Case 1:17-cv-02512-RM-GPG Document 83 Filed 03/30/18 USDC Colorado Page 1 of 13 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 1:17-cv-02512-RM-GPG CSMN INVESTMENTS, LLC, CSMN Operations, LLC, v. Plaintiffs, CORDILLERA METROPOLITAN DISTRICT, CORDILLERA PROPERTY OWNERS ASSOCIATION, INC., DAVID BENTLEY, DAVID DAVIES, ROBERT EGAN, KITTY GEORGE, LARRY KYTE, JUDITH G. MCBRIDE, RACHEL OYS, ED SHRINER, BRUCE SMATHERS, PATRICK WILHELM, and TOM WILNER Defendants. RULE 12(b)(6) MOTION TO DISMISS CLAIMS AGAINST LARRY KYTE, BRUCE SMATHERS, PATRICK WILHELM AND TOM WILNER COME NOW Defendants, Larry Kyte, Bruce Smathers, Patrick Wilhelm, and Tom Wilner (collectively the Non-Board Member Defendants ), by and through their attorneys, HindmanSanchez P.C., appearing through Debra J. Oppenheimer and Jeffrey B. Smith, and submit their Motion to Dismiss as follows: D.C.COLO.LCivR 7.1(a) Certification: Undersigned counsel hereby certifies that she has in good faith conferred with Plaintiffs counsel Brian J. Connolly, Esq. Debra Oppenheimer 06585179.DOCX;3
Case 1:17-cv-02512-RM-GPG Document 83 Filed 03/30/18 USDC Colorado Page 2 of 13 and Brian Connolly exchanged voice mails and emails on March 27, 2018. Defendants did discuss the Motion to Dismiss with Plaintiffs counsel. Defendants understand that Plaintiffs object to the Motion to Dismiss Larry Kyte, Bruce Smathers, Patrick Wilhelm, and Tom Wilner from the case. I. Introduction Plaintiffs are the purchasers of the Lodge & Spa at Cordillera (the "Lodge"), which they propose to convert into a residential drug and alcohol treatment facility. 1 They allege that the Defendants have improperly challenged their right to do so under the applicable zoning regulations in proceedings before the Eagle County Board of County Commissioners and subsequently before the state courts, and that those challenges were undertaken with the intent to discriminate against [plaintiffs] and its prospective clients. 2 Plaintiffs name as Defendants the Cordillera Metropolitan District (the CMD"), the Cordillera Property Owners Association (the "CPOA"), and eleven individuals. The four individual Defendants filing this Motion, Messrs. Kyte, Smathers, Wilhelm and Wilner, are included as defendants based on the allegation that they were appointed to a legal committee by the boards of directors of the CPOA and CMD. 3 None of these four individuals is alleged to be a member of the board of directors of either the CMD or the CPOA. There is no allegation that they individually or as the legal committee had any authority to direct or authorize the actions of those organizations, or that they themselves engaged in any discriminatory action of any kind that could make them liable to Plaintiffs. Although Plaintiffs 1 (Second Amended Complaint, para. 2). (The Second Amended Complaint is hereinafter referred to as Complaint. ) 2 (Complaint, paras. 37, 38, 43, 44, 47, 49, 52, 67, 69, 70, 73, and 76). 3 (Complaint, paras. 4, 10, 14, 15, 16). 06585179.DOCX;3 2
Case 1:17-cv-02512-RM-GPG Document 83 Filed 03/30/18 USDC Colorado Page 3 of 13 have now amended their Complaint twice and added numerous conclusory allegations, the substance of their allegations against these individual defendants has never changed. The Complaint is totally devoid of any specific allegation upon which relief against them could be based. With respect to these Defendants, therefore, the Complaint must be dismissed. II. Legal Standard Over the last decade, the Supreme Court has significantly heightened the pleading requirements that must be met to withstand a motion to dismiss. In Bell Atlantic v. Twombly, 550 U.S. 554 (2007), the Court held that a complaint failed to state a claim of antitrust conspiracy under Section 1 of the Sherman Act when it alleged only parallel conduct by the defendants, which the Court found was as consistent with legitimate business activity as with an illegally motivated conspiracy. In reaching its holding, the Court expressly retired the often quoted statement from its 1957 decision in Conly v. Gibson, 355 U.S. 41, 47, that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. According to the Court, the no set of facts language has been long criticized and is best forgotten. 