Deutsch v. Schoelkopf et al

Opposition BRIEF re MOTION to Dismiss the Action and in Opposition to Plaintiff's Interpleader Motion

W.D. Wash.October 3, 2016

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 129134.0003/6774228.7 PLAINTIFF’S BRIEF OPPOSING DEFENDANTS’ MOTION TO DISMISS LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4100 SEATTLE, WASHINGTON 98101-2338 206.223.7000 FAX: 206.223.7107 THE HONORABLE RONALD B. LEIGHTON . I UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT TACOMA EILEEN DEUTSCH Plaintiff-in-Interpleader, v. ANDREW L. SCHOELKOPF, MICHELLE STORRS BOOZ, JOHN STORRS BOOZ, VALERIE CARBERRY and the RICHARD GRAY GALLERY Defendants-in-Interpleader. ) ) ) ) ) ) ) ) ) ) ) ) ) No. 3:16-CV-05561-RBL PLAINTIFF’S BRIEF OPPOSING DEFENDANTS’ MOTION TO DISMISS NOTED FOR HEARING ON: OCTOBER 7, 2016 ORAL ARGUMENT REQUESTED Case 3:16-cv-05561-RBL Document 21 Filed 10/03/16 Page 1 of 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 129134.0003/6774228.7 PLAINTIFF’S BRIEF OPPOSING DEFENDANTS’ MOTION TO DISMISS - i LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4100 SEATTLE, WASHINGTON 98101-2338 206.223.7000 FAX: 206.223.7107 TABLE OF CONTENTS Page I. INTRODUCTION/RELIEF REQUESTED ..................................................................... 1 II. FACTUAL AND PROCEDURAL BACKGROUND ..................................................... 2 A. Additional Background Supplements the Complaint. .......................................... 3 1. The motion assumes that Andrew Schoelkopf is the exclusive representative of the Schoelkopf gallery corporation (dissolved in 1995) and of his mother and brother. ....................................................... 3 2. The motion assumes the sculpture was not sold in 1969-70. ................... 3 3. The motion rests on speculations about the August 25, 1977 transaction between the gallery and Monique Storrs Booz. ..................... 4 4. Potential additional interpleader claimants/defendants Edwin George Booz and the successors to the Schoelkopf gallery. .................... 6 B. There Were Potential Adverse Claimants When This Action Was Filed............. 7 C. The Parties Have Pending Initial Motions. ........................................................... 7 III. ARGUMENT AND ANALYSIS ..................................................................................... 7 A. Statutory Interpleader Is Remedial and to be Liberally Construed. ..................... 7 B. Factual Issues Must Be Resolved in Favor of Deutsch on a Dismissal Motion for Lack of Subject Matter Jurisdiction under 12(b)(1). .......................... 8 C. The Record Satisfies the Adversity Requirements for Statutory Interpleader under Section 1335. ........................................................................ 10 1. Deutsch faced existing and prospective claimants. ……………………10 2. After judgment against three named defendants, there remains adversity between Deutsch and one remaining and two potential defendants. .............................................................................................. 13 D. Even if the Court Lacks Statutory Interpleader Jurisdiction, the Court has Personal, in Rem or Quasi-in Rem Jurisdiction. ................................................ 16 1. Defendants’ inapposite authorities attacking personal jurisdiction involved intangible property and contract rights, not tangible property. .................................................................................................. 16 2. Schoelkopf necessarily is invoking this state’s protection of his asserted ownership of the sculpture. ....................................................... 17 3. There have been minimum contacts. ...................................................... 19 4. This is also a traditional in rem or quasi-in-rem suit over tangible property. .................................................................................................. 20 IV. CONCLUSION .............................................................................................................. 20 Case 3:16-cv-05561-RBL Document 21 Filed 10/03/16 Page 2 of 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 129134.0003/6774228.7 PLAINTIFF’S BRIEF OPPOSING DEFENDANTS’ MOTION TO DISMISS - ii LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4100 SEATTLE, WASHINGTON 98101-2338 206.223.7000 FAX: 206.223.7107 TABLE OF AUTHORITIES Page(s) Cases Chan v. Soc’y Expeditions, Inc., 39 F.3d 1398 (9th Cir. 1994) .................................................................................................16 DiBernardo-Wallace v. Gullo, 34 Wn. App. 362, 661 P.2d 991 (1983) .................................................................................18 Dunbar v. United States, 502 F.2d 506 (5th Cir. 1974) .................................................................................................12 Edison v. United States, 822 F.3d 510 (9th Cir. 2016) ...................................................................................................9 Equitable Life Assur. Soc’y. of the U.S. v. Porter-Englehart, 867 F.2d 79 (1st Cir. 1989) ...................................................................................................12 FFOC Co. v. Invent A.G., 882 F. Supp. 642 (E.D. Mich. 1994) .....................................................................................16 In re Friedman, 64 A.D.2d 70 (N.Y. App. Div. 1978) ......................................................................................5 FutureSelect Portfolio Mgmt., Inc. v. Tremont Grp. Holdings, Inc., 175 Wn. App. 840, 309 P.3d 555 (2013), aff’d, 180 Wn.2d 954, 331 P.3d 29 (2014) ....................................................................................................................................19 Gemtel Corp. v. Community Redevelopment Agency, 23 F.3d 1542, 1544 n. 1 (9th Cir. 1994) .........................................................................................................................9 Great-W. Life & Annuity Ins. Co. v. Woldemicael, No. C05-01174JLR, 2006 WL 521719 (W.D. Wash. Mar. 2, 2006) ....................................19 Hanson v. Denckla, 357 U.S. 235 (1958) ........................................................................................................16, 20 Indianapolis Colts v. Mayor and City Council of Baltimore, 741 F.2d 954 (7th Cir. 1984) .................................................................................................12 Khaldei v Kaspiev, 135 F.Supp.3d 70 (S.D.N.Y. 2015) .........................................................................................5 Libby, McNeill, & Libby v. City Nat’l Bank, 592 F.2d 504 (9th Cir. 1978) .................................................................................................14 Case 3:16-cv-05561-RBL Document 21 Filed 10/03/16 Page 3 of 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 129134.0003/6774228.7 PLAINTIFF’S BRIEF OPPOSING DEFENDANTS’ MOTION TO DISMISS - iii LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4100 SEATTLE, WASHINGTON 98101-2338 206.223.7000 FAX: 206.223.7107 Lincoln Gen. Ins. Co. v. State Farm Mut. Auto. Ins. Co., 425 F. Supp. 2d 738 (E.D. Va. 2006) ..............................................................................10, 12 Mack v. South Bay Beer Distribs., Inc., 798 F.2d 1279 (9th Cir. 1986) .................................................................................................9 Mattel, Inc. v. Barbie-Club.com, 310 F.3d 293 (2d Cir. 2002) ..................................................................................................20 Metro. Property & Cas. Ins. Co. v. Shan Trac, Inc., 324 F.3d 20 (1st Cir. 2003) .............................................................................................10, 12 Minnesota Mut. Life Ins. Co. v. Ensley, 174 F.3d 977 (9th Cir. 1999) .............................................................................................2, 10 New York Life Ins. Co. v. Dunlevy, 241 U.S. 518, 36 S. Ct. 613, 60 L. Ed. 1140 (1916) ...............................................................8 Office Depot Inc. v. Zuccarini, 596 F.3d 696 (9th Cir. 2010) .................................................................................................20 Paccar Int’l, Inc. v. Com. Bank of Kuwait, S.A.K., 757 F.2d 1058 (9th Cir. 1985) ...............................................................................................19 Phillips, Sons & Neal, Inc. v Borghi & Co., No. 86 Civ. 8544, 1987 WL 27690 (S.D.N.Y. Dec. 10, 1987.) ............................................14 Safe Air for Everyone v. Meyer, 373 F.3d 1035 (9th Cir. 2004) .................................................................................................9 Shaffer v. Heitner, 433 U.S. 186, 97 S. Ct. 2569, 