Justia Business Law Opinion Summaries

The issue before the Supreme Court in this case centered on two water rights cases involving Raftopoulos Brothers (Raftopoulos) and Vermillion Ranch Limited Partnership (Vermillion). In Case No. 11SA86, the Court vacated the portions of the water court’s order interpreting the phrase "all other beneficial uses" in a 1974 change decree regarding Raftopoulos’s absolute water rights and whether Raftopoulos had abandoned any right to use the decreed water for commercial or industrial purposes. The Court reversed the portion of the water court’s order decreeing Raftopoulos’s requested new conditional water storage rights to the extent the decree permits the water to be used for industrial and commercial purposes. In Case No. 11SA124, the Court reversed the water court’s order granting Vermillion’s application for a finding of reasonable diligence for previously decreed conditional water storage rights and granting Vermillion’s application for a new conditional water storage right. View "Vermillion Ranch Limited Partnership v. Raftopoulos Brothers" on Justia Law

Creditors-plaintiffs sued a Colorado LLC claiming the LLC authorized a distribution to members that bankrupted the company and left it unable to pay them. The defendants moved to dismiss plaintiffs' claims of unlawful distribution and breach of fiduciary duty, arguing that no creditor had a right to sue for the distribution, nor a right to claim breach of fiduciary duty. The trial court granted the defendants' motion; the appellate court reversed. Upon review, the Supreme Court concluded that under Colorado law, LLC members are liable to the LLC, but not the LLC's creditors. Furthermore, the Court concluded that the manager of an insolvent LLC does not owe the creditors the same duty an insolvent corporation's directors owe a corporation's creditors. Accordingly, the Court reversed the appellate court and reinstated the trial court's order. View "Weinstein v. Colborne Foodbotics, LLC" on Justia Law

In a case involving breach of fiduciary duty and misappropriation of trade secrets claims, the plaintiffs sought to inspect personal and business computers, smartphones, and other electronic storage devices belonging to the lead defendant and his wife, who was not a party to the case. The plaintiffs also requested discovery of approximately three years of the defendants' telephone records. After the defendants refused to permit the inspection the plaintiffs filed a motion to compel. Over the defendants' objection on privacy grounds and in a brief order concerning this and other discovery matters, the trial court granted the plaintiffs' motion and ordered the defendants to permit inspection of the requested items and records. The trial court also awarded attorneys' fees associated with the discovery dispute to the plaintiffs. Upon review, the Supreme Court concluded that the trial court abused its discretion by granting a motion to compel discovery without making findings of fact balancing defendants' asserted privacy interest with plaintiffs' need for the information sought. Accordingly, the Court vacated the portion of the trial court's order compelling the discovery, and remanded the case to the trial court. View "In re Gateway Logistics, Inc. v. Smay" on Justia Law

Respondents Christopher Roinestad and Gerald Fitz-Gerald were overcome by poisonous gases while cleaning a grease clog in a sewer near the Hog's Breath Saloon & Restaurant. The district court concluded that Hog's Breath caused respondents' injuries by dumping substantial amounts of cooking grease into the sewer thereby creating the clog and consequent build up of the gas. On summary judgment, the district court found the saloon liable under theories of negligence and off-premises liability and granted respondents damages. The saloon carried a commercial general liability policy issued by Petitioner Mountain States Mutual Casualty Company which sought a ruling it had no duty to indemnify Hog's Breath. The district court agreed that under the terms of the policy, the insurer had no duty under a pollution exclusion clause. The appellate court reversed the ruling in favor of the insurer, finding the pollution exclusion clause was ambiguous and that its application to cooking grease (a common waste product) could lead to absurd results and negate essential coverage. Upon review, the Supreme Court reversed, finding that the saloon released enough grease to amount to a discharge of a pollutant, and that the insurance policy pollution exclusion clause barred coverage in this case. View "Mountain States Mutual Casualty Company v. Roinestad" on Justia Law

Petitioner Northstar Project Management, Inc (Northstar) entered into a contract with Respondent DLR Group, Inc. for the construction of a new building. DLR began performing under the contract and submitted invoices to Northstar. Northstar paid DLR in part, but became dissatisfied with DLR's performance before fully satisfying DLR's invoices. Negotiations proved unsuccessful between the parties and Northstar terminated the contract. Northstar sued DLR for breach of contract and related declaratory relief. DLR counterclaimed for breach of contract and declaratory relief. The court admitted a number of exhibits as evidence of the parties' contract claims. Northstar ultimately prevailed at trial. DLR filed a post-trial motion for judgment notwithstanding the verdict, arguing that Northstar failed to meet its prima facie case and that the verdict was not supported by any proper measure of damages. Specifically, DLR took issue with the trial court's admission of several trial exhibits, and argued that the admission of these exhibits led the jury to award "excessive damages" to Northstar. DLR appealed that denial; the appellate court's reversal of the trial court. The Supreme Court held that the appellate court erred when it held that the record designated by DLR on appeal satisfied C.A.R. 10(b). Therefore, the court of appeals did not have the information necessary to determine whether the evidence sufficiently supported the jury's verdict in favor of Northstar. View "Northstar v. DLR Group, Inc." on Justia Law

