Three Circle v. Public Service

• Court: Colorado Court of Appeals
• Decided: February 27, 2025
• Docket: 24CA0621
• Status: Unpublished

Opinion

24CA0621 Three Circle v Public Service 02-27-2025

COLORADO COURT OF APPEALS

Court of Appeals No. 24CA0621 Cheyenne County District Court No. 22CV30006 Honorable Tarryn L. Johnson, Judge

Three Circle Soil & Gas, LLC, a Colorado limited liability company, and Frying Pan Ranch, LLC, a Colorado limited liability company,

Plaintiffs-Appellants and Cross-Appellees,

v.

Public Service Company of Colorado d/b/a Xcel Energy, a Colorado corporation,

Defendant-Appellee and Cross-Appellant.

JUDGMENT AFFIRMED IN PART AND REVERSED IN PART, CROSS-APPEAL DISMISSED, AND CASE REMANDED WITH DIRECTIONS

Division IV Opinion by JUDGE PAWAR Harris and Grove, JJ., concur

NOT PUBLISHED PURSUANT TO C.A.R. 35(e) Announced February 27, 2025

Robinson Waters & O’Dorisio, P.C., Kimberly A. Bruetsch, Nicholas F. Labor, Denver, Colorado, for Plaintiffs-Appellants and Cross-Appellees

Gordon Rees Scully Mansukhani, LLP, Franz Hardy, Abigail H. Kregor, Denver, Colorado, for Defendant-Appellee and Cross-Appellant ¶1 Plaintiffs, Three Circle Soil & Gas, LLC, and Frying Pan Ranch,

LLC, sued defendant, Xcel Energy, for breach of the lease

agreement that allowed Xcel to operate a wind farm on Frying Pan’s

land. The district court granted Xcel summary judgment on the

grounds that all plaintiffs’ claims were time barred by a three-year

statute of limitations. Plaintiffs appeal, and Xcel cross-appeals. We

affirm in part, reverse in part, dismiss the cross-appeal, and

remand with directions.

I. Background

¶2 Frying Pan entered into a lease agreement with Invenergy

Wind Development, LLC, which allowed Invenergy to construct and

operate wind turbines on Frying Pan’s land. Invenergy entered into

similar lease agreements with neighboring landowners, resulting in

the placement of numerous wind turbines on the land of several

different landowners in the area.

¶3 Under Frying Pan’s lease agreement, Invenergy got an

easement to construct and operate wind turbines on Frying Pan’s

land in exchange for periodic royalty payments to Frying Pan based

on the energy the turbines produced. The agreement also required

Invenergy to release its rights to any land initially covered by the

1 easement that would not be used for wind energy production or

transmission — in other words, the undeveloped land. The

agreement specified a time at which Invenergy had to release the

undeveloped land.

¶4 Frying Pan assigned its right to receive royalties to Three

Circle, and Invenergy assigned its agreement rights to Xcel.

¶5 In 2017, Xcel released its interest in several thousand acres of

undeveloped land. By 2018, Xcel was producing and selling energy

from wind turbines on Frying Pan’s land. And by January 2019,

Xcel was making royalty payments to Three Circle.

¶6 In November 2022, plaintiffs filed this action against Xcel. It

included claims for declaratory judgment, breach of contract, and

breach of the duty of good faith and fair dealing. The declaratory

judgment and breach of duty of good faith and fair dealing claims

were based on Xcel’s alleged underpayment of royalties under the

royalty formula in the agreement. And plaintiffs alleged two

different breaches of the contract — one based on underpayment of

royalties and the other on the alleged failure to release undeveloped

land as required by the agreement.

2 ¶7 Xcel moved for summary judgment, arguing that all the other

landowners involved in the wind project were indispensable parties

and their absence from the action entitled Xcel to summary

judgment. The district court denied the motion.

¶8 Xcel then moved for summary judgment a second time on a

different ground: that all plaintiffs’ claims were time barred by the

applicable statutes of limitation. The district court initially denied

this motion as well. But Xcel moved the court to reconsider, and

upon reconsideration, the court granted Xcel summary judgment.

¶9 Plaintiffs appeal. They argue that the royalty-based claims

were timely and that there were material issues of fact that

precluded summary judgment on the undeveloped land release

claim. We agree that plaintiffs’ royalty-based breach claims were

timely because they are governed by a six-year statute of

limitations. But the declaratory judgment action was not timely.

