Ackmann v. Merchants Mortg. & Trust Corp., 78-795

• Decision Date: 09 September 1982
• Docket Number: No. 78-795,78-795
• Citation: 659 P.2d 697
• Parties: , 36 UCC Rep.Serv. 213 Mr. and Mrs. Lowell E. ACKMANN, et al., Plaintiffs-Appellees and Cross-Appellants, and Mr. and Mrs. Roy Kopeikin and Mr. and Mrs. Philip Wangelin, Plaintiffs and Cross-Appellants, v. MERCHANTS MORTGAGE & TRUST CORPORATION, Defendant-Appellant and Cross-Appellee. . II
• Court: Colorado Court of Appeals

Page 697

659 P.2d 697

36 A.L.R.4th 205, 36 UCC Rep.Serv. 213

Mr. and Mrs. Lowell E. ACKMANN, et al., Plaintiffs-Appellees and Cross-Appellants and Mr. and Mrs. Roy Kopeikin and Mr. and Mrs. Philip Wangelin Plaintiffs and Cross-Appellants, v. MERCHANTS MORTGAGE & TRUST CORPORATION, Defendant-Appellant and Cross-Appellee.

No. 78-795.

Colorado Court of Appeals Div. II.

Sept. 9, 1982.

As Modified on Denial of Rehearings

Oct. 21, 1982.

Certiorari Granted Feb. 28, 1983.

Certiorari Denied Feb. 28, 1983.

Davis, Miner & Barnhill, George F. Galland, Jr., Chicago, Ill., Arthur L. Fine, Denver, for plaintiffs-appellees and cross-appellants.

Davis, Moorhead & Ceriani, P.C., Gary J. Ceriani, Denver, for defendant-appellant and cross-appellee.

STERNBERG, Judge.

Following remand from the Colorado Supreme Court, we now address issues not discussed in earlier stages of this appeal. We affirm the judgment of the trial court on all issues.

Plaintiffs purchased undeveloped lots from the Woodmoor Corporation and executed promissory notes secured by deeds of trust in partial payment for their lots. Woodmoor sold the notes to Merchants Mortgage Trust Corporation. Woodmoor failed to make the promised improvements and filed a petition in bankruptcy. Plaintiffs then stopped making payments on their promissory notes and sought a judgment declaring that they were not liable to Merchants on their promissory notes.

Plaintiffs contended that Woodmoor's conduct violated the securities law of Colorado and of the United States and the Interstate Land Sales Full Disclosure Act (ILSFDA), and constituted common law fraud and breach of contract. They further alleged that Merchants was not a holder in due course of their promissory notes and that Merchants took those notes subject to the defenses that the plaintiffs could have asserted against Woodmoor. Merchants counterclaimed to collect the full amount of the promissory notes that it had purchased.

The plaintiffs moved for class certification pursuant to C.R.C.P. 23 to represent others who were in the same situation. The trial court entered an order denying their motion for class certification. The 40 individual plaintiffs then continued the action in their individual capacities. All but four plaintiffs testified at the trial.

The trial court granted Merchants' motion for a directed verdict, dismissing the plaintiffs' ILSFDA claims. The trial court also granted a directed verdict against the four plaintiffs who failed to testify, concluding that there was insufficient evidence to establish the existence of a defense for fraudulent concealment to their promissory notes. However, the fraudulent concealment claims of the remaining 36 plaintiffs were submitted to the jury, which returned verdicts in favor of the plaintiffs. Plaintiffs were awarded damages and a cancellation of the unpaid principal and interest of the promissory notes.

This court reversed, Ackmann v. Merchants Mortgage & Trust Co., 44 Colo.App. 345, 619 P.2d 501 (1980), holding that Merchants should also have been granted a directed verdict on the plaintiffs' fraudulent concealment claims because the plaintiffs had not shown that Woodmoor concealed known present or past facts which made non-performance almost certain when it committed itself to install improvements in the future. In turn the Supreme Court reversed the decision of this court, Ackmann v. Merchants Mortgage & Trust Co., 645 P.2d 7 (Colo.1982), and remanded the case to this court for further proceedings to resolve other issues raised in the appeal and cross-appeal.

The remaining issues include the plaintiffs' contention that their motion for class certification should have been granted, the cross-appellants' challenge to the directed verdict entered against them because of deficiencies in proof resulting from their failure to testify, Merchants' claim that the trial court erred in not granting its motion for a directed verdict based upon its asserted status as a holder in due course, and Merchants' argument that the plaintiffs received what was in effect a double recovery of damages. We affirm the judgment of the trial court on all issues except that relating to damages.

I. CLASS ACTION CERTIFICATION

Merchants contends that plaintiffs may not raise the issue of class action certification as it was not included in their motion for new trial or in a motion to alter or amend the judgment. C.R.C.P. 59(h) provides that the party claiming error may appeal without the necessity of filing a motion for new trial or a motion to alter or amend a judgment when a final judgment is entered after any hearing not involving controverted issues of fact. And, a motion for a new trial is not required when a trial court rules on the issue of class action certification following the presentation of briefs and oral arguments. Levine v. Empire Savings & Loan Ass'n, 40 Colo.App. 285, 579 P.2d 642 (1977), aff'd, 197 Colo. 293, 592 P.2d 410 (1979). Here, in contrast, defendants properly raised the issue of the insufficiency of allegations supporting a class action and the plaintiffs failed to amend their complaint prior to the trial court's ruling on defendant's motion. Thus, plaintiffs are precluded from raising the certification issue on appeal. Levine, supra.

Here, plaintiffs alleged class action status by copying the provisions of C.R.C.P. 23(a) and (b) into paragraph two of their complaint. They later filed a motion for class action determination. Defendant moved to strike the class action allegations contained in paragraph two of plaintiffs' complaint. After review of the file and of the briefs, the trial court issued an order denying class certification. At no time did plaintiffs request the right to amend their complaint. Therefore, they are precluded from raising the issue of class certification on appeal.

II. DISMISSAL OF NON-TESTIFYING PLAINTIFFS' CLAIMS

Of the 40 plaintiffs who brought suit individually, four, the Kopeikins and the Wangelins, did not testify. These plaintiffs alleged that the trial court erred in directing a verdict against them. Ordinarily, where a party fails to testify regarding facts and circumstances which appear to be material to the case which the party is attempting to establish, the inference may be made that the party refrained from testifying because the truth, if made to appear, would not aid that party's contention. Commercial Standard Insurance Co. v. Rinn, 100 Colo. 76, 65 P.2d 705 (1937); Campbell v. Creighton, 63 Colo. 478, 167 P. 975 (1917). However, these plaintiffs contend that personal testimony by them was not necessary to establish the reliance element for defense of fraudulent concealment.

In Morrison v. Goodspeed, 100 Colo. 470, 68 P.2d 458 (19...