Omedelena v. Denver Options, Inc., 00CA1640.

Docket NºNo. 00CA1640.
Citation60 P.3d 717
Case DateMarch 14, 2002
CourtCourt of Appeals of Colorado

Certiorari Denied January 13, 2003.1

Leslie A. Petri, Law Office of J. Mark Baird, LLC, J. Mark Baird, Kimberly L. Johnson, Denver, CO, for Plaintiff-Appellee.

Kennedy & Christopher, P.C., Michael T. Mihm, John R. Mann, Denver, CO, for Defendant-Appellant Denver Options, Inc.

Inman Flynn & Biesterfeld, P.C., Richard P. Brentlinger, Robert J. Thomas, Denver, CO, for Defendant-Appellant Bethphage, Inc.

Hale Hackstaff Tymkovich & ErkenBrack, LLP, Richard A. Westfall, Denver, CO, for Amicus Curiae Colorado Association of Community Centered Boards.

Opinion by Judge TAUBMAN.

Defendants, Denver Options, Inc., and Bethphage, Inc., appeal the judgment entered on a jury verdict in favor of plaintiff, Ollette Omedelena, on her claims of intentional interference with contractual relations and prospective economic advantage. We affirm.

Omedelena is a host home provider. As a host home provider, she cared for two developmentally disabled persons, J.C. and R.M., both severely mentally retarded. Omedelena cared for the two women in her home for almost ten years under a series of contracts with different service agencies. Bethphage, a nonprofit corporation, is a service agency. Services agencies, defined in § 27-10.5-102(28), C.R.S.2001, subcontract with people like Omedelena who provide support for developmentally disabled persons in their home. Bethphage in turn receives its funding from community centered boards.

Denver Options, a nonprofit corporation, is a community centered board. Community centered boards enable persons with developmental disabilities to live in residential settings that reflect typical patterns of everyday living, rather than being housed in institutions. They contract with the Colorado Department of Human Services (Department) to arrange for the provision of services for persons with developmental disabilities. Funding for community centered boards comes from various state and local sources, as well as private donations. Denver Options contracts with thirty-four service agencies that provide adult services and seventy-five agencies that provide services to children.

This conflict arose on June 9, 1998, when two Bethphage employees and a Department inspector conducted a survey for R.M. A survey is an inspection to ensure that developmentally disabled persons are receiving proper care. This survey took place at a beauty parlor where Omedelena had taken J.C. and R.M. for a haircut. When the inspector arrived, he found J.C. sitting alone, outside the beauty parlor, in Omedelena's van. After asking Omedelena why J.C. was not being supervised, he noted the incident in his survey report and advised Bethphage that the incident should be investigated as neglect.

On June 13, 1998, Omedelena notified Bethphage that she did not intend to renew her contract with Bethphage and that she intended to contract with another service agency, Innovative Training and Development Services (ITDS), to provide services for J.C. and R.M.

Although Bethphage is required to file a report within twenty-four hours of an incident, it did not file an incident report related to the June 9 incident until June 16, 1999.

On July 7, 1998, Omedelena, employees from Bethphage and Denver Options, R.M., J.C., and J.C.'s legal guardian attended an interdisciplinary team meeting. At this meeting, the team discussed Omedelena's desire to contract with another service agency, as well as the June 9 incident. The team approved Omedelena's transfer to another service agency, with her continuing to care for J.C. and R.M.

On July 9, 1998, Omedelena entered into a contract with ITDS, funded by a contract between Denver Options and ITDS, to provide services to J.C. and R.M. These contracts were to become effective on July 13, 1998.

On July 10, 1998, Bethphage was informed by the Denver Options employee investigating the June 9 incident that there would likely be a finding of neglect against Omedelena. Bethphage decided, that day, the last business day before Omedelena's contract with ITDS was to take effect, to remove J.C. and R.M. from Omedelena's home. Denver Options also decided that day to delay the funding of its contract with ITDS.

However, when Denver Options and Bethphage attempted to contact Omedelena on July 10, they could not find her, J.C., or R.M. The three had left for vacation and did not return until July 17. Omedelena had notified her Bethphage supervisor about the trip, but she had not discussed the vacation with J.C.'s legal guardian, as she had in the past, or left any contact information with Denver Options or Bethphage. Because Denver Options and Bethphage were unable to contact Omedelena, even after leaving several messages with her son, they notified the police that J.C. and R.M. were missing.

