GF Conservation v. Guire

23CA1717 GF Conservation v Guire 07-11-2024

COLORADO COURT OF APPEALS

Court of Appeals No. 23CA1717

Montrose County District Court No. 19CV6

Honorable Mary E. Deganhart, Judge

GF Conservation Credit II, LLC,

Plaintiff-Appellant,

v.

Jimmy R. Guire II; Roseanne Madsen Guire; Meadows Ranch, LLC;

Tsawhawbitts Meadows Ranch Trust; Tsawhawbitts Meadows Ranch Dynasty

Trust; GW 39 Irrevocable Trust; TMR39, LLC; TMR40, LLC; and TMR44, LLC,

Defendants-Appellees.

ORDER AFFIRMED AND CASE REMANDED WITH DIRECTIONS

Division II

Opinion by JUDGE GROVE

Fox and Sullivan, JJ., concur

NOT PUBLISHED PURSUANT TO C.A.R. 35(e)

Announced July 11, 2024

Keiffer, LLC, Jeffrey C. Keiffer, Lone Tree, Colorado, for Plaintiff-Appellant

Springer and Steinberg, P.C., Michael P. Zwiebel, Denver, Colorado, for

Defendants-Appellees

1

¶ 1 Plaintiff, GF Conservation Credit II, LLC (GF), appeals the

district court’s order denying its motion for a writ of execution

against the property and holdings of defendants, Jimmy R. Guire II,

Roseanne Madsen Guire, Meadows Ranch, LLC, Tsawhawbitts

Meadows Ranch Trust, Tsawhawbitts Meadows Ranch Dynasty

Trust, GW 39 Irrevocable Trust, TMR39, LLC, TMR40, LLC, and

TMR44, LLC. We affirm the district court’s order.

¶ 2 Both GF and the defendants request appellate attorney fees

and costs. We grant both requests.

I. Background

¶ 3 In 2010, GF entered into two contracts for the purchase of

roughly $395,000 in conservation easement tax credits from two

entities managed or owned by the Guires — Meadows Ranch, LLC

and Tsawhawbitts Meadows Ranch Trust (jointly, the transferor

entities). GF is a single-member LLC owned by an unidentified

natural person (the owner) who is not a party to this case. As a

single-member LLC, GF is a “disregarded entity” for federal and

state income tax purposes, meaning that the conservation easement

tax credits purchased from the transferor entities were passed

through to and claimed by the owner.

2

¶ 4 Under each tax-credit agreement, the transferor entities

warranted that the claimed amounts of tax credits were valid.

Additionally, each contract contained an indemnification clause

that provided for reimbursement of attorney fees and costs incurred

in an action arising from a transferee claim.

¶ 5 Several years after the owner claimed the credits, the owner

and the Guires received notice that the Colorado Department of

Revenue (CDOR) was challenging the tax credits. Ultimately, CDOR

disallowed fifteen percent — or nearly $60,000 worth — of the

claimed tax credits. The owner’s representative, not GF, paid the

tax liability.

¶ 6 Based on the indemnification clause in the tax-credit

agreements, GF sought reimbursement from the transferor entities

for the amount of the disallowed credits. The transferor entities

declined to indemnify GF. GF, but not the owner, responded by

suing both transferor entities. While that lawsuit was pending, the

Guires transferred most of the real property from the transferor

entities to the various other entity defendants. In response, GF

amended its complaint to add all named defendants, alleging that

those conveyances were fraudulent.

3

¶ 7 Because the owner, and not GF, paid the bill for the disallowed

tax credits, the trial court ruled that GF lacked standing to seek

relief from the transferor entities because it suffered no damages. A

division of this court affirmed that ruling, see GF Conservation

Credit II, LLC v. Guire, slip op. at ¶¶ 10, 13 (Colo. App. No.

21CA0043, Apr. 7, 2022) (not published pursuant to C.A.R. 35(e))

(Guire I), but the division also held that GF could recover its

attorney fees and costs from the litigation because those amounts

arose from the transferor entities’ breach of warranties.

Accordingly, the division remanded the case for a determination of

attorney fees under the tax-credit agreements. Id. at ¶¶ 33-41. On

remand, the trial court granted GF’s request for attorney fees and

further ordered that the Guires, Meadows Ranch, LLC, and

Tsawhawbitts Meadows Ranch Trust were jointly and severally

liable for the attorney fees.

¶ 8 The Guires and the transferor entities appealed the trial

court’s order. GF Conservation Credit II, LLC v. Guire, (Colo. App.

