DocketNumber： No. 10CA1188
Judges： Bernard, Hawthorne, Russel
Filed Date： 8/16/2012
Status： Precedential
Modified Date： 11/13/2024
T1 This appeal requires us to decide whether the claims of employees in a lawsuit against public entities and public employees lie, or could lie, in tort. If so, the claims must be dismissed under the Colorado Governmental Immunity Act (CGIA). If not, the claims may proceed. We conclude that, under the cireumstances here, some parts of the employees' claims are barred, but some are not. As a result, we affirm in part, reverse in part, and remand for further proceedings.
I. Background
12 Beginning in 1992, employees of nine Colorado colleges, including Mesa State College, contributed to a trust designed to provide long-term disability benefits for them if they were to become disabled. Each participating college appointed a trustee to the trust committee. The trust agreement required the employees and Mesa State to make these contributions.
{3 The original trust was succeeded in 2008 by another, the Colorado Higher Education Insurance Benefits Alliance (CHEI-BA) Trust.
T5 Mesa State withdrew from the CHEI-BA trust in 2005, and it created a new disability trust. Mesa State and its employees then asked the CHEIBA trust to release approximately $1 million from the reserve fund that Mesa State and its employees had contributed to the original trust and to the CHEIBA trust. This money would be placed in the new trust, which would be administered by a new trustee. The CHEI-BA trust refused this request.
1 6 Some of Mesa State's employees filed a class action suit to recover their share of the reserve fund. Plaintiff Terence Timothy Casey represents a class of employees who contributed. to the original trust. Plaintiff Joseph Taylor represents a class of employees who contributed to the CHEIBA trust.
T7 The defendants in this lawsuit are the CHEIBA trust; the eight other colleges that participated in the original trust and that continue to participate in the CHEIBA trust; and, in their official capacities, the trustees of the CHEIBA trust.
T8 The employees alleged that they were third-party beneficiaries of the trust agreement. They claimed that defendants breached the contract, in the form of the trust agreements. This claim asserts that defendants
failed to perform their contractual obligations owed to plaintiffs including contractually imposed fiduciary duties and duties of good faith and fair dealing by depriving [pllaintiffs of all benefits of the trust reserve fund ... and by taking action when they knew or should have known that it would afford employees of the [dle-fendant [cJolleges a disproportionately larger amount of the trust reserves and leave [pllaintiffs with none of the reserve.
19 As relevant here, the employees requested relief in the complaint consisting of (1) an accounting to determine their share of the reserve fund; and (2) a declaratory judgment detailing the parties' rights and duties relative to the two trust agreements, including a disbursement of their. share of the reserve funds to the trustee administering the new trust.
. {10 The employees originally filed this case in Mesa County. The defendants obtained a change of venue to Denver, where it was filed in the Denver Probate Court.
I 11 Defendants then moved to dismiss the case under C.R.C.P. 12(b)(1) and (5), arguing, in part, that the probate court did not have subject matter jurisdiction because the employees' claims were barred by the doctrine of sovereign immunity under the CGIA. Defendants also asked the court to dismiss the lawsuit for other reasons, including their contention that the employees' complaint failed to state a claim for relief under C.R.C.P. 12(b)(5). The probate court, in a written order, denied the motion to dismiss without holding a hearing.
IL Immunity Under the CGIA
12 Defendants contend that the probate court lacked subject matter jurisdiction because all of the employees' claims are barred by the CGIA. For the reasons we describe below, we agree as to some parts of some of the claims, but not as to others.
A. Standard of Review
118 Section 24-10-108, C.R.S.2011, authorizes trial courts to decide pretrial whether a public entity and public employees are immune from suit. Whether a public entity and its employees are immune from suit is an issue of subject matter jurisdiction that is resolved under C.R.C.P. 12(b)(1), and the plaintiff bears the burden of establishing that immunity has been waived. Gray v. University of Colorado Hospital Authority, 2012 COA 118, 1 16, 284 P.3d 191. When the trial court denies the public entity's C.R.C.P. 12(b)(1) motion and concludes that it has subject matter jurisdiction over the case, the public entity may seek interlocutory appellate review in this court,. City & County of Denver v. Crandall, 161 P.8d 627, 633 (Colo. 2007).
