Colorado’s second-highest court on Thursday determined the $5.7 million a trial judge awarded a subcontractor for its work on the Regional Transportation District’s commuter rail expansion is invalid because the company initially sought more than two times that amount without any basis for doing so.

A three-judge panel for the Court of Appeals interpreted for the first time certain provisions of Colorado’s Public Works Act. Broadly, the law ensures financial security to subcontractors on public projects. If a subcontractor provides “labor, materials, sustenance, or other supplies” and the contractor has not paid, the subcontractor files a verified statement of the amount due to start the process for reimbursement.

However, the law also contains a penalty for subcontractors who knowingly exaggerate the amount they are owed: they “shall forfeit all rights to the amount claimed.“

Consequently, the panel found that when Ralph L. Wadsworth Construction Company sought $12.7 million for its work on the RTD project, only to be awarded $5.7 million after trial, its overreach triggered the provision invalidating the entire award.

“While this sanction may seem drastic, it is the only reasonable reading the statutory language can bear,” wrote Judge Ted C. Tow III in the Aug. 1 opinion.

Attorneys for the plaintiffs and the defendants did not respond to a request for comment about the first precedent-setting decision to interpret the Public Works Act’s trigger since lawmakers added it 21 years ago.

RLW became a subcontractor on RTD’s N Line to Thornton, performing work for the project’s construction contractor, Regional Rail Partners. The project encountered delays and defects, with both parties pointing the finger at each other.

“The Project required incredibly detailed planning from start to finish to harness the expertise of all the parties, who were often working disparately toward the end goal: coming together with a project that would allow safe, reliable, fast transport to the residents of the North Corridor,” wrote Denver District Court Judge Darryl F. Shockley in a September 2022 order. “At trial, it was obvious that accomplishing this goal subjected all the parties involved to continuous stress which exacerbated any personality conflicts existing between the individuals involved.”

RLW filed a verified claim under the Public Works Act claiming Regional Rail Partners owed it more than $15.7 million. Later, it revised its request to roughly $12.7 million. After trial, Shockley determined RLW was only owed $5.7 million.

In his order, Shockley spent two paragraphs addressing Regional Rail Partners’ claim that RLW had triggered the forfeiture provision of the Public Works Act by knowingly filing a verified statement for an unreasonably large claim.

“No Colorado appellate court has ever construed (the forfeiture trigger), so there is no guidance for this Court on when a claim exceeds the amount due,” Shockley responded. “The Court finds that there was a reasonable possibility the amount RLW sought in the (statement) was due.”

On review, the Court of Appeals panel struggled to understand how Shockley reached that conclusion in his order.

“Nor did it consider whether the specific amounts claimed were limited to ‘labor, materials, sustenance, or other supplies,'” Tow wrote. “To the contrary, in our view, the record unequivocally establishes there was no such possibility.”

The panel determined RLW had relied on “impacts, delays, disruptions, interference and other problems associated with the Project” as grounds for its complaint. But Tow noted the purpose of the Public Works Act is for subcontractors to file claims over services undisputably provided — not for financial damages stemming from disputed delays.

The evidence showed RLW’s verified statement against Regional Rail Partners “was for an amount greater than the amount due, that there was no reasonable possibility that the entire amount of the claim was due,” Tow concluded, “and that Wadsworth knew that the claim was for an amount greater than the amount due because it included amounts that were not (covered).”

Consequently, the panel deemed RLW to have forfeited its entire claim. The judges also believed Shockley’s award of $200,000 to Regional Rail Partners was a mistake because Shockley found, simultaneously, the contractor “delayed and disrupted” portions of RLW’s work.

The case is Ralph L. Wadsworth Construction Company, LLC. v. Regional Rail Partners et al.