Court Opinion

ID: 4247415
Source: CourtListenerOpinion
Date Created: 2018-02-22 19:11:31.278525+00
Date Added: 2024-06-11T14:44:24.432401
License: Public Domain

The summaries of the Colorado Court of Appeals published opinions
  constitute no part of the opinion of the division but have been prepared by
  the division for the convenience of the reader. The summaries may not be
    cited or relied upon as they are not the official language of the division.
  Any discrepancy between the language in the summary and in the opinion
           should be resolved in favor of the language in the opinion.

                                                                  SUMMARY
                                                           February 22, 2018

                                2018COA21

No. 16CA817, Dorsey & Whitney LLP v. RegScan, Inc. —
Attorney Fees — Due Process — Jurisdiction of Courts — Long-
arm Statute — Personal Jurisdiction

     In a case involving a dispute between a law firm and its client

over unpaid legal fees, a division of the court of appeals considers

whether the district court had specific personal jurisdiction over the

nonresident client. The client reached out to and retained a specific

Colorado attorney in the law firm to represent it in a matter

ultimately filed in another state. In the course of the

representation, the client communicated almost daily with the law

firm in Colorado, and paid the law firm’s retainer in Colorado. The

division concludes that the district court had specific personal

jurisdiction over the nonresident client.
     The division also rejects the client’s contentions that the

district court erred under CRE 703 when it allowed the law firm’s

expert to testify about billing records not admitted into evidence,

that the district court erred by failing to include a fairness element

in the elemental breach of contract jury instruction, and that the

district court improperly relied on CRE 408 to exclude evidence that

the client objected to the amounts the law firm had charged.

     Accordingly, the division affirms the judgment of the district

court.
COLORADO COURT OF APPEALS                                      2018COA21

Court of Appeals No. 16CA0817
City and County of Denver District Court No. 14CV34542
Honorable Karen L. Brody, Judge
Honorable Elizabeth A. Starrs, Judge

Dorsey & Whitney LLP,

Plaintiff-Appellee,

v.

RegScan, Inc.,

Defendant-Appellant.

                            JUDGMENT AFFIRMED

                                  Division IV
                         Opinion by JUDGE J. JONES
                      Hawthorne and Richman, JJ., concur

                         Announced February 22, 2018

Dorsey & Whitney LLP, Scott P. Sinor, Andrea Ahn Wechter, Denver, Colorado,
for Plaintiff-Appellee

Johnson & Klein, PLLC, Eric K. Klein, Boulder, Colorado, for Defendant-
Appellant
¶1    This case involves a dispute between a law firm and its client

 over unpaid legal fees. The client, RegScan, Inc., a

 Pennsylvania-based internet company that assists companies with

 environmental, health, and safety regulations, appeals the

 $373,707.43 judgment against it and in favor of the law firm of

 Dorsey & Whitney LLP (the law firm). Among the issues we address

 is whether the district court had personal jurisdiction over the

 nonresident client, an issue which turns on application of relatively

 well-settled principles to a set of facts that isn’t all that uncommon.

 In the end, we conclude that the court had jurisdiction. Addressing

 as many of RegScan’s other contentions as we need to, including an

 issue of first impression about the meaning of CRE 703, we affirm.

                           I.    Background

¶2    BNA, a competitor of RegScan, began marketing a product to

 which RegScan believed it had exclusive rights. So Edward Ertel,

 RegScan’s president and CEO, called his close friend and former

 college roommate, Greg Tamkin, a partner in the law firm’s Denver

 office who specializes in intellectual property matters. After they

 discussed the situation, RegScan hired the law firm. The parties’

 engagement letter limited the scope of the law firm’s representation

                                    1
 to pre-litigation work. But once it became clear that RegScan would

 have to take BNA to court to vindicate its perceived rights, Mr. Ertel

 and Mr. Tamkin agreed that the law firm would represent RegScan

 in that litigation. Mr. Tamkin sent Mr. Ertel an email confirming

 their modification of the earlier agreement, and Mr. Ertel sent a

 $25,000 retainer to the law firm’s Denver office.

¶3    The law firm filed the BNA case in the United States District

 Court for the Eastern District of Virginia. Throughout the litigation,

 Mr. Ertel had frequent, almost daily, conversations with attorneys

 in the law firm’s Denver office via telephone and email. Each

 month, the law firm sent detailed bills to RegScan, charging time in

 tenth-of-an-hour increments.

¶4    While RegScan didn’t specifically question the legitimacy of the

 hours worked or the billed hourly rates, it eventually complained to

 Mr. Tamkin that the litigation costs were exceeding his estimates.

 According to RegScan, Mr. Tamkin had estimated that the total cost

 of the representation would be between $300,000 and $400,000

 dollars. The law firm ultimately billed RegScan a total of

 $769,894.71, of which RegScan paid $371,187.28.

                                   2
¶5    Through a series of emails, the parties attempted to negotiate

 a resolution. But they couldn’t reach an agreement, and the law

 firm sued RegScan in Denver District Court for the claimed

 outstanding balance, asserting claims for breach of contract and

 account-stated.1 A jury found in the law firm’s favor on both

 claims, awarding damages of $398,707.43, less $25,000, the

 amount of the retainer RegScan had already paid.2

                           II.   Discussion

¶6    RegScan raises half a dozen contentions on appeal: (1) the

 court didn’t have personal jurisdiction over RegScan; (2) the law

 firm’s expert witness shouldn’t have been allowed to testify about

 billing records not admitted into evidence; (3) the elemental breach

 of contract jury instruction omitted an element of the claim; (4) the

 1 “An account stated is an agreement that the balance and all items
 of an account representing the previous monetary transactions of
 the parties thereto are correct, together with a promise to pay such
 balance.” Mace v. Spaulding, 110 Colo. 58, 59, 130 P.2d 89, 89
 (1942) (citation omitted).
 2 The verdict form posed four questions to the jurors: (1) whether

 RegScan breached a contract; (2) whether the law firm had proved
 there was an account stated; (3) if they found for the law firm on
 either question 1 or 2, what damages RegScan owes; and (4) again if
 they found for the law firm on either claim, whether the retainer
 should be deducted from the damages.

