Moreland v. Alpert

124 P.3d 896, 59 U.C.C. Rep. Serv. 2d (West) 969, 2005 Colo. App. LEXIS 1619, 2005 WL 2456880
CourtColorado Court of Appeals
DecidedOctober 6, 2005
Docket04CA0400
StatusPublished
Cited by5 cases

This text of 124 P.3d 896 (Moreland v. Alpert) 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
Moreland v. Alpert, 124 P.3d 896, 59 U.C.C. Rep. Serv. 2d (West) 969, 2005 Colo. App. LEXIS 1619, 2005 WL 2456880 (Colo. Ct. App. 2005).

Opinion

GRAHAM,- J.

Defendants, Laurence Alpert, also known as Lawrence Alpert, individually, and doing business as Columbine Financial Solutions, 'Inc., and Razor’s Edge Collection, L.L.C., appeal the trial court’s order ruling that by writs of garnishment,.intervenors, Mark Al-sentzer and August C. Schultes, III, established a creditor’s claim to shares of stock that was prior to the claim plaintiff, W. Douglas Moreland, had-attemptbd to establish by writs of attachment. We affirm.

In 2001, plaintiff filed a complaint in the trial court against defendants in which he sought damages for breach of contract, fraud, and other statutory claims. In connection therewith, he. sought to attach defendants’ assets prior to judgment.

In 2002, in response to plaintiffs ex parte request for prejudgment attachment pursuant to C.R.C.P. 102, the trial court issued a writ of attachment against all defendants’ nonexempt property.

In January 2003, in New Jersey Superior Court, intervenors obtained a judgment against defendants. The judgment was domesticated in Arapahoe County District Court and entered as an order in April 2003.

Plaintiff learned that defendants had exercised, or were about to exercise, a warrant to purchase certain shares of common stock in a publicly traded corporation. Therefore, on November 19, 2003, plaintiff, with the aid of a sheriffs deputy, served Corporate Stock Transfer (C.S.T.), the stock transfer agent of the issuer, with a writ of attachment pursuant to C.R.C.P. 102(a). However, at-the time of service, the deputy was unable to levy or seize any stock certificates because C.S.T. did not have them in its possession.

On December 1, intervenors served C.S.T. with their writ of garnishment with notice of exemption and pending levy pursuant to C.R.C.P. 103(2). The writ identified the judgment debtors as “Lawrence G. Alpert and/or Columbine Financial Solutions, Inc.” Although then in possession of the stock certificates received from the issuer, C.S.T. did not own the stock and refused to deliver the shares to intervenors without a court order because C.S.T. had received plaintiffs prior writ of attachment.

On December 12, a stipulated settlement agreement between plaintiff and defendants was entered as an order of the trial court. Specifically, plaintiff agreed to dismiss three pending lawsuits against defendants in exchange for defendants’ shares of stock, and defendants agreed to waive any technical defects in plaintiffs November 19 writ of attachment.

Threé days later, C.S.T. filed an inter-pleader seeking leave to deposit the shares with the court, pending the priority determination between the competing claims of in-tervenors and defendants (claiming their right to the shares by virtue of plaintiffs interest).

On December 17, plaintiff served C.S.T. with a second writ of attachment pursuant to C.R.C.P. 102(a). However, C.S.T. had not yet become a party to the litigation because an order allowing the interpleader had not yet been signed, and no levy was effected by the sheriffs deputy.

The record reveals that, prior to C.S.T.’s motion to interplead the stock, intervenors did not have notice of plaintiffs competing interest in the shares of stock. On December 19, intervenors served defendants with a copy of their writ of garnishment with notice of exemption and pending levy pursuant to C.R.C.P. 103(2) and then, on December 22, intervenors filed their motion to intervene in the litigation.

A second writ of garnishment on a debtor other than a natural person, pursuant to C.R.C.P. 103(4), identifying the judgment debtor only as “Columbine Financial Solu *899 tions, Inc.” was served on C.S.T. by interve-nors on December 23.

The trial court granted both C.S.T.’s and intervenors’ motions for the purpose of determining priority between plaintiffs writs of attachment and intervenors’ writs of garnishment.

The trial court set aside its earlier December 12, 2003, settlement order authorizing the release of the shares to plaintiff, quashed plaintiffs writs of attachment, quashed inter-venors’ first writ of garnishment, and found intervenors’ second writ of garnishment to be superior and valid.

This appeal followed.

I. Levy as Prerequisite to Attachment

We first address the priority of creditors’ process because this issue is the fulcrum of analysis for most of defendants’ arguments. We reject defendants’ contention that plaintiffs writs were prior in time and right to intervenors’ writs of garnishment.

C.R.C.P. 102 governs attachment and allows “[a]ny party, at the time of filing a claim ... [to] have nonexempt property of the party against whom the claim is asserted ... attached by an ex parte order of court in the manner and on the grounds prescribed in this Rule.” C.R.C.P. 102(a). The rule requires that the sheriff attach the personal property at issue by “taking it into custody” and “return the writ of attachment within twenty days after its receipt ... making a full inventory of the property attached as a part of his return upon the writ.” C.R.C.P. 102(h)(3), (i).

According to C.R.C.P. 102(h), for a levy of personal property to occur, the property must be taken into physical custody, and if the property is not taken into custody, the process fails and the attachment is void. Crisman v. Dorsey, 12 Colo. 567, 21 P. 920 (1889).

This rule comports with the Uniform Commercial Code rules for creditors’ legal process pertaining to negotiable instruments. Generally, there must be actual manucaption, or physical possession, of a stock certificate before a creditor can acquire a debtor’s interest in the certificate.

Section 4-8-112, C.R.S.2005, sets forth the general rule that a creditor may reach a stock certificate only by actual seizure of the certificate by the sheriff. However, a creditor may serve legal process upon an issuer where the debtor has surrendered the certificate to the issuer, or the creditor may seek the aid of the court to attach property that is not otherwise reachable by legal process. Section 4-8-112 provides in pertinent part:

(a) The interest of a debtor in a certificated security may be reached by a creditor only by actual seizure of the security certificate by the officer making the attachment or levy, except as otherwise provided in subsection (d) of this section. However, a certificated security for which the certificate has been surrendered to the issuer may be reached by a creditor by legal process upon the issuer.
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(d) The interest of a debtor in a certificated security for which the certificate is in the possession of a secured party ... may be reached by a creditor by legal process upon the secured party.
(e) A creditor whose debtor is the owner of a certificated security ... is entitled to aid from a court of competent jurisdiction, by injunction or otherwise, in reaching the certificated security ... or in satisfying the claim by means allowed at law or in equity in regard to property that cannot readily be reached by other legal process.

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Bluebook (online)
124 P.3d 896, 59 U.C.C. Rep. Serv. 2d (West) 969, 2005 Colo. App. LEXIS 1619, 2005 WL 2456880, Counsel Stack Legal Research, https://law.counselstack.com/opinion/moreland-v-alpert-coloctapp-2005.