General Steel Domestic Sales, LLC v. Chumley et al

Filing 236

ORDER granting 93 Plaintiff's Motion for Summary Judgment related to defendants' remaining counterclaims. Defendants' remaining counterclaims are dismissed. By Judge Philip A. Brimmer on 4/26/12.(mnfsl, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Philip A. Brimmer
Civil Action No. 10-cv-01398-PAB-KLM
GENERAL STEEL DOMESTIC SALES, LLC,
d/b/a General Steel Corporation, a Colorado limited liability company,
Plaintiff,
v.
ETHAN DANIEL CHUMLEY, individually, and
ATLANTIC BUILDING SYSTEMS, LLC, a Delaware corporation,
doing business as Armstrong Steel Corporation,
Defendants.

ORDER

This matter is before the Court on plaintiff’s motion for summary judgment
[Docket No. 93] related to defendants’ remaining counterclaims. The motion is fully
briefed and ripe for disposition.
Plaintiff General Steel Corporation (“General Steel”) and defendant Armstrong
Steel Corporation (“Armstrong”)1 are competitors in the prefabricated steel building
market. General Steel initiated this trademark and unfair competition action on June
16, 2010. Armstrong asserted six counterclaims arising out of Colorado law against
General Steel: (1) commercial disparagement, (2) deceptive trade practices, (3) tortious
interference with prospective business advantage, (4) civil conspiracy, (5) unfair
competition, and (6) unjust enrichment. In an order dated June 10, 2011 [Docket No.
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Ethan Chumley, who formed Armstrong, is also named as a defendant. The
Court collectively refers to defendants as Armstrong throughout this order.

67], the Court dismissed the commercial disparagement, deceptive trade practices, and
civil conspiracy counterclaims. Moreover, the Court struck Armstrong’s request for
punitive damages.
The present motion seeks summary judgment on Armstrong’s remaining
counterclaims.2 In response, Armstrong does not address General Steel’s arguments
regarding the failure of Armstrong to present specific evidence on required elements of
its unjust enrichment and unfair competition counterclaims. See generally Docket No.
104; cf. id. at 8 (arguing only that “Armstrong has established that General engaged in
intentional and improper interference with Armstrong’s prospective customers and
prevented the formation of contracts”).3 In light of that failure and the record before the
Court, General Steel has established that it is entitled to summary judgment on those

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Summary judgment is warranted under Federal Rule of Civil Procedure 56 when
the “movant shows that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); see Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 248-50 (1986); Concrete Works, Inc. v. City &
County of Denver, 36 F.3d 1513, 1517 (10th Cir. 1994); see also Ross v. The Board of
Regents of the University of New Mexico, 599 F.3d 1114, 1116 (10th Cir. 2010). A
disputed fact is “material” if under the relevant substantive law it is essential to proper
disposition of the claim. Wright v. Abbott Labs., Inc., 259 F.3d 1226, 1231-32 (10th Cir.
2001). Only disputes over material facts can create a genuine issue for trial and
preclude summary judgment. Faustin v. City & County of Denver, 423 F.3d 1192, 1198
(10th Cir. 2005). An issue is “genuine” if the evidence is such that it might lead a
reasonable jury to return a verdict for the nonmoving party. Allen v. Muskogee, 119
F.3d 837, 839 (10th Cir. 1997). When reviewing a motion for summary judgment, a
court must view the evidence in the light most favorable to the non-moving party. Id.;
see McBeth v. Himes, 598 F.3d 708, 715 (10th Cir. 2010).
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To the extent that failure is because Armstrong believes it is entitled to
additional discovery, see Docket No. 104 at 8-10, that issue has already been
addressed by the Court by its order of April 26, 2012 overruling defendants’ objections
[Docket No. 102] to the magistrate judge’s October 11, 2011 order [Docket No. 94]
denying defendants’ oral motion to compel production of documents.
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claims.
That leaves Armstrong’s tortious interference counterclaim. As the Court has
previously pointed out, see Docket No. 67 at 10, n.6, it appears that Armstrong’s claim,
at least as pled, is more accurately described as a claim for tortious interference with a
contractual relationship rather than with prospective business advantage. See
Wasalco, Inc. v. El Paso County, 689 P.2d 730, 732 (Colo. App. 1984) (“[T]o prove
intentional interference with a contractual relationship it is necessary to show, among
other elements, that there was an underlying contract between plaintiff and a third
party. To prove tortious interference with a prospective contractual relationship, it is not
necessary that there be an underlying contract. But there must be a showing of
intentional and improper interference by the defendant which prevented formation of a
contract between plaintiff and the third party.”) (citations omitted). General Steel argues
that Armstrong has failed to identify an underlying contract with a third party with which
General Steel interfered. See Restatement (Second) of Torts § 766 (2011) (“One who
intentionally and improperly interferes with the performance of a contract . . . between
another and a third person by inducing or otherwise causing the third person not to
perform the contract, is subject to liability to the other for the pecuniary loss resulting to
the other from the failure of the third person to perform the contract.”); TMJ Implants,
Inc. v. Aetna, Inc., 498 F.3d 1175, 1200 (10th Cir. 2007) (“Colorado follows the
Restatement with respect to the elements of both intentional interference with
prospective business relations and intentional interference with contract.”).
Armstrong identifies only one contract with which it alleges General Steel

