20CA1513 Ward Petroleum v Kent 01-06-2022
COLORADO COURT OF APPEALS
Court of Appeals No. 20CA1513
Weld County District Court No. 19CV30538
Honorable Todd Taylor, Judge
Ward Petroleum Corporation, individually and as assignee of Wolf Resources,
LLC; and Ward Energy Investments, LLC, individually and as assignee of Wolf
Resources, LLC,
Plaintiffs-Appellants,
v.
Gregory Kent; Dacono Investments, Inc., a Colorado corporation; and General
Land Development Corporation, LLC, a Colorado limited liability company,
Defendants-Appellees.
JUDGMENT AFFIRMED AND CASE
REMANDED WITH DIRECTIONS
Division VI
Opinion by JUDGE WELLING
Fox and Johnson, JJ., concur
NOT PUBLISHED PURSUANT TO C.A.R. 35(e)
Announced January 6, 2022
Spencer Fane LLP, Troy R. Rackham, Jacob F. Hollars, Denver, Colorado, for
Plaintiffs-Appellants
Woods|Aitken, LLP, Alvin M. Cohen, Denver, Colorado, for Defendants-
Appellees
1
¶ 1 Plaintiffs, Ward Petroleum Corporation and Ward Energy
Investments, LLC (collectively, Ward), appeal the trial court’s
summary judgment decision in their contract dispute arising out of
a purchase agreement with defendant Gregory Kent. We affirm.
I. Background
¶ 2 To best understand the events giving rise to this litigation, we
will start from the beginning. Over twenty years ago, Gregory Kent
purchased two parcels of property: Section 1 and Section 34. In
2008, Kent conveyed the parcels to a limited liability entity and
then from that limited liability entity to Dacono Investments, Inc.
1
(Dacono); Kent was the sole shareholder of both entities. In 2009,
Dacono obtained a $4.25 million bank loan and mortgaged Section
1 as collateral for the loan.
¶ 3 In 2010, Dacono began to fall behind on the loan payments.
In June 2010, Kent attempted to sever the mineral rights of
Section 1 by executing a mineral deed conveying the Section 1
1
In at least one of the documents in the record Dacono
Investments, Inc., is referred to as “Dakono Investments, Inc.” This
discrepancy isn’t identified or raised by the parties as an issue in
their briefing in this court, so we don’t address it further.
2
mineral interests from Dacono to himself; the mineral interest deed
was recorded. Kent didn’t have permission from the bank to sever
the mineral interests from the mortgaged parcel.
¶ 4 In 2012, the bank declared a default on the loan and the court
authorized the sale of Section 1 through a foreclosure auction. At
the foreclosure auction, the bank purchased the property. The
bank’s confirmation deed contained no reservation of mineral rights
for Section 1 to Kent, meaning the bank’s deed didn’t reflect Kent’s
attempt to sever the Section 1 mineral rights following Kent’s pledge
of the property to the bank.
¶ 5 Now we turn to the events giving rise to this litigation. In
2018, Kent agreed to sell the Section 34 mineral rights to a
company called Wolf Resources. After purchasing the Section 34
mineral rights from Kent, Wolf Resources offered to also purchase,
and Kent agreed to sell, the Section 1 mineral rights. Wolf
Resources then discovered a title issue that revealed that Kent
didn’t own the Section 34 mineral rights that Wolf Resources had
purchased from him. It isn’t clear from the record how the title
problems involving Section 34 were discovered by Wolf Resources.
After discovering that Kent didn’t own the Section 34 mineral rights,
3
Wolf Resources and Kent amended the purchase agreement for the
Section 1 mineral rights to reflect a price reduction equivalent to
what Wolf Resources had paid for the Section 34 mineral rights
(that Kent didn’t own).
¶ 6 The amended purchase agreement for the Section 1 mineral
rights contains two clauses that are relevant here. First, the
purchase agreement states that Wolf Resources has no other claims
against Kent and waives and forever releases Kent from any claims,
known or unknown. Second, the purchase agreement states that
Wolf Resources is taking title without any warranty and that any
claims against Kent are limited by the terms of the mineral interest
deed and the purchase agreement. And the mineral deed for
Section 1 incorporated into the purchase agreement contains a six-
month claim limitation. The purchase agreement was executed on
May 3, 2018. The mineral deed was executed on May 14, 2018.
