Ortego et al V Lummi Island Scenic Estates Community Club, Inc et al

MOTION for Partial Summary Judgment Regarding Remaining Claims

W.D. Wash.October 6, 2016

DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING REMAINING CLAIMS - (CASE NO. 2:14-cv-01840-RSL) SUMMIT LAW GROUP PLLC 315 FIFTH AVENUE SOUTH, SUITE 1000 SEATTLE, WASHINGTON 98104-2682 Telephone: (206) 676-7000 Fax: (206) 676-7001 4844-9089-3626 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 The Honorable Robert S. Lasnik UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WASHINGTON AT SEATTLE CHARLES E. ORTEGO, et al., Plaintiffs, v. LUMMI ISLAND SCENIC ESTATES COMMUNITY CLUB, INC., et al., Defendants. CASE NO. 2:14-cv-01840-RSL DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING REMAINING CLAIMS Noted on Motion Calendar: October 28, 2016 Case 2:14-cv-01840-RSL Document 146 Filed 10/06/16 Page 1 of 30 DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING REMAINING CLAIMS - i (CASE NO. 2:14-cv-01840-RSL) SUMMIT LAW GROUP PLLC 315 FIFTH AVENUE SOUTH, SUITE 1000 SEATTLE, WASHINGTON 98104-2682 Telephone: (206) 676-7000 Fax: (206) 676-7001 4844-9089-3626 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 TABLE OF CONTENTS I. INTRODUCTION .............................................................................................................. 1 II. SUMMARY OF UNDISPUTED FACTS .......................................................................... 1 A. Enforcement of LISECC’s Lien and Water Shut-Off Authority. ........................... 1 B. Plaintiffs Ortego, Ponomareva and COKD Trust Refuse to Pay Dues. .................. 6 C. Plaintiff Ortego Collects Rain Water, Stockpiles Water from Rest Stops, and Diverts Surface Water from the County Right-of-Way. .................................. 9 D. LISECC’s Board Has Functioned in Good Faith. ................................................. 11 1. The Board Follows the Bylaws and the Advice of Independent Professionals. ............................................................................................ 11 2. The Regular Grumbling of the Disaffected Few....................................... 13 III. ARGUMENT .................................................................................................................... 17 A. Ortego, Ponomareva, and the COKD Trust’s Personal RICO Claim Fails. ......... 17 1. Four Alleged Acts of Sabotage to Ortego’s Pipes. ................................... 17 2. There Was No Witness Tampering or Extortion. ..................................... 19 B. Plaintiffs May Not Dissolve LISECC. .................................................................. 21 C. Defendants Have Not Breached their Fiduciary Duties to LISECC’s Members. .............................................................................................................. 22 D. Defendants Did Not Violate the Consumer Protection Act. ................................. 23 E. Defendants Have Not Been Unjustly Enriched. ................................................... 24 F. Defendants Are Not Liable for Conspiracy. ......................................................... 24 IV. CONCLUSION ................................................................................................................. 24 Case 2:14-cv-01840-RSL Document 146 Filed 10/06/16 Page 2 of 30 DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING REMAINING CLAIMS - ii (CASE NO. 2:14-cv-01840-RSL) SUMMIT LAW GROUP PLLC 315 FIFTH AVENUE SOUTH, SUITE 1000 SEATTLE, WASHINGTON 98104-2682 Telephone: (206) 676-7000 Fax: (206) 676-7001 4844-9089-3626 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 TABLE OF AUTHORITIES Cases Avalos v. Baca, 596 F.3d 583 (9th Cir. 2010) .....................................................................................................19 Block v. Snohomish Cnty., No. C14-235RAJ, 2015 WL 4164821 (W.D. Wash. July 8, 2015) ...........................................20 Brutscher v. GEICO Gen. Ins. Co., No. C14-1094RSL, 2014 WL 7340724 (W.D. Wash. Dec. 22, 2014) ......................................17 City of Bothell v. Berkley Reg'l Specialty Ins. Co., No. C14-0791RSL, 2014 WL 5110485 (W.D. Wash. Oct. 10, 2014) .......................................17 Dees v. Allstate Ins. Co., 933 F. Supp. 2d 1299 (W.D. Wash. 2013) .................................................................................23 Forsyth v. Humana, Inc., 114 F.3d 1467 (9th Cir. 1997) ...................................................................................................19 Gragg v. Orange Cab Co., Inc., 145 F. Supp. 3d 1046 (W.D. Wash. 2015) .................................................................................23 Hoffman v, Zenith Ins. Co., No. SACV 10-00355 DOC (ANx), 2011 WL 672554 (C.D. Cal. Feb. 10, 2011), aff’d 487 Fed. Appx. 365 9th Cir. 2012 .....................................................................................................19 Howard v. Am. Online, Inc., 208 F.3d 741 (9th Cir. 2000) .....................................................................................................19 In re Cray Inc., 431 F. Supp. 2d 1114 (W.D. Wash. 2006) .................................................................................21 Indoor Billboard/Wash., Inc. v. Integra Telecom of Wash., Inc., 162 Wn.2d 59, 170 P.3d 10 (2007) ............................................................................................23 James v. Paton, No. C15-1914RSL, 2016 WL 1578759 (W.D. Wash. Apr. 19, 2016) ................................22, 23 Kahre v. Damm, 342 Fed. Appx. 267 (9th Cir. 2009) ...........................................................................................19 Koch v. Mut. of Enumclaw Ins. Co., 108 Wn. App. 500, 31 P.3d 698 (2001) .....................................................................................23 McDonald v. Onewest Bank, FSB, 929 F. Supp. 2d 1079 (W.D. Wash. 2013) .................................................................................23 Norcon Builders, LLC v. GMP Homes VG, LLC, 161 Wn. App. 474, 254 P.3d 835 (2011) ...................................................................................24 Oscar v. Univ. Students Co-op Ass'n, 965 F.2d 783 (9th Cir. 1992) .....................................................................................................19 Park South Assocs. v. Fischbein, 626 F. Supp. 1108 (S.D.N.Y.), aff’d 800 F.2d 1128 (2nd Cir. 1986) .........................................20 Ritchie v. Carvel Corp., 714 F. Supp. 700 (S.D.N.Y. 1989) ............................................................................................19 Schwartzman v. McGavick, No. C06-1090P, 2007 WL 1174697 (W.D. Wash. Apr. 19, 2007)............................................21 Scott v. Trans-Sys., Inc., 148 Wn.2d 701, 64 P.3d 1 (2003) ..............................................................................................21 Slade v. Gates, No. CV 01-8244-RMT(EX), 2004 WL 2745657 (C.D. Cal. Nov. 5, 2004), vacated & superseded on other grounds, 2004 WL 2744815 (C.D. Cal. Nov. 23, 2004) ..........................20 Case 2:14-cv-01840-RSL Document 146 Filed 10/06/16 Page 3 of 30 DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING REMAINING CLAIMS - iii (CASE NO. 2:14-cv-01840-RSL) SUMMIT LAW GROUP PLLC 315 FIFTH AVENUE SOUTH, SUITE 1000 SEATTLE, WASHINGTON 98104-2682 Telephone: (206) 676-7000 Fax: (206) 676-7001 4844-9089-3626 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 Straightshot Commcs., Inc. v. Telekenex, Inc., No. C10-268Z, 2011 WL 1770935 (W.D. Wash. May 9. 2011) ...............................................20 Tavenner v. Talon Group, No. C09-1370RSL, 2012 WL 6022836 (W.D. Wash. Dec. 4, 2012) ..................................22, 23 U.S. v. Dischner, 974 F.2d 1502 (9th Cir. 1992) ...................................................................................................19 Woody v. Stapp, 146 Wn. App. 16, 189 P.3d 807 (2008) .....................................................................................24 Young v. Young, 164 Wn.2d 477, 191 P.3d 1258 (2008) ......................................................................................24 Statutes 18 U.S.C. § 1512(b) .................................................................................................................19, 20 18 U.S.C. § 1512(c) .......................................................................................................................20 18 U.S.C. § 1515(A)(1)..................................................................................................................20 18 U.S.C. § 1951 ......................................................................................................................19, 20 18 U.S.C. § 1962 ............................................................................................................................19 RCW 24.03.127 .............................................................................................................................22 RCW 24.03.266 .............................................................................................................................21 RCW 64.38.025(1) .........................................................................................................................22 RCW 9A.04.110(28) ......................................................................................................................20 RCW 9A.56.110.......................................................................................................................19, 20 RCW 9A.72.110(3)(a) ...................................................................................................................20 Case 2:14-cv-01840-RSL Document 146 Filed 10/06/16 Page 4 of 30 DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING REMAINING CLAIMS - 1 (CASE NO. 