Juvenile—Delinquent—Pre-Adjudication Placement—Department of Human Services—Standing.

D.Z.B. had a complex history with the Arapahoe County Department of Human Services (Department) and the juvenile court. Over the Department’s objection, the court placed him in a residential child care facility managed by the Department, in lieu of bond, while his adjudication was pending.

On appeal, the Department asserted that the court lacked authority to place D.Z.B. in the facility preadjudication and in lieu of bond over the Department’s objection. The Department was not a party to the delinquency actions against D.Z.B., so it alleged as an injury the costs of D.Z.B.’s care. The obligation and costs of D.Z.B.’s care are incidental to his delinquency action because the Department has a statutory duty to care for and house children removed from their homes in delinquency actions. Thus the Department did not show an injury in fact. Further, the Children’s Code does not confer standing on the Department to challenge a juvenile court’s ruling regarding preadjudication placement. The Department lacked standing to appeal.

The appeal was dismissed.

Sex Offender—Juvenile—Sexual Assault—Joinder—CRE 404(b)—CRE 403—Motion to Suppress—Search Warrant—Prior Acts—Offer of Proof—Sexually Violent Predator.

Raehal was arrested for failing to register as a sex offender. Shortly after his arrest, it was discovered that Raehal had sexually assaulted two boys, S.F. and J.H., on numerous occasions. The charges for each boy were filed separately, and the cases were later joined over defendant’s objection. At trial, explicit photographs of Raehal and S.F. engaged in sexual acts were admitted. Raehal was convicted and later adjudicated a habitual sex offender against children. The district court designated him a sexually violent predator.

On appeal, Raehal contended that the district court erred in joining the cases. Raehal conceded that, under CRE 404(b), S.F.’s testimony describing the sexual assaults would have been admissible in a separate trial on the charges related to J.H., but argued the photographs depicting the abuse would not have been admissible. Two or more offenses may be charged in the same charging document if the offenses are of the same or similar character or are based on two or more connected acts or transactions or parts of a larger scheme or plan of action. Here, the photographs were not admitted to prove a common scheme or plan but to corroborate S.F.’s testimony. However, because the photographs were not unduly prejudicial under CRE 403 and any error could not have cast serious doubt on the reliability of the judgment of conviction, reversal was not required.

Raehal further contended that the district court erred in denying his motion to suppress the photographs because the digital camera on which they were discovered was outside the scope of the search warrant. The digital camera seized from Raehal’s residence was within the scope of the search warrant because it authorized the seizure of “physical devices which serve to transmit or receive information to and from the computer.”

Raehal also contended that evidence of two previous incidents in which Raehal had sexually assaulted minor boys was improperly admitted because the prosecution’s offer of proof was inaccurate. Although the prosecution submitted an offer of proof alleging that Raehal was convicted of both counts of sexual assault on a child when in fact he was only convicted of one count, the district court’s determination that the prior acts occurred was not based on erroneous information.

Finally, Raehal contended, and the People conceded, that the district court erred by designating him a sexually violent predator without first making specific findings of fact on the record.

The judgment of conviction was affirmed. Raehal’s sexually violent predator designation was vacated, and the case was remanded for further findings on this issue.

Condominium Declaration—Common Expenses—Amendment—Colorado Common Interest Ownership Act—Motion for Leave to Amend—Indispensable Parties.

The Francis parties are trusts and their fiduciaries and other individuals with ownership interests in the Aspen Mountains Condominiums. The parties’ dispute arose from a contested 2010 vote that amended the original 1972 condominium declaration to reallocate the common interest shares and common expenses. The 1972 declaration had originally allocated common interest shares and common expenses based on unit size, and the amended declaration reallocated common interest shares equally among all units. Common expenses increased for the Francis parties, and they later filed suit, seeking a judgment voiding the reallocation of the common interest shares. The trial court ruled in favor of the Aspen Mountain Condominium Association, Inc. (AMCA), finding that the 2010 amendment had been properly adopted.

On appeal, the Francis parties first contended that the trial court erred by partially granting AMCA’s motion for a determination of law. Here, the declaration required a unanimous vote to alter the percentage of the undivided interests in the general common elements. The trial court erred by holding that the Colorado Common Interest Ownership Act, which went into effect in 1992, nullified the 1972 declaration’s requirement of a unanimous vote to alter ownership interests in the common elements.

The Francis parties also contended that the trial court erred in denying their motion for leave to amend the complaint to assert additional breach of fiduciary duty claims against AMCA. The motion was submitted after the discovery deadline and only a few months before trial. Further, the case had been pending for more than five years, and the Francis parties had already amended the complaint five times and could have added the newly asserted claim at any point. Therefore, the court did not abuse its discretion in denying leave to amend.