Antelope Development LLC was formed to develop a residential subdivision in Bennett, Colorado. The LLC took out construction loans from the bank at the start of the project; before it was finished, the LLC had exhausted its financing. The LLC entered into oral agreements with Respondent AC Excavating for work on the subdivision. AC Excavating was paid for some but not all of its work. Petitioner Donald Yale, a member of the LLC, realized that the LLC had insufficient funds to meet its obligations, so he placed some of his own money in the LLC's bank account. Yale then applied these funds to the LLC's general business expenses and some outstanding subcontractor invoices. AC Excavating still was not paid in full. AC Excavating sued Yale alleging, among other things, that the LLC had violated Colorado's construction trust fund statute by failing to hold the funds in the LLC's bank account in trust for payment to AC Excavating. AC Excavating further alleged that Yale thereby committed theft, permitting it to claim treble damages and attorney fees under the state Rights in Stolen Property statute. The trial court ruled in favor of Yale, and AC Excavating appealed. The appellate court reversed. Upon review, the Supreme Court held that the LLC member's voluntary injection of capital into the company did not constitute "funds disbursed to a contractor . . . on a construction project" under the construction trust fund statute, as that money was not required to be held in trust. The Court also concluded the appellate court erred in remanding the case for a determination of whether Yale was civilly liable for theft under the Rights in Stolen Property statute. View "Yale v. AC Excavating, Inc." on Justia Law

At issue before the Supreme Court in this case was whether certain terms contained in a credit agreement between a lender and a bank was ambiguous with regard to the default interest rate. Because the Court held that the credit agreement was not ambiguous, it did not address whether Colorado's Credit Agreement Statute of Frauds allowed for the introduction of extrinsic evidence to resolve a facially ambiguous credit agreement. View "FDIC v. Fisher" on Justia Law

The Supreme Court reviewed a district court order that upheld a county court's decision that a six-year stattue of limitations did not bar Respondent Account Brokers of Larimer County, Inc.'s claim against Pettiioner Daniel Hassler. Petitioner financed the purchase of a vehicle by entering into a security agreement with Account Broker's predecessor-in-interest in which the vehicle served as collateral. Petitioner defaulted on the loan, and the predecessor repossessed the vehicle and later sold it at auction. The precedessor applied the proceeds of the auction to the balance of the loan. The proceeds were insufficient to cover the balance; thus Petitioner was still held responsible for the deficiency. The debt was eventually transferred to Account Brokers who sued Petitioner to recover the deficiency less than six years after the vehicle was sold. The county and district courts ruled in favor of Account Brokers, determining that the statute of limitations did not bar Account Brokers' claim. Upon review, the Supreme Court reversed, holding that the controlling issue was not the date that the debt was made liquidated or determinable but the date the debt accrued. "[U]nder Colorado law and the express terms of the parties' agreement, the present debt became due when it was accelerated following [the predecessor's] repossession of the vehicle and demand for full payment on the debt, which occurred more than six years before the initiation of the present suit. Accordingly, the action [was] barred by the statute of limitations."

Petitioner Accord Human Resources, Inc. (Accord) is a professional employer organization that transacts business in Colorado along with four related entities. In 2004, Accord transferred a portion of its Colorado employees to another Accord entity with a lower unemployment tax rate and in doing so, reduced its unemployment tax burden. The Colorado Division of Employment and Training determined that it had authority to treat the various Accord entities as one for purposes of assessing unemployment taxes, thus erasing any tax advantage that could be gained through the employee transfer. Under this rationale, the Division issued a delinquent tax notice to Accord. Accord appealed, and the hearing officer reversed. On appeal, the court of appeals reversed the Industrial Claim Appeals Office's Final Order and reinstated the hearing officer's decision. The Division sought to reverse the court of appeals decision. Upon review, the Supreme Court affirmed the appellate court's decision, finding that nothing gave the Division authority to combine separate employer tax accounts into one account for purposes of assessing unemployment taxes.

In an arbitration proceeding between Respondent SunOpta Grains and Foods Inc. (SunOpta) and Colorado Mills, LLC, an arbitrator, at SunOpta's request, issued subpoenas to petitioners SK Food International and Adams Vegetable Oil, Inc. SK Food and Adams were not parties to the underlying arbitration. Neither company was incorporated in Colorado, was registered as a foreign corporation in Colorado, or maintained a principal office in Colorado. The subpoenas, which requested business records, were served on SK Food and Adams at their places of business in California and North Dakota. When SK Food and Adams refused to comply with the arbitration subpoenas, SunOpta asked the district court to enforce them. The district court issued an order enforcing the subpoenas.In response, SK Food and Adams filed a petition for a rule to show cause, which the Supreme Court issued. The nonparties appealed the district court's order enforcing the subpoenas. The Supreme Court held that Colorado courts, as a matter of state sovereignty, have no authority to enforce civil subpoenas against out-of-state nonparties. Accordingly, the Court vacated the district court's enforcement order, and remanded case back to the district court for further proceedings.