Mathers Family Trust v. Cagle
| Decision Date | 16 June 2011 |
| Docket Number | No. 10CA0093.,10CA0093. |
| Citation | 297 P.3d 943 |
| Parties | MATHERS FAMILY TRUST; William H. Mathers; Myra M. Mathers; Thomas E. Carpenter Trust; Margaret M. Carpenter Trust; Robert Hall; and Gianpaolo Callioni, Plaintiffs–Appellants, v. Charles Reed CAGLE; Joseph D. Kinlaw; Heartland Energy of Colorado, LLC; Steve Ziemke; Brandon Davis; John Schiffner; Joel Held; Martin Harper; HEI Resources, Inc., f/k/a Heartland Energy, Inc.; Heartland Energy Development Corp.; Reed Petroleum, LLC; D. Deerman, Ltd.; and R & J Associates, Inc., Defendants–Appellees. |
| Court | Colorado Court of Appeals |
OPINION TEXT STARTS HERE
Pryor Johnson Carney Karr Nixon, P.C., Irving G. Johnson, John R. Paddock, Jr., Elizabeth C. Moran, Marta M. Jucha, Greenwood Village, Colorado, for Plaintiffs–Appellants.
Shoemaker Ghiselli + Schwartz LLC, Andrew R. Shoemaker, Paul H. Schwartz, Boulder, Colorado, for Defendants–Appellees Charles Reed Cagle, Heartland Energy of Colorado, LLC, HEI Resources, Inc., Reed Petroleum, LLC, and R & J Associates, Inc.
Robinson Waters & O'Dorisio, P.C., Otto K. Hilbert, II, Stephen L. Waters, Kimberly A. Bruetsch, Denver, Colorado, for Defendants–Appellees Joseph D. Kinlaw, John Schiffner, Heartland Energy Development Corp., and D. Deerman, Ltd.
Hogan Lovells US LLP, Jeffrey George, Colorado Springs, Colorado, for Defendant–Appellee Steve Ziemke.
The Tenenbaum Law Firm, A. Thomas Tenenbaum, Lone Tree, Colorado, for Defendant–Appellee Brandon Davis.
Davis Graham & Stubbs LLP, Thomas P. Johnson, Lydia Floyd, Terry R. Miller, Denver, Colorado, for Defendant–Appellee Joel Held.
Ireland Stapleton Pryor & Pascoe, PC, Mark E. Haynes, Denver, Colorado, for Defendant–Appellee Martin Harper.
Kamlet Reichert, LLP, E. Lee Reichert, Michelle E. Cormier, Denver, Colorado, for Amicus Curiae North American Securities Administrators Association, Inc.
Opinion by Justice ROVIRA.*
Plaintiffs, purchasers of investments sold by a Colorado company, appeal the dismissal of their claims against defendants, that company and others involved in the investments, based on the forum selection clauses in the parties' agreements requiring litigation in Texas. We reverse and remand.
Plaintiffs are out-of-state investors who purchased joint venture interests sold by defendant HEI Resources, Inc., a Colorado corporation formerly known as Heartland Energy, Inc. and headquartered in Colorado Springs. Defendants Martin Harper and Joel Held were the accountant and attorney for each of the joint ventures in which plaintiffs invested, and the other defendants are persons or entities closely related to HEI.
HEI contacted plaintiffs by phone to solicit their purchase of joint venture interests in numerous oil and gas ventures for wells and pipelines in Alabama, Mississippi, and Texas. Plaintiffs invested in the ventures by making payments to HEI and by signing Application Agreements and Joint Venture Agreements.
The Application Agreements contain the following forum selection clause:
Applicable Law. This Agreement will be construed according to the laws of the State of Texas, and is performable in the City of Dallas, Dallas County, Texas. The Courts located in the State of Texas, state or federal, shall have exclusive jurisdiction to hear and determine all claims, disputes, controversies and actions arising from or relating to this Application Agreement and any of its terms or provisions, or to any relationship between the parties hereto, and venue shall be solely in the courts located in Dallas County, Texas. The undersigned expressly consents and submits to the jurisdiction of said courts and to venue being in Dallas County, Texas.
The Joint Venture Agreements contain a similar forum selection clause:
Applicable Law. This Agreement and the application or interpretation hereof shall exclusively be governed by and construed in accordance with the laws of the State of Texas. This Agreement shall be deemed to be performable in and venue shall be mandatory in Dallas County, Texas. The Managing Venturer and each Venturer hereby expressly consents and submits to the jurisdiction of said courts and to venue being in Dallas County, Texas.
