Justia Colorado Supreme Court Opinion Summaries

This case involves attorney Grant Bursek's departure from Johnson Family Law, P.C. (MFL). When Bursek left MFL, 18 clients chose to continue their representation with him, prompting MFL to enforce an agreement that required Bursek to pay a per-client fee. Bursek argued that this fee violated the Colorado Rules of Professional Conduct, which prohibit attorneys from making employment agreements that restrict the right to practice after the termination of the relationship. The Supreme Court of the State of Colorado agreed with Bursek, holding that while a firm may seek reimbursement of specific client costs when a client leaves the firm to follow a lawyer, a firm cannot require a departing attorney to pay a non-specific fee in order to continue representing clients who wish to retain their relationship with that attorney. The court found that such an agreement constitutes an impermissible restriction on the attorney's right to practice and on the clients' right to choose their counsel. The court also held that this provision of the employment agreement was unenforceable, as it violated public policy as expressed in the Colorado Rules of Professional Conduct. The court affirmed in part and reversed in part the Court of Appeals' decision. It affirmed the decision that the per-client fee was unenforceable but reversed the Court of Appeals' decision to sever and attempt to enforce other parts of the agreement. The case was remanded for further proceedings consistent with the opinion. View "Johnson Family Law v. Bursek" on Justia Law

The Colorado Supreme Court granted review in this case to consider whether the common law litigation privilege for party-generated publicity in pending class action litigation excluded situations in which the identities of class members were ascertainable through discovery. In 2018, two law firms, Killmer, Lane & Newman, LLP and Towards Justice (collectively, along with attorney Mari Newman of Killmer, Lane & Newman, “the attorneys”), filed on behalf of former employee and nail technician Lisa Miles and those similarly situated a federal class action lawsuit. This lawsuit named as defendants BKP, Inc.; Ella Bliss Beauty Bar LLC; Ella Bliss Beauty Bar-2, LLC; and Ella Bliss Beauty Bar-3, LLC (collectively, “the employer”), among others. The employer operated three beauty bars in the Denver metropolitan area. Pertinent here, the class action complaint alleged that the employer’s business operation was “founded on the exploitation of its workers.” The complaint alleged that the employer violated the Fair Labor Standards Act and the Colorado Wage Claim Act by not paying service technicians for hours spent performing janitorial work, electing to forgo hiring a janitorial service. The Supreme Court concluded the division erred in conditioning the applicability of the litigation privilege in pending class action litigation on whether the identities of class members were ascertainable through discovery. The Court reached this conclusion for two reasons: (1) ascertainability was generally a requirement in class action litigation, and imposing such a condition would unduly limit the privilege in this kind of case; and (2) the eventual identification of class members by way of documents obtained during discovery was not a substitute for reaching absent class members and witnesses in the beginning stages of litigation. The Court found the litigation privilege applied in this case: five allegedly defamatory statements at issue "merely repeated, summarized, or paraphrased the allegations made in the class action complaint, and which served the purpose of notifying the public, absent class members, and witnesses about the litigation, were absolutely privileged." View "Killmer, Lane & Newman v. B.K.P., Inc." on Justia Law

Defendants were California residents who served in various capacities as officers or directors of JUUL Labs, Inc. (“JUUL”), an e-cigarette manufacturer, or its predecessor companies. The State of Colorado filed an amended complaint alleging that defendants in their individual capacities, along with JUUL as a corporation, violated several provisions of the Colorado Consumer Protection Act (“CCPA”) and were subject to personal jurisdiction in Colorado. Defendants contended the district court’s exercise of personal jurisdiction over them was improper because they lacked the requisite minimum contacts with Colorado and the exercise of personal jurisdiction over them was unreasonable under the circumstances. JUUL did not argue that the district court lacks personal jurisdiction over it. The Colorado Supreme Court concluded that because: (1) the district court based its determination on allegations directed against JUUL and the group of defendants as a whole, rather than on an individualized assessment of each defendant’s actions; and (2) the State did not allege sufficient facts to establish either that defendants were primary participants in wrongful conduct that they purposefully directed at Colorado, or that the injuries alleged in the amended complaint arose out of or related to defendants’ Colorado-directed activities, the district court erred in finding that the State had made a prima facie showing of personal jurisdiction in this matter. View "In re State of Colorado v. Juul Labs, Inc." on Justia Law

