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Colorado Court of Appeals Opinions
May 23, 2013

The Court of Appeals summaries are written for the Colorado Bar Association by licensed attorneys Teresa Wilkins (Denver) and Paul Sachs (Steamboat Springs). Please note that the summaries of Opinions of the Colorado Court of Appeals are provided as a service by the Colorado Bar Association and are not the official language of the Court. The Colorado Bar Association cannot guarantee the accuracy or completeness of the summaries.

2013 COA 74. No. 09CA0903. People v. Hopkins.
Aggravated Motor Vehicle Theft—Prior Convictions—Element—Due Process—Class of Felony.

Defendant appealed the judgment of conviction entered on a jury verdict finding him guilty of aggravated motor vehicle theft in the first degree. The Court of Appeals affirmed the judgment.

Based on proof that defendant had two prior convictions involving theft of a motor vehicle, the court ruled that the current charge was punishable as a class 3 felony and sentenced defendant to ten years in prison. Defendant contended that proof of his prior convictions is an element of the class 3 felony and that the trial court erred when it did not submit this element to the jury for its determination beyond a reasonable doubt. Alternatively, he argued that even if proof of prior convictions is not an element, due process required the court to submit the question to the jury.

CRS § 18-4-409(2)(a) describes the elements of motor vehicle theft in the first degree, which does not include proof of prior convictions. CRS § 18-4-409(3) addresses only the class of felony (it does not create a separate crime), and CRS § 409(3)(b) describes when aggravated motor vehicle theft in the first degree can be a class 3 felony. Therefore, the actus reus and mens rea are the same for the class 3 and class 4 felonies, and proof of two prior convictions related to motor vehicle theft is not an element of the class 3 felony. It follows that due process does not require that defendant’s prior conviction be proved to a jury beyond a reasonable doubt.

2013 COA 75. No. 11CA0009. People v. Wilson.
Voir Dire—Entrapment—ShreckHearing—Expert Testimony—Fingerprint Evidence—Prior Conviction—Burden of Proof—Preponderance of the Evidence.

Defendant appealed the judgment of conviction entered on a jury verdict finding him guilty of possession of a controlled substance, as well as the sentence that the court subsequently imposed. The Court of Appeals affirmed the judgment and sentence.

In May 2008, defendant asked an undercover police officer, who was posing as a prostitute on east Colfax Avenue, if she wanted to smoke crack cocaine with him. When he showed her a Blistex tube that contained three rocks of crack cocaine, police officers from the Aurora Police Department arrested him.

Defendant argued that voir dire was insufficient because the trial court refused his request that the court read to the potential jurors a legal definition of the defense of entrapment. Both the prosecutor and defense counsel, however, had the opportunity to question jurors about the general nature of the entrapment defense. Further, the trial court properly gave instructions to the jury on the issue of entrapment at the close of the evidence. Accordingly, the trial court’s denial of defendant’s request to instruct the jury on the defense of entrapment during voir dire was not an abuse of discretion.

Defendant further argued that the trial court abused its discretion when it denied his motion to hold a Shreck hearing on the admissibility of expert testimony regarding fingerprint evidence concerning a prior conviction. [People v. Shreck, 22 P.3d 68 (Colo. 2001).] The Court ruled that the motions court acted within its discretion when it denied defendant’s request for a Shreck hearing because: (1)the trial court was the finder of fact, not a jury; (2)defendant was permitted to raise issues during the sentencing hearing that would have been allowed during a Shreck hearing; (3) the evidence was not complex; and (4) fingerprint comparisons are reliable evidence.

Defendant contended that the trial court denied his right to due process of law when it used the wrong burden of proof—a preponderance of the evidence—in finding that he had been convicted of the 1997 drug-related felony. When a sentencing statute does not establish a burden of proof, “the prosecution need only prove the existence of prior conviction facts by a preponderance of the evidence.” CRS § 18-18-405(2.3)(a) was a sentence enhancer, not a substantive offense or an element of a substantive offense, and did not contain a prescribed burden of proof. Thus, the trial court used the proper evidentiary standard—a preponderance of the evidence—and defendant’s due process rights were not abridged.

