Paulson v. McKowen et al

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Chief Judge Philip A. Brimmer
Civil Case No. 19-cv-02639-PAB-NRN
JOHN PAULSON, Individually and on Behalf of all Others Similarly Situated,
Plaintiff,
v.
JOHN R. MCKOWEN,
WAYNE HARDING, and
TIMOTHY BEALL,
Defendants.
_____________________________________________________________________
ORDER
_____________________________________________________________________
This matter is before the Court on defendant John McKowen’s Motion to Reopen
Case [Docket No. 195] and Motion to Enforce the Paulson Settlement Agreement,
Release Property From Bankruptcy, and Appoint Trustee for Oversight [Docket
No. 196]. On November 13, 2024, plaintiff John Paulson filed a response. Docket
No. 197. On November 14, 2024, Mr. McKowen filed a reply. Docket No. 198.
I. BACKGROUND
The Court assumes the parties’ familiarity with the background facts and
procedural history in this case, which have been set forth in previous orders, see Docket
Nos. 162, 178, 194, and will not be repeated here except to the extent necessary to
resolve the present motions.
Mr. Paulson brought a securities class action against defendants McKowen,
Wayne Harding, and Timothy Beall. Docket No. 56. On July 21, 2021, Mr. Paulson
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filed an unopposed motion for preliminary approval of a settlement, approval of notice to
the class, preliminary certification of the class for the purposes of settlement, and
appointment of class counsel (“motion for preliminary approval”). Docket No. 157. On
January 19, 2022, the Court granted plaintiff’s motion for preliminary approval. Docket
No. 162. On April 29, 2022, the Court held a fairness hearing. Docket No. 176.
On March 15, 2023, the Court granted Mr. Paulson’s motion for final approval of
the settlement. Docket No. 178 at 17. The Court certified the class as follows:
[A]ll persons or entities that currently hold claims based on securities in GrowCo,
and purchased or otherwise acquired the securities through Offerings during the
period of October 2014 through December 2017 (the “Class Period”), and
suffered Alleged Losses as defined above. For the avoidance of doubt, persons
or entities who purchased or otherwise acquired the securities during the Class
Period and who have assigned the securities to VitaNova Partners, LLC are not
excluded as Class Members by virtue of such assignment. Excluded from the
Class are (1) the Defendants; (2) the officers and directors of Two Rivers and
GrowCo during the Class Period as set forth in the attached Exhibit E for
securities purchased at the time or after they were officers or directors; (3) any
judge or judicial officer who may hear any aspect of this Class Action and his or
her law clerks; and (4) except as provided in clause (2) of this paragraph above,
all persons or entities released in the Settlement. Also excluded from the
Settlement Class are the persons and/or entities who request exclusion from the
Settlement Class within the time period set by the Court in the Preliminary
Approval Order.
Id. at 17-18. The Court gave final approval to the Settlement Agreement and ordered
that “plaintiff and all class members are permanently enjoined and barred from
asserting, initiating, prosecuting, or continuing any of the claims released by the
Settlement Agreement.” Id. at 19. No class members opted out of the settlement. Id.
at 13, 19. The Court ordered “that, without affecting the finality of this Order, this Court
retains jurisdiction to consider all further matters arising out of or connected with the
Settlement Agreement, including its implementation.” Id. at 20. Final judgment entered
on March 16, 2023. Docket No. 179.
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II. ANALYSIS
On October 24, 2024, Mr. McKowen, who is proceeding pro se,1 filed a motion to
reopen this case to “address ongoing violations of the Paulson Settlement Agreement
and to facilitate the Court’s enforcement of the settlement provisions.” Docket No. 195
at 1, ¶ 1. He cites Federal Rule of Civil Procedure 60(b) as “the basis for this motion to
reopen” because there exists “fraud, misrepresentation, or misconduct by an opposing
party.” Id. at 3, ¶ 7. Mr. McKowen claims that the Paulson Settlement Agreement
“prohibit[s] further litigation on any claim that were [sic] or could have been asserted in
the class action.” Id. at 2, ¶ 3. He argues that “Contemnors,2 including Gregory A.
Harrington, have taken actions in violation of the Paulson Settlement Agreement” by
“filing adversary proceedings alleging claims that mirror those addressed and barred by
the Paulson Settlement.” Id., ¶ 4. Mr. McKowen argues that the “Contemnors” are
using “the bankruptcy process . . . to delay or obstruct foreclosure” that has “resulted in
significant harm” to Mr. McKowen, “whose rights are protected under the Paulson
1 Because Mr. McKowen is proceeding pro se, the Court will construe his filings
liberally without serving as his advocate. Hall v. Bellmon, 935 F.2d 1106, 1110 (10th
Cir. 1991).
2 Mr. McKowen identifies, in the captions to his motion to reopen this case and to
his motion to enforce the Paulson Settlement Agreement, the “Contemnors” as Gregory
A. Harrington, Two Rivers Water & Farming Company, TR Capital Partners, LLC, Two
Rivers Farms F-2, Inc., and the Orlando Reservoir No. 2 Company, LLC. Docket No.
