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Bank of Colorado v. Wibaux 1, LLC

United States District Court, D. Colorado

September 21, 2018

BANK OF COLORADO, a Colorado corporation, Plaintiff,
v.
WIBAUX 1, LLC, a Montana limited liability company, JEFFREY W. BERGER, a/k/a Jeff Berger, TAMI M. BERGER a/k/a Tami Berger, PRO-FRAC HEATING & TRUCKING, LLC, a North Dakota limited liability company, and UNITED STATES OF AMERICA, acting through the Internal Revenue Service, Defendants.

          ORDER GRANTING DEFENDANTS' MOTION TO TRANSFER OR STAY

          CHRISTINE M. ARGUELLO UNITED STATES DISTRICT JUDGE

         This matter is before the Court on Defendants Wibaux 1, LLC, Jeffrey W. Berger, Tami M. Berger, and Pro-Frac Heating and Trucking, LLC's (together, “Borrower Defendants”) Motion to Transfer or Stay Piecemeal Litigation (Doc. # 28). For the reasons described below, the Court grants their Motion to Transfer or Stay Piecemeal Litigation.

         I. BACKGROUND

         This case concerns personal and real property owned by Borrower Defendants and located across seven counties in three states, Montana, North Dakota, and South Dakota. Defendants Jeffrey Berger and Tami Berger (together, the “Berger Defendants”) wholly own Defendants Wibaux 1, LLC and Pro-Frac Heating and Trucking, LLC (the “LLC Defendants”). (Doc. # 54 at 1.) Between 2013 and 2015, Plaintiff Bank of Colorado (alternatively, “the Bank”) financed Borrower Defendants' acquisition of this property in three multi-million dollar loans. (Id.) These loans have been in default for more than one year.

         A. PROCEDURAL HISTORY

         The case before this Court is complicated by a prior-filed pending, related case in the United States District Court for the District of Montana (the “Montana Court”), captioned Berger, et al., versus Bank of Colorado, case number CV 17-104-BLG-SPW-TJC (the “Montana Case”), in which Borrower Defendants assert claims against the Bank for negligent misrepresentation, breach of fiduciary duty, fraud and undue influence, breach of the duty of good faith and fair dealing, contractive adhesion, and punitive damages. (Doc. # 28-2.) Borrower Defendants filed the Montana Case in state court on July 11, 2017 (id.); the Bank removed the Montana Case to federal court on August 2, 2017 (Doc. # 28 at 3.) The Bank then filed a Motion to Transfer Venue to the District of Colorado. (Id.) The Montana Court denied the Bank's Motion to Transfer Venue on November 27, 2017, concluding that while venue would have been proper in the District of Colorado, factors assessed under 28 U.S.C. § 1404(a) weighed against transfer. (Doc. # 28-1 at 5-18.) The Bank next filed a Motion to Dismiss in the Montana Case on December 11, 2017; the Montana Court has not yet ruled on the Motion.

         The Bank filed the action presently before this Court on November 30, 2017, (Doc. # 1), approximately three and a half months after Borrower Defendants brought the Montana Case against the Bank. In this case, the Bank ultimately seeks foreclosure on the collateral. (Doc. # 26.)

         On January 4, 2018, Borrower Defendants filed the Motion to Transfer Case or Stay Piecemeal Litigation (“Motion to Transfer or Stay”) now before the Court. (Doc. # 28.) One week earlier, on December 26, 2017, Borrower Defendants had filed in the Montana Case a similar motion, their Motion to Enjoin Piecemeal Colorado Litigation. (Doc. # 28-3.) The Montana Court denied Borrower Defendants' request to expedite its decision on that Motion in light of the motions pending before this Court:

Under considerations of comity, the [Montana] Court will defer to the District of Colorado to exercise its discretion whether to transfer, stay, or dismiss the Colorado Action before addressing [the Borrowing Defendants'] Motion to Enjoin Piecemeal Colorado Litigation. The Court will address the motion in due course, if necessary, following the District of Colorado's resolution of the motions now pending before it.

(Doc. # 78-1 at 3.) The Montana Court has not yet ruled on Borrower Defendants' Motion to Enjoin Piecemeal Colorado Litigation.

         On the basis of the Bank's Second Amended Complaint (Doc. # 26), and Colorado Rule of Civil Procedure 104, this Court issued an Order to Show Cause and Preserve Personal Property to Defendants on January 9, 2018. See (Doc. # 30.) The Court set a hearing on its show cause order for January 17, 2018. (Id.) On January 11, 2018, Borrower Defendants filed their Motion to Dismiss Causes for Replevin, Receivership, and Foreclosure or Stay the Show Cause Hearing. (Doc. # 40.) The following day, the Court denied in part the Motion to Dismiss to the extent that Borrower Defendants sought to stay the show cause hearing. (Doc. # 43.) The Court was prepared to address its show cause order and the pending Motion to Transfer or Stay and Motion to Dismiss at the show cause hearing on January 17, 2018.

         However, on January 16, 2018, the day before the hearing, Borrower Defendants notified the Court that the Berger Defendants had filed for relief under Chapter 11 of the Bankruptcy Code in the federal Bankruptcy Court for the District of Montana. (Doc. # 48.) In accordance of Section 362 of the Bankruptcy Code, [1] an automatic stay of all proceedings as to the Berger Defendants went into effect immediately upon the Berger Defendants' filing of bankruptcy, see 11 U.S.C. § 362(a), and this automatic stay remains in place. The Bankruptcy Court for the District of Montana subsequently ruled that the automatic stay does not extend to the LLC Defendants (Doc. # 68-5); accordingly, the action before this Court proceeds against the LLC Defendants.

         In April 2018, the Bank moved for partial summary judgment against the LLC Defendants. (Doc. # 71.) The LLC Defendants filed a Motion for Discovery “so as to fully respond” to the Bank's Motion for Partial Summary Judgment on June 11, 2018. (Doc. # 86.) These motions, as well as Borrower Defendants' Motion to Dismiss Causes for Replevin, Receivership, and Foreclosure (Doc. # 40), are ripe for the Court to decide.

         Finally, in August 2018, the Court twice granted the Bank's and the LLC Defendant's Stipulated Motion to Stay pending the outcome of a mediation between the parties. (Doc. ## 100, 103.) This stay is no longer in place, as the parties' reported mediation ...


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