October 21, 2017

Archives for June 2017

Nominees Selected for 18th Judicial District Court Vacancy

On Thursday, June 29, 2017, the Colorado State Judicial Branch announced the selection of three nominees to fill an upcoming vacancy on the 18th Judicial District Court. The vacancy will be created by the retirement of Hon. F. Stephen Collins, effective August 1, 2017.

The three nominees are Cori Alcock-Christofferson of Centennial, Richard Ferro of Centennial, and Andrew Baum of Highlands Ranch. Cori Alcock-Christofferson is at the 18th Judicial District Attorney’s Office. Richard Ferro is in the Medicaid Fraud Unit of the Office of the Colorado Attorney General. Andrew Baum is a magistrate in Arapahoe County.

Under the Colorado Constitution, the governor has 15 days in which to select one of the nominees for appointment to the bench. Comments regarding any of the nominees may be submitted to the governor via email at gov_judicialappointments@state.co.us. For more information about the nominees, click here.

Colorado Court of Appeals: Plaintiff Need Only Demonstrate Prima Facie Showing of Personal Jurisdiction to Defeat Rule 12(b) Motion to Dismiss

The Colorado Court of Appeals issued its opinion in Rome v. Reyes on Thursday, June 15, 2017.

Ponzi Scheme—Investments—Insurance—Fraud—Personal Jurisdiction—Long Arm Statute—Colorado Securities Act—C.R.C.P. 12(b)(2)—C.R.C.P. 9(b).

This case arises out of a Ponzi scheme that defrauded at least 255 investors out of $15.25 million dollars. To implement the scheme, Schnorenberg formed KJS Marketing, Inc. in Colorado to obtain funds for investment in insurance and financial products sales companies. Schnorenberg hired Reyes, a California resident, and Kahler, a Wyoming resident, to solicit investor funds on behalf of KJS and its successor company, James Marketing. Rome, the Securities Commissioner for the State of Colorado, brought claims against Schnorenberg, Reyes, and Kahler for securities fraud, offer and sale of unregistered securities, and unlicensed sales representative activity. The Commissioner also sought a constructive trust or equitable lien against Schnorenberg’s mother (among others), who resides in Wyoming, as a “relief defendant,” based on allegations that she received some of the improperly invested funds. Reyes, Kahler, and Schnorenberg’s mother moved to dismiss all claims against them under C.R.C.P. 12(b)(2) for lack of jurisdiction. Reyes and Kahler also sought dismissal of the securities fraud claim on the ground that it failed to meet the C.R.C.P. 9(b) particularity requirements. (Neither Schnorenberg nor KJS is a party to this appeal.) The district court granted all of these motions without conducting an evidentiary hearing. In written orders, the court concluded that it lacked personal jurisdiction over each of the nonresident defendants, and that the Commissioner’s securities fraud claim failed to “link any particular factual allegations to actual false representations” made by Reyes or Kahler.

On appeal, the Commissioner contended that the district court erred in dismissing the claims against Reyes, Kahler, and Schnorenberg’s mother for lack of personal jurisdiction. Here, the Commissioner sufficiently alleged that Reyes and Kahler violated the Colorado Securities Act (CSA) because the transactions at issue pertained to securities that originated in Colorado. Taking the allegations together, the activities of Reyes and Kahler made it reasonably foreseeable that they could be haled into a Colorado court to answer the allegations. Further, the exercise of jurisdiction over them does not offend due process principles. Schnorenberg’s mother received funds from her son that had been transferred from Colorado accounts, and she knew or should have known that the money came from investors in her son’s “Colorado-based investment scheme.” The Commissioner’s action against Schnorenberg’s mother arises from her activities’ consequences in Colorado, and it is reasonable to exercise jurisdiction over her, despite the somewhat limited nature of her direct contacts with Colorado.

