W. Acceptance, LLC v. Gen. Agric.

Full title: WESTERN ACCEPTANCE, LLC, Plaintiff, v. GENERAL AGRICULTURE INC. F/K/A…

Court: United States District Court, District of Colorado

Date published: Jul 8, 2021

Civil Action 20-cv-00052-CMA-KMT (D. Colo. Jul. 8, 2021)

Opinion

Civil Action 20-cv-00052-CMA-KMT

07-08-2021

WESTERN ACCEPTANCE, LLC, Plaintiff, v. GENERAL AGRICULTURE INC. F/K/A GENERAL AGRICULTURE LLC, SONOMA STAINLESS, INC., STIG WESTLING, CALLAGHAN BECKER, PHIL TAGAMI, and CALIFORNIA CAPITAL & INVESTMENT GROUP, INC., Defendants.

Kathleen M. Tafoya, United States Magistrate Judge

RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

Kathleen M. Tafoya, United States Magistrate Judge

Before the court are four motions: (1) “General Agriculture, Inc.'s and Callaghan Becker's Motion to Dismiss Second Amended Complaint Pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6);” (2) “General Agriculture, Inc.'s Motion to Stay Case to Give Effect to a Contractual Mandatory Mediation Provision;” (3) “Defendant Sonoma Stainless, Inc.'s Second Renewed Motion to Dismiss;” and (4) “Defendant Phillip Tagami's FRCP 12(b) Motion to Dismiss Plaintiff's Second Amended Complaint for Lack of Personal Jurisdiction and Failure to State a Claim.” ([“GenAg Defendants' Motion”], Doc. No. 115; [“GenAg Motion”], Doc. No. 116; [“Sonoma Motion”], Doc. No. 118; [“Tagami Motion”], Doc. No. 119.) Plaintiff has responded in opposition to each motion, and Defendants have each replied. (Doc. Nos. 121-22, 125-28, 132-33.)

STATEMENT OF THE CASE

In this commercial dispute, Plaintiff Western Acceptance, LLC [“Plaintiff, ” or “Western Acceptance”], a Colorado limited liability company headquartered in Colorado Springs, Colorado, has sued three California corporations-Defendants General Agriculture, Inc. [“GenAg”], Sonoma Stainless, Inc. [“Sonoma”], and California Capital & Investment Group, Inc. [“CCIG”]-as well as three California citizens affiliated with those entities-Defendants Stig Westling, Callaghan Becker, and Phil Tagami [collectively, “the Individual Defendants”]- asserting claims for breach of contract, negligence, civil theft, conspiracy, conversion, and unjust enrichment. ([“Complaint”], Doc. No. 112.) According to the Second Amended Complaint, at an unspecified point in time, Plaintiff agreed to pay former Defendant SXIP, LLC [“SXIP”]¹approximately $2 million to design and manufacture certain multicomponent business equipment, referred to as a “Distillate Unit.” (Id. at ¶ 10.) In connection with the transaction, on September 6, 2018, Western Acceptance and SXIP executed a Machine Purchase Agreement [“MPA”], which detailed, among other things, the terms of payment, remedies for default, and conditions for closing.² ([“MPA”], Doc. No. 115-2.)

1 Although SXIP was initially named as a Defendant in this case, all claims against it have been dismissed, pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(i). (See Doc. No. 83.)

2 The MPA, a copy of which is attached as an exhibit to several of the pending motions, is directly referenced in the Second Amended Complaint, and appears to be central to certain of Plaintiff's claims. (See, e.g., Compl. ¶¶ 10, 13, 31, 58.) As such, the court considers the MPA in connection with the pending motions to dismiss. See Alvarado v. KOB-TV, LLC, 493 F.3d 1210, 1215 (10th Cir. 2007).

Following the execution of the MPA, “[a]t some point in time during the manufacturing of the Distillate Unit, most likely in the Spring of 2019, ” Western Acceptance reportedly learned that SXIP had been “acquired by GenAg or one of its affiliates.” (Compl. ¶ 13.) Western Acceptance thereafter “entered into an oral contract” with GenAg, pursuant to which Western Acceptance “began dealing directly” with GenAg as to “the design and manufacture of the Distillate Unit, ” and GenAg, in exchange, “took monies directly from” Western Acceptance. (Id. at ¶¶ 13, 17, 31.) This oral agreement between Western Acceptance and GenAg was said to be “in addition to the contract with SXIP which GenAg now own[ed], ” by virtue of its acquisition of SXIP. (Id. at ¶ 31.)

Around that same time, certain of GenAg's “agents, ” including its Chief Executive Officer [“CEO”], Defendant Callaghan Becker [“Mr. Becker”], its retained consultant, Defendant Phil Tagami [“Mr. Tagami”], and its other agent, Defendant Stig Westling [“Mr. Westling”], ³ reportedly began “personally visiting” Plaintiff's facility in Colorado Springs, on GenAg's behalf, so as to “create[] a ruse that they wanted to partner with Plaintiff, [and] help Plaintiff grow its business, ” when in reality, they “were conspiring to learn of Plaintiff's business” for purposes of “eventually tak[ing]” Plaintiff's property and money. (Id. at ¶¶ 11-16, 51.) Western Acceptance alleges that, during one such visit, Mr. Tagami “attempt[ed] to take” its “equipment, ” by disingenuously advising Western Acceptance to “move its entire operation to another facility that [Mr. Tagami] designated.” (Id. at ¶ 16.) Plaintiff further alleges that, after “GenAg learned while visiting Plaintiff's facility that Heaters were necessary for the processing of distillate, ” unspecified “persons from GenAg showed up at” Plaintiff's facility and “took” the Heaters. (Id. at ¶ 18.) Plaintiff complains that “Defendants” have thus far refused to divulge the location of the Heaters. (Id. at ¶ 23.)

3 The Second Amended Complaint does not specify the capacity in which Mr. Westling worked for GenAg.

In this lawsuit, Plaintiff also alleges that it was “damaged by the actions” of Defendant Sonoma, a California corporation to which “SXIP and/or GenAg” had reportedly “subcontracted” certain “portions of the manufacturing process for the Distillate Unit.” (Id. at ¶ 19.) According to the Second Amended Complaint, at some point during the manufacturing process, Plaintiff entered into an oral contract with Defendant Sonoma “for the providing of monies and direction directly from Plaintiff with regard to the manufacture of the Distillate Unit.” (Id.) Defendant Sonoma is said to have “requested to enter into this agreement with Plaintiff knowing [that Plaintiff] was a Colorado company and knowing that the Distillate Unit was to be shipped to Colorado upon completion.” (Id. at ¶ 20.) After orally contracting with Sonoma, Western Acceptance's representatives reportedly travelled to Sonoma's facility in California “to check on progress of the Distillate Unit.” (Id. at ¶ 21.) According to the Second Amended Complaint, during that visit, one of GenAg's agents, who was also present, “told [Western Acceptance] that after completion of the Distillate Unit, GenAg wanted to take possession of it.” (Id.) Western Acceptance claims that it “vehemently refused” to allow GenAg to do so. (Id.) At the time, Western Acceptance reportedly made clear to both GenAg and Sonoma that it “wanted the Distillate Unit sent to Colorado Springs following completion.” (Id.) Plaintiff now alleges that Defendant Sonoma, “[r]ather than abide by [its] direction, ” instead “allowed the Distillate Unit to be taken by Defendants.” (Id. at ¶ 22.) To date, “Defendants” allegedly “refuse to tell Plaintiff where the [Distillate Unit and Heaters] are, ” and “refuse[] to return the property to Plaintiff, ” despite “repeated demands” to do so. (Id. at ¶ 23.)

Based on these allegations, on January 7, 2020, Western Acceptance commenced this lawsuit. (Doc. No. 1.) On January 8, 2021, Western Acceptance filed a Second Amended Complaint, asserting the following claims: (1) breach of contract by Sonoma; (2) breach of contract by GenAg; (3) negligence by Sonoma; (4) civil theft by GenAg, CCIG, and the Individual Defendants; (5) conspiracy by GenAg, CCIG, and the Individual Defendants; (6) conversion by GenAg, CCIG, and the Individual Defendants; and (7) unjust enrichment by all Defendants. (Compl. ¶¶ 24-59.) As relief, Plaintiff requests compensatory damages, interest, costs, and attorneys' fees. (Id. at 10-11.)

On January 22, 2021, Defendants GenAg and Becker [collectively, the “GenAg Defendants”] responded to Plaintiff's allegations by filing a motion to dismiss, pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), while Defendant GenAg filed a separate motion to compel mediation, in the alternative.⁴ (GenAg Defs.' Mot. 1; GenAg Mot. 1 & n.1.) In the motion to dismiss, the GenAg Defendants argue, among other things, that the court lacks subject matter jurisdiction over this case, due to a lack of complete diversity between the parties. (GenAg Defs.' Mot. 4-6.) The GenAg Defendants contend, specifically, that Western Acceptance “is both the plaintiff and a member of former defendant SXIP, ” and thus, “complete diversity does not exist.” (Id. at 4.) In addition, the GenAg Defendants argue that each of the claims asserted against them is inadequately pled. (Id. at 6-15.) In the motion to compel mediation, Defendant GenAg argues that Plaintiff's claims are all subject to certain “mandatory” dispute resolution provisions contained within the MPA. (GenAg Mot. 1-3.) Defendant GenAg contends that this case must be stayed “to give effect to [the MPA's] contractual mandatory mediation provision.” (Id. at 1.)

4 GenAg titled its alternative motion, “Motion to Stay the Case to Give Effect to a Contractual Mandatory Mediation Provision, ” though it is more accurately described as a motion to compel mediation. Indeed, discovery in this matter is already stayed. (See Doc. Nos. 102, 147.) As such, for the sake of clarity, the “Motion to Stay the Case to Give Effect to a Contractual Mandatory Mediation Provision, ” will be referred to as a “motion to compel mediation.”

On January 22, 2021, Defendant Sonoma filed its own motion to dismiss, pursuant to Federal Rules of Civil Procedure 12(b)(2), 12(b)(3), and 12(b)(6). (Sonoma Mot. 1.) In the motion, Sonoma argues, among other things, that “[t]his dispute has little to do with Sonoma or with Colorado, ” and thus, the claims against it should be dismissed, in their entirety, for lack of personal jurisdiction and/or improper venue. (Id. at 1-2.) Finally, also on January 22, 2021, Defendant Tagami filed a separate motion to dismiss, pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6), for lack of personal jurisdiction and failure to state a claim. (Tagami Mot. 1.) Mr. Tagami argues, specifically, that he cannot be held subject to either jurisdiction or liability in this case, because at all times relevant, he was acting as an agent for CCIG, which in turn, was acting as an agent for GenAg. (Id. at 5-13.) All four motions-the GenAg Defendants' motion to dismiss, Sonoma's motion to dismiss, Mr. Tagami's motion to dismiss, and GenAg's motion to compel mediation-are fully briefed and pending.⁵

5 On March 1, 2021, CCIG filed its own motion to dismiss under Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6). (Doc. No. 130.) However, that motion has not been referred to this court for resolution.

ANALYSIS

I. The Rule 12(b)(1) Motion to Dismiss

The court begins with the GenAg Defendants' argument that this case should be dismissed, in its entirety, under Rule 12(b)(1), for lack of subject matter jurisdiction. See Steel Co. v. Citizens for Better Env't, 523 U.S. 83, 93-102 (1998) (clarifying that a federal court generally may not rule on the merits of a case without first determining that it has jurisdiction over the category of claim in suit (subject matter jurisdiction) and the parties (personal jurisdiction)); see also Sinochem Int'l Co. v. Malaysia Int'l Shipping Corp., 549 U.S. 422, 431 (2007) (“[T]here is no mandatory ‘sequencing of jurisdictional issues.'”).

A. Standard of Review

Federal Rule of Civil Procedure Rule 12(b)(1) empowers a court to dismiss a complaint for a lack of subject matter jurisdiction. Fed.R.Civ.P. 12(b)(1). Dismissal under Rule 12(b)(1) is not a judgment on the merits of a plaintiff's case. Rather, it calls for a determination that the court lacks authority to adjudicate the matter, attacking the existence of jurisdiction rather than the allegations of the complaint. See Castaneda v. INS, 23 F.3d 1576, 1580 (10th Cir. 1994) (recognizing federal courts are courts of limited jurisdiction and may only exercise jurisdiction when specifically authorized to do so). The burden of establishing subject matter jurisdiction is on the party asserting jurisdiction. Basso v. Utah Power & Light Co., 495 F.2d 906, 909 (10th Cir. 1974). A court lacking jurisdiction “must dismiss the cause at any stage of the proceedings in which it becomes apparent that jurisdiction is lacking.” Id. at 909. The dismissal is without prejudice. Brereton v. Bountiful City Corp., 434 F.3d 1213, 1218 (10th Cir. 2006).

A Rule 12(b)(1) motion to dismiss “must be determined from the allegations of fact in the complaint, without regard to mere conclusionary allegations of jurisdiction.” Groundhog v. Keeler, 442 F.2d 674, 677 (10th Cir. 1971). When considering a Rule 12(b)(1) motion, however, the Court may consider matters outside the pleadings without transforming the motion into one for summary judgment. Holt v. United States, 46 F.3d 1000, 1003 (10th Cir. 1995). If a party challenges the facts upon which subject matter jurisdiction depends, a court may not presume the truthfulness of the complaint's “factual allegations . . . [and it] has wide discretion to allow affidavits, other documents, and [may even hold] a limited evidentiary hearing to resolve disputed jurisdictional facts under Rule 12(b)(1).” Id.

B. Whether the Court has Subject Matter Jurisdiction

In this case, Plaintiff alleges subject matter jurisdiction, pursuant to 28 U.S.C. § 1332, which requires a showing of: (1) complete diversity among the parties; and (2) that “the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs.” 28 U.S.C. § 1332(a)(1). Diversity jurisdiction exists, only if no plaintiff and no defendant are citizens of the same state. Lincoln Prop. Co. v. Roche, 546 U.S. 81, 89 (2005) (construing 28 U.S.C. § 1332 to require “complete diversity between all plaintiffs and all defendants”) (citation omitted). For individuals, “state citizenship is the equivalent of domicile.” Crowley v. Glaze, 710 F.2d 676, 678 (10th Cir. 1983); accord Smith v. Cummings, 445 F.3d 1254, 1260 (10th Cir. 2006) (“To establish domicile in a particular state, a person must be physically present in the state and intend to remain there.”). A limited liability company is deemed to be a citizen of every state in which its members are domiciled. Siloam Springs Hotel, LLC v. Century Sur. Co., 781 F.3d 1233, 1237-38 (10th Cir. 2015). An incorporated entity, on the other hand, is deemed to be a citizen of any state in which it has been incorporated, and, if different, the state in which it has its principal place of business. 28 U.S.C. § 1332(c)(1).

In their motion, the GenAg Defendants argue that Rule 12(b)(1) “compels dismissal” of this lawsuit, in its entirety, because “complete diversity does not exist.” (GenAg Defs.' Mot. 2.) The GenAg Defendants contend, specifically, that Western Acceptance, a limited liability company, “is both the plaintiff and a member of” former Defendant SXIP, which is also a limited liability company. (Id.) The GenAg Defendants are adamant that “SXIP's citizenship must be considered for jurisdictional purposes even though it is no longer a defendant in this action.” (Id. at 4 n.3.) They contend that, because Plaintiff is a member of SXIP, “SXIP is a citizen of California and a citizen of Colorado for diversity purposes.” (Id. at 6.) The GenAg Defendant go on to argue that, because Plaintiff is, itself, a citizen of Colorado, complete diversity between the parties is lacking. (Id. at 4-5.)

The court finds the GenAg Defendants' argument to be wholly without merit. It is true that “[f]ederal jurisdiction is determined based on the facts as they existed at the time the complaint was filed.” Ravenswood Inv. Co. v. Avalon Corr. Servs., 651 F.3d 1219, 1223 (10th Cir. 2011) (quoting Smith v. Sperling, 354 U.S. 91, 93 n.1 (1957)). That being said, in evaluating whether complete diversity exists, and by extension, whether the court possesses subject matter jurisdiction, the citizenship of a former defendant is irrelevant, assuming that that former defendant was not an indispensable party to the action. See Jett v. Phillips & Assocs., 439 F.2d 987, 989-90 (10th Cir. 1971) (“Parties of course may be dropped in order to achieve the requisite diversity of citizenship if their presence is not essential to a just and meaningful adjudication.”). In this lawsuit, none of the litigants have argued, and nor does this court find, that SXIP is a required party. Therefore, because SXIP was properly dismissed from this case before the operative pleading was filed, SXIP's citizenship does not affect whether this court has jurisdiction over Plaintiff's claims. As such, the GenAg's motion to dismiss for lack of subject matter jurisdiction should be denied.⁶

6 Because SXIP's citizenship does not affect subject matter jurisdiction in this case, there is no need to address whether Western Acceptance is, in fact, a member of SXIP.

II. The Rule 12(b)(2) Motions to Dismiss

Defendants Sonoma and Tagami each move to dismiss the claims against them, pursuant to Rule 12(b)(2), for lack of personal jurisdiction. (Sonoma Mot. 5-9; Tagami Mot. 8-13.)

