HomeMy WebLinkAbout2021-cv-2063-CNS-MEH - City Of Fort Collins V. Open International, Et Al. - 233 - Brief In Opposition To Request For Early Election Remedies W Exhibits
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IN 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.
PLAINTIFF CITY OF FORT COLLINS’ BRIEF OPPOSING OPEN’S REQUEST FOR
AN EARLY ELECTION OF REMEDIES
The City of Fort Collins (the “City”), by and through its undersigned counsel, hereby
submits this Brief Opposing Open’s Request for an Early Election of Remedies.
INTRODUCTION
The City has been harmed by Open’s fraudulent or negligent misrepresentations
concerning the functionality of its software. The City has asserted misrepresentations both as direct
claims and as an affirmative defense to Open’s breach of contract claim. The City has requested a
jury trial on all issues so triable, including its claims, Open’s counterclaim, and the City’s
affirmative defenses.Forcing the City to make a premature election of remedies is inappropriate
for four reasons: First, as the wronged party, the City has the right to elect post-verdict.Second,
the City’s affirmative defenses to Open’s counterclaim mirror the City’s affirmative claims, so an
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election of remedy would not save judicial resources or streamline the upcoming jury trial. Third,
Open has waived its right to argue for an early election of remedies by failing to include it as an
affirmative defense. Finally, an early election of remedies is improper because Open intends to
argue at trial that rescission is not available, which could impede the City’s damages claim and
significantly complicate the upcoming trial.
FACTUAL BACKGROUND
The City demanded a jury trial on all issues so triable. See Complaint \[Dkt 6\]at 22; The
First Amended Complaint reiterated the City’s jury demand. First Amended Complaint (“FAC”),
\[Dkt 192\] at 24.
Open filed a counterclaim against the City for breach of contract. Answer to First Amended
Complaint and Counterclaims (“Answer”) \[Dkt. 194\] at ¶¶ 196-202. The City raised several
affirmative defenses in response to this counterclaim, including, but not limited to, an affirmative
defense that Open’s claim is barred by Open’s fraud and prior material breach.First Amended
Reply to Open’sAnswer to First Amended Complaint and Counterclaims (“Counterclaim
Answer”) \[Dkt. 197\]at 34, Second Affirmative Defense.
Open did not raise election of remedies or the timeliness of rescission as an affirmative
defense in its answers to either the City’soriginal or amendedcomplaints.See Answer and
Counterclaim \[Dkt. 13\]at 11-12; Answer, \[Dkt. 194\]at 15-16.Nevertheless, Open argued in its
motion for summary judgment that the City should be barred from seeking rescission.Defendants’
Motion for Partial Summary Judgment \[Dkt. 125\]at 23-26.On March 22, 2023, theCourt rejected
Opens’ argument, but noted that it involved “questions of disputed fact—namely, when did the
City discover the misrepresentations tied to its software’scapabilities, and did itcontinue with the
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contract with full knowledge of Open’s misrepresentations.” Order Granting in Part and Denying
in Part Plaintiff’s Motion for Summary Judgment \[Dkt. 225\] at 11.Because this is an issue of fact,
Open presumably intends to reassert it at trial.
ARGUMENT
I.The City has the Right to Elect Post-Verdict.
As the victim of Open’s misrepresentationsregarding the capabilities of its software, the
City is empowered to elect between either rescinding the MPSA or suing directly for the damages
caused by Open’s misrepresentations. H &K AutomotiveSupply Co. v. Moore & Co., 657 P.2d
986, 988 (Colo. App. 1982). Colorado law emphasizes that the City is entitled to pursue both
remedies throughout this litigation, and “the choice of remedies belongs to the one who has been
defrauded, and may not be forced upon him by the wrongdoer.” Id. The City mayelect remedies
after a verdict has been reached.Miller v. Rush, 393 P.2d 565, 569 (Colo. 1964) (permitting
election of remedies after verdict). The Court has discretion to direct the City to elect remedies
laterin this dispute in order to streamline this litigation and prevent jury confusion. Kline Hotel
Partners v. Aircoa Equity Interests, Inc., 729 F. Supp. 740, 743 (D. Colo. 1990) (summarizing
Colorado law and concluding that Colorado courts leave the timing of the election to the sound
discretion of the trial court). However, the Court’s discretion should be exercised with the goal of
protecting the City’s rights as the party wronged by Open’s fraudulent and/or negligent conduct.