53 L. Ed. 2d 683 (1977) ............................................17, 18, 19 St. Clair v. City of Chico, 880 F.2d 199 (9th Cir. 1989) ...................................................................................................9 State Farm Fire & Cas. Co. v. Tashire, 386 U.S. 523, 87 S. Ct. 1199, 18 L. Ed. 2d 270 (1967) ....................................................8, 10 Thornhill Publ’g Co. v. Gen. Tel. Co., 594 F.2d 730 (9th Cir. 1979) .................................................................................................10 V & R Fine Art, Inc. v. One Oil on Canvas Painting Entitled Brickyard Shed, by Arthur Dove, No. 08 CIV. 5031 (WHP), 2009 WL 637156 (S.D.N.Y. Feb. 13, 2009) ..............................17 VSIM Patent Co, LLC v. Benson, No. C12-102RSL, 2012 WL 2115373 (W.D. Wash. June 11, 2012) ........................16, 17, 19 Case 3:16-cv-05561-RBL Document 21 Filed 10/03/16 Page 4 of 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 129134.0003/6774228.7 PLAINTIFF’S BRIEF OPPOSING DEFENDANTS’ MOTION TO DISMISS - iv LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4100 SEATTLE, WASHINGTON 98101-2338 206.223.7000 FAX: 206.223.7107 Wausau Ins. Cos. v. Gifford, No. CIV. A. 90-2457, 1990 WL 211485 (E.D. La. Dec. 13, 1990), aff’d, 954 F.2d 1098 (5th Cir. 1992) ................................................................................................13, 14 White v. Lee, 227 F.3d 1214 (9th Cir. 2000) .................................................................................................9 Statutes 15 U.S.C. § 1125(d) .....................................................................................................................20 28 U.S.C. § 1335 ................................................................................................................. passim 28 U.S.C. § 1335(a) .......................................................................................................2, 8, 10, 15 28 U.S.C. § 1655 .........................................................................................................................20 RCW 4.25.185 .............................................................................................................................20 RCW 4.28.185(1)(c) ....................................................................................................................16 RCW 4.28.186 ...............................................................................................................................7 Other Authorities 2 Robert Casad, William Richman, Stanley Cox, 2 Jurisdiction in Civil Cases § 9.11 n. 378 (4th ed. 2014) ........................................................................................................8 5B Charles Alan Wright, et. al, Fed. Prac. & Proc. Civ. § 1350 (3d ed. & 2016 update) .....................................................................................................................................9 Federal Interpleader Act of 1936: I, 45 Yale L.J. 963 (1936) ......................................................8 Federal Interpleader and Some Recent Decisions, 26 Georgetown L.J. 1017, 1017 (1937-38) ........................................................................................................................8 Federal Tort Claims Act ................................................................................................................9 Restatement (First) of Judgments § 32 (1942) ............................................................................20 Restatement of Judgments § 3 (1942) .....................................................................................7, 20 Restatement (Second) of Judgments § 6 .....................................................................................19 Restatement (Second) of Conflict of Laws § 60 (1971) ..............................................................20 Case 3:16-cv-05561-RBL Document 21 Filed 10/03/16 Page 5 of 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 129134.0003/6774228.7 PLAINTIFF’S BRIEF OPPOSING DEFENDANTS’ MOTION TO DISMISS - 1 LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4100 SEATTLE, WASHINGTON 98101-2338 206.223.7000 FAX: 206.223.7107 I. INTRODUCTION/RELIEF REQUESTED Plaintiff opposes Defendants’ pre-answer motion to dismiss the suit for lack of subject- matter and personal jurisdiction and for the failure to state a claim upon which relief may be granted under Rule 12(b)(1), (2), and (6). Dkt. 16. Plaintiff Eileen Deutsch is a retired art teacher living in Port Townsend. Dkt. 1 ¶ 12. Deutsch is interpleading the sculpture, Industrial Forms (aka Auto Tower), that sculptor John Storrs created around 1922. A decade ago, Deutsch received the sculpture from the estate of her father, who owned a New York gallery that closed in 1992. Dkt. 1 ¶ 11. For the last two years, Deutsche investigated the sculpture’s background and value. Dkt. 1 ¶ 12. Deutsch’s investigation led her to identify three general categories of possible claimants: (1) the sculptor’s heirs and representatives, (2) the heirs and successors of the Schoelkopf Gallery that possessed the sculpture in 1969, and (3) Deutsch. Deutsch then brought this interpleader suit naming five specific defendants and additional possible defendants. Dkt. 1. After Deutsch brought this suit in late June 2016, three defendants disclaimed interests in the sculpture in mid-September. They are Valerie Carberry, the Gray Gallery and Michelle Storrs Booz, who are part of category (1) “the sculptor’s heirs and representatives.” Dkt. 17 and 18. Deutsch stipulates that upon this Court entering judgment that these three have no remaining claims against the sculpture, they may be dismissed. Disclaiming Defendant Michelle Storrs Booz is one of several heirs of the sculptor Storrs (his granddaughter). Disclaiming Defendant Valerie Carberry reportedly has represented the Storrs estate and is a part owner of the third disclaiming defendant, The Gray Gallery in Chicago. Deutsch submits a proposed final order and partial judgment under Rule 54(b) declaring that these three Defendants have no claims against the sculpture. The proposed order also indicates that Defendant John Storrs Booz (a grandson of the sculptor) is deceased and Deutsch may substitute the appropriate successor in the next 90 days. (While attempting service, Deutsch learned of his death in 2005.) Additionally, the order indicates that John Storrs Booz remains a potential judgment defendant and Deutsch may substitute him or his assignee or successor Case 3:16-cv-05561-RBL Document 21 Filed 10/03/16 Page 6 of 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 129134.0003/6774228.7 PLAINTIFF’S BRIEF OPPOSING DEFENDANTS’ MOTION TO DISMISS - 2 LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4100 SEATTLE, WASHINGTON 98101-2338 206.223.7000 FAX: 206.223.7107 (possibly Edwin George Booz if not Michelle) in the next 90 days. This case is at the first stage of the interpleader action where the initial issue is whether the court has jurisdiction and later at the second stage, the court determines the rights of the claimants. The court has original jurisdiction over a statutory interpleader suit “if (1) [t]wo or more adverse claimants, …, are claiming or may claim to be entitled to such money or property ….” 28 U.S.C. § 1335(a) (bold added). “The court's jurisdiction under the interpleader statute extends to potential, as well as actual, claims.” Minnesota Mut. Life Ins. Co. v. Ensley, 174 F.3d 977, 980 (9th Cir. 1999). Deutsch faced potential liability to the sculptor’s heirs and representatives as well as to the Schoelkopf gallery’s successors. While Deutsch believes that she is the rightful owner, her potential liability to the potential claimants and her relinquishment of control and possession of the sculpture to the court satisfied the requirements of the interpleader statute, as established below. The record establishes at the time the suit was filed category (1) (“the sculptor’s heirs and representatives”) were potential claimants (two of those heirs may still have to be joined). Regarding category (2) (“the heirs and successors of the Schoelkopf gallery that possessed the sculpture in 1969”), there are loose ends like the winding up of the corporation, properly identifying successors and confirming that Andrew Schoelkopf has authority to act on behalf of the corporation that owned the gallery and his mother and brother. There are no fewer than two adverse claimants, and any factual issues must be resolved in favor of Deutsch since she has made a prima facie showing of adverse claimants in response to this preanswer motion. Alternatively, even if Deutsch did not satisfy the adverse claimant requirements for statutory interpleader, the court has diversity jurisdiction over the suit involving the sculpture valued by Defendant Carberry at $600,000 and personal jurisdiction. II. FACTUAL AND PROCEDURAL BACKGROUND The 12-page complaint attaches nine exhibits. Dkt. 1. Defendants have submitted declarations and Deutsch and her counsel are submitting responsive declarations with exhibits including documents from the Smithsonian Archives of American Art. Case 3:16-cv-05561-RBL Document 21 Filed 10/03/16 Page 7 of 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 129134.0003/6774228.7 PLAINTIFF’S BRIEF OPPOSING DEFENDANTS’ MOTION TO DISMISS - 3 LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4100 SEATTLE, WASHINGTON 98101-2338 206.223.7000 FAX: 206.223.7107 A. Additional Background Supplements the Complaint. 