                                   3
 elemental account-stated jury instruction omitted an element of the

 claim; (5) the district court improperly excluded evidence under

 CRE 408 of RegScan’s objections to the amount the law firm had

 charged; and (6) the district court erred by denying RegScan’s

 motion for a directed verdict on the account-stated claim.

¶7        We first conclude that the district court had personal

 jurisdiction over RegScan. We then reject RegScan’s other

 contentions potentially affecting the jury’s verdict on the breach of

 contract claim. And because we affirm as to the breach of contract

 claim, and the jury awarded the same damages on both claims, we

 don’t address RegScan’s contentions pertaining exclusively to the

 account-stated claim.

     A.     The District Court had Specific Personal Jurisdiction Over
                                    RegScan

¶8        We conclude that the district court had specific personal

 jurisdiction over RegScan based on RegScan’s course of dealing

 with the law firm.

                  1.   Preservation and Standard of Review

¶9        Early on in the case, RegScan filed a motion to dismiss for

 lack of personal jurisdiction. The district court denied that motion

                                      4
  in a thorough, written order. RegScan renewed its motion at the

  close of evidence and the court again denied it. Thus, RegScan

  preserved the issue.

¶ 10   Whether a court may exercise personal jurisdiction over a

  particular defendant presents a question of law that we review de

  novo. Griffith v. SSC Pueblo Belmont Operating Co. LLC, 2016 CO
60M, ¶ 9. Because RegScan renewed its motion at trial, the law

  firm was required to establish personal jurisdiction by a

  preponderance of the evidence. Goettman v. N. Fork Valley Rest.,

  176 P.3d 60, 66 n.3 (Colo. 2007); Archangel Diamond Corp v. Lukoil,

  123 P.3d 1187, 1192 n.3 (Colo. 2005).3

  3 The Colorado Supreme Court hasn’t yet opined on what standard
  an appellate court uses to review any findings of historical fact
  underlying a district court’s ultimate conclusion regarding
  jurisdiction. But other courts review such findings for clear error.
  See, e.g., CutCo Indus., Inc. v. Naughton, 806 F.2d 361, 365 (2d Cir.
  1986); O’Bryan v. McDonald, 952 P.2d 636, 638 (Wyo. 1998). The
  district court didn’t make any express factual findings in denying
  RegScan’s motion at trial, and in ruling on RegScan’s pretrial
  motion to dismiss the court relied on the parties’ submissions; it
  didn’t conduct an evidentiary hearing. No matter. The historical
  facts relevant to our jurisdictional inquiry don’t appear to be
  disputed.

                                    5
              2.   Requirements for Personal Jurisdiction

¶ 11   Colorado’s long-arm statute confers jurisdiction over a cause

  of action arising from “[t]he transaction of any business within this

  state” to the maximum extent permitted by the Due Process

  Clauses of the United States and Colorado Constitutions. § 13-1-

  124(1)(a), C.R.S. 2017; Magill v. Ford Motor Co., 2016 CO 57, ¶ 14;

  Archangel Diamond Corp., 123 P.3d at 1193. This constitutional

  overlay means that a plaintiff desiring to invoke a Colorado court’s

  jurisdiction over a nonresident defendant must show that doing so

  comports with the long-arm statute and due process. Archangel

  Diamond Corp., 123 P.3d at 1193. The result is a two-step process.

  First, the plaintiff must show that the defendant has sufficient

  minimum contacts with Colorado such that the defendant should

  reasonably have foreseen being haled into court here. Id. at 1194;

  Keefe v. Kirschenbaum & Kirschenbaum, P.C., 40 P.3d 1267, 1270

  (Colo. 2002). And second, the plaintiff must show in addition to

  such minimum contacts that requiring the defendant to litigate in

  Colorado doesn’t offend traditional notions of fair play and

  substantial justice. Align Corp. Ltd. v. Boustred, 2017 CO 103, ¶¶

  10, 13; Keefe, 40 P.3d at 1271.

                                    6
¶ 12   Given the nature of RegScan’s arguments regarding

  jurisdiction, further explanation of these two requirements is

  warranted.

                        a.    Minimum Contacts

¶ 13   “The quantity and nature of the minimum contacts required

  depends on whether the plaintiff alleges specific or general

  jurisdiction.” Archangel Diamond Corp., 123 P.3d at 1194. The law

  firm hasn’t ever claimed that RegScan is subject to general

  jurisdiction — that is, jurisdiction based on contacts unrelated to

  the events giving rise to the case — in Colorado. See id. Rather, it

  claims specific jurisdiction. This form of minimum contacts exists

  when the injuries precipitating the case arose out of and are related

  to “activities that are significant and purposefully directed by the

  defendant at residents of the forum.” Align Corp., ¶ 11 (ultimately

  quoting Keefe, 40 P.3d at 1271); see Burger King Corp. v.

  Rudzewicz, 471 U.S. 462, 472 (1985). Put another way, we must

  assess “(1) whether the defendant purposefully availed [itself] of the

  privilege of conducting business in the forum state, and (2),

  whether the litigation ‘arises out of’ the defendant’s forum-related

  contacts.” Archangel Diamond Corp., 123 P.3d at 1194.

