June 27, 2017

Colorado Supreme Court: Acknowledgment of Employer’s Vicarious Liability Bars Direct Negligence Claims Against Employer

The Colorado Supreme Court issued its opinion in In re Ferrer v. Okbamicael on Monday, February 27, 2017.

Tort—Respondeat Superior Liability—Direct Negligence.

In this original proceeding under C.A.R. 21, the Colorado Supreme Court reviewed trial court orders dismissing plaintiff’s direct negligence claims against an employer that acknowledged vicarious liability for its employee’s negligence, and denying plaintiff’s motion for leave to amend her complaint to add exemplary damages against the employer and the employee. The court adopted the rule articulated in McHaffie v. Bunch, 891 S.W.2d 19 822 (Mo. 1995), which held that an employer’s admission of vicarious liability for an employee’s negligence bars a plaintiff’s direct negligence claims against the employer. The court declined to adopt an exception to this rule where the plaintiff seeks exemplary damages against the employer. The court concluded that the trial court did not err in dismissing plaintiff’s direct negligence claims against the employer or in denying plaintiff’s motion for leave to amend the complaint to add exemplary damages. The court therefore affirmed the trial court orders and discharged the rule to show cause.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Objection to Prejudicial Evidence Preserved Despite Direct Examination Testimony

The Colorado Court of Appeals issued its opinion in McGill v. DIA Airport Parking, LLC on Thursday, November 17, 2016.

Trina McGill filed a negligence claim against DIA Airport Parking after the side mirror on one of its shuttle buses hit her in the head. Before trial, McGill moved to exclude evidence of a 20-year-old conviction for check kiting, a type of check fraud. The trial court denied her motion under CRE 608(b) but did not address CRE 403. At trial, McGill introduced the check fraud evidence on direct examination. The jury returned a verdict in favor of DIA, and McGill appealed, arguing the trial court erred in admitting the evidence under CRE 608(b) and 403. DIA argued McGill could not challenge the admission because she introduced it first on direct examination.

The Colorado Court of Appeals found that invited error did not apply because McGill did not expressly acquiesce in the trial court’s ruling. Instead, the trial court ruled over her objection that the evidence was admissible, and she strategically introduced it at trial in an attempt to mitigate the damage. The court of appeals also declined to rule that she waived her right to challenge the evidence. McGill’s attempt to counter the effect of the impeachment evidence was not an intentional abandonment of her objection.

The court of appeals evaluated the U.S. Supreme Court’s ruling in Ohler v. United States, 529 U.S. 753, 755 (2000), and found the dissent by Justice Souter persuasive. Because Ohler‘s ruling did not address constitutional issues, it is not binding on state courts. Justice Souter’s dissent asserted that the majority opinion fostered unfairness at trial. The court of appeals agreed, and ruled that when a party has objected to the admission of impeachment evidence, it is unnecessary and unfair to force her to choose between preserving that objection for appeal and pursuing the most advantageous trial strategy. The court therefore concluded that McGill could challenge the trial court’s ruling on appeal.

The court next addressed McGill’s argument that the trial court erred by admitting the underlying facts of her check fraud conviction under CRE 608(b) because the fact that she passed bad checks many years ago was not probative of her character for truthfulness. The court of appeals disagreed, finding that the small amount of the crime and the length of time intervening went to the weight of the evidence, not the admissibility. The court found no error.

The court turned to McGill’s argument that the trial court erred in not evaluating the evidence under CRE 403. The court found that although the trial court did not make express findings, there was nothing to suggest that it had not conducted a CRE 403 analysis. The court noted that because McGill did not argue on appeal that the evidence was inadmissible under the rule, it would not address that argument.

The trial court’s judgment was affirmed.

Tenth Circuit: Attorney Fee Award Appropriate Where Oil and Gas Well Sustained Physical Damage

The Tenth Circuit Court of Appeals issued its opinion in Sundance Energy Oklahoma, LLC v. Dan D. Drilling Corp. on Friday, September 2, 2016.

