24CA0474 Stern v Farncombe 03-06-2025
COLORADO COURT OF APPEALS
Court of Appeals No. 24CA0474 Boulder County District Court No. 21CV30913 Honorable Stephen A. Groome, Judge
Daniel B. Stern,
Plaintiff-Appellee,
v.
Matthew W. Farncombe, Aurum LLC, a Colorado limited liability company, and 16518808 LLC, a Colorado limited liability company,
Defendants-Appellants.
JUDGMENT REVERSED AND CASE REMANDED WITH DIRECTIONS
Division IV Opinion by JUDGE GROVE Harris and Pawar, JJ., concur
NOT PUBLISHED PURSUANT TO C.A.R. 35(e) Announced March 6, 2025
Gray Bugos & Schroeder LLC, J. Lee Gray, Littleton, Colorado, for Plaintiff- Appellee
Faegre Drinker Biddle & Reath LLP, Desmonne A. Bennett, Brian J. Paul, Lawrence G. Scarborough, Maria S. Downham, Denver, Colorado, for Defendants-Appellants ¶1 In this dispute over the start-up and operation of a home
technology company, defendants, Matthew W. Farncombe, Aurum
LLC (Aurum), and 16518808 LLC (1651), appeal the district court’s
judgment entered in favor of plaintiff, Daniel B. Stern, after a jury
trial. The district court’s final judgment reduced the damages the
jury awarded to defendants for their breach of contract
counterclaim and ruled in favor of Stern on an equitable claim for
constructive fraud that was not submitted to the jury. We reverse
the judgment and remand the case with directions.
I. Background
¶2 The dispute between Stern and defendants concerns Aurum
LLC, a home technology company that Stern and Farncombe
formed in 2016. In April of that year, 1651 (which, according to
defendants, is “an entity in which Farncombe has an ultimate
ownership stake”) made a capital contribution of $500,000 to
Aurum.
¶3 That same month, Farncombe lent $500,000 to Stern; a
promissory note (the April 2016 note) explained that the loan “will
be repaid in Full on or before 02/24/2021” at which point Stern
“shall be entitled to 50% equity of Aurum LLC . . . per the ‘Aurum
1 Agreement’”. The record does not include a written “Aurum
Agreement.” Nonetheless, according to Stern, the arrangement
described in the April 2016 note reflected his and Farncombe’s
understanding that Stern “would invest his sweat equity to build
revenue for the business” and ensured that Stern would have “skin
in the game.” Specifically, Stern maintains that the “Aurum
Agreement” cited in the April 2016 note referred to “Farncombe[’s]
indicat[ion] that the note would be repaid through company
proceeds” rather than by Stern personally.
¶4 In September 2016, Farncombe (via MWF Investments Corp.,
“another entity Farncombe owns,” according to defendants) lent
$500,000 to Aurum; a second promissory note (the September 2016
note) explained that the loan “will be repaid in full [by Aurum] on or
before 02/24/2021.”
¶5 Stern testified that he initially earned an annual salary of
$300,000 while holding four positions at Aurum: CEO, president,
managing member, and head of sales. The company was not
immediately profitable, however, and in April 2021, Farncombe and
Stern signed a new employment agreement that demoted Stern to
sales manager with a base annual salary of $310,400. Around the
2 same time, the parties also amended the “Aurum LLC Equity
Conversion Agreement” and executed a third promissory note (April
2021 note) that refinanced the $732,099 that Stern owed to
Farncombe (Aurum had made no payments on the April 2016 note)
and secured Stern’s financial obligation under the refinanced
promissory note by a deed of trust on his home.
¶6 Farncombe remained dissatisfied with Stern’s performance,
and in the fall of 2021, he placed Stern on administrative leave
before firing him. That December, Stern commenced this litigation.
¶7 Stern’s amended complaint sought to quiet title to his home
and nullify several agreements between Stern and defendants,
including the April 2016 note. Stern alleged several causes of
action, of which the following are relevant to this appeal: (1) fraud
against defendants; (2) constructive fraud against defendants (an
equitable claim); (3) negligent misrepresentation against
defendants; and (4) breach of fiduciary duty against Farncombe.
