The summaries of the Colorado Court of Appeals published opinions constitute no part of the opinion of the division but have been prepared by the division for the convenience of the reader. The summaries may not be cited or relied upon as they are not the official language of the division. Any discrepancy between the language in the summary and in the opinion should be resolved in favor of the language in the opinion.
SUMMARY June 28, 2018
2018COA92
No. 17CA0793, Falcon Broadband, Inc., v. Banning Lewis Ranch Metropolitan District No. 1 — Contracts; Government — Local Government Budget Law of Colorado — Expenditures Not to Exceed Appropriation
This case concerns a dispute between a residential
development district and a provider of internet and cable services
over whether the contract between them is enforceable. Among the
issues the division addresses is whether the contract violates
section 29-1-110, C.R.S. 2017, which, as a general matter,
precludes governmental entities from entering into contracts that
obligate such an entity to expend funds beyond those already
appropriated. The division holds that the contract violates section
29-1-110, and is therefore void, because it is a multi-year contract
that does not provide that the obligation to pay is subject to annual
appropriations. COLORADO COURT OF APPEALS 2018COA92
Court of Appeals No. 17CA0793 El Paso County District Court No. 16CV30823 Honorable Thomas K. Kane, Judge
Falcon Broadband, Inc., a Colorado corporation,
Plaintiff-Appellant and Cross-Appellee,
v.
Banning Lewis Ranch Metropolitan District No. 1; Oakwood Homes, LLC; Chad M. Ellington; Charles P. Leder; Jeffrey P. Carlson; Mike Tinlin; William Ritchie; Bruce Rau; MREC Oakwood Colorado Ranch, LLC; MREC Oakwood Colorado Investments, LLC; MREC Colorado Land Investments, LLC; MREC Oakwood Colorado IV-VI, LLC; and MREC Oakwood Colorado, LLC,
Defendants-Appellees and Cross-Appellants.
JUDGMENT AFFIRMED IN PART, REVERSED IN PART, AND CASE REMANDED WITH DIRECTIONS
Division VII Opinion by JUDGE J. JONES Ashby and Harris, JJ., concur
Announced June 28, 2018
Hamre, Rodriguez, Ostrander & Dingess, P.C., Donald M. Ostrander, Stephanie M. Ceccato, Paul Rufien, Denver, Colorado, for Plaintiff-Appellant and Cross- Appellee
Vaughan & DeMuro, Gordon L. Vaughan, Ann B. Smith, Colorado Springs, Colorado; Spencer Fane, LLP, Jamie N. Cotter, Jacob F. Hollars, Denver, Colorado; Gordon & Rees LLP, John R. Mann, Edward J. Hafer, John D. Keen, Denver, Colorado, for Defendants-Appellees and Cross-Appellants ¶1 In 2007, Falcon Broadband, Inc. (Falcon), signed a contract —
called the Bulk Services Agreement (BSA) — with Banning Lewis
Ranch Metropolitan District No. 1 (the District) to provide internet
and cable services to the residents of the Banning Lewis Ranch
area. Five years later, Falcon sued the District, Oakwood Homes,
LLC (the developer), several of Oakwood Homes’ sister companies
(we refer collectively to all of the related Oakwood entities as
Oakwood),1 and a number of individuals who are affiliated with
Oakwood and serve as directors on the District’s board (Directors)
after the District disavowed the BSA.2 On motions from all
defendants, the district court dismissed Falcon’s complaint in part
as barred by the Colorado Governmental Immunity Act (CGIA),
sections 24-10-101 to -120, C.R.S. 2017, and granted summary
judgment in defendants’ favor on the remaining claims not subject
to dismissal under the CGIA.
1 The affiliated companies are MREC Oakwood Colorado Ranch, LLC; MREC Oakwood Colorado Investments, LLC; MREC Colorado Land Investments, LLC; MREC Oakwood Colorado IV-VI, LLC; and MREC Oakwood Colorado, LLC. 2 The remaining individual defendants are Chad M. Ellington,
Charles P. Leder, Jeffrey P. Carlson, Mike Tinlin, William Ritchie, and Bruce Rau.
1 ¶2 Falcon appeals the judgment. The District and the Directors
cross-appeal the district court’s denial of their requests for attorney
fees. Though we conclude that the district court incorrectly applied
the CGIA in certain respects, we ultimately affirm the judgment in
favor of all defendants in all respects except one; we reverse the
judgment for Oakwood on the unjust enrichment claim and remand
for further proceedings on that claim. We also affirm the district
court’s denial of the District’s requests for attorney fees. But we
reverse the district court’s denial of the Directors’ request for
attorney fees and remand for a determination of the Directors’
reasonable attorney fees incurred in the district court and on
appeal.
I. Background
¶3 Under the BSA, the District granted Falcon the exclusive right
to provide internet and cable services to residents of Banning Lewis
Ranch in exchange for a monthly per resident fee. The BSA doesn’t
have a definite duration, but says that it remains in effect until
2,700 homes in the development are occupied. That hasn’t yet
occurred.
2 ¶4 After the original developers of Banning Lewis Ranch went
bankrupt, Oakwood acquired the property in 2012, appointed a new
slate to the District’s board of directors (all of whom have some
association with Oakwood), and decided it wasn’t happy with the
BSA. The parties tried to negotiate modifications to the BSA,
without success. So the District, saying that the BSA was invalid,
stopped paying Falcon and stopped collecting fees from residents.
