IN RE BLIXSETH
In re: EDRA D. BLIXSETH, Debtor.
ATIGEO LLC and XPATTERNS LLC, Plaintiffs,
v.
RICHARD SAMSON, EDRA D BLIXSETH, OPSPRING LLC, BLXWARE, LLC, JULIE BARVE, MATTHEW CROCKER, ERIK BERGSAGEL, and WESTERN CAPITAL PARTNERS LLC, Defendants.
Case No. 09-60452-7, Adv No. 09-00105.
United States Bankruptcy Court, D. Montana.
January 7, 2011.
MEMORANDUM of DECISIONRALPH B. KIRSCHER, Bankruptcy Judge
At Butte in said District this 7th day of January, 2011.
In this Adversary Proceeding, after due notice, a hearing was held January 4, 2011, in Butte on Plaintiffs' FED.R.CIV.P. 12(b)(6) Motion to Dismiss Count II of Western Capital Partners' Amended Third Party Complaint and Third Party Defendant Michael Sandoval's Motion to Dismiss Third Party Complaint of Western Capital Partners filed November 17, 2010, at docket entry no. 158. At Michael Sandoval's request, the Court also conducted on January 4, 2011, a pretrial conference on discovery issues. Plaintiffs Atigeo LLC ("Atigeo") and xPatterns LLC ("xPatterns") were represented at the hearing by Brian C. Park of Seattle, Washington; Third Party Defendant Michael Sandoval ("Sandoval") was represented by Roland Tellis and Patricia K. Oliver of Los Angeles, California and John H. Grant of Helena, Montana; Western Capital Partners LLC ("Western Capital") was represented by Robert W. Hatch, II of Denver, Colorado; and the Chapter 7 Trustee of Debtor's bankruptcy estate, Richard J. Samson, was represented by David B. Cotner of Missoula, Montana. The Court heard argument from they attorneys, but no witness testimony or exhibits were offered at the hearing.
FACTSThrough their pleadings, various parties to this proceeding have alleged that in 2006, Sandoval was the CEO of xPatterns. Sometime in 2006, Sandoval persuaded Debtor to invest $10 million in xPatterns and also persuaded Debtor to purchase an equity interest in Opspring LLC ("Opspring") for $8 million. Following Debtor's investment in xPatterns, Sandoval allegedly took $5.75 million of the money Debtor invested in xPatterns and used such money to purchase real property located in Kirkland, Washington. Debtor claimed in prior court documents that Sandoval told her he only borrowed the money from xPatterns and intended to repay the money within 30 to 60 days. Debtor maintained she later learned that Sandoval borrowed more money than he represented and that Sandoval intended to repay the loan in three or more years, as opposed to 30 or 60 days.
Upon learning of Sandoval's alleged misrepresentations, Debtor sought to terminate her equity interest in xPatterns and to separate Opspring from xPatterns and Atigeo. To that end, Debtor entered into a March 31, 2007, Letter Agreement with xPatterns, Opspring and possibly others. The Letter Agreement, excluding signature pages and exhibits, is 8 pages. In the Letter Agreement, xPatterns, through Sandoval, agreed to redeem the interests of the Blixseth Family in xPatterns for $2 million payable to Debtor within 120 days plus an additional $8 million payable to Debtor as follows: $1 million on March 31, 2009, $2 million on March 31, 2010, and the balance by March 31, 2011.