A Survey of Outrageous Conduct Under Colorado Law: Part Ii

• Publication year: 1999
• Pages: 5

28 Colo.Law. 5 Colorado Lawyer 1999.

1999, March, Pg. 5. A Survey of Outrageous Conduct Under Colorado Law: Part II

---

5

Vol. 28, No. 1, Pg. 5

The Colorado Lawyer
March 1999
Vol. 28, No. 3 [Page 5]

Articles

A Survey of Outrageous Conduct Under Colorado Law: Part II
by Matthew J. Rita, Elizabeth R. Rita
C 1999 Matthew J. Rita and Elizabeth R. Rita

In the recent case of Coors Brewing Company v. Floyd,1 the Colorado Supreme Court reaffirmed that "the level of outrageousness required for conduct to create liability for intentional infliction of emotional distress is extremely high."2 According to the court's unanimous opinion to state an outrageous conduct claim under Colorado law "a plaintiff must allege behavior by a defendant that is extremely egregious."3 In determining whether a plaintiff's allegations meet "this exacting standard,"4 a court5 must focus on the defendant's alleged behavior toward the plaintiff.6 As the decision in Floyd makes clear, the defendant's actions toward others (i.e., "society") are "irrelevant" to the assessment of a plaintiff's outrageous conduct claim.7

By surveying the published decisions of Colorado's state and federal courts, this two-part article attempts to limn "the high standard for outrageous conduct claims"8 in various categories of cases. Part I of the article9 examined outrageous conduct claims in cases involving accidents,10 the mishandling of dead bodies,11 deprivations of person liberty (i.e., detentions),12 medical treatment (or the withholding thereof),13 and sexual abuse.14 Part II examines such claims in cases involving commercial or business matters, alleged defamation, employment relationships, insurance, and disputes regarding property

As noted in Part I,15 this article endeavors to describe the facts and holding(s) of each relevant decision by quoting and citing the court's own language. It also groups the decisions within each category of cases according to whether or not their recited facts gave rise to triable issues of outrageous conduct—either in whole or in part. While this approach is intended to facilitate the use of this two-part article as a reference tool, the reader is reminded of the following points:

This article surveys published decisions of the Colorado Supreme Court,16 the Colorado Court of Appeals,17 the United States Court of Appeals for the Tenth Circuit,18 and the United States District Court for the District of Colorado.19 The unpublished decisions of those courts,20 and the published decisions of other courts (e.g., the United States Bankruptcy Court for the District of Colorado21), are beyond the scope of this article.

Also beyond the scope of this article are federal court decisions involving claims of outrageous conduct under the laws of states other than Colorado.22

Claims of intentional infliction of emotional distress have spawned judicial opinions regarding a variety of issues.23 However, the cases surveyed in this article are limited to those that addressed, either explicitly or implicitly, the question of whether the conduct at issue could reasonably be deemed outrageous.

To some extent, the categories into which the surveyed cases are divided overlap.24 Accordingly, a practitioner searching for cases involving certain fact patterns should refer to all categories in which relevant precedents might be found.

This article surveys only those decisions that were reported as of the date of its publication. Therefore, reliance on this article should be coupled with appropriate research of subsequent outrageous conduct cases.

COMMERCIAL CASES

The cases in this broadly defined category involved injuries to business and financial interests. The causes of such injuries included defective products, securities fraud, coercive sales and debt collection practices, seizures of secured and unsecured property, and unauthorized disclosures of financial information. While these decisions establish that "[a]n outrageous conduct claim may lie in a commercial setting,"25 they also suggest that something more than "bad business practice"26 is required to support such a claim.

Triable

Behunin v. Dow Chem. Co., 650 F.Supp. 1387 (D.Colo. 1986) (Kane, J.):

"Plaintiffs . . . seek damages arising from the manufacture and marketing of a product . . . designed to increase the bond strength between brick and mortar." Id. at 1389. "The product . . . allegedly corrodes metal materials used in construction." Id. Plaintiffs "experienced injury to [their] business[es] because of [the product's] defective qualities . . . and [defendant's] concealment of those defects. . . ." Id. at 1392. A "series of ongoing transactions and contacts . . . characterized the relationship between [defendant] and plaintiffs. . . ." Id.