                                     7
¶ 14   Whether the purposeful availment requirement is met depends

  on the defendant’s actions, not on those unilaterally taken by

  someone else. This limitation is necessary to assure that exercising

  jurisdiction doesn’t result from “‘random,’ ‘fortuitous,’ or

  ‘attenuated’ contacts.” Burger King Corp., 471 U.S. at 475 (quoting

  Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774 (1984));

  Archangel Diamond Corp., 123 P.3d at 1194; Keefe, 40 P.3d at

  1270-71. However, a single act may be sufficient to establish

  specific jurisdiction, Goettman, 176 P.3d at 69, including, in some

  cases, the “defendant’s deliberate creation of ‘continuing

  obligations’ with the forum state,” Archangel Diamond Corp., 123
P.3d at 1194 (quoting Keefe, 40 P.3d at 1271). “The proper

  question is not where the plaintiff experienced a particular injury or

  effect but whether the defendant’s conduct connects [it] to the

  forum in a meaningful way.” Walden v. Fiore, 571 U.S. ___, ___, 134
S. Ct. 1115, 1125 (2014).

¶ 15   The “arising out of” requirement means that the defendant

  created a “substantial connection” with the forum state through the

  actions that gave rise to the case. Align Corp., ¶ 12; Archangel

                                     8
  Diamond Corp., 123 P.3d at 1194; Giduck v. Niblett, 2014 COA 86,

  ¶ 16.

                   b.   Fair Play and Substantial Justice

¶ 16      Even if the plaintiff shows sufficient minimum contacts, a

  court shouldn’t exercise personal jurisdiction over a nonresident

  defendant unless doing so would comport with traditional notions of

  fair play and substantial justice. This inquiry turns on factors such

  as (1) the burden that litigation in the forum state would impose on

  the defendant; (2) the forum state’s interest in resolving the dispute;

  (3) the plaintiff’s interest in obtaining convenient and effective relief;

  (4) the interstate judicial system’s interest in the efficient resolution

  of cases; and (5) the states’ shared interest in furthering

  substantive social policies. World-Wide Volkswagen Corp. v.

  Woodson, 444 U.S. 286, 292 (1980); Youngquist Bros. Oil & Gas, Inc.

  v. Miner, 2017 CO 11, ¶ 13; Align Corp., ¶ 13; Archangel Diamond

  Corp., 123 P.3d at 1195; Keefe, 40 P.3d at 1271-72. A defendant

  which has purposely directed its activities at forum residents must

  present a compelling case that some other consideration would

  render the court’s exercise of jurisdiction unreasonable. Keefe, 40
P.3d at 1272.

                                      9
                              3.   Analysis

                        a.   Minimum Contacts

¶ 17   Though RegScan doesn’t contest that its conduct giving rise to

  this litigation is “substantially connected” to Colorado — as

  required by the second prong of the specific jurisdiction minimum

  contacts analysis — it does argue that its actions connecting it to

  Colorado are too attenuated to demonstrate purposeful availment

  because it merely contracted with a Minnesota-based law firm

  which happened to staff the case (filed in Virginia) with Colorado

  attorneys.

¶ 18   We aren’t persuaded by RegScan’s arguments. In our view,

  the record amply supports the conclusion that RegScan had

  sufficient contacts with Colorado that it reasonably could’ve

  expected to be haled into court here.4 To wit:

  4 Contrary to RegScan’s suggestion, the law firm isn’t relying on its
  own connections to Colorado to establish jurisdiction. Cf. Giduck v.
  Niblett, 2014 COA 86, ¶¶ 22-24 (the plaintiffs’ reliance on their own
  Colorado residence was misguided where they failed to (1) allege
  that the defendants’ tortious online statements were specifically
  directed at Colorado; (2) show that the defendants formed any
  contact with Colorado; or (3) show that the defendants contacted or
  directed their statements to specific individuals, customers, or
  potential customers in Colorado).

                                   10
 RegScan deliberately reached out to and solicited an

  attorney-client relationship with a Colorado attorney, based on

  that attorney’s writing ability, expertise, and relationship to

  Mr. Ertel.

 RegScan entered into an attorney-client relationship leading to

  continuing obligations by both parties in the state of Colorado

  while knowing that Colorado attorneys would provide most, if

  not all, of the services for which it was contracting. (Colorado

  attorneys performed most (70%) of the work, and Mr. Tamkin

  did almost all of the work during the pre-litigation phase.)

 Mr. Tamkin executed the written fee agreement, showing his

  and the law firm’s contact information and address in

  Colorado, and sent it to Mr. Ertel. Mr. Ertel signed it and

  returned it to Mr. Tamkin in Colorado.

 RegScan sought legal counsel who would charge lower rates

  than those charged by Washington, D.C., attorneys. By hiring

  Mr. Tamkin and his firm, RegScan knew it would pay such

  lower rates.

                               11
        RegScan communicated extensively, almost daily, via email

         and telephone with Colorado attorneys in Colorado. Mr. Ertel

         initiated many of those communications.

        RegScan paid the retainer in Colorado. It made out the

         retainer check to “Dorsey & Whitney, LLP, Gregory S. Tamkin,

         1400 Wewatta Street, Suite 400, Denver, CO 80202-5549.”

¶ 19     “Considered in isolation, these contacts with Colorado might

  not be sufficient to establish specific jurisdiction.” Rome v. Reyes,

  2017 COA 84, ¶ 25. But considering them in their totality, as we

  must, see id., they are sufficient. Cf. Keefe, 40 P.3d at 1272

  (Colorado court had personal jurisdiction over a New York attorney

  where that attorney represented a Colorado resident in a New York

  suit and that resident sued for malpractice in Colorado because

  “[d]ue process . . . requires only fair warning to the defendants that

  they could be subject to the specific jurisdiction of the Colorado

  courts relating to those activities”); Waterval v. Dist. Court, 620 P.2d
5, 10 (Colo. 1980) (personal jurisdiction existed based on several

  factors, including a professional relationship that involved extensive

  communications between a nonresident and resident of Colorado by

  email and telephone).

