May 27, 2017

Archives for 2017

Rules of Civil Procedure and Rules for Magistrates Amended in Rule Change 2017(06)

On May 25, 2017, the Colorado Supreme Court adopted Rule Change 2017(06), which amends Rule 52 of the Colorado Rules of Civil Procedure and Rules 5 and 6 of the Colorado Rules for Magistrates. The changes are effective July 1, 2017.

Rule 52 was amended to change the last sentence, which now provides that “Findings of fact and conclusions of law are unnecessary on decisions on motions under Rule 12 or 56 or any other motion except as provided in these rules or other law.” Previously, it read “Findings of fact and conclusions of law are unnecessary on decisions of motions under Rule 12 or 56 or any other motion except as provided in Rule 41(b).” A new 2017 comment explains the reason for the change:

The final sentence of the former version of the rule, “Findings of fact and conclusions of law are unnecessary on decisions of motions under Rule 12 or 56 or any other motion except as provided in Rule 41(b),” was replaced because of requirements for findings and conclusions in rules other than Rule 41(b) and in some statutes. Regardless, judges are encouraged to include in decisions on motions sufficient explanation that would be helpful to the parties and a reviewing court. Thus, even where findings and conclusions are not required, the better practice is to explain in a decision on any contested, written motion the court’s reasons for granting or denying the motion.

C.R.M. 5 was amended to add a subsection (g) and renumber the prior subsection (g) as (h). Subsection (g) reads as follows:

(g) For any proceeding in which a district court magistrate may perform a function only with consent under C.R.M. 6, the notice — which must be written except to the extent given orally to parties who are present in court — shall state that all parties must consent to the function being performed by the magistrate.

(1) If the notice is given in open court, then all parties who are present and do not then object shall be deemed to have consented to the function being performed by the magistrate.

(2) Any party who is not present when the notice is given and who fails to file a written objection within 7 days of the date of written notice shall be deemed to have consented.

C.R.M. 6(a)(1)(I) was amended by changing statutory references within the subsection and changing the Act cited from the Uniform Act for Out-of-State Parolee Supervision to the Interstate Compact for Adult Offender Supervision. Additionally, a new subsection (f) was added to C.R.M. 6, which reads, “A district court magistrate shall not perform any function for which consent is required under any provision of this Rule unless the oral or written notice complied with Rule 5(g).”

For a redline of Rule Change 2017(06), click here. For all of the Colorado Supreme Court’s adopted and proposed rule changes, click here.

Colorado Court of Appeals: Securities Company Not Liable for Outside Bad Acts of Its Broker

The Colorado Court of Appeals issued its opinion in Houston v. Southeast Investments, N.C., Inc. on Thursday, May 18, 2017.

InvestmentsColorado Securities ActControl Person Liability.

Sorenson created and owned 1st Consumer Financial Services, Inc. (CFS). Around early 2011 Sorenson hired Hornick to work for CFS. Southeast Investments N.C., Inc. (Southeast) was an authorized and registered broker-dealer of securities at all relevant times. In February 2013 Sorenson signed an independent contractor agreement and registered representative agreement with Southeast that prohibited him from engaging in business activities not involving Southeast without disclosing such activities to Southeast and obtaining written approval. In spring 2013 Houston, a retired, unmarried woman, agreed to Hornick’s requests and liquidated her entire retirement savings and transferred the money into a self-directed IRA account to be managed by Hornick. Ultimately these funds were invested in CFS and Houston was unable to obtain a return of the money. Houston sued a number of parties under various theories of liability, including a control person liability claim against Southeast. The district court concluded that, as a matter of law, Southeast was not a control person with regard to Sorenson’s conduct underlying Houston’s securities fraud claim, and Southeast was entitled to summary judgment.

