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In re Gadeco, LLC

Supreme Court of Colorado, En banc

April 9, 2018

In Re Gadeco, LLC; Celeste C. Grynberg, individually and as Co-Trustee for the Rachel Susan Grynberg 1982 Trust, the Stephen Mark Grynberg 1983 Trust, and the Miriam Zela Grynberg 1986 Trust; The Rachel Susan Grynberg 1982 Trust; The Stephen Mark Grynberg 1983 Trust; The Miriam Zela Grynberg1986 Trust; Pricaspian Development Corporation; Rachel S. Grynberg; Miriam Z. Grynberg; Stephen M. Grynberg, individually and as Trustee for Stephen Mark Grynberg Separate Property Trust; The Stephen Mark Grynberg Separate Property Trust; and RSM Production Corporation, Plaintiffs/Counterclaim Defendants:
v.
Jack J. Grynberg, Defendant/Counterclaim Plaintiff: and The Grynberg Petroleum Corporation. Defendant:

          Original Proceeding Pursuant to C.A.R. 21 Arapahoe County District Court Case No. 16CV30959 Honorable Charles M. Pratt, Judge

          Attorneys for Plaintiffs/Counterclaim Defendants Celeste C. Grynberg, individually and as Co-Trustee for the Rachel Susan Grynberg 1982 Trust, the Stephen Mark Grynberg 1983 Trust, and the Miriam Zela Grynberg 1986 Trust; The Rachel Susan Grynberg 1982 Trust; The Stephen Mark Grynberg 1983 Trust; The Miriam Zela Grynberg 1986 Trust; Rachel S. Grynberg; Miriam Z. Grynberg; Stephen M. Grynberg, individually and as Trustee for Stephen Mark Grynberg Separate Property Trust; and The Stephen Mark Grynberg Separate Property Trust:

          Bartlit Beck Herman Palenchar & Scott LLP Fred H. Bartlit, Jr. Glen E. Summers Daniel C. Taylor Katherine L.I. Hacker Denver, Colorado

          Attorneys for Defendant/Counterclaim Plaintiff Jack J. Grynberg: Dorsey & Whitney LLP Gregory S. Tamkin Case Collard Andrea Ahn Wechter Denver, Colorado

          No appearance by or on behalf of Gadeco, LLC; Pricaspian Development Corporation; RSM Production Corporation; The Grynberg Petroleum Corporation.

          OPINION

          RICE CHIEF JUSTICE

         ¶1 In this original proceeding, we consider whether the defendant Jack Grynberg impliedly waived the physician-patient privilege by either (1) requesting specific performance of a contract, or (2) denying the plaintiffs' allegations that he made irrational decisions. Grynberg asserted counterclaims for breach of contract against the plaintiffs, his children and former wife ("the Family"). Grynberg's counterclaims requested the specific performance of an oral or implied-in-fact contract in which the Family allegedly agreed to allow Grynberg to control several family companies for his lifetime. The trial court found that Grynberg impliedly waived the physician-patient privilege by asserting those counterclaims, and it ordered him to produce three years' worth of mental health records for in-camera inspection. Grynberg petitioned this court to review that ruling pursuant to C.A.R. 21, and we issued a rule to show cause why the trial court's order should not be vacated.

         ¶2 We have previously determined that only privilege holders-patients-can impliedly waive the physician-patient privilege, and that they do so by injecting their physical or mental condition into the case as the basis of a claim or an affirmative defense. Weil v. Dillon Cos., 109 P.3d 127, 129 (Colo. 2005). Relevant here, privilege holders inject their physical or mental condition into a case as the basis of a claim when they utilize the condition as "the predicate for some form of judicial relief." Clark v. Dist. Court, 668 P.2d 3, 10 (Colo. 1983). As a corollary to that rule, an adverse party cannot inject the patient's physical or mental condition into a case through its defenses. See Hoffman v. Brookfield Republic, Inc., 87 P.3d 858, 864 (Colo. 2004). Finally, patients do not inject their mental condition into the case by denying the opposing party's allegations. Clark, 668 P.2d at 10. In keeping with our previous interpretations of the implied waiver doctrine, we hold that Grynberg did not inject his mental condition into the case as the basis of a claim by alleging that the Family breached a contract that does not reference his mental health. Likewise, he did not inject his mental condition into the case as the basis of a claim or an affirmative defense by denying the Family's allegations that he made irrational decisions. Accordingly, we conclude that Grynberg did not impliedly waive the physician-patient privilege and that the trial court abused its discretion by ordering Grynberg to produce his mental health records for in-camera inspection.

         ¶3 We make the rule to show cause absolute, and we remand this case to the trial court for further proceedings.

         I. Facts and Proceedings Below

         ¶4 This original proceeding arises out of a dispute between Grynberg, who founded a number of businesses, and his family, the owners and directors[1] of those businesses. According to Grynberg, he transferred his ownership interests in the businesses to the Family on the condition that he would remain in control of the businesses until his death. Grynberg alleges that the Family members expressed agreement to these terms either orally, in writing, or implicitly through their conduct. In 2016, however, the Family voted to remove Grynberg as president of each business, citing his declining mental health. Grynberg refused to comply.

         ¶5 The Family then filed this lawsuit, seeking a declaration that Grynberg no longer controlled the businesses and an injunction preventing him from representing the businesses. In its complaint, the Family asserted that Grynberg was exhibiting erratic behavior, making irrational decisions, and committing significant company funds to obviously fraudulent scam operations. In his amended answer, Grynberg denied the Family's allegations and asserted counterclaims, including claims for breach of the lifetime-control agreement. Grynberg alleged that the Family's breach of the oral or implied contract caused substantial monetary harm, and he sought "damages and/or specific performance" as relief.

         ¶6 Because the case was complex, the trial court appointed a special master to handle discovery issues. The Family filed a motion requesting that the special master order Grynberg to produce all medical records related to his mental health. Grynberg objected, arguing that his medical records were protected by the physician-patient privilege. The special master concluded:

By arguing that he is capable of running the companies via his specific performance claim, [Grynberg] has inserted his physical and mental condition into the case (albeit, in response to the allegations noted above that he is incapable of running the companies). By inserting his mental condition into the case, ...

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