2013 COA 76. No. 11CA0624. People v. Jenkins.
Sexual Exploitation of a Child—Indeterminate Probationary Term—Sex Offender Lifetime Supervision Act (SOLSA).

Defendant appealed the trial court’s order denying his Crim.P. 35(a) motion. The Court of Appeals affirmed the order.

In three cases, defendant was charged with having committed various felonies. In 2009, as part of a plea agreement, defendant pleaded guilty to charges in two of the cases. In the first case, he pleaded guilty to a drug-related felony, and the court sentenced him to prison for five years. In the second case, he pleaded guilty to one count of sexual exploitation of a child, which was a class 4 felony. The court sentenced him to an indeterminate term of ten years to life of sex offender-specific probation.

Defendant argued that the trial court erred when it sentenced him to an indeterminate probationary term of ten years to life even though he was not convicted of a sex offense subject to sentencing under the Sex Offender Lifetime Supervision Act (SOLSA). Defendant could be considered a “sex offender” if he “pleads guilty . . . to a sex offense” listed in CRS § 18-1.3-1003(4). The crime to which defendant pleaded guilty, however, does not appear in this section. Further, defendant could not have been sentenced as a sex offender under former § 18-1.3-1004(4)(a), because the sex offender evaluator in this case determined that defendant was neither a pedophile nor a predator. Because defendant did not meet either of the relevant definitions of a sex offender in SOLSA, he could not be sentenced to probation “for an indeterminate period of at least ten years . . . and a maximum of [his] natural life” under subsection 1004(2)(a). CRS § 18-1.3-1007(1)(a), however, creates an intensive supervision probation program for two classes of persons who have been sentenced to probation. One class includes sex offenders who are sentenced to probation under SOLSA. The second class includes persons who are not sex offenders under SOLSA, such as defendant, who have committed a sex-related offense but are not sentenced to probation under SOLSA. Therefore, because the trial court had the authority to sentence defendant to a probationary term that exceeded the “maximum period of incarceration authorized” for a class 4 felony, an indeterminate probationary term of ten years to life was not an illegal sentence.

2013 COA 77. No. 11CA1940. In re Petition of R.C.
Petition to Seal Records—Traffic Offenses—Non-Traffic Offenses.

Petitioner appealed a district court’s order denying his petition to seal records of non-traffic offense charges brought against him that were subsequently dismissed. The Court of Appeals reversed the order and remanded the case with directions.

Petitioner was charged with possession of marijuana (a class 2 petty offense), possession of drug paraphernalia (a class 2 petty offense), and unsafe lane change. After successful completion of a juvenile diversion program, all of the charges were dismissed with prejudice.

Petitioner argued that the court erred when it denied his petition to seal his records after all of the charges against him were dismissed with prejudice. Although CRS § 24-72-308 specifically prohibits the sealing of traffic infractions, the statute does not appear to contemplate petitions to seal records for cases that include both traffic offenses and non-traffic offenses. Therefore, if the district court “finds that the harm to the privacy of the petitioner or dangers of unwarranted adverse consequences to the petitioner outweigh the public interest in retaining the record” as to the drug offenses, it should seal the criminal records as to those charges. Therefore, the order was reversed and the case was remanded for further proceedings consistent with this opinion.

2013 COA 78. No. 12CA0076. Miller v. City and County of Denver.
Disability Compensation—Police Officers—Line-of-Duty Injury Leave.

In this dispute over disability compensation, plaintiffs Daryl Miller and the Denver Police Protective Association (DPPA) appealed the district court’s summary judgment in favor of defendant, the City and County of Denver (City). The Court of Appeals affirmed the judgment.

On July 15, 2005, Miller, a lieutenant in the Denver Police Department, was injured in an automobile accident in the course and scope of his employment. As a result of his injuries, surgeries, and medical treatment associated with the accident, he did not work for five months. Thereafter, for four years, he worked intermittently either at his position or in modified work functions.

Miller was entitled to disability benefits under the City Charter and the City’s Collective Bargaining Agreement (CBA) with the DPPA. On March 8, 2010, the City determined that he had reached maximum medical improvement (MMI) with respect to his injuries, and discontinued giving Miller line-of-duty injury leave at full salary after one year.

