Denton v. Air Pros One

• Court: Colorado Court of Appeals
• Decided: February 6, 2025
• Docket: 23CA2051
• Status: Unpublished

Opinion

23CA2051 Denton v Air Pros One 02-06-2025

COLORADO COURT OF APPEALS

Court of Appeals No. 23CA2051 El Paso County District Court No. 23CV30514 Honorable David Shakes, Judge

Jack Denton,

Plaintiff-Appellee,

v.

Air Pros One Source, LLC, a Colorado limited liability company,

Defendant-Appellant.

ORDER AFFIRMED

Division V Opinion by JUDGE FREYRE Schock and Sullivan, JJ., concur

NOT PUBLISHED PURSUANT TO C.A.R. 35(e) Announced February 6, 2025

Earl & Earl, PLLC, Collin J. Earl, Ryan T. Earl, Brian E. Hefner, Colorado Springs, Colorado, for Plaintiff-Appellee

Dinsmore & Shohl LLP, Michael A. Paul, Kevin D. Poyner, Jeana M. Mason, Denver, Colorado, for Defendant-Appellant ¶1 Defendant, Air Pros One Source, LLC (Air Pros), appeals the

district court’s order denying its motion to set aside the default

judgment entered in favor of plaintiff, Jack Denton. We affirm.

I. Background

¶2 In June 2020, Denton hired Air Pros to repair a boiler in his

home. Denton paid Air Pros $2,600. By September 2020, the

boiler had not been fixed, and Denton spent the winter of

2020-2021 with no hot water or heat.

¶3 In February 2021, Denton’s pipes froze, resulting in water and

mold damage to the home. Throughout the summer and fall, Air

Pros continued to work on Denton’s boiler sporadically, but the

problems were not resolved, and Denton spent another winter

without heat or hot water.

¶4 In January 2022, Denton filed a complaint against Air Pros

with the Pikes Peak Building Department detailing his repair issues.

An Air Pros representative promised Denton that all problems

would be fixed. Repair work started, but Air Pros terminated its

employee before the work was completed.

¶5 In May 2022, Air Pros sent Denton a signed settlement

agreement offering to refund $3,000, to replace the carpet, and to

1 replace the wood floors if Denton dismissed the building

department complaint. Denton emailed his acceptance of the offer,

but he never signed the agreement. Air Pros refunded the $3,000

but never replaced the carpet or wood floors.

¶6 In March 2023, Denton filed this action for injunctive relief,

specific performance, and negligence, and he sought damages for

loss of enjoyment resulting from the lack of heat or hot water after

the pipes burst in February 2021. Denton properly served Air Pros

with the complaint.

¶7 After receiving the complaint, Air Pros’ registered agent sent it

to the company’s national insurance manager with instructions to

forward the complaint to Air Pros’ insurance carriers, Clear Blue

and Nationwide. Air Pros’ legal counsel was never informed of the

complaint, due to an unsent email, while Air Pros’ national

insurance manager believed that the claim was being handled by

counsel. Consequently, when the national insurance manager

learned the claims had been denied, she never informed legal

counsel of the denial, and Air Pros never responded to the

complaint.

2 ¶8 On May 30, 2023, Denton filed a motion for entry of default on

damages pursuant to C.R.C.P. 55(b). The district court granted the

motion and set a damages hearing. The court held a damages

hearing on September 21, 2023, and entered judgment for Denton

on October 10, 2023, in the amount of $861,576.49.

¶9 Air Pros learned of the judgment the following day when it

received judgment-debtor interrogatories. When Air Pros did not

respond to the interrogatories, Denton filed a contempt motion on

October 27, and the court set a contempt hearing for January 4,

2024.1

¶ 10 On November 28, Air Pros appealed the court’s judgment in

this court and simultaneously filed a motion to set aside the default

judgment in the district court. It requested a stay of the appeal and

a limited remand for ruling on its motion. This court granted the

stay request and remanded the case for a ruling on the motion to

set aside the default judgment.

