United States District Court, E.D. Washington
ORDER DENYING DEFENDANTS' MOTION TO
SALVADOR MENDOZA, JR. UNITED STATES DISTRICT JUDGE
the Court, without oral argument, is Coastal Carriers, LLC
(Coastal) and John and Nicole Dunard's (collectively,
“Defendants”) Motion to Dismiss Second Amended
Complaint Pursuant to FRCP 12(c), ECF No. 72. Defendants
assert that the Second Amended Complaint should be dismissed
for lack of subject matter jurisdiction, or, alternatively,
that the tort claims should be dismissed under Federal Rule
of Civil Procedure 12(c). Plaintiff Seaside Inland Transport
(Seaside), opposes the motion. Having reviewed the pleadings
and the file in this matter, the Court is fully informed and
denies the motion.
Facts as Alleged in the Complaint
Massingill is the principal of Seaside, a corporation formed
in California and doing business in Wenatchee, Washington.
John and Nicole Dunard are the principals of Coastal, a
Misssouri limited liability company based in Troy, Missouri.
Coastal and Seaside were both involved in the freight
brokerage industry. Freight brokers assist shippers in
locating carriers qualified to haul certain goods. Freight
brokers make a profit by moving the freight for less than the
customer is willing to pay to ship the freight. The
difference creates a profit retained by the freight broker.
2003, Massingill and Coastal entered into an agency
agreement, under which Massingill would broker freight for
Coastal in exchange for commissions equal to 70% of the
profit earned from the brokerage transaction. In 2004,
Massingill incorporated Seaside, and Seaside assumed
Massingill's role as a broker for Coastal. The parties
never signed a new agreement, but Seaside operated consistent
with the terms of the 2003 agreement between Coastal and
Massingill. Massingill relocated to Wenatchee, Washington in
2007, and Seaside continued to perform according to the 2003
Seaside's business relationship with Coastal, Coastal
failed to pay Seaside commissions due. Coastal offered
various justifications for this failure: Coastal determined
that it would retain 40% of the profits on any shipments that
fell below a 15% profit margin. Coastal also required that
each load shipped generate a 5% profit margin. If the load
did not generate the required margin, Coastal would withhold
commissions in the amount needed to reach the 5% profit
margin. Coastal also required Seaside to retain large sums of
commissions in escrow accounts. Under the 2003 agreement,
Coastal could place up to $5, 000 of Seaside's
commissions due into an escrow account to cover potential
losses resulting from Seaside's negligence. Coastal
withheld commissions in excess of $5, 000. On information and
belief, Seaside alleges that Coastal never deposited the
excess funds into an escrow account. Coastal also imposed a
multitude of fees-for example, software access fees, fees for
collection on unpaid accounts, etc.-that were offset from
Seaside's commissions. Later on, Coastal withheld
commissions from Seaside on the basis that Seaside owed
Coastal money due to a shipper's failure to pay for
carrier services brokered by Seaside.
occasions, in 2008 and 2015, Coastal induced Seaside to
expand its business. Seaside leased large office space,
purchased equipment, and hired additional staff on the
understanding that Seaside would continue to work closely
with Coastal. Although Seaside trained new freight brokers
and permitted them to use Seaside's facilities and
equipment, the freight brokers were classified by Coastal as
independent contractors rather than Seaside's subagents.
When a freight broker completed a brokerage transaction,
Coastal paid 30% to the subagent, 25% to Seaside, and
retained 40% of the profit for itself. This arrangement cost
Seaside $280, 486.64 in unpaid commissions. In 2015, the
Washington State Department of Labor and Industries audited
Coastal for misclassifying its Seaside-based subagents as
pleadings in this case thus far involve a web of complaints,
counterclaims, third-party claims, and amendments thereto.
Seaside filed suit against Coastal in Chelan County Superior
Court on March 13, 2017. Coastal removed the action to this
Court on April 19, 2017. Coastal answered the complaint and
asserted counterclaims against Seaside. Coastal also lodged a
third-party complaint against Seaside's principal, Paul
Massingill, and Service Driven Transport, Inc. (Service
Driven). Seaside answered the counterclaims on June 20, 2017,
and Service Driven and Massingill filed their respective
answers on June 29, 2017. Massingill also asserted a
third-party crossclaim against Coastal's principals, John
and Nicole Dunard. ECF No. 19. Seaside amended its complaint
on July 28, 2017, and again on May 14, 2018, ECF No. 70, and
Defendants moved to dismiss, ECF No. 72.
on the pleadings is appropriate when, even if all material
facts in the pleading under attack are true, the moving party
is entitled to judgment as a matter of law. Hal Roach
Studios, Inc. v. Richard Feiner & Co., 896 F.2d
1542, 1550 (9th Cir. 1989). Generally, a court may consider
only allegations made in the complaint and the answer;
extrinsic factual material may not be taken into account.
Powe v. City of Chicago, 664 F.2d 639, 642 (7th Cir.
1981). However, materials properly attached to a complaint as
exhibits may be considered. Amfac Mortg. Corp. v. Ariz.
Mall of Tempe, Inc., 583 F.2d 426, 429 & n.2 (9th
Cir. 1978); Fed.R.Civ.P. 10(c) (“A copy of any written
instrument which is an exhibit to a pleading is a part
thereof for all purposes.”). Rule 12(c) itself and
supporting case law indicate that if matters outside the
pleadings are presented to and not excluded by the court, the
motion for judgment on the pleadings is converted into a Rule
56 summary judgment motion. Hal Roach Studios, Inc.,
896 F.2d at 1550. The fact that such extrinsic material was
submitted to the court does not automatically convert a
motion for judgment on the pleadings into one for summary
judgment. It must appear that the court relied on the
extrinsic evidence in reaching its conclusions before that
conversion occurs. Homart Dev. Co. v. Sigman, 868
F.2d 1556, 1561-62 (11th Cir. 1989).
the parties submitted declarations in support of their
motions and responses. The Court did not rely on these
declarations in forming its decision. The only fact outside
the Second Amended Complaint of which the Court took notice
is the fact that Seaside is not currently registered as a
foreign corporation with the Washington Secretary of State.
Because registration-or lack thereof-of a foreign corporation
with the Washington Secretary of State is an official public
record and its contents are not reasonably in dispute, it is
appropriately the subject of judicial notice under Federal
Rule of Evidence 201(b)(2). See, e.g., Ariz.
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