A. Standard of Review

Federal Rule of Civil Procedure 12(b)(2) authorizes the dismissal of a complaint for lack of personal jurisdiction. Fed.R.Civ.P. 12(b)(2). When a defendant files a motion to dismiss under Rule 12(b)(2), the plaintiff bears the burden of establishing personal jurisdiction over that defendant. OMI Holdings, Inc. v. Royal Ins. Co. of Canada, 149 F.3d 1086, 1091 (10th Cir. 1998) (citation omitted). Where, as here, the court does not conduct an evidentiary hearing, the plaintiff need only make a prima facie showing to defeat the motion. Old Republic Ins. Co. v. Cont'l Motors, Inc., 877 F.3d 895, 903 (10th Cir. 2017) (citation omitted). The plaintiff “must make this showing with respect to each of the claims alleged.” Dental Dynamics, LLC v. Jolly Dental Grp., LLC, 946 F.3d 1223, 1228 (10th Cir. 2020) (citation omitted). In evaluating whether the plaintiff has made a prima facie showing that personal jurisdiction exists, the court accepts the well-pleaded allegations of the complaint as true. Wenz v. Memery Crystal, 55 F.3d 1503, 1505 (10th Cir. 1995) (citations omitted). If the presence or absence of personal jurisdiction can be established by reference to the complaint alone, the court need not look further. The plaintiff, however, may also make a prima facie showing “through affidavits or other written materials.” Dental Dynamics, 946 F.3d at 1228 (citing AST Sports Science, Inc. v. CLF Distrib. Ltd., 514 F.3d 1054, 1057 (10th Cir. 2008)). “If the parties present conflicting affidavits, all factual disputes must be resolved in the plaintiff's favor, and the plaintiff's prima facie showing is sufficient notwithstanding the contrary presentation by the moving party.” Wenz, 55 F.3d at 1505 (quoting Behagen v. Amateur Basketball Ass'n of U.S.A., 744 F.2d 731, 733 (10th Cir. 1984)) (internal quotation marks omitted).

B. Legal Framework

To establish personal jurisdiction over a nonresident defendant in a diversity action, a plaintiff must show: (1) that jurisdiction is legitimate under the laws of the forum state; and (2) that the exercise of jurisdiction does not offend the Fourteenth Amendment's Due Process Clause. Dental Dynamics, 946 F.3d at 1228 (citing Walden v. Fiore, 571 U.S. 277, 282 (2014)). Colorado's long-arm statute “confer[s] the maximum jurisdiction permitted by the due process clauses of the United States and Colorado constitutions.” Archangel Diamond Corp. v. Lukoil, 123 P.3d 1187, 1193 (Colo. 2005) (citing Keefe v. Kirschenbaum & Kirschenbaum, P.C., 40 P.3d 1267, 1270 (Colo. 2002)); accord Old Republic, 877 F.3d at 903. Therefore, the jurisdictional analysis here reduces to a single inquiry of whether the exercise of personal jurisdiction over Defendants Sonoma and Tagami comports with the requirements of federal due process. Old Republic, 877 F.3d at 903. Federal law, rather than state law, guides this analysis. Matthys v. Narconon Fresh Start, 104 F.Supp.3d 1191, 1198-99 (D. Colo. 2015).

“The Due Process Clause authorizes personal jurisdiction if two elements are met.” Dental Dynamics, 946 F.3d at 1229. “First, a defendant must have ‘purposefully established minimum contacts with the forum state.'” Id. (citing Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). “Second, the assertion of personal jurisdiction must comport with traditional notions of fair play and substantial justice.” Id. (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476 (1985)).

The “minimum contacts” requirement may be satisfied by showing either general jurisdiction or specific jurisdiction. OMI Holdings, 149 F.3d at 1090-91; see also Old Republic, 877 F.3d at 903 (“Depending on their relationship to the plaintiff's cause of action, an out-of-state defendant's contacts with the forum state may give rise to either general (all-purpose) jurisdiction or specific (case-linked) jurisdiction.”). “General personal jurisdiction means that a court may exercise jurisdiction over an out-of-state party for all purposes.” Old Republic, 877 F.3d at 903-04 (citing Daimler AG v. Bauman, 571 U.S. 117, 127 (2014)). “General jurisdiction arises where the defendant's contacts with the forum state are ‘so continuous and systematic as to render [it] essentially at home' there.” C5 Med. Werks v. CeramTec GMBH, 937 F.3d 1319, 1323 (10th Cir. 2019) (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)) (alterations in original). Specific personal jurisdiction, by contrast, is “jurisdiction specific to this dispute.” Newsome v. Gallacher, 722 F.3d 1257, 1264 (10th Cir. 2013). Specific jurisdiction “allows a court to exercise jurisdiction over an out-of-state defendant only for claims related to the defendant's contacts with the forum State.” XMission, L.C. v. Fluent LLC, 955 F.3d 833, 840 (10th Cir. 2020) (citing Old Republic, 877 F.3d at 904).

Here, Plaintiff only alleges that Defendants Sonoma and Tagami are subject to specific jurisdiction in Colorado. (Doc. No. 121 at 2-9; Doc. No. 122 at 2-10.) As such, the court will focus its analysis on that issue. Old Republic, 877 F.3d at 904.

C. Whether the Court has Jurisdiction Over Sonoma

1. Relevant Jurisdictional Facts

The well-pled allegations, together with the supporting evidence presented by the parties, establish the following jurisdictional facts as evidence of Sonoma's contacts with Colorado:

Sonoma is a California corporation with “a single shop” located in Santa Rosa, California. ([“Frere Declaration”], Doc. No. 118-1, at ¶¶ 6-7.) Sonoma “specializes in custom fabrication of stainless steel equipment, and often builds projects for the wine, beer, and cannabis industries.” (Id. at ¶ 4.) It employs approximately ten employees, all of whom “work at the shop located in Santa Rosa, California.” (Id. at ¶¶ 5, 8.) Sonoma's owner, Vincent Frere [“Mr. Frere”], is a resident of California. (Id. at ¶¶ 1, 3.) “Sonoma designs and fabricates most of its projects at its shop in Santa Rosa, California, ” though on occasion, “fabrication takes place on-site of a client.” (Id. at ¶ 9.) Sonoma has never “done fabrication, ” nor “advertise[d], ” in Colorado. (Id. at ¶¶ 33, 36.) Nor does Sonoma have any employees, offices, facilities, active projects, registered agents, professional licenses, or registrations in Colorado. (Id. at ¶¶ 7, 28-32.)

In September 2018, or thereabouts, Sonoma contracted with another California company, SXIP, “to fabricate parts of a large hemp extraction system, ” i.e., the Distillate Unit. (Id. at ¶ 10; see Compl. ¶ 19.) The work for which Sonoma was contracted “took place largely at Sonoma's shop, ” and “all of the work, whether at the Sonoma shop or otherwise, took place in California.” (Frere Decl. ¶ 12.) After commencing its work on the project, Sonoma learned that SXIP had been acquired by another California company, GenAg. (Id. at ¶ 14.) At around that same time, Sonoma learned that the completed Distillate Unit would ultimately be delivered to Western Acceptance in Colorado. (Id. at ¶ 13.) Neither Sonoma, nor its owner, “had ever worked with, ” or previously “heard of, ” Western Acceptance. (Id.)

Plaintiff's consultant, T. Alan Boyd [“Mr. Boyd”], thereafter “personally visited Sonoma's facility in California, ” and “spoke multiple times” with Sonoma's owner, Mr. Frere, regarding “the specific needs of [the Distillate Unit] so that it could fit the Colorado Springs facility.” ([“Boyd Declaration”], Doc. No. 62-1, at ¶¶ 2, 26-28.) Mr. Boyd and Mr. Frere also discussed “delays and future business dealings between the parties.” (Id. at ¶¶ 28, 33.) Sonoma's owner made clear to Western Acceptance's consultant that “he wanted Sonoma to be part of any future hemp business for Western Acceptance.” (Id. at ¶ 33.)

At some point during the manufacturing process, Plaintiff began making “direct payments of money” to Defendant Sonoma, which were “sent personally by [Plaintiff] from Colorado, ” as compensation for “the work it was doing.” (Id. at ¶¶ 29-30.) In exchange for these “direct payments, ” Plaintiff asked Defendant Sonoma to ship the completed portions of its work on the Distillate Unit to Colorado. (Id. at ¶ 31.) Mr. Frere “agreed and said Sonoma would make sure this occurred.” (Id. at ¶ 32.)

After Sonoma completed its work on the Distillate Unit, representatives from GenAg “came to Sonoma's shop” and “said they were taking the [machinery] for testing at General Agriculture's Ukiah, California facility, and then delivery to Western Acceptance.” (Frere Decl. ¶ 18; see Boyd Decl. ¶ 35.) Only after the GenAg representatives “took” the completed work did Sonoma learn that there was a “dispute” between GenAg and Western Acceptance as to the “cost” of the Distillate Unit. (Frere Decl. ¶ 20.)

Approximately six months later, in November 2019, Western Acceptance asked Sonoma's owner to come to its facility in Colorado to “help” it “review options to move forward with” the Distillate Unit. (Frere Decl. ¶¶ 21, 24; see Boyd Decl. ¶ 36.) Mr. Frere “agreed to do so out of professional courtesy.” (Frere Decl. ¶ 22.) During his ensuing two-day visit to Colorado, Mr. Frere learned that Western Acceptance had received only “two-thirds” of the Distillate Unit from GenAg, and that GenAg “still had the last one-third.” (Id. at ¶ 23.) Mr. Frere later sent Western Acceptance a bill for his “time and travel costs, ” which Western Acceptance “never paid.” (Id. at ¶¶ 25-26.) The completed Distillate Unit was ultimately “never delivered by Sonoma to Colorado, despite the agreement Sonoma made to deliver it directly to Colorado.” (Boyd Decl. ¶ 34.)

2. Whether Sonoma “Purposefully Directed” its Actions Towards Colorado

To establish specific jurisdiction over Defendant Sonoma, Plaintiff must first show that Defendant Sonoma purposefully directed its activities towards Colorado. Dental Dynamics, 946 F.3d at 1229. The Tenth Circuit has recognized four frameworks under which “purposeful direction” may be demonstrated: (1) continuing relationships with forum state residents (“continuing relationships”); (2) deliberate exploitation of the forum state market (“market exploitation”); (3) harmful effects in the forum state (“harmful effects”); and (4) the “stream of commerce” theory. See Old Republic, 877 F.3d at 905, 909 n.21 (identifying the four frameworks). Here, Plaintiff seeks to establish specific personal jurisdiction under both the “continuing relationships” and “harmful effects” frameworks. (Doc. No. 121 at 4-6.)

a. The “Continuing Relationships” Framework

The “typical” purposeful direction analysis looks to the out-of-state defendant's “continuing relationships and obligations with the citizens of the forum state.” Old Republic, 877 F.3d at 905 (citing Burger King, 471 U.S. at 473) (alterations omitted). This framework ensures that “parties who reach out beyond one state and create continuing relationships and obligations with citizens of another state are subject to regulation and sanctions in the other State for the consequences of their activities.” Burger King, 471 U.S. at 473. “[A] defendant's relationship with a plaintiff or third party, standing alone, is an insufficient basis for jurisdiction.” Walden, 571 U.S. at 286. However, jurisdiction may be exercised over a defendant who “enter[ed] a contractual relationship that ‘envisioned continuing and wide-reaching contacts' in the forum State.” Id. at 285 (quoting Burger King, 471 U.S. at 479-80). In determining whether a contractual relationship establishes a defendant's purposeful direction, the court examines “prior negotiations and contemplated future consequences, along with the terms of the contract and the parties' actual course of dealing.” Old Republic, 877 F.3d at 905 (quoting Burger King, 471 U.S. at 479). Notably, “[a] contract alone does not subject a nonresident defendant to the jurisdiction of the subject forum.” AST Sports, 514 F.3d at 1059.

Plaintiff argues that Defendant Sonoma has the requisite minimum contacts with Colorado under this framework, because Defendant Sonoma entered into an oral contract with Plaintiff, ⁷ and because Defendant Sonoma directed communications related to the oral contract, as well as discussions pertaining to “future business dealings between the two entities, ” to Plaintiff's representatives in Colorado. (Doc. No. 121 at 4-6.) Defendant Sonoma, on the other hand, contends that these facts show its “extremely limited interaction with Plaintiff, ” which cannot support the exercise of personal jurisdiction over it in Colorado. (Doc. No. 127 at 5.)

7 Because all factual disputes contained in the parties' affidavits must be resolved in Plaintiff's favor, the court construes Plaintiff's allegation that it entered into an oral contract with Defendant Sonoma to be true. Dudnikov, 514 F.3d at 1070.

As an initial matter, “[t]he bare fact that [Sonoma] entered into a legal relationship with [Western Acceptance], a Colorado entity, cannot establish sufficient contacts to satisfy the purposeful direction requirement.” Old Republic, 877 F.3d at 910. Rather, the court must determine whether Sonoma “reached out” to Colorado, by evaluating the parties' prior negotiations, their contemplated future consequences, the terms of their agreement, and the parties' actual course of dealing. Id. Considering those factors here, the court finds that Plaintiff “has shown some - but not enough - contacts to establish purposeful direction under the continuing relationships framework.” Id. at 914.

Here, Western Acceptance and Sonoma entered into a single contract concerning a single piece of machinery that was manufactured in, and reportedly still remains in, California. See Dental Dynamics, 946 F.3d at 1230 (finding a nonresident business entity's contacts with Oklahoma to be insufficient to show purposeful direction, where “[e]ach transaction concerned the isolated sale or prospective sale of a piece of dental equipment without any long-term or continuing obligations involving Oklahoma, ” and where the “primary contract” relied upon to establish personal jurisdiction was “a two-page bill of sale” concerning “only the sale of a single piece of equipment that never physically passed through the forum state”); c.f. Oaster v. Robertson, 173 F.Supp.3d 1150, 1164-65 (D. Colo. 2016) (finding a continuing relationship sufficient to establish personal jurisdiction over a nonresident defendant, where the parties did not merely “agree to work on one project together and go their separate ways, ” but instead, entered into a contract that “facilitated a business relationship that lasted ten years”); Swift Distrib., LLC v. Reliance Int'l Corp., No. 20-cv-02193-CMA-MEH, 2021 WL 672495, at *4 (D. Colo. Feb. 22, 2021) (finding purposeful direction requirement met, where the defendant “directed thousands of products into Colorado over ten years”). The parties' negotiations, as well as Sonoma's performance, took place entirely in California. (Frere Decl. ¶¶ 10, 12; Boyd Decl. ¶¶ 28-33.) The contractual terms, themselves, were limited: Sonoma agreed to proceed with its design and manufacture of the Distillate Unit, and Plaintiff agreed to send payment for the completed machinery directly to Sonoma. (Boyd Decl. ¶¶ 29-31.) There is no evidence that the parties, by way of their oral contract, contemplated an ongoing business relationship, or future activities by Sonoma in Colorado.⁸ The parties' business arrangement appears to have ultimately spanned a period of less than two years. These contacts are too attenuated to show purposeful direction. See Dental Dynamics, 946 F.3d at 1230 (finding no continuing relationship to support the exercise of personal jurisdiction over a nonresident defendant, where the parties' contract amounted to “a two-page bill of sale negotiated over email that envision[ed] no enduring relationship between the parties and concern[ed] only the sale of a single piece of equipment that never physically passed through the forum state”); Old Republic, 877 F.3d at 911-12 (finding no continuing relationship, where the parties' agreement contemplated “only short-term and minimal obligations”).

8 Plaintiff points to evidence that the parties “discussed future business dealings” together. (Doc. No. 121 at 5.) However, Plaintiff does not allege that these “future business dealings” were to occur in Colorado. Nor are there any facts showing that the discussions resulted in any formal agreement between Western Acceptance and Sonoma. See Old Republic, 877 F.3d at 910 (finding no purposeful direction, even where a contract with a forum-state entity was accompanied by the parties' contemplation of “some potentially ongoing consequences, ” because the record lacked evidence of “any significant course of dealing” or any long-term contractual commitments associated with the forum state).

While Sonoma's affirmative act of requesting payment directly from Western Acceptance in Colorado is some evidence of purposeful activity, it does not show “wide-ranging” or “continuous” contacts with the forum state. Further, Sonoma made the request of Western Acceptance solely out of concerns that SXIP, the California entity with whom Sonoma initially contracted, was “having financial difficulties, ” and thus, would fail to pay Sonoma for its work on the Distillate Unit. (Boyd Decl. ¶ 30.) As such, Sonoma's request for payment was directed into Colorado, only by the fortuitous fact that Western Acceptance was, itself, located there instead of California. See C5 Med. Werks v. CeramTec GMBH, 937 F.3d 1319, 1323-24 (10th Cir. 2019) (rejecting the argument that “merely engaging in commercial promotion in the forum state-even if the location of the promotion is determined by others-is sufficient to invoke the jurisdiction of the forum state”); Floodgate, Inc. v. Outsol, Inc., No. 19-cv-02063-PAB-MEH, 2020 WL 1158283, at *4 (Mar. 10, 2020) (“[T]here is no indication that sending purchase orders to plaintiff was directed in any way at Colorado specifically, rather than directed at where plaintiff happens to be located.”). Nor does the fact that Western Acceptance “spoke multiple times” to Sonoma about the Distillate Unit prior to its completion suffice to establish a “continuing relationship.” See Dental Dynamics, 946 F.3d at 1231 (“Ordinarily use of the mails, telephone, or other international communications simply do not qualify as purposeful activity.”).

