Metro Nat. Bank v. District Court In and For City and County of Denver

• Decision Date: 23 January 1984
• Docket Number: No. 83SA404,83SA404
• Citation: 676 P.2d 19
• Parties: METRO NATIONAL BANK, A National Banking Association, Petitioner, v. DISTRICT COURT In and For the CITY AND COUNTY OF DENVER, State of Colorado and the Honorable John Brooks, Jr., One of the Judges Thereof and Sherry Dolton DuPoncet (Formerly Known as Sherry Waldman), Respondents.
• Court: Colorado Supreme Court

Page 19

676 P.2d 19

METRO NATIONAL BANK, A National Banking Association, Petitioner, v. DISTRICT COURT In and For the CITY AND COUNTY OF DENVER,

State of Colorado and the Honorable John Brooks, Jr., One of

the Judges Thereof and Sherry Dolton DuPoncet (Formerly

Known as Sherry Waldman), Respondents.

No. 83SA404.

Supreme Court of Colorado,

En Banc.

Jan. 23, 1984.

John Mason, Jr., Linda L. Stamp, Denver, for petitioner.

Philip E. Lowery, P.C., Denver, for respondents.

NEIGHBORS, Justice.

This is an original proceeding filed pursuant to C.A.R. 21 in which the petitioner, Metro National Bank (Metro), contests the district court's jurisdiction to issue a prejudgment order of possession under C.R.C.P. 104. The district court ordered Metro to return to Sherry Dolton DuPoncet (DuPoncet), formerly known as Sherry Waldman, all but 50,000 of the 780,000 shares of stock held as collateral by Metro in Landmark Oil & Gas, Ltd., which were registered in DuPoncet's name. We issued a rule to show cause why the district court should not be prohibited from enforcing its order. We now make the rule absolute.

I.

In November 1982, Metro filed a complaint against DuPoncet and Michael Waldman, her former husband, on a demand promissory note executed by Waldman on February 1, 1982. The basis for joining DuPoncet was a continuing guarantee signed by Sherry Waldman (now DuPoncet) on March 2, 1979. DuPoncet was served with a copy of the complaint on May 26, 1983. She filed an answer, counterclaim, cross-claim, and third-party complaint on June 24, 1983.

Metro filed a motion for summary judgment on its claim against Michael Waldman and a hearing was set for September 6, 1983. On August 29, 1983, DuPoncet mailed a "Verified Complaint for Replevin" and "Notice of Forthwith Hearing" to Metro's attorneys. The notice stated that on September 6, 1983, prior to the hearing on Metro's motion for summary judgment, DuPoncet would ask the court to hear her complaint for replevin. The replevin complaint was filed in the case brought by Metro to collect on the promissory note. No show cause order was issued by the respondent court. Metro filed a motion to quash the verified complaint on numerous grounds, including those raised in this original proceeding. However, the respondent court either did not rule on this motion or denied it.

No record of the proceedings held on September 6, 1983, is available since the hearing was held in chambers and no court reporter was present. Apparently, no evidence was presented, although the court heard oral arguments. The respondent judge ordered Metro to return all the Landmark Oil & Gas stock, except for 50,000 shares, to DuPoncet. ¹ The court denied Metro's request that DuPoncet be required to post a bond.

The court's order was delivered to Metro on September 8, 1983. However, Metro did not release the stock to DuPoncet; instead, it presented a bond to the court in the amount of $140,000 (determined by the bank to be double the value of the stock it was holding). This bond was accepted by the court. Metro also filed an "exception to sureties" in which it objected to the respondent court's failure to comply with C.R.C.P. 104 and to require a bond from DuPoncet. The respondent court again refused to require that DuPoncet post a bond and ruled that its order of September 9, 1983, be stayed for fourteen days. On September 12, 1983, the court entered a further ruling in which it determined that the redelivery bond posted by Metro was only effective for the duration of the fourteen-day stay. Metro then commenced this original proceeding and we issued the rule to show cause.

II.

Metro argues that the respondent court exceeded its jurisdiction and abused its discretion in several respects. Metro contends that the respondent court did not have jurisdiction to enter the replevin order because it was not served with the verified complaint and an order to show cause was not issued prior to the hearing. Metro further claims that the respondent court abused its discretion by refusing to require that DuPoncet post a bond and in ruling that Metro's redelivery bond was only effective for fourteen days.

III.

