SUMMARY

July 25, 2019

2019COA115

No. 18CA1316, SG Interests I, Ltd. v. Kolbenschlag — Torts —

Defamation — Libel

In this libel action, a division of the court of appeals holds that 

defendant’s online comment to a newspaper article is substantially 

true and, thus, that plaintiffs failed to prove the elements of 

defamation. It further concludes that there was no basis for 

plaintiffs to depose the defendant under C.R.C.P. 56(f). The division 

remands the case for the district court to determine and award 

reasonable appellate attorney fees.

The summaries of the Colorado Court of Appeals published opinions 

constitute no part of the opinion of the division but have been prepared by 

the division for the convenience of the reader. The summaries may not be 

cited or relied upon as they are not the official language of the division. 

Any discrepancy between the language in the summary and in the opinion 

should be resolved in favor of the language in the opinion.
COLORADO COURT OF APPEALS 2019COA115

Court of Appeals No. 18CA1316

Delta County District Court No. 17CV30026

Honorable Steven L. Schultz, Judge

SG Interests I, Ltd., a Texas limited partnership, and SG Interests VII, Ltd., a 

Texas limited partnership,

Plaintiffs-Appellants,

v.

Peter T. Kolbenschlag, a/k/a Pete Kolbenschlag,

Defendant-Appellee.

JUDGMENT AFFIRMED AND CASE 

REMANDED WITH DIRECTIONS

Division VI

Opinion by JUDGE FREYRE

Fox and Welling, JJ., concur

Prior Opinion Announced June 27, 2019, WITHDRAWN

OPINION PREVIOUSLY ANNOUNCED AS “NOT PUBLISHED PURSUANT TO 

C.A.R. 35(e)” ON June 27, 2019, IS NOW DESIGNATED FOR PUBLICATION

Petition for Rehearing DENIED

Announced July 25, 2019

Abadie & Schill P.C., Andrew D. Schill, William E. Zimsky, Durango, Colorado, 

for Plaintiffs-Appellants

Ballard Spahr, LLP, Steven D. Zansberg, Denver, Colorado, for DefendantAppellee
1

¶ 1 In this libel action, plaintiffs, SG Interests I, Ltd., and SG 

Interests VII, Ltd., (collectively SGI) appeal the district court’s order 

granting summary judgment for defendant, Peter T. Kolbenschlag, 

also known as Pete Kolbenschlag. SGI challenges the court’s 

findings that Mr. Kolbenschlag’s online comments were 

substantially true and immaterial. It also challenges the court’s 

refusal to order Mr. Kolbenschlag’s deposition under C.R.C.P. 56(f). 

We affirm the court’s judgment and remand for the determination 

and award of reasonable appellate attorney fees. 

I. Background

A. Prior Federal Actions and Settlement

¶ 2 SGI and a competitor, Gunnison Energy Corporation (GEC), 

separately acquired and developed oil and gas leases in the Ragged 

Mountain Area of western Colorado. SGI focused its efforts on the 

eastern side while GEC focused on the southern side. Eventually, 

their interests collided and resulted in litigation between an SGI 

affiliate and GEC in 2004. As part of settling this litigation, SGI 

and GEC agreed to collaborate in developing the Ragged Mountain 

Area.
2

¶ 3 In 2005, SGI and GEC executed a Memorandum of 

Understanding (MOU) concerning four leases offered by the Bureau 

of Land Management (BLM) in which they agreed that only SGI 

would submit a bid, and, if it won the bid, SGI would then assign 

50% of the interest in the acquired leases to GEC. They further 

agreed to establish a business plan to develop the leases within 

ninety days of acquiring them. 

¶ 4 SGI successfully bid on the four leases and certified that its 

bid was calculated “independently and without collusion for the 

purpose of restricting competition.” It then assigned a 50% interest 

in the leases to GEC. After the assignment, SGI and GEC executed

additional agreements to share 50% of any oil and gas interests

acquired in the area at cost and to work together on permitting 

pipelines to service the area.1 Neither SGI nor GEC informed the 

BLM of these agreements.

