Ehrlich Feedlot, Inc. v. Oldenburg

• Decision Date: 20 April 2006
• Docket Number: No. 04CA0775.,04CA0775.
• Citation: 140 P.3d 265
• Parties: EHRLICH FEEDLOT, INC.; Ronald O. Ehrlich, as Agent; Robert E. Ehrlich, as Agent; Otto Ehrlich, individually and as Trustee of the Otto Ehrlich Trust; Esther Ehrlich, individually and as Trustee of the Esther Ehrlich Trust; and Ehrlich Farm Company, Inc., Plaintiffs-Appellants, v. R. Sam OLDENBURG; Stow L. Witwer, Jr.; and Witwer, Oldenburg, Barry, and Bedingfield LLP, Defendants-Appellees.
• Court: Colorado Court of Appeals

140 P.3d 265

EHRLICH FEEDLOT, INC.; Ronald O. Ehrlich, as Agent; Robert E. Ehrlich, as Agent; Otto Ehrlich, individually and as Trustee of the Otto Ehrlich Trust; Esther Ehrlich, individually and as Trustee of the Esther Ehrlich Trust; and Ehrlich Farm Company, Inc., Plaintiffs-Appellants, v. R. Sam OLDENBURG; Stow L. Witwer, Jr.; and Witwer, Oldenburg, Barry, and Bedingfield LLP, Defendants-Appellees.

No. 04CA0775.

Colorado Court of Appeals, Div. II.

April 20, 2006.

As Modified on Denial of Rehearing June 1, 2006.

Certiorari Dismissed August 7, 2006.

COPYRIGHT MATERIAL OMITTED

Musgrave & Theis, P.C., B. Lawrence Theis, Bobbee J. Musgrave, Steven J. Perfrement, Stephen D. Rynerson, Denver, Colorado, for Plaintiffs-Appellants.

Haddon, Morgan, Mueller, Jordan, Mackey, & Foreman, P.C., Saskia A. Jordan, Rachel A. Bellis, Ty Gee, Denver, Colorado, for Defendants-Appellees.

NEY^*, J.

In this action for breach of fiduciary duty against a former attorney, plaintiffs, Ehrlich Feedlot, Inc., Ehrlich Farm Company, Inc., Ronald O. Ehrlich, Robert E. Ehrlich, Otto Ehrlich, and Esther Ehrlich (collectively Ehrlich), appeal the trial court orders granting the motions of defendants, R. Sam Oldenburg, Stow L. Witwer, Jr., and Witwer, Oldenburg, Barry and Bedingfield, LLP. (Oldenburg Law Firm), for (1) change of venue, (2) summary judgment for failure to file a certificate of review in violation of § 13-20-602, C.R.S.2005, and (3) summary judgment regarding economic damages. Ehrlich also appeals the trial court order dismissing the civil theft claim. We affirm.

In the 1980s, Ehrlich borrowed money from Wells Fargo to finance farming activities. The notes were secured in part by property owned by Ehrlich Feedlots, Ronald Ehrlich, and Robert Ehrlich. Ehrlich defaulted on the notes, and Ehrlich's attorneys, defendants Witwer and the Oldenburg Law Firm, assisted in renegotiating the notes to avoid the pending foreclosure. However, Ehrlich defaulted again.

To avoid a foreclosure action by Wells Fargo, Ehrlich entered into an agreement with Robert Magness, who purchased the notes from Wells Fargo. Ehrlich subsequently defaulted on the agreement with Magness.

In 1996, Magness died. In 1998, the Magness Estate, represented by attorney Jack Levine, filed a foreclosure action. Levine engaged Oldenburg to act as local counsel in the Weld County action. Ehrlich objected to Oldenburg's involvement in the action, and Oldenburg withdrew. Ehrlich eventually settled with the Magness Estate.

In 2000, Ehrlich filed this action in Denver District Court against Witwer, Oldenburg, and the Oldenburg Law Firm (Oldenburg defendants) alleging, among other things, breach of fiduciary duty and civil theft, pursuant to § 18-4-405, C.R.S.2005. Levine and his law firm (Levine defendants) were added as defendants two weeks later.

The Oldenburg defendants moved for change of venue to Weld County. The trial court granted the motion, concluding that § 18-4-405 imposed a statutory penalty which required the court to transfer venue to Weld County pursuant to C.R.C.P. 98.

In 2002 and 2003, the Oldenburg and Levine defendants filed numerous motions for summary judgment. As relevant here, the Levine defendants' fifth motion for summary judgment challenged Ehrlich's claim for damages, and the eighth motion for summary judgment requested dismissal of the action based on Ehrlich's failure to file a certificate of review under § 13-20-602. The Oldenburg defendants joined in both of these motions.

In May 2003, Ehrlich and the Levine defendants settled, and the Levine defendants were dismissed from the action.

In July 2003, the trial court granted the Oldenburg defendants' fifth motion for summary judgment on Ehrlich's economic damages claims.

In January 2004, as relevant here, the trial court denied the Oldenburg defendants' remaining summary judgment motions, including the motion alleging that Ehrlich had failed to file a certificate of review under § 13-20-602. The trial court concluded that because Ehrlich alleged breach of fiduciary duty, and not negligence, a certificate of review was not required to support those claims.

