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Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 

---

Q.E.R., 

v. 

ALVA J. 

PUBLISH 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

INC. I a Delaware corporation, ) 

) 

Plaintiff-Appellant, ) 

) 

) No. 

) 

HICKERSON, ) 

) 

Defendant-Appellee. ) 

FI LED 

Uoiwd SrtHf6 Co1.1rc of Appeals 

Tenth Circuit 

JUL 2 5 1999 

ROBERT L. HOECKER 

Clerk 

87-1970 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF COLORADO 

(D.C. No. 83-M-1840) 

Steve A. Miller and David E. Graven (with him on the brief), 

Denver, Colorado, for Plaintiff-Appellant. 

Charles F. Brega and Penny Rodeen Bertelsen (with him on the 

brief), Roath & Brega, Denver, Colorado, for Defendant-Appellee. 

Before SEYMOUR, BARRETT, and BALDOCK, Circuit Judges. 

PER CURIAM. 

Plaintiff Q.E.R., Inc. appeals the district court's entry of 

a directed verdict in favor of defendant Al Hickerson, director of 

Hickerson Energy Company (HEC). Q.E.R. brought this action 

alleging that Mr. Hickerson aided and abetted HEC's breach of its 

Appellate Case: 87-1970 Document: 01019742585 Date Filed: 07/25/1989 Page: 1 
fiduciary duty to Q.E.R., and that he intentionally interfered 

with Q.E.R. 's contractual relations with HEC. Q.E.R. contends 

that there is sufficient evidence to defeat a motion for directed 

verdict. We reverse. 

A motion for directed 

standard as that applied in the 

I 

verdict is reviewed under the same 

district court. Wild ex rel. 

Guilfoyle v. Missouri, Kan., and Tex. R. Co., 812 F.2d 1290, 1292 

(10th Cir. 1987). The court may grant a directed verdict only if 

the evidence points but one way and is susceptible to no 

reasonable inferences which may support the opposing party's 

position. Anderson v. Phillips Petroleum Co., 861 F.2d 631, 634 

(10th Cir. 1988)(citation omitted). The evidence and inferences 

must be construed in a light most favorable to the nonmoving 

party. Hurd v. American Hoist & Derrick Co., 734 F.2d 495, 498 

(10th Cir. 1984). A review of the evidence in this light reflects 

the following facts. 

In the fall of 1981, HEC entered into an Operating Agreement 

with Simasko Production, Inc., as operator, to develop and drill 

nine exploratory oil and gas wells on certain properties in 

Oklahoma (the nine well program). Under the agreement, HEC 

received a fifty percent interest in the production of the nine 

well program and was obligated to pay fifty percent of certain 

costs of operations, including approximately $944,000 for the 

drilling costs and approximately $244,000 for oil and gas leases 

covering the relevent tracts of land. HEC agreed to pay the 

drilling costs for the project by December, 1981. Mr. Hickerson 

2 

Appellate Case: 87-1970 Document: 01019742585 Date Filed: 07/25/1989 Page: 2 
personally paid the $244,000 for the oil and gas leasehold 

interests in the nine well program and Simasko Production assigned 

the leases to HEC. 

In November, 1981, HEC entered 

Hickerson-Quartet Partnership agreement 

wholly-owned subsidiary of Quartet Energy 

into 

with 

the 

Q.E.R., 

1981 

Resources, Ltd., 

a 

a 

Canadian corporation. The partnership was to engage in the 

exploration, drilling, and development of oil and gas prospects. 

Under the terms of the agreement, each party assumed certain 

responsibilities for specific costs of initiating and operating 

oil and gas projects and in return would receive a specified 

percentage of the production or profits from any project the 

partnership undertook. 

Mr. Hickerson negotiated with Q.E.R. to include the nine well 

program as a prospect for partnership activity. Under the 

partnership agreement, HEC was required to raise 1.5 million 

dollars by December 30, 1981, to cover the drilling costs in the 

nine well program. HEC agreed to do so by obtaining investors to 

purchase limited partnerhip interests. In turn, Q.E.R. was 

required to pay the cost of the oil and gas leases and in fact did 

pay Mr. Hickerson approximately $251,000, the amount Hickerson 

paid for the nine well leases plus interest. HEC thereafter 

assigned the oil and gas leases to the partnership but never 

recorded the assignment, contrary to its stated intentions. 

