Schmidt v. Wells Fargo & Company et al
Filing
44
ORDER granting 16 Motion to Dismiss by Judge R. Brooke Jackson on 3/28/18. (jdyne, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge R. Brooke Jackson
Civil Action No. 17-cv-01555-RBJ
JOHN SCHMIDT,
Plaintiff,
v.
WELLS FARGO & COMPANY;
WELLS FARGO BANK, N.A.;
WELLS FARGO CAPITAL FINANCE, LLC;
GLOBAL ALTERNATIVE INVESTMENTS,
a division of Wells Fargo Investments Institute, Inc.; and
GLOBAL ALTERNATIVE INVESTMENT SERVICES, INC.,
Defendants.
ORDER ON MOTION TO DISMISS
This matter is before the Court on defendants Wells Fargo & Company’s; Wells Fargo
Bank, N.A.’s; Wells Fargo Capital Finance, LLC’s; Global Alternative Investments’; and Global
Alternative Investment Services, Inc.’s (“defendants”) motion to dismiss. ECF No. 16. For the
reasons stated below, the Court GRANTS defendants’ motion.
I. BACKGROUND
Plaintiff John Schmidt is a former Wells Fargo employee. ECF No. 1 at 4. Before
joining Wells Fargo, Mr. Schmidt co-founded Castle Pines Capital, LLC (“Castle Pines”). Id. at
1. After Wells Fargo acquired Castle Pines, Mr. Schmidt entered into an employment agreement
with Wells Fargo on May 25, 2011 (the “2011 Agreement”) whereby Mr. Schmidt would remain
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employed as the Managing Partner of Castle Pines for a period of five years. Id. at 4. In April of
2016, as the 2011 Agreement was nearing expiration, Wells Fargo asked Mr. Schmidt to apply
for a position in which he would assist with another large Wells Fargo acquisition. Id. Mr.
Schmidt declined and instead chose to resign from Wells Fargo. Id. After the acquisition
occurred, Mr. Schmidt engaged in employment discussions with Wells Fargo executives which
resulted in his being offered the position of Head of Supply Chain Finance for Wells Fargo
Capital Finance, LLC, effective May 5, 2016. Id.
The terms of Mr. Schmidt’s new position were set forth in oral communications and in a
May 5, 2016 letter sent to Mr. Schmidt by Scott Diehl, Executive Vice President and Head of
Global Solutions Group with Wells Fargo Capital Finance, LLC. Id. According to Mr. Schmidt,
the parties orally agreed that his term of employment would be for five years. Id. at 5.
Additionally, the May 2016 letter allegedly provided partial terms of Mr. Schmidt’s
employment, including his annual base pay and bonuses. Id. at 4. On August 25, 2016 Wells
Fargo disseminated a press release announcing that Mr. Schmidt would be leading the Supply
Chain Finance Group. Id. at 5. Mr. Diehl also issued statements in September 2016 touting Mr.
Schmidt’s experience and expertise and noting that Wells Fargo was “fortunate to have him
leading this group.” Id.
Unbeknownst to Mr. Schmidt, this honeymoon period would soon draw to a close as
implementation of the so-called “Volcker Rule” drew closer. Codified in section 619 of the
Dodd-Frank Wall Street Reform and Consumer Protection Act, the Volcker Rule prohibits an
employee of a banking entity—like Mr. Schmidt—from investing in certain types of funds
sponsored by the banking entity unless the employee is directly engaged in providing investment
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advisory or other services to the covered fund. Id. at 6 (citing 12 U.S.C. § 1851(d)(1)(G)(vii)).
The restrictions of the Volcker Rule became effective on July 21, 2012, but in July 2016 the
deadline for banking entities to comply with the Rule was extended to July 21, 2017. Id.
Mr. Schmidt was subject to the requirements of the Volcker Rule because he had
“significant assets” managed in Wells Fargo’s securities and was a Wells Fargo employee. Id.
At the crux of the instant case are the actions undertaken by Mr. Schmidt to comply with the
Volcker Rule. Mr. Schmidt states that he was “assured by Wells Fargo Senior Vice President,
Wealth Advisor Liz O’Connor’s and Investment Manager Paul Hojnick’s conduct, actions, and
representations that he would be given the opportunity to assess his financial position at the end
of 2016 and would have several months into 2017 to take any action required under the Volcker
Rule.” Id. Specifically, Mr. Schmidt alleges that Wells Fargo’s plan was to value his hedge
fund investments after the end of 2016, determine the impact of selling his assets, and allow Mr.
