Free Response to Motion - District Court of Colorado - Colorado


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Case 1:01-cv-02313-JLK

Document 67

Filed 09/26/2005

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 01-cv-2313-JLK-CBS GLN COMPLIANCE, INC., Plaintiff, v. UNITED AIRLINES, INC., d/b/a UNITED BIZ JET HOLDINGS, BIZ JET CHARTERS, INC., AND BIZ JET SERVICES, INC., and JONATHON ROSS, Defendants. ______________________________________________________________________________ RESPONSE TO PLAINTIFF'S MOTION TO LIFT ADMINISTRATIVE STAY ______________________________________________________________________________ Defendant United Airlines, Inc., d/b/a United BizJet Holdings, BizJet Charter, Inc., and BizJet Services, Inc., ("United") by and through undersigned counsel, respectfully submits this Response to Plaintiff's Motion to Lift Administrative Stay. INTRODUCTION GLN's Motion to Lift Administrative Stay is devoid of authority and analysis and presents no reasoned basis for reopening this case while United remains in bankruptcy. Indeed, GLN presents only two cursory rationales for reopening this case: (1) the stay should be lifted to add new unidentified parties because statutes of limitations "may expire;" and (2) bankruptcy is taking longer than expected and discovery may become more difficult. (Mot. at ¶ 4.) Neither argument, however, provides justification for reopening the case and proceeding with discovery and trial without United's involvement.

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With respect to new parties, GLN has not identified, nor can it, any claims that it might wish to assert for which the statutes of limitations have not already run. Thus, GLN is left with the position of seeking to reopen the case merely to proceed against Jonathon Ross. As GLN's claims against Ross are so intertwined with GLN's dispute with United, however, reopening the case to proceed without United at this point is not appropriate. FACTS GLN's Motion provides no background facts nor any context whatsoever for GLN's request to reopen this case. The following is a brief summary of the underlying dispute and the procedural posture of the case. This case arises from a failed business relationship between GLN and United. In 2000, United considered establishing a fractional ownership airline to be called BizJet, which required obtaining operating certificates from the Federal Aviation Administration (FAA). To assist it in the lengthy and complex certification process, United entered into a contract with GLN, whose principal was and remains Gerald Naekel. Although Naekel held himself out as having expertise in FAA certification, it quickly became apparent that GLN intended to rely principally on others to assist United. Jonathan Ross was one of the individuals who contracted with GLN to assist United in the certification process. And while United was satisfied with work performed by Ross and certain other individuals, over time United became dissatisfied with GLN's work and had great difficulty interacting with Naekel. Eventually, this led to United terminating its contract with GLN and a dispute with Naekel (with Naekel claiming United owed GLN additional money and United maintaining that it had not received adequate value for the significant amount of money already paid to GLN).

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Unable to continue working with Naekel, United nevertheless needed to continue pursuing FAA certification. To that end, United entered into an agreement with Ross in

September 2001, wherein it hired Ross as a consultant to assist with the completion of the certification process. Although United ultimately decided not to pursue the BizJet business, and the operating certificates were never obtained, Naekel was very upset that United continued to work with Ross after terminating its relationship with GLN. Naekel thus began a campaign of letters and emails alleging that Ross was directed by United to commit criminal acts. While United and Ross vigorously deny these baseless allegations, this illustrates that GLN's dispute with Ross was tied to his relationship with United. Because United was unwilling to capitulate to repeated threats from GLN, GLN eventually filed suit against United and Ross in October 2001. GLN alleged claims of breach of contract and unjust enrichment against United, civil theft and civil conspiracy against United and Ross together, and tortious interference and outrageous conduct against Ross. (See First

Amended Complaint ("Complaint").) Significantly, all of the claims against Ross dealt with his interaction with United. (Id.) When GLN initially filed its complaint in this action on June 6, 2001, it was represented by Jerre Dixon. Nine months later, on March 4, 2002, Dixon moved to withdraw as counsel for GLN citing "irreconcilable differences concerning the plaintiff's claims in this matter." Shortly thereafter, Paula Ray entered her appearance on behalf of GLN but she likewise moved to withdraw on October 8, 2002. (See December 5, 2002 Order granting GLN extension to obtain new counsel). Jeffrey Edelman then entered his appearance on behalf of GLN. Shortly

thereafter, United filed its Notice of Bankruptcy on December 17, 2002.

