April 26, 2015

The Colorado Lawyer: Four Things to Know About Motions to Disqualify

Editor’s Note: This article originally appeared in the April 2015 issue of The Colorado Lawyer. Reprinted with permission.

By J. Randolph Evans, Shari L. Klevens, and Lino S. LipinskyEvans-Klevens-Lipinsky


Authors’ Note
Readers’ comments and feedback on this series of “Whoops—Legal Practice Malpractice Prevention” articles are welcomed and appreciated. References in the articles to “safest courses to proceed,” “safest course,” or “best practices” are not intended to suggest that the Colorado Rules require such actions. Often, best practices and safest courses involve more than just complying with the Rules. In practice, compliance with the Rules can and should avoid a finding of discipline in response to a grievance or a finding of liability in response to a malpractice claim. However, because most claims and grievances are meritless, effective risk management in the modern law practice involves much more. Hence, best practices and safer courses of action do more; they help prevent and more quickly defeat meritless claims and grievances.


Few things are worse for an attorney than getting a new big matter, starting work on it, and then facing a motion to disqualify. At that point, the attorney is put in the awkward position of either explaining to the client why he or she should pay more money to keep the attorney, or absorbing the fees associated with defending the motion to disqualify.

Motions to disqualify are far from rare occurrences. In recent months, a number of high-profile disqualification motions have been reported.[1] Many disqualification motions are well-founded. Others are nothing more than a litigation tactic, forcing attorneys to scramble to protect valued client relationships. Significantly, the increasing mobility of lateral attorneys (with attorneys rarely spending their entire legal careers at a single law practice or firm) has raised issues that can serve as the basis of a motion to disqualify.

Disqualification motions implicate the most important duties that an attorney owes a client: the duties of confidentiality and loyalty. Under the Colorado Rules of Professional Conduct (Colorado Rules or Colo. RCP), an attorney must safeguard client confidences and secrets, subject to a few exceptions.[2] The attorney is also obligated to elevate the client’s interests above the interests of the attorney and the law firm. Disqualification motions put these obligations directly at issue.

Courts differ on how they address motions to disqualify, especially because such motions are at times simply a litigation tactic by an opposing party in search of a strategic advantage.[3] Additionally, courts are usually reluctant to interfere with a client’s choice of counsel unless the conflict is real and there are few options other than to grant disqualification.[4]

Courts also appear to distinguish between conflicts based on multiple representations and those based on successive representations.[5] After all, parties filing disqualification motions based on multiple representation conflicts are typically strangers to the attorney-client relationship.

The far more common motion to disqualify involves a former client, either of the law firm or of an individual attorney (who may have recently joined the firm). In those circumstances, courts are generally protective of confidences or secrets that the law firm or attorney may possess or to which the firm or attorney has access as a consequence of either the prior or the existing representation. According to the Colorado Supreme Court, however, a court “may not disqualify counsel on the basis of speculation or conjecture.”[6] The moving party’s burden for a motion to disqualify is satisfied only when “the motion to disqualify sets forth specific facts that ‘point to a clear danger that either prejudices counsel’s client or his adversary.’”[7]

Conflict violations are not always the focal point for resolution of a motion to disqualify. As the Colorado Supreme Court has noted, “[v]iolation of an ethical rule, in itself, is neither a necessary nor a sufficient condition for disqualification,” although there typically must be evidence of a violation or potential violation of “attorney ethical proscriptions,” such as those centered on the duties of loyalty and fairness or those intended to protect the integrity of the process.[8] Often, motions to disqualify turn on the risk that a client’s former attorney or law firm might be able to use against the client the confidences or secrets gained during the prior representation. This is because it “must be presumed” that a client shared confidences with its attorney pursuant to the attorney-client relationship.[9] Appreciating this distinction is important to successfully making or defeating a motion to disqualify.

In assessing motions to disqualify based on conflicts, Colorado courts also consider (1) a client’s preference for a particular counsel, (2) the client’s right to confidentiality in communications with his or her attorney, (3) the integrity of the judicial process, and (4) the nature of the particular conflict of interest involved.[10] Below are some important concepts that have emerged in the context of motions to disqualify.[11]

“Substantially Related” Matters

The Colorado Rules do not bar attorneys from representing current clients against former clients. Instead, Colo. RPC 1.9(a) provides that

[a] lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person’s interests are materially adverse to the interests of the former client unless the former client gives informed consent, confirmed in writing.

Colo. RPC 1.9 does not define a “substantially related matter,” although Comment 3 to that Rule provides some context:

Matters are “substantially related” for purposes of this Rule if they involve the same transaction or legal dispute or if there otherwise is a substantial risk that confidential factual information as would normally have been obtained in the prior representation would materially advance the client’s position in the subsequent matter.

