Vol. 42, No. 5
From the Courts
U.S. Court of Appeals for the Tenth Circuit
Summaries of Selected Opinions
Summaries of selected Tenth Circuit Court of Appeals Opinions appear on a space-available basis. The summaries are prepared for the Colorado Bar Association (CBA) by Katherine Campbell and Frank Gibbard, licensed Colorado attorneys. They are provided as a service by the CBA and are not the official language of this Court. The CBA cannot guarantee the accuracy or completeness of the summaries. Full copies of the Tenth Circuit decisions are accessible from the CBA website: www.cobar.org.
No. 11-1149. Peterson v. Martinez. 02/22/2013. D.Colo. Judge Lucero. Concealed Handgun License—Nonresident Applicant—Second Amendment—Privileges and Immunities Clause—Right to Travel.
Plaintiff, a resident of Washington, applied for a concealed handgun license (CHL) from the ex officio sheriff of Denver. Because state law provides that sheriffs may issue CHLs only to state residents, plaintiff’s application was denied. Plaintiff sued the sheriff and Colorado’s executive director of the Department of Public Safety (DPS). He claimed that Colorado’s policy denying CHLs to nonresidents violated the Second Amendment and the Privileges and Immunities Clause, and unconstitutionally restricted his right to travel. The district court entered a judgment against plaintiff, and he appealed.
The Tenth Circuit held that the DPS executive director was entitled to Eleventh Amendment immunity because the sheriffs, not the director, are responsible for administering the state’s CHL regime. The Circuit then held that carrying concealed firearms is not protected by the Second Amendment. Plaintiff’s claim under the Privileges and Immunities Clause was coterminous with his right to travel claim. The Circuit noted that it is only with respect to those privileges and immunities bearing on the vitality of the nation as a single entity that a state must accord residents and nonresidents equal treatment. Also, because the concealed carrying of firearms has been prohibited for much of the nation’s history, this test was not met. Therefore, Colorado’s CHL law also did not violate plaintiff’s right to travel. The district court’s judgment was affirmed.
Nos. 11-1374 & 11-1393. Stewart Title Guaranty Co. v. Dude. 02/26/2013. D.Colo. Judge Gorsuch. Colorado Title Search—Fraudulent Misrepresentation—Justifiable Reliance.
When applying for a mortgage loan from Wells Fargo, defendant was asked to disclose existing liens and loans. Defendant failed to reveal a pre-existing mortgage of $1.9 million on the property. Wells Fargo’s title insurance company (Stewart Title) did not discover the pre-existing mortgage because it had been defectively recorded, and the new loan was made. Later, defendant sold the property, again without discovery or disclosure of the $1.9 million lien. Eventually, the lien was discovered and Stewart Title obtained a judgment against defendant for his fraudulent misrepresentations under Colorado law. Defendant appealed.
Defendant contended that the evidence did not show a necessary element of a fraudulent misrepresentation claim, because Stewart Title knew he was lying and "[a] court cannot reasonably rely on a misrepresentation it knows to be false." Defendant argued that Stewart Title knew it was not true when he responded "none" to the form question about existing liens and loans, because other liens had turned up in the title search. The Circuit pointed out that the forms also required disclosure of liens other than those listed. The theory also failed because the record contained evidence to support the jury’s finding that Stewart Title was unaware of defendant’s false statements.
Defendant also argued that, because the $1.9 million lien was publicly recorded and could have been found by searching through the county records, Stewart Title constructively knew of his fraud; therefore, Stewart Title’s reliance was not justified. However, because the $1.9 million lien had been defectively recorded, Stewart Title did not find it and could not provide constructive notice to a subsequent purchaser of a pre-existing lien. Accordingly, Circuit held that it also could not provide constructive notice to Stewart Title. The judgment in favor of Stewart Title was affirmed.
No. 11-8105. United States v. Addison. 02/26/2013. D.Wyo. Judge O’Brien. Exclusion of Co-Defendant From Courtroom After Mistrial—Sufficiency of Evidence—Embezzlement.
Defendant and her supervisor were on trial for embezzling or converting funds from the Northern Arapahoe Tribe’s Department of Social Services (DSS). They were accused of using federal government money to issue themselves advances and loans that far exceeded their salaries. Defendant allegedly received in excess of $80,000 this way.