Shortly after the trial court issued its ruling, the Oldenburg defendants filed another motion to dismiss for lack of a certificate of review and argued dismissal of Ehrlich's claims was mandatory pursuant to § 13-20-602. In response, the trial court ordered Ehrlich to show cause why the case should not be dismissed for failure to file a certificate of review. Upon considering Ehrlich's response, the trial court reversed its previous order, granted the Oldenburg defendants' motion, and dismissed all of Ehrlich's claims.

I.

Ehrlich first contends the trial court erred in granting defendants' motion to change venue based on C.R.C.P. 98(b)(1), and in concluding that § 18-4-405 imposes a statutory penalty. We disagree.

We have found no Colorado case addressing whether § 18-4-405 imposes a "penalty" within the meaning of C.R.C.P. 98. Therefore, Ehrlich's contention raises an issue of first impression in Colorado.

Generally, a decision to grant or deny a motion for change of venue is within the discretion of the trial court, and the court's decision will not be disturbed on appeal absent an abuse of discretion. Mohler v. Park County Sch. Dist. RE-2, 32 Colo.App. 388, 515 P.2d 112 (1973). However, where, as here, the trial court ruled as a matter of law that C.R.C.P. 98(b)(1) requires a change of venue because § 18-4-405 imposes a statutory penalty, our review is de novo. See Evans v. Romer, 854 P.2d 1270 (Colo.1993).

When interpreting a statute, we give effect to the intent of the general assembly and avoid an interpretation that would defeat the obvious intent of the legislature. See, e.g., Colo. Office of Consumer Counsel v. Pub. Utils. Comm'n, 42 P.3d 23 (Colo.2002).

C.R.C.P. 98(b)(1) requires that actions for "the recovery of a penalty or forfeiture imposed by statute" be tried in the county where "the claim, or some part thereof, arose."

Section 18-4-405 provides:

All property obtained by theft, robbery, or burglary shall be restored to the owner, and no sale, whether in good faith on the part of the purchaser or not, shall divest the owner of his right to such property. The owner may maintain an action not only against the taker thereof but also against any person in whose possession he finds the property. In any such action, the owner may recover two hundred dollars or three times the amount of the actual damages sustained by him, whichever is greater, and may also recover costs of the action and reasonable attorney fees; but monetary damages and attorney fees shall not be recoverable from a good-faith purchaser or good-faith holder of the property.

The distinction between a penal statute and a remedial statute is not always clear. Generally, a penal statute creates a new and distinct statutory cause of action and requires no proof of actual damages as a condition precedent to recovery. See Palmer v. A.H. Robins Co., 684 P.2d 187 (Colo.1984). Further, statutes imposing penalties that benefit the public are more likely to be treated as penal than those benefiting individuals. Carlson v. McCoy, 193 Colo. 391, 566 P.2d 1073 (1977); see Concrete, Inc. v. Arkhola Sand & Gravel Co., 228 Ark. 1016, 311 S.W.2d 770 (1958); Chicago, R.I. & P. Ry. v. Miller, 103 Ark. 151, 146 S.W. 485 (1912).

However, statutes that impose a penalty are not necessarily "penal" statutes for purposes of determining venue. For example, exemplary damages are not a "penalty" for purposes of determining venue because the exemplary damages are incidental to the recovery of the compensatory damages that form the basis for the underlying claim. See Robbins v. McAlister, 91 Colo. 505, 16 P.2d 431 (1932); Moon v. Platte Valley Bank, 634 P.2d 1036 (Colo.App.1981); Jones v. Harding Glass Co., 44 Colo.App. 437, 619 P.2d 777 (1980), vacated on other grounds, 640 P.2d 1123 (Colo.1982).

Section 18-4-405 provides for treble damages. Generally, treble damages serve to punish and deter the proscribed conduct and to promote private enforcement of a statute. Farmers Group, Inc. v. Williams, 805 P.2d 419 (Colo.1991); Carlson v. McCoy, supra.

Statutes that provide for both actual and treble damages are both penal and remedial in nature. Giampapa v. Am. Family Mut. Ins. Co., 64 P.3d 230 (Colo.2003)(characterizing treble damages as a statutory penalty or an enforcement mechanism); Lexton-Ancira Real Estate Fund v. Heller, 826 P.2d 819 (Colo.1992); Group, Inc. v. Spanier, 940 P.2d 1120 (Colo.App.1997) (treble damages provision in § 13-21-109(2), C.R.S.2005, creates a penalty and is not intended merely to compensate).

Treble and exemplary damages serve similar purposes, and a plaintiff may not recover treble damages and exemplary damages premised on the same facts. Lexton-Ancira Real Estate Fund v. Heller, supra. However, treble damages, unlike exemplary damages, are not always incidental to compensatory damages.

Section 18-4-405, for example, permits the rightful owner of property obtained by theft, robbery, or burglary to recover two hundred dollars or three times the amount of the actual damages sustained." Although the amount of damages awarded pursuant to § 18-4-405 may be calculated based on actual damages, the statute otherwise provides for damages irrespective of actual pecuniary loss.

The calculation of a statutory penalty can be determined based on actual damages. See Farmers Group, Inc. v. Williams, supra (statutory action for treble damages under § 38-12-103, C.R.S.2005, calculated based on actual damages is penal for purposes of one-year statute of limitations because treble damages award constitutes an independent statutory "penalty or forfeiture"); Carlson v. McCoy, supra; Atchison, Topeka & Santa Fe R.R. v. Tanner, 19 Colo. 559, 36 P. 541 (1894)(a penalty in an amount of twice the value of each animal killed was a statutory penalty).

Further, while...