¶ 11 In the motion to set aside the default judgment, Air Pros

argued that it would have answered the complaint but for excusable

1 The court never ruled on the contempt motion and focused only

on the motion to set aside the default judgment.

3 neglect. Air Pros asserted that it forwarded the complaint to its

insurance carriers and that an internal miscommunication resulted

in legal counsel never receiving a copy. Consequently, Air Pros

assumed legal counsel knew of the insurance claim denials and was

handling the lawsuit. In its prehearing brief, Air Pros alternatively

argued that Denton failed to comply with the notice provisions of

the Colorado Construction Defect Action Reform Act (CDARA) so it

did not file an answer to the complaint.

¶ 12 Before the hearing, the district court ordered the parties to

address two issues: (1) whether refusing to set aside the default

judgment would be a misapplication of the law; and (2) whether the

judgment was divisible, i.e., whether a portion of the damages could

be reopened, recalculated, or set aside due to mistakes in the

judgment.

¶ 13 The parties filed prehearing briefs and agreed that the district

court had jurisdiction to adjudicate the contempt citation, but they

contested whether sufficient evidence existed to set aside the

4 default judgment. They further agreed that the court could alter or

amend the judgment under C.R.C.P. 60(b).2

¶ 14 Air Pros called two of its employees to testify at the hearing;

Roscoe Brister, director of special projects and registered agent, and

Therese Deutsch, national insurance manager. Brister testified

that he received the complaint and forwarded it to “all the relevant

folks in [Air Pros],” instructing them on how to proceed and which

legal counsel to contact. None of those individuals contacted Air

Pros’ counsel because they believed the complaint was being

handled by Air Pros’ insurance carriers. Further, Brister testified

that Air Pros never received a notice of claim as required under

CDARA. Air Pros argued that it did not file an answer because it

believed the case was going to be stayed since Denton had failed to

file the notice of claim under CDARA. Deutsch testified that when

she received the complaint, she forwarded it to Air Pros’ insurance

broker to file claims with the insurance carriers. She believed the

insurance carriers were handling the claim, and she never followed

2 Denton also argued that the court could amend the judgment

under C.R.C.P. 59(a) and 60(a).

5 up with the insurance carriers to see if local counsel had been hired

to defend the complaint.

¶ 15 On April 10, 2024, the district court issued an order denying

the motion to set aside the default judgment. The court found that

Air Pros failed to meet its burden to show, by clear and convincing

evidence, that it acted with excusable neglect. The court found that

after Air Pros’ agent for service of process forwarded the complaint

to the national insurance manager and one carrier denied coverage,

a series of miscommunications and failures to follow up resulted in

Air Pros not filing an answer to the complaint. It also found that Air

Pros produced no evidence that these miscommunications resulted

from any unforeseen circumstances that would amount to

excusable neglect, under Goodman Associates, LLC v. WP Mountain

Properties, LLC, 222 P.3d 310, 319 (Colo. 2010).

¶ 16 Additionally, the court rejected Air Pros’ argument that it did

not file an answer because Denton failed to comply with CDARA’s

notice requirements. It found the witness’s testimony concerning

CDARA not credible and inconsistent with Air Pros’

miscommunication argument.

6 ¶ 17 The district court considered and rejected Air Pros’ three

meritorious defense arguments. It first found that although Denton

accepted the offer in the settlement agreement, the settlement

agreement itself provided no defense because Air Pros failed to

perform its obligations under the agreement.

¶ 18 It next found that Denton’s failure to file CDARA notices did

not provide a defense because the hearing evidence showed that Air

Pros was aware of the problems in the work it performed or failed to

perform well before the lawsuit was filed. As examples, the court

cited the communications between Denton and Air Pros, the experts

Air Pros sent to inspect the damage and to rectify the mold issue,

the complaint filed by Denton with the building department, and a

December 21, 2022, email Denton sent outlining the problems. It

found that the email alone satisfied the notice requirements of

section 13-20-803.5(11), C.R.S. 2024.

