Free Response - 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-K-1099-JLK-DLW WOLF CREEK SKI CORPORATION, INC., Plaintiff, v. LEAVELL-McCOMBS JOINT VENTURE, d/b/a THE VILLAGE AT WOLF CREEK, Defendant.

PLAINTIFF WOLF CREEK SKI CORPORATION'S RESPONSE TO THE COURT'S OCTOBER 13, 2006 ORDER

Plaintiff Wolf Creek Ski Corporation ("Wolf Creek"), by and through undersigned counsel, hereby responds as follows to the Court's Order of October 13, 2006: 1. The December 4, 2001 draft default letter ("Draft Default Letter") has no estoppel

or tolling effect on the Joint Venture's fraud and negligent misrepresentation claims. If anything, the Draft Default Letter shows that the Joint Venture always understood that its claims in this case, such as they are, are limited to contract, not fraud. 2. The crux of the Joint Venture's fraud and negligent misrepresentation claims is

that Wolf Creek did not intend to perform the 1999 Agreement when it entered into that agreement on July 13, 1999. See Defendant's Response to Plaintiff's Motion for Summary Judgment ("Response") (Docket #156) at 23. Instead of intending to perform, the Joint Venture argues that Wolf Creek reached a "secret deal" with environmentalists" See, e.g., transcript of Sum. J. Hearing (Docket #119) (excerpt attached hereto as Ex. 1) at 33 (When faced with "heat"

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by the environmentalists, "it came to a choice between the road going all the way to the property or the ski lift," and, at that point, "[Wolf Creek] chose the thing that was in their best interest.") Yet the Joint Venture has not provided any evidence that Wolf Creek either entered into any agreements with environmentalists or otherwise intended to breach the contract at or before the time the parties entered into the agreement.1 3. The Joint Venture was permitted to add its fraud and negligent misrepresentation

claims eighteen months ago on February 8, 2005. Since that time, the Joint Venture has conducted extensive discovery in an attempt to expose Wolf Creek's purported "secret deal" with Colorado Wild to prevent the Joint Venture from building its access road and allow Wolf Creek to proceed with its ski lift and parking lots. But the Joint Venture has found no evidence to support this theory. Nor has the Joint Venture found any other evidence that Wolf Creek did not intend to fulfill its commitments under the 1999 Agreement before it entered into that agreement, which it must show to have an actionable fraud claim. See Leece v. Griffin, 371 P.2d 264, 265 (Colo. 1962) (Quoting Bell Press, Inc. v. Phillips, 364 P.3d 398 (Colo. 1961); Swallow v. Calcium Co., 348 P.2d 715, 723 (Colo. 1960) (reversing judgment on fraud in the inducement claim where there was no proof that "the defendants misrepresented their state of mind at the time that the contract was signed in that there was no intent to carry out the undertakings.") (emphasis added).
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In addition, the Joint Venture identifies several purported commitments and legal assertions allegedly made by Wolf Creek to support its fraud and misrepresentation claims. See Motion for Summary Judgment Regarding Fraudulent Inducement and Negligent Misrepresentation Claims (Motion for Summary Judgment) at 6. As explained in the Motion for Summary Judgment, the Joint Venture cannot, as a matter of law, rely on such statements, and therefore they cannot support its fraud and misrepresentation claims. See generally, Motion for Summary Judgment at 10-14. Further, the Joint Venture has pointed to nothing that prevented it from reaching its own conclusions as to legal opinions or predictions either at the time of the 1999 Agreement or within the three year limitations period after the Joyner letter of September 1999.

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4.

Without any evidence of intent before the 1999 Agreement was executed, the

Joint Venture focuses on Wolf Creek's conduct after the agreement was executed and claims that because Wolf Creek met with representatives of Colorado Wild after the 1999 Agreement was executed and reached the compromise described in the Joyner Letter, Wolf Creek must never have intended to honor its obligations under the 1999 Agreement. As set forth in prior briefing, this argument fails for two reasons. 5. First, the fact that Wolf Creek met with Colorado Wild and purportedly agreed to

the terms set forth in the Joyner Letter after the 1999 Agreement was executed is not evidence that Wolf Creek contemplated such a step before it executed the 1999 Agreement. If anything, these facts constitute "mere evidence of non-performance," which, as a matter of law, is not evidence of a pre-existing intent not to perform a contract. See Strum v. Exxon Co., USA, 15 F.3d 327, 331 (4th Cir. 1994); see also Reply in Support of Motion for Summary Judgment (Docket # 159) at 4-5. Indeed, these are the very acts cited in the Draft Default Letter as a basis for a possible breach of contract claim. 6. Second, even if Wolf Creek's participation in the August 1999 meeting with

Colorado Wild and the Joyner compromise were somehow sufficient evidence of Wolf Creek's intent prior to executing the 1999 Agreement, the fact of the meeting and the compromise were known to the Joint Venture as of September 1999, when it received the Joyner Letter. At that point, the Joint Venture knew the following: a. On June 14, 1999, the Forest Service issued a Decision Notice approving

Alternative IV and attaching the Alternative IV map. This map formed the basis for the belief of the Joint Venture and its counsel that the Decision Notice approved the

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road. See, e.g., Response at p. 7, ¶ 12. The Joint Venture takes the position that the Decision Notice included the road. See id. at 40. b. c. On August 3, 1999, Colorado Wild appealed the Decision Notice. The Forest Service wrote in the Joyner letter that: "Davey Pitcher . . . has

agreed to design and construct both the access road turn-around and the easternmost parking lot such that neither facility reaches the actual private land boundary immediately to the east. Per agreement between Dave Pitcher and representatives of Colorado Wild, Inc., . . . a 250-foot buffer will be retained between the access road turnaround and the private land boundary." Motion for Summary Judgment, Ex. 21 at LM00129 (emphasis added). d. The Forest Service also wrote, "private land owner access [i.e., Joint

