Hatkoff v. Accutrend

• Court: Colorado Court of Appeals
• Decided: November 21, 2024
• Docket: 24CA0545
• Status: Unknown

Opinion

24CA0545 Hatkoff v Accutrend 11-21-2024

COLORADO COURT OF APPEALS

Court of Appeals No. 24CA0545

Arapahoe County District Court No. 22CV30705

Honorable Thomas W. Henderson, Judge

Reed A. Hatkoff,

Plaintiff-Appellant,

v.

Accutrend Data Corporation,

Defendant-Appellee.

ORDER AFFIRMED

Division VI

Opinion by JUSTICE MARTINEZ*

Welling and Bernard*, JJ., concur

NOT PUBLISHED PURSUANT TO C.A.R. 35(e)

Announced November 21, 2024

Lewis Roca Rothgerber Christie LLP, Darren J. Lemieux, Elizabeth Michaels,

Denver, Colorado, for Plaintiff-Appellant

Wysocki Law Group P.C., Jeremy S. Wysocki, Zachary Crow, Denver, Colorado,

for Defendant-Appellee

*Sitting by assignment of the Chief Justice under provisions of Colo. Const. art.

VI, § 5(3), and § 24-51-1105, C.R.S. 2024.

1

¶ 1 Plaintiff Reed A. Hatkoff appeals a district court order granting

summary judgment in favor of defendant Accutrend Data

Corporation. We affirm.

I. Background

¶ 2 Hatkoff and Vicki Reavis formed Accutrend in 1999. Each

received 5,000 of the 10,000 total shares of common stock in

Accutrend.

¶ 3 On November 7, 2001, Hatkoff and Accutrend entered into a

Buy-Out Agreement. The Buy-Out Agreement consisted of a Stock

Redemption Agreement, a Stock Pledge Agreement, and a

Promissory Note.

1

¶ 4 The Stock Redemption Agreement provided that Hatkoff would

“sell, assign, convey and transfer” to Accutrend the 5,000 shares of

“the no par value common stock” of Accutrend that Hatkoff owned

in exchange for the purchase price of $717,070.14. The purchase

price was payable by Accutrend’s delivery of a Promissory Note,

secured by the Stock Pledge Agreement. The Stock Redemption

Agreement further provided that the closing would occur on

1

The Buy-Out Agreement also incorporated a consulting agreement

that is not relevant to the questions before us.

2

November 7, 2001, at which time Hatkoff was required to, as

relevant here, “[s]ell, assign, convey, transfer and deliver to

[Accutrend]” his 5,000 shares.

¶ 5 The Stock Pledge Agreement required Accutrend to complete it

as a condition precedent to closing the Stock Redemption

Agreement. The Stock Pledge Agreement provided that

“[Accutrend], as an accommodation, has agreed to pledge to

[Hatkoff] five thousand (5,000) shares of [Accutrend’s] no par value

common stock as collateral” for the Promissory Note. The parties

thus agreed to a “grant of security interest.” The Stock Pledge

Agreement additionally provided Hatkoff with remedies in the event

of a default on the Promissory Note by Accutrend.

¶ 6 Accutrend executed the Promissory Note dated November 7,

2001, in the original principal amount of $717,070.14, payable to

Hatkoff. Pursuant to the terms and conditions of the note,

Accutrend agreed to make monthly payments of $10,648.09,

beginning on January 1, 2022, and to continue until the

Promissory Note was fully paid, “provided, however, if not sooner

paid, the entire principal amount outstanding and accrued interest

thereon, shall be due payable on December 1, 2008.” According to

3

the Promissory Note, a default would occur if Accutrend failed to

make a monthly payment within ten calendar days following the

due date for the payment.

¶ 7 In connection with the Buy-Out Agreement, Accutrend

delivered to Hatkoff a stock certificate (Stock Certificate No. 3).

Stock Certificate No. 3 stated that the shares in Accutrend

represented by the certificate “are subject to further restriction” as

set forth in the Stock Pledge Agreement dated November 7, 2001.

¶ 8 Accutrend defaulted on the note as of 2009 at the latest.

