Bebo Const. Co. v. MATTOX & O'BRIEN, PC, No. 98SC608.

Docket NºNo. 98SC608.
Citation990 P.2d 78
Case DateDecember 06, 1999
CourtSupreme Court of Colorado

990 P.2d 78

BEBO CONSTRUCTION COMPANY, a Colorado corporation, Petitioner,
v.
MATTOX & O'BRIEN, P.C., a Colorado corporation; Judith Ward Mattox; Chris M. Darby; and Excell Development Construction, Inc., a Delaware corporation, Respondents

No. 98SC608.

Supreme Court of Colorado, En Banc.

December 6, 1999.


990 P.2d 80
McDermott & Hansen, Gerald P. McDermott, William J. Hansen, Denver, Colorado, Attorneys for Petitioner

Warren, Mundt & Martin, P.C., James A. Mundt, Colorado Springs, Colorado, Attorney for Mattox & O'Brien, P.C., Judith Ward Mattox, and Chris M. Darby, Respondents

Holland & Hart, LLP, Edward H. Flitton, III, David S. Prince, M. Terry Fox, Colorado Springs, Colorado, Attorneys for Excell Development Construction, Inc., Respondent.

Chief Justice MULLARKEY delivered the Opinion of the Court.

We granted certiorari to review an unpublished opinion of the court of appeals, Bebo Construction Co. v. Mattox & O'Brien, P.C., No. 96CA2179 (Colo.Ct.App. July 2, 1998). The petitioner, Bebo Construction Company (Bebo), appeals the dismissal of its attorney malpractice action against respondents Mattox & O'Brien, P.C., individual attorneys within that law firm (collectively, with the firm, as "Mattox"), and Excell Development Construction, Inc. (Excell). The state hired Bebo to act as general contractor in the reconstruction of the Stroh Road bridge. After the bridge was completed, an inspection revealed the improper installation of certain anchor bolts on the guardrails of the bridge. As a result of these deficiencies, Bebo was debarred by the Colorado Department of Highways (CDOH), thereby precluding Bebo from participating in state construction projects for two years. The debarment effectively put Bebo Construction Company out of business.

Following the debarment, Bebo retained Mattox to handle its legal affairs regarding the Stroh Road bridge. Mattox filed a negligence action against the project engineer, BRW, Inc. (BRW), on behalf of Bebo, but the claims were dismissed because Mattox failed to comply with the applicable statute of limitations. Thereafter, Bebo filed a legal malpractice action against Mattox, arguing that it was damaged by Mattox's failure to comply with the statute of limitations. The court of appeals determined that Mattox's failure did not cause harm to the plaintiff because the doctrine of collateral estoppel1 would have

990 P.2d 81
barred examination of BRW's misconduct in the underlying negligence suit against BRW. Since the underlying claim would have been unsustainable, Bebo could not prevail on the malpractice action. Bebo asserts that the court of appeals improperly applied the doctrine of collateral estoppel in evaluating the propriety of the underlying action. We agree. Accordingly, we reverse the court of appeals' judgment and remand the case with directions

I.

In March 1987, petitioner Bebo contracted with the Colorado Department of Highways to act as general contractor in the replacement of the Stroh Road bridge in Douglas County. BRW, in its capacity as project manager, designed the project, and oversaw and inspected the construction of the bridge which was given final acceptance by CDOH in September 1987.

In March 1988, a CDOH engineer discovered problems with the guardrail anchor bolts, such that their installation met neither federal construction standards nor contractual specifications. Subsequent inspection would reveal that approximately 20% or more of the anchor bolts were deficient and that these deficiencies were disguised by various means including the gluing of threaded rods to face plates instead of projecting those rods through the concrete. BRW inspected the bridge and issued a report documenting the problems with the defective anchor bolts.

Bebo asserts that during the discovery period of subsequent litigation against CDOH, discussed infra, Bebo learned that BRW engaged in improper activity related to the installation of the deficient anchor bolts. Further, Bebo claims that BRW's report to the CDOH following the discovery of the inadequacies improperly placed all blame on Bebo for the anchor bolt problems and falsely accused Bebo of fraudulently concealing the problems from BRW. In its Answer Brief, Mattox did not challenge the existence of misconduct on the part of BRW; instead, Mattox focused on the time at which Bebo first learned of the misconduct.

