In Makoto USA, Inc., v. Russell, 08CA1372 (Nov. 25, 2009), the Colorado Court of Appeals ruled that the economic loss rule barred plaintiff's civil theft claim because it was inextricably intertwined with plaintiff's breach of contract claim.
In Makoto, plaintiff asserted claims of breach of contract and civil theft against the defendants arising out of plaintiff's purchase of defendants' business. Among the purchased assets was a utility patent, which, unbeknownst to the plaintiff, was unenforceable because the defendants had failed to make certain maintenance payments. The purchase agreement between the parties required plaintiff to pay defendants annual installments of $50,000 in satisfaction of the purchase price. Upon learning of the unenforceable patent, plaintiff ceased making payments and filed its action for breach of contract and civil theft.
The issue on appeal was whether the civil theft claim under Colorado's stolen property statute, Section 18-4-405, C.R.S. 2009, which provides for treble damages and attorneys fees, was barred by the economic loss rule. The Court of Appeals held that the civil theft claim was predicated on the existence of a breach of the contract, and therefore the economic loss rule barred recovery for civil theft.
The economic loss rule provides that "a party suffering only economic loss from the breach of an express or implied contractual duty may not assert a tort claim for such breach absent an independent duty of care under tort law." Id. For there to be a cognizable independent duty, "(1) the duty must arise from a source other than the relevant contract, and (2) the duty must not be a duty also imposed by the contract." Id.
The Makoto Court found that the civil theft claim was wholly dependent on the plaintiff's contract claim. The relief sought in the two claims were the same, and the theft claim could not have been proven without first proving that defendants also breached the contract. "Had defendants complied with the their reciprocal contractual duties, plaintiff would have no colorable claim that defendants 'stole' a contractual payment." Id. The Court further found that the legislature did not intend the stolen property statute be used to expand contractual remedies.
Posted By: Brent W. Houston, Esq.
Wednesday, December 16, 2009
Monday, December 14, 2009
ARBITRATORS NOT REQUIRED TO EXPLAIN AWARDS
The Colorado Court of Appeals has ruled "as a matter of Colorado law that arbitrators are not required to explain their reasons for issuing awards authorized by an agreement." Treadwell v. Village Homes of Colorado, Inc., 08CA0304 (Nov. 25, 2009). "Absent an affirmative showing of invalidity, arbitration awards may not be set aside for want of explanation (or ... remand for explanation)." Id.(internal quotations omitted). "'A mere ambiguity in the opinion accompanying an award, which permits the inference that the arbitrator may have exceeded his authority, is not a reason for refusing to enforce the award.'" Id. (quoting United Steel Workers of America v. Enterprise Wheel & Car Corp., 363 U.S. 593, 598 (S. Ct. 1960).
In the Treadwell case, the defendant, Village Homes, appealed the district court's confirmation of the arbitrator's award of attorneys' fees, costs, and post- and pre-judgment interest in favor of the plaintiffs. The arbitration provision contained in the sales contract provided for award of attorneys' fees and expenses to the prevailing party "upon a showing of egregious conduct." Id. The arbitrator awarded the plaintiffs $525,000 in damages and close to $300,000 in attorneys' fees, costs, and pre-judgment interest, but made no written findings. On appeal, Village Homes argued that the arbitrator exceeded its powers with respect to the award of attorneys' fees, costs and interest. The Court of Appeals disagreed.
The Court of Appeals ruled that the award of attorneys fees and costs in this case involved the merits of the dispute, because the arbitration clause provide for attorneys' fees and costs for egregious conduct, and not whether the arbitrator was empowered to make such award. Further, the merits of dispute are not subject to judicial review, and an arbitrator's award cannot be overturned simply because the arbitrator did not explain the reasoning for the award.
The Court of Appeals noted that parties can require the arbitrator to issue written "findings," and in that instance, the arbitrator's failure to issue findings would exceed the arbitrator's powers. However, the merits of the case shown in the findings would not be subject to judicial review. Only whether the award was within the powers of the arbitrator would be reviewable.
Posted By: Brent W. Houston, Esq.
