MG Dyess v. MarkWest

24CA0463, 24CA0995 & 24CA1400 MG Dyess v MarkWest 07-03-2025

COLORADO COURT OF APPEALS

Court of Appeals Nos. 24CA0463, 24CA0995 & 24CA1400
City and County of Denver District Court No. 23CV30585
Honorable Mark T. Bailey, Judge

M.G. Dyess, Inc., and M.G. Dyess LLC,

Plaintiffs-Appellees,

v.

MarkWest Liberty Midstream & Resources, L.L.C.,

Defendant-Appellant.

JUDGMENT AFFIRMED

Division II
Opinion by JUDGE FOX
Harris and Schutz, JJ., concur

NOT PUBLISHED PURSUANT TO C.A.R. 35(e)
Announced July 3, 2025

Wheeler Trigg O’Donnell LLP, Meghan Frei Berglind, Denver, Colorado;
Kilpatrick Townsend & Stockton LLP, Adam H. Charnes, Dallas, Texas;
Kilpatrick Townsend & Stockton LLP, R. Lee Mann III, Atlanta, Georgia, for
Plaintiff-Appellee

Snell & Wilmer L.L.P., James D. Kilroy, Ellie Lockwood, Denver, Colorado, for
Defendant-Appellant
¶1 Defendant, MarkWest Liberty Midstream & Resources, L.L.C.

(MarkWest), appeals the district court’s judgment entered in favor of

plaintiffs, M.G. Dyess, Inc. and its successor-in-interest M.G. Dyess

LLC (collectively, Dyess), on their breach of contract claim.

MarkWest contends that the district court erred by excluding

certain evidence and giving an adverse inference jury instruction at

trial. We affirm.

I. Background

¶2 In August 2017 Dyess contracted with MarkWest to build

three lengths, or “spreads,” of natural gas pipelines, spreads 1A,

1B, and 2, in West Virginia (the contracts). Relevant for this

appeal, each contract specified that in exchange for building each

spread, MarkWest would pay Dyess allocated portions of a lump

sum once Dyess reached “satisfactory completion of a payment

milestone,” including 30% of the lump sum once Dyess reached

“Mobilization,” 40% at “Work Welded Out,” and the remaining 30%

at “Mechanical Completion.”

¶3 However, MarkWest could withhold 10% of the lump sum

(retainage), which would then be due “within forty five (45) days

after Project Completion and Work Acceptance.” “Work Acceptance”

1
was defined as when Dyess “submitted a Notice of Project

Completion,” and MarkWest accepted it, in writing, agreeing that

the work was complete. If MarkWest believed the work was not

complete, it had to issue a “Completion Rework Notice” to Dyess

advising “in writing of any deficiencies or defects in the Work” for

Dyess to remedy and achieve Work Acceptance. MarkWest agreed

to pay $41,249,100.45 for Dyess’s work under all three of the

contracts; 10% of this in retainage amounted to $4,124,910.05.

¶4 Each contract specified that if Dyess failed “to achieve

Mechanical Completion by the Mechanical Completion Date,” it

would pay MarkWest liquidated damages, to a maximum of

$4,500,000 (the late completion payments). If Dyess did not make

the required late completion payments, MarkWest had “the right to

offset such Late Completion Payments against any payments still

due under this Contract including but not limited to the final

payment and Retainage.”

¶5 Conflict arose between the parties as the project progressed,

however. In 2018 Dyess sued MarkWest, and MarkWest asserted

counterclaims in M.G. Dyess, Inc. v. MarkWest Liberty Midstream &

Res., L.L.C., No. 18CV34745 (City & Cnty. of Denver Dist. Ct.)

2
(Dyess I). On February 14, 2020, a jury awarded Dyess

$26,039,641 in quantum meruit damages for an unjust enrichment

claim, awarded MarkWest $4,500,000 in late completion payments

pursuant to MarkWest’s breach of contract counterclaim, and

rejected the parties’ other claims. M.G. Dyess, Inc. v. MarkWest

Liberty Midstream & Res., L.L.C., 2022 COA 108, ¶ 6. The district

court in Dyess I determined that the quantum meruit claim was an

equitable claim, accepted the jury’s verdict as advisory only, and

reduced Dyess’s damages to $934,436. Id. at ¶ 8. The district

court entered judgment on July 8, 2020.

¶6 A division of this court later reversed the Dyess I district

court’s decision to treat the jury verdict as advisory, concluding

that the quantum meruit claim was legal and not equitable. Id. at

¶¶ 19-21. The division remanded the case to reinstate the award

subject to the parties’ posttrial motions and to award both parties

pre- and post-judgment interest. Id. at ¶¶ 24, 37-38.

