Wright v. Muth

23CA1729 Wright v Muth 01-30-2025

COLORADO COURT OF APPEALS

Court of Appeals No. 23CA1729
City and County of Denver District Court No. 19CV89
Honorable Jill D. Dorancy, Judge

Lonnie Wright,

Plaintiff-Appellee,

v.

Steven E. Muth and MAS Corp., a Colorado public benefit corporation,

Defendants-Appellants.

JUDGMENT AFFIRMED AND CASE
REMANDED WITH DIRECTIONS

Division III
Opinion by JUDGE BERNARD*
Tow and Martinez*, JJ., concur

NOT PUBLISHED PURSUANT TO C.A.R. 35(e)
Announced January 30, 2025

Allen Vellone Wolf Helfrich & Factor P.C., Patrick D. Vellone, Brenton L. Gragg,
Denver, Colorado, for Plaintiff-Appellee

Westerfield & Martin, LLC, Zachary S. Westerfield, Denver, Colorado, for
Defendants-Appellants

*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 Defendants, Steven E. Muth and MAS Corp., which we shall

shorten to “MAS,” appeal the trial court’s judgment awarding

plaintiff, Lonnie Wright, treble damages on his claims for breach of

contract, civil theft, and piercing the corporate veil. We affirm, and

we remand the case to the trial court for a determination of

reasonable appellate attorney fees.

I. Background

¶2 Wright and Muth met when they were coworkers at Melco

International, where they worked in the sales department. Over the

years, Wright had gained some experience in home remodeling by

helping friends and family with remodeling projects. In late 2015,

after remodeling part of his home, Wright took pictures of the

project that he showed Muth.

¶3 Impressed by the pictures, Muth, who had previous experience

in residential construction, approached Wright, proposing that they

work together to buy, fix, and flip houses. After a short

conversation, Wright, Muth, and Muth’s adult son Zachary entered

into an oral agreement to act on Muth’s proposal. They would split

the profits into three equal shares.

1
¶4 Under the oral agreement, Muth and Zachary would provide

the finances to purchase the properties, and Muth and Wright

would provide the bulk of the labor to renovate the houses. Muth

and Zachary subsequently formed MAS as a public benefit

corporation that was created “[f]or profits and house flipping.”

Wright was not involved in MAS; he was not a part-owner, and he

did not have access to, or control over, MAS’s activities or finances.

¶5 Over the next year and a half, MAS purchased four houses to

fix and flip: a house on Holly Street in Commerce City in April 2016;

a house on Olive Street in Commerce City in June 2016; a house on

Kingsley Avenue in Littleton in August 2016; and a house on Willow

Street in Denver in March 2017. MAS eventually sold the Holly

Street house in December 2016, the Kingsley Avenue house in April

2017, the Olive Street House in May 2017, and the Willow Street

House in March 2018.

¶6 Wright worked on the Holly Street House, the Olive Street

House, and the Kingsley Avenue house on Friday evenings and on

weekends because he was still working full-time at Melco

International. Although he asked for his share, Wright did not

receive any portion of the profits from the sale of the Holly Street

2
House in December 2016. As a result, he did less work on the

Willow Street house after MAS bought it in March 2017.

¶7 Neither Muth nor MAS paid Wright anything after the sales of

the other three houses. After each sale, Wright asked Muth when

Wright would receive his share of the profits. Each time, Muth

replied that he could not pay Wright any money until he did the

“accounting” to determine if the sale had been profitable. Finally, in

June 2017, shortly after work had begun on the Willow Street

House, Wright refused to continue working on the houses until

Muth completed the accounting.

¶8 For a while, Muth kept promising Wright that he would be

paid for his work. Muth hired a bookkeeper in 2018 to do the

accounting, but this task was not completed, and Muth eventually

quit responding to Wright’s requests for payment.

¶9 Wright filed this lawsuit against Muth in November 2018, and

he later amended the complaint to include claims against both MAS

and Zachary. (Zachary later died, so the issues in this appeal only

involve Muth and MAS.) As is relevant to our analysis, the

complaint alleged claims of breach of contract, civil theft, and

3
piercing the corporate veil. Muth and MAS filed some

counterclaims.

¶ 10 In February 2022, Muth filed a petition under Chapter 13 of

the Bankruptcy Code, and the trial court postponed the trial. The

bankruptcy court eventually dismissed the petition, and the trial

court held a bench trial in February 2023.