On this record, then, Plaintiff has failed to demonstrate that Defendant Sonoma's actions in connection with the oral contract created “continuing and wide-reaching” contacts with Colorado, for purposes of establishing purposeful direction under the continuing relationships framework.

b. The “Harmful Effects” Framework

Purposeful direction can be established, even in the absence of continuing relationships, where “an out-of-state defendant's intentional conduct targets and has substantial harmful effects in the forum state.” Old Republic, 877 F.3d at 907 (citing Calder v. Jones, 465 U.S. 783, 790-91 (1984)) (emphasis in original). The “harmful effects” framework, which applies in the context of tort-based claims, requires a showing that Sonoma: (1) took “intentional action;” (2) that was “expressly aimed” at Colorado; (3) with the “knowledge that the brunt of the injury from the action would be felt” in Colorado. Dental Dynamics, 946 F.3d at 1231 (citations omitted). Notably, however, a “plaintiff cannot be the only link between the defendant and the forum.” Walden, 571 U.S. at 285. “‘[A] defendant's interaction with a plaintiff-even when allegedly tortious-is insufficient to establish personal jurisdiction' without additional contacts between the defendant and the forum state.” Wyles v. Brady, 822 Fed.Appx. 690, 695 (10th Cir. 2020) (quoting Dental Dynamics, 946 F.3d at 1231).

Here, Western Acceptance alleges that Sonoma engaged in tortious conduct, by permitting certain “unauthorized individuals” from GenAg and/or SXIP to “take” the Distillate Unit from Sonoma's California facility, despite the fact that Sonoma was “told to not release the property to the SXIP Agents and GenAg Agents.” (Compl. ¶¶ 38, 41.) While Western Acceptance concedes that “the negligence occurred entirely in California, ” it argues that Sonoma's actions still subject to it to jurisdiction in Colorado, because “the injury occasioned by Sonoma's failure to deliver the Distillate Unit as agreed was suffered in Colorado.” (Doc. No. 121 at 6.) However, Plaintiff has not shown that Defendant Sonoma “expressly aimed” its tortious conduct at Colorado.

“[T]he ‘express aiming' test focuses more on a defendant's intentions-where was the ‘focal point' of its purposive efforts-[as opposed to] . . . the consequences of the defendant's actions-where was the alleged harm actually felt by the plaintiff.” Dudnikov, 514 F.3d at 1075. “The forum state itself must be the focal point of the tort.” Id. at 1074 n.9 (citations and alterations omitted).

In this case, Sonoma's allegedly tortious conduct exclusively⁹ concerns the physical transfer of Western Acceptance's business equipment between two locations in California. (Compl. ¶¶ 21-23; Boyd Decl. ¶¶ 34-35; Frere Decl. ¶¶ 18-19.) The tortious conduct, as alleged bv Plaintiff, occurred entirely in California, and all alleged participants, including Defendant Sonoma, were California residents. (Compl. ¶¶ 2-7, 21-23.) And, importantly, there is nothing in the record to suggest that Sonoma's decision to allow unauthorized persons to take the Distillate Unit was directed specifically towards Colorado. Indeed, the uncontroverted jurisdictional evidence submitted by Sonoma shows that it was under the impression that GenAg representatives “were taking the [Distillate Unit] for testing at [GenAg]'s Ukiah, California facility, and then delivery to Western Acceptance, ” which was in accordance with Sonoma's and GenAg's normal course of dealing. (Frere Decl. ¶¶ 18-19.) Although the tortious conduct attributed to Sonoma bears an “attenuated” connection to Colorado, the record does not show “that Colorado was the focal point of the defendant[‘s] torts.” See Grynberg v. Ivanhoe Energy, Inc., 490 Fed.Appx. 86, 97 (10th Cir. 2012) (finding no purposeful direction under the harmful effects framework, where the plaintiffs “lodge[d] broad assertions that the defendant's conduct was ‘related' to Colorado, ” but failed to explain how the conduct was “expressly and directly aimed toward Colorado”); see Wyles, 822 Fed.Appx. at 695 (“Wyles has not demonstrated that the only act arguably intended to cause harm in Colorado-Brady's call-was directed at the forum state (as opposed to merely at the plaintiff in the forum state)[.]”). The mere fact that Plaintiff's place of business is in Colorado, and thus, its damages were felt in Colorado, is insufficient to establish specific jurisdiction. See Anzures v. Flagship Rest. Grp., 819 F.3d 1277, 1282 (10th Cir. 2016) (“Walden reinforces that personal jurisdiction may not rest solely on the fact that a defendant's conduct affected the plaintiff in the forum state.”); see also Dental Dynamics, 946 F.3d at 1232 (finding no purposeful direction under the harmful effects framework, where the allegedly defective equipment at issue “never passed through [the forum state] and the only effects felt in [the forum state] arose from the incidental factor that” the plaintiff “was located there”).

9 Plaintiff does not identify any other intentional actions taken by Defendant Sonoma, whether tortious or not, that might establish purposeful direction under the harmful effects framework.

3. The Court Lacks Jurisdiction over Defendant Sonoma

On this record, then, Plaintiff has failed to show that Defendant Sonoma has the requisite minimum contacts with Colorado to support the exercise of specific personal jurisdiction in this case. For that reason, Defendant Sonoma's motion to dismiss for lack of personal jurisdiction should be granted. See Old Republic, 877 F.3d at 918. And, because jurisdiction over Sonoma is lacking, there is no need to address Sonoma's other arguments for dismissal.

D. Whether the Court has Jurisdiction Over Mr. Tagami

1. Evidentiary Objections

The exhibits attached to Plaintiff's response to Defendant Tagami's motion to dismiss include a declaration from Plaintiff's consultant, Mr. Boyd, as well as declarations from two SXIP representatives, Tiffany Weaver [“Ms. Weaver”] and Taher Afghani [“Mr. Afghani”]. ([“Weaver Declaration”], Doc. No. 122-1; [“Afghani Declaration”], Doc. No. 122-2; [“Boyd Declaration”], Doc. No. 122-3.) As noted supra, such declarations are, in general, appropriately considered by a court undertaking a jurisdictional analysis. Dental Dynamics, 946 F.3d at 1228. Defendant Tagami, however, argues that the court should “disregard” this evidence, on the grounds that Ms. Weaver and Mr. Afghani are both “former defendants in this matter and primary contributing causes of Plaintiff's claims.” (Doc. No. 128 at 8.) In addition, Mr. Tagami contends that “the criminal history of Boyd and Afghani indicates their statements lack credibility and would be subject to impeachment at an evidentiary hearing.” (Id. at 9.) These objections lack merit and should be overruled. The statements from Mr. Boyd, Ms. Weaver, and Mr. Afghani are based on personal knowledge, which was acquired through the performance of their respective duties with Western Acceptance and SXIP. (See, e.g., Weaver Decl. ¶¶ 3-5, 11-13; Afghani Decl. ¶¶ 2, 4, 11-14, 17; Boyd Decl. ¶¶ 2, 12-13, 16-19.) Defendant Tagami's argument that the declarations “lack credibility” goes to the weight of the evidence, as opposed to its admissibility. See Sara Lee Corp. v. Sycamore Family Bakery, Inc., No. 2:09CV523DAK, 2011 WL 3439933, at *5 (D. Utah Aug. 5, 2011) (denying a motion to exclude evidence from a purportedly “disgruntled” former employee, where the movant's arguments “attack[ed] the credibility and not the admissibility of the evidence”).

2. Relevant Jurisdictional Facts

The following jurisdictional facts regarding Defendant Tagami are taken from the Complaint, as well as the declarations and exhibits attached to the parties' briefs.¹⁰

10 Defendant Tagami attached five exhibits to his reply brief, including his own supplemental affidavit, a proposal letter from GenAg, real estate documents, and criminal history documents. (Doc. No. 128-1, 128-2, 128-3, 128-4, 128-5, 128-6.) Plaintiff never sought leave to file a surreply addressing this new evidence, although it had ample time to do so. Thus, in reaching its decision, the court will consider the additional exhibits attached to Defendant Tagami's reply brief. See Pippin v. Burlington Res. Oil & Co., 440 F.3d 1186, 1191-92 (10th Cir. 2006) (holding that the district court did not abuse its discretion by permitting a movant to attach new exhibits to a summary judgment reply brief, when the nonmovant “had plenty of opportunity to seek leave of the court to file a surreply but never attempted to do so”).

Defendant Phil Tagami is a California citizen who resides in Oakland, California. ([“Tagami Affidavit”], Doc. No. 119-1 at ¶ 3.) Mr. Tagami is a shareholder and employee of Defendant CCIG, a “small” California commercial real estate corporation with a single office located in Oakland, California. (Id.) Mr. Tagami also serves as CCIG's Chief Executive Officer and the President of its Board of Directors. (Id.)

Defendant Tagami has never lived in Colorado. (Id. at ¶ 4.) Nor has he ever owned or leased real property in Colorado. (Id.) Mr. Tagami has likewise never “maintained a personal office, place of business, residence, telephone listing, voter registration, mailing address or bank account in Colorado.” (Id.) He has “never entered into a contract or operated a business in Colorado, ” nor has he ever “litigated any matters in Colorado or otherwise used the Colorado court system.” (Id. at ¶¶ 4-5.) Defendant Tagami has visited Colorado only “sporadically” over the course of his life, mainly “for personal enjoyment and recreation, ” and on “extremely rare occasions, ” for “business meetings.” (Id. at ¶ 5.) In the past five years, Mr. Tagami has traveled to Colorado approximately three times total, “not including flight travel through the Denver airport to locations outside Colorado.” (Id.)

On or about April 2, 2019, CCIG entered into a written Consulting Agreement with GenAg “for the purpose of providing general business consulting services, on an as-needed, task-by-task basis.” (Id. at ¶ 10.) The Consulting Agreement-which identifies CCIG as the “Consultant” and Tagami as the “Consultant Contact”-sets forth a “limited set of specific business services available to GenAg, ” including office clerical/data entry, bookkeeping, project management, and environmental assessment, as well as legal, real estate investment, and brokerage services. (Id.; see [“Consulting Agreement”], Doc. No. 119-2, at 10.) CCIG provided these “business consulting services” to GenAg “through its various individual employees and subcontractors.” (Tagami Aff. ¶ 13.) Defendant Tagami's “role in the Consulting Agreement was to manage the efficient delivery of CCIG services to GenAg.” (Id.)

Around that same time, certain representatives from SXIP were “introduced to” Mr. Tagami, ¹¹ “who represented himself to be a wealthy individual with both extensive capital holdings himself and access to capital and other investors.” (Afghani Decl. ¶ 11.) Defendant Tagami, together with GenAg's CEO, Defendant Becker, “expressed that they wanted to acquire substantially all the assets of SXIP in exchange for ownership in” a new company, General Agriculture Equipment, LLC [“GAE”]. (Id. at ¶ 14.) Based, in part, on Defendant Tagami's promises “to provide capital to finish existing projects, develop new projects, and fund whatever the company needed to move forward in the future, ” as well as his promises “to provide attorneys, staff, money, and use of his buildings, ” on May 2, 2019, SXIP entered into an Asset Purchase Agreement [“APA”] with GAE, whereby SXIP agreed to sell certain of its assets, including “the MPA between SXIP and Western Acceptance, ” to GAE. (Id. at ¶¶ 14, 19-21, 23.) The APA “was initially drafted by” Defendant Tagami's attorneys, and the “final signature copy” was “sent around by” CCIG. (Id. at ¶¶ 24-26.)

11 It is unclear from the record where this meeting occurred.

On approximately May 7, 2019, “as part of CCIG's performance of the Consulting Agreement, GenAg requested that CCIG perform a compliance assessment of a commercial building in Colorado Springs, Colorado.” (Tagami Aff. ¶ 15.) The compliance assessment by CCIG was to be “part of GenAg's evaluation of whether to lease or acquire” the Colorado Springs facility, or whether to “deploy GenAg equipment to” the Colorado Springs facility. (Id.) At the time of the request, Defendant Tagami “understood” that the Colorado Springs facility was “owned by an entity known as[] Land Acquisition, LLC;” that Plaintiff “did not have a long-term possessory right” to the Colorado Springs facility, “only a temporary informal agreement with the owner;” and that the Colorado Springs facility “contained or would contain equipment and other assets owned in part by GenAg.” (Id. at ¶ 16.)

As part of the compliance assessment, GenAg requested that “CCIG agents, ” including Mr. Tagami, travel to Colorado and perform a two-day onsite inspection of the Colorado Springs facility. (Id. at ¶ 18.) Defendant Tagami, in his role as “an employee acting on behalf of CCIG, ” traveled to Colorado to perform the onsite inspection, on May 7, 2019, accompanied by a Colorado-licensed architect, who was “retained” by CCIG “to provide building, fire and zoning code analysis, as well as design review of” the Colorado Springs facility. (Id. at ¶¶ 17, 19.) In addition to Mr. Tagami, representatives from SXIP and GenAg also traveled to Colorado “to discuss business opportunities with Western Acceptance for future business ventures.” (Afghani Decl. ¶ 17.)

During the onsite inspection of the Colorado Springs facility, Defendant Tagami “informally communicated” to one of Plaintiff's representatives, Mr. Boyd, “that Plaintiff's then-present use” of the property “did not comply with local building, fire, and zoning codes, ” based on “CCIG's initial findings from its study on behalf of GenAg.” (Id. at ¶ 21; Boyd Decl. ¶¶ 12-13, 17.) Mr. Tagami's comments “were prompted, in large part, by” his “observation of numerous open and obvious safety hazards” at the Colorado Springs facility, which caused him to “fear” for his “immediate safety.” (Tagami Aff. ¶ 21.) Mr. Tagami “recommended” to Mr. Boyd “that all of Western Acceptance's equipment be moved out of the Colorado Springs facility to a location in Oakland, California or elsewhere that he controlled that would be code compliant.” (Boyd Decl. ¶ 17; see Weaver Decl. ¶ 13.) Plaintiff's representative made clear to Defendant Tagami “that under no circumstances was there going to be any removal of existing equipment from the Colorado Springs location and that if any business was to be done in the future, it must be done in Colorado Springs, at Western Acceptance's facility.” (Boyd Decl. ¶ 18.) Mr. Tagami, in response, told Mr. Boyd that “GenAg and Western Acceptance would work together to develop the hemp extraction business in the Colorado Springs facility.” (Id. at ¶ 19.)

On or about June 19, 2019, “CCIG's subcontracted architect made determinations contained in a compliance report, ” specifically concluding that the Colorado Springs facility “was not in compliance with existing building, fire and zoning codes, and, therefore, would not qualify for the permits necessary for GenAg's intended use.” (Tagami Aff. ¶ 23.) Although the compliance report “was not created for Western Acceptance, ” GenAg “ultimately communicated the contents of th[e] report to Plaintiff.” (Id.) GenAg thereafter “requested that CCIG analyze options for [Western Acceptance] to achieve compliance in order to keep GenAg equipment at the” Colorado Springs facility. (Id. at ¶ 24.) CCIG, upon GenAg's request, “assisted in developing solutions for making the Colorado Facility compliant, including proposed construction of improvements, options for financing thereof, and proposals for GenAg's lease or joint purchase of the space.” (Id.)

In or around August of 2019, “GenAg utilized CCIG's analysis and communicated one or more proposals to Plaintiff to achieve compliance and secure GenAg's lease of the Colorado Facility.” (Id. at ¶ 25.) Plaintiff, however, “rejected all of GenAg's proposals, ” and Defendant Tagami's “involvement with Plaintiff and the Colorado Facility ended there.” (Id.) On October 7, 2019, CCIG terminated the Consulting Agreement with GenAg. (Id. at ¶ 12.)

3. Whether Mr. Tagami has the Requisite Minimum Contacts with Colorado

a. No. Imputed Contacts Rule/Fiduciary Shield Doctrine

Defendant Tagami argues, first, that he cannot be subject to personal jurisdiction in this case, as a matter of law, because at all times relevant, he was acting as an agent for CCIG and/or GenAg. (Tagami Mot. 2, 5-7.) Mr. Tagami contends that, even assuming his alleged contacts with Colorado to be true, “they would ultimately impute only to GenAg, by and through CCIG.” (Id. at 6-7.) In making that argument, Defendant Tagami references the “no-imputed contacts rule.” (Id. at 5-6.)

