Portnoy MTD

7/30/2019 Portnoy MTD

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DISTRICT COURT, CITY AND COUNTY OF

DENVER, COLORADO

1437 Bannock Street

Denver, Colorado 80202

__________________________________________

DANIEL WEST, an individual,Plaintiff,

v.

ANATOLY PORTNOY, an individual and

GREEN CROSS, LLC, a Colorado Limited

Liability Company,

Defendants.__________________________________________

Attorneys for Defendant:Robert J. Corry, Jr. #32705

Travis B. Simpson #43858

600 Seventeenth Street

Suite 2800 South Tower


303-634-2244 telephone

720-420-9084 facsimile

[email protected]

[email protected]

COURT USE ONLY _______________________

Case Number: 12CV5636

Courtroom 376

DEFENDANTS MOTION TO DISMISS PURSUANT TO C.R.C.P. 12(b)(6) ORIN THE ALTERNATIVE FOR A MORE DEFINITE STATEMENT PURSUANT

TO C.R.C.P. 12(e)

Defendants Anatoly Portnoy and Green Cross, LLC, through undersigned

counsel, hereby respectfully submit this motion to dismiss Plaintiffs Complaint

pursuant to C.R.C.P. 12(b)(5)(failure to state a claim upon which relief can be

granted), or in the alternative, for a more definite statement pursuant to C.R.C.P.

12(e), and as grounds states as follows:

C.R.C.P. 121 1-15 8 Certification: On September 26, 2012 and on

October 3, 2012, Robert J. Corry, Jr., counsel for defendants, contacted Adam C.

EFILED Document

CO Denver County District Court 2nd JD

Filing Date: Oct 03 2012 10:33PM MDT

Filing ID: 46796554

Review Clerk: Annie Keirnes


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Foster, counsel for Plaintiff, to confer regarding this motion, and Mr. Foster

responded via electronic mail on September 27, 2012 and on October 3, 2012 that

he opposed the motions to dismiss and for a more definite statement.

STANDARD OF REVIEW

When evaluating a motion to dismiss, the court should only consider

matters stated in the complaint and should not look beyond the confines of the

pleadings. Hewitt v. Rice, 119 P.3d 541, 544 (Colo. App. 2004). Furthermore, the

court must accept all averments of material fact as true. Id. However, the court is

not required to accept legal conclusions as true, even where they are couched as

factual allegations. Western Innovations, Inc. v. Sonitrol Corporation, 187 P.3d

1155, 1157-1158 (Colo. App. 2008). The complaint must set forth factual

allegations sufficient to raise a right to relief above the speculative level. Id.

citingBell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1965, 1968-

1969, 167 L.Ed.2d 929 (2007).

ARGUMENT

I. PLAINTIFFS COMPLAINT FAILS TO STATE CLAIMS UPON

WHICH RELIEF CAN BE GRANTED

A. Plaintiffs First Claim for Breach of Implied Contract and

Second Claim for Failure to Pay Wages Fail to State a Claim

Upon Which Relief May Be Granted in General Contract Terms

The court should dismiss Plaintiffs first claim of breach of contract and

Plaintiffs second claim for failure to pay wages for failure to state a claim upon

which relief may be granted pursuant to C.R.C.P. 12(b)(5).


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Plaintiff, in his Complaint, alleges that Green Cross is a medical marijuana

center (MMC) authorized to produce medical marijuana (MMJ) and dispense it

to patients pursuant to Colorado state law. See Complaint at 5. Plaintiff further

alleges that [i]n the summer of 2010 Mr. Portnoy and Green Cross hired Mr.

West to cultivate MMJ at Green Cross optional cultivation facility located at 505

Bryant Street in Denver (the OPC). See Complaint at 6.

Plaintiff alleges that he was registered and badged as an employee

with the Medical Marijuana Enforcement Division of the Colorado Department of

Revenue (see Complaint at 8), and that Plaintiff engaged in the cultivation of

marijuana as part of this putative employment and conferred benefits upon

Green Cross and Mr. Portnoy. See Complaint at 10, 18, 26, 31.

