United States District Court, D. Colorado
ORDER GRANTING PLAINTIFF'S MOTION FOR SUMMARY
JUDGMENT AND DENYING DEFENDANTS' MOTION FOR SUMMARY
CHRISTINE M. ARGUELLO JUDGE
matter is before the Court on dueling motions of summary
judgment filed by Plaintiff Fifth Third Bank (Doc. # 52) and
Defendants Marie Korallus and Marie Ludian (Doc. # 51).
Because the Court finds the existence of a fraudulent
transfer as a matter of law, the Court grants Plaintiff's
motion and denies Defendants' motion.
2009, Lucy T. Morales (Ms. Morales) created the Lucy T.
Morales Revocable Trust (the Trust) (collectively, the
Defaulting Defendants) and, as grantor, named herself as Trustee
and beneficiary. (Doc. # 52-3 at 349.) Ms. Morales later
amended the Trust to name her daughters Marie Ann Korallus
and Marie Tess Ludian (Defendants) as successor trustees.
(Doc. # 52-1 at 1, 9.) Upon Ms. Morales's death, all the
Trust's assets would be distributed to the Defendants.
(Doc. # 52-2 at 146, 151- 52.) Ms. Morales also transferred
real property in Montrose, Colorado (the Montrose Property)
to the Trust. (Doc. # 52-1 at 146, 158, 164-67.)
2011, Plaintiff loaned approximately $510, 000.00 to Grand
Park Surgical Center (Grand Park) and Chicago Medical and
Surgical Center (Chicago Medical). (Doc. # 52-3 at 349-50.)
Ms. Morales guaranteed the repayment obligation on the loan.
(Id. at 350.) In 2013, based on an alleged default
on the loan, Plaintiff commenced a civil suit against them in
the Circuit Court of Cook County, Illinois (Illinois Court).
(Doc. # 52-2 at 244, 253.) The Illinois Court entered
judgment in Plaintiff's favor in the amount of $607,
768.10 (Illinois Judgment). (Doc. # 52-1 at 179-80.) In 2014,
Plaintiff domesticated and publicly recorded the Illinois
Judgment against Ms. Morales in Montrose County, Colorado
(Colorado Judgment). (Id. at 182-84.) Meanwhile,
Plaintiff also obtained an Order from the Illinois Court
impressing a judicial lien against the assets of the Trust,
including the Montrose Property (Judicial Lien). (Doc. # 52-2
at 189.) In September 2015, Plaintiff commenced post-judgment
collection proceedings against Ms. Morales on the Illinois
Judgment (Id. at 252.)
December 2015, the Defaulting Defendants transferred the
Montrose Property by warranty deed to the Defendants (the
Transfer). In exchange, the Defaulting Defendants received a
promissory note and deed of trust (the Note) from the
Defendants in the principal amount of $395, 000.00. (Doc. #
51-1 at 3.) The Note had a fifteen-year maturity date and
bore no interest. (Id.) It included provisions
requiring Defendants to maintain the Montrose Property and an
acceleration clause in the event of breach or default.
(Id. at 4-10.) At the time of Transfer, the market
value of the property was between $395, 000.00 and $400,
000.00. (Doc. # 51 at 4; Doc. # 52 at 6.)
2017, the Illinois Court entered an Order directing the
Defaulting Defendants to “turn over the [Note]”
to Plaintiff “who may collect upon it.” (Doc. #
52-3 at 331.) The Illinois Court later ordered that “a
writ of execution shall issue directing public auction of the
Note.” (Doc. # 58-2 at 91.) Neither party contends that
any such auction has occurred.
proceedings in Illinois remained pending, Plaintiff commenced
this lawsuit raising three Claims for Relief. (Doc. # 1.) In
its First and Second Claims, Plaintiff argues that the
Defaulting Defendants fraudulently transferred the Montrose
Property to the Defendants pursuant to Colorado Revised
Statute § 38-8-105(a) and (b). (Id. at 7- 10.)
Plaintiff seeks the avoidance of that Transfer pursuant to
§ 38-8-108. (Id.) Plaintiff's Third Claim
alleges that Defendants are liable for Civil Conspiracy based
on their collective participation in the Transfer.
(Id. at 10-11.) The parties agree that all claims
are ripe for summary judgment.
STANDARD OF REVIEW
judgment is warranted when “the movant shows that there
is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(a). A fact is “material” if it is
essential to the proper disposition of the claim under the
relevant substantive law. Wright v. Abbott Labs.,
Inc., 259 F.3d 1226, 1231-32 (10th Cir. 2001). A dispute
is “genuine” if the evidence is such that it
might lead a reasonable jury to return a verdict for the
nonmoving party. Allen v. Muskogee, Okl., 119 F.3d
837, 839 (10th Cir. 1997). When reviewing motions for summary
judgment, a court must view the evidence in the light most
favorable to the non-moving party. Id. However,
conclusory statements based merely on conjecture,
speculation, or subjective belief do not constitute competent
summary judgment evidence. Bones v. Honeywell Int'l,
Inc., 366 F.3d 869, 875 (10th Cir. 2004).
well-pleaded facts in the Complaint are deemed true with
respect to defaulting parties. Newell Recycling, LLC v.
DC Brands Int'l, Inc., No. 13-CV-1238-WJM-KMT, 2014
WL 1213366, at *2 (D. Colo. Mar. 24, 2014).
the parties request summary judgment on each of
Plaintiff's claims, the Court address them in turn.
claims that the Transfer was fraudulent pursuant to §
38-8-105(a) and (b) of the Colorado Uniform Fraudulent
Transfer Act (CUFTA). The burden of proof lies with Plaintiff
to prove fraudulent transfer under either subsection of this
statute. Schempp v. Lucre Mgmt. Grp., LLC, 75 P.3d
1157, 1165 (Colo.App. 2003).
Court begins with subsection (a), which provides:
A transfer made . . . by a debtor is fraudulent as to a
creditor, whether the creditor's claim arose before or
after the transfer was made . . ., if the debtor made the
transfer . . . (a) [w]ith actual intent to hinder, delay, or
defraud any creditor of the debtor.
§ 38-8-105(a). Plaintiff need only demonstrate that the
“debtor”-here, the Defaulting Defendants-made the
Transfer “with actual intent to hinder, delay, or
defraud” Plaintiff-the creditor.
intent” under subsection (a) is seldom susceptible to
direct proof. Courts therefore look to the following
non-exclusive factors, otherwise known as “badges of
fraud, ” to assess a debtor's intent:
(a) The transfer or obligation was to an insider;
(b) The debtor retained possession or control of the property