Miller and the DPPA contended that the district court erred in granting the City’s motion for summary judgment, because he was entitled to line-of-duty injury leave at full salary beyond one year. Here, both City Charter § 9.6.14 and Article 22.2 of the CBA relate to the same subject: disability benefits for a police officer who becomes “incapacitated from service” or “unable to perform [his or her] duties” because of “injuries received” in the “performance” or “discharge” of his or her “duties.” Charter provision § 9.6.14 awards the injured officer “full pay for such time as [he or she] is temporarily incapacitated,” and CBA Article 22.2 awards “any necessary leave of absence not to exceed one year at his [or her] full salary.”

Unlike § 9.6.14, Article 22.2 makes no distinction between benefits for temporary and permanent disabilities. Therefore, an injured officer is entitled to a maximum of one year of disability leave at full salary, without regard to the temporary or permanent nature of his or her disability. Because the record discloses that Miller received 178.25 hours above his allocated full-salary disability leave, the district court properly determined, as a matter of law, that the City was entitled to deduct his excess disability leave from his other accrued leave time.

2013 COA 79. No. 12CA0495. People v. Bernard, Jr.
Protection Order Violation—Authentication of E-Mails Under CRE 901.

Defendant appealed the judgment of conviction entered following a jury verdict finding him guilty of one count of violating a protection order. The Court of Appeals affirmed the judgment.

On August 11, 2011, a mandatory protection order was entered, naming defendant as the restrained party and the victim and her son as the protected parties. The order restrained defendant from harassing, molesting, intimidating, contacting, or communicating with the victim, and ordered him to vacate victim’s home.

The victim testified that defendant called her on August 15 to wish her a happy birthday and arranged to pick up some of his clothing that she was to leave outside her door. He arrived early on August 16 and banged and knocked on her doors and windows. He told her that if she showed up in court the next day, one of them would not be “making it back,” and that he would kill her if she called the police. She called her mother and then the police.

Defendant testified that he and the victim had spent the entire day together on August 15 and that late that night, they had an argument. He testified that the following morning, he left to smoke a cigarette and then tried to get back into the apartment.

The responding police officers testified that when they arrived, they found defendant in a basement storage room in the victim’s apartment complex. He was arrested and charged with one count of intimidation of a witness and one count of violation of a protection order. He was acquitted of the witness intimidation charge but found guilty and convicted of violating a protection order.

On appeal, defendant argued it was error to admit an e-mail into evidence because it was not properly authenticated. The Court disagreed.

An e-mail was sent to the victim from defendant’s e-mail account on the morning she was scheduled to testify in defendant’s trial, stating, “I told you it wuz us r nobody u getting ready 2 make the biggest mistake my God have mercy on Ur soul rip [sic].” The e-mail was admitted into evidence.

The Court held that e-mails may be authenticated (1) through testimony explaining that they are what they purport to be, or (2) through consideration of distinctive characteristics shown by an examination of their contents and substance in light of the circumstances of the case.

The victim testified the e-mail was a true and accurate copy of the e-mail that defendant had sent to her. She testified as to the time she received it and that she recognized the e-mail address of the sender as one belonging to defendant. Defendant did not contest that the sending e-mail address belonged to him. Based on this testimony, there was no abuse of discretion in admitting it into evidence.

Defendant also argued that the prosecution failed to present evidence proving beyond a reasonable doubt that he was guilty of violating a protection order. The Court disagreed. The record clearly showed that defendant was informed of the contents of the protection order, and the testimony of witnesses and of defendant clearly established a violation of that order. The judgment was affirmed.

2013 COA 80. No. 12CA0722. Fidelity National Title Co. v. First American Title Insurance Co.
Contractual Duties of a Real Estate Closer.

Defendant Fidelity National Title Company (Agent) appealed the trial court’s judgment in favor of third-party defendant First American Title Insurance Company (Underwriter). The Court of Appeals affirmed the judgment.

Agent issued title insurance policies underwritten by Underwriter pursuant to an underwriting agreement (contract). Under the contract, Agent was to perform title and closing services. Toward the end of 2007, Agent wrote two title insurance commitments underwritten by Underwriter, each of which committed to insure a different bank as the first-position lienholder for the same parcels of real estate. The policies were issued in 2008.

