RV Horizons, Inc. v. Smith

Decision Date13 November 2020
Docket NumberCivil Action No. 18-cv-02780-NYW
PartiesRV HORIZONS, INC., MHC AMERICA FUND, LLC, MHC AMERICA FUND CLASS C, LLC, MHC AMERICA FUND 2, LLC, MHC AMERICA FUND 2 CLASS B, LLC, MHPS ALUMNI, LLC, MHPS ALUMNI 2, LLC, MHPS ALUMNI 3, LLC, AFFORDABLE HOUSING COMMUNITY FUND 1, LLC, AFFORDABLE HOUSING COMMUNITY FUND 2, LLC, AFFORDABLE HOUSING COMMUNITY FUND 3, LLC, AFFORDABLE HOUSING COMMUNITY FUND 4, LLC, AFFORDABLE HOUSING COMMUNITY FUND 5, LLC, AFFORDABLE HOUSING COMMUNITY FUND 6, LLC, and AWA FUND 3, LLC, Plaintiffs, v. JAMIE SMITH, RYAN SMITH, MHPI VII, LLC, ELEVATION CAPITAL GROUP, LLC, and DAHN CORPORATION, Defendants.
CourtU.S. District Court — District of Colorado
MEMORANDUM OPINION AND ORDER

Magistrate Judge Nina Y. Wang

This matter comes before the court on the following motions:

(1) Smith Defendants' Motion for Summary Judgment and Incorporated Memorandum of Law ("Smith Defendants' Motion for Summary Judgment") [#97, filed March 6, 2020];1(2) Dahn Corporation's Motion for Summary Judgment ("Dahn's Motion for Summary Judgment") [#99, filed March 6, 2020];
(3) Smith Defendants' Motion to Exclude the Testimony of Jon Ahern and Ben Braband ("Smith Defendants' Motion to Exclude") [#112, filed April 24, 2020];
(4) Plaintiffs' Motion to Exclude Defendants' Proffered Retained and Non-Retained Expert Opinion Testimony ("Plaintiffs' Motion to Exclude") [#113, filed April 24, 2020]; and
(5) Dahn Corporation's Motion to Exclude the Opinions and Testimony of Jon S. Ahern ("Dahn's Motion to Exclude") [#114, filed April 24, 2020].

The undersigned Magistrate Judge fully presides over this case pursuant to 28 U.S.C. § 636(c), the Parties' unanimous consent [#42], and the Order of Reference dated January 4, 2019 [#44]. Upon consideration of the motions and related briefing and in light of the applicable legal standards, the Smith Defendants' Motion for Summary Judgment is GRANTED; the Dahn Motion for Summary Judgment is GRANTED; the Smith Defendants' Motion to Exclude is DENIED AS MOOT; Plaintiffs' Motion to Exclude is DENIED AS MOOT; and Dahn's Motion to Exclude is DENIED AS MOOT.

BACKGROUND

The court has discussed in detail this action's background in previous rulings, see, e.g., [#60; #84]. Due to the number of Parties and relevant non-Parties, and the nature of their relationships, the court first begins with a brief summary of the same before turning to the procedural background and undisputed facts underlying the instant Motions for Summary Judgment.

I. Parties

Plaintiffs. Plaintiffs are a series of corporate entities owned by, among others, non-parties David Reynolds ("Mr. Reynolds") and Frank Rolfe ("Mr. Rolfe") and involved in the manufactured housing industry. [#64 at ¶¶ 8-22, 30, 51; #87 at ¶ 1; #88 at ¶ 1 (denying based on lack of knowledge)]. Mr. Reynolds and Mr. Rolfe's business operations are divided across numerous corporate entities, owned at the highest level by a limited liability company ("LLC"). [#64 at ¶ 35, #87 at ¶ 35; #88 at ¶ 35 (denying based on lack of knowledge)]. Those high-level LLCs fund and own an interest, in whole or part, in a special purposed entity ("SPE"), which in turn owns a manufactured housing community or a group of communities. [#64 at ¶ 35, #87 at ¶ 35; #88 at ¶ 35 (denying based on lack of knowledge); #49 at ¶¶ 23, 24]. Each high-level LLC also has a different member-manager, a separate entity, that is responsible for promoting the fund to potential investors. [#64 at ¶ 51].

There are five distinct groupings of high-level LLCs which are relevant to this case: the Alumni Funds;2 the Affordable Housing Community Funds;3 the AWA Funds;4 the MHPI Funds,5 and the MHC America Funds. [#64 at ¶¶ 35, 37, 51, 52]. The MHC America Funds consist of Plaintiffs MHC America Fund, LLC ("Fund 1") and MHC America Fund 2, LLC ("Fund 2").6 [Id. at ¶ 37; #87 at ¶ 37]. Fund 1 was formed in 2016 and included all of the sponsors previously spread among MHPI 1-4, Alumni 1-3, and AHCF 1-6. [#64 at ¶ 37]. Fund 2 was intended to bea fund into which previous funds were "rolled-up" to simplify fund structure. [Id.]7 Plaintiffs MHC America Class C, LLC ("Class C") and MHC America 2 Class B, LLC ("Class B") are separate entities that own and promote interest in Funds 1 and 2, respectively. [Id.]. Each of the high-level LLCs contract with Plaintiff RV Horizons ("RV Horizons"), which, in addition to managing some of the high-level LLCs like Alumni 1-3 and MHPI 1-4, manages and identifies potential manufactured housing communities for investment and negotiates acquisitions. [Id. at ¶¶ 35, 36, 38, 51, 52].

