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Liberty Savings Bank, FSB v. Webb Crane Service

February 9, 2006

LIBERTY SAVINGS BANK, FSB, PLAINTIFF,
v.
WEBB CRANE SERVICE, INC., A COLORADO CORPORATION, JEFFREY A. WEINMAN, THE WEBB CRANE SERVICE, INC., CHAPTER 7 BANKRUPTCY TRUSTEE, KLW & W, LLC, A COLORADO CORPORATION, DAVID E. LEWIS, THE KLW & W, LLC CHAPTER 7 BANKRUPTCY TRUSTEE, WILLIAM WEBB (A/K/A WILL WEBB), AN INDIVIDUAL, KELLY WEBB, AN INDIVIDUAL, LESLIE WEBB, AN INDIVIDUAL, JOHN FORIER, AN INDIVIDUAL. AND GENERAL ELECTRIC CAPITAL CORPORATION, A DELAWARE CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Judge Robert E. Blackburn

ORDER GRANTING DEFENDANT GE CAPITAL'S SUPPLEMENTAL MOTION FOR SUMMARY JUDGMENT

This matter is before me on defendant GE Capital's Supplemental Motion for Summary Judgment on Liberty's Sole Remaining Claim Against It [#203], filed August 19, 2005. I grant the motion.*fn1

I. JURISDICTION

I have subject matter jurisdiction under 28 U.S.C. 1332 (diversity).

II. STANDARD OF REVIEW

Under FED. R. CIV. P. 56(c), summary judgment is proper only if the evidence, viewed in a light most favorable to the nonmoving party, demonstrates that there is no genuine issue as to any material fact, and the moving party is entitled to summary judgment as a matter of law. Farthing v. City of Shawnee, Kan. 39 F.3d 1131, 1134 (10th Cir. 1994). A "material" fact is one "that might affect the outcome of the suit under the governing law," Id. at 1135 (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)), and a "genuine" issue is one where "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. (citing Anderson, 477 U.S. at 248).

I have carefully reviewed the record in this case, including the pleadings, discovery, and affidavits on file, I have carefully considered the reasons stated, arguments advanced, and authorities cited by the parties in their papers. I have employed the analysis required by apposite law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986); Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Applied Genetics Int'l, Inc. v. First Affiliated Sec., Inc., 912 F.2d 1238, 1241 (10th Cir.1990); Redmon v. United States, 934 F.2d 1151,1155 (10th Cir. 1991); and Concrete Works, Inc. v. City & County of Denver, 36 F.3d 1513, 1517 (10th Cir.1994).

III. FACTS

This case concerns a claim by a creditor, plaintiff, Liberty Savings Bank, FSB (Liberty), that its debtor, defendant Webb Crane Service, Inc. (Webb), defrauded Liberty by making false statements in the financial statements Webb provided to Liberty, and by using funds borrowed from Liberty for purposes not authorized under the terms of the loan agreement between Liberty and Webb. In the civil conspiracy claim at issue here, Liberty claims also that a second creditor of Webb, defendant GE Capital Corporation (GE), conspired with Webb to perpetrate the alleged fraud on Liberty. The complaint at issue is the plaintiff's second amended complaint [#101], filed September 13, 2004 (Complaint).

On July 27, 2005, I entered an order granting GE's motion for summary judgment as to all of Liberty's claims against GE, except for Liberty's civil conspiracy claim. I invited further briefing from the parties on the civil conspiracy claim, and GE then filed its supplemental motion for summary judgment concerning the civil conspiracy claim. Liberty has filed a response, and GE has filed a reply. In resolving GE's current motion, I will consider the evidence cited by the parties in their briefs concerning GE's supplemental motion, and I will consider the evidence submitted to the court concerning GE's motion for summary judgment against plaintiff [#153], filed November 1, 2004.

Webb operated a crane rental service. From March, 1997, through March, 2003, Liberty provided a revolving line of credit to Webb. At all times, Webb promised that proceeds from the line of credit would be used only for the operations of Webb's crane business. William, Leslie, and Kelly Webb (the Webbs) were the shareholders, directors, and officers of Webb Crane at the relevant times. In 1996, before Webb had a financial relationship with Liberty, William, Kelly, and Leslie Webb, along with another individual, formed a limited liability company known as KLW&W, LLC (KLWW). KLWW was created to purchase and hold a forty-acre parcel of real estate in Gypsum, Colorado. KLWW planned to use a portion of the Gypsum property for a new facility for Webb's planned expansion into the Western slope area of Colorado. The remainder of the site was to be developed and sold in parcels. The development was named the Spring Creek Industrial Park (SCIP). Beginning in 1997, Webb began diverting some of its funds to KLWW to fund the purchase and development of the Gypsum property. Liberty alleges that some of these diversions involved funds loaned to Webb by Liberty, which were used improperly for purposes other than the operation of Webb Crane's business. Liberty says about 750 thousand dollars of money it loaned to Webb was diverted to the SCIP. Response to supplemental motion for summary judgment (Response II) [#208], filed September 7, 2005, p. 3.

GE supplied Webb Crane with equipment financing for the purchase of cranes and other equipment. Webb rented, and sometimes sold, this equipment to its customers to generate income. GE had a perfected security interest in the equipment it financed.

Webb provided financial statements for calendar years 2000 and 2001 to both Liberty and GE. In its 2000 financial statement, according to GE, Webb reported for the first time that Webb held long term notes receivable from related parties for over 1.1 million dollars, and accounts receivable from related parties for over 1.6 million dollars. After reviewing these financial statements, GE asked Webb to provide complete disclosure of the transactions between Webb and KLWW. These transactions were referenced in the financial statements. After reviewing the requested information, GE says it realized that some of the income received by Webb based on Webb's rental of equipment financed by GE were being used to fund the purchase and development of the SCIP, and were not being used by Webb directly. GE then asked for a corporate guarantee from KLWW concerning the debt owed by Webb to GE. KLWW supplied this guarantee.

By October, 2002, GE had obtained two analyses of Webb's financial condition, including Webb's role in developing the SCIP. First, an appraisal of the SCIP property by Cushman & Wakefield indicated that Webb would have to expend an additional 580 thousand dollars to complete the development of the SCIP before lots sales could begin. Liberty's response to GE's motion for summary judgment (Response I) [#171], filed December 6, 2004, Exhibit 54. Second, a report by the Focus Group ...


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