BOFI Federal Bank v. Advance Funding, LLC et al, No. 2:2014cv00484 - Document 127 (W.D. Wash. 2018)
Court Description: ORDER granting defendants Kirk A. Tovey Recovable Trust and Settlement Collection Service, LLC's 110 Motion for Summary Judgment; dismissing this case in its entirety, signed by Judge Barbara J. Rothstein. (SWT)
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THE HONORABLE BARBARA J. ROTHSTEIN 1 2 3 4 5 6 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON 7 8 9 10 BofI FEDERAL BANK, a federally chartered banking institution, Plaintiff, NO. 14-CV-484 BJR v. 11 12 13 14 ADVANCE FUNDING LLC; KIRK A. TOVEY, individually and as trustee of the KIRK A. TOVEY REVOCABLE TRUST; and SETTLEMENT COLLECTION SERVICE, LLC, Defendants. ORDER GRANTING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT 15 I. 16 17 INTRODUCTION This motion comes before the Court on a Motion for Summary Judgment filed by 18 Defendants Kirk Tovey, individually and as trustee of the Kirk A. Tovey Revocable Trust 19 (“Tovey”), and Settlement Collection Service, LLC (“SCS”) (collectively “Defendants”). 20 Defendants seek dismissal of all claims against them asserted by Plaintiff BofI Federal Bank 21 (“BofI”). Having reviewed the pleadings and held oral argument, the Court finds and rules as 22 follows. 23 II. FACTUAL AND PROCEDURAL BACKGROUND 24 A. Factual Background 25 On November 16, 2011, Sheena Venzant won the Washington State “Lucky for Life” lottery drawing, entitling her to receive $52,000 annually for the rest of her life, or a lump sum 1 1 payment of $750,000.1 Venzant elected to receive the $52,000 annually. Decl. of Sheena 2 Venzant (“Venzant Decl.”), Dkt. No. 30, ¶ 2; Decl. of Daniel Hefner (“Hefner Decl.”), Dkt. 3 No. 39, Ex. A. After winning the lottery, Venzant was contacted by various companies with 4 offers to provide her a lump sum payment in return for assignment of her future lottery 5 payments. Venzant Decl., ¶ 3. Venzant discussed an agreement with McLloyd Onwubere, then 6 an employee of BofI. Id. On March 7, 2012, Venzant entered into an agreement with BofI to 7 assign twenty-five annual payments of $47,000 each to BofI in return for a lump sum payment 8 of $318,401.75. Id.; Hefner Decl., Ex. C., p. 18, Ex. D, p. 10, Ex. F. 9 On the same date, Venzant also entered into a “Life Contingent Payment Addendum” 10 in which Venzant agreed to cooperate with BofI to obtain a life insurance agreement that 11 would pay benefits to BofI should Venzant die prior to the payment of the twenty-five annual 12 payments of $47,000 that Venzant had agreed to assign to BofI. Hefner Decl., Ex. D. The 13 policy contained an incontestability provision (which took effect after two years) and a suicide 14 exclusion (which expired after two years). Hefner Decl., Ex. I at 9. According to BofI, due to 15 regulatory constraints with respect to speculative investments, it was constrained from paying 16 Venzant the lump sum contemplated by the Agreement until the two years had run. Hefner 17 Decl. ¶ 12. 18 Venzant claims, however, that she never agreed to the delay, and she became 19 “increasingly unhappy and frustrated” because “month after month passed, and I still had not 20 received the lump sum payment.” Venzant Decl. ¶¶ 4-5. Venzant states that on February 5, 21 2013, she wrote a letter to BofI purporting to cancel the assignment and life insurance policy. 22 Venzant Decl. ¶ 5; Ex. C. Several months later, Venzant spoke with an account representative 23 24 1 25 Venzant is not a party to this case. 2 1 at Defendant Advance Funding LLC (“Advance”), Barbara Guerra, and agreed to assign her 2 lottery winnings to Advance.2 Venzant Decl. ¶¶ 8, 10. Venzant entered into such an agreement 3 with Advance on or about May 17, 2013. Decl. of Dan Cevallos, Dkt. No 31, ¶ 3; Decl. of 4 Duncan Manville, Dkt. No. 40, Ex. A. Plaintiff claims it did not receive the February 2013 5 letter, and denies any knowledge that Venzant intended to cancel her agreement with BofI until 6 nearly a year later. Hefner Decl. ¶¶ 18, 22. 