Muth v. Wright

23CA2166 Muth v Wright 02-20-2025

COLORADO COURT OF APPEALS

Court of Appeals No. 23CA2166
City and County of Denver District Court No. 23CV61
Honorable Martin F. Egelhoff, Judge

Steven E. Muth, individually and on behalf of the Estate of Zachary S. Muth,

Plaintiff-Appellant,

v.

Lonnie Wright, Patrick D. Vellone, Brenton L. Gragg, and Allen Vellone Wolf
Helfrich & Factor P.C., a Colorado Professional Corporation,

Defendants-Appellees.

JUDGMENT AFFIRMED AND CASE
REMANDED WITH DIRECTIONS

Division II
Opinion by JUDGE FOX
Lum and Berger*, JJ., concur

NOT PUBLISHED PURSUANT TO C.A.R. 35(e)
Announced February 20, 2025

Westerfield & Martin, LLC, Zachary S. Westerfield, Denver, Colorado, for
Plaintiff-Appellant

Burk & Burk, Robert E. Burk, Centennial Colorado, for Defendant-Appellee
Lonnie Wright

Haddon, Morgan & Foreman, P.C., Adam Mueller, Jacob B. McMahon, Denver,
Colorado, for Defendants-Appellees Patrick D. Vellone, Brenton L. Gragg, and
Allen Vellone Wolf Helfrich & Factor P.C.
*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 Plaintiff, Steven E. Muth, appeals the district court’s decisions

(1) granting the motion of defendants Patrick D. Vellone, Brenton L.

Gragg, and Allen Vellone Wolf Helfrich & Factor P.C., a Colorado

professional corporation (collectively, Vellone) to dismiss Steven’s

complaint for failing to state a claim; and (2) rejecting Steven’s

request for entry of default judgment against defendant Lonnie

Wright. We affirm the judgment of the district court and remand

with directions.

I. Background

A. The Contract Dispute

¶2 This appeal arises from the second of two cases between

Steven, Wright, and Vellone (Wright’s counsel). In the first dispute,

in 2019, Wright sued Steven and his company MAS Corp. in

Arapahoe County Case No. 18CV32684, alleging that they

wrongfully withheld the profits of an agreement — to renovate and

1
resell homes — between Steven, Steven’s son Zachary S. Muth,1

and Wright.2

¶3 After a venue transfer, Wright sought to amend his complaint

in what was now Denver District Court Case No. 19CV89 (hereafter,

19CV89) to add claims against Zachary, alleging that because

Zachary served as the president for MAS Corp., and he and Steven

both controlled MAS Corp. and were part of the profit-sharing

agreement, Zachary needed to be joined as a defendant. The

district court allowed the amendment, noting that “the amendments

made are not futile or surprising in light of discovery.”

¶4 Before 19CV89 was resolved, Zachary passed away and Wright

dismissed the claims against him. After a bench trial, the district

court in 19CV89 issued findings of fact and conclusions of law in

favor of Wright and against Steven and MAS Corp., awarding Wright

damages for breach of contract and civil theft. Steven separately

appealed 19CV89, and a division of this court recently affirmed the

1 Because of Steven and Zachary Muth’s shared surname, we

respectfully refer to them by their first names in this opinion.
2 We may take judicial notice of the contents of court records in

related proceedings. Vento v. Colo. Nat’l Bank, 985 P.2d 48, 52
(Colo. App. 1999).

2
district court. See Wright v. Muth, (Colo. App. No. 23CA1729, Jan.

30, 2025) (not published pursuant to C.A.R. 35(e)).

B. The Wrongful Death Dispute

¶5 In 19CV89 Steven twice raised alleged ethical conflicts

between himself and Wright’s counsel. Steven’s initial pro se

answer first requested that Vellone withdraw because the firm

represented him “on very similar matters relating to construction

and more” and the firm had been “intrinsically involved with Steven

for many years,” so their involvement in the case would be “[unfair]

and unethical.” This request was omitted from subsequent

amended answers filed through Steven’s counsel, but Steven later

filed a pro se motion in 2021 again requesting Vellone’s

disqualification. According to the court’s minute orders from

December 20, 2021, the court denied the motion on the ground that

the matters Steven highlighted were not substantially related to

Wright’s case.

