Free Reply to Response to Motion - District Court of Colorado - Colorado

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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, v. LEAVELL-McCOMBS JOINT VENTURE, d/b/a THE VILLAGE AT WOLF CREEK, Defendant.

REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT

In support of its Motion for Summary Judgment on Fraudulent Inducement and Negligent Misrepresentation Claims ("Motion") and in reply to the Defendant's Response to Plaintiff's Motion for Summary Judgment Regarding Fraudulent Inducement and Negligent Misrepresentation Claims ("Response"), Wolf Creek states as follows: I. INTRODUCTION

The Joint Venture's Response is long on argument and short on relevant evidence and law. Indeed, the Joint Venture takes issue with very few of the facts presented by Wolf Creek. Further, the Joint Venture fails to identify a single misrepresented fact upon which the Joint Venture relied prior to entering into the 1999 Agreement. Rather, in a bid to save its fraudulent inducement claim, the Joint Venture now speculates that Kingsbury Pitcher had no intention of honoring his commitments leading up to the 1999 Agreement. The Joint Venture also argues,

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without legal authority, that Kingsbury Pitcher's predictions regarding the outcome of the Forest Service project are somehow actionable. The Joint Venture's assertions about Kingsbury Pitcher's fraudulent intent reveal how hollow its fraudulent inducement claim really is. The Joint Venture leads off with a complete mischaracterization of Kingsbury Pitcher's testimony. Then, the Joint Venture argues that once the Ski Area committed to purchase a ski lift in early 1999, a "conflict of interest" arose between the Ski Area and the Joint Venture that is somehow circumstantial evidence of a pre-conceived scheme to remove "the Access Road from the 1999 EA [to] mollify the opposition and ensure final approval of its already-paid-for-but-not-yet-built Alberta Lift." Response at p. 31. This is rank speculation, which is not sufficient to ward off summary judgment. Notwithstanding extensive discovery on the Joint Venture's far-fetched theories, the Joint Venture has yet to identify a single piece of evidence of a pre-existing plan to reach a compromise with the environmentalists; much less with the requisite clear and convincing evidence. The Joint Venture then argues that Davey Pitcher's purported actions ­ all of which occurred after Kingsbury Pitcher signed the Agreement, somehow demonstrate that Kingsbury Pitcher did not intend to honor commitments he made in February 1998 (and that apparently induced the Joint Venture to enter into the 1999 Agreement). Yet the law is clear ­ a fraud claim cannot be supported by simply reciting evidence of breach and suggesting that nonperformance is evidence that a party never intended to go through with the contract ­ otherwise, nearly every breach of contract case would turn into a fraud case. A claimant must demonstrate evidence of fraud sufficient to go to a jury on the clear and convincing standard. Here, there is absolutely no

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evidence, written, verbal, direct or circumstantial, indicating that Kingsbury Pitcher did not intend to honor any commitments when he signed the 1999 Agreement. Next, the Joint Venture contends that Kingsbury Pitcher's predictions as to the outcome of the Forest Service approval process are somehow actionable because Mr. Pitcher had "superior knowledge" of the Forest Service and because the Joint Venture and Kingsbury Pitcher were purportedly "partners." The Joint Venture's argument focuses on an exception to the general rule that a party cannot reasonably rely on legal opinions. Yet, the Joint Venture's focus on the reasonable reliance element ignores a critical element of fraud -- there must first be a fact upon which it could have reasonably relied. The opinions at issue undisputedly hinged on a prediction of Forest Service approval of Alternative IV, and everyone knew that Kingsbury Pitcher's prediction as to the outcome of the Forest Service's review was just that -- a prediction and not a fact. Misrepresentations must be of fact, regardless of relationships between the parties. Indeed, the Joint Venture does not cite a single case in which a fraud claim survived based on the predictions of the actions of a government agency or other third party. The Joint Venture's various theories of fraud, although creative and imaginative, lack any hard evidence. This is a contract dispute, not a fraud case. Resolution of this issue will streamline the evidence presented at trial and simplify and decrease the length of the trial, among other things. Wolf Creek's Motion is straightforward, is based on undisputable facts, and, as such, should be granted.

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II. A.

ARGUMENT

Kingsbury Pitcher Intended to Fulfill Commitments He Made Prior to Executing the 1999 Agreement, and There is Absolutely No Evidence to the Contrary The Joint Venture hinges its fraud claim on the contention that Wolf Creek never

intended to fulfill the purported Future Commitments recited in the Response at page 22. According to the Joint Venture, Kingsbury Pitcher made these promises, yet he lied about his intent to fulfill the promises. As such, the Joint Venture alleges it was fraudulently induced to enter into the 1999 Agreement. None of the "evidence" of intent cited by the Joint Venture is legally sufficient to meet the "high standard of proof" required to establish a fraud-in-the-inducement claim.1 Applied Genetics Int'l, Inc. v. First Affiliated Securities, Inc., 912 F.2d 1238, 1244 (10th Cir. 1990). The Court must consider on summary judgment whether a reasonable jury could conclude that the Joint Venture's fraud claim has been established by clear and convincing evidence (the standard for proving fraud in Colorado). 2 Id. at 1243-44. (affirming district court's grant of summary judgment dismissing fraud claim in light of the clear and convincing standard for fraud) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986)).

