Allen & Vellone, P.C. et al v. Pino et al

Filing 47

ORDER granting 10 Motion to Dismiss for Lack of Jurisdiction, by Judge Raymond P. Moore on 3/18/2014.(trlee, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Raymond P. Moore
Civil Action No. 13-cv-2002-RM-BNB
ALLEN & VELLONE, P.C., a Colorado Corporation, and
STRAUS & BOIES, LLP,
Plaintiffs,
v.
LAURENCE J. PINO,
ENVERGENT CORPORATION, and
JOHN DOE CORPORATION,
Defendants.

ORDER

This matter is before the Court on Defendant Laurence J. Pino’s Motion to Dismiss for
Lack of Personal Jurisdiction (ECF No. 10) (the “Motion”). The Motion has been fully briefed,
and the parties appeared in a non-evidentiary hearing before this Court on January 16, 2014.
(ECF No. 43.) As set forth below, the Court GRANTS the Motion without prejudice to
Plaintiffs’ right to re-file.1 Below, the Court sets forth its reasoning.
I.

FACTS
The relevant facts, taken in the flight most favorable to Plaintiff from the Amended

Complaint, are as follows:

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At the hearing, Plaintiffs asked that if the Court was inclined to dismiss the Amended Complaint based on the
insufficiency of the allegations, that the court instead consider granting leave to amend. Plaintiffs indicated that they
had obtained additional evidence that bolstered their jurisdictional claims. While the Court concludes that it lacks
jurisdiction to hear this case based on the current Amended Complaint, C.R.S. § 13-80-11 gives Plaintiffs the
opportunity, should they so choose, to commence a new action upon the same cause of action within ninety days of
the termination of this action.

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During the relevant time period that is at issue in this lawsuit, Laurence J. Pino acted as
the CEO and President of Dynetech Corporation (“Dynetech”). On April 16, 2008, Dynetech
and GlobalTec, LLP (“GlobalTec”), executed a class action settlement agreement in Denver,
Colorado, which provided for the payment of the class action plaintiffs’ attorneys’ fees and
expenses by GlobalTec and Dynetech, as “secured by the Security Agreements.” Plaintiffs
herein were the attorneys in the referenced class action to whom payments were owed. Security
Agreements were also executed that same day, which granted Plaintiffs a security interest in
GlobalTec and Dynetech’s “goodwill, contracts, accounts receivable, furniture, fixtures,
inventory, equipment, and all other tangible or intangible personal property now owned or
hereafter acquired by Debtor and used in connection with its business, and all proceeds and
products therefrom.” The Security Agreements also provided that “[i]f any of the Collateral
shall be sold, then the proceeds of such sale shall become collateral.” Dynetech made the
payments as per the Settlement Agreements for 9 months, but then defaulted on August 1, 2009,
with a remaining balance of $1,050,000.00.
The Amended Complaint alleges that “in March of 2009, Defendant Pino, through his
control of Dynetech, sold a substantial portion of its property, which was subject to the security
agreements, to HBK Investments and Optionetics in exchange for forgiveness of debt and a
$3,000,000 cash payment.” In August of 2009, Dynetech completed the sale of more of
Plaintiffs’ collateral without notifying Plaintiffs. No further payments were made to Plaintiffs.
On October 1, 2009, Dynetech merged with Tellegenix Corporation (“Tellegenix”), and
approximately a week later, Tellegenix filed for Chapter 11 bankruptcy. Later, the bankruptcy
was converted to Chapter 7 and a trustee was appointed. The Amended Complaint relates that
on February 22, 2011:

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the Bankruptcy Court approved the sale of Estate property to an insider,
Defendant Pino, subject to all liens, claims, encumbrances, and interests…The
insider purchasing the assets from the bankruptcy estate was Envergent
Corporation, which is a corporation, controlled by its President, Pino. Defendant
Pino was also the former President of Tellegenix Corporation, and is thus an
insider of the bankruptcy Debtor.
On October 5, 2011, the Trustee filed a Complaint on behalf of the bankruptcy estate
against Plaintiffs and others, asserting claims to avoid lien and preferential transfers. In April
2012, the bankruptcy court approved a settlement between the Trustee and Plaintiffs “wherein a
settlement sum was paid to the Trustee but the Plaintiffs’ liens were allowed and acknowledged
as valid, enforceable, and continuing in the property purchased by Defendant Pino through
Envergent.” The bankruptcy court ultimately held that there was no applicable automatic stay
affecting the lien retained by Plaintiffs.
Plaintiffs commenced the instant suit in Colorado state court on June 20, 2013, and
Defendant Pino filed a Notice of Removal removing the action to this Court based on diversity.
(ECF No. 1.) In the Amended Complaint, Plaintiffs set forth seven claims for relief:
enforcement of lien and request to foreclose, civil conspiracy, two counts of fraudulent transfer,
conversion, common law fraud, and aiding and abetting fraud. As to Defendant Pino’s
individual conduct, Plaintiffs specifically allege the following:


“Defendant Pino caused Dynetech to transfer the Property with actual intent to hinder,
delay or defraud its creditors, including Plaintiffs.” (Am. Complaint at 6.)



“Defendant Pino is liable for the acts taken by both Dynetech and Tellegenix as the
President of the companies with authority to sell the assets and authority to determine
which creditors would be paid.” (Id.)



“Defendant Pino is liable for the damage suffered by Plaintiffs for his failure to
compensate Plaintiffs from the proceeds.” (Id.)



“Defendant Pino directed Tellegenix to transfer the Collateral and failed to compensate
Plaintiffs with the proceeds received from that sale.” (Id. at 7.)

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


“Defendant Pino concealed the fact that Dynetech sold the Wizetrade Group to MB
Trading Holdings, LLC, and he should have disclosed the sale to Plaintiffs.” (Id. at 8.)



“Defendant Pino knew that he was concealing a material fact from Plaintiffs that in
equity and good conscience he should disclose.” (Id.)



“Plaintiffs did not know prior to the sale of the Collateral that Defendant Pino was
planning to sell the Collateral and default on the [class action settlement agreement], and
Defendant Pino purposefully kept that information from Plaintiffs.” (Id.)



“Defendant Pino perpetrated the concealment in an effort to avoid Plaintiffs’ lien claim
and claim to the proceeds from the sale.” (Id.)



“Defendant Pino’s actions in concealing the transfers of Collateral resulted in damage to
Plaintiffs.” (Id.)



“Defendant Pino knew that his actions constituted fraud and that his actions would cause
Plaintiffs to suffer damage.” (Id.)



II.

“By consummating the sale of the Plaintiff’s collateral without authorization or payment
to Plaintiffs, Defendant Pino exercised dominion of Plaintiffs’ property.” (Id.)

Defendant Pino directed and or substantially assisted the acts of fraud upon Plaintiffs.”
(Id.)
LEGAL STANDARD
The purpose of a motion to dismiss pursuant to Rule 12(b)(2) is to test whether the Court