H&KAutomotiveSupplyCo.at988.All relevant factors suggest the Court should not exercise
its discretion to force an early election.
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II. APremature Election of Remedies will not Streamline the Trial or Avoid Jury
Confusion.
Early election would do nothing to streamline the case because the City will proceed on all
three causes of action whether it elects a remedy or not. Colorado law allows a party to affirm a
contract and still sue for fraud, breach of contract, and negligent misrepresentation damages. See,
e.g., Western Cities Broadcasting, Inc. v. Schueller, 849 P.2d 44, 48 (1993 Colo.) (en banc) (“\[a\]
plaintiff who has been fraudulently induced to enter a contract may \[\] affirm the contract and
recover in tortfor thedamagescausedby the fraudulent act”);Carpenter v. Donohoe, 154 Colo.
78, 82 (Colo. 1964) (a party can sue for breach of contract and fraud at the same time where the
contract has been affirmed and the defrauded party merely seeks to recover damages to the extent
that the subject of the contract falls short qualitatively or quantitatively of the representation
inducing the transaction). Even if the City elects to rescind based on Open’s fraudulent and
negligent misrepresentations about Open’s software, it could still maintain its breach of contract
claim with rescission as a remedy.See, e.g., Cooper v. Peoples Bank & Trust Co., 725 P.2d 78, 80
(Colo. App. 1986) (substantial breach permitted rescission damages).
Relatedly, the early election would also not simplify matters for the jury. The City’s timely
jury demand entitles it to receive a jury trial to the fullest extent allowed by law on “all issues so
triable.” Compl. \[Dkt. 6\] at 22; FAC \[Dkt 192\] at 24; see also Fed. R. Civ. P. 39(a) (“\[w\]hen a
jury trial has been demanded \[\], the action must be designated as a jury action \[and\] the trial on all
issues so demanded must be by jury unless” the Court “finds that on some or all of those issues
there is no federal right to a jury trial”) (emphasis added). Claims for fraudulent and negligent
misrepresentation, which include damages, are triable to a jury. See, e.g., Anson v. Trujillo, 56
P.3d 114, 119 (Colo. App. 2002) (upholding jury verdicts for fraudulent and negligent
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misrepresentation claims). Juries routinely consider misrepresentation claims and answer
questions involving fraudulent and negligent misrepresentation. See Ex. 1, Pattern Jury Instruction
9:4, Negligent Misrepresentation causing Financial Loss in a Business Transaction; Ex. 2, Pattern
Jury Instruction 19:1, False Representation – Elements of Liability. Jurors also routinely address
instances where parties seek to recover the same or overlapping damages based on alternative
claims for relief. See Ex. 3, Pattern Jury Instruction 6:14, Multiple Recovery Prohibited (when
Plaintiff Suing on Alternative but Duplicative Claims for Relief). Even if the Court must enact
rescission as a remedy, the jury can decide the City’s claims without being prejudiced or awarding
duplicative relief.
While Courts have sometimes concluded that a claim for rescission based on fraud could
be resolved without a jury’s input, this is not the case when, as here, the jury will be required to
address the same factual issues in connection with the City’s affirmative defenses to Open’s
remaining counterclaim no matter how the election is resolved. Open has a remaining
counterclaim for breach of contract, (Answer \[Dkt. 194\] at ¶¶ 196-202) and the City has
affirmative defenses of fraud and prior material breach that mirror its affirmative claims of fraud
and breach of contract. Counterclaim Answer \[Dkt. 197\] at 34, Second and Third Affirmative
Defenses. As just an example, in defense of Open’s breach of contract claim, the City has alleged
a prior material breach by Open for failing to meet the functionalities in the software as promised.
