Registry Systems International, Ltd. v. Hamm et al

Filing 424

ORDER. Defendant Vincent Hamm's 400 Motion for Correction of Final Judgment is denied. Plaintiff Registry Systems International, Ltd. and Third-Party Defendant Edward Sweeney's 401 Motion to Alter or Amend Judgment and Renewed Motion for Judgment as a Matter of Law is granted in part and denied in part. By Judge Philip A. Brimmer on 9/28/12.(mnfsl, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Philip A. Brimmer
Civil Action No. 08-cv-00495-PAB-MJW
REGISTRY SYSTEMS INTERNATIONAL, LTD.,
Plaintiff,
v.
VINCENT HAMM,
KAREN HAMM,
AIM HIGH!, INC., and
1 DOMAIN SOURCE, LTD.,
Defendants and Third Party Plaintiffs,
v.
EDWARD J. SWEENEY,
CHARLES A SWEENEY, and
CAPITAL NETWORKS, PTY., LTD., A/K/A PACNAMES, LTD.,
Third Party Defendants.

ORDER

This matter is before the Court on the Motion for Correction of Final Judgment
[Docket No. 400] filed by defendant Vincent Hamm (“Hamm”) and the Motion to Alter or
Amend Judgment [Docket No. 401] filed by plaintiff Registry Systems International, Ltd.
(“RSI”) and third-party defendant Edward Sweeney. The motions are fully briefed and
ripe for disposition.
I. BACKGROUND
A six-day jury trial took place in this case beginning on April 12, 2010. As is
relevant to the disposition of these motions, the jury found in favor of RSI on its

conversion claim against Hamm, awarding RSI $212,685 in damages, but also found
that RSI contributed to the conversion damages RSI incurred. The jury allocated 50%
of the fault regarding the conversion claim to Hamm, 25% to RSI, and 25% to Edward
Sweeney. The jury also found in favor of RSI on its breach of fiduciary duty claim
against Hamm, awarding RSI $52,453 in damages.
As for Hamm’s and defendant Aim High!’s claims, the jury found in their favor on
their breach of contract claim against RSI, awarding $44,315 in damages.
Both sides ask the Court to alter or amend the Final Judgment [Docket No. 393].
Hamm requests that, pursuant to the jury’s allocation of fault on RSI’s conversion claim,
the Court alter the final judgment to reflect an award of damages of $106,432.50
against him. Docket No. 400 at 3. RSI and Sweeney request that the Court (1) alter
the final judgment to correct the jury’s allocation of fault on their conversion claim
against Hamm, (2) vacate the damages award to Hamm and Aim High! on their breach
of contract counterclaim against RSI, and (3) award RSI attorney’s fees for RSI’s
breach of fiduciary duty claim against Hamm. Docket No. 401 at 2.
II. STANDARD OF REVIEW
A litigant subject to an adverse judgment, who seeks reconsideration by the
district court of that adverse judgment, may file either a motion to alter or amend the
judgment pursuant to Fed. R. Civ. P. 59(e) or a motion seeking relief from the judgment
pursuant to Fed. R. Civ. P. 60(b). Under Rule 59(e), a motion to alter or amend a
judgment must be filed no later than 28 days after the entry of the judgment. Fed. R.
Civ. P. 59(e). In this case, the final judgment [Docket No. 393] entered on February 1,
2011, and the parties filed their motions to alter or amend the judgment [Docket Nos.
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400, 401] on March 1, 2011. The motions were filed within twenty-eight days after
judgment entered and were therefore timely.
In order for a party to succeed on a Rule 59 motion, the party must show either
“(1) an intervening change in the controlling law, (2) new evidence previously
unavailable, [or] (3) the need to correct clear error or prevent manifest injustice.”
Servants of the Paraclete v. Does, 204 F.3d 1005, 1012 (10th Cir. 2000). However, a
Rule 59(e) motion is not an opportunity to rehash arguments previously addressed or to
advance new arguments that could have been raised previously. Id. Finally, the
decision to grant a Rule 59(e) motion is within the discretion of the district court. Brown
v. Presbyterian Healthcare Serv., 101 F.3d 1324, 1332 (10th Cir. 1996) (“[I]n
determining whether to grant or deny a Rule 59(e) motion to alter or amend judgment,
the district court is vested with considerable discretion.”).
III. ANALYSIS
A. Allocation of Fault
Hamm asks the Court to amend the final judgment to reduce the damages award
on RSI’s conversion claim by fifty percent, from $212,685.00 to $106,342.50, pursuant
to the jury’s allocation of fault. Docket No. 400 at 1-2. Hamm argues that, under
Colorado’s pro rata apportionment statute, Colo. Rev. Stat. § 13-21-111.5(1), the jury
allocated fault on the conversion claim 25% for RSI, 25% for Sweeney, and 50% for
Hamm. Id. at 2.
Hamm relies primarily on the Colorado Supreme Court’s decision in Slack v.
Farmers Ins. Exch., 5 P.3d 280 (Colo. 2000), to support the argument that Colorado’s

