February 21, 2019

Colorado Court of Appeals: If More than Six Years Have Elapsed Since Entry of Judgment, Judgment Creditor Must Revive Judgment Prior to Asserting Lien

The Colorado Court of Appeals issued its opinion in Security Credit Services, LLC v. Hulterstrom on Thursday, January 24, 2019.

Civil Procedure—Creditors and Debtors—Judgments—Judgment Liens—Revival.

In 2010, the district court entered a money judgment in favor of plaintiff. In 2017, Marshall Recovery II LLC (Marshall) filed notice with the district court that it had purchased the money judgment from plaintiff. Soon thereafter, but more than six years after entry of the judgment, Marshall moved under C.R.C.P. 54(h) to revive the judgment. The district court denied the motion.

On appeal, Marshall argued that the trial court erred in denying its request to revive the judgment. A creditor may obtain a judgment lien at any time during the 20-year life of the judgment, but if more than six years have passed since entry of the judgment, the creditor must first revive the judgment and record the transcript of the revived judgment. This is true whether or not the judgment creditor previously obtained a judgment lien. Here, not more than 20 years had passed since the judgment entered, so Marshall was entitled to revive the judgment to obtain a judgment lien.

The order denying the motion was reversed and the case was remanded to address the motion

Summary provided courtesy of Colorado Lawyer.

HB 14-1302: Providing Additional Judicial Remedy for Creditors When Debtor Fraudulently Transfers Property

On March 4, 2014, Rep. John Buckner and Sen. Mike Johnston introduced HB 14-1302 – Concerning the Addition of a Judgment Against a Debtor or Transferee who Acts with Actual Intent as an Available Remedy for a Creditor in a Fraudulent Transfer Action. This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

The bill allows a creditor to seek a judgment in a fraudulent transfer action for 1.5 times the value of the asset transferred or for 1.5 times the amount necessary to satisfy the creditor’s claim, whichever is less, together with the creditor’s actual costs, against any debtor or transferee who acts with actual intent to hinder, delay, or defraud a creditor, either alone or in conspiracy with another. The bill also specifies that a judgment may not be entered against a person other than the debtor unless that person also acts with wrongful intent and that a judgment may not be entered unless a court of competent jurisdiction enters or has entered a judgment or order establishing the validity of the creditor’s claim against the debtor.

The bill has passed 3rd Reading in both the House and Senate and is headed to the governor’s desk for action.

Colorado Court of Appeals: In Garnishment Action, Earnings Exemption Does Not Apply to Independent Contractor Since Indebtedness Owed to Contractor Not Earnings

The Colorado Court of Appeals issued its opinion in Idaho Pacific Lumber Co., Inc. v. Celestial Land Co. Ltd. on Thursday, September 26, 2013.

Judgment—Creditor—Debtor—Garnishment—Independent Contractor—Exemption—Writ of Assistance.

Plaintiff Idaho Pacific Lumber Company, Inc. (judgment creditor) appealed the trial court’s order in favor of Celestial Land Company Limited (garnishee) regarding a debt it owed defendant Jack B. Kaufman (judgment debtor). The order was affirmed in part and reversed in part, and the case was remanded.

Judgment creditor served garnishee with a writ of garnishment on personal property and a writ of continuing garnishment for any debt owed to judgment debtor. Garnishee, who was an independent contractor rather than an employee, answered the writs on the basis that the debt owed to judgment debtor constituted earnings, and therefore only 25% was subject to garnishment.

On appeal, judgment creditor contended that the trial court erred in concluding that the debt owed to judgment debtor by garnishee constituted earnings under CRS § 13-54.5-101(2)(a)(I). Because indebtedness owed to an independent contractor is not earnings, the exemption was inapplicable.

Judgment creditor also contended that the trial court erred by denying its motion for a writ of assistance to collect all of judgment debtor’s property. There is no Colorado authority that supports judgment creditor’s request for such a broad writ of assistance under CRCP 69. Accordingly, the trial court did not err in denying judgment creditor’s motion for a writ of assistance. Finally, judgment creditor’s request for attorney fees pursuant to CRCP 103(8)(b)(5) was denied.

Summary and full case available here.

Colorado Court of Appeals: Personal Injury Plaintiff Should Receive Statutory Interest on Damages, Not Market Rate Interest

The Colorado Court of Appeals issued its opinion in Averyt v. Wal-Mart Stores, Inc. on Thursday, January 17, 2013.

Post-Judgment Interest Rate Personal Injury Tort Case.

In general, if a plaintiff obtains a money judgment in a personal injury tort case, CRS § 13-21-101(1) requires the trial court to add post-judgment interest to the amount of damages the jury awards, at the rate of 9%, compounded annually. However, if the judgment debtor appeals the money judgment, then the court must calculate post-judgment interest at a market-determined rate. This appeal raised the question of whether the exception applies when the judgment creditor—here, the plaintiff—appeals after (1) the jury has awarded the plaintiff money damages; (2) the trial court enters judgment in plaintiff’s favor; (3) the judgment debtor—here, the defendant—files a motion for a new trial; and (4) the trial court grants the defendant’s motion for a new trial and vacates the judgment. In this case, the applicability of the exception is particularly meaningful because the post-judgment interest rate established by the general rule is much higher than the market determined rate (9% versus 3%). The Court of Appeals held that the exception did not apply and affirmed the trial court’s judgment.