The "inquiry involved in a ruling on a motion for summary judgment . . . necessarily implicates the substantive evidentiary standard of proof that would apply at the trial on the merits." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). Thus, in Liberty Lobby, the Court held that in a libel case, where the First Amendment requires clear and convincing evidence of malice, the clear and convincing standard should be taken into account when ruling on summary judgment. Id. Likewise, in this case, this Court must consider whether a reasonable jury could conclude that the Joint Venture's fraud claim has been established with the requisite clarity. Id.
2

1

See Central National Bank of Cleveland v. King, 573 F.2d 669, 673 (10th Cir. 1978) (fraud must be established by clear and convincing evidence.); Wiley v. Byrd, 158 Colo. 479, 408 P.2d 72 (1965) (same). 4

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Where, as here, a fraud claim is predicated on the theory that a promise to perform a future act was made with a present intention not to perform, the evidence supporting that claim must consist of something more than speculation on the part of the aggrieved party. A party "cannot simply cry fraud and thereby escape summary judgment." Strum v. Exxon Co., USA, 15 F.3d 327, 331 (4th Cir. 1994); see also Mills v. Damson Oil Corp., 931 F.2d 346, 349 (5th Cir. 1991) (affirming summary judgment on fraud claims where plaintiffs "offer nothing beyond bare allegations to carry the indispensable burden of showing [defendant's] intent."); Micrel, Inc. v. TRW, Inc., 2005 WL 117057 * 11 (N.D. Ohio 2005) (failure to grant summary judgment where party fails to offer sufficient proof of intent would impermissibly transform a breach of contract claim into a fraud claim) (citing Captiva, Inc. v. Viz Communications, Inc., 85 Fed. Appx. 501, 502, 507 (6th Cir. 2004)). Likewise, mere evidence of non-performance does not prove a lack of intent to perform. Strum 15 F.3d at 331 ("The mere failure to carry out a promise in contract . . . does not support a tort action for fraud") (citations omitted); Micrel, 2005 WL 117057 at *12 ("[A] defendant's repudiation of a contract is not evidence that it had a preconceived plan to defraud the plaintiff.") (citing Schneider v. Qaulters, no. 87-3405, 1988 WL 76524 *7 (6th Cir. 1988)). Here, the evidence cited by the Joint Venture is either mischaracterized, amounts to nothing more than speculation, or is mere evidence of non-performance. Kingsbury Pitcher's Testimony Leading with its chin, the Joint Venture characterizes Kingsbury Pitcher's testimony as an "admission" of Mr. Pitcher's fraudulent intent. The Joint Venture states, "when [Mr. Pitcher] wrote the Joint Venture in February 1998 describing '[t]he road from Highway 160 to the Village property' and promising that '[w]e will carry the EA, the engineering, and construction of the 5
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road at Wolf Creek's expense,' he did not mean what he wrote." Response at p. 24. Yet the Joint Venture's paraphrasing of Kingsbury Pitcher's testimony conveniently deletes Mr. Pitcher's complete explanation, which is that he had no intention of building the road to the Village boundary "unless the Forest Service, which controls us, was in approval." Reply, infra, at pp. 22-23, ¶ 46; Mr. Pitcher also pointed out in his testimony that the February 1998 letter, about which he was testifying, states that Wolf Creek would "hopefully" be able to secure Forest Service approval and begin construction on the road. Id.; see also Ex. 6. He did not say he had no intention of carrying out any commitments. Rather, he accurately stated in the February 1998 letter and during his deposition testimony that any representation with respect to the access road was at all times contingent on the Forest Service and its determination of whether a permit would be issued ­ a fact that was well-known to the Joint Venture. Motion at pp. 13-14. Kingsbury Pitcher merely testified that he did not intend to build the road without that approval. Indeed, it is beyond dispute that all parties were aware that an access road would only be constructed when Forest Service Approval was secured. Id. The Joint Venture has never contended that the road was to be constructed without Forest Service approval. Kingsbury Pitcher's Purported "Indifference to the Truth" While the issue of whether a prediction is actionable for fraud is addressed further below, the Joint Venture argues that Kingsbury Pitcher's predictions were made with "indifference to the truth," and that these predictions therefore serve as evidence of Mr. Pitcher's intent not to follow through with his "commitments." This is ridiculous ­ according to the Joint Venture, Kingsbury Pitcher's predictions about Forest Service approval were dead-on until the Joyner Letter was issued. Indeed, the Joint Venture acknowledges that it consulted its own legal 6
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counsel to ensure that the Alternative IV Map would provide legal access to the property, and the Joint Venture and its counsel were satisfied that the Forest Service's approval of the Alternative IV map provided the access it sought. Response at p. 44, ¶ 16(a) and (b). With Kingsbury Pitcher, the Joint Venture, and all of the Joint Venture's advisors (including counsel) in concurrence, this is not a case of wild speculation by Kingsbury Pitcher. He believed his prediction, and he had a basis for it. Reply, infra, p. 23, ¶ 47. The testimony quoted by the Joint Venture merely relates to Mr. Pitcher's regret that his predictions did not come to pass ­ it is not evidence of an indifference amounting to an intent to defraud. The "Conflict of Interest" The Joint Venture next argues as evidence of Kingsbury Pitcher's malicious intent that, facing a "conflict of interest,"3 Wolf Creek planned all along to jettison the road to overcome the growing opposition to the Village. According to the Joint Venture, the "conflict of interest" and the ultimate compromise with Colorado Wild somehow "suggest an intent on the part of Wolf Creek not to honor its commitment to represent the interest of the Joint Venture." Response at p. 31 (emphasis added). Absent from the Joint Venture's argument is any evidence of how this conflict of interest is evidence of a pre-existing or pre-conceived plan to enter into a settlement with

