Roget v. Grand Pontiac, Inc., 97CA2224.

• Decision Date: 28 October 1999
• Docket Number: No. 97CA2224.,97CA2224.
• Citation: 5 P.3d 341
• Parties: Mark D. ROGET and Lori L. Roget, Plaintiffs-Appellees and Cross-Appellants, v. GRAND PONTIAC, INC., Defendant-Appellant and Cross-Appellee.
• Court: Colorado Court of Appeals

5 P.3d 341

Mark D. ROGET and Lori L. Roget, Plaintiffs-Appellees and Cross-Appellants, v. GRAND PONTIAC, INC., Defendant-Appellant and Cross-Appellee.

No. 97CA2224.

Colorado Court of Appeals, Div. V.

October 28, 1999.

As Modified on Denial of Rehearing January 6, 2000.

Certiorari Denied August 7, 2000.

Douglas Pooley, Denver, Colorado, for Plaintiffs-Appellees and Cross-Appellants.

Ruh & Associates, LLC, Richard P. Ruh, Aurora, Colorado, for Defendant-Appellant and Cross-Appellee.

Opinion by Judge TAUBMAN.

In this action arising from an auto lease dispute, defendant, Grand Pontiac, Inc., appeals the judgment entered upon a jury verdict against it and in favor of plaintiffs, Mark D. and Lori L. Roget. Plaintiffs challenge on cross-appeal the trial court's determinations regarding attorney fees and costs. We affirm in part, reverse in part, and remand for further findings.

In January 1990, the Rogets entered into an auto lease with Grand Pontiac. Shortly thereafter, Grand Pontiac assigned the lease to General Electric Capital Auto Lease (GECAL). In January 1991, GECAL filed a complaint against the Rogets alleging that they were in default for failure to make monthly lease payments. The Rogets filed a counterclaim and a third-party complaint against Grand Pontiac, alleging several contract and tort claims, and also claims based on alleged statutory violations. Prior to trial, the Rogets and GECAL settled their claims, which were dismissed with prejudice.

Following a trial in April 1992, the Rogets were awarded damages against Grand Pontiac on some of their claims. When the jury returned the verdict forms, however, confusion ensued regarding the correct calculation of damages. After several unsuccessful attempts to resolve the matter in the trial court, a division of this court reversed the judgment in Roget v. Grand Pontiac, Inc. (Colo.App. No. 94CA0706, Nov. 24, 1995) (not selected for official publication), and the matter proceeded to trial a second time.

On retrial, the jury returned a verdict in favor of the Rogets on their claims for violations of the state consumer protection act and motor vehicle licensing laws, and on their claim of outrageous conduct. Grand Pontiac appeals this judgment.

The trial court awarded attorney fees and costs to the Rogets, but declined to award either prejudgment interest on such fees or computerized legal research expenses as costs. The Rogets, on cross-appeal, challenge these determinations concerning their award.

I. Assignment of the Lease

Grand Pontiac first contends that the trial court erred by denying its motion for a directed verdict on all claims based on its assertion that the Rogets' settlement with GECAL released Grand Pontiac from all liability. We are not persuaded.

Here, Grand Pontiac asserts that, because the relevant statutes govern its conduct as well as that of GECAL, it should have been considered jointly and severally liable with GECAL for the Rogets' claims. Based on this supposed joint and several liability, Grand Pontiac contends that it was a "co-obligor" with GECAL and that a release of one co-obligor releases all. Thus, Grand Pontiac concludes, the Rogets' release of GECAL pursuant to its settlement extinguished the liability of Grand Pontiac as well.

The trial court found, however, that Grand Pontiac and GECAL were not co-obligors and rejected Grand Pontiac's argument. We agree with the trial court.

After the assignment, GECAL became the obligee under the lease agreement while the Rogets remained obligors. Because GECAL was an obligee, Grand Pontiac could not be a co-obligor with GECAL.

Grand Pontiac further asserts that, after the assignment, the relationship between Grand Pontiac and GECAL became one of principal and surety with Grand Pontiac as the surety for GECAL. Grand Pontiac argues that, based on this relationship, a release of GECAL as principal resulted in a release of itself as the surety.

Even if we assume that Grand Pontiac was a surety for GECAL, the Rogets' release of GECAL three days before trial did not release Grand Pontiac from liability. Where a principal/surety relationship arises, the release of the principal releases the surety from liability, unless a party expressly reserves its right to proceed against the surety or receives the surety's consent to remain liable. Matthews v. Saleen, 812 P.2d 1186 (Colo.App.1991).

Here, Grand Pontiac was a party to the Rogets' settlement with GECAL. Further, in his opening statement at trial, Grand Pontiac's attorney acknowledged such settlement without contending that Grand Pontiac had been released from liability as a result of the stipulation to dismiss GECAL. Under these circumstances, we conclude that, by its conduct, Grand Pontiac consented to remain liable.

