June 25, 2019

Archives for August 2013

Tenth Circuit: Failure to Disclose Pending Lawsuit to Bankruptcy Court Resulted in Dismissal of Suit Due to Judicial Estoppel

The Tenth Circuit Court of Appeals published its opinion in Queen v. TA Operating, LLC on Tuesday, August 20, 2013.

Plaintiffs Richard and Susan Queen (“Queens”) sued Defendant TA Operating, LLC (“TA”) in federal district court in Wyoming (“District Court Action”). They brought various claims against TA based on an injury Mr. Queen sustained when he slipped and fell in a parking lot operated by TA. During the course of the District Court Action, the Queens filed for Chapter 7 bankruptcy in California (“Bankruptcy Action”), but did not disclose the District Court Action in their bankruptcy filings. When TA discovered this failure, TA brought it to the attention of the trustee for the Bankruptcy Action (“Trustee”). The Queens subsequently amended their bankruptcy filings to include the District Court Action, but they provided an estimate of its value that was far below what they had indicated in the proceedings before the Wyoming district court, and they claimed that the lawsuit was entirely exempt. Subsequently, the Queens were granted a no-asset discharge in bankruptcy.

The district court granted summary judgment in favor of TA based on the doctrine of judicial estoppel because the Queens had not disclosed the lawsuit in their bankruptcy proceedings.

Because the Queens adopted an inconsistent position that was accepted by the bankruptcy court, and because the Queens would receive an unfair advantage if not estopped from pursuing the District Court Action, the Tenth Circuit held that it was not an abuse of discretion for the court to apply the doctrine of judicial estoppel and grant summary judgment in favor of TA. The court also rejected the Queens’ arguments of mistake and inadvertence, because the record showed that the Queens had knowledge of the claim and a motive to conceal it in their bankruptcy proceedings. The court affirmed the grant of summary judgment to TA.

Tenth Circuit: Whether a Note is a Security in Securities Fraud case is for Jury to Decide

The Tenth Circuit Court of Appeals published its opinion in United States v. McKye on Tuesday, August 20, 2013.

Defendant-Appellant, Brian William McKye, was charged with eight counts of securities fraud, in violation of 15 U.S.C. § 78j(b), and one count of conspiracy to commit money laundering. At trial, McKye tendered an instruction that would have permitted the jury to decide whether the investment notes at issue were securities under the federal securities laws. The district court refused to give McKye’s instruction, instead instructing the jury that the “term ‘security’ includes a note.” The jury convicted McKye on the conspiracy charge and seven of the fraud charges.

McKye argued the jury instruction was an incorrect statement of law because not all notes are securities, according to Supreme Court precedent holding notes are only presumed to be securities. Certain notes are not securities and a note “bearing a family resemblance” to those notes are also not securities. McKye also argued the jury should have decided whether the notes were securities, not the judge.

The Tenth Circuit held that “because the question of whether a note is a security is a mixed question of fact and law and because this jury was instructed that the Government was required to prove the instruments issued by Global West were securities as an element of its case, the district court erred when it instructed the jury that notes are securities.” The court found that the error was not harmless and reversed McKye’s conviction.

Contributing Mask for the Benefit of Denver Hospice is Equivalent to Fundraising

The Colorado Judicial Ethics Advisory Board issued Opinion 2013-04 on August 19, 2013.

The requesting judge was asked to contribute a handcrafted mask to The Mask Project, an annual fundraiser for Denver Hospice. Masks are created by artists, celebrities, sports figures, and community leaders, and an online auction identifies each mask’s creator. The judge’s mask would identify her as a judge, but she noted that she would not solicit contributions or bids. The judge wanted an opinion regarding whether contributing a mask to The Mask Project would violate Rule 3.7 of the Code of Judicial Conduct.

The Judicial Ethics Advisory Board opined that contributing the mask would indeed violate Rule 3.7, as it is the equivalent of fundraising or soliciting contributions for Denver Hospice. The Board noted that the clear language of Rule 3.7(A)(2) and (4) prohibits both active and passive fundraising for a non-law-related non-profit organization. Although the Board noted that the line between permissible and disallowed may not always be clear, it opined that there is no such uncertainty in this instance.

For more information about the Colorado Judicial Ethics Advisory Board, and for a complete list of its opinions, click here.

Tenth Circuit: $2.5 Million IRS Judgment Against Single Shareholder Not Barred by Ten-Year Statute of Limitations

The Tenth Circuit Court of Appeals published its opinion in United States v. Holmes on Friday, August 23, 2013.

The United States sued Mr. James Holmes seeking to collect a federal tax debt owed by the now-defunct corporate entity Colorado Gas Compression. Defendant Holmes was the sole shareholder of Colorado Gas prior to the entity’s demise. The district court granted final judgment in favor of the United States in the amount of $2,533,930.94. Holmes appealed that judgment. The United States cross-appealed from the district court’s decision regarding the date from which prejudgment interest would be awarded.

