[00:00:01] Speaker 03:
Then the third case is City of Fort Collins versus Open International, 24-1152.

[00:00:17] Speaker 00:
Thank you, Your Honor.

[00:00:18] Speaker 00:
I'm Lori Webb Daniel, representing the defendant's appellants.

[00:00:23] Speaker 00:
I have only a few minutes to speak with you this morning.

[00:00:26] Speaker 00:
So putting aside the points in our briefing as to why there's no fraud in this case, I'd like to focus on three reasons why the party's contract precludes the $20 million recovery that the district court ordered.

[00:00:47] Speaker 00:
The contract, which was heavily negotiated for about four months by sophisticated parties, includes verbatim every single representation that the city now challenges.

[00:01:02] Speaker 00:
Second, the contract contains specific merger and non-reliance clauses, precluding and barring pre-contractual representations.

[00:01:14] Speaker 00:
Third, the contract provides a specific remedy for breach of its warranties and representations and excludes other damages regardless of the theory of recovery.

[00:01:29] Speaker 00:
Now, I don't have a PowerPoint for you.

[00:01:33] Speaker 00:
What I'd like is for you to visualize a slide that has six bullet points summarizing why Colorado law

[00:01:44] Speaker 00:
requires a reversal of this judgment.

[00:01:49] Speaker 00:
First, where sophisticated parties by contract allocate the risks and costs if their relationship goes sideways, they should be held to their bargain.

[00:02:01] Speaker 00:
This of course

[00:02:02] Speaker 00:
was the premise that the Colorado Supreme Court adopted in the Town of Alma case and has repeated it throughout, including the most recent decision on the economic loss rule in the mid-century case, which we provided through supplemental authority decided just a few weeks ago.

[00:02:21] Speaker 00:
Second bullet point, under Colorado law,

[00:02:25] Speaker 00:
The economic loss rule bars tort recovery where the tort duties are memorialized.

[00:02:31] Speaker 00:
Memorialized is the word that the Colorado Supreme Court uses time and again when those duties are memorialized in the contract.

[00:02:39] Speaker 00:
Again, the recent decision reaffirmed, restated this principle that is bedrock principle of Colorado law.

[00:02:48] Speaker 02:
Counsel, I know you have six bullet points on this slide, but I want to ask you about that one.

[00:02:53] Speaker 00:
Okay.

[00:02:53] Speaker 02:
You did submit a 28J on this case mid-century about Colorado law and the economic loss rule, but it seems to reaffirm the carve out for intentional torts, such as the one that the jury found here against your client.

[00:03:09] Speaker 02:
So how can we, now looking at it say as a matter of law, that that jury verdict must be overturned when the Colorado Supreme Court told us

[00:03:17] Speaker 02:
that an intentional tort does not fall under the economic loss rule.

[00:03:21] Speaker 00:
That's not exactly what it said, actually, Your Honor.

[00:03:25] Speaker 00:
What it said, it distinguished willful negligence from intentional conduct.

[00:03:32] Speaker 00:
And this comes from the Burmell footnote 6, where Burmell had referred to willful negligence and exculpatory clauses not allowing it, and then makes a statement generally

[00:03:44] Speaker 02:
But this was an intentional tort, right, that the jury found against your claim?

[00:03:47] Speaker 00:
Absolutely.

[00:03:48] Speaker 02:
So here's what it did say in mid-century.

[00:03:51] Speaker 02:
We've noted the economic loss rule generally should not apply to intentional tort claims.

[00:03:55] Speaker 00:
Right.

[00:03:56] Speaker 02:
So I'm having a hard time understanding.

[00:03:58] Speaker 00:
So it's the word generally.

[00:04:00] Speaker 00:
It's the word generally, because number one, that was noted, and it also was not held, because it was not reached in mid-century.

[00:04:09] Speaker 00:
It's a footnote, it's addictive.

[00:04:10] Speaker 02:
But it was held previously in Burnell, wasn't it?

[00:04:13] Speaker 00:
No, it wasn't, Your Honor.

[00:04:13] Speaker 00:
It was in footnote six.

[00:04:14] Speaker 00:
That was a theft, a civil remedy for criminal conduct.

[00:04:19] Speaker 00:
So it was not holding.

[00:04:20] Speaker 00:
And in fact, the Colorado Supreme Court has never held

[00:04:24] Speaker 00:
a bright line rule.

[00:04:26] Speaker 00:
It says generally, and as noted in the case law, there has been a split among the courts of appeals.

[00:04:37] Speaker 00:
However, I'd say the weight of the authority supports our position.

[00:04:40] Speaker 00:
So with that, and let me just say one other thing.