¶5 In its amended complaint, Falcon asserts a total of seven
claims against defendants. Against the District, Falcon asserts
claims for (1) breach of contract; (2) breach of the implied covenant
of good faith and fair dealing; (3) promissory estoppel; (4) unjust
enrichment; (5) civil conspiracy; and (6) declaratory judgment.3
Against Oakwood, Falcon asserts claims for (1) unjust enrichment;
(2) tortious interference with contract; (3) civil conspiracy; and (4)
declaratory judgment. Finally, against the Directors, Falcon asserts
claims for (1) tortious interference with contract and (2) civil
conspiracy.
3 Falcon’s declaratory judgment claim requests a declaration that the BSA is enforceable. We don’t discuss that claim separately in light of our conclusion that the BSA is void.
3 ¶6 Defendants sought dismissal under the CGIA and summary
judgment under several theories. After an evidentiary hearing
pursuant to Trinity Broadcasting of Denver, Inc. v. City of
Westminster, 848 P.2d 916 (Colo. 1993), to determine the court’s
subject matter jurisdiction under the CGIA, the district court
granted defendants’ motions.4 Ruling that the CGIA bars the
promissory estoppel, unjust enrichment, and civil conspiracy claims
asserted against the District, the district court dismissed them
“against all defendants.”5 The court then determined that the BSA
is void and unenforceable for several reasons, and on that basis it
entered summary judgment in all defendants’ favor. But the court
denied the District’s and the Directors’ requests for attorney fees.
II. Falcon’s Appeal
¶7 Falcon contends that the district court erred in its application
of the CGIA, and in granting summary judgment. We conclude that
4 Under Trinity, a district court, rather than a jury, determines issues relating to a governmental immunity claim, “including factual issues, regardless of whether those issues are jurisdictional in nature.” Martinez v. Estate of Bleck, 2016 CO 58, ¶ 5. 5 The district court specifically addressed the civil conspiracy claim,
saying that since the conspiracy claim against the District is barred, “there cannot be a conspiracy at all.”
4 the court erred in applying the CGIA, in part.6 But we agree with
the district court that the BSA is void. And since the majority of
Falcon’s claims are premised on the BSA’s validity, summary
judgment is appropriate for all but one of Falcon’s claims. That one
claim is Falcon’s claim for unjust enrichment against Oakwood.
A. Governmental Immunity
¶8 Because of its jurisdictional implications, we first address
whether the CGIA bars any of Falcon’s claims against the District,
Oakwood, or the Directors.
¶9 Falcon argues that the district court erred by dismissing its
promissory estoppel and unjust enrichment claims against the
District based on governmental immunity because those claims are
contract claims, not tort claims. It also argues that the district
court erred by dismissing its claims against Oakwood based on
governmental immunity, in part for the same reason but also
because the Oakwood entities are private, not public. The Directors
argue that the court should’ve dismissed both of Falcon’s claims
6Because “we can resolve it ourselves as a matter of law,” we needn’t remand on this issue. W.O. Brisben Cos. v. Krystkowiak, 66 P.3d 133, 137 (Colo. App. 2002), aff’d on other grounds, 90 P.3d 859 (Colo. 2004).
5 against them — for tortious interference and civil conspiracy —
under the CGIA because the Directors are public employees within
the meaning of the CGIA.7 We agree with all three arguments.
¶ 10 The CGIA provides that “public entit[ies] shall be immune from
liability in all claims for injury which lie in tort or could lie in tort”
unless immunity has been expressly waived. § 24-10-106(1), C.R.S.
2017. It also immunizes public employees from tort claims so long
as they acted within the scope of their employment. § 24-10-
118(2)(a), C.R.S. 2017. A “public employee” is “an officer, employee,
servant, or authorized volunteer of the public entity, whether or not
compensated, elected, or appointed.” § 24-10-103(4)(a), C.R.S.
2017. A court lacks jurisdiction to adjudicate tort claims against
an entity or employee protected by the CGIA. Springer v. City & Cty.
of Denver, 13 P.3d 794, 798 (Colo. 2000).
¶ 11 Where the facts are undisputed and the issue is one of law, we
review a district court’s application of the CGIA de novo. Ceja v.
Lemire, 154 P.3d 1064, 1065 (Colo. 2007).
7The Directors raised the immunity issue in a motion and at the Trinity hearing.
6 1. The District
¶ 12 It’s undisputed that the District is a public entity within the
meaning and protection of the CGIA. So the district court properly
dismissed the civil conspiracy claim against the District because
that claim is undeniably a tort claim. See Resolution Tr. Corp. v.
Heiserman, 898 P.2d 1049, 1056 (Colo. 1995); Double Oak Constr.,
L.L.C. v. Cornerstone Dev. Int’l, L.L.C., 97 P.3d 140, 148-49 (Colo.
App. 2003).
¶ 13 But we agree with Falcon that the court improperly dismissed
its unjust enrichment and promissory estoppel claims as sounding
in tort. Governmental immunity doesn’t apply to actions “grounded
in contracts.” Berg v. State Bd. of Agric., 919 P.2d 254, 258 (Colo.
1996). “The essential difference between a tort obligation and a
contract obligation is the source of the parties’ duties.” Carothers v.
Archuleta Cty. Sheriff, 159 P.3d 647, 655 (Colo. App. 2006).
