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Hardegger v. Clark

Supreme Court of Colorado, En Banc

October 2, 2017

Ann Hardegger, Petitioner
Daniel Clark and Cheryl Clark. Respondents

         Certiorari to the Colorado Court of Appeals Court of Appeals Case No. 15CA1370

          Attorneys for Petitioner: Rose Walker, L.L.P. Paul M. Grant Denver, Colorado

          Attorneys for Respondents: Boog & Cruser, P.C. Victor F. Boog Lakewood, Colorado



         ¶1 This case principally requires us to determine when the right of contribution provided in 26 U.S.C. § 6672(d) (2012) gives rise to a "claim" under the United States Bankruptcy Code. The petitioner, Ann Hardegger, filed a complaint in the district court seeking contribution from the respondents, Daniel Clark and Cheryl Clark, for their proportionate share of a payment she made to the Internal Revenue Service ("IRS") in full satisfaction of the parties' joint and several tax liabilities. The district court found the Clarks responsible for one-half of the IRS indebtedness and entered summary judgment in Hardegger's favor. A division of the court of appeals reversed, however, concluding that Hardegger's contribution claim constituted a pre-petition debt that had been discharged in the Clarks' bankruptcy case. Hardegger v. Clark, No. 15CA1370, slip op. at 10 (Colo.App. May 26, 2016).

         ¶2 We granted certiorari and now affirm.[1] Applying the "conduct test, " under which a claim arises for bankruptcy purposes at the time the debtor committed the conduct on which the claim is based, we conclude that Hardegger's claim for contribution arose when the parties' jointly owned company incurred federal tax withholding liability between 2007 and 2009, rendering Hardegger and Clark potentially responsible for that debt. Because this conduct occurred before the Clarks filed their bankruptcy petition in 2010, we further conclude that Hardegger's claim constitutes a pre-petition debt that was subject to discharge.

         I. Facts and Procedural History

         ¶3 The material facts in this case are undisputed. The parties are former co-owners of C2H2, Inc. ("C2H2"), a traffic control company. Hardegger and Cheryl Clark each owned a 26% share in C2H2, while Daniel Clark and Hardegger's husband, Jeffrey Hardegger, each owned a 24% share.

         ¶4 Beginning in 2007 and continuing through the first quarter of 2009, C2H2 failed to remit to the IRS federal payroll taxes that had been withheld from its employees. As a result, in November 2009, the IRS recorded a federal tax lien against C2H2.

         ¶5 Shortly thereafter, the Hardeggers filed a lawsuit against C2H2 and the Clarks seeking, among other things, judicial dissolution of C2H2. In that lawsuit, the parties stipulated to the appointment of a special master, and the special master determined that C2H2 was not viable and wound it down. In the course of this wind down, the special master did not pay C2H2's delinquent federal payroll taxes.

         ¶6 Later, in October 2010, the Clarks filed a joint voluntary Chapter 7 bankruptcy petition and gave notice to their creditors, including the Hardeggers. The Hardeggers apparently did not file a proof of claim in the bankruptcy proceeding, and the bankruptcy court granted the Clarks a discharge on May 10, 2011.

         ¶7 Subsequently, the IRS conducted a trust fund investigation and determined that Cheryl Clark and Ann Hardegger were "responsible persons" concerning C2H2's unpaid tax liability. The IRS thus recorded federal tax liens against both women for a so-called "trust fund recovery penalty."

         ¶8 In December 2014, Hardegger paid the total amount of the penalty, comprising all of C2H2's unpaid payroll taxes. She then filed a complaint in the district court seeking contribution, pursuant to 26 U.S.C. § 6672(d), from the Clarks as other persons purportedly liable for those taxes. The Clarks responded, arguing, as pertinent here, that any obligation they might have had to Hardegger with respect to C2H2's tax liability had been discharged in their bankruptcy case.

         ¶9 Both parties moved for summary judgment, and the district court ultimately granted Hardegger's motion. In so ruling, the court found that (1) the Clarks were responsible for 50% of the amount that Hardegger had paid to the IRS on C2H2's behalf and (2) Hardegger's contribution claim did not "accrue" until 2014, "long after the [Clarks'] debts were discharged in bankruptcy."

         ¶10 For reasons largely not pertinent here, the Clarks subsequently filed a motion to amend the judgment. Although the court ultimately denied that motion, in its order doing so, the court clarified that

[t]he action giving rise to [Hardegger's] claim for relief for contribution did not occur (the court inarticulately used the word 'accrue' in its prior order) until the [Clarks] failed to pay to [Hardegger] their share of the tax obligation paid by [Hardegger] to the IRS (it did not occur prior to the bankruptcy).

         ¶11 The Clarks appealed, and in an unpublished decision, a unanimous division of the court of appeals reversed. Hardegger, slip op. at 1, 13. As pertinent here, the division first determined that the district court had improperly focused on when Hardegger's cause of action accrued under 26 U.S.C. § 6672(d) (i.e., when she paid more than her proportionate share of the unpaid federal taxes), rather than when the Clarks committed the conduct on which Hardegger's claim was based (i.e., when C2H2 and its responsible officers did not remit federal withholding taxes, thereby incurring joint and several liability under 26 U.S.C. § 6672(a)). Id. at 8-9. According to the division, the latter, not the former, dictated when Hardegger's claim arose for bankruptcy purposes, and because the material conduct occurred pre-petition, the contribution claim stemming from that conduct likewise arose pre-petition. Id. at 9-10. Then, apparently having discerned no evidence suggesting that Hardegger's claim may have been nondischargeable, the division concluded that the claim had been discharged in the Clarks' Chapter 7 bankruptcy proceeding. Id. Accordingly, the division remanded the case to the district court with orders to enter judgment in favor of the Clarks. Id.

         ¶12 Hardegger then sought, and we granted, certiorari.

         II. Standard of Review

         ¶13 We review a grant of summary judgment de novo. Pulte Home Corp. v. Countryside Cmty. Ass'n, 2016 CO 64, ¶ 22, 382 P.3d 821, 826. When, as here, the material facts are undisputed, summary judgment is proper only when the pleadings and supporting documents show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. C.R.C.P. 56(c); Ryan Ranch Cmty. Ass'n v. Kelley, 2016 CO 65, ¶ 23, 380 P.3d 137, 142. In determining whether summary judgment is proper, a court grants the nonmoving party the benefit of all favorable inferences that may reasonably be drawn from the undisputed facts and resolves all doubts against the moving party. City of Longmont v. Colo. Oil & Gas Ass'n, 2016 CO 29, ¶ 8, 369 P.3d 573, 577-78. In responding to a properly supported ...

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