December 21, 2014

Law Week: New Federal Ethics Rule Precludes Colorado Attorneys Practicing in U.S. District Court from Assisting Clients in Complying with State Marijuana Laws

Editor’s note: This article originally appeared in Law Week Colorado on November 24, 2014. Reprinted with permission.

LipinskySmithBy Lino S. Lipinsky de Orlov and Mason J. Smith

On November 17, the U.S. District Court for the District of Colorado announced an amendment to its Local Rules that arguably will preclude members of the U.S. District Court bar from representing marijuana-related businesses. The U.S. District Court has opted out of comment 14 to Rule 1.2( d) of the Colorado Rules of Professional Conduct, which allows Colorado attorneys to assist clients with conduct-permitted under the Colorado marijuana laws, but not under federal law.

Under the new amendment to Local Rule D.C.COLO.L.Atty.R. 2(b)(2), which takes effect on December 1, practitioners in the U.S. District Court will be permitted to advise clients regarding the “validity, scope, and meaning” of Colorado’s marijuana laws, but may not “assist a client in conduct that the lawyer reasonably believes is permitted by” such laws. The U.S. District Court’s distinction between advice concerning the interpretation of Colorado’s marijuana laws and assistance with “conduct” creates a significant split in the ethical rules applicable to state and federal practitioners in Colorado.

Rule 1.2(d) of Colorado’s Rules of Professional Conduct prohibits attorneys from “counsel[ing]clients to engage, or assist[ing] a client, in conduct that the lawyer knows is criminal. . . .” Colo. RPC 1.2( d). Because the sale, use, and possession of marijuana remain illegal under the federal Controlled Substances Act, Rule 1.2(d) on its face prohibits Colorado attorneys from counseling or assisting clients who seek to comply with the state’s laws on medical and recreational marijuana. On March 24, 2014, the Colorado Supreme Court adopted comment 14 by a 5-2 vote in an attempt to resolve this issue. Comment 14 expressly allows lawyers to “assist a client in conduct that the lawyer reasonably believes is permitted by [Colorado’s marijuana-related] constitutional provisions” and their implementing statutes and regulations. (Emphasis added.) The lawyer, however, must also “advise the client regarding related federal law and policy.”

As we wrote in our article that appeared in the October 20, 2014 issue of Law Week Colorado, the U.S. District Court typically adopts Colorado’s Rules of Professional Conduct. In some instances, however, the Court opts out of particular sections of rules or comments based upon its own views on attorney ethics. On November 17, 2014, the Court made good on its October 10, 2014 proposal to opt out of comment 14. This comes as no surprise. The federal bench is no doubt uneasy about permitting attorneys to facilitate conduct that, while legal under state law, conflicts with federal law.

The Court’s language taking exception to comment 14 states that the Court will not adopt the comment, “except that a lawyer may advise a client regarding the validity, scope, and meaning of [the medical and recreational marijuana provisions of the Colorado Constitution] and the statutes, regulations, orders, and other state or local provisions implementing them. . . .” (Emphasis added). The exception also mirrors the state requirement that practitioners “also advise the client regarding related federal law and policy.”

The U.S. District Court has therefore drawn a fine line between generally “advising” a client and “assisting a client in conduct.” Presumably, the federal court’s version of Rule 1.2 permits an attorney to explain Colorado’s marijuana laws, but requires the attorney to stop short of facilitating compliance with such laws because—under these circumstances—compliance with state law would, in many cases, result in commission of a federal crime.

The other comments to Rule 1.2 provide limited guidance: “There is a critical distinction between presenting an analysis of legal aspects of questionable conduct and recommending the means by which a crime or fraud might be committed with impunity,” and “the fact that a client uses advice in a course of action that is criminal or fraudulent” is not enough by itself to make a lawyer a party to an illegal course of action. RPC 1.2 cmt. 9 (emphasis added). But this critical barrier between appropriate and sanctionable counseling remains unclear. Another comment to Rule 1.2 states, for example, that “a lawyer must not participate in a transaction to effectuate criminal or fraudulent avoidance of tax liability.” RPC 1.2, cmt. 10 (emphasis added). It seems that, by analogy, an attorney’s participation in lease negotiations regarding a property that will house a marijuana grow operation would be prohibited under the U.S. District Court’s rules, as would an attorney’s review and recommendations regarding a license for marijuana retail sale. Such legal work could, at least in theory, result in disciplinary action against federal litigators.

