Fleisher v. First National Bank of Telluride

973 P.2d 690, 1998 Colo. App. LEXIS 171, 1998 WL 379935
CourtColorado Court of Appeals
DecidedJuly 9, 1998
DocketNo. 97CA0672
StatusPublished

This text of 973 P.2d 690 (Fleisher v. First National Bank of Telluride) is published on Counsel Stack Legal Research, covering Colorado Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Fleisher v. First National Bank of Telluride, 973 P.2d 690, 1998 Colo. App. LEXIS 171, 1998 WL 379935 (Colo. Ct. App. 1998).

Opinion

Opinion by

Judge CASEBOLT.

In this declaratory judgment proceeding to determine priority of liens, plaintiff, Terrence J. Fleisher, appeals the summary judgment entered in favor of defendant, First National Bank of Telluride. We reverse and remand.

The facts are undisputed. In 1991, plaintiff commenced an action (underlying action) upon a promissory note issued by an owner of certain real property (owner). Owner answered, denying liability under the note. In January 1992, plaintiff filed a motion for summary judgment, but before owner’s re[692]*692sponse was due, the matter was stayed because of owner’s bankruptcy proceeding.

Upon receiving the notice of automatic stay, the trial court issued a minute order stating, in pertinent part, that the court would assume that the bankruptcy would permanently foreclose further action and that, if it did not hear to the contrary from plaintiff by August 19, 1992, dismissal without prejudice would then occur without further order being necessary.

However, on August 17, 1992, unbeknownst to the trial court, the bankruptcy court dismissed the proceeding. Thereafter, in October 1992, plaintiffs counsel brought the bankruptcy dismissal to the attention of the trial court, which then issued an order requiring owner to provide a response to the motion for summary judgment by November 4, 1992. However, owner did not receive notice that he had been ordered to respond to the motion.

Having received no response to the motion for summary judgment, the court entered a judgment against owner for $106,080.65, plus interest, on November 6,1992. Plaintiff filed his judgment lien against the property on November 16,1992.

On January 14, 1993, owner filed a motion pursuant to C.R.C.P. 60(a) and (b) to vacate the judgment. Finding that owner had not received notice of the court’s order requiring a response, the court granted owner’s motion, and the minute orders reflect that the judgment was vacated.

On April 13, 1993, defendant recorded a deed of trust on the property.

Plaintiff ultimately succeeded in securing a judgment on the merits against owner in the underlying action in 1995. Plaintiff again recorded a judgment lien on March 17, 1995.

In 1996, defendant began proceedings to foreclose on its deed of trust. Plaintiff filed a notice of lis pendens against the property and commenced this proceeding, seeking a declaratory judgment that his judgment lien was prior and superior to defendant’s lien under the deed of trust.

The trial court determined that the judgment obtained in 1992 was void; consequently, it determined that plaintiffs judgment lien filed in November 1992 should be vacated. This appeal followed.

I.

First, we reject defendant’s contention that the appeal is moot because its deed of trust has been foreclosed.

A case is moot when the relief sought, if granted, would have no practical legal effect. State Board of Chiropractic Examiners v. Stjernholm, 935 P.2d 959 (Colo.1997).

Here, even though the deed of trust no longer exists, the public trustee’s deed is subject to any liens filed before the deed of trust. If plaintiffs judgment lien is superior to the deed of trust, then the public trustee’s deed is subject to the judgment lien. Thus, a decision in this case does have a practical, legal effect, and the appeal is not moot.

II.

Plaintiff contends that the trial court erred in holding that defendant’s deed of trust was superior to his judgment lien. We agree.

When a judgment lien has been recorded and the judgment upon which that lien is based is later set aside, an issue concerning the validity of the judgment lien arises. In such circumstances, courts must determine whether the underlying judgment was “opened” or “vacated.” Weaver Construction Co. v. District Court, 190 Colo. 227, 545 P.2d 1042 (1976).

Whether a judgment is opened or vacated depends upon the basis for setting aside the judgment. Generally, when a judgment is set aside on grounds other than those challenging the jurisdiction of the court, the judgment is opened and the case proceeds to a trial on the merits. When a judgment is set aside on jurisdictional grounds, it is vacated and is of no force and effect. Weaver Construction Co. v. Distinct Court, supra.

When a judgment is opened, the defendant defends on the merits of the claim, but the original judgment and judgment lien remain in effect as security pending the reso[693]*693lution of the trial on the merits. If a judgment results in plaintiffs favor after the original judgment is opened for a trial on the merits, the judgment lien will remain in full force and effect as if the original judgment had not been opened. If a judgment results in favor of the defendant after trial on the merits, then the original default judgment is vacated and the judgment and judgment lien are expunged as though they never existed. Weaver Construction Co. v. District Court, supra.

Therefore, generally, a court must refrain from “vacating” a judgment until after the opened judgment results in a new judgment on the merits. However, when a judgment is set aside on jurisdictional grounds, it must be vacated, because a void judgment cannot be allowed to remain in effect pending the outcome of a trial on the merits. Weaver Construction Co. v. District Court, supra.

Here, in the underlying action, owner challenged the judgment based on lack of notice, claiming that he had not received the court’s order requiring him to respond to the motion for summary judgment. The trial court in the underlying action relied upon owner’s lack of notice in entering its order setting aside the judgment under C.R.C.P. 60(a) & (b).

Lack of notice, however, did not constitute a jurisdictional defect. That is, it did not affect the subject matter jurisdiction of the court, nor did it affect the court’s personal jurisdiction over owner. See Paine, Webber, Jackson & Curtis, Inc. v. Adams, 718 P.2d 508 (Colo.1986) (a court has subject matter jurisdiction if the case is one of the type of cases that the court has been empowered to entertain by the sovereign from which the court derives its authority; it is the authority to decide a ease, not the correctness of the decision, which provides the basis for jurisdiction); C.R.C.P. 60 (court has jurisdiction to relieve a party from a final judgment, order, or proceeding within a reasonable time after the judgment was entered). See also People v. Ki Suk Grell, 950 P.2d 660 (Colo.App.1997) (once properly invoked, a court’s jurisdiction is not divested by a party’s failure to comply with a statutory requirement).

Therefore, no jurisdictional defects existed when the court entered the November 1992 judgment in the underlying action. Rather, the defective notice rendered the judgment irregular. See Davidson Chevrolet, Inc. v. City & County of Denver, 138 Colo. 171, 330 P.2d 1116

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Related

People v. Grell
950 P.2d 660 (Colorado Court of Appeals, 1997)
Davidson Chevrolet, Inc. v. City & County of Denver
330 P.2d 1116 (Supreme Court of Colorado, 1958)
Paine, Webber, Jackson & Curtis, Inc. v. Adams
718 P.2d 508 (Supreme Court of Colorado, 1986)
Salter v. Board of County Com'rs of Jefferson County
246 P.2d 890 (Supreme Court of Colorado, 1952)
People v. Janke
852 P.2d 1271 (Colorado Court of Appeals, 1992)
Don J. Best Trust v. Cherry Creek National Bank
792 P.2d 302 (Colorado Court of Appeals, 1990)
State Board of Chiropractic Examiners v. Stjernholm
935 P.2d 959 (Supreme Court of Colorado, 1997)
Weaver Construction Co. v. District Court
545 P.2d 1042 (Supreme Court of Colorado, 1976)

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973 P.2d 690, 1998 Colo. App. LEXIS 171, 1998 WL 379935, Counsel Stack Legal Research, https://law.counselstack.com/opinion/fleisher-v-first-national-bank-of-telluride-coloctapp-1998.