“Contract obligations arise from promises made between parties,”
whereas “[t]ort obligations generally arise from duties imposed by
law, and tortious conduct is a breach of a duty imposed by law, not
by contract.” Id. at 655-56. We apply a “case by case analysis” to
7 determine whether the claims in this case could sound in tort. See
Berg, 919 P.2d at 259.
¶ 14 Promissory estoppel “involves a promise by a government
agency or official.” Allen Homesite Grp. v. Colo. Water Quality
Control Comm’n, 19 P.3d 32, 35 (Colo. App. 2000). The supreme
court has recognized that “promissory estoppel is a distinct contract
claim,” so the CGIA doesn’t bar such a claim when the plaintiff
pleads the claim in terms of a promise that the governmental entity
failed to fulfill. Berg, 919 P.2d at 259.
¶ 15 “Unjust enrichment is a form of quasi-contract or contract
implied in law” that “can be predicated on either tort or contract
law.” Robinson v. Colo. State Lottery Div., 179 P.3d 998, 1007 (Colo.
2008). To determine which is the predicate in a given case, a court
must assess “the nature of the injury and the relief requested.” Id.
¶ 16 In support of its promissory estoppel claim, Falcon alleges that
“[t]hrough negotiation of the [BSA] and as reflected in the [BSA],
[the] District promised Falcon that it would [perform as agreed in
the BSA]” and that Falcon reasonably relied on that promise to its
detriment. Similarly, Falcon alleges in support of its unjust
enrichment claim that the District unjustly benefited from the BSA.
8 ¶ 17 The District argues that these claims are based on its allegedly
fraudulent — that is, tortious — actions. But neither claim is based
on an alleged misrepresentation or duty independent of the BSA;
rather, the source of both claims is the BSA. Indeed, both are
essentially asserted in the alternative in the event the BSA is
declared invalid. And the type of relief Falcon seeks is enforcement
of contractual promises through the quasi-contractual theory of
promissory estoppel and the restitution theory of unjust
enrichment. Thus, these claims sound firmly in contract. Cf.
Robinson, 179 P.3d at 1005 (claims brought based on allegations
that the Colorado State Lottery Division misrepresented the
possibility of winning the lottery were tort claims); CAMAS Colo., Inc.
v. Bd. of Cty. Comm’rs, 36 P.3d 135, 139 (Colo. App. 2001)
(contractor’s claim for quantum meruit sounded in contract while
claims for fraud, negligent misrepresentation, and interference with
future contracts sounded in tort); Lehman v. City of Louisville, 857
P.2d 455, 457 (Colo. App. 1992) (equitable estoppel claim sounded
in tort because it was based on a misrepresentation).
9 ¶ 18 We therefore conclude that the CGIA doesn’t bar either of
these claims. But, as discussed below, the District is entitled to
judgment anyway.
2. Oakwood
¶ 19 All the Oakwood entities are private associations; none is a
public entity. The district court therefore erred in dismissing some
of Falcon’s claims against Oakwood under the CGIA. § 24-10-
103(5) (defining a “[p]ublic entity” for purposes of the CGIA); § 24-
10-106(1) (“[a] public entity shall be immune from liability”); see
also Podboy v. Fraternal Order of Police, 94 P.3d 1226, 1229 (Colo.
App. 2004) (employee union wasn’t a public entity and therefore
wasn’t entitled to the protection of the CGIA).8
3. The Directors
¶ 20 As noted, Falcon asserts two claims against the Directors —
tortious interference and civil conspiracy — both of which are
clearly tort claims. And, as officers of the District, the Directors are
8Oakwood doesn’t defend the district court’s judgment on this basis.
10 public employees for purposes of the CGIA. See Tallman Gulch
Metro. Dist. v. Natureview Dev., LLC, 2017 COA 69, ¶ 17.
¶ 21 Nonetheless, Falcon argues that it has sued the Directors in
their private capacities as agents of Oakwood rather than as
directors of the District.9 We therefore look at the totality of the
circumstances to decide whether the acts in question were
“necessarily incidental to [public] employment.” First Nat’l Bank of
Durango v. Lyons, 2015 COA 19, ¶ 47 (quoting Gallagher v. Bd. of
Trs. for Univ. of N. Colo., 18 P.3d 837, 843 (Colo. App. 2002)). This
determination turns on whether the acts bear a relationship to the
business or are customary in the business. Id.
¶ 22 We don’t see any evidence in the record to support Falcon’s
argument that it has sued the Directors in their private capacities.
Falcon characterizes the Directors as “individuals who have been
elected or appointed to serve or have served on the Board of
Directors of the District and who are or have been employees,
9 Alternatively, in its reply brief, Falcon argues for the first time that the Directors’ actions were willful and wanton and thus excluded from the protection of the CGIA. We won’t consider arguments raised for the first time on appeal. See Estate of Stevenson v. Hollywood Bar & Cafe, Inc., 832 P.2d 718, 721 n.5 (Colo. 1992).
11 agents or representatives of Oakwood.” But in the Trinity hearing,
Falcon’s president, Randy DeYoung, testified that Falcon is suing
the Directors because they’re on the District’s board of directors.
And Falcon’s amended complaint similarly emphasizes the
individuals’ positions as board members. Falcon alleges that the
District, “acting through its Board of Directors,” breached the BSA,
and that “Oakwood met with the District, through the [Directors].”
