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Hardy v. Flood

United States District Court, D. Colorado

February 2, 2018

STEVEN HARDY and JODY WHITSON-HARDY, Plaintiffs,
v.
MERVIN J. FLOOD and SUSAN S. FLOOD, Defendants.

          REPORT AND RECOMMENDATION ON DEFENDANT'S MOTION TO DISMISS (DOCKET NO. 35)

          Michael J. Watanabe United States Magistrate Judge.

         This 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.

         I. BACKGROUND

         The 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 Defendants' conduct.

         II. LEGAL STANDARD

         Under 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.

         While 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.

         A court 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.

         Granting 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).

         III. ANALYSIS

         Defendants 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.

         a. Statute of Limitations

         The 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 (c).[1] 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).

         Defendants 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 ...


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