December 11, 2016

Colorado Supreme Court: Insurer Failed to Show Documents in Question Contained Trade Secrets

The Colorado Supreme Court issued its opinion in In re Rumnock v. Anschutz on Monday, December 5, 2016.

Pretrial Procedure—Protective Orders—Trade Secrets—Commercial Information.

The Colorado Supreme Court discharged its rule to show cause and affirmed the trial court’s partial denial of defendant American Family Mutual Insurance Company’s request for a protective order to restrict plaintiff’s use of alleged trade secrets. The court held that American Family failed to meet its burden to show that the documents were in fact trade secrets or other confidential commercial information.

Summary provided courtesy of The Colorado Lawyer.

When Your Client’s Kid Needs Help: Juvenile Criminal Justice for Every Attorney

pow6qw4fks1i955Every lawyer has had the experience of their client asking questions about an area of law in which they don’t practice. A tax lawyer may field questions about her client’s DUI matter. An immigration attorney may receive a question from his client about preparing an estate plan. A domestic relations attorney may hear questions about her client’s business. Regardless of an attorney’s area of expertise, clients will ask legal questions and expect informed answers.

So what do you do when your client tells you his kid might be in trouble with the law? Because few matters are more important to a parent than the well-being of his or her child, knowing what to say and when to recommend that your client seek a juvenile defense attorney is vital.

From the legalization of marijuana in Colorado to the perils of social media, kids live in a different world than a generation ago. These days, it seems there are more and more ways for kids to find themselves in trouble with the law, not because of criminal intent, but because the children or their families do not understand what behavior the law criminalizes. The pitfalls kids face in the criminal system and school disciplinary settings can be extraordinary, and the consequences can be far-reaching—even lifelong.

In seeking to protect the client’s children from lifelong consequences, it is imperative and ethically required for an attorney to fully understand the laws applicable to the matter, or to find someone who specializes in juvenile law to provide guidance. The Criminal Code and Children’s Code are complex, and children are frequently treated differently than adults in regard to criminal matters.

On Monday, December 12, 2016, attorney Lara Marks Baker will deliver a one-hour breakfast presentation on guiding your client through juvenile criminal justice issues. This program is a great way to learn about what to do when your clients need help with their kids. Lara will highlight the federal and state laws which are frequently implicated in matters of juvenile justice, and when to signal a client that criminal or disciplinary matters may be forthcoming. Register by calling (303) 860-0608 or by clicking the links below.

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CLE Program: When Your Client’s Kid Needs Help

This CLE presentation will occur on December 12, 2016, at the CBA-CLE offices (1900 Grant Street, Third Floor), from 8:30 a.m. to 9:30 a.m. Register for the live program here or register for the webcast here. You may also call (303) 860-0608 to register.

Can’t make the live program? Order the homestudy here: MP3Video OnDemand.

Colorado Court of Appeals: Design of Manufacturing Part Was Not a Secret, Therefore No Misappropriation Occurred

The Colorado Court of Appeals issued its opinion in Hawg Tools, LLC v. Newsco International Energy Services, Inc. on Thursday, December 1, 2016.

Design—Trade Secret—Conversion—Defense—Waiver—Standing—Breach of Contract.

Hawg Tools, LLC (Hawg) rents mud motors to oil and gas drilling companies. Newsco International Energy Services, Inc. (Newsco) uses mud motors to provide drilling services. Gallagher owned Hawg. Before he formed this company, he operated a similar business called New Venture. In 2008 Gallagher asked a machinist to manufacture sealed bearing packs for use in New Venture’s mud motors. The machinist arranged for a designer, defendant Ficken, to design the sealed bearing packs for the machinist as a favor. The designer assigned his rights in the design to the machinist, who assigned them to Gallagher for compensation. Gallagher later assigned the rights to Hawg. The designer later designed a sealing bearing pack for Newsco. After determining that the Newsco design was similar to the Hawg design, Gallagher filed this lawsuit alleging (1) misappropriation of a trade secret concerning the design of a sealed bearing pack, (2) conversion of a trade secret, and (3) breach of contract. The trial court entered judgment in favor of plaintiff. The trial court denied defendants motions for directed verdict and judgment notwithstanding the verdict.

