Voller v. Gertz

107 P.3d 1129, 10 Wage & Hour Cas.2d (BNA) 1113, 2004 Colo. App. LEXIS 2419, 2004 WL 3015790

• Court: Colorado Court of Appeals
• Decided: December 30, 2004
• Docket: 01CA2384
• Status: Published

Opinions

PICCONE, J.

Plaintiffs, Brenda M. Voller and her wholly-owned company, BMV Consulting, Ltd., appeal the trial court’s judgment entered on a jury verdict in favor of defendants, David Gertz, Sunshine Master Builders, Ltd., and Harmony Group, Ltd. Defendants cross-appeal the court’s order awarding attorney fees to Voller and setting the amount of attorney fees awarded to them. We affirm in part, reverse in part, and remand.

Gertz is the sole shareholder of Sunshine, a home building business. Gertz founded Harmony to market homes built by Sunshine, which in return paid Harmony commissions.

In 1995, Voller started working for Harmony as a contractor and became a twenty percent shareholder while Gertz held the other eighty percent.

Harmony paid Voller’s compensation to BMV. Voller supervised the real estate salespeople and controlled day-to-day operations at Harmony. Gertz testified that Voller kept her own hours, and he did not tell her how to do her work or where she needed to be while she was working.

Gertz further testified that in 1999, Voller failed to perform certain duties associated with managing Harmony. After Gertz informed Voller of these problems, Voller tendered her resignation. Subsequently, they negotiated a new compensation agreement, under which Gertz agreed to pay BMV $12,500 per month to manage Harmony’s business.

By August 1999, Gertz was still not satisfied with Voller’s performance. According to Gertz, Voller failed to perform management duties as required by the agreement.

In November 1999, Voller presented a request to Harmony for $37,500 for payment of her management services from September to November. Gertz refused to pay Voller the $37,500. In January 2000, Voller sent Gertz a letter demanding payment of her salary for September through December 1999 and her commission for the sale of several homes.

Voller and BMV filed a lawsuit against Gertz, his wife, Harmony, and Sunshine, alleging breach of contract, violation of the Colorado Wage Act (CWA), breach of fiduciary duty, wrongful discharge, and conspiracy, and requesting the imposition of a constructive trust. Voller also asserted a shareholder derivative claim on behalf of Harmony. Defendants asserted counterclaims for breach of contract, breach of fiduciary duty, and conversion. The parties agreed to bifurcate the trial with regard to the claim for imposition of a constructive trust.

The jury found that Voller was an independent contractor, not an employee of Harmony, and found against her on her wage claim. The jury found in favor of BMV on its breach of contract claim and awarded $65,618.44 in damages. The jury found in favor of Harmony on its counterclaim against Voller for breach of fiduciary duty, awarding $1,000 in damages. The trial court declined to impose a constructive trust. This appeal followed.

I.

Voller contends the trial court erred in instructing the jury that: “An employing real estate broker is not an employee but an independent contractor as a matter of law.” As a remedy, Voller requests that the jury verdict on the breach of contract claim be “instead awarded and attributed to her as damages on her wage claim.” We decline to address this issue because Voller did not object to the instruction in the trial court.

C.R.C.P. 51 provides that a party must “make all objections [to proposed instructions] before they are given to a jury,” and only the grounds so specified shall be considered on appeal. If counsel fails to make a contemporaneous objection to the instructions given to the jury, and if errors are not brought to the attention of the trial court, they are deemed waived. Martin v. Minnard, 862 P.2d 1014 (Colo.App.1993).

Voller did not object to this instruction, but specifically stated that, as relevant here, the instructions were “agreed to.” Voller also said she had no objections to the final packet of instructions. Based upon our review of the record, we reject Voller’s assertion that she objected to this instruction and so preserved this issue for appellate review.

Further, Voller did not argue in the trial court that the jury verdict on BMV’s breach of contract claim be awarded to her as damages on her wage claim. Arguments not asserted in the trial court may not be raised for the first time on appeal. Estate of Stevenson v. Hollywood Bar & Cafe, Inc., 832 P.2d 718 (Colo.1992).

II.

