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Witt v. Snider

United States District Court, D. Colorado

May 19, 2017

MATTHEW WITT, [1] Plaintiff,


          Marcia S. Krieger Chief United States District Judge.

         THIS MATTER comes before the Court, nominally pursuant to Mr. Witt's Motion to Dismiss (# 124), to which Mr. Semmens has filed a response (# 130). The discussion herein also implicates Mr. Semmens' prior Motion to Dismiss (# 30), Mr. Witt's response (# 35), and Mr. Semmens' reply (# 42), as well as similar motions filed by other Defendants. There are a number of other motions pending in this action, including several filed by Mr. Lane, but for the reasons set forth herein, the Court need not reach those.


         DMr. Witt's Amended Complaint (# 27) is a 59-page document thick with impertinent details. Shorn of its excess, the factual allegations can be summarized fairly succinctly. Mr. Witt operated an entity called CCI that engaged in the business of commercial lending. In 2007, Mr. Witt and CCI entered into a lending arrangement with Mr. Snider and Mr. Snider's business, Trico. That arrangement unraveled in 2008, with Mr. Witt and/or CCI bringing suit against Mr. Snider and/or Trico. Mr. Witt alleges that, at this time, Mr. Snider “sw[ore] to Witt that he would get revenge against him for the rest of Witt's life.”

         Separately, in 2008, Mr. Witt and CCI entered into a business arrangement with Mr. Lane and his various business entities.[2] In early 2009, Mr. Lane convinced Mr. Witt to hire him as an officer of CCI, but that arrangement also ended acrimoniously shortly thereafter, with Mr. Witt terminating Mr. Lane and accusing him of attempting to sabotage CCI and steal its business. As with Mr. Snider, Mr. Witt alleges that Mr. Lane then threatened to “take down” CCI and Mr. Witt

         CCI filed a bankruptcy petition under Chapter 11 in April 2009; a Trustee was appointed to represent CCI's estate. Mr. Witt alleges that Mr. Lane “manipulate[d] the bankruptcy cases and defame[d] Witt” by filing numerous frivolous adversary claims in that action, in violation of 11 U.S.C. § 152(4). Mr. Witt further alleges that both Mr. Snider and Mr. Lane jointly agreed at this time to “abuse the bankruptcy process” and “retaliate against Witt, ” albeit in ways that are largely unspecified. The Complaint goes on to recite, in great detail, various events occurring during the course of the bankruptcy case and “defamatory” statements that Mr. Lane purportedly made to trustees and other creditors, accusing Mr. Witt of various acts of fraud or deceit. Little of this detail is relevant, except perhaps for an allegations that from approximately 2010 until “late 2012 and 2013, ” Mr. Lane and Mr. Snider “each . . . made multiple threats against Witt of violent retaliation and incarceration, and threatened to continue to destroy Witt's companies and his reputation, ” unless Mr. Witt would agree to testify on their behalf in opposition to an adversary proceeding brought by CCI's Trustee. Mr. Witt alleges that these threats, for which no additional detail is supplied, constitute witness tampering in violation of 18 U.S.C. § 1512 and witness retaliation in violation of 18 U.S.C. § 1513. Eventually, Mr. Lane and Mr. Snider settled their adversary claims with CCI's Trustee.

         In 2011, one of the Trustees that had represented a CCI entity during the bankruptcy proceeding turned around and brought an adversary suit against Mr. Witt himself, accusing him of misappropriating CCI assets. Once again, Mr. Witt's Complaint goes into extensive detail about this proceeding, but it is unclear what relevance these developments have to his claims against the Defendants herein. At most, Mr. Witt appears to allege that Mr. Lane and Mr. Snider were “leading the creditors who were pressuring [the Trustee] to sue Witt, ” but otherwise makes no allegations regarding them in this context. The proceeding ultimately resulted in a judgment against Mr. Witt in excess of $1.5 million, a judgment that Mr. Witt unsurprisingly insists is improper.

