May 23, 2018

Colorado Court of Appeals: Complete Exhaustion of Funds by Contractor Without Paying Subcontractor Violates Trust Fund Statute

The Colorado Court of Appeals issued its opinion in Franklin Drilling & Blasting, Inc. v. Lawrence Construction Co. on Thursday, April 19, 2018.

Construction Law—Public Works Trust Fund Statute—Civil Theft Statute—Directed Verdict—Culpable Mental State.

Lawrence Construction Company (Lawrence) was the general contractor on a Colorado Department of Transportation (CDOT) road project. Franklin Drilling and Blasting Inc. (Franklin) was a subcontractor. Lawrence was paid in full by CDOT but refused to pay Franklin. Franklin sued Lawrence on a variety of claims, and all but the claim for civil theft were arbitrated in favor of Franklin.

Following arbitration, the parties tried the civil theft claim to the court. Franklin alleged that Lawrence violated the Public Works Trust Fund statute (trust fund statute). The trial court granted Lawrence’s motion for directed verdict, finding that Franklin had not proved that Lawrence intended to permanently deprive Franklin of the monies it was owed. The court also awarded Lawrence costs.

Franklin appealed the judgment in favor of Lawrence on the civil theft claim and the costs awarded to Lawrence. The court of appeals first concluded that C.R.C.P. 50 is unavailable when a trial is to the court. Instead, the governing rule is C.R.C.P. 41(b). Under that standard, the court must find that upon the facts and the law the plaintiff has shown no right to relief.

As relevant here, the theft statute, C.R.S. § 18-4-401(1), provides two ways that Lawrence could possess the culpable mental state required for civil liability: knowing use (C.R.S. § 18-4-401(1)(b)), or intent to deprive (C.R.S. § 18-4-401(1)(a)). On the knowing use element, the Court focused on the “res” created when the government entity (CDOT) pays monies to the contractor to be held in trust for its subcontractors and suppliers. When the res is exhausted before payment to the subcontractor, a violation of the trust fund statute, and perhaps the civil theft statute, may be established. Here, the evidence Franklin presented at trial established that at various relevant times the bank account into which Lawrence deposited the CDOT payments had a zero or negative balance. The trial court’s findings do not resolve the “knowingly uses” alternative mental state, and the trial court erred by not addressing this element of the civil theft claim.

Franklin also argued that the trial court’s ruling in Lawrence’s favor regarding the intent to deprive element was unsupported by the record. The trial court made extensive findings regarding Lawrence’s intent to permanently deprive. Reasonable minds could differ about whether Franklin proved that Lawrence intended to permanently deprive Franklin of the CDOT funds, so the court could not conclude that the trial court findings and conclusion were “so manifestly against the weight of evidence as to compel a contrary result.”

The court denied Franklin’s request for attorney fees because it did not enter judgment in Franklin’s favor.

The judgment was affirmed to the extent the trial court determined that Franklin failed to prove Lawrence’s culpable mental state under C.R.S. § 18-4-401(1)(a). It was reversed and the case was remanded with directions for the trial court to determine whether Lawrence possessed the culpable mental state defined by C.R.S. § 18-4-401(1)(b).

Summary provided courtesy of Colorado Lawyer.

Colorado Court of Appeals: Plaintiff Not Allowed to Treat Denial of Liability as Denial of Coverage

The Colorado Court of Appeals issued its opinion in Pena v. American Family Mutual Insurance Co. on Thursday, April 19, 2018.

Uninsured Motorist—Denial of Liability—Denial of Coverage—CRCP 12(b)(5) Dismissal.

Peña was involved in a three-car collision. Both Peña and Garner, another driver involved in the accident, were insured by defendant American Family Mutual Insurance Company (American Family). Peña sent a letter to American Family asserting a claim under the uninsured motorist provisions of her policy. American Family denied Peña’s claim, asserting that Garner was not responsible for the damage to her vehicle and Garner had coverage at the time of the accident, so Peña’s uninsured motorist property damage (UMPD) provision would not apply.

