United States District Court, D. Colorado
BRADLEY D. OASTER, Plaintiff,
STANLEY ROBERTSON, Defendant.
KRISTEN L. MIX, MAGISTRATE JUDGE.
This matter is before the Court on Defendant’s Motion to Dismiss Pursuant to 12(b)(1), 12(b)(2), and 12(b)(6) and if Necessary, Request for Evidentiary Hearing [#18] (the “Motion”). Plaintiff filed a Response [#22] in opposition to the motion and Defendant filed a Reply [#23]. On October 9, 2015, the Court entered a Minute Order [#30] informing the parties that it was converting Defendant’s Motion [#18] filed pursuant to Rule 12(b)(6) to a motion for summary judgment pursuant to Rule 56. See Minute Order [#30]. As a result of the conversion of the Motion, the Court allowed the parties the opportunity to file supplemental briefs. Id. The parties both filed supplemental briefs, which the Court has reviewed. See Am. Suppl. Brief in Support (“Suppl. Brief in Support”) [#35]; Response Brief to Defendant’s Suppl. Brief in Support (“Suppl. Response”) [#37]. The Court has also reviewed the Motion, the Response, the Reply, the entire case file, and the applicable law, and is sufficiently advised in the premises. For the reasons set forth below, the Motion [#18] is GRANTED IN PART and DENIED IN PART.
A. Factual Background
In 2000, Plaintiff Bradley Oaster and Defendant Stanley Robinson entered into a business relationship which centered on the design and development of various church facilities throughout the United States. Am. Compl. [#14] ¶ 2. Plaintiff alleges that he and Defendant, an architect, entered into a personal services contract in 2000 whereby Defendant would be paid for animation services and that, starting in 2006, this contract was expanded to include supplemental drafting services involving the addition of supplemental detail to existing schematic designs. Id. According to Plaintiff, the two agreed that the work product produced by Defendant would remain the property of Plaintiff, and also that the original schematic designs to which Defendant added detail were created and owned by either Plaintiff or Plaintiff’s business partner. Id. ¶¶ 5, 11. Plaintiff alleges that he has registered copyrights on the designs. Id. ¶ 8. The Complaint also states that the parties worked on twenty-five church development projects together over their ten-year business relationship. Id. ¶ 10. While the parties worked together, Plaintiff alleges that the Defendant had access to all planning, development, and design information related to each project. Id. ¶ 12.
At the outset, Defendant disagrees on the exact characterization of the parties’ relationship. Specifically, Defendant maintains that although he entered into the contract with Plaintiff in his individual capacity, from 2003 onwards the only work he performed was in his official capacity as an owner of two companies he had created in Texas: Gone Virtual Studios, Inc. (“GVS”) and Halo Architects, Inc. (“Halo”). Brief in Support of Motion to Dismiss [#19] (“Brief in Support”) at 2. Thus, Defendant claims that his business relationship with Plaintiff can be divided into two discrete periods: (1) the period of time from 2000 to 2003 where Defendant and Plaintiff had a business relationship as two individuals working together; and (2) the period of time from 2003 to 2010, where Defendant worked with Plaintiff in his capacity as an officer of either GVS or Halo. Id.
Regardless, both parties agree that the relationship ended in either late 2009 or 2010. Id.; Am. Compl. [#14] ¶ 2. On January 5, 2010, Defendant’s lawyer - writing on behalf of Defendant and Defendant’s companies, Halo and GVS - sent Plaintiff a letter demanding that Plaintiff stop using schematic designs prepared by Halo, GVS, or Defendant. Appendix in Support of Motion to Dismiss [#19-1] at 7. Plaintiff then sent Defendant a letter in which he outlined several things that he believed Defendant was doing wrong. Appendix in Support of Summary Judgment [#33] at 21. In the letter, Plaintiff informed Defendant that Plaintiff was planning to bring these allegations of wrongdoing to the proper authorities. Id. One of the allegations reads “[Defendant] ha[s] attempted to hijack Harvestime’s project by intentionally and willfully going around Harvestime and working directly with Harvestime’s client.” Id. The letter goes on to state “[Defendant is] guilty of torsos [sic] interference with a contractual relationship[.]” Id.
In 2013, Plaintiff alleges that he discovered that Defendant told one of Plaintiffs clients that Defendant owned Plaintiffs copyrighted designs. Am. Compl. [#14] ¶ 14. Plaintiff claims that Defendant told the client that he was the owner of the designs in an attempt to persuade the client to terminate its relationship with Plaintiff Id. Additionally, Plaintiff alleges that he learned that Defendant had disparaged him while talking to the client, telling the client that Plaintiff often used “bait and switch” sales techniques. Id. According to Plaintiff, based on this knowledge, in November 2014 Plaintiff began investigating and found that Defendant was misrepresenting to the public that Defendant was the owner of the copyrighted designs, and Defendant had the right to use them and sell them. Id. ¶ 15.
