United States District Court, W.D. Washington, Seattle
ESTATE OF FRANK B. LYNOTT, by and through BRUCE R. MOEN, personal representative, Plaintiff,
LAURIE A. LUCKOVICH, et al., Defendants.
ORDER GRANTING IN PART DEFENDANTS' MOTION FOR
S. LASNIK UNITED STATES DISTRICT JUDGE
matter comes before the Court on “Defendants Daryl
Trevor Reiche and Debra K. Campbell's Motion for Summary
Judgment of Dismissal.” Dkt. # 273. Plaintiff alleges
that defendants Reiche and Luckovich engaged in a scheme to
defraud Frank Lynott, now deceased, by using his money to
purchase and remodel eight properties without compensation
and that defendant Campbell breached her duties to Frank
Lynott as the Designated Broker and/or agent on the
transactions. Reiche and Campbell seek summary judgment on
all of the claims against them.
judgment is appropriate when, viewing the facts in the light
most favorable to the nonmoving party, there is no genuine
issue of material fact that would preclude the entry of
judgment as a matter of law. The party seeking summary
dismissal of the case “bears the initial responsibility
of informing the district court of the basis for its
motion” (Celotex Corp. v. Catrett, 477 U.S.
317, 323 (1986)) and “citing to particular parts of
materials in the record” that show the absence of a
genuine issue of material fact (Fed. R. Civ. P. 56(c)). Once
the moving party has satisfied its burden, it is entitled to
summary judgment if the non-moving party fails to designate
“specific facts showing that there is a genuine issue
for trial.” Celotex Corp., 477 U.S. at 324.
The Court will “view the evidence in the light most
favorable to the nonmoving party . . . and draw all
reasonable inferences in that party's favor.”
Krechman v. County of Riverside, 723 F.3d 1104, 1109
(9th Cir. 2013). Summary judgment should be granted where the
nonmoving party fails to offer evidence from which a
reasonable jury could return a verdict in its favor.
FreecycleSunnyvale v. Freecycle Network, 626 F.3d
509, 514 (9th Cir. 2010).
reviewed the memoranda, declarations, and exhibits submitted
by the parties,  the Court finds as follows:
purposes of this motion, the Court will assume that defendant
Luckovich was engaged in a multi-year scheme to separate
Frank Lynott from his money by convincing him to invest in
properties that Ms. Luckovich would remodel and sell at a
profit. Instead, Ms. Luckovich made only limited efforts to
renovate or remodel the properties, used the rest of the
money for her own personal uses, and sold the properties for
Daryl Trevor Reiche
Reiche acknowledges that he oversaw the remodel, renovation,
and landscaping activities at a number of the properties that
Mr. Lynott and Ms. Luckovich purchased together. He denies
any wrongdoing, however, and demands that plaintiff come
forward with admissible facts giving rise to an inference of
fraud on his part. Plaintiff has failed to do so.
argues that Mr. Reiche must have been involved in defendant
Luckovich's assumed scheme based on the following facts:
(1) Mr. Reiche and Ms. Luckovich were (and potentially are)
in an intimate relationship, (2) Mr. Reiche renovated many of
the properties Ms. Luckovich purchased with Mr. Lynott, (3)
Ms. Luckovich gave Mr. Reiche money so that he could pay the
employees, subcontractors, and vendors who worked on the
projects, and (4) Mr. Reiche was extremely knowledgeable
about the work performed and expenses incurred at each
project. None of the things of which Mr. Reiche is
accused are illegal or unlawful, however, and they are all
entirely consistent with Mr. Reiche providing project
management services for purchasers who were flipping houses.
Plaintiff offers no evidence that Mr. Reiche knew, must have
known, or even should have known that Ms. Luckovich was
allegedly swindling Mr. Lynott on the projects. If Ms.
Luckovich were engaged in a Ponzi scheme or were siphoning
off funds for personal use, such malfeasance involved
financing and record keeping -- activities in which Mr.
Reiche was not involved -- and would not be readily apparent
to the person managing the actual remodels.
addition to the innocuous facts set forth above, plaintiffs
rely heavily on the expert opinions of Patrick C. Jerns and
Linda L. Saunders to show that Mr. Reiche was a knowing
participant in Ms. Luckovich's assumed fraud.
Plaintiff's reliance on these experts is, for the most
part, misplaced and unavailing. An expert can opine only
within his or her area of expertise. Thus, the only
admissible opinions offered by Mr. Jerns have to do with the
professional obligations and standards applicable to real
estate brokers, managing brokers, and real estate companies.
Dkt. # 290 at 19. The only admissible opinions offered by Ms.
Saunders involve tracking the flow of money related to Mr.
Lynott's financial investments and/or comparing Ms.