Sundance contracted with Dan D. to drill several oil and gas wells, and used a standard International Association of Drilling Contractors (IADC) form for each individual well. Dan D. was unable to drill several of the wells because it could not acquire permits, so Sundance asked Dan D. to drill a different group of wells instead, including the Rother well, under the supervision of Tres Management. Although Dan D. did not have a contract, it began drilling the Rother well in December 2012 under the supervision of a Tres company man. Days later, Dan D.’s drill pipe became stuck in the hole. After several failed attempts to remove the pipe, the company man instructed the Dan D. employees to stop pulling on the pipe. A driller ignored the instructions and continued pulling on the pipe, causing the drilling line to break and throw debris, killing the driller. A medical examiner later determined the driller had substantial amounts of methamphetamine in his blood at the time of his death.

A subsequent OSHA investigation suspended all drilling at the Rother well, concluding that the drilling failure resulted from progressive fatigue on the drill line. OSHA issued a citation to Dan D. for failing to inspect and properly maintain the drill line. After the OSHA investigation concluded, Sundance attempted to fish out the stuck drill pipe, but the wellbore had deteriorated and the well was ultimately plugged and abandoned as a total loss.

Sundance sued Dan D. for damages, asserting that Dan D.’s negligence, gross negligence, and breach of implied contract to drill the well in a workmanlike manner resulted in the loss of the hole. Dan D. filed several motions in limine prior to trial, including objecting to the admission of the OSHA narratives and the medical examiner’s toxicology report. The district court denied the motion to suppress the toxicology report and partially denied the motion to suppress the OSHA reports, allowing only portions of the documents to be used. At trial, Sundance’s expert witness testified that Dan D.’s failure to log and track the ton miles of the drill line was “unheard of” in the industry, and that Dan D. should have slipped and cut the drill line to prevent the accident. Sundance relied on Dan D.’s gross negligence caused the line failure and the ultimate loss of the hole. Dan D. disagreed, arguing the fault should lie with Tres and the company man. Dan D. also argued that the IADC contract’s exculpatory provisions state that Sundance was liable for any loss or damage to the hole. Dan D. also asked the district court to instruct the jury that it should impute negligence to Tres, but the district court declined to do so. The district court instead instructed the jury that if it did not find Dan D. was grossly negligent, it should not consider whether an implied contract between the parties incorporated the IADC contract’s exculpatory provisions.

The jury returned a verdict for Sundance, finding Dan D. was grossly negligent and breached an implied contract to drill the well in a workmanlike manner. The jury attributed 75% of the loss to Dan D.’s negligence and 25% to Tres’ negligence, awarding Sundance $1.2 million in damages. Dan D. moved for a new trial under F.R.C.P. 59(a). The district court denied the motion and Dan D. appealed that order. Sundance then filed a motion for attorney fees, which the district court granted. Dan D. also appealed the attorney fee award. The appeals were consolidated.

Dan D. first argued the district court erred in instructing the jury that it need not consider whether the implied contract included the allocation of risk provisions if it found Dan D. grossly negligent, and refusing to impute Tres’ negligence to Sundance. The Tenth Circuit analyzed Dan D.’s claims for abuse of discretion and found none. The district court based its instruction regarding gross negligence on an Oklahoma Supreme Court case where a federal district court certified a question to the Oklahoma Supreme Court regarding whether an exculpatory provision was valid and enforceable. The Oklahoma Supreme Court ruled it was not enforceable in cases involving, among other things, gross negligence. The Tenth Circuit approved of the district court’s reliance on this case and found no abuse of discretion.

Dan D. also argued the district court should have granted a new trial based on its refusal to give Dan D.’s proposed instructions on whether Sundance owed Dan D. a non-delegable duty. The Tenth Circuit found that even if it agreed with Dan D. that the district court erred by not giving the proposed instruction, the error did not prejudice Dan D. because the jury’s verdict for Sundance on the breach of implied contract claim independently supported the damages award. Accordingly, any imputation of negligence would not have affected the breach of contract award.

The Tenth Circuit also found no error in the district court’s admission of the toxicology report or OSHA narratives. Because Dan D. did not object to the admission of any other evidence, and other evidence showed Dan D.’s failures, Dan D. could not show prejudice by the admission of the toxicology report or OSHA narratives.

Finally, the Tenth Circuit addressed Dan D.’s challenge to the attorney fee award. The Tenth Circuit evaluated Okla. Stat. tit. 12, § 940(A), which provides for attorney fees to the prevailing party in any action related to the negligent or willful injury to property, and found the statute applicable in the instant action. The Tenth Circuit noted the physical deterioration of the Rother well during the 12-day OSHA investigation was precisely the type of injury contemplated under § 940(A). Because Sundance prevailed in the action regarding physical injury to a well, the attorney fee award was appropriate.