2:14-cv-01840-RSL) SUMMIT LAW GROUP PLLC 315 FIFTH AVENUE SOUTH, SUITE 1000 SEATTLE, WASHINGTON 98104-2682 Telephone: (206) 676-7000 Fax: (206) 676-7001 4844-9089-3626 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 I. INTRODUCTION Plaintiffs are members of the homeowners’ association (“HOA”) Lummi Island Scenic Estates Community Club, Inc. (“LISECC”). They have sued LISECC, the democratically elected members of the LISECC Board of Directors, and certain former Board members alleging a laundry list of bad acts which are not supported by any evidence. Defendants have successfully moved to dismiss some of Plaintiffs’ claims and have successfully moved for summary judgment on others.1 There are presently pending two partial summary judgment motions filed by Defendants.2 In this motion, Defendants LISECC, Mark Sexton, Ron Bain, Meredith Moench, Leslie and Paul Dempsey, Doug Cash, Timothy Slater, Kent Nielsen, Ken Swanson, and Bridged Lott (and their spouses) move for summary judgment on the remaining claims that (1) Defendants violated RICO,3 (2) LISECC should be dissolved, and claims of (3) breach of fiduciary duty, (4) violation of the Consumer Protection Act (“CPA”), (5) unjust enrichment, and (6) conspiracy.4 II. SUMMARY OF UNDISPUTED FACTS A. Enforcement of LISECC’s Lien and Water Shut-Off Authority. LISECC’s Articles of Incorporation empower the HOA “[t]o fix, establish, levy and collect annually such charges and/or assessments as may be necessary, in the judgment of the board of trustees to carry out any or all of the purposes for which this corporation is formed ….”5 LISECC is required “[t]o enforce liens, charges, restrictions, conditions and covenants existing upon and/or created for the benefit of parcels of real property over which said corporation has jurisdiction ….”6 The Bylaws govern the conduct of LISECC’s business. Its members “shall be liable for the payment of such annual dues as may from time to time be fixed and levied by the Board of 1 Order Granting in Part Mot. to Dismiss, ECF No. 40; Order Granting Defs.’ Mot. for Summ. Re: Bound Lots Claims, ECF No. 80. 2 Defs.’ Mot. for Partial Summ. J. Re: Plat Covenants, ECF No 90; Defs.’ Mot. for Partial Summ. J. Re: RICO Claims, ECF No. 109. 3 The Racketeer Influenced and Corrupt Organizations Act. The RICO claims brought by all Plaintiffs were the subject of Defendants’ prior motion. Defs.’ Mot. for Partial Summ. J. Re: RICO Claims, ECF No. 109 § II. The RICO claims addressed herein are those brought only by Plaintiffs Ortego, Ponomareva and the COKD Trust. 4 Plaintiffs abandoned their claims of emotional distress, outrage and personal injury. Goldman Decl., Ex. 1. 5 Ortego’s Decl., ECF No. 65-4, Art. II ¶ 10. 6 Id., Art. II ¶ 6. Case 2:14-cv-01840-RSL Document 146 Filed 10/06/16 Page 5 of 30 DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING REMAINING CLAIMS - 2 (CASE NO. 2:14-cv-01840-RSL) SUMMIT LAW GROUP PLLC 315 FIFTH AVENUE SOUTH, SUITE 1000 SEATTLE, WASHINGTON 98104-2682 Telephone: (206) 676-7000 Fax: (206) 676-7001 4844-9089-3626 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 Directors ….”7 Dues may only be increased “by the majority vote of the membership present at any meeting of” LISECC.8 Members must pay LISECC “dues, assessments, charges, interest, fines, or penalties” and these sums “shall be a lien upon said land and the membership appurtenant thereto” “and enforceable by foreclosure proceedings in the manner provided by law for foreclosure of mortgages upon land ….”9 The Board is “[t]o conduct, manage and control the affairs and business of [LISECC], and to make such rules and regulations therefore ….”10 As explained by Plaintiff Charles Ortego, “LISECC operates the water system” which “includes the lake, a filtration house, and piping reaching the 215 hookups.”11 Pursuant to the Bylaws, and before any of the parties to this lawsuit had served on the Board, the Board adopted rules governing LISECC’s water service.12 The rule adopted in October 1978 provides that “[n]o hookup will be permitted to any lot or lots upon which the club dues and assessments are not paid in full.”13 Pursuant to the rule adopted in December 1998, “[w]ater may be shut off on any lot upon which the club dues, assessments, charges, interest, fines or penalties are overdue.”14 In 2008, with Plaintiffs and then-Board members Ortego and Boyd Barry leading the charge, LISECC began to firmly enforce and expand its dues and lien enforcement powers to address the growing number of accounts in arrears. At the April 2008 Board meeting, Plaintiffs Ortego and Barry joined the rest of the Board in voting unanimously to “provide the documentation and instructions to lien to LISE attorney regarding Lummi Island Land dues that are owed.”15 The delinquent member, Lummi Island Land Company (“LILCO”), is a Plaintiff in this lawsuit. LISECC’s counsel then recorded liens against seven LILCO properties.16 7 Ortego Decl., ECF No. 65-7 at 4-11, Art. 4.5.1.1. 8 Id. 9 Id. at 4-12, Art. 4.5.1.4. 10 Id. at 4-9, Art. 4.4.2.3. 11 Thulin Decl., ECF No. 92-1 at 2:25-3:1 & n.1. 12 Sexton Decl., ECF No. 144 ¶ 2. 13 Ortego Decl., ECF No. 65-7 at 5-7, Art. 5.4.2.7. 14 Id. at 5-8, Art. 5.4.3.1; id. at 5-20. 15 Sexton Decl., Ex. 1. 16 Id., Ex. 2. Case 2:14-cv-01840-RSL Document 146 Filed 10/06/16 Page 6 of 30 DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING REMAINING CLAIMS - 3 (CASE NO. 2:14-cv-01840-RSL) SUMMIT LAW GROUP PLLC 315 FIFTH AVENUE SOUTH, SUITE 1000 SEATTLE, WASHINGTON 98104-2682 Telephone: (206) 676-7000 Fax: (206) 676-7001 4844-9089-3626 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 In the fall of 2009, Board President Bill Boulton, with whom Plaintiff Ortego aligned himself,17 wrote LISECC members: “We have over $8,000 in unpaid dues and water connection fees. Administrative fees and interest will be charged in accordance with … Policy Statement #7 ….”18 At the September 2009 Board meeting, Plaintiff Ortego voted in favor of “proceed[ing] with [a] foreclosure action” against a delinquent LISECC member.19 In January 2010, Mr. Boulton wrote to LISECC members: LISECC’s ability to repay its loan and meet its budgeting requirements is based on the assumption that members pay their dues and water related fees. Unfortunately, we have a significant number of members who are delinquent and require further collection actions by LISECC’s board. Members should be aware that the filing of liens against their properties causes them to lose their voting rights in LISECC activities.20 He reminded members that, pursuant to the Bylaws, LISECC would cease providing water service to lots with delinquent accounts.21 Later that month, LISECC’s counsel wrote the Board and confirmed that “if an LISECC member is overdue on dues or assessments, the Board has the power to shut off water.”22 At the January 2010 Board meeting, Plaintiff Ortego moved, and the Board unanimously approved, foreclosing on the lien of a delinquent member’s lot.23 On February 2, 2010, Mr. Boulton reported to the Board: “Here is the current status of lien letters sent by the lawyers, and the status of members who have not paid. You will note we still have a lot of members who have paid NO water bills to date. They must be liened to abide by the bylaws.” Plaintiff Ortego responded immediately: “LIEN THEM! We have NO CHOICE but to abide by the bye-laws [sic].”24 Mr. Ortego followed up in an e-mail to his fellow Board members later in the month. 17 Goldman Decl., Ex. 2 at 26:10, 56:19-21, 168:2-6, 188:5-11, 189:10. 18 Sexton Decl., Ex. 3 at 2. 19 Id., Ex. 4. 20 Id., Ex. 5 at 3. 21 Id. at 4 (“Water service shall be disconnected from any lot that has a balance owing on April 1 of the following year.”). 22 Id., Ex. 6. 23 Id., Ex. 7. 24 Slater Decl., ECF No. 140-1, Ex. 1 (emphasis original). Case 2:14-cv-01840-RSL Document 146 Filed 10/06/16 Page 7 of 30 DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING REMAINING CLAIMS - 4 (CASE NO. 2:14-cv-01840-RSL) SUMMIT LAW GROUP PLLC 315 FIFTH AVENUE SOUTH, SUITE 1000 SEATTLE, WASHINGTON 98104-2682 Telephone: (206) 676-7000 Fax: (206) 676-7001 4844-9089-3626 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 I would like to discuss this point at our next board meeting: UNCOOPERATIVE HOMEOWNERS Issue[:] What options does a board of directors have when confronted with a chronically contentious homeowner? Short Answer[:] The law empowers associations to impose fines, liens, charges and ultimately sue delinquent and uncooperative homeowners for violations of association policies.25 At the Board’s next meeting, on February 21, 2010, Plaintiff Ortego made a motion to enhance the Board’s powers in Policy Statement 7 to collect dues, shut off water service, and enforce liens, which was adopted unanimously.26 The policy which the Board adopted at Plaintiff Ortego’s urging provides, in relevant part, as follows: 27 In August 2010, LISECC sought the advice of its attorney regarding its authority to shut off water service for the nonpayment of dues or assessments. He advised that LISECC’s rules and “Policy Statement No. 7 give LISE clear authority under its governing documents to shut off water service as a penalty for unpaid dues and assessments. Our research has not revealed any state authority preventing LISE from shutting off water service until it receives unpaid dues and 25 Id. (emphasis original). 26 Sexton Decl., Ex. 8. 