Ireland v. Wynkoop
| Decision Date | 24 June 1975 |
| Docket Number | 71--302 and 73--435,Nos. 71--301,s. 71--301 |
| Parties | Clarence L. IRELAND et al., Plaintiffs-Appellants, and The Polo Club Condominium Association, a Colorado Corporation, Intervenor-Appellant, v. Neil WYNKOOP, Individually, and as sole Proprietor of Christopher Leasing Company, et al., Defendants-Appellees. The KIE CORPORATION, sometimes also known as Kie Corporation, a Colorado Corporation, et al., Plaintiffs-Appellees, v. The POLO CLUB CONDOMINIUM ASSOCIATION et al., Defendants-Appellants. Clarence L. IRELAND et al., Plaintiffs-Appellants, v. Neil WYNKOOP, Individually, and as sole proprietor of Christopher Leasing Company, et al., Defendants-Appellees. . II |
| Court | Colorado Court of Appeals |
White & Steele, P.C., John E. Clough, Williams, Erickson & Wallace, Wayne D. Williams, Denver, for plaintiffs-appellants Clarence L. Ireland and others, and plaintiffs-appellees, The Kie Corporation and others.
Quiat, Bucholtz & Bull, P.C., Alan H. Bucholtz, Denver, for intervenor-appellant and defendants-appellants, The Polo Club Condominium Ass'n, and others.
Inman, Flynn & Coffee, P.C., Robert D. Inman, Timothy A. Correll, Denver, for defendants-appellees Neil Wynkoop, and others, and plaintiffs-appellees The Kie Corporation, and others.
This case is a consolidation of three appeals filed in this court, No. 71--301, No. 71--302, and No. 73--435, which issued from two Denver District Court actions, No. C--17729 and No. C--19788.
Appellants are past and present owners of condominium units in The Polo Club, a high-rise condominium located in Denver. Appellee The Polo Club Condominium Association is a Colorado not-for-profit corporation, its membership being comprised of all The Polo Club condominium unit owners. Appellees Kie Corporation (Kie) and Polo Club, Inc., (the Corporation) are Colorado corporations controlled by appellee Wynkoop.
Under the aegis of the Corporation, which was record title holder of the condominium site, Wynkoop acted as promoter and developer of The Polo Club. Promotion for sale of the condominium units occurred primarily in 1965 and 1966.
In July of 1970, plaintiffs instituted action No. C--17729 by a complaint premised principally on allegations that Wynkoop had engaged in mismanagement, self-dealing, and breach of fiduciary duty. Plaintiffs sued as individuals, as representatives of a class comprised of all the condominium unit owners, and as representatives of the Association. For purposes of the derivative claims, the Association was named as a defendant. In late 1970, Kie and Wynkoop instituted action No. C--19788 seeking injunctions prohibiting plaintiffs 1 from interfering with performance of the contracts then under attack by plaintiffs, specific performance of the agreements, declarations that the agreements must be performed, and damages. Certain other injunctions were also sought.
The complainants in each district court action moved for a preliminary injunction, and each motion was granted. Plaintiffs have appealed from both others regarding injunctions. In No. 71--301, plaintiffs appeal from an order which, in effect, dissolved the preliminary injunction order entered in their action, while No. 71--302 is plaintiffs' appeal from the granting of the preliminary injunction order in the action initiated by Wynkoop.
At the 1971 annual meeting of the Association membership which was held after entry of these orders, a Board of Managers favorable to Wynkoop was elected. Thereafter, a complaint in intervention that had been filed by the Association in the plaintiffs' action was dismissed, and the Association resumed its original status as a defendant in the suit. The Association filed an answer and four counterclaims, two of which were dismissed.