Tribal funds could be and were used extensively for loans or advances to employees, but it was unlawful to use federal money for these purposes. When interviewed by federal agents, defendant claimed she was unaware of the money’s federal character and that she did not believe her actions were illegal. However, she admitted she used the funds to gamble, that her actions felt "wrong," and that her conduct looked like theft. On the third day of trial, the trial judge declared a mistrial as to the supervisor only and excluded her from the courtroom for the remainder of the trial. Defendant’s trial proceeded, and she was convicted.
On appeal, defendant argued that her Sixth Amendment right to a public trial prohibited the exclusion of her supervisor from the courtroom. The Tenth Circuit disagreed. A partial closure of a trial is permissible if there is a substantial reason for the partial closure. Two of the government’s witnesses at defendant’s trial had alleged that they were intimidated by the supervisor. One of these witnesses said she feared losing her job because the wife of one of the Tribe’s business councilmen was related to the supervisor. It was proper to exclude the supervisor from the courtroom for the duration of the trial, because more than one witness complained of intimidation, and protecting the participants in a trial is an integral part of protecting the integrity of the trial.
Defendant also argued that the government presented insufficient evidence of her knowledge and intent to embezzle or convert funds. She argued that the government failed to show that she knew (1) that she was taking government funds and (2) that the advances and loans were improper at the time of her actions. The first argument failed because the statute did not require defendant to know that the funds were federally derived. As to the second argument, there was sufficient evidence from which the jury could have inferred that the taking was knowing and intentional. Although she testified at trial that she complied with her supervisor’s instructions that loan requests must be in writing, no written requests were found. The supervisor had suspended defendant for preparing a pay advance without permission. Also, in reconciling the Tribe’s books, an auditor discovered four missing checks issued to defendant that had been paid but were not reflected on the Tribe’s books. Finally, given the order of the checks, and the fact that the authorized signor for the Tribe signed them in blank, a jury could reasonably infer that defendant used pre-signed checks to obtain funds without approval. Defendant knew that the signor relied on her representation that the checks were in order and that there was no effective oversight for her actions; thus, even if she had his permission to receive the funds, the permission did not absolve her from criminal liability. Also, the fact that defendant was making payments toward the unpaid balance through payroll deductions did not absolve her; the amounts she was paying meant the loans would never be paid, and it appeared the balances were being paid with new advances and loans. Thus, the evidence of knowing and intentional conversion or embezzlement was sufficient, and the Circuit affirmed the conviction.
No. 12-3003. United States v. Barajas. 03/04/2013. D.Kan. Judge Kelly. Fourth Amendment—Wiretap—Sufficiency of Search Warrant Affidavit—Pinging Cell Phone for GPS Data.
Defendant was convicted of various drug offenses, including using a communication facility (a cellular telephone) to commit, cause, and facilitate a drug conspiracy. His case arose from a Drug Enforcement Administration (DEA) investigation into the importation, transportation, and distribution of methamphetamine and cocaine. As part of its investigation, DEA agents engaged in wiretap surveillance and GPS pinging of phones (a method of using cell towers to locate a party’s phone or other phones in communication with that phone). The police obtained court permission to place a wiretap on the conspirators’ phones, including defendant’s phone. The affidavits in support of the applications did not request GPS data, but the judge’s proposed orders included authorizations for GPS data. The officers used this data to locate and arrest defendant. He moved unsuccessfully to suppress all evidence obtained from the wiretaps, as well as GPS and cell site location data from pinging the phones.
On appeal, defendant argued that the wiretaps did not conform to Title III of the Omnibus Crime Control and Safe Streets Act of 1968, because the government’s affidavits did not demonstrate that the wiretaps were necessary—that is, that traditional investigative techniques had been tried unsuccessfully or that they reasonably appeared to be unsuccessful if tried. The Tenth Circuit disagreed. The affidavits explained why confidential sources and visual surveillance had proved unsuccessful and why other techniques, including trash searches and search warrants, would prove ineffective if tried. Also, subsequent affidavits were not merely repetitive; they were more than triple the length of the first affidavits and, significantly, included new information developed through the investigation.