27 Id., Ex. 9 (highlighting added). Case 2:14-cv-01840-RSL Document 146 Filed 10/06/16 Page 8 of 30 DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING REMAINING CLAIMS - 5 (CASE NO. 2:14-cv-01840-RSL) SUMMIT LAW GROUP PLLC 315 FIFTH AVENUE SOUTH, SUITE 1000 SEATTLE, WASHINGTON 98104-2682 Telephone: (206) 676-7000 Fax: (206) 676-7001 4844-9089-3626 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 assessments from its member.”28 Plaintiff Ortego responded to his fellow Board members: “let’s … start TURNING OFF water to those seriously delinquent.”29 His notes from the September 2010 Board meeting state: “Attorney letter says we have authority to turn off water, though we have not enforced it in the past. Lummi Island Scenic Estates has lost $5,000 by not turning off water. As many as 20 seriously delinquent accounts right now would be eligible for water cut-off, each past due more than $500.”30 At the October 2010 Board meeting, president Boulton reported to Plaintiff Ortego and the other Board members that “[a]s of July 15th, 2010, we had $95,000 in delinquent accounts. We have now collected $51,000.00 of this after lien and water shut off notices were sent.”31 Mr. Ortego made a motion to approve a new Policy Statement No. 19 regarding the procedure the Board would use with “member delinquent account repayment plan proposals.”32 Policy Statement No. 19, approved by the Board, provides, in relevant part: Delinquent account action by LISECC, including but not limited to water shut-off and placement of liens, will not be delayed or postponed until such time as the Board approves the member-submitted repayment plan. If a re- payment plan is approved by the Board, late charges and interest will con- tinue to be routinely assessed on the delinquent balance until paid in full.33 In late 2010, Mr. Ortego seconded a motion to further strengthen Policy Statement 7 which the Board approved unanimously.34 In relevant part, the changes were as follows: 3. Accounts having delinquent balances, whether for water or for dues, reserves, loans, water usage, or violations, shall be subject to additional penalties and consequences. a. Water service may be disconnected from any lot that has a balance owing on any invoice account (whether for water[]-related or dues) which is more than 90 days delinquent. Water service will only be disconnected at the 28 Dempsey Decl., ECF No. 141-1. 29 Slater Decl., ECF No. 140, Ex. 2. 30 Sexton Decl., Ex. 10. 31 Goldman Decl., Ex. 3. 32 Id., Ex. 2 at 213:4-19; id., Exs. 3-4. 33 Id., Ex. 4. 34 Sexton Decl., Ex. 11. Case 2:14-cv-01840-RSL Document 146 Filed 10/06/16 Page 9 of 30 DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING REMAINING CLAIMS - 6 (CASE NO. 2:14-cv-01840-RSL) SUMMIT LAW GROUP PLLC 315 FIFTH AVENUE SOUTH, SUITE 1000 SEATTLE, WASHINGTON 98104-2682 Telephone: (206) 676-7000 Fax: (206) 676-7001 4844-9089-3626 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 direction of the board of directors, and after 30 day written notice has been mailed to the member….35 In early 2011, LISECC members accused Plaintiff Ortego of “personally profiting from [his] relationship with LISE” and he was removed from the Board by an overwhelming majority of LISECC members at a community-wide meeting.36 He has never “gotten over that meeting.”37 B. Plaintiffs Ortego, Ponomareva and COKD Trust Refuse to Pay Dues. In July 2011, Mr. Ortego and his wife Plaintiff Anna Ponomareva stopped paying dues to LISECC on their two undeveloped lots, and Mr. Ortego’s Trust, Plaintiff COKD Trust, stopped paying dues for the lot containing the house in which Mr. Ortego and Ms. Ponomareva reside.38 In December 2011, Plaintiff Ortego – who is not a lawyer39 – wrote the LISECC Board informing them of his conclusion that LISECC’s authority to govern the community had expired 25 years after the community’s plats were recorded, that LISECC’s bound lot policies were unlawful, and that it was unlawful to charge lot owners without a water hook up for any of the expense of maintaining LISECC’s water system. He declared that “LISECC has no legal authority to levy or collect dues.”40 Later that month, he wrote to the entire LISECC community informing them of his view and encouraging them to “[j]oin [him] in not paying your 2012 dues.”41 LISECC sought the advice of its counsel Greg Thulin regarding Mr. Ortego’s letter. Mr. Thulin wrote the Board advising that Mr. Ortego’s letter was replete with misrepresentations and misstatement of facts and “is verging on the unauthorized practice of law.” Mr. Thulin provided a detailed analysis of the plat covenants and of the law and advised that “LISECC does have the right to collect dues and assessments, file liens and foreclose on those liens.”42 35 Sexton Decl., Ex. 12 (underlines and hash marks added to show changes). 36 Goldman Decl., Ex. 2 at 216:14-16; Sexton Decl., Ex. 13. 37 Goldman Decl., Ex. 2 at 214:23-215:24. 38 Id., Ex. 5. 39 Id., Ex. 2 at 36:25-38:2. 40 Sexton Decl., Ex. 14. 41 Id., Ex. 15; Second Am. Compl., ECF No. 79 ¶ 12.3. 42 Sexton Decl., ECF No. 123-1 at 20. Case 2:14-cv-01840-RSL Document 146 Filed 10/06/16 Page 10 of 30 DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING REMAINING CLAIMS - 7 (CASE NO. 2:14-cv-01840-RSL) SUMMIT LAW GROUP PLLC 315 FIFTH AVENUE SOUTH, SUITE 1000 SEATTLE, WASHINGTON 98104-2682 Telephone: (206) 676-7000 Fax: (206) 676-7001 4844-9089-3626 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 Based on Mr. Thulin’s advice, LISECC moved forward with enforcing its dues rights against Plaintiff COKD Trust.43 On May 10, 2012,44 LISECC sent the COKD Trust by certified mail notice of its dues delinquency since 2011 and advised that “[i]n accordance with LISECC Policy #7, after 30 days have passed from receipt of this notice, we will assume the debt is valid and our attorney will record an Assessment Lien against your property unless your delinquent assessments, late fees and interest are paid and all accounts are current.”45 On May 16, 2012, LISECC sent the COKD Trust a water disconnection notice by certified mail. It warned that water service would be shut off to the COKD Trust lot on June 25, 2012 unless the total amount due was received by June 22, 2012.46 The delinquent dues have never been paid for the COKD Trust lot.47 At the May 2012 Board meeting, the Board discussed the delinquent accounts, noted that “23 lien warning letters were sent, of which 8 of them included water disconnection notices,” and confirmed that it would continue to “review the delinquent accounts on a monthly basis.”48 At the June 2012 Board meeting, the Board – including two members Plaintiffs chose not to sue – voted unanimously to “proceed with our current policy for water disconnections for non- payment on lots 10403, 40065 and 50025.”49 The COKD Trust lot bears the LISECC account number 40065.50 Plaintiffs Ortego and Ponomareva contend in this lawsuit that three of the five Board members present at the June meeting “committed witness tampering” when they voted to disconnect water to lot 40065.51 These Plaintiffs also make this same charge against Defendant Meredith Moench who, though a member of the Board in June 2012, did not attend the meeting or participate in the challenged vote.52 43 Sexton Decl. ¶ 18. 44 LISECC’s Board at the time consisted of three members Plaintiffs did not sue along with Defendants Sexton, Moench, Bain and Cash. Id. ¶ 19. 45 Id., Exs. 16-17. 46 Id., Ex. 18. 47 Sexton Decl. ¶ 23. 48 Id., Ex. 19. 49 Sexton Decl. ¶ 25; id., Ex. 20; Second Am. Compl., ECF No. 79 ¶ 12.4. 50 Sexton Decl. ¶ 27. 51 Second Am. Compl., ECF No. 79 ¶ 12.4 (Defendants Mark Sexton, Ron Bain and Doug Cash). 52 Sexton Decl., Ex. 20. Case 2:14-cv-01840-RSL Document 146 Filed 10/06/16 Page 11 of 30 DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING REMAINING CLAIMS - 8 (CASE NO. 2:14-cv-01840-RSL) SUMMIT LAW GROUP PLLC 315 FIFTH AVENUE SOUTH, SUITE 1000 SEATTLE, WASHINGTON 98104-2682 Telephone: (206) 676-7000 Fax: (206) 676-7001 4844-9089-3626 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 On June 25, 2012, LISECC’s counsel recorded a lien against the COKD Trust lot and on June 28, 2012, LISECC ceased providing water service to the house.53 On June 29, 2012, Mr. Ortego wrote the Board complaining that the COKD Trust lot’s water service had been turned off. He rejected the legal opinion of LISECC’s counsel that the HOA has authority to enforce its right to collect dues and lectured the Board: “I think perhaps due to lack of experience, you misunderstand the difference between an attorney relating a fact of law, and his obligation to advocate your position. An attorney will often counsel you that your position on a subject is unlawful, but he still has a duty to advocate your position, if you insist despite his caution that your position is untenable in law.” He reiterated that he “will not [p]ay dues until and unless you provide documentation establishing that LISECC still has the lawful authority to levy dues” and claimed that he had “received no advance notification” of the shut-off.54 On July 6, 2012, LISECC President and Defendant Mark Sexton wrote to Mr. Ortego: I am sorry the notice of water disconnection was not communicated to you. A certified letter was sent to the legal owner at their address of record; it was received and signed for. We would be happy to enter into a payment plan or work with you in any way we can to resolve this. Visit our website at www.lisecc.com to review Policy Statement #7 & #19 under the Policy Statements section of the Bylaws for the procedure for water disconnection/reconnection and the payment plan option. Please contact our business office at business@lisecc.com or 360-758-2699 to get the current balance due and make arrangements for payment of your delinquent account.55 Plaintiff Ortego did not contact LISECC in response to Mr. Sexton’s letter.56 On July 18, 2012, Mr. Sexton again wrote to Mr. Ortego: At the July 15, 2012 LISECC Board of Directors meeting your request for documentation was considered and approved. These documents will also be posted on the LISECC website for all members’ reference. I hope this will 53 Id., Ex. 21; Sexton Decl. ¶ 29. 54 Id., Ex. 22. 55 Id., Ex. 23. 