HomeMy WebLinkAbout2021-cv-2063 - City of Fort Collins v. Open International, et al. - 353 - City Response Mot for New TrialIN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No.: 21-cv-02063-CNS-SBP
CITY OF FORT COLLINS,
Plaintiff/Counterclaim Defendant,
v.
OPEN INTERNATIONAL, LLC
Defendant/Counterclaim Plaintiff,
and
OPEN INVESTMENTS, LLC,
Defendant.
CITY OF FORT COLLINS’ RESPONSE TO DEFENDANTS’ MOTION FOR NEW TRIAL
UNDER RULE 59(a) AND TO ALTER OR AMEND JUDGMENT UNDER RULE 59(e)
AND RULE 52 [DKT 347]
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INTRODUCTION
After more than two years of litigation leading to a unanimous jury verdict in favor
of the City of Fort Collins (“the City”), Defendants Open International, LLC and Open
Investments, LLC (jointly, “Open”) ask this Court to set aside the credibility decisions of a
legitimately empaneled jury for extraordinary relief in the form of a new trial, or,
alternatively, an altered or amended judgment. Open’s arguments in support of its Motion,
however, primarily consist of recycled, previously rejected arguments concerning the
City’s timely election of remedies, rescission amounts, and theories that were waived or
defy Tenth Circuit law, evidentiary standards, and this Court’s prior rulings.
Open’s Motion is an attempt to subvert justice by denying what a jury found after
hearing all the evidence. During trial, numerous Open witnesses admitted to making
statements during the RFP process which amounted to knowing misrepresentations of
the functionalities of Open’s software in order to induce the City to enter into a relationship
with Open, as Open’s first North American client. The jury’s verdict saw through Open’s
weak defenses and held Open accountable for fraud. Open is experiencing the
consequences of its actions, not undue prejudice. Open’s Motion for a new trial or altered
judgment should be denied for seven reasons.
First, despite an opportunity to object and/or seek clarification on the jury’s verdict
prior to the jury’s discharge, Open chose not to. Now, after the jury has long been excused
from its obligation, Open asks this Court to strike the verdict, pointing to Fed. R. Civ. P.
59(e). Open, however, waived its right to seek such relief because it failed to object to the
verdict and/or seek clarification while the jury was still impaneled. Moreover, even if it had
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not waived its right, Open has not met its burden in showing that the jury’s verdict was
the result of plain error. While the trial court has a duty to attempt to reconcile the verdict
of a jury to avoid a retrial, in deference to the jury, the court must accept any reasonable
explanation that reconciles the verdict. Heno v. Sprint/United Mgmt. Co., 208 F.3d 847,
852 (10th Cir. 2000). Here, the determination by the jury is consistent with the evidence
presented and Open’s attempt to speculate as to what order the jury made its findings
are improper. This is particularly true since the facts supporting the City’s fraudulent
inducement claim can be different from its misrepresentation claim and, in any event,
neither the Court nor the parties can (or needs to) determine what specific facts the jury
relied on in reaching its verdict.
Second, as this Court has held on several prior occasions, the City timely elected
to rescind the parties’ agreement due to Open’s fraud. In any event, the City did not need
to elect its remedy sooner as all of the same evidence required to support the City’s
fraudulent inducement claim would nonetheless have been presented to support the
City’s fraud defense to Open’s breach of contract claim. Further, Open has not met its
burden in proving that there was any prejudice or juror confusion.
Third, the Court, in its discretion, properly handled juror questions regarding the
different knowledge requirement between fraudulent inducement and negligent
misrepresentation. The instructions accurately stated the law and provided the jury with
a clear understanding of the issues that needed to be resolved. Again, it is not for Open
or the Court to speculate as to the jury’s thoughts and any attempt to do so is improper.
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Fourth, Open is not entitled to removal of Open Investments from the judgment
under Fed. R. Civ. P. 52 or 59. As an initial matter, neither Rule 52 nor 59 motions are a
proper basis to raise sufficiency of the evidence arguments, which are at the core of
Open’s arguments. Open long ago waived any argument that Open Investments cannot
be liable to the City. Open never once argued that Open Investments’ liability for the
fraudulent inducement claim (or any other claim) could only be due to the guarantee
provision of the parties’ agreement. Further, Open’s belated argument that “Open
Investments was made a party-defendant solely because of its role as the guarantor of
Open International” (ECF No. 347 at 20-21) is clearly disputed and contrary to the
evidence and jury verdict. There was sufficient evidence that “Open”—consisting of both
Open entities as agreed to by the parties and as instructed by the Court—made
misrepresentations to the City in order to defraud and induce the City into entering into
agreements.
Fifth, the Court properly denied Open’s affirmative defense of laches. Importantly,
contrary to Open’s assertions, the City did not delay by bringing this suit in July 2021.
Indeed, the City did not even have the requisite “full knowledge” as to Open’s fraud until
discovery in this action when Open disclosed, for the very first time, its internal
assessment showing that its product actually only met 59.4% of the City’s required
functionalities, despite claiming that its product met 90% of the functionalities as “A” and
part of the base system. See T.E. 74. In any event, there is no evidence that such a
defense would have changed any subsequent findings by the Court.
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Sixth, Open is not entitled to an amended judgment under Fed. R. Civ. P. 52
because the City is entitled to reimbursement for amounts it paid to third-party consultants
and the amount for the reasonable value of services that it incurred because of Open’s
fraud. Importantly, rescission is an equitable remedy meant to “restore the conditions
existing before the agreement was made”. See Trimble v. City & Cty. of Denver, 697 P.2d
716, 723 (Colo. 1985). Here, these amounts are the natural and proximate result of
Open’s fraudulent conduct and are necessary to restore the City to its position prior to
Open’s fraud. Relatedly, the Court did not find that the City was not entitled to the amount
for services it incurred between January 15 and June 15, 2021. The City asserts that this
amount should have been included in the judgment and thus, the judgment amount is
accurate and should not be altered. Moreover, Open’s own damages expert agreed that
the City is entitled to these categories. Additionally, Open is not entitled to any setoff.
Open caused its own purported uncompensated loss by fraudulently inducing the City
into the agreements.
Seventh, the City is entitled to prejudgment interest from the date of Open’s
fraudulent conduct and not when it filed its Complaint. See Arguelles v. Ridgeway, 827
P.2d 553, 558 (Colo. App. 1991) (holding that prejudgment interest accrued from date
defendant fraudulently induced plaintiff to sign a real estate contract).
Accordingly, the Court should deny Open’s Motion in its entirety.
LEGAL STANDARD
Rule 59(a): “In ruling on a motion for a new trial, the trial judge has broad
discretion.” McHargue v. Stokes Div. of Pennwalt Corp., 912 F.2d 394, 396 (10th Cir.
