text:
    In re Rebecca REEVES-TONEY, Plaintiff, v. SCHOOL DISTRICT NO. 1 IN the CITY AND COUNTY OF DENVER, State of Colorado, Defendant.
    Supreme Court Case No. 18SA228
    Supreme Court of Colorado.
    May 28, 2019 Rehearing Denied June 17, 2019
    Attorney for Plaintiff: Charles Kaiser, Denver, Colorado
    Attorneys for Defendant: Molly H. Ferrer, Denver, Colorado, Connelly Law, LLC Sean Connelly, Denver, Colorado
    Attorneys for Amici Curiae the State of Colorado and the People of Colorado: Philip J. Weiser, Attorney General, Julie C. Tolleson, First Assistant Attorney General, Joseph Peters, Assistant Attorney General, Danny Rheiner, Assistant Attorney General, Denver, Colorado
    En Banc
   JUSTICE MÁRQUEZ delivered the Opinion of the Court.

¶1 In this original proceeding under C.A.R. 21, Defendant-Petitioner School District No. 1 in the City and County of Denver (DPS) seeks review of the trial court's denial of its motion to dismiss Plaintiff-Respondent Rebecca Reeves-Toney's constitutional challenge to the "mutual consent" provisions of section 22-63-202(2)(c.5) of the Teacher Employment, Compensation, and Dismissal Act of 1990 (TECDA), §§ 22-63-101 to - 403, C.R.S. (2018). Reeves-Toney alleges that these provisions violate the local control clause of article IX, section 15 of the Colorado Constitution by delegating local school boards' hiring decisions to principals and other administrators.

¶2 DPS moved to dismiss Reeves-Toney's complaint, arguing, among other things, that she lacks standing to bring her claim. The trial court agreed that Reeves-Toney lacks individual standing, but nevertheless concluded that she sufficiently alleged taxpayer standing to challenge section 22-63-202(2)(c.5) and plausibly alleged that the statute is facially unconstitutional. The court thus denied the motion to dismiss.

¶3 DPS sought C.A.R. 21 relief. We issued a rule to show cause and now make the rule absolute. We hold that because Reeves-Toney has not alleged an injury based on an unlawful expenditure of taxpayer money, she has failed to demonstrate a clear nexus between her status as a taxpayer and the challenged government action. Reeves-Toney therefore lacks taxpayer standing to bring her constitutional challenge to section 22-63-202(2)(c.5). Accordingly, we make the rule to show cause absolute and remand the case to the trial court with directions to dismiss Reeves-Toney's complaint.

I. Background

¶4 In 2010, the General Assembly enacted Senate Bill 10-191 (SB 191), which significantly amended TECDA provisions concerning teacher contracts and the transfer process. SB 191 eliminated the earlier practice of transferring teachers to schools without the consent of the principal of the recipient school. See § 22-63-206(5), C.R.S. (2018) ("All transfers to positions at other schools of the school district shall require the consent of the receiving school."). The bill also added paragraph (c.5) to section 22-63-202(2), which provides, as relevant here, that "each employment contract ... shall contain a provision stating that a teacher may be assigned to a particular school only with the consent of the hiring principal and with input from at least two teachers employed at the school." § 22-63-202(2)(c.5)(I), C.R.S. (2018). Such an assignment is called a "mutual consent assignment." § 22-63-202(2)(c.5)(IV).

¶5 Under SB 191, nonprobationary teachers who were deemed effective during the prior school year and who have not secured a mutual consent placement become members of a "priority hiring pool" for available positions. § 22-63-202 (2)(c.5)(III)(A). However, nonprobationary teachers who are unable to secure such a position after the longer of twelve months or two hiring cycles are placed on unpaid leave until they are able to secure an assignment. § 22-63-202(2)(c.5)(IV).

¶6 This is the third time this court has considered a challenge to the constitutionality of SB 191. Last year, we took up two challenges to the law's unpaid leave provisions. In Johnson v. School District No. 1 in the County of Denver , we addressed certified questions of law from the Tenth Circuit in a case in which a teacher argued that her placement on unpaid leave under section 22-63-202(2)(c.5) breached her contract and violated her due process rights. 2018 CO 17, ¶ 1, 413 P.3d 711, 712. We held that nonprobationary teachers who are placed on unpaid leave have no vested property interest in salary and benefits. Id. at ¶ 2, 413 P.3d at 713. We concluded, therefore, that a nonprobationary teacher placed on unpaid leave under section 22-63-202(2)(c.5)(IV) is not deprived of a property interest. Id.

¶7 In School District No. 1 in the City & County of Denver v. Masters , several teachers, together with the Denver Classroom Teachers Association (DCTA), alleged that DPS had invoked SB 191 to place hundreds of teachers on unpaid leave in violation of their rights to due process of law and the contracts clause of the Colorado Constitution. 2018 CO 18, ¶ 1, 413 P.3d 723, 725. Citing our decision in Johnson , announced the same day, we held that TECDA did not create a contractual relationship or vest nonprobationary teachers placed on unpaid leave with a property interest in salary and benefits. Id. at ¶ 2, 413 P.3d at 725-26.

¶8 Approximately two weeks after we issued our decisions in Johnson and Masters , Reeves-Toney filed the complaint in this case, raising the present challenge to SB 191's mutual consent provisions based on article IX, section 15 of the Colorado Constitution.

II. Facts and Procedural History

¶9 Plaintiff Rebecca Reeves-Toney is a nonprobationary elementary school teacher employed by DPS. On February 9, 2015, she took workers' compensation leave from her position after sustaining repeated injuries to her elbow while on the job.

¶10 Fourteen months later, on April 28, 2016, DPS sent Reeves-Toney a letter notifying her that it would no longer hold her position open. According to the letter, the collective bargaining agreement between DPS and the DCTA provided that when a teacher is on leave for a serious medical condition, the teacher's position with DPS will not be held open for more than one year.

¶11 In August 2017, the same month Reeves-Toney's temporary disability payments ended, DPS placed her in a limited term assignment for the 2017-18 school year. DPS also informed Reeves-Toney that if she did not secure a mutual consent position by August 31, 2018, she would be placed on unpaid leave.

¶12 On March 26, 2018, having been unable to secure a mutual consent position despite diligent efforts, Reeves-Toney filed the instant complaint seeking to enjoin DPS from placing her on unpaid leave. Reeves-Toney challenges the constitutionality of section 22-63-202(2)(c.5), asserting that the statute violates local school boards' right to "control of instruction" under article IX, section 15 of the Colorado Constitution by delegating to principals and other administrators the power to decide whether to afford a displaced teacher the opportunity to continue to teach for, and get paid by, DPS.

¶13 DPS sought to dismiss Reeves-Toney's complaint under C.R.C.P. 12(b)(5), arguing that she lacks standing to challenge the statute and failed to state a claim upon which relief could be granted. The trial court denied the motion. It agreed with DPS that Reeves-Toney lacks individual standing to pursue her complaint, reasoning that under this court's decision in Johnson , nonprobationary teachers who are placed on unpaid leave have no vested property interest in salary and benefits. ¶ 1, 413 P.3d at 713. Thus, the trial court concluded, Reeves-Toney could not establish a legally protected interest in continued employment.

¶14 Nevertheless, the trial court concluded that Reeves-Toney had sufficiently alleged taxpayer standing to challenge the mutual consent provisions in section 22-63-202(2)(c.5). The trial court observed that Colorado historically provided for broad taxpayer standing. "So slight was the standing burden," the trial court noted, that "the inquiry had been said to 'collapse' the two-part standing inquiry into a single-question issue of whether the plaintiff-taxpayer has averred a violation of a specific constitutional provision." But the trial court acknowledged that more recently, in Hickenlooper v. Freedom From Religion Foundation, Inc. , we articulated a limit on that broad conceptualization of taxpayer standing, holding that "to satisfy the injury-in-fact requirement, ... the plaintiff must demonstrate a clear nexus between his status as a taxpayer and the challenged government action." 2014 CO 77, ¶ 12, 338 P.3d 1002, 1008. In Hickenlooper , the trial court noted, we concluded the plaintiffs lacked taxpayer standing because they failed to "assert any injury based on an unlawful expenditure of their taxpayer money," or to "allege that their tax dollars [we]re being used in an unconstitutional manner." Id. at ¶ 14, 338 P.3d at 1008.

¶15 Turning to the complaint in this case, the trial court acknowledged that Reeves-Toney had alleged neither an "expenditure nor transfer of taxpayer funds ... as related to [her] particular circumstances." Nevertheless, the trial court was persuaded by Reeves-Toney's argument that she had established a clear nexus between her status as a taxpayer and the allegedly unconstitutional hiring procedure because she "is a taxpayer and her tax dollars finance teachers' salaries which are distributed pursuant to employment contracts which are entered into pursuant to the allegedly unconstitutional procedure." The trial court further found that Reeves-Toney had plausibly alleged that the mutual consent provisions of section 22-63-202(2)(c.5) impermissibly usurp the local board's decision-making authority in violation of the local control provision in article IX, section 15 of the Colorado Constitution. The trial court therefore denied DPS's motion to dismiss, concluding that Reeves-Toney had sufficiently alleged that the mutual consent provisions are facially unconstitutional.

¶16 DPS then filed this C.A.R. 21 petition, and we issued a rule to show cause.