{14 Where, as here, the facts are not disputed for purposes of determining whether the probate court lacked subject matter
B. General Principles Concerning the CGIA
15 The CGIA does not apply to actions "grounded in contract." Berg v. State Bd. of Agriculture, 919 P.2d 254, 258 (Colo.1996). However, aside from limited exceptions not relevant here, the CGIA bars "any action against a public entity" or its employees "for injury which lies in tort or could lie in tort regardless of whether that may be the type of action or the form of relief chosen by a claimant." §§ 24-10-108, 24-10-118(2)(a), C.R.S.2011; see § 24-10-106, C.R.S.2011. In these cireumstances, the issue under the CGIA is not whether the contract claim was properly pled, but, instead, whether the claim could have been brought as a tort. This is a jurisdictional issue. City of Lakewood v. Brace, 919 P.2d 231, 244 (Colo.1996).
T16 Because the complaint's form is not determinative when evaluating whether a claim lies in tort or could lie in tort, we must examine the nature of the alleged injury and the relief the plaintiff seeks. See Patzer v. City of Loveland, 80 P.3d 908, 910 (Colo.App.2003). For example, as pertinent here, when determining whether a claim of breach of contract lies, or could lie, in tort,
[tlhe essential difference between a tort obligation and a contract obligation is the source of the parties' duties. Contract obligations arise from promises made between parties. Tort obligations generally arise from duties imposed by law, and tortious conduct is a breach of a duty imposed by law, not by contract.
Carothers v. Archuleta County Sheriff, 159 P.3d 647, 655-56 (Colo.App.2006). Thus,
[when the injury arises either out of conduct that is tortious in nature or out of the breach of a duty recognized in tort law, and when the relief seeks to compensate the plaintiff for that injury, the claim likely lies in tort or could lie in tort for purposes of the CGIA.
Robinson v. Colorado State Lottery Div., 179 P.3d 998, 1003 (Colo.2008).
117 To apply these principles, we must examine the pleadings, the undisputed evidence, and the trust agreements. Id. at 1004. If we conclude that a claim lies, or could lie, in tort, we will hold that it must be dismissed because it is barred by the CGIA. But if we determine that a claim lies solely in contract, we will hold that it should not be dismissed, and that it must be remanded to the probate court for further proceedings. See CAMAS Colorado, Inc. v. Board of County Comm'rs, 36 P.3d 135, 141 (Colo.App.2001) (reversing judgment dismissing contractual claims, but affirming dismissal of claims that lie or could lie in tort).
C. Analysis of Claims
1. Breach of Contract, Alleging Breach of Fiduciary Duty and Breach of the Implied Covenant of Good Faith and Fair Dealing
18 Defendants contend that the employees' breach of contract claim, which contains an allegation that the defendants breached their fiduciary duties, lies, or could lie, in tort. Therefore, they argue, the breach of contract claim is barred by the CGIA.
1 19 In order to resolve this issue, we do not focus on whether the breach of contract claim was properly pled, but whether the claim could have been brought as a tort. Brace, 919 P.2d at 244. To do so, we must find the source of the duty, which includes, in part, analyzing the trust documents and the pleadings. See Robinson, 179 P.3d at 1004. And that inquiry is de novo, because whether there is a tort duty that is independent of a contractual duty is a question of law. See Rhino Fund, LLLP v. Hutchins, 215 P.3d 1186, 1193 (Colo.App.2008).
120 We analyze the documents creating the original trust and the CHEIBA trust in the manner that we would interpret a contract. See Denver Foundation v. Wells Fargo Bank, 163 P.3d 1116, 1122 (Colo.2007). The interpretation of the trust agreements is
1 21 Our goal in the course of this review is to give effect to the intent of the parties to the trust agreements. We determine this intent from the agreements' language, and we interpret the various provisions in the agreements as a whole, giving effect to all of them. By doing so, we avoid rendering any single provision meaningless. Id.
a. The Trustees
122 We conclude that the trust agreements are the source of the trustees' fiduciary duty described in the employees' breach of contract claim. As a result, the economic loss rule bars the employees from any tort recovery from the trustees.
123 The economic loss rule preserves the boundary between contract law and tort law. Town of Alma v. AZCO Construction, Inc., 10 P.3d 1256, 1262 (Colo.2000). Courts determine the side of the boundary upon which a claim belongs by finding "the source of the duty that forms the basis for the action," rather than by evaluating whether damages are economic or physical. Id.
