Alpine Bank v. Hubbell
| Decision Date | 02 March 2007 |
| Docket Number | No. CIVA05CV00026EWNPAC.,CIVA05CV00026EWNPAC. |
| Citation | 506 F.Supp.2d 388 |
| Parties | ALPINE BANK, a Colorado banking corporation, Plaintiff, v. Platt T. HUBBELL, Kelley S. Hubbell, and Georgia Chamberlain, as Public Trustee of Garfield County, Colorado, Defendants. |
| Court | U.S. District Court — District of Colorado |
This is a deed foreclosure and breach of contract case. Plaintiff Alpine Bank (hereinafter "Plaintiff' or the "Bank") alleges that Defendants and Third-Party Plaintiffs Platt T. Hubbell and Kelley S. Hubbell defaulted on a promissory note to Plaintiff without justification, entitling the Bank to recovery. Defendants, in turn, allege: (1) their default is excused because Plaintiff breached the contract between them; (2) Plaintiff committed the torts of negligent misrepresentation and non-disclosure; and (3) Plaintiff violated the Colorado Consumer Protection Act (hereinafter "CCPA"), Colo.Rev.Stat. section 6-1-101, et seq. This matter is before the court on "Alpine Bank's Motion for Summary Judgment and Memorandum Brief in Support Thereof," filed April 5, 2006. Jurisdiction is premised upon diversity, 28 U.S.C. § 1332 (2006).
The following facts are taken from various submissions to the court and are the result of this court's painstaking endeavor to cull the undisputed from disputed facts despite both parties' flagrant disregard for my procedural rules.1 Plaintiff is a banking corporation with its principal place of business in Colorado. (Compl. for Foreclosure Pursuant to Rule 105 [Colorado Rules of Civil Procedure] ¶ 1 [filed Nov. 10, 2004] [hereinafter "Compl."]; admitted at Hubbells' Answer and Counterclaim ¶ 1 [filed Jan. 21, 2005] [hereinafter "Answer"].) At some point prior to January 22, 2003, Defendants, who were not full-time residents of Colorado, purchased land in the state with the intent to construct a new home on the property (hereinafter the "Project"). (Id. ¶¶ 2, 4; admitted at Answer ¶¶ 2, 4.) At that time, Plaintiff marketed its construction lending services by publicly advertising with the slogan: (hereinafter the "Advertisement"). (Hubbells' Resp. in Opp'n to Alpine Bank's Mot. for Summ. J., Ex. C [Bank Marketing Materials] [hereinafter `Defs.' Resp.'].) Also prior to January 22, 2003, Defendants met on more than one occasion with Elizabeth Cox, an assistant vice president in Plaintiff's Carbondale, Colorado branch to inquire about a home construction loan. (Id., Ex. B, Part 1 at 3-4 [Cox Dep.])2 During one such meeting, Defendants expressed their concern about building a home while living out-of-state and their resulting desire for regular communication with their lender regarding the progress of their home construction. (Id., Ex. B, Part 1 at 10, Part 2 at 1 [Cox Dep.].) Ms. Cox, in response to these concerns, informed Defendants that if they chose the Bank as their lender, it "would hire a professional inspection service to inspect the property's completeness once a month and that [Ms. Cox] as a loan officer would also inspect the property once a month [in order to] make sure that the monies that had been drawn were coincided with the project being at [that stage of] completion." (Id., Ex. B, Part 2 at 3 [Cox Dep.].) Ms. Cox did not make any disclaimer regarding the inspections and did not tell Defendants that the inspections would only be performed for the Bank's benefit; on the contrary, Ms. Cox understood that the inspections were for the customer's benefit as much as for the Bank's. (Id., Ex. B, Part 2 at 4 [Cox Dep.].)
On January 22, 2003, Defendants executed a promissory note (hereinafter the "Note"), Construction Loan Agreement (hereinafter "CLA"), and a Construction Dead of Trust with the Bank for the purpose of building a home on their Colorado property (hereinafter the "Project"). .) On July 25, 2004, the Note became due and payable in full. (Id., Ex. 2 [Note].)
The CLA provided in relevant part:
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make initial Advance and each subsequent Advance under this Agreement shall be subject to the fulfillment to Lender's satisfaction of all the conditions set forth in this Agreement and in Related Documents.
