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Steen v. Wolf Creek Investments, LLC

Supreme Court of Montana

October 29, 2019

MARK A. STEEN, Plaintiff and Appellant,
v.
WOLF CREEK INVESTMENTS, LLC and QUARRY BAY CAPITAL, LLC, Respondents and Appellees.

          Submitted on Briefs: June 26, 2019

          APPEAL FROM: District Court of the First Judicial District, In and For the County of Lewis and Clark, Cause No. BDV-2017-203 Honorable Michael F. McMahon, Presiding Judge

          For Appellant: Jordan Y. Crosby, Ugrin Alexander Zadick, P.C., Great Falls, Montana Cynthia T. Kennedy, Kennedy Law Firm, P.C., Lafayette, Colorado

          For Appellee Quarry Bay Capital, LLC: Murry Warhank. Jackson, Murdo & Grant, P.C., Helena, Montana

          OPINION

          MIKE MCGRATH CHIEF JUSTICE.

         ¶1 Pursuant to Section I, Paragraph 3(c), Montana Supreme Court Internal Operating Rules, this case is decided by memorandum opinion and shall not be cited and does not serve as precedent. Its case title, cause number, and disposition shall be included in this Court's quarterly list of noncitable cases published in the Pacific Reporter and Montana Reports.

         ¶2 Mark Steen appeals two First Judicial District Court orders-a December 18, 2017 order granting Quarry Bay Capital, LLC's motion to set aside default judgment and a November 1, 2018 order granting Quarry Bay's motion for summary judgment. We reverse.

         ¶3 This action stems from a partnership dispute between Mark Steen, a Colorado resident, and Richard Terrance Heard, a Canadian citizen. In October 2016, judgment against Heard over this dispute was entered in a Utah court ("Utah Judgment") for $7.5 million. At the time of the judgment, Heard was the record owner of a ranch ("Property") in Lewis in Clark County, Montana. In an effort to collect against Heard, Steen registered the Utah Judgment in Montana under the Uniform Registration of Foreign Judgments Act.[1]

         ¶4 On November 10, 2016, shortly after entry of the Utah Judgment, Heard conveyed the Property to Wolf Creek Investments, LLC ("Wolf Creek"), a Montana limited liability company managed by Heard's relative.[2] On November 18, 2016, Quarry Bay Capital, LLC, a Delaware limited liability company, obtained a $1.1-million mortgage on the Property, payable "on demand," with Wolf Creek and Heard both listed as borrowers on the note. The mortgage served as security for an outstanding loan Quarry Bay made to Mayan Minerals, Ltd. ("Mayan"), a British Columbia corporation operated by Heard, prior to entry of the Utah Judgment. Quarry Bay's mortgage was junior to two liens on the Property held by First Security Bank.[3]

         ¶5 On December 6, 2016, Steen filed a lawsuit against Heard and Mayan in the Supreme Court of British Columbia, wherein the court issued a "Mareva" injunction, freezing Heard's assets.

         ¶6 On March 22, 2017, seeking to collect on the Utah Judgment, Steen filed a Complaint in Montana against Wolf Creek, claiming Heard's transfer of the Property to Wolf Creek in November 2016 was fraudulent pursuant to the Montana Uniform Fraudulent Transfer Act ("MUFTA").

         ¶7 On April 28, 2017, upon discovering that the Property was encumbered by the Quarry Bay mortgage, Steen filed an Amended Complaint adding Quarry Bay as a defendant. Steen restated his original claims against Wolf Creek.[4] Additionally, Steen alleged that Quarry Bay's mortgage on the Property was a fraudulent loan of Heard's personal funds to himself through his instrumentality Quarry Bay, and the Quarry mortgage was a fraudulent conveyance of interest in Property to prevent Steen from collecting on the Utah Judgment.

         ¶8 On May 15, 2017, Quarry Bay's registered agent was properly served with the Summons and Amended Complaint by a process server at Quarry Bay's Delaware address-its only registered business address. Quarry Bay failed to appear or respond.

         ¶9 On June 13, 2017, Wolf Creek filed an Amended Answer. Wolf Creek denied that Heard's transfer of the Property to Wolf Creek was fraudulent but admitted to executing a loan ...


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