Falcon Broadband, Inc., a Colorado corporation, Plaintiff-Appellant and Cross-Appellee,
Banning Lewis Ranch Metropolitan District No. 1; Oakwood Homes, LLC; Chad M. Ellington; Charles P. Leder; Jeffrey P. Carlson; Mike Tinlin; William Ritchie; Bruce Rau; MREC Oakwood Colorado Ranch, LLC; MREC Oakwood Colorado Investments, LLC; MREC Colorado Land Investments, LLC; MREC Oakwood Colorado IV-VI, LLC; and MREC Oakwood Colorado, LLC, Defendants-Appellees and Cross-Appellants.
Paso County District Court No. 16CV30823 Honorable Thomas K.
Rodriguez, Ostrander & Dingess, P.C., Donald M.
Ostrander, Stephanie M. Ceccato, Paul Rufien, Denver,
Colorado, for Plaintiff-Appellant and Cross-Appellee
Vaughan & DeMuro, Gordon L. Vaughan, Ann B. Smith,
Colorado Springs, Colorado; Spencer Fane, LLP, Jamie N.
Cotter, Jacob F. Hollars, Denver, Colorado; Gordon & Rees
LLP, John R. Mann, Edward J. Hafer, John D. Keen, Denver,
Colorado, for Defendants-Appellees and Cross-Appellants
1 In 2007, Falcon Broadband, Inc. (Falcon), signed a contract
- called the Bulk Services Agreement (BSA) - with Banning
Lewis Ranch Metropolitan District No. 1 (the District) to
provide internet and cable services to the residents of the
Banning Lewis Ranch area. Five years later, Falcon sued the
District, Oakwood Homes, LLC (the developer), several of
Oakwood Homes' sister companies (we refer collectively to
all of the related Oakwood entities as Oakwood),
a number of individuals who are affiliated with Oakwood and
serve as directors on the District's board (Directors)
after the District disavowed the BSA. On motions from all
defendants, the district court dismissed Falcon's
complaint in part as barred by the Colorado Governmental
Immunity Act (CGIA), sections 24-10-101 to -120, C.R.S. 2017,
and granted summary judgment in defendants' favor on the
remaining claims not subject to dismissal under the CGIA.
2 Falcon appeals the judgment. The District and the Directors
cross-appeal the district court's denial of their
requests for attorney fees. Though we conclude that the
district court incorrectly applied the CGIA in certain
respects, we ultimately affirm the judgment in favor of all
defendants in all respects except one; we reverse the
judgment for Oakwood on the unjust enrichment claim and
remand for further proceedings on that claim. We also affirm
the district court's denial of the District's
requests for attorney fees. But we reverse the district
court's denial of the Directors' request for attorney
fees and remand for a determination of the Directors'
reasonable attorney fees incurred in the district court and
3 Under the BSA, the District granted Falcon the exclusive
right to provide internet and cable services to residents of
Banning Lewis Ranch in exchange for a monthly per resident
fee. The BSA doesn't have a definite duration, but says
that it remains in effect until 2, 700 homes in the
development are occupied. That hasn't yet occurred.
4 After the original developers of Banning Lewis Ranch went
bankrupt, Oakwood acquired the property in 2012, appointed a
new slate to the District's board of directors (all of
whom have some association with Oakwood), and decided it
wasn't happy with the BSA. The parties tried to negotiate
modifications to the BSA, without success. So the District,
saying that the BSA was invalid, stopped paying Falcon and
stopped collecting fees from residents.
5 In its amended complaint, Falcon asserts a total of seven
claims against defendants. Against the District, Falcon
asserts claims for (1) breach of contract; (2) breach of the
implied covenant of good faith and fair dealing; (3)
promissory estoppel; (4) unjust enrichment; (5) civil
conspiracy; and (6) declaratory judgment.Against Oakwood,
Falcon asserts claims for (1) unjust enrichment; (2) tortious
interference with contract; (3) civil conspiracy; and (4)
declaratory judgment. Finally, against the Directors, Falcon
asserts claims for (1) tortious interference with contract
and (2) civil conspiracy.