On appeal, defendants contended that the trial court erred when it denied their motions for directed verdict and judgment notwithstanding the verdict on Hawg’s claim for misappropriation of a trade secret. C.R.S. § 7-74-102(4) defines a trade secret as “the whole or any portion . . . of any . . . design . . . which is secret and of value.” To determine whether a trade secret exists, the fact finder considers (among other thing) the extent to which the information is known outside the business. Here, Hawg did not establish that its design, in whole or in part, was substantially different from designs that were publicly available at the time of its creation. The court of appeals concluded that (1) the record does not support a conclusion that the Hawg design was secret and (2) the record does not contain sufficient evidence to support the trial court’s decision to deny defendants’ motions for a directed verdict and for judgment notwithstanding the verdict.

Defendants also contended that the trial court erred when it denied their motion for judgment notwithstanding the verdict on Hawg’s conversion claim, asserting that the Uniform Trade Secrets Act preempts claims for conversion of trade secrets. This was a preemption defense based on choice of law, which defendants waived because they raised it for the first time in their motion for judgment notwithstanding the verdict.

Ficken appealed the judgment against him on Hawg’s breach of contract claim, contending that the trial court erred when it rejected his assertion that Hawg lacks standing to bring suit against him for breach of contract based on his violation of a confidentiality agreement. Here, the designer and the machinist entered into an assignment agreement with Gallagher. Later, Gallagher fully assigned his rights under this agreement to Hawg. Therefore, Hawg had standing to bring suit for breach of that agreement.

The judgment on Hawg’s claim for misappropriation of a trade secret was reversed and the case was remanded for the trial court to enter judgment in favor of defendants on that claim and to vacate the award of damages on that claim. The judgment on Hawg’s claims for conversion and breach of contract were affirmed.

Summary provided courtesy of The Colorado Lawyer.

Privileges and Confidentiality in the Attorney-Client Relationship

EthicsConfidentiality is one of the cornerstones of the attorney-client relationship. It allows clients to feel comfortable discussing sensitive issues with their attorney without fear of disclosure. Colorado Rule of Professional Conduct 1.6 provides, “A lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation, or the disclosure is permitted [in certain enumerated circumstances].” The counterpoint to this is the privilege that protects attorney-client communications. The attorney-client privilege in Colorado is governed by C.R.S. § 13-90-107(1)(b), which states, “An attorney shall not be examined without the consent of his client as to any communication made by the client to him or his advice given thereon in the course of professional employment.”

These seemingly straight-forward rules have many nuances, including the scope of confidentiality versus the attorney-client privilege, the lawyer’s responsibility to reveal information to prevent a client’s misconduct, the lawyer as witness, the lawyer’s duty to prevent the disclosure of client information, and the extension of the attorney-client privilege to others in the attorney’s office.

The Colorado Bar Association Ethics Committee has tackled some of these issues in Formal Opinion 108, “Inadvertent Disclosure of Privileged or Confidential Documents,” and Formal Opinion 90, “Preservation of Client Confidences in View of Modern Communications.” As this guidance suggests, attorneys must always be aware of when issues of privileges and confidentiality may arise in their practices.

At 8:30 am on Wednesday, December 14, 2016, attorney John Palmeri will discuss the intricacies of privileges and confidentiality in one-hour CLE program co-sponsored by the CBA Lawyers Professional Liability Committee. Attendees will also receive a copy of Mr. Palmeri’s chapter inLawyers’ Professional Liability in Colorado with further discussion of the topic. Register here or by clicking the links below.

 

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CLE Program: Privileges and Confidentiality

This CLE presentation will occur on December 14, 2016, at the CBA-CLE offices (1900 Grant Street, Third Floor), from 8:30 to 9:30 a.m. Register for the live program here or register for the webcast here. You may also call (303) 860-0608 to register.