“Jurisdiction over a corporation in a particular forum does not automatically confer jurisdiction over that corporation's employees.” Newsome v. Gallacher, 722 F.3d 1257, 1275 (10th Cir. 2013); see also Ten Mile Indus. Park v. W. Plains Serv. Corp., 810 F.2d 1518, 1527 (10th Cir. 1987) (“Jurisdiction over the representatives of a corporation may not be predicated on jurisdiction over the corporation itself[.]”). Rather, “jurisdiction over the individual officers and directors must be based on their individual contacts with the forum state.” Ten Mile, 810 F.2d at 1527; see also Calder v. Jones, 465 U.S. 783, 790 (1984) (stating that an employee's “contacts with [the forum state] are not to be judged according to [his] employer's activities there, ” and that “[e]ach defendant's contacts with the forum State must be assessed individually”). The so-called “no-imputed contacts rule, ” thus, prevents courts from imputing a corporation's contacts with the forum state onto that corporation's employees. Newsome, 722 F.3d at 1275.

Here, Defendant Tagami appears to conflate the “no-imputed contacts rule” with the “fiduciary shield doctrine, ” a related concept that “gives even greater protection to employees of companies.” Id. Under the fiduciary shield doctrine, even if a particular employee has “substantial contacts” with the forum state, “those contacts will not count against the employee in the personal jurisdiction analysis so long as the employee acted solely on the corporation's behalf.” Id. Critically, however, while “the no-imputed contacts rule is integral to the minimum contacts due process test, ” the fiduciary shield doctrine “only exists as a matter of state law.” Id. As such, the fiduciary shield doctrine is irrelevant to the present jurisdictional analysis. See Serv. First Permits, LLC v. Lightmaker Vancouver (Internet) Inc., No. 18-cv-02089-CMA-NYW, 2019 WL 109335, at *5 (D. Colo. Jan. 4, 2019) (holding that a foreign defendant's “status as a corporate officer or employee” did not “shield his contacts from the court's exercise of personal jurisdiction”). Mindful of the no-imputed contacts rule, the court looks only to Mr. Tagami's own contacts with Colorado to determine whether the exercise of personal jurisdiction is appropriate here.

b. Purposeful Direction Requirement

The court next addresses whether Defendant Tagami purposefully directed his activities towards Colorado. Old Republic, 877 F.3d at 904. Here, Plaintiff relies exclusively upon the “harmful effects” framework to establish purposeful direction. (Tagami Mot. 9-12.) Therefore, Plaintiff must show “(a) an intentional action that was (b) expressly aimed at the forum state with (c) knowledge that the brunt of the injury would be felt in the forum state.” XMission, L.C. v. Fluent LLC, 955 F.3d 833, 841 (10th Cir. 2020) (quoting Old Republic, 877 F.3d at 907).

i. “Intentional Action”

The Second Amended Complaint alleges that Mr. Tagami committed four torts: (1) civil theft; (2) conspiracy; (3) conversion; and (4) unjust enrichment. (Compl. ¶¶ 43-59.) The facts underpinning those claims are that Mr.Tagami personally travelled to Colorado and tried to convince Western Acceptance to move its business operations to an out-of-state facility of Mr. Tagami's choosing, as part of a plan to take control of Western Acceptance's business and property. (Doc. No. 122 at 8 (citing Boyd Decl. ¶¶ 15-19); see Compl. ¶ 16.) While Defendant Tagami does not appear to dispute that Plaintiff's allegations show “intentional actions, ” he contends that his alleged actions do not qualify as “intentional tortious acts.” (Tagami Mot. 9-11.) In addition, Defendant Tagami argues that Plaintiff's allegations against him are “false.” (Id. at 10.)

For purposes of establishing jurisdiction under the harmful effects framework, it remains an open question “whether a defendant's intentional [action] must be wrongful or tortious or whether innocent intentional action suffices.” Burns v. Ledru, No. 12-cv-02646-RBJ-KLM, 2013 WL 1129425, at *5 (D. Colo. Feb. 5, 2013) (quoting Sharpshooter Spectrum Venture, LLC v. Consentino, No. 09-cv-00150-WDM-KLM, 2009 WL 4884281, at *6 (D. Colo. Dec. 10, 2009)). That being said, in this case, Plaintiff has unquestionably alleged that Defendant Tagami intentionally acted in a wrongful manner. See Dudnikov, 514 F.3d at 1073 (avoiding “th[e] thicket” of answering whether “any intentional act, wrongful or not” satisfied the first element of the harmful effects test, because the plaintiffs' complaint alleged wrongful conduct). Plaintiff's allegations, though disputed by Defendant Tagami, are supported by Plaintiff's evidence. See Old Republic, 877 F.3d at 903 (“We resolve all factual disputes in favor of the plaintiff in determining whether plaintiff has made a prima facie showing [of jurisdiction].”). Accordingly, Plaintiff has adequately established that Defendant Tagami took intentional action.

ii. “Expressly Aimed”

The second element of the harmful effects test requires that the forum state itself be the “focal point of the tort.” Dudnikov, 514 F.3d at 1074 n.9. Defendant Tagami argues that the focal point of his alleged actions was not Colorado, but instead, California, where “the ultimate theft and conversion” of the Distillate Unit occurred. (Tagami Mot. 11.) However, this argument misses the mark. While arguably true that the alleged taking of the Distillate Unit occurred strictly in California, Defendant Tagami cannot avoid the Colorado-centric nature of the primary claim against him-that he, and others, conspired to wrongfully take Plaintiff's property. Here, the pleadings and supporting jurisdictional evidence show that Mr. Tagami had ongoing managerial duties relating to the Colorado Springs facility, and that, in furtherance of Defendants' purported conspiracy, Mr. Tagami visited the Colorado Springs facility “multiple times under the guise of being a compliance consultant for GenAg, ” for purposes of learning “Plaintiff's business, its method of operating, its use and ownership of equipment, and its trade secrets, ” so as to “eventually take” Plaintiff's property. (Compl. ¶¶ 16, 51.) And, notably, it is alleged that, on one such visit to Colorado, Defendant Tagami, himself, “attempt[ed] to take” Western Acceptance's “equipment.” (Id. at ¶ 16.) Under these circumstances, Defendant Tagami could reasonably expect to be haled into court in Colorado. See Rain Int'l, LLC v. Cook, No. 2:20-cv-00537-JNP-DBP, 2021 WL 1063310, at *5 (D. Utah Mar. 18, 2021) (finding that a nonresident defendant expressly aimed her allegedly tortious conduct at Utah, where “some of the tortious conduct alleged occurred while [the defendant] was physically present in Utah”).

iii. “Brunt of the Injury”

The third element of the harmful effects test, which “concentrates on the consequences of the defendant's action-where was the alleged harm actually felt by the plaintiff, ” warrants minimal discussion. Dudnikov, 514 F.3d at 1074-75. The prima facie evidence establishes that Mr. Tagami knew that Western Acceptance operated in Colorado. (Afghani Decl. ¶¶ 16-17; Boyd Decl. ¶¶ 12-13, 17; see Tagami Aff. ¶ 16.) Drawing all reasonable inferences in Plaintiff's favor, it is fair to say that Defendant Tagami likewise knew that the brunt of any injury to Western Acceptance would be felt in Colorado. Therefore, the third element is met. See Dudnikov, 514 F.3d at 1077 (finding the “brunt of the injury” element met, where the defendant knew that the plaintiffs' business was located in Colorado, and therefore, knew that the effects of its actions targeting the business would be felt there).

c. “Arising Out Of” Requirement

The assertion of specific jurisdiction also requires Plaintiff to prove its injuries arise out of Defendant Tagami's forum-related activities. Old Republic, 877 F.3d at 908. As the Tenth Circuit has explained, specific jurisdiction “is premised on something of a quid pro quo; in exchange for ‘benefitting' from some purposive conduct directed at the forum state, a party is deemed to consent to the exercise of jurisdiction for claims related to those contacts.” Dudnikov, 514 F.3d at 1078. There are “potentially two” ways to satisfy the “arising out of” requirement- (1) the “but-for” test; and (2) the “proximate cause” test. Newsome, 722 F.3d at 1269-70; accord Dudnikov, 514 F.3d at 1079 (declining to “pick” one test over the other). “Under the but-for approach, any event in the causal chain leading to the plaintiff's injuries is sufficiently related to the claim to support the exercise of specific jurisdiction.” Newsome, 722 F.3d at 1269 (quoting Dudnikov, 514 F.3d at 1078) (alterations omitted). “The proximate cause approach, by contrast, is considerably more restrictive and calls for the court to examine whether any of the defendant's contacts with the forum are relevant to the merits of the plaintiff's claims.” Id. at 1269-70 (quoting Dudnikov, 514 F.3d at 1078) (alterations omitted).

Mr. Tagami argues that Western Acceptance's injuries “primarily aris[e]” from GenAg's purported taking of the Distillate Unit from Sonoma's facility in California, which Mr. Tagami contends is wholly unrelated to his own “narrowly limited” contacts with Colorado. (Tagami Mot. 12-13.) In essence, Defendant Tagami challenges whether Plaintiff has adequately alleged the causation element of its tort-based claims against him, i.e., whether Plaintiff has plausibly stated a valid claim for relief. However, whether Plaintiff has satisfied the Rule 8(a) pleading standard is not relevant to the present jurisdictional inquiry. See Newsome, 722 F.3d at 1270 (“While we recognize the potential defect in the substance of Newsome's allegations, we believe it is important to keep the 12(b)(2) and 12(b)(6) analyses distinct.”); see also Smith v. Sperling, 354 U.S. 91, 94-95 (1957) (admonishing a lower court for holding a hearing on the merits to determine whether diversity jurisdiction existed).

In this case, Western Acceptance alleges that Mr. Tagami knowingly took certain actions, including visits to Colorado, that ultimately caused injury to Western Acceptance's business in Colorado. (Compl. ¶¶ 15-16.) The allegations concerning Mr. Tagami's actions while in Colorado form the basis for Western Acceptance's claims against him. Accordingly, Plaintiff has satisfied the “arising out of” requirement for specific jurisdiction. See Newsome, 722 F.3d at 1270 (finding the “arising out of” requirement met, where the plaintiff alleged “that the individual defendants knowingly acted in Canada to destroy a company operating entirely in Oklahoma, ” and where that allegation “form[ed] the basis of” the plaintiff's “claim to personal jurisdiction, ” as well as the plaintiff's “claim on the merits”).

Accordingly, Plaintiff has demonstrated sufficient minimum contacts between Defendant Tagami and Colorado to support the exercise of specific jurisdiction over him in this case.

4. “Fair Play and Substantial Justice”

Even if, as here, a plaintiff has met its burden of establishing minimum contacts, the court must “still inquire whether the exercise of personal jurisdiction would offend traditional notions of fair play and substantial justice.” Old Republic, 877 F.3d at 908 (quoting Shrader v. Biddinger, 633 F.3d 1235, 1240 (10th Cir. 2011)); see also Int'l Shoe, 326 U.S. at 316. In doing so, the court must be “cognizant of the fact that, with minimum contacts established, it is incumbent on defendants to present a compelling case that the presence of some other considerations would render jurisdiction unreasonable.” Old Republic, 877 F.3d at 909 (quoting Dudnikov, 514 F.3d at 1080). This is a fact-specific inquiry on which Defendant Tagami bears the burden of proof. ClearOne Commc'ns Inc. v. Bowers, 643 F.3d 735, 764 (10th Cir. 2011). Relevant factors include: “(1) the burden on the defendant, (2) the forum state's interest in resolving the dispute, (3) the plaintiff's interest in receiving convenient and effective relief, (4) the interstate judicial system's interest in obtaining the most efficient resolution of controversies, and (5) the shared interest of the several states in furthering fundamental social policies.” Id. (quoting Emps. Mut. Cas. Co. v. Bartile Roofs, Inc., 618 F.3d 1153, 1161 (10th Cir. 2010)). A defendant's showing under these factors operates on a “sliding scale.” Dental Dynamics, 946 F.3d at 1229 (citation omitted). “The weaker a plaintiff's showing with respect to minimum contacts, the less a defendant need show in terms of unreasonableness to defeat jurisdiction.” Id. (internal quotation marks and citation omitted). Conversely, “an especially strong showing of reasonableness may serve to fortify a borderline showing of minimum contacts.” AST Sports, 514 F.3d at 1061 (citation omitted).

Here, Defendant Tagami has neglected to put forth any argument, much less a “compelling case, ” that the court's exercise of jurisdiction over him would be unreasonable. As such, Mr. Tagami has failed to carry his burden on this issue. See ClearOne, 643 F.3d at 764 (finding that the exercise of jurisdiction over an out-of-state defendant would not offend traditional notions of fair play and substantial justice, where the defendant “made no attempt” to address the issue in his motion to dismiss).

5. The Court Possesses Jurisdiction Over Defendant Tagami

On this record, then, the court finds that Defendant Tagami has sufficient minimum contacts with Colorado to support the exercise of specific personal jurisdiction over him, and that the assertion of such jurisdiction comports with federal due process requirements. For that reason, it is recommended that Defendant Tagami's motion to dismiss for lack of personal jurisdiction be denied. See Dudnikov, 514 F.3d at 1082 (holding the exercise of personal jurisdiction over a nonresident defendant under such circumstances to be proper).

III. The Rule 12(b)(6) Motions

The GenAg Defendants and Defendant Tagami also move to dismiss the claims asserted against them, under Rule 12(b)(6), for failure to state a claim. (GenAg Defs.' Mot. 6-15; Tagami Mot. 7-8, 13-14.) The parties agree that Colorado law governs the claims at issue. (GenAg Defs.' Mot. 8, 10, 12-14; Tagami Mot. 7, 14; Doc. No. 122 at 12-14; Doc. No. 126 at 5.)

A. Standard of Review

Federal Rule of Civil Procedure 12(b)(6) provides that a defendant may move to dismiss a claim for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). “The court's function on a Rule 12(b)(6) motion is not to weigh potential evidence that the parties might present at trial, but to assess whether the plaintiff's complaint alone is legally sufficient to state a claim for which relief may be granted.” Dubbs v. Head Start, Inc., 336 F.3d 1194, 1201 (10th Cir. 2003) (quotation marks omitted).

“A court reviewing the sufficiency of a complaint presumes all of plaintiff's factual allegations are true and construes them in the light most favorable to the plaintiff.” Hall v. Bellmon, 935 F.2d 1106, 1109 (10th Cir. 1991). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Plausibility, in the context of a motion to dismiss, means that the plaintiff pleaded facts which allow “the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. The Iqbal evaluation requires two prongs of analysis. First, the court identifies “the allegations in the complaint that are not entitled to the assumption of truth, ” that is, those allegations which are legal conclusion, bare assertions, or merely conclusory. Id. at 679-81. Second, the court considers the factual allegations “to determine if they plausibly suggest an entitlement to relief.” Id. at 681. If the allegations state a plausible claim for relief, such claim survives the motion to dismiss. Id. at 679.

Notwithstanding, the court need not accept conclusory allegations without supporting factual averments. S. Disposal, Inc., v. Tex. Waste, 161 F.3d 1259, 1262 (10th Cir. 1998). “[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S at 678. Moreover, “[a] pleading that offers ‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action will not do.' Nor does a complaint suffice if it tenders ‘naked assertion[s]' devoid of ‘further factual enhancement.'” Id. (citation omitted). “Where a complaint pleads facts that are ‘merely consistent with' a defendant's liability, it ‘stops short of the line between possibility and plausibility of ‘entitlement to relief.'” Id. (citation omitted).

In evaluating a Rule 12(b)(6) motion to dismiss, the court may consider documents incorporated by reference, documents referred to in the complaint that are central to the claims, and matters of which a court may take judicial notice. Tellabs, Inc, 551 U.S. at 322; Gee v. Pacheco, 627 F.3d 1178, 1186 (10th Cir. 2010). Publicly filed court records, including court transcripts, are subject to judicial notice. St. Louis Baptist Temple, Inc. v. Fed. Deposit Ins. Corp., 605 F.2d 1169, 1172 (10th Cir. 1979); United States v. Ahidley, 486 F.3d 1184, 1192 n.5 (10th Cir. 2007); Trusdale v. Bell, 85 Fed.Appx. 691, 693 (10th Cir. 2003).

B. Personal Liability

Defendant Tagami argues that his “status as an agent thrice-removed from Plaintiff's alleged harms” necessarily precludes any “cause of action imposing liability under Colorado state law.” (Tagami Mot. 7.) According to Defendant Tagami, “[a] well-settled principle in Colorado law is that officers and agents acting in their representative capacity for a corporation are not personally liable for those acts.” (Id.) In support of that contention, Mr. Tagami references a Colorado Supreme Court decision, Leonard v. McMorris, 63 P.3d 323 (Colo. 2003), as well as a District of Colorado decision, Fuentes v. Compadres, Inc., No. 17-cv-01180-CMA-MEH, 2018 WL 1444209 (D. Colo. Mar. 23, 2018). (Id.) However, as Plaintiff correctly points out, Leonard and Fuentes both concern an agent's personal liability for violations of Colorado's Wage Claim Act. See Leonard, 63 P.3d at 326 (holding that corporate officers and agents are not personally liable under the Colorado Wage Claim Act “for payment of earned, but unpaid, wages and other compensation the corporation owes to employees”); Fuentes, 2018 WL 1444209, at *10-11 (dismissing Colorado Wage Claim Act claims against individual defendants, pursuant to the holding in Leonard). In this case, by contrast, Western Acceptance seeks to hold Mr. Tagami personally liable for intentional torts. The cases cited by Defendant Tagami are, thus, inapposite to the issues presented here.¹²

12 Defendant Tagami references two additional Colorado decisionsFink v. Montgomery Elevator Co., 421 P.2d 735 (Colo. 1966), and Masinton v. Dean, 659 P.2d 50 (Colo.App. 1982)-for the proposition that “claims against individuals for their alleged actions as corporation agents must allege they acted independently with an undisclosed agent.” (Tagami Mot. 7.) However, Fink and Masinton addressed an agent's personal liability for the principal corporation's debts. See Fink, 659 P.2d at 738-39 (finding that an agent was not personally liable for the corporation's debts); Masinton, 659 P.2d at 51 (“Defendants appeal a judgment holding them individually liable for the debt of a corporation.”). Neither case addresses tort liability.