The Circuit also upheld the denial of defendant’s motion to suppress GPS data obtained through pinging two cell phones. The Circuit first assumed without deciding that cell pinging is a search. It then found that although the government’s failure to request GPS data was not per se fatal to a finding of probable cause, the court could not be certain from the government’s affidavits that probable cause existed for the GPS data search. The affidavits did not explain how defendant’s location would reveal information about the workings of the conspiracy and defendant’s actions in it. The Circuit nevertheless upheld the seizure of the GPS data, reasoning that, given the limited law on electronic surveillance, the government’s actions fell within the "good faith" exception to the exclusionary rule. The Circuit therefore affirmed defendant’s conviction.
No. 11-4158. United States v. Loughrin. 03/08/2013. D.Utah. Judge Tymkovich. Bank Fraud—Necessity of Intent to Defraud Bank—Speedy Trial Act.
Defendant was convicted of bank fraud and other charges arising from a check and identity theft scheme. The charges arose from a scheme to steal checks from people’s mail. After stealing the checks, defendant would alter them and make purchases at a local Target store. He then would return the purchases to Target for cash. A jury convicted him on six counts of bank fraud, as well as on counts for stolen mail and identity theft.
On appeal, defendant argued that the district court erred in refusing to instruct the jury, as he had requested, that a conviction under the bank fraud statute required proof that he intended to defraud the banks on which the checks had been drawn. The Tenth Circuit disagreed. The subsection of the bank fraud statute under which defendant was convicted, 18 USC § 1344(2), contains no requirement that the scheme must be intentionally directed at a bank, and no proof that a bank was actually at risk of suffering financial loss. Thus, a defendant can violate the statute by obtaining money from a bank while intending to defraud someone else, such as a store. Although other circuit courts have reached a different result on this issue, the Tenth Circuit determined that its previous holdings dictated an outcome adverse to defendant on this issue.
Defendant also argued that the government had violated the Speedy Trial Act (STA) in his case. The STA requires that a defendant be tried within seventy days after the filing of the indictment. The parties agreed that forty-nine days were not excludable and counted toward the seventy-day requirement. Defendant, who initially indicated he was going to plead guilty and then changed his mind, argued that the time between the setting of his change-of-plea hearing and the hearing itself also should be counted, because there was no briefing or argument associated with the proceeding.
The Circuit disagreed. Such a motion requires a hearing, thus qualifying as a "pretrial motion" whose delay is excluded from the STA. The Circuit also held that defendant waived his STA objection to a continuance of the trial date; a defendant who wishes to assert such an objection must make a contemporaneous objection on the same grounds he or she wishes to advance on appeal, and defendant failed to do that here. Defendant also challenged the district court’s grant of a continuance to the government based on his decision not to plead guilty. Such a disruptive change, the Circuit held, necessitated extra time for the government to prepare for trial, and the district court did not act arbitrarily or capriciously in granting the government a two-month continuance. Additionally, the district court made adequate factual findings to justify this continuance. The Circuit therefore affirmed defendant’s conviction.
No. 12-3113. Rajala v. Gardner. 03/12/2013. D.Kan. Judge Kelly. Bankruptcy—Fraudulently Transferred Property—Automatic Stay—Not Part of the Bankruptcy Estate Until Recovered.
The trustee of the bankruptcy estate of Generation Resources Holding Company, LLC (GRHC), a developer of a wind power project, claimed that insiders of GRHC fraudulently transferred GRHC’s development and redemption opportunities under various contracts to insider-owned companies. The trustee asserted that these opportunities were subject to the automatic stay in bankruptcy. In other litigation, a judgment for $9 million was entered in favor of two insiders, and the judgment amount was transferred to the bankruptcy court for distribution. The case was moved to the Kansas federal district court, where the court ruled that the $9 million judgment was not property of GRHC’s bankruptcy estate and distributed the funds to the insiders. The district court held that allegedly fraudulently transferred property is not part of the bankruptcy estate until recovered and therefore is beyond the reach of the automatic stay. The trustee appealed, requesting that the $9 million be returned to the bankruptcy estate.
After holding that it had appellate jurisdiction, the Tenth Circuit addressed whether a bankruptcy estate includes fraudulently transferred property that the trustee has not yet recovered. Although fraudulent transfer claims are included in the bankruptcy estate, property that is the subject of such a claim is not part of the bankruptcy estate until recovered. The district court’s judgment was affirmed.
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