Denver Options permanently terminated funding of its contract with ITDS on July 13, 1998. As a result, ITDS rescinded its contracts with Omedelena pursuant to a funding availability clause. When Omedelena returned with J.C. and R.M., they were removed from her home and placed with another host home provider.

Omedelena filed this suit against both Denver Options and Bethphage, asserting claims including intentional interference with contractual relations and intentional interference with prospective economic advantage. Omedelena alleged that Bethphage's and Denver Options' purported reason for removing J.C. and R.M. from her care and terminating the ITDS contract — to protect J.C. and R.M. from neglect — was a mere pretense to prevent her from contracting with ITDS and to protect their own economic self-interest.

Both Denver Options and Bethphage filed motions for summary judgment, which the trial court denied. At trial, Denver Options and Bethphage moved for directed verdicts. Relying on Restatement (Second) of Torts § 770 (1979), Denver Options asserted that it was privileged to interfere with a contract or prospective economic advantage because it was acting to protect the welfare of J.C. and R.M. when it denied funding to ITDS. Bethphage joined Denver Options in this motion and also argued that it could not have interfered with Omedelena's contracts because it did not control any funding for her. The trial court denied both motions. The jury awarded Omedelena economic, noneconomic, and punitive damages.

I. Absolute Statutory Right to Prohibit Neglect

Denver Options and Bethphage contend the trial court improperly denied their motions for directed verdict because they have an absolute statutory right to prohibit neglect and that, therefore, their interference with ITDS's contract with Omedelena was not improper. We disagree.

The tort of intentional interference with contractual relations is committed when one intentionally and improperly interferes with the performance of a contract between another person and a third person by inducing or otherwise causing the third person not to perform the contract. Westfield Dev. Co. v. Rifle Inv. Assoc., 786 P.2d 1112 (Colo. 1990).

In Memorial Gardens, Inc. v. Olympian Sales & Management Consultants, Inc., 690 P.2d 207 (Colo.1984), the supreme court followed Restatement (Second) of Torts §§ 767 and 768 (1979) to determine whether interference is improper. The court stated that the term "improper" requires courts to examine the factors listed in § 767, which include the interests of the parties and those of society, before determining whether a person's intentional interference with a contract is actionable.

Generally, tortious interference with contractual rights must involve a wrongful act or a legal act performed in an unlawful manner. Int'l Ass'n of Machinists v. Southard, 170 Colo. 119, 459 P.2d 570 (1969).

No liability attaches, however, where the act alleged to have caused the breach was undertaken in the exercise of an absolute right, that being conduct which the actor has a definite legal right to engage in without qualification. Radiology Prof'l Corp. v. Trinidad Area Health Ass'n, 39 Colo.App. 100, 565 P.2d 952 (1977), aff'd, 195 Colo. 253, 577 P.2d 748 (1978).

In Radiology, a division of this court noted that the boundaries of absolute right and qualified justification have not been firmly established. It also observed that absolute rights had been established concerning such interests as property ownership, contractual entitlement, and freedom of contract. Further, the division stated that an absolute right may be exercised without liability regardless of motivation, while qualified justification requires a fact finder to determine, after balancing conflicting interests, whether an alleged interference was warranted.

Colorado also recognizes a cause of action for tortious interference with prospective business or economic advantage. See Amoco Oil Co. v. Ervin, 908 P.2d 493 (Colo.1995)

. A division of this court has applied Restatement (Second) of Torts § 768 to this tort. Dolton v. Capitol Fed. Sav. & Loan Ass'n, 642 P.2d 21 (Colo.App.1981).

While an underlying contract is not required for this tort, there must be a showing of improper and intentional interference by the defendant that prevented the formation of a contract between the plaintiff and a third party. Wasalco, Inc. v. El Paso County, 689 P.2d 730 (Colo.App.1984).

In evaluating motions for directed verdict, we must determine whether there is any evidence of sufficient probative force to support the trial court's findings. A reviewing court considers all evidence in the light most favorable to the party against whom the motion is directed and indulges every reasonable inference that can be legitimately drawn from the evidence in that party's favor. However, when the relevant facts are undisputed, an appellate court may make an independent determination of...

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