United States District Court, D. Colorado
OPINION AND ORDER DENYING MOTIONS TO DISMISS AND FOR
STAY
Marcia
S. Krieger, Senior United States District Judge.
THIS
MATTER comes before the Court on the Defendants'
Motion to Dismiss (# 10), the
Plaintiff's response (# 23), and the
Defendants' reply (# 31); and the
Defendants' Motion to Stay (# 25), the
Plaintiff's response (# 39), and the
Defendants' reply (# 40). For the
reasons that follow, both Motions are
DENIED.
I.
JURISDICTION
The
Court has subject-matter jurisdiction to hear this case under
28 U.S.C. § 1332(a). The parties dispute whether the
Court can exercise personal jurisdiction over the Defendants.
II.
BACKGROUND[1]
Plaintiff
Joshua Bartch is a member of Doctors Orders LLC, a licensed
cannabis provider in Colorado since 2009. (# 1 ¶ 13.) To
facilitate expansion to other states, the Plaintiff formed
Doctors Orders Group LLC as a Delaware company based in
Colorado. (# 1 ¶ 14.) He hired Defendant Mackie
Barch[2] to expand into Maryland, where the
Defendant lives. (# 1 ¶ 16.) The Defendant was paid to
work full-time for Doctors Orders Group, frequently traveling
to the Group's Colorado offices. (# 1 ¶¶
16-17.) In June 2015, the Plaintiff formed Doctors Orders
Maryland LLC, a Maryland limited liability company, to be the
Group's Maryland cannabis provider. (# 1 ¶ 19.) The
Plaintiff also formed DO Maryland OP LLC, a Maryland limited
liability company, to hold his 70% interest in Doctors Orders
Maryland. (# 1 ¶¶ 22-24.) It appears that the
Plaintiff owned the entirety of DO Maryland OP. Nonparty TJ
Health LLC held the remaining 30% interest in Doctors Orders
Maryland. (# 1 ¶ 24.) By virtue of its ownership of
Doctors Orders Maryland, DO Maryland OP was its sole Class A
member. (# 1 ¶ 24.)
In
November 2014, criminal charges against the Plaintiff for
misdemeanor drug possession resulted in deferred judgment. (#
1 ¶ 30.) Upon the advice of counsel, the Plaintiff,
Defendant, Ashley Peebles (a Colorado resident affiliated
with Doctors Orders Group), and Jeff Black (a Maryland
resident) agreed that the Plaintiff would withdraw from DO
Maryland OP. (# 1 ¶ 30.) They further agreed that DO
Maryland OP would hold its Class A interest in Doctors Orders
Maryland for the Plaintiffs benefit.[3] (# 1 ¶ 30.) The
Plaintiff then withdrew and named Peebles and Black as
members - with Peebles holding a 25% interest and Black
holding a 75% interest - and Black as manager. (# 1
¶¶ 30-31.) The Plaintiff and Defendant continued to
negotiate with investors for Doctors Orders Maryland. (# 1
¶¶ 29, 34-35.)
Doctors
Orders Maryland ultimately received preapprovals of its
licenses in 2016. (# 1 ¶ 35.) Around this time, the
Plaintiff decided to share “his” interest in
Doctors Orders Maryland with the Defendant - an interest that
was being held for his benefit by Peebles and Black. (# 1
¶ 37.) The Plaintiff and Defendant signed a memorandum
memorializing this agreement, attached to the Complaint as
Exhibit A, providing that upon final licensing of Doctors
Orders Maryland, they would amend the DO Maryland OP
operating agreement to remove Black as manager and allocate
its Class A interest in Doctors Orders Maryland as follows:
26.875% to the Plaintiff, 26.875% to the
Defendant, 4.75% to Black, and 1.5% to Peebles. (# 1
¶ 39; # 1-1.)
The
Plaintiff and Defendant later agreed to transfer the Class A
interest out of DO Maryland OP and into a new entity,
Defendant Trellis Holdings Maryland Inc., a Maryland
corporation.[4] (# 1 ¶ 41.) As a result, the Class A
interest being held for the Plaintiff was now under the
exclusive control of the Defendant as owner of
Trellis.[5] (See # 1 ¶ 41.) In other
words, the Plaintiffs interest was executory in that it had
never actually been consummated. Upon final licensing in
2018, the Defendant refused to transfer the Plaintiffs share
of the Class A interest, apparently on the advice of Doctors
Orders Maryland's counsel. (# 1 ¶¶ 53-54.) Josh
brings this action to receive the Class A interest held for
his benefit. (# 1 ¶ 56.)
The
Complaint (# 1) alleges six claims: (1) declaratory judgment
on the agreement reached by the Plaintiff, Defendant,
Peebles, and Black to hold the Class A interest in Doctors
Orders Maryland for the Plaintiffs benefit, (2) civil theft,
(3) conversion, (4) constructive trust, (5) breach of
contract with a remedy of specific performance, and (6)
unjust enrichment. The Defendants, as Maryland residents,
move to dismiss the Complaint for lack of personal
jurisdiction (# 10).
III.
LEGAL STANDARD
When
the Court's jurisdiction over a defendant is challenged
pursuant to Rule 12(b)(2), the plaintiff bears the burden of
establishing that personal jurisdiction exists. Soma
Medical Int'l v. Standard Chartered Bank, 196 F.3d
1292, 1295 (10th Cir. 1999); OMI Holdings Inc.
v. Royal Ins. of Canada, 149 F.3d 1086, 1091 (10th Cir.
1998). A court may elect to resolve the jurisdictional
question immediately, by conducting an evidentiary hearing on
the issue, or may defer resolution of the jurisdictional
question until trial, requiring the plaintiff to make only a
prima facie showing of jurisdiction at the pretrial
phase. Wenz v. Memery Crystal, 55 F.3d 1503, 1505
(10th Cir. 1995). A court may receive affidavits and other
evidentiary material to assist in resolving the issue, but it
must resolve any disputed facts in the light most favorable
to the plaintiff. Id. Here, the Court will determine
whether the Plaintiff has made a prima facie showing, and
will reserve the ultimate jurisdictional question until
trial.
Normally,
the jurisdictional inquiry comprises two components. The
plaintiff must show (1) the laws of the forum state confer
jurisdiction by authorizing service upon the defendant; and
(2) the exercise of such jurisdiction comports with the
principles of due process. Niemi v. Lasshofer, 770
F.3d 1331, 1348 (10th Cir. 2014). However, in Colorado, that
inquiry is short-circuited because Colorado's Long-Arm
Statute “confers the maximum jurisdiction permissible,
consistent with the Due Process clause.” Id.
Thus, the inquiry simply becomes one of whether due process
principles would be satisfied by the exercise of personal
jurisdiction.
The due
process inquiry itself has two components. First, the Court
must determine whether the Defendant has “such minimum
contacts with the forum state that he should reasonably
anticipate being haled into court there.” Id.
Second, the Court considers whether the exercise of personal
jurisdiction in the circumstances ...