23CA2166 Muth v Wright 02-20-2025
COLORADO COURT OF APPEALS
Court of Appeals No. 23CA2166 City and County of Denver District Court No. 23CV61 Honorable Martin F. Egelhoff, Judge
Steven E. Muth, individually and on behalf of the Estate of Zachary S. Muth,
Plaintiff-Appellant,
v.
Lonnie Wright, Patrick D. Vellone, Brenton L. Gragg, and Allen Vellone Wolf Helfrich & Factor P.C., a Colorado Professional Corporation,
Defendants-Appellees.
JUDGMENT AFFIRMED AND CASE REMANDED WITH DIRECTIONS
Division II Opinion by JUDGE FOX Lum and Berger*, JJ., concur
NOT PUBLISHED PURSUANT TO C.A.R. 35(e) Announced February 20, 2025
Westerfield & Martin, LLC, Zachary S. Westerfield, Denver, Colorado, for Plaintiff-Appellant
Burk & Burk, Robert E. Burk, Centennial Colorado, for Defendant-Appellee Lonnie Wright
Haddon, Morgan & Foreman, P.C., Adam Mueller, Jacob B. McMahon, Denver, Colorado, for Defendants-Appellees Patrick D. Vellone, Brenton L. Gragg, and Allen Vellone Wolf Helfrich & Factor P.C. *Sitting by assignment of the Chief Justice under provisions of Colo. Const. art. VI, § 5(3), and § 24-51-1105, C.R.S. 2024. ¶1 Plaintiff, Steven E. Muth, appeals the district court’s decisions
(1) granting the motion of defendants Patrick D. Vellone, Brenton L.
Gragg, and Allen Vellone Wolf Helfrich & Factor P.C., a Colorado
professional corporation (collectively, Vellone) to dismiss Steven’s
complaint for failing to state a claim; and (2) rejecting Steven’s
request for entry of default judgment against defendant Lonnie
Wright. We affirm the judgment of the district court and remand
with directions.
I. Background
A. The Contract Dispute
¶2 This appeal arises from the second of two cases between
Steven, Wright, and Vellone (Wright’s counsel). In the first dispute,
in 2019, Wright sued Steven and his company MAS Corp. in
Arapahoe County Case No. 18CV32684, alleging that they
wrongfully withheld the profits of an agreement — to renovate and
1 resell homes — between Steven, Steven’s son Zachary S. Muth,1
and Wright.2
¶3 After a venue transfer, Wright sought to amend his complaint
in what was now Denver District Court Case No. 19CV89 (hereafter,
19CV89) to add claims against Zachary, alleging that because
Zachary served as the president for MAS Corp., and he and Steven
both controlled MAS Corp. and were part of the profit-sharing
agreement, Zachary needed to be joined as a defendant. The
district court allowed the amendment, noting that “the amendments
made are not futile or surprising in light of discovery.”
¶4 Before 19CV89 was resolved, Zachary passed away and Wright
dismissed the claims against him. After a bench trial, the district
court in 19CV89 issued findings of fact and conclusions of law in
favor of Wright and against Steven and MAS Corp., awarding Wright
damages for breach of contract and civil theft. Steven separately
appealed 19CV89, and a division of this court recently affirmed the
1 Because of Steven and Zachary Muth’s shared surname, we
respectfully refer to them by their first names in this opinion. 2 We may take judicial notice of the contents of court records in
related proceedings. Vento v. Colo. Nat’l Bank, 985 P.2d 48, 52 (Colo. App. 1999).
2 district court. See Wright v. Muth, (Colo. App. No. 23CA1729, Jan.
30, 2025) (not published pursuant to C.A.R. 35(e)).
B. The Wrongful Death Dispute
¶5 In 19CV89 Steven twice raised alleged ethical conflicts
between himself and Wright’s counsel. Steven’s initial pro se
answer first requested that Vellone withdraw because the firm
represented him “on very similar matters relating to construction
and more” and the firm had been “intrinsically involved with Steven
for many years,” so their involvement in the case would be “[unfair]
and unethical.” This request was omitted from subsequent
amended answers filed through Steven’s counsel, but Steven later
filed a pro se motion in 2021 again requesting Vellone’s
disqualification. According to the court’s minute orders from
December 20, 2021, the court denied the motion on the ground that
the matters Steven highlighted were not substantially related to
Wright’s case.
