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Franklin Drilling and Blasting Inc. v. Lawrence Construction Co.

Court of Appeals of Colorado, Seventh Division

April 19, 2018

Franklin Drilling and Blasting Inc., Plaintiff-Appellant,
v.
Lawrence Construction Company, Defendant-Appellee.

          San Miguel County District Court No. 13CV30050 Honorable David S. Westfall, Judge.

          Law Office of John C. Seibert, LLC, John Seibert, Durango, Colorado, for Plaintiff-Appellant.

          Miller & Law P.C., Curtis R. Henry, Littleton, Colorado, for Defendant-Appellee.

          OPINION

          BERGER JUDGE.

         ¶ 1 Plaintiff-Appellant, Franklin Drilling and Blasting Inc. (Franklin), was a subcontractor on a Colorado Department of Transportation (CDOT) road project. Defendant-Appellee, Lawrence Construction Company (Lawrence), was the general contractor. Although Lawrence was paid in full by CDOT, Lawrence refused to pay Franklin. That failure led Franklin to sue Lawrence on a variety of claims. All but one of Franklin's claims - a claim for civil theft - were arbitrated in favor of Franklin.

         ¶ 2 After the arbitration, the parties tried Franklin's civil theft claim to the court. That claim was premised on Lawrence's violation of the Public Works Trust Fund statute (Trust Fund statute), section 38-26-109, C.R.S. 2017. At the conclusion of Franklin's case-in-chief, the trial court granted Lawrence's motion for directed verdict, finding that Franklin had not proved that Lawrence intended to permanently deprive Franklin of the monies it was owed.

         ¶ 3 The theft statute, section 18-4-401(1), C.R.S. 2017, provides, as relevant here, two separate ways that Lawrence could possess the culpable mental state required for civil liability under the theft statute: intent to deprive or knowing use. Because the trial court's findings and conclusions either addressed only the first of the two alternatives, or the trial court misconstrued the second, we must reverse that portion of the judgment and remand for the court to address the second alternative. We affirm that portion of the judgment that rests on the trial court's finding regarding intent to permanently deprive.

         I. Relevant Facts and Procedural History

         ¶ 4 The facts, as found by the arbitrator, tell us that this dispute began when Lawrence was hired by CDOT to reconstruct the Leopard Creek Bridge on State Highway 145 near Telluride. Lawrence hired Franklin as its subcontractor to provide drilling and blasting services on the project. As relevant here, the subcontract required Lawrence to pay Franklin within seven days of receipt of payment from CDOT.

         ¶ 5 Franklin completed its work on the project, and, after various delays, the project was finished. CDOT paid Lawrence the full contract price for the work. Lawrence, however, did not pay Franklin. Instead, it notified Franklin that it planned to withhold all payments because Franklin allegedly failed to meet the contractually promised production rates.

         ¶ 6 Franklin sued in the trial court, alleging that Lawrence wrongfully withheld those payments in violation of section 38-26-109. That statute provides as follows:

(1) All funds disbursed to any contractor or subcontractor under any contract or project subject to the provisions of this article shall be held in trust for the payment of any person that has furnished labor, materials, sustenance, or other supplies used or consumed by the contractor in or about the performance of the work contracted to be done or that supplies laborers, rental machinery, tools, or equipment to the extent used in the prosecution of the work where the person has:
(a) Filed or may file a verified statement of a claim arising from the project; or
(b) Asserted or may assert a claim against a principal or surety under the provisions of this article and for whom or which such disbursement was made.

Id. (emphasis added).

         ¶ 7 Importantly, the statute also provides that "[a]ny person who violates the provisions of subsections (1) and (2) of this section commits theft within the meaning of section 18-4-401, C.R.S."[1] § 38-26-109(4). Section 18-4-405, C.R.S. 2017, provides a civil remedy for the owner of stolen property:

The owner may maintain an action not only against the taker thereof but also against any person in whose possession he finds the property. In any such action, the owner may recover two hundred dollars or three times the amount of the actual damages sustained by him, whichever is greater, and may also recover costs of the action and reasonable attorney fees . . . .

         ¶ 8 Franklin pleaded a claim for civil theft under section 18-4-405 based on Lawrence's violation of the Trust Fund statute. Lawrence countersued. The parties arbitrated all of their claims except for their respective claims for civil theft, which were stayed pending arbitration.[2]

         ¶ 9 The arbitrator found that Lawrence breached its subcontract with Franklin, that Lawrence had no good faith defenses to its failure to pay, and that Lawrence had failed to prove its counterclaims against Franklin.[3] The arbitrator awarded Franklin $80, 099.62 in damages, which Lawrence immediately paid.

         ¶ 10 The parties then proceeded in court with their respective claims for civil theft. The court dismissed Lawrence's claim for civil theft on Franklin's C.R.C.P. 12(b)(5) motion. (Lawrence does not appeal that dismissal.) Franklin also moved for summary judgment on its civil theft claim, which the court granted in part and denied in part. Based on the arbitrator's findings, the court held that Lawrence violated the Trust Fund statute, meaning Lawrence "knowingly obtain[ed], retain[ed], or exercise[ed] control over" the trust funds without authorization, thus satisfying the first element of theft under section 18-4-401(1). But the court ...


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