¶ 7 After Wolf Resources purchased the Section 1 mineral rights
from Kent, Wolf Resources sold them to Ward — the plaintiffs in
this case. After the conveyance from Wolf Resources to Ward was
complete, Ward discovered that Kent also didn’t own the Section 1
4
mineral rights that he purported to sell to Wolf Resources (and that
Wolf Resources then sold to Ward).
¶ 8 In May 2019, Wolf Resources assigned any and all claims it
had against Kent relating to the sale of the Section 1 mineral rights
to Ward. In June 2019, Ward commenced this action against Kent
alleging fraud by misrepresentation, concealment or nondisclosure,
negligent misrepresentation, violation of the Colorado Consumer
Protection Act, breach of contract, and unjust enrichment.
¶ 9 Kent filed a motion for summary judgment on all of Ward’s
claims. The trial court granted summary judgment in favor of Kent,
concluding that the plain language of the purchase agreement and
the mineral deed between Wolf Resources and Kent barred Ward’s
claims. Ward appeals.
II. Analysis
¶ 10 Ward raises four contentions on appeal. Specifically, Ward
contends that the trial court erred by (1) failing to recognize that
Kent breached the covenant of seisin; (2) granting Kent’s summary
judgment motion on Ward’s unjust enrichment claim; (3) granting
Kent’s summary judgment motion on Ward’s fraud and negligent
5
misrepresentation claims; and (4) granting Kent’s summary
judgment motion on Ward’s fraudulent concealment claim.
¶ 11 Because we are reviewing the trial court’s grant of summary
judgment, we review each contention de novo, applying the same
standard as that court. Poudre Sch. Dist. R-1 v. Stanczyk, 2021 CO
57, ¶ 12. A court may grant a motion for summary judgment when
the pleadings and supporting documents establish that there is no
genuine issue as to any material fact and that the moving party is
entitled to judgment as a matter of law. See C.R.C.P. 56(c); Gibbons
v. Ludlow, 2013 CO 49, ¶ 11. The moving party has the initial
burden of demonstrating the absence of a genuine issue of material
fact. See AviComm, Inc. v. Colo. Pub. Utils. Comm’n, 955 P.2d 1023,
1998). If this burden is met, then the burden shifts to the
nonmoving party to adequately demonstrate by relevant and
specific facts that a real controversy exists. See City of Aurora v.
ACJ P’ship, 209 P.3d 1076, 1082 (Colo. 2009); Churchey v. Adolph
Coors Co., 759 P.2d 1336, 1340 (Colo. 1988).
¶ 12 We address each contention below.
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A. Covenant of Seisin
¶ 13 Ward first contends that Kent breached the covenant of seisin
because he didn’t actually own the Section 1 mineral rights that he
purported to sell. The covenant of seisin is a promise by the seller
that he owns the property and has the rights of ownership.
Bernklau v. Stevens, 150 Colo. 187, 194, 371 P.2d 765, 769 (1962).
“The generally accepted rule is that a covenant of seisin is broken, if
at all, when it is made.” Id.
¶ 14 Ward argues that by conveying the mineral deed to Wolf
Resources for the Section 1 mineral rights, Kent promised that he
owned those mineral rights, and therefore the covenant of seisin
was breached at the time of the purported conveyance because he
didn’t actually own the mineral rights he was selling.
¶ 15 While we agree that the breach of the covenant of seisin was
adequately alleged, we conclude that the purchase agreement and
mineral deed expressly bar this claim. We reach this conclusion in
two different ways.
¶ 16 First, the purchase agreement provides that Wolf Resources
took title without any warranty, specifically: “Wolf acknowledges
that it is taking title without any warranty whatsoever, except as
7
granted in the revised Mineral Deed which is attached hereto as
Exhibit A and made a part hereof, and based only on its own
investigation and not any statements made by Seller.” Second, the
mineral deed contains this time limitation: “Notwithstanding the
foregoing, any warranty or agreement made by Grantor [Kent]
regarding title shall terminate and be of no effect on the date which
is six (6) months after the date of this Mineral Deed and no claim
may be made thereafter.”
