November 22, 2014

Tenth Circuit: Guilty Plea Does Not Waive Defendant’s Right to Contest Evidence Admission for Other Purposes

The Tenth Circuit Court of Appeals issued its opinion in United States v. Farmer on Wednesday, November 5, 2014.

Joseph Farmer was pulled over on I-40 in Oklahoma in June 2012. The officer who stopped him smelled marijuana and asked to search the car. During the search, the officer found a loaded .357 revolver under the front edge of the driver’s seat. Based on these facts, a jury convicted Farmer of being a felon in possession of a firearm, and he was sentenced to 60 months’ imprisonment followed by three years’ supervised release. Farmer appealed, contending the evidence of his 2010 firearm possession should have been suppressed because the evidence was obtained in an unlawful search.

The Tenth Circuit examined the prior firearm possession charge, and determined that although Farmer had pled guilty to the possession charge, thereby waiving his right to appeal that charge, he did not waive the right to assert that the search was unlawful for other purposes. The Tenth Circuit found that it was error for the district court to rule that Farmer had waived his right to challenge the search by pleading guilty. However, it found that the error was harmless beyond a reasonable doubt. Farmer’s defense at trial was that he did not know that the firearm was in the car. The government presented evidence that Farmer tried to distract the officer while he was searching the driver’s side of the car, muttered about the gun while the officer was searching, and tried to get his passenger to claim the gun as hers. These facts overwhelmingly support the conviction, regardless of the evidence of the prior conviction.

Farmer also argued the prosecutor’s closing remarks deprived him of a fair trial. During closing, the prosecutor made statements that the deputy had nothing to gain by planting a gun in Farmer’s car, which Farmer argued impermissibly vouched for the officer’s credibility. The Tenth Circuit disagreed, finding instead that the prosecutor was addressing the defense’s argument that the officer had planted the gun. The Tenth Circuit found that the prosecutor’s other remarks were harmless beyond a reasonable doubt.

The Tenth Circuit affirmed Farmer’s conviction.

Colorado Court of Appeals: Announcement Sheet

On Thursday, November 20, 2014, the Colorado Court of Appeals issued seven published opinions and 29 unpublished opinions.

People v. Brown

People v. Bonan

People v. Pernell

People v. Bruno

People v. Gutierrez-Vite

Rome v. HEI Resources

M.C. v. Adoption Choices of Colorado

Summaries of these cases are forthcoming, courtesy of The Colorado Lawyer.

Neither State Judicial nor the Colorado Bar Association provides case summaries for unpublished appellate opinions. The case announcement sheet is available here.

Tenth Circuit: Unpublished Opinions, 11/20/2014

On Thursday, November 20, 2014, the Tenth Circuit Court of Appeals issued no published opinion and three unpublished opinions.

Robledo-Valdez v. West

Gomez v. Macgrew

Robledo-Valdez v. Smelser

Case summaries are not provided for unpublished opinions. However, published opinions are summarized and provided by Legal Connection.

Tenth Circuit: Damages Award on Default Judgment Upheld in Complex Litigation

The Tenth Circuit Court of Appeals issued its opinion in Niemi v. Lasshofer on Tuesday, November 4, 2014.

John Niemi, along with co-plaintiffs Robert Naegele, III, and Jesper Parnevik, was working on a large-scale development project in Breckenridge, Colorado, known as the Fairmont Breckenridge. Azco, LLC and Azco II, LLC, as well as Mesatex, LLC – companies run by Niemi, collectively known as the Azco entities – were the purchasers of the properties for the Fairmont. Based on the success of Phase I of the project, Niemi and the co-investors sought $200-$220 million in financing for Phase II. Defendants Lasshofer and Michael Burgess represented that they could provide financing for Phase II, but required the investors to agree to stop looking for other financing and to provide a $180,000 loan commitment fee. The investors agreed and wired the money. Following an extensive due diligence process, plaintiffs provided an additional $2 million “upfront collateral deposit” to Lasshofer and Burgess. The loan proceeds never materialized, despite repeated assurances from Burgess and Lasshofer that the funds were coming, and eventually Burgess was indicted on criminal fraud charges and sentenced to 180 months’ imprisonment. As part of his plea bargain, Burgess indicated that the funds from the investors were deposited in an account belonging to Innovatis Asset Management, SA (IAM), a company associated with Lasshofer. Burgess implicated Lasshofer as his co-defendant and stated that IAM was continuing to defraud investors. Even after Burgess’s arrest, Lasshofer continued to assure the investors that their funds were coming, but no money ever materialized.