See Reply to Countercls. \[Dkt. 197\] at 34; Final Pretrial Order \[Dkt. 230\] at 2-8. Accordingly,
the jury will hear the same evidence going to the City’s fraud and negligent misrepresentation
claims during the City’s defense of Open’s remaining breach of contract counterclaim—even if
the City elects rescission as a remedy. The City has demanded a jury trial on Open’s breach of
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contract counterclaim by demanding a jury in its original Complaint and again in its Amended
Complaint (Compl. \[Dkt. 6\] at 22; FAC \[Dkt 192\] at 24). See, e.g., YJR Enters., Inc. v. Twin Cty.
Grocers, Inc., 709 F. Supp. 499, 501-02 (S.D.N.Y. 1989) (“The jurydemand covers all issues
raised in subsequent pleadings affecting the party making the demand, because it has already told
its opponent that it wants a jury trial to the extent guaranteed by the Seventh Amendment.”)
(internal punctuation omitted). Open does not dispute that its claim (and therefore the City’s
affirmative defenses) should be submitted to the jury. September 16, 2021 Scheduling Order \[Dkt.
21\] at 15 (indicating that the “parties anticipate a 7-day jury trial”). In order to resolve Open’s
breach of contract claim, the jury will need to evaluate the City’s defenses that Open cannot
enforce the contract because it was obtained through Open’s misrepresentations or, in the
alternative, that Open materially breached the contract first. Since the jury will need to consider
evidence of fraud in connection with the City’s affirmative defense to Open’s counterclaim, in this
context, bifurcating is “undesirable, duplicitous and virtually impossible.” Commercial Iron &
Metal Co. v. Bache Halsey Stuart, Inc., 581 F.2d 246, 250 (10th Cir. 1978) (“even if it were
assumed that its claims were purely equitable, its claims for relief and its defense against the
counterclaim were factually identical, so that bifurcation into an equitable action and a legal action
would be undesirable, duplicitous and virtually impossible, and could well have deprived
Commercial of its right to a full jury trial on Bache's counterclaim”). A premature election of
remedies is improper because it will not simplify the upcoming jury trial.
The facts and procedural posture in this case are distinguishable from those in which courts
have ordered the early election of remedies. For example, in Kline Hotel Partners v. Aircoa Equity
Interests, Inc., the court concluded that an early election of remedies would be helpful because it
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had the potential to narrow both the evidence and the claims presented to the jury, because the
need for an accounting significantly complicated the issues submitted to the jury, and because the
rescission claim “necessarily encompasses relevant pre-partnership agreement activity.” 729 F.
Supp. 740, 744-45 (D. Colo. 1990). Similarly, the court in Cross Country emphasized that, while
there was no risk of confusion because the case did not involve an accounting, a premature election
of remedies was nevertheless appropriate because it would increase judicial efficiency and allow
a smoother trial. See Cross Country Land Servs. v PB Telecomms., Inc., 276 Fed. Appx. 825, 832
(10th Cir. 2008). Because the risk of jury confusion is low and readily mitigated through effective
jury instructions, and because the City’s affirmative defenses to Open’s counterclaim mean that
the City will present the same evidence no matter what, there is no benefit to curtailing the City’s
right to choose a theory of recovery now.
III. Open has Waived its right to Compel an Election of Remedies
Based on its motion for summary judgment, the City anticipates that Open plans to argue
that the City did not promptly elect to rescind its agreement. This argument is untimely and unpled.
Election of remedies is an affirmative defense. Donner v. Nicklaus, 778 F.3d 857, 876 (10th Cir.