¶ 9 On December 1, 2009, Hatkoff sent Reavis a letter asserting

Accutrend had been in default under the Buy-Out Agreement since

2007 because Accutrend had defaulted on the Promissory Note, and

that Hatkoff would take further action if the default was not

resolved by the end of 2009. Neither Accutrend nor Reavis

responded to Hatkoff’s December 1, 2009, letter.

¶ 10 On November 14, 2019, Hatkoff sent Reavis another letter. In

that letter, Hatkoff asserted that Accutrend’s debt was “way past

the statutory limit to bring an action to collect,” but that “the stock

certificate and ownership” were still valid. Hatkoff thus claimed he

owned half of the company, and he “would settle for the [December]

4

2009 balance without any accruing interest.” Again, neither

Accutrend nor Reavis responded to Hatkoff’s November 14, 2019,

letter.

¶ 11 Hatkoff filed suit against Accutrend on April 20, 2022. Hatkoff

sought a declaratory judgment “that [Accutrend] Certificate No. 3 is

a valid stock certificate and that [Hatkoff] is the rightful owner of

five thousand shares of common stock in [Accutrend] with the right

to vote, execute proxies or receive distributions with respect to the

Collateral Shares.” Hatkoff also sought a books and records

inspection under sections 7-116-102 and -103, C.R.S. 2024.

¶ 12 Accutrend moved for summary judgment, asserting that

Hatkoff’s declaratory judgment claim had been barred since at least

2011 under a two-year statute of limitations and his right to enforce

the Promissory Note had been barred since at least 2014 under a

six-year statute of limitations.

¶ 13 The district court granted Accutrend’s motion. First, the court

concluded that the Buy-Out Agreement unambiguously stated that

Accutrend was to provide 5,000 shares to Hatkoff as security for the

payment of the Promissory Note. Therefore, the court concluded

Stock Certificate No. 3 represented secured collateral in Accutrend,

5

not a certificate of issued shares in Accutrend. The district court

further concluded that Hatkoff’s claim was barred by the statute of

limitations and Hatkoff was not entitled to equitable tolling. The

district court later denied Hatkoff’s motion for reconsideration on

the same grounds. Hatkoff now appeals the district court’s order

granting summary judgment in favor of Accutrend.

II. Hatkoff’s Security Interest in Accutrend

¶ 14 Hatkoff asserts that the district court erred by concluding that

Stock Certificate No. 3 represented unissued shares of Accutrend,

or alternatively, that the district court failed to resolve ambiguities

in the Buy-Out Agreement. We disagree.

A. Additional Relevant Facts

¶ 15 The Buy-Out Agreement encompassed three documents: the

Stock Redemption Agreement, the Stock Pledge Agreement, and the

Promissory Note. These documents were executed by Hatkoff and

Accutrend on November 7, 2001.

¶ 16 Under the Stock Redemption Agreement, Accutrend agreed to

pay Hatkoff $717,070.14 plus interest for his 5,000 shares of the

company with payments due on the first of each month until the

total plus interest was paid off, or when the Promissory Note

6

expired on December 1, 2008, at which time any outstanding

balance was due.

¶ 17 Under the Stock Pledge Agreement, consideration of

Accutrend’s promise to pay the Promissory Note was supported by

Accutrend’s issuance to Hatkoff of 5,000 shares of “authorized but

unissued no par value stock” as “secured collateral.” The Stock

Pledge Agreement provided that if Accutrend defaulted on payment

of the Promissory Note, Hatkoff could notify Accutrend to receive a

new stock certificate for the 5,000 shares of no par value common

stock. That agreement further required all “notices, demands, and

requests of any kind” to be in writing, in accordance with the Stock

Redemption Agreement.

B. Standard of Review

¶ 18 We review a district court’s ruling on a motion for summary

judgment de novo. Gibbons v. Ludlow, 2013 CO 49, ¶ 11.

Summary judgment is appropriate when there is no genuine issue

as to any material fact and the moving party is entitled to judgment

as a matter of law. Id.; see C.R.C.P. 56(c). We further review a

district court’s interpretation of a contract and whether that

contract is ambiguous de novo. Rocky Mountain Health Maint. Org.,

7

Inc. v. Colo. Dep’t of Health Care Pol’y & Fin., 54 P.3d 913, 919

(Colo. App. 2001).