1. The motion assumes that Andrew Schoelkopf is the exclusive representative of the Schoelkopf gallery corporation (dissolved in 1995) and of his mother and brother. Defendant Andrew Schoelkopf (“Andrew”) asserts that the sculpture was sold by Monique Storrs Booz (“Monique”) to the Schoelkopf Gallery in August 1977. Dkt. 19. The 1969 consignment agreement was on behalf of Schoelkopf’s father and permitted him to assign his rights to a corporation. Dkt. 1-1 at 25, 31. A subsequent state record for a corporation named, “Robert J. Schoelkopf Gallery Ltd.,” has an initial filing date of April 5, 1974, and dissolution date of September 27, 1995. Exhibit A to Decl. of Christopher B. Wells Opposing Defs.’ Mot. to Dismiss (“Wells Decl.”) (“Wells Ex. A”) (admissible under ER 803(8)). The sculpture transaction between the Schoelkopf Gallery and Monique occurred in August 1977—three years after the incorporation of the gallery. Compl. Ex. G (Dkt. 1-1 at 22). Defendants have provided no evidence tracking the Schoelkopf Gallery entity’s assets to anyone: another art gallery (with sale proceeds distributed to shareholders), transfer of the assets to the Menconi + Schoelkopf Gallery in New York City in exchange for Andrew’s interest in that Gallery, http://www.msfineart.com/about/; or distribution of the assets to various Schoelkopf family members. Defendants supplied no evidence that Andrew had obtained the Schoelkopf Gallery entity’s assets or had a power of attorney authorizing him to act on behalf of his mother and brother, or Gallery asset purchasers, to prosecute claims on their behalf at the time this suit was filed. Andrew speculated about his legal authority to act rather than supply first hand evidence to demonstrate it. On this record, Andrew’s mother or brother or someone who acquired the gallery’s assets could have launched a separate lawsuit claiming the sculpture, and there were even more questions before the suit was filed. 2. The motion assumes the sculpture was not sold in 1969-70. Schoelkopf Gallery records raise the possibility that the sculpture could have been sold between September 1969 and October 1970 – about seven years before Robert told Monique the sculpture was stolen. The Industrial Forms sculpture was initially listed on an April 15, Case 3:16-cv-05561-RBL Document 21 Filed 10/03/16 Page 8 of 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 129134.0003/6774228.7 PLAINTIFF’S BRIEF OPPOSING DEFENDANTS’ MOTION TO DISMISS - 4 LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4100 SEATTLE, WASHINGTON 98101-2338 206.223.7000 FAX: 206.223.7107 1969 inventory of Storrs works consigned to the Corcoran Gallery of Art in Washington DC by the Downtown Gallery in New York City. Wells Exs. C and D. Monique and Robert Schoelkopf adopted that same inventory list and labelled it Exhibit C to their 1969 contract. Wells Ex. E and Dkt. 15-1 at 5-6. On both lists (Wells Exs. D and E), longhand notations on the line for Industrial Forms at the bottom of the first page indicate that the sculpture was in the gallery, as opposed to the warehouse, on “9/17/69.” Yet, from October 20, 1970 onward, the sculpture is not included on any inventory. Wells Exs. F (10/20/70), G (11/17/70), H (Nov. 21- Dec. 24 [1970]) and I (Mar. 4 – 29, 1975). 3. The motion rests on speculations about the August 25, 1977 transaction between the gallery and Monique Storrs Booz. On May 8, 1975, about a week after Schoelkopf reported to the Art Dealers Association of America the theft of “Opposing Forms,” another Storrs sculpture, Dkt. 15-1 at 2 (and Dkt. 1- 1 at 33), he wrote to Monique with news of a “rash of interest” in Storrs works resulting in a number of museums “borrowing” them. Wells Ex. J. But despite the absence of Industrial Forms from inventory lists for over six years and as close in proximity to this letter as March 4 – 29, 1975, Schoelkopf said nothing to Monique about a theft of Industrial Forms for another two years -- in the August 25, 1977 letter. Compl. Ex. G (Dkt. 1-1 at 22). The dismissal motion fails to address another relevant document from the Archives: a two-page longhand note from Monique to Robert (Bob) dated August 29, 1977. Wells Ex. B. It appears to respond to Robert’s August 25, 1977 letter to Monique (Compl. Ex. G, Dkt. 1-1 at 22), based on Monique’s confirmed receipt of a large check transmitted with Schoelkopf’s August 25 letter and her inclusion of a $250 check for “repairs on Forms in Space,” which Robert’s August 25 letter had requested. Defendants submit speculative (legal) opinion testimony about what Monique and Robert Schoelkopf intended in August 1977. Andrew Schoelkopf posits that his father apparently “compensated” Monique for what he would have paid her had the sculpture been sold and echoes Carberry’s legal opinion about ownership. Andrew Decl. ¶¶ 9-11, Dkt. 19 at Case 3:16-cv-05561-RBL Document 21 Filed 10/03/16 Page 9 of 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 129134.0003/6774228.7 PLAINTIFF’S BRIEF OPPOSING DEFENDANTS’ MOTION TO DISMISS - 5 LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4100 SEATTLE, WASHINGTON 98101-2338 206.223.7000 FAX: 206.223.7107 3:1-10. But this testimony is simply Andrew’s second-hand interpretation of the transaction described in Complaint Ex. G (Dkt. 1-1 at 22). Neither Andrew nor Michelle participated in the August 1977 transaction, nor did either provide testimony about the standard practice, custom or habit of Monique and Robert with respect to deviations from their 1969 contract terms (Dkt. 15-1 at 8-10) concerning pieces of stolen art. Id.; Michelle Decl. ¶¶ 10-14; Dkt. 18 at 2:24-3:16. Michelle, after submitting hearsay testimony as to what Monique said about the August 25, 1977 letter, offered a legal opinion on ownership: “Given that Robert Schoelkopf made my mother whole for the loss of the sculpture, I believe that title passed to him and the rightful owner of the sculpture is the Schoelkopf family.” Id. at 3:14-16.1 Likewise, Defendant Valerie Carberry submitted testimony that included hearsay upon hearsay about Monique’s lay legal interpretation of the August 1977 transaction to support Carberry’s legal opinion. Carberry Decl. ¶¶ 15-19; Dkt. 17 at 3:12-4:4. Despite their usurpation of the Court’s role as decision-maker on the facts and law, even as they relied on hearsay, none of the Defendants explained the discrepancy between the legal conclusions they concocted and the plain terms of the 1969 contract (Dkt. 15-1 at 9-10). Schoelkopf could not purchase a Storrs piece and yet pay his gallery a commission, and he had to have the specific written permission of Monique to purchase. Id. Defendants’ legal opinions are not admissible in evidence and contradict the ancient documents that are. ER 803(16). And despite the “rash of interest” in Storrs works swelling up in 1975, Schoelkopf 1 The Schoelkopf gallery’s incomplete payment withheld a commission in violation of the 1969 contract’s self- dealing clause and paid less than fair market value. Exs. G-H to Compl, Dkt. 1-1 at 22-31. The gallery also violated the agreement’s term requiring the insurance of the work since there is some indication the insurance claim was rejected. At most, the gallery’s payment had the effect of partial subrogation to lay claim to the recovery of damages against a third party; there is no documentation of a transfer of title. “[A] consignment is considered ‘essentially, an agency with a bailment … [and the] … law is clear that where ‘a bailee fails to return a bailor’s property, there is a presumption of liability, and if the property cannot be found, a prima facie case of negligence exists.’” Khaldei v Kaspiev, 135 F.Supp.3d 70, 79 (S.D.N.Y. 2015) (citations omitted) (holding art dealer liable to artist for compensatory damages; dealer breached fiduciary duty to account for missing prints and could not meet the burden of proving “full payment was made for that work to the artist or the artist’s estate”); id. at 77, 80 (bailee’s explanation “cannot merely be the product of speculation and conjecture”); In re Friedman, 64 A.D.2d 70, 82-83 (N.Y. App. Div. 1978) (consignments were the prevalent business arrangement between artists or their estates and art dealers, even absent statute). New York law and the 1969 contract’s terms made it a consignment, even if the art dealer statute post-dated the contract. See also Dkt. 1-1 at 33 (“all our consignments”). Case 3:16-cv-05561-RBL Document 21 Filed 10/03/16 Page 10 of 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 129134.0003/6774228.7 PLAINTIFF’S BRIEF OPPOSING DEFENDANTS’ MOTION TO DISMISS - 6 LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4100 SEATTLE, WASHINGTON 98101-2338 206.223.7000 FAX: 206.223.7107 unilaterally selected a 1977 sale price for Industrial Forms, $3750, that appeared in a longhand notation dated 9/17/69, Wells Ex. D, suggesting that Schoelkopf substantially underpaid Monique in 1977 – unless he had actually sold the sculpture between September 1969 and October 1970 but botched the accounting. Monique’s August 29, 1977 longhand letter does not contain “specific written permission of Mrs. Booz” for Schoelkopf “to purchase [the Industrial Forms sculpture] for his own account,” as required by the contract between Monique and Schoelkopf. Dkt. 15-1 at p. 10. Defendants produced no “specific written permission” document. Monique’s August 29 letter shows why. Neither Michelle nor Andrew took part in the transactions between Monique and Robert between 1969 and 1977. They offered no direct testimony, only officious, inadmissible legal opinions. In contrast to Defendants’ conclusory hearsay and conjecture contradicting their predecessors’ contemporaneous documents,2 Deutsch has submitted admissible testimony of her father’s habit and routine practice of purchasing artworks offered at estate sales after retiring to Florida. Deutsch Opp’n. Decl. ¶ 4. She has presented direct testimony admissible under ER 406 that her father was a bona fide purchaser and direct testimony on her lawful 2006 acquisition of the sculpture from her father’s estate in Florida. 4. Potential additional interpleader claimants/defendants Edwin George Booz and the successors to the Schoelkopf gallery. Michelle’s Declaration raises the substitution of one potential adverse claimant for another. She confirmed John Storrs Booz had died years earlier. Dkt. 18 at 2:7-11. Michelle further explained that when her brother John died intestate, she and her brother Edwin George Booz (“Edwin”) each took half of John’s half of Monique’s estate. Id. Michelle then testified that she “paid out … Edwin ... for his share of John’s estate, leaving [Michelle] as the sole beneficiary.” Id. But Michelle did not provide an admissible record evidencing this transfer, nor did Edwin testify confirming that he had transferred his interest to Michelle and on what 2 Deutsch requests that the court either not consider the inadmissible evidence or strike the inadmissible portions including: Dkt 17 at 3:13-14, and 4:1-2 and 12-14; Dkt. 18 at 2:9-11, and 3:4-6 and 14-16; and Dkt. 19 at 3:9-10 and 18-19, and 5:1-4. Case 3:16-cv-05561-RBL Document 21 Filed 10/03/16 Page 11 of 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 129134.0003/6774228.7 PLAINTIFF’S BRIEF OPPOSING DEFENDANTS’ MOTION TO DISMISS - 7 LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4100 SEATTLE, WASHINGTON 98101-2338 206.223.7000 FAX: 206.223.7107 conditions. Consequently, in addition to potential transferees of the Schoelkopf Gallery corporation’s assets, Edwin remains a potential claimant. Michelle’s evidence does not remove the credibility of her testimony from the possibility of impeachment. B. There Were Potential Adverse Claimants When This Action Was Filed. Defendants’ Declarations have not changed the landscape of potential claimants at the time Deutsch filed this action. Their communications with each other in late 2015-early 2016 fail to extinguish the potential adverse claims Deutsch faced when this suit was filed, even when viewed with the benefit of hindsight. Carberry contacted Michelle in late 2015 and Andrew by early 2016, Dkt. 17 at 3:12-4:9; yet, neither Carberry nor Andrew told Deutsch that Michelle was the successor to the Storrs estate following Monique. Dkt. 17 and 19. Nor did Michelle contact Deutsch directly, to establish Carberry’s authority to speak on the question of ownership of the sculpture. Defendants have still offered no explanation why Michelle did not join in communications with Deutsch before June 24, 2016, when this action was filed. C. The Parties Have Pending Initial Motions. The pleadings on Deutsch’s motions for leave and for an injunction were closed upon Deutsch’s reply brief, which was filed on September 16, 2016.3 This response is limited to the other sections of the dismissal motion challenging subject matter jurisdiction for lack of adversity under the interpleader statute and lack of personal jurisdiction under rule interpleader and the state long-arm statute, and, the request for attorney’s fees under RCW 4.28.186. Dkt. 16, Argument § II. A & B, § III. A, B, C; Dkt. 16 at 18-23, 25-29. III. ARGUMENT AND ANALYSIS A. Statutory Interpleader Is Remedial and to be Liberally Construed. In 1916, the Supreme Court ruled that the location of the attachment and garnishment of an insurance policy that was the subject of an interpleader suit could be not the res (property) 3 Compare Dkt. 20 (Deutsch’s Reply) with Dkt. 16 at 23:13-25:4 (entitled “C. The Action Should Also Be Dismissed Because Deutsch Does Not Plan to Properly Deposit the Sculpture with the Court or Post a Bond”); id. at 29:8-30:9 (entitled “IV. Deutsch’s Motions for Injunction and Alternative Deposit Should Be Denied for the Same Reasons that the Action Should Be Dismissed.”) Case 3:16-cv-05561-RBL Document 21 Filed 10/03/16 Page 12 of 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 129134.0003/6774228.7 PLAINTIFF’S BRIEF OPPOSING DEFENDANTS’ MOTION TO DISMISS - 8 LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4100 SEATTLE, WASHINGTON 98101-2338 206.223.7000 FAX: 206.223.7107 supporting quasi-in rem jurisdiction and dismissed the suit since one of the claimants was beyond the jurisdiction of the district court. New York Life Ins. Co. v. Dunlevy, 241 U.S. 518, 36 S. Ct. 613, 60 L. Ed. 1140 (1916). The first Federal Interpleader Act was enacted in response to the Dunlevy decision. 2 Robert Casad, William Richman, Stanley Cox, 2 Jurisdiction in Civil Cases § 9.11 n. 378 at 376 (4th ed. 2014); Note, Federal Interpleader and Some Recent Decisions, 26 Georgetown L.J. 1017, 1017 (1937-38). Subsequently, the 1936 Interpleader Act expanded the scope of interpleader to permit bills in the nature of interpleader permitting “some special ground for equitable relief beyond double vexation.” Zechariah Chafee, Jr., The Federal Interpleader Act of 1936: I, 45 Yale L.J. 963, 970 (1936). Yet, the thrust of the pending 12(b)(1) dismissal motion is the absence of double vexation in view of the recent disclaimers by three defendants. Those disclaimers did not extinguish all adverse potential claims; moreover, an interested stakeholder is not disqualified under the existing federal statute. “The district courts shall have original jurisdiction of any civil action of interpleader or in the nature of interpleader …” 28 U.S.C. § 1335(a). Therefore, an interested stakeholder like Deutsch may bring a statutory “action … in the nature of interpleader.” Id. The plaintiff need not be “wholly disinterested with respect to the fund [or property] he [or she] has deposited in court. State Farm Fire & Cas. Co. v. Tashire, 386 U.S. 523, 540 n. 9, 87 S. Ct. 1199, 1208, 18 L. Ed. 2d 270 (1967) (citation omitted). Therefore, the 12(b)(6) dismissal of this case would violate the statute’s plain terms covering “two or more claimants … [who] are claiming or may claim to be entitled to such … property.” See § 1335(a). Dismissal would also violate the statute’s remedial purpose, and the directive that the statute be liberally construed. Tashire, 386 U.S. at 1204-05. B. Factual Issues Must Be Resolved in Favor of Deutsch on a Dismissal Motion for Lack of Subject Matter Jurisdiction under 12(b)(1). A motion to dismiss for lack of subject matter jurisdiction may either “facially attack … the allegations in a complaint as insufficient to invoke federal jurisdiction” or “factually attack Case 3:16-cv-05561-RBL Document 21 Filed 10/03/16 Page 13 of 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 129134.0003/6774228.7 PLAINTIFF’S BRIEF OPPOSING DEFENDANTS’ MOTION TO DISMISS - 9 LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4100 SEATTLE, WASHINGTON 98101-2338 206.223.7000 FAX: 206.223.7107 … the truth of the allegations, that by themselves, would otherwise invoke federal jurisdiction.” Safe for Everyone, 373 F.3d at 1039. The factual attack may “rely upon affidavits or any other evidence properly