Harvest Worship Center v. Resound Church

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Regina M. Rodriguez
Civil Action No. 22-cv-002285-RMR-NRN
HARVEST WORSHIP CENTER, a Colorado Nonprofit Corporation,
Plaintiff,
v.
RESOUND CHURCH, an Oregon Non-Profit Corporation,
Defendant,
RESOUND CHURCH, an Oregon Non-Profit Corporation,
Counterclaim Plaintiff,
v.
HARVEST CHURCH a/k/a HARVEST WORSHIP CENTER, STEPHEN LEE VALDEZ,
VICKIE MAESTAS, and DANIEL VALDEZ,
Counterclaim Defendants.
ORDER ADOPTING MAGISTRATE JUDGE RECOMMENDATION ECF 65
REGARDING HARVEST CHURCH’S MOTION FOR REMAND (ECF #32) AND
MOTION TO APPOINT RECEIVER (ECF #47)
Central to this case is a dispute between two churches and their respective
leadership—Harvest and the Valdez family on one side and Resound and Luke Reid on
the other. The heart of the dispute is ownership of the property located at 2300 West 90th
Avenue, Federal Heights, Colorado, which is by all accounts the primary and most
valuable asset of the church. The special warranty deed for the subject property identifies
Resound as the sole title owner. Harvest has sued Resound challenging the ownership
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and asserting myriad reasons why Harvest rather than Resound is the rightful owner of
the subject property. The claims and central facts in this controversy are succinctly and
thoughtfully 	set 	forth 	by 	Magistrate 	Judge 	N. 	Reid 	Neureiter 	in 	his 	Report 	and
Recommendation on Harvest Church’s Motion for preliminary Injunction and Temporary
Retraining Order. ECF 141. What has ensued is an avalanche of filings since the case’s
removal to this Court on September 2, 2022 beginning with a challenge to the removal of
the case.
On December 21, 2022, at ECF No. 65, Magistrate Judge N. Reid Neureiter issued
a 	Recommendation 	on 	Plaintiff/Counterclaim 	Defendant 	Harvest 	Worship 	Center’s
(“Harvest”) Opposed Motion for Remand, ECF No. 32 and Harvest’s Opposed Forthwith
Motion to Appoint Receiver Over Subject Property Pursuant to Fed. R. Civ. P. 66, ECF
Nos. 471. Magistrate Judge Neureiter recommends that both motions be denied. Harvest
filed an objection to the Recommendation, at ECF No. 68. The Court has received and
considered the Recommendation, the Objection, the record, and the pleadings. After
consideration, 	the 	Court 	OVERRULES 	Harvest’s 	objection 	and 	ADOPTS 	the
Recommendation.
I. 	Harvest’s Motion for Remand
Harvest commenced this action in the District Court for Adams County, Colorado.
Harvest filed a First Amended Complaint (FAC) on September 1, 2022 (ECF #6).
Resound promptly removed the case to federal court pursuant to this Court’s diversity
jurisdiction, 28 U.S.C. Section 1441(b). Harvest objects to the removal and asks that the
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case be remanded to Colorado state court because there is not complete diversity of
citizenship. This Court is required to make a de novo determination of those portions of a
magistrate judge’s recommendation on a dispositive issue to which a specific objection
has been made, and it may accept, reject, or modify any or all of the magistrate judge’s
findings or recommendations. Fed. R. Civ. P. 72(b). In the Tenth Circuit, motions to
remand are considered dispositive. See First Union Mortg. Corp. v. Smith, 229 F.3d 992,
996 (10 th Cir. 2000).
As Magistrate Judge Neureiter recognized, the record indicates Harvest is a
Colorado non-profit entity and Resound is an Oregon non-profit religious corporation with
its principal place of business at 1400 NE 48th Avenue, Suite 100, Hillsboro, OR 97124.
ECF 65 at 4. Based upon the sworn filings in the case and allegations in the pleadings,
Magistrate Judge Neureiter concluded the parties are diverse. Nonetheless, Harvest
argued that complete diversity does not exist because one member of Resound’s Board
of Directors is a Colorado resident. Magistrate Judge Neureiter rejected this argument.