56 Sexton Decl. ¶ 32. Case 2:14-cv-01840-RSL Document 146 Filed 10/06/16 Page 12 of 30 DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING REMAINING CLAIMS - 9 (CASE NO. 2:14-cv-01840-RSL) SUMMIT LAW GROUP PLLC 315 FIFTH AVENUE SOUTH, SUITE 1000 SEATTLE, WASHINGTON 98104-2682 Telephone: (206) 676-7000 Fax: (206) 676-7001 4844-9089-3626 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 help your understanding of these issues and facilitate bringing your account up to date.57 At the August 2012 Board meeting, “Chuck Ortego addressed the board regarding his account.”58 Mitch Nimon, a Board member who Plaintiffs did not sue, wrote on behalf of the Board to Mr. Ortego in response to the latter’s demands to the Board.59 After careful consideration, the board has determined that we are unable to waive the fees as you requested. Your past due account has been handled in accordance with LISECC Policy Statement #7 and we cannot make an exception for you. These rules have been in place since you helped to approve them while you were on the board. On our part, we have paid the attorney fees the club incurred in dealing with this matter. Please accept this decision along with our wish that we may resolve our differences amicably. Please do not disregard our resolve in this matter. Be advised that this is a final demand for the balance due, including all late charges, interest, lien fees, and water disconnection and reconnection fees. Our intent is to continue to welcome your participation in resolving some of the complex issues that the club faces.60 C. Plaintiff Ortego Collects Rain Water, Stockpiles Water from Rest Stops, and Diverts Surface Water from the County Right-of-Way. Instead of paying the $496 in annual dues under protest while they sued, Plaintiffs Ortego and Ponomareva undertook an elaborate, risky, expensive, and very time-consuming plan of obtaining water from alternative sources – which they, perversely, refer to as “mitigat[ing] these injuries and losses”61 – and sued to challenge LISECC’s authority and for damages. Until the spring of 2015, they “haul[ed] water constantly.”62 Mr. Ortego and Ms. Ponomareva spent one day per week traveling from Lummi Island to a rest stop in Bellingham where they “filled up probably 70 to 80 gallons of potable water at a rest area” and then would 57 Id., Ex. 24. 58 Id., Ex. 37. 59 The Board also included one other member Plaintiffs did not sue along with Defendants Sexton, Moench, Nielsen, Bain and Cash. Sexton Decl. ¶ 34. 60 Id., Ex. 25. 61 Second Am. Compl., ECF No. 79 at 46:16. 62 Id. ¶ 12.5. Case 2:14-cv-01840-RSL Document 146 Filed 10/06/16 Page 13 of 30 DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING REMAINING CLAIMS - 10 (CASE NO. 2:14-cv-01840-RSL) SUMMIT LAW GROUP PLLC 315 FIFTH AVENUE SOUTH, SUITE 1000 SEATTLE, WASHINGTON 98104-2682 Telephone: (206) 676-7000 Fax: (206) 676-7001 4844-9089-3626 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 “drag” it back to their home.63 They also traveled from Lummi Island to the mainland to purchase cases of water from Costco.64 During this time, they also obtained water from a “home water system” which Mr. Ortego “spen[t] hours and great cost building”65 based on what he learned about water systems from a six- week cultural anthropology class.66 The water came “off the roof, but when it rained we collected the water in buckets, like in five-gallon pails. We placed all of that water in tubs, plastic tubs, put a top on it.”67 “I’d run and hold the pail under the water, run, fill up the tub, run back, you know. It rained at 2:00 in the morning, we’d wake up, hear the rain, and it was all hands on board, on deck. Loved that drinking water.”68 “The rainwater sounds really pretty until it’s been sitting on your deck for three months and the mosquitoes have gotten to it.”69 Mr. Ortego also extracted surface water “from a ditch alongside the road,” “in a public right-of-way,” “one block away, up the hill.”70 The ditch is not on the Ortego, Ponomareva or COKD Trust properties and the water must first “go[] through a culvert underneath the street” before reaching their property.71 From the culvert, the untreated water continues onto these Plaintiffs’ undeveloped lot and into a four-inch corrugated pipe.72 From there, “we took a garden hose and used it as a barb and spliced it into the four-inch overflow ditch-water pipe, secured it, and so long as water was flowing in that, it brought water, ditch water, down to the house.”73 Today, Mr. Ortego’s water system, which he designed and which took him and a friend 500 hours to build in 2015, “collects, primarily, rainwater from the … roof of the house. It’s 63 Goldman Decl., Ex. 2 at 119:23-120:15. 64 Second Am. Compl., ECF No. 79 ¶ 12.5. 65 Id. 66 Goldman Decl., Ex. 2 at 39:3-12, 40:2-10. 67 Id. at 116:6-15. 68 Id. at 116:17-21 69 Id. at 118:12-15. 70 Id. at 112:22-113:3; 116:22-25. 71 Sexton Decl. ¶ 36; Goldman Decl., Ex. 2 at 113:9-23. 72 Goldman Decl., Ex. 2 at 116:22-117:7. 73 Id. at 117:25-118:4. Photographs of Mr. Ortego’s pipes, hoses and back lot are attached to the Paul Dempsey Declaration. Case 2:14-cv-01840-RSL Document 146 Filed 10/06/16 Page 14 of 30 DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING REMAINING CLAIMS - 11 (CASE NO. 2:14-cv-01840-RSL) SUMMIT LAW GROUP PLLC 315 FIFTH AVENUE SOUTH, SUITE 1000 SEATTLE, WASHINGTON 98104-2682 Telephone: (206) 676-7000 Fax: (206) 676-7001 4844-9089-3626 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 augmented with groundwater. If the tanks are emptying and it doesn’t seem like there’s going to be rain, then we augment it with groundwater six months out of the year. The water is collected in three tanks, two 2,500-gallon tanks and a 300-gallon tank.”74 He has paid “close to $20,000” for parts.75 His water system is not permitted and has never been inspected by Whatcom County.76 D. LISECC’s Board Has Functioned in Good Faith. LISECC’s Board is, and always has been, composed of volunteer, lay members of the community.77 With the noted exception of the period during which Messrs. Ortego and Boulton controlled the Board before their removal in 2011, the Board has followed LISECC’s Bylaws and rules and has regularly sought and followed the advice of independent reserve specialists, accountants, and attorneys. Nonetheless, LISECC has regularly been saddled with complaints from a few members who are among the Plaintiffs in this case. 1. The Board Follows the Bylaws and the Advice of Independent Professionals. Pursuant to the Bylaws, LISECC’s dues must be “authorized by the majority vote of the membership present at any meeting of the Community Club ….”78 Each Board has taken pains to be transparent in proposing budgets and dues to the members.79 Dues always have been set in this manner, including during the Board tenure of Plaintiffs Louise Weber, Boyd Barry, and Charles Ortego and each of the Defendants. Moreover, LISECC members always have knowingly approved using dues charged to all lot owners – including those without water service – to pay for the upkeep and operation of the community’s water system.80 Following Mr. Ortego’s removal from the Board, the Board – including Defendants Mark Sexton, Leslie Dempsey, Ken Swanson, Meredith Moench, Ron Bain, and Kent Nielsen – 74 Goldman Decl., Ex. 2 at 108:6-13, 108:19-109:1, 109:7-8, 111:10-16, 115:25-116:2. 75 Id. at 111:21-24. 76 Id. at 112:11-18. 77 Sexton Decl. ¶ 37. 78 Decl. of Mark Sexton, ECF No. 114-1, Art. 4.5.1.1 (emphasis added). 79 See Defs.’ Mot. for Partial Summ. J. re: RICO Claims, ECF No. 109 § III.A. 80 Unlike water utilities and most private water systems, LISECC does not charge thousands of dollars for new members to connect to its water system. Rather, all lot owners pay for the water system and are entitled to connect to it. Decl. of Tim Slater, ECF No. 112 ¶ 2. Case 2:14-cv-01840-RSL Document 146 Filed 10/06/16 Page 15 of 30 DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING REMAINING CLAIMS - 12 (CASE NO. 2:14-cv-01840-RSL) SUMMIT LAW GROUP PLLC 315 FIFTH AVENUE SOUTH, SUITE 1000 SEATTLE, WASHINGTON 98104-2682 Telephone: (206) 676-7000 Fax: (206) 676-7001 4844-9089-3626 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 analyzed the new HOA Act reserve requirements and engaged Reserve Consultants Ltd. to perform the Standard Full Reserve Study required by the statute.81 In 2013, Reserve Consultants concluded that LISECC was “considered well funded.”82 In October 2013, the Board engaged an independent accountant to perform an audit and she advised the Board “that LISECC is a pretty healthy organization and the fact that LISECC has over $250,000 in reserves shows that the volunteer board members are being good custodians of LISECC’s assets and preparing for future needs.”83 Since the 2013 Reserve Study, the Board has complied with the funding recommendations set forth in the Study and has transparently accounted for transfers into and out of the reserves.84 Three months ago, Reserve Consultants completed a Reserve Study Update and concluded that LISECC was “well funded” and even stronger than it had been in 2013.85 Mr. Ortego seeks the advice of attorneys “to tell me what’s right and what’s wrong.”86 If “you’re on the board, and you have … property owners who feel that something is illegal, I think you have a fiduciary duty to check with your attorney and get some sort of determination.”87 The same is true for each of the other present and former Board members sued here.88 For example, in March 2011, shortly after Mr. Ortego’s removal from the Board, Board members and Defendants Mark Sexton, Leslie Dempsey and Ken Swanson met with LISECC attorney Rich Davis to discuss the claim raised by delinquent member (and Plaintiff) LILCO that LISECC’s authority to levy dues had expired 25 years after the initial plats were recorded. Mr. Davis, like LISECC’s prior attorney Tim Carpenter, advised the Board members that LISECC had a strong position regarding its continuing authority to levy dues.89 Defendants relied on this advice in 81 See Defs.’ Mot. for Partial Summ. J. re: RICO Claims, ECF No. 109 § III.B. 82 Decl. of Mark Sexton, ECF No. 114-35 at 14. 83 Decl. of Mark Sexton, ECF No. 114-38 at 1. 84 Decl. of Mark Sexton, ECF No. 114 ¶ 43. 85 Decl. of Mark Sexton, ECF No. 114-45 at 3. 86 Goldman Decl., Ex. 2 at 22:12-13. 87 Id. at 87:8-12. 88 Sexton Decl. ¶ 38; Cash Decl. ¶ 2; Bain Decl. ¶ 2; L. Dempsey Decl. ¶ 2; P. Dempsey Decl. ¶ 2; Lott Decl. ¶ 2; Moench Decl. ¶ 2; Nielsen Decl. ¶ 2; Slater Decl. ¶ 4; Swanson Decl. ¶ 2. 89 Sexton Decl., ECF No. 123 ¶ 6; id., ECF No. 123-1 at 7. Case 2:14-cv-01840-RSL Document 146 Filed 10/06/16 Page 16 of 30 DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING REMAINING CLAIMS - 13 (CASE NO. 2:14-cv-01840-RSL) SUMMIT LAW GROUP PLLC 315 FIFTH AVENUE SOUTH, SUITE 1000 SEATTLE, WASHINGTON 98104-2682 Telephone: (206) 676-7000 Fax: (206) 676-7001 4844-9089-3626 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 describing the issue to the community and continuing to levy dues.90 In December 2011, when Mr. Ortego challenged LISECC’s continuing authority in a letter to LISECC members,91 the Board again turned to its attorney for advice. On April 9, 2012, attorney Greg Thulin wrote a nine-page letter to the Board analyzing and rejecting Mr. Ortego’s contentions and advising the Board that “LISECC does have the right to collect dues and assessments, file liens and foreclose on those liens.”92 Defendants relied on this advice in continuing to govern LISE.93 In early 2012, Plaintiffs John and Louise Weber challenged LISECC’s authority to charge water connection fees. In response to the Board’s request for advice, Mr. Thulin confirmed that LISECC had properly charged the challenged fees and that the Webers’ contentions were without merit.94 Defendants relied on this advice in continuing to charge water connection fees.95 In March 2012, the Board learned that LISECC Treasurer and Plaintiff Louise Weber had sued LISECC and sought the advice of Mr. Thulin. At the March 2012 Board meeting, the Board passed a “motion to remove Louise Weber from the LISECC Treasurer position on the advice of our attorney.”96 2. The Regular Grumbling of the Disaffected Few. Some of the Plaintiffs repeatedly have lauded the diligent work of LISECC’s Board members, while LISECC has regularly had to weather the complaints of a handful of members, who also are among the Plaintiffs in this lawsuit. In the spring of 2005, while Defendant Mark Sexton was on the Board, Plaintiffs Ortego and Ponomareva joined a group of LISECC members in sending a letter to the community regarding the upcoming Annual General Meeting of LISECC members (“AGM”). They informed their fellow LISECC members of their belief “that the present Board has done an exceptionally fine job of operating the Estates during the past year.”97 90 Sexton Decl. ¶ 39. 91 Albert Decl., ECF No. 119-4 at 10. 92 Sexton Decl., ECF No. 123-1 at 19. 93 Sexton Decl. ¶ 39. 94 Id., Ex. 26. 95 Sexton Decl. ¶ 41. 96 Id., Ex. 27; see also Sexton Decl. ¶ 43. 97 Sexton Decl. ¶ 44; id., Ex. 28. Case 2:14-cv-01840-RSL Document 146 Filed 10/06/16 Page 17 of 30 DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING REMAINING CLAIMS - 14 (CASE NO. 2:14-cv-01840-RSL) SUMMIT LAW GROUP PLLC 315 FIFTH AVENUE SOUTH, SUITE 1000 SEATTLE, WASHINGTON 98104-2682 Telephone: (206) 676-7000 Fax: (206) 676-7001 4844-9089-3626 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 In 2006, while Defendants Mark Sexton and Ron Bain were on the Board, Plaintiff Barry heaped praise upon the Board. He wrote to LISECC members “that serving on the Board this year has been a pleasure and I have enjoyed working with my fellow Board Members” and noted “the fact that this Board works so well together and has accomplished so much this year.”98 In 2007, Plaintiff Barry specifically called out the work of fellow Board member Defendant Mark Sexton. He advised community members that Mr. Sexton had continued as the leader of the project to increase the number of water hookups allowed by the Department of Health “and we all thank him for all of his work.”99 Plaintiff Ortego ran for a seat on the Board at the AGM in 2008. At the time, Defendant Mark Sexton continued on the Board and Mr. Ortego “thanked the Board for doing unappreciated work” and recognized that the Board “is required to protect the assets of the community.”100 Just as his first year on the Board ended, he complimented his fellow Board members, including Defendant Mark Sexton, that, despite “this reluctant and divisive community,” “we have always managed to keep disagreements healthy, and the minority has always supported the majority.”101 In the lead up to the April 2009 AGM, Plaintiffs Ortego and Ponomareva again wrote to community members. They advised that Defendant Mark Sexton had “done a fine job on the Board” and “we urge you to vote for” him at the AGM.102 In the fall of 2009, Plaintiff Ortego, wrote to LISECC members to laud the Board which included Defendants Ken Swanson, Mark Sexton and Tim Slater: Remember, no one is getting paid to give up every third Sunday, and a lot of hours each month in between. Every single board member is doing his or her best to make a contribution to the community. And although sometimes we might disagree amongst one another, there’s not a single insincere person on the board, not a single person there who is selfish or only serving their own interests. As we all struggle to understand why all of these changes are necessary, and face stressful readjustments to 98 Id., Ex. 29 at 7. 99 Id., Ex. 30 at 4. 100 Id., Ex. 31 at 3. 101 Id., Ex. 32. 102 Id., Ex. 33. Case 2:14-cv-01840-RSL Document 146 Filed 10/06/16 Page 18 of 30 DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING REMAINING CLAIMS - 15 (CASE NO. 2:14-cv-01840-RSL) SUMMIT LAW GROUP PLLC 315 FIFTH AVENUE SOUTH, SUITE 1000 SEATTLE, WASHINGTON 98104-2682 Telephone: (206) 676-7000 Fax: (206) 676-7001 4844-9089-3626 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 accommodate these new realities, keep in mind that every change the board finds necessary to meet new challenges, affects each and every board member as individuals, just as they affect the community at large. We too pay the same fees as everyone else, and we too must bear the same burdens and make the same sacrifices (such as, for instance, when water usage is restricted).103 Mr. Ortego complained to his fellow Board members Defendants Ken Swanson and Tim Slater about Plaintiffs Louise Weber, Victor Armfield and Boyd Barry.104 “THESE life forms would be the guiding inspiration of life in LISECC were it not for the unrecognized and unrewarded diligence of those of us who serve on the board.”105 In November 2009, Mr. Ortego addressed his fellow Board members, discounting the complaints of the folks who are now his fellow Plaintiffs and complimenting fellow Board members and Defendants Ken Swanson and Tim Slater. Maybe I am wrong, but I do not get the feeling that the majority of the membership hates the board. I think this vocal minority hates the board because for the first time ever, the board has refused to be bullied, or intimidated by them, and has stood up to them. i think the vocal minority would like to think that the majority of the community hates the board as they do[.] but i do not think in fact the majority of the community hates the board[.] i think the majority of the community understands that the board is faced with a lot of challenges, is doing the very best job possible, and that we have one of the most capable boards ever…and despite controversy…has achieved more than just about any other board[.]106 Mr. Ortego reiterated this sentiment to the entire community in the winter 2010 newsletter at the time that Defendants Tim Slater and Ken Swanson continued their service on the Board. “I’ve been a resident in this community for over eight years now, and with all due respect to past boards, I feel compelled to say that I have never seen a board accomplish as much in a single year.”107 His ally, Mr. Boulton, wrote to the community about the actions of Plaintiffs Louise Weber and Victor Armfield and about his faith in the Board: This has been a year of member turmoil, with special meeting requests that were “out of order”, activist actions that required a “cease and desist” letter, 103 Id., Ex. 3 at 6 (emphasis added). 104 Goldman Decl., Ex. 2 at 199:19-201:16 id., Ex. 6. 105 Id., Ex. 6. 106 Slater Decl., Ex. 2 (emphasis added). 107 Sexton Decl., Ex. 5 at 7; Sexton Decl. ¶ 51. Case 2:14-cv-01840-RSL Document 146 Filed 10/06/16 Page 19 of 30 DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING REMAINING CLAIMS - 16 (CASE NO. 2:14-cv-01840-RSL) SUMMIT LAW GROUP PLLC 315 FIFTH AVENUE SOUTH, SUITE 1000 SEATTLE, WASHINGTON 98104-2682 Telephone: (206) 676-7000 Fax: (206) 676-7001 4844-9089-3626 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 and the creation of “shadow organizations” that represent community members who prefer to remain nameless. Like all Boards, your volunteers continue to do their best to carry out the By Laws and conduct the business of LISECC.108 Prior to the 2010 AGM, Plaintiffs Ortego and Ponomareva again wrote community members regarding the Board which included Defendants Tim Slater and Ken Swanson. [W]e have had the services of a skilled and experienced board of directors, and we are lucky that many of them are willing to remain on the board. In addition, we are luck that several members are willing to stand for election and carry on with the same dedication of their predecessors. The letter you received about the Annual General Meeting has bios about those nominated to serve on the board. Once you have read those you will see that the best candidates are Bill Boulton, Chuck Ortego [and Defendants] Ken Swanson, Tim Slater and Paul Dempsey. All of them are experienced in business and bring polished problem-solving and leadership skills…. … [P]lease thank the people on the board who have given thousands of hours of their time for our community. We want to especially recognize … [Defendant] Mark Sexton … who ha[s] served diligently and with best intentions, devoting years of efforts to realize the ongoing water system improvements.109 In the spring 2011 LISECC Newsletter, Mr. Ortego again complained about “the constant efforts by this vocal minority to subvert the democratically expressed will of the majority. I think it is time that we firmly asked them to quit all of the shenanigans, the libelous slander, and the harassment techniques.”110 There followed Mr. Ortego’s removal from the Board in April 2011 by a large majority of LISECC members at a meeting called by the “vocal minority” and his now- fellow Plaintiffs Victor Armfield, La Priel Barnes, Boyd Barry, Grant Bowery, Linda Fengler, Ruth Gross, Joy Krell, Mark Mech, Lee Mundstock, Richard Owen, Midana Bilik-Franklin and John Weber.111 This lawsuit – while certainly the most burdensome – is not the first time Plaintiffs have sued LISECC. Plaintiff Louise Weber has filed so many baseless small claims actions against LISECC that in October 2014, the commissioner not only dismissed her claim with prejudice but 108 Id., Ex. 5 at 1. 