Contrary to Mr. Tagami's assertions, “[u]nder Colorado law, a corporate officer or agent can be held personally liable for his individual tortious acts, ‘even though committed on behalf of the corporation, which is also held liable.'” List Interactive, Ltd. v. Knights of Columbus, 303 F.Supp.3d 1065, 1078 (D. Colo. 2018) (quoting Hoang v. Arbess, 80 P.3d 863, 867 (Colo.App. 2003)); see Snowden v. Taggart, 17 P.2d 305, 307 (Colo. 1932) (“To permit an agent of a corporation, in carrying on its business, to inflict wrong and injuries upon others, and then shield himself from liability behind his vicarious character, would often both sanction and encourage the perpetration of flagrant and wanton injuries by agents of insolvent and irresponsible corporations.”).

“To be found personally liable to third persons for a tort, the officer of a corporation must have participated in the tort.” Hoang, 80 P.3d at 868 (citations omitted). This requires a showing that the defendant “was directly involved in the conduct” at issue, either “through conception or authorization.” Id. (citation omitted). “Other direct involvement, such as active participation or cooperation, specific direction, or sanction of the conduct, also may be sufficient.” Id. (citations omitted); accord Colo. Coffee Bean, LLC v. Peaberry Coffee, Inc., 251 P.3d 9, 28 (Colo.App. 2010) (“Corporate agents are liable for torts of the corporation if they approved of, sanctioned, directed, actively participated in, or cooperated in such conduct.”).

Here, Western Acceptance alleges that Mr. Tagami, though simultaneously acting as an agent of both CCIG and GenAg, “personally participated in the tortious act described [in the pleading] and his actions benefitted not only himself, but also CCIG and GenAg.” (Compl. ¶ 12.) Plaintiff further alleges that Defendant Tagami actively participated in an “attempt to take Plaintiff's equipment, which ultimately occurred, ” by personally visiting Plaintiff's facility “multiple times under the guise of being a compliance consultant for GenAg, ” and then disingenuously advising Plaintiff to “move its entire operation to a facility that he designated.” (Id. at ¶ 16.)

At this stage of the proceedings, Plaintiff has adequately pled the personal liability of Defendant Tagami. See List Interactive, 303 F.Supp.3d at 1078-79 (finding agent/officer defendants' personal tort liability to be adequately pleaded, where the plaintiff alleged that each defendant “was directly involved in the wrongful conduct” that formed the basis for the tort claims). As such, Defendant Tagami's motion to dismiss, to the extent predicated on a lack of individual liability, should be denied.

C. Superseding Cause

Defendant Tagami argues, as another basis for dismissal of the claims against him, that Plaintiff, by way of the Second Amended Complaint, has “conced[ed] to” his “defense of superseding cause.” (Tagami Mot. 13.) Mr. Tagami contends, specifically, that the Second Amended Complaint's allegations pertaining to Sonoma “sever the causal link between the alleged actions of Tagami and Plaintiff's alleged ultimate harm, ” thereby establishing that Sonoma was an intervening cause that breaks any chain of causation that might be attributed to Mr. Tagami. (Id.)

Intervening, or superseding, cause is an affirmative defense. White v. Caterpillar, Inc., 867 P.2d 100, 109 (Colo.App. 1993). It is well-settled that “[a] plaintiff has no burden to anticipate an affirmative defense and plead facts negating it.” Rivero v. Bd. of Regents of Univ. of N.M., 950 F.3d 754, 759-60 (10th Cir. 2020); accord Fernandez v. Clean House, LLC, 883 F.3d 1296, 1299 (10th Cir. 2018) (“A plaintiff need not anticipate in the complaint an affirmative defense that may be raised by the defendant; it is the defendant's burden to plead an affirmative defense.”). A claim is subject to dismissal at the pleadings stage based on an affirmative defense, “only when the complaint itself admits all the elements of the affirmative defense by alleging the factual basis for those elements.” Fernandez, 883 F.3d at 1299; Miller v. Shell Oil Co., 345 F.2d 891, 893 (10th Cir. 1965) (“If the defense appears plainly on the face of the complaint itself, the motion [to dismiss for failure to state a claim] may be disposed of under [Rule 12(b)].”).

In Colorado, “[a]n intervening cause only relieves the defendant of liability if it was not reasonably foreseeable.” Redden v. SCI Colo. Funeral Servs., Inc., 38 P.3d 75, 81 (Colo. 2001) (en banc) (citing Webb v. Dessert Seed Co., 718 P.2d 1057, 1062-63 (Colo. 1986)). And, relevant here, “[f]oreseeability is ordinarily a question of fact.” Heinrich v. Master Craft Eng'g, Inc., 131 F.Supp.3d 1137, 1148 (D. Colo. 2015) (citing Westin Operator, LLC v. Groh, 347 P.3d 606, 614 n.5 (Colo. 2015)).

Here, the Second Amended Complaint does not “admit” that Sonoma's alleged actions- namely, of permitting “unauthorized individuals” to “illegally” take the Distillate Unit from its California facility- were unforeseeable. Indeed, Plaintiff alleges that the Distillate Unit was taken from Sonoma's facility by GenAg representatives, pursuant to “scheme” that involved Mr. Tagami. (Compl. ¶¶ 49-50.) Therefore, because the face of the Second Amended Complaint does not unequivocally establish that the actions by Defendants Sonoma and GenAg were unforeseeable, Defendant Tagami's motion to dismiss based on the affirmative defense of superseding cause should be denied. See Bistline v. Parker, 918 F.3d 849, 889 (10th Cir. 2019) (holding that a district court erred in dismissing claims on affirmative defense grounds, where the face of the complaint did not establish the elements of the affirmative defense).

D. The Breach of Contract Claim

In its operative pleading, Western Acceptance alleges that GenAg breached an oral contract relating to the Distillate Unit. (Compl. ¶¶ 30-34.) Specifically, the Second Amended Complaint alleges that “Plaintiff and GenAg entered into an oral contract, in addition to the contract with SXIP which GenAg now owns, for the design and manufacture of [the] Distillate Unit to be used in Plaintiff's business;” that “GenAg accepted monies directly from Plaintiff for said Contract;” that “Plaintiff performed all conditions precedent required by the Contract;” that “GenAg has failed and continues to fail to deliver to Plaintiff the equipment for which Plaintiff paid;” and that the “breach of the contract by GenAg has caused Plaintiff damages including out of pocket expenses and loss of revenue, and attorney's fees.” (Id. at ¶¶ 31-34.)

In Colorado, the elements of a breach of contract claim are: (1) the existence of a contract; (2) performance by the plaintiff or some justification for nonperformance; (3) failure to perform the contract by the defendant; and (4) resulting damages. W. Distrib. Co. v. Diodosio, 841 P.2d 1053, 1058 (Colo. 1992).

Here, Defendant GenAg argues that Plaintiff has failed to adequately allege “even a single element” of a breach of contract claim. (GenAg Defs.' Mot. 8-10.) As to the first element, GenAg argues that Western Acceptance's allegations are “insufficient to establish the existence of a contract.” (Id. at 8.) GenAg contends, specifically, that the Second Amended Complaint “does not allege what specific services [it] was to perform, the consideration for those services, [or] the timing of those services.” (Id.) Defendant GenAg emphasizes that, in addition to an oral contract between Plaintiff and itself, the Second Amended Complaint alleges a written contract between Plaintiff and SXIP, i.e., the MPA, which was also “for the design and manufacture of” the Distillate Unit. (GenAg Defs.' Mot. 8; see Compl. ¶ 10.) GenAg argues that the Second Amended Complaint's allegations make it impossible “to distinguish between what SXIP contracted for in the MPA” and “what GenAg supposedly contracted for” in the oral contract, a “problem” which GenAg contends is “compounded” by the fact that Western Acceptance also appears to allege that GenAg “stepped into SXIP's shoes with respect to the MPA.” (GenAg Defs.' Mot. 8.)

Plaintiff, in response, insists that its breach of contract claim against Defendant GenAg is not premised upon the written MPA.¹³ (Doc. No. 126 at 6.) Rather, it argues that, “separate and distinct from the MPA, ” Western Acceptance and GenAg reached an oral agreement, whereby “GenAg was to take over the design and manufacture of the Distillate Unit in exchange for direct payment by [Western Acceptance].” (Id. at 5-6.) It contends that the alleged oral contract is not merely “the MPA by a different name, ” because “GenAg is not a party to the MPA and [the MPA] was never transferred to GenAg.” (Id. at 6.)

13 In previous briefing, Western Acceptance has made clear that it “is not suing GenAg for any breach related to the MPA.” (Doc. No. 61 at 5.)

Under Colorado law, “[a] contract is formed when one party makes an offer and the other accepts it, and the agreement is supported by consideration.” See Fed. Deposit Ins. Corp. v. Fisher, 292 P.3d 934, 937 n.2 (Colo. 2013) (en banc) (“An enforceable contract requires mutual assent to an exchange, between competent parties, with regard to a certain subject matter, for legal consideration.”). To establish the existence of a contract, “the parties must agree upon all essential terms.” Fed. Lumber Co. v. Wheeler, 643 P.2d 31, 36 (Colo. 1981) (citations omitted). Those terms must be “definite, certain, clear, and unambiguous.” Yaekle v. Andrews, 195 P.3d 1101, 1112 (Colo. 2008) (quoting Mestas v. Martini, 155 P.2d 161, 164-65 (Colo. 1944)). Notably, “[t]he offer must not merely be complete in terms, but the terms must be sufficiently definite to enable to the court to determine whether the contract has been performed or not.” Stice v. Peterson, 355 P.2d 948, 952 (Colo. 1960); accord Watson v. Pub. Serv. Co. of Colo., 207 P.3d 860, 868 (Colo.App. 2008) (“The terms of the offer must be sufficiently definite that the promises and performances of each party are reasonably certain.”).

Here, Western Acceptance alleges that it “paid GenAg directly, ” in exchange for GenAg's promise to “design and manufacture [the] Distillate Unit to be used in [Western Acceptance]'s business.” (Compl. ¶¶ 17, 31.) At the same time, however, Plaintiff alleges that Defendant GenAg “now owns” the MPA, a contract which was also “for the design and manufacture of the [Distillate Unit] to be utilized in Plaintiff's business.” (Id. at ¶¶ 10, 31.) The Second Amended Complaint is devoid of any additional allegations from which to discern GenAg's obligations under the oral contract, as distinguished from its obligations, if any, under the MPA.¹⁴ Notably, GenAg's alleged breach of the oral contract appears to hinge on its purported failure “to deliver” the Distillate Unit to Western Acceptance, making that an essential term of the parties' agreement. (Id. at ¶ 33.) However, nowhere in the Second Amended Complaint does Plaintiff allege that Defendant GenAg ever agreed to deliver the Distillate Unit, much less that it promised to do so pursuant to the terms of the oral contract. “The law is clear that although the parties may intend to enter into a contract, if essential terms are omitted from their agreement, or if some of the terms included are too indefinite, no legally enforceable contract will result.” Ellis Canning Co. v. Bernstein, 348 F.Supp. 1212, 1223 (D. Colo. 1972). Because the terms of the oral contract between Western Acceptance and GenAg, as alleged, are too uncertain to ascertain the parties' intent, the court cannot find that a valid contract, in fact, exists. See Stice, 355 P.2d at 952 (holding evidence as to an alleged oral contract to be “too vague and indefinite to support a claim that a contract ever existed, ” where the purported agreement left “all terms and conditions in doubt, ” including the nature of the parties respective obligations arose); see also Brightspot Sols., LLC v. A+ Prods., Inc., No. 20-cv-03335-MEH, 2021 WL 1251512, at *5 (D. Colo. April 5, 2021) (holding the terms of an agreement to be “too indefinite” to support a breach of contract claim under Colorado law, where the plaintiff alleged that it “paid for sufficient materials to have” a certain amount of products manufactured, but failed to allege that the defendant “agreed to manufacture those quantities”); Fleming v. Sims, No. 17-cv-1827-WJM-NRN, 2019 WL 967816, at *6 (D. Colo. Feb. 28, 2019) (finding no valid contract to exist, where the terms of the purported contract were “so ambiguous and difficult to comprehend” that the court was left “utterly at a loss to understand what promises or performances [the plaintiff] was to render”); Tan v. Det-CO, Inc., No. 17-cv-01678-NYW, 2018 WL 922133, at *10 (D. Colo. Feb. 15, 2018) (dismissing a claim for breach of an oral contract, where the complaint's allegations failed to set forth “the material terms of the agreement”).

14 Paragraph 17 of the Second Amended Complaint states that “GenAg, during its many visits to Colorado Springs, told Plaintiff additional work would need to be done on the Distillate Unit for which Plaintiff paid GenAg directly.” (Compl. ¶ 17.) However, Plaintiff does not specify the nature of this “additional work.” Nor does Plaintiff allege that the “additional work” formed the basis for the oral contract at issue.

On this record, then, Plaintiff has failed to plausibly allege the existence of a valid oral contract between itself and Defendant GenAg. As such, Plaintiff's breach of contract claim against Defendant GenAg should be dismissed.

E. The Civil Theft Claim

Plaintiff seeks to impose liability against all Defendants except for Sonoma, pursuant to Colo. Rev. Stat. § 18-4-405, for civil theft. (Compl. ¶¶ 43-46.) The GenAg Defendants, specifically, seek dismissal of this claim, on the basis that the Second Amended Complaint's allegations “do not state a civil theft claim upon which relief can be granted.” (GenAg Defs.' Mot. 10.)

Colorado's civil theft statute permits the rightful owner of stolen property to recover that property from the possession of another person. Colo. Rev. Stat. § 18-4-405; Bermel v. BlueRadios, Inc., 440 P.3d 1150, 1157 (Colo. 2019) (“Section 18-4-405 provides the rightful owner of stolen property a private right of action against the wrongdoer without requiring proof of a criminal conviction.”). “To recover under the statute, the owner must prove that the taker committed acts constituting at least one of the statutory crimes of theft, robbery, or burglary.” Bermel, 440 P.3d at 1156-57 (Colo. 2019) (citation omitted); Itin v. Unger, 17 P.3d 129, 134 (Colo. 2000) (holding that the statute provides an owner of property with a private remedy that “requires proof a specified criminal act”); see Montoya v. Grease Monkey Holding Corp., 883 P.2d 486, 490 (Colo.App. 1994) (The civil theft statute “was intended to be a punitive measure depriving thieves and persons who buy and sell stolen goods of the immediate fruits of their criminal activities.”). “A person commits theft under [the statute] when he or she ‘knowingly obtains, retains, or exercises control over anything of value of another without authorization or by threat or deception,' and acts intentionally or knowingly in ways that deprive the other person of the property permanently.” Van Rees v. Unleaded Software, Inc., 373 P.3d 603, 608 (Colo. 2016) (quoting Colo. Rev. Stat. §§ 18-4-401(1)(a)-(d)). A civil theft claim may be asserted against the taker of the property, as well as against any person who is in possession of the stolen property. Colo. Rev. Stat. § 18-4-405.

Here, the Second Amended Complaint alleges that “persons from GenAg showed up at Plaintiff's Colorado Springs facility and took heaters and other component parts . . . necessary for the distillate process;” that one of GenAg's agents “told Plaintiff that after completion of the Distillate Unit, GenAg wanted to take possession of it;” that Plaintiff “vehemently refused;” that the Distillate Unit was thereafter “taken by Defendants;” that “Defendant[s] refuse to tell Plaintiff where the property is and refuse[] to return the property to Plaintiff;” that Plaintiff is the “owner of the property which was stolen;” that the GenAg Defendants “are responsible for stealing the property;” and that the GenAg Defendants “are believed to be in actual and/or constructive possession of the property.” (Compl. ¶¶ 18, 21-23, 45.)

These allegations, taken as true and construed in Plaintiff's favor, establish the requisite elements of a civil theft claim, insofar as Plaintiff alleges that the GenAg Defendants knowingly took possession of the Distillate Unit and Heaters; that the Distillate Unit and Heaters are owned by Plaintiff; that the GenAg Defendants did so without Plaintiff's authorization; that Plaintiff demanded the return of the property after it was taken; and that the GenAg Defendants refused that request. See Cent. Garden & Pet Co. v. Paladin Com. Grp., LLC, No. 07-cv-02224-MSK-MEH, 2008 WL 3852683, at *2 (D. Colo. Aug. 19, 2008) (finding a civil theft claim to be plausibly alleged, where the defendant was said to have collected funds from a third party that were owned by the plaintiff, the defendant's collection of the funds was without the plaintiff's consent or approval, and the defendant later “demanded consideration it was not entitled to” as a condition for returning the funds to the plaintiff).