                                     12
¶ 20   The facts of this case are remarkably similar to those in

  Fischbarg v. Doucet, 880 N.E.2d 22 (N.Y. 2007), whose reasoning we

  find persuasive. Residents of California (an individual and a

  corporation) retained a New York attorney to represent the

  corporation in an Oregon lawsuit. When the clients failed to pay

  the attorney, he sued them in New York. Id. at 24. New York’s

  highest court held that the courts of that state had personal

  jurisdiction over the defendants because the defendants had

  “projected themselves into New York via telephone to solicit

  plaintiff’s legal services.” Id. at 30. The defendants reached out to

  the attorney and sent a letter to New York confirming the

  arrangement. The attorney worked from New York, and the

  defendants communicated with him twice per week for nine months

  via email, mail, and telephone. Id. at 25. The court deemed these

  facts sufficient to establish purposeful availment of the benefits and

  protections of New York laws. Id. at 25-27.

¶ 21   In trying to distinguish Fischbarg, RegScan argues that it

  hired the law firm (not a specific Colorado attorney) because of the

  law firm’s expertise in intellectual property, and its proximity and

  connections to Washington, D.C. But the evidence shows that

                                    13
  RegScan’s CEO reached out to a particular Colorado attorney and

  knew that the work on the matter would be done chiefly by

  Colorado attorneys. And RegScan did so, at least in part, to receive

  the benefit of the lower rates the law firm’s Colorado attorneys

  would charge.

¶ 22   Apparently in the alternative, RegScan argues, citing several

  cases from other jurisdictions, that all it did was retain a Colorado

  lawyer, and that alone doesn’t subject it to personal jurisdiction in

  Colorado. But the cases on which RegScan primarily relies are

  distinguishable or unpersuasive.

¶ 23   In Amins v. Life Support Medical Equipment Co., 373 F. Supp.
654 (E.D.N.Y. 1974), a client hired a New York attorney to act as a

  patent attorney in Massachusetts. The attorney sued the client for

  fees in New York. Id. at 656. The court ruled that even though the

  attorney did most of the work in New York and that the client had

  gone to New York to see the attorney, it lacked jurisdiction because

  there was no “purposeful resort by the [clients] to the protection of

  the laws of New York in one form or another.” Id. at 657. But

  Amins applied New York law, id., and was decided decades before

                                     14
  Fischbarg. In light of the New York Court of Appeals’ decision in

  Fischbarg, Amins doesn’t appear to be good law.

¶ 24   In Hyatt v. Broyles, Dunstan & Dunstan, P.C., 400 S.E.2d 665

  (Ga. Ct. App. 1990), a South Carolina resident hired an attorney

  who lived in Georgia but who was licensed in both Georgia and

  South Carolina to handle a matter in South Carolina. The parties

  entered into the agreement in South Carolina. Id. at 667. Though

  most of the work was done in Georgia, the court held that the

  location of the attorney’s law office alone didn’t confer personal

  jurisdiction over the client in Georgia: “purposeful acts must have

  been performed by the defendant to tie it to the State, and mere

  telephone or mail contact with an out-of-state defendant, or even

  the defendant’s visits to this state [are] insufficient.” Id. In so

  holding, however, the court relied on Amins, id., a case of dubious

  continuing validity. And, as noted, the contract had been formed in

  another state.

¶ 25   Schmidt v. JPS Industries, Inc., No. 1:09-CV-3584-JEC, 2011
WL 1262165 (N.D. Ga. Mar. 31, 2011), is clearly distinguishable.

  The defendant hired counsel for a case in Massachusetts, and the

  lawyer, not the defendant, then hired the plaintiff, a Georgia

                                     15
  resident, as an expert. It was therefore the attorney’s acts, not the

  defendant-client’s, that had created some connection with Georgia.

  So the Georgia court didn’t have personal jurisdiction over the

  client.

¶ 26    In Zavian v. Foudy, 747 A.2d 764 (Md. Ct. Spec. App. 2000),

  an attorney brought an action against nonresident athletes to

  recover payment for serving as their agent for product

  endorsements. The court held that Maryland courts lacked

  personal jurisdiction over the defendants because the professional

  services the attorney rendered for the nonresidents “could have

  been conducted from any where.” Id. at 770-71. Though the

  athletes contacted the lawyer “to obtain her professional services, it

  was because [the lawyer’s] name appeared on a list of lawyers

  willing to perform such services for female athletes and not because

  she was a Maryland lawyer.” Id. at 771. The court also emphasized

  that the parties didn’t negotiate or execute the contract for services

  in Maryland. Id.

¶ 27    RegScan, in contrast, didn’t simply pick a lawyer from a list of

  lawyers with intellectual property experience; its CEO purposefully

  chose Mr. Tamkin based on an existing relationship, knowing that

                                    16
  work on the matter would be done in Colorado, and knowing the

  rates RegScan would be charged would be lower than those charged

  by Washington, D.C., attorneys. Mr. Ertel directed numerous

  communications to Colorado to negotiate (and enter into) the fee

  agreement and the modification. And RegScan initiated numerous

  contacts with the law firm in Colorado and sent the retainer to the

  law firm in Colorado. Perhaps the services could’ve been performed

  somewhere else, but that fact alone doesn’t defeat jurisdiction. Cf.