6 Defendants sought dismissal under the CGIA and summary
judgment under several theories. After an evidentiary hearing
pursuant to Trinity Broadcasting of Denver, Inc. v. City
of Westminster, 848 P.2d 916 (Colo. 1993), to determine
the court's subject matter jurisdiction under the CGIA,
the district court granted defendants'
motions. Ruling that the CGIA bars the promissory
estoppel, unjust enrichment, and civil conspiracy claims
asserted against the District, the district court dismissed
them "against all defendants." The court then
determined that the BSA is void and unenforceable for several
reasons, and on that basis it entered summary judgment in all
defendants' favor. But the court denied the
District's and the Directors' requests for attorney
7 Falcon contends that the district court erred in its
application of the CGIA, and in granting summary judgment. We
conclude that the court erred in applying the CGIA, in
part. But we agree with the district court that
the BSA is void. And since the majority of Falcon's
claims are premised on the BSA's validity, summary
judgment is appropriate for all but one of Falcon's
claims. That one claim is Falcon's claim for unjust
enrichment against Oakwood.
8 Because of its jurisdictional implications, we first
address whether the CGIA bars any of Falcon's claims
against the District, Oakwood, or the Directors.
9 Falcon argues that the district court erred by dismissing
its promissory estoppel and unjust enrichment claims against
the District based on governmental immunity because those
claims are contract claims, not tort claims. It also argues
that the district court erred by dismissing its claims
against Oakwood based on governmental immunity, in part for
the same reason but also because the Oakwood entities are
private, not public. The Directors argue that the court
should've dismissed both of Falcon's claims against
them - for tortious interference and civil conspiracy - under
the CGIA because the Directors are public employees within
the meaning of the CGIA. We agree with all three arguments.
10 The CGIA provides that "public entit[ies] shall be
immune from liability in all claims for injury which lie in
tort or could lie in tort" unless immunity has been
expressly waived. § 24-10-106(1), C.R.S. 2017. It also
immunizes public employees from tort claims so long as they
acted within the scope of their employment. §
24-10-118(2)(a), C.R.S. 2017. A "public employee"
is "an officer, employee, servant, or authorized
volunteer of the public entity, whether or not compensated,
elected, or appointed." § 24-10-103(4)(a), C.R.S.
2017. A court lacks jurisdiction to adjudicate tort claims
against an entity or employee protected by the CGIA.
Springer v. City & Cty. of Denver, 13 P.3d 794,
798 (Colo. 2000).
11 Where the facts are undisputed and the issue is one of
law, we review a district court's application of the CGIA
de novo. Ceja v. Lemire, 154 P.3d 1064, 1065 (Colo.
12 It's undisputed that the District is a public entity
within the meaning and protection of the CGIA. So the
district court properly dismissed the civil conspiracy claim
against the District because that claim is undeniably a tort
claim. See Resolution Tr. Corp. v.
Heiserman, 898 P.2d 1049, 1056 (Colo. 1995);
Double Oak Constr., L.L.C. v. Cornerstone Dev.
Int'l, L.L.C., 97 P.3d 140, 148-49 (Colo.App. 2003).
13 But we agree with Falcon that the court improperly
dismissed its unjust enrichment and promissory estoppel
claims as sounding in tort. Governmental immunity doesn't
apply to actions "grounded in contracts." Berg
v. State Bd. of Agric., 919 P.2d 254, 258 (Colo. 1996).
"The essential difference between a tort obligation and
a contract obligation is the source of the parties'
duties." Carothers v. Archuleta Cty.
Sheriff, 159 P.3d 647, 655 (Colo.App. 2006).
"Contract obligations arise from promises made between
parties," whereas "[t]ort obligations generally
arise from duties imposed by law, and tortious conduct is a
breach of a duty imposed by law, not by contract."
Id. at 655-56. We apply a "case by case
analysis" to determine whether the claims in this case
could sound in tort. See Berg, 919 P.2d at 259.
14 Promissory estoppel "involves a promise by a
government agency or official." Allen Homesite Grp.
v. Colo. Water Quality Control Comm'n, 19 P.3d 32,
35 (Colo.App. 2000). The supreme court has recognized that
"promissory estoppel is a distinct contract claim,"
so the CGIA doesn't bar such a claim when the plaintiff
pleads the claim in terms of a promise that the governmental
entity failed to fulfill. Berg, 919 P.2d at 259.
15 "Unjust enrichment is a form of quasi-contract or
contract implied in law" that "can be predicated on
either tort or contract law." Robinson v. Colo.
State Lottery Div., 179 P.3d 998, 1007 (Colo. 2008). To
determine which is the predicate in a given case, a court
must assess "the nature of the injury and the relief
16 In support of its promissory estoppel claim, Falcon
alleges that "[t]hrough negotiation of the [BSA] and as
reflected in the [BSA], [the] District promised Falcon that
it would [perform as agreed in the BSA]" and that Falcon
reasonably relied on that promise to its detriment.
Similarly, Falcon alleges in support of its unjust enrichment
claim that the District unjustly benefited from the BSA.
