Court of Appeals of Washington,

Division 2.

LANDSTAR INWAY, INC., Appellant,

v.

Frank SAMROW and Jane Doe Samrow and the marital community comprised thereof; Respondent,

Oasis Pilot Car Service LLC; and CJ Car Pilot, Inc., Defendants.

 

No. 43894–1–II.

May 6, 2014.

 

Appeal from Pierce County Superior Court; Hon. Susan K. Serko, J.David B. Jensen, Sylvia Janelle Hall, Merrick Hofstedt and Lindsey, Seattle, WA, for Appellant.

 

Richard William Lockner, Attorney at Law, Thomas George Krilich, Attorney at Law, Paul Lawrence Crowley, Lockner & Crowley, Inc., P.S. Tacoma, WA, for Respondent.

 

Robert William Novasky, Forsberg & Umlauf, P.S., Tacoma, WA, for Other Parties.

 

PUBLISHED OPINION

BJORGEN, J.

*1 ¶ 1 Landstar Inway Inc. sued Frank Samrow and others over an accident involving a Landstar truck allegedly caused by the negligence of a pilot car operator dispatched through a limited liability corporation (LLC) of which Samrow was a member. Samrow sought and obtained summary judgment dismissing him from the lawsuit, arguing that he was shielded from liability as a member of the LLC. Landstar appeals this order and the denial of its motions to reconsider summary judgment and amend its complaint. Landstar argues that the trial court erred because material issues of fact remain as to whether Samrow was (1) personally liable for’ the LLC’s obligations as one of its members under the doctrine of corporate disregard, (2) personally liable as a partner in an unnamed partnership with the LLC, and (3) personally liable for his own tortious acts. Because genuine issues of fact remain about Samrow’s personal liability under the doctrine of corporate disregard, we partially reverse the order for summary judgment and remand for further proceedings.

 

FACTS

¶ 2 Washington is among the minority of states that do not require the road transportation of tall cargo loads on designated routes. Instead, Washington allows cargo carriers to select their own routes, so long as “pilot car” vehicles escort any tall cargo shipments. Where necessary to ensure that the load can safely travel beneath an overpass, a “pole car,” a pilot car with a survey pole exceeding the height of the load attached to the front bumper, must precede the load. In theory, if the pole car can pass through without the pole striking the overpass, so may the cargo shipment. Regrettably, this theory may not always survive its passage through the real world.

 

¶ 3 In 2003, Samrow became a pilot car operator. For several years, Samrow offered his services in the form of his sole proprietorship, Blacksands Safety and Pilot Car Service. During these years, Samrow often worked with another pilot car operator, Terry Walker. The two of them occasionally provided pilot car services to Landstar.

 

¶ 4 In 2007, Samrow and Walker realized that they were receiving more offers for work than they could personally handle. They were referring the excess jobs to other contractors, but decided that they should receive payment for this service. This realization gave birth to Oasis Pilot Car Service LLC. Samrow testified that he and Walker never intended that Oasis would provide pilot car services, but would only dispatch other pilot car operators.

 

¶ 5 Samrow testified also that he and Walker decided to form Oasis as an LLC because “it would give [them] some protection.” Clerk’s Papers (CP) at 138. Samrow noted that he and Walker had tried to get insurance for the dispatching business, but no insurer would agree to provide them with a policy because, as a dispatcher, Oasis lacked any “direct link to the jobs.” CP at 138. Even after Oasis’s incorporation as an LLC, Samrow never successfully obtained insurance for the entity.

 

*2 ¶ 6 Under its business model, when a request for pilot car services came in, Oasis would offer the work to trusted pilot car operators and handle all the billing for the operator, taking 10 percent of the total fee for these services. Because they considered Oasis a dispatcher, both Samrow and Walker kept their sole proprietorships, and often did work referred by Oasis.

 

¶ 7 After Samrow and Walker formed Oasis, Landstar transferred its business to the new LLC. In July 2009, Landstar and related corporate entities signed two agreements with Oasis: a. “Master Independent Contractor Agreement” (Agreement) and a “Route Survey Indemnity Addendum to Master Independent Contractor Agreement” (Addendum). Through the former, Oasis became one of Landstar’s independent contractors providing pilot car services, although it had no obligation to accept every job Landstar offered. Through the latter, Oasis also agreed to provide route surveying services in conjunction with its pilot car services.

 

¶ 8 The Agreement laid out Oasis’s obligations to Landstar. One of Oasis’s primary duties was insuring Landstar against any loss it might cause. Part rV.B.l of the Agreement required Oasis to maintain

 

Commercial Automobile Liability insurance with a combined single limit for bodily injury and property damage of not less than ONE MILLION DOLLARS ($1,000,000) for each occurrence with respect to all vehicles owned, leased, hired, or assigned by Contractor to escort shipments on behalf of Companies. Commercial General Liability insurance coverage of not less than ONE HUNDRED THOUSAND DOLLARS ($100,000) per occurrence for personal property in the care, custody or control of Companies while such property is being escorted by Contractor. The Contractor[‘]s Automobile Liability and Commercial General Liability insurance policies must be endorsed to name the Companies as an additional insured for claims and liabilities arising out of the Contractor’s work or services provided or performed under this Agreement.

 

CP at 103 (emphasis omitted). The Agreement required Oasis to prove it had “procured” and continued to “maintain[ ]” the required insurance. CP at 103. In the event that Oasis failed to “provide satisfactory proof of the liability insurance” required by the Agreement, Landstar reserved the right to purchase insurance at Oasis’s expense. CP at 103. Oasis also agreed to

indemnify and hold harmless Companies and any and all motor carriers for whom Companies are providing transportation services from any and all claims, judgments, costs, expenses and losses (including attorneys’ fees) by reason of any claim of damage or injury to person (including death) or property, including but not limited to damage or injury sustained by Companies, its employees, drivers, or customers, caused in whole or in part by the negligence, breach of contract, breach of warranty, or other fault or default on the part of Contractor or its employees or agents in the performance of, or pursuant to, its work under this Agreement.

 

*3 CP at 104. The Addendum contained a similar indemnification clause.

 

¶ 9 The Agreement also contained a nonassignability clause that declared that “none of the rights or obligations attaching to either party hereunder shall be assignable.” CP at 105. However, the Agreement did not specifically require that Samrow perform the contract on Oasis’s behalf. In fact, in keeping with Oasis’s status as an independent contractor, the Agreement gave Oasis sole discretion to determine how to perform its contractual duties. CP at 102 (“[Oasis] shall have complete control over the means and method of providing services required to be performed.”). To give effect to this discretion, the Agreement speaks generally to Oasis’s agents and employees performing its contractual duties and no mention is made of any obligation for Samrow to personally provide the services.

 

¶ 10 Samrow signed the Agreement on behalf of Oasis using the title “Partner.” CP at 106. The signature block where Samrow indicated his title contained Oasis’s phone and federal tax numbers, as well as Oasis’s e-mail address. Samrow later testified that he did not know whether there was a distinction between a partner and a member of an LLC.

 

¶ 11 When Landstar sought proof that Oasis had fulfilled its contractual obligation to procure and maintain the requisite insurance, Samrow provided it with the insurance policy for his personal vehicle, which listed Landstar as an additional insured. Samrow testified that he provided his personal insurance because Landstar employees told him that he could do so.

 

¶ 12 In October 2009 Landstar contracted to transport a tall load from British Columbia to the East Coast. One of Landstar’s drivers called Oasis to alert it that he would need route survey and escort services through Washington. Samrow testified that he told the Landstar driver that “I couldn’t handle the job” and that he gave the driver the name of Phil Kent, who provided pilot car services under the trade name CJ Car Pilot Inc. CP at 163–64. When Kent met the driver at the border, however, Kent was driving a vehicle marked with Oasis signs, and Oasis later billed Landstar for Kent’s services.

 

¶ 13 When the two vehicles reached the New York Avenue overpass at milepost 124 on Interstate 5, Kent believed he passed successfully underneath. The Landstar cargo load, however, struck the bottom of the overpass, and, because of the speed at impact, scraped its way completely under it. Landstar eventually paid both the Washington Department of Transportation and the company owning the load for damages to the overpass and the cargo.

 

¶ 14 When Landstar tendered its indemnity claims to Samrow pursuant to the Agreement, Samrow’s insurance company denied the claim because Samrow’s policy covered his personal vehicle, which had not been used to escort the load. Landstar then tendered its indemnity claims to CJ Car Pilot and Kent. Kent’s insurer also rejected the tender. Eventually, to recover its losses, Landstar sued Oasis, Samrow and his marital community, and CJ Car Pilot Inc., alleging three different causes of action: negligence, breach of contract, and breach of indemnity. Samrow moved for summary judgment dismissing him from the action, claiming that any liability ran to Oasis and not to him personally.

