author: Opinion by JUDGE BERNARD

text:
    David Ross CALVERT, Plaintiff-Appellant, v. Diane L. MAYBERRY, a/k/a Diane Marie Laba-Mayberry; and Desiree L. Mayberry, Defendants-Appellees.
    Court of Appeals No. 14CA1559
    Colorado Court of Appeals, Division V.
    Announced April 21, 2016
    Cox Baker & Page, LLC, Anne Whalen Gill, Castle Rock, Colorado, for Plaintiff-Appellant
    James Law Firm, P.C., Eric M. James, Fort Collins, Colorado, for Defendant-Appellee Diane L. Mayberry
    Miller & Steiert, P.C., Gary M. Clexton, Christopher J. Forrest, Littleton, Colorado, for Defendant-Appellee Desiree L. Mayberry
   Opinion by JUDGE BERNARD

¶ 1 If a lawyer enters into a contract with a client that violates Colo. RPC 1.8(a), one of the Colorado Rules of Professional Conduct, can the attorney later enforce the contract against the client? Appellate courts in Colorado have not previously addressed this question. We conclude that the answer to this question is "no."

¶ 2 The attorney, plaintiff, David Ross Calvert, asks us to reverse the summary judgment that the trial court entered in favor of his former client, defendant Diane L. Mayberry, also known as Diane Marie Laba-Mayberry, and her daughter, defendant Desiree L. Mayberry. We disagree with the attorney's contentions, so we affirm the judgment. We also remand the case to the trial court to (1) determine whether the attorney prosecuted this appeal for the sole purpose of harassing the former client and her daughter or of delaying the resolution of these proceedings; and (2) if so, award the former client her daughter reasonable attorney fees related to this appeal.

I. Background

¶ 3 In a 2009 disciplinary proceeding, the Colorado Supreme Court disbarred the attorney after a hearing board determined he had committed ethical violations that involved several people whom he had previously represented. People v. Calvert, 280 P.3d 1269 (Colo.O.P.D.J.2011). As is relevant to this case, the hearing board found that the attorney had "plied a vulnerable client"-the former client in this case-"with loans in excess of one hundred thousand dollars." Id. at 1272.

To secure his interest in those loan funds, he recorded a false deed of trust on the [former] client's home in a second client's name without the clients' knowledge or consent. [The attorney] then attempted to persuade the second client to assign the deed of trust to [the attorney's] real estate company which, when taken together with his earlier acts, signal[ed] a calculated scheme to deprive [the former] client of her home.

Id.

¶ 4 One finding that supported the hearing board's decision to disbar the attorney-the ultimate sanction in the hearing board's quiver-was that the former client was "the epitome of a vulnerable victim: she suffer[ed] from mental illness and a severe chemical dependency, both of which significantly impair[ed] her judgment." Id. at 1287. The board also ordered the attorney to pay any attorney fees that the former client incurred to remove the false deed of trust from the chain of title on her house.

¶ 5 The hearing board also found that the attorney had not complied with any of the requirements of Colo. RPC 1.8(a) when he made the loans to the former client. Those requirements are:

A lawyer shall not enter into a business transaction with a client or knowingly acquire an ownership, possessory, security or other pecuniary interest adverse to a client unless:
(1) the transaction and terms on which the lawyer acquires the interest are fair and reasonable to the client and are fully disclosed and transmitted in writing in a manner that can be reasonably understood by the client;
(2) the client is advised in writing of the desirability of seeking and is given a reasonable opportunity to seek the advice of independent legal counsel on the transaction; and
(3) the client gives informed consent, in a writing signed by the client, to the essential terms of the transaction and the lawyer's role in the transaction, including whether the lawyer is representing the client in the transaction.

Colo. RPC 1.8(a).

¶ 6 The attorney then filed this case to recoup the money that he had loaned the former client. He claimed that she had entered into an oral contract with him to repay the money that he had loaned to her by giving him a security interest in her house.

¶ 7 The attorney alternatively asserted that the trial court should impose an equitable lien on the former client's house. The attorney also filed claims against the former client's daughter because the former client had quitclaimed her interest in the house to her daughter sometime after the attorney had loaned her the money. (The hearing board described the oral contract this way: the attorney had offered the former client a loan to remodel her house "on the understanding that the [former client] would repay [the attorney] out of the equity of her house." Id. at 1275.)

¶ 8 The former client and her daughter filed a motion for summary judgment. They asserted that the attorney could not enforce the oral contract because (1) the hearing board had disbarred him; and (2) the board had disbarred him because he had violated an ethical rule when he engaged in the same conduct-loaning money to the former client-that he asserted to be the substance of the oral contract.

¶ 9 The trial court granted the summary judgment motion in a thoughtful and detailed order. The court observed that, "[g]iven the importance of [ Rule 1.8(a) ] in protecting clients, permitting [the attorney] to reap the benefits of an agreement that he was ethically prohibited from entering [into] cannot be countenanced." So, "[a]s a general matter, and especially in light of the facts of this case, " the oral contract between the attorney and the former client "violate[d] the letter and purposes of [ Rule 1.8(a),] and [it is] therefore[ ] void as against public policy and unenforceable." (Emphasis added.)

II. The Record Supports the Trial Court's Decision to Grant the Summary Judgment Motion

A. Summary Judgment Principles

¶ 10 We review a grant of summary judgment de novo. A.C. Excavating v. Yacht Club II Homeowners Ass'n, 114 P.3d 862, 865 (Colo.2005). "Summary judgment is appropriate when the pleadings and supporting documents clearly demonstrate that no issues of material fact exist and the moving party is entitled to judgment as a matter of law." Id. ; see C.R.C.P. 56(c). We give the nonmoving party the benefit of all favorable inferences that may be drawn from the undisputed facts, and we resolve all doubts as to the existence of a triable issue of fact against the moving party. A.C. Excavating, 114 P.3d at 865.

¶ 11 Our first step in resolving this appeal is to determine whether the doctrine of issue preclusion bars the attorney from relitigating factual issues that were litigated during the disciplinary proceeding.

B. The Hearing Board's Findings Bind the Attorney Under the Doctrine of Issue Preclusion

¶ 12 The doctrine of issue preclusion bars relitigation of an issue if:

(1) the issue is identical to that actually and necessarily adjudicated in a prior proceeding; (2) the party against whom estoppel is asserted was a party or in privity with a party in the proceeding; (3) there was a final judgment on the merits; and (4) the party against whom estoppel is asserted had a full and fair opportunity to litigate the issues in the prior proceeding.

City of Thornton v. Bijou Irrigation Co., 926 P.2d 1, 82 (Colo.1996).

¶ 13 The former client contends that, applying the doctrine of issue preclusion, she should not have to relitigate factual issues that the hearing board had previously resolved.

¶ 14 The attorney counters by asserting that the issues in this case are not identical to the issues resolved by the hearing board because the elements of his claims do not correspond to the requirements of Rule 1.8(a). He therefore urges us to apply a different issue preclusion test. He points to Bristol Bay Productions, LLC v. Lampack, 2013 CO 60, ¶ 19, 312 P.3d 1155. In that case, our supreme court "examine[d] the elements of Bristol Bay's fraud claims in both California and Colorado to determine whether the identity of the defendant [was] relevant to the causation element of the fraud and fraud-based claims in [the Colorado] case." Id.

¶ 15 But the attorney's reliance on Bristol Bay Productions conflates issue preclusion with a different doctrine called claim preclusion. Claim preclusion bars subsequent claims by identical parties based on the same claim for relief after a final judgment on the merits. See Kuhn v. State, 897 P.2d 792, 795 (Colo.1995). Even if the attorney's reading of Bristol Bay Productions were correct, we would nonetheless conclude that this contention is something of a red herring. Our focus in this case is on the factual questions that were litigated before, and resolved by, the hearing board. The doctrine of issue preclusion applies to the relitigation of "factual ... matter[s]" that a court previously litigated and decided. Carpenter v. Young, 773 P.2d 561, 565 n. 5 (Colo.1989). We therefore now apply the issue preclusion test found in Bijou Irrigation Co.

¶ 16 Issues actually and necessarily adjudicated . As is relevant here, the hearing board found the following facts in its opinion. And these factual findings were necessary to the board's judgment because the board relied heavily on them when it decided to impose the ultimate sanction of disbarment.

• The attorney violated Rule 1.8(a) when he loaned money to the former client. Calvert, 280 P.3d at 1280.
• He loaned her approximately $150,000 over two years. Id. at 1276.
• The terms of the loans were not in writing. Id.
• He did not advise her to seek independent legal counsel before accepting the loans. Id.
• He obtained her signature on a deed of trust granting an interest in her home to a third party. Id. at 1275.
• She did not understand the content or significance of the deed of trust. Id. at 1276 n. 15.
• He recorded the deed of trust against her house without her knowledge. Id. at 1276.
• He "recorded the deed in bad faith with the intention of profiting from his deceit." Id. at 1278.
• He then unsuccessfully tried to persuade or pressure another person to assign the deed of trust to the attorney's real estate company. Id. at 1276-77.
• He engaged in a "calculated scheme to deprive [the former] client of her home." Id. at 1272.
• She was "the epitome of a vulnerable victim: she suffer[ed] from mental illness and a severe chemical dependency, both of which significantly impair[ed] her judgment." Id. at 1287.