The Commissioner also argued that the district court erred in dismissing the claims against Reyes and Kahler under the CSA on the ground that the Commissioner failed to meet his pleading burden under Rule 9(b). The Commissioner’s complaint provided sufficient particularity to give Reyes and Kahler fair notice of the claim for securities fraud and the main facts or incidents upon which it is based.

The judgment was reversed and the case was remanded.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Attorney Must Assume Financial and Ethical Responsibility in Order to Share Fees

The Colorado Court of Appeals issued its opinion in Scott R. Larson, P.C. v. Grinnan on Thursday, June 15, 2017.

Attorney Fee Dispute—Referral Fees—Division of Fees.

Grinnan is a general practitioner with limited experience in personal injury cases. Grinnan’s friend Kelley asked Grinnan to represent him in a personal injury case. Grinnan obtained Kelley’s approval to involve Scott Larson., P.C. in the case, and Larson entered into a contingency fee agreement with the Kelley family. As relevant here, the agreement identified Grinnan as “associated counsel,” stated that Grinnan would be paid a percentage of Larson’s fee “not to exceed 100%,” and provided that Larson was responsible for paying case expenses. Grinnan was not a signatory to the agreement.

Larson brought claims against various entities and settled with one early in the case. From Larson’s $333,333 fee on this settlement, he sent Grinnan a check for $50,000. After three years of litigation, the case settled. Based on the settlements, the contingent fee agreement entitled Larson to a fee of $3,216,666.67. Larson had incurred about $300,000 in costs.

Larson and Grinnan couldn’t agree on how to divide the contingent fee. Grinnan entered his appearance, and the court granted his request that all attorney fees paid to Larson be placed in a restricted interest bearing account. Following a hearing, the trial court entered a detailed written order allocating the attorney fees. The trial court declined to divide the fees in proportion to services and found that Grinnan had assumed joint responsibility for the litigation. The court divided the fees by awarding Grinnan 20% of the $333,333.34 from the first settlement and 12.5% of the $2,883,333.33 fee from the other two settlements. The court also awarded Grinnan prejudgment interest at the rate of 8% from the date the settlement checks were issued until final judgment entered on the fees allocated to him. It also awarded Larson interest on the fees placed in the restricted account less the fees awarded to Grinnan (as a wrongful withholding). The court declined to award costs, finding that neither lawyer was the prevailing party.

On appeal, Larson asserted that Grinnan never assumed joint responsibility because he did not assume responsibility for the representation as a whole. The court of appeals found that Grinnan had assumed one of the two components of joint responsibility—financial responsibility for the case—because of Grinnan’s exposure to liability for any malpractice of Larson. A remand was necessary to determine whether he also assumed ethical responsibility, the second component, on which the court had made no findings.

As guidance to the trial court on remand, the court analyzed the ethical responsibility issue. It concluded that a referring lawyer must: actively monitor the progress of the case; make reasonable efforts to ensure that the firm of the lawyer to whom the case was referred has in effect measures giving reasonable assurance that all lawyers in the firm conform to the Rules of Professional Conduct; and remain available to the client to discuss the case and provide independent judgment as to any concerns the client may have that the lawyer to whom the case was referred is acting in conformity with the Rules of Professional Conduct.

On remand, if the court finds that Grinnan assumed ethical responsibility, the court’s fee award will stand, subject to appeal by Larson. If the court finds that Grinnan did not assume ethical responsibility, he is only entitled to fees in proportion to the services he performed, with the referral fees to be reallocated to Larson, subject to appeal by Grinnan.

The court concluded that Grinnan failed to preserve issues he raised on cross-appeal.

Grinnan also contended that the trial court erred in finding a wrongful withholding.  The court found no error in the trial court’s award of prejudgment interest to Larson based on Grinnan’s wrongful withholding.

The court also noted that on remand the trial court could reconsider its decision not to award costs based on its findings on ethical responsibility.

The attorney fee award was vacated, the cross-appealed rulings were affirmed, and the case was remanded.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Public Utilities Commission has Exclusive Jurisdiction Over Claims for Enforcement of Tariffs

The Colorado Court of Appeals issued its opinion in Development Recovery Co., LLC v. Public Service Co. of Colorado on Thursday, June 15, 2017.

