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Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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FILED 

United States Court of Appeals 

·r enth Cir~i~ 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

S£P 131989 

ROBERT L. HOECKER 

Clerk 

CRAIG A. LINDBERG and JUDITH M. 

LINDBERG, 

Plaintiffs-Appellants, 

v. 

AMERICAN DAIRY QUEEN CORPORATION, 

a Delaware Corporation, 

Defendant-Appellee. 

ORDER AND JUDGMENT* 

No. 88-2481 

(D.C. No. 87-F-1460) 

(D. Colo.) 

Before MOORE, ANDERSON, and BRORBY, Circuit Judges. 

After examining the briefs and appellate record, this panel 

has determined unanimously that oral argument would not materially 

assist the determination of this appeal. See Fed. R. App. P. 

34(a); 10th Cir. R. 34.1.9. 

submitted without oral argument. 

The cause is therefore ordered 

In this suit based on diversity jurisdiction, the plaintiffs/ 

appellants, Craig and Judith Lindberg (Lindbergs), appeal from the 

granting of the motion for summary judgment of defendant, American 

Dairy Queen (American). In 1987 Lindbergs brought a suit for 

declaratory judgment alleging in four causes of action that 

* This order and judgment has no precedential value and shall 

not be cited, or used by any court within the Tenth Circuit, 

except for purposes of establishing the doctrines of the law of 

the case, res judicata, or collateral estoppel. 10th Cir. R. 

36.3. 

Appellate Case: 88-2481 Document: 01019973779 Date Filed: 09/13/1989 Page: 1 
American had taken actions inconsistent with Lindbergs' 1948 Dairy 

Queen franchise agreement. Claims one, three and four alleged 

American issued retail outlets in 1972, 1971, and 1969 at three 

locations which interfered with Lindbergs' exclusive territory 

granted in the 1948 agreement. Lindbergs' second claim related to 

American notifying the Lindbergs that they have no right to grant 

sublicenses under the 1948 agreement. The United States District 

Court for the District of Colorado granted American's motion for 

summary judgment on Lindbergs' first, third and fourth claims 

finding these claims barred by the six year statute of limitations 

contained at Colo. Rev. Stat. § 13-80-ll0(d) (1973). 1 However, 

Lindbergs asserted the statute of limitations was tolled by 

American's fraudulent concealment of the infringements. The 

parties reached a stipulated settlement on the second claim 

granting the Lindbergs the right to issue sublicenses. 2 Lindbergs 

1 The parties agree the applicable statute of limitations is 

contained at Colo. Rev. Stat. § 13-80-ll0(d) (1973) (Repealed 

1986). Appellants' brief at 9; Appellee's brief at 12. This 

section states "[T]he following actions shall be commenced within 

six years after the cause of action accrues, and not afterwards: 

[a]ll actions of assumpsit, or on the case founded on any 

contract or liability, express or implied .... " Colo. Rev. Stat. § 

13-80-ll0(d). In 1986 the Colorado Legislature repealed and 

reenacted the statutes on limitations. The amendments became 

effective July 1, 1986, and applied to claims of relief arising on 

or after that date. Any action commenced after July 1, 1986 to 

assert a claim for relief arising before that date shall be 

commenced within the time limits applicable when such claim arose. 

1986 Colo. Sess. Laws ch. 114, § 23 as amended by ch. 116, § 1. 

2 The district court's order based on the 

in pertinent part: 

stipulation states, 

IT IS HERBY ORDERED as follows: 

1. Plaintiffs shall have the right pursuant to 

the April 15, 1948, Dairy Queen Agreement between and 

among H.A. McCullough and H.F. McCullough, and Lawrence 

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appeal only the dismissal of their third claim related to the 

expansion of the Broomfield franchise in 1969, which conflicts 

with their territory. 

