Casey v. Colorado Higher Educ. Ins. Benefits Alliance Trust, Court of Appeals No. 10CA1188

Citation2012 COA 134
Decision Date16 August 2012
Docket NumberCourt of Appeals No. 10CA1188
PartiesTerence Timothy Casey, as a representative of a class consisting of pre-6/30/2003 employees of Mesa State College who contributed to the Disability Trust; and Joseph Taylor, as a representative of a class consisting of all post-6/30/2003 employees of Mesa State College who contributed to the Disability Trust,Plaintiffs-Appellees, v. Colorado Higher Education Insurance Benefits Alliance Trust; Adams State College; Auraria Higher Education Center; Colorado School of Mines; Colorado State University at Pueblo; Fort Lewis College; Metropolitan State College of Denver; University of Northern Colorado; Western State College; and the following trustees in their official capacity as trustees of the Colorado Higher Education Insurance Benefits Alliance Trust, Darren Mathews, Ken Nufer, Kim Gailey, Judy Zewe, Marshall Parks, Mike Dougherty, Tracy Rogers, Blaine Nickeson, and Dee Martinez, efendants-Appellants.
CourtCourt of Appeals of Colorado

City and County of Denver Probate Court No. 09PR315

Honorable C. Jean Stewart, Judge

ORDER AFFIRMED IN PART, REVERSED IN PART

AND CASE REMANDED WITH DIRECTIONS

Division VII

Opinion by JUDGE BERNARD

Russel, J., concurs

Hawthorne, J., concurs in part and dissents in part

John Williams Legal, LLC, John Williams, Grand Junction, Colorado, for Plaintiffs-Appellees

Hall & Evans, LLC, Thomas J. Lyons, John E. Bolmer, II, Malcolm S. Mead,

Denver, Colorado, for Defendants-Appellants

¶1 This appeal requires us to decide whether the claims of employees in a lawsuit against public entities and public employees lie, or could lie, in tort. If so, the claims must be dismissed under the Colorado Governmental Immunity Act (CGIA). If not, the claims may proceed. We conclude that, under the circumstances here, some parts of the employees' claims are barred, but some are not. As a result, we affirm in part, reverse in part, and remand for further proceedings.

I. Background

¶2 Beginning in 1992, employees of nine Colorado colleges, including Mesa State College, contributed to a trust designed to provide long-term disability benefits for them if they were to become disabled. Each participating college appointed a trustee to the trust committee. The trust agreement required the employees and Mesa State to make these contributions.

¶3 The original trust was succeeded in 2003 by another, the Colorado Higher Education Insurance Benefits Alliance (CHEIBA) Trust.

¶4 The trustees of both trusts intentionally set the contribution amount higher than the anticipated benefit payments to create a reserve fund.

¶5 Mesa State withdrew from the CHEIBA trust in 2005, and it created a new disability trust. Mesa State and its employees then asked the CHEIBA trust to release approximately $1 million from the reserve fund that Mesa State and its employees had contributed to the original trust and to the CHEIBA trust. This money would be placed in the new trust, which would be administered by a new trustee. The CHEIBA trust refused this request.

¶6 Some of Mesa State's employees filed a class action suit to recover their share of the reserve fund. Plaintiff Terence Timothy Casey represents a class of employees who contributed to the original trust. Plaintiff Joseph Taylor represents a class of employees who contributed to the CHEIBA trust.

¶7 The defendants in this lawsuit are the CHEIBA trust; the eight other colleges that participated in the original trust and that continue to participate in the CHEIBA trust; and, in their official capacities, the trustees of the CHEIBA trust.

¶8 The employees alleged that they were third-party beneficiaries of the trust agreement. They claimed that defendants breached the contract, in the form of the trust agreements. This claim asserts that defendants

failed to perform their contractual obligations owed to plaintiffs including contractually imposed fiduciary duties and duties of good faith and fair dealing by depriving [p]laintiffs of all benefits of the trust reserve fund . . . and by taking action when they knew or should have known that it would afford employees of the [d]efendant [c]olleges a disproportionately larger amount of the trust reserves and leave [p]laintiffs with none of the reserve.

¶9 As relevant here, the employees requested relief in the complaint consisting of (1) an accounting to determine their share of the reserve fund; and (2) a declaratory judgment detailing the parties' rights and duties relative to the two trust agreements, including a disbursement of their share of the reserve funds to the trustee administering the new trust.

¶10 The employees originally filed this case in Mesa County. The defendants obtained a change of venue to Denver, where it was filed in the Denver Probate Court.

