Editor’s note: Summaries are pulled directly from court opinions and edited for clarity and space.
Court Opinions for Feb. 9
Colorado Court of Appeals
Lewis v. Taylor
In 2006, Steve Taylor invested $3 million in a hedge fund run by securities broker Sean Mueller.
Taylor withdrew all of his money in 2007, about one year after investing, and made a profit of over $487,000.
In 2010, the Colorado Securities Commissioner discovered that the hedge fund was a Ponzi scheme, and Mueller was convicted of various criminal offenses.
The district court appointed the plaintiff, C. Randel Lewis, as receiver to collect and distribute Mueller’s assets to the creditors and investors he defrauded through the Ponzi scheme. Lewis filed a claim under the Colorado Uniform Transfer Act seeking to void the transfer of profits Taylor received.
Both Lewis and Taylor moved the district court for summary judgment.
Taylor argued that the CUFTA claim was filed outside the statutory time period and even if the claim was timely, his net profits were not recoverable under CUFTA because he was an innocent investor.
Lewis argued that the claim was timely filed and that CUFTA required Taylor to return his net profits. The district court agreed with Lewis on both issues and granted him summary judgment.
Taylor appealed, and a division of the Court of Appeals held that the district court erred by ruling that the claim was timely and reversed the district court’s grant of summary judgment on that ground.
Based on this conclusion, the division did not address whether CUFTA required Taylor to return his net profits.
Lewis appealed the division’s decision to our Supreme Court. The Supreme Court reversed the division’s opinion, reinstated the district court’s ruling that the CUFTA claim was timely and remanded the case to this court to “consider the alternate argument on which Taylor appealed the trial court’s order.”
The Court of Appeals on remand addressed whether CUFTA required Taylor to relinquish any amount of money exceeding his principal investment in the Ponzi scheme.
Active Release Techniques v. Xtomic
Active Release Techniques describes itself as a provider of “training, seminars and business support software for chiropractor and other health care professionals who specialize in soft tissue treatment techniques called Active Release Techniques.” Tulio Pena was an employee of ART for several years and worked closely with ART’s founder and owner, Dr. Michael Leahy.
Pena introduced Jay Ferguson, a coowner of Xtomic, to Leahy, and Leahy hired Xtomic to manage ART’s information technology services and provide IT support.
Xtomic also developed software programs and wrote software code for ART. Approximately 10 years later, Ferguson, Pena and others formed Select Seminar Services, LLC (S3). S3 was created to market seminar training for a different soft tissue technique than that offered by ART using software programs that Xtomic had developed, including a program that ART also used.
When ART learned about S3, it petitioned the court for a temporary restraining order and a preliminary injunction.
It also initiated the current litigation, asserting claims for, inter alia, misappropriation of trade secrets.
Xtomic responded by asserting numerous counterclaims including, as relevant here, a claim for abuse of process.
A jury ultimately decided all claims in Xtomic’s favor and awarded $1,530,000 in damages. ART appeals.
The Court of Appeals reversed in part and remanded the case to the trial court to amend the damages award.
Martinez v. American Family
Mutual Insurance Company
Martinez owned a home in Erie that had a finished basement with windows below the ground, which were surrounded by window wells.
On Aug. 3, 2013, there was a severe thunderstorm in Erie. As alleged by Martinez, the rainwater accumulated on top of hail from a storm to such an extent that it eventually overflowed the basement windows, seeped into the basement and caused substantial damage to his home and personal property.
Martinez filed a claim with his insurer, American Family.
After conducting an investigation, American Family concluded that the damage to Martinez’s home was caused by either “flooding” or “surface water,” and was, therefore, expressly excluded from coverage under Martinez’s insurance policy. American Family denied Martinez’s claim on these grounds.
Martinez filed suit, seeking a declaratory judgment on the issue of coverage.
Martinez also asserted claims for contractual and extra-contractual damages. American Family filed a motion for summary judgment on the issue of coverage, arguing that the insurance policy’s water damage exclusion for “flood” and “surface water” applied, as a matter of law, to the damage to Martinez’s home.
The district court granted American Family’s motion for summary judgment, concluding that the rain and hail that collected in the window wells was “surface water” and, thus, the loss from the resulting damage was excluded by the plain language of the insurance policy.
Martinez appealed the district court’s entry of summary judgment, pursuant to Colorado Rule of Civil Procedure 56(c), in favor of defendant, American Family Mutual Insurance Company (American Family). The Court of Appeals affirmed
Traer Creek-EXWMT v. Eagle
County Board of Equalization,
This appeal concerned the property tax valuation of a parcel of land that has a commercial retail building on it.
The tract has been subject to a lease since 1987, and since 2002 Traer has been the lessee.
Under a “Declaration of Easements,” Traer Creek is contractually obligated to pay the property taxes “directly to the appropriate taxing authorities.”
But since assuming the lease, Traer has not paid the property taxes directly to the taxing authority; the owner has made those payments and Traer has reimbursed the owner.
On May 1, 2015, the Eagle County Assessor mailed the owner a notice of valuation regarding the tract. Traer (but not the owner) initiated the statutory protest and adjustment process to challenge the 2015 valuation of the tract. The assessor issued a notice of determination declining to adjust the valuation.
Traer appealed the notice of determination to the Eagle County Board of Equalization. The board upheld the valuation. Traer appealed the board’s decision to district court.
The board moved to dismiss on the theory that a mere lessee does not have standing to challenge a property tax valuation of the sort issued by the assessor. The district court agreed and dismissed the case.
Traer appealed the district court’s judgment dismissing its claims against defendant, the board for lack of standing.
The Court of Appeals concluded that a mere lessee of property (such as Traer) does not have standing to challenge a property tax valuation of property that includes the leased property and affirmed the district court’s decision.
— Tony Flesor, [email protected]