During Plaintiffs investigation, Plaintiff also alleges he learned that Defendant sold Plaintiffs protected designs on a website, www.worshipplaces.com, but that Defendant refused to stop selling the designs and did not compensate Plaintiff in any way for use of the designs. Id. ¶¶ 17-19. Plaintiff alleges that this website is Defendant’s website. Id. Again, however, Defendant disagrees with this characterization, and claims that the website is not owned and operated by him, but is owned and operated by GVS. Brief in Support [#19] at 12. Additionally, Plaintiff claims that Defendant exploited Plaintiffs confidential lists of potential clients and encouraged these clients to work with Defendant instead of Plaintiff Am. Compl. [#14] ¶ 20.
B. Procedural History
On March 2, 2015, Plaintiff filed a complaint in state court alleging numerous claims against Defendant. State Court Compl. [#1-3]. Defendant filed a Notice of Removal on April 24, 2015 pursuant to 28 U.S.C. § 1441(b). Id. On May 1, 2015, Defendant filed a motion to dismiss, and Plaintiff then responded by filing an Amended Complaint on May 19, 2015. Motion to Dismiss [#6]; Am. Compl. [#14]. Plaintiff’s Amended Complaint brings elevenclaims against Defendant: (1) breach of contract; (2) fraud; (3) conversion; (4) civil theft; (5) slander; (6) breach of fiduciary duty; (7) interference with contract; (8) violation of the Colorado Consumer Protection Act, C.R.S. § 6-1-101, et seq.; (9) replevin; (10) unjust enrichment; and (11) copyright infringement. Id. ¶¶ 24-83. The Court then denied the motion to dismiss as moot. Minute Order [#16].
Subsequently, Defendant filed the present Motion to Dismiss on June 8, 2015. Motion [#18]. In support of his Motion to Dismiss, Defendant provides an appendix containing an affidavit executed by himself, the aforementioned 2010 letter from his counsel to Plaintiff formally severing the business relationship, and the certificates of formation of GVS and Halo. Appendix in Support of Motion to Dismiss [#19-1]. Additionally, Plaintiff cites to his own affidavit in response to Defendant’s Motion to Dismiss. See Response [#22]; Affidavit of Bradley D. Oaster [#15-1].
In the original briefing provided with the Motion, Defendant requested that the Court “dismiss this entire cause of action pursuant to Rule 12(b)(1), or in the alternative, Rule 56 because all of the claims are barred by the applicable statute of limitations.” Brief in Support [#19] at 11. However, because the evidence put forth by Defendant pertains to whether Plaintiff has sufficiently alleged a claim (as discussed below), on October 9, 2015, the Court converted the Motion to a Rule 56 Motion for Summary Judgment pursuant to Rule 12(d).Minute Order [#30]. The parties submitted supplemental briefing to the Court pursuant to the Court’s Order. See Suppl. Brief in Support [#35]; Suppl. Response [#37]. Defendant also submitted a supplemental appendix of evidence in support of the Motion; similarly, Plaintiff has provided a supplemental affidavit. See Appendices in Support of Motion for Summary Judgment [#33, #34]; Suppl. Affidavit of Bradley D. Oaster [#37-2] (“Suppl. Oaster Affidavit”).
On January 11, 2016, the Court granted in part Defendant’s motion to strike portions of the supplemental affidavit provided by Plaintiff. Order [#40]. Specifically, the Court struck portions of paragraph 9, all of paragraph 10 except for the first and last sentences, the last two sentences of paragraph 11, and a portion of paragraph 14 on the basis that these statements were inadmissable hearsay. Id. Thus, in analyzing the parties’ respective arguments, the Court does not consider the portions of Plaintiff’s affidavit stricken by the Court.
Defendant’s Motion makes three arguments: (1) lack of personal jurisdiction; (2) lack of subject matter jurisdiction; and (3) failure to state a claim pursuant to Rule 12(b)(6). Brief in Support [#19] at 1. In the alternative, Defendant requests that the Court transfer this matter to the United States District Court for the Northern District of Texas pursuant to 28 U.S.C. § 1404. Id. at 2.