More Than “Playbook Knowledge”

Frequently, a former client accuses the attorney of having “insider information” regarding the client that does not rise to the level of a client confidence. Indeed, even if the attorney does not possess any direct information regarding the present lawsuit or transaction, the client may say that the attorney understands how the client thinks and acts. The attorney may know the client’s bottom line for settlement or how the client prefers to approach litigation. This is often referred to as “playbook knowledge”—the attorney knows the client’s paths and approaches.

As with the “substantial relationship” test, whether an attorney’s playbook knowledge is sufficient for disqualification is heavily dependent on the facts. Thus, there is no bright-line rule or test to determine whether an attorney should be disqualified because of her or his playbook knowledge. However, Comment 3 to Colo. RPC 1.9 sets a minimum baseline: “In the case of an organizational client, general knowledge of the client’s policies and practices ordinarily will not preclude a subsequent representation.”

This comment makes clear that attorneys are permitted, under some circumstances, to engage in representations that are adverse to a former client. Possessing “general knowledge” about a client may not, by itself, be enough for disqualification. Typically, a former client seeking to disqualify a former attorney from representing an opposing party must identify specific, cogent information that the attorney possesses and show that the information is confidential and implicates the duty of loyalty.

Attorneys should not assume that possession of mere playbook knowledge precludes disqualification. Attorneys should be aware, however, that clients can make a successful case for disqualifying attorneys who had a greatly invested role with the organizational client or where the playbook knowledge is uniquely and particularly relevant to the new representation.

Avoiding the Motion to Disqualify

The best way to deal with motions to disqualify is to prevent them. Two important pre-motion strategies are effective. First, identify and resolve potential conflicts, including both multiple and successive representations, before undertaking a representation or hiring a lateral. Where a conflict exists, an effective written consent is the best defense to a motion to disqualify.

Second, take effective steps to mitigate, if not eliminate, risks that a former client’s confidences and secrets might be accessible to attorneys working on a matter involving the former client. Increasingly, courts nationwide have recognized and accepted timely, effective ethics screens as a positive factor for permitting an attorney to continue the representation, although sometimes a screen is not enough to avoid the ramifications of an imputed conflict.[12] Nonetheless, if the attorneys choose to employ a screen, it is important that it be erected before the involvement of the conflicted attorney in the new representation.[13]

Responding to a Motion to Disqualify

Upon receiving a motion to disqualify, the attorney should promptly notify the client. Attempting to defeat the motion without advising the client is not an acceptable solution.

In addition, if the motion is made by a former client, attorneys should consider providing notice of a potential circumstance to their legal malpractice insurer. Such motions are sometimes followed by either a grievance or a legal malpractice claim.

Finally, assess whether the firm or different counsel should defend the motion to disqualify. Independent counsel, free from the suggestion of economic self-interest, often can more effectively than the attorney press the case for allowing the client to keep its counsel of choice.

Conclusion

Attorneys understandably may feel apprehensive about the threat of a motion to disqualify, given the potential risk and loss of work. However, by understanding the underpinnings of this ethical issue, attorneys will be better prepared to anticipate, respond to, or even avoid motions to disqualify.


Notes

[1] E.g., Celgard, LLC v. LG Chem., Ltd, No. 2014-1675 (Fed.Cir. Dec. 10, 2014) (order disqualifying Jones Day), http://assets.law360news.com/0606000/606910/Celgard-LGC%20Order%20disqualifying%20Jones%20Day.pdf; Utica Mut. Ins. Co. v. Employers Ins. Co. of Wausau, No. 6:12-cv-01293-NAM-TWD (N.D.N.Y. Dec. 18, 2014) (denying motion for summary judgment on issue of whether Hunton & Williams should be disqualified in underlying arbitration), http://assets.law360news.com/0580000/580691/Memorandum%20and%20Order.pdf; Defendant and Counterclaimant Tate & Lyle Ingredients Americas LLC’s Notice of Motion and Motion to Disqualify Squire Patton Boggs (US) LLP; Memorandum of Points and Authorities in Support Thereof, Western Sugar Coop. v. Archer-Daniels-Midland Co., No. 2:11-cv-03473-CBM-MAN (Aug. 26, 2014) (motion to disqualify Squire Patton Boggs), www.law360.com/dockets/download/53fdfac81101ea655a00000b?doc_url=https%3A%2F%2Fecf.cacd.uscourts. gov%2Fdoc1%2F031119586589&label=Case+Filing.

[2] Colo. RPC 1.6.

[3] Brown v. Encompass Ins. Co. of Am., No. 14-CV-01885-RM-BNB, 2014 WL 7177378 at *2 (D.Colo. Dec. 16, 2014) (the court noted that “[m]otions to disqualify opposing counsel are viewed with suspicion”).

[4] People v. Nozolino, 298 P.3d 915, 919 (Colo. 2013) (“Disqualification of a party’s chosen attorney is an extreme remedy and is only appropriate where required to preserve the integrity and fairness of the judicial proceedings.”) (citation omitted).

[5] See, e.g., People v. Shari, 204 P.3d 453, 457 (Colo. 2009) (distinguishing between duties to current clients under Colo. RPC 1.7 and to former clients under Colo. RPC 1.9).

