Case 1:18-cv-03016-MSK-NYW Document 1 Filed 11/23/18 USDC Colorado Page 1 of 18

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

Civil Action No. 18-cv-3016

DAVID JOSHUA BARTCH,

Plaintiff,

v.

MACKIE A. BARCH, and

TRELLIS HOLDINGS MARYLAND, INC.,

Defendants.

COMPLAINT AND JURY DEMAND

PRELIMINARY STATEMENT

1. This is an action by Plaintiff David Joshua Bartch (“Josh”) against

Defendants Mackie A. Barch (“Mackie”) and Trellis Holdings Maryland, Inc. (“Trellis”)

seeking a declaratory judgment and asserting legal and equitable claims to recover for

Defendants’ theft of Josh’s 50% ownership rights in Trellis’s Class A Member interest in

Doctor’s Orders Maryland LLC (“DOMD”), n/k/a Culta, LLC, a Baltimore, Maryland

company whose business involves cultivation, processing, and retail dispensing of

medical cannabis. As a Class A Member of DOMD, Trellis currently owns at least a 35%

to 43% membership interest, 50% of which was stolen by Mackie and Trellis to enrich

themselves and to deprive Josh of its multi-million-dollar value.

2. Mackie is the sole owner, president, director, and alter ego of Trellis.
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Individually and on behalf of Trellis, Mackie agreed with Josh that they would hold legal

title to 50% of Trellis’s Class A Member interest for a time for the benefit of Josh, with an

obligation to transfer the interest back to Josh upon his demand.

3. Mackie has repeatedly re-affirmed the agreement and assured Josh that

upon his request Mackie would cause Trellis to transfer the DOMD Class A Member

interest Trellis holds for Josh’s benefit.

4. In late 2017, Josh requested that the interest be transferred. Mackie

responded by informing Josh that DOMD’s corporate counsel had instructed him to cease

all communications with Josh and to refuse to acknowledge that Trellis and Mackie had

any obligations to hold and transfer Josh’s 50% of Trellis’s Class A Member interest to

Josh. Despite repeated demands, Mackie and Trellis continue to refuse to acknowledge

and transfer Josh’s Class A Member interest in DOMD to him.

5. Accordingly, Josh has initiated this action for a declaration that Trellis holds

50% of its Class A Member interest on his behalf and is obligated to transfer it to him.

Josh also seeks an order directing Mackie and Trellis to specifically perform their

agreement by transferring that Class A Member interest to him. Alternatively, Josh seeks

a judgment against Mackie and Trellis for treble damages of not less than $32.250 million

for civil theft and for compensatory damages of not less than $10.75 million for

conversion, breach of trust, and breach of contract.

JURISDICTION AND VENUE

6. Jurisdiction is proper under 28 U.S.C. § 1332(a) because the amount in

controversy exceeds $75,000 and there is complete diversity between, on the one hand,

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Josh, a Colorado resident, and, on the other hand, and Mackie, a Maryland resident and

Trellis, a Maryland corporation with its principal place of business in Maryland.

7. Venue is proper over Mackie and Trellis under 28 U.S.C. § 1391 because

Josh’s legal and equitable claims arise out of breaches of trust and of contractual and tort

duties which the defendants committed in the State of Colorado.

PARTIES

8. Josh is a resident and citizen of the State of Colorado.

9. Mackie is a resides at 10303 Montgomery Avenue, Kensington, Maryland.

10. Trellis is a Maryland corporation with its principal place of business located

at Mackie’s residence. Mackie formed Trellis on April 24, 2017 to take over the ownership

of the DOMD Class A Membership interest of Mackie and Josh.

11. Mackie is Trellis’s sole owner, director and resident agent.

12. Mackie exercises complete dominion and control over Trellis and as such

is its alter ego and personally responsible and liable for its actions.

GENERAL ALLEGATIONS

13. Josh began working in the legal cannabis industry in 2009 when he founded

Doctors Orders, LLC (“DO Denver”) to become a licensed medical marijuana provider in

Denver, Colorado, which had enacted legislation authorizing the cultivation, processing,

and dispensing of medically-prescribed marijuana.

