Source: http://wa.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20180323_0001987.WWA.htm/qx
Timestamp: 2019-04-23 04:38:38+00:00

Document:
CHRISTENSEN GROUP INCORPORATED, et al., Defendants.
THIS MATTER is before the Court on Plaintiff Henry Luken's Motion for Partial Summary Judgment [Dkt. #114] as well as CSL Defendants' Motion for Partial Summary Judgment [Dkt. #138] and Motion to Compel Production of Documents [Dkt. #118]. The underlying lawsuit involves numerous complicated claims and counterclaims over who is financially responsible for the failure of luxury yacht builder Christensen Shipyards. Luken alleges that the CSL Defendants engaged in mismanagement and fraud ultimately driving CSL into insolvency. The CSL Defendants characterize Luken as a corporate raider who is attempting to complete his hostile takeover of CSL through this litigation. The present summary judgment motions relate to claims stemming from a 2001 Guaranty between Luken and Defendant David Christensen, Luken's claims under Washington's vessel dealer trust account statute (RCW § 88.02.770), and CSL Defendants' intentional interference and shareholder oppression counterclaims.
Summary judgment is proper if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56. In determining whether an issue of fact exists, the Court must view all evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in that party's favor. Anderson Liberty Lobby, Inc., 477 U.S. 242, 248-50 (1986); Bagdadi v. Nazar, 84 F.3d 1194, 1197 (9th Cir. 1996). A genuine issue of material fact exists where there is sufficient evidence for a reasonable factfinder to find for the nonmoving party. Anderson, 477 U.S. at 248. The inquiry is “whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Id. at 251-52. Factual disputes whose resolution would not affect the outcome of the suit are irrelevant to the consideration of a motion for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The moving party bears the initial burden of showing that there is no evidence which supports an element essential to the nonmovant's claim. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Once the movant has met this burden, the nonmoving party then must show that there is a genuine issue for trial. Anderson, 477 U.S. at 250. If the nonmoving party fails to establish the existence of a genuine issue of material fact, “the moving party is entitled to judgment as a matter of law.” Celotex, 477 U.S. at 323-24.
Luken moves for summary judgment on several issues related to a 2001 Guaranty agreement between David Christensen and Luken, on Defendants' intentional interference with contract claim (Fourth Counterclaim), and on Defendants' shareholder oppression claim (First Counterclaim).
A. Claims related to the 2001 Guaranty between David Christensen and Luken.
The obligations of the Guarantor under this Agreement shall be absolute and unconditional, notwithstanding any notice of discontinuance delivered to the Lender, and shall remain in full force and effect until all the Obligations shall have been paid or satisfied in full . . . .
Luken argues that the language in the agreement entitles him a broad and continuing guaranty of all indebtedness of any kind that CSL may owe him in the future. Dkt. 114 at 4. Luken contends that he is entitled to the $11.7 million maximum under the Guaranty and seeks summary judgment on several claims and defenses related to the Guaranty. Id. at 12-13.
CSL Defendants assert that the 2001 Guaranty only applied to loan obligations that CSL, as a borrower, owed to Luken, as a lender (as opposed to any obligation CSL had as a yacht seller to Luken as a yacht buyer). Dkt. 130 at 7-8. Defendants also contend that CSL satisfied the Guaranty by repaying all loan obligations in 2008.
The Court's review of the record reveals a genuine dispute of material fact as to whether or not the Guaranty was satisfied. Because the parties dispute whether CSL repaid Luken and satisfied its obligations under the Guaranty, summary judgment is inappropriate at this juncture. Accordingly, Luken's motion for partial summary judgment as it relates to the 2001 Guaranty [Dkt. 114 at ¶¶1-4] is DENIED.
Luken moves for summary judgment on Defendants' intentional interference with economic relations counterclaim. This counterclaim stems from a loan of approximately $1.1 million that David Christensen made to CSL in December 2011. Defendants allege that Luken abused his corporate position and engaged in a course of misconduct before and after the loan was made resulting in CSL's insolvency and subsequent inability to repay the loan. Dkt. 97 at 44-46.