¶ 5 In October 2009, a former vice president of GEC (relator) filed 

a qui tam complaint under the False Claims Act (FCA) alleging that 

 1 The additional agreements include the Area of Mutual Interest 

Agreement (AMIA) and the Option and Participation Agreement 

(OPA), and they are not the subject of this litigation.
3

SGI and GEC had falsely certified to the BLM that the bids for the 

leases did not violate 18 U.S.C. § 1860 (2018), and that they were 

not for the purpose of restricting competition. The relator had

drafted and executed all of the agreements on behalf of GEC.

¶ 6 The Department of Justice (DOJ) then initiated an 

investigation into SGI’s bidding practices with respect to federal oil 

and gas leases in the Ragged Mountain Area. It filed a complaint in 

February 2012 against SGI and GEC alleging that the companies 

had violated section 1 of the Sherman Act by executing the MOU on 

the eve of the auction and that, consequently, the United States had

received less revenue than it would have received had SGI and GEC 

competitively bid for the leases. The DOJ offered to settle both the 

Sherman Act violation and the FCA violation for $550,000 and 

issued a press release stating: 

The Department of Justice today announced

that it has reached a settlement with

Gunnison Energy Corporation (GEC), SG 

Interests I Ltd. and SG Interests VII Ltd. (SGI) 

that requires the companies to pay a total of 

$550,000 to the United States for antitrust 

and False Claims Act violations related to an 

agreement not to compete in bidding for four 

natural gas leases sold at auction by the U.S. 

Department of Interior’s Bureau of Land

Management (BLM). Today’s action marks the 
4

first time the Department of Justice has 

challenged an anticompetitive bidding 

agreement for mineral rights leases.

¶ 7 The government received seventy-six public comments, and on 

December 12, 2012, a federal district court judge rejected the 

proposed settlement, finding “[t]here is no basis for saying that the 

approval of these settlements would act as a deterrence to these 

defendants and others in the industry, particularly as GEC 

considers ‘joint bidding’ to be common in the industry.” The court 

concluded “the settlement of this civil action for nothing more than 

the nuisance value of this litigation is not in the public interest.”

¶ 8 The parties then reached a second proposed settlement, which 

required SGI and GEC to each pay $275,000 in the Sherman Act 

case and SGI to pay $206,250 and GEC pay $245,000 in the FCA 

case. It also required SGI and GEC to provide advance notice to the 

government of any intention to bid for future leases with another 

company for a period of five years. 

¶ 9 The agreement also stated that “[t]he United States contends 

that it has certain civil claims against SG arising from the Covered 

Conduct” and “[t]his Settlement Agreement is neither an admission 

of liability by SG nor a concession by the United States that its 
5

claims are not well founded.” It also declared that the parties had 

entered the settlement agreement “[t]o avoid the delay, uncertainty, 

inconvenience, and expense of protracted litigation.” 

¶ 10 The DOJ’s motion for entry of final judgment stated:

The revised settlements constitute meaningful 

relief that compensate the United States for 

damages it incurred as a result of the alleged 

antitrust violations, serve as a deterrent to 

these Defendants from engaging in joint 

bidding that violates the antitrust laws, and 

put others in the industry on notice that such 

anticompetitive conduct will not be tolerated.

The DOJ explained that the antitrust suit was an issue of first 

impression and that it wanted to quickly resolve the litigation to 

“deter others from crossing the line from appropriate to illegal joint

bidding at BLM auctions” and specifically to deter SGI and GEC 

from crossing this line in the future. It acknowledged that the AMIA 

and OPA agreements did not violate the Sherman Act because those 

agreements involved “a collaboration through which pro-competitive 

efficiencies arise.” However, it found that the MOU “reflected a 

deviation from common industry practice, as the MOU was merely a 

naked restraint that allowed Defendants to avoid a bidding war.” 

And the DOJ noted that under this second proposed settlement 
6

agreement, “SGI and GEC will have paid more than twelve times 

their original cost of acquisition of the four parcels,” an amount 

exceeding actual damages. It acknowledged that the charges were 

not proven at trial and that “[t]he monetary amount is a product of 

settlement and accounts for litigation risk and costs.” 