has personal jurisdiction over the named parties. The plaintiff bears the burden of establishing
personal jurisdiction over a defendant. Behagen v. Amateur Basketball Ass’n, 744 F.2d 731, 733
(10th Cir. 1984). When the district court does not hold an evidentiary hearing before ruling on
jurisdiction, “the plaintiff need only make a prima facie showing” of personal jurisdiction to
defeat a motion to dismiss. Id. (citing Am. Land Program, Inc. v. Bonaventura Uitgevers
Maatschappij, N.V., 710 F.2d 1449, 1454 n.2 (10th Cir. 1983)). A prima facie showing is made
where the plaintiff has demonstrated facts that, if true, would support jurisdiction over the
defendant. OMI Holdings, Inc. v. Royal Ins. Co. of Can., 149 F.3d 1086, 1091 (10th Cir. 1998).
To defeat the plaintiff’s prima facie case, a defendant “must present a compelling case
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demonstrating ‘that the presence of some other considerations would render jurisdiction
unreasonable.’” Id. (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985)).
The Court will accept the well-pled allegations (namely, the plausible, nonconclusory,
and nonspeculative facts) of the complaint as true to determine whether Plaintiffs have made a
prima facie showing that personal jurisdiction exists. Dudnikov v. Chalk & Vermillion Fine Arts,
Inc., 514 F.3d 1063, 1070 (10th Cir. 2008). Any factual conflicts must be resolved in the
plaintiff’s favor. Wentz v. Memery Crystal, 55 F.3d 1503, 1505 (10th Cir. 1995).
Colorado’s long arm statute extends jurisdiction to the fullest extent permitted by the Due
Process clause of the Fourteenth Amendment, thereby obviating the need for a long-arm
statutory analysis separate from the due process inquiry. Archangel Diamond Corp. v. Lukoil,
123 P.3d 1187, 1193 (Colo. 2005). In order to determine whether the exercise of personal
jurisdiction over Defendant Pino comports with due process, the Court is required to conduct a
two-step inquiry. First, does the nonresident Defendant have sufficient “minimum contacts”
with Colorado that he should reasonably anticipate being haled into court here; if so, does the
exercise of personal jurisdiction over Defendant offend “traditional notions of fair play and
substantial justice”? International Shoe Co. v. State of Wash., 326 U.S. 310, 316 (1945) (internal
quotations omitted).
In order to meet the “minimum contacts” standard for specific jurisdiction over a
nonresident defendant: (1) that defendant must have “purposefully directed” its activities at
residents of the forum state; and (2) the plaintiff’s alleged injuries must “arise out of or relate to”
those activities. AST Sports Science, Inc. v. CLF Distrib. Ltd., 514 F.3d 1054, 1058 (10th Cir.
2008).

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III.

DISCUSSION
The relevant inquiry for purposes of resolving the instant motion is whether Defendant

Pino in his individual capacity has “minimum contacts” with Colorado such that notions of “fair
play and substantial justice” are not offended. Dudnikov, 514 F.3d at 1063. As set forth in
Dudnikov, this Court must take all well-pled allegations, meaning the plausible, nonspeculative
facts in the Amended Complaint, as true. Id. A nonresident defendant establishes sufficient
contacts with the forum state for personal jurisdiction purposes only when that defendant
“purposefully avails” himself of the privilege of conducting activities within the forum state. Id.
at 1071.
As a starting point, it should be noted that all of Defendant Pino’s conduct which
occurred after the Security Agreements were executed either occurred outside of Colorado or,
alternatively, is not alleged to have occurred in Colorado. This includes the asset sales,
bankruptcy, purchase of bankruptcy estate assets and other matters. The assumption that, as an
officer of one or more corporations, Defendant Pino is subject to jurisdiction wherever the
corporations may be, permeates the Amended Complaint.
Defendant Pino argues that “Plaintiffs’ entire theory of liability as to Pino is based on
Pino’s relationship with Dynetech…Plaintiffs have not alleged that Pino has or had any
individual contact with Colorado in his individual capacity.” (ECF. No. 10 at 4.) In Plaintiffs’
Response, they assert that Defendant Pino, during the mediations that led to the class action
settlement agreement, personally participated in one or more mediations in the state of Colorado.
No such allegation, however, is included in the Amended Complaint.
Even taking into account the allegation, which Defendant Pino independently conceded at
the hearing on this matter, that Defendant Pino personally participated in one or more mediation

