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Plaintiff: GUARANTY BANK AND TRUST COMPANY, v. Defendants: GENE A. OSBORNE, COMSTOCK AUTO MUSEUM, LLC and LYN M. OSBORNE.
EFILED Document CO Douglas County District Court 18th JD Filing Date: Jan 25 2011 9:25AM MST Filing ID: 35557652 Review Clerk: N/A
▲ COURT USE ONLY ▲ ________________________ Case No.: 2009CV1488 Division: 6 FINDINGS OF FACT, CONCLUSIONS OF LAW AND ORDER A bench trial took place on April 20, 21 & 29, and 30, 2010, with closing arguments concluding on May 20, 2010. Plaintiff Guaranty Bank and Trust Co. (“Guaranty”) was represented by Bradford Dempsey and Joseph Daniels of Faegre & Benson LLP. Defendants Defendant Lyn M. Osborne (“Lyn Osborne” or Ms. Osborne”) and Comstock Auto Museum, LLC (“Comstock”) were represented by Christopher Forrest, William Waller and Conor Boyle of Hamilton Faatz and Waller, PC. Defendant Gene A. Osborne (“Gene Osborne” or “Mr. Osborne”) was represented by Peter Forbes of Horowitz/Forbes, LLP. The Court, having heard the testimony of witnesses, including the deposition of Guy James, who did appear on his subpoena; reviewed the exhibits admitted into evidence; and considered the argument of counsel, enters the following findings of fact, conclusions of law and judgment: FINDINGS OF FACT 1. Guaranty is a corporation and state-chartered bank organized under the laws of the State of Colorado with its principal place of business at 1331 17th St., Denver, Colorado 80217. 2. Gene Osborne is an individual residing at 81 Comstock Place, Castle Rock, Colorado 80108. 3. Lyn Osborne is an individual residing at 81 Comstock Place, Castle Rock, Colorado 80108.
4. Comstock is a limited liability company organized under the laws of the State of Colorado on April 2, 2009, and having its stated principal place of business at 81 Comstock Place, Castle Rock, Colorado 80108. Mr. and Mrs. Osborne has previously discussed that they wanted to put together an LLC for liability purposes. 5. The Court has jurisdiction over the parties and the subject matter of this action. Venue is proper in Douglas County. 6. Gene and Lyn Osborne married in 1995. They have generally kept separate finances, however there have been major transfers from Gene Osborne to Lyn Osborne since their marriage, including the marital residence at 81 Comstock Place and the Osborne Cattle Company, LLC. The two have been lax in keeping their assets totally separate. 7. Osborne Cattle Company, LLC (“OCC”) is a limited liability company organized under the laws of the State of Nebraska. OCC was formed in 1995 by Gene and Lyn Osborne. On March 26, 2001, the Osbornes executed an Amendment of Operating Agreement of OCC which officially removed Gene Osborne as a member and manager of OCC and transferred the capital account of Gene Osborne to Lyn Osborne effective January 1, 2001. Gene Osborne gave his interest in OCC to his wife, in part, to protect it from any potential claims by his children. The Amended Articles of Organization were filed with the Nebraska Secretary of State on April 3, 2001. 8. Gene Osborne continued to be interested in OCC and to provide services to OCC until the property was sold in 2008. He was a signer on checks, signed official documents for filing in Nebraska as a member of OCC; and was prominently featured in advertising for the sale of the ranch’s cattle. Mr. Osborne’s June 2003 financial statement listed OCC as his asset with a value of over $2.8 million. His testimony that the entry could have been a loan to OCC was not credible. His December 2003 financial statement also listed OCC as his asset with a value of over $4.2 million. 9. Lyn Osborne also included OCC on her personal financial statement dated December 2004, signed in April 2005, which noted a value of $6 million. She also listed an account receivable from OCC at $33,000. 10. Gene Osborne also transferred his interest in the marital residence at 81 Comstock Place, Castle Rock to Lyn Osborne in 2001. 11. Mr. Osborne was a successful developer with a good reputation as to payment of his financial obligations. However, in 2008, the real estate market took a downturn and he and his entities were affected. 12. Gene Osborne and his related entities were also obligated on a secured a loan from Guaranty in 2005, as part of the development of the Finley Property. The Finley Loan was in default as of the fall of 2008. Christopher (Kit) Phillips was a limited guarantor on the Finley
Loan. Guaranty filed suit on the loan in approximately October 2008, including Gene Osborne, and the borrower, an entity owned and controlled by Gene Osborne. 13. Kit Phillips, through his entity Phillips Facilitator, LLC, and agent Donovan, approached Guaranty to purchase the Finley Loan in order to resolve his exposure under his limited guaranty. 14. On December 29, 2009, Phillips Facilitator, LLC, entered into a Loan Purchase Agreement with Guaranty to purchase the Finley Loan. The Loan Purchase Agreement, which was amended twice, required Phillips Facilitator to provide $500,000 in December 2008, a $300,000 non-refundable deposit and then another $25,000 non-refundable payment. The $500,000 would be credited towards the full purchase price upon the completion of the sale. Additionally, even if the Loan Purchase Agreement did not close, the $500,000 would be credited towards Mr. Phillips’ liability under the limited guaranty. The idea was for Phillips to buy the note at a discount, which would benefit the borrowers and guarantors. The purchase would not affect Gene Osborne’s liability on his guaranty. All of the funds came from Gene Osborne. Mr. Osborne was attempting to raise the money to purchase the loan but could not. Phillips went ahead and closed the deal. Phillips Facilitator, LLC did deposit the $500,000 with Guaranty on December 29, 2009. Mr. Phillips obtained the $500,000 to make that payment from Lyn Osborne. Phillips paid another $300,000 to extend the contract for 45 days. If the deal didn’t close, it would not be credited to Phillips’ guarantee. In March 2009, for the first time, Gene Osborne was present for discussions with Phillips and Guaranty. The sale date was extended again when another $25,000 was paid as a non-refundable payment toward the purchase price. 15. Mr. Osborne was not a party to the contract. Contrary to the recitals in the Purchase Agreement, Kit Phillips testified at trial that he was not acting as Gene Osborne’s agent in the purchase of the Finely Loan. Mr. Phillips was acting on his own behalf and for his own benefit, which happened to also be beneficial to Gene Osborne. Guaranty was not aware of Mr. Osborne’s involvement. The purchase did close and the Phillips entity stepped into the shoes of Guaranty. 16. Gene Osborne and his related entities were also obligated on a secured loan from Guaranty as part of the development of the Heritage Todd Creek Property. The loans were repaid as closings of filings were completed. By the fifth closing in 2008, the loan became in default. The loan was sent to “special assets” at the bank, where Mr. Osborne was no longer dealing with the banker he had established a relationship with over the years. 17. On July 16, 2008, Guaranty Bank & Trust Company (“Guaranty”) filed a lawsuit in the Denver District Court against Gene Osborne and his related entities to enforce and collect on those defaulted promissory notes and guaranties (the “Judgment Case”). Guaranty moved for summary judgment in the Judgment Case in August 2008. 18. Starting in October 2008, Guy James entered into negotiations with Guaranty to purchase the Heritage Loan at a discount at the request of Gene Osborne, who believed Guaranty would not talk to him. A foreclosure was set on the property for December 31, 2008. Guaranty sued on the debt in early 2009.
