Mordhorst Cleaning v. Cardamone

23CA0781 Mordhorst Cleaning v Cardamone 09-12-2024

COLORADO COURT OF APPEALS

Court of Appeals No. 23CA0781

City and County of Denver District Court No. 22CV305

Honorable Stephanie L. Scoville, Judge

Mordhorst Cleaning, LLC, d/b/a Blue Ribbon Exteriors and Construction,

Plaintiff-Appellee,

v.

Geoff Cardamone and Katie Cardamone,

Defendants-Appellants.

JUDGMENT AFFIRMED

Division II

Opinion by JUDGE SCHOCK

Fox and Johnson, JJ., concur

NOT PUBLISHED PURSUANT TO C.A.R. 35(e)

Announced September 12, 2024

Allen & Curry P.C., Theodore A. Wells, Denver, Colorado, for Plaintiff-Appellee

The Arriola Law Firm, LLC, Erick S. Arriola, Englewood, Colorado, for

Defendants-Appellants

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¶ 1 Defendants, Geoff Cardamone and Katie Cardamone (the

Cardamones), appeal the judgment entered for them and against

plaintiff, Mordhorst Cleaning, LLC, d/b/a Blue Ribbon Exteriors

and Construction (Blue Ribbon), following a bench trial. We affirm.

I. Background

¶ 2 Months after the Cardamones moved into their new home, the

fire suppression system froze and a pipe burst, causing extensive

water damage. The Cardamones filed an insurance claim and hired

a public adjuster to assist them with the insurance claim process.

¶ 3 The Cardamones hired Blue Ribbon to serve as the general

contractor for the repairs. The parties entered into one contract for

the repair of the fire suppression system and another for the repair

of the damage caused by the burst pipe. Neither contract included

a price for the work. Instead, the contracts provided that “materials

and specialty trade contractors shall be billed at cost plus twenty

percent . . . subject to change without notice,” and the general

contractor “shall be entitled to 10% overhead and 10% of the

amounts due and owing for repairs completed.” The parties entered

into additional agreements for other work not covered by insurance.

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¶ 4 The public adjuster made several payments to Blue Ribbon

out of the insurance proceeds. But the Cardamones did not have

sufficient insurance coverage to pay the full cost of the repair and

restoration. So several months into the project, they requested

detailed information from Blue Ribbon about the remaining costs.

The owner and managing partner of Blue Ribbon, Ryan Mordhorst,

refused to provide the information, deeming it an unreasonable

request. Ten days later, Blue Ribbon stopped work on the project,

though the parties dispute who terminated the relationship.

¶ 5 Blue Ribbon sent the Cardamones a final invoice for

$13,940.54, which the Cardamones did not pay.

¶ 6 Blue Ribbon then sued the Cardamones for the unpaid

invoice. The Cardamones asserted counterclaims for breach of

contract, civil theft, and unjust enrichment. They alleged that Blue

Ribbon had (1) failed to complete the work required by the parties’

contracts; (2) failed to pay subcontractors and material suppliers, in

violation of section 38-22-127, C.R.S. 2024; and (3) retained money

for work it did not perform and materials it did not deliver.

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¶ 7 After a two-day bench trial, the district court found in favor of

Blue Ribbon on some issues and in favor of the Cardamones on

others. Four of those rulings are at issue in this appeal:

(1) The district court ruled against the Cardamones on their

claim for civil theft, finding that they failed to prove Blue

Ribbon received funds for the payment of any

subcontractor that it failed to pay, or that it acted with

the requisite state of mind in doing so.

(2) The court rejected the Cardamones’ claim of unjust

enrichment related to Blue Ribbon’s markup for cabinets

because the Cardamones agreed to the price for the

cabinets in separate contracts.

(3) The court rejected the Cardamones’ claim of unjust

enrichment for payments relating to the handling of their

personal property, finding that they had suffered no

losses that were not covered by insurance and that Blue

Ribbon had acted as a middleman for this work.

(4) The court found that the Cardamones were liable for

$5,653.99 for additional framing work. The court noted

that this amount was not included in Blue Ribbon’s

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original complaint, but it concluded that the issue was

tried by consent because Blue Ribbon presented evidence

on this point at trial and the Cardamones did not object.

