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Elbridge and Debra Stuart Family Foundation v. Korey

United States District Court, W.D. Washington, Seattle

January 27, 2017

CAMP KOREY, Defendant.


          Honorable Richard A. Jones United States District Judge.


         This matter comes before the Court on Defendant Camp Korey's Motion to Dismiss. Dkt. # 7. For the reasons that follow, the Court DENIES Camp Korey's motion.


         The Court recites the facts as Plaintiff Elbridge and Debra Stuart Family Foundation (the “Stuart Foundation”) alleges them in its complaint, suggesting no opinion as to whether those allegations will prove true. The Court cites the numbered paragraphs of the complaint using paragraph (¶) symbols.

         In 2009, Elbridge H. Stuart III, whose great-grandfather founded the Carnation Milk Company, established the Stuart Foundation with inheritance funds after his father passed away. ¶¶ 6, 10. Stuart was on the board of directors at Camp Korey, a non-profit organization that operates camps for seriously-ill children in Washington. ¶ 7. At the time, Camp Korey owned a parcel of land in Carnation, Washington upon which the Carnation Milk Company originally had been located (“Carnation Farms”). ¶ 8. Camp Korey, however, was in financial distress. ¶ 9. As a solution, the Stuart Foundation formed Carnation Farms, LLC, which purchased Carnation Farms and then leased it back to Camp Korey. ¶¶ 11-12. The lease was for a period of up to thirty years and the annual rent was $1.00. ¶ 12.

         In 2012, Ann Stuart Lucas, Stuart's aunt and fellow board member, informed Camp Korey that she intended to create an endowment called the Elbridge and Evelyn Stuart Endowment for Camp Korey (the “Stuart Endowment” or “endowment agreement”). ¶ 13. Her first contribution to the endowment was $30, 000. Id. A month later, Lucas notified Camp Korey that it would not receive disbursements from the endowment until the corpus reached $1, 000, 000 and that “should Camp Korey at Carnation Farms cease to exist, I require that the endowment corpus be given to the [Stuart Foundation].” ¶ 14. Over the following years, Lucas donated or raised nearly $1, 000, 000 for the Stuart Endowment. ¶ 16. By accepting and depositing these donations into a bank account designated for the endowment, Camp Korey accepted and agreed to the two restrictions imposed by Lucas on the endowment. ¶ 17. When raising money, Lucas relied on Camp Korey's acceptance of these restrictions by discussing them with donors, most of whom were members of the Stuart family who intended for their donations to benefit charitable activities at Carnation Farms. ¶ 18.

         In 2016, Stuart resigned from the board of Camp Korey. ¶ 20. Days later, Carnation Farms, LLC notified Camp Korey that it was in default of several lease provisions. ¶ 21. Following a second notice of default, Camp Korey agreed to vacate Carnation Farms no later than September 30, 2016. ¶ 22.

         As a consequence of Camp Korey's departure from Carnation Farms, the Stuart Foundation demanded that Camp Korey forfeit the Stuart Endowment in accordance with Lucas' restrictions. ¶ 23. Camp Korey refused. Id.

         On August 29, 2016, the Stuart Foundation filed the instant complaint alleging claims for breach of contract, ¶¶ 24-27, and declaratory relief, ¶¶ 28-29. Camp Korey now moves to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6). Dkt. # 7. The Stuart Foundation opposes the motion. Dkt. # 13.


         Federal Rule of Civil Procedure 12(b)(6) permits the Court to dismiss a complaint for failure to state a claim. The rule requires the Court to assume the truth of the complaint's factual allegations and credit all reasonable inferences arising from those allegations. Sanders v. Brown, 504 F.3d 903, 910 (9th Cir. 2007). The Court “need not accept as true conclusory allegations that are contradicted by documents referred to in the complaint.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). The plaintiff must point to factual allegations that “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 568 (2007).

         In deciding whether a complaint states a claim for relief, the Court may consider “documents incorporated into the complaint by reference, and matters of which a court may take judicial notice.” Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007). A document incorporated by reference may be relied upon “if the plaintiff refers extensively to the document or the document forms the basis of the plaintiff's claim.” United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003). “Documents not physically attached to the complaint may be considered only if (1) their authenticity is not contested and (2) the complaint necessarily relies on them.” F.D.I.C. v. Clementz, No. C13-737-MJP, 2013 WL 6212166, at *1 (W.D. Wash. Nov. 27, 2013) (citing Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994), overruled on other grounds by Galbraith v. Cty. of Santa Clara, 307 F.3d 1119 (9th Cir. 2002)).

         IV. ...

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