19. The Heritage Loan Purchase Agreement was originally executed on October 31, 2008 and required Mr. James to close the deal no later than January 28, 2009. Under the original Loan Purchase Agreement Guy James was not required to provide any type of monetary deposit. Gene Osborne and his entities were also signatories to the agreement. 20. On January 28, 2009, Guy James informed Guaranty that he would not be able to close the deal on that date and requested an extension to close the sale. Guaranty agreed to amend the Loan Purchase Agreement and extend the closing date, but required Mr. James to provide a $100,000 non-refundable deposit that same day. The $100,000 was given to James by Gene Osborn, apparently from Lyn, to settle the Heritage obligation. James gave it to Guaranty. The closing was set for March 31, 2009. The money was not in satisfaction of any obligation of Mr. Osborne’s, but would have delayed the suit and allowed Mr. Osborne to try to raise money or do a workout. 21. Mr. James did deposit $100,000 with Guaranty and the Loan Purchase Agreement was extended. Mr. James obtained the $100,000 on January 28, 2009 from Gene Osborne through OCC. Mr. James was unaware of any arrangements between Mr. and Ms. Osborne concerning the Classic Cars. 22. Nevertheless, On March 31, 2009, the Denver District Court in the Judgment Case granted Guaranty’s motion for summary judgment and entered a judgment against Gene Osborne and his related entities in an amount greater than $7 million (“Judgment”). 23. On April 1, 2009, after the Judgment was entered, Mr. James informed Guaranty that he decided not to purchase the Heritage Loan. 24. As of the date of the trial, neither Gene Osborne nor any of his related entities named in the Judgment have satisfied the Judgment or made any voluntary payments on the Judgment. 25. This case concerns Gene Osborn’s interest in the following classic cars (the “Classic Cars”): 1956 Ford Victoria 4 Dr. HDTP, VIN # P6DF194134 (“1956 Ford Victoria”) 1929 Ford Model A Roadster, VIN # LB11846 (“1929 Ford Roadster”) 1964 Lincoln 4 Dr. Convertible, VIN # 4V86N404655 (“1964 Lincoln”) 1927 Paige 629 4 Dr Sedan, No VIN (“1927 Paige”) 1936 International CL Pick-up, VIN # 54968 (“1936 International”) 1946 Chevrolet 3100 Pick-up, VIN # 5BPF3140 (“1946 Chevy”) 1954 Chevrolet 5100 2 Ton Truck, VIN # 0847302F540 (“1954 Chevy”) 1954 Massay-Harris 44 Special, No VIN (“1954 Massay-Harris”) 4
1956 Packard 400 – 2 Dr HDTP, VIN # 56872140 (“1956 Packard”) 1934 Packard 1108 Limousine V-12, VIN # 902510 (“1934 Packard”) 2002 Thunderbird Roadster, VIN # 1FAHP60A22Y108396 (“2002 Thunderbird”) 1995 Mercedes Benz S-600, VIN # WDBGA57E4SA238066 (“1995 Mercedes”) 26. Shortly after the Judgment was entered, Guaranty discovered that the following vehicles were titled in the records of the Colorado Department of Motor Vehicles showing Gene Osborne as the owner (“Original Cars”): • • • • 1956 Ford Victoria; 1929 Ford Roadster; 1964 Lincoln; and 2002 Thunderbird
27. On May 1, 2009, Guaranty obtained writs of execution from the Denver District Court and coordinated with the Douglas County Sheriff’s office to levy upon the four Original Cars. 28. On May 12, 2009, Sergeant Gary Butler of the Douglas County Sheriff’s Department and Dave Reisman, a private contractor hired by Guaranty specializing in collecting and transporting antique vehicles, went to Gene Osborne’s primary residence, 81 Comstock Place, Castle Rock, Colorado, to levy upon the four Original Cars. 29. Gene Osborne was not present when Sergeant Butler and Mr. Reisman arrived, but Lyn Osborne was there and showed them to the Original Cars. Ms. Osborne informed both Sergeant Butler and Mr. Reisman that the titles to the vehicles had recently been transferred from Gene Osborne to Comstock Auto Museum, LLC, which is owned by Lyn Osborne and located at the Osborne residence. 30. Lyn Osborne presented Sergeant Butler with newly issued Certificates of Title for the Original Cars, attempting to establish that the vehicles were currently titled to Comstock. The new Certificates of Title showing Comstock Auto Museum, LLC as the owner of the four Original Cars had been issued by the Colorado Department of Motor Vehicles on April 17 and 29, 2009, a few weeks after the Denver District Court entered its Judgment against Gene Osborne. 31. Sergeant Butler noticed another classic car located at the Osborne residency, a green truck, and asked whether that vehicle belonged to Gene Osborne. Ms. Osborne did not provide Sheriff Butler with a certificate of title for that vehicle, but showed him copies of cancelled checks drawn from Comstock Auto Museum’s bank account showing payment for restoration work and represented to him that Comstock Auto Museum owned the vehicle. 5
32. Mr. Reisman spoke to Ms. Osborne while he was at the Osborne residency. Mr. Reisman testified at trial that Ms. Osborne stated to him during these conversations that the titles to the Original Cars were changed from Gene Osborne’s name because of the lawsuit. Although Ms. Osborne disputes that she made such a statement, the Court finds Mr. Reisman’s testimony on this issue to be more credible than Ms. Osborne’s testimony. 33. Given the uncertainties of title and Ms. Osborne’s representations to Sergeant Butler and Mr. Reisman that Comstock Auto Museum, LLC owned the four Original Cars and the other green truck in the garage, Guaranty and its counsel did not proceed with execution and levy upon any of the vehicles. 34. After learning on May 12, 2009 that Gene Osborne had transferred the Original Cars to Comstock Auto Museum, Guaranty filed this action a week later on May 19, 2009 seeking to avoid the fraudulent transfer. Also on May 19, 2009, Guaranty sought the entry of an immediate prejudgment writ of attachment on the Original Cars and temporary restraining order enjoining the Defendants from taking certain actions relating to the Original Cars. 35. Immediately after the Douglas County Sheriff’s visit on May 12, 2009, Lyn and Gene Osborne organized a group of family members to move the Original Cars, along with any other Classic Cars located at the Osborne residence, from their home to what Lyn Osborne described as a “secure location.” At trial, Lyn Osborne disclosed, for the first time, that the “secure location” was an enclosed garage at her son’s home. The Defendants moved the Original Cars and other vehicles to the secret location to conceal them and to prevent the Sheriff and Guaranty from levying execution upon the vehicles. 36. On May 20, 2009, this Court granted Guaranty a prejudgment writ of attachment on the Original Cars. 37. On June 17, 2009, Sergeant Butler and Mr. Reisman went to the Osbornes’ residence to execute the prejudgment writ of attachment, however the Original Cars had been removed from the Osborne residence. 