January 27, 2015

Colorado Supreme Court: Trial Court Abused Discretion by Allowing Change of Venue

The Colorado Supreme Court issued its opinion in In re Hagan v. Farmers Insurance Exchange; In re Ewald v. Farmers Insurance Exchange; In re Mayfield v. Farmers Insurance Exchange on Monday, January 26, 2015.

Change of Venue.

In these original proceedings under CAR 21, plaintiffs sought extraordinary relief from the trial courts’ orders granting a change of venue. The Supreme Court issued rules to show cause why those orders should not be vacated and venue transferred back to Boulder County District Court and consolidates its ruling here.

The Court held that the trial courts abused their discretion when they granted a change of venue in each of these cases. First, Boulder County District Court is a proper venue for all three cases; under CRCP 98(c)(1), plaintiffs were allowed to file their complaints in the county of their choice because defendant is a nonresident. Second, the trial courts granted the motions without the requisite evidentiary support. The affidavits that defendant submitted improperly focus on convenience to plaintiffs and do not satisfy the standard set forth in Sampson v. District Court, 197 Colo. 158, 160, 590 P.2d 958, 959 (1979). Consequently, the Court made the rules absolute and directed the transferee courts to return the cases to Boulder County District Court.

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

Tenth Circuit: Collateral Estoppel Bars Relitigation of Claims Decided in Other Federal Courts

The Tenth Circuit Court of Appeals issued its opinion in Stan Lee Media Inc. v. Walt Disney Co. on Tuesday, December 23, 2014.

In October 1998, legendary comic book artist Stan Lee entered into an employment agreement (“1998 agreement”) with a Colorado company he formed to create new characters, Stan Lee Entertainment, Inc. (the predecessor to Stan Lee Media). At the time, Lee had worked for Marvel for approximately 60 years, and the agreement expressly recognized he would continue to work for Marvel. In November 1998, Lee entered into a similar agreement with Marvel, transferring to Marvel essentially the same rights he had transferred to Stan Lee Media through the 1998 agreement. In 2001, Stan Lee repudiated the 1998 agreement, contending Stan Lee Media committed material breach and reclaiming ownership of the intellectual property rights. Over five years later, Stan Lee Media recorded the 1998 agreement with the U.S. Copyright Office, asserting in a cover letter that the 1998 agreement transferred to Stan Lee Media ownership rights in many famous characters, including Spider-Man and Iron Man.

Meanwhile, Marvel exploited the comic book universe by selling and licensing the character rights to major production companies in order to create, sell, and distribute motion pictures. These included 2002’s Spider-Man movie, which has grossed over $800 million worldwide. Despite Marvel’s success, Stan Lee Media did not assert ownership interests over the characters until 2007, at which time it filed lawsuits across the country. Many courts have considered Abadin v. Marvel Entm’t, Inc., No. 09 Civ. 0715 (PAC), 2010 WL 1257519 (S.D.N.Y. Mar. 31, 2010) (Abadin I) binding precedent, including the lower court in this action.

Stan Lee Media filed a claim against Disney in the U.S. District Court for the District of Colorado, alleging a single cause of action for federal copyright infringement. The district court granted Disney’s motion to dismiss, relying on Abadin I as precluding the Colorado litigation. Since the district court’s decision, the Ninth Circuit has issued a decision in a related suit. The U.S. District Court for the Central District of California dismissed Stan Lee Media’s claims on res judicata grounds, but the Ninth Circuit affirmed on different grounds, finding that Stan Lee Media failed to state a claim that is plausible on its face.

The Tenth Circuit reviewed the Ninth Circuit decision, the briefing in the Ninth Circuit and the Central District of California, and supplemental briefing submitted in the Tenth Circuit, and found that none of the elements of collateral estoppel can be reasonable debated, because each are present in the Tenth Circuit case.

The Tenth Circuit found that only the fourth element of collateral estoppel was seriously contested — Stan Lee Media alleges it did not have a full and fair opportunity to litigate the ownership issue. However, the Tenth Circuit rejected that argument. Stan Lee Media devoted five full pages in a response explaining how its claims met the Iqbal/Twombly and Rule 8 standards. Further, the Ninth Circuit’s decision was a dismissal with prejudice, so there is no point in allowing Stan Lee Media to amend its complaint. Finally, the Ninth Circuit’s singular and readily discernible rationale for dismissal — that Stan Lee Media’s claims are “simply implausible,” — clears all remaining obstacles to the application of collateral estoppel.

