LVB-Ogden Marketing LLC v. Bingham et al

Filing 126

MINUTE ORDER denying Defendant Henry Dean's 85 Motion for Order of Dismissal Pursuant to FRCP 41(b) ; denying Defendant Henry Dean's 87 Motion to Dismiss ; denying Judgment Debtors' 89 Second Motion to Dismiss ; denying Defendant BGH Holdings, LLC's 90 Motion to Dismiss for Failure to State a Claim ; denying Defendant Henry Dean's 103 Motion for Relief from Deadline Regarding Preliminary Injunction Briefing ; denying Plaintiff LVB-Ogden Marketi ng, LLC's 105 Motion for Protective Order ; denying Defendant SKBB Enterprises, LLC's 115 Motion to Dismiss for Failure to State a Claim ; directing parties to submit a Joint Status Report within fourteen (14) days of this Minute Order. Authorized by Judge Thomas S. Zilly.(SWT)

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

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LVB-OGDEN MARKETING, LLC,

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Plaintiff,
C18-243 TSZ
v.
MINUTE ORDER
DAVID S. BINGHAM, et al.,

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Defendants.

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The following Minute Order is made by direction of the Court, the Honorable
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(1)
Currently pending before the Court is a series of motions to dismiss (docket
nos. 85, 87, 89, 90, and 115), a motion for relief from deadline (docket no. 103), and a
motion for protective order (docket no. 105).
a.
Motions to Dismiss: Before the Court is (1) Defendant Henry
Dean’s Motion for Order of Dismissal Pursuant to Fed. R. Civ. P. 41(b) or in the
Alternative to Show Cause, docket no. 85 (“Dean’s 41(b) Motion”); (2) Defendant
Henry Dean, in his Capacity as Trustee of the Sharon Graham Bingham 2007
Trust’s, Motion to Dismiss, docket no. 87 (“Trustee’s Motion”); (3) Motion to
Dismiss by David S. Bingham, Sharon Bingham, Christopher Bingham, Kelly
Bingham, Bingo Investments, LLC, and CCRB Enterprises, docket no. 89
(“Judgment Debtors’ Motion”); (4) Henry Dean and BGH Holdings, LLC’s
Motion to Dismiss, docket no. 90 (“BGH Motion”); and (5) SKBB Enterprises,
LLC’s Motion to Dismiss, docket no. 115 (“SKBB Motion”). The legal theories
and arguments presented in these motions largely overlap and seek dismissal of
the First Amended and Verified Complaint, docket no. 82 (the “Amended
Complaint”) under Federal Rules of Civil Procedure 12(b)(1) for lack of subject
matter jurisdiction, 12(b)(6) for failure to state a claim, 12(b)(7) for failure to join

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MINUTE ORDER - 1

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indispensable parties, and 41(b) for failure to comply with Court order. The Court
rules on these issues and the pending motions as follows:

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i.
Plaintiff has complied with the Court’s April 25, 2018,
Minute Order, docket no. 69, ordering Plaintiff to file a verified
complaint.

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ii.
The Court concludes it has ancillary jurisdiction over the
claims for declaratory judgment and relief under Washington’s Uniform
Fraudulent Transfer Act (UFTA) asserted in the Amended Complaint.
Peacock v. Thomas, 516 U.S. 349, 356 (1996). On or around July 27,
2009, LVB-Ogden Marketing Corporation filed the underlying lawsuit in
the United States District Court for the Northern District of Illinois. See
Amended Complaint, Exhibit B (later assigned case number 09-cv-4518)
(the “Underlying Lawsuit”). On October 29, 2009, the Northern District
of Illinois granted LVB-Ogden Marketing Corporation’s “Motion to
Substitute Party Plaintiff LVB-Ogden Marketing, LLC in the place of
LVB-Ogden Marketing Corporation . . . .” Underlying Lawsuit, docket
no. 33. LVB-Ogden Marketing, LLC is the named plaintiff in these
supplemental proceedings and the Court concludes that LVB-Ogden
Marketing, LLC is the proper judgment creditor for purposes of
concluding that the Court has ancillary jurisdiction over the instant
dispute. Neither Washington’s Trust and Estate Dispute Resolution Act
(TEDRA) nor Federal Rule of Civil Procedure 69 divest the Court of its
ancillary jurisdiction. See Thomas, Head & Greisen Emps. Trust v.
Buster, 95 F.3d 1449, 1454–55 (9th Cir. 1996). For these reasons, the
Court declines to dismiss the Amended Complaint under Rule 12(b)(1).

