Court Opinion

ID: 159712
Source: CourtListenerOpinion
Date Created: 2010-08-14 06:30:22+00
Date Added: 2024-06-11T09:35:10.475095
License: Public Domain

F I L E D
                                                                    United States Court of Appeals
                                                                            Tenth Circuit
                       UNITED STATES COURT OF APPEALS
                                                                           MAY 30 2000
                                   TENTH CIRCUIT
                                                                         PATRICK FISHER
                                                                                Clerk

 FLANNERY PROPERTIES, a
 California general partnership;
 MICHAEL FLANNERY,

            Plaintiffs-Counter-Claim-
            Defendants - Appellants
            - Cross-Appellees,

   v.                                                Nos. 98-1122 & 98-1134
                                                      (D.C. No. 95-Z-1870)
 RON BYRNE; BMS VAIL LIMITED                                (D.Colo.)
 PARTNERSHIP, a Colorado Limited
 Partnership; BMS VAIL GENERAL
 PARTNERSHIP, a Colorado general
 partnership; RON BYRNE &
 ASSOCIATES REAL ESTATE,

            Defendants-Counter-Claimants
            - Appellees - Cross-Appellants.

                              ORDER AND JUDGMENT           *

Before BRORBY, HOLLOWAY,                and BRISCOE , Circuit Judges .

        This order and judgment is not binding precedent, except under the
        *

doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
      In this diversity action, plaintiffs Flannery Properties and Michael Flannery

appeal the jury verdict rejecting their fraudulent misrepresentation claim.

Flannery also appeals the district court’s denial of prejudgment interest on the

jury’s damage award for negligent misrepresentation. Defendants Ron Byrne,

BMS Vail Limited Partnership, BMS Vail General Partnership, and Ron Byrne &

Associates cross-appeal the jury verdict against them on their counterclaim for

abuse of process. We exercise jurisdiction pursuant to 28 U.S.C. § 1291 and

affirm both the appeal and the cross-appeal.

                                            I.

      In 1991, Michael Flannery, a resident of California, became interested in

purchasing property in Colorado.   1
                                       In October 1991, Mark Cadmus, a real estate

broker, showed Flannery a house at 146 Forest Road owned by Ron Byrne.        2

Cadmus and Flannery later looked at the house with Byrne. According to

Flannery, Byrne told him the eastern property line “was just below the light

columns [] just where the driveway intersects the street.” Aplt. App. II at 428-

30. Byrne denied telling Flannery that the property ran from the light posts.

      1
         Flannery Properties is a partnership with Flannery and his three children.
The distinction between Flannery Properties and Flannery individually was not
relevant at trial and we will refer to both as “Flannery.”
      2
         The distinction between Ron Byrne individually and BMS Vail Limited
Partnership, BMS Vail General Partnership, and Ron Byrne & Associates was not
relevant at trial and we will refer to all as “Byrne.”

                                            2
Byrne owned the adjacent property, Lot 5, and told Flannery that he planned to

build a single-family home on the back part of the lot. Flannery claimed Byrne

told him an easement would keep the house on Lot 5 “far out of the view from

anything at this house.”   Id. at 432. Flannery believed that “everything between

the light columns to the house was included in this property, including the deck

and walkway that went from the patio out on to this property.”   Id. at 433. Byrne

testified that he never pointed out the property line to Flannery. Much of the area

that Flannery believed was part of the 146 Forest Road property was actually part

of Lot 5.

       In October 1991, Flannery offered to buy the house at 146 Forest Road for

$4 million. Byrne rejected the offer and made a counter-offer of $4.5 million,

which Flannery rejected. Flannery then purchased a house at 636 Forest Road for

$2 million. Shortly after Flannery moved into the 636 Forest Road house, Byrne

and Flannery agreed to an exchange of houses – Flannery would give Byrne the

636 Forest Road house and pay Byrne $2.1 million in exchange for the 146

Forest Road house. Flannery again looked at the 146 Forest Road house the next

day. According to Flannery, Byrne assured him that any development on Lot 5

would be on the back part of the lot. Flannery did not have a survey done on the

property. On November 18, 1991, Flannery and Byrne completed the exchange

of real estate.

                                           3
       According to Flannery, Byrne approached him at various times from early

1992 through 1993 to discuss Flannery’s purchase of Lot 5. In the fall of 1993,

Flannery made an offer of $2.35 million for Lot 5, which Byrne rejected.