Thus, the Complaint alleges that Plaintiff was engaged in the cultivation of

medical marijuana, and Defendant was engaged in the business of retail medical

marijuana sales. Plaintiff argues that he had valid contracts with Defendants to

cultivate medical marijuana for compensation and wages. Contracts require an

offer, acceptance, supported by consideration. For an enforceable contract to

exist, there must be mutual assent to an exchange between competent parties, legal

consideration, and sufficient certainty with respect to the subject matter and

essential terms of the agreement. Denver Truck Exch. v. Perryman, 307 P.2d 805

(Colo. 1957) Industrial Prods. Intl, Inc. v. Emos Trans, Inc., 962 P.2d 983(Colo.

App. 1997), cert. denied(Colo. 1998).


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The Complaint fails to allege any of these requirements of a contract, fails

to state the parameters and provisions of the alleged contract, and fails to state the

provisions of the alleged employment or wage agreement, and hence fails to state

a claim on this basis.

However, even if the precise provisions of the contract or wage agreement

were stated, these alleged contracts are void as against public policy because

marijuana remains illegal under federal law and any contract for the sale,

manufacture, and/or cultivation of marijuana is unenforceable in a court of law.

B. All Three Claims Should be Dismissed as They are Void for

Public Policy and Illegality Reasons

1. Cultivation and Possession of Marijuana Remain Illegal

Under Federal Law.

All three claims of Plaintiff relate to the production and for-profit sale of

marijuana. Marijuana remains an illegal substance under federal law. People v.

Watkins, 2012 COA 15, at 20, cert. denied, No. 12SC179, 2012 WL 1940753

(Colo. May 29, 2012)see also, Benoir v. Indus. Claims Appeals Office, 262 P.3d

970, 977 (Colo. App. 2011), cert denied, No. 11SC676, 2012 WL 1940833 (Colo.

May 29, 2012). In 1970, Congress enacted the Comprehensive Drug Abuse

Prevention and Control Act (CSA) in an effort to consolidate the growing

number of piecemeal drug laws and to enhance federal drug enforcement powers.

21 U.S.C.A. 801-971 (West 2011) Gonzales v. Raich, 545 U.S. 1, 12 (2005).

The CSA created a comprehensive regime to combat the international and

interstate traffic in illicit drugs. Gonzales, 545 U.S. at 12. The CSA makes it


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unlawful to manufacture, distribute, dispense, or possess any controlled substance

except in a manner authorized by the CSA. Gonzales, 545 U.S. at 13 (citing 21

U.S.C.A. 841(a)(1), 844(a)).

Controlled substances are categorized into five schedules according to

accepted medical uses, the potential for abuse, and their psychological and

physical effects on the body. Gonzales, 545 U.S. at 13 (citing 21 U.S.C.A.

811, 812). Congress classified marijuana as a Schedule I drug. Gonzales, 545

U.S. at 14 (citing 21 U.S.C.A. 812(c)). Drugs are categorized under Schedule I

because of their high potential for abuse, lack of any accepted medical use, and

absence of any accepted safety for use in medically supervised treatment.

Gonzales, 545 U.S. at 14 (citing 21 U.S.C.A. 812(b)(1)). When Congress

categorized marijuana as a Schedule I drug, the manufacture, distribution, or

possession of marijuana became a criminal offense. Id. citing21 U.S.C.A.

823(f), 841(a)(1), 844(a)).

Notwithstanding the prohibition of marijuana under the CSA, numerous

states, including Colorado, have enacted medical marijuana laws, creating some

conflicting uncertainty regarding the status of marijuanas legality. See Gonzales,

545 U.S. at 5 Colorado Constitution, Article XVIII 14 C.R.S. 18-18-406.3

C.R.S. 12-43.3-101 et seq. C.R.S. 25-1.5-106. Colorado courts recognize that

authorization to use medical marijuana is not limitless. Benior, 262 P.3d 970, 976

(citing People v. Clendenin, 232 P.3d 210, 212, 214 (Colo. App. 2009) In re

Marriage of Parr, 240 P.3d 509, 511 (Colo. App. 2010)).


