Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

SGS Acquisition Company Ltd. v. Linsley

United States District Court, D. Colorado

March 23, 2018

SGS ACQUISITION COMPANY LIMITED, Plaintiff,
v.
DAVID LINSLEY; BERNARD GUARNERA; NORTHERN ZINC, LLC; STAR MOUNTAIN RESOURCES, INC.; and BROADLANDS MINERAL ADVISORY SERVICES, LTD, Defendants.

          OPINION AND ORDER DENYING MOTION TO DISMISS

          Marcia S. Krieger, Chief United States District Judge.

         THIS MATTER comes before the Court pursuant to the Defendants' Motion to Dismiss Second Amended Complaint Pursuant to Fed.R.Civ.P. 12(b)(6) (#61), the Plaintiffs' response (#62), and the Defendants' reply (#63).

         JURISDICTION

         The Court exercises jurisdiction over this matter pursuant to 28 U.S.C. § 1332.

         ALLEGED FACTS

         The Court offers a brief summary of the Second Amended Complaint's allegations here and elaborates as necessary in its analysis.

         Plaintiff SGS Acquisition Company Limited (“SGS”) intended to purchase a zinc mine and retained Defendants David Linsley and Bernard Guarnera to assist in obtaining financing and performing due diligence for the purchase. Mr. Linsley and Mr. Guarnera are partners at non-party Centurion Resource Group (“Centurion”). It was contemplated that SGS would purchase the mine with private equity from Centurion, and Mr. Linsley and Mr. Guarnera assured[1] SGS that Centurion would finance the purchase of the mine.

         Relying on Mr. Linsley and Mr. Guarnera's assurance, on February 20, 2014, SGS prepared a Letter of Intent (“LOI”) to purchase the mine and presented it to the mine's owner. Shortly thereafter, the mine's owner agreed to the terms of the LOI, and SGS and the mine's owner had 75 days to perform due diligence and finalize the transaction.

         During the due diligence period, SGS, Mr. Linsley, and Mr. Guarnera visited the mine. At the mine, Mr. Linsley and Mr. Guarnera learned SGS's plan for the mine and received certain “confidential information” from the mine's management. SGS also gave them access to SGS's confidential financial information, tax information, financial models, prospective business opportunities, mining concept, deal or acquisition plan and structure, and the LOI.

         After the mine visit, Centurion changed the terms under which it had proposed to finance the mine's purchase, requiring SGS to make larger payments to repay Centurion and to adhere to a different payment schedule than what was anticipated under the LOI. Mr. Linsley and Mr. Guarnera also stopped providing any assistance to finalize SGS's purchase of the mine and would not return SGS's phone calls or emails. SGS decided to seek financing from another source, but was unable to do so. The due diligence period ended without financing in place, the LOI expired, and SGS was unable to purchase the mine.

         Subsequently, Defendant Northern Zinc, LLC (“Northern Zinc”) - a company in which Mr. Linsley and Mr. Guarnera were partners - purchased the company that owned the mine. Thereafter, Defendant Star Mountain Resources, Inc. (“Star Mountain”) purchased Northern Zinc. As part of this purchase, Mr. Linsley and Mr. Guarnera received 10, 000, 000 shares of Star Mountain's stock in exchange for their interests in Northern Zinc, and Star Mountain assumed $1.39 million in Northern Zinc's debts.

         In its Second Amended Complaint (# 58), SGS asserts six claims, all arising under Colorado law[2]: (i) Intentional Interference with Prospective Business Relations against Mr. Linsley and Mr. Guarnera; (ii) Intentional Interference with Contract against Mr. Linsley and Mr. Guarnera; (iii) Breach of Fiduciary Duty against Mr. Linsley and Mr. Guarnera; (iv) Misappropriation of Trade Secrets, ostensibly against all Defendants; (v) Misappropriation of Business Value against Mr. Linsley and Mr. Guarnera; and (vi) Vicarious Liability[3] against Broadlands Mineral Advisory Services, Ltd. (“Broadlands”)

         The Defendants filed a joint Motion to Dismiss (#61) in which they argue that the Second Amended Complaint does not allege sufficient facts to state any of the claims against them under Federal Rule of Civil Procedure 12(b)(6).

         ANALYSIS

         A. Standard of review

         In considering a motion to dismiss pursuant to Rule 12(b)(6), the Court accepts all well-pleaded allegations in the Complaint as true and views 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 limits its consideration to the four corners of the Complaint, any documents attached thereto, and any external documents that are referenced in the 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 unless it 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” as compared to merely being “conceivable” or “possible”. 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, ” are not sufficient. Khalik v. United Air Lines, 671 F.3d 1188, 1191 (10th Cir. 2012).

         B. Intentional Interference with Prospective Business Relations

         To prove a claim of intentional interference with prospective business relations, SGS must establish that Mr. Linsley and Mr. Guarnera: (i) interfered with (ii) SGS's prospective business relation, (iii) which prevented SGS from entering into, acquiring, or continuing the prospective relation, and (iv) that Mr. Linsley and Mr. Guarnera did so intentionally and improperly. See Amoco Oil Co. v. Ervin, 908 P.2d 493, 502 (Colo. 1995). Mr. Linsley and Mr. Guarnera argue that the Second Amended Complaint's allegations are not sufficient to show that they interfered with SGS's prospective business relations with the mine's owner, and that any such interference was not improper. They further argue than any alleged improper influence did not prevent ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.