And we disagree with plaintiffs’ challenge to the entry of summary

judgment on the undeveloped land release claim.

¶ 10 Xcel cross-appeals, challenging the court’s denial of its first

summary judgment motion based on indispensable parties. We

dismiss the cross-appeal for lack of jurisdiction.

3 II. District Court’s Grant of Summary Judgment

¶ 11 We review an order granting summary judgment de novo.

Univ. of Denver v. Doe, 2024 CO 27, ¶ 7. Before we get to the issue

of which statute of limitations applies to each claim, we first reject

plaintiffs’ argument that the district court erred by even considering

Xcel’s motion to reconsider that precipitated the grant of summary

judgment.

A. Xcel’s Motion to Reconsider Was Proper

¶ 12 According to plaintiffs, Xcel’s motion to reconsider the initial

denial of its second summary judgment motion was error because

the motion was not based on a change in the law. We reject this

argument because the applicable rules contain no such

requirement.

¶ 13 C.R.C.P. 121, section 1-15(11), provides that a motion to

reconsider “must allege a manifest error of fact or law that clearly

mandates a different result or other circumstance resulting in

manifest injustice.” The rule does not require that the motion be

based on a change in the law. And it is clear that Xcel’s motion to

reconsider alleged a manifest error of law as required by the rule: It

alleged that the district court applied the wrong statute of

4 limitations when it initially denied Xcel’s second summary

judgment motion. Accordingly, the court did not err by addressing

the merits of the motion to reconsider.

B. Statute of Limitations for Royalty Payment Claims

¶ 14 Which statute of limitations applies is a question of law that

we review de novo. See Gunderson v. Weidner Holdings, LLC, 2019

COA 186, ¶ 9. We agree with plaintiffs that the district court erred

by holding that a three-year limitations period applied to the breach

of duty of good faith and fair dealing claim and the breach of

contract claim based on underpaid royalties. Instead, a six-year

limitations period applied to these two claims.

¶ 15 Section 13-80-101(1)(a), C.R.S. 2024, provides that contract

claims must be brought within three years after the claim accrues.

However, section 13-80-103.5(1)(a), C.R.S. 2024, contains an

exception. Any claim that seeks to “recover a liquidated debt or an

unliquidated, determinable amount of money due to the person

bringing the action” can be brought within six years of accrual. Id.

The question therefore becomes whether any of plaintiffs’ claims

sought to recover a liquidated debt or a determinable amount of

money.

5 ¶ 16 A debt is determinable “if the amount due is capable of

ascertainment by reference to an agreement or by simple

computation.” Rotenberg v. Richards, 899 P.2d 365, 367 (Colo.

App. 1995). In other words, if the terms of the agreement provide a

formula for calculating the debt, the debt is determinable. This is

true even if the values of certain variables in the formula are

disputed and resolving those disputes requires examining facts

external to the agreement. See id. at 368 (“[I]f the written document

sets forth a specific method for determining the amount due, the

fact that reference must be made to a fact external to that

document does not make a claim under that document

unliquidated . . . .”).

¶ 17 Rotenberg illustrates how this works. The agreement in that

case provided that a client owed his attorney $100 per hour for

services rendered. Id. The parties disputed how many hours the

attorney reasonably worked for the client. Id. Despite this dispute,

the debt was deemed determinable for purposes of the statute of

limitations and the six-year limitations period applied. Id.

¶ 18 Here, like Rotenberg, the agreement contained a formula for

calculating Xcel’s royalty payments. Although the formula was

6 more complicated than the simple one in Rotenberg, it was no less

determinable. The parties have agreed to keep the precise formula

confidential, so we do not reproduce it here. But the only variables

in it are the megawatt hours produced from “all project meters,” the

number of turbines on Frying Pan’s land, and the number of

turbines in the project. Once the values of these variables are

identified, they are plugged into the formula, producing a singular

and determinable amount that Xcel must pay Three Circle as a

royalty.

¶ 19 For our purposes, it does not matter that the parties may

dispute any or all of the three variables in the formula. Just as the

Rotenberg parties disputed the only variable in that formula, any

dispute here about the power produced or number of turbines in

the project does not change the fact that Xcel’s debt is determinable

for statute of limitations purposes. Cf. Patterson v. BP Am. Prod.