Each cause of action centered on Stern’s contention that he was led
to believe that the documents he signed
were necessary for [Stern] to have a one-half ownership interest in [Aurum], that [Stern] would obtain a one-half ownership interest in
3 [Aurum] based on his “sweat equity” instead of financial contribution, and that the $500,000 loan purportedly made on [Stern’s] behalf to [Aurum] would be paid by [Aurum] instead of personally by [Stern].
¶8 Defendants asserted several affirmative defenses and
counterclaims. The affirmative defenses relevant to this appeal
included the following: (1) the absence of any duty owed to Stern;
(2) waiver, estoppel, and ratification; (3) setoff; (4) statute of frauds;
and (5) failure to mitigate damages. The counterclaims relevant to
this appeal were (1) breach of fiduciary duty and (2) breach of
contract.
¶9 After the district court granted summary judgment on several
matters not before us, the case proceeded to trial. As relevant to
this appeal, the jury’s verdict reflected the following:
• Stern did not prevail on his negligent misrepresentation
claim.
• Stern did not prevail on his fraud claim (although the
jury found that Farncombe had committed fraud, it also
found in Farncombe’s favor on his defenses of ratification
and statute of limitations).
4 • Stern prevailed on his breach of fiduciary duty claim,
receiving a damages award of $269,000 (the jury found in
Farncombe’s favor on his defense of failure to mitigate
damages and reduced the damages award accordingly).
• Defendants prevailed on their breach of contract
counterclaim, receiving a damages award of $1.678
million.
• Defendants prevailed on their breach of fiduciary duty
counterclaim, receiving a damages award of $0.
¶ 10 The district court entered judgment reflecting the jury’s
verdict. With Stern’s equitable claim of constructive fraud still
outstanding, the parties filed competing post-trial motions — both
initially styled as C.R.C.P. 59 motions1 — requesting that the
district court rule on that claim in their favor. In his post-trial
motion, Stern requested $7.3 million in damages, $7 million of
which “represent[ed] the value of half of the company that [Stern]
lost due to Farncombe’s misrepresentations,” and $300,000 of
1 Later, Stern filed a motion asking the court to convert his “Rule 59
motion to Amend Judgment filed on December 5, 2023, to a ‘Motion for Entry of Judgment under Rule 58’ on the outstanding constructive fraud claim.”
5 which “represent[ed] six years of a $50,000 per year salary
reduction” that Stern accepted when he departed his previous
position to work for Aurum. In addition, Stern’s post-trial motion
sought to reduce the damages the jury awarded to defendants for
their successful breach of contract counterclaim from $1.678
million to $807,111 (the amount Stern owed on the April 2016
promissory note) because Aurum’s losses for breach of contract
were expressly limited by the parties’ contract “to the amount of
[Stern’s] direct or indirect ownership of Aurum, which is
undisputedly zero.”
¶ 11 The district court later ruled on the parties’ post-trial motions
and entered final judgment on all claims. Ruling in Stern’s favor on
his constructive fraud claim, the district court awarded him $1.5
million — half the amount that Stern testified Farncombe told him
Aurum was worth in 2017. The court declined to award Stern the
$7 million that he sought because “that would result in a windfall
for [Stern] especially in light of the jury finding that [Stern]
breached his contract.” The court also granted Stern’s request to
apply the contract’s “liability limitation provision” and reduced
defendants’ damages to $807,111. Finally, the court denied
6 defendants’ request for attorney fees and costs “[s]ince both parties
prevailed on a portion of their respective claims.”
II. Jurisdiction to Enter Final Judgment
¶ 12 We address, at the outset, defendants’ contention that the
district court waited too long to rule on the parties’ post-trial
motions and therefore lost jurisdiction to rule in Stern’s favor on his
constructive fraud claim or to reduce the jury’s damages award for
Stern’s breach of contract.