         At some point in or about 2014, Mr. Lane and Mr. Snider “determined the best way to continue advancing their shared goal of destroying the rest of Witt's life was to purchase the Judgment” described above. An entity named Rekon, owned by Mr. Snider and Mr. Lane, offered to purchase the judgment from the Trustee for $16, 000. The Trustee provisionally accepted, and although Mr. Witt recites a wealth of additional information regarding the sale of the judgment, little of it is significant. It is sufficient to note that Mr. Witt attempted to purchase the judgment himself, but the Trustee accepted Rekon's bid of $18, 000 and sold the judgment in February 2014. Thereafter, it appears that Rekon commenced suit against Mr. Witt in Arapahoe County, Colorado, accusing Mr. Witt of engaging in fraudulent transfers to shield his assets from collection on that judgment. That proceeding is, by all appearances, ongoing.

         Based on these allegations, Mr. Witt alleges eight claims for relief: (i) violation of the Racketeer Influenced and Corrupt Organizations (“RICO”) Act, 18 U.S.C. § 1961 et seq., in that Mr. Lane and Mr. Snider formed a criminal enterprise in 2009 (and that Mr. Semmens and Mr. Keil joined it later, as discussed herein) for the purpose of destroying Mr. Witt and CCI and engaged in a pattern of racketeering acts including “extortion, bankruptcy fraud, witness tampering, witness retaliation, and related tortious acts” to achieve that goal; (ii) violation of the Colorado Corrupt Organizations Control Act (“CCOCA”), C.R.S. § 18-17-101 et seq., on the same facts and others discussed below; (iii) a common-law tort claim for abuse of process, apparently under Colorado law, against Mr. Snider, Mr. Lane, and Mr. Semmens, in that Rekon and Mr. Semmens have commenced the proceeding in Arapahoe County alleging fraudulent transfers, all “for no purpose other than to embarrass Witt”; (iv) common-law defamation against Mr. Keil, arising primarily from statements Mr. Keil made to Mr. Witt's co-workers in 2015, accusing Mr. Witt of engaging in embezzlement; (v) common-law defamation against Mr. Semmens, apparently on the theory that Mr. Semmens is vicariously liable for the defamatory statements made by Mr. Keil, along with statements made by Mr. Semmens in the Arapahoe County litigation; (vi) and (vii) the same defamation claim that is alleged against Mr. Semmens, now alleged against Mr. Snider and Mr. Lane respectively; and (viii) a tort claim for outrageous conduct, apparently under Colorado law, against all Defendants, based generally on the allegations above.

         Three of the four Defendants - all but Mr. Lane -filed motions to dismiss Mr. Witt's claims against them pursuant to Fed.R.Civ.P. 12(b)(6). Mr. Lane instead filed a pro se Answer and Counterclaims (# 84) that runs some 150 pages and asserts a broad range of claims against Mr. Witt, the other Defendants in this matter, and various third parties. Before the Court could rule on any motions, Mr. Witt filed for bankruptcy (# 103) on March 6, 2017, and a Trustee was appointed to administer his estate. In light of that appointment, the Court amended the caption of the action to substitute the Trustee for Mr. Witt and denied all the pending motions - including the Defendants' motions to dismiss - until the Trustee could examine Mr. Witt's claims and decide whether to pursue, modify, or withdraw them on behalf of the estate (# 106). The record reflects that Mr. Witt's bankruptcy case was short-lived, however; it was apparently dismissed by the bankruptcy court on April 26, 2017. The dismissal of the bankruptcy case effectively terminated the Trustee's control over this case, placing it back in Mr. Witt's hands. (As a result, the Court has again amended the caption set forth above to reflect this state of affairs.)

         Shortly thereafter, Mr. Witt filed the instant Motion to Dismiss (# 124), explaining that he had become convinced that the case would be heard more expeditiously if pursued in state court. He sought to dismiss[3] his RICO claim without prejudice, thereby severing the predicate for federal subject-matter jurisdiction and effectuating the dismissal of the action in its entirety. Mr. Witt made clear that he intended to continue to pursue his state-law claims against the Defendants in a new state-court action. Although the time to respond to this motion under D.C. Colo. L. Civ. R. 7.1(d) has not yet run, at least one Defendant, Mr. Semmens, has already opposed Mr. Witt's requested dismissal. Mr. Semmens argues that Mr. Witt is engaging in vexatious litigation designed to cause the Defendants to incur fees, yet prevent conclusive adjudication of Mr. Witt's (or, for that matter, the Defendants' state-court) claims. Mr. Semmens requests, alternatively, that the Court deny Mr. Witt's request to dismiss the action, that the Court grant the motion on the condition that Mr. Witt pay the Defendants' accrued attorney fees in part or whole, that the Court dismiss Mr. Witt's claims with prejudice to prevent them from being reasserted, or that the Court revive and determine the Defendants' prior Rule 12(b)(6) motions.