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1990) (citation omitted). A motion for a new trial is “generally not regarded with favor,”
and is “granted only with great caution.” Nosewicz v. Janosko, 857 F. App’x 465, 468
(10th Cir. 2021) (citing United States v. Perea, 458 F.2d 535, 536 (10th Cir. 1972)). It is
inappropriate to grant a new trial “unless it is reasonably clear that prejudicial error has
crept into the record or that substantial justice has not been done, and the burden of
showing harmful error rests on the party seeking the new trial.” Id. (quoting 11 Charles
Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 2803); see also Burke v.
Regalado, 935 F.3d 960, 1026 (10th Cir. 2019) (noting that a district court abuses its
discretion in Rule 59(a) context “if it [makes] a clear error of judgment or exceed[s] the
bounds of permissible choice in the circumstances.”) (quotations omitted).
Further, when “a new trial motion asserts that the jury verdict is not supported by
the evidence, the verdict must stand unless it is clearly, decidedly, or overwhelmingly
against the weight of the evidence.” Ryan Dev. Co. v. Indiana Lumbermens Mut. Ins. Co.,
711 F.3d 1165, 1172 (10th Cir. 2013). In making this determination, the Court must
consider “the evidence in the light most favorable to the prevailing party, bearing in mind
that the jury has the exclusive function of appraising credibility, determining the weight to
be given to the testimony, drawing inferences from the facts established, resolving
conflicts in the evidence, and reaching ultimate conclusions of fact.” Nosewicz v. Janosko,
2020 WL 4041457, at * 5 (D. Colo. July 17, 2020) (quoting Snyder v. City of Moab, 354
F.3d 1179, 1188 (10th Cir. 2003).
Rule 59(e) and Rule 52(b): “A Rule 59(e) motion to alter or amend the
judgment should be granted only to correct manifest errors of law or to present newly
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discovered evidence.” Phelps v. Hamilton, 122 F.3d 1309, 1324 (10th Cir.
1997) (quotations omitted). Further, a Rule 59 motion is not meant to be a vehicle “to
revisit issues already addressed or advance arguments that could have been raised” but
were not. Servants of Paraclete v. Does, 204 F.3d 1005, 1012 (10th Cir. 2000). Similarly,
the purpose of a Rule 52(b) motion is “to correct manifest errors of law or fact, or, in some
limited situations, to present newly discovered evidence.” Lyons v. Jefferson Bank & Tr.,
793 F. Supp. 989, 991 (D. Colo. 1992). And like a Rule 59(e) motion, it should not be
employed “to introduce new evidence that was available at the time of trial but was not
proffered, to advance new theories, or to secure a rehearing on the merits.” Id.
ARGUMENT
I. Open Is Not Entitled to a New Trial.
A. Open Waived its Objections to Any Purported Inconsistencies in the Jury’s
Verdict and, In Any Event, the Jury’s Verdict is Consistent.
Open initially argues that the jury’s verdict contains an internal inconsistency
requiring a new trial because the jury found against Open’s waiver defense for fraudulent
inducement, but found in favor of Open’s waiver defense for negligent misrepresentation.
There is, however, nothing inconsistent with the jury’s verdict that justifies a retrial.
Open Waived: When a jury returns its verdict, a party that believes the verdict is
inconsistent must object before the jury is discharged. See Bartee v. Michelin N. Am.,
Inc., 374 F.3d 906, 911 (10th Cir. 2004). If the party fails to do so, it has waived the issue
“unless the verdict is inconsistent on its face such that the entry of judgment upon the
verdict is plain error.” Id. (quotation omitted). Plain error exists only when verdicts are
inconsistent on their face. Diamond Shamrock Corp. v. Zinke & Trumbo, Ltd., 791 F.2d
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1416, 1424 (10th Cir. 1986). However, as is the case here, a “verdict that resolves
separate and distinct causes of action in favor of both parties is not inconsistent on its
face.” Id. at 1424-25. This rule protects the fair and expeditious correction of error by
allowing a court to resubmit the verdict to the jury for clarification. Id. at 1422. It requires
that any alleged inconsistency be corrected in the proceeding in which it is made, by the
jury that made it. Id. “Any other decision would hamper the just and efficient operation of
federal courts. It would encourage jury-shopping by litigants, permitting them to decide
whether to take their chances on resubmitting the verdict and findings to the jury sitting
or remain silent thereby allowing the entry of judgment and moving for a new trial before
a new jury . . . .” Id. (quoting Cundiff v. Washburn, 393 F.2d 505, 506-07 (7th Cir. 1968)).1
Here, Open did not object to the verdict before the Court released the jury. There
can be no dispute that Open had the opportunity to do so, but it chose not to object to the
verdict. Indeed, immediately following the City’s election of rescission, the Court provided
Open with an opportunity to raise any objections before bringing the jury back to the
courtroom to discharge them, but Open raised no objections. Trial Tr. at 2091:7-16. The
1 Any argument that the verdict was a special verdict because it required the jury to opine
on Open’s affirmative defenses and, thus, any inconsistency argument could not be
waived, is without merit. Zhang v. Am. Gem Seafoods, Inc., 339 F.3d 1020, 1031 (9th Cir.
2003) (“In addition to the ultimate legal conclusion in a case, a jury may make legal
conclusions as to subsidiary issues, such as affirmative defenses, or the amount of
damages owed, which are neither findings of fact nor quite ‘verdicts.’ Such answers are
similar in kind to general verdicts, because they require application of the law to the facts
. . . .”). Further, a “party who fails to bring to the trial court's attention ambiguities created
by jury instructions or special verdict forms may not seek to take advantage of such
ambiguities on appeal." Kenworthy v. Conoco, Inc., 979 F.2d 1462, 1468 (10th Cir. 1992)
(finding waiver where party did not object to either the jury instruction or the special verdict
form and did not seek clarification of the verdict before the jury was dismissed).
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Court also provided another opportunity for any motions after discharging the jury and
again, Open raised no objections. See id. at 2093:2-12. For this reason alone, the Court
should deny Open’s request for a new trial.
The Verdict is Not Inconsistent: The Tenth Circuit does not “lightly” grant new
trials based on supposed inconsistencies in a jury verdict. See Johnson v. Ablt Trucking
Co., 412 F.3d 1138, 1143 (10th Cir. 2005). The law is just the opposite: To protect the
jury’s function, courts must “reconcile the jury’s findings, by exegesis if necessary” before
they are “free to disregard” a jury’s verdict and order a new trial. Id. (quoting Gallick v.
