Bartch v. Barch

          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 (10^th 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 ...