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Lux Sterling Holdings, LLC v. Manerbino

United States District Court, D. Colorado

September 27, 2018

LUX STERLING HOLDINGS, LLC, a Nevada Limited Liability Company, Plaintiff,
v.
ANTHONY MANERBINO, an individual, DAWNA MANERBINO, an individual, PHILIP WHELAN, an individual, and CNW, LLC, a Colorado limited liability company, Defendants. ANTHONY MANERBINO, an individual, and CNW, LLC, a Colorado Limited Liability Company, Third-Party Plaintiffs,
v.
PHIL NEUMAN, an individual, and COLIN C. CONNER II, an individual, Third-Party Defendants.

          ORDER

          Kristen L. Mix United States Magistrate Judge.

         This matter is before the Court[1] on Third-Party Defendants Phil Neuman (“Neuman”) and Colin C. Conner II's (“Conner”) Motion to Dismiss Third Party Complaint [#59][2] (the “Motion”). Third-Party Plaintiffs Anthony Manerbino (“Manerbino”) and CNW, LLC (“CNW”) filed a Response [#60] in opposition to the Motion. No. Reply was filed. The Court has reviewed the briefs, the entire case file, and the applicable law, and is sufficiently advised in the premises. For the reasons set forth below, the Motion [#59] is GRANTED in part and DENIED in part.

         I. Background

         Plaintiff initiated this action by filing a Complaint [#2] in the District of Nevada on June 3, 2016. The lawsuit was transferred to this Court on March 29, 2017. See [#1]. On June 28, 2017, Plaintiff filed the operative Second Amended Complaint [#31], which includes two remaining claims against Defendants: (1) Fraud-Misrepresentations of Operating Expenses, and (2) Fraud-Misrepresentation of Compliance with MED[3]Regulations. Second Am. Compl. [#31] at 13-17; see also Order [#49] (dismissing Count III). These claims arise from Plaintiff's allegations that Defendants committed fraud during contract negotiations regarding a joint medical marijuana venture between the parties. Id. at 1-2 ¶ 1.

         Specifically, Plaintiff alleges that “[i]n reasonable reliance on fraudulent misrepresentations and omissions, [Plaintiff] entered into a joint venture governed by unenforceable contracts with [D]efendants and incurred damages in excess of $500, 000.” Id. Plaintiff and Defendants entered into the agreement on September 14, 2015. Id. at 7 ¶ 22. In short, Plaintiff asserts that it invested in Defendants' medical marijuana business because of Defendants' representations that: (1) the business was in compliance with all MED regulations, including not using pesticides during the marijuana cultivation process; and (2) the business had a monthly operating cost of only $10, 500. Id. at 3-8. Plaintiff asserts that it learned that both representations were false less than six months after executing the agreement. Id. at 8-10.

         On April 8, 2018, Defendants filed the Answer and Third-Party Complaint of Defendants Anthony Manerbino, Dawna Manerbino, Philip Whelan and CNW, LLC (“Third-Party Complaint”) [#50]. Third-Party Plaintiffs, consisting of only Mr. Manerbino and CNW, assert that, over the course of several months in 2015, they negotiated with Mr. Neuman and Mr. Conner regarding the purchase of CNW. Third-Party Compl. [#50] at 27-28 ¶¶ 9-10, 11. Mr. Manerbino and CNW allege that during those negotiations, Mr. Neuman and Mr. Conner made numerous attractive business representations. Id. at 27-28 ¶¶ 10-11. Ultimately, the parties agreed that Luxembourg Canna Holdings, LLC (“LuxCanna”), an entity that Mr. Neuman and Mr. Conner would form and control, would operate CNW's marijuana business for two years and then purchase CNW for $1.5M. Id. at 27-28 ¶ 11. Based on the representations made during negotiations, Mr. Manerbino and CNW decided to execute the LuxCanna Agreement and a separate Operating Agreement (collectively, the “LuxCanna Documents”). Id. at 28 ¶¶ 12-14. Mr. Neuman and Mr. Conner controlled CNW's business operations from the time of the execution of the LuxCanna Documents through March 3, 2016. Id. at 27 ¶ 8; id. at 29 ¶ 19.

         However, Mr. Manerbino and CNW assert that Mr. Neuman and Mr. Conner knowingly made false representations during their business negotiations in order to induce them into executing the LuxCanna Documents. Id. at 30 ¶¶ 21-22. Mr. Manerbino and CNW allege that during the time that Mr. Neuman and Mr. Conner controlled the company's operations, CNW incurred substantial losses due to missing and unaccounted for product, damage to vendor, patient, and employee relationships, failure to pay sales taxes, closing of the dispensary for three months, sale of product at less than market value, and damage to and theft of company property. Id. at 30 ¶ 24.

         Mr. Manerbino and CNW assert two claims against Mr. Neuman and Mr. Conner: (1) fraudulent inducement of contract, and (2) civil theft as defined in Colo. Rev. Stat. § 18-4-401. Third-Party Compl. [#50] at 30 ¶¶ 21-24; id. at 31 ¶ 31. Mr. Manerbino and CNW seek compensatory damages, treble damages, and attorneys' fees and costs as a result of Mr. Neuman and Mr. Conner's actions. Id. at 31-32.

         II. Standard of Review

         The purpose of a motion to dismiss pursuant to Rule 12(b)(6) is to test “the sufficiency of the allegations within the four corners of the complaint after taking those allegations as true.” Mobley v. McCormick, 40 F.3d 337, 340 (10th Cir. 1994); Fed.R.Civ.P. 12(b)(6) (stating that a complaint may be dismissed for “failure to state a claim upon which relief can be granted”). “The court's function on a Rule 12(b)(6) motion is not to weigh potential evidence that the parties might present at trial, but to assess whether the plaintiff's complaint alone is legally sufficient to state a claim for which relief may be granted.” Sutton v. Utah State Sch. for the Deaf & Blind, 173 F.3d 1226, 1236 (10th Cir. 1999) (citation omitted). To withstand a motion to dismiss pursuant to Rule 12(b)(6), “a complaint must contain enough allegations of fact to state a claim for relief that is plausible on its face.” Robbins v. Oklahoma, 519 F.3d 1242, 1247 (10th Cir. 2008) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)); see also Shero v. City of Grove, Okla., 510 F.3d 1196, 1200 (10th Cir. 2007) (“The complaint must plead sufficient facts, taken as true, to provide ‘plausible grounds' that discovery will reveal evidence to support the plaintiff's allegations.” (quoting Twombly, 550 U.S. at 570)).

         “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “A pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not do. Nor does a complaint suffice if it tenders naked assertion[s] devoid of further factual enhancement.” Id. (brackets in original; internal quotation marks omitted).

         To survive a motion to dismiss pursuant to Rule 12(b)(6), the factual allegations in the complaint “must be enough to raise a right to relief above the speculative level.” Christy Sports, LLC v. Deer Valley Resort Co., 555 F.3d 1188, 1191 (10th Cir. 2009). “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, ” a factual allegation has been stated, “but it has not show[n][ ] that the pleader is entitled to relief, ” as required by Fed.R.Civ.P. 8(a). Iqbal, 556 U.S. at 679 (second brackets added; citation and internal quotation marks omitted).

         III. Analysis

         A. ...


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