Voller asserts the trial court erred in awarding attorney fees to Harmony for defending her wage claim. Specifically, she contends that the former § 8-4-114, Colo. Sess. Laws 1967, ch. 398, § 80-8-14 at 861 (repealed Colo. Sess. Laws 2003, eh. 286, § 2 at 1850) supports an award of fees to a defending party only when an “employee” brings a claim pursuant to the CWA and that, because the jury determined she was not an employee, Harmony was not entitled to attorney fees under § 8-4-114. In a related contention, Voller asserts the trial court erred in not awarding her attorney fees pursuant to § 8-4-114. We reject each contention in turn.

The relevant portions of § 8-4-114, in effect at the time, provided:

Whenever it is necessary for an employee to commence a civil action for the recovery or collection of wages and penalties due as provided by [the former] sections 8-4-104 and 8-4-105, the judgment in such action shall include a reasonable attorney fee in favor of the winning party, to be taxed as part of the costs of the action.

A.

Section 8-4-114 provided that a reasonable attorney fee must be awarded to the “winning party” on a CWA claim. See Van Steenhouse v. Jacor Broad. of Colo., Inc., 958 P.2d 464, 466 n. 5 (Colo.1998). “The purpose of [§ 8-4-114 was] twofold, to indemnify the employee against the necessity of paying an attorney’s fee when he is successful and to protect the employer against nuisance litigation.” Hartman v. Freedman, 197 Colo. 275, 280, 591 P.2d 1318, 1322 (1979). “Thus, either the employee or the employer may be the winning party under the statute.” Van Steenhouse, supra, 958 P.2d at 468. To qualify as a winning party, a litigant must receive some relief on the merits. Hartman, supra.

Voller relies on Hyland v. Pikes Peak Capital Corp., 714 P.2d 914 (Colo.App.1985). In Hyland, a real estate salesman sued a company that he contended was his employer for recovery of commissions under the CWA. With no analysis, a division of this court concluded that because the real estate salesman was not an “employee,” attorney fees were not available to the defendant company. For the reasons stated below, we decline to follow Hyland.

“When interpreting a statute, we attempt to implement the intent of the General Assembly. To discern that intent, we look first to the plain language of the statute and interpret statutory terms in accordance with their commonly accepted meanings.” People v. Rockwell, 104 P.3d 900, 2003 WL 23095487 (Colo.App. No. 02CA1812, Dec. 31, 2003).

We are also guided by general principles of statutory interpretation. See § 2-4-201, C.R.S.2004 (it is presumed the General Assembly, when enacting a statute, intended to make the entire statute effective). We should avoid an unreasonable interpretation or one that produces an absurd result. Rocky Mountain Animal Defense v. Colo. Div. of Wildlife, 100 P.3d 508 (Colo.App.2004).

Under Hyland, nonemployees, like Voller here, would have no disincentive for advancing unwarranted litigation under the CWA. This is contrary to the purpose of protecting the employer from nuisance litigation. Further, the statute provides for fees to be awarded to the “winning party.” The first clause of the statute, which refers to the commencement of a civil action, does not limit the award. The CWA necessarily assumes that a claim will be brought by an employee. If, however, a plaintiff does not prevail because he or she is determined not to be an employee, the provision does not preclude an award of attorney fees to the winning defendant. By focusing on the use of the term employee, the Hyland division created a result that is not required by the statutory language and is at odds with the statute’s purpose.

Further, if we were to read this provision as did the division in Hyland, § 8^1-114 would never support an award of attorney fees to a defendant, because a finding that a plaintiff did not recover under § 8-4-114 would always mean that it was not “necessary” to sue under the Wage Claim Act. See § 8-4-114 (stating that attorney fees should be awarded to the “winning party” “[w]hen-ever it shall become necessary for an employee to commence a civil action for the recovery or collection of wages”).

Accordingly, we read § 8-4-114 as permitting an award of attorney fees to the winning party, even if the claim is asserted by one who is found not to be an employee.

B.

Voller asserts the trial court erred in not awarding her attorney fees under the CWA. We disagree. Here, the jury determined Voller was an independent contractor, not an employee of Harmony, and ruled against her on all her claims under the CWA. Therefore, Voller was not the winning party.

III.

Voller contends the trial court erred in granting a directed verdict on her CWA penalty claim in favor of Harmony on the ground that she had not made a written demand for payment within sixty days from the date of her separation from Harmony. We disagree.

