Sterenbuch v. Goss, 10CA1459.

• Decision Date: 13 October 2011
• Docket Number: No. 10CA1459.,10CA1459.
• Parties: Martin STERENBUCH, Plaintiff–Appellant and Cross–Appellee, v. E. Warren GOSS, III; Lyle Smith; and Intercontinental Capital Management, LTD, Defendants–Appellees and Cross–Appellants.
• Court: Colorado Court of Appeals

266 P.3d 428

Martin STERENBUCH, Plaintiff–Appellant and Cross–Appellee,

v.E. Warren GOSS, III; Lyle Smith; and Intercontinental Capital Management, LTD, Defendants–Appellees and Cross–Appellants.

No. 10CA1459.

Colorado Court of Appeals, Div. II.

Oct. 13, 2011.

Bland Law Offices, P.C., Richard Bland, Longmont, Colorado, for Plaintiff–Appellant and Cross–Appellee.

Sanderson Law, P.C., David S. Sanderson, Boulder, Colorado, for Defendants–Appellees and Cross–Appellants.

Opinion by Judge DAILEY.

Plaintiff, Martin Sterenbuch, appeals the district court's judgment dismissing his claims for tortious interference with contracts, civil conspiracy, unjust enrichment, and constructive trust against defendants, E. Warren Goss, III, Lyle Smith, and Intercontinental Capital Management, LTD (ICM). Goss, Smith, and ICM cross-appeal the court's judgment dismissing their abuse of process counterclaim. We affirm in part, reverse in part, and remand with directions.

Sterenbuch and Goss are attorneys; Smith and his company, ICM, are self-proclaimed investment fund recovery experts. In 1999, Sterenbuch agreed to represent, on a contingency basis, approximately twenty-five people who, along with himself, had been victimized by a fraudulent investment scheme. By November 1999, however, nine of his clients had terminated their agreements with him and entered into new ones with Smith, who had allegedly disparaged Sterenbuch's abilities. The new agreements were later superseded by contingency fee contracts with Goss.¹ In time, Sterenbuch came to believe that Smith and Goss had been acting together from the start to obtain his clients.

The effort to recover the investment funds was complicated by the federal government's instituting an asset forfeiture case against those funds. On March 16, 2007, however, a consent judgment was entered in the asset forfeiture case. The terms of that judgment provided for the distribution of funds to fraud victims, including those clients represented by Sterenbuch and Goss. As a result of that judgment, Goss, Smith, and ICM received $598,710 in fees from Sterenbuch's former clients.

On March 10, 2009, Sterenbuch filed the present action. In response, Goss, Smith, and ICM filed a counterclaim alleging that Sterenbuch's lawsuit was an abuse of process. Each side successfully moved for partial judgment on the pleadings dismissing the other's claims.

The district court ruled that Sterenbuch's claims were time-barred, despite his assertion that he could not have pursued his claims before learning, in March 2007, that his former clients would indeed have a recovery. The court determined that his claims should have been brought within two years of November 1999, when he first became “aware of [the other side's] defamatory statements [about him], the loss of his clients, and the harm to his reputation.”

The district court also dismissed the abuse of process claim because Goss, Smith, and ICM failed to plead any facts pertaining to an essential element of that tort, that is, an improper use of legal process. Thus, the district court's rulings resolved all claims in the case.

I. Standard of Review

“Judgment on the pleadings is appropriate when a case's material facts are not in dispute, and ‘judgment on the merits can be achieved by focusing on the content of the pleadings and any facts of which the court will take judicial notice.’ ” Fischer v. City of Colorado Springs, 260 P.3d 331, 334 (Colo.App.2010) (quoting City & County of Denver v. Qwest Corp., 18 P.3d 748, 754 (Colo.2001)).

In considering a motion for judgment on the pleadings, a court must construe the allegations in the pleadings strictly against the moving party, must consider the allegations of the opposing party's pleadings as true, and should not grant the motion unless the pleadings themselves show that the matter can be determined on the pleadings. Redd Iron, Inc. v. Int'l Sales & Servs. Corp., 200 P.3d 1133, 1135 (Colo.App.2008). Entry of judgment on the pleadings is proper only if the material facts are undisputed and the movant is entitled to judgment as a matter of law. Hannon Law Firm, LLC v. Melat, Pressman & Higbie, LLP, ––– P.3d ––––, ––––, 2011 WL 724742 (Colo.App.2011) ( cert. granted Aug. 29, 2011).

We review de novo an order entering judgment on the pleadings. Redd Iron, 200 P.3d at 1135.

II. Sterenbuch's Appeal

Sterenbuch contends that the district court erred in ruling that his claims were, as a matter of law, time-barred. Although we disagree with respect to his tort claims, we agree with respect to his equitable claims.

