Oilman International, FZCO v. Neer et al
Filing
102
ORDER. The 84 Recommendation of United States Magistrate Judge is accepted in part and rejected in part. Plaintiff's 64 motion for partial summary judgment is denied without prejudice. Defendant Jesusa S. Neer's 77 motion for partial summary is granted in part and held in abeyance in part. Upon entry of final judgment in this case, judgment shall enter in favor of defendants and against plaintiff on plaintiff's civil conspiracy claim. Within 21 days of entry of this order, plaintiff may file a motion for summary judgment in which it elects its remedies and addresses the potential implications of Colorado's economic loss rule.By Judge Philip A. Brimmer on 3/29/12.(mnfsl, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Philip A. Brimmer
Civil Action No. 10-cv-02810-PAB-BNB
OILMAN INTERNATIONAL, FZCO,
Plaintiff,
v.
MARVIN BRUCE NEER, d/b/a TREE MACHINES, a.k.a MARVIN BARTOLOME, and
JESUSA S. NEER a/k/a JESUSA S. BARTOLOME,
Defendants.
ORDER
This matter is before the Court on the Recommendation of United States
Magistrate Judge (the “Recommendation”) [Docket No. 84] filed on December 13, 2011.
The magistrate judge recommends that the Court deny the motions for partial summary
judgment filed by plaintiff [Docket No. 64] and defendant Jesusa S. Neer [Docket No.
77]. On December 19, 2011, plaintiff filed timely objections to the Recommendation
[Docket No. 86]. The Court therefore will “determine de novo any part of the magistrate
judge’s disposition that has been properly objected to.” Fed. R. Civ. P. 72(b)(3).1
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Plaintiff cites Gomez v. Martin Marietta Corp., 50 F.3d 1511 (10th Cir. 1995), for
the proposition that “[e]ven though a movant requests a sanction that would be
dispositive, if the magistrate judge does not impose a dispositive sanction the order falls
under Rule 72(a) rather than Rule 72(b).” Id. at 1519-20. This case, and the authority it
cites, addressed the inapposite question of whether a magistrate judge’s ruling on a
motion for a discovery sanction, which is a pre-trial matter ordinarily reviewed pursuant
to Rule 72(a), is subject to de novo review when the sanction actually imposed
disposes of the case. See 12 Wright, Miller, et al., Federal Practice & Procedure – Civil
§ 3068.2 (2d ed. 2011). In contrast, the law is clear that a magistrate judge may not
rule on a motion for summary judgment, regardless of the outcome, but rather may only
As plaintiff summarizes in its amended complaint, plaintiff asserts claims
pursuant to Colorado law to claim damages from a fraud perpetrated by the
Defendant, Mr. Marvin Bruce Neer, on the Plaintiff, Oilman International,
FZCO, by (1) misrepresenting the material specifications of two new
Caterpillar land-based engines that were required by the Plaintiff in its
business of supplying equipment to the Middle East oil industry; (2)
receiving the contract price of $559,723.66 U.S.D. from the Plaintiff; (3)
failing to deliver the two new Caterpillar land-based engines as requested
by the Plaintiff; and (4) failing to refund the contract price to the Plaintiff.
Instead, Mr. Neer paid another broker $280,000.00 U.S.D. for two used
non-conforming engines, and transferred the balance he received from
Oilman International, FZCO, with the exception of $55,000.00 U.S.D., to his
wife [defendant Jesusa S. Neer], in a fraudulent conveyance.
Docket No. 60 at 1-2. Plaintiff asserts eleven causes of action. In its motion for partial
summary judgment, plaintiff seeks summary judgment against defendant Marvin Bruce
Neer on its claims for breach of contract (claim one), fraudulent misrepresentation
(claim five), and fraudulent concealment (claim six). Plaintiff also seeks summary
judgment against both Mr. Neer and defendant Jesusa S. Neer on its claims for civil
theft (claim eight), fraudulent conveyance (claim ten), and imposition of a constructive
trust and equitable lien (claim eleven). In addition, plaintiff seeks summary judgment
against both Marvin and Jesusa on its claim for civil conspiracy (claim nine). Plaintiff,
however, no longer wishes to proceed with its civil conspiracy claim and concedes that
summary judgment should enter against it on this claim. See Docket No. 78 at 9.
The Recommendation concluded that plaintiff’s motion for partial summary
judgment cannot be granted because plaintiff seeks summary judgment under both
contract and tort law without indicating whether it seeks to affirm or rescind the contract.
submit “proposed findings of fact and recommendations for the disposition” of the
motion. 28 U.S.C. § 636(b)(1)(B); see Ocelot Oil Corp. v. Sparrow Industries, 847 F.2d
1458, 1461-62 (10th Cir. 1988).
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See Trimble v. City and County of Denver, 697 P.2d 716, 723 (Colo. 1985) (“One
seeking to remedy fraudulent inducement of a contract must elect either to rescind the
entire contract to restore the conditions existing before the agreement was made, or to
affirm the entire contract and recover the difference between the actual value of the
benefits received and the value of those benefits if they had been as represented.”),
superseded by statute on other grounds by Colo. Rev. Stat. §§ 24-10-101 et seq.
(1986). Plaintiff contends that it is clear from its summary judgment motion that plaintiff
is not seeking to enforce the contract and that nothing in its motion can be “construed
as seeking an affirmance of its contract with Mr. Neer,” Docket No. 86 at 5, despite the
fact that the motion argues that Mr. Neer breached the contract. The Court agrees with
the Recommendation that the election of remedies doctrine is implicated.
