Case Law Update

Colorado Supreme Court

People v. Flockhart – Court declines to adopt a per se rule on challenges for cause. (SC 07/01/13).  In this criminal matter, the Court holds that while the better practice is for challenges for cause to be heard outside of the jury, a trial court retains discretion to conduct challenges for cause in open court. 

Planning Partners International, LLC v. QED, Inc. – Court holds that determination of whether, amount and apportionment of attorneys’ fee award is discretionary (SC 07/01/13). Petitioner argued that apportionment is not mandatory when determining reasonable attorney fees under a contract providing for such an award. The Supreme Court agreed, concluding that the determination of whether and how to apportion attorney fees is typically within the discretion of the trial court. Accordingly, the judgment was reversed.

Gibbons v. Ludlow – Supreme Court defines necessary evidence for real estate malpractice action (SC 07/01/13). The Supreme Court held that to sustain a professional negligence claim against a transactional real estate broker, a plaintiff must show that, but for the alleged negligent acts of the broker, he or she either: (1) would have been able to obtain a better deal in the underlying transaction; or (2) would have been better off by walking away from the underlying transaction. The Court found that here, the sellers failed to present evidence of the fact of damages, as they did not establish beyond mere possibility or speculation that they suffered a financial loss as a result of the brokers’ negligence.

Marshall v. People – Supreme Court allows supervisory expert to testify in lieu of actual technician (SC 07/01/13). In criminal trial, prosecutors called the supervisor of the toxicology lab to testify about petitioner’s level of intoxication. Although the lab supervisor did not conduct the urinalysis test herself, she supervised the testing process, reviewed all the data generated by the test, made the determination that the data accurately determined that petitioner had methamphetamine present in her urine, and certified the test results. The trial court admitted the lab report without the testimony of the lab technician who actually performed the test. The Supreme Court affirmed the district court’s ruling regarding the admission of the lab report, finding it was not “surrogate” testimony of the sort found to be problematic in Bullcoming v. New Mexico, ___ U.S. ___, 131 S.Ct. 2705 (2011), nor did it violate the statute which requires the lab employee who “accomplished the requested analysis” be available to testify at trial. The court found by performing the final analysis of the data required to certify the results as accurate, the supervisor accomplished the analysis.

Concerning the Application for Underground Water Rights, Change of Water Rights, and Plan for Augmentation of Cherokee Metropolitan District, El Paso County: Cherokee Metropolitan Dist. v. Felt, Monson & Culichia LLC. – Supreme Court holds party seeking to intervene needs to show a compelling interest that its interests were not adequately represented under Rule 24 CRCP (SC 07/01/13). The Supreme Court held that Felt, Monson & Culichia LLC (FMC) did not have a right to intervene under CRCP 24(a) because FMC did not make a compelling showing that Cherokee Metropolitan District may not adequately represent its interest in the underlying litigation. Furthermore, FMC did not establish that the water court abused its discretion in denying its motion for permissive intervention under CRCP 24(b).

Weinstein v. Colborne Foodbotics, LLC. – LLC members not liable for unlawful distribution claim of creditors (SC 06/10/13). The Supreme Court held that, pursuant to CRS § 7-80-606, an LLC’s members are liable for an unlawful distribution to the LLC but not to the LLC’s creditors. The Supreme Court also held that an insolvent LLC’s managers do not owe the LLC’s creditors the same common law fiduciary duty an insolvent corporation’s directors owe the corporation’s creditors. Accordingly, plaintiff, a creditor of an LLC, may not assert a claim for either unlawful distribution against the defendant members or common law breach of fiduciary duty against the defendant managers absent express statutory authority.

In Re DCP Midstream, LP v. Anadarko Petroleum Corp. – Supreme Court holds courts have a duty to consider appropriate scope of discovery under Rules (SC 6/24/13). The Supreme Court held that CRCP 26(b) requires trial courts to take an active role managing discovery when a scope objection is raised. The trial court must determine the appropriate scope of discovery in light of the reasonable needs of the case and tailor discovery to those needs. To resolve a dispute regarding the proper scope of discovery, the trial court should, at a minimum, consider the cost–benefit and proportionality factors set forth in CRCP 26(b)(2)(F). The Court also held that title opinions, like any document sought in discovery, may contain privileged attorney–client communications if the parameters of that doctrine are met.

Larrieu v. Best Buy Stores, L.P. – Certified question results in holding that Premises Liability statute is to be applied in case-by-case analysis (SC 06/24/13). The Supreme Court considered a certified question: whether Colorado’s premises liability statute applies as a matter of law only to those activities and circumstances that are directly or inherently related to the land. The Supreme Court held that the statute is not, as a matter of law, restricted solely to activities and circumstances that are directly or inherently related to the land. Instead, the Court held that the premises liability statute applies to conditions, activities, and circumstances on the property that the landowner is liable for in its legal capacity as a landowner. This inquiry necessitates a fact-specific, case-by-case inquiry into whether (1) the plaintiff’s alleged injury occurred while on the landowner’s real property, and (2) the alleged injury occurred by reason of the property’s condition or as a result of activities conducted or circumstances existing on the property.