  Jason Pharm., Inc. v. Jianas Bros. Packaging Co., 617 A.2d 1125,

  1126-27, 1129 (Md. Ct. Spec. App. 1993) (Maryland court had

  personal jurisdiction over nonresident corporation where the

  corporation contacted a Maryland company about purchasing

  machines, negotiated with the Maryland company via numerous

  telephone calls, entered into a contract with the Maryland company,

  and sent payments to the Maryland company).

¶ 28   Thompson Hine, LLP v. Taieb, 734 F.3d 1187 (D.C. Cir. 2013),

  is similarly distinguishable. In that case, a Florida resident

  contracted with an Ohio law firm to represent him in a matter

  pending in Oregon. Attorneys with the law firm’s District of

  Columbia office did much of the work. When the client failed to pay

                                    17
  the bill, the law firm sued him in the District of Columbia. In

  affirming the dismissal of the complaint for lack of personal

  jurisdiction, the court relied on the facts that the client hadn’t

  sought to retain attorneys in the District of Columbia, the client

  had negotiated with one of the law firm’s attorneys in Georgia, the

  matter was supervised by the Georgia lawyer, the client didn’t

  develop any relationships with the District of Columbia attorneys,

  and there was no evidence of any communications between the

  client and the District of Columbia attorneys. Id. at 1188, 1191-92.

  Those facts are a far cry from the facts of this case.

¶ 29   In sum, we conclude that considering the totality of the

  circumstances, RegScan’s purposeful activities directed at Colorado

  satisfy the minimum contacts requirement.

                 b.    Fair Play and Substantial Justice

¶ 30   RegScan asserts that the burden of litigating in Colorado is so

  heavy as to make exercising personal jurisdiction over it in Colorado

  unreasonable. But this fee dispute case is not complex, discovery

  was very limited, and there were relatively few witnesses (only four

  testified at trial). The trial itself lasted less than three days. And

  though RegScan may not be a very large company, we note that it

                                     18
  has a few employees in several states, including as far west as

  Texas.

¶ 31     True, as RegScan points out, its only trial witness (Mr. Ertel)

  did have to fly to Colorado for one day of the trial, and weather

  apparently prevented one RegScan may-call witness from getting to

  Colorado to testify. But we aren’t persuaded that this burden was

  so severe as to violate RegScan’s right to due process. Such travel

  is frequently necessary when a court exercises jurisdiction over a

  nonresident defendant. In this day and age, the limited amount of

  travel required in this case isn’t likely to have been too onerous (or

  unusual) for this corporation.

¶ 32     RegScan doesn’t argue that Colorado lacks an interest in

  resolving this dispute or that the law firm lacks a strong interest in

  litigating the case here. Any such argument would be unavailing in

  light of the Colorado-centric nature of the agreement and the work

  performed, as well as the fact the law firm’s witnesses live in

  Colorado.5

  5   The three law firm witnesses who testified live in Colorado.

                                      19
¶ 33   The upshot is that we simply can’t say that requiring RegScan

  to defend this case in Colorado is unreasonable.

¶ 34   For these reasons, we hold that the district court didn’t err in

  denying RegScan’s motion to dismiss for lack of personal

  jurisdiction.

                      B.   The Expert’s Testimony

¶ 35   RegScan next contends that the court erred by allowing the

  law firm’s expert witness on the reasonableness of its fees, Neal

  Cohen, to testify to the substance of information in the pro forma

  bills (records reflecting the total number of hours worked), which

  the law firm didn’t offer into evidence. It argues that the testimony

  ran afoul of CRE 703. We see no reversible error.

                      1.    Additional Background

¶ 36   When the law firm’s counsel asked Mr. Cohen whether he had

  seen any differences between the draft bills and the invoices, he

  said, “In general, what I found was that the hours — I think the

  total number of hours in the pro formas were reduced by roughly

  fifteen percent in the invoices.” RegScan’s attorney objected under

  CRE 703 on the basis the draft bills wouldn’t be coming into

  evidence. The court overruled the objection. Mr. Cohen then

                                    20
  testified that, based on his review of the pro formas, the law firm’s

  attorneys worked more hours than they ultimately billed:

              The total number of hours — it’s called hours
              worked, these are the total number of hours
              that were reported in the pro formas — was
              2442.9, 2,443. The information I received
              from Dorsey about the total hours that were
              billed was 2,098.65. So, the difference
              between the number of hours worked, and the
              number of hours reportedly billed was about a
              thirteen percent reduction [or about $100,000]
              from worked to billed.

¶ 37   He also testified that Dorsey discounted costs by 49% (about

  $50,000).

                2.   Preservation and Standard of Review

¶ 38   The parties disagree about whether RegScan preserved this

  issue. But because defense counsel likely preserved it when he

  made a Rule “703 objection to all of this potential testimony that

  relates to analysis that Mr. Cohen comparing pro formas against the

  invoices that pro formas are not coming into evidence,” we’ll assume

  that RegScan did so.

¶ 39   We review evidentiary rulings, including a ruling on the

  admissibility of expert testimony, for an abuse of discretion.

  Genova v. Longs Peak Emergency Physicians, P.C., 72 P.3d 454, 458

                                    21
  (Colo. App. 2003). We review a preserved claim of error for

  harmless error, and therefore will reverse only if the error

  “substantially influenced the outcome of the case.” Id. at 459.

                              3.    Analysis

¶ 40   According to RegScan’s opening brief, Mr. Cohen’s testimony

  about the number of hours actually worked was inadmissible under

  CRE 703 because the pro formas “were never offered or introduced

  in evidence.” But that argument misconstrues the rule.