 

*4 ¶ 15 Just before the hearing on Samrow’s summary judgment motion, Landstar moved for permission to file an amended complaint that sought to impose personal liability on Samrow for abuse of Oasis’s corporate form in two ways. First, Landstar alleged that Samrow had used Oasis to evade a legal duty existing independently of the contract that required him to exercise reasonable care in the provision of pilot car services. Second, Landstar alleged that Samrow had fraudulently failed to disclose that Oasis was only a dispatcher, instead of a provider of pilot car services, and fraudulently represented his own insurance as Oasis’s.

 

¶ 16 At the summary judgment hearing, the parties contested the theories of Samrow’s individual liability found in both the original and amended complaints, despite the fact that the trial court had not yet granted leave to amend the complaint. Ultimately, the trial court granted the motion for summary judgment after determining that the facts did not justify disregarding the corporate form or imposing personal liability on Samrow.

 

¶ 17 Landstar moved for reconsideration, and the trial court consolidated the hearing on this motion with the hearing on the motion to amend Landstar’s complaint. At the hearing, the trial court first heard the motion for reconsideration because the order for summary judgment had dismissed Samrow from the action, so Landstar could not amend its complaint unless the court granted reconsideration. Landstar’s arguments at the hearing were essentially the same as the ones it had made at the summary judgment hearing: it contended Samrow was personally liable under the independent duty doctrine and under the doctrine of corporate disregard. The trial court rejected the motion for reconsideration, stating:

 

The whole purpose of setting up corporations is to limit liability. So, to say that they did that to limit their liability, well, that’s why most corporations are set up. LLCs are set up for that purpose, so I don’t think that that, in and of itself, raises the issue of fact. The closest, I think, that the plaintiff gets to an issue of fact on whether there are material misrepresentations or fraud, quite frankly, because that’s what you have to raise, an issue on those issues in order to raise an issue as to whether or not the Court should ultimately, as fact finder, pierce the corporate veil, is whether or not he’s setting up a corporation just because he can’t get insurance. I don’t think that gets to raising an issue of fact on piercing the corporate veil; especially in light of the contract which was ultimately signed by the parties, the master contract which talks about, in essence, the responsibility being on, I think, both sides to ensure that there’s insurance.

 

I still think that my decision on summary judgment was accurate, correct, and I’m going to deny motion for reconsideration, which in turn means that the [motion to amend] is moot.

 

Verbatim Report of Proceedings (VRP) (June 22, 2012) at 17–18.

 

*5 ¶ 18 Landstar now appeals the trial court’s orders granting summary judgment to Samrow and denying its motions to amend its complaint and for reconsideration of the summary judgment order.

 

ANALYSIS

¶ 19 Landstar seeks reversal of the trial court’s summary judgment order and the trial court’s denial of its motions to amend its complaint and for reconsideration for three reasons. First, Landstar contends that Samrow’s abuse of Oasis’s corporate form justifies imposing its liabilities on him as a member under either the doctrine of corporate disregard or the independent duty doctrine. Second, Landstar alleges Samrow bore liability for Oasis’s negligence or breach of contract or indemnity because he signed the Agreement as a partner of Oasis. Finally, Landstar contends that Samrow is liable for his own tortious actions. We agree that material questions of fact remain with regard to the disregard of Oasis’s corporate form. Consequently, we partially reverse the order for summary judgment.

 

I. STANDARD OF REVIEW

[1][2][3] ¶ 20 We review de novo a trial court’s decision to grant a motion for summary judgment. Kofmehl v. Baseline Lake, LLC, 177 Wash.2d 584, 594, 305 P.3d 230 (2013). Our review requires us to “perform[ ] the same inquiry as the trial court.” Kofmehl, 177 Wash.2d at 594, 305 P.3d 230. We examine the record, including the pleadings, depositions, answers to interrogatories, admissions on file, and affidavits, in the light most favorable to the nonmoving party, drawing all reasonable inferences in the nonmoving party’s favor, to determine if a genuine material issue of fact exists. Kofmehl, 177 Wash.2d at 594, 305 P.3d 230; CR 56(c). Summary judgment is appropriate where there is no material issue of fact and the moving party is entitled to judgment as a matter of law. CR 56(c).

 

[4][5][6][7] ¶ 21 We review a trial court’s decision regarding either a motion for reconsideration or a motion to amend a complaint for an abuse of discretion. City of Longview v. Wallin, 174 Wash.App. 763, 776, 301 P.3d 45, review denied, 178 Wash.2d 1020, 312 P.3d 650 (2013); Protect the Peninsula’s Future v. City of Port Angeles, 175 Wash.App. 201, 214, 304 P.3d 914, review denied, 178 Wash.2d 1022, 312 P.3d 651 (2013). A trial court abuses its discretion if its “ ‘decision is manifestly unreasonable or based upon untenable grounds or reasons.’ “ In re Marriage of Horner, 151 Wash.2d 884, 893, 93 P.3d 124 (2004) (quoting State v. Brown, 132 Wash.2d 529, 572, 940 P.2d 546 (1997)). A trial court’s

 

“decision is manifestly unreasonable if it is outside the range of acceptable choices, given the facts and the applicable legal standard; it is based on untenable grounds if the factual findings are unsupported by the record; it is based on untenable reasons if it is based on an incorrect standard or the facts do not meet the requirements of the correct standard.”

 

Horner, 151 Wash.2d at 894, 93 P.3d 124 (quoting In re Marriage of Littlefield, 133 Wash.2d 39, 47, 940 P.2d 1362 (1997)).

 

II. THE ISSUES BEFORE THE TRIAL COURT

*6 ¶ 22 One procedural matter requires discussion before turning to the merits of Landstar’s appeal. Technically, the corporate disregard and independent duty doctrine theories of Samrow’s liability that Landstar urges here were not before the trial court during the summary judgment proceedings. Landstar had only moved to amend its complaint to add these theories of liability a day before the summary judgment hearing, and the trial court had not granted the motion to amend. However, the vast majority of the summary judgment hearing was devoted to discussion of corporate disregard and the independent duty doctrine. The trial court ultimately rejected these theories on their merits at the summary judgment hearing.

 

[8][9] ¶ 23 We have recognized that parties may contest unpleaded claims by implication. Kirby v. City of Tacoma, 124 Wash.App. 454, 471, 98 P.3d 827 (2004). We look to the record as a whole to see if the parties have actually done so by contesting the issue, the evidence in the record, and the trial court’s consideration of the legal and factual issues involved. See Kirby, 124 Wash.App. at 471, 98 P.3d 827 (quoting Dewey v. Tacoma Sch. Dist. No. 10, 95 Wash.App. 18, 26, 974 P.2d 847 (1999)). Here, the record contains extensive discussion of the corporate disregard and independent duty doctrine issues and the evidence Landstar relies on to present these theories. The trial court ultimately denied Landstar’s motion to amend its complaint after rejecting the merits of the claims Landstar wished to add. Analogizing Kirby to summary judgment proceedings, the parties contested the corporate disregard and independent duty doctrine claims, despite the fact that they were not formally before the court. Therefore, we consider them properly before us. FN1

 

III. CORPORATE DISREGARD

¶ 24 Landstar first argues that summary judgment was inappropriate because material issues of fact remain concerning whether Oasis’s corporate form should be disregarded in order to hold Samrow, as one of its members, individually liable. Specifically, Landstar alleges that material issues of fact remain as to whether Samrow (1) abused the corporate form through fraud and (2) abused the corporate form by using it to evade a legal duty he owed independently of the Agreement and addendum. We agree that material issues of fact remain about whether Samrow committed fraud that abused the corporate form. These issues of fact, consequently, preclude summary judgment dismissing Samrow from the suit. However, as discussed in Part III B, below, we disagree that material issued of fact remain about Samrow’s liability under the independent duty doctrine and affirm the grant of summary judgment with respect to that theory of Samrow’s personal liability.

 

[10][11][12] ¶ 25 An LLC “is a statutory business structure that is like a corporation in that members of the company are generally not personally liable for the debts or obligations of the company.” Chadwick Farms Owners Ass’n v. FHC, LLC, 166 Wash.2d 178, 186–87, 207 P.3d 1251 (2009); see RCW 25.15.125(1), (2). However, just as the courts may disregard the separate existence of a corporation to impose personal liability on the corporation’s shareholders, courts may disregard the LLC entity to impose personal liability on the LLC’s members under certain circumstances. Chadwick Farms, 166 Wash.2d at 200, 207 P.3d 1251; RCW 25.15.060. We employ the same test used to determine the propriety of piercing the veil of the corporate form to determine the propriety of piercing the veil of the LLC form to impose liability on LLC members. Chadwick Farms, 166 Wash.2d at 200, 207 P.3d 1251; RCW 25.15.060.