Can’t make the live program? Order the homestudy here: MP3Video OnDemand.

Colorado Gives: Wheels of Justice Cycling Team Pedals for Pediatric Cancer Patients

Colorado Gives: CBA CLE Legal Connection will be focusing on several Colorado legal charities in the next few days to prepare for Colorado Gives Day, December 6, 2016. These charities, and many, many others, greatly appreciate your donations of time and money.

woj-logoEach year, the Wheels of Justice Cycling Team rides in Colorado’s Courage Classic, a challenging 2-day bicycle tour covering 157 miles of mountain passes, in order to raise money for Children’s Hospital Colorado’s Center for Cancer and Blood Disorders. The Wheels of Justice has contributed over $3 Million toward treating and researching cancer, as well as supporting patients suffering from cancer.

The Wheels of Justice Team was created in 2005 by Heather Purcell and Aaron Bradford. They formed a team of attorneys to participate in the Courage Classic with the underlying goal of being the top fundraising team each year. In its first three years, the Wheels of Justice Team raised more than $500,000 for Children’s Hospital Colorado. Since then, the Wheels of Justice Team has raised more than 3 million dollars. In 2016, the team raised $345,000 with 238 riders from various law firms, corporations, and nonprofit organizations.

The Wheels of Justice Team is always happy to accept new riders, be they experienced cyclists or weekend warriors. To join for the team, email info@wheelsofjusticecycling.org or call (720) 323-2538.

The Team also accepts sponsorships. In 2016, Denver’s top law firms and businesses stepped up as sponsors, adding more than $110,000 to the team’s total raised for Children’s Hospital Colorado. Sponsorship information is available at info@wheelsofjusticecycling.org.

Individual donations are also accepted. Each team member is required to raise $300 in addition to paying the race’s registration fee, so donations can be made to individual riders or the team as a whole. Contact info@wheelsofjusticecycling.org for more information.

Colorado Court of Appeals: Cafeteria Plan Deductions Should Not Be Included in Unemployment Compensation Calculations

The Colorado Court of Appeals issued its opinion in Meyer v. Industrial Claim Appeals Office on Thursday, November 17, 2016.

Lizabeth A. Meyer (Claimant) received unemployment compensation benefits in the amount of $500 per week, effective March 11, 2012, and continuing until May 19, 2012, when she obtained full-time employment. During the majority of that period, she worked part-time at Coach, and for the last two weeks she worked full-time at Sutrak. A deputy for the Division of Unemployment Insurance conducted an audit of Claimant’s file and determined that she had been overpaid unemployment compensation benefits in the amount of $1,712 for the period from March 18, 2012, through May 19, 2012. The deputy found that claimant had underreported her hours and earnings for certain weeks during that period, and assessed a monetary penalty of $1,112.80 against her.

Claimant appealed the deputy’s determination and an evidentiary hearing was held, at which Claimant conceded that the hours reported on her paystubs, rather than those she reported online, accurately reflected the hours she worked. However, she asserted that she was only required to report her taxable earnings, not her gross earnings. The Division’s hearing officer accepted Claimant’s concessions about the hours worked but held that she was required to report her gross earnings. The hearing officer found that because Claimant knowingly misrepresented her gross earnings, she was overpaid $1,890.64 in unemployment compensation, and assessed a monetary penalty of $1,228.91. Claimant appealed to the Industrial Claim Appeals Office, and the Panel affirmed. Claimant then appealed to the Colorado Court of Appeals.

Claimant contended the Panel erred in determining she was required to report her gross earnings rather than her taxable earnings, arguing she was not required to report any contributions to her 26 U.S.C. § 125 cafeteria plan. The court of appeals agreed. The court found that the Division required Claimant to report her gross earnings, but that was in contravention of the definition of “wages” in C.R.S. § 8-70-142. The court held the Division erred in requiring Claimant to report her gross wages without deducting contributions to her § 125 cafeteria plan.

