Hodge v. Matrix Group, Inc.
2022 COA 4. No. 20CA0746. Civil Litigation—Damages—Lost Profits—Loss of Earning Capacity—S Corporation—Sole Owner—Discovery Sanctions.
January 6, 2022
Hodge is a fire and products liability investigator and the sole owner and CEO of Hodge Services, a small forensic expert witness company. The company’s office is in Hodge’s home, and its only other employee is a secretary. Hodge Services leased a storage unit from Matrix Group, Inc. and Waterpark II & III, LLC (collectively, Waterpark). While visiting the storage unit, Hodge slipped and fell on ice. The fall caused a complete retinal detachment and loss of useful vision in his right eye. Hodge brought a personal injury lawsuit against Waterpark alleging negligence and violations of the Premises Liability Act. Before trial, Waterpark filed a motion in limine to bar Hodge from offering evidence of Hodge Services’ lost profits to support his claim of lost earning capacity. The district court denied the motion. The jury found that Hodge was 40% at fault, Hodge Services was 25% at fault, and Waterpark was 35% at fault. The jury further found that Hodge had suffered $1.15 million in economic damages, including loss of earning capacity. Ultimately, the court entered judgment against Waterpark and awarded Hodge $752,500.
On appeal, Waterpark argued that the district court abused its discretion by admitting evidence of Hodge Services’ lost profits because Hodge may not claim damages that belong to his corporation. Here, both Hodge’s salary and the profits of Hodge Services reflected Hodge’s earning capacity. Further, Hodge Services’ profits were generated from Hodge’s personal services. Therefore, it was within the district court’s discretion to determine whether, under the circumstances, the profits of Hodge’s solely owned S corporation were admissible as evidence of his lost earning capacity, and the trial court did not abuse that discretion.
Alternatively, Waterpark contended that the district court erred by allowing Hodge to maintain that Hodge Services was a separate corporate entity for purposes of liability, while simultaneously allowing him to claim Hodge Services’ business profits as personal damages, because this resulted in an inconsistent verdict. Waterpark’s arguments regarding the comparative negligence statute and inconsistent verdict were not preserved for appeal. But the Court of Appeals considered Watermark’s argument to the extent it contended the district court erred by admitting evidence of corporate profits without a finding that Hodge and Hodge Services are one and the same and determined that the admissibility of corporate profits and the limitation of liability afforded by the corporate form are two separate issues. Therefore, the district court did not err by admitting evidence of corporate profits without a finding that Hodge and Hodge Services are the same.
Lastly, Waterpark contended that the district court abused its discretion by admitting evidence of Hodge Services’ lost profits because the evidence should have been barred as a discovery sanction. Here, the district court did not abuse its discretion by denying Waterpark’s request to exclude evidence of lost profits as a sanction for the late disclosure because Waterpark had almost seven months before trial to review the late-disclosed evidence and prepare for trial, so it was not prejudiced or surprised.
The judgment was affirmed.