Furthermore, the trial court found that, where a lessor assigns a lease to another party, a lessee's release of the assignee does not necessarily result in a waiver of its claims of wrongdoing against the assignor. Again, we agree with the trial court.

An assignment does not relieve the assignor from liability under the contract. Rather, after the assignment, the assignee becomes primarily liable for the obligations under the contract, while the assignor remains secondarily liable. The debtor may then sue the assignor, the assignee, or both. See Herigstad v. Hardrock Oil Co., 101 Mont. 22, 52 P.2d 171 (1935); Southern Surety Co. v. W.E. Callahan Construction Co., 283 S.W. 1098 (Tex.Civ.App.1926); see also Sobol v. Avila, 480 P.2d 116 (Colo.App.1970)

(not selected for official publication).

Thus, we conclude that the Rogets' settlement with GECAL did not release Grand Pontiac from all liability because it was still secondarily liable under the lease agreement.

II. Outrageous Conduct

A. Directed Verdict

Grand Pontiac also asserts that the trial court erred by denying its motion for directed verdict on the claim of outrageous conduct. It argues that insufficient evidence existed for submission of the claim to the jury. We disagree.

When reviewing a trial court's denial of a motion for a directed verdict, we must ask whether a reasonable jury, after drawing all possible inferences from the evidence presented, could reach the same verdict delivered at the trial. Palmer v. A.H. Robins Co., 684 P.2d 187 (Colo.1984).

We must also view the evidence which led to the jury verdict in the light most favorable to the prevailing party. Roberts v. Holland & Hart, 857 P.2d 492 (Colo.App. 1993).

Outrageous conduct occurs when an actor intentionally and recklessly causes severe emotional distress. Hansen v. Hansen, 43 Colo.App. 525, 608 P.2d 364 (1980). Such conduct must be so outrageous and extreme as to go beyond all possible bounds of decency and to be regarded as atrocious and utterly intolerable in a civilized community. Rugg v. McCarty, 173 Colo. 170, 476 P.2d 753 (1970).

Conduct, otherwise permissible, may become extreme and outrageous if it is an abuse by the actor of a position in which he or she has actual or apparent authority over the other, or the power to affect the other's interest. Zalnis v. Thoroughbred Datsun Car Co., 645 P.2d 292 (Colo.App.1982); Restatement (Second) of Torts § 46 comment e (1965).

Although the question of whether conduct is sufficiently outrageous is ordinarily one for the jury, the court must determine, in the first instance, whether reasonable people may differ as to whether the conduct of a defendant is sufficiently extreme to result in liability. Card v. Blakeslee, 937 P.2d 846 (Colo.App.1996).

As to such issue, the trial court's conclusion of law is not binding on this court. Zalnis v. Thoroughbred Datsun Car Co., supra.

Here, the trial court found that the alleged course of conduct of the employees of Grand Pontiac included strong-arming during negotiations, committing fraudulent acts, and falsifying documents related to the lease transaction. The court found that the cumulative effect of these actions could constitute outrageous conduct.

In our view, reasonable persons could differ as to whether the conduct of Grand Pontiac was sufficiently extreme to result in liability. Evidence that Grand Pontiac refused to give Mark Roget the keys to his car when he requested them and the above-noted conduct by Grand Pontiac employees could be considered extreme and outrageous under these facts. See Zalnis v. Thoroughbred Datsun Car Co., supra. The question, therefore, was properly one for the jury to resolve.

B. Punitive Damages

Grand Pontiac also contends that the trial court erred by submitting the claim for punitive damages to the jury because the evidence of corporate involvement was insufficient as a matter of law. We disagree.

Punitive damages may be awarded against a corporation for the actions of its agent if the agent was employed in a managerial capacity and was acting within the scope of his or her employment. If the agent was acting in a managerial capacity, the corporation need not actually authorize or ratify the act to warrant an award of punitive damages. Jacobs v. Commonwealth Highland Theatres, Inc., 738 P.2d 6 (Colo.App.1986).

Here, the trial court found that the evidence was sufficient to allow the jury to conclude that the actions of the employees of Grand Pontiac who dealt with the Rogets were authorized and ratified by the corporation itself.

At trial, the Rogets presented evidence that Grand Pontiac's owner was present at the dealership during the initial meeting and that he had interacted with Mark Roget's brother-in-law who had accompanied Roget to the dealership. In addition, the Rogets presented evidence that several managers discussed the Rogets' lease and participated in facilitating the transaction at various stages of lease negotiations. We conclude that, even if there was insufficient evidence of explicit ratification of the outrageous conduct at issue, sufficient evidence of managerial participation existed to warrant allowing the jury to...