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Anderson v. Colorado Mountain News Media, Co.

United States District Court, D. Colorado

December 18, 2019

CAROLYN ANDERSON, Plaintiff,
v.
COLORADO MOUNTAIN NEWS MEDIA, CO. and RANDY WYRICK, Defendants.

          ORDER ADOPTING AND AFFIRMING RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

          CHRISTINE M. ARGUELLO UNITED STATES DISTRICT JUDGE

         This matter is before the Court on the Recommendation (Doc. # 45) by Magistrate Judge Gordon P. Gallagher wherein he recommends that this Court grant in part and deny in part Defendants' Motion to Dismiss Plaintiff's Amended Complaint (Doc. # 34). On June 5, 2019, Plaintiff Carolyn Anderson and Defendants Colorado Mountain News Media and Randy Wyrick filed Objections to the Recommendation. (Doc. ## 47, 48.) Both Objections have been fully briefed. (Doc. ## 49, 50, 53.) For the following reasons, the Court adopts and affirms the Recommendation.

         I. BACKGROUND

         The magistrate judge's Recommendation provides a recitation of the factual and procedural background of this dispute and is incorporated herein by reference. See 28 U.S.C. § 636(b)(1)(B); Fed.R.Civ.P. 72(b). Accordingly, this Order will reiterate only what is necessary to address the Parties' Objections.

         On November 16, 2017, Vail Daily published an article (“the Article”) written by Defendant Wyrick, which described a fraudulent scheme that had been orchestrated by Plaintiff's late husband. The Article created the impression that Plaintiff was materially involved in the scheme through the following statements:

• “Vail widow sued for scam”
• “Securities and Exchange Commission lawsuit claims woman and now-deceased husband defrauded investors of $5.3M”
• “Vail widow accused of securities fraud
• “A federal financial watchdog is suing the widow of a former Vail resident, saying she was part of her deceased husband's ponzi scheme.”
• “The [SEC] sued [Plaintiff] . . . claiming that she and husband Michael Anderson scammed 18 investors out of more than $5.3 million . . . .”
• “SEC attorney Leslie Hughes is charging [Plaintiff] with securities fraud . . . .”

(Doc. # 1-1 at 2) (emphasis added).[1]

         The Article was based, in large part, on a complaint that the SEC filed (“the SEC Complaint”) in this district on November 8, 2017. See Sec. and Exch. Comm'n v. End of the Rainbow Partners, L.L.C., No. 17-cv-02670-MSK-NYW (Doc. # 1) (original complaint); (Doc. # 34-3) (copy of complaint filed as Exhibit 2 to Defendants' Motion to Dismiss). The named defendants in the SEC Complaint were The End of the Rainbow Partners, L.L.C. and The Estate of Michael F. Anderson. Plaintiff was included as a relief defendant in her individual capacity as well as her capacity as the personal representative of the Estate of Michael F. Anderson, and as trustee for the Michael Anderson Trust.

         The SEC Complaint explained that the named defendants allegedly “violated the anti-fraud provisions of the federal securities laws.” (Doc. # 34-3 at 4.) By contrast, the SEC Complaint explained that the relief defendants allegedly “received investors' funds misappropriated by Mr. Anderson, and were unjustly enriched because they provided no or negligible bona fide services or consideration in exchange for the funds received.” (Id.) The SEC Complaint did not allege that Plaintiff was part of the fraudulent scheme at issue or that she violated the federal securities laws. Rather, the SEC Complaint portrays Plaintiff as-at best-an unwitting recipient of the fruits of the scheme, as evidenced by the following statements:

• Mr. Anderson executed electronic inter-bank transfers by electronically logging in under [Plaintiff's] user credentials, without her knowledge or consent.
• [Mr. Anderson] directed [Plaintiff] to sign blank checks on behalf of Rainbow Partners, and then he subsequently completed the payment information on the Rainbow Partners' checks.
• [Mr. Anderson] also forged [Pla in tiff's] signature on brokerage account documents.
• Mr. Anderson caused [Plaintiff] to create the Rainbow Foundation, which he used as a fraudulent device to misappropriate investors' funds through the guise of contributions to a charitable organization.
• Mr. Anderson caused [Plaintiff] to create Seaoma, which he used as a fraudulent device to misappropriate investors' funds through the guise of paying Seaoma for purported services.

(Id. at 8-9, 13-14) (emphasis added).

         The differences between the Article and the SEC Complaint gave rise to the instant case. Plaintiff's Amended Complaint raises four claims against Defendants:

Claim 1 - defamation;
Claim 2 - defamation for republished statements;
Claim 3 - negligent defamation; and
• Claim 4 - negligent infliction of ...

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