Robinson v. Colorado State Lottery Div.

• Decision Date: 04 May 2006
• Docket Number: No. 04CA1785.,04CA1785.
• Citation: 155 P.3d 409
• Parties: Lavonne ROBINSON, f/k/a Lavonne Bazemore, individually and as representative of a class, Plaintiff-Appellant, v. COLORADO STATE LOTTERY DIVISION, an agency of the State of Colorado; Colorado State Lottery Commission, an agency of the State of Colorado; and Texaco, Inc., a Texas corporation, Defendants-Appellees.
• Court: Colorado Court of Appeals

155 P.3d 409

Lavonne ROBINSON, f/k/a Lavonne Bazemore, individually and as representative of a class, Plaintiff-Appellant, v. COLORADO STATE LOTTERY DIVISION, an agency of the State of Colorado; Colorado State Lottery Commission, an agency of the State of Colorado; and Texaco, Inc., a Texas corporation, Defendants-Appellees.

No. 04CA1785.

Colorado Court of Appeals, Div. I.

May 4, 2006.

Certiorari Granted April 9, 2007.

The Carey Law Firm, Robert E. Carey, Leif Garrison, Colorado Springs, Colorado, for Plaintiff-Appellant.

John W. Suthers, Attorney General, Danielle Moore, Assistant Attorney General, Denver, Colorado, for Defendants-Appellees Colorado State Lottery Division and Colorado State Lottery Commission.

Holland & Hart, LLP, Todd W. Miller, Greenwood Village, Colorado, for Defendant-Appellee Texaco, Inc.

HUME^*, J.

Plaintiff, Lavonne Robinson, appeals the judgment in favor of defendants, the Colorado State Lottery Division, the Colorado State Lottery Commission, and Texaco, Inc. Plaintiff also appeals the trial court's order awarding attorney fees and certain costs to defendants. We affirm in part, reverse in part, and remand with directions.

The Lottery Division is part of the Colorado Department of Revenue and is authorized to establish, operate, and supervise certain lottery games and to license retailers to sell its products to the general public. The Lottery Commission is part of the Lottery Division and is responsible for promulgating rules and regulations governing the operation of the lottery, including the rules governing the number and size of prizes for the winning tickets. (We will refer collectively to these two entities as the Lottery.)

Texaco is a Texas corporation authorized to do business in Colorado. Texaco has been granted a license by the Lottery to sell instant scratch game tickets directly to the public. Although both Texaco and plaintiff are listed in the complaint as members of a class, no class has been certified by the trial court.

In her complaint, plaintiff alleged that the Lottery and Texaco continued to sell, for a period of a few weeks to several months, instant scratch game tickets after all represented and advertised prizes were awarded or claimed. Plaintiff also alleged that defendants were aware that the represented and advertised prizes were not available and that the Lottery understood that retailers continued to sell these tickets and condoned and authorized such sales. Plaintiff further alleged that for at least five years, she had purchased various instant scratch game tickets with the expectation that she could win the represented and advertised prizes. Consequently, plaintiff claimed that she, as a purchaser of a scratch game ticket, was denied the benefit of her bargain.

Plaintiff alleged, for example, that she had purchased "Luck of the Zodiac" scratch game lottery tickets at a Texaco store, which is a licensed retailer, on July 24, 1998. The "Luck of the Zodiac" game offered a $10,000 grand prize. However, the lottery had awarded the final grand prize for the "Luck of the Zodiac" scratch game lottery ticket 72 days earlier, on May 13, 1998.

Plaintiff alleged seven claims against defendants: (1) breach of express contract; (2) breach of express warranty under the Colorado Uniform Commercial Code (UCC); (3) breach of implied warranty under the UCC; (4) breach of the implied covenant of good faith and fair dealing; (5) violation of § 24-35-206, C.R.S.2005; (6) violation of the Colorado Consumer Protection Act (CCPA); and (7) restitution and unjust enrichment. Plaintiff asserted that all her claims against defendants were either contractual, statutory in nature, or equitable claims arising out of a contractual relationship.

The Lottery and Texaco filed separate motions to dismiss plaintiff's complaint pursuant to C.R.C.P. 12(b)(1) and (5) asserting, among other things, that plaintiff had failed to exhaust administrative remedies and that her claims were barred by the Colorado Governmental Immunity Act (GIA), § 24-10-101, et seq., C.R.S.2005.

The trial court granted defendants' motions based on the failure to exhaust administrative remedies. Plaintiff appealed, and a division of this court held that adequate remedies were not available, and thus, plaintiff could not have exhausted her administrative remedies before filing suit. See Bazemore v. Colo. State Lottery Div., 64 P.3d 876 (Colo. App.2002). The division remanded the case to the trial court for further proceedings on the issue of governmental immunity.

