Motion: Civil fraud claims against bankrupt Aspen company have no teeth
Dogbite case from February 2016 incident goes another round in court
An Aspen business declared bankruptcy because it could not afford to pay a six-figure court judgment stemming from a 2016 dog-bite incident, but civil accusations that the company’s owner and his wife fraudulently used company money for their personal use are baseless, attorneys argued in a recent pleading.
Ajax Technologies, an IT firm no longer in business, filed for Chapter 7 bankruptcy protection in September 2020 following a default court judgment that the company and its owner, Magnus Grimmett, pay $369,948 to Linda Hassall. The judgment came after Hassall sued Ajax Technologies and other parties in Pitkin County District Court over personal injuries she suffered from a German shepherd’s bite nearly six years ago in February 2016.
Hassall had gone to Ajax Technologies’ then-place-of-business at 555 N. Mill St. to return the business some of its misplaced mail. Her lawsuit, which was filed in April 2018, said the dog was not provoked, but its bite was significant enough to injure Hassall’s wrist, requiring multiple medical procedures.
Ajax Technologies’ bankruptcy filing put Hassall’s debt collection efforts on hold. In September, however, the court-appointed trustee overseeing the bankruptcy proceedings filed an adversary action against the company and its owner, Magnus Grimmett, and his wife, Autumn Kent DeSimone. The complaint accused the couple of engaging in civil fraud by enriching themselves through $1.2 million of transfers they made from Ajax Technologies from 2017 through July 2020.
The defendants, through Glenwood Springs law firm Johnston Van Arsdale Martin PLLC, are seeking dismissal of DeSimone from the adversary case, in addition to dropping eight of the nine counts in the complaint. The only count they are not seeking dismissal of is for illegal distributions against Grimmett.
“In September 2020, after a successful run of seven years in the IT business, Ajax Technologies declared bankruptcy because it was no longer financially viable,” said a Dec. 13 motion to dismiss filed in the adversary case. “The primary reason forcing Ajax Technologies to shutter was an exorbitant, fraudulent, and procedurally defective default judgment obtained against the company by Linda Hassall.”
The adversary complaint also alleged that in August 2017, Grimmett and DeSimone transferred the ownership of their $1 million Carbondale home into the name of a limited liability company called Bazzaminty Holdings, which they established also in August 2017. The two had been on notice, since September 2016, that Hassall would be suing them, according to the complaint. By doing so, they violated the Colorado Uniform Fraudulent Transfer Act, the complaint alleged.
“In an apparent further effort to distance themselves personally from third-party claims, Grimmett and DeSimone again doubled down, transferring their million dollar residence in Carbondale, Colorado, to BazzaMinty, which was formed for no other legitimate business purpose than to hinder, delay, and defraud the debtor and its creditors,” said the trustee’s complaint.
Last month’s motion, written by attorney Alexander Clayden, countered that Ajax Technologies — the bankrupt party — had no connections to the property transfer, which was lawful.
“The Carbondale Property was never property of the Debtor, Ajax Technologies, and never transferred by Ajax Technologies,” the motion said. “Rather, that property was owned by Mr. Grimmett and Mrs. DeSimone, who transferred it to another non-debtor third-party, BazzaMinty Holdings.”
The motion also sought the dismissal of BazzaMinty Holdings from the adversary complaint.
Responding to allegations that the couple milked the company for $1.2 million for their own personal use and also personally took proceeds from a $60,000 SBA disaster-relief loan the company received in May 2020, the motion said those claims are baseless.
“The factual allegations the Trustee does include in the Complaint indicate that Mrs. DeSimone loaned money to Ajax Technologies, and that its payments to her constituted repayments of that debt,” the motion said. “These allegations cannot support any claim for fraudulent transfer against Mrs. DeSimone.”
DeSimone had no ownership in the company, and it was entirely owned by Grimmett, the motion said, also arguing that the SBA loan was taken out before Ajax Technologies went bankrupt. The trustee’s complaint lacks plausibility and is based on leaps in conclusion, the motion said.
“The Trustee has not alleged facts plausibly showing Mr. Grimmett took a thing of value from Ajax Technologies with specific intent to permanently deprive Ajax Technologies of its use,” the motion said. “As a purported basis for this claim, the Trustee relies on a disaster relief loan obtained by Mr. Grimmett for Ajax Technologies in early June 2020, during the initial wave of nationwide impacts resulting from the Covid-19 pandemic. Less than three months later, Mr. Grimmett petitioned for Chapter 7 bankruptcy on behalf of Ajax Technologies. The Trustee contends that merely by transferring most of the proceeds of the SBA disaster relief loan to a different bank account, Mr. Grimmett committed civil theft against his own company.”