As a preliminary matter, the Court notes that Defendant’s second argument - lack of subject matter jurisdiction - is premised on the contention that the Court lacks jurisdiction because the statutes of limitations have run on Plaintiff’s claims. Brief in Support [#19] at 11. However, “[i]f the allegations . . . show that relief is barred by the applicable statute of limitations, the complaint is subject to dismissal for failure to state a claim[.]” Jones v. Bock, 549 U.S. 199, 215 (2007). Thus, because the statute of limitations issues are not jurisdictional, this argument must be analyzed pursuant to Rule 56 rather than Rule 12(b)(1).
Accordingly, the Court will address Defendant’s arguments as follows: (A) dismissal for lack of personal jurisdiction pursuant to Rule 12(b)(2); (B) entry of summary judgment in Defendant’s favor pursuant to Rule 56; and (C) the Court should transfer this action pursuant to 28 U.S.C. § 1404. The Court’s analysis of Defendant’s Rule 56 arguments will consist of two subparts: (1) Defendant’s argument that, as a threshold matter, Plaintiff’s claims are barred by the applicable statutes of limitations and (2) Defendant’s argument that, substantively, no genuine dispute of any material fact exists and judgment should be entered in favor of Defendant.
A. Motion to Dismiss for Lack of Personal Jurisdiction
The Court analyzes Defendant’s argument that the Court lacks personal jurisdiction pursuant to Rule 12(b)(2). A plaintiff bears the burden of establishing personal jurisdiction over a defendant. Behagen v. Amateur Basketball Ass’n of the United States, 744 F.2d 731, 733 (10th Cir. 1984). Before trial, a plaintiff need only make a prima facie showing of jurisdiction. Id. The Court accepts the well-pled allegations (namely the plausible, nonconclusory, and nonspeculative facts) of the operative pleading as true to determine whether the plaintiff has made a prima facie showing that the defendants are subject to the Court's personal jurisdiction. Dudnikov v. Chalk & Vermillion Fine Arts, Inc., 514 F.3d 1063, 1070 (10th Cir. 2008). The Court “may also consider affidavits and other written materials submitted by the parties.” Impact Prods., Inc. v. Impact Prods., LLC, 341 F.Supp.2d 1186, 1189 (D. Colo. 2004). However, any factual disputes are resolved in the plaintiff’s favor. Benton v. Cameco Corp., 375 F.3d 1070, 1074-75 (10th Cir. 2004).
The exercise of personal jurisdiction over a non-resident defendant must satisfy the requirements of the forum state’s long-arm statute as well as constitutional due process requirements. Doe v. Nat’l Med. Servs., 974 F.2d 143, 145 (10th Cir. 1992). Colorado’s long-arm statute “is to be interpreted as extending jurisdiction of our state courts to the fullest extent permitted by the due process clause of the United States Constitution.” Mr. Steak, Inc. v. Dist. Court In & For Second Judicial Dist., 194 Colo. 519, 521 (1978). Therefore, if jurisdiction is consistent with the due process clause, Colorado’s long-arm statute authorizes jurisdiction over a nonresident defendant. Under the due process clause of the Fourteenth Amendment, personal jurisdiction may not be asserted over a party unless that party has sufficient “minimum contacts” with the state, so that the imposition of jurisdiction would not violate “traditional notions of fair play and substantial justice.” Helicopteros Nacionales De Columbia, S.A. v. Hall, 466 U.S. 408, 414 (1984) (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).
Here, Defendant contends that Plaintiff does not allege facts to demonstrate the Court’s general or specific jurisdiction over him. Brief in Support [#19] at 7. Defendant further argues that his contacts with Plaintiff (and thus Colorado) were not on a personal level, but through Defendant’s business, and thus, Defendant himself has no contacts with Colorado. Id. at 8. In response, Plaintiff directs the Courts’s attention to a number of ways in which Defendant has contacts with Colorado, including the fact that Defendant used to have a professional license from Colorado, and previously resided in Colorado. Response [#22] at 5-7.
1. General jurisdiction.
Under principles of general jurisdiction, a nonresident defendant may be subject to a state’s jurisdiction even where the alleged injury is unrelated to the defendant’s contacts with the forum state. If a defendant’s contacts with a state are strong enough, the state may assert jurisdiction over a defendant on any matter, whether or not it arises out of the defendant’s contacts with the state. See Perkins v. Benguet Consol. Mining Co., 342 U.S. 437, 446 (1952). General jurisdiction is appropriate only when a defendant has “continuous and systematic” general business contacts with the forum state, Helicopteros, 466 U.S. at 415, so that the defendant could reasonably anticipate being haled into court in that forum. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985).