before the court.” St. Clair v. City of Chico, 880 F.2d 199, 201 (9th Cir. 1989). Rather than mount a facial attack against the complaint and its nine exhibits, Defendants are making a factual attack relying upon documents outside the complaint, and they claim the motion should not be converted into a summary judgment motion. Dkt. 16 at 16 n. 3 (citing Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004)). They rely upon three declarations that include as exhibits emails, letters, and other documents (without authentication and foundation in some instances). They rely on hearsay and legal conclusions; they omit the best evidence. Dkt. 17-19, Schoelkopf Decl., Storrs Booz Decl., Carberry Decl. (with Exs. 1-2). But the extrinsic evidence must be undisputable either by the parties’ stipulation or by admission or facts subject to judicial notice to be dispositive in a 12(b)(1) motion. “With a factual Rule 12(b)(1) attack … a court may look beyond the complaint to matters of public record without having to convert the motion into one for summary judgment.” White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000) (citing Gemtel Corp. v. Community Redevelopment Agency, 23 F.3d 1542, 1544 n. 1 (9th Cir. 1994) and Mack v. South Bay Beer Distribs., Inc., 798 F.2d 1279, 1282 (9th Cir. 1986)).4 Yet, the ultimate touchstone is: “Any factual disputes, however, must be resolved in favor of plaintiff” in such a pre-answer motion. Edison v. United States, 822 F.3d 510, 517 (9th Cir. 2016) (reversing 12(b)(1) dismissal under the independent contractor exception to the Federal Tort Claims Act). The 12(b)(1) motion should be denied: it asks the court prematurely to decide factual issues in favor of the moving party, rests on inadmissible evidence and speculates about evidence that is unavailable to the responding party. Defendants also nominally assert a 12(b)(6) claim on the same basis, but they fail to argue the merits. Dkt. 16 at 9:7-8. Consequently, Deutsch merely points to the principle: 4 Mack, 798 F.2d at 1282 (judicial notice). Factual issues may warrant discovery, and the court may order a further hearing before ruling on the Rule 12(b)(1) motion. 5B Charles Alan Wright, et. al, Fed. Prac. & Proc. Civ. § 1350 n. 74 (3d ed. & 2016 update). Case 3:16-cv-05561-RBL Document 21 Filed 10/03/16 Page 14 of 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 129134.0003/6774228.7 PLAINTIFF’S BRIEF OPPOSING DEFENDANTS’ MOTION TO DISMISS - 10 LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4100 SEATTLE, WASHINGTON 98101-2338 206.223.7000 FAX: 206.223.7107 “[W]hen a statute provides the basis for both the subject matter jurisdiction of the federal court and the plaintiffs' substantive claim for relief, a motion to dismiss for lack of subject matter jurisdiction rather than for failure to state a claim is proper only when the allegations of the complaint are frivolous.” Thornhill Publ'g Co. v. Gen. Tel. Co., 594 F.2d 730, 734 (9th Cir. 1979) (omitting quotation). C. The Record Satisfies the Adversity Requirements for Statutory Interpleader under Section 1335. Defendants acknowledge that an interpleader involves two stages with the court first considering whether interpleader jurisdiction lies. Dkt. 16 at 20:6-14. Defendants argue this case does not meet the adverse claim requirements, because several defendants have aligned and disavowed interest; they further accuse Deutsch of abusing the interpleader after she was informed all relevant parties are aligned. Dkt. 16 at 20:15- 23:12. Again, Defendants request the court to decide factual issues prematurely and ignore the statute’s text, history, and purpose. 1. Deutsch faced existing and prospective claimants. The court has original jurisdiction over a statutory interpleader suit “if (1) [t]wo or more adverse claimants, …, are claiming or may claim to be entitled to such money or property ….” 28 U.S.C. § 1335(a) (bold added). The “may claim” text indicates potential claims and was added by amendment and is remedial and must be liberally construed. Tashire, 386 U.S. at 1204-05. Consistent with this plain text, the Ninth Circuit has ruled: “The court's jurisdiction under the interpleader statute extends to potential, as well as actual, claims.” Minnesota Mut. Life Ins. Co. v. Ensley, 174 F.3d 977, 980 (9th Cir. 1999); Metro. Property & Cas. Ins. Co. v. Shan Trac, Inc., 324 F.3d 20, 22-24 (1st Cir. 2003) (“potential adversity … is entirely sufficient to meet the relatively undemanding jurisdictional requirement” at time of commencement even if claimants later settle). “And, because the existence of subject matter jurisdiction is determined as of the date the action is brought, it necessarily follows that federal jurisdiction over this statutory interpleader action remains notwithstanding the subsequent dismissal from the action of [all but one defendant-claimant].” Lincoln Gen. Ins. Co. v. State Farm Mut. Auto. Case 3:16-cv-05561-RBL Document 21 Filed 10/03/16 Page 15 of 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 129134.0003/6774228.7 PLAINTIFF’S BRIEF OPPOSING DEFENDANTS’ MOTION TO DISMISS - 11 LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4100 SEATTLE, WASHINGTON 98101-2338 206.223.7000 FAX: 206.223.7107 Ins. Co., 425 F. Supp. 2d 738, 742 (E.D. Va. 2006). Before Deutsch filed this action, sculptor’s representative (Carberry) stated in writing that because the sculpture “was stolen from the Schoelkopf Gallery *** The estate still retains title to it *** The representatives of the Storrs Estate … wish to restore the statue to their rightful ownership.” Dkt. 1-1 at 6 (italics added). Deutsch’s research of Archives documents indicated that Monique’s children were the “representatives of the Storrs estate [who] wish[ed] to restore the statue to their rightful ownership.” Dkt. 1-1 at 6. Deutsch responded by asking Carberry in a November 10, 2015 letter: 1. Who do you hold to be the current owner(s) … names, addresses, telephone numbers and email addresses). 2. What is your relationship to the owner(s) – are you authorized to speak on their behalf? 3. Provide documentation to support your authority to engage in these discussions … (I need to know that you are the person I should be dealing with … that the … “representatives” have authorized you to act as their agent in connection with their claim.) 4. Who are the “representatives of the Storrs Estate” and the “they” in your letter? Dkt. 1-1 at 16-17. Carberry never answered these questions and more, leaving Deutsch to name Carberry as a defendant in the Complaint, which was filed on June 24, 2016. Likewise, in his May 16, 2016 letter, Andrew did not identify the “representatives of the Storrs Estate”; nor did he provide evidence that Storrs Estate representatives had relinquished their claim of ownership. Dkt. 1-1 at 19-20. Instead, without joining or even identifying Michelle, John or Edwin, Andrew pointedly closed the letter with, I believe that this sets forth all the information you need to know to understand that the Schoelkopf family holds proper title to this work. Please let me know if we can arrange to have the work picked up from you in Washington. Id. at 19 (italics added). These furtive communications of Carberry and Andrew (combined with Archives documents contradicting their representations that the sculpture was stolen) suggested that the Storrs Estate had not even been fully informed of the potential adverse claims of Andrew Case 3:16-cv-05561-RBL Document 21 Filed 10/03/16 Page 16 of 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 129134.0003/6774228.7 PLAINTIFF’S BRIEF OPPOSING DEFENDANTS’ MOTION TO DISMISS - 12 LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4100 SEATTLE, WASHINGTON 98101-2338 206.223.7000 FAX: 206.223.7107 Schoelkopf and Deutsch. Against this background, when the Complaint was filed, Deutsch had ample reason to believe there were two categories of additional claimants: (1) the sculptor’s uninformed heirs and (2) the successor(s) to the Schoelkopf Gallery assets in addition to (3) Deutsch. The statutory text covering “claimants who are claiming or may claim” an interest in the sculpture include (1) the sculptor’s heirs and representatives (Chicago resident Michelle and John’s successors, possibly Edwin and Mary Adams Young (Dkt. 1-1 at 8) and (2) the heirs and successor of the Schoelkopf gallery -- New York or Connecticut Schoelkopf family members or other galleries to which the Schoelkopf Gallery assets might have been passed and (3) Deutsch. When the Complaint was filed, there was actual or potential adversity, and “jurisdiction over an interpleader action, once properly established, remains despite the fact that there is no longer a live dispute between any of the original defendant-claimants.” Lincoln, 425 F. Supp. 2d at 742. The default of a defendant or the withdrawal of a