United States Court of Appeals, Tenth Circuit.

“ We do not hesitate to conclude that the damages fall within the scope of the "benefit of the bargain." There is ample evidence that, throughout the ongoing fraud perpetuated by the defendants, they were aware that refusing to deliver the promised loan proceeds would result in the failure of the Fairmont Breckenridge project. Plaintiffs' damages are demonstrably a result of that project's failure. ”

“ The district court properly refused to consider evidence Defendants introduced in an effort to defend the contract claims on the merits. After an entry of default, a defendant cannot defend a claim on the merits. ”

“ The district court’s description of its prior ruling was an unfortunate misstatement. The February 4, 1998 order clearly did not dismiss Plaintiff’s fraud and breach of contract claims. Instead, the order noted that these claims were still viable but that, in the interest of judicial economy, "Plaintiff [would not be allowed] to put on evidence to prove a fraud claim when Plaintiff has already received a judgment in his favor entitling him to the same damages." The district court never dismissed Plaintiff’s fraud and breach of contract claims. ”

“ A plaintiff bears the burden of proving his damages. Morsey v. Chevron, USA, Inc., 94 F.3d 1470, 1476 (10th Cir. 1996) . Appellants observe that the district court criticized the Lasshofer Defendants for putting on only one witness who critiqued Niemi's testimony without offering positive testimony of his own. We do not equate such criticism with an improper shifting of the burden. To the contrary, the district court found that only the Plaintiffs presented positive damages evidence, found that evidence credible, and entered a damages award accordingly. ”

“ In evaluating the merits of the litigation, an insurer is bound to consider its potential exposure. But Continental is incapable of doing so until it knows the possible extent of its liability in the Home-Stake litigation. The District of Columbia Circuit aptly stated: If insurance provided only a right to reimbursement for final judgments entered against the insured, a finding of ripeness might be difficult on the facts of this case. But the policies' protections are considerably broader, including a right to the insurer's provision of a defense and active participation in settlement. ”

“ Plaintiffs also argue that Appellants must either post a bond in the amount of the default judgment or obtain a stay before proceeding on appeal. They rely solely on one sentence plucked from the Niemi I decision: "After a final judgment, too, an absent civil defendant cannot appeal without either posting a bond or coming to court and winning a stay." ”

“ Plaintiff's claims have been pending before the federal courts for over twenty years. Defendants willful refusal to comply with the district court's discovery orders is a significant source of the delay. Enough is enough. We AFFIRM the June 6, 2001 judgment order and damage award. We also AFFIRM the district court's award of prejudgment interest, but REMAND with instructions to recalculate the prejudgment interest award pursuant to New Jersey Rule 4:42-11 (b) . ”

“ On August 23, 2013, the district court issued a written final judgment as to Claims 5 and 12 against the Lasshofer Defendants. In its order granting final judgment as to these claims, the court reiterated that it found no just reason for delay. It also noted its view that despite the complaint's "assert [ion of] more claims . . . and nam [ing of] more defendants than what might be necessary . . . this lawsuit has been pursued as the three plaintiffs' attempt to establish what amount to statutory and common law fraud claims against Mr. Lasshofer and his entities." ”

“ The dispute over the meaning of "40,000 Each Claim" can only add uncertainty to a settlement process where certainty is sought. A declaration on count II might very well affect both parties' settlement strategy. To overturn the district court's ruling would hinder any hope of such a result. Admittedly, some uncertainty remains regarding whether the policy's fraud exclusion will deny Kunkel coverage for any liability he incurs. This alone, however, did not render the district court powerless to resolve a second element of uncertainty. ”

“ In this instance the district court has disposed of each count in the complaint. Thus, we may properly exercise jurisdiction over this appeal.
II. The starting point for our discussion must be the relevant language of the Declaratory Judgment Act: " In a case of actual controversy within its jurisdiction . . . any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." ”

“ This isn't to suggest the statutory standing problem is insurmountable—or even close to it. Though standing isn't apparent in the transcript the plaintiffs recently supplied or the record they prepared for our review on appeal, perhaps on remand the plaintiffs can muster credible evidence that an assignment occurred before the lawsuit began. . . . Perhaps they can establish some direct and personal injury. ”

“ Although the standing argument advanced by Appellants may no longer be properly labeled "prudential," we affirm that it is meritless.
In keeping with the procedural history of this case, the chronicle of Appellants' challenge to standing and subject-matter jurisdiction is complex. Although the Lasshofer Defendants asked Niemi some questions related to standing at the preliminary injunction hearing, they did not raise a standing argument at that stage in the proceedings. ”

