Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-91-01322/USCOURTS-ca10-91-01322-0/pdf.json

Nature of Suit Code: 140
Nature of Suit: Negotiable Instruments
Cause of Action: 

---

UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

RESOLUTION TRUST CORPORATION, as ) 

Receiver for First Federal Savings Bank) 

of East Alton, in Receivership, ) 

Plaintiff-Appellant, 

v. 

TEEM PARTNERSHIP, a Colorado general 

partnership; JOHN A. WINTERS, 

Individually and as general partner of 

the Teem Partnership; MICHAEL P. BAHR, 

Individually and as general partner of 

the Teem Partnership; STEVAN G. STRAIN, 

Individually and as general partner of 

the Teem Partnership; NEAL M. PRICE, 

Individually and as general partner of 

the Teem Partnership, 

Defendants-Appellees. 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

ORDER AND JUDGMENT* 

SEP 3 C· 1992 

No. 91-1322 

(D.C. No. 88-B-1560) 

(D. Colo.) 

Before LOGAN, EBEL, and KELLY, Circuit Judges.** 

* This order and judgment has no precedential value and shall 

not be cited, or used by any court within the Tenth Circuit, 

except for purposes of establishing the doctrines of the law of 

the case, res judicata, or collateral estoppel. 10th Cir. R. 

36.3. 

** After examining the briefs and appellate record, this panel 

has determined unanimously that oral argument would not materially 

assist the determination of this appeal. See Fed. R. App. P. 

34(a); 10th Cir. R. 34.1.9. The case is therefore ordered 

submitted without oral argument. 

Appellate Case: 91-1322 Document: 010110392327 Date Filed: 09/30/1992 Page: 1
This case requires us to decide whether the district court 

erred in holding that Rule 106(a)(5) of the Colorado Rules of 

Civil Procedure may be used by judgment creditors to collect from 

additional persons only when the creditors discover after the 

judgment has entered that such additional persons may be liable as 

joint obligors on the judgment. In holding that Rule 106 was so 

limited, the district court was without the benefit of the recent 

decision of the Colorado Court of Appeals in FDIC v. Wells Plaza 

Ltd. Partnership, 826 P.2d 427 (Colo. App. 1992), which was 

decided after judgment entered and after appeal was docketed in 

this court. In view of the Wells Plaza decision, we reverse and 

remand. 1 

Colorado Rule of Civil Procedure 106(a)(5) provides: 

When judgment is recovered against one or more of 

several persons jointly indebted upon an obligation, and 

it is desired to proceed against the persons not 

originally served with the summons who did not appear in 

the action[, s]uch persons may be cited to show cause 

why they should not be bound by the judgment in the same 

manner as though they had been originally served with 

the summons, and in his answer any such person may set 

up any defense either to the original obligation or 

which may have arisen subsequent to judgment, except a 

discharge from the original liability by the statute of 

limitations. 

1 At the time of briefing to this court, both parties agreed 

that the issue in this case was appropriate for certification to 

the Colorado Supreme Court. "[A] state supreme court . . . is 

the final arbiter of the meaning of the rules that it 

establishes." See Mattox v. Disciplinary Panel, 758 F.2d 1362, 

1365 (10th Cir. 1985). Here, although the decision in Wells Plaza 

is not from Colorado's highest court, we regard it as sufficiently 

settling this aspect of the operation of Rule 106 that 

certification is no longer appropriate. See Lehman Bros. v. 

Schein, 416 U.S. 386, 391 (1974). Appellant's Motion for 

Certification is denied. 

2 

Appellate Case: 91-1322 Document: 010110392327 Date Filed: 09/30/1992 Page: 2
Here the Resolution Trust Corporation (RTC) brought an action 

against Teem Partnership and all general partners known to RTC at 

the time the complaint was filed. After RTC's motion for summary 

judgment had been briefed, RTC learned of the existence of another 

general partner, Mr. Clark, who had not been named in the original 

suit. Instead of moving to join Mr. Clark, RTC elected to wait 

until the district court granted its motion for summary judgment 

and then proceed against Mr. Clark pursuant to Rule 106. When RTC 

attempted this course, the district court held that because RTC 

had ample time to amend its complaint to name an additional 

defendant before the entry of judgment, any "belated" reliance on 

"the exceptional provisions" of Rule 106 would deny Mr. Clark a 

"meaningful, fair and full participation in [the] proceedings." 

Resolution Trust Corp. v. Teem Partnership, No. 88-B-1560, 

Memorandum Opinion and Order at 7 (D. Colo. Aug. 9, 1991). The 

court thus denied RTC's motion for summary judgment on the 

previously entered Rule 106 show cause order. This result is 

inconsistent with the holding of the Colorado Court of Appeals in 

Wells Plaza. 

In Wells Plaza, FSLIC, as the receiver for a failed thrift, 

sued a partnership to recover on a promissory note. It served the 

general partner, as the agent of the partnership, but did not 

serve the partners as individuals or name them as defendants. 

FSLIC won a judgment against the partnership but, because the 

assets of the partnership had been paid out to other creditors, 

FSLIC was unable to collect. FDIC, as successor to FSLIC, filed a 

post trial motion against the general partners and requested a 

3 

Appellate Case: 91-1322 Document: 010110392327 Date Filed: 09/30/1992 Page: 3
Rule 106 show cause order regarding their individual liability. 

The trial court's refusal to issue the order was reversed by the 

court of appeals. 

In rebutting Wells Plaza's contention that a plaintiff must 

name and serve the partner in the original action against the 

partnership before a court can issue a show cause order to that 

partner pursuant to Rule 106, the court held: "the plain language 

of C.R.C.P. 106(a)(S) does not require that the partner be named. 

To the contrary, it specifically allows a court to issue an order 

to 'persons not originally served. who did not appear in the 

action.'" Wells Plaza, 826 P.2d at 429. The fact that FSLIC knew 

of the existence of the Wells Plaza partners, but chose not to 

involve them in the suit until after judgment, did not change the 

court's analysis. Similarly, RTC's failure to join Mr. Clark in 

the lawsuit when it learned of his partner status is not fatal to 

its right to invoke the provisions of Rule 106. 

The district court was concerned that Mr. Clark would be 

deprived of his day in court. Rule 106, however, provides that 

when a person has been served with a show cause order entered 

under the rule, "in his answer any such person may set up any 

defense either to the original obligation or which may have arisen 

subsequent to the judgment, except a discharge from the original 

liability by the statute of limitations." Colo. R. Civ. P. 

106(a)(5). The Colorado Court of Appeals noted in Wells Plaza 

that by permitting an answer to the show cause order, "'the issues 

are made up in much the same way as they would be if the 

proceedings had been started with a summons and complaint.'" 

4 

Appellate Case: 91-1322 Document: 010110392327 Date Filed: 09/30/1992 Page: 4
Wells Plaza, 826 P.2d at 429 (quoting R. Hardaway & S. Hyatt, 5 

Colorado Civil Rules Annotated 512-13 (2d ed. 1985)). The 

opportunity to so respond to the show cause order, therefore, 

obviates the fairness concerns of the district court. 

The judgment of the United States District Court for the 

District of Colorado is therefore REVERSED, and this case is 

REMANDED for further proceedings consistent with this order. 

Entered for the Court 

Paul J. Kelly, Jr. 

Circuit Judge 

5 

Appellate Case: 91-1322 Document: 010110392327 Date Filed: 09/30/1992 Page: 5