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In response to a challenge relevant to Californias medical marijuana laws,

the United States Supreme Court held that there is no medical necessity exception

to the prohibitions contained within the CSA. United States v. Oakland Cannabis

Buyers Co-op., 532 U.S. 483, 486, 494 (2001).

Furthermore, Colorados medical marijuana provision may protect

claimant from prosecution under Colorados criminal laws, but the Amendment

has no effect on federal laws. Watkins, 2012 COA at 20. In Gonzales, the

United States Supreme Court held that application of the CSA to intrastate

growers and users of medical marijuana did not violate the Commerce Clause of

the United States Constitution, thus affirming Congresss power to

comprehensively regulate, and in some cases prohibit, intrastate and interstate

drug activity. See Gonzales, 545 U.S. at 9.

Finally, the Colorado Court of Appeals has found that medical marijuana

laws continue to violate federal public policy. Benoir, 262 P.3d at 974 (citing the

Office of National Drug Policys notice mandating that enforcement of federal

drug laws would remain in effect despite state passage of medical marijuana

provisions).

2. Federal law regarding marijuana preempts state law

because Colorado state law creates an obstacle to the full

enforcement of federal law.

The Supremacy Clause of the United States Constitution provides that the

Constitution and laws of the United States shall be the supreme Law of the

Land. U.S. Const. art. VI, cl. 2Maryland v. Louisiana, 451 U.S. 725, 746


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(1981). It is fundamental to this constitutional command that all conflicting state

provisions be without effect. Maryland, 451 U.S. at 746. However, a federal act

cannot supersede the States historic police power unless that is the clear

purpose of Congress. Medtronic, Inc. v. Lohr, 518 U.S. 470, 471 (1996).

Therefore, interpretation of a statutes preemptive scope must focus on the fair

understanding of Congressional purpose. Id.

Congress may indicate its preemptive intent through explicit statutory

language or implicitly through its structure and purpose. Jones v. Rath Packing

Co., 430 U.S. 519, 525 (1977). A federal statute may implicitly supersede a state

statute when a statutes scope indicates that Congress intended federal law to

occupy a field exclusively, or when the state law is in actual conflict with

federal law. Freightliner Corp. v. Myrick, 514 U.S. 280, 287 (1995).The CSAs

central objective is to conquer drug abuse and to control the legitimate and

illegitimate traffic in controlled substances. Gonzales, 545 U.S. at12. Congress

created a comprehensive framework for regulating the production, distribution,

and possession of five classes of controlled substances. Id. at 24.

Congress classified marijuana as a Schedule I drug partly for its lack of

any accepted medical use. Id. at 14. Despite considerable efforts to reschedule

marijuana, Congress has refused to classify marijuana under any lesser schedules.

Id. at 15. Further, the United States Supreme Court held that there is no medical

necessity exemption available under the CSA, thus foreclosing any conclusion that

Colorados marijuana law can create any such exemption under federal drug law.


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See Oakland Cannabis, 532 U.S. at 483, 486, 494. Since Congress has not

indicated any intent to occupy the field of drug law exclusively, the Court must

consider the existence of an actual conflict between state and federal law. Actual

conflict may exist when it is physically impossible to comply with both state and

federal law or when state law stands as an obstacle to the accomplishment and

execution of the full purposes and objectives of Congress. Freightliner, 514 U.S.

at 287. Historically, the Court has applied the physical impossibility standard very

narrowly. See Wyeth v. Levine, 555 U.S. 555, 590 (2009).

Here, it is not physically impossible to comply with both state and federal

law because a person can simply refrain from using marijuana, medical

or otherwise. In Emerald Steel Fabricators, Inc. v. Bureau of Labor & Indus. (230

P.3d 518, 528 (Or. 2010)), the Oregon Supreme Court applied similar reasoning

and concluded that it is not physically impossible for Oregon residents to comply

with both federal law and Oregons medical marijuana law because residents can

refrain from using marijuana altogether. Similarly, it is not physically impossible

for Colorado residents to comply with both federal and state law. Therefore,

the physical impossibility standard of preemption is not satisfied.