       Rule 703 provides as follows:

            The facts or data in the particular case upon
            which an expert bases an opinion or inference
            may be those perceived by or made known to
            the expert at or before the hearing. If of a type
            reasonably relied upon by experts in the
            particular field in forming opinions or
            inferences upon the subject, the facts or data
            need not be admissible in evidence in order for
            the opinion or inference to be admitted. Facts
            or data that are otherwise inadmissible shall
            not be disclosed to the jury by the proponent of
            the opinion or inference unless the court
            determines that their probative value in
            assisting the jury to evaluate the expert’s
            opinion substantially outweighs their prejudicial
            effect.

  (Emphasis added.)

                                    22
¶ 41   The rule was substantially amended in 2002 to conform to

  Fed. R. Evid. 703, which had been substantially amended in 2000.

  As relevant, the rule allows an expert to base his opinion on facts or

  data that wouldn’t be admissible if such facts and data are of a type

  on which experts in the field would reasonably rely. But the expert

  may not disclose those inadmissible facts and data to the jury

  unless the court so allows after engaging in the balancing analysis

  called for by the last sentence of the rule. As structured, the rule

  recognizes that experts frequently rely on inadmissible information

  in forming their opinions, and their opinions shouldn’t necessarily

  be excluded on that basis alone. On the other hand, a party

  shouldn’t be able to use an expert as a mere conduit for otherwise

  inadmissible information (frequently, hearsay). See Fed. R. Evid.

  703 advisory committee’s note to 2000 amendment; 1 George E. Dix

  et al., McCormick on Evidence § 15, at 126-27 (Kenneth S. Broun

  ed., 7th ed. 2013); 2 George E. Dix et al., McCormick on Evidence

  § 324.3, at 578-80 (Kenneth S. Broun ed., 7th ed. 2013); 3

  Christopher B. Mueller & Laird C. Kirkpatrick, Federal Evidence

  § 7:16, at 864-68 (4th ed. 2013); see also, e.g., Marvel Characters,

  Inc. v. Kirby, 726 F.3d 119, 136 (2d Cir. 2013) (affirming exclusion

                                    23
  of expert reports that were largely a conduit for inadmissible

  hearsay); Malletier v. Dooney & Bourke, Inc., 525 F. Supp. 2d 558,

  666 (S.D.N.Y. 2007) (excluding expert testimony that was hearsay

  “not admissible under any hearsay exception”).6

¶ 42   With this understanding of the rule in mind, it’s easy to see

  where RegScan’s argument goes astray: it equates “weren’t

  admitted” with “otherwise inadmissible.” “Otherwise inadmissible,”

  however, refers to information that can’t be admitted under the

  rules of evidence, not facts or data that simply haven’t been

  admitted. See, e.g., Fed. R. Evid. 703 advisory committee’s note to

  2000 amendment (“This amendment covers facts or data that

  cannot be admitted for any purpose other than to assist the jury to

  evaluate the expert’s opinion. The balancing test provided in this

  amendment is not applicable to facts or data that are admissible for

  any other purpose but have not yet been offered for such a purpose

  at the time the expert testifies. The amendment provides a

  presumption against disclosure to the jury of information used as

  6Fed. R. Evid. 703 is substantially similar to CRE 703. Therefore,
  authorities addressing the federal rule may be persuasive in
  applying the Colorado rule. Stewart ex rel. Stewart v. Rice, 47 P.3d
316, 321 (Colo. 2002); Leaf v. Beihoffer, 2014 COA 117, ¶ 29.

                                   24
  the basis of an expert’s opinion and not admissible for any

  substantive purpose.”) (emphasis added).

¶ 43   RegScan’s objection to the testimony, therefore, wasn’t a

  cognizable objection under CRE 703. Neither at trial nor in their

  opening brief on appeal did RegScan argue that the pro formas

  weren’t admissible.7

¶ 44   In any event, we don’t perceive any real prejudice to RegScan.

  Mr. Tamkin testified, without objection, as to the discounting of the

  bills, including the amount of time that the law firm had “written

  off.” His testimony as to the amount — “around $100,000” —

  closely matched Mr. Cohen’s. Thus, the substance of the expert

  testimony RegScan contests was already in evidence. Further,

  RegScan doesn’t argue that Mr. Cohen’s ultimate opinion as to the

  7 In its reply brief on appeal, RegScan argued for the first time that
  the information was otherwise inadmissible. That’s too late. See
  Estate of Stevenson v. Hollywood Bar & Cafe, Inc., 832 P.2d 718,
  721 n.5 (Colo. 1992) (“Arguments never presented to, considered or
  ruled upon by a trial court may not be raised for the first time on
  appeal.”); In Interest of L.B., 2017 COA 5, ¶ 48 (“We do not consider
  arguments raised for the first time in a reply brief.”). Had RegScan
  timely objected on this basis, the law firm may have been able to lay
  a foundation for admissibility of the documents, perhaps as records
  “kept in the regular course of business activity.” See CRE 803(6)
  (the business records exception to the hearsay rule).

                                   25
  reasonableness of the fees, which was based on a host of

  unchallenged considerations, was inadmissible or even in any way

  wrong. So as we see it, RegScan’s argument is much ado about

  very little.

         C.      The Elemental Breach of Contract Jury Instruction

¶ 45    RegScan next contends the district court erred by failing to

  include a fairness element in the elemental breach of contract jury

  instruction. We conclude that any error was harmless.

