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Colorado Court of Appeals Opinions
January 30, 2014

The Court of Appeals summaries are written for the Colorado Bar Association by licensed attorneys Teresa Wilkins (Denver) and Paul Sachs (Steamboat Springs). Please note that the summaries of Opinions of the Colorado Court of Appeals are provided as a service by the Colorado Bar Association and are not the official language of the Court. The Colorado Bar Association cannot guarantee the accuracy or completeness of the summaries.

2014 COA 10. No. 12CA2428. Taylor Morrison of Colorado, Inc. v. Bemas Construction, Inc.
Construction Defect—Homeowner Protection Act of 2007.

Taylor Morrison of Colorado, Inc. (Taylor) was the developer of a residential subdivision known as Homestead Hills (Project). Pursuant to written contracts with Taylor, Terracon Consultants, Inc. (Terracon) performed geotechnical engineering and construction material testing services at the Project. Bemas Construction, Inc. (Bemas) performed site grading.

After many of the homes were constructed, Taylor began receiving complaints about cracks in the drywall of homes. Taylor remedied the defective conditions, and then sued Terracon and Bemas for breach of contract and negligence, among other things.

Ten months after the deadline to amend pleadings, Taylor moved for leave to add claims against Terracon for gross negligence, negligent misrepresentation, and fraudulent misrepresentation/concealment, as well as a demand for exemplary damages. These claims were based, in part, on allegations that Terracon had willfully and wantonly breached duties to Taylor when it ignored or concealed inadequate subsurface soil conditions at the Project. The trial court denied the motion to amend the pleadings.

Taylor also moved for determination as to whether the Homeowner Protection Act of 2007 (HPA) invalidated the limitation of liability clauses in the contracts with Terracon. The trial court denied the motion on the ground that the HPA applies to residential property owners but not to commercial entities.

Terracon moved for leave to deposit into the court’s registry $550,000, representing the maximum amount that Taylor could recover from Terracon under the contractual limitation of liability clauses and the court order. It also requested that upon acceptance of such deposit, the court should declare Taylor’s claims against Terracon moot and dismiss them with prejudice. The trial court ruled in favor of Terracon. The money was deposited and the claims were dismissed with prejudice.

Taylor then went to trial against Bemas. The jury returned a verdict in Bemas’s favor on all of Taylor’s claims against it. Taylor appealed.

Taylor argued that it was error to rule that the HPA did not invalidate the limitation of liability clauses in Taylor’s contracts with Terracon. The Court of Appeals affirmed the trial court’s judgment, but for different reasons. The Court held that regardless of whether the HPA applies to commercial entities, retroactive application of the HPA to these facts would be unconstitutionally retrospective. The Courtconcluded, however, that further proceedings were necessary to determine whether Taylor should have been permitted to introduce evidence of Terracon’s willful and wanton conduct to attempt to overcome Terracon’s assertion of the limitation of liability clauses.

Taylor also argued that if a new trial is ordered against Terracon, a new trial as to Bemas also should be granted. The Court held that the Bemas’s liability was distinct and separable from Terracon’s liability and there would be no injustice or unfairness to Taylor in allowing the verdict for Bemas to stand. The judgment was affirmed and the case was remanded to the trial court to determine whether Taylor should have been permitted to introduce evidence of Terracon’s willful and wanton conduct for the sole purpose of attempting to overcome Terracon’s assertion of the limitation of liability clauses at issue.

2014 COA 11. No. 13CA0659. Rose L. Watson Revocable Trust v. BP America Production Company.
Frivolous and Groundless Claim Sanctions.

Attorney William Bontrager brought claims against BP America Production Company (BP) on behalf of the Rose L. Watson Revocable Trust (Trust). The Trust alleged that BP had failed to explore and develop natural gas formations pursuant to its lease of the Trust’s property. Sixteen months after suit was filed, BP moved for summary judgment. As of that date, the Trust had not conducted any discovery and had not set the case for trial. The Trust did not respond to BP’s motion. Bontrager stated that the Trust was choosing not to respond and, instead, sought leave to conduct extensive discovery. He did not submit an affidavit pursuant to CRCP 56(f) requesting additional time to respond to BP’s motion after completing discovery.