Baltimore & Ohio R. Co., 372 U.S. 108, 119 (1963)). Courts must accept “any reasonable
explanation that reconciles” a jury’s verdict in determining whether the verdict is
inconsistent. Domann v. Vigil, 261 F.3d 980, 983 (10th Cir. 2001). A jury’s verdict is
“irreconcilably inconsistent” where its answers are “logically incompatible, thereby
indicating that the jury was confused or abused its power.” Johnson, 412 F.3d at 1144
(quotations omitted). “If there is any plausible theory that supports the verdict, the
reviewing court must affirm the judgment.” Romero v. Helmerich & Payne Int’l Drilling Co.,
768 F. App’x 838, 844 (10th Cir. 2019); see also Harvey v. Gen. Motors Corp., 873 F.2d
1343, 1347-48 (10th Cir. 1989) (courts “must attempt to reconcile rather than look for
inconsistency in verdicts when such a question arises”). Movants bear the burden of
showing that any verdict inconsistency demonstrates that the jury was confused or
abused its power. Domann, 261 F.3d at 983.2
2 Open’s reliance on Global Van Lines, Inc. v. Nebeker, 541 F.2d 865, 868 (10th Cir.
1976) to claim that a new trial must be granted is unavailing particular since in that case,
the Tenth Circuit denied a request for a new trial.
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Here, Open asserts that the jury’s finding of waiver in favor of Open regarding the
City’s negligent misrepresentation means that the jury’s verdict was “inconsistent”
because it did not also find in Open’s favor for waiver on the City’s fraudulent inducement.
The jury’s verdict is not inconsistent. At a fundamental level, Open ignores that the City
showed that Open engaged in a wide variety of misleading behavior that could serve as
logically distinct bases for each claim. Instead, Open claims that the only difference
related to time. That is not accurate.
The City’s fraudulent inducement claim was based on Open’s false statements that
it intentionally made to the City during the RFP process. Open knowingly provided the
City grades for its product through the functional matrix, which were contradicted by
Open’s internal documentation, to induce the City to enter into an agreement with Open.
See Trial Tr. at 2012:17-2013:6. Specifically, in responding to the RFP and grading the
functionalities of its OSF product into the functional matrix, Open graded approximately
89.7% of the required functionalities “A”—or as already existing in the current system.
See generally T.E. 5. Open admitted that the City would rely on Open’s grading and that
in turn, the City did so. See Trial Tr. at 2013:7-2014:11. These grades, however, were
false and it is plausible and logical that the jury did not find that the City waived this claim,
particularly since the City did not have knowledge of Open’s false representations until
the spring of 2021, when it conducted a functional matrix review. See id. at 182:24-183:14,
201:5-10 (testifying that realization that Open made a misrepresentation about its product
“was a gradual process” and that “the TMG report and functional matrix work was the
point in time where [he] said I think we may have gotten swindled”); see also id. at 633:7-
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634:10 (Ms. Walder’s description of the functional matrix review and testimony that the
results of that review were “[a]stonishing” because after years of working with Open, “only
several hundred [functionalities]. . . were accepted and passed in testing” and “the system
was not working” and “could not bill”). In fact, the City did not even obtain the requisite
“full knowledge” as to Open’s fraud until the discovery in this action when Open disclosed,
for the very first time, its internal assessment showing that its system actually only met
59.4% of the City’s required functionalities when Open responded to the RFP falsely
representing that its product met 90% of the functionalities as “A” and part of the base
system. See T.E. 74; see also Trial Tr. at 1419:2-4 (Mr. Parrott admitting that no one at
Open had told the City about this internal grading).
On the other hand, the City’s negligent misrepresentation claim logically maps to
Open’s misrepresentation of the version of its product. In particular, Open was negligent
in telling the City what version of its product it was implementing by making contradicting
statements throughout its RFP response. For example, Open (falsely) stated that “version
8 was released in 2017.” T.E. 5 at 312. It is possible, however, that the jury found that the
City waived this claim based on Open’s testimony that version 8 was released in 2019
(and evidence that the City was aware of the release). In other words, even though Open
negligently misrepresented the version of its product during the RFP process, the jury
may have found that the City came to learn of the actual version being implemented
before 2021. This just one example of a plausible reconciliation of the alleged
inconsistency. There may be others, but one is all that is required to deny Open’s Motion.
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Romero, 768 F. App’x at 844 (“If there is any plausible theory that supports the verdict,
the reviewing court must affirm the judgment.”).
Additionally, contrary to Open’s repeated insistence, the Court cannot speculate
as to what happened in the jury room and which facts they relied on for which claim. See,
e.g., Yeager v. United States, 557 U.S. 110, 122 (2009) (“A contrary conclusion would
require speculation into what transpired in the jury room. Courts properly avoid such
explorations into the jury’s sovereign space . . . and for good reason. The jury’s
deliberations are secret and not subject to outside examination.”) (citations omitted).
Accordingly, the verdict and relevant findings do not suggest, let alone establish,
that the jury’s verdict was “logically incompatible.” Rather, there is more than reasonable
explanation that shows the verdict and relevant findings of the jury to be consistent,
especially since the City’s claims were based on multiple different misrepresentations.3
B. The Court Properly Allowed the City to Elect its Remedy After the Jury’s
Verdict on the City’s Claims for Fraudulent Inducement and Negligent
Misrepresentation.
Despite the Court’s previous findings, Open again argues that the Court should
have required the City to elect its remedy before trial and thus, a new trial is now
3 Open also speculates that the jury first found waiver as to the negligent
misrepresentation claim and the fraudulent inducement claim. There is, however,
absolutely no evidence of the timing of the jury’s findings and thus, the Court should
ignore such argument altogether. See Midwest Underground Storage, Inc. v. Porter, 717
F.2d 493, 501 (10th Cir. 1983) (“[I]t is well settled that a verdict will not be upset on the
basis of speculation as to the manner in which the jurors arrived at it.”); Howard D. Jury,
Inc. v. R&G Sloane Mfg. Co., 666 F.2d 1348, 1352 (10th Cir. 1981) (“[T]his Court will not
invalidate a jury verdict on the basis of plaintiff's guesswork as to the manner in which the
jurors arrived at that verdict.”). The Court need not speculate on the jury’s process and
certainly should not accept Open’s speculation.
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warranted. In support, Open asserts that the trial was “plagued” because the jury was
presented with evidence of the City’s contractual damages and that the bifurcated trial
caused jury confusion. Both arguments lack merit.
“Election of remedies is a harsh doctrine which should not be unduly extended.” In
re Centrix Fin., LLC, 2019 WL 4242667, at *2 (D. Colo. Sept. 6, 2019); see also Est.
Couns. Serv., Inc. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 303 F.2d 527, 530 (10th
Cir. 1962) (cautioning that the election of remedies doctrine is “disfavored,” and that “the
court should be sensitive to equitable principles” in applying the doctrine)). An election of
remedies complaint is a poor basis for a new trial because, as this Court previously stated
and as Open admits, the timing of a party’s election of remedies is “up to the sound
discretion of the trail court.” ECF No. 255 at 4 (citing Cross Country Land Servs., Inc. v.