[6] People v. Harlan, 54 P.3d 871, 877 (Colo. 2002).

[7] Id. (quoting People ex rel. Woodard v. Dist. Ct., 704 P.2d 851, 853 (Colo. 1985)).

[8] Myers v. Porter (In re Estate of Myers), 130 P.3d 1023, 1025 (Colo. 2006).

[9] Rodriguez v. Dist. Ct., 719 P.2d 699, 704 (Colo. 1986).

[10] Shari, 204 P.3d at 460-62. See also Harlan, 54 P.3d at 877 (the Court noted that “[i]n determining whether disqualification is warranted ‘the critical question is whether the litigation can be conducted in fairness to all parties’” and explained that “[d]isqualification should not be imposed unless the claimed misconduct in some way ‘taints’ the trial or legal system”) (quoting Fed. Deposit Ins. Co. v. Isham, 782 F.Supp. 524, 528 (D.Colo. 1992)).

[11] By far the majority of successful motions to disqualify are brought on the basis of a conflict of interest with a former or concurrent client or imputation, but attorneys should also be aware that successful motions to disqualify have been brought on the following bases, among others: (1) lawyer as witness, (2) appearance of impropriety, (3) receipt of confidential data, (4) personal interest, (5) violation of the no contact rules, and (6) misconduct with a witness. See Swisher, “The Practice and Theory of Lawyer Disqualification,” 27 Geo. J. Legal Ethics 71, 77 (Winter 2014).

[12] See People ex rel. Peters v. Dist. Ct., 951 P.2d 926, 930 (Colo. 1998).

[13] See People v. Perez, 201 P.3d 1220, 1246 n.11 (Colo. 2009).

Randy Evans is an author, litigator, columnist and expert in the areas of professional liability, insurance, commercial litigation, entertainment, ethics, and lawyer’s law. He has authored and co-authored eight books, including: The Lawyer’s Handbook; Georgia Legal Malpractice Law; Climate Change And Insurance; Georgia Property and Liability Insurance Law; Appraisal In Property Damage Insurance Disputes; and California Legal Malpractice Law. He writes newspaper columns (the Atlanta Business Chronicle, the Recorder, and the Daily Report) and lectures around the world. He served as counsel to the Speakers of the 104th – 109th Congresses of the United States. He co-chairs the Georgia Judicial Nominating Commission. He serves on the Board of Governors of the State Bar of Georgia. He handles complex litigation throughout the world. He has been consistently rated as one of the Best Lawyers in America, Super Lawyer (District of Columbia and Georgia), Georgia’s Most Influential Attorneys, and Georgia’s Top Lawyers for Legal Leaders. Along with numerous other awards he has been named the “Complex Litigation Attorney of the Year in Georgia” by Corporate International Magazine, and Lawyer of the Year for Legal Malpractice Defense in Atlanta. He is AV rated by Martindale Hubble.

Shari Klevens is a partner in the Atlanta and Washington, D.C. offices of McKenna Long & Aldridge LLP. Shari represents lawyers and law firms in the defense of legal malpractice claims and advises and counsels lawyers concerning allegations of malpractice, ethical violations, and breaches of duty. In addition, Shari is the Chair of the McKenna’s Law Firm Defense and Risk Management Practice and is a frequent writer and lecturer on issues related to legal malpractice and ethics. Shari co-authored Georgia Legal Malpractice Law and California Legal Malpractice Law, which address the intricacies and nuances of Legal Malpractice law and issues that confront the new millennium lawyer. She also co-authored The Lawyer’s Handbook: Ethics Compliance and Claim Avoidance, which is an easy-to-use desk reference offering practical solutions to real problems in the modern law practice for every attorney throughout the United States.

Lino Lipinsky de Orlov is a litigation partner in the Denver office of McKenna Long & Aldridge, LLP.  He represents clients in all aspects of commercial litigation, mediation, arbitration, and appeals.  He has developed particular experience in complex business cases, particularly those involving creditor’s rights, real estate, trade secrets, and employment disputes.  Mr. Lipinsky also frequently speaks and writes on legal issues relating to technology, employment law, and ethics.   He is a member of the Colorado Bar Association’s Board of Governors and serves on the Board of the Colorado Judicial Institute.  He is a former President of the Faculty of Federal Advocates.  Among his honors, Chambers USA has recognized Mr. Lipinsky as one of Colorado’s leading general commercial litigators, and he has been included in The Best Lawyers in America.  He received his A.B. degree, magna cum laude, from Brown University and his J.D. degree from New York University School of Law, where he was a member of the New York University Law Review.

 

The opinions and views expressed by Featured Bloggers on CBA-CLE Legal Connection do not necessarily represent the opinions and views of the Colorado Bar Association, the Denver Bar Association, or CBA-CLE, and should not be construed as such.