¶ 11 After the court heard the evidence, it issued a detailed and

comprehensive written order. The court found in Wright’s favor on

the claims of breach of contract, civil theft, and piercing the

corporate veil; it found in Wright’s favor on the counterclaims that

Muth and MAS had filed; it entered judgment for Wright for

$48,729.86 as damages for the profits that Muth and MAS should

have paid him; relying on the civil theft statute, it ruled that Wright

was entitled to treble damages totaling $146,189.58; it added in

prejudgment interest of $23,491.95, bringing the total judgment to

$169,681.53; and it ruled that postjudgment interest would accrue

at eight percent per annum.

II. Breach of Contract Claim

¶ 12 Muth and MAS contend that the trial court erred when it

decided that they had breached their contract with Wright.

4
Specifically, they assert that the trial court erred when it

determined that Wright and Muth entered into a partnership. We

disagree.

A. Applicable Law

¶ 13 Generally, contract interpretation is a question of law that we

review de novo. Gagne v. Gagne, 2014 COA 127, ¶ 50. But

whether a contract exists is a question of fact to be determined

considering all the surrounding circumstances. Yaekle v. Andrews,

195 P.3d 1101, 1111 (Colo. 2008). “The existence of an oral

contract, its terms and conditions, and the intent of the parties are

questions of fact to be determined by the trier of fact.” Beach v.

Beach, 56 P.3d 1125, 1127 (Colo. App. 2002) (citing Huddleston v.

Union Rural Elec. Ass’n, 841 P.2d 282, 291-92 n.12 (Colo. 1992)),

rev’d on other grounds, 74 P.3d 1 (Colo. 2003).

¶ 14 “A partnership is an association of two or more persons to

carry on, as co-owners, a business for profit . . . .” § 7-60-106(1),

C.R.S. 2024. Partnerships are a form of “contract, express or

implied, between two or more competent persons to place their

money, effects, labor or skill, or some or all of them, into a

business, and to divide the profits and bear the losses in certain

5
proportions.” Grau v. Mitchell, 397 P.2d 488, 489 (Colo. 1964).

“[N]o express agreement is necessary; rather, a partnership may be

formed by the conduct of the parties.” Yoder v. Hooper, 695 P.2d

1182, 1187 (Colo. App. 1984), aff’d, 737 P.2d 852 (Colo. 1987).

¶ 15 To prevail on a breach of contract claim, a plaintiff must show,

by a preponderance of the evidence, “(1) the existence of a contract,

(2) the plaintiff’s performance of the contract or justification for

nonperformance, (3) the defendant’s failure to perform the contract,

and (4) the plaintiff’s damages as a result of the defendant’s failure

to perform the contract.” Univ. of Denver v. Doe, 2024 CO 27, ¶ 46.

B. Additional Facts

¶ 16 During the trial, Wright and Muth did not dispute various

aspects of their oral agreement. They agreed that they would fix up

residential properties and split the anticipated profits into equal

thirds with Zachary when they flipped the properties by selling

them. They agreed that Muth and Zachary would supply the

project’s financing and that Wright and Muth would provide most of

the labor. They agreed that Zachary would provide some labor, but

they expected him to contribute less because he was a student.

6
¶ 17 Wright and Muth disagreed about other aspects of the

agreement, and they disagreed about who had breached it.

1. Wright’s Testimony

¶ 18 For his part, Wright testified that the agreement was to fix and

flip houses and that it was not limited to any one house because,

when they made the agreement, they had not selected a specific

house to fix up. Wright said that he had agreed to make his tools

and his truck available, but he never told Muth that he had all the

tools necessary to renovate a house. And, while Wright said that

they had agreed to work on Fridays, Saturdays, and Sundays, they

had not agreed to put in a specific number of hours.

¶ 19 Wright acknowledged that he did not provide any finances for

fixing the houses and that he did not have final decision-making

authority on what properties to buy. He added that he had not

discussed with Muth and Zachary what would happen if they lost

money on the houses, but he did not believe that he would be

financially responsible for any potential losses. Nonetheless, Muth

would email him information about various houses and ask his

opinion about fixing them before MAS bought them.

7
¶ 20 Wright estimated that he would work for about five to six

hours on Fridays, ten to twelve hours on Saturdays, and nine to ten

hours on Sundays. He maintained this schedule consistently for

fourteen months, and he only missed working on the houses on two

or three weekends. Because MAS owned more than one house at a

time, they were forced to split their time between houses, which

slowed down their progress.

¶ 21 Wright said that Muth did not tell him how much the houses

sold for or how much of the sales price was profit. Despite working

on each property, Wright had not been paid any portion of the

profits by the time that they began working on the Willow Street

house. He said that he demanded payment from Muth “countless

times.”

