Not a CBA Member? Join Now!
Find A Lawyer Directory
Legal Directory

Colorado Court of Appeals Opinions
March 15, 2012

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.

2012 COA 36. No. 08CA0128. People v. Ujaama.
Murder—Confrontation Rights—CRS § 16-10-402—Testimony—Attempted Concealment of Death.

Defendant appealed the judgments of conviction entered on jury verdicts finding him guilty of first-degree murder (after deliberation) and aggravated motor vehicle theft. The judgments were affirmed.

While defendant was living in Denver with his wife and his 6-year-old stepdaughter, I.R., wife began a romantic relationship with the victim, Timothy Kaufman. Defendant lured Kaufman to their home and shot him several times, killing him.

Defendant contended that the trial court violated his federal confrontation rights by allowing I.R. to testify via closed-circuit television without sufficient grounds to do so. CRS § 16-10-402 authorizes the use of closed-circuit television to obtain the live testimony of a witness who, at the time of a trial, is under 12 years of age and where the judge determines that testimony by the witness in the courtroom and in the presence of the defendant would result in the witness suffering serious emotional distress or trauma such that the witness would not be able to reasonably communicate. Here, the prosecution based its motion on the following offers of proof: defendant was I.R.’s stepfather; she observed him kill a person she knew; she had not seen defendant since the shooting; she had been in counseling for several months; and she would suffer serious emotional distress if forced to testify in front of defendant and would not be able to communicate what she witnessed. Under the circumstances, the trial court did not abuse its discretion in using an offer of proof in lieu of actual evidence to resolve the prosecution’s motion.

Defendant also contended that his aggravated motor vehicle theft conviction should be reversed because there was insufficient evidence that he committed the offense underlying that crime. Here, the charged underlying offense for aggravated motor vehicle theft was attempted concealment of a death. The prosecution presented evidence that after killing Kaufman, defendant wrapped the body in a rug, put it in the trunk of a car, drove the car to a different county, abandoned the car by the side of a road, and did not reveal the location of the car or body to the police when he turned himself in. This evidence was sufficient to allow the jury to conclude that defendant took a substantial step toward concealing Kaufman’s death.

Defendant raised seven other issues on appeal. However, those issues were not properly preserved for appellate review. The judgments of conviction were affirmed.

2012 COA 37. No. 08CA0775. People v. Nelson.
Standing—Search—Resident vs. Guest—Motion to Suppress Evidence—Probable Cause—Exigent Circumstances—Independent Source Exception—Exclusionary Rule.

Defendant Harvey Nelson appealed the judgment of conviction entered on jury verdicts finding him guilty of numerous illegal substance-related offenses. The case was remanded.

On January 27, 2006, police officers went to an apartment building after receiving a tip from an anonymous informant that narcotics distribution was occurring in one of the apartments. The officers knocked on the apartment door, and Nelson answered it. Another man inside the apartment attempted to flee the apartment by running out the back door. The officers recovered a glass pipe commonly used for smoking marijuana from a table inside the apartment and methamphetamine from the other man’s pockets.

The People contended that Nelson lacked standing to challenge the search because he was not an “overnight guest” and, after the entry and search began, he stated that he did not live there. However, undisputed facts adduced at the suppression hearing showed that Nelson was living in the apartment. Thus, he had standing to challenge the entry and search.

Nelson contended that the trial court erred in denying his motion to suppress evidence based on police officers’ unconstitutional entry and search of his residence. The officers testified that they wished to conduct a “knock and talk” investigation to seek consent to enter the apartment. Their ruse of claiming to be maintenance workers was intended only to get a person inside the apartment to open the door; it was not intended or used to deceive any person into giving consent to enter or search the apartment. Therefore, the officers’ ruse was permissible. Further, the officers’ subsequent entry into the apartment was justified by probable cause and exigent circumstances. The officers knew from a reliable informant that narcotics distribution was possibly taking place at the apartment and that a large quantity of methamphetamine was reportedly inside, and the officers personally observed the glass pipe and the other man fleeing before entering the apartment.

Nelson contended that, even if the initial entry into the apartment was constitutional, his girlfriend’s subsequent consent to search was invalid as to him. Because the evidence proved that Nelson lived there, the girlfriend’s consent to search was invalid in light of Nelson’s refusal to consent. The Court of Appeals ruled there was probable cause for issuance of the search warrant. However, the case was remanded to determine whether the independent source exception to the exclusionary rule permitted the recovery and use at trial of the items seized pursuant to issuance of the search warrant, despite the illegality of the consent search.