The Joint Venture implies (but has never argued previously) that a "conflict of interest" should have been disclosed to them. Mr. Honts's affidavit, however, is notable for the fact that he does not state he was unaware that the Pitchers had purchased the lift and were under pressure, or that the Village was the target of environmentalists. He does not make that claim because he cannot. Kingsbury Pitcher undisputedly informed the Joint Venture in May 1999 that the environmentalists were opposed to the Village. Motion at p. 23, ¶¶ 23(b)-(c) and Response at p. 45, ¶¶ 23 (b) - (c). Also, the Joint Venture knew about the lift commitment and that the commitment was a gamble that put pressure on the Ski Area. Reply, infra, at p. 20, ¶ 25; see also Ex. 12. 7
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environmentalists or agree to a 250-foot setback. All the Joint Venture has to show for its efforts to uncover a "conspiracy" is: a public, hearsay newspaper article from 1998 concerning a possible meeting between Davey Pitcher and environmentalist Joanie Berde (a meeting that never occurred); a 1997 letter from Ms. Berde to the Ski Area (that the Ski Area never responded to) in which Ms. Berde asks for information about the ski area expansion proposal; and a phone message slip prepared by Davey Pitcher's secretary (after the execution of the 1999 Agreement) indicating simply that a "Marie" called seeking to speak to Davey Pitcher. See Motion at p. 26, ¶ 27 and Response at p. 46, ¶ 27. The Joint Venture deposed Ms. Berde, Ms. Jordan, Mr. Berman, and Mr. Pitcher. Not surprisingly, the Joint Venture does not cite the testimony of any these individuals on this issue. This is because Ms. Berde testified that she does not remember Mr. Pitcher responding to her 1997 letter. Reply, infra, p. 23-24, ¶ 27. Further, Ms. Berde and Davey Pitcher never met, and never had a conversation about the EA (other than Mr. Pitcher's possible attendance on a conference call with the Forest Service) about the EA after the appeal, and certainly did not meet or confer after the associated press article where Mr. Pitcher "announced his intention" to meet with Ms. Berde. Reply, infra, p. 19, ¶ 8; p. 23-24; ¶ 27. Finally, the alleged call from Ms. Jordan occurred after the agreements were signed, the appeal was filed, and the compromise with the Forest Service was reached. Reply, infra, at p. 21, ¶ 38. The Joint Venture has presented no record evidence that any conversation occurred, or that the call was returned. This is not evidence of a pre-conceived plan, nor could it be clear and convincing under any standard. It is not enough for the Joint Venture to speculate as to intent. Rather, the evidence of intent, even at the summary judgment stage, must be sufficient to allow a reasonable juror to 8
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conclude that the Joint Venture could meet the clear and convincing standard. Without something beyond its unsubstantiated allegations, the Joint Venture cannot show that it has produced sufficient evidence to succeed on its fraud claim. Mills, 931 F.2d at 349. Davey Pitcher's Alleged Actions Finally, the Joint Venture points to Davey Pitcher's negotiations with Colorado Wild and the Forest Service and the eventual compromise reached between them, and it claims that these negotiations somehow prove that Kingsbury Pitcher never intended to honor purported obligations made prior to (and subsumed within) the 1999 Agreement. Of course, as the Joint Venture must admit, Davey Pitcher's actions all took place after the 1999 Agreement had been executed. See Joint Venture's Brief at 32. As such, this evidence is, if anything, nothing more than mere proof of non-performance, and therefore cannot, as a matter of law, serve as proof that Wolf Creek had a preconceived plot not to honor contractual obligations. Strum, 15 F.3d at 331. Moreover, Davey Pitcher's testimony in no way suggests that Kingsbury Pitcher lied about his intentions. The fact is, as Colorado Wild testified, it was Colorado Wild's idea--not Wolf Creek's--to insert the 250-foot buffer into the 1999 Decision Notice, and Davey Pitcher clearly testified that it was not his idea. Motion at p. 20, ¶29; Reply, infra, at p. 24, ¶ 29. The Joint Venture disputes this fact, but provides no evidence demonstrating that Davey or Kingsbury Pitcher ever conceived of such a plan, much less clear and convincing evidence that it was conceived (by Colorado Wild or anyone else, for that matter) prior to execution of the 1999 Agreement.4

4

In paragraph 29 of Defendant's Response to Wolf Creek's undisputed facts, the Joint Venture once again trots out the March 22, 2000 letter from Davey Pitcher to the Forest Service. This letter does not state the Davey Pitcher conceived the idea, it merely states (as the Joyner 9

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Put simply, the Joint Venture has failed to set forth sufficient evidence "to establish to a clear and convincing standard that [Wolf Creek's] promises were made with the intention of not performing them." Applied Genetics, 912 F.2d at 1244. As such, the Joint Venture cannot establish an essential element of its fraud claim ­ fraudulent intent at the time of the commitments ­and the fraudulent inducement claim must be dismissed on summary judgment. See Bancoklahoma Mortgage Corp. v. Capital Title Co., 194 F.3d 1089, 1106 (10th Cir. 1999) (upholding district court's dismissal of fraud claim on summary judgment where plaintiff failed to establish an element of fraud); Traffas v. Bridge Capital Corp., 46 F.3d 1152 (10th Cir. 1995) (No. 93-3322) (defendant entitled to summary judgment on fraud claim where plaintiff failed to advance sufficient evidence to establish intent); Applied Genetics, 912 F.2d at 1244 (affirming dismissal of fraud claim on summary judgment where plaintiff failed to meet the "high standard of proof" to establish each element of the claim); see also, Mills, 931 F.2d at 349 (affirming summary judgment on fraud claim where plaintiff failed to offer evidence beyond "bare allegations" to establish intent); Micrel, Inc. 2005 WL 117057 *9 (granting summary judgment on fraudulent inducement claim where plaintiff failed to provide evidence beyond mere nonperformance to prove intent).

