INDVR Brands, Inc. v. Mascio

United States Bankruptcy Court, D. Colorado·Decided September 29, 2025·No. 25-01156·Unknown

Opinion

UNITED STATES BANKRUPTCY COURT DISTRICT OF COLORADO Bankruptcy Judge Thomas B. McNamara

In re: Bankruptcy Case No. 25-10631 TBM JEFFREY ALLAN MASCIO, Chapter 7

Debtor.

INDVR BRANDS, INC. INDVR BRANDS U.S., INC., Adv. Pro. No. 25-1156 TBM Plaintiffs,

v.

JEFFREY MASCIO,

Defendant. ______________________________________________________________________

ORDER DENYING MOTION TO DISQUALIFY DAVID F. OLSKY AND FORTIS LAW PARTNERS, LLC AS COUNSEL FOR INDVR ______________________________________________________________________

I. Introduction.

A pattern of litigation, which appears to be meritless, is emerging in this Adversary Proceeding. On May 8, 2025, the Plaintiffs, INDVR Brands, Inc. and INDVR Brands U.S., Inc. (together, “INDVR”) filed a “Complaint” (Docket No. 1, the “Complaint”) commencing this action against Jeffrey Mascio (the “Debtor”). INDVR brings the Complaint pursuant to both 11 U.S.C. §§ 727(a)(2), (3) and (4)(A) and 523(a)(4) and (6). INDVR challenges the Debtor’s entitlement to a discharge in his underlying Chapter 7 case (In re Mascio, 25-10631 TBM (Bankr. D. Colo.) (the “Main Case”)) for allegedly having diverted or concealed property of the estate with intent to hinder, delay or defraud a creditor; having concealed, falsified or failed to preserve records from which his financial condition might be ascertained; and having made a false oath in connection with this case. Additionally, INDVR asserts that its $37,398,774.04 judgment against the Debtor and others should be excepted from any discharge the Debtor might receive in the Main Case. The Debtor, who appears on his own behalf,1 in seriatim, filed a “Motion to Dismiss or Strike Adversary Complaint for Lack of Standing, Bad Faith Filings and Material Misrepresentations” (Docket No. 5, the “Motion to Dismiss”) followed by a Motion for Sanctions (Docket No. 6, the “Sanctions Motion”). Neither Motion was properly supported or presented. Thus, on August 11, 2025, this Court issued Orders denying both the Motion to Dismiss and the Sanctions Motion (Docket Nos. 14 and 15, the “Orders”).

On August 25, 2025, the Debtor filed his “Answer to Complaint and Counterclaim” (Docket No. 20, the “Answer and Counterclaim”). On August 26, 2025, this Court issued its “Order Setting Pretrial Scheduling Conference” (Docket No. 21, the “Order Setting Pretrial”) setting an initial Pretrial Conference for October 2, 2025. In response, to the Counterclaim, the Plaintiffs first filed, on September 15, 2025, their Answer to Counterclaim (Docket No. 24). Later, on September 25, 2025, the Plaintiffs responded to the Counterclaim with a Motion to Dismiss (Docket No. 26, the “Motion to Dismiss Counterclaim”). Now, the Debtor raises disqualification of Counsel issues.

II. Jurisdiction and Venue.

The Court has subject matter jurisdiction over this Adversary Proceeding (and motions presented within this Adversary Proceeding) concerning the Debtor’s entitlement to a discharge and the dischargeability of particular debts pursuant to 28 U.S.C. § 1334. This dispute is a core proceeding under 28 U.S.C. §§ 157(b)(2)(B), (b)(2)(I) and (b)(2)(J), because it seeks a determination as to the dischargeability of a particular debt and a challenge to the Debtor’s entitlement to a discharge. Venue is proper in this Court under 28 U.S.C. §§ 1408 and 1409.

III. The Motion to Disqualify.

Having lost his initial efforts to thwart the prosecution of the Complaint challenging his entitlement to a discharge, eleven days later, on August 22, 2025, the Debtor filed his “Motion to Disqualify David F. Olsky and Fortis Law Partners, LLC as Counsel for INDVR in this Adversary Proceeding” (Docket No. 19, the “Motion to Disqualify”). The Debtor moves to disqualify INDVR’s counsel, David F, Olsky (“Mr. Olsky”) and Fortis Law Partners, LLC (“Fortis”) (together, “Counsel”) from representing INDVR in this Adversary Proceeding “and any related appellate matters.” Motion to Disqualify at 1. The Debtor alleges that Counsel (1) has a “non-waivable personal- interest conflict under Colo. RPC 1.7(a)(2)” because Counsel acquired an equity interest

1 The Debtor is represented by counsel in his Main Bankruptcy Case. The Court has previously encouraged the Debtor to obtain counsel to represent him in this Adversary Proceeding. (Docket No. 15). The Court has also advised that Debtor, that if he chooses to represent himself, he may do so but will be held to the same rules of procedure that litigants represented by counsel are held to. (Id.) The Court observes that, unlike other parties who are unrepresented, the Debtor appears to have some familiarity with legal research, or access to someone who does. Both his Motion to Disqualify and Response are presented in a form much like legal briefs filed by attorneys and include citation to more than a half-dozen legal authorities, generally in proper citation form. in INDVR “in the very transactions at issue”; (2) has violated Colo. RPC 1.8(a) governing business transaction with a client; and (3) has violated “the advocate-witness rule, Colo. PRC 3.7,” because Counsel or its attorneys “are necessary fact witnesses regarding those transactions and the resulting issuance of shares.” Id. at 1 -2.

The Debtor alludes to vague facts allegedly surrounding an acquisition of shares in INDVR by Baskerville LLC (Exhibit 1 to Docket 19, at 7-45) and a “Debt Settlement Acknowledgment and Release” (Exhibit 3 to Docket No. 19, at 49-50) which appear to settle a debt for legal fees owed by INDVR to Fortis. The documents attached as Exhibits 1 and 3 to the Motion to Disqualify are dated November 5, 2020 and November 6, 2020.

A. The Debtor’s Position.

The Debtor asserts: (1) “Fortis’s acquisition of INDVR shares in the transactions is at the center of this dispute;” (2) “the Court should not permit counsel to litigate the propriety of its own transactions with the client in a case where those transactions are among the facts in dispute;” and (3) Counsel are “necessary witnesses who must be barred from trial and depositions [because] [t]he circumstances of Fortis’s equity acquisition, documentation, and advice about the private placement/debt settlement are relevant and material, not merely cumulative, and much of that evidence is unobtainable elsewhere. Fortis’s testimony will bear on motive, corporate formalities, disclosures, valuation, dilution, and damages.” Motion to Disqualify ¶¶ III. A-C. The Debtor also filed his Response to Plaintiffs’ Opposition (Docket No. 25, the “Response”). The Debtor’s Response makes clear that the Debtor views the central “disputed facts” about which he believes Mr. Olsky will be called to testify about relate to the “2020 debt-for-equity deal; causation for INDVR’s collapse.” Response at 2.

B. INDVR’s Oppostion.

INDVR filed an Opposition to the Motion to Disqualify (Docket No. 23, the “Opposition”). INDVR presents three cogent arguments. The first is two-part: (1) the focus of the Complaint is whether the Debtor has violated Section 727(a) in the filing of or in connection with his Main Case which he filed on February 5, 2025; and whether the $37,398,774.04 Judgment entered by the District Court, Denver County, State of Colorado in Cannabis Corp. et.al. v. INDVR Brands, Inc.

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