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McWhinney Holding Co., LLLP v. Poag

United States District Court, D. Colorado

March 29, 2019

MCWHINNEY HOLDING COMPANY, LLLP, a Colorado Limited Liability Partnership, MCWHINNEY CENTERRA LIFESTYLE CENTER, LLC, a Colorado Limited Liability Company, and CENTERRA LIFESTYLE CENTER, LLC, a Delaware Limited Liability Company, Plaintiffs,
v.
G. DAN POAG, an individual; JOSHUA D. POAG, an individual; an individual acting as co-trustee of the Josh and Chloee Poag 2004-GST Exempt Trust; an individual acting as co-trustee of the Jeremy and Chloee Poag 2004-GST Exempt Trust; an individual acting as co-trustee of the Mark and Chloee Poag 2004-GST Exempt Trust; an individual acting as co-trustee of the Josh and Dan Poag 2004-GST Exempt Trust; an individual acting as co-trustee of the Jeremy and Dan Poag 2004-GST Exempt Trust; an individual acting as co-trustee of the Mark and Dan Poag 2004-GST Exempt Trust; TERRY W. McEWEN, an individual; POAG & McEWEN LIFESTYLE CENTERS - CENTERRA, LLC, a Delaware Limited Liability Company; POAG & McEWEN LIFESTYLE CENTERS, LLC, a Delaware Limited Liability Company; POAG LIFESTYLE CENTERS, LLC, a Delaware Limited Liability Company; POAG SHOPPING CENTERS, LLC, a Delaware Limited Liability Company; PM LIFESTYLE SHOPPING CENTERS, LLC, a Delaware Limited Liability Company; POAG BROTHERS, LLC, a Tennessee Limited Liability Company; JEREMY M. POAG, an individual acting as co-trustee of the Josh and Chloee Poag 2004-GST Exempt Trust; an individual acting as co-trustee of the Jeremy and Chloee Poag 2004-GST Exempt Trust; an individual acting as co-trustee of the Mark and Chloee Poag 2004-GST Exempt Trust; an individual acting as co-trustee of the Josh and Dan Poag 2004-GST Exempt Trust; an individual acting as co-trustee of the Jeremy and Dan Poag 2004-GST Exempt Trust; an individual acting as co-trustee of the Mark and Dan Poag 2004-GST Exempt Trust; D. MARK POAG, an individual acting as co-trustee of the Josh and Chloee Poag 2004-GST Exempt Trust; an individual acting as co-trustee of the Jeremy and Chloee Poag 2004-GST Exempt Trust; an individual acting as co-trustee of the Mark and Chloee Poag 2004-GST Exempt Trust; an individual acting as co-trustee of the Josh and Dan Poag 2004-GST Exempt Trust; an individual acting as co-trustee of the Jeremy and Dan Poag 2004-GST Exempt Trust; an individual acting as co-trustee of the Mark and Dan Poag 2004-GST Exempt Trust; DOE INDIVIDUALS 1-10; DOE TRUSTS 11-30; and ROE CORPORATIONS 31-60; Defendants.

          ORDER ON MOTION TO AMEND PLAINTIFFS' FIRST AMENDED COMPLAINT

          R. BROOKE JACKSON, UNITED STATES DISTRICT JUDGE

         Plaintiffs move for leave to file a Second Amended Complaint (“SAC”) in which it seeks to add five claims and two individual defendants. ECF No. 129 (red-lined version of the proposed SAC at ECF No. 129-2). The various existing defendants and one proposed defendant filed opposition briefs. ECF Nos. 133, 137, 138, 149, 169. The motion became ripe for review upon the filing of plaintiffs' five reply briefs. ECF Nos. 140, 172, 173, 174, 175. On review of the motion and briefs, the Court GRANTS plaintiffs' motion in part and DENIES it in part.

         I. BACKGROUND

         Plaintiffs and defendants have been in continuous litigation since 2011. Because of the lengthy and factually intensive background of this case, I will not repeat most of my previous background discussions that I have covered in two previous orders. See ECF Nos. 78, 106. Instead, I will primarily focus on the events that have occurred since my most recent order, ECF No. 106, dated September 28, 2018.

         The trial in the first phase of the state court litigation (“Phase I”) occurred in June 2017 in the District Court of Larimer County, Colorado. Following a 13-day bench trial, Honorable Thomas R. French determined that Poag & McEwen Lifestyle Centers - Centerra, LLC (“P&M”) breached its contractually imposed fiduciary duties owed to McWhinney Centerra Lifestyle Center, LLC (“MCLC”) and to Centerra Lifestyle Center, LLC (“CLC”) under the express terms of the Operating Agreement. See Phase I Judgment, ECF No. 22-1 at 34-70. Judge French found P&M liable to MCLC for $42, 006, 032.50. Id. at 69. The state court reserved plaintiffs' alter ego claims for the second phase of the state court litigation (“Phase II”).