¶ 8 After awarding prejudgment interest and offsetting the

amounts awarded to each party, the court entered judgment in

favor of the Cardamones in the total amount of $8,768.74.

II. The Cardamones’ Claims

¶ 9 The Cardamones contend that the district court erred by

denying their claims for (1) civil theft; (2) excess cabinet markup;

and (3) Blue Ribbon’s retention of funds for personal property

services.

A. Standard of Review

¶ 10 Our review of a judgment following a bench trial presents a

mixed question of fact and law. State ex rel. Weiser v. Ctr. for

Excellence in Higher Educ., Inc., 2023 CO 23, ¶ 33. We review the

district court’s factual findings for an abuse of discretion and its

legal conclusions de novo. Id. In doing so, we defer to the district

court’s credibility findings and its assessment of the weight and

probative effect of the evidence. Amos v. Aspen Alps 123, LLC, 2012

CO 46, ¶ 25; Saturn Sys., Inc. v. Militare, 252 P.3d 516, 521 (Colo.

5

App. 2011). It is not our role to decide the facts or substitute our

judgment for that of the district court, and we will not disturb the

district court’s findings of fact “unless they are so clearly erroneous

as to find no support in the record.” Saturn Sys., 252 P.3d at 521.

B. Civil Theft

¶ 11 The Cardamones contend that the district court erred in

applying section 38-22-127 to their civil theft claim arising out of

payments owed to three subcontractors: Ridge Construction (Ridge),

The Contents Company (TCC), and Electronic Restoration Services

(ERS). They assert that Blue Ribbon received payments intended

for these subcontractors but intentionally failed to fully pay them.

Because the Cardamones have not shown that the district court’s

findings to the contrary are clearly erroneous, we affirm its ruling.

1. Additional Background

¶ 12 Blue Ribbon subcontracted with Ridge to obtain the framing

permit for the project. Ridge submitted the permits and invoiced

Blue Ribbon for the permitting fees. Blue Ribbon did not pay the

invoice, but it included the permitting fees in its final invoice to the

Cardamones. The Cardamones did not pay that invoice, and the

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district court found that Blue Ribbon had not been compensated for

the permit by the public adjuster or the Cardamones.

¶ 13 The Cardamones contracted directly with TCC and ERS for

services related to their personal property insurance claim,

including inventorying, packing, cleaning, storing, and redelivering

their personal property. Although Blue Ribbon did not contract

with either TCC or ERS, it served as an intermediary between those

companies and the Cardamones. TCC and ERS submitted invoices

to Blue Ribbon, which passed them on to the public adjuster. The

public adjuster then paid Blue Ribbon, and Blue Ribbon paid TCC

and ERS after taking out a charge for its own overhead and profit.

¶ 14 Blue Ribbon paid TCC more than $40,000 and ERS more than

$8,000. But after Blue Ribbon stopped working on the project, both

companies billed the Cardamones additional amounts. Blue Ribbon

eventually paid TCC in full. Although the Cardamones asserted

that they paid a final past due invoice to ERS, the district court

found the evidence was insufficient to prove that they did so.

2. Analysis

¶ 15 Colorado’s construction trust fund statute, section 38-22-

127(1), provides:

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All funds disbursed to any contractor . . .

under any . . . construction, or remodeling

contract or on any construction project shall

be held in trust for the payment of the

subcontractors . . . who have a lien, or may

have a lien, against the property, or who claim,

or may claim, against a principal and surety

under the provisions of this article and for

which such disbursement was made.

A violation of this subsection constitutes theft, as defined in section

18-4-401, C.R.S. 2024. § 38-22-127(5); see also § 18-4-405, C.R.S.

2024 (providing for civil action to recover treble damages for theft).