Court of Appeals

Fry v. Lee – Court of Appeals more specifically defines Rule 12 (b) (5) standard (CA 06/20/13). The Post published an article about Fry after she admitted to Lee, a reporter for the Post, that she accidently plagiarized an online publication. Fry then filed an action against Lee and the Post, contending that defendants had published materially false and defamatory statements. Fry contended that, in ruling on the CRCP 12(b)(5) motion, the district court erred because it did not accept her pleaded facts as true and construe them in the light most favorable to her. Contrary to Fry’s contention, however, the district court was not required to accept the meanings alleged in her amended complaint as factual matters; instead, it properly referred to lay dictionaries to determine, as a matter of law, the ordinary and plain meanings ascribed to the challenged words. Fry also argued that the court improperly summarily dismissed her ancillary claims, including respondeat superior, negligence, negligence per se, intentional infliction of emotional distress, and deceptive trade practices, based on the failure of her defamation claims. The district court did not err in dismissing Fry’s ancillary claims, however, given that they alleged damages resulting from defendants’ purportedly defamatory statements.

In re the Estate of Wheeler: Wheeler v. Tower Building, LLC. – Court of Appeals holds that lease granting security interest in personal property in leasehold is enforceable (CA 06/20/13). David Wheeler was the sole proprietor of a jewelry store located in a building owned by Landlord. After David died, Landlord filed a claim to recover unpaid rent and interest. Landlord asserted that David’s lease for his jewelry store granted it a security interest in David’s personal property located in the store at the time of his death. Personal Rep Mary Beth Wheeler contended that Landlord did not have an enforceable security interest in David’s personal property, because the lease did not sufficiently describe the property. The Court disagreed, and held that a security interest is enforceable against the debtor and third parties if the security agreement provides a sufficient description of the collateral. Here, the lease described the collateral as all of debtor’s personal property and identified the location of the property as the leased premises, which was sufficient.

People v. McMinn – Court of Appeals finds police officer accident reconstruction testimony qualifies as expert testimony (CA 06/21/13). McMinn and his girlfriend got into a fight, and he called the police. When Police Officer Anderson arrived at his house, McMinn was already in his pickup truck. He backed out of his driveway and accelerated. Because there was packed snow and ice on the road, the truck slid sideways, striking the officer. McMinn then led the police on a chase before being apprehended. In challenging the introduction of the police officers testimony as being expert testimony and not lay testimony, the Court of Appeals noted that police officers regularly and appropriately offer testimony under CRE 701 based on their perceptions and experiences, but that a police officer’s testimony becomes objectionable, however, when what is essentially expert testimony is improperly admitted under the guise of lay opinions. In determining whether testimony is lay or expert, trial courts are instructed that they should consider whether the opinion results from a process of reasoning familiar in everyday life, or a process of reasoning that can be mastered only by specialists in the field. Here, the officer testified using “time-distance analysis,” that he had determined that the truck’s acceleration rate was “10.99 feet per second squared,” and he calculated the truck’s speed and its exertion of “about 171,000 pounds of foot force.” This testimony was found to be expert in nature, but harmless.

Mikes v. Burnett – Owner of trespassing steers not strictly liable for cowboy’s injuries (CA 06/20/13). In July 2010, steers owned by Burnett and J & V Diller wandered onto neighboring land owned by Lester Friend. Friend asked several individuals, including Mikes, if they would assist him in herding the steers off his property. While Mikes was attempting to separate Burnett’s steers from Friend’s cows using his four-wheel vehicle, the vehicle flipped several times, and he was injured. On appeal, Mikes contended that the trial court erred in granting summary judgment on his trespass claims. Specifically, he argued that he could maintain a claim for trespass of the steers because he was in possession of Friend’s land when he was injured. The owner of livestock is strictly liable for damages caused when the livestock trespass on another’s land. Further, a claim for trespass may be asserted by anyone injured while in possession of that land. Mikes did not claim he constructively possessed Friend’s land, and it was undisputed that Mikes does not own the land. Further, the record did not establish that Mikes had anything more than a temporary right to enter Friend’s land to help move the steers, and there is no evidence in the record suggesting that Friend granted Mikes any right to occupy, control, or manipulate the land in any manner. Consequently, as a matter of law, he could not maintain a trespass claim against defendants.

