23CA1621 Heartwood v Harrington 10-17-2024
COLORADO COURT OF APPEALS
Court of Appeals No. 23CA1621 El Paso County District Court No. 21CV31903 Honorable David Shakes, Judge
Heartwood Custom Cabinetry, LLLP, a Colorado limited liability limited partnership,
Plaintiff-Appellant,
v.
Charles Kent Harrington and Lynn Harrington f/k/a Lynn Lemay,
Defendants-Appellees,
Tracy Victor Martinez,
Third-Party Defendant-Appellant.
JUDGMENT AND ORDER AFFIRMED
Division IV Opinion by JUDGE YUN Harris and Kuhn, JJ., concur
NOT PUBLISHED PURSUANT TO C.A.R. 35(e) Announced October 17, 2024
Kane Law Firm, P.C., Mark H. Kane, Colorado Springs, Colorado, for Plaintiff- Appellant and Third-Party Defendant-Appellant
Sparks Willson, P.C., Matthew A. Niznik, Colorado Springs, Colorado, for Defendants-Appellees ¶1 This case arises from a contract dispute that plaintiff,
Heartwood Custom Cabinetry, LLLP, and third-party defendant,
Tracy Victor Martinez (collectively, Heartwood), had with
defendants, Charles Kent Harrington and Lynn Harrington f/k/a
Lynn Lemay (collectively, the Harringtons).
¶2 After Heartwood failed to respond to the Harringtons’ discovery
requests, the district court entered an order compelling discovery,
imposed attorney fees and costs, and ordered Martinez to appear in
person at a court hearing. When Heartwood still failed to respond
to the discovery and Martinez failed to appear in court, the district
court dismissed Heartwood’s claims and entered default judgment
on the Harringtons’ counterclaims against Heartwood as discovery
sanctions under C.R.C.P. 37(c).
¶3 Heartwood appeals these sanctions, arguing that they were
unduly harsh and that the court should have imposed less severe
penalties. Heartwood also appeals the court’s order denying its
motion to reconsider the sanctions due to the negligence of its prior
attorney. Because we conclude that the district court did not abuse
its discretion by imposing the sanctions and because Heartwood did
1 not demonstrate gross negligence in its motion for reconsideration,
we affirm the judgment and order.
I. Background
¶4 In 2021, the Harringtons entered into a contract with
Heartwood Custom Cabinetry to build and install custom cabinetry
and a butcher block in their kitchen. But, according to the
Harringtons, the company failed to comply with many of the
agreed-upon specifications for the installation. The Harringtons
eventually replaced the company on the project and refused to
make the final payment required by the contract upon completion
of the work.
¶5 Thereafter, Martinez — a general partner of Heartwood
Custom Cabinetry — allegedly threatened to disseminate to the
Harringtons’ neighbors news articles about a deferred prosecution
agreement that Charles Harrington entered into a decade earlier
unless the Harringtons made the final payment. When the
Harringtons did not capitulate, Heartwood filed a mechanic’s lien
against their home and commenced this lawsuit asserting claims for
2 breach of contract, unjust enrichment, and foreclosure of a
mechanic’s lien.1
¶6 The Harringtons asserted counterclaims for breach of contract,
fraudulent misrepresentation, violation of the Colorado Consumer
Protection Act, and conversion against Heartwood Custom
Cabinetry, and they asserted claims for outrageous conduct and
violation of the Colorado Organized Crime Control Act against both
the company and Martinez. Martinez responded by asserting a
claim for libel per se against the Harringtons based on their
allegations against him.
¶7 The Harringtons served discovery requests on Heartwood.
After granting the Harringtons’ anti-SLAPP2 motion to dismiss
Martinez’s libel claim that had automatically stayed discovery, the
district court set a specific deadline for Heartwood to respond to the
Harringtons’ discovery requests. But Heartwood did not meet this
deadline. Instead, four days after the deadline had passed,
1 Heartwood also asserted these claims against Aletha Ann
Harrington, but she was ultimately dismissed from the case and her involvement is not relevant to this appeal. 2 “SLAPP” is an acronym for “strategic lawsuits against public
participation.”
3 Heartwood’s counsel reached out to the Harringtons’ attorney and
was given an additional four days to respond. Ten days later, the
Harringtons still had not received any discovery responses and filed
a motion to compel.
¶8 Thirteen days after the motion to compel was filed (and
twenty-seven days after the original discovery deadline), the district
court held a status conference on the discovery dispute.