Holly Averyt drove a commercial truck. She slipped and fell on grease-coated ice on a loading dock when she was making a delivery to Wal-Mart Stores, Inc. (Wal-Mart). The fall ruptured a disc in her spine and injured her shoulder and neck, rendering her unable to do her job and unable to control her bladder or bowel.

Averyt sued Wal-Mart for negligence and premises liability. The jury returned a verdict in her favor, assessing total damages at $15 million. In December 2010, the trial court entered judgment and reduced the damages to $9,866,250 to reflect the statutory cap on noneconomic damages. Wal-Mart moved for a new trial based on an evidentiary issue, and the motion was granted. Averyt sought relief in the Supreme Court under CAR 21. The Supreme Court reversed the trial court’s order granting Wal-Mart a new trial.

In February 2012, the trial court entered judgment for the driver in the amount of $9,866,250, pre-judgment interest in the amount of $2,794,788.47, and costs of roughly $45,000. It also awarded post-judgment interest at the statutory rate of 9%, accruing from December 1, 2010 and compounding annually until the judgment was satisfied. Wal-Mart appealed.

Wal-Mart argued that the premises liability verdict was not supported by sufficient evidence. However, the Court found sufficient facts in the record to support the verdict.

Wal-Mart also argued that the market-based interest rate of 3% should apply. It contended that the trial court should have treated Averyt’s CAR 21 original proceeding after the trial court vacated the judgment (an appeal by the judgment creditor) like an appeal by a judgment debtor for the purposes of determining the rate of post-judgment interest. The Court disagreed. CRS § 13-21-101(1) refers only to judgment debtors, not to judgment creditors. The 9% rate was affirmed.

Averyt contended that she should be awarded attorney fees because Wal-Mart’s appeal was frivolous. The Court disagreed. The appeal was not frivolous because there was a basis for Wal-Mart’s argument.

Summary and full case available here.

Colorado Court of Appeals: C.R.S. § 38-38-111(2) Does Not Bar Garnishment of Excess Foreclosure Funds by Judgment Creditor

The Colorado Court of Appeals issued its opinion in TCF Equipment Finance, Inc. v. Public Trustee for the City and County of Denver on Thursday, January 17, 2013.

Writ of Garnishment by Judgment Debtor on Public Trustee Foreclosure Funds.

The Public Trustee for the City and County of Denver (Public Trustee) appealed the trial court’s order upholding a writ of garnishment served by TCF Equipment Financial, Inc. (TCF) for the purposes of collecting on a judgment against a judgment debtor, Matthew Gold, whose property had been foreclosed on by the Public Trustee. The order was affirmed.

TCF obtained a judgment against Gold that was not satisfied. TCF seized Gold’s commercial equipment, which satisfied a portion of the judgment. A month before entry of judgment, Gold’s real property was foreclosed on by the mortgaging bank. The foreclosure sale yielded substantial excess funds. The redemption period expired, and the excess funds were held in escrow by the Public Trustee. The parties agree that TCF could not have filed a notice to redeem, or attempted to participate in the foreclosure sale, because the foreclosure predated the judgment. However, TCF sought to garnish the funds held by the Public Trustee before their return to Gold.

The Public Trustee argued that, pursuant to CRS § 38-38-111(2), the Public Trustee has a legal obligation to return any excess funds to the judgment debtor after the expiration of the redemption period. The trial court disagreed, finding the garnishment was for funds remaining after the foreclosure had been completed.

On appeal, the Public Trustee argued that during a foreclosure, a judgment creditor cannot use garnishment as a means to gain priority over a judgment debtor, because the foreclosure statute clearly specifies excess proceeds are to be distributed to the judgment debtor. The Court of Appeals disagreed. CRCP 103(13) provides for the garnishment of a public body, and CRCP 103(2)(a) spells out the garnishment procedure. TCF contended it is a judgment creditor and that CRS § 38-38-111(2) is not the sole method to recover excess funds generated from a foreclosure sale. The Court agreed, holding that a judgment creditor’s garnishment claim filed after the close of the redemption period in a foreclosure sale is not barred by the foreclosure statute.

The Court found that TCF was not a junior lienor in the foreclosure proceeding. However, once the Public Trustee determined that the overbid funds were to be paid to the owner, garnishment of those funds is outside the foreclosure procedure. The garnishment statute provides a mechanism for a judgment creditor to reach the judgment debtor’s assets possessed by a third party. If the legislature had intended to prohibit garnishment actions commenced after a foreclosure sale, it could have done so. The Court found no reason to treat the Public Trustee any differently than any other entity holding funds of a judgment debtor.

Summary and full case available here.