¶ 11 The federal district court judge accepted this second proposed 

settlement on April 23, 2013. Thereafter, numerous publications 

reported that SGI had paid a fine to the federal government, and 

several stated that the fine was for violating antitrust laws. See, 

e.g., Jon B. Dubrow, Natural Gas Companies Settle Antitrust Suit 

Stemming from Joint Bidding, Nat’l L. Rev. (Apr. 28, 2013) (noting 

that SGI and GEC “will each pay a fine of $275,000 to the DOJ to 

settle allegations of agreeing not to bid against each other in 

violation of antitrust law”); infra Part II.B n.2. SGI never brought a 

defamation action against these commentators. 

B. Current Litigation

¶ 12 Mr. Kolbenschlag is an environmental activist from Paonia, 

Colorado, who manages Mountain West Strategies, Ltd., a website 

that “specializes in public outreach and community engagement” in 

western Colorado. In 2016, the BLM cancelled eighteen of SGI’s gas 
7

leases in Colorado. The Glenwood Springs Post Independent 

newspaper published an article about the cancellation. John 

Stroud, Divide Lease Decision Likely to Land in Court, Glenwood 

Springs Post Independent, Nov. 28, 2016, https://perma.cc/6WM9-

GK9J. The article discussed how SGI vowed to take legal action 

“based on evidence it says points to collusion between the Obama 

administration and environmental interests to reach a 

‘predetermined political decision.’” Id.

¶ 13 Mr. Kolbenschlag posted a reader comment to the article on 

the newspaper’s website in which he noted the irony of SGI’s

collusion allegation and stated:

While SGI alleges “collusion” let us recall that 

it, SGI, was actually fined for colluding (with 

GEC) to rig bid prices and rip off American 

taxpayers. Yes, these two companies owned by 

billionaires thought it appropriate to pad their 

portfolios at the expense of you and I and every 

other hard-working American.

The comment included a link to the DOJ press release describing 

the first settlement agreement for antitrust and FCA violations 

related to anticompetitive bidding by SGI and GEC. 

¶ 14 Four months later, SGI filed this lawsuit. Mr. Kolbenschlag 

filed a motion to dismiss, contending that his comment was 
8

substantially true and that SGI had not pleaded actual malice. 

After SGI filed an amended complaint, Mr. Kolbenschlag renewed 

his motion to dismiss. The district court converted the motion to 

one for summary judgment under C.R.C.P. 56 and set an expedited 

briefing schedule. Mr. Kolbenschlag then withdrew the portion of 

his motion seeking judgment on actual malice. Thereafter, SGI filed 

a response and sought leave to take Mr. Kolbenschlag’s deposition 

under C.R.C.P. 56(f) concerning his factual basis for stating the

comments were substantially true. 

¶ 15 The district court granted the motion for summary judgment, 

denied SGI’s request to depose Mr. Kolbenschlag, and in a separate 

hearing not at issue here, awarded Mr. Kolbenschlag attorney fees 

finding that the lawsuit was frivolous and vexatious. This appeal 

followed.

II. Summary Judgment Properly Granted

¶ 16 SGI first contends that the district court erroneously 

concluded that Mr. Kolbenschlag’s comments were substantially 

true and immaterial. We disagree. 
9

A. Standard of Review and Law

¶ 17 We review grants of summary judgment de novo. Morrison v. 

Goff, 91 P.3d 1050, 1052 (Colo. 2004); SMLL, L.L.C. v. Peak Nat’l 

Bank, 111 P.3d 563, 564 (Colo. App. 2005). Summary judgment is 

a drastic remedy and is appropriate only when the pleadings and 

the supporting documents show that no genuine issue of material 

fact exists and that the moving party is entitled to judgment as a 

matter of law. W. Elk Ranch, L.L.C. v. United States, 65 P.3d 479, 

481 (Colo. 2002). 

¶ 18 A “material fact” is one that will affect the outcome of the case 

or claim. Thompson v. Md. Cas. Co., 84 P.3d 496, 501 (Colo. 2004). 

In determining whether a genuine issue of material fact exists, we 

consider “the pleadings, depositions, answers to interrogatories, 

and admissions on file, together with the affidavits, if any.” 

C.R.C.P. 56(c). All favorable inferences that can be drawn from the 

record must be resolved in favor of the non-moving party. People in 

Interest of S.N., 2014 CO 64, ¶¶ 15-16. 

