Koontz v. Rosener

• Decision Date: 14 December 1989
• Docket Number: WORLD-RANGE,No. 87CA1733,87CA1733
• Parties: 29 Wage & Hour Cas. (BNA) 1029 Carl KOONTZ, Diane Koontz, Wayne Newsom and John Murphy, Plaintiffs-Appellants and Cross-Appellees, v. Greg ROSENER, Defendant-Appellee, Third-Party Plaintiff, and Cross-Appellant. REALTYREALTY, LTD. v. ESTES VILLAGE PROPERTIES, LTD., a Colorado corporation, Third-Party Defendant and Cross-Appellee. . II
• Court: Colorado Court of Appeals

Page 192

787 P.2d 192

29 Wage & Hour Cas. (BNA) 1029

Carl KOONTZ, Diane Koontz, Wayne Newsom and John Murphy, Plaintiffs-Appellants and Cross-Appellees, v. Greg ROSENER, Defendant-Appellee, Third-Party Plaintiff, and Cross-Appellant.

REALTY WORLD-RANGE REALTY, LTD. v. ESTES VILLAGE PROPERTIES, LTD., a Colorado corporation,

Third-Party Defendant and Cross-Appellee.

No. 87CA1733.

Colorado Court of Appeals Div. II.

Dec. 14, 1989.

As Modified on Denial of Rehearing Jan. 18, 1990.

Frascona, Joiner & Smittkamp, Steven O. Sims and Cynthia T. Kennedy, Boulder, for plaintiffs-appellants and cross-appellees and third-party defendant and cross-appellee.

Davis & Ceriani, Gary J. Ceriani and John A. Logan, Denver, for defendant-appellee, third-party plaintiff and cross-appellant.

No appearance for third-party defendant and cross-appellee.

Opinion by Judge HUME.

Plaintiffs, Carl Koontz, Diane Koontz, Wayne Newsom, and John Murphy, appeal the judgment that dismissed their claims seeking compensation from defendant, Greg Rosener, for services rendered as employees, and awarded defendant damages on his counterclaims. Defendant cross-appeals those portions of the judgment that awarded plaintiffs an offset for commissions against his damage award, dismissed his third-party claim for unjust enrichment against Estes Village Properties, Ltd. (Estes), and limited his recovery for claimed attorney fees. We affirm in part, reverse in part, and remand with directions.

Plaintiffs are real estate salespersons who were formerly employed by Range Realty, Ltd. (Range), an incorporated real estate brokerage firm in Estes Park, Colorado. Defendant was the principal majority shareholder for Range and was the corporation's designated individual broker pursuant to §§ 12-61-103(7) and 12-61-103(8), C.R.S. (1985 Repl.Vol. 5).

In 1985, while still employed by Range, plaintiffs jointly formulated a plan to buy into and work for Estes, a competing real estate brokerage firm. Neither defendant nor Range was apprised of plaintiffs' anticipated move.

Plaintiffs eventually told Rosener they wanted to resign, but indicated a willingness to remain with Range for an additional week or two before they actually left that employment. However, defendant, after discovering a serious diminution in Range's inventory of continuing listings, elected to terminate plaintiffs' employment immediately.

Claiming entitlement to payment of listing commissions on property they had listed for Range prior to their termination and which had thereafter resulted in sales, plaintiffs commenced this action against defendant pursuant to § 8-4-101, et seq., C.R.S. (1986 Repl.Vol. 3B) to enforce payment of compensation, for imposition of the statutory penalty for its non-payment, and for recovery of attorney fees in prosecuting the action.

Defendant denied liability on plaintiffs' claims and, as Range's assignee, asserted counterclaims against plaintiffs for breach of fiduciary duty, breach of contract, civil conspiracy, and fraud. Later, defendant, as assignee, also asserted a third-party claim against Estes, for recovery on an unjust enrichment theory.

I.

Plaintiffs contend that the trial court erred in adopting the written findings, conclusions, and judgment prepared by defendant's counsel pursuant to the court's direction. We disagree.

Although appellate courts will critically scrutinize findings prepared by a party to proceedings that are adopted by the court, such findings will nevertheless be sustained if, as here, they are supported by the evidence. Ficor, Inc. v. McHugh, 639 P.2d 385 (Colo.1982).

Plaintiffs argue further that, because the court's written findings vary from those it announced earlier on the record in open court, the inconsistent written findings must be set aside. We reject this argument.

A court's remarks or expressions of opinion made during or at the end of a trial are not necessarily formal findings of fact prepared as the basis for a judgment. Jones v. Boyer, 68 Colo. 568, 193 P. 492 (1920).

Here, the findings that serve as the basis for the court's judgment are those it formally approved and adopted contemporaneously with the entry of judgment. See C.R.C.P. 52; C.R.C.P. 58(a), as then in effect; cf. C.R.C.P. 58(a) as amended November 12, 1987.

