April 18, 2014

Tenth Circuit: State Employment and Tort Claims Barred by Federal Enclave Doctrine

The Tenth Circuit Court of Appeals published its opinion in Allison v. Boeing Laser Tech. Servs. on Friday, August 10, 2012.

The Tenth Circuit affirmed the district court’s decision. Petitioner “was a civilian employee of [Respondent], a federal contractor located on Kirtland Air Force Base. Kirtland Air Force Base is a federal enclave: it is located on land that New Mexico ceded to the federal government in 1952 and 1954. Since that time the federal government has exercised exclusive jurisdiction within the boundaries of the Base. [Petitioner] was terminated . . . [and] filed suit in state court, alleging that [Respondent] discharged him in retaliation for reporting corporate fraud to the Air Force. His claims were all based on state law theories—wrongful discharge, breach of implied contract, breach of covenant of good faith and fair dealing, retaliatory discharge, prima facie tort, and defamation.”

“It is well-established that after a state has transferred authority over a tract of land creating a federal enclave, the state may no longer impose new state laws on these lands. But state laws enacted before the cession continue to apply unless Congress specifically overrides them. The question here is whether state common law causes of action recognized after the state ceded the enclave to the federal government are available on federal enclaves. This question is governed by a long string of Supreme Court precedent that makes it clear that the law on a federal enclave is the state law that governed the land at the time the federal government established the enclave, not state law enacted thereafter—unless that law was expressly adopted by the enclave’s new sovereign, the federal government.”

“[Petitioner]’s causes of action arose from conduct on Kirtland Air Force Base, a federal enclave established in 1954. Because [Petitioner]’s state law claims are based on legal theories created by common law after that date, they are barred unless federal statutory law allows them to go forward. Because no federal statute authorizes state employment and tort claims of the sort here to be asserted against federal contractors, [Petitioner]’s suit is barred by the federal enclave doctrine.”

Colorado Court of Appeals: Homeowners’ Liability to Injured Contractor Limited by Statutory Damages Cap

The Colorado Court of Appeals issued its opinion in Cavaleri v. Anderson on July 19, 2012.

Premises Liability—CRS § 8-41-401(3).

In this premises liability case, Chris Cavaleri (contractor) and Magdalena Cavaleri (wife) appealed the trial court’s judgment dismissing their personal injury claims against Aaron and Heidi Anderson (homeowners) with prejudice. The judgment was affirmed.

Contractor was the sole proprietor of a business and did not carry workers’ compensation insurance on himself. He was hired by homeowners to do some tiling work on their home. As he walked down their front steps after completing the work, he leaned on a wooden railing and it gave way, causing him to fall and sustain injuries. Contractor and his wife brought this premises liability action, seeking economic and noneconomic damages.

Before trial, the court asked the parties about the impact of CRS § 8-41-401(3) on contractor’s claims. The court ruled that the $15,000 limitation on damages applied to contractor’s claims. Homeowners immediately tendered the statutory limit. The trial court dismissed the action with prejudice and contractor appealed.

Contractor argued that CRS § 8-41-401(3) did not apply because homeowners were not required to obtain workers’ compensation insurance covering contractor and, because no coverage was required, homeowners were not among the individuals protected by the statutory damages cap. The Court of Appeals disagreed. The Court noted that the purpose of the section is to encourage participation in the workers’ compensation system and limit exposure of contractors who obtain coverage from lawsuits or claims brought by uncovered independent contractors injured on the job.” [Snook v. Joyce Homes, Inc., 215 P.3d 1210, 1215 (Colo.App. 2009).]

Here, homeowners are not general contractors and are excluded from the Workers’ Compensation Act. However, contractor provided no support for his argument that this somehow kept him from obtaining workers’ compensation insurance for himself. Contractor’s argument failed to address the express inclusion of “sole proprietor[s] who [are] not covered under a policy of workers’ compensation insurance” among the individuals who may bring an action against a negligent third party, but whose damages will be limited to $15,000 if they elect to forego workers’ compensation insurance. The dismissal with prejudice was affirmed.

Summary and full case available here.

Tenth Circuit: Misdiagnosis and Surgical Malpractice Claims Would Fail Under Both Arizona and Navajo Law

The Tenth Circuit Court of Appeals published its opinion in Harvey v. United States on Friday, July 13, 2012.

