RRW Legacy Management Group, Inc. v. Walker

Filing 36

ORDER denying dft's 9 Motion for Summary Judgment by Judge Marsha J. Pechman.(RS)

1
2
3
4
5
6
7
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

8
9
10

RRW LEGACY MANAGEMENT
GROUP, INC.,

11
Plaintiff,
12

CASE NO. C14-326 MJP
ORDER ON DEFENDANT’S
MOTION FOR SUMMARY
JUDGMENT

v.
13
CAMPBELL WALKER,
14
Defendant.
15
16
The Court, having received and reviewed:
17
1. Defendant Campbell Walker’s Motion for Summary Judgment (Dkt. No. 9),
18
2. Plaintiff’s Response in Opposition to Defendant Campbell Walker’s Motion for
19
Summary Judgment (Dkt. No. 15), and
20
3. Defendant Campbell Walker’s Reply in Support of Motion for Summary Judgment
21
(Dkt. No. 20).
22
and all attached declarations and exhibits, and having heard oral argument on the matter, makes
23
the following ruling:
24
ORDER ON DEFENDANT’S MOTION FOR
SUMMARY JUDGMENT- 1

1

IT IS ORDERED that the motion is DENIED.

2
3
4

Background
A. Argyll Limited Partnership
Robert R. Walker formed Argyll Limited Partnership (“Argyll”) in 1992; Argyll is

5 governed by a limited partnership agreement (“the Agreement”) subject to Washington law.
6 (Dkt. No. 11-1 at 5, 22; Dkt. No. 11 at 2.) Under the Agreement, Robert R. Walker became the
7 general partner, and he and his five children – Defendant Campbell Walker (“Campbell”),
8 Victoria Walker Councell (“Victoria”), Cody C. Walker, Antoinette R. Walker (“Antoinette”),
9 and Robert Angus Walker (“Angus”) – became limited partners. (Dkt. No. 11-1 at 5; Dkt. No.
10 11 at 2.) Under the Agreement, Robert R. Walker had a five percent interest as general partner
11 and a 20 percent interest as a limited partner. (Dkt. No. 11-1 at 7.) The children each had 15
12 percent interests as limited partners. (Id.)
13

The general partner had “exclusive power and authority to manage” Argyll’s business

14 and affairs. (Id. at 13.) Limited partners cannot vote on any matter except for “removal and
15 selection of a successor” to the general partner. (Dkt. No. 11-1 at 14.) As stated in the
16 Agreement, the limited partners can remove the general partner “for cause,” which includes the
17 general partner’s acts of fraud, larceny, willful misconduct, deceit or a “crime otherwise
18 involving moral turpitude, willful misrepresentation to Partners, or the continued and habitual
19 misuse of alcohol or any use of controlled substances.” (Id. at 15.) An “affirmative vote of
20 Limited Partners having a majority of the Limited Partners’ Partnership Interests” is necessary to
21 remove the general partner for cause. (Id. at 14.)
22

Once the general partner is removed, the limited partners have 30 days to select a new

23 general partner, and the “[s]election shall occur upon agreement of Limited Partners holding
24 60% or more of the Limited Partners’ Partnership Interests.” (Dkt. No. 11-1 at 17.) The new
ORDER ON DEFENDANT’S MOTION FOR
SUMMARY JUDGMENT- 2

1 general partner “shall, unless already acquired by him or her, purchase the Partnership Interest of
2 the General Partner[.]” (Id. at 16.)
3
4

B. Events After Campbell Succeeded Robert R. Walker as General Partner
In 1999, Robert R. Walker appointed Campbell to succeed him as general partner and

5 assigned him his five percent interest as general partner. (Dkt. No. 11 at 2.) Robert R. Walker’s
6 20 percent interest as limited partner was distributed equally among Campbell and the other four
7 children. (Id.) Each of Robert R. Walker’s children then had a 19 percent interest as a limited
8 partner, and Campbell had an additional five percent interest as general partner. (Id.)
9

In 2014, Antoinette, Victoria, and Angus voted to remove Campbell as general partner.

