ANNUAL SURVEY

of Colorado Law

2011
Torts
John W. Grund, Esq. Grund Dagner, P.C. Denver

CONTINUING LEGAL EDUCATION IN COLORADO, INC.

COLORADO BAR ASSOCIATION DENVER BAR ASSOCIATION

TORTS
John W. Grund, Esq.
Grund Dagner, P .C. Denver

INTRODUCTION
What a difference a year makes! Last year, the Introduction to this chapter characterized the developments in tort law in 2010 as relatively unexciting, except as it concerned what was passed by the legislature. This year, the General Assembly did little to pique the interests of tort litigators, whereas the Colorado appellate courts issued opinions covering a wide range of topics that should be compelled reading for all of us. The Colorado Supreme Court published noteworthy decisions interpreting the Dram Shop Statute (Build It & They Will Drink, Inc. v. Strauch), the Colorado Governmental Immunity Act (Henisse v. First Transit, Inc.), the Civil Theft Statute (Steward Software Co. v. Kopcho), and the Punitive Damages Statute (Averyt v. Wal-Mart Stores, Inc.), as well as several other noteworthy opinions addressing tort and damages issues that practitioners in the fields face on a regular basis: Kendrick v. Pippin (res ipsa loquitur doctrine and sudden-emergency instruction), Day v. Johnson (medical

malpractice), Allen v. Steele (legal malpractice and negligent misrepresentation), Qwest Services Corp. v. Blood (constitutionality of significant punitive-damages award) and that is not an all-inclusive list. On October 31, 2011, the court also issued several opinions each of which involved tort or insurance claims that addressed the burden of proof as well as some elemental issues in the certification of class actions. The Colorado Court of Appeals output likewise produced a broad spectrum of cases of interest that are summarized below, several of which concerned matters of first impression or at least had a novel twist to them, including questions about the proof necessary for but-for causation in a transactional-malpractice case; whether a parents exculpatory release waived her childs recreational-liability claim; the independent nature of a claim for negligent infliction of emotional distress; and the trade-secret status of a proprietary computer database, to list a few. All and all, it was the year that had something that should interest almost any civil litigator 2012 will be hard-pressed to match it.

JOHN W. GRUND, ESQ., is managing shareholder at Grund Dagner, P in Denver. He is licensed in state and .C., federal court in Colorado and Wyoming, the Fifth, Sixth, and Tenth Circuit Courts of Appeal, and practices throughout the Rocky Mountain region, specializing in the defense of complex and multidistrict litigation and emphasizing product liability, recreation/amusement liability, common-carrier and general aviation law, hospital liability, professional negligence, and insurance law. Mr. Grund is an appointed member of the Colorado Supreme Court Committee on Civil Pattern Jury Instructions (since 1987) and chairs the subcommittee responsible for Product Liability, Professional Malpractice, and Insurance Bad Faith. He is co-author of (and annually supplements) the four-volume Personal Injury Practice Torts and Insurance (West Group 2d ed. 2000), contributed three chapters to Colorado Courtroom Handbook Civil Trials (CLE in Colo., Inc. 2012), and is a frequent presenter at seminars concerning trial practice, tort liability, and risk-management issues for lawyers as well as representatives from all sectors of the amusement and recreational industry. Mr. Grund has been peer-selected each year since 2007 for the Colorado SuperLawyers in the classification of Personal Injury Defense: General, and for The Best Lawyers in America, in the Insurance Law Specialty.