The Tenth Circuit affirmed the district court’s decision. Petitioner’s appeal stems from a Federal Tort Claims Act (FTCA) lawsuit that Petitioner brought against the United States government for complications arising from an injury to his hand. Petitioner “claims that government employees injured him by (1) misdiagnosing and delaying treatment of his hand fracture, and (2) performing negligent surgery on his hand. He argues that the district court erred in holding the misdiagnosis/delay-intreatment claim (‘misdiagnosis claim’) to be time-barred and in granting summary judgment on the negligent surgery claim for failure to produce expert evidence. Also, as a threshold matter, [Petitioner] contends that the district court should have granted his motion for default judgment. The district court agreed with [Petitioner] that Navajo law is the substantive law that should be applied to this case. But [Petitioner] argues on appeal that the district court failed to follow Navajo law in dismissing his negligent surgery claim.”

The Court held that the district court properly denied Petitioner’s motion for default judgment. Although the Court disagreed with the district court’s conclusion that the misdiagnosis claim was time-barred, it concluded that Petitioner’s “failure to provide expert evidence doomed both his misdiagnosis and surgical malpractice claims.” Finally, although the parties disagreed about whether Arizona law or Navajo law applies, the Court determined that it did not need to decide that issue because the outcome would be the same under both.

Colorado Court of Appeals: Issue Preclusion Deemed Waived When Asserted for the First Time Two Days Into Trial and 19 Months After Pleas Entered

The Colorado Court of Appeals issued its opinion in Vanderpool v. Loftness on July 5, 2012.

Negligence and Battery—Nonmutual Offensive Issue Preclusion Waiver.

Plaintiff Adam Vanderpool appealed the district court’s judgment on jury verdicts in favor of defendant Jeremy Loftness on plaintiff’s negligence and battery claims. The Court of Appeals affirmed.

Vanderpool and Loftness, both students at Colorado State University, had a physical altercation near campus after attending a party. Loftness hit Vanderpool and claimed self-defense.

The District Attorney charged Loftness with second-degree assault. On September 8, 2009, Loftness pleaded guilty to added charges of attempted second-degree assault (a felony) and third-degree assault (a misdemeanor). His plea to the felony was subject to a stipulation for a deferred judgment. If he successfully fulfilled the conditions of the deferred judgment, in two years the guilty plea would be withdrawn and the charge dismissed with prejudice. His plea to the misdemeanor was unconditional.

Vanderpool filed this civil case against Loftness on August 19, 2009, asserting claims for negligence, assault, battery, and outrageous conduct. The jury found in Loftness’s favor on the negligence and battery claims.

On appeal, Vanderpool argued four points of error: (1) denying his motion for a directed verdict on the battery claim; (2) allowing one of Loftness’s medical expert witnesses to testify; (3) improperly instructing the jury on the elements of the battery claim; and (4) denying his motion for judgment notwithstanding the verdict on the battery claim. The Court rejected all these arguments.

On the second day of trial, Vanderpool’s attorney prematurely moved for a directed verdict on the battery claim on the ground that issue preclusion barred Loftness from denying that he had committed battery on Vanderpool and from claiming self-defense. This is offensive issue preclusion and, because it was asserted by a nonparty to the criminal case, it is “nonmutual.” This requires consideration not just of the four foundational requirements for issue preclusion but also consideration as to (1) whether the party seeking to assert preclusion could have joined the first action; (2) the extent to which the party sought to be stopped had incentive to litigate vigorously the prior case; (3) whether the decision sought to be relied on is inconsistent with another decision involving the party sought to be estopped; and (4) whether the second case affords the party sought to be estopped procedural protections that were unavailable in the first case.

Issue preclusion may be waived. Courts have held that a party waives offensive issue preclusion unless it is timely raised. Here, Vanderpool’s counsel was aware of Loftness’s guilty pleas, but did not assert issue preclusion until the second day of trial, eighteen months after filing the complaint and seventeen months after the guilty pleas. Given that time frame and the lack of any indication that the issue would be raised, the Court found that the trial court did not abuse its discretion in ruling that Vanderpool had waived issue preclusion.