Peña sued Garner and American Family in separate actions. In this action, she sued American Family under C.R.S. § 10-3-1115 for the unreasonable delay and denial of benefits due under the UMPD provisions of her policy. American Family moved to dismiss, arguing that Peña’s complaint failed, as a matter of law, to state a claim upon which relieve could be granted because Peña’s UMPD coverage applied only if American Family, as Garner’s insurer, denied coverage, rather than liability, for Garner in connection with the accident. The district court agreed with this interpretation of Peña’s policy and the distinction made between denial of coverage and denial of liability. But because American Family had only denied liability and the issue of liability had not yet been determined, the court concluded that Peña’s UMPD coverage did not apply at that point and the lawsuit was premature. The district court dismissed the case without prejudice.

On appeal, Peña contended that the district court erred in dismissing her case. She argued that the district court erred in not considering whether American Family unreasonably delayed or denied her claim before dismissing her action. Because American Family denied liability but not coverage, her policy’s UMPD provision was inapplicable, and there were no benefits that could have been delayed or denied. Peña had no claim as a matter of law. The district court’s determination that Peña’s lawsuit was premature was in error because Peña will never have a claim against American Family under her policy for unpaid UMPD benefits from the accident; Garner’s insurer has not denied coverage, which is the circumstance that would trigger Peña’s UMPD coverage. If Garner is ultimately found liable, Peña will have a claim against American Family under the liability provisions of his policy.

The judgment was affirmed.

Summary provided courtesy of Colorado Lawyer.

Colorado Court of Appeals: Colorado Wage Claim Act Does Not Categorically Bar Plaintiff from Piercing Corporate Veil

The Colorado Court of Appeals issued its opinion in Paradine v. Goei on Thursday, April 19, 2018.

Wage Claim Act—Corporations—Piercing the Corporate Veil.

Plaintiff served as the chief financial officer and vice president of administration for Aspect Technologies, Inc. (Aspect), a corporation. Defendant Goei was the chief executive officer. Plaintiff sued Goei and Aspect, raising a claim under the Colorado Wage Claim Act (the Act), for fraud, and for breach of contract. He alleged that defendants owed him unpaid wages. The trial court granted Goei’s motion for judgment on the pleadings and dismissed the three claims against him individually with prejudice.

On appeal, plaintiff asserted that he was not barred from piercing the corporate veil and holding Goei personally liable under the Act. The Act does not categorically bar a plaintiff from piercing the corporate veil to hold an individual liable for unpaid wages. Plaintiff’s fraud claim made allegations in support of his request that the trial court pierce the corporate veil to impose liability on Goei, and plaintiff’s breach of contract claim incorporated the allegations in the fraud claim. Because plaintiff pleaded sufficient facts to establish a plausible claim that plaintiff could pierce the corporate veil, the trial court erred when it granted Goei’s motion to dismiss on the pleadings.

The judgment was reversed and the case was remanded with directions.

Summary provided courtesy of Colorado Lawyer.

Colorado Court of Appeals: Obvious Error in Trial Court’s Restitution Calculation Did Not Seriously Affect Fairness or Integrity of Judicial Proceeding

The Colorado Court of Appeals issued its opinion in People v. Butcher on Thursday, April 19, 2018.

Restitution—Post-Judgment Interest—Crim. P. 52(b)—Plain Error.

A jury convicted Butcher of two counts of securities fraud and two counts of theft from at-risk adults, and he was ordered to pay restitution.

On appeal, Butcher argued that the trial court erred in its award of prejudgment and post-judgment interest in its amended restitution order. The court of appeals reviewed the appeal for plain error and found that the trial court erred by calculating post-judgment interest from the date of conviction rather than from the date of the operative restitution order. However, although this error was obvious, it did not seriously affect the fairness, integrity, or public reputation of judicial proceedings.

The court exercised its discretion under Crim. P. 52(b) and affirmed the order.

Summary provided courtesy of Colorado Lawyer.

Colorado Court of Appeals: Police Officer’s Testimony Defining Street Slang for Drug Considered Expert Testimony

The Colorado Court of Appeals issued its opinion in People v. Bryant on Thursday, April 19, 2018.

Assault—Expert Testimony—Jury Instructions—MirandaWarning—Voluntary Statements—Evidence.

