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Wellons, Inc. v. Eagle Valley Clean Energy, LLC
United States District Court, D. Colorado
April 18, 2019
WELLONS, INC., an Oregon corporation, Plaintiff,
EAGLE VALLEY CLEAN ENERGY, LLC, a Utah limited liability company, EVERGREEN CLEAN ENERGY CORPORATION, a Colorado corporation, CLEARWATER VENTURES, LLC, a Utah limited liability company, DEAN L. ROSTROM, individually, KENDRIC B. WAIT, individually, WESTERN RESOURCES, LLC, a Utah limited liability company, COLORADO FORESTRY FUNDING, LLC, a Delaware limited liability company, and WEST RANGE FOREST PRODUCTS, LLC, a Colorado limited liability company, Defendants. EAGLE VALLEY CLEAN ENERGY, LLC, EVERGREEN CLEAN ENERGY CORPORATION, and CLEARWATER VENTURES, LLC, Counterclaimants,
WELLONS, INC., Counterclaim defendant. EAGLE VALLEY CLEAN ENERGY, LLC, EVERGREEN CLEAN ENERGY CORPORATION, and CLEARWATER VENTURES, LLC, Third-party plaintiffs,
WELLONS GROUP, INC., and MARTIN NYE, Third-party defendants. GCUBE INSURANCE SERVICES, INC., a California corporation, Plaintiff,
WELLONS, INC., an Oregon corporation, Defendant.
ORDER ON ADDITIONAL POST-TRIAL MOTIONS
Brooke Jackson United States District Judge.
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.
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.
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:
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.
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.
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.
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.
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.
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. 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.
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 ...