Vanderpool argued it was error for the trial court to not rule on his motion to compel production of documents from one of Loftness’s expert witnesses, Dr. Ramos, or on his motion to prohibit him from testifying. Vanderpool did not preserve this issue for appellate review. He filed motions, but never requested rulings on them before or during trial.

Vanderpool argued that the instruction on battery that the jury had to find “harmful” physical contact should have been “harmful or offensive” physical contact. The Court did not address this argument because Vanderpool’s counsel tendered an elemental instruction on battery substantially identical to the one the court ultimately gave the jury and expressly stipulated to the court’s instruction. In addition, there was no objection to the instruction. The judgment was affirmed.

Summary and full case available here.

Colorado Court of Appeals: Plain Language of Statute Grants Immunity from Suit to Provider of Services for Developmentally Disabled Adult

The Colorado Court of Appeals issued its opinion in McLaughlin v. Oxley on July 5, 2012.

Negligence—CRS § 13-21-117.5—Immunity.

Defendants Christopher Oxley, Ricardo Sison, and Ability Specialists, Inc. (Ability) appealed the trial court’s holding that they were not immune from the suit brought by plaintiffs Brandon McLaughlin, Michael McLaughlin, and Selena McLaughlin. The Court of Appeals reversed the trial court’s order and the case was remanded with directions.

Michael and Selena McLaughlin retained Ability to provide services to assist in the care of their developmentally disabled son, Brandon, who at the time was 21 years old. As part of the services, Oxley, an employee of Ability, was supervising Brandon at Oxley’s home, while Oxley’s own 7-year-old son, B.O., was present. Brandon and B.O. were left unattended together, during which time Brandon put B.O. in a “spanking position,” pulled down B.O.’s pants, and kissed him. Oxley informed his superiors, who called the police to investigate. The police charged Brandon with sexual assault on a child. The criminal case was dismissed after Brandon was found incompetent to proceed.

Plaintiffs later sued defendants, alleging negligence against Oxley and Ability. Defendants moved for summary judgment on all claims, arguing they were immune from liability under CRS §§ 13-21-117.5(4) and (6). The trial court denied the motion and defendants appealed.

CRS § 13-21-117.5 was enacted to “mitigate the risk of liability to providers to the developmentally disabled to the extent that such mitigation is reasonable and possible.” The Court agreed with defendants that the trial court erred in finding that § 13-21-117.5(6) did not apply. The trial court reasoned that the section applied only to immunize a provider against civil actions initiated by a victim of a developmentally disabled person’s assaultive behavior and not, as here, to a suit regarding harm to the developmentally disabled person. The Court found no support for such an interpretation of the statute. The order was reversed and the case was remanded for entry of summary judgment in favor of defendants.

Summary and full case available here.

Colorado Court of Appeals: Hospital’s Immunity Waived Under Governmental Immunity Act, But Not for Willful and Wanton Conduct; Claims Against Doctor Should Have Been Allowed

The Colorado Court of Appeals issued its opinion in Gray v. University of Colorado Hospital Authority on July 5, 2012.

Public Entity Immunity—Public Employee Immunity—Willful and Wanton Actions.

Charles Gray died while a patient of the University of Colorado Hospital and the University of Colorado Hospital Authority (collectively, the hospital). His family brought a medical malpractice suit against the hospital and some of its employees. Defendants moved to dismiss under the Colorado Governmental Immunity Act (Act), and the trial court granted the motion. The Court of Appeals affirmed in part and reversed in part, and the case was remanded with directions.

It was undisputed that Gray suffered from epilepsy and checked into the epilepsy monitoring unit in October 2007 so that the nature and extent of his seizures could be monitored while he was weaned from his anti-seizure medications. This required Gray to stay in the hospital for several nights. Members of his family were assured that Gray would be monitored around the clock by hospital personnel during this process. The hospital later admitted this assurance was false. On the fifth night of the patient’s stay, he was left unattended for about an hour. The patient suffered a seizure, stopped breathing, and died.

The Act provides immunity to all public entities from suit for all actions that lie in tort or that could lie in tort, unless an enumerated exception applies. One exception is applicable in this case: injuries resulting from the “operation of any public hospital.” When immunity is waived, a plaintiff’s recovery is limited to $150,000 per occurrence from one or more public entities. The hospital deposited $150,000 in the court registry and the trial court declared the claim moot.

