United States District Court, D. Colorado
ORDER ADMINISTRATIVELY CLOSING CASE
Y. Wang Magistrate Judge
matter comes before the court on Defendants Vert Capital
Corp., Adam Levin, Michael Pope, and Liquidity Capital Group,
LLC's Motion to Dismiss and Request for Attorney Fees
(the “Motion”). [#79, filed January 10, 2017].
The Motion is before the undersigned Magistrate Judge
pursuant to the Order of Reference dated July 27, 2016 [#20]
and 28 U.S.C. § 636(c). Having carefully reviewed the
Motion and associated filings, the case file, and the
relevant case law, and considered the comments offered by
counsel during the April 11, 2017 Motion Hearing, IT IS
ORDERED that this matter is ADMINISTRATIVELY CLOSED, subject
to being re-opened for good cause.
Scenic Tours Pty Ltd and Evergreen Tours are Australian
corporations that arrange for and provide river cruise tours
around the world. Between July 2013 and November 2014,
Plaintiffs entered into three Charter Agreements with
Defendant Haimark, Ltd. (“Haimark”) facilitating
a series of river cruises through Vietnam, Cambodia, and
Myanmar (the “Agreements”). [#60 at ¶¶
20-23]. Plaintiffs initiated this civil action on May 26,
2016 against Haimark, Vert Capital, VC2 Capital LLC, Willis
& Connelly, P.C., and ABC Corporations 1-100, to assert
claims for breach of contract, unjust enrichment, unlawful
distributions under the Colorado Business Corporation Act
§ 7-108-403, successor liability, and declaratory relief
arising from their dissatisfaction with Haimark's
performance pursuant to the Agreements. See [#1]. On
November 4, 2016, Plaintiffs amended their Complaint with
leave of court, adding Defendants VC2 Funding, LLC, Haimark
Cruise Lines, Inc, Haimark Holdings, Inc., Adam Levin, and
Michael Pope, Liquidity Capital Group, LLC. See
court draws the following facts from the First Amended
Complaint (“FAC”) and presumes them to be true
for the purpose of this Order. Haimark is a Colorado
corporation. [#60 at ¶ 4]. Defendant Vert Capital Corp.
(“Vert”) is a Delaware corporation with its
principal place of business in California. [Id. at
¶ 5]. Defendants Haimark Cruise Lines, Inc.
(“Haimark Cruise Lines”) and Haimark Holdings,
Inc. (“Haimark Holdings”) are Delaware
corporations with principal places of business in California.
[Id. at ¶¶ 8, 9]. Defendants Adam Levin
and Michael Pope are residents of California. [Id.
at ¶¶ 10, 11]. Defendant Liquidity Capital Group,
LLC (“Liquidity”) is a limited liability company
with a single member who resides in California. [Id.
at ¶ 12; #89]. Non-parties VC2 Capital LLC
(“VC2”) and VC2 Funding, LLC (“VC2
Funding”) are limited liability companies with
principal places of business in California. [Id. at
¶¶ 6-7]. Plaintiffs assert jurisdiction pursuant to
28 U.S.C. § 1332.
Vert controls or is under common control with VC2, VC2
Funding, Haimark Cruise Lines, and/or Haimark Holdings.
[Id. at ¶ 14]. VC2, VC2 Funding, Haimark Cruise
Lines, and/or Haimark Holdings purchased Haimark.
[Id.] Defendants Levin and Pope represented these
companies in their purchase of Haimark. [Id.] The
instant Motion was filed by Defendants Vert, Levin, Pope, and
Liquidity (collectively, “Consenting Defendants,
” for the purpose of this Order). The remaining
Defendants, Haimark, Haimark Cruise Lines, and Haimark
Holdings, have not appeared in this matter.