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sessions in Colorado on behalf of a corporation, that is insufficient to establish personal
jurisdiction in this case. “Jurisdiction over the representatives of a corporation may not be
predicated on jurisdiction over the corporation itself ... jurisdiction over the individual officers
and directors must be based on their individual contacts with the forum state.” Dietz v. Dietz, No.
11-CV-01692-RBJ-KMT, 2012 WL 1931549 (D. Colo. May 29, 2012) (quoting Ten Mile Indus.
Park v. Western Plains Serv. Corp., 810 F.2d 1518, 1527 (10th Cir. 1987)). Other than this
limited instance of contact, no other personal contact with Colorado by Defendant Pino is
alleged.
Plaintiffs, perhaps recognizing this, argue that where “the commission of a tort forms the
basis of personal jurisdiction,” the allegation of the commission of the tort itself, where the
injury is felt in the forum state, forms a sufficient nexus to satisfy the minimum contacts test.
(ECF No. 17 at 7.) Plaintiffs contend that since they “allege that Defendant intentionally and
tortiously engaged in conduct that was ‘expressly aimed’ at Colorado…no more is needed for the
assertion of personal jurisdiction in Colorado over the Defendant.” (Id. at 8.)
Plaintiffs cite the Fifth Circuit opinion in Mullins v. TestAmerica, Inc. for the proposition
that the “effects” test established in Calder v. Jones, 104 S.Ct. 1482 (1984), can and should be
applied in instances where the recipient of a fraudulent conveyance is challenging jurisdiction in
the forum state. 564 F.3d 386, 398 (5th Cir. 2009). In Mullins, the Fifth Circuit affirmed the
district court’s exercise of jurisdiction where the defendants “purposefully aimed their conduct
at…Texas…with the knowledge that their conduct would allegedly impair the rights of a single,
major creditor and Texas resident under agreements that center around Texas.” Id. at 398.
While this theory, as posited in the Response and developed in argument at the hearing, is

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potentially persuasive, the facts as they appear in the Amended Complaint fall short of the
Mullins scenario.
In Mullins, the Fifth Circuit was skeptical of the notion that the Calder effects test
establishes personal jurisdiction whenever the recipient of a fraudulent transfer injures a creditor
by such action. The court was further skeptical that “personal jurisdiction exists over the
recipient of a fraudulent transfer anywhere a complaining creditor files suit simply by virtue of
the creditor’s residence in that forum.” Id. at 401. But the court was able to overcome its
skepticism based upon evidence that the complaining creditor was targeted and singled out by
defendants and that defendants intended to block any asset sale that included a distribution of
assets to the complaining creditor. Id.
Despite Plaintiffs’ suggestions at the hearing that comparable circumstances exist in this
case, the Amended Complaint does not so allege. To the contrary, the allegation is that
Defendants acted “with actual intent to hinder, delay or defraud its creditors, including
Plaintiffs.” (Am. Complaint ¶ 45.) Fairly construed, Plaintiffs’ allegation is that they—like all
other creditors—were negatively affected by Defendant Pino’s actions. That is a far cry from the
purposeful, targeted actions that were established in Mullins.
Calder aside, the Amended Complaint simply does not contain sufficient factual
allegations that Defendant Pino personally engaged in conduct in Colorado such as would justify
the exercise of personal jurisdiction. Rather, the Amended Complaint repeatedly treats
Defendant Pino and Defendant Envergent, as well as other corporate entities, as though their
conduct was inextricably linked and identical. For instance, both the Amended Complaint as
well as Plaintiffs’ Response to the Motion to Dismiss allege that “Defendant Pino and Envergent
purchased the assets” during the bankruptcy proceedings. (ECF No. 17 at 5.) These types of

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allegations, while mentioning Defendant Pino specifically by name, do not make clear how
Defendant Pino was acting in his personal rather than professional capacity as a corporate officer
or otherwise establish why the corporate activities subject Defendant Pino to personal
jurisdiction in his individual capacity. There are allegations that Defendant Pino directly and
knowingly engaged in fraudulent activity, but these allegations are contained as conclusory
recitals within the claims portion of the Amended Complaint, and are not attached to specific
factual allegations which would point to individual conduct by Defendant Pino specifically
aimed at Colorado.
In short, allegations which would establish a prima facie basis for the exercise of personal
jurisdiction against Defendant Pino in his individual capacity are inadequate.

IV.

CONCLUSION

For the reasons set forth above, the Court ORDERS as follows:
Defendant’s Motion to Dismiss (ECF No. 10) is GRANTED.
DATED this 18th day of March, 2014.
BY THE COURT:

____________________________________
RAYMOND P. MOORE
United States District Judge

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