¶7 Because the division had affirmed the jury’s quantum meruit

liability finding, the Dyess I remand court simply offset MarkWest’s

$4,500,000 breach of contract judgment from Dyess’s $26,039,641

quantum meruit judgment, arriving at a net award of $21,539,641

3
(plus pre- and post-judgment interest) in favor of Dyess. The new

judgment was entered on December 27, 2023. MarkWest

challenged the remand court’s decision in a separate appeal, and

another division of this court affirmed the judgment as entered by

the remand court. M.G. Dyess v. MarkWest Liberty Midstream &

Res., LLC, slip op. at ¶¶ 12, 58 (Colo. App. No. 24CA0585, May 22,

2025) (not published pursuant to C.A.R. 35(e)).

¶8 While the Dyess I case was progressing, however, Dyess and

MarkWest began disputing whether MarkWest had to pay Dyess the

retainage, which led to a second case and this appeal. On January

20, 2020, shortly before trial commenced in Dyess I, Dyess sent

project completion notices for all three spreads and requested

payment. Dyess requested $4,081,182.83 in retainage (accounting

for a $43,727.22 partial payment MarkWest had made to Dyess).

¶9 On February 19, 2020, MarkWest responded by sending a

“Nonacceptance of Projection Completion and Completion Rework

Notice” (the nonacceptance notice). According to MarkWest, Dyess

had “not performed all Services required under the Contracts nor

ha[d] it fulfilled its outstanding obligations under the Contracts to

MarkWest’s satisfaction.” MarkWest specifically contended that

4
Dyess failed to “complete restoration of Number 2 Ridge Road” (the

Ridge Road restoration work), despite requests to do so, and failed

to compensate MarkWest for the cost of hiring another contractor to

complete this work. MarkWest also alleged that Dyess still owed

$4,500,000 in late completion payments and had submitted

insufficiently detailed project completion notices. As a result,

MarkWest refused to pay Dyess the retainage.

¶ 10 Dyess sued MarkWest on February 23, 2023, asserting a

breach of contract claim based on MarkWest’s failure to pay the

retainage. M.G. Dyess, Inc. v. MarkWest Liberty Midstream & Res.,

L.L.C., No. 23CV30585 (City & Cnty. of Denver Dist. Ct.) (Dyess II).

MarkWest asserted several affirmative defenses and a counterclaim

for breach of contract. As relevant here, MarkWest alleged that

Dyess’s request for retainage was barred by the contracts, which

allowed MarkWest to offset late completion payments against the

retainage. On November 16, 2023, after a four-day trial, the jury

awarded Dyess $4,451,182.84 in damages (several hundred

thousand dollars more than Dyess’s demand).

¶ 11 On December 7, 2023, MarkWest moved pursuant to C.R.C.P.

59 for a new trial or, alternatively, remittitur. The district court

5
declined the request for a new trial but agreed to reduce the jury’s

award to $4,081,182.83, the amount of Dyess’s demand. The

court’s February 7, 2024, judgment awarded Dyess $4,081,182.83

in damages with $1,441,924.06 in prejudgment interest, for a total

of $5,523,106.89.1 This appeal followed.

II. Issues on Appeal

¶ 12 MarkWest raises two issues on appeal. First, MarkWest

argues that the district court erred by excluding evidence that as of

February 2020, when MarkWest issued the nonacceptance notice,

Dyess owed $4,500,000 in late completion payments, which meant

it was in breach of the contracts. Second, MarkWest argues that

the district court erred by instructing the jury that it could presume

that spoliated evidence was adverse to MarkWest.

¶ 13 MarkWest posits that both errors require a new trial. We

conclude that the district court did not err in either instance, so we

affirm the district court.

1 The district court also later awarded Dyess attorney fees and costs

after finding that “MarkWest made claims and defenses in this
action that lacked substantial justification under [section 13-17-
102, C.R.S. 2024].”

6
A. Evidence of the Jury’s Determination in Dyess I

1. Additional Background

¶ 14 Before trial in Dyess II, Dyess filed a motion in limine to

exclude any evidence of the Dyess I verdict awarding MarkWest

$4,500,000 in late completion payments. The Dyess I remand court

had not yet entered its December 27, 2023, judgment awarding

Dyess the netted quantum meruit damages, but MarkWest’s late

completion payment award was not in dispute.

¶ 15 Dyess argued that MarkWest was effectively seeking a double

recovery by trying to deny Dyess’s claim for the retained funds

based on the late completion payments in Dyess II while also using

this award to reduce Dyess’s quantum meruit damages in Dyess I.

