J. Lilly, LLC v. Clearspan Fabric Structures Int'l, Inc.

11 Citing cases

  1. Bartch v. Barch

    111 F.4th 1043 (10th Cir. 2024)   Cited 4 times
    Agreeing with the majority that this was a merits problem not implicating justiciability

    blic policy would be violated by enforcement of the contract term); Green Earth Wellness Ctr., LLC v. Atain Specialty Ins. Co., 163 F. Supp. 3d 821, 834-35 (D. Colo. 2016) (declining to find marijuana-related insurance contract void on public policy grounds); Hemphill v. Liberty Mut. Ins. Co., No. 10-861, 2013 WL 12123984, at *2 (D.N.M. Mar. 28, 2013) (holding federal court sitting in diversity could not require an insurer to pay plaintiff's future medical expenses for medical marijuana use because to do so would violate federal law and policy); Erickson v. Pfiester, No. 1:21-CV-00009, 2023 WL 6297343, at *2-4 (D. Alaska Sept. 27, 2023) (rejecting defendants' illegality defense under federal law because the court could order return of plaintiff's investment without causing a party to violate federal law); Polk v. Gontmakher, No. 2:18-CV-01434, 2020 WL 2572536, at *2-3 (W.D. Wash. May 21, 2020) (granting motion to dismiss contract action because remedy would be unlawful under the CSA); J. Lilly, LLC v. Clearspan Fabric Structures Int'l, Inc., No. 3:18-CV-01104, 2020 WL 1855190, at *11-13 (D. Or. Apr. 13, 2020) (dismissing contract lost profits claim because awarding damages would require compelling defendants to violate the CSA); Bart St. III v. ACC Enters., LLC, No. 2:17-cv-00083, 2018 WL 4682318, at *4-6 (D. Nev. Sept. 27, 2018) (declining to dismiss breach of contract claims based on illegality because the possible remedy would not mandate illegal activity); Ginsburg v. ICC Holdings, LLC, No. 3:16-CV-2311, 2017 WL 5467688, at *9 (N.D. Tex. Nov. 13, 2017) ("Defendants ... posit that, if a contract has an illegal purpose, it is automatically void and unenforceable. But ... federal courts do not take such a 'black-and-white' approach to enforceability....

  2. Bartch v. Barch

    721 F. Supp. 3d 380 (D. Md. 2024)   Cited 1 times

    Debtors highlight several cases in which they claim that "federal courts have refused to enforce contracts and award damages pertaining to marijuana-related businesses when no other remedy exists except one that would compel a party to violate the [Controlled Substances Act]." ECF 79-1, at 6-8 (citing Sensoria, LLC v. Kaweske, No. 20-00942, 2021 WL 103020 (D. Colo. Jan. 12, 2021); Polk v. Gontmakher, Civ. No. 18-01434, 2020 WL 2572536 (W.D. Wash. May 21, 2020); J. Lilly, LLC v. Clearspan Fabric Structures Int'l, Inc., Civ. No. 3:18-01104, 2020 WL 1855190 (D. Or. Apr. 13, 2020); Bart St. III v. ACC Enters., LLC, Civ. No. 2:17-00083, 2018 WL 4682318 (D. Nev. Sept. 27, 2018); Next Step Advisors LLC v. True Harvest Holdings Inc., 641 F. Supp. 3d 655 (D. Ariz. 2022)). But of the cases Debtors cite, only one addresses the impact of illegal conduct on standing, and not one involves a judgment enforcement proceeding.

  3. Century Bank v. ADT Commercial LLC

    Civ. 22-423 GJF/SMV (D.N.M. Dec. 1, 2022)

    See Talley v. Sec'y Serv. Corp., 1983-NMSC-046, ¶ 18, 99 N.M. 702, 706 (internal quotations omitted); e.g., J. Lilly, LLC v. Clearspan Fabric Structures Int'l, Inc., No. 3:18-cv-01104, 2020 WL 1855190, at *1 (D. Or. Apr. 13, 2020) (unreported) (enforcing consequential damages waiver provision under New Mexico law); Carl Kelley Const. LLC v. Danco Techs., 656 F.Supp.2d. 1323, 1344 (D.N.M. Aug. 7, 2009) (rejecting procedural unconscionability challenge to contractual warranty disclaimer under New Mexico law). Valid waiver requires that