550 U.S. at 563. Instead, the Court explained that Rule 8 of the Federal Rules of Civil Procedure requires that a complaint allege facts, as opposed to legal labels and conclusions, giving rise to a plausible, rather than merely conceivable, entitlement to relief. Two years later, the Supreme Court reaffirmed those principles in Ashcroft v. Iqbal, 556 U.S. 662 (2009). That case is particularly relevant here; it was also a discrimination case in which the plaintiff alleged that the defendants, federal officials in that case, had undertaken actions for improper discriminatory purposes. Following its decision in Twombly, the Court in 06585179.DOCX;3 3
Case 1:17-cv-02512-RM-GPG Document 83 Filed 03/30/18 USDC Colorado Page 4 of 13 Iqbal reversed the Second Circuit and found the complaint's allegations of discrimination by the individual defendants insufficient to withstand a motion to dismiss. In doing so, the Court made clear that its ruling in Twombly "expounded the pleading standards for 'all civil actions,' and it applies to antitrust and discrimination suits alike..." 556 U.S. at 684. Applying those standards, the Court found that plaintiff's complaint failed to state a claim for discrimination. The Court began by setting out the necessary elements for such a claim: [T]he plaintiff must plead and prove that the defendant acted with discriminatory purpose... [P]urposeful discrimination requires more than intent as volition or intent as awareness of consequences.... It instead involves a decision maker s undertaking a course of action because of, not merely in spite of, [the action s] adverse effects upon an identifiable group. To state a valid claim for discrimination therefore, the plaintiff must plead sufficient factual matter to show that [defendants] adopted and implemented the [practices] at issue not for a neutral... reason but for the purpose of discriminating..." Id. at 676-77. The Court repeated that it is not bound to accept as true a legal conclusion couched as a factual allegation." 556 U.S. at 678. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. Only a complaint that states a plausible claim for relief survives a motion to dismiss." Id. at 679. And the complaint fails "where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct..." Id. As it had said in Twombly, "Where a complaint pleads facts that are 'merely consistent with' a defendant's liability, it stops short of the line between possibility and plausibility of 'entitlement to relief.'" Id. at 678. (Emphasis added) Applying those standards, the Court rejected the complaint's conclusory allegations that defendants' actions had been taken with the intent to discriminate and found that the factual 06585179.DOCX;3 4
Case 1:17-cv-02512-RM-GPG Document 83 Filed 03/30/18 USDC Colorado Page 5 of 13 allegations in the complaint of disparate treatment were as consistent with legitimate law enforcement purposes as with wrongful intent. The Court found therefore that plaintiff's "complaint does not contain any factual allegation sufficient to plausibly suggest [defendants'] discriminatory state of mind. [Plaintiff s] pleadings thus do not meet the standard necessary to comply with Rule 8." Id. at 683. 4 III. The Complaint Fails to Plead Facts Sufficient to State a Claim A. The Complaint Should Be Dismissed Against All Defendants. Based on the standards established by the Supreme Court in Twombly and Iqbal, it is clear that the Complaint here fails to plead facts sufficient to state a claim for discrimination and that it must therefore be dismissed. The gravamen of Plaintiffs Complaint lies in the allegations that the Defendants or, more precisely, the CPOA and CMD boards of directors, authorized proceedings to be brought before the Eagle County Board of County Commissioners (the BOCC ) and subsequently in state court challenging Plaintiffs right under existing zoning regulations to carry out its proposed conversion of the Lodge. 