Nelson v. Elway, 94SC453

Docket NºNo. 94SC453
Citation908 P.2d 102
Case DateDecember 11, 1995
CourtSupreme Court of Colorado

Jean E. Dubofsky, P.C., Jean E. Dubofsky, Boulder, Podoll & Podoll, P.C., Richard B. Podoll, Robert A. Kitsmiller, Denver, for Petitioners/Cross-Respondents.

Brownstein Hyatt Farber & Strickland, P.C., Stanley L. Garnett, Patrick F. Carrigan, Denver, for Respondents/Cross-Petitioners.

Chief Justice VOLLACK delivered the Opinion of the Court.

We granted certiorari to review the decision by the court of appeals in Nelson v. Elway, No. 93CA0629 (Colo.App. May 26, 1994), affirming in part and reversing in part the trial court's grant of summary judgment in favor of the respondents. The court of appeals affirmed the trial court's entry of summary judgment in the respondents' favor as to the petitioners' allegations of breach of contract, fraud and misrepresentation, dual agency, civil conspiracy, and punitive damages. The court of appeals reversed the trial court's entry of summary judgment as to the promissory estoppel count in the petitioners' complaint, ruling that there existed a material issue of fact as to this count. We reverse the court of appeals decision reversing summary judgment as to the promissory estoppel claim and affirm in all other respects.


Mel T. Nelson (Nelson) was the president and sole shareholder of two car dealerships, Metro Auto and Metro Toyota, Inc. General Motors Acceptance Corporation (GMAC) provided all the financing for both dealerships. In the first half of 1990, both dealerships were experiencing financial difficulties. In July of 1990, Nelson retained John J. Pico and the Aspen Brokerage Company (Pico) to represent him in the selling or refinancing of one or both of the dealerships.

In early 1991, Pico, acting on behalf of Nelson and Metro Toyota, began negotiations with John A. Elway, Jr. (Elway) and Rodney L. Buscher (Buscher) regarding the sale of Metro Toyota and the property upon which it was situated. On March 14, 1991, pursuant to those negotiations, Elway and Buscher signed a "Buy-Sell Agreement" and a separate real estate contract to purchase Metro Toyota. The closing was scheduled for April 15, 1991.

Soon after the signing of these documents, Pico asked Nelson if he would be willing to sell both Metro Auto and Metro Toyota to Elway. Nelson stated that he would be willing to sell both dealerships along with the land upon which they were located if he received sufficient personal remuneration. Pico then began negotiating with Elway and Buscher regarding the sale of both dealerships. Through these negotiations it became apparent that Elway and Buscher were unwilling or unable to pay the full purchase price for the dealerships and the land upon which they were located.

In order to consummate the transaction, Pico suggested to Nelson that Elway and Buscher reimburse Nelson for his interest in Metro Toyota by paying Nelson $50 per vehicle sold by both dealerships for a period of seven years commencing on May 1, 1991. In exchange for this compensation arrangement, Elway and Buscher would purchase Metro Auto from Nelson at a greatly reduced purchase price. These terms, referred to by the parties as the "Service Agreement," were reduced to writing but never signed by the parties. Subsequently, on March 16, 1991, the parties signed a "Buy-Sell Agreement" and a separate real estate contract for the purchase of Metro Auto. This written, signed agreement did not incorporate the terms of the Service Agreement.

By early 1991, the dealerships owed GMAC over $3 million. In order to protect its security interests, on April 3, 1991, GMAC required Nelson to execute agreements referred to as "keeper letters," allowing GMAC significant control over the dealerships. GMAC imposed this requirement as consideration for its agreement to pay in excess of $890,000 in debt owed by Metro Auto and Metro Toyota at the closing of the sale of the dealerships to Elway and Buscher. Nelson knew that execution of these letters would preclude his ability to file for bankruptcy protection and proceed through re-organization. He alleges that he thus sought and received assurances from Elway and Buscher that the orally agreed upon, but as yet unsigned, Service Agreement would be honored.