claim expedites the second stage of the interpleader that adjudicates the claims, by eliminating the claim; it does not extinguish jurisdiction under the statute. This is not a case involving only pseudo-adversity [such as Indianapolis Colts v. Mayor and City Council of Baltimore, 741 F.2d 954, 958 (7th Cir. 1984).]” Compare Metro. Property & Cas. Ins. Co., 324 F.3d at 23-24 with Defs. Mem. at 15:18-23; Indianapolis Colts v. Baltimore, 741 F.2d at 954, 956, 958 (7th Cir. 1984) (ruling the city of Baltimore and the Indianapolis board operating a stadium did not have conflicting claims over a single stake). “The threat of possible multiple litigation—not necessarily the likelihood of duplicative liability—justifies resort to interpleader.” Equitable Life Assur. Soc’y. of the U.S. v. Porter- Englehart, 867 F.2d 79, 84 (1st Cir. 1989). Defendants concede: “[A] prerequisite for the action is that the party requesting interpleader demonstrate that he has been or may be subjected to adverse claims.” Dkt. 16 at 20:6-14 (citing Dunbar v. United States, 502 F.2d 506 (5th Cir. 1974). This is not a case of Deutsch “employing cosmic interpleader” conjuring “some unnamed and unknown party or parties” with a claim based upon “factual arrogance” as the federal government did in Dunbar. Dunbar, 502 F.2d at 511-12. Case 3:16-cv-05561-RBL Document 21 Filed 10/03/16 Page 17 of 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 129134.0003/6774228.7 PLAINTIFF’S BRIEF OPPOSING DEFENDANTS’ MOTION TO DISMISS - 13 LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4100 SEATTLE, WASHINGTON 98101-2338 206.223.7000 FAX: 206.223.7107 2. After judgment against three named defendants, there remains adversity between Deutsch and one remaining and two potential defendants. Three months after this suit was filed, three defendants have disclaimed their interests. Deutsch stipulates to a judgment declaring that each of the three defendants who filed declarations disclaiming interests in the sculpture have no claim and may be dismissed; they are one heir of the sculptor Storrs (his granddaughter Michelle Storrs Booz) and the Chicago gallery and its owner representing the Storrs (the Richard Gray Gallery and its part owner Valerie Carberry). Dkt. 18 (Michelle Storrs Booz Decl.); Dkt. 17 (Cranberry Decl.). Deutsch’s pre-suit investigation led her to believe that Michelle Storrs Booz and John Storrs Booz received the residue of the Storrs estate from Monique. But the complaint warns that a sibling Edwin George Booz might have to be added as a defendant if he has a claim against the sculpture). Dkt. 1 at 5:18-23 & n. 5. Deutsch requests that the court reserve ruling on the dismissal of defendant John Stores Booz and potential defendant Edwin George Booze. Defendant Michelle Storrs Booz has provided inadmissible, second hand information about her brother Edwin’s interests. She states that the estate of her brother John Storrs Booze “is now fully closed” and she has “paid out my other brother, Edwin George Booze, for his share of John’s estate.” Dkt. 18 at 2:5-15. The admissible and best evidence would have been a sworn statement from Edwin George Booze and documents memorializing the events and transactions that Michelle testifies about. By failing to provide that evidence, Michelle has raised questions about her credibility that cannot be resolved on this record. Defendants point to two decisions for the proposition that where there is only one defendant claiming an interest there is not sufficient adversity. Dkt. 16 at 20:15-26, id. at 22:4- 11 (citing Libby, McNeill, & Libby v. City Nat’l Bank, 592 F.2d 504, 508 (9th Cir. 1978); Wausau Ins. Cos. v. Gifford, No. CIV. A. 90-2457, 1990 WL 211485, at *3 (E.D. La. Dec. 13, 1990), aff'd, 954 F.2d 1098 (5th Cir. 1992)). In Gifford, six insurance companies insured a Case 3:16-cv-05561-RBL Document 21 Filed 10/03/16 Page 18 of 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 129134.0003/6774228.7 PLAINTIFF’S BRIEF OPPOSING DEFENDANTS’ MOTION TO DISMISS - 14 LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4100 SEATTLE, WASHINGTON 98101-2338 206.223.7000 FAX: 206.223.7107 contractor/developer whose houses sunk or settled; the six insurers sought to consolidate 30 separate cases by means of an interpleader/declaratory judgment suit on six policies. 954 F.2d at 1099. The trial court dismissed the interpleader suit for lack of jurisdiction on two alternative grounds. One ground was that the home purchasers were not competing to recover from a single fund. Gifford, 1990 WL 211485, at *2. The alternative ground was an insurer could not be considered to be an interested party otherwise an insurer could bring an interpleader every time it denied coverage. 1990 WL 211485, at *3. The Fifth Circuit affirmed the dismissal on the first ground -- a single, identifiable fund was a prerequisite to an interpleader, and the six funds from the six policies failed to satisfy the single, identifiable fund requirement. 954 F.2d at 1100 (citing Tashire, 386 U.S. at 530). Separately, the Fifth Circuit it ruled: “Interpleader cannot be used to consolidate cases involving diverse claims against diverse funds.” Id. at 101. Ours is not such a case. There is a single sculpture interpleaded for appropriate interpleader. In Libby, the Ninth Circuit refused to exercise interpleader jurisdiction because the defendants raised claims that were separate and distinct from that transactions that had produced the deposited fund in a case stemming from the bankruptcy of a supplier of goods. Libby, 592 F.2d at 507-09 (where suppliers were not making a claim to interpleaded funds, it was improper to preside over their counterclaims).5 The Ninth Circuit ruled the court lacked jurisdiction under the interpleader statute, because the bank was the only defendant claiming an interest in the interpleaded funds. Id. at 507-8. The Ninth Circuit ruled the court lacked jurisdiction over the interpleader: “Here, only one party made a claim against the fund and that is insufficient.” Id. at 507-08. It appears that Libby did not argue that it was an interested stakeholder/second adverse claimant and the Ninth Circuit did not reach the related issue of whether a court would 5 Libby purchased frozen meals on a cost-plus basis from Shanghai Instant Foods and required Shanghai to make purchases from Libby-approved venders. Id. at 506. Shanghai obtained financing from a bank that received a security interest in Shanghai’s accounts receivable. Shanghai later declared bankruptcy; Libby interpleaded net sums owed to Shanghai (after a setoff). The suit named as defendants the bankruptcy trustee, the bank, and Shanghai suppliers and asked for a declaratory judgment freeing Libby from the supplier and debtor claims. Id. at 506-07. The bank was the only party to assert a claim in the funds, the suppliers counterclaimed against Libby based on the supplies provided to Shanghai, and the court ruled on the counterclaims. Id. at 507. Case 3:16-cv-05561-RBL Document 21 Filed 10/03/16 Page 19 of 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 129134.0003/6774228.7 PLAINTIFF’S BRIEF OPPOSING DEFENDANTS’ MOTION TO DISMISS - 15 LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4100 SEATTLE, WASHINGTON 98101-2338 206.223.7000 FAX: 206.223.7107 have jurisdiction if one of two defendants withdrew claims. Id. at 508 n. 4.6 The Libby decision does not address the issues before this Court. In summary, Defendants argue the court lacks jurisdiction, because the competing claims are “a fiction, concocted to … invoke [the] nationwide service of process provision” under the federal interpleader statute. Dkt. 16 at 8-9. Yet, the text, structure, purpose, and history of § 1335 demonstrate that the court has jurisdiction over the interpleader of the Industrial Forms sculpture. This is a quintessential interpleader – one for a sculpture that went missing over forty years ago and whose absence the defendants failed to report to the Art Loss Registry until 2016. Dkt. 1 at 10 n. 10. The decades of delay cause evidentiary prejudice (the loss of memories and records). The decades of delay also multiply the number of potential claimants after the deaths of direct participants, the parsing of assets in their estates, and corporate dissolution. These circumstances squarely fit into § 1335’s plain terms granting the court jurisdiction over actions “in the nature of interpleader” if “two or more claimants … are claiming or may claim to be entitled to such … property.” See § 1335(a). The statute’s purpose was to create personal jurisdiction over defendants residing in states where the res is not located. The statute’s history reveals an expansion of its remedies to allow for interested stakeholders (the in-the-nature-of-interpleader text) like Deutsch to bring suit and to include potential claims (the