¶ 17 Identity of parties . The attorney was obviously a party in the disciplinary proceeding.

¶ 18 Final judgment . The disciplinary opinion was a final judgment.

¶ 19 Full and fair opportunity to litigate . We conclude that the attorney had a full and fair opportunity before the hearing board to litigate the factual questions that are pertinent to this case.

An inquiry into whether a party received a full and fair opportunity to litigate an issue must look to whether the initial proceeding was so inadequate or so narrow in focus as to deprive an individual of his or her due process rights should application of the doctrine of [issue preclusion] be used to bar relitigation of that issue.

Bebo Constr. Co. v. Mattox & O'Brien, P.C., 990 P.2d 78, 87 (Colo.1999).

¶ 20 In deciding whether a party had a full and fair opportunity to litigate an issue, we consider such factors as whether the remedies and procedures in the disciplinary proceeding were substantially different from those in this case, whether the party against whom issue preclusion is sought had sufficient incentive to litigate vigorously, and the extent to which the issues are identical. A-1 Auto Repair & Detail, Inc. v. Bilunas-Hardy, 93 P.3d 598, 603 (Colo.App.2004).

¶ 21 The hearing board applied procedures that were adequate to protect the attorney's due process rights. See Bebo Constr. Co., 990 P.2d at 87. In particular, the hearing board received testimony from the attorney, the former client, the former client's daughter, and other witnesses; the attorney was represented by a lawyer; the lawyer cross-examined witnesses during the hearing; and the supreme court upheld the board's findings on review. See People v. Bennett, 810 P.2d 661, 665 (Colo.1991) (hearing board's factual findings are binding on review if supported by substantial evidence). The burden of proof in a disciplinary action-clear and convincing evidence-is more stringent than the burden of proof that applies in this case-a preponderance of the evidence.See In re Egbune, 971 P.2d 1065, 1067 (Colo.1999) (district court's ruling not binding on disciplinary hearing board because burden of proof in a civil action is generally a preponderance of the evidence).

¶ 22 The attorney's incentive to defend his law license in the disciplinary proceeding, which permanently affected his livelihood and reputation, was at least as strong as his present incentive to recover the money that he loaned to the former client. And, as we noted above, the factual issues that the former client and her daughter seek to preclude the attorney from relitigating are identical to the ones that the board resolved.

¶ 23 Because we conclude that the former client met the four factors of the Bijou Irrigation Co. issue preclusion test, we further conclude that the hearing board's factual findings bind the attorney in this case, including its finding that the attorney violated Rule 1.8(a) when he entered into the oral contract with the former client.

¶ 24 We now must decide what effect these facts have on the question of whether the oral contract between the attorney and his former client is enforceable.

C. The Oral Contract is Void and Unenforceable Because It Violates Rule 1.8(a) and Because It Transgresses the Public Policy That Supports the Ethical Rule

¶ 25 A contract is void "if the interest in enforcing [it] is clearly outweighed by a contrary public policy." Norton Frickey, P.C. v. James B. Turner, P.C., 94 P.3d 1266, 1267 (Colo.App.2004). A court will not enforce such a void contract. Id.

1. Rule 1.8(a) Is a Source of Public Policy

¶ 26 The ethical rules that govern the conduct of attorneys-the Colorado Rules of Professional Conduct-can be sources of public policy. See id. ; see also Rocky Mountain Hosp. & Med. Serv. v. Mariani, 916 P.2d 519, 525 (Colo.1996) ; S. Colo. Orthopaedic Clinic Sports Med. & Arthritis Surgeons, P.C. v. Weinstein, 2014 COA 171, ¶ 24, 343 P.3d 1044 ( Colo. RPC 1.5(a) codifies public policy imposing a reasonableness requirement on fee-shifting agreements; a trial court has discretion to adjust fee award based on factors set forth in the rule); Roberts v. Holland & Hart, 857 P.2d 492, 496 (Colo.App.1993) (assigning legal malpractice claims is against public policy reflected in professional rules prescribing attorney's duties of confidentiality and loyalty). But, to qualify as a source of public policy,

the ethical provision must be designed to serve the interests of the public rather than the interests of the profession. The provision may not concern merely technical matters or administrative regulations. In addition, the provision must provide a clear mandate to act or not to act in a particular way.

Rocky Mountain Hosp. & Med. Serv., 916 P.2d at 525 ; accord LK Operating, LLC v. Collection Grp., LLC, 181 Wash.2d 48, 331 P.3d 1147, 1164 (2014) ("[W]hether something can be a source of public policy in the context of contract enforceability should depend on whether it is primarily intended to promote the public good or protect the public from injury, and whether it was issued by an entity with the legal power and authority to set public policy in the relevant context.").

¶ 27 We next apply the test in Rocky Mountain Hospital & Medical Service to answer this question: Is Rule 1.8(a) a source of public policy? We conclude that it is.

¶ 28 The obvious purpose of Rule 1.8(a) is to protect the interests of clients, who are clearly part of the public, and not the interests of lawyers. Comment 1 to this rule states that a "lawyer's legal skill and training, together with the relationship of trust and confidence between lawyer and client" can work together to "create the possibility of overreaching when the lawyer participates in a business, property or financial transaction with a client[.]" Colo. RPC 1.8 cmt. 1. The ethical rule "is therefore designed to prevent an attorney, who likely benefits from a considerable advantage when dealing with a client, from exploiting the attorney-client relationship, given that the client should be free to repose a great deal of trust and confidence in the attorney." Rafel Law Grp. PLLC v. Defoor, 176 Wash.App. 210, 308 P.3d 767, 774 (2013) (interpreting a substantively identical rule).

¶ 29 Rule 1.8(a) does not concern itself with merely technical matters. Rather, it aims to avoid the sorts of fundamental conflicts of interest that can grievously harm clients.

¶ 30 And Rule 1.8(a)'s requirements are mandatory and clear. The rule lays out easily understood and specific steps that lawyers must follow if they are to enter into business or financial arrangements with their clients. See Rocky Mountain Hosp. & Med. Serv., 916 P.2d at 525.

¶ 31 So what does this public policy mean?

2. Analysis

¶ 32 Courts in other states have held that the violation of an ethical rule that is based on public policy renders contracts that were formed in violation of the ethical rule void. See Santiago v. Evans, 547 Fed.Appx. 923, 926-27 (11th Cir.2013) (a lawyer's violation of Florida's version of Rule 1.8(a) rendered a contract void as against public policy); Law Offices of Peter H. Priest, PLLC v. Coch, 780 S.E.2d 163, 174 (N.C.Ct.App.2015) (lawyer who violated rule substantially similar to Rule 1.8(a) could not enforce resulting contract "in light of the strong public policy considerations that [the ethical rule] embodies"); see also Scolinos v. Kolts, 37 Cal.App.4th 635, 44 Cal.Rptr.2d 31, 34 (1995) ("It would be absurd if an attorney were allowed to enforce an unethical fee agreement through court action, even though the attorney potentially is subject to professional discipline for entering into the agreement."); Succession of Cloud, 530 So.2d 1146, 1150 (La.1988) ("When an attorney enters into a contract with his client in direct and flagrant violation of a disciplinary rule ... [the court] should prohibit the enforcement of the contract...."); Evans & Luptak, PLC v. Lizza, 251 Mich.App. 187, 650 N.W.2d 364, 370 (2002) ("[C]ontracts that violate our ethical rules violate our public policy and therefore are unenforceable."); cf. LK Operating, LLC, 331 P.3d at 1164-65 (Washington applies a presumptively void contract test).

¶ 33 We are persuaded by the reasoning in those opinions, so we will apply it to this case. And, by doing so, we conclude that the oral contract between the attorney and the former client is void and unenforceable. The attorney violated an ethical rule- Rule 1.8(a) -and that ethical rule is based on public policy. See Rocky Mountain Hosp. & Med. Serv., 916 P.2d at 525 ; Rafel Law Grp. PLLC, 308 P.3d at 774.

D. Conclusion

¶ 34 Based on the preceding analysis, we conclude that the trial court properly granted summary judgment in favor of the former client and her daughter. We reach this conclusion because there are no issues of material fact concerning any of the attorney's six claims, and the former client and her daughter are entitled to judgment as a matter of law. See A.C. Excavating, 114 P.3d at 865.

1. The Claims That Were Based on the Oral Contract

¶ 35 Four of the claims against the former client depended on the oral contract. These claims fail as a matter of law because we have concluded that the oral contract is void and unenforceable. We list each of these claims, and we explain how they incorporated the oral contract.

