Genova v. Longs Peak Emergency Physicians, No. 02CA0756.

• Decision Date: 08 May 2003
• Docket Number: No. 02CA0756.
• Citation: 72 P.3d 454
• Parties: Ronald T. GENOVA, M.D., Plaintiff-Appellant, v. LONGS PEAK EMERGENCY PHYSICIANS, P.C.; Albert H. Colton, M.D.; Herbert Ogden, M.D.; Michael Monahan, M.D.; and Merle Miller, M.D., Defendants-Appellees.
• Court: Colorado Court of Appeals

72 P.3d 454

Ronald T. GENOVA, M.D., Plaintiff-Appellant, v. LONGS PEAK EMERGENCY PHYSICIANS, P.C.; Albert H. Colton, M.D.; Herbert Ogden, M.D.; Michael Monahan, M.D.; and Merle Miller, M.D., Defendants-Appellees.

No. 02CA0756.

Colorado Court of Appeals, Div. I.

May 8, 2003.

Anita S. Fiddleman, P.L.L.C., Anita S. Fiddleman, Boulder, Colorado; The Spillman Law Firm, L.L.C., Jason Slade Spillman, Trenton, Missouri, for Plaintiff-Appellant.

Caplan and Earnest, L.L.C., Peter M. Hamilton, Mark B. Wiletsky, Derek Kiernan-Johnson, Boulder, Colorado, for Defendants-Appellees.

Opinion by Judge GRAHAM.

Plaintiff, Ronald T. Genova, M.D., appeals the judgment entered on jury verdicts in favor of defendants, Longs Peak Emergency Physicians, P.C. (LPEP); Albert H. Colton, M.D.; Herbert Ogden, M.D.; Michael Monahan, M.D.; and Merle Miller, M.D., on plaintiff's claims of wrongful discharge in violation of public policy and breach of fiduciary duty. We affirm.

LPEP is a physician-owned professional corporation that provides emergency medical services to Longmont United Hospital. Plaintiff became an employee, shareholder, and director of LPEP in 1993. The individual defendants are shareholders and employees of LPEP.

In July 1999, defendants terminated plaintiff's employment and provided plaintiff with four months severance pay in accordance with his employment contract. LPEP requested the return of plaintiff's stock certificate in exchange for $100 pursuant to the shareholders' agreement, which provided that upon termination for any reason, a shareholder must sell his or her stock to LPEP for $100.

Plaintiff alleged that LPEP wrongfully discharged him in violation of public policy, that LPEP breached its employment contract with him, and that the individual defendants breached their fiduciary duties to him by undermining his standing with Longmont United Hospital and related conduct.

The jury awarded plaintiff $34,944 on his breach of contract claim, but found in favor of defendants on the wrongful discharge and breach of fiduciary duty claims.

I.

We first reject plaintiff's contention that the trial court abused its discretion in excluding evidence of the value of his ownership interest in LPEP and in not instructing the jury that the loss of that value was recoverable in tort.

Contrary to defendants' assertion, plaintiff argued in the trial court that ownership value in LPEP was relevant to prove the damages component of his breach of fiduciary duty claim. The trial court specifically ruled on that issue, finding that loss of value was not relevant to establish damages and not recoverable for breach of fiduciary duty. Thus, we deem this issue to have been sufficiently raised for purposes of appellate review.

A.

Plaintiff first argues that evidence of the value of his purported twenty percent ownership interest in LPEP was admissible and relevant to his breach of fiduciary duty claim. We conclude the trial court did not abuse its discretion because such evidence was irrelevant and would have confused the jury.

We review a trial court's ruling admitting or excluding evidence under an abuse of discretion standard. Hock v. N.Y. Life Ins. Co., 876 P.2d 1242 (Colo.1994). A court abuses its discretion when it rules based on an erroneous application of the law. Wallbank v. Rothenberg, 74 P.3d 413, 2003 WL 30427 (Colo.App. No. 01CA1949, Jan. 2, 2003). A trial court's exercise of discretion should not be overturned on appeal unless its ruling was manifestly arbitrary, unreasonable, or unfair. Wallbank v. Rothenberg, supra.

However, a trial court's ruling excluding evidence is reversible error only if a substantial right of a party is affected, that is, if the error substantially influenced the outcome of the case. Devenyns v. Hartig, 983 P.2d 63 (Colo.App.1998).

Under CRE 401, proffered evidence must relate to a fact "that is of consequence to the determination of the action." In essence, the evidence must be legally material to some factual issue in the case. Pennington v. Sears, Roebuck & Co., 878 P.2d 152 (Colo.App.1994).

If the proffered evidence is legally material, its admissibility becomes dependent on whether it has any tendency to make the existence of a consequential fact more probable or less probable than it would be without the evidence, that is, it must be logically relevant. Pennington v. Sears, Roebuck & Co., supra.