124 Contractual duties arise from the promises that contracting parties make to each other. Tort duties generally are created by law, and are designed to protect all citizens from risks that their persons or property will be injured. Id.
125 The economic loss rule bars recovery in tort when a plaintiff suffers only economic loss from the breach of an express or implied contractual duty, unless tort law creates an independent duty. Grynberg v. Agri Tech, Inc., 10 P.3d 1267, 1269 (Colo.2000). Thus,
some special relationships by their nature automatically trigger an independent duty of care that supports a tort action even when the parties have entered into a contractual relationship.... In these situations where we have recognized the existence of a duty independent of any contractual obligations, the economic loss rule has no application and does not bar a plaintiff's tort claim because the claim is based on a recognized independent duty of care and thus does not fall within the scope of the [economic loss] rule.
AZCO Construction, 10 P.2d at 1263 (citations omitted) (emphasis in original).
126 However, as the division pointed out in Hamon Contractors, Inc. v. Carter & Burgess, Inc., 229 P.3d 282, 291 (Colo.App.2009), AZCO Construction does not stand for the proposition that the economic loss rule always bars certain torts, sometimes bars others, and never bars still others. The division observed that, rather than enunciating a "sweeping principle" that a particular tort is exempted "from the ambit of the economic loss rule," AZCO Construction stresses that it is the source of the duty allegedly breached that determines whether the economic loss rule applies. Id.
1 27 Courts consider three factors to determine the source of the duty: Is the relief sought in tort the same relief sought for breach of contract? Is there an established common law duty of care? Does the tort duty differ from the contractual duty? Id. at 298 (citing BRW, Inc. v. Dufficy & Sons, Inc., 99 P.3d 66, 74 (Colo.2004)).
1 28 If the answers to these questions establish that the duty of care is "memorialized" in the contract, it follows that (1) there is no duty independent of the contract; (2) the economic loss rule bars the tort claim; and (3) the parties are held to the terms of the contract that they negotiated. BRW, Inc., 99 P.3d at 74. "[EJven a duty separately recognized under tort law is not independent if it is also imposed under the parties' contract" because courts assume that sophisticated parties can include the potential cost of breach of contractual duties in contracts they negotiate. A Good Time Rental, LLC v. First American Title Agency, Inc., 259 P.3d 534, 537 (Colo.App.2011).
129 Fiduciary relationships may be the kind of special relationship that will trigger an independent common law duty of care. See Cosmopolitan Homes, Inc. v. Weller, 663 P.2d 1041, 1043-44 (Colo.1983) (builders have a duty independent of contract to build a home without latent defects for the benefit of subsequent buyers); Colorado Homes, Ltd. v. Loerch-Wilson, 43 P.3d 718, 721-22
130 Applying the foregoing principles, and particularly the three factors from BRW, Inc., we conclude that
1. The complaint does not allege a tort claim for breach of fiduciary duty against the trustees. Rather, it alleges that the trustees breached the contract-the trust agreements-by "failling] to perform their contractual obligations, including contractually imposed fiduciary duties." We know that the form of the complaint does not establish whether a claim lies in contract or in tort. Carothers, 159 P.8d at 655. However, the reference in the complaint to the specific contractual duties found in the trust agreements establishes that the claim lies in contract, not in tort, because it identifies the source of the duty as the trust agreements. See id. at 655-56. In other words, the employees' breach of fiduciary duty claim against the trustees arises from the alleged failure to perform the fiduciary duties set forth in the trust agreements, not from extrinsic matters. See Hamon Contractors, Inc., 229 P.8d at 289.
2. An established common law tort duty of care attaches to fiduciary relationships between trustees and beneficiaries. See Vento v. Colorado Natl Bank-Pueblo, 907 P.2d 642, 646 (Colo. App.1995)("A trustee owes a duty to trust beneficiaries to exercise such care and skill as a person of ordinary prudence would exercise in safeguarding and preserving his or her own property."); see also § 15-1-804, C.R.S.2011 (standard of care of fiduciaries who invest property for others is the same); Restatement (Second) of Trusts § 174 (1959)("The trustee is under a duty to the beneficiary in administering the trust to exercise such care and skill as a man of ordinary prudence would exercise in dealing with his own property ....").
