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Bebo Construction Co. v. Mattox & O'Brien, P.C.
Citations: 998 P.2d 475; 2000 Colo. J. C.A.R. 1329; 2000 Colo. App. LEXIS 379; 2000 WL 371059Docket: 96CA2179
Court: Colorado Court of Appeals; March 16, 2000; Colorado; State Appellate Court
Bebo Construction Company (Bebo) appealed a decision regarding its claims against multiple defendants, including Mattox, O'Brien, P.C., and Excell Development Construction, Inc. (Excell). The Colorado Court of Appeals initially affirmed a summary judgment favoring the defendants. However, the Colorado Supreme Court reversed this decision and remanded the case for further consideration of unresolved appellate issues. The primary focus on remand was whether the trial court erred in dismissing Bebo's joint venture claim for vicarious liability against Excell due to failure to state a claim. The court found that Bebo's complaint did present a valid claim against Excell. The facts revealed that Excell and the law firm entered into a joint venture agreement where Excell provided financial support and marketing assistance to the law firm, receiving 75% of its net income in return. Bebo, alleging legal malpractice against the law firm, sought damages from Excell, claiming joint liability due to their joint venture status. The court emphasized that motions to dismiss under C.R.C.P. 12(b)(5) should be granted only if it is clear the plaintiff cannot prove any facts supporting their claim. All factual averments must be accepted as true and viewed favorably toward the plaintiff. As a joint venturer, Excell could be held liable for the negligence of the law firm's other members, as they shared joint responsibility for the venture's obligations. Bebo argued that Excell's involvement as a joint venturer rendered it liable for the legal malpractice committed by the other defendants. The court reversed the dismissal of Bebo's claim against Excell and remanded the case for further proceedings on this issue. Excell, a nonlawyer, argued that the Colorado Rules of Professional Conduct exempted it from liability to Bebo due to a joint venture's illegality. However, the trial court agreed with Excell, while the reviewing court sided with Bebo. The Colorado Rules prohibit attorneys from sharing fees or forming partnerships with nonlawyers if the partnership's activities involve the practice of law, making any agreement that violates these rules unenforceable. Consequently, Excell cannot use the Colorado Rules to defend against liability to innocent third parties. The court referenced previous cases, such as Roylex, Inc. v. Avco Community Developers, Inc., and Oppenheimer Industries, Inc. v. Firestone, which established that a party involved in an illegal contract cannot bar recovery for another party who was not aware of the illegality. The court concluded that Excell must defend against Bebo's claims, reversed the trial court's judgment, and remanded the case for further proceedings. Judges Davidson and Criswell concurred.