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2011 Annual Survey of Colorado Law

CASE LAW
Statutes of Limitations
Accrual of Claims Between Counsel. In two different cases, the Colorado Court of Appeals addressed issues concerning accruals of claims for statute of limitations purposes where one attorney sued another. In Hannon Law Firm, LLC v. Melat, Pressman & Higbie, LLP, 2011 WL 724742 (Colo. App. March 3, 2011), cert. granted, 2011 WL 3855738 (Colo. Aug. 29, 2011) (also at 2011 Colo. LEXIS 685), the plaintiff and defendants were law firms who had contingent-fee agreements with certain clients in a federal court tort action against a mine owner. Together, they entered into a fee-sharing agreement that did not state how the compensation would be handled if one law firm withdrew. The plaintiff eventually did withdraw, and some considerable period later when the case settled, the clients paid the defendant law firms their fees and costs as required by the contingent-fee agreement, and one defendant paid the plaintiff for costs it had incurred before it withdrew, but not for any services that the law firm had rendered. The plaintiff sued less than three years after being notified of the settlement, asserting a claim for quantum meruit, and the district court dismissed the case on statute-of-limitations grounds. The court of appeals agreed with the plaintiff that its quantum-meruit claim did not accrue until recovery actually occurred in the underlying case. The court of appeals disagreed with the defendants contention that the claim accrued when the plaintiff last provided legal services to the clients, nearly nine years before the instant suit was filed, because a claim for quantum meruit accrues when a person discovers or reasonably should discover that all elements of the claim are present, which means when a plaintiff has conferred a benefit upon the defendant and the retention of the benefit becomes unjust. Id. at *2. The accrual standard in C.R.S. 13-80-108(6), concerning breach of implied contract, does not apply, because quantum meruit claims require no proof of any agreement or breach. Hannon Law Firm, 2011 WL 724742 at *4. Because a claim for attorney fees under a contingent-fee contract may accrue only when recovery actually occurs in the underlying litigation, and a withdrawing attorneys quantum-meruit claim

against former co-counsel cannot accrue earlier than when that recovery in the underlying action happens, that is the earliest time when it could be said to be unjust for the settling counsel to have retained the benefit of the withdrawing attorneys work. Id. at *5. This is one of the issues that the supreme court has agreed to review on certiorari. See Melat, Pressman & Higbie, LLP v. Hannon Law Firm, LLC, 2011 WL 3855738 (Colo. Aug. 29, 2011). Another division of the court of appeals followed the holding in Hannon when one attorney sued another attorney and an investment-fund recovery expert for unjust enrichment in Sterenbuch v. Goss, 2011 WL 4837519 (Colo. App. Oct. 13, 2011) (also at 2011 Colo. App. LEXIS 1637). In that case, the plaintiff sued for tortious interference with contracts and civil conspiracy, and also for unjust enrichment, claiming that the defendants had stolen clients that the plaintiff represented on a contingency basis in an underlying case alleging a fraudulent investment scheme, which ultimately resulted in a consent judgment and distribution of funds to the plaintiff s former clients, among others. Because a claim for unjust enrichment is equitable and based on principles that are associated with restitution, the court relied on Hannon, and held that, by analogy, any retention by [defendants] for the benefits of [plaintiff s] legal services could become unjust only upon a clients recovery in a contingency fee case. Id. at *9. Thus, the plaintiff s cause of action for unjust enrichment accrued only when the defendants obtained recovery of their contingency from the distribution following the consent judgment. A different result followed, however, as it concerned the tortious interference claim. Under the applicable statute holding that a tort cause of action accrues when both the injury and its loss are known or should have been known by the exercise of reasonable diligence, C.R.S. 13-80-108(1), that claim accrued when the plaintiff knew or should have known that the defendant attorney had improperly induced his clients to terminate their contracts with him, Sterenbuch, 2011 WL 4837519 at *4, and it was not necessary that the plaintiff know the precise extent of his damages, as opposed to knowing that he had been injured. Three-Year Statute of Limitations Barred Claim for Misappropriation of Trade Secrets. The Colorado Supreme Court reviewed and affirmed a