14. When DO Denver became a successful and thriving business, Josh decided

that he should expand the medical marijuana business into states that were enacting laws

to authorize and license medical marijuana businesses. To accomplish the expansion

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Josh formed Doctors Orders Group, LLC, a Delaware company based in Denver,

Colorado, which he then would use to establish Doctors Orders medical marijuana

businesses in several of these states.

15. In 2015, Josh learned that the previous year, Maryland had adopted and

was implementing legislation to authorize and license medical marijuana providers. The

Maryland Medical Cannabis Commission (the “Commission”) was established to issue

cultivation, processing, and dispensary licenses, and hundreds of companies were filing

competing applications for these valuable licenses.

16. To expand into Maryland, Josh was introduced to and recruited Mackie to

become part of Doctors Orders Group. Mackie was paid to work fulltime to spearhead the

expansion of a Doctors Orders medical marijuana business into Maryland.

17. Mackie frequently traveled to Doctors Orders Group’s office in Colorado to

work with Josh on developing DOMD.

18. Josh and Mackie immediately began to develop a team of preeminent

Maryland investors and professionals whose ownership and affiliation with DOMD would

enhance its chances to be selected and approved by the Commission from among the

several hundred competing applicants to become a licensed medical marijuana provider.

19. In June 2015, through his company Evolutionary Ventures, LLC, Josh hired

and paid the Baltimore, Maryland law firm Neuberger, Quinn, Gielen, Rubin & Gibber,

P.A. (“Neuberger Quinn”) to form DOMD as the Doctors Orders entity to become a

medical marijuana provider in Maryland.

20. Josh also hired two other law firms to assist him in the formation of DOMD’s

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business: Gracin & Marlow, LLC, a corporate and securities law firm located in New York

City, and Vicente Sederberg, LLC, a Denver law firm experienced in marijuana licensing.

21. On June 8, 2015, Neuberger Quinn filed DOMD’s Articles of Incorporation,

initially locating DOMD’s office at the firm’s office in Baltimore and appointing Brian Flank,

a member of the firm, as DOMD’s resident agent. Shortly thereafter, Flank changed

DOMD’s office to 10303 Montgomery Avenue, Kensington, Maryland, which was Mackie’s

residence.

22. On July 6, 2015, Josh asked Neuberger Quinn to form DO Maryland OP,

LLC (“DO Maryland”) as the investment vehicle through which Josh would own his interest

in DOMD.

23. Also on or about July 6, 2015, Neuberger Quinn prepared Operating

Agreements for DOMD and DO Maryland which, among other things, appointed Josh as

the manager of both companies.

24. Vicente Sederberg later prepared an Operating Agreement for DOMD

which, among other things, provided for Josh and his group to become the sole Class A

member of DOMD through DO Maryland’s ownership of 70% of DOMD, the majority

interest, with and Glenn and Tyler Weinberg to become the sole Class B member through

TJ Health LLC, a Maryland LLC, owning the other 30%.

25. Josh was introduced to and recruited the Weinbergs through a consultant

of Josh’s to become DOMD investors. Glenn Weinberg’s investment and affiliation with

DOMD was considered to be of particular value because Glenn was well known in

Maryland as a principal in and former vice president of the The Cordish Companies, a

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very large and prominent Baltimore-based international development company that

owned businesses in Maryland and numerous other states and foreign countries. Glenn

also was a director of the Weinberg Family Foundation, a well-known charitable

foundation associated with the Associated Jewish Community Federation of Baltimore.

26. The Weinbergs were issued Class B Member interests representing a 30%

interest in DOMD solely in consideration of their willingness to affiliate with DOMD and to

use their prestige to enhance DOMD’s license applications. The Weinbergs had no

obligation to contribute capital for their interest. To further enhance DOMD’s selection

prospects, Glenn Weinberg agreed to become DOMD’s Chief Executive Officer.

27. Mackie introduced Josh to Jeff Black and Josh then recruited Black to

become a DOMD investor. Black was a prominent Maryland restauranteur and principal

in the Black Restaurant Group, which owns and operates restaurants in Maryland and the

District of Columbia. Mackie believed Black’s affiliation with DOMD, like that of the

Weinbergs, would appreciably enhance the prospects of DOMD’s approval as a licensed

medical marijuana provider in Maryland. Black agreed to become the Chief Operating

Officer of DOMD. Black had no obligation to contribute capital for his DOMD interest

either.