Co., 159 P.3d 634, 636-37 (Colo. App. 2006) (applying six-year

statute of limitations to oil and gas lease that calculated royalties

based on percentage of price received for sale of gas produced

minus proportionate share of costs incurred to make gas

marketable), rev’d on other grounds, 185 P.3d 811 (Colo. 2008).

7 ¶ 20 We therefore conclude that any claim that sought to collect

royalties pursuant to the formula in the agreement was subject to a

six-year limitations period under section 13-80-103.5(1)(a). Any

royalty-seeking claim accrued no earlier than 2018 when Xcel

started paying royalties. And plaintiffs filed their action in 2022.

Therefore, any royalty-seeking claim was timely.

¶ 21 The good faith and fair dealing claim and the royalty-based

breach of contract claim both sought unpaid royalties under the

formula. They were therefore subject to the six-year limitations

period and were not time barred.1

¶ 22 In contrast, the declaratory judgment claim sought to recover

no money. And declaratory judgment claims are generally subject

to a two-year limitations period. See § 13-80-102(1)(i), C.R.S. 2024

(two-year limitations period for actions for which no specific

limitations period is provided); Harrison v. Pinnacol Assurance, 107

P.3d 969, 972 (Colo. App. 2004) (applying the catch-all two-year

limitations period in section 13-80-102(1)(i) to a declaratory

1 Because we conclude that these claims were brought within the

applicable limitations period, we need not address plaintiffs’ alternate arguments that they were timely based on equitable tolling or a continuing breach.

8 judgment claim). Accordingly, the declaratory judgment claim was

time barred.

¶ 23 We therefore conclude that the district court properly granted

summary judgment on the declaratory judgment claim but erred by

granting summary judgment on the good faith and fair dealing

claim and the royalty-based breach of contract claim.

C. Undeveloped Land Release Claim

¶ 24 Plaintiffs argue that there were disputed issues of material fact

regarding when the undeveloped land release claim accrued that

precluded summary judgment. Specifically, they argue that the

agreement did not require Xcel to release undeveloped land on a

particular date but rather before the expiration of a nebulous and

undefined period of years. Consequently, according to plaintiffs,

their undeveloped land release claim did not accrue until the

expiration of that nebulous time period, thereby rendering the claim

timely. We disagree and conclude that the plain and unambiguous

9 language of the agreement required Xcel to release undeveloped

land on a particular date.2

¶ 25 We interpret the language of a written agreement like this one

de novo. See DA Mountain Rentals, LLC v. Lodge at Lionshead

Phase III Condo. Ass’n, 2016 COA 141, ¶ 16. Our aim is to

ascertain and give effect to the parties’ intent. Johnson Nathan

Strohe, P.C. v. MEP Eng’g, Inc., 2021 COA 125, ¶ 12. We read

clauses and phrases in context, seeking to give meaning to all

provisions. Id. at ¶ 14. If the language of the agreement is

unambiguous, we apply it as written. Id. at ¶ 13. Language is

ambiguous if it is fairly susceptible to more than one reasonable

interpretation. Id.

¶ 26 The agreement here identifies and defines various terms and

dates. The “Initial Term” began on the date the agreement was

signed and ran for five years. The agreement provided that the

2 We question plaintiffs’ framing of this argument as one that

alleges the existence of disputed material facts. In our view, the only dispute is whether the undeveloped land release deadline in the agreement is a single date or a nebulous time period. This is not an issue of fact that can be disputed — instead, it is a question of law that is the district court’s and ours to resolve. The facts material to this issue appear to be undisputed.

10 Initial Term would automatically end, and the “Operations Term”

would automatically begin, as soon as Xcel began selling electrical

energy from one or more of its wind turbines installed on Frying

Pan’s land:

If, prior to the end of the Initial Term, [Xcel] installs on the Property one or more Wind Turbines and [Xcel] begins selling electrical energy generated by the Wind Turbines (the actual date of electrical generation from such Wind Turbines, as declared by [Xcel], shall be referred to as the “Commencement Date”), the Initial Term of this Agreement shall automatically expire and the term of this Lease shall automatically extend for twenty-five (25) years (the “Operations Term”).

The agreement then required Xcel to release undeveloped land “at

the beginning of the Operations Term.” So, what does “the

beginning of the Operations Term” mean?

¶ 27 We conclude that there is only one point in time that marks

the beginning of the Operations Term: the first day of that term.