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iii.
The Court incorporates by reference the arguments and
rulings made at the May 3, 2018, hearing. See docket 81 (motion hearing
transcript). At that hearing the Court rejected Defendants’ arguments that
Plaintiff has failed to state its UFTA and declaratory relief claims. Since
then, Plaintiff has filed the Amended Complaint which has bolstered the
allegations contained in the original complaint at issue during the hearing.
The Court concludes that Plaintiff has properly plead its claim for
declaratory judgment and relief under the UFTA consistent with Federal
Rules of Civil Procedure 8(a) and 12(b)(6). 1 See Aqua-Chem, Inc. v.
Marine Sys., Inc., No. C13–2280JLR, 2014 WL 795922, at *3–4 (W.D.

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That Plaintiff has already registered with this Court the judgment from the Underlying
Lawsuit does not somehow render its declaratory relief or UFTA claims implausible. As the
Amended Complaint makes clear, the instant litigation is an effort to assist Plaintiff in enforcing
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Wash. Feb. 27, 2002) (the definition of “transfer” under the UFTA is to
be construed as broad as possible to include both direct and indirect
dispositions of assets); RCW 19.40.081(2)(a) (permitting a judgment
creditor to recover the value of an asset that has been fraudulently
transferred, irrespective of whether the fraudulent transferee still
possesses that asset). 2 Likewise, the Amended Complaint is not subject
to dismissal on statute of limitations grounds. The vast majority of the
allegedly fraudulent transfers took place within the four-year limitations
period identified in RCW 19.40.091(1). For those limited transfers that
allegedly occurred outside of the limitations period, the Court concludes
that the Amended Complaint contains enough allegations to warrant
application of the discovery rule contained in the statute of limitations for
fraud at this stage of the litigation. See Freitag v. McGhie, 133 Wash. 2d
816, 821 (1997). Defendants will have the opportunity to test these
allegations during discovery. The Court therefore declines to dismiss the
Amended Complaint under Rule 12(b)(6).

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iv.
Plaintiff has joined all necessary parties sufficient to
withstand dismissal under Rule 12(b)(7). The Court concludes that it can
accord complete relief among the existing parties and Defendants have
not identified any absent party that has a legally protected interest in this
lawsuit. See Fed. R. Civ. P. 19(a)(1). The Court declines to dismiss the
Amended Complaint for failure to join any necessary parties.

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v.
For the foregoing reasons, the Court DENIES Dean’s 41(b)
Motion, docket no. 85, the Trustee’s Motion, docket no. 87, the Judgment
Debtors’ Motion, docket no. 89, the BGH Motion, docket no. 90, and the
SKBB Motion, docket no. 115.

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b.
Motion for Relief from Deadline: The Motion for Order Granting
Relief from Court Deadline Regarding Preliminary Injunction Briefing, docket no.
103, is DENIED. The pending motion for Preliminary Injunction, docket no. 4
(the “Preliminary Injunction Motion”) is ripe for the Court’s review.
c.
Motion for Protective Order: Plaintiff’s Motion for Protective
Order, docket no. 105, is DENIED. The Court has determined that no diversity
jurisdiction exists, but that this enforcement proceeding may continue under the

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Defendants argue that Plaintiff’s claims fail because the trust contains a spendthrift
provision. See Judgment Debtors’ Motion at 5. Courts routinely look past the language
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contained in a trust and look to the conduct of the relevant actors in assessing the extent to which
a trust is entitled to spendthrift protection. See, e.g., Britannica Holdings Ltd. v. Greer, 127
22 Wash. App. 926, 935 (2005).

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MINUTE ORDER - 3

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Court’s ancillary jurisdiction. However, Defendants may challenge the Court’s
jurisdiction at any time. Correspondingly, Defendants may depose LVB-Ogden
Marketing, LLC’s Rule 30(b)(6) witness about facts pertaining to jurisdiction,
including but not limited to whether the District Court for the Northern District of
Illinois had jurisdiction over the underlying action. Additionally, the parties may
proceed with the depositions of Steve Weiss, Joel Solomon, and James Raved, but
the Court will not delay its ruling on the Preliminary Injunction Motion.

(2)
The parties are DIRECTED to confer regarding the Proposed Case
Management Order submitted by Plaintiff at docket no. 99 and, within fourteen (14) days
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pretrial schedule.
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(3)
The Clerk is directed to send a copy of this Minute Order to all counsel of
record.
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Dated this 27th day of July, 2018.

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William M. McCool
Clerk

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s/Karen Dews
Deputy Clerk

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MINUTE ORDER - 4