Schmidt time to make a decision in 2017 about whether or not to sell his assets to ensure
compliance with the Volcker Rule. Id. at 6–7. At some point the plan changed.
Despite being assured that his hedge fund investments would not be redeemed until
“several months into 2017,” Mr. Schmidt alleges that he received notice from Wells Fargo on
December 8, 2016 that Wells Fargo would redeem his hedge fund investments on December 31,
2016. Id. at 7. Mr. Schmidt attempted to elicit an explanation for the accelerated redemption
timeline but claims that “no satisfactory answer was provided.” Id. Mr. Schmidt alleges that the
accelerated timeline put him in the “untenable position of choosing whether to remain employed
and potentially face unknown colossal tax and/or opportunity cost consequences by having to
redeem his investment without the opportunity to conduct due diligence prior to the redemption,
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or to resign from his position before the [end of the] five-year term of his employment
agreement.” Id. On December 13, 2016 Ms. O’Connor requested that Mr. Schmidt submit his
resignation and Mr. Schmidt complied. Id. Mr. Schmidt asserts that this interaction amounted to
constructive discharge. Id. at 2, 9.
Mr. Schmidt filed a complaint on June 26, 2017, asserting four claims: (1) breach of
contract; (2) negligent misrepresentation; (3) negligence; and (4) promissory estoppel. See id. at
8–13. On August 9, 2017 Wells Fargo filed a motion to dismiss Mr. Schmidt’s complaint in its
entirety. ECF No. 16. That motion has been fully briefed. See ECF Nos. 16, 24, 27.
II. STANDARD OF REVIEW
To survive a 12(b)(6) motion to dismiss, the complaint must contain “enough facts to
state a claim to relief that is plausible on its face.” Ridge at Red Hawk, L.L.C. v. Schneider, 493
F.3d 1174, 1177 (10th Cir. 2007) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). A plausible claim is a claim that “allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
While the Court must accept the well-pleaded allegations of the complaint as true and construe
them in the light most favorable to the plaintiff, Robbins v. Wilkie, 300 F.3d 1208, 1210 (10th
Cir. 2002), conclusory allegations are not entitled to be presumed true, Iqbal, 556 U.S. at 681.
However, so long as the plaintiff offers sufficient factual allegations such that the right to relief
is raised above the speculative level, he has met the threshold pleading standard. See, e.g.,
Twombly, 550 U.S. at 556; Bryson v. Gonzales, 534 F.3d 1282, 1286 (10th Cir. 2008).
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III. ANALYSIS
Defendants move to dismiss plaintiff’s complaint in its entirety for failure to state a
claim. ECF 16 at 1. Defendants argue that each of plaintiff’s four counts should be dismissed as
a matter of law. Id. I will address each count in turn.
A. Count I: Breach of Contract.
In his complaint, plaintiff asserts that he entered into a five-year employment contract
with defendants on May 5, 2016 which incorporated both oral and written terms. ECF No. 1 at
8. Plaintiff contends that defendants’ accelerating his investment redemption timeline—which
resulted in his resigning—amounted to a constructive discharge, thereby breaching the terms of
his employment contract.1 ECF No. 16 at 9–10. Plaintiff further asserts that defendants’ actions
constituted a breach of the implied covenant of good faith and fair dealing that is inherent in
every contract under Colorado law. Id. at 10. Defendants argue in their motion to dismiss that
Colorado’s statute of frauds renders plaintiff’s alleged contract void, precluding his breach of
contract claim and his related claim for breach of the implied covenant of good faith and fair
dealing. ECF No. 16 at 1–2. Because I agree with defendants that plaintiff has failed to plead
facts supporting the existence of a valid contract, I find that his breach of contract claim and his
claim for breach of the implied covenant of good faith and fair dealing both fail.