While high on PCP, defendant assaulted two teenagers. After defendant’s arrest, police officers interviewed him and he admitted that he was under the influence of PCP, which he initially referred to as “sherm.” Defendant told officers that they could retrieve the substance from his sock, which they did. Before trial, defendant filed several motions to suppress. The court denied all of the motions, ruling that defendant’s statements were made voluntarily and that he had validly waived his Miranda rights. Defendant was convicted of unlawful possession of a controlled substance and two counts of third degree assault.

On appeal, defendant contended that the trial court erred by ruling that his statements to the police were voluntary. He argued that the police exploited his intoxicated state during their interrogation. Here, by the time they reached the police station, defendant was calm, coherent, and cooperative. The interview lasted no more than 15 minutes; there was no evidence that defendant’s demeanor changed during the interview; and there was no evidence of psychological coercion. The trial court did not err by finding that defendant’s statements to police were voluntary.

Defendant also contended that his statements should have been suppressed because police failed to obtain a valid waiver of his Miranda rights. Defendant contended that he was so intoxicated and confused when he was advised of his Miranda rights that he did not make a knowing and intelligent waiver of those rights. The record supports the trial court’s finding that defendant was not intoxicated when he waived his Miranda rights. The trial court did not err by finding that defendant validly waived his Miranda rights.

Defendant also contended that the trial court reversibly erred by allowing Officer Fink to testify as a lay witness regarding the meaning of the term “sherm.” This testimony was not based on Officer Fink’s personal knowledge or investigation of defendant’s case, but was based on his training and experience as a police officer. Although the trial court erred by allowing Officer Fink to testify as a lay witness, the error was harmless because the testimony was cumulative of other evidence presented at trial that served to prove the “knowingly” element of the possession charge.

Defendant next contended that the trial court erred by improperly instructing the jury. First, the instruction that voluntary intoxication was not a valid defense to the charged crimes could not have confused the jury, particularly because it was a brief and correct statement of the law. Second, the pattern instruction on mens rea was legally correct and informed the jury to apply a subjective standard rather than on objective standard. There was no error in the manner in which the trial court instructed the jury.

The judgment was affirmed.

Summary provided courtesy of Colorado Lawyer.

Colorado Court of Appeals: Witness’s Probationary Status Alone Does Not Implicate Defendant’s Right to Cross-Examine

The Colorado Court of Appeals issued its opinion in People v. Margerum on Thursday, April 19, 2018.

Assault—Menacing—Sixth Amendment—Confrontation Clause—Cross-Examination—Probationary Status.

Defendant was alone in a friend’s apartment with the friend’s girlfriend, E.S. When E.S. rejected defendant’s sexual advances, defendant became angry and forced E.S. onto the bed, climbing on top of her and kissing and groping her. Then defendant tried to remove E.S.’s clothing. Eventually he stopped and let E.S. leave the apartment. Defendant then texted his sister, T.M., to come to the apartment. He told her he had a bag of clothes he wanted to give her. T.M. went to defendant’s apartment with her son. Without warning, defendant grabbed her around the neck and began choking her. Defendant then pinned T.M. underneath him and began groping her body. T.M. grabbed a glass candleholder and hit defendant on the back of the head, which allowed her to escape with her son. A jury convicted defendant of unlawful sexual contact without physical force as to E.S., and third-degree assault and menacing with a deadly weapon as to T.M.

On appeal, defendant argued that the trial court violated his rights under the Confrontation Clause by not allowing him to cross-examine E.S. concerning her probationary status. A witness’s probationary status alone does not implicate a defendant’s constitutional right to cross-examine the witness on potential bias or motive. Rather, some logical connection between the probationary status and the witness’s motive for testifying is required. Here, at the time of defendant’s trial, E.S. was serving a one-year probation in another county for a forgery conviction. Defendant pointed to no other facts that would logically connect E.S.’s probationary status with her testimony at his trial. Accordingly, the trial court did not err in denying defendant’s request to cross-examine E.S. regarding her probationary status because these facts do not show that E.S.’s testimony might have been influenced by a promise or expectation of leniency in exchange for favorable testimony.

