DIA Brewing Co. v. MCE-DIA, LLC

• Decision Date: 06 February 2020
• Docket Number: Court of Appeals No. 18CA2136
• Citation: 480 P.3d 703
• Parties: DIA BREWING CO., LLC, a Colorado limited liability company, Plaintiff-Appellant, v. MCE-DIA, LLC, a Michigan limited liability company; Midfield Concessions Enterprises, Inc. a Michigan limited liability company; Andrea Hachem; Noureddine "Dean" Hachem; Samir Mashni; Simrae Solutions, LLC, a Colorado limited liability company; Sudan I. Muhammad; Pangea Concessions Group, LLC, a Florida limited liability company; Niven Patel ; Rohit Patel ; and Richard E. Schaden, Defendants-Appellees.
• Court: Colorado Court of Appeals

480 P.3d 703

DIA BREWING CO., LLC, a Colorado limited liability company, Plaintiff-Appellant,

v.MCE-DIA, LLC, a Michigan limited liability company; Midfield Concessions Enterprises, Inc. a Michigan limited liability company; Andrea Hachem; Noureddine "Dean" Hachem; Samir Mashni; Simrae Solutions, LLC, a Colorado limited liability company; Sudan I. Muhammad; Pangea Concessions Group, LLC, a Florida limited liability company; Niven Patel ; Rohit Patel ; and Richard E. Schaden, Defendants-Appellees.

Court of Appeals No. 18CA2136

Colorado Court of Appeals, Division VII.

Announced February 6, 2020

Jones & Keller, P.C., G. Stephen Long, Christopher S. Mills, Denver, Colorado; The Law Offices of George A. Barton, P.C., George A. Barton, Denver, Colorado; Connelly Law, LLC, Sean Connelly, Denver, Colorado, for Plaintiff-Appellant

Merchant & Gould P.C., Peter A. Gergely, Denver, Colorado; Woodrow & Peluso, LLC, Steven L. Woodrow, Denver, Colorado, for Defendants-Appellees MCE-DIA, LLC, Midfield Concessions Enterprises, Inc., Andrea Hachem; Noureddine "Dean" Hachem; Samir Mashni; Simrae Solutions, LLC, Sudan I. Muhammad; Pangea Concessions Group, LLC, Niven Patel; Rohit Patel,

Haddon, Morgan and Foreman, P.C., Pamela Robillard Mackey, Saskia A. Jordan, Adam Mueller, David G. Maxted, Denver, Colorado for Defendant-Appellee Richard E. Schaden

Opinion by JUDGE LIPINSKY

¶ 1 Plaintiff, DIA Brewing Co., LLC (Brewing), had several options after the district court dismissed its claims without prejudice, if it wished to continue litigating against the defendants:

• move for leave to file an amended complaint that emedied the defects in its original pleading;

• file an amended complaint with the defendants’ written consent; or

• commence a new case, with a new complaint.

¶ 2 But Brewing chose a different strategy that raises novel issues under Colorado law: it filed an amended complaint, purportedly as a matter of course under C.R.C.P. 15(a), despite the dismissal of its claims.

¶ 3 We decide three questions of law. First, we hold that, under the facts of this case, the orders dismissing Brewing's claims without prejudice were not final judgments. Second, because the dismissal orders were not final judgments, we hold that Brewing retained the right to amend its complaint as a matter of course under C.R.C.P. 15(a). Third, we hold that the district court erred by deciding that Brewing's amended complaint failed under the futility of amendment doctrine. Thus, we reverse the order striking Brewing's amended complaint and remand for further proceedings.

I. Relevant Facts and Procedural History

¶ 4 Brewing unsuccessfully bid for a contract to establish restaurants and related businesses at Denver International Airport (DIA). The businesses included a Colorado-themed microbrewery, two burger restaurants, and a coffee bar. DIA issued publicly available rankings of the five qualified bidders, which ranked Brewing fourth.

¶ 5 Brewing then sued several public and private defendants, alleging a bid-rigging conspiracy between defendants MCE-DIA, LLC, the winner of the contract; Midfield Concessions Enterprises, Inc., Andrea Hachem, Noureddine "Dean" Hachem, Samir Mashni, Simrae Solutions, LLC, Sudan I. Muhammad, Pangea Concessions Group, LLC, Niven Patel, and Rohit Patel, who are affiliates of MCE-DIA, LLC; Richard E. Schaden, the CEO of the hamburger chain Smashburger; and DIA officials (who are no longer parties to the case).

¶ 6 More specifically, Brewing alleged that the owners of MCE-DIA offered partial ownership of the company to affiliates of one of the DIA officials in exchange for the official's help in awarding the contract to MCE-DIA. Brewing asserted that DIA's ranking of the bidders was tainted and invalid based on defendants’ alleged wrongful conduct.

¶ 7 Brewing pleaded claims for bid-rigging in violation of section 6-4-106, C.R.S. 2019; bribery and other predicate acts in violation of the Colorado Organized Crime Control Act, § 18-17-104, C.R.S. 2019; tortious interference with prospective business opportunity; and civil conspiracy.