No. 23CA0078, May 16, 2024) (not published pursuant to C.A.R.

35(e)) (Guire II). For various reasons not relevant to the issues

before us, they argued that GF was not entitled to an award of fees

4

and costs at all. In addition, they argued that the Guires could not

be held personally liable for the fee award because they had signed

the tax-credit agreements in their capacities as agents for the

transferor entities. Id. at ¶ 18. The division concluded that GF was

entitled to an award of fees and costs, but it also held that the

Guires were not personally liable for that award because they had

signed the agreements as agents for the transferor entities. Id. As

a result of the division’s holding in Guire II, the transferor entities

are the only judgment debtors.

¶ 9 While its appeal in Guire II was pending, GF filed a motion in

the district court for a writ of execution to satisfy the attorney fee

award. GF requested execution on “property equitably owed [sic] by

the current Judgment Debtors: Jimmy R. Guire II, Roseanne

Madsen Guire, Meadows Ranch, LLC, and Tsawhawbitts Meadows

Ranch Trust, including a Writ against Defendants Tsawhawbitts

Meadows Ranch Dynasty Trust, GW39 Irrevocable Trust, TMR39,

LLC, TMR40, LLC, TMR44, LLC.”

1

In its motion, GF acknowledged

1

We will refer to the Tsawhawbitts Meadows Ranch Dynasty Trust,

GW39 Irrevocable Trust, TMR39, LLC, TMR40, LLC, and TMR44,

LLC, collectively, as the non-debtor entities.

5

that it did not hold a judgment against the non-debtor entities but

argued that it should nonetheless be permitted to execute on real

property that the non-debtor entities owned, because the Guires

fraudulently transferred property from the transferor entities to the

non-debtor entities and both sets of entities are owned and

controlled by the Guires. GF’s proposed writ of execution did not

distinguish between the judgment debtors and the remaining

defendants; as proposed, it would direct “any Sheriff in Colorado,

specifically including Montrose County,” to “[l]evy upon the property

(real, personal, or intangible), goods, chattels, lands and tenements

of any of the above named defendants, found in your county to

enforce the payment of the December 21, 2022 Judgment.”

¶ 10 The defendants opposed GF’s motion for a writ of execution,

arguing that a writ may only be issued against judgment debtors,

and that because C.R.C.P. 69 does not allow parties to litigate

ownership of real property, GF could not raise fraudulent transfer,

veil piercing, or successor liability issues at that stage of the

proceedings.

¶ 11 The district court agreed with the defendants. Relying on the

holding of Securities Investor Protection Corp. v. First Entertainment

6

Holding Corp., 36 P.3d 175 (Colo. App. 2001), the court ruled that

ownership of property may not be litigated in a C.R.C.P. 69

proceeding and that “the issues of corporate veil piercing and

fraudulent conveyance all relate to the ownership of property.”

Thus, the court concluded, “[t]he proposed writ of execution is

improper because it includes the [non-debtor entities] as judgment

debtors even though there is no judgment against them.”

¶ 12 GF filed a motion for partial reconsideration. For the first

time, it argued that even if ownership may not be litigated in a

C.R.C.P. 69 proceeding, the district court should still grant a writ of

execution against the judgment debtors. Before the court could

rule on the motion, however, GF filed the instant appeal. The court

issued an order denying the motion anyway, noting that (1) GF

never sought a writ solely against the judgment debtors and it was

inappropriate to raise new arguments in a motion for

reconsideration and (2) it had been divested of jurisdiction once the

notice of appeal was filed.

II. Analysis

¶ 13 GF first contends that the district court erred by declining to

issue a writ of execution against the judgment debtors. (After Guire

7

II, this group includes only the transferor entities.) Second, GF

argues that the district court erroneously precluded it from

employing alternative collection methods against the non-debtor

entities via the C.R.C.P. 69 proceeding. We discern no error in

either aspect of the district court’s ruling.

¶ 14 Both parties also request an award of appellate attorney fees.

We grant both requests for reasons that we explain further below.

A. Writ of Execution Against Judgment Debtors

¶ 15 GF contends that the district court erred by declining to issue

a writ of execution against the judgment debtors. Because this

issue was not preserved, we do not address it on the merits. See

McGihon v. Cave, 2016 COA 78, ¶ 16.

