Yale v. AC Excavating, Inc.

Antelope Development LLC was formed to develop a residential subdivision in Bennett, Colorado. The LLC took out construction loans from the bank at the start of the project; before it was finished, the LLC had exhausted its financing. The LLC entered into oral agreements with Respondent AC Excavating for work on the subdivision. AC Excavating was paid for some but not all of its work. Petitioner Donald Yale, a member of the LLC, realized that the LLC had insufficient funds to meet its obligations, so he placed some of his own money in the LLC's bank account. Yale then applied these funds to the LLC's general business expenses and some outstanding subcontractor invoices. AC Excavating still was not paid in full. AC Excavating sued Yale alleging, among other things, that the LLC had violated Colorado's construction trust fund statute by failing to hold the funds in the LLC's bank account in trust for payment to AC Excavating. AC Excavating further alleged that Yale thereby committed theft, permitting it to claim treble damages and attorney fees under the state Rights in Stolen Property statute. The trial court ruled in favor of Yale, and AC Excavating appealed. The appellate court reversed. Upon review, the Supreme Court held that the LLC member's voluntary injection of capital into the company did not constitute "funds disbursed to a contractor . . . on a construction project" under the construction trust fund statute, as that money was not required to be held in trust. The Court also concluded the appellate court erred in remanding the case for a determination of whether Yale was civilly liable for theft under the Rights in Stolen Property statute. View "Yale v. AC Excavating, Inc." on Justia Law