Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-87-01570/USCOURTS-ca10-87-01570-0/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 

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PUBLISH 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

LOWELL STAATS MINING COMPANY, INC., a 

Colorado corporation, 

Plaintiff-Appellant, 

JUN 1 91999 

ROBERT L. H~CKER 

Clerk 

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Nos. 87-1570 and 

87-1779 

PHILADELPHIA ELECTRIC COMPANY, UMETCO 

MINERALS CORPORATION, BURTON P. SMITH, 

WALLACE D. ROBISON, C. DAVID CULVER, 

PIONEER NUCLEAR, INC., PIONEER 

CORPORATION and MESA OPERATING LIMITED 

PARTNERSHIP, 

Defendants-Appellees. 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF COLORADO 

· (D.C. NO. CIV. 87-K-35) 

Joseph Coleman of Coleman, Brown & Jouflas, Grand Junction, 

Colorado, for Plaintiff-Appellant. 

David A. Price (Gregory K. Hoskin, Theodore Allegra with him on 

the briefs) of Nelson, Hoskin, Groves & Prinster, P.C., Grand 

Junction, Colorado, for Defendants-Appellees. 

Before LOGAN, BARRETT, and BRORBY, Circuit Judges. 

BRORBY, Circuit Judge. 

Appellate Case: 87-1570 Document: 01019784686 Date Filed: 06/19/1989 Page: 1 
Lowell Staats Mining Company (Staats} brings two separate 

appeals arising out of one case in the district court. These 

appeals were consolidated. Staats claims the federal district 

court erred in granting the defendants' petition to remove the 

case from the Colorado state district court based on diversity 

jurisdiction, and in dismissing the claims against all defendants 

as barred by res judicata. This opinion discusses each appeal 

separately. Havirig considered the parties' arguments we affirm. 

Staats originally brought a suit against Pioneer Uravan, Inc. 

wherein the jury awarded $629,562 in damages. When Staats was 

unable to collect on that judgment it brought a second suit, which 

is the subject of these two appeals. 

The following facts regarding the two separate district court 

suits brought by Staats and the three resulting appeals are necessary to understand this appeal. 

STAATS I 

In 1982, Staats brought a suit against Pioneer Uravan, Inc. 

(Uravan} claiming breach of a mining contract and misrepresentation of terms and actions to be taken under the contract. 

Pretrial Order. In 1985, Staats brought into this suit as third 

party defendants, Pioneer Corporation (Pioneer) and Pioneer 

Nuclear Inc. (Nuclear}, claiming these corporations were 

responsible for Uravan's liabilities under the theories of alter 

ego, instrumentality, agency, successor corporation, and receipt 

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of fraudulent conveyances. At the conclusion of Staats' case in 

chief, the court granted Pioneer and Nuclear a directed verdict on 

all claims. Staats' breach of contract claim went to the jury, 

which awarded Staats $629,562 in damages against Uravan. The 

district court's rulings on post trial motions are discussed in 

Lowell Staats Mining Co. v. Pioneer Uravan, Inc., 645 F. Supp. 254 

(D. Colo. 1986). Staats appealed the district court's directed 

verdict in favor of Nuclear and Pioneer, and its failure to award 

prejudgment interest on the damages against Uravan. We affirmed 

the district court's decision except as to prejudgment interest in 

Lowell Staats Mining Co. v. Pioneer Uravan, Inc., F.2d 

(10th Cir. 1989) (No. 86-2626 filed June 19, 1989). 

STAATS II 

When Staats was unsuccessful in collecting its judgment 

against Uravan, it brought a second suit in Colorado state 

district court against three individuals and five corporations 

seeking to hold these defendants liable for the Staats I judgment. 

In the complaint, Staats alleged three of the individuals, Smith 

Robison and Culver, were liable for the Staats I judgment because 

they aided a~d assisted in the fraudulent conveyances of Uravan 

assets to Nuclear, and Nuclear assets to Pioneer. Staats alleged 

liability against Nuclear, Pioneer, and Mesa Operating Limited 

Partnership (Mesa) under theories that they received fraudulent 

conveyances from Uravan; that Staats was a third party beneficiary 

of a contract wherein Nuclear agreed to be responsible for the 

Staats I judgment; that Nuclear was a partner of Uravan and liable 

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Appellate Case: 87-1570 Document: 01019784686 Date Filed: 06/19/1989 Page: 3 
for its debts; and that Pioneer and Mesa were likewise responsible 

as successor corporations of Nuclear. Staats alleged liability 

against Philadelphia Electric Company (PEC) on theories of 

partnership, bulk transfer, and receipt of fraudulent conveyances 

from Uravan. Staats alleged liability against Umetco Minerals 

Corporation (Umetco) based on theories of partnership and receipt 

of fraudulent conveyances from Uravan. 