Dyess contended that the issues in Dyess I had no bearing on the

retainage issue in Dyess II and would be irrelevant and prejudicial.

Instead, the only issue the jury had to decide was whether

MarkWest was entitled to any retainage reduction because of the

Ridge Road restoration work that MarkWest alleged Dyess failed to

complete.

¶ 16 Dyess further argued that once judgment in Dyess I was

entered, MarkWest was precluded under the doctrine of merger

7
from bringing a counterclaim on the grounds that the late

completion payments offset the retainage. Dyess thus requested

that any issue related to the Dyess I judgment be handled by the

court after trial.

¶ 17 MarkWest responded that it was seeking to use the Dyess I

judgment only to offset any retainage judgment. It explicitly agreed

that its “declaratory judgment claim and its affirmative defense of

offset or set-off should be decided by the Court and not the jury” to

avoid confusing the jury. MarkWest also reiterated that it did not

“dispute that its original claim for contract damages ‘merged into’ a

$4,500,000 judgment” and that it was not seeking to relitigate the

issue.

¶ 18 Notably, before MarkWest responded to Dyess’s motion in

limine, MarkWest also moved to preclude any evidence of Dyess’s

quantum meruit judgment and extracontractual work Dyess

performed, arguing it would be confusing and prejudicial.

¶ 19 Dyess argued that a jury instruction should be tendered

explaining that there was prior litigation between the parties but

that the jury’s verdicts in Dyess I were irrelevant. It also argued

that it would be improper to inform the jury of the late completion

8
payments award but not the quantum meruit award. But Dyess

opposed the request to exclude all evidence of extracontractual

work Dyess performed because evidence relating to the Ridge Road

restoration work was disputed in Dyess II.

¶ 20 The court ruled on both motions in limine, finding that the

jury verdicts in Dyess I had “little if any relevance,” and any

marginal relevance would be “substantially outweighed” by risks of

prejudice, confusion, or misleading the jury. The court agreed that

any question of whether to offset the retainage award with the late

completion payments judgment would be addressed after trial.

Finally, evidence of extracontractual work related to the quantum

meruit claim in Dyess I would be tentatively admissible, subject to

contemporaneous objections and the limitation that evidence or

discussion of the Dyess I jury’s verdicts was inadmissible.2

¶ 21 MarkWest and Dyess later submitted a joint stipulation before

trial. The parties agreed that the late completion payments offset

2 After trial, the Dyess II court declined to use the $4,500,000

judgment to offset any of Dyess’s retainage damages because once
the Dyess I remand court used this judgment to offset Dyess’s
quantum meruit damages, the judgment was not available to offset
the retainage damages.

9
issue would be decided by the court after trial and agreed that the

court would tender the following jury instruction:

There has been a prior jury trial between these
same parties involving this same construction
project. That case is pending before another
Judge in this courthouse and there are post-
trial motions to still decide in that first case. I
instruct you, as a juror in this case, as follows
regarding the prior case between these parties:

a) the monetary claims in the prior jury trial
are not before you;

b) the recovery, if any, by either party to the
prior jury trial is not before you;

c) you should address and issue your decision
solely on the claims at issue in this action;

d) You are not to perform any investigation or
research on the Internet or in any other way,
or take any other actions of any type to learn
about the prior action or the outcome of it.

The parties also agreed “not to introduce evidence or make

arguments inconsistent with this instruction.” The court accepted

the joint stipulation, and the instruction was read to the jury at the

start of trial. It was also included in the written jury instructions.

¶ 22 At trial, the late completion payments issue arose during

MarkWest’s counsel’s cross-examination of Marshall Grant Dyess,

Dyess’s president. MarkWest’s counsel was inquiring about the

10
retainage and “project completion” portions of the contracts and

asked Mr. Dyess to confirm that to receive retainage Dyess had to

comply with all other contractual obligations, which Mr. Dyess

confirmed was correct. MarkWest’s counsel then began to ask, “So

let’s look at one of the obligations in the contract. On Page 5, . . .

late completion payments.” Dyess’s counsel asked to approach the

bench before Mr. Dyess could answer.

¶ 23 Dyess’s counsel argued that MarkWest was attempting to

introduce evidence of the late completion payments, but MarkWest

no longer had a claim on these grounds after the judgment in Dyess

I merged with MarkWest’s contractual right. MarkWest’s counsel

argued the questioning had “nothing to do with” offsetting damages

and the court’s motion in limine rulings on this point; instead,

counsel was seeking to explain that the late completion payments

were a “condition precedent” to retainage under the contracts.

