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Scenic Tours Pty Ltd v. Haimark, Ltd.

United States District Court, D. Colorado

May 3, 2017



          Nina Y. Wang Magistrate Judge

         This 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.


         Plaintiffs 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 [#59, #60].

         The Parties

         This 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.[1] [Id. at ¶¶ 6-7]. Plaintiffs assert jurisdiction pursuant to 28 U.S.C. § 1332.

         Defendant 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.[2]

         Purchase of the Haimark Companies

         Plaintiffs 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].

         Breach of the Agreements

         Haimark 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”).[3] 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 ¶ 54].

         Relevant Procedural History[4]

         On 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].[5] Plaintiffs assert three claims against these Consenting Defendants: Unjust Enrichment; Unlawful Distribution under Colo. Rev. Stat. § 7-108-403; and Successor Liability. See [#60].

         On 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 Consenting ...

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