¶ 17 Because Wolf Resources acknowledged that it was taking title
without any warranty whatsoever and because the six-month
window had closed by the time Ward filed suit, we conclude that the
purchase agreement and the mineral deed expressly bar Ward’s
claim arising under the covenant of seisin. Accordingly, summary
judgment on this claim was properly granted.
B. Unjust Enrichment
¶ 18 Ward argues that the trial court erred in granting summary
judgment on its unjust enrichment claim because of material fact
disputes raised by Ward.
¶ 19 A person is unjustly enriched when they benefit due to an
unfair detriment to another. Salzman v. Bachrach, 996 P.2d 1263,
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1265 (Colo. 2000). The proper remedy upon a finding of unjust
enrichment is to restore the harmed party to the position it formerly
occupied either by the return of what it formerly had or by the
receipt of its monetary equivalent. Lewis v. Lewis, 189 P.3d 1134,
1141 (Colo. 2008).
¶ 20 The claim of unjust enrichment is a judicial creation designed
to remedy the benefit to one party that comes at the unfair
detriment of another. Salzman, 996 P.2d at 1265.
¶ 21 Although a claim for unjust enrichment provides an equitable
remedy and doesn’t depend on any contract, oral or written, see
Lewis, 189 P.3d at 1141, a plaintiff can’t prevail on a claim of
unjust enrichment where the express terms of a contract between
the parties bar that claim. Printz Servs. Corp. v. Main Elec., Ltd.,
949 P.2d 77, 82 (Colo. App. 1997) (if an express contract exists and
an implied contract is alleged to co-exist and relate to the same
subject matter, the provisions of the express contract supersede the
alleged terms of the implied contract), aff’d in part and rev’d in part
on other grounds, 980 P.2d 522 (Colo. 1999).
¶ 22 The time bar that defeated Ward’s covenant of seisin claim is
equally fatal to the unjust enrichment claim. Specifically, the
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mineral deed’s language provides: “Notwithstanding the foregoing,
any warranty or agreement made by Grantor [Kent] regarding title
shall terminate and be of no effect on the date which is six (6)
months after the date of this Mineral Deed and no claim may be
made thereafter.” (Emphasis added.) This language expressly bars
any claim regarding title after six months. Ward’s unjust
enrichment claim is simply a repackaged title claim. Ward can’t
circumvent the express terms of the mineral deed by reframing this
claim as one for unjust enrichment. This is because a party cannot
recover for unjust enrichment by asserting a quasi-contract when
an express contract covers the same subject matter; the express
contract precludes any implied-in-law contract. Printz Servs. Corp.,
949 P.2d at 82; Stanford v. Ronald H. Mayer Real Est., Inc., 849
P.2d 921 (Colo. App. 1993); see also Interbank Invs., LLC v. Eagle
River Water & Sanitation Dist., 77 P.3d 814, 816 (Colo. App. 2003).
¶ 23 Because the unjust enrichment claim is barred by the terms of
the mineral deed, summary judgment on that claim was properly
granted.
C. Interpretation of the Purchase Agreement and Mineral Deed
10
¶ 24 Next, Ward contends that the trial court erred in its
interpretation of the purchase agreement and the mineral deed.
Ward’s argument focuses on the following language in the purchase
agreement:
Wolf warrants that, in exchange for the
reduction of the Purchase Price as set forth in
this paragraph, it has no other claims against
Seller for the Prior Transaction or any other
transaction, and in consideration of Seller
reducing the Purchase Price, hereby waives
and forever releases [Kent] from any claim
whatsoever, whether known or unknown,
including but not limited to any claims which
might have arisen under the Prior Transaction.
(Emphasis added.)
¶ 25 Specifically, Ward contends that “has” refers only to claims
that Wolf Resources may have had at the time the purchase
agreement was signed and doesn’t release Kent from liability for
claims arising in the future. We disagree.
¶ 26 As stated above, the claims that Ward is asserting are all
connected to the title — that is, each claim arises out of Kent not
actually owning the mineral rights that he purported to convey.
These claims are expressly barred by the mineral deed’s six-month
time limitation on “any warranty or agreement . . . regarding title.”
11
Even assuming that the word “has” refers only to claims that
existed at the time the agreement was executed, Ward’s argument
doesn’t defeat the six-month time limit in the mineral deed.