         The Court finds that it is sufficiently apprised of the issues here, and requires no further briefing on Mr. Witt's Motion to Dismiss to make a determination. D.C. Colo. L. Civ. R. 7.1(d).


         The Court will not belabor its analysis of Mr. Witt's Motion to Dismiss under Rule 41(a)(2). Regardless of whether the Court would be inclined to grant that motion, either unconditionally or on certain conditions sought by Mr. Semmens, a curious feature of Rule 41(a)(2) presents an additional obstacle. Under the Rule, “if a defendant has pleaded a counterclaim before being served with the plaintiff's motion to dismiss, the action may be dismissed over the defendant's objection only if the counterclaim can remain pending for independent adjudication.” Here, Mr. Lane has pled a counterclaim prior to Mr. Witt seeking to dismiss, and although Mr. Lane has not yet responded to Mr. Witt's motion, one may reasonably anticipate that Mr. Lane might object to Mr. Witt dismissing his own action, taking Mr. Lane's counterclaims down in the process. Thus, the Court is faced with the question of whether Mr. Lane's counterclaims can, of their own accord, support federal subject-matter jurisdiction (and, relatedly, can any such claim that supports such jurisdiction survive further review under Fed.R.Civ.P. 8 and 12(b)(6)?).

         The Court sees little cause to attempt to parse Mr. Lane's extensive and rambling counterclaims in order to answer that question. Instead, the Court finds it far easier to accept Mr. Semmens' invitation for the Court to return to the Defendants' fully-briefed motions to dismiss Mr. Witt's claims under Rule 12(b)(6) - specifically including the RICO claim - and adjudicate those. For the reasons set forth below, the Court finds that Mr. Witt has failed to state a cognizable RICO claim. Dismissal of that claim disposes of the sole basis for federal subject-matter jurisdiction here, requiring dismissal of the entire action - the very same relief that the Defendants previously sought and which Mr. Witt seeks now.[4]

         A. Standard of review

         In reviewing a motion to dismiss pursuant to Rule 12(b)(6), the Court must accept all well-pleaded allegations in the Amended Complaint as true and view those allegations in the light most favorable to the nonmoving party. Stidham v. Peace Officer Standards & Training, 265 F.3d 1144, 1149 (10th Cir. 2001) (quoting Sutton v. Utah State Sch. for the Deaf & Blind, 173 F.3d 1226, 1236 (10th Cir. 1999)). The Court must limit its consideration to the four corners of the Amended Complaint, any documents attached thereto, and any external documents that are referenced in the Amended Complaint and whose accuracy is not in dispute. Oxendine v. Kaplan, 241 F.3d 1272, 1275 (10th Cir. 2001); Jacobsen v. Deseret Book Co., 287 F.3d 936, 941 (10th Cir. 2002); Dean Witter Reynolds, Inc. v. Howsam, 261 F.3d 956, 961 (10th Cir. 2001).

         A claim is subject to dismissal if it fails to state a claim for relief that is “plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). To make such an assessment, the Court first discards those averments in the Complaint that are merely legal conclusions or “threadbare recitals of the elements of a cause of action, supported by mere conclusory statements.” Id. at 678-79. The Court takes the remaining, well-pleaded factual contentions, treats them as true, and ascertains whether those facts (coupled, of course, with the law establishing the requisite elements of the claim) support a claim that is “plausible” or whether the claim being asserted is merely “conceivable” or “possible” under the facts alleged. Id. What is required to reach the level of “plausibility” varies from context to context, but generally, allegations that are “so general that they encompass a wide swath of conduct, much of it innocent, ” will not be sufficient. Khalik v. United Air Lines, 671 F.3d 1188, 1191 (10th Cir. 2012).

         B. RICO claim

         Mr. Witt's RICO claim is the linchpin that permits this federal court to exercise subject-matter jurisdiction over this proceeding pursuant to 28 U.S.C. §1331. Accordingly, the Court elects to first evaluate all of the Defendants' motions as directed at the RICO claim.

         To adequately plead a civil RICO claim, a plaintiff must allege three elements: (i) conduct, (ii) of an enterprise, (iii) through a pattern of racketeering ...

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