Heartwood’s counsel informed the court that he “was having
difficulties with [Martinez]” concerning discovery. He did not object
to an order granting the motion to compel and told the court that
“what is provided to me by [Martinez] will be provided to” the
Harringtons. Accordingly, the court granted the motion, ordered
Heartwood to provide its discovery responses within seven days,
and awarded the Harringtons their attorney fees and costs
associated with the discovery dispute. The district court also
determined that “it would be important to have a status
conference . . . with Mr. Martinez present, so that I can go over
what my expectations are directly with him,” and it ordered
Martinez to appear in person at a conference set a month later.
4 ¶9 Heartwood again failed to deliver any discovery responses by
the deadline, and the Harringtons filed a motion for sanctions
requesting that the district court dismiss Heartwood’s claims and
enter default judgment on the Harringtons’ counterclaims. The
court did not rule on the motion before the scheduled status
conference.
¶ 10 Martinez did not appear at the conference despite the court
order that he attend in person. Heartwood’s counsel informed the
court that he had spoken with Martinez a couple of weeks earlier
and that it was his “expectation that [Martinez] would be here.”
Heartwood’s counsel also told the court that Martinez had
“informed [him that] he was going to be pulling together the
information for the responses to discovery” but he had “not received
those from him to date.”
¶ 11 The next day — sixty-one days after the original discovery
response deadline — the district court granted the motion for
sanctions, awarded attorney fees and costs associated with the
motion, and dismissed Heartwood’s claims while entering default
judgment on the Harringtons’ counterclaims against Heartwood.
The court found that Heartwood completely “fail[ed] to comply with
5 the disclosure and discovery rules and orders” because Heartwood
“ha[d] disclosed nothing.” It also found that Heartwood’s repeated
failure to comply was prejudicial because the Harringtons “cannot
adequately prepare their claims, defenses, or expert disclosures”
without the discovery responses. And the court noted that, whether
at the hearing or in its response to the motion for sanctions,
Heartwood never explained “the absence of . . . Martinez or . . . the
failure to comply with the court’s discovery order.” Because of
these failures, the court determined that Heartwood’s conduct was
willful and deliberate.
¶ 12 Several months later, Heartwood’s counsel filed a motion to
withdraw his representation of Heartwood Custom Cabinetry and
Martinez, and Heartwood retained a new attorney who entered his
appearance shortly thereafter. Heartwood then filed a C.R.C.P.
60(b) motion to reconsider the sanctions order, accompanied by
Martinez’s affidavit asserting that he “was unaware of any problems
with discovery requests and/or responses” and “was unaware of
any motions to compel or any potential sanctions taken against
Heartwood or [him] because of any failure to provide discovery
responses.” The motion “acknowledge[d] that discovery violations
6 occurred” but argued that the sanctions the court imposed were
nonetheless too severe and that less drastic measures could have
been appropriate. And the motion asserted that prior counsel “did
not share the significance of the sanctions potentially employed for
failure to comply with discovery requests.”
¶ 13 The district court denied the motion. It noted that, at the time
it granted the motion for sanctions, “all prior efforts to encourage
[Heartwood] to comply with disclosure and discovery rules over the
preceding months had been futile and further efforts by the court to
encourage discovery compliance would be futile.” It thus concluded
that “the sanction imposed in this case was and remains the
appropriate and necessary sanction.” And the court found that
“[b]ased on the evidence available in this case, the suggestion
[Heartwood was] unaware of the seriousness of the discovery
violations is not plausible.”
¶ 14 The court ultimately held a hearing on the Harringtons’
claimed damages where it allowed Heartwood to contest the amount
before entering a monetary award in the Harringtons’ favor.
Heartwood does not challenge that award.
7 II. Analysis
¶ 15 Heartwood appeals the district court’s imposition of sanctions
and its denial of Heartwood’s motion for reconsideration. We
address and reject each contention in turn.
A. Dismissal and Default Judgment
¶ 16 Heartwood first contends that the district court abused its
discretion when it dismissed Heartwood’s claims and entered
default judgment against it on the Harringtons’ counterclaims.
Specifically, it argues that the sanctions were unduly harsh and
that the court should have imposed other, less severe sanctions.
We disagree.