¶ 16 Colorado courts have construed theft under section 38-22-

127(5) to incorporate the culpable mental states in section 18-4-

401(1). See People v. Anderson, 773 P.2d 542, 544 (Colo. 1989); see

also Franklin Drilling & Blasting, Inc. v. Lawrence Constr. Co., 2018

COA 59, ¶ 18 (holding that a plaintiff must prove a culpable mental

state to prove civil theft under similar Public Work Trust Fund

statute, section 38-26-109, C.R.S. 2024). One such culpable

mental state is that the defendant “[k]nowingly uses . . . the thing of

value in such manner as to deprive the other person permanently of

its use or benefit.” § 18-4-401(1)(b). This means the defendant

must “be aware that his manner of using the trust funds is

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practically certain to result in depriving another person of the use

or benefit of the funds.” Anderson, 773 P.2d at 545.

¶ 17 The district court found that the Cardamones did not prove

Blue Ribbon failed to pay Ridge, TCC, or ERS any amounts for

which it received payment from the Cardamones. As to Ridge, the

court found that Blue Ribbon did not receive payment from the

Cardamones for the permits. As to TCC, the court found that it was

paid in full. And as to ERS, the court found that the Cardamones

failed to prove that they were required to pay an additional invoice.

The court also found that there was no evidence that Blue Ribbon

held any additional funds in trust for payment of ERS.

¶ 18 The Cardamones do not point to anything in the record that

refutes these findings. Instead, they argue more generally that

because Blue Ribbon received total funds that exceeded the

amounts due, it was required to pay all outstanding amounts before

taking any profit. But section 38-22-127(1) does not require a

contractor to hold all funds it receives on a project in trust until all

subcontractors have been paid. It requires the contractor to hold

funds in trust for the payment of subcontractors “for which such

disbursement was made.” § 38-22-127(1). In other words, a

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contractor must pay a subcontractor all amounts for which the

contractor itself has received payment. The Cardamones do not

identify any evidence that they made payments to Blue Ribbon for

the purpose of paying Ridge for permits or paying TCC or ERS for

the amounts billed after Blue Ribbon stopped work on the project.

¶ 19 The Cardamones cite Mordhorst’s testimony that Blue Ribbon

received more money for framing related work than it paid Ridge.

That testimony does not show that Blue Ribbon received any funds

for the permits. To the contrary, Mordhorst testified that the

Cardamones refused to pay anything for the permits. And the

“permits” line item on the final invoice — which the district court

found the Cardamones had not paid — supports that conclusion.

Similarly, the fact that Blue Ribbon received payments for other

amounts billed by TCC and ERS does not show that it received

payment for the amounts that were billed several months later.

¶ 20 The district court also found that Blue Ribbon did not act with

the requisite state of mind to commit civil theft with respect to

either the permitting fees or the personal property claims. See

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Anderson, 773 P.2d at 544. That finding is not clearly erroneous.

1

Mordhorst’s testimony that he received more money for framing

related work than he paid Ridge does not establish that Blue

Ribbon was aware that its conduct was “practically certain” to

deprive the Cardamones of the use of funds intended for the

payment of permits. See id. Nor does Mordhorst’s retention of

overhead and profit on earlier invoices from TCC and ERS establish

that Blue Ribbon knowingly deprived the Cardamones of the use of

funds intended for the payment of other personal property invoices.

That is particularly true given the nature of the parties’ ongoing

disputes. See § 38-22-127(2) (providing that a contractor need not

hold funds in trust if the contractor “has a good faith belief that

such . . . claim is not valid or . . . , in good faith, claims a setoff”).

¶ 21 Finally, to the extent the Cardamones contend that Blue

Ribbon violated section 38-22-127(3) by failing to maintain

adequate records of account for the project, such a violation — even

1

The Cardamones assert that the interpretation and application of

section 38-22-127, C.R.S. 2024, is a question of law that we review

de novo. But they have not identified any legal error in the district

court’s application of the statute. Their disagreement with the

court’s factual findings does not mean the court misapplied the law.

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if proved — would not prove their theft claim. See § 38-22-127(5)

(limiting “theft” to a violation of subsections (1) and (2)).

¶ 22 Thus, the district court did not clearly err in finding that Blue

Ribbon did not receive funds for the payment of Ridge, TCC, or ERS

that it failed to pay to those entities. In light of that finding, the

district court correctly denied the Cardamones’ civil theft claim.