Subsequently, plaintiffs' complaint was dismissed and they filed an amended complaint asserting two 'claims for relief.' The wording of that complaint is confusing, but it appears that plaintiffs sued as individuals, as representatives of a class comprised of all the owners of condominium units, and as representatives of the Association. The 'first claim' essentially was a repetition of the original complaint and consisted of the following allegations (our shorthand designation of the allegation is included in brackets):
(1) Wynkoop and Kie received secret 'kick backs' from a company which had enclosed many of the condominium unit owners' balconies; (balcony kick back allegation)
(2) Wynkoop improperly received a commission on a policy insuring the common elements of The Polo Club; (insurance commission allegation)
(3) the Corporation did not furnish a limousine and laundry equipment to the Association as required by the condominium owners' purchase agreements, but, instead, the limousine and laundry equipment were rented from Christopher Leasing Company, a company owned by Wynkoop; (limousine and laundry allegation)
(4) Kie diverted Association funds to pay the salary of Kie 'supervisory personnel' and to pay Kie's overhead expenses, in violation of the management contract; (salary diversion allegation)
(5) Wynkoop and Kie used Association common elements for business and entertainment unrelated to management of The Polo Club; (wrongful use allegation)
(6) Wynkoop, without authorization by the Association, received Association funds for rental of office equipment placed in the Association's offices; (rental of equipment allegation)
(7) Wynkoop, Kie and the Corporation caused improper disbursements from Association assessment funds, and caused the Corporation to neglect to pay its proper share of common expenses as a condominium unit owner, from the time that plaintiffs closed their unit purchases through December, 1968; (improper disbursements allegation)
(8) without disclosure to condominium unit buyers, the management contract involved self-dealing by Wynkoop and bound the Association for an unconscionable length of time; (management contract allegation)
(9) Wynkoop improperly leased the condominium owned by him for use as a beauty parlor, causing deterioration of the portion of The Polo Club parking area used by customers of the beauty salon. (beauty parlor allegation)
The 'second claim' sought to have declared invalid a settlement agreement which was entered into after dismissal of the original complaint.
In response to the amended complaint, the various defendants filed multiple motions to dismiss. After a hearing, the trial court dismissed the complaint in its entirety as against the Association. The court also dismissed as against the other defendants, either in whole or in part, the various allegations of wrongdoing contained in the 'first claim' for relief. In addition, the court dismissed the 'second claim' as against defendants Wynkoop, Kie, and he Corporation, on the ground that the preliminary injunction in the action initiated by plaintiffs had been dissolved by operation of law when the original complaint was dismissed, and therefore the settlement agreement was valid.
The result of the trial court's rulings on these various motions was that the individual claims regarding the 'balcony kick back' allegation and the individual and derivative claims regarding the 'improper disbursements' allegation and the 'beauty parlor' allegation, remained for litigation as against Wynkoop, Kie, and the Corporation. All other claims and allegations asserted by plaintiffs in the action were dismissed.
On June 8, 1973, the district court found that there was no just reason for delay, directed entry of judgment pursuant to C.R.C.P. 54(b), and stayed further proceedings in both district court actions. Plaintiffs' appeal followed.
On appeal, plaintiffs challenge the trial court's dismissal of the original complaint. The amended complaint, which iterated and expanded the original complaint, superseded the original complaint. Kalish v. Brice, 130 Colo. 220, 274 P.2d 600. Hence, any errors in the trial court's ruling regarding the original complaint were made moot or waived by the filing of the amended complaint, and cannot be raised on this appeal. American Concrete Agricultural Pipe Ass'n. v. NoJoint Concrete Pipe Co., 331 F.2d 706 (9th Cir.). Cf. Burson v. Adamson, 87 Colo. 451, 288 P. 623.
The next issue presented is whether the trial court's dismissal orders entered relative to the amended complaint constitute a final appealable judgment under C.R.C.P. 54(b).
In its dismissal rulings, the trial court disposed of the class action aspects of the 'balcony kick back' allegation, the 'improper disbursements' allegation, and the 'beauty parlor' allegation, and the derivative aspects of the 'balcony kick back' allegation. However, because the individual aspects of these allegations were retained, the disposition of the class aspects of these allegations and the disposition of the derivative aspect of the 'balcony kick back' allegation are not appealable judgments under C.R.C.P. 54(b). Levine v. Empire Savings & Loan Ass'n, 34 Colo.App. 235, 527 P.2d 910, Aff'd Colo., 536 P.2d 1134 (announced June 16, 1975). Therefore, the partial dismissal of these allegations is not before this court.
Since there are multiple parties involved, the court's determination and direction have made its order granting the defendant Association's motion to dismiss the entire complaint an appealable judgment as to the Association. Similarly, under the multiple claims facet of C.R.C.P. 54(b), as will be discussed below, the dismissal of most of the claims against defendants Wynkoop, Kie, and the Corporation were also certifiable for appeal by the trial court, since they arose from different transactions or occurrences than the retained claims. See 10 C. Wright & A. Miller, Federal Practice and Procedure § 2657, at 50.
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