The Tenth Circuit affirmed the district court.

Tenth Circuit: Release of Liability for Recreational Activity Precludes Claims for Negligence Per Se

The Tenth Circuit Court of Appeals issued its opinion in Espinoza v. Arkansas Valley Adventures, LLC on Tuesday, January 5, 2016.

Sue Ann Apolinar hired a guide through Arkansas Valley Adventures, LLC, for a family rafting trip and camping excursion in the Colorado Rocky Mountains. Ms. Apolinar and the family received guidance and signed a release before navigating the rapids. However, while maneuvering around a rapid known locally as Seidel’s Suck Hole, the raft capsized. The current swept Ms. Apolinar into a logjam, and despite efforts to save her, she drowned. Ms. Apolinar’s son, Jesus Espinoza, Jr., brought suit against the rafting company, alleging negligence per se and fraud. The company moved for summary judgment, averring that the release signed by Ms. Apolinar shielded them from liability, and the district court granted their motion. Mr. Espinoza appealed.

On appeal, the Tenth Circuit addressed whether Colorado law allows parties to contract away claims of negligence. The Tenth Circuit evaluated the four Jones factors in determining whether to respect agreements of the sort Ms. Apolinar entered into: (1) the existence or lack thereof of a duty to the public, (2) the nature of the service performed, (3) whether the contract was fairly entered into, and (4) whether the parties’ intention is expressed in clear and unambiguous language. The Tenth Circuit noted that the first two factors tend to focus on public policy while the second two focus on party- and contract-specific questions. The Tenth Circuit noted that the Colorado Supreme Court has generally held that businesses engaged in recreational activities generally owe no special duties to the public.

Mr. Espinoza attempted to distinguish his claim from those disallowed by the Colorado courts, noting that his claim was for negligence per se, noting that rafting companies may face criminal liability for careless or imprudent operation of a raft and therefore rafting has become a matter of public concern. The Tenth Circuit disagreed, finding that Mr. Espinoza’s argument conflated state regulation with matters of public importance—whether an activity is of practical necessity or recreational in nature. The Tenth Circuit found that Colorado courts have upheld releases of liability for other recreational activities, and noted that the General Assembly was free to amend the statutes in the future to address contractual releases of liability for negligence. The Tenth Circuit also noted that the Colorado Consumer Protection Act may preclude enforcement of releases where plaintiffs plead viable claims under that statute.

Turning to the third and fourth Jones factors, the Tenth Circuit again found that they favored the rafting company. Mr. Espinoza argued that his mother was not fairly apprised of the dangers of the rafting trip, but the release she signed clearly indicated that rafting can cause “physical injury and/or death.” The Tenth Circuit found the disclosures in the release sufficient to satisfy the third and fourth Jones factors. The Tenth Circuit further agreed with the district court that the release resolved Mr. Espinoza’s fraud claim, concluding that even if the company misrepresented the danger of the rafting excursion in Ms. Apolinar’s initial phone call, the release she signed clearly enumerated the risks.

The Tenth Circuit affirmed the district court. Judge Hartz concurred in part and dissented in part; he would have allowed a jury to determine whether the third Jones factor was satisfied.

Colorado Supreme Court: Hospital Assumed Duty to Protect Suicidal Patient from Self-Harm

The Colorado Supreme Court issued its opinion in In re P.W. v. Children’s Hospital Colorado on Monday, January 25, 2016.

Torts—Medical Malpractice—Comparative Negligence.

In this original proceeding arising out of a medical malpractice action, the Supreme Court considered whether the defendant hospital’s comparative negligence and assumption of risk defenses were properly dismissed on summary judgment. First, the Court analyzed the nature of defendant’s duties toward the patient and determined that defendant undertook to render mental healthcare services to prevent the patient from engaging in self-harm. The Court then reasoned that the scope of defendant’s assumption of duty subsumed any legal duty the patient had not to engage in foreseeable self-destructive behavior. Accordingly, the Court concluded that defendant cannot assert the patient’s comparative negligence under the facts of the case and discharged the rule.