In his appeal, Mr. Holmes raised a single issue: whether the claims of the government were barred by the Colorado statute of limitations. The government argued that its claims were limited only by the ten-year statute of limitations of 26 U.S.C. § 6502(a). This was not the position that the government took in the district court. In the district court, the government argued its claim was not subject to any period of limitations, state or federal. Consequently, the court had to first decide whether to consider the argument raised for the first time on appeal.

The court decided to consider the government’s argument because the alternate argument was consistent with the record. Also, the government was seeking to affirm the district court’s judgment and not reverse it, and the government in this action was the appellee, rather than the appellant.

Mr. Holmes argued that assessments against Colorado Gas did not extend the government’s time to proceed against him personally, but only against his company. The IRS in response contended that these provisions merely provided it with an alternative way to pursue collection against a transferee, rather than prescribing a required method. The court held the government was correct: The collection procedures contained in § 6901 are not exclusive and mandatory, but are cumulative and alternative to the other methods of tax collection recognized and used prior to the enactment of  26 U.S.C. § 6901 and its statutory predecessors. The court held that the district court did not err in granting summary judgment to the government on the issue of Mr. Holmes’s liability as transferee for the taxes of his company.

In its cross-appeal, the government urged that the district court committed error in deciding the date from which prejudgment interest would accrue on the government’s recovery. The Tenth Circuit concluded, however, that this issue was not properly preserved for appeal, and the court accordingly declined to consider it.


Tenth Circuit: Unpublished Opinions, 8/26/13

On Monday, August 26, 2013, the Tenth Circuit Court of Appeals issued no published opinions and six unpublished opinions.

Villalobos v. Colvin

Ardizzone v. Jones

Chavez v. Trani

Jane Doe v. Heil

Williams v. Trammell

United States v. Lujan-Lopez

No case summaries are provided for unpublished opinions. However, published opinions are summarized and provided by Legal Connection.

Tenth Circuit: Unpublished Opinions, 8/23/13

On Friday, August 23, 2013, the Tenth Circuit Court of Appeals issued one published opinion and six unpublished opinions.

Henderson v. Parker

United States v. King

United States v. Alvarado-Bon

United States v. Escalante-Bencomo

Rodriguez v. State of Colorado

Cunningham v. University of New Mexico Board of Regents

No case summaries are provided for unpublished opinions. However, published opinions are summarized and provided by Legal Connection.

Counsel Appointment in Dependency & Neglect Language Added to CJD 04-05

The Colorado Supreme Court released amended Chief Justice Directive 04-05 in August 2013. CJD 04-05 addresses appointment and payment procedures for court-appointed counsel, guardians ad litem, child and family investigators, and court visitors appointed by the State Court Administrator’s Office.

Attachment B to CJD 04-05 was revised in August to include language regarding appointment of counsel for children subject to dependency and neglect proceedings. The counsel appointment is in addition to the GAL. No other changes were made to the Chief Justice Directive.

For the full text of CJD 04-05, click here. For all of the Colorado Supreme Court Chief Justice Directives, click here.

Colorado Court of Appeals: No Workers’ Compensation Prepayment of Meal and Hotel Expenses

The Colorado Court of Appeals issued its opinion in Winter v. Industrial Claim Appeals Office on Thursday, August 15, 2013.

Workers’ Compensation—Prepayment of Hotel and Meal Expenses.

In this workers’ compensation proceeding, claimant sought review of the final order issued by the Industrial Claim Appeals Office (Panel) in favor of his employer, the City of Trinidad, and its insurer, CIRSA, which upheld the denial of his request for prepayment of the hotel and meal expenses he incurred while traveling to see his authorized treating physician. The Court of Appeals affirmed.

Summary and full case available here.

Tenth Circuit: Unpublished Opinions, 8/22/13

On Thursday, August 22, 2013, the Tenth Circuit Court of Appeals issued no published opinion and two unpublished opinions.

Rouse v. Romero

Warner, Jr. v. Patterson

No case summaries are provided for unpublished opinions. However, published opinions are summarized and provided by Legal Connection.

Colorado Court of Appeals: Summary Judgment Not Appropriate Where Disputed Issue of Material Fact Exists

The Colorado Court of Appeals issued its opinion in CapitalValue Advisors, LLC v. K2D, Inc. on Thursday, August 15, 2013.

Summary Judgment—Severable Provisions in Contracts—Void Contracts.

Plaintiff CapitalValue Advisors, LLC, doing business as CapitalValue M & A, LLC (CapitalValue), appealed the district court’s orders granting summary judgment in favor of defendants, K2D, Inc., doing business as Colorado Premium Foods, and its owners, Kevin LaFleur and Don Babcock (collectively, CPF), and Triton Capital Partners, Ltd. (Triton). The Court of Appeals reversed and the case was remanded with directions.

CapitalValue is a capital advisory firm. In December 2008, CapitalValue and CPF entered into an engagement agreement (Agreement) whereby CapitalValue contracted to help sell K2D, Inc. or otherwise obtain funding to alleviate its seasonal cash flow shortages.