2012 COA 38. No. 09CA1745. People v. Casias.
Murder—Child Abuse—Other Acts Evidence—Mental State—Accident.

Defendant appealed the judgments of conviction entered on jury verdicts finding him guilty of first-degree murder (causing the death of a child under the age of 12 by one in a position of trust) and knowing or reckless child abuse resulting in death. The judgments were reversed and the case was remanded for a new trial.

Defendant’s girlfriend left defendant at home with their 7-week-old baby, J.C., who died in defendant’s care. At trial, the People presented expert witnesses who opined that J.C. died as the result of non-accidental traumatic brain injury caused by being violently shaken or slammed against a hard surface. The jury convicted defendant as charged.

Defendant contended that the trial court erroneously admitted evidence that he had, on two previous occasions, mistreated his other daughter, A.C. The Court of Appeals agreed for two reasons. First, the prosecution offered evidence of defendant's alleged past acts only to prove his mental state, but those acts (in anger, defendant slapped, shook, and roughly handled A.C.) did not result in serious injury or death to A.C. Second, those acts bear no resemblance to the acts he was alleged to have committed against J.C. Defendant was alleged to have injured J.C. by hitting her hand with a hairbrush, violently shaking her, and slamming her against a hard surface. Therefore, because of the dissimilarities between the acts against A.C. and the alleged acts against J.C., the acts against A.C. were not relevant to prove the culpable mental state element of child abuse resulting in death. Consequently, the trial court abused its discretion in admitting them for this purpose and to disprove defendant’s claim of mistake or accident. Because there was a reasonable probability that the admission of the other acts evidence contributed to defendant’s conviction, defendant’s convictions were reversed and the case was remanded for a new trial.

2012 COA 39. No. 09CA1949. People v. Finney.
Deferred Judgment—Revocation—Due Process—Advisement—Sentence—Mitigating Evidence—Ineffective Assistance of Counsel.

Defendant appealed the revocation of his deferred judgment conviction. The judgment was affirmed.

In 2003, defendant was charged with three counts of class 3 felony sexual assault and three counts of class 4 felony sexual assault. Defendant entered into a deferred judgment, subsequently violated the conditions of the deferred judgment, waived any further advisement on revocation of the deferred judgment, and admitted to violating the deferred judgment. The trial court sentenced him on revocation of the deferred judgment and denied his post-conviction motions.

Defendant contended that the second judge’s denial of his post-conviction motions was error. Specifically, he argued that the Constitution’s Due Process Clause requires that the second judge advise him of the penalties he faced if the deferred judgment agreement were to be revoked. The Court of Appeals disagreed. Plea counsel, in defendant’s presence, waived defendant’s statutory right to be advised of the possible penalties defendant faced if the deferred judgment agreement were to be revoked. By its terms, Crim.P. 11 expressly applies to the entry of the guilty plea. Crim.P. 11 does not require the court to inform defendant of the possible penalties he could face when revoking the deferred judgment agreement in which he expressly waived a formal advisement and for which he repeatedly was informed of the potential penalties.

Defendant raised two contentions about the sentencing hearing. He argued that the fifth judge (1) denied him his right to offer mitigating evidence at the sentencing hearing when the court denied plea counsel’s motion to continue the hearing; and (2) ignored mitigating evidence when he imposed sentence. However, defendant did not demonstrate that he actually was prejudiced by the trial court’s decision to deny his request for a continuance. As a result, the fifth judge did not abuse his discretion when he denied that motion. Further, defendant did not raise the issue of mitigation before the trial court, so the Court declined to address that issue.

Defendant also argued that (1) the second judge unreasonably limited the evidence he could submit at the post-conviction hearing; and (2) plea counsel was ineffective in his representation of defendant during the deferred judgment revocation process. The Court disagreed. The trial court did not abuse its discretion by limiting the time in which defendant presented evidence on his allegation either that plea counsel was ineffective or that the court erroneously denied his motion to reconsider his sentence. Defendant had sufficient opportunity to present evidence in support of his post-conviction claims. Further, the record does not support a conclusion that there was a reasonable probability that, but for plea counsel’s alleged errors, defendant would not have confessed the motion to revoke his deferred judgment and would have insisted on having a hearing on the motion. Therefore, defendant was not prejudiced by plea counsel’s alleged deficient performance.