III. Analysis

¶17 We begin by discussing the exercise of our original jurisdiction in this case. Next, after setting out the applicable standard of review, we consider whether Reeves-Toney's complaint alleged an injury in fact in her capacity as a taxpayer sufficient to establish standing to challenge the constitutionality of the mutual consent provisions in section 22-63-202(2)(c.5). We conclude it did not. We hold that because Reeves-Toney has not alleged an injury based on an unlawful expenditure of taxpayer money, she has failed to establish a clear nexus between her status as a taxpayer and the challenged government action. Accordingly, we make the rule to show cause absolute, and remand the case to the trial court with directions to dismiss Reeves-Toney's complaint.

A. Original Jurisdiction

¶18 An original proceeding under C.A.R. 21 is an extraordinary remedy that is limited in both its purpose and availability. In re People v. Tafoya , 2019 CO 13, ¶ 13, 434 P.3d 1193, 1195. That said, we have chosen to exercise our jurisdiction in cases that "raise issues of first impression and that are of significant public importance." Dwyer v. State , 2015 CO 58, ¶ 4, 357 P.3d 185, 187-88. In Dwyer , for example, we chose to review a trial court's order denying a motion to dismiss a constitutional challenge in a case with overriding public importance and heightened interest in a swift resolution, observing that the case presented "a pure question of law" and "the existing record [was] sufficient" for resolution of the issues. Id. at ¶ 4, 357 P.3d at 188.

¶19 Reeves-Toney's complaint challenges the constitutionality of landmark legislation that has already been the subject of significant litigation. Although our decisions in Masters and Johnson addressed some of the constitutional concerns with SB 191, the instant complaint raises a new constitutional challenge-whether the Act's mutual consent provisions violate article IX, section 15 of the Colorado Constitution -a claim that had been raised in at least one other trial court action at the time we granted review. See Warden v. Westminster Pub. Sch. , No. 2018CV31083 (Adams Cty. Dist. Ct. filed June 19, 2018). Finally, the petition presents a pure question of law amenable to swift resolution without further proceedings in the trial court. We conclude that these circumstances merit the exercise of our original jurisdiction.

B. Standard of Review

¶20 "Whether a plaintiff has standing to sue is a question of law that we review de novo." Barber v. Ritter , 196 P.3d 238, 245 (Colo. 2008). In determining whether standing has been established, we accept as true all material allegations of fact in the complaint. State Bd. for Cmty. Colleges & Occupational Educ. v. Olson , 687 P.2d 429, 434 (Colo. 1984).

C. Reeves-Toney Lacks Taxpayer Standing

¶21 Standing is a threshold issue that must be satisfied in order for a court to decide a case on the merits. Ainscough v. Owens , 90 P.3d 851, 855 (Colo. 2004). The purpose of the standing inquiry is to test a litigant's right to raise a legal argument or claim. City of Greenwood Vil. v. Petitioners for the Proposed City of Centennial , 3 P.3d 427, 436 (Colo. 2000).

¶22 To establish standing under Colorado law, a plaintiff must show both "(1) that [she] 'suffered an injury in fact,' and (2) that the injury was to a 'legally protected interest.' " Barber , 196 P.3d at 245 (quoting Wimberly v. Ettenberg , 194 Colo. 163, 570 P.2d 535, 538 (1977) ). The standing doctrine is rooted in the separation of the judicial, legislative, and executive powers mandated by article III of the Colorado Constitution. It prevents judicial intrusion into legislative and executive spheres by permitting only injured parties-not the public in general-to seek redress in the courts. Id. at 254-55 (Eid, J., concurring in the judgment). Put differently, the standing requirement distinguishes "those particularly injured by ... government action," who may present their controversy for resolution by the courts, from members of the general public, whose interests are more remote and who "must address their grievances against the government through the political process." Id. at 255 (Eid, J., concurring in the judgment); see also Hickenlooper , ¶ 9, 338 P.3d at 1006 ("[T]he injury-in-fact requirement[ ] maintains the separation of powers ... by preventing courts from invading legislative and executive spheres.").

¶23 Although Colorado permits relatively broad taxpayer standing, "the injury-in-fact requirement [provides] conceptual limits to the doctrine when plaintiffs challenge an allegedly unlawful government action." Hickenlooper , ¶ 12, 338 P.3d at 1008. We have recently clarified that to meet the injury-in-fact requirement, a plaintiff relying on her status as a taxpayer to confer standing must demonstrate "a clear nexus between h[er] status as a taxpayer and the challenged government action." Id. Importantly, the interest of the taxpayer who challenges the constitutionality of government action is her "economic interest in having h[er] tax dollars spent in a constitutional manner." Conrad v. City & Cty. of Denver , 656 P.2d 662, 668 (Colo. 1982). Thus, a taxpayer asserts injury in fact to a legally protected interest when she challenges the allegedly unconstitutional expenditure of public funds to which she has contributed by her payment of taxes. See Hickenlooper , ¶ 12, 338 P.3d at 1008.

¶24 In Barber v. Ritter , for example, we held that plaintiffs established taxpayer standing where they alleged that the legislature had transferred money from certain cash funds to the state's General Fund to be used for general government expenses without voter approval in violation of article X, section 20 of the Colorado Constitution, and that the transfers created unconstitutional debt in violation of article XI, sections 3 and 4. 196 P.3d at 247, 253. Similarly, in Nicholl v. E-470 Public Highway Authority , we concluded that a taxpayer who challenged the E-470 highway financing plan under article X, section 20 had standing to "seek[ ] review of what he claims is an unlawful government expenditure which is contrary to our state constitution." 896 P.2d 859, 866 (Colo. 1995). In Dodge v. Department of Social Services , we held that taxpayers had standing to challenge expenditures of public funds to finance nontherapeutic abortions where they alleged that such spending violated a constitutional article providing that no money could be disbursed from treasury except upon appropriations made by law. 198 Colo. 379, 600 P.2d 70, 71-72 (1979). And in Conrad v. City & County of Denver , we held taxpayers had standing to challenge government use of public funds on a nativity scene they alleged unconstitutionally supported or gave preference to one religion to the exclusion of others. 656 P.2d 662, 669 (Colo. 1982). In each of these cases, the alleged unlawful government action concerned the alleged misappropriation or misuse of taxpayer money.

¶25 In contrast, in Hickenlooper , plaintiffs alleged that certain governors of Colorado had unconstitutionally endorsed religion during their time in office by issuing honorary proclamations recognizing a statewide day of prayer.¶ 12, 338 P.3d at 1005. Though the plaintiffs asserted in their complaint that they were Colorado taxpayers, they did "not assert any injury based on an unlawful expenditure of their taxpayer money, nor ... allege that their tax dollars [were] being used in an unconstitutional manner." Id. at ¶ 14, 338 P.3d at 1008. We therefore held that plaintiffs did not allege an injury in fact sufficient to establish standing in their capacity as taxpayers. Id. at ¶ 15, 338 P.3d at 1008. In reaching that conclusion, we specifically rejected the argument that certain costs incidental to the issuance of the proclamations could establish the requisite nexus between plaintiffs' status as taxpayers and the challenged government action. Id. We reasoned that to allow such costs (which included use of a computer, basic office supplies, and state employee time) to confer standing would permit "any and all members of the public ... to challenge literally any government action." Id . We declined to read article III so expansively. Id.

¶26 Similarly, in Brotman v. East Lake Creek Ranch, L.L.P. , we concluded that the Land Board's alleged mismanagement of school lands had no effect on the plaintiff (a neighboring landowner) as a taxpayer where the plaintiff did not allege that the Land Board unlawfully spent any taxpayer funds, and where the alleged mismanagement of school lands could not, in any event, cause a shortfall in funds that would affect the state's financing of schools through the taxing power. 31 P.3d 886, 891-92 (Colo. 2001).

¶27 Here, Reeves-Toney challenges the constitutionality of the mutual consent provisions of section 22-63-202(2)(c.5). The first of those provisions, subsection 22-63-202(2)(c.5)(I), requires teachers' contracts to include a provision regarding mutual consent assignments:

[E]ach employment contract ... shall contain a provision stating that a teacher may be assigned to a particular school only with the consent of the hiring principal and with input from at least two teachers employed at the school and chosen by the faculty of teachers at the school to represent them in the hiring process, and after a review of the teacher's demonstrated effectiveness and qualifications, which review demonstrates that the teacher's qualifications and teaching experience support the instructional practices of his or her school.

The second, section 22-63-202(2)(c.5)(IV), provides that a nonprobationary teacher who is unable to secure a mutual consent position within twelve months or two hiring cycles shall be placed on unpaid leave:

If a nonprobationary teacher is unable to secure a mutual consent assignment at a school of the school district after twelve months or two hiring cycles, whichever period is longer, the school district shall place the teacher on unpaid leave until such time as the teacher is able to secure an assignment.

Reeves-Toney complains that these provisions unconstitutionally delegate local school boards' responsibility to control instruction as required by article IX, section 15 of the Colorado Constitution. That provision directs the General Assembly to provide for the organization of school districts, each with a board of education made up of elected directors. Colo. Const. art. IX, § 15. It further provides that "[s]aid directors shall have control of instruction in the public schools of their respective districts." Id.

¶28 We conclude that Reeves-Toney has failed to establish a clear nexus between her status as a taxpayer and the constitutional violation she alleges. To meet the injury-in-fact requirement, Reeves-Toney was required to show that "her tax dollars [we]re spent in an unconstitutional manner." Barber , 196 P.3d at 255 (Eid, J., concurring in the judgment). But as the trial court found, her complaint asserted "neither an alleged expenditure nor transfer of taxpayer funds." Given this finding, we hold the trial court erred in concluding that Reeves-Toney had nonetheless established standing as a taxpayer.

