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North Seattle Health Center Corp. v. Allstate Fire & Casualty Ins. Co.

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

April 11, 2017

NORTH SEATTLE HEALTH CENTER CORPORATION, Plaintiff,
v.
ALLSTATE FIRE & CASUALTY INSURANCE COMPANY, Defendant. ALLSTATE INDEMNITY COMPANY, et al., Third-Party Plaintiffs,
v.
DAEHYUN CHOI, et al., Third-Party Defendants.

          ORDER TO SHOW CAUSE, RESERVING RULING ON MOTION FOR CONTEMPT, AND DENYING MOTION FOR INJUNCTION WITHOUT PREJUDICE

          JAMES L. ROBART United States District Judge

         I. INTRODUCTION

         Before the court are two motions by Defendant Allstate Fire and Casualty Insurance Company and Third-Party Plaintiffs Allstate Indemnity Company, Allstate Insurance Company, and Allstate Property and Casualty Insurance Company (collectively, “Allstate”): (1) Allstate's motion for contempt against Third-Party Defendants Daehyun Choi and Hyun Joo Kwan (Contempt Mot. (Dkt. # 66)), and (2) Allstate's motion for a preliminary injunction (PI Mot. (Dkt. # 69)). No party has responded to either motion. (See generally Dkt.) The court has considered the motions, all submissions related to the motions, the relevant portions of the record, and the applicable law. Being fully advised, [1] the court RESERVES RULING on Allstate's motion for contempt as more fully described below and DENIES Allstate's motion for a preliminary injunction without prejudice to re-filing if appropriate at a later date. The court also ORDERS Mr. Choi and Ms. Kwan to SHOW CAUSE why the court should not hold them in contempt for failure to appear at their October 3, 2016, depositions and SCHEDULES a show cause hearing for Monday, May 1, 2017, at 3:00 p.m.

         II. BACKGROUND

         On October 4, 2014, Plaintiff North Seattle Health Center Corporation (“Health Center”) filed a complaint in state court against Allstate alleging claims for tortious interference with a contractual and business relationship and tortious interference with a business expectancy. (See Compl. (Dkt. # 1-1) at 1.) On October 31, 2014, Allstate removed the lawsuit from Snohomish County Superior Court to this court. (Not. of Rem. (Dkt. # 1).) Allstate answered the complaint and included counterclaims for violation of Washington's Consumer Protection Act (“CPA”), RCW ch. 19.86, common law civil fraud, violation of Washington's Criminal Profiteering Act, RCW ch. 9A.82, unjust enrichment, and piercing the corporate veil. (Ans. (Dkt. # 3-1) ¶¶ 7.1-10.8.) Allstate also brought third-party claims against Mr. Choi, Ms. Kwan, DRDC Corporation, Inc., Bestway Chiropractic Clinic Corporation (“Bestway”), and Good Care Spine Clinic Corporation (“Good Care”) (collectively, “Third-Party Defendants”) for violation of the corporate practice of medicine doctrine, violation of the Professional Services Corporation Act, RCW ch. 18.100, violation of Washington's Anti-Rebate Statute, RCW ch. 19.68, violation of the CPA, common law civil fraud, violation of Washington's Criminal Profiteering Act, unjust enrichment, and piercing the corporate veil. (Id. ¶¶ 11.1-22.8.)

         On August 25 and 27, 2015, Allstate moved for the entry of default against the Health Clinic and Third-Party Defendants as a sanction for discovery violations and failure to abide by the court's prior orders. (See Mot. for Default (Dkt. # 34); Supp. Mot. for Default (Dkt. # 36).) On September 17, 2015, the court held a hearing on Allstate's motions for sanctions and the entry of default, which was based on the Health Clinic's and Third-Party Defendants' failure to obtain counsel as the court ordered and to respond to Allstate's discovery requests. (See 9/17/15 Min. Entry (Dkt. # 38).) Neither the Health Clinic nor Third-Party Defendants responded to Allstate's motions or appeared at the September 17, 2015, hearing. (See id.; see generally Dkt.) At the hearing, the court granted Allstate's motions, dismissed the Health Clinic's claims, and found Plaintiff and Third-Party Defendants in default. (9/17/15 Min. Entry.)