38. Gene and Lyn Osborne purposely kept the Original Cars away from their home and hid them at the “secure location” until October 2009. The Osbornes returned the vehicles back to their residence only after coordinating with the Sheriff’s office to accept a redelivery bond. The Defendants purposely concealed the vehicles until the redelivery bond had been accepted for the purpose of preventing Guaranty from levying upon the vehicles under either the writ of execution or this Court’s order granting Guaranty a prejudgment writ of attachment on the vehicles. 39. As part of their Rule 26 Disclosures in this action, the Defendants provided Guaranty with an “Agreement for Purchase and Sale of Classic Automobiles” and a “Bill of Sale” (explained further below) representing that Gene Osborne transferred the twelve Classic Cars to Comstock Auto Museum, LLC. 40. On September 4, 2009, Guaranty filed a second motion for a prejudgment writ of attachment, this time to obtain a writ allowing it to attach the eight additional vehicles listed in 6
the “Agreement for Purchase and Sale” and a “Bill of Sale”. On October 30, 2009, the Court granted Guaranty’s request for a prejudgment writ of attachment on the eight additional vehicles. 41. The Defendants failed to disclose and intentionally concealed the location of the remaining eight Classic Cars until March 25, 2010, until this Court granted Guaranty’s motion to compel the Defendants to disclose the location of the vehicles. Again, the purpose of the Defendants’ concealment was to prevent Guaranty from exercising its right to attach vehicles pursuant to this Court’s order granting Guaranty a prejudgment writ of attachment on the eight additional vehicles. 42. Prior to the creation of Comstock Auto Museum, LLC, the Osbornes constructed a detached garage at their residence and garaged several of the Classic Cars in that garage. The Defendants testified that Comstock Auto Museum, LLC uses this same garage to store the Classic Cars. 43. Comstock has no lease agreement with the Osbornes and Comstock did not pay any rent between the time of its April 2, 2009 formation and February 25, 2010, the date that Ms. Osborne was deposed in this action. Comstock Auto Museum is located in the Osbornes’ garage within a gated community, is not open to the public, has no visitors, has neither sold or loaned any vehicles to other parties, generates no income or revenue, and engages in no commercial activities. Comstock is funded solely through funds injected from time to time from other Osborne accounts into a business bank account that was set up for Comstock on April 3, 2009, a day after Comstock was formed. 44. On May 22, 2009, after this action was filed, Gene Osborne contacted his attorney, Jeffery Jackson, to draft a Purchase Agreement and Bill of Sale whereby Gene Osborne would transfer his interest in the Classic Cars to Comstock Auto Museum. 45. At trial, neither Gene nor Lyn Osborne could recall when the Purchase Agreement and Bill of Sale were signed, but according to Mr. Jackson’s testimony the documents were not ready to be signed until May 26, 2009. Therefore, the Purchase Agreement and Bill of Sale were not drafted and signed until after Sergeant Butler attempted to levy execution on the Original Cars and until after this fraudulent transfer action was filed against the Defendants. While the date the Bill of Sale was actually signed is unknown, it was backdated to purportedly transfer and warrant Gene Osborne’s title in the Classic Cars to Comstock Auto Museum, LLC on April 2, 2009, the date of Comstock’s formation. 46. The Bill of Sale states that Gene Osborne transfers all of his “right, title and interest” in the Classic Cars. The Bill of Sale also provides that Gene Osborne agrees “to warrant and defend the title” of all 12 Classic Cars. 47. According to the terms of the Purchase Agreement and the testimony of the Defendants, the Purchase Agreement had an “Effective Date” of December 28, 2008, and the Purchase Agreement was based on a purported “oral agreement” by Gene and Lyn Osborne. The Osbornes did not tell attorney Jackson anything about such an agreement before Gene Osborne came to him in April to form Comstock.
48. According to the Osbornes’ testimony, the Purchase Agreement was based on an oral agreement between Gene and Lyn Osborne, whereby Gene transferred his interest in the Classic Cars to his wife Lyn for $600,000. The $600,000 was not based on the true value of the 12 vehicles but based on the amount of money Gene Osborne needed to resolve the defaulted loans with Guaranty. The Court does not find the testimony of the Osbornes to be credible as to their 2008 “agreement.” 49. The Osbornes testified the “oral agreement” did not occur on a specific date or during a specific conversation, but was part of a series of conversations over several months. The total purchase price was not actually set at $600,000 as of the December 28, 2008 “effective date.” It would actually have been impossible to arrive at the $600,000 figure as of December 28, 2008 given that the $100,000 payment to Guy James referenced in the Purchase Agreement was not established until January 29, 2009. In December 2008, Gene Osborne thought $200,000 would be enough to resolve the matters. Lyn Osborne thought he needed $100,000. Both knew that Mr. Osborne would not be able to repay her. 50. Lyn Osborne provided $500,000 to Christopher “Kit” Phillips on December 29, 2008 and $100,000 to Guy James on January 29, 2009 from the OCC account. These two payments represented the purported $600,000 consideration referenced in the Purchase Agreement. 51. As of April 2, 2009, the following Classic Cars were titled exclusively in Gene Osborne’s name with the State of Colorado: • • • • • 1929 Ford Roadster; 1956 Ford Victoria; 1995 Mercedes Benz; 2002 Ford Thunderbird; and 1964 Lincoln
52. As of April 2, 2009, the Colorado Department of Motor Vehicles had not issued certificates of title reflecting either Gene or Lyn Osborne as the registered owner of the other 7 Classic Cars. In addition to the vehicles titled solely in Gene Osborne’s name, Gene Osborne also purchased the 1954 Massay-Harris and the 1927 Paige prior to Gene and Lyn Osborne’s marriage in 1995 and were his property. 53. In his testimony, Gene Osborne admitted that he owned the 1956 Ford Victoria, the 1929 Ford Model A Roadster, the 1964 Lincoln Convertible, and a “small interest” in the 1927 Paige sedan, the 1936 International Pick-up and the 1954 Massay-Harris. His ownership interest in the first three vehicles is confirmed by the insurance policy with Philadelphia Indemnity effective March 2008 through March 2009 naming him as the insured.