¶ 19 “Defamation is a communication that holds an individual up 

to contempt or ridicule thereby causing him to incur injury or 

damage.” Lawson v. Stow, 2014 COA 26, ¶ 15 (quoting Keohane v. 
10

Stewart, 882 P.2d 1293, 1297 (Colo. 1994)). “A statement may be 

defamatory if it tends so to harm the reputation of another as to 

lower him in the estimation of the community or to deter third 

persons from associating or dealing with him.” Sky Fun 1 v. 

Schuttloffel, 27 P.3d 361, 369 n.3 (Colo. 2001) (alteration omitted)

(quoting Burns v. McGraw-Hill Broad. Co., 659 P.2d 1351, 1357 

(Colo. 1983)).

¶ 20 The elements of defamation are:

(1) a defamatory statement concerning 

another; (2) published to a third party; (3) with 

fault amounting to at least negligence on the 

part of the publisher; and (4) either 

actionability of the statement irrespective of 

special damages or the existence of special 

damages to the plaintiff caused by the 

publication.

McIntyre v. Jones, 194 P.3d 519, 523-24 (Colo. App. 2008) (quoting 

Williams v. Dist. Court, 866 P.2d 908, 911 n.4 (Colo. 1993)). 

¶ 21 Substantial truth is a complete defense to defamation. Gordon 

v. Boyles, 99 P.3d 75, 81 (Colo. App. 2004). A defendant need only 

show that “the substance, the gist, the sting of the matter is true.” 

Id. (citation omitted). So, the question is whether “there is a 

substantial difference between the allegedly libelous statement and 
11

the truth; or, stated differently whether the statement produces a 

different effect upon the reader than that which would be produced 

by the literal truth of the matter.” Gomba v. McLaughlin, 180 Colo. 

232, 236, 504 P.2d 337, 339 (1972). This inquiry focuses on an 

“average reader” and asks whether “the challenged statement 

produces a different effect upon the [average] reader than that 

which would be produced by the literal truth of the matter.” Fry v. 

Lee, 2013 COA 100, ¶ 23. 

¶ 22 In Colorado, the plaintiff in a defamation case must prove that 

a statement is false and material. Bustos v. A & E Television 

Networks, 646 F.3d 762, 764 (10th Cir. 2011) (applying Colorado 

law). To be material, “the alleged misstatement must be likely to 

cause reasonable people to think ‘significantly less favorably’ about 

the plaintiff than they would if they knew the truth; a misstatement 

is not actionable if the comparative harm to the plaintiff’s 

reputation is real but only modest.” Id. at 765 (citation omitted).

¶ 23 Because “protracted litigation could have a chilling effect upon 

constitutionally protected rights of free speech,” it is appropriate to 

“prompt[ly] resolv[e] . . . defamation actions . . . by summary 
12

judgment.” Barnett v. Denver Publ’g Co., 36 P.3d 145, 147 (Colo. 

App. 2001). 

B. Application

¶ 24 SGI asserts that the comment, “was actually fined for 

colluding (with GEC) to rig bid prices and rip off American 

taxpayers,” was not substantially true because (1) it had settled the 

antitrust suit for nuisance value; (2) the claims had not proceeded 

to trial; (3) there were no actual findings of illegal conduct; (4) the 

DOJ had expressed concerns about its ability to succeed at trial; 

and (5) SGI did not admit any wrongdoing and, therefore, any 

statement that it was “fined for colluding” was materially false. We 

are not persuaded. 

¶ 25 First, we reject SGI’s claim that it settled the case for nuisance 

value. The record shows that the federal judge rejected the first 

settlement agreement precisely because it reflected a nuisance 

value settlement that would not deter the parties or others in the 

industry from engaging in illegal bidding. The federal judge 

concluded that a nuisance value settlement was not in the public 

interest. 
13

¶ 26 Moreover, the DOJ explained its reasons for settling: (1)

stating that this was an issue of first impression; (2) proving the 

claim would be costly; (3) settling would compensate the 

government for the violations by reimbursing it more money than it 

lost at auction; and (4) settling would deter SGI, GEC, and other 

companies from executing these illegal agreements. And the record 

reveals that SGI and GEC paid twelve times the cost of the four 

leases subject to the antitrust claim, an amount that directly 

refutes SGI’s claim that the payment was simply a business 

decision and the amount paid was for nuisance value.