Claimant next contended that the Panel erred in upholding the hearing officer’s determination that she knowingly failed to report her earnings accurately, and that both the Panel and hearing officer erred in determining she had received an overpayment and imposing a monetary penalty. The court of appeals agreed in part. The court found that, for the period from May 6 through May 21, 2012, Claimant was not eligible for unemployment compensation benefits and therefore was overpaid $1,000 for this period. The court found the Division did not err in imposing the 65% penalty for this period, in the amount of $650. However, for the period for which Claimant worked for Coach, she was eligible for benefits. Because the Division calculated Claimant’s overpayment based on her gross earnings rather than her taxable wages, the Division erred in its calculations. The court of appeals analyzed Claimant’s taxable wages and found an overpayment of $76 for the period in which she worked for Coach. The 65% penalty for this amount is $49.40, for a total of $125.40 owed for the period in which Claimant worked for Coach.

The court of appeals affirmed in part, reversed in part, and remanded with directions for the Panel to issue a new order regarding the $76 overpayment.

Colorado Judicial Ethics Advisory Board Releases Two New Opinions

On Monday, November 14, 2016, the Colorado Judicial Ethics Advisory Board released two new opinions.

CJEAB Opinion 2016-02 answers a judge’s question regarding whether Opinion 2007-07 remains effective in light of the repeal and reenactment of the Colorado Code of Judicial Conduct, and whether the judge may serve on the board of directors for the Joint Initiatives for Youth and Families of the Pikes Peak Region, since the operation of the board of directors has changed. The Judicial Ethics Advisory Board evaluated Opinion 2007-07 and determined it was no longer applicable, consequently withdrawing the opinion. The Judicial Ethics Advisory Board then concluded that a judge may serve on the board of directors of the Joint Initiatives for Youth and Families of the Pikes Peak Region, even if the board engages in legislative advocacy benefitting children and families, provided that doing so would not lead to his frequent disqualification or otherwise interfere with his ability to perform his judicial duties.  The judge must ensure that his activities as a board member do not undermine his impartiality, give rise to the appearance of impropriety, or violate other provisions of the Code.

CJEAB Opinion 2016-03 answers a judge’s question regarding whether it is permissible for him to sit on the Board of Trustees of the Colorado PERA. The Judicial Ethics Advisory Board determined that a judge elected to sit on the Board of Trustees of Colorado PERA should abstain from participating as a panelist in PERA’s administrative hearing process because such participation constitutes arbitration or another judicial function outside of a judge’s official duties and violates the Code of Judicial Conduct.

For all of the Colorado Judicial Ethics Advisory Board opinions, click here.

Colorado Court of Appeals: Insurer Required to Pay Portion of Costs Regardless of Whether Coverage Existed

The Colorado Court of Appeals issued its opinion in Mt. Hawley Insurance Co. v. Casson Duncan Construction, Inc. on Thursday, November 3, 2016.

Insurance—Partial Summary Judgment.

A homeowners association (HOA) sued developer Mountain View Homes III (MVH III) and general contractor Casson Duncan Construction Inc. (Casson Duncan) on defective construction claims. In arbitration, MVH III’s insurer, Mt. Hawley Insurance Co. (Mt. Hawley), defended under a reservation of rights. The arbitration resulted in awards of damages and taxable costs to the HOA. Casson Duncan paid the costs award, for which it and MVH III were jointly liable, and thereafter sought contribution from MVH III and Mt. Hawley.

Mt. Hawley initiated this action against MVH III, the HOA, and Casson Duncan, requesting a declaration that there was no coverage under its commercial general liability policies with MVH III for either the costs or damages awarded in the arbitration. Casson Duncan filed a counterclaim for declaratory and monetary relief against Mt. Hawley for payment of MVH III’s portion of the costs award. The parties filed cross-motions for summary judgment on coverage issues. The district court denied summary judgment on all but one issue: it determined that Mt. Hawley was, as a matter of law, responsible for paying MVH III’s portion of the cost award, regardless of whether it was also responsible for paying its portion of the damages award. This partial summary judgment ruling was certified as “final” for purposes of permitting appellate review.