54. There was conflicting evidence concerning the ownership of the some of the Classic Cars at various times. At trial, the Osbornes admitted that the ownership of the vehicles as between Gene and Lyn Osborne was unclear. Lyn Osborne admitted that she had concerns that other third parties, such as Gene Osborne’s children and the bank, might be able to claim an interest in the vehicles through Gene Osborne. They both participated in arranging for restoration of many of the cars in the collection. 55. In a personal financial statement dated December 31, 2004, signed in 2005, Lyn Osborne reported an asset value of $35,000 for “Automobiles”. At trial, Lyn Osborne testified that this entry reflected only the 2002 Thunderbird. In a financial statement submitted to Guaranty in August 2008 in connection with her own loan with Guaranty, Lyn Osborne did not list any of the Classic Cars as an asset except the 2002 Thunderbird, which she listed with a value of $40,000. Although she listed this vehicle as an asset on some financial statements, the 2002 Thunderbird was never titled in Lyn Osborne’s name, but, rather, Gene Osborne’s name. He bought the car and made payments on the loan. He bought the car for Lyn Osborne’s use but remained its owner. 56. In July 2009, Lyn Osborne put together a personal financial statement backdated to February 2009 in which she listed “Comstock Auto Museum- Collector Autos” with a value of $423,300. All 12 Classic Cars were included in a schedule attached to that statement. Comstock was not in existence in February 2009 nor did the Osbornes own the Mercedes listed on the schedule. This statement was put together after April 2, 2009. This statement was used to obtain the redelivery bond in this case with a letter of credit from Collegiate Pealks. . 57. In the years prior to the Judgment and transfer, however, Gene Osborne’s financial statements consistently report “Collector Autos” as an asset. For example, Gene Osborne’s June 30, 2003 statement, signed again in 2004, lists as an asset Collector Autos valued at $100,000. Likewise a personal financial statement in December 2003 listed the collector cars as well. Several years later, Gene Osborne’s June 30, 2008 statement lists as an asset Collector Autos valued at $150,000. No detail on the cars was provided. Gene Osborne told Guy James that he had a collection of classic automobiles and the bank was “chasing” them. Guy James was with Gene Osborne when he bought the 1929 Model A. 58. At trial, both Lyn Osborne and Gene Osborne admitted that the Bill of Sale, wherein Gene Osborne assigns the twelve Classic Cars to Comstock Auto Museum, LLC as of April 2, 2009, is the only bill of sale that Comstock Auto Museum LLC has received. Although Comstock Auto Museum LLC is the present owner of the twelve Classic Cars, the only party that has conveyed an interest in the vehicles to Comstock Auto Museum LLC is Gene Osborne. Lyn Osborne did not transfer any ownership interest to Comstock. 59. Gene Osborne is an experienced real estate developer who understands the meaning and legal import of the warranty of title he gave in the Bill of Sale. In addition, Gene Osborne admitted that he had the assistance of counsel in preparing and reviewing this Bill of Sale and that he had the opportunity to review and make changes to the Bill of Sale prior to executing and delivering the Bill of Sale to Comstock Auto Museum, LLC. Despite his experience with documents of title, his opportunity to review and make corrections to the Bill of
Sale, and his opportunity to review the document with counsel, Gene Osborne made no changes to the Bill of Sale. 60. On April 17, 2009, Gene and Lyn Osborne went to the Douglas County Division of Motor Vehicles (“DMV”) to transfer title to the following vehicles from Gene Osborne to Comstock Auto Museum: • • • • 1929 Ford Roadster; 1956 Ford Victoria; 1995 Mercedes Benz; 2002 Thunderbird
61. Both Gene and Lyn Osborne participated in the acts of transferring the title of each of the vehicles above from Gene Osborne to Comstock Auto Museum and applying for and obtaining new certificates of title from the Colorado Department of Motor Vehicles (“DMV”). As of April 17, 2009, Comstock Auto Museum became, and currently is, the titled owner of the above-referenced Classic Cars. 62. For each of the above-referenced vehicles, Comstock Auto Museum, through Lyn Osborne, represented to the DMV that the vehicle was purchased on April 17, 2009 for $ 0. The Osbornes did not inform the DMV that the vehicles were part of a $600,000 purchase. 63. Effective April 15, 2009, all 12 Classic Cars were covered by an insurance policy for Gene and Lyn Osborne, Comstock Auto Museum. 64. On April 29, 2009, Gene Osborne returned to the DMV by himself to transfer title to the 1964 Lincoln from his name to Comstock Auto Museum. Lyn Osborne did not go to the DMV on April 29, 2009, but did participate in the transfer by filling out portions of the prior certificate of title and by providing Gene Osborne with a signed, blank Comstock Auto Museum check to use at the DMV for registration fees. 65. The Osbornes represented to the DMV that the 1964 Lincoln was purchased by Comstock Auto Museum on April 17, 2009 for $ 0. Gene Osborne signed the required paperwork at the DMV on behalf of Comstock, that authority having been granted to him by Lyn Osborne. As of April 29, 2009, Comstock became, and currently is, the titled owner of the 1964 Lincoln. 66. On July 7, 2009, Gene Osborne returned to the DMV to transfer title to the 1936 International from Terrance Maloney to Comstock Auto Museum. Terrance Maloney was the person who sold the 1936 International to the Defendants. 67. Lyn Osborne did not go to the DMV on July 7, 2009, but did participate in the transfer by providing Gene Osborne with a signed, blank Comstock check to use at the DMV for registration fees. The Osbornes represented to the DMV that the 1936 International was purchased by Comstock Auto Museum on August 21, 2005 for $7,750.00. The Osbornes 10
improperly “skipped title” to the 1936 International since a transfer between Mr. Maloney and Comstock Auto Museum was impossible in 2005 as Comstock Auto Museum had not yet been created. Lyn Osborne was the owner of that vehicle. As of July 7, 2009, Comstock Auto Museum became, and currently is, the title owner of the 1936 International. 68. The 1946 Chevrolet pick-up was sold to Gene Osborne for OCC, with a bill of sale dated June 2008. 69. Gene Osborne’s possession and control of the Classic Cars has not changed since the transfer. Therefore, the Court finds and concludes that Gene Osborne has retained possession and control of the transferred property. The Court finds that Gene Osborne was the owner of and had a leviable interest in the: 1929 Ford Roadster; 1954 Massay-Harris; 1927 Paige; 1956 Ford Victoria; 1995 Mercedes Benz; 2002 Ford Thunderbird; and 1964 Lincoln at the time Guaranty took its judgment on March 31, 2009. 70. The preponderance of the evidence established that the 1934 Packard limousine; 1956 Packard; 1936 International Pick-up; 1946 Chevrolet 3100 Pick-up; and 1954 Chevrolet 5100 Pick-up were the property of Lyn Osborne at the time the Judgment was taken. Guaranty did not prove that Gene Osborne had any interest in these vehicles. CONCLUSIONS OF LAW A. The Transfer of the Classic Cars was Fraudulent Under C.R.S. § 38-8-105(1)(a)
1. Under C.R.S. § 38-8-105(1)(a), a transfer of assets by a debtor is fraudulent, as to a creditor, “if the debtor made the transfer . . . [w]ith actual intent to hinder, delay, or defraud any creditor of the debtor.” 2. The CUFTA does not require the plaintiff to provide evidence establishing the debtor’s actual subjective intent, rather the statute provides a non-exclusive list of factors (the “badges of fraud”) the fact-finder can consider in determining actual intent. See C.R.S. 38-8105(2). The badges of fraud include whether (C.R.S. § 38-8-105(2)(a)-(k)): • the transfer or obligation was to an insider; • the debtor retained possession or control of the property transferred after the transfer; • the transfer was disclosed or concealed; • before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit; • the transfer was substantially all the debtor’s assets; • the debtor absconded; • the debtor removed or concealed assets; • the value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred; • the debtor was insolvent or became insolvent shortly after the transfer was made; • the transfer occurred shortly before or shortly after a substantial debt was incurred; and 11
