October 16, 2018

Archives for October 1, 2018

Colorado Court of Appeals: C.R.C.P. 12(b)(5) and “Plausibility” Standard Do Not Apply to C.R.C.P. 16.2 Motions

The Colorado Court of Appeals issued its opinion in In re Marriage of Durie on Thursday, September 20, 2018.

Division of Marital Property—C.R.C.P. 16.2(e)(10)Post-Dissolution Proceeding—C.R.C.P. 12(b)(5).

Three years after a decree was entered incorporating a separation agreement dividing the parties’ marital property, wife moved under C.R.C.P. 16.2(e)(10) to reallocate proceeds from husband’s post-decree sale of business assets. She alleged that husband had failed to disclose facts that materially impacted the value of the parties’ business assets. In response, husband filed a motion to dismiss wife’s motion. The district court applied the plausibility standard in Warne and Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 554–56 (2007), and granted husband’s motion to dismiss. Wife moved for attorney fees, but the district court did not rule on her request.

On appeal, wife contended that the district court erred in dismissing her motion. After briefing, but before argument, a division of the court of appeals decided In re Marriage of Runge, 415 P.3d 884 (Colo.App. 2018), concluding that Rule 12(b)(5) and the Warne plausibility standard do not apply to a Rule 16.2(e)(10) motion. The court agreed with Runge and concluded that the district court erred in dismissing wife’s motion under that standard.

The court also rejected husband’s argument that C.R.C.P. 9(b), which requires that pleadings asserting fraud or mistake must allege the circumstances with particularity, applied in this context. Rule 16(e)(10) does not refer to fraud, but to misstatements or omissions. While some claims not denominated as fraud may be subject to the Rule 9(b) pleading requirements, the Rule 9(b) particularity requirement does not apply to Rule 16.2(e)(10) motions.

The parties also disagreed as to whether a movant under Rule 16.2(e)(10) can make allegations based on information and belief. The court concluded that Rule 8(e)(1) allows allegations based on information and belief in the context of a Rule 16.2(e)(10) motion, and wife properly included allegations based on information and belief in her motion.

However, wife’s allegations here did not enable the district court to conclude that her motion was sufficient on its face. The court instructed that (1) given Rule 16.2(e)(10)’s lack of applicable standard for determining a motion under the rule, a preponderance of the evidence standard should apply and the moving party bears the burden of proof; and (2) wife is entitled to undertake discovery in support of her motion.

The court further concluded that wife is entitled to seek attorney fees under C.R.S. § 14-10-119 on remand, but is not entitled to attorney fees under C.R.S. § 13-17-102. The district court may also award wife appellate attorney fees in its discretion under C.R.S. § 14-10-119.

The order was reversed and the case was remanded.

Summary provided courtesy of Colorado Lawyer.

Colorado Court of Appeals: Phrase “Arising Under” in Arbitration Clause Should Be Interpreted Broadly

The Colorado Court of Appeals issued its opinion in Digital Landscape Inc. v. Media Kings LLC on Thursday, September 20, 2018.

Arbitration Clause “Arising Under”Broad DefinitionAttorney Fees.

Media Kings LLC (Media) entered into a contract to provide marketing services to Transcendent Marketing, LLC (Transcendent). Media then contracted with Digital Landscape Inc. (Digital) to provide advertising services to Transcendent. The contract between Media and Digital had an arbitration clause providing that any disputes arising under the agreement would be resolved by binding arbitration. Per the contract, Media agreed to pay Digital a portion of its earnings from Transcendent in exchange for Digital’s work on the project. Media failed to pay Digital, and Transcendent proposed that Digital take over the project. Digital’s principal officer agreed, but had one of his other companies take over the work. Thus, Media was effectively cut out of its agreement with Transcendent.