The sole issue on appeal was whether the district court erred in granting summary judgment for Southeast, based on its conclusion that, as a matter of law, Southeast was not liable as a control person under C.R.S. § 11-51-604(5)(b) of the Colorado Securities Act (the Act). A plaintiff establishes a prima facie case of control person liability where the plaintiff demonstrates that (1) a primary violation of securities fraud occurred and (2) the defendant was a controlling person. As a general rule, a broker-dealer is statutorily in control of its registered representatives as a matter of law. However, a broker-dealer is not in statutory control of its registered representative’s underlying conduct when all of the following factors are undisputed: (1) the plaintiff did not reasonably rely on the registered representative’s relationship with the broker-dealer in making plaintiff’s investment; (2) the plaintiff invested in markets other than those promoted by the broker-dealer; (3) the registered representative did not rely on its relationship with the broker-dealer to access the securities market to sell the subject securities to the plaintiff; and (4) the broker-dealer did not know of, or have a financial interest in, the investor’s business with the registered representative.

Here, Sorenson hid his conduct from Southeast by failing to notify Southeast of his outside securities sales on behalf of CFS and by using undisclosed, private email accounts to engage in the subject transactions. No one from Southeast knew about Sorenson’s involvement with Houston. Sorenson did not use Southeast’s access to the securities markets to promote or conduct his deals with Houston (through Hornick), because CFS was a private venture created and owned by Sorenson. Southeast never held any of Houston’s money because Sorenson never opened a Southeast account for Houston. Southeast accordingly had no financial interest in Houston’s investments with Sorenson. Houston did not rely on Sorenson’s relationship with Southeast in deciding to invest with Sorenson. Thus, Southeast was not in control of Sorenson with respect to his conduct underlying this case, and Southeast was entitled to judgment as a matter of law on the issue of control.

The judgment was affirmed.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Property Stored in Evidence Locker Is Not Owned by County

The Colorado Court of Appeals issued its opinion in People v. Berry on Thursday, May 18, 2017.

Sheriff’s DeputyEmbezzlementPublic PropertyOwnershipOfficial Misconduct.

Berry was a sheriff’s deputy when he responded to a domestic violence call involving a husband and his wife. Four guns were removed from the home while the domestic violence charges were pending. After those charges were resolved, the district attorney authorized the sheriff to either destroy the guns or return them to their rightful owner. Because the owner (the husband) had been deported from the United States, the sheriff could not return them to him, so the sheriff planned to destroy them. Instead, before the guns were destroyed, Berry purchased them from wife. A jury found Berry guilty of embezzlement of public property and first degree official misconduct.

On appeal, Berry argued that the evidence admitted at trial was insufficient to support a guilty verdict on the embezzlement charge. He asserted that the statute under which he was charged requires proof that the guns were owned, not merely possessed, by the county, and there was no such evidence. A person is culpable under C.R.S. § 18-8-407(1) only if he knowingly converts public moneys or property to his own use or to any use other than the public use authorized by law. Because there is no evidence that Lake County or any other public entity owned the guns, there was insufficient evidence to support Berry’s conviction for embezzlement.

Berry also contended that the evidence didn’t sufficiently prove that he committed “an act relating to his office but constituting an unauthorized exercise of his official function,” an element of first degree official misconduct. Here, Berry committed an act relating to his office because he used his office as a sheriff’s deputy to facilitate and effectuate the purchase of the guns. Berry followed the wife in his police car, spoke to her while in full police uniform, and gave her comfort that, because he was a police officer, the transaction was lawful. Thus, sufficient evidence supports the official misconduct conviction.

The judgment for conviction for embezzlement of public property was vacated and the case was remanded for entry of a judgment of acquittal on that charge. The judgment of conviction for first degree official misconduct was affirmed.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Announcement Sheet, 5/25/2017

On Thursday, May 25, 2017, the Colorado Court of Appeals issued no published opinions and 20 unpublished opinions.

Neither State Judicial nor the Colorado Bar Association provides case summaries for unpublished appellate opinions. The case announcement sheet is available here.

Tenth Circuit: Unpublished Opinions, 5/25/2017

On Thursday, May 25, 2017, the Tenth Circuit Court of Appeals issued no published opinion and nine unpublished opinions.

United States v. Aparicio

Wright v. State of Colorado

Hays v. Berryhill

United States v. Garcia

United States v. Mowery

McMiller v. Corrections Corp. of America

Booth v. Davis

Rollins v. Finch

Lee v. Berryhill

Case summaries are not provided for unpublished opinions. However, some published opinions are summarized and provided by Legal Connection.