¶ 27 Next, we are not persuaded that the absence of a trial requires 

a different result or that the record shows there was no improper

conduct. Initially, we note that SGI does not dispute that it 

executed the MOU with GEC on the eve of the auction and that it 

did not disclose the MOU to the BLM. While we acknowledge that 

the FCA agreement states the agreement is not an admission of 

liability by SGI, importantly, it also states that it is not a concession 

by the United States that its claims are not well founded. Moreover, 

the agreement specifically provides that “[n]othing in this 

Agreement releases SG from any liability for the Covered Conduct 
14

under Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1.” And 

paragraph six of the agreement lists ten separate claims from which 

SGI was not released. Finally, the agreement required SGI to waive 

and not assert any defenses it may have to any future criminal 

prosecution or administrative action.

¶ 28 As well, the antitrust settlement specifically addressed the 

wrongful conduct by declaring up front that “the United States 

determined that SGI’s and GEC’s agreement to bid jointly pursuant 

to the MOU constituted a per se violation of the Sherman Act.” It

also addressed the companies’ defenses, stating that

[t]he United States determined that [SGI’s] 

purported . . . defense amounted to little more 

than a contention that by successfully 

colluding under the MOU at the February and 

May 2005 auctions, the Defendants eventually 

learned to overcome their mutual distrust. 

However, the mere hope that parties might 

someday come to an understanding on terms 

of a legitimate venture does not justify their 

agreeing to a naked restraint of trade in the 

interim. 

¶ 29 Moreover, the antitrust agreement set forth “punishment” 

related to the improper bidding — not only the monetary damages 

SGI and GEC had to pay, but also the further requirement that 

“GEC and SGI agree to provide thirty days advance notice to the 
15

United States of any joint bidding, either between themselves or 

with another party, at a BLM auction. Upon the United States’ 

request, each must provide additional information to the United 

States regarding its plans to bid jointly.” 

¶ 30 As well, the DOJ explained its reasoning for not proceeding to 

trial in the antitrust case, which had nothing to do with the 

strength of its case or the absence of misconduct. Instead it 

explained that

[t]he improper joint bidding by Defendants 

occurred nearly eight years ago and since that 

time they have been engaged in a legitimate 

venture that has resulted in substantial 

development of the Ragged Mountain Area. . . . 

[T]he goal of a civil antitrust remedy is to 

terminate the violation, undo its effects and, in 

cases where the United States is the injured 

party, obtain compensation for its injury. 

¶ 31 Accordingly, we conclude that viewing the evidence favorably 

for SGI and GEC, Mr. Kolbenschlag’s comment that SGI and GEC 

“colluded to rig bid prices,” as understood by the average reader, is 

substantially true and is well supported by the record. See Gomba, 

180 Colo. at 236, 504 P.2d at 339; see also Brokers’ Choice of Am., 

Inc. v NBC Universal, Inc., 861 F.3d 1081, 1107 (10th Cir. 2017) 

(“The law of defamation overlooks inaccuracies and focuses on 
16

substantial truth.” (quoting Schwarz v. Am. Coll. of Emergency 

Physicians, 215 F.3d 1140, 1146 (10th Cir. 2000))); Fry, ¶¶ 39-40 

(concluding that “caught up in plagiarism charge” was substantially 

true because the plain language would not lead an average reader 

to conclude that criminal charges were brought against the 

plaintiff); see also Merriam-Webster Dictionary, 

https://perma.cc/TGU7-9M69 (defining colluding as “to work 

together secretly especially in order to do something illegal or 

dishonest”).

¶ 32 Finally, we are not persuaded that Mr. Kolbenschlag’s use of 

the word “actually fined” requires a different result. The word “fine” 

means “a sum imposed as punishment for an offense” or “a 

forfeiture or penalty paid to an injured party in a civil action.” 