Finally, the Court must consider whether the state law stands as an

obstacle to the accomplishment and execution of the full purposes and objectives

of Congress. Hines v. Davidowitz, 312 U.S. 52, 67 (1941). I n Michigan Canners

& Freezers Assn, Inc. v. Agric. Mktg. & Bargaining Bd . (467 U.S. 461, 478

(1984)), the United Supreme Court held that state law was preempted when state


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law authorized associations of farmers and other producers of agricultural

commodities to engage in conduct forbidden by federal law. The Court held that

federal law preempted state law because it stood as an obstacle to the

accomplishment and execution of the full purposes and objectives of

Congress.Id.

InEmerald, the Oregon Supreme Court found that Oregon law

affirmatively authorizes the use of medical marijuana whereas the CSA

prohibits marijuana regardless of any medical purpose. 230 P.3d at 529. Similarly,

Colorado law authorizes certain individuals to use marijuana for medical purposes,

whereas federal law forbids any use of marijuana. Ultimately, the CSA prohibits

the manufacture, distribution, or possession of marijuana, and any state

authorization to engage in the manufacture, distribution, or possession of

marijuana creates an obstacle to the full execution of the federal CSA. Therefore,

Colorados marijuana laws are preempted by the CSAs prohibition of marijuana.

Similarly, inEmerald, the Oregon Supreme Court held that Oregon marijuana law

is without effect because Oregons marijuana laws are preempted by federal law.

230 P.3d at 529.

3. Contracts in Contravention of Public Policy are Void and

Unenforceable.

[C]ontracts in contravention of public policy are void and unenforceable.

Pierce v. St. Vrain Valley School Dist. RE-1J, 981 P.2d 600, 604 (Colo. 1999).

Parties to illegal contracts generally cannot recover damages for breach of


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contract.Bd. of Cnty. Commrs of Pitkin Cnty. v. Pfeifer, 546 P.2d 946, 950

(Colo. 1976). Although parties have the freedom to agree to whatever terms they

see fit, such terms cannot violate statutory prohibitions affecting public policy of

the state. Fox v. I-10 Ltd, 957 P.2d 1018,1022 (Colo. 1998) see also City of

Colorado Springs v. Mountain View Electric Assn, Inc., 925 P.2d 1378, 1386

(Colo. App. 1995) (It is a fundamental principle of contract law that parties

cannot by private contract abrogate the statutory requirements or conditions

affecting the public policy of the state.) Above all else, no one can lawfully do

that which tends to injury the public, or is detrimental to the public good. Russell

v. Courier Printing & Publg Co., 95 P. 936 (Colo.1908). As a result, a defendant

may not be forced to perform on a contract to which he agreed and received a

benefit. See Id. However, it is not for his sake, or for his protection, that the

objection is allowed, but for the protection of the public.Id.

Furthermore, Colorado law does not suggest that a public policy analysis

should be limited to violations of public policy only as defined by Colorado law.

See Pierce, 981 P.2d at 604Fox, 957 P.2d at 1022Pfeifer, 546 P.2d at

950Mountain View, 925 P.2d at 1386. Instead, the concept of public policy

includes both thestate of Colorado and the state as defined as a politically

organized body of people [usually] occupying a definite territory. Websters

Dictionary 1151 (9th

ed. 1989). Colorado courts are responsible for upholding the

public policy of thestate of Coloradoand the state of the nation. InRussell, the

Supreme Court of Colorado held that a contract was void as against public policy


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because it violateda ruling by the United States Supreme Court declaring that

agreements forgovernment contracts are void as against public policy when

compensation iscontingent upon the success of the promisees efforts. 95 P. at

938. Therefore, ifthe disputed contract violates federal law, it would be against

public policy andwould be void and unenforceable.