To state a claim for intentional interference, a plaintiff must set forth the following elements: (1) the plaintiff was engaged in a valid contractual relationship or business expectancy; (2) the defendant knew of this relationship; (3) the defendant acted intentionally in inducing a breach or termination of the relationship; (4) the defendant was motivated by an improper purpose or used improper means; and (5) the plaintiff suffered damages as a result of the interference. Kische USA, LLC v. Simsek, No. C-16-0168JLR, 2016 WL 6273261, *9 (W.D. Wash. June 29, 2016); Libera v. City of Port Angeles, 316 P.3d 1064, 1068 (Wash.Ct.App. 2013).
Luken suggests that CSL Defendants cannot establish all elements of their intentional allegations of misconduct or improper purpose by Luken; (2) that simply contributing to CSL's inability to repay a loan is not actionable interference; and (3) that Defendants cannot show causation or damages. Dkt. 114 at 21-22. These arguments lack merit.
CSL Defendants present ample evidence of misconduct and improper purpose that goes beyond contributing to CSL's inability to repay the loan. This includes evidence or testimony which suggests Luken inflated the trade-in values on hull contracts, misappropriated CSL funds for personal expenses, forced CSL to sell the yacht Cacique to him at a loss, and provided insider information on CSL to his friends to the harm of CSL. Viewing the evidence in a light most favorable to the nonmoving party, a reasonable jury could find that Luken, motivated by improper purpose, engaged in a course of intentional conduct which caused CSL to default on its loan and harm Christensen. The Court determines that the CSL Defendants present sufficient evidence to satisfy the elements of their intentional interference counterclaim. There are genuine issues of material fact on this counterclaim that need to be resolved at trial. Accordingly, Luken's motion for partial summary judgment on the intentional interference counterclaim [Dkt. 114 at ¶5] is DENIED.
CSL Defendants David Christensen, Joe Foggia, and Cindi Curtin assert a counterclaim for shareholder oppression alleging that Luken, as CSL's controlling shareholder, abused his corporate position for his own personal benefit and engaged in oppressive conduct to the harm of CSL's minority shareholders. Dkt. 97 at 37-39. Christensen, Foggia, and Curtin contend that an award of damages is warranted for Luken's allegedly oppressive conduct considering that equitable remedies are insufficient given that CSL has been placed in receivership and liquidated. Dkt. 130 at 28-29. Luken moves for summary judgment on this claim, arguing his alleged misconduct is either not actionable or falls outside the statute of limitations. Dkt. 114 at 22-25.
Washington's Business Corporation Act authorizes the superior courts to dissolve a corporation if “the directors or those in control of the corporation have acted . . . in a manner that is illegal, oppressive, or fraudulent.” Wash. Rev. Code § 23B.14.300. Because the statute does not define the term “oppressive, ” Washington courts look to both a “reasonable expectations” test and a “fair dealing” test to evaluate whether a corporate director or controlling shareholder has engaged in oppressive conduct. Scott v. Trans-System, Inc., 64 P.3d 1, 6 (Wash. 2003); Miller v. Robertson, 93 Wash.App. 1089 (Wash.Ct.App. 1999). The “reasonable expectations” test “defines shareholder oppression as a violation by the majority of the reasonable expectations of the minority, ” and is “most appropriate in situations where the complaining shareholder was one of the original participants in the venture-one who would have committed capital and resources.” Scott, 64 P.3d at 6 (citing Gimpel v. Bolstein, 477 N.Y.S.2d 1014, 1018 (N.Y. Sup. Ct. 1984)).
burdensome, harsh and wrongful conduct; a lack of probity and fair dealing in the affairs of a company to the prejudice of some of its members; or a visible departure from the standards of fair dealing, and a violation of fair play on which every shareholder who entrusts his money to a company is entitled to rely.

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