 

*7 [13][14][15][16] ¶ 26 Under this test, a plaintiff must prove the LLC form “was used to violate or evade a duty and that the LLC form must be disregarded to prevent loss to an innocent party.” Chadwick Farms, 166 Wash.2d at 200, 207 P.3d 1251. Establishing the first element requires the plaintiff to show “an abuse of the corporate form.” Meisel v. M & N Modern Hydraulic Press Co., 97 Wash.2d 403, 410, 645 P.2d 689 (1982). Typically this involves some manner of “ ‘fraud, misrepresentation, or some form of manipulation of the corporation to the stockholder’s benefit and creditor’s detriment.’ “ Meisel, 97 Wash.2d at 410, 645 P.2d 689 (quoting Truckweld Equip. Co. v. Olson, 26 Wash.App. 638, 645, 618 P.2d 1017 (1980)). Establishing the second element requires the plaintiff to show that disregarding the corporate form is necessary to avoid the consequences of intentional misconduct harmful to the plaintiff. Meisel, 97 Wash.2d at 410, 645 P.2d 689.

 

A. Fraud.

[17][18] ¶ 27 Landstar first alleges that Samrow abused the corporate form by committing two different frauds.FN2 First, Landstar alleges that Samrow fraudulently concealed the fact that Oasis dispatched pilot car operators instead of providing pilot car services of its own. Second, Landstar contends that Samrow fraudulently misrepresented his own insurance as Oasis’s in order to satisfy Oasis’s contractual obligation to provide coverage. FN3

 

[19][20][21] ¶ 28 To establish fraudulent misrepresentation, a plaintiff must prove nine elements: (1) representation of an existing fact, (2) the materiality of the representation, (3) the falsity of the representation, (4) the speaker’s knowledge of the falsity of the representation or ignorance of its truth, (5) the speaker’s intent that the listener rely on the false representation, (6) the listener’s ignorance of its falsity, (7) the listener’s reliance on the false representation, (8) the listener’s right to rely on the representation, and (9) damage from reliance on the false representation.   Baertschi v. Jordan, 68 Wash.2d 478, 482, 413 P.2d 657 (1966). An omission may constitute a misrepresentation if the plaintiff had a duty to disclose information and breached this duty. Boonstra v. Stevens–Norton, Inc., 64 Wash.2d 621, 624–25, 393 P.2d 287 (1964); Oates v. Taylor, 31 Wash.2d 898, 903–04, 199 P.2d 924 (1949). A duty to disclose material information can arise in arm’s-length contract negotiations because of the contractual duty of good faith. Liebergesell v. Evans, 93 Wash.2d 881, 891–94, 613 P.2d 1170 (1980); Oates, 31 Wash.2d at 904, 199 P.2d 924.

 

[22][23] ¶ 29 Samrow argues that we should not even reach the merits of Landstar’s corporate disregard theory because Landstar failed to properly plead fraud according to CR 9(b). CR 9(b) obliges a plaintiff alleging fraud claims to plead the elements of fraud and the factual circumstances constituting the fraud or face dismissal of the complaint. Haberman v. Wash. Pub. Power Supply Sys., 109 Wn.2d 107, 165, 744 P.2d 1032, 750 P.2d 254 (1987). However, despite the nomenclature Landstar used in amending its complaint, corporate disregard is not a freestanding claim for relief. Corporate disregard is instead an equitable remedy that would allow the trial court to impose liability on Samrow for Oasis’s negligence, breach of contract, or breach of indemnity. See Truckweld, 26 Wash.App. at 643, 618 P.2d 1017.

 

*8 [24] ¶ 30 There is no Washington case addressing whether a party must satisfy the pleading requirements of CR 9(b) in seeking to disregard a corporate form. The federal courts have, however, addressed the issue, and we may refer to these decisions as persuasive authority interpreting our analogous rules of procedure. See Chapel Ridge Invs., LLC v. Petland Leaseholding Co., No. 1:13–cv–00146–PPS, 2013 WL 6331095, at *6 (N.D.Ind. Dec.4, 2013) (collecting federal cases discussing the pleading requirements for corporate disregard claims); Washburn v. City of Federal Way, 178 Wash.2d 732, 750, 310 P.3d 1275 (2013) (citing Beal v. City of Seattle, 134 Wash.2d 769, 777, 954 P.2d 237 (1998)). Unfortunately, the federal courts have yet to reach a consensus on whether a plaintiff seeking to disregard the corporate form due to fraud must plead the fraud in accordance with the federal version of CR 9(b). Chapel Ridge, 2013 WL 6331095, at *6–7.

 

[25] ¶ 31 Those federal courts that decline to impose heightened pleading requirements in the context of corporate disregard do so because those pleading standards only apply to claims for relief, not the relief itself. See Taurus, IP, LLC v. DaimlerChrysler Corp. ., 519 F.Supp.2d 905, 925 (W.D.Wis.2007). These courts do not impose the pleading requirements of FRCP 9, because the federal courts treat corporate disregard as an equitable remedy, rather than an independent claim. Taurus, 519 F.Supp.2d at 925; see also 18 Am.Jur.2d Corporations § 47 (2004). This interpretation of CR 9 comports with both Washington’s commitment to maintaining liberal pleading standards and its view of corporate disregard as an equitable remedy, not a claim for relief. See, e.g., Putman v. Wenatchee Valley Med. Ctr., 166 Wash.2d 974, 983, 216 P.3d 374 (2009); Truckweld, 26 Wash.App. at 643, 618 P.2d 1017. Based on these considerations, we follow those federal courts not requiring parties seeking to disregard the corporate form due to fraud to plead the fraud with particularity.

 

¶ 32 We turn now to the merits of Landstar’s fraud allegation. Landstar introduced evidence that (1) it had done business with Samrow before the incorporation of Oasis, which might reasonably allow it to beheve Oasis was a provider of pilot car services; (2) Oasis held itself out as a provider of pilot car services; (3) the language of the contract suggested that Landstar understood Oasis as aprovider of pilot car services; (4) Samrow did not disclose that Oasis would not, as he had, directly provide pilot car services, but would only dispatch pilot car operators; (5) the contract required Oasis to procure insurance to cover its operations; and (6) Samrow provided his own insurance in the place of providing Oasis’s to Landstar. For his part, Samrow introduced evidence that (1) he never considered Oasis anything other than a dispatcher and (2) he provided his personal insurance with Landstar’s permission.

 

[26][27][28] ¶ 33 We hold that material issues of fact remain as to whether Samrow abused the corporate form. The first element of the test for corporate disregard is satisfied when recognizing the corporate entity would help accomplish a fraud:

 

*9 [n]ormally a corporate entity will be regarded unless [to do so] would help accomplish the breach of duty owing to the person who has dealt with the corporation. In exceptional cases, however, when the natural or artificial person sought to be held has so conducted himself or itself with respect to the person seeking relief that not to enforce the remedy for breach against that person would aid in the perpetration of a wrong as, for example, accomplishing a fraud, the corporate entity will be disregarded to prevent such a result.

 

Soderberg Adver., Inc. v. Kent–Moore Corp., 11 Wash.App. 721, 732, 524 P.2d 1355 (1974). The Supreme Court of Oregon, a state following the same principles of corporate disregard, Harris, supra, at 259, expressed a similar approach in its holding that

“[i]t is well settled that, when corporate entity is used to accomplish fraud or injustice, the courts will disregard it, and will look through the corporate form to the real actor or actors in the transaction.”

 

Amfac Foods, Inc. v. Int’l Sys. & Controls Corp., 294 Or. 94, 106, 654 P.2d 1092 (1982) (emphasis omitted) (quoting Epton v. Moskee Inv. Co., 180 Or. 86, 93, 174 P.2d 418 (1946)).

 

¶ 34 A reasonable, although not necessary inference from the language of the contract and other evidence is that Landstar wanted Oasis’s insurance, not Samrow’s, and that Samrow fraudulently provided his own insurance to satisfy Oasis’s obligations under the Agreement. Similarly, a reasonable fact finder could conclude that the prior course of dealing and the provision of Samrow’s insurance led Landstar to reasonably conclude that Oasis would use Samrow’s vehicle to provide the pilot car services called for by the Agreement and that Samrow did not disclose that would not be the case. This, in turn, could have led Landstar to believe the insurance Samrow provided would adequately protect it. Material issues of fact remain as to whether Samrow committed fraud to satisfy Oasis’s contractual duties and whether recognizing Oasis’s corporate status helped accomplish that fraud. For this reason, the trial court erred in granting summary judgment.