¶ 19 Finally, the court rejected Air Pros’ statute of limitations

defense. It noted that work began in June 2020 but was never

completed. Instead, Air Pros continually performed defective work

over the next several years and had not completed the work at the

time Denton filed the complaint. It found that Air Pros had not

7 made a convincing argument that the limitations period began to

run in 2020.

¶ 20 The district court acknowledged that Air Pros was correct that

“there may be damages that were awarded to Plaintiff incorrectly.”

It considered this fact in its analysis of the equities, which it found

favored Denton. It noted that Air Pros had known of the mold

problems since the inspection by its experts and that this problem

had never been remediated. It further noted that Air Pros

continued to use the settlement agreement as a defense to this

action and the complaint to the building department despite having

never completed its obligations under the agreement. And it noted

that the property was a residence, not a commercial property for

which loss of use damages could be more easily calculated. Even

considering Air Pros’ prompt motion to set aside the default

judgment and the errors in the damages calculations, the court

concluded they did not outweigh the equitable considerations in

favor of Denton. It then denied the motion.

¶ 21 On appeal, Air Pros contends that the district court

erroneously (1) held it to a heightened burden of proof on each of

the Goodman factors; (2) misinterpreted provisions of CDARA,

8 including the application of a mandatory automatic stay that

rendered the judgment void; (3) made findings of fact contrary to

the weight of evidence; (4) failed to consider meritorious defenses

and equitable considerations; (5) failed to consider inadvertence as

a basis for setting aside the judgment; and (6) failed to consider or

correct the improper and excessive damages awarded. We discern

no abuse of discretion in the district court’s finding that Air Pros

failed to establish excusable neglect by clear and convincing

evidence because the record shows the court carefully considered

and weighed each of the Goodman factors in reaching its decision.

Moreover, applying the doctrine of judicial restraint and the rule

recognized in McMichael v. Encompass PAHS Rehabilitation Hospital,

LLC, 2023 CO 2, ¶ 13, that a court may deny a motion to set aside

a default judgment if the moving party fails to establish any one of

the Goodman factors, we do not address Air Pros’ remaining

arguments concerning meritorious defenses and equitable

considerations. Moreover, we reject Air Pros’ inadvertence and void

judgment arguments. Finally, while we agree the court

acknowledged probable mistakes in the damages calculations, the

9 court’s order shows that it considered these mistakes in evaluating

the equities of the parties and discern no basis for reversal.

II. Excusable Neglect

A. Standard of Review and Applicable Law

¶ 22 We review the district court’s denial of relief under Rule 60(b)

for an abuse of discretion. Goodman Assocs., LLC, 222 P.3d at 314.

“Abuse of discretion exists where a decision is manifestly arbitrary,

unreasonable, or unfair.” Id. A court also abuses its discretion if

its decision is based on a misapplication of the law. Ferraro v. Frias

Drywall, LLC, 2019 COA 123, ¶ 10.

¶ 23 “To set aside a judgment under C.R.C.P. 60(b), the movant

bears the burden of establishing by clear and convincing evidence

that the motion should be granted.” Goodman Assocs., LLC, 222

P.3d at 315. Clear and convincing evidence is evidence that is

highly probable and free from serious or substantial doubt. L.S.S.

v. S.A.P., 2022 COA 123, ¶ 39. At its core, the decision whether to

set aside a default judgment is an equitable decision designed to

balance the finality of judgments and the need to provide relief in

the interests of justice in exceptional circumstances. Goodman

Assocs., LLC, 222 P.3d at 319.

10 ¶ 24 Courts consider three factors when determining whether to

relieve a party from default judgment under C.R.C.P. 60(b):

“(1) whether the neglect that resulted in the entry of judgment by

default was excusable; (2) whether the moving party has alleged a

meritorious claim or defense; and (3) whether relief from the

challenged order would be consistent with considerations of equity.”