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pro rata apportionment statute applies to both intentional and negligent torts. Docket
No. 414 at 7. Hamm argues that the General Assembly’s purpose in adopting the pro
rata apportionment statute was to ensure that parties would not be liable for more than
their fair share of damages. Id. Therefore, he contends that it follows naturally that the
pro rata apportionment statute envisions the apportionment of fault between a plaintiff
and a defendant with respect to intentional torts just as it does with negligent torts. Id.
In response, RSI and Sweeney contend that the allocation of fault to RSI and
Sweeney is improper as a matter of Colorado law because comparative fault principles
do not apply to intentional torts such as conversion. Docket No. 408 at 3. Therefore,
RSI and Sweeney contend that Jury Instruction No. 461, was contrary to Colorado law
and request that the Court alter the judgment pursuant to Rule 59(e). Id. at 4.
Contrary to Hamm’s argument, the holding in Slack does not support
apportioning fault to a plaintiff when a plaintiff asserts an intentional tort against a
defendant. The court in Slack was faced with the issue of whether “a jury [could]
apportion fault among tortfeasors who were merely negligent and others who intended

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Instruction 46, which pertained to the apportionment of fault, states as follows:

“If you find that RSI proved by a preponderance of the evidence that it suffered
damages resulting from its claims of breach of fiduciary duty, conversion, or unjust
enrichment, you must next consider whether others also were at fault. If you find that
RSI, Vincent Hamm, Aim High, 1 Domain Source, Kim Keeling-Hamm, Edward
Sweeney, or Capital Networks PTY also were at fault with respect to RSI’s damages,
then you must determine to what extent the conduct of each contributed to RSI’s
damages, expressed as a percentage of 100 percent.
If RSI is allowed to recover, the total damages you award to RSI against the defendant
of each claim will be reduced by the Court by the percentage of RSI’s fault and by the
percentage of the fault attributed to the other parties listed.” Docket No. 374 at 51.
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to do wrong.” 5 P.3d at 284. The court found that there was no reason to “suggest that
the General Assembly intended to expose a negligent tortfeasor to greater liability when
his conduct was coupled with that of an intentional tortfeasor, than when his conduct
combined with that of another negligent torfeasor.” Id. at 286. Accordingly, the court
found that the pro rata apportionment statute applied “even when one of several
tortfeasors commits an intentional tort that contributes to [a plaintiff’s] indivisible injury.”
Id. However, this case does not present a situation where the jury was asked to
apportion comparative fault between negligent and intentional tortfeasors. The
Colorado Court of Appeals’ decision in Toothman v. Freeborn & Peters, 80 P.3d 804
(Colo. App. 2002), is more analogous. In Toothman, the plaintiffs brought a putative
class action suit pursuant to the Colorado Securities Act, Colo. Rev. Stat. § 11-51-101,
et seq., and alleged that defendants acted with “the intent to defraud investors.” Id. at
807. The district judge refused to certify a putative class action because he found that
the apportionment of fault between plaintiffs and defendants allowed individual issues
to predominate over common issues. Id. at 815. Because of the pro rata
apportionment statute, the district judge found that, even though plaintiffs were suing
defendants based on intentional conduct, the statute required the apportionment of fault
between each individual plaintiff and defendant. Id. In reversing the district judge, the
court of appeals found that the ruling in Slack did not “mandate apportionment among
plaintiffs when the underlying action alleges intentional, as opposed to negligent,
conduct by the defendants.” Id. at 816. The court of appeals noted that “nothing in the
[pro rata apportionment statute shows] that the General Assembly intended a plaintiff’s