 

[29] ¶ 35 We also hold that material issues of fact remain as to whether disregard of the corporate form is necessary to avoid an injustice. This portion of the test for corporate disregard focuses on the nexus between the abuse of the corporate form and the injury the plaintiff claims justifies the disregard of the corporate form. See Meisel, 97 Wash.2d at 410, 645 P.2d 689. As noted, Landstar has introduced evidence that would allow a reasonable fact finder to conclude that Samrow provided his insurance to satisfy Oasis’s contractual obligations. Landstar has also introduced evidence that would allow a reasonable fact finder to conclude that Samrow’s provision of insurance on Oasis’s behalf prevented it from knowing it needed to purchase its own insurance. The fraud, if proven, would have led to Landstar’s losses due to Oasis’s breach of the provisions of the Agreement. Disregard of Oasis’s LLC form to impose its liability on Samrow would therefore be necessary to avoid an injustice to Landstar arising from Samrow’s abuse of that form. See Chadwick Farms, 166 Wash.2d at 200, 207 P.3d 1251.

 

*10 ¶ 36 Samrow argues that Landstar should have realized that someone other than Samrow would escort its cargo because of provisions in the contract authorizing Oasis to use employees or agents to discharge its obligations, meaning that no fraud occurred. Samrow contends that Landstar should have viewed the provision of his insurance as a breach of the provision requiring Oasis to provide insurance and exercised its option to purchase coverage at Oasis’s expense. Samrow’s argument, however, misses Landstar’s point and misstates the provisions of the Agreement. Landstar contends that Samrow passed off his own personal insurance information as Oasis’s, which precluded Landstar from exercising its contractual option to purchase insurance based on Oasis’s failure to obtain coverage. If true, and if Landstar reasonably relied on this falsity and suffered damages in consequence, Samrow committed fraud. Again, a material issue of fact remains, and the trial court should have denied the motion for summary judgment.FN4

 

[30] ¶ 37 The trial court based its denial of Landstar’s motion to reconsider on Samrow’s argument about Landstar’s failure to procure insurance. In making its ruling, the trial court mistakenly characterized the Agreement as placing on both parties the responsibility to obtain insurance. The terms of the contract required Oasis to procure insurance and only allowed Landstar to do so where Oasis breached this obligation. Because the trial court based its ruling on an erroneous reading of the record, it abused its discretion in denying the motion for reconsideration.

 

B. Independent Duty Doctrine

¶ 38 Landstar also alleges that Samrow abused the corporate form by using Oasis to evade a legal duty to provide pilot car services in a reasonable manner that existed independently of the contract. To support its claim of an independent duty, Landstar cites WAC 468–38–100 and argues that this provision required Samrow to “operate the pilot car (or to ensure that the driver of the pilot car hired by Samrow operated the pilot car) with reasonable skill and judgment.” Br. of Appellant at 17.

 

[31][32][33][34] ¶ 39 Tort law serves “society’s interests in freedom from harm, with the goal of restoring the plaintiff to the position he or she was in prior to the defendant’s harmful conduct.” Alejandre v. Bull, 159 Wash.2d 674, 682, 153 P.3d 864 (2007). In contrast, contract law serves “society’s interest in performance of promises, with the goal of placing the plaintiff where he or she would be if the defendant had performed as promised.” Alejandre, 159 Wash.2d at 682, 153 P.3d 864. Generally an injury will sound in either contract or tort, and the plaintiff must seek remedies appropriate to the injury. See G.W. Constr. Corp. v. Prof’l Servs. Indus., Inc., 70 Wash.App. 360, 364, 853 P.2d 484 (1993). However, the independent duty doctrine recognizes that an injury may sound in both tort and contract law. Under the doctrine a party may pursue both contract and tort remedies if a breach of contract is simultaneously a “breach of a tort duty arising independently of the terms of the contract.” Eastwood v. Horse Harbor Found., Inc., 170 Wash.2d 380, 389, 241 P.3d 1256 (2010) (lead opinion by Fairhurst, J.).

 

*11 [35] ¶ 40 We conclude that Samrow owed no independent duty under these facts. WAC 468–38–100 imposes detailed requirements on the operation of pilot cars, focusing on required equipment and the driver’s duties in operating the vehicle. Among these are requirements that the pilot car driver notify the operator of the truck of overhead obstructions and that the pilot car have a height pole in certain circumstances. WAC 468–38–100(6), (14). Thus, the breach of any duty arising out of these provisions would be defined by the failure to provide pilot car services in accordance with their terms. Samrow, however, never provided pilot car services here, and we cannot say that he assumed any duty to act with ordinary care under WAC 468–38–100. Samrow could not use the corporate form to evade a duty he did not have.

 

[36] ¶ 41 Landstar also asks us to hold that Samrow owed a personal duty to provide pilot car services to Landstar under the Agreement. The Agreement provides no support for this argument.FN5 The Agreement gave Oasis the discretion to determine the manner in which it fulfilled its contractual duties. This discretion encompassed using employees or agents to perform the required tasks; none of this spoke to a requirement that Samrow provide the services himself. Further, Landstar is blurring contract and tort duties in its argument. There is no general duty requiring individuals in Samrow’s position to provide pilot car services and no tort related to breach of this duty.

 

[37][38] ¶ 42 As to Landstar’s claim that Samrow owed a duty to ensure that Oasis discharged any duty imposed by WAC 469–38–100, this appears to be an argument that any duty under the WAC provision was nondelegable. Tort and agency law recognize that principals may not delegate the compliance with statutory duties to their agents. Carabba v. Anacortes Sch. Dist. No. 103, 72 Wash.2d 939, 957–58, 435 P.2d 936 (1968) (citing Restatement (Second) of Agency § 214); Millican v. N.A. Dagerstrom, Inc., 177 Wash.App. 881, 890–91, 313 P.3d 1215 (2013), review denied, ––– Wn.2d ––––, ––– P.3d –––– (2014). If anything, Kent was either Oasis’s agent or its apparent agent, not Samrow’s, so any duty ran to Oasis, not Samrow. We find no basis for imputing Kent’s liability to Samrow under theories of nondelegation.

 

[39][40] ¶ 43 Landstar argues finally that it would be unjust to allow Samrow to escape liability for Oasis’s breach of a nondelegable duty because doing so would amount to an abuse of the corporate form. Landstar’s argument reduces to a claim that Samrow and Walker could not incorporate and operate Oasis as an LLC because doing so limited their liability. We long ago rejected this argument. As with all American jurisdictions, Washington’s law allows the use of the corporate form specifically to allow individuals to limit their liability. See Truckweld, 26 Wash.App. at 644–45, 618 P.2d 1017. Absent some kind of fraud or abuse of the corporate form, we respect the LLC’s separate existence, and the choice to limit liability through incorporation is not, by itself, such an abuse of the corporate form. Truckweld, 26 Wash.App. at 644–45, 618 P.2d 1017.

 

IV. PARTNERSHIP LIABILITY

*12 [41] ¶ 44 Landstar also argues that summary judgment was inappropriate because material issues of fact remain as to Samrow’s liability because he signed the Agreement and Addendum as a partner with Oasis, making him liable for the partnership’s debts. As noted above, summary judgment is proper only where no material issue of fact remains, entitling a party to judgment as a matter of law. Again, we draw all reasonable inferences in favor of the nonmoving party. When these reasonable inferences create material issues of fact, summary judgment is inappropriate. Kofmehl, 177 Wash.2d at 594, 305 P.3d 230. In contrast, where a party asks us to draw an unreasonable inference, the inference does not create a material issue of fact and summary judgment is appropriate. Lynn v. Labor Ready, Inc., 136 Wash.App. 295, 310–11, 151 P.3d 201 (2006); Marshall v. AC & Inc., 56 Wash.App. 181, 184–85, 782 P.2d 1107 (1989).

 

¶ 45 If Landstar is suggesting that Samrow’s use of the title “Partner” effectively converted the LLC into a partnership, its position cannot be sustained. Nothing in the terms or purposes of applicable statutes suggests that the protections of an LLC are lost by signing as a partner instead of a member.

 

[42] ¶ 46 We take Landstar’s position, instead, to be that Samrow’s signature as a partner showed that he had entered into an unnamed separate partnership with Oasis. We agree that if Samrow had entered into such a partnership, he could be personally liable for the partnership’s debts under RCW 25.05.125(1). However, the inference of an unnamed partnership was unreasonable, and the trial court properly declined to deny summary judgment on the basis of that unreasonable inference. As Samrow argues, the Agreement and Addendum disclose no intent on Landstar’s part to contract with a third entity, a partnership between Samrow and Oasis, to obtain Oasis’s services. All of the provisions of the Agreement and Addendum speak only of a contractual relationship between Oasis and Landstar. Further, the signature block on the Agreement and Addendum lists Oasis’s address, e-mail address, and federal tax identification number. This information indicates that Samrow was signing on behalf of Oasis, but that he simply used the wrong title to do so. Samrow’s deposition confirms this understanding of the information in the signature block on the Agreement and Addendum: he testified that he did not know that incorporation as an LLC transformed him and Walker from “partners” into “members.” See CP at 161.

