Wellons, Inc. v. Eagle Valley Clean Energy, LLC

          ORDER ON ADDITIONAL POST-TRIAL MOTIONS

          R. Brooke Jackson United States District Judge.

         On June 5, 2017 a jury rendered its verdicts in No. 15-cv-1252-RBJ, finding in favor of the plaintiff on separate counts of breach of contract against defendants Eagle Valley Clean Energy, LLC and Evergreen Clean Energy Corporation and awarding damages in the amount of $10, 840, 000. The jury found in favor of the two defendants (and entities related to them) on plaintiff's fraudulent transfer claims. Finally, the jury found against Eagle Valley on its counterclaims for breach of contract and negligence. ECF No. 367. The Court entered its Final Judgment on July 24, 2017. ECF No. 382.

         Defendants filed a notice of appeal on August 23, 2017. On September 7, 2017 the Clerk of the Tenth Circuit indicated that the appeal would be abated until the district court disposed of the motion for a new trial. ECF No. 425. On September 29, 2017 the Court denied defendants' motion for a new trial. ECF No. 455. On October 19, 2017 the plaintiff filed a notice of cross appeal. ECF No. 463. The appeals are pending.

         Nevertheless, the parties continue to file motions in this Court. Presently pending are four more post-trial motions, all related to plaintiff's efforts to collect its judgment. Notably, Eagle Valley and Evergreen Clean Energy have not sought or obtained a stay of execution pending appeal. The Court has reviewed the motions, responses and replies (if any), and rules as follows:

         A. ECF No. 536: [Defendant Evergreen's] Motion to Set Aside Amended Order Charging Interests of Evergreen Clean Energy Corporation in a Limited Liability Company Pursuant to C.R.S. § 7-80-703.

         By way of background, the Court denied plaintiff's initial motion for a charging order against Evergreen's membership interests in two LLCs, Western EVCE LLC and Meridian Valley, LLC, because Colo. Rev. Stat. § 7-80-703 does not apply to LLC's not formed under that article. See ECF No. 436. Plaintiff filed another similar motion, this time seeking a charging order against Evergreen's membership interest in West Range Reclamation, LLC. ECF No. 530. Evergreen opposed the motion on grounds that it does not hold and has never held a membership interest in West Range Reclamation, LLC. ECF No. 531.

         Plaintiff then amended that motion to seek a charging order against Evergreen's membership interest in West Range Forest Products LLC (WRFP). ECF No. 532. No. response was filed, and the Court on November 6, 2018 granted the amended motion. ECF No. 535. More than a month later Evergreen filed the pending motion to set aside the latter order. ECF No. 536. Evergreen acknowledges that it used to own an interest in WRFP. However, it states that it “has not owned an interest in WRFP since January 1, 2014.” Id. at 1. In support of that statement it provides

• A Purchase and Sale Agreement indicating that Evergreen sold its membership interest in WRFP to Clearwater Ventures LLC for $1.00 and other good and sufficient consideration “as of January 1, 2014.” The document signed by Mr. Wait for Evergreen and by his wife Bethani Wait and Laura Rostrom, the wife of defendant Dean Rostrom, for Clearwater. ECF No. 536-1 at 5-6.

• A Statement of Correction filed with the Colorado Secretary of State on April 30, 2015 advising that “As of January 1, 2014 West Range Forest Products LLC is a wholly owned subsidiary of Clearwater Ventures LLC.” Signed by Kendric B. Wait, Manager [of Clearwater Ventures LLC]. Id. at 8-10.

• Mr. Wait's declaration attesting that Evergreen sold its membership interest in WRFP and is not a member of WRFP; that he caused the April 30, 2015 statement to be filed with the Colorado Secretary of State; and that WRFP is now owned by Trust Holdings, LLC, its sole member. Id. At 2-3.

         In its response, ECF No. 537, plaintiff provides no contrary evidence. However, plaintiff states that Clearwater and Trust Holdings, LLC, the current owner, are affiliates of Evergreen. Plaintiff notes that, in an exchange of emails between counsel in the fall of 2018, it received two Purchase and Sale Agreements, one indicating that CSE Ventures sold its membership interest in WRFP to Evergreen “as of January 1, 2014, ” and the other that Evergreen in turn sold its interest to Clearwater “as of” the same date. See Id. at __and ECF Nos. 537-1 and 537-2. Plaintiff argues that the transactions should be closely scrutinized, i.e., for backdating, lack of consideration, and possible fraudulent conveyance. ECF No. 537 at ¶13, 15, 19-25. Plaintiff requests that the Court allow limited discovery and then hold an evidentiary hearing on these issues. Id. at ¶15, 26.

         Plaintiff also informs the Court about a Chapter 7 bankruptcy proceeding for one Cody Thomas Neff. Neff created West Range Reclamation, WRFP and CSE Ventures. West Range Reclamation later experienced financial difficulties. In a Complaint filed in Neff's bankruptcy proceeding, ECF No. 537-4, the trustee alleges that Neff depleted the assets of West Range Reclamation and his own personal assets in an effort to defraud creditors, and that his “sale” of CSE's interest in WRFP to Evergreen was part of that effort. However, it does not appear from my review of the trustee's Complaint that he is accusing Evergreen, Clearwater or affiliates of knowingly participating in Neff's alleged efforts to defraud creditors.

         In its reply to plaintiff's motion Evergreen first asserts that plaintiff represented to the Court that Evergreen owns an interest in WRFP even though it knew that Evergreen did not. It points to four things: (1) testimony in the Rule 30(b)(6) deposition of WRFP wherein Mr. Wait agreed that after Evergreen purchased Mr. Neff's (CSE Ventures') interest in WRFP, it was “pretty much immediately transferred to Clearwater; (2) a question posed in a 30(b)(6) deposition of Clearwater Ventures which reflected plaintiff counsel's knowledge that in January 2014 Clearwater became the sole member of WRFP; (3) a deposition exhibit in plaintiff's deposition of WRFP deposition that contained an indication that WRFP was owned by Clearwater; and (4) plaintiff's trial exhibit 106-1 which, according to Evergreen, shows that WRFP is owned by Clearwater.^[1] Evergreen also argues that plaintiff counsel violated local rule 7.1(d) by including a motion for a “trial” on whether Evergreen's transfer to Clearwater should be voided in a response or reply to a motion. Id. at 1-2.^[2]

         There appears to be no doubt, and I think no dispute, that Evergreen does not own any membership interest in WRFP and has not owned such an interest at least since April 30, 2015, perhaps not since January 2014. So, the dispute boils down to whether the conveyance of the ...