Flannery testified that in October 1994, he discovered the property line between

146 Forest Road and Lot 5 was next to his house. Flannery told Byrne that if

they could not resolve the property line issue, he would initiate litigation against

Byrne. In November 1994, Flannery instituted a lawsuit against Byrne in

California. Flannery testified that after the lawsuit was filed, he became aware

that construction was beginning on Lot 5 and that Byrne planned to build a

duplex and an employee housing unit only 20 to 25 feet from Flannery’s house.

After Flannery filed another lawsuit, Byrne built the duplex farther back from the

property line.

       In June 1996, Flannery filed a third amended complaint against Byrne in

Colorado federal district court, raising claims,       inter alia , of fraud and negligent

misrepresentation.   3
                         Byrne raised counterclaims,     inter alia , of slander of title,

       3
          The district court dismissed Flannery’s three claims for specific
performance of covenants and his claim for promissory estoppel. At trial, the
district court dismissed Flannery’s claims for reformation of deed due to mutual
mistake of the parties, constructive trust, and breach of contract. Flannery
voluntarily dismissed his claim for trespass. None of these claims are at issue on
appeal.

                                              4
abuse of process, and trespass.   4
                                      Flannery also filed a lis pendens against Lot 5.

In January 1998, a jury found against Flannery on his claims of fraudulent

misrepresentation and fraudulent concealment, but in favor of Flannery on his

claim that Byrne made a negligent misrepresentation of material fact and awarded

Flannery damages of $60,000. The jury found against Byrne on his

counterclaims for slander of title and abuse of process, but for Byrne on his

counterclaim for trespass and awarded Byrne damages of $1.00.         5
                                                                          The district

court denied Flannery’s motion to amend the judgment to include prejudgment

interest.

                                             II.

District court’s evidentiary rulings – appeal and cross-appeal

       Flannery argues the district court erred in two evidentiary rulings: (1)

allowing Byrne’s counsel to cross-examine Byrne with leading questions, and (2)

excluding documents from the Colorado Real Estate Commission. In the cross-

appeal, Byrne argues the district court erred in excluding evidence that Flannery

previously used litigation improperly. We review evidentiary rulings for abuse of

discretion. Woodworker’s Supply, Inc. v. Principal Mut. Life Ins. Co.         , 170 F.3d

       4
        The district court dismissed Byrne’s counterclaim for business
disparagement. This claim is not at issue on appeal.
       5
         The parties do not appeal the verdicts on Byrne’s slander of title and
trespass counterclaims.

                                              5
985, 992 (10th Cir. 1999).

      Leading questions on cross-examination.       Flannery called Byrne as a

witness in his case-in-chief. Before beginning cross-examination, Byrne’s

attorney stated: “I intend to cross only on those points raised by the plaintiffs,

reserving the right to recall Mr. Byrne in the defendant’s case-in-chief.” Aplt.

App. III at 846. After cross-examination began, Flannery objected to Byrne’s

counsel asking leading questions because Byrne was not an adverse witness. The

district court ruled Byrne’s counsel could ask leading questions because it was

cross-examination.

      Federal Rule of Evidence 611(c) states:

      Leading questions should not be used on the direct examination of a
      witness except as may be necessary to develop the witness’
      testimony. Ordinarily leading questions should be permitted on
      cross-examination. When a party calls a hostile witness, an adverse
      party, or a witness identified with an adverse party, interrogation
      may be by leading questions.

The advisory committee notes to Rule 611(c) state that “[t]he purpose of the

qualification ‘ordinarily’ is to furnish a basis for denying the use of leading

questions when the cross-examination is cross-examination in form only and not

in fact, as for example the ‘cross-examination’ of a party by his own counsel after

being called by the opponent.” Cross-examination by leading questions is not a

matter of right when a party is being cross-examined by his own counsel.     Shultz

v. Rice , 809 F.2d 643, 654 (10th Cir. 1986).

                                           6
       Under the abuse of discretion standard, this court will not disturb the

district court’s ruling unless this court has a “definite and firm conviction that the

[district] court made a clear error of judgment or exceeded the bounds of

permissible choice in the circumstances.”        Hidalgo v. Fagen, Inc. , 206 F.3d 1013,

1020 (10th Cir. 2000) (internal quotations omitted).       See Shultz , 809 F.2d at 655

(finding district court did not abuse its discretion when it allowed leading

questions on cross-examination of a client that were “archetypical of those

allowed during direct examination to develop testimony and expedite entry into

evidence of time-consuming foundational information”). Some of Byrne’s

counsel’s leading questions went to the substance of the case, but our review of

the transcript does not establish that this affected Flannery’s substantial rights.

