90 F.3d 1523 (10th Cir. 1996), 94-1514, Trierweiler v. Croxton and Trench Holding Corp.

Docket Nº:94-1514, 94-1522.
Citation:90 F.3d 1523
Party Name:Daniel J. TRIERWEILER, Plaintiff-Appellant, v. CROXTON AND TRENCH HOLDING CORPORATION, a Delaware corporation; Dublin Osaka Group, Inc., a Nevada corporation; R&B Financial Group, a Texas corporation; Columbus Equities International, Inc., formerly known as Parsons Securities, Inc., an Ohio corporation; Monetary Fund, Inc., a Texas corporation; Cha
Case Date:July 29, 1996
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit
 
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Page 1523

90 F.3d 1523 (10th Cir. 1996)

Daniel J. TRIERWEILER, Plaintiff-Appellant,

v.

CROXTON AND TRENCH HOLDING CORPORATION, a Delaware

corporation; Dublin Osaka Group, Inc., a Nevada

corporation; R&B Financial Group, a Texas corporation;

Columbus Equities International, Inc., formerly known as

Parsons Securities, Inc., an Ohio corporation; Monetary

Fund, Inc., a Texas corporation; Charles W. Trench;

Benjamin C. Croxton, an individual; Ralph Ben-Schoter;

Gary S. Okizaki, an individual; Margaret E. Kerr, an

individual; Steven Kerr, an individual; Edward R. Lucero,

an individual; Leo Copeland, an individual; Steven W.

Kochensparger, an individual; Martin Howard Corsberg, an

individual; U.S. Monetary Fund, Inc., a Texas corporation;

Herbert Watkins, Defendants,

and

Wenner, Silvestain & Company, a Colorado partnership; John

D. Brasher, Jr., an individual; James G. Watt, an

individual; Stephen L. Wenner; Gary P. Saltzman; Lawrence

L. Greenberg; Barry H. Silvestain, Defendants-Appellees,

and

Machol, Davis & Michael, P.C.; James A. Kaplan, an

individual, Defendants-Third-Party-Plaintiffs-Appellees,

and

Robert Cooper, Thomas C. Clinton, Third-Party-Defendants.

Daniel J. TRIERWEILER, Plaintiff-Appellant,

v.

MACHOL, DAVIS & MICHAEL, P.C., formerly known as Machol &

Machol, P.C., a Colorado corporation; James A. Kaplan,

Wenner Silvestain & Company, a Colorado general partnership;

John D. Brasher, Jr., Defendants-Appellees.

Nos. 94-1514, 94-1522.

United States Court of Appeals, Tenth Circuit

July 29, 1996

Rehearing Denied Sept. 6, 1996.

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Michael Thomas Gilbert (Robert E. Youle with him on the briefs), of Williams, Youle & Koenigs, P.C., Denver, Colorado, for Plaintiff-Appellant Daniel J. Trierweiler.

John R. Mann of Kennedy & Christopher, P.C. (Elizabeth A. Starrs and Matthew S. Feigenbaum of Kenney and Christopher, P.C.; Robert S. Treece and Michael L. Hutchinson of Treece, Alfrey & Musat, P.C.; and John D. Brasher, Jr., pro se, with him on the brief), Denver, Colorado, for Defendants-Appellees Wenner, Silvestain & Co., et al., Machol, Davis & Michael, P.C., James A. Kaplan, and John D. Brasher, Jr.

William P. Schwartz of Ranck & Schwartz, Jackson, Wyoming, for Defendant-Appellee James G. Watt.

Before BRISCOE, SETH [*] and LUCERO, Circuit Judges.

LUCERO, Circuit Judge.

Plaintiff-appellant Daniel J. Trierweiler loaned Croxton and Trench Holding Corporation ("C&T") $1.2 million. The debtor defaulted, and Trierweiler seeks to recover his investment. Following two unsuccessful lawsuits before the United States District Court for the District of Colorado, Trierweiler appeals the dismissal of several of his claims for failure to comply with Colorado's certificate of review requirement and for lack of personal jurisdiction over one defendant. He also appeals the district court's grant of summary judgment on statute of limitations grounds favoring one defendant in his first lawsuit, and all defendants in his second lawsuit. We affirm in part and reverse in part. 1

I

In July 1989 Daniel Trierweiler loaned $300,000 to C&T in order to fund a new subsidiary called Aesir Securities, Inc. ("Aesir"). Later that year, C&T asked Trierweiler to loan it an additional $900,000. C&T offered to have Dublin Osaka Group, Inc. ("Dublin") and R&B Financial Group, Inc. ("R&B") guarantee the loans. C&T would pay the guarantors to execute an Unconditional Guaranty, which represented that they would repay the $1.2 million if C&T defaulted, and a Security Agreement Governing Bonds, which secured the Guaranty with over $1.2 million in GNMA bonds. Before he would invest any more in C&T, however, Trierweiler insisted that Dublin provide him with legal opinions on (1) the perfection of uncertificated securities under Colorado law, and (2) Dublin's legal capacity to enter into the proposed agreements. When these opinions were provided, Trierweiler agreed to the deal.