¶6 But, before 19CV89 was resolved, Steven, acting pro se,

separately sued Wright and Vellone on his own and Zachary’s

estate’s behalf, raising the same ethical violations. Steven later filed

two amended complaints through counsel. In the second amended

3
complaint (SAC), Steven alleged that Vellone attorneys represented

him from approximately 2002-2014 on various legal matters and

then improperly used confidential information it learned about

Steven and Zachary against him in 19CV89. Steven also alleged

that Zachary was only added to the case to force Steven to settle.

Steven then argued that Vellone’s use of confidential information,

including Zachary’s medical history, caused Zachary “extreme and

emotional hardship,” causing Zachary to use illegal drugs and die

from an overdose. Steven raised claims for abuse of process and

wrongful death against Vellone.

¶7 Steven also applied for entry of default judgment against

Wright, arguing that Wright failed to timely respond to the first

amended complaint (FAC). Two days later, Steven submitted the

SAC. Wright soon retained counsel to argue default judgment was

unwarranted because Steven had failed to serve Wright with the

FAC in accordance with C.R.C.P. 4(e)(1). Wright also pointed out

that the SAC raised no claims against him and requested he be

dismissed from the case.

¶8 Vellone moved to dismiss the SAC for failing to state a claim

under C.R.C.P. 12(b)(5). Steven’s response contested these

4
arguments, but it also explained that he was withdrawing the abuse

of process claim. But the abuse of process claim was the wrongful

act undergirding the wrongful death claim.

¶9 The district court sided with the defendants on the motion to

dismiss and the application for default judgment. In dismissing the

abuse of process claim, the court found that “although the amended

complaint sufficiently alleges ulterior motives by the defendants in

instituting the underlying lawsuit and thereafter joining Zachary

Muth as a party, the complaint contains no facts establishing an

improper use of the judicial process.” The court noted that Steven

“fail[ed] to assert any facts demonstrating how the defendants used

the judicial process in any fashion that is outside its regular and

intended course” and that the SAC was therefore facially deficient.

The district court acknowledged that, in 19CV89, the court

addressed Steven’s prior representation issue and denied the

motion to disqualify, and the district court stated here that “an

attorney’s resistance to a motion to disqualify does not constitute

an improper use of the judicial process.”

¶ 10 The court added that it took judicial notice of the findings of

fact and conclusions of law order issued in 19CV89 and that the

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“judgment ultimately entered against both Steven and Zachary

Muth in the underlying lawsuit belies any improper or untoward

use of the judicial process.” The court was careful to clarify in a

footnote that it was not taking judicial notice of the evidentiary

findings in 19CV89’s order; rather, only “of the final judgment

ultimately entered.”

¶ 11 As a result, the court found that the SAC failed to state a

viable claim for abuse of process. For wrongful death, the court

found that, because Steven failed to allege a plausible claim for

abuse of process, there was no underlying “wrongful act” to support

an inherently derivative wrongful death claim.

¶ 12 Finally, the court declined to enter default judgment against

Wright, finding that the “pleadings demonstrate that the defendant

was not properly served with process” and “[m]oreover, the original

[complaint and FAC] were superseded with the filing [of] a [SAC]”

that was never served on Wright. Furthermore, the court noted,

because it granted Vellone’s motion to dismiss the SAC, “entry of

default on a facially implausible claim is inappropriate.”

¶ 13 This appeal followed, raising two main issues. First, Steven

argues that the district court erred by granting Vellone’s motion to

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dismiss the SAC. Second, Steven argues the court erred by

declining to enter a default judgment against Wright. These

contentions were preserved. See Gebert v. Sears, Roebuck & Co.,

2023 COA 107, ¶ 25. Vellone and Wright, in turn, request appellate

attorney fees and costs.