In reconsidering the grant of American's motion for summary 

judgment, the district court rejected Lindbergs' argument that the 

statute of limitations was tolled by American's fraudulent 

concealment of the breach of contract. The court stated, "Under 

Colorado law, tolling of the statute of limitations based on 

fraudulent concealment has only been. applied to tort and fraud 

actions. Plaintiffs' [contract] claims do not fall within these 

exceptions." Order on Motion for Partial Relief from Judgment at 

pp. 2-3, IR. tab 4. Lindbergs assert the district court erred in 

determining Colorado law does not recognize that a party who 

fraudulently conceals a cause of action for breach of contract is 

barred from raising the statute of limitations as a defense. We 

agree, but affirm the district court's decision on other grounds. 

Oetkens, Henrietta J. Oetkens, Henry 0. Bens and Mrs. 

Henry O. Bens, to issue sublicenses, subject to 

plaintiffs' compliance with all laws applicable to such 

sublicensing and the compliance by plaintiffs with the 

requirements of American Dairy Queen Corporation 

relative to such sublicensing, including the right to 

review and approve any sublicense agreement or offering 

circular of plaintiffs. 

2. This Order will be vacated upon the request of 

American Dairy Queen Corporation if plaintiffs should 

prosecute a successful appeal from this Court's grant of 

summary judgment dismissing the claims set forth in 

paragraphs 4A, c, and D of plaintiffs' complaint. 

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Appellate Case: 88-2481 Document: 01019973779 Date Filed: 09/13/1989 Page: 3 
Analysis 

In this diversity case we apply the law of the forum state, 

Colorado. Erie R. Co. v. Tompkins, 304 U.S. 64 (1938); Brady v. 

Hopper, 751 F.2d 329, 332 (10th Cir. 1984). However the parties 

have cited no cases directly on point, therefore we must construe 

the law of Colorado as we think the Colorado Supreme Court would 

do if faced with the same facts and issues. Daitom Inc. v. 

Pennwalt Corp., 741 F.2d 1569, 1574 (10th Cir. 1984); City of 

Aurora, Colo. v. Bechtel Corp., 599 F.2d 382, 386 (10th Cir. 

1979). Dicta or holdings in analogous state court decisions, 

while not authoritative expressions of the law of Colorado, are 

persuasive and entitled to consideration by this court. Id. 

Based on Mountainwood Condominium Homeowners Association v. CalColorado, 765 P.2d 1066 (Colo. App. 1988); Cooper v. First 

Interstate Bank of Denver, N.A., 756 P.2d 1017 (Colo. App. 1988); 

and Hall v. Bankers Trust Co., 101 Colo. 449, 74 P.2d 720 (1937), 

we believe the Colorado Supreme Court would apply equitable 

estoppel to the defense of the statute of limitations in a breach 

of contract claim where the breaching party fraudulently concealed 

the cause of action. 

The Cooper case involved a dispute over the application of 

collateral proceeds to the payment of a promissory note. The 

plaintiffs sued the bank for the proceeds from the sale of the 

collateral in excess of the promissory note. The bank asserted it 

was entitled to the principal, interest from the date of default, 

and a deficiency judgment on the promissory note. The trial court 

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denied the deficiency judgment on the promissory note as barred by 

the statute of limitations. On appeal, the bank argued the 

plaintiffs were estopped to assert the statute of limitations. 

The Colorado Court of Appeals disagreed finding the bank had 

failed to establish all the elements of equitable estoppel, 

because it was aware of the true facts. Id., 756 P.2d at 1019-20. 

The court's analysis indicates Colorado recognizes the application 

of equitable estoppel to a statute of limitations defense in a 

contract action. 

