitted therewith, as well as the remainder of the record, the Court grants Defendant's Motion and dismisses all claims against him with prejudice for the reasons provided herein.

FACTUAL AND PROCEDURAL BACKGROUND

Additional factual details are provided in the Court's previous Order on Motions, dismissing Plaintiff's claims against former Defendants Chad and Elizabeth Rudkin. See Dkt. # 93. The instant action arises out of a $200, 000 loan made by Plaintiff Jennifer Schweickert to Defendant Hunts Point Ventures, Inc. ("HPV"). See Dkt. # 15 ("FAC"). In her operative Amended Complaint, Plaintiff pleads three state law causes of action against Defendant Du Wors based on alleged misrepresentations made by Du Wors to induce Plaintiff's investment in HPV: fraud in the inducement, negligent misrepresentation, and conspiracy. Id. Plaintiff additionally alleges that Du Wors conspired to interfere with her contractual rights by rebooking her loan as an "angel investment." Id. Du Wors is the sole remaining individual defendant in this action, scheduled for trial on January 12, 2015. See Dkt. # 24.

According to Plaintiff, HPV was incorporated on or about May 3, 2010 by various friends of Mark Phillips, a non-party and the now fiance of Plaintiff 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. See United States v. Mark Phillips, 2:10-cr-00269-JCC; Dkt. # 80, Ex. 1 (J. Schweickert Dep.) at 5:22-6:6. 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 for assistance in financing his litigation costs and protecting his intellectual property. FAC at ¶¶ 9, 10. Phillips subsequently licensed his intellectual property ("IP") to the newly formed HPV, which was to raise funds by prosecuting violations of the IP. Id. at ¶ 11. Plaintiff contends that it was her understanding that the initial shares of HPV were divided between Chad Rudkin and non-parties Stephen Schweickert, Doug Lower, and Mark Phillips. Id. [1]

Plaintiff asserts that she was approached in April 2011 by Stephen Schweickert, her father's cousin and the boyfriend of her mother, Joyce Schweickert, to become an investor in HPV. Schweickert Dep., p. 18; Dkt. # 90, Ex. A (S. Schweickert Decl.), ¶¶ 18, 50. According to Stephen Schweickert, Joyce Schweickert had withdrawn her own $200, 000 investment in HPV out of concern that she could be implicated in the federal investigation of Phillips, and Plaintiff's investment was intended as replacement capital. Id. at ¶¶ 48-50. Plaintiff asserts that she desired to speak to Du Wors, the sole attorney involved in HPV who was simultaneously serving as Phillips' personal attorney, in order to vet the company before extending any loan. J. Schweickert Dep. at pp. 22-23; FAC at ¶¶ 11, 16. Plaintiff's misrepresentation claims against Du Wors relate to statements that he made during a telephone call on or about April 22, 2011, pursuant to Plaintiff's request. J. Schweickert Dep. at p. 27. Plaintiff attests that Stephen Schweickert, Du Wors, and herself were the sole participants on the call. Id.

Following the call, Plaintiff decided to proceed with the loan, secured by a written promissory note on behalf of HPV. Dkt. # 80, Ex. 3. The promissory notes provides a schedule for repayment of the loan and further provides 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 p. 2 & Ex. A. 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 attests that at the time she executed the Note, she was unclear about the relationship between HPV and HPVG, the latter of which had been registered on March 1, 2011. FAC, ¶ 19. 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.

Plaintiff filed the instant lawsuit seeking to recover her damages from this alleged breach. 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. On December 4, 2014, the Court filed an Order on Motions, which dismissed all claims against Chad and Elizabeth Rudkin and their marital community. Dkt. # 93. As a consequence, John Du Wors is the sole remaining individual defendant in this case. Du Wors filed the instant Motion for Summary Judgment on October 14, 2014, seeking dismissal of all claims against him asserted by Plaintiff in her First Amended Complaint. Dkt. # 80.[2]

Plaintiff alleges that Du Wors made the following material misrepresentation during the 20-minute April 2011 phone call: (1) that HPVG was formed as a viable entity to grant equity interests to certain individuals as promised in the note (FAC at ¶ 19); (2) that Plaintiff would benefit in profit-sharing between HPV and HPVG as an equity holder in HPVG ( id. at ¶ 20); (3) that Du Wors would use Plaintiff's loan to pursue patent violations ( id. at ¶ 21); (4) that time was of the essence for Plaintiff to make her loan or she would lose the final slot to invest ( id. at ¶ 22); (5) and that Mark Phillips was a shareholder, director, and officer of HPV with at least a 30% interest in the company as well as an economic and voting member ( id. at ¶ 23). In addition, Plaintiff alleges that Du Wors counseled or instructed the Rudkins to book Plaintiff's loan as an "angel investment" to HPV in order to avoid repayment obligations. Id. at ¶ 24. This order considers each claim asserted against Du Wors in turn.

DISCUSSION

A. Summary Judgment Standard

Summary Judgment is proper where "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). The nonmoving party defeats a motion for summary judgment if she "produces enough evidence to create a genuine issue of material fact." Nissan Fire, 969 F.2d at 1103. By contrast, the moving party is entitled to summary judgment where "the nonmoving party has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof" at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

Material facts are those that may affect the outcome of the suit under governing law. Anderson, 477 U.S. at 248. An issue of material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. In ruling on a motion for summary judgment, the court does "not weigh the evidence or determine the truth of the matter but only determine[s] whether there is a genuine issue for trial." Crane v. Conoco, 41 F.3d 547, 549 (internal citations omitted). Inferences drawn from underlying facts are viewed in the light most favorable to the party opposing the motion. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). However, conclusory or speculative testimony is insufficient to raise a genuine issue of fact to defeat summary judgment. Anheuser-Busch, Inc. v. Natural Beverage Distributors, 60 F.3d 337, 345 (9th Cir. 1995).

In ruling on summary judgment, the court is required to consider only "the papers submitted on the motion and such other papers as may be on file and specifically referred to and facts therein set forth in the motion papers." Carmen v. San Francisco Unified Sch. Dist., 237 F.3d 1026, 1031 (9th Cir. 2001). The court is not required to search the entire record for ...


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