109 Goldman Decl., Ex. 7 (emphasis added); id., Ex. 2 at 201:18-202:22. 110 Sexton Decl., Ex. 34 at 15. 111 Id., Exs. 35 & 32. Case 2:14-cv-01840-RSL Document 146 Filed 10/06/16 Page 20 of 30 DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING REMAINING CLAIMS - 17 (CASE NO. 2:14-cv-01840-RSL) SUMMIT LAW GROUP PLLC 315 FIFTH AVENUE SOUTH, SUITE 1000 SEATTLE, WASHINGTON 98104-2682 Telephone: (206) 676-7000 Fax: (206) 676-7001 4844-9089-3626 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 ruled that “Plaintiff shall not file another small claim against this defendant without seeking leave of the court + obtaining prior approval.”112 III. ARGUMENT To avoid summary judgment, Plaintiffs must demonstrate a genuine dispute as to a material fact. “An issue is genuine only if there is a sufficient evidentiary basis on which a reasonable fact finder could find for the nonmoving party.”113 Moreover, “[f]actual disputes whose resolution would not affect the outcome of the suit are irrelevant ….”114 Plaintiffs cannot meet this standard for any of their remaining claims. A. Ortego, Ponomareva, and the COKD Trust’s Personal RICO Claim Fails. Plaintiffs Ortego and Ponomareva claim that LISECC’s disconnection of water service to their home and the alleged sabotage of their water pipes are part of a broad RICO conspiracy of intimidation against them (the “Extortion Allegations”). Because none of the Extortion Allegations are supported by evidence or give rise to RICO liability, they should be dismissed. 1. Four Alleged Acts of Sabotage to Ortego’s Pipes. Mr. Ortego contends that on four occasions the pipes running across his undeveloped lot behind the COKD Trust home were sabotaged. He alleges that Defendant “Sexton and or [LISECC water system manager] John Graham or other LISECC staff employee” committed the acts of sabotage “to hinder and threaten Ortego against pursuing legal action or giving evidence in support of any legal action brought to challenge the dues collection.”115 However, there is no evidence that Mr. Sexton or either of LISECC’s water system employees committed the alleged sabotage. Mr. Ortego runs his business out of his home116 and yet, in response to being asked about whether Mr. Sexton “ever trespassed onto your family’s 112 Id., Ex. 36. 113 City of Bothell v. Berkley Reg’l Specialty Ins. Co., No. C14-0791RSL, 2014 WL 5110485, *1 (W.D. Wash. Oct. 10, 2014) (quotation marks & citations omitted). 114 Brutscher v. GEICO Gen. Ins. Co., No. C14-1094RSL, 2014 WL 7340724, *1 (W.D. Wash. Dec. 22, 2014). 115 Second Am. Compl., ECF No. 79 ¶ 12.9 116 Id. at 56:11. Case 2:14-cv-01840-RSL Document 146 Filed 10/06/16 Page 21 of 30 DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING REMAINING CLAIMS - 18 (CASE NO. 2:14-cv-01840-RSL) SUMMIT LAW GROUP PLLC 315 FIFTH AVENUE SOUTH, SUITE 1000 SEATTLE, WASHINGTON 98104-2682 Telephone: (206) 676-7000 Fax: (206) 676-7001 4844-9089-3626 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 properties,” Mr. Ortego testified: “He’s been on our property, but nothing that I would call trespass, that I can prove.”117 Mr. Ortego “think[s] it’s very unlikely” that LISECC employee Kevin Southworth had anything to do with the alleged sabotage and there is no evidence putting Mr. Southworth anywhere near the Ortego properties at the time of the alleged sabotages.118 Moreover, other than a 10-minute inspection of the LISECC meter near the street on the COKD trust property months after the final alleged sabotage, LISECC’s other water system employee John Graham has never entered the Ortego properties without Mr. Ortego’s permission.119 The first allegation of sabotage is as follows: On November 23, 2013, Ortego woke up and discovered the home water system did not work. He investigated and found someone had pulled a collector water hose of the coiled-pipes reservoir and poked holes in the 4” corrugated pipe on his property. Ortego saw the stick that was used and pulled it out of its unnatural position. The pipe would not be punctured by a falling branch, there are no trees above; and it would take human force to effect the puncture.120 The undisputed evidence demonstrates that the lot through which Mr. Ortego has wound his pipes and hoses is heavily forested and that his pipes and hoses are covered in fallen branches.121 The second act of sabotage is alleged to have occurred 11 months later, on October 7, 2014, a day before “Ortego expected to see Sexton in a state court on a matter related to LISECC’s dues authority.” According to the Complaint, “someone again pull[ed] the hose out of the pipe” “to suppress legal action or evidence given by Ortego.”122 Plaintiffs contend the third act of sabotage occurred on March 23, 2015, the day “plaintiffs caused the complaint in this RCO action to be served on LISECC” and the day before “Ortego was to be deposed in the state court proceeding.” They allege that “someone disconnect[ed] a pipe joint” “to threaten Ortego into not giving evidence in either suit.”123 117 Goldman Decl., Ex. 2 at 127:18-128:18. 118 Id. at 134:15-135:10; 148:3-150:12. 119 Id. at 144:22-148:3. 120 Second Am. Compl., ECF No. 79 ¶ 12.8. 121 P. Dempsey Decl.; id., Exs. 1-3. 122 Second Am. Compl., ECF No. 79 ¶ 12.9. 123 Id. ¶ 12.10. Case 2:14-cv-01840-RSL Document 146 Filed 10/06/16 Page 22 of 30 DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING REMAINING CLAIMS - 19 (CASE NO. 2:14-cv-01840-RSL) SUMMIT LAW GROUP PLLC 315 FIFTH AVENUE SOUTH, SUITE 1000 SEATTLE, WASHINGTON 98104-2682 Telephone: (206) 676-7000 Fax: (206) 676-7001 4844-9089-3626 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 Finally, they claim that “[o]n April 19, 2015, someone” “pull[ed] apart the pipe joint” “to prevent or hinder Ortego giving evidence in this suit.”124 2. There Was No Witness Tampering or Extortion. “RICO was intended to combat organized crime, not to provide a federal cause of action and treble damages to every tort plaintiff.”125 To recover, a plaintiff must prove, inter alia, that the defendant engaged in “racketeering activity” which the statute defines as various crimes.126 Plaintiffs claim the Extortion Allegations qualify as “racketeering activity” because Defendants are alleged to have violated 18 U.S.C. § 1512(b), 18 U.S.C. § 1951, and RCW 9A.56.110.127 Plaintiffs’ claims cannot withstand summary judgment.128 First, as a result of Mr. Ortego and Ms. Ponomareva’s refusal to pay dues and in compliance with a policy adopted and used by Plaintiff Ortego, the LISECC Board’s vote to disconnect water service to Plaintiffs’ home was lawful conduct which cannot support a RICO claim.129 Second, other than Plaintiffs’ bald assertions “on information and belief,”130 there is no evidence whatsoever that any of the Defendants had anything to do with the alleged acts of vandalism to Plaintiffs’ pipes.131 Third, 18 U.S.C. § 1512(b) applies only to conduct affecting “an official proceeding” which includes cases 124 Id. ¶ 12.12. 125 Oscar v. Univ. Students Co-op Ass’n, 965 F.2d 783, 786 (9th Cir. 1992). 126 18 U.S.C. § 1962. 127 Second Am. Compl., ECF No. 79 ¶¶ 13.8-13.10. 128 The same is true for their RICO conspiracy claim. Howard v. Am. Online, Inc., 208 F.3d 741, 751 (9th Cir. 2000). 129 See U.S. v. Dischner, 974 F.2d 1502, 1516 (9th Cir. 1992) (“Obtaining property is generally ‘wrongful’ if the alleged extortionist has no lawful claim to that property.”), overruled in part on other grounds by U.S. v. Morales, 108 F.3d 1031, 1035 (9th Cir. 1997) (en banc); Kahre v. Damm, 342 Fed. Appx. 267, 268 (9th Cir. 2009) (“legitimate law enforcement activity carried out in the course of the officer’s employment” is not RICO predicate activity); Ritchie v. Carvel Corp., 714 F. Supp. 700, 706 (S.D.N.Y. 1989) (“RICO does not criminalize otherwise lawful conduct. It merely attaches new consequences to traditionally criminal conduct.”). 130 Second Am. Compl., ECF No. 79 at 48:5, 48:15, 48:22, 49:2, 49:21. 