5 The Complaint alleges that those actions, authorizing the BOCC and state-court appeals, "were done with the intent to discriminate against CSMN and its prospective clients." 6 Plaintiffs add one conclusory 4 The Tenth circuit has recognized and implemented the findings of Twombly and Iqbal and has held that, while the court must "accept as true all well-pleaded factual allegations... and view these allegations in the light most favorable to the plaintiff" (Casanova v. Ulibarri, 595 F.3d 1120, 1124 (10th Cir. 2010), quoting Smith v. United States, 561 F.3d 1090, 1098 (10th Cir. 2009)), a plaintiff may not rely on mere labels or conclusions. As the Tenth Circuit explained in Ridge at Red Hawk, L.L.C. v. Schneider, 493 F.3d 1174, 1177 (10th Cir. 2007), "the mere metaphysical possibility that some plaintiff could prove some set of facts in support of the pleaded claims is insufficient; the complaint must give the court reason to believe that this plaintiff has a reasonable likelihood of mustering factual support for these claims." "The burden is on the plaintiff to frame a complaint with enough factual matter (taken as true) to suggest that he or she is entitled to relief." Robbins v. Oklahoma, 519 F.3d 1242, 1247 (10th Cir. 2008) (quoting Twombly, 555 U.S. at 556). A complaint must set forth sufficient facts to elevate a claim above level of mere speculation. Id. 5 (Complaint paras. 35, 46, 66). 6 (Complaint paras. 38, 47, 67). 06585179.DOCX;3 5
Case 1:17-cv-02512-RM-GPG Document 83 Filed 03/30/18 USDC Colorado Page 6 of 13 allegation in paragraph 37 of the Complaint. This allegation states that [t]he Legal Committee, from its inception, has served a single function: to advise with the intent to discriminate, the CMD, the CPOA, and the Cordillera community in the various ways in which each can oppose the Use. 7 Those allegations form the entire basis for the claims of discrimination. They are much like, but even more conclusory, than the allegations found insufficient by the Supreme Court in Twombly and Iqbal. They are exactly the type of "mere conclusory statements" that the Supreme Court expressly held "do not suffice." Ashcroft v. Iqbal, 556 U.S. at 678. Moreover, the boards' actions in authorizing those challenges are certainly consistent with a legitimate purpose. The boards have a clear constitutional right to pursue relief before agencies of the government and the courts. Indeed, it could be strongly argued that they had a duty to take actions to uphold the zoning regulations in the communities they represent, and their challenges simply contend that Plaintiffs proposed use of the property is not permitted under existing zoning. There is no allegation that their challenges were a sham or in any way frivolous or insubstantial. Their actions in bringing those challenges are at least as consistent with a valid purpose as with wrongful intent. In these circumstances, [w]here the complaint pleads facts that are merely consistent with the defendants liability, it stops short of the line between possibility and plausibility of entitlement to relief. Ashcroft v. Iqbal, 556 U.S. at 678. The Complaint here, as in that case, must therefore be dismissed. Furthermore, the boards' actions in exercising their constitutional rights to petition the BOCC and the courts for relief are immune. The Supreme Court's Noerr-Pennington doctrine provides broad immunity from liability to those who exercise their First Amendment rights by petitioning the government for relief. See Eastern R.R. Presidents Conference v. Noerr Motor 7 (Complaint, para. 37). 06585179.DOCX;3 6