[00:04:43] Speaker 00:
There's no case from Colorado Supreme Court or any Colorado appellate court that has allowed a tort recovery

[00:04:52] Speaker 00:
where the circumstances here are all present.

[00:04:56] Speaker 00:
That's why I'm mentioning complete integration, repeated, the merger clause, and the exclusion of damages.

[00:05:05] Speaker 03:
So if I if- What about Van Rees?

[00:05:08] Speaker 00:
No, Van Rees didn't include that, Your Honor.

[00:05:10] Speaker 03:
Van Rees- Van Rees specifically, I mean, I think, Justice Seid, specifically differentiated for Web related, for- Precontractal, pre-contractal,

[00:05:23] Speaker 03:
Differentiating from saying that a contract for web related services that claims not only that unleaded breached its obligations under the contract claims that aren't an issue, but also that it wrongly wrongfully induced him into entering a contractual relationship, knowing that it did not have the capability to perform any of the web related

[00:05:45] Speaker 03:
services under our case law, the latter allegation of violation of tort duty that is independent of the contract.

[00:05:51] Speaker 03:
That's exactly what Ms.

[00:05:53] Speaker 03:
Walder testified that the problem was with Open, is that they induced Fort Collins into entering into this contract by externally grading A when they didn't

[00:06:12] Speaker 03:
currently have that capability.

[00:06:14] Speaker 00:
All right.

[00:06:15] Speaker 00:
A couple of things about Van Rees.

[00:06:16] Speaker 00:
First, it did not have a merger clause.

[00:06:18] Speaker 00:
It did not discuss an integration clause.

[00:06:21] Speaker 00:
Right.

[00:06:21] Speaker 03:
I'm just talking about the economic law.

[00:06:24] Speaker 00:
Well, they are distinct but overlapping doctrines.

[00:06:27] Speaker 00:
And I would submit that as the economic law doctrine has evolved since Van Rees, that courts have applied it to

[00:06:42] Speaker 00:
applying Colorado law have applied it to fraud and the inducement.

[00:06:48] Speaker 00:
And I can give you a couple of cases.

[00:06:50] Speaker 00:
They're cited.

[00:06:52] Speaker 00:
And before I do that, though, I'd like to refer the court to the health bank decision.

[00:06:56] Speaker 00:
This is in the, it's Utah, Utah Supreme Court, but referring to Van Rees.

[00:07:03] Speaker 03:
Justice Lee says, I disagree.

[00:07:06] Speaker 03:
He quotes Justice Aydin and says, I disagree with her.

[00:07:10] Speaker 00:
It was, I think, clarifying where you have absolutely every single thing to say.

[00:07:16] Speaker 00:
Well, what was spoken and then memorialized, it shouldn't be any different.

[00:07:23] Speaker 00:
But let me give you a citation to two cases that are applying Colorado law, even where there is

[00:07:30] Speaker 00:
to bar fraud in the inducement cases, even when there's no murder clause and no limitation exclusion on damages, where the representation is included and memorialized in the contract.

[00:07:46] Speaker 00:
That's the remax case.

[00:07:48] Speaker 00:
It is a district court case.

[00:07:50] Speaker 00:
But it pointed to three of the representations were not memorialized.

[00:07:56] Speaker 00:
One of them was the one that was memorialized says, no.

[00:07:59] Speaker 00:
That's barred.

[00:08:01] Speaker 00:
And there's also the recent case that I cited in our Reply Brace Smart case.

[00:08:08] Speaker 00:
It involved a pre-contractual and non-disclosure.

[00:08:13] Speaker 00:
The plaintiff was arguing there's a common law duty to disclose latent defects.

[00:08:20] Speaker 00:
But this was also a contractual disclosure duty.

[00:08:24] Speaker 00:
And the court found it was barred.

[00:08:26] Speaker 00:
It was assumed memorialized.

[00:08:29] Speaker 01:
So just, you know... Why would false misrepresentations about capabilities to perform be distinct from the contract itself?

[00:08:39] Speaker 00:
Well, so what was represented was, yes, there was this grading.

[00:08:45] Speaker 00:
It was represented before.

[00:08:46] Speaker 00:
But just to be sure that the parties were totally clear on what they had negotiated over four months, they included the RFP,

[00:08:56] Speaker 00:
and the same functionality matrix completely, every bit of it was repeated, memorialized, same representations, same condition, same truth or false study, whatever, it's there.

[00:09:16] Speaker 00:
This is what parties do when they bargain for

[00:09:20] Speaker 00:
risks and allocations.

[00:09:23] Speaker 00:
It fits well under the economic law stocking, but please do not lose sight of the integration clause.