• the debtor transferred the essential assets of the business to a lienor who transferred the assets to an insider of the debtor. 3. In deciding whether there was actual intent, not all of the badges of fraud must be present; rather when the “’badges of fraud’ are present in sufficient number, they may give rise to an inference or presumption of an intent to defraud.” Krol v. Unglaub, 332 B.R. 303, 315 (Bankr. N.D. Ill. 2005) (applying Colorado law). Additionally, the factfinder is not required to consider all of the badges of fraud in reaching its decision or to provide separate findings for each factor. Silverberg v. Colantuno, 991 P.2d 280, 287 (Colo. Ct. App. 1998). All that is required is that “the findings and the record make it clear that the trial court was aware of and considered many, if not all, [of the badges of fraud].” Id. 4. Additionally, the term “asset” includes the levyable interest of property held by the debtor as joint tenants or tenants in common, and a creditor is allowed to collect against that interest. See C.R.S. 38-8-102(2) (official comments). Gene Osborne had an interest subject to levy in 7 Classic Cars 5. The Court has found that at the time Guaranty took its judgment on March 31, 2009, Gene Osborne had an interest subject to levy in 7 of the 12 cars covered by the bill of sale. The Court has found that he had an interest in 7 of the 12 cars covered by the bill of sale: 1929 Ford Roadster; 1954 Massay-Harris; 1927 Paige; 1956 Ford Victoria; 1995 Mercedes Benz; 2002 Ford Thunderbird; and 1964 Lincoln. Ownership was established by the totality of the evidence. Further, the law provides that one records an ownership interest in a vehicle by registering one’s ownership of a vehicle with the Division of Motor Vehicles. See Potter v. State Farm Mut. Auto Ins. Co., 996 P.2d 781, 782 (Colo. Ct. App. 2000) (holding that a certificate of title evidences a rebuttable presumption of ownership). This presumption as to some of the vehicles was not overcome by testimony at trial. 6. Defendants testified that Gene Osborne did not have any interest in several of the Classic Cars since Lyn Osborne purchased and restored those vehicles with her own personal finances. Although the evidence was not always strong, Guaranty had the burden of proof and failed to meet that burden by a preponderance as to the 1934 Packard limousine; 1956 Packard; 1936 International Pick-up; 1946 Chevrolet 3100 Pick-up; and 1954 Chevrolet 5100 Pick-up. The Record Establishes Direct Evidence of Gene Osborne’s Actual Intent to Hinder, Delay and Defraud Guaranty’s Collection Efforts 7. While C.R.S. § 38-8-105(1)(a) allows a plaintiff to establish actual intent through the badges of fraud, in this case the record also provides direct evidence of Gene Osborne’s intent. 8. First, in a statement made to Dave Reisman on May 12, 2009, Lyn Osborne admitted that the Osbornes transferred the titles from Gene Osborne’s name because of the Judgment Case. The Court finds Mr. Resiman, a retired El Paso County sheriff, credible and finds that Lyn Osborne’s statement evidences the Defendants’ true intent in transferring the ownership of the vehicles to Comstock Auto Museum. 12
9. Second, the evidence is clear that Gene Osborne contacted attorney Jeff Jackson just days after the Douglas County Sheriff’s office attempted to levy on the vehicles and just days after this fraudulent transfer lawsuit was filed to draft the Purchase Agreement and Bill of Sale. Other than the Osbornes' own testimony, there is no corroborating evidence or testimony establishing that the idea to transfer all 12 Classic Cars existed prior to May 22, 2009. The timing of the preparation of the Purchase Agreement provides compelling evidence that Gene Osborne’s intent was to transfer the 12 Classic Cars so as to avoid collection, not to memorialize an “oral agreement” that occurred almost 6 months prior. The Record Establishes that a Sufficient Number of the Badges of Fraud are Present to Presume Actual Intent 10. C.R.S. § 38-8-102(8)(a)(I) defines an “insider” as a “relative of the debtor.” Gene and Lyn Osborne are currently married and were married at the time of the transfer. Comstock Auto Museum, LLC, is a sham entity that was created solely for the purpose of taking title to the Classic Cars and hindering and delaying Guaranty’s collection efforts. There is no distinction between Lyn Osborne and Comstock Auto Museum, and a transfer to Comstock Auto Museum was a transfer to Lyn Osborne. Therefore, the Court finds and concludes that the transfer was to an insider of Gene Osborne. 11. The current owner of the Classic Cars is Comstock Auto Museum, which is located at the Osborne’s home. The Classic Cars, when not out for restoration work, have resided at the Osborne home both before and after the transfer. The evidence presented at trial indicates that Gene Osborne still has access to and control of the Classic Cars. Gene Osborne still drives those vehicles that can be driven, Gene Osborne continues to be the primary business contact with all the restorers working on the Classic Cars as all invoices from the restorers continue to be directed to Gene Osborne. In addition, Gene Osborne continues to have unfettered authority to handle all transactions with the Colorado DMV including applying for new certificates of title for the Classic Cars on behalf of Comstock Auto Museum, LLC. The evidence establishes that Gene Osborne’s possession and control of the Classic Cars has not changed since the transfer. Therefore, the Court finds and concludes that Gene Osborne has retained possession and control of the transferred property. 12. The transfer was concealed on multiple fronts. First, on May 12, 2009, when the Douglas County Sheriff attempted to levy upon the Original Cars, Lyn Osborne made no reference to or provided a copy of the Purchase Agreement and Bill of Sale. Second, Gene and Lyn Osborne concealed from the Division of Motor Vehicles that the vehicles being titled to Comstock Auto Museum were part of a $600,000 purchase. Instead, they represented on at least five applications for title that the purchase price for the vehicles was $0. Finally, the Purchase Agreement and Bill of Sale were specifically drafted to create the false impression they were signed and executed on April 2, 2009, however the evidence establishes that those documents were not signed and executed until at least May 26, 2009. Therefore, the Court finds concludes that Gene Osborne concealed the true nature of the transfer. 13. Guaranty filed its lawsuit against Gene Osborne and his related entities in the Judgment Case in July 2008. Gene Osborne testified that he was aware of the pending lawsuit. Therefore, the Court finds and concludes that Gene Osborne had been sued before the transfer. 13