• Claim 1: Agreement for debt.
The attorney asserted that he made loans to the former client "in contemplation of the equity of the [former client's] house and an agreement between [the attorney and the former client] that eventually [the former client] would grant the [attorney] a lien interest in the property."
• Claim 2: Breach of contract.
The contract in this claim was the oral contract.
• Claim 4: Fraudulent transfer.
The attorney asserted that the former client's decision to execute a quitclaim deed to her daughter impaired the interest in her house that the oral contract gave him.
• Claim 6: Intentional interference with a contract.
This claim, which named the former client's daughter, asserted that the daughter had convinced the former client to breach her oral contract with the attorney by executing the quitclaim deed.

2. The Equitable Lien Claim

¶ 36 The attorney contends that the trial court erred when it applied the doctrine of unclean hands to bar Claim 3, his request to place an equitable lien on the former client's home. We disagree.

¶ 37 Under the doctrine of unclean hands, a "court will not consider a request for equitable relief under circumstances where the litigant's own acts offend the sense of equity to which he or she appeals." Ajay Sports, Inc. v. Casazza, 1 P.3d 267, 276 (Colo.App.2000). The doctrine applies when the improper conduct relates directly to the underlying litigation. Id.

¶ 38 The attorney's ethical misconduct, as described by the hearing board, relates directly to his attempt to take the former client's house from her. We therefore conclude that the trial court properly, as a matter of law, applied the doctrine of unclean hands to bar his claim for an equitable lien on the house.

3. The Fraud Claim against the Former Client's Daughter

¶ 39 The attorney also asserted a claim for deceit, Claim 5, which was based on an allegation that the former client's daughter had engaged in fraud. He asserted that the former client's reliance on her daughter's allegedly false representation damaged his interests. But an essential element of deceit by fraud is that the plaintiff -the attorney in this case-acted in reliance on the alleged misrepresentation. See Knight v. Cantrell, 154 Colo. 396, 402, 390 P.2d 948, 951 (1964) ; Kilpatrick v. Miller, 55 Colo. 419, 423, 135 P. 780, 782 (1913). And the attorney does not allege that the former client was acting as his agent. So this claim cannot stand as a matter of law.

III. The Record Supports the Trial Court's Decision to Award Attorney Fees to the Former Client and Her Daughter

¶ 40 We review a trial court's decision to award attorney fees under section 13-17-102, C.R.S.2015, for abuse of discretion. We will affirm such a decision if the evidence supports it. Haney v. City Court, 779 P.2d 1312, 1316 (Colo.1989) ; Webster v. Boone, 992 P.2d 1183, 1188 (Colo.App.1999) ; see also Front Range Home Enhancements, Inc. v. Stowell, 172 P.3d 973, 976 (Colo.App.2007) ; Mitchell v. Ryder, 104 P.3d 316, 320 (Colo.App.2004). We must accept the factual findings underlying the decision to award attorney fees unless they are "so clearly erroneous as not to find support in the record." Page v. Clark, 197 Colo. 306, 313, 592 P.2d 792, 796 (1979).

¶ 41 A court may award attorney fees if it finds that a party brought an action that lacked substantial justification. § 13-17-102(4). " '[L]acked substantial justification' means substantially frivolous, substantially groundless, or substantially vexatious." Id. "A vexatious claim is one brought or maintained in bad faith to annoy or harass. It may include conduct that is arbitrary, abusive, stubbornly litigious, or disrespectful of truth." Engel v. Engel, 902 P.2d 442, 446 (Colo.App.1995). "[T]he rationale for awarding attorney fees is even stronger" when the record shows that a party brought an action in bad faith. W. United Realty v. Isaacs, 679 P.2d 1063, 1069 (Colo.1984).

¶ 42 In this case, the trial court found it

disturbing that the [attorney], after being disbarred in connection with a scheme to deprive a vulnerable client of her home-a scheme involving the recording of a false deed of trust on the property-would then try to use the court system to obtain a lien on that same property.

¶ 43 The trial court also noted that the attorney's testimony in the disciplinary proceeding flatly contradicted some of the claims that he brought in this case. (For example, the attorney testified before the hearing board that he did not have an oral contract with the former client and, although he had given her money, he did not "loan" it to her. The hearing board rejected this testimony.) The court found that this case appeared to be "a continued effort to achieve an improper objective after that effort was thwarted by [the attorney's] disbarment."

¶ 44 These findings are supported by ample evidence in the record. We conclude that they, in turn, support the trial court's determination that this case lacked substantial justification and that the attorney brought it in bad faith. So we further conclude that the trial court did not abuse its discretion when it awarded attorney fees to the former client and to her daughter.

IV. We Remand This Case to the Trial Court to Determine Whether to Award Appellate Attorney Fees to the Former Client and Her Daughter

¶ 45 The former client and her daughter request an award of attorney fees related to this appeal under C.A.R. 39.5. They contend that the appeal is frivolous.

¶ 46 An appeal may be frivolous as filed, frivolous as argued, or both. Castillo v. Koppes-Conway, 148 P.3d 289, 292 (Colo.App.2006).

¶ 47 An appeal is frivolous as argued if the appellant commits misconduct in arguing the appeal. Id. This appeal is not frivolous as argued because the improprieties in the attorney's amended opening brief discussed by the former client and her daughter do not rise to the level of misconduct. And, although we agree that the attorney's original opening brief in this appeal was stricken, it was stricken because parts of it violated C.A.R. 28. We conclude that these violations did not render the attorney's appeal frivolous as argued. And the amended opening brief omits much of the objectionable content that appeared in the original opening brief.

¶ 48 The test for whether an appeal is frivolous as filed has two separate prongs. The first prong asks whether the judgment below was so plainly correct and the legal authority contrary to the appellant's position is so clear that there was really no appealable issue. Castillo, 148 P.3d at 292. We conclude that this appeal was not frivolous as filed under the first prong because it presented a novel legal issue that had not previously been addressed in Colorado.

¶ 49 The second prong of the frivolous-as-filed test asks the question whether the appeal was "prosecuted for the sole purpose of harassment or delay." Mission Denver Co. v. Pierson, 674 P.2d 363, 366 (Colo.1984) ; Castillo, 148 P.3d at 292. The former client asserts in her answer brief that the attorney "ignored" an order from the trial court to remove a lien that he had filed on the former client's house and "proceeded with this appeal." By doing so, the answer brief alleges that he "needlessly cloud[ed] title" to the house, and he "caused suffering and financial hardship" to the former client and her daughter.

¶ 50 If true, these alleged facts could show that the attorney filed this appeal to harass the former client and her daughter and to delay the resolution of these proceedings. But we cannot find facts; we are an appellate court. See People v. A.W., 982 P.2d 842, 852 (Colo.1999) ("Appellate courts are not empowered to make factual findings....").

¶ 51 We conclude that we must therefore remand this case to the trial court to determine whether this appeal is frivolous as filed because the attorney "prosecuted [it] for the sole purpose of harassment or delay." Mission Denver Co., 674 P.2d at 366 ; Castillo, 148 P.3d at 292. If the trial court finds that the attorney did so, then the court shall determine and award reasonable attorney fees to the former client and her daughter. If the court finds that the attorney did not do so, then the court shall not award such fees.

¶ 52 The judgment is affirmed. The case is remanded to the trial court to determine whether the attorney prosecuted this appeal for the sole purpose of harassment or delay and, if so, to award reasonable attorney fees to the former client and her daughter.

JUDGE FURMAN and JUDGE LICHTENSTEIN concur.


source: Caselaw Access Project

author: Opinion by JUDGE BERGER

license: Public Domain

text:
    The PEOPLE of the State of Colorado, Plaintiff-Appellee, v. Tommy Allen GOW, Defendant-Appellant.
    Court of Appeals No. 14CA0921
    Colorado Court of Appeals, Division V.
    Announced August 25, 2016 As Modified September 8, 2016
    Cynthia H. Coffman, Attorney General, Rebecca A. Adams, Senior Assistant Attorney General, Denver, Colorado, for Plaintiff-Appellee
    Douglas K. Wilson, Colorado State Public Defender, Anne B. Stockham, Deputy State Public Defender, Denver, Colorado, for Defendant-Appellant
   Opinion by JUDGE BERGER

¶ 1 This case presents the important question of whether a police officer, consistent with the Fourth Amendment, may require a person who requests assistance to be subjected to a pat-down search for weapons before the person is allowed to enter the officer's vehicle.

¶ 2 We hold that there is no affront to the Fourth Amendment when a police officer requires a person who has voluntarily sought assistance, but whom the officer has no duty to assist, to undergo a pat-down search as a condition of entering a police vehicle, even when the officer does not have a reasonable, articulable suspicion that the person is armed and dangerous.