Accordingly, the court finds that Plaintiff has met the elements necessary to plausibly state a violation of § 18-4-405 against the GenAg Defendants. As such, the GenAg Defendants' motion to dismiss that claim should be denied.

F. The Unjust Enrichment Claim

The GenAg Defendants also move to dismiss the unjust enrichment claim against them. (GenAg Defs.' Mot. 14-15; see Compl. ¶¶ 56-59.) “Unjust enrichment is a quasi-contractual, equitable remedy designed to undo a benefit conferred on one party at the unfair expense of another party.” Pulte Home Corp. v. Countryside Cmty. Ass'n, Inc., 382 P.3d 821, 833 (Colo. 2016). To state a claim for unjust enrichment under Colorado law, a plaintiff must allege: “(1) [t]he defendant received a benefit (2) at the plaintiff's expense (3) under circumstances that would make it unjust for the defendant to retain the benefit without commensurate compensation.” City of Arvada ex rel. Arvada Police Dep't v. Denver Health & Hosp. Auth., 403 P.3d 609, 616 (Colo. 2017) (quoting Lewis v. Lewis, 189 P.3d 1134, 1141 (Colo. 2008)).

Here, Plaintiff has adequately alleged all three elements of its unjust enrichment claim. Plaintiff alleges, first, that the GenAg Defendants “have received a large sum of money, directly or indirectly from Plaintiff, for the manufacture of the Distillate Unit.” (Compl. ¶ 58.) As to the second element, Plaintiff alleges that the Distillate Unit “was stolen from Plaintiff, ” and that, “in addition to having the moneys, ” the GenAg Defendants presently “have the Distillate Unit.” (Id.) Finally, as to the third element, Plaintiff alleges that, under these circumstances, it would be unjust for the GenAg Defendants “to retain the moneys and property to Plaintiff's detriment.” (Id.)

Accordingly, Plaintiff has set forth sufficient factual allegations to state a claim for unjust enrichment. See United States v. Centerre Gov't Contracting Grp., LLC, No. 13-cv-02823-CMA-MJW, 2014 WL 1924368, at *8 (D. Colo. May 13, 2014) (denying a motion to dismiss a claim for unjust enrichment, where the complaint alleged that the plaintiff “provided labor and material at its expense, and it has not been paid in full for the labor and materials;” that the defendants “received benefits from the labor and material provided to them;” and that “under these circumstances, it is unjust for the [] defendants to retain the benefits of the labor and material without paying for them”); The Arc of the Pikes Peak Region v. Nat'l Mentor Holdings, Inc., No. 10-cv-01144-REB-BNB, 2011 WL 1047081, at *6 (D. Colo. March 18, 2011) (finding allegations that the defendants “stole money from plaintiffs” to be sufficient to allege unjust enrichment under Colorado law).

The GenAg Defendants argue, nevertheless, that the unjust enrichment claim against them must fail, as it is “merely a backdoor attempt” by Plaintiff “to assert in quasi-contract what it already alleges in its breach of contract claim.” (GenAg Defs.' Mot. 15.) In other words, the GenAg Defendants contend that the unjust enrichment claim is merely a reiteration of the breach of contract claim.

It is true that, under Colorado law, a party generally “cannot recover for unjust enrichment by asserting a quasi-contract when an express contract covers the same subject matter because the express contract precludes any implied-in-law contract.” Pulte, 382 P.3d at 833 (citation omitted). However, there are exceptions to this principle. Id. Relevant here, a party may recover on a quasi-contract (i.e., unjust enrichment), where the party “will have no right under an enforceable contract.” Interbank Invs., LLC v. Eagle River Water & Sanitation Dist., 77 P.3d 814, 816 (Colo.App. 2003) (quoting Backus v. Apishapa Land & Cattle Co., 615 P.2d 42, 44 (Colo.App. 1980)). For instance, quasi-contractual recovery may be permitted when an express contract claim fails. Id. Here, Plaintiff does not allege any enforceable contract against Defendant Becker, at all. And, as discussed supra, Plaintiff has failed to plausibly allege a breach of contract claim against Defendant GenAg. Further, as Plaintiff correctly points out, regardless of the viability of the breach of contract claim, at this stage of the proceedings, it is permittable to plead alternative and potentially inconsistent bases for relief. See Kaiser v. Bowlen, 181 F.Supp.2d 1200, 1203 (D. Colo. 2002) (“Alternative theories of relief are permitted at the pleading stage of litigation. The plaintiff may be required to elect between these claims before trial.”).

For those reasons, therefore, the GenAg Defendants' motion to dismiss the unjust enrichment claim, under Rule 12(b)(6), should also be denied.

G. The Remaining Claims

1. The Economic Loss Rule

The GenAg Defendants move to dismiss the conversion and conspiracy claims against them, first, on the grounds that those claims are barred by Colorado's economic loss rule. (GenAg Defs.' Mot. 11, 13; see Compl. ¶¶ 47-55.)

Pursuant to the economic loss rule, “a party suffering only economic loss from the breach of an express or implied contractual duty may not assert a tort claim for such a breach absent an independent duty of care under tort law.” Bermel, 440 P.3d at 1153 (quoting Town of Alma v. AZCO Constr., Inc., 10 P.3d 1256, 1264 (Colo. 2000)). “To survive a motion to dismiss based on the economic loss rule, [a plaintiff] merely has to allege sufficient facts, taken in the light most favorable to [the plaintiff], that would amount to the violation of a tort duty that is independent of the contract.” Van Rees v. Unleaded Software, Inc., 373 P.3d 603, 608 (Colo. 2016). “Under Colorado law, for a duty to be ‘independent' of a contract, and thus actionable in tort notwithstanding the economic-loss rule, ” the duty must: (1) “arise from a source other than the relevant contract;” and (2) “the duty must not be a duty also imposed by the contract.” Haynes Trane Serv. Agency, Inc. v. Am. Standard, Inc., 573 F.3d 947, 962 (10th Cir. 2009) (citing BRW, Inc. v. Dufficy & Sons, Inc., 99 P.3d 66, 74 (Colo. 2004)); Grynberg v. Agri Tech, Inc., 10 P.3d 1267, 1270 (Colo. 2000)). “The source of the duty may be determined by considering three factors: (1) whether the relief sought is the same; (2) whether there is a recognized common law duty in tort; and (3) whether the tort duty differs from the contractual duty.” Electrology Lab'y, Inc. v. Kunze, 169 F.Supp.3d 1119, 1152 (D. Colo. 2016) (citing BRW, 99 P.3d at 74).

Here, Plaintiff's conspiracy and conversion claims against Defendant Becker are clearly not barred by the economic loss rule. “The economic loss rule applies where the plaintiff has an enforceable contractual remedy against the person or entity sought to be charged with liability.” Rhino Fund, LLLP v. Hutchins, 215 P.3d 1186, 1195 (Colo.App. 2008); accord Town of Alma, 10 P.3d at 1264 n.12 (“[T]he economic loss rule applies here to prohibit . . . duplicate claims under tort and contract theories.”). In this case, Plaintiff neither alleges, nor argues, that it has a contractual remedy against Defendant Becker, pursuant to any contract. As such, the economic loss rule is irrelevant to Plaintiff's tort claims against Defendant Becker. See Rhino Fund, 215 P.3d at 1195 (holding that the economic loss rule did not apply to conversion and civil theft claims, where the plaintiff had “no contractual remedy against [the defendant] for his conversion and civil theft, ” given that the defendant was not a party to the contract at issue); Satcom Sol. & Res. LLC v. Pope, No. 19-cv-02104-CMA-GPG, 2020 WL 4511773, at *15 (D. Colo. Apr. 20, 2020) (holding that the economic loss rule did not preclude a plaintiff's conversion claim, where the contract at issue was “silent” as to the defendant's relevant contractual duties).

The Second Amended Complaint references two contracts pertaining to GenAg: (1) the written MPA, which was entered into by Western Acceptance and SXIP, and which GenAg “now owns” in some unspecified capacity; and (2) the oral contract between Western Acceptance and GenAg. (Compl. ¶¶ 10, 31.) Both contracts concern “the design and manufacture of the Distillate Unit.” (Id. at ¶¶ 10, 17, 31.) The tort claims against GenAg, by contrast, relate to Defendants' wrongful taking of the Distillate Unit and Heaters. (Id. at ¶¶ 49, 54.) The Second Amended Complaint does not allege that GenAg was obligated, under either the MPA or the oral contract, to deliver the Distillate Unit to Western Acceptance. Nor does the Second Amended Complaint allege that either contract imposed duties upon GenAg relating to the Heaters, at all.

GenAg apparently reads the Second Amended Complaint as alleging that it was “paid (pursuant to one or more contracts) to design, manufacture, and deliver” certain “equipment” to Plaintiff.¹⁵ (GenAg Defs.' Mot. 11.) Defendant GenAg argues that “[a]ny duty [it] had related to the equipment was governed by those contracts, ” and that “[a]ny loss Plaintiff allegedly suffered is encompassed in Plaintiff's claim for breach of contract.” (Id. at 11-12.) However, GenAg does not point to any provisions of the written MPA, nor any allegations within Plaintiff's operative pleading, which identify GenAg's affirmative contractual duties.

15 While GenAg construes the Second Amended Complaint as alleging a contractual duty owed by GenAg to “deliver” the “equipment” to Western Acceptance, the operative pleading is devoid of any such allegation.

In determining whether the economic loss rule applies to bar a particular tort claim, the court must initially identify “the source of the duties of the parties.” Town of Alma, 10 P.3d at 1262. If the duty is also “memorialized in the contracts, it follows that the plaintiff has not shown any duty independent of the interrelated contracts and the economic loss rule bars the tort claim.” BRW, 99 P.3d at 74. With respect to the tort claims asserted against GenAg here, the difficulty in determining what duties arose from the contract or are independent of the contract, is that the present record is devoid of specific details regarding the duties and obligations GenAg did and did not assume under any contract, oral or written. In the absence of additional allegations concerning GenAg's affirmative contractual duties, the court cannot determine whether GenAg's purportedly breached duties arose under a contract, as opposed to from some independent duty of care under tort law. See Haynes, 573 F.3d at 962-63 (10th Cir. 2009) (declining to dismiss a tort claim despite the presence of a written contract, where the subject of the tort claim was not clearly memorialized in the contract); Satcom, 2020 WL 4511773, at *15 (holding that a plaintiff's conversion claim, which alleged that the defendants wrongfully withheld money owed under a contract, was not precluded by Colorado's economic loss rule, where there were “no provisions within the contract” obligating the defendants to deliver payment); Swan Global Invs., LLC v. Young, No. 18-cv-03124-CMA-NRN, 2020 WL 897654, at *5-6 (D. Colo. Feb. 25, 2020) (holding that a plaintiff's tort claims were not precluded by Colorado's economic loss rule, where the relevant contract was “extremely vague and unspecific” as to the defendant's affirmative contractual duties, and where the contract was “silent with respect to all of [the plaintiff]'s tort claims”). Accordingly, at this stage of the proceedings, it is not possible to determine whether the economic loss rule bars tort recovery against GenAg.

For those reasons, therefore, the GenAg Defendants' motion to dismiss, to the extent predicated on the economic loss rule, should be denied.

2. The Conversion Claim

Western Acceptance brings a claim against the GenAg Defendants for “negligently or intentionally exercis[ing] unauthorized dominion over” its property, specifically, the Distillate Unit and Heaters. (Compl. ¶¶ 23, 54.) “Conversion under Colorado law is ‘any distinct, unauthorized act of dominion or ownership exercised by one person over personal property belonging to another.'” Scott v. Scott, 428 P.3d 626, 634 (Colo.App. 2018) (quoting Itin, 17 P.3d at 135 n.10). To state a claim for conversion, a plaintiff must allege that “(i)[ the defendant] exercised dominion and control over property; (ii) that property belonged to [the plaintiff]; (iii) [the defendant's] exercise of control was unauthorized; (iv) [the plaintiff] demanded return of the property; and (v) [the defendant] refused to return it.” Id. (citations omitted). “Although the act of conversion takes place at the time the converter takes dominion over the property, predicates to a successful claim for conversion are the owner's demand for the return of the property, and the controlling party's refusal to return it.” Glenn Arms Assocs. v. Century Mortg. & Inv. Corp., 680 P.2d 1315, 1317 (Colo.App. 1984).

Here, Plaintiff's allegations adequately set forth each element of a conversion claim. As to the first element, the Second Amended Complaint alleges that “persons from GenAg” “took” the Heaters from Western Acceptance's facility; that Sonoma “allowed” GenAg representatives “to take” the Distillate Unit from Sonoma's facility; and that the GenAg Defendants are presently “believed to be in actual and/or constructive possession of the property.” (Compl. ¶¶ 18, 21-22, 41, 45.) These allegations are sufficient to show that the GenAg Defendants exercised dominion or control over the Distillate Unit and Heaters. Plaintiff alleges, as to the second element, that it possesses “a superior right of ownership to the property, ” and also that it is “the owner of the property which was stolen.” (Id. at ¶¶ 45, 53.) As to the third element, Plaintiff alleges that it did not authorize the GenAg Defendants to retain the Distillate Unit and Heaters. (Id. at ¶¶ 21-23, 45.) Fourth, Plaintiff alleges that it made “repeated demands” for the return of the property. (Id. at ¶ 23.) Finally, it alleges that Defendants “refuse[d] to return the property to Plaintiff.” (Id.)

The GenAg Defendants, for their part, do not appear to dispute that Plaintiff has plausibly alleged a conversion claim against them with respect to the Distillate Unit. (See GenAg Defs.' Mot. 13-14.) They contend, however, that the Second Amended Complaint “does not contain a single non-conclusory allegation” showing: “(1) that the heaters belonged to Plaintiff; (2) who took them or how those people were or are connected to [GenAg]; (3) that [GenAg]'s alleged taking of the heaters was unauthorized; (4) that Plaintiff demanded return of the heaters; or (5) that [GenAg] refused to return the heaters.” (Id. at 14.) However, the court finds these arguments to be without merit. First, although Plaintiff does not explicitly allege that it owns the Heaters, it does allege: (1) that the Heaters were taken from Plaintiff's facility; and (2) that Plaintiff is the “owner of the property which was stolen.” (Compl. ¶¶ 18, 45.) These allegations can be fairly read to claim that Plaintiff owns the Heaters. And, while the Second Amended Complaint does not allege facts showing that the initial taking of the Heaters was unauthorized, Plaintiff does allege that the GenAg Defendants ultimately took possession of the Heaters and then refused to return the property. (Id. at ¶¶ 23, 45); see Scott, 428 P.3d at 634 (“A person in lawful possession of property may commit conversion when he or she refuses the legal owner's demand for return of the property.”). As to the GenAg Defendants' remaining arguments, the Second Amended Complaint clearly alleges that “persons from GenAg” took the Heaters, and that, “[d]espite repeated demands, ” Defendants “refuse[] to return the property to Plaintiff.” (Compl. ¶¶ 18, 23.) At the pleading stage, this is enough to push the “right of relief above the speculative level.” Twombly, 550 U.S. at 555.

Accordingly, the GenAg Defendants' motion to dismiss the conversion claim should also be denied.

3. The Conspiracy Claim

The GenAg Defendants and Defendant Tagami separately move to dismiss the civil conspiracy claim. (GenAg Defs.' Mot. 12-13; Tagami Mot. 14.) “To establish a civil conspiracy in Colorado, a plaintiff must show: (1) two or more persons; (2) an object to be accomplished; (3) a meeting of the minds on the object or course of action; (4) an unlawful overt act; and (5) damages as to the proximate result.” Nelson v. Elway, 908 P.2d 102, 106 (Colo. 1995) (citing Jet Courier Serv., Inc. v. Mulei, 771 P.2d 486, 502 (Colo. 1989)). To state a viable conspiracy claim, a plaintiff must “allege specific facts showing agreement and concerted action among defendants.” DTC Energy Grp., Inc. v. Hirschfeld, 420 F.Supp.3d 1163, 1182 (D. Colo. 2019) (quoting Durre v. Dempsey, 869 F.2d 543, 545 (10th Cir. 1989)); see Nelson, 908 P.2d at 106 (“The court will not infer the agreement necessary to form a conspiracy; evidence of such an agreement must be presented by the plaintiff.”). Further, “the purpose of the conspiracy must involve an unlawful act or unlawful means.” Nelson, 908 P.2d at 106. “A party may not be held liable for doing in a proper manner that which it had a lawful right to do.” Id. (citation omitted).

Here, the Second Amended Complaint alleges that GenAg, CCIG, and the Individual Defendants “perpetuated a scheme” to unlawfully take the Distillate Unit and Heaters from Western Acceptance. (Compl. ¶ 49.) Plaintiff alleges, specifically, that:

GenAg and CCIG, through their co-ownership, co-Agents/employees, and co-actions, via meetings with Plaintiff and conversations with Plaintiff were conspiring to learn of Plaintiff's business, its method for operating, its use and ownership of equipment, and its trade secrets so that GenAg, the GenAg Agents, and CCIG could eventually take Plaintiff's Heaters and Distillate Unit and Plaintiff's money for their own use to Plaintiff's detriment.