131 Avalos v. Baca, 596 F.3d 583, 594 (9th Cir. 2010) (affirming summary judgment where plaintiff failed to proffer evidence of specific injury to a business); Forsyth v. Humana, Inc., 114 F.3d 1467, 1481-1482 (9th Cir. 1997) (plaintiffs’ failure to offer evidence doomed RICO claim on summary judgment), aff’d, 525 U.S. 299 (1999), and overruled in part on other grounds by Lacey v. Phoenix New Times, LLC, 693 F.3d 896 (9th Cir. 2012); Hoffman v, Zenith Ins. Co., No. SACV 10-00355 DOC (ANx), 2011 WL 672554, *3 (C.D. Cal. Feb. 10, 2011) (“At this summary judgment stage, Plaintiffs must do more than allege sufficient facts to constitute RICO claims; they must provide adequate evidence to support their already pled allegations and prove the existence of a genuine issue of material fact.”), aff’d, 487 Fed. Appx. 365 (9th Cir. 2012). Case 2:14-cv-01840-RSL Document 146 Filed 10/06/16 Page 23 of 30 DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING REMAINING CLAIMS - 20 (CASE NO. 2:14-cv-01840-RSL) SUMMIT LAW GROUP PLLC 315 FIFTH AVENUE SOUTH, SUITE 1000 SEATTLE, WASHINGTON 98104-2682 Telephone: (206) 676-7000 Fax: (206) 676-7001 4844-9089-3626 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 in federal court but not cases in state court.132 The first three of the Extortion Allegations had no possible connection to an “official proceeding.” The June 2012 vote of the Board occurred 30 months before this lawsuit was filed. The alleged November 2013 damage to Plaintiffs’ pipe took place 13 months before they filed their federal lawsuit. The alleged October 2014 damage to Plaintiffs’ pipe took place two months before they filed the case at bar.133 Fourth, the latter two Extortion Allegations occurred long after the Board actions which gave rise to this lawsuit – regarding enforcement of the bound lots policies and dues authority, management of reserves, and determination of dues amounts134 – and they occurred in the context of the very proceedings at bar. Such actions cannot serve as RICO predicate acts.135 Fifth, RCW 9A.56.110 requires that the defendant obtain or seek to obtain something by means of a “threat,” that is a communication of an intent to do something in the future.136 There is no evidence that Defendants made a single threat to Plaintiff Ortego in connection with the Extortion Allegations. Finally, the predicate act of extortion, under 18 U.S.C. § 1951 or RCW 9A.56.110, requires that the defendant have obtained or attempted to obtain something of value from the plaintiff.137 The Defendants did not receive or attempt to receive anything of value from Ms. Ponomareva and Mr. Ortego in connection with the Extortion Allegations. 132 18 U.S.C. § 1512(b); 18 U.S.C. § 1515(A)(1); Straightshot Commcs., Inc. v. Telekenex, Inc., No. C10-268Z, 2011 WL 1770935, *7 (W.D. Wash. May 9. 2011) (“[T]he prohibition on evidence tampering found in 18 U.S.C. § 1512(c) applies only in an ‘official proceeding,’ which does not include state court proceedings.”). 133 See Compl., ECF No. 1 (Dec. 3, 2014); Straightshot Commcs., 2011 WL 1770935 at *7 (“All of Summers’ alleged misconduct, with the exception of his testimony at the November 2010 deposition, took place in connection with the state court litigation, and as such, it is not indictable racketeering activity that can support a showing of continuity.”); Park South Assocs. v. Fischbein, 626 F. Supp. 1108, 1113 (S.D.N.Y.) (“At the time of the alleged attempted bribe, the only proceedings in existence involving these parties were in state courts or before state administrative bodies.”), aff’d, 800 F.2d 1128 (2nd Cir. 1986). 134 Second Am. Compl., ECF No. 79 ¶ 13.12 (the alleged “Enterprise has existed since 2011”). 135 See Slade v. Gates, No. CV 01-8244-RMT(EX), 2004 WL 2745657, *4 (C.D. Cal. Nov. 5, 2004) (plaintiffs’ allegation of witness tampering in connection with the case at bar was not “a predicate act given that it occurred five years after the incident which gave rise to this lawsuit”), vacated & superseded on other grounds, 2004 WL 2744815 (C.D. Cal. Nov. 23, 2004). 136 See, e.g., RCW 9A.72.110(3)(a); RCW 9A.04.110(28). 137 Block v. Snohomish Cnty., No. C14-235RAJ, 2015 WL 4164821, *5 (W.D. Wash. July 8, 2015). Case 2:14-cv-01840-RSL Document 146 Filed 10/06/16 Page 24 of 30 DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING REMAINING CLAIMS - 21 (CASE NO. 2:14-cv-01840-RSL) SUMMIT LAW GROUP PLLC 315 FIFTH AVENUE SOUTH, SUITE 1000 SEATTLE, WASHINGTON 98104-2682 Telephone: (206) 676-7000 Fax: (206) 676-7001 4844-9089-3626 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 B. Plaintiffs May Not Dissolve LISECC. Plaintiffs ask this Court to dissolve LISECC pursuant to RCW 24.03.266 because they claim the individual Defendants “are acting in a manner that is illegal, oppressive, or fraudulent and corporate assets are being misapplied (dues misapplied to water cost) or wasted.”138 “In deciding whether to grant dissolution, the trial court should consider whether that solution will be beneficial or detrimental to all the shareholders or injurious to the public…. The remedy of liquidation is so drastic that it must be invoked with extreme caution.”139 Moreover, “[c]ourts will not undertake to control the policy or business methods of a corporation.”140 Oppression and waste are closely related concepts. For oppression, Plaintiffs must prove “burdensome, harsh and wrongful conduct; a lack of probity and fair dealing in the affairs of a company to the prejudice of some of its members; or a visible departure from the standards of fair dealing.”141 Corporate waste arises only where a corporate exchange was so one sided that no business person of ordinary, sound judgment could conclude that the corporation has received adequate consideration. A claim of waste will arise only in the rare unconscionable case where directors irrationally squander or give away corporate assets. This onerous standard for waste is a corollary of the proposition that where business judgment presumptions are applicable, the board’s decision will be upheld unless it cannot be attributed to any rational business purpose.142 Even if a plaintiff has proof of oppressive or wasteful conduct, a dissolution claim will fail under the business judgment rule “where (1) the decision to undertake the transaction is within the power of the corporation and the authority of management, and (2) there is a reasonable basis to indicate that the transaction was made in good faith.”143 138 Second Am. Compl., ECF No. 79 ¶ 15.4. 139 Scott v. Trans-Sys., Inc., 148 Wn.2d 701, 708-09, 64 P.3d 1 (2003) (quotation marks & citations omitted). 140 Id. (quotation marks & citation omitted). 141 Id. at 711 (quotation marks & citation omitted). 142 Schwartzman v. McGavick, No. C06-1090P, 2007 WL 1174697, *5 (W.D. Wash. Apr. 19, 2007) (quotation marks & citations omitted); accord In re Cray Inc., 431 F. Supp. 2d 1114, 1135 (W.D. Wash. 2006). 143 Scott, 148 Wn.2d at 710. Case 2:14-cv-01840-RSL Document 146 Filed 10/06/16 Page 25 of 30 DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING REMAINING CLAIMS - 22 (CASE NO. 2:14-cv-01840-RSL) SUMMIT LAW GROUP PLLC 315 FIFTH AVENUE SOUTH, SUITE 1000 SEATTLE, WASHINGTON 98104-2682 Telephone: (206) 676-7000 Fax: (206) 676-7001 4844-9089-3626 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 For all of the reasons set forth in this motion and in Defendants’ prior dispositive motions and as this Court has ruled in its orders in this matter to date,144 there is no evidence that Defendants have acted illegally, oppressively, or fraudulently or have wasted LISECC’s assets. Moreover, all of the evidence establishes that the volunteer members of LISECC’s Board have acted in good faith in following the votes of LISECC’s members and the advice of LISECC’s lawyers, accountants and reserve specialists and, hence, that their conduct is amply protected by the business judgment rule. Finally, the dissolution pressed here by a small number of permanently-disgruntled members will be very detrimental to the large majority of LISECC members who enjoy and pay for the benefits of LISECC membership.145 C. Defendants Have Not Breached their Fiduciary Duties to LISECC’s Members. Plaintiffs charge that the individual Defendants have breached their fiduciary duty to LISECC’s members pursuant to RCW 64.38.025(1) and RCW 24.03.127.146 This duty requires that board members act in good faith, in a manner such director believes to be in the best interests of the corporation, and with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances. In performing the duties of a director, a director shall be entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, in each case prepared or presented by: … (2) Counsel, public accountants, or other persons as to matters which the director believes to be within such person’s professional or expert competence.147 Pursuant to the business judgment rule, corporate directors “are immune from liability for their honest errors or mistakes of judgment as long as they act without corrupt motive and in good faith.”148 This rule “is based upon a judicial preference for avoiding entanglements with the 144 Order Granting in Part Mot. to Dismiss, ECF No. 40; Order Granting Defs.’ Mot. for Summ. Re: Bound Lots Claims, ECF No. 80; Defs.’ Mot. for Partial Summ. J. Re: Plat Covenants, ECF No 90; Defs.’ Mot. for Partial Summ. J. Re: RICO Claims, ECF No. 109. 145 Sexton Decl. ¶ 55. 146 Second Am. Compl., ECF No. 79 ¶ 16.2. 147 RCW 24.03.127. 148 Tavenner v. Talon Group, No. C09-1370RSL, 2012 WL 6022836, *5 (W.D. Wash. Dec. 4, 2012); accord James v. Paton, No. C15-1914RSL, 2016 WL 1578759, *2 (W.D. Wash. Apr. 19, 2016) (“an error in judgment does not strip [board members] of the protections of the business judgment rule”). Case 2:14-cv-01840-RSL Document 146 Filed 10/06/16 Page 26 of 30 DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING REMAINING CLAIMS - 23 (CASE NO. 2:14-cv-01840-RSL) SUMMIT LAW GROUP PLLC 315 FIFTH AVENUE SOUTH, SUITE 1000 SEATTLE, WASHINGTON 98104-2682 Telephone: (206) 676-7000 Fax: (206) 676-7001 4844-9089-3626 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 internal management of corporations.”149 Moreover, LISECC’s Bylaws have provided since prior to any of the Defendants’ service on the Board that “[t]he Directors shall not be individually liable except for a Director’s own bad faith, dishonesty, or fraud.”150 In good faith, Defendants have followed LISECC’s Bylaws, the votes of LISECC’s members, and the advice of its attorneys, accountants and reserve professionals. To avoid summary judgment, Plaintiffs must – but cannot – come forward with “evidence from which one could reasonably infer subjective bad faith, disloyalty, or intentional wrongdoing” by the Defendants.151 D. Defendants Did Not Violate the Consumer Protection Act. To establish a violation of the CPA, Plaintiffs must prove that Defendants’ actions on or after December 3, 2010152 were an: “(1) unfair or deceptive act or practice; (2) occurring in trade or commerce; (3) public interest impact; (4) injury to plaintiff in his or her business or property; and (5) causation.”153 Plaintiffs cannot survive summary judgment on this claim because there is no evidence to satisfy the first and the fifth elements. “Whether an act is unfair or deceptive is a question of law.”154 Plaintiffs have no evidence – and none exists – that Defendants acted unfairly or deceptively.155 Plaintiffs also have no evidence that “but for” Defendants’ alleged actions, Plaintiffs would have been able to avoid paying dues to LISECC and complying with LISECC’s other lawful acts of governance.156 149 Tavenner, 2012 WL 6022836, *5. 