Luckovich's accounting methods with generally applicable
expert has offered an opinion within their area of expertise
regarding Mr. Reiche. Instead, the experts attempt to
establish underlying facts by fiat. Mr. Jerns declares, for
example, that Mr. Reiche is not a licensed contractor, but
provides no evidence of that fact or any indication that he
did an appropriate records search. Dkt. # 290 at 27. Ms.
Saunders states that Mr. Reiche purchased or was given a
truck using money Mr. Lynott invested on March 16, 2012, but
makes no effort to explain how an October 2011 vehicle title
registered to one of Ms. Luckovich's companies supports
such a statement. Dkt. # 291 at 3 and 42. The experts also
draw inferences, make credibility findings, and offer
opinions on legal liability. Their reports, if accepted,
would displace both the fact finder and the Court, offering
opinions that require no expertise at all or, at other
points, offering opinions for which the necessary expertise
is entirely lacking. Ms. Saunders, for example, opines that
Ms. Luckovich and Mr. Reiche will likely be “jointly
and severally liable for all intentional and unintentional
wrongful acts taken by either of them.” Dkt. # 291 at
17. Mr. Jerns concludes that the scope of Ms. Luckovich's
alleged fraud shows that it could have existed only with the
knowing participation of Mr. Reiche. Dkt. # 290 at 32. Shorn
of the inadmissible conjecture and supposition contained in
the reports, the actual facts regarding Mr. Reiche cannot
reasonably support a finding of liability in this action.
Debra K. Campbell
Campbell is the “Designated Broker” for defendant
Investors Choice Real Estate, LLC, one of Ms. Luckovich's
companies. She was also the real estate agent or, along with
Ms. Luckovich, a co-agent on five of the listings for
properties in which Mr. Lynott had invested. Plaintiff
maintains that Ms. Campbell negligently supervised Ms.
Luckovich, which allowed the alleged scheme to continue for
an extended period of time and increased the resulting
damage. See Dkt. # 290 at 23. It is not
entirely clear what duty Ms. Campbell is accused of having
violated, however. In its complaint, plaintiff cites to whole
chapters of the Revised Code of Washington. The legal
argument portion of plaintiff's response memorandum
merely challenges Ms. Campbell's factual contentions
regarding the number of transactions in which she was
involved and causation. Dkt. # 280 at 21-22. No. statutory or
regulatory duties are identified. The fact section of the
memorandum cites a number of statutory provisions, but relies
on Mr. Jerns' expert report to explain how those
provisions were violated in this case. For his part, Mr.
Jerns identifies a long list of statutes and regulations that
govern real estate brokers in Washington. Because he
specifically asserts that Ms. Campbell breached duties owed
under RCW 18.85.285 and RCW 18.86.030, the Court will analyze
those provisions. Dkt. # 290 at 28.
18.85.285(1) requires real estate brokers to submit complete
copies of their transactions to their firms and places the
burden on the firm's Designated Broker to keep adequate
records of those transactions including “an itemization
of receipts and disbursements with each transaction.” A
common sense reading of the statute suggests that the
Designated Broker's duty to maintain the records arises
when the broker submits them to the firm. See RCW
18.85.275(2). Plaintiff has not shown that Ms. Campbell
destroyed or otherwise failed to maintain records submitted
by Ms. Luckovich in connection with the properties purchased
and sold for Mr. Lynott. Rather, plaintiff argues that Ms.
Campbell should have insisted on the submission of additional
records and/or should have questioned the way certain
investments were recorded. No. breach of Ms. Campbell's
Designated Broker duties under RCW 18.85.285(1) has been
18.85.285(1) and RCW 18.86.030 impose duties on the real
estate brokers, defined as anyone acting on behalf of a real
estate firm that offers or performs real estate brokerage
services. Those duties, which undoubtedly apply to Ms.
Campbell, include the duty to exercise reasonable care, the
duty to deal honestly and in good faith with all parties, the
duty to disclose all material facts known by the broker that
would not be apparent to or readily discernable by a party,
the duty to account for all money and property received, and
the duty to submit complete copies of their transaction files
to their firms. Plaintiff suggests that, because Ms. Campbell
was identified as a co-agent on listings for five of the
subject properties, Ms. Luckovich's alleged breaches of
these duties should be imputed to Ms. Campbell. Plaintiff
makes no effort to show that Ms. Campbell had any actual
involvement with these properties beyond being identified on
the listing, that she dealt with Mr. Lynott or the purchasers
at all, much less dishonestly, or that she had material facts
and/or transaction files but failed to disclose them.
Plaintiff's claim seems to be that Ms. Campbell breached
her duty to exercise reasonable care by not scrutinizing Ms.
Luckovich's activities more closely. As written, the
duties imposed by these statutes are personal to the
individual real estate ...