Simasko Production had no knowledge of and did not consent to this 

assignment. 

3 

Appellate Case: 87-1970 Document: 01019742585 Date Filed: 07/25/1989 Page: 3 
By late December, HEC had not been able to raise the drilling 

funds through offerings of limited partnership interests in the 

Hickerson-Quartet partnership. 1 Mr. Hickerson separately 

negotiated within both Simasko Production and Q.E.R. to obtain an 

extension of time to raise the drilling funds. Simasko Production 

agreed to give HEC until March 31, 1982, to pay for the drilling 

costs after Mr. Hickerson personally paid Simasko Production 

$37,000 for its cost in setting up the drilling rig. In addition, 

Q.E.R. agreed to amend the partnership agreement to extend the 

deadline by which HEC was contractually obligated to raise the 

drilling funds to March 31, 1982. Q.E.R. also secured from HEC a 

separate "letter agreement" under which HEC agreed to refund the 

$251,000 plus interest paid by Q.E.R. for the oil and gas leases 

if the limited partnership money was not raised by the new 

deadline. Thereafter, HEC failed to meet the March deadline and 

again requested that the deadline be extended under the 

partnership agreement. Q.E.R. agreed to the extension but also 

demanded certain concessions from HEC, including that Q.E.R. be 

excused for one year from any f inacial obligations for future oil 

and gas prospects under the partnership agreement. 

On April 5, 1982, Simasko Production sent HEC a letter 

threatening to sue HEC for failure to pay the $950,000 drilling 

costs and indicated that it would name Mr. Hickerson and Mr. 

1 Mr. Hickerson testified that HEC's lack of success was due to 

the poor oil economy. Mr. Simasko, president of Simasko 

Production, and other witnesses for Q.E.R., however, claimed that, 

in December, Mr. Hickerson represented that the funds had already 

been committed by the limited partners but technical problems with 

the preparation and filing of S.E.C. documents prohibited 

dispersion of the funds. 

4 

Appellate Case: 87-1970 Document: 01019742585 Date Filed: 07/25/1989 Page: 4 
Martin, president of. HEC, personally for misrepresentation of 

HEC's ability to raise the drilling funds. As an alternative to 

litigation, Simasko Production suggested HEC place its oil and gas 

leases into escrow and Simasko Production would thereafter help 

HEC find substitute buyers to purchase the leases and to assume 

the other obligations under the operating agreement. Under this 

arrangement, HEC would remain liable for the drilling costs until 

the individual leases were sold, but HEC would also receive full 

payment for the leases. HEC rejected this escrow agreement and 

instead, chose to assign all of the oil and gas leases back to 

Simasko Production without compensation, thereby forfeiting the 

$244,000 payment for the leases as liquidated damages. In return 

for the assignment, Simasko Production issued releases to HEC, Mr. 

Hickerson, and Mr. Martin for any liability under the operating 

agreement. Through this action, HEC disposed of all the 

partnership property without compensation and obtained releases 

only for HEC, the general partner, and its officers. Q.E.R. was 

never notified of HEC's transaction with Simasko Production, as 

required by the partnership agreement, until after the leases were 

surrendered. 

Q.E.R. brought an action against Mr. Hickerson, as director 

of HEC, claiming he was personally liable .for aiding and abetting 

in HEC's breach of its fiduciary duty owed as general partner to 

Q.E.R., 2 and for intentionally interfering with HEC's partnership 

2 On appeal, Mr. Hickerson argues HEC did not owe a fiduciary 

duty to Q.E.R. In the pretrial order, however, Mr. Hickerson 

stipulated that "HEC was a fiduciary to Q.E.R. with respect to 

HEC's obligations to Q.E.R. under the Hickerson-Quartet 

Partnership agreement." Moreover, nothing in the record indicates 

5 

Appellate Case: 87-1970 Document: 01019742585 Date Filed: 07/25/1989 Page: 5 
contract with Q.E.R. Q.E.R. contends the district court 

improperly granted a directed verdict on these two claims. 