McMichael, ¶ 13 (quoting Buckmiller v. Safeway Stores, Inc., 727

P.2d 1112, 1116 (Colo. 1986)). “[E]ach factor must be weighed and

considered together as a part of the question whether excusable

neglect exists to satisfy C.R.C.P. 60(b)(1).” Goodman Assocs., LLC,

222 P.3d at 320. A court’s consideration of these factors must be

guided by the general rule that motions to set aside default

judgments “should be liberally construed in favor of the movant,

especially where the motion has been promptly made.” Craig v.

Rider, 651 P.2d 397, 402 (Colo. 1982); see also Goodman Assocs.,

LLC, 222 P.3d at 320. While the mere existence of a meritorious

defense does not, by itself, justify vacating a judgment, the nature

of a defense “may shed light on the existence and degree of neglect,

and possibly on the equitable considerations.” Goodman Assocs.,

LLC, 222 P.3d at 320 (citation omitted). A district court may deny a

11 motion to set aside a default judgment if the moving party fails to

establish any one of these factors. McMichael, ¶ 13; Goodman

Assocs., LLC, 222 P.3d at 321; Buckmiller, 727 P.2d at 1116.

¶ 25 “A party’s conduct constitutes excusable neglect when the

surrounding circumstances would cause a reasonably careful

person similarly to neglect a duty.” McMichael, ¶ 14 (quoting In re

Weisbard, 25 P.3d 24, 26 (Colo. 2001)). “[N]egligence” or “[c]ommon

carelessness” does not constitute “excusable neglect.” Id. (quoting

Weisbard, 25 P.3d at 26). Excusable neglect involves “unforeseen

circumstances which would cause a reasonably prudent person to

overlook a required act in the performance of some responsibility.”

Goodman Assocs., LLC, 222 P.3d at 319 (quoting Colo. Dep’t of Pub.

Health & Env’t v. Caulk, 969 P.2d 804, 809 (Colo. App. 1998)). As

relevant here, poor office procedures do not justify the failure to

respond to a complaint. Id. at 321.

B. Analysis

¶ 26 The district court relied on two cases, Lopez v. Reserve

Insurance Co., 525 P.2d 1204 (Colo. App. 1974) (not published

pursuant to C.A.R. 35(f)), and Plaisted v. Colorado Springs School

12 District No. 11, 702 P.2d 761 (Colo. App. 1985), to find no excusable

neglect.

¶ 27 In Lopez, the defendant never filed an answer to the complaint

or otherwise appeared, and the court entered a default judgment

against him. 525 P.2d at 1205. He filed a motion to set aside the

default judgment and asserted excusable neglect. Id. His motion

claimed that he believed that his codefendant would respond and

defend the action for all of the defendants. Id. The district court

denied the motion. Id. A division of this court held that a

defendant’s reliance on the belief that another party has the legal

responsibility to appear and defend an action against him does not

excuse his noncompliance with the rules of civil procedure requiring

a timely response. Id. at 1205-06.

¶ 28 In Plaisted, a school board secretary accepted service of a

complaint and summons and delivered them to a second secretary

in the school board office. 702 P.2d at 762. The second secretary

called the school district’s insurance carrier to inform it that a

lawsuit had been filed. Id. She then mailed copies of the summons

and the complaint to the school district’s attorney and to the

insurer. Id. However, the documents were not received by either

13 party. Id. After a default judgment entered against the school

district, the school district filed a motion to set aside the judgment.

Id. The district court denied the motion and found there was no

excusable neglect. Id. A division of this court held that the loss of

the summons and complaint in the mail did not constitute

excusable neglect because the second secretary did not follow up

with the school district’s attorney and insurance carrier to ensure

their receipt of the documents. Id. at 763.