The first commitment was issued with respect to Brown Financial, LLC (Brown), which loaned money to the developer of the parcels (Developer). Brown assigned its deed of trust to Academy Bank (Academy), and Brown serviced the loan by collecting money from Developer and forwarding it to Academy. The policy insured Academy as the first-position lienholder.

Two months after Agent had issued the commitment for the Brown title policy, it issued a commitment to insure the interest of Colorado East Bank & Trust (CEB&T) as first position lienholder on the same parcels in connection with a new loan from CEB&T to Developer. The CEB&T commitment had a requirement that the previous deed of trust be released, and noted it had been assigned to Academy.

Agent closed both loans within two months. Agent failed to pay Academy from the closing proceeds of the CEB&T loan and failed to obtain a release of Academy’s deed of trust on the parcels. Both Academy and CEB&T were insured in their respective policies as first position lienholders for the same parcels. Agent did not notify Underwriter of this fact.

After Academy began foreclosure proceedings on the parcels in 2009, CEB&T sought to enjoin the foreclosure. Because the Academy lien had not been paid or released, Academy asserted a claim against Underwriter under the Brown title policy, and CEB&T asserted a claim against Underwriter under CEB&T’s policy. Underwriter paid CEB&T $986,000 to resolve the latter’s claims in foreclosure and $55,000 to reimburse CEB&T for its attorney fees.

The claims in this appeal are by Underwriter against Agent under the terms of the contract. The trial court found in favor of Underwriter.

On appeal, Agent argued the trial court misconstrued section 7.3 of the contract and erroneously found Agent liable for committing “[an] error, fault, or negligence in handling funds in connection with [an] escrow.” Requirement G of the title commitment required that the deed of trust on the property be released. It indicated that Academy would need to release the deed of trust. A letter from Brown was received before closing, stating it would provide a release of the deed of trust and the original promissory note marked “paid in full” within fourteen days of the closing. No mention was made of Academy. The closer was not happy with this, but her branch manager authorized her to proceed. The trial court found this was negligent handling of funds in connection with an escrow by Agent, in violation of section 7.3 of the contract.

Agent argued it was not “handling funds,” but simply performing a title search and completing a closing. Also, Agent contended that any errors occurred in the context of a real estate closing and that those services do not fall within the meaning of “escrow.” The Court held that the record and the plain meaning of those terms supported the trial court’s finding that Agent’s error was a breach of section 7.3 of the contract.

Agent also argued that under CRS § 38-35-124.5, the letter it received from Brown was a “payoff statement” on which Agent was entitled to rely. The Court found the letter was not a payoff statement within the meaning of the statute. The testimony of the expert witnesses and the plain language of the statute support the finding that a payoff statement is a statement that a certain sum of money would need to be paid at closing in exchange for release of a deed of trust. The Brown letter was simply a statement that no money was due to Brown; it did not specify how much was due to Academy, which was the holder of the indebtedness.

Agent argued that the trial court misconstrued section 7.4 of the contract by ruling that Agent had knowledge of a claim or loss stemming from a title report, and its failure to give notice of such a claim or loss caused Underwriter to sustain “actual prejudice.” The Court disagreed. Agent contended that it didn’t know about the claim or loss because parts of the knowledge were held by various employees. The Court found that Agent must be held accountable for the knowledge of its employees. Agent knew and therefore had a duty to report to Underwriter that it was ensuring two different entities as the first priority lien holders with respect to the same parcels of property. Clearly, Underwriter suffered “actual prejudice” as a result of the lack of this knowledge. Had it known of the potential claim in advance, it could have taken proactive steps to mitigate the damages it ultimately had to pay. The judgment was affirmed.

2013 COA 81. No. 12CA0872. Deutsche Bank Trust Company Americas v. Samora.
Statute of Limitations—Equitable Tolling—Attorney Fees—Fraud in the Factum—Holder in Due Course—Spurious Lien.

Defendant Veronica E. Samora appealed the trial court’s judgment in favor of Deutsche Bank Trust Company Americas (Deutsche Bank). Samora also appealed the trial court’s dismissal of her claims against Saxon Mortgage, Inc. (Saxon). The Court of Appeals affirmed the judgment and the case was remanded with directions.

