United States District Court, W.D. Washington, Tacoma
Russell D. Garrett, Chapter 7 Trustee for the bankruptcy estate of Robert and Stephanie Taylor, Plaintiff,
MORGAN ROTHSCHILD f/k/a MORGAN HENNING, HALEY HENNING, and FRANNET GLOBAL, LLC, Defendants.
ORDER DENYING DEFENDANT'S MOTION TO DISMISS FOR
LACK OF PERSONAL JURISDICTION, GRANTING DEFENDANT'S
MOTION TO COMPEL ARBITRATION, AND DENYING DEFENDANT'S
MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM AS
BENJAMIN H. SETTLE UNITED STATES DISTRICT JUDGE
matter comes before the Court on Defendant Hayley
Henning's (“Henning”) motion to dismiss or
compel arbitration. Dkt. 45. The Court has considered the
pleadings filed in support of and in opposition to the motion
and the remainder of the file and hereby denies the motion to
dismiss for lack of personal jurisdiction, grants the motion
to compel arbitration, and denies the motion to dismiss for
failure to state a claim as moot for the reasons stated
September 17, 2018, Robert Sean Taylor (“Sean
Taylor”) and Stephanie Taylor (“Stephanie
Taylor”) (collectively “the Taylors”) filed
suit against Morgan Rothschild f/k/a Morgan Henning
(“Rothschild”), his ex-spouse Haley Henning
(“Henning”), and John Does 1-10 in the Washington
Superior Court for Clark County. Dkt. 1-1. On October 25,
2018, Rothschild removed the case to this Court. Dkt. 1. On
November 16, 2018, Rothschild moved to dismiss for lack of
personal jurisdiction or in the alternative to compel
arbitration and stay the case. Dkt. 7. On December 11, 2018,
the Court entered a stay pursuant to the parties'
stipulation for the parties to pursue settlement discussions
and for the Taylors' counsel to seek litigation approval
from the Bankruptcy Court. Dkts. 9, 10. On January 7, 2019,
the parties agreed to lift the stay and renote the motion.
Dkt. 11. On February 24, 2019, the Court granted the
Taylors' motion to substitute Chapter 7 Trustee Russell
Garrett (“Plaintiff”) into the action as
Plaintiff in place of the Taylors. Dkt. 19.
2, 2019, the Court denied Rothschild's motion to dismiss
for lack of personal jurisdiction or compel arbitration. Dkt.
25. On May 16, 2019, Rothschild filed a second motion to
change venue and compel arbitration. Dkt. 27. On May 30,
2019, Plaintiff filed an amended complaint with leave of the
Court adding claims against Defendant FranNet Global, LLC
(“FranNet”). Dkts. 31, 33. On July 12, 2019, the
Court granted Rothschild's motion to compel arbitration.
29, 2019, Plaintiff filed a notice of voluntary dismissal as
to FranNet. Dkt. 43. On August 28, 2019, Henning filed the
instant motion to dismiss or compel arbitration. Dkt. 45. On
September 16, 2019, Plaintiff responded. Dkt. 49. On
September 20, 2019, Henning replied. Dkt. 53.
case involves a dispute between a franchisor and disenchanted
franchisees. The Court summarized the facts relevant to all
parties in prior orders but will focus in this order on the
facts relevant to Henning. Dkts. 25, 42. Some of these facts
are alleged in the amended complaint, Dkt. 33, and additional
facts are contained in declarations and exhibits submitted
with this motion.
runs Party Princess International (“Party
Princess”). Dkt. 1-1, ¶ 2. Henning, his former
spouse, worked with Rothschild on the business and advised on
franchises. Id. Plaintiff alleges that Henning acted
as a founder and active franchise advisor of Party Princess.
Dkt. 33, ¶ 2. Henning declares that though she is
“the creative founder of the Party Princess concept,
” she did not have a formal role in the company between
2015 and 2018. Dkt. 47, ¶ 2. Rothschild “explained
that he was in charge of management and operations, and
[Henning] handled the creative side and was the heart of the
business.” Dkt. 33, ¶ 20. The Franchise Disclosure
Document the Taylors received identified Henning as the
founder of Party Princess and the CEO of its parent company,
Rothschild Enterprises, Inc. Dkt. 8-1 at 90-91.
point in 2015, Sean Taylor consulted a franchise broker about
investment opportunities who referred him to Rothschild. Dkt.
1-1, ¶ 15. At this time, all parties resided in
California. See Dkt. 12 at 2, 3; Dkt. 16 at 6. Sean
Taylor and Rothschild spoke by phone, and Rothschild
“informed Taylor that a Google advertising campaign
alone in Taylor's prospective territory [partially in
Washington] would generate at least $100, 000 per year for
Taylor, ” but Rothschild “could not put the
projections in writing due to regulatory prohibitions.”
Dkt. 1-1, ¶ 17. Rothschild also told Sean Taylor that
meeting Party Princess's requirement that each franchise
host 40 parties per month would be “easily
achievable.” Id. ¶ 18.
to purchasing a franchise, the Taylors attended an
informational event about Party Princess where they met
Henning, who was married to Rothschild at that time. Dkt. 33,
¶ 19. Sean Taylor declared that at this event he spoke
to Henning, told her he was planning to move to Vancouver, WA
with his wife and looking for a home business, and Henning
responded with an extensive history of her work with Party
Princess, her partnership with her husband Rothschild, and
their support for husband-and-wife teams like theirs. Dkt.
51, ¶ ¶ 2-3. Henning declared that she recalled
speaking to Sean Taylor at the event but only recalled him
“mentioning they were moving.” Dkt. 47, ¶
dinner following the event, Plaintiff alleges that Henning
and Stephanie Taylor “made a connection and ended up
exchanging phone numbers so Stephanie could ask [Henning]
more questions about the franchise.” Dkt. 33, ¶
19. After the event, Henning and Stephanie Taylor interacted
through phone calls, text messages, and meetings with their
children present. Id. ¶ 20. Henning declared
that she had only a personal interest in Stephanie Taylor and
they connected about their health-focused lifestyles and
positions on vaccinating children. Dkt. 47, ¶ ¶
Taylor declared that in November 2015, he and Stephanie
Taylor met with Rothschild in his office where he referenced
himself and Henning as a team and represented how much
revenue the Taylors should expect to generate in Vancouver,
WA. Dkt. 51, ¶ 9. Henning joined for lunch after the
meeting, and Sean Taylor declared that there, Rothschild and
Henning said the Taylors “were they [sic] type of
people that they wanted to build this business with.”
Id. ¶ 10.
November 23, 2015, a representative from FranNet contacted
Rothschild to inquire whether Party Princess had a signing
and deposit date for Sean Taylor. Dkt. 52-1. Rothschild
responded saying he would keep the representative updated and
that Henning ...