 

V. SAMROW’S PERSONAL LIABILITY

¶ 47 Finally, Landstar contends that the trial court erred in granting Samrow summary judgment because material issues of fact remain about Samrow’s liability for his own tortious acts. In support, Landstar simply repeats its allegations that Samrow committed the common law tort of fraud with certain representations he implicitly or explicitly made to it.FN6

 

[43] ¶ 48 Landstar presents Samrow’s fraudulent statements here as an independent tort claim, rather than as a means to relief, as it did in seeking corporate disregard as a remedy. CR 9(b) does apply where the party sets out a claim for fraud. Under CR 9(b), Landstar needed to affirmatively plead the nine elements of fraud in its amended complaint or face its dismissal.   Haberman, 109 Wn.2d at 165; Schreiner Farms, Inc. v. Am. Tower, Inc., 173 Wash.App. 154, 163, 293 P.3d 407 (2013). Neither Landstar’s complaint nor its amended complaint pleads the elements of fraud as required by CR 9(b). Because Landstar’s pleading failed to satisfy the requirements of CR 9(b), we cannot address the merits of its claim. Summary judgment in Samrow’s favor was appropriate as to this theory of Samrow’s liability.

 

CONCLUSION

*13 ¶ 49 We partially reverse the summary judgment order dismissing Samrow from Landstar’s suit, because material issues of fact remain about whether Samrow abused the corporate form by committing fraud; and we remand to the trial court. If the finder of fact determines that Samrow abused the corporate form in this way, consistently with Part II. A. of the Analysis above, the trial court may disregard Oasis’s LLC form in imposing any liability for that fraud.

 

We concur: WORSWICK, C.J. and JOHANSON, J.

 

FN1. For his part, Samrow does not argue that the claims are not before us.

 

FN2. As used in the cases concerning corporate disregard, fraud carries the broader meaning of “inequitable or unconscionable conduct” rather than the limited common law meaning of fraudulent misrepresentation. Viewcrest Co–Op. Ass’n v. Deer, 70 Wash.2d 290, 294, 422 P.2d 832 (1967); see Meisel, 97 Wash.2d at 410, 645 P.2d 689 (citing Thomas Harris, Washington’s Doctrine of Corporate Disregard, 56 WASH. L.Rev. 253, 260 n.38); J.I. Case Credit Corp. v. Stark, 64 Wash.2d 470, 475–76, 392 P.2d 215 (1964) (quoting Charles Horowitz, Disregarding the Entity of Private Corporations, 14 WASH. L.Rev. 285, 294 (1939)) (explaining that fraud within the meaning of corporate disregard is broader than fraud within the meaning of common law tortious conduct). Landstar does not avail itself of this wider meaning and contends that Samrow’s conduct constituted common law fraud. Nonetheless, common law fraud does fall within the ambit of “fraud, misrepresentation, or … manipulation” and thus, if Landstar’s allegations are true, suffices to allow a court to disregard the LLC form. See Meisel, 97 Wash.2d at 410, 645 P.2d 689.

 

FN3. Landstar does not argue that Samrow’s provision of his insurance on Oasis’s behalf shows that he treated Oasis as his alter ego, and therefore abused the corporate form by not treating Oasis as a separate entity. See Harris, supra, at 253.

 

FN4. On remand, the trial court will need to apply CR 15 to determine the propriety of allowing Landstar to amend its complaint to add the corporate disregard theory of Samrow’s liability.

 

FN5. Landstar alleges that it contracted with Oasis specifically to obtain the expertise of Samrow. The record, however, contains no evidence of this.

 

FN6. At oral argument, Landstar also alleged that material issues of fact remained about Samrow’s negligence in picking the route used by Kent. Landstar did not assign error to the trial court’s grant of summary judgment in this regard, and, although it made argument in this respect before the trial court, it provided no argument as to any error in its appellate briefs. The issue is not properly before us and we decline to address it. See Holland v. City of Tacoma, 90 Wash.App. 533, 537–38, 954 P.2d 290 (1998); RAP 10.3(a)(6).

 

United States District Court,

E.D. California.

LEXINGTON INSURANCE COMPANY, Plaintiff,

v.

SILVA TRUCKING, INC. et al., Defendants.

 

No. 2:14–CV–0015 KJM CKD.

Signed May 6, 2014.

Filed May 7, 2014.

 

Eric John Emanuel, Quinn Emanuel Urquhart & Sullivan, LLP, Los Angeles, CA, for Plaintiff.

 

Brian J. Panish, Robert S. Glassman, Panish Shea & Boyle LLP, Los Angeles, CA, Robert Buccola, Steven Campora, Dreyer Babich Buccola Wood, LLP, C. Brooks Cutter, Kershaw Cutter & Ratinoff, LLP, Sacramento, CA, for Defendants.

 

ORDER

K.J. MUELLER, District Judge.

*1 On April 25, 2014, the court heard argument on a motion to dismiss filed by defendants William and Debra Hackett (the Hacketts), Silva Trucking, Inc. (Silva) and Elaine McDonold (McDonold) (collectively defendants). It also heard argument on a motion to intervene filed by Carolina Casualty Insurance Company (CCIC). Eric Emanuel appeared for plaintiff Lexington Insurance Company (Lexington); Robert Buccola and Steven Campora appeared for the Hacketts and made a special appearance for Brian Panish on behalf of Silva and McDonold; Galina Jakobson appeared for proposed intervenor CCIC. After considering the parties’ arguments, the court GRANTS the motion to dismiss and DENIES the motion to intervene as moot.

 

I. BACKGROUND FN1

 

FN1. The facts in this section are drawn from the complaint and from the additional documents the parties have submitted in support of or in opposition to the motions to dismiss. The defendants claim the motions are brought under Rule 12(b)(1) and so provide the documents as part of their factual attack on jurisdiction. As discussed below, however, the motion is not a challenge to subject matter jurisdiction. However, in cases requesting a dismissal or stay because of a pending state action, courts routinely rely on materials outside the record. Although there are some objections to portions of declarations submitted with the motions, which the court resolves below, the parties do not object to the documents submitted in support of and opposition to the motion, so the court considers them in resolving the pending motions.

 

In 2010, Lexington issued a commercial automobile insurance policy to Silva on a “follow-form” excess basis with an indemnity limit of $4 million for all claims arising from one accident, in excess of the $1 million per accident limit under the primary policy issued by CCIC.FN2 Complaint, ECF No. 1 ¶ 11.

 

FN2. “There are two levels of insurance coverage—primary and excess. Primary insurance is coverage under which liability attach[es] to the loss immediately upon the happening of the occurrence. Liability under an excess policy attaches only after all primary coverage has been exhausted.” Cmty. Redev. Agency of L.A. v. Aetna Cas. & Surety Co., 50 Cal.App.4th 329, 337–38, 57 Cal.Rptr.2d 755 (1996) (internal quotation marks and citation omitted). A follow-form policy “has the same scope of coverage as the primary policy.” Coca–Cola Bottling Co. of San Diego v. Columbia Cas. Ins. Co., 11 Cal.App.4th 1176, 1183, 14 Cal.Rptr.2d 643 (1993) (emphasis and internal citation omitted).

 

On October 11, 2010, while driving for Silva, McDonold was involved in an accident, causing injuries to Benjamin Curry and Debra Hackett. Id. ¶¶ 11–12. At the time of the accident, Debra Hackett was acting in the course of her employment with Storer Transportation, which has a workers’ compensation policy with National Interstate. Id. ¶ 15.

 

Primary insurer CCIC retained Cholakian & Associates as counsel for Silva and McDonold. Id. ¶ 16; see Hacketts’ Mot. to Dismiss, Ex. B, ECF No. 8–2 at 11. Kevin Cholakian and Jennifer Kung of Cholakian and Associates handled the negotiations and ultimate defense against the Hacketts’ claim.

 

On December 16, 2011, the Hacketts’ lawyer Elliott Reiner wrote to Cholakian and requested “preliminary acceptance” of their settlement demand for the combined $5 million policy limits of the primary and excess policies. ECF No. 1 ¶ 17. This proposal was conditioned on the Hacketts’ confirming there was no insurance above $5 million and structuring of the settlement by plaintiffs’ representative. Id. The letter did not mention any potential claim by Curry, liens or property damage claims. Id. Subsequently Curry’s lawyer indicated that Curry’s claim would be included with the Hacketts’ claim; still later, the workers’ compensation carrier for Curry’s employer demanded direct payment. Id.