Next, the Francis parties argued that the trial court erred by denying their CRCP 59(a) motion to amend the judgment based on failure to join as indispensable parties the beneficiaries of the various trusts included among the Francis parties. The proposed additional parties were alleged to be beneficiaries of trusts that were already parties to the action and were represented by their respective trustees. As a matter of law, the beneficiaries’ interests were sufficiently protected by the trustees’ participation in the action on their behalf.

The judgment was affirmed in part and reversed in part, and the case was remanded with directions.

Breach of Contract—Unjust Enrichment—Colorado Wage Protection Act—Civil Theft—Conversion—Economic Loss Rule—Attorney Fees.

Bermel entered into a “Contractor Agreement” with BlueRadios, Inc. under which he provided engineering services to BlueRadios. He also signed a “Proprietary Information and Inventions Agreement” (PIAA). The parties later ended their relationship. Anticipating that he might end up in litigation over unpaid wages, Bermel breached the PIAA by forwarding to his personal email account  thousands of BlueRadios emails and attachments, some of which contained proprietary information. Bermel sent a demand letter to BlueRadios for unpaid wages, which BlueRadios paid. Bermel thereafter filed a lawsuit against BlueRadios asserting claims for breach of contract, unjust enrichment, and violation of the Colorado Wage Protection Act (CWPA). BlueRadios filed counterclaims against him, including breach of contract; civil theft, under CRS § 18-4-405; and conversion. The court granted summary judgment in favor of BlueRadios on Bermel’s CWPA claim, and following trial, found Bermel liable on all of BlueRadios’ counterclaims.

On appeal, Bermel contended that the trial court erred when it denied his motion for summary judgment, in which he argued that the economic loss rule barred BlueRadios’ claim for civil theft. Because the economic loss rule is a judicial construct and a civil theft claim is a statutory cause of action, the economic loss rule does not preclude a cause of action under the civil theft statute.

Bermel also argued that the trial court erred in granting BlueRadios’ motion for summary judgment on his CWPA claim, contending that the court failed to apply the CWPA’s definition of “employee” when it concluded he was an independent contractor. The evidence attached to BlueRadios’ motion for summary judgment did not establish that Bermel was free from control and direction under his contract or that he was customarily engaged in an independent trade, occupation, profession, or business related to the service performed. Accordingly, BlueRadios failed to establish that no genuine dispute of material fact existed as to whether, under the parties’ contracts, Bermel was an employee for purposes of the CWPA.

            Finally, BlueRadios was entitled to its appellate attorney fees under the civil theft statute.

The summary judgment on the CWPA claim was reversed, the judgment was otherwise affirmed, and the CWPA claim was remanded for further proceedings.

Workers’ Compensation Insurance—Fine—Lapse in Coverage—Unconstitutional—Eighth Amendment.

The Division of Workers’ Compensation (Division) imposed a fine of $841,200 on Dami Hospitality, LLC, a small employer, for failing over several years to maintain workers’ compensation insurance.

On appeal, Dami argued that CRS § 8-43-409 is unconstitutional on its face and as applied. Dami also argued that the fine is grossly disproportionate both to its ability to pay and to the harm caused by the lack of workers’ compensation insurance. The statute is not unconstitutional on its face. However, because the division director failed to apply the excessive fine factors adopted under the Eighth Amendment to the particular facts that Dami presented, including his ability to pay, the fine was excessive.

Dami also contended that the provisions of CRS § 8-43-304 must be read into CRS § 8-43-409 to incorporate a cure provision, a limitation period, and a clear and convincing burden of proof; and the fine must be set aside based on the Division’s failure to meet these requirements. The Court of Appeals analyzed the statutes and determined that the Division was not obligated to credit Dami for curing the violation, was not required to prove by clear and convincing evidence that Dami violated CRS § 8-43-409, and did not have to file notice of Dami’s violation within one year of Dami’s lapse.

The order was set aside and the case was remanded.

Fair Campaign Practices Act—Campaign and Political Finance Amendment—Statute of Limitations.

The Alliance for a Safe and Independent Woodmen Hills (Alliance) was established to work for the common good and general welfare of the Woodmen Hills community. Before the 2014 Woodmen Hills Metropolitan District board of directors’ election, Alliance sent postcards and created Facebook posts directed at undermining the character of a board candidate. Campaign Integrity Watchdog, LLC (CIW) filed a complaint with the Secretary of State alleging a violation of § 9 of the Campaign and Political Finance Amendment, Colo. Const. Art. 28 (Amendment) and various violations of the Fair Campaign Practices Act (FCPA). The matter was referred to the Office of Administrative Courts. After a hearing, the administrative law judge (ALJ) found that the alliance was a “political committee” under the FCPA and it failed to register and file required reports as of the first day of the hearing, June 26, 2014. Thus Alliance violated the FCPA. The ALJ imposed a fine and ordered Alliance to register with the Secretary of State and file all required reports.