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Four months later, after GLN took no steps to prosecute this case against Ross, this Court administratively closed the case. (See April 8, 2003 Order.) Subsequently, on November 18, 2003, Edelman wrote counsel for both United and Ross that GLN would like to reopen negotiations and that if such discussions were not productive he would file within two weeks a motion to reopen the case and a motion to amend the Complaint to add additional defendants and additional causes of action. In the proposed Second Amended Complaint that accompanied Edelman's November 18th letter, GLN threatened to add as defendants former employees of United and independent contractors who worked for United, including the Chief Executive Officer and Chief Operating Officer of BizJet. (2nd Am. Compl. at ¶¶ 5-6, 9-12.)1 The only additional claim added to the Second Amended Complaint was a claim against all defendants, including United and Ross, under the Racketeer Influenced and Corrupt Organization Act ("RICO") and the Colorado Organized Crime Control Act ("COCCA"). (Id. at ¶¶ 61-74.) Despite the threat from GLN's counsel, however, GLN took no steps to file a motion to reopen the case or to file the Second Amended Complaint. More than a year later, Edelman withdrew as GLN's counsel. (See Sep. 15, 2004 Order.) Richard O. Schroeder then entered his appearance as GLN's fourth lawyer in this case on November 4, 2004. Three months later, on February 5, 2005, Schroeder filed a Motion for Default Judgment against Ross. Days later, this Court denied that Motion without further briefing or response, as it was not accompanied by a certification of compliance with D.C. Colo. L. Civ. R. 7.1A. (See February 8, 2005 Order.) The

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Because the proposed Second Amended Complaint was never filed with this Court, and because it contains inflammatory and baseless allegations against individuals not even in this case, United is not submitting a copy herewith. United presumes, however, that GLN will not contest the accuracy of United's citation to that document.

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Court further noted that this case was stayed and administratively closed in December 2002, and that there had been no request by any party to reopen it. (Id.) Despite the Court's admonition in this regard, another seven months went by before GLN filed the pending Motion to Lift Administrative Stay. The process of dealing with GLN's numerous attorneys has been very consistent. Each time a new attorney enters his or her appearance for GLN they indicate a desire on behalf of GLN to move forward with the case. After becoming more educated and well-versed regarding GLN's case, however, no further action is taken and the attorney withdraws. GLN's latest counsel has now filed the pending Motion to reopen the case, without any substantive explanation for why it makes sense to do so. As set forth below, it does not make sense. ARGUMENT I. The Case Should Not be Reopened to Add Additional Defendants Without providing any information as to the persons or claims to which it refers, GLN attempts to justify reopening this case by stating its intent to add unnamed "individual defendants" and professing concern that applicable statutes of limitations "may expire during the abeyance of this matter." (Mot. at ¶¶ 2-4) (emphasis added). Because GLN has not even indicated which persons or claims it intends to add, United is without sufficient information to fully address these contemplated additions. Assuming, however, that GLN intends to add parties and claims identified by its former counsel, such claims are already barred by the applicable statutes of limitations. Nearly two years ago, GLN's previous counsel threatened to add additional defendants to the previously asserted tort claims and to add a claim under the Racketeer Influenced and

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Corrupt Organization Act ("RICO") and the Colorado Organized Crime Control Act ("COCCA"). (2nd Am. Compl.)2 Each of the causes of action GLN threatened to assert, however, are subject to the two-year statute of limitations set forth in C.R.S. § 13-80-102 (2004). Accordingly, because GLN's proposed Second Amended Complaint is based entirely on events that occurred almost exclusively in 2001 (with a limited number of allegations related to events in early 2002), such claims are already barred. See Keeney v. Larkin, 306 F.Supp.2d 522, 526 (D. Md. 2003) (holding that administrative closure of litigation subject to bankruptcy stay did not toll the statute of limitations for claims against previously unnamed defendants). II. The Case Should Not Be Reopened Against Defendant Ross With no basis to reopen the case to add additional parties, there is little reason to reopen the case at this juncture merely to allow GLN to proceed with its claims against Ross. Indeed, because GLN has not alleged a single claim against Ross that is truly independent of United, proceeding without United at this point makes little sense, would involve many practical difficulties, and would risk unfairly prejudicing United. As set forth in GLN's Complaint (and in its Proposed Second Amended Complaint), this litigation centers on a dispute regarding a contractual relationship between GLN and United, whereby GLN was to assist United in obtaining certain FAA certification. As a practical matter, there simply is no aspect of this case that can proceed without fully fleshing out the problems that developed in the cantankerous history of that contractual relationship ­ issues that cannot adequately be addressed without significantly involving United. For instance, the only claims

While the 2nd Am. Compl. was not filed with this Court, it provides the only indication as to what additional parties or claims GLN wishes to add to this case.