2015) (“election of remedies is an affirmative defense”). Open, however, failed to plead election
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of remedies as an affirmative defense. As a consequence, Open is not entitled to compel the City
to elect remedies. Kuhlv. Hayes, 212 F.2d 37, 39 (10th Cir. 1954) (emphasizing that “\[a\]n election
of remedies is an affirmative defense\[, i\]t must be pleaded by the party who asserts it and the
burden of proof is on him to establish it.”); see also, e.g., Tuscan/LehighDairies,Inc.vBeyer
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Open previously attempted to prevent the City from raising an affirmative defense concerning appropriations that
Open contended the City did not plead (and the City amended in response) but now seeks to pursue an affirmative
defense it did not plead.
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Farms, Inc., 136 A.D.3d 799, 805 (2d Dep’t 2016) (defendant “waived the defense of election of
remedies by failing to raise it as an affirmative defense in its amended answer”). Open has had
multiple opportunities to raise this affirmative defense, including in the operative answer it filed
recently on February 14, 2023, but it has not done so. See generally, Answer \[Dkt. 194\]. As a
result, Open has waived its right to seek or compel an early election of remedies, and the City
should be permitted to elect post-verdict.
IV. Open is Attempting to Use Election of Remedies to Deprive the City of a Full
Recovery
Open’s real goal in seeking an election of remedies is not to simplify this case at trial, but
to impede the City’s right to relief. Open intends to both force the City to prematurely elect its
remedy and to argue that the City should not be entitled to pursue rescission as a remedy. If, for
example, the City were forced to elect now and elected rescission, Open intends to argue at trial
that the City did not make a timely election to rescind. If this argument succeeds, the City will be
unfairly estopped from seeking damages. See Gordon-Tiger Mining & Reduction Co. v. Brown,
56 Colo. 301, 312, 138 P. 51, 55 (Colo. 1914) (“When, however, he elects to waive the fraud such
election isirrevocable and his remedy thereafter isan actionfor damages.”). By forcingelection
now, Open hopes to deprive the City of its right to seek redress for Open’s misrepresentations.As
a consequence, an early election of remedies is not only inappropriate, but also has the potential
to deprive the City of its rights or significantly complicate the resolution of this dispute.
CONCLUSION
For the reasons stated herein, the City respectfully requests that Open’s request to require
the City to make an early election of remedies be denied.
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st
day of July, 2023.
Respectfully submitted this 24
D
ORSEY & 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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CERTIFIC A TE OF SERVICE
I hereby certify that on July 24, 2023 I caused the foregoing document to be electronically
filed via CM/ECF system which will send notification of such filing to the following:
Alexander D. White
Paul D. Swanson
Hannah E. Armentrout
Anna C. Van de Stouwe
Alexandra E. Pierce
HOLLAND & HART LLP
555 17th Street, Suite 3200
Denver, CO 80202
Telephone: (303) 295-8578
adwhite@hollandhart.com
pdswanson@hollandhart.com
hearmentrout@hollandhart.com
acvandestouwe@hollandhart.com
aepierce@hollandhart.com
Attorneys for Defendants
s/Stacy Starr
D ORSEY & W HITNEY LLP
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19:1 FALSE REPRESENTATION ELEMENTS OF LIABILITY
For the plaintiff, (name), to recover from the defendant, (name), on (his) (her) claim
of deceit based on fraud, you must find all of the following have been proved by a
preponderance of the evidence:
1. The defendant made a false representation of a past or present fact;
2. The fact was material;
3. At the time the representation was made, the defendant:
(a) knew the representation was false; or
(b) was aware that (he) (she) did not know whether the representation was
true or false;
4. The defendant made the representation with the intent that (the plaintiff) (a
group of persons of which the plaintiff was a member) would rely on the representation;
5. The plaintiff relied on the representation;
7. This reliance caused (injuries) (damages) (losses) to the plaintiff.
If you find that any one or more of these (number) statements has not been proved,
then your verdict must be for the defendant.
On the other hand, if you find that all of these (number) statements have been
proved, (then your verdict must be for the plaintiff) (then you must consider the
\[insert any affirmative defense that would be a complete
).