Merriam-Webster Dictionary, https://perma.cc/6792-KGWE; see 

also Knapp v. Post Printing & Publ’g Co., 111 Colo. 492, 497-98, 114 

P.2d 981, 984 (1943) (the meaning of an allegedly defamatory 

statement is determined by the plain and ordinary meaning of the 

word). Given that SGI and GEC paid twelve times the amount of 

the government’s actual damages to settle the antitrust and FCA 

claims, we have little difficulty concluding that an average reader 
17

would find no substantial difference between SGI settling civil 

claims brought against it for money and paying a fine. Indeed, 

many commentators described this payment as a fine for alleged 

misdeeds at the time of the settlement, and SGI does not explain

why it did not pursue defamation claims against those 

commentators at that time.2 

¶ 33 Even if we were to conclude that the “gist” of the comment was 

false, we agree with the district court that any inaccuracy is 

immaterial. See Bustos, 646 F.3d at 764 (“Where truth was once 

 2 While many of the articles described SGI’s conduct as “alleged,” 

many did not. For example, one article stated that “the companies 

were implicated for a 2005 collusion scheme” and “[t]he two 

companies were found to have conspired to buy federal leases for 

lower prices.” Competition Policy International, US: Gas Cos Agree 

to Even Steeper Penalty, Fine Nearly Doubled, Apr. 22, 2013,

https://perma.cc/MF2D-EN7V. A Durango Herald newspaper 

article stated that SGI and GEC “agreed to pay a $550,000 fine to 

settle an antitrust lawsuit by the Justice Department for agreeing 

not to compete in a 2005 auction of drilling rights in Western 

Colorado.” Joe Hanel, Driller Starts Super PAC to Support Tipton, 

Durango Herald, Oct. 28, 2012, https://perma.cc/PD68-22AG. 

And a Crested Butte News article reporting on the settlement titled 

the article “North Fork gas drillers fined by feds for collusion.” 

North Fork Gas Drillers Fined by Feds for Collusion, Crested Butte 

News, Feb. 22, 2012, https://perma.cc/ME47-46DW. Although 

this article later stated that the parties settled the federal antitrust

lawsuit “alleging the two companies cooperated in submitting 

winning bids,” id., the title of the article is almost identical to Mr. 

Kolbenschlag’s statement. 
18

strictly a defense, now the plaintiff must shoulder the burden in his 

case-in-chief of proving the falsity of a challenged statement if he is 

a public figure or the statement involves a matter of public 

concern.”). Mr. Kolbenschlag’s comment included a link to the DOJ 

press release stating that the settlement “requires the companies to 

pay a total of $550,000 to the United States for antitrust and False 

Claims Act violations related to an agreement not to compete in 

bidding for four natural gas leases sold at auction by the U.S. 

Department of Interior’s Bureau of Land Management (BLM).”

(Emphasis added.) We conclude that the press release’s “pay for 

antitrust and False Claims Act violations” language and Mr. 

Kolbenschlag’s “fined for colluding” comment are virtually 

indistinguishable. And, if a reasonable person knew all of the 

undisputed facts apart from the comment, including the DOJ’s 

reasons for settling, the federal district court’s rejection of the first

nuisance value settlement, and the additional requirement that SGI 

inform the DOJ of future joint bidding agreements, Mr. 

Kolbenschlag’s statement is not “likely to cause reasonable people 

to think ‘significantly less favorably’ about the plaintiff than they 

would if they knew the truth.” Bustos, 646 F.3d at 764-65 (citation 
19

omitted); Jankovic v. Int’l Crisis Grp., 429 F. Supp. 2d 165, 177 n.8 

(D.D.C. 2006) (explaining that an allegedly defamatory statement 

was clarified by two internet links and “[w]hat little confusion the 

sentence could possibly cause is easily dispelled by any reader 

willing to perform minimal research”), aff’d in part, rev’d in part and 

remanded, 494 F.3d 1080 (D.C. Cir. 2007). 

¶ 34 We are not persuaded that Mr. Kolbenschlag’s comment that 

SGI was actually fined is problematic when compared to other 

articles describing a fine for allegations for the reasons described 

above. The undisputed record demonstrates that SGI paid twelve 

times the actual amount of damages to settle two civil claims 

related to its illegal bidding practices in the MOU and that it agreed 

to additional restrictions to its bidding practices in future joint 

bidding ventures. Therefore, the absence of the word “alleged” is 

immaterial and does not affect the substantial truth of the 

comment. 

III. Deposition Would Not Alter the Outcome

¶ 35 SGI next contends that the district court erroneously denied 

its discovery request to depose Mr. Kolbenschlag. It reasons that a 

deposition would shed light on whether Mr. Kolbenschlag could 
20

validate his claim that the comment was substantially true. 