Defendant asserted, and the prosecution conceded, that the mittimus incorrectly stated that his sentence includes a mandatory three-year term of parole. Under CRS § 18-1.3-1006(1)(b), defendant’s conviction required a ten-year-to-life parole term. Thus, the case was remanded to correct the mittimus to reflect the proper parole term.

2012 COA 40. No. 10CA0383. People v. Vecellio.
Sexual Assault—Child—Position of Trust—Enticement—Conspiracy—Evidence—C.R.E. 404(b).

Defendant appealed the judgment of conviction entered on jury verdicts finding him guilty of conspiracy to commit sexual assault on a child by one in a position of trust; solicitation to commit sexual assault on a child by one in a position of trust; criminal attempt to commit sexual assault on a child; and enticement of a child. The judgment was affirmed.

Defendant, a police officer for the University of Colorado at Colorado Springs (UCCS), contacted “Karina” in an Internet chat room and expressed interest in having sex with her and her 13-year-old daughter, “Shayla.” In actuality, Karina was an undercover police officer.

Defendant contended that the evidence was insufficient to convict him of conspiracy to commit sexual assault on a child by one in a position of trust. Colorado’s conspiracy statute adopts the unilateral approach to conspiracy. Specifically, a defendant may be convicted of conspiracy by agreeing with another party to commit a crime, regardless of whether the other party is an undercover police officer who feigns agreement. Accordingly, the fact that defendant’s agreement was made with an undercover police officer does not, as a matter of law, preclude his conviction for conspiracy, and the evidence, including defendant’s conversations with Katrina to commit sexual assault on her 13-year-old daughter, driving to meet Katrina and Shayla, and purchasing condoms and beer for that purpose, was sufficient to support defendant’s conviction for conspiracy to commit sexual assault on a child by one in a position of trust. Additionally, as a result of these findings, the jury instructions on this issue were proper.

Defendant also contended that the evidence was insufficient to convict him of enticement of a child, because no child was involved in this case and because he never communicated with anyone pretending to be a child. A defendant may be convicted of enticement regardless of whether the victim is real, provided the defendant believed the victim was under 15 years of age and the other statutory elements are met. The fact that Shayla did not exist and that defendant never communicated with her directly does not preclude his conviction for enticement, and the evidence here was sufficient to uphold defendant’s conviction for enticement.

Defendant further contended that the trial court erred in permitting the prosecutor to ask him questions about his sexual interests that he posted on his Adult Friend Finder profile, prior sex acts, and employment history, because such evidence was inadmissible as improper character evidence. The evidence, however, did not implicate C.R.E. 404(b) and was admissible because it was relevant to rebut defendant’s theory of defense and was not unduly prejudicial.

2012 COA 41. No. 10CA2185. People v. Estes.
Voir Dire—Presumption of Innocence—Evidence—Testimony—Prosecutorial Misconduct.

Defendant appealed from the judgment entered on jury verdicts finding him guilty of felony menacing and assault in the third degree. The judgment was affirmed.

Defendant objected, for the first time on appeal, to the comments made by the trial court during voir dire. The trial court should have avoided any suggestion that defendant “did something.” Although the court explained that defendant may have done nothing illegal, its statements were confusing and could have suggested to prospective jurors that the court believed that the charges leveled against defendant were warranted. The court’s use of “we” also improperly aligned the court with the prosecution, implying that it found the evidence against defendant sufficient to justify his standing trial. Nonetheless, although the court’s explanation was confusing, it did not constitute reversible error, because it did not lessen the prosecution’s burden of proof or refute the presumption of innocence.

Defendant contended that the trial court erred in allowing testimony about the probability of finding missing guns in criminal cases. Evidence that the police rarely recover a missing gun in cases in which one is reported was offered to rebut defendant’s inference that the failure to recover a gun decreased the probability that he actually had possessed one. Therefore, the court did not abuse its discretion in admitting this evidence.