1. Colorado’s Statute of Frauds.
Colorado’s statute of frauds provides that, with exceptions not relevant here, “[e]very
agreement that by the terms is not to be performed within one year after the making thereof” is
1
In his complaint, plaintiff provides an alternative theory of contract formation, namely that because he continued to
perform under the terms of the 2011 Agreement, he and defendants entered into an implied contract with the same
terms. ECF No. 1 at 8. Plaintiff has apparently abandoned this argument by not raising it in response to defendants’
motion to dismiss. See, e.g., Morman v. Campbell Cty. Mem’l Hosp., 632 F. App’x 927, 932–33 (10th Cir. 2015)
(“[Plaintiff] abandoned the policy argument when she failed to argue it in response to the motion to dismiss.”).
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void. C.R.S. § 38-10-112(a). The Colorado Supreme Court construes the one-year provision
narrowly, applying it to “only those agreements that exclude, by their very terms, the possibility
of performance within one year.” Prof’l Bull Riders, Inc. v. AutoZone, Inc., 113 P.3d 757, 761
(Colo. 2005). Although several partial terms were conveyed in Mr. Diehl’s May 2016 letter, the
parties do not dispute that the alleged employment contract in this case was an oral agreement.
See ECF Nos. 16, 24. Thus “the issue is whether, based on the undisputed facts, the employment
contract could have been fully performed according to its terms within one year.” Vinton v.
Adam Aircraft Indus., Inc., 232 F.R.D. 650, 658 (D. Colo. 2005). An agreement for continued
employment for a period of five years cannot be performed within one year. See Gill-Mulson v.
Eagle River Fire Protection Dist., No. 11-CV-01896-RBJ-KLM, 2013 WL 258745, at *3 (D.
Colo. Jan. 23, 2013) (“[A]n agreement for continued employment for two years cannot be
performed within one year.”). Therefore, the alleged oral contract is void under the plain
wording of the statute.
Plaintiff argues that the statute of frauds does not apply because his oral contract was in
fact capable of being performed in less than one year. ECF No. 24 at 4. In particular, plaintiff
asserts in response to the motion to dismiss that because he could be “terminate[d] for cause,
such as for unsatisfactory performance, at any time,” his contract could have been performed
within one year. Id. at 5. Indeed, “[t]he general rule in Colorado is that contracts of employment
for ‘so long as the employee performs satisfactorily’ are not barred by the statute of frauds.”
Vinton, 232 F.R.D. at 658 (quoting Pickell v. Ariz. Components Co., 902 P.2d 392, 397 (Colo.
App. 1994) rev’d on other grounds, 931 P.2d 1184 (Colo. 1997)). However, as defendants point
out, plaintiff failed to plead any facts in his complaint that would support his assertion that the
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oral agreement in this case was such an agreement. See ECF No. 27 at 2. Instead, plaintiff’s
complaint expressly pleads that his employment agreement contemplated a five-year term. ECF
No. 1 at 8. I am not convinced by plaintiff’s argument in response to the motion to dismiss that
because the complaint contained the vague assertion that he “adequately performed his job
responsibilities,” plaintiff had by implication pled that the employment agreement was of the
type contemplated in Vinton. See ECF No. 24 at 5–6. Instead, I agree with defendants that
plaintiff has improperly attempted to “‘add[] factual allegations in response to Defendant’s . . .
motion to dismiss.’” ECF No. 27 at 2 (quoting Sudduth v. Citimortgate, Inc., 79 F. Supp. 3d
1193, 1198 (D. Colo. 2015)). For this reason alone, plaintiff’s complaint fails to plausibly plead
the type of oral agreement that might survive the statute of frauds.
However, even if plaintiff had plausibly pled that the five-year oral agreement in his case
could be terminated for cause, he has failed to provide authority indicating that such an
agreement would be immune from the statute of frauds. The cases plaintiff cites in support of
the notion that terminating a contract within a year might constitute “performing” that contract
are inapposite. In Professional Bull Riders the Colorado Supreme Court found that the statute of
frauds did not invalidate an oral agreement in which the defendant agreed to sponsor the
plaintiff’s event for two seasons, an obligation that would necessarily take more than one year.