The Recommendation implied that plaintiff’s failure to elect a remedy at this
stage of the proceedings automatically bars resolution of plaintiff’s motion. The Court
may exercise its discretion to determine when to require an election of remedies, which
under appropriate circumstances need not occur until a request for judgment to enter.
See Cross Country Land Services, Inc. v. PB Telecommunications, Inc., 276 F. App’x
825, 832-33 (10th Cir. 2008). “Election of remedies is a harsh doctrine which should
not be unduly extended.” Stewart v. Blanning, 677 P.2d 1382, 1383 (Colo. App. 1984).
Colorado courts recognize the doctrine in order “to prevent a plaintiff from recovering
twice for the same wrong, to prevent jury confusion and promote judicial efficiency, and
to preclude the assertion of mutually inconsistent remedial theories on the same set of
facts.” Cross Country Land Services, 276 F. App’x at 830-31 (citations omitted). In
light of the doctrine’s limited purpose, the Court likely would not require an election of
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remedies if the only motion now pending were plaintiff’s motion for partial summary
judgment. Plaintiff, however, has since filed a motion for default judgment [Docket No.
96] against Mr. Neer on all of its claims, wherein it again fails to elect its remedy.
Consequently, the Court concludes that requiring an election of remedies at this stage
is justified.
Requiring plaintiff to elect a remedy (and not construing his objections to the
Recommendation as attempting to do so) is further justified by the potential implications
of Colorado’s economic loss rule. In Town of Alma v. AZCO Constr., Inc., 10 P.3d 1256
(Colo. 2000), the Colorado Supreme Court held “that a party suffering only economic
loss from the breach of an express or implied contractual duty may not assert a tort
claim for such breach absent an independent duty of care under tort law.” Id. at 1264.2
While the economic loss rule is most commonly applied to negligence claims, Town of
Alma “did not draw any bright lines among types of torts (e.g., fraud, negligence) that
are always barred by the economic loss rule, those that may be barred, and those that
are never barred.” Hamon Contractors, Inc. v. Carter & Burgess, Inc., 229 P.3d 282,
291 (Colo. App. 2009). Rather, courts must maintain the distinction between contract
and tort law which, for purposes of the economic loss rule, requires identifying “the
source of the duties of the parties.” Town of Alma, 10 P.3d at 1262. The Town of Alma
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The Colorado Supreme Court has since identified “three main policy reasons”
that support the application of the rule “between and among commercial parties . . .: (1)
to maintain a distinction between contract and tort law; (2) to enforce expectancy
interests of the parties so that they can reliably allocate risks and costs during their
bargaining; and (3) to encourage the parties to build the cost considerations into the
contract because they will not be able to recover economic damages in tort.” BRW, Inc.
v. Dufficy & Sons, Inc., 99 P.3d 66, 72 (Colo. 2004).
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court “recognized that certain common law claims that sound in tort and are expressly
designed to remedy economic loss may exist independent of a breach of contract
claim.” Id. at 1263 (citing cases arising out of common law fraud and negligent
misrepresentation) (emphasis added); cf. Hamon Contractors, 229 P.3d at 291 (“The
court did not articulate any sweeping principle exempting post-contractual fraud claims
from the ambit of the economic loss rule.”); Makoto USA, Inc. v. Russell, 250 P.3d 625,
629 (Colo. App. 2009) (barring plaintiff’s civil theft claims where “plaintiff's contract and
theft claims were inextricably intertwined: the latter could not be proven without first
proving the former”).
Plaintiff’s fraudulent misrepresentation, fraudulent concealment, and civil theft
claims all arise from Mr. Neer’s failure to comply with his contractual duties. The
parties’ agreement required that Mr. Neer supply certain engines in exchange for
payment. Plaintiff alleges that Mr. Neer promised that he would supply such engines
(fraudulent misrepresentation), concealed the fact that he was supplying the wrong
engines (fraudulent concealment), and retained plaintiff’s payment pursuant to their
agreement despite his failure to supply the engines (civil theft). The Court therefore
questions whether plaintiff could proceed on any of these claims without first
establishing an underlying contract. Plaintiff’s election of remedies, however, may
obviate the need to resolve that question.
For these reasons, the Court will deny plaintiff’s motion for partial summary
judgment without prejudice. Because plaintiff’s election of remedies and the potential
impact of the economic loss rule may resolve plaintiff’s civil theft claim, the Court will
defer resolution of Mrs. Neer’s motion for partial summary judgment [Docket No. 77] to
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the extent it seeks judgment on plaintiff’s civil theft claim. The Court, however, will
grant Mrs. Neer’s motion to the extent she seeks summary judgment on plaintiff’s civil
conspiracy claim.
For the foregoing reasons, it is
ORDERED that the Recommendation of United States Magistrate Judge [Docket
No. 84] is ACCEPTED in part and REJECTED in part. It is further
ORDERED that plaintiff’s motion for partial summary judgment [Docket No. 64] is
DENIED without prejudice. It is further
ORDERED that defendant Jesusa S. Neer’s motion for partial summary
judgment [Docket No. 77] is GRANTED in part and held in abeyance in part. Upon
entry of final judgment in this case, judgment shall enter in favor of defendants and
against plaintiff on plaintiff’s civil conspiracy claim. It is further
ORDERED that, within 21 days of entry of this order, plaintiff may file a motion
for summary judgment in which it elects its remedies and addresses the potential
implications of Colorado’s economic loss rule.
DATED March 29, 2012.
BY THE COURT:
s/Philip A. Brimmer
PHILIP A. BRIMMER
United States District Judge
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