The Court held that the statute and case law clearly provide that the hospital is immune from suit for its own willful and wanton acts or omissions, or for the willful and wanton acts or omissions of its employees. However, the hospital and the Court recognized that its sovereign immunity was nonetheless waived under the statute. That liability is capped at $150,000 and the claim against the hospital was rendered moot when it deposited that amount into the court registry to be distributed to the patient’s family.

The patient’s family also made numerous allegations against various hospital employees. The Court affirmed the dismissal by the trial court of all those claims except for the claim against Dr. Mark Spitz. Public employees have qualified immunity, not sovereign immunity. Public employees are immune from liability for “injuries arising out of an act or omission occurring during the performance of his or her duties and within the scope of his or her employment, unless such act or omission was willful and wanton.” The $150,000 cap does not apply to limit a public employee’s liability if his or her acts or omissions were willful and wanton. In this case, the facts alleged support a reasonable inference that Dr. Spitz was aware that his acts or omissions created danger or risk to the patient’s safety and that the doctor acted, or failed to act, without regard to the danger or risk. The dismissal therefore was in error and the case was remanded for proceedings against the doctor.

The Court did not find the conduct of any of the other defendants as alleged in the complaint were of sufficient specificity to support a reasonable inference that they were willful and wanton. Accordingly, the Court affirmed their dismissal.

Summary and full case available here.

Colorado Court of Appeals: Playground Equipment at a Public School Considered “Public Facility” for Purposes of Waiver of Colorado Governmental Immunity Act

The Colorado Court of Appeals issued its opinion in Loveland v. St. Vrain Valley School District RE-1J on July 5, 2012.

Governmental Immunity—Subject Matter Jurisdiction—Injuries on School Playground.

During lunch recess on November 21, 2008, a 9-year-old minor child (the minor) suffered a compound fracture of her left arm when she fell from a playground apparatus. The minor, through her parents and next friends, sued defendants St. Vrain Valley School District RE-1J (school district) and Cathy O’Donnell, alleging claims of premises liability and negligent supervision. The trial court dismissed all claims against defendants. The Court of Appeals affirmed in part and reversed in part, and the case was remanded with directions.

The common law doctrine of sovereign immunity was abrogated by the Colorado Supreme Court in a 1971 trilogy of cases. The General Assembly responded by enacting the Colorado Governmental Immunity Act (Act), which includes an immunity waiver for a “dangerous condition of any public hospital, jail, public facility located in any park or recreation area maintained by a public entity. . . .” Defendants filed a CRCP 12(b)(1) motion, arguing lack of subject matter jurisdiction. The trial court granted the motion, holding that the playground apparatus did not constitute a “public facility” under the Act.

On appeal, plaintiffs argued it was error to conclude the apparatus is not a “public facility” under the Act, and the Court agreed. The Court found the phrase “public facility” ambiguous and therefore looked to rules of statutory construction and legislative history to ascertain intent. The Court found that the apparatus clearly was “public,” given its availability to all, and that it was a “facility,” because it was a man-made, mechanical device installed on a playground for the purpose of providing recreation. The legislative history supported this conclusion. The trial court decision was reversed and remanded on this issue.

Plaintiffs also argued that it was error to conclude that the tort of negligent supervision is not a recognized exception to sovereign immunity under the Act. The Court disagreed and affirmed on this issue. The Court noted that all parties agreed that injuries resulting from negligent supervision were not among the tortious injuries for which sovereign immunity has been expressly waived. Plaintiffs’ arguments for an implied waiver are of no avail because the case law is clear that, absent specific language unambiguously waiving sovereign immunity, implied waiver is disallowed by the Act.

Summary and full case available here.

Colorado Court of Appeals: Evidence Existed for Triable Claim for Intentional Interference with Contractual Relations and Unjust Enrichment

The Colorado Court of Appeals issued its decision in Slater Numismatics, LLC v. Driving Force, LLC on June 21, 2012.

Summary Judgment—Intentional Interference With Contractual Relations—Unjust Enrichment.