The three investors met to discuss how they would recover from the fraud, and during the conversation Niemi, acting on behalf of the Azco entities, expressly assigned all causes of action and claims to Parnevik, Naegle, and himself. The three filed a Verified Complaint in April 2012, initiating the lawsuit and identifying the various parties and their relationships. The amended complaint filed in July 2012 alleged 17 claims for relief, including a claim under the Colorado Organized Crime Control Act (COCCA) against the Lasshofer defendants and a common law fraud claim against all defendants. In March 2012, the district court issued a TRO to guard against dissipation of the Lasshofer defendants’ assets, and in June 2012 the court issued a preliminary injunction, effectively freezing the worldwide assets of the Lasshofer defendants. After a hearing in March 2013, the court found the Lasshofer defendants to be in contempt of its June 2012 preliminary injunction. In a joint filing between the investors and the Lasshofer defendants, the Lasshofer defendants declared they would no longer devote resources to the case at the district court level, would not participate in discovery, and would not answer Plaintiffs’ amended complaint. The district court eventually entered default judgment against the Lasshofer defendants and awarded over $61 million to the plaintiffs, trebled to $185 million. Lasshofer appealed.

Prior to reaching the merits, the Tenth Circuit had to resolve issues related to its authority to decide the appeal. Plaintiffs had requested the Tenth Circuit to employ the “fugitive disentitlement doctrine” to dismiss the Lasshofer defendants’ appeal. The Tenth Circuit could find no circumstances that would warrant application of the doctrine. Plaintiffs also contend that the Lasshofer defendants must post a bond on the default judgment before appealing, but the Tenth Circuit disagreed, finding that would be sharply at odds with the rules of procedure. Since all issues were ripe due to the district court’s dismissal of claims with prejudice, the Tenth Circuit evaluated the merits of the appeal.

First, the Lasshofer defendants raised several issues related to the district court’s authority to hear the case. They contended (1) Plaintiffs lacked standing to bring their claims, and the district court thus lacked subject matter jurisdiction, (2) the court lacked personal jurisdiction over the Lasshofer defendants, and (3) venue was not proper in the District of Colorado. The Tenth Circuit first addressed the standing claim. Defendants argued that the plaintiffs were not proper parties, because the loan agreement listed Azco as the borrower. However, after reviewing the record, the Tenth Circuit was satisfied that plaintiffs possessed proper standing to bring their claims. The defendants argued that the Loan Agreement barred transfer of the right to sue, but the district court held, and the Tenth Circuit agreed, that the Loan Agreement was a tool of defendants’ broader fraudulent enterprise, and therefore its terms were void and unenforceable.

The Tenth Circuit likewise disposed of defendants’ arguments that the court lacked personal jurisdiction over them. Plaintiffs had many connections to Colorado, and although the Loan Agreement specified jurisdiction was proper in the District of New York, the defendants contended they would have disputed New York jurisdiction also. Therefore, the U.S. District Court for the District of Colorado was the proper venue for the claims. The court also concluded that sufficient minimum contacts existed to confer personal jurisdiction over Lasshofer.

Finally, defendants argued several errors in the determination of damages. The Tenth Circuit reviewed the record and found no error in the court’s calculation. After entry of default judgment, the court requested that plaintiffs present evidence regarding their damages. Plaintiffs presented two different damages calculations, based on two different methods of arriving at the damages amount, that were nearly identical in the total amount. The district court chose the actual damages and trebled it. There was no error in its decision.

The Tenth Circuit denied plaintiffs’ motion to dismiss based on the fugitive entitlement doctrine, denied defendants’ motion to file a surreply based on that motion, denied plaintiffs’ motion to require defendants to post a bond, and denied the requests to award fees and costs. The district court’s award of damages was affirmed, except to the extent it applied to one defendant that did not exist at the time of the controversy. The Tenth Circuit ordered the district court to vacate its order of contempt. The case was remanded for further proceedings.

Tenth Circuit: Unpublished Opinions, 11/19/2014

On Wednesday, November 19, 2014, the Tenth Circuit Court of Appeals issued no published opinion and three unpublished opinions.

United States v. Thompson

Mosher v. Long Beach Mortgage Co.

