McCafferty v. Musat

• Citation: 817 P.2d 1039
• Decision Date: 13 December 1990
• Docket Number: No. 88CA0615,88CA0615
• Parties: William J. McCAFFERTY, Plaintiff-Appellee and Cross-Appellant, v. L. Richard MUSAT and Opland & Musat, P.C., Defendants-Appellants and Cross-Appellees. . V
• Court: Court of Appeals of Colorado

Page 1039

817 P.2d 1039

William J. McCAFFERTY, Plaintiff-Appellee and Cross-Appellant, v. L. Richard MUSAT and Opland & Musat, P.C. Defendants-Appellants and Cross-Appellees.

No. 88CA0615.

Colorado Court of Appeals Div. V.

Dec. 13, 1990.

As Modified on Denial of Rehearing March 14, 1991.

Certiorari Denied Oct. 7, 1991.

Charles Welton & Associates, P.C., Charles Welton, Denver, for plaintiff-appellee and cross-appellant.

Sherman & Howard, Michael A. Williams, Christopher J. Koenigs, Denver, for defendants-appellants and cross-appellees.

Opinion by Judge JONES.

The defendants, L. Richard Musat and Opland & Musat, P.C. (collectively Musat), appeal the judgment entered upon a jury verdict finding them negligent in their legal representation of the plaintiff, William J. McCafferty. We affirm.

In April 1980, plaintiff, while employed as a miner at the Climax Molybdenum mine near Leadville sustained serious injuries during certain blasting operations that used an explosive fuse cord, Primacord, manufactured by the Ensign-Brickford Co. The injury occurred when a miner on a different level of the mine lit the Primacord while McCafferty was still holding a box of it.

After receiving workers' compensation benefits and seeking legal advice from other attorneys, McCafferty contacted Musat concerning a tort case against Ensign-Bickford and the Climax Molybdenum Co. In January 1982, McCafferty and Musat entered into a retainer agreement whereby Musat and his firm agreed to:

"[T]ake charge of [McCafferty's] claim for purposes of investigating said claim, filing a lawsuit and if, in counsel's judgment, the claim or claims, after initial discovery are meritorious in their judgment to pursue it to final determination or disposition, by legal proceedings or compromise of settlement, as may seem proper and advisable."

Musat advised McCafferty that, because of the Workmen's Compensation Act of Colorado, he had no cause of action against his employer. After analysis, Musat determined that he would file a claim based on the negligent failure of Ensign-Bickford to prepare and implement adequate instructions and safeguards for the use of its Primacord product. Musat sought and received permission from McCafferty to retain co-counsel with experience in product liability cases. Accordingly, Musat proceeded to retain one Griffith. Musat, however, was to remain McCafferty's legal contact.

After preliminary research and investigation were done, Musat and Griffith, on or about May 21, 1982, filed a lawsuit on McCafferty's behalf in the United States District Court. Musat advised McCafferty that he had a strong case and that he "would probably end up settling [the case] for $60,000 a year for the rest of [McCafferty's] life."

The law firm representing Ensign-Bickford was Hall & Evans. Unbeknownst to McCafferty, Musat, beginning in October 1982, actively sought employment with that firm. And, by December 14, 1982, he had told McCafferty's occupational therapist that he would soon be working for Hall & Evans. Thereafter, prior to the completion of a substantial amount of discovery, and before he ever apprised McCafferty of his conflict of interest, Hall & Evans offered Musat a job.

On December 22, 1982, Musat telephoned McCafferty to notify him of the job offer. He then informed McCafferty of his conflict of interest arising as a result of the job offer. Despite his prior statements to McCafferty that his case, although imperfect, was strong, he now told McCafferty that, in his opinion, he had no case against Ensign-Bickford and that Ensign-Bickford was sure to win at trial. Musat therefore proceeded to convey to McCafferty a settlement offer from Ensign-Bickford, via Hall & Evans as counsel, in the amount of $5,000. He recommended that McCafferty accept the offer, calling it a "gift" tendered as a favor to Musat.

Despite his recommendation that McCafferty accept the offer, Musat suggested that McCafferty first discuss it with co-counsel Griffith. McCafferty, however, replied that he trusted Musat's opinion and would do whatever Musat recommended. Nevertheless, McCafferty did contact Griffith, pursuant to Musat's suggestion. Griffith, however, told him that he could not discuss the situation involving the conflict of interest and that it was strictly a matter between McCafferty and Musat. On approximately December 24, 1982, McCafferty reiterated his acquiescence to Musat's recommendation of settlement.