The Tenth Circuit affirmed the district court’s dismissal of Stan Lee Media’s complaint for failure to state a claim.

Colorado Supreme Court: Abuse of Discretion Not to Dismiss Lawsuit Filed After Expiration of Statute of Limitations

The Colorado Supreme Court issued its opinion in In re Malm v. Villegas on Tuesday, January 20, 2015.

Civil Procedure—Time for Service of Process.

Villegas petitioned for relief pursuant to CAR 21 from an order of the district court granting Malm’s motion to reopen her personal injury lawsuit. The court denied Villegas’s motion to reconsider and dismiss the action for failure to prosecute, despite the passage of more than seven years between the filing and service of the complaint. Relying largely on Malm’s self-reported efforts to find and serve Villegas, as well as Villegas’s failure to demonstrate prejudice from the delay, the district court found that service was made within a reasonable time. The Supreme Court issued a rule to show cause why the district court had not abused its discretion in declining to dismiss for failure to prosecute.

The Court made its rule absolute and remanded the case with directions to dismiss the action. The delay between filing and service of the complaint extended beyond expiration of the applicable statute of limitations and there were no factual findings that the delay was the product of either wrongful conduct by the defendant or some formal impediment to service. Because the service was not made within a reasonable time, the district court abused its discretion in declining to dismiss the lawsuit for failure to prosecute.

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

Frederick Skillern: Real Estate Case Law — Contracts, Purchase and Sale, Transactions (4)

Editor’s note: This is Part 7 of a series of posts in which Denver-area real estate attorney Frederick Skillern provides summaries of case law pertinent to real estate practitioners (click here for previous posts). These updates originally appeared as materials for the 32nd Annual Real Estate Symposium in July 2014.

frederick-b-skillernBy Frederick B. Skillern

Taylor Morrison of Colorado, Inc. v. Bemas Construction
Colorado Court Appeals, January 30, 2013
2014 COA 10

Construction defects statute; willful and wanton breach of contract required to overcome liability limitation provisions in contract.

Taylor Morrison of Colorado, Inc. was the developer of a residential subdivision known as Homestead Hills. Pursuant to written contracts with Taylor, Terracon Consultants, Inc. performed geotechnical engineering and construction material testing services at the construction site. Bemas Construction performed site grading.

After many of the homes were constructed, Taylor began receiving complaints about cracks in the drywall of homes. Taylor remedied the defective conditions, and then sued Terracon and Bemas for breach of contract and negligence and other claims.

Taylor also moved for determination as to whether the Homeowner Protection Act of 2007 (HPA) invalidated the limitation of liability clauses in the contracts with Terracon. The trial court denied the motion on the ground that the HPA applies to residential property owners but not to commercial entities.

Terracon moved for leave to deposit into the court’s registry $550,000, representing the maximum amount that Taylor could recover from Terracon under the contractual limitation of liability clauses and the court order. It also requested that upon acceptance of such deposit, the court should declare Taylor’s claims against Terracon moot and dismiss them with prejudice. The trial court ruled in favor of Terracon. The money was deposited and the claims were dismissed with prejudice.

Taylor then went to trial against Bemas. The jury returned a verdict in Bemas’ favor on all of Taylor’s claims. Taylor appeals.

Taylor argued that it was error to rule that the HPA did not invalidate the limitation of liability clauses in Taylor’s contracts with Terracon. The court of appeals panel affirms the trial court’s judgment, but for different reasons. The court holds that regardless of whether the HPA applies to commercial entities, retroactive application of the HPA to these facts would be unconstitutionally retrospective. The Court concludes, however, that further proceedings are necessary to determine whether Taylor should have been permitted to introduce evidence of Terracon’s willful and wanton conduct to attempt to overcome Terracon’s assertion of the limitation of liability clauses.

The judgment is affirmed and the case is remanded to the trial court to determine whether Taylor should have been permitted to introduce evidence of Terracon’s willful and wanton conduct for the sole purpose of attempting to overcome Terracon’s assertion of the limitation of liability clauses at issue.

