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Colorado Court of Appeals Opinions
March 8, 2007

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.

No. 04CA1402. Atmel Corporation v. Vitesse Semiconductor Corporation.
Preliminary Injunction—Bond—Attorney Fees—Prejudgment Interest.

Defendants (collectively, Vitesse) appeal the trial court’s order granting a portion of their requested attorney fees and denying prejudgment interest on the award. Plaintiff (Atmel) cross-appeals the award of attorney fees. The order is affirmed.

At Atmel’s request, the district court entered a one-year preliminary injunction against Vitesse and set a $5,000 injunction bond pursuant to C.R.C.P. 65(c). On remand, after a division of the Colorado Court of Appeals disapproved the preliminary injunction, the trial court awarded Vitesse $75,000 in attorney fees and declined to award prejudgment interest.

Atmel contends that the trial court erred in awarding attorney fees in excess of the original $5,000 injunction bond. As a general rule, a wrongfully enjoined party may not recover damages in excess of the bond amount. However, there is an exception to the general rule where the enjoined party has diligently sought relief, the injunction has been set aside, and an appellate court has determined that the trial court abused its discretion in ordering an insufficient injunction bond as in this case.

Vitesse contends that the court erred in not awarding all of its attorney fees. The court’s ruling rests well within the bounds of its discretion. Therefore, the trial court’s award of $75,000 is a reasonable amount of fees for the entirety of this action, including further litigation.

Vitesse claims the trial court erred when it declined to award prejudgment interest on the $75,000 award of attorney fees. Here, the fees did not constitute an element of actual damages but were awarded to shift part of the burden of litigation. Accordingly, the trial court properly declined to award prejudgment interest. The order is affirmed.

No. 05CA0096. People v. Martinez.
Sexual Exploitation of Children—Unlawful Manufacture of a Schedule II Controlled Substance—Unlawful Possession of a Schedule II Controlled Substance—Motion to Suppress Evidence—Search Warrant—CRS § 18-18-407(1)(f)—Unconstitutional—Handgun—Circumstantial Evidence.

Defendant appeals the judgment of conviction entered on jury verdicts finding him guilty of sexual exploitation of children, unlawful manufacture of a schedule II controlled substance, and unlawful possession of a schedule II controlled substance. Defendant also appeals the sentence imposed on the jury’s finding that he committed the possession offense as a special offender by having a deadly weapon available for use. The judgment is affirmed.

Defendant argues that the trial court erred by denying his motion to suppress evidence obtained as the result of an allegedly unlawful search. Here, police officers applied for a warrant to search a single-story home occupied by defendant’s father. During the execution of this warrant, one of the officers approached the back bedroom and defendant’s mother objected. Defendant’s mother informed the officer it was defendant’s room, and that she entered it only to do defendant’s laundry. However, the door to the bedroom was open, and the officer did not see any indication that defendant’s mother was doing laundry. Under these circumstances, where defendant’s father had ready access to defendant’s bedroom, the search of defendant’s bedroom for the contraband identified in the search warrant was constitutionally reasonable, irrespective of whether the officers were aware that defendant was paying rent to his parents.

Defendant next argues that the special offender provision established by CRS § 18-18-407(1)(f) is unconstitutionally overbroad as applied in this case because the handgun seized from his bedroom was inoperable and was not, therefore, "available for use [as] a deadly weapon." The evidence was sufficient to prove the gun was operable and that it was "available for use," because it had been discovered on a shelf in the same room where the officers had found methamphetamine. It is immaterial that the gun was not loaded.

Defendant contends the evidence is insufficient to support the jury’s verdict finding him guilty of unlawfully manufacturing a schedule II controlled substance. The evidence seized from the garage and the computer, when considered with the evidence seized from defendant’s bedroom, sufficiently supports the jury’s verdict.

Finally, defendant argues that the evidence is insufficient to support the jury’s verdict finding him guilty of sexual exploitation of children. Although the absence of any direct evidence that defendant obtained or viewed the child pornography, the Colorado Court of Appeals does not say that the circumstantial evidence was insufficient to prove that defendant knowingly possessed the images of child pornography contained on the computer. The evidence indicating that defendant’s father likely shared possession of the child pornography does not diminish defendant’s criminal liability. The judgment and sentence are affirmed.