On appeal, Mt. Hawley argued that the district court erred in granting partial summary judgment because Mt. Hawley’s responsibility for paying costs was inextricably linked to the question of whether the policies provided MVH III with coverage for the HOA’s claims, and because the coverage issues had not been determined, the costs issues could not be determined either. The court of appeals interpreted the policies to decide the issue. The insurance policies had standard “coverages” and “exclusions” sections and provided that the insurance company would pay “[a]ll costs taxed against the insured in the ‘suit,’” where “suit” clearly covered the arbitration proceeding. The obligation to pay costs was not linked to coverage but simply to the defense of the case. Because Mt. Hawley conducted MVH III’s defense in the arbitration proceedings, it was obligated to pay MVH III’s portion of taxable costs.

Mt. Hawley also argued that its reservation of rights letter superseded the policies’ costs provisions. A reservation of rights does not destroy the insured’s rights or create new rights in the insurer. The Colorado case law exception to this principle applies to defense costs, and defense costs are different from costs taxed against an insured.

Lastly, Mt. Hawley asserted that the court’s interpretation of the policies leads to absurd results. Mt. Hawley agreed in its policies to pay all costs taxed against MVH III in suits in which it defended MVH III. If Mt. Hawley wanted to avoid the result here, it could have changed the language in its policy regarding coverage of such costs.

The judgment was affirmed.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Preliminary Injunction Appropriate Where HOA Board Amending Bylaws Without Proper Notice

The Colorado Court of Appeals issued its opinion in Anderson v. Applewood Water Association, Inc. on Thursday, November 3, 2016.

Homeowners Association—Open Meetings—Notice—Colorado Common Interest Ownership Act—Colorado Revised Nonprofit Corporations Act.

Plaintiffs filed for a preliminary injunction to enjoin defendant Applewood Water Association, Inc. (Association) from (1) conducting special meetings of the board of directors (board) in violation of its bylaws and (2) submitting an amended declaration of covenants for a full membership vote, based on their belief that the amended declaration illegally conveyed certain property rights. The owners presented evidence to support their contention that the board conducted special meetings without giving required notice set forth in the Colorado Common Interest Ownership Act (CCIOA) and the Colorado Revised Nonprofit Corporations Act (CRNCA). They also presented evidence that those meetings concerned amendments to existing covenants. The trial court denied both requests.

On appeal, the owners contended that the trial court erred as a matter of law when it found that it had no legal authority to enjoin future violations of civil statutes. The CCIOA and CRNCA create a legally protected interest in open meetings. The plain language of both statutes gives a court the authority to enjoin the violation of their provisions where a movant can show noncompliance and harm. Therefore, the trial court has the authority to enjoin the Association from holding special board meetings without providing the notice required under CCIOA and CRNCA. The trial court’s order as to that preliminary injunction request was reversed and the case was remanded for further factual findings.

The Court of Appeals concluded that the second injunction request is moot because a vote on the amended declaration has already occurred. That portion of the appeal was thus dismissed.

Summary provided courtesy of The Colorado Lawyer.

Tenth Circuit: Communications Decency Act Does Not Provide Immunity from Suit

The Tenth Circuit Court of Appeals issued its opinion in General Steel Domestic Sales, L.L.C. v. Chumley on Tuesday, November 1, 2016.

General Steel employed Ethan Chumley until 2005, when he left to start his own company, Armstrong Steel. The two parties have had numerous legal disputes since then. Armstrong Steel initiated a negative online advertising campaign against General Steel, so that when internet users search for General Steel, negative advertisements from Armstrong Steel appear that redirect the internet user to Armstrong Steel’s web page entitled “Industry Related Legal Matters.” The web page contains 37 posts, 20 of which are at issue in this action. The 20 posts summarize, quote, and reference lawsuits involving General Steel, and contain selective snippets of court documents.