2. Muth’s Testimony

¶ 22 Muth’s account of the agreement differed. He claimed that the

agreement applied only to the purchase and renovation of the Holly

Street house. Concerning the division of labor, Muth said that he

and Wright had agreed to provide an equal number of hours for the

project. Muth said that Wright agreed to supply all the tools for the

project, as well as access to his truck and trailer. Muth added

8
Wright had said that he would bring his “extensive experience” to

the project. Muth asserted that he and Wright had agreed to a

three-month plan for fixing up the Holly Street house.

¶ 23 Discussing MAS, Muth said that he had formed it in 2015 as a

“public benefit corporation,” with the stated purpose of “profits and

house flipping.” Wright was not a co-owner or a member of MAS.

As part of the fix and flip process, MAS both purchased and sold

the properties that Muth and Wright worked on.

¶ 24 Muth said that Wright breached their agreement “almost

immediately” after work began on the Holly Street house. In

support of his assertion, Muth claimed that Wright

• did not bring his tools to the house;

• stopped working at the house for weeks after he was

potentially exposed to asbestos;

• refused to do any work on Mondays through Thursdays;

• did not provide Muth with access to his truck or trailer;

and

• misrepresented the level of his expertise in renovating

houses.

9
¶ 25 Muth testified that these alleged breaches caused significant

delays and financial hardship to the house renovation project. He

said that he was forced to hire subcontractors to make up for the

hours of work that Wright missed. Muth added that he had to buy

tools for the project, and eventually even buy a truck, because

Wright was not providing these items, even though he had agreed to

do so. And while Muth agreed that Wright had provided labor on

the Olive Street, Kingsley Avenue, and Willow Street houses, he said

that Wright had not performed this labor as part of his agreement

with Muth. Rather, Muth stated that Wright had worked on these

houses to make up for the time he did not work on the Holly Street

house.

3. The Trial Court’s Written Order

¶ 26 The court found that Wright and Muth had entered into an

enforceable agreement to form a partnership for the purpose of

fixing and flipping houses and that Muth had breached it. The

court found that Wright’s testimony was credible on matters such

as his work on the houses, the tools that he had agreed to provide,

and his level of expertise.

10
¶ 27 But the court rejected much of Muth’s testimony. It found

that his account of events lacked credibility. For instance, the

court noted that, although Wright had testified in detail about the

work he performed on the houses, Muth’s recollection was

“generally about activities such as picking up and organizing

materials, arranging for subcontractors, moving trees, and helping

with drywall.”

¶ 28 The court also found other parts of Muth’s testimony

implausible. It rejected his assertions that he would spend about

fifty-five hours a week working on the houses while he maintained

full time employment at Melco International, and it found that his

testimony that Wright had breached the contract was incredible.

¶ 29 The court found that Wright and Muth had “entered into an

enforceable contract, a partnership agreement.” In that regard,

• Muth and Wright agreed to “renovate and sell houses

that . . . Muth would buy, and the profits would be split

in equal thirds”;

• “Wright agreed to contribute his time, labor, expertise,

and the tools and equipment he had to the venture”;

11
• “Muth agreed to finance the homes and contribute his

time and labor”; and

• “[t]he partnership did not require equal labor

contribution from each of the partners when the

agreement was made.”

¶ 30 In summary, the court found that Wright and Muth had

agreed to the essential terms of the partnership agreement: “each of

the men knew what [he] would contribute — labor or expertise or

tools or financing — and each man knew what [he] would receive —

a definite share of the profits if the venture were profitable.”

C. Analysis

1. Standard of Review

¶ 31 Muth and MAS submit that, because this appeal concerns the

interpretation of the oral agreement, we must review this contention

de novo. See Gagne, ¶ 50. But the core of their contention is more

fundamental than a disagreement over what the terms of the

agreement meant: they assert that there was no agreement at all.

In service of this assertion, they submit that (1) the court “erred in

finding that the parties entered into a partnership agreement to fix-

and-flip properties”; and (2) even if Wright’s description of the

12
agreement is the “correct version,” there were “a multitude of

reasons” why a “legally enforceable oral contract [did] not exist.”

¶ 32 As we have indicated above, the question of whether an oral

contract was created is a question of fact. See Yaekle, 195 P.3d at

1111; Beach, 56 P.3d at 1127. So we will review the court’s finding

that there was “an enforceable contract, a partnership agreement”

by evaluating all the surrounding circumstances, see Yaekle, 195

P.3d at 1111, and we will uphold the court’s factual findings if there

is evidence in the record that supports them, see Loveland Essential

Grp., LLC v. Grommon Farms, Inc., 251 P.3d 1109, 1117 (Colo. App.

2010); Reed Mill & Lumber Co. v. Jensen, 165 P.3d 733, 736 (Colo.