(Id. at ¶ 51.)

These allegations fail to outline specific agreements or concerted action among Defendants that would establish “a meeting of the minds on the object or course of action.” The Second Amended Complaint alleges a myriad of interwoven relationships between GenAg, CCIG, and the Individual Defendants. (See, e.g., Compl. ¶¶ 10-12, 19-20.) One could reasonably speculate, based on the nature of those alleged relationships, that those individuals and entities potentially engaged in concerted action. However, the relationships between the alleged co-conspirators, alone, is insufficient to demonstrate that they agreed upon a course of action to steal Plaintiff's business equipment and money. See Procom Supply, LLC v. Langner, No. 12-cv-00391-MSK-KMT, 2013 WL 4510243, at *11 (D. Colo. Aug. 24, 2013) (“Although the multiple bank transfers that occurred shortly after the Invested Funds were wired to Real Investors are suspicious, the fact that the individual defendants were members of Real Investors LLC and allegedly received portions of the Invested Funds is insufficient to demonstrate that Defendants agreed upon a course of action to solicit and misappropriate [the plaintiff]'s investment.”). Indeed, even “[s]ilent knowledge of an unlawful act is insufficient to establish the requisite agreement.” More v. Johnson, 568 P.2d 437, 494 (Colo. 1977). Ultimately, Plaintiff “cannot succeed on its claim for civil conspiracy without showing that each defendant agreed to do something in furtherance of the conspiracy, knowing of its improper purpose.” Powell Prods., Inc. v. Marks, 948 F.Supp. 1469, 1480 (D. Colo. 1996). The operative pleading, here, is devoid of any specific facts demonstrating concerted action and/or agreement by GenAg, CCIG, and the Individual Defendants to steal Plaintiff's property and/or money. In the absence of such allegations, Plaintiff has failed to nudge its civil conspiracy claim across “the line from conceivable to plausible.” Twombly, 550 U.S. at 556; see Wagner v. CHER, LLC, No. 18-cv-01007-STV, 2018 WL 6046432, at *5 (D. Colo. Nov. 19, 2018) (“Plaintiff's bare allegation that Ms. Eberle and Ms. Stitch ‘agreed by words and conduct' to terminate Plaintiff without any specific factual allegations regarding the agreement or the alleged agreed upon conduct is insufficient to state a [civil conspiracy] claim.”); Harris v. Commerce City, No. 09-cv-01728-MSK-KMT, 2010 WL 3307465, at *5 (D. Colo. Aug. 18, 2010) (finding allegations-that “defendants agreed by words or conduct to accomplish unlawful goals, ” and that “defendants schemed and acted in concert to apply undue pressure and threats of a[n] arrest”-to be insufficient to state a civil conspiracy claim); Brinkman Constr., Inc. v. Lloyd, No. 19-cv-03438-CMA-KLM, 2020 WL 9424363, at *14 (D. Colo. June 29, 2020) (finding allegations-that “Defendant, Ricky Naylor and/or NCSE conspired together, ” and that “[t]here was a meeting of the minds of Defendant, Ricky Naylor and/or NCSE to misrepresent . . . NCSE's true financial condition as demonstrated by the executed Agreement and financial documents provided by Defendant to [Plaintiff]”-to be “conclusory” and inadequate to show a “meeting of the minds”); c.f. DTC Energy, 420 F.Supp.3d at 1182 (holding a civil conspiracy claim to be plausibly alleged, where the complaint included “specific allegations of concerted action, ” including that the defendants “exchanged ideas about” the subject of the conspiracy, and communicated via “secret” email accounts, so as to avoid the plaintiff's detection).

In sum, the court finds that Plaintiff's claim for civil conspiracy fails to satisfy the Rule 8(a) pleading standard. Accordingly, it is recommended that the GenAg Defendants' and Defendant Tagami's motion to dismiss that claim, under Rule 12(b)(6), be granted.

IV. The Motion to Compel Mediation

Finally, GenAg argues, in the alternative to its motion to dismiss, that the claims against it are subject to certain mandatory dispute resolution procedures contained within the MPA. (GenAg Mot. 1 & n.1; see MPA) Specifically, GenAg references the following provisions of the MPA [“ADR Provisions”]:

12. MEDIATION/ARBITRATION. The parties acknowledge that any dispute or controversy concerning this Agreement or the rights of the parties under this Agreement, including (i) whether or not any such dispute or controversy is arbitrable and/or subject to this Section 12, or (ii) any breach of this Agreement, shall be determined in accordance with the following provisions:

12.1. Upon the occurrence of any dispute or controversy that cannot be settled through direct discussions, the parties shall endeavor to settle the dispute by nonbinding mediation administered by Judicial Arbitration & Mediation Services, Inc. (“JAMS”), before resorting to arbitration. The parties shall agree to a mediator and if they are unable to agree, the Santa Rosa office of JAMS shall select a mediator who may be rejected by the parties only for bias. The parties shall notify the mediator in writing of the existence of a dispute and the mediator shall have thirty (30) days from receipt of notification to meet with the parties and help them resolve the dispute, unless the parties mutually agree to an extension of the deadline. The cost of mediation (but not the attorneys' fees of the respective parties) shall be borne equally between the parties. No. party can compel arbitration before the end of the thirty (30) day period. If any

party refuses to participate in a mediation, that party will not be entitled to recover his or its attorneys' fees under Sections 12.2.4 or 13.6 below or otherwise even if that party is the “prevailing party” in a subsequent arbitration.

12.2. Any remaining unresolved controversy or claim arising out of or relating to this Agreement shall be settled by binding arbitration, which shall constitute the sole and exclusive remedy. Any party desiring to institute an arbitration proceeding shall send written notice thereof, briefly describing the nature of the matter to be arbitrated, to the JAMS (Santa Rosa Office) with a copy to the other parties. Any such arbitration proceeding shall be carried out in accordance with the following provisions:

12.2.1. The arbitration shall be conducted under the JAMS rules, in effect at the time a demand for arbitration is made. To the extent that there is any conflict between the JAMS rules and these arbitration provisions, these provisions shall govern and determine the rights of the parties.

12.2.2. The arbitration shall take place in Santa Rosa, California before a single arbitrator. The Santa Rosa Office of JAMS shall provide a list of the available qualified arbitrators to arbitrate such dispute following the demand for arbitration. The parties shall each rank the arbitrators in their respective order of preference . . . and present the rankings to the Santa Rosa Office of Jams. The highest ranking arbitrator . . . shall serve as the single arbitrator.

12.2.3. The decision of the arbitrator, including a determination of the amount of any damages suffered, shall be conclusive, final and binding on the parties, their successors and assigns, as applicable and not subject to appeal. The arbitrator will determine which party or parties is or are the “prevailing party” for purposes of Sections 12.1 above and 12.2.4 and 13.6 below.

12.2.4. The costs of arbitration, including attorneys' fees, administrative fees, fees for a record and transcript, and the arbitrator's fees shall be borne by the party(ies) not prevailing in such action as determined by the arbitrator.

(MPA 8 § 12.)

GenAg argues that Section 12.1 of the MPA obligates Western Acceptance to submit all of its claims against GenAg to mandatory, nonbinding mediation. (GenAg Mot. 4-5.) GenAg insists that this case must, therefore, be stayed “to give effect to [the] contractual mandatory mediation provision.”¹⁶ (Id. at 1.)

16 GenAg also contends that, pursuant to Section 12.2 of the MPA, Western Acceptance's claims must be submitted to binding arbitration following mediation. (GenAg Mot. 3, 11-12.) GenAg asserts that it “reserves the right” to seek to compel arbitration after the required mediation has taken place. (Id. at 11-12.)

The MPA, by its terms, is an agreement between Western Acceptance and SXIP. (MPA 2, 10, 12.) GenAg contends, however, that it is entitled to enforce the terms of the MPA, including the ADR Provisions, by virtue of an Asset Purchase Agreement [“APA”], pursuant to which GAE, a subsidiary of GenAg, purchased “certain assets” from SXIP. (GenAg Mot. 3.) According to GenAg, “[o]ne of the assets purchased through the APA is the MPA.” (Id.) Defendant GenAg contends that the APA “therefore entitles” it to compel mediation of Plaintiff's claims against it, pursuant to the MPA's ADR provisions. (Id.)

A. Standard of Review

The parties agree, and the court evinces, that the present dispute is governed by the Federal Arbitration Act [“FAA”], 9 U.S.C. §§ 1-16. (See GenAg Mot. 11; Doc. No. 125 at 2.) “The FAA applies to all arbitration agreements ‘involving commerce,' and ‘create[s] a body of federal substantive law of arbitrability, applicable to any arbitration agreement within coverage of the Act.'” Comanche Indian Tribe of Okla. v. 49, LLC, 391 F.3d 1129, 1131 (10th Cir. 2004) (citations omitted). The FAA “manifests a liberal federal policy favoring arbitration.” Id. (quoting Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 25 (1991)) (internal quotation marks omitted). It “reflects the fundamental principle that arbitration is a matter of contract, ” “places arbitration agreements on an equal footing with other contracts, ” and “requires courts to enforce [such agreements] according to their terms.” Rent-A-Car West, Inc. v. Jackson, 561 U.S. 63, 67-68 (2010) (citations omitted). Under the FAA, “[d]isputes are subject to arbitration when a valid and enforceable arbitration agreement exists, and when the dispute falls within the scope of . . . the arbitration agreement.” Frazier v. W. Union Co., 377 F.Supp.3d 1248, 1257 (D. Colo. 2019) (citations omitted).

“Determining whether a dispute is subject to arbitration ‘is similar to summary judgment practice.'” Petrie v. GoSmith, Inc., 360 F.Supp.3d 1159, 1161 (D. Colo. 2019) (quoting Bellman v. i3Carbon, LLC, 563 Fed.Appx. 608, 613 (10th Cir. 2014)). “The party moving to compel arbitration must present ‘evidence sufficient to demonstrate the existence of an enforceable agreement.'” Id. (quoting Bellman, 563 Fed.Appx. at 1161). “The burden then shifts to the nonmoving party ‘to raise a genuine dispute of material fact regarding the existence of an agreement.'” Id. (quoting Bellman, 563 Fed.Appx. at 1161).

B. Evidentiary Objections

The exhibits attached to Gen Ag's motion include an affidavit from its Chief Executive Officer, Defendant Callaghan Becker. ([“Becker Affidavit”], Doc. No. 116-1.) In his affidavit, Mr. Becker states that, “[o]n or about May 2, 2019, ” GAE and SXIP “entered into an Asset Purchase Agreement pursuant to which GAE acquired, among other assets, the MPA.” (Id. at ¶ 3.) Mr. Becker further declares that he is “a manager of GAE, ” and that GenAg is “an owner of GAE.” (Id. at ¶¶ 4-5.)

As a preliminary matter, Western Acceptance moves to exclude the Becker affidavit, in its entirety, on the basis that it is “conclusory, ” and does not lay a proper foundation, ” as to “how Mr. Becker has the knowledge his testimony reflects.” (Doc. No. 125 at 2-3.) Plaintiff contends, first, that Mr. Becker, in his affidavit, makes an improper “legal conclusion” that the APA “conveyed the rights in the MPA to GAE.” (Id. at 2.) The court disagrees. Mr. Becker gives his subjective belief as to the terms of the MPA. This is not a legal conclusion and is allowable. See 1 Richard A. Lord, Williston on Contracts § 4:1 (4th ed. updated 2021) (“In the formation of contracts, . . . it was long ago settled that secret, subjective intent is immaterial, so that mutual assent is to be judged only by overt acts and words rather than by the hidden, subjective or secret intention of the parties.”).

Plaintiff also argues that Mr. Becker's affidavit “lays no predicate for [his] actual role in [GAE or GenAg], how he purportedly knows ‘GAE acquired the MPA,' or any other details which would permit the Court to be assured of his qualifications and ability to attest.” (Doc. No. 125 at 3.) Affidavits “must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated.” Felkins v. City of Lakewood, 774 F.3d 647, 650 (10th Cir. 2014) (quoting Fed.R.Civ.P. 56(c)(4)). “Personal knowledge” means that the affiant's testimony is based on his own actual perceptions and observations, as opposed to “statements of mere belief.” Argo v. Blue Cross & Blue Shield of Kan., Inc., 452 F.3d 1193, 1200 (10th Cir. 2006). Nevertheless, personal knowledge “may be inferred from the context of the affidavit.” Roberts v. Cessna Aircraft Co., 289 Fed.Appx. 321, 324 (10th Cir. 2008) (citation omitted).

In his affidavit here, Mr. Becker testifies as to his respective positions with GenAg and GAE, as well as his knowledge of the contracts to which those entities are parties. (Becker Aff. ¶¶ 1-2, 5.) From Mr. Becker's testimony, the court infers that he is testifying from personal knowledge. As such, Mr. Becker has laid a proper foundation for the statements set forth in his affidavit.

Accordingly, the court finds Mr. Becker's affidavit to be admissible, and it will be considering by the court to resolve the final pending motion.

C. The Question of Arbitrability

GenAg argues, first, that an arbitrator, rather than the court, must decide whether the claims in this action are subject to the MPA's ADR Provisions. (GenAg Mot. 5.)

“[A]rbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.” Dish Network, LLC v. Ray, 900 F.3d 1240, 1243 (10th Cir. 2018) (quoting Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (2002)). “Accordingly, the first task of a court asked to compel arbitration of a dispute is to determine whether the parties agreed to arbitrate that dispute.” Id. (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985)). This so-called “question of arbitrability” encompasses two types of disputes: (1) “disputes about ‘whether a particular merits-related dispute is arbitrable because it is within the scope of a valid arbitration agreement, '” and (2) “threshold disputes about ‘who should have the primary power to decide' whether a dispute is arbitrable.” Belnap v. Iasis Healthcare, 844 F.3d 1272, 1280 (10th Cir. 2017) (citations omitted). The Tenth Circuit has made clear that “the question of who should decide arbitrability precedes the question of whether a dispute is arbitrable.” Id. at 1281 (citations omitted).

Given that “arbitration is simply a matter of contract, ” the determination as to “‘who has the primary power to decide arbitrability' turns upon what the parties agreed about that matter.” Belnap, 844 F.3d at 1280 (quoting First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 943 (1995)). “Unless the parties clearly and unmistakably provide otherwise, the question of whether the parties agreed to arbitrate is to be decided by the court, not the arbitrator.” AT&T Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 649 (1986); accord BG Grp., PLC v. Rep. of Arg., 572 U.S. 25, 34 (2014) (“[C]ourts presume that the parties intend courts, not arbitrators, to decide what we have called disputes about ‘arbitrability.'”). Notably, “[t]he issue of whether an arbitration agreement was formed between the parties must always be decided by a court, regardless of whether the alleged agreement contained a delegation clause or whether one of the parties specifically challenged such a clause.” Fedor v. United Healthcare, Inc., 976 F.3d 1100, 1105 (10th Cir. 2020) (citations omitted); see also Granite Rock Co. v. Teamsters, 561 U.S. 287, 299-300 (2010) (holding that disputes over “formation of the parties' arbitration agreement” and “its enforceability or applicability to the dispute” at issue are “matters . . . the court must resolve”). Indeed, “a court cannot order arbitration of a particular dispute unless it is ‘satisfied that the parties agreed to arbitrate that dispute.'” Fedor, 976 F.3d at 1106 (quoting Granite Rock, 561 U.S. at 297).

In this case, Plaintiff argues that no valid and enforceable arbitration agreement exists, because Defendant GenAg is neither a party to, nor an intended beneficiary of, the MPA, and because “neither GenAg nor GAE have any rights under the MPA.” (Doc. No. 125 at 5-9.) Therefore, because “there is a dispute between the parties as to whether [they] entered into an agreement that included the arbitration clause, ” the court, not the arbitrator, must decide whether the MPA's ADR Provisions apply to this matter. Smith v. Aliera Cos., Inc., No. 1:20-cv-02130-RBJ, 2021 WL 1990009, at *7-8 (D. Colo. Apr. 16, 2021) (holding that, under such circumstances, “the Court should decide arbitrability”); Fedor, 976 F.3d at 1106-07 (“By claiming that neither she nor the other class members read or accepted the 2016 arbitration agreement, [the plaintiff] raised an issue of formation which . . . cannot be delegated to an arbitrator.”).

D. Whether Western Acceptance and GenAg Agreed to Arbitrate

The court next considers whether Western Acceptance and GenAg agreed to arbitrate. See Avedon Eng'g, Inc. v. Seatex, 126 F.3d 1279, 1287 (10th Cir. 1997) (“The existence of an agreement to arbitrate is a threshold matter which must be established before the FAA can be invoked.”). As the party seeking to compel arbitration here, GenAg bears the burden of establishing that the matter is subject to arbitration. Bellman, 563 Fed.Appx. at 1161.

