IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

Judge Christine M. Arguello

Civil Action No. 11-cv-02678-CMA

In re:

DAVID A. MASCIO, d/b/a DM CAPITAL, INC., MASCIO ASSET MANAGEMENT, INC.,

MASCIO ASSET MANAGEMENT, LLC, and

MONICA L. MASCIO,

Debtors,

DM CAPITAL, INC., f/k/a MASCIO ASSET MANAGEMENT, INC.,

DAVID MASCIO, and MAM CAPITAL, LLC.,

Appellants,

v.

PAUL GRONEWOLLER and

GRONEWOLLER & ASSOCIATES, INC.,

Appellees.

ORDER AFFIRMING BANKRUPTCY COURT’S ORDER

This matter is before the Court on Appellant David Mascio’s (“Mascio”) appeal

of a Bankruptcy Court’s Order that awarded damages to Appellee Paul Gronewoller

(“Gronewoller”) in the amount of $183,641.17. See In re Mascio, Bankruptcy No. 03-

12994, Adversary No. 03-1482, 2011 WL 4527350, at *4 (Bankr. D. Colo. Sept. 29,

2011) (unpublished). This Court has jurisdiction to review the final orders and

judgments of the Bankruptcy Court pursuant to 28 U.S.C. § 158(a)(1), (c)(1) and

Fed. R. Bankr. P. 8001(e), 8002. 

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 This is Mascio’s third appeal to the district court in this case, and the second to this Court. 

In this Court’s prior order, issued on March 30, 2011, the Court set forth the relevant facts and

the lengthy procedural history of this case. See In re Mascio, 454 B.R. 146, 148-151 (D. Colo.

2011). The Court incorporates the background section of its March 30, 2011 Order herein and

will provide only those facts necessary to resolve the issue raised in this appeal. 

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 In December of 2001, Gronewoller filed a lawsuit against Mascio in state court. Shortly

before that case went to trial, Mascio filed for bankruptcy relief, and Gronewoller commenced

this adversary proceeding in June of 2003 under 11 U.S.C. § 523(a).

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I. BACKGROUND1

Mascio owned and operated a business called Mascio Asset Management, Inc.

(“MAM”), which provided financial and investment advisory services. Gronewoller met

Mascio in January of 2000 and they decided to form MAM Capital, LLC (“Capital”),

which would be the successor company to MAM and would provide similar services. 

To capitalize the new company, Gronewoller formed an entity called Gronewoller &

Associates, Inc. (“Associates”). 

Associates and MAM entered into an Asset Purchase and Contribution

Agreement (the “Agreement”) on October 1, 2000, pursuant to which (1) Associates

would purchase a 49% interest in certain MAM assets for $164,640, and (2) the assets

would be contributed and assigned to Capital. Associates, through Gronewoller,

transferred the $164,640 to MAM on January 1, 2001, as was required by the

Agreement. 

In this adversary proceeding, Gronewoller claims that he was induced to

purchase his 49% stake in Capital by Mascio’s fraudulent representations that MAM

was worth more than it actually was.2

 On May 13, 2010 the Bankruptcy Court issued

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 Under Colorado law, “the measure of damages in [fraud] cases is the ‘benefit of the bargain’

rule, designed to give a plaintiff his or her expectation interest for loss of bargain.” Ballow v.

PHICO Ins. Co., 878 P.2d 672, 677 n.5 (Colo. 1994). Thus, a plaintiff is entitled to receive “the

difference between the actual value of the property and what its value would have been had the

representation been true.” Otis & Co. v. Grimes, 48 P.2d 788, 791 (Colo. 1935). 

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an order, finding that Gronewoller was entitled to $150,355 in benefit of the bargain

damages.3

 (Doc. # 21-5.) Mascio appealed. On March 30, 2011, this Court affirmed

the Bankruptcy Court’s determination that Gronewoller was entitled to recover benefit of

the bargain damages; however, the Court found that the Bankruptcy Court erred when

calculating damages by considering evidence of value at times other than the date of

purchase. See In re Mascio, 454 B.R. 146, 154 (D. Colo. 2011). Thus, the Court

remanded the case to the Bankruptcy Court for re-calculation of damages, instructing

that “Gronewoller should receive 49% of the difference between the actual value of the

company and the represented value of the company on the date of purchase.” Id. 

On remand, the Bankruptcy Court awarded Gronewoller $183,641.71 in

damages. See In re Mascio, 2011 WL 4527350, at *4. Pursuant to this Court’s March

30, 2011 Order, the Bankruptcy Court arrived at this damages amount by taking 49% of

the difference between the actual value of MAM and the represented value of MAM. Id. 

In calculating the actual and represented value of MAM, the Bankruptcy Court used

January 1, 2001 – the date that Gronewoller transferred the $164,640 – as the “date

of purchase.” 

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 Mascio raises three other issues that were raised in the previous appeal to this Court. 

Mascio asserts that he includes those issues in his opening brief for notice purposes to

preserve them for appeal to the Tenth Circuit. (Doc. # 15 at 4.) Thus, the Court will not address

those issues in this Order. 

