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Warne v. Hall

Supreme Court of Colorado, En Banc

June 27, 2016

Menda K. Warne, Petitioner
v.
Bill J. Hall, Respondent

          Certiorari to the Colorado Court of Appeals. Court of Appeals Case No. 12CA719.

          Judgment Reversed in Part and Affirmed in Part.

          SYLLABUS

         Warne petitioned for review of the court of appeals' judgment reversing the dismissal of Hall's complaint, which asserted a claim of intentional interference with contract. Although invited to apply the standard for dismissal articulated in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), and Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), the district court dismissed for failure to state a claim upon which relief could be granted without addressing either Twombly or Iqbal in its written order. By contrast, the court of appeals expressly declined to apply the more recent United States Supreme Court jurisprudence governing Fed.R.Civ.P. 12(b)(6), finding itself instead bound by the Colorado Supreme Court's existing precedent, which had heavily relied on the United States Supreme Court's earlier opinion in Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957), and particularly its language to the effect that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove " no set of facts" in support of his claim. Declining, therefore, to be influenced by the United States Supreme Court's more recent admonition to the federal courts that " a complaint must contain sufficient factual matter, accepted as true, to 'state a claim for relief that is plausible on its face,'" Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570), the court of appeals found the complaint sufficient to state a claim.

         The Colorado Supreme Court reversed the judgment of the court of appeals finding the complaint to be sufficient. Because the Colorado Supreme Court's case law interpreting the Colorado Rules of Civil Procedure in general, and C.R.C.P. 8 and 12(b)(5) in particular, reflected first and foremost a preference to maintain uniformity in the interpretation of the federal and state rules of civil procedure and a willingness to be guided by the United States Supreme Court's interpretation of corresponding federal rules whenever possible, rather than an intent to adhere to a particular federal interpretation prevalent at some fixed point in the past, the Colorado Supreme Court found that its precedent was interpreted too narrowly by the court of appeals. Because it also found that the plaintiff's complaint, when evaluated in light of the more recent and nuanced analysis of Twombly and Iqbal, failed to state a plausible claim for relief, the Colorado Supreme Court found the complaint insufficient under the Colorado Rules of Civil Procedure.

         For Petitioner: Vaughn & DeMuro, Gordon L. Vaughan, David R. DeMuro, Colorado Springs, Colorado.

         For Respondent: Clark Williams and Matsunaka, LLC, Roger E. Clark, Loveland, Colorado.

         For Amicus Curiae Colorado Civil Justice League: Davis Graham & Stubbs LLP, Jordan Lipp, Geoffrey C. Klingsporn, Denver, Colorado; Wheeler Trigg O'Donnell LLP, Terence Ridley, Evan Stephenson, Thomas Werge, Denver, Colorado.

         For Amicus Curiae Colorado Defense Lawyers Association: Jaudon & Avery LLP, Jared R. Ellis, Denver, Colorado.

         For Amicus Curiae Colorado Plaintiff Employment Lawyers Association: Lowrey Parady, LLC, Sarah J. Parady Denver, Colorado.

         For Amici Curiae The State of Colorado and Colorado Intergovernmental Risk Sharing Agency (CIRSA): Cynthia H. Coffman, Attorney General, Daniel D. Domenico, Solicitor General, Frederick R. Yarger, Assistant Solicitor General, Kathleen L. Spalding, Senior Assistant Attorney General, Matthew D. Grove, Assistant Solicitor General, Denver, Colorado; Colorado Intergovernmental Risk Sharing Agency (CIRSA), Tami A. Tanoue, General Counsel, Denver, Colorado.

         For Amicus Curiae The Colorado Trial Lawyers Association: Leventhal & Puga, P.C., Benjamin Sachs, David Mason Denver, Colorado; Holland, Holland Edwards & Grossman, PC, John R. Holland, Denver, Colorado.

         JUSTICE COATS delivered the Opinion of the Court. JUSTICE GABRIEL dissents, and JUSTICE MÁRQUEZ and JUSTICE HOOD join in the dissent.