¶6 But, before 19CV89 was resolved, Steven, acting pro se,
separately sued Wright and Vellone on his own and Zachary’s
estate’s behalf, raising the same ethical violations. Steven later filed
two amended complaints through counsel. In the second amended
3 complaint (SAC), Steven alleged that Vellone attorneys represented
him from approximately 2002-2014 on various legal matters and
then improperly used confidential information it learned about
Steven and Zachary against him in 19CV89. Steven also alleged
that Zachary was only added to the case to force Steven to settle.
Steven then argued that Vellone’s use of confidential information,
including Zachary’s medical history, caused Zachary “extreme and
emotional hardship,” causing Zachary to use illegal drugs and die
from an overdose. Steven raised claims for abuse of process and
wrongful death against Vellone.
¶7 Steven also applied for entry of default judgment against
Wright, arguing that Wright failed to timely respond to the first
amended complaint (FAC). Two days later, Steven submitted the
SAC. Wright soon retained counsel to argue default judgment was
unwarranted because Steven had failed to serve Wright with the
FAC in accordance with C.R.C.P. 4(e)(1). Wright also pointed out
that the SAC raised no claims against him and requested he be
dismissed from the case.
¶8 Vellone moved to dismiss the SAC for failing to state a claim
under C.R.C.P. 12(b)(5). Steven’s response contested these
4 arguments, but it also explained that he was withdrawing the abuse
of process claim. But the abuse of process claim was the wrongful
act undergirding the wrongful death claim.
¶9 The district court sided with the defendants on the motion to
dismiss and the application for default judgment. In dismissing the
abuse of process claim, the court found that “although the amended
complaint sufficiently alleges ulterior motives by the defendants in
instituting the underlying lawsuit and thereafter joining Zachary
Muth as a party, the complaint contains no facts establishing an
improper use of the judicial process.” The court noted that Steven
“fail[ed] to assert any facts demonstrating how the defendants used
the judicial process in any fashion that is outside its regular and
intended course” and that the SAC was therefore facially deficient.
The district court acknowledged that, in 19CV89, the court
addressed Steven’s prior representation issue and denied the
motion to disqualify, and the district court stated here that “an
attorney’s resistance to a motion to disqualify does not constitute
an improper use of the judicial process.”
¶ 10 The court added that it took judicial notice of the findings of
fact and conclusions of law order issued in 19CV89 and that the
5 “judgment ultimately entered against both Steven and Zachary
Muth in the underlying lawsuit belies any improper or untoward
use of the judicial process.” The court was careful to clarify in a
footnote that it was not taking judicial notice of the evidentiary
findings in 19CV89’s order; rather, only “of the final judgment
ultimately entered.”
¶ 11 As a result, the court found that the SAC failed to state a
viable claim for abuse of process. For wrongful death, the court
found that, because Steven failed to allege a plausible claim for
abuse of process, there was no underlying “wrongful act” to support
an inherently derivative wrongful death claim.
¶ 12 Finally, the court declined to enter default judgment against
Wright, finding that the “pleadings demonstrate that the defendant
was not properly served with process” and “[m]oreover, the original
[complaint and FAC] were superseded with the filing [of] a [SAC]”
that was never served on Wright. Furthermore, the court noted,
because it granted Vellone’s motion to dismiss the SAC, “entry of
default on a facially implausible claim is inappropriate.”
¶ 13 This appeal followed, raising two main issues. First, Steven
argues that the district court erred by granting Vellone’s motion to
6 dismiss the SAC. Second, Steven argues the court erred by
declining to enter a default judgment against Wright. These
contentions were preserved. See Gebert v. Sears, Roebuck & Co.,
2023 COA 107, ¶ 25. Vellone and Wright, in turn, request appellate
attorney fees and costs.