The U.S. District Court’s decision to opt out of comment 14 gives rise to two major issues. First, it creates a rift between attorneys admitted to practice only before the Colorado state courts and those attorneys admitted to practice in the U.S. District Court. Second, it leaves those attorneys subject to the federal rules guessing about the critical point at which legal advice becomes the facilitation of conduct. In any event, members of both bars should be cognizant of these inconsistent ethical standards as attorneys encounter more and more clients interested in diving into Colorado’s growing marijuana industry.

Until this issue is resolved, federal practitioners should be conservative in rendering any legal advice in connection with marijuana. All attorneys practicing in Colorado should at least advise all clients as to the illegality of marijuana under federal law. Those admitted to the federal bar should also, at the very least, avoid (1) participating directly in conduct that could technically constitute a federal crime or (2) affirmatively advising or encouraging clients to take specific courses of action regarding the growth, use, possession, or sale of marijuana.

Lino Lipinsky de Orlov is a litigation partner in the Denver office of McKenna Long & Aldridge, LLP.  He represents clients in all aspects of commercial litigation, mediation, arbitration, and appeals.  He has developed particular experience in complex business cases, particularly those involving creditor’s rights, real estate, trade secrets, and employment disputes.  Mr. Lipinsky also frequently speaks and writes on legal issues relating to technology, employment law, and ethics.   He is a member of the Colorado Bar Association’s Board of Governors and serves on the Board of the Colorado Judicial Institute.  He is Immediate Past President of the Faculty of Federal Advocates.  Among his honors, Chambers USA has recognized Mr. Lipinsky as one of Colorado’s leading general commercial litigators, and he has been included in The Best Lawyers in America.  He received his A.B. degree, magna cum laude, from Brown University and his J.D. degree from New York University School of Law, where he was a member of the New York University Law Review.

Mason Smith is an in-house attorney at Amazon.  He previously worked as an associate at the Denver office of McKenna Long & Aldridge, LLP and as an extern for the Hon. Judge Christine M. Arguello of the U.S. District Court, District of Colorado.  Mr. Smith is a graduate of The George Washington University Law School, where he was a member of The George Washington University Law Review.

The opinions and views expressed by Featured Bloggers on CBA-CLE Legal Connection do not necessarily represent the opinions and views of the Colorado Bar Association, the Denver Bar Association, or CBA-CLE, and should not be construed as such.

Colorado Supreme Court: Burden of Proof Does Not Shift Under Res Ipsa Loquitur

The Colorado Supreme Court issued its opinion in Chapman, M.D. v. Harner on Monday, December 8, 2014.

Allocation of the Burden of Proof Under Res Ipsa Loquitur.

In this case, the Supreme Court clarified the proper allocation of the burden of proof under the doctrine of res ipsa loquitur. Specifically, the Court resolved the tension between its fifty-six-year-old precedent in Weiss v. Axler, 137 Colo. 544, 559, 328 P.2d 88, 96-97 (1958), which held that the burden of proof shifts to the defendant once a plaintiff makes a prima facie showing of res ipsa loquitur, and the more recent adoption of CRE 301, which indicates that rebuttable presumptions such as res ipsa loquitur shift onto the defendant only the burden of production and not the burden of proof. After determining that this issue has remained unsettled since the adoption of CRE 301, the Court held that the burden of proof does not shift to the defendant under res ipsa loquitur. Accordingly, the Court reversed the court of appeals’ judgment.

Summary and full case available here, courtesy of The Colorado Lawyer.

Colorado Supreme Court: Forum Selection Clause Presents Question of Whether Jurisdiction is Reasonable Under Circumstances of Case

The Colorado Supreme Court issued its opinion in In re Nickerson v. Network Solutions, LLC on Monday, December 8, 2014.

CAR 21 Original Proceeding in Civil Case—Motion to Set Aside Default Judgment—Forum Selection Clause.