Alliance filed a motion to stay the decision, which was denied, and immediately thereafter filed a notice of appeal, which it then withdrew. About a year later, CIW filed a complaint in district court to enforce the ALJ’s decision. Alliance filed a CRCP 12(b)(5) motion to dismiss alleging the Amendment’s one-year statute of limitations barred CIW’s enforcement action. The district court dismissed the complaint, finding it time-barred under the Amendment.

On appeal, both parties agreed that the statute of limitations is triggered by the date of “violation” in § 9(2)(a) of the Amendment, but disagreed about what “violation” means. The Court of Appeals concluded that “violation” means the act(s) of breaking or dishonoring the FCPA or Amendment and therefore the statute of limitations began running the day following the last such act.

            The Court then reviewed CIW’s complaint and concluded it could be read to allege a continuing violation of the Amendment, and the record does not show when or if the continuing violation ended. The complaint states a plausible claim of a continuing violation sufficient to withstand a Rule 12(b)(5) motion to dismiss based on the statute of limitations.

            The order dismissing the complaint was reversed and the case was remanded.

Bad Faith—CRS § 10-3-1116—Jury Instructions—Statutory Delay—Attorney Fees.

            Nibert and her husband were injured when a car collided with their motorcycle. As relevant to this appeal, Nibert had an underinsured motorist (UIM) policy through Geico Casualty Co. (Geico) with a $25,000 coverage limit. Geico offered Nibert $1,500 to settle her claim.

            Nibert sued Geico for breach of contract, common law bad faith, and statutory delay under CRS § 10-3-1116. After discovery and before trial, Geico paid Nibert the $25,000 UIM coverage limit to settle the breach of contract claim.

            A jury returned verdicts awarding Nibert $33,250 in noneconomic damages on her bad faith claim and $25,000 for her statutory delay claim. The trial court entered judgment on the jury’s verdict for the bad faith claim and judgment of $50,000 for damages on the statutory delay claim. It also granted Nibert’s motion for attorney fees in the amount of $118,875.30.

            On appeal, Geico argued that the trial court failed to adequately instruct the jury on its theory of defense that challenges to debatable claims are reasonable. The trial court relied on the Colorado pattern jury instructions governing common law bad faith and first-party statutory claims. While it did not accept Geico’s tendered instructions on these issues, it allowed Geico to present expert testimony regarding the “fairly debatable” issue and to argue its theory of defense to the jury. The Court of Appeals concluded that the instructions, as given, adequately instructed the jury on the applicable law and the parties were afforded ample opportunity to present their case theories to the jury. The trial court’s ruling was neither manifestly arbitrary, unreasonable, or unfair, nor a misapplication of the law.

            Geico then argued that the trial court erred in awarding Nibert recovery of two times her UIM benefit as a penalty. CRS § 10-3-1116(1) provides a first-party claimant the right to bring an action for “two times the covered benefit.” Geico argued that the trial court should have allowed a setoff of the ultimate statutory damages award in the amount of $25,000 previously paid to Nibert on her UIM claim. The Court agreed with other divisions that have concluded that a statutory damages award of two times a delayed benefit—even when that benefit has already been paid, resulting in an effective payment of three times the contracted benefit—is contemplated by the plain meaning of CRS § 10-3-1116.

            Geico also contended it was error to award attorney fees incurred to prosecute the common law bad faith and statutory delay claims, both before and after the date when payment of the UIM benefit was delayed. They argued the attorney fees should be limited to the period from the date the benefit was first delayed to the date the benefit was actually paid. The Court found no support for Geico’s argument that the section does not contemplate an award of attorney fees incurred litigating anything other than a contractual claim or incurred for the time before and after a delayed benefit accrues and is paid.

            The Court also granted Nibert’s request for an award of her appellate attorney fees.

Urban Renewal Law—Delay in Start Date of Tax Increment Financing Period.

            Colorado’s Urban Renewal Law (URL) authorizes the use of tax increment financing (TIF) to fund renewal projects for redeveloping blighted or slum areas. TIF uses recently assessed property values in an urban renewal area to establish a base tax value. As property values increase above the base value, increased tax revenues are allocated to the financing of the renewal project to pay down the debt against the project. The statute places a 25-year limit on TIF allocations to a renewal fund that runs from “the effective date of such a [TIF] provision.”

            The City of Aurora (City) approved two urban renewal plans (the Plans) with multiple phases of redevelopment. The Fitzsimons Plan included four development phases and stated that TIF would begin immediately for the first two phases but be delayed for the second two phases. The Iliff Plan included two phases and provided for TIF to begin immediately for phase one and be delayed for phase two.