II. Analysis

A. The SAC Was Properly Dismissed

¶ 14 Steven raises several sub-issues concerning the district court’s

dismissal of the SAC. First, he argues that the SAC sufficiently

pleaded facts alleging an abuse of process. Second, Steven alleges

the district court erred by taking judicial notice of information in

court filings from 19CV89 because the court (1) incorrectly noted

that judgment was entered against both Zachary and Steven; (2)

took notice of the court’s findings and conclusions of law in

19CV89; and (3) improperly found those rulings had a preclusive

effect in this case. Third, Steven argues the district court should

have converted the motion to dismiss into a motion for summary

judgment because it reviewed and relied on information in exhibits

attached to Vellone’s motion. Finally, Steven argues he should be

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permitted to pursue his wrongful death claim because his abuse of

process claim was viable.

1. Standards of Review and Applicable Law

¶ 15 Under C.R.C.P. 12(b)(5), a party may move to dismiss a

complaint for “fail[ing] to state a claim upon which relief can be

granted.” “[W]e review de novo the district court’s ruling on a

C.R.C.P. 12(b)(5) motion to dismiss . . . .” Peña v. Am. Fam. Mut.

Ins. Co., 2018 COA 56, ¶ 12.

¶ 16 “[T]o survive a motion to dismiss for failure to state a claim, a

plaintiff must allege a plausible claim for relief.” N.M. v. Trujillo,

2017 CO 79, ¶ 20. Complaints may be dismissed under Rule

12(b)(5) “if the substantive law does not support the claims

asserted, or if the plaintiff’s factual allegations do not, as a matter

of law, support a claim for relief.” Peña, ¶ 13 (citations omitted).

But “a court may consider only the facts alleged in the complaint,

documents attached as exhibits or referenced in the complaint, and

matters of which the court may take judicial notice”; otherwise the

court must treat the matter as a motion for summary judgment. Id.

at ¶ 14 & n.3; see also C.R.C.P. 12(b).

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¶ 17 When reviewing motions to dismiss under Rule 12(b)(5), “[w]e

accept all factual allegations in the complaint as true and view them

in the light most favorable to the plaintiff. Nonetheless, we are not

required to accept as true legal conclusions that are couched as

factual allegations.” Denver Post Corp. v. Ritter, 255 P.3d 1083,

1088 (Colo. 2011) (citation omitted); see also Walker v. Van

Laningham, 148 P.3d 391, 394 (Colo. App. 2006) (“There are a few

exceptions to this rule, such as when the facts alleged in the

complaint run counter to facts of which the court can take judicial

notice.”).

¶ 18 As relevant here, the Wrongful Death Act provides,

When the death of a person is caused by a
wrongful act, neglect, or default of another,
and the act, neglect, or default is such as
would, if death had not ensued, have entitled
the party injured to maintain an action and
recover damages in respect thereof, then, and
in every such case, the person who or the
corporation which would have been liable, if
death had not ensued, shall be liable in an
action for damages notwithstanding the death
of the party injured.

§ 13-21-202, C.R.S. 2024.

¶ 19 “[T]he right of the heirs to collect damages in a wrongful death

case does not arise from a separate tort, but instead is wholly

9
derivative of the injury to the decedent.” Steedle v. Sereff, 167 P.3d

135, 140 (Colo. 2007); see also Pizza Hut of Am., Inc. v. Keefe, 900

P.2d 97, 102 (Colo. 1995) (“The cause of action created by this

statute arises out of tortious acts which injured the decedent and

resulted in the decedent’s death . . . .”).

Any wrongful death claim, then, contains two
elements: (1) the death of a person, and (2) a
wrongful act that would have entitled the
person “injured” to maintain an action, had
the person survived. . . . [The second element]
depends upon the claim that the decedent
would have had if she had survived her
injuries.

Stamp v. Vail Corp., 172 P.3d 437, 451 (Colo. 2007) (Eid, J.,

concurring in part and concurring in the judgment only in part).

¶ 20 Finally, for abuse of process claims,

a plaintiff [must] prove the following elements:
(1) an ulterior purpose for the use of judicial
process; (2) willful action in the use of that
process which is not proper in the regular
course of the proceedings, that is, use of a
legal proceeding in an improper manner; and
(3) resulting damage.

Palmer v. Diaz, 214 P.3d 546, 550 (Colo. App. 2009). “Although the

litigant’s motive may be important in determining whether there

was an ulterior purpose, it still must be established that, viewed

10
objectively, there was an improper use of the process.” Walker, 148

P.3d at 394. The improper use at the heart of an abuse of process

claim “is the use of a legal proceeding primarily to accomplish a

purpose that the proceeding was not designed to achieve.” Id.

