Colorado Court of Appeals Opinions
February 27, 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 14. Nos. 11CA1853 & 11CA1881. People v. Shifrin.
Deceptive Trade Practices—Colorado Consumer Protection Act—CRCP 41(b).
The Attorney General (AG) brought this action against defendant, Leonid Shifrin, Jerry A. Johnson, and five companies with which defendant was involved. The complaint alleged a pattern of deceptive trade practices whereby defendants, acting in concert, fraudulently placed consumers in high risk “option” adjustable rate mortgage loans.
The trial court ruled that defendant was not entitled to a jury trial. The Colorado Consumer Protection Act (CCPA) does not provide for trial by jury. Further, based on the equitable nature of the relief sought under the CCPA, defendant was not entitled to a jury trial.
The trial court refused to stay the trial, pending resolution of federal criminal proceedings against him. The court did not abuse its discretion in this regard because the two proceedings had minimal overlap.
The trial court found a CCPA violation based on the testimony of representative witnesses, without requiring testimony from all thirty-seven borrowers allegedly harmed. Although the CCPA permits the AG to subpoena witnesses, the CCPA does not require the AG to elicit testimony from every consumer who was harmed to prove a violation. Thus, the question becomes whether the evidence was sufficient to prove a CCPA violation.
The trial court admitted the affidavits of borrowers who did not testify at trial. These affidavits constituted inadmissible hearsay, and allowing them into evidence was an abuse of discretion. However, because the trial court found that the affidavits were relevant only to determine the remedy for defendant’s violations of the CCPA, their lack of admissibility affects only restitution and disgorgement. Therefore, the amount of restitution awarded to the borrowers who did not testify was set aside. Further, the disgorgement also reduced by those amounts established through the affidavits.
Defendant contended that the trial court’s restitution award was barred by the credit agreement statute of frauds, CRS § 38-10-124. This statute requires the existence of a debtor–creditor relationship. Defendant, who was a mortgage broker, is not a creditor pursuant to § 38-10-124; therefore, it does not apply and the trial court’s restitution award was not barred. Also, the trial court’s formula for calculating restitution was within its discretion under § 6-1-110.
The trial court concluded that defendant was not entitled to a setoff for the amount paid by codefendant Johnson in settlement. Because tort damages are not recoverable by the AG under the CCPA, defendant was not entitled to a setoff.
The AG argued that the trial court erred in granting Shifrin’s directed verdict motion, because it applied the wrong legal standard. When an action is tried to the court without a jury, a directed verdict motion can be dismissed pursuant to CRCP 41(b). The standard for ruling on a CRCP 41(b) motion is “whether judgment in favor of defendant is justified on the evidence presented.” Because the court applied the wrong legal standard, the case was remanded for the court to consider the motion under CRCP 41.
2014 COA 15. No. 12CA1005. People v. Bassford.
Sentence Illegal—Crim.P. 35(a)—Removal of Probation Requirement—Resentencing.
Defendant was charged in Denver District Court (case No. 02CR5403) with one count of violating the Colorado Organized Crime Control Act (COCCA), and with multiple counts of securities fraud and felony theft. He later was charged in Denver District Court (case No. 03CR4422) with one count each of felony theft, defrauding a secured creditor, and forgery. The cases were consolidated for trial, and a jury found defendant guilty of all counts ultimately tried.
The court sentenced defendant to twelve years in Department of Corrections (DOC) custody and then to twelve years of probation. On appeal, the forgery conviction was vacated, but the judgment and sentence were affirmed as to all other counts. Thereafter, defendant filed a Crim.P. 35(a) motion, claiming that the probation portion of his sentence was illegal. The trial court vacated the original sentence and then resentenced defendant to twenty-two years in DOC custody, plus mandatory parole; suspended the entire DOC sentence (giving defendant credit for a little more than twelve years of time served); and imposed twelve years of probation with the economic crime unit.
On appeal, defendant contended that his original sentence was illegal because the court ordered him to complete probation after his release from DOC custody, and that the district court erred by resentencing him rather than simply removing the probation requirement. Defendant’s original sentence was illegal, and the court was without statutory authority to suspend ten years of the eighteen-year DOC sentence on the condition that defendant complete economic crime probation after the initial eight years in the DOC. Although Crim.P. 35(b) authorizes a district court to reduce a sentence, the district court erred in relying on Crim.P. 35(b) to modify defendant’s sentence, because the court did not reduce his sentence. However, because defendant’s original sentence was illegal in its entirety, the appropriate remedy was to remand the case to the trial court for resentencing.
2014 COA 16. No. 13CA0094. Shigo, LLC v. Hocker.
Homestead Exemption Statute—Proper Interpretation—Writ of Execution—Exemption of Water Rights—Levying Shares to Satisfy Judgment.
Plaintiffs claimed that Hocker had operated a Ponzi scheme that defrauded them of more than $6 million. Hocker failed to defend the action, and the district court entered a default judgment against her. The partiesthen stipulated that Hocker would pay plaintiffs damages amounting to $4.4 million, plus interest.Plaintiffs were unable to collect from Hocker.
In an attempt to reach some of Hocker’s assets, they served Hocker with a writ of execution, seeking to levy Hocker’s shares in the Highland Ditch Company (Highland). Hocker owns an undivided 50% interest in two and three-quarter shares of Highland stock. The Highland shares represent Hocker’s right to use water that runs through a mutually owned ditch, a branch of which leads to a pond on the thirty-five-acre farm that Hocker owns with her husband.Hocker protested, and filed a claim under the homestead exemption, asserting that the shares could not be levied.The court denied Hocker’s claim of exemption, and Hocker brought this appeal.
