United States District Court, D. Colorado
IN RE DVR, LLC and UTE LAKE RANCH, INC., Debtors.
DVR, LLC, JOLI A. LOFSTEDT - TRUSTEE FOR DEBTOR'S ESTATE, UTE LAKE RANCH, INC., and JANICE STEINLE - TRUSTEE FOR DEBTOR'S ESTATE, Appellees. BRUCE HAMON, Appellant,
MEMORANDUM OPINION AND ORDER
T. BABCOCK, JUDGE.
Bruce Hamon (“Hamon”) appeals the United States
Bankruptcy Court for the District of Colorado's (the
“Bankruptcy Court”) Order Allowing Settlement
Hearing to Proceed dated March 26, 2018 [Doc # 1, Ex. 1] and
Order Approving Settlement Agreement dated October 26, 2018
[Doc # 1, Ex. 2]. Oral argument would not materially assist
in the determination of this appeal. After full consideration
of the record and the parties' briefs, I affirm the
orders of the Bankruptcy Court.
28 U.S.C. § 158(a)(1), this Court has jurisdiction to
hear appeals from “final judgments, orders and
decrees” of the Bankruptcy Court. There is no dispute
that the orders that are the subject of this appeal are final
and that this Court has jurisdiction over this appeal.
approved settlement at issue in this appeal was entered into
by the Trustees for DVR, LLC (“DVR”) and Ute Lake
Ranch, Inc. (“ULR”) (collectively
“Debtors”) and non-party New Lake, LLC
(“New Lake”). Barry Freedman
(“Freedman”) formed Debtors for the purpose of
owning and developing land in New Mexico. Freedman is a
majority member and shareholder of Debtors, and Hamon is a
minority member and shareholder of Debtors. New Lake is
another entity formed by Freedman.
2006, DVR, Hamon, and Freedman, as co-borrowers, borrowed
$2.5 million from First National Bank of New Mexico
(“FNB”). The FNB loan was evidenced ny a
promissory note (the “FNB Note”) and secured by
mortgages (the “FNB Mortgages”) on real property
owned by Debtors (the “Property”).
disputes arose between Freedman and Hamon, multiple lawsuits
were filed involving Freedman, Hamon, and other related
parties. In particular, Hamon and another minority owner of
Debtors, filed Hamon v. ULR, Case No. 2009CV2340 in
the District Court for Arapahoe County, Colorado (the
“State Court Case”) wherein they asserted claims
for breach of fiduciary duty and fraudulent concealment
against Freedman and requested dissolution of Debtors or the
appointment of a receiver.
the State Court Case was pending, DVR defaulted on the FNB
Note after Hamon failed to execute a change in terms
agreement negotiated by Freedman. Freedman formed New Lake
and through it purchased the FNB Note and the FNB Mortgages.
November 29, 2012, following a trial, the Arapahoe County
District Court (the “State Court”) issued its
Findings of Fact, Conclusions of Law, and Order (the
“Post-Trial Order”) in the State Court Case. In
the Post-Trial Order, the State Court found that Freedman
breached his fiduciary duties as manger of DVR by
self-dealing with respect to the FNB Note and through
mismanagement but that the plaintiffs had not proven that
they suffered any resulting damages. The State Court reserved
ruling on the plaintiffs' request for judicial
dissolution of Debtors but appointed a receiver for them (the
appealed the Post-Trial Order. Hamon moved to dismiss the
appeal on the basis that it was untimely due to important
matters still pending before the State Court. The Colorado
Court of Appeals agreed and dismissed Freedman's appeal.
Freedman then filed a motion for clarification or,
alternatively, for certification of final judgment pursuant
to Colo. R. Civ. P, . 54(b). The State Court denied
October 24, 2013, the State Court entered an Order Imposing
Constructive Trust (the “CTO”) on the FNB Note
and FNB Mortgages as requested by the Receiver. In the CTO,
the State Court found that New Lake was the alter ego of
Freedman and further ordered that the money paid by Freedman
to purchase the FNB Note would be deemed a capital
contribution to DVR; that the FNB Mortgages were
extinguished; and that Freedman or, should Freedman fail to
do so, the Receiver execute written releases of the FNB
Mortgages. The Receiver ultimately filed releases of the FNB
filed a second appeal aimed at the CTO. Hamon again moved to
dismiss Freedman's appeal on the basis that it was
untimely since there was still no final judgment in the State
Court Case. The Colorado Court of Appeals agreed and
dismissed Freedman's appeal of the CTO.
to the orders of the State Court, the Receiver attempted to
sell the Debtors' Property. To thwart the Receiver's
efforts, Freedman and New Lake filed a notice of lis pendens
against the Property. The State Court ordered Freedman to
release the notice of lis pendens but he failed to do so and
instead filed a second notice of lis pendens against the
Property. On August 11, 2016, the State Court held New Lake
in indirect punitive contempt and imposed a fine of $50, 000.
On August 15, 2016, the State Court held Freedman in indirect
punitive contempt in four separate instances and sentenced
him to 1 week of imprisonment for each instance for a total
sentence of 4 weeks imprisonment.
the Receiver was unable to sell the Debtors' Property and
filed bankruptcy petitions for both Debtors. On January 24,
2017, New Lake filed a secured proof of claim in the
Debtors' bankruptcy cases in the amount of $2, 529,
713.24 (the “New Lake Claim”) representing the
balance owing on the FNB Note. New Lake also filed a notice
of appeal from the August 11, 2016 indirect punitive contempt
finding against it. This appeal was stayed as a result of the
of forty-nine creditors filed claims in the DVR bankruptcy
case, and a total of forty-four creditors filed claims in the
ULR bankruptcy case. The unsecured claims asserted in the DVR
bankruptcy case total $16, 477, 716.23.
13, 2017, in reliance on the CTO, Hamon commenced an
adversary proceeding (the “Adversary Proceeding”)
against New Lake and Freedman objecting to the New Lake Claim
pursuant to 11 U.S.C. § 502 and seeking to equitably
subordinate the New Lake Claim to the claims of every other
unsecured creditor pursuant to 11 U.S.C. § 510(c) and to
re-characterize it from a debt claim to an equity claim.
Shortly thereafter, with the approval of the Bankruptcy
Court, trustees for the Debtors in the bankruptcy cases (the
“Trustees”) sold the Property for a purchase