If you find that (this affirmative defense has) (any one or more of these affirmative
defenses have) been proved by a preponderance of the evidence, then your verdict must be
for the defendant.
However, if you find that (this affirmative defense has not) (none of these
affirmative defenses have) been proved, then your verdict must be for the plaintiff.
Notes on Use
1. When the alleged deceit is based on the concealment or nondisclosure of a material
fact, rather than an overt misrepresentation, Instruction 19:2 should be used rather than this
instruction. See Ballow v. PHICO Ins. Co., 875 P.2d 1354 (Colo. 1993); Colo. Interstate Gas
2
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Co. v. Chemco, Inc., 833 P.2d 786 (Colo. App. 1991), , 854 P.2d 1232
(Colo. 1993).
2. In cases involving multiple defendants or designated nonparties where the pro rata
liability statute, § 13-21-111.5, C.R.S., is applicable, see the Notes on Use to Instruction 4:20
(model unified verdict form).
3. Omit any numbered paragraphs, the facts of which are not in dispute.
4. Use whichever parenthesized words are most appropriate and omit the parenthesized
clause of the last two paragraphs if the defendant has put no affirmative defense in issue or there
is insufficient evidence to support any defense.
5. Though mitigation of damages is an affirmative defense, see Instruction 5:2, only
rarely, if ever, when established will it be a complete defense. For this reason, mitigation should
not be identified as an affirmative defense in the concluding paragraphs of this instruction.
Instead, if supported by sufficient evidence, Instruction 5:2 should be given along with the actual
damages instruction appropriate to the claim and the evidence in the case.
6. Other appropriate instructions defining the terms used in this instruction, for example,
necessary, an appropriate instruction or instructions relating to causation must be given. See
Instructions 9:18 to 9:21.
7. In common-law actions for deceit or in statutory actions under what is now section 42-
6-204, C.R.S., based on a misrepresentation in the mileage disclosure statement required by
section 42-6-202(5), C.R.S., or created by concealing the actual mileage of a motor vehicle as
prohibited by section 42-6-202(1), there is a rebuttable presumption that a purchaser who
received the mileage representation justifiably relied on the representation and that the
representation was material to the transaction. Lurvey v. Phil Long Ford, Inc., 37 Colo. App.
11, 541 P.2d 114 (1975). In those cases, Instruction 3:5, incorporating this presumption, must be
given with this instruction or, in a concealment case, with Instruction 19:2.
Source and Authority
1. This instruction is supported by and was cited with approval by the Colorado Supreme
Court in Bristol Bay Productions, LLC v. Lampack, 2013 CO 60, ¶ 26, 312 P.3d 1155, 1160
three discrete sub-parts, requiring the plaintiff to prove separately actual reliance, the
reasonableness of that reli
instruction is also supported by Knight v. Cantrell, 154 Colo. 396, 390 P.2d 948 (1964);
Morrison v. Goodspeed, 100 Colo. 470, 68 P.2d 458 (1937); Colorado Springs Co. v. Wight,
44 Colo. 179, 96 P. 820 (1908); and Sellar v. Clelland, 2 Colo. 532 (1875). See also Vinton v.
Virzi, 2012 CO 10, ¶ 15, 269 P.3d 1242; , 776
P.2d 1114 (Colo. 1989); Alzado v. Blinder, Robinson & Co., 752 P.2d 544 (Colo. 1988);
Kinsey v. Preeson, 746 P.2d 542 (Colo. 1987); Trimble v. City & County of Denver, 697 P.2d
716 (Colo. 1985); Just in Case Bus. Lighthouse, LLC v. Murray, 2013 COA 112M, ¶ 46,
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, 2016 CO 47; Barfield v. Hall Realty, Inc., 232 P.3d 286
(Colo. App. 2010) (citing this instruction); , 214 P.3d 1060
(Colo. App. 2009); Nelson v. Gas Research Inst., 121 P.3d 340 (Colo. App. 2005); Robert K.