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

Colorado Court of Appeals: No Requirement that Complaint be “Well Pleaded” Before Entry of Default

The Colorado Court of Appeals issued its consolidated opinion in Dickinson v. G4S Secure Solutions (USA) Inc. and Dickinson v. Lincoln Building Corporation on Thursday, November 19, 2015.

Premises Liability—Entry of Default—Comparative Negligence and Pro Rata Liability.

This is a consolidated appeal in a premises liability case brought by Charlene Dickinson against Lincoln Building Corporation (LBC); Wells Fargo Bank National Association (Wells Fargo); and G4S Secure Solutions (USA), Inc. (G4S). Dickinson sought damages for shoulder injuries sustained when she attempted to open a door leading to her workplace that allegedly was locked or malfunctioning.

LBC and Wells Fargo admitted they were served but failed to enter an appearance or file an answer. The district court entered default against them, and they filed a joint motion to set it aside, which the court denied. On appeal, LBC and Wells Fargo argued the default should have been set aside because it was entered in violation of their right to due process of the law and it was not well pleaded. The Court of Appeals disagreed. LBC and Wells Fargo were properly served with the complaint and summons, and they failed to enter an appearance or file an answer until almost a year later, well after the court had entered default. As to the argument that the trial court had to first find that the complaint was “well-pleaded,” the Court could find absolutely no support for any such requirement.

LBC and Wells Fargo also argued that they should have been permitted to present evidence of Dickenson’s comparative negligence and G4S’s pro rata liability at the damages hearing after entry of default. The Court disagreed, finding that the default constituted an admission of liability that precluded them from thereafter presenting evidence of others’ comparative fault. The damages hearing was only to determine the amount of damages owed and any discussion of liability underlying that award is prohibited.

Dickenson argued that the trial court erred in rejecting a tendered negligence per se instruction as to G4S. The Court affirmed, finding that the tendered instruction did not apply to G4S, a security company, but to the manufacturer of the door’s locking mechanism. Moreover, even if it did apply, no evidence was presented that the code section regarding the door’s locking mechanism was intended to protect against injuries stemming from attempting to open a locked exit door. The judgments and orders were affirmed.

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

Tenth Circuit: Dismissal Appropriate Where Plaintiffs Failed to Show Scienter

The Tenth Circuit Court of Appeals issued its opinion in In re ZAGG, Inc. Securities Litigation: Swabb v. ZAGG, Inc. on Tuesday, August 18, 2015.

Robert Pedersen, former CEO and Chair of ZAGG, Inc., pledged nearly half of his shares in ZAGG, Inc., as collateral in a margin account. Pedersen’s pledged shares equaled nearly 9 percent of the company. ZAGG was required by SEC Rule S-K to disclose the amount of shares pledged as security “in a footnote or otherwise” in ZAGG’s Form 10-K, but Pedersen failed to make the required disclosure. In December 2011, ZAGG share prices fell, creating a deficiency in Pedersen’s account, and he was forced to sell 345,200 of his shares to meet the margin call. He mailed a Form 144 to the SEC disclosing the margin call on December 22, 2011, and electronically filed a Form 4 the next day. Pedersen’s account experienced a second margin deficiency in August 2012, and he was forced to sell an additional 515,000 shares. Pedersen filed a Form 4, stating the sale occurred “to meet margin calls.”

On August 17, 2012, ZAGG issued a press release announcing Pedersen was stepping down as Chair and CEO. ZAGG also filed a Form 8-K with the SEC, stating the company had implemented a policy prohibiting officers, directors, and 10 percent shareholders from pledging ZAGG securities on margin. A week later, after Pedersen’s resignation was final, a third margin call resulted in the forced sale of his remaining ZAGG shares. ZAGG held a conference call to reassure investors, and stated that Pedersen’s departure was entirely related to the margin call situation. Pedersen also spoke at the call, telling investors he had taken a step toward building investor confidence by completely deleveraging his ZAGG stock.