II 

The district court granted a directed verdict for three 

reasons. First, en the morning of trial, defendant raised for the 

first time the issue of whether Q.E.R., as a dissolved 

corporation, was the real party in interest. Q.E.R. had been 

dissolved by its parent corporation, Quartet Energy Resources, 

almost two months before the filing of the complaint. Defendant 

was aware that Q.E.R. had been dissolved long before the trial 

date, yet never raised the issue in the pretrial order or 

otherwise. The trial court held that Q.E.R. had the obligation to 

amend the complaint to name the proper party in interest, and 

because it failed to do so, a directed verdict was proper for this 

reason alone. We disagree. 

Q.E.R. was incorporated under Delaware law. Delaware law 

provides that a corporation is a recognized entity for the purpose 

of maintaining legal actions if the action is brought within three 

years of its dissolution. Del. Code Ann. tit. 8, § 278 (1983). 

This action was filed within a few months of Q.E.R. 's dissolution. 

A dissolved corporation may maintain a federal suit when it has 

been given the requisite power by state law. National Indep. 

Theatre Exhibitors, Inc. v. Buena Vista Distrib. Co., 748 F.2d 

602, 610 (11th Cir. 1984). On this basis alone, the directed 

that defendant raised this argument before the district court. We 

will therefore not consider the argument on appeal. See Doelle v. 

Mountain States Telephone & Telegraph, 872 F.2d 942, 944 n.4 (10th 

Cir. 1989). 

6 

Appellate Case: 87-1970 Document: 01019742585 Date Filed: 07/25/1989 Page: 6 
verdict was incorrect. In addition, the district court abused its 

discretion in permitting defendant to raise this issue on the 

first day of trial where he was repeatedly made aware throughout 

discovery that Q.E.R. had been dissolved. Defendant had more than 

a sufficient opportunity to contest Q.E.R.'s status as the real 

party in interest, and in fact admitted in the pretrial order that 

jurisdiction was proper. See Trujillo v. Uniroyal Corp., 608 F.2d 

815, 817 (10th Cir. 1979)(pretrial order should reflect all of a 

party's contentions and should be "adhered to in the absence of 

some good and sufficient reason"). Q.E.R. should not be penalized 

for failing to adequately respond to this issue initially raised 

on the first day of trial. At the very least, it should have been 

granted a continuance to address the issue. 33 Federal Procedure, 

L.Ed. § 77:38 (Law. Co-op. 1985); cf. Conway v. Chemical Leaman 

Tank Lines, Inc., 687 F.2d 108, 112 (5th Cir. 1982)(noting that a 

continuance is preferable to a new trial). 

As a second basis for directing a verdict, the district court 

found that there was not a breach of a fiduciary duty because "in 

[its] view Q.E.R. itself had an exposure to liability in the event 

that the leases hadn't been surrendered." The record contains 

very little evidence which indicates that Q.E.R. was liable under 

the operating agreement. The operating agreement itself does not 

directly impose liability on an assignee of the leases. 3 On its 

3 In arguing liability attached to the partnership, Mr. Hickerson 

referred to a section of the operating agreement which addressed 

the liabilities of the parties to the agreement when a lease is 

"surrendered." This section does not apply to the facts of this 

case because it only refers to the surrender of a lease by a party 

to the operating agreement, and does not cover an assignment to a 

third party. Moreover, the section requires that all the parties 

7 

Appellate Case: 87-1970 Document: 01019742585 Date Filed: 07/25/1989 Page: 7 
face, the operating agreement binds only HEC. In addition, 

Simasko Production threatened to sue only HEC and Mr. Martin and 

Mr. Hickerson personally, and never looked to Q.E.R. or the 

partnership for payment of the drilling costs. 

Based on this evidence, a jury could reasonably find Q.E.R. 

was not obligated under the operating agreement for the drilling 

costs, and that these costs were solely HEC's responsibility. 

Contrary to the district court's conclusion, the jury could 

therefore also find that HEC's disposal of all the partnership 

property to satisfy its own debt constituted a breach of its 

fiduciary duty to Q.E.R. The ultimate issue in this case, 

however, is whether a jury could find that Mr. Hickerson was 

personally liable for aiding and abetting in the breach of 

fiduciary duty. 

Colorado courts have not specifically recognized the tort of 

aiding and abetting the breach of fiduciary duty. 4 Under the 

Restatement (Second) of Torts § 874 (1977), "one standing in a 

fiduciary relation with another is subject to liability to the 

other for harm resulting from a breach of duty imposed by the 

relation." Comment c to this section states, "a person who 

knowingly assists a fiduciary in committing a breach of trust is 

himself guilty of tortious conduct and is subject to liability for 

the harm thereby caused." In Alexander Co. v. Packard, 754 P.2d 

to the 

leases. 

agreement must give their consent to any surrender of the 

No such consent was given to the assignment in this case. 

