Salazar v. Clancy Systems Intern., Inc.
| Decision Date | 07 September 2006 |
| Docket Number | No. 04CA2347.,04CA2347. |
| Citation | 155 P.3d 488 |
| Parties | Francis R. SALAZAR, Plaintiff-Appellant, v. CLANCY SYSTEMS INTERNATIONAL, INC., Defendant-Appellee. |
| Court | Colorado Court of Appeals |
David Sean Carroll, Denver, Colorado, for Plaintiff-Appellant.
Burns, Figa & Will, P.C., Dana L. Eismeier, Alix L. Joseph, Englewood, Colorado, for Defendant-Appellee.
Opinion by Judge KAPELKE*.
Plaintiff, Francis R. Salazar, appeals from the trial court's summary judgment in favor of defendant, Clancy Systems International, Inc. The judgment determined that plaintiff's tort claims relating to restrictive legends on stock certificates were preempted by state statute. We reverse and remand for further proceedings.
According to plaintiff's complaint, in May 1993, six million shares of defendant's stock were transferred to plaintiff by Robert B. Brodbeck through an "Agreement and Bill of Sale." Plaintiff alleges that at the time of the transfer he did not receive the stock certificate because Brodbeck either had lost it or had never received it himself.
In late 1999 or early 2000, the value of defendant's stock appreciated substantially in value, and plaintiff attempted to sell the shares he allegedly owned. Brodbeck signed an affidavit of loss, which plaintiff submitted to defendant's transfer agent in March 2000. He also submitted other documents required to have the stock certificate reissued in his name, as well as a cashier's check to cover the bond for the reissuance of a lost certificate. Plaintiff requested that the new certificate be issued without any restrictive legend.
Defendant authorized the transfer agent to issue a replacement certificate to plaintiff, but only with a restrictive legend. The restrictive legend required plaintiff to hold the stock for a minimum of two years from the reissue date before he could sell it in the open market.
In April 2000, plaintiff asked the transfer agent to remove the restrictive legend. In response, defendant asserted that the restriction was appropriate, stating: "The stock was issued in March 2000—per rule 144—the holding period must apply."
Defendant requested that plaintiff provide the original 1993 agreement and bill of sale, an explanation why the stock transfer had not been previously reflected in any Securities and Exchange Commission (SEC) documents, and a legal opinion stating that the removal of the restrictive legend would not violate SEC Rule 144.
The opinion letter was ultimately provided in May 2000, and in June 2000, the transfer agent reissued the stock certificate to plaintiff without the restrictive legend.
Plaintiff filed this action on March 13, 2002, alleging in his complaint that the value of his stock had depreciated by approximately $2 million between the time of his initial request for a certificate and the date the certificate was reissued without the restrictive legend. He asserted, as relevant here, tort claims of trespass to chattel and intentional interference with prospective advantage, alleging that defendant's inclusion of the restrictive legend was wrongful and malicious and deprived him of his legal right to sell the stock.
Defendant moved for summary judgment, asserting that plaintiff's common law tort claims were preempted by the Uniform Commercial Code (UCC), § 4-8-401, C.R.S.2005. The trial court granted summary judgment in favor of defendant.
Plaintiff contends that the trial court erred in granting defendant's motion for summary judgment and in concluding that plaintiff's common law tort claims were preempted by the UCC, specifically § 4-8-401. We agree.
Summary judgment is appropriate if the pleadings and supporting documents demonstrate that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law. The nonmoving party is entitled to the benefit of all favorable inferences that may be drawn from the undisputed facts, and all doubts as to the existence of a triable issue of fact must be resolved against the moving party. We review a summary judgment de novo. Martini v. Smith, 42 P.3d 629, 632 (Colo.2002); Loar v. State Farm Mut. Auto. Ins. Co., 143 P.3d 1083 (Colo.App. 2006); see C.R.C.P. 56(c).
As the supreme court has stated, "[W]here the interaction of common law and statutory law is at issue, we acknowledge and respect the General Assembly's authority to modify or abrogate common law, but can only recognize such changes when they are clearly expressed." Vigil v. Franklin, 103 P.3d 322, 327 (Colo.2004); see also Van Waters & Rogers, Inc. v. Keelan, 840 P.2d 1070, 1076 (Colo. 1992) (); Double Oak Constr., L.L.C. v. Cornerstone Dev. Int'l, L.L.C., 97 P.3d 140, 148 (Colo.App.2003)("preexisting common law rights and remedies are not terminated absent clear legislative intent to abrogate them by the enactment of a new right").
The UCC provides that "[u]nless displaced by the particular provisions of this title, the principles of law and equity . . . shall supplement its provisions." Section 4-1-103, C.R.S.2005. Thus, common law tort remedies remain available unless a provision of the UCC clearly states otherwise.
It is generally recognized that when the UCC prescribes particular standards of care or limitations on liability, "the common law is annulled to the extent it modifies these standards or changes these limitations." Equitable Life Assurance Soc'y v. Okey, 812 F.2d 906, 909 (4th Cir.1987).
Similarly, a division of this court has stated, "If a statute creates legal duties and provides a particular means for their enforcement, the designated remedy excludes all others." Minnick v. City & County of Denver, 784 P.2d 810, 812 (Colo.App.1989).
Section 4-8-401 pertains to the duty of an issuer to register a transfer of securities, and § 4-8-406, C.R.S.2005, imposes a coextensive duty upon a transfer agent to register a transfer as requested. Section 4-8-401(b), C.R.S.2005, states:
If an issuer is under a duty to register a transfer of a security, the issuer is liable to a person presenting a certificated security or...
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..."the common law is annulled to the extent it modifies these standards or changes these limitations." Salazar v. Clancy Sys. Int'l, Inc., 155 P.3d 488, 490 (Colo.App.2006) (quoting Equitable Life Assurance Soc'y v. Okey, 812 F.2d 906, 909 (4th Courts have concluded, based on these principles......