195 at 1; Docket No. 196 at 1. Mr. McKowen argues that the “Contemnors” are using
“the bankruptcy process . . . to delay or obstruct foreclosure” that has “resulted in
significant harm” to Mr. McKowen “whose rights are protected under the Paulson
Settlement Agreement.” Docket No. 195 at 2, ¶ 6. However, he only argues that
“adversary complaints filed by Farms F-2 and Harrington’s actions directly violate these
terms by attempting to obstruct the foreclosure process and prevent secured creditors
from exercising their rights under the Deeds of Trust,” such that the “Court’s authority to
enforce the Paulson Settlement is critical.” Docket No. 196 at 5. He does not explain
how the other “Contemnors” are allegedly violating the Paulson Settlement Agreement.
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Settlement Agreement.” Id., ¶ 6. Mr. McKowen states that this case should be
reopened so that the Court can consider his motion to enforce the Paulson Settlement
Agreement. Id. at 3, ¶ 2. Mr. McKowen asks that the Court enforce the Paulson
Settlement Agreement by “releas[ing] property from bankruptcy to McKowen for
development or sale,” dismiss “adversary complaints” filed by Two Rivers Farms F-2 in
the bankruptcy proceedings, and appoint a Trustee to oversee the management of
property. Docket No. 196 at 5-8.
On March 3, 2025, Mr. McKowen filed a complaint against Greg Harrington, Two
Rivers Water & Farming Company, TR Capital Partners, LLC, Two Rivers Farms F-2,
Inc., Wayne Harding, The State of Colorado, Colorado Attorney General Philip Weiser,
Colorado Securities Commissioner Tung Chang, and John Does. McKowen v.
Harrington, 25-cv-00708-PAB-KAS, Docket No. 1. Only Mr. Harding and Mr. McKowen
are parties to both that case and this case.
The Court finds that Mr. McKowen seeks to reopen this case based on the same
underlying conduct that he alleges in McKowen v. Harrington, 25-cv-00708-PAB-KAS.
Specifically, Mr. McKowen seeks to reopen this case because the “Contemnors,”
particularly Mr. Harrington and Two Rivers Farms F-2, Inc., are allegedly violating the
Paulson Settlement Agreement through their participation in two adversary proceedings
pending in bankruptcy court, Two Rivers Farms F-2, Inc. v. GrowCo Capital Partners 1,
LLC, 24-01111-KHT, and Two Rivers Farm F-2, Inc. v. GrowCo Inc., 24-01112-KHT.
See Docket No. 195 at 1, ¶ 1; Docket No. 196 at 5-8; Docket No. 196-1 at 92, 202. Mr.
McKowen challenges these same adversary proceedings in his new case on the basis
that they violate the Paulson Settlement Agreement. See McKowen v. Harrington, 25-
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cv-00708-PAB-KAS, Docket No. 1 at 5-8. In his new case, Mr. McKowen similarly asks
the Court to “[e]nforce the Paulson Settlement Agreement and declare all bankruptcy
claims barred.” Id. at 8. He also similarly alleges that Two Rivers Farms F-2 Inc.’s and
Mr. Harrington’s participation in the bankruptcy process are violating the Paulson
Settlement Agreement. See id. at 2-3, ¶ 6.
The Court finds that it serves the interests of judicial economy to resolve the
issue of whether the “Contemnors” have violated the Paulson Settlement Agreement in
McKowen v. Harrington, 25-cv-00708-PAB-KAS, rather than in this case. Doing so not
only avoids duplicative litigation, but also has the advantage of resolving the issue in a
case where the alleged “Contemnors” are parties to the case, which is not true in this
case. See Wiggins v. Hatch, 2022 WL 2966622, at *1-2 (D.N.M. July 27, 2022)
(denying the plaintiff’s Rule 60(b) motion to reopen the case because the court found
that “[r]eopening the case at this stage is also unnecessary and would result in
duplicative litigation” because the plaintiff filed a new case that raised “claims related to
the lost filing fee” that plaintiff previously cited as being the basis for the plaintiff’s Rule
60(b) motion to reopen the case) (citing Gabriel v. Melton Truck Lines, 2022 WL
1275242, at *1 (10th Cir. Apr. 29, 2022)); Riddick v. Dep’t of Correction, 2018 WL
4078273, at *5 (D. Conn. Aug. 27, 2018) (denying the plaintiff’s “motions to reopen and
to enforce the settlement agreements” without prejudice because the court found that
“the claims for violations of the 2014 Settlement Agreement and the 2015 Clarification of
the terms of that agreement will be addressed” in the new case filed by the plaintiff);
Barela v. Curry Cnty. Det. Ctr., 2021 WL 601842, at *3 (D.N.M. Feb. 16, 2021) (finding
there was “no reason for the Court to reconsider and reopen this case” where the
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plaintiff “filed a new case that remains pending before the Court”). Therefore, the Court
will deny Mr. McKowen’s motion to reopen this case and will deny without prejudice Mr.
McKowen’s motion to enforce the Paulson Settlement Agreement.
III. CONCLUSION
It is therefore,
ORDERED that the Motion to Reopen Case [Docket No. 195] is DENIED. It is
further
ORDERED that the Motion to Enforce the Paulson Settlement Agreement,
Release Property From Bankruptcy, and Appoint Trustee for Oversight [Docket No. 196]
is DENIED without prejudice.
DATED April 18, 2025.
BY THE COURT:
___________________________
PHILIP A. BRIMMER
Chief United States District Judge
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