 

On January 17, 2012, the date set for accepting the settlement demand, Cholakian and Ralph Zappala of Lewis Brisbois Bisgaard & Smith LLP, counsel for Lexington, wrote to the Hacketts’ counsel, indicating acceptance of the offer while seeking clarification of the identity of all the claimants to the policy proceeds. Id. ¶ 18; ECF No. 9–1 at 53–55.

 

On January 18, 2012, Reiner wrote, acknowledging the policy-limits settlement offer, but saying he needed additional information before he could resolve the case; he asked for assets and insurance declarations from Silva and a declaration from Silva’s insurance broker. Id. ¶ 19. He said he also needed to obtain an allocation agreement with the workers’ compensation insurer and resolve a subrogation claim for damage to Curry’s vehicle. Id. ¶¶ 19–20.

 

*2 Silva’s lawyer failed to provide the information about assets and insurance to the Hacketts’ lawyer and on March 21, 2012, the Hacketts’ counsel wrote, saying the policy limits settlement was no longer acceptable. Id. ¶ 22. Thereafter Silva’s lawyer provided the financial and insurance information. Id.

 

On April 20, 2012, Lexington filed a complaint in interpleader in Sacramento County Superior Court, case number 34–2012000122876, tendering its $4 million policy limit into court. Id.

 

On May 17, 2012, Curry filed suit in Sacramento County Superior Court, case number 34–2012–00124592, against Silva, McDonold and Debra Hackett. Id. ¶ 25. This case was later consolidated with case number 34–2012–00128931 filed on July 27, 2012 by Dreyer Babich Buccola Wood Campora, LLP as well as Reiner on behalf of the Hacketts against Silva and McDonold (the Underlying Action), with William Hackett claiming loss of consortium and Debra Hackett seeking recovery for bodily injury. Id. ¶ 27. National Interstate filed a complaint in intervention in these actions, seeking $1,137,347 in workers’ compensation benefits paid to Debra Hackett. Id. 27.

 

On July 12, 2013, Cholakian wrote to Buccola, noting the issues to be resolved before the combined policy limit funds could be released to settle the Hacketts’ claims. ECF Nos. 8–2 at 11–13 & 9–1 at 14–16.

 

Traveler’s Insurance Company filed a workers’ compensation lien on Curry’s claim and in October 2013, CCIC and Lexington released $500,000 from the interpleaded funds to settle Curry’s and Traveler’s claims. ECF No. 1 ¶ 29.

 

On December 6, 2013, a jury returned a verdict in the Underlying Action against Silva and McDonold in favor of the Hacketts for $34.9 million. Judgment in that amount was entered. Id. 30.

 

On December 13, 2013, William Gorham, new counsel for Silva and McDonold wrote to Karen Uno of Meckler Bulger Tilson Marick & Pearson, lawyers for CCIC, and Lane Ashley of Lewis Brisbois Bisgaard & Smith, lawyers for Lexington, “to demand that Lexington and CCIC satisfy the verdict in order to protect their insureds …” by January 3, 2014. Pl.’s Opp’n, Ex. A, ECF No. 21–1 at 4–15. Gorham sent another letter on December 19, 2013, asking Lexington and CCIC to provide information in anticipation of his engaging in mediation with the Hacketts’ lawyer “to explore avenues available to protect them against what appears to be an impending judgment.” ECF No. 21–1 at 17–19.

 

On December 30, 2013, Ashley responded to Gorham on behalf of Lexington, taking issue with Gorham’s characterization of the record, and noting that he would not engage in further debate “through the mail as it appears that [these issues] will only be resolved through future litigation.” Id. at 21–27. A second letter dated December 31, 2013, followed. Id. at 29–30.

 

On January 2, 2014, Lexington filed this action under the Declaratory Judgment Act, 28 U.S.C. § 2201, against the Hacketts, Silva and McDonold. ECF No. 1. Lexington seeks a judgment declaring that its policy limits applicable to any judgment in the Underlying Action are $4 million, it owes no contractual or other duty to pay more than that amount to indemnify Silva and McDonold and that it discharged its contractual duties and its duty of good faith and fair dealing in response to settlement opportunities in the Underlying Action. Id. at 9.

 

*3 On January 6, 2014, Gorham wrote to Uno and Ashley, again asking CCIC and Lexington to pay the judgment against Silva and McDonold or, in the alternative, to pay for counsel for Silva and McDonold. ECF No. 21–1 at 32–33. On January 7, 2014, Ashley responded on Lexington’s behalf, saying that it included Silva and McDonold as defendants in the declaratory judgment action because of Gorham’s claim that Lexington had not acted in good faith. Id. at 35–36. It declined to “pay to sue itself.”

 

On January 8, 2014, Brian Panish, new counsel for Silva and McDonold, wrote to Ashley, noting he had been retained to prosecute a bad faith action against Lexington. Id. at 38. He also said he would be filing a cross-claim/counter-claim in the declaratory judgment action against counsel. Id.

 

On January 28, 2014, Panish, on behalf of Silva and McDonold, filed suit in Sacramento County Superior Court, Case No. 34–2014–00157903, against Lexington, CCIC, Cholakian & Associates, Kevin Cholakian and Jennifer Kung from that firm; and Lewis, Brisbois, Bisgaard & Smith, LLP and Ralph Zappala from that firm, alleging three causes of action: (1) breach of the implied duty of good faith and fair dealing against CCIC and Lexington; (2) breach of contract against CCIC and Lexington; (3) professional negligence against Cholakian and Associates and Lewis, Brisbois, Bisgaard & Smith and the individual lawyers. ECF Nos. 8–2 at 15–28 & 9–1 at 20–42.

 

On March 20, 2014, CCIC removed McDonold v. Lexington Insurance Company to this court, claiming the court had supplemental jurisdiction over the action because of the pendency of the instant case. See Civ. No. S–14–733 TLN KJN (McDonold docket), ECF No. 2 at 4–5. On April 2, 2012, the district judge assigned to the removed action accepted the parties’ stipulation and remanded the McDonold action to the Superior Court. McDonold Docket, ECF No. 12.

 

Lexington has demurred to the Superior Court case, citing the pendency of the instant action. ECF No. 23–1 at 4–17.

 

II. THE MOTIONS TO DISMISS

The Hacketts, Silva and McDonold have filed motions to dismiss under Rule 12(b)(1) of the Federal Rules of Civil Procedure, presenting almost identical arguments that the court should decline to exercise jurisdiction under Brillhart v. Excess Insurance Co. of America, 316 U.S. 491, 62 S.Ct. 1173, 86 L.Ed. 1620 (1942). They also claim their motions are based on Rule 12(b)(7), but as they provide no argument in support of this reference, the point is waived. See John–Charles v. California, 646 F.3d 1243, 1247 n. 4 (9th Cir.2011) (stating that an undeveloped argument is waived); Navellier v. Sletten, 262 F.3d 923, 948–49 (9th Cir.2001) (stating that an issue not supported by argument or citations to authorities and supporting documents in the record is waived). Silva and McDonold also cite Rule 12(b)(6), but without any elaboration; any reliance on that rule also is waived.

 

As explained more fully below, Brillhart is concerned with a court’s discretionary jurisdiction rather than subject matter jurisdiction. Nevertheless, some courts consider a motion to dismiss or stay under Brillhart as one brought under Rule 12(b)(1). See, e.g., Exit 282A Development Co., LLC v. Worrix, No. 3:12–CV–939–BR, 2013 WL 786443, at *2 (D.Or. Mar.1, 2013); Cincinnati Ins. Co. v. Silvestri Paving Co., No. 10 C 07971, 2011 WL 4686437 at *2 (N.D.Ill. Oct.4, 2011). This court will not rely on Rule 12(b)(1), but rather will consider whether to exercise jurisdiction under the Declaratory Judgment Act, 28 U.S.C. § 2201, on which Lexington relies. Wilton v. Seven Falls Company, 515 U.S. 277, 289–90, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995) (recognizing that a district court’s decision about the propriety of hearing declaratory judgment actions is to be reviewed for an abuse of discretion); Monavie v. Quixtar, Inc., 741 F.Supp.2d 1227, 1232 n. 2 (D.Utah 2009) (stating that Brillhart abstention does “not raise Rule 12(b)(1) jurisdictional defects”).

 

A. Evidentiary Considerations

*4 The defendants attach a number of exhibits to their respective motions and provide declarations of counsel identifying the exhibits and describing the progress not only of the Underlying Action but also of the parties’ dealings before the judgment was entered in that case. Hacketts’ Mot. to Dismiss, ECF No. 8, Decl. of Steven Campora, ECF No. 8–2; Silva & McDonold’s Mot. to Dismiss, ECF No. 9, Decl. of Steven Campora, ECF No. 9–1.

