United States District Court, W.D. Washington, Seattle
ORDER GRANTING DEFENDANT'S MOTION TO
Honorable Richard A. Jones United States District Judge.
Honorable Richard A. Jones This matter comes before the Court
on Defendant Leonid Gontmakher's Motion to Dismiss (Dkt.
# 6). Defendants Cannex Capital Holdings, Inc. and Northwest
Cannabis Solutions d/b/a NWCS425.com join the Motion. Dkt. #
14. Having considered the submissions of the parties, the
relevant portions of the record, and the applicable law, the
Court finds that oral argument is unnecessary. For the
reasons stated below, Defendant's Motion is GRANTED.
following is taken from Plaintiff's Complaint (Dkt. # 1),
which is assumed to be true for the purposes of this motion
to dismiss. Sanders v. Brown, 504 F.3d 903,
910 (9th Cir. 2007). Plaintiff Evan James Polk (“Mr.
Polk” or “Plaintiff”) and Defendant Leonid
Gontmakher (“Mr. Gontmakher” or
“Defendant”) are in the cannabis business. In
late 2012 or early 2013, Mr. Gontmakher approached Mr. Polk
about starting a cannabis growing and processing business in
Washington. Dkt. # 1 at ¶ 3.2. At the time, Washington
voters had just passed Initiative 502 regulating the
production, distribution, and sale of marijuana and removing
related state criminal and civil penalties-codified in the
Washington Uniform Controlled Substances Act as RCW §
RCW § 69.50, individuals or entities intending to
produce, process, or distribute cannabis must obtain either a
producer/processor license or a retail license from the
Liquor and Cannabis Board (“LCB”). RCW §
69.50.325. There are, of course, restrictions to who can
obtain these licenses. Individuals with a criminal history
are generally restricted from obtaining a license if they
have 8 or more points under the LCB's point system. WAC
314-55-040. Felony convictions are assigned 12 points, while
misdemeanors are assigned 4 or 5 points. WAC 314-55-040(1).
During the application process, prior state or federal
convictions may be considered for mitigation on an individual
basis. WAC 314-55-040(3)(b).
Polk and Mr. Gontmakher initially launched their growing
operation from a relative's house. Dkt. # 1 at ¶
3.4. After the new cannabis regulations were promulgated,
they decided to purchase a producer/processor license. Dkt. #
1 at ¶ 3.3. But they soon ran into a problem. Prior to
starting the business with Mr. Gontmakher, Mr. Polk pled
guilty to possession of marijuana with intent to dispense in
Virginia (a felony), and possession of drugs in Nevada (a
misdemeanor). Dkt. # 7, Exs. A-C. As such, he was prohibited
from obtaining a producer or processor license under WAC
314-55-040(3)(b), absent mitigation of his criminal
convictions. After Mr. Polk and Mr. Gontmakher realized that
Mr. Polk could not be listed as an owner of their licensed
business, Northwest Cannabis Solutions (“NWCS”),
they agreed to move forward with the business anyway, orally
agreeing to be “equal partners” in their cannabis
growing venture. Id. at ¶ 3.5. They ultimately
agreed that Mr. Polk would receive a 30% ownership interest
in NWCS, Mr. Gontmakher would receive a 30% interest, and the
other investors would receive a 40% interest. Id. at
¶ 3.10. Mr. Polk's “interest” would be
held in the name of one of Mr. Gontmakher's relatives.
time, Mr. Polk explored different ways to make his interest
in NWCS legal. Dkt. # 1 at ¶¶ 3.11-3.12, 3.17,
3.20. Although these efforts were unsuccessful, he stayed
with NWCS at Mr. Gontmakher's encouragement. Dkt. # 1 at
¶ 3.16. Finally, in September 2015, Mr. Polk left NWCS.
Dkt. # 1 at ¶ 3.28. After his departure, Mr. Gontmakher
disputed what he owed Mr. Polk for his alleged interest in
NWCS. Id. at ¶ 3.29. As a result, in 2018, Mr.
Polk sued Mr. Gontmakher, NWCS, and the other investors in
NWCS, alleging, among other things, that he is entitled to an
ownership interest in NWCS and past and future profits. Dkt.
# 1. Mr. Gontmakher moves to dismiss causes of action one to
four, and cause of action six, for failure to state a claim
under Fed.R.Civ.P. 12(b)(6).
Civ. P. 12(b)(6) permits a court to dismiss a complaint for
failure to state a claim. The court must 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).
A 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). Instead,
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). If the plaintiff succeeds, the complaint
avoids dismissal if there is “any set of facts
consistent with the allegations in the complaint” that
would entitle the plaintiff to relief. Id. at 563;
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
Federal Law Precludes Enforcement of the
absence of a federal statute or treaty, a federal court
sitting in diversity generally applies the law of the forum
state. Erie R. R. Co. v. Tompkins, 304 U.S. 64
(1938). But where it is alleged that an agreement violates a
federal statute, courts look to federal law. See Kelly v.
Kosuga, 358 U.S. 516, 519 (1959) (“the effect of
illegality under a federal statute is a matter of federal
law”). Contracts that violate a federal statute are
illegal and unenforceable. Kaiser Steel Corp. v.
Mullins, 455 U.S. 72 (1982). Here, Mr. Polk alleges that
he is entitled to an ownership interest in NWCS. Dkt. # 1 at
¶¶ 3.37, 3.40, 3.42, 3.44. Under the Federal
Controlled Substances Act (“CSA”), however, the
production, distribution, and sale of marijuana remains
illegal. 21 U.S.C. § 801 et seq. So
any agreement giving Mr. Polk an equity interest in NWCS is
illegal under federal law.
Polk argues that the CSA is not an absolute bar to
enforcement where the requested remedy does not require a
violation of the CSA. Dkt. # 17 at 10 (citing Bassidji v.
Goe, 413 F.3d 928 (9th Cir. 2005) (“Nuanced
approaches to the illegal contract defense, taking into
account such considerations as the avoidance of windfalls or
forfeitures, deterrence of illegal conduct, and relative
moral culpability, remain viable in federal court … as
long as the relief ordered does not mandate illegal
conduct.”). The Court agrees. However, Mr. Polk's
characterization that he is only requesting monetary damages
is inconsistent with his Complaint. Mr. Polk is not
requesting monetary damages that can be obtained legally. He
is asserting an equity interest in NWCS and a right to its
past and future profits. Dkt. ...