Tenth Circuit Court of Appeals

Wittner v. Banner Health – Tenth Circuit finds no state action in authorizing involuntary commitment and holds that Rule 59(c)requires removal to be applicable  (10th Cir. 06/24/13). Ian Wittner died at the North Colorado Medical Center after being injected with the drug Haldol during a seventy-two-hour involuntary mental health hold. His parents, Lizbeth Cardenas and George Wittner, brought a § 1983 claim against the Medical Center, the doctor, and the nurse involved in their son’s treatment. The district court granted summary judgment for the defendants and denied the plaintiffs’ F.R.C.P. 59(e) motion to retain jurisdiction over their state law tort claims. On appeal, Plaintiffs contended the state of Colorado transformed the private medical facility and its health care employees into state actors by assuming the power to authorize the involuntary commitment of mentally ill persons and delegating that power to designated facilities which the state regulates. Noting that private actors may be considered state actors for constitutional deprivation purposes if the facts meet one of four tests: (1) the nexus test, (2) the public function test, (3) the joint action tests, and (4) the symbiotic relationship test, the Tenth Circuit held that the defendants in this case were not state actors and reversed the court’s denial of defendants’ Rule 12(b) (6) motion. The court affirmed the denial of the plaintiffs’ Rule 59(e) motion to remand to state court because the trial court could not remand state law claims that had never been removed from state court.

Hackstaff Law Group, LLC v. Hartford Casualty Insurance Co., (D. Colo. June 11, 2013) (Matsch). The allegations of the Complaint were that even though the law firm knew Donald and R2 had no right to convey an ownership interest, they “conspired . . . to design [a] sham transaction” conveying an interest in the Subject Property, and did so “with full knowledge of its fraudulent purpose and intended fraudulent effect.” The law firm argued that the claims of legal malpractice and aiding and abetting a breach of fiduciary duty claims may be satisfied by a showing of mere negligence, the “state of mind” exclusion should not apply. The court held that, by its terms, the Exclusion is not limited to claims that require proof of unlawful purpose or intent; rather, it is broader, applying to claims arising out of acts committed with such purpose or intent. Therefore, the focus is, first, whether the allegations show that the insured acted with dishonest, fraudulent, or malicious purpose or intent, and second, whether the claims against the insured flow from that conduct. The dishonesty exclusion barred coverage when such claims “arise out of” acts that require proof of unlawful purpose or intent.

UNITED STATES SUPREME COURT DECISIONS

Products Liability. United States Supreme Court held that state law design defect claims against manufacturers of generic pharmaceuticals are preempted by federal law when the claim hinges on the adequacy of the drug’s warning. In the case at issue, the plaintiff argued at trial that the maker of a drug was liable on a defective design theory because the drug “was unreasonably dangerous and had an inadequate warning.” Finding that it would have been impossible for the manufacturer to have complied with both the FDA’s regulations promulgated under the Hatch-Waxman Amendments and state tort law duties, the Court reversed a $21 million verdict. [Note that the First had affirmed based on the premise that the defendant manufacturer could have complied with both federal and state law by choosing not to make the drug]. Mutual Pharmaceutical Co. Inc. v. Bartlett, (U.S. June 24, 2013), 570 U.S. ___ (2013). The Court acknowledged the “passionate responses” engendered from the often serious injuries in products liability cases, “[b]ut sympathy for [the plaintiff] does not relieve [the Court] of the responsibility of following the law.”

1. On June 24, 2013, the United States Supreme Court issued two decisions that provide additional protections to employers defending claims made under Title VII of the Civil Rights Act of 1964. One decision, University of Texas Southwestern Medical Center v. Nassar, requires a heightened level of proof to establish causation in retaliation claims made under Title VII. In Nassar, the Court ruled that retaliation claims require proof that the desire to retaliate was the “but-for” cause for the alleged retaliation. In other words, plaintiffs must prove that the harm would not have occurred ‘but for’ the wrongful conduct [desire to retaliate] of the employer.

The other case, Vance v. Ball State University, limits the circumstances under which an employer may be held vicariously liable for harassment claims under Title VII by restricting the definition of a supervisor. Under Title VII, if the harasser is a coworker, the employer will be liable only if the plaintiff can show that the employer knew or should have known of the harassment but failed to correct it. If the alleged harasser is a supervisor, however, Title VII imputes the supervisor’s acts to the employer. Thus, the issue is what is a “supervisor” for purposes of Title VII. The court held that a person must be “empowered” to take tangible employment actions against the victim — that is to be a supervisor, the person must be able to hire, fire, determine promotions, reassign with significantly different responsibilities or decide a significant change in benefits. An employee who merely directs or controls some aspects of an individual’s day-to-day responsibilities — such as a “team leader” — is likely not a supervisor under Title VII.