¶29 We disagree with the trial court's reasoning that teachers' salaries paid by DPS provide a sufficient nexus to confer taxpayer standing to challenge section 22-63-202(2)(c.5). In arguing that the mutual consent provisions violate article IX, section 15, Reeves-Toney does not allege that DPS is constitutionally prohibited from paying the salaries of any of its teachers. In fact, she does not allege any direct fiscal impact on taxpayers tethered to SB 191's requirement that the hiring principal consent to teacher assignments. Instead, DPS's expenditure of money on teachers' salaries is, at most, incidental to the mutual consent assignment provisions Reeves-Toney challenges as violating school boards' right to local "control of instruction" under article IX, section 15. Cf. Hickenlooper , ¶ 15, 338 P.3d at 1008.

¶30 Taxpayer standing does not flow from every allegedly unlawful government action that has a cost. If it did, taxpayers would have standing to challenge virtually every government action with which they disagreed, and our state courts would be transformed into "forums in which to air generalized grievances about the conduct of state government." Dodge , 600 P.2d at 72 (Dubofsky, J., specially concurring); cf. Hein v. Freedom From Religion Found., Inc. , 551 U.S. 587, 593, 127 S.Ct. 2553, 168 L.Ed.2d 424 (2007) ("[I]f every federal taxpayer could sue to challenge any Government expenditure, the federal courts would cease to function as courts of law and would be cast in the role of general complaint bureaus."). Instead, to establish standing as a taxpayer, a plaintiff must establish an injury relevant to her status as a taxpayer-that is, to the use of her tax dollars . Here, because Reeves-Toney has alleged no unconstitutional expenditure of public funds to which she has contributed by her payment of taxes, we conclude that she has failed to establish any injury relevant to her status as a taxpayer.

¶31 Because we hold that Reeves-Toney has not shown standing as a taxpayer to challenge section 22-63-202(2)(c.5), we do not consider whether she has plausibly alleged that the statute is unconstitutional. We make the rule to show cause absolute and remand the case to the trial court with directions to dismiss Reeves-Toney's complaint.

IV. Conclusion

¶32 We hold that because Reeves-Toney has alleged no injury based on an unlawful expenditure of taxpayer money, she has failed to demonstrate a clear nexus between her status as a taxpayer and the challenged government action. Reeves-Toney therefore lacks taxpayer standing to bring her constitutional challenge to section 22-63-202(2)(c.5). Accordingly, we make the rule to show cause absolute and remand the case to the trial court with directions to dismiss Reeves-Toney's complaint.

      Amici Curiae the State of Colorado and the People of Colorado have described SB 191 as a landmark legislative reform.

      A nonprobationary teacher is distinguishable from a probationary teacher, defined under SB 191 as "a teacher who has not completed three consecutive years of demonstrated effectiveness or a nonprobationary teacher who has had two consecutive years of demonstrated ineffectiveness." § 22-63-103(7), C.R.S. (2018).

      In her complaint, Reeves-Toney sought declaratory and injunctive relief. During the pendency of this original proceeding, Reeves-Toney notified this court that she has obtained a mutual consent position. As a result, she no longer seeks injunctive relief. We agree with the parties that this development does not render the case moot because Reeves-Toney continues to seek declaratory relief and back pay.

      Reeves-Toney's complaint did not allege that she was a taxpayer, but the trial court nevertheless concluded that she adequately alleged taxpayer status by virtue of her employment with DPS.

      Colorado's approach stands in contrast to the United States Supreme Court's narrow view of taxpayer standing. See Hickenlooper , ¶ 12, 338 P.3d at 1008 (observing that under federal law, "[a]bsent special circumstances ... standing cannot be based on a plaintiff's mere status as a taxpayer" (quoting Ariz. Christian Sch. Tuition Org. v. Winn , 563 U.S. 125, 134, 131 S.Ct. 1436, 179 L.Ed.2d 523 (2011) )).

      The trial court correctly concluded that under Masters and Johnson , Reeves-Toney lacks individual standing to pursue her complaint.


source: Caselaw Access Project

license: Public Domain

text:
    Thomas KLUN and Joseph Klun, Jr., Plaintiffs-Appellees v. Michael KLUN, Defendant-Appellant
    and Concerning, Bill Tyner, Division Engineer, Water Division 2, Appellee Pursuant to C.A.R. 1(e).
    Supreme Court Case No. 18SA266
    Supreme Court of Colorado.
    June 3, 2019
    Attorneys for Defendant-Appellant: Carlson, Hammond & Paddock, LLC, Karl D. Ohlsen, Katrina B. Fiscella, Denver, Colorado
    Attorneys for Plaintiffs-Appellees: Stinnett Masters & Massey LLP, Jeff A. Massey, Colorado Springs, Colorado
    No appearance on behalf of Division Engineer.
    En Banc
   JUSTICE GABRIEL delivered the Opinion of the Court.

¶1 Defendant Michael Klun appeals the water court's order denying his motion for attorney fees after he prevailed on all claims brought against him in the underlying action by plaintiffs Thomas Klun and Joseph Klun, Jr. (because the parties are brothers and share the same last name, we will consistently refer to Michael Klun as "defendant" and Thomas Klun and Joseph Klun, Jr., as "plaintiffs," even though in the initial litigation between them, which we discuss below, their roles were reversed). Defendant here asserts that he is entitled to recover his attorney fees pursuant to a fee-shifting provision of a prior settlement agreement (the "Settlement Agreement") between him and plaintiffs.

¶2 The fee-shifting clause at issue provided that the prevailing party in an action to enforce, by any means, any of the terms of the Settlement Agreement shall be awarded all costs of the action, including reasonable attorney fees. Here, plaintiffs' claims, in substance, sought relief based on allegations that defendant had breached the terms of the Settlement Agreement, and defendant responded by arguing that it was plaintiffs' claims that were inconsistent with that Agreement. In these circumstances, we conclude that plaintiffs' claims constituted an effort to enforce the terms of the Settlement Agreement. Indeed, consistent with this conclusion, plaintiffs themselves had asserted a claim for fees pursuant to the fee-shifting clause at issue.

¶3 Accordingly, we hold that defendant, as the prevailing party on all claims below, is entitled to recover his attorney fees pursuant to the Settlement Agreement's fee-shifting clause, and we therefore reverse the water court's order denying an award of such fees and remand this case for a determination of the trial and appellate fees to be awarded to defendant.

I. Facts and Procedural History

¶4 In 2011, defendant sued plaintiffs for dissolution and winding up of their family-held partnership, Klun Farm & Cattle, which owned certain farm property and associated shares of water stock.

¶5 Several months later, the parties reached a mediated settlement in which plaintiffs agreed to buy out defendant's interest in the partnership, including defendant's interest in the farm property and associated shares of water stock. Plaintiffs ultimately did not fulfill their obligations under this settlement, however, and over the next two years, defendant filed four motions in the Pueblo district court to enforce the settlement. These proceedings culminated in 2014, when the court entered a money judgment against plaintiffs in excess of $1.6 million and ordered defendant to convey the farm property and water shares to plaintiffs upon payment in full by plaintiffs. The court also awarded attorney fees to defendant based on plaintiffs' "groundless and frivolous defense and obdurate litigation behavior."

¶6 Several weeks later, plaintiffs filed petitions in bankruptcy seeking reorganization under Chapter 11. Defendant participated in the bankruptcy proceedings as plaintiffs' largest unsecured creditor.

¶7 The parties subsequently resolved the bankruptcy proceedings by entering into a memorandum of understanding that was subsequently finalized into the Settlement Agreement at issue. As pertinent here, section 2 of the Settlement Agreement required plaintiffs to convey their entire interest in three parcels of land (parcels A, B, and C), as well as the shares of water stock associated with those parcels, to defendant. Section 7 provided, in pertinent part, "The Parties acknowledge that all existing right away [sic] accesses remain unaffected." In section 10, the parties represented and warranted that they had neither made nor caused to be made "any encumbrances, liens or other interests on the Property to be transferred." And section 13(a) included, as pertinent here, a fee-shifting clause that entitled the prevailing party in any action to enforce the Settlement Agreement, regardless of the means of enforcement, to an award of costs, including reasonable attorney fees. In consideration of plaintiffs' representations and contractual promises, defendant agreed to provide plaintiffs with a full release and to file an appropriate satisfaction of judgment and dismissal of all remaining claims against plaintiffs. Pursuant to the Settlement Agreement, plaintiffs conveyed parcels A, B, and C to defendant by general warranty deed.

¶8 Prior to the Settlement Agreement, the parties' family farm had been operated as a single unit. The fragmentation effectuated by the Settlement Agreement almost immediately led to conflicts and confrontations among the parties. According to plaintiffs, shortly after signing the Settlement Agreement, defendant, contrary to property lines that were acknowledged and acquiesced to for over fifty years, began preventing plaintiffs from accessing head gates, valves, and ditch roads that they needed to access to irrigate their property, and defendant allegedly damaged a divider box weir to divert extra water into his lateral. In addition, plaintiffs alleged that defendant had dug up plaintiffs' pipeline at a head gate and permanently removed an air vent, shut-off valve, and Alfalfa Valve. Plaintiffs further claimed that defendant moved the shut-off valve onto his property, constructed a new road and large berm on the southern property line of his parcel, and excluded plaintiffs from all ingress and egress on the parcels that were transferred to defendant under the Settlement Agreement.