In this case, the tort duty is not appre-clably different from the contractual duty. The fiduciary duty that tort law imposes on trustees generally is nearly identical to the fiduciary duty that the language of the trust agreements imposes on the trustees here. The trust agreements explicitly spell out the trustees' duties in the section labeled "Fiduciary Duties." The trustees are required to act on behalf of the beneficiaries with the "care, skill, prudence and diligence" that "prudent person{s]" acting in the same position, and undertaking the same "enterprise," would employ under the prevailing cireum-stances.
Because the trustees' duty of care is "memorialized" in the trust agree- ' ments, there is no common law tort duty independent of that document upon which a tort action for breach of fiduciary duty could be based. See BRW, Inc., 99 P.8d at 74; CAMAS Colorado, Inc., 36 P.3d at 188 ("In determining whether a claim is contractual or lies in tort, a court should examine whether the claim and the duty allegedly breached arise from the terms of the contract itself.").
The employees' allegations are clearly based on the duty owed them that is described in the trust agreements, not on a general duty imposed by law that is designed to protect all persons from a risk of harm. See Adams v. City of Westminster, 140 PS3d 8, 11 (Colo. App.2005)("[Pllaintiff has not asserted that [defendant] breached a duty imposed by law to protect all citizens from a risk of harm, nor could he successfully do so. Instead, the essence of plaintiffs claim is that he has suffered economic losses arising from the employment contract. Under the economic loss rule, it is highly doubtful that plaintiff could assert a tort claim against [defendant].").
*204 6. The language in the trust agreements creating the fiduciary duty indicates that sophisticated parties negotiated this contract. See A Good Time Rental, LLC, 259 P.3d at 537. Therefore, the trustees and the employees should be held to the terms of the contract for which they bargained.
7. The trustees have not provided us with any compelling policy reasons why, notwithstanding the contractual fiduciary duty established by the trust agreements, a remedy based on common law tort fiduciary duty should be available in this case. See id. at 540; Homon Contractors, Inc., 229 P.3d at 292.
8. Any tort claim for breach of fiduciary duty that the employees attempt to inject into this case concerning the trustees would be barred by operation of the economic loss rule. See BRW, Inc., 99 P.3d at 74; see also Action Nissan, Inc. v. Hyundai Motor America, 617 F.Supp.2d 1177, 1192-93 (M.D.Fla.2008) ("While the economic loss rule does not automatically bar a breach of fiduciary duty claim, the rule does apply when the claim for breach of fiduciary duty is based upon and inextricably intertwined with the claim for breach of contract."); Micale v. Bank One, 382 F.Supp.2d 1207, 1221-22 (D.Colo.2005). Under the facts of this case, the employees' breach of fiduciary duty claim against the trustees is not, and cannot be, a tort claim.
9. The CGIA does not bar the employees' breach of contract claim against the trustees because the CGIA does not bar claims, such as this one, that are grounded in contract. See Berg v. State Bd. of Agriculture, 919 P.2d 254, 258 (Colo.1996).
131 We next turn to defendants' argument that the CGIA bars the employees' claim that the trustees violated the covenant of good faith and fair dealing implied in the trust agreements because it lies, or could lis, in tort. Every contract contains an implied covenant of good faith and fair dealing. Amoco Oil Co. v. Ervin, 908 P.2d 493, 498 (Colo.1995)("Colorado, like the majority of jurisdictions, recognizes that every contract contains an implied duty of good faith and fair dealing.").
132 With the notable exception of insurance contracts, which are not involved in this case, a contention that this implied covenant has been violated does not allege a tort. See Cary v. United of Omaha Life Ins. Co., 68 P.3d 462, 466 (Colo.2003){in most contractual relationships, a breach of the duty of good faith and fair dealing will only result in damages for breach of contract and will not give rise to tort liability); Wells Fargo Realty Advisors Funding, Inc. v. Uioli, Inc., 872 P.2d 1359, 1362 (Colo.App.1994)("Colorado has also recognized a separate cause of action sounding in tort for bad faith breach of insurance contract. However, no such tort claim has been recognized in other contract actions...."); see also Decker v. Browning-Ferris Industries of Colorado, Inc. 931 P.2d 436, 446 (Colo.1997)(declining to recognize existence of tort claim for breach of an express covenant of good faith and fair dealing in employment contracts).