                           1.   Standard of Review

¶ 46    We review de novo whether a particular jury instruction

  correctly states the law. Day v. Johnson, 255 P.3d 1064, 1987

  (Colo. 2011). But we review a district court’s decision to give a

  particular jury instruction for an abuse of discretion. Id. Because

  RegScan preserved the issue, we will reverse only if any error

  affected RegScan’s substantial rights. C.R.C.P. 61. That’s the

  result only if the jury “probably would have decided [the] case

  differently if given a correct instruction.” Gasteazoro v. Catholic

  Health Initiatives Colo., 2014 COA 134, ¶ 12 (quoting Harris Grp.,

  Inc. v. Robinson, 209 P.3d 1188, 1195 (Colo. App. 2009)).

                                     26
                              2.   Analysis

¶ 47   The elements of a breach of contract claim — existence of a

  contract, breach of a material term of the contract, and (sometimes)

  performance of the contract by the plaintiff — are so

  well-established as to require no citation to authority.8 But

  RegScan tendered an elemental instruction adding two elements:

  “the contract was fair and reasonable under the circumstances” and

  “the services performed were reasonably worth the amounts billed.”

  It relied on cases such as Enyart v. Orr, 78 Colo. 6, 13, 238 P. 29,

  33 (1925), which address the requirements of a breach of contract

  claim in the attorney-client fee dispute context. See also Bryant v.

  Hand, 158 Colo. 56, 59, 404 P.2d 521, 523 (1965); Rupp v. Cool,

  147 Colo. 18, 22, 362 P.2d 396, 398 (1961). The district court gave

  the jury an elemental instruction that included the second of these

  additional elements, but not the first.

¶ 48   RegScan now argues that the court erred in failing to instruct

  the jury that the law firm had to prove that the contract was fair

  and reasonable under the circumstances. The law firm counters

  8 The elements are discussed in the notes on use to CJI-Civ. 30:1
  (2009).

                                    27
  that this element doesn’t apply when the parties merely modify their

  fee agreement, as RegScan and the law firm did when RegScan

  decided to retain the law firm to commence litigation, and that this

  element applies only to flat-fee or contingency-fee agreements. (The

  parties’ fee agreement called for payment on an hours worked

  basis.) Alternatively, the law firm argues that the fair and

  reasonable requirement was adequately covered by the included

  element that the fees were “reasonable in light of the services

  rendered.”

¶ 49   We needn’t wade into this morass. For even if we assume that

  the court erred in omitting the element that the fee agreement was

  “fair and reasonable under the circumstances,” it’s clear that any

  error was harmless.

¶ 50   The putative element in question pertains to the formation of

  the agreement. The nature of the attorney-client relationship

  dictates that the terms of a proposed fee agreement be fully

  disclosed to the client in advance and not contrary to public policy,

  and that the attorney use no undue influence to secure the client’s

  agreement. See Bryant, 158 Colo. at 61, 404 P.2d at 523; Rupp,
147 Colo. at 22, 362 P.2d at 398.

                                    28
¶ 51   RegScan doesn’t even argue that there is anything

  unreasonable about any term or combination of terms of the fee

  agreement. And though RegScan says that it was important that it

  be fully informed before it entered into the agreement, it doesn’t

  identify any relevant fact of which it wasn’t informed before it

  entered into the agreement.

¶ 52   We note that the fee agreement is a standard, clearly written,

  hourly billing based contract. The law firm provided it to RegScan

  in full before any agreement had been reached. Mr. Ertel, a lawyer,

  reviewed it and agreed to it without caveat. And, of course, nothing

  forced Mr. Ertel to hire the law firm, or Mr. Tamkin in particular.

  The client, RegScan, is a sophisticated business entity, not some

  “babe in the woods” unfamiliar with the legal system or the risks

  (and costs) of litigation.

¶ 53   Against all this, RegScan says only that it was vulnerable

  because it was facing “devastating” litigation and Mr. Tamkin was

  Mr. Ertel’s friend. But RegScan chose to sue BNA; it wasn’t being

  forced into court. And in any event, the fact a corporate client is

  faced with impending litigation hardly renders the client incapable

  of making informed, rational decisions about whether to retain legal

                                    29
  counsel, and on what terms. To hold otherwise would cast doubt

  on the validity of countless fee agreements.

¶ 54   As for Mr. Ertel’s friendship with Mr. Tamkin, RegScan utterly

  fails to explain how Mr. Tamkin unfairly took advantage of that

  relationship in any way. The closest it comes is by referencing the

  $25,000 retainer and pointing out that the two friends

  communicated about the retainer by email. Yet, RegScan doesn’t

  come out and say the amount of the retainer was unreasonable.

  And today there’s certainly nothing unusual or underhanded about

  an attorney communicating with a client by email.9

¶ 55   In short, RegScan’s half-hearted effort to portray itself as the

  helpless victim of a predatory law firm lacks any basis in fact. All

  relevant evidence in the record shows, overwhelmingly, that the fee

  agreement was fair and reasonable under the circumstances. It

  follows that any error in omitting that element from the elemental

  instruction didn’t affect RegScan’s substantial rights.

  9 RegScan also seems to complain that the amount of the fees billed
  exceeded Mr. Tamkin’s alleged estimates. But it doesn’t contest
  that the written fee agreement plainly says that “legal
  representations often involve variables that make it difficult or
  impossible to estimate fees accurately.”

                                    30
               D.   Exclusion of Evidence Under CRE 408

¶ 56   Finally, RegScan argues that the district court erred by relying

  on CRE 408 to exclude evidence — email communications between

  Mr. Ertel and Mr. Tamkin (or “information about” these emails) —

  that RegScan disputed the reasonableness of the law firm’s fees and

  didn’t admit liability. Addressing this argument only as it pertains

  to the breach of contract claim, we reject it.