“When a cause of action accrues is a question of law, the formulation of which settles a general rule of law.” Hickman v. N. Sterling Irrigation Dist., 748 P.2d 1349, 1350 (Colo.App.1987). Once the rule is settled upon, when a particular claim accrues and whether that claim is time-barred by a statute of limitations ordinarily are questions of fact for a jury to resolve. See J.A. Balistreri Greenhouses v. Roper Corp., 767 P.2d 736, 739 (Colo.App.1988); Norton v. Leadville Corp., 43 Colo.App. 527, 530, 610 P.2d 1348, 1350 (1979). However, when the material facts are undisputed and reasonable persons could not disagree about their import, these questions may be decided as a matter of law. See Liscio v. Pinson, 83 P.3d 1149, 1153 (Colo.App.2003); Winkler v. Rocky Mountain Conference of United Methodist Church, 923 P.2d 152, 159 (Colo.App.1995); see also Nelson v. State Farm Mut. Auto. Ins. Co., 419 F.3d 1117, 1119 (10th Cir.2005) (“Whether a court properly applied a statute of limitations and the date a statute of limitations accrues under undisputed facts are questions of law we review de novo.”).

A. Tort Claims

The applicable statute of limitations for a general tort action requires commencement of a suit “within two years after the cause of action accrues, and not thereafter.” § 13–80–102(1)(a), C.R.S.2011; see Build It & They Will Drink, Inc. v. Strauch, 253 P.3d 302, 305 n. 1 (Colo.2011).

As applicable here, a cause of action accrues “on the date both the injury and its cause are known or should have been known by the exercise of reasonable diligence.” § 13–80–108(1), C.R.S.2011.

1. Tortious Interference with Contractual Relations

On appeal, Sterenbuch argues that his claim for tortious interference with contractual relations is not time-barred because, due to the contingent nature of the contracts with his former clients, he could not have suffered, much less known of, any injury before March 16, 2007, when it was determined that his former clients would recover their lost funds. As his complaint was filed within two years of that date, that is, on March 10, 2009, he asserts that it was timely. We disagree.

Sterenbuch relies on Miller v. Armstrong World Industries, Inc., 817 P.2d 111 (Colo.1991), in which the supreme court held that “[a] claim for relief ‘does not accrue until the plaintiff knows, or should know, in the exercise of reasonable diligence, all material facts essential to show the elements of that cause of action.’ ” Id. at 113 (quoting City of Aurora v. Bechtel Corp., 599 F.2d 382, 389 (10th Cir.1979)); see also Hannon, –––P.3d at –––– (“A cause of action generally accrues ‘when a suit may be maintained thereon.’ ”) (quoting Jones v. Cox, 828 P.2d 218, 224 (Colo.1992)). He argues that, because he could not have known with any degree of certainty the facts relating to an essential element of his claim (i.e., damages) ² until March 2007, his claim could not have accrued before that time. We are not persuaded.

“[A]n injury is different from the damages that flow from the injury.... [D]amages do not need to be known before accrual of a claim.” Brodeur v. Am. Home Assurance Co., 169 P.3d 139, 147 n. 8 (Colo.2007); see Broker House Int'l, Ltd. v. Bendelow, 952 P.2d 860, 863 (Colo.App.1998) (uncertainty as to the precise extent of damage neither precludes the filing of a suit nor delays the accrual of a claim for purposes of the statute of limitations); see also Duell v. United Bank, 892 P.2d 336, 340 (Colo.App.1994) (“[O]nce some injury has occurred, the statute [of limitations] begins to run, notwithstanding that further injury continues to occur.”).

Courts in other jurisdictions recognize that an action for tortious interference with a contract accrues when the injury from the alleged interference occurred, that is, when the interference succeeded. Hroch v. Farmland Indus., Inc., 4 Neb.App. 709, 548 N.W.2d 367, 370 (1996); see also Scott v. City of New Orleans, 888 So.2d 318, 320 (La.Ct.App.2004) (cause of action for tortious interference with contract accrued from the date that the contract was terminated); Morrow v. Reminger & Reminger Co., 183 Ohio App.3d 40, 915 N.E.2d 696, 712 (2009) (a claim of tortious interference with contract arises when one party to a contract is induced to breach the contract).

This rule has been applied even where, as here, the contract breached was a contingency fee contract. In Trembath v. Digardi, 43 Cal.App.3d 834, 118 Cal.Rptr. 124, 125 (1974), the court rejected an attorney's assertion that his tortious interference action for another's inducement of his client to breach a contingent contract did not accrue until the client's claim was successful. In doing so, the court distinguished between the attorney's claim for breach of contract against his client and his tortious interference claim against the interfering defendants. Id. at 125–26. It held that the claim against the client—which sounded in contract—did not accrue until the client recovered in order to “prevent ‘a disaster to the client and a windfall to the attorney.’ ” Id. at 126 (quoting Brown v. Connolly, 2 Cal.App.3d 867, 83 Cal.Rptr. 158, 160 (1969)). However, the court held that because “[n]o such consideration favor[ed] a third party ... who tortiously induce[d] a client to breach a contingent fee contract,” the claim against the defendants—which sounded in tort—was “distinct from...