Mountain States Tel. & Tel. Co. v. DiFede

• Decision Date: 02 October 1989
• Docket Number: No. 88SC266,88SC266
• Citation: 780 P.2d 533
• Parties: The MOUNTAIN STATES TELEPHONE AND TELEGRAPH COMPANY, a Colorado corporation, Kent J. Stauffer, Public Administrator for El Paso County, and Anne DiFede, Petitioners/Cross-Respondents, v. Susan DiFEDE, Respondent/Cross-Petitioner.
• Court: Colorado Supreme Court

Page 533

780 P.2d 533

The MOUNTAIN STATES TELEPHONE AND TELEGRAPH COMPANY, a

Colorado corporation, Kent J. Stauffer, Public Administrator for El Paso County, and Anne DiFede, Petitioners/Cross-Respondents, v. Susan DiFEDE, Respondent/Cross-Petitioner.

No. 88SC266.

Supreme Court of Colorado,

En Banc.

Oct. 2, 1989.

Rehearing Denied Oct. 23, 1989.

Eiberger, Stacy, Smith & Martin, Raymond W. Martin and Paul F. Hodapp, and U.S. West Communications, Law Dept., Russell P. Rowe, Denver, for petitioner/cross-respondent Mountain States Tel. and Tel. Co.

Rector, Retherford, Mullen & Johnson, Anthony A. Johnson and Neil C. Bruce, Colorado Springs, for petitioner/cross-respondent Anne DiFede.

Kofoed & Larson, P.C., David L. Kofoed, Englewood, and Eugene F. Costello, P.C., Eugene F. Costello and Bernadette M. Bauman, Denver, for respondent/cross-petitioner Susan DiFede.

Justice VOLLACK delivered the Opinion of the Court.

In Mountain States Telephone & Telegraph Co. v. DiFede, 763 P.2d 298 (Colo.App.1988), the court of appeals reversed a judgment in favor of Mountain States Telephone and Telegraph Company (Mountain Bell or Anthony's employer) and John and Anne DiFede (the DiFedes or Anthony's parents). It held that the trial court erred both in entering a judgment notwithstanding the verdict in favor of Mountain Bell and the parents of Anthony DiFede (Anthony) and in treating the jury verdict in favor of Susan DiFede (Susan) as merely advisory. It also held that the trial court erred in prohibiting Mountain Bell and Anthony's parents from questioning Susan about the conversation she had with an attorney, concluding that a client may not invoke the attorney-client privilege to avoid testifying about conversations the client had with the attorney. We reverse the judgment of the court of appeals and remand the case to the court of appeals with instructions to reinstate the trial court's judgment in favor of Mountain Bell and the DiFedes.

I.

The procedural, strategic, and substantive issues involved in this case involve a great amount of factual detail. For clarity, we will divide the facts into various subheadings.

A. EVENTS BEFORE ANTHONY'S DEATH

Susan and Anthony were married on December 28, 1976. In early 1979, Anthony learned he had terminal cancer. In April 1979, they decided to divorce. ¹ On June 28, 1979, Anthony filed a petition for dissolution of marriage in El Paso County District Court. Susan was served the next day. She and Anthony agreed to meet at Anthony's attorney's office on July 2 to sign a separation agreement.

On July 2, 1979, Susan met privately with Raymond Wilder, Anthony's attorney, before Anthony arrived, to discuss the effect of a separation agreement he had prepared for her to sign and to communicate her concern that Anthony was no longer acting in a rational capacity. What was said during that conversation is the essence of this dispute.

When Anthony arrived at Wilder's office, he and Susan signed the separation agreement. Among other things, the separation agreement permitted Anthony to change the beneficiary of the life insurance policy provided by his employer, Mountain Bell; ² prohibited Susan from claiming an interest in certain real estate acquired by Anthony before his marriage; ³ and prohibited Susan from claiming a right of inheritance. ⁴ Anthony's previous will was torn up at that meeting. Susan at that time quitclaimed any interest she had in the real property to Anthony and received a $5,000 lump-sum spousal support and maintenance settlement from Anthony under the terms of the separation agreement.

Ten days after signing the separation agreement, Susan met with Jack Foutch, a Colorado Springs attorney, to discuss the separation agreement. What was said during that conversation is also relevant to this dispute.

On August 14, 1979, Anthony executed a new will incorporating the separation agreement and naming his parents as legatees and devisees. He also made his parents the beneficiaries of the life insurance policy provided by Mountain Bell. On August 16, 1979, Anthony conveyed the real estate to his parents. Anthony died on August 23, 1979, however, before the separation agreement could be submitted for the approval of a court, and before a decree of dissolution could be entered.