MarkWest’s counsel contended that it was therefore proper to

explain that MarkWest’s refusal to pay retainage was based on the

missing late completion payments and that “as a matter of fact, a

jury decided that [Dyess] [was] liable for those late payments.”

MarkWest’s counsel added that “maybe we should have brought it

11
up earlier, but it’s undisputed that there is a finding that they

breached the late payment provision, and that is our whole case.”

¶ 24 Because it was late in the afternoon, the court dismissed the

jury and agreed to hear the issue further the next day. The next

day, Dyess’s counsel argued that MarkWest had never raised a

specific condition precedent argument in the pleadings in violation

of C.R.C.P. 9(c), and MarkWest could not raise the issue for the first

time during trial. Dyess also reiterated that after the judgment in

Dyess I there was no reason to discuss the late completion

payments with the jury now that the judgment had merged with

and extinguished any late payment contract claim. Dyess added

that Michael Hoy, a “designated corporate representative for

MarkWest,” testified in a deposition that the only reason for failing

to pay the retainage was Dyess’s alleged “[f]ailure to complete the

required scope of work as detailed in the original contract and scope

of work.”

¶ 25 MarkWest responded that C.R.C.P. 9(c) did not bar

MarkWest’s condition precedent argument and that it was

necessary to explain why MarkWest refused to pay the retainage by

referencing the late completion payments — and that “as a matter

12
of fact, it has been determined that there was a breach” of the

contracts in Dyess I. The court responded by asking, “So then are

we going to give [Dyess] . . . a chance to talk about all the money

that Dyess thought they were owed by MarkWest, and then that’s

why they didn’t pay?” MarkWest’s counsel argued this would be

irrelevant because Dyess’s quantum meruit claim was irrelevant to

Dyess II.

¶ 26 After a recess, the court denied Dyess’s request to completely

exclude discussion of the late completion payments, finding that

“this was central to what the parties were talking about during the

time of the alleged breach,” and declined to redact exhibits that

mentioned the late completion payments. But the court also

maintained that “neither party will be permitted to refer [to] or offer

evidence about the jury verdicts; i.e., who won and the amount of

damages in the prior case.” Dyess’s counsel reiterated its objection,

and MarkWest’s counsel asked to make an offer of proof later in the

afternoon.

¶ 27 When Mr. Dyess’s cross-examination resumed, MarkWest’s

counsel asked about the late completion payments. Mr. Dyess

agreed that Dyess could be forced to pay up to $4,500,000 if it

13
failed to achieve timely mechanical completion for all three spreads,

and he confirmed that mechanical completion occurred after the

contracts’ specified deadlines. Mr. Dyess also acknowledged that

the contracts allowed MarkWest to offset late completion payments

against any retainage owed and that “[n]o checks were written” to

make any late completion payments. On redirect, Dyess’s counsel

elicited testimony from Mr. Dyess that he believed MarkWest had

granted an extension for mechanical completion and that Dyess had

completed the spreads by this extended deadline. MarkWest’s

counsel did not object to these questions.

¶ 28 MarkWest’s counsel made the offer of proof later in the

afternoon, explaining that he would have elicited testimony showing

that (1) the Dyess I lawsuit began in December 2018, and the Dyess

II lawsuit began after Dyess submitted its project completion notices

in January 2020; (2) “during the trial of [Dyess I], the jury issued a

verdict finding that MarkWest did not breach the contract on any

level” but that “Dyess did breach the contract, and particularly [the

section] dealing with failure to make late completion payments,”

and that the verdict was affirmed on appeal; and (3) Dyess obtained

a quantum meruit verdict after MarkWest’s nonacceptance notice.

14
¶ 29 MarkWest’s counsel added that Mr. Dyess’s redirect testimony

that Dyess had met the extended mechanical completion deadline

had “opened the door” to its proposed inquiry. MarkWest’s counsel

said it was now necessary to explain to the jury that the extension

argument and Dyess’s breach of contract claim were rejected in

Dyess I.

¶ 30 Dyess’s counsel then responded that Dyess had not opened

the door. MarkWest sought to introduce exhibits and testimony

about the late completion payments and the Dyess I verdict without

allowing Dyess to explain its position on the matter.

¶ 31 The court noted that it was concerned that MarkWest had

violated C.R.C.P. 9(c) by failing to plead what appeared to be its new

“condition precedent” defense: that Dyess’s failure to make the late

completion payments relieved MarkWest of its obligation to pay the

retainage. After reviewing deposition testimony, interrogatories,

and MarkWest’s answer, the court found that “MarkWest did not

plead this matter specifically and with particularity,” and it did not

allow the theory to go to the jury.