In January 1983, Musat and Griffith received Ensign-Bickford's answers to McCafferty's interrogatories. One answer indicated that Ensign-Bickford technical representatives had provided oral instruction at the Climax mine concerning the use of Primacord. Musat ignored an answer to an interrogatory which provided a possible link between Ensign-Bickford's alleged negligence and McCafferty's injury. Moreover, he persisted in his recommendation that McCafferty take the $5,000 settlement.

Soon thereafter, Musat presented McCafferty with a Disclosure Agreement. That document disclosed, inter alia, that Musat had a conflict of interest and stated that McCafferty's case had no reasonable likelihood of success on the merits of the defective product claim. There was no reference to other claims for relief. It further stated that Ensign-Bickford had made a "final offer" of $5,000, which McCafferty had chosen to accept. Both McCafferty and Musat signed the disclosure agreement, and the proceeds of the settlement were tendered to McCafferty on January 13, 1983. After subtracting costs and attorney fees, McCafferty was left with $1,176. On January 17, 1983, Musat began work with Hall & Evans.

Subsequently, McCafferty initiated this action against Musat, Musat's law firm, and Griffith, claiming that, by recommending settlement before adequately pursuing discovery, they had violated the retainer agreement and negligently failed to use the degree of skill, knowledge, and judgment ordinarily possessed by members of the legal profession. McCafferty also claimed that Musat and his law firm had engaged in outrageous conduct. He sought both compensatory and punitive damages.

At trial, the court dismissed all of McCafferty's claims against Griffith, as well as his outrageous conduct and punitive damages claims against Musat. The issue of Musat's professional negligence was presented to the jury in a "trial within a trial." The jury considered the evidence from the underlying negligence case and awarded McCafferty damages in the amount of $801,600. Musat moved for a judgment notwithstanding the verdict, which motion was denied by the trial court.

I.

Musat first contends that the trial court erred in denying his motion for judgment notwithstanding the verdict or, in the alternative, for new trial. In support of that motion, Musat alleged that, in the underlying case between McCafferty and Ensign-Bickford, McCafferty could not, as a matter of law, have prevailed and that McCafferty could not reasonably have relied upon Musat's advice concerning whether to settle the underlying case once Musat disclosed his conflict. We disagree with Musat's contention.

A judgment notwithstanding the verdict may be entered only if reasonable persons, viewing the evidence in the light most favorable to the party against whom the motion is directed, could not reach the same conclusion as the jury. Alzado v. Blinder, Robinson & Co., 752 P.2d 544 (Colo.1988).

A.

We disagree with Musat's claim that judgment notwithstanding the verdict should have been granted as to the jury's determination that McCafferty could have prevailed in his negligence action against Ensign-Bickford.

To be entitled to recover for negligence, there must be a duty owed, a breach of that duty, and damages as a result of such breach. The question of the existence of a duty is one for the court to determine. Observatory Corp. v. Daly, 780 P.2d 462 (Colo.1989).

If one undertakes, gratuitously or for a consideration, to render services to another, which service he should recognize as necessary for the protection of a third person, a duty arises, and he is subject to liability to that third person for physical harm resulting from his failure to exercise reasonable care in carrying out his undertaking. DeCaire v. Public Service Co., 173 Colo. 402, 479 P.2d 964 (1971); Restatement (Second) of Torts § 324A (1965) (especially comments a, d, and e); Restatement (Second) of Torts §§ 388 and 390 (1965). Furthermore, the concept of negligent performance of an undertaking to render services applies to nonfeasance as well as malfeasance. Jefferson County School Dist. R-1 v. Justus, 725 P.2d 767 (Colo.1986).

While the evidence was sharply disputed, when that evidence is viewed in a light most favorable to the verdict, as we must, the record discloses the following with reference to McCafferty's claims against Ensign-Bickford. "Bickford. McCafferty presented the testimony of an explosives expert, Albert Teller. Teller testified that he reviewed trade reports in Ensign-Bickford's files, Bureau of Mines information, the Climax Mine safety sheet, and the Mine Safety and Health Administration report and state accident report. Based on that information, he opined that there was evidence showing that Ensign-Bickford technical representatives had visited the Climax mine, had witnessed substandard blasting procedures using Ensign-Bickford products, and had neither sought to remedy those procedures nor the misuse of the Primacord product. The expert opined, therefore, that the blasting procedures for coordinating blasts at the mine at the time of McCafferty's injuries "were very, very substandard."

Specifically, Teller testified that Ensign-Bickford had neither recommended nor instituted a written procedure for taking a head count and insuring that all participants in the operation and others were beyond a safe distance of the blasts. He noted that there was "no procedure to insure that one man, and only one man,...