Sebastian et al v. GreenLink International Inc. et al

Filing 83

ORDER. The Court ORDERS as follows: Defendant's 66 Motion is GRANTED IN PART with respect to Plaintiffs' conversion claim and DENIED IN PART with respect to its counterclaims, and Plaintiffs' 73 Motion is DENIED. By Judge Raymond P. Moore on 9/15/2022.(sdunb, )

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Raymond P. Moore
Civil Action No. 20-cv-01788-RM-NRN
FRED SEBASTIAN, and
DUKE CAPITAL S.A.,
Plaintiffs,
v.
GREENLINK INTERNATIONAL INC.,
Defendant.
______________________________________________________________________________
ORDER
______________________________________________________________________________
Before the Court are Defendant’s Motion for Summary Judgment or, in the Alternative,
Partial Summary Judgment (ECF No. 66), requesting that the Court grant summary judgment in
its favor on Plaintiffs’ conversion claim and its counterclaims for breach of contract and
declaratory relief, and Plaintiffs’ Motion for Leave (ECF No. 73), seeking to modify the
scheduling order to permit them to submit a rebuttal expert disclosure. The Motions have been
fully briefed. (ECF Nos. 68, 70, 80, 81.) For the reasons below, Defendant’s Motion is granted
in part and denied in part, and Plaintiffs’ Motion is denied.
I.

BACKGROUND
Plaintiffs once owned more than 56 million shares of Defendant, formerly known as

E-Debit Global Corporation. But in June 2018, Defendant’s board of directors passed a
resolution allowing its management to cancel Plaintiffs’ shares based on a loan agreement with
Plaintiff Sebastian that, according to Plaintiffs, never existed. Plaintiffs admit that a document

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representing the loan agreement exists and that “a facsimile” of Plaintiff Sebastian’s signature
appears on it (ECF No. 68 at 4), while taking the position that Plaintiff Sebastian “first saw the
alleged loan agreement when it was filed as an exhibit to an affidavit in this case” (ECF No. 71,
¶ 49). Plaintiffs also admit that they received a notice of demand for payment in June 2020 and
did not contact Defendant before the shares were cancelled later that month. (Id. at ¶¶ 10, 12,
45-47.)
Plaintiffs initiated this lawsuit in June 2020; their only remaining claim is against
Defendant for conversion. Defendant asserts counterclaims for breach of contract and
declaratory relief premised on the loan agreement.
II.

LEGAL STANDARDS
A.

Summary Judgment

Summary judgment is appropriate only if there is no genuine dispute of material fact and
the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 250 (1986); Stone v. Autoliv ASP, Inc., 210 F.3d 1132, 1136
(10th Cir. 2000); Gutteridge v. Oklahoma, 878 F.3d 1233, 1238 (10th Cir. 2018). Applying this
standard requires viewing the facts in the light most favorable to the nonmoving party and
resolving all factual disputes and reasonable inferences in his favor. Cillo v. City of Greenwood
Vill., 739 F.3d 451, 461 (10th Cir. 2013). However, “if the nonmovant bears the burden of
persuasion on a claim at trial, summary judgment may be warranted if the movant points out a
lack of evidence to support an essential element of that claim and the nonmovant cannot identify
specific facts that would create a genuine issue.” Water Pik, Inc. v. Med-Sys., Inc., 726 F.3d
1136, 1143-44 (10th Cir. 2013). “The mere existence of some alleged factual dispute between
the parties will not defeat an otherwise properly supported motion for summary judgment; the
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requirement is that there be no genuine issue of material fact.” Scott v. Harris, 550 U.S. 372,
380 (2007) (citation omitted). A fact is “material” if it pertains to an element of a claim or
defense; a factual dispute is “genuine” if the evidence is so contradictory that if the matter went
to trial, a reasonable jury could return a verdict for either party. Anderson, 477 U.S. at 248.
B.