¶ 13 According to defendants, the district court’s judgment became
final on December 6, 2023, when it entered its “Amended Entry of
Judgment Per C.R.C.P. Rule 58(a)” (December 6 order) that reflected
both the jury’s verdicts and the court’s pretrial rulings on summary
judgment. The December 6 order did not address Stern’s
constructive fraud claim. Even so, defendants contend the court’s
judgment was final as of that date because the outcome of the
constructive fraud claim was dictated by the jury’s verdicts on the
issues that were submitted to it, meaning that “[a]ll that was left
was for the court to make a clerical notation” to reflect that
defendants had prevailed on the constructive fraud claim. Thus,
defendants argue, even though the post-trial motions were filed
7 before the court entered its December 6 order (which did not, in any
event, address the constructive fraud claim), the parties’ competing
post-trial motions were properly cognizable under C.R.C.P. 59. This
matters, according to defendants, because the court did not rule on
those motions until it issued its “Second Amended Entry of
Judgment Per C.R.C.P. 58(a)” on February 27, 2024 (February 27
judgment) — eighty-four days after the parties filed their competing
post-trial motions invoking C.R.C.P. 59. As defendants see it, the
parties’ post-trial motions were “deemed denied” on February 6,
2024 (i.e., once sixty-three days had passed after the motions’ filing
without a ruling, see C.R.C.P. 59(j)), meaning that the court’s
February 27 judgment was of no effect. Ultimately, the defendants
maintain that because the district court lost jurisdiction to amend
its December 6 order by failing to timely address the parties’ post-
trial motions, the February 27 judgment is void and the December 6
order — which does not address the constructive fraud claim —
controls.
¶ 14 We are unpersuaded. Contrary to defendants’ assertion, the
final judgment was the February 27 judgment, the written
judgment signed by the district court that disposed of all the claims
8 against all parties. See C.R.C.P. 58(a), 54(b). Regardless of its title,
the December 6 order was not final because it adjudicated “fewer
than all the claims or the rights and liabilities of fewer than all the
parties” and therefore did “not terminate the action as to any of the
claims, or parties.” C.R.C.P. 54(b); see Smeal v. Oldenettel, 814
P.2d 904, 908-09 (Colo. 1991). The fact that the parties invoked
C.R.C.P. 59 in their subsequent competing post-trial motions is
inconsequential. See Church v. Am. Standard Ins. Co. of Wis., 742
P.2d 971, 972 (Colo. App. 1987) (“Where motions filed following a
jury trial pertain to unresolved, substantive claims raised in the
complaint, they are not actually directed at obtaining post-
judgment relief, and accordingly, the provisions of C.R.C.P. 59 do
not apply.”). Accordingly, the sixty-three-day deadline for the
determination of post-trial motions mandated by C.R.C.P. 59(j) was
inapplicable. The district court had jurisdiction to, and did, enter
final judgment when it issued its February 27 judgment.
III. Constructive Fraud
¶ 15 Turning to the merits, defendants challenge the district court’s
ruling on the constructive fraud claim from several different angles.
Because we agree with defendants that the damages the court
9 awarded Stern for constructive fraud were duplicative of — and
limited by — the damages that the jury awarded Stern on his
breach of fiduciary duty claim, we need not reach defendants’
remaining challenges to the constructive fraud ruling.
A. Additional Facts
¶ 16 In alleging that Farncombe breached the fiduciary duty he
owed to Stern, Stern’s amended complaint described this duty as
arising “in the formation of the joint venture.” The complaint
claimed that “Farncombe breached his fiduciary duties to [Stern]
by . . . falsely representing that [Stern] would earn his 50%
ownership interest in [Aurum] by ‘sweat equity’ instead of a
financial contribution and that [Aurum] would repay the $500,000
investment purportedly made on behalf of [Stern].” Per the
complaint, “Farncombe also breached his fiduciary duties by
requiring [Stern] to sign” the April 2016 note, the April 2021 note,
and the deed of trust “when Farncombe did not loan any funds or
provide anything of value to [Stern].” And, the complaint stated,
“Farncombe’s breach has caused and will cause [Stern] damages in
an amount to be proven at trial.”