II. Analysis
A. The SAC Was Properly Dismissed
¶ 14 Steven raises several sub-issues concerning the district court’s
dismissal of the SAC. First, he argues that the SAC sufficiently
pleaded facts alleging an abuse of process. Second, Steven alleges
the district court erred by taking judicial notice of information in
court filings from 19CV89 because the court (1) incorrectly noted
that judgment was entered against both Zachary and Steven; (2)
took notice of the court’s findings and conclusions of law in
19CV89; and (3) improperly found those rulings had a preclusive
effect in this case. Third, Steven argues the district court should
have converted the motion to dismiss into a motion for summary
judgment because it reviewed and relied on information in exhibits
attached to Vellone’s motion. Finally, Steven argues he should be
7 permitted to pursue his wrongful death claim because his abuse of
process claim was viable.
1. Standards of Review and Applicable Law
¶ 15 Under C.R.C.P. 12(b)(5), a party may move to dismiss a
complaint for “fail[ing] to state a claim upon which relief can be
granted.” “[W]e review de novo the district court’s ruling on a
C.R.C.P. 12(b)(5) motion to dismiss . . . .” Peña v. Am. Fam. Mut.
Ins. Co., 2018 COA 56, ¶ 12.
¶ 16 “[T]o survive a motion to dismiss for failure to state a claim, a
plaintiff must allege a plausible claim for relief.” N.M. v. Trujillo,
2017 CO 79, ¶ 20. Complaints may be dismissed under Rule
12(b)(5) “if the substantive law does not support the claims
asserted, or if the plaintiff’s factual allegations do not, as a matter
of law, support a claim for relief.” Peña, ¶ 13 (citations omitted).
But “a court may consider only the facts alleged in the complaint,
documents attached as exhibits or referenced in the complaint, and
matters of which the court may take judicial notice”; otherwise the
court must treat the matter as a motion for summary judgment. Id.
at ¶ 14 & n.3; see also C.R.C.P. 12(b).
8 ¶ 17 When reviewing motions to dismiss under Rule 12(b)(5), “[w]e
accept all factual allegations in the complaint as true and view them
in the light most favorable to the plaintiff. Nonetheless, we are not
required to accept as true legal conclusions that are couched as
factual allegations.” Denver Post Corp. v. Ritter, 255 P.3d 1083,
1088 (Colo. 2011) (citation omitted); see also Walker v. Van
Laningham, 148 P.3d 391, 394 (Colo. App. 2006) (“There are a few
exceptions to this rule, such as when the facts alleged in the
complaint run counter to facts of which the court can take judicial
notice.”).
¶ 18 As relevant here, the Wrongful Death Act provides,
When the death of a person is caused by a wrongful act, neglect, or default of another, and the act, neglect, or default is such as would, if death had not ensued, have entitled the party injured to maintain an action and recover damages in respect thereof, then, and in every such case, the person who or the corporation which would have been liable, if death had not ensued, shall be liable in an action for damages notwithstanding the death of the party injured.
§ 13-21-202, C.R.S. 2024.
¶ 19 “[T]he right of the heirs to collect damages in a wrongful death
case does not arise from a separate tort, but instead is wholly
9 derivative of the injury to the decedent.” Steedle v. Sereff, 167 P.3d
135, 140 (Colo. 2007); see also Pizza Hut of Am., Inc. v. Keefe, 900
P.2d 97, 102 (Colo. 1995) (“The cause of action created by this
statute arises out of tortious acts which injured the decedent and
resulted in the decedent’s death . . . .”).
Any wrongful death claim, then, contains two elements: (1) the death of a person, and (2) a wrongful act that would have entitled the person “injured” to maintain an action, had the person survived. . . . [The second element] depends upon the claim that the decedent would have had if she had survived her injuries.
Stamp v. Vail Corp., 172 P.3d 437, 451 (Colo. 2007) (Eid, J.,
concurring in part and concurring in the judgment only in part).
¶ 20 Finally, for abuse of process claims,
a plaintiff [must] prove the following elements: (1) an ulterior purpose for the use of judicial process; (2) willful action in the use of that process which is not proper in the regular course of the proceedings, that is, use of a legal proceeding in an improper manner; and (3) resulting damage.
Palmer v. Diaz, 214 P.3d 546, 550 (Colo. App. 2009). “Although the
litigant’s motive may be important in determining whether there
was an ulterior purpose, it still must be established that, viewed
10 objectively, there was an improper use of the process.” Walker, 148
P.3d at 394. The improper use at the heart of an abuse of process
claim “is the use of a legal proceeding primarily to accomplish a
purpose that the proceeding was not designed to achieve.” Id.
