Free Motion for Leave - District Court of Colorado - Colorado

Case 1:04-cv-01099-JLK-DW

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 04-cv-1099-JLK-DLW WOLF CREEK SKI CORPORATION, INC. Plaintiff(s), v. LEAVELL-MCCOMBS JOINT VENTURE D/B/A THE VILLAGE AT WOLF CREEK Defendant(s). ______________________________________________________________________________ DEFENDANT'S MOTION TO SURREPLY TO PLAINTIFF'S RESPONSE TO THE COURT'S OCTOBER 13, 2006 ORDER ______________________________________________________________________________ Defendant Leavell-McCombs Joint Venture (the "Joint Venture"), through its undersigned counsel, respectfully requests leave to surreply to Plaintiff Wolf Creek Ski Corporation's Response to the Court's October 13, 2006 Order ("Plaintiff's Response"), and in support of this request states as follows: Certification of Counsel: Pursuant to D.C.COLO.LCivR 7.1(A), counsel for the movant has conferred in good faith with Plaintiff's counsel and such counsel has indicated that Plaintiff will oppose the relief requested herein. 1. On October 13, 2006, this Court issued a Minute Order requesting briefing on a

very narrow issue: "the significance or lack thereof, of the December 4, 2001 draft default letter prepared by Holland & Hart as it would relate specifically to statute of limitation questions in Plaintiff's Motion for Summary Judgment Regarding Fraudulent Inducement and Negligent Misrepresentation Claims." See Docket # 214.

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2.

Both parties responded on the date specified. Defendant limited its responsive

briefing to the specific issue delineated by this Court. Plaintiff did not. Instead, Plaintiff's Response went beyond the narrow scope of that issue, re-hashing previously raised arguments unrelated to the December 4, 2001 draft default letter, and interjecting additional argument and case law outside the scope of the Court's Minute Order request and the Ski Corporation's prior briefing on Plaintiff's pending Motion for Summary Judgment Regarding Fraudulent Inducement and Negligent Misrepresentation Claims (the "Fraud MSJ"). In fact, of the twelve paragraphs (both numbered and alphabetized subparagraphs) in the Plaintiff's Response, only three even mention the draft default letter. Instead, the Ski Corporation took this Court's request as an open invitation to re-argue and supplement its Fraud MSJ. Most importantly, the Ski Corporation also took the opportunity to advance an incorrect premise of law to influence this Court into a ruling that would be contrary to both Colorado and federal law. 3. Where the summary judgment movant raises new argument after the non-movant See Beaird v. Seagate

has already responded, the right of additional reply is warranted.

Technology, Inc., 145 F.3d 1159, 1164 (10th Cir. 1998). And see Pehr v. Rubbermaid, Inc., 87 F.Supp.2d 1222, 1237 (D. Kan. 2000), citing Humphries v. Williams Natural Gas Co. No. 964196-SAV, 1998 WL 982903, at *1 (D. Kan. Sept. 23, 1998). 4. With respect to the Ski Corporation's erroneous statement of law, on the last page

of its Response Brief, the Ski Corporation cites Aldrich v. McCulluch Props. Inc., 627 F.2d 1036 (10th Cir. 1980) for an incorrect premise on the issue of equitable estoppel in an attempt to relitigate a previous ruling by this Court. Specifically, the Ski Corporation argued that equitable estoppel does not apply unless the innocent party is prevailed upon not to file suit for the entirety

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of the statutory period; if the innocent party discovers the fraud at any time before expiration of the statutory period, then the statutory deadline remains unchanged. See Plaintiff's Response p. 6 n2. The Ski Corporation made this same erroneous argument during its briefing and oral argument on its motion for partial summary judgment on the Joint Venture's breach of contract claims almost a year ago.1 Under the Ski Corporation's faulty interpretation of the law, a party that discovers it has been defrauded on the day before the statutory period expires must file suit the very next day or forever be time barred on its claim. This is not the law in Colorado or in the Tenth Circuit. 5. To support this incorrect premise, the Plaintiff's Response cites footnoted dicta on

an issue that was not before the Aldrich court ­ the Aldrich court addressed the issue of equitable tolling, not equitable estoppel.2 Based on this dicta, the Ski Corporation maintains that Aldrich stands for the proposition that equitable estoppel only applies where the wrongdoer is prevailed upon to forego enforcing its right to sue "until the statutory time has elapsed." Plaintiff's Response p. 6 n2. According to the Ski Corporation, the Joint Venture knew that the Ski Corporation's reassurances were hollow before the expiration of the three-year period and