D. Fraud, Negligent Misrepresentation, and Fraudulent
Concealment
¶ 27 Lastly, we address Ward’s three tort claims: (1) fraud;
(2) negligent misrepresentation; and (3) fraudulent concealment.
These claims are different than the covenant of seisin claim and the
unjust enrichment claim because they are contract formation
claims. That is, if Ward’s claims of fraud, negligent
misrepresentation, or fraudulent concealment succeed, they
invalidate the contract and therefore would also escape the grasp of
Kent’s defenses that rely on the express terms of the contract.
1. Economic Loss Rule Isn’t A Bar to Ward’s Fraud Claims
¶ 28 As a threshold matter, Kent contends that the three tort
claims are barred by the economic loss rule. We disagree.
¶ 29 The economic loss rule doesn’t apply to claims arising from a
defendant’s pre-contractual conduct because, at that time, there
was no contract that could have subsumed identical tort duties.
Hamon Contractors, Inc. v. Carter & Burgess, Inc., 229 P.3d 282,
12
291, 293 (Colo. App. 2009); see also Van Rees v. Unleaded
Software, Inc., 2016 CO 51, ¶ 15 (explaining that the economic loss
rule does not bar claims “based on misrepresentations made prior
to the formation of the contracts, which [the plaintiff] alleges
induced him to enter into the contracts and therefore violated an
independent duty in tort to refrain from such conduct”). The
alleged misrepresentations and fraud by Kent that give rise to these
three claims were precontractual, meaning the fraud claims aren’t
barred by the economic loss rule. Therefore, we will address the
merits of each claim below.
2. Fraud and Negligent Misrepresentation
¶ 30 Ward contends that the trial court erred by granting summary
judgment when there were material factual disputes regarding its
fraud and negligent misrepresentation claims.
¶ 31 To establish fraud, Ward has to prove that (1) Kent made a
fraudulent misrepresentation of material fact; (2) at the time the
representation was made, Kent knew the representation was false
or was aware that he didn’t know whether the representation was
true or false; (3) Ward relied on the misrepresentation; (4) Ward had
the right to rely on, or was justified in relying on, the
13
misrepresentation; and (5) the reliance resulted in damages.
Barfield v. Hall Realty, Inc., 232 P.3d 286, 290 (Colo. App. 2010).
¶ 32 To prevail on its negligent misrepresentation claim, Ward must
prove that (1) in the course of Kent’s business or in a transaction in
which he had a pecuniary interest; (2) Kent supplied false
information for the guidance of others in their business
transactions; (3) Kent failed to exercise reasonable care or
competence in obtaining or communicating the information; and
(4) Ward justifiably and detrimentally relied on the
misrepresentation. Id.
¶ 33 Ward’s fraud and negligent misrepresentation claims both fail
as a matter of law on the element of justifiable reliance. If a party
claiming fraud has access to information that was equally available
to both parties and would have led to the discovery of the true facts,
that party is not justified, as a matter of law, in relying on the
¶ 34 Vinton is instructive in this regard. In Vinton, the plaintiff
alleged fraud after she was damaged by reliance on
misrepresentations by the defendant concerning the titles to certain
properties and their respective deeds. Id. at ¶ 16. Our supreme
14
court held that because the official records regarding the properties
were accessible to the general public in a publicly recorded system,
the plaintiff in Vinton had no right to rely on the false
representation. Id. at ¶ 17.
¶ 35 Ward argues that Vinton is not on point because several
reviews of the public records didn’t reveal the truth, and therefore
the access to the public records wasn’t equal. We disagree, and
believe the present case is analogous to Vinton.
¶ 36 Here, as in Vinton, the documents that would have revealed
the ownership status of the mineral interests were recorded and
publicly available and accessible. Ward doesn’t contend otherwise.
Nor does Ward contend that material information was missing from
the public record. Instead, Ward contends that the title search
didn’t reveal the information about the true owner of the Section 1
mineral rights. Ward’s contention is, in essence, that the public
record was confusing, not that the information wasn’t in the public
record or was otherwise unavailable. Although we acknowledge
that the public record relating to the Section 1 mineral rights may
be confusing or convoluted, the history of the various transactions
can be pieced together, as evidence to determine that Kent
15
ostensibly does not own the Section 1 mineral rights. That a real
estate transaction or series of transactions may make a title history
confusing isn’t enough, though, to create a genuine dispute
regarding the element of reasonable reliance. This is because any
reliance on Kent’s alleged representations (or silence) regarding his
ownership of the mineral rights was unreasonable as a matter of
law. Accordingly, Ward’s fraud and negligent misrepresentation
claims fail as a matter of law.