The rulings in this case involved plaintiff’s claims for intentional interference with contractual relations and unjust enrichment. The trial court granted summary judgment on the claims and awarded defendants costs. The judgment was reversed and the case was remanded the case for further proceedings.

Plaintiff was in the business of purchase and sale of rare and modern coins. It had an ongoing relationship with Black Diamond Holding Company, doing business as Independent Coin Grading Company (ICG). After buying coins, plaintiff sent them to ICG to be graded and packaged for sale. ICG forwarded the coins to plaintiff’s customer, Cable Shopping Network (Cable), which purchased the coins from plaintiff and then sold them through television infomercials and call centers.

Ultimately, plaintiff and ICG entered into a referral agreement under which plaintiff would refer to ICG all of the coin grading and valuing work for Cable. In exchange, ICG would pay plaintiff each month a referral fee equal to 25% of the net grading fees derived from sales of grading services to Cable.

James Taylor was a founding member of ICG and worked for them from 1998 to 2005. He then left to work as CEO for Driving Force, LLC, doing business as ANACS (ANACS), a different coin-grading company. He then returned to ICG as CEO in 2007.

Brett Williams was ICG’s chief financial officer (CFO) for nine years. While he and Taylor were employed by ICG, they signed employment agreements that prohibited the disclosure of confidential information obtained during the course of their employment at ICG. Both knew of the referral agreement. Taylor knew how critical Cable was to ICG and referred to it as ICG’s “golden goose.”

When Taylor left ICG, he hired Williams to be the CFO of ANACS. ANACS then hired all but two of ICG’s employees, rendering ICG unable to compete in the coin-grading business. ANACS’s offices also were moved from Texas to Colorado, two miles from ICG’s offices. Taylor and Williams approached Cable and, with their knowledge of the referral agreement, were able to get Cable to transfer its modern coin-grading business from ICG to ANACS.

In its summary judgment order, the trial court stated: “the Court assumes that a reasonable jury could find that Mr. Taylor and Mr. Williams intentionally set out to take away ICG’s business with [Cable] by hiring away ICG’s employees and selling coins to [Cable] for less by avoiding the 25% Referral Fee, all in violation of their contractual and fiduciary duties to ICG.” The Court of Appeals agreed that this assumption was supported by the evidence when viewed in the light most favorable to plaintiff but disagreed with the conclusion that, notwithstanding that evidence, ANACS was entitled to summary judgment.

Given the evidence presented, the Court found that a reasonable jury could conclude that ANACS purposefully depleted the ranks of ICG, significantly impairing its ability to fulfill Cable’s coin grading needs. Given that, combined with ANACS’s use of plaintiff’s confidential information to make a play for Cable’s business while undercutting ICG’s pricing, the Court determined that a reasonable jury could conclude that ANACS caused ICG “not to perform” its contract with plaintiff; thus a triable claim for intentional interference with contractual relations existed.

The Court also agreed with plaintiff’s contention that it was error to grant summary judgment for ANACS on plaintiff’s claim for unjust enrichment. On such a claim, a plaintiff must show that (1) the defendant received a benefit (2) at the plaintiff’s expense (3) under circumstances that would make it unjust for the defendant to retain the benefit without commensurate compensation. The Court ruled that simply without the contractual relationship, a reasonable jury could determine that ANACS received a benefit at plaintiff’s expense under circumstances that would make it unjust for ANACS to receive the benefit without compensating plaintiff.

Summary and full case available here.

Tenth Circuit: Business Is Deemed to Have Accepted the Terms of the Bill of Lading By Suing Under It

The Tenth Circuit Court of Appeals published its opinion in Flying Phoenix Corp. v. Creative Packaging Machinery, Inc. on Tuesday, June 12, 2012.

The Tenth Circuit affirmed the district court’s decision. Petitioner, a corporation in the business of importing and reselling fireworks, purchased a machine designed to package fireworks for sale to end users from Respondent. Petitioner previously purchased a different machine from Respondent, and that machine arrived in satisfactory condition. The second machine, however, arrived severely damaged. Respondent was responsible for shipping the second machine to Petitioner. A bill of lading issued for the shipment listed Respondent as shipper, R&L Carriers as carrier, and Petitioner as consignee. “Importantly, the bill of lading limited the period for filing claims with a carrier to nine months, and limited the time for filing civil suit to two years and one day following denial of a claim.”