¶9 In light of the foregoing, and based on their view that under the express terms of the Settlement Agreement, they had retained all historical rights of ingress and egress, including access to all valves, head gates, and ditch roads on all parcels whether they were exchanged or not, plaintiffs filed the present action in the water court. In this action, plaintiffs asserted claims for (1) a temporary restraining order and preliminary injunction precluding defendant from denying plaintiffs reasonable historical access to the head gate that was the sole access point to the only lateral that provided irrigation water to plaintiffs' farm land; (2) a declaration that defendant shall not limit reasonable access to head gates and valves historically used to irrigate plaintiffs' farm operation, shall not exclude plaintiffs from historical easements affecting plaintiffs' farm operation, and shall remove the above-referenced berm, which plaintiffs alleged restricted the natural flow of irrigation water on which plaintiffs relied; (3) conversion of plaintiffs' personal property by taking possession of plaintiffs' air vent, valves, and pipeline, among other property, as well as by diverting plaintiffs' water from the newly constructed diverter box; and (4) trespass by destroying and restricting access to plaintiffs' property without legal right or plaintiffs' consent.

¶10 Plaintiffs subsequently filed a motion for partial summary judgment, alleging, among other things, that (1) pursuant to the Settlement Agreement, they had retained all of their historical rights of ingress and egress, including access to all valves, head gates, and ditch roads on all parcels whether they were exchanged or not, and (2) "[t]he clear and unambiguous terms of the Settlement Agreement demonstrate that the Parties intended and did in fact contractually agree that all rights of ingress and egress would survive the exchange of the parcels." Based on these allegations, plaintiffs asserted, "The defendant has breached the Settlement Agreement by unilaterally restricting the Plaintiffs' access to all historical rights of way, while maintaining that he has unfettered access to the Plaintiffs' property."

¶11 Defendant also moved for partial summary judgment, specifically as to plaintiffs' declaratory judgment, conversion, and trespass claims. As pertinent here, he argued that plaintiffs were not entitled to relief on these claims because they had "voluntarily divested themselves of the property rights they now seek to recapture by executing the June 4, 2015, Warranty Deed and [the Settlement Agreement]." Thus, like plaintiffs' motion, defendant's motion focused on the Settlement Agreement.

¶12 The water court granted partial summary judgment in defendant's favor on the portions of plaintiffs' declaratory judgment claim requesting that the court order defendant to return the irrigation pipe to its prior condition (including returning plaintiffs' air vent, Alfalfa Valve, and shut-off valve to where they were previously), to move the road from on top of plaintiffs' pipeline, and to preclude defendant from padlocking any common valves. The court otherwise denied both parties' motions for partial summary judgment.

¶13 The case proceeded to trial, and during the trial, the water court dismissed certain of plaintiffs' claims pursuant to C.R.C.P. 41(b)(1). After the conclusion of the evidence and the submission of written closing arguments by the parties, the court then issued detailed and comprehensive findings of fact and conclusions of law, ruling against plaintiffs on all of their remaining claims and entering judgment for defendant. As pertinent here, the court rejected plaintiffs' claims for conversion and trespass because plaintiffs had "failed to present any credible evidence supporting their theoretical property line." The court also rejected plaintiffs' easement claims because, among other things, those claims were contrary to both the Settlement Agreement's plain language and plaintiffs' repeated agreements to convey their "entire interest" without any indication or statement of intent to reserve access rights to the transferred property.

¶14 Defendant then requested attorney fees pursuant to section 13(a) of the Settlement Agreement. Plaintiffs opposed this motion, contending that section 13(a) "clearly and unambiguously applies to claims of breach of the agreement and suits to obtain specific performance" and that defendant was not entitled to attorney fees because the provision was silent as to claims for declaratory relief.

¶15 The water court sided with plaintiffs and denied defendant's fee motion. In so ruling, the court stated, in pertinent part:

The Court finds that Section 13(a) of the parties' Settlement Agreement does not provide a basis for an award of attorney fees to Defendant under the facts of this case. Plaintiffs did not contend that Defendant breached the settlement agreement, did not pursue a breach of contract or specific performance claim. Plaintiffs sought only a declaratory judgment and injunctive relief. Therefore, Plaintiffs' claims in this matter did not violate the Settlement Agreement. The litigation in this case did not involve enforcement of the Settlement Agreement.

¶16 Defendant now appeals from this order.

II. Analysis

¶17 After setting forth the applicable standard of review, we consider whether section 13(a) of the Settlement Agreement mandates an award of attorney fees on the facts of this case. We conclude that it does.

A. Standard of Review

¶18 Contract interpretation presents a question of law that we review de novo. Ad Two, Inc. v. City & Cty. of Denver ex rel. Mgr. of Aviation , 9 P.3d 373, 376 (Colo. 2000). In construing a contract, our primary goal is to determine and give effect to the intent of the parties. Id. We determine the parties' intent primarily from the language of the instrument itself. Id. When a written contract is complete and free from ambiguity, we will deem it to express the intent of the parties, and we will enforce it according to its plain language. Id. In ascertaining whether provisions of an agreement are ambiguous, we review the instrument's language and construe it consistent with the plain and generally accepted meaning of the words employed. Id.

¶19 Terms used in a contract are ambiguous when they are susceptible of more than one reasonable interpretation. Id. The mere fact that the parties may interpret the agreement differently, however, does not alone establish an ambiguity in the agreement. Id. at 377. Absent such ambiguity, we will not look beyond the four corners of the agreement to determine the meaning intended by the parties. Id. at 376-77.

B. Application

¶20 Section 13(a) of the Settlement Agreement provides:

Nothing in this Agreement will be construed so as to impair any legal or equitable right of either Party hereto to enforce any of the terms of this Agreement by any means , including without limitation , an action for damages or a suit to obtain specific performance of any or all of the terms of this Agreement. In the event of such action, the prevailing Party shall be awarded all costs of the action, including reasonable attorneys' fees, in addition to any other relief to which such Party may be entitled.

(Emphases added.)

¶21 On the facts before us, we conclude that this provision mandates an award of attorney fees to defendant in this case.

¶22 As an initial matter, we note that, contrary to plaintiffs' assertion and the water court's ruling, the language of this provision is not limited to claims for breach of contract or specific performance. Rather, it unambiguously mandates an award of fees to the prevailing party in any action to enforce the agreement, regardless of the means by which enforcement is sought (i.e., enforcement "by any means"), including "without limitation" actions for damages or specific performance. On its face, then, the provision contemplates claims to enforce the agreement beyond just damages actions for breach of contract and suits to obtain specific performance. The contrary reading by plaintiffs and the water court gives no meaning to the phrase "by any means, including without limitation." Accordingly, we cannot agree with the narrow interpretation advanced by plaintiffs and the water court.

¶23 The question thus becomes whether plaintiffs' claims amounted to an effort to enforce any of the Settlement Agreement's terms. We conclude that they did. Specifically, the general allegations of plaintiffs' complaint began by quoting the Settlement Agreement. The complaint then proceeded to describe defendant's actions that plaintiffs maintain were contrary to that Agreement. Although the complaint did not expressly allege breaches of the Agreement, that was the import of the allegations, and plaintiffs' motion for partial summary judgment made clear that that was precisely what plaintiffs were alleging. Thus, as noted above, in their motion, plaintiffs asserted that (1) pursuant to the Settlement Agreement, they had retained all of their historical rights of ingress and egress on all parcels whether they were exchanged or not; (2) "[t]he clear and unambiguous terms of the Settlement Agreement demonstrate that the Parties intended and did in fact contractually agree that all rights of ingress and egress would survive the exchange of the parcels"; and (3) "[t]he defendant has breached the Settlement Agreement by unilaterally restricting the Plaintiffs' access to all historical rights of way, while maintaining that he has unfettered access to the Plaintiffs' property."

¶24 Similarly, in their reply in further support of their motion, plaintiffs contended, "The clear and unambiguous terms of the Settlement Agreement demonstrate that the Parties intended and did in fact contractually agree that all rights of ingress and egress would survive the exchange of the parcels, whether on the Plaintiffs' property or the Defendant's property." And plaintiffs asserted that defendant was attempting to alter the terms of the Settlement Agreement to refuse access to plaintiffs but continue unfettered access to plaintiffs' property "in direct conflict with the express terms of the Settlement Agreement and established water law jurisprudence."

¶25 Accordingly, plaintiffs' own pleadings made clear that their claims turned on their interpretation of the Settlement Agreement, the alleged terms of which plaintiffs were seeking to enforce.

¶26 Notably, defendant and the water court likewise appear to have understood that plaintiffs' claims implicated the terms of the Settlement Agreement. Accordingly, in his motion for partial summary judgment, defendant contended that through their claims for relief in this case, plaintiffs were seeking to regain the rights that they had prior to the Settlement Agreement and that their effort to do so was "contrary to the express terms of the settlement, the conveyance, the circumstances surrounding dissolution, and the continued conflict between the parties." Defendant further asserted, "Plaintiffs voluntarily divested themselves of the property rights they now seek to recapture by executing the June 4, 2015, Warranty Deed and [the Settlement Agreement]."

¶27 Similarly, notwithstanding its later order denying defendant's motion for attorney fees, the water court found, among other things, that plaintiffs' requested easements were contrary to the plain terms of the Settlement Agreement.

