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Stewart v. West

United States District Court, D. Colorado

September 6, 2018

JOHN I. WEST, and JENNIFER HART, Defendants.


          Nina Y. Wang United States Magistrate Judge

         This matter comes before the court on Defendant Jennifer Hart's (“Defendant Hart” or “Ms. Hart”) Fed.R.Civ.P. 12(b)(2) & 12(b)(6) Motion to Dismiss (“Motion to Dismiss” or “Motion”). [#20]. The Parties consented to have the undersigned Magistrate Judge preside over this action fully for all purposes. See [#27]; 28 U.S.C. § 636(c); Fed.R.Civ.P. 73. Having considered the Motion, the applicable case law, the entire docket, and having entertained oral argument at the September 5, 2018 Motion Hearing, the court DENIES the Motion to Dismiss for the reasons stated herein.


         The court draws the following facts from the Amended Complaint and presumes they are true for purposes of the instant Motion. Plaintiffs Neil and Caroline Stewart (collectively, “Plaintiffs” or the “Stewarts”) bring this action against Defendants John West (“Mr. West”) and Ms. Hart (collectively, “Defendants”) in their individual capacities as well as in their capacities as co-trustees of The Margaret E. Hart Trust, Dated September 10, 2008 (“Trust”).[1] See generally [#19]. The dispute concerns a real estate transaction involving property located in Avon, Colorado (the “Property”). See [id. at ¶ 1]. Defendant West and his wife built the Property in 2000, lived at the Property, and owned the Property until about 2008 when they transferred ownership to the Trust. See [id. at ¶¶ 6-9].

         Plaintiffs allege that the Trust listed the Property for sale in or around 2016, and that Defendant Hart “traveled to Colorado to help prepare the Property to be listed for sale, which preparations included cleaning up the Property.” [Id. at ¶ 12]. About 2017 the Stewarts sought to purchase the Property. See [id. at ¶¶ 1, 2, 13]. On or about September 5, 2017, Defendants signed the Property Disclosure regarding the Property, see [#1-1], and indicated that they “did not know” whether the Property had any issues with moisture and/or water damage, roof leaks, roof damage, hazardous and/or biohazardous materials, or other environmental problems. See [#1-1; #19 at ¶ 14]. The Stewarts hired a roofer to inspect the Property's roof-the inspection revealed some repairs, but the roofer could not determine whether the repairs were for leakage or routine maintenance. See [id. at ¶ 16]. The Stewarts then inquired whether the roof had ever leaked or had any other problems given that leakage could have serious structural ramifications; Defendants responded through their real estate agent that the roof “never had any leaks or other problems.” [Id. at ¶¶ 17-19]. An inspection of the Property did not reveal any water damage or mold contamination, though Plaintiffs allege they were unaware at the time that the Inspector could not access the attic because personal property obstructed the attic hatch. See [id. at ¶ 20].

         Being unaware of any defects with the Property, and in reliance on Defendants' disclosures, the Stewarts purchased the Property. See [id. at ¶¶ 21-22; #1-2]. Ahead of closing Defendant Hart allegedly traveled to the Property to pack Defendant West's belongings and furniture and to clean the Property. [#19 at ¶ 24]. The Stewarts closed on the Property on or around October 20, 2017. [Id. at ¶ 25]. But at some point, following closing, Plaintiffs “discovered significant mold contamination throughout the [Property], including in the attic.” [Id. at ¶ 26]. Plaintiffs further discovered an oscillating fan and roof vents in the attic, and that the roof had dealt with leakage in the past, prompting a roofing contractor to submit a proposal to Defendant West for repairs needed to the roof. See [id. at ¶¶ 26-28]. The Stewarts further allege that Defendant West had dealt with roof issues in the past. [Id. at 6].

         Plaintiffs then initiated this action asserting claims for fraudulent nondisclosure[2] against Defendants in their individual and co-trustee capacities for allegedly concealing and failing to disclose the nature and extent of the roof issues and for breach of contract against Defendants in their capacities as co-trustees for alleged breach of the Real Estate Contract that obligated Defendants to “disclose to [the Stewarts] any latent defects actually known by Seller.” See [#19 at ¶ 29-43; #1-2 at 13]. On June 1, 2018, Ms. Hart answered the Amended Complaint in her capacity as co-trustee of the Trust [#21], but moved to dismiss the fraudulent nondisclosure claim against her in her individual capacity. [#20]. She argues first that the court lacks personal jurisdiction over her in her individual capacity because she has no connection to Colorado; second, if the court does have personal jurisdiction over her in her individual capacity, she personally owed no duty to disclose to Plaintiffs given her limited role as co-trustee. [Id. at 4]. The Stewarts have since responded [#24], Ms. Hart replied [#30], and the court entertained oral argument on the Motion to Dismiss on September 5, 2018 [#38]. The Motion is now ripe for disposition.