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fault or degree of culpability to be considered when the defendants are alleged to have
committed intentional torts.” Id.
In this case, RSI asserted a claim for conversion against Hamm. See Docket
No. 1 at 16. Conversion is an intentional tort. See Harris Group, Inc. v. Robinson, 209
P.3d 1188, 1199 (Colo. App. 2009). Therefore, based on Toothman, the pro rata
apportionment statute would not allocate fault to RSI. Toothman, 80 P.3d at 816. As a
result, the Court agrees with RSI and Sweeney and finds that Jury Instruction No. 46,
Docket No. 374 at 51, and Question 17 of Special Verdict Form A2, Docket No. 373-1 at
4, were erroneously given to the jury.3 Given that the jury considered the erroneous
instruction and verdict form, the Court next determines the appropriate remedy for such
error.

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Question No. 17 of Special Verdict Form A, as completed by the jury, reads as
follows:
QUESTION NO. 17: With regard to RSI’s conversion claim, taking as 100 percent the
combined fault of all parties you find were at fault, what percentage of fault, if any, was
caused by Vincent Hamm, Aim High, 1 Domain Source, RSI, Edward Sweeney, and
Kim Keeling-Hamm. Enter the figure of zero “0” for any party you decide was not at
fault or whose fault you decide was not a cause of any of RSI’s damages.
ANSWER NO. 17:
Percentage charged to Vincent Hamm
Percentage charged to Aim High
Percentage charged to 1 Domain Source
Percentage charged to RSI
Percentage charged to Sweeney
Percentage charged to Kim Keeling-Hamm
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50%
Ø%
Ø%
25%
25%
Ø%

To the extent that Hamm argues that RSI and Sweeney waived the right to
object to the jury instruction, the Court finds this argument unconvincing. Even if they
did waive the right to object, an appellate court could nevertheless review the
instruction under the plain error standard. See Royal Maccabees Life Ins. Co. v.
Choren, 393 F.3d 1175, 1179 (10th Cir. 2005).
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B. Jury Instructions
Ordinarily, when a jury instruction is challenged as legally erroneous, a new trial
may be warranted if the Court is convinced that the “jury might have based its verdict on
the erroneously given instruction.” Townsend v. Lumbermens Mut. Cas. Co., 294 F.3d
1232, 1242 (10th Cir. 2002). However, RSI and Sweeney do not request a new trial;
rather, they state that “a new trial is not necessary in this case . . . [because] [t]he Court
has the information that is necessary to correct the error.” Docket No. 417 at 5. Hamm
does not request a new trial either. Docket No. 414 at 10. Given that neither side
requests a new trial, the question then becomes how to correct the error and whether
doing so would cause prejudice to one side or the other.
An instructional error requires reversal only if the error is determined to have
been prejudicial based on the record as a whole. See Bohrer v. DeHart, 961 P.2d 472,
476 (Colo. 1998) (under Colorado law, a jury verdict may not be set aside based upon
trial error unless the error is inconsistent with substantial justice). In addition, harmless
error analysis generally applies in civil cases involving jury instruction error. Bangert
Bros. Constr. Co., Inc. v. Kiewit W. Co., 310 F.3d 1278, 1290 (10th Cir. 2002) (applying
harmless error analysis to a jury instruction error related to Colorado’s pro rata
apportionment statute).
The Court finds that Jury Instruction No. 46 and Question No. 17 of Special
Verdict Form A did not prejudice Hamm. As required by Colorado’s pro rata
apportionment statute, the Court utilized special verdict forms. See generally Docket
No. 373-1. The instructions together with the verdict forms appropriately allowed the