Plaintiffs filed a complaint against ZAGG and six individual officers and directors on behalf of a putative class of all people who purchased ZAGG stock during the relevant time period, alleging the company’s filings omitted material information regarding Pedersen’s pledged shares and also that ZAGG failed to disclose a secret succession plan that had been implemented after Pedersen’s first margin call in December 2011. Defendants filed two motions to dismiss, the first by Pedersen and the second by ZAGG and several individual officers and directors. After a hearing on the motions, the court dismissed the complaint with prejudice, finding the § 10(b) and § 14(a) claims failed because they did not allege with particularity facts giving rise to a strong inference Pedersen intended to violate securities laws. Plaintiffs appealed only the dismissal of their §10(b) and Rule 10b-5 claims and only as to Pedersen and ZAGG, and only as to Pedersen’s material omission of his margin account.

The Tenth Circuit agreed with the district court that plaintiffs failed to meet the heightened pleading requirements applicable to the scienter element in § 10(b) claims. The district court held that plaintiffs proved only one element of scienter—that Pedersen knew of the pledged securities in the margin account. The district court held, and the Tenth Circuit agreed, that the complaint failed to allege any facts showing that Pedersen knew failure to reveal the account would likely mislead investors. Plaintiffs listed five facts they claimed proved scienter: (1) Pedersen made inconsistent statements following the first margin call, (2) Pedersen selectively complied with the Item 403(b) disclosure requirement, (3) Pedersen knew that disclosing his margin account would jeopardize his position at ZAGG, (4) Pedersen was forced to resign because of his margin account, and (5) following Pedersen’s resignation, ZAGG adopted a policy prohibiting holding stock in margin accounts. The Tenth Circuit analyzed each claim.

First, the Tenth Circuit evaluated plaintiffs’ claim that Pedersen’s statements on the Forms 144 and 4 in December 2011 were inconsistent. Pedersen stated on the Form 4 that the sale was made “to meet an immediate financial obligation” and on the Form 144 that the sale was made “to meet margin calls.” The Tenth Circuit found no inconsistency in these two statements, as margin calls could certainly be characterized as immediate financial obligations. Plaintiffs also argued that it was deceptive of Pedersen to mail the Form 144 when he e-filed the Form 4, but the Tenth Circuit noted Pedersen was under no obligation to deliver the forms via the same method.

The Tenth Circuit next addressed plaintiffs’ argument that Pedersen’s failure to disclose his margin account amounted to scienter. Defendants argued that the violation of a rule is not enough to show scienter, and the Tenth Circuit agreed. Without some other facts evidencing Pedersen knowingly omitted the disclosure, the violation alone was not enough. Plaintiffs argued Pedersen failed to disclose the account because he knew it would jeopardize his position at ZAGG, but the Tenth Circuit again found that at most Pedersen’s execution of the certifications supported an inference of negligence.

The Tenth Circuit similarly found that neither Pedersen’s forced resignation nor ZAGG’s implementation of a new policy barring investors from pledging ZAGG shares on margin accounts established an intent to defraud. Rather, the Tenth Circuit found that both the resignation and new policy acknowledged that the company had found a better way to run its business moving forward. The district court found, and the Tenth Circuit agreed, that the complaint failed to allege any facts giving rise to an inference of scienter. Plaintiffs argued that even if the knowing element was not met, the facts showed that Pedersen acted with reckless disregard of a substantial likelihood of misleading investors. The Tenth Circuit disagreed, finding that plaintiffs failed to overcome the high standard necessary to show recklessness.

The Tenth Circuit affirmed the district court.

Tenth Circuit: Exception to Open and Obvious Doctrine Applies Where Employees Must Confront Danger for Work

The Tenth Circuit Court of Appeals issued its opinion in Martinez v. Angel Exploration, LLC on Tuesday, August 4, 2015.

Jesus Martinez was employed Smith Contract Pumping (SCP) to conduct routine inspections on oil wells in Oklahoma. While inspecting a well owned by Angel Exploration, LLC, Martinez dropped a tool. As he bent to retrieve it, the sleeve of his sweatshirt was caught in Angel’s unguarded pump jack and his hand was pulled into the well, severing his thumb. Martinez received workers’ compensation benefits from SCP but also filed tort claims against Angel, alleging that the lack of guarding was an unreasonably dangerous condition and Angel was negligent in failing to inspect its wells and to warn or take other precautions to protect Martinez. During discovery, SCP admitted Angel relied on SCP to report any needed repairs or adjustments to Angel, but also said that SCP’s employees were not trained on what guards were needed on a pump jack. And although Angel’s managing member admitted that the lack of a guard would be obvious to anyone who saw the well, he also said Angel never confirmed that SCP knew what was required by safety regulations, including a relevant OSHA regulation. Martinez testified that although he was aware the well was not guarded, he did not know he was supposed to report that, and another person testified that the well had not been guarded since 2003.