Dissemination of Confidential Client Information Discouraged in Formal Ethics Opinion 130

The Colorado Bar Association Ethics Committee recently issued Formal Opinion 130, dated April 3, 2017. Formal Opinion 130 addresses the disclosure of confidential client information, including information that is publicly available, such as when the information has been on the news. The opinion concludes that dissemination of such information is prohibited by the Rules of Professional Conduct, and specifically states that there is no exception for information contained in the public record.

Formal Opinion 130 also addresses the use of information about former clients, concluding that such use may be allowed under the Rules when such information is “generally known.” The opinion advises attorneys to exercise caution when using information about former clients.

The opinion offers redaction and informed consent as reasonable measures to use for the dissemination of confidential client information, but cautions that merely redacting the client’s name is likely insufficient to comply with the Rules.

Finally, the opinion cautions against editing confidential client information in order to mislead or misrepresent positions. This would implicate Rule 8.4(c), which prohibits conduct involving dishonesty, fraud, deceit, or misrepresentation.

The opinion concludes, “In many situations, making information obtained in the course of representing a client public is helpful, either to other lawyers or to educate the public.  But client confidences must be respected.” Lawyers should use caution when disseminating confidential client information.

Formal Opinion 130 by cleincolorado on Scribd

Colorado Court of Appeals: Set-Off to Other Liable Parties Should be Applied to Jury Verdict before Contractual Limitation

The Colorado Court of Appeals issued its opinion in Taylor Morrison of Colorado, Inc. v. Terracon Consultants, Inc. on Thursday, May 18, 2017.

Contract—Limitation on Liability—Setoff—Jury Award—Statutory Costs—Prejudgment Interest—Post-Judgment Interest—Expert Testimony—Willful and Wanton—Settlement Statute—Costs.

Taylor Morrison of Colorado, Inc. (Taylor) was the developer of a residential subdivision. Taylor contracted with Terracon Consultants, Inc. (Terracon) to provide geotechnical engineering and construction materials testing services for the development of the subdivision. Taylor and Terracon agreed to cap Terracon’s total aggregate liability to Taylor at $550,000 (Limitation) for any and all damages or expenses arising out of its services or the contract. After homeowners notified Taylor about drywall cracks in their houses, Taylor investigated the complaints and then sued Terracon and other contractors for damages relating to those defects. After trial, the jury awarded Taylor $9,586,056 in damages, but also found that Terracon’s conduct was not willful and wanton. The court concluded that the Limitation includes costs and prejudgment interest and applied it to reduce the jury’s $9,586,056 damages award to $550,000. It also deducted the $592,500 settlement received from the other liable parties to arrive at zero dollars. The court found that neither party prevailed for purposes of awarding statutory interest and further concluded that neither Terracon’s deposit of $550,000 into the court registry nor its email to Taylor addressing a mutual dismissal constituted a statutory offer of settlement that would have allowed Terracon a costs and fees award.

On appeal, Taylor contended that the trial court erroneously deducted the setoff from the Limitation instead of deducting it from the jury damages verdict. The correct approach is to first apply the setoff against the jury verdict and then apply the contractual limitation against this reduced amount. Thus, Terracon’s liability according to the Limitation should have been a final judgment of $550,000 for Taylor.

Taylor next contended that the trial court erred when it concluded that the Limitation, by its terms, includes statutory costs and prejudgment interest. The pertinent contract language states that the Limitation applies to “any and all” expenses “including attorney and expert fees.” Thus, the Limitation’s language covers costs associated with interpreting and enforcing the contract.

Taylor further argued that the trial court erred in ruling that the Limitation does not include prejudgment interest within its cap on liability. The Limitation caps Terracon’s liability for “any and all injuries, damages, claims, losses, or expenses.” (Emphasis in original.) Because prejudgment interest is a form of damages, the Limitation also covers prejudgment interest. Taylor also asserted that post-judgment interest is not covered by the Limitation. The Court of Appeals agreed because post-judgment interest is not an element of compensatory damages.