1. Standard of Review and Applicable Law
¶ 17 We review the district court’s imposition of sanctions under
C.R.C.P. 37 for an abuse of discretion. Pinkstaff v. Black & Decker
(U.S.) Inc., 211 P.3d 698, 702 (Colo. 2009). The district court “has
considerable discretion to determine whether sanctions should be
imposed for discovery violations and what those sanctions should
be.” Prefer v. PharmNetRx, LLC, 18 P.3d 844, 849 (Colo. App. 2000).
A district court abuses its discretion when its ruling is manifestly
arbitrary, unreasonable, or unfair or when it misinterprets or
8 misapplies the law. Cath. Health Initiatives Colo. v. Earl Swensson
Assocs., Inc., 2017 CO 94, ¶ 8; see Churchill v. Univ. of Colo., 2012
CO 54, ¶ 74 (“In assessing whether [the district] court’s decision is
manifestly unreasonable, arbitrary, or unfair, we ask not whether
we would have reached a different result but, rather, whether the
[district] court’s decision fell within a range of reasonable options.”
(quoting E-470 Pub. Highway Auth. v. Revenig, 140 P.3d 227,
230-31 (Colo. App. 2006))).
¶ 18 C.R.C.P. 37(b)(2) provides that a district court may sanction a
party that “fails to obey an order to provide or permit discovery.”
Sanctions can range from deeming certain facts as established, to
“dismissing the action or proceeding or any part thereof,” or
entering default judgment against the noncompliant party.
C.R.C.P. 37(b)(2)(A)-(C).
Generally, sanctions under C.R.C.P. 37 “should be applied in a manner that effectuates proportionality between the sanction imposed and the culpability of the disobedient party.” . . . When discovery abuses are alleged, courts should carefully examine whether there is any basis for the allegation and, if sanctions are warranted, impose the least severe sanction that will ensure there is full compliance with a court’s
9 discovery orders and is commensurate with the prejudice caused to the opposing party.
Pinkstaff, 211 P.3d at 702 (quoting Kwik Way Stores, Inc. v.
Caldwell, 745 P.2d 672, 677 (Colo. 1987)).
¶ 19 “Dismissal, the severest form of sanction, is generally
appropriate only for willful or deliberate disobedience of discovery
rules, flagrant disregard of a party’s discovery obligations, or a
substantial deviation from reasonable care in complying with those
obligations.” Prefer, 18 P.3d at 850. Thus, dismissal “should be
imposed only in extreme circumstances.” Nagy v. Dist. Ct.,
762 P.2d 158, 161 (Colo. 1988).
2. Discussion
¶ 20 Heartwood does not contest any of the district court’s findings
in the sanctions order, including that Heartwood failed “to comply
with the disclosure and discovery rules and orders,” that it had
“disclosed nothing,” and that the Harringtons could not “adequately
prepare their claims, defenses, or expert disclosures” without the
discovery responses. Nevertheless, Heartwood contends that the
district court abused its discretion by imposing dismissal and
default judgment in lieu of lesser sanctions. We are not persuaded.
10 ¶ 21 The district court took steps of escalating severity in an effort
to make Heartwood comply with its discovery obligations. The court
initially set a specific deadline for Heartwood to respond; when that
failed, it entered an order compelling Heartwood to respond and
awarded the Harringtons attorney fees and costs. And as a final
measure, it ordered Martinez to appear in person at the next status
conference so it could impress upon him the importance of
complying with his discovery obligations.
¶ 22 Despite these efforts, Martinez did not appear at the
subsequent hearing and, sixty-one days after the initial response
deadline and well over a year after filing the lawsuit, Heartwood had
not produced any discovery. Heartwood’s repeated failure to
participate in discovery warranted severe sanctions because, as the
district court found, Heartwood was “withholding necessary and
important evidence to every claim in the matter” and “[w]ithout
Heartwood’s and Martinez’s discovery responses, [the Harringtons]
[could not] adequately prepare their claims, defenses, or expert
disclosures.” Cf. Cornelius v. River Ridge Ranch Landowners Ass’n,
202 P.3d 564, 571 (Colo. 2009) (Because “the nondisclosure in this
11 case was so extensive that the parties and the water court had
virtually no specific information,” it merited dismissal of the case.).
¶ 23 In total, Heartwood disregarded three separate court orders.
And, as the district court noted, Heartwood did not make any effort
to “explain the failures to comply with disclosure rules and
discovery orders” or why Martinez did not appear as ordered. Thus,
the district court did not abuse its discretion in dismissing
Heartwood’s claims and entering default judgment against it on the
Harringtons’ counterclaims because Heartwood willfully or
flagrantly disregarded its discovery obligations. See Caldwell,
745 P.2d at 677 (“Where a party . . . engages in a course of conduct
that manifests a flagrant disregard of discovery obligations . . . , a
court may properly impose the sanction of default.”); Newell v.