Martinez brought additional claims against Angel, averring that his claims fell within the Oklahoma Workers’ Compensation Act’s intentional tort exception. He sought actual and punitive damages and his wife brought derivative claims for loss of consortium and household services. Angel moved for summary judgment. The district court found the danger imposed by the unguarded well was open and obvious and therefore Angel had no duty to warn or otherwise remedy the condition. The court also found that the Oklahoma Workers’ Compensation Act’s intentional tort exception did not apply because there was no evidence Angel intentionally caused the tort. The district court also entered summary judgment on Martinez’ wife’s claims since they were derivative.

Martinez appealed, arguing (1) Angel’s failure to comply with the OSHA regulation constituted negligence per se; (2) because Martinez’ attention was distracted, fact issues exist as to whether the danger was open and obvious; (3) there were competing inferences as to whether Martinez fully appreciated the danger of the unguarded belt and whether it had a deceptively innocent appearance; and (4) even if the danger was open and obvious, Angel should have anticipated harm. The Tenth Circuit summarily dismissed the first two arguments as forfeited because they were not raised in district court. The Tenth Circuit also rejected the third argument, finding reasonable minds could not differ as to the open and obvious nature of the unguarded belt. As to the fourth argument, however, the Tenth Circuit reluctantly reversed due to an intervening Oklahoma Supreme Court decision that greatly changed application of the open and obvious doctrine.

The Tenth Circuit analyzed Wood v. Mercedes-Benz, 336 P.3d 457 (Okla. 2014), and found that it dramatically changed Oklahoma’s law regarding open and obvious dangers to invitees. Wood recognized an exception to the open and obvious doctrine where the invitee was required to confront the open and obvious danger as a condition of employment. The Tenth Circuit found Martinez’ case indistinguishable from Wood, and remanded for the parties to brief and argue the scope of Wood and how Oklahoma courts might resolve the question of whether Angel had notice that its well was unguarded.

The Tenth Circuit next turned to Martinez’ claim that Angel’s failure to guard the well constituted an intentional tort. The Tenth Circuit rejected this argument, finding that the district court correctly rejected this alternative theory of liability. Martinez resisted Angel’s argument that at the time of the accident he was a statutory employee of Angel and therefore the Workers’ Compensation Act’s exclusive remedy provision applied. The Tenth Circuit rejected Martinez’ argument.

The district court’s grant of summary judgment to Angel on the intentional tort claim was affirmed. The district court’s grant of summary judgment to Angel on the open and obvious claim was reversed and remanded for reconsideration in light of Wood.

Colorado Court of Appeals: Jury Determination that Defendant’s Negligence Did Not Cause Plaintiff’s Injuries Acceptable

The Colorado Court of Appeals issued its opinion in Vititoe v. Rocky Mountain Pavement Maintenance, Inc. on Thursday, June 18, 2015.

Personal Injury—Challenges to Jurors and Jury Verdict and Jury Instructions.

Plaintiff was riding his motorcycle late at night. Shortly after making a U-turn, he collided with a lowboy trailer that was connected to a tractor driven by an employee of defendant. The collision occurred as the tractor was either stopped or beginning to proceed through an intersection controlled by a traffic signal that had turned green.

Plaintiff alleged negligence on the part of the truck driver. Plaintiff’s expert opined that defendant’s employee had worked more than the allowable fourteen-hour day and was likely tired and inattentive at the intersection and stopped for an unreasonable amount of time. Another expert for plaintiff testified that the taillights were positioned too low. The jury returned a special verdict form finding defendant was negligent but its negligence was not a cause of plaintiff’s injuries. Judgment was entered for defendant.

On appeal, plaintiff argued that some of the jurors made prejudicial statements during voir dire concerning motorcyclists’ helmet use, and that the trial court erred by refusing to canvass the jurors on that topic, give a limiting instruction, or declare a mistrial. The Court of Appeals disagreed. In Colorado, evidence of a plaintiff’s failure to wear a helmet is inadmissible to show negligence on the part of the plaintiff or to mitigate damages. If the jury learns a motorcyclist was not wearing a helmet, a limiting instruction may be required. When a prospective juror makes a potentially prejudicial statement during voir dire, the trial court may issue a curative instruction, canvass the jury, or declare a mistrial. Whether a statement is potentially prejudicial depends significantly on the facts and circumstances. Here, no juror expressed an opinion that plaintiff was negligent for not wearing a helmet and, in fact, there was no evidence allowed as to whether or not plaintiff wore a helmet.