In this CAR 21 original proceeding, the Supreme Court held that the trial court erred in setting aside a default judgment as void for lack of jurisdiction due to a contractual forum selection clause purporting to divest Colorado courts of jurisdiction over the matter. A forum selection clause in a contract does not divest a court of personal or subject matter jurisdiction but instead presents the question of whether it is reasonable for the court to exercise its jurisdiction in the particular circumstances of the case. The Court also held that the trial court erred by failing to conduct an evidentiary hearing on damages before entering default judgment. The Court made this rule absolute and remanded the case to the trial court for further proceedings.

Summary and full case available here, courtesy of The Colorado Lawyer.

Colorado Supreme Court: Special Districts May Assign Right to Receive Fees to Private Party

The Colorado Supreme Court issued its opinion in SDI, Inc. v. Pivotal Parker Commercial, LLC on Monday, December 8, 2014.

Powers of Local Governments.

In this case, the Supreme Court held that the Special District Act, CRS §§ 32-1-101 to -1807, gives special districts the power to assign to private parties the right to receive revenue from development fees. The Court found that the power to assign revenue falls within the express power given to districts to “dispose of . . . real and personal property.” CRS § 32-1-1001(1)(f). It also concluded that under CRS § 32-1-1001(1)(n), the Act should be interpreted as empowering a district to act, not as a limitation on powers found elsewhere in the statute. The court of appeals therefore erred in finding that the power to “pledge” under CRS § 32-1-1001(1)(j)(I) necessarily restricts the power to assign. Accordingly, the Court reversed the court of appeals’ holding and remanded the case to that court for consideration of the other issues respondent raised on appeal, including whether petitioner was entitled to increase the fees.

Summary and full case available here, courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Abuse of Discretion for Trial Court to Deny Correction of Minor Error

The Colorado Court of Appeals issued its opinion in Reisbeck, LLC v. Levis on Thursday, December 4, 2014.

Quiet Title—CRCP 60(a).

Plaintiffs Reisbeck, LLCand Robert Jersin are the record owners of real property in Adams County (property). Reisbeck owns an undivided 85% interest and Jersin owns an undivided 15% interest in the property.

In 1947, defendant Arthur Levis obtained a right-of-way across the property for a “rail spur.” However, no rail spur was ever constructed on the property. To clear the record encumbrance, Reisbeck’s counsel commenced an action under CRCP 105 to quiet title to the property in Reisbeck and Jersin against any claims of Levis and all unknown persons claiming any interest in the property. Jersin was joined as an involuntary party plaintiff.

Defendants were served by publication, and no answers or responsive pleadings were filed. Reisbeck’s counsel moved for entry of default. The judgment form submitted named “Reisbeck, LLC” as plaintiff. However, Reisbeck, LLC does not exist; its proper name is Reisbeck Subdivision, LLC. The district court granted the motion and entered default judgment in plaintiffs’ favor. Following entry of judgment, Reisbeck’s counsel discovered the name error. He filed a motion under CRCP 60(a), seeking relief and asking the court to amend the judgment and correct the name. The court denied the request.

On appeal, plaintiffs argued it was an abuse of discretion to deny the request for relief. The Court of Appeals agreed. CRCP 60(a) is a safety valve allowing the district court to correct, at any time, an honestly mistaken judgment that does not represent the understanding and expectations of the court and the parties. Here, there was nothing in the record indicating that the error by counsel was anything other than an honest mistake. The corrected judgment would represent the parties’ expectation in pursuing the quiet title action and the court’s intention in issuing the judgment. No different or additional liability would be imposed on any existing defendant and no party previously not named would need to be added. The district court’s order was reversed and the case was remanded to amend the judgment.

Summary and full case available here, courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Default Judgment Improper Sanction for Nonappearance at Trial Where Attorney Present

The Colorado Court of Appeals issued its opinion in People in Interest of K.J.B. on Thursday, December 4, 2014.

Dependency and Neglect—Right to a Jury Trial—Appearance by Counsel but not Defendant.

The Park County Department of Human Services (department) took the subject child into protective custody, placed the child with her father, and filed a petition in dependency and neglect. Mother denied the allegations in the petition and requested a trial to the court. Shortly thereafter, mother filed two written demands for a jury trial. The court denied mother’s requests.