14. Defendants testified that they purposely moved and concealed the location of the Original Cars to avoid Guaranty’s collection efforts under both the writ of execution and the prejudgment writ of attachment. Defendants also admitted that they purposely choose not to disclose the location of the Classic Cars so that Guaranty would be unable to physically levy upon the vehicles. The location of all 12 Classic Cars was not provided until March 25, 2010, after this Court entered an order compelling the Defendants to provide those locations. Therefore, the Court finds and concludes that Gene Osborne removed and concealed assets. 15. The Defendants contend that Gene Osborne received $600,000 consideration for the Classic Cars. However, other than the Defendants’ own documents created after this case was filed and their testimony, no corroborating evidence was offered linking the $600,000 Osborne Cattle Company paid to Kit Phillips and Guy James to the transfer of the Classic Cars. Not a single witness, including the attorney who drafted the Purchase Agreement and Bill of Sale, could confirm that the Defendants’ “oral agreement” existed prior to April 2009. Additionally, the Defendants’ represented to the Division of Motor Vehicles that the vehicles it did title were purchased for $ 0. Based on those facts, especially the fact that the Purchase Agreement and Bill of Sale were only created after this lawsuit was filed, the Court finds that the $600,000 provided by Osborne Cattle Company was not part of any “oral agreement” to transfer the Classic Cars. Instead, the $600,000 was paid separate and independent of any agreement regarding the Classic Cars, and the Classic Cars were actually transferred to Comstock Auto Museum for no consideration. 16. C.R.S. § 38-8-103(2) defines “insolvency” as a “debtor who is generally not paying his debts as they become due is presumed to be insolvent.” At the time of the transfer, Gene Osborne had defaulted on both the Heritage Note and Finley Note. Moreover, Gene Osborne has not made any voluntary payments to satisfy the Judgment. Therefore, the Court concludes that Gene Osborne was insolvent at the time of the transfer. 17. The evidence establishes that transfer occurred either on April 2, 2009 or sometime after that date. April 2, 2009 was two days after the $7 million judgment was entered against Gene Osborne. Therefore, the Court concludes that the transfer occurred shortly after a substantial debt was incurred. Defendants’ Transfer of the Classic Cars was Not in Good Faith and for the Benefit of Guaranty 18. Although not clear from their pleadings, Defendants have attempted to raise a defense to Guaranty’s claim under C.R.S. § 38-8-105(1)(a) that the transfer of the Classic Cars is not fraudulent under the CUFTA since the transfer was made in good faith and Guaranty ultimately received the benefit of the $600,000 consideration.1
C.R.S. § 38-8-109(1) provides a transferee with the following defense to an actual fraud claim brought under C.R.S. § 38-9-105(1)(a): “A transfer or obligation is not voidable under section 38-8-105 (1) (a) against a person who took in good faith and for a reasonably equivalent value or against any subsequent transferee or obligee.” 14
19. The Defendants claim that the transfer actually occurred on December 29, 2008 and the reason Gene Osborne transferred his interest in the Classic Cars was to obtain the $600,000 so he could resolve his issues with Guaranty. 20. However, the evidence and testimony presented at trial does not establish or corroborate Defendants’ claim that an “oral agreement” existed as of December 29, 2008. Other than the Osbornes’ own testimony, no evidence was presented establishing the existence of the purported “oral agreement.” The Court has found that testimony to be incredible. The agreement was not entered into until late May 2009, after the Sheriff’s office attempted to levy on the vehicles and after this action was filed. 21. Defendants testified that Lyn Osborne maintains her own separate finances and that Gene Osborne has no interest or control over Osborne Cattle Company, LLC, the source of the funds at issue. However, the evidence established that Gene Osborne maintained a significant role in the company. 22. Based on the Defendants’ overall lack of credibility and since their testimony was the only evidence establishing that the purported “oral agreement” existed, the Court finds that the Defendants have failed to meet their burden of showing that the transfer was made in good faith. 23. The Court does not conclude that Guaranty received the “benefit” of the transfer. Defendants argue that since Gene Osborne sold the Classic Cars for $600,000 and that money went to Guaranty, Guaranty has already received the value of the Classic Cars. There was no such agreement when the money went to Guaranty. 24. The Court does find that Osborne Cattle Company did provide a total of $600,000 to Mr. Phillips and Mr. James, and that same amount of money was paid to Guaranty. However, the evidence does not establish that the $600,000 would not have been provided but for the transfer of the Classic Cars. 25. Therefore, the Court finds and concludes that the transfer of the Classic Cars was not in good faith and did not benefit Guaranty since the only evidence establishing such a defense is the Defendants’ own less-than-credible testimony and documents created after this action was filed. The Transfer of the Classic Cars to Comstock Auto Museum was Fraudulent Under C.R.S. 38-8-105(1)(a) 26. As described above, the transfer of the Classic Cars from Gene Osborne to his wife Lyn Osborne and her single-member limited liability company Comstock Auto Museum, features numerous badges of fraud as outlined in C.R.S. § 38-8-105(2). While not all of the badges of fraud outlined in the statute have been discussed, the Court finds that Guaranty has conclusively proven numerous badges of fraud to convince this Court that Gene Osborne transferred the Classic Cars with the actual intent to defraud Guaranty. 27. Therefore, after reviewing and considering all of the evidence presented at trial in light of the badges of fraud outlined in the CUFTA, the Court concludes that Gene Osborne’s 15
transfer of the Classic Cars was made with the actual intent to hinder, delay, or defraud Guaranty, a creditor of Gene Osborne. B. Alternatively, The Transfer of the Classic Cars was Fraudulent Under C.R.S. § 38-8-106(2)
28. Under C.R.S. § 38-8-106(2), a transfer is fraudulent as to a creditor whose claim arose before the transfer was made if: a. the transfer was made to an insider for an antecedent debt; b. the debtor was insolvent at that time; and c. the insider had reasonable cause to believe that the debtor was insolvent. 29. The Defendants’ testified that the Purchase Agreement and Bill of Sale is the written documentation of the “oral agreement” they entered into on December 29, 2008. As the Court found in the proceeding section, the evidence fails to prove that an agreement actually existed on December 29, 2008. 30. Instead, the evidence establishes that Lyn Osborne, through Osborne Cattle Company, LLC, provided Mr. Phillips and Mr. James a total of $600,000 in connection with two separate loan purchase agreements with Guaranty. Those payments consisted of a $500,000 payment to Mr. Phillips on December 29, 2008, and a $100,000 payment to Mr. James on January 28, 2009. 31. Even assuming that the Defendants had an agreement whereby Gene Osborne transferred the Classic Cars for $600,000, the evidence reflects that the purpose of any such agreement was to satisfy an antecedent debt rather than to consummate a contemporaneous sale. According to the Bill of Sale, such transfer of the Classic Cars did not occur until April 2, 2009. Therefore, the Court finds and concludes that the transfer represented in the Purchase Agreement and Bill of Sale was a transfer to an insider for an antecedent debt. 32. the transfer. The Court has already concluded that Gene Osborne was insolvent at the time of
33. Lyn Osborne testified that she was aware that Gene Osborne was unable to pay his debts to Guaranty, which is why Gene Osborne was asking his wife to provide the $600,000. Additionally, Lyn Osborne testified that the Classic Cars were Gene Osborne’s only valuable assets at the time. Therefore, the Court finds that Lyn Osborne had reasonable cause to believe that the debtor was insolvent at the time of transfer. 34. Therefore, based on the evidence and testimony presented at trial, the Court finds and concludes that the transfer of the Classic Cars was fraudulent under C.R.S. § 38-8-106(2) since it was a transfer made to an insider for an antecedent debt, Gene Osborne was insolvent at the time of the transfer, and Lyn Osborne had reasonable cause to know her husband was insolvent. 16
The Defendants Engaged in a Civil Conspiracy to Defraud Guaranty and Guaranty is Entitled to Its Damages Elements of Civil Conspiracy Claim
35. In order to establish a claim of civil conspiracy the plaintiff must establish the following elements: • • • • • two or more persons; an object to be accomplished; a meeting of the minds on the object or course of action; an unlawful act; and damages as to the proximate result.
