2013 COA 112M
Colo. Ct. App.2013Background
- Mahoney’s company (Just In Case Business Lighthouse, LLC) had agent/commission agreements (Harvest Agreements) with Pearl Development; plaintiff sought a commission if Pearl sold during the agreement or tail period.
- Pearl and Epic Energy signed a letter of intent unbeknownst to Mahoney; Pearl’s president (Murray) negotiated a $100,000 Termination Agreement with plaintiff that excluded commissions if Epic (and other named entities) bought Pearl; sale to Epic closed five months later.
- Plaintiff sued for fraudulent misrepresentation and concealment by Murray (and others); Pearl later went bankrupt and two Pearl owners settled; jury returned a large verdict against Murray, later reduced for comparative fault.
- Plaintiff’s primary case development and documentary summaries were prepared and presented by Preston Sumner, who had a contingency agreement to receive 10% of any recovery.
- The trial court allowed Sumner to testify as a fact/summary witness (not as an expert) and admitted his summary exhibits; defendant appealed arguing Sumner’s contingent compensation required exclusion and that other evidentiary and instruction rulings were erroneous.
- The court affirmed most evidentiary rulings but held a limited remand was required for the trial court to consider striking Sumner as a sanction under Colorado RPC 3.4(b) because contingent payment to a fact witness is disapproved and may warrant exclusion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Contingent compensation for a fact witness — does it require per se exclusion? | Sumner was an investigative/summary witness whose testimony was admissible; contingency did not mandate exclusion. | Contingent payment (10%) created an intolerable bias and required preclusion of Sumner’s testimony. | Court disapproved contingent fees for fact witnesses but rejected a per se exclusion; remanded for trial court to consider striking Sumner as a sanction under Colo. RPC 3.4(b) or for bad faith. |
| Admissibility of Sumner as a summary (lay) witness under CRE 602/701 | Sumner reviewed voluminous admitted documents and could testify from personal knowledge of those exhibits to help the jury organize complex evidence. | Sumner lacked personal knowledge of underlying events and was not an expert; testimony should be excluded. | Court affirmed trial court’s discretion to admit a summary witness who personally examined admitted exhibits and limited testimony to admitted evidence; no abuse of discretion. |
| Admission of Sumner’s summary exhibits under CRE 1006 | Exhibits summarized voluminous records and were admissible because underlying documents were admitted and in‑court examination would be inconvenient. | Underlying documents were already admitted so summaries were unnecessary and potentially prejudicial (highlighting, labeling). | Court held CRE 1006 allows summaries of voluminous admitted exhibits; trial court did not abuse discretion and summaries were not unduly prejudicial. |
| Designating employer (Pearl) as a nonparty at fault based solely on vicarious liability under §13-21-111.5 | Defendant argued Pearl could be listed as a nonparty at fault (and/or had settled) to apportion fault for conduct by other employees. | Plaintiff argued defendant failed to designate specific other employees/nonparties who owed duties; vicarious-only designation is insufficient. | Court held a nonparty-at-fault designation requires the nonparty to have owed a legal duty to plaintiff (not only secondary/vicarious liability); designation based solely on vicarious liability is insufficient and instruction denial was proper. |
Key Cases Cited
- People v. Belfor, 591 P.2d 585 (Colo. 1979) (payment to a witness contingent on testimony or outcome is illegal and against public policy)
- City & Cnty. of Denver v. Bd. of Assessment Appeals, 947 P.2d 1373 (Colo. 1997) (contingent compensation for expert witnesses weakens reliability and impartiality; contingent agreements impermissible for appraisers)
- Barfield v. Hall Realty, Inc., 232 P.3d 286 (Colo. App. 2010) (elements of fraudulent misrepresentation)
- Nielson v. Scott, 53 P.3d 777 (Colo. App. 2002) (elements of fraudulent concealment)
- Miller v. Byrne, 916 P.2d 566 (Colo. App. 1995) (nonparty at fault must have owed a legal duty to the plaintiff)