[00:09:31] Speaker 00:
That's very important because it's actually, it's an independent basis for saying, wait a minute, you cannot have this tort recovery where there's been express non-reliance, and this is in several places in the

[00:09:48] Speaker 00:
Preamble, it's an integration.

[00:09:51] Speaker 00:
The warranties and reps say, we are warranting everything in that functionality matrix.

[00:09:58] Speaker 00:
And there's a lot of warranties in there.

[00:10:01] Speaker 00:
But you cannot rely, you know, disclose no pre-contractual representations.

[00:10:07] Speaker 00:
And that distinguishes this case.

[00:10:09] Speaker 01:
So the integration clause, is that the crux of your argument?

[00:10:12] Speaker 01:
In other words, if you take that out, you say you would lose?

[00:10:15] Speaker 00:
No, Your Honor.

[00:10:17] Speaker 00:
We also have, in addition to that, and in addition to the complete repetition and inclusion of all the other representations, we have the, and this was maybe my last bullet point, sorry about the slide,

[00:10:37] Speaker 00:
And I'm going to quote from the Dream Finder.

[00:10:39] Speaker 00:
Dream Finders did rely on post-contractual representations, but it has an alternative, an alternative basis for applying the economic loss rule.

[00:10:51] Speaker 00:
And I'm going to quote one of its headings as, quote, under economic loss rule, a plaintiff may not assert tort claims to recover damages expressly excluded under its contract.

[00:11:06] Speaker 00:
It also has a nice quote about not being able to cloak your contract claim and tort theories in order to evade the contractual remedies that you bargained for.

[00:11:19] Speaker 00:
It describes Dream Finders as a separate

[00:11:24] Speaker 00:
grounds for economic loss rule.

[00:11:27] Speaker 03:
Right after that, or we're on page 123, doesn't the Court

[00:11:42] Speaker 03:
alleged conduct occurred after the parties entered into the contract.

[00:11:46] Speaker 03:
So if I enter into a contract with you and then I lie about what I'm planning to do, sure, I can see that that would be clearly covered under any state's integration clause or merger clause.

[00:12:00] Speaker 03:
But here, it's a little different, isn't it?

[00:12:04] Speaker 03:
It's saying, let's say you hire me to mow your lawn.

[00:12:08] Speaker 03:
And I tell you, oh, I have mowed thousands of lawn.

[00:12:11] Speaker 03:
I've never had a customer dissatisfied.

[00:12:15] Speaker 03:
And you hire me.

[00:12:16] Speaker 03:
And then I enter into warranty.

[00:12:18] Speaker 03:
I will cut your grass just perfectly.

[00:12:20] Speaker 03:
And then I start cutting the grass, and I don't know how to turn the lawn mower.

[00:12:25] Speaker 03:
And you say, well, I'd never... Okay, fine.

[00:12:28] Speaker 03:
Your judgment proves back, Rick.

[00:12:30] Speaker 03:
That doesn't be no good.

[00:12:31] Speaker 03:
I would have hired Judge Federico to mow your grass if I'd have known you were so incompetent.

[00:12:36] Speaker 03:
Isn't that exactly what we have here?

[00:12:38] Speaker 03:
It's not exactly lying after the fact.

[00:12:42] Speaker 03:
It's lying before the fact and precluding other people from getting the job.

[00:12:46] Speaker 00:
Okay.

[00:12:46] Speaker 00:
Your Honor, I will give you a straight answer on this in Dream Finders.

[00:12:51] Speaker 00:
It is an additional basis.

[00:12:53] Speaker 00:
It says.

[00:12:54] Speaker 00:
So you need to look at that.

[00:12:56] Speaker 00:
If you read the opinion, it says that.

[00:12:59] Speaker 00:
And by the way, the cases that the city has cited that are distinguishing, they're rejecting it, they distinguish those cases and saying there is no exclusion of these tort damages.

[00:13:11] Speaker 00:
They're saying it allows.

[00:13:12] Speaker 00:
So they're observing that contract.

[00:13:14] Speaker 00:
I'd like to save the rest of my time for rebuttal.

[00:13:16] Speaker 00:
Thank you.

[00:13:22] Speaker 04:
Good morning.

[00:13:23] Speaker 04:
May it please the court.

[00:13:24] Speaker 04:
My name is Case Collard and I'm representing the city of Fort Collins.

[00:13:29] Speaker 04:
I think Miss Daniel's representation of Colorado law was a little narrow and a little bit misleading.

[00:13:37] Speaker 04:
I think that the cases have been very consistent, and I'd like to try to reconcile those for you all.