Letter does) that Wolf Creek played a role in the settlement. Further, it does not state in any way that Wolf Creek's role (or anyone else's, for that matter) pre-dated execution of the 1999 Agreement. The only summary judgment evidence on this point is Jeffery Berman's testimony that the 250 foot buffer was Colorado Wild's idea, and Davey Pitcher's testimony that he did not come up with the idea. Motion at p. 20, ¶29; Reply, infra, at p. 21, ¶ 29. The Joint Venture's unsupported speculation is not enough to overcome summary judgment. 10
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B.

As a Matter of Law, A Prediction with No Guarantees Is Simply Not Actionable, Regardless of "Specialized Knowledge" or "Relationships" In the remaining six pages of its argument, the Joint Venture contends that Kingsbury

Pitcher's predictions regarding the "outcome of the forest service approval process" were incorrect, and are therefore actionable. See Response at Sections IV(A)-(B), pp. 34-40. Yet the Joint Venture ignores the well-established rule that a prediction regarding the likelihood of Forest Service approval is not, and cannot be, a fact sufficient to support a claim for fraudulent inducement. A misrepresentation of fact is a required element of fraud. Further, because the Joint Venture knew it was a prediction and was consulting with its counsel about the adequacy of that prediction, the Joint Venture also fails to meet the element of reasonable reliance as a matter of law. 1. A Prediction Without a Guarantee is Not a Fact and Does Not Support a Claim of Fraudulent Inducement

Wolf Creek argued in its Motion that the Joint Venture's fraud claims hinge on a prediction of Forest Service approval as well as a legal opinion about the approval itself, neither of which can support its fraud claims. In its Response, the Joint Venture focuses on the latter issue, suggesting that Kingsbury Pitcher's "superior knowledge" and alleged position of trust entitled the Joint Venture to rely on a legal opinion of Mr. Pitcher. In doing so, however, the Joint Venture skips right over the prediction that forms the basis for any legal opinion ­ that is, the prediction that the Alternative IV Map would be approved. Kingsbury Pitcher's statements concerning the outcome of the Forest Service process were nothing more than a prediction of what a third party (i.e., the Forest Service) would do. The prediction was qualified with terms like "hopefully" and "likely." Response at p. 9, ¶ 6 and 11
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p. 10, ¶ 21. The fact that the Ski Area was applying to the Forest Service for a permit clearly establishes that the Forest Service was in control. Perhaps the Joint Venture captures this uncertainty best when, in arguing reasonable reliance, the Joint Venture states: "the Joint Venture was justified in making an educated and calculated business judgment as to the likely outcome of the Forest Service Approval Process regardless of the knowledge that the outcome could not be guaranteed." Response at pp. 39-40 (emphasis added). A prediction about "likely" outcomes with no guarantee simply cannot be the basis for a fraud claim. It defies logic. Particularly where, as here, the Joint Venture acknowledges that Kingsbury Pitcher's prediction of approval of the Alternative IV Map was accurate up until late August (well after the execution of the allegedly fraudulently induced contract) when the Joyner Letter provided for the 250 foot buffer between the parking lots and the Village. As set forth in Wolf Creek's Motion, a prediction is not a fact. It is hornbook law that a misrepresentation must concern a material fact that "either exists in the present or has existed in the past." Leece v. Griffin, 150 Colo. 132; 371 P.2d 264, 265 (Colo. 1962). "[A]ctionable fraud cannot be based upon erroneous predictions of the future conduct of independent third parties." Corbin v. Preston, 218 P. 917, 920 (Or. 1923); see also Wellcraft Marine v. Lyell, 960 S.W.2d 542, 546 (Mo. App. 1998) (upholding judgment notwithstanding the verdict on negligent misrepresentation claim based on predicted actions of third party that was not under the speaker's control); and cases cited in Motion at p. 10 n.5. This rule applies regardless of a party's level of expertise or the nature of the parties' relationship. See, e.g, Eureka Pipe, Inc. v. Cretcher-Lynch & Co. 754 S.W. 2d 897, 899 (Mo. App. 1988) (holding that predictions of future actions of third parties not under a party's control cannot form the basis for a fraud claim, despite the defendant's 12
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superior knowledge of the third-party's business and prior actions); Fuller v. Perry, 476 S.E.2d 793, 796 (Ga. 1996) (holding that a fiduciary "duty of diligence and good faith cannot be held to include an obligation to predict accurately or guarantee the future financial condition or performance of a third party.") The cases cited by the defendant are inapposite, as they involve legal opinions concerning application of law to then-existing facts.5 They do not involve application of law to predictions of future events contingent on the actions of third parties (such as the Forest Service). There is no dispute that the Forest Service is a third party and that Kingsbury Pitcher could not control the Forest Service, as admitted by Red McCombs. Response at pp. 38-39; Motion at p. 25, ¶24. As a mater of law, such a prediction cannot form the basis of a fraud claim. The Joint Venture cannot prove fraud based on the prediction of Forest Service approval of the Alternative IV Map, because the prediction is not a fact. As such, the Court need not even address the Joint Venture's contention that it reasonably relied on any legal opinion about what effect the approval would have if the prediction became true. Nonetheless, as set forth below, the Joint Venture also is unable to demonstrate reasonable reliance on a legal opinion as a matter of law.