¶ 21 A plausible claim for relief in an abuse of process action must

allege “not only proof of an ulterior motive but proof of willful

actions by the defendant in the use of process which are not proper

in the regular conduct of a proceeding.” Id.; Trujillo, ¶ 20. “[I]f the

action is confined to its regular and legitimate function in relation

to the cause of action stated in the complaint[,] there is no abuse,

even if the plaintiff had an ulterior motive in bringing the action or

if he knowingly brought suit upon an unfounded claim.” Parks v.

Edward Dale Parrish LLC, 2019 COA 19, ¶¶ 13, 16 (second

alteration in original) (quoting Colo. Cmty. Bank v. Hoffman, 2013

COA 146, ¶ 37) (“[B]ringing a malpractice case and carrying it to its

natural end . . . doesn’t constitute an improper use of process, no

matter the motive.”). Compare Walker, 148 P.3d at 394-96 (Even

with an alleged ulterior motive, defendants’ filing of complaints

under an animal control ordinance was “a proper use of the process

mandated by the Ordinance” as the filing of complaints was

11
envisioned by the proceedings and “[a]ny advantages that they may

have obtained as a result of [plaintiff’s] convictions for violating the

Ordinance were regular and legitimate goals which the proceedings

were designed to achieve.”), and James H. Moore & Assocs. Realty,

Inc. v. Arrowhead at Vail, 892 P.2d 367, 373-74 (Colo. App. 1994)

(where party’s filing of lis pendens sought the intended use of the

process there was no abuse of process), with Colo. Homes, Ltd. v.

Loerch-Wilson, 43 P.3d 718, 723 (Colo. App. 2001) (abuse of process

finding was proper where “the jury reasonably could find that

plaintiffs’ motivation in seeking the restraining order did not relate

to any alleged assault or threat of assault”).

2. Application

a. Abuse of Process and Wrongful Death

¶ 22 The district court properly dismissed Steven’s wrongful death

claim because it is derivative of, and dependent on, his facially

deficient abuse of process claim. Steven’s abuse of process claim

was facially deficient because it did not sufficiently allege facts that,

when taken as true and viewed in the light most favorable to the

plaintiff, constituted an improper use of a legal proceeding. See

Ritter, 255 P.3d at 1088; see also Diaz, 214 P.3d at 550.

12
¶ 23 Steven’s SAC essentially alleged two abuses of process that led

to Zachary’s death. First, that Vellone learned confidential

information about Steven and Zachary after it represented Steven

and used this information to gain an “unfair advantage” in the

litigation against him and Zachary. Second, that Zachary “was

added to the lawsuit as leverage against Steven Muth . . . to force

Steven Muth to settle the claims in the underlying lawsuit.”

¶ 24 The district court correctly found that these factual allegations

met the requirements of the first element of abuse of process —

namely, that there was an alleged “ulterior purpose for the use of

judicial process.” Diaz, 214 P.3d at 550. But, even taken as true

and in the light most favorable to Steven, the district court also

correctly found that these allegations could not support the second

element — “the use of a legal proceeding primarily to accomplish a

purpose that the proceeding was not designed to achieve.” Walker,

148 P.3d at 394.

¶ 25 Wright, through Vellone, filed 19CV89 to resolve a contract

dispute among the parties, which the parties saw to its conclusion

with the court awarding Wright damages for breach of contract and

civil theft. Ultimately, Wright bringing a lawsuit “and carrying it to

13
its natural end to obtain a result such an action is designed to

achieve doesn’t constitute an improper use of process, no matter

the motive.” Parks, ¶ 16.

¶ 26 Further, Vellone’s alleged use of confidential information does

not necessarily lead to the conclusion that Vellone used the joinder

procedure in an improper manner, sufficient to support an abuse of

process claim. Zachary’s joinder, regardless of the alleged improper

motive, was granted by the district court in 19CV89 based on

discovery concerning Zachary’s connection to MAS Corp. and the

alleged agreement. This reasoning is independent of Vellone’s

alleged improper use of confidential information.

