F IL E D
United States Court of Appeals
Tenth Circuit
PUBLISH
February 27, 2007
U N IT E D ST A T E S C O U R T O F A PP E A L S
Elisabeth A. Shumaker
Clerk of Court
T E N T H C IR C U IT
In re: JEFFR EY SH A WN R EGAN
and K ER RIE M A RIE R EG A N ,
Debtors,
____________________________
FO W LER & PETH, INC., a W yoming
corporation,
Plaintiff - Appellant ,
v. No. 05-1307
JEFFR EY SH AW N REGAN and
K ERRIE M A RIE R EG A N ,
Defendants - Appellees,
____________________________
CRESCENT ELECTRIC SUPPLY
CO M PAN Y; HERCU LES
IN D U STR IES, IN C.; K & W M ETAL
FA BRICATORS, INC., d/b/a W eather
Guard Building Products, Inc.;
SHELTER PRODUCTS, IN C.;
W H ITE CAP C ON STR UC TIO N
SU PPLY , IN C.; A M ER IC AN
SUBCONTRACTORS
ASSO CIATION, INC.; and
AM ERICAN SUBCONTRACTORS
A SSO CIA TIO N O F C OLO RA DO,
Amici Curiae.
A PPE A L FR O M T H E U N IT ED ST A T ES D IST R IC T C O U R T
FO R T H E D IST R IC T O F C O L O R A D O
(D .C . N O . 04-cv-1483-L T B )
Submitted on the briefs: *
Harvey L. Kramer and Brian J. Berardini, Brown, Berardini & Dunning, P.C.,
Denver, Colorado, for Appellant.
Stephen E. Berken and Jennifer O. Pielsticker, Law Offices of Stephen Berken,
Denver, Colorado, for Appellee.
Robert H. (“Rick”) M iller, David B. Law, W . Andrew Figel, Lichtenfels, Pansing
& M iller, P.C., Denver, Colorado, and Gilbert R. Egle, Preeo, Silverman, Green
& Egle, P.C., Denver, Colorado, filed a brief on behalf of amici.
Before B R ISC O E , A N D ER SO N , and E B E L , Circuit Judges. * *
A N D ER SO N , Circuit Judge.
This case is before us following our certification of a dispositive issue of
state law to the Colorado Supreme Court. Plaintiff and appellant Fow ler & Peth,
*
After examining the briefs and appellate record, this panel has determined
unanimously to honor the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
submitted without oral argument.
**
Judge Robert H. M cW illiams was assigned to this matter originally but
recused prior to the court’s certification to the Colorado Supreme Court.
-2-
Inc. appeals a decision of the United States District Court for the District of
Colorado reversing the Bankruptcy Court’s determination that a debt owed to
Fow ler & Peth by debtors Jeffrey Shawn Regan and Kerrie M arie Regan was
nondischargeable under 11 U.S.C. § 523(a)(4). The question of whether the debt
was dischargeable or not depended, in turn, on the proper construction of a
Colorado statute known as the Colorado M echanic’s Lien Trust Fund Statute.
The Colorado Supreme Court has furnished us with the proper construction of that
statute, as a result of which we reverse the decision of the district court and
remand this case to that court for further proceedings.
The basic facts relevant to this matter are undisputed. The Regans are, or
were at all relevant times, the sole shareholders, officers and directors of Eagle
Roofing, Inc., a Colorado corporation specializing in the installation and repair of
roofs. As the sole owners and operators of Eagle R oofing, the Regans made all
financial decisions relating to the company and controlled its cash flow.
During the course of its business, Eagle Roofing opened a credit account
with Fow ler & Peth, a W yoming corporation which supplied roofing materials and
supplies. In 2000, Eagle Roofing encountered financial difficulties. To improve
its cash flow, the Regans made payments to Eagle Roofing’s suppliers, including
Fow ler & Peth, based on the dates of the invoices, regardless of the project for
which monies were allocated. Additionally, the Regans used some of the funds
-3-
allocated to projects to pay the Regans’ personal living expenses and other
general business expenses incurred by Eagle R oofing. As a result, Fowler & Peth
was not fully paid for materials and supplies delivered to Eagle Roofing, even
though Eagle R oofing was fully compensated for its w ork on the properties into
which Fowler & Peth’s materials were incorporated. Fowler & Peth did not file
liens against any of the properties into which its supplies were incorporated.