10 ¶ 17 Similarly, Stern alleged that defendants committed
constructive fraud “during discussions leading up to and at the
time [Stern] signed the April 2016 Note, the Equity Conversion
Agreement, and 2017 [Line of Credit] Agreement.” The complaint
further stated,
Farncombe, acting on behalf of himself and the other [defendants], falsely represented to [Stern] that these documents were necessary for [Stern] to have a one-half ownership interest in [Aurum], that [Stern] would obtain a one-half ownership interest in [Aurum] based on his “sweat equity” instead of financial contribution, and that the $500,000 loan purportedly made on his behalf to [Aurum] would be paid by [Aurum] instead of personally by [Stern].
¶ 18 In the portion of the trial management order where the parties
itemized the damages and relief sought, Stern specified “rescission
damages,” “[m]onetary loss . . . due to defamatory statements,”
“[c]osts incurred in pursuing this litigation to have . . . Farncombe’s
invalid Deed of Trust removed,” “[n]oneconomic [d]amages due to
reputational harm,” and “[p]rejudgment and postjudgment interest
on all damages awarded.” He described the remaining $7 million in
desired damages as “[c]onsequential damages related to the loss of
11 50% value of Aurum, in the event that the agreements at issue in
this case are not rescinded.”
¶ 19 The jury instructions at trial explained the following:
• Stern asserted a claim for “breach of fiduciary duty based
on a confidential relationship against . . . Farncombe
related to the startup of Aurum.”
• Defendants asserted an affirmative defense of waiver to
Stern’s claims for fraud, negligent misrepresentation, and
breach of fiduciary duty, which applied to the signing of
the April 2016 note.
• Defendants asserted setoff as an affirmative defense to
breach of fiduciary duty, which applied in part if the jury
found that “[Stern’s] damages [we]re based on [his]
entitlement to equity in Aurum . . . or an equivalent to an
equity interest in Aurum.”
• Defendants asserted an affirmative defense of failure to
mitigate damages to Stern’s claims for fraud, negligent
misrepresentation, and breach of fiduciary duty, which
applied in part if the jury found that “[Stern] failed to
12 take reasonable steps to cause Aurum to be profitable so
that the profits could be used to repay the [promissory
notes].”
• Stern “sued for the same damages and losses on three
different claims for relief,” which were “fraud, negligent
misrepresentation, and breach of fiduciary duty,” and
thus, “[i]f [the jury found] for [Stern] on more than one
claim for relief, [it could] award him damages only once
for the same damages and losses.”
• In determining Stern’s damages for his breach of
fiduciary duty claim, the jury had to consider both
economic and noneconomic losses.
¶ 20 The jury found in favor of Stern on his breach of fiduciary duty
claim. In assessing damages for this claim, however, the jury found
in favor of Farncombe on his failure to mitigate defense and, taking
that into account, awarded Stern $269,000.
¶ 21 Two months later, the district court ruled in Stern’s favor on
his constructive fraud claim and awarded him $1.5 million in
damages. The court explained that the damages award represented
13 one half of Aurum’s value based on the valuation that Stern
testified Farncombe provided him in 2017.
B. Standard of Review and Applicable Law
¶ 22 Generally, determining the amount of damages is within the
trial court’s discretion, and its decision will not be overturned
absent an abuse of that discretion. McDonald’s Corp. v. Brentwood
Ctr., Ltd., 942 P.2d 1308, 1311 (Colo. App. 1997). But the proper
measure of damages is a question of law subject to de novo review.
Taylor Morrison of Colo., Inc. v. Terracon Consultants, Inc., 2017 COA
64, ¶ 23.
¶ 23 A plaintiff may not receive a double recovery for the same
injuries or losses arising from the same conduct. Lexton-Ancira
Real Est. Fund, 1972 v. Heller, 826 P.2d 819, 823 (Colo. 1992);
Quist v. Specialties Supply Co., 12 P.3d 863, 866 (Colo. App. 2000).
