Court of Appeals Rules Again in Family Business Feud

In protracted dispute over company control, court finds in favor of oil and gas magnate’s family members

The Court of Appeals has issued yet another decision in a family feud that has become familiar in Colorado’s courts. Disputes over admissibility of evidence in the case have already made two trips to the Supreme Court, and the latest decision may mean another try. 

Business magnate Jack Grynberg built a fortune from three oil and gas companies. He has fought with family members over control of the companies, which Grynberg founded but gave family members ownership of. They took steps to revoke his control of the companies in 2016 when a number of events and decisions by Grynberg led his family to believe his capacity to manage the businesses was failing.

In the latest appeal, Grynberg challenged the Arapahoe County District Court’s decision to allow evidence about his mental status in the most recent trial. But in an unpublished June 4  opinion obtained by Law Week, the Court of Appeals ruled the evidence didn’t unfairly prejudice the trial. 

In a previous trial in 2019, Grynberg claimed he had an oral or implied contract with the family allowing him control of the businesses for life in exchange for giving them ownership. But a jury found there was no contract.

The most recent trial also ended in the family’s favor. Grynberg claimed his family members’ financial benefit from owning the businesses made it unjust for them to keep ownership and profits without compensating him. But after a bench trial, Judge Charles Pratt found that was not the case.

In the appeal decided June 4, Grynberg raised a handful of challenges to an expert witness used by the family who testified about Grynberg’s mental status. He claimed the trial court should not have allowed the expert witness to rely on notes made by his daughter Rachel when she accompanied him to doctor appointments because of physician-patient privilege. He also claimed the court should not have allowed the witness to testify about Grynberg’s mental health because he didn’t examine Grynberg or his medical records. And Grynberg challenged testimony by the witness that he didn’t examine Grynberg because the latter invoked physician-patient privilege.

But the Court of Appeals did not find any of those arguments persuasive, according to the opinion. 

In one piece of its analysis, the court decided physician-patient privilege did not cover Rachel Grynberg’s observations because the statute does not preclude a third party who is present from testifying. Since she was not at the appointments to facilitate communication between the doctor and Jack Grynberg, she was there as a third party who could provide testimony, according to the decision.

“The actual issue in this case is significantly different than the one that Mr. Grynberg poses: Was it appropriate for the family’s expert to rely on the notes of Rachel Grynberg, a third person, who described what she had observed and heard during the doctor’s appointment?” wrote Chief Judge Steve Bernard for the panel. “Relying on cases such as Harmann, Covington, and Iwerks, we conclude that it was.”

The court rejected Grynberg’s claim the expert’s testimony about his mental health was not reliable because he had not examined Grynberg. According to the decision, Grynberg didn’t dispute the expert’s qualifications or expertise. The expert based his testimony on evidence such as videos, voicemails, emails and deposition transcripts, and according to the opinion, objections to the testimony’s sufficiency factor into the weight of the testimony rather than its admissibility. 

In the decision, the court also found the testimony did not risk unfair prejudice in the trial court, because it was relevant to the central issue of Grynberg’s ability to manage his companies, and the expert didn’t offer any opinion about Grynberg’s credibility.

The decision rejected Grynberg’s challenge to the expert’s testimony that Grynberg’s invoking of physician-patient privilege prevented him from examining Grynberg. According to the court, Grynberg invited that error. He had asked the trial court to exclude evidence of invoking the privilege, but the Court of Appeals raised its eyebrows at repeated questioning of the expert by Grynberg’s attorney about why he did not examine Grynberg. 

“Mr. Grynberg ‘may not complain on appeal of an error that he has invited or injected into the case; he must abide the consequences of his acts,’” Bernard wrote in the decision.

In the final piece of its analysis, the Court of Appeals rejected the claim that the trial court applied the wrong legal test to Grynberg’s ask for compensation for losing control of the businesses. 

He claimed the court should have focused on the family’s expectations for what he should receive as compensation, because according to him, the family understood he expected to keep control of the businesses permanently. 

But the Court of Appeals said according to applicable case law, the appropriate focus should be on “the parties’” actions showing mutual purpose. 

“There is no indication … that the supreme court intended this language to be a broad rule requiring trial courts to focus on the defendant’s understanding of the plaintiff’s expectations to the exclusion of the plaintiff’s understanding of the defendant’s expectations,” Bernard wrote.

—Julia Cardi

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