                       1.   Additional Background

¶ 57   The law firm moved in limine under CRE 408 to exclude

  certain emails sent between Mr. Tamkin and Mr. Ertel. They

  included Mr. Tamkin’s repeated requests for payment, and Mr.

  Ertel’s repeated attempts to pay $200,000 and have the rest of the

  bill written-off. The back-and-forth of the emails shows that, after

  RegScan had refused to pay the outstanding balance, Mr. Tamkin

  emailed Mr. Ertel an offer to write-off an additional $40,000 if

  RegScan would make a $200,000 payment by the end of 2012.

  Resolution of the rest of the bill would wait until 2013. Mr. Ertel

  responded, “Your offer is not close.” He then offered $200,000 “as a

  complete settlement for all monies owed by RegScan to Dorsey and

  Whitney.” Mr. Tamkin replied that he couldn’t write off that much

                                     31
  of the bill, and said that RegScan could pay $200,000 by the end of

  2012 and the rest ($140,000) in 2013.

¶ 58   The trial court concluded that the emails “fall within the scope

  of Rule 408 because a claim or dispute existed at the time the

  communications occurred.”

                         2.   Standard of Review

¶ 59   As noted above, we review a district court’s evidentiary

  decisions for an abuse of discretion. Am. Guarantee & Liab. Ins. Co.

  v. King, 97 P.3d 161, 169 (Colo. App. 2003).10

                              3.    Analysis

¶ 60   RegScan asserts that the evidence was relevant to requisite

  elements of both claims because both require that “the amounts

  billed were reasonable in light of the services rendered.” But in the

  body of its argument, RegScan says that it needed the emails to

  prove that RegScan disputed the bill — an element of the

  account-stated claim, but not the breach of contract claim. (To

  10The parties dispute whether RegScan preserved this issue, but we
  needn’t decide if it did. It hasn’t escaped us, however, that, at trial,
  RegScan’s counsel said he wasn’t “interested in using those emails
  as exhibits. I’m happy to pass that up.” He said he only wanted to
  have Mr. Ertel “testify about the fact that he objected to the overall
  reasonableness of the fees at the conclusion of the litigation.”

                                    32
  prevail on its account-stated claim, the law firm had to prove there

  was “an agreement that the balance and all items of an account . . .

  are correct” and that RegScan promised to pay such balance. Mace

  v. Spaulding, 110 Colo. 58, 59, 130 P.2d 89, 89 (1942).)

¶ 61   While both claims include a reasonableness element, proof of

  the breach of contract claim doesn’t depend on RegScan’s subjective

  perception of whether the fees were reasonable. Rather, the

  reasonableness of the fees is an objective inquiry. See, e.g., Payan

  v. Nash Finch Co., 2012 COA 135M, ¶ 18 (using lodestar method —

  the number of hours reasonably expended multiplied by a

  reasonable hourly rate — to calculate objective fees “carries with it

  a strong presumption of reasonableness”); Krone v. State, Dep’t of

  Health & Soc. Servs., 222 P.3d 250, 257 (Alaska 2009) (“the proper

  approach to determining actual reasonable fees is to objectively

  value the attorney’s services”) (emphasis added). Thus, the

  evidence was arguably irrelevant to the breach of contract claim.

  Because we need only affirm the verdict on the breach of contract

  claim to affirm the judgment, we needn’t go any farther. See Rush

  Creek Sols., Inc. v. Ute Mountain Ute Tribe, 107 P.3d 402, 406 (Colo.

                                    33
Ohio App. 2004) (appellate court “may affirm the trial court’s ruling

  based on any grounds that are supported by the record”).11

¶ 62   But in any event, at least as to the breach of contract claim,

  the district court’s ruling that the emails were subject to CRE 408

  was correct.

¶ 63   CRE 408(a) prohibits the admission of evidence concerning

  offers to compromise “when offered to prove liability for, invalidity

  of, or amount of a claim that was disputed as to validity or

  amount.” In determining whether a statement is inadmissible

  under CRE 408, the “thresh[]old question is whether the conduct or

  statements were made in settlement negotiations.” Aaron v.

  Marcove, 685 P.2d 268, 270 (Colo. App. 1984).

  11 We observe that Mr. Ertel testified about his strong concerns that
  the law firm was billing too much during the BNA litigation. He
  complained to Mr. Tamkin about the “unbelievable cost overruns,”
  told Mr. Tamkin that he was relying on Mr. Tamkin’s earlier
  estimates, and told Mr. Tamkin that he wouldn’t have hired the law
  firm if he’d known the BNA case was going to cost so much. In
  other words, Mr. Ertel made plain to the jury that he had
  complained about the reasonableness of the fees during the BNA
  litigation. So RegScan was in fact able to introduce evidence that,
  at the time the fees were incurred, it didn’t think the fees were
  reasonable.

                                    34
¶ 64   During the time the emails were created, the parties disputed

  the amount owed and were exchanging offers to resolve that

  dispute. And RegScan’s ultimate reason for wanting to introduce

  the evidence was to defeat or minimize liability on the law firm’s

  claims. That’s classic CRE 408(a) stuff.

¶ 65   In short, the district court didn’t abuse its discretion in

  excluding this evidence (at least as to the breach of contract

  claim).12

                             III.   Conclusion

¶ 66   The judgment is affirmed.

       JUDGE HAWTHORNE and JUDGE RICHMAN concur.

  12 We don’t address whether some of this evidence would be
  admissible to defend against an account-stated claim; specifically,
  to show that the defendant didn’t agree to the amount claimed to be
  owed.

                                     35