Colorado Supreme Court clarifies the scope of the Colorado Premises Liability Act

In Larrieu v. Best Buy Stores, L.P., Case No. 2013 CO 38 (June 24, 2013), the Colorado Supreme Court rejected the argument that the premises liability statute applies only to those activities and circumstances that are “directly or inherently related to the land.” In response to a certified question from the U.S. 10th Circuit Court of Appeals, the Court held that the premises liability statute applies to conditions, activities, and circumstances on the property that the landowner is liable for in its legal capacity as a landowner.  The Court set out a two-part fact specific case-by-case inquiry for determining whether the premises liability act applies to a given circumstance: (a) whether the plaintiff’s alleged injury occurred while on the landowner's real property, and (b) whether the alleged injury occurred by reason of the property’s condition or as a result of activities conducted or circumstances existing on the property.

In this case, the plaintiff brought a truck with an attached trailer to a Best Buy store to pick up a freezer he had purchased the previous day.  The plaintiff and a Best Buy employee removed the trailer’s tailgate and began carrying it away from the trailer. As the plaintiff walked backwards, he tripped over a curb and fell when the employee carrying the tailgate kept carrying it forward towards the curb. The tailgate landed on top of the plaintiff causing a compression fracture of his lumbar spine.

The trial court granted summary judgment in favor of the defendant finding that even if the employee had an obligation to properly guide the plaintiff as he walked backwards with the heavy gate, his failure to do so was not an activity inherently related to the land so as to give rise to recovery under the premises liability statute.  The Supreme Court rejected this analysis finding that the premises liability statute is not restricted solely to activities and circumstances directly or inherently related to the land since that restriction does not appear in the statutory language. Instead, the statute uses the phrase "activities conducted or circumstances existing on such property."

The Court also rejected the contention that the premises liability statute covers essentially any tort that occurs on the property of another, finding that this broad interpretation would render much of the statute superfluous.  The statute contains language limiting its scope to injuries caused by “the condition of [the landowner’s] property, or activities conducted or circumstances existing on such property.” 

The Court held that the circumstances of this case fell squarely within the purview of the premises liability statute because the plaintiff alleged that the defendant, in its capacity as a landowner, was responsible for the activities conducted and conditions on its premises, including the process of assisting a customer with loading a freezer he had purchased from the retailer on to his truck.  Thus, the plaintiff alleged that he was injured by reason of the condition of defendant’s property or activities conducted or circumstances existing on such property.

The Court noted that its interpretation of the Premises Liability Act harmonizes the Legislature’s stated purposes of “promot[ing] . . . responsibility by both landowners and those upon the land” and “creat[ing] a legal climate which will promote private property rights and commercial enterprise and will foster the availability and affordability of insurance.”  At the same time, the interpretation of the statute does not interfere with the Legislature’s intent to “protect landowners from liability in some circumstances when they were not protected at common law.”  The Court gave examples of this protection including the statute’s requirement that landowners have actual knowledge of dangers on the land to be liable to licensees for injuries caused by the dangers. 

You can read the Court’s opinion here: http://www.courts.state.co.us/userfiles/file/Court_Probation/Supreme_Court/Opinions/2012/12SA213.pdf

Lee Katherine Goldstein is an appellate lawyer with the Denver law firm of Fairfield and Woods, PC. 

Colorado Court of Appeals rejects the use of “Lone Pine” orders requiring plaintiffs to provide evidence to support their case prior to conducting discovery

In Strudley v. Antero Resources, Corp., et al., Colorado Court of Appeals Case No. 12CA1251 (July 3, 2013), the Colorado Court of Appeals held that Colorado law prohibits the use of so called “Lone Pine” orders which require plaintiffs to present prima facie evidence supporting their claims prior to conducting discovery. 

The Strudleys sued four defendants for allegedly causing personal injuries to the Strudley family and property damage to their wells through the Defendants’ natural gas drilling operations near the Strudleys' home.   At the Defendants' request, the trial court ordered the Plaintiffs to provide expert reports and medical records demonstrating injuries and causation before they could conduct discovery.  When the Plaintiffs’ proofs fell short, the trial court dismissed their case with prejudice.   