Likewise, in Mountainwood, 765 P.2d at 1066, the Colorado 

Court of Appeals addressed a similar claim of whether a developer 

was estopped by its prior actions from relying upon the statute of 

limitations as a defense to claims of breach of implied warranty 

of workmanlike construction and breach of a subsequent promise to 

repair certain defects. Although this case does not explicitly 

address a breach of contract claim, we find it sufficiently 

analogous to be persuasive that Colorado courts would recognize 

equitable estoppel as barring the defense of statute of 

limitations in an action for breach of contract. In analyzing the 

claim of equitable estoppel the court stated: 

In its opposition to summary judgment, the 

Association also asserted that the developer was 

estopped by its prior actions from relying upon the 

statute of limitations as a defense. 

* * * 

A party who relies to his detriment on the 

affirmative promise or representation of another may 

invoke the doctrine of equitable estoppel if the 

promissor reasonably expects to induce action or 

forbearance of a material nature by his actions. 

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Ralston Oil & Gas Co. v. July Corp., 719 P.2d 334 (Colo. 

App. 1985). 

Application of the doctrine of equitable estoppel 

may prevent the assertion of a statute of limitations 

defense. Klamm Shell v. Berg, 165 Colo. 540, 441 P.2d 

10 (1968). However, one cannot rely upon mere 

noncommittal acts of the other party to establish an 

estoppel against a party who raises the statute as a 

defense. Lee v. Denver, 29 Colo.App. 256, 482 P.2d 389 

(1971). 

Id., 765 P.2d at 1068-69. In applying these principles of 

equitable estoppel to the facts of the case, the court found the 

letter from the developer that did not promise any performance was 

not the type of affirmative conduct required to establish an 

equitable estoppel. Mountainwood is persuasive authority that 

equitable estoppel may be applied to a statute of limitations 

defense in a contract claim. 

Our analysis is consistent with the early Colorado Supreme 

Court decision of Hall v. Bankers Trust Co., 101 Colo. 449, 74 

P.2d at 720, in which the court tolled the running of the statute 

of limitations from the time of the defendant's fraudulent 

misrepresentations which breached the contract until the plaintiff 

discovered the fraud and brought a suit for recision. Hall's 

action for recision sounds in contract. Aaberg v. H. A. Harman 

Co., 358 P.2d 601, 603 (Colo. 1960) (citing Wheeler v. Wilkin, 98 

Colo. 568, 570, 58 P.2d 1223, 1224 (1936)). The court held the 

statute of limitations began to run at the time of discovery of 

the fraud. Hall, 74 P.2d at 721. The court was construing Colo. 

Laws § 6392 (1921), the predecessor of Colo. Rev. Stat. § 13-80-

110 (1973). We are persuaded that Colorado tolls the running of 

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the statute of limitations until discovery of the breach of 

contract or such time as it should have been discovered by 

reasonable diligence. 

American asserts Lindbergs theory of equitable estoppel or 

fraudulent concealment was not raised before the district court 

and therefore cannot be raised on appeal. However, American 

admits in its brief that Lindbergs argued to the district court 

that the statute of limitations in a contract action does not 

begin to run until the aggrieved party discovers the breach and 

the concealment of a cause of action in contract tolls the statute 

of limitations. Appellee's Brief at 7. The district court 

addressed Lindbergs' argument regarding fraudulent concealment in 

the Order on Motion for Partial Relief From Judgment. IR. tab 4. 

The Lindbergs have preserved the fraudulent concealment issue for 

our review. 

American asserts if we find Colorado law does recognize that 

the statute of limitations in a contract action may be tolled by 

fraudulent concealment, then the district court decision may be 

affirmed because the Lindbergs have failed to prove its elements. 

We may affirm the district court's decision on any grounds 

supported in the record. Colorado Flying Academy, Inc. v. United 

States, 724 F.2d 871, 880 (10th Cir. 1984), cert. denied, 476 U.S. 

