Tag Archives: Loans or Lending

Cynthia H. Coffman, as Attorney General, and Julie Ann Meade, as the Administrator of the Uniform Debt Management Services Act, v. Lawrence W. Williamson, Jr., Esq.; Donald Drew Moore, Esq.; and Morgan Drexen, Inc., a California corporation, and Walter Joseph Ledda, 2015CO35 (May 26, 2015).

“It isn’t what we say or think that defines us, but what we do.” – Jane Austen. Some companies offer debt-management services to debtors. Plaintiff is one of them. They are regulated by CRS 12-14.5-202. (the DMSA). Attorneys providing such services are exempt from regulation. Plaintiff (consisting entirely of nonlawyers) hired “local counsel” and sought “legal services exemption.” The Court, interpreting the DMSA with Colo.RPC 5.3, held that nonlawyer assistants may be exempt if they work for an attorney in substance, not just in name, and under the attorney’s supervision. Here, Plaintiff’s attorneys, some out-of-state , did not actually provide meaningful instruction or supervision. Although the Court, through CRCP 205.1, not the Legislature, regulates attorneys, the DMSA did violate the Separation of Powers doctrine. Thus, Plaintiff was subject to regulation.

https://www.courts.state.co.us/userfiles/file/Court_Probation/Supreme_Court/Opinions/2014/14SA249.pdf

http://www.cobar.org/opinions/opinion.cfm?opinionid=9789&courtid=2

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Filed under Attorney Regulation, Constitutional

Alva Hickerson v. Thomas Vessels, 2014CO2 (January 13, 2014)

“Don’t wait for the last judgment – it takes place every day.” Albert Camus. In this case, four issues are at play: 1) the equitable doctrine of laches (prevents a party from waiting too long to bring a claim); 2) the statute of limitations for collecting a debt (six years); 3) the doctrine of partial payment (restarts the six years after a partial payment); and 4) the separation of powers doctrine (prevents application of equitable doctrines to expressly conflicting statutes). The court of appeals held that laches cannot shorten a limitations period because the separation of powers doctrine prevented it. The Court reversed because laches does not conflict with the statute of limitations, and the partial payment doctrine does not preclude laches, even though it effectively lengthens the time within which a claim can be brought. The Court remanded for review of the laches claim.

http://www.courts.state.co.us/userfiles/file/Court_Probation/Supreme_Court/Opinions/2012/12SC198.pdf

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Filed under Constitutional, Contracts

Planning Partners Int’l, LLC v. QED, Inc., 2013CO43 (July 1, 2013)

“I’ve lived with this case since I’ve been here in January, and I am very much aware of the protracted convoluted history this cases possesses [sic]” – The Trial Court. Plaintiff (PPI) entered into an Agreement to provide services to Defendant (QED). PPI later loaned money to QED pursuant to a promissory note. The Note required QED to pay reasonable costs and fees that PPI might incur “in connection with the enforcement of” the promissory note. PPI later sued for breach of the note and QED counterclaimed for breach of the Agreement. They both win. The trial court awarded fees to PPI, but did not apportion them. The court of appeals held it should have. The Court disagreed, rejecting a rule requiring proportional diminishment of fees when the defendant recovers on a counterclaim. Rather, trial courts may apportion fees, but if the contract does not require apportionment, it need not do so.

http://www.courts.state.co.us/userfiles/file/Court_Probation/Supreme_Court/Opinions/2011/11SC961.pdf

http://www.cobar.org/opinions/opinion.cfm?opinionid=9012&courtid=2

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Dennis Shaw and First Horizon Home Loan Corporation, v. 17 West Mill St, LLC, 2013CO37 (June 24, 2013)

“Rather fail with honor than succeed by fraud.” – Sophocles. In this case the attorney for a borrower signed a request for a release of a lender’s deed of trust as “attorney for lender.” Lender later found out and sued, seeking to set aside the release because CRS 38-39-102 voids releases based on a “fraudulent request.” The Court upheld the trial court and reversed the court of appeals by holding that “fraudulent” means proof of actual fraud by a preponderance of the evidence, similar to common law fraud. It did so to fulfill the purpose of the statute: creating certainty, predictability, and relieving public trustees from a duty to inspect releases to determine validity. Here, borrower’s attorney signed for the lender because he had done so before and was under time pressures. It was negligent, not fraudulent. Thus, the later bona fide purchaser obtained title to the property.

http://www.courts.state.co.us/userfiles/file/Court_Probation/Supreme_Court/Opinions/2011/11SC516.pdf

http://www.cobar.org/opinions/opinion.cfm?opinionid=8996&courtid=2

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Fidelity National Title Company, f/k/a Security Title Guaranty Company v. First American Title Insurance Company, 2013COA80 (May 23, 2013)

It was a $1million mistake. A title company (Agent) closed 2 loans, for 2 different banks, 2 months apart, assuring both banks that they were first position lienholders for the same property. The Agent’s underwriter eventually paid over $1 million to resolve the banks’ competing claims over foreclosure proceeds. Underwriter sued Agent, and won. Agent appealed, challenging the interpretation of their contract and the applicability of a statutory defense for reliance on a payoff statement. The court of appeals held: 1) Agent was an “escrow” because it “handled” money during the closings, 2) Agent couldn’t rely on a “payoff statement” under CRS 38-35-124.5, as it didn’t indicate the amounts owed to the actual creditor or holder of the debt, and 3) the contractual phrase “actual prejudice” meant “substantial detriment to the significant interests of the party.” Affirmed.