4 The district court did not directly address this 

decided to reject Q.E.R. 's claim of aiding and abetting 

of fiduciary duty because it determined that there was 

of a fiduciary duty. 

8 

issue but 

the breach 

no breach 

Appellate Case: 87-1970 Document: 01019742585 Date Filed: 07/25/1989 Page: 8 
780, 782 (Colo. App. 1988), the Colorado Court of Appeals held a 

corporate vice president personally liable for the corporation's 

breach of trust and for breach of a constructive trust. The court 

found it significant that, by breaching the trust, the officer was 

able to avoid substantial personal liability under an unrelated 

obligation to a third party. See also In re Specialized 

Installers, Inc., 12 Bankr. 546, 554 (Bankr. D. Colo. 1981}; cf. 

Circle T Corp. v. Deerfield, 166 Colo. 238, 444 P.2d 404, 407, 

(1968)(judgment entered against corporation's president based on 

the corporation's breach of fiduciary duty pursuant to statute}. 

In addition, Colorado has recognized the general rule that 

corporate officers and directors may be held personally liable for 

illegal acts of the corporation in which they actively 

participated. See Kleckner v. Keser, 29 Colo. App. 476, 488 P.2d 

1135, 1137 (1971}. In Lobato v. Pay Less Drug Stores, Inc., 261 

F.2d 406, 408-09 (10th Cir. 1958), this court stated, 

It is the general rule that if an officer or agent of a 

corporation directs or participates actively in the 

commission of a tortious act or an act from which a tort 

necessarily follows or may reasonably be expected to 

follow, he is personally liable to a third person for 

injuries proximately resulting therefrom .•.. 

Specific direction or sanction of, or active 

participation or cooperation in, a positively wrongful 

act of commission or omission which operates to the 

injury or prejudice of the complaining party is 

necessary to generate individual liability in damages of 

an officer or agent of a corporation for the tort of the 

corporation. 

Based on the theories of recovery asserted in Alexander and 

Kleckner, we are satisfied that the claim of aiding and abetting a 

breach of fiduciary duty would be recognized in Colorado. 

9 

Appellate Case: 87-1970 Document: 01019742585 Date Filed: 07/25/1989 Page: 9 
In light of this conclusion, whether· Mr. Hickerson's 

involvement in the settlement with Simasko Production amounted to 

sufficient participation in the breach of its fiduciary duty to 

the partnership is a question of fact. Viewing the facts in a 

light most favorable to Q.E.R., there is sufficient evidence for a 

reasonable jury to find that Mr. Hickerson was a primary actor in 

all the negotiations with Simasko Production and that his 

involvement in the reassignment of all the partnership property 

constituted sufficient participation to hold him individually 

liable for the breach. 

Finally, Q.E.R. challenges the district court's directed 

verdict on its intentional interference with contract claim. The 

district court found that, because the interests of Q.E.R., HEC, 

and Mr. Hickerson were aligned, there could be no improper motive 

on Mr. Hickerson's part in deciding to reassign the nine well 

leases. Again, the court assumes that Q.E.R. was liable for HEC's 

obligations under the operating agreement. As discussed above, 

the evidence does not conclusively support this finding but raises 

an issue of fact for the jury. In addition, the district court 

found that Mr. Hickerson's conduct was privileged as that of a 

corporate officer because he was not acting contrary to HEC's best 

interest. As a privileged actor, the court held Mr. Hickerson. 

could not be liable for intentional interference with the 

corporation's contract. 

Colorado has adopted 

interference with contractual 

(Second) of Torts§ 766 (1977). 

the elements 

relations from 

for 

the 

·Section 766 reads: 

10 

intentional 

Restatement 

Appellate Case: 87-1970 Document: 01019742585 Date Filed: 07/25/1989 Page: 10 
One who intentionally and improperly interferes with the 

performance of a contract (except a contract to marry) 

between another and a third person by inducing or 

otherwise causing the third person not to perform the 

contract, is subject to liability to the other for the 

pecuniary loss resulting to the other from the failure 

of the third person to perform the contract. 