General Steel filed suit in district court with four claims: (1) unfair competition and unfair trade practices under the Lanham Act, (2) libel and libel per se, (3) intentional interference with prospective business advantage, and (4) civil conspiracy. Armstrong Steel sought summary judgment, claiming immunity from suit and liability under Section 230 of the Communications Decency Act (CDA). The district court found that Armstrong Steel was entitled to immunity for three posts because they simply linked to third-party content. However, the court refused to extend CDA immunity to the other 17 posts and the internet search ads, finding that the defendants were not entitled to immunity because they created and developed the content by selectively quoting and summarizing the court documents in a deceiving way. Armstrong Steel appealed the district court’s denial of immunity and claims appellate jurisdiction under the collateral order doctrine.

The Tenth Circuit analyzed whether the CDA provided immunity from suit or simply immunity from liability. The Tenth Circuit noted that if the CDA provided immunity from suit, the appeal would be effectively unreviewable, but if it provided immunity from liability, the Tenth Circuit would lack jurisdiction because the order of the district court was not a final order. The CDA does not contain “an explicit statutory or constitutional guarantee that trial will not occur,” so it does not provide immunity from suit.

The Tenth Circuit dismissed the appeal.

Colorado Court of Appeals: Loss Prevention Director’s Spreadsheet was Admissible Under Business Records Exception

The Colorado Court of Appeals issued its opinion in People v. Flores-Lozano on Thursday, October 20, 2016.

Maria Guadalupe Flores-Lozano was a manager at a fast-food chain. The fast-food chain’s loss prevention director noticed that Flores-Lozano was giving a high number of discounts to customers and suspected that she was pocketing the difference between the amount the customer paid and the discount. He prepared a spreadsheet showing 4400 transactions in which Flores-Lozano gave discounts on cash transactions, calculating the total amount of the suspected theft at $23,320.01. The loss prevention director confronted Flores-Lozano with the spreadsheet and still photos from the chain’s surveillance video, and she admitted she had been stealing from the company. The loss prevention director contacted the police, and Flores-Lozano was charged with theft of over $20,000.

The sole issue at trial was the amount of the theft. The People argued Flores-Lozano should be charged with the total amount calculated by the loss prevention director, but Flores-Lozano countered she should only be charged with the specific instances in which she had admitted guilt, which amounted to less than $500. The trial court disagreed with both parties and ultimately found Flores-Lozano guilty of the lesser included offense of theft of more than $1,000 but less than $20,000.

On appeal, Flores-Lozano contended that the spreadsheet prepared by the loss prevention director constituted impermissible hearsay. The Colorado Court of Appeals concluded that it did contain hearsay, but was admissible under the business records exception to the hearsay rule, CRE 803(6). The court analyzed the five factors of CRE 803(6) and found that the spreadsheet satisfied all the factors. First, the data contained in the spreadsheet was automatically generated at the point of sale. Second, the spreadsheet was prepared by the loss prevention director, a person who indisputably had knowledge of the matters contained in the spreadsheet. Next, the third, fourth, and fifth factors were satisfied by the loss prevention director’s testimony that he regularly conducted investigations of theft within the restaurant chain and regularly prepared and kept spreadsheets of the records in the course of his investigations. The court found that the spreadsheet was properly admitted. Although the loss prevention director testified that he prepared the spreadsheet for litigation, the court was entitled to disregard his testimony.

The judgment was affirmed. Judge Bernard wrote a special concurrence; he would have found that all of the data contained in the spreadsheet was made in the regular course of business.

Colorado Court of Appeals: Notice of Appeal Timely Filed 49 Days After Denial of Motion for Reconsideration

The Colorado Court of Appeals issued its opinion in Semler v. Hellerstein on Thursday, October 6, 2016.

Notice of Appeal—Timeliness—Amended Complaint—Jurisdiction—Motion to Dismiss—Fraud—Concealment—Misrepresentation—Civil Conspiracy—Breach of Fiduciary Duty—Breach of Contract—Third Party Beneficiary—Attorney Fees.