1. Choice of Law

In evaluating “whether an agreement to arbitrate has been reached, ” the court “look[s] to state law principles of contract formation.” Avedon, 126 F.3d at 1287 (citation omitted). Here, Section 13.9 of the MPA contains a California choice of law provision, which states that: “This Agreement shall be governed by and construed under the laws of the State of California without giving effect to any choice or conflict of laws rule or provision that would cause the application of the domestic substantive laws of any other jurisdiction.” (MPA § 13.9.) Notwithstanding that provision, Western Acceptance argues that Colorado law governs whether GenAg “has the power to enforce” the terms of the MPA. (Doc. No. 125 at 6.) However, Western Acceptance does not provide legal support for this position. Nor does Western Acceptance explain how the application of California law would render a different result from the application of Colorado law. GenAg, for its part, does not address the issue, at all.

In diversity actions, the court applies “the substantive law of the forum state, including its choice of law rules.” Pepsi-Cola Bottling Co. of Pittsburgh, Inc. v. PepsiCo, Inc., 431 F.3d 1241, 1255 (10th Cir. 2005) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 495-97 (1941)). Colorado, the forum state here, generally recognizes contractual choice of law provisions. Kipling v. State Farm Mut. Auto. Ins. Co., 159 F.Supp.3d 1254, 1265 n.3 (citation omitted); see, e.g., Hansen v. GAB Bus. Servs., Inc., 876 P.2d 112, 113 (Colo.App. 1994). Consistent with the Restatement (Second) of Conflict of Laws § 187 (1971), Colorado courts “will apply the law chosen by the parties unless there is no reasonable basis for their choice or unless applying the chosen state's law would be contrary to the fundamental policy of the state whose law would govern otherwise.” Target Corp. v. Prestige Maintenance USA, Ltd., 351 P.3d 493, 497 (Colo.App. 2013) (citation omitted). Here, there is a reasonable basis for choosing California law, given that one of the contracting parties, SXIP, is a California entity with its principal place of business in California. See Yavuz v. 61 MM, Ltd., 465 F.3d 418, 428 (10th Cir. 2006) (observing that the primary rationale for enforcing choice of law provisions is “to protect the justified expectations of the parties and to make it possible for them to foretell with accuracy what will be their rights and liabilities under the contract”). Further, neither Western Acceptance, nor GenAg, argues that the application of California law would be contrary to any fundamental policy of Colorado. See Am. Express Fin. Advisors, Inc. v. Topel, 38 F.Supp.2d 1233, 1238 (D. Colo. 1999); Jet AirParts, LLC v. Reg. One, Inc., No. 18-CV-1189-EFM-KGG, 2018 WL 5617827, at *8 n.35 (D. Kan. Oct. 30, 2018).

Nevertheless, the Tenth Circuit has recognized “the logical flaw inherent in applying a contractual choice of law provision before determining whether the underlying contract is valid.” B-S Steel of Kan., Inc. v. Tex. Indus., Inc., 439 F.3d 653, 661 n.9 (10th Cir. 2006); accord Schnabel v. Trilegiant Corp., 697 F.3d 110, 119 (2d Cir. 2012) (“Applying the choice-of-law clause to resolve the contract formation issue would presume the applicability of a provision before its adoption by the parties has been established.”); Trans-Tec Asia v. M/V Harmony Container, 518 F.3d 1120, 1124 (9th Cir. 2008) (“[W]e cannot rely on the choice of law provision until we have decided, as a matter of law, that such a provision was a valid contractual term and was legitimately incorporated into the parties' contract.”). Therefore, considering this matter without deciding whether the choice of law provision is binding, the law of either California or Colorado may apply to this dispute. That being said, the court need not “resolve this typically thorny choice-of-law question” here, because the relevant principles that govern contract formation in California and Colorado are substantially similar, and “[w]hich state's law applies is therefore without significance.” Schnabel, 697 F.3d at 119; Schneider v. SRC Energy, Inc., 424 F.Supp.3d 1094, 1099 n.2 (D. Colo. 2019); see also Guinn v. Cedarhurst Living, LLC, No. 18-2182-DDC-KGG, 2018 WL 5281564, at *3 (D. Kan. Oct. 24, 2018) (“Nevertheless, this choice of law issue is not pivotal because the legal principles governing contract formation-at least as they apply to the current issue here-do not vary significantly from state to state.”); Favell Servs., Inc. v. Bond Int'l Software, Inc., No. 09-cv-682-TCK-TLW, 2010 WL 11561566, at *3 (N.D. Okla. July 23, 2010).

2. Whether a Valid Arbitration Agreement Exists

In determining whether a valid contract exists, the touchstone inquiry, under either California or Colorado law, is the parties' outward manifestation of assent. See Chi. Title Ins. Co. v. AMZ Ins. Servs., Inc., 115 Cal.Rptr.3d 707, 725 (Cal.Ct.App. 2010) (“Mutual assent is determined under an objective standard applied to the outward manifestations or expressions of the parties.”) (internal quotation marks omitted); Pierce v. St. Vrain Valley Sch. Dist. RE-1J, 981 P.2d 600, 603 (Colo. 1999) (“[T]he formation of a contract requires a bargain in which there is a manifestation of mutual assent to the exchange and a consideration.”); see also Jacks v. CMH Homes, Inc., 856 F.3d 1301, 1304 (10th Cir. 2017) (“As every first-year law student knows, an agreement or mutual assent is of course essential to a valid contract.”) (internal quotation marks and alterations omitted).

Here, Plaintiff argues that GenAg cannot compel mediation and/or arbitration, because “[i]t is undisputed that the MPA was between Plaintiff and SXIP, LLC, ” and because “there is no evidence that Plaintiff ever agreed with GenAg to arbitrate any issue related to the MPA or anything else.” (Doc. No. 125 at 5-6.) GenAg argues that, although it is not a signatory to the MPA, it can still enforce the MPA's ADR Provisions, by virtue of the fact that it is the owner of GAE, and GAE is “the successor to SXIP for purposes of the MPA.” (GenAg Mot. 6.) In making that argument, GenAg obliquely references third-party beneficiary and successor-in-interest theories.¹⁷ (Id.)

17 In its reply brief, Defendant GenAg argues that it also may enforce the MPA's ADR Provisions based on principles of equitable estoppel. (Doc. No. 133 at 3-5.) Because GenAg failed to raise this argument in its opening brief, the court need not address it. See In re Motor Fuel Temperature Sales Practices Litig., 872 F.3d 1094, 1113 n.5 (10th Cir. 2017) (“[A]rguments raised for the first time in a reply brief are waived.”).

In general, the contractual right to compel arbitration may not be invoked by one who is not a party to the agreement. Santich v. VCG Holding Corp., 443 P.3d 62, 65 (Colo. 2019); Crowley Maritime Corp. v. Boston Old Colony Ins. Co., 70 Cal.Rptr.3d 605, 611 (Cal.Ct.App. 2008); Smith v. Multi-Fin. Sec. Corp., 171 P.3d 1267, 1272 (Colo.App. 2007); see also However, courts have recognized that ordinary principles of contract and agency law may allow arbitration agreements to be enforced by or against nonsignatories in certain limited circumstances. See, e.g., Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 631 (2009); Comer v. Micor, 436 F.3d 1098, 1101 (9th Cir. 2006); N.A. Rugby Union LLC v. U.S.A. Rugby Football Union, 442 P.3d 859, 863 (Colo. 2019); see also Guinn, 2018 WL 5281564, at *3 (collecting cases). These “limited circumstances” include: “(1) incorporation of an arbitration provision by reference in another agreement; (2) assumption of the arbitration obligation by the nonsignatory; (3) agency; (4) veil-piercing/alter ego; (5) estoppel; (6) successor-in-interest; and (7) third-party beneficiary.” Santich, 443 P.3d at 65 (quoting N.A. Rugby Union, 442 P.3d at 863-64)); Suh v. Superior Court, 105 Cal.Rptr.3d 585, 593 (Cal.App. Ct. 2010) (identifying six theories under which nonsignatories can be compelled to arbitrate under California law). The court limits its analysis to those theories upon which Defendant GenAg relies.

GenAg argues that, as a nonsignatory to the MPA, it “is entitled to the benefit of” the MPA's ADR Provisions, because “the APA made GAE the successor to SXIP for purposes of the MPA, ” and because GenAg “is an owner of GAE.” (GenAg Mot. 6.) Under both California and Colorado law, nonsignatories can enforce arbitration agreements as third-party beneficiaries or successors-in-interest. N.A. Rugby Union, 442 P.3d at 866; Crowley, 70 Cal.Rptr.3d at 611; see also Molloy v. RK Netmedia, Inc., No. CV 09-02614 MMM (AGRx), 2009 WL 10669608, at *5 (C.D. Cal. Oct. 8, 2009) (“[N]on-signatory successors in interest to a contract are able to enforce an arbitration provision contained in the agreement.”).

“A third-party beneficiary may enforce a contract only if the parties to that contract intended to confer a benefit on the third party when contracting; it is not enough that some benefit incidental to the performance of the contract may accrue to the third party.” Everett v. Dickinson & Co., Inc., 929 P.2d 10, 12 (Colo.App. 1996); accord United States v. Paulson, 331 F.Supp.3d 1066, 1091 (S.D. Cal. 2018) (“To sue as a third-party beneficiary of a contract, the third party must show that the contract reflects the express or implied intention of the parties to the contract to benefit the third party.”). “While the intent to benefit the non-party need not be expressly recited in the contract, the intent must be apparent from the terms of the agreement, the surrounding circumstances, or both.” Parrish Chiropractic Ctrs., P.C. v. Progressive Cas. Ins. Co., 874 P.2d 1049, 1056 (Colo. 1994). “To determine the intent of the parties, the court should give effect to the plain and generally accepted meaning of the contractual language.” Copper Mountain Inc. v. Indus. Sys., Inc., 208 P.3d 692, 697 (Colo. 2009). “The critical fact that determines whether a nonsignatory is a third-party beneficiary is whether the underlying agreement manifests an intent to confer specific legal rights upon the nonsignatory.” N.A. Rugby Union, 442 P.3d at 865-66 (Colo. 2019) (quoting Ouadani v. TF Final Mile LLC, 876 F.3d 31, 39 (1st Cir. 2017)) (internal quotation marks and alterations omitted) (emphasis in original).

In arguing that it is entitled to compel arbitration as a nonsignatory here, GenAg points to Section 13.5 of the MPA, which states that: “This Agreement shall be binding on, and shall inure to the benefit of, the parties to it and their respective heirs, legal representatives, successors and permitted assigns.” (GenAg Mot. 6; see MPA 9 § 13.5.) Notably, however, aside from Section 12.2.3, which states that the arbitrator's decision “shall be conclusive, final and binding on the parties, their successors and assigns, ” the MPA's ADR Provisions refer only to the rights and obligations of the “parties.” (MPA 8 § 12.); see Hogan v. SPAR Grp., Inc., 914 F.3d 34, 40 (1st Cir. 2019) (holding that, even if the nonsignatory defendant “could show an intent of the parties to confer upon it some benefit unrelated to arbitration, ” the language of the arbitration clause “limit[ed] its applicability to the signatories by only covering disputes ‘between the Parties, '” and thus, the agreement did not “confer arbitration rights to” the nonsignatory defendant); Parker v. Ctr. for Creative Leadership, 15 P.3d 297, 299 (Colo.App. 2000) (holding that an attorney fees clause could not be enforced against a nonparty, because, unlike the arbitration clause within that same contract which specifically referenced a certain class to which the nonparty belonged, the attorney fees clause only referenced a “party”). Further, the MPA contains an Anti-Assignment Clause, which states:

13.3 Assignment. Neither this Agreement nor any right created hereby or in any agreement entered into in connection with the transactions contemplated hereby is assignable by any party hereto, whether by operation of law or otherwise, and no party may delegate its duties herein without the prior written consent of the other party; provided that [Western Acceptance] may transfer and assign its rights to a wholly-owned subsidiary, an affiliate of [Western Acceptance] or any other entity controlled by [Western Acceptance]; provided that [Western Acceptance] shall not be released or discharged from its obligations set forth in this Agreement.

(MPA 9 § 13.3.) The language of this provision accentuates the parties' intent to confine to its signatories the right to invoke the MPA's ADR Provisions. See Guinn, 2018 WL 5281564, at *4 (holding that a nonsignatory could not compel arbitration as a third party and successor-in-interest, where the relevant contract included no assignment provision); c.f. Wieshaar v. Wells Fargo Bank, N.A., No. 2:18-cv-02188-HLT-GLR, 2018 WL 4189696, at *3 (D. Kan. Aug. 31, 2018) (holding that a nonsignatory could compel arbitration as a successor-in-interest, where the agreement provided “that it applies to claims arising out of Plaintiff's employment . . . that Plaintiff may have against World Savings, including its successors and assigns”) (emphasis added). And, as Plaintiff points out, it is relevant that the MPA's Anti-Assignment provision contemplates a potential assignment by Western Acceptance to its subsidiaries, but is silent as to the rights of SXIP. (Doc. No. 125 at 6-7.)

In sum, the language of the MPA does not evince the contracting parties' intent to bind or benefit GenAg with respect to the ADR Provisions, as either a third-party beneficiary or a successor-in-interest. As such, GenAg has failed to meet its burden to show a valid arbitration agreement between itself and Western Acceptance. Without a valid arbitration agreement, the court cannot compel the parties to mediate their dispute.¹⁸

18 Even assuming a valid arbitration agreement between Western Acceptance and GenAg did exist, it is clear that the claims against GenAg would fall outside the scope of that agreement. Specifically, Plaintiff's breach of contract claim against Defendant GenAg is based on a purported oral contract, which is alleged to be separate from the MPA. (Compl. ¶ 31.)

Accordingly, Defendant GenAg's motion to compel mediation should be denied.

WHEREFORE, for the foregoing reasons, this court respectfully

RECOMMENDS that “General Agriculture, Inc.'s and Callaghan Becker's Motion to Dismiss Second Amended Complaint Pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6)” (Doc. No. 115) be GRANTED, in part, and DENIED, in part. Specifically, the civil conspiracy claim against Defendants GenAg and Becker should be dismissed, pursuant to Rule 12(b)(6), for failure to state a claim. The breach of contract claim against Defendant GenAg should also be dismissed, pursuant to Rule 12(b)(6), for failure to state a claim. The Motion should be denied in all other respects. It is further

RECOMMENDED that “Defendant Sonoma Stainless, Inc.'s Second Renewed Motion to Dismiss” (Doc. No. 118) be GRANTED, in part, and DENIED as moot, in part. The claims against Defendant Sonoma should be dismissed, pursuant to Rule 12(b)(2), for lack of personal jurisdiction, and Defendant Sonoma should be dismissed from this lawsuit. The Motion should be denied as moot in all other respects. It is further

RECOMMENDED that “Defendant Phillip Tagami's FRCP 12(b) Motion to Dismiss Plaintiff's Second Amended Complaint for Lack of Personal Jurisdiction and Failure to State a Claim” (Doc. No. 119) be GRANTED, in part, and DENIED, in part. The civil conspiracy claim against Defendant Tagami should be dismissed, pursuant to Rule 12(b)(6), for failure to state a claim. The Motion should be denied in all other respects. It is further

RECOMMENDED that “General Agriculture, Inc.'s Motion to Stay Case to Give Effect to a Contractual Mandatory Mediation Provision” (Doc. No. 116) be DENIED.

ADVISEMENT TO THE PARTIES

Within fourteen days after service of a copy of the Recommendation, any party may serve and file written objections to the Magistrate Judge's proposed findings and recommendations with the Clerk of the United States District Court for the District of Colorado. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b); In re Griego, 64 F.3d 580, 583 (10th Cir. 1995). A general objection that does not put the district court on notice of the basis for the objection will not preserve the objection for de novo review. “[A] party's objections to the magistrate judge's report and recommendation must be both timely and specific to preserve an issue for de novo review by the district court or for appellate review.” United States v. One Parcel of Real Prop. Known As 2121 East 30th Street, Tulsa, Okla., 73 F.3d 1057, 1060 (10th Cir. 1996). Failure to make timely objections may bar de novo review by the district judge of the magistrate judge's proposed findings and recommendations and will result in a waiver of the right to appeal from a judgment of the district court based on the proposed findings and recommendations of the magistrate judge. See Vega v. Suthers, 195 F.3d 573, 579-80 (10th Cir. 1999) (a district court's decision to review a magistrate judge's recommendation de novo despite the lack of an objection does not preclude application of the “firm waiver rule”); One Parcel of Real Prop., 73 F.3d at 1059-60 (a party's objections to the magistrate judge's report and recommendation must be both timely and specific to preserve an issue for de novo review by the district court or for appellate review); Int'l Surplus Lines Ins. Co. v. Wyo. Coal Ref. Sys., Inc., 52 F.3d 901, 904 (10th Cir. 1995) (by failing to object to certain portions of the magistrate judge's order, cross-claimant had waived its right to appeal those portions of the ruling); Ayala v. United States, 980 F.2d 1342, 1352 (10th Cir. 1992) (by their failure to file objections, plaintiffs waived their right to appeal the magistrate judge's ruling); but see, Morales-Fernandez v. INS, 418 F.3d 1116, 1122 (10th Cir. 2005) (firm waiver rule does not apply when the interests of justice require review).