¶ 3 In so holding, we necessarily disagree with People v. Berdahl , 2012 COA 179, 310 P.3d 230, in which another division of this court held that to justify a warrantless pat-down search of an individual before allowing entry into a police vehicle, an officer must have a reasonable, articulable basis to conclude that the person is armed and dangerous. While we give considerable deference to decisions of other divisions of this court, we are not bound by those decisions. See e.g., People v. Frye, 2014 COA 141, ¶ 12, 356 P.3d 1000. Because we believe that Berdahl reaches a result not required by the Fourth Amendment or any binding authority, we decline to follow it.

¶ 4 Given our holding, we reject the argument of defendant, Tommy Allen Gow, challenging the admission of evidence discovered during a pat-down search, and we affirm the judgment of conviction.

I. Facts and Procedural History

¶ 5 A jury convicted Gow of possession of methamphetamine and possession of a schedule I controlled substance. His sole contention on appeal is that the trial court erred by denying his motion to suppress the evidence obtained during the search.

¶ 6 The arresting officer testified at the suppression hearing that at approximately 2:15 a.m., he observed Gow walking in a residential neighborhood with a box in his hands. The officer stated that, upon exiting his vehicle, he "asked [Gow] what he was up to" and that Gow told him that he had "c[o]me from his friend['s] ... house and just bought an iPad from him for $600." The officer testified that Gow offered to produce and did produce his identification card, and that after discovering no outstanding warrants, he told Gow he was free to leave.

¶ 7 The officer further testified that he continued to watch Gow as Gow walked away, but he eventually decided to drive away from the area. He stated that, as he was passing Gow, Gow started waving his hands and motioning for the officer to stop and lower his window. The officer testified that Gow approached his vehicle and asked for a ride to another friend's house that was four blocks away. The officer agreed to give Gow a ride but told Gow that "[he] had to pat him down first before [he] put him in the back of [the] vehicle to insure [sic] that he didn't have any weapons or anything illegal on him." The officer testified that this was not an official "procedure" but that he wanted to ensure his safety when giving Gow a "courtesy ride."

¶ 8 The officer testified that Gow responded, "[o]kay. I don't have any weapons," and the officer did not find anything on Gow's person. The officer stated that he then asked Gow if he could look inside the box with the iPad in it to check for weapons and Gow said "sure." The officer testified that, when Gow opened the box and took the iPad out, the box dropped to the ground and two small plastic baggies fell out. He stated that Gow picked up the baggies and handed them to him and that, when asked, Gow told him they contained "speed." The officer testified that, in his experience, he suspected the baggies contained methamphetamine.

¶ 9 The officer then arrested Gow. The substances inside the baggies later tested positive for unlawful drugs.

¶ 10 Gow's version of the encounter was substantially different. He testified that on the night in question, he was walking away from his friend's apartment when he heard the officer "holler" at him to come over. He stated that he asked the officer why he was "harassing" him and that the officer said there had been reports of people breaking into cars in the area. Gow testified that the officer asked about the box in his hand and that he told him it contained an iPad. He stated that he handed the box to the officer and that the officer then returned the box to him.

¶ 11 Gow testified that he then walked away, but that, about four to five minutes later, the officer pulled up next to him and asked to see the iPad box. He stated that he gave the box to the officer and that two baggies fell out when it was opened. Gow testified that he did not wave the officer down to ask for a ride, that the officer did not ask for permission to search the box, and that he did not tell the officer the baggies contained "speed."

¶ 12 In its oral ruling, the trial court found the officer's testimony credible and held that the second encounter was consensual because it was initiated by Gow waving down the officer and requesting a ride. The court denied the motion to suppress, concluding that the officer's pat-down search of Gow before giving him a courtesy ride did not violate the Fourth Amendment's prohibition against unreasonable searches and seizures because it was "logical ... that one must make sure they are going to be safe in giving a ride to somebody."

II. The Fourth Amendment-General Principles

¶ 13 The Fourth Amendment to the United States Constitution and article II, section 7 of the Colorado Constitution protect individuals against unreasonable searches and seizures. People v. Brown, 217 P.3d 1252, 1255-56 (Colo. 2009). "A warrantless search is presumptively invalid under the [F]ourth [A]mendment ..., subject only to a few narrow and specifically delineated exceptions." People v. Dandrea, 736 P.2d 1211, 1216 (Colo. 1987). "The constitutional test of a warrantless search ultimately is reduced to the question of whether the search was reasonable under all relevant attendant circumstances." Id.

¶ 14 Our review of a trial court's ruling on a motion to suppress is a mixed issue of law and fact. People v. Bostic, 148 P.3d 250, 254 (Colo. App. 2006). We defer to a trial court's findings of fact if they are supported by competent evidence in the record. People v. Gothard, 185 P.3d 180, 183 (Colo. 2008). However, a trial court's legal conclusions are subject to de novo review. Id.

III. Analysis

¶ 15 Gow does not contend that the trial court's findings of fact are not supported by the evidence at the suppression hearing, and we are bound by a trial court's findings of historical fact that find support in the record. People v. Matheny, 46 P.3d 453, 458 (Colo. 2002). Instead, Gow argues that the pat-down search, which entailed the search of the iPad box, was unconstitutional because, under Berdahl , an officer may not, in the course of providing a courtesy ride, search the individual to be transported without a reasonable, articulable suspicion that the individual is armed and dangerous, and the officer here had no such suspicion.

¶ 16 Although the trial court did not cite Berdahl , the court's conclusion-that the officer could pat down Gow to ensure the officer's safety while giving Gow a ride-is directly at odds with Berdahl 's holding that Colorado does not recognize an "officer safety exception" to the requirement that an officer have a warrant or a reasonable, articulable suspicion that an individual is armed and dangerous to lawfully conduct a pat-down search for weapons before the person enters a police vehicle.

¶ 17 While Berdahl is factually distinguishable from this case in important respects, the trial court's ruling here is impermissible under Berdahl 's blanket holding that officer safety cannot justify a pat-down search in this type of situation. Thus, unless we can resolve the case on other grounds than those relied on by the trial court, we must decide whether we agree with Berdahl . See People v. Aarness, 150 P.3d 1271, 1277 (Colo. 2006) (appellate court may affirm trial court's suppression order on any ground supported by the record).

¶ 18 Although the prosecution argued in response to Gow's suppression motion that Gow had consented to the search, the trial court did not decide consent or make any factual findings on the issue because the court found that the search was justified under an officer safety rationale. Because a determination whether an individual voluntarily consented to a search must take into account the totality of the circumstances, People v. Munoz-Gutierrez, 2015 CO 9, ¶ 19, 342 P.3d 439, the record does not contain the factual findings necessary for us to decide whether Gow consented to the search.

¶ 19 Moreover, although we could remand the case to the trial court to make findings on consent, if the trial court found that Gow did not consent to the search, we would still then have to decide whether the search was nevertheless reasonable for officer safety purposes. Because the resolution of this appeal thus requires us to decide if the pat-down search of Gow was constitutionally justified under the circumstances as an officer safety measure, we must address Berdahl , under which the search would not be permissible.

¶ 20 In Berdahl , a state trooper conducted a pat-down search of the defendant before giving him and his girlfriend a courtesy ride to a service station because their car had run out of gas and they were stranded on the side of the road in "frigid" conditions. Id. at ¶ 6. The trooper explained that, "although he did not believe any criminal activity had occurred, he performed the pat-down search on [the] defendant, because '[i]t's an officer-safety practice when you're putting someone in the back of your patrol car.' " Id. at ¶ 7.

¶ 21 During the search, the trooper discovered unlawful drugs and drug paraphernalia, and the defendant was arrested. Id. at ¶¶ 8-10. The trial court denied the defendant's motion to suppress this evidence, concluding that the pat-down search was constitutionally permissible because "it was reasonable under the circumstances for officer safety." Id. at ¶ 13.

¶ 22 On appeal, a division of this court reversed the trial court's ruling. The division held that "[l]aw enforcement officers may justifiably contact an unsuspicious person when other legitimate official reasons exist," "[b]ut during that contact, a protective search for a weapon 'is justified only when the circumstances of an otherwise valid stop provide the officer with a reasonable basis to suspect that the person with whom he is dealing may be armed and dangerous.' " Id. at ¶ 19 (quoting People v. Ratcliff, 778 P.2d 1371, 1376-77 (Colo. 1989) ). The division concluded that Colorado has not recognized an "officer safety exception" to this requirement. Id. at ¶¶ 26, 29.

¶ 23 The Berdahl division relied on several out-of-state cases to support its holding. See id. at ¶ 25. The division cited United States v. Glenn, 152 F.3d 1047, 1049 (8th Cir. 1998), in which the majority of a three-judge panel held that an officer's decision to place a traffic offender in the back of a patrol car after stopping him for a traffic violation did not create a reasonable, articulable suspicion to justify a pat-down search. The majority held, however, that the weapon that was found during the pat-down search need not be suppressed because it inevitably would have been discovered incident to the offender's arrest. Id. at 1049-50. The third judge concurred in the result only, expressing the view that anytime the circumstances surrounding a traffic stop allow the placing of a detainee inside a police car with a lone officer, the Terry doctrine authorizes an outside-of-the-clothing search for weapons. Id. at 1050 (Beam, J., concurring in the result).