Double recovery occurs when a plaintiff is compensated for the
same wrong under different theories or for equivalent damages
based on the same acts. Lexton-Ancira, 826 P.2d at 824; see also
Farmers Grp., Inc. v. Williams, 805 P.2d 419, 426 n.9 (Colo. 1991)
(insured could not receive double recovery for the same wrong
under both a statutory bad faith claim and a common law tort
14 claim); DeBose v. Bear Valley Church of Christ, 890 P.2d 214, 223
(Colo. App. 1994) (jury’s award for breach of fiduciary duty that
included damages jury had already awarded for extreme and
outrageous conduct claims were improperly duplicative), rev’d on
other grounds, 928 P.2d 1315 (Colo. 1996). This general rule
prohibiting double recovery for the same injury or losses applies in
cases involving multiple defendants as well as in cases involving
multiple claims against a single defendant. Quist, 12 P.3d at 866.
C. Analysis
¶ 24 Although Stern’s claims for breach of fiduciary duty and
constructive fraud were not identical, both claims overlapped such
that they alleged the same injuries or losses arising from the same
conduct. For both claims, Stern’s amended complaint sought
monetary damages for injuries that he alleged arose during the
formation of Aurum — specifically, Farncombe’s misrepresentations
regarding Stern’s ownership interest in Aurum and the repayment
of the April 2016 note. In the trial management order, Stern
requested damages of $7 million in “[c]onsequential damages
related to the loss of 50% value of Aurum,” without linking that
amount to any particular cause of action. The jury instructions
15 expressly stated that Stern “sued for the same damages and losses”
on his claims for fraud, negligent misrepresentation, and breach of
fiduciary duty, and that the jury was therefore permitted to award
Stern damages “only once for the same damages and losses.” And
Stern’s post-trial motion sought “$7,000,000 as damages for the
constructive fraud claim, which represents the value of half of the
company that he lost due to Farncombe’s misrepresentations.”
¶ 25 Despite this extensive overlap and the jury’s verdict for Stern
on his breach of fiduciary duty claim (which included $269,000 in
damages), the district court ruled for Stern on his constructive
fraud claim and awarded him $1.5 million in damages as
compensation for his loss of a one-half ownership interest in
Aurum. Because of the jury’s earlier verdict, however — which had
valued Stern’s interest in the company at a maximum of $269,000
via its findings on the breach of fiduciary duty claim — the district
court’s damages award gave Stern an impermissible double
recovery.
¶ 26 Stern argues on appeal that the damages awarded by the
district court were not duplicative of the damages awarded by the
jury. According to Stern, although the jury instructions required
16 the jury to consider both economic and noneconomic losses when
awarding damages for the breach of fiduciary duty claim, “the jury’s
damage award may have consisted solely of the non-economic
damages Stern was seeking on his breach of fiduciary duty claim.”
Therefore, he contends, the district court’s economic damages
award for the same injuries or losses arising from the same conduct
was not duplicative.
¶ 27 In support of his contention, Stern points out that the jury is
presumed to have followed the instructions before it. Yet if we were
to accept his argument, we would have to reach the opposite
conclusion. Indeed, we cannot interpret the jury’s verdict as
awarding noneconomic damages alone without overlooking the fact
that the court instructed the jury to take both economic and
noneconomic losses into account. And while the absence of any
evidence to the contrary is sufficient for us to presume that the jury
did in fact follow the court’s instructions to award damages
encompassing economic and noneconomic losses, that conclusion
is further buoyed by the jury’s finding in favor of Farncombe on his
failure to mitigate defense — which was applicable only to economic
damages.
17 ¶ 28 Stern also argues that his breach of fiduciary duty and
constructive fraud claims were “factually separable” and therefore
not duplicative. This is so, according to Stern, because the facts
supporting the former were limited to pre-April 2016 conduct while
the facts supporting the latter were “also based on conduct that
occurred after Stern signed the [April 2016 note].” However, the
post-April 2016 conduct that supposedly distinguished the
damages awarded for these claims appears only in Stern’s one-
sentence assertion in his post-trial motion regarding his
constructive fraud claim that “even after having retained counsel [in
2017], Stern continued to trust Farncombe and his representations
when he signed the later documents in 2017.” This lone
assertion — when both claims were otherwise consistently grouped
together, dealt with the April 2016 note and sought the same
damages for Stern’s claimed ownership interest in Aurum — is
insufficient to differentiate these claims such that the damages
awarded for both were not duplicative. This is especially true
because the district court’s order granting Stern’s constructive
fraud claim made no such distinction between the conduct forming
18 the basis of each claim and instead discussed at length the conduct
leading up to the signing of the April 2016 note.
