Vyanet Operating Group, Inc. v. Maurice
1:21-cv-02085
D. Colo.Sep 2, 2022Background
- Vyanet acquired Mountain Acquisition Company, LLC (MAC) on Feb 1, 2019 via an LLC Membership Purchase Agreement. Defendants Maurice and Heath were the sellers.
- Vyanet alleges defendants warranted MAC’s financials and books were complete and accurate at closing but failed to disclose post‑statement account cancellations caused by the 2018 Camp Fire.
- Vyanet claims breach of contract (Agreement and an addendum), false representation, and fraudulent nondisclosure/concealment; alternatively unjust enrichment.
- Defendants moved to dismiss, arguing Colorado’s economic loss rule bars the fraud and concealment tort claims; the magistrate judge recommended dismissing those tort claims but denying dismissal of contract and unjust enrichment claims.
- Vyanet objected; the district court reviewed de novo the economic‑loss issue, concluded recent Colorado and Tenth Circuit authority treats intentional torts (including fraud) as independent of contract duties, and therefore denied dismissal of the fraud and concealment claims while affirming denial as to contract and unjust enrichment claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the economic loss rule bars Vyanet's common‑law fraud and fraudulent nondisclosure claims | Fraud and concealment are intentional torts that arise from duties independent of the contract (fraud in the inducement); recent Colorado/Tenth Circuit authority supports that these torts are outside the economic loss rule | The asserted tort duties mirror contractual duties; the economic loss rule should bar tort claims that merely duplicate contract remedies | Court: economic loss rule does not bar these intentional tort claims; denies dismissal of fraud and concealment claims |
| Whether to dismiss breach of contract and unjust enrichment claims under Rule 12(b)(6) | Vyanet plausibly alleged breaches of the Agreement and First Addendum and an alternative unjust enrichment claim | Defendants sought dismissal for failure to state claims | Court: adopts magistrate’s recommendation to deny dismissal as to contract and unjust enrichment claims |
Key Cases Cited
- Town of Alma v. AZCO Constr., Inc., 10 P.3d 1256 (Colo. 2000) (articulates Colorado economic loss rule and notes fraud may be an exception)
- Bermel v. BlueRadios, Inc., 440 P.3d 1150 (Colo. 2019) (signals economic loss rule has been applied mainly to negligence and suggests intentional torts generally should not be barred)
- Van Rees v. Unleaded Software, Inc., 373 P.3d 603 (Colo. 2016) (fraud in the inducement not barred by economic loss rule where misrepresentations induced contract formation)
- McNees v. Ocwen Loan Servicing, LLC, [citation="853 F. App'x 211"] (10th Cir. 2021) (to survive dismissal under the economic loss rule, plaintiff must allege a tort duty independent of the contract)
- Thomas v. Arn, 474 U.S. 140 (1985) (standards for district‑court review of magistrate recommendations)