Tag Archives: Colorado Securities Act

CapitalValue Advisors, LLC v. K2D, Inc., d/b/a Colorado Premium Foods; Kevin LaFleur; Don Babcock; and Triton Capital Partners, Ltd., 2013 COA 125 (August 15, 2013)

It is the promise, not the paper it’s written on, that makes a contract. Plaintiff is a capital advisory firm. It had an agreement with Defendants to help them find financing. Defendants later contracted with another firm that did secure financing for Defendants. Plaintiff sought to enforce a provision that entitled it to 4.5% of the financed amount. Defendants argued the agreement was void because two of three provisions violated CRS 12-61- 101 (brokerage laws) and CRS 11-51-604 (securities laws), and thus the whole agreement was void. The trial court agreed; the court of appeals did not. Looking to the number of promises in the agreement, the court held that, in essence, each provision was its own “contract” even though they were all memorialized in the same agreement. The two unlawful provisions were severed so the agreement was not void, and judgment for Defendants was reversed.

http://www.courts.state.co.us/Courts/Court_of_Appeals/Opinion/2013/12CA1396-PD.pdf

http://www.cobar.org/opinions/opinion.cfm?opinionid=9062&courtid=1

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Filed under Contracts, Corporations

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.

http://www.courts.state.co.us/Courts/Court_Of_Appeals/Opinion/2012/11CA1870-PD.pdf

http://www.cobar.org/opinions/opinion.cfm?opinionid=8698&courtid=1

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Filed under Insurance