After receiving the complaint, the defendants petitioned the 

federal district court for removal from state court, alleging two 

of the individual defendants had been fraudulently joined to 

defeat diversity jurisdiction. The individual defendants Smith 

and Robison moved for dismissal. The district court judge 

conducted a hearing pursuant to 28 u.s.c. § 1446(c)(5) (Supp. 

1988) to determine the propriety of granting the petition for 

removal and the motions to dismiss. The trial court took judicial 

notice of the proceedings in Staats I. The trial court found the 

individual defendants, Smith and Robison, in privity with Uravan, 

Pioneer, and Nuclear. Lowell Staats Mining Co. v. Philadelphia 

Elec. Co., 651 F. Supp. 1364, 1367 (D. Colo. 1987) (hereinafter 

Staats v. PEC), and Order on the Motion for Reconsideration (finding Smith and Robison in privity with Nuclear). The trial court 

found the interests of Robison and Smith were at stake in Staats I 

and the directed verdict in that case barred the second suit 

against these individuals as agents of Uravan, Pioneer, and 

Nuclear. Id. The district court dismissed the claims against 

Robison and Smith and granted the removal petition. Id. Staats 

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appeals, asserting the district court erred in applying res 

judicata and in granting the petition for removal. 

STAATS III 

Following the district court's Order in Staats II dismissing 

defendants Smith and Robison, the remaining defendants, PEC, 

Umetco, Mesa, and Culver, filed motions to dismiss based on res 

judicata. The district court applied the doctrine of res judicata 

to defendants Nuclear and Pioneer sua sponte. The district court 

dismissed all of Staats' claims against these remaining 

defendants. Lowell Staats Mining Co. v. Philadelphia Elec. Co., 

660 F. Supp. 809 (D. Colo. 1987) (hereinafter Staats v. PEC II). 

Staats appeals this dismissal. 

A. Standard of Review 

The district court's dismissal of Staats' claims after 

consideration of matters outside of the pleadings is treated as a 

motion for summary judgment. Fed. R. Civ. P. 12(b)(6). In 

reviewing a summary judgment order, the appellate court applies 

the same standard employed by the trial court under Fed. R. Civ. 

P. 56(c). 

When a motion for summary judgment is granted, it is the 

appellate court's duty to examine the record to 

determine if any genuine issues of material fact were in 

dispute; if not, the court must decide if the 

substantive law was correctly applied. During this 

review, the court must examine the record in the light 

most favorable to the party opposing the motion. 

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Osgood v. State Farm Mut. Auto. Ins. Co., 848 F.2d 141, 143 (10th 

Cir. 1988) (citation omitted). The party resisting the motion may 

not rest on the bare allegations or denials of his pleadings. 

Rather he must produce some evidence showing a genuine issue for 

trial. Rea v. Wichita Mortg. Corp., 747 F.2d 567, 573 (10th Cir. 

1984). 

As a general rule we apply federal law to the res judicata 

issue in successive diversity actions, but federal law will 

incorporate state law when. the issue is more distinctly substantive, as with the concept of "privity". Petromanagement Corp. v. 

Acme-Thomas Joint Venture, 835 F.2d 1329, 1333 (10th Cir. 19~8). 

"Under res judicata, a final judgment on the merits of an action 

precludes the parties or their privies from relitigating issues 

that were or could have been raised in that action." Allen v. 

Mccurry, 449 U.S. 90, 94 (1980) (citing Cromwell v. County of Sac, 

94 U.S. 351, 352 (1876)); St. Louis Baptist Temple v. Federal 

Deposit Ins. Corp., 605 F.2d 1169, 1174 (10th Cir. 1979). Stated 

differently, "'a final judgment on the merits bars further claims 

by parties or their privies based on the same cause of action.'" 

Brown v. Felson, 442 U.S. 127, 131 (1979) (quoting Montana v. 

United States, 440 U.S. 147, 153 (1979)). We.have adopted the 

transactional approach of the Restatement (Second) of Judgments 

§ 24 (1982) to determine what is a single "cause of action." 

Petromanagement, 835 F.2d at 1335. Section 24 states a final 

judgment extinguishes all rights of the plaintiff to remedies 

against the defendant with respect to all or any part of the 

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transaction, or series of connected transactions, out of which the 

action arose. What. constitutes a "transaction" or a II series" . is 

to be determined pragmatically considering whether the facts are 

related in time, space, origin, or motivation, and whether they 

form a convenient trial unit. Id. at S 24(2). 

