Vista Resorts, Inc. v. Goodyear Tire & Rubber Co.

• Citation: 117 P.3d 60
• Decision Date: 08 August 2005
• Docket Number: No. 02CA1690.,02CA1690.
• Parties: VISTA RESORTS, INC., a Delaware corporation, Plaintiff-Appellee, v. GOODYEAR TIRE & RUBBER CO., an Ohio corporation, Defendant-Appellant.
• Court: Colorado Supreme Court

117 P.3d 60

VISTA RESORTS, INC., a Delaware corporation, Plaintiff-Appellee, v. GOODYEAR TIRE & RUBBER CO., an Ohio corporation, Defendant-Appellant.

No. 02CA1690.

Colorado Court of Appeals, Division V.

November 18, 2004.

Certiorari Denied August 8, 2005.^*

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Rothgerber, Johnson & Lyons, LLP, Richard K. Clark, Michael D. Plachy, Kristin M. Bronson, Denver, Colorado, for Plaintiff-Appellee.

Ballard, Spahr, Andrews & Ingersoll, LLP, Roger P. Thomasch, Denver, Colorado; Wells, Anderson & Race, LLC, Mary A. Wells, L. Michael Brooks, Jr., Denver, Colorado; Garfield & Hecht, PC, David L. Lenyo, Aspen, Colorado, for Defendant-Appellant.

WEBB, J.

In this product liability action, defendant, Goodyear Tire & Rubber Co., appeals a judgment entered on a jury verdict in favor of plaintiff, Vista Resorts, Inc., for breach of implied warranty, strict product liability, failure to warn, negligence, fraud, and violation of the former version of § 6-1-113 of the Colorado Consumer Protection Act (CCPA). We affirm the judgment and remand for a hearing on attorney fees.

Vista built and sold six luxury residences in Beaver Creek. The homes included similar hydronic radiant heating systems, installed by Vista or its subcontractors, which circulated heated water and antifreeze through rubber hoses in the floors. Chiles Power Supply, d/b/a Heatway Radiant Floors and Snowmelting, contracted with Goodyear to supply rubber hose for use in the hydronic heating systems, called "Entran II." Vista purchased this hose from Heatway.

When the Entran II hose leaked and caused major damage in one of the homes, the six homeowners replaced all the Entran II hose in their residences. They sued Vista, Heatway, and Goodyear.

Through a settlement agreement, the homeowners assigned all their claims against Heatway and Goodyear to Vista. On Goodyear's motion to dismiss the homeowners, the trial court substituted Vista for the homeowners under C.R.C.P. 25(c) as the sole plaintiff. Heatway filed for bankruptcy and was dismissed, leaving Goodyear as the sole defendant.

The jury found for Vista on all claims, awarding compensatory and punitive damages. Goodyear appeals two evidentiary rulings, but does not contest the sufficiency of the evidence. The trial court entered judgment for compensatory damages, trebled under the CCPA (which Vista accepted in lieu of punitive damages), attorney fees, costs, and prejudgment interest. Goodyear challenges the constitutionality of treble damages as applied, but does not otherwise contest the amount of the judgment.

I. Assignment of Punitive and Treble Damages

Goodyear contends the trial court erred by allowing the jury to consider punitive damages and awarding treble damages under the CCPA because those claims were not assignable by the homeowners to Vista. We conclude the doctrine of invited error precludes our considering the merits of this contention.

The invited error doctrine prevents a party from inducing an erroneous ruling and then seeking to benefit by appealing that error. A party's affirmative action during litigation triggers this doctrine and usually bars appellate review of alleged error arising from such action. Horton v. Suthers, 43 P.3d 611 (Colo.2002).

Here, Goodyear moved for the complete substitution of Vista as the real party in interest under C.R.C.P. 25(c) and for dismissal of the homeowners under C.R.C.P. 56. Goodyear quoted from the homeowners' settlement agreement with Vista and asserted that the homeowners "assigned, transferred and conveyed all their interests in claims and causes of action, together with any remedies" against Goodyear. Goodyear further asserted that the homeowners should be dismissed because their continued inclusion "as straw plaintiffs ... would only be misleading and confusing." According to Goodyear, the homeowners had "ulterior motives — to pose [themselves] as injured homeowners (albeit extremely wealthy multi-home owners now more than fully compensated), or to not have a jury trial between the real parties — the developer and two manufacturers."

The homeowners opposed Goodyear's motion, noting that "joinder or substitution under Rule 25(c) does not alter substantive rights of the parties." They did not dispute that the settlement agreement assigned all their claims to Vista.

Goodyear orally argued to the trial court that it did not seek to dismiss any claims, but rather to "clean up the caption" of the case. The court asked, "So there's no sub rosa purpose?" Goodyear answered, "No."

