Clark v. Peters (In re Bryan)

In Re Bryan, 10th Cir. Court of Appeals, (No. 12-1485) December 5, 2013
In a decision in which the court affirmed in part, reversed in part and remanded for the lower courts consideration, the court held that Mr. Clark’s judgment lien recorded in 2004 attached to the property upon Mr. Bryan’s recording of the property in his name on May 19, 2005.
Procedural context:
Mr. Clark appealed the ruling of the Bankruptcy Court in the third adversary proceeding that held that he did not have a lien on property of the debtors (Mr. and Mrs. Bryan) to the 10th Circuit District Court. The 10th Circuit District Court affirmed. Mr. Clark timely appeals to the 10th Circuit Court of Appeals.
In 1999, Mrs. Bryan and debtor Mr. Bryan formed the Bryan Family Trust, in which they were beneficiaries along with their two children. In 2000, the Bryans purchased the property, and in 2001, the Bryans transferred the property to the Trust after taking out a $203,000 loan from Washington Mutual Bank against it. In 2002, Mr. Clark filed a lawsuit against Mr. Bryan and, on June 1, 2004, Mr. Clark was awarded a judgment against him for $211,000. Shortly thereafter, on July 15, 2004, Mr. Clark recorded a transcript of judgment against Mr. Bryan in Jefferson County, where the property is located, as permitted by Colorado law. At the time of Mr. Clark’s recording, the property was titled in the name of the Trust. Between the time Mr. Clark filed his lawsuit in 2002 and recorded the transcript of judgment in 2004, two transfers of the property occurred. First, on February 21, 2003, the Trust transferred the property back to Mr. and Mrs. Bryan, who then used it to refinance their loan with Washington Mutual Bank for $250,000, after which they transferred the property back to the Trust. Second, on June 16, 2003, the Trust took out a $250,000 loan against the property from Vectra Bank. After Mr. Clark recorded his judgment lien in 2004, two additional transfers occurred. First, on January 25, 2005, the Trust transferred the property to Mrs. Bryan alone, who, six days later, took out another loan against it with Vectra, this time for $560,000; a loan now held by Aurora. Also on January 31, 2005, Mrs. Bryan executed a deed of trust joined by Mr. Bryan securing the Vectra loan and then transferred the property back to the Trust. In October 2005, Mr. Bryan filed for bankruptcy protection under Chapter 13 of the Bankruptcy Code, and, in November 2006, his case was converted to a Chapter 7 case. Three adversary bankruptcy proceedings soon followed. The first, brought by Mr. Clark, resulted in Mr. Bryan waiving a discharge. The second, brought by the Trustee, resulted in a determination that the Trust was a sham. The third adversary proceeding, seeks a declaration concerning the validity, priority, and extent of liens on the property vis-a-vis Mr. Clark. The bankruptcy court determined that Aurora held a first-priority lien, Specialized held a second-priority lien, and Mr. Clark held no lien at all because he took no action to uncover any fraudulent transfers of the property to the Trust.
Paul KELLY, LUCERO, and MATHESON, Circuit Judges.

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