Replevin is governed by C.R.C.P. 104, which was adopted by this court in 1972 in order to insure that proceedings in such actions comply with the due process standards announced in Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972). In Fuentes, the Supreme Court held that in the context of prejudgment possession orders in replevin cases, due process requires that before property can be taken from a person, notice and an opportunity to be heard must be given "at a time when the deprivation can still be prevented." 407 U.S. at 81, 92 S.Ct. at 1994. The Court went on to hold that

"[t]he nature and form of such prior hearings, moreover, are legitimately open to many potential variations and are a subject, at this point, for legislation--not adjudication. Since the essential reason for the requirement of a prior hearing is to prevent unfair and mistaken deprivations of property, however, it is axiomatic that the hearing must provide a real test. '[D]ue process is afforded only by the kinds of "notice" and "hearing" that are aimed at establishing the validity, or at least the probable validity, of the underlying claim against the alleged debtor before he can be deprived of his property....' "

Fuentes, 407 U.S. at 96-97, 92 S.Ct. at 2002 (footnote and citation omitted) (emphasis in original).

The provisions of C.R.C.P. 104 were "intended to ensure that a replevin defendant's constitutionally guaranteed property rights would not be jeopardized by unduly summary claim and delivery proceedings." Jack Kent Cadillac, Inc. v. District Court, 198 Colo. 403, 406, 601 P.2d 626, 627-28 (1979). The rule sets forth the procedures which provide adequate protection for all parties to a replevin action. Compliance with the provisions of C.R.C.P. 104 insures that the replevin defendant's constitutional rights are adequately protected.

A.

We first examine the question of whether DuPoncet's replevin claim was properly before the respondent court. Metro argues that DuPoncet's "Verified Complaint for Replevin" should not have been accepted by the court for filing because no docket fee was paid. Metro also claims that the pleading was not personally served upon it as required by C.R.C.P. 104(c) because service was effected by mailing a copy to its attorneys who had appeared in the promissory note case. We reject Metro's arguments.

In the first claim for relief alleged in her counterclaim for which a docket fee was paid, DuPoncet requests the court to enter judgment that Metro be ordered to "[r]eturn to DuPoncet ... all certificates of Landmark Oil & Gas, Ltd. shares in the name of DuPoncet held by Plaintiff [Metro]." She also requests damages. We construe the facts alleged in the counterclaim and the demand for relief as constituting a claim for replevin. Replevin is a possessory action. Barslund v. Anderson, 106 Colo. 238, 103 P.2d 23 (1940); Wyman v. McCarthy, 93 Colo. 340, 26 P.2d 245 (1933). A replevin claimant seeks to recover possession of personal property and damages for its unlawful detention. Mason v. General Machinery and Supply Co., 91 Colo. 69, 11 P.2d 802 (1932).

Under C.R.C.P. 104(e), a party seeking a prejudgment order of possession before a hearing is held must post a bond. A claimant who seeks a prejudgment order of possession after a hearing may be required to post a bond. C.R.C.P. 104(g). Therefore, a replevin claimant may elect to forego a claim for possession prior to final judgment in order to avoid the cost of a bond or the filing of the necessary affidavit or verified complaint as required by C.R.C.P. 104(b).

We construe the "Verified Complaint for Replevin" filed by DuPoncet on August 29, 1983, to be an inartfully drafted motion for a prejudgment order of possession. The verified complaint incorporates by reference the answer, counterclaim, cross-claim, and third-party complaint, and is sworn to by DuPoncet. As such, the requirements of C.R.C.P. 104(b) for a "verified complaint" or "complaint and affidavit under penalty of perjury" were met. In addition, service of the pleading upon the attorneys for Metro was proper since they previously had entered an appearance in the case. C.R.C.P. 5(b).

B.

Respondents DuPoncet and the district court failed to comply with the provisions of C.R.C.P. 104 in several material respects. C.R.C.P. 104(c) provides:

"Show Cause Order; Hearing within Ten Days. The court shall without delay, examine the complaint and affidavit, and if it is satisfied that they meet the requirements of section (b), it shall issue an order directed to the defendant to show cause why the property should not be taken from the defendant and delivered to the plaintiff. Such order shall fix the date and time for the hearing thereof. The hearing date shall be not more than ten days from the date of the issuance of the order and the order must have been served at least five days prior to the hearing date. Such order shall inform the defendant that he may file affidavits on his behalf with the court and may appear and present testimony in his behalf at the time of such hearing, or that he may, at or prior to such hearing, file with the court a written undertaking to stay the delivery of the property, in accordance with the provisions of section (j) of this rule, and that, if he fails to appear at the hearing on the order to show cause or to file an undertaking, plaintiff may apply to the court for an order requiring the sheriff to take immediate possession of the property described in the complaint and deliver same to the plaintiff. The summons and complaint, if not previously served, and the order shall be served on the defendant and the order shall fix the manner in which service shall be...