Taylor next argued that the trial court’s exclusion of expert testimony concerning willful and wanton conduct was reversible error. Here, the court allowed the experts to testify about the factual conduct and opine on Terracon’s performance using characterizations within their expertise, but prevented testimony about legal concepts outside their expertise and whether a legal standard was met.

Terracon argued on cross-appeal that the trial court erred by not awarding it costs under Colorado’s settlement statute. Terracon’s deposit of $550,000 into the court registry pursuant to C.R.C.P. 67(a) was not a settlement offer because Taylor did not have the option to reject it. The statute requires both an offer and a rejection; thus the statute was not triggered, and Terracon is not entitled to costs. Further, Terracon’s email did not comply with C.R.S. § 13-17-202 because this alleged “settlement offer” contained nonmonetary conditions that extended the offer beyond the claims at issue. Therefore, there was no error in denying costs to Terracon.

The judgment was reversed as to the final award and the case was remanded with instructions. The judgment and orders were affirmed in all other respects.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Witness’s Vague and Fleeting Reference to Prior Criminal Activity Did Not Undermine Fairness of Trial

The Colorado Court of Appeals issued its opinion in People v. Salas on Thursday, May 18, 2017.

Sexual Assault on a Child—Due Process—Mistrial—Prior Criminality—Videotaped Interview—Inconsistent Statements—Sexually Violent Predator—Findings of Fact.

A jury found Salas guilty of sexual assault on a 9-year-old child by one in a position of trust and sexual assault on a child, pattern of abuse. The trial court’s order found him to be a sexually violent predator (SVP).

On appeal, Salas contended that the trial court abused its discretion and violated his rights to due process, a fair trial, and an impartial jury by denying his motion for a mistrial after victim’s grandmother testified by giving a nonresponsive answer to a question which, Salas contended, impermissibly referred to prior criminality. Because grandmother’s remark was fleeting, minimally prejudicial, and immediately followed by a curative instruction, the trial court did not abuse its discretion when it denied Salas’s motion for a mistrial.

Salas next contended that the district court abused its discretion when it denied his request to play a videotaped interview of grandmother. Here, defense counsel sufficiently confronted grandmother with her inconsistent statements and she either explained or conceded them. Thus admission of the videotape would have been cumulative, and the trial court did not abuse its discretion.

Salas also argued that the trial court’s determination that he qualified as an SVP failed to satisfy statutory and due process requirements because the court never made specific findings of fact in support of its determination as required by C.R.S. § 18-3-414.5(2). While the record evidence might support a conclusion that Salas either promoted or established a relationship with the victim for purposes of sexual victimization, the court did not make specific findings on this matter, and other evidence might lead to the opposite conclusion. This error was substantial and cast serious doubt on the reliability of the SVP designation.

The judgment and sentence were affirmed. The SVP designation was vacated and the case was remanded for the trial court to make specific findings of fact regarding Salas’s SVP designation.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Possession of Controlled Substance at Direction of Legal Owner Not Affirmative Defense

The Colorado Court of Appeals issued its opinion in People v. Martinez on Thursday, May 18, 2017.

Unlawful Possession—Prescription—Affirmative Defense—Prosecutorial Misconduct.

Defendant was charged with simple possession after the police found Percocet and Vicodin in her purse for which she did not have a prescription. At trial, defendant’s neighbor testified that she had prescriptions for both medications and that she had asked defendant to hold her prescriptions while they were out that evening because her purse was too small and she did not wish to leave the medications at home. A jury convicted defendant of possession and the trial court sentenced her to probation.

On appeal, defendant contended that she could lawfully possess the medications if she was “acting at the direction of the legal owner of the controlled substance,” and the trial court erred by failing to give the jury an affirmative defense instruction. The language defendant relies on in C.R.S. § 18-18-413 may present a defense to the crime of unauthorized possession of a prescribed controlled substance. However, C.R.S. § 18-18-413 is a separate offense, and it does not present an affirmative defense to unlawful possession under C.R.S. § 18-18-403.5, under which defendant was charged. Further, the trial court did not err in failing to tie the instruction to the elemental instructions given to the jury because the error would have to have been plain and obvious, which it was not. Thus, the trial court did not commit plain error by declining to adopt this construction sua sponte.