Colorado Supreme Court: Lone Pine Orders Not Allowable Under Colorado Rules of Civil Procedure

The Colorado Supreme Court issued its opinion in Antero Resources Corp. v. Strudley on Monday, April 20, 2015.

CRCP 16—Lone Pine Orders.

In this decision, the Supreme Court granted certiorari to consider whether a specialized type of modified case management order known as a “Lone Pine order” is authorized under the Colorado Rules of Civil Procedure. After the initial exchange of Rule 26 disclosures, Antero Resources Corporation asked the trial court to enter a modified case management order requiring the Strudleys to present prima facieevidence that they suffered injuries attributable to the natural gas drilling operations of Antero Resources. The trial court granted the motion and issued a Lone Pine order directing the Strudleys to provide prima facie evidence to support their allegations of exposure, injury, and causation before the court would allow full discovery. The trial court determined that the Strudleys failed to present sufficient evidence and dismissed their case with prejudice. The court of appeals reversed, concluding that, as a matter of first impression, Lone Pine orders “are not permitted as a matter of Colorado law.”

The Court affirmed the court of appeals’ judgment. The Court held that the Colorado Rules of Civil Procedure do not allow a trial court to issue a modified case management order that requires a plaintiff to present prima facie evidence in support of a claim before a plaintiff can exercise its full rights of discovery under the Colorado Rules.

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

Tenth Circuit: Automatic Bankruptcy Stay Deprives Tenth Circuit of Appellate Jurisdiction

The Tenth Circuit Court of Appeals issued its opinion in Eastom v. City of Tulsa on Monday, April 20, 2015.

Dustin Eastom filed § 1983 claims for malicious prosecution against the City of Tulsa, a Tulsa police officer (Mr. Henderson), and an ATF agent (Mr. McFaddon). Mr. Eastom also filed a negligence claim against the city under Oklahoma’s Governmental Tort Claims Act. After Mr. Eastom filed suit, Mr. McFaddon filed for bankruptcy, and Mr. Eastom’s claim against him was automatically stayed by 11 U.S.C. § 362. The district court entered summary judgment for the City and Mr. Henderson, dismissing Mr. Eastom’s claims with prejudice. It declined to exercise jurisdiction over Mr. Eastom’s state law claims against the City and also dismissed them with prejudice.

Mr. Eastom appealed the summary judgment order, and the Tenth Circuit issued an order to show cause why the appeal should not be dismissed because there was no final judgment as to all parties. Mr. Eastom voluntarily dismissed his district court claim against Mr. McFaddon without prejudice and responded to the show cause order that his appeal was now final because he was time-barred from refiling the claim. However, under Oklahoma’s savings statute, Mr. Eastom had an additional year to re-file his voluntarily withdrawn claims against Mr. McFaddon despite the time bar.

Mr. Eastom waited a year and again appealed to the Tenth Circuit. However, the § 362 stay was still in place, and the Tenth Circuit again ordered Mr. Eastom to show cause why his appeal should not be dismissed for lack of jurisdiction. Mr. Eastom contended the district court’s summary judgment was final because the time for refiling under the savings statute had elapsed.

The Tenth Circuit examined the interplay between the applicable statute of limitations, the savings statute, and the bankruptcy stay, and found that Mr. Eastom’s claims were still not final because the bankruptcy stay was still in place, tolling the statute of limitations. Because the automatic stay prevented Mr. Eastom from exercising legal remedies against the debtor, Oklahoma law prevents the running of the savings statute while the stay is in place.

The Tenth Circuit dismissed the appeal for lack of jurisdiction.

Tenth Circuit: Election of Remedies Doctrine Inapplicable Where Plaintiffs Neither Affirmed Nor Repudiated Contract

The Tenth Circuit Court of Appeals issued its opinion in Donner v. Nicklaus on Thursday, February 19, 2015.

Legendary golfer Jack Nicklaus lent his name to a golf course and luxury development, claiming in a press release he was so impressed with the land that he became a “founding charter member” of the development and urging others to purchase charter memberships at $1.5 million. The Donners are a married couple who purchased a charter membership. When the developer’s parent company declared bankruptcy, the developer was not able to build the golf course or luxury development. The Donners settled with the parent company in its bankruptcy proceedings, then sued Jack Nicklaus and Jack Nicklaus Golf Club, LLC for intentional misrepresentation, negligent misrepresentation, and violation of the Interstate Land Sales Full Disclosure Act.

The district court dismissed the action, holding the complaint failed to state a valid claim for relief and the defendants were entitled to summary judgment because the Donners elected their remedies by entering into a settlement agreement with the other parties. The Donners appealed, and the Tenth Circuit addressed five issues: (1) Defendants’ argument that the claims were untimely; (2) the district court’s dismissal of claims under the Interstate Land Sales Full Disclosure Act because the purchase of a charter membership did not concern a “lot”; (3) the district court’s dismissal of the Donners’ intentional misrepresentation claims; (4) the district court’s dismissal of the Donners’ negligent misrepresentation claims; and (5) the district court’s grant of summary judgment to Defendants on the grounds that the Donners elected the remedy of settlement.