5

See Fawcett v. Sun Life Assurance Company of Canada, 135 F.2d 544, 545 (10th Cir. 1943) (insurance sales person's representation that the Bureau of Internal Revenue had previously ruled that the insurance policy was not taxable at death was a statement of fact about the present state of law's application to the specific policy being sold); Seal v. Hart 755 P.2d 462, 464 (Colo. App. 1988) (holding that plaintiff may be justified in relying on representation that the current zoning permitted rental of both upper and lower floors of property because of claim of superior knowledge and potential special relationship). 13

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2.

The Joint Venture Could Not Rely, As a Matter of Law, on Any Legal Opinion by Kingsbury Pitcher Regarding the Legal Effect of Approval of the Alternative IV Map

As set forth in Wolf Creek's Motion, a party cannot meet the reasonable reliance element of fraudulent inducement because it cannot reasonably rely upon a statement of legal opinion. See Motion at p. 7. The Joint Venture argues that it is subject to an exception to this rule because Kingsbury Pitcher had "superior knowledge" and was in a position of trust. In support, the Joint Venture provides nothing beyond Mr. Honts' affidavit stating that he thought the Pitchers were experts and its previously-dismissed fiduciary duty arguments. However, the Joint Venture does not satisfy the exception it cites, because any legal opinion advanced by the Ski Area was based on an assumption that everyone admittedly knew was not guaranteed ­ that a third party (the Forest Service) would approve the road. First, the Joint Venture ignores the fact that the exception it attempts to employ only applies where "the party making the representation [of law] was or professes to have superior knowledge which is not reasonably available to the person to whom the representation is made." Seal v. Hart 755 P.2d 462, 464 (Colo. App. 1988). The exception does not permit those involved in an arm's length business negotiation (including the negotiating of agreement that went though multiple drafts by their respective attorneys) to blindly rely on information to which it has full and complete access. See Bedard v. Martin, 100 P.3d 584, 592 (Colo. App. 2004) (dismissing fraud claim on summary judgment because plaintiff could not have justifiably relied on representations by defendant that she had title to property when title to the property in

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question was a matter of public record).6 While the Joint Venture attempts to demonstrate that geographical location made it inconvenient to obtain public information, there is no evidence that the Ski Area had access to information to which the Joint Venture also did not have access. Particularly where, as here, the Joint Venture was represented by Aspen counsel (an expert on federal permitting) and the matter involved federal permitting, the Joint Venture cannot claim to have been at a disadvantage in obtaining information. Moreover, the Joint Venture admits that it had its own independent legal representation, and that it consulted with its counsel and relied on their advice to determine the effect of approval of the Alternative IV Map. See Motion at p. 20, ¶16(b) and Response at p. 43, ¶ 16(b). Additionally, in response to the prior motion for summary judgment on the contract claim, the Joint Venture put forth evidence that Holland & Hart's Aspen Office was providing advice on the 1999 Agreement, including specific advice regarding the implications of a failure of the Forest Service to approve access. See Ex. A-32 at L-M 01858, 01860; see also Recommendation of Magistrate Judge on Plaintiff Wolf Creek Ski Corporation's Motion for Summary Judgment at p. 5 (re March 23, 1999 entry). There can be no justifiable reliance on a representation where the allegedly defrauded party sought independent counsel. See, e.g., Greathouse v. Jones, 167 Colo. 406, 408; 447 P.2d 985, 986 (Colo. 1968) (abrogated on other grounds, Page v. Clark, 197 Colo. 306, 592 P.2d 792 (Colo. 1979)) (plaintiff was not justified on relying on alleged misrepresentations when he conducted his own investigation, including consulting his own

6

Balkind v. Telluride Mountain Title Co., 8 P.3d 581, 587 (Colo.App.2000) (granting summary judgment on plaintiff's negligent misrepresentation claim because plaintiff could not have reasonably relied on representations of defendant who sold him property without disclosing restrictions on its use, where plaintiff had available to him various title documents which disclosed restrictions on the property). 15

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experts and friends); Colorado Jury Instructions for Civil Trials, § 19:11 ("the defendant's representation is not the cause of plaintiff's damages if the plaintiff substantially relied and acted on his own investigation rather than on the defendant's representations."). Finally, as set forth above, the Joint Venture undisputedly was aware of the possibility that the road may not be approved. While the Joint Venture attempts to distance itself from thenManaging Member Peter Leavell's admission, as well as that of Mr. Woods, they cannot do so as a matter of law.7 Mr. McCombs expressly testified that he relied on Mr. Woods, as did Mr. Woods. Reply, infra, p. 23; ¶ 24. Further, the Joint Venture states in its brief its knowledge that there were no guarantees. Response at pp. 38-39. Under such circumstances, it simply is not reasonable as a matter of law to rely on a statement that admittedly was a prediction with no guarantees. C. The Statue of Limitation Bars All Claims Regarding Representations Related to the Outcome of the 1999 Environmental Assessment Process, Which Was Final as of September 1999 The Joint Venture claims it was induced to enter into the 1999 Agreement based on either a fraudulent or negligent misrepresentation. The clock begins ticking on this claim once the Joint Venture knew a fact was misrepresented. Unlike the contract claim, where the Joint Venture argued that its "breach of contract claims focus on whether or not Wolf Creek breached its obligations under the [1999 Agreement] to `jointly' and `diligently' (and in good faith) pursue [the] road during 1999 and thereafter," at issue in the instant Motion is whether the Joint Venture entered into the contract pursuant to