¶28 In our view, the foregoing facts make clear that through their claims for relief, plaintiffs were, in fact, seeking to enforce the terms of the Settlement Agreement. Indeed, consistent with this conclusion, plaintiffs themselves repeatedly asserted a right to attorney fees under the fee-shifting provision of the Settlement Agreement. Plaintiffs requested fees in their complaint. They did so in their C.R.C.P. 26(a)(1) disclosures, in which they expressly stated that they were seeking "reasonable attorney fees pursuant to the written agreement between the parties." And they did so in their written closing argument, when they reiterated their request for "their attorney fees and costs incurred in prosecuting this matter."

¶29 Plaintiffs' contemporaneous actions and course of performance speak louder than their post-judgment words. Cf. Pepcol Mfg. Co. v. Denver Union Corp. , 687 P.2d 1310, 1315 (Colo. 1984) (noting that extrinsic evidence of the parties' performance under a contract before any controversy arose is indicative of their intent at the time of contracting). Indeed, it was only after the water court ruled against them and in defendant's favor on all claims in this case that plaintiffs changed their position and argued that their claims did not implicate the fee-shifting provision of the Settlement Agreement. Having themselves sought attorney fees under that provision, plaintiffs tacitly acknowledged that their claims sought to enforce the Settlement Agreement's terms. Having done so, plaintiffs cannot now take the opposite position, merely because their lack of success at trial rendered them liable for defendant's attorney fees under the Settlement Agreement.

¶30 For these reasons, we conclude that defendant is entitled to attorney fees pursuant to section 13(a) of the Settlement Agreement.

III. Conclusion

¶31 Because (1) section 13(a) of the Settlement Agreement provided that the prevailing party in an action to enforce, by any means, any of the terms of that Agreement shall be awarded reasonable attorney fees; (2) plaintiffs' claims, in substance, sought to enforce the Agreement; (3) plaintiffs' own pleadings in this case evinced their understanding of this fact; and (4) defendant prevailed on all claims below, we conclude that defendant is entitled to recover his attorney fees in this case.

¶32 Accordingly, we reverse the water court's order denying an award of such fees, and we remand this case to that court with instructions that the court determine and award the reasonable attorney fees that defendant incurred at trial and in these appellate proceedings.


author: JUSTICE HART delivered the Opinion of the Court. JUSTICE SAMOUR, concurring in part and dissenting in part.

text:
    COLORADO DEPARTMENT OF LABOR AND EMPLOYMENT, Division of Workers' Compensation, Petitioner v. DAMI HOSPITALITY, LLC; and Industrial Claim Appeals Office, Respondents.
    Supreme Court Case No. 17SC200
    Supreme Court of Colorado.
    June 3, 2019 As Modified on Denial of Rehearing June 17, 2019
    Attorneys for Petitioner: Philip J. Weiser, Attorney General, John T. Lee, Senior Assistant Attorney General, Emmy A. Langley, Assistant Solicitor General, Denver, Colorado
    Attorneys for Respondent Dami Hospitality, LLC: Law Offices of Daniel T. Goodwin, Daniel T. Goodwin, Paige Orgel, Broomfield, Colorado
    Attorney for Amici Curiae Cato Institute and Independence Institute: David B. Kopel, Denver, Colorado
    No appearance on behalf of Industrial Claim Appeals Office.
    En Banc
   JUSTICE HART delivered the Opinion of the Court.

¶1 This case requires us to consider whether the Eighth Amendment's prohibition on the government imposition of "excessive fines" applies to fines levied on corporations. We conclude that the purpose of the Excessive Fines Clause is to prevent the government from abusing its power to punish by imposing fines, and nothing in that purpose or in the text of the Eighth Amendment limits its reach to fines imposed on individuals. We further conclude that the proper test to assess the constitutionality of government fines under the Eighth Amendment is that set forth by the United States Supreme Court in United States v. Bajakajian , 524 U.S. 321, 334, 118 S.Ct. 2028, 141 L.Ed.2d 314 (1998), which requires an assessment of whether the fine is grossly disproportional to the offense for which it is imposed. We thus reverse the court of appeals' ruling and remand to that court for return to the Division of Workers' Compensation with instructions to, as appropriate and necessary, develop an evidentiary record sufficient to determine whether the $ 250-$ 500 fine that a business was required to pay for each day that it was out of compliance with Colorado's workers' compensation law is proportional to the harm or risk of harm caused by each day of noncompliance.

I. Facts and Procedural History

¶2 Dami Hospitality, LLC ("Dami") is the owner-operator of a Denver motel located on Peoria Street. Dami employs between four and ten people at any given time. As an employer, Dami is required by statute to maintain workers' compensation insurance. See § 8-43-409, C.R.S. (2018).

¶3 Dami allowed its workers' compensation coverage to lapse on or about July 1, 2005. Upon receiving notification of the lapse from the Division of Workers' Compensation ("DWC"), Dami conceded the violation and paid a corresponding settlement in June 2006.

¶4 Approximately two months later, Dami again allowed its workers' compensation coverage to lapse. This time, Dami went without coverage from August 10, 2006, through June 8, 2007.

¶5 From June 9, 2007, to September 11, 2010, Dami carried the proper insurance, but the company's workers' compensation coverage again lapsed on September 12, 2010. Dami was without such insurance from that time until July 9, 2014.

¶6 On February 19, 2014, the DWC discovered that Dami had allowed its workers' compensation insurance to lapse for these periods of time and issued a notice to Dami regarding this. That written correspondence was dispatched to Dami's Peoria Street address, which was the address on file with the Colorado Secretary of State for both the limited liability company and its registered agent, Soon Pak. The DWC notice advised Dami that it had twenty days to return an enclosed compliance questionnaire and to submit documents either establishing that it had maintained coverage during the relevant periods or demonstrating an exemption from the coverage requirement. It also specified that Dami could "request a prehearing conference on the issue of default."

¶7 After Dami failed to respond to the notice of subsequent violation, the DWC mailed a second notice to Dami on June 25, 2014, this time sending it to an East Dartmouth Place address. For the second time, Dami was given twenty days to return the same compliance questionnaire and to submit documents either establishing coverage during the relevant periods or demonstrating an exemption from the coverage requirement. The DWC also specified, again, that Dami could request a prehearing conference on the issue of default.

¶8 On July 11, 2014, the DWC received a faxed certificate of workers' compensation insurance for Dami effective from July 10, 2014, through July 10, 2015. Dami did not offer any other documentation or any explanation for the extended periods of noncompliance.

¶9 Having received no claim of exemption or proof of coverage for the second and third periods of noncompliance, and no request for a prehearing conference, the DWC concluded its legally mandated investigation into Dami's noncompliance on October 29, 2014. The applicable statutory framework provides that the DWC shall:

For every day that the employer fails or has failed to insure or to keep the insurance required by articles 40 to 47 of this title in force, allows or has allowed the insurance to lapse, or fails or has failed to effect a renewal of such coverage: impose a fine of: (I) Not more than two hundred fifty dollars for an initial violation; or (II) Not less than two hundred fifty dollars or more than five hundred dollars for a second and subsequent violation.

§ 8-43-409(1)(b), C.R.S. (2018). In implementing this provision, the DWC promulgated Rule 3-6(D), 7 CCR 1101-3, which provides that:

For the Director's finding of an employer's second and all subsequent defaults in its insurance obligations, daily fines from $ 250/day up to $ 500/day for each day of default will be assessed in accordance with the following schedule of fines until the employer complies with the requirements of the Workers' Compensation Act regarding insurance or until further order of the Director:
Class VII 1-20 Days $250/Day Class VIII 21-25 Days $260/Day Class IX 26-30 Days $280/Day Class X 31-35 Days $300/Day Class XI 36-40 Days $400/Day Class XII 41 Days $500/Day

¶10 The DWC applied this statutory and regulatory regime in calculating the fine for Dami's second and third periods of noncompliance with the Workers' Compensation Act. On October 30, 2014, the DWC sent its "Specific Findings of Fact, Conclusions and Order to Pay Fine-Subsequent Violation" (the "Order") to Dami. This document categorized the fine amounts owed by Dami by the six classes of violation defined in DWC Rule 3-6(D), noting the per diem amount owed for each of the corresponding date ranges. The final paragraph of the order explained that the total amount Dami owed as a result of the 1,698 per diem fines was $ 841,200.

¶11 On November 18, 2014, the DWC received correspondence from Soon Pak, Dami's registered agent. In a letter written on Dami's behalf, Pak conceded that the business had failed to maintain workers' compensation insurance during the noticed periods. Pak explained that Dami's failure to consistently maintain coverage was a result of her reliance on others to maintain "business coverage." Pak stated that Dami's annual payroll is less than $ 50,000, and that the aggregate fine proposed by the DWC exceeded the business's gross annual income. Pak informed the DWC that Dami was thus unable to pay the aggregated per diem fines and requested leniency in the form of a penalty "that is more reasonable to the size of [the] business." Pak also asserted that there had never been a worker-related accident or injury at the motel, either when coverage was in place or during any period of Dami's noncompliance. Pak did not request a hearing on the issue of Dami's default on its workers' compensation insurance obligation.