¶ 29 We agree with the district court that the facts here are similar

to those in the two cases on which it relied. As in Lopez, Air Pros

received the complaint and believed that its insurance carriers were

handling a response to it. When a party has been properly served,

reliance on another party does not excuse the served party’s lack of

compliance with the rules of civil procedure. Lopez, 525 P.2d at

1205-06.

¶ 30 Moreover, like the secretary in Plaisted, the district court

found that Air Pros failed to follow up with legal counsel and the

insurance companies. “‘[E]xcusable neglect’ occurs when there has

been a failure to take proper steps at the proper time, not in

consequence of carelessness, but as the result of some unavoidable

14 hindrance or accident.” Farmers Ins. Grp. v. Dist. Ct., 507 P.2d 865,

867 (Colo. 1973). Air Pros presented no evidence of an unavoidable

hindrance or accident that affected its ability to respond to the

complaint, and to the extent it claims it was not required to do so,

we reject that claim. The record shows that Air Pros’ service agent

received the complaint and forwarded it to the appropriate people

with instructions on which legal counsel to contact. Those

individuals failed to comply with the agent’s instructions and

instead assumed the insurance attorneys were handling the matter,

without ever contacting the attorneys to learn the status of the

lawsuit. These poor office procedures do not justify failing to

respond to the complaint. See Goodman Assocs., LLC, 222 P.3d at

322. Rather, Air Pros’ failures to follow up with its insurance

carriers constitute negligence and common carelessness that is

insufficient to establish excusable neglect. See id. Accordingly, we

discern no abuse of discretion in the court’s finding that Air Pros

failed to establish excusable neglect by clear and convincing

evidence. Further, we are not convinced that the district court

imposed a heightened burden of proof. The court cited the proper

15 burden of proof in its order and used it in analyzing the Goodman

factors.

¶ 31 We are also unpersuaded that J.B. v. MKBS, LLC, 2024 COA

117, requires us to reverse the district court’s order. As Air Pros

noted in its notice of supplemental authority, this case properly

states the standards relevant to motions to set aside default

judgment, standards we have articulated above. Id. at ¶¶ 50-70.

The fact that the J.B. division found no abuse of discretion and

affirmed the district’s decision to set aside the default judgment

does not require a conclusion that a district court who denies a

motion to set aside a default judgment abuses its discretion in

doing so. In our view, this case simply illustrates the district

court’s broad discretion in applying the Goodman factors.

¶ 32 Finally, in deciding to resolve this case based on the excusable

neglect factor, we acknowledge a tension between our ability to do

so under longstanding supreme court cases, McMichael, ¶ 13, and

Goodman’s language requiring a weighing of all the factors. But

even assuming, without deciding that Air Pros sufficiently alleged

meritorious defenses, they do not justify vacating a judgment, but

instead may shed light on the other factors. See Goodman Assocs.,

16 LLC, 222 P.3d at 320. Indeed, the record shows the district court

considered and weighed Air Pros’ employees’ contradictory

testimony that internal miscommunications caused the failure to

respond, but also that Denton’s failure to comply with CDARA’s

notice requirement caused the failure to respond. Because the

record supports the court’s findings, we conclude that Air Pros

failed to establish excusable neglect by clear and convincing

evidence, affirm the judgment on this basis, and do not address the

remaining Goodman factors. See McMichael, ¶ 13; Buckmiller, 727

P.2d at 1116; see also People v. Curtis, 2014 COA 100, ¶ 12 (“[T]he

cardinal principle of judicial restraint [is] if it is not necessary to

decide more, it is necessary not to decide more.” (quoting PDK

Lab’ies Inc. v. U.S. Drug Enf’t Admin., 362 F.3d 786, 799 (D.C. Cir.

2004) (Roberts, J., concurring in part and concurring in the

judgment))).