150 Ortego Decl., ECF No. 65-7 at 22, Art. 4.4.2.8. 151 James, 2016 WL 1578759, *2. 152 Dees v. Allstate Ins. Co., 933 F. Supp. 2d 1299, 1309 (W.D. Wash. 2013) (“A CPA claim for damages has a four year statute of limitations” and “the statute ran on any alleged conduct violating the CPA prior to” four years before the complaint was filed.). 153 Gragg v. Orange Cab Co., Inc., 145 F. Supp. 3d 1046, 1052 (W.D. Wash. 2015) (quotation marks, citation & brackets omitted; emphasis added). 154 McDonald v. Onewest Bank, FSB, 929 F. Supp. 2d 1079, 1097 (W.D. Wash. 2013). 155 See Defs.’ Mot. for Partial Summ. J. Re: RICO Claims, ECF No. 109; Koch v. Mut. of Enumclaw Ins. Co., 108 Wn. App. 500, 509, 31 P.3d 698 (2001) (summary judgment proper where “there was no evidence supporting an inference of dishonesty or bad faith”). 156 Indoor Billboard/Wash., Inc. v. Integra Telecom of Wash., Inc., 162 Wn.2d 59, 83, 170 P.3d 10 (2007). Case 2:14-cv-01840-RSL Document 146 Filed 10/06/16 Page 27 of 30 DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING REMAINING CLAIMS - 24 (CASE NO. 2:14-cv-01840-RSL) SUMMIT LAW GROUP PLLC 315 FIFTH AVENUE SOUTH, SUITE 1000 SEATTLE, WASHINGTON 98104-2682 Telephone: (206) 676-7000 Fax: (206) 676-7001 4844-9089-3626 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 E. Defendants Have Not Been Unjustly Enriched. Unjust enrichment “is founded on notions of justice and equity” and Plaintiffs must prove “(1) the defendant receives a benefit, (2) the received benefit is at the plaintiff’s expense, and (3) the circumstances make it unjust for the defendant to retain the benefit without payment.” 157 Enrichment alone will not suffice to invoke the remedial powers of a court of equity. It is critical that the enrichment be unjust both under the circumstances and as between the two parties to the transaction. There mere fact that a defendant has received a benefit from the plaintiff is insufficient alone to justify recovery. The doctrine of unjust enrichment applies only if the circumstances of the benefits received or retained make it unjust for the defendant to keep the benefit without paying.158 There is no evidence to support any of the elements Plaintiffs must prove. F. Defendants Are Not Liable for Conspiracy. To establish a civil conspiracy, Plaintiffs “must prove by clear, cogent, and convincing evidence that (1) two or more people combined to accomplish an unlawful purpose, or combined to accomplish a lawful purpose by unlawful means; and (2) the conspirators entered into an agreement to accomplish the conspiracy. But mere suspicion or commonality of interest is insufficient to prove a conspiracy.”159 To avoid summary judgment on this claim, Plaintiffs “must offer evidence establishing a prima facie case supporting the claim.”160 As described above and each of Defendants’ prior dispositive motions, Plaintiffs offer no proof at all of these elements. IV. CONCLUSION Because there is no genuine dispute as to any material fact and each of Plaintiffs’ remaining claims is baseless, Defendants move for summary judgment on each of them. Upon the Court’s determination of this and the other pending summary judgment motions, Defendants will address their request for attorney’s fees and sanctions and will move for dismissal with prejudice of this lawsuit. 157 Young v. Young, 164 Wn.2d 477, 484-86, 191 P.3d 1258 (2008). 158 Norcon Builders, LLC v. GMP Homes VG, LLC, 161 Wn. App. 474, 490, 254 P.3d 835 (2011) (quotation marks & citations omitted). 159 Woody v. Stapp, 146 Wn. App. 16, 22, 189 P.3d 807 (2008) (quotation marks, brackets & citation omitted). 160 Id. Case 2:14-cv-01840-RSL Document 146 Filed 10/06/16 Page 28 of 30 DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING REMAINING CLAIMS - 25 (CASE NO. 2:14-cv-01840-RSL) SUMMIT LAW GROUP PLLC 315 FIFTH AVENUE SOUTH, SUITE 1000 SEATTLE, WASHINGTON 98104-2682 Telephone: (206) 676-7000 Fax: (206) 676-7001 4844-9089-3626 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 DATED this 6th day of October, 2016. Respectfully submitted, SUMMIT LAW GROUP PLLC Attorneys for Defendants By s/ Jessica L. Goldman Philip S. McCune, WSBA #21081 Jessica L. Goldman, WSBA #21856 Summit Law Group 315 Fifth Avenue South, Suite 1000 Seattle, WA 98104 Telephone: (206) 676-7000 Fax: (206) 676-7001 philm@summitlaw.com jessicag@summitlaw.com Case 2:14-cv-01840-RSL Document 146 Filed 10/06/16 Page 29 of 30 DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING REMAINING CLAIMS - 26 (CASE NO. 2:14-cv-01840-RSL) SUMMIT LAW GROUP PLLC 315 FIFTH AVENUE SOUTH, SUITE 1000 SEATTLE, WASHINGTON 98104-2682 Telephone: (206) 676-7000 Fax: (206) 676-7001 4844-9089-3626 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 CERTIFICATE OF SERVICE I hereby certify that on this day I electronically filed the foregoing with the Clerk of the Court using the CM/ECF system which will send notification of such filing to the following: Attorneys for Plaintiffs Gregory W. Albert Albert Law PLLC 3131 Western Avenue, Ste. 410 Seattle, WA 98121 greg@albertlawpllc.com Attorneys for Defendants Slater W. Scott Clement Clement & Drotz, PLLC 100 W. Harrison St., Ste. N-350 Seattle, WA 98119 sclement@clementdrotz.com lmckeon@clementdrotz.com (Legal Assistant) DATED this 6th day of October, 2016. s/ Marcia A. Ripley Marcia A. Ripley, Legal Assistant Case 2:14-cv-01840-RSL Document 146 Filed 10/06/16 Page 30 of 30 [PROPOSED] ORDER GRANTING DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING PLAT COVENANTS - 1 (CASE NO. 2:14-cv-01840-RSL) SUMMIT LAW GROUP PLLC 315 FIFTH AVENUE SOUTH, SUITE 1000 SEATTLE, WASHINGTON 98104-2682 Telephone: (206) 676-7000 Fax: (206) 676-7001 4833-8733-3178 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 The Honorable Robert S. Lasnik UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WASHINGTON AT SEATTLE CHARLES E. ORTEGO, et al., Plaintiffs, v. LUMMI ISLAND SCENIC ESTATES COMMUNITY CLUB, INC., et al., Defendants. CASE NO. 2:14-cv-01840-RSL ORDER GRANTING DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING REMAINING CLAIMS [PROPOSED] NOTED ON MOTION CALENDAR: October 28, 2016 This matter came before the Court on Defendants’ Motion for Partial Summary Judgment Regarding Remaining Claims. The Court, having reviewed the briefs of the parties and the evidence at issue, finds that there are no issues of disputed material fact and judgment is proper as a matter of law and, therefore, GRANTS Defendants’ Motion for Partial Summary Judgment Regarding Remaining Claims. THEREFORE, the following claims are HEREBY DISMISSED WITH PREJUDICE: 1. The claims of Plaintiffs Charles Ortego, Anna Ponomareva and COKD Trust for violation of the Racketeer Influenced and Corrupt Organizations Act; 2. Plaintiffs’ request for the dissolution of Defendant Lummi Island Scenic Estates Community Club, Inc.; 3. Plaintiffs’ claims for breach of fiduciary duty; 4. Plaintiffs’ claims for breach of the Consumer Protection Act; Case 2:14-cv-01840-RSL Document 146-1 Filed 10/06/16 Page 1 of 3 [PROPOSED] ORDER GRANTING DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING PLAT COVENANTS - 2 (CASE NO. 2:14-cv-01840-RSL) SUMMIT LAW GROUP PLLC 315 FIFTH AVENUE SOUTH, SUITE 1000 SEATTLE, WASHINGTON 98104-2682 Telephone: (206) 676-7000 Fax: (206) 676-7001 4833-8733-3178 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 5. Plaintiffs’ claims of unjust enrichment; and 6. Plaintiffs’ claims of civil conspiracy. DATED this _____ day of _______________, 2016. THE HONORABLE ROBERT S. LASNIK UNITED STATES DISTRICT COURT JUDGE Presented by: SUMMIT LAW GROUP PLLC Attorneys for Defendants By s/ Jessica L. Goldman Philip S. McCune, WSBA #21081 Jessica L. Goldman, WSBA #21856 philm@summitlaw.com jessicag@summitlaw.com Case 2:14-cv-01840-RSL Document 146-1 Filed 10/06/16 Page 2 of 3 [PROPOSED] ORDER GRANTING DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT REGARDING PLAT COVENANTS - 3 (CASE NO. 2:14-cv-01840-RSL) SUMMIT LAW GROUP PLLC 315 FIFTH AVENUE SOUTH, SUITE 1000 SEATTLE, WASHINGTON 98104-2682 Telephone: (206) 676-7000 Fax: (206) 676-7001 4833-8733-3178 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 CERTIFICATE OF SERVICE I hereby certify that on this day I electronically filed the foregoing with the Clerk of the Court using the CM/ECF system which will send notification of such filing to the following: Attorneys for Plaintiffs Gregory W. Albert Albert Law & Litigation 2200 6th Ave, Suite 1250 Seattle, WA 98121 greg@albertlitigation.com Attorneys for Defendants Slater W. Scott Clement Clement & Drotz, PLLC 100 W. Harrison St., Ste. N-350 Seattle, WA 98119 sclement@clementdrotz.com lmckeon@clementdrotz.com (Legal Assistant) DATED this 6th day of October, 2016. s/ Marcia A. Ripley Marcia A. Ripley, Legal Assistant Case 2:14-cv-01840-RSL Document 146-1 Filed 10/06/16 Page 3 of 3