App. 2006). In other words, we will not disturb the court’s findings

on these matters unless they are so clearly erroneous as to find no

support in the record. See Adler v. Adler, 445 P.2d 906, 908 (Colo.

1968). It is not for us to reweigh the evidence or to substitute our

own judgment for the trial court’s. In re Estate of Owens, 2017 COA

53, ¶ 22.

¶ 33 To the extent that Muth and MAS contend that the evidence

was insufficient to prove that there was a partnership or an oral

agreement, we must decide whether the evidence, when viewed as a

13
whole and in the light most favorable to Wright as the prevailing

party, was sufficient to support the court’s judgment. See Fisher v.

State Farm Mut. Auto. Ins. Co., 2015 COA 57, ¶ 40, aff’d, 2018 CO

39. It was within the court’s “sole province” to assess the credibility

of the witnesses, the probative effect and the weight of the evidence,

and the inferences to be drawn from the evidence. See id.

2. Formation of the Partnership

¶ 34 Under section 7-64-202(1), C.R.S. 2024, “the association of

two or more persons to carry on as co-owners a business for profit

forms a partnership, whether or not the persons intend to form a

partnership.” We conclude, for the following reasons, that there is

evidence in the record supporting the trial court’s finding that

Wright and Muth entered into a partnership to renovate and to sell

houses.

¶ 35 Although they disagreed about the details, Wright and Muth

testified at trial that they had entered into an agreement that they

would fix and flip houses, splitting the profits into equal thirds. To

that end, Wright testified that he believed that they were partners

because, in part, (1) Muth often referred to the two of them as “we”

when discussing the work on the houses; (2) they had agreed to use

14
their skills and their efforts together to fix and flip houses; and (3)

Muth would send him emails asking for his input on which houses

to buy.

¶ 36 Muth and MAS raise several objections to the trial court’s

findings. They contend that there was not a partnership because

Wright was not a co-owner of MAS, he did not control it, and he did

not share in the partnership’s potential losses. We disagree.

¶ 37 First, the fact that Wright did not have an ownership interest

or any ability to control MAS is a red herring. Wright conceded at

trial that he was not a co-owner or member of MAS and that he was

not involved in its operation.

¶ 38 The court found that Wright and Muth’s partnership was

separate from MAS. While Muth had formed MAS to assist in fixing

and flipping houses, the court observed that there was no evidence

that MAS was a part of Wright and Muth’s partnership. Rather,

their partnership was based on their agreement to renovate houses

and split the profits when they sold the houses.

¶ 39 Second, Muth and MAS submit that, because Wright said he

was not responsible for any losses, he and Muth were not partners;

15
Wright was, instead, an independent contractor. We are not

persuaded.

¶ 40 Section 7-60-118, C.R.S. 2024, sets out the rights and duties

of partners. Subsection (1)(a) states that “[e]ach partner shall . . .

contribute toward the losses whether of capital or otherwise

sustained by the partnership according to such partner’s share in

the profits.” “In the absence of language to the contrary, the law

presumes that losses are to be borne by the partners in the same

percentage as profits.” Tucker v. Ellbogen, 793 P.2d 592, 596 (Colo.

App. 1989). “[S]imply because losses are not specifically mentioned

does not mean there has been no agreement establishing a joint

venture.” McNeill v. Allen, 534 P.2d 813, 817 (Colo. App. 1975).

While the sharing of losses is an incident of
partnership, it has been held that the right to
participate in profits implies a corresponding
liability for losses, and that though there is no
clause in the contract saying that either party
was to bear the losses, in the absence of
evidence to the contrary, the law presumes
that losses were to be borne by them in the
same proportion in which they shared the
profits.

Quier v. Rickly, 177 P.2d 549, 552 (Colo. 1947)(citation omitted).

16
¶ 41 The fact that Wright did not think that he was responsible for

any losses generated by the partnership does not mean that he was

right: we have seen that the sharing of losses is a requirement of a

partnership. See § 7-60-118. So, because the court found that

there was a partnership — and not that Wright was an independent

contractor — the law presumes that Wright had a duty to bear a

portion of the partnership’s putative losses: in for a penny, in for a

pound. See Quier, 177 P.2d at 552.

¶ 42 Muth and MAS submit that there was no partnership because

Wright did not direct all the partnership’s activities, such as buying

and selling the houses. But, although “[a]ll partners have equal

rights in the management and conduct of the partnership

business,” § 7-60-118(1)(e), a partner may agree to delegate the

management responsibilities to another. See Tucker, 793 P.2d at

597 (“[P]artners may agree that one or more of them shall have

exclusive control over the management of the partnership

business.”); Chan v. HEI Res., Inc., 2022 CO 36, ¶ 21 (recognizing

that partners retain control over their business venture even where

they delegate the day-to-day management responsibilities to

others).