¶ 16 To preserve a matter for appeal, a party must bring the

specific issue to the district court’s attention so that the district

court may rule on it. JW Constr. Co. v. Elliott, 253 P.3d 1265, 1271-

72 (Colo. App. 2011); Martinez v. People, 2015 CO 16, ¶ 14. While

“talismanic language” is not required for preservation, the objection

or request must be specific enough to make the court aware of the

issue. Martinez, ¶ 14 (quoting People v. Melendez, 102 P.3d 315,

322 (Colo. 2004)).

8

¶ 17 GF did not move for a writ of execution solely against the

judgment debtors; to the contrary, GF made clear that its request

for the writ was not restricted to the judgment debtors. To that end,

GF focused the entire motion accompanying the proposed writ on

reaching the non-debtors’ assets and argued that the court should

issue a broadly worded writ against all of the defendants because

the transferor entities had allegedly fraudulently transferred all of

their real property to the non-debtor entities. GF’s reply in support

of the motion was similarly expansive, and the proposed writ

purported to direct the sheriff to “[l]evy upon the property (real,

personal, or intangible), goods, chattels, lands and tenements of

any of the above named defendants, found in your county to enforce

the payment of the December 21, 2022 Judgment.”

¶ 18 After the district court declined to issue the writ, GF moved for

reconsideration and, for the first time, requested that the district

court issue a writ of execution against the judgment debtors alone.

In its order addressing the motion, the district court pointed out

that it no longer had jurisdiction over the case because GF had

already filed a notice of appeal. But the court also noted that, in its

original motion, GF had “sought issuance of the writ against all

9

named parties,” rather than just the judgment debtors. As a result,

the court concluded, GF’s motion for reconsideration was raising a

new argument — and “essentially seeking to amend its original

[m]otion” — by narrowing the scope of the requested writ of

execution.

¶ 19 The order denying GF’s motion for reconsideration made clear

that GF failed to timely advance any argument that the court

should issue a writ of execution against the judgment debtors

alone. Yet in its opening brief on appeal, GF summarily asserts

that this issue was preserved because “[t]he issue did not need

additional preservation other than the notice of appeal.” We reject

that argument. See Briargate at Seventeenth Ave. Owners Ass’n v.

Nelson, 2021 COA 78M, ¶ 66 (“Arguments made, as here, for the

first time in a post-trial motion are too late and, consequently, are

deemed waived for purposes of appeal.”). We also observe that, to

the extent that GF develops any substantive argument on appeal as

to why the district court should have issued a narrower writ of

execution than the one GF originally requested, it does not do so

until its reply brief. We do not consider arguments raised for the

10

first time in a reply brief. Vitetta v. Corrigan, 240 P.3d 322, 330

(Colo. App. 2009).

¶ 20 Because GF did not timely present its arguments regarding the

scope of the proposed writ of execution in the district court, they

are not preserved and we decline to address them further.

B. Writ of Execution Against All Defendants

¶ 21 GF also contends the district court erred by denying its motion

for the writ of execution as it was originally proposed. GF argues

first that issuing a writ of execution is mandatory, and second that

because the transferor entities fraudulently transferred property to

the non-debtor entities and the non-debtor entities are under the

control of the Guires, the court was required to issue the requested

writ against all defendants. We are not persuaded.

1. Standard of Review and Applicable Law

¶ 22 “We review the interpretation of statutes and rules of civil

procedure de novo.” Nesbitt v. Scott, 2019 COA 154, ¶ 19. C.R.C.P.

69(a) provides that the “process to enforce a final money judgment

shall be by writ of execution.” All non-exempt real property “of

every person against whom any judgment is obtained . . . [is] liable

to be sold on execution.” § 13-52-102(1), C.R.S. 2023.

11

¶ 23 Only the debtor’s property may be executed upon. See, e.g.,

First Nat’l Bank of Denver v. Dist. Ct., 652 P.2d 613, 616 (Colo.

1982). Additionally, “[w]hen there is an actual dispute as to

ownership of property, the court may not try such an issue in a

C.R.C.P. 69 proceeding, because the purpose of a C.R.C.P. 69

proceeding is to discover what property the judgment debtor has

that is subject to execution.” Sec. Inv. Prot. Corp., 36 P.3d at 179

(citing Walker v. Staley, 89 Colo. 292, 1 P.2d 924 (1931)). In this

respect, writ of execution proceedings differ from writ of

garnishment proceedings because garnishment proceedings do

allow for ownership litigation and, therefore, may reach issues of

corporate veil piercing and fraudulent conveyance. Great Neck

Plaza, LP v. Le Peep Rests., LLC, 37 P.3d 485, 488-89 (Colo. App.

2001).