The elements of a claim for relief determine whether the challenged evidence relates to a fact of consequence. Damages are a necessary part of establishing a prima facie case of breach of fiduciary duty. Miller v. Byrne, 916 P.2d 566 (Colo.App.1995).

Here, the trial court ruled that the shareholders' agreement, which limits plaintiff's interest to $100 in the event of termination, did not justify the admission of plaintiff's expert testimony that plaintiff owned a twenty percent interest in LPEP worth in excess of $300,000. The court reasoned that allowing evidence of the fair market value of a shareholder's interest would render the shareholders' agreement meaningless. The trial court also found that any determination of LPEP's fair market value would be speculation.

Plaintiff argues that, by precluding evidence of the value of his ownership interest, the court essentially applied an economic loss rule to his claim. In Town of Alma v. AZCO Construction, Inc., 10 P.3d 1256 (Colo.2000), the supreme court held that a party suffering only economic loss from a breach of an express or implied contract could not assert an independent tort claim in the absence of an independent duty giving rise to the tort claim.

There is a distinction between the damages theories available in breach of contract claims and those available in tort claims. Contractual damages are limited to those foreseen by the parties when their bargain was struck. Vanderbeek v. Vernon Corp., 50 P.3d 866 (Colo.2002). This damages calculation, first applied in Hadley v. Baxendale, 9 Ex. 341, 156 Eng. Rep. 145 (1854), assures that contractual liability is limited to mutually allocated risks which were contemplated and foreseeable at the time of contract negotiations.

In contrast, tort damage analysis focuses on the concept of proximate cause and allows recovery of damages that were the particular consequence of the tort. Whether the claimant "reasonably contemplated a particular consequence as the probable result of the tort at the time it occurred is irrelevant." Vanderbeek v. Vernon Corp., supra, 50 P.3d at 871.

Here, the trial court allowed plaintiff to assert his tort claim for breach of fiduciary duty, but plaintiff offered only a theory that sought to compensate him for the loss of something he did not own, namely, a one-fifth interest in LPEP. No other theory of damages was advanced. Plaintiff's equity ownership in LPEP was subject to his right to receive $100 for his stock. Although he was free to offer proof of other damages proximately caused by the breach of fiduciary duty, he did not do so.

The trial court did not apply the economic loss rule and instead allowed plaintiff to put on proof of separate and distinct tort claims. However, the court properly refused to allow proof of a damages theory based on plaintiff's equity ownership because it was contrary to the facts in evidence. The record reflects that plaintiff never had a twenty percent interest in LPEP. Thus, the trial court did not err in precluding evidence of a nonexistent ownership.

B.

Plaintiff further contends that the trial court erred in refusing to instruct the jury that loss of assets or property is recoverable in tort. We disagree.

A trial court has a duty to instruct the jury correctly on the law applicable to the case. A party is entitled to a jury instruction if it is supported by the evidence and consistent with the existing law. Devenyns v. Hartig, supra.

Although the Colorado Civil Jury Instruction Manual includes loss of assets or property as damages that may be recoverable for a breach of fiduciary duty, here, the trial court instructed the jury that in determining damages for that claim, it could consider:

1. Any noneconomic losses or injuries which plaintiff has had or will probably have in the future, including: pain and suffering, inconvenience, emotional stress, and impairment of the quality of life; and,

2. Any economic losses which plaintiff has had or will probably have in the future, including:

a. Anything of value or any profit the defendants, Colton, Ogden, Monahan or Miller, received as a result of the breach of fiduciary duty; and

b. Any loss of profits and/or income which plaintiff could reasonably have expected to earn had the fiduciary duty not been breached.

Based upon the record, plaintiff's claim could only have resulted in economic damages based upon loss of future earnings as a continuing employee. He did not suggest that he had been defrauded in connection with the shareholders' agreement or proffer any other reason why the shareholders' agreement did not properly fix the value of his interest. In fact, before trial, defendants prevailed on summary judgment on plaintiff's claim that the shareholders' agreement should be reformed to reflect an oral agreement granting him an increased equity ownership. Thus, the jury instruction was proper and conformed to the evidence.

C.

Plaintiff next argues that the trial court erred in refusing to instruct the jury that loss of assets or property is recoverable on a claim for wrongful termination in violation of public policy. We are not persuaded.

Economic damages for wrongful discharge are limited to back pay, loss of future pay, loss of benefits, and related economic losses proximately resulting from the discharge. Economic damages are appropriate to "put the wrongfully discharged employee in the same position he ... would have been in had the employer not breach[ed] the employment contract." Decker v. Browning-Ferris Indus. of Colo., Inc., 947 P.2d 937, 940-41 (C...