In July 2012, CPF hired Triton and terminated the Agreement with CapitalValue. CPF then obtained a $57 million line of credit from U.S. Bank. CapitalValue informed CPF that under a twenty-four-month “tail provision” in the Agreement, CPF owed it 4.5% of the total value of the loan. CapitalValue sued CPF, alleging breach of the Agreement, unjust enrichment, and tortious interference with contract and prospective business advantage. CPF counterclaimed, in part, asserting that because CapitalValue did not hold the requisite securities or real estate licenses, the Agreement was void. CapitalValue later amended its complaint, adding Triton as a defendant.

CPF and Triton filed summary judgment motions. CapitalValue responded that it was not a licensed securities or real estate broker at the time it entered the Agreement, but that securing the loan required no licenses and that portion of the Agreement was severable and enforceable. In a series of three orders, the district court granted CPF’s and Triton’s motions for summary judgment. CapitalValue appealed.

CapitalValue argued that it was error to conclude that, as a matter of law, the Agreement was not severable. The Court agreed. Contrary to CPF’s contention, the plain language of the Agreement provided that CapitalValue would seek to secure a loan on CPF’s behalf and would receive 4.5% of the total amount secured for “debt financing for [CPF].”

The Court then considered whether this portion of the Agreement was severable and enforceable. It disagreed with the district court’s conclusion that severing the Agreement would eviscerate real estate licensing laws. Rather, it concluded that the Agreement provided for multiple agreements, one of which was for help in obtaining debt financing. Even though the Agreement did not have a severability provision, whether the parties intended the Agreement to be severable was a disputed issue of material fact that precluded summary judgment.

CapitalValue also contended it was error to determine the Agreement was void because it violated state and federal securities laws. The Court agreed based on similar reasoning as its severability analysis. Because the Agreement contained multiple promises, each of which may constitute a separate agreement or contract, the fact that some of the agreements were void does not mean that the entire Agreement is void. The judgment was reversed and the case was remanded for further proceedings.

Summary and full case available here.

Colorado Court of Appeals: Announcement Sheet, 8/22/13

On Thursday, August 22, 2013, the Colorado Court of Appeals issued no published opinions and 32 published opinions.

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

Running Past Our Limits Update (Part 4): Find Your Placebo

rhodesLast summer I wrote a series on lessons we all can learn from marathon training. (You can find it in the archives.) This series responds to requests for an update.

My new AMT/Open Stride training got a boost when I surprised myself by going to an MS seminar and being glad I did. I’d gotten these invitations before and blew them off, but the topic was “dealing with MS through diet and exercise,” and I wanted to sharpen my edge.

What I got for starters was a surprising sense of community. It was odd to watch other people do the “get up from a chair” routine, and funny to hear a speaker talk about the characteristic MS “foot slap” and “toe stub.” We all laughed when another speaker acknowledged that EVERYONE views c-a-n-e as the “never-say-that-to-me-if-you-know-what’s-good-for-you” four-letter word. And it was good to know I’m not the only one who’s afraid I’ll get stopped for public drunkenness because of the way I walk sometimes. “Just use your cane,” someone said. “People will just assume you’re handicapped and not bother you.”

We weren’t just friends in that room, we were teammates with a common goal:  don’t give up. One woman whose symptoms had obviously gotten the best of her – she said she was on the anti-spaz drug, and was in one of those wheelchairs that holds you upright – won a door prize and took a loonnggg time to motor herself up to the front. We didn’t care, we just cheered. Plus, I saw “the look” on a couple faces. It’s my game face, the one I wear when I go to my workout. It was pretty scary – both to see it and to recognize it as my own.

The highlight for me came when a medical researcher talked about the placebo effect:  how people get well not from “real” treatment, but because they believe they will. “Find your placebo,” he advised. “if you think it will help you, it probably will.” I felt smug;  I’d already found mine. Is it crazy to believe that elliptical marathon training will get me across a finish line? No crazier than people getting better taking placebos. I’ll take another bottle of those, please, and I don’t care that they’re not covered by insurance.

I just finished a book called Mind Over Medicine: Scientific Proof That You Can Heal Yourself. The writer is Lissa Rankin, an M.D. who went kicking and screaming into non-traditional medicine after realizing that LOTS of people in placebo control groups get better. She realized that the typical attitude of “Isn’t that cute, those people got better taking sugar pills” misses what she ended up viewing as the mother lode.

Plus, she goes on to say, it’s not just what we believe, it’s also about making room in our lives for purpose and meaning, working with passion and living with joy, getting connected and making room for creative expression, and changing our circumstances when they turn toxic on us. All these things can heal both our bodies and our lives.

And our legal careers, too, I might add.

How about it? What’s your placebo for whatever is ailing you?

To be continued.


For more about Mind Over Medicine, see Dr. Rankin’s interview on The Good Life Project:  http://www.goodlifeproject.com/lissa-rankin-mind-medicine/.


Kevin Rhodes is a lawyer in private practice who’s on a mission to help people love their work and their lives. He leads workshops for a variety of audiences, including the CBA’s Solo and Small Firm Section and the Job Search and Career Transitions Support Group. You can email Kevin at kevin@rhodeslaw.com.