Torres v. Bodycote International Aerospace & Defense & Energy

Case summaries are not provided for unpublished opinions. However, published opinions are summarized and provided by Legal Connection.

Tenth Circuit: Unpublished Opinions, 11/18/2014

On Tuesday, November 18, 2014, the Tenth Circuit Court of Appeals issued no published opinion and five unpublished opinions.

Edmond v. Raemisch

Ramirez v. Holder

In re Murray: Williamson v. Murray

United States v. Smith

Quarrie v. New Mexico Institute of Mining & Technology

Case summaries are not provided for unpublished opinions. However, published opinions are summarized and provided by Legal Connection.

 

Tenth Circuit: States Have Wide Latitude to Determine Which Offenses are Serious for ACCA Purposes

The Tenth Circuit Court of Appeals issued its opinion in United States v. Titley on Tuesday, November 4, 2014.

John Ervin Titley pled guilty to being a felon in possession of a firearm. He was sentenced, and his sentence was enhanced due to the provisions of the Armed Career Criminal Act (ACCA), due to his three prior felony convictions. Although Mr. Titley agrees his Missouri armed robbery conviction qualifies for ACCA purposes, he argues that his convictions for possession of marijuana with intent to distribute in Arkansas and unlawful possession of marijuana with intent to distribute in Oklahoma should not qualify because in 19 other states and the District of Columbia those crimes would not have constituted “serious drug offenses.” Mr. Titley argued this violates the Equal Protection clause.

The Tenth Circuit, applying rational basis review, analyzed whether the challenged ACCA provision is rationally related to a legitimate government purpose, and found that it was. ACCA’s purpose is to incapacitate repeat offenders who possess firearms and deter such conduct in others. Mr. Titley does not challenge the purpose, but instead argues ACCA violates equal protection because it does not apply uniformly to similarly situated defendants. The Tenth Circuit found that Congress afforded the states wide latitude in determining which crimes they regarded as serious. Rational basis does not require uniformity.

The sentence was affirmed.

Tenth Circuit: Unpublished Opinions, 11/17/2014

On Monday, November 17, 2014, the Tenth Circuit Court of Appeals issued no published opinion and two unpublished opinions.

Gomez v. Martin

 Sperry v. Maes

Case summaries are not provided for unpublished opinions. However, published opinions are summarized and provided by Legal Connection.

 

Tenth Circuit: When Both Parties to Contract Agree to Its Terms, Third Party Has No Standing to Object

The Tenth Circuit Court of Appeals issued its opinion in Security Service Federal Credit Union v. First American Mortgage Funding, LLC on Tuesday, November 4, 2014.

Security Service Federal Credit Union’s predecessor in interest, New Horizons Community Credit Union, entered into a funding service agreement with First American Mortgage Funding, LLC (FAM) and First American Mortgage, Inc. (together, FAM defendants), under which FAM originated 26 mortgage loans to individual borrowers for the purchase and construction of residential properties in Colorado and California. The closing agents performed closing procedures. Security Service (SSFCU) contended that the FAM defendants and closing agents wrongfully induced New Horizons to fund the loans to straw borrowers, and that the loan transactions were a vehicle to misappropriate $14 million in funds. SSFCU brought claims in district court, but FAM objected, contending that SSFCU was not a proper party in interest to pursue the claims. The district court found for FAM and dismissed SSFCU’s claims with prejudice.

The Tenth Circuit found this case easy to resolve, following 6th Circuit precedent in JP Morgan Chase Bank, N.A. v. First Am. Title Ins. Co., 750 F.3d 573 (6th Cir. 2014). When both parties to a contract agree to its terms, a third party cannot object. Here, both New Horizons and SSFCU entered into a Purchase and Assumption Agreement, where SSFCU had all rights to pursue claims on behalf of New Horizons. FAM, as a third party, had no right to object to SSFCU’s standing. The district court’s dismissal was reversed.

Tenth Circuit: Contract’s No Third-Party Beneficiary Provision Effectively Barred Claims of Third-Party Beneficiary Entities

The Tenth Circuit Court of Appeals issued its opinion in Gorsuch Ltd., B.C. v. Wells Fargo National Bank Association on Tuesday, November 4, 2014.