http://www.courts.state.co.us/Courts/Court_Of_Appeals/Opinion/2013/12CA0722-PD.pdf

http://www.cobar.org/opinions/opinion.cfm?opinionid=8956&courtid=1

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Filed under Appellate Review Challenged, Contracts, Insurance, Property

Deutsche Bank Trust Co. Americas, and Saxon Mortgage, v. Veronica E. Samora, 2013COA81 (May 23, 2013)

“Samora chose to accept … misrepresentations rather than … investigate the transaction after discovering the document was a warranty deed with the name of an individual [Wasia] she had never met.” (Opinion). Samora was the victim of a complex real estate fraud. As part of the fraud, she relied on misrepresentations about a warranty deed she signed, and unknowingly transferring title to Wasia. Wasia deeded the house to Saxon for a loan. Deutsche Bank (DB), Saxon’s trustee, sought to quiet title. The appellate court held that the Samora-Wasia deed was valid. As a consequence: 1) Samora’s claims accrued when she alerted the DA to the fraud, 2) there was no fraud in the factum because she knew she signed a deed, and 3) DB (who was not “closely related” to Saxon) was a holder in due course. Thus, the deed was not voided and the Wasia-Saxon deed was not a spurious lien. Title quieted in Saxon.

http://www.courts.state.co.us/Courts/Court_Of_Appeals/Opinion/2013/12CA0872-PD.pdf

http://www.cobar.org/opinions/opinion.cfm?opinionid=8957&courtid=1

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Filed under Contracts, Corporations

Oasis Legal Finance, LLC, et. al., and Funding Holding, Inc., d/b/a LawCash v. John W. Suthers, as Attorney General; and Laura E. Udis, as the Administrator, Uniform Consumer Credit Code, 2013COA82 (May 23, 2013)

“You keep using that word. I do not think it means what you think it means.” – Inigo Montoya, Princess Bride. Here, Plaintiffs pay tort plaintiffs while their cases are pending. Repayment depends on the net amount recovered (if any); and if recovery exceeds net proceeds, the debt is increased based on time. The Administrator of the Colorado Uniform Consumer Credit Code, CRS 5-1-101 to 13-103 (UCCC), found the agreements were unlawful “loans.” Plaintiffs disagreed and sued. The court of appeals, like the trial court, found for Administrator. Under the UCCC, a “loan” is a debt created by the lender’s payment, or agreement to pay, money to a consumer. A “debt” is either fixed (a specific sum due) or contingent (not presently fixed but may become fixed in the future). A debt is not, however, an unconditional promise to pay. Here, Plaintiffs’ payments were contingent debts and thus loans.

http://www.courts.state.co.us/Courts/Court_Of_Appeals/Opinion/2013/12CA1130-PD.pdf

http://www.cobar.org/opinions/opinion.cfm?opinionid=8958&courtid=1

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Filed under Administrative, Contracts, Government

Donald Yale v. AC Excavating, Inc., 2013CO10 (February 4, 2013)

You are not defined by what you do – nor is your LLC. An LLC created for the purpose of developing a property suffers major financial problems. The sole member and manager loaned his own funds to the company. The LLC fails anyway. An excavation company doing work for the LLC does not get paid in full and sues. By the time of trial, the member was the the last defendant standing. Excavator claimed the funds loaned to the LLC should have been held in trust under the Construction Trust Fund Statute – CRS 38-22-127. The Court disagreed. The loan was made for general operations, not specific construction activities. There is a distinction between the contractor (here, the LLC) and the project. Examining the totality of the circumstances, the Court concluded the loaned funds were not funds disbursed “on a construction project.” Thus, the manager was not liable for not holding the funds in trust.

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Filed under Corporations, Trusts & Estates

Federal Deposit Insurance Corporation [as Receiver for Community Banks] v. Yale Fisher, 2013CO5 (January 22, 2013)

There is an old saying, “Banks will only lend money to people who don’t need a loan.” Actually, banks normally off-set the risk of non-payment by adding a 36% default interest rate. But in this case, the original agreement did not include 36% default interest. A series of later modifications added a 36% default rate, but without noting it as a changed term. That seemed to make the rate ambiguous. The Supreme Court disagreed, finding the later modifications unambiguously included the 36% rate. The Credit Agreement Statute of Frauds, CRS 38-10-124, allows for extrinsic evidence to be considered to resolve ambiguous credit agreements. Here, extrinsic evidence suggested that the 36% rate was only added later as a computer error. However, as the contract was unambiguous, the statute didn’t apply and the evidence could not be considered. The borrower owed 36% on the defaulted amount.

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Filed under Contracts, Evidence

TCF Equipment Finance, Inc. v. Public Trustee for the City and County of Denver, 2013COA8 (January 17, 2013)

Garnishment defined: He owes me money, you owe him money; where’s my money? Here, a Public Trustee held excess funds following a foreclosure sale and redemption. Creditor did not obtain judgment until after the foreclosure, and the redemption period expired. Creditor sought to garnish the excess from the Public Trustee, who claimed the excess funds cannot be garnished. CRS 38-38-111 dictates distribution of excess funds following a foreclosure, and states that after the redemption period for junior lien holders ends, excess funds are paid to the owner. CRCP 103 permits garnishing funds of a judgment debtor held in escrow by a public entity. The court of appeals held the statute did not bar garnishment because Creditor was not a junior lienor, but a judgment creditor. Thus, the funds were subject to garnishment once the Public Trustee determined the excess funds were due to Debtor.

http://www.courts.state.co.us/Courts/Court_Of_Appeals/Opinion/2012/12CA0345-PD.pdf

http://www.cobar.org/opinions/opinion.cfm?opinionid=8802&courtid=1

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Filed under Government