17 The District argues that these claims are based on its
allegedly fraudulent - that is, tortious - actions. But
neither claim is based on an alleged misrepresentation or
duty independent of the BSA; rather, the source of both
claims is the BSA. Indeed, both are essentially asserted in
the alternative in the event the BSA is declared invalid. And
the type of relief Falcon seeks is enforcement of contractual
promises through the quasi-contractual theory of promissory
estoppel and the restitution theory of unjust enrichment.
Thus, these claims sound firmly in contract. Cf.
Robinson, 179 P.3d at 1005 (claims brought based on
allegations that the Colorado State Lottery Division
misrepresented the possibility of winning the lottery were
tort claims); CAMAS Colo., Inc. v. Bd. of Cty.
Comm'rs, 36 P.3d 135, 139 (Colo.App. 2001)
(contractor's claim for quantum meruit sounded in
contract while claims for fraud, negligent misrepresentation,
and interference with future contracts sounded in tort);
Lehman v. City of Louisville, 857 P.2d 455, 457
(Colo.App. 1992) (equitable estoppel claim sounded in tort
because it was based on a misrepresentation).
18 We therefore conclude that the CGIA doesn't bar either
of these claims. But, as discussed below, the District is
entitled to judgment anyway.
19 All the Oakwood entities are private associations; none is
a public entity. The district court therefore erred in
dismissing some of Falcon's claims against Oakwood under
the CGIA. § 24-10-103(5) (defining a "[p]ublic
entity" for purposes of the CGIA); § 24-10-106(1)
("[a] public entity shall be immune from
liability"); see also Podboy v. Fraternal Order of
Police, 94 P.3d 1226, 1229 (Colo.App. 2004) (employee
union wasn't a public entity and therefore wasn't
entitled to the protection of the CGIA).
20 As noted, Falcon asserts two claims against the Directors
- tortious interference and civil conspiracy - both of which
are clearly tort claims. And, as officers of the District,
the Directors are public employees for purposes of the CGIA.
See Tallman Gulch Metro. Dist. v. Natureview Dev.,
LLC, 2017 COA 69, ¶ 17.
21 Nonetheless, Falcon argues that it has sued the Directors
in their private capacities as agents of Oakwood rather than
as directors of the District. We therefore look at the totality
of the circumstances to decide whether the acts in question
were "necessarily incidental to [public]
employment." First Nat'l Bank of Durango v.
Lyons, 2015 COA 19, ¶ 47 (quoting Gallagher v.
Bd. of Trs. for Univ. of N. Colo., 18 P.3d 837, 843
(Colo.App. 2002)). This determination turns on whether the
acts bear a relationship to the business or are customary in
the business. Id.
22 We don't see any evidence in the record to support
Falcon's argument that it has sued the Directors in their
private capacities. Falcon characterizes the Directors as
"individuals who have been elected or appointed to serve
or have served on the Board of Directors of the District and
who are or have been employees, agents or representatives of
Oakwood." But in the Trinity hearing,
Falcon's president, Randy DeYoung, testified that Falcon
is suing the Directors because they're on the
District's board of directors. And Falcon's amended
complaint similarly emphasizes the individuals' positions
as board members. Falcon alleges that the District,
"acting through its Board of Directors," breached
the BSA, and that "Oakwood met with the District,
through the [Directors]." According to Falcon, Oakwood
told the Directors what to do. But Falcon doesn't allege
that the Directors did anything outside the scope of their
roles as District directors or otherwise acted as private
23 In short, Falcon sued the Directors because they, as
District directors, decided to stop honoring the BSA; it
didn't allege, much less present any evidence at the
Trinity hearing indicating, that the Directors, as
private individuals, caused the District to stop honoring the
24 Because the Directors allegedly acted in their roles as
directors of the District, governmental immunity protects
them. It follows that the district court should've
dismissed the claims against them under C.R.C.P. 12(b)(1).
W.O. Brisben Cos. v. Krystkowiak, 66 P.3d 133, 137
(Colo.App. 2002) (where the plaintiff improperly postured his
motion to dismiss as a C.R.C.P. 12(b)(1) motion, the
reviewing court analyzed it under the proper standard without
remand), aff'd on other grounds, 90
P.3d 859 (Colo. 2004); Norsby v. Jensen, 916 P.2d
555, 559 (Colo.App. 1995) (district court improperly treated
a C.R.C.P. 12(b)(1) motion as a C.R.C.P. 12(b)(5) motion, but
reviewing court applied governing rule without remand).
Falcon's Other Contentions
25 Falcon also contends that the district court erred by
determining that the BSA is void and by entering summary
judgment on its tortious interference and civil conspiracy