Because we conclude that Mr. Kolbenschlag’s subjective belief is 

not relevant, and because SGI has failed to allege any additional 

facts it could have discovered through a deposition, we discern no 

abuse of discretion by the district court in denying the request. 

A. Standard of Review and Law

¶ 36 “Whether to grant a request for discovery pursuant to C.R.C.P. 

56(f) lies within the discretion of the trial court.” A-1 Auto Repair & 

Detail, Inc. v. Bilunas-Hardy, 93 P.3d 598, 604 (Colo. App. 2004). A 

district court abuses its discretion when it refuses to grant a party a 

reasonable continuance to permit utilization of the discovery 

procedures provided by the rules of civil procedure and when it is 

premature to grant a motion for summary judgment. Holland v. Bd.

of Cty. Comm’rs, 883 P.2d 500, 508 (Colo. App. 1994). However,

“[i]t is not an abuse of discretion to deny a C.R.C.P. 56(f) request if 

the movant has failed to demonstrate that the proposed discovery is 

necessary and could produce facts that would preclude summary 

judgment.” A-1 Auto Repair, 93 P.3d at 604.
21

B. Application

¶ 37 The district court found that SGI had failed to articulate how 

Mr. Kolbenschlag’s deposition would reveal facts that could change 

the outcome. See id. Indeed, it found that Mr. Kolbenschlag’s 

deposition was irrelevant to the objective question whether his 

comment was substantially true; that actual malice (the subjective 

issue) was no longer part of the litigation; and that Mr. 

Kolbenschlag had no personal, special, or unique knowledge of the 

prior litigation that would cause him to know more about the 

substantial truth of it. We discern no abuse of discretion in the 

court’s finding for two reasons. 

¶ 38 First, Mr. Kolbenschlag’s subjective reasons for the comment 

have no bearing on the question whether a reasonable person 

would find his comment substantially true or materially false. This 

is particularly so since the burden of proving material falsity is on 

the plaintiff. See Brokers’ Choice of Am., 861 F.3d at 1110 (applying 

Colorado law). SGI’s assertion that the deposition would “determine 

any objective criteria upon which he can validate that his statement 

was substantially true” is illogical and misconstrues both the 

burden and the objective standard applicable to defamation. And, 
22

because actual malice was not an issue for summary judgment, Mr. 

Kolbenschlag’s reasons for making the comment are simply 

irrelevant. Even assuming he acted out of malice or had no reason 

to believe the truth of what he said, his subjective intent is 

irrelevant to whether the comment itself was substantially true. 

See Fry, ¶ 34 (explaining that the substantial truth test requires a 

court to determine “how the publication would have been 

understood by a reasonable or average law reader”) (emphasis 

added).

¶ 39 Second, nothing in the records shows that Mr. Kolbenschlag 

had any special or unique knowledge of the prior litigation. SGI 

argues that Mr. Kolbenschlag may have followed the litigation 

closely because he worked on issue campaigns and some of the 

commenters in the antitrust litigation had “endorsed” his LinkedIn

page. These assertions are speculative. And, even if proven, they 

are irrelevant to the issue whether the comment itself is 

substantially true. Because Mr. Kolbenschlag’s comment does not 

constitute defamation, his intent in making it is irrelevant; thus, we 

affirm the district court’s order denying SGI’s deposition request. 
23

IV. Appellate Attorney Fees

¶ 40 Relying on C.A.R. 38(d) and 39.1, Mr. Kolbenschlag asks us to

award him attorney fees and costs on appeal. He contends that 

SGI’s appeal is groundless, frivolous, and vexatious. We agree that 

the appeal is groundless and frivolous and, therefore, we do not 

need to consider whether it is vexatious.

¶ 41 In any civil action, a court shall award “reasonable attorney 

fees against any attorney or party who has brought or defended a 

civil action, either in whole or in part, that the court determines 

lacked substantial justification.” § 13-17-102(2), C.R.S. 2018. 

¶ 42 Appeals can be frivolous in two ways: (1) they may be frivolous 

as filed where the judgment by the court below is so plainly correct 

and the legal authority contrary to appellant’s position so clear that 

there is really no appealable issue; or (2) an appeal may be frivolous 

as argued where the appellant commits misconduct in arguing the 

appeal. Averyt v. Wal-Mart Stores, Inc., 2013 COA 10, ¶ 40. 

