Meyer v. Haskett

• Decision Date: 09 December 2010
• Docket Number: Nos. 09CA1776,09CA2217.,s. 09CA1776
• Citation: 251 P.3d 1287
• Parties: Keegan L. MEYER, Plaintiff–Appellee,v.Phillip David HASKETT and Sarah D'Ann Haskett Educational Trust, Defendants–Appellants.
• Court: Colorado Court of Appeals

251 P.3d 1287

Keegan L. MEYER, Plaintiff–Appellee,

v.Phillip David HASKETT and Sarah D'Ann Haskett Educational Trust, Defendants–Appellants.

Nos. 09CA1776

09CA2217.

Colorado Court of Appeals, Div. II.

Dec. 9, 2010.

The Torbet Law Firm, John Randolph Torbet, Hans Christian Tuft, Colorado Springs, Colorado, for Plaintiff–Appellee.Phillip David Haskett, Pro Se.David H. Krall, Colorado Springs, Colorado, for Defendant–Appellant Sarah D'Ann Haskett Education Trust.Opinion by Judge ROY.

In this consolidated appeal, the Sarah D'Ann Haskett Educational Trust (the trust) appeals from a summary judgment quieting title to a parcel of real property (the property) in Keegan L. Meyer (purchaser). Phillip David Haskett (debtor) appeals from the entry of default judgment. In addition, the trust and debtor both appeal the orders denying their respective motions to vacate the judgments. We affirm.

I. Background

A stipulated judgment, in the amount of $81,126.69, entered against debtor for past due child support, and a writ of execution was issued and recorded in the records of the El Paso County Clerk and Recorder. Debtor and the mother of his child then apparently agreed that the judgment would be assigned to the trust for the education of the child. In a response to interrogatories, debtor represented that he owned the property, and the trust sought to enforce the writ of execution against it. However, prior to the entry of judgment, debtor had conveyed what interest he had in the property to Palmer Divide Energy Resources, LLC (the LLC), a limited liability company in which he was the only member.

However, in 1983, prior to the above-described events, the Treasurer of El Paso County sold a tax lien on the property at a tax sale for unpaid 1982 taxes and issued a certificate of purchase. After several assignments of the certificate of purchase, it was transferred to purchaser in 2007, who then requested that a treasurer's deed issue. Thereafter, the treasurer sent notice to a number of parties, including the LLC, and published a notice pursuant to section 39–11–128, C.R.S.2010. When the property was not redeemed, a tax deed was issued to purchaser and recorded on June 8, 2007.

On June 20, 2007, pursuant to the writ of execution, a sheriff's sale was held and the trust purportedly purchased debtor's interest in the property. Before the sheriff could issue a sheriff's deed, however, purchaser requested, and was granted, an injunction enjoining the sheriff from completing the sale.

Purchaser filed a complaint to quiet title to the property and requested permission to serve some of the interested parties, including debtor and the LLC, by publication because they listed out-of-state post office boxes as their addresses. The trust answered the complaint, but neither debtor nor the LLC filed an answer or otherwise responded to the complaint. The trial court entered default judgment against debtor and the LLC.

Purchaser then filed a motion for summary judgment against the trust, which was granted. The trust and debtor both filed motions asking the court to vacate the judgments against them; both were denied. These appeals followed.

II. The Trust's Claims

As we understand its arguments, the trust contends that (1) the trial court erred in granting summary judgment in favor of purchaser because there were genuine issues of material fact as to the validity of the treasurer's deed because the treasurer failed to give notice of the tax sale in strict conformity with the applicable statute; (2) the trial court erred in denying its motion to reconsider the summary judgment based upon newly discovered evidence; and (3) the trial court erred in dismissing its claims under the Colorado Uniform Fraudulent Transfers Act (CUFTA). §§ 38–8–101 to –112, C.R.S.2010. We are not persuaded.

A. Summary Judgment

We first consider whether the trial court erred in granting summary judgment in favor of purchaser. We conclude that it did not.

We review de novo a trial court's grant of summary judgment. Aspen Wilderness Workshop, Inc. v. Colorado Water Conservation Board, 901 P.2d 1251 (Colo.1995). Summary judgment is a drastic remedy and should be granted only if there is no genuine issue as to any material fact, and the moving party is entitled to judgment as a matter of law. Peterson v. Halsted, 829 P.2d 373, 375 (Colo.1992). A litigant is entitled to have disputed facts determined by the finder of fact during a trial, and it is only in the clearest of cases, where no doubt exists concerning the facts, that summary judgment is warranted. Moses v. Moses, 180 Colo. 397, 402, 505 P.2d 1302, 1304 (1973).