 

Jehly v. Brown
Colorado Court of Appeals, March 27, 2014
2014 COA 39

Fraudulent Concealment; Imputed Knowledge.

“Actual knowledge,” in the context of a fraudulent concealment claim, cannot be imputed to a principal through knowledge of its agent. Defendant Brown owned real property in Teller County and hired a general contractor to build a house on it. Before commencing, the contractor discovered that part of the property was located in a floodplain. Brown was not told of this fact.

Plaintiffs David and Peggy Jehly entered into a contact to purchase the house from Brown. Brown filled out a Seller’s Property Disclosure form by writing “New Construction” diagonally across every page and not checking any of the boxes. Before buying the house, the Jehlys were never informed that part of the property was located in a floodplain.

Approximately five years after the home purchase, heavy rains caused severe flooding and damage to the basement of the house. The Jehlys sued Brown, alleging he fraudulently concealed knowledge of the floodplain to induce plaintiffs to buy the house. During a bench trial, defendant denied having any personal knowledge of the floodplain at the time of the sale and denied that his general contractor or any subcontractors had so informed him. The trial court found as a matter of fact that he had no knowledge, and found in favor of defendant.

On appeal, plaintiffs asserts that it was error not to impute the general contractor’s knowledge that part of the property was in a floodplain to Brown. The court of appeals disagrees, and affirms. To prevail on a claim of fraudulent concealment, a plaintiff must show that a defendant actually knew of a material fact that was not disclosed. It is not enough that defendant should have or might have known the fact, and knowledge of his agent cannot be imputed for the purpose of this particular tort claim. Plaintiffs did not contest on appeal the trial court’s factual finding that defendant had no active or conscious belief or awareness of the existence of the floodplain. The trial court did not apply the wrong legal standard, because defendant did not have the requisite actual knowledge of the information allegedly concealed.

Frederick B. Skillern, Esq., is a director and shareholder with Montgomery Little & Soran, P.C., practicing in real estate and related litigation and appeals. He serves as an expert witness in cases dealing with real estate, professional responsibility and attorney fees, and acts as a mediator and arbitrator in real estate cases. Before joining Montgomery Little in 2003, Fred was in private practice in Denver for 6 years with Carpenter & Klatskin and for 10 years with Isaacson Rosenbaum. He served as a district judge for Colorado’s Eighteenth Judicial District from 2000 through 2002. Fred is a graduate of Dartmouth College, and received his law degree at the University of Colorado in 1976, in another day and time in which the legal job market was simply awful.

Proposed Changes to Colorado Rules of Civil Procedure

The Colorado Supreme Court is seeking public comment on proposed changes to the Colorado Rules of Civil Procedure. Amendments to rules 1, 12, 16, 16.1, 26, 30, 31, 34, 37, 54, and 121, § 1-22 are proposed; some of the amendments, including those for Rule 16, “Case Management and Trial Management,” are extensive. A redline of the proposed changes is available here.

Written comments to the proposed rule changes can be submitted to Christopher Ryan, the Clerk of the Colorado Supreme Court, at 2 East 14th Ave., Denver, CO 80203. Comments must be received no later than 5 p.m. on April 17, 2015.

A public hearing on the changes will be held on April 30, 2015, at 1:30 p.m. in the Colorado Supreme Court courtroom. The courtroom is located on the 4th floor of the Ralph Carr Justice Center at 2 East 14th Avenue in Denver.

Tenth Circuit: Privilege Cannot Be Used as Both Sword and Shield

The Tenth Circuit Court of Appeals issued its opinion in Seneca Insurance Co., Inc. v. Western Claims, Inc. on Monday, December 22, 2014.

Seneca hired Western Claims to investigate an insured’s claim for wind and hail damage to buildings. Western’s adjuster investigated and found some damage but determined the buildings had not suffered hail damage to the roof. Later, the insured asked Seneca to reopen its claim based on an estimate from its roofing contractor that it had suffered hail damage to the roof. Eventually, the insured sued Seneca, Western, and the adjuster in Oklahoma state court, claiming all three had mishandled its claims, and sued Seneca for breach of insurance contract, bad faith, and fraud.