[00:13:44] Speaker 04:
The relatively recent Viola Water-Tex case that is cited in the briefing says, fraudulent concealment was not barred because otherwise it, quote, would effectively insulate a party to a contract from their own fraudulent actions and would effectively allow contract law to swallow valid tort law fraud claims.

[00:14:05] Speaker 04:
So that's the economic loss rule portion of this, which is separate from the integration clause, which I will get to right now.

[00:14:13] Speaker 04:
But I think from an economic loss rule perspective,

[00:14:16] Speaker 04:
Van Rees is the right case.

[00:14:18] Speaker 04:
No Colorado, I disagree with her representation of Remax and Smart and V. Stropas.

[00:14:25] Speaker 04:
No Colorado court, Court of Appeals, Supreme Court, has looked at a pre-contractual fraud, a situation like this, a competitive RFP, where they lied to get the contract over eight other competitors

[00:14:43] Speaker 04:
and that somehow that they would be insulated by the economic loss rule.

[00:14:48] Speaker 04:
No Colorado court has held that.

[00:14:51] Speaker 04:
The Remax case and the Smart and Stropas case, to close the loop on that, are different because in Remax there were existing contracts.

[00:14:57] Speaker 04:
It was a series of contracts.

[00:14:59] Speaker 04:
Smart and Stropas is actually a meth house case, and that was in the contract itself.

[00:15:07] Speaker 04:
While I'm on economic loss rule, I think the clarifying issue, whether you're getting to Health Bank and the Utah Court and all of those things, is to really go back.

[00:15:17] Speaker 04:
Town of Alma starts the modern line of cases in Colorado on economic loss rule.

[00:15:22] Speaker 04:
But the go to the rule, you don't even need, and I appreciate your honor citing the recent language in mid-century that does have the word generally.

[00:15:33] Speaker 04:
But you don't need to go to that language where generally intentional torts are not part of the economic loss rule.

[00:15:40] Speaker 04:
Because the test itself, the three-part test, and we cited the Levin case for that, but it's also in Hammond, I think, and BRW.

[00:15:51] Speaker 04:
this three-part test to determine if there's an independent duty.

[00:15:55] Speaker 04:
And even in the Town of Alma case, there's a footnote where the Supreme Court said, we kind of wish we could rename the test the independent duty test, because that's a little better than the economic loss rule.

[00:16:06] Speaker 04:
And so if you go through that test, I won't do it with your honors, because we've done it.

[00:16:10] Speaker 04:
And I think it's pretty clear under Van Rees and all the other precedent that we pass with fine colors.

[00:16:16] Speaker 04:
The economic loss rule simply doesn't apply.

[00:16:19] Speaker 04:
So I would like to mention integration because that's the other piece.

[00:16:24] Speaker 04:
And I don't want to get them too confused.

[00:16:26] Speaker 04:
There's a separate line of cases.

[00:16:28] Speaker 04:
And the Keller case, which I think is interesting because it's a 10th circuit request for a special question from the Colorado Supreme Court.

[00:16:38] Speaker 04:
And that's really the case on integration clauses that I think your honor should turn to.

[00:16:44] Speaker 04:
Here's a quote.

[00:16:46] Speaker 04:
from Keller.

[00:16:48] Speaker 04:
A seller should not be allowed to hide behind an integration clause to avoid consequences of a misrepresentation, whether fraudulent or negligent."

[00:16:58] Speaker 04:
So I think Open has kind of combed through the case law.

[00:17:04] Speaker 04:
to find factual situations where perhaps there was a fraud that was not an independent duty, that was a duty in the contract, and then find language that's helpful to them.

[00:17:18] Speaker 04:
But overall, there was an independent duty not to lie.

[00:17:23] Speaker 04:
That's not really in dispute.

[00:17:25] Speaker 04:
There's an independent common law duty not to lie to get someone to enter a contract

[00:17:30] Speaker 04:
as your honor's example about mowing grass shows.

[00:17:34] Speaker 04:
And everybody who responded to the RFP, not just open, had that duty.

[00:17:39] Speaker 04:
There were additional contractual duties

[00:17:43] Speaker 04:
that were required, requirements, and the functional matrix did become a requirement of the contract, and they had to meet those requirements.

[00:17:53] Speaker 04:
But the contract also says that we're relying on Open's representations about their product.

[00:18:00] Speaker 04:
The city of Fort Collins was relying on those.

[00:18:03] Speaker 04:
And I think that reliance, it says in the contract, was reasonable, but there's also a lot of evidence in the record, and that this jury verdict

[00:18:10] Speaker 04:
was well supported with evidence, kind of up and down the line here.

[00:18:16] Speaker 04:
And I can go through that if your honors would like.

[00:18:18] Speaker 04:
But if you have any questions on economic loss rule or integration, I'd be happy to talk about those.

