Bristol Bay Prods., LLC v. Lampack

• Decision Date: 21 October 2013
• Docket Number: Supreme Court Case No. 12SC139
• Citation: 312 P.3d 1155
• Parties: BRISTOL BAY PRODUCTIONS, LLC, f/k/a Crusader Entertainment, LLC, Petitioner v. Peter LAMPACK; The Peter Lampack Agency, Inc.; Simon & Schuster, Inc.; and Penguin Group USA, Inc., Respondents
• Court: Colorado Supreme Court

312 P.3d 1155

BRISTOL BAY PRODUCTIONS, LLC, f/k/a Crusader Entertainment, LLC, Petitioner

v.Peter LAMPACK; The Peter Lampack Agency, Inc.; Simon & Schuster, Inc.; and Penguin Group USA, Inc., Respondents

Supreme Court Case No. 12SC139

Supreme Court of Colorado.

October 21, 2013

Rehearing Denied November 35, 2013

Court of Appeals Case No. 10CA2039

Lewis Roca Rothgerber LLP, Frederick J. Baumann, Jesús M. Vázquez, Denver, Colorado, O'Melveny & Myers LLP, Marvin S. Putnam, Jessica Stebbins Bina, Los Angeles, California, Attorneys for Petitioner.

Haddon, Morgan and Foreman, P.C., Ty Gee, Denver, Colorado, Attorneys for Respondents Peter Lampack and The Peter Lampack Agency, Inc.

Wheeler Trigg O'Donnell LLP, N. Reid Neureiter, Denver, Colorado, Attorneys for Respondent Simon & Schuster, Inc.

Dorsey & Whitney LLP, Gregory S. Tamkin, Van Aaron Hughes, Denver, Colorado, Attorneys for Respondent Penguin Group (USA), Inc.

McElroy, Deutsch, Mulvaney & Carpenter, LLP, William K. Rounsborg, Greenwood Village, Colorado, Attorneys for Amicus Curiae Colorado Defense Lawyers Association.

En Banc

CHIEF JUSTICE BENDER delivered the Opinion of the Court.

¶ 1 Bristol Bay Productions, LLC brought claims against author Clive Cussler in California for fraud based on allegations that he had misrepresented his readership figures. Bristol Bay alleged that Cussler misrepresented his readership figures by claiming that he had sold over 100 million books when, in fact, the figure was closer to 40 million. According to Bristol Bay, it was fraudulently induced by Cussler's misrepresentations and reasonably relied on them by purchasing the film rights to Cussler's books and producing an unsuccessful movie based on one of them, Sahara, with resulting damages of more than $50 million. In a special verdict, a California jury found that Cussler misrepresented his readership figures and that Bristol Bay reasonably relied on those misrepresentations but that Bristol Bay's reliance on those misrepresentations did not cause its damages.

¶ 2 Meanwhile, Bristol Bay sued Cussler's literary agent and publishers for fraud in Colorado based on the same allegations directed at Cussler in California and based on misrepresentations that Bristol Bay concedes before this court to have been the same: that they had misrepresented Cussler's readership figures by claiming that Cussler had sold over 100 million books. As in California, Bristol Bay alleged that it was fraudulently induced by the misrepresentations and reasonably relied on them by purchasing the film rights to Cussler's books and producing Sahara. Again, Bristol Bay alleged damages of more than $50 million.

¶ 3 Following BristolBay's unsuccessful appeal of the California action, the trial court dismissed Bristol Bay's Colorado action under C.R.C.P. 12(b)(5) on issue preclusion grounds for failure to state a claim. The trial court found “no meaningful difference” between the alleged misrepresentations and concluded that Bristol Bay was precluded from bringing the Colorado action because the California jury had determined that Bristol Bay's reliance on the misrepresentations did not cause its damages, irrespective of who made them. The court of appeals affirmed. Bristol Bay Prods., LLC v. Lampack, 313 P.3d 674, 2011 WL 5865902 (Colo.App.2011).

¶ 4 We hold that Bristol Bay's Colorado action is barred on issue preclusion grounds because the identity of the defendants in this case is not relevant to the causation element Bristol Bay must prove to prevail on its fraud and fraud-based claims. Because applying issue preclusion is appropriate, we must determine whether the trial court erred by dismissing Bristol Bay's Colorado action under C.R.C.P. 12(b)(5). We hold that the trial court erred by dismissing Bristol Bay's Colorado action under C.R.C.P. 12(b)(5) without converting the defendants' motion to dismissinto a motion for summary judgment under C.R.C.P. 56.

¶ 5 Hence, we affirm that portion of the court of appeals' decision applying issue preclusion to bar Bristol Bay's Colorado action, but we reverse that portion of its decision upholding dismissal under C.R.C.P. 12(b)(5) for failure to state a claim. Because C.R.C.P. 56 was the appropriate procedure to resolve this case, Bristol Bay is not liable for attorney fees under Colorado's attorney fee-shifting statute.