3. Fraudulent Concealment
¶ 37 Ward’s final claim is for fraudulent concealment. The
elements of fraudulent concealment are: (1) concealment of a
material existing fact that in equity and good conscience should be
disclosed; (2) knowledge on the part of the party against whom the
claim is asserted that such a fact is being concealed; (3) ignorance
of that fact on the part of the one from whom the fact is concealed;
(4) the intention that the concealment be acted upon; and (5) action
on the concealment resulting in damages. Kopeikin v. Merchs.
Mortg. & Tr. Corp., 679 P.2d 599, 602 (Colo. 1984).
¶ 38 To prevail on a claim of fraudulent concealment, Ward must
prove that Kent actually knew of a material fact that was not
16
disclosed and that Kent’s nondisclosure was intended to cause
Ward to act differently than it might otherwise have done if the
information had been disclosed. Id.
¶ 39 This claim too fails as a matter of law for the reasons outlined
in Vinton (though we acknowledge this is a closer call). As we
understand it, Ward contends that because Kent knew about the
bank foreclosure on the Section 1 property and his subsequent
attempt — without permission from the bank — to transfer the
Section 1 mineral rights back to himself, this, in part, was material
information that Kent should have affirmatively disclosed to Wolf
Resources when Wolf Resources asked if there were any issues with
the property.
¶ 40 Even if Wolf Resources asked Kent whether he knew about any
problems with the Section 1 property, our review of the record
discloses that the information that Ward alleges Kent had a duty to
disclose is information that was undisputedly available and
accessible in the public record. Specifically, the deed transferring
title of Section 1 to Dacono Investments was signed by Gregory Kent
as President and recorded on October 3, 2008. The pledge of
Section 1 as collateral for the loan between the bank and Dacono is
17
signed, again, by Gregory Kent as President of Dacono and recorded
on August 10, 2009. Kent’s attempt to sever the mineral rights
from Dacono back to himself as an individual — whether with or
without permission of the bank — is recorded on September 28,
2010. And then the bank’s foreclosure on, the court’s authorization
for the sale of, and the subsequent purchase by the bank (and then
to Carlile Capital, LLC) of Section 1 are also all recorded
transactions, recorded on March 7, 2012, October 26, 2012, and
March 22, 2013, respectively. Simply put, this all occurred and
was recorded in the public record well in advance of the 2018
agreements between Kent and Wolf Resources. Because Ward had
access to information that would’ve revealed that Kent didn’t own
the Section 1 mineral rights, Ward can’t prevail on a fraudulent
concealment claim based on an alleged failure to disclose that
publicly available information. See Vinton, ¶ 17.
¶ 41 Because the information that forms the basis of Ward’s
fraudulent concealment claim was equally available to Ward, this
claim too fails as a matter of law.
E. Appellate Attorney Fees
18
¶ 42 The purchase agreement contains the following fee-shifting
provision:
In the event an unsuccessful claim is brought
by Wolf against [Kent] with regard to the
limitations on damages as set forth herein,
[Kent] shall be awarded its attorney’s fees and
costs. This section shall bind any assignee of
this Purchase Agreement and the Mineral
Deed.
Kent is the prevailing party on appeal and has a contractual right to
recover reasonable attorney fees and costs. Therefore, Kent is
entitled to an award of his reasonable attorney fees and costs
incurred in defending this appeal. Because a trial court is better
situated to resolve the factual issues associated with the
entitlement to attorney fees, we exercise our discretion under C.A.R.
39.1 and remand for the trial court to determine and award Kent
appellate attorney fees. See In re Marriage of Beatty, 2012 COA 71,
¶ 22.
III. Conclusion
¶ 43 For the reasons set forth above, the judgment is affirmed and
the case is remanded to the trial court for it to award Kent his
reasonable attorney fees and costs incurred on appeal.
JUDGE FOX and JUDGE JOHNSON concur.