Petitioner filed suit against Respondent almost four years after its initial claim submitted to Respondent was denied, and nearly two years after the limitations period for filing civil suit expired. The district court held that Petitioner’s claims were brought pursuant to the bill of lading and were time-barred by the limitations period contained therein. “On appeal, Petitioner argues that the district court erred by holding that (1) its claims were based on the bill of lading, and (2) it was bound by the terms of the bill of lading even though it was not a party and did not consent. [Petitioner] acknowledges that a bill of lading existed for the shipment, but urges that (1) it was not a party to that bill of lading (but instead was listed as consignee by someone else), and (2) it had no knowledge of the bill of lading until shortly before the present lawsuit was filed.”

The Court disagreed and found that “a carrier’s failure to issue a bill of lading only precludes the carrier from contracting for limitations periods in line with § 14706(e)(1). Thus, the Carmack Amendment does not create an independent cause of action for recovery where a receipt or bill of lading issued, and [Petitioner] does not dispute that a bill of lading was issued in this case.” Additionally, Petitioner “is deemed to have accepted the terms of the bill of lading by suing under it.” Lastly, “[t]here is no suggestion in the record that [Petitioner] ever sought a copy of the bill of lading but was denied access, and it is well-established that a party may not sit idly by, making no effort to obtain obviously necessary documents, and then claim ignorance.”

Colorado Court of Appeals: Transcript of Interview About Railroad Incident Was Admissible as Prior Consistent Statement to Rebut General Charge of Fabrication

The Colorado Court of Appeals issued its opinion in McLaughlin v. BNSF Railway Co. on June 7, 2012.

Federal Employers’ Liability Act—Locomotive Inspection Act—Safety Appliance Act—Personal Injury—Negligence—Strict Liability—Eggshell Doctrine—Aggravation Doctrine—Pre-existing Medical Condition—Lost Wages—Collateral Source Rule—Disability Benefits.

Defendant BNSF Railway Company (railroad) appealed the judgment entered and damages awarded after a jury found in favor of its employee, plaintiff Thomas McLaughlin, on his statutory strict liability and negligence claims. The judgment was affirmed.

McLaughlin was injured when a locomotive handbrake allegedly malfunctioned when he attempted to release it. He sued the railroad for negligence and strict liability. The railroad asserted that McLaughlin’s injuries were not caused by the handbrake, and alternatively that the jury should apportion damages because McLaughlin had preexisting conditions that the incident had merely aggravated.

The railroad contended that the district court erred by (1) admitting a transcript of the railroad’s claims agent’s post-incident interview of McLaughlin because it contained hearsay, and (2) denying the railroad’s motion for a new trial based on this admission. The railroad’s counsel offered a page of the transcript to challenge McLaughlin’s testimony about the handbrake tension or pressure, and also more generally challenged his description of the incident and his injuries. Consequently, the entire transcript of McLaughlin’s interview about the incident was admissible as a prior consistent statement to rebut the general charge of fabrication. Alternatively, it was admissible to provide context for McLaughlin’s testimony on cross-examination that he had not reported experiencing tension or pressure in operating the handbrake. Because it was not offered for the truth of the matter asserted, it was not inadmissible hearsay.

The railroad also contended that the district court erred by improperly instructing the jury on the eggshell and aggravation doctrines. The evidence showed that although McLaughlin’s doctors had diagnosed him with pre-existing degenerative disc disease, other age-related deteriorating back conditions, and a pre-existing hernia from his childhood, he had not experienced any symptoms before the incident. The eggshell doctrine can apply in Federal Employers’ Liability Act (FELA) cases involving pre-existing conditions. The aggravation doctrine applies when the pre-existing condition was symptomatic before the incident giving rise to the plaintiff’s claim. The eggshell doctrine instruction was appropriate here because (1) there was no evidence that McLaughlin had suffered any pain or symptoms from his back conditions or hernia before the handbrake incident; and (2) there was evidence that his pre-existing conditions were made symptomatic or exacerbated by the incident. In contrast, the evidence did not support giving the aggravation instruction or the modified verdict form. However, any error was harmless because it was in the railroad’s favor.

