Tarco, Inc. v. Conifer Metro. Dist.

• Decision Date: 25 April 2013
• Docket Number: No. 12CA0250,12CA0250
• Citation: 316 P.3d 82
• Parties: TARCO, INC., Plaintiff–Appellant, v. CONIFER METROPOLITAN DISTRICT, Defendant–Appellee.
• Court: Colorado Court of Appeals

316 P.3d 82

TARCO, INC., Plaintiff–Appellant,

v.CONIFER METROPOLITAN DISTRICT, Defendant–Appellee.

No. 12CA0250

Colorado Court of Appeals,

Div. V.

Announced April 25, 2013

Jefferson County, District Court No. 10CV35, Honorable Philip J. McNulty, Judge

Rice, LLC, T.R. Rice, Greenwood Village, Colorado, for Plaintiff–Appellant

Fowler, Schimberg & Flanagan, P.C., Timothy P. Schimberg, Andrew R. McLetchie, Denver, Colorado, for Defendant–Appellee

Opinion by JUDGE MILLER

JUDGMENT AFFIRMED IN PART, REVERSED IN PART, AND CASE REMANDED WITH DIRECTIONS

¶ 1 In this breach of contract action, plaintiff, Tarco, Inc., a construction contractor, appeals the district court's grant of summary judgment for defendant, Conifer Metropolitan District (CMD). CMD is a special district created pursuant to the Special District Act, sections 32–1–101 to 32–20–110, C.R.S.2012. Tarco contends that the district court erred in holding that its claims are barred by section 38–26–106, C.R.S.2012 (the bond statute), based on Tarco's failure to post performance bonds for the two contracts at issue.

¶ 2 Specifically, Tarco argues that (1) the contracts at issue were not for “public works” projects and thus not covered by the bond statute; (2) the bond statute is not a nonclaim statute; (3) CMD waived the bond statute or, in the alternative, should be equitably estopped from enforcing it; (4) CMD failed to adequately plead breach of the bond statute; and (5) if the district court properly granted summary judgment, CMD's counterclaims should be dismissed. CMD asserts that Tarco advanced frivolous arguments on appeal, thus entitling CMD to an award of fees and costs.

¶ 3 We conclude that the district court erred in granting summary judgment based on its holding that the bond statute is a nonclaim statute, notwithstanding disputed issues of material fact concerning Tarco's assertion that CMD was equitably estopped from raising the defense. We reject the parties' other contentions.

¶ 4 Accordingly, we affirm in part, reverse in part, and remand for further proceedings.

I. Background

¶ 5 In 2005, Tarco and CMD entered into a series of contracts for construction projects related to the development of a shopping center. Tarco alleges that the work on two of the contracts is substantially complete and that CMD has wrongfully withheld payment on them.

¶ 6 Tarco sued CMD for breach of the two contracts based on CMD's nonpayment. CMD counterclaimed, alleging material breach by Tarco, thereby relieving CMD of any payment obligations and entitling it to fees and costs. After two years of litigation, CMD moved for partial summary judgment, asserting that Tarco cannot recover under the contracts because it did not satisfy the bond statute. ¹ The district court granted the motion. The court subsequently granted a stipulated motion to (1) vacate the trial date, (2) certify the summary judgment order as final pursuant to C.R.C.P. 54(b) so that Tarco could appeal it, and (3) stay litigation on CMD's counterclaims until resolution of the appeal.

II. Analysis

¶ 7 Tarco asserts that the district court erred in granting summary judgment for CMD. The court held that the contracts at issue were subject to the bond statute. The bond statute provides, in pertinent part:

A contractor who is awarded a contract for more than fifty thousand dollars for the construction, erection, repair, maintenance, or improvement of any building, road, bridge, viaduct, tunnel, excavation, or other public works for any ... political subdivision of the state ... before entering upon the performance of any such work ... shall duly execute, deliver ..., and file ... a good and sufficient bond or other acceptable surety approved by the contracting board, officer, body, or person....

§ 38–26–106(1). If the bond is not executed, delivered, and filed, “no claim in favor of the contractor arising under the contract shall be audited, allowed, or paid.” § 38–26–106(2), C.R.S.2012.

¶ 8 Tarco does not dispute that it did not provide a bond. The district court concluded that the bond statute bars recovery by contractors failing to post bond and that CMD was therefore entitled to judgment as a matter of law.

A. Standard of Review

¶ 9 We review de novo an order granting summary judgment. McIntyre v. Bd. of County Comm'rs, 86 P.3d 402, 406 (Colo.2004). Summary judgment is proper when the pleadings and supporting documentation show that there is no disputed, genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. C.R.C.P. 56(c); Andersen v. Lindenbaum, 160 P.3d 237, 239 (Colo.2007). The mere existence of an alleged factual dispute is insufficient to defeat a summary judgment motion. Andersen, 160 P.3d at 239. Instead, the disputed factual issue must be “genuine” and “material,” such that a reasonable jury could return a verdict for the nonmoving party. Id.

