United States District Court, W.D. Washington, Seattle
STUC-O-FLEX INTERNATIONAL, INC., a Washington corporation, Plaintiff,
LOW AND BONAR, INC., a Delaware corporation; WALFLOR INDUSTRIES, INC., a Washington corporation; WATERWAY RAINSCREEN, LLC, a Washington limited liability company; JOHN URAL, an individual; MIKE CZERWINSKI, an individual; JIM HEWITT, an individual; and PACIFICWEST INDUSTRIES, INC., a Washington corporation, Defendants.
ORDER GRANTING DEFENDANTS’ PARTIAL MOTION TO
HONORABLE RICHARD A. JONES UNITED STATES DISTRICT JUDGE.
Honorable Richard A. Jones This matter comes before the Court
on Defendant’s Partial Motion to Dismiss (Dkt. # 12).
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, Defendants’ Motion is
GRANTED. Dkt. # 12.
following is taken from Plaintiff’s Amended Complaint
(Dkt. # 1-2), which is assumed to be true for the purposes of
this motion to dismiss, along with any judicially noticed
documents. Sanders v. Brown, 504 F.3d 903,
910 (9th Cir. 2007).
Stuc-O-Flex International, Inc. (“Stuc-O-Flex” or
“Plaintiff”) is a Washington-based distributor of
stucco and siding products. Dkt. # 1-2 at ¶ 3.1. One of
the products patented and distributed by Plaintiff is
“Waterway Rainscreen, ” a rainscreen product that
is installed between the exterior framing of a home and the
stucco finish to facilitate drainage of moisture away from
the stucco. Id. at ¶ 3.3.
John Ural (“Defendant Ural” or
“Ural”) was a licensed siding contractor in
Washington, when he became a customer of Stuc-O-Flex in 2003.
Id. at ¶ 3.4. In 2011, Defendant Ural decided
to enter the manufacturing sector and purchased an
“extruder” machine which would allow him to
manufacture, among other things, rainscreen products. Dkt. #
1-2 at ¶ 3.5. After receiving the machine, Defendant
Ural formed a separate manufacturing entity, Defendant
Waterway Rainscreen, LLC (“Defendant Waterway” or
“Waterway”). Id. at ¶ 3.9.
2012, Plaintiff entered into an exclusive distribution
agreement with Defendants Ural and Waterway. Id. at
¶ 3.10. Under the agreement, Plaintiff agreed to be the
exclusive distributor of all products manufactured by
Defendant Ural within the United States. Id. In
March 2013, Plaintiff and Defendants Ural and Waterway
entered into an updated distribution agreement, extending the
agreement to include both United States and Canadian
markets. Id. at ¶ 3.13. In exchange, Defendant
Ural agreed not to sell rainscreen products to any other
third parties. Id.
2011, Defendant Ural also formed a Canadian company, Water
Wave Building Supply, Inc. (“Water Wave”), with
Defendant Mike Czerwinski (“Defendant
Czerwinski”), for the purpose of distributing and
selling its products in Canada. Id. at ¶ 3.7.
On September 25, 2012, Defendant Ural sold his interest in
Water Wave to Defendant Jim Hewitt (“Defendant
Hewitt”) and Water Wave entered into a distribution
agreement with Defendant Ural, under which Water Wave agreed
to be the exclusive distributor of Defendant Ural’s
products in Canada. Id. at ¶ 3.11.
point, Plaintiff began to receive invoices for its rainscreen
products from Defendant PacificWest
(“PacificWest”), another company owned by
Defendants Hewitt and Czerwinski. Id. at ¶
3.14. According to Plaintiff, Ural said that he was just
using the PacificWest name for insurance purposes, when in
fact, he was selling the rainscreen products to PacificWest
directly, in violation of Plaintiff’s distribution
agreement. Id. at ¶¶ 3.16–3.17.
Plaintiff alleges that Ural was also selling its rainscreen
products to Water Wave and Defendant Walflor Industries, Inc.
(“Walflor”), a third Hewitt/Czerwinski entity,
and that Water Wave and Walflor were selling the products to
other third parties. Id. at ¶¶
2015, Defendant Ural attempted to sell 100% of his Waterway
stock to PacificWest. Id. at ¶ 3.21. According
to Plaintiff, the parties ran into an issue because the
extruder machine was not owned by Waterway directly, but
rather a different Ural entity. Id. at ¶ 3.22.
On February 10, 2016, Defendants Ural, Hewitt, and Czerwinski
agreed that Ural would sell the extruder machine to Walflor
and, in exchange, he would receive a 33% share of Walflor and
join Walflor as a Vice President and member of the Board of
Directors. Id. at ¶ 3.24. Plaintiff learned of
the sale by email in January 2016. Id. at ¶
3.28. According to Plaintiff, Defendant Ural represented that
Plaintiff’s exclusive distribution agreement would
still be honored by Walflor when, in fact, Walflor was
selling rainscreen products to other third parties.
Id. at ¶¶ 3.29–3.30.
Walflor purchased the extruder machine, Defendants Ural,
Hewitt, Czerwinski, and Walflor executed a letter of intent
with Defendant Low & Bonar (“Low & Bonar”
or “Defendant Low & Bonar”), a multi-national
corporation purportedly interested in expanding into the
rainscreen and sound control mat business. Id. at
¶¶ 3.31–3.34. On January 17, 2017, the
parties executed a stock purchase agreement, under which Low
& Bonar purchased 100% of Walfor’s stock.
Id. at ¶ 3.24. Stuc-O-Flex’s exclusive
distribution agreement with Defendant Ural was not listed as
a material contract during the due diligence process, prior
to the sale. Id. at ¶ 3.36. Shortly after the
sale closed, Low & Bonar informed Plaintiff that it was
increasing the price of the rainscreen product to 7%.
Id. at ¶ 3.37. Low & Bonar also proceeded
to manufacture and sell rainscreen products to other third
parties. Id. at ¶ 3.38.
November 29, 2017, Plaintiff filed suit in King County
Superior Court, alleging breach of contract, tortious
interference, trademark infringement, and Washington Consumer
Protection Act claims. Dkt. # 1-1. Plaintiff subsequently
amended its complaint (Dkt. # 1-2), incorporating federal
trademark claims, and on September 17, 2018, Defendants
removed to this Court. Dkt. # 1. Defendants now move to
dismiss Plaintiff’s breach of contract claim as to
Defendant Low & Bonar and the tortious interference and
alter ego/veil piercing claims as to all Defendants. Dkt. #
question for the Court on a motion to dismiss is whether the
facts in the complaint and judicially-noticed documents
sufficiently state a “plausible” ground for
relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570 (2007). Although a complaint need not provide detailed
factual allegations, it must offer “more than labels
and conclusions” and contain more than a
“formulaic recitation of the elements of a cause of
action.” Twombly, 550 U.S. at 555. If the
complaint fails to state a cognizable legal theory or fails