The Tenth Circuit dismissed Defendants’ argument that the Donners’ claims were untimely because it was raised for the first time in district court in a reply brief. The District of Utah does not allow parties to assert new arguments in a reply brief, so the argument was waived.

Next, the Tenth Circuit addressed the Donners’ claims that they bought a lot based on Mr. Nicklaus’ fraudulent misrepresentations. However, under the Interstate Land Sales Full Disclosure Act, the misrepresentations must concern a lot, which Mr. Nicklaus’ statements did not. The Donners were promised an estate lot certificate with the purchase of a charter membership in the development, but the certificate did not refer to a specific parcel of land. No lots were ever developed and the Donners never had an opportunity to redeem their certificates, so the Interstate Land Sales Full Disclosure Act did not apply. The Tenth Circuit affirmed the district court’s dismissal of this argument.

Turning to the intentional misrepresentation claims, the Tenth Circuit found the Donners adequately alleged misrepresentation of Mr. Nicklaus’ membership status. The Donners purportedly relied on Mr. Nicklaus’ purchase of a charter membership when deciding to purchase a charter membership in the development due to his statements about being a “founding charter member.” The Tenth Circuit found that Mr. Nicklaus’ statements implied that he had purchased a charter membership, and that the Donners reasonably relied on those statements, and reversed the dismissal of the intentional misrepresentation claims pertaining to Mr. Nicklaus’ membership status. The Tenth Circuit found no other basis for intentional misrepresentation.

The Donners invoked the economic loss doctrine to support their claims for negligent misrepresentation. The Tenth Circuit found that the Donners did not adequately allege any duty of Mr. Nicklaus or Jack Nicklaus Golf Club, LLC outside of their contractual obligations, and affirmed dismissal on the negligent misrepresentation claims. No special relationship existed between the Donners and Defendants to support an outside duty.

Finally, the Tenth Circuit found erroneous the district court’s grant of summary judgment to Defendants on the grounds that the Donners elected their remedies against Defendants through the settlement agreement. Defendants argued the Donners were seeking inconsistent remedies involving both affirmance and repudiation of the charter membership agreement, but the Tenth Circuit found the Donners did neither by settling with the developer. Because the election of remedies doctrine was inapplicable, summary judgment failed.

The district court’s judgment was affirmed in part, reversed in part, and remanded for further proceedings.

Tenth Circuit: Sua Sponte Amendment of Original Opinion by Tenth Circuit

The Tenth Circuit Court of Appeals re-issued its opinion in ConAgra Foods, Inc. v. Americold Logistics, LLC on Thursday, April 9, 2015. The opinion was originally published on January 27, 2015, but the court sua sponte amended a sentence in the conclusion of the decision. Read the previous Legal Connection summary here.

Colorado Supreme Court: Hotel Has Duty of Reasonable Care to Intoxicated Guests During Lawful Eviction

The Colorado Supreme Court issued its opinion in Westin Operator, LLC v. Groh on Monday, April 13, 2015.

Summary Judgment—Negligence—Innkeeper–Guest Special Relationship—First Impression Duty of Care During Eviction—Colorado Dram Shop Act.

Through her parents, Jillian Groh sought to hold the Westin Hotel responsible for serious injuries she sustained in a drunk-driving accident following a lawful eviction from the Westin. The Westin filed a motion for summary judgment, which the trial court granted. The court of appeals initially affirmed the summary judgment order. The court of appeals then granted Groh’s petition for rehearing. A different panel withdrew the first court of appeals opinion, held that a hotel has a duty to evict a guest “in a reasonable manner,” and reversed the summary judgment order with respect to Groh’s claims of negligence and negligent hiring and training.

For the first time, the Supreme Court examined the duty of care a hotel owes a guest during a lawful eviction. Based on the special relationship that exists between an innkeeper and guest, the Court held that a hotel that evicts a guest has a duty to exercise reasonable care under the circumstances. This requires the hotel to refrain from evicting an intoxicated guest into a foreseeably dangerous environment. Whether a foreseeably dangerous environment existed at the time of eviction depends on the guest’s physical state and the conditions into which he or she was evicted, including the time, the surroundings, and the weather. In this case, genuine issues of material fact preclude summary judgment on Groh’s negligence-related claims.

The Court also considered whether the Dram Shop Act of the Colorado Liquor Code, CRS § 12-47-801, applies to this case. The Court concluded that the Act does not apply because it is undisputed that the Westin did not serve alcohol to Groh. Consequently, the Court affirmed the judgment of the court of appeals and remanded the case for further proceedings.

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

Colorado Supreme Court: Primary Tenant of Medical Building Not “Landowner” Under Premises Liability Act

The Colorado Supreme Court issued its opinion in Jordan v. Panorama Orthopedics & Spine Center, PC on Monday, April 13, 2015.

