HR BRIARGATE, LLC v. Colorado Springs Orthopaedic Association, P.C. et al

Filing 51

ORDER granting Plaintiff's 46 Motion for Summary Judgment; denying Defendant's 33 Motion for Summary Judgment. The Trial Preparation Conference and Bench Trial are VACATED. by Judge R. Brooke Jackson on 2/4/14.(rbjcd, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge R. Brooke Jackson
Civil Action No. 12-cv-02636-RBJ
HR BRIARGATE, LLC, a Delaware limited liability company,
Plaintiff,
v.
COLORADO SPRINGS ORTHOPEDIC GROUP,
Defendant.

ORDER

This case concerns whether the Colorado Springs Orthopedic Group (“CSOG”) has
satisfied its obligations under an agreement to guarantee the payment of rent by the Julie Penrose
Health Education and Research Center. CSOG claims that it has fully done so. The lessor, HR
Briargate (“HRB”), claims that it has not, and that it is still owed $206,475.11. Both parties
represent that there are no genuine disputes of material fact, and that the Court should resolve the
matter on their cross-motions for summary judgment. For the reasons set forth herein, the Court
agrees with HRB and enters summary judgment in its favor.
FACTS
On May 14, 2008, a lease agreement was executed between NorthCare at St. Francis,
LLC (“NorthCare”) and the Julie Penrose Health Education and Research Center (the “Julie
Penrose Center”) to commence on January 1, 2009 for a term of ten years. At the time,
NorthCare was the owner of the building and landlord on the lease, and the Julie Penrose Center
was the tenant. The lease was guaranteed by CSOG for up to $250,000 in rent and additional
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rent (collectively, the “rent”). The Guaranty also provides for payment of interest, costs,
expenses, and attorneys’ fees without limit. 1 According to CSOG, it only agreed to sign the
Guaranty because Ashley Wiechmann, the Chief Executive Officer of CSOG from January 2000
to March 31, 2011, assured the group that they would never have to pay on it. [Docket #44-2 at
7].
In addition to serving as CEO, from at least May 14, 2008 until March 31, 2011, Mr.
Wiechmann served on the Board of the Julie Penrose Center. During this same period, Kirk Blad
served as Operations Manager for CSOG as well as the Advisor for Center Facilities and
Infrastructure for the Julie Penrose Center.
From the inception of the Julie Penrose Center, CSOG paid the Center’s rent, security
deposit, the salaries of its employees, and other expenses. [Docket #44-2 at 6, #44-4 at 10–13,
#33-8 at 1]. The Center’s employees were not only put on CSOG’s payroll, but they were also
categorized as CSOG employees and put on CSOG’s profit-sharing plan. [Docket #44-2 at 6].
On April 14, 2009, a property manager for NorthCare sent an email to Mr. Blad asking
about the status of the Julie Penrose Center’s rent payments for March and April. [Docket #333]. A follow up email was sent on April 27, 2009 asking Mr. Blad to make sure the payments
were processed that week. [Docket #33-4 at 2]. On May 1, 2009, Mr. Blad emailed that he had
the rent check for March and April. [Docket #33-5 at 1].
On June 12, 2009, a different property manager sent an email to Mr. Wiechmann and Mr.
Blad stating that May and June rent had not yet been received, and that they would have to make
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The Guaranty provides, in relevant part: “The payments to be made under this Guaranty shall commence
when the following occurs: NorthCare gives Guarantor written notice of a failure of [the Julie Penrose
Center] to make timely payments of rent or additional rent per the Lease. NorthCare shall give Guarantor
written notice of any such failure of the tenant to timely pay rent or additional rent, and Guarantor will,
without any further notice, then pay that and subsequent monthly rent in the amount stated in such notice
until NorthCare gives notice that the tenant has recommenced paying rent.” [Docket #33-1 at 2]
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their payment in full by 4:00 p.m. on June 22, 2009. [Docket #33-6 at 1]. The email continues,
“If we do not receive payment by the date and time mentioned above, we will have no choice but
to notify the guarantor on the Lease, Colorado Springs Orthopedic Group that we have not
received payment for May and June and proceed from there.” [Docket #33-6 at 1]. Mr. Blad
emailed Mr. Wiechmann within twenty minutes asking “What do you want me to do? I can get a
check processed today . . . . Do we want to pay both months now?” [Docket #33-6 at 1]. Mr.
Weichmann responded, “Yes. Rent fir [sic] may and June.” [Docket #33-6 at 1]. Mr. Blad
immediately cut a check for May and June rent. [Docket #33-7].
On November 21, 2010, Mr. Wiechmann signed a tenant estoppel certificate regarding
the Julie Penrose Center’s lease. [Docket #44-1 at 18–20]. This certificate certified that “no
default or event that, with the passage of time or notice, would constitute a default . . . on the part
of Tenant exists under the Lease in the performance of the terms, covenants, and conditions of
the Lease required to be performed on the part of the Tenant.” [Docket #44-1 at 18–19, ¶ 9].
The certificate was signed by Mr. Wiechmann in his capacity as Treasurer of the Julie Penrose
Center. [Docket #44-1 at 19].
In December 2010, HRB purchased the NorthCare building from NorthCare and assumed
all of its leases, including the lease for the Julie Penrose Center. In 2011 the Julie Penrose
Center was late and irregular in its rent payments. HRB began to make formal demands for rent,
and, in August 2011, HRB served an eviction demand on the Julie Penrose Center and formally
put CSOG on notice under the Guaranty. At that time, CSOG asserted that it had already made
$206,475.11 in rent payments under the Guaranty. On March 7, 2012, CSOG made a one-time
payment to HRB in the amount of $43,524.89. Through this payment, CSOG asserts, it met its
full $250,000 obligation under the Guaranty.