¶ 24 The Berdahl division also relied on State v. Brockel, 746 N.W.2d 423 (N.D. 2008). There, the North Dakota Supreme Court held that although North Dakota law authorized an officer to order a motorist who is stopped for a traffic violation to sit in the patrol car while the officer issues a citation, that fact does not authorize a pat-down search without a reasonable and articulable suspicion that the motorist is armed and dangerous. Id. at 426-27.

¶ 25 The other cases on which the Berdahl division relied to support its holding, however, do not, in our view, stand for the proposition that an officer may not conduct a pat-down search of an individual before placing him in a police vehicle unless the officer reasonably believes that the individual is armed and dangerous.

¶ 26 For instance, in Wilson v. State, 745 N.E.2d 789 (Ind. 2001), the Indiana Supreme Court acknowledged that,

when an officer places a person into a patrol car that will be occupied by the officer or other persons, there is a significantly heightened risk of substantial danger to those in the car in the event the detainee is armed. We believe that this increased risk is sufficient to satisfy the requirements of Ybarra [v. Illinois , 444 U.S. 85, 94, 100 S.Ct. 338, 62 L.Ed.2d 238 (1979) (a reasonable belief or suspicion directed at the person to be frisked) ], and that it is generally reasonable for a prudent officer to pat-down persons placed in his patrol car, even absent a belief of dangerousness particularized to the specific detainee.

Id. at 792 (footnote omitted).

¶ 27 Similarly, in State v. Varnado, 582 N.W.2d 886, 891 (Minn. 1998), the Minnesota Supreme Court held that "we agree that officer safety is a paramount interest and that when an officer has a valid reasonable basis for placing a lawfully stopped citizen in a squad car, a frisk will often be appropriate without additional individual articulable suspicion."

¶ 28 These cases thus do not hold that an interest in officer safety arising solely from the decision to place an individual in a patrol car can never justify a pat-down search. Rather, they held, as described by the court in Wilson , that the "Fourth Amendment [does not] permit[ ] the police routinely to place traffic stop detainees in a police vehicle if this necessarily subjects the detainee to a preliminary pat-down frisk." 745 N.E.2d at 793 (emphasis added). Consequently, without "a particularized justification making it reasonably necessary" to place an individual in a patrol car, an officer violates the Fourth Amendment by placing the person into the vehicle and thereby subjecting him to a pat-down search. Id. ; see also Varnado, 582 N.W.2d at 891-92 ("We will not allow officers to contravene the reasonableness requirement of the Fourth Amendment simply by requesting that a person sit in the squad car.").

¶ 29 But, in holding that a decision to place an individual in a police vehicle does not by itself justify a pat-down search, the Wilson and Varnado courts recognized that if the "various particularized circumstances," Wilson, 745 N.E.2d at 793, causing an officer to require or allow an individual to enter a police vehicle reasonably justify such a decision, a pat-down search before the individual enters the vehicle is not unreasonable under the Fourth Amendment. See id. ;

Varnado, 582 N.W.2d at 891 ("We are not to be understood as holding that police have no right, for their own protection, to search a person before placing him in a squad car if there is a valid reason for requiring him to enter the vehicle and it is not merely an excuse for an otherwise improper search." (quoting State v. Curtis, 290 Minn. 429, 190 N.W.2d 631, 636 (1971) ). Because the courts in Wilson and Varnado concluded that there were no circumstances in those cases providing a reasonable basis for requiring the defendants to enter the police vehicles, and the officers did not have a reasonable, articulable suspicion that the defendants were armed and dangerous, the courts held that the pat-down searches of the defendants were unlawful. See Wilson, 745 N.E.2d at 792-93 ; Varnado, 582 N.W.2d at 889-92.

¶ 30 Other cases that the Berdahl division cited (but rejected the holdings of) likewise focused on the reason an officer was requiring or allowing an individual to enter a police vehicle. These cases held permissible the pat-down searches of individuals who were ordered or allowed into police vehicles, whether or not the officer had a reasonable basis to believe that the individual was armed and dangerous, if there was a valid reason for placing the individual in the vehicle and it was not merely an excuse for a search. See Varnado, 582 N.W.2d at 891.

¶ 31 The Berdahl division cited, but rejected, the holding of the California Court of Appeal in People v. Tobin, 219 Cal.App.3d 634, 269 Cal.Rptr. 81, 82-85 (1990), which concluded that the pat-down searches of three men before placing them in a patrol car were reasonable when the officer conducting the searches had a duty to transport the men off a busy freeway that the officer reasonably believed "would be extremely unsafe" for the men to walk on. See Berdahl, ¶¶ 24-29.

¶ 32 Similarly rejected by Berdahl, id. , were holdings of the Illinois intermediate appellate court, the Michigan intermediate appellate court, and the Rhode Island Supreme Court, all of which held that a pat-down search was constitutional, without a specific showing that a person was armed and dangerous, when the police had a valid reason for transporting the person in a police car. People v. Queen, 369 Ill.App.3d 211, 307 Ill.Dec. 400, 859 N.E.2d 1077, 1079, 1084-85 (2006) (holding that pat-down search of an intoxicated man was reasonable when the officer acted for safety purposes according to departmental policy and reasonably believed that the "defendant was in need of a courtesy ride in the squad car because he could not proceed safely in his condition without assistance"); People v. Hannaford, 167 Mich.App. 147, 421 N.W.2d 608, 609-10 (1998) (holding that a pat-down search was reasonable when the officer transported three men at their request late at night, the men had been drinking, and the officer could not contain their movement in the patrol car); State v. Lombardi, 727 A.2d 670, 673-74, 676 (R.I. 1999) (holding that the pat-down search of a passenger in a validly stopped vehicle was reasonable when he had to be transported home in a police car because he was intoxicated, it was late at night, and the area was not safe for walking).

¶ 33 The Berdahl division was legitimately concerned that a blanket rule that the police may always perform a pat-down search of persons they order or allow into a police vehicle could erode established Fourth Amendment protections. Such a blanket rule would permit evasion of the established Fourth Amendment law that warrantless pat-down searches for weapons are permissible during an investigative stop only when the officer has a reasonable, articulable basis for believing that his safety would be compromised without such a search. See Terry v. Ohio, 392 U.S. 1, 29-31, 88 S.Ct. 1868, 20 L.Ed.2d 889 (1968).

¶ 34 But we think that this concern can be accommodated without subjecting police officers to substantial risk of serious injury or death when transporting a person in a police vehicle by focusing, like the courts in the cases discussed above, on the circumstances of the encounter between the police officer and the individual. A protective pat-down search is permissible only when those circumstances reasonably justify the officer's decision to require or allow the individual to enter the vehicle. Because, for instance, a routine traffic stop does not, without more, vest authority in the officer to demand that the motorist enter the police vehicle, see, e.g., People v. Kinsella, 139 A.D.2d 909, 527 N.Y.S.2d 899, 901 (1988), a rule allowing a pat-down search whenever an officer has reasonable justification for placing a person into a police vehicle may not be used as a subterfuge to avoid the established limitations on when a detainee may be subjected to a mandatory pat-down search for weapons. See Curtis, 190 N.W.2d at 636.

¶ 35 For these reasons, we conclude that the cases the Berdahl division rejected are, in fact, the better reasoned cases. In our view, they reach the appropriate balance between the critical interest of officer safety and an individual's right to be free from unreasonable searches and seizures. "The Fourth Amendment was surely not intended to stand for the proposition that police officers must either abandon civilians [in need of assistance] or transport them at the risk of personal safety, rather than transport them at reduced risk of personal safety by first subjecting them to a frisk for weapons." Hannaford, 421 N.W.2d at 610 ."[An] officer [is] not required to gamble his life by placing [an individual] in [a] patrol car with him without the precaution of a pat down for weapons." Lombardi, 727 A.2d at 675 (quoting Williams v. State, 403 So.2d 453, 456 (Fla. Dist. Ct. App. 1981) ).

¶ 36 Thus, we hold that when an officer has a valid, reasonable basis for placing an individual into a police vehicle that will be occupied by the officer or other persons, the significantly heightened risk of danger to those in the vehicle in the event the individual is armed justifies a pat-down search of the individual for weapons, irrespective of whether the officer has a reasonable, articulable belief that the individual is armed and dangerous. See Varnado, 582 N.W.2d at 891.

¶ 37 Applying this holding to the facts of this case, we conclude that the officer had a reasonable, valid basis to permit Gow to enter his police vehicle, and therefore also to conduct a pat-down search of Gow.