28. In June 2015 Josh engaged through Doctors Orders Group Baltimore

County Delegate Dan Morhaim, M.D., a prominent Maryland legislator who had

championed the Maryland Medical Marijuana legislation, to act as DOMD’s consultant

and to lobby in favor of DOMD’s approval as a licensed medical marijuana provider.

Morhaim formed Whitebridge Assocates, LLC to act as his consulting company and to

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execute the consulting agreements.

29. Between June and October 2015 Mackie and Josh, with the assistance of

Morhaim, also recruited a number of prominent Maryland medical professionals to serve

as DOMD board and advisory board members to enhance the prospects of DOMD’s

approval as a licensed medical provider. These professionals included Brian Avin, M.D.,

Michael Auerbach, M.D., Fred Burke, M.D., Debra Furr-Holden, M.D., Neil Goldberg,

M.D., Mary Lyn McPherson, BCPS, CPE, Sanford Siegel, M.D., James Andrew Sumner,

M.D. and Gloria Williams, M.S.

30. In the meantime, in November 2014, Josh had entered into a two-year

deferred judgment for misdemeanor drug possession, which would expire in November

2016. Accordingly, upon the advice of Vicente Sederberg, Josh, Mackie, Black, and

Ashley Peebles, who was an owner with Josh in DO Denver, agreed that DO Maryland,

Josh’s ownership vehicle, should be restructured to name Jeff Black and Ashley Peebles

is its members and Jeff Black as its manager in lieu of Josh. They further agreed that DO

Maryland would hold its Class A Member interest in DOMD for a time for Josh’s benefit.

31. To effect the restructuring agreement, Vicente Sederberg prepared a DO

Maryland Limited Liability Company Agreement, dated November 6, 2015, that provided,

among other things, that Black was a member owning 75%, Peebles was a member

owning 25%, and Black was the managing member. It also prepared a First Amendment

to DOMD’s Operating Agreement which was executed by Josh, DO Maryland, TJ Health

and Vicente Sederberg that, among other provisions, confirmed the issuance of 7,205

Class A units to DO Maryland, now representing 65.5% ownership; 3,300 Class B

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Member units to TJ Health, representing 30% ownership; and admitting Vicente

Sederberg through a newly formed company, VS Holdings LLC, as a Class D Member to

own a 4.5% interest that Josh carved out of DO Maryland’s 70% ownership as

compensation for its services and advice to Josh with respect to restructuring DO

Maryland to effectuate Josh’s agreement with Mackie, Black, and Peebles.

32. The Weinbergs refused to sign DOMD’s Amended and Restated Operating

Agreement until Josh executed a November 5, 2015 agreement that the Weinbergs had

prepared that required that Josh and Black, for themselves, and DOMD itself, agree to

offer the Weinbergs the opportunity to acquire up to 30% of any New Business

Opportunities they might pursue related to their marijuana businesses, except in Oregon

and Colorado, where Josh already had established medical marijuana businesses.

33. While not on paper as a DOMD owner, in November 2015, in connection

with preparing DOMD’s amended operating agreement, Neuberger Quinn determined

that, based upon DOMD’s accountant’s records, Josh’s capital contributions should be

included in DOMD’s Amended and Restated Operating Agreement and reflected as

approximately $251,000. That determination was based upon the accountant’s

determination that as of November 2015, Josh had made capital contributions through

payment of DOMD expenses of approximately $251,000, and that another $130,000 was

due and unpaid. As of that time, Mackie, Black, and Peebles had made no capital

contributions to DOMD.

34. To further enhance DOMD’s prospects and raise needed capital, the

Weinbergs recommended that they bring in their neighbor and close friend Herbert P.

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“Herb” Wilkins, Jr., a prominent businessman in Maryland to invest in DOMD.

35. Josh and Mackie negotiated with Wilkins to have DOMD issue a Class C

Member interest to Wilkins through his newly formed company, Morris Medical LLC, in

consideration of $1 million, which would be payable only upon pre-approval of DOMD’s

licensing application. Wilkins contributed the $1 million of capital when DOMD received

pre-approval of its licenses in 2016.

36. Vicente Sederberg ultimately filed DOMD’s applications for licenses. As

noted, the Commission issued pre-approvals of the licenses in 2016.