Nelson v. Elway, 908 P.2d 102, 106 (Colo. 1995). 36. Additionally, the essence of a civil conspiracy claim is not the actual conspiracy, but the damages resulting from the action taken in furtherance of the conspiracy. Double Oak Constr., L.L.C. v. Cornerstone Dev. Int’l., L.L.C., 97 P.3d 140, 146 (Colo. Ct. App. 2004). 37. Colorado courts have recognized claims for conspiracy to defraud creditors, including claims that a “transfer in violation of the CUFTA is a legal wrong that will support a conspiracy claim.” Double Oak Constr., 97 P.3d at 146-147. Additionally, the courts have rejected the notion that the remedies of a fraudulent conveyance are limited to the remedies provided by the CUFTA and have held that a conspiracy claim “provides plaintiffs with damage remedies independent of those provided under CUFTA.” Id. at 148. 38. Damages are the measure of loss or harm resulting from an injury suffered by a person because of an unlawful act, omission, or negligence of another. Double Oak Constr., 97 P.3d at 150. 39. In situations where the amount of damages is uncertain, the law allows for the approximation of damages as long as the fact of damages is certain. Western Conf. Resorts, Inc. v. Pease, 668 P.2d 973, 977 (Colo. Ct. App. 1983). 40. Attorney fees are clearly damages if they are part of the substance of a lawsuit, that is, if the fees being sought are the legitimate consequences of the tort or breach of contract sued upon. Double Oak Constr., 97 P.3d at 150. Defendants Acted Together to Accomplish the Goal of Defrauding Guaranty 41. Since April 2, 2009, the Defendants have acted together in the efforts to defraud Guaranty and prevent it from collecting upon its Judgment against Gene Osborne. 42. To hinder and delay Guaranty’s collection of its multi-million dollar judgment against Gene Osborne, the Osbornes acted together to fraudulently transfer 12 Classic Cars to the newly formed company, Comstock Auto Museum, LLC. 17
43. The Defendants each played a role in transferring some of the Certificates of Title from Gene Osborne to Comstock Auto Museum. Both Gene and Lyn Osborne went to the Division of Motor Vehicles and executed portions of the necessary documents to transfer title. For two of the vehicles Lyn Osborne, as the sole member of Comstock Auto Museum, granted Gene Osborne the authority to sign the necessary paperwork with the DMV. 44. The Defendants both engaged in the concealment of the Classic Cars from Guaranty for the purpose of avoiding and evading Guaranty’s writs of execution and prejudgment writs of attachment. Gene and Lyn both organized a group to help them both move the vehicles from the Osbornes’ residence to a secret “secure location.” Both Gene and Lyn Osborne refused to disclose the location of all 12 Classic Cars until ordered by the Court. 45. Both Gene and Lyn Osborne worked with Jeff Jackson, after this lawsuit was filed, to create the Purchase Agreement and Bill of Sale that the Osbornes have relied on throughout this action. Those documents transferred ownership from Gene Osborne to Comstock Auto Museum, preventing Guaranty from levying upon those vehicles. 46. Therefore, the Court finds that each of the Defendants acted together, both before and during this litigation, on an agreed upon course of action for the purpose of defrauding Guaranty. The Fraudulent Transfer was an Unlawful Act 47. The Court has already concluded that the transfer of the Classic Cars from Gene Osborne to Comstock Auto Museum was a fraudulent transfer under the CUFTA. 48. Even after the fraudulent transfer and throughout this action, the Defendants have continued to act to defraud Guaranty and hinder and delay Guaranty’s legitimate collection efforts. 49. First, the Defendants purposely moved and concealed several of the Classic Cars for the purpose of frustrating and avoiding Guaranty’s right to levy upon those vehicles under its prejudgment writs of attachment. 50. Second, the Defendants drafted and executed the Purchase Agreement and Bill of Sale after this lawsuit was filed. 51. Third, the Defendants represented that the Purchase Agreement and Bill of Sale were made and entered into on April 2, 2009. Guaranty’s Attorney Fees and Costs are the Proximate Damages Caused by Defendants Civil Conspiracy 52. According to the evidence at trial, Guaranty has incurred approximately $208,000 in attorneys’ fees and costs in litigating this action. Guaranty has established the amount of its damages through its detailed attorney fees invoices for fees and costs incurred through March 2010, together with the testimony of Jennifer Ostenson, Guaranty’s Senior Vice President supervising this litigation matter, who estimated that Guaranty’s attorneys’ fees and costs for the 18
month of April 2010 to be between $45,000 to $60,000. At the time of trial, Guaranty had not yet been invoiced for fees and costs incurred during April 2010. During April 2010, the parties participated in a mediation and four days of trial. 53. This action would not have been necessary and Guaranty would not have been required to incur the fees and costs it incurred in this action but for Defendants’ conspiracy and fraudulent transfer of the Classic Cars to Comstock Auto Museum, LLC. 54. On May 12, 2009, Guaranty attempted to collect on its Judgment against Gene Osborne. It took the appropriate steps of obtaining writs of execution and having the Douglas County Sheriff execute those writs. If the Defendants had not transferred the Classic Cars to Comstock Auto Museum, Guaranty would have been able to levy upon those vehicles that day. 55. However, since the Defendants had already transferred the Original Cars, Guaranty was forced to file this action in order to avoid the transfer. Guaranty had no other course of action or remedy to undo the transfer other than file a fraudulent transfer claim under the CUFTA. 