          OPINION

         COATS, JUSTICE

          [¶1] Warne petitioned for review of the court of appeals' judgment reversing the dismissal of Hall's complaint, which asserted, as relevant here, a claim of intentional interference with contract. See Hall v. Warne, No. 12CA719 (Colo.App. Jan. 23, 2014) (not published pursuant to C.A.R. 35(f)). Although invited to apply the standard for dismissal articulated in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), and Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), the district court dismissed for failure to state a claim upon which relief could be granted without addressing either Twombly or Iqbal in its written order. By contrast, the court of appeals expressly declined to apply the more recent United States Supreme Court jurisprudence governing Fed.R.Civ.P. 12(b)(6), finding itself instead bound by this court's existing precedent, which has heavily relied on the Supreme Court's earlier opinion in Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957), and particularly its language to the effect that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove " no set of facts" in support of his claim. Declining, therefore, to be influenced by the United States Supreme Court's more recent admonition to the federal courts that " a complaint must contain sufficient factual matter, accepted as true, to 'state a claim for relief that is plausible on its face,'" Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570), the court of appeals found the complaint sufficient to state a claim.

          [¶2] Because our case law interpreting the Colorado Rules of Civil Procedure in general, and C.R.C.P. 8 and 12(b)(5) in particular, reflects first and foremost a preference to maintain uniformity in the interpretation of the federal and state rules of civil procedure and a willingness to be guided by the Supreme Court's interpretation of corresponding federal rules whenever possible, rather than an intent to adhere to a particular federal interpretation prevalent at some fixed point in the past, the court of appeals too narrowly understood our existing precedent. Because the plaintiff's complaint, when evaluated in light of the more recent and nuanced analysis of Twombly and Iqbal, fails to state a plausible claim for relief, the judgment of the court of appeals finding the complaint to be sufficient is reversed, and the matter is remanded with instruction to permit further proceedings consistent with this opinion.

         I.

          [¶3] Bill Hall filed a complaint in state district court against the Town of Gilcrest and its mayor, Menda Warne, as an individual. Hall's complaint alleged that Warne used her authority as mayor to interfere with his purchase agreement to sell a parcel of land in Gilcrest to Ensign United States Drilling, Inc., which intended, according to an attachment to the complaint, to build its headquarters on the property. Although the precise terms of the agreement were not included in the pleadings, the complaint, along with its attached exhibits, indicated that Ensign tried for more than a year to obtain approval to purchase the property and construct its headquarters in Gilcrest, but its efforts were thwarted by the town government. More specifically, the complaint alleged that Warne caused Ensign to terminate the agreement by imposing unauthorized and unreasonable conditions on its proposed site development plan, by mayoral order, after the plan had been conditionally approved by the town board at a public hearing. The complaint further alleged that Warne's actions were motivated by malice towards Hall and that the conditions imposed on Ensign's plans were " disproportionate to any impact Ensign would have on the town" and " were not based on the reasonable requirements of applicable ordinances or law." On the basis of these and similar allegations, the complaint asserted several claims for relief under state and federal law, including intentional interference with contractual obligations, taking without just compensation, and violation of substantive due process under 28 U.S.C. § 1983 (2012).

          [¶4] Because the original complaint included both state and federal claims, the case was removed to federal district court pursuant to 28 U.S.C. § 1441 (2012). Upon removal, Warne and the town filed a motion to dismiss for failure to state a claim for relief under Fed.R.Civ.P. 12(b)(6). Before briefing was complete, the federal district court accepted a stipulation by the parties whereby the federal law claims would be voluntarily dismissed by Hall and the case would be remanded to state district court for resolution of the state law claim for intentional interference with contractual obligations against Warne. [1]

          [¶5] On remand to the state district court, the motion to dismiss under Fed.R.Civ.P. 12(b)(6) was converted into a motion to dismiss under the corresponding, though differently-numbered state rule, C.R.C.P. 12(b)(5). In subsequent briefing, Warne and the town urged the district court to review the motion to dismiss according to the " plausible on its face" standard recently articulated by the United States Supreme Court in Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), and Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), rather than the so-called " no set of facts" standard from Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957), cited favorably by this court in the past. Without expressly distinguishing the Conley from the Twombly/Iqbal standard of review, the district court granted the defendants' motion to dismiss, finding that the complaint contained insufficient allegations that Warne in fact caused the conditions to be imposed on Ensign's proposed development plan that ultimately led Ensign to terminate its contract with Hall.