See p. 4 of Plaintiff's Response to Defendant's Supplement and Plaintiff's Supplement to the Summary Judgment Record, Docket # 80 ("Equitable estoppel requires reasonable reliance on the assurances during the entirety of the limitations period." (Emphasis in original)). (The Joint Venture was then represented by different counsel and the error was not pointed out to this Court in those briefings). And see Exh. A-33 attached hereto, transcript of November 15, 2005 oral argument 16:16-19 (Mr. Shoemaker: "Under the law estop ­ you have the statutory period and you have to be ­ you have to be reassured and lulled during the entire period based on the misconduct of Wolf Creek to trigger equitable estoppel."); 17:24-25 (Mr. Shoemaker: "You must reasonably rely for the entire statutory period"). At the hearing, the Joint Venture's current counsel pointed out the error of the Ski Corporation's argument. Id. 41:23-42:13. 2 Equitable estoppel occurs when a party is aware of its right to sue, but is prevailed upon to forego litigation. Aldrich, 627 F.2d 1043, n7. Equitable tolling applies where the wronged party is not aware of the other's wrongdoing because the wrongdoer concealed the wrong. Id. The language quoted by the Ski Corporation was used in the context of equitable estoppel, not equitable tolling. Id.

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therefore their fraud (and contract) claims are time-barred.3 This argument is flawed for at least two reasons. 6. First, the Ski Corporation is just plain wrong about the operation of the doctrine

of equitable estoppel and the Colorado-Ute case, cited by the Ski Corporation on page 6 of Plaintiff's Response, says so. In Colorado-Ute, the four-year statute of limitations applicable to product warranties applied. Id. 524 F. Supp. at 1155. The defective product was installed in December 1974 and failed to pass its performance test in October 1975; either event, according to defendant Buell, was sufficient to trigger the four year statute of limitations. Id. ColoradoUte knew of the defects, but from 1975 until July 1978 Buell made repeated assurances that it would effectuate repair, repudiating those assurances in October 1978. Under the Ski

Corporation's theory of equitable estoppel, Colorado-Ute would have had to file suit by either December 1978 or October 1979 since Buell's assurances ceased before "the statutory time had elapsed." Plaintiff's Response at p. 6 n2. Colorado-Ute, however, did not file suit until

December 1979, well after both deadlines. Nevertheless, Judge Carrigan allowed the suit to go forward, concluding that Buell's repeated reassurances and efforts to remedy the product "tolled the running of the statute of limitations until 1978 when Buell, for the first time, denied liability and refused to make further efforts to improve the precipitator." Id. Accordingly, there is no fixed rule that the innocent party must reasonably rely for the entirety of the limitations period.4

This statement is not supported by any evidence sufficient to take this question away from the jury. See Aldrich, 627 F.2d at 1042 (The question of whether a plaintiff should have discovered the basis of his suit does not lend itself to determination as a matter of law). 4 See also Strader v. Beneficial Finance Co. of Aurora 551 P.2d 720, 724 (Colo. 1976) (applying equitable estoppel to bar defendant's statute of limitations defense where plaintiff learned of the wrong within the statutory period but nevertheless filed suit three or four months after the running of the statute.)

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7.

Second, the Ski Corporation's argument, even assuming it is correct, which it is

not, does not apply to equitable tolling. Under Colorado law, "[t]he tolling of a statute of limitations will either `delay the start of the limitations period' or suspend the running of the limitations period if the accrual date has passed." Morrison v. Goff, 91 P.3d 1050, 1053 (Colo. 2004) (en banc) (emphasis added). "The limitation period does not begin to run until the plaintiff discovers, or in the exercise of reasonable diligence should have discovered, the existence of facts forming the basis of a claim for relief." First Interstate Bank of Fort Collins, N.A. v. Piper Aircraft Corp., 744 P.2d 1197, 1201 (Colo.1987).5 8. Tenth Circuit law is in accord with Colorado law. See Esplin v. Hirschi 402 F.2d

94, 103 (10th Cir. 1968) (stating that in 1946, "the Supreme Court announced the proposition that where a plaintiff has been injured by fraud and remains in ignorance of it without any fault or want of diligence or care on his part, the bar of the statute does not begin to run until the fraud is discovered." (Emphasis added, internal quotation marks and citation omitted)). Accordingly, the Ski Corporation's mistaken premise of law has no effect on the Joint Venture's fraud and misrepresentation claims since the Joint Venture did not discover the falsity of the Ski Corporation's representations until October 2004. 9. The Ski Corporation seeks to re-litigate an issue that has already been fully

briefed and was argued at the November 15, 2005 hearing on the Ski Corporation's motion for summary judgment as to the Joint Venture's breach of contract claim. At that time, the Joint

In effect, equitable tolling principles are incorporated into the fraud statute of limitations in the accrual provisions. See C.R.S. § 13-80-108(3) ("A cause of action for fraud, misrepresentation, concealment, or deceit shall be considered to accrue on the date such fraud, misrepresentation, concealment, or deceit is discovered or should have been discovered by the exercise of reasonable diligence.") The same is true with respect to federal statutes of limitations. Aldrich, 627 F.2d at 1042 ("equitable tolling principles are read into every federal statute of limitation." (Internal quotation marks and citation omitted)).