Though not binding precedent, on August 8, 2012, following a bench trial

in which the plaintiff brought a breach of contract action, the Arapahoe District

Court voided an otherwise-valid and existing contract for the sale of medical

marijuana under similar rationale. In Arapahoe District Court Case No. 11CV709,

District Court Judge Charles M. Pratt concluded that contracts for the sale of

marijuana are void as they are against public policy. Accordingly the contract

here is void and unenforceable. See Haeberle v. Blue Sky Care Connection,

LLC, Arapahoe District Court Case No. 11CV709, August 8, 2012 ORDER,

attached hereto and incorporated herein by reference as Defendants Exhibit 1.

Here, the contracts, as alleged, are illegal under federal law. Therefore,

neither law nor equity will aid either toenforce, revoke, or rescind. Baker v.

Couch, 221 P. 1089, 1090 (Colo. 1923) (emphasis added). The contracts are void

as against public policy because they violate federal law prohibiting the cultivation

and sale of marijuana.

Moreover, as Baker v. Couch explains, there can be no equitable claim for

illegal activity in violation of the law. In order to prevail on a claim for unjust

enrichment, the plaintiff must show that she conferred a benefit on the defendant


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under circumstances that would make it unjust for defendant to retain the benefit

without paying. Lewis v. Lewis, 189 P.3d 1134, 1145 (Colo. 2008) quoting

DCB Constr. Co. v. Cent. City Dev. Co., 965 P.2d 115, 119-20 (Colo. 1998). It

would be unjust for the Court to compensate Plaintiff for his illegal acts.

Defendants recognize this is a somewhat unsettled area of the law, and that

various attorneys and courts have taken a variety of positions about the legality of

medical marijuana in light of federal law. However, pursuant to the Colorado

Rules of Professional Conduct, licensed practicing attorneys are ethically required

to raise and advance arguments on behalf of clients that could potentially benefit

the lawyers clients, notwithstanding the lawyers personal interest or political

views. See Colo. R. Prof. C. 1.1 (Competence) 3.1 (Meritorious Claims and

Defenses The advocate has a duty to use legal procedure for the fullest benefit of

the client's cause...) 3.2 (Expediting Litigation). Even if lawyers may personally

believe that federal law related to marijuana is antiquated or irrational, said law

remains valid and binding, and eliminates all claims alleged here.

Additionally, pursuant to Colo. R. Prof. C. 3.3 (Candor Toward the

Tribunal), counsel for Defendants believe they are ethically obligated to advise

this Court of contrary authority as to the above federal illegality argument. The

following controlling legal authority may fit in this category: Colorado

Constitution, Article XVIII 14(2)(d) (constitutional right to the medical use of

marijuana includes acquisition, possession, manufacture, production, sale,

distribution, dispensing, or transportation of marijuana) In re Marriage of Parr,


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240 P.3d 509, 511 (Colo. App. 2010) (discussing fathers constitutional right to

use medical marijuana throughout Court of Appeals opinion) 21 U.S.C. 903

(no Congressional intent to occupy the field on subject matter of controlled

substances which would otherwise be within the authority of the State) 21

U.S.C. 885(d) CFR 1301.24 (federal immunity for state or local government

official who shall be lawfully engaged in the enforcement of any law or

municipal ordinance relating to controlled substances) C.R.S. 12-43.3-901

(deputizing Center licensees and employees as badged state and local government

officials empowered to confiscate fraudulent documentation and pursue all

violations of State law) U.S. Patent No. 6,630,507 (patent held by United States

of America, as represented by the Department of Health and Human Services, for

the use of cannabinoids for medical purposes) National Institute of Drug Abuse,

Compassionate Use Protocol (federal program growing, transporting, and

distributing marijuana to U.S. citizens throughout the states for medical purposes)

District of Columbia Medical Marijuana Program, D.C. Stat. 7-1671 et seq.

D.C. Law 13-315 57 DCR 3360 (federal medical marijuana program passed by

U.S. Congress and signed into law by President of the United States).