2. Application

¶ 24 First, we need not decide whether it is mandatory for a district

court to grant a motion for a writ of execution against a judgment

debtor because — as discussed above — GF never sought a writ of

execution against only the transferor entities, and the district court

12

appropriately declined to issue the much broader writ of execution

that GF requested.

¶ 25 Second, ownership may not be litigated in a C.R.C.P. 69

proceeding. Sec. Inv. Prot. Corp., 36 P.3d at 179. GF sought a writ

of execution against the non-debtor entities based on fraudulent

conveyance and veil piercing. However, both theories necessarily

involve litigating ownership of the real property that might be

subject to execution. C.R.C.P. 69 therefore did not apply and the

district court correctly declined to issue the requested writ.

¶ 26 Relying on Great Neck Plaza, 37 P.3d 485, GF asserts that the

district court erred by refusing to consider its arguments regarding

fraudulent transfer and veil piercing. But Great Neck was a

garnishment case, and there are significant differences between a

garnishment proceeding and an execution proceeding. See

Maddalone v. C.D.C., Inc., 765 P.2d 1047, 1049 (Colo. App. 1988)

(cataloguing differences between garnishment proceedings under

C.R.C.P. 103 and execution proceedings under C.R.C.P. 69). We

decline GF’s invitation to interpret C.R.C.P. 69 as allowing for the

same procedures as C.R.C.P. 103.

C. Appellate Fees and Costs

13

¶ 27 Both GF and the defendants request an award of their

appellate attorney fees and costs. We grant both requests.

1. Indemnification Clause

¶ 28 GF requests its appellate costs and fees because this appeal

arises from an attempt to enforce a money judgment related to a

transferee claim. GF is entitled to such an award under the plain

language of the contract.

¶ 29 The tax-credit agreements each provide the following:

Transferor shall indemnify, defend and hold

the Transferee and its officers, directors,

shareholders, employees, agents and

representatives, and its and their heirs,

successors and legal representatives (each a

“Transferee Indemnitee”) harmless from and

against any and all damages, claims, losses,

actions, liabilities, deficiencies, judgments,

fines, penalties, costs and expenses, including,

without limitation, reasonable attorneys’ fees

and costs of litigation, and any amounts paid

in settlement thereof (collectively “Damages”)

arising from any Transferee Claim (as defined

below). Such payment for Damages shall be

made . . . after any written demand by a

Transferee Indemnitee for payment of Damages

incurred by any Transferee Indemnitee arising

out of or related to any breach by Transferor of

any representation, warranty or covenant in

this Agreement . . . (collectively, the

“Transferee Claims”).

14

¶ 30 A transferee claim is a claim that arises from the transferors’

breach of the listed warranties; the amount of tax credits to be

transferred is one such warranty. Under the plain language of the

agreement, GF may recover fees for asserting a transferee claim

without regard to whether it actually prevails. Guire I, slip op. at

¶¶ 36-40. There is no language that excludes enforcement

proceedings from the scope of the indemnification clause.

2

¶ 31 This appeal arose from GF seeking enforcement of its money

judgment against the transferor entities. The judgment was for the

fees and costs incurred while litigating a claim that arose from

deficiencies in the tax credits. Guire II, slip op. at ¶¶ 10-14.

Therefore, this appeal is “related to” a breach by the transferor

entities. GF is contractually entitled to the fees it incurred

pursuing enforcement against the transferor entities.

¶ 32 The defendants assert that a transferee claim does not include

postjudgment enforcement proceedings. We reject this argument

2

However, the parties are cautioned not to try to turn the process

into the punishment itself. Public policy may weigh against

enforcement of a contractual fee-shifting provision in cases

involving an abuse of the litigation process. See Klein v. Tiburon

Dev. LLC, 2017 COA 109, ¶ 29.

15

because the tax-credit agreements have no such limiting language.

See, e.g., Wota v. Blue Cross & Blue Shield of Colo., 831 P.2d 1307,

1309 (Colo. 1992). Because, in this action, GF is seeking to enforce

a judgment from a transferee claim, we conclude that the appeal is

related to the transferee claim and therefore grant GF’s request to

recover its reasonable appellate attorney fees and costs from the

transferor entities.

3

2. Frivolous Appeal

¶ 33 The defendants request their appellate costs and fees under

C.A.R. 38(b). We agree that a fee award is warranted.

¶ 34 Section 13-17-102(2), C.R.S. 2023, authorizes courts to assess

attorney fees against a party that brings an action or appeal that

lacks substantial justification. A claim lacks substantial

justification if it is substantially frivolous. § 13-17-102(4). A

frivolous claim is one that advances no rational argument based on

the record or law in support of the claim. Hamon Contractors, Inc.

v. Carter & Burgess, Inc., 229 P.3d 282, 299 (Colo. App. 2009).

