Castle Arch Real Estate Company Litigation
D. Ray Strong, as Liquidating Trustee et al. v. Kirby D. Cochran et al.
United States District Court for the District of Utah, Central Division
Summary:
After an October 2011 bankruptcy filing of Castle Arch Real Estate Company, LLC (“CAREIC”), a Chapter 11 Trustee was appointed and the trustee took assignments of creditor and equity holders of CAREIC and its affiliates’ causes of action against former management, officers, directors, insiders and certain other individuals pursuant to a Chapter 11 Plan of Liquidation. Generally, the Trustee alleged that certain assignor investors and creditors lost millions of investments due to the alleged fraudulent conduct and other malfeasance, rather than the global economic meltdown. Causes of action included:
(1) Breach of Fiduciary Duty,
(2) Violation of Utah, Nevada, Arizona and California Securities Law (state securities fraud),
(3) Violations of § 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and SEC Rule 10b-5 thereunder (federal securities fraud),
(4) violations of § 20(a) of the Exchange Act (control person liability),
(5) common law fraud,
(6) negligent misrepresentation,
(7) civil conspiracy,
(8) violation of Utah and Nevada state RICO laws,
(9) Avoidance of Fraudulent Transfers under 11 U.S.C. § 548(a)(1)(A),
(10) Avoidance of Fraudulent Transfers Under 11 U.S.C. § 548(a)(1)(B),
(11) Avoidance of Fraudulent Transfers Under 11 U.S.C. § 544(b) and Utah Code Annotated §§ 25-6-5(1)(a) and 25-6-8,
(12) Avoidance of Fraudulent Transfers Under 11 U.S.C. § 544(b) and Utah Code Annotated §§ 25-6-5(1)(b) and 25-6-8,
(13) Avoidance of Fraudulent Transfers Under 11 U.S.C. §544(b) and Utah Code Ann. §§ 25-6-6(1) and 25-6-8,
(14) Avoidance of Preferential Transfers Under 11 U.S.C. § 547(b),
(15) Recovery of Avoided Transfers Under 11 U.S.C. §§ 550 and 551,
(16) Disallowance of Claims—11 U.S.C. § 502,
(17) Subordination – 11 U.S.C. § 510(c),
(18) Constructive Trust and
(19) Unjust Enrichment and Disgorgement.
Representation:
- Alleged de facto officer and director of CAREIC with a securities bar from more than a decade before litigation
Outcome:
Based on limited budget defense and prior to completion of representation, successful dismissal with prejudice of:
(1) federal securities fraud law claims (violation of § 10(b) of the Securities Exchange Act of 1934, SEC Rule 10b-5 and control person liability under § 20(a) of the Exchange Act),
(2) common law fraud,
(3) negligent misrepresentation, and
(4) various bankruptcy avoidance claims (Avoidance of Fraudulent Transfers under 11 U.S.C. § 548(a)(1)(A), Avoidance of Fraudulent Transfers Under 11 U.S.C. § 548(a)(1)(B), Avoidance of Fraudulent Transfers Under 11 U.S.C. § 544(b) and Utah Code Annotated §§ 25-6-5(1)(a) and 25-6-8, Avoidance of Fraudulent Transfers Under 11 U.S.C. § 544(b) and Utah Code Annotated §§ 25-6-5(1)(b) and 25-6-8, Avoidance of Fraudulent Transfers Under 11 U.S.C. §544(b) and Utah Code Ann. §§ 25-6-6(1) and 25-6-8, Avoidance of Preferential Transfers Under 11 U.S.C. § 547(b) and Recovery of Avoided Transfers Under 11 U.S.C. §§ 550 and 551).
In addition, successfully defended against Plaintiff’s motion for summary judgment on claim of Arizona, California, Nevada and Utah state securities law violations and dismissal of the majority of the assigned state securities law claims based on affirmative defense of statute of limitations/statute of repose under state securities law.
Sample Case Files:
- Motion to Dismiss Amended Complaint in its Entirety for Failure to Sufficiently State Claims for Relief under Rule 12(b)(6)
- Declaration of Evans and Exhibits in Support of Motion to Dismiss Amended Complaint in its Entirety for Failure to Sufficiently State Claims for Relief under Rule 12(b)(6)
- Request for Judicial Notice in Support of Motion to Dismiss Amended Complaint in its Entirety for Failure to Sufficiently State Claims for Relief under Rule 12(b)(6)
- Motion to Dismiss for Lack of Personal Jurisdiction Pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure
- Reply in Support of Motion to Dismiss for Lack of Personal Jurisdiction Pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure
- Answer to Amended Complaint and Counterclaims for Declaratory Relief
- Opposition to Plaintiff’s Motion for Summary Judgment on Second Claim for Relief (Violation of Utah, Nevada, Arizona and California Securities Law)
- Objections to Evidence in Plaintiff’s Reply in Support of Plaintiff’s Motion for Summary Judgment on Second Claim for Relief (Violation of Utah, Nevada, Arizona and California Securities Law)
- Supplemental Brief in Response to Court’s Request for Additional Briefing on Section 108(a) of the Bankruptcy Code to Potential Tolling of Statute of Limitations
- Response to Plaintiff’s Supplemental Brief on Section 108(a) of the Bankruptcy Code to Potential Tolling of Statute of Limitations
- Order and Memorandum Decision on Plaintiff’s Motion for Summary Judgment on Second Claim for Relief (Violation of Utah, Nevada, Arizona and California Securities Law)