United States District Court, W.D. Washington, Seattle
ORDER ON PLAINTIFFS' MOTION TO STRIKE PLEADING,
PLAINTIFFS' MOTION TO DISMISS ADDED PARTIES FOR FAILURE
TO SERVE, AND DEFENDANT'S MOTION FOR RELIEF FROM DEADLINE
FOR JOINING ADDITIONAL PARTIES
S. Lasnik, United States District Judge
matter comes before the Court on plaintiffs'
“Motion to Strike Pleading, ” Dkt. #20,
plaintiffs' “Motion to Dismiss Added Parties for
Failure to Serve, ” Dkt. #27, and defendant's
“Motion for Relief from Deadline for Joining Additional
Parties.” Dkt. #30.
September 25, 2018, plaintiffs BGH Holdings, LLC
(“BGH”), Ginger Atherton and Henry Dean filed a
First Amended Complaint against DL Evans Bank (“the
Bank”). Dkt. #4 (Compl.). According to the complaint,
in September 2017, the Bank registered a default judgment
dated January 12, 2010 in the King County Superior Court that
it had “knowingly obtained against plaintiff Dean in
Idaho without due process of law.” Id. at
¶ 2.4. The Superior Court entered a charging order
requiring BGH to pay to the Bank any monies to which Dean was
entitled through his member owner interests in BGH.
Id. at ¶ 2.5. In August 2018, the Bank also
caused the Superior Court to issue a writ of execution
directing the King County Sheriff to enter the residence of
plaintiffs Dean and Atherton and seize their personal
property. Id. at ¶ 2.6. Plaintiffs bring claims
for violations of their Fourth Amendment and Fourteenth
Amendment rights under 42 U.S.C. § 1983, id. at
¶¶ 4.1-5.15, for conversion, id. at
¶¶ 6.1-6.2, for unjust enrichment, id. at
¶¶ 7.1-7.2, and for declaratory and injunctive
relief regarding the right of execution under the Idaho
Default Judgment. Id. at ¶¶ 8.1-8.2.
Bank filed its Answer, Affirmative Defenses and Counterclaims
(“Answer”) on October 29, 2018. Dkt. #15. The
Bank argues that it obtained a judgment against Dean in 2010
in the amount of $1, 063, 503.16, arising out of a failed
real estate development. Id. at 1. Dean has been
evading the Bank's attempts to collect on the Idaho
Default Judgment and has transferred equities to BGH and
Atherton in an attempt to further hinder, delay and defraud
the Bank. Id. In its Counterclaims, the Bank
requested declaratory judgment regarding the validity of the
Idaho Default Judgment and its enforceability in Washington.
Id. at 11-15. On November 21, 2018, the Court issued
a Minute Order setting a deadline of December 19, 2018 for
the joinder of parties. Dkt. #17.
December 27, 2018, the Bank filed its Amended Answer,
Affirmative Defenses and Counterclaims (“Amended
Answer”). Dkt. #18 (Countercl.). This added claims
against WN3, LLC (“WN3”), Jim Dean
(“Jim”), Frank Dean (“Frank”), and
Does 1-5. Id. at 11. WN3, on information
and belief, is owned and managed by Atherton and was
dissolved on July 1, 2016. Id. Jim and Frank are
individuals residing or believed to be residing in
Washington. Does 1-5 are “other persons, corporate or
limited liability entities, trusts or other persons or
entities to whom [plaintiff] Dean or the other Defendants
have made intermediate or final fraudulent transfers.”
Id at 11-12. The Bank brought six new claims under
Washington's Uniform Voidable Transactions Act
(“UVTA”) against BGH, Atherton, WN3, Jim, Frank,
and Does 1-5, and a request for an injunction to prevent
further fraudulent transfers. Countercl. at ¶¶
filed a motion to strike the Bank's Amended Answer on
February 14, 2019, arguing that the Bank had violated Federal
Rules of Civil Procedure 14(a)(1) and 15(a) and had purported
to add new parties after the deadline for doing so had
expired. Dkt. #20. While this motion was pending, on May 16,
2019, plaintiffs filed a “Motion to Dismiss Added
Parties for Failure to Serve.” Dkt. #27. Plaintiffs
argued that the Bank had failed to serve the additional
parties or file a Praecipe to Issue Summons. Id. at
1. The Bank accordingly filed a “Motion for Relief from
Deadline for Joining Additional Parties” on May 23,
2019. Dkt. #30. It requests relief from the deadline for
joining additional parties and seeks leave to serve the
additional parties. Id. at 2. As all three motions
concern the proposed additional parties, the Court deals with
them in a single order.
district court is given broad discretion in supervising the
pretrial phase of litigation.” Zivkovic v. S.
California Edison Co., 302 F.3d 1080, 1087 (9th Cir.
2002) (quoting Johnson v. Mammoth Recreations, Inc.,
975 F.2d 604, 607 (9th Cir. 1992)). Other than an amendment
as a matter of course, “a party may amend its pleading
only with the opposing party's written consent or the
court's leave. The court should freely give leave when
justice so requires.” Fed.R.Civ.P.
15(a)(2). However, a case scheduling order may be
modified “only for good cause and with the judge's
consent.” Fed.R.Civ.P. 16(b)(4). For the purposes of
Rule 16, “good cause” means that “the
scheduling deadlines cannot be met despite the party's
diligence.” Paz v. City of Aberdeen, No.
C13-5104 RJB, 2013 WL 6163016, at *2 (W.D. Wash. Nov. 25,
2013) (citing Johnson, 975 F.2d at 609). “If the party
seeking the modification was not diligent, the inquiry should
end.” Id. (citing Millenkamp v. Davisco
Foods Intern., Inc., 448 Fed.Appx. 720, 721 (9th Cir.
person who is subject to service of process and whose joinder
will not deprive the court of subject-matter jurisdiction
must be joined as a party if: (A) in that person's
absence, the court cannot accord complete relief among
existing parties; or (B) that person claims an interest
relating to the subject of the action and is so situated that
disposing of the action in the person's absence may: (i)
as a practical matter impair or impede the person's
ability to protect the interest; or (ii) leave an existing
party subject to a substantial risk of incurring double,
multiple, or otherwise inconsistent obligations because of
the interest.” Fed.R.Civ.P. 19.
defendant is not served within 90 days after a complaint is
filed, the Court “must dismiss the action without
prejudice against that defendant or order that service be
made within a specified time. But if the plaintiff shows good
cause for the failure, the court must extend the time for
service for an appropriate period.” Fed.R.Civ.P. 4(m).
“District courts have broad discretion to extend time
for service under Rule 4(m).” Efaw v.
Williams, 473 F.3d 1038, 1041 (9th Cir. 2007). “In
making extension decisions under Rule 4(m) a district court
may consider factors like a statute of limitations bar,
prejudice to the defendant, actual notice of a lawsuit, and
eventual service.” Id. (internal citation and
quotation marks omitted).
Addition of New Parties
Bank alleges in its counterclaims that Dean made several
fraudulent transfers. He acquired stock and stock options in
Hytech Power, Inc. (“Hytech”) during his
employment with the company for the past four years.
Countercl. at ¶¶ 18-19. He transferred
approximately 50, 000 options in Hytech stock to Frank and
Jim for no consideration. Id. at ¶ 20. He
formed BGH on or about February 5, 2015. He transferred
approximately 1.2-1.25 million shares of Hytech stock to BGH
for less than their reasonably equivalent value. Id.
at ¶¶ ...