During the litigation, Seneca’s claims examiner prepared a large loss report and distributed it to several Seneca executives. Seneca also sought advice from two attorneys in separate firms regarding the lawsuit. The attorneys advised Seneca regarding its potential bad faith liability and recommended settling the lawsuit for $1 million and then suing Western and the adjuster to recover. Seneca followed this advice. In discovery, Seneca disclosed that it had settled the litigation “on advice of counsel.” Western Claims filed a motion to compel documents Seneca relied on in settling the litigation. Seneca objected to the motion and again at trial, claiming the attorney-client privilege and work product doctrine, but the district court found Seneca had put the documents in issue. At trial, several Seneca executives testified that they agreed upon the $1 million settlement “on advice of counsel.”

At the close of Seneca’s case-in-chief, the district court granted Western Claims’s motion for judgment as a matter of law regarding Seneca’s equitable indemnity claim, but allowed the negligence claim to be submitted to the jury, where Western Claims ultimately prevailed. Seneca appealed the district court’s decision to allow Western Claims to discover the correspondence from its attorneys. Western Claims cross-appealed the district court’s denial of its motion for judgment as a matter of law as to the negligence claim.

Seneca argued the district court erred in concluding it waived its right to claim attorney-client privilege and work product protection regarding the correspondence from its attorneys. The Tenth Circuit evaluated whether some “affirmative act” by Seneca waived the privilege. It found that, when Seneca claimed it relied on “advice of counsel” for the settlement amount, it put that advice at issue and thus waived privilege. Seneca claimed that the information was available in other sources, but the Tenth Circuit disagreed, finding that Seneca expressly relied on “advice of counsel” and could not use the advice both as a sword and a shield.

The district court’s judgment was affirmed.

Tenth Circuit: Federal Appellate Rules Provide for Bond Only for Costs Allowable by Rule or Statute

The Tenth Circuit Court of Appeals issued its opinion in Tennille v. Western Union Co. on Monday, December 22, 2014.

Plaintiffs initiated a class action against Western Union based on Western Union’s retention of funds from failed wire transfers. After several years of litigation, plaintiffs and Western Union settled the case. The district court preliminarily certified a class of more than one million customers who experienced a failed wire transfer between January 1, 2001 and January 3, 2013, and ordered the class administrator to notify those class members of the class action, the proposed settlement, and the opportunity for them to opt out of the class or to object to the settlement. Several class members objected. The district court overruled all objections, certified the class, approved the settlement, and entered final judgment. Objectors Dorsey and Nelson appealed the district court’s denial of their objections. Plaintiffs asked the district court to require Dorsey and Nelson, as a condition of their appeal, to post a $1,007,294 appeal bond—$647,674 to notify class members of Objectors’ merits appeals challenging the settlement, $334,620 as administrative costs to maintain the settlement agreement pending Objectors’ appeal, and $25,000 as costs for printing and copying and preparing a supplemental record. The district court granted plaintiffs’ request, and Objectors appealed.

The Tenth Circuit first addressed plaintiffs’ contention that it lacked jurisdiction to hear the appeal, since the bond order was not a final, appealable order. The Tenth Circuit determined it had jurisdiction over the appeal on at least two bases. The district court’s bond order was entered “in aid of appellate court jurisdiction,” and since the Tenth Circuit has jurisdiction to review Objectors’ merits appeals, it also has jurisdiction over the bond appeal. Second, the district court’s bond order was a final order ending the post-judgment bond proceeding, and as such the Tenth Circuit has jurisdiction to hear the appeal.

Moving to the bond itself, the Tenth Circuit found unanimous circuit precedent allowing Rule 7 cost recovery only for costs expressly provided for by rule or statute. Because no rule or statute provides for costs for notifying class members or administrative costs, the district court erred in allowing those costs. The Tenth Circuit rejected plaintiffs’ argument that the district court has discretion to include in an appeal bond any cost a defendant may encounter in defending an appeal. The Tenth Circuit characterized plaintiffs’ argument as seeking damages for the delay caused by Objectors’ merits appeal, but noted the Federal Appellate Rules do not have separate provisions for class actions and the purpose of a Rule 7 bond is not to compensate for damages.