Engel, 899 P.2d 273, 277 (Colo. App. 1994) (“[A] sufficient level of
culpability for default will generally be present in cases in which an
order compelling discovery was entered and the party failed to
comply.”). And because Heartwood ignored the court’s previous
attempts to enforce discovery compliance, including a lesser
sanction awarding attorney fees and costs and an order requiring
Martinez to appear in court to discuss the importance of complying
12 with his discovery obligations, it was reasonable for the district
court to conclude that no less severe sanctions were appropriate.
Cf. Sheid v. Hewlett Packard, 826 P.2d 396, 399 (Colo. App. 1991)
(dismissal appropriate where the plaintiff refused to comply with
three orders directing the plaintiff to sign medical releases despite
the tribunal’s efforts to stay the proceedings pending compliance).
¶ 24 In sum, while dismissal is only appropriate in rare cases for
“willful or deliberate disobedience of discovery rules, flagrant
disregard of a party’s discovery obligations, or a substantial
deviation from reasonable care in complying with those obligations,”
Prefer, 18 P.3d at 850, this is that rare case where dismissal and
the entry of default judgment was a reasonable exercise of the
district court’s discretion because Heartwood willfully or flagrantly
disobeyed its discovery obligations and multiple court orders.
¶ 25 We are not persuaded otherwise by Heartwood’s contention
that the sanctions were too severe given “evidence of attorney
misconduct” — failing to respond to requests for admission and to
explain Martinez’s absence at the status conference — by
Heartwood’s prior counsel. Heartwood did not raise this argument
with the district court, so we will not consider it. See Gestner v.
13 Gestner, 2024 COA 55, ¶ 18 (“In civil cases, issues not raised in or
decided by the district court generally will not be addressed for the
first time on appeal.”).
B. Motion for Reconsideration
¶ 26 Heartwood next contends that the district court abused its
discretion by denying Heartwood’s C.R.C.P. 60(b) motion for
reconsideration premised on the “gross negligence” of its prior
attorney. We again disagree.
¶ 27 We review a district court’s denial of a C.R.C.P. 60(b) motion
for an abuse of discretion. Gold Hill Dev. Co., L.P. v. TSG Ski & Golf,
LLC, 2015 COA 177, ¶ 65. “To constitute an abuse of discretion,
the [district] court’s ruling must be manifestly arbitrary,
unreasonable, or unfair, or be based on a misunderstanding of the
law.” Id. The district court’s findings of fact and credibility
determinations may not be disturbed on appeal unless they are
clearly erroneous and lack support in the record, and we may not
substitute our own findings of fact for those of the district court.
See M.D.C./Wood, Inc. v. Mortimer, 866 P.2d 1380, 1383-84 (Colo.
1994).
14 ¶ 28 As relevant in this case, a judgment or order may be set aside
for “[m]istake, inadvertence, surprise, or excusable neglect.”
C.R.C.P. 60(b)(1). “A party’s conduct constitutes excusable neglect
when the surrounding circumstances would cause a reasonably
careful person similarly to neglect a duty. Common carelessness
and negligence do not amount to excusable neglect.” In re
Weisbard, 25 P.3d 24, 26 (Colo. 2001) (citation omitted). “When
determining whether a [litigant]’s failure to act is excusable under
C.R.C.P. 60(b), courts ‘should not impute the gross negligence of an
attorney to the client.’” Plaza del Lago Townhomes Ass’n v.
Highwood Builders, LLC, 148 P.3d 367, 374 (Colo. App. 2006)
(quoting Buckmiller v. Safeway Stores, Inc., 727 P.2d 1112, 1116
(Colo. 1986)).
¶ 29 The movant bears the burden of establishing grounds for relief
by clear and convincing evidence. Goodman Assocs., LLC v. WP
Mountain Props., LLC, 222 P.3d 310, 315 (Colo. 2010); see Borer v.
Lewis, 91 P.3d 375, 379 (Colo. 2004).
¶ 30 As a threshold matter, Heartwood did not preserve the
argument that its prior counsel was grossly negligent for our review.