[00:18:26] Speaker 03:
Well, I do have a question about what you just said in terms of the merger clause.

[00:18:31] Speaker 03:
Once there was a contractual provision saying, we are relying on that,

[00:18:35] Speaker 03:
Wouldn't that have been precluded under the disclaimer of warranties?

[00:18:42] Speaker 04:
No, Your Honor.

[00:18:44] Speaker 04:
It's a separate issue because it doesn't change the independent duty rule.

[00:18:47] Speaker 04:
That's not a part of the economic loss or the independent duty test.

[00:18:53] Speaker 03:
Right.

[00:18:55] Speaker 03:
So I'm not asking about economic loss rule on just the integration merger clause to the extent that

[00:19:03] Speaker 03:
that there was a contractual statement saying, we are relying on your functional matrix, your internal grades, that would be integrated into the written contract.

[00:19:16] Speaker 04:
It's actually the opposite, Your Honor.

[00:19:18] Speaker 04:
And this, I think, is shown by a pair of cases.

[00:19:23] Speaker 04:
And so Keller was interpreted by Judge Moore twice, in two separate cases.

[00:19:29] Speaker 04:
One in Steak and Shake, where he found the integration clause was, and the language is that it has to be, it can't be a general integration clause.

[00:19:38] Speaker 04:
It has to be clear and specific.

[00:19:40] Speaker 04:
And he found that the integration clause in that steak and shake case, which we do cite, I think both sides cited it, is that it was clear and specific that there's no reliance on prior representations of profitability.

[00:19:55] Speaker 04:
And so that barred that claim.

[00:19:59] Speaker 04:
Then in Penceford, four years later, in 2019, he looks at another integration clause.

[00:20:07] Speaker 04:
he comes out the opposite way.

[00:20:09] Speaker 04:
And he says, these claims aren't barred.

[00:20:11] Speaker 04:
And he cites Keller again, because it's a general integration clause.

[00:20:14] Speaker 04:
And he calls it, it doesn't have no representation language.

[00:20:19] Speaker 04:
And what that means is when you look at the integration clause, does it say, and this is from our integration clause in this case, section 18.15.

[00:20:29] Speaker 04:
So an entire agreement

[00:20:35] Speaker 04:
and precedents.

[00:20:36] Speaker 04:
It said this agreement, including all exhibits, constitutes the final, complete, exclusive agreement between the parties with respect to the subject matter of this agreement and supersedes any prior contemporaneous agreement, proposals, warranties, and representations.

[00:20:54] Speaker 04:
So it's about what constitutes the agreement.

[00:20:56] Speaker 04:
What are the promises in the agreement?

[00:20:59] Speaker 02:
What about that language that it supersedes any prior representations?

[00:21:03] Speaker 02:
Is that specific enough?

[00:21:04] Speaker 02:
No.

[00:21:05] Speaker 04:
And you can look both at Keller.

[00:21:06] Speaker 04:
Keller had much more specific language than this.

[00:21:10] Speaker 04:
And Pinsford, I think, is a really nice contrast because he is pretty short.

[00:21:15] Speaker 04:
He talks about this no representation language.

[00:21:18] Speaker 04:
And the language you'd need here

[00:21:20] Speaker 04:
To your point, Your Honor, to get this included in the integration, the city does not rely on any representation made by Open prior to signing this agreement.

[00:21:31] Speaker 04:
But it says the opposite of that.

[00:21:33] Speaker 04:
In the introduction to the agreement, it says the city is relying on Open's representations.

[00:21:39] Speaker 04:
So the agreements in this, our contract, the integration clause is generic when compared to how courts have treated them.

[00:21:50] Speaker 04:
And not only do we not have, sorry, the no representation and we're not relying on any representations, no reliance clause, we have a reliance clause.

[00:22:01] Speaker 04:
We are relying on your representations about your product.

[00:22:05] Speaker 04:
And I think there's a distinction too between the requirements that must be implemented and the capabilities that we have been told about and we are relying on as the basis for entering this contract.

[00:22:21] Speaker 04:
Frankly, we did have a contract claim until we elected our remedy.

[00:22:25] Speaker 04:
There was a breach of contract as well, but that's an election of remedies issue.

[00:22:30] Speaker 04:
That's not the verdict we're here about today.

[00:22:32] Speaker 04:
We're here about the intentional tort of fraudulent inducement.

[00:22:34] Speaker 04:
That occurred in March 2018 when they gave us the grades that were

[00:22:41] Speaker 04:
lies that did not match their internal grading, along with grades about a portal that they didn't use, along with lots of other representations that support a fraud verdict months before a contract was ever entered.

