United States District Court, D. Colorado
REPORT AND RECOMMENDATION ON DEFENDANT'S MOTION
TO DISMISS (DOCKET NO. 35)
Michael J. Watanabe United States Magistrate Judge.
case is before the Court pursuant to an Order (Docket No. 39)
referring the subject motion (Docket No. 35) issued by Judge
Christine M. Arguello. Now before the Court is Defendants
Mervin J. Flood and Susan S. Flood's (collectively
“Defendants”) Motion to Dismiss Plaintiffs'
Amended Complaint. (Docket No. 35.) The Court has carefully
considered the motion, Plaintiffs Steven Hardy and Jody
Whitson-Hardy's (collectively “Plaintiffs”)
response (Docket No. 37), and Defendants' reply. (Docket
No. 42.) The Court has taken judicial notice of the
Court's file and has considered the applicable Federal
Rules of Civil Procedure and case law. The Court now being
fully informed makes the following findings of fact,
conclusions of law, and recommendation.
following allegations are taken from the Amended Complaint
(Docket No. 32), and described in the light most favorable to
Plaintiffs. Plaintiffs purchased certain real property from
Defendants pursuant to a written Contract to Buy and Sell
Real Estate (the “Contract”). Plaintiffs allege
that prior to closing, Defendants made material and false
written and oral representations as to the condition of the
property. These representations related to, among other
things, whether the property had moisture or water problems
and whether improvements to the property were properly
permitted and complied with governmental building code
requirements. Plaintiffs assert claims for breach of
contract, fraud, and negligent misrepresentation. Plaintiffs
request an award of punitive and exemplary damages, in
addition to the actual damages incurred as a result of
Rule 12(b)(6), “[d]ismissal is appropriate only if the
complaint, viewed in the light most favorable to plaintiff,
lacks enough facts to state a claim to relief that is
plausible on its face.” United States ex rel.
Conner v. Salina Regional Health Center, 543 F.3d 1211,
1217 (10th Cir. 2008) (quotation omitted). A claim is
plausible on its face “when the plaintiff pleads
factual content that enables the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (citing Bell Atlantic Corp. v. Twombly, 550
U.S. 544, 556 (2007)). “The plausibility standard is
not akin to a ‘probability requirement, ' but it
asks for more than a sheer possibility that a defendant has
acted unlawfully.” Id.
Plaintiffs need not provide “detailed factual
allegations” to survive a motion to dismiss, they must
provide more than “labels and conclusions” or
“a formulaic recitation of the elements of a cause of
action.” Twombly, 550 U.S. at 555; see
also Ashcroft, 556 U.S. at 678 (explaining that
a complaint will not suffice if it offers “naked
assertions devoid of further factual enhancement”
(quotations and alterations omitted)). Furthermore,
conclusory allegations are “not entitled to be assumed
true.” Ashcroft, 556 U.S. at 679.
may not dismiss a complaint merely because it appears
unlikely or improbable that a plaintiff can prove the facts
alleged or ultimately prevail on the merits.
Twombly, 550 U.S. at 556. Instead, a court must ask
whether the facts alleged raise a reasonable expectation that
discovery will reveal evidence of the necessary elements.
Id. If, in view of the facts alleged, it can be
reasonably conceived that the plaintiff could establish a
case that would entitle him to relief, the motion to dismiss
should not be granted. Id. at 563 n.8.
a motion to dismiss is a “harsh remedy” that
should be “cautiously studied” to
“effectuate the liberal rules of pleading” and
“protect the interests of justice.” Dias v.
City & Cty. of Denver, 567 F.3d 1169, 1178 (10th
Cir. 2009) (quotations omitted).
move to dismiss Plaintiffs' Amended Complaint on five
grounds. First, they argue that Plaintiffs' claims are
barred by the statute of limitations. Second, they assert
that Plaintiffs' fraud and negligent misrepresentation
claims fail because there is no proof of reasonable or
justifiable reliance. Third, Defendants state that
Plaintiffs' Amended Complaint is wholly conclusory in
nature. Fourth, Defendants argue their alleged failure to
disclose whether improvements to the property were done
pursuant to a permit is not material, and therefore not
actionable. Finally, Defendants argue that the breach of
contract claim fails as a matter of law because Plaintiffs
cannot show that Defendants failed to perform under the
contract. The Court will address each in turn.
Statute of Limitations
parties do not appear to dispute that Colorado law applies to
Plaintiffs' claims. The Colorado statute of limitations
for breach of contract and fraud, misrepresentation,
concealment, or deceit actions is three years from the date
of accrual. Colo. Rev. Stat. § 13-80-101(1)(a) and
A breach of contract claim in Colorado “accrue[s] on
the date the breach is discovered or should have been
discovered by the exercise of reasonable diligence.”
Id. § 13-80-108(6). Similarly, a fraud,
misrepresentation, concealment, or deceit cause of action is
“considered to accrue on the date such fraud,
misrepresentation, concealment, or deceit is discovered or
should have been discovered by the exercise of reasonable
diligence.” Id. § 13-80-108(3).
argue that Plaintiffs' claims are barred by the statute
of limitations because the Contract was entered into on April
27, 2013, but Plaintiffs did not file suit until December 28,
2016, more than three years later. Plaintiffs respond that
the underlying Contract is beyond the scope of the pleadings
and therefore the Court cannot consider it. They also claim
that the Contract is irrelevant to calculating when the
statute of ...