Until that point in the proceedings, mother had participated by telephone; however, she was ordered to personally appear for the adjudicatory trial. She failed to appear, but her counsel appeared on her behalf. The department requested that a default judgment be entered against mother for failing to personally appear. Without hearing evidence, the court sustained the department’s allegations under multiple provisions of CRS §19-3-102(1) and adjudicated the child dependent and neglected by default judgment. It also adopted a treatment plan for mother. Mother appealed the adjudicatory order.

Nonappearance at trial does not constitute a failure “to plead or otherwise defend,” and is not a reason on which entry of a default can be predicated. The court could have received evidence in mother’s absence and then rendered judgment. Because the trial court did not state the legal authority it relied on to enter default judgment against mother for failing to appear, the Court of Appeals inferred that the judgment was entered as a sanction against mother. Although the court has contempt powers under CRCP 107, the rule does not authorize default judgment as a sanction for contempt. The Court therefore held that the trial court exceeded its authority in entering the default judgment. The order was reversed and the case was remanded for a trial.

Summary and full case available here, courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Trial Delays Caused by Plaintiff’s Counsel Justified Dismissal with Prejudice

The Colorado Court of Appeals issued its opinion in Kallas v. Spinozzi, O.D. on Thursday, December 4, 2014.

Professional Negligence—Sanctions—Motion to Strike Expert—Failure to Prosecute—Motion to Continue.

Kallas filed this action against Spinozzi, a licensed optometrist, asserting claims of professional negligence, battery, and lack of informed consent arising from a procedure Spinozzi performed on her right eye. The court granted Spinozzi’s motion to dismiss the case with prejudice for failure to prosecute. This occurred after a three-year delay; after Kallas’s attorney refused to remove himself from the case despite serious health issues; after Kallas’s attorney refused to cooperate in production of documents and refused to schedule Kallas’s expert for deposition; and after Kallas’s attorney failed to appear for numerous hearings and trial.

On appeal, Kallas contended that the trial court abused its discretion by granting Spinozzi’s motion to strike Kallas’s expert. Trial courts have broad discretion to manage the discovery process, including the ability to impose sanctions. Here, Kallas failed to cooperate in scheduling her expert’s deposition and failed to produce her expert’s file; Kallas’s discovery violation was neither substantially justified nor harmless; and Spinozzi was unfairly prejudiced by Kallas’s uncooperative conduct. For those reasons, the sanction of striking Kallas’s expert was not an abuse of discretion, even though it ultimately led to the dismissal of the case.

Kallas also contended that the trial court abused its discretion when it dismissed her claims for failure to prosecute on the day of trial. In addition to failing to schedule the expert deposition, Kallas’s attorney failed to attend a court-ordered settlement conference; failed to appear at the mandatory pretrial readiness conference; and failed to file a trial management order, witness list, exhibit list, or jury instructions. Therefore, the trial court did not err in dismissing the case.

Kallas further argued that the trial court erred in denying her motion to continue the April 15 trial. The record supports the trial court’s finding that the health problems faced by Kallas’s counsel when he moved for a continuance were foreseeable. Moreover, the issues raised in Kallas’s motion for a continuance were the same issues that the trial court predicted and proactively tried to address months before. The record also supports the trial court’s finding that Spinozzi would be substantially prejudiced by a continuance of the trial date. For these reasons, the trial court did not abuse its discretion in denying Kallas’s motion for a continuance. The judgment was affirmed.

Summary and full case available here, courtesy of The Colorado Lawyer.

Tenth Circuit: Standing as Insurance Company’s Local Agent Not Enough to Prove Significant Defendant Requirement Under CAFA Removal Provision

The Tenth Circuit Court of Appeals issued its opinion in Woods v. Standard Insurance Co. on Monday, November 10, 2014.