C. Cabinet Claim

¶ 23 The Cardamones next argue that the district court erred by

denying their claim for unjust enrichment based on Blue Ribbon’s

markup for the cabinets, which exceeded the twenty percent

markup in the parties’ primary contracts. We are not persuaded.

1. Additional Background

¶ 24 The Cardamones selected and ordered custom cabinetry

through the Flooring Group. Because the Flooring Group is a

wholesaler, it did not invoice the Cardamones directly. Instead, it

invoiced Blue Ribbon, which then invoiced the Cardamones. The

Flooring Group charged Blue Ribbon $22,347.17 for the kitchen

cabinets and $4,821.13 for the bathroom vanities. Blue Ribbon

charged the Cardamones $39,757.19 and $7,556.76, respectively.

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¶ 25 Mr. Cardamone signed separate contracts with Blue Ribbon

for the cabinets and vanities. Mr. Cardamone testified at trial that

he was concerned that the price of the cabinetry was excessive, but

he felt pressure to agree to it due to time constraints. He signed the

agreement after Mordhorst told him “[t]he price is the price.” The

cabinets were delivered damaged and the wrong color. But by that

time, Blue Ribbon had stopped working on the project, and it

refused to work with the Flooring Group to correct the issues.

¶ 26 In their post-trial brief, the Cardamones asserted that Blue

Ribbon had been unjustly enriched to the extent its markup

exceeded the standard twenty percent markup in the parties’

primary contracts. The district court rejected the claim because the

cabinets were covered by separate contracts confirming the price.

2. Analysis

¶ 27 Unjust enrichment is “a quasi-contractual, equitable remedy

designed to undo a benefit conferred on one party at the unfair

expense of another party.” Pulte Home Corp. v. Countryside Cmty.

Ass’n, 2016 CO 64, ¶ 63. It “seeks to restore fairness . . . when the

plaintiff has no alternative right under an enforceable contract.”

Alderman v. Bd. of Governors of Colo. State Univ., 2023 COA 61,

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¶¶ 22-23 (cert. granted May 6, 2024). But “[a] party generally

cannot recover for unjust enrichment . . . where there is an express

contract addressing the subject of the alleged obligation to pay.”

Pulte Home Corp., ¶ 64.

¶ 28 The record supports the district court’s finding that the

Cardamones and Blue Ribbon entered into separate contracts for

the cabinetry that set its price. Mordhorst testified that the parties

entered into one contract for the kitchen cabinets and one for the

bathroom vanities, both of which stated the price the Cardamones

owed. He also testified that the Cardamones had an opportunity to

ask questions about the price before they signed the contracts. Mr.

Cardamone similarly testified as to these separate agreements. And

although he thought the price was high and felt pressured to sign

the agreements, he acknowledged that he signed them voluntarily.

¶ 29 The Cardamones assert that the district court’s finding that

the cabinets and vanities were subject to separate agreements “does

not comport [with] the evidence presented.” But they don’t explain

why, particularly in light of the testimony above. They do not cite

anything in the record to support their assertion that the cabinets

were included in the primary rebuild contract and, thus, limited to

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a twenty-percent markup. See C.A.R. 28(a)(7)(B) (requiring

appellant to cite “the authorities and parts of the record on which

the appellant relies”); Brighton Sch. Dist. 27J v. Transamerica

Premier Ins. Co., 923 P.2d 328, 335 (Colo. App. 1996) (“[I]t is not the

duty of the reviewing court to search the record for evidence to

support bald assertions.”), aff’d, 940 P.2d 348 (Colo. 1997). And

even if they were, the Cardamones do not explain why the parties

could not later separately agree on the price for those cabinets.

¶ 30 The Cardamones also hint at several factual challenges to the

cabinet contracts and Blue Ribbon’s performance, including that

the markups were “beyond excessive,” that Blue Ribbon delayed

payment to the cabinet supplier, and that Blue Ribbon did not

assist in resolving the incorrect delivery. But none of these

arguments negate the district court’s finding that enforceable

contracts existed. And although the Cardamones assert that they

were “under duress of timing and financial pressures,” they do not

dispute Mr. Cardamone’s concession that he signed the contracts

voluntarily. Having agreed to the prices for the cabinets, the

Cardamones could not claim Blue Ribbon was unjustly enriched.