[00:22:58] Speaker 04:
Anything else on integration or economic loss runners?

[00:23:03] Speaker 04:
I would just take a moment to talk about two-waved arguments.

[00:23:09] Speaker 04:
There is an argument that

[00:23:11] Speaker 04:
that one of the two defendants' open investments should not be a part of the judgment.

[00:23:16] Speaker 04:
That argument was not brought up until a Rule 52 motion two months after the verdict.

[00:23:23] Speaker 04:
And it's been waived.

[00:23:26] Speaker 04:
The Rule 52 motion was not even a correct motion, since that is for non-jury trials.

[00:23:33] Speaker 04:
The case was tried with Open as one entity.

[00:23:36] Speaker 04:
That was a strategic choice Open International and Open Investments made.

[00:23:40] Speaker 04:
We've litigated many cases with multiple defendants, and keeping that corporate separateness sometimes is the strategy to say, well, you'd have to prove alter ego to paint this conduct for this corporate entity.

[00:23:56] Speaker 04:
That's not what happened here.

[00:23:58] Speaker 04:
Open itself chose to litigate this way.

[00:24:00] Speaker 03:
Let me ask you about your first waiver argument, or maybe your second, of the 50A, that it wasn't brought up in a real 50 motion.

[00:24:06] Speaker 03:
It was brought up in an inapplicable real 52 motion.

[00:24:11] Speaker 03:
The anomaly is that it really should have been a judge-tried issue.

[00:24:16] Speaker 03:
It's an equitable remedy.

[00:24:18] Speaker 03:
What the judge did was allow the jury to decide an equitable issue.

[00:24:24] Speaker 03:
And nobody, now, this is not before us.

[00:24:26] Speaker 03:
Nobody's challenged that.

[00:24:28] Speaker 03:
But because the judge allowed a jury to decide an equitable issue, then Fort Collins comes in and says, well, this was tried by a jury, so you should have raised rule 50 issue.

[00:24:43] Speaker 03:
It seems quite anomalous since it really should have been an equitable remedy.

[00:24:48] Speaker 03:
And obviously, the judge then at stage two takes it.

[00:24:52] Speaker 03:
But it wasn't like,

[00:24:53] Speaker 03:
rescission and restitution all of a sudden surfaced as an issue.

[00:25:00] Speaker 03:
Once the jury rendered a verdict, it was always an issue.

[00:25:04] Speaker 03:
So it's kind of weird, isn't it?

[00:25:07] Speaker 03:
It's a weird question, I guess.

[00:25:08] Speaker 03:
But why can't we say that it was waived by raising it

[00:25:15] Speaker 03:
in Rule 52 when it should have been adjudicated as a judge tried issue.

[00:25:22] Speaker 04:
So can I start by, it's an interesting question.

[00:25:24] Speaker 04:
It is not before your honor because it was not raised.

[00:25:27] Speaker 04:
But I do have an answer for that, which the argument that was waived is about liability of open investments.

[00:25:35] Speaker 04:
And that is a hundred percent a jury question.

[00:25:37] Speaker 04:
and was appropriately given to the jury and was not objected to at the time.

[00:25:42] Speaker 04:
The verdict form provided liability instructions.

[00:25:46] Speaker 03:
That's a jury question, a factual question.

[00:25:50] Speaker 03:
Let's say there's only one claim and it's for rescission and restitution.

[00:25:55] Speaker 03:
You're saying that's a jury issue?

[00:25:58] Speaker 04:
The liability question is a jury issue.

[00:26:02] Speaker 04:
We have a Seventh Amendment right to a jury on those issues, Your Honor.

[00:26:06] Speaker 04:
And the only thing in front of the court was remedy.

[00:26:11] Speaker 04:
We had five minutes to elect.

[00:26:14] Speaker 04:
We elected rescission.

[00:26:16] Speaker 04:
The only thing left for the court was remedy.

[00:26:19] Speaker 04:
I think we have a case on that.

[00:26:20] Speaker 04:
I'm sorry I wasn't able to flip to it while you were talking, but because it's common factual issues, she can't do anything on liability.

[00:26:28] Speaker 04:
She can't revisit liability.

[00:26:30] Speaker 04:
She can't choose not to apply rescission because there are common factual issues to liability that were decided by the jury, and that's the Seventh Amendment issue.

[00:26:38] Speaker 02:
Does it change our standard of review?

[00:26:41] Speaker 04:
On which issue?

[00:26:43] Speaker 02:
On just looking at, you know, we're here to look at the rescission, and as Judge Bacharach noted, that's an equitable remedy.