¶ 32 The court also denied MarkWest’s defense on the merits. The

court reasoned that after MarkWest’s $4,500,000 breach of contract

15
judgment in Dyess I was entered, Dyess no longer had a contractual

obligation to make the late completion payments because they had

merged with MarkWest’s judgment in Dyess I.

2. Analysis

¶ 33 MarkWest argues that the district court abused its discretion

by excluding evidence of the facts underlying the jury’s verdict in

Dyess I. MarkWest contends that its primary defense against

Dyess’s claim for retainage was that, at the time it sent the notice of

nonacceptance in February 2020, Dyess was in breach of the

contracts based on its failure to make the late completion

payments. It acknowledges that Dyess’s contractual obligation

regarding the late completion payments no longer existed once

judgment entered in Dyess I, but it points out that judgment had

not entered as of February 2020.

¶ 34 MarkWest argues it was prevented from telling the jury about

this evidence even after Dyess opened the door, thereby misleading

the jury into thinking that Dyess had met its contractual

obligations. It argues that if the jury had heard this evidence, it

“very well may have concluded that Dyess was not owed anything.”

16
¶ 35 Dyess counters that the court did not err. It says that

MarkWest waived this argument and, even if it did not, the court

properly excluded the evidence because the court (1) acted

consistently with the joint stipulation; (2) correctly found that

MarkWest failed to sufficiently plead the matter in accordance with

C.R.C.P. 9(c); and (3) properly rejected the defense on the merits

because once the judgment in Dyess I was entered Dyess no longer

had any contractual obligation to pay the late completion damages.

Finally, Dyess argues that even if an error occurred it was

harmless.

¶ 36 As we explain below, the court did not err.

a. Standard of Review and Applicable Law

¶ 37 MarkWest preserved this issue for appeal through its offers of

proof, numerous discussions with the district court, and objections.

See Gebert v. Sears, Roebuck & Co., 2023 COA 107, ¶ 25.

¶ 38 “In general, all relevant evidence is admissible, and the

Colorado Rules of Evidence strongly favor admission of material

evidence.” Bly v. Story, 241 P.3d 529, 535 (Colo. 2010) (citations

omitted). But a district court may exclude relevant evidence “if its

probative value is substantially outweighed by the danger of unfair

17
prejudice, confusion of the issues, or misleading the jury, or by

considerations of undue delay, waste of time, or needless

presentation of cumulative evidence.” CRE 403.

¶ 39 “[T]rial courts have broad discretion to determine the

admissibility of evidence,” CORE Elec. Coop. v. Freund Invs., LLC,

2022 COA 63, ¶ 28, so we review “evidentiary rulings for abuse of

discretion,” Ronquillo v. EcoClean Home Servs., Inc., 2021 CO 82,

¶ 12. “A district court abuses its discretion when its decision is

‘manifestly arbitrary, unreasonable, or unfair, or based on an

erroneous understanding or application of the law.’” Gebert, ¶ 29

(citation omitted).

b. Application

¶ 40 The district court did not abuse its discretion when it refused

to allow the jury to hear MarkWest’s evidence relating to the late

completion payments. True, MarkWest’s answer alleged that

MarkWest could offset the late completion payments against a

retainage award and, generically, that “Dyess failed to satisfy

conditions precedent under the contracts.” But both parties agreed

the offset argument would be addressed by the court after trial.

18
¶ 41 Despite its contentions otherwise, MarkWest — not Dyess —

opened the door to the testimony it now contends it needed to

respond to. During Mr. Dyess’s cross-examination, MarkWest’s

counsel brought up the issue of the late completion payments and

their connection to retainage. In response to MarkWest’s allegation

that it did not have to pay retainage because Dyess breached the

contract, Dyess argued that, at the time, it believed the deadline

had been extended. See Itin v. Ungar, 17 P.3d 129, 132 n.4 (Colo.

2000) (‘“[O]pening the door’ . . . often occurs when one party

introduces evidence that causes another party to introduce

counterproof that would otherwise be inadmissible but for the first

party’s introduction of the subject matter.”). MarkWest cannot

complain that Dyess was able to elicit this limited testimony when

MarkWest first raised the issue.