Defendant also made allegations of prosecutorial misconduct. The prosecutor did not impermissibly suggest in his opening statement that defendant had lied to the police; the prosecutor merely referred to the evidence to be adduced at trial and inferences from that evidence. It was not improper for the prosecution to discuss self-defense during closing argument, because the discussion referred to the strength and significance of the evidence. Although it was not proper for the prosecution, during closing argument, to tell the jury that defendant lost the presumption of innocence, the misconduct was not sufficiently prejudicial to undermine the confidence in the verdict, especially in light of the evidence in this case against defendant. Therefore, reversal was not warranted.

2012 COA 42. No. 10CA2291. Colorado Ethics Watch v. Clear the Bench Colorado.
Judicial Retention—Election Laws Violation—Issue Committee Versus Political Committee—Colorado Campaign Finance Law—Contribution Limits.

Colorado Ethics Watch brought this action alleging that Clear the Bench Colorado (CTBC), an organization that opposed the retention of the three justices of the Colorado Supreme Court who stood for retention in 2010, violated state election laws by registering as an issue committee rather than as a political committee. The administrative law judge’s holding that CTBC was a political committee was affirmed.

The issue in this appeal was whether a committee that supports or opposes the retention of a justice or judge constitutes an issue committee or a political committee for purposes of Colorado campaign finance law. The distinction is significant primarily because issue committees are not subject to contribution limits and political committees are. An issue committee is one that supports or opposes a ballot issue or ballot question; judicial retention is not a “ballot issue” or “ballot question” for purposes of campaign finance law; therefore, CTBC is not an issue committee. A political committee is one that supports or opposes the nomination or election of a candidate. Because a judge or justice standing for retention is a candidate in an election, CTBC is a political committee.

2012 COA 43. No. 10CA2617. Crow, MD v. Penrose-St. Francis Healthcare System.
Private Hospital Peer Review Process—Subpoena to Obtain Records—State Administrative Procedure Act—Colorado Professional Review Act—Exhaustion of Remedies—Burden of Proof.

Jimmie R. Crow, MD appealed the judgment of the district court affirming the decision of Penrose-St. Francis Healthcare System (Penrose) to terminate Crow’s hospital staff privileges and denying his request to subpoena records of the peer review committee. The judgment was affirmed in part and reversed in part, and the case was remanded for further proceedings.

In October 2004, Crow performed surgery on J.C., who died later that month. Penrose began a peer review process to address whether Crow failed to treat the patient properly and in a timely manner. The district court quashed Crow’s subpoena to obtain the peer review records, granted Penrose’s motion to dismiss several of the amended complaint claims, and affirmed Penrose’s decision to terminate Crow’s hospital staff privileges.

Crow contended that private hospital peer review is a state administrative action subject to judicial review under the state Administrative Procedure Act (APA). Because Penrose’s peer review process to determine whether the private hospital will continue to extend hospital staff privileges to a physician is not state agency action, the APA does not govern Crow’s claims. Instead, judicial review of administrative actions by private hospitals must be conducted pursuant to C.R.C.P. 106(a)(4).

Crow also contended that the Colorado Professional Review Act (CPRA) authorized his subpoena of the records of Penrose’s peer review committee and board and granted him the right to those records. CRS § 12-36.5-104(10)(b) plainly provides that the records “shall be subject to subpoena and available for use in any appeal or de novo proceeding brought pursuant to this part 1” and “by a physician seeking judicial review.” Accordingly, the records Crow requested were subject to subpoena before the administrative review panel, and he is entitled to a new hearing before that body after the records are provided. Further, implicit in this language is the authority of the appellate review panel to issue the subpoenas.

Crow also claimed that he exhausted his administrative remedies regarding summary suspension because no summary suspension hearing right exists. Because Crow failed to avail himself of the proper administrative remedy, the district court did not have jurisdiction to review the summary suspension.

Crow further argued that the hearing panel applied the incorrect burden of proof. Even if the incorrect standard of proof was applied, the alternative finding makes it clear that the outcome would have been the same under either standard.

2012 COA 44. No. 11CA0020. People v. Welliver.
Restitution—Unemployment—Penalty—Colorado Employment Security Act—Colorado Department of Labor and Employment—Due Process.

Defendant appealed the order for restitution, including a penalty imposed by the Colorado Employment Security Act (CESA). The order was affirmed in part and reversed in part, and the case was remanded with directions.