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The lease space vacated by the Julie Penrose Center has remained unoccupied despite
diligent efforts by HRB to re-let the premises. Rent in excess of $350,000 remains unpaid, as
well as interest, costs, expenses, and attorneys’ fees owed under the lease. CSOG has stipulated
that the $250,000 rent cap is not applicable to the amount it owes for interest, costs, expenses,
and attorneys’ fees. [Docket #48 at n.1].
On July 26, 2012, CSOG filed a lawsuit in this district (No. 12CV1948-PAB-MEH)
against Mr. Wiechmann, by then its former CEO. [Docket #44-7 in the present case]. The
complaint alleged, among other things, that beginning in January 2009 Mr. Wiechmann made
payments on behalf of the Julie Penrose Center—including rent—using CSOG funds. Id. at 2, ¶
43. The complaint further alleges that “CSOG reasonably expected that all sums paid to or on
behalf of the Julie Penrose Center by [Mr. Wiechmann] would be repaid to CSOG.” Id. at 2, ¶
44. CSOG instructed Mr. Wiechmann to stop making payments to or on behalf of the Julie
Penrose Center in July 2010 and again in December 2010. Id. at 2, ¶ 46. CSOG alleged that the
payments “were not authorized by CSOG.” Id. at 3, ¶ 49. Rather, according to CSOG’s Initial
Rule 26(a)(1) Disclosures [Docket #44-8 in the present case], the payments were a “conversion
of funds belonging to CSOG that [Mr. Wiechmann] paid to the Julie Penrose Center.” Id. at 2, ¶
3. CSOG also made similar claims in its answer to Mr. Wiechmann’s Interrogatory # 6 in case
No. 12CV1948-PAB-MEH. [Docket #44-9 in the present case at 2].
In that lawsuit CSOG demanded that Mr. Wiechmann return $470,305.60 he was “not
authorized to pay to or on behalf of the Julie Penrose Center.” [Docket #44-7 at 3, ¶ 51; #44-8 at
2, ¶ 3]. In its interrogatory answers in that case, CSOG asserted that unauthorized payments
made by Mr. Wiechmann to or on behalf of the Julie Penrose Center included the rent payments.

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[Docket #44-9 at 2, answer to Interrogatory 6]. The suit was ultimately settled for an
undisclosed amount.
STANDARD OF REVIEW
“Summary judgment is appropriate ‘if the pleadings, the discovery and disclosure
materials on file, and any affidavits show that there is no genuine issue as to any material fact
and that the movant is entitled to judgment as a matter of law.’” Utah Lighthouse Ministry v.
Found. for Apologetic Info. & Research, 527 F.3d 1045, 1050 (10th Cir. 2008) (quoting Fed. R.
Civ. P. 56(c)). When deciding a motion for summary judgment, the Court considers “the factual
record, together with all reasonable inferences derived therefrom, in the light most favorable to
the non-moving party . . . .” Id. The Court does not weigh the evidence or make credibility
determinations. Id. The moving party has the burden to show that there is an absence of
evidence to support the nonmoving party’s case. Celotex Corp. v. Catrett, 477 U.S. 317, 325
(1986). The nonmoving party must “designate specific facts showing that there is a genuine
issue for trial.” Id. at 324. In challenging such a showing, the non-movant “must do more than
simply show that there is some metaphysical doubt as to the material facts.” Matsushita Elec.
Indus. Co., Ltd. V. Zenith Radio Corp., 475 U.S. 574, 586 (1986).
ANALYSIS
I. CSOG’S MOTION FOR SUMMARY JUDGMENT.
CSOG essentially argues that in order to obtain summary judgment in its favor it must
prove that the Guaranty’s section on written notice (1) imposes a covenant, and not a condition
precedent, to CSOG’s payment obligation under the Guaranty; or (2) if it is a condition
precedent, NorthCare provided CSOG with written notice of the Julie Penrose Center’s failure to
make timely payments of rent, and CSOG then made those payments under the Guaranty.