Defendant further contended that the trial court plainly erred by not giving an affirmative defense instruction based on the prescription exception in C.R.S. § 18-18-302(3)(c), which allows lawful possession by “[a]n ultimate user or a person in possession” of the medication “pursuant to a lawful order of a practitioner.” C.R.S. § 18-18-302(3)(c) is an affirmative defense to unlawful possession of a controlled substance. However, this affirmative defense did not apply to the charges against defendant because she did not have a valid prescription from a practitioner. Further, even assuming that the court erred in sua sponte failing to give this affirmative defense, such error would not be reversible error because it was not obvious and substantial.

Finally, defendant argued that the prosecutor committed reversible error by arguing that C.R.S. § 18-18-413 was not an affirmative defense to C.R.S. § 18-18-403.5 and by misstating the evidence in closing arguments. Because C.R.S. § 18-18-413 is not an affirmative defense to C.R.S. § 18-18-403.5, and the prosecutor’s statements were reasonable inferences drawn from the evidence presented at trial, the prosecutor’s arguments both during voir dire and closing argument were proper.

The judgment was affirmed.

Summary provided courtesy of The Colorado Lawyer.

Tenth Circuit: Unpublished Opinions, 5/24/2017

On Wednesday, May 24, 2017, the Tenth Circuit Court of Appeals issued one published opinion and two unpublished opinions.

United States v. $112,061.00 in United States Currency

Morris v. Gracy

Case summaries are not provided for unpublished opinions. However, some published opinions are summarized and provided by Legal Connection.

Tenth Circuit: No Abuse of Discretion by Imposing Within-Guidelines Sentence after Variance Request

The Tenth Circuit Court of Appeals issued its opinion in United States v. Wireman on February 28, 2017.

The issue in this case was whether the Defendant’s sentence was procedurally reasonable when the district court failed to address Defendant’s non-frivolous arguments for a downward variance from his within-United States Sentencing Guidelines sentence.

Defendant pled guilty to five counts of distributing child pornography and one count of possessing child pornography. Defendant had also emailed a friend non-pornographic images of children that he personally knew and claimed at the time he had sexually abused. Defendant had prior sexual offenses that involved children, including being convicted of five different sexually based crimes involving minors, four of which included physical sexual conduct with a minor.

Section 2G2.2 of the United States Sentencing Guidelines  set Defendant’s base level offense for his crimes and applied several other Specific Offense Characteristics under § 2G2.2 to Defendant, which increased his offense level. These SOCs included increases because (i) the material involved prepubescent minors; (i) he distributed material involving the sexual exploitation of a minor; (iii) the material involved sadistic or violent depictions; (iv) he engaged in a pattern of activity involving sexual abuse or exploitation of a minor; and (v) because he used a computer to distribute the material. The corresponding USSG range for Defendant’s crimes and the added SOCs was 210-262 months’ imprisonment.

In his sentencing memorandum to the district court, Defendant argued that he was entitled to a downward variance from the USSG range because § 2G2.2 was inherently flawed. Defendant argued that the Sentencing Commission did not depend on empirical data when drafting § 2G2.2, that the range for his crimes was “harsher than necessary,” and that the SOCs in § 2G2.2 were utilized so often that they applied in nearly every child-pornography case and therefore fail to distinguish between various offenders. The district court never specifically mentioned this memorandum at sentencing, but alluded to it.

The district court ultimately sentenced Defendant to concurrent terms of 240 months’ imprisonment on each of the six counts against him. The district court addressed the personal nature of the non-pornographic images the Defendant emailed to his friend as well as Defendant’s prior criminal history. After handing down the sentence, the district court asked Defendant if they had “anything further,” to which Defendant’s counsel stated that they did not.

