770 F.3d 1331 (10th Cir. 2014), 13-1256, Niemi v. Lasshofer

Docket Nº:13-1256
Citation:770 F.3d 1331
Opinion Judge:LUCERO, Circuit Judge.
Party Name:JOHN NIEMI; ROBERT NAEGELE, III; JESPER PARNEVIK, Plaintiffs - Appellees, v. ERWIN LASSHOFER; INNOVATIS GMBH; INNOVATIS IMMOBILIEN GMBH; INNOVATIS ASSET MANAGEMENT SA, Defendants - Appellants, and MICHAEL FRANK BURGESS; LEXINGTON CAPITAL & PROPERTY INVESTMENTS, LLC; BARRY FUNT; CREDIT SUISSE AG, Defendants
Attorney:Kevin D. Evans (Phillip L. Douglass with him on the briefs), Steese, Evans & Frankel, P.C., Denver, Colorado, for the Defendants - Appellants. Michael Lee Bender (Robert N. Miller and Michael A. Sink, Perkins Coie LLP; Denver, Colorado, and Christopher W. Madel, Robins, Kaplan, Miller & Ciresi L....
Judge Panel:Before LUCERO, O'BRIEN, and GORSUCH, Circuit Judges.
Case Date:November 04, 2014
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit
SUMMARY

Plaintiffs-appellees John Niemi, Robert Naegele, III, and Jesper Parnevik claimed that defendants-appellants Erwin Lasshofer and three companies affiliated with him, along with other co-conspirators, perpetrated a fraudulent financing scheme that caused the collapse of Plaintiffs’ large-scale real estate development project in Breckenridge, Colorado. The district court rejected Defendants’... (see full summary)

 
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Page 1331

770 F.3d 1331 (10th Cir. 2014)

JOHN NIEMI; ROBERT NAEGELE, III; JESPER PARNEVIK, Plaintiffs - Appellees,

v.

ERWIN LASSHOFER; INNOVATIS GMBH; INNOVATIS IMMOBILIEN GMBH; INNOVATIS ASSET MANAGEMENT SA, Defendants - Appellants,

and

MICHAEL FRANK BURGESS; LEXINGTON CAPITAL & PROPERTY INVESTMENTS, LLC; BARRY FUNT; CREDIT SUISSE AG, Defendants

No. 13-1256

United States Court of Appeals, Tenth Circuit

November 4, 2014

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Appeal from the United States District Court for the District of Colorado. (D.C. No. 1:12-CV-00869-RBJ).

Kevin D. Evans (Phillip L. Douglass with him on the briefs), Steese, Evans & Frankel, P.C., Denver, Colorado, for the Defendants - Appellants.

Michael Lee Bender (Robert N. Miller and Michael A. Sink, Perkins Coie LLP; Denver, Colorado, and Christopher W. Madel, Robins, Kaplan, Miller & Ciresi L.L.P., Minneapolis, Minnesota, on the briefs), Perkins Coie LLP, Denver, Colorado, for the Plaintiffs - Appellees.

Before LUCERO, O'BRIEN, and GORSUCH, Circuit Judges.

OPINION

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LUCERO, Circuit Judge.

John Niemi, Robert Naegele, III, and Jesper Parnevik (" Plaintiffs" or " Appellees" ) claim that Erwin Lasshofer and three companies affiliated with him (the " Lasshofer Defendants" or " Appellants" ), along with other co-conspirators, perpetrated a fraudulent financing scheme that caused the collapse of Plaintiffs' large-scale real estate development project in Breckenridge, Colorado. The district court rejected the Lasshofer Defendants' challenges to standing, jurisdiction, and venue, and entered a default judgment of approximately $185 million in favor of Plaintiffs. Exercising jurisdiction under 28 U.S.C. § 1291, we affirm the district court's judgments with two exceptions. We reverse as to personal jurisdiction over Innovatis Immobilien GmbH. We also remand to the district court with instructions to vacate its contempt order.

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I

A

According to the Amended Complaint, Niemi began working with Fairmont Hotels and Resorts on a large-scale development project in Breckenridge, Colorado in 2006.1 The project, which became known as the Fairmont Breckenridge, was a joint venture between Niemi, Naegele, and Parnevik, with Niemi acting as agent for the group. Niemi testified that a combination of debt and equity was used to purchase properties for the three primary components of the project, known as the Fairmont Shock Hill, Fairmont Residences on the River, and Fairmont River Lodge. Niemi also testified that Azco LLC and Azco II LLC (the " Azco entities" ) were the purchasers of these properties, and that the Azco entities rolled up into Mesatex LLC, of which he was the managing member.

Based on the success of Phase I of the project, Niemi sought $200-220 million in funding to pay off Phase I loans and complete the project in Phase II. He initially engaged in discussions with various potential financers. Defendants Lasshofer and Michael Burgess represented that their companies could secure the full amount needed for Phase II, but required Niemi to sign an agreement prohibiting him from seeking other funding before the due diligence process could begin. In September 2009, Niemi authorized a formal loan request. This document required that a $180,000 loan commitment fee be paid to Burgess' company, Prosperity International LLC (" Prosperity" ), and contained a confidentiality clause prohibiting Niemi from discussing the project with other potential lenders. After Prosperity issued a Commitment Letter, Niemi wired Prosperity the loan commitment fee. Negotiations regarding the potential loan took place via numerous emails, phone calls, and meetings. Following an extensive due diligence process, a Loan Agreement was executed on December 7, 2009. Plaintiffs provided a $2 million " upfront collateral deposit."