of the Haimark Companies
allege that Vert, “through its principals, directors,
and officers Levin and Pope, approached the former
shareholders of Haimark to inject capital into Haimark in
exchange for stock in Haimark and its related
companies.” [#60 at ¶ 24]. Vert, VC2, VC2 Funding,
and Haimark Cruise Lines, whom Plaintiffs refer to as the
“Haimark Purchasers, ” purchased Haimark and its
related companies in late January 2016 through companies
formed for the purpose of the acquisition, namely Haimark
Cruise Lines and Haimark Holdings. [Id. at ¶
25]. Plaintiffs allege that the Haimark Purchasers did not
thereafter inject capital into Haimark, but rather, Defendant
Vert, pursuant to the direction of Defendants Pope and Levin,
caused Haimark funds to “be used to pay fees to
Liquidity under the auspice of ‘consulting fees,
'” resulting from the purchase of Haimark.
[Id. at ¶¶ 27, 28]. Plaintiffs further
allege that Vert, at the direction of its principals Pope and
Levin, targeted Haimark as a “distressed company
vulnerable to a takeover, ” with the purpose of
draining its liquid assets, including payments that Haimark
had received from Plaintiffs. [Id. at ¶ 29].
Additionally, Defendants Levin and Pope authorized
distributions to Haimark shareholders despite knowledge of
Haimark's liabilities, including its obligations to
Plaintiffs under the Agreements. [Id. at ¶ 33].
On April 15, 2016, the Haimark Purchasers dismissed all of
Haimark's employees and shuttered Haimark. [Id.
at ¶ 34].
of the Agreements
represented in the Agreements that it owned and operated the
two ships that would be used for the river cruises, and it
obligated itself to arrange a cruise on May 8, 2016. [#60 at
¶¶ 35, 39]. Haimark did not in fact own those two
ships, and it failed to arrange the May 8 river cruise.
[Id. at ¶¶ 36-39]. Additionally, the
Agreements provided for a series of payments whereby
Plaintiffs would remit payment to Haimark in some instances
and to an escrow account in other instances. [Id. at
¶ 40]. Subsequent to entering into the Agreements,
Haimark issued multiple invoices that included its routing
information rather than the routing information for the
escrow account, resulting in Plaintiffs sending payments to
Haimark instead of to the escrow account, as intended by the
Agreements. [Id. at ¶¶ 43, 44]. Haimark
kept these funds that should have instead been held in
escrow, which total approximately $247, 592.65
(“Misdirected Payments”). [Id. at
¶¶ 45, 47]. By contrast, the escrow account had a
balance of approximately $34, 227.12 (“Escrow
Balance”). The Escrow Balance was to be released upon
completion of the May 8, 2016 cruise. [Id. at ¶
48]. Haimark stopped operating on April 15, 2016.
[Id. at ¶ 49]. Plaintiffs consequently arranged
for the owners of the ships to provide the cruises for which
it had contracted with and paid Haimark. [Id. at
November 11, 2016, following the court's order accepting
the First Amended Complaint, Plaintiffs filed a suggestion of
bankruptcy alerting the court that in October 2016, three of
Haimark's creditors had placed it into involuntary
bankruptcy in the United States Bankruptcy Court for the
District of Colorado (“Chapter 7 bankruptcy”).
See [#61]. Plaintiffs stated their intention to
nonetheless pursue their claims as to “all other
Defendants.” [Id.] Thereafter, Plaintiffs
served or procured waivers of service for Pope, Levin, and
Vert. See [#70, #72, #78]. Plaintiffs assert three
claims against these Consenting Defendants: Unjust
Enrichment; Unlawful Distribution under Colo. Rev. Stat.
§ 7-108-403; and Successor Liability. See
January 10, 2017, the Consenting Defendants filed the instant
Motion to Dismiss under Federal Rules of Civil Procedure
12(b)(1) and (6), arguing that the court lacks jurisdiction
over Plaintiffs' claims against them because such claims
may only be asserted by the Chapter 7 bankruptcy trustee; the
claims as pled do not implicate Consenting Defendants as a
matter of law; and they are entitled to attorney fees
incurred in filing the Motion. See [#79]. Plaintiffs
filed a Response on January 31, 2017 [#81], and the