There is no definition of "privity" which can be 

automatically applied to all cases involving the doctrines of res 

judicata and collateral estoppel. Privity requires, at a minimum, 

a substantial identity between the issues in controversy and showing the parties in the two actions are really and substantially in 

interest the same. St. Louis Baptist Temple, 605 F.2d at 1174. 

Privity has been held to exist in the following relationships: 

concurrent relationship to the same property right (i.e. trustee 

and beneficiary); successive relationship to the same property or 

right (i.e. seller and buyer); or representation of the interests 

of the same person. lB J. Moore, J. Lucas, T. Currier, Moore's 

Federal Practice, ~ 0.411[1] at 392 (2d. ed. 1988). 

Under collateral estoppel, once a court has decided an issue 

of fact or law necessary to its judgment, that decision precludes 

relitigation of that fact or issue in a second suit on a different 

cause of action involving the same party or their privy. Montana 

v. United States, 440 U.S. at 153 (citing Parklane Hosiery Co. v. 

Shore, 439 U.S. 322, 326 n.5 (1979)); St. Louis Baptist Temple, 

605 F.2d at 1175. 

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B. Appeal of Staats II 

The district court dismissed Staats' claims of fraudulent 

conveyances against Robison and Smith, finding they were barred by 

res judicata because Robison and Smith were in privity with 

Uravan, Nucleari and Pioneer, and the issue of fraudulent conveyances by these entities had been litigated in Staats I. Staats v. 

PEC, 651 F. Supp. at 1367-68. We agree with the district court's 

dismissal of Robison and Smith but affirm for different reasons. 

Robison 

In this appeal, Staats asserts res judicata cannot apply to 

Robison's participation in fraudulent convey~nces that occurred 

after the Staats I trial. We do not reach this issue, because 

these conveyances were not properly before the district court when 

it considered the motion to dismiss Robison. Staats contends that 

the complaint was sufficient to place at issue transfers that occurred in 1986 after the Staats I trial. We di~agree. While we 

must review the record in a light most favorable to Staats, 

Osgood, 848 F.2d at 143, in resisting the motion for summary judgment, Staats cannot rest on the allegations of the complaint; 

rather it must produce some evidence showing a genuine issue for 

trial. Rea, 747 F.2d at 573. At the hearing on dismissal, 

Robison testified that he made no conveyances on behalf of Uravan 

after the Staats I trial. Staats presented no contradicting 

evidence regarding Robison's participation in conveyances after 

the Staats I trial. Staats presented no evidence at the hearing 

that Robison received any Uravan assets. Staats' complaint alone 

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is insufficient to resist the motion for sununary judgment. Staats 

failed to establish a factual question that Robison either 

participated in, or received fraudulent conveyances of Uravan 

assets. 

Following the final judgment dismissing Robison, Staats filed 

-an untimely motion for new trial under Fed. R. Civ. P. 59 with 

attached affidavits regarding Robison's alleged participation in 

fraudulent conveyances during the week after the Staats I trial. 

Based on Staats' allegations, the district court treated the motion for new trial as filed under Fed. R. Civ. P. 60(b)(2), newly 

discovered evidence, and Fed. R. Civ. P. 60(b)(3). fraud by an 

adverse party. The district court found that Staats failed to 

explain why this evidence was not discovered earlier and presented 

in a motion for new trial in Staats I or during the hearing to 

dismiss Robison in Staats II. The district court also found the 

record did not support a finding of fraud, misrepresentation or 

misconduct. We review the denial of a motion for new trial based 

on newly discovered evidence for abuse of discretion by the 

district court. Vanderwater v. Hatch, 835 F.2d 239, 244 (10th 

Cir. 1987). Fed. R. Civ. P. 60(b)(2) defines newly discovered 

evidence as that "which by due diligence could not have been 

discovered in time to move for a new trial .... " We do not find 

the district court abused its discretion in denying the motion for 

a new trial based upon Staats' claim of newly discovered evidence 

and fraud. Therefore, we do not consider Staats' newly discovered 

evidence in determining the propriety of the district court's 

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ruling that Staats' claim against 

judicata • 

Robison is barred by res 

. Staats contends that res judicata cannot bar its claim 

against Robison because Robison was not a party to Staats I or in 

privity with the parties of that case. We agree that Robison was 

not a named party to Staats I. However, the district court found 

Robison was in privity with Uravan, Nuclear, and Pioneer in Staats 

! for purposes of the fraudulent conveyance claim against Robison 

in Staats II. Staats v. PEC, 651 F. Supp. at 1367. The 

"determination of identity between litigants for the purpose of 

establishing privity is a factual.question, and the District Court 

should not be reversed unless its determination is clearly erroneous." Astron Indus. Assocs. v .. Chrysler Motors Corp., 405 F.2d 

958, 961 (5th Cir. 1968); People v. Tynan, 701 P.2d 80, 83 (Colo. 