Schader, P.C. v. Etta Indus., Inc., 892 P.2d 363 (Colo. App. 1994); Pittman v. Larson
Distrib. Co., 724 P.2d 1379 (Colo. App. 1986); Forsyth v. Associated Grocers of Colo.,Inc.,
724 P.2d 1360 (Colo. App. 1986) (citing with approval the elements as set out in this
instruction); Club Valencia Homeowners , 712 P.2d 1024 (Colo.
App. 1985); 2 F. H ARPER ET AL., H ARPER, J AMES, AND G RAY ON T ORTS § 7.1 (3d ed. 2006); W.
P AGE K EETON ET AL., P ROSSER AND K EETON ON THE L AW OF T ORTS §§ 105-110 (5th ed. 1984).
2. Paragraph number 3 is supported by Meredith v. Ramsdell, 152 Colo. 548, 552, 384
when he knows it does not, is guilty of fraud, notwithstanding he entertains a belief and
expectation that it Denver Business Sales Co. v. Lewis, 148 Colo.
293, 365 P.2d 895 (1961) (trial court reversed in a deceit case based on nondisclosure for
Pattridge v. Youmans, 107 Colo.
not knowing whether it is true or false, and it is in fact untrue, is guilty of fraud as much as if he
Otis & Co. v. Grimes, 97 Colo. 219, 221-22, 48 P.2d 788, 789 (1935)
true
Lahay v.
City National Bank of Denver, 15 Colo. 339, 25 P. 704 (1891) (same). See also Overland Dev.
Co. v. Marston Slopes Dev. Co., 773 P.2d 1112 (Colo. App. 1989); H ARPER, J AMES AND G RAY
ON T ORTS, supra, § 7.3; P ROSSER AND K EETON ON THE L AW OF T ORTS, supra, § 107. The
language of paragraph 3 was cited with approval in Sodal v. French, 35 Colo. App. 16, 531 P.2d
972 (1974), Slack v. Sodal, 190 Colo. 411, 547 P.2d 923
(1976).
3. Numbered paragraph 5 is specifically supported by Huston v. Ohio & Colorado
Smelting & Refining Co., 63 Colo. 152, 165 P. 251 (1917) (plaintiff denied relief for damages
caused by his reliance which was other than that intended by the defendant). See also Nielson v.
Scott, 53 P.3d 777 (Colo. App. 2002) (summary judgment proper where no evidence that
reliance on false representation was justified); Soneff v. Harlan, 712 P.2d 1084 (Colo. App.
1985) (no evidence of detrimental reliance); Blinder, Robinson & Co. v. Alzado, 713 P.2d
1314 (Colo. App. 1985), , 752 P.2d 544 (Colo.
1988).
4. The cases cited above in general support of this instruction do not use the phrase
ive standard of the
reasonably prudent man, , 75 Colo. 170, 225 P. 217 (1924), it may not be
wholly unwarranted. See Instructions 19:8, 19:9, 19:10, and 19:11; see also Fasing v. LaFond,
944 P.2d 608 (Colo. App. 1997) (element of claim i
misrepresentation); , 849 P.2d 887 (Colo. App.
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1992) (false representation requires justifiable reliance by the one to whom the representation is
made).
5. In a deceit action, actual damages must be proved as an element of the tort. W. Cities
Broad., Inc. v. Schueller, 849 P.2d 44 (Colo. 1993); ,
830 P.2d 1103 (Colo. App. 1992), La Plata Med. Ctr. Assocs.
v. United Bank of Durango, 857 P.2d 410 (Colo. 1993); Harrison v. Smith, 821 P.2d 832
(Colo. App. 1991); Dann v. Perrotti & Hauptman Dev. Co., 670 P.2d 448 (Colo. App. 1983);
Greenleaf, Inc. v. Manco Chem. Co., 30 Colo. App. 367, 492 P.2d 889 (1971).