Plaintiff Semler and defendant Perfect Place, LLC are both members of the 1940 Blake Street Condominium Association (Association). Defendant Hellerstein owns and controls both Perfect Place, LLC and Bruce S. Hellerstein, CPA P.C. (collectively, Perfect Place defendants). Hellerstein also served as treasurer of the Association. Defendant Bewley is an attorney employed by defendant law firm Berenbaum Weinshienk, P.C. At all relevant times, Bewley represented Hellerstein and his two corporate entities.

The current litigation stems from a related quiet title action in which Perfect Place asked the court to determine that it was the rightful owner of parking spaces C, D, and E. The court presiding over the quiet title action determined that Semler owned parking spaces C and D, while Perfect Place owned parking space E. Semler then brought the current suit, claiming that Bewley and Hellerstein devised a scheme to gain title to Semler’s parking spaces C and D. Semler’s first amended complaint alleged claims only for breach of fiduciary duty against Hellerstein, aiding and abetting that breach against Bewley, and civil conspiracy against all defendants. The court granted defendants’ motions to dismiss. Semler then moved to amend his complaint a second time, proposing to add claims for fraud, nondisclosure and concealment, negligent misrepresentation, negligent supervision, vicarious liability, and breach of contract. He also more clearly explained that he was seeking damages for lost income opportunities he suffered as a result of having to defend against the quiet title action. The court denied Semler’s second motion to amend based on lack of standing to pursue alleged fraud or misrepresentation against the prior owner of the parking spaces and awarded attorney fees in favor of defendants.

On appeal, defendants asserted that Semler’s notice of appeal was untimely and, therefore, the Colorado Court of Appeals lacked jurisdiction to consider the appeal. The court determined that Semler timely filed his notice of appeal 49 days after the court denied his C.R.C.P. 59 motion for reconsideration.

Semler contended that the trial court erred by denying his motion for leave to amend his complaint a second time. The court’s dismissal of the action was specifically premised on Semler’s fraud claims, which were new to the second amended complaint. It was therefore apparent to the court that although the trial court denied the motion to amend, it considered the claims in the second amended complaint when ruling on the motion to dismiss.

Semler argued that the trial court erred in granting defendants’ motions to dismiss. Semler’s fraud, concealment, and misrepresentation claims were all premised on conversations and transactions between the prior owner of the parking spaces and defendants in which Semler was not involved. Semler lacked standing to bring those claims. Semler’s claims for lost opportunity damages are too remote and unforeseeable to be recoverable under these claims. Therefore, these claims failed to state a claim upon which relief could be granted and should have been dismissed under C.R.C.P. 12(b)(5).

Semler also contended that defendants conspired with each other to obtain his parking spaces. He is not entitled to relief on a civil conspiracy claim against Bewley because a director cannot conspire with the corporation that he serves, which is the premise of Semler’s argument. Additionally, because Hellerstein was not acting in his role as treasurer when he engaged in the allegedly fraudulent conduct, Semler’s breach of fiduciary duty claim against Hellerstein fails. Because these claims fail, Semler’s aiding and abetting breach of fiduciary duty claim against Bewley and negligent supervision and vicarious liability claims against Bewley’s law firm, Berenbaum Weinshienk, fail as well.

As to his breach of contract claim, although Semler was not a party to the contract between Berenbaum Weinshienk and the Association in which Berenbaum Weinshienk agreed that it would not represent one Association member against another, Semler sufficiently pleaded a third-party beneficiary breach of contract claim pursuant to this agreement. Therefore, the case was remanded to the trial court for further proceedings on this claim.

Semler also contended that if the dismissal order is reversed, the attorney fees award in favor of defendants must also be reversed. Only Semler’s breach of contract claim survives C.R.C.P. 12(b) dismissal. Thus, because that claim was not pleaded against the Perfect Place defendants, the attorney fees award to them remains undisturbed. The order awarding fees award under this statute to Bewley and Berenbaum Weinshienk was reversed.

The orders were affirmed in part and reversed in part, and the case was remanded with directions.

Summary provided courtesy of The Colorado Lawyer.