may-claim text). See id. These remedial terms must be construed liberally in favor of Deutsch. See id. Next, the case law underscores that the public policies and equities favor Deutsche, who is a retired teacher. She is not a professional stakeholder like the insurance companies, a professional football franchise, and others engaging in forum shopping and artificial adversity in the cases cited by defendants. The threshold is relatively low for the court’s initial determination of adversity supporting interpleader jurisdiction. If there are factual issues, then they should be decided in 6 See, e.g., Phillips, Sons & Neal, Inc. v Borghi & Co., No. 86 Civ. 8544, 1987 WL 27690 *2-3 (S.D.N.Y. Dec. 10, 1987.) (auction house filed interpleader of funds paid by purchaser of drawings when confusion developed as to scope of the collection; but seller notified court it would “release its claims upon appropriate order of the Court”; leaving only one claimant because interpleader plaintiff had no claim of its own to the funds, so no adverse claims remained and action was dismissed). In contrast, Deutsch and Schoelkopf at a minimum have adverse claims. Case 3:16-cv-05561-RBL Document 21 Filed 10/03/16 Page 20 of 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 129134.0003/6774228.7 PLAINTIFF’S BRIEF OPPOSING DEFENDANTS’ MOTION TO DISMISS - 16 LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4100 SEATTLE, WASHINGTON 98101-2338 206.223.7000 FAX: 206.223.7107 Deutsch’s favor on this record or she should be permitted to engage in discovery to bolster the jurisdiction showing under § 1335. D. Even if the Court Lacks Statutory Interpleader Jurisdiction, the Court has Personal, in Rem or Quasi-in Rem Jurisdiction. Defendants contend the Court cannot assert personal jurisdiction over them under Rule 22 interpleader and diversity jurisdiction, based on the ownership of personal property located in Washington. Dkt. 16 at 27:14-16:21. Yet, our state long-arm statute expressly authorizes jurisdiction over “an individual, his or her personal representative, … as to any action arising from the doing of any of said acts: … (c) The ownership, use, or possession of any property whether real or personal situated in this state.” RCW 4.28.185(1)(c). The state supreme court and Ninth Circuit have ruled that the long-arm statute is intended to operate to the full extent allowed by due process except where limited by terms of the statute. Chan v. Soc'y Expeditions, Inc., 39 F.3d 1398, 1405 (9th Cir. 1994). 1. Defendants’ inapposite authorities attacking personal jurisdiction involved intangible property and contract rights, not tangible property. Defendants rely upon the dismissal of another suit seeking declaratory judgment on licenses covering a patent. Dkt. 16 at 27:21-28:10 (discussing VSIM Patent Co, LLC v. Benson, No. C12-102RSL, 2012 WL 2115373, at *2 (W.D. Wash. June 11, 2012). That case “really boils down to a dispute over the validity and ownership of licenses and sub-licenses granted or received by one or more of the Defendants before Plaintiff took ownership of the patent,” and where the court was asked “to declare each of these licenses invalid or, in the alternative, to declare that it is the sole lawful owner of each.” VSIM Patent Co., 2012 WL 2115373, at *1. But VSIM’s facts and the applicable law differs fundamentally from our artwork case. “[T]he situs of intangible property does not automatically equate to the domicile of its owner” and a patent is generally not a res within a district. VSIM Patent Co., 2012 WL at *2 n. 5 (citing Denckla, 357 U.S. at 246-47 and FFOC Co. v. Invent A.G., 882 F. Supp. 642, 649 (E.D. Mich. 1994)). Denckla involved intangible property (funds) – not tangible property and Case 3:16-cv-05561-RBL Document 21 Filed 10/03/16 Page 21 of 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 129134.0003/6774228.7 PLAINTIFF’S BRIEF OPPOSING DEFENDANTS’ MOTION TO DISMISS - 17 LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4100 SEATTLE, WASHINGTON 98101-2338 206.223.7000 FAX: 206.223.7107 FFOC Co. recounts how courts have generally held patents are intangible property. In contrast to the intangible property at issue in those decisions, a decision involving tangible property – an artwork -- has ruled the federal declaratory judgment act and the removal of lien provision grant jurisdiction over a painting in the district and over the defendants. V & R Fine Art, Inc. v. One Oil on Canvas Painting Entitled Brickyard Shed, by Arthur Dove, No. 08 CIV. 5031 (WHP), 2009 WL 637156, at *3 (S.D.N.Y. Feb. 13, 2009) (quoting FFOC, 882 F. Supp. at 649). 2. Schoelkopf necessarily is invoking this state’s protection of his asserted ownership of the sculpture. VSIM Patent Co. also relied upon Shaffer v. Heitner, which presented the different factual and legal situation of quasi in rem jurisdiction over intangible property for the purpose of seizure/attachment and leveraging other claims. Shaffer was a shareholder’s derivative suit in Delaware seeking to seize/attach shares (intangible property) belonging to corporate officers and directors of a Delaware corporation and requiring personal jurisdiction over those defendants, who resided in other states. Shaffer v. Heitner, 433 U.S. 186, 205-06, 97 S. Ct. 2569, 2581–82, 53 L. Ed. 2d 683 (1977). Yet, true in rem jurisdiction over personal or real property and quasi-in-rem jurisdiction by a plaintiff asserting a pre-existing claim to the property in the forum survive Shaffer: For example, when claims to the property itself are the source of the underlying controversy between the plaintiff and the defendant, it would be unusual for the State where the property is located not to have jurisdiction. In such cases, the defendant's claim to property located in the State would normally indicate that he expected to benefit from the State's protection of his interest. The State's strong interests in assuring the marketability of property within its borders and in providing a procedure for peaceful resolution of disputes about the possession of that property would also support jurisdiction, as would the likelihood that important records and witnesses will be found in the State. Shaffer v. Heitner, 433 U.S. 186, 207–09 (bold added). Here, Washington has a “strong interest in assuring the marketability” of the sculpture; and Andrew told Deutsch, I believe that this sets forth all the information you need to know to understand that the Schoelkopf family holds proper title to this work. Please let me know if we can arrange to have the work picked up from you in Washington. Case 3:16-cv-05561-RBL Document 21 Filed 10/03/16 Page 22 of 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 129134.0003/6774228.7 PLAINTIFF’S BRIEF OPPOSING DEFENDANTS’ MOTION TO DISMISS - 18 LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4100 SEATTLE, WASHINGTON 98101-2338 206.223.7000 FAX: 206.223.7107 Dkt. 1-1 at 19-20. Clearly, Schoelkopf claims to own the sculpture located in Washington and if he had someone pick it up, he would be benefiting from state laws here regarding its prior storage and deposit in the safe deposit box and while it was being transferred intrastate until it left the state. And regardless of where the issues were adjudicated, to recover the sculpture following a judgment in his favor, Schoelkopf would have to register the judgment in Washington; and Schoelkopf necessarily would “benefit from the State’s protection of his interest” by utilizing this state’s courts, marshals, sheriffs and other instrumentalities to execute and obtain possession of the sculpture. In contrast to VSIM’s result for intangible patents, the same guiding principles in Shaffer v. Heitner would lead to personal jurisdiction over Schoelkopf in this Court. In turn, the disclaiming Defendants seek to assist Schoelkopf and they submitted to personal jurisdiction when they filed declarations asking for a final judgment declaring that they have no claim against the sculpture and may be dismissed. Their actions reinforced this Court’s jurisdiction under § 1335. Defendants argue that it would be fundamentally unfair to permit personal jurisdiction on the basis of the statute located in the state and on defendants claiming an interest in that property; they cite two decisions for that proposition. Dkt. 16 at 28:11-21 (citing Great-W. Life & Annuity Ins. Co. v. Woldemicael, No. C05-01174JLR, 2006 WL 521719, at *1 (W.D. Wash. Mar. 2, 2006) and DiBernardo-Wallace v. Gullo, 34 Wn. App. 362, 364, 661 P.2d 991, 992 (1983)). But the Gullo decision did not stem from the ownership of property in Washington. The property was in Oregon. Gullo, 34 Wn. App. At 363-64. The defendants resided in California, plaintiff lived in Washington, and the jurisdictional question arose under the long arm statute’s tortious act provision. Plaintiff