Perkumpulan Investor Crisis Ctr. Dressel WBG v. Wong
| Decision Date | 29 July 2014 |
| Docket Number | CASE NO. C09-1786-JCC |
| Court | U.S. District Court — Western District of Washington |
| Parties | PERKUMPULAN INVESTOR CRISIS CENTER DRESSEL - WBG, Plaintiff, v. DANNY MK WONG, et al., Defendants. |
THE HONORABLE JOHN C. COUGHENOUR
This matter comes before the Court on Defendant PADRM Gold Mine, LLC's motion for attorneys' fees pursuant to Wash. Rev. Code § 4.28.185(5) (Dkt. No. 557) and the motion for attorneys' fees filed jointly by David and Kelly Thacker and Donald and Michelle Sherer. (Dkt. No. 559.) Having thoroughly considered the parties' briefing and the relevant record, the Court finds oral argument unnecessary and DENIES both motions for the reasons explained herein.
Plaintiff filed the instant lawsuit on December 26, 2009, seeking approximately $450,000,000 in damages from numerous defendants, including David and Kelly Thacker and Donald and Michelle Sherer. (Dkt. No. 1.) Plaintiff's Amended Complaint included claims for violations of the Racketeer Influenced and Corrupt Organizations ("RICO") Act, as well as state law claims, each of which was based upon the alleged execution of a complex Ponzi scheme to defraud thousands of Indonesian investors. (See Dkt. No. 381.) Plaintiff's Amended Complaintincluded a single fraudulent conveyance declaratory judgment claim against PADRM Gold Mine, LLC ("PGM"), a Utah-based holding company, which Plaintiff added to this lawsuit in 2013 so that it could attach property owned by PGM should the action be successful. (Id. at ¶ 19.1-19.8.)
Most of the remaining defendants filed either a motion to dismiss or a motion for summary judgment after Plaintiff filed its Amended Complaint. PGM moved to dismiss the state claim against it for lack of personal jurisdiction, for failure to state a claim and failure to plead fraud with particularity, and for seeking a remedy that is unavailable. (Dkt. No. 404.) Defendants Donald and Michelle Sherer, joining a motion filed by their son, Jared Sherer, moved to dismiss for failure to state a claim and for lack of subject matter jurisdiction, among other grounds. (Dkt. No. 388.) On March 14, 2014, the Court dismissed Plaintiff's sole federal RICO claim with prejudice as barred under Section 107 of the Private Securities Litigation Reform Act. (Dkt. No. 554.) Because subject matter jurisdiction for this entire dispute was premised upon the Court's federal question jurisdiction over that RICO claim, the Court declined to exercise its supplemental jurisdiction over Plaintiff's remaining state-law claims, dismissed those claims without prejudice, and denied the motions relating to those claims as moot. (See Dkt. No. 554 at 26-27.) Specifically, the Court did not reach any issues raised in PGM's motion, and did not separately address the Thackers' motion because it did not address the issues discussed in the Court's Order of Dismissal. (Dkt. No. 554.)
Shortly after the Court entered judgment, PGM filed a motion for attorneys' fees pursuant to Wash. Rev. Code § 4.28.185(5). (Dkt. No. 557.) PGM seeks $47,247.06 for approximately 170 hours of legal work in this matter and $1,042.75 in costs. (Id.; see Dkt. No. 558.) The Thackers and Sherers also filed a motion for fees pursuant to Federal Rule of Civil Procedure 54. (Dkt. No. 559.) The Thackers seek approximately $100,000 in legal fees and the Sherers seek approximately $35,000 in fees. (Id. at 3.) The Court addresses each request in turn.
PGM requests approximately $48,000 in attorneys' fees and costs pursuant to Wash. Rev. Code § 4.28.185(5), the fee-shifting provision of Washington's long-arm statute. That statute provides:
In the event the defendant is personally served outside the state on causes of action enumerated in this section, and prevails in the action, there may be taxed and allowed to the defendant as part of the costs of defending the action a reasonable amount to be fixed by the court as attorneys' fees.
Wash. Rev. Code § 4.28.185(5). As Defendant points out, one purpose of the statute is to "compensate defendants for the added expense caused them by plaintiffs' assertions of long-arm jurisdiction." Scott Fetzer Co., Kirby Co. Div. v. Weeks, 114 Wn.2d 109, 121 (Wash. 1990) ("Fetzer I")). However, the fee-shifting provision also seeks to prevent plaintiffs from invoking Washington's long-arm statute as a means to harass foreign defendants, id. at 121 n.6, and to promote the full exercise of Washington's long-arm jurisdiction. See Scott Fetzer Co. v. Weeks, 122 Wn.2d 141, 148 (Wash. 1993) ("Fetzer II"). Ultimately, the decision to award attorneys' fees under section 4.28.185(5) is within the trial court's sound discretion. See Amazon.com, Inc. v. Kalaydjian, No. C00-1740, 2001 WL 1892190, at *1 (W.D. Wash. Mar. 27, 2001) ().
