Hartman v. COMMUNITY RESPONSIBILITY CENTER, 02CA1308.

• Decision Date: 06 November 2003
• Docket Number: No. 02CA1308.,02CA1308.
• Citation: 87 P.3d 202
• Parties: Gillian P. HARTMAN, Plaintiff-Appellee, v. COMMUNITY RESPONSIBILITY CENTER, INC., Defendant-Appellant.
• Court: Colorado Court of Appeals

87 P.3d 202

Gillian P. HARTMAN, Plaintiff-Appellee, v. COMMUNITY RESPONSIBILITY CENTER, INC., Defendant-Appellant.

No. 02CA1308.

Colorado Court of Appeals, Div. IV.

November 6, 2003.

Certiorari Denied March 22, 2004.

Holland & Hart LLP, Christopher H. Toll, Megan C. Bertron, Denver, Colorado, for Plaintiff-Appellee.

Fowler, Schimberg & Flanagan, P.C., Daniel M. Fowler, Katherine Taylor Eubank, Jessica J. Eklund, Denver, Colorado, for Defendant-Appellant.

Opinion by Judge KAPELKE.

Defendant, Community Responsibility Center, Inc. (CRC), appeals the judgment entered upon a jury verdict in favor of plaintiff, Gillian P. Hartman, a former employee, on plaintiff's claim for damages under the Colorado Wage Act and on CRC's counter-claims for negligence and breach of fiduciary duty. We affirm.

Hartman was employed for several years by CRC, a nonprofit corporation. As the director of finance and administration, she reported to the executive director.

In 1998, the entire board of directors of CRC resigned following an internal liability audit. The new board determined that the executive director was underpaid and therefore decided to increase his compensation substantially and also to grant him back pay. The executive director, in turn, increased the compensation of Hartman and another employee and authorized back pay for them as well. Under CRC's bylaws, the executive director had the authority to set the rate of compensation for all subordinate officers and employees, subject to any limitations imposed by the board.

In 2000, CRC terminated the executive director's employment. Hartman resigned shortly thereafter. In her resignation letter, she requested that CRC deposit into her bank account her final paycheck for her last four days of work and her accrued vacation pay. CRC refused to make the requested payments. After unsuccessfully pursuing a formal wage demand claim through the Colorado Department of Labor and Employment, Hartman filed this action for unpaid wages and accrued vacation pay, penalties, and attorney fees. CRC filed counterclaims, including claims for negligence and breach of fiduciary duty, based on Hartman and her coemployee's having received the increased compensation and back pay.

At the close of CRC's case-in-chief, the court directed a verdict in favor of Hartman on liability as to her Wage Act claim. The jury awarded her damages for her unpaid wages and accrued vacation pay and also found for her on CRC's counterclaims. The judgment entered by the trial court included a statutory penalty in the amount of one-half of the jury's award, pursuant to former § 8-4-104(3), Colo. Sess. Laws 1986, ch. 65 at 505 (now codified with amendments at § 8-4-109(3)).

I. Exclusion of Expert Testimony

CRC first contends that the trial court abused its discretion by ruling, pursuant to Hartman's motion in limine, that CRC's expert witness would not be allowed to testify concerning the reasonableness of Hartman's conduct. Specifically, CRC argues that its expert witness, an accountant, should have been permitted to testify that Hartman knew or should have known that the compensation increases were imprudent, that she had a duty to report the compensation increases and their detrimental effect to the board, and that she breached that duty. We perceive no basis for reversal.

CRE 702 provides that an expert may give opinion testimony where scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue. Trial courts are granted broad discretion in determining the admissibility of expert testimony under CRE 702, and the exercise of that discretion will not be overturned unless manifestly erroneous. Masters v. People, 58 P.3d 979, 988 (Colo.2002).

Generally, expert opinion testimony is not inadmissible merely because it touches on an ultimate issue of fact. However, an expert may not usurp the function of the court by expressing an opinion regarding the applicable law or legal standards. Quintana v. City of Westminster, 8 P.3d 527 (Colo.App. 2000).

The nature and scope of the duties owed by a fiduciary are issues of law to be determined by the court. Command Communications, Inc. v. Fritz Cos., 36 P.3d 182 (Colo.App.2001).