On appeal, Defendant claimed that his sentence was procedurally unreasonable because the district court did not adequately address his critiques of § 2G2.2. Because Defendant did not contemporaneously object in the district court to the method by which the district court arrived at a sentence, including that the sentencing court failed to explain adequately the sentence imposed, the Tenth Circuit applied the plain error standard of review, rather than de novo review. The Tenth Circuit explained that it finds plain error only when there is “(1) error, (2) that is plain, which (3) affects substantial rights, and which (4) seriously affects the fairness, integrity, or public reputation of judicial proceedings.”

The Tenth Circuit first addressed the first prong of the plain error standard, whether the district court committed error.  The Tenth Circuit first noted that a district court must explain its reasons for rejecting a defendant’s non-frivolous argument for a more lenient sentence. Further, the Tenth Circuit held that Defendant’s critiques of § 2G2.2 were non-frivolous. In fact, the Tenth Circuit addressed how many of its sister circuit courts, along with itself, have described arguments criticizing § 2G2.2 as “quite forceful.”

However, the Tenth Circuit stated the principle that whether a district court can functionally reject or instead must explicitly reject a defendant’s arguments depends on whether the sentence imposed is within or outside of the USSG range. If the sentence is varied upwards of the USSG range, the district court must specifically address and reject the defendant’s arguments for a more lenient sentence. If it is within the USSG range, then the district court does not need to specifically address and reject each of the defendant’s arguments, so long as the court somehow indicates that it did not rest on the guidelines alone, but considered whether the USSG sentence actually conforms in the circumstances to the statutory factors.

In the Tenth Circuit, a within-guideline range sentence by the district court is entitled to a rebuttable presumption of reasonableness on appeal. The Tenth Circuit stated that this was true even if the USSG at issue arguable contains serious flaws or lacks an empirical basis.

In this case, the Tenth Circuit held that the district court was at least aware of Defendant’s arguments because the district court explicitly referenced Defendant’s sentencing memorandum at the sentencing hearing. Because the district court’s ultimate sentence was within the USSG range, the Tenth Circuit held that the district court did not need to explicitly reject Defendant’s arguments. The district court needed only to indicate that it did not rest on the guidelines alone, which the district court did. The district court stated that it relied on the USSG as well as Defendant’s extensive criminal history and the personal nature of the emailed images in determining Defendant’s sentence. The Tenth Circuit held that this acted as a functional rejection of Defendant’s policy disagreement with § 2G2.2. Therefore, the Tenth Circuit held that the district court did not err by not explicitly responding to Defendant’s arguments for a more lenient sentence. Because the district court did not err, the Tenth Circuit did not address the three remaining prongs of the plain error review.

The Tenth Circuit affirmed the district court’s sentence of Defendant.

Tenth Circuit Judge McKay wrote a concurrence to this decision. Judge McKay expressed his view that precedence requires a district court rejecting a defendant’s non-frivolous arguments to provide at least a general statement of its reasons for rejecting such arguments.  If the defendant’s arguments are that the USSG reflect an unsound judgment, Judge McKay states that the sentencing judge should go further to explain why he rejected those arguments. Here, the district court did not do as much.

Further, Judge McKay questioned the wisdom of applying the “reasonable” presumption to within-Guidelines sentences, regardless of a particular Guideline’s alleged lack of empirical support.  The Sentencing Commission did not use an empirical approach when developing § 2G2.2, and therefore Judge McKay believes that the Tenth Circuit should not presume the sentence’s reasonableness. Regardless, he agrees that the Majority followed the rules of the Tenth Circuit in applying the “reasonable” presumption as it stands.

Judge McKay believed that the district court erred, but he concurred in judgment because the Defendant still could not satisfy the requirement that the error affected his substantial rights. There was nothing on the record to suggest that the district court would have imposed a different sentence even if he explicitly considered Defendant’s arguments.

Tenth Circuit: Unpublished Opinions, 5/23/2017

On Tuesday, May 23, 2017, the Tenth Circuit Court of Appeals issued two published opinions and six unpublished opinions.

Fisher v. Koopman

McCoy v. Allbaugh

Blough v. Rural Electrical Coop, Inc.

Davis v. GEO Group Corrections, Inc.

Faircloth v. Raemisch

Sawyer v. Kinlen

Case summaries are not provided for unpublished opinions. However, some published opinions are summarized and provided by Legal Connection.