¶ 10 Before analyzing the effect of the bond statute on Tarco's claims, we first consider and reject Tarco's contentions that (1) the district court erred in considering the bond statute because it had not been timely pled, and (2) the bond statute does not apply because the contracts at issue did not involve “public works.”

B. Pleadings

¶ 11 As an initial matter, we consider Tarco's assertion, also made in the district court, that CMD's defense based on the bond statute was not timely or sufficiently pled under C.R.C.P. 8(c) and 9(c) and therefore should not have been used by the district court as a basis for granting CMD's motion for summary judgment. CMD filed the motion after the deadline for amending pleadings.

¶ 12C.R.C.P. 8(c) requires that a party “set forth affirmatively” any affirmative defenses in its responsive pleading. Where a party claims a denial of performance of a condition precedent, the denial must be pleaded “specifically and with particularity.” C.R.C.P. 9(c). According to Tarco, CMD failed to satisfy these requirements in its answer by merely referencing “Title 38” and the “penal bond statute,” as opposed to specifically pleading Tarco's noncompliance with the bond statute.

¶ 13 Assuming without deciding that CMD's pleading of its bond statute defense failed to comply with the requirements of C.R.C.P. 8(c) and 9(c), we conclude, for two reasons, that such noncompliance does not bar our consideration of the defense.

¶ 14 First, CMD's contention, accepted by the district court, that the bond statute is a nonclaim statute raises a jurisdictional defense. The defense of lack of subject matter jurisdiction may be raised at any point, even on appeal for the first time. Pueblo West Metro. Dist. v. Se. Colorado Water Conservancy Dist., 717 P.2d 955, 957 (Colo.1986) (citing C.R.C.P. 12(h)(3)); Hansen v. Long, 166 P.3d 248, 250 (Colo.App.2007). Accordingly, as discussed in part II.D below, the district court did not err in considering CMD's nonclaim statute jurisdictional arguments.

¶ 15 Second, Tarco failed to demonstrate any prejudice resulting from any failure by CMD to properly raise the bond statute defense before moving for summary judgment. “Entry of summary judgment is error if the opposing party is denied an opportunity to demonstrate that summary judgment is inappropriate.” Ferrera v. Nielsen, 799 P.2d 458, 460 (Colo.App.1990). In Ferrera, the district court granted summary judgment on an issue the parties had not raised. The district court allowed the nonmoving party to respond to the new issue the court had raised, and the court considered his brief, authorities, and additional materials. A division of this court concluded that the nonmoving party was not prejudiced by this procedure and held that any error was harmless. Id.; see alsoGognat v. Ellsworth, 224 P.3d 1039, 1048 (Colo.App.2009) (nonmoving party was not prejudiced by district court's ruling on motion for summary judgment before a response had been filed, because nonmoving party had presented its arguments orally before decision and court also reviewed the subsequently filed motion for reconsideration and supporting materials), aff'd,259 P.3d 497 (Colo.2011); Union Ins. Co. v. Hottenstein, 83 P.3d 1196, 1199 (Colo.App.2003) (citing C.R.C.P. 61, division disregarded district court's ruling on summary judgment before the nonmoving party's response was due because the subsequently filed response and related briefs were available in the record for de novo review on appeal).

¶ 16 Here, Tarco fully briefed the bond issue in response to the motion for summary judgment. It sought and obtained an eleven-day extension of time to file its brief, based on counsel's schedule and workload. Tarco did not file an affidavit pursuant to C.R.C.P. 56(f) explaining why it could not respond to the bond defense underlying the motion for summary judgment. Nor did it seek a continuance in the district court based on alleged surprise or request the reopening of discovery before responding to the motion. See, e.g.,Foster v. Redd, 128 P.3d 316, 319 (Colo.App.2005) (plaintiff was precluded from raising argument after failing to file a C.R.C.P. 56(f) affidavit seeking continuance to obtain information necessary to answer motion for summary judgment); Card v. Blakeslee, 937 P.2d 846, 849 (Colo.App.1996) (trial court was without discretion to defer ruling on motion for summary judgment in the absence of a C.R.C.P. 56(f) affidavit).

¶ 17 Tarco argues that our supreme court's recent decision in Town of Carbondale v. GSS Properties, LLC, 169 P.3d 675, 676 (Colo.2007), supports its position on this issue. The court there held that a defendant may raise an affirmative defense for the first time in a summary judgment motion where (1) the plaintiff did not object to the untimely defense and (2) the plaintiff was not prejudiced by the delay in raising it. Id. at 679–80. The facts in the present case, however, are distinguishable. First, the supreme court recognized that its analysis does not apply where, as here, the affirmative defense challenges...