¶ 21 A plausible claim for relief in an abuse of process action must
allege “not only proof of an ulterior motive but proof of willful
actions by the defendant in the use of process which are not proper
in the regular conduct of a proceeding.” Id.; Trujillo, ¶ 20. “[I]f the
action is confined to its regular and legitimate function in relation
to the cause of action stated in the complaint[,] there is no abuse,
even if the plaintiff had an ulterior motive in bringing the action or
if he knowingly brought suit upon an unfounded claim.” Parks v.
Edward Dale Parrish LLC, 2019 COA 19, ¶¶ 13, 16 (second
alteration in original) (quoting Colo. Cmty. Bank v. Hoffman, 2013
COA 146, ¶ 37) (“[B]ringing a malpractice case and carrying it to its
natural end . . . doesn’t constitute an improper use of process, no
matter the motive.”). Compare Walker, 148 P.3d at 394-96 (Even
with an alleged ulterior motive, defendants’ filing of complaints
under an animal control ordinance was “a proper use of the process
mandated by the Ordinance” as the filing of complaints was
11 envisioned by the proceedings and “[a]ny advantages that they may
have obtained as a result of [plaintiff’s] convictions for violating the
Ordinance were regular and legitimate goals which the proceedings
were designed to achieve.”), and James H. Moore & Assocs. Realty,
Inc. v. Arrowhead at Vail, 892 P.2d 367, 373-74 (Colo. App. 1994)
(where party’s filing of lis pendens sought the intended use of the
process there was no abuse of process), with Colo. Homes, Ltd. v.
Loerch-Wilson, 43 P.3d 718, 723 (Colo. App. 2001) (abuse of process
finding was proper where “the jury reasonably could find that
plaintiffs’ motivation in seeking the restraining order did not relate
to any alleged assault or threat of assault”).
2. Application
a. Abuse of Process and Wrongful Death
¶ 22 The district court properly dismissed Steven’s wrongful death
claim because it is derivative of, and dependent on, his facially
deficient abuse of process claim. Steven’s abuse of process claim
was facially deficient because it did not sufficiently allege facts that,
when taken as true and viewed in the light most favorable to the
plaintiff, constituted an improper use of a legal proceeding. See
Ritter, 255 P.3d at 1088; see also Diaz, 214 P.3d at 550.
12 ¶ 23 Steven’s SAC essentially alleged two abuses of process that led
to Zachary’s death. First, that Vellone learned confidential
information about Steven and Zachary after it represented Steven
and used this information to gain an “unfair advantage” in the
litigation against him and Zachary. Second, that Zachary “was
added to the lawsuit as leverage against Steven Muth . . . to force
Steven Muth to settle the claims in the underlying lawsuit.”
¶ 24 The district court correctly found that these factual allegations
met the requirements of the first element of abuse of process —
namely, that there was an alleged “ulterior purpose for the use of
judicial process.” Diaz, 214 P.3d at 550. But, even taken as true
and in the light most favorable to Steven, the district court also
correctly found that these allegations could not support the second
element — “the use of a legal proceeding primarily to accomplish a
purpose that the proceeding was not designed to achieve.” Walker,
148 P.3d at 394.
¶ 25 Wright, through Vellone, filed 19CV89 to resolve a contract
dispute among the parties, which the parties saw to its conclusion
with the court awarding Wright damages for breach of contract and
civil theft. Ultimately, Wright bringing a lawsuit “and carrying it to
13 its natural end to obtain a result such an action is designed to
achieve doesn’t constitute an improper use of process, no matter
the motive.” Parks, ¶ 16.
¶ 26 Further, Vellone’s alleged use of confidential information does
not necessarily lead to the conclusion that Vellone used the joinder
procedure in an improper manner, sufficient to support an abuse of
process claim. Zachary’s joinder, regardless of the alleged improper
motive, was granted by the district court in 19CV89 based on
discovery concerning Zachary’s connection to MAS Corp. and the
alleged agreement. This reasoning is independent of Vellone’s
alleged improper use of confidential information.
