Dinnen V. Kneen: Case Study

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In Dinnen v. Kneen, No. 16–cv–00882–PAB–STV, 2017 BL 332704 (D. Colo. Sept. 19, 2017), the United States District Court for the District of Colorado granted PdC, LLC, Timothy Kneen, Michael Roberts, Timothy Flaherty, and Carl Vertuca (“Defendants”) Motion to Dismiss, finding that Michael W. DInnen’s (“Plaintiff”) Amended Complaint failed to sufficiently allege scienter in their Section 10(b) claim under the heightened pleading requirements of the Private Securities Litigation Reform Act (“PSLRA”). According to the Amended Complaint, Plaintiff alleged that Defendants made false and misleading statements, which led Plaintiff to invest in a luxury real estate project in Mexico. Plaintiff identified five broad categories that he alleged are considered misrepresentations from …show more content…

Therefore, the court evaluated the facts the Plaintiff provided and evaluated if they support a reasonable belief that the Defendants’ statements were misleading. The court held that (1) Defendants statement that Plaintiff would double his money is mere puffery and no reasonable investor would rely on such representations; (2) the table of financial projections must be viewed only as “estimates” and not binding, which do not demonstrate fraudulent intent; (3) the e-mail was not sent to Plaintiff. Therefore, it is not relevant to Plaintiff’s claim; (4) Because Defendants could not have disclosed the ongoing litigation at the time Plaintiff made first investment, Defendants did not violate the securities laws by failing to inform Plaintiff of litigation; (5) documents given to Plaintiff prior to investment expressly acknowledged potential challenges with respect to permitting. The false statements related to permits were not sent to Plaintiff before his decision to invest. Therefore, those misrepresentations are not actionable under the provisions of the Exchange act relied upon by the

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