See Hidalgo , 206 F.3d at 1020 (noting that a party is entitled to a new trial only

if the error affected his substantial rights). Although the district court erred in

stating that cross-examination by leading questions was a matter of right, we are

convinced this did not rise to an abuse of discretion.     See Fed. R. Ev. 611(c),

advisory committee’s notes (noting that “[a]n almost total unwillingness to

reverse for infractions has been manifested by appellate courts”).

       Admission of documents from Colorado Real Estate Commission           . Flannery

sought to admit

       redacted factual findings by the . . . Commission that find . . . that
       probable cause and reasonable grounds exist[] that [] Byrne violated

                                             7
         the real estate licensing laws by misrepresenting the location of the
         eastern boundary from approximately 1989 to 1991, and that as a
         result of that, [they recommended] . . . Byrne’s real estate license be
         publicly censured for a six-month period, and that he admit to the
         public and the real estate community that he engaged in those
         misrepresentations.

Aplt. App. I at 243. The district court refused to admit the evidence as hearsay,

concluding that it was not a factual finding from an investigation of a public

agency admissible under Federal Rule of Evidence 803(8)(C).        6
                                                                       Flannery

unsuccessfully sought to admit the Commission evidence numerous times during

trial.

         The Commission found there was probable cause to refer Flannery’s

complaint against Byrne to a hearing for violation of the real estate licensing law.

The investigative report of the Commission consisted of a summary of various

statements from individuals. Flannery argues the Commission evidence was

admissible under Federal Rule of Evidence 803(8)(C). Rule 803(8)(C) is an

exception to the hearsay rule, which allows the admission of “[r]ecords, reports,

statements, or data compilation, in any form, of public offices or agencies, setting

forth . . . (C) in civil actions and proceedings . . ., factual findings resulting from

       The district court also concluded the Commission evidence was
         6

inadmissible under Federal Rule of Evidence 408 as evidence of conduct or
statements made in compromise negotiations. We conclude the district court
abused its discretion in excluding the evidence under Rule 408 because there is
no indication that the Commission matter involved offers of compromise or
settlement by Byrne or Flannery.

                                             8
an investigation made pursuant to authority granted by law, unless the sources of

information or other circumstances indicate lack of trustworthiness.”

       There are three requirements for a document to be admissible under Rule

803(8)(C): (1) the report was prepared “pursuant to authority granted by law”;

(2) the evidence constitutes “factual findings”; and (3) circumstances do not

indicate the report is untrustworthy.   Perrin v. Anderson , 784 F.2d 1040, 1046-47

(10th Cir. 1986). The term “factual findings” is construed broadly and includes

“conclusions and opinions found in evaluative reports of public agencies.”    Id. at

1047. Byrne argues the Commission has no authority to make factual findings

but can only impose sanctions on real estate licensees found to have violated the

licensing law. See Colo. Rev. Stat. § 12-61-114(1) (stating that “[e]xcept as

otherwise provided in this section, all proceedings before the commission with

respect to disciplinary actions . . . shall be conducted by an administrative law

judge”). The Colorado Supreme Court has stated that “the Commission is not the

fact-finder in the agency process, and the Commission is not required to make

findings regarding the relationship between the conduct, the public need and the

sanction.” Colorado Real Estate Comm’n v. Hanegan        , 947 P.2d 933, 936-37

(Colo. 1997). Further, the evidence Flannery sought to admit does not contain

factual findings. The district court did not abuse its discretion in not admitting

                                           9
the Commission evidence under Rule 803(8)(C).        7

      Flannery contends these evidentiary rulings amounted to cumulative error

requiring reversal. “‘A cumulative-error analysis merely aggregates all the errors

that individually have been found to be harmless, and therefore not reversible,

and it analyzes whether their cumulative effect on the outcome of the trial is such

that collectively they can no longer be determined to be harmless.’”      McCue v.

Kansas Dept. Human Resources       , 165 F.3d 784, 791 (10th Cir. 1999) (quoting

United States v. Rivera , 900 F.2d 1462, 1470 (10th Cir.1990) (en banc)). The

record does not indicate that the rulings amounted to cumulative error. Flannery

was able to introduce evidence that Byrne acted fraudulently in representing the

property lines to him and he was able to fully examine Byrne on the matters

elicited during Byrne’s cross-examination.