“A motion for directed verdict should not be granted unless the evidence compels the conclusion that reasonable jurors could not disagree and that no evidence or inference has been received at trial upon which a verdict against the moving party could be sustained.” Brossia v. Rick Constr., L.T.D. Liab. Co., 81 P.3d 1126, 1131 (Colo.App.2003). The trial court must review the evidence in the light most favorable to the nonmoving party. Brossia, supra, 81 P.3d at 1131.

The relevant version of § 8-4-104(3) provided:

If an employer refuses to pay wages or compensation in accordance with subsection (1) of this section upon request by the employee and without good faith legal justification for such refusal, the employer is liable to the employee [for a penalty] .... The employee or his designated agent shall make a written demand for the payment within sixty days from the date of separation .... Any employee or his designated agent who has not made a written demand for the payment within sixty days from the date of separation who has otherwise not been available to receive payment shall not be entitled to any such penalty under this subsection (3).

Colo. Sess. Laws 1986, eh. 65 at 505.

The record supports the trial court’s determination that Voller did not present evidence that she gave the requisite notice within sixty days of her separation from Harmony. Vol-ler admits that she was terminated on November 9, 1999, and that she submitted a letter to Gertz demanding wages on January 28, 2000. Further, Voller cites no record support for her contention that she “presented evidence that she performed duties on behalf of Harmony during January [2000] and that Harmony accepted those services.” See Westrac, Inc. v. Walker Field, 812 P.2d 714, 718 (Colo.App.1991)(counsel must designate portions of the record that support the contention).

IV.

Voller asserts the trial court abused its discretion by not “directing payment of the judgment in the shareholder derivative claim” to her. We decline to review this contention because it was never presented to, considered by, or ruled upon by the trial court. See Estate of Stevenson v. Hollywood Bar & Cafe, Inc., supra.

Voller never requested the trial court to enter judgment on the derivative claim in favor of her or to “direct payment” on Harmony’s judgment to her. The jury instructions and verdict form, to which Voller did not object, specifically stated that an award on the derivative claim would be entered in favor of Harmony.

V.

Voller contends the trial court erred in refusing to impose a constructive trust on the assets of Gertz and Sunshine. We disagree.

A constructive trust “arises in the presence of fraud, duress, abuse of confidence, or some other form of questionable or unconscionable conduct by which the trustee obtained property.” Timothy C. Wirt, M.D., P.C. v. Prout, 754 P.2d 429, 430 (Colo.App.1988); see Whalen v. Shepler, 104 P.3d 243, 2004 WL 1211888 (Colo.App. No. 03CA0509, June 3, 2004). Therefore, a constructive trust is appropriate only if there has been wrongful conduct by the party charged with the trust. Wirt, supra, 754 P.2d at 430.

For the court to impose a constructive trust, there must be some property to which the trust attaches. See In re Marriage of Allen, 724 P.2d 651, 657 (Colo.1986)(property that is subject of trust must be traceable to lost property); Schmidt-Tiago Constr. Co. v. City of Colorado Springs, 633 P.2d 533 (Colo.App.1981); State v. Benjamin, 41 Colo.App. 520, 587 P.2d 1207 (1978)(refusing to impose constructive trust where plaintiff failed to trace property wrongfully taken to proceeds being claimed).

“A party attempting to set aside a transaction on equitable grounds is required to prove the truth of his contentions by a preponderance of the evidence,” which persuades the trier of fact that “the existence of the contested fact is more probable than not.” Ralston Oil & Gas Co. v. July Corp., 719 P.2d 334, 338 (Colo.App.1985). We accept the trier of fact’s findings unless they are “so clearly erroneous as to find no support in the record.” Ralston, supra.

At trial, Voller failed to present any evidence in support of her claim for a constructive trust. Following argument and briefing, the trial court declined to impose a constructive trust, making the following findings based on the evidence presented on Voller’s other eight claims:

On or about April 11, 2000, Harmony approved [a] $200,000 payment to Sunshine for compensation for Davi[d] Gertz’s consultant work. Subsequently, Harmony paid the money to Sunshine. Gertz th[e]n paid the operational expenses of Sunshine. The Court found Mr. Gertz’s testimony credible that Sunshine was incurring additional expenses that normally would have been incurred by Harmony. The Court finds that no credible evidence was presented as to what specific expenses were paid. There is no credible evidence where the money Harmony paid to Sunshine went or is currently located .... Finally, the Court cannot find any asset upon which to impose a constructive trust. The Plaintiff never presented evidence to answer the ultimate question of what asset is in effect to be attached ....

