August 19, 2017

Archives for May 26, 2017

Rules of Civil Procedure and Rules for Magistrates Amended in Rule Change 2017(06)

On May 25, 2017, the Colorado Supreme Court adopted Rule Change 2017(06), which amends Rule 52 of the Colorado Rules of Civil Procedure and Rules 5 and 6 of the Colorado Rules for Magistrates. The changes are effective July 1, 2017.

Rule 52 was amended to change the last sentence, which now provides that “Findings of fact and conclusions of law are unnecessary on decisions on motions under Rule 12 or 56 or any other motion except as provided in these rules or other law.” Previously, it read “Findings of fact and conclusions of law are unnecessary on decisions of motions under Rule 12 or 56 or any other motion except as provided in Rule 41(b).” A new 2017 comment explains the reason for the change:

The final sentence of the former version of the rule, “Findings of fact and conclusions of law are unnecessary on decisions of motions under Rule 12 or 56 or any other motion except as provided in Rule 41(b),” was replaced because of requirements for findings and conclusions in rules other than Rule 41(b) and in some statutes. Regardless, judges are encouraged to include in decisions on motions sufficient explanation that would be helpful to the parties and a reviewing court. Thus, even where findings and conclusions are not required, the better practice is to explain in a decision on any contested, written motion the court’s reasons for granting or denying the motion.

C.R.M. 5 was amended to add a subsection (g) and renumber the prior subsection (g) as (h). Subsection (g) reads as follows:

(g) For any proceeding in which a district court magistrate may perform a function only with consent under C.R.M. 6, the notice — which must be written except to the extent given orally to parties who are present in court — shall state that all parties must consent to the function being performed by the magistrate.

(1) If the notice is given in open court, then all parties who are present and do not then object shall be deemed to have consented to the function being performed by the magistrate.

(2) Any party who is not present when the notice is given and who fails to file a written objection within 7 days of the date of written notice shall be deemed to have consented.

C.R.M. 6(a)(1)(I) was amended by changing statutory references within the subsection and changing the Act cited from the Uniform Act for Out-of-State Parolee Supervision to the Interstate Compact for Adult Offender Supervision. Additionally, a new subsection (f) was added to C.R.M. 6, which reads, “A district court magistrate shall not perform any function for which consent is required under any provision of this Rule unless the oral or written notice complied with Rule 5(g).”

For a redline of Rule Change 2017(06), click here. For all of the Colorado Supreme Court’s adopted and proposed rule changes, click here.

Colorado Court of Appeals: Securities Company Not Liable for Outside Bad Acts of Its Broker

The Colorado Court of Appeals issued its opinion in Houston v. Southeast Investments, N.C., Inc. on Thursday, May 18, 2017.

InvestmentsColorado Securities ActControl Person Liability.

Sorenson created and owned 1st Consumer Financial Services, Inc. (CFS). Around early 2011 Sorenson hired Hornick to work for CFS. Southeast Investments N.C., Inc. (Southeast) was an authorized and registered broker-dealer of securities at all relevant times. In February 2013 Sorenson signed an independent contractor agreement and registered representative agreement with Southeast that prohibited him from engaging in business activities not involving Southeast without disclosing such activities to Southeast and obtaining written approval. In spring 2013 Houston, a retired, unmarried woman, agreed to Hornick’s requests and liquidated her entire retirement savings and transferred the money into a self-directed IRA account to be managed by Hornick. Ultimately these funds were invested in CFS and Houston was unable to obtain a return of the money. Houston sued a number of parties under various theories of liability, including a control person liability claim against Southeast. The district court concluded that, as a matter of law, Southeast was not a control person with regard to Sorenson’s conduct underlying Houston’s securities fraud claim, and Southeast was entitled to summary judgment.