App. 1984), cert. denied, (1985). Staats asserts that its claim 

is against Robison in his individual capacity and therefore 

Robison's employee/employer relationship with Uravan does not 

establish privity for the purpose of barring its claim, citing 

Morgan v. City of Rawlins, 792 F.2d 975, 980 (10th Cir. 1986). 

If Staats' claim against Robison is based on his individual 

receipt of fraudulent conveyances, we agree, under the reasoning 

of Morgan, that there is no privity upon which to base application 

of the doctrine of res judicata. However, we hold the district 

court could properiy have entered summary judgment for Robison 

dismissing Staats' claim of-fraudulent conveyances because Staats 

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failed to present any evidence at the hearing that Robison had 

received any of the Uravan assets. 

If Staats' claim against Robison is based on his participation in the conveyances of Uravan assets, then its claim against 

Robison is in his capacity as Uravan's agent. 1 A corporation acts 

through its officers, directors and agents. The district court 

was not clearly erroneous in finding Robison in privity with 

Uravan, Nuclear and Pioneer on the claim of participation in 

fraudulent conveyances. Litigation involving alleged fraudulent 

conveyances by a corporation would be res judicata in favor of 

such persons who conducted its affairs and determined its 

policies, if the plaintiff failed in an action against the 

qorpora~ion to prove the existence of the fraudulent conveyances. 

Cf.· Nicholas v. Alker, 126 F. Supp. 679, 682-83 (E.D.N.Y. 1954) 

(claim of fraud and conspiracy against corporation barred later 

claim against officers, directors, and agents on same theory). In 

Staats I, Staats failed to prove that Uravan made fraudulent 

conveyances to Nuclear and Pioneer. Staats may not relitigate 

this issue by the simple expedient of naming Robison as a 

defendant in another action. We hold the district court properly 

1 We do not agree with the district court's finding that Staats 

has stated a claim for relief in alleging "Robison through [his] 

own personal acts and omissions, aided and assisted in conveyances 

designed to or resulting in delay, hindrance, and fraud relative 

to Staats' ability to collect the Staats' judgment." Complaint at , 4.12. "[C]ourts have generally held as to fraudulent 

conveyances that a person who assists another to procure one, is 

not liable in tort to the insolvent's creditors." Duell v. 

Brewer, 92 F.2d 59, 61 (2d Cir. 1937) (citing Adler v. Fenton, 65 

U.S. 407, 412 (1860)). 

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applied the doctrine of res judicata to dismiss the fourth claim 

against Robison. 

Staats contends that res judicata cannot apply to fraudulent 

conveyances that occurred after the 1982 complaint was filed in 

Staats I. This argument is specious. In 1985 Staats filed its 

third party complaint in Staats I· alleging Uravan fraudulently 

conveyed assets to Pioneer and Nuclear. The same conveyances that 

formed the basis of Staats' claim in Staats I are the basis for 

Staats' claim against Robison in this case. There is no reason 

that Staats could not have included its claims against Robison in 

the third party. complaint, especially where Robison's acts are 

part of the same transaction that was the basis of Staats' claims 

against Nuclear and.Pioneer. 

We affirm the dismissal of the fourth claim against Robison. 

Smith 

Staats contends the district court erred in dismissing its 

claims that Smith participated in fraudulent conveyances by Uravan 

and Nuclear, asserting the complaint stated a cause of action and 

the action against Smith was not barred by res judicata. We 

disagree. 

In the fourth claim against Smith, Staats alleged Uravan 

conveyed its assets to Nuclear, PEC, and Umetco without providing 

for payment of the Staats I judgment. Staats alleged that Smith 

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personally aided and assisted in these conveyances. Complaint 

Fourth Claim. Staats alleged- these conveyances were accomplished 

by a 1984 settlement agreement, Exhibit 39. In the sixth claim, 

Staats alleged Nuclear was dissolved in July 1986 and transferred 

its assets to Pioneer without providing for payment of the Staats 

I judgment. Staats alleged Smith was an officer or director at 

the time of these conveyances and he was personally liable for the 

Staats I judgment. Complaint Sixth Claim. 