ECF No. 65 (“The Court rejects Harvest’s argument that ‘Resound’s ‘nerve center’ is its
Board of Directors, wherever they are located,’ as unsupported by case law or common
sense.”). Instead, applying Hertz, Magistrate Judge Neureiter correctly determined that
Resound’s nerve center is Oregon. See Hertz Co. v. Friend, 599 U.S. 77, 95-96 (2010)
(The nerve center test requires a court to determine “the center of overall direction,
control, and coordination” of a corporation, as well as where the top officers of the
corporation are located and where “the bulk of a company’s business activities visible to
the public take place.”)
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Harvest objects to the finding that Resound’s nerve center is in Oregon. Instead, it
reiterates its “novel” argument—without any legal authority to support it—that, because
one member of Resound’s four-member board of directors is domiciled in Colorado,
diversity should not be considered complete. There is no dispute that Resound is
incorporated under the laws of Oregon, its bylaws identify Oregon as its “principal office,”
and the President of Resound filed a declaration confirming that Resound’s headquarters
are located in Hillsboro, Oregon. This Court finds no support for Harvest’s argument and
agrees with Magistrate Judge Neureiter’s determination that Resound is an Oregon
citizen. Accordingly, the Court has diversity jurisdiction under 28 U.S.C. § 1332. Harvest’s
objection is OVERRULED.
II. 	Harvest’s Motion to Appoint a Receiver
Unlike the motion for remand, a determination on a motion for receivership is
considered a non-dispositive ruling. See Wells Fargo Bank, N.A. v. Mesh Suture Inc., No.
19-CV-03218-PAB-GPG, 2020 WL 5822019, at *1, n.4 (D. Colo. Feb. 11, 2020).
“Magistrates may issue orders as to non-dispositive pretrial matters, and district courts
review such orders under a ‘clearly erroneous or contrary to law’ standard of review.
Ocelot Oil Corp. v. Sparrow Indus., 847 F.2d 1458, 1461–62 (10th Cir. 1988). The clearly
erroneous standard “requires that the reviewing court affirm unless it ‘on the entire
evidence is left with the definite and firm conviction that a mistake has been committed.’
” Ocelot Oil Corp. v. Sparrow Industries, 847 F.2d 1458, 1464 (10th Cir. 1988) (quoting
United States v. U.S. Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 92 L.Ed. 746 (1948)).
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The Magistrate Judge recommends that the Court deny Harvest’s motion to
appoint a receiver over the real property in dispute (the “Subject Property”). Magistrate
Judge Neureiter recognized that receivership “is an extraordinary equitable remedy that
lies in the discretion of the court, justifiable only in extreme situations.” Waag v. Haam,
10 F. Supp. 2d 1191, 1993 (D. Colo. 1998). In deciding whether to exercise its discretion
to appoint a receiver, Waag instructs a court to consider: “(1) the existence of a valid claim
by the moving party; (2) the probability that fraudulent conduct has occurred or will occur
to frustrate the claim; (3) imminent danger that the property will be lost, concealed, or
diminished in value; (4) inadequacy of available legal remedies; (5) lack of a less drastic
equitable remedy; and (6) the likelihood that appointment of a receiver will do more harm
than good.” Waag, 10 F. Supp. 2d at 1993. Analyzing the Waag factors, the Magistrate
Judge determined that the factors weigh against the appointment of a receiver and this
Court does not find that this recommendation is clearly erroneous or contrary to law.
Indeed, the Objection does not address the Waag factors or how they might favor
appointment of a receiver. Instead, Harvest uses its Objection as an opportunity to
reargue its allegation that the Subject Property was fraudulently conveyed and continues
to claim that it will suffer irreparable harm if Resound fails to maintain the Subject Property
and loses a paying tenant. The Objection is devoid of legal authority challenging the
Recommendation’s analysis and provides nothing that would suggest to the Court that
the Magistrate Judge’s analysis was clearly erroneous.
Thus, Harvest’s objection is OVERRULED.
Accordingly, the Court ORDERS:
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1. 	Harvest’s Objection to the Recommendation is OVERRULED;
2. 	The Recommendation, ECF No. 65, is ACCEPTED and ADOPTED;
3. 	Harvest’s Opposed Motion for Remand, ECF Nos. 32 is DENIED;
4. 	Harvest’s 	Opposed 	Forthwith 	Motion 	to 	Appoint 	Receiver 	Over 	Subject
Property Pursuant to Fed. R. Civ. P. 66, ECF Nos. 47, 53 is DENIED.
DATED: September 29, 2023.
BY THE COURT:
_____________________________
REGINA M. RODRIGUEZ
United States District Judge
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