Public Utility—Subject Matter Jurisdiction—Enforcement of Tariffs—Common Law Claims.

The Public Service Company of Colorado, d/b/a Xcel Energy Co. (Xcel), is a utility company regulated by the Colorado Public Utilities Commission (PUC). Development Recovery Company, LLC (DRC) was the assignee of claims from real estate developers who entered into extension agreements (agreements) with Xcel for the construction of distribution facilities to provide gas or electric service for homes in new developments. The agreements specified that they were governed by the PUC’s rules and regulations and referred several times to Xcel’s extension policies. The extension policies on file with the PUC are referred to as tariffs and provide that extension contracts are based on the estimate of the cost to construct and install the necessary facilities to provide the requested service. The tariffs explain in detail how construction costs and payments are to be handled.

DRC filed a complaint against Xcel alleging various common law claims and violation of C.R.S. § 40-7-102, related to an unspecified number of agreements between developers and Xcel over the course of 18 years. Xcel moved to dismiss, arguing that this matter was within the exclusive jurisdiction of the PUC or, alternatively, if the PUC did not have exclusive jurisdiction, the court should nevertheless refer the matter to the PUC under the primary jurisdiction doctrine. The district court agreed with Xcel on both grounds and dismissed the complaint.

On appeal, DRC argued that the district court has exclusive subject matter jurisdiction over DRC’s common law claims, asserting that the trial court erred in concluding that the substance of its claims is merely the enforcement of tariffs. The court of appeals noted that the PUC has exclusive jurisdiction in its constituted field, including enforcement of tariffs. The court concluded that all of DRC’s claims substantively involved enforcement of the tariffs (essentially, how costs were to be calculated and paid). Further, even if DRC has a cause of action under C.R.S. § 40-7-102, exhaustion of administrative remedies before the PUC is required.

DRC also asserted that the district court must have jurisdiction because only it can award the relief sought. DRC cannot confer subject matter jurisdiction on the district court simply by requesting relief in the form of damages. Further, the PUC has authority to order reparations where excessive charges have been collected by a public utility for a product or service, which is a potential remedy in this case.

The judgment was affirmed.

Summary provided courtesy of The Colorado Lawyer.

Tenth Circuit: Unpublished Opinions, 6/29/2017

On Thursday, June 29, 2017, the Tenth Circuit Court of Appeals issued no published opinion and one unpublished opinion.

United States v. Antwine

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

Colorado Court of Appeals: District Court Correctly Characterized Water Storage Plan as Frustrated Plan in Condemnation Action

The Colorado Court of Appeals issued its opinion in Board of County Commissioners of County of Weld v. DPG Farms on Thursday, June 15, 2017.

Condemnation—Highest and Best Use—Lost Income—Costs.

The Board of County Commissioners of Weld County (the County) filed a petition in condemnation to extend a public road over 19 acres of DPG Farms, LLC’s 760-acre property (the property). When condemnation proceedings were initiated, the property was used primarily for agricultural and recreational purposes. The parties stipulated to the County’s immediate possession of the 19 acres and proceeded to a valuation trial. The dispute centered on the highest and best use of 280 acres that contained gravel deposits. DPG’s experts testified about the highest and best use of the property. The district court determined, as a matter of law, that the evidence was too speculative to support a finding that water storage was the highest and best use of the relevant area (Cell C); instead, it determined that the highest and best use of those acres was gravel mining, but not water storage as well. The jury awarded DPG $183,795 in damages for the condemned property and nothing for the residue. DPG then requested costs. The district court rejected a substantial portion of the costs on grounds that they were disproportionate to DPG’s success and that certain expert evidence had been excluded.

On appeal, DPG contended that the district court erred in rejecting water storage as the highest and best use of certain portions of the property. The Court of Appeals reviewed the evidence that the district court’s determination was based on and concluded that the district court did not err in determining, as a matter of law, that the evidence was too speculative to support a jury finding that water storage was the highest and best use of Cell C.

