Breaker v. Corrosion Control Corp.

23 P.3d 1278, 2001 Colo. J. C.A.R. 1815, 2001 Colo. App. LEXIS 660, 2001 WL 363685
CourtColorado Court of Appeals
DecidedApril 12, 2001
Docket00CA0420
StatusPublished
Cited by9 cases

This text of 23 P.3d 1278 (Breaker v. Corrosion Control Corp.) is published on Counsel Stack Legal Research, covering Colorado Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Breaker v. Corrosion Control Corp., 23 P.3d 1278, 2001 Colo. J. C.A.R. 1815, 2001 Colo. App. LEXIS 660, 2001 WL 363685 (Colo. Ct. App. 2001).

Opinion

Opinion by

Judge CRISWELL. *

Plaintiff, John V. Breaker, and two counterclaim defendants, Sara D. Breaker and Elizamy, Inc., a dissolved Colorado corporation (Elizamy), appeal, pursuant to § 13-22, *1281 221(1)(a), C.R.S.2000, from the order of the trial court that denied their motion to compel arbitration of certain counterclaims asserted against them by defendant, Corrosion Control Corporation (CCC). We affirm in part, reverse in part, and remand for further proceedings.

The record discloses the following undisputed facts.

In 1991, Elizamy was in the business of designing and manufacturing - specialized flanges and other gaskets and distributing and marketing such products in this and other states. In September of that year, CCC entered into an agreement (the purchase agreement) with Elizamy and plaintiff, Elizamy's principal stockholder, pursuant to which Elizamy agreed to transfer to CCC all of its assets. Plaintiff was made a party to this agreement to reflect that he had personally made certain representations and warranties to CCC and to bind him to certain obligations respecting the future receipt by Elizamy or by him of capital stock in CCC. By the purchase agreement, neither plaintiff nor Elizamy made any express agreement not to disclose information respecting Eliza-my's or CCC's business to other parties.

In addition, this agreement obligated CCC to enter into an employment agreement with plaintiff in substantially the same form as a document attached to the purchase agreement.

The purchase agreement also provided that:

Any controversy or claim arising out of or relating to this Agreement, or breach thereof, shall be settled by arbitration before a single arbitrator chosen by [CCC] and [Elizamy]. The arbitration shall be conducted in accordance with the Uniform Arbitration Act of 1974 [Section 18-22-201, et seq., C.R.8.2000]. ...

After this purchase agreement was executed, plaintiff and CCC entered into an employment agreement whereby CCC. employed plaintiff for a period of five years and agreed to pay him a salary plus a royalty upon the sales of certain products. By this agreement, plaintiff agreed, among other things, that he would not, during the term of that agreement, "impart any information relative to the business or affairs of [CCC] to anyone," except to certain of CCC's employees.

The employment agreement contained no express provision referring to arbitration. Rather, it provided that "any action, special proceeding, or other proceeding ... arising out of, in connection with, or by reason of" that agreement was to be governed by Colorado law and that:

The venue for any action brought by either party against the other shall be in the District Court in and for the City and County of Denver, State of Colorado, and any other venue is hereby waived.

This employment agreement also contained a provision acknowledging that its terms constituted:

the complete agreement between the parties and shall, as of the effective date hereof, supersede all other agreements between the parties.

In 1994, more than two years later, CCC, plaintiff, and Elizamy entered into a further agreement (the 1994 agreement). Under this agreement, CCC consented to plaintiff's employment by another party; plaintiffs nondisclosure obligation created by the employment agreement was reaffirmed; and El-izamy and plaintiff waived their rights under the purchase agreement to receive shares of CCC's capital stock. This agreement made no express reference to any arbitration obligation. It did, however, provide that "the exclusive jurisdiction and venue for any action brought under this agreement will be the District Court of Denver County, Colorado."

Plaintiff commenced this action in December 1998. His complaint made reference to the purchase agreement only to note that the employment agreement between CCC and himself was entered into as a condition of the sale of Elizamy's assets; he placed no reliance upon any provision of the purchase agreement to support his claim. Rather, he attached a copy of the employment agreement to his complaint and alleged, simply, that CCC had violated that agreement by failing to pay him royalties due.

*1282 In CCC's initial responsive pleading, it, likewise, placed no reliance upon any provision of the purchase agreement. It attached a copy of the employment agreement and of the 1994 agreement to this pleading and asserted, as a counterclaim, that plaintiff had violated these two agreements by disclosing confidential information to an identified third party. It also alleged, as a second counterclaim, that plaintiff had improperly interfered with an advantageous business relationship that CCC had developed with that same identified third party.

Thereafter, both parties engaged in discovery efforts. However, the precise results of those efforts had not been presented to the trial court at the time it entered the order that is the subject of this appeal. Those results, therefore, form no proper part of the record before us.

CCC later alleged that it had discovered information during the deposition of another counterclaim defendant (Kohn) that caused it to conclude that certain representations and warranties made by plaintiff and Elizamy as a part of the purchase agreement were untrue. With leave of court, it joined Kohn and the other two counterclaim defendants and asserted several counterclaims.

First, it re-alleged, in essence, its two original counterclaims against plaintiff for violation of the employment agreement by disclosing confidential information to a third party and tortious interference with CCC's relationship with that party.

Next, invoking both the common law and the deceptive trade practices statute, § 6-1-105, C.R.9$.2000, CCC asserted three claims against plaintiff and Elizamy, based upon their alleged false representations and fraudulent nondisclosures relating to certain patent rights that Elizamy had transferred to CCC pursuant to the purchase agreement.

Further, it alleged that plaintiff and Kohn had interfered with relationships between CCC and certain of its customers and that they had disclosed CCC's trade secrets in violation of the Uniform Trade Secrets Act, § 774-101, et seq., C.R.8.2000.

In addition, CCC also alleged, generally, that plaintiff, Elizamy, and Kohn had unlawfully conspired to accomplish an unlawful goal through unlawful means (although neither the goal nor the means was specified).

Finally, Sara D. Breaker was joined as a counterclaim defendant, and it was alleged that plaintiff and she, as stockholders, had received assets of Elizamy upon its dissolution, and to the extent of the value of those assets, both were liable for Elizamy's debts under $ 7-114-108, C.R.$.2000.

As relief, CCC sought actual damages, exemplary damages, declaratory relief, and an injunction against further improper disclosure of confidential information.

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23 P.3d 1278, 2001 Colo. J. C.A.R. 1815, 2001 Colo. App. LEXIS 660, 2001 WL 363685, Counsel Stack Legal Research, https://law.counselstack.com/opinion/breaker-v-corrosion-control-corp-coloctapp-2001.