Case 1:17-cv-02512-RM-GPG Document 83 Filed 03/30/18 USDC Colorado Page 7 of 13 Freight, Inc., 365 U.S. 127 (1961); United Mine Workers of Am. v. Pennington, 381 U.S. 657 (1965); California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508 ("the right to petition extends to all departments of the Government [and] [t]he right of access to the courts is indeed but one aspect of the right of petition.") Although that doctrine was originally adopted in the antitrust context, those circuits that have examined the issue have held that this "right-to petition immunity" applies to claims under the Fair Housing Act and the Americans with Disabilities Act. See Tri-Corp Hous., Inc. v Bauman, 826 F.3d at 446, 450 (7 th Cir. 2016) (applying right-to-petition immunity in the context of the FHA and ADA); White v. Lee, 227 F.3d 1214, 1228 (9th Cir. 2000) (holding that plaintiffs were entitled to immunity even if their proposed result would have been contrary to the FHA). The Complaint should therefore be dismissed against all Defendants. The Non-Board Member Defendants, Larry Kyte, Bruce Smathers, Patrick Wilhelm and Tom Wilner, also hereby join in Defendants Cordillera Metropolitan District, David Bentley, David Davies, Robert Egan, Kitty George, Judith G. McBride, and Rachel Oys' Motion to Dismiss, as if fully set forth and restated herein, seeking the same relief, dismissal, for the same and additional reasons set forth by them. B. The Complaint Should Certainly Be Dismissed Against the Non-Board Members Defendants. Even if the Court feels there is a question whether the Complaint should be dismissed with respect to all the Defendants, it is absolutely clear that it must be dismissed against the individual Non-Board Member Defendants. There are no allegations whatsoever in the Complaint that support a finding of liability against them. 06585179.DOCX;3 7
Case 1:17-cv-02512-RM-GPG Document 83 Filed 03/30/18 USDC Colorado Page 8 of 13 As discussed, the gravamen of Plaintiffs Complaint is that the CPOA and CMD boards acted improperly by authorizing challenges to Plaintiffs proposed development plans. 8 After stating clearly that the boards authorized those challenges, the Complaint then switches to the term "Defendants" to try to cast blame for those actions on all the parties and individuals it has decided to name in the lawsuit. Thus, it alleges in paragraph 35 that "the CPOA board of directors and the CMD board voted unanimously to authorize CPOA and CMD staff and legal counsel to proceed with an appeal." It then alleges in paragraph 38 that [t]he Defendants actions authorizing the BOCC Appeal were done with the intent to discriminate..." 9 Similarly, in paragraph 66, the Complaint alleges that [o]n September 23, 2016, the CMD board and the CPOA board of directors, on the advice and recommendation of the Legal Committee, voted to authorize a state judicial appeal of the BOCC decision..." In the following paragraphs, it then uses the term "Defendants" loosely to allege that: The Defendants actions in actively encouraging and coaching community sentiment against the Plaintiff s intended use and its Clients, and in recommending, authorizing and prosecuting the appeal... were done with intent to discriminate" 10 ; Defendants, by and through their attorneys filed the... appeal" 11 ; The Defendants have continued to encourage community sentiment against Plaintiff s intended use and its Clients, and to prosecute the Civil Action with intent to discriminate 12 ; "To shield their discriminatory intent, the Defendants have, multiple times throughout the course of the 8 (Complaint paras. 35, 46, 66). 9 (Complaint para. 38). 10 (Complaint para. 67). 11 (Complaint para. 68). 12 (Complaint para. 69). 06585179.DOCX;3 8
