Elite Oil Field Enterprises v. Reed

979 F.3d 857
CourtCourt of Appeals for the Tenth Circuit
DecidedNovember 3, 2020
Docket19-1406
StatusPublished
Cited by1 cases

This text of 979 F.3d 857 (Elite Oil Field Enterprises v. Reed) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Elite Oil Field Enterprises v. Reed, 979 F.3d 857 (10th Cir. 2020).

Opinion

FILED United States Court of Appeals PUBLISH Tenth Circuit

UNITED STATES COURT OF APPEALS November 3, 2020

Christopher M. Wolpert FOR THE TENTH CIRCUIT Clerk of Court _________________________________

ELITE OIL FIELD ENTERPRISES, INC., a Colorado corporation,

Plaintiff - Appellee,

v. No. 19-1406

GARRETT REED, individually and as trustee of Ventana Investment Trust; REILLY REED, an individual; ELEMENT SERVICES, LLC, a Colorado limited liability company; JHENNA DAWN REED, an individual; REEDESIGN CONCEPTS, LLC, a Colorado limited liability company; ROBERT KUBISTEK, an individual,

Defendants - Appellants,

and

BOND R. BAIAMONTE, an individual,

Defendant. _________________________________

Appeal from the United States District Court for the District of Colorado (D.C. No. 1:19-CV-00539-RBJ) _________________________________ Submitted on the briefs:*

Jordan D. Factor, James Helfrich, and Brenton L. Gragg, Allen Vellone Wolf Helfrich & Factor P.C., Denver, Colorado, for Appellant.

Robert Bernhoft, The Bernhoft Law Firm, S.C., Austin, Texas, for Appellee. _________________________________

Before TYMKOVICH, Chief Judge, BRISCOE, and MURPHY, Circuit Judges. _________________________________

BRISCOE, Circuit Judge. _________________________________

Defendants Garrett Reed, Reilly Reed, Element Services, LLC, Jhenna Reed,

Reedesign Concepts, and Robert Kubistek seek to appeal from the district court’s

order remanding this case from federal district court to Colorado state court due to

lack of subject matter jurisdiction. Plaintiff Elite Oil Field Enterprises, Inc. (Elite)

has moved to dismiss the appeal for lack of appellate jurisdiction. Having reviewed

the motion to dismiss and the record on appeal, we conclude that we lack subject

matter jurisdiction over this appeal. We therefore grant Elite’s motion and dismiss

the appeal.

I

Factual background

Plaintiff Elite is a Colorado corporation that was formed in March of 2012 by

Reilly Reed (Reilly) and Dustin Tixier (Tixier). Elite was formed to provide

* After examining the briefs and appellate record, this panel has determined unanimously that oral argument would not materially assist in the determination of this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore ordered submitted without oral argument. 2 roustabout services for the oil field industry. Immediately after its formation, Elite in

turn formed two subsidiary corporations: Elite Oil Field Services, Inc. and Elite Oil

Field Equipment, Inc.

The organizational meeting of Elite took place in early April of 2012 at its

principal place of business in Lamar, Colorado. Tixier accepted a 75% ownership

interest in Elite, while Reilly accepted a 25% ownership interest in Elite. Tixier,

Reilly, and an individual named Jason Whisenand were elected as the directors and

officers of Elite.

At some point after the formation, Reilly became upset that he only had a 25%

ownership interest in Elite and believed that he was entitled to a 50% share in Elite.

During the Thanksgiving 2012 holiday, Reilly’s brother Garrett Reed

(Garrett), a California resident, was present in Colorado for a family gathering, and

allegedly told Reilly that the way for Reilly to gain control of Elite was to “run it into

the ground,” or words to that effect. Aplt. App. at 16-17.

In September of 2013, Reilly, Tixier and Whisenand met at Elite’s Greeley,

Colorado office. During the meeting, the three men allegedly discussed the value of

Reilly’s 25% ownership interest in Elite. Following the meeting, Reilly and Tixier

allegedly exchanged proposals regarding the possibility of Reilly becoming a 50%

owner of Elite. No such agreement was ever reached, however.

Elite’s gross revenues grew dramatically between 2012 and 2015, rising from

approximately $1,062,241 in 2012 to over $10 million in 2015. Reilly perceived

himself, rather than Tixier, as responsible for this growth.

3 In June of 2016, Garrett allegedly sent an email to Reilly stating, in part,

“I just don’t think there’s a way you’re getting to your money without destroying

Elite.” Id. at 17.

At some point thereafter, Garrett and Reilly allegedly devised a scheme for

Reilly to form surreptitiously a competing company known as Element Services, LLC

(Element), and for Element to improperly lure away Elite’s customers and employees

with the intent of economically harming Elite and rendering Elite unable to continue

its operations at the level it had achieved.

In July of 2016, Reilly allegedly registered Element with the Colorado

Secretary of State and listed himself as the sole member of Element. Garrett

allegedly counseled and advised Reilly regarding the formation of Element. The

address that Reilly listed for Element was Reilly’s home address in Eaton, Colorado,

and the same address that Garrett used for his own business, TriSpoke Technologies,

LLC. Not long after Element’s registration, Garrett allegedly paid Reilly $450,000 to

acquire an interest in Element.

On October 14, 2016, Reilly, allegedly as part of the scheme to harm Elite,

filed a civil lawsuit in the District Court of Weld County, Colorado (the Weld County

Action), against Elite, Elite’s two subsidiaries, Tixier, Tixier’s wife, and Whisenand.

In that lawsuit, Reilly alleged, in pertinent part, that Tixier, Tixier’s wife, and

Whisenand conspired to alter Elite’s corporate documents so that Reilly would own

only 25% of the total outstanding corporate stock rather than the originally agreed

upon 50%. Elite filed counterclaims against Reilly and other third-party defendants,

4 including the same defendants that Elite ultimately named in this action in its

amended complaint, for conversion (of tools and equipment owned by Elite), civil

theft (of the same tools and equipment), replevin (again of the same tools and

equipment), unjust enrichment, constructive trust, aiding and abetting a breach of

fiduciary duty, and civil conspiracy.

Garrett allegedly assisted Reilly in a number of ways in carrying out the

scheme to harm Elite. This allegedly included (a) providing funding for Element,

(b) advising Reilly concerning how to use Element to usurp Elite’s business

opportunities, (c) advising Reilly to fabricate billing issues with Elite’s customers as

a means of sabotaging Elite’s relationships with its customers, (d) advising Reilly to

fabricate a false narrative to Elite’s employees and customers that Elite was going out

of business and that a receiver was going to be appointed, (e) advising Reilly to

fabricate a false narrative that Tixier was stealing from Elite and engaging in other

improper acts in order to sabotage Elite’s relationships with customers and

employees, (f) advising Reilly to fabricate a false narrative that Reilly was a 50%

owner of Elite, (g) advising Reilly to fabricate a false narrative that Elite had been

dissolved and all of its contacts transferred to Element in order to procure bank

financing for Element, (h) advising Reilly to make use of Elite’s assets to facilitate

the start-up of Element, (i) advising Elite employees about what to say in their exit

interviews with Elite before they joined Element, (j) plotting with others to falsely

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979 F.3d 857, Counsel Stack Legal Research, https://law.counselstack.com/opinion/elite-oil-field-enterprises-v-reed-ca10-2020.