United States District Court, D. Colorado
Wiley Y. Daniel Senior United States District Judge
This matter is before the Court on Plaintiff Meeper, LLC’s Resubmitted Motion for Leave to File Second Amended Complaint filed March 9, 2015, and Plaintiff Meeper, LLC’s Motion for Leave to Supplement its Resubmitted Motion for Leave to File Second Amended Complaint with the Declaration of Water Lawyer Stephen H. Leonhardt filed May 8, 2015. These motions were referred to Magistrate Judge Tafoya who issued a Recommendation of United States Magistrate Judge on July 28, 2015.
Magistrate Judge Tafoya recommended therein that the motion to amend, which seeks leave to amend the complaint to add claims against former Defendant Joyce L. Lester [“Lester”], be denied as futile based on the principles of claim preclusion because of my prior order dismissing Lester with prejudice pursuant to a settlement. The magistrate judge rejected Plaintiff’s argument that the settlement agreement between Plaintiff and Lester that resulted in Lester’s dismissal be invalidated based on fraud. Because of her ruling based on claim preclusion, Magistrate Judge Tafoya did not address whether Plaintiff’s proposed amendments were also unduly delayed or prejudicial.
The Recommendation also found that Plaintiff’s motion to supplement should be denied. Magistrate Judge Tafoya stated that the declaration it sought to submit effectively amounted to an expert opinion in support of Plaintiff’s claims against Lester. It did not include any information relevant to the question of whether Plaintiff should be allowed to amend the complaint to assert such claims.
Plaintiffs filed an Objection to the Recommendation on August 11, 2015. Defendant Charles C. Powers and proposed Defendant Lester filed separate responses to the Objection on August 25, 2015. Plaintiff filed a reply to these responses on September 11, 2015.
II. FACTUAL BACKGROUND
This case was originally filed in July 2012 and involves a Purchase Contract entered into in 2005 between Plaintiff and the Lesters related to real property in Rio Grande County, Colorado. Plaintiff alleged that the Purchase Contract was entered into based on representations that the closing documents transferred 640 acres and a 60 foot access easement to access the property when, in fact, the Contract did not. Plaintiff sued Lester asserting claims of implied easement by necessity, quiet title, fraudulent concealment/misrepresentation, reformation, fraud in the inducement/ rescission, and negligent misrepresentation. The Court set May 9, 2014, as the deadline for amending the pleadings. Plaintiff timely submitted a First Amended Complaint. The claims all related to the easement and acreage of the property.
On June 17, 2013, Plaintiff filed an Unopposed Motion to Dismiss Plaintiff’s Claims Against Defendant Joyce L. Lester With Prejudice and Release of Lis Pendens. The motion indicated that Plaintiff and Lester had come to a full and final settlement and stated that “no issues between the parties require resolution by the Court.” (ECF No. 60, at 1.) The settlement provided Plaintiff with an access easement and a new deed conveying the full acreage bargained for. (Id.) The settlement agreement released Lester “from all actual and potential claims that were or could have been asserted in the Litigation.” (ECF No. 189, Ex. A.) Plaintiff’s Unopposed Motion to Dismiss was granted and Lester was dismissed from the case with prejudice by Order of June 17, 2013.
Plaintiff asserts in its motion to amend that at the time of the settlement in 2013, it was unaware that it did not actually have the water rights Lester purported to sell to it in 2005. More specifically, Plaintiff states that Lester promised it 21 cubic feet per second (“cfs”) of water. An amendment to the agreement granted Lester a superior water right to the first 2 cfs each year with proration during drought. The quitclaim deed that was filed reserved Lester’s superior right but left out proration during drought.
Plaintiff asserts there were no issues regarding the water rights until 2014 when Lester used most of the water available to irrigate their property, leaving Plaintiff to fend for itself. Plaintiff requested a water engineering analysis of the land and spoke to a water law attorney, Stephen H. Leonhardt [“Leonhardt”] in Colorado. The water engineering analysis came back in January of 2015 showing that at most, Plaintiff had 4 cfs of water per year. The water law attorney explained that while Lester may have had court-ordered rights to certain quantities of waters, Colorado law bases water rights on past usage. The motion for leave to file a Second Amended Complaint to bring Lester back into the case was filed based on this new information.
The proposed Second Amended Complaint asserts claims against Lester for fraudulent misrepresentation, fraudulent nondisclosure, negligent misrepresentation, and reformation of the contract as to the water rights. In the motion and proposed Second Amended Complaint, Plaintiff alleges that Lester represented that she was capable of delivering water rights of approximately twenty-one cubic feet per second (c.f.s.) appurtenant to the land purchased by Plaintiff when she knew that those waters rights historically yielded far less water. The motion to supplement sought leave to include a declaration of Leonhardt to support Plaintiff’s claims regarding these issues.
I will construe the recommendation to deny the motion to amend as a dispositive ruling since a finding that Plaintiff's proposed amendments are futile is “functionally equivalent” to a finding that the proposed amendments should be dismissed for failure to ...