¶ 38 The "touchstone" of the Fourth Amendment is "always the reasonableness in all the circumstances of the particular governmental invasion of a citizen's personal security." Pennsylvania v. Mimms, 434 U.S. 106, 108, 98 S.Ct. 330, 54 L.Ed.2d 331 (1977) (citation omitted). The factual findings made by the trial court, which Gow does not challenge on appeal, establish that Gow voluntarily sought the officer's assistance, which specifically consisted of transport in a police vehicle. At no time during the encounter (at least until the drugs were found) was Gow "seized" under the Fourth Amendment-the officer did not restrain Gow's freedom to walk away by means of physical force or a show of authority. See Terry, 392 U.S. at 16, 19 n.16, 88 S.Ct. 1868.

¶ 39 The officer thus had a reasonable, valid basis for allowing Gow to enter the police vehicle-Gow's voluntary decision to seek assistance of that nature and Gow's continued participation in the encounter, which indicated his continued desire for such assistance. Under these circumstances, the pat-down search of Gow was reasonable.

¶ 40 Given our conclusion, it is unnecessary for us to address whether the function of "community caretaking," recognized by the United States Supreme Court in Colorado v. Bertine, 479 U.S. 367, 381, 107 S.Ct. 738, 93 L.Ed.2d 739 (1987), would provide an independent basis to validate the pat-down search in this case.

IV. Conclusion

¶ 41 The judgment of conviction is affirmed.

Román and Nieto , JJ., concur

      Gow does not challenge the extent of the search, arguing only that no search was constitutionally permitted. We limit our analysis accordingly. Specifically, we do not address whether it was constitutionally permissible for the officer to separately seize and search the contents of the iPad box as part of the search of Gow's person.

      Because Gow does not contend that the Colorado Constitution provides different or greater protection than the Fourth Amendment, we do not further address its protections.

      We do not address formal arrests because if an officer has probable cause to arrest an individual, the officer, without any additional cause or reason, may search the individual and areas under his control incident to the arrest. See e.g. , People v. Clouse , 859 P.2d 228, 234 (Colo. App. 1992).

      For an extensive discussion of the reach of the community caretaking function of police, see Michael R. Dimino, Sr., PolicePaternalism: Community Caretaking, Assistance Searches, and Fourth Amendment Reasonableness , 66 Wash. & Lee L. Rev. 1485 (Fall 2009).

      Sitting by assignment of the Chief Justice under provisions of Colo. Const. art. VI, § 5 (3), and § 24-51-1105, C.R.S. 2015.


author: Opinion by JUDGE BOORAS JUDGE BERGER, specially concurring.

text:
    Chris BERMEL, Plaintiff-Appellant, v. BLUERADIOS, INC., Defendant-Appellee.
    Court of Appeals No. 16CA0102
    Colorado Court of Appeals, Division VII.
    Announced February 23, 2017
    Kishinevsky & Raykin, LLC, Igor Raykin, Ian Griffin, Aurora, Colorado, for Plaintiff-Appellant
    Brosseau Bartlett Seserman, LLC, David B. Seserman, Chad Lieberman, Greenwood Village, Colorado, for Defendant-Appellee
   Opinion by JUDGE BOORAS

¶ 1 In Van Rees v. Unleaded Software, Inc. , 2016 CO 51, 373 P.3d 603, the supreme court granted certiorari review on the question whether the economic loss rule may bar a claim for civil theft under section 18-4-405, C.R.S. 2016 (the civil theft statute). Ultimately, the court did not answer that question because it was able to affirm on the narrower ground that the plaintiff had failed to prove one of the required elements of theft. Van Rees , ¶¶ 23-24.

¶ 2 This appeal raises the question left unanswered in Van Rees . Plaintiff, Chris Bermel, contends that the trial court erred when it denied his motion for summary judgment, in which he argued that the economic loss rule barred the claim of defendant, BlueRadios, Inc., for civil theft. Because the economic loss rule is a judicial construct, and because a civil theft claim is a statutory cause of action, we reject Bermel's argument and hold that the economic loss rule does not preclude a cause of action under the civil theft statute.

¶ 3 However, as to Bermel's Colorado Wage Protection Act (CWPA) claim, we conclude that summary judgment was improper, and we remand for further proceedings as to that claim.

I. Background

¶ 4 In 2009, Bermel entered into a "Contractor Agreement" with BlueRadios. Under the agreement, Bermel provided engineering services to BlueRadios. Contemporaneously with his execution of that agreement, Bermel also signed a "Proprietary Information and Inventions Agreement" (PIAA). The PIAA contained the following provision related to Bermel's removal, delivery, and return of "Company Materials":

All Company Materials shall be the sole property of the Company. I agree that during my employment and/or contracting arrangement with the Company, I will not remove any Company Materials from the business premises of the Company or deliver Company materials to any person or entity outside the Company, except as I am required to do in connection with performing the duties of my employment and/or contracting arrangement. I further agree that, immediately upon the termination of my employment and/or contracting arrangement by me or by the Company for any reason, or for no reason, or during my employment and/or contracting arrangement if so requested by the Company, I will return all Company Materials, apparatus, equipment and other physical property, or any reproduction of such property, excepting only (i) my personal copies of records relating to my compensation; (ii) my personal copies of any materials previously distributed generally to stockholders of the Company; and (iii) my copy of this agreement.

¶ 5 The parties renewed both agreements annually until July 2014. At that point, they were unable to agree on renewal terms, so the parties ended their relationship. However, anticipating that he might end up in litigation over unpaid wages, Bermel breached the PIAA by forwarding to his personal e-mail account (Gmail account) what he described as thousands of BlueRadios e-mails and attachments, some of which contained proprietary information.

¶ 6 Soon after the parties' contract expired, BlueRadios received a demand letter from Bermel requesting $5113.34, which consisted of unpaid wages and expenses he had incurred on behalf of BlueRadios. BlueRadios paid Bermel this amount approximately two months after he sent the demand letter.

¶ 7 Bermel filed the current lawsuit in August 2014, asserting claims for breach of contract, unjust enrichment, and violation of the CWPA, section 8-4-109(1)(a), (b), C.R.S. 2016.

¶ 8 During a subsequent deposition, Bermel revealed to BlueRadios that he had forwarded company e-mails to his Gmail account. As a result, BlueRadios filed counterclaims against him, including breach of contract; civil theft, under section 18-4-405 ; and conversion. BlueRadios also requested, and received, a preliminary injunction barring Bermel from "continuing to misappropriate [BlueRadios'] confidential information." Despite this injunction, Bermel continued to access, modify, and delete BlueRadios e-mails that he had forwarded to his Gmail account.

¶ 9 Both parties later filed motions for summary judgment. BlueRadios contended that Bermel was an independent contractor not entitled to the CWPA's protection, and Bermel argued that BlueRadios' civil theft and conversion claims were barred by the economic loss rule.

¶ 10 The court granted summary judgment in favor of BlueRadios on Bermel's CWPA claim, but it denied summary judgment on BlueRadios' civil theft and conversion claims. The parties then proceeded to trial on BlueRadios' counterclaims. After the close of evidence, Bermel moved for a directed verdict on BlueRadios' civil theft claim, again arguing that the economic loss rule precluded such a claim. And, again, the court rejected Bermel's argument, concluding that the economic loss rule does not bar a statutory cause of action.

¶ 11 Following trial, the court entered a written order finding Bermel liable on all of BlueRadios' counterclaims. Pursuant to the civil theft statute, the court awarded attorney fees and $200 in statutory damages on BlueRadios' civil theft claim. It awarded $1 in nominal damages on each of the other claims.

¶ 12 On appeal, Bermel contends that the trial court erred when it (1) denied his motion for summary judgment on BlueRadios' civil theft and conversion claims and (2) granted BlueRadios' motion for summary judgment on his CWPA claim. Before reaching their merits, we first address Bermel's preservation of these arguments.

¶ 13 Although in his motion for summary judgment Bermel raised the issue of the economic loss rule's application to BlueRadios' conversion counterclaim, he did not re-raise it in a motion for directed verdict or in a motion for judgment notwithstanding the verdict. Consequently, he failed to preserve that issue for appeal, so we will not address it. See, e.g. , Top Rail Ranch Estates, LLC v. Walker , 2014 COA 9, ¶ 44, 327 P.3d 321 (a district court's denial of a party's motion for summary judgment is not an appealable order unless the moving party preserves the issue by re-raising it in a later motion for directed verdict or judgment notwithstanding the verdict).

¶ 14 Bermel did, however, preserve his contentions regarding the application of the economic loss rule to a civil theft claim and the court's summary judgment on his CWPA claim. We address these two contentions in turn.

II. Standard of Review and Summary Judgment

¶ 15 We review de novo a trial court's ruling on a party's motion for summary judgment. Armed Forces Bank, N.A. v. Hicks , 2014 COA 74, ¶ 20, 365 P.3d 378. "Summary judgment is appropriate when the pleadings and supporting documents clearly demonstrate no issue of material fact exists, and the moving party is entitled to judgment as a matter of law." Olson v. State Farm Mut. Auto. Ins. Co. , 174 P.3d 849, 852 (Colo. App. 2007).