¶ 27 Because the abuse of process claim is facially deficient,
Steven’s wrongful death claim fails as a matter of law. A wrongful
death claim depends on the wrongful acts suffered by the deceased
party, and the right of action he would have been able to maintain
but for his injuries. See Keefe, 900 P.2d at 102; see also Stamp,
172 P.3d at 451. Steven cannot pursue a wrongful death claim
without Zachary having been able to maintain the abuse of process
action.
14 ¶ 28 As a result, the district court did not err by dismissing the
SAC for failing to state a claim. See Trujillo, ¶ 20.
b. Judicial Notice, Facts Outside of the Pleadings, and Preclusion
¶ 29 To Steven’s claim that the district court erred by taking
judicial notice of facts and legal conclusions in the 19CV89 court
filings to preclude Steven’s abuse of process claims, we conclude
that any claimed error was harmless in light of our conclusion that
Steven’s complaint was properly dismissed for failing to state a
claim as a matter of law. See C.A.R. 35(c); C.R.C.P. 61.
¶ 30 The district court’s order overwhelmingly focused on the
allegations in the SAC, directly citing Steven’s factual allegations.
And only after concluding that the complaint was facially deficient
as a matter of law did the court add that, “[m]oreover, having taken
judicial notice of the court file in case number 19CV89, the [court]
finds that judgment ultimately entered against both Steven and
Zachary Muth in the underlying lawsuit belies any improper or
untoward use of the judicial process.” Therefore, any error
resulting from this alternative reasoning was harmless because the
court properly dismissed the complaint for failing to state a claim
15 without relying on the proceedings in 19CV89. See C.A.R. 35(c);
C.R.C.P. 61.
¶ 31 It is also clear that that the district court did not find that
findings of fact and conclusions of law in 19CV89 precluded
Steven’s claims, as the reference to the outcome in 19CV89 was
merely an additional source of support and the court did not
mention preclusion. And to the fact that the court erroneously
stated that judgment had been entered against Zachary and Steven
in 19CV89 when Zachary had been dismissed from the case, this
was also harmless. See C.A.R. 35(c); C.R.C.P. 61.
¶ 32 Our review of the district court’s order dismissing the SAC also
shows that the court did not rely on information outside of the SAC
or information not properly before it; thus there was no need to
convert the motion into one for summary judgment. See Peña,
¶ 14. The court began its order by stating that it considered “the
motion, the plaintiff’s response, the reply thereto, as well as the
supplements to those pleadings, and . . . reviewed the Court’s file
and applicable authorities.” But its background section only briefly
cites the procedural history leading to the motion and then solely
cites facts from the SAC. And in the court’s analysis for the abuse
16 of process and wrongful death claims, it relies solely on the facts
alleged in the SAC, save for its brief mention of taking judicial
notice of the filings in 19CV89.
¶ 33 As a result, the district court did not rely on improper
information outside of the complaint and did not need to treat the
motion to dismiss as a motion for summary judgment. See id. So
the court did not err.
B. The Court Properly Rejected the Application for Default Judgment
¶ 34 Next, Steven contends that the district court erred by rejecting
his application for entry of default judgment against Wright. Steven
argues that (1) the court misapplied the requirements of C.R.C.P.
4(e)(1); (2) he did not have to serve Wright with the SAC after Steven
applied for default judgment; and (3) Wright would not be entitled to
relief from the dismissal of the SAC.
¶ 35 A default judgment may be entered “[w]hen a party against
whom a judgment for affirmative relief is sought has failed to plead
or otherwise defend as provided by these rules and that fact is
made to appear by affidavit or otherwise.” C.R.C.P. 55(a); see also
C.R.C.P. 55(b)(1) (“A party entitled to a judgment by default shall
17 apply to the court therefor . . . .”). “A default judgment comprises
two steps: ‘entry of default’ by the clerk and ‘entry of default
judgment’ by the court.” Ferraro v. Frias Drywall, LLC, 2019 COA
123, ¶ 11.