            After the City approved the plans, the Arapahoe County assessor (Assessor) immediately calculated the base tax value for all development phases. The City and the Aurora Urban Renewal Authority (collectively, Aurora) filed a complaint against the Assessor, asking the court to order him to delay allocating TIF. The Assessor argued that he was complying with the URL, which does not permit a city to delay the start of TIF allocations. On cross-motions for determination of law, the district court entered an order in favor of the Assessor.

On appeal, Aurora first argued that the doctrines of waiver, preclusion, and estoppel barred the Assessor’s defense because the Assessor did not submit the issue to arbitration or appeal the Plans’ approval via a CRCP 106(a)(4) action. The Court of Appeals found that the URL’s statutory arbitration procedure does not apply to this dispute, thus the Assessor did not waive his right to assert his defense. The Court did not consider Aurora’s Rule 106(a)(4) argument because it was not raised in the district court. The Court determined that claim and issue preclusion were inapplicable to this case. Finally, because neither the Assessor nor the county were part of the URL’s public approval process, there was no merit in the argument that the Assessor’s defense was equitably estopped.

            On the merits, the Court found that the URL does not permit a municipality to alter or evade the 25-year time limit on a TIF provision by denominating parts of a plan “effective” after the plan is approved. The statute is clear that TIF cannot exceed 25 years from the date the provision is adopted, and a city cannot extend that time limit by denominating certain provisions “effective” on a date after they are actually approved.

The City also argued that adopting the urban renewal plans involved legislative acts within its home-rule powers. Adopting an urban renewal plan is not a legislative act. Even if approving an urban renewal plan was a legislative act, approving these plans would be beyond the City’s power because the plans conflict with the URL’s TIF timeline. Thus, even if the City’s acts were legislative, they would be invalid.

Aurora further argued that the Assessor and the Court could not rely on or be bound by informal guidance from the Colorado Property Tax Administrator (Administrator). The Court did not give the Administrator’s guidance even persuasive weight. 

            The order and judgment were affirmed.

Prejudgment Interest under CRS § 13-21-101(1).

            Munoz was injured in a collision with an uninsured motorist (UM). Munoz opened a UM claim with his insurer, American Family Mutual Insurance Co. (American Family). American Family made settlement offers to Munoz but maintained it was not required to pay prejudgment interest because it was only required to do so after a judgment had been entered by a court. Munoz accepted American Family’s final offer, understanding that it did not include interest.

            Munoz then sued American Family and the UM. Munoz moved under CRCP 56(h) for a determination whether American Family was required to include prejudgment interest as part of its UM claim settlement. The trial court ruled, as a matter of law, that the insured is entitled to such interest only when a judgment has been entered and interest is awarded as a component of damages assessed by the jury’s verdict or the court.

            On appeal, Munoz argued that the trial court erred because prejudgment interest is a necessary element of compensatory damages that makes an injured party whole. American Family countered that the plain language of CRS § 13-21-101 states that prejudgment interest can only be awarded after a judgment, based on a damages award determined by a trier of fact, has been entered. The Court of Appeals determined the plain language of the statute requires, prior to prejudgment interest being awarded, that (1) an action must be brought; (2) the plaintiff must claim damages in the complaint; (3) there must be a finding of damages by a jury or the court; and (4) judgment is entered.

The judgment was affirmed.

Interlocutory Appeal—Motion to Dismiss for Lack of Subject Matter Jurisdiction.

            Sterling Ethanol, LLC and Yuma Ethanol, LLC (collectively, Companies) are ethanol manufacturing plants that are sources of air pollution in northeastern Colorado. They are required to operate in accordance with air permits issued by the Colorado Air and Pollution Control Division (Division). After the Division issued two compliance orders addressing the Companies’ alleged violations of their air permits, Companies sought timely administrative review from the Air Quality Control Commission (Commission), which operates pursuant to the Colorado Air Pollution Prevention and Control Act (APPCA). Following an evidentiary hearing, the Commission issued a final order affirming the Division’s orders.

            Companies filed a motion to reconsider, which the Commission denied. Companies then filed a complaint in the district court 69 days after the Commission issued its final order and 35 days after the Commission denied its motion to reconsider. The Commission filed a motion to dismiss for lack of subject matter jurisdiction, arguing the complaint was untimely filed. The district court denied the motion. The district court, on the Commission’s request, certified for review the question whether the State Administrative Procedure Act (APA), the APPCA, and the Commission’s procedural rules, read together, compel the conclusion that the complaint was untimely filed, thus depriving the Court of Appeals of subject matter jurisdiction.

            The Court held that the district court erred in denying the motion to dismiss because Companies’ complaint was untimely. The party seeking judicial review must file a complaint within 35 days of the effective date of the Commission’s final order, even if that party first filed a motion to reconsider, and the Commission declined to reconsider its order. The plain language of the APPCA, the APA, and the Commission’s procedural rules required such a conclusion.

The order was reversed and the case was remanded for entry of an order dismissing the action.