“ In Allendale, the insurer sought a declaration that if held liable to the insured, it would be entitled to judgment against the tortfeasors. We explained: "The contingent nature of the right or obligation in controversy will not bar a litigant from seeking declaratory relief when the circumstances reveal a need for a present adjudication." Id. at 594; accord Keene Corp. v. Insurance Co. ”

“ Lasshofer, a domiciliary of Austria, is described as the managing director and sole beneficial owner of defendants Innovatis GmbH and Innovatis Immobilien GmbH, which are registered in Austria, as well as a co-founder and board member of defendant IAM, a Panamanian company. The three companies are members of the Innovatis Group, "a collection of affiliated entities from around the world purporting to provide asset management and consulting services." Burgess was the manager of Prosperity, a now-dissolved Florida company that claimed to engage in real estate development and project financing. ”

“ We conclude it was implicit from Niemi's declaration and testimony that he would not have agreed to the forum provision if he knew Burgess was lying, and that such an assumption also comports with common sense. We agree with the district court that Niemi has adequately demonstrated that the forum selection clause was fraudulently induced, and thus reject Appellants' venue challenge. ”

“ Plaintiff originally filed this action in the District of New Jersey and the pendant state claims alleged violations of New Jersey law. Accordingly, New Jersey law, rather than Oklahoma law, governs.
Under New Jersey law, a court may award prejudgment interest in its discretion, and the court's exercise of its discretion will not be disturbed on appeal unless it represents "a manifest denial of justice." Liberty Lincoln-Mercury v. Ford Motor Co., 134 F.3d 557, 574 (3d Cir. 1998) (applying New Jersey law) . A court clearly may award prejudgment interest on tort claims, including fraud claims. ”

“ But we elaborated that " [a] plaintiff who can identify some way in which he or she suffered personally and directly as a result of the defendant's conduct—some way in which his or her losses are not derivative of the corporation's losses—can proceed with or without the corporation in the case." ”

“ We disagree. The district court heard evidence that Plaintiffs' project had sold well in early offerings, received positive press, and was unique in the market such that the economic downturn was less harmful to it than to other projects. ”

“ There are also sufficient minimum contacts for two of the Innovatis Group companies. Plaintiffs presented a JVA between Prosperity and Innovatis GmbH that was sent to Niemi to prove that the two entities were working together to fund the Fairmont Breckenridge. Appellants' assertion that the document is a forgery is insufficient to negate personal jurisdiction. The fact that the JVA was signed after the Loan Agreement was executed is inapposite because it was allegedly sent to induce Plaintiffs to continue to rely on the fraudulent funding scheme. ”

“ To the extent that Appellants' causation argument rests on its contention that the project would have failed even absent the fraud, the argument implicates the factual findings of the district court and fails on clear error review. Appellants essentially ask us to speculate that "lean economic times," Niemi I, 728 F.3d at 1253, and the difficulties Plaintiffs faced in obtaining Phase II financing mandate a conclusion that the damages award exceeds the "natural and proximate consequence [s] of the fraud." ”

“ In their second appeal to this court, Plaintiffs have overcome the burden they failed to surmount in Niemi I.
We first consider Plaintiffs' argument that the Lasshofer Defendants' standing challenge was not timely raised below and is therefore waived. Appellants are correct that the question of subject-matter jurisdiction can be raised at any time. ”

“ The district court articulated several grounds for rejecting Appellants' venue arguments. "The enforceability of a forum selection clause is a question of law which we review de novo." K & V Scientific Co., Inc. ”

“ As this court held in Niemi I, "Colorado courts interpreting COCCA look to federal [Racketeer Influenced and Corrupt Organizations Act ("RICO") ] law for guidance" and "a shareholder or guarantor lacks standing to assert RICO claims when their losses are only derivative of a corporation's." 728 F.3d at 1260 (citing Bixler v. Foster, 596 F.3d 751, 758-59 (10th Cir. 2010) ) . Appellants assert that subject-matter jurisdiction cannot exist if prudential standing is defeated, and thus all decisions made by the district court are void. ”

“ Nothing in the record persuades us that an improper burden shifting occurred.
We are similarly unpersuaded by Appellants' arguments that the damages award was based on speculative evidence. Appellants point to statements made by Niemi at the damages hearing in which he approximated numbers not included in Exhibit 1, such as the breakdown of debt versus equity lost by Plaintiffs. ”