Next, Objector Dorsey challenged the district court’s imposition of a $25,000 bond to cover costs of preparation and transmission of the record. Plaintiffs failed to justify the need for $25,000. Because Objector Dorsey suggested he would be amenable to imposition of a $5,000 bond to cover such costs, the Tenth Circuit reduced the bond accordingly. Objector Nelson claimed she would experience hardship from the imposition of any bond, but the Tenth Circuit found that a $5,000 bond is not so burdensome as to deprive her of due process or equal protection of law, and found that she failed to establish that the smaller bond would deprive her of due process.

The district court’s bond imposition was affirmed, but the bond was reduced to $5,000. Objectors were ordered to post the bond within 14 days or their merits appeals would be dismissed.

Tenth Circuit: Allowing Recovery for Lost Horses Would Effectively Nullify State Forfeiture Proceeding

The Tenth Circuit Court of Appeals issued its opinion in Campbell v. City of Spencer on Tuesday, December 16, 2014.

The City of Spencer, Oklahoma, along with the Town of Forest Park and Blaze Equine Rescue seized 44 emaciated and malnourished horses from Ann Campbell’s three properties pursuant to a search warrant issued for one of the properties. The City and Town filed a joint petition in Oklahoma County District Court for forfeiture of the horses as a remedy for animal abuse. During the forfeiture proceeding, Campbell did not raise any argument regarding the scope of the search warrant. The court granted the forfeiture petition, the Oklahoma Court of Civil Appeals affirmed, and the Oklahoma Supreme Court denied certiorari.

Campbell subsequently filed a § 1983 action in the U.S. District Court for the Western District of Oklahoma, claiming that the municipalities and Blaze had violated the Fourth Amendment in two ways: (1) by withholding from the search warrant information about Campbell’s plan to reduce the number of horses, and (2) by searching the two locations not listed on the warrant. The municipalities filed motions to dismiss on preclusion grounds, since Campbell did not raise her arguments in the state forfeiture proceeding. Blaze filed a motion for summary judgment on preclusion grounds. The district court granted the motions. Campbell appealed.

The Tenth Circuit affirmed the district court, finding the exclusionary rule applied in Oklahoma state forfeiture proceedings and Campbell could have raised her claims in that proceeding. Campbell asserted that the state court judge refused to consider the legality of the evidence, but the Tenth Circuit reviewed the record and  found no evidence of such refusal. Campbell also suggested that suppression issues could not be raised in state court proceedings, which was an incorrect understanding of the law. Because of its conclusion that Campbell could have raised her claims in state court, the Tenth Circuit next considered whether allowing her to pursue the claims in federal court would nullify the original proceeding. The Tenth Circuit could not state with certainty whether barring the suppression would nullify the forfeiture proceeding, but found that allowing Campbell to pursue her claims would impermissibly impair the municipalities’ rights as established in the state court. The Tenth Circuit noted that allowing Campbell to recover the value of the lost horses would suggest the invalidity of the state court’s forfeiture order, and declined to allow recovery.

The Tenth Circuit affirmed the district court’s dismissal as to the municipalities and grant of summary judgment as to Blaze.

Tenth Circuit: Texas’s “Fair Notice Rule” Required Indemnity Provision to be Express and Conspicuous

The Tenth Circuit Court of Appeals issued its opinion in Martin K. Eby Construction Co., Inc. v. Onebeacon Insurance Co. on Tuesday, December 9, 2014.

Martin K. Eby Construction Company’s predecessor in interest contracted to build a water pipeline, engaging the predecessor of Kellogg Brown & Root, LLC and promising to indemnify it for claims resulting from Eby’s work. During the construction of the pipeline, Eby accidentally hit a methanol pipeline and caused a leak. At the time, no one knew about the leak. It was discovered over two decades later, and the methanol pipeline owner had to pay for cleanup. It sued Kellogg and Eby, seeking to recover its expenses, but Kellogg and Eby prevailed. Kellogg incurred over $2 million in attorney fees and costs, and it sought to recover those from Eby and its insurer, Travelers Indemnity Co., pursuant to the indemnity provision. The district court granted summary judgment to Eby and Travelers, and Kellogg appealed.

