Rademacher v. Becker

• Decision Date: 24 September 2015
• Docket Number: Court of Appeals No. 14CA0281
• Citation: 2015 COA 133,374 P.3d 499
• Parties: Carol RADEMACHER, Plaintiff–Appellee, v. John BECKER, Trustee of the John E. Becker Trust, Defendant–Appellant.
• Court: Colorado Court of Appeals

374 P.3d 499

2015 COA 133

Carol RADEMACHER, Plaintiff–Appellee

v.John BECKER, Trustee of the John E. Becker Trust, Defendant–Appellant.

Court of Appeals No. 14CA0281

Colorado Court of Appeals, Div. V.

Announced September 24, 2015

Rehearing Denied November 19, 2015

St. Clair & Greschler, P.C., Ira E. Greschler, Dipak P. Patel, Boulder, Colorado, for Plaintiff–Appellee.

Dietze and Davis, P.C., Joel C. Maguire, Boulder, Colorado, for Defendant–Appellant/

Opinion by JUDGE TERRY

¶ 1 In this suit brought by plaintiff, Carol Rademacher, to collect on a promissory note, defendant, John Becker, Trustee of the John E. Becker Trust and obligor on the note, appeals the judgment in favor of plaintiff entered after a jury trial.

¶ 2 The note was executed as part of a settlement agreement between the parties. Defendant argues that the settlement agreement and note are unenforceable. It is undisputed that, although the note and agreement were entered into partly to settle a civil claim, they were also executed as consideration for plaintiff's agreement—as the alleged victim of a crime committed by defendant's wife, Ms. Becker—to seek leniency in Ms. Becker's sentencing.

¶ 3 As an issue of first impression in Colorado, we conclude that a private agreement in which influence over a criminal prosecution is exchanged for the payment of money—or, here, the promise to pay money—is void as against public policy. We therefore reverse the judgment and remand to the trial court to dismiss the action.

I. Background

¶ 4 For approximately ten years, defendant and plaintiff were involved in an extramarital relationship. Things came to a head when defendant's wife, Ms. Becker, confronted plaintiff. Ms. Becker threw coffee on plaintiff and kicked over the chair plaintiff was sitting in.

Plaintiff contacted the police and, as a result, Ms. Becker was criminally charged with assault. Plaintiff submitted a victim's impact letter asking that Ms. Becker be prosecuted to the full extent of the law. After negotiating with plaintiff, defendant entered into a settlement. As part of the settlement, plaintiff agreed not to pursue any claims against Ms. Becker or defendant and to ask the Boulder District Attorney's office to offer Ms. Becker a deferred sentence. In exchange for these promises, defendant executed a $300,000 promissory note payable to plaintiff. At the same meeting where the settlement agreement was signed, plaintiff signed a letter to the District Attorney indicating her desire that Ms. Becker be offered a deferred sentence.

¶ 6 Defendant made payments on the note totaling approximately $25,000 and then stopped paying. After plaintiff sent defendant a demand letter and notice of acceleration of the note, defendant sent an additional check for $10,000, but made no further payments on the note. Plaintiff filed this suit to enforce the note, and the jury found for plaintiff. The trial court denied defendant's post-trial motion for judgment notwithstanding the verdict.

II. Public Policy

¶ 7 Defendant contends that the trial court erred in denying his motion for judgment notwithstanding the verdict because the settlement agreement and note are void as against public policy. We agree.

¶ 8 As an initial matter, we reject plaintiff's argument that we should decline to address defendant's contention of voidness based on public policy. The courts may not assist a party in enforcing a contract serving an illegal purpose. See Feiger, Collison & Killmer v. Jones, 926 P.2d 1244, 1252 (Colo. 1996). Therefore, we elect to review the issue.

A. Standard of Review

¶ 9 We review de novo a trial court's ruling on a motion for judgment notwithstanding the verdict. Vaccaro v. Am. Family Ins. Grp., 2012 COA 9, ¶ 40, 275 P.3d 750. We also review de novo the trial court's ruling as to whether the note and settlement agreement are void. See Bailey v. Lincoln Gen. Ins. Co., 255 P.3d 1039, 1045 (Colo. 2011) ; Adams Reload Co., Inc. v. Int'l Profit Assocs., Inc., 143 P.3d 1056, 1058 (Colo. App. 2005).

B. Applicable Law

¶ 10 Colorado courts will not enforce a contract that violates public policy. Russell v. Courier Printing & Pub. Co., 43 Colo. 321, 325, 95 P. 936, 938 (1908). This rule does not exist for the benefit of the party seeking to avoid contractual obligations, but instead serves to protect the public from contracts that are detrimental to the public good. Id. at 325–26, 95 P. at 938.