At the removal and dismissal hearing, Smith testified that he 

was a director of Uravan, Nuclear and Pioneer until April 30, 

1984. Smith Affidavit. Staats presented no contradictory 

evidence at the hearing. Smith cannot be held responsible for 

corporate acts occurring· after his_ term as a director ended. 

Blair v. Mueller, 299 F.2d 385, 388 (10th Cir. 1962); Carpenter 

Paper Co. v. Noble, 140 Colo. 486, 345 P.2d 731, 732-33 (1959). 

Exhibit 39, which is the basis for the fourth claim, was signed on 

August 15, 1984 by Culver as the president of Nuclear and Uravan 

three months after Smith resigned as director. Nuclear was 

dissolved and its assets transferred to Pioneer, which is the 

basis for the sixth claim, in July 1986, two years after Smith 

resigned. The district court properly dismissed these claims 

against Smith on the motion for summary judgment, because Staats 

failed to establish any factual basis for Smith's liability. 

Staats also asserts Smith is liable for the negligent conduct 

of Nuclear affairs before his retirement as a director. Utlder 

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Colorado law a director's liability for negligent distribution of 

assets runs only to the corporation itself. Colo. Rev. Stat. § 7-

5-114(3) (1973). Rosebud Corp. v. Boggio, 39 Colo. App. 84, 561 

P.2d 367, 372 (1977). A creditor of a corporation may sue a 

director on the corporation's behalf, if the creditor establishes 

that it will not benefit at the expense of other creditors 

similarly situated .. Ficor, Inc. v. McHugh, 639 P.2d 385, 393-94 

(Colo. 1982). Staats has failed to allege it will not benefit at 

the expense of similarly situated creditors, which is necessary to 

bring Staats' claim within the narrow exception created by ,Ficor. 

Delgado Oil Co. v. Torres, 785 F.2d 857, 861 n.10 (10th Cir. 

198~) . 

. Even if Staats could present facts that it will not benefit 

at the expense of other similarly situated creditors of Nuclear, 

this claim would be barred by res judicata as a theory which could 

have been raised by Staats against Nuclear or its privies in the 

Staats I case. The district court found that Smith, in his capacity as a director, was in privity with Nuclear. Staats v. PEC, 

651 F. Supp. at 1367; Order. We do not find this factual 

determination clearly erroneous. Astron Industrial, 405 F.2d at 

961 (privity is a factual determination); Tynan, 701 P.2d at 83 

(same); Fed. R. Civ. P. 52(a) (factual findings reviewed under 

clearly erroneous standard). A director's close relationship with 

the corporation will generally establish privity. See Oglala 

Sioux Tribe v. Homestake·Min. Co., 722 F.2d 1407, 1410 n.3 (8th 

Cir. 1983) (citing Towle v. Boeing Airplane Co., 364 F.2d 590, 

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592-93 (8th Cir. 1966)). Staats has failed to demonstrate that 

the district court's finding of privity is clearly erroneous. If 

Smith is in privity with Nuclear, then res judicata bars claims 

against Smith which could have been raised in the Staats I 

litigation against Nuclear. 

Staats contends that Smith is individually liable for his 

negligent distribution of Nuclear assets and therefore privity 

does not apply for purposes of res judicata, citing Morgan, 792 

F.2d at 980. We find Staats' argument unpersuasive. Individual 

liability for negligent distribution of corporate assets is created by statute, Colo. Rev. Stat. § 7-5-114(l)(c) (1986 Repl. 

Vol.) (director liability for distribution of assets during 

liquidation attaches when director votes for or assents to a 

corporate act), and attaches only to directors acting in their 

official capacity. Ficor, 639 P.2d at 393. Staats has failed to 

allege any other basis of common law liability against Smith. 

Rosebud, 561 P.2d at 372; see also B & K Distributing, Inc. v. 

Drake Building Corp., 654 P.2d 324, 325-26 (Colo. App. 1982) 

(corporate officer individually liable for his fraudulent 

misrepresentations of corporation's financial 

the district properly dismissed the fourth 

status). We hold 

and sixth claims 

against Smith because Staats failed to state a claim against Smith 

in his individual capacity and all claims against him in his 

capacity as a director are barred by res judicata. 

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Removal 

Having determined that the district court properly dismissed 

the claims against Robison and Smith, we find the district court 

was warranted in granting the petition to remove the case to the 

federal district court, for substantially the same reasons stated 

in the district court's opinion in Staats v. PEC, 651 F. Supp. 

i364. We affirm-the district court's decision in Staats II. 