According to Falcon, Oakwood told the Directors what to do. But
Falcon doesn’t allege that the Directors did anything outside the
scope of their roles as District directors or otherwise acted as
private individuals.
¶ 23 In short, Falcon sued the Directors because they, as District
directors, decided to stop honoring the BSA; it didn’t allege, much
less present any evidence at the Trinity hearing indicating, that the
Directors, as private individuals, caused the District to stop
honoring the BSA.
¶ 24 Because the Directors allegedly acted in their roles as directors
of the District, governmental immunity protects them. It follows
that the district court should’ve dismissed the claims against them
under C.R.C.P. 12(b)(1). W.O. Brisben Cos. v. Krystkowiak, 66 P.3d
12 133, 137 (Colo. App. 2002) (where the plaintiff improperly postured
his motion to dismiss as a C.R.C.P. 12(b)(1) motion, the reviewing
court analyzed it under the proper standard without remand), aff’d
on other grounds, 90 P.3d 859 (Colo. 2004); Norsby v. Jensen, 916
P.2d 555, 559 (Colo. App. 1995) (district court improperly treated a
C.R.C.P. 12(b)(1) motion as a C.R.C.P. 12(b)(5) motion, but
reviewing court applied governing rule without remand).
B. Falcon’s Other Contentions
¶ 25 Falcon also contends that the district court erred by
determining that the BSA is void and by entering summary
judgment on its tortious interference and civil conspiracy claims
regardless of the BSA’s validity. Both contentions fail.
1. Standard of Review
¶ 26 Falcon’s arguments present issues of statutory interpretation,
contract interpretation, and summary judgment. We review all
such issues de novo. Burton v. Colo. Access, 2018 CO 11, ¶ 19
(summary judgment and statutory interpretation); Laleh v. Johnson,
2017 CO 93, ¶ 18 (contract interpretation). Summary judgment is
proper where there is no genuine issue as to any material fact and
13 the moving party is entitled to judgment as a matter of law.
C.R.C.P. 56(c).
2. The BSA Is Void and Unenforceable
¶ 27 The district court determined that the BSA violates four
different statutes, and that each violation is sufficient to render the
BSA void and unenforceable.10 We needn’t address each reason
because we agree with the district court that the BSA is void under
section 29-1-110, C.R.S. 2017. See Saunders v. Muratori, 251 P.3d
550, 556 (Colo. App. 2010) (where appellate court affirmed ruling
on one of two alternative grounds, it wasn’t necessary to address
the other); Bolser v. Bd. of Comm’rs, 100 P.3d 51, 54 (Colo. App.
2004) (same).
a. Additional Background
¶ 28 The fees provision of the BSA says that “Metro District shall
pay to [Falcon] the Bulk Services fee as set forth on Exhibit B.” The
10 The court ruled that (1) the BSA violates section 29-1-110(1), C.R.S. 2017, because the District’s payment of fees could exceed annual appropriations; (2) the directors who negotiated it failed to file conflict disclosures required by section 24-18-201, C.R.S. 2017; (3) it wasn’t approved at a District meeting as required by section 24-6-402(8), C.R.S. 2017; and (4) it violates sections 6-2-108 and -109, C.R.S. 2017, as an illegal contract to share money and destroy competition.
14 District then bills the residents for recoupment of the fees. This
arrangement is to last “until 2700 homes in the Development [have
been] [o]ccupied.”
¶ 29 The district court found that “by the plain language of the
document,” the fee provision requires “payment of fees that could
exceed annual appropriations in violation of C.R.S. 29-1-110(1).”
Falcon had argued that the statute applies only to the fiscal year in
which a contract is formed, but the district court wasn’t persuaded,
and neither are we.
b. Section 29-1-110
¶ 30 “[L]ong term agreements involving expenditures of municipal
funds are looked upon with disfavor . . . .” 10A Eugene McQuillin,
The Law of Municipal Corporations § 29:101, at 58 (3d ed., rev. vol.
2009). Colorado has codified that sentiment in section 29-1-110 by
limiting a governmental entity’s power to contract without a prior
appropriation of funds. It reads as follows:
(1) During the fiscal year, no officer, employee, or other spending agency shall expend or contract to expend any money, or incur any liability, or enter into any contract which, by its terms, involves the expenditures of money in excess of the amounts appropriated. Any contract, verbal or written, made in violation of
15 this section shall be void, and no moneys belonging to a local government shall be paid on such contract.
(2) Multiple-year contracts may be entered into where allowed by law or if subject to annual appropriation.
§ 29-1-110.
¶ 31 Our aim in construing a statute is to give effect to the General
Assembly’s intent. Hernandez v. Ray Domenico Farms, Inc., 2018
CO 15, ¶ 6. Our first step is to determine whether the statute has a
plain and unambiguous meaning. Id. To do this, we look at the
language of the statute (applying the plain and ordinary meanings
of the words), the context in which the language is used, and the
context of the statute as a whole. See Burton, ¶ 23; see also
Hernandez, ¶ 6 (“[W]e must consider the statute in its entirety,
giving ‘harmonious and sensible effect to all its parts.’” (quoting
Leonard v. McMorris, 63 P.3d 323, 326 (Colo. 2003))). A “cardinal
principle of statutory construction” is that no clause, sentence, or
word is “superfluous, void, or insignificant.” TRW Inc. v. Andrews,
534 U.S. 19, 31 (2001) (citation omitted).
¶ 32 If, after doing this, we determine that the statute is
unambiguous, we apply it as written. But if we determine that the
16 statute is ambiguous, we lean on other rules of statutory
construction to discern the General Assembly’s intent. People in
Interest of O.C., 2013 CO 56, ¶¶ 13, 15.
