Quals et al v. Lunn et al

Filing 24

ORDER. Plaintiff Hybrid Finance, Ltd.s Motion for Default Judgment 20 filed 9/9/2011, is DENIED WITHOUT PREJUDICE. Plaintiffs Qualss Motion for Default Judgment Against Defendants Lunn, Curry, and WGC Group 21 filed 9/14/2011, is DENIED WITHOUT PREJUDICE. Plaintiff F Cubeds Motion for Default Judgment 22 filed 9/27/2011, is DENIED WITHOUT PREJUDICE. Plaintiffs Motion To Amend Motions for Default Judgment To Include Award of Attorneys Fees 23 filed 11/1/2011, is DENIED AS MOOT. By Judge Robert E. Blackburn on 1/31/2012.(sah, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Robert E. Blackburn
Civil Case No. 11-cv-01453-REB-KMT
DERRICK A. QUALS,
HYBRID FINANCE, LIMITED, a British Virgin Islands company, and
F CUBED.ca INVESTMENTS, LIMITED, a Canadian company,
Plaintiffs,
v.
GEOFFREY H. LUNN,
MICHAEL SCHMIDT,
VINCENT CURRY, and
WGC GROUP, INC., a Nevada corporation,
Defendants.

ORDER DENYING WITHOUT PREJUDICE
MOTIONS FOR DEFAULT JUDGMENT
Blackburn, J.
The matters before me are (1) Plaintiff Hybrid Finance, Ltd.’s Motion for
Default Judgment [#20]1 filed September 9, 2011; (2) Plaintiff’s Quals’s Motion for
Default Judgment Against Defendants Lunn, Curry, and WGC Group [#21] filed
September 14, 2011; (3) Plaintiff F Cubed’s Motion for Default Judgment [#22] filed
September 27, 2011; and (4) Plaintiffs’ Motion To Amend Motions for Default
Judgment To Include Award of Attorney’s Fees [#23] filed November 1, 2011 . I
deny the substantive motions for default judgment without prejudice and deny the
motion to amend as moot.
1

“[#20]” is an example of the convention I use to identify the docket number assigned to a
specific paper by the court’s electronic case filing and management system (CM/ECF). I use this
convention throughout this order.

I have jurisdiction over this case pursuant to 28 U.S.C. § 1332 (diversity of
citizenship). Plaintiffs duly served the corporate defendant, WGC Group, Inc., in
accordance with Fed. R. Civ. P. 4(h)(1), and the individual defendants, Vincent Curry
and Geoffrey Lunn, as required by Fed. R. Civ. P. 4(e)(1). (See Dkt. #8 & #10, filed
June 20, 2011, & Dkt. # 11, filed July 6, 2011.) Defendants have failed to answer or
otherwise respond within the time permitted by law, and, thus, have admitted the factual
allegations of the complaint other than those relating to damages. See FED. R. CIV. P.
8(d); see also Burlington Northern Railroad Co. v. Huddleston, 94 F.3d 1413, 1415
(10th Cir. 1996). Entry of default pursuant to Fed. R. Civ. P. 55(a) was made by the
Clerk of the Court as to WGC Group, Inc., and Lunn on July 12, 2011 [Dkt. #13] and as
to Curry on July 25, 2011 [Dkt. #18]. Plaintiffs, therefore, are entitled to seek default
judgment against these defendants pursuant to Fed. R. Civ. P. 55(b).
Plaintiffs each claim that the facts now admitted in the complaint prove up the
substantive elements of their claims for breach of contract. “[A] party attempting to
recover on a claim for breach of contract must prove the following elements: (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 to the plaintiff.” Western Distribution Co. v. Diodosio, 841 P.2d 1053, 1058
(Colo.1992) (citations omitted). However, I cannot find that the allegations – now
admissions – of the complaint conclusively establish that any of the defaulting
defendants is liable for breach of contract.
The complaint establishes that in October and November, 2010, each plaintiff