3

To the extent that the defendants reraise arguments concerning

GF’s standing that were rejected in Guire I and Guire II, we decline

to revisit those issues.

16

¶ 35 Rule 38(b) authorizes this court to assess costs, including

attorney fees, against a party that brings a frivolous appeal. A

party requesting fees has the burden of proving by a preponderance

of the evidence that the claims lack substantial justification. Bd. of

Cnty. Comm’rs v. Auslaender, 745 P.2d 999, 1001 (Colo. 1987).

¶ 36 “An appeal may be either frivolous as filed or frivolous as

argued.” Calvert v. Mayberry, 2019 CO 23, ¶ 45. As relevant here,

an appeal is frivolous as filed if “the judgment by the tribunal below

was so plainly correct and the legal authority contrary to the

appellant’s position so clear that there is really no appealable

issue.” Castillo v. Koppes-Conway, 148 P.3d 289, 292 (Colo. App.

2006) (citation omitted).

¶ 37 GF’s appeal is frivolous as filed. Regarding GF’s contention

that the district court should have granted its motion in part and

issued a narrower writ of execution than the one it requested, GF

did not make any such argument in the trial court until it filed its

motion for reconsideration. But as we have already noted — and as

the district court observed — new issues may not be raised in a

motion for reconsideration. See, e.g., Nelson, ¶ 66 (collecting cases).

Yet, despite the fact that the district court had already rejected GF’s

17

untimely attempt to narrow the scope of its motion for a writ of

execution (albeit in an order issued after GF filed its notice of

appeal) GF doubled down in its opening brief in this court by

asserting — without citing any authority or acknowledging the

district court’s order — that it had preserved the issue through its

notice of appeal rather than acknowledging its failure to make any

such arguments in the district court. See id. (“Objections to trial

court rulings must be made contemporaneously with the court’s

actions before appellate review is afforded.”).

¶ 38 As for GF’s arguments about the permissible scope of

execution proceedings, the plain language of C.R.C.P. 69 and

section 13-52-102(1) allows creditors to obtain a writ of execution

only against the judgment debtors — not against related parties.

Ruscitti v. Sackheim, 817 P.2d 1046, 1048 (Colo. App. 1991). The

case law addressing whether ownership may be litigated through

Rule 69 is equally clear, and has been for nearly a century:

ownership may not be litigated during a writ of execution

proceeding. Sec. Inv. Prot. Corp., 36 P.3d at 179; see also Walker,

89 Colo. at 295, 1 P.2d at 925 (“It is beyond the purpose of

[supplementary proceedings in aid of execution] to try contested

18

title to real property. Where title to real property claimed to belong

to a judgment debtor stands in the name of another, a creditor's

suit is the proper proceeding to subject the property to the

satisfaction of a judgment.”). Yet, notwithstanding this clear

precedent, and even though the district court expressly relied on

Securities Investor Protection Corp. in its order denying GF’s motion,

GF barely acknowledges the case in its opening brief (it appears

only once, in a block quote of the district court’s order), and instead

argues that Great Neck — a garnishment case — controls. But

Great Neck itself recognizes the clear differences between execution

proceedings under C.R.C.P. 69 and garnishment under C.R.C.P.

103, see 37 P.3d at 489 (citing Maddalone, 765 P.2d 1047), and

comes nowhere near suggesting that the rules applicable to

garnishment can be applied in an execution proceeding.

¶ 39 While we are mindful that litigants must be given latitude to

argue that the law should be extended, GF does not plausibly do so

here. And the law that GF does cite is so contrary to GF’s position

that there is simply no legitimate appealable issue before us.

Castillo, 148 P.3d at 292. As the district court ruled, and as well-

settled case law clearly provides, ownership issues cannot be

19

litigated in execution proceedings under C.R.C.P. 69. Between the

preservation issues that we have already discussed and the

untenable arguments that GF advances regarding C.R.C.P. 69, we

must conclude that its appeal was frivolous as argued. We

therefore grant the defendants’ request for their appellate fees and

costs.

III. Disposition

¶ 40 We affirm the district court’s order. We also grant both GF’s

and the defendants’ requests for appellate attorney fees and costs.

We remand the case to the district court for a determination of the

reasonable appellate attorney fees and costs for both parties.

JUDGE FOX and JUDGE SULLIVAN concur.