¶ 33 With these rules of statutory construction in mind, we turn to
the meaning of section 29-1-110 and Falcon’s argument that
section 29-1-110 doesn’t apply to the BSA because it only requires
an appropriation for the fiscal year in which the contract was
executed.
¶ 34 It isn’t completely clear whether the phrase “[d]uring the fiscal
year” in subsection (1) limits the section’s application to the year in
which a contract was entered into, as Falcon argues, or whether it
imposes a prohibition that applies to every year of a contract’s
existence, as defendants argue. We think the correct reading of the
statute conditions contractual validity on prior appropriation of
funds for the year in which the contract was entered into and any
subsequent years. The broader context of the statute as well as its
history supports this interpretation.
¶ 35 First, Falcon overlooks subsection (2) of section 29-1-110,
which says that “[m]ultiple-year contracts may be entered into
where allowed by law or if subject to annual appropriation.” The
17 statute therefore expressly says when multi-year contracts are
allowed. This provision would be meaningless if the appropriation
requirement only applied to the fiscal year the contract was entered
into. And we won’t read a statute to render any part meaningless.
Johnson v. Sch. Dist. No. 1, 2018 CO 17, ¶ 17; Krol v. CF & I Steel,
2013 COA 32, ¶ 18.
¶ 36 Second, the statute is part of the “Local Government Budget
Law of Colorado.” § 29-1-101, C.R.S. 2017. The purposes of these
statutes collectively are “to protect the taxpayer against improvident
use of tax revenue, to encourage citizen participation and debate
prior to the institution of public projects, to insure public disclosure
of proposed spending, and to encourage prudence and thrift by
those elected to direct expenditure of public funds.” Shannon Water
& Sanitation Dist. v. Norris & Sons Drilling Co., 29 Colo. App. 48, 52,
477 P.2d 476, 478 (1970). These purposes are served by requiring
advance appropriations for the entire term of a contract.
¶ 37 Third, previous versions of this statute evidence the General
Assembly’s continual unease over allowing contracts that bind
governmental entities without prior appropriations. The original
version of the statute said:
18 When contracts and expenditures are prohibited. No officer, department, board, commission, or other spending agency shall, during the fiscal year, expend or contract to be expended any money, or incur any liability, or enter into any contract which, by its terms, involves the expenditure of money for any of the purposes for which provision is made in the appropriation ordinance in excess of the amounts appropriated in said ordinance, for such officer, department, board, commission, or other expending agency, or purpose, for such fiscal year. Any contract, verbal or written, made in violation of this Section shall be null and void as to the local government, and no moneys belonging thereto shall be paid thereon; Provided, however, that nothing herein contained shall prevent the making of contracts for governmental services or for capital outlay in school districts of the first class for a period exceeding one year, but any contract so made shall be executory only for the amounts agreed to be paid for such services to be rendered in succeeding fiscal years.
Ch. 125, sec. 10, 1933 Colo. Sess. Laws 671-72 (emphasis added);
C.S.A. 1935, Ch. 103, § 13.
¶ 38 The word “executory” indicates that no contract would be
enforceable absent the satisfaction of a condition precedent —
specifically, an appropriation. See Mitchell Bank v. Schanke, 676
N.W.2d 849, 857 (Wis. 2004) (an executory contract is conditioned
on a future activity); Gaugert v. Duve, 579 N.W.2d 746, 748 (Wis.
19 Ct. App. 1998) (“At law, when a contract is missing one of the
essential elements which would make it binding, it is known as an
‘executory’ contract and a party is under no obligation to perform.”);
Black’s Law Dictionary 393 (10th ed. 2014) (an executory contract
is “[a] contract that remains wholly unperformed or for which there
remains something still to be done on both sides, often as a
component of a larger transaction and sometimes memorialized by
an informal letter agreement, by a memorandum, or by oral
agreement”).
¶ 39 Thus, the first iteration of the statute rendered all multi-year
contracts unenforceable subject to the satisfaction of the
appropriation condition precedent. Subsequent versions of the
statute followed in these footsteps, but the current version goes
further: multi-year contracts aren’t merely executory if money
hasn’t been appropriated — they’re void. § 29-1-110(1), (2).11
¶ 40 The BSA creates an economic commitment the District wasn’t
at liberty to make because it requires the District to pay Falcon
11Subsection (2) of the statute also allows multi-year contracts if otherwise allowed by law. Falcon doesn’t argue that any other provision of law allows multi-year contracts like the BSA.
20 regardless of appropriations.12 Even though the BSA didn’t require
the District to pay anything during the fiscal year in which it was
signed, it did require expenditures without appropriation in the
following fiscal years in violation of section 29-1-110. The BSA is
therefore void. See Town of Alma v. AZCO Constr., Inc., 985 P.2d 56,
58 (Colo. App. 1999) (“Section 29-1-110(1), C.R.S. [2017], prohibits
municipalities from spending any funds in excess of amounts
appropriated in the adopted budget, and renders any contract
entered in violation of this section void.”), aff’d, 10 P.3d 1256 (Colo.