Venture access] for commercial uses other than permitted ski use would trigger the NEPA process where [Colorado Wild] and others could participate." Id. at L-M00128 (emphasis added). e. As a result of the appeal, and based on the Joyner letter, the Joint Venture

did not obtain access in the 1999 EA process. f. Yet, although the Joint Venture did not obtain its access, Wolf Creek

obtained permission in September 1999 to build a lift and parking lots through the Joyner letter and 1999 EA process. The Joint Venture knew all about the lift and any related pressure on the Ski Area. In a memorandum dated February 24, 1999, Mr. Honts informed the Joint Venturers that Wolf Creek had already obligated itself to spend "$1,500,000 for the equipment on the Alberta Lift, still scheduled to be open in the Fall

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of 1999. Pitch had to take this action in spite of the fact that the [Forest Service process is not final]. He is clearly betting that the clearance will go through. . . ." Reply in Support of Summary Judgment (Docket #159), Ex. 30 at L-M04123. That bet apparently paid off, as was known to everyone by September 1999. g. Wolf Creek did not consult with the Joint Venture on the agreements

identified in the Joyner Letter. See Response at p. 14, ¶ 36. Thus, the Joint Venture was aware of the facts it now claims support its fraud and misrepresentation claims well within the three-year limitations period for fraud and the two-year limitations period for misrepresentation. 7. The Joint Venture has argued and will argue that it has learned new facts through

discovery ­ but each piece of evidence identified refers to purported actions that occurred after the date of the 1999 Agreement. See, e.g., Response at p. 15, ¶ 37. A newly-discovered document stating facts known previously does not excuse a failure to file a lawsuit based on such already-known facts. As such, any new documents do not establish that the Joint Venture "discovered" anything relevant to its fraud or misrepresentation claims during the course of discovery. To the contrary, these "new facts" are more of the same, and, as such, they do not establish preexisting intent not to perform. 8. Finally, the Joint Venture will undoubtedly invoke the doctrine of equitable

estoppel once again and argue that the statute of limitations was estopped by Kingsbury Pitcher's "assurances" that Wolf Creek would obtain USFS Approval. See Response at 42. As an initial matter, while the Court has ruled that factual questions remain about whether the Joint Venture's reliance on Mr. Pitcher's purported assurances was reasonable with respect to the contract claims,

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it has not made any such ruling with respect to the fraud and negligent misrepresentation claims.2 Taking the Joint Venture's account of its conversations with Mr. Pitcher as true, nothing in Mr. Pitcher's statements implies that he intended to dissuade the Joint Venture from bringing a fraud in the inducement or negligent misrepresentation claim. See Colorado-Ute Elec. Ass'n v. Envirotech Corp., 524 F. Supp. 1152, 1156 (D. Colo. 1981) (equitable estoppel applies only where a party intentionally lulls another party into sleeping on its rights). Indeed, the Joint Venture fails to mention or even hint at a fraud claim in the Draft Default Letter. If anything, Mr. Pitcher's alleged promises that Wolf Creek would get the road had only to do with Wolf Creek's performance of the 1999 Agreement. They do not address any of the facts necessary to establish fraud in the inducement, nor could they have been made with the intent that the Joint Venture rely on them. As such, they cannot form the basis of an equitable estoppel defense. 9. Put simply, the Joint Venture's fraud and negligent misrepresentation cases are

nothing more than an attempt to turn a purported breach of contract into a tort based on speculation and should be dismissed.

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As stated in prior briefing, Wolf Creek objects to the application of the doctrine of equitable estoppel to the Joint Venture's contract claim. As a matter of law, the purported representation identified by Mr. Honts was inadequate. Further, as the December 4, 2001 letter makes plain, the Joint Venture was aware prior to the conclusion of the limitations period that any purported reassurances were hollow. Although the Court did not rule on this previously, under such circumstances there can be no estoppel as a matter of law because the purported reassurances were discovered to be false during the limitations period. Aldrich v. McCulloch Props. Inc., 627 F.2d 1036, 1043 n7 (10th Cir. 1980) (wrongdoer must "prevail[] upon the other to forego enforcing his right until the statutory time has elapsed") (emphasis added).

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Respectfully submitted this 23rd day of October, 2006.

s/Andrew R. Shoemaker Andrew R. Shoemaker HOGAN & HARTSON L.L.P. 1470 Walnut Street, Suite 200 Boulder, Colorado 80302 (303) 720-5300 Telephone (303) 720-5301 Facsimile Attorneys for Plaintiff Wolf Creek Ski Corporation, Inc.

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CERTIFICATE OF SERVICE I hereby certify that on this 23rd day of October, 2006, I electronically filed the foregoing PLAINTIFF WOLF CREEK SKI CORPORATION'S RESPONSE TO THE COURT'S OCTOBER 13, 2006 ORDER with the Clerk of Court using the CM/ECF system which will send notification of such filing to the following e-mail addresses: George V. Berg: Sally P. Berg: Melissa M. Heidman: Kathleen M. Morgan: James Robert Moriarty: Kimberly A. Tomey: [email protected] [email protected] [email protected] [email protected] [email protected] [email protected]

s/Andrew R. Shoemaker

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