Defendant provided false information to the Colorado Department of Labor and Employment (CDLE) when he represented that he was unemployed and earned no income. Based on this conduct, defendant was charged with one count of felony theft, one count of computer crime, and one count of forgery. He was not criminally charged under the provisions of the CESA. Defendant entered into a plea agreement, and the trial court sentenced him to seven years’ probation and ordered him to pay $11,905 in restitution, including the CESA penalty.

Defendant contended that the restitution order violated his right to due process because the prosecution did not prove the amount of the alleged victim’s actual pecuniary loss by a preponderance of the evidence. Other than an objection to the penalty, defendant did not object to the amount of the CDLE’s pecuniary loss as documented in the attachments to the presentence report, which included the overpayments that were paid by the CDLE to defendant in the total amount of $7,830 and a 50% percent statutory penalty of $3,915. Accordingly, the court was justified in relying on the report to determine the amount of restitution.

Defendant also contended that the trial court erred when it included a 50% statutory penalty as restitution. The penalty authorized in CRS § 8-81-101(4)(a)(II) is to be paid into the unemployment revenue fund, which is a general fund used for such enforcement purposes, and the amount cannot be specifically attributed to defendant’s conduct. Thus, there is no evidence in the record that the amount of the penalty ($3,915) correlates in any way to the cost that the CDLE incurred to investigate and enforce the provisions of the CESA against defendant. Without such a correlation, there is no loss suffered by the CDLE that can be “reasonably calculated” under the restitution act. Accordingly, the 50% penalty was not properly included as restitution because it is not a “pecuniary loss that was suffered by” the CDLE as a “natural and probable sequence produced” by defendant’s conduct. Therefore, the trial court abused its discretion when it included the penalty as restitution.

2012 COA 45. No. 11CA0146. In re 2010 Denver County Grand Jury, and Concerning the Grand Jury Report Issued December 8, 2010.
Grand Jury—Report—Public Document—Misfeasance.

This appeal involved the potential public release of a report, issued by a grand jury, that declined to return an indictment in an investigation involving alleged perjury. Special prosecutor Scott W. Storey, the First Judicial District Attorney, appealed the court’s order declining to release the report, contending that the report met the “public interest” criteria of CRS § 16-5-205.5. He also asserted that the court erroneously refused to extend the term of the grand jury so that it could consider whether to modify its report. The order was affirmed.

A Denver County grand jury convened in September 2010 to investigate allegations of perjury by a police officer. The grand jury did not return an indictment. It did, however, issue a report concerning its investigation, which identified purported deficiencies in policies and procedures relating primarily to the Denver Police Department. The grand jury sought to make the report public pursuant to CRS § 16-5-205.5. The trial court reviewed the report and declined to release it as a public document.

The special prosecutor asserted that the grand jury report contained allegations of government misfeasance within the meaning of CRS § 16-5-205.5(5) and, therefore, should have become a public document. Although CRS § 16-5-205.5 may provide for exposure of “government actions that fall short of criminal activity, but are nonetheless not good government,” misfeasance involves conduct that is not simply bad public policy, but an illegal, wrongful, or corrupt exercise of government power. The grand jury’s recommendations regarding public policy and other matters of judgment or discretion did not constitute allegations of government misfeasance under CRS § 16-5-205.5. The report does not sufficiently allege misfeasance and therefore does not qualify for public release.

The special prosecutor also contended that the court erroneously refused to extend the term of the grand jury so it could review and modify its report, or draft a new one, in light of the court’s order denying publication. The role of the district court is to review the report independently to determine whether, on its face, the report satisfies the requirement that it concern matters of public interest. The governing statutes cast the district court as an independent gatekeeper, not as an active partner in the publication of a report. Further, minor revisions or the use of different terminology would not change the fact that the grand jury report did not allege sufficient misconduct to permit publication under CRS § 16-5-205.5. The grand jury’s desire to revise its report for publication cannot override the court’s determination that the allegations in the report do not meet the public interest standard. Therefore, the trial court did not abuse its discretion by refusing to extend the grand jury’s term.

2012 COA 46. No. 11CA0230. National Farmers Union Property and Casualty Company v. Garfinkel.
Insurance—Property Damage—Injuries—Business Pursuits Exclusion—Owned Premises Exclusion.