{33 We are not at liberty, in a case such as this one, to classify an allegation that the implied covenant has been violated as a tort. See Decker, 931 P.2d at 446 (in the absence of administrative or legislative public policy declarations ensuring that all interested parties are aware of the relevant duty's seope, "there is no appropriate basis upon which to ground a tort of breach of an express covenant of good faith and fair dealing"); see also Farmers Group, Inc. v. Trimble, 691 P.2d 1138, 1141 (Colo.1984) ("The basis for liability in tort for the breach of an insurer's implied duty of good faith and fair dealing is grounded upon the special nature of the insurance contract and the relationship which exists between the insurer and the insured.").
4 34 Last, defendants contend that the employees base their claim on duties that are independent of the trust agreement. They argue that the employees identify a duty to disburse their contributions from the reserve fund and a duty to treat them equally with all other beneficiaries of the trust. We respectfully disagree with defendants' contention be
135 The breach of contract claim in the complaint states that defendants (1) deprived the employees of "all benefits of the trust reserve fund"; and (2) took action "when they knew or should have known that it would afford employees of [the colleges] a disproportionately larger amount of the trust reserves and leave [the employees] with none of the reserve." In context, these statements are not a description of a duty, but, rather, a description of how the trustees breached the fiduciary duty established by the trust agreements and the implied covenant of good faith and fair dealing.
T 36 This conclusion is reinforeed by statements in the declaratory judgment claim in the complaint. There, the employees allege that the colleges owed the employees "undivided loyalty" in appointing the trustees; that the colleges breached their "contractually imposed fiduciary obligation"; and that this breach allowed the trustees to "act in a manner intending to benefit their respective colleges and the employees of their respective colleges."
I 37 Accordingly, the employees' claim that the trustees breached the implied covenant of good faith and fair dealing is not barred by the CGIA.
b. The Colleges
138 We agree with defendants, however, that the allegation that the colleges breached any fiduciary duties they owed the employees lies, or could lie, in tort.
1 39 The employees' complaint alleges that the colleges breached a "contractually imposed fiduciary duty" to the employees. However, the language of the trust agreements only places fiduciary duties on the trustees, not on the colleges. Thus, based on our de novo review of the record before us, see Rhino Fund, LLLP, 215 P.3d at 1193, the only source of a fiduciary duty that the colleges may owe the employees would be the common law. See § 15-1-304; Vento, 907 P.2d at 646; Restatement (Second) of Trusts § 174. Therefore, this portion of the breach of contract claim is barred by the CGIA.
140 However, the employees' contention that the colleges violated the implied covenant of good faith and fair dealing is not inextricably bundled with the allegation that the colleges violated their contractually imposed fiduciary duties. The complaint distinguishes between those two parts of the breach of contract claim by stating that the defendants "failed to perform their contractual obligations owed to [the employees], including contractually imposed fiduciary duties and duties of good faith and fair dealing." (Emphasis supplied.) -
T 41 Thus, although the part of the breach of contract claim alleging that the colleges violated their fiduciary duties is barred by the CGIA, the claim that they violated the implied covenant of good faith and fair dealing is not barred because it does not, and cannot, lie in tort. See Cary, 68 P.3d at 466; Decker, 931 P.2d at 446; Farmers Group, Inc., 691 P.2d at 1141; Wells Fargo Realty Advisors Funding, Inc., 872 P.2d at 1362.
2. - Inverse Condemnation
¶ 42 Defendants contend that the CGIA bars the employees' inverse condemnation claim. We disagree.
¶ 48 Colorado Constitution article II, section 15, prohibits the government from taking private property without just compensation. If a governmental entity does not commence an eminent domain proceeding, the private property owner may institute an inverse condemnation proceeding under the eminent domain statute. Conners v. City of Colorado Springs, 962 P.2d 294, 296 (Colo.App.1997), aff'd, 993 P.2d 1167 (Colo.2000)(Commers II). An inverse condemnation action is neither contractual nor tortious in nature. See Conners II, 993 P.2d at 1170 (affirming court of appeals' opinion reasoning that Colorado Civil Rights Act claim is similar to other actions authorized against the government that are neither contractual nor tortious in nature and not subject to the CGIA). Because an inverse condemnation claim could not lie in tort, it is not barred by the CGIA. Jorgenson v. City of Aurora, 767 P.2d 756, 758 (Colo.App.1988) verse condemnation claim is not subject to
4 44 Defendants also assert grounds other than the CGIA for reversing the probate court's order concerning the inverse condemnation claim. We decline to address those other grounds because we do not have jurisdiction to resolve them within the context of this interlocutory appeal. See Carothers, 159 P.3d at 650 (trial court's order denying a motion to dismiss pursuant to C.R.C.P. 12(b)(5) is not an appealable final order).
