Harris Group, Inc. v. Robinson
2009 Colo. App. LEXIS 325, 209 P.3d 1188, 2009 WL 540662 (2009)
Rule of Law:
An erroneous jury instruction on the business competition privilege for intentional interference with contract is harmless if the jury's verdict is independently supported by findings of other torts that constitute 'wrongful means.' Further, the equitable remedy of unjust enrichment is unavailable when adequate remedies at law, such as damages for contract breach and torts, fully compensate the plaintiff for the same injury or benefit received. Prejudgment interest under C.R.S. § 5-12-102 is only applicable to past losses and not to future damages.
Facts:
- Harris Group, Inc. operated as an engineering firm, including a department specializing in financial consulting for ethanol and power plant projects.
- Michael S. Robinson, Jon E. Neff, and Robert D. Courtney (the former employees) worked in Harris Group’s financial consulting department.
- In early 2006, the former employees began planning and making arrangements to open a new business, Luminate, L.L.C. (the new business).
- They took inventory of Harris Group's clients and projects to identify those they would take, leased office space, and obtained liability insurance.
- The former employees copied Harris Group's confidential files, emailed or saved them for future use at the new business, and then deleted the original files.
- They developed a website announcing that one of the former employees had left Harris Group to join Luminate, "tak[ing] along [the company's] entire ... Consulting Team."
- Near the end of April 2006, the former employees resigned from Harris Group, giving only one day's notice.
- Upon their resignation, they extended job offers to five of the seven remaining workers in Harris Group's financial consulting department, all of whom accepted, resigned from Harris Group, and joined Luminate.
- In early May 2006, the former employees contacted Harris Group's clients, offered to take over their projects, and provided a form letter to terminate their relationships with Harris Group, resulting in 17 of 29 active projects transferring to Luminate.
Procedural Posture:
- In May 2006, Harris Group, Inc. filed suit against Luminate, L.L.C., Michael S. Robinson, Jon E. Neff, Robert D. Courtney, and four other employees in a trial court.
- The suit alleged various claims including computer fraud and abuse, conversion, civil theft, misappropriation of trade secrets, breach of confidentiality agreements, breach of fiduciary duty, defamation, intentional interference with contract, intentional interference with prospective business relations, civil conspiracy, fraud, and unjust enrichment.
- Before trial, Harris Group voluntarily dismissed claims for computer fraud and abuse and defamation.
- During the trial, the court entered a directed verdict in favor of the defendants on the claims of civil theft and misappropriation of trade secrets.
- The remaining claims were submitted to the jury, and the trial court ordered that the verdict on the unjust enrichment claim would be advisory.
- The jury found Luminate liable for intentional interference with contract, conversion, and unjust enrichment.
- The jury found the former employees liable for breach of confidentiality agreements, breach of fiduciary duty, intentional interference with contract, conversion, and unjust enrichment.
- The jury found Harris Group did not prove the claims of fraud, intentional interference with prospective business relations, and conspiracy.
- The jury awarded Harris Group $1,929,500 in actual damages (including an advisory verdict of $205,000 for unjust enrichment) and $630,550 in punitive damages.
- The trial court entered a judgment for damages, including the advisory verdict for unjust enrichment.
- Defendants Luminate, L.L.C., Michael S. Robinson, Jon E. Neff, and Robert D. Courtney appealed the trial court's judgment to the Colorado Court of Appeals.
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Issue:
1. Does a jury instruction on the business competition privilege for intentional interference with contract constitute reversible error when it circularly lists the tort itself as "wrongful means" and includes unsupported examples, if other independently actionable torts found by the jury also qualify as "wrongful means"? 2. Is a plaintiff entitled to recover damages for unjust enrichment when adequate remedies at law, such as damages for breach of contract, breach of fiduciary duty, intentional interference with contract, and conversion, fully compensate for the same injury or benefit received? 3. Does Colorado law, specifically C.R.S. § 5-12-102, permit an award of prejudgment interest on lost future profits or damages incurred after the date of judgment?
Opinions:
Majority - Judge BERNARD
1. No, an erroneous jury instruction on the business competition privilege for intentional interference with contract does not constitute reversible error if the jury's verdict is independently supported by findings of other torts that qualify as "wrongful means." While the instruction was circular, listing "intentional interference with contract" as a "wrongful means" example for the defense to that very tort, the phrase "for example" indicated the list was illustrative, not exhaustive. The jury found the former employees and the new business liable for conversion and breach of fiduciary duty. These torts are "independently actionable conduct" and thus qualify as "wrongful means" under Colorado law, as recognized in Amoco Oil Co. v. Ervin and DP-Tek, Inc. v. AT & T Global Info. Solutions Co., and supported by McCrea & Co. Auctioneers, Inc. v. Dwyer Auto Body. Therefore, the error was harmless as the jury would have reached the same conclusion even with a corrected instruction. 2. No, Harris Group is not entitled to recover damages for unjust enrichment because adequate remedies at law, specifically damages for breach of confidentiality agreement, breach of fiduciary duty, intentional interference with contract, and conversion, fully compensated for the same injury and benefits received. Unjust enrichment is an equitable remedy, generally not available when a "plain, speedy, [and] adequate remedy at law" exists, as held in Szaloczi v. John R. Behrmann Revocable Trust. Although legal damages focus on harm to the plaintiff and restitution on gain to the defendant, the specific jury instructions for damages on the other claims (e.g., "anything of value or profit" the defendants received, "fair market value of the converted property," and lost profits) encompassed the value of the benefits Harris Group claimed were unjustly received. Consequently, the legal remedies provided complete relief, rendering the unjust enrichment award duplicative and improper. 3. Yes, the trial court erred in calculating prejudgment interest on both past and future damages. Under C.R.S. § 5-12-102, prejudgment interest is allowed only on past losses, meaning money "due and owing prior to the date of payment or prior to the date judgment is entered," as established in Shannon v. Colo. Sch. of Mines. This principle has been extended to preclude prejudgment interest on lost future profits, as they are not due and owing before judgment (citing Bennett v. Greeley Gas Co.). Therefore, the award of prejudgment interest must be reversed and the case remanded for recalculation, limiting the interest to damages incurred before the judgment date.
Analysis:
This case significantly clarifies the application of the business competition privilege, particularly the definition of "wrongful means," by explicitly including independently actionable torts like conversion and breach of fiduciary duty. This provides a clear standard for distinguishing legitimate competition from tortious interference. The ruling also strongly reinforces the principle that equitable remedies, such as unjust enrichment, are secondary to adequate legal remedies, preventing plaintiffs from recovering duplicative damages for the same harm. Furthermore, the court's detailed explanation regarding prejudgment interest provides crucial guidance on limiting such awards to past damages, which is vital for calculating complex damages in future business tort and contract disputes involving both accrued and prospective losses.