After losing substantial sums of money on the ventures, plaintiffs filed suit in Colorado. In their second amended complaint, plaintiffs asserted nineteen claims against all defendants except Harper and Held. These included claims based on violations of the Colorado Securities Act (CSA), §§ 11–51–101 to –908, C.R.S.2010, the Vermont Securities Act, the Illinois Securities Law, and the California Corporate Securities Law, as well as claims for tender and remedy, accounting, fraud, nondisclosure or concealment, breach of fiduciary duty, civil theft, and common law negligence. Plaintiffs also asserted claims against Harper and Held for negligent misrepresentation.
All defendants moved for dismissal pursuant to the forum selection clauses and requested attorney fees and costs. As relevant here, plaintiffs responded that the forum selection clauses were unenforceable in light of the anti-waiver provision of the CSA, § 11–51–604(11), C.R.S.2010.
The district court dismissed all of plaintiffs' claims based on the forum selection clauses. The court stated the appropriate standard of review for motions to dismiss, that is, it would accept as true all facts alleged in the complaint and view the allegations in the light most favorable to plaintiffs. It concluded that the forum selection clauses were enforceable because plaintiffs failed to show by a preponderance of the evidence that the clauses were unfair, unreasonable, fraudulently induced, or against public policy. It also concluded that all the claims arose from the same operative facts and therefore dismissed plaintiffs' claims. In addition, the court concluded that attorney fees and costs were appropriate pursuant to section 13–17–102(2), C.R.S.2010, and C.R. C.P. 12(b) because plaintiffs lacked substantial justification to bring their claims in Colorado.
Plaintiffs filed a C.R.C.P. 59 motion to amend the findings and judgment, which the court granted in part by vacating the award of attorney fees and costs. The court noted that whether the anti-waiver provision of the CSA trumps a forum selection clause was an issue of first impression and found that plaintiffs were attempting in good faith to establish a new theory of law in Colorado. See§ 13–17–102(7), C.R.S.2010. In all other respects, the court upheld the dismissal order. This appeal followed.
Plaintiffs argue that the forum selection clauses are void and the district court erred in ruling that the forum selection clauses (1) are not voided by the anti-waiver provision of the CSA, § 11–51–604(11), (2) are reasonable, (3) apply to all the claims against HEI and the other defendants, and (4) are enforceable against plaintiffs William H. and Myra M. Mathers, even though they were alleged to be suffering from diminished capacity when they signed the agreements. We agree with the first argument and do not address the others.
We review de novo a trial court's ruling on a motion to dismiss. Shapiro & Meinhold v. Zartman, 823 P.2d 120, 122–23 (Colo.1992) (). In determining a motion to dismiss a complaint, a court must accept all averments of material fact contained in the complaint as true, and a complaint is sufficient to withstand a motion to dismiss if the plaintiff states a claim that would entitle him or her to relief. Id.; seeC.R.C.P. 12(b)(5). A complaint should not be dismissed so long as the pleader is entitled to some relief upon any theory of the law. See Rosenthal v. Dean Witter Reynolds, Inc., 908 P.2d 1095, 1100 (Colo.1995).
We also review de novo the enforceability of forum selection clauses. See Adams Reload Co. v. Int'l Profit Associates, Inc., 143 P.3d 1056, 1058 (Colo.App.2005) ().
No Colorado Supreme Court case states a procedure for reviewing a motion to dismiss based on a forum selection clause; however, in Edge Telecom, Inc. v. Sterling Bank, 143 P.3d 1155, 1159 (Colo.App.2006), another division of this court described an appropriate procedure:
• The trial court must address the motion at the outset of the proceedings.
• Once the party moving to dismiss has demonstrated the existence of a forum selection clause, the trial court must require any party opposing the motion not merely to allege, but to demonstrate by a preponderance of the evidence that the clause is unfair or unreasonable or was fraudulently induced.
• The trial court is free, if it deems it necessary, to hold an evidentiary hearing and make requisite factual findings.
• When appropriate, the court may apply the doctrine of waiver.
Following this procedure, the district court determined that the forum selection clauses were enforceable here.
Plaintiffs contend that the forum selection clauses are void because they conflict with the public policy behind the CSA and its anti-waiver provision. We agree.
The express purposes of the CSA are
to protect investors and maintain public confidence in securities markets while avoiding unreasonable burdens on participants in capital markets. [The CSA] is remedial in nature and is to be broadly construed to effectuate its purposes.
§ 11–51–101(2), C.R.S.2010. In addition, the CSA contains the following anti-waiver provision:
Any condition, stipulation, or provision binding any person acquiring or disposing of any security to waive compliance with any provision of this article or any rule or order under this article is void.
Defendants correctly point out that no...
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Mathers Family Trust v. Cagle
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