          [¶6] The plaintiff was granted leave to file an amended complaint, which he did, to include additional allegations that he had been informed that Warne exercised control over land development matters and would have used any means at her disposal to ensure that Ensign would never meet the requirements necessary to build, regardless of what had been approved by the town board. The defendants renewed their motion to dismiss for failure to state a claim, which the district court again granted, finding that while the amended complaint provided additional allegations supporting a conclusion that Warne possessed the authority and intent to block Ensign's development plan, it lacked allegations of Warne's specific conduct causing Ensign's breach. Subsequently, the district court also awarded attorney fees in favor of the defendants.

          [¶7] On Hall's appeal of the dismissal of his claim for contractual interference, the court of appeals reversed, finding itself bound by this court's precedent relying on Conley's " no set of facts" standard and, therefore, rejecting Warne's proposal to examine the complaint under the Twombly/Iqbal " plausible on its face" standard. Under the Conley standard, the court of appeals concluded that the complaint sufficed to state a claim for relief and, more specifically, that Hall's allegations to the effect that Warne possessed the authority and intent to block Ensign's development plan and that she had exercised that authority to impose conditions despite the town board's prior approval of Ensign's plan sufficiently pled that Warne caused Ensign to terminate its contract with Hall. The court of appeals therefore also reversed the district court's award of attorney fees.

          [¶8] Warne petitioned this court for further review by writ of certiorari.

         II.

          [¶9] in Bell Atlantic Corp. v. Twombly, in addressing the proper standard for pleading an antitrust conspiracy through allegations of parallel conduct, the United States Supreme Court explicated the pleading standard of Federal Rule of Civil Procedure 8 in greater detail than it had done in at least a half-century, giving particular emphasis to the " plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief.'" 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (quoting Fed.R.Civ.P. 8(a)(2)). In that context, the Court stated that the factual allegations of the complaint must be enough to raise a right to relief " above the speculative level," id., and provide " plausible grounds to infer an agreement," id. at 556. Had there been any doubt, two years later, in Ashcroft v. Iqbal, the Court made clear that Twombly's " plausibility standard" was in no way limited to the antitrust conspiracy context in which it had been articulated, but rather represented a " construction of Rule 8," Iqbal, 556 U.S. 662, 678-80, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), which governs the pleading standard " in all civil actions and proceedings in the United States district courts," id. at 684. Quoting liberally from its earlier opinion in Twombly, the Court in Iqbal characterized that standard as being underlain by two working principles: First, " the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions," id. at 678, and second, " only a complaint that states a plausible claim for relief survives a motion to dismiss," id. at 679.

          [¶10] The Court derived its " plausibility standard" from Rule 8 as it then existed, without feeling compelled to either amend the language of the rule or overturn any of the Court's prior interpretations, Twombly, 550 U.S. at 569 n.14, instead characterizing the Twombly plaintiffs' main argument against this interpretation as its " ostensible conflict" with an isolated statement in the Court's earlier construction in Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957), Twombly, 550 U.S. at 560-61. As the Court explained, when it spoke (some fifty years earlier in Conley) not only of the need for fair notice of the grounds for entitlement to relief, but also of " the accepted rule that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief," id. at 561 (quoting Conley, 355 U.S. at 45-46), the " accepted rule" to which it referred was a rule that " once a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint," id. at 563. While the Court openly conceded that the " no set of facts" passage of Conley could be read in isolation as saying that any statement revealing the theory of the claim would suffice unless its factual impossibility could be shown from the face of the pleadings, and that many courts had understood it precisely that way, id. at 561, in context, Conley " described the breadth of opportunity to prove what an adequate complaint claims, not the minimum standard of adequate pleading to govern a complaint's survival," id. at 563.