I. Facts and Procedural History

¶ 6 Sahara, a movie starring Matthew McConaughey as master adventurer Dirk Pitt, a character from author Clive Cussler's widely read adventure novels, was released in 2005 with the expectation of becoming a successful movie and eventual film franchise similar to the Indiana Jones series. Instead, the movie was plagued by pre-production problems, opened to mostly tepid reviews, and grossed about half of its multi-million-dollar budget. Plans to produce additional Dirk Pitt movies were scrapped. The fallout spawned litigation in California and then Colorado, with Bristol Bay Productions, LLC, which produced Sahara, alleging that it was fraudulently induced into purchasing the film rights to Cussler's novels and then producing Sahara based on inflated representations of Cussler's readership figures. We begin with the California action.

The California Action

¶ 7 Bristol Bay Productions, LLC (“Bristol Bay”) ¹ contracted with Clive Cussler to produce a film of Cussler's novel Sahara with an option to produce additional movies based on other Dirk Pitt books. After pre-production began, a dispute arose about the Sahara screenplay. Cussler, who retained approval rights over the script, grew increasingly dissatisfied with its progress and began writing his own version. After Bristol Bay refused to use it, Cussler stopped approving screenplay drafts.

¶ 8 Before Sahara hit theaters, Cussler sued Bristol Bay in California for breach of contract and other claims because it had failed to secure his approval of the final screenplay. During discovery, Bristol Bay learned that Cussler's readership figures were smaller than it had been led to believe they were: only 40 million, and not 100 million, of Cussler's books had been sold. Bristol Bay then brought claims against Cussler for fraud, alleging that Cussler or Cussler's literary agent Peter Lampack misrepresented Cussler's readership figures and that those misrepresentations induced Bristol Bay to agree to enter the film-rights contract and produce Sahara at a loss of more than $50 million.

¶ 9 The California jury returned a special verdict rejecting Bristol Bay's fraud claims. Despite the jury's findings that Cussler misrepresented his readership figures and that Bristol Bay reasonably relied on those misrepresentations, it also found that Bristol Bay's reliance on Cussler's misrepresentations did not cause its damages or losses. Because the jury's special verdict did not provide a reason why Bristol Bay's reasonable reliance did not cause its damages, we are left to speculate that Sahara was unsuccessful for reasons other than its reliance on Cussler's misrepresentations of his readership figures.

¶ 10 While the California trial was ongoing but months before the California jury had returned its special verdict, Bristol Bay sued Cussler's agent Lampack and Cussler's publishers, Simon & Schuster, Inc. and Penguin Group (USA), Inc. (collectively, “Publishers”), in Colorado. We turn to the Colorado action now before us.

The Colorado Action

¶ 11 In Colorado, Bristol Bay sued Lampack and the Publishers based on the same allegations directed at Cussler in California and based on the same misrepresentations he made: that they had misrepresented Cussler's readership figures by claiming that Cussler had sold over 100 million books when, in fact, the accurate figure was closer to 40 million. That the misrepresentations alleged in the Colorado action are the same as those alleged in California was conceded by Bristol Bay at oral argument before this court. Bristol Bay alleged that it was fraudulently induced by those misrepresentations and relied on them to determine the breadth of Cussler's fan base, the appropriate purchase price for the film rights, and the money to spend developing, producing, and marketing Sahara. Again, Bristol Bay alleged damages of more than $50 million.

¶ 12 After the California jury returned its special verdict, Lampack and the Publishers moved to stay the Colorado action on issue preclusion grounds. They alleged that Bristol Bay was attempting to recover identical damages based on identical issues already litigated in the California action–that misrepresentations about Cussler's readership figures induced it to buy the film rights and to produce Sahara. Bristol Bay opposed the motion, and the parties submitted voluminous documents from the California action to support their respective positions, including pleadings, jury instructions, the jury's special verdict, hundreds of pages of trial transcripts, and affidavits from counsel.

¶ 13 Considering this material to address whether the issues were identical, and despite the fact that Bristol Bay's claims were based on the misrepresentations allegedly made by the Publishers rather than by Cussler, the trial court found “no meaningful difference between the content of the misrepresentations of fact alleged here and those presented to the jury in the prior litigation.” Given this finding, the trial court reasoned that the identity of the defendant may be relevant to whether Bristol Bay's reliance was reasonable but not to whether Bristol Bay's reliance caused its damages, “a contention which [Bristol Bay] actually litigated and on which it necessarily and demonstrably failed to prevail in the California Action.” In the trial court's view, Bristol Bay “simply failed to convince the California jury that its reasonable reliance on these false representations caused it any injury.” Hence, the trial court granted the motion to stay, concluding that issue preclusion would bar Bristol Bay's Colorado action...