On April 8, 1991, after the execution of the keeper letters, Pico, Elway, and Buscher met at Pico's office. During this meeting, GMAC telephoned Pico's office and informed Pico, Elway, and Buscher that as a condition to its agreement to finance the acquisition of the land and assets of the dealerships by Elway and Buscher, Nelson was not to receive any proceeds from the sale of the dealerships. The respondents then informed Nelson they would not be able to enter into the Service Agreement with him, and the Service Agreement was therefore not executed at the closing on April 12, 1991. After closing, Nelson demanded that the respondents honor the Service Agreement. When the respondents refused, Nelson filed the instant action.

In his complaint, Nelson sought damages from Elway and Buscher for breach of contract, promissory estoppel, fraud, conspiracy, and dual agency. Additionally, Nelson sought exemplary damages. The respondents then moved the trial court for summary judgment, which the court granted as to all counts. The court of appeals affirmed with respect to all counts except for promissory estoppel. On that claim the court of appeals held there was a genuine issue of material fact and remanded the case to the trial court for trial on that issue alone.


Summary judgment is appropriate when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Cung La v. State Farm Auto. Ins. Co., 830 P.2d 1007, 1009 (Colo.1992). The burden to show that there exists no genuine issue of material fact is on the moving party, id., and the court must resolve all doubts as to whether an issue of fact exists against that party. Id.


The first issue is whether the court of appeals erred in ruling that the petitioners failed to allege facts sufficient to support the unlawful overt act element of a civil conspiracy claim. The petitioners assert that Pico breached his fiduciary duty, and that this breach constituted the requisite unlawful overt act to give rise to liability for civil conspiracy. The respondents maintain that no valid conspiracy claim exists here because the petitioners failed to show an unlawful overt act. Moreover, the respondents contend that even if Pico breached his fiduciary duty to the petitioners, this is insufficient to impose liability upon the respondents in the absence of evidence that the respondents either committed an unlawful overt act or conspired with Pico to do so. The court of appeals held that:

the negotiations cited by plaintiffs which allegedly gave rise to a civil conspiracy contain no reference to any unlawful overt acts necessary to support a civil conspiracy....

Here, the parties entered into negotiations which culminated in the signing of the buy-sell agreements and contracts for the sale of real estate. After those negotiations, GMAC informed defendants that Nelson was not to receive any proceeds from the sale, and defendants promptly informed plaintiffs about this condition. There is no evidence that Elway or Buscher engaged in unlawful overt acts in negotiating this sale.

Nelson, slip op. at 10.

We agree with the court of appeals. To establish a civil conspiracy in Colorado, a plaintiff must show: (1) two or more persons; (2) an object to be accomplished; (3) a meeting of the minds on the object or course of action; (4) an unlawful overt act; and (5) damages as to the proximate result. Jet Courier Serv., Inc. v. Mulei, 771 P.2d 486, 502 (Colo.1989). The court will not infer the agreement necessary to form a conspiracy; evidence of such an agreement must be presented by the plaintiff. More v. Johnson, 193 Colo. 489, 494, 568 P.2d 437, 440 (1977). Additionally, the purpose of the conspiracy must involve an unlawful act or unlawful means. A party may not be held liable for doing in a proper manner that which it had a lawful right to do. Contract Maintenance Co. v. Local No. 105, 160 Colo. 190, 194-95, 415 P.2d 855, 857 (1966).

In this case, as was held by the trial and appellate courts, the petitioners alleged no facts giving rise to any unlawful overt act required to support a conspiracy claim. In their brief, the petitioners claim that "Elway and Pico either prompted GMAC or conspired with GMAC to impose an additional condition, eliminating compensation for Nelson." The petitioners' amended complaint, however, is devoid of such an allegation. Indeed, the record contains no support at all for such an assertion.

While the petitioners do allege that Pico, as the agent of Metro Toyota, breached his fiduciary duty to the petitioners, this alone does not give rise to a claim for relief against the respondents. Without an allegation that the respondents committed, or participated in the commission of, an unlawful overt act, conspiracy liability may not be imposed against them. The record indicates that the respondents negotiated, at arm's length, the best deal they could for the purchase of the dealerships. We decline to impose liability upon the respondents for doing in a proper manner that which they had the lawful right to do: attempt to obtain the most advantageous position for themselves in purchasing the dealerships. We thus hold that the court of appeals correctly affirmed the trial court's entry of summary judgment in favor of the respondents on this issue.


The next issue is whether the court of appeals erred in upholding the trial court's entry of summary...

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