15 In its motion for reconsideration, Heartwood argued that “[p]revious
counsel . . . did not share the significance of the sanctions
potentially employed for failure to comply with discovery requests”
and that “Heartwood and Martinez were not aware of the discovery
disputes or the pending sanctions.” Even if we assume that these
assertions preserved the argument that Heartwood’s counsel was
negligent, they did not preserve the argument that the attorney was
grossly negligent. See Gebert v. Sears, Roebuck & Co., 2023 COA
107, ¶ 25 (“To properly preserve an argument for appeal, the party
asserting the argument must present ‘the sum and substance of the
argument’ to the district court.” (quoting Madalena v. Zurich Am.
Ins. Co., 2023 COA 32, ¶ 50)). Gross negligence requires “conduct
[that] is so aggravated as to be all but intentional. . . . [It]
describe[s] a form of aggravated negligence that differs in quality
rather than degree from ordinary lack of care.” White v. Hansen,
837 P.2d 1229, 1233 (Colo. 1992); see Pfantz v. Kmart Corp.,
85 P.3d 564, 568 (Colo. App. 2003). Heartwood’s contention that
its prior attorney “did not share the significance of the sanctions
potentially employed for failure to comply with discovery requests”
does not allege conduct rising to this level. See In re Weisbard,
16 25 P.3d at 26. And Martinez’s affidavit does not contain a single
reference to his prior attorney or the attorney’s conduct. Instead, it
simply states that Martinez was “unaware of any problems with
discovery requests and/or responses” and “unaware of any motions
to compel or any potential sanctions . . . because of any failure to
provide discovery responses” without any further explanation. See
Goodman Assocs., LLC, 222 P.3d at 315. Accordingly, we conclude
that Heartwood’s motion for reconsideration did not preserve its
argument of gross negligence.
¶ 31 But even if Heartwood’s gross negligence argument were
preserved, the district court considered and rejected the evidence
underpinning the argument when it found that “the suggestion that
violations is not plausible.” This finding enjoys record support
through the statements of Heartwood’s prior counsel demonstrating
that he was communicating with his clients about discovery. Most
notably, at the status conference that Martinez was ordered to
attend, Martinez’s counsel told the court that he had spoken with
Martinez about the conference and expected him to appear in
person and that, during their conversation, Martinez “informed me
17 he was going to be pulling together the information for the
Responses to the discovery.” Heartwood does not dispute that this
conversation took place. Instead, it contends that “one call
made . . . two-and-a-half weeks before the hearing was inadequate,”
and it stresses that the record reflects other supposedly negligent
conduct by its prior counsel that undercuts the credibility of the
attorney’s statements. But even if true, it is the role of the district
court to weigh conflicting evidence; the court’s finding is supported
by the record, and we cannot substitute it with our own. See
Mortimer, 866 P.2d at 1383-84.
¶ 32 The district court also rejected Heartwood’s argument that it
was entitled to C.R.C.P. 60(b) relief because it was inadequately
advised when prior counsel “did not share the significance of the
sanctions potentially employed for failure to comply with discovery
requests.” The court ruled that “[i]f the excuse offered by
[Heartwood] is that its attorney failed to properly advise and
represent it, then that issue is more appropriately addressed in a
forum in which that attorney can be heard and respond.” We
discern no abuse of discretion in this ruling because, as we
previously mentioned, the alleged misconduct of prior counsel does
18 not rise to the level of gross negligence warranting relief under
C.R.C.P. 60(b)(1). See In re Weisbard, 25 P.3d at 26.
¶ 33 Accordingly, we perceive no abuse of discretion in the district
court’s denial of Heartwood’s motion for reconsideration.
C. Attorney Fees
¶ 34 The Harringtons request an award of their appellate attorney
fees pursuant to “Rule 37”3 and under the district court’s order
entering a monetary award. Because the Harringtons do not
explain how the rule or the order entitles them to appellate attorney
fees, we deny their request. See C.A.R. 39.1 (requiring that the
party requesting attorney fees explain the legal and factual basis to
support the request); Sos v. Roaring Fork Transp. Auth., 2017 COA
142, ¶ 59 (declining to consider an “undeveloped request” for
attorney fees where the requesting party failed to state any legal or
factual basis for an award).
3 We assume that the Harringtons are referring to C.R.C.P. 37
(“Failure to Make Disclosure or Cooperate in Discovery: Sanctions”) and not C.A.R. 37 (“Interest on Judgments”).
19 III. Disposition
¶ 35 The judgment and order are affirmed.
JUDGE HARRIS and JUDGE KUHN concur.