No. 05CA0295. People v. Cohn.
Right to Counsel—Right to be Present in Court—Disruptive Conduct—Removal of Defendant—Jury Selection—Intent to Defraud

Defendant appeals the judgment of conviction entered on jury verdicts finding him guilty as charged of six felony counts of first-degree offering a false instrument for recording. The judgment is reversed and the case is remanded for a new trial.

Defendant represented himself at trial. He contends the trial court violated his constitutional right to the assistance of counsel by removing him from the courtroom at various times during the trial without permitting him to appear by means of videoconferencing equipment and without counsel being appointed to represent him in his absence.

Here, defendant demonstrated consistent disregard for the trial court’s orders. Despite the court’s admonitions to ask questions or to refrain from making speeches, defendant persisted. Defendant was "disruptive, contumacious, [and] stubbornly defiant." Although defendant’s exclusion during some trial testimony was harmless under the facts of this case, the convictions must be reversed, because defendant was excluded during portions of jury selection and denied the opportunity to exercise any peremptory challenges.

Defendant contends the evidence is insufficient to sustain his convictions because there is no evidence establishing he intended to defraud the board members against whom he filed mechanic’s liens. However, defendant’s admission that he knew the liens were "spurious" was sufficient to support an inference that he possessed an intent to defraud. The case is remanded for a new trial.

No. 05CA0469. In re the Marriage of Hatton, Jr.
Postdissolution of Marriage—Parenting Time—Decision-Making Responsibility—No Contact—Evidence—Parental Evaluator—Rebuttal Witnesses—Bias—Endangerment—Best Interests.

In this postdissolution of marriage proceeding, mother appeals from the December 14, 2004 order awarding all parenting time and decision-making responsibility for the parties’ three children to father and allowing her no contact with the children except with father’s written permission. The order is affirmed in part and reversed in part, and the case is remanded for further proceedings.

Mother contends the trial court erred in limiting or not considering evidence and testimony, including rebuttal witnesses, thereby accepting the evaluator’s recommendations without correlating them to the facts. In this case, the trial court allowed mother to call rebuttal witnesses and properly balanced its obligation to accord mother due process against its need to efficiently manage the case before it.

Mother argues that the trial court was biased against her. However, adverse rulings, standing alone, do not constitute grounds for claiming bias or prejudice. The court considered and weighed the evidence before it and its ruling is amply supported by the evidence.

Mother claims the trial court erred in the part of its parenting time order that denied her any contact with her children. Before parenting time may be eliminated completely, the trial court must consider both the endangerment standard and the best interests of the child. Because the trial court only considered the endangerment standard to determine that parenting time rights should be allocated to father rather than to mother, and failed to considered whether denying mother’s parenting time rights completely was in the children’s best interests by expressly considering the least detrimental alternative to ensure their development, the case must be remanded on this issue.

Mother also claims the trial court erred in ruling that she could not have any contact whatsoever with the children in any form, unless she has signed, written permission from father. The Court of Appeals rules that given the contentious nature of this case, the trial court should not have delegated to father the decisions regarding mother’s exercise of parenting time, even if father were to rely on professionals for reasonable advice in this regard.

The order is reversed to the extent it denies mother all contact with the children and to the extent it allows mother to have parenting time only with father’s consent. The case is remanded for further proceedings consistent with this opinion. The order is affirmed in all other respects.

No. 05CA1159. People v. Edwards.
Presentence Confinement Credit—Moot Issue—Confinement Completed.

In 1994, following a jury trial, defendant was convicted of aggravated robbery and conspiracy to commit aggravated robbery in connection with the robbery of an adult bookstore. On April 17, 1995, defendant was sentenced to a term of ten years in the Department of Corrections (DOC) for aggravated robbery, and a concurrent term of six years for the conspiracy count. Defendant was granted nineteen days of presentence confinement credit pursuant to CRS § 18-1.3-405. Defendant’s conviction was affirmed on appeal.

Defendant first challenged his presentence confinement credit in 2005 during an evidentiary hearing on a postconviction motion raising other issues, claiming an incorrect calculation or clerical error had just been discovered. Defendant then filed a Crim.P. 36 motion to correct the mittimus. The People objected, arguing that the presentence confinement credit was in a separate case and his sentence in that case was consecutive to the sentence in this case. The trial court denied the motion in an order dated June 7, 2005. Defendant filed a motion to reconsider, which also was denied. Defendant has been released on mandatory parole.