C. Staats III 

Nuclear, Pioneer, and Mesa 

We have considered the briefs of the parties, the record on 

appeal, and the oral arguments of counsel. We affirm the district 

court's dismissal of Nuclear, Pioneer, and Mesa for substantially 

the same reasons set forth tn .the district court's opinion in 

Staats v. PEC II, 660 F. Supp. at 811-16. 

Culver 

The district court dismissed Culver from Staats' fourth 

claim, participation in fraudulent conveyances by Uravan, and 

sixth claim, participation in fraudulent conveyances by Nuclear, 

finding the decision in Staats I barred these claims under res 

judicata. Staats asserts it is suing Culver in his individual 

capacity and therefore Culver is not in privity with Uravan, 

Nuclear, or Pioneer for purposes of res judicata, citing Morgan, 

792 F.2d at 980. We disagree. 

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In an affidavit attached to his motion to dismiss, Culver 

asserted that he participated in these conveyances in his capacity 

·as an officer and director of Uravan, Nuclear, and Pioneer. 

Culver Affidavit. This assertion was uncontroverted by Staats. A 

director's close relationship with the corporation will generally 

establish privity. Oglala Sioux Tribe, 722 F.2d at 1410 n.3. 

Based on this record we find· Staats failed-to present a material 

issue of fact that it was suing Culver in his individual capacity. 

We do not find the district court's determination that Culver was 

in privity with Uravan, Nuclear, and Pioneer to be clearly 

erroneous. 

The issue of fraudulent conveyances from Uravan to Nuclear 

and Culver's participation therein, the basis of Staats' fourth 

claim, were litigated in Staats I. Culver's role in Uravan's 

conveyances was specifically brought to the district court's attention during the hearing on the motion for directed verdict. In 

Staats I the district court granted the motions for directed 

verdict of Nuclear and Pioneer, and dismissed the third party 

complaint. Implicit in this dismissal is the district court's 

finding that Uravan made no fraudulent'conveyances to Nuclear or 

Pioneer. Staats' fourth claim against Culver is barred by res 

judicata as a cause of action that could have been raised in 

Staats I against Culver as a privy to Nuclear and Pioneer. 

Staats' sixth claim alleges Culver is liable as an officer or 

director for distributing Nuclear's and Pioneer's assets without 

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providing for payment of the Staats I judgment. Culver's liability for this claim is contingent upon Staats proving Nuclear 

and Pioneer are liable for the Staats I judgment. The district 

court's dismissal in Staats II of all claims against Nuclear, 

Pioneer, and Mesa as barred by res judicata prevents Staats from 

proving the liability of Nuclear and Pioneer under a different 

· theory. Culver is· ~n privity with Nuclear and Pioneer as their 

director and officer. Res judicata bars any· claims that could 

have been brought against Nuclear and Pioneer or its privies. We 

affirm the district court's dismissal of both the fourth and sixth 

claims against Culver. 

Philadelphia Electric Company 

Staats alleged PEC was liable for the Staats I judgment, 

based on the theories of partnership or joint venture, receipt of 

a bulk transfer, receipt of partnership assets, and receipt of 

fraudulent conveyances. The district court dismissed three of 

these claims as barred by res judicata and then dismissed the bulk 

transfer claim as barred by the statute of limitations. 

On the first and third claims based on partnership liability, 

Staats contends that res judicata cannot bar its later suit 

against the individual partners for the joint liability of the 

Staats I judgment. Under res judicata a final judgment on the 

merits bars later claims against parties or their privies on the 

same cause of action. Brown v. Felson, 442 U.S. 127, 131 (1979). 

Staats concedes a final judgment on the merits was entered in 

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Staats I on Uravan's breach of the mining contract with Staats. 

Complaint 11 1. 6. Staats claims PEC is obligated to pay the entire 

judgment as a partnership obligation. Complaint, 1.10. PEC was 

not a named party to Staats I. The district court found PEC was 

in privity with Uravan because Staats sought to impose liability 

on PEC, as a partner of Uravan, for the partnership debt of the 

Staats I judgment. Staats III, 660 F. Supp. at 816 n.9. Staats 

has failed to show that the district court's finding of privity is 

clearly erroneous. Astron Industrial Assoc., 405 F.2d at 961; 

Tynan, 701 P.2d at 83. 