          [¶11] Like many federal courts and other state courts, this court took Conley's " no set of facts" language, at least ostensibly, at face value. As the court of appeals rightly noted, this court has a long, and continuous, tradition of repeating, in reliance on Conley, that motions for dismissal are looked upon with disfavor and will be granted only if it appears beyond doubt that the plaintiff can prove no set of facts in support of a claim that would entitle the plaintiff to relief. See, e.g., Qwest Corp. v. Colo. Div. of Prop. Taxation, 2013 CO 39, ¶ 12, 304 P.3d 217, 221; Sprott v. Roberts, 154 Colo. 252, 390 P.2d 465, 467 (Colo. 1964) (quoting Conley's " no set of facts" passage for the first time in a concurring opinion, while noting that " [t]his expresses the recognized way to test the sufficiency of a claim, and it has been applied in a legion of cases in the lower federal courts" ). In fact, our reliance on the federal courts for our interpretation of the pleading standards of our own Rule 8 can be traced back even before Conley, virtually to the initial replacement of our former Code of Civil Procedure by the modern Rules of Civil Procedure. See People ex rel. Bauer v. McCloskey, 112 Colo. 488, 150 P.2d 861, 863 (Colo. 1944) (citing Eberle v. Sinclair Prairie Oil Co., 35 F.Supp. 296, 297 (E.D. Okla. 1940), aff'd, 120 F.2d 746 (10th Cir. 1941); Sparks v. England, 113 F.2d 579, 582 (8th Cir. 1940); Leimer v. State Mut. Life Assurance Co. of Worcester, Mass., 108 F.2d 302, 306 (8th Cir. 1940) (subsequently relied on by Conley, 355 U.S. at 45-46 n.5, for its characterization of the " accepted rule" )).

          [¶12] The question before us today is therefore less one of whether we will abandon the Conley pleading standard in favor of the Twombly/Iqbal standard than whether our pleading standard has always represented an attempt to mirror the accepted federal construction of the virtually identical federal pleading rules, rather than to adopt the particular interpretation of the corresponding federal rule that was prevalent at the time. For a number of reasons, in the absence of some compelling justification unique to the history or practice of this jurisdiction, we have always considered it preferable to interpret our own rules of civil procedure harmoniously with our understanding of similarly worded federal rules of practice. See Leaffer v. Zarlengo, 44 P.3d 1072, 1080 (Colo. 2002) (federal cases interpreting federal rules provide " highly persuasive guidance" when interpreting identical state rules); Faris v. Rothenberg, 648 P.2d 1089, 1091 n.1 (Colo. 1982). We see no reason to abandon that philosophy or approach today.

          [¶13] As a general matter, except as required by the Supremacy Clause of the Federal Constitution, we are clearly not bound to accept the United States Supreme Court's understanding of language susceptible of more than one reasonable interpretation, and for various reasons we have, on occasion, deviated in our construction of similarly worded constitutional provisions, statutes, and rules. However, quite apart from the fact that a considered interpretation by the Supreme Court, applying rules of construction equally acceptable in this jurisdiction, will virtually always be worthy of serious consideration, as we have previously observed, simply disagreeing with the Supreme Court about the meaning of the same or similar provisions appearing in both federal and state law risks undermining confidence in the judicial process and the objective interpretation of codified law. See Curious Theatre Co. v. Colo. Dep't of Pub. Health & Env't, 220 P.3d 544, 551 (Colo. 2009). This concern is only heightened when the disagreement in question reflects our resistance to the Supreme Court's determination that our understanding of one of its prior pronouncements has in fact been mistaken. Cf. Ingold v. AIMCO/Bluffs, L.L.C. Apartments, 159 P.3d 116, 123-25 (Colo. 2007) (overturning prior decision relying on federal caselaw subsequently repudiated by the United States Supreme Court).

          [¶14] In light of our unequivocal statements of attribution in the past, we think it disingenuous to suggest that our understanding of the pleading requirements of our own rules was not directly borrowed from the prevailing interpretation of the corresponding federal rules, by both the lower federal courts and ultimately the Supreme Court itself. Of course, were we to conclude that our reliance on this federal interpretation had become so much a part of the fabric of state practice that the benefit of retaining it unaltered would outweigh the benefits of harmonizing the construction of identical federal and state rules of civil procedure, we could avoid the tension created by disparate interpretations of identical rules by simply amending our rule to expressly codify a " no set of facts" standard. We do not, however, find that to be the case.

