Miguel County District Court No. 13CV30050 Honorable David S.
Office of John C. Seibert, LLC, John Seibert, Durango,
Colorado, for Plaintiff-Appellant.
& Law P.C., Curtis R. Henry, Littleton, Colorado, for
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.
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." § 38-26-109(4). Section 18-4-405,
C.R.S. 2017, provides a civil remedy for the owner of stolen
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.
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. 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 ...