Plaintiff National Farmers Union Property and Casualty Company (NFU) appealed the trial court’s summary judgment in favor of defendants Larry Garfinkel; Kane Real Estate & Development, LLLP; Daniel B. Willie; Dessa S. Willie; Moore P. Huffman, Jr.; General Property Mortgage, Inc.; Great Northern Insurance Company; and Ranch at Roaring Fork Homeowners Association, Inc. The judgment was affirmed in part and reversed in part, and the case was remanded for further proceedings.

In 2008, a wildfire in Garfield County injured Garfinkel and damaged the property of the other defendants. In two lawsuits (underlying lawsuits), defendants sued Larry Gerbaz and 100 Road Cattle Company LLC (the LLC), alleging that (1) Gerbaz was acting individually and as an agent of the LLC when he burned slash piles on the LLC’s property (farm property); (2) he was negligent in leaving the fires unattended; and (3) his negligence caused their losses. At the time of the fire, NFU had in effect a farm liability insurance policy covering the farm property where the slash-burning took place. The LLC was the named insured. NFU also had in effect a homeowners insurance policy insuring the residence of Gerbaz, which was adjacent to the farm property. Gerbaz was the named insured, and Molly Gerbaz, his wife, also qualified as an insured under the policy.

NFU contended that, because the farm property was being leased to third parties for haying and pasturing at the time of the April 2008 wildfire, coverage for defendants’ losses specifically was excluded by the business pursuits exclusion in the homeowners policy, and the trial court erred in ruling to the contrary. When an activity evinces “continuity” and “profit motive,” it is a business pursuit within the meaning of the business pursuits exclusion. Because issues of material fact remained as to whether the continuity and profit motive elements of the business pursuits test were present here, the case was remanded for these issues to be decided by the finder of fact.

NFU also contended that the trial court erred in finding that the owned premises exclusion does not preclude coverage in this case. This exclusion applies only where the insured is the title owner of the property. It does not apply to a situation where title to the property is held by an entity in which an insured has an interest, even a controlling interest. Here, it is undisputed that the LLC held title to the farm property where the slash burning occurred. Although Molly Gerbaz was an owner of the LLC, the LLC remained a separate legal entity. Therefore, the NFU policy exclusion barring coverage for injuries and damage arising out of uninsured premises owned by an insured does not apply.

2012 COA 47. No. 11CA0496. Young v. Bush.
Derivative Action—Dismissal—Independent—Inquiry—Direct Claim—Breach of Settlement.

Plaintiff Daniel E. Young, as an individual and on behalf of Cutthroat Ranch LLC, Quebec Plaza LLC, University Park Place, LLC, and Leetsdale Self Storage, LLC (the LLCs), appealed the trial court’s summary judgment dismissing his claims against defendants Eric Bush, Bush Development, Inc., and the LLCs. The judgment was affirmed in part and reversed in part, and the case was remanded for further proceedings.

Eric Bush is the founder and president of Bush Development. Bush also was the founder and sole manager of the LLCs, which were formed to acquire and develop real estate. The LLCs had between four and seven members each, including plaintiff. In 2008, plaintiff began questioning Bush’s management of the LLCs and subsequently filed an action against Bush, Bush Development, and the LLCs on behalf of himself and the other LLC members. The trial court entered summary judgment for defendants, dismissing the derivative action.

Plaintiff contended that the trial court erred in dismissing his derivative claims. CRS § 7-80-716 requires a court to dismiss a derivative action against an LLC if any of the individuals or entities described in subsection (2) has determined “in good faith, after conducting an inquiry upon which the determination is based,” that maintenance of the derivative action is not in the best interests of the LLC. The best interests determination must be made by independent members and based on an adequate inquiry producing facts sufficient to enable LLC members to make an informed and good-faith decision on whether maintenance of the derivative action is in the LLC’s best interests. The facts set forth in plaintiff’s affidavit showed business and family relationships sufficient to create a material question of fact as to the independence of the LLC members who made the best interests determination. The record did not indicate whether their inquiry was adequate. Because there was insufficient evidence in the record, the case was returned to the trial court to allow plaintiff to conduct discovery on the issues of independence and adequate inquiry, and to allow the court to assess whether the derivative claims should be dismissed under CRS § 7-80-716.