In August 1988, CDOH commenced a debarment action against Bebo predicated upon the anchor bolt deficiencies and the concealment of those deficiencies. Mattox did not represent Bebo in that action. At the debarment proceeding, the ALJ found that two regulatory bases to support debarment existed: (1) "the person ... has demonstrated wrongdoing reflecting a lack of integrity in... performing public projects," and (2) "[t]he CDOH [engineer] has reasonable grounds to believe and finds that the public health, welfare or safety imperatively requires such action." At the conclusion of the proceeding, the agency instituted a two year debarment, precluding Bebo from participating in any state construction projects or related activities for that time period.

In August 1989, Bebo entered into an agreement with respondent Mattox to handle legal matters related to the bridge project. Bebo also signed an agreement with Mattox to allow respondent Excell to assist in the preparation of the case. Two legal actions conducted by Mattox, on behalf of Bebo, concern us in this case.

In the first action, Mattox filed a complaint against CDOH asserting a number of claims, primarily involving delay damages related to the bridge project. CDOH counterclaimed for breach of contract and fraud based upon the defective anchor bolts. Mattox petitioned the trial court in a motion in limine to exclude references to the debarment because (1) Bebo had requested that the ALJ reopen the debarment proceedings to address newly discovered evidence, presumably, related to BRW's misconduct, and (2) because the references to debarment would be unfairly prejudicial. In a minute order, the trial court granted Bebo's motion. The jury returned a verdict in favor of Bebo on all claims, including CDOH's counterclaims, and awarded damages to Bebo.

990 P.2d 82
In the second relevant legal action, Mattox filed a lawsuit against BRW asserting a variety of negligent or misrepresentory acts. On BRW's summary judgment motion, the trial court dismissed Bebo's action for failure to file the complaint within the two-year statute of limitations. The trial court also found the filing to be frivolous and groundless, awarding over $8000 in attorney's fees to BRW

Bebo then brought this legal malpractice action against Mattox, asserting that Mattox negligently failed to comply with the statute of limitations in the action against BRW. This failure, Bebo argues, damaged Bebo by foreclosing its ability to recover for BRW's misconduct and also resulted in the attorney's fees awarded against Bebo for the filing of a frivolous lawsuit. Additionally, Bebo asserted a claim against Excell, contending that Excell was a joint venturer with Mattox and, therefore, was liable through imputation of the negligence claims.

The trial court granted Excell's motion to dismiss, holding that the relationship between BRW and Excell, upon which Bebo founded its joint venturer liability claim, would violate Rule 5.4 of the Rules of Professional Conduct. See Colo. RPC 5.4(a) (proscribing the sharing of legal fees between lawyers and non-lawyers). The court reasoned that a determination of vicarious liability premised on a joint venture initially must recognize the validity of the joint venture relationship. Since the agreement as argued by Bebo would be void, the trial court granted Excell's motion to dismiss.

The trial court subsequently granted Mattox's motion for summary judgment and dismissed with prejudice all claims against Mattox, holding that Bebo's underlying claim against BRW would have failed, and therefore, Bebo could not sustain its legal malpractice action against Mattox. This decision was predicated on the trial court's determination that, in the underlying claim against BRW, all of the damages arose through the debarment and that collateral estoppel barred Bebo from relitigating the fact and cause of the debarment as determined by the ALJ.

The court of appeals addressed, and rejected, Bebo's arguments for reversal of the trial court's decisions. It reasoned as follows. First, Mattox did not waive its collateral estoppel defense by asserting it for the first time in a motion for summary judgment. Second, the first element of collateral estoppel, that an issue was actually and necessarily litigated in a prior proceeding, was satisfied in the administrative debarment action. The misconduct of BRW was actually litigated because administrative regulations require that the "respondent shall present any information it feels is sufficient to prevent debarment," see Rule 3.22(c), 2 C.C.R. 601-10 (1999), which, according to the court of appeals, would include the misconduct of others. Third, using the same rationale, the court of appeals rejected Bebo's argument that it was not provided a full and fair opportunity to litigate its claims in the administrative hearing. Finally, the court of appeals found the trial court did not abuse its discretion in refusing to apply the prior inconsistent judgments exception to the collateral estoppel doctrine.

The court of appeals also affirmed the dismissal of Excell. The court recognized that joint venturers are liable for the negligence of other joint venturers. Since it was affirming the dismissal of the negligence claim against Mattox, no claim could be imputed to Excell, and the claim against Excell must, therefore, be dismissed.

We granted certiorari to consider whether the court of appeals correctly applied the doctrine of collateral estoppel to deny a legal malpractice action and whether the court of appeals...