7 On May 21, 2013, Monica Ray with Northeastern Capital Funding, the entity that 8 worked with Advance on the Venzant transaction, sent an email to Richard Miller, III with 9 SCS, asking whether SCS wanted to buy “this Washington lottery stream.” Decl. of Susan Rae 10 Fox, Dkt. No. 111, Ex. 8. Although the subject heading of the email was “VEN (WA)”, 11 Defendants claim, and BofI does not dispute, that the email did not contain any potentially 12 identifying details about Venzant. Id. On June 3, 2013, Advance filed a Petition for Order 13 Approving Assignment with the Superior Court of Thurston County, seeking approval of the 14 assignment from Venzant to Advance. The petition noted that Advance had assigned all of its 15 rights contained in the Venzant agreement to the Kirk A. Tovey Revocable Trust. Manville 16 Decl., Ex. B. The petition was granted on June 14, 2013. Fox Decl., Ex. 12. 17 On June 28, 2013, Ray sent Amy Schwartz, an attorney representing SCS and Tovey, a 18 closing binder containing information regarding the sale of the lottery stream investment from 19 Advance to Tovey. Second Decl. of Duncan Manville, Dkt. 71, Ex. B, Advance Dep. Ex. 12; 20 Decl. of Richard Miller, III, Dkt. No. 112, ¶¶ 9&10. It is not disputed that this is the first that 21 SCS and Tovey became aware of any agreement Venzant may have had with BofI. It is also 22 undisputed that SCS and Tovey never had any contact with Venzant at any time. Tovey 23 provided funding and the deal closed in July 2013. Miller Decl., ¶ 9. 24 25 2 It is disputed, but for purposes of this motion not material, who contacted whom first. 3 1 B. Procedural History 2 On April 2, 2014, after learning of Venzant’s assignment to Advance (and ultimately, 3 Tovey), BofI filed this Complaint. It asserted claims against all Defendants for tortious 4 interference with contract and unjust enrichment, and sought equitable relief and money 5 damages. Compl., Dkt. No. 1. Defendants filed the first motion for summary judgment on 6 February 19, 2015, seeking dismissal of BofI’s tortious interference claim. On April 28, 2015, 7 the Court granted the motion, finding that the contract between BofI and Venzant was 8 unenforceable as against public policy, and therefore could not form the basis of a tortious 9 interference claim. The parties subsequently filed additional motions for summary judgment, 10 Defendants seeking dismissal of BofI’s remaining claims for unjust enrichment and declaratory 11 judgment, and BofI seeking dismissal of Defendants’ tortious interference counterclaim. The 12 Court granted these motions on August 20, 2015 and December 12, 2015, respectively. BofI 13 (but not Defendants) appealed the Court’s orders of dismissal. On December 11, 2017, the 14 Ninth Circuit reversed the Court’s order, finding that that the BofI-Venzant contract was not 15 unenforceable as against public policy, and remanded to this Court for further proceedings. 16 On August 16, 2018, BofI filed a motion for default judgment against Defendant 17 Advance Funding, after Advance’s attorney, Susan Fox, withdrew her representation. The 18 Court granted that motion on August 20, 2018, as to that Defendant only. The remaining 19 Defendants SCS and Tovey filed the instant Motion for Summary Judgment on September 20, 20 2018. On October 26, 2018, the Court heard oral argument. 21 III. DISCUSSION 22 A. Summary Judgment Standard 23 Defendants move for summary judgment pursuant to Federal Rule of Civil Procedure 24 56. “The court shall grant summary judgment if the movant shows that there is no genuine 25 dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The moving party bears the burden of demonstrating the absence of a genuine 4 1 issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The court “should 2 review all of the evidence in the record . . . [and] draw all reasonable inferences in favor of the 3 nonmoving party.” Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000). A 4 genuine issue for trial exists if “the evidence is such that a reasonable jury could return a 5 verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). 6 However, “[t]he mere existence of a scintilla of evidence” in support of a nonmoving party’s 7 position is not sufficient to create a genuine issue of material fact. Anderson, 477 U.S. at 252. 