Hocker argued that the district court erred in concluding that the homestead exemption “does not apply to water stock certificates,” and “does not preclude the seizure and levy of the Stock Certificates” at issue in this case. The homestead exemption for a “farm” includes not just the farm’s soil, but also the water rights appurtenant to the land. Shares of stock in a mutual ditch company represent water rights. However, because the record is not clear as to whether the water rights represented by the Highland shares are necessary to the use and enjoyment of the land in question as a farm, the case was remanded to the trial court for further findings on that matter.
2014 COA 17. No. 13CA0188. Colorado Airport Parking, LLC v. Department of Aviation.
Ground Transportation Rules and Regulations—Privilege Fee—Airport Expenses—Reasonable Apportionment.
Plaintiffs own large parking lots located on private land proximate to Denver International Airport (DIA), and provide their customers with shuttle service to and from the airport. This dispute arose when defendants (department) implemented Rule 100.22 of its Ground Transportation Rules and Regulations, which assessed a “privilege fee” of 8% of the gross revenues of off-site parking lot operators (such as plaintiffs).
Plaintiffs argued that Rule 100.22 should be invalidated because it violated § 5-16(e) of the Denver Revised Municipal Code regarding allocation of airport expenses. After a two-day hearing, the hearing officer issued an order denying plaintiffs’ petitions. After reviewing the administrative record but without holding a hearing, the district court issued an order denying all of plaintiffs’ requests for relief.
Plaintiffs contended that the district court’s order must be reversed because the hearing officer misapplied the law in his determination that the department reasonably apportioned the expenses of the airport. Because plaintiffs generate all, or almost all, of their revenues through “use” of the airport—unlike taxis, hotel shuttles, mountain express vehicles, and limousines, which are not entirely dependent on the airport for their revenues—it is not unreasonable for the department to employ a different method to assess plaintiffs’ fees based on those revenues. Additionally, it is rational to use revenues as the basis for assessing fees and apportioning costs to users of airport facilities. Further, it is rational for the department to employ a revenue collection method that achieves cost savings. However, because the hearing officer did not make any findings on how the department arrived at the 8% figure, the case was remanded for further findings on this issue to determine whether the use of the 8% figure results in a reasonable apportionment of costs.
2014 COA 18. No. 13CA0280. Foster v. Board of Governors of Colorado State University System.
Breach of Oral Bailment Contract—Tort—Colorado Governmental Immunity Act.
This case arose from a fire at Colorado State University’s Equine Reproduction Laboratory (Lab) that destroyed plaintiff Heather Foster’s property. Foster sued the Lab, asserting a claim for breach of an oral contract for bailment. Defendant, the Board of Governors of the Colorado State University System (CSU) filed a motion to dismiss Foster’s claim for breach of an oral bailment contract based on immunity under the Colorado Governmental Immunity Act (CGIA), which the trial court denied.
The sole issue on appeal was whether Foster’s claim for damages for the destruction of her bailed property lies in tort or could lie in tort for purposes of the CGIA. The bailee’s liability will depend on whether the bailor establishes that the bailee acted negligently regardless of whether such a claim is pleaded in contract or in tort. Here, the allegations in Foster’s complaint sound in tort or could support a tort claim.
First, though Foster has phrased her claim as one for breach of contract, CSU’s liability for damage to the bailed goods would depend on proof of negligence. Second, the duty CSU allegedly breached is one implied by law—a duty to act with reasonable care—not one that arises from promises made between the parties. Third, an action against a bailee for damage to or destruction of bailed property can be pleaded alternatively in contract or in tort. Therefore, because Foster’s claim for the destruction of her bailed property lies in tort or could lie in tort, it is barred by the CGIA, unless an exception to immunity applies. The district court’s order was reversed and the case was remanded to consider and rule on Foster’s assertion that the exception to immunity applies.
2014 COA 19. No. 13CA0538. In re the Marriage of Dorsey.
Post-Dissolution of Marriage—Arbitration Provision.
The parties’ marriage ended in 2007. They entered into a separation agreement dividing their marital property and debt, and resolving maintenance and attorney fees. Under the property division, husband agreed to pay wife $4 million, in installment payments of no less than $40,000 a month for fifty-nine months, and the balance by December 20, 2011. Husband was entitled to reimbursement for certain expenses incurred in selling their properties and in facilitating wife’s purchase of her new home, and was entitled to apply any proceeds from the sale of property that was awarded to him to the amount owed to wife.
The separation agreement had a dispute resolution provision providing for mediation and then arbitration, if mediation was unsuccessful. The parties could not agree on the expenses for which husband was entitled to a credit, and wife refused to mediate/arbitrate. Husband requested the court order the parties to mediate/arbitrate pursuant to the agreement. Wife objected, arguing that the governing law provision should be read to mean that the courts should decide any disputes between the parties.
The district court ordered the parties to mediate/arbitrate. The arbitrator entered an award resolving their dispute concerning the final amount owed based on the credits. Wife moved to vacate the arbitrator’s award under CRS § 13-22-223(1)(d), contending that the arbitrator exceeded her authority by interpreting the separation agreement. The court denied the motion and confirmed the award. Wife appealed, and the Colorado Court of Appeals affirmed.
The arbitration provision in the separation agreement was extremely broad in scope, covering “any claim or controversy arising out of or as a result of [the parties’] dissolution of marriage.” The dispute regarding the credit due husband was clearly encompassed by this language. Wife’s argument regarding the “governing law and jurisdiction” provision does not supersede the arbitration clause. Because the dispute was subject to arbitration, the Court did not need to address wife’s contentions concerning the merits of the arbitrator’s award.
Colorado Court of Appeals Opinions