Renie and David Gorsuch founded Gorsuch, Ltd., a retail store, in 1962, and subsequently founded Gorsuch, Limited at Aspen and  Gorsuch, Limited at Keystone to operate additional retail stores. They founded Gorsuch Cooper to own the property from which Gorsuch, Ltd. at Aspen operates its business. The three child entities are collectively known as the Gorsuch Entities. In 2008, Gorsuch, Ltd. obtained a $14 million line of credit from Wells Fargo, and the credit agreement explicitly contained a no third-party beneficiary (NTPB) provision. When Gorsuch’s retail sales were lower than expected in 2009, Wells Fargo suspended the line of credit. Gorsuch Ltd. and the Gorsuch Entities brought suit against Wells Fargo for damages in state court, but Wells Fargo removed to federal court for diversity jurisdiction. Wells Fargo moved to dismiss the Gorsuch Entities’ third-party beneficiary claims due to the NTPB provision.

The district court determined the Gorsuch Entities were impermissible third-party beneficiaries and held the NTPB provision precluded them from seeking relief. The district court dismissed the Gorsuch Entities, granted Wells Fargo’s motion to dismiss the third-party claims, stayed the proceeding while Wells Fargo and Gorsuch, Ltd. proceeded to arbitration, and administratively closed the case without prejudice. Gorsuch, Ltd. moved to amend the complaint to include the Gorsuch Entities, but the district court denied the motion since the case was administratively closed and no one had petitioned to reopen it. Gorsuch, Ltd. eventually petitioned to reopen the case, but later withdrew the motion as it arbitrated its claims. After the district court’s deadline for reopening passed, it dismissed the case without prejudice. Gorsuch, Ltd. subsequently moved to reopen the case, which was granted, and moved for the court to confirm the arbitration award and file a third amended complaint along with the Gorsuch Entities. The district court affirmed the arbitration award, concluding Gorsuch, Ltd.’s involvement in the case. A magistrate judge filed a minute order clarifying that Gorsuch, Ltd. was the only proper plaintiff in the case, and the district court judge agreed, finding that the Gorsuch Entities had been dismissed from the litigation and had not shown good cause to file the third amended complaint. The Gorsuch Entities filed a timely appeal.

On appeal, the Tenth Circuit, applying Colorado law, found that (1) the district court correctly dismissed the Gorsuch Entities, and (2) properly denied their motion to amend. The Tenth Circuit found the Gorsuch Entities were not permissive assignees under the contract with Wells Fargo, and in fact were barred from bringing claims by the contract’s NTPB provision. Although Wells Fargo understood the business relationship between Gorsuch, Ltd. and the Gorsuch Entities, the contract expressly prohibited litigation from the Gorsuch Entities, therefore the district court’s dismissal of the Entities’ claims was correct. The Gorsuch Entities asserted that the district court gave improper weight to the NTPB provision, but there was no evidence in writing that the Entities were permissible third-party beneficiaries under the contract.

The Tenth Circuit also found that the district court correctly denied the Gorsuch Entities’ motion to amend the complaint. They were dismissed as parties in November 2011, and their July 2013 motion to amend was both untimely and showed no good cause to amend the complaint. Because the Gorsuch Entities lacked good cause for the delay in filing their amended complaint, the district court’s dismissal was proper.

The Tenth Circuit affirmed the district court’s dismissal of the Gorsuch Entities as parties and denial of their motion to amend.

Tenth Circuit: Unpublished Opinions, 11/14/2014

On Friday, November 14, 2014, the Tenth Circuit Court of Appeals issued one published opinion and four unpublished opinions.

Madrid v. Wilson

United States v. Harris

McCulley v. University of Kansas School of Medicine

United States v. Kujat

Case summaries are not provided for unpublished opinions. However, published opinions are summarized and provided by Legal Connection.

 

Tenth Circuit: Plaintiff Denied Due Process When Not Allowed Hearing on Allegations of Sexual Harassment

The Tenth Circuit Court of Appeals issued its opinion in McDonald v. Wise on Tuesday, October 28, 2014.

Wayne McDonald was a Special Assistant to Denver Mayor Michael Hancock in 2011 and 2012. He was appointed by the mayor to serve “at the pleasure of the Special Assistant,” and in his official duties, he worked closely with Denver police officer Leslie Wise, who provided security to the mayor. He communicated with Ms. Wise on and off duty, discussing both work-related and personal matters. Between September 2011 and March 2012, Ms. Wise called Mr. McDonald at least 41 times on his personal phone, with calls as early as 6:26 a.m. and as late as 7:39 p.m. On November 3, 2011, unbeknownst to Mr. McDonald, Ms. Wise recorded two of these calls. At least 3/4 of the calls from Ms. Wise to Mr. McDonald occurred after November 3, 2011. She also gave him a Christmas gift, attended church with him, and met his family. They last spoke on March 14, 2012, when Ms. Wise telephoned Mr. McDonald.