8 B. BofI’s Tortious Interference Claim 9 In order to maintain a claim against Defendants SCS and Tovey for tortious 10 interference with a contract, BofI must establish (1) that it had a valid contractual relationship 11 with Venzant; (2) that Defendants SCS and Tovey had knowledge of the relationship; (3) that 12 those Defendants intentionally interfered, causing a breach or termination of the relationship; 13 (4) that those Defendants interfered for an improper purpose or used improper means; and (5) 14 resultant damages. Sintra, Inc. v. City of Seattle, 119 Wash. 2d 1, 28 (1992), citing Pleas v. 15 City of Seattle, 112 Wash. 2d 794, 800 (1989). 16 The analysis of whether Defendants caused a breach of Venzant and BofI’s agreement 17 requires an inquiry into when such breach may have occurred. Venzant testified in her 18 declaration that in February 2013, she wrote and sent to BofI a letter repudiating the contract. 19 Venzant Decl., ¶ 7, Ex. C. Based on this undisputed testimony, Defendants argue that a 20 contractual relationship between BofI and Venzant no longer existed by the time Venzant 21 signed her agreement with Advance in May 2013. BofI claims, however, that it did not receive 22 the letter, and that the parties to the contract continued to act, at least through April 2013, as if 23 it were still in place. See, e.g., Hefner Decl., Ex. B (internal BofI records referencing email to 24 BofI from Venzant stating “I just think things will be better to keep things the way they are 25 now.”). Whether Venzant effectively repudiated the BofI contract in February 2013, therefore, appears to be a dispute of fact. 5 1 What is not disputed, however, is that Venzant signed a contract with Advance Funding 2 on or about May 17, 2013. Manville Decl., Ex. A. Under that contract, Advance agreed to pay 3 Venzant $300,000.00 in exchange for assignment to Advance of her “right, title and interest in 4 and to Twenty (20) partial annual lottery prize payments each in the amount of $50,000.00, 5 which represent the payments due to me from the Washington State Lottery.” Id. The payments 6 to Advance were to begin in November 2013 and run through November 2032. Id. In other 7 words, on May 17, 2013, Venzant entered into a contract with Advance that was incompatible 8 with her performance of the BofI contract. In doing so, Venzant acted in a manner that made it 9 legally impossible for her to comply with the BofI contract, and therefore at that moment she 10 breached any agreement she may still have had with BofI. See Wallace Real Estate Inv., Inc. v. 11 Groves, 124 Wash. 2d 881, 898 (1994) (“[A]n anticipatory breach is a positive statement or 12 action by the promisor indicating distinctly and unequivocally that he either will not or cannot 13 substantially perform any of his contractual obligations.”); Restatement (Second) of Contracts 14 § 250 (1981) (“A repudiation is . . . a voluntary affirmative act which renders the obligor 15 unable or apparently unable to perform without such a breach.”). 16 What is also undisputed is that Defendants SCS and Tovey did not learn of Venzant’s 17 identity until it received the transaction closing binder on June 28, 2013. Decl. of Richard 18 Miller, III, ¶ 10; see also Transcript [Rough Draft] of October 26, 2018 hearing, 12:24-13:1 19 (counsel for BofI stating “there’s also no dispute that the evidence indicates that SCS and 20 Tovey were not aware of the BOFI agreement until June 28, 2013”). This fact is fatal to BofI’s 21 tortious interference claims against SCS and Tovey. Although Monica Ray, on behalf of 22 Advance, contacted SCS on May 21, 2013, soliciting bids on a “Washington Lottery stream” 23 investment opportunity, the undisputed evidence indicates that Advance did not share any 24 identifying details with SCS at that time. See Fox Decl., Ex. 8. Advance did not share with 25 SCS and Tovey detailed information regarding the investment opportunity until June 28, 2013, 6 1 over a month after Venzant’s indisputable breach with BofI.3 That date was the first SCS and 2 Tovey learned of either Venzant and her lottery winnings, or any agreement she may or may 3 not have had with BofI. 4 A claim of tortious interference requires a defendant to have knowledge of the 5 plaintiff’s contractual relationship, and for defendant to have induced or caused the breach. 