¶ 27 Because the abuse of process claim is facially deficient,

Steven’s wrongful death claim fails as a matter of law. A wrongful

death claim depends on the wrongful acts suffered by the deceased

party, and the right of action he would have been able to maintain

but for his injuries. See Keefe, 900 P.2d at 102; see also Stamp,

172 P.3d at 451. Steven cannot pursue a wrongful death claim

without Zachary having been able to maintain the abuse of process

action.

14
¶ 28 As a result, the district court did not err by dismissing the

SAC for failing to state a claim. See Trujillo, ¶ 20.

b. Judicial Notice, Facts Outside of the Pleadings, and Preclusion

¶ 29 To Steven’s claim that the district court erred by taking

judicial notice of facts and legal conclusions in the 19CV89 court

filings to preclude Steven’s abuse of process claims, we conclude

that any claimed error was harmless in light of our conclusion that

Steven’s complaint was properly dismissed for failing to state a

claim as a matter of law. See C.A.R. 35(c); C.R.C.P. 61.

¶ 30 The district court’s order overwhelmingly focused on the

allegations in the SAC, directly citing Steven’s factual allegations.

And only after concluding that the complaint was facially deficient

as a matter of law did the court add that, “[m]oreover, having taken

judicial notice of the court file in case number 19CV89, the [court]

finds that judgment ultimately entered against both Steven and

Zachary Muth in the underlying lawsuit belies any improper or

untoward use of the judicial process.” Therefore, any error

resulting from this alternative reasoning was harmless because the

court properly dismissed the complaint for failing to state a claim

15
without relying on the proceedings in 19CV89. See C.A.R. 35(c);

C.R.C.P. 61.

¶ 31 It is also clear that that the district court did not find that

findings of fact and conclusions of law in 19CV89 precluded

Steven’s claims, as the reference to the outcome in 19CV89 was

merely an additional source of support and the court did not

mention preclusion. And to the fact that the court erroneously

stated that judgment had been entered against Zachary and Steven

in 19CV89 when Zachary had been dismissed from the case, this

was also harmless. See C.A.R. 35(c); C.R.C.P. 61.

¶ 32 Our review of the district court’s order dismissing the SAC also

shows that the court did not rely on information outside of the SAC

or information not properly before it; thus there was no need to

convert the motion into one for summary judgment. See Peña,

¶ 14. The court began its order by stating that it considered “the

motion, the plaintiff’s response, the reply thereto, as well as the

supplements to those pleadings, and . . . reviewed the Court’s file

and applicable authorities.” But its background section only briefly

cites the procedural history leading to the motion and then solely

cites facts from the SAC. And in the court’s analysis for the abuse

16
of process and wrongful death claims, it relies solely on the facts

alleged in the SAC, save for its brief mention of taking judicial

notice of the filings in 19CV89.

¶ 33 As a result, the district court did not rely on improper

information outside of the complaint and did not need to treat the

motion to dismiss as a motion for summary judgment. See id. So

the court did not err.

B. The Court Properly Rejected the Application for Default
Judgment

¶ 34 Next, Steven contends that the district court erred by rejecting

his application for entry of default judgment against Wright. Steven

argues that (1) the court misapplied the requirements of C.R.C.P.

4(e)(1); (2) he did not have to serve Wright with the SAC after Steven

applied for default judgment; and (3) Wright would not be entitled to

relief from the dismissal of the SAC.

¶ 35 A default judgment may be entered “[w]hen a party against

whom a judgment for affirmative relief is sought has failed to plead

or otherwise defend as provided by these rules and that fact is

made to appear by affidavit or otherwise.” C.R.C.P. 55(a); see also

C.R.C.P. 55(b)(1) (“A party entitled to a judgment by default shall

17
apply to the court therefor . . . .”). “A default judgment comprises

two steps: ‘entry of default’ by the clerk and ‘entry of default

judgment’ by the court.” Ferraro v. Frias Drywall, LLC, 2019 COA

123, ¶ 11.