II. PLAINTIFFS THIRD CLAIM FOR QUANTUM MERUIT/UNJUST

ENRICHMENT FAILS TO STATE A CLAIM UPON WHICH

RELIEF CAN BE GRANTED

In addition to, and separately from, the federal rationale set forth above, the

court should dismiss Plaintiffs third claim for relief through the equitable doctrine

of unjust enrichment. As detailed above, Plaintiff alleges that he entered into an


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enforceable contract and an employment agreement providing for wages with

Defendants, which are allegations taken as true at this stage and for purposes of

this motion.

Therefore, since legal remedies exist, an equitable one is automatically

precluded. Plaintiff is not entitled to assert a claim for unjust enrichment, the

survival of which as a claim requires the non-existence of a contract, i.e. a legal

remedy. Unjust enrichment is available as a remedy only in the absence of an

otherwise enforceable contract. Scott Co. v. MK-Ferguson Co., 832 P.2d 1000

(Colo.App.1991)see also Gilmore v. Ute City Mortgage Co., 660 F.Supp. 437

(D.Colo.1986). It is long-standing precedent that equitable claims can exist where

there is no adequate remedy at law. Patterson v. People ex rel. Parr, 130 P. 138

(Colo. 1913) Blitz v. Moran, 67 P. 1020 (Colo. 1902). If there has been mutual

agreement between the parties forming a contract, as is alleged here, the remedy of

unjust enrichment is not available. Vigoda v. Denver Urban Renewal Authority,

646 P.2d 900 (Colo.1982).

Plaintiff asserts that there were numerous express agreements entered into

with Defendant. (Plaintiffs Complaint 9). Accepting these assertions as true,

Plaintiff is precluded from asserting the claim of unjust enrichment, which

depends on the non-existence of a contract, and the Court should dismiss this

claim.

Plaintiff cannot have it both ways, even at this stage. Legal and equitable

remedies are mutually exclusive. If Plaintiff descends into the world of equity,


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such claims depend on the lackof remedies at law. Since Plaintiff alleges

remedies exist at law, and these allegations are taken as true, then the equitable

claims must fail.

III. IF THE MOTION TO DISMISS IS DENIED, THEN IN THE

ALTERNATIVE PLAINTIFF SHOULD PROVIDE A MORE

DEFINITE STATEMENT

The Complaint does not set forth the terms of the alleged contract and wage

agreement, and it should do so, in order to advance the litigation so that parties

need not aim at a moving target and increase their expenses and impact the

Courts limited resources. C.R.C.P. 12(e) allows this Court, in its discretion, to

order Plaintiff to provide a more definite statement:

Before responding to a pleading or, if no responsive pleading is

permitted by these rules, within 21 days after the service of the

pleading upon him, a party may file a motion for a statement in

separate counts or defenses, or for a more definite statement of any

matter which is not averred with sufficient definiteness or

particularity to enable him properly to prepare his responsivepleading.

C.R.C.P. 12(e).

In a contracts case such as this, Plaintiff should be required to state at the

outset the precise terms of the alleged contracts. It is expected that Plaintiff will

resist, at this stage and throughout the litigation, ever actually setting forth the

terms of these alleged contracts or the putative wages supposedly due.

PRAYER FOR RELIEF

Wherefore, for the reasons stated herein, the Court should dismiss

Plaintiffs claims forthwith and with prejudice, or in the alternative, should order


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Plaintiff to provide a more definite statement detailing the alleged specifics of the

contracts, and for all other relief just and proper.

Date: October 3, 2012 Respectfully Submitted,

/s/ Robert J. Corry, Jr.

(original signature on file)

____________________________

Robert J. Corry, Jr.


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Certificate of Service

Above designated counsel hereby certifies that on the above date he served via

LexisNexis File & Serve a true and complete copy of the foregoing to:

Adam C. Foster

Hoban & Feola, LLC

1626 Wazee Street Suite 2A


303-674-7000

[email protected]

/s/ Robert J. Corry, Jr.

(original signature on file)

____________________________Robert J. Corry, Jr.

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