3. Mistake
€45 Defendants assert that language in the trust agreements bars the employees from obtaining the relief that they seek. The employees' complaint alleges that the defendants deprived them of their share of the reserve fund, and they want their share disbursed to the trustee who is administering the new disability trust. Defendants reply that both trust agreements explicitly provide that contributions are irrevocable unless a majority of the trustees votes to dissolve the trusts.
146 Defendants state that restrictions on recovery of contributions appear, for example, in three sections of the CHEIBA trust agreement. Article V, section 5.8, provides:
[A]ll contributions to the Trust shall be irrevocable, and under no circumstances shall any monies properly paid into the Trust or any part of the Trust, including any increments to the Trust arising from its investments, be recoverable by or payable to the Colleges or any Participant, nor shall any of the same be used for or diverted to purposes other than for the exclusive benefit of Employees and Participants under this Trust Agreement. The Trust Committee may authorize a distribution from the Trust Fund to participating Employees of any portion of an insurance policy premium refund, rebate or dividend attributable to Employee Contributions, if such a rebate to Employees is appropriate under the cireumstances.
Article VI, section 6.2(c), states:
In the event of a College's withdrawal pursuant to this section, such withdrawing College shall have no right to any of the assets, income or reserves of the Trust at any time, nor shall such College have any right to a refund or rebate of any of its contributions to the Trust.
Article X, section 10.1, adds:
Neither any Employee [nor any] Participant ... shall have any right, title or interest, vested or otherwise, in or to any assets of the Trust, whatsoever ... except to the extent otherwise specifically provided for in this Agreement. Any participating Employee who withdraws or ceases to participate in the program does hereby and shall immediately and expressly waive and forfeit any right, title or interest in or to any assets of the trust. Any benefits such Participant may have shall be forever terminated and discharged when this Agreement is terminated, the Trust dissolved or a Participant ceases to be eligible under the terms of any Benefit Plan....
147 The employees seek to nullify this language, particularly Article X, section 10.1. They allege, as part of their declaratory judgment claim, that they are entitled to a declaration that their contributions to the CHEIBA trust that "purport to authorize a forfeiture" of the contributions that they made to it are null and void because of either unilateral or mutual mistake. We conclude that this part of the declaratory judgment claim is barred by the CGIA because it lies, or could lie, in tort.
148 The doctrine of mistake allows the mistaken party to avoid the contract. Sumerel v. Goodyear Tire & Rubber Co., 232 P.3d 128, 135 (Colo.App.2009); see also Poly Trucking, Inc. v. Concentra Health Services, Inc., 93 P.3d 561, 563 (Colo.App.2004) (reformation is generally permitted when the parties made a mutual mistake or one party made a unilateral mistake and the other engaged in fraud or inequitable conduct). Remedies for mistake, such as contract reformation and rescission, are equitable in nature. Morris v. Belfor USA Group, Inc., 201 P.3d 1253, 1260 (Colo.App.2008)(reformation is an equitable remedy); CAMAS
149 Unilateral mistake applies where one party is mistaken about a basic contractual assumption. Sumerel, 232 P.3d at 185. A mutual mistake claim requires a showing that both parties were laboring under the same erroneous conception of the contract's terms and conditions. Maryland Cas. Co. v. Buckeye Gas Products Co., 797 P.2d 11, 18 (Colo.1990).
150 As is pertinent here, the employees contend that the ones in their ranks who contributed to the original trust were not represented when the CHEIBA trust was created. Further, an attorney from the Attorney General's Office allegedly
® represented all the colleges, resulting in a conflict of interest;
e did not inform each college that, if it chose, it was entitled to independent counsel;
e did not inform the trustees that, by approving the CHEIBA trust, they could foreseeably discriminate among different beneficiaries, violating a contractually imposed duty to afford equal treatment to all trust beneficiaries; and
® inserted Article X, section 10.1, into the CHEIBA trust without the employees' knowledge. ~
1 51 The employees thus maintain that the attorney's misconduct renders the language in the CHEIBA trust barring the disbursement of any of their contributions void because that misconduct resulted in a unilateral or a mutual mistake. By doing so, the employees base their unilateral and mutual mistake arguments on the prospect of legal malpractice or misrepresentation by the attorney.
