City of Fort Collins v. Open International

CourtCourt of Appeals for the Tenth Circuit
DecidedJuly 23, 2025
Docket24-1152
StatusPublished

This text of City of Fort Collins v. Open International (City of Fort Collins v. Open International) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
City of Fort Collins v. Open International, (10th Cir. 2025).

Opinion

Appellate Case: 24-1152 Document: 79-1 Date Filed: 07/23/2025 Page: 1 FILED United States Court of Appeals PUBLISH Tenth Circuit

UNITED STATES COURT OF APPEALS July 23, 2025

Christopher M. Wolpert FOR THE TENTH CIRCUIT Clerk of Court _________________________________

CITY OF FORT COLLINS, a Colorado home rule municipality,

Plaintiff - Appellee,

v. No. 24-1152

OPEN INTERNATIONAL, LLC, a Florida limited liability company; OPEN INVESTMENTS, LLC, a Florida limited liability company,

Defendants - Appellants. _________________________________

Appeal from the United States District Court for the District of Colorado (D.C. No. 1:21-CV-02063-CNS-SBP) _________________________________

Laurie Webb Daniel (Jeffrey Keith Sandman, with her on the briefs), of Webb Daniel Friedlander LLP, Atlanta, Georgia, and New Orleans, Louisiana, for Defendants-Appellants.

Case L. Collard of Dorsey & Whitney LLP, Denver, Colorado (Maral J. Shoaei and Andrea Ahn Wechter, of Dorsey & Whitney LLP, Denver, Colorado, and Carrie Mineart Daggett, City Attorney, and John R. Duval, Senior Litigation Counsel, of the Fort Collins City Attorney’s Office, Fort Collins, Colorado, with him on the brief), for Plaintiff-Appellee. _________________________________

Before BACHARACH, PHILLIPS, and FEDERICO, Circuit Judges. _________________________________

PHILLIPS, Circuit Judge. _________________________________ Appellate Case: 24-1152 Document: 79-1 Date Filed: 07/23/2025 Page: 2

The City of Fort Collins and Open International, LLC, contracted for

software services, which ended with each party (including Open International’s

parent company, Open Investments, LLC) alleging breach-of-contract claims

against the other. 1 But the City also alleged that Open’s precontractual

statements were negligent or fraudulent misrepresentations—claims sounding in

tort law. Answering only the question of liability, a jury found that Open

fraudulently induced the City to enter the contract. The City elected to rescind

the contract, so the district court held a bench trial on restitution and ordered a

judgment of almost $20 million against Open.

Open appeals the jury’s verdict and the district court’s denials of its

motions for judgment as a matter of law. Because we find no error with the

district court’s rulings or the jury’s verdict, we affirm. 2

BACKGROUND

I. Factual Background

In February 2018, the City published a request for proposal (RFP) for a

billing software system for municipal utilities, including a new broadband

utility called Connexion. On March 12, 2018, Open submitted a proposal for

the project based on its forthcoming software, Open SmartFlex Version 8. Open

1 Except where the distinction matters, we refer to Open International and Open Investments collectively as “Open.” 2 On February 19, 2025, Open moved for leave to file a supplemental appendix. We deny that motion.

2 Appellate Case: 24-1152 Document: 79-1 Date Filed: 07/23/2025 Page: 3

claimed that its product “complie[d] with the vast majority of functional and

technical requirements of th[e] RFP with one single and uniform product[.]”

Supp. App. vol. 4, at 1011 (emphasis omitted).

The RFP included a functional matrix that listed all the functional

requirements needed for the product and that directed bidders to complete the

matrix “accurately and factually” according to the provided grading rubric.

Supp. App. vol. 8, at 2143. In its RFP response, Open graded about 90% of its

homegrown software’s functionalities with “A’s,” representing that the

functionality was “part of [its software’s] base system” and that “[n]o

[m]odification [was] required.” App. vol. 2, at 3.

The City selected Open International to be its vendor. And the parties

formalized their contract with a Master Professional Services Agreement, in

which Open Investments guaranteed Open International’s performance under

the contract but made no contractual representations of its own. The contract’s

introduction incorporates by reference the RFP and Open’s proposal, which

includes the detailed functionality matrix for the services that Open

International was to provide.

The project kicked off in late 2018 and suffered problems from the

beginning. One of the main sources of conflict was the customer self-service

portal for the City’s broadband-billing services. The service went live in

August 2019 and had “critical functionality missing.” App. vol. 7, at 68–69. In

November 2019, the City cited the portal as one of its primary concerns, stating

3 Appellate Case: 24-1152 Document: 79-1 Date Filed: 07/23/2025 Page: 4

that the “portal testing hours [have been] extensive” and that the “presented

portal was different than what got delivered[.]” App. vol. 9, at 26–27.

Despite these problems, the City continued its contractual relationship

with Open International. Throughout the project, the parties negotiated and

executed twenty-nine project change requests (PCRs), including PCR 19, which

addressed issues relating to the customer portal. In a March 2020 memorandum,

the City’s external project manager documented her concerns over problems

with Open International’s product, but still recommended that the City preserve

its relationship with Open International. And in June 2020, both parties agreed

to a formal amendment that extended project milestones into 2021 and assigned

most of the added project costs to the City. The parties again agreed to extend

the project in December 2020.

Prompted by this second amendment, the City hired a third-party

consultant to assess the project. In an April 2021 report, the consultant advised

the City to continue the project with Open International despite the project

delays and frustrations. Completing the project with Open International

remained “Plan A” for the City. App. vol. 7, at 120–21. The parties jointly

reviewed the functional matrix to evaluate whether the program was performing

as Open had represented it would. But during the review in April and May

2021, the City determined that Open’s precontractual assertions about its

software’s capabilities were false.

4 Appellate Case: 24-1152 Document: 79-1 Date Filed: 07/23/2025 Page: 5

Also during the review, Open International sent the City a notice of

default stating that it could not proceed with its work unless and until the City

cured certain deficiencies. From the City’s view, that default notice “was a

significant breach of trust.” Id. at 123. Then on May 28, 2021, the City served

its own notices—a notice of dispute and notice of termination. In June, Open

International provided a “Reset Proposal” that acknowledged the results of the

functional matrix audit—which showed that only 17.3% of the “[i]n scope”

requirements had been accepted—and sought additional funds to complete the

project. Supp. App. vol. 9, at 2473. But the proposal would not cure the issues

within the thirty days required by the contract, so the City initiated this lawsuit

on July 2, 2021. The City also promptly retained a second vendor and began

implementing that product, and it stopped all use of Open International’s

product as soon as the new platform was available in December 2021.

II. Procedural Background

On July 2, 2021, the City sued Open for breach of contract, negligent

misrepresentation, and fraud-in-the-inducement.

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City of Fort Collins v. Open International, Counsel Stack Legal Research, https://law.counselstack.com/opinion/city-of-fort-collins-v-open-international-ca10-2025.