Governor's Ranch Professional Center, Ltd. v. Mercy of Colorado, Inc.

793 P.2d 648, 14 Brief Times Rptr. 555, 1990 Colo. App. LEXIS 125, 1990 WL 57634
CourtColorado Court of Appeals
DecidedMay 3, 1990
Docket88CA0793, 88CA1586
StatusPublished
Cited by25 cases

This text of 793 P.2d 648 (Governor's Ranch Professional Center, Ltd. v. Mercy of Colorado, Inc.) is published on Counsel Stack Legal Research, covering Colorado Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Governor's Ranch Professional Center, Ltd. v. Mercy of Colorado, Inc., 793 P.2d 648, 14 Brief Times Rptr. 555, 1990 Colo. App. LEXIS 125, 1990 WL 57634 (Colo. Ct. App. 1990).

Opinions

Opinion by

Judge DAVIDSON.

Governor’s Ranch Professional Center, Ltd., and its two partners, Donald W. Werking and Gregory R. Kowalchuk, appeal the trial court's summary judgment granting Merco, Inc., and several of its subsidiaries, restitution and rescission of a contract it had entered into with Governor’s Ranch. We reverse and remand.

Werking and Kowalchuk formed Governor’s Ranch for the purpose of building and operating a medical-dental facility. Their exclusive leasing broker was Bradley Zieg, and, in 1985, Zieg secured Rose Medical as the anchor tenant for the building. When Rose Medical, in January 1986, expressed a desire to be relieved of its lease, other potential anchor tenants were approached, including Merco.

In preparing the Governor’s Ranch facilities for leasing, Zieg had hired David Schore as a consultant. In October 1985, a subsidiary of Merco, Mercy Health Initiatives, also hired Schore. Schore presented Merco with the intent to lease documents in February 1986, and, on April 18, 1986, Mer-co and Governor’s Ranch entered into the lease. Rose Medical subsequently was released from its lease commitment.

In September 1986, Merco informed Governor’s Ranch that it had placed further development of the project “on hold,” and, on October 24, 1986, it stated that it was reconsidering its obligations under the lease because of the “dual agency” of David Schore. In November, Merco notified Governor’s Ranch in writing of its intent to rescind the lease.

On December 2, 1986, Governor’s Ranch and Merco filed complaints against each other in different district courts. Governor’s Ranch sought preliminary and permanent injunctions requiring Merco to perform under the lease, and compensatory and exemplary damages. Merco sought restitution and rescission of the contract. The cases were consolidated, and Governor’s Ranch moved for a preliminary injunction.

Concluding that none of the prerequisites for a preliminary injunction had been met, the trial court denied the motion. First, after resolving all disputed issues of fact related to witness credibility in favor of Merco, it found substantial evidence in support of Merco’s dual-agency defense and, accordingly, concluded that Governor’s Ranch was unlikely to succeed on the merits. Second, it ruled that Governor’s Ranch had an adequate remedy at law in monetary damages. Third, it found that grant[650]*650ing a preliminary injunction would disturb rather than preserve the status quo, and that Governor’s Ranch, if it were to lose on the merits, would be unable to respond in damages for the costs Merco would incur in complying with a preliminary injunction. Finally, because the contract was a private matter, the court concluded that the injunction was not needed to serve the public interest.

Approximately one year later, after discovery had been completed, both parties moved for summary judgment. The trial court granted Merco’s motion on one of the same grounds, and based on the same findings, on which it had previously denied Governor’s Ranch’s request for a preliminary injunction: that David Schore was an undisclosed dual agent in negotiating the lease agreement between the parties and that such dual agency entitled either party to void the agreement. It did not consider Governor’s Ranch’s contention that Merco waived any objection to Schore’s alleged dual agency by ratifying the contract after it had knowledge of the dual agency.

The court granted Merco rescission of the contract and ordered that Governor’s Ranch reimburse Merco for its security deposit and rental payments, plus interest and costs. Finally, after a subsequent hearing on the issue, the court ruled that Werking and Kowalchuk, who had not been named in the action between Governor’s Ranch and Merco, were bound by the judgment against Governor’s Ranch, as partners thereof, under C.R.C.P. 106(a)(5).

Governor’s Ranch, Werking, and Kowal-chuk then filed this appeal.

I.

Plaintiffs first contend that the trial court erred in ruling as a matter of law that David Schore was a dual agent of Governor’s Ranch and Merco. They argue that the court erred in two ways in making this determination: first, in relying on its factual findings in the preliminary injunction hearing concerning dual agency, and second, by failing to acknowledge that disputed issues of material fact existed. We agree.

A.

The trial court’s reliance on its factual findings from the preliminary injunction hearing is, in effect, a misapplication of the “law of the ease.”

The doctrine of the law of the case is a discretionary rule of practice directing that prior relevant rulings made in the same case generally are to be followed. People ex rel. Gallagher v. District Court, 666 P.2d 550 (Colo.1983). It applies to decisions of law, rather than to the resolution of factual questions, Moore’s Federal Practice § 0.404[1] (1988), and discourages reconsideration only of the ruling itself, not of a court’s preliminary opinion on questions of fact or law related to the ruling. Credit Francais v. Sociedad Financiera, 490 N.Y.S.2d 670, 128 Misc.2d 564 (Sup.Ct.1985); see Moore v. 1600 Downing Street, Ltd., 668 P.2d 16 (Colo.App.1983). “Rulings that simply deny extraordinary relief for want of a clear and strong showing on the merits, or that are avowedly preliminary or tentative, do not trigger law of the case consequences.” 18 C. Wright, A. Miller & E. Cooper, Federal Practice & Procedure § 4478 (1981); accord Wilcox v. United States, 888 F.2d 1111 (6th Cir.1989); Berrigan v. Sigler, 499 F.2d 514 (D.C.Cir. 1974).

Consistent with these principles, the jurisdictions that have considered the issue have uniformly concluded that factual findings made in a preliminary injunction hearing may not sua sponte be used to dispose of an action on the merits by means of summary judgment. Wilcox v. United States, supra; United States v. Cen-Card Agency, 724 F.Supp. 313 (D.N.J.1989); Consumers Union v. New Regina Corp., 664 F.Supp. 753 (S.D.N.Y.1987); see also Papa Ginos’s of America, Inc. v. Plaza at Latham Associates, 524 N.Y.S.2d 536, 135 A.D.2d 74 (App.Div.1988); Ladner v. Plaza del Prado Condominium Ass’n, 423 So.2d 927 (Fla.App.1982); Amfac Financial Corp. v. Pok Sung Shin, 2 Haw.App. 428, 633 P.2d 1125 (1981); Thompson v. [651]*651Barnes, 294 Minn. 528, 200 N.W.2d 921 (1972).

These courts have reasoned that the burdens of proof and focus of the two motions are substantially different. Unlike that of a summary judgment order, the purpose of a preliminary injunction is “to prevent a tort or wrong and to preserve the status quo until final hearing and a determination as to the controverted rights of the parties.” Litinsky v. Querard, 683 P.2d 816 (Colo.App.1984), quoting Monatt v. Pioneer Astro Industries, Inc., 42 Colo.App. 265, 592 P.2d 1352 (1979).

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793 P.2d 648, 14 Brief Times Rptr. 555, 1990 Colo. App. LEXIS 125, 1990 WL 57634, Counsel Stack Legal Research, https://law.counselstack.com/opinion/governors-ranch-professional-center-ltd-v-mercy-of-colorado-inc-coloctapp-1990.