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Torts court of appeals decision in a case of first impresstatute fixes an accrual date for an action for mission in Colorado, concerning the statute of limitaappropriation of a trade secret and its subsequent tions for misappropriation of trade secrets. Gognat reference to a continuing misappropriation is v. Ellsworth, 259 P 497 (Colo. 2011), aff g 224 P .3d .3d clearly limited to the continuing misappropriation 1039 (Colo. App. 2009). An action for misappropriof that same trade secret. Id. at 503 (emphasis in ation of a trade secret must be brought within original). Nonetheless, under the facts of the case three years after the misat issue, the fact that appropriation is discovthere were different locaered, or by the exercise tions involved did not Circumstances that might toll of reasonable diligence create a genuine dispute the statute of limitations for the should have been discovof fact, and there were injured party do not necessarily ered, and importantly, no real significant differtoll the statute of limitations under this provision, a ences in the designs, for a spouse who seeks to continuing misappropriprocesses, procedures, recover for loss of consortium. ation constitutes a single formulas, or improveclaim. C.R.S. 7-74-107. ments that were secret In the case, the plaintiff in the two areas, and the asserted that several defendants were guilty of trial courts grant of summary judgment based on misappropriating a method he claimed to have the statute of limitations was affirmed. Id. at 504. developed for identifying and extracting oil and Statute of Limitations Applies Equally to natural-gas reserves, and that he had provided Loss-of-Consortium Claimant. As a derivative this information to at least one of the defendants claim, an action for loss of consortium is subject to in the late 1990s. Unfortunately for the plaintiff, the same defenses as the underlying claim, and the defendants who knew of this information that includes a defense of the statute of limitations. allegedly failed to pay the plaintiff sufficiently A husbands claim for loss of consortium as a result and thus, misappropriated his trade secrets of injuries his wife suffered in an auto accident between 1997 and 2001, yet the plaintiff did not file was subject to the same three-year statute of limihis complaint until late 2005. The plaintiff, howevtations, see C.R.S. 13-80-101(1)(m)(I), that would er, argued that his claim did not accrue until he apply to his injured wife. Draper v. DeFrenchilearned of the defendants inappropriate use of Gordineer, 2011 WL 3851738 (Colo. App. Sept. 1, this information in a second location, within three 2011) (also at 2011 Colo. App. LEXIS 1435). years of his filing date. Both courts discussed the However, because loss-of-consortium claims are broad statutory definition of misappropriation separate and do not have to be pursued in connecand trade secret in C.R.S. 7-74-102(2) and (4), tion with the injured partys claim, circumstances as well as the fact that any continuing misapprothat might toll the statute of limitations for the priation is considered a single claim. Nonetheless, injured party do not necessarily toll the statute of the court of appeals broader ruling, essentially limitations for a spouse who seeks to recover for holding that the statute fixes a single accrual date loss of consortium. Id. for multiple misappropriations of either a single For Purposes of Tolling Statute of Limitations, trade secret, or multiple, related trade secrets, see Ignorance and Reliance Elements of Fraudulent Gognat, 259 P at 500, was not endorsed by the .3d Concealment May Be Established With Circumhigher court. While acknowledging that the lanstantial Evidence Common to a Class. In BP guage in the three statutory provisions evidences America Production Co. v. Patterson, 263 P 103 .3d a design, or legislative intent, to discourage the dif(Colo. 2011), the supreme court noted that to toll a ferentiation of various acts of misappropriation statute of limitations based on a defendants fraudand the proliferation of misappropriation claims, ulent concealment, each plaintiff must prove the id. at 501, the supreme court was unwilling to elements of that claim. Its prior case law had recagree that 7-74-107 necessarily would apply to ognized that the ignorance and reliance elements separate and distinct misappropriations of differcould be established with circumstantial evidence, ent trade secrets. In the higher courts view, [t]he so, the court held, it followed that those elements