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interfered. See Docket No. 104 at 8; see id. at 2, ¶ 6. In support of that contention,
Armstrong cites the deposition testimony of an Armstrong employee who contends that
a certain unidentified customer breached a binding contract because of comments by
General Steel. See Docket No. 93-1 at 8, Beavers Depo. at 99, ll. 7-9. Such vague
testimony, which is not clearly based on personal knowledge, see Docket No. 93-1 at 8,
Beavers Depo. at 99, ll. 11-14, is not sufficient to create a genuine dispute of material
fact.4 Furthermore, to intentionally interfere with a contract, General Steel must also
have been aware of the contractual relationship. See Krystkowiak v. W.O. Brisben
Companies, Inc., 90 P.3d 859, 871 (Colo. 2004) (“To be liable for intentional
interference with contract, a defendant must 1) be aware of a contract between two
parties, 2) intend that one of the parties breach the contract, 3) and induce the party to
breach or make it impossible for the party to perform the contract.”). Armstrong does
not cite any evidence to that effect. Because Armstrong identifies no evidence that
General Steel intentionally and improperly interfered with the performance of a contract,
General Steel is entitled to summary judgment to the extent Armstrong seeks to recover
for intentional interference with a contractual relationship.
To the extent Armstrong claims intentional interference with prospective
business advantage, General Steel is also entitled to summary judgment. “Under
Colorado law, ‘the crucial question in determining liability for tortious interference with

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The same employee also references two customers, with whom he was not
familiar, who he “imagine[d] . . . refused to do business with [Armstrong] after hearing
disparaging comments made by [General Steel].” Docket No. 93-1 at 6, Beavers Depo.
at 89, ll. 6-8. This, too, is insufficient to provide a jury with a basis to conclude that any
conduct by General Steel interfered with a binding contract.
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prospective financial advantage is whether defendant’s interference was intentional and
improper.’” Occusafe, Inc. v. EG&G Rocky Flats, Inc., 54 F.3d 618, 622 (10th Cir.
1995) (quoting Cronk v. Intermountain Rural Elec. Ass’n, 765 P.2d 619, 623 (Colo. App.
1988)). The “general rule” in Colorado, however, is that a party “cannot sue one of its
competitors for intentional interference in prospective economic advantage.” Occusafe,
54 F.3d at 622-23 (citations omitted). This “competitor’s privilege provides that a
defendant does not engage in improper conduct, so as to be liable for intentional
interference, if: ‘(1) it concerns a matter of competition between the defendant and
plaintiff; (2) the defendant does not employ wrongful means; (3) the action does not
amount to an unlawful restraint of trade; and (4) the defendant’s purpose is, at least in
part, to advance its own interests.’” Zimmer Spine, Inc. v. EBI, LLC, No. 10-cv-03112LTB-CBS, 2011 WL 4089535, at *5 (D. Colo. Sep. 14, 2011) (citations omitted); see
Restatement (Second) of Torts § 768, Comment e (“The predatory means discussed in
§ 767, Comment c, physical violence, fraud, civil suits and criminal prosecutions, are all
wrongful in the situation covered by this Section.”).
In its motion, General Steel argues, among other things, that Armstrong’s claim
does not overcome this “competitor’s privilege.” See Docket No. 93 at 16-17.5 It is
undisputed that General Steel and Armstrong are competitors. And, Armstrong failed to
address General Steel’s competitive privilege argument or to otherwise identify
evidence that would clearly demonstrate that the privilege is inapplicable here. The
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In Zimmer Spine, the court noted that “it appears that ‘[u]nder Colorado law, the
competitor’s privilege is not an element of plaintiff’s claim, but an affirmative defense
that must be asserted and proven by the defendant.’” 2011 WL 4089535, at *5
(citations omitted).
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Court, therefore, concludes that General Steel is entitled to summary judgment on
Armstrong’s claim for intentional interference with prospective business advantage.
For the foregoing reasons, it is
ORDERED that plaintiff’s motion for summary judgment [Docket No. 93] related
to defendants’ remaining counterclaims is GRANTED. Defendants’ remaining
counterclaims are dismissed.

DATED April 26, 2012.
BY THE COURT:

s/Philip A. Brimmer
PHILIP A. BRIMMER
United States District Judge

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