In determining whether summary judgment is proper, the court must give the party opposing the motion the benefit of all favorable inferences that reasonably may be drawn from the facts presented. Peterson, 829 P.2d at 376. “[T]he trial court may not assess the weight of the evidence or credibility of witnesses in determining a motion for summary judgment....” Kaiser Found. Health Plan v. Sharp, 741 P.2d 714, 718 (Colo.1987).

1. Treasurer's Deed

The trust contends that there was a genuine issue of material fact as to whether it was properly notified of the issuance of a treasurer's deed. We are not persuaded.

A lien for general taxes for the current year attaches to all taxable property at 12 p.m. on the assessment date. § 39–1–107(1), C.R.S.2010. If taxes levied on real property become delinquent, they become a perpetual lien with priority over all other liens. § 39–1–107(2), C.R.S.2010. The lien may be purchased by paying the taxes, the delinquent interest, and any pertinent fees. § 39–11–115, C.R.S.2010. If the lien is not redeemed by any person with legal or equitable title in the property within the three-year statutory redemption period, the holder of the certificate of purchase may request a treasurer's deed. § 39–11–102, C.R.S.2010.

Because the tax lien is superior to all other interests in the property, a validly issued treasurer's deed conveys a paramount title, wiping out any other interest in the property. Harrison v. Everett, 135 Colo. 55, 60, 308 P.2d 216, 219 (1957). Such a deed acts to “terminate the taxpayer's entire ownership interest in the subject property by conveying the totality of the land on which the taxes are delinquent.” Bolser v. Board of Comm'rs, 100 P.3d 51, 54 (Colo.App.2004) (citing Pyles v. Portland Gold Mining Co., 76 Colo. 598, 599, 233 P. 618, 619 (1925) (tax deed vests purchaser with all the rights the former owner had at the time of the sale)).

As relevant to the issues in this matter, the tax lien statute provides:

Before any purchaser, or assignee of such purchaser, of a tax lien on any land ... sold for taxes ... is entitled to a deed for the land ... he shall make request upon the treasurer, who shall then comply with the following:

(a) The treasurer shall serve ... a notice of such purchase on every person in actual possession or occupancy of such land ... and also on the person in whose name the same was taxed ... and upon all persons having an interest or title of record in or to the same if, upon diligent inquiry, the residence of such persons can be determined....

§ 39–11–128(1)(a), C.R.S.2010 (emphasis added). “ ‘Persons having an interest or title of record’ is equivalent to ‘record owners' and that language is held to exclude even holders of known but unrecorded contracts of sale.” Godfrit v. Judd, 116 Colo. 489, 492, 182 P.2d 907, 909 (1947). The requirements of this section are jurisdictional; anything less than full compliance would invalidate the treasurer's deed. Wittemyer v. Cole, 689 P.2d 720, 721 (Colo.App.1984).

The purpose of this provision is to “forbid the issuance of a treasurer's deed unless notice is given to persons with an interest in the property, especially to those persons with a right to redeem.” Turkey Creek, LLC v. Rosania, 953 P.2d 1306, 1313 (Colo.App.1998). However, “[o]ne who has no interest in the land has no right to redeem,” Winter Park Devil's Thumb Investment Co. v. BMS Partnership, 926 P.2d 1253, 1255 (Colo.1996) (quoting Notch Mountain Corp. v. Elliott, 898 P.2d 550, 555 (Colo.1995)), and therefore, no right to notice.

In order to prevail in this matter, the trust must demonstrate that it has an interest in, or title of record to, the property. The resolution of the trust's argument depends upon whether a writ of execution against a member of an LLC reaches the property interest, if any, of the LLC.

2. Limited Liability Companies

It is undisputed that a corporation, in which debtor was the sole shareholder, conveyed any interest it had in the property to debtor who, in turn, transferred all of his interest to the LLC, which held it at the time the child support judgment was entered and the writ of execution recorded.¹

Limited liability companies generally operate under an entity theory of property rights. See 1 Larry E. Ribstein & Robert Keatinge, Limited Liability Companies § 7:1, at 7–3 (2d ed. 2006). Under this theory, a member has no interest in the property owned by the LLC. Id. While Colorado statutes do not specifically define the interest of LLC members in, or their power to transfer, property owned by the LLC, they describe a member's interest in the LLC as a “share of the profits and losses of a limited liability company and the right to receive distributions of such company's assets.” § 7–80–102(10), C.R.S.2010.

This membership interest is the personal property of the member and is the limit of what the member is permitted to transfer or assign, which thereby limits the rights of the member's creditors. See §§ 7–80–702(1), 7–80–703, C.R.S.2010. “A member, regardless of the nature of the member's contribution, has no right to demand and receive any distribution from a limited liability company in any form other than cash.” § 7–80–604, C.R.S.2010 (emphasis added).

Therefore, we conclude that the principles of entity theory apply to Colorado...