The district court granted BP’s motion. In its order, the court expressed doubt as to whether Bontrager had conducted an adequate investigation before filing suit and found that the Trust’s complaint was frivolous and groundless, entitling BP to an award of attorney fees and costs under CRS §§ 13-17-101 to -106.

The Trust appealed, and a division of the Court of Appeals affirmed the summary judgment and remanded for a determination of BP’s reasonable attorney fees incurred on appeal. Following a hearing, the district court issued an order detailing why BP was entitled to an award of fees and costs. The court awarded $162,697 in fees to BP and ordered Bontrager to pay 75% of that sum. Bontrager appealed.

Bontrager filed the notice of appeal on April 10, 2013 and his opening brief on June 22, 2013. BP filed an answer brief on July 29, 2013. Bontrager filed a reply brief on August 19, 2013. On December 1, 2013, Bontrager filed a one-sentence motion to voluntarily dismiss his appeal. BP opposed, arguing that CAR 42(b) requires that if the appeal is voluntarily dismissed, it must be conditioned on Bontrager paying BP’s appellate attorney fees. The Court ordered Bontrager to reply to BP’s opposition. Bontrager’s reply stated he was moving to dismiss because (1) substantial attorney fees had been awarded against him in other similar cases; and (2) owing to decisions of the Court and denials of certiorari review in other similar cases, he had “lost all hope” that his arguments would be resolved on the merits.

The Court of Appeals denied Bontrager’s motion, holding that it would not be in the interests of justice or fairness to allow him to voluntarily dismiss the appeal at this point and not pay BP its appellate attorney fees. The Court next declared the appeal frivolous. The Court noted that other similar cases filed by Bontrager had been dismissed by various district courts and divisions of the Court as frivolous. It rejected Bontrager’s continued assertion that the summary judgment order was incorrectly granted and rejected his repeated arguments already held to be frivolous by other divisions of the Court. The Court granted BP’s request for an award of its attorney fees incurred on appeal and remanded the case for a determination of those fees.

2014 COA 8. No. 09CA2409. People v. Conyac.
Sexual Assault on a Child—Challenge for Cause—Expert Testimony—Motive—CRE 404(b)—Rape Shield Statute—Prosecutorial Misconduct.

KT informed her mother, LC, that defendant, her stepfather, had molested her. A jury found defendant guilty of three counts of incest; three counts of sexual assault on a child—position of trust; and one count of sexual assault on a child—position of trust pattern of abuse.

On appeal, defendant argued that the trial court erred in denying a challenge for cause to a juror who stated that her niece had been sexually assaulted and murdered by her sister’s live-in boyfriend. The Court of Appeals disagreed. Because the juror also stated she could consider the evidence in the case and make a decision and follow the presumption of innocence, the trial court did not abuse its discretion in denying defendant’s challenge for cause.

Defendant claimed the trial court erroneously allowed two unqualified prosecution witnesses to testify as experts. The Court reviewed the trial court’s admission of expert testimony and found no abuse of discretion.

The Court disagreed that the officer’s testimony was an improper commentary on defendant’s credibility. The Court found that the testimony was an explanation of the officer’s interview tactics.

The Court agreed with the trial court's ruling that a defendant’s prior attempt or request to have anal sex with his spouse may be relevant concerning motive in a child sexual abuse trial, provided the evidence otherwise satisfies CRE 404(b). Here, the evidence related to a material fact and had logical relevance.

Defendant asserted that the court erroneously excluded evidence of the pending dependency and neglect case concerning LC. The Court disagreed, ruling that exclusion of this additional evidence did not contribute to the guilty verdict.