“Standards for determining whether an appeal is frivolous should 

be directed toward penalizing egregious conduct . . . .” Mission 

Denver Co. v. Pierson, 674 P.2d 363, 365 (Colo. 1984). C.A.R. 38(d) 

should, therefore, only be used to impose sanctions in clear and 
24

unequivocal cases when the appellant presents no rational 

argument, or when the appeal is prosecuted for the sole purpose of 

harassment or delay. Wood Bros. Homes, Inc. v. Howard, 862 P.2d 

925, 934-35 (Colo. 1993); Mission Denver Co., 674 P.2d at 365-66.

¶ 43 We begin with SGI’s appeal of the second issue — the court’s 

refusal to order Mr. Kolbenschlag’s deposition — and conclude that 

it is frivolous because there is no proper legal basis for SGI’s 

argument. See Mitchell v. Ryder, 104 P.3d 316, 323 (Colo. App. 

2004) (“An appeal is frivolous if the proponent can present no 

rational argument based on the evidence and law or the appeal is 

prosecuted for the sole purpose of harassment or delay.”). Once Mr. 

Kolbenschlag withdrew his actual malice argument, his subjective 

belief in the truth of his comment was plainly irrelevant. We 

therefore discern no basis in law or in fact for SGI to pursue an 

appeal of that ruling.

¶ 44 SGI asserts repeatedly that Mr. Kolbenschlag’s deposition was 

relevant because he “may have had knowledge regarding the 

underlying federal litigation and its eventual outcome.” It argues 

that Mr. Kolbenschlag “is not a random person” but is “a seasoned 

media professional and the owner of” an issue group. And it asserts 
25

that Mr. Kolbenschlag knew some of the individuals that 

commented on the initial settlement agreement because they had 

“endorsed the Defendant on LinkedIn” and therefore he may have 

“provided assistance or advice to some commenters.” However, as 

described above, Mr. Kolbenschlag’s subjective reasons for 

commenting on the news article are simply irrelevant to whether his 

comment was substantially true. 

¶ 45 For similar reasons, we award appellate attorney fees for the 

libel claim. SGI’s claim on appeal that its settlement was purely a 

“business decision” for “nuisance value” and that it did not engage 

in misconduct is directly refuted by the undisputed record. These 

undisputed facts are

• SGI and GEC competed for oil and gas leases.

• SGI and GEC executed the MOU agreeing not to compete 

against each other for four leases.

• SGI and GEC never disclosed the MOU to the BLM.

• Representatives from both SGI and GEC attended the 

auction where SGI secured the successful bid.

• The successful bids were less than market value.
26

• SGI conveyed 50% of the leases to GEC after the bidding 

process.

• Emails among GEC executives congratulated themselves 

on avoiding a bidding war with SGI by way of the 

undisclosed MOU.

• A GEC executive brought a federal qui tam action alleging 

illegal collusion between SGI and GEC in the MOU and 

SGI’s false certification that there had been no bid 

rigging.

• The DOJ concluded the MOU constituted a per se 

restraint of trade, violated section 1 of the Sherman Act, 

and commenced an antitrust lawsuit.

• A federal judge rejected the first settlement proposal 

concluding it was for nuisance value, provided 

insufficient deterrence to the parties and others in the 

industry, and, thus, was not in the public interest.

• The settlement entered required SGI and GEC to pay 

twelve times the amount of damages actually incurred

and required them to give the government advance notice 

of any proposed joint bidding practices for five years.
27

¶ 46 Because the overwhelming record refutes SGI’s libel claims, we 

conclude there is no reasonable basis for it. See § 13-17-102(2) 

(attorney fees proper where the court determines a party “lacked 

substantial justification”). Accordingly, we order that attorney fees 

be awarded jointly and severally against SGI and its counsel. § 13-

17-102(3). We exercise our discretion under C.A.R. 39.1 to remand 

the case to the district court for a determination and award of 

reasonable appellate attorney fees.

V. Conclusion

¶ 47 The judgment is affirmed, and the case is remanded for the 

district court to determine and award reasonable appellate attorney 

fees. 

JUDGE FOX and JUDGE WELLING concur.