On June 30, 1997, Samora purchased real property at 4555 W. 33rd Avenue in Denver (property), financing the purchase with a note and deed of trust. In 2003, Samora fell behind on payments on the note and foreclosure proceedings were commenced. It was disputed whether Samora was aware of the foreclosure action.

In October 2003, Samora approached Randy Gonzales, a mortgage broker, to refinance the property to lower her monthly payments. In October, Samora executed a new promissory note and deed of trust in favor of BNC Mortgage, Inc., which was then transferred to Chase Bank.

On October 21, 2003, Gonzales and Kenneth Medina, his uncle, transferred title to the property into their names by forging Samora’s signature on a quitclaim deed. Medina then obtained a loan for $32,000 from a third party, which he secured by another note and deed of trust. Medina later executed a quitclaim deed conveying the property solely to Gonzales.

Samora was unaware of the foregoing transactions. In May 2004, she sought a second refinancing of the property to obtain an even lower interest rate. Chase Bank told her the property belonged to Gonzales. When Samora confronted him, he acted surprised to learn that title to the property was in his name. On September 9, 2004, Gonzales signed and filed a quitclaim deed conveying the property back to Samora.

Samora continued to work with Gonzales and Medina on the second refinance. When Medina determined Samora was ineligible for refinancing, he sold the property to his girlfriend, Amanda Wasia, who would then lease the property back to Samora. Samora was unaware of this.

In September 2004, Gonzales completed a loan application for Wasia with Saxon. The loan application provided a false income and stated that she would be using the property as her primary residence. Wasia did not qualify for the loan. Matthew Libby, a loan officer with Saxon, suggested to Medina and Gonzales that they submit a falsified gift letter stating that Wasia was Samora’s granddaughter and that Samora was gifting the equity in her home to Wasia. Based on this, Wasia obtained a loan from Saxon for $172,000.

On September 20, 2004, Medina told Samora her loan was approved and had her come to his office to sign the documents. When she arrived, he placed a document in front of her with the top covered by his hand and told her to sign. She noticed it was titled “Warranty Deed” and that Wasia, whom she had never heard of, was on the deed. When she asked Medina about this, he stated that Wasia was a co-signer and on the deed for her protection. She signed it and it was recorded on October 4, 2004.

Also on the same day, Wasia executed a note and deed of trust in favor of Saxon for the $172,000 loan. The proceeds were used in part to pay off Samora’s existing loan on the Property. Saxon endorsed the note in blank, and the note and deed of trust were deposited in the trust res of Saxon Asset Securities Trust 2004-3 (Trust). Deutsche Bank was the indentured trustee of the Trust.

In 2005, this whole scheme fell apart. After investigation by the Denver District Attorney’s Office, Gonzales, Wasia, Medina, and Libby were indicted by a grand jury for crimes, including fraud. They all pleaded guilty and, as part of the plea agreement, each executed a quitclaim deed in favor of Samora.

No payments were made on the note during the criminal proceedings. In October 2006, Deutsche Bank commenced foreclosure proceedings. Based on the fraud committed by the parties and the complexity of the underlying transactions, the magistrate denied the requested foreclosure.

In July 2007, Deutsche Bank filed this CRCP 105 action to quiet title in the Trust. A default judgment was entered, which Samora appealed and a division of this Court reversed (Samora I). After reversal, Deutsche Bank amended its complaint to include a claim for unjust enrichment. Samora filed an amended answer on November 2, 2009, alleging for the first time counterclaims against Deutsche Bank and cross-claims against Saxon.

Saxon filed a motion to dismiss based on the two-year statute of limitations applicable to the cross-claims. On February 17, 2012, the trial court granted the motion to dismiss. A trial to the court was held on Deutsche Bank’s and Samora’s claims and counterclaims, and the court found in favor of Deutsche Bank.