[00:26:50] Speaker 02:
Typically, we give a lot of deference to jury verdicts, but here the jury verdict

[00:26:55] Speaker 02:
made certain findings, but then the judge takes it because it's an equitable remedy.

[00:26:58] Speaker 04:
No, it doesn't change your standard of review.

[00:27:00] Speaker 04:
It's still the same very deferential review to the jury's verdict because those factual issues were underlying liability.

[00:27:06] Speaker 04:
All the judge took was arrest.

[00:27:08] Speaker 04:
All we had was a restitution hearing.

[00:27:10] Speaker 04:
There was no liability issues whatsoever.

[00:27:12] Speaker 04:
She made that clear on the record, and she made that clear, I think, in the briefing.

[00:27:17] Speaker 04:
And then all she did

[00:27:18] Speaker 04:
We had a hearing on restitution.

[00:27:22] Speaker 04:
It was a combined order where she rejected some of the arguments that were made on Rule 52.

[00:27:26] Speaker 04:
And then she said, so I'm entering my restitution order.

[00:27:29] Speaker 04:
But in that hearing, all we did was talk about the damages categories.

[00:27:35] Speaker 03:
Or sorry, the restitution categories.

[00:27:39] Speaker 03:
Maybe I'm confused.

[00:27:41] Speaker 03:
Their whole argument is an open investment.

[00:27:43] Speaker 03:
There was no evidence that open investments committed fraud.

[00:27:47] Speaker 03:
Open International did.

[00:27:49] Speaker 03:
So back to Judge Federico's question, the only part of this issue that is a disagreement is on liability.

[00:27:58] Speaker 03:
as I understand it.

[00:28:00] Speaker 04:
Your honor, that idea that there's no evidence that open investments committed fraud, that's what was waived.

[00:28:09] Speaker 04:
That's what they should have raised.

[00:28:10] Speaker 04:
If they thought that liability needed to be proven separately, I'll give you the key example.

[00:28:16] Speaker 04:
A verdict form where it says, did open international commit fraud?

[00:28:20] Speaker 04:
Did open investments commit fraud?

[00:28:22] Speaker 04:
That would be the minimum.

[00:28:24] Speaker 04:
And that would have still, it would have been waived long before that.

[00:28:27] Speaker 04:
And we cited a case, it's the Miller glass containers, the Miller brewing.

[00:28:33] Speaker 04:
and they had a defense and they were said silent as a tomb as the tomb on this defense they actually tried to bring it up in that in that miller case they actually tried to bring it up for jury instructions and the court said no and the fifth circuit said you can't lie behind the log and bring up a defense you know for the first time in jury instructions this is even worse than that

[00:28:55] Speaker 04:
Liability, the verdict entered.

[00:28:57] Speaker 04:
They said nothing for two months.

[00:28:59] Speaker 04:
And then they said, should have been separate.

[00:29:01] Speaker 04:
We should have had separate verdict instructions.

[00:29:03] Speaker 04:
Liability was established jointly as open.

[00:29:06] Speaker 04:
Every piece of evidence that went towards open internationals fraud, this is their framing, also went toward open investments fraud, because open was one in the same.

[00:29:16] Speaker 03:
Yeah.

[00:29:17] Speaker 03:
And I know you're just answering my question, which I appreciate.

[00:29:20] Speaker 03:
But I'm going to give you about 20 seconds to finish up.

[00:29:25] Speaker 03:
Oh, I'm over.

[00:29:27] Speaker 04:
Sorry.

[00:29:29] Speaker 04:
If you all don't have anything else, I'll leave it there.

[00:29:31] Speaker 04:
All right.

[00:29:31] Speaker 04:
Thank you.

[00:29:34] Speaker 00:
Ready for some bullet points?

[00:29:36] Speaker 03:
Ready.

[00:29:37] Speaker 03:
Always ready.

[00:29:38] Speaker 00:
All right.

[00:29:39] Speaker 00:
On open investments.

[00:29:41] Speaker 00:
Number one, plaintiff had the burden of proof.

[00:29:47] Speaker 00:
Number two, open investments was a guarantor brought

[00:29:51] Speaker 00:
guarantor and was on the hook until there was an election of remedies.

[00:29:56] Speaker 00:
What we need to keep in mind is this election of remedies was not just between fraud and contract.

[00:30:03] Speaker 00:
It was whether there was going to be a ratification of the contract, so city would seek actual damages for fraud, in other words, benefit of the bargain damages, or rescission.

[00:30:14] Speaker 00:
That did not occur until after the jury returned its verdict.

[00:30:19] Speaker 00:
Number three, or four, I'm losing track.

[00:30:23] Speaker 00:
The jury did not decide joint and several liability.

[00:30:26] Speaker 00:
This was a special verdict form under Rule 49.

