Straitshot Communications Inc et al v. Telekenex Inc et al

Filing 410

FINDINGS OF FACT AND CONCLUSIONS OF LAW, by Judge Thomas S. Zilly. (CL) (cc: J. Chaney)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

1
2
3
4

STRAITSHOT COMMUNICATIONS, INC., a
Washington corporation, and STRAITSHOT RC,
LLC, a Delaware limited liability company,

5

No. C10-268Z

Plaintiffs,

6

v.

7

TELEKENEX, INC., a Delaware corporation;
IXC HOLDINGS, INC., a Delaware corporation;
MARK PRUDELL and JOY PRUDELL, husband
and wife and the marital community composed
thereof; MARK RADFORD and NIKKI
RADFORD, husband and wife and the marital
community composed thereof; JOSHUA
SUMMERS and JULIA SUMMERS, husband and
wife and the marital community composed thereof;
ANTHONY ZABIT and KAREN SALAZAR,
husband and wife and the marital community
composed thereof; BRANDON CHANEY and
DEANNA CHANEY, husband and wife and the
marital community composed thereof;
MAMMOTH NETWORKS, LLC, and BRIAN
WORTHEN and NIKKI WORTHEN, husband and
wife and the marital community composed thereof,

8
9
10
11
12
13
14
15
16

FINDINGS OF FACT AND
CONCLUSIONS OF LAW

17

Defendants.
____________________________________

18

MAMMOTH NETWORKS, LLC, a Wyoming
limited liability company,

19

Counterclaimant,

20

v.

21

STRAITSHOT COMMUNICATIONS, INC., a
Washington corporation,

22
23

Third-Party Defendant.

24
25
FINDINGS OF FACT AND CONCLUSIONS OF LAW - 1

1

INTRODUCTION

2

This matter came before the Court for trial on January 9, 2012, and concluded on

3
4

February 1, 2012. On February 6, 2012, the jury awarded $6,490,000 in favor of Straitshot

5

Communications, Inc. and Straitshot RC, LLC and against Defendants Telekenex, Inc., IXC

6

Holdings, Inc., Brandon Chaney, Deanna Chaney, Anthony Zabit, Karen Salazar, Joshua

7

Summers, Julia Summers, Mark Prudell, Joy Prudell, Mark Radford, and Nikki Radford

8

(collectively “Telekenex Defendants”). This amount represented the jury’s verdict for
9
10

Straitshot Communications, Inc. and Straitshot RC, LLC’s claims for Breach of Duty of

11

Loyalty against Mark Prudell, Joy Prudell, Joshua Summers, and Julia Summers (Third

12

Claim); Interference with Contractual Relations against Telekenex, Inc., IXC Holdings, Inc.,

13

Brandon Chaney, Deanna Chaney, Anthony Zabit, Karen Salazar, Joshua Summers, Julia

14
15

Summers, Mark Prudell, Joy Prudell, Mark Radford, and Nikki Radford (Fourth Claim); and

16

Violation of the Consumer Protection Act against Telekenex, Inc., IXC Holdings, Inc.,

17

Brandon Chaney, Deanna Chaney, Anthony Zabit, Karen Salazar, Mark Prudell, Joy Prudell,

18

Mark Radford, and Nikki Radford (Seventh Claim).1

19

The Telekenex Defendants raised the affirmative defenses that Straitshot
20
21

Communications, Inc. and Straitshot RC, LLC’s claims are barred, in whole or in part, on

22

the grounds of estoppel, waiver, and by the doctrine of unclean hands. Agreed Pretrial

23

Order, docket no. 334 at 4-5. The affirmative defense of waiver was subsumed in the

24

1

The jury also awarded $674,431 to Mammoth Networks, LLC on its counterclaim for breach of contract.

25
FINDINGS OF FACT AND CONCLUSIONS OF LAW - 2

1
2

verdict and that affirmative defense is now moot. The Court has considered all of the
evidence submitted at trial, the exhibits admitted into evidence, the testimony of witnesses

3
4

at trial, and the arguments of counsel. The Court being fully advised, now enters the

5

following Findings of Fact and Conclusions of Law relating to the remaining affirmative

6

defenses of estoppel and unclean hands.

7

FINDINGS OF FACT

8

The Parties
9
10

1.

Plaintiff Straitshot Communications, Inc. was a corporation organized under

11

the laws of the State of Washington and authorized to conduct business in the

12

State of Washington. Plaintiff Straitshot RC, LLC, is a Delaware limited

13

liability company. (Straitshot Communications, Inc. and Straitshot RC, LLC

14

are collectively referred to as “Plaintiff” or “Straitshot”).

15
16

2.

17
18

Defendant Telekenex, Inc. (“Telekenex”) is a Delaware corporation,
registered to do business in Washington.

3.

Defendant IXC Holdings, Inc. (“IXC Holdings”) is a corporation organized

19

under the laws of the State of Delaware. IXC Holdings maintains an office in
20
21

Seattle, Washington and is registered to do business in the State of

22

Washington. IXC Holdings is the successor in interest to Telekenex.

23
24
25
FINDINGS OF FACT AND CONCLUSIONS OF LAW - 3

1

4.

2

Defendants Brandon Chaney (“Chaney”) and Deanna Chaney are California
residents and husband and wife, constituting a marital community. Chaney is

3

the Chief Executive Officer of Telekenex.

4
5

5.

Defendants Anthony Zabit (“Zabit”) and Karen Salazar are California

6

residents and husband and wife, constituting a marital community. Zabit is the

7

President of Telekenex.

8

6.

Defendants Joshua Summers and Julia Summers are Washington residents and

9

husband and wife, constituting a marital community.

10
11

7.