10 (Dkt. No. 11-2 at 2.) Just after Campbell’s removal, the same three siblings that removed
11 Campbell voted to appoint RRW Legacy Management Group, Inc. (“RRW Legacy”) as the
12 successor general partner. (Dkt. No. 11 at 3; Dkt. No. 11-3 at 2.) Antoinette is the president and
13 sole shareholder of RRW Legacy. (Dkt. No. 15 at 7.)
14
15

C. Procedural Posture
RRW Legacy sued Campbell on February 26, 2014, in King County Superior Court,

16 seeking a declaratory judgment that Campbell was properly removed as general partner and
17 RRW Legacy was properly appointed as the new general partner. (Dkt. No. 2-1 at 4.) The suit
18 was removed to this Court on March 7, 2014. (Dkt. No. 1.) Campbell has countersued and
19 asserted several counterclaims, including declaratory judgment, civil conspiracy, tortious
20 interference, violation of RCW 25.10.331 and RCW 25.10.431, and breach of duty of good faith
21 and fair dealing. (Dkt. No. 7.) Campbell now moves for summary judgment, requesting a
22 declaratory judgment he was not removed “for cause” and RRW Legacy was not appointed
23 pursuant to the Agreement. (Dkt. No. 9.) Discovery has not commenced. (Dkt. No. 13; Dkt.
24 No. 9 at 7.)
ORDER ON DEFENDANT’S MOTION FOR
SUMMARY JUDGMENT- 3

1
2
3
4

Discussion/Analysis
A. Legal Standard
Summary judgment is appropriate under Fed. R. Civ. P. 56(a) “if the movant shows that

5 there is no genuine dispute as to any material fact.” See Celotex Corp. v. Catrett, 477 U.S. 317,
6 327 (1986). Inferences drawn from the underlying facts must be viewed in the light most
7 favorable to the non-moving party. Matsushita Elec. Indus. Co., LTD. v. Zenith Radio Corp.,
8 475 U.S. 574, 587 (1986). When the moving party has met its burden of showing no genuine
9 issue of fact exists, “its opponent must do more than simply show that there is some
10 metaphysical doubt as to the material facts.” Id. at 586. The non-moving party must come
11 forward with specific facts showing a genuine issue exists for trial. Id. at 587. No genuine issue
12 for trial exists if the “record taken as a whole could not lead a rational trier of fact to find for the
13 non-moving party.” Id.
14
15

B. “For Cause” Removal of Campbell
Defendant denies committing any act which would have constituted “for cause” grounds

16 for removal under the Agreement. (Campbell Decl. ¶ 14.) He attacks the complaint and the
17 declarations of his siblings for failure to articulate with specificity the facts which constituted the
18 cause for which he was removed.
19

“[Summary] judgment ‘shall be entered’ against the nonmoving party unless affidavits or

20 other evidence ‘set forth specific facts showing that there is a genuine issue for trial.’”
21 Matsushita Elec. Indus. Co., 475 U.S. at 587. The Court agrees that, as regards the declarations
22 of Angus and Victoria, specific facts are lacking. Angus alleges that Defendant has engaged in
23 “many years of deceit, willful misconduct and willful misrepresentations” (Angus Decl. ¶ 3);
24 Victoria claims to have witnessed “an on-going pattern of deceit, willful misconduct, and willful
ORDER ON DEFENDANT’S MOTION FOR
SUMMARY JUDGMENT- 4

1 misrepresentations.” (Victoria Decl. ¶ 3.) Angus provides no specific examples of the conduct
2 he alleges. Victoria’s declaration does recount some incidents (Id. ¶¶ 3, 4, 5), but her allegations
3 are vague as to date, place and other specifics, and are lacking in corroborative evidence.
4

While Antoinette’s declaration suffers from some of these same defects, the Court finds

5 that she provides sufficient factual information supporting her allegations to demonstrate “a
6 genuine issue for trial” sufficient to defeat summary judgment. She recounts several occurrences
7 for which she provides dates and corroborating evidence in support of her assertions of
8 Defendant’s “many acts of deceit and willful misconduct.” (Antoinette Decl. ¶¶ 3, 5-14.)
9 Although whether these incidents ultimately satisfy the “for cause” requirements of the
10 Agreement will be a question for the trier of fact, this Court (viewing every inference from these
11 facts in the light most favorable to the nonmoving party) finds them sufficient to create “a
12 genuine issue for trial” and denies Defendant’s summary judgment request on that basis.
13
14

C. Appointment of Plaintiff as Successor General Partner
By his motion, Defendant attacks the validity of the appointment of Plaintiff RRW

15 Legacy as successor General Partner. Two of his grounds for doing so may be dispensed with
16 quickly. He first claims the appointment was invalid because his removal from the General
17 Partner position was improper – since the Court has already declined to reach that issue at this
18 time, the propriety or impropriety of Defendant’s removal will not determine the question of the
19 propriety of succession, either.
20

Secondly, Defendant argues that RRW Legacy’s appointment is invalidated by the failure

21 to purchase his General Partnership interest as prescribed by the Agreement. (See Campbell
22 Decl., Ex. A, ¶ 7.4(d); hereinafter “the Agreement.”) Not only are there clear issues of disputed
23 material fact concerning whether Defendant has cooperated in the process of valuing and
24
ORDER ON DEFENDANT’S MOTION FOR
SUMMARY JUDGMENT- 5