      Exclusion of evidence that Flannery previously used litigation coercively      .

Byrne contends the district court erred in excluding four items of evidence: (1)

Byrne’s testimony that Flannery’s attorney said Flannery would sue Byrne if he

did not sell Flannery Lot 5, (2) newspaper advertisements placed by Flannery

      7
        At oral argument, Flannery contended the Commission evidence was also
admissible under Federal Rule of Evidence 803(8)(A) as a record setting forth the
activities of a public office or agency. Flannery did not raise this issue with the
district court or in his appellate brief and we will not consider it for the first time
on appeal. See Tele-Communications, Inc. v. Commissioner       , 104 F.3d 1229,
1232 (10th Cir. 1997) (noting that “[g]enerally, an appellate court will not
consider an issue raised for the first time on appeal”).

                                           10
publicizing the lawsuit, (3) testimony of William Dorricott that Flannery

breached an agreement, then sued him, and (4) testimony of David Black that

Flannery breached an agreement, then sued him.

      The district court excluded Byrne’s testimony that Flannery’s trial attorney,

Dale Kinsella, told Byrne that if he did not give Flannery part of Lot 5 Flannery

would make his life miserable. The district court excluded the testimony under

Federal Rule of Evidence 403, finding that “the prejudicial effect and the

disruption to the trial in having Mr. Kinsella have to argue his own credibility

outweighs the possible probative effect.” Aplt. App. IV at 1590. Under the facts

of the case, the district court did not abuse its discretion. Byrne testified that

Flannery threatened him with litigation; the testimony concerning Kinsella

repeating that threat was not necessary and would have been more prejudicial

than probative under the circumstances.

      The district court granted Flannery’s motion in limine to exclude the

newspaper advertisements as irrelevant. The advertisements, which publicized

the lawsuit between Flannery and Byrne and sought fact witnesses, are not

relevant to whether Flannery engaged in abuse of process. Further, Byrne

presented other evidence of Flannery’s state of mind in filing the lawsuit.

      Byrne sought to admit the testimony of Dorricott and Black under Federal

Rule of Evidence 404(b), which allows evidence of prior acts to show, among

                                          11
other things, the actor’s motive, intent, or state of mind. Byrne argues this

testimony would support the inference that Flannery’s motive in filing the lawsuit

was to avoid the terms of his agreement with Byrne. However, Byrne testified to

this motive and Dorricott testified to limited facts surrounding Flannery’s lawsuit

against him. Although it may have been relevant, the district court did not abuse

its discretion in excluding evidence of prior litigation by Flannery.

District court’s denial of Flannery’s motion for judgment as a matter of law on
Byrne’s abuse of process counterclaim

       We review de novo the district court’s denial of a motion for judgment as a

matter of law. Baker v. Barnard Constr. Co. , 146 F.3d 1214, 1220 (10th Cir.

1998). Judgment as a matter of law “is warranted only if the evidence points but

one way and is susceptible to no reasonable inferences supporting the party

opposing the motion.”     Baty v. Willamette Indus., Inc.   , 172 F.3d 1232, 1241

(10th Cir. 1999) (internal quotation omitted). We do not “weigh the evidence,

pass on the credibility of the witnesses, or substitute our conclusions for [those]

of the jury,” but we “must enter judgment as a matter of law in favor of the

moving party if ‘there is no legally sufficient evidentiary basis . . . with respect to

a claim or defense . . . under the controlling law.’”   Id. (quotations omitted). We

view the evidence and any inferences to be drawn therefrom most favorably to

the non-moving party.     Id.

                                             12
      Flannery moved for judgment as a matter of law on Byrne’s counterclaim

after the close of evidence, pursuant to Federal Rule of Civil Procedure 50(a).

Byrne’s abuse of process counterclaim concerned Flannery’s filing of a lis

pendens against Lot 5. In addressing Flannery’s argument that there was no

evidence that he used the process in an improper way, the district court stated

that “[Byrne’s] position is that it was to force [] Byrne to sell the property to []

Flannery.” Aplt. App. IV at 1647, 1650. The district court denied Flannery’s

motion for judgment as a matter of law and the jury eventually found for

Flannery on the counterclaim.