6 Sintra, Inc., 119 Wash. 2d at 28. The undisputed evidence demonstrates that SCS and Tovey 7 did not have knowledge of the Venzant-BofI agreement if and when Venzant breached it. They 8 could not have caused Venzant to enter into a contract with Advance Funding on May 17, 9 2013, because they were not even aware of her identity at the time, let alone any existing 10 11 contract she may have had with BofI. At oral argument on this motion for summary judgment, counsel for BofI argued that 12 despite Defendants’ ignorance of Venzant’s identity at the time she breached the agreement 13 with BofI, Defendants SCS and Tovey nevertheless “caused” the breach because they 14 subsequently agreed to purchase the income stream. BofI claimed that had Defendants failed 15 to do so, “there is every reason to believe” Venzant would have honored her contract with 16 BofI. Tr. of Hearing, 13:15-16. 17 To the contrary, there is no reason to believe this. The record is devoid of any evidence 18 (or even allegation) that Advance’s contract with Venzant was dependent on Defendants’ 19 funding. The agreement explicitly authorized Advance to reassign the payments, but did not 20 require it to do so, and did not make performance contingent on Advance obtaining a 21 secondary assignee. Manville Decl., Ex. A at 8. Indeed, the agreement explicitly provided 22 “both parties recognize that this Agreement is enforceable upon execution.” Id. at 6. There is, 23 moreover, no evidence that either Venzant or Advance had any intention of breaching their 24 25 3 To be clear, the Court is not finding that Venzant breached her agreement with BofI; merely that if an enforceable agreement between Venzant and BofI still existed as of May 17, 2013, Venzant’s execution of the contract with Advance at that time constituted a breach of that Venzant-BofI agreement. 7 1 agreement if SCS and Tovey failed to provide funding. Counsel’s claims at oral argument are 2 wholly insufficient to create a dispute of fact, let alone support a claim of tortious interference. 3 BofI’s tortious interference claim against Defendants SCS and Tovey must therefore be 4 dismissed. 5 C. BofI’s Unjust Enrichment and Declaratory Judgment Claims 6 “Three elements must be established in order to sustain a claim based on unjust 7 enrichment: a benefit conferred upon the defendant by the plaintiff; an appreciation or 8 knowledge by the defendant of the benefit; and the acceptance or retention by the defendant of 9 the benefit under such circumstances as to make it inequitable for the defendant to retain the 10 benefit without the payment of its value.” Young v. Young, 164 Wash. 2d 477, 484, citing 11 Bailie Commc'ns, Ltd. v. Trend Bus. Sys., Inc., 61 Wash. App. 151, 159–60 (1991). 12 As outlined above, SCS and Tovey had no part in Venzant’s repudiation of her 13 agreement with BofI. By the time Advance shared any specific details about the lottery 14 investment with CSC and Tovey, Advance had a binding contract with Venzant and an order 15 from the Thurston County Superior Court approving assignment of the lottery winnings to 16 Advance. Under these circumstances, it is not inequitable for SCS and Tovey to retain the 17 benefit of their purchase. Moreover, BofI has failed to demonstrate that it conferred a benefit to 18 SCS and Tovey. Any benefit SCS and Tovey received was assigned by Advance, not BofI. 19 Finally, BofI has not demonstrated that it is entitled to relief in equity. It chose to delay 20 performance of its obligations under the agreement with Venzant, who the record demonstrates 21 was quite desperately in need of the money. Without finding that BofI delayed performance of 22 the agreement in anything other than good faith, it is nevertheless indisputable that had BofI 23 expeditiously performed its end of the deal with Venzant, this dispute never would have arisen. 24 It is not only not unjust that Defendants keep the benefit of the bargain they made with 25 Advance; it would in fact be patently unjust for the Court to undo it. BofI’s claim for unjust 8 1 enrichment is therefore dismissed. There being no basis for a declaratory judgment, that claim 2 is dismissed as well. 3 4 5 6 IV. CONCLUSION For the foregoing reasons, the Court hereby grants the Motion for Summary Judgment of Defendants SCS and Tovey and dismisses this case in its entirety. Signed this 5th day of November, 2018. 7 8 A 9 Barbara Jacobs Rothstein U.S. District Court Judge 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 9
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