12
13

Defendants Mark Prudell and Joy Prudell are Washington residents and
husband and wife, constituting a marital community.

8.

Defendants Mark Radford and Nikki Radford are Washington residents and

14

husband and wife, constituting a marital community.

15

CONCLUSIONS OF LAW

16
17

9.

18

The Telekenex Defendants assert that Straitshot’s claims are barred, in whole
or in part, under the doctrine of unclean hands.

19

10.

Under the doctrine of unclean hands, in order to seek equitable relief,

20
21

Straitshot must not have conducted itself in a manner “unconscientious, unjust,

22

or marked by the want of good faith....” Portion Pack, Inc. v. Bond, 44 Wn.2d

23

161 (1954).

24
25
FINDINGS OF FACT AND CONCLUSIONS OF LAW - 4

1

11.

2

The jury found in favor of Straitshot and against Mark Prudell, Joy Prudell,
Joshua Summers, and Julia Summers on Straitshot’s Third Claim for Breach

3

of Duty of Loyalty; against all the Telekenex Defendants on the Fourth Claim

4
5

for Interference with Contractual Relations; and against Telekenex, Inc., IXC

6

Holdings, Inc., Brandon Chaney, Deanna Chaney, Anthony Zabit, Karen

7

Salazar, Mark Prudell, Joy Prudell, Mark Radford, and Nikki Radford on the

8

Seventh Claim for Violation of the Consumer Protection Act. There was
9

substantial evidence presented at trial to support these findings. In contrast,

10
11

there was no evidence presented at trial that Plaintiff engaged in any

12

misconduct, let alone misconduct directly related to Defendants’ acts. See

13

McKelvie v. Hackney, 58 Wn. 2d 23, 31 (1961) (“‘The authorities are in

14

accord that the ‘clean hands’ principle does not repel a sinner from courts of

15
16

equity, nor does it disqualify any claimant from obtaining relief there who has

17

not dealt unjustly in the very transaction concerning which he complains * *

18

*.’” (emphasis in original) (quoting J. L. Cooper & Co. v. Anchor Securities

19

Co., 9 Wn.2d 45, 75 (1941))). The Telekenex Defendants have failed to
20

prove by a preponderance of the evidence their defense of unclean hands.

21
22
23
24

12.

The Telekenex Defendants assert that Straitshot’s claims are also barred, in
whole or in part, on the grounds of estoppel. The Telekenex Defendants claim
that Straitshot is estopped from repudiating its authorization to Telekenex

25
FINDINGS OF FACT AND CONCLUSIONS OF LAW - 5

1

and/or Joshua Summers to access its systems on or after January 30, 2009

2

and/or its requests that Defendants use the information to provide services to

3

Straitshot and/or its customers.

4
5

13.

The defense of estoppel requires (1) an admission, statement or act

6

inconsistent with a claim later asserted by Plaintiff; (2) reasonable reliance by

7

Defendants on that admission, statement or act by Plaintiff; and (3) injury to

8

the Defendants if the court permits the Plaintiff to contradict or repudiate the
9

admission, statement or act. Estoppel is based on the notion that a party

10
11

should be held to a representation made or position assumed where

12

inequitable consequences would otherwise result to another party who has

13

justifiably and in good faith relied thereon. Kramarevcky v. Dep’t of Soc. and

14

Health Services, 122 Wn.2d 738, 743 (1993).

15
16

14.

On January 30, 2009, Straitshot expressly authorized Telekenex, Summers,

17

and other Telekenex network engineers to “access its systems” in order to

18

provide assistance to Straitshot customers. See Trial Ex. A-237. The

19

Telekenex Defendants claim they justifiably relied upon the authorization
20
21

from Straitshot to “access its systems” and did so. However, Straitshot

22

demonstrated at trial that the Telekenex Defendants’ conduct went well

23

beyond what was authorized by Straitshot, including using its access to

24
25
FINDINGS OF FACT AND CONCLUSIONS OF LAW - 6

1

Straitshot’s systems to encourage Straitshot customers to move to Telekenex.

2

See Trial Exs. 52, 57, 95, 234.

3
4

15.

The Telekenex Defendants have not shown that Straitshot’s authorization of

5

Telekenex, Summers, and other Telekenex network engineers to access its

6

systems to provide assistance to Straitshot customers is an “admission,

7

statement or act inconsistent with its later claim” that the Telekenex

8

Defendants interfered with its customer contracts. Kramarevcky,122 Wn.2d
9

at 743; State, Dept. of Ecology v. Campbell & Gwinn, L.L.C., 146 Wn.2d 1,

10
11

14 (2002). Nor have the Telekenex Defendants shown any reliance by or

12

injury to Defendants based on this access. Id. The Telekenex Defendants

13

have failed to prove by a preponderance of the evidence the affirmative

14

defense of estoppel.

15
16

16.

The wives of defendants Prudell, Radford, Summers, Zabit, and Chaney are

17

proper defendants in this case because Washington is a community property

18

state. See Sunkidd Venture, Inc. v. Snyder-Entel, 87 Wn. App. 211, 215

19

(1997); Verstraelen v. Kellog, 60 Wn.2d 115, 119-20 (1962). Judgments
20
21

holding individual defendants liable for intentional torts committed by one

22

spouse for the benefit of the marital community are therefore judgments

23

against the individual defendants’ marital communities.

24
25
FINDINGS OF FACT AND CONCLUSIONS OF LAW - 7

1
2

17.

The Court concludes that the defenses of unclean hands and estoppel have not
been established by the Telekenex Defendants.

3
4
5
6
7

DATED this 23rd day of February, 2012.

A
Thomas S. Zilly
United States District Judge

8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
FINDINGS OF FACT AND CONCLUSIONS OF LAW - 8