¶ 36 The court noted “that entry of default on a facially implausible

claim is inappropriate.” We agree. A similar situation to this issue

arose in Schenck v. Van Ningen, and there a division of this court

held that a district court may refuse to enter default judgment

against a defendant when “the pleadings on their face reveal that no

cause of action has been stated by plaintiffs.” 719 P.2d 1100, 1102

(Colo. App. 1986). Notably, in Schenck a codefendant had also

responded and “pled successfully for entry of summary judgment.”

Id. at 1101-02. The division noted that “[i]t would be inconsistent

to enter judgment against the [defendant] after having held the

same facts do not state a claim for relief against the [codefendant]

who, under the facts here, occupies the same legal position.” Id. at

1102. The same reasoning applies here.

¶ 37 Furthermore, Steven’s filing of the SAC rendered Wright’s non-

response to the FAC irrelevant. The SAC superseded the FAC and

became the operative pleading. See Currier v. Sutherland, 218 P.3d

18
709, 715 (Colo. 2009) (“Once a plaintiff files an amended complaint,

the original complaint is superseded, and the defendant must

answer the amended complaint.”); see also Ireland v. Wynkoop, 539

P.2d 1349, 1355 (Colo. App. 1975) (“The amended complaint, which

iterated and expanded the original complaint, superseded the

original complaint. Hence, any errors in the trial court’s ruling

regarding the original complaint were made moot or waived by the

filing of the amended complaint, and cannot be raised on this

appeal.”) (citation omitted).

¶ 38 To Steven’s final contentions — that the court misapplied

C.R.C.P. 4(e)(1), that he was not required to serve Wright with the

SAC, and that Wright was not entitled to relief from the motion to

dismiss — these arguments are largely irrelevant in light of our

conclusions that the district court properly dismissed the SAC

(which superseded the FAC) for failing to state a claim, and properly

rejected Steven’s application for default judgment. This is

particularly true given that the SAC raised no claims against

Wright. See Sutherland, 218 P.3d at 715.

19
¶ 39 Collectively, the court properly refused to enter default

judgment against Wright, the SAC superseded the FAC, and Wright

was not named in the SAC. The district court did not err.

C. Attorney Fees

¶ 40 Finally, both Vellone and Wright request appellate attorney

fees and costs. C.A.R. 39(a)(2) provides that, “if a judgment is

affirmed, costs are taxed against the appellant.” And C.A.R 39.1

provides that “[i]f attorney fees are recoverable for the appeal, . . .

the party claiming attorney fees must include a specific request . . .

and must explain the legal and factual basis for an award of

attorney fees.”

¶ 41 Vellone and Wright both argue they may recover appellate

attorney fees under section 13-17-201(1), C.R.S. 2024 (Except for

when a motion to dismiss is treated as one for summary judgment,

“where any [tort] action is dismissed on motion of the defendant

prior to trial under rule 12(b) of the Colorado rules of civil

procedure, such defendant shall have judgment for his reasonable

attorney fees in defending the action.”). See Kreft v. Adolph Coors

Co., 170 P.3d 854, 859 (Colo. App. 2007) (“An award of attorney

fees is mandatory when a trial court dismisses a tort action under

20
C.R.C.P. 12(b). A party who successfully defends a dismissal order

is entitled to recover reasonable attorney fees incurred on appeal.”)

(citations omitted); see also Patterson v. James, 2018 COA 173,

¶ 34 (“[S]ection 13-17-201 applies automatically, without regard to

whether the claims lacked justification.”).

¶ 42 Steven argues that section 13-17-201 does not apply to Wright

and Vellone because the district court should have treated the

motion to dismiss as one for summary judgment. Because we

rejected that argument, we award Wright and Vellone their fees

under section 13-17-201(1). See Kreft, 170 P.3d at 859; see also

C.A.R. 39.1. Moreover, because we have affirmed the district court

on all claims Steven advanced in this appeal, appellate costs are

taxed against him. C.A.R. 39(a)(2). We therefore exercise our

discretion under C.A.R. 39.1 to remand the case for the district

court to determine a reasonable amount of appellate attorney fees

and costs.

III. Disposition

¶ 43 We affirm the judgment of the district court and remand for

the district court to determine Vellone and Wright’s reasonable

appellate attorney fees and costs.

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JUDGE LUM and JUDGE BERGER concur.

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