7

See Lee v. Durango Music, 355 P.2d 1083 (Colo. 1960) ("Knowledge of one partner concerning the business of the partnership is knowledge possessed by all the partners."); Colo. Stat. Ann. § 7-60-112. 16

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materially false information. Here, with respect to Kingsbury Pitcher's prediction of the Forest Service approval, the Joint Venture knew as of the time of the Joyner Letter that his prediction was incorrect. As of September 1999, the Forest Service did not approve the entire "package," but instead approved the lift and parking lot with a 250 foot buffer. As such, the Joint Venture's claim is well outside the three year limitations period for fraudulent inducement and the two year limitations period for negligent misrepresentation. With respect to Kingsbury Pitcher purportedly lying about his intent, the Joint Venture has yet to identify any evidence of malicious intent by Kingsbury Pitcher or Wolf Creek prior to the execution of the 1999 Agreement. Notably, even the purported "conflict of interest" ­ Wolf Creek's purchase of the lift which the Joint Venture alleges led to the compromise with the environmentalists ­ was well known by the Joint Venture as of the time of the Joyner Letter. Indeed, the facts that the Joint Venture asserts that gave rise to a "conflict of interest," Wolf Creek's need to install the previously purchased Alberta lift, were known prior the execution of the 1999 Agreement. See Reply, infra, p. 20, ¶ 25. Accordingly, any claim of misrepresentation based on the "conflict of interest" is barred by the statute of limitations. Finally, although referring to it previously as a "red herring," the Joint Venture attempts to invoke the doctrine of equitable estoppel to toll the statute of limitations for the fraudulent inducement or negligent misrepresentation claim. Again, unlike the contract claim, here there was no issue of future performance ­ what is at issue is whether the Joint Venture entered into the 1999 Agreement on false pretenses. The Joint Venture has not identified any active deception by the Ski Area following the Joyner Letter to prevent the Joint Venture from learning that Kingsbury Pitcher's prediction of Forest Service approval was incorrect, or concerning the 17
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purported "conflict of interest" resulting from the advance purchase of the Alberta ski lift. As such, equitable estoppel is not applicable. See Edwards v. International Union, 46 F.3d 1047, 1054-55 (10th Cir. 1995) (Kane, J.). III. RESPONSE TO JOINT VENTURE'S STATEMENT OF ADDITIONAL DISPUTED MATERIAL FACTS

The Joint Venture spends considerable time trying to draw Wolf Creek into a dispute over facts by improperly quoting and mischaracterizing testimony. However, the Joint Venture cannot provide any competent summary judgment evidence of: (1) a misrepresented fact at or before the time of execution of the 1999 Agreement, much less one upon which the Joint Venture can (2) reasonably rely. The standard for summary judgment requires, "If a party that would bear the burden of persuasion at trial does not come forward with sufficient evidence on an essential element of its prima facie case, all issues concerning all other elements of the claim and any defenses become immaterial." Med Safe Northwest, Inc. v. Medvial, Inc., 1 Fed.Appx. 795 (10th Cir. 2001) (emphasis supplied) (citing Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir.1998)). Because the Joint Venture has not come forward with any clear and convincing evidence of a misrepresentation of existing fact, the intent not to perform a future promise, or justifiable reliance, all alleged disputed factual issues are immaterial. Given this and that the summary judgment standard requires the Court to review evidence and draw reasonable inferences in the light most favorable to the party opposing summary judgment, Wolf Creek's responses below are merely Wolf Creek's admission or denial of whether there is evidence in support of the statement at issue for purposes of this summary judgment motion. As such, Wolf Creek's admissions are not a stipulation or concession that the asserted fact will be proved at trial.

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Wolf Creek will likely contest certain of these issues at a trial, as well as many of the Joint Venture's characterizations of the evidence. 1. 2. 3. Admit. Admit. Admit, and add that Kingsbury Pitcher had a more significant financial interest in the Ski Area and that Mr. Pitcher never represented to the Joint Venture that he would place the Joint Venture's interests above that of the Ski Area. McCombs II Dep. at 60:4-8, Ex. 26. Admit. Admit that Mr. Pitcher signed the proposed agreement, but add that the Joint Venture rejected it and never signed it. Ex. A-8. Admit. Admit. Admit first sentence, but deny that Davey Pitcher met with Ms. Berde. He may have been on a conference call with the Forest Service, although she could not specifically remember, and Ms. Berde's concerns were not addressed on the call -- "we agreed to disagree." See Berde Dep. at 39:22-40:23; 85:6-9, Ex. 27. Admit, and add that the March 1999 EA contained the Alternative IV Map which the Joint Venture believed (with advice of counsel) would suit its needs. See Response at p. 44, ¶ 16(b); id. at p. 22, fn. 8. Admit. Admit. Admit, and state that according to the Joint Venture (after consultation with counsel) the June 1999 EA approved the Access Road and would suit its needs. See Response at. 44, ¶ 16(b); id. at p. 22, fn. 8. Admit that, as applicant, Wolf Creek had initial control over the application. However, as the Forest Service was responsible for determining whether to issue the permit, the Forest Service had ultimate control. No later than the time the Forest Service pulled the 1998 EA in response to the Carson Forest Watch appeal, the Forest Service controlled the content of the EA document. D. Pitcher Dep. at 191:24-192:13, Ex. 28.