PB. Telecomms., Inc., 276 F. App’x 825, 832 (10th Cir. 2008)).
The Court prudently exercised its discretion. An early election before trial would
not have impacted the issues that were presented at trial. Rather, based on the claims
and affirmative defenses in the case, the City was required to produce essentially the
same evidence regardless of whether the Court compelled an early election. Specifically,
as the City pointed out in earlier briefing on this issue, “Open has a remaining
counterclaim for breach of contract, . . . and the City has affirmative defenses of fraud
and prior material breach that mirror its affirmative claims of fraud and breach of contract”
(ECF No. 233 at 5). Even if the City was forced to elect among its proposed rescission-
and damages-based remedies before trial (and elected rescission), it still would have
needed to present evidence of Open’s alleged fraud and misrepresentations to defend
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against Open’s breach-of-contract counterclaim. Specifically, all of the City’s arguments
regarding Open’s pre-contract misrepresentations in the functional matrix and RFP that
support fraud and negligent misrepresentation were also relevant to breach of contract
since they supported the City’s affirmative defenses to Open’s contract claim.
Open’s reliance on the testimony of Ronald Seigneur, the City’s damages expert,
as a purported reason for the trial being “plagued” as a result of the later election of
remedies lacks merit. First and foremost, Open wanted Mr. Seigneur to testify as to
rescission damage amounts, despite the City’s insistence that presentation of such
evidence could potentially cause problems on appeal. See Trial Tr. at 848:3-853:9. Mr.
Seigneur did not testify as to rescission damages. Rather, during a two-week trial, he
testified regarding potential breach of contract damages for only 3 hours and 12 minutes,
(including cross-examination by Open). ECF No. 279. In other words, the jury had no idea
as to any rescission amount sought by the City and thus, could not have been “plagued”
by any testimony regarding amounts. This is further emphasized by the fact that Open
provides no support for this proposition. 4
Moreover, any purported jury confusion is purely speculative and the Court cannot
upset the jury verdict based on such speculation. See Howard D. Jury v. R & G Sloane
4 Open’s reference to a “compromise verdict” is also without merit. A "compromise verdict"
is one in which "the jury, unable to agree on liability, compromises that disagreement and
enters a low award of damages." Shugart v. Cent. Rural Elec. Co-op., 110 F.3d 1501,
1505 (10th Cir. 1997) (citing National R.R. Passenger Corp. v. Koch Indus., Inc., 701 F.2d
108, 110 (10th Cir.1983)). Here, there was no close question of liability as the jury found
Open liable as to both fraudulent inducement and negligent misrepresentation. See ECF
No. 295. Further, there was no issue as damages as the Court separately handled the
rescission award. Simply, there is no compromise verdict.
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Mfg. Co., 666 F.2d 1348, 1351 (10th Cir. 1981) (“a verdict will not be upset on the basis
of speculation” about possible jury confusion). The juror question cited by Open in its
Motion (ECF No. 347 at 17) reveals no confusion. Indeed, Open fails to even identify what
the confusion may have even been. Rather, a close look at the question, and the
surrounding testimony that Open fails to cite to, simply shows that the juror was clarifying
whether the jury can potentially address the fraudulent inducement claim or negligent
misrepresentation in different order or if they are potentially unable to come to a decision
as to one claim or another. See Trial Tr. at 2056:13-2057-20. In other words, this question
had nothing to do with election of remedies by the City between its tort claims and contract
claims. Additionally, as the Court previously held, “Open’s concern regarding the potential
for jury confusion or an award of duplicative remedies may be mitigated with the
submission of appropriate, carefully crafted jury instructions.” ECF No. 255 at 7. Open
had every opportunity to submit carefully crafted jury instructions, and in fact did so,
including through lengthy discussions during the Charge Conference. Had Open
genuinely believed that the jury was confused, it could have moved for a mistrial or
requested that Judge Sweeney take additional corrective action beyond the instructions
to which it agreed. Open did not do so.5 That the jury subsequently ruled against Open
does not necessitate a new trial. See United States v. Taylor, 514 F.3d 1092, 1096 (10th
5 Even if there was any confusion, which there was not, a new trial is required only in rare
cases where the jury’s answer or action is truly logically incompatible. In other words, a
jury’s verdict may not be overturned merely because “the jury's resolution of different
questions in the case difficult, though not impossible, to square.” See Johnson, 412 F.3d
at 1144.
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Cir. 2008) (denying appeal where the court gave a curative instruction and defense
counsel neither objected to the curative instruction nor moved for a mistrial).
Accordingly, Open’s Motion should be denied to the extent it seeks a new trial
based on any purported delay in the City’s election of remedies.
C. Contrary to Open’s Assertions, the Court Adequately Instructed the Jury on
the Applicable Law.
Open’s attempt to re-argue instructions that were properly rejected to obtain a new
trial should be denied. In particular, Open’s assertion that the Court’s instructions in
response to juror questions regarding the difference between fraudulent inducement and
negligent misrepresentation somehow “short-circuited” the elements of each charge is
misleading and far-fetched.
The “admission or exclusion of a particular jury instruction is left to the sound
discretion of the trial court.” Coletti v. Cudd Pressure Control, 165 F.3d 767, 771 (10th
Cir. 1999). Instructions do not need to be “faultless in every way.” Durflinger v. Artiles,
727 F.2d 888, 895 (10th Cir. 1989). Rather, they merely must ensure the jury understood
the issues and its role in deciding the issues. Id. Further, the “sufficiency of the instructions
is not determined by giving or not giving particular instructions, but rather by viewing the
instructions as a whole.” Richards v. Attorneys’ Title Guar. Fund, Inc., 866 F.2d 1570,
1575 (10th Cir. 1989). A judge may properly refuse to give a particular instruction if it
reflects “an abstract statement of the law unrelated to the facts of the case” or “if the point
of law it refers to is fairly and adequately otherwise covered by the instructions.” United
States v. Pena, 930 F.2d 1486, 1492 (10th Cir. 1991) (internal citation and quotation
omitted). Ultimately, the court “uphold[s] the judgment in absence of substantial doubt
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that the jury was fairly guided.” United States v. Magleby, 241 F.3d 1306, 1310 (10th Cir.
2001) (internal citation and quotation omitted).
