United States District Court, D. Colorado
Brooke Jackson United States District Judge.
matter is before the Court on two pending motions: (1)
plaintiff LaFondFX, Inc.'s (“LFX”) Motion for
Partial Summary Judgment on Defendants' Counterclaim, ECF
No. 74; and (2) defendant Steven Kopelman's Second Motion
for Determination of Question of Law, ECF No. 75. For the
reasons below, the Court DENIES plaintiff's motion [ECF
No. 74] but GRANTS Mr. Kopelman's motion [ECF No. 75].
STANDARD OF REVIEW
Court may grant summary judgment if “there is no
genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed.R.Civ.P.
56(a). The moving party has the burden to show that there is
an absence of evidence to support the nonmoving party's
case. Celotex Corp. v. Catrett, 477 U.S. 317, 325
(1986). The nonmoving party must “designate specific
facts showing that there is a genuine issue for trial.”
Id. at 324. A fact is material “if under the
substantive law it is essential to the proper disposition of
the claim.” Adler v. Wal-Mart Stores, Inc.,
144 F.3d 664, 670 (10th Cir. 1998). A material fact is
genuine if “the evidence is such that a reasonable jury
could return a verdict for the nonmoving party.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). The Court will examine the factual record and make
reasonable inferences in the light most favorable to the
party opposing summary judgment. Concrete Works of Colo.,
Inc. v. City & Cnty. of Denver, 36 F.3d 1513, 1517
(10th Cir. 1994).
Court previously discussed the background and procedural
history of this suit in its order dated March 3, 2017.
See Order, ECF No. 89, at 1-4. With these pending
motions, filed before the Court's prior order but not
ripe until recently, both parties seek rulings in their favor
on discrete issues. First, LFX seeks a partial summary
judgment on defendants' counterclaim for breach of
contract. See ECF No. 74. Mr. Kopelman seeks a
ruling of his own that LFX's damages, should it
ultimately prevail in this breach of contract action, are
capped at $53, 029.28. See ECF No. 75. I discuss
both motions in turn and in greater detail below.
LFX's Motion for Partial Summary Judgment on
Defendants' Counterclaim for Breach of Contract [ECF No.
argues that because Mr. Kopelman terminated the parties'
contract for an alleged “defect” with the
“haunts” LFX built (i.e., an apparent failure to
apply flame retardant) and did not give plaintiff a 30-day
window to “cure” this alleged defect per Section
5.1 of the parties' Agreement, defendants are precluded
from asserting a breach of contract counterclaim.
See ECF No. 74 at 5-7; ECF No. 74-2 at 4 (the
Agreement). In response, defendants argue that LFX has waived
this “right to cure” affirmative defense by
failing to plead it. See ECF No. 88 at 2-10.
Alternatively, they argue that LFX's motion should be
denied because genuine issues of material fact exist on three
crucial issues related to plaintiff's affirmative
defense: (1) whether LFX knew about the defects with the
haunts before it shipped them to defendants; (2) whether LFX
was in fact given a reasonable opportunity to cure; and (3)
whether LFX's alleged breaches were even
“curable.” See id.at 24-27. Finding that a
fact question exists at the very least over whether
defendants provided LFX with a reasonable opportunity to
“cure” the alleged defects with the haunts, the
Court DENIES LFX's motion.
defendants point out, at the meeting when they eventually
terminated their contract with LFX, Henry Cottel, Mr.
Kopelman's partner, provided plaintiff's counsel with
an “Options” document. See ECF No. 88-8
at 2 (Options document); Dep. of Henry Cottle, ECF No. 88-7
at 19:17-25, 28:3-23. That document referenced defects
defendants found with plaintiff's work (e.g., the failure
to apply flame retardant), and likewise ostensibly detailed
several options defendants were giving plaintiff going
forward for how to deal with those issues. See ECF
No. 88-8 at 2. On its face, that document provided plaintiff
with what it now claims it was not given: notice of the
alleged defects with plaintiff's products and an
opportunity to “cure.” See Id. Indeed,
two out of the three “options” defendants
apparently gave plaintiff through that document expressly
allowed for continuation of the parties' Agreement after
LFX “fixed” the flame retardant issue. See
part, LFX denies that defendants or Mr. Cottle ever
identified the specific claimed deficiencies with
plaintiff's work. ECF No. 74 at 4 n.3. It nevertheless
argues that even if plaintiff was given this document,
defendants immediately terminated the parties' contract
which, it contends, makes that the disputed issue of whether
defendants gave plaintiff an opportunity to cure through this
“Options” document immaterial. See Id. I
the facts in a light most favor to defendants as I must do at
this point in the litigation, see, e.g., Concrete Works
of Colo., 36 F.3d at 1517, I find instead that it was
possible that plaintiff rejected reasonable opportunities
defendants gave it to cure before defendants
terminated the contract at that same meeting. See
ECF No. 88-7 at 28:3-23. Indeed, it is also possible based on
the facts the parties provide that defendants terminated the
contract because plaintiff elected the third
“option” provided for in the
“Options” document-i.e., that plaintiff would
not make use of any opportunity to cure and that the
parties would instead “let the attorneys settle the
rest.” See id.; ECF No. 88-8 at 2.
Accordingly, I disagree with plaintiff and find that a fact
question exists over plaintiff's “right to
cure” affirmative defense. Its motion for summary
judgment on defendants' counterclaim based on that
argument is accordingly DENIED.
Steven Kopelman's Second Motion for Determination of
Question of Law [ECF No. 75].
Mr. Kopelman has moved for a ruling that should plaintiff
ultimately prevail in this suit, that its damages are capped
at $53, 029.28. See ECF No. 75. As Mr. Kopelman
explains, that amount is what the parties agree is what
defendants apparently still owe plaintiff under the
parties' Agreement but which, to date, has not been paid.
See Id. at 2; Pl.'s Rule 26(a)(1) Initial
Disclosures, ECF No. 75-1, at 7. He nevertheless acknowledges
that the parties' Agreement includes what appears to be
“liquidated damages” provisions. See ECF
No. 74-2 at 3 (Sections 2.2 and 2.3). One of those provisions
provides that if Mr. Kopelman breaches the Agreement, which
is what plaintiff alleges in this suit, plaintiff is entitled
to not only the amounts it has already received prior to the
drafting of the agreement and any amounts defendants still
owed it under the remaining portions of the Agreement, but
also to ownership and possession of the haunts it constructed
for defendants. See id.
with this provision, Mr. Kopelman nevertheless contends that
plaintiff's damages must be capped at $53, 029.28 because
that provision is a “penalty” clause that is
unenforceable under Colorado law. ECF No. 75 at 10-14.
Plaintiff, by contrast, asserts that it can recover $405,
591.55 in damages, arguing that the parties' provision
should be interpreted as a “convey or pay”
clause-in other words, a specific performance provision that
provides that if defendants breach, that plaintiff can elect
to obtain either the haunts (which it values at
$405, 591.55) or defendants' remaining financial