17
¶ 43 Once the court found that Wright and Muth were in a

partnership, it had found that there was a contract between them.

See Grau, 397 P.2d at 489. Because we conclude that the evidence

supports the court’s findings, we need not further address Muth

and MAS’s contentions that (1) there was no enforceable oral

contract because there was “insufficient certainty regarding the

material terms of” Wright’s description of the contract “to be legally

enforceable”; and (2) Wright’s “version of the contract also fails

because there was no meeting of the minds, [and] it lacked

consideration.”

3. Proof of Profits, Breach of the Partnership Agreement, and the
Implied Duty of Good Faith and Fair Dealing

a. Proof of Profits

¶ 44 Muth and MAS contend that they did not breach the

partnership agreement because Wright did not show that the sales

of any of the four houses yielded a profit. We disagree.

¶ 45 Two experts, one called by Wright, and one called by Muth and

MAS, testified about whether the sales of the houses returned any

profits. In finding that the sales had produced profits, the court

adopted testimony from Wright’s expert. Although Muth and MAS

18
submit that Wright’s expert made mistakes in calculating expenses,

such as not including loans that Muth had arranged or not

considering some reports, the court found that Wright’s expert was

more credible than Muth and MAS’s expert.

¶ 46 On the one hand, the court favored the testimony of Wright’s

expert because she

• was a certified public accountant;

• had used generally accepted standard accounting

principles when analyzing the evidence in this case;

• had experience in “construction accounting”; and

• had reviewed information from a variety of sources,

including MAS’s corporate records.

¶ 47 On the other hand, the court was less impressed with the

testimony of Muth and MAS’s expert because

• she was only beginning to learn construction accounting

when she analyzed the records in this case;

• she admitted to making some mistakes in her

calculations in this case; and

19
• she looked at whether MAS was a profitable entity as

opposed to whether the sales of the four houses had

generated any profits.

¶ 48 We conclude that the decision of which expert to believe was

within the court’s discretion and that there was evidence in the

record to support the court’s decision that the testimony of Wright’s

expert that the sales of the four houses had yielded profits was

more credible. See Fisher, ¶ 40.

b. Breach of the Partnership Agreement

¶ 49 Muth and MAS assert that it was Wright who breached the

partnership agreement by not providing fifty percent of the labor

and by not giving Muth access to Wright’s tools, truck, and trailer.

Again, this was an issue of fact, and there is evidence in the record

supporting the court’s decision to reject these assertions. See

Adler, 445 P.2d at 908.

¶ 50 For example, Wright testified that he worked on the houses on

nearly every Friday, Saturday, and Sunday, for the duration of the

project. He described in detail the work that he did on each of the

houses. He said that he provided Muth with consistent access to

his truck and trailer, and he identified numerous occasions when

20
he picked up materials and transported them to the houses. He

provided Muth with access to the tools he had, and he stated he

never told Muth that he had all the tools necessary to renovate a

house.

¶ 51 The court found that his testimony was credible, and, because

it is supported by evidence in the record, we have no basis to reach

a different conclusion. See In re Estate of Owens, ¶ 22; Fisher,

¶ 40.

c. Implied Duty of Good Faith and Fair Dealing

¶ 52 Muth and MAS assert that Wright breached the partnership

agreement because he violated the contract’s implied duty of good

faith and fair dealing. We disagree.

¶ 53 “Each party to a contract has a justified expectation that the

other will act in a reasonable manner in its performance.” Wells

Fargo Realty Advisors Funding, Inc. v. Uioli, Inc., 872 P.2d 1359,

1363 (Colo. App. 1994). To that end, “[e]very contract in Colorado

contains an implied duty of good faith and fair dealing.” New

Design Constr. Co. v. Hamon Contractors, Inc., 215 P.3d 1172, 1181

(Colo. App. 2008) (quoting Cary v. United of Omaha Life Ins. Co., 68

P.3d 462, 466 (Colo. 2003)). A violation of this duty gives rise to a

21
claim for breach of contract. City of Golden v. Parker, 138 P.3d 285,

292 (Colo. 2006). The duty applies “when the manner of

performance under a specific contract term allows for discretion on

the part of either party.” New Design Constr. Co., 215 P.3d at 1181

(quoting Parker, 138 P.3d at 292). At its core, the duty “requires

only that the parties perform in good faith the obligations imposed

by their agreement.” Wells Fargo Realty Advisors Funding, Inc., 872

P.2d at 1363. “Whether a party acted in good faith is a question of

fact to be determined on a case-by-case basis.” Univ. of Denver,

¶ 51.