Here, in partly granting Hartman's motion in limine, the trial court recognized that the scope of the fiduciary duty of the officers of a nonprofit corporation is defined by case law and statute. See § 7-128-401, C.R.S.2003 (requiring that an officer act in good faith, with the care an ordinarily prudent person in a like position would exercise under similar circumstances, and in a manner the officer reasonably believes to be in the best interest of the nonprofit corporation); Van Schaack Holdings, Ltd. v. Van Schaack, 867 P.2d 892 (Colo.1994) (officer's fiduciary duty determined by looking to legal standards, including prior case law).

In discussing the distinction between claims for breach of fiduciary duty and those for malpractice, the trial court quoted from Moses v. Diocese of Colorado, 863 P.2d 310, 321 n. 13 (Colo.1993):

The fundamental difference between the two causes of action is the former [for fiduciary breach] is a breach of trust and does not require a professional relationship or a professional standard of care, while the latter [for malpractice] is an action for negligence based on a professional relationship and a professional standard of care.

In contrast to an ordinary negligence claim or a breach of fiduciary duty claim, a claim for professional negligence involves standards of care that are generally not within the common knowledge and experience of ordinary persons. Therefore, the standard of care must be established by expert witnesses in professional liability cases.

Here, in excluding the proffered expert witness testimony, the court concluded that it went to the scope of Hartman's duty as an officer, which was a matter of law.

We agree with the trial court that CRC's breach of loyalty claim was not governed by standards of care of a particular profession and that the jury would be able to determine whether a breach occurred based on the court's instructions. Under these circumstances, the court did not abuse its broad discretion in excluding the testimony, even though we recognize that the court may have been incorrect in viewing the proffered testimony as inadmissible as a matter of law, rather than as a matter of the court's discretion.

II. Admission of Evidence

CRC next contends that the trial court abused its discretion by allowing Hartman to introduce evidence regarding CRC's settlement with the former executive director and regarding the financial condition of the corporation and certain financial decisions made by management. We disagree.

A.

First, we find no abuse of discretion in the trial court's admitting evidence of the settlement agreement reached by CRC with its former executive director.

Pursuant to CRE 408, evidence of a settlement agreement is not admissible to prove liability for the settled claims, but may be admissible if offered for other purposes, including to prove bias or prejudice of a witness. While CRE 408 enumerates certain exceptions to the general rule excluding evidence of settlements, the list is not exclusive. See Genova v. Longs Peak Emergency Physicians, P.C., 72 P.3d 454, 464 (Colo.App. 2003).

Here, the executive director testified that he was constrained in his testimony by the agreement, which prohibited disclosure of its terms to Hartman. Accordingly, the settlement agreement was admissible to explain the context of the testimony given by the executive director.

In addition, the evidence was relevant to rebut CRC's own evidence that its losses for the year were caused by the allegedly excessive compensation paid to Hartman and her coemployee. For accounting purposes, CRC had treated the sizable settlement payment to the executive director as an expense in the same year Hartman and her coemployee received their payments.

Fed.R.Evid. 408, the counterpart of CRE 408, "does not require exclusion of evidence regarding a settlement if the evidence is offered for some purpose other than proving `liability for or invalidity of the claim or its amount.'" Jack B. Weinstein & Margaret A. Berger, 2 Weinstein's Federal Evidence § 408.08, at 408-27 (2d ed.2003). We conclude that principle should apply with respect to CRE 408, as well. See State v. Buckley Powder Co., 945 P.2d 841 (Colo.1997)(interpretations of federal rules are persuasive authority as to the Colorado rule counterparts).

Here, the settlement evidence was not offered for those prohibited purposes. Accordingly, we conclude that the trial court did not abuse its discretion.

B.

The trial court also did not abuse its discretion in permitting evidence of CRC's finances and certain corporate financial decisions made during Hartman's employment and following her resignation.

CRC initially asserts that Hartman should not have been permitted to introduce evidence that when her compensation and that of her coworker were increased, CRC had $1.8 million in reserves in the bank, had decided for the first time to compensate board members, had placed an attorney on monthly retainer, and had significantly increased the executive director's compensation and given him a large award of back pay. The trial court ruled that this evidence was relevant to CRC's contention that Hartman should have known that the pay increases would have a negative impact on the company's finances. The evidence also served to corroborate Hartman's testimony that her own pay increase and that of her coworker appeared reasonable in light of the overall financial position of the company. We find no abuse of discretion in the court's ruling.

CRC also maintains that the court abused its discretion in admitting evidence that CRC spent $315,000 on a rental property in Florida approximately seven months after Hartman...