We reject Voller’s and BMW’s argument that the evidence and the jury’s verdict required the trial court to impose a constructive trust and that it was not necessary for them to present evidence of any identifiable assets subject to the trust. See Schmidt-Tiago, supra. Moreover, to the extent that Voller relies on exhibits attached to her brief in making this argument, we cannot consider them, because they are not part of the record on appeal. See In re Marriage of Tagen, 62 P.3d 1092, 1096 (Colo.App.2002)(any facts not appearing in the record cannot be reviewed, and we presume material portions omitted from the record would support the judgment of the trial court).

Accordingly, the trial court was correct in not imposing a constructive trust.

VI.

On cross-appeal, Harmony, Gertz, and Sunshine contend the trial court erred in awarding attorney fees to Voller based on the judgment in favor of Harmony on the shareholder derivative claim. We agree.

Attorney fees are generally not recoverable in the absence of “a specific contractual, statutory, or procedural rule providing otherwise.” Waters v. Dist. Court, 935 P.2d 981, 990 (Colo.1997).

Here, the trial court awarded $7,676.14 in attorney fees to Voller “in her capacity as a shareholder of Harmony.” The fact Voller pursued a derivative claim on behalf of Harmony does not entitle her to an award of attorney fees. The court’s award of attorney fees was not premised on “a contractual, statutory, or procedural rule.” See Waters, supra.

In Van Schaack Holdings, Ltd. v. Fulenwider, 768 P.2d 740 (Colo.App.1988), aff'd, 798 P.2d 424 (1990), a shareholder brought a derivative action against a property manager on behalf of a corporation. A division of this court concluded that because the trial court’s award was not premised on any “contractual, statutory, or procedural rule,” Van Schaack, supra, 768 P.2d at 743, an award of attorney fees was improper. We reach the same conclusion here.

We reject Voller’s contention that Collie v. Becknell, 762 P.2d 727 (Colo.App.1988), supports the trial court’s award of attorney fees to her. The Collie division merely stated that “[a]n award of attorneys fees may be justified in a derivative action.” Collie, supra, 762 P.2d at 732 (emphasis added). The division did not, however, specify situations in which such an award may be justified. Notwithstanding the comment in Collie, an award of attorney fees still must be based on a contractual, statutory, or procedural rule. Therefore, the award to Voller cannot stand.

VII.

Harmony, Gertz, and Sunshine also contend the trial court abused its discretion in awarding them attorney fees in the amount of $7,676.14. We agree.

“The determination of the reasonableness of ... attorney fees is a question of fact for the trial court and will not be disturbed on appeal unless patently erroneous and unsupported by the evidence.” Invisible, Inc. v. Tillison, — P.3d -, 2004 WL 2136948 (Colo.App. No. 03CA1525, Sept. 23, 2004). Therefore, we will not disturb a court’s ruling absent an abuse of discretion. Invisible, supra.

Here, the court awarded attorney fees to Gertz and Harmony as the winning parties under the former § 8^1-114. In support of the amount of fees claimed, Gertz and Harmony presented an affidavit that stated eighty percent of their effort in the ease was in defense of the wage claim.

The trial court held Gertz, Harmony, and Sunshine did not meet their burden of proof that eighty percent of their time was spent on this issue, but nonetheless awarded them “the same amount of money per claim as was awarded to Voller.”

We conclude this was an abuse of discretion. Merely awarding to Gertz and Harmony the same amount awarded to Voller on a different claim was arbitrary and not based on any attempt to determine the reasonableness of the fees requested by Gertz and Harmony. See City of Wheat Ridge v. Cerveny, 913 P.2d 1110, 1115 (Colo.1996)(setting forth factors to consider in determining the reasonableness of attorney fees). Even if we assume the affidavit was not sufficient, it was still incumbent upon the trial court to determine the attorney fees attributable to the wage claim.

Accordingly, the judgment is reversed as to the award of attorney fees to Voller and as to the amount of attorney fees awarded to Gertz and Harmony, and the case is remanded to the trial court for a finding as to the allocation of attorney fees based on the evidence previously submitted to the court. In all other respects, the judgment is affirmed.

Judge VOGT concurs. Judge TAUBMAN concurs in part and dissents in part.