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Lewis v. Taylor

Supreme Court of Colorado, En Banc

June 20, 2016

C. Randel Lewis, solely in his capacity as receiver, Petitioner
v.
Steve Taylor, Respondent.

          Attorneys for Petitioner: Lindquist & Vennum LLP Michael T. Gilbert John C. Smiley Theodore J. Hartl Denver, Colorado

          Attorneys for Respondent: Podoll & Podoll, P.C. Richard B. Podoll Robert A. Kitsmiller Dustin J. Priebe

          Attorneys for Amicus Curiae Gerald Rome, Securities Commissioner for the State of Colorado: Cynthia H. Coffman, Attorney General Russell B. Klein, Deputy Attorney General Charles J. Kooyman, Assistant Attorney General

          JUSTICE GABRIEL dissents, and CHIEF JUSTICE RICE and JUSTICE COATS join in the dissent.

          OPINION

          HOOD, JUSTICE

          ¶1 Under the Colorado Uniform Fraudulent Transfer Act ("CUFTA"), §§ 38-8-101 to -112, C.R.S. (2015), any action to avoid an intentionally fraudulent transfer is extinguished if not brought within four years after the transfer was made or, if later, within one year after the transfer was or could reasonably have been discovered, § 38-8-110(1)(a). In this case, we consider whether this time period may be extended by a tolling agreement entered into voluntarily by both parties. We conclude that it may.

         ¶2 Though section 38-8-110(1) provides that a claim is "extinguished" if not acted upon within the prescribed time period, we find that term ambiguous in this context because it applies to language within section 38-8-110(1)(a) suggesting both a period of limitation and a period of repose. In resolving that ambiguity, we do not interpret the word "extinguished" to wholly eliminate the right to bring a claim where the time period for exercising that right has been extended by express agreement.

         ¶3 Accordingly, we hold that section 38-8-110(1)'s time limitations may be tolled by express agreement. Because the parties signed a tolling agreement here, and the petitioner's CUFTA claims were properly brought within the tolling period, we conclude that his claims were timely filed and are not barred. We therefore reverse the judgment of the court of appeals and reinstate the trial court's order of summary judgment in favor of the petitioner. We remand to the court of appeals to consider the alternate argument on which the respondent appealed the trial court's order.

         I. Facts and Procedural History

         ¶4 In 2006, the respondent, Steve Taylor, invested $3 million in several investment companies operated by Sean Mueller. Unbeknownst to Taylor, Mueller was using these companies (the "Mueller Funds") to run a multi-million dollar Ponzi scheme. The Mueller Funds received approximately $147 million in total investments, and paid out approximately $86 million to investors, before the scheme collapsed.

         ¶5 Taylor happened to be one of the "winners" of the scheme. Between September 1, 2006, and April 19, 2007, Taylor received $3, 487, 305.29 in payouts from the Funds, representing a return of his invested principal, plus a net profit of $487, 305.29. Others were not so fortunate. Approximately ninety-five investors lost a total of approximately $72 million.

         ¶6 In April 2010, the Colorado Securities Commissioner discovered that the Mueller Funds were a Ponzi scheme. In November 2010, Mueller pleaded guilty to securities fraud, theft, and violating the Colorado Organized Crime Control Act. In December 2010, he was sentenced to a total of 40 years in prison and ordered to pay over $64 million in restitution.

         ¶7 On April 27, 2010, the district court appointed the petitioner, C. Randel Lewis, as the Receiver for the Mueller Funds. The Receiver was tasked with collecting and distributing Mueller's assets to his creditors, including to his defrauded investors.

         ¶8 On April 12, 2011, the Receiver and Taylor, who was represented by counsel, signed a tolling agreement that extended the time period within which the Receiver could institute a cause of action against Taylor through and including December 31, 2011. The agreement provided that "[a]ll applicable statutes of limitation or repose, each and every statutory or common law time limitation respecting the commencement of an action, . . . and any other defenses based on the passage of time . . . hereby are and shall be tolled during the Tolling Period." It stipulated that any action brought by the Receiver within the tolling period would be deemed to have been filed on April 12, 2011, the effective date of the agreement.

         ¶9 On October 14, 2011, the Receiver filed a complaint against Taylor that included a CUFTA claim seeking to recover Taylor's net profit of $487, 305.29 for equitable distribution among all losing investors in the Mueller Funds. CUFTA provides that a cause of action to avoid an intentionally fraudulent transfer is extinguished if it is not brought within four years after the transfer was made or, if later, within one year after the transfer was or could reasonably have been discovered. § 38-8-110(1)(a). Taylor's last payout-the last fraudulent transfer he received-was made on April 19, 2007, and the transfer was or could reasonably have been discovered by the Receiver on the date of his appointment, April 27, 2010. Thus, section 38-8-110(1)(a) would bar any claim not filed by April 27, 2011, one year after the later of those dates.

         ¶10 The Receiver filed a motion for partial summary judgment on the CUFTA claim, and Taylor filed a cross-motion, arguing that the Receiver's CUFTA claim was filed outside the statutory time period and therefore was time-barred. The trial court found in the Receiver's favor. It considered the tolling agreement valid and binding, and it concluded that the Receiver's claims against Taylor were timely.

         ¶11 Taylor appealed, and the court of appeals reversed. Lewis v. Taylor, 2014 COA 27M, ¶ 23, ___ P.3d ___. It read section 38-8-110(1)-specifically, its use of the word "extinguished"-to impose a jurisdictional time limitation on filing a claim that, if not met, destroys the right of action. It therefore concluded that the parties could not toll the time limitation by agreement. The court of appeals remanded the case to the trial court with instructions to grant Taylor's motion for summary judgment.[1]

         ¶12 The Receiver petitioned this court to review the court of appeals' judgment. We granted his petition.[2]

         II. Standard of Review

         ¶13 A trial court's order granting or denying summary judgment is subject to de novo review. Oasis Legal Fin. Grp., LLC v. Coffman, 2015 CO 63, ¶ 30, 361 P.3d 400, 405. Summary judgment is appropriate only if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." C.R.C.P. 56(c). The material facts are not in dispute in this case.

         ¶14 Additionally, the proper meaning of section 38-8-110(1) presents a question of statutory interpretation, which we review de novo. Roup v. Commercial Research, LLC, 2015 CO 38, ¶ 8, 349 P.3d 273, 275.

         III. ...


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