Staats' partnership claims against PEC clearly arise out of 

the same "transaction'' that was the basis of the litigation in 

Staats I. In Colorado partners are jointly and ~everally liable 

for joint debts of the partnership. Colo. Rev. Stat. § 7-60-

llS(l)(a) (1986 Repl. Vol.). We acknowledge that as a general 

rule a judgment in favor of an injured person against one partner 

will neither bind the personal assets of, or preclude a suit 

against, another partner who did not control or participate in the 

action, or was not given notice of an opportunity to defend the 

action. Restatement (Second) of Judgments§ 60(b) (1982); see 

also Colo. R. Civ. P. 106(a)(5). Staats really does not dispute 

this but rather argues that by suing one defendant in Staats I, 

without alleging a partnership, he still retains his right to sue 

other alleged partners in a second, independent action. The cases 

relied upon by Staats, however, presuppose the alleged debt was 

identified in the first action as a partnership obligation. See, 

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~, Dayco Corp. v. Fred T. Roberts & Co., 192 Conn. 497, 472 

A.2d 780 (1984); Griffin v. McBrayer, 252 N.C. 54, 112 S.E.2d 748 

(1960); Faricy v. J.S. Brown Mercantile Co., 87 Colo. 427i 288 P. 

639 ll930); see also Colo. R. Civ. P. 106(a)(5) (denying the 

later-sued party the defense of the statute of limitations on the 

original liability). 

As the district court ·found, Staats knew of the alleged 

partnership relation significantly before trial and with enough 

time to add PEC as a party or at least to identify the claim as 

one against an apparent partnership. This is not a case like 

First Nat'l Bank v. Newton, 10 Colo. 161, 14 P. 428 (1887), in 

which existence of the partnership was concealed during 

litigation. With knowledge of the alleged partnership, Staats 

proceeded in Staats I to treat this as an individual obligation of 

Uravan for breach of mining contract and obtained judgment on that 

basis. The case most closely analogous to the situation before us 

is a Colorado case, Feddersen v. Goode, 112 Colo. 38, 145 P.2d 

981, 986 (1944). There the plaintiff had brought suit against one 

person for the whole of an alleged debt, and settled without 

mentioning any partner of the defendant. Thereafter the plaintiff 

sought to sue the alleged partner of the first defendant on the 

same debt. The court denied relief, stating "[i]f action be 

brought against a single defendant for the entire claim and the 

evidence discloses his sole liability, or the litigation be 

settled on that basis, suit cannot thereafter be sustained against 

another on the theory of his joint liability." Id. at 986. 

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Consistent with this analysis and what we believe to be Colorado 

law, we affirm the district court's dismissal of Staats' first and 

third claims against PEC. 

The district court dismissed Staats' second claim against 

PEC, receipt of a bulk transfer without notice to creditors, as 

barred by the statute of ~imitations. Staats asserts the statute 

of limitations is not available to PEC, because Staats is seeking 

to impose liability upon PEC as a joint obliger under Colo. R. 

Civ. P. 106(a)(5) (1988 Supp.), which provides the statute of 

limitations is not a defense available to a joint obliger sued 

under this rule. Having determined that Staats is barred from 

proving PEC is jointly and severally liable for the Staats I judgment, we find the provisions of Colo. R. Civ. P. 106(a)(5) do not 

apply to preclude PEC's assertion of the statute of limitations. 

We affirm the district court's dismissal of the second claim 

against PEC as being barred by the applicable statute of limitations. 

Staats' fourth claim against PEC is based on its alleged 

receipt of fraudulent conveyances from Uravan pursuant to a 1984 

settlement agreement, Exhibit 39. The district court dismissed 

this claim as barred by res judicata. The district court reasoned 

that the fraudulent conveyance claim was based on Exhibit 39. 

This exhibit was introduced in Staats I. The district court found 

that any issues arising out of Exhibit 39 could have been 

litigated in the first suit. 

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Staats contends that the adjudication of Uravan's fraudulent 

conveyances to Nuclear and Pioneer is a separate and distinct 

transaction which cannot have a res judicata effect on Uravan's 

fraudulent conveyances to PEC. We agree that res judicata is not 

available to bar Staats' claim of fraudulent conveyances against 

PEC, but. affi-rm the district court's. dismissal on the basis of 

collateral estoppel. 

Res judicata is applicable only to parties to the first suit 

or their privies. Allen v. Mccurry, 449 U.S. 90, 94 (1980). PEC 

was not a party to the first suit nor is PEC a privy to Uravan, 

Nuclear, or Pioneer. Privity may exist if parties have a 

successive relationship to the same property. See~, St. Louis 

Baptist Temple v. Federal Deposit Ins. Corp, 605 F.2d 1169, 1175 

(10th Cir. 1979). The assets which Uravan allegedly conveyed to 

PEC are not the same assets which Staats challenged as 

fraudulently conveyed to Nuclear and Pioneer in Staats r. PEC 

cannot claim privity as a successor to the interests of Nuclear 

and Pioneer. Privity may also be established if a party to the 

first suit represented the interests of the party to the second 

suit. See ~' Montana v. United States, 440 U.S. 147 (1979). 