The sole issue on appeal was whether the district court erred in granting summary judgment for Southeast, based on its conclusion that, as a matter of law, Southeast was not liable as a control person under C.R.S. § 11-51-604(5)(b) of the Colorado Securities Act (the Act). A plaintiff establishes a prima facie case of control person liability where the plaintiff demonstrates that (1) a primary violation of securities fraud occurred and (2) the defendant was a controlling person. As a general rule, a broker-dealer is statutorily in control of its registered representatives as a matter of law. However, a broker-dealer is not in statutory control of its registered representative’s underlying conduct when all of the following factors are undisputed: (1) the plaintiff did not reasonably rely on the registered representative’s relationship with the broker-dealer in making plaintiff’s investment; (2) the plaintiff invested in markets other than those promoted by the broker-dealer; (3) the registered representative did not rely on its relationship with the broker-dealer to access the securities market to sell the subject securities to the plaintiff; and (4) the broker-dealer did not know of, or have a financial interest in, the investor’s business with the registered representative.

Here, Sorenson hid his conduct from Southeast by failing to notify Southeast of his outside securities sales on behalf of CFS and by using undisclosed, private email accounts to engage in the subject transactions. No one from Southeast knew about Sorenson’s involvement with Houston. Sorenson did not use Southeast’s access to the securities markets to promote or conduct his deals with Houston (through Hornick), because CFS was a private venture created and owned by Sorenson. Southeast never held any of Houston’s money because Sorenson never opened a Southeast account for Houston. Southeast accordingly had no financial interest in Houston’s investments with Sorenson. Houston did not rely on Sorenson’s relationship with Southeast in deciding to invest with Sorenson. Thus, Southeast was not in control of Sorenson with respect to his conduct underlying this case, and Southeast was entitled to judgment as a matter of law on the issue of control.

The judgment was affirmed.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Property Stored in Evidence Locker Is Not Owned by County

The Colorado Court of Appeals issued its opinion in People v. Berry on Thursday, May 18, 2017.

Sheriff’s DeputyEmbezzlementPublic PropertyOwnershipOfficial Misconduct.

Berry was a sheriff’s deputy when he responded to a domestic violence call involving a husband and his wife. Four guns were removed from the home while the domestic violence charges were pending. After those charges were resolved, the district attorney authorized the sheriff to either destroy the guns or return them to their rightful owner. Because the owner (the husband) had been deported from the United States, the sheriff could not return them to him, so the sheriff planned to destroy them. Instead, before the guns were destroyed, Berry purchased them from wife. A jury found Berry guilty of embezzlement of public property and first degree official misconduct.

On appeal, Berry argued that the evidence admitted at trial was insufficient to support a guilty verdict on the embezzlement charge. He asserted that the statute under which he was charged requires proof that the guns were owned, not merely possessed, by the county, and there was no such evidence. A person is culpable under C.R.S. § 18-8-407(1) only if he knowingly converts public moneys or property to his own use or to any use other than the public use authorized by law. Because there is no evidence that Lake County or any other public entity owned the guns, there was insufficient evidence to support Berry’s conviction for embezzlement.

Berry also contended that the evidence didn’t sufficiently prove that he committed “an act relating to his office but constituting an unauthorized exercise of his official function,” an element of first degree official misconduct. Here, Berry committed an act relating to his office because he used his office as a sheriff’s deputy to facilitate and effectuate the purchase of the guns. Berry followed the wife in his police car, spoke to her while in full police uniform, and gave her comfort that, because he was a police officer, the transaction was lawful. Thus, sufficient evidence supports the official misconduct conviction.

The judgment for conviction for embezzlement of public property was vacated and the case was remanded for entry of a judgment of acquittal on that charge. The judgment of conviction for first degree official misconduct was affirmed.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Announcement Sheet, 5/25/2017

On Thursday, May 25, 2017, the Colorado Court of Appeals issued no published opinions and 20 unpublished opinions.

Neither State Judicial nor the Colorado Bar Association provides case summaries for unpublished appellate opinions. The case announcement sheet is available here.

Tenth Circuit: Unpublished Opinions, 5/25/2017

On Thursday, May 25, 2017, the Tenth Circuit Court of Appeals issued no published opinion and nine unpublished opinions.

United States v. Aparicio

Wright v. State of Colorado

Hays v. Berryhill

United States v. Garcia

United States v. Mowery

McMiller v. Corrections Corp. of America

Booth v. Davis

Rollins v. Finch

Lee v. Berryhill

Case summaries are not provided for unpublished opinions. However, some published opinions are summarized and provided by Legal Connection.