sued her former parents-in-law for conversion and the intentional infliction of emotional distress after her former husband allegedly fraudulently transferred to his parents his interest in real property in Oregon. Id. at 364. The court of appeals held that the parents in law did “not have sufficient contact with Washington to justify the assumption of personal jurisdiction over them” and alleged conduct “was a single, isolated incident with an effect in Washington only” because plaintiff resided in Case 3:16-cv-05561-RBL Document 21 Filed 10/03/16 Page 23 of 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 129134.0003/6774228.7 PLAINTIFF’S BRIEF OPPOSING DEFENDANTS’ MOTION TO DISMISS - 19 LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4100 SEATTLE, WASHINGTON 98101-2338 206.223.7000 FAX: 206.223.7107 there – not because the property was located here. Id. at 366-67. Next, Defendants rely upon a decision where an insurance company sued for declaratory judgment rescinding insurance coverage and for rulings that the insurance policy was void and no defendant was entitled to benefits. Woldemicael, 2006 WL 521719 at *1. The suit did not interplead the insurance proceeds; therefore, the court predictably ruled the cause of action was not one “arising under” under a long-arm statute’s provision for “the doing of acts: involving … the use, ownership, or possession of any property ...” Id. at *2 (citing RCW 4.28.185(1)(c)). The court did make an alternative ruling that even if a defendant’s interest in the insurance policy was property, that ownership interest is an insufficient basis for personal jurisdiction under Shaffer.” Id. That alternative ruling court simply followed the minimum contacts analysis applying to intangible property consistent with Restatement (Second) of Judgments § 6 cmt. e (1982) and implicitly applied in the VSIM Patent Co. decision. 3. There have been minimum contacts. Even if the intangible property minimum contacts analysis were to apply, that standard has been met. The case satisfies the three requirements for specific jurisdiction and the seven factors for regarding the reasonableness of exercising jurisdiction.7 Schoelkopf wrote Deutsch demanding that she make the sculpture available for his agents to pick it up presumably invoking the laws of the state where it is located. His communications were aimed at this state and the earlier gallery’s contacts and the successors’ contacts are relevant.8 Deutsch’s interpleader and declaratory relief claims arise out of Schoelkopf’s deceptive demand letter and related communications and earlier actions of the gallery and its successors, 7 “(1) The nonresident defendant must do some act or consummate some transaction with the forum or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws. (2) The claim must be one which arises out of or results from the defendant's forum-related activities. (3) Exercise of jurisdiction must be reasonable. Paccar Int'l, Inc. v. Com. Bank of Kuwait, S.A.K., 757 F.2d 1058, 1062 (9th Cir. 1985).; id. at 1065(listing seven reasonableness factors (A) to (G). 8 FutureSelect Portfolio Mgmt., Inc. v. Tremont Grp. Holdings, Inc., 175 Wn. App. 840, 891-92, 309 P.3d 555, 580 (2013), aff'd, 180 Wn.2d 954, 331 P.3d 29 (2014) (practical policy considerations like predecessor liabilities and contacts and successorship issues are relevant factors). Case 3:16-cv-05561-RBL Document 21 Filed 10/03/16 Page 24 of 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 129134.0003/6774228.7 PLAINTIFF’S BRIEF OPPOSING DEFENDANTS’ MOTION TO DISMISS - 20 LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4100 SEATTLE, WASHINGTON 98101-2338 206.223.7000 FAX: 206.223.7107 which likely launched works into the stream of commerce and failed to report the alleged theft. Deutsch commenced this action to resolve her own claim and competing and potential claims of others. The exercise of jurisdiction is reasonable, this Court may apply New York law, this Court does not have the congestion of the Southern District of New York, and finally the plaintiff and the property are located here. 4. This is also a traditional in rem or quasi-in-rem suit over tangible property. In rem jurisdiction is alive and well. 9 In rem stems from unknown persons in quiet title cases, while traditional quasi-in stems from known claimants in property.10 The court may exercise pure in rem jurisdiction if it grants leave to permit service by publication for other unknown defendants under 28 U.S.C. § 1655 and Deutsch requests leave to amend to add the sculpture as a party converting the complaint from a quasi-in-rem to a pure in rem proceeding. The known individual defendants must be joined under Rule 19 to render judgment declaring that they have no claims. But even if § 1335 did not apply, Washington’s long arm statute provides jurisdiction over the defendants in the sculpture, and a court in this state has the power in rem over the disposition of the sculpture. Finally, even if this Court were to rule that the long-arm statute does not apply, the record does not support a discretionary fee award under RCW 4.25.185 in view of the good faith basis for federal interpleader jurisdiction, which provides an overlapping basis for jurisdiction. IV. CONCLUSION Deutsch has invoked the court’s subject matter and personal jurisdiction under 28 U.S.C. § 1335 by depositing the sculpture in a bank safe deposit box and proposing an order transferring control over the safe deposit box/sculpture to this Court. Defendants have collectively confirmed § 1335 jurisdiction by submitting disclaimers and evidence (much of it 9 Anticybersquatting Consumer Protection Act of 1999 (ACPA), 15 U.S.C. § 1125(d); Mattel, Inc. v. Barbie-Club.com, 310 F.3d 293, 294 (2d Cir. 2002) (construing statute); Office Depot Inc. v. Zuccarini, 596 F.3d 696, 703 (9th Cir. 2010) (quasi-in-rem jurisdiction to enforce an assigned judgment). 10 Restatement (First) of Judgments § 32 cmt. a (1942); Restatement of Judgments § 3, at 7 (1942); Restatement (Second) of Conflict of Laws § 60 (1971) (jurisdiction over rights in chattel); see Hanson v. Denckla, 357 U.S. 235, 246 (1958) (“A judgment in rem affects the interests of all persons in designated property.”) Case 3:16-cv-05561-RBL Document 21 Filed 10/03/16 Page 25 of 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 129134.0003/6774228.7 PLAINTIFF’S BRIEF OPPOSING DEFENDANTS’ MOTION TO DISMISS - 21 LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4100 SEATTLE, WASHINGTON 98101-2338 206.223.7000 FAX: 206.223.7107 inadmissible) to advance the Schoelkopf ownership claim, so that this Court could issue declaratory relief that the disclaiming Defendants had no ownership claims and could be dismissed. The Illinois Defendants have invoked jurisdiction by requesting an order of this Court that would eliminate their claims of ownership of the sculpture in favor of New York/Connecticut Defendant Schoelkopf, while Schoelkopf has invoked the benefit of the forum state’s laws by demanding return of the sculpture from this State. Thus, under Rule 22 interpleader and state long-arm statute, this Court has subject matter and personal jurisdiction. In the event the Court must resort to in-rem jurisdiction, Deutsch requests leave to amend and name the sculpture to an Amended Complaint and to include John Does. Plaintiff is submitting a proposed judgment to reduce the number of claimants who “are claiming and may claim to be entitled to” the sculpture under § 1335. The proposed judgment would move the case toward final resolution grounded on other jurisdictional authority as well. Dated this 3rd day of October, 2016 at Seattle, Washington. LANE POWELL PC By /s/ Christopher Wells Christopher B. Wells, WSBA No. 08302 Attorneys for Plaintiff Eileen Deutsch Case 3:16-cv-05561-RBL Document 21 Filed 10/03/16 Page 26 of 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 129134.0003/6774228.7 PLAINTIFF’S BRIEF OPPOSING DEFENDANTS’ MOTION TO DISMISS - 22 LANE POWELL PC 1420 FIFTH AVENUE, SUITE 4100 SEATTLE, WASHINGTON 98101-2338 206.223.7000 FAX: 206.223.7107 CERTIFICATE OF SERVICE I hereby certify under penalty of perjury of the state of Washington that on September 16, 2016, I caused to be served a copy of the foregoing PLAINTIFF’S BRIEF OPPOSING DEFENDANTS’ MOTION TO DISMISS to the following person(s) in the manner indicated below at the following address. Ms. Diana Breaux Yarmuth Wilsdon, PLLC 1420 5th Avenue, Suite 1400 Seattle, WA 98101 Telephone: (206) 516-3800 Facsimile: (206) 516-3888 E-Mail: dbreaux@yarmuth.com sbarber@yarmuth.com  by CM/ECF  by Electronic Mail  by Facsimile Transmission  by First Class Mail  by Hand Delivery  by Overnight Delivery Dated this 3rd day of October, 2016. s/ Ann Gabu Ann Gabu, legal assistant Case 3:16-cv-05561-RBL Document 21 Filed 10/03/16 Page 27 of 27