C. Applicable Law

¶ 19 “The primary goal of contract interpretation is to determine

and effectuate the intent and reasonable expectations of the

parties.” Copper Mountain, Inc. v. Indus. Sys., Inc., 208 P.3d 692,

697 (Colo. 2009). To determine the parties’ intent, the court should

examine the contract in its entirety and “give effect to the plain and

generally accepted meaning of the contractual language.” Id.

¶ 20 Unless ambiguous, we enforce a contract according to its plain

language. Id. A contract term is ambiguous if it is reasonably

susceptible to more than one meaning, but the potential for more

than one interpretation does not, in itself, create ambiguity. Rocky

Mountain Health, 54 P.3d at 919. Mere disagreement of the parties

does not necessarily indicate ambiguity, either. E. Ridge of Fort

Collins, LLC v. Larimer & Weld Irrigation Co., 109 P.3d 969, 974

(Colo. 2005).

D. Analysis

¶ 21 We conclude that the Buy-Out Agreement unambiguously gave

Hatkoff a security interest in 5,000 unissued shares of Accutrend.

8

¶ 22 Hatkoff originally possessed 5,000 shares of Accutrend before

the Buy-Out Agreement was effectuated. A corporation may issue

shares authorized by its articles of incorporation, and these issued

shares are outstanding shares until they are redeemed. See

§ 7-106-103(1), C.R.S. 2024. Here, pursuant to the plain language

of the Stock Redemption Agreement, Accutrend redeemed Hatkoff’s

5,000 shares of no par value common stock of Accutrend in

exchange for the delivery of the Promissory Note. This redemption

closed on November 7, 2001, when Accutrend executed the

Promissory Note.

¶ 23 Meanwhile, the Stock Pledge Agreement granted Hatkoff a

security interest in 5,000 shares of no par value common stock as

collateral for the Promissory Note. And Stock Certificate No. 3

specifically provided that the shares were “subject to further

restriction” as set forth in the Stock Pledge Agreement.

¶ 24 Viewed in isolation, some of the language in Stock Certificate

No. 3 could be read to grant Hatkoff a stock pledge in Accutrend,

which would create an ambiguity. But we construe a contract as a

whole with the goal of harmonizing its provisions so that none will

be rendered meaningless. See Copper Mountain, 208 P.3d at 697.

9

Thus, even if one contractual provision read in isolation appears to

create an ambiguity, we can resolve that ambiguity by referencing

other provisions. See Travelers Ins. Co. v. Jefferies-Eaves, Inc., 442

P.2d 822, 824 (Colo. 1968) (when the wording of a clause is

susceptible to multiple interpretations, it is the duty of a court to

examine the contract as a whole to determine if other provisions will

resolve the ambiguity).

¶ 25 Here, the terms of the Buy-Out Agreement can be harmonized

by reading the Stock Pledge Agreement with Stock Certificate No. 3.

Section 1.1 of the Stock Pledge Agreement specifies, as follows:

As security for the obligations specific in

Section 2 hereof, [Accutrend] hereby grants to

[Hatkoff] . . . a security interest in and to five

thousand (5,000) shares of [Accutrend’s]

authorized but unissued no par value common

stock (the “Collateral Shares”).

¶ 26 As acknowledged by Hatkoff, section 1.2 provided for delivery

of the “Collateral Shares” — as specifically defined in section 1.1 as

authorized but unissued — by a stock certificate. Therefore, as we

read the plain terms of the Buy-Out Agreement, Hatkoff was the

owner of 5,000 authorized but unissued shares in Accutrend as

10

secured collateral for Accutrend’s debt.

2

In turn, Stock Certificate

No. 3 was a representation of these 5,000 authorized but unissued

shares in Accutrend. Accordingly, the district court correctly

determined the unambiguous meaning of the parties’ agreement.

III. Statute of Limitations

¶ 27 Hatkoff asserts that the district court erred by measuring the

accrual date from Accutrend’s default on the Promissory Note.

Instead, he asserts that his claim accrued in March 2022 when

Accutrend denied his shareholder status. We disagree.

A. Additional Relevant Facts

¶ 28 In February 2022, Hatkoff sent a books and records inspection

demand to Accutrend. Accutrend responded to that demand on

March 4, 2022. In its response, Accutrend indicated that Hatkoff

“sold any ownership interest he held in [Accutrend] years ago” and

that Hatkoff was “no longer a shareholder of Accutrend.”