¶ 42 MarkWest insists that the Dyess II jury needed to hear that

the Dyess I jury found that Dyess breached the contract. But

MarkWest conceded at trial, and here on appeal, that once

MarkWest obtained its breach of contract judgment for the late

completion payments in Dyess I, any contractual right it may have

been able to maintain based on the late completion payments

19
merged into this judgment. See Restatement (Second) of

Judgments § 18(1) (Am. L. Inst. 1982) (“When a valid and final

personal judgment is rendered in favor of the plaintiff: (1) The

plaintiff cannot thereafter maintain an action on the original claim

or any part thereof . . . .”); see also id. § 18 cmt. a (Under the

doctrine of merger, “[w]hen the plaintiff recovers a valid and final

personal judgment, his original claim is extinguished and rights

upon the judgment are substituted for it. The plaintiff’s original

claim is said to be ‘merged’ in the judgment.”); id. § 21(1); id. § 21

cmt. a (“A defendant who interposes a counterclaim is, in

substance, a plaintiff as far as the counterclaim is concerned.”); cf.

Mortg. Invs. Corp. v. Battle Mountain Corp., 70 P.3d 1176, 1185

(Colo. 2003) (“When a creditor elects to sue on a promissory note

after a debtor defaults and the creditor obtains a judgment, the

note loses its identity and merges into the judgment.”).

¶ 43 Because Dyess’s obligation to pay late completion payments

merged into MarkWest’s breach of contract judgment, whether

Dyess breached the contract in this respect became irrelevant for

the Dyess II jury. We understand MarkWest’s argument that it

originally refused to pay the retainage because of the unpaid late

20
completion payments, but at the time of trial in Dyess II this was no

longer a valid basis for refusing to pay the retainage. And because

the jury could no longer use this theory as a basis to find that

MarkWest could refuse to pay retainage, it had no reason to hear

evidence on this argument. See Restatement (Second) of

Judgments § 18(1); see also Genova v. Longs Peak Emergency

Physicians, P.C., 72 P.3d 454, 459 (Colo. App. 2003) (“Under CRE

401, proffered evidence must relate to a fact ‘that is of consequence

to the determination of the action.’ . . . [T]he evidence must be

legally material to some factual issue in the case.”) (citation

omitted).

¶ 44 Indeed, had the jury ruled in MarkWest’s favor on these

grounds, it would have been improper because this would have

constituted a double recovery for MarkWest. See Lexton-Ancira Real

Est. Fund, 1972 v. Heller, 826 P.2d 819, 823 (Colo. 1992)

(“Generally, a plaintiff may not receive a double recovery for the

same wrong.”); see also Quist v. Specialties Supply Co., 12 P.3d 863,

866 (Colo. App. 2000) (The double recovery prohibition “applies in

cases involving multiple defendants as well as in cases involving

multiple claims against a single defendant.”). Had MarkWest’s

21
argument been successful, it could have allowed MarkWest to avoid

Dyess’s request for $4,081,182.83 in retainage in Dyess II, while at

the same time recovering $4,500,000 in late completion payments

through its judgment in Dyess I. Such an outcome would have

allowed MarkWest to use the breach of contract claim to benefit

twice.

¶ 45 Accordingly, admitting this evidence given its legal irrelevance

— coupled with a high risk of prejudice — would have been error.

Thus, the district court properly excluded it.

B. The Spoliation Instruction

1. Additional Background

¶ 46 Before trial, Dyess sought information and documents related

to MarkWest’s bidding process and efforts to hire another

contractor for the Ridge Road restoration work. Dyess contended

that MarkWest failed to preserve much of the documentation amid

active litigation in Dyess I despite knowing this issue would be

relevant for Dyess II. So Dyess requested a permissive adverse

inference instruction to remedy the spoliation. MarkWest opposed

the request, arguing it was untimely and Dyess had not shown that

MarkWest spoliated evidence or that Dyess was prejudiced.

22
¶ 47 During trial, Dyess’s counsel cross-examined Michael Hoy

about the Ridge Road restoration work, discussing MarkWest’s file

management software system. Dyess’s counsel asked about

MarkWest’s efforts to solicit bids for the Ridge Road restoration

work, and Hoy eventually confirmed that MarkWest had been

unable to provide Dyess with “the bidding documents and

communications with the bidders for . . . Ridge Road.”

¶ 48 Dyess introduced an undated proposal that Hoy prepared after

MarkWest began seeking bids for the restoration work that outlined

the scope and requirements of the Ridge Road restoration work.

But Hoy confirmed that he could not locate any other

documentation concerning (1) what MarkWest sent to bidders;

(2) when he sent the proposal; (3) information bidders sent to

MarkWest; (4) the timeframe MarkWest provided for bids; and

(5) internally referenced exhibits in the proposal — or anything else

related to the bidding. Hoy agreed that Dyess had requested these

documents and that MarkWest had notice of the need to retain

them, but MarkWest had not preserved them. Hoy attributed their

disappearance to transitioning to a new file management software

system. Dyess contended this documentation was important

23
because it could have shown that MarkWest had sent the proposal

soliciting bids for the restoration work before it told Dyess it was

hiring another contractor. Dyess contended this could have shown

that MarkWest had planned to hire a cheaper contractor and use

Dyess’s reluctance to begin the restoration work without payment

assurances as a pretext to bill Dyess for the contractor’s work.

