2017 COA 3
Colo. Ct. App.2017Background
- Begley and Hirsch owned a Denver lot, obtained city approvals, contracted a builder, and demolished the existing house to build a new home; shoring began Oct. 1, 2014, and work stopped after Oct. 2 when the builder refused to continue.
- Plaintiffs allege that neighbors Myrtle Ireson and Virginia Hoeekele, and their attorney Andrew Gibbs (and GibbsYoung LLC), made complaints and statements (to the City and to the builder) from before demolition through mid-Jan. 2015 that induced the builder to halt work and breach the construction contract.
- Plaintiffs filed suit in late Jan. 2015 asserting intentional interference with contract and with prospective contractual relations; Ireson and Hoeekele quickly filed their own suit against plaintiffs.
- Defendants moved to dismiss under C.R.C.P. 12(b)(5)/(6), arguing defendants’ statements were litigation-related and therefore absolutely privileged, and the district court granted dismissal after taking judicial notice of the later-filed suit.
- The court of appeals reviewed de novo, accepted plaintiffs’ factual allegations as true, and addressed (1) whether the complaint adequately alleged causation by Ireson/Hoeekele and (2) whether Gibbs’ prelitigation statements were privileged.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether complaint adequately alleges that Ireson/Hoeekele caused the builder to breach the contract | Begley/Hirsch: complaint alleges specific acts (calls to City, fraudulent complaints, demands about pre-existing damage) that induced the builder to stop and breach | Defs: no allegation that defendants’ complaints caused the builder to cease performance | Court: Complaint sufficiently alleged causation; dismissal of claims against Ireson and Hoeekele was error |
| Whether attorney Gibbs’ prelitigation statements are absolutely privileged against tortious-interference claims | Plaintiffs: privilege should not automatically cover prelitigation statements; privilege applies only if statements relate to litigation contemplated in good faith | Gibbs: adopts Restatement §586 — communications preliminary to litigation are absolutely privileged if related to proceeding | Court: Privilege may attach to prelitigation statements only if (1) related to prospective litigation and (2) the litigation was contemplated in good faith; good-faith inquiry required |
| Whether district court properly dismissed on privilege grounds without addressing good-faith of contemplated suit | Plaintiffs: district court failed to consider good-faith requirement and improperly resolved factual issue on motion to dismiss | Defs: privilege applied because statements related to subsequent litigation | Court: District court erred by not assessing good-faith; on 12(b)(6) record, cannot determine privilege; remand for further proceedings |
Key Cases Cited
- Bly v. Story, 241 P.3d 529 (Colo. 2010) (12(b)(6) dismissal standards; complaints need only give notice of claim)
- Warne v. Hall, 373 P.3d 588 (Colo. 2016) (standard for accepting complaint allegations as true on motion to dismiss)
- Story v. Bly, 217 P.3d 872 (Colo. App.) (pleading sufficiency and notice pleading principles)
- Buckhannon v. U.S. W. Commc’ns, Inc., 928 P.2d 1331 (Colo. App.) (attorney defamatory statements during trial preparation are privileged for interference claims)
- Westfield Dev. Co. v. Rifle Inv. Assocs., 786 P.2d 1112 (Colo. 1990) (filing lis pendens/initiating litigation gives only a qualified privilege; good-faith requirement to avoid abuse)
- Merrick v. Burns, Wall, Smith & Mueller, P.C., 43 P.3d 712 (Colo. App. 2001) (communications preliminary to litigation protected only if related to proceeding contemplated in good faith)
- Club Valencia Homeowners Ass'n v. Valencia Assocs., 712 P.2d 1024 (Colo. App. 1985) (application of litigation privilege to certain attorney communications)
- Renner v. Chilton, 351 P.2d 277 (Colo.) (earlier state-court precedents discussed in privilege context)