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2011 Annual Survey of Colorado Law could be established with circumstantial evidence that was common to a class. Id. at 110. For purposes of class certification, however, it is mandatory that a trial court rigorously analyze the evidence presented to determine whether there is evidence common to the class to support such an inference, id at 111, and where the record reflected that the court did so, the supreme court upheld its finding of class certification. Statute of Limitations is Tolled During Pendency of Class Action. Where a class action is commenced, that suspends the applicable statute of limitations as to all asserted members of the class who would have been parties had the suit been permitted to continue as a class action. Jackson v. American Family Mutual Insurance Co., 258 P 328, 333 (Colo. App. 2011) (quoting from .3d Am. Pipe & Constr. Co. v. Utah, 414 U.S. 538, 554 (1974)). In that situation, the statute of limitations remains tolled for all members of a putative class until class certification is denied. Where successive class actions are filed, however, that does not perpetually toll the running of the statute of limitations, and where a partys claim was untimely filed because it was not considered tolled during the pendency of a class action where the subject matter was not and could not have been adjudicated, the claim in question was barred by the applicable statute of limitations. Id. at 334. responsible causes other than the defendants negligence are sufficiently eliminated; and (3) the presumed negligence is within the scope of the defendants duty to the plaintiff. Kendrick, 252 P at .3d 1061. While noting that the doctrine has been applied in auto-accident cases where defendants drove on the wrong side of the road or struck another vehicle in the rear, see CJI-Civ. 11:10, 11:12 (CLE ed. 2011), it observed that in most jurisdictions, the mere fact that a vehicle skids or slides on a slippery highway does not in itself constitute evidence of negligence. Id. Ultimately, the court determined that the plaintiff failed to establish, by a preponderance of the evidence, that the accident that occurred in this case [was] of the kind that ordinarily does not occur in the absence of negligence, thus failing to satisfy the second element, and it did not address the remaining elements of the doctrine. Id. at 1062. Evidence of Building Code Violation Did Not Create Presumption that Facility Knew of Dangerous Condition. A case that reached the court of appeals for a second time did not turn out favorably for the plaintiff in Lombard v. Colorado Outdoor Education Center, Inc., 2011 WL 3616755 (Colo. App. Aug. 18, 2011) (also at 2011 Colo. App. LEXIS 1401). The plaintiff was a schoolteacher who was injured at a conference facility while attending an overnight training session, when she fell while descending a ladder in her unit. When summary judgment had been granted prior to her earlier appeals, the supreme court had ultimately ruled in the plaintiff s favor when discussing the relationship between the Premises Liability Act, C.R.S. 13-21-115, and the common-law doctrine of negligence per se. The court ruled that the statute was the exclusive remedy for a party seeking recovery for premises liability, and although a negligence per se claim may no longer be brought in that circumstance, proof of the landowners violation of the statute intended for the plaintiff s protection, is evidence of the landowners unreasonable failure to exercise reasonable care, for purposes of liability under the Premises Liability Act. Lombard v. Colorado Outdoor Educ. Ctr., 187 P .3d 565, 574 (Colo. 2008) (quoting from C.R.S. 13-21115 (3)(c)(I)). Following remand and trial to a jury, the plaintiff claimed error when the trial court refused to instruct the jury that if it found that the defendants had violated the building code provi-

Negligence: Standard of Care and Proof

Plaintiff Was Not Entitled to Instruction on Res Ipsa Loquitur. In Kendrick v. Pippin, 252 P .3d 1052 (Colo. 2011), the Colorado Supreme Court affirmed the court of appeals ruling, see Kendrick v. Pippin, 222 P 380 (Colo. App. 2009), that a plain.3d tiff who was injured in an automobile accident in snowy weather failed to satisfy the elements necessary to implicate the doctrine of res ipsa loquitur. The plaintiff argued that she was entitled to a presumption that when the defendants car slid into her stopped vehicle, the defendant was negligent. The trial court and court of appeals rejected that argument, and the supreme court affirmed. The court conducted a fairly thorough review of the doctrine, noting that the party seeking to invoke it must establish that it is more probable than not that: (1) the event is of the kind that ordinarily does not occur in the absence of negligence; (2)