         In the Phase II bench trial, held in the last week of November 2018, Judge French heard evidence of whether Poag & McEwen Lifestyle Centers, LLC (“PMLC”) and P&M were alter egos. See Phase II Judgment, ECF No. 132. On December 28, 2018 the court issued its opinion in which it found that PMLC and P&M were separate entities and not alter egos under Delaware law. Id. at 28. Phase II is currently on appeal to the Colorado Court of Appeals.

         Returning to the case in this Court, I held a status conference on February 26, 2019. At the parties' request, I agreed to bifurcate the case in similar fashion as the state court proceedings. On January 6, 2020 I will hear the fraudulent inducement claims and other related claims. However, I stayed plaintiffs' alter ego and fraudulent transfer claims pending the appeal of Phase II and that decision's potential collateral estoppel effect.

         II. STANDARD OF REVIEW

         Fed. R. Civ. P. 15(a)(2) instructs that leave to amend should be freely granted when justice so requires. This Court freely permits parties to amend their pleadings absent “a showing of undue delay, undue prejudice to the opposing party, bad faith or dilatory motive, failure to cure deficiencies by amendments previously allowed, or futility of amendment.” Frank v. U.S. West, Inc., 3 F.3d 1357, 1365 (10th Cir. 1993). In this case, defendants' chief argument is that the proposed amendments would be futile. The futility question is “functionally equivalent to the question whether a complaint may be dismissed for failure to state a claim.” Gohier v. Enright, 186 F.3d 1216, 1218 (10th Cir. 1999).

         To properly state a claim, the complaint must contain “enough facts to state a claim to relief that is plausible on its face.” Ridge at Red Hawk, L.L.C. v. Schneider, 493 F.3d 1174, 1177 (10th Cir. 2007) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A plausible claim is a claim 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). While the Court must accept the well-pleaded allegations of the complaint as true and construe them in the light most favorable to the plaintiff, Robbins v. Wilkie, 300 F.3d 1208, 1210 (10th Cir. 2002), conclusory allegations are not entitled to be presumed true. Iqbal, 556 U.S. at 681. However, so long as the plaintiff offers sufficient factual allegations such that the right to relief is raised above the speculative level, he has met the threshold pleading standard. See, e.g., Twombly, 550 U.S. at 556; Bryson v. Gonzales, 534 F.3d 1282, 1286 (10th Cir. 2008).

         Plaintiffs' motion for leave to amend is somewhat unique in that plaintiffs argue the merits of their proposed claims. See generally ECF No. 129 at 5-14. In turn, defendants treat the motion as a Rule 12(b)(6) motion, attacking the proposed claims as futile for failure to state a claim. Because most of the claims are fully briefed, I too analyze the fully briefed claims under the Rule 12(b)(6) standard. I now turn to the proposed claims.

         III. ANALYSIS

         A. Aiding and Abetting Breach of Contractually Imposed Fiduciary Duties against Josh, Dan, Terry, David, PMLC, PMLSC, Chloee, Poag Brothers, and Trustee defendants.

         Plaintiffs' proposed third claim for relief is the tort of aiding and abetting a breach of contractually imposed fiduciary duties. ECF No. 129-2 at 65. Plaintiffs argue that a “party is liable for aiding and abetting if ‘the party whom the defendant aids performs a wrongful act that causes an injury, the defendant is generally aware of his role as part of an overall illegal or tortious activity at the time that he provides the assistance, and the defendant knowingly and substantially assists the principal violation.'” ECF No. 129 at 5 (quoting Holmes v. Young, 885 P.2d 305, 308 (Colo.App. 1994) (citing Restatement (Second) of Torts § 876(b) (1977))). As evidenced by plaintiffs' cited authority, plaintiffs treat this claim as a tort. Consequently, defendants argue that the economic loss rule bars this claim. I agree with defendants.

         I have already ruled that any post-contractual tort claims are barred by the economic loss rule. ECF No. 106 at 28-35. The wrongful conduct plaintiffs allege in this proposed claim stems from the operating agreement. Stated another way, plaintiffs have failed to allege a claim that “stem[s] from a tort duty independent of the contract.” Van Rees v. Unleaded Software, Inc., 373 P.3d 603, 605 (Colo. 2016).[1] This principle applies to the officers, directors, and owners of the Poag and McEwen entities because, “[w]hen the economic loss rule bars a claim against a corporate entity, it may also bar claims against that entity's officers and directors, even if the officers and directors were not parties to the contract at issue.” Former TCHR, LLC v. First Hand Mgmt. ...


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