¶ 49 At a hearing (after the jury left), Dyess renewed its request for

a permissive adverse inference instruction after Hoy’s testimony,

and the court granted the request. The court noted that the

documentation, which was lost in the midst of active litigation, was

“highly relevant” to the credibility of witnesses and MarkWest’s

argument that it was entitled to offset portions of the retainage —

namely, its claim that it could offset the costs of the Ridge Road

restoration work (approximating $700,000). The court added that

an adverse inference instruction would serve remedial and punitive

purposes given the importance of the documents and noted that

MarkWest “did a really, really, really bad job of preserving the

documents when there was a case going on.”

¶ 50 MarkWest’s counsel requested that the instruction specify that

the jury could presume an adverse inference as to MarkWest’s

24
offsetting counterclaim against Dyess but not Dyess’s breach of

contract claim against MarkWest. But the court noted that the

current instruction already did this, detailing that the instruction

then read, “You’re instructed that you may infer, by reason of

MarkWest’s failure to preserve and produce its documents related

to the bidding and contracting work for the work at issue and its

counterclaim, that the evidence contained in such documents was

unfavorable to MarkWest.”

¶ 51 The next day MarkWest’s counsel notified the court that

MarkWest had decided “to withdraw the breach of contract

counterclaim.” But MarkWest’s counsel clarified that “we are

preserving our [declaratory judgment] offset counterclaim that [the

court] will decide if necessary post-trial.” MarkWest’s counsel then

moved to dismiss the counterclaim with prejudice, again noting that

it was dismissing “the breach of [contract] counterclaim, not the

offset counterclaim,” which the court granted.

¶ 52 MarkWest agreed this would require altering the jury

instructions. But, during the jury instruction conference, Dyess’s

counsel argued the instruction needed to cover more than just the

counterclaim because the spoliation of the Ridge Road documents

25
directly related to MarkWest’s defense that it did not have to pay

the retainage because of Dyess’s alleged failure to complete the

Ridge Road restoration work. MarkWest represented that it was not

seeking to offset any retainage with the Ridge Road restoration work

costs; rather, “[w]e are arguing they are not entitled to retainage; in

other words, they didn’t substantially perform the project.”

¶ 53 The instruction tendered to the jury, Instruction 12, was

tailored specifically to the Ridge Road restoration work, and it read,

It is the duty of a party not to take action that
will cause the destruction or loss of relevant
evidence, hindering the other side from making
its own examination and investigation of all
potentially relevant evidence. You are
instructed that you may infer, by reason of
MarkWest’s failure to preserve and produce
documents relating to the RFQ for the No. 2
Ridge Road slip repair and remediation work in
July or August of 2019, that the evidence
contained in such documents was unfavorable
to MarkWest.

2. Analysis

¶ 54 MarkWest argues that the district court erred by instructing

the jury it could presume the evidence MarkWest spoliated was

unfavorable to its case. MarkWest argues that the evidence it lost

only related to its counterclaim, which it voluntarily dismissed, and

26
therefore the instruction was irrelevant to the issues before the

jury. As a result, MarkWest asserts, the instruction “only served to

paint MarkWest in a negative light,” “was highly prejudicial,” and

warrants a new trial.

¶ 55 Dyess counters that MarkWest forfeited this issue “by

submitting a conclusory opening brief” that fails to adequately cite

record support for its contentions. If the issue is reviewable, Dyess

argues that (1) it is undisputed that MarkWest spoliated evidence

that the court found MarkWest should have known to preserve, and

(2) the evidence was related to MarkWest’s contention that Dyess

was not entitled to retainage because Dyess failed to complete the

Ridge Road restoration work. Dyess argues that while MarkWest

used Dyess’s alleged failure to restore the road to justify its refusal

to pay retainage, the missing evidence could have shown that

MarkWest never wanted Dyess to complete this work and had been

trying to obtain other contractors to complete the work at a price

lower than its contract with Dyess. Finally, Dyess argues that any

alleged error was harmless.

27
a. Standard of Review and Applicable Law

¶ 56 MarkWest’s objections to the instruction preserved this issue

for appeal. See Gebert, ¶ 25.