That the agreement gave a separate name to this point in time (the

Commencement Date) does not matter. Identifying the same point

in time in two different ways does not make the meaning of the

agreement on this point ambiguous.

11 ¶ 28 Plaintiffs argue otherwise, contending that “the beginning of

the Operations Term” means “a longer period constituting the

beginning portion of the 25-year operations term.” We find this

interpretation unreasonable — especially in light of the agreement’s

statement that Xcel shall not hold any land “for speculative

purposes, or to preclude development by other companies.”

¶ 29 Thus, we conclude that the clear and unambiguous language

of the agreement required Xcel to release all undeveloped land on

the day it began selling energy generated from the turbines on

Frying Pan’s land. There is no dispute that this occurred in 2018,

after Xcel had already released some undeveloped land the previous

year. There is also no dispute that a three-year statute of

limitations applied to the undeveloped land release claim. See § 13-

80-101(1)(a) (three-year limitations period for all contract actions).

The limitations period for this claim therefore expired in 2021, the

year before plaintiffs filed this action in 2022.

¶ 30 Plaintiffs argue that even if the claim accrued more than three

years before they filed this action, Xcel’s actions equitably tolled the

three-year limitations period. However, plaintiffs concede in their

principal brief that this tolling argument fails if the agreement “had

12 a clear date by which the land needed to be released.” As explained

above, the agreement had such a date, the Commencement Date

also known as the beginning of the Operations Term. Accordingly,

plaintiffs’ tolling argument fails on its own terms.

¶ 31 For these reasons, we conclude that the undeveloped land

release claim was time barred, and the district court properly

granted Xcel summary judgment on it.

III. We Dismiss Xcel’s Cross-Appeal

¶ 32 In its cross-appeal, Xcel seeks to challenge the district court’s

denial of its first summary judgment motion, whose grounds were

unrelated to the second summary judgment motion the district

court granted. We have jurisdiction to review only final judgments.

McDonald v. Zions First Nat’l Bank, N.A., 2015 COA 29, ¶ 34. And

because we have reversed the grant of summary judgment to Xcel,

the denial of Xcel’s first summary judgment motion is now an

unreviewable interlocutory ruling that we lack jurisdiction to

review. See Tetro v. Elliott Popham Pontiac, Oldsmobile, Buick, &

GMC Trucks, Inc., 173 F.3d 988, 992 (6th Cir. 1999) (suggesting

that by reversing dismissal, appellate opinion instantly reinstated

13 the case and rendered the denial of summary judgment an

unappealable interlocutory order).

¶ 33 As part of its cross-appeal, Xcel appears to seek relief in

addition to the reversal of the court’s denial of its first summary

judgment motion. Xcel contends that if we provide Three Circle any

relief in the appeal, on remand we should direct the district court to

make findings about joining other parties under C.R.C.P. 19. We

decline to do so because there is no Rule 19 ruling properly before

us. And we express no opinion about any Rule 19 proceedings that

might occur on remand.

IV. Attorney Fees and Costs

¶ 34 Xcel requests its reasonable attorney fees and costs on appeal

and below under the appellate rules and the prevailing party

provision of the agreement. We decline to award Xcel its fees and

costs under C.A.R. 39 or 39.1. See C.A.R. 39(a)(4) (only trial court

can order costs if judgment is affirmed in part and reversed in part);

C.A.R. 39.1 (appellate court has discretion to determine whether

appellate attorney fees are appropriate).

¶ 35 And we conclude that Xcel is not the prevailing party in this

appeal for purposes of the prevailing party provision of the

14 agreement. See Archer v. Farmer Bros. Co., 90 P.3d 228, 230-31

(Colo. 2004) (“A ‘prevailing party’ is one who prevails on a

significant issue in the litigation and derives some of the benefits

sought by the litigation”; under that standard, it is possible that no

party prevails.).

¶ 36 Finally, we express no opinion about prevailing party fees and

costs for the district court litigation because that litigation is

ongoing.

V. Disposition

¶ 37 Xcel’s cross-appeal is dismissed for lack of jurisdiction. The

summary judgment on the declaratory judgment claim and the

undeveloped land release claim is affirmed. The summary

judgment on the royalty breach of contract claim and the breach of

the duty of good faith and fair dealing claim is reversed, and those

claims are reinstated. The case is remanded to the district court

with directions to conduct further proceedings consistent with this

opinion.

JUDGE HARRIS and JUDGE GROVE concur.