Leave to Amend Scheduling Order

Where, as here, a scheduling order deadline has passed, Plaintiffs must establish good
cause under Fed. R. Civ. P. 16(b)(4) to amend the scheduling order. See Gorsuch, Ltd., B.C. v.
Wells Fargo Nat’l Bank Ass’n, 771 F.3d 1230, 1241 (10th Cir. 2014). “In practice, this standard
requires the movant to show the scheduling deadlines cannot be met despite the movant’s
diligent efforts.” Id. (quotation omitted). The Court has considerable discretion in determining
what kind of showing satisfies the good cause standard and may focus on, inter alia, the diligence
of the moving party, its reasons for seeking to amend, and any possible prejudice to the opposing
party. See Tesone v. Empire Mktg. Strategies, 942 F.3d 979, 989 (10th Cir. 2019).
III.

ANALYSIS
A.

Plaintiffs’ Claim

To state a claim for conversion under Colorado law, Plaintiffs must allege that
(1) Defendant exercised dominion or control over the cancelled shares; (2) that the shares
belonged to them; (3) Defendant’s exercise of control was unauthorized; (4) Plaintiffs demanded
return of the property; and (5) Defendant refused to return it. See DTC Energy Grp., Inc. v.
Hirschfeld, 420 F. Supp. 3d 1163, 1181 (D. Colo. 2019); Scott v. Scott, 428 P.3d 626, 634 (Colo.
App. 2018). However, the fourth and fifth elements are not necessary where surrounding
circumstances are sufficient in themselves to prove conversion. See Fin. Corp. v. King, 370 P.2d
432, 435 (Colo. 1962); see also Tennille v. W. Union Co., 751 F. Supp. 2d 1168, 1173-74
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(D. Colo. 2010) (concluding that pleading demand and refusal serves no logical function and is
unnecessary where conversion claim is premised on interest accrued on unclaimed deposits).
Defendant argues that Plaintiffs fail to state a claim because they admit they never
demanded return of the shares and that it was not given the opportunity to consider such a
demand. (See ECF No. 66 at 11.) Defendant further argues that the circumstances are
insufficient in themselves to prove conversion and that the loan agreement authorized the
repurchase of the shares. Plaintiffs argue that because Plaintiff Sebastian never signed the loan
agreement, Defendant had no legal basis to cancel the shares.
The Court first finds that the surrounding circumstances in themselves are insufficient to
prove conversion. Plaintiffs have presented no evidence that Defendant—or anyone else,
specifically—somehow affixed a facsimile of Plaintiff Sebastian’s signature to the loan
agreement. Nor have they adduced any evidence that Defendant had any reason to believe that
the loan agreement was not valid. The demand for payment, to which Plaintiffs did not respond,
referenced the loan agreement and informed Plaintiffs that action would be taken if payment was
not received within fourteen days. (See ECF No. 67-1 at 21.) Having received no response,
Defendant canceled the shares as permitted under terms of the loan agreement. Thus, in the
absence of circumstances that are sufficient in themselves to prove conversion, Plaintiffs failure
to demand return of the shares is fatal to their conversion claim.
The Court further finds that Plaintiffs have failed to adduce evidence that Defendant’s
cancellation of the shares was unauthorized. Indeed, Plaintiffs do not dispute that “[o]n June 19,
2018, having received no response to the Notice of Demand for Payment or payment toward the
loan balance, Defendant’s transfer agent was authorized to repurchase the 54,111,729 common
shares.” (ECF No. 71, ¶ 21.) Nor do Plaintiffs dispute that “[t]he only fact(s) identified by
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Plaintiffs in their discovery response to support their contention that Defendant exercised
‘unauthorized’ dominion or control over Plaintiffs’ shares is that ‘Plaintiffs deny that either Mr.
Sebastian or Duke Capital, individually or collectively, executed an August 31, 2012 Loan
Agreement’ and ‘Plaintiffs dispute the existence of any loan and any loan agreement.” (Id.
at ¶ 22.) Given these concessions by Plaintiffs and the absence of any evidence that Defendant
had any reason to believe it could not lawfully repurchase the shares when it did so, the Court
finds Plaintiffs have failed to adduce evidence that Defendant’s exercise of control over the
shares was unauthorized. Put differently, the cancellation of the shares was apparently
authorized by the loan agreement, whether valid or not. Accordingly, even if pleading demand
and refusal were not required under the circumstances of the case, Defendant is still entitled to
summary judgment on Plaintiffs’ conversion claim.
B.