113 P.3d at 761. However, that agreement contained a provision expressly allowing the
defendant to elect to complete its performance and terminate the contract within one year of
entering the agreement. Id. The Court observed that the agreement “did not purport to grant [the
defendant] an option to terminate the agreement at will or upon the occurrence of some particular
event; rather it provided [the defendant] with two alternative ways of satisfying its obligations as
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contemplated by the agreement,” one of which would arise within a year. Id. Unlike in
Professional Bull Riders, the plaintiff in this case has not alleged that the oral agreement at issue
contained an affirmative election provision that contemplated termination within one year as an
alternative method of satisfying the contract. Thus, because the court in Professional Bull Riders
was not “decid[ing] whether an option to terminate a contract must always be construed as an
alternative and sufficient means of performance,” this case would not support plaintiff’s
argument even if he had sufficiently alleged that such an option was present in his case. Id.
Vinton is similarly inapt. In that case the oral agreement provided for employment until
the plaintiff’s retirement, but the plaintiff testified that the agreement also contemplated that he
could be terminated for performance issues. Vinton, 232 F.R.D. at 658. A different judge in this
Court determined that the statute of frauds did not invalidate the agreement in Vinton. Id. at 659.
This determination was based in part on the following rule from Pickell v. Arizona Components
Co., 902 P.2d at 397:
Contracts for ‘permanent’ employment include employment for life, until
retirement, until the employee leaves voluntarily, so long as the employee
performs satisfactorily, or so long as the employer remains in business. These
contracts do not violate the statute of frauds because any of these events could
occur within one year.
As Pickell makes clear, oral agreements contemplating indefinite terms of employment can be
satisfied within a year should the triggering event occur during that time. Thus, these
agreements will indeed have been fully performed “according to their terms” within a year
should the contemplated event arise during that time. The oral agreement in Vinton was defined
by two indefinite terms: the plaintiff’s retirement or his unsatisfactory performance. 232 F.R.D.
at 659. In this case, in contrast, the clear terms of the oral agreement contemplated a five-year
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term of employment, rather than an indefinite term that could fall either within or outside of one
year. As such, unlike in Vinton or Professional Bull Riders, the requirements of the oral
agreement at issue in this case could not be performed within one year. Instead, by the clear
terms of the agreement the requirements were to be completed in five years. The statute of
frauds therefore voids this oral agreement.
2. Applicability of the Partial Performance Exception.
Alternatively, plaintiff alleges that if the Court finds that Colorado’s statute of frauds
applies to the contract between him and defendants, then the part performance doctrine precludes
the application of the statute to this case. ECF No. 24 at 8. The part performance doctrine
precludes application of the statute of frauds “if there is part performance of an oral contract
which is: (1) substantial; and (2) required by, and fairly referable to no other theory besides that
allegedly contained in the oral agreement.” Nelson v. Elway, 908 P.2d 102, 108 (Colo. 1995)
(citing L.U. Cattle Co. v. Wilson, 714 P.2d 1344, 1347 (Colo. App. 1986)). The Colorado
Supreme Court explains that the “rule is based on the premise that the conduct constituting the
partial performance must convincingly evidence the existence of the oral agreement.” Id. at 109
(citing John D. Calamari & Joseph M. Perillo, Contracts § 19–15, at 799 (3d ed. 1987)). Here
plaintiff argues that he partially performed the oral contract and that his performance was
“substantial and required by the oral agreement.” ECF No. 24 at 8. Plaintiff’s argument fails.
First, under Colorado law the partial performance exception to the statute of frauds does
not apply to oral employment contracts. “In the context of an oral contract for at-will
employment, in which the defense of statute of frauds has been raised . . . neither the partial
performance of services nor the payment of compensation will be deemed sufficient to avoid the
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bar of the statute as to enforcement of the entire contract.” Chidester v. Eastern Gas and Fuel
Assocs., 859 P.2d 222, 224 (Colo. App. 1992); see also Wilcott v. Matlack, Inc., 64 F.3d 1458,
1465 (10th Cir. 1995) (concurring with Chidester in the context of “oral employment
contract[s]”). The oral agreement between plaintiff and defendants in this case was for
employment and was governed by Colorado law, and as noted, plaintiff failed to allege in his
complaint that the agreement was terminable only for cause rather than at-will. Thus, even
accepting all of plaintiff’s well-pleaded facts as true, plaintiff cannot state a plausible claim that
the partial performance doctrine precludes application of Colorado’s statute of frauds in his case.