Eby acknowledged that the indemnity provision covered the claims asserted against Kellogg, but argued the coverage was unenforceable because the clause was inconspicuous and not expressly stated. The Tenth Circuit agreed. Under Texas law, indemnity clauses are restricted by the “fair notice rule.” The Tenth Circuit analyzed Texas’s fair notice rule and found it covered the conduct at issue. The fair notice rule required indemnity provisions to be conspicuous and expressly stated. The provision in this case was on page 86 of a 197-page contract, with no identifying heading, in the same typeface and without bolding or other changes to set off the indemnity clause. Because of this, Eby did not have fair notice of the provision, and the coverage was unenforceable.

Turning to Kellogg’s claims against Travelers, the Tenth Circuit found that because it denied the claims as to Eby, there was no claim as to Travelers. The district court’s grant of summary judgment was affirmed.

Colorado Supreme Court: C.R.C.P. 45 Inapplicable to Administrative Subpoena Enforcement Proceedings Under UCCC

The Colorado Supreme Court issued its opinion in Tulips Investments, LLC. v. State of Colorado ex rel. Suthers on Monday, January 12, 2015.

Uniform Consumer Credit Code—Subject Matter Jurisdiction—Authority to Issue and Enforce Administrative Subpoena—CRS § 5-6-106.

The Supreme Court held that, in enacting the Uniform Consumer Credit Code (UCCC), the General Assembly conferred administrative subpoena issuance authority on the UCCC Administrator and authorized trial courts to enforce such a subpoena against a nonresident who is alleged to have violated the UCCC and has refused to obey a subpoena. In so holding, the Court distinguished its decisions in Solliday v. District Court, 135 Colo. 489, 313 P.2d 1000 (1957), and Colorado Mills, LLC v. SunOpta Grains & Foods Inc., 269 P.3d 731 (Colo. 2012). Those cases addressed a limitation under CRCP 45 restricting service of a subpoena in civil actions to areas located within the state. CRCP 45 is inapplicable to administrative subpoena enforcement proceedings under the UCCC, which applies equally to residents and nonresidents suspected of conduct violating its provisions. Accordingly, the Court affirmed the judgment of the court of appeals.

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

Tenth Circuit: Class Certification Appropriate Where Common Issues Predominate Over Individualized Claims

The Tenth Circuit Court of Appeals issued its opinion in CGC Holding Co. LLC v. Broad & Cassel on Monday, December 8, 2014.

In this RICO class action interlocutory appeal, defendants contest the district court’s class certification. Plaintiff class representatives CGC Holding Co., LLC, Harlem Algonquin, LLC, and James Medick, on behalf of the proposed class, assert that a group of lenders led by Sandy Hutchens conspired to create a scheme to defraud borrowers by requiring up-front fees for loan commitments the lenders never intended to fulfill. Plaintiffs also allege the lenders fraudulently concealed Hutchens’ criminal past through the use of pseudonyms, and had they known about his financial history they would not have taken part in the financial transactions that caused them to lose their up-front fees.

In 2004, Hutchens pleaded guilty in Canada to financial fraud charges similar to those at issue here. Following his conviction, he changed his name and assumed various aliases. Plaintiffs claim Hutchens operated a scheme in which a potential borrower, typically a distressed “do-or-die” borrower, would submit a loan application to one of several issuing entities through a loan broker. The lending entity would issue a loan commitment requiring non-refundable up-front fees, also requiring the borrower to meet certain eligibility requirements. If the borrower failed to meet an eligibility requirement, the lending entity would terminate the loan application. Plaintiffs contend this was a subterfuge intended to scam the borrowers out of the non-refundable up-front fees, without any intention or ability to fund the loan. Hutchens contends the loans were legitimately terminated for failure to meet the eligibility requirements. However, his accountant testified that by the end of 2009 Hutchens and his entities had received over $8 million in up-front fees and had lent less than $500,000.

Plaintiffs also contend that Hutchens and his cohorts concealed Hutchens’ criminal past through the use of aliases and false addresses, and but for these omissions and misrepresentations, no borrower would have participated in the loan scheme. Plaintiffs named several persons and entities as co-conspirators with Hutchens, including his wife and daughter, five issuing entities, Hutchens’ attorney Alvin Meisels, and Broad and Cassel, a Florida law firm that represented several of the defendants during the relevant time period.