         I. Rule 12(b)(2)

         Rule 12(b)(2) of the Federal Rules of Civil Procedure allows a defendant to challenge the court's personal jurisdiction over the named parties. Fed.R.Civ.P. 12(b)(2). Plaintiffs bear the burden of demonstrating that the court has personal jurisdiction over Ms. Hart. See Dudnikov v. Chalk & Vermilion Fine Arts, 514 F.3d 1063, 1069 (10th Cir. 2008). When, as here, the district court decides a Rule 12(b)(2) motion to dismiss without holding an evidentiary hearing, “the plaintiff need only make a prima facie showing of personal jurisdiction to defeat the motion.” AST Sports Sci., Inc. v. CLF Distrib. Ltd., 514 F.3d 1054, 1057 (10th Cir. 2008). “The plaintiff[s] may make this prima facie showing by demonstrating, via affidavit or other written materials, facts that if true would support jurisdiction over the defendant.” OMI Holdings, Inc. v. Royal Ins. Co. of Canada, 149 F.3d 1086, 1091 (10th Cir. 1998). The court's focus is upon Defendant Hart's relationship with the District of Colorado and this litigation; so long as it creates a substantial connection” with this District, even a single act can support jurisdiction. Leachman Cattle of Colorado, LLC v. Am. Simmental Ass'n, 66 F.Supp.3d 1327, 1336 (D. Colo. 2014). In considering whether Ms. Hart has sufficient contacts with this District to support the court's exercise of personal jurisdiction, the court must accept all well pleaded facts, and must resolve any factual disputes in favor of Plaintiffs. See Wenz v. Memery Crystal, 55 F.3d 1503, 1505 (10th Cir. 1995).

         II. Rule 12(b)(6)

         Under Rule 12(b)(6) a court may dismiss a complaint for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). In deciding a motion under Rule 12(b)(6), the court must “accept as true all well-pleaded factual allegations . . . and view these allegations in the light most favorable to the plaintiff.” Casanova v. Ulibarri, 595 F.3d 1120, 1124 (10th Cir. 2010) (quoting Smith v. United States, 561 F.3d 1090, 1098 (10th Cir. 2009)). A plaintiff may not rely on mere labels or conclusions, “and a formulaic recitation of the elements of a cause of action will not do.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). Rather, “a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009); see also Robbins v. Oklahoma, 519 F.3d 1242, 1247 (10th Cir. 2008) (explaining that plausibility refers “to the scope of the allegations in a complaint, ” and that the allegations must be sufficient to nudge a plaintiff's claim(s) “across the line from conceivable to plausible.”). The court may also consider materials beyond the complaint if the documents are central to the plaintiff's claims, referred to in the complaint, and if the parties do not dispute their authenticity. See Cty. of Santa Fe, N.M. v. Public Serv. Co. of N.M., 311 F.3d 1031, 1035 (10th Cir. 2002). Ultimately, the court must “determine whether the complaint sufficiently alleges facts supporting all the elements necessary to establish an entitlement to relief under the legal theory proposed.” Forest Guardians v. Forsgren, 478 F.3d 1149, 1160 (10th Cir. 2007).


         I. Personal Jurisdiction

         “The requirement that a court have personal jurisdiction flows from the Due Process Clause. It represents a restriction on judicial power not as a matter of sovereignty, but as a matter of individual liberty.” Peay v. BellSouth Med. Assistance Plan, 205 F.3d 1206, 1210 (10th Cir. 2000) (brackets, ellipses, and internal quotation marks omitted). “To obtain personal jurisdiction over a nonresident defendant in a diversity action, a plaintiff must show that jurisdiction is legitimate under the laws of the forum state and that the exercise of jurisdiction does not offend the due process clause of the Fourteenth Amendment.” Far W. Capital, Inc. v. Towne, 46 F.3d 1071, 1074 (10th Cir. 1995). “Colorado's long-arm statute, Colo. Rev. Stat. § 13-1-124, extends jurisdiction to the [United States] Constitution's full extent. The personal jurisdiction analysis here is thus a single due process inquiry.” Old Republic Ins. Co. v. Cont'l Motors, Inc., 877 F.3d 895, 903 (10th Cir. 2017) (internal case citations omitted).

         “To exercise jurisdiction in harmony with due process, defendant[] must have minimum contacts with the forum state, such that having to defend a lawsuit there would not offend traditional notions of fair play and substantial justice.” Shrader v. Biddinger, 633 F.3d 1235, 1239 (10th Cir. 2011) (brackets and internal quotation marks omitted). The minimum contacts may give way to specific or general jurisdiction. See Intercon, Inc. v. Bell Atl. Internet Sols., Inc., 205 F.3d 1244, 1247 (10th Cir. 2000). General jurisdiction exists when the defendant's contacts with the forum are “‘so continuous and systematic as to render [it] essentially at home in the forum State.'” Fireman's Fund Ins. Co. v. Thyssen Min. Const. of Canada, Ltd., 703 F.3d 488, 493 (10th Cir. 2012) (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)). Specific jurisdiction exists when a defendant purposefully directs her activities to residents of the forum, and the cause of action arises out of those activities. See Melea, Ltd. v. Jawer SA, 511 F.3d 1060, 1066 (10th Cir. 2007).

         It is undisputed that the court does not have general jurisdiction over Ms. Hart and, thus, I focus on specific jurisdiction. To exercise specific jurisdiction over Ms. Hart Plaintiffs must make a prima facie showing of Ms. Hart's contacts with the forum that are more than just “random, fortuitous, or attenuated”, such that she should “reasonably anticipate being haled into court there.” Monge v. RG Petro-Mach. (Grp.) Co. Ltd., 701 F.3d 598, 613 (10th Cir. 2012). The court must therefore examine the “quantity and quality” of Ms. Hart's contacts with Colorado and determine whether a nexus exists between those contacts and Plaintiffs' cause of action. See Emp'rs Mut. Cas. Co. v. Bartile Roofs, Inc., 618 F.3d 1153, 1160 (10th Cir. 2010).

         A. ...

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