Defendants. Defendants Jamie Smith ("Ms. Smith") and Ryan Smith ("Mr. Smith" and collectively, "the Smiths") own several corporate entities formerly or currently intertwined with Plaintiffs'. [#64 at ¶ 52; #87 at 16 ¶ 52]. Specifically, the Smiths own Colonial Kitchen, LLC ("Colonial"), which in turn owns an interest in Alumni 1-3, and MHP Portfolio LLC ("MHP") which is invested in non-Parties MHPI 1-3, and Salvo Conducto which owns part of MHPI 4. [#64 at ¶¶ 51-52; #49 at 7-8 at ¶¶ 23-24]. The Smiths also own MHPI V LLC, which in turn owns part of AHCF 6 as noted above. [#64 at ¶¶ 51-52; #49 at ¶¶ 23-24]. Mr. Smith is a manager of Defendant Elevation Capital Group, LLC ("Elevation"), which is used to promote Defendant MPHI VII, LLC ("Fund 7"). [#97-1 at ¶ 2; #64 at ¶ 61; #87 at ¶ 61]. Defendant Dahn Corporation is a California corporation that, together with the Smith Defendants, created Fund 7 with the purpose of acquiring storage facilities and manufactured housing community through subsidiary single purpose entities. [#64 at ¶¶ 4, 27, 86; #87 at ¶¶ 4, 27, 86; #88 at ¶¶ 4, 27, 86].

After working together on a number of projects, the business relationship between Mr. Reynolds, Mr. Rolfe, and the Smith Defendants soured. See generally [#61 (Notice of Related Cases); #64]. Among other things, Plaintiffs believed that the Defendants were unfairly promotingFund 7 and discouraging investors from Fund 1 and Fund 2 by improperly capitalizing on Plaintiffs' trademarks, prior experience, and confidential business information. See generally [#64]. This lawsuit followed.

II. Procedural History

Plaintiffs initiated this action on October 30, 2018, see and filed the operative Second Amended Complaint on March 22, 2019.8 [#64]. The Second Amended Complaint asserts seven claims for relief based on allegations that the Smith Defendants and Dahn misappropriated Plaintiffs' trademarks and otherwise engaged in unfair competition in promoting Fund 7 through, inter alia, an Offering Package that includes Supplement No. 2 dated October 31, 2017; Supplement No. 1 dated July 27, 2017; and a Private Placement Memorandum dated April 1, 2017 (collectively, "Offering Package") and misuse of trade secrets. [Id.]. Specifically, the claims asserted in the Second Amended Complaint include: (1) direct trademark infringement9 inviolation of the Lanham Act, 15 U.S.C. § 1125(a)(1)(A), by RV Horizons, Alumni 1-3, AWA 3, ACF 1-6, and Fund 1 against all Defendants ("Count I") [id. at ¶¶ 132-46]; (2) unfair competition in violation of the Lanham Act, 15 U.S.C. § 1125(a)(B), by RV Horizons, Alumni 1-3, AWA 3, ACF 1-6, and Fund 1 against all Defendants ("Count II") [id. at ¶¶ 147-60]; (3) contributory trademark infringement in violation of the Lanham Act, 15 U.S.C. § 1125(a), by RV Horizons, Alumni 1-3, AWA 3, ACHF 1-6, and Fund 1 against the Smiths, Elevation, and Dahn ("Count III") [id. at ¶¶ 161-77]; (4) misappropriation of trade secrets in violation of the Defend Trade Secrets Act ("DTSA"), 18 U.S.C. § 1836, by RV Horizons, Fund 1, Class C, Fund 2, and Class B against Fund 7 and the Smiths ("Count IV") [id. at ¶¶ 178-83]; (5) misappropriation of trade secrets in violation of the Colorado Uniform Trade Secrets Act ("CUTSA") by RV Horizons, Fund 1, Class C, Fund 2, and Class B against Fund 7 and the Smiths ("Count V") [id. at ¶¶ 184-89]; (6) violation of the Colorado Consumer Protection Act, Colo. Rev. Stat. § 6-1-101, by RV Horizons, Fund 1, Class C, Fund 2, and Class B against all Defendants ("Count VI") [id. at ¶¶ 190-96]; and (7) unjust enrichment by RV Horizons, Fund 1, Class C, Fund 2, and Class B against all Defendants ("Count VII") [id. at ¶¶ 197-203]. As relief, Plaintiffs seek compensatory and consequential damages, injunctive relief, pre-judgment and post-judgment interest, and allowable fees and costs. [Id. at 51-52].

After proceeding through extensive discovery,10 on March 6, 2020, the Smith Defendants and Dahn filed their respective Motions for Summary Judgment presently before the court. [#97;#99]. The Smith Defendants make arguments as to all seven of Plaintiffs' claims. [#97]. However, because Counts IV and V are not asserted against Dahn, Dahn makes arguments only as to Counts I, II, III, VI, and VII. [#99]. After the court granted two extensions of time, [#101; #105], Plaintiffs filed their Responses to the Motions for Summary Judgment on April 17, 2020, [#109; #110], as well as a separate Joint Appendix of Exhibits in Support of their Responses, [#111]. After an extension from the court [#119], Defendants filed their Replies in support of their respective Motions for Summary Judgment on May 11, 2020. [#128; #129]. The instant Motions for Summary Judgment are ripe for determination.

LEGAL STANDARD

Summary judgment is appropriate only if "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986); Henderson v. Inter-Chem Coal Co., Inc. 41 F.3d 567, 569 (10th Cir. 1994). "A 'judge's function' at summary judgment is not 'to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.'" Tolan v. Cotton, 572 U.S. 650, 656, 134 S. Ct. 1861, 188 L. Ed. 2d 895 (2014) (quoting Anderson v. Liberty Lobby, ...

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