Case 1:17-cv-02512-RM-GPG Document 83 Filed 03/30/18 USDC Colorado Page 9 of 13 BOCC Appeal and the Civil Action, (i) actively coached the community on what to say in opposition, and (ii) changed their legal arguments " 13 Plaintiffs continued use of the term Defendants in the Complaint is an improper attempt to cast a net over all the Defendants for the alleged actions of some of them, where clearly all the Defendants were not involved in the alleged actions. In fact, Plaintiffs recognize in paragraph 46 of their Complaint that the Legal Committee is not part of the Defendants in alleging that with the support of the Legal Committee, the Defendants filed the BOCC appeal Plaintiffs practice of alleging each claim against "Defendants" results in a pleading that is prohibitively vague and fails to inform each defendant of the particular claims against him or her. Plaintiffs' current Complaint is impermissibly replete with allegations that the Defendants engaged in certain conduct, making no distinction among the defendants charged. See Magluta v. Samples, 256 F.3d 1282, 1284 (11 th Cir. 2001). Federal pleading standards require the presentation of factual allegations sufficient to state a plausible claim for relief as to each defendant. Barren v. Harrington, 152 F.3d 1193, 1194 (9 th Cir.1998) ("[a] plaintiff must allege facts, not simply conclusions, that show that an individual was personally involved in the deprivation of civil rights"). Plaintiffs fail to allege a single act to sustain their claims against Non-Board Member Defendants Smathers and Wilhelm. The references to Smathers and Wilhelm 14 present nothing other than conclusory allegations with no specific actions by either one. 13 (Complaint para. 70). 14 (Complaint para 14, 15, 82, 83, 100, 102). 06585179.DOCX;3 9
Case 1:17-cv-02512-RM-GPG Document 83 Filed 03/30/18 USDC Colorado Page 10 of 13 But, the actions complained of were taken not by all the Defendants, but by the boards of the CMD and the CPOA. The Complaint acknowledges: "The CMD is governed by a board of directors." 15 As the Complaint makes clear, the boards of directors of those organizations authorized those appeals, and the organizations themselves were the parties to those appeals. 16 Messrs. Kyte, Smathers, Wilhelm and Wilner are not alleged to have been members of the board of either the CMD or the CPOA, or to have had any authority with respect to the decisions made by those organizations. It is not even alleged that the "Legal Committee" on which they allegedly served was in existence when the decisions complained of were made. 17 Likewise, there is no factual basis presented supporting the allegation that the Non-Board Members were members of the Legal Committee at all times relevant to this action. 18 In summary, neither the Legal Committee nor the Non-Board Member Defendants themselves were parties to either the BOCC Appeal or the Civil Action. There are no allegations that the Non-Board Member Defendants or the Legal Committee had the authority to or actually did authorize the BOCC Appeal or the Civil Action. In fact, all of the allegations specifically state that those actions were taken the Boards of Directors of the CMD and CPOA. The Non- Board Member Defendants were not members of those boards and had no authority over them. 19 15 (Complaint Para. 3). 16 (Complaint paras. 35, 66, 68). 17 (Complaint para. 36 only alleges that the legal committee was formed on June 3, 2016 by reference to para 35). 18 (Complaint Para. 10, 14, 15, 16). 19 In fact, the actual name of the so-called legal committee was the Legal Advisory Committee ("LAC") by which it was referred in all communications. The title reflects the actual role of the Legal Advisory Committee which was advisory only and had no authority whatsoever to act on behalf of the CMD or CPOA boards or to vote on any proposal before those boards. And Plaintiffs acknowledge that their role was advisory at paragraph 37. 06585179.DOCX;3 10