Plaintiffs Brett Woods and Kathleen Valdes filed suit in New Mexico state court on behalf of themselves and a class of all others similarly situated, regarding premiums paid for insurance coverage for state employees who were not insured under the subject policies. Plaintiffs named three defendants: Standard Insurance Company, an Oregon company that agreed to provide the subject insurance coverage; the Risk Management Division of the New Mexico General Services Department (Division), the state agency that contracted with Standard and was responsible for administering benefits under the policies; and Martha Quintana, Standard’s customer service representative responsible for managing the Division’s account with Standard and providing customer service and account management to the Division and New Mexico state employees. Defendants moved to remove the action to federal district court pursuant to the provisions of the Class Action Fairness Act (CAFA), which allow removal of state class actions to federal court as long as minimal diversity is established and the amount in controversy exceeds $5 million. Plaintiffs objected to removal before a federal magistrate, claiming CAFA’s state action and local controversy provisions precluded removal. The magistrate remanded the case to state court, finding remand proper under the local controversy exception because Ms. Quintana was a local defendant from whom plaintiffs sought “significant relief.” The magistrate did not examine the amount in controversy to see if it met CAFA’s requirements. Defendants appealed the magistrate’s order of remand.

The Tenth Circuit first explained that Congress enacted CAFA to allow removal to federal court of certain class actions in which the class has more than 100 members, is minimally diverse, and the amount in controversy exceeds $5 million, in order to correct certain perceived abusive practices in state court by class plaintiffs. Exceptions to CAFA’s broad reach include cases in which primary defendants are states against which the district court may be foreclosed from ordering relief under the Eleventh Amendment, and also local controversies in which states have a strong interest in adjudicating disputes. Plaintiffs argued that because the Division is a primary defendant, CAFA’s exception applies. However, the Tenth Circuit disagreed, finding that the exclusion only applies where all primary defendants are states or state agencies. Because Standard is a primary defendant in this dispute, the CAFA exclusion does not apply. Plaintiffs also argue that Ms. Quintana is a significant local defendant. The Tenth Circuit examined whether Ms. Quintana’s conduct formed a significant basis for Plaintiffs’ claims, and whether Plaintiffs seek significant relief from her.

The Tenth Circuit noted that Ms. Quintana is only mentioned briefly in Plaintiffs’ 91-paragraph complaint, and found that Ms. Quintana’s standing as Standard’s only local agent was not enough to meet the significant defendant requirement. Plaintiffs do not allege it is part of Ms. Quintana’s job to collect of insurability, make coverage determinations, record who had purchased insurance coverage, or verify that employees were in fact receiving coverage, and their complaint does not suggest she ever collected or retained premiums, solicited employees to purchase insurance, enrolled state employees, or had any actual contact with Plaintiffs or other state employees. The sole basis of Plaintiffs’ complaint against Ms. Quintana is that she failed to discover the Division’s and Standard’s allegedly illegal conduct. Therefore, the Tenth Circuit concluded she was not a significant defendant and reversed the magistrate judge’s decision on this issue.

The Tenth Circuit found there was an actual dispute as to whether the amount in controversy met or exceeded the $5 million minimum for removal under CAFA. Therefore, it remanded to the magistrate for determination of whether the amount in controversy exceeds $5 million. If it does, Defendants have established federal jurisdiction under CAFA, and if it does not, the action must be remanded to state court.

F.R.A.P. 6 and Tenth Circuit Local Rules Amended

Rule 6 of the Federal Rules of Appellate Procedure, “Bankruptcy Appeals,” was amended, effective December 1, 2014. The changes to the rule incorporates the most recent numeric amendments to the bankruptcy rules, language was incorporated to include reference to electronic records, and the rule has been updated to include references to discretionary bankruptcy appeals in the Tenth Circuit per 28 U.S.C. § 158(d)(2).

The Tenth Circuit Local Rules were also amended, effective January 1, 2015. The changes to the Tenth Circuit Local Rules include changing references to accommodate electronic filing, moving all specific requirement for appendices to a single rule (Rule 30), adding a requirement that agency petitions include a list of parties to be served by the circuit clerk, outlining procedures for obtaining exemptions from electronic filing requirements, clarifications regarding citations to the record on appeal, and, most significantly, adding a rule that delineates requirements for appendices. The goal in adding Rule 30 was to move all requirements for appendices into one unified rule. Rule 30 requires electronic appendices for all retained counsel cases after January 1, 2015, except that one hard copy must be filed in the clerk’s office. Requirements for content and time of filing are delineated in the new rule, as well as options for seeking exemptions from the electronic filing requirement.

A memorandum issued by the Tenth Circuit explaining the changes to F.R.A.P. 6 and the Local Rules is available here. For a redline of the changes, click here.