¶12 The DWC construed Pak's correspondence as a petition to review the Order. The DWC then made settlement overtures, offering to decrease the fine by nearly half, to $ 425,000 (the aggregated minimum per diem fines permissible under section 8-43-409(1)(b)(II) ). Dami did not accept the settlement, and instead submitted a brief in furtherance of the petition to review. Dami argued that (1) it had "reasonably believed that it was in compliance with the statute" at all relevant times; (2) the DWC failed to provide adequate and timely notice of Dami's noncompliance; (3) because Dami promptly cured its default upon receiving notice, it should be assessed no penalty or at least a much smaller penalty; and (4) the assessed per diem fines were constitutionally excessive in violation of the Excessive Fines Clause of the Eighth Amendment.

¶13 The DWC issued an order upholding the fines. The DWC began by noting that the per diem fines were "not discretionary" and were properly calculated pursuant to section 8-43-409 and Rule 3-6(D)'s assessment classification schedule. Next, the DWC observed that the law places the responsibility for knowing whether workers' compensation coverage is consistently maintained on the employer and not on the DWC. Further, the order explained that Dami's policy was cancelled in 2006 due to nonpayment of required premiums and "its 2010 policy was cancelled for failure to comply with terms & conditions or audit failure." The DWC determined that both of those reasons for cancellation were within Dami's control. The DWC stated that Dami's procurement of coverage after receiving actual notice of its subsequent violation did not relieve it of responsibility to pay the statutory fines imposed for the prior 1,698 days of noncompliance. Finally, the DWC declined to address Dami's constitutional arguments, concluding that administrative agencies are not authorized to "pass on the constitutionality of statutes."

¶14 Dami appealed to the Industrial Claim Appeals Office ("ICAO"). The ICAO rejected all but Dami's excessive fines argument. The ICAO remanded the matter to the DWC, directing it to review the constitutionality of the aggregated per diem fines assessed in accordance with the test established by the court of appeals in Associated Business Products v. Industrial Claim Appeals Office , 126 P.3d 323 (Colo. App. 2005). That test, borrowed from United States Supreme Court Fourteenth Amendment jurisprudence, requires consideration of "(1) the degree of reprehensibility of the defendant's misconduct, (2) the disparity between the harm (or potential harm) suffered by the plaintiff and the punitive damages award, and (3) the difference between the punitive damages awarded and the civil penalties authorized or imposed in comparable cases." Id. at 326 (citing Cooper Indus. v. Leatherman Tool Grp., Inc. , 532 U.S. 424, 425, 121 S.Ct. 1678, 149 L.Ed.2d 674 (2001) ).

¶15 Without holding a hearing, the DWC ultimately issued a supplemental order concluding that "Rule 3-6(D) incorporates and addresses all of the elements of the Associated Business Products test, and thus that the fine of $ 841,200.00 assessed against [Dami] according to that Rule is appropriate." The DWC explained that the graduated nature of the daily fines, increasing as the length of the period of noncompliance increases, accounted for the degree of reprehensibility of the conduct. The potential harm caused by noncompliance, according to the DWC, was in line with the fines because each day of noncompliance presents a risk that an employee will be injured and insurance will not be in place to cover that injury. And because the penalties are statutorily imposed and apply to all violators equally, Rule 3-6(D) ensures that there is no disparity between the fines imposed on Dami and fines imposed on any other noncompliant employer.

¶16 Dami again appealed to the ICAO, which affirmed the DWC's supplemental order.

¶17 Dami then appealed to the court of appeals. The division set aside the assessment of aggregated per diem fines. Dami Hosp., LLC v. Indus. Claim Appeals Office , 2017 COA 21, ¶ 110, --- P.3d ----. It assumed without deciding that the Excessive Fines Clause could be applied to challenge regulatory fees imposed on a corporation.

Id. at ¶ 57. It determined that the Associated Business Products test was the correct test to apply in assessing the constitutionality of the fee and that consideration of Dami's ability to pay the fine was a relevant factor in that assessment. Id. at ¶¶ 71-81. And it concluded that DWC abused its discretion by failing "to apply the Associated Business Products factors ... to Dami's specific circumstances." Id. at ¶ 110. The division remanded the Order to the DWC for recalculation in accordance with its opinion. Id. The DWC petitioned for certiorari, and we granted the petition.

II. Analysis

¶18 We first consider whether the Excessive Fines Clause affords corporations protection against constitutionally excessive fines. We conclude that it does. Next, we hold that the proper test for determining whether a fine is unconstitutionally excessive is whether it is grossly disproportional to the gravity of the subject offense. See Bajakajian , 524 U.S. at 334, 118 S.Ct. 2028. We explain that the evaluation of disproportionality should include consideration of the company's ability to pay the fine. We then consider whether the gross disproportionality analysis should be applied to each per diem fine or to the aggregate amount imposed for 1,698 days of noncompliance. We hold that where, as here, a statute expressly states that each day a party fails to comply with a legal obligation "shall constitute a separate and distinct violation" of the law, the Eighth Amendment analysis must focus on each per diem fine imposed by statute. § 8-43-305, C.R.S. (2018). We then remand the case to the court of appeals with instructions to return it to the DWC for the development, as appropriate and necessary, of an evidentiary record to facilitate application of the proportionality analysis.

A. Applicability of the Excessive Fines Clause to Corporations

¶19 Whether a particular constitutional guarantee applies to both natural persons and corporations "depends on the nature, history, and purpose" of the provision. First Nat'l Bank of Boston v. Bellotti , 435 U.S. 765, 778 n.14, 98 S.Ct. 1407, 55 L.Ed.2d 707 (1978).

¶20 Guarantees that are "purely personal" or "limited to the protection of individuals" will not apply to corporations. Id. The established personal guarantees include the Fifth Amendment privilege against self-incrimination and the right to privacy. See United States v. Morton Salt Co. , 338 U.S. 632, 652, 70 S.Ct. 357, 94 L.Ed. 401 (1950) ("[C]orporations can claim no equality with individuals in the enjoyment of a right to privacy."); United States v. White , 322 U.S. 694, 698-701, 64 S.Ct. 1248, 88 L.Ed. 1542 (1944) (Fifth Amendment); NW Nat. Life Ins. v. Riggs , 203 U.S. 243, 255, 27 S.Ct. 126, 51 L.Ed. 168 (1906) (noting that the "liberty" referred to in the Fourteenth Amendment is the liberty of natural persons).

¶21 On the other hand, when a guarantee is against certain government overreach, and is a "constitutional immunit[y] appropriate to [a corporate] body," this constitutional limitation on government power can apply to protect a corporation just as it may protect a natural person. Hale v. Henkel , 201 U.S. 43, 76, 26 S.Ct. 370, 50 L.Ed. 652 (1906). Thus, corporations have been recognized to have First Amendment rights to free speech and Fourteenth Amendment rights to due process and equal protection of the law. See Metro. Life Ins. v. Ward , 470 U.S. 869, 880, 105 S.Ct. 1676, 84 L.Ed.2d 751 (1985) (equal protection); Helicopteros Nacionales de Colombia v. Hall , 466 U.S. 408, 414, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984) (due process); First Nat'l Bank , 435 U.S. at 783-84, 98 S.Ct. 1407 (free speech). Similarly, corporations are protected from unreasonable searches and seizures, cannot have their property taken without just compensation, and cannot be tried twice for the same offense. See Penn Cent. Transp. Co. v. City of New York , 438 U.S. 104, 122, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978) (takings); Marshall v. Barlow's, Inc. , 436 U.S. 307, 311-13, 98 S.Ct. 1816, 56 L.Ed.2d 305 (1978) (unreasonable searches and seizures); United States v. Martin Linen Supply Co. , 430 U.S. 564, 568-69, 97 S.Ct. 1349, 51 L.Ed.2d 642 (1977) (double jeopardy).

¶22 With these cases as guideposts, in considering whether the Excessive Fines Clause applies to corporations we must evaluate both the purpose of the clause and the appropriateness of applying it to corporations.

¶23 The Eighth Amendment provides that "[e]xcessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted." U.S. Const. amend. VIII. On its face, the text of the Excessive Fines Clause does not suggest that its protections are limited to natural persons. The clause is a directive to the government not to impose excessive fines. It does not include any limitation on who merits protection from the imposition of excessive fines.

¶24 The DWC argues that the other clauses of the Eighth Amendment offer an important textual clue to the meaning of the Excessive Fines Clause. Wielding the maxim of noscitur a sociis , which provides that the meaning of a phrase should be informed "by the neighboring words with which it is associated," United States v. Williams , 553 U.S. 285, 294, 128 S.Ct. 1830, 170 L.Ed.2d 650 (2008), it asserts that (1) the prohibitions of excessive bail and cruel and unusual punishment can only be applied to protect natural persons, and, therefore (2) the Excessive Fines Clause must be limited in application to natural persons.

¶25 Unfortunately for the DWC, the United States Supreme Court has already abandoned noscitur a sociis in interpreting the Eighth Amendment. In Austin v. United States , 509 U.S. 602, 610, 113 S.Ct. 2801, 125 L.Ed.2d 488 (1993), the Court concluded that the Excessive Fines Clause applied to prohibit excessive civil fines as well as excessive criminal fines when the purpose of the civil fine was, at least in part, to impose punishment. The Court reached that conclusion despite the fact that it had previously held that the Cruel and Unusual Punishment Clause applied only to criminal punishment. See Ingraham v. Wright , 430 U.S. 651, 666-68, 97 S.Ct. 1401, 51 L.Ed.2d 711 (1977). In so holding, the Austin Court moved away from its earlier suggestion that the three clauses of the Eighth Amendment must all be interpreted to have the same reach. See id. at 664, 97 S.Ct. 1401 ; see also Austin , 509 U.S. at 608-09 & n.5, 113 S.Ct. 2801. Instead, the Court focused on the purpose of the Excessive Fines Clause itself-which is to prevent the government from abusing its power to punish through the imposition of fines, whether those fines are part of a criminal scheme or a civil one. Austin , 509 U.S. at 610-11, 113 S.Ct. 2801.

