A cannabis entrepreneur urged a Colorado federal judge Friday to bar his former business partner from making any equity transactions until after the court has the opportunity to revisit a $6.4 million judgment ruling as part of a recent Tenth Circuit remand.
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Plaintiff and judgment creditor David Joshua Bartch said that a temporary restraining order and preliminary injunction was necessary to prevent defendants and judgment debtors Mackie A. Barch and his company Trellis Holdings Maryland Inc. from upsetting the status quo while the matter of enforcing the judgment is pending.
According to Friday's motion, counsel for Bartch asked Barch and Trellis "to stipulate to this eminently sensible short-term relief," and the two judgment debtors "refused."
"This refusal alone creates serious concern that Mackie [Barch] intends to try to use the remand as an opportunity to try to evade the Court's judgment once and for all," plaintiff Bartch said.
The motion said an injunction was necessary given what they characterized as a long pattern of the defendant parties allegedly using deceit to duck their responsibilities.
The motion specifically referenced "Mackie [Barch]'s well-documented history, acknowledged by the Court on multiple occasions, of dishonesty and judgment evasion — a history that includes giving false testimony in court, evidence spoliation and, crucially, secret attempts to sell its [equity in a Maryland cannabis cultivation and dispensary business called Culta Inc.] for purposes other than paying the Court's September 2022 judgment."
A Maryland federal judge entered a $6.4 million damages award against Barch and Trellis for failing to restore Bartch's stake in Culta.
When they failed to pay up, Bartch filed suit in Colorado federal court seeking an order that would require Barch and Trellis to sell off their equity in Culta to satisfy the judgment, which the court granted.
Barch and Trellis, in turn, claimed in an appeal that their ex-partner Bartch lacked standing to seek enforcement of the judgment because the order would require them to engage in conduct in violation of the Controlled Substances Act — namely, cultivating and selling marijuana, which is legal in Colorado and Maryland but still prohibited federally under the CSA.
A majority of a Tenth Circuit three-judge panel disagreed, finding in an opinion published in July that Barch and Trellis have no path for relief from the judgment based on that argument.
The circuit court order required Barch and Trellis to "use their best efforts" to sell their equity in Culta and "turn over the proceeds of such transaction(s)" to Bartch until the judgment is paid.
"This language does not specifically instruct Mackie [Barch] and Trellis to cultivate, process, or sell marijuana — they may only need to sell their equity and compensate Josh [Bartch] for his contract damages," U.S. Circuit Judge Scott M. Matheson Jr. wrote for the majority. "But they also may need to rely on Culta's continued CSA-infringing business operations to enable them to sell the equity."
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