Opinion ID: 2602361
Heading Depth: 2
Heading Rank: 2

Heading: other issues common to defendants

Text: ¶ 55 Having decided that the trial court committed reversible error by misinterpreting Margulies, we need not reach the other issues defendants raise on appeal. Nevertheless, due to the complexities of this case, a brief discussion of these issues is appropriate as guidance for the trial court on remand. See Buzas Baseball v. Salt Lake Trappers, 925 P.2d 941, 949 (Utah 1996).
¶ 56 To aid the jury in addressing comparative fault, the trial court provided the jury with special verdict forms on which it was allowed to apportion any fault it found. A separate form was provided for each plaintiff seeking recovery. Each form allowed the jury to apportion fault, if any, between the individual plaintiff seeking recovery and defendants. For instance, the special verdict form for plaintiff Joseph Lee only permitted the jury to apportion fault among Wiley Rein, Richard Wiley, and Joseph Lee. Further, the form stated that one-hundred percent of Joseph Lee's damages, if any, had to be apportioned among these three. Defendants contended that plaintiff David Lee was also partly at fault for Joseph Lee's losses, and, accordingly, David Lee should have been included on the special verdict form. The trial court rejected this contention, finding this was not required by section 78-27-39(1) of the Utah Code, which governed the apportionment of comparative fault. ¶ 57 On appeal, defendants contend the trial court erred in limiting the jury's comparative fault determination to apportioning fault only between an individual recovering plaintiff and defendants. In particular, defendants argue that the court's instructions to the jury regarding comparative fault improperly excluded parties who shared in fault. ¶ 58 At the time of trial, Utah's comparative fault statute read as follows: The trial court may, and when requested by any party shall, direct the jury, if any, to find separate special verdicts determining the total amount of damages sustained and the percentage or proportion of fault attributable to each person seeking recovery, to each defendant, and to any person who contributed to the alleged injury. Utah Code Ann. § 78-27-39(1) (1996). In Field v. Boyer Co., we concluded that the comparative fault statutory scheme, [of which section 78-27-39(1) is a part,] taken as a whole, allows the court to consider the fault of any person but to allocate fault only to plaintiffs, defendants and persons immune from suit. 952 P.2d 1078, 1081 (Utah 1998). As this section was applied by the trial court, the jury was allowed to allocate fault only to the individual recovering plaintiff and defendants on the separate special verdict form, without consideration of other non-recovering plaintiffs. ¶ 59 We do not reach the issue of whether the trial court erred in interpreting the comparative fault statute. Section 78-27-39(1) was amended after trial below, and we conclude the current version will be applicable on remand. In addressing the application of such amendments, we have previously stated as follows: [P]rocedural statutes enacted subsequent to the initiation of a suit which do not enlarge, eliminate, or destroy vested or contractual rights apply not only to future actions, but also to accrued and pending actions as well. . . . Generally, new procedural rules do not affect proceedings completed prior to enactment. . . . Further proceedings in a pending case are governed by the new law. . . . However, when the purpose of an amendment is to clarify the meaning of an earlier enactment, the amendment may be applied retroactively in pending actions. Dep't of Social Servs. v. Higgs, 656 P.2d 998, 1000-01 (Utah 1982) (emphasis added). In this case, the legislature's intent was to clarify the original meaning of the comparative fault statute. See Floor Debate, Utah Judiciary Comm., 1999 Gen. Sess., Jan. 29, 1999 (the amendment's sponsor, Representative John Swallow, stated, [T]he changes that we are recommending will place us back in pretty much the position we thought we were [in] before this recent Supreme Court case [interpreting the comparative fault statute].); see generally Field, 952 P.2d at 1078-82 (the case referred to by Representative Swallow). Further, in light of the fact that we have now reversed the jury's verdict, the plaintiffs have no vested or contractual right that would prohibit application of the amended statute. Thus, the amended statute will be applicable on remand. ¶ 60 We now address the proper course for the court to take on remand as it relates to the issue of comparative fault. The current version of the comparative fault statute reads as follows: The trial court may, and when requested by any party shall, direct the jury, if any, to find separate special verdicts determining the total amount of damages sustained and the percentage or proportion of fault attributable to each person seeking recovery, to each defendant, and to any other person whether joined as a party to the action or not and whose identity is known or unknown to the parties to the action, including a person immune from suit who contributed to the alleged injury. Utah Code Ann. § 78-27-39(1) (Supp.2000) (emphasis added). ¶ 61 The correct application of this statute is best illustrated by example. As noted earlier, the special verdict form for plaintiff Joseph Lee only permitted the jury to apportion fault among Wiley Rein, Richard Wiley, and Joseph Lee. Defendants contended that plaintiff David Lee was also partly at fault for Joseph Lee's losses and that, accordingly, David Lee should have been included on the special verdict form. On remand, David Lee's inclusion on Joseph Lee's special verdict form would indeed be appropriate provided there was some evidence that a percentage or proportion of fault [is] attributable, id., to him. Put another way, such a special verdict form would be proper only if there is some evidence that David Lee was, at least in part, at fault. Indeed, if this were the case, the inclusion of David Lee on the special verdict form would be mandatory, if requested by any party. ¶ 62 To demonstrate fault, the evidence must be capable of proving that the individual or entity sought to be included on the special verdict form breached some duty owed to the party seeking recovery. Turning back to our example, to find David Lee at fault in some measure, the jury would have to find he owed a legal duty to Joseph Lee and breached that duty. In this manner, the trial court will ensure any damages awarded are properly apportioned.