¶26 The question we face, then, is whether there is justification to conclude that the purpose of the Excessive Fines Clause supports its application to protect corporations even if the other clauses in the Eighth Amendment do not. We conclude that there is. The bail clause is necessarily limited to natural persons because corporations cannot be jailed, and therefore cannot be subject to bail. Similarly, cruel and unusual punishment cannot be imposed upon a corporation. In short, these two guarantees are not "appropriate to [a corporate] body." Hale , 201 U.S. at 76, 26 S.Ct. 370. By contrast, "[t]he payment of monetary penalties ... is something that a corporation can do as an entity." Browning-Ferris Indus. v. Kelco Disposal, Inc. , 492 U.S. 257, 285, 109 S.Ct. 2909, 106 L.Ed.2d 219 (1989) (O'Connor, J., concurring in part and dissenting in part). Moreover, the government regularly imposes a wide array of monetary penalties, both civil and criminal, on corporations for the purposes of punishing corporate misconduct and regulatory violations. And when the government imposes these punitive sanctions, we hold that it must do so in compliance with the Excessive Fines Clause.

B. The Proportionality Standard for Determining Whether a Fine is Constitutionally Excessive

¶27 Having determined that corporations are entitled to assert claims that fines imposed by the government for punitive purposes are excessive in violation of the Eighth Amendment, we next consider what standard a corporation must meet to succeed in such a claim. The United States Supreme Court articulated that standard in Bajakajian , where it explained that "[i]f the amount of the [fine] is grossly disproportional to the gravity of the ... offense, it is unconstitutional." 524 U.S. at 337, 118 S.Ct. 2028.

¶28 In adopting this proportionality standard, the Court in Bajakajian relied on two "particularly relevant" considerations. Id. at 336, 118 S.Ct. 2028. The first is that "judgments about the appropriate punishment for an offense belong in the first instance to the legislature." Id. at 336, 118 S.Ct. 2028 (citing Solem v. Helm , 463 U.S. 277, 290, 103 S.Ct. 3001, 77 L.Ed.2d 637 (1983), and Gore v. United States , 357 U.S. 386, 393, 78 S.Ct. 1280, 2 L.Ed.2d 1405 (1958) ). The second is that judicial determinations as to the gravity of an offense are inherently imprecise. Id. These considerations, explained the Court, "counsel against requiring strict proportionality" between the amount of a punitive fine and the gravity of the underlying offense, and for adopting the test previously articulated in cases interpreting the Cruel and Unusual Punishment Clause. Id. (citing Solem , 463 U.S. at 288, 103 S.Ct. 3001 and Rummel v. Estelle , 445 U.S. 263, 271, 100 S.Ct. 1133, 63 L.Ed.2d 382 (1980) ). Under that test, courts evaluating proportionality must consider whether the defendant was treated more harshly (1) than others within the same jurisdiction and (2) than he would have been in any other jurisdiction. Solem, 463 U.S. at 303, 103 S.Ct. 3001.

¶29 Neither the court of appeals nor the ICAO hearing panel in this case applied the United States Supreme Court's "gross disproportionality" test to evaluate the fines imposed on Dami for its protracted failure to maintain workers' compensation insurance. Instead, both relied on the test articulated by the court of appeals in Associated Business Products. This test is inconsistent with Bajakajian . Today, we bring Colorado law into conformity with federal law and hold that the proper standard for determining whether a regulatory penalty amounts to a constitutionally excessive fine in violation of the Eighth Amendment is whether it is grossly disproportional to the gravity of the underlying offense.

¶30 The United States Supreme Court has not addressed whether the Eighth Amendment proportionality assessment can or should include consideration of the ability of the person being fined to pay that fine. The only reference to the issue in Bajakajian itself was a footnote observing that: "respondent does not argue that his wealth or income are relevant to the proportionality determination or that full forfeiture would deprive him of his livelihood ... and the District Court made no factual findings in this respect." 524 U.S. at 340 n.15, 118 S.Ct. 2028. The Court has, however, in a number of cases observed that the historical precursor to the Eighth Amendment, the English Magna Carta, limited the power of government to impose punitive fines by, among other things, requiring that a penalty "not be so large as to deprive [a person] of his livelihood." Browning-Ferris , 492 U.S. at 271, 109 S.Ct. 2909 ; see also Bajakajian , 524 U.S. at 335, 118 S.Ct. 2028 (same). And the Court's most recent Excessive Fines Clause decision cited with approval a statement from Blackstone's Commentaries on the Laws of England that "no man shall have a larger amercement imposed upon him, than his circumstances or personal estate will bear." Timbs , --- U.S. ----, 139 S. Ct. at 688, 203 L.Ed.2d 11 (citing 4 W. Blackstone, Commentaries on the Laws of England 372 (1769)). We see in the Court's citation to these historical predecessors of the Excessive Fines Clause, and their consideration of ability to pay, persuasive evidence that a fine that is more than a person can pay may be "excessive" within the meaning of the Eighth Amendment.

¶31 The concept of "proportionality" itself also persuades us that ability to pay is an appropriate element of the Excessive Fines Clause gross disproportionality analysis.

A fine that would bankrupt a person or put a company out of business would be a substantially more onerous fine than one that did not. For some types of criminal or regulatory infractions, a penalty that would have that kind of grave consequence might be warranted, whereas for others the severity of that outcome may be out of proportion to the gravity of the offense for which the fine is imposed. We thus conclude that courts considering whether a fine is constitutionally excessive should consider ability to pay in making that assessment.

C. The Proportionality Analysis Must Consider Each Individual Per Diem Fine

¶32 Dami argues that the proportionality analysis should be applied to the aggregate $ 841,200 that the company was assessed, and not to each of the $ 250-$ 500 daily fines. We disagree. The workers' compensation statutory regime explicitly states that "[e]very day during which an employer ... fails to perform any duty imposed by articles 40 to 47 of this title shall constitute a separate and distinct violation thereof." § 8-43-305. Moreover, the statute directs the DWC to impose a daily fine of $ 250-$ 500 for each day of noncompliance. The statute thus puts every employer on notice that it will be fined between $ 250 and $ 500 per day for each day that it is out of compliance with its legal obligations. While the assessment for the 1,698 per diem fines may have reflected a lump sum total owed by Dami, the fines were clearly imposed at a daily rate as a result of many daily violations.

¶33 In the criminal context, we have refused to aggregate sentences that were assessed individually for purposes of evaluating the proportionality of the sentences. In People v. Lucero , 2017 CO 49, ¶ 23, 394 P.3d 1128, 1133-34, we rejected the defendant's argument that his four consecutive sentences totaling eighty-four years for four separate crimes amounted in the aggregate to a sentence of life without the possibility of parole. We concluded instead that "[t]he question of whether Lucero's consecutive term-of-years sentences meet the dictates of the Eighth Amendment's proportionality principle requires consideration of each individual crime and each sentence imposed." Id. at 1134 ; see also Close v. People , 48 P.3d 528, 538-40 (Colo. 2002) (holding that, because each sentence is a separate punishment for a separate offense, the proper question is whether each sentence is appropriate for its related offense and not whether the aggregate of the sentences is disproportional in the abstract). We see no principled justification for taking a different approach in the context of the regulatory fines at issue here.

¶34 We recognize that, under the circumstances, the fact that Dami did not receive notice of noncompliance regarding its subsequent violations from the DWC for several years resulted in a staggeringly high-dollar aggregate total of per diem fines. However, responsibility for that unfortunate circumstance rests squarely on the shoulders of Dami, and perhaps its business advisors. Dami was in fact well aware that it had an obligation to carry workers' compensation insurance and that it would be subject to daily fines for noncompliance; at the very moment that the company allowed its insurance to lapse in 2006 it was in the process of settling with the DWC for a year-long period of noncompliance during 2005 and 2006. Moreover, under the workers' compensation statutes, it is the employer who is responsible for ensuring that it is in compliance with the obligation to carry insurance. The statute makes plain-by excluding any mens rea element and imposing a daily fine for each day that an employer fails to have insurance or allows its insurance to lapse-that the legislature intended that a violation of section 8-43-409(1)(b)(II) be a strict-liability offense.

¶35 There are good and practical reasons for putting the burden on the employer, and not on the DWC, to ensure compliance. First, workers' compensation insurance is not paid to or by the DWC. Instead, it is private insurance coverage that an employer purchases from an insurance company. See Division of Workers' Compensation, Employer's Guide 2 (Dec. 2015). The employer is therefore in a better position than the DWC to know whether it has obtained the required coverage. Second, the lack of a mens rea element in the requirement to maintain coverage discourages both negligent noncompliance (where an employer should have known that coverage was lacking) on the one hand, and gamesmanship (where an employer knew coverage was lacking but willfully failed to procure or maintain a compliant policy) on the other. Adopting a rule that focuses on the proportionality of the aggregate of daily fines, rather than the proportionality of each daily fine, would actually incentivize employers to forego workers' compensation coverage for as long as possible, hoping that the DWC would not notice until the fines had accrued for an extended period of time so that they could then argue that the fine for noncompliance was excessive.