The railroad further argued that the district court erred by denying its motion in limine to preclude McLaughlin from presenting evidence of lost wages because of his receipt of Railroad Retirement Act (RRA) disability benefits or to reduce the damages award by the amount of those benefits. RRA payments, such as those received by McLaughlin here, are collateral source benefits and may not be offset against a FELA award. Therefore, the district court did not err in denying the motion in limine.

Summary and full case available here.

Colorado Court of Appeals: No Error for Trial Court to Allow Jury Instruction or Testimony on Noneconomic Damages

The Colorado Court of Appeals issued its opinion in Hendricks v. Allied Waste Transportation, Inc. on May 24, 2012.

Negligence—Noneconomic Damages—Subject Matter Jurisdiction—Administrative Remedies—Jury Instructions—Costs.

In this negligence action, defendant Allied Waste Transportation, Inc. (Allied) appealed a jury verdict awarding plaintiffs Paul and Linda Hendricks $160,100 in damages. The judgment was affirmed.

While driving an Allied garbage truck, an Allied employee backed into the corner of the Hendrickses’ house in the City of Englewood (City). After Allied admitted liability, the trial focused on the amount of damages. The Hendrickses’ expert testified that because the damage could not be repaired due to structural deficiencies, the damaged portion of the home would need to be torn down and rebuilt.

Allied contended that the trial court lacked subject matter jurisdiction because the Hendrickses failed to exhaust their administrative remedies by failing to complete the building permit application process before the damages trial. However, the Hendrickses’ complaint did not seek review of an administrative action, and the building permit process does not provide a remedy for the Hendrickses’ injury. Accordingly, the Hendrickses were not required to exhaust administrative remedies before seeking judicial review.

Allied also contended that the trial court erred by providing jury instructions that misstated the law about noneconomic damages and by admitting testimony about noneconomic damages. The trial court instructed the jury that recoverable damages included “damages and losses suffered by the plaintiffs as a result of the defendant’s conduct, including loss of enjoyment, annoyance, discomfort, and inconvenience,” which are not emotional distress damages. Therefore, the jury was properly instructed on noneconomic damages.

Allied next contended that the trial court erred by permitting Mrs. Hendricks to testify about “pure emotional damages.” Mrs. Hendricks testified that she was “dismayed” and “distraught” by the damage to her property, which are recoverable components of noneconomic damages. Therefore, the trial court did not err in admitting her testimony.

Allied further contended that the trial court was required to grant its request for a hearing on the reasonableness of the Hendrickses’ bill of costs. The Hendrickses’ bill of costs included costs that were statutorily allowed or otherwise subject to a fixed standard, as well as costs for expert witnesses that cannot be validated by statute or a fixed standard. The trial court did not abuse its discretion in denying the request for a hearing on costs where Allied did not specify which costs it contested and offered no reason for its challenge other than a bare statement that the costs were unreasonable.

Allied also argued that the trial court erred by awarding the Hendrickses prejudgment interest from the date their property was damaged. Because the jury returned a general verdict form that did not apportion damages, the trial court appropriately awarded prejudgment interest from the date the Hendrickses’ house initially was damaged, which also is when any noneconomic damages began accruing.

Summary and full case available here.

Colorado Court of Appeals: Multiple Errors in Trial Court for Consolidated Workers’ Compensation/Medical Malpractice Actions

The Colorado Court of Appeals issued its opinion in Schuessler v. Wolter on May 24, 2012.

Medical Malpractice—Workers’ Compensation Benefits—Jury Instruction—Negligence—Exclusion of Expert—Fair Debatability—Economic and Noneconomic Damages—Designated Nonparty—Comparative Fault—Prejudgment Interest—Subrogation Rights.

In these bad-faith cases, defendants James Wolter, MD and Pinnacol Assurance appealed the judgments entered on jury verdicts in favor of plaintiff Michael Schuessler, who cross-appealed certain trial court rulings. The judgment against Dr. Wolter was reversed and the case was remanded for a new trial as to him. The judgment against Pinnacol was affirmed in part and reversed in part, and the case was remanded for further proceedings.

