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ORDER – 1

UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON

AT SEATTLE

USA GATEWAY TRAVEL, INC., 

Plaintiff,

v.

GEL TRAVEL, INC., et al.,

Defendants.

CASE NO. C06-053JLR

ORDER

The court has received Defendants’ motion for reconsideration (Dkt. # 62) of the

court’s order dated December 20, 2006 (Dkt. # 60). For the reasons stated below, the

court DENIES the motion. 

Pursuant to Local Rules W.D. Wash. CR 7(h)(1), motions for reconsideration are

disfavored, and will ordinarily be denied unless there is a showing of (a) manifest error in

the prior ruling, or (b) facts or legal authority which could not have been brought to the

attention of the court earlier, through reasonable diligence. Defendants’ motion does not

meet either standard. 

Defendants argue that the court committed manifest error in finding Ms. Chen

personally liable for the breach of contract under alternative theories of piercing the

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ORDER – 2

corporate veil and the responsible corporate officer doctrine. See Order at 9-11. While it

is not necessary, the court amplifies its prior order as follows: 

The established test for evaluating claims of corporate disregard is set forth in

Morgan v. Burks, 611 P.2d 751, 755 (Wash. 1980). The corporate entity will be

disregarded when the corporation has been intentionally used to violate or evade a duty

owed to another. Id. A court may do so because the liability-causing activity did not

occur only for the benefit of the corporation, and the corporation and its controllers are

thus “alter egos.” Id. The court’s finding that Ms. Chen abused the corporate entity does

not rest on her status as the principal and sole employee of GEL, but rather her failure to

keep GEL’s affairs separate from her own. Defendants do not provide the court with

evidence or authority warranting reconsideration of the court’s finding that Ms. Chen

intentionally blurred the distinction between her personal and business affairs. 

Even where a court finds the intent necessary to disregard the corporate entity, the

doctrine will not apply unless it is necessary and required to prevent unjustified loss to

the injured party. Id. at 587. “The corporate entity will be disregarded only to prevent

the violation of a duty . . . . ‘For example, the obligee of a contract has a right to receive

performance of its obligations. When the doctrine of disregard is applied, it is applied

because of the necessity of enforcing this right-duty.’” Id. at 587-88 (quoting J.I. Case

Credit Corp. v. Stark, 392 P.2d 215, 219 (Wash. 1964)). Gateway’s loss is directly

attributable to Ms. Chen’s use of Dr. Ou’s Citibank card, which continued for nearly 18

months unbeknownst to Dr. Ou only because Ms. Chen intentionally redirected his

Citibank statements to her home address. Pursuant to the terms of the contract between,

Gateway and GEL, Gateway is entitled to collect payment for the airline tickets issued to

GEL’s customers. Accordingly, the court finds that the application of the doctrine to Ms.

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1

During oral argument on December 14, 2006, Defendants’ counsel stated that Defendants’

position was that Ms. Chen was personally covered by the terms of the contract. Defendants necessarily

made this concession in order to take advantage of the doctrine of economic loss. Indeed, the court

dismissed Gateway’s negligent misrepresentation claim on this basis. Defendants argument here, that Ms.

Chen is not personally liable, is inconsistent with his representations in open court. 

ORDER – 3

Chen is necessary to prevent unjustified loss to Gateway. Thus, Ms. Chen is personally

liable to Gateway on its breach of contract claim.1

Dated this 12th day of January, 2007.

A JAMES L. ROBART

United States District Judge

Case 2:06-cv-00053-JLR Document 63 Filed 01/12/07 Page 3 of 3