The Parties first dispute whether PGM has "prevailed" in this action as that term is used in section 4.28.185(5).1 PGM argues that because the Court dismissed the federal RICO claimagainst other defendants and declined to exercise supplemental jurisdiction over the state-law claim against PGM, it has "prevailed" in this action. Plaintiff argues in response that PGM has not prevailed because it did not obtain dismissal based on a lack of personal jurisdiction over PGM. To support its position, Plaintiff notes that Washington's Courts of Appeals and Federal District Courts regularly state that section 4.28.185(5) authorizes a court to "award reasonable attorney fees to a foreign defendant who prevails in an action on the basis that the court lacked personal jurisdiction under the long-arm statute." CTVC of Hawaii, Co., Ltd. v. Shinawatra, 82 Wn. App. 699, 722 (Wash. 1996); see also In re Marriage of Yocum, 870 P.2d 1033 (1994); Fetzer I, 114 Wn.2d at 111, 124; Hunter v. Ferebauer, 980 F.Supp.2d 1251, 1259 (E.D. Wash. 2013); Sportsfragrance v. Perfumer's Workshop Int'l, Ltd., No. C09-0177, 2009 WL 1884429 (W.D. Wash. June 30, 2009); Silvaris Corp. v. Brissa Lumber Corp., No. C07-0196, 2008 WL 2697186 (W.D. Wash. July 2, 2008).
Both parties overreach in their arguments. It is true, as Plaintiff notes, that courts regularly explain the rule as authorizing fee awards for a party who "prevails" by obtaining a jurisdictional dismissal. The rule does authorize the Court to award fees under that circumstance, see Fetzer I, 114 Wn.2d at 111, and it appears that as a practical matter, a successful motion to dismiss for lack of personal jurisdiction is the most common scenario in which fees are awarded under this section. However, neither the statute itself nor any of the cases Plaintiff cites necessarily limit the statute's application to dismissals for a lack of personal jurisdiction. The statute states that a defendant may be awarded fees after if he "prevails in the action" where the causes of action are based on the Court's exercise of long-arm jurisdiction, but does not otherwise define that phrase. The Washington Supreme Court has further explained that a jurisdictional dismissal is one of the ways, in addition to prevailing on the merits or even obtaining a voluntary nonsuit from a plaintiff, that a defendant could "prevail in an action" within the statute's meaning. Id. at 111, 124; see Andersen v. Gold Seal Vineyards, Inc., 81 Wn.2d 863, 868 (1973) ().
However, PGM's position is that anything short of a full victory on the merits for a plaintiff equates to a situation in which the defendant "prevails" and is entitled to a full fee award. The Court finds that position to go beyond the common meaning of "prevail." Here, for example, where the Court has not addressed a defendant's motion to dismiss for lack of personal jurisdiction and has otherwise declined to exercise its supplemental jurisdiction over the single claim against that defendant, the Court is placed in the seemingly absurd position of awarding fees to a defendant for no apparent reason. PGM did not obtain dismissal on the merits, it did not obtain a jurisdictional dismissal, and it did not negotiate a voluntary dismissal with Plaintiff.2 Stated differently, PGM's efforts had no bearing on the outcome of this case, and because the Court did not reach PGM's jurisdictional motion, the Court cannot fairly say that Plaintiff improperly hauled PGM into a Washington court under the long-arm statute. Cf. First and Beck, LLC v. Bank of the Southwest, No. C05-1358, 2008 WL 718842, at *1-2 (D. Ariz. March 14, 2008) (); Silvaris Corp. v. Brissa Lumber Corp., No. C07-0196, 2008 WL 2697186, at *1 (W.D. Wash. July 2, 2008) (). Ultimately, while the Court cannot say that section 4.28.185(5) should be limited only to cases in which a defendant prevails on a personal jurisdiction motion to dismiss, it does not read the statute to encompass a situation in which a Court declines to exercise supplemental jurisdiction over a state-law claim when the defendant had nothing to do with obtaining dismissal of the sole federal claim against a separate defendant. This simply is not a case in which PGM has"prevailed in the action."
Regardless of whether PGM is deemed the prevailing party for purposes of section 4.28.185(5), such a conclusion would only mean that the Court could award fees, not that PGM is necessarily entitled to such an award. The Court's decision whether to grant or deny a request for attorneys' fees under section 4.28.185(5) is "wholly within the discretion of ...
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