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D. Personal Property Claim

¶ 31 The Cardamones also assert that the district court erred by

denying their unjust enrichment claim related to Blue Ribbon’s

retention of funds for serving as the middleman between the

Cardamones and the companies handling the personal property

claim. They contend that Blue Ribbon was not entitled to retain

any portion of such funds because their contract with Blue Ribbon

did not cover the personal property portion of the claim and the

Cardamones were not aware that Blue Ribbon was involved.

¶ 32 To prevail on an unjust enrichment claim, a plaintiff must

prove that (1) the defendant received a benefit (2) at the plaintiff’s

expense (3) under circumstances that would make it unjust for the

defendant to retain the benefit without commensurate

compensation. Pulte Home Corp., ¶ 63. When the parties have an

express contract, a party may still recover for unjust enrichment for

matters outside of the contract. Id. at ¶ 64. We review the district

court’s ruling on an unjust enrichment claim for an abuse of

discretion. Lewis v. Lewis, 189 P.3d 1134, 1140 (Colo. 2008).

¶ 33 The district court agreed with the Cardamones that no

contract covered Blue Ribbon’s handling of the Cardamones’

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personal property claim. But it found that the Cardamones did not

prove the second and third elements of their claim because (1) they

did not show that their personal property expenses were not fully

covered by insurance; and (2) the public adjuster, who acted as the

Cardamones’ agent, knew Blue Ribbon was serving in that role.

¶ 34 The Cardamones do not meaningfully challenge either of these

findings. Although they assert that they were “left to cover a

portion of [TCC’s and ERS’s] bills,” they do not cite any record

support for that assertion, and the district court found otherwise.

C.A.R. 28(a)(7)(B); see also Makeen v. Hailey, 2015 COA 181, ¶ 49

(“[W]e will not comb the record in search of additional facts to

support this claim.”). Beyond that, the Cardamones highlight facts

(again without record citation) that were either undisputed or

immaterial to the court’s resolution of their claim — namely, that

they contracted directly with TCC and ERS and that they did not

agree to Blue Ribbon’s involvement. Neither of these facts refutes

the district court’s determination that there was no unjust

enrichment where the Cardamones’ agent knew what was going on

the entire time and approved of Blue Ribbon’s participation.

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¶ 35 We therefore conclude that the district court did not abuse its

discretion by denying the Cardamones’ claim for unjust enrichment

related to Blue Ribbon’s handling of the personal property claim.

III. Noninsurance Framing Cost

¶ 36 The Cardamones also contend that the district court erred by

awarding Blue Ribbon the unpaid amount for additional framing

work that Blue Ribbon did not plead in its complaint.

A. Additional Background

¶ 37 In its complaint, Blue Ribbon alleged that it was owed the

amount of its final invoice. Blue Ribbon’s damage disclosure and

the trial management order similarly stated that Blue Ribbon

sought to recover as damages the amount of the final invoice.

¶ 38 At trial, Blue Ribbon’s counsel asked Mordhorst about another

category of damages that was not included in the final invoice.

Specifically, Mordhorst testified that the Cardamones still owed

Blue Ribbon $5,653.99 for framing changes that were not covered

by insurance. He requested that this amount be awarded or

credited to Blue Ribbon. The Cardamones’ counsel did not object to

this testimony, but on cross-examination, he introduced Blue

Ribbon’s damages disclosure as an exhibit to show that Mordhorst’s

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testimony was inconsistent with that disclosure. On cross-

examination, Mr. Cardamone acknowledged that the Cardamones

had not paid the full balance of the noninsurance framing invoice,

but he said that it was because the framing was not completed.

¶ 39 The district court awarded Blue Ribbon the unpaid amount of

that invoice. It recognized that the amount was not included in

Blue Ribbon’s complaint, but it concluded that the issue had been

tried by consent because the Cardamones did not object.