¶ 57 “The ability to provide the jury with an adverse inference

instruction as a sanction for spoliation of evidence derives from the

trial court’s inherent powers. A trial court has broad discretion to

permit the jury to draw an adverse inference from the loss or

destruction of evidence.” Aloi v. Union Pac. R.R. Corp., 129 P.3d

999, 1002 (Colo. 2006) (citation omitted). We review a court’s

decision for an abuse of discretion, and “we will not overturn the

trial court’s imposition of an adverse inference unless the sanction

is manifestly arbitrary, unreasonable, or unfair. In determining

whether the trial court abused its discretion, we must examine

whether the rationales underlying the adverse inference supported

giving the instruction as a sanction for spoliation.” Id. (citation

omitted).

¶ 58 To this end, “adverse inference instructions serve both a

punitive and a remedial purpose.” Id. The punitive purpose “serves

to deter parties from destroying evidence in order to prevent its

introduction at trial,” while the remedial purpose “serves to restore

28
the putative prejudiced party to the position it would have held”

absent spoliation. Id.

¶ 59 As for the culpable party’s state of mind, our supreme court

held in Aloi that there was “no useful distinction between destroying

evidence in bad faith and destroying evidence willfully.” Id. at 1003.

Therefore, it is not necessary for a district court to find that the

culpable party acted in bad faith to merit an adverse inference —

willfulness will suffice where it appears the evidence would have

been relevant to an issue at trial. Id. at 1002-04 (when a defendant

had notice of an impending lawsuit but failed to preserve

documents relevant to the litigation, this was sufficient for a finding

of willfulness justifying an adverse inference).

¶ 60 Further, the district court’s “inherent power to impose a

punitive sanction is not limited to intentional spoliation of

evidence.” Pfantz v. Kmart Corp., 85 P.3d 564, 568-69 (Colo. App.

2003). Negligence may justify an adverse inference “to remediate

harm when the inference is ‘reasonably likely to have been

contained in the destroyed evidence.’” Id. at 569 (quoting Rodriguez

v. Schutt, 896 P.2d 881, 884 (Colo. App. 1994)).

29
b. Application

¶ 61 The district court did not abuse its discretion by issuing a

permissive adverse inference instruction. To start, MarkWest does

not dispute that it spoliated evidence. And the negative inference

Dyess sought to introduce — namely, that MarkWest may have

already been soliciting bids for the Ridge Road restoration work

before it construed Dyess’s request for a commitment for payment

as a “refusal” — could have been substantiated by the missing

materials. See Pfantz, 85 P.3d at 569. Therefore, MarkWest’s

spoliation merited an adverse inference instruction to remedy its

conduct that was, at the very least, negligent. See Aloi, 129 P.3d at

1002-04; Pfantz, 85 P.3d at 568-69.

¶ 62 Further, the punitive and remedial purposes of an adverse

inference instruction were served here. The instruction served a

punitive purpose by punishing MarkWest for failing to preserve

relevant documents, preventing their introduction at trial. See Aloi,

129 P.3d at 1002. And the instruction served a remedial purpose

because Dyess would have been prejudiced by the materials’ loss

without an instruction allowing the jury to infer that they could

30
have been adverse to MarkWest. See id. As a result, the district

court did not abuse its discretion.

¶ 63 Furthermore, MarkWest’s argument that the documents only

related to its counterclaim lacks merit. MarkWest defended Dyess’s

breach of contract claim in part on a theory that Dyess had failed to

complete the Ridge Road restoration work. Indeed, MarkWest’s

nonacceptance notice explicitly refused Dyess’s request for

retainage on this ground. And MarkWest repeatedly emphasized

this argument during trial. Even after MarkWest withdrew its

counterclaim, it still maintained that Dyess was not entitled to

retainage because Dyess failed to complete the Ridge Road

restoration work. During closing arguments, for example,

MarkWest’s counsel argued that a Dyess witness

told us that he simply chose . . . to
intentionally not complete restoration of No. 2
Ridge Road, . . . even though doing so was
certainly within the contract scope of work. He
acknowledged that. And there is no question
that Dyess failed to restore No. 2 Ridge Road
right-of-way in any fashion, and therefore
failed to complete this project.

31
MarkWest’s counsel’s continuation of this argument takes up nearly

six pages of the transcript, and it was mentioned several more times

even after this.

¶ 64 Collectively, because MarkWest failed to preserve documents

directly relevant to Dyess’s breach of contract claim, and because

the permissive adverse inference instruction was appropriate and

served proper punitive and remedial purposes, the district court did

not abuse its discretion by giving the challenged instruction.

III. Disposition

¶ 65 We affirm the judgment of the district court.

JUDGE HARRIS and JUDGE SCHUTZ concur.

32