III. Inadvertence and Void Judgment

¶ 33 Air Pros contends the district court erred by not ruling on its

alternative “inadvertence” argument, under Rule 60(b)(1), and its

void judgment argument predicated on Denton’s failure to comply

with CDARA’s notice requirements before judgment entered.

17 ¶ 34 Concerning inadvertence, Air Pros concedes on appeal that the

same facts forming the basis of its excusable neglect argument

constitute the basis for its inadvertence argument. While we

recognize that the terms in Rule 60(b)(1) are not synonymous,

Goodman Assocs., LLC, 222 P.3d at 318, Air Pros did not develop its

argument by explaining the difference between excusable neglect

and inadvertence and relied on a decades-old out-of-state case

discussing inadvertence but finding it was insufficient to reverse the

denial of the motion to set aside the default judgment. Because we

do not address undeveloped arguments, we discern no error by the

district court. Am. Fam. Mut. Ins. Co. v. Am. Nat’l Prop. & Cas. Co.,

2015 COA 135, ¶ 42.

¶ 35 Air Pros premises its void judgment claim on Denton’s failure

to comply with the notice provisions of CDARA and the automatic

stay that enters pending a claimant’s completion of CDARA’s

requirements. § 13-20-803.5. It reasons that actions taken in

violation of an automatic stay are void. We disagree for two

reasons. First, as noted above, a meritorious defense does not

automatically justify vacating a default judgment but rather is one

factor that informs the court’s excusable neglect finding under

18 C.R.C.P. 60(b). The district court found that Air Pros knew of the

damages caused by its defective work more than seventy-five days

before Denton filed his lawsuit, thereby rejecting the notice

argument under CDARA, and the record supports this finding.

Second, as discussed, the record shows the court considered

meritorious defenses, including the CDARA argument, in reaching

its excusable neglect finding. Therefore, the district court’s

excusable neglect finding necessarily includes a finding that the

judgment is not void. Because we affirm that finding, we reject Air

Pros’ void judgment argument.

IV. Damages Calculation

¶ 36 Air Pros next contends that the district court failed to consider

whether the judgment should be set aside, reopened, or corrected

based on potential mistakes in the damages calculation. We

disagree because the court considered these potential mistakes in

its analysis of the equities. Indeed, the court’s order states, “In

considering the equitable factors in this case the court has

considered the relatively prompt response of Defendant in seeking

to set aside the judgment and the alleged incorrectness of some of

Plaintiff’s damages calculations. However, these considerations do

19 not outweigh the equitable considerations in favor of Plaintiff.”

Accordingly, we discern no legal basis to reverse the damages

awarded.

V. Attorney Fees

¶ 37 Denton requests an award of attorney fees and double costs

pursuant to C.A.R. 39.1 and C.A.R. 38(b). He asserts that Air Pros’

arguments are frivolous and without merit. An appeal can be

frivolous in two ways: frivolous as filed or frivolous as argued. See

Castillo v. Koppes-Conway, 148 P.3d 289, 292 (Colo. App. 2006).

An appeal may be frivolous as filed where the “judgment by the

tribunal below was so plainly correct and the legal authority

contrary to appellant’s position so clear that there is really no

appealable issue.” Campaign Integrity Watchdog v. Coloradans for a

Better Future, 2016 COA 56M, ¶ 33 (citation omitted). An appeal

may be frivolous as argued where “the appellant commits

misconduct in arguing the appeal,” id. (citation omitted), and “fail[s]

to set forth . . . a coherent assertion of error, supported by legal

authority,” Castillo, 148 P.3d at 292.

¶ 38 We conclude that Air Pros’ appeal is neither frivolous as filed

nor frivolous as argued. Its brief argued the tension in the case law

20 noted above and cited legal authority to support its arguments.

Accordingly, we deny Denton’s request for appellate attorney fees

and costs.

VI. Disposition

¶ 39 The order is affirmed.

JUDGE SCHOCK and JUDGE SULLIVAN concur.