In this case, defendant has completed the confinement portion of his sentence by virtue of having been placed on mandatory parole. Once he was placed on mandatory parole, the balance of his sentence of incarceration was discharged. Therefore, there is no period of confinement from which to deduct any additional presentence confinement. Also, contrary to defendant’s arguments, the presentence confinement would not have any effect on a sentence if he were to violate his mandatory parole. The issue is moot and the appeal is dismissed.

No. 05CA1251. Saxe v. Board of Trustees of Metropolitan State College of Denver.
Delcaratory and Injunctive Relief—Tenure Issues—Breach of Employment Contract—Denial of Procedural Due Process—Impact of Handbook on Reductions in Force.

Plaintiffs, five tenured professors at Metropolitan State College of Denver (Metro State) and the Colorado Federation of Teachers (CFT), appeal the judgment entered following a Bench trial. This case concerns the impact of the 2003 Handbook for Professional Personnel (2003 Handbook) at Metro State on tenure issues that could arise during reductions in force (RIFs).

At the time of trial, Metro State employed 291 tenured and tenure-track faculty members and approximately 600 part-time faculty. Approximately 100 faculty members, all of whom received tenure prior to 2003, were members of the CFT. The trial court found that the 2003 Handbook and its predecessor, the Colorado Handbook for Professional Personnel (1994 Handbook), constituted part of the contracts of employment between faculty members and Metro State. The essence of the dispute is the extent to which Metro State may modify the terms of employment through changes to the 1994 Handbook.

The 1994 Handbook provided that in the event of a RIF, nontenured faculty would be laid off first. The 2003 Handbook did not afford tenured faculty a similar priority. In addition, the 1994 Handbook stated that if tenured faculty were laid off, "every reasonable effort would be made to relocate individuals in the institution." The 2003 Handbook did not require Metro State to make any efforts to relocate dismissed faculty. The two handbooks also contained different hearing procedures in the event a tenured faculty member was dismissed for cause or in a RIF.

Plaintiffs brought two claims in an action for declaratory and injunctive relief against the Board of Trustees of Metro State (Board), alleging that the changes in the 2003 Handbook (1) breached their employment contract by removing prior substantive and procedural due process rights and protections for continued employment; and (2) denied them procedural due process by limiting the hearing procedures.

The trial court made extensive findings of fact and conclusions of law and held there was no breach of contract. However, it concluded, "The President must bear the burden of establishing the ground or grounds for cause set forth in the notice." The trial court dismissed the due process claim because "the mere possibility that Plaintiffs may be subject to a dismissal for cause or by reduction in force in the future does not constitute actual controversy."

Plaintiffs contend the trial court erred in denying declaratory relief on their first claim because (1) the court adopted plaintiffs’ interpretation of the 2003 Handbook related to the burden of proof in a RIF hearing for dismissal, and (2) the Board breached the employment contract by taking away a vested property right without due process of law. The Colorado Court of Appeals concludes the trial court entered a declaratory judgment in favor of plaintiffs on the burden of proof claim, without expressly stating so, and remands to determine whether certain provisions of the 2003 Handbook regarding priority and relocation created vested rights for the plaintiffs and, if so, whether those changes were retrospective.

Plaintiffs also contend the trial court erred by dismissing the due process claim. The Court agrees that the controversy was ripe for adjudication in a declaratory judgment action and should not have been dismissed. Plaintiffs entered into their employment contract relying on the terms stated therein and face substantial uncertainty as to those terms.

Plaintiffs claim the Board violated their procedural due process right under the Colorado Constitution by (1) providing the President with final authority to dismiss a tenured faculty member even though the President is not an impartial decision maker; (2) eliminating the hearing officer’s duty of issuing an explanatory, written decision when the hearing officer agrees with the President’s initial decision to lay off a faculty member; and (3) shifting the burden of proof. The Court agrees as to the first point, disagrees on the second, and does not address the third point, as it is resolved in its resolution of the declaratory judgment claim. The judgment is affirmed in part and reversed in part, and the case is remanded with directions.

No. 05CA2079. Thompson v. State Farm Fire & Casualty Company.
Homeowners’ Insurance Policy—Denial of Coverage—Exclusion of Losses—"All Risk" Policy.

Plaintiffs appeal summary judgment in favor of defendant (State Farm). Plaintiffs assert that State Farm wrongly denied coverage under their homeowners insurance policy for water damage they sustained based on an exclusion of losses arising from "water below the surface of the ground." The Colorado Court of Appeals affirms.