4. 5. 6. 7. 8.

9.

10. 11. 12.

13.

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14.

Admit that Davey Pitcher was in charge of Wolf Creek's role in the Environmental Assessment Process and dealing with the Forest Service in that process. There is no summary judgment evidence of Wolf Creek or Davey Pitcher "preparing" or having input into any pre-decisional Environmental Assessments after October 1998. D. Pitcher Depo., p. 187:25 ­ 193:5, Ex. 28. Admit that McCombs and Honts testified as set forth. Add that the Joint Venture consulted with counsel on the adequacy of Alternative IV. Response at p. 44, ¶ 16(b). The Joint Venture also communicated with the Aspen office of Holland & Hart on the potential Forest Service outcomes. Exhibit A-32 to Joint Venture's Response to Wolf Creek's Motion for Partial Summary Judgment on Contract Claim, Docket # 38. Admit that McCombs and Honts testified as set forth in the first sentence. Deny that Mr. Honts did not know that a Decision Notice existed, as Honts later changed his testimony (as cited in the response) once confronted with proof that he sent the Decision Notice to the Joint Ventures on June 21, 1999. Honts Dep. at 497:9- 499:24, Ex. 29. Admit, and state that document speaks for itself. Admit, and state that document speaks for itself. Admit that Robert Honts testified to this effect. Admit that Robert Honts testified to this effect. Admit, and noted that in Honts summary, he stated that Forest Services approval process had a 45 day appeal period, but it was likely (not guaranteed) a done deal. Admit that Kingsbury Pitcher stated that in light of the opposition from the environmentalists, Wolf Creek "feels we will eventually prevail, though it may take time." Admit that Robert Honts testified to this effect. Admit that Robert Honts testified to this effect. Admit, and add that Wolf Creek informed the Joint Venture of opposition to the Village by environmentalists as well as Wolf Creek's gamble on purchasing the lift in advance of Forest Service approval. Honts Dep. at 186:1-189:11, Ex. 29; Ex.14; February 24, 1999 Memorandum, Ex. 30.. Notably, the Joint Venture does not state that it was unaware of any "conflict of interest." Admit that the Forest Service approved Alternative IV in the June 1999 Decision Notice. Admit, as set forth in Exhibit 16, that Kingsbury Pitcher advised that he thought the Forest Service would act on August 1st or shortly thereafter. 20

15.

16.

17. 18. 19. 20. 21. 22.

23. 24. 25.

26. 27.

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28. 29.

Admit that Honts documented that the Pitcher "do not anticipate a problem"; not that they guaranteed no appeal would occur. Admit, and add that this is because the idea was never raised until after execution of the 1999 Agreement, and because the idea was not Wolf Creek's. D. Pitcher Dep. at 251:3252:18, Ex. 28. See also Berman Dep. at 80:2-82:25, Ex. 19. Admit that Honts informed the Joint Venture it was "virtually" a done deal. Admit, although denied that this precluded them from access to the local news or other publicly available information. Admit that Honts testified that Kingsbury Pitcher asked Honts not to be involved because he would "rock the boat". Admit that Honts testified that Wolf Creek did not provide Honts with all of the publicly-available EAs. Admit that Honts had other access to information ("almost exclusively" and "relative ignorance"). Add that Honts had advice of counsel. Response at p. 44, ¶ 16(b). See also, supra, p. 19, ¶ 15. Admit. Admit. Admit, although add that Wolf Creek informed the Joint Venture that the environmentalists were appealing. See, e.g., Ex. 16. Admit, and add that the meeting took place in August 1999, that there was no agreement with Wolf Creek at that time, and that Berman informed Davey Pitcher that the text of an agreement had been worked out on August 30, 1994. Ex. A-23; Berman Dep. 85:17-86:3, Ex. 19. Admit that Davey Pitcher received calls from opponents of the Access Road after the execution of the 1999 Agreement. Deny that Davey Pitcher was on a first name basis with opponents of the June 1999 EA. M. Jordan Dep. at 56:15-21, Ex. 31 (Marie Jordan testifying that she has met Davey Pitcher twice). Deny that phone message from Cox states or suggests that Pitchers was to be an "honored guest" or "newly admitted member." See Ex. A-23. Admit that the letter references an agreement between Wolf Creek, Colorado Wild, and the Forest Service, relating to (among other things) the 250 foot buffer. Admit, although deny with respect to (3) any assurance of Access Road approval.

30. 31. 32.

33.

34. 35. 36. 37.

38.

39. 40.

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41.