Between 2004 and 2008, respondents HEI Resources, Inc. (“HEI”), and the Heartland Development Corporation (“HEDC”), both corporations whose principal place of business is Colorado, formed, capitalized, and operated eight separate joint ventures related to the exploration and drilling of oil and gas wells. They solicited investors for what they called Los Ojuelos Joint Ventures by cold calling thousands of individuals from all over the country. Those who joined the ventures became parties to an agreement organized as a general partnership under the Texas Revised Partnership Act. In 2009, the Securities Commissioner for the State of Colorado (“the Commissioner”) initiated this enforcement action, alleging that respondents had violated the Colorado Securities Act (CSA) by, among other things, offering and selling unregistered securities to investors nationwide through the use of unlicensed sales representatives and in the guise of general partnerships. The Commissioner alleged that HEDC and HEI used the general partnership form deliberately in order to avoid regulation. Each of the Commissioner’s claims required that the Commissioner prove that the general partnerships were securities, so the trial was bifurcated to permit resolution of that threshold question. THe Colorado Supreme Court granted review in this matter to determine how courts should evaluate whether an interest in a “general partnership” is an “investment contract” under the CSA. The Court concluded that when faced with an assertion that an interest in a general partnership is an investment contract and thus within the CSA’s definition of a “security,” the plaintiff bears the burden of proving this claim by a preponderance of the evidence. No presumption beyond that burden applies. Accordingly, the Court reversed the court of appeals’ judgment on the question of whether courts should apply a “strong presumption,” and the Court remanded the case to the trial court for further findings. View "Chan v. HEI Resources, Inc." on Justia Law

Plaintiff DIA Brewing Co., LLC contended that after the district court entered an order dismissing this action pursuant to C.R.C.P.12(b)(1), C.R.C.P. 15(a) gave DIA Brewing the right to amend its complaint as a matter of course and without leave of the court or the consent of defendants because no responsive pleading had been filed. Defendants MCE-DIA, LLC and Richard Schaden (collectively, “MCE-DIA”), in contrast, contended that the C.R.C.P. 12(b)(1) dismissal resulted in a final judgment that cut off DIA Brewing’s right to amend as a matter of course under C.R.C.P. 15(a). Thus: if DIA Brewing wanted to amend, it was required to seek leave of the court or to obtain MCE-DIA’s written consent. The Colorado Supreme Court granted certiorari to resolve this dispute, and concluded a final judgment cuts off a plaintiff’s right to file an amended complaint as a matter of course under C.R.C.P. 15(a), and the dismissal order here was a final judgment. Therefore, DIA Brewing did not have the right to amend its complaint as a matter of course, but obligated to request the trial court for leave to amend, or indicate MCE-DIA had consented in writing to the filing of an amended complaint. In this case, the Supreme Court determined the amended pleading was not futile, stating viable claims for relief. The Court thus affirmed the appellate court, though on different grounds, and remanded this case with directions that this case be returned to the district court to accept DIA Brewing’s amended complaint for filing, after which MCE-DIA could respond in the ordinary course. View "Schaden v. DIA Brewing Co., LLC" on Justia Law

In 2013, Blooming Terrace No. 1 (“Blooming Terrace”) obtained an $11 million loan from KH Blake Street, LLC (“KH Blake Street”), a special purpose entity organized by Kresher Holdings, LLC. The loan was secured by a deed of trust and memorialized by promissory note. Blooming Terrace paid a $220,000 origination fee upon execution of that note. The note specified that interest would accrue on the outstanding principal at a rate of 11% per annum. In the event of default, the note provided for a higher default interest rate of 21% per annum. The note required monthly interest payments in the amount of 8% per annum throughout the term of the loan, though these periodic payments did not apply to reduce the principal balance of the loan. In the event of any late monthly payment, a 5% late fee was applicable to the overdue amount. The note was to mature in 2014. However, KH Blake Street reserved the right to accelerate Blooming Terrace’s full loan repayment obligation upon an event of default. Prior to paying down any portion of the principal, Blooming Terrace defaulted on its monthly payment obligation. The parties entered into a forbearance agreement; at that time, the parties stipulated that the accrued charges due and owing to KH Blake Street under the original loan agreement were $778,583.33. In exchange for KH Blake Street’s agreement not to pursue collection of that sum, or any other remedies, Blooming Terrace agreed to pay a $110,000 fee. Payment of this new fee did not substitute for any other charges that continued to accrue during the forbearance period, including, but not necessarily limited to, default interest and late fees. Instead, a condition of the forbearance was Blooming Terrace’s compliance with all of the original loan terms. The Colorado Supreme Court granted certiorari to clarify the proper method for determining the effective rate of interest charged on a nonconsumer loan to ascertain whether that rate was usurious under Colorado law: the effective interest rate should be calculated by determining the total per annum rate of interest that a borrower is subjected to during a given extension of credit. Here, where a forbearance agreement was entered into after an event of default, all charges that accrued during the period of forbearance must be totaled and then annualized using only that timeframe as the annualization period. Such includable interest must then be combined with any interest that continued to accrue pursuant to the original loan terms to determine the effective rate of interest subject to the 45% ceiling set by Colorado’s usury statute, section 5-12-103, C.R.S. (2018). View "Blooming Terrace No. 1, LLC v. KH Blake Street, LLC" on Justia Law

