Target Corp. v. Prestige Maint. USA, Ltd.

• Decision Date: 31 January 2013
• Docket Number: No. 12CA0445.,12CA0445.
• Citation: 351 P.3d 493,2013 COA 12
• Parties: TARGET CORPORATION, a Minnesota corporation, Plaintiff–Appellee, v. PRESTIGE MAINTENANCE USA, LTD., Defendant–Appellant.
• Court: Colorado Court of Appeals

351 P.3d 493

2013 COA 12

TARGET CORPORATION, a Minnesota corporation, Plaintiff–Appellee

v.PRESTIGE MAINTENANCE USA, LTD., Defendant–Appellant.

No. 12CA0445.

Colorado Court of Appeals, Div. VII.

Jan. 31, 2013.

Rehearing Denied April 18, 2013.

Montgomery, Kolodny, Amatuzio & Dusbabek, LLP, John R. Chase, Krista Maher, Denver, Colorado, for Plaintiff–Appellee.

White and Steele, P.C., John Lebsack, Denver, Colorado, for Defendant–Appellant.

Opinion

Opinion by Judge HAWTHORNE.

¶ 1 Defendant, Prestige Maintenance USA, Ltd. (Prestige), appeals the trial court's judgment awarding future damages to plaintiff, Target Corporation (Target). We affirm.

¶ 2 We publish this opinion because we conclude that, as matters of first impression in Colorado, for choice of law purposes: (1) the sufficiency of evidence supporting a damages award is a substantive issue; and (2) whether an issue is preserved for appeal is an issue of judicial administration.

I. Facts and Procedural History

¶ 3 Prestige had contracted with Target to provide cleaning services at Target stores. The contract provided that Prestige would indemnify Target for, among other things, all injuries or damages relating to or arising out of Prestige's performance of its services.

¶ 4 While using a vacuum cleaner, a Prestige employee caused Johanna Cleveland, a Target employee, to fall and injure her right knee while working in a Colorado Target store.

¶ 5 A doctor recommended that Cleveland undergo total knee replacement

surgery. She filed a workers' compensation claim against Target to cover the costs stemming from the injury. An administrative law judge found that Target was liable for the injury and directed Target to pay for the surgery.

¶ 6 Following the surgery, Cleveland continued to have stability problems. Her knee later buckled, causing her to fall and tear her left rotator cuff. She then underwent a partial knee replacement, which was also unsuccessful. Doctors recommended that she undergo shoulder surgery and another knee surgery.

¶ 7 Target filed a breach of contract action against Prestige, seeking, pursuant to their contract, indemnification for Cleveland's injuries and damages. Prestige denied that the contract required it to indemnify Target.

¶ 8 After a bench trial, the trial court ruled in Target's favor. The court made numerous findings, including:

• the Prestige employee, acting in the scope of her employment, caused Cleveland's injuries;

• the Prestige employee was negligent in causing Cleveland's injuries;

• Cleveland and Target were not negligent in any respect; and

• Prestige was contractually required to indemnify Target for its past and future damages.

¶ 9 The court awarded Target damages for the costs it had already incurred and for the costs it would continue to incur in compensating Cleveland. However, the court declined to award Target the full amount of damages it sought. Specifically, the court did not award damages for further independent medical examinations because it found that the need for such examinations was speculative. It also reduced the total award by $56,827.26 because that amount duplicated Social Security retirement payments that Cleveland was receiving.

¶ 10 Prestige appeals the future damages awarded to Target.

II. Future Damages

¶ 11 Prestige contends that the trial court erred in awarding Target future damages in three categories: (1) future medical treatment; (2) future disability payments; and (3) future medical management costs¹ . Prestige argues that there is no support for such future damages. We disagree.

¶ 12 As an initial matter, there are two threshold questions we must answer: (1) Which state's law applies? (2) Did Prestige preserve the future damages question for appellate review?

A. Governing Law

¶ 13 The parties' cleaning contract contains a choice of law provision, which states that Minnesota law shall “govern all matters arising out of or related to this Agreement, including its interpretation, construction, performance or enforcement.”

¶ 14 Consistent with the Restatement (Second) of Conflict of Laws § 187 (1971) (Restatement), we will apply the law chosen by the parties unless there is no reasonable basis for their choice or unless applying the chosen state's law would be contrary to the fundamental policy of the state whose law would otherwise govern. Hansen v. GAB Bus. Services, Inc., 876 P.2d 112, 113 (Colo.App.1994). Here, there is a reasonable basis for selecting Minnesota law because Target is headquartered there. Cf. id. Moreover, neither party has argued that we should not apply Minnesota law because of a fundamental policy of Colorado. Cf. id.

