August 20, 2017

Colorado Supreme Court: Motion to Disqualify Under Colo. RPC 1.9(a) Rarely Raises “Identical” Issue to Other Case

The Colorado Supreme Court issued its opinion in In re Villas at Highland Park Homeowners Association, Inc. v. Villas at Highland Park, LLC on Monday, May 22, 2017.

Issue Preclusion—Attorney Disqualification—Colo. RPC 1.9.

In this original proceeding under C.A.R. 21, the supreme court reviewed a district court’s order applying the doctrine of issue preclusion to deny defendants’ motion to disqualify one of the plaintiff’s attorneys under Colo. RPC 1.9 and to disqualify her law firm by imputation of the attorney’s conflict under Colo. RPC 1.10. The disqualification inquiry under Colo. RPC 1.9(a) asks whether an attorney’s prior representation and current representation are “substantially related.” This inquiry under Colo. RPC 1.9(a) is specific to the particular matter for which disqualification is sought. The supreme court therefore concludes that a motion to disqualify under Colo. RPC 1.9(a) will rarely, if ever, raise an “identical” issue to a disqualification motion in another case for purposes of issue preclusion. Here, the court held that the trial court abused its discretion by relying on the doctrine of issue preclusion to deny the disqualification motion instead of conducting the requisite analysis under Colo. RPC 1.9(a). The court therefore made the rule to show cause absolute, vacated the trial court’s order, and remanded the case for the trial court to address the merits of the motion to disqualify under Colo. RPC 1.9(a).

Summary provided courtesy of The Colorado Lawyer.

Tenth Circuit: Plaintiff Cannot Bring § 1983 Claim for Damages if it Renders Conviction Invalid

The Tenth Circuit Court of Appeals issued its opinion in Havens v. Johnson on Wednesday, April 15, 2015.

In January 2007, the Denver Metro Auto Theft Team Task Force planned a sting to arrest Darrell Havens, who had arranged to sell a stolen Audi in an alcove behind a Target store. Havens drove the Audi into the icy alcove, where officers surrounded him in other vehicles and on foot. Several vehicles rammed into the Audi from many directions. At one point, Officer Johnson, who was not in a vehicle, was directly in front of the Audi and fired shots at the driver, leaving him a paraplegic. Havens testified at deposition that he did not have control of the Audi after it was hit the first time and did not make any other maneuvers, but other officers testified the Audi was accelerating toward Officer Johnson and about to pin him against another vehicle when he fired the shots. Officer Johnson testified that he thought he was about to be crushed by the Audi, which was accelerating toward him, and fired into the windshield to stop the driver. Havens was left a quadriplegic after the shooting.

After the incident Havens was charged with multiple crimes. He pleaded guilty to attempted first-degree assault of Johnson, among other charges. At the plea hearing, the court insisted on a record that Havens admitted committing the crimes and was pleading guilty to them. His attorney said he had no recollection of the incident because of the serious injuries he suffered that night. The court then asked Havens if he knew what he was pleading guilty to and he said yes. Havens filed a motion for postconviction relief in state court, arguing that his plea was not knowing, intelligent, or voluntary. The state court denied the motion and the court of appeals affirmed. The Colorado Supreme Court denied certiorari. Havens then filed a § 1983 action against Johnson in federal district court, denying any wrongdoing by Havens and asserting the criminal prosecution was bogus. The district court granted summary judgment to Johnson, finding Havens failed to establish a prima facie case of excessive force and Johnson was entitled to qualified immunity. Johnson argued in the alternative that Havens’ guilty plea supported summary judgment on grounds of issue preclusion, judicial estoppel, and Heck, but the district court denied the other grounds.

The Tenth Circuit affirmed summary judgment on a different ground, finding that Heck required judgment for Johnson and that the Heck defense was properly before the Tenth Circuit because it had been raised and fully briefed below and he raised it again on appeal. Heck was a Supreme Court case where the Court ruled a plaintiff could not bring a § 1983 claim for damages if it rendered a criminal conviction invalid. In this case, Havens’ § 1983 claim asserted no wrongdoing on the part of Havens, instead attributing all fault to the officers. Havens’ version of the events could not sustain a conviction for attempted first-degree assault, and his theory of innocence is barred by Heck.