Defendant next argued that there was insufficient evidence to support his menacing conviction. He contended that (1) the menacing statute requires that a defendant place the victim in fear before any actual injury, and (2) the conduct underlying his menacing conviction cannot be the same single act as the conduct underlying his assault conviction. The statute does not require that the victim be placed in fear before she in injured; it is thus irrelevant whether the victim is injured before, during, or after she is placed in fear of imminent bodily harm, if defendant’s actions place or attempt to place her in such fear. Defendant presented no basis to depart from established law that a person can commit two crimes with one act. The evidence supports defendant’s menacing conviction.

The judgment was affirmed.

Summary provided courtesy of Colorado Lawyer.

Colorado Court of Appeals: Defendant May Challenge Unrevoked Deferred Judgment under Crim. P. 32(d)

The Colorado Court of Appeals issued its opinion in People v. Figueroa-Lemus on Thursday, April 19, 2018.

Deferred Judgment—Crim. P. 32(d)—Jurisdiction—Immigration Consequences—Ineffective Assistance of Counsel—Withdrawal of Plea.

As relevant to this appeal, defendant pleaded guilty to possession of a schedule II controlled substance. The parties stipulated to a two-year deferred judgment. The court accepted the deferred judgment and sentenced defendant to two years of probation. About five months later, defendant filed a Crim. P. 32(d) motion to withdraw his guilty plea, arguing that his counsel failed to advise him of the clear immigration consequences of the plea and claiming that if he had been properly advised, he would have rejected the offer. After an evidentiary hearing, the district court denied the motion.

On appeal, the People argued that the court of appeals did not have jurisdiction to review the trial court’s order because the motion challenged a non-final judgment. Although a deferred judgment may not be subjected to either Crim. P. 35 or direct review while it is still in effect, a defendant may challenge an unrevoked deferred judgment under Crim. P. 32(d). Further, the Court had jurisdiction to review the district court’s denial of a motion to withdraw a guilty plea because that motion challenged a deferred judgment still in effect.

Defendant argued that his guilty plea was not made knowingly, voluntarily, and intelligently because his counsel never informed him of the clear immigration consequences of the plea. Here, the record supports the district court’s finding that defendant’s criminal attorney and immigration attorney both told defendant on multiple occasions that a guilty plea to a drug felony would result in deportation. Because counsel’s performance was not deficient, the district court did not abuse its discretion when it denied the Crim. P. 32(d) motion.

Defendant also argued that counsel should have advised him that he would be held in custody during the removal proceeding. The court found no authority that would require counsel to give this advice, and defendant failed to explain how such an advisement would have affected his decision to accept the plea offer.

The order was affirmed.

Summary provided courtesy of Colorado Lawyer.

Colorado Court of Appeals: Announcement Sheet, 4/19/2018

On Thursday, April 19, 2018, the Colorado Court of Appeals issued nine published opinions and 45 unpublished opinions.

People v. Figueroa-Lemus

People v. Margerum

People v. Bryant

People v. Butcher

Paradine v. Goei

Pena v. American Family Mutual Ins. Co.

People in Interest of L.M.

People in Interest of E.R.

Franklin Drilling & Blasting, Inc. v. Lawrence Construction Co.

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.

Colorado Supreme Court: Announcement Sheet, 4/16/2018

On Monday, April 16, 2018, the Colorado Supreme Court issued two published opinions.

People v. Brown

People v. Quick

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.

Colorado Court of Appeals: Judge Committed Reversable Error by Not Recusing Where Judge Was Previously GAL in Different Case Involving Mother

The Colorado Court of Appeals issued its opinion in People in Interest of C.Y. and J.O. on Thursday, April 5, 2018.

Dependency and Neglect—Recusal—Disqualification.

In this dependency and neglect proceeding, during the termination hearing, the judge realized she had served as a guardian ad litem (GAL) on a different case involving mother’s oldest child. The judge declined to recuse herself from the case over mother’s objection and terminated mother’s parental rights.