         On December 2, 2015, Allstate filed a motion for default judgment. (Mot. for DJ (Dkt # 41).) The court denied Allstate's motion on January 27, 2016, but without prejudice to re-filing an amended motion. (1/27/16 Order (Dkt. # 46).) Allstate filed an amended motion for default judgment on February 16, 2016 (Am. Mot. for DJ (Dkt. # 49)), which the court granted Allstate's amended motion for default judgment on April 26, 2016 (DJ Order (Dkt. # 64)). The court formally entered judgment the next day dismissing the Health Clinic's claims with prejudice and granting default judgment to Allstate in the amount of $374, 147.96. (Judg. (Dkt. # 65).)

         Allstate sent subpoenas to Mr. Choi and Ms. Kwan for depositions noted on October 3, 2016. (Goltermann Decl. (Dkt. # 67) ¶¶ 3-4, Exs. B, C.) Allstate hoped to obtain information from Mr. Choi and Ms. Kwan that would enable Allstate to collection upon and satisfy the default judgment it had obtained. (Contempt Mot. at 6.) Both Mr. Choi and Ms. Kwan failed to appear at their October 3, 2016, depositions and gave no explanation for their absence. (See Id. ¶¶ 5-6, Exs. D, E; see also PI Mot. at 3-4 (“To date [March 6, 2017], Allstate has received no communications from either Daehyun Choi or Hyun Joo Kwan regarding their missed debtor depositions or attempting to reschedule for a later date.”).)

         Allstate asserts that following the inception of its claims against the Health Center and Third-Party Defendants, Mr. Choi and Ms. Kwan opened two new clinics- Appletree Acupuncture Clinic (“Appletree”) and Green Day Clinic (“Green Day”)- “under the overarching umbrella” of the Health Center. (PI Mot. at 4.) Allstate argues that Mr. Choi and Ms. Kwan opened the new clinics to “shield assets from any judgments that might stem from Allstate's suit.” (Id.)

         In support of this assertion, Allstate submits copies of the articles of incorporation for both Appletree and Green Day. (2d Goltermann Decl. (Dkt. # 70) ¶¶ 7-8, Exs. F, G.) Appletree's articles of incorporation indicate that Appletree was incorporated by “Dae Hyun Choi, ” who is also serving as Appletree's registered agent at 4629 168th SW C4, Lynnwood, Washington. (Id. ¶ 8, Ex. G at 3.) The name “Dae Hyun Choi” is remarkably similar to Third-Party Defendant Daehyun Choi. Further, Mr. Choi's address on the court docket is listed as 4629 168th St., SW, STE B, Lynnwood, Washington. (See Dkt.) Although the suite numbers are distinct, the remainder of the address for Mr. Choi, as the registered agent of Appletree, corresponds to the address for Mr. Choi on the court's docket. (Compare 2d Goltermann Decl. Ex. G, with Dkt.)

         The articles of incorporation for Green Day indicate that Green Day was incorporated by “Sung Jun Jung.” (2d Goltermann Decl. ¶ 7, Ex. F at 3.) Allstate provides no explanation or evidence concerning the relationship, if any, between Sung Jun Jung and the Health Clinic or Third-Party Defendants. However, the address listed for Sung Jun Jung on Green Day's articles of incorporation is nearly identical to the address provided for the Health Center and Third-Party Defendants on the court's docket.[2] (Compare id., with Dkt.)

         Finally, Allstate asserts that it “recently received information suggesting that Dr. Choi and Hyun Joo Kwan are in the process of selling their businesses and moving back to South Korea, likely to escape the payment of the Court ordered judgment to Allstate.” (PI Mot. at 4.) Allstate, however, submits no evidence in support of this assertion. (See generally Dkt.)

         On December 28, 2016, Allstate filed a motion for contempt against Mr. Choi and Ms. Kwan for their failure to appear at their debtors' depositions. (See Contempt Mot.) Allstate asked the court to award its reasonable attorneys' fees and costs in bringing the motion for contempt and the court reporter fees for the depositions at which Mr. Choi and Ms. Kwan failed to appear. (Id. at 6.) Allstate also asks the court to issue bench warrants for both Mr. Choi and Ms. Kwan. (Id.) On March 6, 2017, Allstate filed a motion for a preliminary injunction seeking an order from the court prohibiting Mr. Choi and Ms. Kwan, in either their personal capacities or in their capacities as owners of Third-Party Defendants, from selling any real property, personal property, or businesses. (See PI Mot.) The court now considers Allstate's motions.

          I ...


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