Ten Bridges, LLC v. Midas Mulligan, LLC

522 F.Supp.3d 856

TEN BRIDGES, LLC, Plaintiff,

v.MIDAS MULLIGAN, LLC, et al., Defendants.

CASE NO. C19-1237JLR

United States District Court, W.D. Washington, at Seattle.

Signed February 25, 2021

William G. Fig, Sussman Shank, Portland, OR, Clifford Scott Davidson, Snell & Wilmer, Bellevue, WA, for Plaintiff.

Guy William Beckett, Berry & Beckett, PLLP, Seattle, WA, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS COUNTERCLAIMS

JAMES L. ROBART, United States District Judge

I. INTRODUCTION

Before the court is Plaintiff Ten Bridges, LLC's ("Ten Bridges") motion to dismiss or strike Defendants Midas Mulligan, LLC ("Midas") and Madrona Lisa, LLC's ("Madrona") (collectively, "Defendants") counterclaims. (Mot. (Dkt. # 53); see also Reply (Dkt. # 61).) Defendants oppose Ten Bridges’ motion. (Resp. (Dkt. # 59).) The court has reviewed Ten Bridges’ motion, the parties’ submissions filed in support of and in opposition to Ten Bridges’ motion, the relevant portions of the record, and the applicable law. Having been fully advised,¹ the court GRANTS in part and DENIES in part Ten Bridges’ motion to dismiss or strike.

II. BACKGROUND

Defendants’ counterclaims arise from litigation between the parties in King County Superior Court related to Ten Bridges’ attempts to redeem a property that Madrona purchased at a foreclosure sale. (See generally SAC (Dkt. # 47); SAC Ans. (Dkt. # 50).) The court begins by recounting the factual background underlying Ten Bridges’ claims against Defendants before proceeding to Defendants’ allegations regarding the state-court litigation between the parties. Finally, the court discusses the procedural background of the parties’ action in this court.

A. Factual Background

Ten Bridges, Midas, and Madrona compete to purchase residential property at judicial foreclosure auctions. (SAC ¶ 1.) The companies also "purchase redemption rights and/or the right to surplus proceeds from foreclosed owners and related parties following the sheriff's sale of a property." (Id. ) These rights entitle the purchasing companies "to redeem foreclosed properties or collect surplus proceeds, if any, following a judicial foreclosure sale after all secured creditors are satisfied." (Id. ¶ 10.) According to Ten Bridges, foreclosed property owners sell these rights to companies like Ten Bridges, Midas, and Madrona "when they are interested in receiving an upfront payment quickly, to avoid the cost and expense of redeeming a property or pursuing surplus proceeds, or when they are unsure whether any surplus proceeds will remain after the secured debt is satisfied." (Id. ¶ 12.)

Ten Bridges alleges that Midas and Madrona have "purposefully undertaken wrongful and improper actions to interfere with [Ten Bridges’] contracts with parties for the purchase of their redemption rights and/or their rights to surplus proceeds, causing direct harm and damage to [Ten Bridges]." (Id. ¶ 1.) Relevant to the instant motion, Ten Bridges alleges that Madrona interfered with a contract for purchase of redemption rights and rights to surplus proceeds that Ten Bridges entered into with non-party Yukiko Asano on May 15, 2019, after Madrona purchased Ms. Asano's property at a foreclosure sale on March 22, 2019.² (Id. ¶¶ 33-34.) It alleges that Madrona had no good-faith basis to object to Ten Bridges’ subsequent attempt to redeem Ms. Asano's property in state court and that Defendant Matthew Toth made unsolicited contact with Ms. Asano on behalf of Madrona to encourage her to breach her contract with Ten Bridges. (Id. ¶¶ 35-36.) It contends that the actions taken by Madrona and Mr. Toth constitute tortious interference with business relationships (id. ¶¶ 45-49 (Madrona), 68-70 (Mr. Toth)) and abuse of process (id. ¶¶ 75-79 (Madrona)).

B. State Court Procedural Background

Ten Bridges and Madrona litigated Ten Bridges’ attempt to redeem Ms. Asano's foreclosed property in King County Superior Court. (See generally SAC; SAC Ans.) Madrona alleges that the May 15, 2019, contract between Ten Bridges and Ms. Asano, pursuant to which Ms. Asano delivered to Ten Bridges a quit claim deed to her property, was unlawful. (SAC Ans. ¶ 20; id. at 17-23 ("Am. Counterclaims") ¶ 4.) According to Madrona, Ten Bridges asserted that the quit claim deed gave it the right to redeem the property; notified the King County Sheriff of its intent to redeem the property; and tendered what it claimed was the proper amount to redeem the property. (Am. Counterclaims ¶ 4.) Madrona, however, contended that the correct redemption amount was approximately $40,000 more than Ten Bridges’ tender. (Id. ¶ 5.) Because the parties disputed the redemption amount, the King County Sheriff refused to allow Ten Bridges to redeem the property. (Id. )

On July 10, 2019, Ten Bridges moved in King County Superior Court for an order establishing its tendered amount as the correct redemption amount. (Id. ¶ 6; 1/4/21 Beckett Decl. (Dkt. # 60) ¶ 2.a, Ex. 1.³ ) Madrona opposed Ten Bridges’ motion, arguing that the contract between Ten Bridges and Ms. Asano was unlawful and unenforceable, and that even if the contract was lawful, the amount Ten Bridges had tendered was insufficient to redeem the property. (Am. Counterclaims ¶ 7.) On August 8, 2019, the superior court ruled in favor of Madrona, holding that the quit claim deed between Ms. Asano and Ten Bridges was void and unenforceable because their contract violated RCW 63.29.350(1).⁴ (Id. ¶ 8.) On August 30, 2019, Ten Bridges appealed the superior court's order. (Id. ¶ 14; 1/4/21 Beckett Decl. ¶ 2.c, Ex. 3.)