¶ 29 Accordingly, we conclude that the district court erroneously
awarded Stern duplicative damages when it awarded him damages
for his constructive fraud claim after the jury had already awarded
Stern damages for his breach of fiduciary duty claim. In short, the
jury found that Stern’s interest in the company was worth, at most,
$269,000. Irrespective of the merits of Stern’s constructive fraud
claim, the court could not award him any more than the jury had
already determined his interest was worth.
¶ 30 Our conclusion eliminates the need to reach defendants’
remaining challenges to the constructive fraud ruling. We note,
however, that we would arrive at the same destination if we
accepted defendants’ contention that the jury’s finding in their favor
on Stern’s claims for negligent misrepresentation and fraud
foreclosed the district court’s ruling in Stern’s favor on his
constructive fraud claim. Under either approach, Stern’s damages
for losing his ownership interest in Aurum would be limited to the
jury’s award of $269,000: The district court could have either ruled
against Stern on the constructive fraud claim, or it could have ruled
19 in favor of Stern on that claim but declined to award him additional
damages in light of the jury’s determination.
IV. Reduction of Damages
¶ 31 Defendants next contend that the district court erroneously
reduced the jury’s damages award because the court based its
ruling on an argument that Stern waived. We agree.
¶ 32 In addition to seeking a favorable ruling on his constructive
fraud claim, Stern’s post-trial motion requested that the district
court reduce the jury’s damages award on defendants’ breach of
contract counterclaim. Specifically, Stern sought to reduce the
award from $1.678 million to $807,111 “by subtracting the
damages related to the purported losses of [Aurum] because those
damages were expressly limited by the Amended and Restated
Operating Agreement to the amount of [Stern’s] direct or indirect
ownership of Aurum, which is undisputedly zero.” Stern had not
raised this issue at any previous point in the litigation, either as an
affirmative defense, in his summary judgment briefing, in the trial
management order, or at trial.
20 ¶ 33 In their response, defendants argued, among other things,
that Stern had waived the issue by failing to raise it earlier in the
litigation. The district court nonetheless granted Stern’s request,
explaining that the amended operating agreement cited by Stern
“clearly limits [Stern’s] liability to an amount equal to his ownership
interest in the company. Since [Stern] never received any
ownership interest in the company, his liability for breach of
contract is zero.”
¶ 34 “Ordinarily, waiver is a factual matter determined by the trial
court,” Avicanna Inc. v. Mewhinney, 2019 COA 129, ¶ 24, and we
review factual waiver issues for an abuse of discretion, Shoen v.
Shoen, 2012 COA 207, ¶ 12. However, when, as here, “the facts
bearing on waiver are uncontested and the evidence before the trial
court is entirely documentary, waiver becomes a matter of law, and
we are not bound by the trial court’s findings.” Avicanna, ¶ 24.
¶ 35 Waiver is the intentional relinquishment of a known right or
privilege. Id. at ¶ 25. “A party waives a contractual right . . . if the
party acts inconsistently with the right and prejudice accrues to the
other parties to the contract.” Id. “Waiver may be express, or it
21 may be implied when a party’s actions manifest an intent to
relinquish a right or privilege.” Venard v. Dep’t of Corr., 72 P.3d
446, 450 (Colo. App. 2003).
¶ 36 Pursuant to C.R.C.P. 8(c), “a party shall set forth
affirmatively . . . any . . . matter constituting an avoidance or
affirmative defense.” Moreover, “[a]ny mitigating circumstances to
reduce the amount of damage shall be affirmatively pleaded.” Id.
¶ 37 Defendants argue that, because Stern did not assert that his
damages were contractually limited until after the trial was over, he
waived his argument that any damages assessed against him
related to Aurum’s losses could not exceed the value of his
ownership interest in the company, which was zero. Thus,
according to defendants, it was error for the district court to grant
Stern’s request to reduce the jury’s damages award to defendants
for their breach of contract counterclaim.
¶ 38 Under the circumstances, we agree that Stern waived this
argument by waiting to raise it until after the trial had concluded.