Here, there is absolutely no evidence that the jury was misguided by the Court’s
instructions in response to the questions presented during the second day of
deliberations. The questions presented were clear that the jury had questions regarding
the knowledge requirement for fraud and negligent misrepresentation. While Open
wished for the Court to provide a “comparison” instruction and a new instruction re-writing
the already agreed to instructions, including elements contrary to Colorado law (see Trial
Tr. at 2065:11-16; 2072:24-2075:1), the Court, in its discretion, decided to provide the
jury with clarification of the differences in the knowledge requirement between the two
claims—which is exactly what the questions asked for. See ECF No. 293; see also Trial
Tr. at 2075:8-2079:12. Most importantly, the Court accurately provided the knowledge
requirement for fraud and for negligent misrepresentation based on Colorado law. See id.
Open’s assertions that the Court somehow “short-circuited” Open’s affirmative defenses
by leading the jury to believe that once they determined the knowledge requirement they
could ignore the other elements of the claims is fiction. The Court specifically referred the
jurors back to Instruction 21 (id. at 2077:2-9), which included all of the elements for
negligent misrepresentation, and the Court further instructed the jury to go back and “to
continue [their] journey through the jury instructions.” Id. at 2079:4-12.6
6 To the extent that Open argues that the Court erred by refusing to explicitly state that
certain instructions concerning Open’s affirmative defenses applied to both claims, such
argument should be rejected as it was not necessary. See Morrison Knudsen Corp. v.
Fireman's Fund Ins. Co., 175 F.3d 1221, 1231 (10th Cir. 1999). And in any event, the
Court reminded the jury that the “affirmative defenses apply to both claims.” Trial Tr. at
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In short, the Court adequately instructed the jury and a new trial is not warranted.
II. Open is Not Entitled to An Amended or Altered Judgment.
A. The Court Should Not Remove Open Investments from the Judgment.
Open once again argues that the judgment as to Open Investments cannot stand.
While Open claims that it is seeking such relief under Rule 59(e), a “Rule 59(e) motion to
alter or amend the judgment should be granted only to correct manifest errors of law or
to present newly discovered evidence.” Phelps, 122 F.3d at 1324.
Here, there was no manifest error or newly discovered evidence justifying Open
Investments’ removal from the judgment. Rather, as further addressed in the City’s
Response to Open’s Rule 50 Motion, which the City incorporates herein pursuant to Fed.
R. Civ. P. 10, Open waived any affirmative defense that Open Investments is not liable
under the City’s fraudulent inducement claim. As the Court already found based on the
City’s response to Open’s purported Rule 52(c) motion, Open’s argument “disclaiming
any liability of Open Investments comes far too late.” ECF No. 328 at 9. Indeed, Open
chose to present itself as one joint entity in both Opening Statements and Closing
Arguments. See Trial Tr. at 117:13-119:2, 2029:21-2041:7. Open did not seek separate
liability instructions for each defendant for any of the claims, nor did it object to the Court’s
proposed opening jury instructions provided prior to trial or to the final opening
instructions. See ECF No. 275. Most importantly, Open did not object to the verdict
form, which applied joint liability to the entities. ECF No. 296. Additionally, Open’s
argument that Open Investment merely served as guarantor does not make sense
2075:8-14. In other words, there was no error.
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because the issue of Open Investments’ liability was always at play.7 In any event, it is
clearly disputed and contrary to the jury verdict particularly since the evidence at trial
demonstrated that the two Open entities acted together to fraudulently induce the City to
enter an agreement that both Open entities signed.
Accordingly, as set forth above and further elaborated in the City Response to
Open’s Rule 50 Motion, the Could should decline to disturb the jury’s finding of Open
Investments’ liability.
B. The Court Made No Error in Excluding Open’s Laches Defense.
Open’s request that the Court modify its prior decision and find Open’s laches
defense viable is not only improper under the Rules of Civil Procedure, but, there is no
basis for such request. As a threshold matter, Open seeks to have the Court reconsider
its prior ruling. See ECF No. 347 at 22 (stating that Court should “revisit” its prior decision
“now”). However, a “motion to reconsider should not be used to revisit issues already
addressed or advance arguments that could have been raised earlier.” United States v.
Christy, 739 F.3d 534, 539 (10th Cir. 2014). As Open admits, the Court already heard
argument at the close of evidence from Open as to its laches defense. ECF No. 347 at
21-22. Accordingly, Open’s request is improper.
Further, Open has not met its burden in showing that the Court erred in denying
Open’s defense. Rather, Open simply concludes that the Court’s “decision reflects an
7 Indeed, the jury’s finding of Open’s liability for fraud had nothing to do with any provision
in the MPSA. See ECF No. 285 at 16 (Instruction No. 15, “Elements of Liability—
Fraudulent Inducement”). Rather, it required that “Open made a false representation of a
past or present fact to the City,” among other things. See id. (lacking any element about
guarantee under a contract).
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error” and points to the same arguments regarding its waiver defense. See id. at 22. This
is wholly insufficient. Because laches is an affirmative defense, the burden of proof falls
on Open to demonstrate that the City unreasonably delayed in bringing its fraudulent
inducement claim and that the delay prejudiced Open in some material way. See Bristol
Co., LP v. Osman, 190 P.3d 752, 755 (Colo. App. 2007). Further, the record must show
lack of diligence in the face of actual knowledge of the conditions giving rise to the
claim. See Bd. of Cty. Comm’rs v. Echternacht, 572 P.2d 143, 146 (Colo. 1977).
Here, as discussed above, the City did not “unreasonably delay” in bringing its
claim for fraudulent inducement against Open. Rather, the City did not have knowledge
of Open’s false representations in the functional matrix until at least the spring of 2021,
when it conducted a functional matrix review. See Trial Tr. at 182:24-183:14, 201:5-10;
see also id. at 633:7-634:10. Further, the City did not even obtain the requisite “full
knowledge” as to Open’s fraud until the discovery in this action when Open disclosed, for
the very first time, its internal assessment showing that its system actually only met 59.4%
of the City’s required functionalities at the time responded to the RFP falsely representing
that its product met 90% of the functionalities as “A” and part of the base system. See
T.E. 74; see also Trial Tr. at 1419:2-4. Accordingly, the City did not unreasonably delay
when it initiated this action on July 2, 2021. See In re the Matter of Estate of Scott, 735
P.2d 924, 926 (Colo. App. 1986) (“[L]aches cannot be imputed to one who has the right
to the relief, until he discovers the fraud or mistake upon which his claim is based, and
has a reasonable time thereafter within which to seek relief.”). For this reason alone, the
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Court should deny Open’s request to revisit the judgment and add a laches defense in
Open’s favor.
Additionally, other than merely declaring that an amended judgment reflecting a
successful laches defense eliminates the City’s rescission award, Open provides no
support for such assertion. The Court should not give credit to such unsupported
assertions under either Rule 52 or 59, particularly since laches is an equitable defense
left to the discretion of the trial court. See Jicarilla Apache Tribe v. Andrus, 687 F.2d 1324,
1338 (10th Cir. 1982).