2000).
c. Falcon Isn’t Entitled to Equitable Relief
¶ 41 Falcon next contends that it’s entitled to equitable relief even if
the BSA is void. But a party contracting with a governmental entity
has the duty to “ascertain whether the contract complies with the
constitution, statutes, charters, and ordinances so far as they are
12Falcon argues that even if the statute applies, the District couldn’t have exceeded appropriations absent fraud because the amount paid to Falcon is recouped from the residents. But the BSA requires the District to expend funds before recouping from residents and doesn’t account for potential nonpayment by the residents. That is, it doesn’t condition payment to Falcon on the District’s ability to recoup.
21 applicable.” 10 McQuillin, § 29:10, at 351. And so the party
contracting with a governmental entity bears the risk that “all
recovery, including quantum meruit, [will be] denied” if the contract
isn’t valid. Normandy Estates Metro. Recreation Dist. v. Normandy
Estates, Ltd., 191 Colo. 292, 295, 553 P.2d 386, 388-89 (1976); see
also 10A McQuillin, § 29:91, at 8-9 (a municipal corporation isn’t
“required to restore status quo or to compensate for benefits
received under [a void] agreement”). This rule can produce “harsh
results,” but it protects the taxpayers against improper
expenditures. Shannon Water & Sanitation Dist., 29 Colo. App. at
52, 477 P.2d at 478.
¶ 42 There is, however, a limited exception. “[W]here property is
furnished to a municipal corporation under an unenforceable
contract, and the municipality has not paid for the property, then
the seller or person supplying the property may, upon equitable
terms, recover it in specie.” Normandy Estates, 191 Colo. at 296,
553 P.2d at 389.
¶ 43 In Normandy Estates, a contract to transfer property and
recreational facilities on that property was void for failure to comply
with a statutorily required vote. Id. Nonetheless, the supreme
22 court allowed the corporation to recover either the remaining
balance or specific property transferred. Id. at 297, 553 P.2d at
390.
¶ 44 But this exception is extremely limited. Id. The only equitable
recovery theoretically available to Falcon would be the recovery of
any property it transferred to the District. Id. And Normandy
Estates makes clear that “there can be no recovery where the
property is no longer in existence or identifiable.” Id. Addressing
this exception, a division of this court held in another case that a
contractor wasn’t entitled to recover upon equitable terms where
property couldn’t be restored without “serious damage to the
property of the municipality.” F. J. Kent Corp. v. Town of Dillon, 648
P.2d 669, 670 (Colo. App. 1982).
¶ 45 The BSA was a contract for services; the only tangible property
transferred was the infrastructure and wiring required to provide
the services. Falcon asked for recovery for its provision of services,
not for its provision of infrastructure. And, even if it had asked, the
infrastructure couldn’t be returned without serious damage to the
District’s property. It follows that Falcon isn’t entitled to equitable
relief under Normandy Estates.
23 3. Because the BSA Is Void, All of Falcon’s Claims, Save One, Fail
¶ 46 Because all of Falcon’s claims are premised on the BSA’s
validity, only its unjust enrichment claim against Oakwood
survives.
a. Contract-type Claims
¶ 47 Initially, we affirm the district court’s judgment on the breach
of contract and breach of the implied covenant of good faith and fair
dealing claims because both claims require a valid contract. See
City of Golden v. Parker, 138 P.3d 285, 292 (Colo. 2006) (covenant
of good faith and fair dealing is implied in every contract and
requires good faith in the discretionary performance of contractual
obligations); W. Distrib. Co. v. Diodosio, 841 P.2d 1053, 1058 (Colo.
1992) (the existence of a contract is an element of a breach of
contract claim); see also Schmidt v. Wells Fargo & Co., ___ F. Supp.
3d ___, ___, 2018 WL 1522609, * 5 & n.2 (D. Colo. Mar. 28, 2018) (a
void contract can’t support a claim for breach of the implied
covenant of good faith and fair dealing; applying Colorado law);
Restatement (Second) of Contracts § 7 cmt. a (Am. Law Inst. 1981)
(there is no remedy for breach, nor is there any duty of performance
24 under a void contract because it “is not a contract at all”). Falcon
doesn’t argue otherwise.
¶ 48 Next, where a contract with a governmental entity is void for
the reason discussed above, there is no option for recovery under
any theory, save the limited exception not applicable in this case.
Normandy Estates, 191 Colo. at 295, 553 P.2d at 388-89; Rocky
Mountain Nat. Gas, LLC v. Colo. Mountain Junior Coll. Dist., 2014
COA 118, ¶ 31 (“[W]here a contract is void because it is not within a
municipality’s power to make, the municipality cannot be estopped
to deny the validity of the contract.”). And so neither the BSA itself
nor the District’s actions in connection therewith can support a
cause of action for either promissory estoppel or unjust enrichment
against the District. See 10A McQuillin, § 29:117, at 160-62 (“The
fiction of an implied promise or agreement, or the theory of a
liability based on quantum meruit cannot be substituted for an
express contract which is void for noncompliance with mandatory
terms of the statutes or charter.”).13
13The district court dismissed this claim as barred by section 24- 10-103, C.R.S. 2017, of the CGIA. As discussed above, the court shouldn’t have dismissed this claim as to the District under the
25 ¶ 49 Falcon also asserts the unjust enrichment claim against
Oakwood, however, alleging that Oakwood benefited from the
provision of the services Falcon provided.14 The only reason the
district court gave for dismissing this claim against Oakwood was
that it’s barred by governmental immunity. But because the
Oakwood entities are private entities, not public ones, governmental
immunity doesn’t apply to this claim.