¶ 15 Accordingly, we will apply Minnesota law to all substantive legal matters. See id. However, we will apply Colorado law to all matters of judicial administration, including the procedures by which controversies are brought into Colorado courts and the rules prescribing how litigation shall be conducted.² Apache Village, Inc. v. Coleman Co., 776 P.2d 1154, 1155 (Colo.App.1989) ; Restatement § 122 comment a. As the forum court, we are more concerned with the function and administration of our courts. See Apache Village, Inc., 776 P.2d at 1155 ; Restatement § 122 comment a.

¶ 16 A state's substantive law generally concerns parties' rights and liabilities, whereas a state's rules of judicial administration generally concern how litigation must be conducted and how court processes will be administered. Restatement § 122 cmt. a. Unlike a state's substantive law, parties do not usually consider a state's judicial administration rules when contractually selecting a particular state's law. See id. Thus, “there is no danger of unfairly disappointing their hopes by applying the forum's rules in such matters.” Id.

¶ 17 Here, we must determine under Colorado law whether the following three matters are substantive legal matters requiring us to apply Minnesota law, or whether they are simply matters of judicial administration permitting us to apply Colorado law: (1) Prestige's contention that there is insufficient evidence to support the future damages award; (2) Target's contention that the future damages issue is not preserved for appellate review; and (3) the applicable standard of review.

¶ 18 We conclude that the first matter—the evidence needed to support a future damages award—is substantive because damages are the measure of a party's liability. See id. (substantive law primarily concerns the parties' rights and liabilities); see also Marine Midland Bank v. Kilbane, 573 F.Supp. 469, 470 (D.Md.1983) (damages are a substantive, not procedural, matter); Paine Webber Jackson & Curtis, Inc. v. Winters, 22 Conn.App. 640, 579 A.2d 545, 550 (1990) (liability and damages are substantive issues); Cap Gemini Am., Inc. v. Judd, 597 N.E.2d 1272, 1281 (Ind.Ct.App.1992) (type, measure, and amount of damages are substantive issues); ARY Jewelers, L.L.C. v. Krigel, 277 Kan. 464, 85 P.3d 1151, 1162 (2004) (“[b]oth the measure of damages for breach of contract[ ] and the rate of interest allowed as part of those damages” “are substantive issues”); Phibro–Tech, Inc. v. Osmose Holdings, Inc., No. BER–C–365–05, 2007 WL 1989431, at *17 (N.J.Super.Ct.App.Div.2007) (unpublished opinion) (“Generally, and here, damages follow the substantive law.”); cf. Swanson v. Image Bank, Inc., 206 Ariz. 264, 77 P.3d 439, 440 (2003) (treble damages are a substantive legal issue subject to the state law selected in a contractual choice of law provision). Moreover, damages matter greatly to parties, and it is reasonable to assume that parties would consider a state's laws concerning damages when contractually selecting the applicable law. See Restatement § 122 cmt. a. Therefore, we will apply Minnesota law to the quantum of evidence needed to support Target's future damages award.

¶ 19 We conclude that the remaining two issues—the legal standards governing preservation for appellate review and the standard of review—are matters of judicial administration. See, e.g., Arkoma Basin Exploration Co. v. FMF Associates 1990–A, Ltd., 249 S.W.3d 380, 388 (Tex.2008) (applying forum's law to the procedural, nonsubstantive issue of preservation of error); HealthTronics, Inc. v. Lisa Laser USA, Inc., 382 S.W.3d 567, 576–77 (Tex.App.2012) (same); Vertopoulos v. Siskiyou Silicates, Inc., 177 Or.App. 597, 34 P.3d 704, 707 n. 4 (2001) (“The law of the forum state ... applies to procedural matters such as preservation of issues for appellate review.”); River Mgmt. Corp. v. Lodge Properties Inc., 829 P.2d 398, 401 (Colo.App.1991) (applying substantive law of state that parties had contractually selected, but applying Colorado law to procedural issues, including the standard of review). These issues concern how parties conduct litigation and how courts administer cases. See Restatement § 122 cmt. a. Accordingly, we will apply Colorado law to the legal standards governing preservation for appellate review and the standard of review.

B. Issue Preservation

¶ 20 Target contends that Prestige failed to preserve for appellate review its challenge to the sufficiency of evidence supporting the court's future damages award. Regardless of whether a party must raise a sufficiency of the evidence challenge to a trial court to preserve the issue for appellate review, we conclude that Prestige sufficiently preserved the issue here.

¶ 21 In its closing argument, Prestige argued the following:

[W]e do not believe that Target has proven its damages, especially with respect to its future damages. Dr. Aschberger ... testified that regarding the future, he doesn't know what's going to happen. A lot of it is unknown.... We don't know how she [Cleveland] is going to do, and so, for this Court to base a damage award on pure speculation without some good-faith basis, would cause us substantial injustice in this matter....

Now Target wants this Court to believe that it's going to pay another half a million or more in the future. The evidence just simply does not

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