On November 30, 1989, Dublin and R&B executed the Unconditional Guaranty and Security Agreement Governing Bonds, and Trierweiler and C&T entered a new loan agreement in which Trierweiler refinanced his first loan and loaned an additional $900,000, based on assurances that the entire investment

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would be secured. At this point, Trierweiler had invested $1.2 million into the C&T/Aesir venture.

In January 1990 C&T defaulted on the loans, and Dublin subsequently failed to honor its guaranty. Trierweiler claims he then discovered that neither Dublin nor R&B had ever owned the GNMA bonds, and since then he has been unable to recover most of his losses. Trierweiler claims that "each appellee here played a key role in inducing [him] to make the investment." Appellant's Opening Br. at 5. Following is a description of each appellee's alleged role, and a summary of the litigation resulting from the default.

Watt

In early 1989, former Secretary of the Interior James G. Watt agreed to join a new investment banking firm, C&T, in an "of counsel" capacity and as chairman of the firm's advisory board. Watt owned equity in the firm and was to receive a share of its profits.

According to Trierweiler, Watt called to persuade him to invest in C&T, in order to get Aesir off the ground. Specifically, Watt said C&T constituted a good investment; that Watt had chosen "sharp people" to run C&T; and that Watt was participating in and overseeing C&T. Based on these representations, Trierweiler loaned C&T the initial $300,000. After the first loan, Trierweiler claims Watt called him again to encourage further investment.

Machol and Kaplan

Dublin retained the Denver law firm of Machol, Davis & Michael ("Machol") to write an opinion letter on the issue concerning perfection of uncertificated securities under Colorado law. James Kaplan, a Machol associate, prepared the letter, which affirmed that Trierweiler could obtain an enforceable perfected security interest in the GNMA bonds under the terms of the Guaranty and the Security Agreement. Trierweiler claims that Kaplan negligently failed to confirm whether Dublin owned the bonds, tell Trierweiler that he had not done so, or tell Trierweiler that it was necessary to confirm ownership.

Brasher

Dublin's general counsel, John D. Brasher, Jr., prepared an opinion letter on the issue of Dublin's authority to carry out its obligations as guarantor. Brasher wrote that Dublin did in fact have the authority to fulfill its duties under the Unconditional Guaranty and Security Agreement. Trierweiler claims that Brasher's letter falsely represented that Dublin had the authority to pledge its bonds and honor its Guaranty.

Wenner and the Wenner Partners

In addition to the Machol and Brasher opinion letters, Trierweiler also claims he relied on an audit of Dublin performed by the accounting firm of Wenner, Silvestain & Company ("Wenner"). 2 Wenner's audit incorrectly stated that Dublin owned the GNMA bonds. Trierweiler claims that Brasher sent this audit to Trierweiler's attorney, who relied on it in advising Trierweiler to enter the loan agreement. In addition, Wenner consented to the use of its audit as part of Dublin's SEC registration statement.

Procedural History

In November 1991 Trierweiler instituted a lawsuit in the United States District Court of the Western District of Michigan, asserting charges of negligent misrepresentation, fraud and other claims against Watt, Machol, Kaplan, Wenner, Brasher, C&T, Dublin, R&B, and other defendants ("Trierweiler I "). 3 In January 1993 the case was transferred to the United States District Court in Colorado, and in June 1993 Trierweiler added the individual Wenner Partners as defendants. In June 1994 Judge Weinshienk of the Colorado district court entered an order (1) granting summary judgment to the Wenner Partners based on Colorado's statute of limitation; (2)

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dismissing plaintiff's claims against Wenner, the Wenner Partners, Machol, Kaplan and Brasher for failure to file a timely certificate of review; and (3) dismissing the claims against Watt for lack of personal jurisdiction.

In July 1994 Trierweiler sued Brasher, Machol, Kaplan and Wenner again, for negligent misrepresentation ("Trierweiler II "). The district court granted summary judgment in favor of all defendants on the basis of Colorado's statute of limitations.

Trierweiler I and Trierweiler II have been consolidated on appeal.

II

Preliminarily, we must resolve a choice of law question: whether Michigan or Colorado law applies to Trierweiler's claims. First, we analyze which forum's choice of law principles apply to each defendant. We then determine which state's substantive law applies under the appropriate choice of law rules.

A

Generally, a federal trial court sitting in diversity applies the forum state's choice of law. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021-22, 85 L.Ed. 1477 (1941); TPLC, Inc. v. United Nat'l Ins. Co., 44 F.3d 1484, 1490 (10th Cir.1995). However, where a case is transferred from one forum to another under 28 U.S.C. § 1404(a), as here, then the transferee court must follow the choice of law rules of the transferor court. Van Dusen v. Barrack, 376 U.S. 612, 635-37, 84 S.Ct. 805, 818-20, 11 L.Ed.2d 945 (1964).

Some circuits have created an exception to this exception: where the case has been transferred but the transferor court lacked personal jurisdiction over...

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