¶ 50 We note that whether a party is entitled to an equitable
remedy for unjust enrichment is a discretionary call for the district
court, and that in making that call the court may need to make
extensive factual findings. Lewis v. Lewis, 189 P.3d 1134, 1140
(Colo. 2008). Oakwood doesn’t argue on appeal that there’s an
alternative legal basis for entering judgment in its favor on this
claim, and so we think the wisest course is to reverse the judgment
and remand for further proceedings.
CGIA, but rather should’ve done so on summary judgment under section 29-1-110. Likewise, Oakwood isn’t entitled to dismissal of this claim on governmental immunity grounds. 14 Oakwood argues that Falcon waived this issue because it didn’t
appeal the judgment on this claim. But Falcon did appeal as to this claim; it argues in its opening brief that the Oakwood entities are private and therefore not entitled to CGIA protection — the only basis for the judgment given by the district court on this claim.
26 b. Tort Claims
¶ 51 Falcon contends that even if the BSA is void, its tortious
interference and civil conspiracy claims remain viable. We disagree.
Because, as explained above, the CGIA protects the Directors from
both of these claims and protects the District from the civil
conspiracy claim (Falcon doesn’t assert the tortious interference
claim against the District, presumably because a party can’t
tortiously interfere with its own contract), we need only address
these claims further as they pertain to Oakwood.
i. Tortious Interference
¶ 52 In arguing that its tortious interference claim remains viable
because that claim doesn’t depend on the BSA’s validity, Falcon
ignores its own factual allegations and misapprehends the
applicable law.
¶ 53 As pleaded in the amended complaint, Falcon’s claim for
tortious interference expressly relies on the validity of the BSA.
Falcon alleges that
“[t]he [BSA] is a valid contract between the District and
Falcon”;
27 Oakwood and its officers, employees, and “interested
parties” on the District’s board knew about the BSA;
and
Oakwood told the Directors to cease the District’s
performance under the BSA.
It is therefore clear that Falcon’s claim is premised on the BSA
alone, and not some prospective business arrangement.
¶ 54 The law, also, isn’t on Falcon’s side. “One who intentionally
and improperly interferes in the performance of a contract between
another and a third person is liable in tort to the other for the
pecuniary loss resulting from the nonperformance of the contract.”
W.O. Brisben Cos., 66 P.3d at 136 (citing Trimble v. City & Cty. of
Denver, 697 P.2d 716, 726 (Colo. 1985)). “[A]n essential element of
this tort is the existence of a contract between the plaintiff and a
third party.” Grimm Constr. Co. v. Denver Bd. of Water Comm’rs,
835 P.2d 599, 601 (Colo. App. 1992); see also Condo v. Conners,
271 P.3d 524, 526 (Colo. App. 2010) (“For a claim for tortious
interference with a contract to be viable, a valid contract must
exist.”), aff’d, 266 P.3d 1110 (Colo. 2011). So “if for any reason [a
contract] is entirely void, there is no liability for causing its breach.”
28 Restatement (Second) of Torts § 766 cmt. f (Am. Law Inst. 1979);
accord Restatement (Second) of Torts § 774 & cmts. a, b; see also
Condo, 271 P.3d at 530 (because the contract at issue was void, the
tortious interference claim necessarily failed).15 This is so because
a void contract is no contract at all. Restatement (Second) of Torts
§ 774 cmt. b; see also Restatement (Second) of Contracts § 7 cmt. a.
It follows that Falcon’s claim for tortious interference against
Oakwood (and the Directors, were the CGIA not applicable) fails as
a matter of law.16
ii. Civil Conspiracy
¶ 55 “[T]he elements for a civil conspiracy claim require that the
underlying acts be unlawful and create an independent cause of
action.” Double Oak Constr., 97 P.3d at 146. Given our conclusions
that the BSA is void and that there was no tortious interference, no
unlawful overt act arguably supports Falcon’s civil conspiracy
claim. So that claim also fails. Condo, 271 P.3d at 530.
15The rule is different as to contracts that are merely voidable. See Restatement (Second) of Torts § 766 cmt. f (Am. Law Inst. 1979). But the BSA is void, not merely voidable.
16None of the cases on which Falcon relies in this context pertain to void contracts.
29 III. Cross-Appeals
¶ 56 The District and the Directors cross-appeal, arguing that the
court erred by failing to award them attorney fees under section 13-
17-201.17 We agree only with the Directors.
A. Standard of Review
¶ 57 We review de novo questions of law, including whether a
statute requires an award of attorney fees. Crandall v. City of
Denver, 238 P.3d 659, 661 (Colo. 2010).
B. Applicable Law
¶ 58 Section 13-17-201 provides in relevant part as follows:
In all actions brought as a result of a death or an injury to person or property occasioned by the tort of any other person, where any such action is dismissed on motion of the defendant prior to trial under rule 12(b) of the Colorado rules of civil procedure, such defendant shall have judgment for his reasonable attorney fees in defending the action.
¶ 59 The statute unambiguously requires an award of attorney fees
where an action is dismissed under C.R.C.P. 12(b). See Crandall,
17 The Oakwood entities don’t ask for attorney fees, presumably because they are private entities not entitled to the protection of the CGIA. Section 13-17-201, C.R.S. 2017, allows an award of attorney fees only in an action dismissed under C.R.C.P. 12(b). As discussed, the claims against Oakwood, except the unjust enrichment claim, should’ve been resolved under C.R.C.P. 56.