Even if the partial performance exception applied to employment cases, plaintiff has
failed to plausibly plead substantial part performance in this case. As evidence of his substantial
part performance, plaintiff merely states that he “was employed as Head of Supply Chain
Finance for several months in 2016” and that he received “payment from [defendants] consistent
with the employee-employer relationship established in the oral contract.” ECF No. 24 at 8. A
greater factual showing is required. For example, in Nelson the Colorado Supreme Court held
that selling automobile dealerships, selecting a corporate name, and providing information about
a new incorporation to an attorney were not substantial enough steps to trigger application of the
partial performance doctrine for an alleged oral agreement to sell automobile dealerships.
Nelson, 908 P.2d at 109; see also Judson v. Black, No. 10-CV-00504-CMA-KMT, 2015 WL
134172 at *4, (D. Colo. Jan. 9, 2015) (holding that plaintiff’s funding and closing of real estate
transactions was not “convincing evidence” of oral agreements relating to the sale of real
property). Here the only evidence supplied by plaintiff to support his partial performance is that
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he worked for several months out of a five-year contract, and that he was paid. These facts fail
to meet the “substantial” standard illustrated in Nelson and Judson.
Because the statute of frauds invalidates the oral agreement plaintiff entered into with
defendants, and because the partial performance doctrine does not apply in this case, plaintiff has
failed to plead the existence of a valid contract with defendants. As a result, plaintiff’s claims
for breach of contract and breach of the implied covenant of good faith and fair dealing must
fail.2 Accordingly, defendants’ motion to dismiss plaintiff’s breach of contract claim is
GRANTED and the claim is dismissed.
B. Counts II and III: Negligent Misrepresentation and Negligence.
In the alternative, plaintiff claims that (1) defendants’ promise that “he would be given
the opportunity to assess his financial position at the end of 2016 and would have several months
into 2017 to take any action required under the Volcker Rule” amounted to negligent
misrepresentation; and that (2) defendants were negligent when they “unreasonably and
arbitrarily accelerated the redemption date for [his] hedge fund investments.” ECF No. 1 at 10–
11. Defendants counter that plaintiff’s negligence claims are defective because he cannot
establish the existence of a relevant duty defendants owed plaintiff. ECF No. 16 at 7. I agree
with defendants.
“In Colorado, the elements of a negligence claim consist of . . . a duty owed by the
defendant to the plaintiff, a breach of that duty, injury to the plaintiff, and a proximate cause
2
“[A] necessary predicate for a claim for breach of the covenant of good faith and fair dealing is the
existence of a contract, ‘as the claim generally must be tied to a specific contract term that allows for
discretion on the part of either party.’” Peace v. Parascript Mgmt., Inc., 59 F. Supp. 3d 1020, 1029 (D.
Colo. 2014) (quoting Occusafe, Inc. v. EG & G Rocky Flats, Inc., 54 F.3d 618, 624 (10th Cir. 1995)
(internal citation and quotation marks omitted)). Because plaintiff has failed to plead the existence of a
contract in this case, his claim for breach of the implied covenant of good faith and fair dealing
necessarily fails.
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relationship between the breach and the injury.”3 Ayala v. United States, 846 F. Supp. 1431,
1437 (D. Colo. 1993), aff’d, 49 F.3d 607 (10th Cir. 1995). “A negligence claim fails where the
law does not impose a duty on the defendant to act for the plaintiff’s benefit.” Keller v. Koca,
111 P.3d 445, 447–48 (Colo. 2005) (internal citation omitted). The Court must determine as a
matter of law whether a defendant in a particular action owes the plaintiff a legal duty. Id. Thus,
plaintiff’s failure to establish as a matter of law that defendants owed him a duty is fatal to his
claims of negligence and negligent misrepresentation.
Whether defendants owed plaintiff a duty depends on the nature of their employment
relationship.4 In the absence of a valid employment contract (for the reasons discussed above),
Colorado law directs that plaintiff was employed “at will.” Anderson v. Regis Corp., 185 F.
App’x 768, 771 (10th Cir. 2006) (“Employment in Colorado is generally at will.”). When an
individual is employed at will, his “‘employment may be terminated by either party without
cause and without notice,’” and his “‘termination does not give rise to a cause of action.’”