          [¶15] The desirability and importance of procedural uniformity in our unique, federal form of government has been a critical factor not only in the development of federal rules capable of serving as a model for the states, but also for our own decision to adopt a version of the federal rules and construe them accordingly. It cannot seriously be disputed that the Colorado Rules of Civil Procedure were modeled almost entirely after the corresponding federal rules, with the principal goal of establishing uniformity between state and federal judicial proceedings in this jurisdiction. See C.R.C.P. app. D at 427, Colo. Stat. Ann. vol. 1 (Supp. 1941) (" With the hope that procedure might be adopted in Colorado following as far as practicable the new federal rules, so that a Colorado lawyer would be equally at home in the courts of the United States and those of Colorado, the Colorado Bar Association in September, 1938, authorized the appointment of a Committee to effectuate that reform." ); see also Thomas Keely, How Colorado Conformed State to Federal Civil Procedure, 16 F.R.D. 291 (1954) (authored by the Chairman of the Colorado Supreme Court Rules Committee).

          [¶16] Far from a novel concept, the prevailing policy in this country has been to favor procedural uniformity between state and federal court practice virtually since the founding of our Union. Beginning with its adoption of the so-called " Conformity Act" in 1789, Congress required lower federal courts to largely apply the procedural law of the state in which they were located. Act of Sept. 29, 1789, ch. 21, § 2, 1 Stat. 93, 93; see also 4 Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 1002 (3d ed. 2002) (titled, " History of Federal Procedure Under Statute" ). While the Conformity Act's localized approach to federal procedure ultimately proved problematic, it was replaced by the Federal Rules of Civil Procedure, which were intended to facilitate state-federal uniformity by serving as a singular, authoritative model for states to follow. See Report of the Committee on Judicial Administration and Remedial Procedure, reprinted in Report of the Thirty-Fifth Annual Meeting of the American Bar Association at 434-35 (1912) (resolving to adopt rules of civil procedure for use in federal courts and " as a model" ); see also Edson R. Sunderland, The Grant of Rule-Making Power to the Supreme Court of the United States, 32 Mich. L.Rev. 1116, 1122 (1934) (authored by one of the eventual drafters of the Federal Rules) (" [T]he primary purpose [of the Federal Rules project] . . . was the attainment of local uniformity in trial court practice between the state and federal courts." ).

          [¶17] Beyond the convenience and practical benefits of permitting practicing attorneys to move effortlessly from one forum to another, both this court and the Supreme Court have long emphasized the undesirability of having vastly different outcomes result from nothing more than a choice of forums. See, e.g., Erie R. Co. v. Tompkins, 304 U.S. 64, 77-78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938); AE, Inc. v. Goodyear Tire & Rubber Co., 168 P.3d 507, 511 (Colo. 2007) (" Colorado's policy is to discourage . . . forum shopping." ). While state courts are generally free to adopt procedural rules different from those governing federal proceedings, but see Brown v. W. Ry. of Ala., 338 U.S. 294, 298, 70 S.Ct. 105, 94 L.Ed. 100 (1949) (state court not permitted to dismiss federal law claim under strict local rule of pleading), the more outcome-determinative any specific disparity between state and federal rules may be, the more undesirable that disparity becomes. In this respect, there can be little question that the difference between a rule of pleading that effectively permits reliance on the compulsory process available in civil actions to discover whether grounds for the action exist in the first place and another that effectively bars such reliance without being able to first allege plausible grounds for relief can be extremely outcome-determinative. One important benefit of uniformity in federal and state procedures has been and continues to be the reduction of forum shopping.

          [¶18] In addition to the clear importance we have identified in maintaining a substantial degree of procedural uniformity between state and federal practice, we also do not view the plausibility standard described by the Supreme Court as effecting a meaningful departure from the direction our interpretations and amendments have taken in light of the existing realities of modern practice. Just as the Supreme Court observed that a good many judges and commentators have balked at taking the literal terms of the Conley passage as a pleading standard, Twombly, 550 U.S. at 562-63 (citing numerous examples of Conley's " no set of facts" language being " questioned, criticized, and explained away" by judges and scholars, alike), we have at times found it problematic to accept factual allegations that appear too conclusory, and on at least one occasion have, without openly criticizing the " no set of facts" standard, simply found a complaint insufficient to state a claim, for the reason that it merely asserted a theory without alleging facts which, if proved, would satisfy the elements of the claim, see Denver Post Corp. v. Ritter,255 P.3d 1083, 1088 (Colo. 2011) (favorably citing Western Innovations, Inc. v. Sonitrol Corp.,187 P.3d 1155, 1158 (Colo.App. 2008) (itself relying on Twombly, 550 U.S. at 555-56)); see also Pub. Serv. Co. of ...


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