30 238 P.3d at 663 (statute “unequivocally mandate[s]” attorney fees);
Gagne v. Gagne, 2014 COA 127, ¶ 74 (same). But sometimes
applying it isn’t as simple as looking to whether the defendant
prevailed on a motion filed under that rule. For instance, by its
own terms, the statute doesn’t apply to a Rule 12(b) motion that is
“treated as a motion for summary judgment.” § 13-17-201. Nor
does it apply if the court doesn’t dismiss all the tort claims against
a certain defendant or “if an action contains both tort and non-tort
claims and the defendant obtains C.R.C.P 12(b) dismissal of only
the tort claims.” Dubray v. Intertribal Bison Coop., 192 P.3d 604,
607 (Colo. App. 2008); see also Barton v. Law Offices of John W.
McKendree, 126 P.3d 313, 314 (Colo. App. 2005) (no recovery where
one of the tort claims was dismissed for failure to file a certificate of
review); First Interstate Bank of Denver, N.A. v. Berenbaum, 872 P.2d
1297, 1302 (Colo. App. 1993) (no recovery where one of the tort
claims was disposed of on summary judgment). In other words, for
the statute to apply, the court must’ve dismissed the entire action
pursuant to a Rule 12(b) motion, and that action must be a tort
action.
31 ¶ 60 For purposes of this statute, how the plaintiff chose to plead
the claim (as a tort or not) controls. Robinson, 179 P.3d at 1010;
Castro v. Lintz, 2014 COA 91, ¶ 16. And, when a plaintiff brings
both tort and non-tort claims against a particular defendant, an
award of attorney fees is required only if “the essence of the action
was one in tort.” Castro, ¶ 16.
C. Analysis
¶ 61 To recap, of the various claims Falcon asserts against the
District, we’ve concluded that (1) the district court properly granted
the District summary judgment on the breach of contract, breach of
the implied covenant of good faith and fair dealing, and declaratory
judgment claims; (2) the district court should’ve granted summary
judgment to the District on the promissory estoppel and unjust
enrichment claims rather than dismissing them under the CGIA;
and (3) the district court properly dismissed the civil conspiracy
claim under the CGIA. As for the claims Falcon asserts against the
Directors (for tortious interference and civil conspiracy), the district
court should’ve dismissed them under C.R.C.P. 12(b)(1) as barred
by the CGIA.
32 ¶ 62 Because the statute applies to the claims against each
defendant individually, Colo. Special Dists. Prop. & Liab. Pool v.
Lyons, 2012 COA 18, ¶ 60, we address the District’s and the
Directors’ requests for fees separately.
1. The District
¶ 63 Of the six claims Falcon brought against the District, only one
is a tort claim that was properly dismissed under C.R.C.P. 12(b)(1)
as barred by the CGIA.18 The rest are contract-type claims that the
court resolved on summary judgment or should’ve resolved on
summary judgment. And the gist of Falcon’s action against the
District was the District’s failure to perform the BSA, not its
commission of any tort. And so the District isn’t entitled to fees.
Compare Castro, ¶¶ 29-33 (dismissal didn’t entitle a party to
attorney fees because the essence of the action wasn’t tort), with
Crow v. Penrose-St. Francis Healthcare Sys., 262 P.3d 991, 997
18 The District’s arguments to the contrary notwithstanding, the promissory estoppel and unjust enrichment claims are even more clearly contract-type claims in this context than they are for CGIA purposes. See Robinson v. Colo. State Lottery Div., 179 P.3d 998, 1010 (Colo. 2008) (“[W]e will not read the CGIA’s concern for claims that ‘lie or could lie in tort’ into the plain language of section 13-17- 201.”).
33 (Colo. App. 2011) (the defendant was entitled to attorney fees
because tort claims sought relief beyond that available under a
breach of contract theory, and there were an equal number of tort
and non-tort claims).
2. The Directors
¶ 64 But with respect to Falcon’s action against the Directors, it’s a
different story. The only claims Falcon brought against the
Directors were tort claims. The district court should’ve dismissed
both claims under C.R.C.P 12(b)(1) because the Directors, as public
employees, are entitled to the protection of the CGIA.
¶ 65 Because Falcon’s entire action against the Directors should’ve
been dismissed under C.R.C.P. 12(b)(1) as tort claims barred by the
CGIA, the Directors are entitled to an award of their reasonable
attorney fees under section 13-17-201.
IV. Attorney Fees on Appeal
¶ 66 The Directors are also entitled to an award of their reasonable
attorney fees incurred in their successful appeal under section 13-
17-201. State Farm Fire & Cas. Co. v. Weiss, 194 P.3d 1063, 1065
(Colo. App. 2008). We direct the district court to determine those
fees. See C.A.R. 39.1.
34 V. Conclusion
¶ 67 We affirm the judgment on all claims except as to Falcon’s
unjust enrichment claim against the Oakwood entities. We reverse
the judgment as to that claim. We affirm the district court’s denial
of the District’s request for attorney fees. And lastly, we reverse the
district court’s denial of the Directors’ request for attorney fees and
remand that issue for a determination of the Directors’ reasonable
attorney fees incurred in the district court and on appeal.
JUDGE ASHBY and JUDGE HARRIS concur.