Plaintiff also contended that his third claim for relief (for breach of his settlement agreement with Eric Bush), twelfth claim (for access to records of Quebec Plaza LLC), and thirteenth claim (for an accounting with respect to Quebec Plaza) were direct claims, not derivative claims. He argued that he should have been allowed to pursue them notwithstanding the trial court’s dismissal of the derivative claims on defendants’ motion. Only plaintiff’s breach of settlement claim is a direct claim, because it alleged an injury separate and distinct from any injury suffered by the LLCs or the other LLC members and any relief would go to him personally rather than to the LLCs. Plaintiff did not allege that he was asserting claims twelve and thirteen solely in his individual capacity, nor did he provide further factual allegations suggesting that that was his intent. Therefore, the court did not err in dismissing those claims as direct claims.

2012 COA 48. No. 11CA0830. Estate of Guido v. Exempla, Inc.
Arbitration Award—Confirmation Proceedings—Statute of Limitations.

Plaintiff, the Estate of Salvadore Guido (estate), appealed the district court’s order denying its motion to confirm an arbitration award as time-barred. The order was reversed and the case was remanded.

Salvadore Guido brought a medical malpractice action against Lutheran Medical Center, which was a predecessor entity to defendant Exempla, Inc. (Exempla). The parties agreed to submit the claims to arbitration and, in June 1998, the arbitrator awarded Guido $20,000, plus interest and costs. Guido died in September 2009. In December 2010, the estate filed a motion to confirm the arbitrator’s award, alleging that the amounts awarded to Guido in the arbitration were never paid or satisfied.

The estate contended that the district court erred in denying its confirmation motion as time-barred under the six-year statute of limitations applicable to actions to recover a liquidated debt set forth in CRS § 13-80-103.5(1)(a). An application for confirmation is not a complaint that initiates a civil action in the district court. There is a clear statutory framework for the confirmation process under the Colorado Uniform Arbitration Act of 1975, which does not impose a deadline to file an application to confirm the award. Therefore, the district court mischaracterized the confirmation proceeding as an action to recover a liquidated debt pursuant to CRS § 13-80-103.5(1)(a). Accordingly, the order was reversed and the case was remanded to the district court with directions to reconsider the estate’s motion to confirm the arbitration award.

2012 COA 49. No. 11CA2634. Kowalchik v. Brohl, Exec. Dir., Colorado Dep’t of Revenue.
Conservative Easement—Tax Credits—Transferees—Taxpayer—Tax Liability—Tax Matters Representative—Joinder of Parties—Due Process.

In this dispute involving conservation easement (CE) tax credits, defendant Barbara Brohl, Executive Director of the Colorado Department of Revenue (Department), petitioned for interlocutory review of the trial court’s orders in favor of plaintiffs. The orders were affirmed in part and reversed in part, and the case was remanded.

Plaintiffs donated CEs purportedly generating several million dollars of CE tax credits. They sold these credits to transferees, who claimed the credits on their state income tax returns or retained them for use against future tax liability. The Department disallowed all of the claimed tax credits. The trial court held that people who purchased CE tax credits from plaintiffs (1) are not within the statutory definition of “taxpayer” under CRS § 39-22-522(1); (2) have no tax liability for deficiencies, interest, and penalties for the improper claim of a tax credit; (3) need not be joined as necessary parties to this action under C.R.C.P. 19(a); and (4) may be given notice of this proceeding by mail rather than being personally served under C.R.C.P. 4.

The Department argued that the General Assembly intended to require transferees to be parties. The General Assembly added CRS § 39-22-522.5, which provided detailed court procedures as an alternative to administrative review, but did not require participation by transferees. Instead, the new section provided transferees with an absolute right to intervene. By acquiring a CE credit and claiming it as a deduction, a transferee agrees to be represented by its “tax matters representatives” (TMRs) under CRS § 39-22-522(7)(i). The sale of CE tax credits creates a sufficient alignment of interests between transferees and TMRs, who understand that they are acting in a representative capacity. Therefore, due process does not require joinder of transferees under C.R.C.P. 19(a) in litigation where the transferee is represented by its TMR. Further, mailing notice of this proceeding to all transferees and allowing this action to proceed without service of a summons and complaint on each transferee who chooses not to intervene satisfies due process. Finally, the court’s holding that a transferee is not a “taxpayer,” subject to deficiencies, interest, and penalties, was reversed.

Colorado Court of Appeals Opinions