Kwik Way Stores, Inc. v. Caldwell

745 P.2d 672, 1987 Colo. LEXIS 655
CourtSupreme Court of Colorado
DecidedNovember 16, 1987
DocketNo. 85SC281
StatusPublished
Cited by227 cases

This text of 745 P.2d 672 (Kwik Way Stores, Inc. v. Caldwell) is published on Counsel Stack Legal Research, covering Supreme Court of Colorado primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kwik Way Stores, Inc. v. Caldwell, 745 P.2d 672, 1987 Colo. LEXIS 655 (Colo. 1987).

Opinion

QUINN, Chief Justice.

We granted certiorari to review the decision of the court of appeals in Kwik Way Stores, Inc. v. Caldwell, 709 P.2d 36 (Colo.App.1985), which reversed a default judgment in favor of the petitioner-plaintiff, Kwik Way Stores, Inc. (Kwik Way), as a result of the failure of the respondents-defendants, Donna Caldwell and James Waits, to appear for their depositions after having been duly served with a deposition-subpoena, and remanded the case to the trial court for further proceedings. We reverse in part, affirm in part, and remand the case for further proceedings.

I.

In December 1982, Kwik Way, the owner and operator of several convenience stores, filed separate suits against Donna Caldwell and James Waits in the District Court of El Paso County. Kwik Way sought actual and punitive damages for libel and slander, outrageous conduct, and interference with business and contractual relations, and also requested an order permanently enjoining Caldwell and Waits from similar conduct in the future. Kwik Way’s claims were based on the alleged conduct of Caldwell and Waits during former litigation in the United States District Court. In the federal litigation, Caldwell, who is a former employee of Kwik Way, sued Kwik Way for allegedly violating the Fair Labor Standards Act. The United States Department of Labor subsequently entered that litigation on behalf of all former and present Kwik Way employees. The federal litigation proceeded as a class action and was ultimately settled by a consent judgment for unpaid overtime in favor of approximately sixty current and former Kwik Way employees.1

Kwik Way’s complaint against Caldwell and Waits in the El Paso County District Court alleged that during the course of the federal litigation they defamed Kwik Way by statements, newspaper advertisements, and letters, that Caldwell and Waits solicited other Kwik Way employees to initiate additional and unjustified litigation against Kwik Way, that Caldwell and Waits harassed Kwik Way’s former and present employees, and that Caldwell and Waits interfered with Kwik Way’s business relationship with its employees and customers. Caldwell and Waits were not represented by counsel during the earlier phase of the case and did not file answers to the complaint.

As part of pretrial discovery, Kwik Way subpoenaed Caldwell and Waits for their depositions. When Caldwell and Waits failed to appear, Kwik Way filed a motion for default pursuant to C.R.C.P. 37(d). At the default hearing, Waits advised the court that he failed to appear for the deposition because his attorney, who had not yet entered the case, told him that he (Waits) was under no obligation to appear if he had not been personally served with the subpoena. The trial court, noting that two affidavits on file showed personal service of the subpoenas on Caldwell and Waits, entered a default, ruling as follows:

Mr. Waits, the rules require that if you are a party to an action — and you are a party in this case — that you appear at depositions. And if you fail to cooperate in these matters, that then your pleading can be stricken. That’s what the court is going to do. I'm going to strike your pleadings. This is not something that you can go to and decide you do want to appear or you don’t.
* # # # * ⅜
The court’s going to strike the pleadings of the defendants and their default will be entered under Rule 37 for failure to comply with the discovery. And we’ll set the matter down for default hearing.

[674]*674The trial court then informed Caldwell and Waits that the default would be set aside if they were able to produce testimony from the lawyer that he advised him in a manner consistent with Waits’ prior statement to the court. The court set the case for a hearing on damages.

At the damages hearing Caldwell and Waits were represented by counsel. The trial court advised defense counsel that his role at the hearing would be as follows:

[Y]our function in this hearing will be to observe the proceedings and advise your clients as to what is going on and not to interpose objections or to present arguments; because they stand in default, and they stand in a position of being without any pleadings. So it would be inappropriate for this matter to be transformed into a trial.

Kwik Way presented its evidence on damages,2 but the court refused to permit counsel for Caldwell and Waits to present evidence on their behalf, to object to evidence presented by Kwik Way, or to cross-examine witnesses called by Kwik Way. The court awarded Kwik Way $25,000 in actual damages and $25,000 in punitive damages on its claim for defamation and interference with business relations. It also permanently enjoined Caldwell and Waits from contacting Kwik Way employees without court consent and from making any libelous statements about Kwik Way’s alleged violation of state or federal wage-and-hour regulations.

Caldwell and Waits appealed from the judgment. The court of appeals reversed the judgment for two reasons: (1) the trial court erred in entering a default without a specific finding that Caldwell and Waits willfully failed to attend the deposition; and (2) the trial court did not permit Caldwell and Waits to cross-examine Kwik Way’s witnesses at the damages hearing or present evidence in mitigation of damages. In remanding the case to the trial court for further proceedings, the court of appeals held that if the trial court on remand enters a default, it must permit Caldwell and Waits to participate fully in the damages hearing. We granted certiorari to review both aspects of the court of appeals’ decision.

II.

We first address whether the court of appeals correctly held that a party’s failure to comply with discovery obligations must be willful before a default can be entered against the noncomplying party. The present version of C.R.C.P. 37(d) provides as follows:

If a party or an officer, director, or managing agent of a party, or a person designated under Rule 30(b)(6) or 31(a) to testify on behalf of a party fails: (1) To appear before the officer who is to take his deposition, after being served with a proper notice; or (2) to serve answers or objections to interrogatories submitted under Rule 33, after proper service of the interrogatories; or (3) to serve a written response to a request for inspection submitted under Rule 34, after proper service of the request, the court in which the action is pending on motion may make such orders in regard to the failure as are just, and among others it may take any action authorized under subparagraphs (A), (B), and (C) of subsection (b)(2) of this Rule.3

[675]*675(Emphasis added). C.R.C.P. 37(b)(2) authorizes the court in which the action is pending to “make such orders in regard to the failure as are just, and among others the following:”

(A) An order that the matters regarding which the order was made or any other designated facts shall be taken to be established for the purposes of the action in accordance with the claim of the party obtaining the order;

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Bluebook (online)
745 P.2d 672, 1987 Colo. LEXIS 655, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kwik-way-stores-inc-v-caldwell-colo-1987.