On April 14, 2003, the Regans filed for Chapter 7 relief under the
Bankruptcy Code. As of that date, Eagle R oofing owed Fowler & Peth
$48,185.03. Fowler & Peth commenced an adversary proceeding, in w hich it
asserted that the Regans should be held personally liable for the debt, and that the
debt was nondischargeable under 11 U.S.C. § 523(a)(4). 1
1
Section 523(a)(4) prohibits the discharge of a debt “for fraud or
defalcation while acting in a fiduciary capacity.” W e proceed on the assumption
that the Trust Fund Statute creates a fiduciary relationship between Fowler & Peth
and the Regans. W hile our circuit ordinarily does not cite unpublished decisions
as authoritative precedent, we take this opportunity to adopt and publish the
following unpublished opinion. “W hile ‘the existence of a fiduciary relationship
under § 523(a)(4) is determined under federal law ,’ state law is relevant to this
inquiry. Under applicable federal principles, ‘an express or technical trust must
be present for a fiduciary relationship to exist under § 523(a)(4).’ The Colorado
construction lien statute creates such a trust.” M angum v. Siegfried (In re
Siegfried), 5 Fed. Appx. 856, 859 (10th Cir. M arch 14, 2001) (unpublished)
(quoting Fowler Bros. v. Young (In re Y oung), 91 F. 3d 1367, 1371 (10th Cir.
1996)); see also Stetson Ridge Assocs. v. W alker (In re W alker), 325 B.R. 598,
603 (D. Colo. 2005); Climax M olybendum Co. v. Specialized Installers, Inc. (In
re Specialized Installers, Inc.), 12 B.R. 546, 551 (Bankr. Colo. 1981) (“Section
38-22-127 is unambiguous in its creation of a trust relationship.”).
-4-
The Colorado M echanic’s Lien Trust Fund Statute, Colo. Rev. Stat.
§ 38-22-127, provides in relevant part as follow s:
38-22-127. M oneys for lien claim s m ade trust funds -
d isbursements - p en alty.
(1) All funds disbursed to any contractor or subcontractor under any
building, construction, or remodeling contract or on any construction
project shall be held in trust for the payment of the subcontractors,
laborer or material suppliers, or laborers who have furnished
laborers, materials, services, or labor, who have a lien, or may have a
lien, against the property, or w ho claim, or w ho may claim, against a
principal and surety under the provisions of this article and for which
such disbursement was made.
The Regans argued that because Fowler & Peth failed to exercise its mechanic’s
lien rights when it was not paid, it could not “have a lien” under the Trust Fund
Statute.
The Bankruptcy Court rejected the Regans’ argument, holding that “the
language of the [Trust Fund Statute] appears to provide wronged laborers and
materialmen with a second source of protection and relief, separate and apart
from the traditional mechanic’s lien practice.” Fowler & Peth, Inc. v. Regan (In
re Regan), 311 B.R. 271, 276 (Bankr. Colo. 2004). It explained its reasoning by
stating that the “statutory interpretation urged by the Regans, namely, that Fow ler
must have perfected its interest by filing a mechanic’s lien to fall within the
[Trust Fund Statute], vitiates the ‘may have a lien’ portion of the statute . . . . as
if it did not exist.” Id. The court therefore held that “if Fowler can establish it
-5-
had the ‘potential’ for a lien, this portion of the [Trust Fund Statute] is satisfied.”
Id.
The Regans appealed the Bankruptcy Court’s decision to the United States
District Court for the D istrict of Colorado, which reversed the B ankruptcy Court’s
decision and remanded the case with directions to order that the $48,185.03 debt
owed to Fow ler & Peth was dischargeable. The district court agreed with the
Regans’ argument that Fowler & Peth cannot invoke the Trust Fund Statute
because it failed to demonstrate that it has actual perfected or potential perfectible
liens against properties which contain its materials. Fow ler & Peth appealed that
decision to this court. 2 W e certified the following question to the Colorado
Supreme Court:
M ust a subcontractor, laborer, material supplier, or any other
interested party seeking to invoke the protection of, or enforce any
rights available under, Colo. Rev. Stat. § 38-22-127 either have a
perfected lien against property upon which he had performed labor or
to which he has provided supplies or, if no such lien has been filed
and/or perfected, must the time within which a lien may be filed
under Colo. Rev. Stat. §§ 38-22-109 and -110 not have expired?
The Colorado Supreme Court answered that question in the negative: “the
procedural requirements for perfecting a lien contained in sections 38-22-109 and
2
The Regans filed a motion to dismiss the appeal to our court as untimely
filed. That motion was referred to the panel on the merits. The motion was
denied in our order certifying the question of the interpretation of the Trust Fund
Statute to the Colorado Supreme Court.
-6-
110 do not apply to claims against money held in trust under section 38-22-127.”
Fow ler & Peth, Inc. v. Regan (In re Regan), 2007 W L 315115, at *1 (Colo.
Feb. 5, 2007). This answer is clear and requires us to remand this case to the
district court for further proceedings.
For the foregoing reasons, we REVERSE and REM AND for further
proceedings.
-7-