United States District Court, D. New Mexico
BOBBY L. WILLIS, individually and as trustee for the BOBBY L. WILLIS AND CARRIE S. WILLIS TRUST, WILLIS ASSET MANAGEMENT, LLC, JTB DEVELOPMENT PROPERTIES 3, LLC, and JTB DEVELOPMENT PROPERTIES 4, LLC, Plaintiffs,
QUENTIN SMITH and STOREY & CLYDE, INC. Defendants, QUENTIN SMITH and STOREY & CLYDE, INC., Counterclaimants
BOBBY WILLIS, Counterdefendant.
MEMORANDUM OPINION AND ORDER ORDER GRANTING
DEFENDANTS QUENTIN SMITH'S MOTION FOR SUMMARY JUDGMENT
REGARDING ALTER EGO LIABILITY
January 25, 2017 Defendant Quentin Smith (Smith) filed
DEFENDANTS (sic) QUENTIN SMITH'S MOTION FOR SUMMARY
JUDGMENT REGARDING ALTER EGO LIABILITY (Doc. No. 70)
(Motion). A response to the Motion was due on February 24,
2017. See NOTICE OF AGREEMENT TO EXTEND TIME TO FILE
RESPONSE (Doc. No. 81). At a status conference on February
27, 2017, Plaintiffs' counsel, Allan Wainwright, informed
the Court that Plaintiffs did not intend to file a Response
to the Motion. Under Local Rule 7.1(b), “[t]he failure
of a party to file and serve a response in opposition to a
motion within the time prescribed for doing so constitutes
consent to grant the motion.” D.N.M. LR-Civ. 7.1(b).
The Court will grant the Motion based on Local Rule 7.1(b)
and also on the merits and will enter a judgment in favor of
Defendants on all claims asserting alter ego liability.
STANDARD OF REVIEW
judgment may be granted 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). When applying this standard, the Court
examines the factual record and reasonable inferences
therefrom in the light most favorable to the party opposing
summary judgment. Applied Genetics Intl, Inc. v. First
Affiliated Sec., Inc., 912 F.2d 1238, 1241 (10th Cir.
1990). The party seeking summary judgment bears the initial
burden of “show[ing] that there is an absence of
evidence to support the nonmoving party's case.”
Bacchus Indus., Inc. v. Arvin Indus., Inc., 939 F.2d
887, 891 (10th Cir. 1991) (internal quotation marks omitted).
The party opposing the motion must present sufficient
evidence in specific, factual form for a jury to return a
verdict in that party's favor. Id. citing
Clifton v. Craig, 924 F.2d 182, 183 (10th Cir.
1991). In other words, the nonmoving party “may not
rest upon the mere allegations or denials of his
pleadings” to avoid summary judgment. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In
considering a motion for summary judgment, the Court's
“role is simply to determine whether the evidence
proffered by plaintiff would be sufficient, if believed by
the ultimate factfinder, to sustain her claim.”
Foster v. Alliedsignal, Inc., 293 F.3d 1187, 1195
(10th Cir. 2002).
COMPLAINT FOR FRAUD AND OTHER CLAIMS (Doc. No. 1-1),
Plaintiffs allege that in 2011, Ronnie Garner (Garner)
developed a plan for the construction of a project called the
Americas Medical Clinic. (Compl. ¶ 11.) In August 2011,
Garner hired Smith as manager for the “various AMC
companies.” (Id. ¶ 12.) During the period
between December 30, 2011 and February 3, 2012, Smith managed
two limited liability companies (LLCs), JTB 3 Development
Properties, LLC (JTB 3) and Americas Medical Clinic, LLC
(AMC). (Mot. Ex. 1 Smith Aff. ¶¶ 17-18.) Plaintiffs
allege that due to Smith's mismanagement of the LLCs, the
AMC project “collapsed resulting in significant
financial losses to the Bobby Willis Plaintiffs.”
(Compl. ¶ 24.) Smith received no payment for his
services other than a 5% interest in two LLCs: AMC and JTB 3.
allege that “Smith delivered gemstones and jewelry to
Willis as his investment in AMC and companies related to AMC
(Exhibit 11)[, ]” and Smith “exchanged his
gemstones and jewelry as an investment in AMC or JTB 3
LLC.” (Compl. ¶¶ 26-27.) Smith, Garner,
Michael Atchison (Atchison) and Willis “all met in or
around December 29, 2011 and negotiated an agreement …
confirmed by Addendums attached hereto as Exhibit 15 dated
December 29, 2011 whereby [Smith] was to acquire the 5%
interest in AMC and JTB 3, LLC.” (Compl. ¶¶
29-30.) Smith received no other remuneration for his
services, and Smith received no documentation confirming his
ownership interest in JTB 3 or AMC. (Mot. Ex. 1 ¶¶
allege that Smith represented that millions of dollars were
needed for the construction of the AMC project, and Smith
“contrived a plan to convince Willis to invest assets,
time and labor from his company and employees in the
project.” (Compl. ¶ 18.) Plaintiffs claim Willis
relied on Smith's statements and invested “Real
Estate that was deeded into JTB 3[, ] . . . 3395 ounces of
Gold and 1117 ounces of Silver and gem stones delivered
directly to Garner which was valued at approximately $10
million[, ] . . . [m]oney for professional services, . . .
[and] [h]ours of time spent by Bobby Willis and his
employees[.]” (Id. ¶19A-D.)
allege that AMC was never properly capitalized and Smith and
Garner “used AMC or related entities for improper or
fraudulent purposes as their alter ego (sic).” (Compl.
¶ 17.) Smith, Garner and possibly others “operated
AMC as their alter ego (sic) and are individually responsible
for all damages or losses sustained by Willis in connection
with AMC.” (Id. ¶ 58.) “Any
corporate veil of AMC should be pierced such that [Smith] and
Garner are individually responsible for any claims or amounts
owed by AMC.” (Id. ¶ 61.) Smith, as the
alter ego of AMC, is “personally liable to Willis for
failure to pay for all the amounts detailed above, including
the fair market value of the 5112 ounces of Gold and Silver,
plus interest.” (Id. ¶ 66.)
the AMC project failed, Smith demanded the return of his
gemstones and jewelry, but Willis refused to return the
property. Smith allegedly gave false statements to the State
of New Mexico, which led to Willis' arrest on charges of
embezzlement. (Id. ¶ 45-46.) Willis claims he
was falsely imprisoned on those charges at the San Juan
County Jail until his release on May 28, 2015. (Id.
asked to identify all facts supporting alter ego liability,
Willis answered interrogatories and supplemented his answers
Interrogatory No. 28: Identify all facts upon which
you contend Quentin Smith operated any entity as an alter
ego, and explain how each Plaintiff suffered damages as a
result of the same.
Answer: Looking back I think all the entities, AMC,
Mesquite, and the color LLCs were just sham companies run by
Smith to sucker me and others in. The facts are in my
complaint and we are going to do discovery to gather more. I
was damaged because if there was nothing behind the curtain
then it was all a fraud to get me to invest and now lose all
my money that I have already detailed herein. . . .
Answer: After the fact I learned that the various
companies were shams set up by Smith and maybe Garner just as
a rouse (sic) to get me to invest. Smith is going to need to
prove that all the . . . companies were legit and that the
new companies he set up or took over had any real substance.
When Smith took over, I am ...