¶36 We thus cannot allow the size of aggregated per diem fines in this case to distort our Eighth Amendment jurisprudence more generally. When a fine is imposed on a per diem basis, with each day constituting an independent violation, the evaluation of whether a fine is excessive must be done with reference to each individual daily fine.

III. Remand

¶37 There is scant evidence in the record before us, particularly about Dami's ability to pay the daily fines. Dami asserted in a letter to the DWC that it could not pay without going out of business. Dami did not request the evidentiary hearing to which it was entitled in order to develop a record supporting that claim. Moreover, because the test we announce today is a new one in Colorado, we remand to the court of appeals so that it can return the case to the DWC. Assuming it is appropriate or necessary to conduct an evidentiary hearing at this stage, the DWC should permit the parties to develop a record that permits a complete evaluation of whether the $ 250-$ 500 fine imposed on Dami each day that it violated the workers' compensation laws was constitutionally excessive in accordance with this opinion.

IV. Conclusion

¶38 In sum, we hold that the Eighth Amendment does protect corporations from punitive fines that are excessive. The appropriate test to apply in assessing whether a regulatory fine violates the Excessive Fines Clause is the "gross disproportionality" test. In assessing proportionality, a court should consider whether the gravity of the offense is proportional to the severity of the penalty, considering whether the fine is harsher than fines for comparable offenses in this jurisdiction or than fines for the same offense in other jurisdictions. In considering the severity of the penalty, the ability of the regulated individual or entity to pay is a relevant consideration. And the proportionality analysis should be conducted in reference to the amount of the fine imposed for each offense, not the aggregated total of fines for many offenses.

¶39 We therefore reverse the ruling of the court of appeals and remand this case for return to the DWC so that the DWC can, as necessary and appropriate, permit the development of an evidentiary record sufficient to allow the application of this Excessive Fines Clause analysis.

JUSTICE SAMOUR concurs in part and dissents in part.

JUSTICE SAMOUR, concurring in part and dissenting in part.

JUSTICE HOOD does not participate.

¶40 My colleagues in the majority and I are generally on the same page in this case. I write separately because I disagree that the proportionality analysis must be conducted with regard to each individual per diem fine, as opposed to the total fine of $ 841,200. Like the court of appeals, I would focus on the aggregate fine that the Director imposed, which is what triggered Dami's appeal. Dami has never argued that the daily fine of $ 250 to $ 500 is unconstitutionally excessive; rather, Dami has contended all along that the $ 841,200 fine is.

¶41 I agree that section 8-43-409(1), C.R.S. (2018), required the Director to impose a penalty on Dami, and that once Dami obtained insurance coverage (after receiving the notice from the Director), the only available penalty was a fine of between $ 250 and $ 500 for every day Dami was noncompliant. But the penalty imposed in October 2014-the state action Dami complains about-was the $ 841,200 fine, not the per diem rate of $ 250 to $ 500. As the majority acknowledges, the Director did not send Dami a notice at the beginning of the violation period to inform it that he intended to impose a prospective fine of $ 250 to $ 500 every day until it obtained the required insurance. Maj. op. ¶ 34. Had he done so, I might accept looking at the daily fine to determine constitutional proportionality. Instead, he waited more than seven years to contact Dami about a purported violation and then imposed a retroactive fine of almost a million dollars. To be sure, Dami, as an employer, was responsible for complying with section 8-43-409(1). Id. But I nevertheless find it troubling that, under today's decision, if the Director retroactively imposes a "staggeringly high-dollar aggregate" fine, id. , simply because he delayed taking action to correct a potential violation, the employer's only recourse is to argue that the daily fine amount is excessive.

¶42 The majority today holds that the Eighth Amendment offers Dami protection against excessive fines. Id. at ¶¶ 18, 26, 38. I wholeheartedly agree. Unfortunately, the majority opinion, at least in this context, has no teeth because it says that Dami is restricted to challenging the daily fine amount. That's where the majority and I part company. I would conclude that, to be meaningful, the proportionality analysis has to focus on the total fine the Director required Dami to pay ($ 841,200), not the daily fine amount ($ 250 to $ 500) used to calculate the total fine. In my view, to focus on the daily fine amount instead of the total fine Dami must pay renders the entire constitutional analysis an exercise in futility.

¶43 Notably, under the majority's analytical framework, if the Director had waited twelve years to contact Dami and then imposed a retroactive fine of over two million dollars ($ 500 × 4,380 days), the outcome would be identical: Dami would still be limited to challenging whether the daily fine amount of $ 250 to $ 500 is excessive. The same would be true if the Director had contacted Dami within a month of a potential violation and imposed a total fine of only $ 15,000 ($ 500 × 30 days). Stated differently, whether a fine of over two million dollars is excessive and whether a fine of $ 15,000 is excessive both depend on whether the daily fine amount of $ 250 to $ 500 is excessive. Hence, in evaluating the constitutionality of a section 8-43-409 fine under the Eighth Amendment's Excessive Fines Clause, the majority renders the total amount of the fine imposed completely inconsequential. To my mind, that greatly risks immunizing the Director and the statute from constitutional attack under the Eighth Amendment. So long as the daily fine amount is not excessive, it matters not whether the Director imposes a $ 1,000 fine or a $ 10,000,000 fine.

¶44 The reality here is that the Director imposed a one-time, aggregate fine retroactively when he advised Dami in October 2014 that it was required to pay $ 841,200. He did not impose a fine in the amount of $ 250 to $ 500 1,698 times (a fine each day Dami was in violation of section 8-43-409(1) ). Given that the Eighth Amendment's Excessive Fines Clause applies, Dami should be allowed to challenge the constitutionality of the Director's action-i.e., the one-time, aggregate fine imposed after the fact in October 2014.

¶45 Accordingly, like the majority, I would reverse the judgment of the court of appeals and remand the case with instructions to have it returned to the Division of Workers' Compensation. However, I would do so on slightly different grounds. For this reason, I respectfully concur in part and dissent in part.

      We granted certiorari to review the following issues:
      1. Whether the protections of the Excessive Fines Clause of the Eighth Amendment apply to corporations;
      2. Whether the court of appeals applied the correct test to determine the constitutionality of a civil fine; and
      3. Whether the court of appeals reasonably concluded that the fine at issue violated the Eighth Amendment.

      It is not clear from the record why the DWC mailed an additional subsequent violation notice to the East Dartmouth Place address. However, the record includes documentation from the Colorado Secretary of State's website indicating that the East Dartmouth Place address appears in Dami's May 11, 2000 Articles of Incorporation for both the "principal place of business" and its organizer, Soon Pak. Elsewhere, Pak identifies the East Dartmouth Place address as her personal residence.

      After oral argument in this case, the United States Supreme Court held that the Excessive Fines Clause is incorporated against the States by the Due Process Clause in Timbs v. Indiana , --- U.S. ----, 139 S. Ct. 682, 687, 203 L.Ed.2d 11 (2019). The prohibition against imposing excessive fines thus does apply to Colorado's DWC.

      Contrary to the court of appeals' suggestion that there has been a "tidal shift" toward favoring the application of constitutional guarantees to corporations, Dami , ¶ 58, this nature and purpose-based approach to evaluating the question has been applied by the United States Supreme Court since at least 1906, see Hale , 201 U.S. at 76, 26 S.Ct. 370.

      Indeed, this case featured prominently in the legislature's decision to amend section 8-43-409 in 2017 to limit the maximum period for which fines can be imposed to "three years prior to the date an employer is notified by the division of a potential violation." § 8-43-409(c). See David Gallivan, HB 17-1119 Brings Reform to Workers' Compensation , 46 Colo. Law., Nov. 2017, at 58, 59.

      We take judicial notice of this official publication, as it appears on the Colorado Department of Labor and Employment's website. See https://www.colorado.gov/pacific/sites/default/files/Employers_Guide_2015.pdf [https://perma.cc/6TVT-DS7J].

      Dami's arguments about lack of notice and the consequent length of the period of noncompliance are more properly understood as supporting a due process claim that is outside the scope of the issues upon which we granted certiorari. The fact that the DWC did not catch Dami's noncompliance for a number of years is not relevant to the Eighth Amendment argument.

      The statute also contemplates a cease-and-desist order and an order for injunctive relief as potential penalties. See § 8-43-409(4) ("The issuance of an order to cease and desist, the imposition of a fine ..., or the issuance of an order for injunctive relief ... shall be the penalty ...."). However, issuing such an order after Dami had come into compliance with the insurance mandate wouldn't have made sense.

      Dami went without coverage between August 10, 2006 and June 8, 2007, and again between September 12, 2010 and July 9, 2014. The Director did not attempt to notify Dami about a potential violation until February 19, 2014. He then waited until June 25, 2014, to mail a second notice to a different address.

      In some circumstances, such as when a fine is the only feasible penalty, the Director is required by the statute to impose a retroactive fine, the total amount of which is calculated by multiplying the number of days an employer was noncompliant times $ 250 to $ 500.

      I understand that section 8-43-305, C.R.S. (2018), provides that "[e]very day during which any employer ... fails to perform any duty imposed by articles 40 to 47 of this title shall constitute a separate and distinct violation thereof." But the fact remains that the Director imposed a one-time, aggregate, retroactive fine in the amount of $ 841,200.