¶ 63 Defendants submitted proposed jury instructions on the affirmative defenses of waiver and estoppel. They contended plaintiffs' actions, after learning of defendants' representation of parties with adverse interests, barred the lawsuit entirely. The trial court refused to give the proposed instructions, however, concluding they did not properly state the law of waiver and estoppel. Nevertheless, the court gave an instruction on the affirmative defense of informed consent. The court determined this instruction provided defendants with the substance of their affirmative defenses of waiver and estoppel. On appeal, defendants contend the trial court erred in refusing to give the jury any instruction on defendants' affirmative defenses of waiver and estoppel. ¶ 64 As an initial point, while we have not specifically addressed the question before, waiver and estoppel are widely considered appropriate defenses to a claim of legal malpractice. See, e.g., 2 Ronald E. Mallen & Jeffrey M. Smith, Legal Malpractice, §§ 20.11 & 20.14, at 699-700, 717-20 (4th ed.1996) (stating that waiver and estoppel are proper defenses to legal malpractice and citing cases). We agree. Accordingly, defendants can properly rely on these defenses if there is evidence to support them. As we have earlier stated, A party is entitled to have his theory of the case submitted to the jury, and where there is evidence to support a party's theory of the case, it is error for the court to refuse to instruct thereon. Goode v. Dayton Disposal, Inc., 738 P.2d 638, 640 (Utah 1987). Thus, on remand, if the evidence supports the defenses of waiver and estoppel, the trial court should instruct the jury regarding them. ¶ 65 At trial below, the trial court rejected defendants' proposed instructions on waiver and estoppel, finding they incorrectly stated the law. [12] Indeed, the trial court may properly refuse to give [a] requested instruction[ ] where it does not accurately reflect the law governing the factual situation of the case. Black v. McKnight, 562 P.2d 621, 622 (Utah 1977). Yet, this should not overshadow the trial court's obligation to see that the jury is presented with a party's theory of the case. Goode, 738 P.2d at 640. On remand, if this issue arises again, the trial court should require the proponent of the instruction to rewrite it to conform with the law governing the facts presented.