¶11 Defendants then moved to dismiss the case under C.R.C.P. 12(b)(1) and (5), arguing, in part, that the probate court did not have subject matter jurisdiction because the employees' claims were barred by the doctrine of sovereign immunity under the CGIA. Defendants also asked the court to dismiss the lawsuit for other reasons, including their contention that the employees' complaint failed to state a claim for relief under C.R.C.P. 12(b)(5). The probate court, in a written order, denied the motion to dismiss without holding a hearing.

II. Immunity Under the CGIA

¶12 Defendants contend that the probate court lacked subject matter jurisdiction because all of the employees' claims are barred by the CGIA. For the reasons we describe below, we agree as to some parts of some of the claims, but not as to others.

A. Standard of Review

¶13 Section 24-10-108, C.R.S. 2011, authorizes trial courts to decide pretrial whether a public entity and public employees are immune from suit. Whether a public entity and its employees are immune from suit is an issue of subject matter jurisdiction that is resolved under C.R.C.P. 12(b)(1), and the plaintiff bears the burden of establishing that immunity has been waived. Gray v. University of Colorado Hospital Authority, 2012 COA 113, ¶ 16. When the trial court denies the public entity's C.R.C.P. 12(b)(1) motion and concludes that it has subject matter jurisdiction over the case, the public entity may seek interlocutory appellate review in this court. City & County of Denver v. Crandall, 161 P.3d 627, 633 (Colo. 2007).

¶14 Where, as here, the facts are not disputed for purposes of determining whether the probate court lacked subject matter jurisdiction, we review de novo the probate court's jurisdictional ruling. Springer v. City & County of Denver, 13 P.3d 794, 798 (Colo. 2000). (We note that neither party requested a Trinity hearing at which the trial court could have considered factual disputes. See Trinity Broadcasting, Inc. v. City of Westminster, 848 P.2d 916 (Colo. 1993).)

B. General Principles Concerning the CGIA

¶15 The CGIA does not apply to actions "grounded in contract." Berg v. State Bd. of Agriculture, 919 P.2d 254, 258 (Colo. 1996). However, aside from limited exceptions not relevant here, the CGIA bars "any action against a public entity" or its employees "for injury which lies in tort or could lie in tort regardless of whether that may be the type of action or the form of relief chosen by a claimant." §§ 24-10-108, 24-10-118(2)(a), C.R.S. 2011; see § 24-10-106, C.R.S. 2011. In these circumstances, the issue under the CGIA is not whether the contract claim was properly pled, but, instead, whether the claim could have been brought as a tort. This is a jurisdictional issue. City of Lakewood v. Brace, 919 P.2d 231, 244 (Colo. 1996).

¶16 Because the complaint's form is not determinative when evaluating whether a claim lies in tort or could lie in tort, we must examine the nature of the alleged injury and the relief the plaintiff seeks. See Patzer v. City of Loveland, 80 P.3d 908, 910 (Colo. App. 2003). For example, as pertinent here, when determining whether a claim of breach of contract lies, or could lie, in tort,

[t]he essential difference between a tort obligation and a contract obligation is the source of the parties' duties. Contract obligations arise from promises made between parties. Tort obligations generally arise from duties imposed by law, and tortious conduct is a breach of a duty imposed by law, not by contract.

Carothers v. Archuleta County Sheriff, 159 P.3d 647, 655-56 (Colo. App. 2006). Thus,

[w]hen the injury arises either out of conduct that is tortious in nature or out of the breach of a duty recognized in tort law, and when the relief seeks to compensate the plaintiff for that injury, the claim likely lies in tort or could lie in tort for purposes of the CGIA.

Robinson v. Colorado State Lottery Div., 179 P.3d 998, 1003 (Colo. 2008).

¶17 To apply these principles, we must examine the pleadings, the undisputed evidence, and the trust agreements. Id. at 1004. If we conclude that a claim lies, or could lie, in tort, we will hold that it must be dismissed because it is barred by the CGIA. But if we determine that a claim lies solely in contract, we will hold that it should not be dismissed, and that it must be remanded to the probate court for further proceedings. See CAMAS Colorado, Inc. v. Board of County Comm'rs, 36 P.3d 135, 141 (Colo. App. 2001)(reversing judgment dismissing contractual claims, but affirming dismissal of claims that lie or could lie in tort).

C. Analysis of Claims
1. Breach of Contract, Alleging Breach of Fiduciary Duty andBreach of the Implied Covenant of Good Faith and Fair Dealing

¶18 Defendants contend that the employees' breach of contract claim, which contains an allegation that the defendants breached their fiduciary duties, lies, or could lie, in tort. Therefore, they argue, the breach of contract claim is barred by the CGIA.

¶19 In order to resolve this issue, we do not focus on whether the breach of contract claim was properly pled, but whether the claim could have been brought as a tort. Brace, 919 P.2d at 244. To do so, we must find the...

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