56. Moreover, Defendants’ actions after this lawsuit was filed greatly increased the amount of damages suffered by Guaranty. The list of Defendants obdurate behavior during this action includes, but is not limited to, the following: a. Defendants admittedly moved several of the Classic Cars to a secret “secure location” for the purpose of preventing Guaranty from exercising its rights under the order entered by this Court granting Guaranty a prejudgment writ of attachment on the Original Cars ; b. After this lawsuit was filed, Defendants created the Purchase Agreement and Bill of Sale with false execution dates to manufacture a defense to this action; c. Defendants refused to disclose the location of all 12 Classic Cars which prevented Guaranty from obtaining a bond on the second prejudgment writ of attachment granted by the Court; d. Defendants claimed that Guaranty did not need access to the undisclosed Classic Cars since Mr. Feherman, Guaranty’s appraiser, stated that he could appraise the vehicles through photographs. However, the discussions between Defendants and Mr. Fehrman occurred outside the presence of counsel as Defendants refused to allow Guaranty’s counsel onto their property to observe Mr. Fehrman’s appraisal; e. Guaranty was forced to file two motions requesting a nominal bond based on Defendants concealment of the Classic Cars; f. Defendants failed to properly provide their C.R.C.P. 26(a) disclosures and were deficient in their responses to requests for production, resulting in Guaranty having to seek two motions to compel;
g. This Court issued an order compelling Defendants to comply with Guaranty’s requests for production and Guaranty was forced to file a motion to enforce that order since Defendants failed to produce any documents within 9 days of that order; 57. Additionally, since the transfer involved both Lyn Osborne and, her entity, Comstock Auto Museum, Guaranty was forced to involve third parties in this litigation to avoid the fraudulent transfer. 58. After the lawsuit was filed, the Defendants created a Purchase Agreement and Bill of Sale that not only transferred the Classic Cars belonging to Gene Osborne, but those documents also created defenses and counter-arguments used by the Defendants during the course of this litigation. 59. During trial, the Defendants relied on the Purchase Agreement and Bill of Sale to assert their defenses that Gene Osborne did not have an interest in all of 12 Classic Cars, that the transfer was conducted in good faith, and that Guaranty received the benefit of the transfer. All of those defenses stem from the statements made in the Purchase Agreement. The creation of the Purchase Agreement resulted in additional litigation expenses since Guaranty had to unwind both the transfer but also the assertions made in that document. 60. Based on the evidence presented at trial, including the Court having taken judicial notice of the entire case file, the Court concludes that Guaranty’s attorneys’ fees were the proximate damages caused by the Defendants’ conspiracy to defraud Guaranty by engaging in the fraudulent transfer of the Classic Cars. Except for the fraudulent transfer, Guaranty would have been able to levy upon the Classic Cars and partially collect on its Judgment against Gene Osborne. Guaranty’s Attorneys’ Fees are Reasonable 61. Given that Guaranty has claimed its attorneys’ fees as damages, the Court is not required to follow the guidelines set forth in C.R.C.P. 121 § 1-22(2). See Double Oaks, 97 P.3d at 151. Also, based on the fact that Guaranty is seeking its attorneys’ fees as damages, the Court is not required to apportion Guaranty’s attorneys’ fees and determine which fees resulted from the Defendants’ unlawful conduct. Id. 62. Therefore, Guaranty is entitled to its reasonable attorneys’ fees, which is a question of fact to be determined by the Court. See Double Oaks, 97 P.3d at 152. 63. First, Guaranty admitted into evidence detailed invoices from the attorneys that worked on this matter. The invoices contained detailed and contemporaneous time entries for all time billed on this case. The narratives and descriptions in the invoices provide ample information to assess the nature and extent of the work done. 64. The invoices demonstrate that the majority of the time spent on this case was at the start, when Guaranty was trying to collect the vehicles and file this lawsuit, and in the last few months before trial as the Defendants started to produce documents. 20
65. Additionally, the invoices demonstrate that Guaranty’s attorneys wrote off a significant amount of time and fees and made sure that Guaranty was not billed for duplicative work or appearances at depositions or hearings. 66. Second, at trial, Jennifer Ostenson, Guaranty’s representative supervising this litigation matter, testified that in her opinion the attorneys’ fees incurred by Guaranty were reasonable. 67. Ms. Ostenson personally reviewed each of the attorney fee invoices in this case and, based on the circumstances during the course of litigation, determined that the fees were reasonable and actually paid such invoices in full. 68. Ms. Ostenson noted that Guaranty’s attorneys, Faegre & Benson LLP, were very conscious of minimizing costs and agreed to several cost saving measures, such as staffing the case with only two attorneys, one of whom was a first-year associate, and writing off significant portions of that junior associates’ time. 69. Therefore, based on the record, the Court concludes that there is sufficient evidence, including Ms. Ostenson’s unrebutted testimony regarding the reasonableness of the fees, as well as the Court’s own review of the detailed attorney fee invoices, to find that the attorneys’ fees incurred by Guaranty are reasonable. III. ORDER
Based on the forgoing findings of fact and conclusions of law, it is hereby ORDERED that Judgment shall enter in favor of Plaintiff Guaranty Bank & Trust Company and against the Defendants on Plaintiff’s First and Second Claims for relief as follows: A. Pursuant to C.R.S. § 38-8-108(1)(a), Defendant Gene Osborne’s fraudulent transfer of these 7 of the Classic Cars to Defendants, 1929 Ford Roadster; 1954 Massay-Harris; 1927 Paige; 1956 Ford Victoria; 1995 Mercedes Benz; 2002 Ford Thunderbird; and 1964 Lincoln; is avoided and set aside. B. Pursuant to C.R.S. § 38-8-108(1)(c)(I), Defendants are enjoined from disposing or encumbering those 7 Classic Cars. C. Pursuant to C.R.S. § 38-8-108(1)(c)(II), Plaintiff may request the appointment of a receiver to take control and possession of the 7 Classic Cars pending sale. D. Pursuant to C.R.S. § 38-8-108(2), the Plaintiff may levy execution upon the 7 Classic Cars. E. Plaintiff is awarded damages in the amount of $208,000 for the damages it incurred as the result of Defendants’ conspiracy to defraud Plaintiff. Defendants are each jointly and severally liable for the payment of these damages.
Dated: January 25, 2011 BY THE COURT:
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