III. The Economic Loss Rule and Civil Theft

¶ 16 Bermel first contends that the trial court erred when it concluded that the economic loss rule does not bar BlueRadios' civil theft counterclaim. We are not persuaded.

A. The Economic Loss Rule

¶ 17 Under the economic loss rule, "a party suffering only economic loss from the breach of an express or implied contractual duty may not assert a tort claim for such a breach absent an independent duty of care under tort law." Town of Alma v. AZCO Constr., Inc. , 10 P.3d 1256, 1264 (Colo. 2000).

¶ 18 The Colorado Supreme Court adopted the economic loss rule in Town of Alma . In that case, the town contracted with a construction company for "improvements to [the town's] water distribution system." Id. at 1258. After discovering defects in the improvements to its water system, the town brought negligence claims against the construction company. Id.

¶ 19 The court held that the town's "negligence claim [wa]s based solely on the breach of a contractual duty resulting in purely economic loss, and thus [wa]s barred by application of the economic loss rule." Id. at 1266. In doing so, the court recognized that the rule was "originally born from products liability law," but the court held that its applicability was "broader, because it serves to maintain a distinction between contract and tort law." Id. at 1262.

¶ 20 In deciding whether the economic loss rule bars a particular claim, Town of Alma directs courts to focus on "determining the source of the duty that forms the basis of the action." Id. Not only must the duty arise from a source independent of the contract, it must also be a duty that is not memorialized in the parties' contract. BRW, Inc. v. Dufficy & Sons, Inc. , 99 P.3d 66, 74 (Colo. 2004).

B. Discussion

¶ 21 We agree with the trial court's conclusion that the economic loss rule does not bar a claim under the civil theft statute.

¶ 22 By its plain terms, the civil theft statute establishes both a cause of action and a remedy for victims of theft: an owner of stolen property "may maintain an action ... against the taker" to "recover two hundred dollars or three times the amount of the actual damages sustained ..., whichever is greater, and may also recover costs of the action and reasonable attorney fees." § 18-4-405. Indeed, in interpreting this statute in another context, our supreme court has concluded that "the General Assembly intended the [civil theft] statute to provide an owner with a private remedy against the taker that requires proof of a specified criminal act but not proof of a prior criminal conviction to recover treble damages, fees, and costs." Itin v. Ungar , 17 P.3d 129, 134 (Colo. 2000) (emphasis added); see also In re Marriage of Allen , 724 P.2d 651, 656 (Colo. 1986) (noting that the legislature enacted the civil theft statute for "a punitive ... purpose by depriving thieves ... of the immediate fruits of their criminal activities and by making such persons pay damages that by definition are three times greater than the amount necessary to compensate their victims").

¶ 23 In contrast to this legislatively created cause of action, the economic loss rule-a rule that seeks to maintain the boundary between the law of contracts and torts-is a judicial construct. See Town of Alma , 10 P.3d at 1264.

¶ 24 While maintaining the distinction between the law of contracts and torts is no doubt a laudable goal, the economic loss rule is nonetheless a judge-made rule. And that being the case, the economic loss rule cannot preclude a claim under the civil theft statute because the legislature explicitly provided that cause of action, and its attendant remedy, to victims of theft.

¶ 25 Indeed, as the Florida Supreme Court put it in Comptech , the leading case on this topic, "the Legislature has the authority to enact laws creating causes of action. If the courts limit or abrogate such legislative enactments through judicial policies, separation of powers issues are created, and that tension must be resolved in favor of the Legislature's right to act in this area." Comptech Int'l, Inc. v. Milam Commerce Park, Ltd. , 753 So.2d 1219, 1222 (Fla. 1999), receded from by Tiara Condo. Ass'n v. Marsh & McLennan Cos. , 110 So.3d 399, 400 (Fla. 2013) (restricting the economic loss rule's application to products liability cases); see also Boehme v. U.S. Postal Serv. , 343 F.3d 1260, 1266 (10th Cir. 2003) ("Colorado's economic loss rule has no application" to a party's claim under the forcible entry and detainer statute, section 13-40-104(1)(d), C.R.S. 2016, because "the Colorado legislature has provided a statutory remedy to landlords"); Ulbrich v. Groth , 310 Conn. 375, 78 A.3d 76, 102 (2013) (the economic loss rule does not bar claims under the Connecticut Uniform Trade Practices Act, overruling prior contrary authority); Stuart v. Weisflog's Showroom Gallery, Inc. , 308 Wis.2d 103, 746 N.W.2d 762, 772 (2008) (the economic loss rule "cannot apply to statutory claims, including those under the [Home Improvement Practices Act]" because doing so would "ignor[e] the public policies that are the basis for the [act]").

¶ 26 In short, allowing the economic loss rule to preclude a civil theft claim would thwart the legislature's intended goals of (1) punishing thieves, Marriage of Allen , 724 P.2d at 656 ; and (2) "provid[ing] an owner with a private remedy against the taker" of stolen property, Itin , 17 P.3d at 134.

¶ 27 In arguing to the contrary, Bermel relies principally on Makoto USA, Inc. v. Russell , 250 P.3d 625, 629 (Colo. App. 2009). In that case, a division of this court was presented with the same issue: the plaintiff argued that "the economic loss rule, as a judicial construct, cannot be applied to preclude a statutory claim." Id. The court agreed that "if the legislature intended to provide a remedy in addition to a contractual one, the statutory remedy would trump the economic loss rule." Id. Finding "no indication that the [civil theft] statute was intended to expand contractual remedies," however, the Makoto division concluded that the economic loss rule barred the plaintiff's civil theft claim. Id.

¶ 28 We agree with Makoto 's general statement that a private remedy provided by the legislature would trump the economic loss rule. But we disagree with Makoto 's focus on whether the legislature "intended to expand contractual remedies." Id.

¶ 29 In our view, by asking whether the legislature "intended to expand contractual remedies," id. the Makoto division incorporated the economic loss rule's policy rationales in its analysis. We think the inquiry is simply whether the legislature intended to establish a cause of action for victims of theft. And, in this case, under the plain terms of the statute, it is evident that the legislature intended to do so. Accordingly, we affirm the trial court's conclusion that the economic loss rule does not bar a claim under the civil theft statute.

IV. Bermel's CWPA Claim

¶ 30 Bermel also contends that the trial court erred in granting BlueRadios' motion for summary judgment on his CWPA claim under section 8-4-109(1)(a), (b). Specifically, he contends that the trial court failed to apply the CWPA's definition of "employee" when it concluded that Bermel was an independent contractor not entitled to the CWPA's protection. We agree.

¶ 31 Under the CWPA, an employee is "any person ... performing labor or services for the benefit of an employer in which the employer may command when, where, and how much labor or services shall be performed." § 8-4-101(5), C.R.S. 2016. The CWPA goes on to state that

[f]or the purpose of this article, an individual primarily free from control and direction in the performance of the service, both under his or her contract for the performance of service and in fact, and who is customarily engaged in an independent trade, occupation, profession, or business related to the service performed is not an "employee."

Id.

¶ 32 As we set forth above, BlueRadios filed a motion for summary judgment in which it contended that Bermel could not assert a claim under the CWPA because he was an independent contractor rather than an "employee." BlueRadios supported its motion with an affidavit from its president, deposition transcripts, and other exhibits. In the affidavit, the president averred the following:

• From 2009 to 2014, BlueRadios and Bermel annually renewed their "Contractor Agreement."
• BlueRadios gave Bermel "general project assignments"; Bermel "chose the order to perform work, the hours to work and the method for completing project assignments"; BlueRadios did not provid[e] any training to" Bermel; and Bermel "could pick and choose which assignments he wanted to work on."
• "After his deposition, [Bermel] produced a copy of a notebook that he testified he maintained and [that] reflected all of the direction and control he received from BlueRadios." The president had "reviewed [a] copy of the notebook" and said it "consists primarily of doodles, schematic drawings, personal notes (such as notes on [Bermel's] mortgage) and blank pages. The notebook shows that there was little, if any, direction given to or control exercised over how [Bermel] completed the tasks he was given."
• "In 2014, the Colorado Department of Labor and Employment conducted an audit of BlueRadios for the purpose of assessing whether the independent contractors working with BlueRadios were properly classified" as such. "The auditor conducted a very extensive and thorough review during which payroll records, time sheets, work assignments, contracts and other documents were reviewed." The auditor also "conducted several interviews and looked at the amount of oversight and control BlueRadios exercised over contractors. The Colorado Department of Labor and Employment concluded that independent contractors, including [Bermel], were properly classified as independent contractors and not employees."