Defendant’s Counterclaims

“Under Colorado law, a breach of contract claim has four 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.” Mattys v.
Narconon Fresh Start, 104 F. Supp. 3d 1191, 1204 (D. Colo. 2015) (quotation omitted). In light
of Plaintiff Sebastian’s unequivocal declaration that he did not sign the loan agreement (ECF
No. 69-1, ¶ 24), the Court finds there are genuine issues of material fact as to the existence of a
valid contract. As a result, Defendant cannot prevail on either of its counterclaims for breach of
contract and declaratory relief at this stage of the case.
C.

Plaintiffs’ Motion for Leave

Defendant filed its Motion for Summary Judgment after the expert witness disclosure
deadlines had passed and discovery was closed. (See ECF No. 40 at 9.) Plaintiffs contend it
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was at that time they learned Defendant intended to authenticate Plaintiff Sebastian’s signature
on the loan agreement with nonexpert opinion testimony by one of its board members, Doug
Mac Donald. See Fed. R. Evid. 702(b)(2) (stating authentication requirement may be satisfied by
“[a] nonexpert’s opinion that handwriting is genuine, based on a familiarity with it that was not
acquired for the current litigation”). To rebut such testimony, Plaintiffs now seek to present
expert testimony that the signature on the loan agreement is not authentic, despite failing to
designate either an expert or a rebuttal expert by the deadlines set forth in the scheduling order.
The Court notes that Plaintiffs’ previous Motion to Amend Scheduling Order (ECF
No. 56) was summarily denied by United States Magistrate Judge N. Reid Neureiter (ECF
No. 58) and finds Plaintiffs still have not established good cause to amend the scheduling order.
Contrary to Plaintiffs’ suggestion, Defendant did not indicate for the first time that Mr. Mac
Donald’s testimony would be the basis for authenticating the loan agreement in its summary
judgment motion. Rather, Defendant authenticated the loan agreement via Mr. Mac Donald’s
testimony in October 2020, when it successfully moved to set aside entry of default in this case.
(See ECF Nos. 28, 28-1.) And because Defendant did not designate any experts by the deadline
in October 2021, Plaintiffs were on notice that Defendant would likely authenticate the loan
agreement by the same means at trial. Therefore, Plaintiffs have been less than diligent about
preparing for the contingencies of this case.
Plaintiffs’ request is now moot with respect to their conversion claim. But should this
case proceed to trial on Defendant’s counterclaims, the Court finds Defendant would be
prejudiced and unfairly surprised if, now that the parties have completed discovery while under
the impression that no experts would testify, Plaintiffs were suddenly permitted to present expert
testimony.
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Moreover, although the parties dispute the validity of the loan agreement, the Court does
not foresee authentication of the agreement being an issue at trial. Plaintiffs’ position is that
“[t]he signature on the alleged August 31, 2012 loan agreement is a facsimile of Mr. Sebastian’s
from the securities agreement he signed on August 15, 2012.” (ECF No. 71, ¶ 50.) And it is
undisputed that Mr. Mac Donald and Plaintiff Sebastian have a business relationship spanning
decades. Under the circumstances, the Court cannot fathom a scenario in which the loan
agreement—the key document of the case—would not be admitted at trial, should one be
necessary. In any event, it is much too late for an expert witness disclosure, and Plaintiffs’
Motion must be denied.
IV.

CONCLUSION
The Court ORDERS as follows:
(1)

Defendant’s Motion (ECF No. 66) is GRANTED IN PART with respect to

Plaintiffs’ conversion claim and DENIED IN PART with respect to its counterclaims, and
(2)

Plaintiffs’ Motion (ECF No. 73) is DENIED.

DATED this 15th day of September, 2022.
BY THE COURT:

____________________________________
RAYMOND P. MOORE
United States District Judge

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