Murren v Schaeffer

[2018] NZHC 2320

IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY

I TE KŌTI MATUA O AOTEAROA WHAKATŪ ROHE

CIV-2015-442-028

[2018] NZHC 2320

BETWEEN

JAMES JOSEPH MURREN as trustee of the JAMES J. MURREN SPENDTHRIFT

TRUST and DANIEL LEE
Plaintiffs/Respondent

AND

GLENN SCHAEFFER

Defendant/Applicant

Hearing:	3 September 2018
Counsel:	A J Horne and A E Simkiss for Plaintiffs/Respondent A R Shaw and C W Martin for Applicant/Defendant
Judgment:	4 September 2018

JUDGMENT OF CHURCHMAN J

Introduction

[1]    The plaintiffs, Mr Murren and Mr Lee, and the defendant, Mr Schaeffer, are all American citizens. They have a mutual background in the casino industry in the United States. They were once friends.

[2]    In 2000, Mr Schaeffer acquired an interest in a company now known as Woollaston Estates Holdings Ltd which owned and operated a vineyard and winery at Upper Moutere, Nelson.

[3]    In 2002, Mr Schaeffer approached Mr Murren and Mr Lee about investing in the vineyard and winery enterprise. The parties entered into an agreement and the plaintiffs contributed capital to the enterprise.

MURREN & ANOR v SCHAEFFER [2018] NZHC 2320 [4 September 2018]

[4]    In 2006, a further agreement was entered into and subsequent further capital contributions were made.   It is alleged that Mr Murren paid US$1,600,813.92 to   Mr Schaeffer between 2002 and 2008 and that Mr Lee paid US$700,406.96 during the same period.

The proceeding

[5]    On 16 June 2015, the plaintiffs filed a statement of claim against the defendant alleging:

(a)breaches of the Fair Trading Act 1986;

(b)negligent misstatement;

(c)deceit;

(d)fraudulent misrepresentation; and

(e)violation of the Nevada Deceptive Trade Practices Act.

[6]    The pleadings were refined in  a  first  amended  statement  of  claim  dated 22 January 2018. However, the issues remained the same relating to Mr Schaeffer’s conduct in soliciting investment funds from Mr Murren and Mr Lee and the use to which the funds provided by Mr Murren and Mr Lee were put, together with the issue of whether he complied with promises allegedly made by him to the plaintiffs.

The mediation

[7]    The parties, along with their various legal advisors, attended a mediation in Auckland before Warren Sowerby on 10 August 2017.

[8]    It is alleged that Mr Lee made threats to Mr Schaeffer during the course of the mediation. There is a dispute as to exactly what was said. Mr Schaeffer’s recollection is that Mr Lee said if Mr Schaeffer did not give his money back, he would bury him in the desert like in the old days, would destroy his children’s lives, bankrupt his ex-wife and kill his three show dogs. Aspects of Mr Schaeffer’s recollection are

supported by affidavits of others, including an affidavit of Paul Donald Le Gros dated 4 April 2018.

[9]    Mr Lee’s recollection is that he said that if a dispute such as the present one had arisen between Las Vegas gaming executives in the “old days”, Mr Schaeffer might have ended up buried in the Nevada desert. He said that after saying this he also said that things were…