Oster v. Baack

• Decision Date: 09 April 2015
• Docket Number: Court of Appeals No. 13CA0760
• Citation: 2015 COA 39,351 P.3d 546
• Parties: Heidi OSTER, individually and as a member of Horizon Women's Care Professional, LLC ; and Horizon Women's Care Professional, LLC, a Colorado limited liability company, Plaintiffs–Appellees, v. Judy BAACK, Defendant–Appellant.
• Court: Colorado Court of Appeals

351 P.3d 546

2015 COA 39

Heidi OSTER, individually and as a member of Horizon Women's Care Professional, LLC ; and Horizon Women's Care Professional, LLC, a Colorado limited liability company, Plaintiffs–Appellees

v.Judy BAACK, Defendant–Appellant.

Court of Appeals No. 13CA0760

Colorado Court of Appeals, Div. III.

Announced April 9, 2015

Allen & Vellone, P.C., Patrick D. Vellone, Jordan Factor, Tatiana G. Popacondria, Denver, Colorado; Lowe, Fell & Skogg, LLC, Kenneth K. Skogg, Dana B. Baggs, Denver, Colorado, for Plaintiffs–Appellees.

Hershey Decker, Kari M. Hershey, Carmen N. Decker, Lone Tree, Colorado, for Defendant–Appellant.

Opinion

Opinion by JUDGE DAILEY

¶ 1 Defendant, Judy Baack, appeals from the trial court's order denying her C.R.C.P. 60 motion to vacate an award of attorney fees and costs that had previously been entered in favor of plaintiffs, Heidi Oster and Horizon Women's Care Professional, LLC (Horizon).

¶ 2 Baack raises here an issue of first impression, that is, whether a party who has not directly appealed from an order awarding attorney fees and costs may still challenge that award under C.R.C.P. 60. Because, under the particular circumstances of this case, we agree that Baack was entitled to do so, we reverse the trial court's fees and costs award and remand with directions.

I. Background

¶ 3 Doctors Oster and Baack owned and practiced medicine at Horizon. Oster and Horizon severed Baack's employment following the loss of her medical license and brought a declaratory judgment action seeking, as pertinent here, a declaration that Baack's employment had been terminated “for cause.” Under the parties' Employment Agreement, termination “for cause” entitled Baack to only 25% of the value of her ownership interest in Horizon.

¶ 4 Baack counterclaimed, asserting that Oster and Horizon breached the Employment Agreement by purporting to terminate her employment “for cause” instead of for “disability.” Termination for disability would have entitled Baack to 100% of the value of her ownership interest in Horizon.

¶ 5 Following a bench trial, the court found for Oster and Horizon on this claim. It also found that Baack had “breached the Employment Agreement and [a second agreement,] the Buy–Sell Agreement[,] by failing to sell her membership interests in Horizon.” Five months after entering judgment, the court, over Baack's objection, awarded Oster and Horizon attorney fees ($199,667.50) and costs ($52,011) under a prevailing party provision in the Employment Agreement.

¶ 6 Baack appealed the trial court's judgment on the Employment Agreement claim. She did not, however, separately appeal the award of attorney fees and costs, nor did she amend her original notice of appeal to encompass the award.

¶ 7 On appeal, a division of this court (1) reversed the part of the judgment concluding that Baack's employment could be considered terminated “for cause”; (2) determined, as a matter of law, that Baack had to be considered terminated for “disability” rather than “for cause”; and (3) remanded the case for entry of an order requiring Oster and Horizon to pay Baack the full value of her interest in Horizon. See Oster v. Baack, slip op. at 5–13, 30–31 (Colo. App. No. 11CA0368, 2012 WL 1624391, May 10, 2012) (not published pursuant to C.A.R. 35(f) ) (Baack I ).

¶ 8 After the case had been remanded, Baack filed a C.R.C.P. 60 motion to vacate the attorney fees and costs award, arguing that the award was a “ity” because Baack I had reversed the very ground on which the court had awarded fees and costs under the Employment Agreement (that is, that Oster and Horizon were the prevailing parties on the Employment Agreement claim). The trial court denied Baack's motion, finding that

the court['s] jurisdiction is limited to the issues included in the remand order[;] [Baack] has waived [her] right to contest the court's ... award of costs and attorney fees by failing to raise the issue on appeal[;] and [Oster] was the prevailing party on the Buy–Sell Agreement which also contains a provision for the award of costs and fees to the prevailing party.

II. Issues on Appeal

¶ 9 On appeal, Baack contends that the trial court erred in denying her C.R.C.P. 60(b) motion because (1) it had jurisdiction to consider the motion; (2) she was not required to separately appeal the attorney fee and costs award because the Baack I division's reversal of the judgment on the Employment Agreement claim ified the very basis for the award; and (3) the court could not retroactively rely on the Buy–Sell Agreement as a basis for the attorney fee and costs award. We agree, on all counts.

III. Standard of Review

¶ 10 As relevant here, C.R.C.P. 60(b) provides for relief from a final judgment or order when the judgment is void, C.R.C.P. 60(b)(3), or “a prior judgment upon which it is based has been reversed or otherwise vacated,” C.R.C.P. 60(b)(4).