Local Rules for U.S. District Court Amended Effective December 1, 2014

The U.S. District Court for the District of Colorado has made changes to its Local Rules, effective December 1, 2014. The Advisory Committee continues to revise the rules in its comprehensive review. The changes effective December 1 focus on stylistic changes to the criminal rules, converting pilot programs to local rules, and updating rules applicable to members of the bar.

The Advisory Committee will conduct a public forum in January 2015 in which to discuss these changes to the Local Rules and invite questions and comments from the bar. It will be held at the Alfred A. Arraj U.S. District Courthouse at an as yet undetermined date.

For the complete Local Rules effective December 1, 2014, click here. For a redline showing the changes to the Local Rules, click here.

Tenth Circuit: Damages Award on Default Judgment Upheld in Complex Litigation

The Tenth Circuit Court of Appeals issued its opinion in Niemi v. Lasshofer on Tuesday, November 4, 2014.

John Niemi, along with co-plaintiffs Robert Naegele, III, and Jesper Parnevik, was working on a large-scale development project in Breckenridge, Colorado, known as the Fairmont Breckenridge. Azco, LLC and Azco II, LLC, as well as Mesatex, LLC – companies run by Niemi, collectively known as the Azco entities – were the purchasers of the properties for the Fairmont. Based on the success of Phase I of the project, Niemi and the co-investors sought $200-$220 million in financing for Phase II. Defendants Lasshofer and Michael Burgess represented that they could provide financing for Phase II, but required the investors to agree to stop looking for other financing and to provide a $180,000 loan commitment fee. The investors agreed and wired the money. Following an extensive due diligence process, plaintiffs provided an additional $2 million “upfront collateral deposit” to Lasshofer and Burgess. The loan proceeds never materialized, despite repeated assurances from Burgess and Lasshofer that the funds were coming, and eventually Burgess was indicted on criminal fraud charges and sentenced to 180 months’ imprisonment. As part of his plea bargain, Burgess indicated that the funds from the investors were deposited in an account belonging to Innovatis Asset Management, SA (IAM), a company associated with Lasshofer. Burgess implicated Lasshofer as his co-defendant and stated that IAM was continuing to defraud investors. Even after Burgess’s arrest, Lasshofer continued to assure the investors that their funds were coming, but no money ever materialized.

The three investors met to discuss how they would recover from the fraud, and during the conversation Niemi, acting on behalf of the Azco entities, expressly assigned all causes of action and claims to Parnevik, Naegle, and himself. The three filed a Verified Complaint in April 2012, initiating the lawsuit and identifying the various parties and their relationships. The amended complaint filed in July 2012 alleged 17 claims for relief, including a claim under the Colorado Organized Crime Control Act (COCCA) against the Lasshofer defendants and a common law fraud claim against all defendants. In March 2012, the district court issued a TRO to guard against dissipation of the Lasshofer defendants’ assets, and in June 2012 the court issued a preliminary injunction, effectively freezing the worldwide assets of the Lasshofer defendants. After a hearing in March 2013, the court found the Lasshofer defendants to be in contempt of its June 2012 preliminary injunction. In a joint filing between the investors and the Lasshofer defendants, the Lasshofer defendants declared they would no longer devote resources to the case at the district court level, would not participate in discovery, and would not answer Plaintiffs’ amended complaint. The district court eventually entered default judgment against the Lasshofer defendants and awarded over $61 million to the plaintiffs, trebled to $185 million. Lasshofer appealed.

Prior to reaching the merits, the Tenth Circuit had to resolve issues related to its authority to decide the appeal. Plaintiffs had requested the Tenth Circuit to employ the “fugitive disentitlement doctrine” to dismiss the Lasshofer defendants’ appeal. The Tenth Circuit could find no circumstances that would warrant application of the doctrine. Plaintiffs also contend that the Lasshofer defendants must post a bond on the default judgment before appealing, but the Tenth Circuit disagreed, finding that would be sharply at odds with the rules of procedure. Since all issues were ripe due to the district court’s dismissal of claims with prejudice, the Tenth Circuit evaluated the merits of the appeal.