Despite the court's characterization of its oral remarks as "findings and conclusions," it expressly reserved entry of judgment pending its adoption of written findings and conclusions. In so doing, the court properly reserved its authority to supplement and modify the opinions it expressed in its oral remarks until the date judgment formally entered.

Hence, we conclude that the court's written findings and conclusions constitute the basis of its judgment, and insofar as those findings are supported by substantial evidence in the record, we will not disturb them on appeal.

II.

Plaintiffs also contend that the trial court erred in determining that they breached duties of loyalty they owed to defendant's assignor, Range. We disagree.

A.

Plaintiffs argue that because the court found that they did not go "behind the sign" and actively solicit Range's customers for themselves during the period of their employment, their activities did not exceed permissible preparations to compete. We reject that argument.

As stated in Jet Courier Service, Inc. v. Mulei, 771 P.2d 486 (Colo.1989):

" '[U]nless otherwise agreed, an agent is subject to a duty to his principal to act solely for the benefit of the principal in all matters connected with his agency.' "

One facet of the duty of loyalty is the agent's duty not to compete with his principal concerning the subject matter of the agency, and fairness dictates that an employee not be permitted to exploit his employer's trust so as to obtain an unfair advantage in competing with the employer in a matter concerning the latter's business. While employees are entitled to a privilege which enables them to prepare or make arrangements to compete prior to leaving the employ of their prospective rivals, it is the nature of such preparations that is significant in determining whether a breach has occurred. Jet Courier Service, Inc. v. Mulei, supra.

Here, the court found that plaintiffs' activity in systematically "shortlisting" i.e., listing properties for only a short period, and "failing to list" properties for Range, so that potential listings would be prospectively available for their own competing venture, was tantamount to active competition with Range. This practice was not in Range's best interests, but was done with a view toward promoting plaintiffs' private interests at Range's expense and to its detriment.

As real estate salespersons employed or engaged by or on behalf of Range, plaintiffs had an obligation to conduct real estate business activities solely on Range's behalf. See §§ 12-61-101(3) and 12-61-102, C.R.S. (1985 Repl.Vol. 5); Becker v. Arnold, 42 Colo.App. 178, 591 P.2d 596 (1979).

Hence, we conclude that the nature of plaintiffs' activities exceeded the bounds of permissible preparations to compete, and constituted active competition, in violation of plaintiffs' duty of loyalty to Range. See Jet Courier Service, Inc. v. Mulei, supra.

B.

Plaintiffs also argue that the trial court erred in considering their undisclosed agreement to terminate en masse their employment with Range as a factor in concluding that they had violated their duty of loyalty. We perceive no error.

If an employee engages in impermissible solicitation of his co-workers during the term of his employment, he violates a duty of loyalty to his employer. Jet Courier Services, Inc. v. Mulei, supra.

Here, the trial court found that plaintiffs had gained sufficient trust and confidence that they were permitted to conduct Range's listing and sales activities in a largely independent fashion. The court also found that plaintiffs had acted in concert to conceal from Range their plan simultaneously to leave Range's employment and only announced their resignations when they feared that the plan and their subsequent "short listing" activities would inevitably be discovered.

Those findings, when coupled with undisputed evidence that plaintiffs comprised approximately one-half of Range's entire sales staff and were responsible for the bulk of Range's total sales and listing activities, are sufficient to warrant the court's conclusion that plaintiffs' conduct evidenced an intent to diminish Range's prospective ability to compete with their anticipated venture and thus violated a duty of loyalty owed to Range. See Jet Courier Services, Inc. v. Mulei, supra.

III.

Plaintiffs next contend that, even if it is assumed that the trial court correctly concluded that they breached duties of loyalty owed to Range, it erred in its assessment of damages resulting from that conduct. We disagree.

In determining issues of causation of injury and the amount of losses suffered, the trier of fact is vested with broad discretion, and its assessment and award of compensation therefor will not be set aside absent a showing that it abused that discretion. Preuss v. Schoonover, 154 Colo. 531, 391 P.2d 880 (1964).

Here, the record contains substantial evidence that Range's demonstrated loss of profits resulted from plaintiffs' disloyal conduct during their employment, and we perceive no abuse of the court's discretion in its award of damages based upon that evidence.

IV.

Plaintiffs also contend that the court erred in dismissing their claim for compensation for their failure to join Range as a party defendant. We disagree.

Plaintiffs' reliance upon the provisions of § 12-61-103(8), C.R.S. (1985 Repl.Vol. 5) is misplaced. That statute provides that the designated director-broker for a corporate real estate brokerage firm may be held personally responsible for claims of breaches of fiduciary duty made against the corporate firm.

Here, plaintiffs' claims against Rosener were not based on any allegation...