Federal Deposit Insurance Corp. v. Fisher
2013 CO 5
| Colo. | 2013Background
- Fisher borrowed $3.42 million from Community Banks in May 2000 to build a custom home in Colorado; loan secured by the Stanford home and a Telluride property.
- Original loan term was 15 months; Fisher obtained three extensions memorialized as Change in Terms agreements, including a Second Extension that introduced a 36% default rate.
- Second Extension (Feb 18, 2002) amended maturation to May 18, 2002 and changed several terms; Fisher signed acknowledging understanding all provisions.
- Third Extension extended to May 18, 2008 but description of changes omitted many substantive terms; it also included the 36% default rate; Fisher signed acknowledging understanding all terms.
- Fisher defaulted; loan foreclosed; loan sold to Western Real Estate Equities; Fisher sued Banks for fraud, breach of contract, civil conspiracy, and breach of implied covenant.
- Trial court excluded much of Fisher’s extrinsic evidence under CASOF; jury ruled for Banks on fraud and other claims; Court of Appeals reversed and remanded, holding extensions ambiguous and CASOF applicable; Supreme Court granted certiorari.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are the Second and Third Extensions ambiguous regarding the 36% default rate? | Fisher contends the 36% rate is not described in change descriptions, creating ambiguity. | Banks contends the 36% rate is unambiguously established by the Third Extension when read as a whole. | Not ambiguous; 36% default rate unambiguously governs. |
| Does CASOF prohibit extrinsic evidence to interpret a credit agreement when ambiguous? | Fisher argues extrinsic evidence should be admissible to resolve ambiguity under CASOF. | Banks argues extrinsic evidence is barred by CASOF and general contract interpretation. | Court did not reach CASOF question because contract is not ambiguous. |
| Are Fisher's fraud and implied covenant claims viable given the contract interpretation? | Fisher asserts misrepresentation, scrivener's error, and breach of good faith and fair dealing support these claims. | Banks disputes these theories; argues no deliberate fraud and limitations under CASOF. | Claims fail on multiple independent grounds; majority rejects them. |
| Does the latest contract iteration control despite prior conflicting change terms? | Extrinsic evidence should show prior terms and intent; conflicts create ambiguity needing resolution. | Latest iteration controls and harmonizes terms; inconsistencies do not create ambiguity. | Court interprets the Third Extension as controlling, harmonizing terms. |
Key Cases Cited
- Ad Two, Inc. v. City & Cnty. of Denver, 9 P.3d 373 (Colo. 2000) (contract interpretation is a question of law; de novo review)
- Morrison v. Goodspeed, 68 P.2d 458 (Colo. 1937) (fraud requires intentional misrepresentation; scrivener's error not fraud)
- Ryan v. Fitzpatrick Drilling Co., 342 P.2d 1040 (Colo. 1959) (ambiguity resolved by extrinsic evidence when provisions irreconcilable)
- Barzingus v. Wilheim, 306 F.3d 17 (10th Cir. 2010) (arbitration-related standard equality; not directly here but cited for interpretation principles)
- Simon v. Shelter Gen. Ins. Co., 842 P.2d 236 (Colo. 1992) (contract interpretation; terms and conflicts within instruments)