2

Indeed, Hatkoff’s 2009 letter recognized he had sold his interest in

Accutrend and that the stock he possessed was secured collateral.

However, in his 2019 letter, Hatkoff claimed he “was always aware

that [his] original ownership interest was intact and never conveyed

or released,” and that he knew he “was still an owner of half of the

[Accutrend] stock.”

11

B. Standard of Review

¶ 29 Whether the statute of limitations bars a particular claim is

“usually a fact question.” Sulca v. Allstate Ins. Co., 77 P.3d 897,

899 (Colo. App. 2003). However, where the facts relevant to a

claim’s accrual are undisputed, we review a district court’s

application of the statute of limitations de novo. Pilmenstein v.

Devereux Cleo Wallace, 2021 COA 59, ¶ 48; Kovac v. Farmers Ins.

Exch., 2017 COA 7M, ¶ 13. We also review de novo a court’s

determination as to which statute of limitations controls a cause of

action. Gunderson v. Weidner Holdings, LLC, 2019 COA 186, ¶ 9.

C. Applicable Law

¶ 30 “The interpretation of when a claim accrues under a statute of

limitations is an issue of law.” Sulca, 77 P.3d at 899. A district

court may grant summary judgment if a plaintiff’s claim is barred

by the governing statute of limitations, but not when there are

disputed issues of fact about when the statute of limitations began

running. Curry v. Zag Built LLC, 2018 COA 66, ¶ 23.

¶ 31 The start of a statutory limitation period depends on when an

action accrues. Harrison v. Pinnacol Assurance, 107 P.3d 969, 972

(Colo. App. 2004). A cause of action accrues when the injury, loss,

12

damage, or conduct giving rise to the claim is discovered or should

have been discovered through the exercise of reasonable diligence.

§ 13-80-108(8), C.R.S. 2024.

D. Analysis

¶ 32 There are two alternative statutes of limitations applicable to

Hatkoff’s claims. The first — section 13-80-102(1)(i), C.R.S. 2024 —

establishes a two-year statute of limitations for declaratory

judgment actions. The second — section 13-80-103.5(1)(a), C.R.S.

2024 — establishes a six-year statute of limitations for actions

seeking to enforce a promissory note. Hatkoff’s claims are time

barred under both statutes since it is undisputed that he didn’t

take the actions necessary to collect the authorized, but

not-yet-issued shares outlined in the Buy-Out Agreement until well

after both statutes of limitations had passed.

1. Hatkoff’s Claim is Barred by Section 13-80-102(1)(i)

¶ 33 We apply a two-year statute of limitations under section

13-80-102(1)(i) to actions seeking a declaratory judgment.

Harrison, 107 P.3d at 972 (“We discern no statute of limitations

specifically applicable to declaratory judgment actions and therefore

apply the two-year catch-all statute of limitations.”).

13

¶ 34 We conclude that Hatkoff’s claim was time barred. Hatkoff

asserted in his 2009 letter to Accutrend that payment due under

the Promissory Note was “chronically and seriously in default.”

Thus, Hatkoff was aware of the injury to his interests at least as

early as 2009, although he likely discovered the harm earlier due to

his references to default dating back to 2006. Even assuming

Hatkoff discovered the harm when the 2009 letter was written,

Hatkoff’s claim accrued on December 1, 2009. From that date,

Hatkoff had two years to raise his claim under section 13-80-102.

But Hatkoff didn’t raise a claim at this time. Instead, it is

undisputed that he raised the claim more than ten years after the

2009 letter.

2. Hatkoff’s Claim is Barred by Section 13-80-103.5(1)(a)

¶ 35 Though Hatkoff’s complaint sought declaratory judgment, the

district court, in ruling on Accutrend’s motion for summary

judgment, found that his claim could be construed as an action for

a liquidated sum of money to collect on the Promissory Note.

¶ 36 All actions seeking to enforce rights set forth in an instrument

securing the payment of or evidencing any debt are subject to a

six-year statute of limitations. § 13-80-103.5(1)(a). A claim to

14

collect on a promissory note accrues the day after it matures. See

Rossi v. Osage Highland Dev., LLC, 219 P.3d 319, 321 (Colo. App.