C. The Court Correctly Found that the City is Entitled to Amounts Paid to Third-
Party Consultants and the Labor Costs That It Incurred, and that Open is
Not Entitled to Any Setoff.
A motion to reconsider is not a second opportunity for the losing party to make its
case, to rehash arguments or to dress up arguments that previously failed. See Voelkel
v. Gen. Motors Corp., 846 F. Supp. 1482, 1483 (D. Kan. 1994), aff’d, 43 F.3d 1484 (10th
Cir. 1994). Such motions are not appropriate if the movant only wants the Court to revisit
issues already addressed or to hear new arguments or supporting facts that it could have
presented originally. See Van Skiver v. U.S., 952 F.2d 1241, 1243 (10th Cir. 1991).
Despite this clear standard, and without new evidence or law, Open again argues
that the City is not entitled to recover more than the amounts paid to Open when
rescinding the agreements. The Court should (again) reject Open’s argument for the
same reasons set forth in the judgment. ECF No. 327 at 14-18. However, for
completeness sake, the City responds below to Open’s arguments.
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As a preliminary matter, rescission is an equitable remedy meant to “restore the
conditions existing before the agreement was made.” See Trimble, 697 P.2d at 723.
However, as the Court previously found, “rescission may still leave the claimant with
losses from related expenditures—separate from any consideration given under the
contract—that were made in reliance on the contract.” ECF No. 327 at 16. Indeed,
“[d]amages measured by the claimant’s expenditure can be included in the accounting
that accompanies rescission, in order to do complete justice in a single proceeding.” Id.
(citing Restatement (Third) of Restitution § 54; Trimble, 697 P.2d at 724 (“The defrauded
party may recover such damages as are a natural and proximate consequence of the
fraud.”)). Accordingly, to be put back in the position the City was in before Open’s fraud,
the City is entitled to recover not only amounts paid to Open, but also (1) amounts paid
to third-party consultants, and (2) the amount for the reasonable value of services that it
incurred during the project because of Open’s fraud.
Here, beginning in 2020, the City paid $456,024 to its third-party consultants, TMG
Consulting (“TMG”) and Vanir Construction Management (“Vanir”), for services performed
on the project with Open. As the evidence showed at trial, the City paid Vanir $169,917
in 2020 and an additional $86,810 in 2021 for project management services. T.E. 743 at
Sch. K3; Trial Tr. at 1061:6-12. The City paid TMG a total of $199,297 for consulting
services on the project in 2021. See T.E. 349 (yellow and green highlighting). The City is
entitled to recover these amounts because, but for Open’s fraud, it would not have needed
to hire or pay TMG or Vanir to provide consulting or project management services on the
project with Open. Not only was hiring outside consultants permitted by the agreements
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and encouraged by Open, but Open repeatedly stated that the City should use outside
consultants to manage the project. Trial Tr. at 335:5-17. Further, Open conceded via its
expert that such amounts are due to the City based on rescission and the amount due.
See T.E. 744 at Fig. 7. Open cannot now claim error. Rather, as the Court already found,
“the City’s third-party consultant costs were directly related to its performance under the
Agreements—performance which would not have occurred at all, but for the City having
been induced by fraud into entering the Agreements.” ECF No. 327 at 16-17.
Additionally, the City is entitled to the reasonable value of services that it incurred
during the project because the City was required to use significant resources and incur
substantial labor costs in order to implement the project that it would not have incurred
but for Open’s fraudulent conduct. As Open repeatedly stated during trial, the City was
required to have a certain number of full-time equivalents (“FTEs”) on the project per the
parties’ agreements. Trial Tr. at 1295:3-1297:14. These employees expended even more
time and effort due to Open’s fraud since the product was not ready and the City ended
up testing, improving, and effectively developing Open’s product.
From August 15, 2018 to January 15, 2021, the City had an average of 12 business
FTEs at $80.00/hour and an average of 6 IT FTEs at $100.00/hour on the project. See
T.E. 743, Sch. M; T.E. 24 at 37; Trial Tr. at 801:13-802:6. Open’s argument that these
numbers are somehow improper or should have been “scrutinized more closely” (see
ECF No. 347 at 23) should also be rejected because Open misrepresents how the City
calculated its value. Indeed, while TMG had originally estimated that each of these
individuals had worked an average of 8 hours per day on the project during this time-
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period based on City records, to be conservative, the City’s damages expert reduced the
average daily hours each individual worked on the project to 5 hours per day—a 37.5%
reduction. See T.E. 743, Sch. M. In total, (and reflecting the City’s expert’s reduction),
between August 15, 2018 and January 15, 2021, the City incurred $4,376,969 in labor
costs on the project. Id. The City is entitled to these amounts. See Rice v. Hilty, 38 Colo.
App. 338, 340-41 (1976); Gearhart v. Goehner, 701 P.2d 461, 467 (Or. Ct. App. 1985)
(granting cost of expenditures incurred in reliance on fraudulent statements). Further,
Open conceded that this category and amount is appropriate by including it in its expert’s
calculations for rescission and subsequent testimony. See T.E. 744 at Fig. 7; see Ex. A,
11/17/23 Tr. at 92:8-21-93:17. Open cannot now disavow its prior concessions via its
experts. See Sines v. Darling Ingredients, Inc., 2022 U.S. Dist. LEXIS 88397, *53-54 (D.
N.M. May 17, 2022) (testifying expert “acts as an agent of a proponent, because the
proponent means the Court and the opposing party to rely on the expert’s [opinions] as
the proponent’s own”) (quotation omitted).
Relatedly, while Open argues that the Court should reduce the final judgment
because the Court “declined to grant the additional five months’ of labor costs” that the
City sought, there is no such substantive finding by the Court that it meant to intentionally
cut off the reimbursement for labor costs in January, when the labor costs undisputedly
extended through June. Rather, as addressed in the City’s expert’s report (T.E. 743, Sch.
M at fn. b) and the City’s Closing Brief (ECF No. 315 at 8), the City incurred additional
labor costs on the project between January 15 and June 15, 2021, totaling $850,612,
including pre-judgment interest. That fact that this additional amount is missing from the
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judgment appears to be simply an oversight by the Court, not a basis to reduce the final
judgment in the City’s favor.8
Finally, Open is not entitled to any setoff for the City’s temporary efforts to use
Open’s product. Indeed, as previously addressed in the City’s Closing Brief (ECF No. 315
at 4-5) and this Court’s Order (see ECF No. 327 at 13-14), especially when sitting in equity
after a jury reached a fraud verdict, the Court need not account for the 29 months the City
limped along with Open’s system until it finally terminated the contract and implemented
a replacement. Rather, a party seeking setoff under circumstances involving fraud “is
precluded by general equitable principles from deriving any benefit from the fraud
perpetrated by him.” Arguelles, 827 P.2d at 557 (emphasis added). Thus, as the Court
previously found, any deduction for the City’s partial use of Open’s malfunctioning product
would “offend basic principles of equity.” ECF No. 327 at 13-14 (citing cases); see also
Full Tilt Boogie, LLC v. Kep Fortune, LLC, 2023 U.S. Dist. LEXIS 49142, *21 (C.D. Cal.