Case 1:17-cv-02512-RM-GPG Document 83 Filed 03/30/18 USDC Colorado Page 11 of 13 Even after adding 13 paragraphs of alleged facts to the Complaint, Plaintiffs have still failed to present this Court with the facts necessary to establish their claims. To date the Plaintiffs have failed to set forth how any Defendant, and particularly any Non-Board Member Defendant, has made the Lodge unavailable as alleged in Claim Two. No facts have set forth even a hint as to how the Lodge is unavailable by any actions of the Non-Board Member Defendants. Thus, the Plaintiffs have failed to state a claim and this claim must be dismissed against the Non-Board Member Defendants. Plaintiffs also baldly assert that the actions of the Non-Board Member Defendants were "under color of state law", 20 and agents of CMD 21. But they make no attempt to explain why that is so, how it is so, or in what respect it is so. The Complaint provides no factual support for either claim. It is exactly the sort of unsupported conclusory legal allegation that the Supreme Court rejected in Twombly and Iqbal. Plaintiffs failure to support their claim that the Non- Board Member Defendants were acting under color of state law must lead to the dismissal of such claim. There has been no allegation in the original Complaint, or in the First Amended Complaint or the Second Amended Complaint, which supports that any of the Defendants, and particularly the Non-Board Member Defendants, has had any authority or control over the zoning such that their actions and objections violated the rights of Plaintiffs. Even after amending their Complaint twice to add thirteen paragraphs, Plaintiffs have failed to state any sort of plausible claim that would justify relief against these individual Non- 20 (Complaint, para. 83). 21 (Complaint, para 18). 06585179.DOCX;3 11
Case 1:17-cv-02512-RM-GPG Document 83 Filed 03/30/18 USDC Colorado Page 12 of 13 Board Member Defendants. With respect to them, at the least, the Complaint must clearly be dismissed. IV. Conclusion WHEREFORE, Non-Board Member Defendants respectfully urge the Court to dismiss Plaintiffs claims against Larry Kyte, Bruce Smathers, Patrick Wilhelm and Tom Wilner. Dated this 30 th day of March, 2018. Respectfully submitted, /s/ Debra J. Oppenheimer Debra J. Oppenheimer Jeffrey B. Smith HindmanSanchez P.C. 555 Zang Street, Suite 100 Lakewood, Colorado 80228-1011 Telephone: 303-432-9999 FAX: 303-991-2085 E-mail: doppenheimer@hindmansanchez.com ATTORNEYS FOR DEFENDANTS, LARRY KYTE, BRUCE SMATHERS, PATRICK WILHELM, AND TOM WILNER 06585179.DOCX;3 12
Case 1:17-cv-02512-RM-GPG Document 83 Filed 03/30/18 USDC Colorado Page 13 of 13 CERTIFICATE OF SERVICE I hereby certify that on the 30 th day of March, 2018, I electronically filed the foregoing RULE 12(b)(6) MOTION TO DISMISS CLAIMS AGAINST LARRY KYTE, BRUCE SMATHERS, PATRICK WILHELM AND TOM WILNER with the Clerk of Court using the CM/ECF system, which will send notification of such filing to the following e-mail addresses: OTTEN JOHNSON ROBINSON NEFF + RAGONETTI, P.C. Brian J. Connolly, Esq. Bill E. Kyriagis, Esq. Thomas Macdonald, Esq. Andrew L.W. Peters, Esq. 950 Seventeenth Street, Suite 1600 Denver, Colorado 80202 bconnolly@ottenjohnson.com bkyriagis@ottenjohnson.com mac@ottenjohnson.com apeters@ottenjohnson.com ATTORNEYS FOR PLAINTIFF CSMN INVESTMENTS, LLC AND CSMN OPERATIONS, LLC HALL & EVANS, LLC Lisa F. Mickley, Esq. Gillian Dale, Esq. 1001 Seventeenth Street, Suite 300 Denver, CO 80202 mickleyl@hallevans.com daleg@hallevans.com ATTORNEYS FOR DEFENDANTS CORDILLERA METROPOLITAN DISTRICT, DAVID BENTLEY, DAVID DAVIES, ROBERT EGAN, KITTY GEORGE, JUDITH G. MCBRIDE, AND RACHEL OYS SARAH J. BAKER PC Sarah J. Baker, Esq. 1099 Capitol Street #204 Post Office Box 4551 Eagle, CO 81631 sbaker@sbakerpc.com ATTORNEYS FOR PLAINTIFF CSMN INVESTMENTS, LLC AND CSMN OPERATIONS, LLC NEMIROW PEREZ P.C. Miles Buckingham, Esq. 445 Union Blvd. Suite 209 Lakewood, CO 80228 mbuckingham@nemirowperez.com ATTORNEYS FOR DEFENDANTS CORDILLERA PROPERTY OWNERS ASSOCIATION, INC. AND ED SHRINER /s/ Carole Zarrella Carole Zarrella, Paralegal HindmanSanchez P.C. 555 Zang Street, Suite 100 Lakewood, Colorado 80228-1011 Telephone: 303-432-9999 FAX: 303-991-2085 E-mail: czarrella@hindmansanchez.com 06585179.DOCX;3 13