On remand, the parties briefed the issue of governmental immunity, and the trial court held an evidentiary hearing. The trial court found that Texaco was a public entity for purposes of the GIA and that plaintiff's claims were all in the nature of tort claims for which defendants' immunity under the GIA had not been waived. Accordingly, the trial court dismissed plaintiff's complaint.

The Lottery then sought its attorney fees pursuant to § 13-17-201, C.R.S.2005. The trial court concluded that the Lottery was entitled to $52,514 in attorney fees.

I. GIA

Plaintiff contends that the trial court erred in finding that her claims against defendants were barred by the GIA. In particular, plaintiff argues that her claims were based in contract, not tort, and that they were not subject to the GIA. We disagree.

Except in certain specified situations, sovereign immunity is a bar to any action against a public entity for injuries which lie in tort or could lie in tort regardless of whether that may be the type of action or the form of relief chosen by the claimant. Section 24-10-108, C.R.S.2005.

The GIA is intended to apply when the claimant seeks redress from injuries that result from tortious conduct. See Adams v. City of Westminster, 140 P.3d 8 (Colo.App. 2005). Consequently, it has been interpreted as not applying to contract claims. See State Pers. Bd. v. Lloyd, 752 P.2d 559 (Colo.1988).

In determining whether a particular claim lies in tort or could lie in tort for purposes of the GIA, a court must consider the nature of the injury and the relief sought. See City of Colorado Springs v. Conners, 993 P.2d 1167 (Colo.2000). This determination must be made on a case-by-case basis. Berg v. State Bd. of Agric., 919 P.2d 254 (Colo. 1996).

When a party has alleged a contract claim, the court should examine whether the claim and the duty allegedly breached arise from the terms of the contract itself or whether the claim could lie in tort. See CAMAS Colo., Inc. v. Bd. of County Comm'rs, 36 P.3d 135 (Colo.App.2001); Morrison v. City of Aurora, 745 P.2d 1042 (Colo. App.1987). If the claims are for breach of obligations that arose from the terms of a contract, the public entity is not immune. See Adams v. City of Westminster, supra; Elliott v. Colo. Dep't of Corr., 865 P.2d 859 (Colo.App.1993).

Although most actions for purely economic loss injuries are based on breaches of contractual duties, some torts are expressly designed to remedy such loss. The supreme court has "recognized that certain common law claims that sound in tort and are expressly designed to remedy economic loss may exist independent of a breach of contract claim." Town of Alma v. AZCO Constr., Inc., 10 P.3d 1256, 1263 (Colo.2000).

It is well established that in some circumstances a claim of negligent misrepresentation based on principles of tort law, independent of any principle of contract law, may be available to a party to a contract. Consequently, a contracting party's negligent misrepresentation of material facts prior to the execution of an agreement may provide the basis for an independent tort claim asserted by a party who detrimentally relied on such negligent misrepresentations. See Keller v. A.O. Smith Harvestore Prods., Inc., 819 P.2d 69 (Colo.1991); see also W. Cities Broad., Inc. v. Schueller, 849 P.2d 44 (Colo.1993)(a plaintiff who has been fraudulently induced to enter a contract may either rescind the contract or affirm the contract and recover in tort for the damages caused by the fraudulent act).

As pertinent here, the supreme court in Keller v. A.O. Smith Harvestore Products, Inc., supra, 819 P.2d at 73, specifically recognized that negligent misrepresentation is a tort claim based "not on principles of contractual obligation[,] but on principles of duty and reasonable conduct." See Town of Alma v. AZCO Constr., Inc., supra, 10 P.3d at 1263 (quoting Keller). As such, any claim brought by plaintiff that alleges negligent misrepresentation is based in tort and would be subject to the GIA.

The underlying factual basis for plaintiff's claims was that defendants sold instant scratch game tickets for several weeks to several months after all represented and advertised prizes were awarded or claimed. Plaintiff asserted that she bought tickets for at least five years with the expectation that she could win the advertised and represented prizes. The essence of plaintiff's claims was that defendants negligently misrepresented to her the possibility that she could win one of the advertised and represented prizes and thereby defendants fraudulently induced her to purchase scratch game tickets.

Although plaintiff argues that she was denied the benefit of her bargain and that her claims sound in contract, we conclude that plaintiff's complaint attacks conduct occurring prior to her purchase of scratch game tickets. Therefore, her contract claims are based on her asserted reliance upon defendants' alleged negligent misrepresentation or fraudulent inducement and the injuries resulting from that reliance. Thus, her claims sound in tort for purposes of the GIA. See Keller v. A.O. Smith Harvestore Prods., Inc., supra. We reject the argument that in order for plaintiff's action to lie in tort, plaintiff must suffer physical or bodily injury. See CAMAS Colo., Inc. v. Bd. of County Comm'rs, supra.

Similarly, while plaintiff characterizes her claims for restitution and unjust...