B. Applicable Law and Standard of Review

¶ 40 C.R.C.P. 54(c) provides that “every final judgment shall grant

the relief to which the party in whose favor it is rendered is entitled,

even if the party has not demanded such relief in [its] pleadings.”

See also Twp. Homeowners Ass’n v. Arapahoe Roofing & Sheet Metal

Co., 844 P.2d 1316, 1318 (Colo. App. 1992) (“[T]he relief ultimately

granted is governed not by the demand [in the complaint], but by

the facts alleged, the issues, and the proof.”).

¶ 41 Thus, “[w]hen issues not raised by the pleadings are tried by

express or implied consent of the parties, they shall be treated in all

respects as if they had been raised in the pleadings,” even if the

pleadings are not amended. C.R.C.P. 15(b). A party who fails to

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object to the introduction of evidence concerning such an issue is

deemed to consent. Bittle v. CAM-Colorado, LLC, 2012 COA 93,

¶ 43. Under such circumstances, the district court “has the duty to

consider [the] issue . . . even if the matter was not pled and no

formal application was made to amend” the pleadings, so long as

the issue was “intentionally and actually tried.” Id. at ¶¶ 43-44.

¶ 42 We review the district court’s decision to address an issue not

raised in the pleadings for an abuse of discretion. Id. at ¶ 41.

C. Analysis

¶ 43 We conclude that the district court did not abuse its discretion

by awarding Blue Ribbon the unpaid amount of the noninsurance

framing costs for three reasons.

¶ 44 First, the issue was “intentionally and actually tried.” Id. at

¶ 44. Not only did Mordhorst testify that Blue Ribbon was owed

this amount, but he explicitly requested that it be awarded to Blue

Ribbon as part of the judgment in the case. Blue Ribbon’s counsel

also cross-examined Mr. Cardamone about the remaining balance.

Then, in Blue Ribbon’s proposed findings of fact after trial, which

the district court ordered in lieu of closing argument, Blue Ribbon

requested that the court award it that amount. Thus, Blue Ribbon

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did more than merely present “some evidence . . . germane to the

issue.” Id. (citation omitted). It put the Cardamones on notice that

Blue Ribbon was seeking to recover that amount.

¶ 45 Second, the Cardamones did not object to Mordhorst’s

testimony. See id. at ¶ 43 (“[C]onsent is generally found when

evidence is introduced without objection . . . .”) (citation omitted).

Although their counsel later introduced Blue Ribbon’s damage

disclosure to show that Mordhorst’s testimony was inconsistent

with it, he did not argue that Blue Ribbon was precluded from

seeking the additional amount. Nor did he object to Blue Ribbon’s

cross-examination of Mr. Cardamone on the same point.

¶ 46 Third, even if the Cardamones did not consent to try the issue,

they have not shown that they were prejudiced. See Davis v.

GuideOne Mut. Ins. Co., 2012 COA 70M, ¶ 73. Prejudice in this

context means “a lack of opportunity to prepare to meet the

unpleaded issue.” Id. at ¶ 74 (citation omitted). As the district

court noted, there was no dispute that Blue Ribbon had billed the

Cardamones for this amount and the Cardamones had not paid it.

To the extent the Cardamones assert that they did not pay the

21

balance because “the framing wasn’t completed,” they had ample

opportunity to litigate that issue as part of their counterclaim.

¶ 47 The district court therefore did not abuse its discretion in

considering this unpleaded issue under C.R.C.P. 15(b).

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IV. Disposition

¶ 48 The judgment is affirmed.

JUDGE FOX and JUDGE JOHNSON concur.

2

The Cardamones’ reference to the district court’s denial of their

pretrial motion to amend their counterclaims to add additional

parties is a non sequitur. That motion — which Blue Ribbon

opposed — has nothing to do with whether the unpaid framing

invoice issue was tried by the consent of the parties.

Case Details

Case Name: Mordhorst Cleaning v. Cardamone

Court Name: Colorado Court of Appeals

Date Published: Sep 12, 2024

Docket Number: 23CA0781

Court Abbreviation: Colo. Ct. App.