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[Docket #33] HRB, in response, argues that “CSOG’s statement of the issues is incorrect, and its
arguments are an extended diversion from the real issues.” [Docket #45 at 3]. Instead, HRB
contends that the burden falls on CSOG “to demonstrate that its damages should be reduced on
account of Wiechmann’s payments to HRB’s predecessors, NorthCare . . . .” [Docket #45 at 3].
This Court agrees with HRB. This case presents a unique situation where, instead of an
action to enforce payment under a Guaranty, the guarantor is alleging it has already paid the
amount owed. The issue in this case is whether payments made by Mr. Wiechmann from
CSOG’s account were voluntarily-made rent payments or, instead, payments made as obligations
under the Guaranty. The issue is not whether the Guaranty itself required payment under it or
what triggered that payment scheme. CSOB has essentially erected a “straw man,” and knocking
it down will not resolve the underlying issue.
II. HRB’S CROSS-MOTION FOR SUMMARY JUDGMENT.
HRB contends that the question raised is whether CSOG’s guaranty obligation to HRB
should be reduced by the $206,475.11 that was paid between 2008 and 2010 to HRB’s
predecessor, NorthCare, on behalf of the Julie Penrose Center. [Docket #46]. HRB asserts that
the $206,475.11 constituted voluntary rent payments, not guarantor payments. CSOG contends
the opposite.
Normally, a question of the parties’ understanding and intent is inappropriate for
resolution on summary judgment. See e.g., Harlow v. Fitzgerald, 457 U.S. 800, 816 (1982);
Decibel Credit Union v. Pueblo Bank & Trust Co., 996 P.2d 784 (Colo. Ct. App. 2000) (citations
omitted). However, in some cases the facts on the record effectively prove the parties’
subjective intent. In those rare cases, the Court may resolve the issue in a motion for summary
judgment. This case is one of those exceptions.

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A. Judicial Admissions.
HRB relies heavily on positions that CSOG took in case No. 12CV1948-PAB-MEH that
are inconsistent with the position CSOG is now taking in the present case. HRB attaches the
label “judicial admissions” to these positions. I am not convinced that the label fits.
“Judicial admissions are formal, deliberate declarations which a party or his attorney
makes in a judicial proceeding for the purpose of dispensing with proof of formal matters or of
facts about which there is no real dispute.” U.S. Energy Corp. v. Nukem, Inc., 400 F.3d 822, 833
n.4 (10th Cir. 2005) (citing Kempter v. Hurd, 713 P.2d 1274, 1279 (Colo. 1986) (en banc)).
“Judicial admissions . . . have the effect of withdrawing a fact from issue and dispensing wholly
with the need for proof of the fact.” Guidry v. Sheet Metal Workers Int'l Ass'n, Local No. 9, 10
F.3d 700, 716 (10th Cir. 1993) (internal quotation marks and citations omitted).
Admissions in the pleadings of a case constitute judicial admissions. 6 Handbook of Fed.
Evid. § 801:26 (7th ed.). However, judicial admissions in a separate case are considered
ordinary admissions. Id. Ordinary admissions may be controverted or explained by the party
against whom they are being used. Id.
While CSOG made certain judicial admissions through its pleadings in case No.
12CV1948-PAB-MEH, those pleadings are considered ordinary admissions in the present case.
Given the settled law on this matter, to the extent that HRB’s argument relies upon the judicial
admission doctrine, I reject it.
B. Ordinary Admissions.
CSOG does not deny that it took the position in the earlier case that Mr. Wiechmann’s
payments were unauthorized. It denies that this was a “judicial admission, but seems
comfortable enough with the label “ordinary admissions,” perhaps because the case it cites holds