The Tenth Circuit acknowledged that Havens’ plea was a nolo contedere plea, not a typical guilty plea, but found the Heck doctrine survived by the existence of a valid conviction, not the mechanism by which that conviction was obtained. In a lengthy footnote, Judge Hartz related his concerns with the effect the nolo contendere plea would have on Johnson’s issue preclusion and judicial estoppel arguments, but this footnote was not joined by the rest of the panel.

The Tenth Circuit affirmed the district court’s summary judgment.

Colorado Supreme Court: Issue Preclusion Does Not Bar Inquiry Into Post-Decree Historical Consumptive Use of Water Right

The Colorado Supreme Court issued its opinion in Concerning the Application for Water Rights of Sedalia Water and Sanitation District in Douglas County: Wolfe v. Sedalia Water and Sanitation District on Monday, February 9, 2015.

Historical Beneficial Consumptive Use Calculation—Change of Water Right and Augmentation Plan Decree—Claim and Issue Preclusion—Prolonged Unjustified Period of Nonuse.

The Supreme Court examined whether, in a successive change of the Stephan Sump No.1/Ball Ditch water right, its historical use based on average annual historical use in Case No. 83CW364 should be re-quantified to take into account twenty-four years of nonuse. The Court affirmed the water court’s determination that issue preclusion applies here to bar the State and Division Engineers from contesting the amount of historical beneficial consumptive use allocated to the Stephan Sump No.1/Ball Ditch water right for the 1872 to 1986 period. It reversed the water court’s ruling applying issue preclusion to the post-decree period following entry of the 1986 decree. The Court directed that, on remand from this decision in finalizing its decree, the water court should take any evidence and legal argument offered by the parties on the issue of the alleged period of post-1986 nonuse. If the water court finds there has been prolonged unjustified nonuse of the water right between entry of the prior change decree and the pending decree application, it may conclude that this constitutes a changed circumstance calling for the selection of a revised representative period of time for calculating the annual average annual consumptive use amount available for Sedalia Water and Sanitation District’s change of water right and augmentation decree.

Summary and full case available here, courtesy of The Colorado Lawyer.

Tenth Circuit: Lawsuit Properly Dismissed for Untimeliness, Failure to State a Claim, and Issue Preclusion

The Tenth Circuit Court of Appeals issued its opinion in Knight v. Mooring Capital Fund, LLC on Tuesday, April 22, 2014.

In 2010, the Tenth Circuit decided two appeals involving claims and cross-claims between, on one side, Judy Knight and her company Phoenix Central Inc., and, on the other side, Mooring Capital Fund, LLC. Two years later, Knight filed a new suit in Oklahoma state court on behalf of herself, Phoenix, and another of her companies, Mini Malls of America. The defendants were Capital and Financial and individuals associated with them, including Financial’s Chief Executive Officer, John Jacquemin, and unnamed “Counsels and Agents of Defendants.” Capital, Financial, and Mr. Jacquemin removed the litigation to federal district court, and moved to dismiss with prejudice. Knight responded and filed a first amended complaint that named as additional defendants the law firm and individual lawyers who represented Capital and Financial in the earlier proceedings. Capital, Financial, and Mr. Jacquemin then moved to dismiss the first amended complaint with prejudice, and the court granted the motion, citing claim preclusion, the statute of limitations, and F.R.C.P. 12(b)(6). The next day, Knight filed a motion to remand to state court, which was denied as moot; next, she filed an F.R.C.P. 59 motion to vacate, alter, or amend the district court’s motion, which was also denied; thereafter, she sent an email seeking the district court judge’s recusal. The court ordered the email to be filed and denied the recusal.

The Tenth Circuit affirmed, noting that the removal of the case to federal court was proper, some of Knight’s claims were untimely, others failed to state a claim or were barred by issue preclusion (not claim preclusion), and her request for recusal was untimely.

Tenth Circuit: Issue Preclusion Does Not Apply in Bankruptcy Court to a Final Determination in District Court Where Party Waived Issue

The Tenth Circuit Court of Appeals published its opinion in In re Zwanziger on Tuesday, January 28, 2014.

James Hamilton and Richard Kus sued Wolfgang Zwanziger for fraud and violations of Oklahoma’s wage laws. A jury found Zwanziger liable and awarded Hamilton and Kus a combined sum of $573,000. Zwanziger appealed.

On appeal, the Tenth Circuit affirmed the jury’s verdict on liability but reversed on damages. Hamilton and Kus had failed to include damages for emotional distress in their final pretrial order, even though they listed such damages in their complaint. Thus, the Tenth Circuit concluded that the district court erred in instructing the jury to consider emotional distress damages. So the Tenth Circuit remanded to the district court to recalculate damages.