152 As such, the source of the duty that the attorney owed the trustees, and, by implication, the employees, is not found in the trust agreements, but in the special responsibility that attorneys owe their clients. See A Good Time Rental, LLC, 259 P.8d at 539. That special responsibility creates a duty of care independent of any contract, which "implicates a risk of damages to interests that contract law is not well suited to protect." Id. The existence of this special duty supports a tort action, and so the employees' allegation of a unilateral or mutual mistake lies, or could lie, in tort. Id.; see also AZCO Construction, 10 P.3d at 1262. And, as the supreme court noted in Robinson, 179 P.3d at 1005, "a claim that is supported by allegations of misrepresentation or fraud is likely a claim that could lie in tort."
153 Further, our conclusion is buttressed by two complementary factors. First, neither the Attorney General's Office, nor the attorney from that. office who represented the colleges, is a party to the trust agreements. Second, neither that office, nor that attorney, is a party to this case. Thus, the "author" of the alleged mistake is not a party to the trust agreement and is not before the trial court. See Del Raso v. United States, 244 F.3d 567, 571 (7th Cir.2001) (mutual mistake of fact did not apply when contention was that a party to a contract had a misunderstanding with a person who was not a party to the contract); Alden Auto Parts Warehouse, Inc. v. Dolphin Equipment Leasing Corp., 682 F.2d 330, 883 (24 Cir. 1982) (a fraud committed by a person who is not a party to a contract does not support a claim that the contract should be rescinded because of unilateral mistake).
1 54 Although we conclude that the part of the declaratory judgment claim alleging mutual or unilateral mistake is barred by the .CGIA, we cannot further decide what effect the language in the trust agreements, which bars release of funds from the trust, may have on the employees' claims and their requests for relief, This is because the applicability and scope of this language are not properly before us in this interlocutory appeal, which is limited to addressing issues of sovereign immunity under the CGIA. See Adams, 140 P.8d at 12 ("[Interlocutory appeals under § 24-10-108 are limited to determining issues of sovereign immunity. Determining merits-based issues would expand the nature of appellate review beyond that mandated by statute.").
¶ 56 We obviously take no position on the merits of such arguments. As a result, we can only recognize the existence of the "elephant in the room." The employees and the defendants will have to confront it on remand as this case proceeds because we have concluded that some of the employees' claims are not barred by the CGIA.
IIL Conclusion
Based on the foregoing analysis, we hold that
© The employees' breach of contract claim alleging that the trustees breached their fiduciary duty does not, and could not, lie in tort because the trustees' fiduciary duty in this case was created by contract, in the form of the trust agreements. Any tort claim for breach of fiduciary duty that the employees might raise against the trustees would be barred by operation of the economic loss rule.
© The employees' breach of contract claim that the trustees violated the implied covenant of good faith and fair dealing does not, and could not, lie in tort.
e The employees' breach of contract claim alleging that the colleges breached their fiduciary duties les, or could lie, in tort because the contractual provisions concerning fiduciary duties, found in the trust agreements, only apply to the trustees. The source of any fiduciary duty that the colleges owe the employees thus lies outside the trust agreements, and would be found in statute or common law. This part of the breach of contract claim against the colleges must be dismissed on remand.
e However, the colleges are parties to the trust agreements. The employees' claim that the colleges breached the implied covenant of good faith and fair dealing is, as relevant here, a contractual claim, not a claim that lies, or could lie, in tort.
e The employees' claim that their contributions to the trusts should be returned because of mutual or unilateral mistake lies, or could lie, in tort because this claim is based on allegations of attorney misconduct or misrepresentation, which involve a special duty that could support a tort claim. This part of the declaratory judgment claim must be dismissed on remand.
® The employees' inverse condemnation claim does not lie, and could not lie, in tort.
[ 57 As a result, the order is affirmed as to the employees' (1) claim that the trustees breached their fiduciary duties; (2) claim that the trustees violated the implied covenant of good faith and fair dealing; (8) claim that the colleges breached the implied covenant of good faith and fair dealing; and (4) inverse condemnation claim; and the case is remanded for further proceedings on those claims. The order is reversed as to the employees' (1) claim the colleges breached their fiduciary duties; and (2) claim that the employees' contributions to the trusts should be returned because of mutual or unilateral mistake, and on remand the probate court shall dismiss those claims.