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that “ordinary admissions” are not conclusive. [Docket #48 at 10–11]. The label doesn’t make a
great deal of difference to me. What does matter, in my view, is that CSOG took positions in
Judge Brimmer’s case that benefitted its damages suit against Mr. Wiechmann, but it has turned
around and taken positions in the present case that are plainly inconsistent with what it
essentially represented to Judge Brimmer because the new positions seem to benefit CSOG in
this case. If that doesn’t trouble CSOG and its counsel, it does trouble me.
1. The Admission.
Basically, CSOG’s position in the other case was that the payments that Mr. Wiechmann
made on behalf of the Julie Penrose Center were rent payments. Having concluded that battle,
CSOG now contends that the payments were not unauthorized rent payments after all. Rather,
they were payments made to discharge CSOG’s obligation under the Guaranty, its agreement to
step in and pay the landlord if the Center defaulted and did not make its rent payments.
In attempting to escape the problem that this inconsistency creates, CSOG argues that
Mr. Wiechmann received notice that the Julie Penrose Center had failed to pay rent, such that his
subsequent payment from the CSOG bank account must have constituted payment from the
guarantor to satisfy the Guaranty. I am not persuaded.
First, the tenant estoppel certificate signed by Mr. Wiechmann, who was among other
things the Treasurer of the Julie Penrose Center, represented that the Center was current on its
rent. But that representation could not reasonably have been made if the Center had defaulted
and the Guaranty had been activated.
Second, in attempting to distance itself from the tenant estoppel certificate CSOG argues
that it cannot be bound by the certificate because Mr. Wiechmann signed it as Treasurer of the
Julie Penrose Center. Yet, by the same token, when Mr. Wiechmann delivered rent checks to

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NorthCare, nothing indicates that he was doing so as an agent of CSOG to satisfy the guaranty
obligation.
Third, CSOG paid all of the Julie Penrose Center’s expenses since the Center’s inception,
including its security deposit and employee salaries. The fact that the payments now in
controversy were made from CSOG’s bank account surely does not prove that the payments
were made on behalf of CSOG as the guarantor.
Fourth, Mr. Wiechmann’s actions upon receiving the landlord’s demands suggest that he
was trying to avoid triggering the Guaranty. In particular, on July 12, 2009, Mr. Wiechmann
immediately paid May and June 2009 rent after NorthCare threatened to notify CSOG of the
default and trigger the Guaranty. He did not respond to the July 12, 2009 email by offering to
make guaranty payments as a CSOG agent. Considering that CSOG has indicated that it only
agreed to sign the Guaranty because Mr. Wiechmann assured the group that they would never
have to pay on it, it is not surprising that Mr. Wiechmann did not want NorthCare to notify
CSOG of the untimely payments.
In short, CSOG initiated a civil lawsuit against Mr. Wiechmann partly on the grounds
that it never authorized him to make payments to or on behalf of the Julie Penrose Center. If
these payments were made as guarantor payments, CSOG should not have alleged in the case
before Judge Brimmer that they were unauthorized or illegal conversions. While an ordinary
admission in the pleadings may not necessarily be conclusive in all circumstances, I find that in
the circumstances here it is conclusive.
CONCLUSION
The Court has considered the factual record, together with all reasonable inferences
derived therefrom, in the light most favorable to CSOG, and it finds that the payments did not

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constitute guaranty payments. Instead, they constituted rent payments, whether authorized or
not, made on behalf of the Julie Penrose Center. Therefore, because its only payment on the
Guaranty to date has been the $43,524.89 paid on February 28, 2012, CSOG remains liable
under the Guaranty for $206,475.11. CSOG is also liable for interest, costs, expenses, and
attorneys’ fees, none of which are capped by the $250,000 limit.
Order
1. Motion #33 is DENIED.
2. Motion #46 is GRANTED. Judgment shall be entered in favor of the plaintiff, HR
Briargate, LLC, and against the defendant, the Colorado Springs Orthopedic Group, in the
amount of $206,475.11 plus interest, costs, expenses and attorney’s fees as provided by the
contract. The Court directs the parties through counsel to confer and attempt to reach a
stipulation on the latter amounts to be added to the judgment.
3. The trial preparation conference set February 7, 2014 at 8:00 a.m. and the bench trial
scheduled March 10, 2014 are vacated.
DATED this 4th day of February, 2014.
BY THE COURT:

___________________________________
R. Brooke Jackson
United States District Judge

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