United States Securities and Exchange Commission v. Collector's Coffee Inc.

Background

The SEC brought this action against Collector’s Coffee Inc., doing business as Collector’s Café, and Mykalai Kontilai, alleging violations of federal securities laws through investor fraud. Kontilai was identified as CCI’s founder, president, and chief executive officer.

The opinion states that CCI’s only assets of value were original contracts signed by Jackie Robinson. CCI’s secured creditors—SDJ Investments, LLC; Adobe Investments, LLC; and Darren Sivertsen, as trustee of the Sivertsen Family Trust U/A/D 10/01/2002—intervened and claimed ownership of the contracts. They asserted that the contracts had been used as collateral for approximately $6 million in loans to CCI, which were in default.

The Jackie Robinson Foundation, Inc. replaced the Los Angeles Dodgers, LLC as an intervenor-defendant after the Dodgers gifted its rights in the contracts to the Foundation. The Foundation then filed a crossclaim seeking a declaration that it, rather than CCI, owned the contracts.

Motions

The secured creditors moved for summary judgment on the second cause of action for declaratory relief. They sought rulings that the Jackie Robinson Foundation and the Los Angeles Dodgers had no rights in the contracts, that CCI had clear title and ownership when it pledged the contracts as collateral, and that the secured creditors held a first-position perfected interest in them.

The Jackie Robinson Foundation cross-moved for summary judgment against the creditors’ motion and in support of its own claim for a declaration that it owned the contracts.

Court’s Analysis

Magistrate Judge Gabriel W. Gorenstein recommended that both motions be denied and that the declaratory-judgment claims proceed to trial. No party objected to the recommendation, and more than fourteen days had passed after it was served.

Judge Marrero reviewed the record, the parties’ motion papers, the recommendation, and the applicable law. He concluded that the recommendation’s factual and legal analysis was not clearly erroneous or contrary to law and adopted the recommendation in its entirety.

Disposition

The court adopted the Report and Recommendation dated May 22, 2023, in full. It denied the summary-judgment motion filed by Adobe Investments, LLC, SDJ Investments, LLC, and Darren Sivertsen as trustee of the Sivertsen Family Trust U/A/D 10/01/2002. It also denied the Jackie Robinson Foundation’s summary-judgment motion. The opinion states that the declaratory-judgment claims will proceed to trial.