¶ 8 The nongovernmental defendants moved to dismiss for lack of subject matter jurisdiction under C.R.C.P. 12(b)(1), failure to plead fraud with particularity under C.R.C.P. 9(b), and failure to state claims on which relief could be granted under C.R.C.P. 12(b)(5). Brewing did not amend its complaint before the district court ruled on the dismissal motions. But, in its briefs opposing the motions to dismiss, Brewing requested leave to amend its complaint if the court determined that "additional averments are required," as well as a hearing on the dismissal motions.

¶ 9 After considering the materials filed by the defendants in support of their motions to dismiss, including the list ranking the bidders (which was not incorporated into the complaint), but without conducting a hearing, the district court concluded that Brewing lacked standing to assert any of its claims and had failed to plead fraud with particularity. In a series of orders (the June orders), the court dismissed the complaint in its entirety. The dismissal orders did not indicate whether the case was dismissed with or without prejudice.

¶ 10 Brewing did not move under C.R.C.P. 59 or 60 to vacate or set aside the June orders. Instead, the day before the time to appeal the June orders expired, Brewing filed an amended complaint, contending that it had a right to amend as a matter of course under C.R.C.P. 15(a). The defendants moved to strike and dismiss the amended complaint, both on the grounds articulated in their original dismissal motions and based on the June orders.

¶ 11 The district court entered an order (the November order) ruling that the amended complaint was "denied for filing." The court said that Brewing had not "preserved amendment as a matter of course" when it included an amendment request in its responses to the dismissal motions and had not sought relief from the June orders under C.R.C.P. 59. Under the court's reasoning, Brewing could no longer amend as a matter of course after entry of the June orders because "whether with or without prejudice, the dismissal of all claims by the Court would be considered an ‘order to or from which an appeal lies’ " and thus were final judgments. In the alternative, the court ruled that the amended complaint failed under the futility of amendment doctrine because, like Brewing's original complaint, it neither established standing nor pleaded fraud with particularity.

¶ 12 Following entry of the November order, Brewing appealed the June and November orders. The defendants moved to dismiss the appeal. A motions division of this court dismissed the appeal of the June orders as untimely but allowed the appeal to proceed with respect to the November order. Brewing does not challenge the motions division's partial dismissal. Defendants do not challenge our jurisdiction over the November order.

II. Analysis

A. Right to Amend Versus Leave to Amend

¶ 13 C.R.C.P. 15(a) allows for three types of amendment: amendment as a matter of course, amendment by leave of court, and amendment with the adverse party's written consent. "A party may amend his pleading once as a matter of course at any time before a responsive pleading is filed .... Otherwise, a party may amend his pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires." C.R.C.P. 15(a). A motion to dismiss is not a responsive pleading. Davis v. Paolino , 21 P.3d 870, 873 (Colo. App. 2001).

¶ 14 Brewing contends that it had the right to amend its complaint as a matter of course, even after dismissal of its original claims, because the defendants never filed a responsive pleading and the court dismissed its original claims without prejudice. Brewing takes the position that it filed the amended complaint as a matter of course. Thus, whether the district court abused its discretion in denying Brewing leave to amend its complaint is not before us.

¶ 15 Defendants contend that we should review the November order for an abuse of discretion. They argue that Brewing's delay in attempting to amend, as well as other factors, gave the district court discretion to dismiss the amended complaint. But we agree with Brewing that whether it had the right to amend as a matter of course under C.R.C.P. 15(a) and whether the June orders cut off that right are questions of law that we review de novo. So we review de novo whether the district court committed legal error when it concluded that Brewing had lost its absolute right to amend as a matter of course. See DCP Midstream, LP v. Anadarko Petroleum Corp. , 2013 CO 36, ¶ 24, 303 P.3d 1187, 1193.

B. The Entry of a Final Judgment Cuts off a Plaintiff's Right to Amend as a Matter of Course Under C.R.C.P. 15(a)

¶ 16 The entry of a final, appealable judgment cuts off the right to amend, despite the language of C.R.C.P. 15(a). Harris v. Reg'l Transp. Dist. , 155 P.3d 583, 587 (Colo. App. 2006) ; Estate of Hays v. Mid-Century Ins. Co. , 902 P.2d 956, 959 (Colo. App. 1995) ; Wilcox v. Reconditioned Office Sys. , 881 P.2d 398, 400 (Colo. App. 1994). The version of Fed. R. Civ. P. 15(a) in effect before the 2009 amendments was identical to the current version of C.R.C.P. 15(a). Thus, cases interpreting the older version of the federal rule are persuasive. Harris , 155 P.3d at 588. Federal courts construing the earlier version of Fed. R. Civ. P. 15(a) uniformly reached the same conclusion: the right to amend is cut off on entry of a final judgment. Tool Box v. Ogden City Corp. , 419 F.3d 1084, 1087 (10th Cir. 2005) (listing cases applying this rule); accord 3 James Wm. Moore et al., Moore's Federal Practice § 15.97[2] (2d ed. 1980) (noting that the absolute right to amend is lost after final judgment is entered). (Under the current version of the federal rule, a party may amend as a matter of course within twenty-one days after service of either a responsive...