¶ 54 Muth and MAS contend that Wright testified that he had

discretion (1) “regarding how many hours he had to work fixing and

flipping the properties”; and (2) “regarding the percentage of the

total of work he was to contribute.” According to Muth and MAS,

this testimony allowed Wright “to control the terms of performance

and allow[ed] him to be the sole judge to determine if his

performance met his contractual obligations.” So, Muth and MAS

finish up, Wright breached the duty of good faith and fair dealing

because he acted “contrary” to the partnership’s “agreed common

purpose and the parties’ reasonable expectations.”

22
¶ 55 The court found that, “although [Muth] claimed that the

parties agreed to match hours, . . . matching hours exactly was not

a term of the agreement, especially when viewed from the

perspective of the parties when they entered into the agreement.”

The court decided that, “[i]n the absence of a specific term [in the

partnership] concerning the hours each man was to contribute to

the venture,” “each man agreed to dedicate a reasonable amount of

time.” The court then found that Wright had “performed his side of

the agreement by dedicating most of his Friday nights, Saturdays,

and Sundays to working on the houses.” As a result, the trial

court’s factual findings undercut Muth and MAS’s contention that

Wright violated the implied duty of good faith and fair dealing. See

id.

III. Civil Theft

¶ 56 Muth and MAS contend that the trial court erred in finding

that they had committed civil theft because (1) a creditor/debtor

relationship existed between Wright and Muth; and (2) Wright

cannot establish that Muth and MAS knowingly retained or

exercised control over a thing of value. We disagree.

23
¶ 57 To succeed on a claim for civil theft, a plaintiff must establish

that the defendant knowingly obtained, retained, or exercised

control over anything of value without authorization or by threat or

deception and that the defendant acted intentionally or knowingly

in ways that deprived the plaintiff permanently of the thing of value.

See Scott v. Scott, 2018 COA 25, ¶ 26; § 18-4-401, C.R.S. 2024.

Like criminal theft, civil theft also requires that the defendant have

the specific intent to permanently deprive the owner of the benefit of

the property. Van Rees v. Unleaded Software, Inc., 2016 CO 51,

¶ 21.

A. Additional Facts

¶ 58 The court found that Muth and MAS had committed civil theft

by knowingly retaining Wright’s portion of the profits with the intent

to deprive him permanently of that property. As we have concluded

above, the court found that one part of the partnership agreement

was that Wright was entitled to one-third of the profits from the sale

of each house.

¶ 59 The court added that

the parties had an enforceable contract
whereby [Wright] was entitled to one-third of
the profits from the houses the parties fixed

24
and flipped together. Renovating the houses
produced a profit. When the houses were sold,
[Muth and MAS] received those profits. Once
[Muth and MAS] received the profits from the
houses [Wright] had an interest in one-third of
those profits. [Muth and MAS] did not give . . .
Wright his share of the profits, but instead
either retained or used them. . . . Wright did
not consent to this or authorize it, instead
demanding, repeatedly, that the profits be
given to him.

B. Analysis

¶ 60 Muth and MAS correctly assert that the existence of a

creditor/debtor relationship by itself is insufficient to give rise to a

claim of civil theft. See Tisch v. Tisch, 2019 COA 41, ¶ 53. But if a

plaintiff obtains “a distinct, proprietary interest” in specific

property, a claim of civil theft may then be brought. Id. at ¶ 63.

¶ 61 Muth and MAS submit that a contract dispute in which one

party performs services, and the other party fails to pay, is only

sufficient to create a creditor/debtor relationship. Because, they

continue, the “property” at issue is “indirect economic lost ‘profits,’”

Wright cannot establish the elements of civil theft. And, they finish

up, a right to recover “a debt, or money, or damages for a breach of

contract” cannot create a claim for civil theft. See City & Cnty. of

25
Denver v. Jones, 274 P. 924, 924-25 (Colo. 1929) (quoting 1

Bouvier’s Law Dictionary 483 (3d rev. 1914)).

¶ 62 But Wright’s interest in property — one-third of the profits

from selling the houses — was not speculative or theoretical.

Rather, under the partnership agreement, he accrued an interest

once each house sold, which was sufficient to sustain a claim for

civil theft. See Tisch, ¶¶ 55-59 (noting that the corporate

distribution of dividends was specific money in which the

shareholders maintained an interest).

¶ 63 Muth and MAS also submit that Wright did not establish that

they had “knowingly exercised control” over Wright’s property, or

that Muth and MAS had acted intentionally to retain all the profits

from each sale. We disagree.