The promised loan proceeds never materialized. The defendants " engaged in an elaborate scheme to defraud Plaintiffs out of millions of dollars" by promising to fund the loan for Phase II without any intention of doing so, resulting in the collapse of the Fairmont Breckenridge project. During the first half of 2010, " Burgess sent dozens of emails explaining why loan proceeds would not be delivered as scheduled and promising their imminent release. Burgess repeatedly represented in these emails that he spoke for himself and for Lasshofer and/or that he was passing on information" from Lasshofer. In February 2010, Niemi traveled to Europe with Burgess to meet with Lasshofer and attempt to resolve any barriers to financing. At the meeting, Lasshofer and Burgess acknowledged the hardship caused by the delayed funding, and Lasshofer assured Niemi that funding would begin within five weeks. On March 9, 2010, the parties entered a Loan Modification Agreement which called for loan payments to begin later that month. The Amended Complaint also describes several documents sent to Niemi to assure Plaintiffs that the loan would be funded, including a Joint Venture Agreement (" JVA" ) between Lasshofer and Burgess indicating that they were working to fund the Fairmont Breckenridge and memoranda signed by Lasshofer authorizing transfers of loan funds.

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In June 2010, Burgess was indicted in the U.S. District Court for the Middle District of Florida in connection with frauds related to the Fairmont Breckenridge and other projects. He pled guilty to conspiracy to commit wire fraud and money laundering and was sentenced to 180 months' imprisonment. The court ordered Burgess to pay over $94 million in restitution, including $45,990,300 designated to Niemi. According to the Amended Complaint, Burgess admitted as part of his plea agreement that wire fraud proceeds were deposited in an account belonging to defendant Innovatis Asset Management, SA (" IAM" )--a company associated with Lasshofer, implicated Lasshofer as his co-conspirator, and stated that IAM was continuing to defraud investors. Even after Burgess' arrest, Lasshofer continued to reassure Plaintiffs that the loan would be funded. No funds were ever disbursed.

According to sworn declarations by the three plaintiffs, they held a conversation on August 2, 2010 to discuss how to recover from the fraud. During the conversation, Niemi, acting on behalf of the Azco entities and Mesatex, expressly assigned all causes of action and claims belonging to those companies to Parnevik, Naegele, and himself. During a preliminary injunction hearing, Niemi testified that Plaintiffs had " acceded" to any claims possessed by these companies.2 Following that hearing, in July 2012, Plaintiffs signed a written Assignment Agreement memorializing the prior oral assignment.

B

In April 2012, Plaintiffs filed a Verified Complaint commencing the underlying lawsuit against Burgess, the Lasshofer Defendants, and others, in the U.S. District Court for the District of Colorado. The complaint explains the various defendants' identities and relationships. Lasshofer, a domiciliary of Austria, is described as the managing director and sole beneficial owner of defendants Innovatis GmbH and Innovatis Immobilien GmbH, which are registered in Austria, as well as a co-founder and board member of defendant IAM, a Panamanian company. The three companies are members of the Innovatis Group, " a collection of affiliated entities from around the world purporting to provide asset management and consulting services." Burgess was the manager of Prosperity, a now-dissolved Florida company that claimed to engage in real estate development and project financing. Burgess was also the secretary of Innovatis, Inc., and Lasshofer was its president, before that company's dissolution. Defendant Lexington Capital & Property Investments, LLC, represented itself as Prosperity's exclusive underwriter. Defendant Barry Funt, through a now-defunct corporation called Essex Investment Partners, LLC, purported to work as a loan administrator and escrow agent for Prosperity.3

The July 2012 Amended Complaint alleged seventeen claims for relief, including, as relevant to this appeal, a claim under the Colorado Organized Crime Control Act (" COCCA" ) against the Lasshofer Defendants (Claim 5) and a common law fraud claim against all defendants (Claim 12). We recount below the pertinent portions of the case's extensive procedural history.

After granting Plaintiffs' motion for an ex parte temporary restraining order (" TRO" ) to guard against dissipation of the Lasshofer Defendants' assets, the district

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court held a preliminary injunction hearing on March 25, 2012. At the hearing, the court found that it possessed personal jurisdiction over the Lasshofer Defendants and that venue was proper in the District of Colorado. In a written order issued June 1, 2012, granting a preliminary injunction, the district court reiterated its rulings on personal jurisdiction and venue. The order effectively froze the worldwide assets of the Lasshofer Defendants (with exceptions for business expenses) and ordered them to deposit $2.18 million in escrow in Colorado pending a final judgment. On September 6, 2013, this Court vacated the preliminary injunction on the ground that Plaintiffs had not established statutory standing under COCCA, upon which the injunction was based, and remanded the matter to the district court. Niemi v. Lasshofer, 728 F.3d 1252, 1257-58, 1263 (10th Cir. 2013) (" Niemi I" ).

While the interlocutory appeal of the preliminary injunction was pending, the district court ruled on several motions, asserting authority to do so under Colorado v. Idarado Mining Co., 916 F.2d 1486, 1490 (10th...

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