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invested in a high-yield investment scheme designated as the “.44 MAGNUM
Leveraged Financing Program,” which was offered by a fictitious entity known as
Dresdner Financial.com. In connection with these investments, plaintiffs each executed
two written agreements – the “.44 Magnum Agreement and Procedures” (the
“Agreement”) and the “.44 MAGNUM ASSURANCE LETTER Letter of Guarantee and
Performance Insurance Contract” (the “Guarantee”). Yet the allegations regarding
these two documents do not provide a conclusive basis for establishing liability of the
defaulting defendants.
The Agreement allegedly provided that non-performance thereof was attributable
to Dresdner Financial.com and its “partners or officers.” (Complaint ¶¶ 11-16 at 2-4.)
Yet the facts admitted by the complaint do not clearly establish that any of the defaulting
defendants is a “partner[] or officer[]” of Dresdner Financial.com.2 Defendant Lunn is
alleged to be the owner and operator of defendant WGC Group, Inc., which owned the
bank account into which plaintiffs transferred their ill-fated investments with Dresdner.
However, the complaint contains nothing suggesting that Lunn or WGC Group were
“partners or officers” of Dresdner.3 As regards defendant Curry, he is alleged to have
been “alternatively identified as the manager or the executive corporate advisor of
Dresdner Financial.” (Id. ¶ 17 at 4.) These titles do not clearly convey Curry’s status as
a partner or officer of the company, and neither do the allegations that F Cubed and
2

It is not alleged who signed any of the Agreements on behalf of Dresdner Financial.com, and
copies of those documents are not appended to the complaint or otherwise of record.
3

The closest the complaint comes is the allegation that plaintiff Quals “was repeatedly advised
that the head of the entire Dresdner operation was Defendant Lunn.” (Complaint ¶ 19 at 5.) The
admission that Quals was thus advised, however, does not establish that Lunn was in fact a partner or
officer who might be liable on the Agreement or otherwise.

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Quals dealt primarily with Curry in making their investments. (Id. ¶¶ 18 at 4 & 19 at 5.)
I perceive similar issues with respect to the Guarantees. There is no allegation
regarding who may have signed the Guarantee provided to Quals, and no copy of this
or any of the other Guarantees are part of the record before me. (See id. ¶ 20 at 5.)
The Guarantee that plaintiff Hybrid Finance, Ltd., executed allegedly was signed by
defendant Michael Schmidt, who has not been served in this matter, as chief operating
officer of Dresdner Financial.com. (Id. ¶ 15 at 3-4.) Finally, although F Cubed’s
Guarantee purportedly was executed by defendant Curry on behalf of Dresdner, in the
absence of or more specific allegation and/or a copy of the Guarantee itself, it is not
possible to say whether Curry can be held individually liable for breach thereof or
merely signed as an agent of the corporation. (See id. ¶ 18 at 4-5.)
It may be that plaintiffs meant to establish liability via an alter ego argument
based on the allegation that Dresdner Financial.com was wholly fictitious and without
any legal status. However, they have not advanced such an argument in their motions,
and even if they were not represented by able and competent counsel, I would be
disinclined to formulate arguments on their behalf. Should plaintiffs choose to refile their
motions, they would be well advised to ensure that they demonstrate more particularly
how the matters now admitted in the complaint prove each and every element of at least
one of their claims for relief.
THEREFORE, IT IS ORDERED as follows:
1. That Plaintiff Hybrid Finance, Ltd.’s Motion for Default Judgment [#20]
filed September 9, 2011, is DENIED WITHOUT PREJUDICE;

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2. That Plaintiff’s Quals’s Motion for Default Judgment Against Defendants
Lunn, Curry, and WGC Group [#21] filed September 14, 2011, is DENIED WITHOUT
PREJUDICE;
3. That Plaintiff F Cubed’s Motion for Default Judgment [#22] filed
September 27, 2011, is DENIED WITHOUT PREJUDICE; and
4. That Plaintiffs’ Motion To Amend Motions for Default Judgment To
Include Award of Attorney’s Fees [#23] filed November 1, 2011, is DENIED AS
MOOT.
Dated January 31, 2012, at Denver, Colorado.
BY THE COURT:

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