State Farm insured plaintiffs’ home under an "all-risk" policy. While the policy was in force, the building supply pipe for the domestic plumbing system that runs from the street water main under the interior basement floor slab began to leak, causing water to enter plaintiffs’ basement through the slab and foundation. Plaintiffs submitted a timely claim for damages to State Farm, which denied coverage based on the above exclusion.

Plaintiffs sued, asserting breach of contract and bad faith and also sought a declaration that the damages incurred were covered under the policy. The trial court granted summary judgment in favor of State Farm, concluding that the policy language clearly and unambiguously excluded coverage for all losses caused by water below the surface of the ground.

On appeal, plaintiffs argue that the water exclusion means naturally occurring or subterranean water. State Farm asserts that the policy language clearly and unambiguously excludes coverage for losses caused by water below the surface of the ground, regardless of the source or cause. The Court agrees with State Farm.

The damage to plaintiffs’ basement and property was caused by subsurface water that leaked through the foundation of the home. The exclusion precludes coverage for loss from water below the surface of the ground from any cause. Water leaking from a building supply pipe below the surface of the ground is encompassed by the exclusion.

No. 05CA2176. Brodeur v. Industrial Claim Appeals Office.
Workers’ Compensation Death Benefits—Timely Filing of Petition—Mailing Requirement to Commence Running of Time.

The underlying issue in this case is whether claimant’s petition for review by the Industrial Claim Appeals Office (Panel) of the order of an administrative law judge (ALJ) denying death benefits was timely filed under CRS § 8-43-301(2). Specifically, the question is whether the provision of CRS § 8-43-215(1) that a written order granting or denying benefits "shall be mailed . . . to each of the parties in interest" requires a mailing to the claimant in addition to a mailing to the claimant’s attorney to commence the running of the time within which a petition for review must be filed. The Colorado Court of Appeals concludes that it does not.

This is the second appeal arising out of an admitted compensable injury to, and subsequent death of, the decedent. Procedurally, as relevant to the appeal, on January 20, 2005, the ALJ issued an order denying the claimant death benefits. A petition for review of that order was not filed until February 22, 2005, thirty days after the certificate of service on the order, with twenty days being allowed. The employer filed, and the ALJ granted, a motion to dismiss on the ground that the petition for review was untimely. The claimant then filed a timely petition for review. The Panel affirmed and the claimant appealed.

CRS § 8-43-301(2) provides that an ALJ’s order denying benefits is final unless the dissatisfied party files a petition for review within twenty days of the certificate of mailing of the order. It is undisputed that the claimant’s petition for review was late. The statutory time limits are jurisdictional and can be addressed only by the General Assembly.

The claimant argues that her counsel of record was properly served, but she was not. CRS § 8-43-215(1) requires that at the conclusion of a hearing, the ALJ or the director shall issue a written order that "shall be mailed . . . to each of the parties in interest." "Parties in interest" is not defined. The Court notes that generally the attorney-client relationship vests in the attorney the management, discretion, and control of all procedural matters connected with a proceeding, and the client is bound by the actions of the attorney. In the absence of specific statutory language to the contrary, the Court concludes that mailing a written order to the attorney appearing in the proceedings for the claimant satisfies the notice requirement of mailing the order to the claimant as a party in interest, and that the time within which to file a petition for review commences running on the date indicated in the certificate of mailing.

No. 05CA2442. In re the Estate of Ligon: Pratt v. Pratt.
Colorado Medical Assistance Act—Distribution of Estate Proceeds—Interpretation of Recovery of Assets—Attorney Fees—Probate Code Classification of Claims.

Pamela Pratt appeals the trial court’s order for final settlement and distribution of the estate of Pamela’s mother, Ligon, as executed by her sister, Sandra Pratt. The final order of settlement is reversed as to the estate beneficiaries other than Pamela Pratt. The case is remanded with instructions.

Ligon’s will nominating Sandra Pratt as the personal representative of the estate and naming Ligon’s four children as equal beneficiaries was admitted into probate. Before her death, Ligon incurred medical bills paid by Colorado’s Medicaid program. Health Management Systems, Inc. (HMS), on behalf of the Colorado Department of Health Care Policy and Financing (Department), filed a claim against the estate to recover those expenditures. The Department’s claim exceeded the value of the estate.