¶ 66 The liability question before the jury was whether defendants had breached any fiduciary duty owed to the plaintiffs. Defendants argue the trial court improperly allowed the jury to choose between two alternative bases for finding defendants liable for a breach of fiduciary duty: (i) a breach of defendants' duty of loyalty or (ii) a breach of defendants' duty of confidentiality. They contend that proof of actual disclosure or misuse of confidential information is a prerequisite for a finding of a breach of the duty of confidentiality and that there is no such proof in this case. Accordingly, they contend, the jury should only have considered whether defendants breached the duty of loyalty. ¶ 67 In addressing this issue, we are guided by our earlier opinion in Gildea v. Guardian Title Co. of Utah, 970 P.2d 1265 (Utah 1998). In that case, we affirmed the trial court's summary judgment ruling that dismissed the plaintiff's tort claims against various defendants. Id. at 1272. Among those claims, was an accusation that one of the defendants had breached its duty of confidentiality to the plaintiff by allowing an attorney to view a confidential file related to the plaintiff. Id. at 1269-70. We concluded the defendant had no fiduciary duties to the plaintiff and further determined that, even if such duties existed, the plaintiff had presented no evidence at all that the defendant had breached its duty of confidentiality. Id. at 1270. The only evidence before the trial court was that the attorney had never, in fact, seen the relevant file. Id. While the attorney had used information that was in the file, he testified he had gained the information from another source, and the plaintiff did not contest that testimony. Id. Based on these facts we concluded that without any evidence that [the defendant] communicated confidential information, [the plaintiff's contention] is pure speculation and conjecture which cannot be allowed to form the basis of a jury's verdict. Id. ¶ 68 As applied to this case, Gildea mandates that plaintiffs present some evidence that Wiley Rein and/or Richard Wiley actually communicated confidential information. For instance, in their dealings with Wood, several plaintiffs provided him with much confidential information about their financial positions. However, they also provided Northstar with financial information. To prove that Wiley Rein and/or Richard Wiley had actually breached the duty of confidentiality by providing Northstar with confidential information, plaintiffs must demonstrate that Northstar had financial information available to it beyond what plaintiffs had given it, financial information that only could have come from Wiley Rein and/or Richard Wiley. [13]
¶ 69 David Schutz was the plaintiffs' sole expert witness on damages. At trial, Schutz presented two separate valuations of Channel 13. The first was based on the 1987 fair market value of Channel 13. Schutz estimated the 1987 value of the MWT, Ltd., limited partners' interest in Channel 13 at $10 million. The second estimate was based on the value of Channel 13 as it would have been in 1997 but for the alleged breaches of fiduciary duty by defendants. Under this estimate, the MWT, Ltd., limited partners' interest in Channel 13 was valued at $25 million. ¶ 70 The 1987 and 1997 appraisals were each based on a discounted cash flow analysis. Under this analysis, Schutz valued Channel 13 by projecting a hypothetical stream of profits over a ten year period. [14] The hypothetical profit streams reflected revenues less expenses, and the accumulated cash flow over the ten year period was discounted to present value. After arriving at discounted present value of the accumulated cash flows, Schutz applied a standard multiple (ten) to the estimated cash flow of the final year to determine a resale value, which was also discounted to present value. The discounted accumulated cash flow and the discounted resale value were then added together, resulting in Schutz's estimation of the fair market value of the Channel 13 license. In the 1987 estimate, this value was over $25 million, and, in the 1997 estimate, it was almost $61 million. ¶ 71 Plaintiffs contention at trial was that the damage they had incurred from defendants' tortious conduct was the loss of their forty percent interest in the Channel 13 license. Accordingly, Schutz calculated the damages from defendants' breaches as forty percent of the fair market value of the Channel 13 license, over $10 million in his 1987 estimate and over $24 million in his 1997 estimate.
¶ 72 Defendants contend the trial court erred in allowing the jury to determine plaintiffs' damages resulting from their loss of ownership in the station, i.e., lost ownership and lost cash distribution, as measured either from the date of defendants' alleged breaches of fiduciary duty or from the date almost a decade later when the case was ready for trial. We disagree. Defendants rely heavily on Sharma v. Skaarup Ship Management Corp., 916 F.2d 820 (2d Cir. 1990), a federal case interpreting New York contract law. The Sharma court stated as follows: Measuring . . . damages by the value of the item at the time of the breach is eminently sensible and actually takes expected lost future profits into account. The value of assets for which there is a market is the discounted value of the stream of future income that the assets are expected to produce. This stream of income, of course, includes expected future profits and/or capital appreciation. 916 F.2d at 826. While such an approach may be appropriate in some cases, the general objective of tort law [is] to place an injured person in a position as nearly as possible to the position he would have occupied but for the defendant's tort . . . . Acculog, Inc. v. Peterson, 692 P.2d 728, 731 (Utah 1984) (citing State v. Stanley, 506 P.2d 1284 (Alaska 1973)). We believe that the trial court is in the best position to determine what award of damages will make a plaintiff whole, and, thus, we are willing to permit the trial court to use its discretion in determining the date from which damages will be measured. See Anchorage Asphalt Paving Co. v. Lewis, 629 P.2d 65, 68 (Alaska 1981) (Because the circumstances of individual cases differ drastically, it is impractical to adopt a definite point in time to value damages. It has been found preferable to leave the question to the trial court's discretion.). ¶ 73 In this case, we conclude the trial court's decision was within its permitted range of discretion. By measuring damages at the time of trial, the jury was presented with estimates of the MWT, Ltd., limited partners' lost profits from 1987 to the expected trial date, 1997, as well as the potential fair market value of Channel 13 in 1997. We believe this evidence allowed the jury to come to a reasonable approximation of the damages the MWT, Ltd., limited partners actually incurred as a result of defendants' alleged breaches of fiduciary duty. Accordingly, the trial court's decision was within its permitted discretion.