1 purchasing the General Partnership interest (see Antoinette Decl. ¶¶ 18-23), but the Court agrees
2 with the point made by Plaintiff during oral argument on this motion: as long as Defendant
3 disputes whether he was properly removed, it is not in his best interest to acquiesce in the sale of
4 the General Partnership shares, and equity requires that he not be heard to argue that the failure
5 to purchase them at this time somehow invalidates the appointment of his successor. 1
6

Defendant's third argument concerning the invalidity of RRW Legacy’s appointment is

7 more substantive. The Agreement states:
8

[Argyll] shall be terminated unless a new General Partner is selected within sixty
(60) days of the date on which the Partnership no longer had a general partner.
The Limited Partners first shall be given a period of thirty (30) days in which to
select a new General Partner. Selection shall occur upon agreement of the
Limited Partners holding 60% or more of the Limited Partners’ Partnership
Interests.

9
10
11

Agreement, ¶ 7.6.
12
As long as Robert Walker held the position of General Partner, regardless of how the
13
term “Limited Partners’ Partnership Interests” was defined it would require a vote by at least
14
four of the Limited Partners to achieve a 60% majority and approve the selection of a successor
15
General Partner. When Robert stepped down as General Partner, named Campbell as his
16
successor and distributed his Limited Partner shares among the five siblings/Limited Partners,
17
however, the situation became considerably less well-defined.
18
Under the configuration of Argyll as it existed at the time the vote was cast to oust
19
Campbell as General Partner, depending on how the term “Limited Partners’ Partnership
20
21
22
1

Finally, on the issue of the sale of the General Partnership interest, the Court concurs with Plaintiff’s

23 other point made at oral argument: that § 9 of the Agreement sets no timeline for the purchase of the General

Partnership shares, nor any requirement that the transfer of interest occur simultaneously with the appointment of the

24 successor.
ORDER ON DEFENDANT’S MOTION FOR
SUMMARY JUDGMENT- 6

1 Interests” is defined, the vote to install RRW Legacy as the successor General Partner was either
2 proper or improper:
3

1. If “Limited Partners’ Partnership Interest” is defined as “the total interest held by each

4

Limited Partner in his/her capacity as Limited Partner” (i.e., 95% of the total of all

5

shares) then the combined interest held by Antoinette, Victoria, and Angus (57% of the

6

total of all shares) equals 60% of the shares allotted to the Limited Partners in their

7

capacity as Limited Partners;

8
9

2. If “Limited Partners’ Partnership Interest” is defined as “the total interest, including the
General Partnership share, held by each Limited Partner,” then the combined interest held

10

by Antoinette, Victoria and Angus falls short of 60%.

11

Unsurprisingly, Plaintiff advocates for the former definition while Defendant insists that

12 the latter is the only proper reading of the Agreement. It is the finding of this Court that the term
13 is ambiguous and that the Agreement on its face offers no clear-cut evidence of which
14 interpretation is correct. On that basis, the Court must deny summary judgment for Defendant
15 on this issue.
16

It is the law of Washington State that:

17

[E]xtrinsic evidence may be relevant in discerning [ ] intent, where the evidence gives
meaning to words used in the contract. Nationwide Mut. Fire Ins. Co. v. Watson, 120
Wash.2d 178, 189, 840 P.2d 851 (1992) (extrinsic evidence illuminates what was
writeen not what was intended to be written). However admissible extrinsic evidence
does not include:
• Evidence of a party’s unilateral or subjective intent as to the meaning of a
contract word or term
• Evidence that would show an intention independent of the instrument; or
• Evidence that would vary, contradict or modify the written word.

18
19
20
21
22

23 Hollis v. Garwall, Inc., 137 Wn.2d 683, 696-97 (1999) (emphasis in original; further citations
24 omitted).
ORDER ON DEFENDANT’S MOTION FOR
SUMMARY JUDGMENT- 7

1
2

The Court does find the Agreement to be ambiguous.

3
Conclusion
4
5

The Court finds that genuine issues of disputed material fact preclude the granting of

6 summary judgment on the question of whether Defendant’s removal from the position of General
7 Partner was justified under the Agreement. The Court further finds that the ambiguity of the
8 Agreement prevents an award of summary judgment on the question of whether Plaintiff RRW
9 Legacy was properly selected as the successor General Partner following Defendant’s removal.
10

Defendant’s motion for summary judgment is DENIED.

11
12
13
14

The clerk is ordered to provide copies of this order to all counsel.
Dated: June 2, 2014.

15

A

16
17

Marsha J. Pechman
United States District Judge

18
19
20
21
22
23
24
ORDER ON DEFENDANT’S MOTION FOR
SUMMARY JUDGMENT- 8