¶ 36 The court noted “that entry of default on a facially implausible
claim is inappropriate.” We agree. A similar situation to this issue
arose in Schenck v. Van Ningen, and there a division of this court
held that a district court may refuse to enter default judgment
against a defendant when “the pleadings on their face reveal that no
cause of action has been stated by plaintiffs.” 719 P.2d 1100, 1102
(Colo. App. 1986). Notably, in Schenck a codefendant had also
responded and “pled successfully for entry of summary judgment.”
Id. at 1101-02. The division noted that “[i]t would be inconsistent
to enter judgment against the [defendant] after having held the
same facts do not state a claim for relief against the [codefendant]
who, under the facts here, occupies the same legal position.” Id. at
1102. The same reasoning applies here.
¶ 37 Furthermore, Steven’s filing of the SAC rendered Wright’s non-
response to the FAC irrelevant. The SAC superseded the FAC and
became the operative pleading. See Currier v. Sutherland, 218 P.3d
18 709, 715 (Colo. 2009) (“Once a plaintiff files an amended complaint,
the original complaint is superseded, and the defendant must
answer the amended complaint.”); see also Ireland v. Wynkoop, 539
P.2d 1349, 1355 (Colo. App. 1975) (“The amended complaint, which
iterated and expanded the original complaint, superseded the
original complaint. Hence, any errors in the trial court’s ruling
regarding the original complaint were made moot or waived by the
filing of the amended complaint, and cannot be raised on this
appeal.”) (citation omitted).
¶ 38 To Steven’s final contentions — that the court misapplied
C.R.C.P. 4(e)(1), that he was not required to serve Wright with the
SAC, and that Wright was not entitled to relief from the motion to
dismiss — these arguments are largely irrelevant in light of our
conclusions that the district court properly dismissed the SAC
(which superseded the FAC) for failing to state a claim, and properly
rejected Steven’s application for default judgment. This is
particularly true given that the SAC raised no claims against
Wright. See Sutherland, 218 P.3d at 715.
19 ¶ 39 Collectively, the court properly refused to enter default
judgment against Wright, the SAC superseded the FAC, and Wright
was not named in the SAC. The district court did not err.
C. Attorney Fees
¶ 40 Finally, both Vellone and Wright request appellate attorney
fees and costs. C.A.R. 39(a)(2) provides that, “if a judgment is
affirmed, costs are taxed against the appellant.” And C.A.R 39.1
provides that “[i]f attorney fees are recoverable for the appeal, . . .
the party claiming attorney fees must include a specific request . . .
and must explain the legal and factual basis for an award of
attorney fees.”
¶ 41 Vellone and Wright both argue they may recover appellate
attorney fees under section 13-17-201(1), C.R.S. 2024 (Except for
when a motion to dismiss is treated as one for summary judgment,
“where any [tort] action is dismissed on motion of the defendant
prior to trial under rule 12(b) of the Colorado rules of civil
procedure, such defendant shall have judgment for his reasonable
attorney fees in defending the action.”). See Kreft v. Adolph Coors
Co., 170 P.3d 854, 859 (Colo. App. 2007) (“An award of attorney
fees is mandatory when a trial court dismisses a tort action under
20 C.R.C.P. 12(b). A party who successfully defends a dismissal order
is entitled to recover reasonable attorney fees incurred on appeal.”)
(citations omitted); see also Patterson v. James, 2018 COA 173,
¶ 34 (“[S]ection 13-17-201 applies automatically, without regard to
whether the claims lacked justification.”).
¶ 42 Steven argues that section 13-17-201 does not apply to Wright
and Vellone because the district court should have treated the
motion to dismiss as one for summary judgment. Because we
rejected that argument, we award Wright and Vellone their fees
under section 13-17-201(1). See Kreft, 170 P.3d at 859; see also
C.A.R. 39.1. Moreover, because we have affirmed the district court
on all claims Steven advanced in this appeal, appellate costs are
taxed against him. C.A.R. 39(a)(2). We therefore exercise our
discretion under C.A.R. 39.1 to remand the case for the district
court to determine a reasonable amount of appellate attorney fees
and costs.
III. Disposition
¶ 43 We affirm the judgment of the district court and remand for
the district court to determine Vellone and Wright’s reasonable
appellate attorney fees and costs.
21 JUDGE LUM and JUDGE BERGER concur.