Plaintiff argued that the evidence admitted at trial did not support the jury’s verdict. After reviewing the evidence presented, the Court found that there was competent evidence to support the verdict.

Plaintiff argued that the court erroneously instructed the jury by not omitting any reference to the doctrine of assumption of risk because the evidence did not support it. The Court found that testimony from a detective that plaintiff “accelerated toward something he saw” supported the instruction regarding assumption of risk.

Plaintiff argued that the court erred by instructing the jury that the law presumes a driver is negligent if the driver hits another vehicle in the rear. Plaintiff contended that the instruction should not have been given because this was not a rear-end collision, but a barrier crash. The Court found no authority to suggest that hitting the lowboy trailer, even if not moving forward, constituted a barrier crash as opposed to a type of rear-end collision. The judgment was affirmed.

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

Colorado Court of Appeals: No Abuse of Discretion to Admit Video Deposition of Adverse Witness

The Colorado Court of Appeals issued its opinion in Winkler v. Shaffer on Thursday, May 7, 2015.

Motion to Strike Video Deposition—Negligence Per Se Jury Instruction.

Plaintiffs were injured in a multi-vehicle accident during a snowstorm on an icy highway. Defendant lost control of a semitrailer after he was struck by two vehicles and came to a stop blocking the highway. Plaintiffs’ vehicle hit defendant’s truck in the ensuing pileup. Plaintiffs sued defendant and a number of other co-defendants not parties to this appeal.

At trial, defendants submitted a video deposition of Sergeant Gates, who, as the first law enforcement officer to respond to the accident, had witnessed part of it. Gates concluded that defendant drove reasonably, given the weather and road conditions.

Following trial, the jury concluded that some defendants were negligent and had caused 100% of plaintiffs’ injuries. It also concluded that defendant and several other co-defendants were not negligent and had not caused plaintiffs’ injuries.

On appeal, plaintiffs asserted that the trial court erred in denying their motion to strike Sergeant Gates’s deposition. Plaintiffs argued that Gates’s deposition exceeded the expert disclosure’s scope and that they did not have adequate time before trial to respond to the opinions expressed. The Court of Appeals disagreed. Plaintiffs failed to establish any prejudice or harm associated with this alleged error. They made no offer of proof of what they would have done or shown had they had additional time to respond to the deposition. They never requested a continuance after the deposition, which was taken ten days before trial. Moreover, their expert’s testimony provided rebuttal to the opinions expressed in the deposition, so any error was harmless.

Plaintiffs argued that the trial court erred in refusing to give a negligence per se instruction. The Court disagreed. The instructions given described the standard for common law negligence. Because the statutory standard under CRS §§ 42-4-1008 and -1101 codify common law negligence, any additional negligence per se standard would have been redundant. To find a statutory violation needed to establish negligence per se, a jury first has to find negligence, so giving the added instruction is not necessary. The judgment was affirmed.

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

Frederick Skillern: Real Estate Case Law — Lawyers and Professional Liability

Editor’s note: This is Part 14 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

Gibbons v. Ludlow
Colorado Supreme Court, July 1, 2013
2013 CO 49

Professional negligence; transactional “case within the case”; causation of damage; “better deal” test.

This case was mentioned in last year’s “supplement” to our outline, and is repeated here for convenience, as it is an important case in the professional liability circles. It involves liability claims against both brokers and transactional attorneys, and the key element of causation. If one is negligent in advising a client in a transaction, and the client gains less from a deal than is anticipated, must the plaintiff prove that a “better deal” could be had? The court is required to find the analog to the “case within a case” that is tried in legal malpractice actions arising out of the litigation process. Although the case addresses the liability of a seller’s broker, the same principles apply to a claim against a seller’s attorney.

