United States District Court, D. Colorado
T. RICHARD BUTERA, an individual, Plaintiff,
RICHARD P. CRANE, JR., an individual, Defendant
For T. Richard Butera, an individual, Plaintiff: Avery Ann Simpson, LEAD ATTORNEY, Chad James Schmit, David L. Lenyo, Garfield & Hecht, PC-Aspen, Aspen, CO.
For Richard P. Crane, Jr., an individual, Defendant: Karl L. Schock, LEAD ATTORNEY, Carrie Elizabeth Johnson, Brownstein Hyatt Farber Schreck, LLP-Denver, Denver, CO; Suzanne Margaret Henry, Buchalter Nemer-Los Angeles, Los Angeles, CA.
R. Brooke Jackson, United States District Judge.
Plaintiff Richard Butera filed breach of contract, fraud, and negligent misrepresentation claims against defendant Richard Crane in connection with an investment plaintiff made in a development trust for the City of Vernon, California. Defendant seeks dismissal of all of plaintiff's claims, arguing that all three are time-barred and that the latter two fail under Federal Rule of Civil Procedure 9(b). For the reasons laid out below, the Court now grants in part and denies in part defendant's motion to dismiss.
The present dispute originates from an alleged fraudulent scheme surrounding a development trust for the City of Vernon, California, an industrial city located outside of Los Angeles. Amended Complaint, ECF No. 14, at ¶ ¶ 8-23. The city adopted a resolution in June of 2004 declaring its intention to create a " Development Trust as the economic investment vehicle to act for the City." Id. at ¶ 12. Mr. Crane, a California resident, thereafter executed an " Agreement and Declaration of Development Trust of the City of Vernon, " purporting to establish the trust (" DTCV") pursuant to the city resolution. Id. at ¶ ¶ 2, 14, 15. However, the city never signed this Agreement and Declaration, nor did the City Council of Vernon take any action to approve it, as was required by the resolution. Id. at ¶ ¶ 13, 16-19.
Some months later, on November 29, 2004, defendant allegedly caused the DTCV to enter into an Investment Transaction Agreement with CIC Financiere SA (" CIC"), pursuant to which the self-appointed trustees of the DTCV, including defendant, granted authority and control over funds invested in the DTCV to CIC. Id. at ¶ ¶ 22, 23.
Mr. Butera, a Colorado resident, became involved when--at some unspecified date--he met Mr. Crane through a mutual acquaintance, Frank Ross. Id. at ¶ ¶ 1, 25, 26. The plaintiff and defendant then had a meeting in New York--their only in-person meeting regarding the DTCV--and discussed Mr. Butera's possible investment in the trust. Id. at ¶ ¶ 27, 28. The rest of the negotiations about his investment, including a trip that Mr. Ross made on behalf of defendant, took place while plaintiff was in Colorado. Id. at ¶ ¶ 29, 30.
During the course of these negotiations, " Defendant and his representatives" allegedly made various false representations. Id. at ¶ 32. Specifically, the Amended Complaint alleges the following misrepresentations:
(a) DTCV was a validly existing entity and investment vehicle for Vernon.
(b) DTCV had been properly organized and approved under the authority of Vernon.
(c) Defendant was a trustee of the DTCV with authority granted by Vernon to solicit investors for city projects.
(d) Investments in DTCV would be used for the benefit of Vernon.
(e) The trustees, including Defendant, intended to make investments in the European market in order to help finance the construction of a power plant in Vernon and other city projects.
(f) Plaintiff's investment would benefit the DTCV.
(g) The DTCV was subject to oversight by Vernon.
(h) Plaintiff's investment would be secured by a $25 million " capital fund."
(i) The $25 million " capital fund" would grow to $500 million by September 2006.
(j) Plaintiff's investment would be placed in Triple A rated securities with high yields.
(k) CIC would pay the DTCV $50 million by September 2006 for the purpose of repaying investor capital.
(l) CIC would pay the DTCV $100 million no later than November 2007.
(m) Plaintiff would be repaid the entire amount of his principal investment in addition to high ...