Digital sued Media for breach of contract, and as relevant here, Media filed a counterclaim alleging that Digital had breached the implied covenant of good faith and fair dealing. The district court ordered the parties to arbitrate the dispute. The arbitrator awarded Digital $68,197.41. While discussing the counterclaim, the arbitrator also referred to it as addressing a breach of Digital’s duty of loyalty to Media. The arbitrator decided that Digital still owed a duty of loyalty to Media that it had breached, and she awarded Media damages on the counterclaim. Lastly, finding that there was no prevailing party, she declined to award either party attorney fees. The district court confirmed the order.

On appeal, Digital contended that the arbitrator lacked jurisdiction to consider whether Digital had breached a duty of loyalty to Media because this claim did not “arise under” the arbitration clause. The court of appeals analyzed the phrase “arising under” and concluded that it was sufficiently broad to include the duty-of-loyalty counterclaim. Further, the arbitration clause was unrestricted.

Digital further contended that the arbitrator improperly converted the counterclaim alleging breach of implied covenant of good faith and fair dealing to a different one, breach of loyalty, which Media had not raised. It alleged that the ruling on this different claim was unfair and the award to Media was therefore void. The court found as an initial matter that the arbitrator did not intend to rule on a facially different counterclaim. But even assuming that she had, the different claim was within the issues that the parties had agreed to submit. The arbitrator did not exceed her powers because the substituted counterclaim “arose under” the contract between Digital and Media. Further, the evidence and arguments were encompassed in the breach-of-the-duty-of-good-faith-and-fair-dealing claim. The district court did not err when it confirmed the arbitrator’s award.

Finally, Digital argued that the arbitrator exceeded her authority by refusing to award attorney fees because neither party had prevailed. The court concluded there was clearly no prevailing party, so the arbitrator did not have to award attorney fees.

The judgment was affirmed.

Summary provided courtesy of Colorado Lawyer.

Colorado Court of Appeals: Whole Person Impairment Rating Relevant in Non-Workers’ Comp Personal Injury Case

The Colorado Court of Appeals issued its opinion in Herrera v. Lerma on Thursday, September 20, 2018.

Subsequent Accident Jury InstructionPersonal InjuryNegligenceEvidence RelevancyVoir Dire.

Defendant’s truck hit plaintiff’s car from behind as she slowed for traffic. A week later plaintiff was diagnosed with neck strain. The following year, plaintiff was involved in a second car accident in which she hit a car from behind. She testified that the second accident did not injure her.

A year later, plaintiff sought additional medical treatment for her neck and lower back. She sued defendant for negligence, claiming damages of $38,356.46. She was awarded $1,980.81 by a jury in economic damages and zero on her claims of physical impairment and noneconomic damages.

On appeal, plaintiff argued it was error to instruct the jury to consider whether the second accident worsened any injuries, damages, or losses caused by the first accident because defendant hadn’t presented any evidence supporting such an instruction. Here, neither party presented evidence that plaintiff suffered any injury or aggravation of an existing injury because of the second accident, so the evidence was insufficient to justify instructing the jury about the second accident and the trial court abused its discretion. Further, but for the trial court’s improper instruction, the jury might have reached a different verdict.

Plaintiff also argued that the trial court erred by excluding her expert’s testimony about her 15% permanent whole body impairment rating. Before trial, defendant requested that the court exclude testimony about plaintiff’s impairment rating. While it allowed testimony that plaintiff suffered an impairment, the court excluded testimony about the impairment rating as irrelevant under CRE 401 and prejudicial under CRE 403. The court of appeals could not discern any reason that the percentage rating of the impairment would not be relevant, and found reasons why it would be relevant. The court similarly found no support for the trial court’s belief that such testimony would be unfairly prejudicial, confusing, or misleading. The trial court abused its discretion by excluding the testimony.

Plaintiff finally contended that it was error for the trial court to prevent her counsel from asking prospective jurors during voir dire whether they had an interest in defendant’s insurance carrier. Counsel was entitled to ask the insurance question during voir dire to determine the biases and prejudices of the prospective jurors, so the trial court abused its discretion.

The judgment was reversed and the case was remanded.

Summary provided courtesy of Colorado Lawyer.