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Torts sion in question, that finding created a conclusive presumption that the ladder in question was a dangerous condition and that the defendant failed to take steps to guard against it. See Lombard, 2001 WL 3616755 at *4. Based on the supreme courts 2008 holding, the court of appeals rejected that argument, holding that any conclusive-presumption instruction would be contrary to the higher courts holding and rationale, which was that violation of any state or ordinance was merely to be considered as evidence of a defendants failure to exercise reasonable care. Id. The jurys finding in favor of the defendants was affirmed. bilitation following a surgical procedure. The district court rejected the defendants tendered instruction on but-for causation and instructed the jury that if it found that the defendants negligence increased the risk of the decedents death or deprived him of some significant chance to avoid death, it could find that the defendants negligence was the cause of the death. Reigel, 2011 WL 6091709 at *7. The court discussed the elemental requirement of proving proximate cause, cited Ludlow as it concerned the aspects of factual and legal causation, and then thoroughly reviewed the case law, including a recent Tenth Circuit decision that had predicted that the Colorado Supreme Court would not endorse the increased-risk standard addressed in a 1987 court of appeals case. See June v. Union Carbide Corp., 577 F.3d 1234 (10th Cir. 2009) (discussing Sharp v. Kaiser Found. Health Plan of Colo., 710 P 1153 (Colo. App. 1985), aff d, 741 .2d P 714 (Colo. 1987)). In June, the Tenth Circuit had .2d noted that the Colorado Supreme Court routinely followed the but-for causation test, and that the lower courts opinion in Sharp was inconsistent not only with that test, but in its out-of-context reliance on various sections of the Restatement (Second) of Torts. The Reigel court concluded: As both a logical and practical matter, the fact that a defendants conduct increased the victims risk of injury does not necessarily mean that the defendants conduct was a but-for cause of the injury or a necessary component of a causal set of events that would have caused the injury. Put another way, the victims injury may well have occurred regardless of whether the defendants conduct increased the risk that it would occur. Reigel, 2011 WL 6091709 at *8. Holding that the district court erred in instructing the jury, the court of appeals reversed the judgment against the defendant. Nonetheless, it rejected that defendants claim that judgment necessarily had to be entered in its favor, because there was evidence in the record from which reasonable jurors could conclude that the defendants negligence was a but-for cause of the decedents death, so the defendant was not necessarily entitled to a directed verdict on the negligence claim, and a retrial was ordered.

Negligence: Causation
Common-Law Negligence Claim Requires Proof of But-For Causation. Two Colorado Court of Appeals cases emphasized that the causation element of a negligence claim requires proof that the claimed injury would not have occurred but for the defendants negligent conduct. Ludlow v. Gibbons, 2011 WL 5436481 (Colo. App. Nov. 10, 2011) (also at 2011 Colo. App. LEXIS 1820); Reigel v. SavaSeniorCare, LLC, 2011 WL 6091709 (Colo. App. Dec. 8, 2011) (also at 2011 Colo. App. LEXIS 2042). Ludlow involved claims by sellers alleging professional negligence against both lawyers and brokers, and also asserting claims for negligent supervision and breach of fiduciary duty. Regarding the negligence claims, the court observed that the causation element has two aspects, causation in fact and legal causation, with the former requiring proof that, but for the negligence, there would have been no damages. In cases involving professional negligence, this has been construed to mean that the plaintiff must prove that but for the professional negligence, the plaintiff would have achieved a better result. Id. at *4. Because a party is not required to prove causation with certainty (i.e., it may do so by circumstantial evidence), and because the sellers presented more than speculation to support their causation theory that had they been appropriately informed by the brokers, they would not have suffered injury, the court reversed summary judgment in favor of the defendants. In Reigel, the defendant appealed from a verdict in favor of a woman whose husband died as a result of the claimed negligence of employees of a nursing facility where he had been sent for reha-

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