In granting Goodyear's motion under C.R.C.P. 25, the court explained, "I also want the record to be made clear, though, in case I'm not here, that the individual homeowners' claims remain intact as Goodyear concedes ... these are the claims of individual homeowners." The court denied Goodyear's C.R.C.P. 56 motion.

At the time of Goodyear's motion, the pleadings included claims for punitive damages and treble damages under the CCPA. Goodyear did not raise the assignability issue in the trial management order. Nevertheless, Goodyear challenged assignability of these damage claims in its motion for a directed verdict.

Even if the trial court erred in treating these claims as assignable to Vista, Goodyear induced this error through its motion and supporting argument to substitute plaintiffs. Therefore, Goodyear is precluded from arguing on appeal that this assignment did not transfer claims for punitive damages and treble damages.

II. Other Incident Evidence

Goodyear next contends the trial court erred by permitting Vista to introduce evidence of approximately 950 complaints about Entran II made to Heatway, despite Goodyear's hearsay and relevancy objections. We disagree.

A trial court enjoys substantial discretion in admitting evidence of prior incidents, and absent a clear abuse of discretion, its ruling will not be disturbed. Morgan v. Bd. of Water Works, 837 P.2d 300 (Colo.App.1992). In determining whether a court abused its discretion, the appellate court should give the evidence its maximum probative value as weighed against its minimum prejudicial effect. City of Englewood v. Denver Waste Transfer, L.L.C., 55 P.3d 191 (Colo.App.2002). Admissibility depends on the particular facts at issue. People v. Arrington, 843 P.2d 62 (Colo.App.1992).

Prior incident evidence may be admitted if it is offered to establish a material fact, if it is logically relevant, if it contains no inference of the opposing party's bad character, and if it does not result in unfair prejudice. Scharrel v. Wal-Mart Stores, Inc., 949 P.2d 89 (Colo.App.1997).

Here, the trial court denied Goodyear's motion in limine to exclude evidence of the complaints, holding that this evidence would be admissible to prove notice and whether Goodyear acted willfully for purposes of punitive damages. However, the court did not resolve how the complaints would be proven.

At trial, Goodyear objected to documents maintained by Heatway concerning complaints that it had received. Over Goodyear's objection, Vista then elicited testimony from a Heatway officer that Heatway received 950 complaints about "hard and leaking" Entran II hose. He also testified that Heatway reported these complaints to Goodyear from 1992 through 1996, even though Goodyear ceased manufacturing Entran II in 1993.

This testimony did not include any details about the contents of the complaints, and the Heatway documents were never reoffered. However, the officer explained that he interpreted these complaints to mean the Entran II hose was defective because Heatway received very few complaints about hose supplied by Goodyear's predecessor.

A. Hearsay

Goodyear argues that the trial court erred because the Heatway officer's testimony was inadmissible hearsay. We disagree.

Hearsay is a statement made by someone other than the testifying witness that is offered to prove the truth of the matter asserted. CRE 801(c). Subject to certain exceptions, hearsay is generally inadmissible. CRE 802.

Hearsay may be admitted for a nontruth purpose, such as proof of notice or willful conduct. Bear Valley Church of Christ v. DeBose, 928 P.2d 1315 (Colo.1996); Schmutz v. Bolles, 800 P.2d 1307 (Colo.1990). Reports of prior incidents offered only to establish notice are admissible because they do not purport to establish the truth of the incidents. Schmutz v. Bolles, supra; Armentrout v. FMC Corp., 819 P.2d 522 (Colo.App.1991)(refusal to admit prior incidents for purposes of notice constituted error), aff'd in part and rev'd in part, 842 P.2d 175 (Colo.1992); see 5 Jack B. Weinstein, Weinstein's Federal Evidence § 801.11[5] (Joseph M. McLaughlin ed., 2d ed.2004).

The Heatway officer could testify about what Heatway told Goodyear regarding the complaints Heatway received. However, he had no personal knowledge of the truthfulness of the complaints. Nor was their truth established through any other evidence. Nevertheless, because evidence of the complaints was admitted to establish notice to Goodyear, not to show the defective nature of the Entran II hose, we discern no hearsay error.

B. Substantial Similarity

Goodyear next argues that the complaints evidence was irrelevant absent nonhearsay evidence showing substantial similarity between the circumstances underlying the complaints and the homeowners' claims that Entran II was defective. Goodyear points to multiple causes other than a defect in Entran II which could cause leakage, such as improper use of clamps and damage during installation. We are not persuaded.

Prior incidents involving other "untoward consequences" are relevant because the reports serve as notice that something may be amiss in the product. Palmer v. A.H. Robins Co., 684 P.2d 187 (Colo.1984). Differences in the circumstances surrounding prior incidents bear on the weight to be given such evidence, not its admissibility. Simon v. Coppola, 876 P.2d 10 (Colo.App.19...