On review, the Court of Appeals held that existing Colorado law prohibits the use of Lone Pine orders before allowing discovery on issues central to a plaintiff’s claim.  Strudley, ¶26. 

Lone Pine orders get their name from an unpublished decision by the New Jersey Superior Court in 1986 in which the court entered a case management order requiring the plaintiffs to provide facts to support their claims through expert reports, or risk having their case dismissed.  Lore v. Lone Pine Corp., 1986 WL 637507 (N.J. Super. Ct., 1986).  Since then, courts in other jurisdictions have used similar orders in exceptionally complex cases.  See discussion in Strudley, ¶¶14, 19-24.  The Colorado Court of Appeals held that such orders are contrary to Colorado law which favors broad discovery, and Colorado’s established system of pretrial rules and procedures designed to strike a balance between protecting defendants against frivolous claims, while allowing plaintiffs access to information which is central to their claims.  Strudley, ¶¶15-18, 38-39.

What do you think about Lone Pine orders?  Are they necessary to protect businesses against the expense of meritless litigation or an unwarranted denial of citizens’ access to courts? 

You can read the Court’s opinion here: http://www.courts.state.co.us/Courts/Court_of_Appeals/Opinion/2013/12CA1251-PD.pdf

Lee Katherine Goldstein is an appellate lawyer with the Denver law firm of Fairfield and Woods, PC. 

Under Colorado law, an LLC’s members and managers are not liable to the LLC’s creditors for an unlawful distribution

In Weinstein v. Colborne Foodbotics, LLC, Case No. 10SC143 (decided June 10, 2013) the Colorado Supreme Court held that members of a limited liability corporation (LLC) are not liable to the LLC’s creditors, and managers of an LLC do not owe fiduciary duties to the LLC’s creditors. 

After the managers of an LLC issued distributions to their members, a creditor of the LLC sued the managers and members seeking to recover on a judgment owed by the LLC.  Overruling the Court of Appeals’ prior decision in Sheffield Servs. Co. v. Trowbridge, 211 P.3d 714 (Colo. App. 2009), the Supreme Court held that the creditor lacked standing to sue because the Colorado LLC Act does not provide statutory authority for creditors to sue an LLC’s members for unlawful distribution, and the managers did not owe fiduciary duties to the LLC’s creditors. 

The Court’s opinion focuses on the nature of an LLC and the differences between the statutes which govern an LLC, and those which govern corporations, noting in particular that:

• Under the LLC structure, neither members nor managers are personally liable for the entity’s debts.

•  Colorado’s LLC Act allows an LLC’s operating agreement to override the LLC Act’s provisions in all but a few instances, while the Colorado Corporation Act does not allow a corporation’s articles of incorporation to control over its provisions.

•  The Colorado Legislature intended that the LLC Act, and not corporate common law, would govern LLCs in all but one limited circumstance (i.e., the circumstances in which the “entity veil” will be pierced to provide personal liability of the members when the entity is a sham).

The Court held that under the LLC Act, only the LLC may assert a claim against its members for an unlawful distribution absent express statutory authority.  With respect to the LLC’s managers, the Court held that the limited fiduciary duty owed by a director of an insolvent corporation to the corporation’s creditors that requires officers and directors to avoid favoring their own interests over creditors’ claims do not apply to an LLC’s managers.

You can read the Court’s opinion here.

Lee Katherine Goldstein is an appellate lawyer with the Denver law firm of Fairfield and Woods, PC. 

Disclaimer: the author makes no representation about the application of law referenced in this post to your particular case.  No attorney client relationship is created or intended by this post or by any comment posted by this author.

 

Welcome!

Welcome to my blog First Impressions of Colorado Law.


First Impressions of Colorado Law highlights new law and new legal concepts, often as developed through case law.  Each week, the blog introduces a new case, statute or legal concept to readers, focusing on those that change existing law or fill holes in the legal landscape.

Author Lee Katherine Goldstein is an appellate lawyer who enjoys tracking the development of law through cases and legislation, as well as helping to apply and shape the law through her appellate practice.

Disclaimer: the author makes no representation about the application of law referenced in this post to your particular case.  No attorney client relationship is created or intended by this post or by any comment posted by this author.