The trial court answered the presented question affirmatively, and dismissed a negligence claim against the seller’s broker on summary judgment. The court of appeals reversed, but the supreme court reverses and reinstates the summary judgment ruling. To sustain a professional negligence claim against a transaction real estate broker (or attorney), a plaintiff must show causation of damage, in addition to negligence. That is, it must be shown that but for the alleged negligent acts of the broker, the seller either (1) would have been able to obtain a better deal in the underlying transaction, or (2) would have been better off by walking away from the underlying transaction. In the court’s view, the sellers failed to present evidence that any negligence of the broker caused the seller to suffer damage. They did not establish beyond mere possibility or speculation that they suffered a financial loss as a result of the transactional broker’s professional negligence. Because no injury could be shown, the trial court properly granted summary judgment as a matter of law.

The underlying deal was documented in a contract with a set price, with adjustments for construction of infrastructure and cost-sharing with other developers. The sellers claim that the brokers failed to explain that the net income from the transaction could be substantially less than the stated purchase price as a result of the cost-sharing provisions. The brokers argued that their sellers submitted no evidence that they could have sold the property to someone else for more. This is termed the “better deal” test. The sellers respond that they presented evidence that the property was worth the contract price, or $1.6 million more than the net proceeds of the deal. They argue that they can recover in negligence for this “no deal” scenario. The court of appeals agreed and held that the general measure of damages for a total loss of property is the fair market value of the property at the date of loss. In effect, the Supreme Court says — you must prove you could have sold the property for more, or that you would have made more had you walked away from the deal.

 

Baker v. Wood, Ris & Hames

Petition for Writ of Certiorari GRANTED February 3, 2014.

Summary of the Issues:

  • Whether the court of appeals erred in determining that third-party intended beneficiaries of a deceased testator’s estate plan lack standing to pursue a claim for professional malpractice against the testator’s estate planning attorneys based on either breach of contract or professional negligence.
  • Whether the court of appeals erred in confusing petitioners’ claim for fraudulent concealment with the distinct tort of fraudulent misrepresentation in applying the heightened pleading requirements of C.R.C.P. 9(b) to petitioners’ concealment claim as if it were a claim for fraudulent representation.
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.

Tenth Circuit: Particular Circumstances Leading to Fall from Horse Should Be Analyzed for Liability Determination

The Tenth Circuit Court of Appeals issued its opinion in Kovnat v. Xanterra Parks & Resorts on Tuesday, October 21, 2014.

Corrine Kovnat and her husband vacationed in Yellowstone National Park in Wyoming in June 2012. While there, Kovnat and her husband went on a horseback ride at the Canyon Corral, operated by Xanterra Parks & Resorts. While on the trail, Kovnat’s saddle slipped and she fell, striking her back on the ground and fracturing three vertebrae. Kovnat filed a diversity action against Xanterra, claiming Xanterra negligently operated Canyon Corrals because Kovnat’s horse was improperly saddled, and that Xanterra negligently failed to maintain the saddle in a safe condition or warn Kovnat of its unsafe condition. Xanterra filed a motion for summary judgment, asserting that under the Wyoming Recreation Safety Act (WRSA), Xanterra owed no duty of care to protect Kovnat from the injuries alleged in her complaint. The district court granted summary judgment to Xanterra, and Kovnat appealed.

The Tenth Circuit first examined the WRSA, and found that in general, claims like Kovnat’s would not be allowed. The Tenth Circuit reviewed a similar case involving a Wyoming horseback rider injured in a saddle accident, where it ruled that the particular circumstances leading to the rider’s injury needed to be examined on a case-by-case basis. Turning to Kovnat’s claims, the Tenth Circuit found no error in the district court’s summary judgment regarding Kovnat’s claim that the saddle cinch was not tight enough, because there was a great deal of evidence that employees of Xanterra checked the cinch and it was too tight to slip the saddle back around after Kovnat’s fall, therefore any slipping of the cinch was an inherent risk of horseback riding. However, the Tenth Circuit evaluated Kovnat’s claim that her stirrups were uneven and determined that the uneven stirrups may not have been a result of the inherent risks of horseback riding. It remanded for further proceedings on this issue.

As to Kovnat’s negligent training and supervision claims, the Tenth Circuit affirmed the district court’s summary judgment as to the cinch issue and reversed as to the stirrup issue. The case was remanded for further findings regarding whether the uneven stirrups were an inherent risk of horseback riding or some extenuating circumstance in which Xanterra may have been liable.