Premises Liability Act—Statutory Definition of “Landowner.”

In this case, the Supreme Court considered whether a clinic that was the main tenant at a medical campus qualified as a “landowner,” as defined by the Premises Liability Act, of a common area sidewalk where petitioner fell and sustained injuries. The Court determined that the clinic was not in possession of the sidewalk because it had only a right of non-exclusive use of the sidewalk and the landlord retained responsibility for maintaining that area. The Court then concluded that, under the terms of the lease and the facts of this case, the clinic was not legally responsible for the condition of the sidewalk or for the activities conducted or circumstances existing there. Therefore, the clinic was not the landowner within the meaning of the Premises Liability Act. The judgment was affirmed.

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

Colorado Court of Appeals: Separate Challenge to Attorney Fee Award Not Prerequisite to Filing C.R.C.P. 60 Motion

The Colorado Court of Appeals issued its opinion in Oster v. Baack on Thursday, April 9, 2015.

Employment Agreement—Attorney Fees—First Impression—Challenge Under CRCP 60.

Doctors Oster and Baack owned and practiced medicine at Horizon Women’s Care. Oster and Horizon severed Baack’s employment following the loss of her medical license and brought a declaratory judgment action seeking a declaration that Baack’s employment had been terminated “for cause,” which meant that Baack would only be entitled to 25% of the value of her ownership interest in Horizon. The court entered judgment in favor of Oster and Horizon and ordered Baack to pay their attorney fees. This decision was reversed on appeal, and Baack thereafter filed a CRCP 60 motion to vacate the attorney fees award. The trial court denied the motion to vacate.

This case raised an issue of first impression—whether a party who has not directly appealed from an order awarding attorney fees and costs may still challenge that award under CRCP 60. The trial court had jurisdiction to consider Baack’s CRCP 60 motion, and Baack did not need to separately appeal the attorney fees award before filing her CRCP 60 motion. Because the appellate court reversed the underlying judgment, the trial court had awarded fees and costs under the prevailing party provision of the Employment Agreement, and the remaining agreements between the parties did not entitle Oster and Horizon to an attorney fees award. Accordingly, the attorney fees award in favor of Oster and Horizon was vacated and the case was remanded to the trial court to award Baack a reasonable amount of attorney fees and costs incurred on appeal.

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

Special District Transparency, Home Services Contracts, Recorking Wine, and More Bills Signed

On Wednesday, April 8, 2015, Governor Hickenlooper signed 11 bills into law. To date, he has signed 113 bills this legislative session. The bills signed Wednesday are summarized here.

  • HB 15-1046 – Concerning Authorization for the Executive Director of the Department of Transportation to Waive Department Project Cost Estimate-Based Statutory Contract Amount Limits When Awarding a Highway Project Contract, by Rep. Dominick Moreno and Sen. Ray Scott. The bill allows the executive director of the DOT to contract for highway projects when there are fewer than three bids even if the bids are above the CDOT cost estimate.
  • HB 15-1067 – Concerning the Establishment of a Continuing Professional Development Program for Licensed Psychologists, by Reps. Tracy Kraft-Tharp & Lois Landgraf and Sen. Linda Newell. The bill requires licensed psychologists to complete at least 40 hours of continuing education for each two-year compliance period.
  • HB 15-1074 – Concerning the Liability of an Individual Member of a Board of County Commissioners in a Legal Proceeding in which the Board is Found Liable, by Rep. Ed Vigil and Sen. Larry Crowder. The bill protects board members from having judgments against the board enforced individually.
  • HB 15-1092 – Concerning the Transparency of Title 32, Colorado Revised Statutes, Special Districts, by Rep. Steve Lebsock and Sens. Beth Martinez Humenik & John Kefalas. The bill makes several changes to the law regarding special districts in order to increase transparency.
  • HB 15-1145 – Concerning the Regulation of Radioactive Materials, and, in Connection Therewith, Implementing an Audit Report Issued by the Federal Nuclear Regulatory Commission, by Rep. Bob Rankin and Sen. Mary Hodge. The bill modifies Colorado’s radiation control statutes as required by the federal Nuclear Regulatory Commission.
  • HB 15-1164 – Concerning the Postponement of Jury Service for a Person who is Breast-Feeding a Child, by Rep. Brittany Petterson and Sen. Andy Kerr. The bill allows a person who is breastfeeding a child to postpone jury service for up to two 12-month periods.
  • HB 15-1184 – Concerning the Operation of Charter School Networks, by Rep. Susan Lontine and Sen. Owen Hill. The bill allows charter schools to work with other charters in a charter school network and establishes guidelines for charter school networks.
  • HB 15-1202 – Concerning the Ability of a Licensing Authority to Reissue Expired Alcohol Beverage Licenses, by Rep. Jonathan Singer and Sen. Laura Woods. The bill allows a licensing authority to reissue liquor licenses that have been expired more than 90 days but less than 180 days if the licensee pays extra fines.
  • HB 15-1213 – Concerning Clarifications in Connection with the Responsibilities of the Office of Information Technology, by Reps. Jack Tate & Max Tyler and Sens. Beth Martinez Humenik & Tim Neville. The bill makes changes related to the Office of Information Technology, specifically defining “enterprise agreement” and allowing procurement of enterprise facilities.
  • HB 15-1223 – Concerning the Extension of Current Standards Regarding Home Services Contracts to New Homes, by Rep. Angela Williams and Sens. David Balmer & Cheri Jahn. The bill extends the regulation of home warranty service products for preowned homes to include new homes.
  • HB 15-1244 – Concerning the Ability of Members of a Club Licensed Under the “Colorado Liquor Code” to Remove from the Club a Resealed Container of Partially Consumed Vinous Liquor Purchased at the Club, by Reps. Jonathan Singer & Dan Nordberg and Sens. Cheri Jahn & Kevin Lundberg. The bill adds clubs to the list of liquor licensees who are allowed to recork wine bottles and send them with the customer.