Pamela Pratt applied to the Department for a waiver of its recovery of her portion of the estate. She stated that she was looking for work and living in a motel, but would be forced to apply for public assistance if she did not receive a waiver. The Department determined that she qualified for the waiver and notified HMS. The Department reduced the recoverable amount from $62,315.98 to $46,736.99.

With the assistance of counsel, Sandra Pratt paid the $46,736.99 to the Department and, after deducting attorney fees and administrative and funeral expenses totaling approximately $10,400, distributed $1,630.70 to each of the four designated beneficiaries. Pamela Pratt requested a hearing to argue that the Department’s waiver was intended to benefit her alone. The court disagreed, finding that Pamela Pratt had reduced the amount taken by the Department and augmented the recovery by all of the heirs. On appeal, the Colorado Court of Appeals agrees with Pamela Pratt that this was error.

Federal law requires that states create procedures to waive the recovery of Medicaid funds if such recovery would work an undue hardship on any beneficiary of an estate. The Department has promulgated regulations stating that, if without proceeds from an estate an heir would become eligible for assistance payments and/or medical assistance programs, the waiver is appropriate.

In this instance, the Department expressly waived one-fourth of the claim amount "that would pass to Pamela Pratt." Notwithstanding the terms of this waiver, Pamela Pratt did not receive its full benefit. The Court concludes the trial court’s ruling is contrary to the stated public policy of waiving estate recovery for those heirs who may become a burden on the state if they are not allowed to receive a share of the estate proceeds. Therefore, Pamela Pratt was entitled to the proceeds that remained after payment of administrative costs and attorney fees, in the amount of $6,521.08.

No. 05CA2520. Curtis v. Hyland Hills Park & Recreation District.
Governmental Immunity Act—CRS § 24-10-106(1)(e)—Dangerous Conditions—CRS § 24-10-106(1)(f)—Swimming Facility.

Defendant, owner and operator of Water World, a water park, appeals the trial court's order denying its motion to dismiss for lack of subject matter jurisdiction under the Colorado Governmental Immunity Act (CGIA). Plaintiff, a visitor injured at the water park, cross-appeals the trial court's determination that the attraction where plaintiff was injured is not a swimming facility within the meaning of the CGIA. Plaintiff was injured when another visitor collided with plaintiff on Thunder River, a raft ride down a flume that ends in a shallow pool.

The trial court erred in concluding that defendant waived its immunity under the CGIA, because the conditions that caused plaintiff's injuries were dangerous conditions under CRS § 24-10-106(1)(e). To be actionable under the CGIA, an injury must have been caused by a physical or structural defect caused by negligence in the construction or maintenance of a public facility and not by operation of the facility. Because plaintiffs only allegation is that defendant was negligent in the operation of its attraction, plaintiff failed to allege the existence of dangerous conditions and defendant was immune from suit.

The trial court did not err in concluding that Thunder River is not a swimming facility under CRS § 24-10-106(1)(f) and, therefore, immunity is not waived under the CGIA. The term "swimming facility" refers to a facility that is both suitable and commonly used for swimming. The evidence supports the trial court's conclusion that the Thunder River pool was not suitable for swimming. Further, there was no evidence that the Thunder River pool was commonly used for swimming.

The Colorado Court of Appeals reverses the portion of the order that concludes that immunity has been waived. The Court affirms the portion of the order that concludes that the attraction is not a swimming facility and remands with instructions to dismiss plaintiff's claims for lack of subject matter jurisdiction.

No. 06CA0200. In re the Estate of Morgan: El Paso County Dept. of Human Services v. Martin.
Guardianship—Authority of Court to Appoint Governmental Agency as Guardian.

The El Paso County Department of Human Services (DHS) appeals the trial court order appointing it as permanent guardian for the ward, Morgan. In 2004, Morgan was 20 years old and under the jurisdiction of the court pursuant to an earlier dependency and neglect action. Due to her mental disabilities, Morgan's guardian ad litem petitioned the court for appointment of a guardian. Following a series of emergency guardian appointments, Mesa was appointed as permanent guardian. However, in 2005, Mesa wished to no longer serve as permanent guardian. The court appointed DHS to serve as Morgan's permanent guardian over its objection.