Approval of Contractors, Subcontractors, and Materialmen. Lender shall have approved a list of all contractors employed in connection with the construction of the improvements.... Lender shall have the right to communicate with any person to verify the facts disclosed by the list or by any application for any Advance, or for any other purpose.
Plans, Specifications, Permits. Lender shall have received and accepted a complete set of written Plans and Specifications setting forth all improvements for the Project, and Borrower shall have furnished to Lender copies of all permits and requisite approvals of any governmental body necessary for the construction and uses of the Project.
Architect's and Construction Contracts. Borrower shall have furnished in form and substance satisfactory to Lender an executed copy of the Architect's Contract and an executed copy of the Construction Contract.
Budget and Schedule of Estimated Advances. Lender shall have approved a budget for the Project and a schedule of the estimated amount and time disbursements of each Advance.
. . . .
Satisfactory Construction. All work usually done at the stage of construction for which disbursement is required shall have been done in a good and workmanlike manner ... in compliance with the Plans and Specifications. Borrower shall also have furnished to Lender such "proofs as Lender may require to establish the progress of the work, compliance with applicable laws, freedom of the Property from liens, and the basis for the requested disbursement.
Certification. Borrower shall have furnished to Lender a certification by an engineer, architect, or other qualified Inspector acceptable to Lender that the construction of the improvements has complied and will continue to comply with all applicable statutes, ordinances, codes, regulations and similar requirements.
DISBURSEMENT OF LOAN FUNDS....
Application for Advance. Each application shall be stated on a standard ... form approved by Lender, executed by Borrower, and supported by such evidence as Lender shall reasonably require.... Each application for an Advance shall be deemed a certification of Borrower that as of the date of such application, all representations and warranties contained in the Agreement are true and correct, and that Borrower is a in compliance with all provisions of this Agreement. Payments.... At its sole option, Lender may directly pay the General Contractor and any subcontractors or other parties the sums due under the Construction Contract. Borrower appoints Lender as its attorney-in fact to make such payments. This power shall be deemed coupled with an interest, shall be irrevocable and shall survive in Event or Default under this Agreement.
. . . .
LIMITATION OF RESPONSIBILITY. The making of any Advance by Lender shall not constitute or be interpreted as either (A) an approval or acceptance by Lender of the work done through the date of the Advance, or (B) a representation or indemnity by Lender to any party against any deficiency or defect in the work or against any breach of contract. Inspections and approvals of the Plans and Specifications, the Improvements, the workmanship and materials used in the Improvements, and the exercise of any other right of Inspection, approval, or injury granted to Lender in this Agreement are acknowledged to be solely for the protection of Lender's interests, and under no circumstances shall they be construed to impose any responsibility for liability of any nature whatsoever on Lender to any party. Neither Borrower nor any contractor, subcontractor, materialman, laborer, or any other person shall rely, or have a right to rely, upon Lender's determination of the appropriateness of any Advance. No disbursement or approval by Lender shall constitute a representation by Lender as to the nature of the Project, its construction, or its intended use for Borrower or for any other person, nor shall it constitute an Indemnity by Lender to Borrower or to any other person against any deficiency or defects in the Project or against any breach of contract.
(Id., Ex. 3 at 2-4[CLA].)3
On January 23, 2003, Defendants signed a residential construction agreement with Third-Party Defendant Carney Brothers Construction (hereinafter "CBC") for construction of the Project. (Pl.'s Br., Ex. 5 [Residential Construction Agreement].) Plaintiff was not a party to this agreement. (Id., Ex. 6 at No. 1 [Request for Admission].) According to Defendants, construction of the Project began in or around May 2003. (Defs.' Resp., Fact Issues Precluding Summ. J. ¶ 43.)4 Plaintiff controlled the disbursement of funds, but Defendants signed off on each of CBC's construction draws. (Id., Fact Issues Precluding Summ. J. ¶ 44.) Ms. Cox sent approval forms to Defendants for each disbursement, noting the billing was acceptable to her and the Bank. (Id., Ex. B, Part 6 at 8-9 [Cox Dep.].) In the last quarter of 2003, Defendants became concerned with the slow progress of the construction, as well as escalating costs. (Id., Fact Issues Precluding Summ. J. ¶ 45.) They had several meetings with CBC and the Bank attempting to resolve these issues. (Id.) On December 11,...
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