For a complete list of Governor Hickenlooper’s 2015 legislative decisions, click here.

Tenth Circuit: No Abuse of Discretion to Deny Eve of Trial Amendment of Final Pretrial Order

The Tenth Circuit Court of Appeals issued its opinion in Monfore v. Phillips on Tuesday, February 10, 2015.

Sherman Shatwell went to the hospital complaining of neck pain, and although doctors determined he had throat cancer, he was not told until a year later, when it was too late to treat it. His surviving spouse and child brought negligence claims against the doctors and hospital. Two weeks before trial, a settlement was reached with some of the parties but not with Dr. Phillips. Dr. Phillips sought to amend the final pretrial order in order to claim contributory negligence by the settling parties but the trial court denied his motion. The jury found Dr. Phillips liable for negligence and awarded over $1 million in damages. Dr. Phillips appealed, arguing the district court’s denial of his motion to amend was reversible error.

The Tenth Circuit, in a majority opinion penned by Judge Gorsuch, conducted an abuse of discretion review and found none. The majority opinion admonished Dr. Phillips for not anticipating an eve of trial settlement by some of his co-defendants, and was unsympathetic to what it saw as Dr. Phillips’ regret for his decision to present a unified front with his co-defendants. The majority opinion also pointed out the prejudice to the plaintiff that could have come from Dr. Phillips’ eve of trial modification of the final pretrial order. Finding that even though the district court could have allowed Dr. Phillips to “rejigger his defense at the last minute,” the majority opinion concluded that outcome was far from mandatory. The Tenth Circuit affirmed the judgment of the district court.

Judge Moritz wrote a separate concurrence to point out that this was a closer call than the majority opinion implied. Judge Moritz evaluated the appeal under the four-pronged Koch analysis and found that the majority opinion focused too much on lack of surprise to Dr. Phillips rather than prejudice to the opposing party. Judge Moritz pointed out that although Dr. Phillips should not have been surprised by the settlement of some of the co-defendants, likewise the plaintiff should not have been surprised that Dr. Phillips would seek to revise his trial strategy in light of the settlement. Nevertheless, Judge Moritz found Dr. Phillips failed to satisfy his double burden of proving both manifest injustice and abuse of discretion, and concurred with the majority affirmance of the district court’s decision.

Colorado Court of Appeals: Declaratory Judgment Appropriate and Statutory Definition of Firearm Encompasses Bow Hunting

The Colorado Court of Appeals issued its opinion in Moss v. Board of County Commissioners for Boulder County on Thursday, March 26, 2015.

Declaratory Judgment—Firearm—Definition—County Board—Geographic Area.

This case concerns a county resolution that prohibits firearm discharges in a designated area of Sugar Loaf Mountain in unincorporated Boulder County. Moss and Westby live and own property in this area. Colorado Advocates for Public Safety is a nonprofit corporation whose mission is to assist in protecting the public from safety hazards, such as those involving firearms. This dispute between plaintiffs and the Board of County Commissioners for Boulder County (County Board) centers around the definition and scope of this resolution.

On appeal, plaintiffs contended that the district court erred in dismissing their declaratory judgment claim, wherein plaintiffs sought a judicial determination that, as a matter of law, the word “firearm” in CRS §§ 30-15-301 to -302 and Resolution 80-52 includes bows and arrows. Because a declaratory judgment would terminate the controversy or uncertainty regarding the scope of the resolution, plaintiffs’ declaratory judgment claim was properly raised in the district court and the district court erred in declining to address it.

The statute that authorizes counties to prohibit firearm discharges expressly defines “firearm” or “firearms” as “any pistol, revolver, rifle, or other weapon of any description from which any shot, projectile, or bullet may be discharged.” A bow is a weapon and an arrow is a projectile. Therefore, a bow and arrow constitute a “firearm” under this statute, and plaintiffs were entitled to a declaratory judgment in their favor on this issue.