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Venture brought the First Interstate Bank case supra to this Court's attention. See Exh. A-33, 41:23-42:13. The Court also specifically questioned the Ski Corporation's counsel regarding the assertion that reliance must be proven throughout the statutory time period. Id. 61:22-62:12. In denying that motion, the Court rejected the argument that the Ski Corporation now seeks again to advance. 10. In addition to attempting to beef up its previous briefing, the Ski Corporation also

re-argues, and adds a new exhibit in support of, the position that the Joint Venture has no evidence that the Ski Corporation intended its representations to be false at the time they were made. This is incorrect. Responding to this renewed argument and new evidence, and as explained in the Joint Venture's Response to the Fraud MSJ (found at Docket # 156), evidence in the form of testimony from both Kingsbury and Davey Pitcher provides direct evidence of such lack of intent. Kingsbury Pitcher admitted he made representations to the Joint Venture for which he had no basis in fact. See Docket # 156 p. 25. And Davey Pitcher, a scant six weeks after the signing of the 1999 Agreement, admittedly entered into the negotiations with the Forest Service with no intention to represent the interests of the Joint Venture or to try to obtain the Access Road for the benefit of the Joint Venture. Id. Exh. 16, 233:9-234:5. Additional evidence from which intent can be inferred was also set forth in the Joint Venture's Response to the Fraud MSJ. See generally id. pp. 24-34. 11. For purposes of fraud, intent may be inferred because it is rarely provable by

direct evidence. Frontier Exploration, Inc. v. American Nat. Fire Ins. Co., 849 P.2d 887, 891 (Colo. App. 1992). Such evidence includes specifically the fact that the Ski Corporation initially referred to the Access Road in its original EA as the "future link" to the Village Property but

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later deleted that language when it became aware of the environmentalists' complaints. See id ¶¶ 6 through 14. The fact that the Ski Corporation never intended to support the effort to obtain the complete Access Road may be inferred from the subtle removal of the reference to the road in the EA and the fact the Davey Pitcher cut a deal with the Forest Service and the environmentalists without full disclosure to the Joint Venture. Such reasonable inference must be accorded to the Joint Venture. Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998) (on summary judgment a court must draw all reasonable inferences most favorably to the nonmovant). 12. Finally, "the issue of a party's intent is a question of fact and is not an appropriate

issue for summary disposition." Wolther v. Schaarschmidt, 738 P.2d 25, 28 (Colo. App. 1986). Given the foregoing evidence, the Joint Venture has provided sufficient evidence from which fraudulent intent can be inferred sufficient to overcome the Ski Corporation's Fraud MSJ. 13. As the Ski Corporation has advanced an incorrect premise of law, strayed from

the confines of this Court's October 13, 2006 Minute Order to re-argue its Fraud MSJ, and injected new argument, this surreply is warranted. Respectfully submitted this 27th day of October, 2006.

s/ Kim A Tomey George V. Berg, Jr. Kim A. Tomey BERG HILL GREENLEAF & RUSCITTI LLP 1712 Pearl Street Boulder, CO 80302 Phone: (303) 402-1600 Fax: (303) 402-1601 Email: [email protected] Attorneys for Defendant

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CERTIFICATE OF SERVICE I hereby certify that on October 27, 2006, I electronically filed the foregoing DEFENDANT'S MOTION TO SURREPLY TO PLAINTIFF'S RESPONSE TO THE COURT'S OCTOBER 13, 2006 ORDER with the Clerk of the Court using the CM/ECF system which will send notification to such filing to the following e-mail addresses: Andrew R. Shoemaker Hogan & Hartson LLP 1470 Walnut Street, Suite 200 Boulder, CO 80302 [email protected] Jim Moriarty Moriarty Leyendecker 1123 Spruce Street, Suite 200 Boulder, CO 80302 [email protected] Kathleen M. Morgan Moriarty Leyendecker 1123 Spruce Street, Suite 200 Boulder, CO 80302 [email protected] Sally Berg Moriarty Leyendecker 1123 Spruce Street, Suite 200 Boulder, CO 80302 [email protected] Denise D. Riley Hogan & Hartson LLP 1200 Seventeenth Street, Suite 1500 Denver, CO 80202 [email protected] Cynthia A. Mitchell Hogan & Hartson LLP 1470 Walnut Street, Suite 200 Boulder, CO 80302 [email protected]

s/ Martha Meshak

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