¶ 64 The court found that Muth and MAS had knowingly and

intentionally retained the profits from each house with the “intent

that Mr. Wright would never receive them.” We conclude, for the

following reasons, that this finding is supported by the record. See

In re Estate of Owens, ¶ 22; Fisher, ¶ 40.

¶ 65 Wright’s expert, whom the court found credible, testified that

the sale of each of the houses resulted in a specified amount of

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profit. To reach that figure, she reviewed MAS’s financial

statements, books, and records; she considered various third-party

sources, such as credit cards and bank statements; and she looked

at other documentary evidence. She then calculated that Wright

was entitled to a specified share of those profits.

¶ 66 Muth’s conduct before and after selling the Holly Street house

supports the court’s finding that there were profits. Although Muth

told Wright that he had not spent any of the proceeds of selling the

Holly Street house, he had done so. For example, before the sale of

the Holly Street house, the expert testified that MAS’s expenses

appeared to be business expenses, such as materials and payments

to subcontractors.

¶ 67 But, following the sale of the Holly Street house, MAS’s

purchases changed drastically. Muth bought a Ford Mustang for

over $24,000 a day after the sale. Over the next year, MAS’s bank

account was used to make frequent and consistent purchases at

fast food restaurants, liquor stores, grocery and pet stores, and

dating websites.

¶ 68 The record also contains evidence showing that Muth acted

knowingly or intentionally. Wright’s expert said that Muth had

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transferred $55,000 from MAS’s account to an E-trade account,

which he used to trade stock. Wright repeatedly demanded

payment from Muth, but Muth repeatedly refused, claiming that he

either needed to do an “accounting” or that he needed to liquidate

assets to pay Wright. On one occasion, Muth told Wright that he

would pay him once he sold one of the properties, but Muth had

already sold the same property weeks earlier. See Huffman v.

Westmoreland Coal Co., 205 P.3d 501, 509 (Colo. App. 2009)(“The

intent permanently to deprive the owner of the use or benefit of a

thing of value may be inferred from the defendant’s conduct and the

circumstances of the case, but requires proof of a knowing use by

the defendant inconsistent with the owner’s permanent use and

benefit.”).

IV. Piercing the Corporate Veil

¶ 69 Muth and MAS contend that the court erred in piercing the

corporate veil, determining that Muth and MAS were alter egos of

each other. They submit that (1) MAS was not Muth’s alter ego;

(2) Muth did not use MAS to defraud Wright or to defeat his rightful

claim; and (3) piercing the corporate veil led to an inequitable

result. We disagree.

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A. Standard of Review

¶ 70 “To prevent abuse, Colorado law permits trial courts to

disregard the corporate form and pierce the corporate veil when a

corporation and a shareholder are alter egos of each other.” In re

Phillips, 139 P.3d 639, 644 (Colo. 2006). Piercing the corporate veil

involves a mixed question of law and fact. Lester v. Career Bldg.

Acad., 2014 COA 88, ¶ 42. We therefore defer to the trial court’s

findings of fact if they are supported by the record, but we review

the trial court’s legal conclusions de novo. Million v. Grasse, 2024

COA 22, ¶ 22. The issue of whether a court should pierce the

corporate veil based on the facts in the record is one such legal

conclusion. Id.

¶ 71 To pierce the corporate veil, a court must conduct a three-part

inquiry. Sedgwick Props. Dev. Corp. v. Hinds, 2019 COA 102, ¶ 21.

First, it must determine whether the corporate entity is the alter ego

of the person or entity in issue. Id. An alter ego relationship exists

when a corporation or limited liability company is merely an

instrumentality for the transaction of the shareholders’ or members’

affairs and “there is such unity of interests in ownership that the

separate personalities of the corporation and the owners no longer

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exist.” In re Phillips, 139 P.3d at 644 (quoting Krystkowiak v. W.O.

Brisben Cos., 90 P.3d 859, 867 n.7 (Colo. 2004)).

¶ 72 Second, a court must determine whether the corporate fiction

was used to perpetuate a fraud or defeat a rightful claim.

Sedgwick, ¶ 21.

¶ 73 Finally, a court must consider whether disregarding the

corporate form would achieve an equitable result. Id.

¶ 74 If the court finds that the moving party has satisfied the three-

part test by a preponderance of the evidence, then it may disregard

the corporate form and impute liability to the relevant individual or

individuals. Id.

B. Analysis

¶ 75 We conclude, for the following reasons, that the record

supports the court’s findings and its legal conclusions. See Million,

¶ 22; Lester, ¶ 42.

¶ 76 To show that an alter ego relationship exists, a court should

consider whether

(1) the corporation is operated as a distinct
business entity; (2) funds and assets are
commingled; (3) adequate corporate records
are maintained; (4) the nature and form of
the entity’s ownership and control facilitate

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misuse by an insider; (5) the business is
thinly capitalized; (6) the corporation is used
as a “mere shell”; (7) legal formalities are
disregarded; and (8) corporate funds or
assets are used for noncorporate purposes.