2009). Here, it is undisputed that the Promissory Note matured on

December 1, 2008, the date that the outstanding principal balance

was due under the Agreement. Any claim seeking to enforce the

Promissory Note therefore accrued on December 2, 2008, and

became time barred on December 2, 2014. Hatkoff didn’t file suit

against Accutrend until 2022, nearly eight years after any claim to

enforce the Promissory Note had expired.

¶ 37 Because Hatkoff didn’t bring the action within either the two-

year or six-year period, summary judgment was proper.

IV. Equitable Tolling

¶ 38 Alternatively, Hatkoff asserts that the district court erred by

denying his request for equitable tolling of the statute of limitations.

We are not persuaded.

A. Applicable Law

¶ 39 Equitable tolling applies when flexibility is required to

“accomplish the goals of justice.” Dean Witter Reynolds, Inc. v.

Hartman, 911 P.2d 1094, 1096 (Colo. 1996). Courts may toll the

statute of limitations in situations where, despite diligent efforts, a

15

plaintiff is unable to bring a case due to the defendant’s wrongful

impediment or other “truly extraordinary circumstances.” Id. at

1099. However, equitable tolling is generally disfavored and there

must be an “extraordinary situation” for it to apply. Brown v.

Walker Com., Inc., 2022 CO 57, ¶ 35.

B. Analysis

¶ 40 Hatkoff argues that Accutrend acted in bad faith by not

responding to his letters. However, Accutrend’s failure to respond

didn’t impede his ability to seek redress as outlined in the Buy-Out

Agreement or by filing a timely claim. Accutrend wasn’t obligated to

respond to Hatkoff’s letters because they weren’t requests for his

non-issued stock shares to issue, and the Stock Pledge Agreement

only required that Accutrend deliver a new stock certificate for the

shares upon a written request. Accutrend’s unresponsiveness does

not amount to wrongful conduct or extraordinary circumstances

sufficient for us to equitably toll either statute of limitations.

¶ 41 Hatkoff further asserts that equitable tolling should apply here

because Accutrend’s failure to alert him that he didn’t possess

actual stock in the company is an omission that contributed to the

running of the statute of limitations. See Strader v. Beneficial Fin.

16

Co., 551 P.2d 720, 724 (1976) (“equitable estoppel” will prevent

party from asserting a statute of limitations defense where the

party’s own acts or omissions contributed to statute’s running).

But Accutrend didn’t omit any information that prevented Hatkoff

from filing his claim before either statute of limitations passed.

Indeed, Hatkoff seems to have recognized that he would need to

take steps to “assert [his] rights,” which he claimed included the

ability to require the “total disclosure of [Accutrend’s] financial

records” and obtaining “stock in half the company that [Accutrend]

placed as secured collateral.” Hatkoff’s 2009 letter was therefore

written with an understanding of the Buy-Out Agreement and the

process he needed to comply with to assert his interest in the

unissued stock shares.

¶ 42 We therefore conclude that Hatkoff’s 2009 letter wasn’t

sufficient to assert his rights under the Agreement, and as reasoned

above, at the time of Hatkoff’s 2019 letter both statute of limitations

periods had lapsed.

V. Appellate Costs and Fees

¶ 43 Lastly, we consider the parties’ respective requests for

appellate costs and attorney fees. Hatkoff requests appellate costs

17

and fees under section 2.2 of the Stock Pledge Agreement, and

Accutrend requests appellate attorney fees under C.A.R. 28(b),

asserting that Hatkoff’s appeal was frivolous.

¶ 44 Because we are affirming the district court’s order, we deny

Hatkoff’s request for appellate costs and fees. Although Hatkoff

didn’t prevail on his appellate arguments, he supported his

arguments with pertinent law and facts. Accordingly, Accutrend

isn’t entitled to its attorney fees. See Averyt v. Wal-Mart Stores, Inc.,

2013 COA 10, ¶ 42 (Even where a lawyer presents a supportable

argument that is “extremely unlikely to prevail on appeal,” the

appeal is not “necessarily frivolous.”) (citation omitted).

VI. Conclusion

¶ 45 The district court’s order granting summary judgment in favor

of Accutrend is affirmed.

JUDGE WELLING and JUDGE BERNARD concur.