1182 (1986). The court of appeals reviews the grant of summary 

judgment de novo using the same standard as the district court, 

Missouri Pacific R.R. Co. v. Kansas Gas & Elec. Co., 862 F.2d 796, 

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Appellate Case: 88-2481 Document: 01019973779 Date Filed: 09/13/1989 Page: 7 
798 (10th Cir. 1988). We view the evidence in a light most 

favorable to the party opposing the motion to determine whether a 

genuine issue of material fact exists under the applicable 

standard of proof. Kaiser-Francis Oil Co. v. Producer's Gas Co., 

870 F.2d 563, 565 (10th Cir. 1989) (citing Celotex Corp. v . 

Catrett, 477 U.S. 317, 322-23 (1986)). 

Lindbergs have the burden of proving the statute of 

limitations has been tolled. Capek v. Monahan, 184 P. 2d 501 

(Colo. 1947). The elements of fraudulent concealment, which the 

Lindbergs must prove to toll the statute of limitations are set 

out in First Interstate Bank of Fort Collins, N.A. v. Piper 

Air c raft Corp., 744 P.2d 1197 (Colo. 1987), as follows: 

(1) the concealment of a material existing fact that in 

equity and good conscience should be disclosed; (2) 

knowledge on the part of the party against whom the 

claim is asserted that such a fact is being concealed; 

(3) ignorance of that fact on the part of the one from 

whom the fact is concealed; (4) the intention that the 

concealment be acted upon; and (5) action on the 

concealment resulting in damages. 

Id. 744 P.2d at 1200 (applying fraudulent concealment to wrongful 

death limitation period). Similar elements of equitable estoppel 

are set out in Department of Health v. Donahue, 690 P.2d 243 

(Colo. 1984): 

There are four basic elements to an estoppel: the party 

to be estopped must know the facts; this party also must 

intend that her conduct be acted on or must so act that 

the party asserting the estoppel has a right to believe 

the other party's conduct is so intended; the party 

asserting the estoppel must be ignorant of the true 

facts; and the party asserting the estoppel must rely on 

the other party's conduct to its injury. 

Id., 690 P.2d at 247. Under either fraudulent concealment or 

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equitable estoppel, Lindbergs burden of proof is essentially the 

same. Lindbergs must establish an affirmative act of concealment 

to establish their claim. Pipeline Materials v. Turf Irrigation 

Corp., 754 P.2d 775, 776 (Colo. App. 1988). 

American contends the Lindbergs have failed to prove American 

or its predecessor in interest made any affirmative statements 

concealing Lindbergs cause of action. Herrington, American's 

predecessor in interest, first expanded the protected territory of 

the Broomfield store when it was transferred to Winter on November 

20, 1967. Herrington Deposition (Depo.} at 22. Herrington did 

not disclose this expansion to Oetkens, the owners of the Boulder 

franchise and Lindbergs' predecessors in interest. Depo. at 35. 

Herrington transferred his interests to American in 1969. Depo. 

at 25-26. Oetkens sold the Boulder franchise to Fitzgeralds on 

April 20, 1973. The sale documents were submitted to American for 

approval of the transfer, which was granted on November 21, 1973. 

Lindbergs contend American's failure to disclose the expanded 

Broomfield territory to the Fitzgeralds when American approved the 

franchise transfer is an affirmative act of concealment. 

Lindbergs' argument ignores the fact that this act occurs more 

than six years after the Broomfield territory expansion and after 

the statute of limitations had run. We cannot hold American's act 

of approving the Fitzgeralds purchase after the statute of 

limitations had run is an affirmative act that tolls the statute. 

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Lindbergs contend American and its predecessor, Herrington, 

had a duty to disclose the Broomfield expansion because they had 

superior knowledge and a confidential relationship. After 

reviewing the record, we are unable to find where the Lindbergs 

presented these contentions to the district court. We will not 

review matters raised for the first time on appeal. Cain v. Yukon 

Pub. Schools, Dist. I-27, 775 F.2d 15, 20 (10th Cir. 1985). 

The district court's order is AFFIRMED. 

issue forthwith. 

Th e mandat e shall 

Entered for the Court: 

WADE BRORBY 

United States Circuit Judge 

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