Denying defendant's motion to dismiss. "I will not now deprive the jury of its right to consider whether there is any merit to the outrageous conduct claim." Id. "I cannot state definitively that reasonable minds would not differ as to the outrageousness presented by the pleaded facts." Id. (citations omitted).

Malandris v. Merrill Lynch, Pierce, Fenner & Smith Inc., 703 F.2d 1152 (10th Cir. 1981), aff'd on reh'g en banc (10th Cir.), cert. denied, 464 U.S. 824 (1983):

Plaintiff "commenced this action . . . as the result of [securities] transactions between [her] husband and [defendant's] account executive. . . ." Id. at 1157. Plaintiff "has never been to school." Id. at 1160. "She can neither read nor write [her native language] or English." Id. "There was evidence that [defendant] avoided consulting the plaintiff before making unauthorized transactions in her account, knowing that such transactions were directly contrary to her wishes; that [defendant] convinced her husband to misrepresent the facts to her and used [him] as a pawn, knowing that the plaintiff insisted on having the account in her name alone because of her husband's gullibility; that [defendant] continued to suggest high-risk investment decisions to [plaintiff's husband], knowing the plaintiff was very concerned with financial security; and that even when the account showed a $30,000 loss, [defendant] persisted in trying to conduct other transactions with what remained of plaintiff's savings." Id. at 1165.

Affirming judgment entered upon a jury verdict in favor of plaintiff. "We cannot accept defendant's contention that the conduct could not be found to be outrageous." Id. "[T]he evidence was sufficient to go to the jury . . . and to justify a compensatory damage award. . . ." Id. at 1167.

Mitchell v. Surety Acceptance Corp., 838 F.Supp. 497 (D.Colo. 1993) (Babcock, J.):

A third party "used plaintiff's name, social security number and savings/checking account information to withdraw monies from plaintiff's bank and conduct business transactions with certain creditors." Id. at 499. The third party "issued a check . . . [t]hat . . . was subsequently returned unpaid as a result of insufficient funds." Id. The payee "referred that item for collection to [defendant]. . . ." Id. "Plaintiff then contacted [defendant] . . . advising it that she was not [the third party] and that she was not liable for the check." Id. Plaintiff called defendant's representative and "told [him] that [she] was not [the third party], . . . that [the third party] had been using [her] social security number, that [she] had been diagnosed with MS, that the stress caused by these credit problems was aggravating [her] condition, that the incorrect information on [her credit] report had cost [her] the chance to buy a house and a job [for] which [she] had returned to school and that the continued misidentification was making [her] feel like [her] life was no longer worth living." Id. at 502. Defendant's representative "implied that [plaintiff] was lying by laughing and telling [her] that 'according to our source, you are responsible to pay this debt. So, you might as well pay it!'" Id. Plaintiff "asked to speak with a supervisor, he laughed and said, 'O.K., but she'll just tell you the same thing.'" Id. at 503. The supervisor "did also tell [plaintiff] the same thing." Id. Defendant "continued to report to [the credit bureau] that the debt was verified as reported." Id. at 499.

Denying defendant's motion for summary judgment. "I conclude that an issue of fact exists as to whether reasonable jurors could find [defendant's] conduct atrocious or utterly intolerable in a civilized community." Id. at 503.

Montgomery Ward & Co. v. Andrews, 736 P.2d 40 (Colo.App. 1987):

Defendant "contracted with [plaintiff] to operate a catalog sales agency in a building owned by [defendant]. . . ." Id. at 43. Defendant "also entered into a financing agreement with [plaintiff] providing for it to have a security interest in some of his equipment and merchandise." Id. "Problems and disputes developed . . . and . . . [defendant] decided to sell the agency." Id. Defendant "had refused to pay his remittances to [plaintiff], as a result of which [plaintiff] decided to close the store." Id. "While [defendant] was out of town, [plaintiff] cleared everything, including [defendant's] personal belongings, out of the store in which [defendant] had operated for three years." Id. at 46. Plaintiff "then changed all the locks and turned the key over to its attorney." Id. "When [defendant] returned . . . he found an empty, inaccessible store where his business had once been." Id. Defendant "obtained [a] judgment[] . . . against [plaintiff] on his counterclaim[] for . . . outrageous conduct. . . ." Id. at 43.

Affirming judgment entered in favor of defendant on his counterclaim. "Reasonable persons could differ on the question of whether...