But before the district court could recalculate damages, Zwanziger declared bankruptcy. Kus and William Clark, as trustee of Hamilton’s estate, (since Hamilton had also declared bankruptcy), then filed a complaint in bankruptcy court to determine how much of Zwanziger’s liability was not dischargeable. After reviewing both sides’ damages case, the bankruptcy court awarded Clark and Kus a combined sum of $181,300 in nondischargeable damages, $50,000 of which was for emotional distress. Zwanziger appealed to the Bankruptcy Appellate Panel (BAP), arguing that res judicata precluded the bankruptcy court from including damages for emotional distress. The BAP reversed. Clark and Kus appealed the BAP’s decision.

In this appeal, the Tenth Circuit considered a novel question: Does issue preclusion apply in bankruptcy court to a final determination in district court that a party waived an issue? The court concluded issue preclusion does not apply to the waiver finding here. In this case, issue preclusion does not apply because a finding that an issue of fact or law is waived is not a decision on the merits. Waiver as a general matter is a procedural determination that governs only the case in which it is made.

Therefore, the court REVERSED the judgment of the Bankruptcy Appellate Panel and REMANDED for the bankruptcy court to REINSTATE its order.

Colorado Supreme Court: Issue Preclusion Bars Claims But Incorrect Rule of Civil Procedure Applied in Dismissal

The Colorado Supreme Court issued its opinion in Bristol Bay Productions, LLC v. Lampack on Monday, October 21, 2013.

Issue Preclusion—CRCP 12(b)(5).

The Supreme Court held that the Colorado action brought by Bristol Bay Productions, LLC (Bristol Bay) is barred on issue preclusion grounds, because the identity of the defendants in this case is not relevant to the causation element Bristol Bay must prove to prevail on its fraud and fraud-based claims. The Court emphasized that Bristol Bay’s Colorado action is based on identical allegations concerning substantially identical misrepresentations to those Bristol Bay alleged in its previous California action.

The Court also held that the trial court erred by dismissing Bristol Bay’s Colorado action under CRCP 12(b)(5) without converting defendants’ motion to dismiss into a motion for summary judgment under CRCP 56. Because CRCP 56 was the appropriate procedure to resolve this case, Bristol Bay is not liable for attorney fees under Colorado’s attorney fee-shifting statute. The judgment was affirmed in part and reversed in part.

Summary and full case available here.

Tenth Circuit: Amendments to Utah’s Sexual Solicitation Statute Constitutional

The Tenth Circuit Court of Appeals published its opinion in Bushco v. Shurtleff on Monday, September 9, 2013.

Plaintiffs—Bushco Corp; Companions, L.L.C.; and TT II, Inc.  (“Appellants”)—are escort services licensed as sexually oriented businesses. Defendant is the Attorney General of the State of Utah (“Attorney General”). Plaintiffs brought a lawsuit in federal district court for the district of Utah, seeking declaratory and injunctive relief. They claimed that certain amendments (“Amendments”) to Utah Code Ann. § 76-10-1313 (“Sexual Solicitation Statute” or “Statute”)—specifically, § 1313(1)(c) and § 1313(2)—were overly broad, were unconstitutionally vague, and infringed on the right of free speech under the First Amendment of the U.S. Constitution. The parties filed cross-motions for summary judgment.

The district court held that § 1313(2) was unconstitutionally vague, and therefore ordered that that provision be severed and stricken from the statute. But the court upheld § 1313(1)(c). Appellants appealed the court’s ruling that § 1313(1)(c) was constitutional, and the Attorney General filed a cross-appeal, challenging the court’s ruling that § 1313(2) was unconstitutionally vague.

On appeal before the court were three main issues: (1) whether issue preclusion applied to the question of the Statute’s constitutionality because a district court previously held unconstitutional similar language of a predecessor statute, Utah Code Ann. § 76-10-1301(1) (“Sexual Activity Statute”); (2) whether the Amendments to the Sexual Solicitation Statute were overbroad or placed too great a burden on expression protected by the First Amendment; and (3) whether the Amendments to the Sexual Solicitation Statute were unconstitutionally vague.