DPG also argued that the trial court erred in excluding evidence of lost income, arguing that it was admissible pursuant to an income capitalization approach to valuing the property. DPG’s evidence of a potential income stream was admissible not as the measure of its damages but rather as a factor that could inform the fair market value of the property. And both the appraiser and the mining expert testified that the potential income stream from mining informed their fair market valuations. Because the lost income evidence, on its own, did not reflect the proper measure of damages, the district court correctly excluded it.

Finally, because the income valuation evidence presented by DPG’s experts was properly excluded, the district court did not abuse its discretion in limiting DPG’s award of costs on this basis.

The judgment and cost order were affirmed.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Concealed Weapon Statute Requires Person to Carry Weapon “Unlawfully”

The Colorado Court of Appeals issued its opinion in People in Interest of L.C. on Thursday, June 15, 2017.

Protection Order—Constitutionality—Evidence—Possession of Weapon.

A police officer observed L.C. in a public park after hours. The officer contacted L.C. and discovered that he was subject to a protection order, which provided, among other things, that L.C. was not to “possess or control a firearm or other weapon.” When the officer searched L.C.’s backpack, he found a knife with a five and one-half inch blade inside a sheath. L.C. was found guilty of violating a protective order and unlawfully carrying a concealed weapon. He was adjudicated delinquent and sentenced to probation. L.C. petitioned for district court review, which was denied.

On appeal, L.C. contended that C.R.S. § 18-12-105, which defines the offense of unlawfully carrying a concealed weapon, is unconstitutionally vague and overbroad. The statute is not unconstitutionally vague, and the merits of L.C.’s overbreadth argument were not addressed because he did not raise it in the district court. L.C. also contended that the evidence was insufficient to prove that he carried a concealed knife “on or about his . . . person,” as required to sustain a conviction for the statutory violation. He argued that because the knife was in a sheath in an interior zippered compartment of his backpack, it was not readily accessible and therefore was not “on or about” his person. The Court of Appeals disagreed with L.C.’s interpretation.

L.C. further contended that because the prosecution failed to prove that he did anything directed at the protected person named in the protection order, the evidence was insufficient to establish that he violated it. Violation of a protective order does not always require proof that the accused contacted the protected person. Thus, evidence that the protection order contained a provision prohibiting L.C. from possessing a weapon and that L.C. was found in possession of a weapon was sufficient to sustain his conviction for violation of a protection order.

The judgment was affirmed.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Announcement Sheet, 6/29/2017

On Thursday, June 29, 2017, the Colorado Court of Appeals issued five published opinions and 13 unpublished opinions.

People v. Cardman

People v. Hoggard

People v. Wilson

Sovde v. Scott, D.O.

People v. Oldright

Summaries of these cases are forthcoming.

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, 6/28/2017

On Wednesday, June 28, 2017, the Tenth Circuit Court of Appeals issued one published opinion and six unpublished opinions.

Sione v. Sessions

Lansky v. Lengerich

United States v. James

Powers v. Federal Bureau of Prisons

United States v. Kutz

Auld v. Sun West Mortgage Company, Inc.

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

Post-Decree Modifications of Parental Responsibilities — Best Interests, Endangerment, and More

Sometimes, after a decree of dissolution is entered, parents seek to modify their allocation of parental responsibilities. The standard for modification of decision-making is found in C.R.S. § 14-10-129(2)(a) through (d). Subsection (a) allows for modification when the parties agree, but in practice this rarely or never happens. Subsection (b) allows modification when the child has been integrated into the family of the moving party with the consent of the other party — this, too, rarely happens. Subsection (c) addresses relocation and lists specific criteria for modification. The “meat” of the statute, however, is in subsection (d).