Oracle was a Delaware corporation headquartered in California, and it is the parent of a worldwide group of affiliated corporations. OJH was a Delaware corporation and a wholly-owned subsidiary of Oracle, existing solely as a holding company. During the period at issue in this matter, OJH held stock in Oracle Japan, and it sold 8.7 million shares of that stock on the Tokyo Stock Exchange, realizing capital gains of approximately $6.4 billion. The tax treatment of these gains was at the center of this dispute. Specifically, the issues this case presented for the Colorado Supreme Court's review were: (1) whether the Colorado Department of Revenue could require Oracle Corporation (“Oracle”) to include its holding company, Oracle Japan Holding, Inc. (“OJH”), in its Colorado combined income tax return for the tax year ending May 31, 2000; and (2) if no, then whether the Department could nevertheless allocate OJH’s gain from the sale of shares that it held in Oracle Corporation Japan (“Oracle Japan”) to Oracle in order to avoid abuse and to clearly reflect income. For the reasons set forth in Department of Revenue v. Agilent Technologies, Inc., 2019 CO __, __ P.3d __, the Colorado Supreme Court concluded the pertinent statutory provisions and regulations did not permit the Department either to require Oracle to include OJH in its combined tax return for the tax year at issue or to allocate OJH’s capital gains income to Oracle. Accordingly, the Supreme Court concluded the district court properly granted summary judgment in Oracle's favor. View "Department of Revenue v. Oracle" on Justia Law

Agilent Technologies, Inc. was a Delaware corporation headquartered in California, and was the parent company of a worldwide family of affiliated corporations. Agilent maintains research and development and manufacturing sites in Colorado and is thus subject to Colorado corporate income tax. World Trade, Inc. is a Delaware corporation and a wholly owned subsidiary of Agilent, and existed solely as a holding company. World Trade earned substantial dividends on its shares in its noted subsidiaries, the tax treatment of dividends gave rise to the dispute before the Colorado Supreme Court. Specifically, the issues reduced to: (1) whether the Colorado Department of Revenue and Michael Hartman, in his official capacity as the Executive Director of the Department, could require Agilent to include its holding company, Agilent Technologies World Trade in its Colorado combined income tax returns for the tax years 2000–07; if not, then whether the Department could nevertheless allocate World Trade’s gross income to Agilent in order to avoid abuse and to clearly reflect income. The Colorado Court determined sections 39-22-303(11)–(12), C.R.S. (2018), did not authorize the Department to require Agilent to include World Trade in its combined tax returns for the tax years at issue because World Trade was not an includable C corporation within the meaning of those provisions. As to the second question, the Court likewise concluded the Department could not allocate World Trade’s income to Agilent under section 39-22-303(6) because: (1) that section has been superseded by section 39-22-303(11) as a vehicle for requiring combined reporting for affiliated C corporations; and (2) even if section 39-22-303(6) could apply, on the undisputed facts presented here, no allocation would be necessary to avoid abuse or clearly reflect income. View "Department of Revenue v. Agilent Technologies" on Justia Law

Chris Bermel contracted to provide engineering services for BlueRadios, Inc., a wireless data and voice communications company. In 2014, Bermel knowingly forwarded thousands of company emails containing proprietary information to his personal email account without authorization. For this conduct, the trial court found Bermel liable for breach of contract and for civil theft under section 18-4-405, C.R.S. (2018). The statute allowed the rightful owner of stolen property to recover the greater of $200 or three times the actual damages sustained, as well as costs and reasonable attorney fees. Bermel argued BlueRadios’ remedies were limited to those for breach of contract, and that Colorado’s economic loss rule barred BlueRadios’ claim for civil theft. After review, the Colorado Supreme Court disagreed, holding that the judge-made economic loss rule could not bar a statutory cause of action. View "Bermel v. BlueRadios, Inc." on Justia Law

U.S. Welding sought review of the court of appeals’ judgment affirming the district court’s order awarding it no damages whatsoever for breach of contract with Advanced Circuits. Notwithstanding its determination following a bench trial that Advanced breached its contract to purchase from Welding all its nitrogen requirements during a one-year term, the district court reasoned that by declining Advanced’s request for an estimate of lost profits expected to result from Advanced’s breach prior to expiration of the contract term, Welding failed to mitigate. Because an aggrieved party is not obligated to mitigate damages from a breach by giving up its rights under the contract, and because requiring Welding to settle for a projection of anticipated lost profits, rather than its actual loss, as measured by the amount of nitrogen Advanced actually purchased from another vendor over the contract term, would amount to nothing less than forcing Welding to relinquish its rights under the contract, the Colorado Supreme Court concluded the district court erred. The court of appeals’ judgment concerning failure to mitigate was therefore reversed, and the case was remanded for further proceedings. View "U.S. Welding, Inc. v. Advanced Circuits, Inc." on Justia Law