 

Lexington does not object to any of the defendants’ exhibits, but does object to paragraphs 7 and 11 and portions of paragraph 13 of Campora’s declaration. ECF No. 21–2 at 2.

 

In paragraph 7 Campora avers that after March 2012, all the attorneys involved in the Underlying Action knew Lexington and CCIC “would be sued for bad faith” if the judgment in the Underlying Action exceeded the combined policy limits. ECF No. 8–1. Lexington objects that the statement is not based on personal knowledge but rather only speculation as to what the other lawyers knew. ECF Nos. 8–2 ¶ 7 & 9–1 ¶ 7. This objection is well-taken. FED. R. EVID. 602 (“A witness may testify to a matter only if evidence is introduced sufficient to support a finding that the witness has personal knowledge of the matter.”).

 

In paragraph 11, Campora discusses the suit filed in state court, opining that “[i]t would be uneconomical as well as vexatious for a federal court to proceed in a declaratory judgment suit, in this matter, because if Silva Trucking, Inc. and Elaine McDonold prevail in this pending declaratory relief action, their claims for monetary damages will not be addressed. The State Court action will still have to proceed and that would result in piecemeal litigation and, perhaps, inconsistent judgments.” Id. ¶ 11. This objection too is sustained. FED. R. EVID. 701; see Lee v. City of Madera, CIVF04–5607 AWI DLB, 2008 WL 5042856, at *4 (E.D.Cal. Nov.21, 2008) (stating that “a lay witness cannot offer testimony to establish a legal conclusion”).

 

Finally, Lexington objects to Campora’s claim that “Lexington … filed this pending action at a time when it was well aware that a State Court action, involving identical issues raised in this case, as well as others, specifically including damages, would be filed in State Court.” ECF Nos. 8–2 ¶ 13 & 9–1 ¶ 13. This objection is sustained. FED. R. EVID. 602.

 

The Hacketts ask the court to take judicial notice of documents from McDonold v. Lexington Insurance Company, Sacramento County Superior Court No. 34–2014–00157903, and from McDonold v. Lexington Insurance Company, Civ. No. S–14–733 TLN KJN. This request is granted. United States v. Black, 482 F.3d 1035, 1041 (9th Cir.2007) (quoting United States ex. rel. Robinson Rancheria Citizens Council v. Borneo, Inc., 971 F.2d 244, 248 (9th Cir.1992)) (stating that a court may take judicial notice “ ‘of proceedings in other courts, both within and without the federal judicial system, if those proceedings have a direct relation to the matters at issue’ ”).

 

B. Analysis

*5 Under 28 U.S.C. § 2201, a court may “declare the rights and other legal relations” of the parties to an actual controversy. It is “ ‘an enabling act, which confers discretion on the courts rather than an absolute right on a litigant.’ “ Wilton, 515 U.S. at 287 (quoting Public Serv. Comm’n of Utah v. Wycoff Co. 344 U.S. 237, 241, 73 S.Ct. 236, 97 L.Ed. 291 (1952)); Leadsinger, Inc. v. BMG Music Pub., 512 F.3d 522, 533 (9th Cir.2008) (“The Declaratory Judgment Act gives the Court the authority to declare the rights and legal relations of interested parties, but not a duty to do so.”).

 

In evaluating whether to hear a declaratory judgment action, a district court must first determine “whether there is an actual case or controversy within its jurisdiction.” Am. States Ins. Co. v. Kearns, 15 F.3d 142, 143 (9th Cir.1994). Defendants concede and the court finds there is an actual case or controversy based on the parties’ dispute over whether plaintiff breached its duty to Silva and McDonold. ECF Nos. 8–1 at 4 & 9–2 at 4.

 

The court must then decide “whether to exercise its discretion by analyzing the factors set out in Brillhart ….“ Principal Life Ins. Co. v. Robinson, 394 F.3d 665, 669 (9th Cir.2005). In Brillhart, Excess, an insurer, sought a declaratory judgment to determine its rights under a reinsurance agreement made with Central Mutual Insurance Company, which had issued an automobile policy to Cooper–Jarrett, Inc. 316 U.S. at 492. Petitioner’s decedent was killed in an accident caused by the driver of a truck leased by Cooper–Jarrett, but Central Mutual refused to defend the suit against its insured. Id. During the pendency of petitioner’s suit, Central Mutual became insolvent and Cooper–Jarrett defaulted. Petitioner obtained a default judgment against Cooper–Jarrett and then instituted garnishment proceedings, adding Excess as a party. Id. at 492–93. Before it was added to the garnishment action, Excess filed the declaratory judgment case; petitioner moved to dismiss. Id. at 493.

 

The Supreme Court said that the district court “was under no compulsion to exercise” its jurisdiction and ordinarily “it would be uneconomical as well as vexatious for a federal court to proceed in a declaratory judgment suit when another suit is pending in a state court presenting the same issues, not governed by federal law, between the parties.” Id. at 495. It continued:

 

Where a district court is presented with a claim such as was made here, it should ascertain whether the questions in controversy between the parties to the federal suit, and which are not foreclosed under the applicable substantive law, can better be settled in the proceeding pending in state court. This may entail inquiry into the scope of the pending state proceeding and the nature of defenses open there. The federal court may have to consider whether the claims of all parties in interest can satisfactorily be adjudicated in that proceeding, whether the necessary parties have been joined, whether such parties are amenable to process in that proceeding, etc.

 

*6 Id. at 495.

 

In Wilton, the Supreme Court reaffirmed a district court’s discretion “whether and when to entertain an action under the Declaratory Judgment Act, even when the suit otherwise satisfies subject matter jurisdictional prerequisites” and observed that Brillhart supported the district court’s decision to stay an insurer’s declaratory judgment action filed before a related state court proceeding. 515 U.S. 277, 282, 283, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995).

 

Courts in the Ninth Circuit have distilled three main inquiries from Brillhart, inquiries that remain the “philosophic touchstone” for the court’s decision: the court “should avoid needless determination of state law issues; it should discourage litigants from filing declaratory actions as a means for forum shopping; and it should avoid duplicative litigation.” Gov’t Emps. Ins. Co. v. Dizol, 133 F.3d 1220, 1225 (9th Cir.1998) (en banc). In addition, a court may consider “ ‘whether the declaratory action will settle all aspects of the controversy; whether the declaratory action will serve a useful purpose in clarifying the legal relations at issue; whether the declaratory action is being sought merely for the purposes of procedural fencing or to obtain a ‘res judicata’ advantage; or whether the use of a declaratory action will result in entanglement between the federal and state court systems.’ ” Id. at 1225 n. 5 (quoting Kearns, 15 F.3d at 145).

 

Before addressing the Brillhart factors, the court considers plaintiff’s contention that this court has exclusive jurisdiction over the action because it was filed before the state action. ECF Nos. 20 & 21 at 9. Plaintiff relies on a footnote in Wilson v. Schnettler, which says that “[w]hen a state court and a court of the United States may each take jurisdiction of a matter, the tribunal where jurisdiction first attaches holds it, to the exclusion of the other ….” 365 U.S. 381, 385 n. 3, 81 S.Ct. 632, 5 L.Ed.2d 620 (1961). Wilson did not involve a declaratory judgment action, but rather was a case where a party, charged criminally in state court, asked the federal court to enjoin the use of evidence in his state trial. As the Northern District has observed, this ruling was a precursor to Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971), which addresses federal court interference in ongoing state criminal proceedings, and does not have general application to a consideration of actions pending in both state and federal courts. See Great Lakes Dredge & Dock v. Campbell, NO. C07–01694 MJJ, 2007 WL 3023126, at *3 (N.D.Cal.2007). At argument, plaintiff conceded that Wilson does not control the resolution of this motion.

 

1. Needless Determination of State Law Issues

Lexington invokes this court’s diversity jurisdiction, as it is a citizen of Delaware and defendants are citizens of California, and it raises only state law issues in seeking the declaration that it owes no contractual duty to pay any more than its policy limits to indemnify Silva and McDonold and did not breach its duty of good faith and fair dealing when evaluating settlement of the Underlying Action. See generally ECF No. 1. Moreover, the state law involved—regulation of relations between insurance companies and insureds—is one left exclusively to the states, although this consideration does not compel abstention. Cont’l Cas. Co. v. Robsac Indus., 947 F.2d 1367, 1371 (9th Cir.1991), overruled in part on other grounds by Dizol, 133 F.3d 1220.