In the Treadwell case, the defendant, Village Homes, appealed the district court's confirmation of the arbitrator's award of attorneys' fees, costs, and post- and pre-judgment interest in favor of the plaintiffs. The arbitration provision contained in the sales contract provided for award of attorneys' fees and expenses to the prevailing party "upon a showing of egregious conduct." Id. The arbitrator awarded the plaintiffs $525,000 in damages and close to $300,000 in attorneys' fees, costs, and pre-judgment interest, but made no written findings. On appeal, Village Homes argued that the arbitrator exceeded its powers with respect to the award of attorneys' fees, costs and interest. The Court of Appeals disagreed.
The Court of Appeals ruled that the award of attorneys fees and costs in this case involved the merits of the dispute, because the arbitration clause provide for attorneys' fees and costs for egregious conduct, and not whether the arbitrator was empowered to make such award. Further, the merits of dispute are not subject to judicial review, and an arbitrator's award cannot be overturned simply because the arbitrator did not explain the reasoning for the award.
The Court of Appeals noted that parties can require the arbitrator to issue written "findings," and in that instance, the arbitrator's failure to issue findings would exceed the arbitrator's powers. However, the merits of the case shown in the findings would not be subject to judicial review. Only whether the award was within the powers of the arbitrator would be reviewable.
Posted By: Brent W. Houston, Esq.
Wednesday, December 9, 2009
COLORADO COURT OF APPEALS RULES ON SCOPE OF HEALTH CARE PROXY
Sections 15-18.5-103 and 15-18.5-104, C.R.S. 2009, provide for appointment of a person to act as a health care proxy to make medical treatment and health care benefit decisions on behalf of an incapacitated person. The Colorado Court of Appeals recently ruled that a decedent's estate was not bound by an arbitration provision contained in nursing home admission documents signed by the decendent's health care proxy. Estate of Lujan v. Life Care Centers of America, d/b/a Evergreen Nursing Home, Case No. 08CA2367 (Nov. 25, 2009).
The Court ruled that the person appointed as the decedent's health care proxy did not have the authority to enter into an arbitration agreement because a decision to arbitrate is not a "medical treatment decision," and therefore the the estate was not bound by the arbitration agreement contained in the admission documents. Id. Note that the issue of whether an agreement to arbitrate is a "health care benefit decision" was resolved in the negative at the trial court level and was not raised on appeal.
The Court agreed that the decision to admit an incapacited person to a nursing home facility may fall with the definition of "medical treatment decision," but concluded that the General Assembly intended that this term be construed narrowly. In support of this conclusion, the Court pointed to Section 13-64-403(7), C.R.S. 2009, which provides that a health care provider cannot condition provision of medical care services on the patient's signing an arbitration agreement, and to Section 13-64-403(1), C.R.S. 2009, which requires arbitration agreements to be entered into voluntarily by the patient.
The Court further concluded that because of the incapacitated person's inherent lack of choice in appointment of the proxy "the health care proxy's authority should be viewed as a last resort and should be strictly limited to those decisions that are necessary to preserve a patient's health and well-being and that the patient would likely make were he or she able to do so." Id.
Posted By: Brent W. Houston, Esq.
The Court ruled that the person appointed as the decedent's health care proxy did not have the authority to enter into an arbitration agreement because a decision to arbitrate is not a "medical treatment decision," and therefore the the estate was not bound by the arbitration agreement contained in the admission documents. Id. Note that the issue of whether an agreement to arbitrate is a "health care benefit decision" was resolved in the negative at the trial court level and was not raised on appeal.
The Court agreed that the decision to admit an incapacited person to a nursing home facility may fall with the definition of "medical treatment decision," but concluded that the General Assembly intended that this term be construed narrowly. In support of this conclusion, the Court pointed to Section 13-64-403(7), C.R.S. 2009, which provides that a health care provider cannot condition provision of medical care services on the patient's signing an arbitration agreement, and to Section 13-64-403(1), C.R.S. 2009, which requires arbitration agreements to be entered into voluntarily by the patient.
The Court further concluded that because of the incapacitated person's inherent lack of choice in appointment of the proxy "the health care proxy's authority should be viewed as a last resort and should be strictly limited to those decisions that are necessary to preserve a patient's health and well-being and that the patient would likely make were he or she able to do so." Id.
Posted By: Brent W. Houston, Esq.
Subscribe to:
Posts (Atom)