¶ 11 Whether a contract violates public policy is determined based on the particular facts of the case. See Bailey, 255 P.3d at 1045 (citing Russell, 43 Colo. at 326, 95 P. at 938 ). Colorado appellate courts have looked to various sources to discern public policy. Those sources include statutory law, see Bailey, 255 P.3d at 1045 (looking to insurance statutes to determine whether insurance provision violates public policy); Pierce v. St. Vrain Valley Sch. Dist. RE–1J, 981 P.2d 600, 604 (Colo. 1999) (looking for “legislative direction” to determine public policy), and the common law of the various states, see, e.g., Salzman v. Bachrach, 996 P.2d 1263, 1267–68 (Colo. 2000) (collecting cases from other jurisdictions and noting that most jurisdictions now enforce contracts between cohabitants previously considered void as against public policy). Cf. Martin Marietta Corp. v. Lorenz, 823 P.2d 100, 109 (Colo. 1992) (in context of public-policy exception to employment-at-will doctrine, policy must be “clearly expressed statutory policy” to satisfy required element that employer had notice of public policy).

C. Discussion

1. The Promissory Note Was in Consideration of Influencing Criminal Prosecution

¶ 12 We begin by analyzing the nature of the parties' agreement. In most respects, the written settlement agreement appears typical of agreements settling civil claims. The agreement recites that defendant paid $300,000 to settle any civil claims plaintiff might have had against defendant or Ms. Becker, and says:

[Plaintiff] shall not pursue any claims against [Ms. Becker] and [defendant] and shall to the best ability [sic] request that others not pursue claims against [Ms. Becker] or [defendant] on her behalf. [Plaintiff] shall hold [Ms. Becker] and [defendant] harmless from any and all civil claims which may be brought by any third party [arising from the assault incident].

In the only explicit reference to Ms. Becker's criminal proceedings, the agreement states that defendant's payment of $300,000 is in addition to any criminal restitution that might be ordered.

¶ 13 But at oral argument, counsel for both plaintiff and defendant acknowledged that part of the consideration for the settlement payment was the settlement of the pending criminal matter. This acknowledgment is supported by the evidence at trial.

¶ 14 The parties presented extensive trial testimony about the settlement negotiations to explain the reasons for the agreement and consideration given outside the written agreement. No issue has been raised about the parol evidence rule, and because a major portion of the consideration for the agreement is reflected in the parties' oral side agreement, we are guided in our decision by the parties' undisputed testimony and the surrounding circumstances. See E. Ridge of Fort Collins, LLC v. Larimer & Weld Irrigation Co., 109 P.3d 969, 973–75 (Colo. 2005) ; see also Lazy Dog Ranch v. Telluray Ranch Corp., 965 P.2d 1229, 1236 (Colo. 1998) ; Pepcol Mfg. Co. v. Denver Union Corp., 687 P.2d 1310, 1314 (Colo. 1984) (“[W]hen a contract or agreement has been given a practical construction, as reflected by the conduct and acts of the parties in its performance, such construction may, and perhaps even should, be considered by the court in eliminating any ambiguity....”).

¶ 15 Undisputed evidence showed that one of the primary reasons why defendant entered into the agreement was to get plaintiff to influence the Boulder District Attorney's office to agree to a deferred sentence in the criminal case against Ms. Becker. Plaintiff had earlier submitted a victim's impact statement to the district attorney's office, explaining that she wished Ms. Becker to be prosecuted to the full extent of the law. Although defendant and plaintiff had been negotiating about a possible settlement for months, plaintiff testified that “there seemed to be an acceleration” after she sent the impact letter because the “letter caused a lot of fracus [sic].” Plaintiff further testified that defendant made a “beginning offer,” after which she called her attorney and said that

[she] need[ed] to promise [defendant] that [she would] not sue him, [she would] not sue [Ms. Becker], [she would] write a different letter—these are all things [defendant] demanded of [her]. [She] had to write another letter back to the DA, ... totally rescinding [her earlier victim's impact statement], asking for the least possible sentence.

¶ 16 Undisputed evidence showed that at the same time and place the settlement agreement was signed, plaintiff also signed a letter addressed to the District Attorney's office, stating:

To Whom It May Concern,

It is my understanding that Ms. Becker has been offered a plea agreement under which she would plead guilty to third degree assault, be on probation for 18 months (supervised), have anger management evaluation and treatment, pay restitution, [and] have no contact with me, and [that] your office will not review the case for a possible felony charge.

I agree to allow [Ms. Becker] to plead guilty subject to the conditions previously offered with a deferred sentence as requested by Ms. Becker's attorney. I understand that the plea will not modify my existing restraining order.

Plaintiff testified that defendant “wanted [the letter] delivered that day,” and she continued, “this statement had to be made.” She said the letter's purpose was “to satisfy [defendant] that [she] offset [her] impact statement.”

The record shows that the letter was received by the District Attorney's office.

¶ 17 We conclude that a significant purpose, if not the...