McCallum Fam. L.L.C. v. Winger, 221 P.3d 69, 74 (Colo. App. 2009).

¶ 77 First, Wright provided a substantial amount of evidence

showing that Muth used MAS as his alter ego. Notably, MAS’s

financial transactions following the sale of the Holly Street house

showed that Muth used MAS as his personal bank account. MAS’s

transactions following this sale became increasingly “personal” in

nature, with the corporation buying a car, liquor, groceries, pet

supplies, and subscriptions to dating websites.

¶ 78 Wright’s expert testified that, based on her analysis of MAS’s

finances, it appeared that the Muth’s and MAS’s funds were often

comingled, with MAS routinely paying Muth’s personal expenses.

¶ 79 Muth’s consistent use of MAS’s funds for his personal

expenses led to a severe undercapitalization of MAS. On several

occasions, MAS ran out of money in its corporate bank accounts,

leading to thousands of dollars in overdraft fees.

¶ 80 The record contains evidence that MAS did not comply with

customary corporate formalities. Wright’s expert testified that the

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corporation’s general ledger was in disarray. Muth’s expert

conceded that MAS’s “profit and loss statements” contained

inaccuracies.

¶ 81 Second, Muth used MAS to conceal the partnership’s business

from Wright. Because Wright had no control in, or ownership of,

MAS, he was denied important information about the partnership’s

business, including whether the house sales made a profit. As a

result, Muth was able to use the profits from the sales of the houses

without Wright’s knowledge.

¶ 82 Third, the record shows that Muth used MAS to defeat

Wright’s rightful claim to the partnership’s profits. During the

partnership, Muth personally used some of the profits; after the

partnership ended, he used the money to invest in new properties.

By doing so, Muth placed Wright’s share of the profits beyond

Wright’s grasp. So the court decided to pierce the corporate veil to

achieve an equitable result.

¶ 83 Muth and MAS submit that the testimony of their expert

showed that there were no profits. But, as we have concluded

above, this was a factual question that the court resolved with

support in the record.

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V. Damages

¶ 84 Muth and MAS assert that the record did not support the

court’s computation of Wright’s damages. They submit that

Wright’s expert did not provide a specific breakdown of the profits

earned from each house; instead she only provided a report

containing an estimate of the profits derived from the sales of the

four houses. They add that Wright conceded that he was not owed

one-third of the profits from the sale of the Willow Street house. We

disagree.

¶ 85 Generally, a trial court has broad discretion in determining the

amount of damages, and its decision will not be disturbed on

appeal absent an abuse of discretion. McDonald’s Corp. v.

Brentwood Ctr., Ltd., 942 P.2d 1308, 1311 (Colo. App. 1997). The

trial court’s award of damages will not be set aside unless it is

manifestly and clearly erroneous. Roberts v. Adams, 47 P.3d 690,

697 (Colo. App. 2001).

¶ 86 First, we note that Muth and MAS’s characterization of

Wright’s concession is misleading. Although Wright testified that

he had stopped working on the Willow Street house before the work

was complete, he did so only after Muth had refused to pay him any

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of the partnership’s profits for over a year. And while Wright

indicated that he might not be entitled to a one-third split of the

profits from the Willow Street house, he never said that he was not

owed anything for his work on that house. Indeed, during cross-

examination, Wright repeatedly said that he was owed

compensation for his work on the Willow Street house.

¶ 87 Second, the record contains evidence to support the court’s

findings of damages. For example, the court found the testimony of

Wright’s expert credible, it decided that the sale of the houses had

yielded profits based on that testimony, and its damages award

arose from that testimony. See id.

VI. Appellate Attorney Fees

¶ 88 Wright asks us to award him attorney fees “for defending an

appeal concerning a civil theft claim.” The civil theft section,

section 18-4-405, C.R.S. 2024, states that the owner of the property

“may also recover . . . reasonable attorney fees.”

¶ 89 We agree that Wright is entitled to reasonable appellate

attorney fees under the civil theft statute. Relying on C.A.R. 39.1,

and because the trial court is better suited to conduct any

necessary factual inquiry, we exercise our discretion and remand to

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the trial court to determine and to award Wright reasonable

appellate attorney fees. See Black v. Black, 2018 COA 7, ¶ 130.

¶ 90 The judgment is affirmed, and the case is remanded to the

trial court for a determination of reasonable appellate attorney fees.

JUDGE TOW and JUSTICE MARTINEZ concur.

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