37. During 2016 Josh agreed that Mackie should share 50% of the Class A

Member interest held by DO Maryland for Josh.

38. In addition, Black informed Josh and Mackie that Black’s tax accountant had

advised him that he risked adverse tax consequences because of his membership in DO

Maryland and agreement to hold and transfer the Class A member interest to Josh upon

the expiration of the deferred judgment.

39. To avoid Black’s tax risks, they agreed that DO Maryland’s operating

agreement would be amended. Accordingly, on January 23, 2017, Josh and Mackie

signed a memorandum, a copy of which is attached as Exhibit A, memorializing their

agreement that upon issuance of DOMD’s final licensing they would prepare a new

operating agreement removing Black as DO Maryland’s manager and allocating the

ownership of its Class A Member interest in DOMD as follows: 4.75% to Jeff Black; 1.5%

to Ashley Peebles; 26.875% to Mackie; and 26.875% to Josh.

40. As part of the above agreement, and because of Black’s possible tax risks,

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they agreed that DOMD, or if it failed to do so, DO Maryland, would pay the costs of any

state or federal audit that resulted because Black held Josh’s interest through DO

Maryland.

41. Later, they agreed that DO Maryland’s Class A member interest should be

transferred out of DO Maryland into a new entity. To accomplish that transfer, on April 24,

2017, Mackie formed Trellis to hold the Class A member interest for Josh and Mackie.

Black’s 4.75% interest was issued through JB Maryland Medical, LLC. Peebles’ 1.5%

interest was issued through Panda Consulting, LLC.

42. In January 2017, Josh, Mackie, and other DOMD investors decided to seek

other investors or to sell an interest in DOMD to raise capital because of the anticipated

millions of dollars required to build out DOMD’s cultivation, processing, and retail

dispensary operations. They prepared an investment memorandum with a schedule of

five-year financial projections that estimated DOMD would generate revenues and

EBITDA as follows:

a. 2017: Revenue of $1,108,464 and EBITDA of ($715,058)

b. 2018: Revenue of $13,579,254 and EBITDA of $6,172,371

c. 2019: Revenue of $26,903,462 and EBITDA of $14,549,410

d. 2020: Revenue of $38,317,262 and EBITDA of $21,940,855

e. 2021: Revenue of $47,168,566 and EBITDA of $27,823,433

43. To help DOMD in its efforts to raise capital, Josh, among other efforts, found

a potential investor, Liberty Health Sciences USA. Liberty was an affiliate of Aphria, a

publicly-traded Canadian medical cannabis company.

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44. Josh, Mackie, and Wilkins flew to Toronto to meet with Aphria officials and

Scott Gelbard, a Canadian colleague of Josh’s and Mackie’s who introduced them to

Aphria and helped arrange the meeting.

45. The group eventually negotiated terms by which Liberty Health would

acquire 65% of both DOMD and DO Health Massachusetts, LLC.

46. Mackie sent Josh an email listing the assets of Trellis for Josh to present to

the potential acquirers. In so doing, Mackie understood and acknowledged that Josh was

presenting for potential purchase his and Josh’s shared DOMD ownership interest held

by Trellis. The “Trellis Holdings Asset List” that Mackie sent Josh for this purpose lists, in

addition to assets in Colorado, Oregon, and Massachusetts, their 54.5% interest in

“Maryland Retail, Cultivation, Processing, Real Estate – 10 Washington St., Cambridge,

MD,” which was a reference to their shared Class A Member interest in DOMD.

47. The so-called “Liberty Deal” eventually resulted in draft letters of intent, with

which Mackie was extensively involved.

48. On June 22, 2017, Mackie emailed Scott Gelbard with the latest offer from

the potential acquirers: a total value in cash and stock of $10,636,354.30 for what Mackie

referred to as “our piece.” Mackie’s reference to “our piece” was the 54.5% Class A

Member interest held by Trellis for Mackie and Josh. Mackie’s reference to the

$10,636,354.30 for Mackie and Josh’s “piece” reflected Liberty’s offer of approximately

$25 million in total.

49. Mackie, Glenn Weinberg, Wilkins, and Black decided to reject Liberty’s $25

million offer as inadequate to reflect the value of DOMD, which they believed was at least

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$40 million.