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II. DISCUSSION

In this appeal, Mascio’s only argument is that the Bankruptcy Court erred by

using January 1, 2001 as “the date of purchase.”4

 Mascio contends that October 1,

2000 – the effective date of the Agreement – was the date of purchase and should have

been used to calculate damages. The Court declines to consider the merits of Mascio’s

argument because the Court agrees with Gronewoller that it is inappropriate for Mascio

to raise this argument for the first time on appeal. 

The first time that this case was appealed to the district court, the court

remanded the case for the Bankruptcy Court to expressly evaluate whether Gronewoller

had waived his state law claim of fraud, and to determine the proper measure of

damages, if any, on Gronewoller’s claim of nondischargeability of Mascio’s debt under

§ 523(a)(2)(A). See In re Mascio, No. 06-cv-01780, 2007 WL 3407516, at *7 (D. Colo.

Nov. 13, 2007) (unpublished). The Bankruptcy Court then issued an order on February

25, 2009, finding that Gronewoller was entitled to benefit of the bargain damages. 

(Doc. # 21-4.) Notably, the Bankruptcy Court ordered that the record be reopened

“for the limited purpose of allowing the parties to present evidence regarding the value

of the investment as represented and the actual value of the investment in January

2001.” (Id. at 13) (emphasis added). Thus, Mascio knew, or should have known, that

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the Bankruptcy Court was intending to determine the represented and actual values of

MAM based on the date of payment in January of 2001. 

At the subsequent hearing on damages, held on August 12, 2009, Gronewoller

testified that he believed the purpose of the trial was “to provide evidence regarding the

value of the investment as represented and the actual value of the investment on

January – in January of 2001.” (Doc. # 21-2 at 5:9-11.) Despite his knowledge that

both Gronewoller and the Bankruptcy Court were using January 1, 2001 as the date of

purchase, Mascio never argued that this was error. Rather, during closing statements,

Mascio asserted that the actual value of MAM “was higher than what [Mascio] actually

represented in August, in October, and again in January.” (Id. at 46:14-17) (emphasis

added.) 

After the hearing, the Bankruptcy Court issued its order on May 13, 2010, finding

that Gronewoller was entitled to $150,355 in benefit of the bargain damages. (Doc.

# 21-5.) In that order, the Bankruptcy Court again used January 1, 2001 as the date of

purchase. (Id. at 8.) Although Mascio appealed the Bankruptcy Court’s May 13, 2010

Order on other grounds, Mascio failed to argue that the Bankruptcy Court erroneously

used January 1, 2001 as the date of purchase. (See In re Mascio, No. 10-cv-01501-

CMA, “Opening Brief of Appellant,” Doc. # 7.) As a result of Mascio’s failure to dispute

the date of purchase, this Court used “date of payment” and “date of purchase”

interchangeably as the Bankruptcy Court had done throughout this lengthy adversary

proceedings.

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[T]he Bankruptcy Court should have looked at the actual and represented

value of the company on the date of payment. Under Colorado law,

Gronewoller is entitled to receive the difference between the actual value

of the property at the time of purchase and its value at that time had the

representation been true. In the damage calculation, the Bankruptcy

Court averaged all of the represented value estimates testified to by

Gronewoller without filtering the evidence so that it pertained only to the

represented value at the time of purchase. Under Colorado law, values

prior to or subsequent to the date of payment are irrelevant. Although

the Bankruptcy Court’s decision to average the various represented

values is understandable given that Gronewoller testified to numerous

values, it was error for the Bankruptcy Court to consider evidence of value

at times other than the date of purchase. 

In re Mascio, 454 B.R. at 154 (internal citations and quotation marks omitted and

emphasis added).

Thus, January 1, 2001 has consistently been used as the “date of purchase” for

the purpose of calculating damages. Mascio never objected to using January 1, 2001

as the date of purchase prior to the instant appeal. As a result, Mascio cannot now

argue that January 1, 2001 is not the date of purchase for purposes of calculating

damages. See McDonald v. Kinder-Morgan, 287 F.3d 992, 999 (10th Cir. 2002)

(“It is clear in this circuit that absent extraordinary circumstances, we will not consider

arguments raised for the first time on appeal.”). As the Tenth Circuit has explained,

“a party may not lose in the [trial court] on one theory of the case, and then prevail on

appeal on a different theory.” Id. (quoting Lyons v. Jefferson Bank & Trust, 994 F.3d

716, 722 (10th Cir. 1993). Mascio has not identified any extraordinary circumstances

that would justify an exception to the rule that an appellate court should generally refrain

from considering arguments raised for the first time on appeal. 

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Accordingly, the Court will affirm the Bankruptcy Court’s order because Mascio’s

only claim of error – that the Bankruptcy Court erred by using January 1, 2001 as the

purchase date – was raised for the first time in this appeal. 

III. CONCLUSION

 For the foregoing reasons, it is ORDERED that the September 29, 2011 Order

of the Bankruptcy Court is AFFIRMED. 

DATED: July 12 , 2012

BY THE COURT:

_______________________________

CHRISTINE M. ARGUELLO

United States District Judge

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