Plaintiff does not allege sufficient facts to demonstrate that the Court has general jurisdiction over Defendant. General jurisdiction is appropriate only when a defendant has “continuous and systematic” general business contacts with the forum state. Helicopteros, 466 U.S. at 415. Plaintiff’s only allegation to this effect is the conclusory statement “at all material times, [Defendant] did and continues to do business in Colorado.” Am. Compl. [#14] at 1. Plaintiff also includes facts about Defendant that demonstrate that Colorado may have previously had general jurisdiction over Defendant (e.g., Defendant previously lived in Colorado and had a professional license issued by Colorado). Id. However, it is undisputed that Defendant has lived outside of Colorado since 2002. Reply [#18] at 8. Plaintiff offers no support to show that an individual’s prior connections continue into perpetuity, and to so find would be illogical. Plaintiff has not demonstrated that the Court has general jurisdiction over Defendant.
2. Specific jurisdiction.
When pervasive contacts to assert a finding of general personal jurisdiction are lacking, specific jurisdiction may nevertheless be asserted if a defendant has “purposefully directed” his activities toward the forum state, and if the lawsuit is based upon injuries that “arise out of” or “relate to” the defendant’s contacts with the state. Burger King, 471 U.S. at 472. “Because a state’s sovereignty is territorial in nature, a defendant’s contacts with the forum state must be sufficient such that, notwithstanding [his] lack of physical presence in the state, the state’s exercise of sovereignty over [him] can be described as fair and just.” Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 514 F.3d 1063, 1070 (10th Cir. 2008). To implement this principle, courts typically make three inquiries: (1) whether the defendant purposefully directed his activities at residents of the forum state; (2) whether the plaintiff’s injury arose from those purposefully directed activities; and (3) whether exercising jurisdiction would offend traditional notions of fair play and substantial justice. Id.
a. Contract claims.
Plaintiff must allege sufficient facts to demonstrate that Defendant purposefully directed his activities at residents of the forum state. Dudnikov, 514 F.3d at 1070. Plaintiff’s allegations demonstrate this to be the case. It is undisputed that Defendant entered into a contract with Plaintiff, and worked for him over a ten-year period. Plaintiff is a Colorado resident, and Plaintiff worked from an office located in Colorado while Defendant performed his work for and submitted it to Plaintiff. Am. Compl. [#14] ¶ 1, 4. This is not to say that every time a party enters into a contract with a nonresident that the party has sufficient connections with the other party’s home forum. “If the question is whether an individual’s contract with an out-of-state party alone can automatically establish sufficient minimum contacts in the other party’s home forum, we believe the answer clearly is that it cannot.” Burger King, 471 U.S. at 478 (emphasis in original). Prior negotiations and contemplated future consequences, along with the terms of the contract and the parties’ actual course of dealing, must be evaluated in determining whether the defendant purposefully established minimum contacts with the forum. Id. at 479.
The facts of this case mirror AST Sports Sci., Inc. v. CLF Distribution Ltd., 514 F.3d 1054 (10th Cir. 2008). In Sports Sci., the plaintiff (a Colorado company) and defendant (a British company) entered into an contract allowing defendant to sell plaintiff’s products in England. Id. at 1056. The parties did business together via telephone and e-mail for six years, until the defendant stopped paying the plaintiff. Id. The plaintiff brought contract and tort claims against the defendant. Id. The district court held that it did not have specific personal jurisdiction over defendant, and dismissed the claims. Id.
The 10th Circuit reversed, finding that specific personal jurisdiction did exist based on the contract and business relationship between the two parties. Id. at 1060. The court noted that the contract evidenced prior negotiations and future consequences of a continuing business relationship. Id. at 1058. In making this determination, the court also relied on the phone calls, letters, facsimiles, and e-mails which “provided additional evidence that the [foreign defendant] pursued a continuing business relationship with [the plaintiff].” Id. at 1059 (quoting Pro Axess v. Orlux Distrib., Inc., 428 F.3d 1270, 1278 (10th Cir. 2005)). In summary, the court stated: “Quite simply, defendants reached out to become AST’s European distributor, the relationship was allegedly memorialized in [a] contract, and the relationship lasted for a . . . period of seven years. It should not be a surprise to defendants that this continuing relationship and the resulting obligations to plaintiff subjects them to regulation and sanctions in Colorado for the consequences of their alleged activities.” Sports Sci., 514 F.3d at 1059-60.