Comment j to this section of the Restatement provides, "[this] 

rule applies to an interference that is incidental to the 

actor's independent purpose and desire but known to him to be a 

necessary consequence of his action." Although this comment could 

be found to apply to the facts of this case, to succeed on its 

claim Q.E.R. must also establish that the interference with the 

contractual relations was improper. Trimble v. City & County of 

Denver, 697 P.2d 716, 726 (Colo. 1985). 

Determination of whether a person acted improperly in 

interfering with a contract depends on consideration of the 

factors set forth in Restatement § 767, which are: 

(a) the nature of the actor's conduct, 

(b) the actor's motive, 

(c) the interests of the other with which the actor's 

conduct interferes, 

(d) the interest sought to be advanced by the actor, 

(e) the social interests in protecting the freedom of 

action of the actor and the contractual interests 

of the other, 

(f) the proximity or remoteness of the actor's conduct 

to the interferences, and 

(g) the relations between the parties. 

Trimble v. City & County of Denver, 697 P.2d at 726.; see also 

Boettcher DTC Bldg. Joint Venture v. Falcon Ventures, 762 P.2d 

788, 790-91 (Colo. App. 1988); Memorial Gardens, Inc. v. Olympian 

11 

Appellate Case: 87-1970 Document: 01019742585 Date Filed: 07/25/1989 Page: 11 
Sales & Management Consultants, Inc., 690 P.2d 207, 210 (Colo. 

1984). In order to decide whether a defendant's actions were 

justified, the fact finder must conduct a balancing of the 

conflicting interests and determine according to the above factors 

whether the alleged interference was warranted under the 

particular circumstances. 

As a general rule, a corporate officer is privileged in 

interfering in a contract between his corporation and a third 

party if he is acting for a bona fide organizational purpose. 

Zappa v. Seiver, 706 P.2d 440, 442 (Colo. App. 1985); see 

Zelinger v. Uvalde Rock Asphalt Co., 316 F.2d 47, 52 (10th Cir. 

1963)("the rule [is] that any interference with a corporation's 

contract by an officer, director or employee of the corporation 

who is in good faith serving the corporate interests is 

privileged."); Trimble, 697 P.2d at 726. This privilege is not 

absolute, but must be weighed in balance with the other competing 

factors listed above. See Restatement (Second) Torts § 767 

comment b (1977)("The issue in each case is whether the 

interference is improper or not under the circumstances; whether, 

upon a consideration of the relative significance of the factors 

involved, the conduct should be permitted without liability, 

despite its effect of harm to another. The decision therefore 

depends upon a judgment and choice of values in each situation."). 

Whether Mr. Hickerson was justified or acted improperly remains a 

question of fact under the unique circumstances of this case. 

The evidence supports different inferences regarding Mr. 

Hickerson's motivation and conduct in negotiating with Simasko 

12 

Appellate Case: 87-1970 Document: 01019742585 Date Filed: 07/25/1989 Page: 12 
Production. Mr. Simasko testified that, when discussing the 

escrow agreement, HEC's secretary, Mr. Melman, indicated HEC would 

not sign any document that would leave Mr. Hickerson and Mr. 

Martin liable. Mr. Hickerson testified that he thought the 

partnership was liable for the drilling costs but neither he nor 

anyone else at HEC ever attempted to obtain a release for the 

partnership or for Q.E.R. when the final agreement with Simasko 

Production was executed. In fact, all the negotiations with 

Simasko Production were done without the knowledge of or notice to 

Q.E.R. Further, under the final agreement, HEC forfeited the 

leases without compensation for itself or the partnership, yet it 

was relieved of all its own obligations under the operating 

agreement, and its officers were released of their own personal 

liability. This arrangement could reasonably be found to have 

compromised HEC's position as general partner and directly harmed 

the partnership and Q.E.R., the only party with a significant 

financial stake in the partnership at that time. 

HEC's capacity as general partner and its possible breach of 

fiduciary duty combined with Mr. Hickerson's personal liability to 

Simasko Production create a substantial question of whether Mr. 

Hickerson acted improperly under the circumstances. We conclude 

that there is sufficient evidence to submit the question of 

intentional interference with contract to the jury. 

The district court's order directing a verdict is REVERSED 

and the case is REMANDED for a new trial. 

13 

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