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142 practice notes
  • Samson v. W. Capital Partners LLC (In re Blixseth), Case No. 09-60452-7
    • United States
    • United States Bankruptcy Courts. Ninth Circuit. U.S. Bankruptcy Court — District of Montana
    • March 18, 2013
    ...litigate the issues in the prior proceeding.Rantz v. Kaufman, 109 P.3d 132, 139 (Colo. 2005); Bebo Constr. Co. v. Mattox & O'Brien, P.C., 990 P.2d 78, 84-85 (Colo. 1999). The Supreme Court of Colorado, discussing issue preclusion and claims preclusion, explained in Rantz v. Kaufman:The doct......
  • Samson v. W. Capital Partners LLC (In re Blixseth), Bankruptcy No. 09–60452–7.
    • United States
    • United States Bankruptcy Courts. Ninth Circuit. U.S. Bankruptcy Court — District of Montana
    • March 18, 2013
    ...litigate the issues in the prior proceeding.Rantz v. Kaufman, 109 P.3d 132, 139 (Colo.2005); Bebo Constr. Co. v. Mattox & O'Brien, P.C., 990 P.2d 78, 84–85 (Colo.1999). The Supreme Court of Colorado, discussing issue preclusion and claims preclusion, explained in Rantz v. Kaufman: The doctr......
  • Glencove Holdings, LLC v. Bloom (In re Bloom), Bankruptcy Case No. 17-11650 TBM
    • United States
    • U.S. Bankruptcy Court — District of Colorado
    • September 10, 2020
    ...Supreme Court identified the "special relationships" by citations as follows: "See, e.g., Bebo Constr. Co. v. Mattox & O'Brien, P.C., 990 P.2d 78, 83 (Colo. 1999) (attorney-client relationship creates independent duty of care); Greenberg v. Perkins, 845 P.2d 530, 534 (Colo. 1993) (physician......
  • Allen v. Martin, No. 06CA1768.
    • United States
    • Colorado Court of Appeals of Colorado
    • June 12, 2008
    ...The burden of establishing these elements rests with the party seeking preclusion. Bebo Constr. Co. v. Mattox & O'Brien, P. C., 990 P.2d 78, 85 Allen disputes that the first and fourth elements of issue preclusion were satisfied by her plea because, she asserts, whether she committed securi......
  • Request a trial to view additional results
141 cases
  • Samson v. W. Capital Partners LLC (In re Blixseth), Case No. 09-60452-7
    • United States
    • United States Bankruptcy Courts. Ninth Circuit. U.S. Bankruptcy Court — District of Montana
    • March 18, 2013
    ...litigate the issues in the prior proceeding.Rantz v. Kaufman, 109 P.3d 132, 139 (Colo. 2005); Bebo Constr. Co. v. Mattox & O'Brien, P.C., 990 P.2d 78, 84-85 (Colo. 1999). The Supreme Court of Colorado, discussing issue preclusion and claims preclusion, explained in Rantz v. Kaufman:The doct......
  • Samson v. W. Capital Partners LLC (In re Blixseth), Bankruptcy No. 09–60452–7.
    • United States
    • United States Bankruptcy Courts. Ninth Circuit. U.S. Bankruptcy Court — District of Montana
    • March 18, 2013
    ...litigate the issues in the prior proceeding.Rantz v. Kaufman, 109 P.3d 132, 139 (Colo.2005); Bebo Constr. Co. v. Mattox & O'Brien, P.C., 990 P.2d 78, 84–85 (Colo.1999). The Supreme Court of Colorado, discussing issue preclusion and claims preclusion, explained in Rantz v. Kaufman: The doctr......
  • Glencove Holdings, LLC v. Bloom (In re Bloom), Bankruptcy Case No. 17-11650 TBM
    • United States
    • U.S. Bankruptcy Court — District of Colorado
    • September 10, 2020
    ...Supreme Court identified the "special relationships" by citations as follows: "See, e.g., Bebo Constr. Co. v. Mattox & O'Brien, P.C., 990 P.2d 78, 83 (Colo. 1999) (attorney-client relationship creates independent duty of care); Greenberg v. Perkins, 845 P.2d 530, 534 (Colo. 1993) (physician......
  • Allen v. Martin, No. 06CA1768.
    • United States
    • Colorado Court of Appeals of Colorado
    • June 12, 2008
    ...The burden of establishing these elements rests with the party seeking preclusion. Bebo Constr. Co. v. Mattox & O'Brien, P. C., 990 P.2d 78, 85 Allen disputes that the first and fourth elements of issue preclusion were satisfied by her plea because, she asserts, whether she committed securi......
  • Request a trial to view additional results
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