Plaintiffs also requested an expansion of the geographic area covered by the resolution in their claim for injunctive relief. CRS § 30-15-302 does not subject the County Board to any procedural requirements to address plaintiffs’ request, and Colorado’s Administrative Procedure Act does not apply to the County Board. Additionally, plaintiffs concede that they have not asserted and cannot assert a claim under CRCP 106(a)(4) because there has been no final agency action in this case. Finally, plaintiffs have failed to state a constitutional due process claim on which relief can be granted. Therefore, the district court did not err in dismissing plaintiffs’ claim for injunctive relief on this issue.

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

e-Legislative Report: March 24, 2015

legislationCBA Legislative Policy Committee

For readers who are new to CBA legislative activity, the Legislative Policy Committee (LPC) is the CBA’s legislative policy-making arm during the legislative session. The LPC meets weekly during the legislative session to determine CBA positions on requests from the various sections and committees of the Bar Association.

The following bill was discussed as the only action item taken up at the meeting on Friday, March 20. Other bills of interest from that agenda are tracked and updated below.

HB 15-1272—Timely Filed Claims Not Barred By Laches
Sponsors: Rep. Daneya Esgar (D) & Sen. Chris Holbert (R)
The LPC voted to oppose this bill because Laches is an important equitable defense. Colorado has a long history with the Doctrine of Laches and this bill upsets that balance. We understand the specific nature of the concern addressed in the bill, but the approach to a solution was overbroad. Therefore we voted to oppose HB 1272.

SB 15-069—Repeal Job Protection Civil Rights Enforcement Act
Sponsors: Sen. Laura Woods (R) & Rep. Kevin Priola (R)
The Legislative Policy Committee voted to oppose this bill to maintain a consistent position with the CBA’s position on previous legislation (HB13-1136 which the CBA supported). SB 69 would have reversed the effect of that bill.

HB 15-1292—Resentence Juveniles Life Sentence No Parole
Sponsors: Rep. Daniel Kagan (D)
The LPC voted to support the Juvenile Law Section’s recommendation to support this bill. There was a great deal of discussion. The bill allows for Juveniles who were previously convicted to petition for resentencing. The bill takes into consideration many factors for both victims and offenders.

Bills that the LPC is monitoring, watching or working on can be found at this link on Priority Bill Track.

At the Capitol—Week of March 16

This past week was a slower week for Bar priority bills. A number of bills we are watching and working on have not been scheduled for hearings or debate. We are constantly watching to ensure we are represented and up to date on bills the LPC has taken action on, and expect that this section will be more full after the “Long bill” (the state budget) is passed over the next two weeks.

HB 15-1142—Public Trustee Conduct Electronic Foreclosure Sale
We successfully amended this bill per the Real Estate Sections requirements, working in conjunction with the Denver Public Trustee and Representative McCann.

SB 15-077—Parents Bill of Rights
This bill was Postponed Indefinitely by the House Committee on Public Health Care and Human Services.

New Bills of Interest

The pace of new bill introductions is now slowing down, but there are a few new bills introduced still introduced through the remainder of the session. We will highlight some of the bills we have identified for tracking or monitoring here:

SB 15-200—Private Student Loan Disclosure Requirements
Sponsors: Sen. Andrew Kerr (D) & Sen. Nancy Todd (D)

The bill prohibits a private educational lender, as defined in the bill, from offering gifts to a covered educational institution, as defined in the bill, including public and private institutions of higher education, in exchange for any advantage or consideration related to loan activities or from engaging in revenue sharing. Further, the bill prohibits persons employed at covered educational institutions from receiving anything of value from private educational lenders. The bill makes it unlawful for a private educational lender to impose a fee or penalty on a borrower for early repayment or prepayment of a private education loan and requires a lender to disclose any agreements made with a card issuer or creditor for purposes of marketing a credit card. The bill requires private educational lenders to disclose information to a potential borrower or borrower both at the time of application for a private education loan and at the time of consummation of the loan.

The required disclosures are described in the bill and include, among other disclosures, the interest rate for the loan and adjustments to the rate, potential finance charges and penalties, payment options, an estimate of the total amount for repayment at the interest rate, the possibility of qualifying for federal loans, the terms and conditions of the loan, and that the borrower may cancel the loan, without penalty, within three business days after the date on which the loan is consummated.

SB 15-210—Title Insurance Commission
Sponsors: Sen. Laura Woods (R) & Rep. Jennifer Arndt (D)

The bill creates the title insurance commission (commission). The bill establishes the powers, duties, and functions of the commission and provides for the appointment of the members of the commission. With the exception of rate regulation and licensing, which will continue to be done by the insurance commissioner, the commission participates in the regulation of the title insurance business in Colorado by concurring in rules of the insurance commissioner, proposing rules for approval by the insurance commissioner, and reviewing and concurring in disciplinary actions related to the regulation of the title insurance business. The commission is scheduled to sunset Sept. 1, 2025, subject to continuation after a sunset review as provided by law.