[00:30:30] Speaker 00:
The jury answered a few questions.

[00:30:33] Speaker 00:
Liability was determined by the judge.

[00:30:36] Speaker 00:
Next bullet point.

[00:30:39] Speaker 00:
Rule 50 doesn't even come into play unless you've been fully heard on an issue.

[00:30:45] Speaker 00:
open investments was not fully heard on this issue.

[00:30:49] Speaker 00:
It was only a few questions that were submitted to the jury.

[00:30:55] Speaker 00:
There was no evidence as to open investments, and they were on the hook.

[00:30:59] Speaker 00:
If the city had affirmed the contract, still on the fraud claim, they were guaranteed.

[00:31:08] Speaker 00:
They had no basis for appraising this earlier than they did.

[00:31:11] Speaker 00:
This is a naming convention, common defenses,

[00:31:15] Speaker 00:
Parties do that all the time, unrelated.

[00:31:17] Speaker 00:
There's no evidence, no alter ego evidence.

[00:31:19] Speaker 00:
The jury did not decide alter ego.

[00:31:22] Speaker 00:
Nothing there.

[00:31:24] Speaker 00:
So I see it's turned red.

[00:31:26] Speaker 03:
I think my... You can finish your... I'm curious of what your remaining bullet points are.

[00:31:31] Speaker 00:
Yeah.

[00:31:32] Speaker 00:
I think my opposing counsel got an extra minute or so if I could.

[00:31:36] Speaker 03:
Well, I'm not going to give you an extra minute.

[00:31:38] Speaker 03:
I mean, he was the answer to my question, but I will let you briefly give me your bullets.

[00:31:46] Speaker 00:
On the specifics of the merger clause, integration clause, look at section 2.3 of the contract.

[00:31:56] Speaker 00:
It disclaims or reliance.

[00:32:00] Speaker 00:
Coffee, bean, Colorado appellate decision, enforces a fraud in the inducement case, integration clauses that are specific.

[00:32:10] Speaker 00:
It discusses Keller, and Keller does not disallow it.

[00:32:14] Speaker 00:
This is specific enough.

[00:32:17] Speaker 00:
Remax says, on the other hand, the third

[00:32:21] Speaker 00:
representation concerns Remax's ability to provide certain marketing services through its websites.

[00:32:28] Speaker 00:
Thus, the third alleged representation was made, and the parties negotiated and memorialized the obligations related to that, so it was

[00:32:37] Speaker 00:
barred under the economic loss doctrine.

[00:32:40] Speaker 00:
And then finally, I'll say, on the Viola case, it's a long, long decision, a little odd in some places, because it refers to incorporation of representation and being part of the contract and part of the representation.

[00:32:54] Speaker 00:
But anyway, what I want to say is, and it's concluding, and I'll wrap up right now.

[00:32:58] Speaker 00:
It says, we therefore hold the economic loss rule does not bar and terrorist fraud because, and it talks about

[00:33:07] Speaker 00:
the fraud not being there.

[00:33:08] Speaker 00:
And then number two reason is, Antero is not using tort claims to pursue damages explicitly prohibited by the DBA.

[00:33:15] Speaker 00:
And that's exactly what we have here.

[00:33:17] Speaker 00:
Thank you, Your Honors.

[00:33:19] Speaker 00:
Can I ask for the relief?

[00:33:22] Speaker 00:
You betcha.

[00:33:23] Speaker 00:
What would we want for you?

[00:33:26] Speaker 00:
Yeah.

[00:33:26] Speaker 00:
We would want you to reverse and render judgment as a matter of law on the fraud claim, but remand for the parties

[00:33:36] Speaker 00:
We have a new trial on the contract claims.

[00:33:39] Speaker 00:
Citi has its remedy, its contractual remedy.

[00:33:42] Speaker 00:
Open has a counterclaim.

[00:33:44] Speaker 00:
This should be remitted for a new trial on the contract.

[00:33:46] Speaker 00:
So everybody gets the remedy they deserve.

[00:33:49] Speaker 03:
Thank you.

[00:33:50] Speaker 03:
OK.

[00:33:50] Speaker 03:
Thank you.

[00:33:51] Speaker 03:
I did give you two minutes, 36 seconds, just for the record.

[00:33:57] Speaker 03:
Thank you.

[00:33:57] Speaker 03:
It's very well presented by both sides.

[00:34:00] Speaker 03:
And we appreciate your excellent briefs and your excellent advocacy today.

[00:34:04] Speaker 03:
We're going to take a 10-minute break.

[00:34:06] Speaker 03:
and then come back for our last three cases.

[00:34:08] Speaker 03:
Thank you.