Mar. 21, 2023) (granting plaintiff full amount in rescission damages against defendant as
any deduction “would not accomplish complete equity”) (quotations omitted); 1 Dan B.
Dobbs, Law of Remedies § 9.3(3) at 593 (2d ed. 1993) (“the plaintiff must account to the
defendant only for actual benefits received when the transaction is avoided”).9
8 To overcome any doubt, and any inconsistency, the City respectfully requests that the
Court enter an amended judgment reflecting the amount of $6,568,998 in labor costs
through June 15, 2021 and in order to reconcile the total amount calculated by the City’s
expert to include pre-judgment interest through March 26, 2024. See ECF No. 330-1.
9 In its Motion, Open ignores much of the case law that either the Court or the City cited
in support of their positions that Open is not entitled to a setoff. Rather, Open hangs its
hat on the fact that Rice v. Hilty relied on the First Restatement while the Court and the
City largely cite to the Third Restatement. This, however, is neither manifest error nor a
new law and in fact, this is an argument that Open could have raised in response to the
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D. The City is Entitled to Pre-Judgment Interest Dating Back to Open’s Fraud.
Open’s assertion that the City should only receive pre-judgment interest from the
rescission date, or the filing of the Complaint, is without merit.
As a preliminary matter, Open’s argument is not proper under Rule 52 as it already
raised this argument once to no avail.
Additionally, however, C.R.S. § 5-12-102(1)(a) provides that the prevailing party is
entitled to prejudgment interest on money or property that is “wrongfully withheld.”
“Wrongfully withheld” means “when plaintiff’s injury is measured because the damages,
if then paid, would make the plaintiff whole.” Goodyear Tire & Rubber Co. v. Holmes, 193
P.3d 821, 827 (Colo. 2008). In turn, Colorado courts have held that injury from fraudulent
or tortious conduct is typically measured from the date of the defendant’s wrongful
conduct. See e.g., Frontier Exploration, Inc. v. Am. Nat’l Fire Ins. Co., 849 P.2d 887, 893-
94 (Colo. App. 1992) (holding prejudgment interest began to accrue on date insured’s
fraudulent estimates caused insurance company to pay benefits); Arguelles, 827 P.2d at
558 (holding prejudgment interest accrued from date defendant fraudulently induced
plaintiff to sign a real estate contract); UETRR, LLC v. Cotnis, 739 F. App’x 475, 480 (10th
Cir. 2018) (applying Colorado law). This is exactly how the City’s expert calculated it—
starting interest accrual when the payment went from the City to Open.
Further, Open admitted, through its expert, that the City is due prejudgment
interest dating back to 2018. See Ex. A, 11/17/23 Tr. at 95:10-96:7 (admitting that the City
City’s Closing Brief citing the Third Restatement, but chose not to. It cannot now seek a
new trial or amended judgment on this basis. See Van Skiver, 952 F.2d at 1243.
Case No. 1:21-cv-02063-CNS-SBP Document 353 filed 05/14/24 USDC Colorado pg 26 of
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may be awarded pre-judgment interest on its monetary award and that it was calculated
correctly by the City’s expert); see also id. at 87:16-25 Sines, 2022 U.S. Dist. LEXIS
88397, *53-54; see also Ballay v. Legg Mason Wood Walker, Inc., 1990 U.S. Dist. Lexis
4412, *6-8 (E.D. Pa. Apr. 13, 1990) (finding that “[w]ithout the element of interest, plaintiffs
would not be fully compensated” when electing rescission).
Accordingly, the Court should reject Open’s Motion for an altered or amended
judgment.
CONCLUSION
For the reasons the set forth above, the City respectfully requests that the Court
deny Open’s Motion for a new trial or alternatively, an amended judgment, in its entirety.
Respectfully submitted this 14th day of May, 2024.
DORSEY & W HITNEY LLP
s/ Case Collard
Case Collard
Andrea Ahn Wechter
Maral J. Shoaei
1400 Wewatta Street, Suite 400
Denver, Colorado 80202-5549
Telephone: (303) 629-3400
Fax: (303) 629-3450
E-mail: collard.case@dorsey.com
E-mail: wechter.andrea@dorsey.com
E-mail: shoaei.maral@dorsey.com
Attorneys for Plaintiff City of Fort Collins
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CERTIFICATE OF SERVICE
I hereby certify that on May 14, 2024 I caused the foregoing document to be
electronically filed via CM/ECF system which will send notification of such filing to all
counsel of record.
s/ Stacy Starr
DORSEY & W HITNEY LLP
Case No. 1:21-cv-02063-CNS-SBP Document 353 filed 05/14/24 USDC Colorado pg 28 of
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Exhibit A
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Proceedings reported by mechanical stenography ;
transcription produced via computer .
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 21-cv-02063-CNS-SBP
CITY OF FORT COLLINS,
Plaintiff,
vs.
OPEN INTERNATIONAL, LLC, and OPEN
INVESTMENTS, LLC,
Defendants.
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REPORTER'S TRANSCRIPT
Damages Hearing
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Proceedings before the HONORABLE CHARLOTTE N. SWEENEY, Judge,
United States District Court for the District of Colorado,
commencing on the 17th day of November, 2023, in Courtroom
A-702, United States Courthouse, Denver, Colorado.
APPEARANCES
For the Plaintiff:
CASE L. COLLARD and ANDREA A. WECHTER and MARAL SHOAEI, Dorsey
& Whitney LLP, 1400 Wewatta St., Ste. 400, Denver, CO 80202
JOHN R. DUVAL, Fort Collins City Attorney's Office, P.O. Box
580, Fort Collins, CO 80522
For the Defendants:
PAUL D. SWANSON and KEVIN MCADAM and ALEXANDRIA PIERCE,
Holland & Hart LLP, 555 17th St., Ste. 3200, Denver, CO 80201
Sarah K. Mitchell, RPR, CRR, 901 19th Street, Room A252,
Denver, CO 80294, 303-335-2108
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Damages Hearing21-cv-02063-CNS-SBP
Sarah K. Mitchell , RPR, CRR
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I N D E X
PLAINTIFF'S WITNESS PAGE
RONALD SEIGNEUR
Direct Examination By Ms. Shoaei 5
Cross-Examination By Mr. McAdam 25
Redirect Examination By Ms. Shoaei 48
DEFENDANTS' WITNESS PAGE
PETER SCHULMAN
Direct Examination By Mr. McAdam 52
Cross-Examination By Mr. Collard 85
Redirect Examination By Mr. McAdam 126
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Damages Hearing21-cv-02063-CNS-SBP
Sarah K. Mitchell , RPR, CRR
11/17/2023 3
*****
(The proceedings commenced at 8:59 a.m.)