¶ 74 In addition to arguing that the damages were calculated as of an improper date, defendants also contend the trial court erred in allowing the jury to award lost ownership and cash distribution damages based solely on the estimates of plaintiffs' expert witness, Schutz. We conclude the trial court did not err in this regard. ¶ 75 Part of the difficulty in addressing this issue is that, contrary to defendants' assertions, there was evidence apart from Schutz's testimony to support the jury verdict. The jury had before it several similar appraisals of Channel 13's value prepared by Wood, Northstar, Communications Partners, and Frazier, Gross & Kadlec. Even setting aside this evidence, however, we conclude Schutz's testimony is not insufficient as a matter of law. ¶ 76 Lost profits must be established with reasonable certainty, Cook Assocs., Inc. v. Warnick, 664 P.2d 1161, 1165 (Utah 1983), or, in other words, with `sufficient certainty that reasonable minds might believe from a preponderance of the evidence that the damages were actually suffered.' Id. (quoting First Sec. Bank of Utah v. J.B.J. Feedyards, Inc., 653 P.2d 591, 596 (Utah 1982)); see also Canyon Country Store v. Bracey, 781 P.2d 414, 418 (Utah 1989). While start-up businesses, such as Channel 13, lack an actual record of past earnings, which decreases the certainty with which one could predict future profits[,] . . . that fact should not automatically preclude new businesses from recovering lost profits. . . . Rather, new businesses should be allowed to try to prove lost profits up to a reasonable level of certainty by other means. . . . Cook, 664 P.2d at 1166. One method of measuring damages in such a situation is by expert testimony. Id. at 1166 n. 4. While this may not be as precise as other methods of proof, nevertheless, [o]nce a defendant has been shown to have caused a loss, he should not be allowed to escape liability because the amount of the loss cannot be proved with precision. . . . Consequently, the reasonable level of certainty required to establish the amount of a loss is generally lower than that required to establish the fact or cause of a loss. Id. at 1166 (citations and emphasis omitted); see also Price-Orem Inv. Co. v. Rollins, Brown & Gunnell, Inc., 784 P.2d 475, 478 n. 1 (Utah Ct.App.1989) (While an award of damages based only upon speculation cannot be upheld, some degree of uncertainty in the evidence of damages will not relieve the defendant from compensating a wronged plaintiff.). Accordingly, [t]he certainty requirement is met as to the amount of lost profits if there is sufficient evidence to enable the trier of fact to make a reasonable approximation. Cook, 664 P.2d at 1166. ¶ 77 Applying the above principles to the case at hand, we conclude Schutz's testimony was not inadequate as a matter of law to provide a basis for the jury's award of damages. Schutz used industry-accepted methods to calculate the potential value of Channel 13, and, in calculating Channel 13's potential market revenue prior to 1997, Schutz used estimates based on published information of actual Salt Lake television stations. While such expert testimony may not be as precise as calculations of actual revenue, it is, nevertheless, not inadequate as a matter of law. The testimony presented sufficient evidence to enable the trier of fact to make a reasonable approximation. Id.
¶ 78 The jury concluded that MWT Corporation was the only plaintiff damaged as a result of Northstar's 1991 cash call. Accordingly, the jury awarded MWT Corporation $184,000 in actual damages ($92,000 against Richard Wiley and $92,000 against Wiley Rein) and $150,000 in punitive damages against Richard Wiley. Defendants contend the trial court erred in allowing the jury to award MWT Corporation any damages for Northstar's 1991 cash call. We agree. ¶ 79 It is undisputed that MWT Corporation never incurred any actual financial loss as a result of the cash call. Plaintiffs contend, however, that the cash call is a legal obligation caused by defendants' breach of fiduciary duties, and, therefore, they are entitled to damages. See Wilson v. S. Pac. Co., 13 Utah 352, 44 P. 1040, 1042 (1896) (allowing jury to award damages where plaintiff incurred a legal obligation as yet unpaid). We disagree with this characterization of the cash call. Northstar's cash call is better described as setting forth Northstar's view that the MWT, Ltd., limited partners had a legal obligation, a view these plaintiffs disputed. However, as Northstar has done nothing to create such an obligation, none exists. Accordingly, on remand, absent new evidence that would support the characterization of the cash call as a legal obligation, it would be inappropriate for plaintiffs to be awarded damages on this basis.