  4. Next Step Advisors LLC v. True Harvest Holdings Inc.

    641 F. Supp. 3d 655 (D. Ariz. 2022)   Cited 2 times
    Finding that plaintiffs alleging breach of contract claims regarding marijuana business lacked redressability and therefore did not have standing to bring claims

    "[D]istrict courts in this circuit have declined to enforce contracts and award damages for the manufacture and sale of marijuana when no other remedy exists except one that would compel a party to violate the CSA." J. Lilly, LLC v. Clearspan Fabric Structures Int'l, Inc., No. 3:18-cv-01104-HZ, 2020 WL 1855190, at *12 (D. Or. Apr. 13, 2020). Thus, courts have held that they cannot enforce contract provisions providing funds to be used to cultivate cannabis, see Bart St. III v. ACC Enters., LLC, No. 2:17-cv-00083-GMN-VCF, 2018 WL 4682318, at *5 (D. Nev. Sept. 27, 2018), nor require one party to pay another for marijuana plants, see J. Lilly, LLC, 2020 WL 1855190, at *12.

  5. 1240 S. Bannock, LLC v. Siem

    2:21-cv-00183 (W.D. Mich. May. 27, 2022)

    Anderson v. Int'l Union, United Plant Guard Workers of Am., 370 F.3d 542, 554 (6th Cir. 2004), citing Kaiser Steel Corp. v. Mullins, 455 U.S. 72, 77 (1982). Even where conduct may be legal under state law and enforceable by a state court, federal courts sitting in diversity have held that contracts that violate the federal marijuana laws are not enforceable by a federal court. See Sensoria, LLC v Kaweske, 2021 WL 103020, *6 (D. Colo., Jan. 12, 2021) (dismissing investor's allegations in lawsuit based on the pleadings in the complaint against owners of a corporate holding company that owned and operated marijuana retail and manufacturing entities); Tracy v. USSA Cas. Ins. Co., 2012 WL 928186 (D. Haw., Mar. 16, 2012) (granting summary judgment to insurance company on plaintiff's claim for loss of medical marijuana plants that were legal under State law); J. Lilly, LLC v. Clearspan Fabric Structures International, Inc., 2020 WL 1855190 (D. Or., April 13, 2020) (dismissing claim for lost profits from the sale of marijuana arising out of alleged breach of greenhouse lease with option to purchase). However, a federal court may provide relief on a contract claim if the relief can be granted in a manner that does not violate federal marijuana laws.

  6. Sensoria, LLC v. Kaweske

    581 F. Supp. 3d 1243 (D. Colo. 2022)   Cited 12 times   2 Legal Analyses
    Holding that "the mere fact that unlawful activity is involved in some way"— i.e., that a contract "might bear some relationship to marijuana"—"does not automatically foreclose contract relief" and weighing various factors to determine if public policy would be violated by enforcement of the contract term

    Mischalski v. Ford Motor Co. , 935 F. Supp. 203, 205 (E.D.N.Y. 1996) (noting that the defense also applies "to actions arising in tort, under the theory that one should not be rewarded for voluntary participation in an illegal act or profit from his or her own wrongdoing"). In J. Lilly, LLC v. Clearspan Fabric Structures Int'l, Inc. , No. 18-cv-01104, 2020 WL 1855190 (D. Or. Apr. 13, 2020), the plaintiff sought lost profits as damages "for the breach of contract, breach of warranty, and negligence arising from [its] lease of a commercial greenhouse" used for marijuana cultivation. Id. at *1.

