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Tatonka Capital Corp. v. Connelly

United States District Court, D. Colorado

October 25, 2019



          Marcia S. Krieger Senior United States District Judge

         THIS MATTER comes before the Court pursuant to Mr. Connelly's Motion for Reconsideration (# 134) of certain portions of the Court's May 20, 2019 Findings of Fact and Conclusions of Law (“Findings and Conclusions”) (# 131) and Judgment (# 132), Tatonka's response (# 135), and Mr. Connelly's reply (# 136).


         The Court assumes the reader's familiarity with the Findings and Conclusions and the contents of that document are deemed incorporated herein. In summary, following a bench trial, the Court concluded that Mr. Connelly had breached contractual promises to Tatonka to personally guarantee certain loans that Tatonka made to Mosaica Education (“Mosaica”), upon which Mosaica eventually defaulted. Mr. Connelly tendered affirmative defenses seeking reformation of the guarantees, arguing that either Tatonka shared his mistaken understanding that the guarantees would only secure certain short-term loans that Mosaica eventually repaid (i.e. a defense of mutual mistake) or that Tatonka was aware of Mr. Connelly's mistaken understanding of the guarantees but that Tatonka purposefully remained silent and allowed Mr. Connelly to act in reliance upon that mistaken understanding (i.e. a defense of unilateral mistake). The Court rejected Mr. Connell's mutual mistake defense, finding that Mr. Connelly had not shown that decision-making officials at Tatonka shared his mistaken understanding of the guarantees, and rejected his defense of unilateral mistake because Mr. Connelly had not shown that he would not have entered into the guarantees if Tatonka had disclosed its contrary understanding of their effect. Accordingly, the Court entered judgment in favor of Tatonka for breach of contract on all of the guarantees, awarding it roughly $8 million in principal and interest.

         Mr. Connelly now moves (# 134) for reconsideration of the Court's findings and conclusions. Mr. Connelly argues: (i) that Tatonka failed to prove that it accepted Mr. Connelly's guarantees because it failed to countersign those guarantees, thus reflecting its acceptance of his offer, and that the Court erred in relying upon a provision in the guarantees that the failure of Tatonka to sign the guarantees would not affect their validity; (ii) that Tatonka had failed to prove that Mosaica remained indebted to Tatonka under the “Revolver” agreement that Mr. Connelly's guarantees secured; and (iii) that the Court erred in requiring Mr. Connelly to prove that he would not have entered into the guarantees if Tatonka had promptly disclosed its understanding of their effect. Mr. Connelly also tenders his own affidavit, which both amplifies the arguments in his motion and supplies additional factual evidence that was not tendered during the bench trial. Mr. Connelly's affidavit also adds an additional argument not present in his memorandum of law: that the Court erred in calculating pre-judgment interest.


         A. Standard of review

         Mr. Connelly's motion was filed within 28 days from entry of judgment, allowing it to be construed pursuant to Fed.R.Civ.P. 59(e). Such a motion is appropriate to address an intervening change in the controlling law, the discovery of new evidence that was previously unavailable, or the need to correct clear error or to prevent manifest injustice. Pack v. Hickey, 776 Fed.Appx. 549, 557 (10th Cir. 2019). In this latter category, such a motion is appropriate where the Court has “misapprehended the facts, a party's position, or the controlling law.” Id. A Rule 59(e) motion is not “the appropriate vehicle in which to advance for the first time arguments that could have been raised earlier in the proceedings.” Eaton v. Pacheco, 931 F.3d 1009, 1028 (10th Cir. 2019).

         With these standards in mind, the Court declines to entertain any facts raised for the first time in Mr. Connelly's tendered affidavit. Mr. Connelly had a full and fair opportunity to present all pertinent evidence at the time of trial. Nothing in his motion or the material itself indicates that the facts in question are newly-discovered since the time of trial, nor that their relevance to the issues before the Court at the time of trial could not have been anticipated. As such, the Court entertains Mr. Connelly's affidavit only to the extent that affidavit supplements or amplifies the arguments made in his motion based on the factual record that existed at the close of trial.

         B. Proof of acceptance

         Mr. Connelly argues that the Court erred in finding that Tatonka accepted Mr. Connelly's offer of the guarantees because Tatonka never produced a version of the guarantees bearing its own countersignature. The Court's Findings and Conclusions addressed this issue in a footnote, noting that the terms of the guarantees signed by Mr. Connelly contain language providing that the effectiveness of the guarantees was not conditioned upon “deliver[y of] an original executed counterpart.” Mr. Connelly argues that the Court misinterpreted the context in which that language appears.

         The Court need not reach the question of whether it properly interpreted the guarantees' language regarding countersignatures because Tatonka's countersignature on the guarantees is not required in order to give them legal effect. Mr. Connelly raised the same argument - the absence of Tatonka's countersignature on the guarantees prevents it from establishing the existence of an enforceable contract - in opposition to Tatonka's motion for summary judgment, and this Court rejected (# 112) that argument. The Court explained[1] that: (i) Colorado law does not generally require that agreements be in writing, much less signed, except as may be required by the Statute of Frauds; and (ii) the Statute of Frauds requires only the signature of the party sought to be bound, namely, Mr. Connelly. Thus, the absence of a countersignature by Tatonka on the agreements does not vitiate the agreements' legal effectiveness.

         To the extent Mr. Connelly is arguing that the record lacks proof that Tatonka actually accepted his offer to guarantee the loans, the Court rejects that argument as frivolous. As the Court's summary judgment ruling notes, under Colorado law, whether a party has accepted a contractual offer is assessed based on whether there is objective indicia of the party's intention to accept. Where an offer simply calls for the offeree to take some action, [2] the offeree may accept the offer simply by performing the requested act; “in such a case, performance is the only thing needful to complete the agreement and create a binding promise.” Denver Truck Exchange v. Perryman, 307 P.2d 805, 810 (Colo. 1966). Here, the language of the guarantee agreements only imposed upon Tataonka the duty “to make loans to [Mosaica] . . .” There is no dispute that Tatonka made the loans Mosaica was requesting. Therefore, the record is undisputed that Tatonka accepted Mr. Connelly's offer by Tatonka's performance. Mr. Connelly's argument that the Court erred in finding the existence of a valid contract is thus without merit.

         C. Proof of Mosaica's unpaid ...

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