The Tenth Circuit reached the following conclusions: (1) Issue preclusion did not apply, because the Predecessor Sexual Activity Statute and the Sexual Solicitation Statute are different statutes, with different purposes, and the constitutionality of the Sexual Solicitation Statute at issue in this case was not previously litigated. (2) The Amendments are not unconstitutionally overbroad because they do not encompass a substantial amount of constitutionally protected conduct. Moreover, the Amendments do not place too great a burden on Appellants’ speech rights because they pass the O’Brien test for incidental restrictions on First Amendment rights. United States v. O’Brien, 391 U.S. 367, 376 (1968). (3) Section 1313(1)(c) is not unconstitutionally vague, because it provides fair notice of the prohibited conduct and sufficient guidance to law enforcement. Similarly, § 1313(2) is not unconstitutionally vague, because it does not authorize or encourage discriminatory enforcement of the Sexual Solicitation Statute.

Accordingly, the Tenth Circuit AFFIRMED the district court’s ruling as to the constitutionality of § 1313(1)(c), but REVERSED the district court’s ruling that § 1313(2) is unconstitutionally vague.

Colorado Supreme Court: In Disciplinary Proceeding, PDJ Erred in Determining Issue Preclusion

The Colorado Supreme Court issued its opinion in In re Matter of Greene on Monday, May 20, 2013.

Attorney Discipline—Claim Preclusion—Identity of Claims—Same Criminal Episode.

The Attorney Regulation Counsel sought review of the Presiding Disciplinary Judge’s (PDJ) order granting summary judgment in favor of respondent David Jerome Greene. The PDJ found that all of the claims in the complaint for attorney discipline should have been joined and adjudicated along with the claims raised in a previous complaint. Therefore, they were barred according to the doctrine of claim preclusion.

The Supreme Court held that although the doctrine of claim preclusion applies to complaints for attorney discipline, a single claim in that context is analogous to a single “criminal episode” for the purposes of barring sequential prosecutions of the same defendant. Because none of the claims alleged in the instant complaint was identical with any claim that had already been finally adjudicated, according to that standard, the PDJ erred. The Court therefore vacated the order granting summary judgment in favor of Greene and remanded the case for further proceedings on the claims as to which summary judgment was ordered.

Summary and full case available here.

Colorado Court of Appeals: Issue Preclusion Does Not Bar Action of Insurer To Prove It Was Not Liable for Actions of Insured

The Colorado Court of Appeals issued its opinion in Shelter Mutual Insurance Co. v. Vaughn on Thursday, March 28, 2013.

Personal Injury—Intentional Acts Exclusion to Insurance—Issue Preclusion.

At a YMCA basketball game, Steven Vaughn, the father of a player, hit Alvin Miller, a referee, several times and injured him. Miller sued Vaughn for assault and battery. Shelter Mutual Insurance Company (Shelter) hired a lawyer to defend Vaughn under a reservation of rights. Miller amended his complaint to add a negligence claim. The assault and battery claim was dropped before trial. The jury found Vaughn negligent and awarded Miller damages.

Shelter filed a declaratory action, asserting that Vaughn’s intentional actions caused Miller’s injuries and therefore the judgment was not covered by Vaughn’s insurance policy. Vaughn argued that Shelter was precluded from claiming he acted intentionally given the jury verdict of negligence. The trial court disagreed, finding that the issue of whether Vaughn acted intentionally was not adjudicated at trial and Shelter’s interest was not identical to Vaughn’s. The court then found Vaughn’s actions were intentional and thus excluded under the policy. Only the ruling on issue preclusion was challenged on appeal.

Issue preclusion bars relitigation of issues actually litigated in and necessary to the outcome of a prior action. Of the four elements that must be proven, the Court of Appeals found two that were not. The Court found that Shelter was not in privity with Vaughn in the underlying trial. Although Shelter funded Vaughn’s defense, it was not a party to the litigation and its interests were not aligned with Vaughn’s. Vaughn wanted to deny all liability, but Shelter only wanted to prove that if Vaughn were liable, it was for intentional acts that would release it from its duty to indemnify. Shelter’s reservation of rights put Vaughn on notice of their divergent interests. The Court further held that Shelter did not have a full and fair opportunity to assert its own interests in the underlying trial and litigate the issue of whether Vaughn was negligent. Shelter’s interests conflicted with Vaughn’s interest.

In sum, issue preclusion will not bar an insurer from later denying coverage to its insured when the insurer defended the insured under a reservation of rights and the insurer had an interest in establishing a different set of facts than the insured in the underlying litigation. The judgment was affirmed.

Summary and full case available here.