 

*7 Even though there is no absolute requirement that a court dismiss insurance cases, “when a state action is pending presenting the same issue of state law as is presented in a federal declaratory suit, ‘there exists a presumption that the entire suit should be heard in the state court.’ “ Robsac, 947 F.3d at 1370 (quoting Chamberlain v. Allstate Ins. Co., 931 F.2d 1361, 1366–67 (9th Cir.1991)). In fact, “needless determination of state law issues alone may support” abstention or dismissal. R.R. Street & Co., Inc. v. Transport Ins. Co., 656 F.3d 966, 975 (9th Cir.2011).

 

At hearing, plaintiff argued that no such presumption arises in this case because there was no state action pending at the time it filed suit. Defendants countered that the Ninth Circuit has found the presumption to attach when the state action was “pending” at the time the court considered whether to exercise its judgment, not whether it was pending when the declaratory judgment action was filed. Ninth Circuit law supports both arguments: in Dizol, the court said “[i]f there are parallel state proceedings involving the same issues and parties pending at the time the federal declaratory action is filed, there is a presumption that the entire suit should be held in state court.” 133 F.3d at 1225. In Chamberlain, the Ninth Circuit observed that the presumption arises when a suit is pending in state court; in that case, the state case was the later-filed action. 931 F.3d at 1366–67. Whether or not the timing of the actions gives rise to a presumption ultimately does not control here: this court must consider whether the pendency of the state action would render this court’s decision an unnecessary decision on state law issues. See Am. Cas. Co. v. Krieger, 181 F.3d 1113, 1119 (9th Cir.1999) (stating that court should evaluate this factor “under the circumstances existing at the time the issue was raised rather than at the time of filing”).

 

Plaintiff argues this comity factor does not support dismissal because its suit will not require the interpretation of any unique or specialized state law. ECF Nos. 20 & 21 at 13. It cites to Brillhart, arguing the Supreme Court limited the rule to “technical and specialized subjects.” Id.; see Brillhart, 316 U.S. at 497. It is true the Brillhart court said it was “not our function to find our way through a maze of local statutes and decisions on so technical and specialized a subject as the scope of a garnishment proceeding.” Id. However, in Wilton, the Supreme Court upheld the district court’s decision to stay a declaratory judgment act in which an insurer sought a declaration that its policies did not cover a state court judgment against an insured. 515 U.S. at 279–80. And in Robsac, the Ninth Circuit observed that the district court could have avoided a needless determination of questions of insurance coverage by declining jurisdiction. 947 F.2d at 1371. Accordingly, even non-technical and general state law issues may call for dismissal or abstention. Here, the pending state case will address the issues raised by this action, suggesting this action will involve the needless determination of state law issues. Whether or not there is a presumption, this factor favors dismissal.

 

2. Forum Shopping

*8 The Ninth Circuit has said that Brillhart’s forum shopping factor relates to “the ‘defensive’ or ‘reactive’ nature of a federal declaratory judgment suit,” and such a suit “would justify a court’s decision not to exercise jurisdiction.” Robsac, 947 F.2d at 1371 (citation and internal quotation marks omitted).

 

Defendants argue it is clear plaintiff’s action is a reactive one, as it was filed the day before the date the lawyer for Silva and McDonold requested Lexington respond to his request for indemnification of the full amount of the judgment in the Underlying Action. ECF No. 23 at 9; see ECF No. 21–1 at 17–19. Plaintiff counters it did not engage in forum shopping but rather acted only when it was clear the negotiations over the demands of Silva and McDonold for coverage had broken down. ECF No. 21. It also argues that defendants have acted improperly by filing suit when they knew the declaratory judgment action was pending.

 

Nothing in the record before the court supports a finding that either party’s suit was improperly reactive or defensive: “Federal declaratory judgment suits are routinely filed in anticipation of other litigation…. Merely filing a declaratory judgment action in a federal court with jurisdiction to hear it, in anticipation of state court litigation, is not in itself improper anticipatory litigation or otherwise abusive ‘forum shopping.’ “ Sherwin–Williams Co. v. Holmes Cnty., 343 F.3d 383, 391 (5th Cir.2003); see also Dizol, 133 F.3d at 1225 (“We know of no authority for the proposition that an insurer is barred from invoking diversity jurisdiction to bring a declaratory judgment action against an insured on an issue of coverage.”) (citation and internal quotation marks omitted); but see Budget Rent–A–Car v. Crawford, 108 F.3d 1075, 1081 (9th Cir.1997), overruled in part on other grounds by Dizol, 133 F.3d 1220 (stating that concerns about forum shopping “are also present when a federal plaintiff seeks declaratory relief in anticipation that a related state court proceeding may be filed”).

 

Moreover, “[t]iming is only one consideration when deciding whether to entertain a declaratory judgment action, and the Wilton/Brillhart factors sometimes compel a court to decline to entertain an earlier-filed action in favor of a later-filed action.” R.R. Street, 656 F.3d at 976. The fact that defendants’ state action was filed later similarly does not, without more, show the suit was defensive or reactive.

 

The record here does not completely support Lexington’s claim that it filed suit only after attempts at mediation: the exchange of letters are akin to the opening salvos of battle. Moreover, Gorham’s letter of December 16 questions Cholakian’s actions on behalf of CCIC, suggesting that Silva and McDonold would include this non-diverse party in any litigation. ECF No. 21–1 at 14–15. Nevertheless, nothing in the record demonstrates Lexington has gained substantial tactical advantage by filing the instant action.

 

*9 This factor is neutral.

 

3. Avoiding Duplicative Litigation

A court may dismiss or abstain from a declaratory action when “[a]ll of the issues presented by the declaratory judgment action could be resolved by the state court.” Robsac,

 

947 F.2d at 1372. The federal and state cases do not have to be completely parallel: “an exact or precise identity of the issues between the federal and state action is not required to support dismissal of a declaratory action.”   Navigators Specialty Ins. Co. v. CHSI of Cal., No. 3:12–cv–1611–GPC–JMA, 2013 WL 435944, at *5 (S.D.Cal. Feb.4, 2013); see also Emps. Reins. Corp. v. Karussos, 65 F.3d 796, 800 (9th Cir.1995), overruled in part on other grounds by Dizol, 133 F.3d 1220.

 

In the instant action, Lexington seeks a declaration that it did not breach its contractual duties and its duty of good faith in responding to the settlement overtures in the Underlying Action. ECF No. 1. In the state court, Silva and McDonold seek damages against CCIC and Lexington for breach of contract and for the implied covenant of good faith and against various lawyers for professional negligence, all stemming from the state defendants’ alleged acts and omissions concerning settlement with the Hacketts.

 

Lexington argues the differences between the two actions show that the suits are not duplicative and also show the dispute can better be resolved in this action. It says that because the Hacketts are interested parties to this dispute but are not parties to the state action, the limits dispute may only be resolved completely in this action. ECF No. 21 at 11. However, even if the some of the parties to the federal action are not parties to the state action and the issues are not identical, “neither of these circumstances warrants the exercise of federal jurisdiction. It is enough that the state proceedings arise from the same factual circumstances.” Golden Eagle Ins. Co. v. Travelers Co., 103 F.3d 750, 754–55 (9th Cir.1996), overruled in part on other ground by Dizol, 133 F.3d 1220. Moreover, “in determining whether to exercise its jurisdiction to reach the merits in an action for declaratory relief, the dispositive question is not whether the pending state proceeding is ‘parallel,’ but rather, whether there was a procedural vehicle available to the insurance company in state court to resolve the issues raised in the action in federal court.” Polido v. State Farm Mut. Auto. Ins. Co., 110 F.3d 1418, 1423 (9th Cir.1997), overruled in part on other grounds in Dizol, 133 F.3d 1220. Lexington has not suggested it will be unable to proceed against the Hacketts in state court, if they are indeed proper parties, a question this court does not address.

 

It is true that the case might be more speedily resolved if it were to remain only a declaratory judgment action, FED. R. CIV. P. 57, an important consideration as interest on the $39 million judgment increases. But this court’s supervisory powers notwithstanding, there is no guarantee the action will remain so narrow, as Silva and McDonold may well assert counterclaims against Lexington and seek to join the lawyers as parties to those counterclaims. See ECF No. 21–1 at 38. Any increased efficiency in litigating the case in this court is likely illusory.

 

*10 This final factor favors dismissal.

 

On balance, dismissal is appropriate to avoid needless resolution of state law issues and duplicative litigation. Because the court is dismissing this case, CCIC’s motion to intervene is moot.

 

IT IS THEREFORE ORDERED that:

 

1. The motions to dismiss, ECF Nos. 8 & 9, are granted;

 

2. The motion to intervene, ECF No. 11, is denied as moot; and

 

3. This case is closed.