  7. Indian Hills Holdings, LLC v. Frye

    3:20-cv-00461-BEN-AHG (S.D. Cal. Dec. 15, 2021)   Cited 3 times   1 Legal Analyses

    Other courts have also found that "the mere presence of marijuana" in a federal case does not per se bar the plaintiff from relief. See, e.g., Burton v. Money (In re Burton), 610 B.R. 633, 637-38 (B.A.P. 9th Cir. 2020) (noting that "the mere presence of marijuana near a bankruptcy case does not automatically prohibit a debtor from bankruptcy relief); J. Lilly, Ltd. Liab. Co. v. Clearspan Fabric Structures Int'l, Inc., No. 3:18-cv-01104-HZ, 2020 WL 1855190, at *12, 2020 U.S. Dist LEXIS 64340, at *34-35 (D. Or. Apr. 13, 2020) (noting that "courts will enforce a contract related to marijuana when enforcing the contract does not require a party to violate the CSA" but finding it could not award the plaintiff lost profits because the profits the plaintiff sought would have been earned from violating the CSA); Street v. ACC Enters., Ltd. Liab. Co., No. 2:17-cv-00083-GMN-VCF, 2018 U.S. Dist. LEXIS 167299, at *16-18 (D. Nev. Sep. 27, 2018) (declining to dismiss the plaintiffs claims relating to breach of contract on illegality grounds because the potential remedy would not mandate illegality even though the promissory notes that the plaintiff sought to enforce were "effectively tied to advancing Defendants' cannabis cultivation business; thus promoting acts that violate the Controlled Substances Act"). Here, the Court can provide a remedy without requiring performance of the c

  8. Sensoria, LLC v. Kaweske

    548 F. Supp. 3d 1011 (D. Colo. 2021)   Cited 5 times   1 Legal Analyses

    However, the Court may not vindicate equity in or award profits from a business that grows, processes, and sells marijuana. Sensoria , 2021 WL 103020 at *6 (citing In re Malul , 614 B.R. 699 (D. Colo. 2020) ; Polk v. Gontmakher , No. 18-cv-01434, 2020 WL 2572536 (W.D. Wash. May 21, 2020) ; J. Lilly, LLC v. Clearspan Fabric Structures Int'l, Inc. , No. 18-cv-01104, 2020 WL 1855190 (D. Or. Apr. 13, 2020) ). Key aspects of this lawsuit concern activities that represent either actual ongoing CSA violations (by Defendants) or the attempt to recover the investment in an enterprise (Clover Top Holdings, Inc.) whose activities implicate the CSA. Marijuana is not an indirect or tangential aspect of the dispute.

  9. Sensoria, LLC v. Kaweske

    Civil Action No. 20-cv-00942-MEH (D. Colo. May. 20, 2021)

    However, the Court may not vindicate equity in or award profits from a business that grows, processes, and sales marijuana. Sensoria, 2021 WL 103020 at *6 (citing in re Malul, 614 B.R. 699 (D. Colo. 2020); Polk v. Gontmakher, No. 18-cv-01434, 2020 WL 2572536 (W.D. Wash. May 21, 2020); J. Lilly, LLC v. Clearspan Fabric Structures Int'l, Inc., No. 18-cv-01104, 2020 WL 1855190 (D. Or. Apr. 13, 2020)). Key aspects of this lawsuit concern activities that represent either actual ongoing CSA violations (by Defendants) or the attempt to recover the investment in an enterprise (Clover Top Holdings, Inc.) whose activities implicate the CSA. Marijuana is not an indirect or tangential aspect of the dispute.

  10. Sensoria, LLC v. Kaweske

    Civil Action No. 20-cv-00942-MEH (D. Colo. Jan. 12, 2021)   Cited 8 times

    The circumstances of this lawsuit are similar to those situations to which the affirmative defense of illegality has been applied. In re Malul, 614 B.R. at 713 (declining to administer the debtor's asset of equity rights in a defunct marijuana business obtained through a subscription agreement); Polk v. Gontmakher, No. 18-cv-01434, 2020 WL 2572536 (W.D. Wash. May 21, 2020) (finding plaintiff's request for an equitable interest in a business that produces and processes marijuana as well as past and future profits from it to constitute a CSA violation); J. Lilly, LLC v. Clearspan Fabric Structures Int'l, Inc., No. 18-cv-01104, 2020 WL 1855190, at *12 (D. Or. Apr. 13, 2020) (finding that the CSA precluded the court from awarding plaintiff lost profits as damages for the breach of a contract to build a growhouse).