B. PROCEDURAL EVOLUTION OF THE THREE CASES

On September 14, 1979, Susan filed a complaint in El Paso County District Court (No. 79CV1840, the real-property-transfer case or property case) against the DiFedes to set aside the August 16 transfers of real property on the grounds of undue influence on the part of the DiFedes and incapacity on the part of Anthony. Neither Susan, in her complaint, nor the DiFedes, in their answer, requested a jury trial in the real-property-transfer case.

On September 17, 1979, Susan filed a complaint for declaratory judgment in El Paso County District Court (No. 79CV1858, the change-of-beneficiary case or beneficiary case) against Mountain Bell and the DiFedes to set aside Anthony's change of life-insurance beneficiary on the grounds of undue influence and incapacity. Neither Susan, in her complaint, nor Mountain Bell and the DiFedes, in their answers, demanded a jury trial in the change-of-beneficiary case.

On November 30, 1979, Susan filed a petition for adjudication of intestacy and for her appointment as personal representative of Anthony's estate in El Paso County District Court (No. 79PR0582, the probate case). She asked that the will be probated informally. On January 9, 1980, the court denied Susan's request to have the will probated informally and appointed Raymond Wilder personal representative of Anthony's estate according to the terms of Anthony's will. On February 13, 1980, Wilder filed a petition for formal probate of the will. Susan objected to the petition for formal probate on March 4, 1980. She alleged that Anthony lacked capacity to execute a will and that the DiFedes exerted undue influence on Anthony to designate them as his devisees and legatees. She demanded a jury trial of six and paid a $25.00 jury fee in the probate case.

1. Consolidation of Property Case and Beneficiary Case

On May 21, 1980, the trial court granted Mountain Bell's request to consolidate the property case and the beneficiary case. On December 5, 1980, the trial court set the consolidated cases for a two-and-a-half-day jury trial to begin August 11, 1981, even though no party had requested a jury trial for those cases.

2. Bifurcation of Issues

On July 3, 1980, the DiFedes moved for summary judgment in the property case on the ground that Susan's claim was barred by the separation agreement. Mountain Bell joined in this motion in the beneficiary case on August 5, 1980. On November 15, 1980, the trial court granted partial summary judgment in favor of the DiFedes and Mountain Bell, holding that the separation agreement was enforceable subject to Susan's claim of fraud, concealment, failure to disclose assets, and misrepresentation.

On December 19, 1980, two weeks after the trial court sua sponte set the cases for jury trial, the DiFedes moved to bifurcate the property case and the beneficiary case so as to litigate first the issue of enforceability of the separation agreement. In their motion to bifurcate, the DiFedes requested that the issue of enforceability of the separation agreement be tried to the court rather than to a jury because rescission of the separation agreement, the remedy sought by Susan, was an equitable action not entitled to a jury trial. A hearing on the motion to bifurcate was held on March 16, 1981. The issue of consent to a jury trial in the two consolidated cases arose only in the following exchange between the court and the attorney for the DiFedes:

MR. JOHNSON [representing the DiFedes]: I have also asserted that the trial should be one to the Court, and that may be premature, Your Honor, because I think if the Court orders that this be bifurcated, I think I am entitled to a pleading from the other side telling why they think the settlement agreement should be set aside, and there is no pleading in the file, and I don't--I wouldn't want the Court to rule on whether they are entitled to a jury trial without having that pleading to look at, because as the Court is aware, the case law says that the pleading is what determines whether there is a right to a jury trial or not, whether it is a case in equity or not.

....

THE COURT: ... [I]f the Plaintiff wants to attack this agreement on fraud, concealment, failure to disclose, that sounds like a jury question, Mr. Johnson.

....

MR. JOHNSON: It may very well be, and that's why I said the question of jury should be put off until we had a pleading to which to respond with respect to the settlement agreement.

Following the hearing, the trial court granted the motion to bifurcate. It declined to decide the jury-trial issue, however, until Susan made clear through responsive pleadings the basis of her attack on the validity of the separation agreement.

3. Pretrial Statements

Pretrial statements of Susan, the DiFedes, and Mountain Bell filed in May 1981 indicated that trial was to be held before a jury. Statements made by attorneys for the DiFedes and Susan at the pretrial conference on August 5, 1981, indicated that a jury would be impaneled. ⁵ The pretrial order entered August 11, 1981, the day trial was scheduled to begin, also stated that trial was to be held before a jury.

4. Consolidation of Probate Case With Consolidated Cases

On May 12, 1981, the DiFedes filed a motion to consolidate the probate case with the two previously consolidated cases. The trial court granted the DiFedes' motion to consolidate on August 11, 1981, the day the trial on the property case and the beneficiary case was scheduled to begin. The trial court at that time delayed deciding whether the six-person jury was an advisory or binding jury until the close of evidence. ⁶

C. THEORY OF THE CASE

Although the three case...