THE COURT: We are here for a damages hearing in
21-cv-2063, City of Fort Collins v. Open International.
May I have entries of appearance, please.
MR. COLLARD: Of course, Your Honor. Case Collard,
Andrea Wechter, and Maral Shoaei of Dorsey & Whitney. And
with us today we also have from the City, John Duval of the
City's Attorney's Office. And I have to say because this is
his last day before retirement after 44 years of practicing
law.
THE COURT: Well, I'm sorry you're here. But
congratulations.
MR. DUVAL: Thank you. Thank you, Your Honor.
MR. SWANSON: And Paul Swanson from Holland & Hart on
behalf of Open International and Open Investments, with my
colleagues Kevin McAdam and Alexandria Pierce, and our client
representative William Corredor.
THE COURT: Good morning to you all. All right. I
anticipate -- we've blocked off three hours. Do you all think
it's going to be three hours? Let's start there.
MR. COLLARD: Your Honor, I think that that's about
right, but with one caveat, which is I'm not sure if you're
looking for any argument on any of the legal aspects here
after we wrap up with the two damages experts.
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Damages Hearing21-cv-02063-CNS-SBP
Sarah K. Mitchell , RPR, CRR
11/17/2023 87
Q.Okay. In your opinion that would not include lost profits
of any kind, right? To quote your report, you said, This
so-called status quo ante would not provide lost profits of
any kind, fair?
A.Yes.
Q.Okay. But you don't cite any authority for that position
in that section of your report, do you?
A.I don't remember, but if you -- I mean, my report speaks
for itself.
Q.You're welcome to look. It's on page 28 of your report.
A.I'm not trying to argue the point. But I'll look at it.
Q.Okay. You don't cite any authority for that position,
that the status quo ante could not provide lost profits of any
kind, at the very bottom of page 28.
A.Yes.
Q.Okay. But you agree that if the City had never been
fraudulently induced to enter a contract with Open in 2018,
that they would have been free to contract with another
software vendor for a billing system, right?
A.Can you just repeat that so I can think about it?
Q.Sure. If the City had never been fraudulently induced to
enter a contract with Open in 2018, they would have been free
to contract with another software vendor for a billing system,
right?
A.Yeah, I think I would agree with that.
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Damages Hearing21-cv-02063-CNS-SBP
Sarah K. Mitchell , RPR, CRR
11/17/2023 92
it from your alternative calculation, and you said you had
complete control over what you did for the Schulman & Company
amount and the notes, right? And when you thought a category
didn't apply to rescission, you removed it?
A.All I'm saying is --
Q.Please answer my question, sir.
A.I am.
Q.No. My question is when you thought a category didn't
apply, you removed it, and you said not rescission, correct?
A.That's correct.
Q.Okay. You didn't remove the category under number seven
of the amounts the City paid to Open, right?
A.Yes.
Q.And you didn't remove the category of payments to
consultants for project management. You didn't say that's not
rescission and remove that. You left that in your alternative
calculation, right?
A.Yes.
Q.Okay. And same for the City's labor costs. You left that
in your calculation as well, correct?
A.Yes.
Q.Okay. And you agree on the payments to consultants that
the City would not have -- have hired any outside or
third-party consultants to work on the project if it had never
entered a contract with Open. You agree with that, right?
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Damages Hearing21-cv-02063-CNS-SBP
Sarah K. Mitchell , RPR, CRR
11/17/2023 93
A.Yes.
Q.Okay. And you agree -- you've heard testimony and seen
evidence that Open really wanted the City to hire outside
consultants and project managers to work on this project,
right?
MR. MCADAM: Objection, foundation.
THE COURT: Overruled.
A.I don't know.
Q.(By MR. COLLARD) Okay. And you agree on the labor costs
that had the City not been fraudulently induced to enter the
contract with Open, it would not have had any labor
expenditures on the project with Open?
A.I would agree with that, yes.
Q.And you would also agree that the City's staffing and
labor requirements were mandated by that contract with Open,
right?
A.Yes.
Q.Okay. Your other change here in your alternative column
was to remove prejudgment interest from Mr. Seigneur's
calculations, correct?
A.Yes.
Q.Okay. So your opinion in your report -- this is on
page 29 of your report, Figure 7, was that even without the
lost net revenue category and removing the PJI, the Schulman &
Company amount for the City's rescission claim is 12,531,849,
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Damages Hearing21-cv-02063-CNS-SBP
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A.Yes.
Q.And the column with your restated rescission damages is
the Schulman & Company amount column, correct?
A.Yes.
Q.And the total for that column is $12,531,849, correct?
A.Yes.
Q.Okay. And you understand that the City has now prevailed
on its claim for fraud, right?
A.On liability, yes.
Q.Yes. And if the City receives a monetary award, you agree
that the Court may award prejudgment interest pursuant to
Colorado statute, correct?
A.My understanding is that's correct, if it's not already
included in Mr. Seigneur's analysis.
Q.Right. And your understanding of Mr. Seigneur's report is
that he was using 8 percent, and that that was equivalent to
prejudgment interest, right?
A.I'm saying it was prejudgment interest.
Q.And if it is prejudgment interest, you agree that the
calculation done by Mr. Seigneur was done properly and
compounded, correct?
A.The calculation of prejudgment interest was correct.
Q.Okay. So based on Mr. Seigneur's report, you would agree
that if the City receives prejudgment interest, Mr. Seigneur
has properly done that calculation through April 14, 2023,
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correct?
A.The calculation of prejudgment interest, correct.
Q.But the Court, if they awarded prejudgment interest
through the judgment, would still need to add prejudgment
interest between April 14, 2023, and the judgment date,
correct?
A.Yes.
Q.Okay. So you removed prejudgment interest here, but you
agree that if the City receives a monetary award and is
awarded prejudgment interest, that that would have to be added
back in, correct?
A.If the award was on the amounts in the SCo amount column,
I would agree with that.
Q.Great. So I also want to discuss this calculation error,
which is what you call it, on the amount that Mr. Seigneur
removed from the amount due due to use by the City of the
software for some time. Do you recall that issue?
A.Yes.
Q.All right. And for the basis of Mr. Seigneur's
calculation, he used the present value of the payments, and
then he multiplied that by 12.08 percent, correct?
A.I'm sorry. Can you just repeat that again?
Q.Sure. For the basis of Mr. Seigneur's calculation, he
used the present value of payments and multiplied that by
12.08 percent, correct?
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