6. In Williams v. Boyle, 72 P.3d 392 (Colo. App. 2003), the court held that expert
misrepresentation and fraudulent concealment claims against a physician who had allegedly
misinformed plaintiff regarding the effects of a medication that the physician had prescribed.
7. For fraud as a defense to a breach of contract action, see Instruction 30:18. For an
excellent discussion of the various remedies and defenses which may be based on fraud, see
P ROSSER AND K EETON ON THE L AW OF T ORTS, supra, § 105.
8. Under section 13-25-
See
Wiley v. Byrd
convincing); Wallick v. Eaton, 110 Colo. 358, 363, 134 P.2d 727, 729 (1943) (proof of fraud
9. For recovery for financial losses arising out of a business relationship caused by a
negligently made misrepresentation on which the plaintiff relied, see Instruction 9:4. Also, for
the tort of negligent misrepresentation resulting in physical harm, see Instruction 9:3.
10. In certain cases, the usual common-law requirements for the tort of deceit may have
been changed by statute. See, e.g., § 13-21-109, C.R.S. (damages recoverable for writing checks
or other instruments when no account or insufficient funds). See also nk of
Durango v. Lyons, 2015 COA 19, ¶ 28, 349 P.3d 1161, 1166 (a fraud claim under the Colorado
Securities Act could lie in tort for purposes of the Colorado Governmental Immunity Act
because section 11-51-y, knowingly, or with an
intent to defraud sells or buys a security in violation of \[this section\] . . . is liable to the person
Barfield, 232 P.3d at 291 (section 12-61-807, C.R.S.,
expressly provides that agent acting a
failure to do so could not be basis for negligent misrepresentation or fraud claim); Nelson, 121
P.3d at 344 (elements to establish action for fraud under section 8-2-104, C.R.S., prohibiting
obtaining workers by misrepresentation, are the same as those for common-law fraud). In other
cases, common-law fraud requirements remain the same. See, e.g., In re Estate of Gattis, 2013
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11. Where a plaintiff has been induced fraudulently to enter into two related contracts as
part of the same general transaction, the plaintiff need not elect the same remedy for both
contracts. The plaintiff may elect to affirm one and sue for damages in deceit, and rescind the
other and seek restitution for any consideration paid. Plaintiff should not be required to elect the
same remedy for both contracts unless necessary to prevent double recovery or because the
assertion of different remedies would be so inconsistent that the assertion of one would
necessarily be a repudiation of the other. Stewart v. Blanning, 677 P.2d 1382 (Colo. App.
1984).
12. Lack of privity with a remote purchaser does not insulate a seller of property from
liability for false representation arising out of a failure to disclose a latent defect which
materially affected the desirability of the property. Iverson v. Solsbery, 641 P.2d 314 (Colo.
App. 1982); Schnell v. Gustafson, 638 P.2d 850 (Colo. App. 1981).
13. A disclosed principal may be held liable in deceit for a misrepresentation made by an
agent within the scope of a transaction the agent was authorized to effect. Erickson v. Oberlohr,
749 P.2d 996 (Colo. App. 1987).
14. A fraud claim based on only vicarious liability is insufficient. Just in Case Business
Lighthouse, 2013 COA 112M, ¶ 64.
15. There is authority for the proposition that if the plaintiff has access to information that
would have led to the discovery of the true facts and such information was equally available to
f law. See Colo.
Coffee Bean, LLC v. Peaberry Coffee, Inc., 251 P.3d 9 (Colo. App. 2010); Balkind v.
Telluride Mtn. Title Co., 8 P.3d 581 (Colo. App. 2000); see also Vinton, 2012 CO 10, ¶ 17;
M.D.C./Wood, Inc. v. Mortimer, 866 P.2d 1380 (Colo. 1994). However, for a different test, see
the authority cited in the Source and Authority to Instructions 19:8 to 19:10.
-contractual claims for fraudulent
concealment and fraudulent misrepresentation which arise out of contract rather than tort duties.