On May 18, 2012, the mayor’s deputy chief of staff and the city attorney informed Mr. McDonald that Ms. Wise had accused him of sexual harassment and produced the two recorded phone calls from November 3, 2011. Mr. McDonald denied the allegations and agreed to participate fully in an investigation. He left the meeting with the understanding that he was suspended pending the outcome of an investigation and hearing. At a subsequent meeting on May 21, Mr. McDonald was told he could either resign or be fired due to the allegations. Mr. McDonald requested an investigation and opportunity to defend himself, but was fired on the spot. The mayor and his staff subsequently informed the news media that Mr. McDonald was fired for sexual harassment. Mr. McDonald applied for unemployment compensation benefits, but was denied based on his termination for sexual harassment. He appealed to the Colorado Department of Labor, and the hearing officer determined Mr. McDonald was not responsible for the separation from employment. Mr. McDonald has not been able to find subsequent employment, and has been told by potential employers that his termination for sexual harassment is the reason. He brought suit against the city, the mayor, and the mayor’s press secretary for due process violations, breach of contract, and unlawful disclosure of confidential information. He sued Ms. Wise for defamation. The district court rejected all of his claims, and this appeal followed.

The Tenth Circuit first addressed Mr. McDonald’s claims that he was deprived due process of the law for both property and liberty interests. The Tenth Circuit found that Mr. McDonald did not have a property interest in his continued employment, because he served at the pleasure of the mayor and as such was an at-will employee. He could not have had a property interest in continued employment because of his at-will status, and the district court correctly dismissed this claim. The Tenth Circuit reached a different outcome as to Mr. McDonald’s liberty interest in his good name and continued employment. The mayor said at a press conference that Mr. McDonald was terminated for sexual harassment, not because of allegations, thus effectively affirming the allegations in a public forum. The statements called Mr. McDonald’s good name into question, and Mr. McDonald has been unable to secure further employment due to the statements. The Tenth Circuit determined that Mr. McDonald’s liberty interest was infringed upon, and next turned to the question of whether he had a chance to clear his name at a proper name-clearing hearing. Because Mr. McDonald received no hearing at all on this issue, the Tenth Circuit found a serious deprivation of due process related to his protected liberty interest, and reversed the district court. However, the Tenth Circuit found that the mayor’s press secretary need not be named in her official capacity in the suit, since the mayor and the city were named. On remand, the proper parties for this issue are solely the mayor and the city.

Mr. McDonald also contended that his termination was a breach of his employment contract with the city. The Tenth Circuit disagreed, finding as above that his employment was at will, and his claim is not one for which relief can be granted. The Tenth Circuit likewise disposed of his claim regarding non-disclosure of personnel records under the Colorado Open Records Act, because there is no private right of action under CORA and he did not allege sufficient reason to amend his complaint.

Finally, the Tenth Circuit turned to Mr. McDonald’s defamation claim against Ms. Wise. The district court dismissed his defamation claim, finding qualified immunity for Ms. Wise, and that even if she were not immune, Mr. McDonald failed to allege a viable defamation claim. The Tenth Circuit disagreed with the trial court’s reasoning, finding instead that Ms. Wise was not entitled to qualified immunity since her actions were willful and wanton. Mr. McDonald’s complaint alleged sufficient facts to support an inference of willful and wanton conduct, including the numerous phone calls made to him by Ms. Wise after the date of the alleged sexual harassment, and he was entitled to a trial on the merits. As to the defamation claim, the Tenth Circuit found that Ms. Wise held no qualified privilege since she made the allegedly defamatory statements with actual malice, and the district court erred by concluding Ms. Wise was immune from liability.

The Tenth Circuit affirmed the district court’s dismissal of Mr. McDonald’s property interest due process claim, breach of employment contract claim, and CORA violation claim. The Tenth Circuit reversed the district court’s dismissal of Mr. McDonald’s liberty interest due process claim and defamation claim against Ms. Wise, and remanded for further proceedings.