Tag Archives: Bankruptcy

Colorado Supreme Court grants certified question of law

PURSUANT TO C.A.R. 21.1, the Court granted a certified question posed by the United States Bankruptcy Court, for the District of Colorado in No. 15SA68, In re Michael and Marlene Heimann.

This post will be updated when more information about the issue certified becomes available.

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Arlene Abady, et. al. v. Certain Underwriters at Lloyd’s London, 2012COA173 (October 11, 2012)

Hard money lenders are private investment companies that offer shorter term loans secured by real property when traditional commercial real estate loans are not available from banking institutions. Here, a hard money lender, CCI, insured against its own losses for want of fidelity by CCI’s own officers, with a fidelity bond from Lloyds. CCI officers allegedly committed fraud in attracting investors to invest in CCI, which made hard money loans to commercial real estate borrowers. Following CCI’s bankruptcy, investors sued Lloyds on behalf of CCI, and CCI itself,  to recover losses. Lloyds claimed its policy did not cover the investors’ losses. The court of appeals agreed. Indirect losses to investors are protected by liability policies, not fidelity bonds. Because Lloyds issued a fidelity bond to protect CCI directly, it did not cover indirect losses by investors.



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Sander v. Cygan (In Re: Anthony Rivera, Debtor), 2012CO43 (June 4, 2012)

When it comes to real property, a rose is not a rose by any other name. A deed of trust securing an interest in property that does not include a “legal description” is not validly recorded. A street address is not a “legal description.” The Supreme Court gave this response in answering a certified question from the District of Colorado Bankruptcy Court. This case involved a deed of trust that referenced a legal description in an exhibit; it had a street address, but was recorded without the exhibit. The creditor foreclosed on the property after the owner filed for bankruptcy. The bankruptcy Trustee asserted his power to claw-back property, but could only do so if he did not have “notice” of the deed. At the time of the petition, the deed lacked any legal description, and, therefore, it was not validly recorded. The Trustee, lacking “notice,” could claw-back the property from the creditor.



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