      To establish a claim for abuse of process under Colorado law, Byrne must

prove: “(1) an ulterior purpose for the use of a judicial proceeding; (2) willful

action in the use of that process which is not proper in the regular course of the

proceedings, i.e., use of a legal proceeding in an improper manner; and (3)

resulting damage.”   Lauren Corp. v. Century Geophysical Corp.       , 953 P.2d 200,

202 (Colo. App. 1998). Flannery contends there was no evidence that he filed

the lis pendens in an improper manner.

      A litigant’s motive is relevant in determining whether there was an ulterior

purpose for the use of the process, but the plaintiff must still establish there was

an objectively improper use of the process.        James H. Moore & Assoc. Realty,

Inc. v. Arrowhead at Vail , 892 P.2d 367, 373 (Colo. App. 1994). “Classic

                                              13
examples of the requisite improper use include the use of process to accomplish a

coercive goal which is not the intended legal purpose of the process.”      Id. Byrne

contended the actual purpose of Flannery’s action was to force Byrne to sell Lot

5 to Flannery. Byrne testified that just before Flannery sued him, Flannery said

that “if I did not sell him this lot for his price or give him the property that he

would sue me, my life would be miserable, and I would not be able to sell it to

anyone.” Aplt. App. IV at 1581-82. This is evidence of an improper purpose.

      Although the filing of a lis pendens relates to a right of possession, use, or

enjoyment of real property, “[t]he intended purpose for filing a notice of lis

pendens is to provide notice to anyone who may acquire an interest in the

property during the pendency of the litigation so that he or she will be bound by

its outcome.” Moore , 892 P.2d at 373. Flannery could have had a proper

purpose in filing the lis pendens, but there was also evidence that he used the lis

pendens for the improper purposes of preventing other individuals from

purchasing Lot 5 and forcing Byrne to sell the property to him. The district court

did not err in denying the motion for judgment as a matter of law and allowing

the jury to decide the claim.

District court’s denial of prejudgment interest on the jury’s award for negligent
misrepresentation

      Flannery asserts the district court erred in denying him prejudgment

                                           14
interest on the damages awarded for his negligent misrepresentation claim. We

review the district court’s decision to deny prejudgment interest for abuse of

discretion. United Phosphorus, Ltd. v. Midland Fumigant, Inc.        , 205 F.3d 1219,

1236 (10th Cir. 2000). Because this issue involves prejudgment interest on a

state law claim, the propriety of interest is determined by Colorado law.      See id.

       After trial, Flannery filed a motion to amend the judgment to include

prejudgment interest of $96,443.80. The district court summarily denied the

motion. Colorado statutes provide that at the claimant’s election, “[i]nterest shall

be at the rate of eight percent per annum compounded annually for all moneys or

the value of all property after they are wrongfully withheld or after they become

due to the date of payment or to the date judgment is entered, whichever first

occurs.” Colo. Rev. Stat. § 5-12-102(1)(b). Flannery contends the “time of the

wrong” was no later than November 18, 1991, when he acquired the 146 Forest

Road property.

       The jury awarded Flannery $60,000, but did not specify the nature of the

damages. “Damages recoverable for negligent misrepresentation include (1) the

difference between the value of what the plaintiff received and its purchase price

or other value given for it (out-of-pocket expenses); and (2) other pecuniary loss

suffered as a consequence of the plaintiff’s reliance upon the misrepresentation

(consequential damages).”     Western Cities Broadcasting, Inc. v. Schueller    , 849

                                            15
P.2d 44, 49 (Colo. 1993). The trial testimony showed that the fair market value

of the property was equal to or greater than the price paid by Flannery. Based on

the testimony, there was no evidence of a negative difference between the value

Flannery received and the purchase price he paid.

      Because there was no evidence of out-of-pocket expenses for the negligent

misrepresentation, Flannery is left with consequential damages for the negligent

misrepresentation. Flannery testified he spent $60,000 for Byrne to move the

planned house on Lot 5; the jury awarded Flannery $60,000 in damages for his

negligent misrepresentation claim. Flannery did not testify when he incurred

those damages. Prejudgment interest for consequential damages may only be

awarded from the time the damages were incurred.    Pegasus Helicopters, Inc. v.

United Tech. Corp. , 35 F.3d 507, 513 (10th Cir. 1994) (applying Colorado law).

Flannery has presented no evidence of when the consequential damages were

incurred.

                                        III.

      We AFFIRM on all issues raised in both the appeal and the cross-appeal.

                                         16
     Entered for the Court

     Mary Beck Briscoe
     Circuit Judge

17