First, the Lasshofer defendants raised several issues related to the district court’s authority to hear the case. They contended (1) Plaintiffs lacked standing to bring their claims, and the district court thus lacked subject matter jurisdiction, (2) the court lacked personal jurisdiction over the Lasshofer defendants, and (3) venue was not proper in the District of Colorado. The Tenth Circuit first addressed the standing claim. Defendants argued that the plaintiffs were not proper parties, because the loan agreement listed Azco as the borrower. However, after reviewing the record, the Tenth Circuit was satisfied that plaintiffs possessed proper standing to bring their claims. The defendants argued that the Loan Agreement barred transfer of the right to sue, but the district court held, and the Tenth Circuit agreed, that the Loan Agreement was a tool of defendants’ broader fraudulent enterprise, and therefore its terms were void and unenforceable.

The Tenth Circuit likewise disposed of defendants’ arguments that the court lacked personal jurisdiction over them. Plaintiffs had many connections to Colorado, and although the Loan Agreement specified jurisdiction was proper in the District of New York, the defendants contended they would have disputed New York jurisdiction also. Therefore, the U.S. District Court for the District of Colorado was the proper venue for the claims. The court also concluded that sufficient minimum contacts existed to confer personal jurisdiction over Lasshofer.

Finally, defendants argued several errors in the determination of damages. The Tenth Circuit reviewed the record and found no error in the court’s calculation. After entry of default judgment, the court requested that plaintiffs present evidence regarding their damages. Plaintiffs presented two different damages calculations, based on two different methods of arriving at the damages amount, that were nearly identical in the total amount. The district court chose the actual damages and trebled it. There was no error in its decision.

The Tenth Circuit denied plaintiffs’ motion to dismiss based on the fugitive entitlement doctrine, denied defendants’ motion to file a surreply based on that motion, denied plaintiffs’ motion to require defendants to post a bond, and denied the requests to award fees and costs. The district court’s award of damages was affirmed, except to the extent it applied to one defendant that did not exist at the time of the controversy. The Tenth Circuit ordered the district court to vacate its order of contempt. The case was remanded for further proceedings.

Colorado Rules of Civil Procedure and Colorado Rules of Juvenile Procedure Amended

The Colorado Supreme Court announced Rule Change 2014(14), effective October 30, 2014, and 2014(15), effective November 1, 2014. Rule Change 2014(14) amends Rule 47, “Jurors,” of the Colorado Rules of Civil Procedure. Rule Change 2014(15) amends Rule 2.2, “Summons — Content and Service,” Rule 3, “Advisement,” and Rule 3.7, “Detention,” of the Colorado Rules of Juvenile Procedure, and it adds a new Rule 3.9, “Counsel.” The changes to the Rules of Juvenile Procedure coordinate with changes to the Colorado Revised Statutes pursuant to HB 14-1032.

C.R.C.P. 47(u), “Juror Questions,” was amended to clarify that juror questions will be reviewed with counsel for the parties outside the hearing of the jury, to permit jurors to ask follow up questions in writing, and to prohibit jurors from orally questioning any witness. The amendments specify that the court retains discretion to address juror questions or permit follow up questions. Click here for a redline of the changes to Rule 47.

The changes to the Rules of Juvenile Procedure are extensive. Rule 2.2 was amended to subdivide different types of juvenile proceedings and specify summons procedures for each type of proceeding. The changes to Rule 3 were relatively minor, adding language to clarify timing for the juvenile’s advisement and changing some wording. The changes to Rule 3.7 were much more extensive, detailing procedures for juvenile detention and court oversight of the detainer. New Rule 3.9, “Counsel,” deals with appointed counsel in juvenile delinquency proceedings, and includes provisions for appointment of counsel, waiver of counsel, and withdrawal of counsel. Click here for a redline of the changes to the Rules of Juvenile Procedure.

In addition to the rules changes, two Chief Justice Directives were amended to comply with HB 14-1032. The Colorado Supreme Court amended CJD 04-04 and added new CJD 14-01CJD 04-04 was amended to eliminate specified procedures related to the appointment of counsel in juvenile delinquency proceedings. CJD 14-01 was added to adopt new procedures for the appointment of defense counsel in juvenile delinquency proceedings. Both CJDs are effective November 1, 2014.