A Washington state appeals court has thrown out an investor's suit alleging that a cannabis venture failed to follow through on a deal to acquire ownership interest in exchange for a $650,000 investment, finding his settlement of a prior suit block his claims.
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In an opinion filed Monday, a three-judge panel found the trial court was wrong to deny summary judgment to SMRB LLC and Robert Russell on Steven Bagot's Washington Securities Act claim, saying Bagot could have brought all claims in the prior suit, which was based on the same alleged conduct.
According to the opinion, Bagot invested $650,000 to purchase 6% of SMRB in 2017, along with a promissory note guaranteeing $100,000 of the initial investment. However, Bagot did not receive repayment for the loan under the promissory note, and later sued for breach of contract in Washington state court in Skagit County.
The parties settled that suit in July 2018, with the defendants agreeing to pay $139,887.50 to Bagot in exchange for Bagot dismissing his claims with prejudice. The court granted an order to that effect in September 2018. However, Bagot filed another suit alleging many of the same claims, as well as violations of the Washington Securities Act, in January 2019 in King County Superior Court.
The trial court granted dismissal on all claims except the Securities Act claim, prompting the appeal, in which SMRB and Russell argued that all claims were precluded thanks to the prior settlement. At oral argument in March, the panel questioned why Bagot waited for the second suit to make the Securities Act claim.
According to Monday's opinion, while Bagot argued that SMRB and Russell waived the preclusion affirmative defense because they didn't plead it in their answer or file a motion to dismiss to that effect, Bagot responded to the motion for summary judgment and participated in oral arguments, effectively waiving his argument that the defense had been waived
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