Schuessler was injured on the job and filed a workers’ compensation claim with R. Merrill, Inc. (Merrill), his putative employer. Pinnacol, which provided workers’ compensation insurance coverage for Merrill, denied the claim. Dr. Wolter, a neurosurgeon, performed surgery on Schuessler for his injuries. The surgery caused damage to his spinal cord. Schuessler commenced a medical malpractice action against Dr. Wolter. Schuessler also filed a common law bad-faith breach of insurance contract action against Pinnacol, contending that it had wrongly denied him workers’ compensation benefits. The cases were consolidated, and a jury awarded damages to Schuessler against Pinnacol and Dr. Wolter.

On appeal, Dr. Wolter contended that the trial court erred in rejecting its proposed jury instruction, arguing that a physician does not guarantee or promise a successful outcome simply by treating or agreeing to treat a patient, and an unsuccessful outcome does not, by itself, mean the physician was negligent. Dr. Wolter’s expert specifically stated that the outcome could occur without negligence. Because the proffered instruction accurately stated the law and no other instruction informed the jury that Dr. Wolter could not be held liable merely because of a bad outcome, it was reversible error for the court to reject it.

Pinnacol asserted that the trial court erred in denying its motion for directed verdict or judgment notwithstanding the verdict. The defense of fair debatability is not in itself a complete defense to a bad-faith claim. Here, the reasonableness of Pinnacol’s conduct was disputed, and a reasonable person could reach the same conclusion as the jury. Accordingly, the trial court did not err in denying the motion.

Pinnacol also argued that the jury awarded excessive and duplicative economic and noneconomic damages to Schuessler, warranting a new trial. However, there was sufficient evidence in the record to support the award of economic damages. Additionally, there was support on record for the noneconomic damages award, and the amount awarded was not so grossly and manifestly excessive as to indicate that it was based on passion or prejudice.

Pinnacol further contended that the damages award was affected by the trial court’s erroneous failure to admit an exhibit it tendered at trial. Pinnacol’s exhibit depicted the amount and duration of its payments to Schuessler in chart form. Because the information contained in the exhibit was covered by other evidence introduced, the trial court abused its discretion in rejecting the exhibit.

Pinnacol asserted that the jury awarded duplicative damages because it awarded Schuessler the same amount of noneconomic damages that it awarded against Dr. Wolter. However, Pinnacol failed to overcome the presumptions that the jury followed the instruction not to award duplicative damages.

Pinnacol contended that the trial court erred in allowing Schuessler’s bad-faith insurance expert to testify at trial. There is no per se requirement that an expert should be excluded unless he or she has adjusted a workers’ compensation claim in Colorado, and Schuessler’s expert was otherwise qualified as an expert. Therefore, the court did not err in allowing this expert’s testimony.

Pinnacol asserted that the trial court erred in rejecting its tendered instruction concerning the liability of a designated nonparty. Pinnacol designated Merrill a nonparty at fault, but Pinnacol failed to establish that Merrill, as Schuessler’s employer, had a legal duty to Schuessler to maintain and immediately produce employment records such that a violation of that duty would give rise to a claim against it by Schuessler.

Pinnacol argued that the trial court erroneously rejected its instruction on the comparative fault of Schuessler. Pinnacol’s assertions that Schuessler was comparatively at fault because he asked for a postponement of the workers’ compensation hearing, failed to attend an appointment with a second doctor, and initially delayed several weeks before going to the doctor after the injury were insufficient to warrant an instruction.

Pinnacol asserted that the trial court’s award of costs should be reversed or reduced. The award of fees, which should be attributable only to the case against Dr. Wolter, should not be assessed against Pinnacol. The case was remanded to reverse this portion of the cost award.

Pinnacol also contended that the trial court improperly awarded prejudgment interest. Because Schuessler’s economic damages did not result from a personal injury inflicted by Pinnacol, the case was remanded for the court to properly compute the prejudgment interest on Schuessler’s economic damages based on the wrongful withholding statute, CRS § 5-12-102(1)(a).

Pinnacol argued that the trial court improperly ruled that it had waived its right to make a subrogation claim against Schuessler’s recovery from Wolter. Waiver is the intentional relinquishment of a known right. Here, Pinnacol did not waive its subrogation rights. Accordingly, on remand, Pinnacol may assert its subrogation rights.

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