Background
This long-running matter arose from a divorce-related receivership over businesses in the marital estate. Sterling Consulting Corporation was initially appointed receiver, with Richard Block, Sterling’s president, filing an oath of receiver. The court later replaced Sterling with Gary Schwartz but did not formally discharge Sterling; it ordered Sterling and its staff to cooperate and remain subject to the court’s jurisdiction.
After Schwartz reported alleged fiduciary breaches and financial harm by Sterling and the Blocks, Sterling agreed to pay $100,000 to settle potential claims. The court approved and later enforced that agreement. Schwartz’s remaining claims were assigned to Yates, who sued Sterling and the Blocks. After the Blocks were served but did not answer or comply with orders concerning a response and show-cause hearing, the district court entered default judgment for Yates, including the $100,000 and fees and costs.
The Court’s Holding
The Colorado Court of Appeals affirmed. It held that the district court had personal jurisdiction over the Blocks. They had consented through Richard Block’s receiver oath, the order retaining jurisdiction over Sterling and its staff, and the settlement agreement; their Colorado receivership activities also supported specific jurisdiction.
The court declined to review the Blocks’ challenge to the default judgment because they never moved in district court to set it aside or otherwise seek relief from it. It also rejected their contention that Schwartz’s discharge terminated the receivership action, explaining that discharge relieved Schwartz of his duties but did not dismiss the action or discharge Sterling and the Blocks. The Blocks’ challenge to approval of the settlement agreement was unpreserved, and their recusal and electronic-access arguments lacked merit. The case was remanded only for the district court to decide whether Yates should receive appellate attorney fees and, if so, their amount.
Key Takeaways
- A receiver’s discharge does not itself dismiss a receivership action.
- A party seeking to challenge a default judgment ordinarily must first seek relief in the trial court.
- Prior government employment alone, without evidence of actual or probable bias, does not require judicial recusal.
Why It Matters
The decision underscores that participants in a Colorado receivership can remain subject to the trial court’s authority after a successor receiver is discharged, particularly where the original receiver was never formally discharged. It also illustrates the preservation consequences of bypassing trial-court procedures for setting aside a default judgment.