Subsection (d) allows modification of decision-making when “The child’s present environment endangers the child’s physical health or significantly impairs the child’s emotional development and the harm likely to be caused by a change of environment is outweighed by the advantage of a change to the child.” Many cases have interpreted “endangerment” as it relates to the modification of decision-making; it is where attorneys get creative with their arguments. Typically, though, “endangerment” is when the parent fails to make decisions or when the parents cannot agree on even the most minor of decisions and it harms the child.

The standard to modify parenting time is the best interest of the child standard, which is slightly less onerous to meet than the endangerment standard. Learn more about the interplay of the two standards and practical applications of the standards in case law from Marie Moses, a partner at Lass Moses Ramp, LLP. Ms. Moses presented a program, “Mastering Post-Decree Modification Standards: Best Interests Versus Endangerment,” which is available here:

Ms. Moses discusses the difference between the best interests and the endangerment standards, and how courts apply the two in practical situations.

The materials and homestudy are available for purchase here.

Colorado Supreme Court: Statutory Continuous Sentence Requirement Applies to Both Concurrent and Consecutive Sentences

The Colorado Supreme Court issued its opinion in Executive Director of the Colorado Department of Corrections v. Fetzer on Monday, June 26, 2017.

Parole Eligibility.

The Department of Corrections petitioned for review of the court of appeals’ judgment reversing an order of the district court that denied Fetzer’s petition pursuant to C.R.C.P. 106(a)(2). Fetzer’s petition sought an order compelling the recalculation of his parole eligibility date, asserting that the Department’s “governing sentence” method, which calculated his parole eligibility date solely on the basis of the longest of his concurrent sentences, violated the statutory requirement that his multiple sentences be treated as one continuous sentence. The court of appeals reversed and remanded for recalculation, reasoning both that, contrary to the Department’s understanding, the statutory continuous sentence requirement applies to concurrent as well as consecutive sentences and that the Department’s “governing sentence” method of calculation could not apply to Fetzer’s sentences because they were all subject to the same statutory parole provisions.

The supreme court held that, because the “governing sentence” theories that have previously been sanctioned by this court have served to determine the statutory parole and discharge provisions applicable to a single continuous sentence and the manner in which those provisions can be meaningfully applied to it, rather than as an alternative to the statutory continuous sentence requirement itself, the Department erred in simply substituting Fetzer’s longest sentence for the required continuous sentence. Because, however, Fetzer’s multiple sentences are not all subject to the same statutory parole provisions, as indicated in the court of appeals’ opinion, reference to a governing sentence, or some comparable means of determining the applicable incidents of his parole, may remain necessary to the calculation of Fetzer’s parole eligibility date. The judgment of the court of appeals reversing the district court’s order was therefore affirmed. Its remand order, directing the Department to recalculate Fetzer’s parole eligibility date in accordance with its opinion, however, was reversed, and the case was remanded with directions that it be returned to the district court for further proceedings.

Summary provided courtesy of The Colorado Lawyer.

Colorado Supreme Court: Inquiry into Unemployment Claimant’s Mental Condition Beyond Scope of Simplified Administrative Proceedings

The Colorado Supreme Court issued its opinion in Mesa County Public Library District v. Industrial Claim Appeals Office on Monday, June 26, 2017.

Unemployment Compensation—Fault or Misconduct—Illness or Physical Disability of Employee.

The supreme court held that where the Division of Unemployment Insurance determines a claimant was mentally unable to perform assigned work under C.R.S. § 8-73-108(4)(j) of the Colorado Employment Security Act, C.R.S. §§ 8-70-101 to 8-82-105, neither the text of C.R.S. § 8-73-108(4)(j) nor related case law contemplates further inquiry into the cause of the claimant’s mental condition, and such an inquiry is beyond the scope of the simplified administrative proceedings to determine the claimant’s eligibility for benefits. Here, the court concluded that the Division’s hearing officer erred in determining that claimant committed a volitional act to cause her mental incapacity and thus was at fault for her separation from employment and was disqualified from receiving unemployment benefits. The court of appeals’ judgment was affirmed.

Summary provided courtesy of The Colorado Lawyer.