McGuire v. Continental Airlines, Inc., 210 F.3d 1141, 1145 (10th Cir. 2000) (quoting Crawford
Rehab. Servs. v. Weissman, 938 P.2d 540, 546 (Colo. 1997)). Further, “employers operating
under at-will employment principles are generally free to discharge employees for any reason,
even if that reason is wrong or incorrect, as long as the reason asserted does not trigger a
recognized exception to the at-will termination doctrine.” Wisehart v. Meganck, 66 P.3d 124,
127 (Colo. App. 2002). Moreover, courts recognize that “a special relationship that would give
3
The elements of a negligent misrepresentation claim are distinct from the elements of negligence, see
Allen v. Steele, 252 P.3d 476, 482 (Colo. 2011), but because both parties treat this claim under the general
“negligence” framework, the Court will consider any distinct arguments plaintiff may have had with
respect to the negligent misrepresentation claim to have been waived.
4
Plaintiff does not assert that defendants owed him any duty in their capacities as his investment
managers or advisors, instead asserting only employment-related duties. See ECF No. 24 at 10.
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rise to a tort duty of honesty and disclosure is not recognized in the usual employment
relationship.” Id. at 129.
Plaintiff has failed to identify a duty defendants owed him as an at-will employee. In his
complaint, plaintiff contends that defendants misrepresented without reasonable care “that he
would have several months into 2017 to resolve any issues with his employment related to the
Volcker Rule” when in fact he was required to resolve these issues at the end of 2016. ECF No.
1 at 10–11. Relatedly, plaintiff asserts that defendants owed him “a duty of reasonable care with
respect to his employment and his investments.” Id. As the cases discussing at-will employment
demonstrate, defendants had no duty derived from the employment relationship to be honest or
to disclose particular facts to plaintiff, and they were free to discharge plaintiff at any time, even
for invalid reasons. As such, plaintiff’s negligence claims asserted on the basis of his
employment with defendants fail to identify any particular duty owed to him under the
circumstances.
Perhaps given the broad latitude with which an employer may treat an at-will employee,
plaintiff’s response to the motion to dismiss instead relies on the assertion that defendants
breached the “‘duty of ordinary care’” that every individual owes “‘not to create an unreasonable
risk of harm to others.’” ECF No. 24 at 10 (quoting Laughman v. Girtakovskis, 374 P.3d 504,
507 (Colo. App. 2015)). However, plaintiff’s assertion of this broadly framed duty appears to be
merely an end-run around the at-will employment context in which he asserts his negligence
claims. Plaintiff has not asserted that defendants created any “unreasonable risk of harm” to him
outside of those harms that arose in the employment context, and as noted, defendants did not
have any duty to avoid these risks given plaintiff’s status as an at-will employee. Thus, even
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taking all of plaintiff’s well-pleaded facts as true, his complaint simply does not plausibly
establish that defendants breached the duty of ordinary care through their actions.
Because plaintiff has failed to identify any employment-related duty that defendants
owed him in these circumstances or to plausibly plead a breach of the duty of ordinary care, his
claims of negligent misrepresentation and negligence fail as a matter of law.5 Accordingly,
defendants’ motion to dismiss plaintiff’s negligent misrepresentation and negligence claims is
GRANTED, and the claims are dismissed.
C. Count IV: Promissory Estoppel.
Plaintiff last asserts that, in the alternative, he is entitled to recover damages from
defendants on a theory of promissory estoppel. ECF No. 1 at 12. Notwithstanding a statute of
frauds defense, an employee can recover on a theory of promissory estoppel if equity requires it.
Kiely v. St. Germain, 670 P.2d 764, 768–70 (Colo. 1983). Under Colorado law, a claim for
promissory estoppel consists of four elements: (1) a promise; (2) that the promisor reasonably
should have expected would induce action or forbearance by the promisee or a third party; (3) on
which the promisee or third party reasonably and detrimentally relied; and (4) that must be
enforced in order to prevent injustice. Pinnacol Assurance v. Hoff, 375 P.3d 1214, 1221 (Colo.
2016). Plaintiff’s complaint alleges each of these elements. However, plaintiff has failed to
sufficiently plead the last two elements as required to survive defendants’ motion to dismiss.
Defendants argue in their motion to dismiss that the first two elements of plaintiff’s
promissory estoppel claim are insufficiently pled as well as incurable. ECF No. 16 at 9–11. I
disagree. I am not persuaded by defendants’ argument that plaintiff’s wealth advisor Ms.
5
Because I find that the negligence claims fail, I need not reach the parties’ argument about the
application of the Economic Loss Rule. See ECF No. 16 at 9, No. 24 at 10, No. 27 at 5.