On appeal, Samora argued it was error to grant Saxon’s motion to dismiss based on the statute of limitations. The Court disagreed. Samora filed its cross-claims on November 2, 2009. They sounded in tort and therefore had to be brought within two years after the cause of action accrued. Similarly, its spurious documents and lien claims had to be brought within two years of accrual. Accrual of such claims occurs on “the date both the injury and its cause are known or should have been known by the exercise of reasonable diligence.” Samora argued accrual occurred in October 2006 when Deutsche Bank started its foreclosure proceedings. The Court found that Samora was injured when she executed the deed to Wasia in September 2004, which made it possible for Wasia to execute the note and deed of trust. In December 2005, indictments were issued against Medina, Gonzales, Libby, and Wasia based on their scheme to transfer title to the property. The Court found that Samora either knew of the indictments or should have known of them based on her participation in pursuing these actions against the perpetrators.

Samora argued the doctrine of equitable tolling should have prevented the application of the statute of limitations. The Court disagreed. Equitable tolling of a statute of limitations is restricted to situations in which the defendant has wrongfully impeded the plaintiff’s ability to bring the claim or truly extraordinary circumstances prevented the plaintiff from filing the claim despite diligent efforts. The Court found neither of these circumstances was present.

Saxon was awarded reasonable attorney fees pursuant to CRS § 13-17-201, and the Court held it was entitled to reasonable attorney fees for defending this appeal. The Court remanded the case to the trial court for a determination of reasonable attorney fees.

Samora then argued it was reversible error for the trial court to find that she failed to establish fraud in the factum in the execution of the warranty deed. Fraud in the factum results in an instrument that is void and not merely voidable. The Court agreed with Samora that the trial court erred in using an objective standard of “ordinary prudence,” rather than a subjective standard based on her education, age, and other considerations to determine whether she was excusably ignorant in signing the warranty deed. However, the Court concluded that Samora failed to establish fraud in the factum because she was not fraudulently deceived about the nature of the document she signed and because she had a reasonable opportunity to obtain knowledge; therefore, she was not excusably ignorant. Samora knew the nature of the document she signed; she was deceived by Medina’s fraudulent misrepresentations about the use of the warranty deed. As a result, the deed was voidable but not void. In addition, the Court agreed with the trial court that Samora was not excusably ignorant.

As a result of the warranty deed being voidable and not void, to defeat Deutsche Bank’s claim to quiet title in the trust, Samora needed to show that Deutsche Bank as trustee was not advancing a claim by the trust as a holder in due course of the note and deed of trust. Samora argued that the interrelated Saxon companies and the trust shared such a “close connectedness” that the trust’s status as a holder in due course should be defeated. The trial court simply concluded that Deutsche Bank was a holder in due course.

Samora argued the focus should have been on the status of the trust, and the Court agreed. However, Samora introduced no evidence that Saxon and the other Saxon entities shared employees, officers, directors, or other members, or that any one entity controlled the actions of another. Absent such evidence, the Court was unwilling to decide that corporate status was enough to establish a close relationship causing the conduct of Saxon to be imputed to the Trust.

Finally, Samora contended that it was error not to find that the deed of trust was a spurious document under CRS § 38-35-201(3). A deed of trust is a lien. The Court agreed with Deutsche Bank that the deed of trust should have been examined under CRS § 38-35-201(4) as a spurious lien, not as a spurious document. Samora executed a voidable warranty deed in favor of Wasia. When Wasia executed the note and deed of trust, she was the legal owner of the property and the deed of trust was not a spurious lien. The judgment was affirmed.

2013 COA 82. No. 12CA1130. Oasis Legal Finance Group, LLC v. Suthers, Colorado Attorney General.
Declaratory Judgment—Partial Summary Judgment—“Loans” Under the Colorado Uniform Consumer Credit Code.

In this declaratory judgment action, plaintiffs Oasis Legal Finance Group, LLC, Oasis Legal Finance, LLC, and Oasis Legal Finance Operating Company, LLC (collectively, Oasis), and plaintiff Funding Holding, Inc., doing business as LawCash, appealed the district court’s grant of partial summary judgment to defendants John W. Suthers, in his capacity as Attorney General of the State of Colorado, and Laura E. Udis, in her capacity as the Administrator of the Uniform Consumer Credit Code (collectively, Administrator). The Court of Appeals affirmed the judgment.

Oasis and LawCash contracted with people who had pending personal injury claims against third-parties (tort plaintiffs) to pay them money to assist them while their cases were pending. In exchange, the tort plaintiffs agreed that, once their personal injury claims resulted in a settlement or judgment, they would pay certain sums to Oasis or LawCash from the net litigation proceeds.

