Court Opinion

ID: 9786537
Source: CourtListenerOpinion
Date Created: 2023-08-30 23:57:40.116002+00
Date Added: 2024-06-11T07:36:46.218076
License: Public Domain

Judge WEBB
concurring in part and dissenting in part.
In my view, defendant, Community Responsibility Center, Inc. (CRC), presented sufficient evidence of breach of fiduciary duty from which a reasonable jury could conclude that CRC had a "good faith legal justification" for refusing to pay Hartman's final four days' wages and accrued but unused vaca tion. Hence, I respectfully dissent from the majority's conclusion in Section III that CRC's liability for the statutory penalty under the former § 8-4-104(8) need not have been submitted to the jury.
A directed verdict is proper only in the clearest of cases, after the court has considered the evidence and all reasonable inferences therefrom in favor of the nonmoving party. See, eg., Romero v. Denver & Rio Grande W. Ry., 183 Colo. 32, 514 P.2d 626 (1973); Evans v. Webster, 882 P.2d 951 (Colo.App.1991).
An employee who breaches his fiduciary duty is not entitled to compensation for the period of disloyalty. Jet Courier Serv., Inc. v. Mulei, 771 P.2d 486 (Colo.1989).
The majority upholds the directed verdict on Hartman's Wage Act claim by concluding that an employee's breach of fiduciary duty does not constitute "lawful charges and indebtedness" for a setoff under the former § 8-4-101(7.5). I perceive the issue differently.
Under the former $ 8-4-104(2), the statutory definition of "lawful charges and indebtedness" limited an employer's power to make a setoff against wages otherwise payable when the employment relationship ends. That section permitted an employer to "set off any lawful charges or indebtedness owing by the employee to the employer." I agree with the majority that damages from an employee's breach of fiduciary duty are not "lawful charges and indebtedness."
Here, however, in addition to asserting a setoff against the Wage Act claim based on damages caused by Hartman's alleged breach of fiduciary duty, CRC contends that, because of Hartman's disloyalty, the wages and vacation pay she seeks did not acerue. See Jet Courier, supra. Hence, under CRC's theory, wages were not payable because they had not been earned under the former § 8-4-104(1)(b).
Unlike the majority, I read the concurrence in Jet Courier, supra, as limited to setoffs, which "are disfavored because of the inherent economic inequity between the employer and employee." 771 P.2d at 505 (Mullarkey, J., concurring). Thus, for me, it does not preclude the distinction between setoff and nonacerual that I perceive as pivotal here.
The trial court concluded that CRC had presented sufficient evidence for the jury to consider the breach of fiduciary duty counterclaim. Hence, I believe that Hartman's Wage Act claim should likewise have been submitted to the jury, because wages do not accrue during the time when an employee is in breach of fiduciary duty. This error is | harmless since the jury, having found against CRC on its counterclaim for breach of fidu-clary duty, would necessarily have resolved the Wage Act claim in Hartman's favor.
However, I do not draw the same conclusion concerning failure to submit the penalty to the jury. Under the former $ 8-4-104(3), an employer avoided the penalty by showing a "good faith legal justification" for refusing to pay wages due upon termination of the employment relationship. A determination that wages were due does not preclude the existence of a good faith legal justification for having withheld payment based on the same evidence. See Rohr v. Ted Neiters Motor Co., 758 P.2d 186 (Colo.App.1988). Were wage liability and penalty liability coterminous, then the "good faith legal justification" provision would be without purpose. Porter v. Castle Rock Ford Lincoln Mercury, Inc., 895 P.2d 1146 (Colo.App.1995), dealt only with the employer's mere belief that withholding payment was justified, not with the sufficiency of the evidence needed to support that belief.
In contrast, here evidence concerning Hartman's alleged breach of fiduciary duty *210could still have sufficed to establish a good faith legal justification, even if that evidence did not support refusing to pay the wages at issue. Hence, I disagree that merely because the jury rejected CRC's breach of fiduciary duty counterclaim, the jury would nee-essarily have also rejected CRC's assertion of "good faith legal justification" and awarded Hartman the statutory penalty.
Accordingly, I would reverse and remand for a new trial on the question of CRC's liability for the statutory penalty.