On appeal, mother contended that the judge erred by not recusing herself from the termination hearing based on her having served as the GAL of mother’s older child in 2005. The Code of Judicial Conduct requires judges to disqualify themselves in any proceeding in which their impartiality might reasonably be questioned. Here, both the GAL and the Department of Human Services discussed the 2005 case and urged the court to rely on it when ruling on the termination motion, which the court did. Under these circumstances, the judge created the appearance of impropriety by presiding over the case and abused her discretion by not recusing herself.

The judgment was reversed and the case was remanded for a new termination hearing before a different judicial officer.

Summary provided courtesy of Colorado Lawyer.

Colorado Court of Appeals: Excess Insurer Must Step Into Shoes of Insured and Plead Primary Bad Faith

The Colorado Court of Appeals issued its opinion in Preferred Professional Insurance Co. v. The Doctors Co. on Thursday, April 5, 2018.

Medical Malpractice—Primary Insurance Policy—Excess Insurance Policy—Equitable Subrogation —Bad Faith.

A medical malpractice suit was filed against Dr. Singh and other parties. The Doctors Company (TDC), the primary insurer, defended Dr. Singh in the suit as required by its primary liability policy. Preferred Professional Insurance Company’s (PPIC) insurance policy was an “excess policy,” which would cover any losses that exceeded TDC’s $1 million coverage up to an additional $1 million. As an excess insurer, PPIC did not have any duty to defend Dr. Singh in the suit. The plaintiff in the medical malpractice suit offered to settle the case with Dr. Singh for $1 million, the amount of TDC’s policy limits. Dr. Singh conveyed his desire to accept the settlement offer to both insurers, but TDC declined to settle the case. PPIC told Dr. Singh he should accept, and it paid the $1 million settlement. PPIC then filed suit against TDC for equitable subrogation to recover the amount paid. The district court granted summary judgment in PPIC’s favor without addressing TDC’s argument that PPIC was required to prove that TDC refused to settle in bad faith.

On appeal, TDC contended that the district court erred as a matter of law because an equitable subrogation claim brought by an excess insurer against the primary insurer to recover the amount paid in settlement can only be derivative of the insured’s rights. Thus, PPIC’s refusal to plead and present evidence that TDC acted in bad faith in declining to settle required dismissal of PPIC’s claim. An excess insurer seeking recovery under equitable subrogation for a primary insurer’s failure to settle a case against their mutual insured “steps in the shoes of the insured” and must plead and prove the primary insurer’s bad faith. Here, without an assertion that TDC acted in bad faith, PPIC’s equitable subrogation claim is not legally viable.

The order granting summary judgment for PPIC was reversed and the case was remanded for entry of judgment of dismissal in TDC’s favor.

Summary provided courtesy of Colorado Lawyer.

Colorado Court of Appeals: Payments by Victim’s Compensation Board are Direct Result of Defendant’s Conduct and Properly Ordered as Restitution

The Colorado Court of Appeals issued its opinion in People v. Henry on Thursday, April 5, 2018.

Restitution—Victim Compensation Board—Rebuttable Presumption—In Camera Review.

A jury convicted defendant of third degree assault. The trial court imposed a two-year jail term and ordered defendant to pay $900 in restitution. Defendant objected to the amount, requesting additional documentation to support the restitution request and a hearing. The court denied the request for additional documentation and granted the hearing request. After an evidentiary hearing, the court upheld its order regarding the restitution amount because defendant failed to offer any evidence rebutting the compensation board director’s testimony.

On appeal, defendant contended that the record did not contain sufficient evidence to support the trial court’s decision to order him to pay $230 in restitution to the compensation board for the victim’s lost wages. C.R.S. § 18-1.3-603(10)(a) creates a rebuttable presumption: once the compensation board has established that it paid a victim a set amount, the defendant has the burden of introducing evidence to show that the amount paid was not the direct result of his criminal conduct. Here, the prosecution proved by a preponderance of the evidence that the victim had lost $230 in wages and that the compensation board had paid that amount to her, and defendant did not rebut the presumption.

Defendant also asserted that the trial court should have conducted an in camera review of the compensation board’s records. Because defendant’s request for an in camera review was speculative and not based on an evidentiary hypothesis, the court did not err in denying defendant’s request for an in camera review.

The order was affirmed.

Summary provided courtesy of Colorado Lawyer.