¶ 11 An appellate court reviews de novo a trial court's denial of a motion under C.R.C.P. 60(b)(3) to set aside a “void” judgment; otherwise, it reviews a trial court's denial of a C.R.C.P. 60(b) motion for an abuse of discretion. See Werth v. Heritage Int'l Holdings, PTO, 70 P.3d 627, 628–29 (Colo. App. 2003) (noting that the de novo standard of review for a C.R.C.P. 60(b)(3) motions differs from that for other proceedings under C.R.C.P. 60 ).

¶ 12 By both enumeration and characterization, Baack presented the trial court with a motion for relief under C.R.C.P. 60(b)(4) and not, as she asserts here, under C.R.C.P. 60(b)(3). Baack's motion is not, contrary to her assertion, cognizable under C.R.C.P. 60(b)(3) ; its substance is that the award of fees and costs is erroneous, and not that the award is void due to a lack of jurisdiction. See Nickerson v. Network Solutions, LLC, 2014 CO 79, ¶ 9, 339 P.3d 526 (For purposes of C.R.C.P. 60(b)(3), “[a] judgment is void if the court lacked personal jurisdiction over the parties or subject matter jurisdiction over the cause of action.”); Winslow v. Williams, 749 P.2d 433, 436 (Colo. App. 1987) (“A judgment entered without jurisdiction is void.... However, if a court with jurisdiction enters a judgment erroneously, that judgment is merely voidable, and is binding upon the parties unless vacated by the trial court or reversed by an appellate court.”).

¶ 13 Because Baack's motion did not assert C.R.C.P. 60(b)(3) grounds for relief, it is properly considered (as it was styled in the district court) a C.R.C.P. 60(b)(4) motion, the denial of which is reviewable for an abuse of discretion. “A court abuses its discretion when its decision rests on a misunderstanding or misapplication of the law or when its decision is manifestly arbitrary, unreasonable, or unfair.” Sinclair Transp. Co. v. Sandberg, 2014 COA 75M, ¶ 26, 350 P.3d 915 (citations omitted).

IV. Analysis

A. Trial Court's Jurisdiction on Remand

¶ 14 As an initial matter, Baack asserts that the court had jurisdiction to consider her Rule 60(b) motion. We agree.

¶ 15 “[A]fter an appellate court announces its decision and issues its mandate, the trial court is automatically reinvested with jurisdiction....” Pet Inc. v. Goldberg, 37 Colo.App. 257, 258, 547 P.2d 943, 944 (1975). Although a district court must follow the appellate court mandate in subsequent proceedings on remand, see In re Marriage of Balanson, 107 P.3d 1037, 1043 (Colo. App. 2004), it may entertain additional motions that do not, expressly or by necessary implication, contravene the mandate. See generally Super Valu Stores, Inc. v. Dist. Court, 906 P.2d 72, 78 (Colo. 1995) (“A trial court retains discretion to grant a party leave to amend the pleadings following remand from an appellate court unless such amendment would contravene a mandate that expressly or by necessary implication precludes such amendment.”); Gavend v. Malman, 946 P.2d 558, 562 (Colo. App. 1997) (although the mandate required the reinstatement of improperly dismissed claims, on remand the court could nonetheless dismiss those claims on alternate grounds); see also Quern v. Jordan, 440 U.S. 332, 347 n.18, 99 S.Ct. 1139, 59 L.Ed.2d 358 (1979) (“ ‘While a mandate is controlling as to matters within its compass, on the remand a lower court is free as to other issues.’ ” (quoting Sprague v. Ticonic Nat'l Bank, 307 U.S. 161, 168, 59 S.Ct. 777, 83 L.Ed. 1184 (1939) )).

¶ 16 As pertinent here, the mandate in Baack I directed the trial court to award Baack 100% of the value of her interest in Horizon. It did not address any issue related to attorney fees and costs, nor was such an issue before the appellate court. Because neither the mandate nor the division's ruling and supporting rationale was inconsistent with Baack's request to re-examine the basis on which fees and costs were awarded, we conclude the trial court had jurisdiction to consider Baack's request.

B. Necessity of Separately Appealing the Fee and Costs Award

¶ 17 Baack contends that she did not, under the circumstances, have to separately appeal the fees and costs award, but could seek relief from it under C.R.C.P. 60(b)(4), which, on its face, allows relief from a final judgment or order when “a prior judgment upon which it is based has been reversed or otherwise vacated.” We agree.

¶ 18 Divisions of this court have recognized that “when an underlying judgment is reversed, an award that is dependent on that judgment for its validity is also necessarily reversed and becomes a nullity.” Bainbridge, Inc. v. Douglas Cnty. Bd. of Comm'rs, 55 P.3d 271, 273–74 (Colo. App. 2002) ; see Reyher v. State Farm Mut. Auto. Ins. Co., 2012 COA 58, ¶ 32, 280 P.3d 64 (“[B]ecause the judgment dismissing [plaintiff]'s claims was reversed in [a prior appeal], the costs and fees related to that dismissal must also be reversed.”); Nichols v. Burlington N. & Santa Fe Ry., 56 P.3d 106, 110 (Colo. App. 2002) (award of costs becomes when judgment supporting that award is reversed); Nagy v. Landau, 807 P.2d 1227, 1229 (Colo. App. 1990) (award of attorney fees is necessarily reversed...