¶ 33 In his response, Bermel contended that BlueRadios had cited cases that were inapplicable in determining whether a person was an employee or an independent contractor. Bermel asserted that the proper inquiry was whether he met the statutory definition of an "employee" under section 8-4-101(5). He further maintained that the question whether he was an employee or independent contractor involved disputed issues of material fact, but he did not support his allegations by "affidavits or otherwise" as required under C.R.C.P. 56(e).

¶ 34 The trial court concluded that BlueRadios' "exhibits set forth the way in which [Bermel] was treated by [BlueRadios] [as]-and held himself out via loans and federal tax forms to be-an independent contractor." Thus, because independent contractors may not avail themselves of the CWPA's protections, and Bermel "submitted no rebuttal evidence," the court granted BlueRadios' motion for summary judgment.

¶ 35 We agree with the trial court's conclusion that the evidence attached to BlueRadios' motion for summary judgment, which Bermel did not rebut, established that BlueRadios treated Bermel as an independent contractor. This unrebutted evidence was sufficient to carry BlueRadios' initial summary judgment burden of establishing that Bermel was, "in fact," "primarily free from control and direction in the performance of" his services to BlueRadios. § 8-4-101(5).

¶ 36 But the CWPA requires that the individual be "primarily free from control and direction in the performance of the service, both under his or her contract for the performance of service and in fact." Id. (emphasis added). It also requires that the individual be "customarily engaged in an independent trade, occupation, profession, or business related to the service performed ." Id. (emphasis added). The evidence attached to BlueRadios' motion for summary judgment, which included the parties' Contractor Agreement, did not establish that Bermel was free from control and direction under his contract or that he was customarily engaged in an independent trade, occupation, profession, or business related to the service performed.

¶ 37 The parties' contract contained the following provisions:

3. Rate of Payment for Services. The Company shall pay Contractor an hourly wage of $27.50/hr. for the services of the contractor, payable at regular payroll periods every 2-weeks. Company will provide Contractor time recording time sheet that shall be updated daily and signed and dated when submitted by the Contractor to the Company for payment. As an independent 1099 Contractor[,] the responsibility for any [and] all taxes and social security, etc[.] will be the responsibility of the Contractor.
4. Duties and Position. The Company hires the Contractor in the capacity of Electronics Design Engineer. The Contractor's duties may be reasonably modified at the Company's discretion from time to time.
5. Contractor to Devote Full Time to Company. The Contractor will devote full time, attention, and energies to the business of the Company, and, during this contract, will not engage in any other related business activity of the Company, regardless of whether such activity is pursued for profit, gain, or other pecuniary advantage [but] Contractor is not prohibited from making personal investments in any other businesses provided those investments do not require active involvement in the operation of said companies.
...
8. Restriction on Post Contract Compensation. For a period of 2 years after the end of the contract, the Contractor shall not start or have control in any business similar to that conducted by the company, either by soliciting any of its accounts or by operating within Employer's specific trade business.

¶ 38 In our view, these provisions raise a genuine issue of material fact as to whether Bermel was primarily free from BlueRadios' control and direction in his performance of services under the terms of the parties' contracts, and whether Bermel customarily engaged in an independent trade, occupation, profession, or business related to the services performed. In particular, under the terms of the contracts (1) BlueRadios required Bermel to "devote full time, attention, and energies to the business of" BlueRadios; (2) Bermel was prohibited from "engag[ing] in any other related business activity of" BlueRadios; (3) BlueRadios retained the right to reasonably modify Bermel's duties at its discretion; (4) BlueRadios contracted to pay Bermel at an hourly rate "payable at regular payroll periods every" two weeks; and (5) Bermel could not operate a business that offered services similar to those conducted by BlueRadios for two years after the conclusion of the Contractor Agreement. Accordingly, BlueRadios failed to carry its burden of establishing that no genuine dispute of material fact existed as to whether, under the parties' contracts, Bermel was an employee for purposes of the CWPA. We therefore reverse the trial court's grant of summary judgment on Bermel's CWPA claim.

¶ 39 In reaching this conclusion, we acknowledge that the parties could have provided better analysis in their summary judgment briefing to the trial court. BlueRadios did not cite the CWPA's definition of an employee, and Bermel did not support his response to BlueRadios' motion for summary judgment with any evidence. Nonetheless, BlueRadios failed to carry its initial summary judgment burden of establishing that Bermel was not an employee as that term is defined under section 8-4-101(5). Accordingly, reversal of the summary judgment on the CWPA claim is required.

V. Appellate Attorney Fees

¶ 40 Finally, BlueRadios contends that it should be awarded its attorney fees on appeal under the theft statute, section 18-4-405, and under the CWPA, section 8-4-110, C.R.S. 2016. We agree that BlueRadios is entitled to its appellate attorney fees under the civil theft statute. We therefore exercise our discretion under C.A.R. 39.1 to remand this issue to the trial court to determine and award the total amount of BlueRadios' reasonable fees incurred in litigating the civil theft issue on appeal. Payan v. Nash Finch Co. , 2012 COA 135M, ¶ 63, 310 P.3d 212. In light of our reversal of the trial court's grant of summary judgment on Bermel's CWPA claim, however, we need not address BlueRadios' request for appellate attorney fees under section 8-4-110.

VI. Conclusion

¶ 41 The summary judgment on the CWPA claim is reversed. The judgment is affirmed in all other respects. The CWPA claim is remanded for further proceedings consistent with this opinion and for determination of BlueRadios' reasonable fees under the civil theft statute.

JUDGE TERRY concurs.

JUDGE BERGER specially concurs.

JUDGE BERGER, specially concurring.

¶ 42 I agree with the division's disposition of this appeal and almost all of its analysis. My only departure is that I do not believe that BlueRadios met any part of its summary judgment burden on the CWPA claim.

¶ 43 As the division recounts, BlueRadios supported its summary judgment motion with extensive evidence, including an affidavit from its president. While Bermel responded to the summary judgment motion, and contended that there were disputed issues of material fact that precluded summary judgment, he did not, as C.R.C.P. 56(b) permits (and sometimes requires), submit any evidence in opposition to the summary judgment motion.

¶ 44 The division holds that the "unrebutted evidence [submitted by BlueRadios] was sufficient to carry BlueRadios' initial summary judgment burden of establishing that Bermel was, 'in fact,' 'primarily free from control and direction in the performance of' " his services to BlueRadios.

¶ 45 I disagree with this conclusion. In my view, BlueRadios did not meet any part of its summary judgment burden. The trial court had before it during the summary judgment proceedings the parties' contract. Several provisions in that contract (addressed by the division in connection with its conclusion that BlueRadios did not meet its summary judgment burden regarding control of Bermel by BlueRadios "under his or her contract") are relevant both to the control exercised by BlueRadios in fact as well as control that could be exercised under the contract.

¶ 46 Contractual provisions that impose restrictive covenants upon a worker, both during the service of the worker and after termination of the relationship, speak not only to hypothetical control, but control in fact. While it is possible that BlueRadios could have waived those restrictions, making them inconsequential in connection with the "in fact" inquiry, nothing in the summary judgment record so indicates. Thus, in my view, BlueRadios did not meet any part of its summary judgment burden and the trial court should have denied the motion in its entirety.

¶ 47 Other than this relatively minor disagreement, I join the division's opinion.

      The division cited West v. Roberts , 143 P.3d 1037 (Colo. 2006), for the proposition that the civil theft statute has been construed narrowly to avoid expanding contractual remedies. There, the supreme court held that a provision of the Uniform Commercial Code-adopted by the legislature and codified at section 4-2-403, C.R.S. 2016-had "abrogate[d] the stolen property statute so that 'theft' in that provision does not include any theft in which an owner voluntarily relinquishes property to a thief under a transaction of purchase." West , 143 P.3d at 1045. We agree that under the facts of Makoto , the West decision precluded the plaintiff's civil theft claim in that case. We do not agree however that West provides guidance on the issue of whether the economic loss rule can bar a statutory cause of action. West considered whether one legislative enactment abrogated another, whereas here we are considering whether a judicial construct can, in essence, abrogate a statutory cause of action.

      Section 8-70-115(1)(c), C.R.S. 2016, contains a similar definition of employee in the context of unemployment compensation insurance tax liability. In that context, a multi-factor test, in which no one factor is determinative, is used to assess whether an individual is engaged in an independent business. See Indus. Claim Appeals Office v. Softrock Geological Servs., Inc. , 2014 CO 30, ¶¶ 15, 16, 325 P.3d 560.

      Unless the summary judgment movant meets her initial burden, the responding party has no duty to submit any evidence in opposition to the motion. People v. Wunder , 2016 COA 46, ¶ 43, 371 P.3d 785. The mere fact that the moving party submits evidence in support of the motion does not, by itself, compel the opposing party to counter with evidence. Id. Only if the moving party demonstrates that there are no disputed issues of material fact and that it is entitled to summary judgment as a matter of law does the responsibility devolve upon the opposing party to submit evidence. Id. While it surely is risky for the opposing party to fail to present evidence in opposition, he is not required to do so unless the moving party first meets her burden. Id.