Based on Plaintiff’s allegations, the scope and length of the agreement along with the parties’ course of dealing suggest that Defendant intended to engage in a significant amount of business with Plaintiff and Plaintiff’s Colorado-based business. Plaintiff and Defendant did not agree to work on one project together and go their separate ways. The contract they entered into facilitated a business relationship that lasted ten years. Am. Compl. [#14] ¶ 2. Over the course of those ten years, Plaintiff paid Defendant $1, 287, 607. Id. ¶ 3. Halfway through their business relationship, Defendant increased the role he played in Plaintiff’s business operations. Id. ¶ 2. These contacts between Defendant and Plaintiff in Colorado are not the type of “random, ” “fortuitous, ” or “attenuated” contacts that are insufficient to give a court jurisdiction over a defendant. Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774 (1984). Just as in Sports Science, Defendant should not be surprised that, as a result of the continuing business relationship with Plaintiff, Colorado courts have personal jurisdiction over him with regard to claims brought based on those contacts.
Having made this determination, the Court must examine whether Plaintiff sufficiently alleges that his injuries arose from these activities. Dudnikov, 514 F.3d at 1070. Plaintiff alleges that Defendant breached the contract that the parties entered into, and that the breach caused Plaintiff damages. See generally Am. Compl. [#14]. Plaintiff’s other claims relate to the business relationship between the parties as well. If not for the business relationship, Defendant would never have had access to the intellectual property at issue, and Defendant would never have had access to Plaintiff’s client lists.
Because the Court has determined that the contract and business relationship between the parties constituted purposeful availment on the part of Defendant, any damages that relate to the business relationship between the parties stem from Defendant’s actions directed at Colorado. Without commenting on the legitimacy of Plaintiff’s claims, the Court, based on the findings above, finds that Plaintiff’s allegations establish that his injuries arose from Defendant’s contacts with Colorado.
The only dispute Defendant raises with respect to personal jurisdiction is that Defendant, individually, did not do business with Plaintiff after 2003. Brief in Support [#19] at 8. Thus, Defendant argues, because all of the contractual disputes concern a period of time (i.e., after 2003) when Defendant was doing business with Plaintiff in his capacity as an officer of GVS or Halo, there is no specific jurisdiction with respect to Defendant individually. Suppl. Brief in Support [#35] at 7. However, the evidence cited to by Defendant does not support this assertion. Specifically, Defendant cites to an affidavit executed by Defendant. Id. However, this affidavit merely asserts the following: “Neither myself, nor GVS or Halo Architects, have had any business relationship or any relationship . . . with [Plaintiff] since 2010.” Appendix in Support of Summary Judgment [#33] at 4 (emphasis added).
Nonetheless, even were the Court to accept Defendant’s assertion that Defendant only acted as an officer of one of his corporations, the outcome would still be the same. Although Defendant does not address the issue in his briefing, his argument implicates the fiduciary shield doctrine. Under the fiduciary shield doctrine, “a nonresident corporate agent generally is not individually subject to a court's jurisdiction based on acts undertaken on behalf of the corporation.” Newsome v. Gallacher, 722 F.3d 1257, 1275 (10th Cir. 2013) (quotation marks and citation omitted). However, “under Newsome, the threshold question is whether Colorado recognizes the fiduciary shield doctrine.” Carskadon v. Diva Int'l, Inc., No. 12-cv-01886-RM-KMT, 2014 WL 7403237, at *5 (D. Colo. Feb. 26, 2014) report and recommendation adopted, No. 12-cv-01886-RM-KMT, 2014 WL 7403233 (D. Colo. Dec. 29, 2014). The Court has been unable to find any instances of a Colorado court adopting or applying the fiduciary shield doctrine. In the absence of such law, the consideration of all of Defendant’s contacts with Colorado is required. See Id. (declining to apply the fiduciary shield doctrine and considering all of the defendant’s contacts with Colorado). Accord Carnrick v. Riekes Container Corp., No. 15-cv-01899-CMA-KMT, 2016 WL 740998, at *6 n.1 (D. Colo. Feb. 24, 2016); Powers v. Emcon Associates, Inc., No. 14-cv-03006-KMT, 2016 WL 1111708, at *5 (D. Colo. Mar. 22, 2016).
Therefore, because the Court has found that Plaintiff has sufficiently alleged that Defendant purposefully availed himself of Colorado’s laws by entering into a contract with Plaintiff and working with Plaintiff for ten years, and that Plaintiff’s injuries arose from this business relationship, Plaintiff has pled a prima facie case for personal jurisdiction.
As Defendant purposefully availed himself of Colorado’s laws, and Plaintiff’s alleged injuries arise out of Defendant’s contacts with Colorado, the Court can exercise jurisdiction over Defendant in this case unless exercising jurisdiction would offend traditional notions of fair play and substantial justice. Dudnikov, 514 F.3d at 1070. With minimum contacts established, it is incumbent on Defendant to “present a compelling case that the presence of some other considerations would render jurisdiction unreasonable.” Id. at 1080. Defendant makes no argument here that the Court’s exercise of jurisdiction would be “unreasonable” or ...