The Colorado Court of Appeals reviews the statutory scheme and determines that a court has the authority to appoint a governmental agency as a guardian even though it does not appear on the priority list in CRS § 15-14-310(1)(a). Although the statutory scheme contemplates the possibility a court can appoint DHS as a guardian for an incapacitated person, the scheme does not provide a basis for forcing DHS to accept such an appointment over its objection. The Court determines that there is no indication the General Assembly intended to empower courts to order agencies like DHS to serve as guardians when there is no qualified person willing and able. The order is reversed.

No. 06CA1808. People in the Interest of D.P., and Concerning T.N. and T.P.
Dependency and Neglect—Termination of Parent-Child Legal Relationship—Fitness Within a Reasonable Time—Appropriateness of Treatment Plan—Compliance With Treatment Plan—Reasonable Efforts to Reunite Family—Less Drastic Alternative.

Father and mother separately appeal from the judgment terminating their parent-child legal relationship with their son. The Mesa County Department of Human Services (Department) filed a dependency and neglect petition on son's behalf. Mother is developmentally delayed and father is low functioning. The court adjudicated son to be dependent and neglected and adopted a treatment plan for each parent. Five months after the court approved the treatment plans, the Department filed a motion to terminate the parent-child legal relationship. The court granted the motion following a contested hearing.

First, the Colorado Court of Appeals determines that the record supports the trial court's finding that the parents were not fit or could not become fit within a reasonable time. Next, the Court concludes that the parents waived their right to argue that the evidence did not support the finding that the treatment plans were appropriate. The parents' acquiescence in and subsequent failure to request modification of the plans precludes them from arguing that those plans were inappropriate. The Court then rules the evidence supports the trial court's finding that father had not successfully complied with the plan.

Further, the Court determines that mother waived the argument that the Department did not make reasonable efforts to rehabilitate her and reunite the family. If mother believed the Department was not making reasonable efforts to implement the plan, she needed to bring that issue to the trial court's attention before the termination hearing. Finally, the trial court's determination that there was no less drastic alternative to termination of parental rights and that termination of parental rights was in son's best interests are supported by the record. The judgment is affirmed.

Nos. 04CA0583 and 04CA1203. Kim v. The Grover C. Coors Trust.
Shareholders—Common Stock—Directors—Fiduciary Duty—Standing—Burden of Proof—Transaction—Fairness Test.

In this shareholders’ suit, plaintiff appeals the trial court’s judgment finding against Kim and in favor of defendants (collectively, Coors), and the trial court’s order awarding costs and expert witness fees to Coors. The judgment is affirmed, the order awarding costs and expert witness fees to Coors is vacated, and the case is remanded.

At the time of the transaction involved in this case, Kim owned shares of common stock in Graphic Packaging International Corp., Inc. (GPK). Defendants were directors of GPK. GPK decided to raise revenue by selling shares of convertible preferred stock to the Grover C. Coors Trust (Trust). Kim filed suit, alleging that the directors breached their fiduciary duties in approving the transaction. Defendants prevailed at trial.

Coors argues that Kim lacks standing to pursue a claim for damages against the board of GPK. Kim has standing in this action because his complaint alleges injury based on his status as a noncontrolling shareholder and derived from the actions of members of the Coors family who controlled GPK; his alleged injury is not common to all shareholders.

Kim contends that the trial court erred in assigning to him the burden of proving the transaction was unfair. In cases involving a director’s dealings with the corporation, the burden of proof is on the director to demonstrate that the transaction took place in good faith, was fair to the corporation, and was accompanied by full disclosure. Although the trial court put the burden of proof on Kim, any error was harmless.

Kim also contends that the trial court erred in determining that the transaction was fair to GPK and its shareholders. The test for whether a transaction is "fair" is whether "under all the circumstances [it] carries the earmarks of an arm’s length bargain." In this case, there is support in the record that (1) the transaction was accompanied by a full and fair disclosure of the material facts to the shareholders; (2) the transaction was not attended by fraud; (3) there was adequate consideration for the transaction; (4) the transaction benefited the corporation; and (5) there was no evidence that the directors siphoned corporate benefits. Therefore, the transaction was fair.

Kim further contends that the trial court erred in awarding costs without holding a hearing to determine the reasonableness of those costs. Here, Kim requested a hearing on the reasonableness of costs and expert witness fees claimed by Coors, and the trial court erred in awarding those costs and expert witness fees without first conducting an evidentiary hearing. The judgment is affirmed and the case is remanded.

Colorado Court of Appeals Opinions