Plaintiffs conceded they lacked standing to pursue their claims against Broad and Cassel, and the Tenth Circuit reversed and remanded on this issue. However, the Tenth Circuit affirmed the district court’s grant of F.R.C.P. 23 class certification. Defendants contend the district court erred in finding that common issues predominated over individual ones in the class certification. The Tenth Circuit reviewed for abuse of discretion and found none. The Tenth Circuit found no reasonable dispute that plaintiffs met the threshold requirements of Rule 23(a), and evaluated solely for whether common issues predominated under the class type listed in Rule 23(b)(3).

After evaluating the prerequisites of a civil RICO claim, the Tenth Circuit discussed plaintiffs’ requirement to prove that a link existed between defendants’ actions and the class injury. Plaintiffs must prove a causal connection between defendants’ misrepresentation and and plaintiffs’ reliance on that misrepresentation. In the context of a class action, the plaintiffs must show that the reliance is susceptible to generalized proof. In the instant case, the evidence of class members’ payments for loan commitments is sufficient to show reliance on defendants’ promise to provide loan funds. The fact of payment of the up-front fee is common to the entire class. The Tenth Circuit also found that superiority was proven as to the class action’s preference over individualized actions.

Defendant Meisel also raised the question of whether the district court had subject matter jurisdiction over the Canadian defendant entities. The Tenth Circuit declined to consider the question, finding it exceeded the scope of Rule 23(f) review and instead was a merits issue. The Tenth Circuit similarly declined to consider several other issues raised by defendants, finding their review limited to the scope of Rule 23(f) and disfavoring interlocutory review of other issues.

The district court’s class certification was reversed and remanded as to Broad and Cassel, and was affirmed as to all other defendants.

Colorado Court of Appeals: Testimony of Treating Physician About Preexisting Condition Properly Admitted in Personal Injury Case

The Colorado Court of Appeals issued its opinion in Gonzales v. Windlan on Wednesday, December 31, 2014.

Personal Injuries—Expert Testimony—Non-retained Expert—Noneconomic Damages—Costs—Prevailing Party.

This case arose from a car accident in which Windlan drove through an intersection without the right-of-way and struck a car driven by Gonzales. The jury found Windlan 60% at fault and Gonzales 40% at fault for the accident. The trial court found Windlan to be the prevailing party and awarded costs to her in the amount of $15,637.77.

On appeal, Gonzales contended that the trial court abused its discretion in admitting Dr. Sayed’s expert testimony about a radiologist’s MRI report from October 2009. Dr. Sayed was Gonzales’s primary care physician, treated Gonzales after the accident, reviewed the MRI report from another specialist at the time, and opined that the MRI report showed a degenerative condition that was probably present before Gonzales’s accident and did not indicate an acute injury as claimed by Gonzales. Although he was not a radiologist, Dr. Sayed had the knowledge and experience to testify about MRI reports because he regularly reviewed and relied on them in the course of his medical practice. Therefore, Dr. Sayed was qualified to give expert testimony about the 2009 MRI report, and such testimony was properly admitted as non-retained expert testimony.

Gonzales also contended that the jury award of zero noneconomic damages was contrary to the evidence and inconsistent with the jury award of $640 for economic damages. There was ample evidence, however, to support the jury’s finding that Gonzales’s injuries were minor and did not result in compensable noneconomic damages.

Gonzales also contended that the trial court abused its discretion in finding that Windlan was the prevailing party and granting Windlan’s motion for costs under CRCP 54(d). The jury’s verdict generally aligned with Windlan’s position on each contested issue. It found Gonzales 40% at fault for the accident (Gonzales claimed that Windlan was fully at fault); awarded damages in an amount equal to an amount billed by the doctor who diagnosed Gonzales with a temporary muscle strain (Gonzales sought $212,000 in economic damages); and awarded no damages for noneconomic losses or physical impairment (Gonzales’s counsel requested noneconomic damages between $25,000 and $2 million). Therefore, the trial court did not abuse its discretion in finding Windlan to be the prevailing party and awarding costs to Windlan. The judgment was affirmed.

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