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jury to differentiate the liability of each defendant and to separately determine the
amount of damages for which that defendant was responsible. Hamm’s liability for
conversion was addressed in Jury Instruction No. 11, Docket No. 374 at 16, Jury
Instruction No. 18, id. at 23, and Question No. 1 of Special Verdict Form A.4 Docket
No. 373-1 at 1. The jury found that Hamm was liable for $212,685.00 in damages on
the conversion claim.5 Docket No. 373-1 at 2. Therefore, the Court concludes that the
jury determined both liability and damages as to Hamm on the conversion claim without
the danger of confusing liability with comparative fault. See Loughridge v. Chiles Power
Supply Co., Inc., 431 F.3d 1268, 1274-75 (10th Cir. 2005) (under Rule 59(e) “[w]hen
reviewing claims that a jury verdict is inconsistent, [the reviewing court] must accept any
reasonable view of the case that makes the jury’s answers consistent”). Considering
the jury instructions and the verdict forms as a whole, the Court finds that the instruction
error was harmless and did not prejudice Hamm.
As Hamm points out, despite the jury’s apportionment of fault in response to
Question No. 17 on Special Verdict Form A, the final judgment awarded $212,685.00 to
RSI and against Hamm. The fact that it did so is why Hamm filed his motion to correct

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QUESTION NO. 1: Did RSI prove by a preponderance of the evidence its
conversion claim against Vincent Hamm?
ANSWER NO. 1: Yes.

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QUESTION NO. 3: What is the total amount of RSI’s actual damages
resulting from its claim of conversion against Vincent Hamm? Actual
damages are those damages described in Instruction No. 16. You should
answer “0” if you determine there were none.
ANSWER NO. 3: $212,685.00
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the final judgment. However, given that the final judgment correctly, as determined
herein, awarded the full amount of damages to RSI without being reduced by the jury’s
apportionment of fault, there is no need to correct the final judgment pursuant to RSI
and Sweeney’s request. This is especially true given that the final judgment does not
refer to the apportionment of fault. RSI’s and Sweeney’s motion to correct the final
judgment as to the conversion claim will be denied.
C. Rule 50(b) Motion
RSI asserts that it made an unsuccessful Rule 50(a) motion for judgment as a
matter of law concerning Hamm and Aim High!’s breach of contract counterclaim.
Docket No. 401 at 5. RSI states that it is now renewing its motion because the
evidence at trial was insufficient to support the jury’s verdict on the breach of contract
counterclaim. Id. at 6.
Before reaching the merits, the Court must resolve whether RSI is moving for a
renewed motion for a judgment as a matter of law under Rule 50(b) or whether RSI is
seeking to challenge the Court’s denial of a Rule 50(a) motion under Rule 59(e). This
distinction is important because, although the same standard applies for motions filed
under Rules 50(a) and 50(b), a party cannot assert a renewed motion under Rule 50(b)
if it presents grounds for relief not asserted in the original Rule 50(a) motion. See
Marshall v. Columbia Lea Reg’l Hosp., 474 F.3d 733, 738-39 (10th Cir. 2007) (a
“pre-verdict Rule 50(a) motion” is a “prerequisite to a post-verdict motion under Rule
50(b).”).