50. Following that failed effort to raise capital through a sale to Liberty, Mackie

and the Weinbergs undertook efforts to raise capital from a group of almost two dozen

wealthy investors. They were successful in selling Class E Member interests in DOMD

representing a 10% ownership at a pre-money valuation of $50 million.

51. Following the offering, in June 2017, DOMD adopted a Second Amendment

and Restated Operating Agreement that, among other provisions, set forth the DOMD

Members and their ownership interest in DOMD. According to the Agreement, Trellis’s

Class A Member interest was diluted by the sale of the Class E Member interests from its

previous ownership of 53.750% in DOMD to an ownership interest of 43.1537%. At the

pre-money valuation of $50 million for the Class E Member interests, Trellis’s Class A

Member interest was worth at least $21.5 million, 50% of which is $10.750 million.

52. Inexplicably, and without any explanation (because Mackie ceased

communications upon DOMD’s counsel’s instructions), since the above-referenced

offering Mackie has claimed that Trellis’s Class A Member interest has been further

diluted to a purported 35% even though no other members’ interests has been diluted

since the offering.

53. DOMD used the $10 million of capital raised from the Class E offering to

complete construction of its warehousing, cultivation, and dispensaries. With its final

licensing approval, DOMD became fully operational in 2018 with the opening of its

Baltimore retail dispensary. Based upon these events, Josh estimates that the current

valuation of DOMD is at least between $50 and $60 million. As a result, Mackie and

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Trellis’s refusal to transfer 50% of Trellis’s Class A Member interest to him is causing him

to suffer losses of at least $10.750 million if not more than $13.0 million.

54. Consistent with Josh’s agreement with Mackie, Josh requested that Mackie

have Trellis transfer his 50% share of Trellis’s Class A Member interest in DOMD to him.

Mackie was instructed by DOMD’s counsel to cease communications with Josh and to

refuse to acknowledge or transfer Josh’s Class A Member interest held by Trellis.

55. Notwithstanding and following Mackie’s refusal to acknowledge and transfer

Josh’s Class A Member interest to him, Wilkins began negotiating with Josh to buy Josh’s

interest. Those negotiations continued until DOMD’s counsel learned of them and

instructed Wilkins to cease communications and negotiations with Josh.

56. Because of Mackie’s refusal to acknowledge and transfer 50% of Trellis’s

Class A Member interest to Josh pursuant to their agreement, Josh has initiated this

action seeking the declaratory, equitable, and legal relief set forth below.

FIRST CLAIM FOR RELIEF

(Declaratory Judgment)

57. Josh incorporates the allegations set forth above.

58. Josh has requested, but Mackie and Trellis have refused, to acknowledge

that pursuant to their agreement Trellis holds 50% of its Class A Member interest in

DOMD for the benefit of Josh and is now obligated to transfer such interest to him

pursuant to his request.

59. By reasons of Mackie and Trellis’s actions, an actual controversy exists

between Josh, on the one hand, and Mackie and Trellis, on the other hand, as to Trellis’s

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and Mackie’s obligations to hold and transfer Josh’s ownership interest in DOMD to him.

60. Accordingly, Josh seeks a judgment declaring that Trellis legally holds and

is obligated to transfer 50% of Trellis’s Class A Member interest to him.

SECOND CLAIM FOR RELIEF

(Civil Theft)

61. Josh incorporates the allegations set forth above.

62. Mackie and Trellis acquired the Class A Membership interest in DOMD with

the intent and purpose of holding 50% of the interest for Josh to be returned to Josh at a

later time.

63. Mackie and Trellis have refused to convey the interest to Josh after demand

and thereby have knowingly and intentionally exercised unauthorized dominion and

control over the interest for the purpose of enriching themselves by permanently depriving

Josh of the interest.

64. Accordingly, Mackie and Trellis have committed civil theft under C.R.S. 8-

1-401 and are liable to Josh for treble damages, plus attorneys’ fees.

THIRD CLAIM FOR RELIEF

(Conversion)

65. Josh incorporates the allegations set forth above.

66. Josh has a right to ownership and is the true owner of the 50% of Trellis’s

interest in DOMD that Mackie, through Trellis, holds for him.