Consistent with C.R.C.P. 8(c)’s directive that “a party shall set forth
affirmatively . . . any . . . matter constituting an avoidance or
22 affirmative defense” and that “[a]ny mitigating circumstances to
reduce the amount of damage shall be affirmatively pleaded,” Stern
should have listed the contract’s liability limitation as an affirmative
defense at the outset of the case. Cf. Farmers Ins. Exch. v. Taylor,
45 P.3d 759, 763 (Colo. App. 2001) (“[P]olicy limits and setoff
amounts were affirmative defenses to the insurer’s obligation to pay
benefits to the insured,” and thus within the scope of C.R.C.P. 8(c),
“because, if applicable, those limits and setoffs would have
considerably reduced the arbitration award.”). He did not do so,
however, and never moved to amend his answer to include the
defense. Thus, he arguably waived the issue even at that early
stage of the proceedings. See Town of Carbondale v. GSS Props.,
LLC, 169 P.3d 675, 681 (“If a defense is not raised in the answer or
through a successful amendment of the answer, it is waived.”);
Soicher v. State Farm Mut. Auto. Ins. Co., 2015 COA 46, ¶ 21.
¶ 39 Nor did Stern assert his contractual limitations defense at the
summary judgment stage, which he might have been able to do if
the defendants failed to object. See Tarco, Inc. v. Conifer Metro.
Dist., 2013 COA 60, ¶ 17 (noting that a party may raise an
affirmative defense for the first time in summary judgment
23 pleadings if (1) the opposing party does not object to the untimely
defense, and (2) the opposing party is not prejudiced by the delay in
raising it). And if there was any doubt left about the status of the
defense as trial approached, Stern’s failure to include the defense in
the trial management order — which stated that “[a]ll claims and
defenses not listed [are] withdrawn” — put the matter to rest. See
Blood v. Qwest Servs. Corp., 224 P.3d 301, 327 (Colo. App. 2009)
(holding that the defendant waived an affirmative defense when it
was listed in the answer but not included in the trial management
order or raised at trial), aff’d, 252 P.3d 1071 (Colo. 2011). Because
defendants objected to Stern’s tardy assertion of the defense and
argued that they would be prejudiced if the court applied the
contractual limitation, the trial court erred by considering it. See
Tarco, ¶ 17.
¶ 40 We are not persuaded otherwise by the holding in Taylor
Morrison of Colorado v. Terracon Consultants, Inc., 2017 COA 64,
which, according to Stern, approved a party’s decision to raise the
issue of a contractual damage limitation for the first time in post-
trial briefing. In that case, the contractual cap was litigated
extensively before trial, see id. at ¶ 6, n.2 (“Taylor raised three
24 challenges to the $550,000 cap on liability.”); moreover, no party
appears to have objected to the issue of the limitation’s applicability
being resolved after the jury had rendered its verdict. As a result,
the Taylor Morrison division did not even consider, much less
resolve, whether there might be circumstances under which a party
could assert a contractual damage limitation for the first time in a
post-trial motion.2
V. Attorney Fees and Costs
¶ 41 Finally, defendants argue that the district court erred by
denying their motion for attorney fees and costs based on its finding
that “both parties prevailed on a portion of their respective claims.”
Given our disposition of this appeal, we agree that the order bears
reexamination. We reverse the order on attorney fees and costs and
remand that question to the district court for further consideration.
2 Vista Resorts, Inc. v. Goodyear Tire & Rubber Co. is also
distinguishable because the constitutionality of the statute at issue in that case, which was raised for the first time in a post-trial motion, “was not ripe until the jury returned its verdict and the court imposed [statutory] treble damages at Vista’s request, in lieu of punitive damages awarded by the jury.” 117 P.3d 60, 74 (Colo. App. 2004).
25 VI. Disposition
¶ 42 We reverse the district court’s reduction of defendants’
damages for their breach of contract counterclaim. We also reverse
the district court’s award of damages to Stern for his constructive
fraud claim. Finally, we reverse the order on attorney fees and
costs and remand the case for further proceedings consistent with
this opinion.
JUDGE HARRIS and JUDGE PAWAR concur.