In the Oasis contractual payment schedule, the amount due increased over time. If the amount due couldn’t be covered from the net litigation proceeds, then the tort plaintiffs had to pay Oasis only the net proceeds received, if any. If nothing was recovered, then Oasis recovered nothing.

In the LawCash contracts, once the tort plaintiffs received the net litigation proceeds, they were required to repay LawCash the funded amount plus a “monthly user fee” of 3.5% of the funded amount, compounded monthly. LawCash also received a lien and security interest in the proceeds of their lawsuits. As with Oasis, the tort plaintiffs didn’t have to pay more than the net litigation proceeds and, if nothing was recovered, LawCash received nothing.

In 2010, the Administrator advised Oasis and LawCash that these types of transactions were loans made in violation of the Uniform Consumer Credit Code (UCCC). Oasis and LawCash filed this action, seeking a declaration that they had purchased contingent rights to receive a portion of the proceeds of personal injury lawsuits and did not make loans or create debt and thus were not subject to the UCCC. The Administrator moved for and was granted partial summary judgment that the transactions were loans governed by the UCCC.

On appeal, Oasis and LawCash argued that the transactions were purchases of litigation proceeds and not loans under the UCCC. The Court was not persuaded. The UCCC definition of “loan” includes “[t]he creation of debt by the lender’s payment of or agreement to pay money to [a] consumer.” The Colorado Supreme Court has endorsed a broad reading of the UCCC’s definition of “loan.” A debt would include a contingent debt under such a broad reading. It was undisputed that the funds paid by Oasis and LawCash to tort plaintiffs created contingent debt. Therefore, they were loans within the meaning of the UCCC. The judgment was affirmed.

2013 COA 83. No. 12CA1694. Hudak v. Medical Lien Management, Inc.
Failure to Prosecute.

Defendant Medical Lien Management (MLM) appealed the district court’s judgment dismissing with prejudice its counterclaims against plaintiff Tammy Hudak for failure to prosecute. The Court of Appeals reversed the judgment and the case was remanded with directions.

In 2006, Hudak was injured in an automobile accident. Because she was unable to pay for her medical treatment, she entered into “lien” agreements with various medical providers to obtain that treatment. Pursuant to those agreements, she received medical care in exchange for the providers’ right to place liens on any settlement or judgment funds she might obtain in a personal injury action against the alleged tortfeasor, and collect from her any amounts owed above that recovered in a settlement or judgment.

After obtaining a $47,000 settlement in her personal injury action, Hudak filed a motion for declaratory and interpleador relief, naming MLM as an interpleader defendant. MLM, which had accumulated or been assigned a lien balance of $40,430.70, filed a breach of contract, unjust enrichment, and account-stated counterclaims against Hudak for any amount owed after distribution of the interpleaded funds.

MLM filed a motion for summary judgment, claiming priority over other interpleador defendants to the interpleaded funds, and a right to judgment on its counterclaims. The trial court determined that because MLM had second priority, it was entitled to recover only $20,353.75 of the interpleaded funds. The district court never ruled on the part of MLM’s summary judgment motion relating to its counterclaims and, without notice to MLM, entered an order closing the case.

Thirteen months later, MLM filed a renewed motion for summary judgment with respect to its counterclaims. The district court, acting through a different judge, dismissed the counterclaims for failure to prosecute. On appeal, MLM argued this was error, and the Court agreed.

To reverse a decision to dismiss for failure to prosecute, the Court must find that the trial court’s decision was manifestly arbitrary, unreasonable, or unfair. Here, the case was inactive for thirteen months. MLM argued that it was awaiting a ruling by the district court on its pending motion for summary judgment and this was a mitigating circumstance or reasonable excuse for delay. The Court agreed that the burden of following up on motions generally is on the party filing them. However, MLM had done all that was necessary to put its dispositive summary judgment before the court and was not obliged to renew the motion or remind the court that it needed to be ruled on. Under these circumstances, it was error for the trial court to exercise its discretion to dismiss MLM’s case. The judgment was reversed and the case was remanded for reinstatement and further proceedings.

Colorado Court of Appeals Opinions