Defendant argued that the trial court erred in excluding evidence of KT’s prior sexual knowledge and familiarity with sexual assault investigations, because the evidence was relevant to rebut the “natural assumption” that KT could only know about such facts from defendant and to support his defense that KT’s allegations were aimed at removing him from the home because she disliked his rules and disciplinary efforts. The Court disagreed, finding that KT was old enough to know about sexual matters regardless of her experience with defendant and there was alternative evidence of KT’s outside sexual knowledge. In addition, the prosecution did not argue that KT was sexually naïve and had no other source of sexual knowledge.

Defendant also claimed that prosecutorial misconduct in the rebuttal closing argument required reversal. The Court disagreed. The prosecutor used rhetorical devices and argument to point out the weaknesses of defendant’s theory of the case. Although the prosecutor made an erroneous statement regarding the beyond-a-reasonable-doubt standard, it was not plain error. The Court also rejected defendant’s challenge of the constitutionality of the rape shield statute and the Sex Offender Lifetime Supervision, as well as the determination of his habitual criminal charges without a jury. The judgment was affirmed.

2014 COA 9. Nos. 12CA0227 & 12CA1326. Top Rail Ranch Estates, LLC v. Walker; Walker Development Co. v. Top Rail Ranch Estates, LLC.
Issue of First Impression—Motions for Directed Verdict—Doctrine of Claim Preclusion—Pursuit of Same Claim in Two Actions—Fraud—Economic Loss Rule—CRCP 59(a)(4)—Attorney Fees.

Top Rail Real Estates, LLC (Top Rail) entered into a contract with Walker Development Company to purchase a subdivision of platted residential lots. Top Rail paid $200,000 of the purchase price in cash, and executed a promissory note payable for the balance of $1 million. After Walker Development’s failed attempt to change the zoning to sell a portion of the property to a mining company, Top Rail was unable to sell lots in the subdivision, and it halted construction activities. Top Rail stopped making payments on its loan from the bank, and the bank foreclosed on its deed of trust. The parties sued each other in separate actions, and this appeal followed.

Walker Development argued in the first action that the court erred in granting the motion for directed verdict and dismissing its counterclaim. Regardless of whether the lien imposed by the deed of trust was extinguished by foreclosure of the bank’s senior lien, the contractual covenants in the deed of trust were not extinguished by the foreclosure.

Ronald Walker and Walker Development also argued that the trial court erred in denying their motion for directed verdict on the fraud claims asserted by Top Rail and Christopher Jenkins. The economic loss rule applied to bar the fraud claims asserted by Top Rail and Jenkins because the relief sought was the same as that sought for breach of contract and breach of the covenant of good faith and fair dealing.

The Court of Appeals agreed that the trial court erred in its calculation of prejudgment interest. The award should have been based on the $500,000 damages award in the final judgment entered by the trial court, and not on the $567,000 damages awarded by the jury.

Walker Development also contended that the trial court improperly granted summary judgment for Top Rail and Jenkins in the second action, based on its ruling that claim preclusion barred Walker Development’s claims. The doctrine of claim preclusion does not bar claims that were permissive counterclaims in a prior action, where the adjudication of those claims would not result in inconsistent judgments or a deprivation of rights established by the first judgment. Here, allowing Walker Development’s claims to be adjudicated in the second action did not nullify the judgment in the first action or impair any rights established by it, nor did inconsistent judgments result. Accordingly, the trial court erred in granting summary judgment against Walker Development based on claim preclusion.

On cross-appeal from the second action, Top Rail and Jenkins argued that the trial court erred in denying their CRCP 59(a)(4) motion for cancellation of the promissory notes, release of the deed of trust, and release of the notice of lis pendens. The Court disagreed. The trial court did not abuse its discretion in determining that it would be inequitable to require Walker Development to file an additional bond on top of the $1.3 million bond that it had already posted in the first action. The judgment was affirmed in part and reversed in part, and the case was remanded with directions.

Colorado Court of Appeals Opinions

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