Hamon Contractors, Inc. v. Carter & Burgess, Inc., 229 P.3d 282 (Colo. App. 2009); see also
Top Rail Ranch Estates, LLC v. Walker, 2014 COA 9, ¶ 39, 327 P.3d 321 (economic loss rule
barred fraud claims); In re Estate of Gattis, 2013 COA 145, ¶ 14 (economic loss rule does not
bar a nondisclosure claim against a home seller for latent defects known to the seller); Makoto
USA, Inc. v. Russell, 250 P.3d 625 (Colo. App. 2009) (economic loss rule bars fraud and theft
claims that are dependent on contractual duty).
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Exhibit 3
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C. MULTIPLE RECOVERY
6:14 MULTIPLE RECOVERY PROHIBITED (WHEN PLAINTIFF SUING ON
ALTERNATIVE BUT DUPLICATIVE CLAIMS FOR RELIEF)
The plaintiff, (name), has sued for the same (injuries) (damages) (losses) on (number)
different claims for relief. The claims for relief on which the plaintiff has sued and on
which you have been instructed are:
claims).
If you find for the plaintiff on more than one claim for relief, you may award (him)
(her) damages only once for the same (injuries) (damages) (losses).
Notes on Use
1. This instruction applies only to multiple claims that are duplicative in terms of their
recoverable damages. The court should instruct the jury on each claim for relief, provided there
is sufficient evidence on each such theory in the case. In such circumstances, however, this
instruction must be given. Schuessler v. Wolter, 2012 COA 86, ¶ 64, 310 P.3d 151; Rusch v.
Lincoln-Devore Testing Lab., Inc., 698 P.2d 832 (Colo. App. 1984). Also, the verdict forms
submitted to the jury should be so phrased that the jury is not misled. See Am. Furniture Co. v.
Veazie, 131 Colo. 340, 281 P.2d 803 (1955); see also Andrews v. Picard, 199 P.3d 6 (Colo.
App. 2007); Colo. Homes, Ltd. v. Loerch-Wilson, 43 P.3d 718 (Colo. App. 2001); DeBose v.
Bear Valley Church of Christ, 890 P.2d 214 (Colo. App. 1994), , 928
P.2d 1315 (Colo. 1996).
2. When the plaintiff is suing for the same physical injuries to person or property and
basing his or her claims on alternative theories of relief (for example, breach of implied warranty
of merchantability and strict liability in tort), but is also suing for other or additional damages
based on one of these or yet a different theory (for example, commercial damages caused by
breach of express warranty), this instruction must be appropriately modified.
3. Where damages are the same for each of multiple claims for relief, clarifying
instructions and a special verdict form should be used so that the jury will award the same
damages only once for all successful claims. Steward Software Co. v. Kopcho, 275 P.3d 702
(Colo. App. 2010), , 266 P.3d 1085 (Colo. 2011).
4. For a verdict form addressing multiple claims and parties, see Instruction 4:20, the
model unified verdict form.
Source and Authority
1. This instruction is supported by American Furniture Co., 131 Colo. at 346, 281 P.2d
at 806. In that case, the court noted in dictum that the confusion of the verdict forms could have
been avoided by requiring the plaintiff to elect his remedy before the case was submitted to the
jury. However, the court did not state that such necessarily should have been done, and other
authority clearly indicates that in the absence of unusual circumstances, the plaintiff is entitled to
go to the jury on alternative theories, if there is sufficient evidence supporting each theory. See
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Carpenter v. Donohoe, 154 Colo. 78, 388 P.2d 399 (1964) (when remedies are consistent, a
party is entitled to pursue either or both until satisfaction of one is obtained); see also C.R.C.P.
18(a), 318(a); Stewart v. Blanning, 677 P.2d 1382, 1384 (Colo. App. 1984) (requiring election
2. The rule prohibiting double recovery for the same injury on multiple claims for relief
also applies in cases involving multiple defendants. Quist v. Specialties Supply Co., 12 P.3d
863 (Colo. App. 2000).
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