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O’Connor and his investment manager Mr. Hojnick—both employed by Wells Fargo—
necessarily lacked authority to make a promise that would bind plaintiff’s employer, who was
also a Wells Fargo employee. ECF No. 16 at 10. Instead I find it plausible that plaintiff might
have reasonably concluded that his Wells Fargo investment advisors’ promise was binding on his
Wells Fargo employer. See Hoyt v. Target Stores, Div. of Dayton Hudson Corp., 981 P.2d 188,
194 (Colo. App. 1998) (an enforceable promise must “be one that the employee could reasonably
conclude constituted a commitment by the employer”). I am also not persuaded by defendants’
argument that the alleged promise or promises were no more than “vague statements.” ECF No.
16 at 10. Judging by plaintiff’s complaint, I find that it is at least plausible that (1) defendants
made a promise to plaintiff that he would have a few months into 2017 to resolve his Volcker
Rule-related employment issues and that (2) defendants reasonably should have expected that the
promise would induce action or forbearance by plaintiff. See ECF No. 1 at 12. Because plaintiff
has provided “enough facts to raise a reasonable expectation that discovery will reveal evidence
of [the first two elements of promissory estoppel],” it would be inappropriate to dismiss
plaintiff’s claim after considering evidence of the first two elements. Twombly, 550 U.S. at 556.
The trouble for plaintiff begins with the third element. Plaintiff’s detrimental reliance
argument is conclusory and fails to meet the threshold pleading standard under Iqbal. Nowhere
in his complaint does plaintiff plead any facts that, taken as true, show he relied on the alleged
promise to his detriment. See Marquardt v. Perry, 200 P.3d 1126, 1129 (Colo. App. 2008)
(“Reliance can be shown where a party alters his or her position as a consequence of another’s
conduct.”) (citation omitted). Plaintiff claims only that defendants’ actions in December of 2016
caused him to accelerate his decision-making process with respect to the Volcker Rule, and that
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this acceleration forced him to resign, causing “monetary damage in the form of lost wages and
benefits” for the remainder of his five-year employment contract. ECF No. 1 at 11. However,
plaintiff has not alleged that he would have made a different, better decision had he instead been
given “several months into 2017” to make this decision. According to the complaint, plaintiff
and defendants both knew what the Volcker Rule required of them, and that it was going to come
into effect in July of 2017. Id. at 6. Absent a promise from defendants, plaintiff was still going
to be forced to make the difficult decision about his investments at some point before the July
deadline. The relevant inquiry is not whether plaintiff’s decision to resign was unnecessarily
accelerated, which, though inconvenient does not necessarily imply any detriment to plaintiff;
rather, it is whether “the opportunity to conduct due diligence” would have made a difference in
plaintiff’s ultimate decision. See id. at 7. Because plaintiff has not alleged that he made a
different decision in reliance on defendant’s promise, he has failed to plead this element of the
promissory estoppel claim.
The fourth and final element of plaintiff’s promissory estoppel claim—that enforcement
of the promise is necessary to prevent injustice—is also insufficiently pled. Under Colorado law,
the injustice element of promissory estoppel “involves a discretionary decision for the court.”
Jones v. Denver Pub. Schs., 427 F.3d 1315, 1326 (10th Cir. 2005) (citing Kiely, 670 P.2d at 767).
Without demonstrating how he detrimentally relied on defendants’ alleged promise, plaintiff
cannot show that justice requires the promise be enforced. Consequently, I cannot form an
opinion as to the plausibility of plaintiff’s injustice claim without more facts.
As a result, I find that plaintiff has sufficiently pled the first two elements of his
promissory estoppel claim but has failed to meet the threshold pleading standard for the final two
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elements. Defendants’ motion to dismiss plaintiff’s promissory estoppel claim is GRANTED,
and this claim is dismissed.
ORDER
Defendants’ motion to dismiss, ECF No. 16, is granted. Plaintiff’s claims are dismissed.
Because the Court cannot rule out the possibility that plaintiff could, in good faith, allege facts
that would plausibly support one or more of his claims, this dismissal will be without prejudice
and with leave to amend.
DATED this 28th day of March, 2018.
BY THE COURT:
___________________________________
R. Brooke Jackson
United States District Judge
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