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asserted solely against Ross (tortious interference and outrageous conduct) are based on allegations that he somehow interfered with United's contractual relationship with GLN. (Compl. at ¶¶ 45, 49.) The remaining claims of civil theft and civil conspiracy are alleged against United and Ross together. (Id. at ¶¶ 36-43.) Proceeding with regard to GLN's conspiracy claim against Ross, without United's participation, is particularly problematic. To establish a case of civil conspiracy, GLN must prove: (1) action of two or more persons; (2) a common object to be accomplished; (3) meeting of the minds on the object or course of action; (4) one or more unlawful acts; and (5) damages as a proximate result thereof. White v. Lincoln Plating Co., 955 F.Supp. 98, 101 (D. Colo. 1997). Based on these elements, it is impossible for GLN to pursue a conspiracy claim against Ross without establishing participation by United. More importantly, from United's perspective,

allowing GLN to proceed against Ross alone risks unfairly prejudicing United because a conspiracy claim allows for imputed liability between co-conspirators. Dixon v. City of Lawton, 898 F.2d 1443, 1449 (10th Cir. 1990) (discussing a conspiracy claim under 42 U.S.C. § 1983). Similar concerns apply to GLN's threat to add RICO and COCCA claims alleging that Ross and United together "engaged in a pattern of racketeering activity." (2nd Am. Compl. at ¶ 62.) Also, because "Plaintiff is not requesting that the court permit proceedings against entities subject to the bankruptcy stay," (Mot. at ¶ 5), reopening the case now creates the potential that this Court would have to conduct two trials on the precise same issues, with the attendant waste of judicial resources and risk of inconsistent factual findings or judgments. GLN's passing reference to the prejudice it might suffer during United's bankruptcy does not overcome the prejudice Ross and United risk facing if the case is reopened at this time. As

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an initial matter, GLN had no reasonable basis to expect that "United would emerge from bankruptcy within a year." (See Mot. at ¶ 2.) This Court did not condition the administrative closure of this case on whether the bankruptcy would last more than one year; rather, it ordered that this case would be reopened upon motion of the parties "within thirty days following a resolution of the bankruptcy proceedings." (See April 2003 Order.) In any event, United's bankruptcy has progressed, with a hearing to confirm the submitted bankruptcy plan scheduled for January 18, 2006. (See September 22, 2005 Order, attached as Exhibit 1.) Although GLN expresses concern about fading memories and unavailable witnesses, GLN has not referred to any particular witness whose memory is at issue or who will be unavailable when the bankruptcy concludes. Several years have already passed since the events that form the basis for this suit and waiting to reopen this case will not drastically change the landscape or preserve testimony about events that are immediate and fresh in any witness' memory. In these circumstances, all parties are better served by waiting to proceed with this case until United emerges from bankruptcy. As set forth above, reopening the case at this stage is unwarranted and impractical, imposes unfair prejudice on both Ross and United, would waste the parties' and the Court's resources, and risks inconsistent rulings as applied to United and Ross with regard to claims that they conspired together to harm GLN. CONCLUSION For the reasons set forth above, this Court should not reopen this matter as to United's codefendant Ross or any other unnamed defendants.

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Respectfully submitted this 23rd day of September, 2005. /s Mark T. Barnes Mark T. Barnes,
BROWNSTEIN HYATT & FARBER, P.C.

410 17th St., 22nd Floor Denver, CO 80202 (303) 223-1100 [email protected] ATTORNEYS FOR DEFENDANT UNITED AIR LINES, INC.

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CERTIFICATE OF SERVICE I hereby certify that on this 23rd day of September, 2005, I electronically filed the foregoing RESPONSE TO PLAINTIFF'S MOTION TO LIFT ADMINISTRATIVE STAY with the Clerk of Court using the CM/ECF system which will send notification of such filing to the following e-mail address: [email protected] [email protected] [email protected] I hereby certify that on this 23rd day of September, 2005, I served a true and correct copy of the attached RESPONSE TO PLAINTIFF'S MOTION TO LIFT ADMINISTRATIVE STAY via the United States mail, postage pre-paid, properly addressed to: Jonathan Ross c/o Stephen Gurr, Esq. KAMLET SHEPHERD & REICHERT, LLP 1515 Arapahoe Tower One, Suite 1600 Denver, CO 80202

/s Mark T. Barnes Mark T. Barnes BROWNSTEIN HYATT & FARBER, P.C. 410 17th Street, 22nd Floor Denver, Colorado 80202 Phone: (303) 223-1100 Fax: (303) 223-1111 E-mail:[email protected] ATTORNEYS FOR DEFENDANTS
5903\85\937704.6

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