The Ski Area faxed the Joyner Letter to Mr. Honts on September 15, 1999. See Ex. A-26. Mr. Honts repeatedly characterized the Joyner Letter, including the 250 foot buffer, as a "major step forward" and a major victory. See Ex. 22 and 23 (at LMO 2353-4). Admit, and stated that Exs. A-23 and A-26 speak for themselves.. Admit that Robert Honts testified to this effect. Admit that Robert Honts testified to this effect. Deny any fraud or intent by Kingsbury Pitcher not to fulfill any commitments. Deny mischaracterization of testimony and partial quote of Kingsbury Pitcher. Rather, Kingsbury Pitcher testified that it was not his intent to build the road touching the Joint Venture Property, unless they received Forest Service Approval, which he was hopeful that they could get. Specifically, Kingsbury Pitcher testified: Q Okay. Paragraph No. 1 on the first page of Exhibit 24 starts out by saying "The road from Highway 160 to The Village property has been surveyed and mapped by us. "Do you see that? A Yes. Q And then it goes on to say, "We will carry the" -- "the EA" -- which that meant environmental assessment; is that correct? Yes, environmental assessment. Q -- "the engineering, and construction of the road at Wolf Creek's expense." Do you see that? A Yes. Q Now, it was -- then it was the intention of Wolf Creek in February of 1998 to take those steps with respect to the access road to The Village property; is that correct? A No, it wasn't. Q Okay. What was incorrect about it? A We intended that road to connect the highway with the new parking lot which was under construction. Q Okay. And what about ­ what about the road -- the access road up to The Village property? A We did not have any intention of constructing that unless the Forest Service, which controls us, was in approval. Q And you say in this letter that you would -- you would actually -"you" being Wolf Creek -- would take the steps -- would take the lead in securing U.S. Forest Service approval; is that correct? A I think paragraph 1 says "hopefully, will be able to secure USFS approval." Q Okay. And were you going to take the lead in getting USFS approval? 22

42. 43. 44. 45. 46.

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A There's no way that we can take the lead. We have to wait until the Forest Service questions us about our intentions. K. Pitcher Dep. at 10:9-13:4 (emphasis added), Ex. 32. 47. Denied. As the Joint Venture acknowledges, the access road that the Joint Venture believed would serve its purposes (based on advice of its counsel), was in the Forest Service decision up until the time of the Joyner Letter. Kingsbury Pitcher certainly had a basis for his prediction. K. Pitcher Dep. at 81:1-83:6; 84:3-11; 91:1-12, Ex. 32. Admit quoted portion of testimony, but deny characterization of testimony. Admit to quoted portion of document, and add that the letter contains nothing not already contained in the Joyner Letter. Deny characterization of "gloating." Admit and add that McCombs also relied on Woods. Woods Dep. 60:15-62:14, Ex. 33; McCombs Dep. 38:6-38:24, McCombs Dep. II 20:16-20:25, Ex.26. Admit. Admit, and add that Leavell remained the Managing Venturer. Ex. 5, ¶ 2; IV. REPLY TO JOINT VENTURE'S RESPONSE TO STATEMENT OF UNDISPUTED MATERIAL FACTS

48. 49. 50. 51. 52.

On pages 43 to 47 of its Response, the Joint Venture specifically responds to each of Wolf Creek's Undisputed Facts. Of these facts, the Joint Venture denies only three facts. See paras. 24, 27, 29. Wolf Creek replies to each below. 24. The Joint Venture purports to deny Wolf Creek's statement that, "The Joint Venture participants were aware of the appeal rights and the uncertain outcome of the 1999 Decision Notice at the time the 1999 Agreements were signed." However, the Joint Venture acknowledges that Honts was "generally aware that an appeal could be filed" and were "relatively confident" of approval. This is hardly a denial. Further, the Joint Venture acknowledges the testimony of Leavell, Woods and McCombs. Leavell and McCombs were actual members of the Joint Venture (unlike Honts), and knowledge of any of the Joint Venture's is imputed to the others. Further, as McCombs and Woods testified, McCombs relied on Woods. Woods Dep. at 60:15-62:10, Ex. 33; McCombs Dep. 38:6-38:24, McCombs Dep. II 20:16-20:25, Ex. 26. 27. While the parties may dispute the definition of "substantive contact", the Joint Venture has identified no contact between the Ski Area and environmentalists other than unreturned telephone calls or correspondence. See supra, at p. 19 & 21; ¶¶ 8 & 38. Further, Ms. 23
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Berde testified that she did not recall Mr. Pitcher responding to her 1997 letter, and she did not meet with him to discuss her opposition as referenced in the newspaper article. Berde Dep. at 19:15-16; 85:6-13, Ex. 27. 29. The testimony of Berman is quite conclusive. Berman has a "clear recollection" that he came up with the 250 foot concept. His only hesitation was that others at Colorado Wild may have come up with it, rather than he. Berman Dep. at 80:2-82:25, Ex. 19. There is no evidence that Davey Pitcher came up with the concept. In fact, Davey Pitcher testified that it was not his idea. D. Pitcher Dep. at 251:3-252:18, Ex. 28. The document referred to by the Joint Venture indicates only that Davey Pitcher had a role in the settlement; not that he conceived the concept. Dated this 21st day of February, 2006. HOGAN & HARTSON L.L.P.

By:

s/Andrew R. Shoemaker Andrew R. Shoemaker Denise D. Riley Jacqueline S. Cooper 1470 Walnut Street, Suite 200 Boulder, Colorado 80302 [email protected] [email protected] [email protected] (720) 406-5300 telephone (720) 406-5301 facsimile Attorneys for Wolf Creek Ski Corporation, Inc.

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CERTIFICATE OF SERVICE I hereby certify that on this 21st day of February, 2006, I electronically filed the foregoing REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT 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: [email protected] Kimberly A. Tomey: [email protected] Sally P. Berg: [email protected]

s/Andrew R. Shoemaker

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