Ten Bridges then requested a different form of quit claim deed from Ms. Asano. (Am. Counterclaims ¶ 9.) According to Madrona, Ten Bridges told Ms. Asano it needed the new form of quit claim deed "in order to ‘save time’ " in its effort to obtain surplus proceeds from the sale of Ms. Asano's former property. (Id. ) Madrona alleges that Ten Bridges did not tell Ms. Asano that the superior court had invalidated the prior quit claim deed and did not inform her that it was attempting to redeem her former property. (Id. ) Ms. Asano signed the new quit claim deed and delivered it to Ten Bridges. (Id. ¶ 10.)

On October 15, 2019, Ten Bridges moved again in the superior court, this time with the new quit claim deed, to set the amount required to redeem the property from Madrona. (Id. ¶ 11; 1/6/20 Beckett Decl. (Dkt. # 23) ¶ 2.i, Ex. 9.⁵ ) It contended that because the new quit claim deed did not contain the terms that the court had previously found unlawful, it was severable from the original contract and enforceable. (Am. Counterclaims ¶ 11.) Madrona again opposed Ten Bridges’ motion, and on October 30, 2019, the superior court again ruled in Madrona's favor on the ground that the contract between Ten Bridges and Ms. Asano was unlawful under RCW 63.29.350(1). (Id. ¶¶ 12, 13.) On November 27, 2019, Ten Bridges appealed the superior court's second order invalidating its contract with Ms. Asano.⁶ (Id. ¶ 14; 1/4/21 Beckett Decl. ¶ 2.f, Ex. 6.)

On October 26, 2020, the Washington Court of Appeals affirmed the superior court's orders invalidating the contract between Ten Bridges and Ms. Asano and the quit claim deeds that Ms. Asano executed pursuant to that contract. (Am. Counterclaims ¶ 15); see Ten Bridges, LLC v. Guandai , 15 Wash.App.2d 223, 474 P.3d 1060, 1069-70 (2020) (holding that the contract between Ten Bridges and Ms. Asano violated RCW 63.29.350(1) and voiding the quit claim deeds). Ten Bridges moved for reconsideration and informed Madrona that it would petition the Washington Supreme Court for review if the Court of Appeals denied that motion. (Id. ¶ 22.) The Washington Court of Appeals denied Ten Bridges’ motion for reconsideration on December 31, 2020. (1/4/21 Beckett Decl. ¶ 2.g, Ex. 7.)

C. Federal Court Procedural Background

Ten Bridges filed its original complaint in this action on August 7, 2019, while its first motion to redeem Ms. Asano's property was still pending before the King County Superior Court. (Compl. (Dkt. # 1).) Ten Bridges alleged claims arising from the sales of four properties—including Ms. Asano's—against Madrona, Midas, and Defendant Danielle Gore for tortious interference with business relationships; against Madrona and Midas for abuse of process; and against Madrona and Midas for injunctive relief. (See generally id. )

On August 27, 2019—after the superior court entered its first order invalidating the contract between Ten Bridges and Ms. Asano, and after Ten Bridges filed its notice of appeal of that order—Ten Bridges amended its complaint to include allegations establishing this court's diversity jurisdiction over its claims. (FAC (Dkt. # 6).) Ten Bridges did not, however, reallege its claim against Madrona for tortious interference with business relationships in its amended complaint. (Compare Compl. ¶¶ 31-39 (alleging tortious interference claims based on the sales of both Ms. Asano's property and property owned by Jay Millsap) with FAC ¶¶ 31-36 (alleging a tortious interference claim based only on the sale of Mr. Millsap's property).) In both its complaint and its amended complaint, Ten Bridges alleged a claim for abuse of process arising from Madrona's conduct in the state-court litigation regarding Ms. Asano's foreclosed property. (Compl. ¶¶ 53-57; FAC ¶¶ 50-54.)

Defendants answered the first amended complaint on November 25, 2019—after the superior court denied Ten Bridges’ second motion to set the redemption price for Ms. Asano's property—and asserted a counterclaim on behalf of Madrona and Midas against Ten Bridges for violation of Washington's anti-SLAPP⁷ statute, RCW 4.24.510. (Ans. (Dkt. # 19).) This statute provides that "[a] person who communicates a complaint or information to any branch or agency of federal, state, or local government ... is immune from civil liability for claims based upon the communication to the agency ... regarding any matter reasonably of concern to that agency." RCW 4.24.510. A...