It does not appear from our review of the record, that PEC's 

interests were represented by Uravan, Nuclear or Pioneer in Staats 

I. We find the district court improperly applied res judicata to 

dismiss Staats' claim of fraudulent conveyances against PEC. 

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Even though PEC cannot claim the protection of res judicata, 

it may still assert collateral estoppel against Staats on those 

factual issues determined in Staats I that are applicable to the 

claim of fraudulent conveyances in this second suit. Defensive 

collateral estoppel occurs when a defendant seeks to prevent a 

plaintiff from asserting a claim the plaintiff has previously 

litigated and lost against another defendant. Parklane Hosiery 

Co. v. Shore, 439 U.S. 322, 326 n.4 (1979). 

Staats' fraudulent conveyance claim against PEC is based on 

the transfer of assets accomplished in the 1984 settlement agreement, Exhibit 39, introduced in both the Staats I and Staats II. 

In Staats I the attorney for Pioneer and Nuclear urged the court 

to consider Exhibit_39 as showing the agreement was "not entered 

into to defeat any claim of [Staats]. It was entered into to 

fulfill a binding legal commitment by Pioneer Uravan, Inc. to 

Philadelphia Electric [PEC] made in 1978." Alternately, Staats' 

attorney characterized the agreement as showing Nuclear's control 

over Uravan affairs, stating: "Clearly, ••• Nuclear has assumed or 

acknowledged its responsibility in this lawsuit by that document." 

In Staats I, at the close of Staats' case-in-chief the 

district court granted directed verdicts for Nuclear and Pioneer, 

and dismissed Staats' third party complaint against them without 

making specific findings. Implicit in the district court's 

dismissal of Staats' claims against Nuclear and Pioneer, is a 

finding that Exhibit 39 was an agreement entered into to fulfill a 

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( binding legal commitment by Uravan to PEC. This implicit finding 

collaterally estops Staats from proving the conveyances in Exhibit 

39 are fraudulent as to PEC. We affirm the district court 

dismissal the fourth claim of fraudulent conveyances against PEC 

on the basis of collateral estoppel. "A trial court's granting of 

a motion for summary judgment may be affirmed if any proper 

grounds exist to support-the ruling." Koch v. City-of Hutchinson, 

814 F.2d 1489, 1493 (10th Cir. 1987). 

Umetco Minerals Corporation 

Staats contends the district court erred in dismissing its 

fourth and eighth claims against Umetco as barred by res judicata. 

Staats' fourth claim alleges Umetco is liable for the Staats I 

judgment because it received fraudulent conveyances from Uravan 

pursuant to the 1984 settlement agreement, Exhibit 39. Staats' 

eighth claim alleges Umetco was responsible as a partner for the 

partnership debt of the Staats I judgment. 

Staats' fourth claim against Umetco for receipt of fraudulent 

conveyances is not barred by res judicata because Umetco was not·a 

party or privy in Staats I. See discussion of PEC's liability for 

fraudul~nt conveyances, slip op. at pp. 21-23. However, we affirm 

the district court's dismissal of Staats' fourth claim against 

Umetco for fraudulent conveyances on the basis of collateral 

estoppel. See Koch, 

affirmed on different 

814 F.2d at 1493 (summary judgment may be 

grounds). Staats' claim of fraudulent 

conveyances against Umetco is based on transfers of Uravan assets 

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l' 

by the 1984 settlement agreement, Exhibit 39. Implicit in the 

district court's granting .of a-directed verdict to Nuclear and 

Pioneer in Staats I, is a finding that Exhibit 39 was an agreement 

entered into to fulfill a binding legal commitment of Uravan. 

This implicit finding collaterally estops Staats from proving the 

conveyances in Exhibit 39 are fraudulent as to Umetco. 

On Staats' eighth claim that Umetco is liable for the Staats 

I judgment as a partner of Uravan we find, consistent with our 

discussion of Staats' partnership claims against PEC, that Staats 

is precluded from proving the Staats I judgment is a partnership 

debt. Slip op. at pp. 18-19. We affirm the district court's 

dismissal of Staats' eighth claim against Umetco. 

We AFFIRM the district court's opinions in Staats v. PEC, 651 

F. Supp. 1364 (D. Colo. 1987) and Staats v. PEC II, 660 F. Supp. 

809 (D. Colo. 1987). 

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