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After reviewing the trial transcript, the Court finds that the arguments currently
asserted by RSI were not presented in RSI’s Rule 50(a) motion at the close of
evidence. See Docket No. 360 at 228-238. In its Rule 50(a) motion, RSI moved for
judgment as a matter of law on defendants’ fourth counterclaim for intentional
interference with contractual relations and seventh counterclaim for third-party liability
involving Kim Keeling. Docket No. 360 at 229. RSI, however, did not move for a
judgment as a matter of law on defendants’ first counterclaim for breach of contract.
See id. Accordingly, RSI’s challenge to the jury award of $44,315 in damages for
Hamm and/or Aim High! for RSI’s breach of the contract will be reviewed under a Rule
59(e) standard.
To succeed under Rule 59(e), RSI must show either an intervening change of
law, new evidence previously unavailable, or a clear error of law. See Servants of the
Paraclete, 204 F.3d at 1012. The Court finds that RSI fails to meet this burden. RSI
does not argue that there has been an intervening change of law, nor does it present
the Court with new evidence. Additionally, RSI had sufficient opportunity to
cross-examine Hamm with regard to the invoices presented at trial, see Docket No. 360
at 166-219, argue the lack of evidence to the jury during closing argument, or attack the
sufficiency of evidence in a Rule 50(a) motion at the close of evidence. Yet, it did none
of the above. Thus, because RSI’s challenge is inherently factual, the Court finds no
clear error of law and denies RSI’s motion to reconsider the jury’s verdict on the breach
of contract counterclaim.

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D. Attorney’s Fees
RSI also requests that the Court amend the final judgment to include an award of
attorney’s fees to RSI on its breach of fiduciary duty claim against Hamm. See Docket
No. 401 at 6-7. RSI explains that it “does not claim attorneys’ fees as an element of its
damages subject to determination by a jury,” but rather as an exception to the American
Rule regarding attorney’s fees recognized under Colorado law in breach of trust cases.
Docket No. 417 at 6. RSI asserts that the “judgment failed to address RSI’s claim for
fees, and effectively denied it.” Id. at 6.
Rule 54(d)(2) of the Federal Rules of Civil Procedure states that a “claim for
attorney’s fees” must be made “by motion” and “be filed no later than 14 days after the
entry of judgment.” RSI is correct that the 14 day period does not begin to run until
after the Court rules on the Rule 59(e) motions. See Weyant v Okst, 198 F.3d 311 (2d
Cir. 1999). However, the Court does not construe RSI’s present motion as a Rule
54(d)(2) motion for attorney’s fees. RSI argues that the final judgment should have
“addressed” RSI’s claim for fees, which presumably would have made a separate Rule
54(d) motion unnecessary. Docket No. 401 at 6. RSI’s “claim” for attorney’s fees
consisted of a reference in the final pretrial order that it sought “injunctive relief,
declaratory relief, damages, attorneys’ fees, and costs.” Docket No. 138 at 5. This
request for relief was not tied to any particular claim. Given the generality of RSI’s
reference to attorney’s fees in the final pretrial order, it is hard to imagine how the final
judgment could have contemplated a reference to attorney’s fees on RSI’s breach of
fiduciary duty claim against Hamm. Moreover, as RSI acknowledges, its attorney’s fee

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claim was not a jury issue, but rather is a Rule 54(d)(2) claim. As such, it would not be
addressed in the final judgment, but instead would be resolved after judgment entered.
Thus, RSI is incorrect that the final judgment should be amended to award attorney’s
fees to RSI on its breach of fiduciary duty claim against Hamm. That aspect of RSI’s
and Sweeney’s motion will be denied.
IV. CONCLUSION
Accordingly, it is
ORDERED that Defendant Vincent Hamm’s Motion for Correction of Final
Judgment [Docket No. 400] is DENIED. It is further
ORDERED that Plaintiff Registry Systems International, Ltd. and Third-Party
Defendant Edward Sweeney’s Motion to Alter or Amend Judgment and Renewed
Motion for Judgment as a Matter of Law [Docket No. 401] is GRANTED in part and
DENIED in part as indicated in this Order.

DATED September 28, 2012.
BY THE COURT:

s/Philip A. Brimmer
PHILIP A. BRIMMER
United States District Judge

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