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Bell v. Land Title Guarantee Co.

Court of Appeals of Colorado, Second Division

May 17, 2018

Charles C. Bell and Shirley M. Bell, Plaintiffs-Appellants,
v.
Land Title Guarantee Company, Orr Land Company LLC, and Tammy Ellerman, Defendants-Appellees.

          Weld County District Court No. 16CV30498 Honorable Todd L. Taylor, Judge.

          Poulson, Odell & Peterson, LLC, Nick A. Swartzendruber, Aaron G. Norris, Denver, Colorado, for Plaintiffs-Appellants

          Frascona, Joiner, Goodman and Greenstein, PC, Britney D. Beall-Eder, Cinthia Manzano, Boulder, Colorado; Robinson Waters & O'Dorisio, PC, Stephen L. Waters, Kimberly A. Bruetsch, Denver, Colorado, for Defendants-Appellees

          OPINION

          HAWTHORNE, JUDGE.

         ¶ 1 We all know that we should read carefully and understand any important document before we sign it. In fact, a principle of contract law says that anyone who signs a document is presumed to know its contents. We also know generally that if we have a legal claim arising from a document we've signed, we must file that claim in court within a certain time or our claim may be barred by a statute of limitations. And as to when that time starts to run, another principle of law codified by a Colorado statute says it starts on the date when both the claimant's injury and its cause are known or should have been known by the exercise of reasonable diligence.

         ¶ 2 This case poses a question arising from the intersection of these two legal principles: Does the presumed-to-know-what-you-signed principle conclusively establish, as a matter of law, that the statute of limitations for a claim against a third person who prepared the document begins to run on the date the claimant signed it? We conclude that it doesn't. So we reverse the district court's order dismissing negligence and breach of contract claims brought by plaintiffs, Charles C. Bell and Shirley M. Bell, against defendants, Land Title Guarantee Company (Land Title), Orr Land Company LLC (Orr), and Tammy Ellerman.

         I. Facts and Procedural Background

         ¶ 3 The Bells hired Orr and its employee Ellerman to represent them in selling their real property. Orr found a buyer, [1] and the Bells entered into a buy and sell contract with the buyer, which provided - as pertinent here - that the sale excluded all oil, gas, and mineral rights in the property. Orr then retained Land Title to draft closing documents, including the warranty deed. On May 31, 2005, the Bells signed the warranty deed and sold the property to the buyer.

         ¶ 4 The Bells didn't know that the warranty deed prepared by Land Title didn't contain any language reserving the Bells' mineral rights as provided in the buy and sell contract. But, for over nine years, the Bells continued to receive the mineral owner's royalty payments due under an oil and gas lease on the property. In September 2014, the lessee oil and gas company learned that the Bells hadn't owned the mineral rights to the property since closing on the buy and sell contract in May 2005. So, it began sending the mineral owner's royalty payments to the buyer. After that, the Bells discovered that the warranty deed they had signed over nine years earlier didn't reserve their mineral rights as provided in the buy and sell contract.

         ¶ 5 In May 2016, the Bells filed this negligence and breach of contract action against defendants. Defendants filed motions to dismiss under C.R.C.P. 12(b)(5), arguing that the Bells' claims were untimely because the statute of limitations had run.

         ¶ 6 The district court agreed and granted defendants' motions to dismiss. The court reasoned that the Bells' complaint showed that they had signed the deed in 2005 (eleven years before filing suit) and, because they were charged with knowing the contents of the document they signed, they should have discovered when they signed the deed that it failed to reserve their mineral rights.

         II. Statute of Limitations

         ¶ 7 The Bells contend that the court erred in granting defendants' motions to dismiss because they sufficiently alleged facts that, if true, establish that the statute of limitations didn't begin to accrue on their claims until the oil and gas company ceased payment in September 2014, which is when they ...


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