67. Mackie and Trellis intentionally have refused to acknowledge and surrender

this property to Josh upon Josh’s lawful demand.

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68. In refusing to return Josh’s ownership interest in DOMD, Mackie and Trellis

have acted, and are acting, in bad faith.

69. As a result of Mackie and Trellis’s conversion of Josh’s property, Josh has

been damaged, and continues to suffer damages, in an amount to be determined at trial.

FOURTH CLAIM FOR RELIEF

(Constructive Trust)

70. Josh incorporates the allegations set forth above.

71. Mackie, and through him, Trellis, acquired Class A Membership interest in

DOMD with the understanding and purpose that he would receive 50% of the interest for

himself and would hold the remaining 50% for Josh.

72. It would be inequitable for Mackie and/or Trellis to retain the 50% that

rightfully belongs to Josh.

73. By operation of law, therefore, Mackie and/or Trellis holds Josh’s 50% in

trust for Josh.

74. Josh accordingly seeks judicial recognition of a constructive trust for his

benefit.

FIFTH CLAIM FOR RELIEF

(Specific Performance for Breach of Contract)

75. Josh incorporates the allegations above.

76. Mackie and Trellis agreed that Trellis would hold 50% of the Class A

Membership interest held by Trellis for the benefit of Josh.

77. All conditions precedent to Mackie and Trellis’s obligation to perform have

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been fulfilled.

78. Upon Josh’s demand, Mackie and Trellis refused to transfer the Class A

Membership interest in DOMD and thereby breached their agreement with Josh.

79. The Class A Membership interest is a property interest with unique value.

80. Accordingly, Josh seeks an order requiring Mackie and Trellis to specifically

perform their agreement and transfer Josh’s Class A Membership interest to him.

SIXTH CLAIM FOR RELIEF

(Damages for Breach of Contract)

81. Josh incorporates the allegations above.

82. Mackie and Trellis agreed that Trellis would hold 50% of the Class A

Membership interest held by Trellis for the benefit of Josh.

83. All conditions precedent to Mackie and Trellis’s obligation to perform have

been fulfilled.

84. Upon Josh’s demand, Mackie and Trellis refused to transfer the Class A

Membership interest in DOMD and thereby breached their agreement with Josh.

85. The Class A Membership has a current value of more than $10.5 million.

86. Accordingly, Josh demands damages from Mackie and Trellis of at least

$10.750 million for their breach of contract.

SEVENTH CLAIM FOR RELIEF

(Unjust Enrichment)

87. Josh incorporates the allegations above.

88. Josh conferred a valuable benefit upon Mackie, and through Mackie, Trellis,

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in the form of an ownership interest in DOMD.

89. Mackie and Trellis have accepted, enjoyed the benefit of, and retained the

ownership interest Josh conveyed to them.

90. It would be inequitable for Mackie and Trellis to retain the benefit without at

least paying the value of Josh’s interest to Josh.

WHEREFORE, Josh requests judgment in his favor as follows:

a. Declaring that Trellis and Mackie hold 50% of Trellis’s Class A

Membership interest for Josh’s benefit and must forthwith transfer the

interest to Josh;

b. Ordering Trellis and Mackie to specifically perform the parties’

agreement by transferring 50% of Trellis’s Class A Membership interest

to Josh;

c. Awarding Josh compensatory damages of not less than $10.750 million;

d. Awarding Josh treble damages of not less than $32.250 million for civil

theft, plus costs and attorneys’ fees;

e. And/or awarding Josh such other relief as the Court deems just and

appropriate.

DEFENDANT DEMANDS A JURY TRIAL ON ALL ISSUES SO TRIABLE

November 23, 2018.

s/ Paul H. Schwartz

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James E. Nesland
LAW OFFICES OF JAMES E. NESLAND
4252 E. Caley Avenue
Aurora, Colorado 80016
(303) 807-9449
jenesland@comcast.net

Paul H. Schwartz
Jonathan A. Helfgott
SHOEMAKER GHISELLI + SCHWARTZ LLC
1811 Pearl Street
Boulder, Colorado 80302
(303) 530-3452
pschwartz@sgslitigation.com
jhelfgott@sgslitigation.com

Attorneys for Plaintiff David Joshua Bartch

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