UNITED STATES CO URT OF APPEALS FOR THE TENTH CIRCUIT

________________ _________________ RICE’S LUCKY CLOVER HONEY, LLC., a Colorado li mited liability company, Plai ntiff/Counterclaim De fendant - Appellant,

v. JAMIE HAWLEY, an individual Defe ndant/Counterclaimant - Appellee. No. 16-1186 (D.C. No. 1:14- CV-00402-RPM) (D. Colo.)

________________ _________________ ORDER AND JUDGMENT *

________________ _________________ Before BACHARACH , PHILLIPS , and McHUGH , Circuit Judges.

________________ _________________ This appeal grew out of a conf using contract between a honey business (Rice’s Lucky Cl over Honey, LLC) and its president (Mr. Jamie Hawley). Both parties sued one anothe r for breach of c ontract, with Rice Honey also suing for br each of fiduciary duty. 1

* This order and judgme nt does not constitute bi nding precedent except under the doctrines of law of the case, res judicata, and collateral estoppel. But the order and judgment may be ci ted for its persuasive value under Fed. R. App. P. 32.1(a) and Tenth Cir. R. 32.1(A).

1 Rice Honey also asserted a claim for a declaratory j udgment, but this claim is not involved in the appeal. FILED United States Court of Appeals Tenth Circuit 

### August 15, 2017
Elisabeth A. Shumaker Clerk of Court2 The district court awarded judgment as a matter of law to Mr. Hawley on Rice Honey’s claims for breach of contract and breach of fiduciary duty. These rulings were correct. The district court also awarded j udgment as a matter of law to Mr. Hawley on his counterclaim for breach of contract. In our view, the district court should have let the jury decide this claim. Accordingly, we reverse the judgment for Mr. Hawley on his counterclaim for breach of contract. In connection with this counterclaim, the district court also held as a matter of law that a liquidated-d amages clause wa s enforceable. U nder state law, the enforceability of this clause should ha ve been left fo r the jury to decide.
I. Background The parties negotiated over th e contract terms and exchanged multiple drafts. Rice Honey wanted to hire Mr. Hawley for one year and see how the relation ship worked before deciding whether to continue. Mr. Hawley wanted a term longer than one year. Rice Honey proposed a contract with a one-year term that could be renewed for up to three years. Mr. Hawley changed the language without alerting Rice Honey to th e change. Rice Honey signe d, thinking that it was signing its latest version. Rice H oney was wrong; the written contract contained indicia reflecting the wishes of both parties:3 [Mr.] Hawley’s term of employment under this Agreement (such term of employme nt, as it may be extended or terminated, is herein referred to as the “Employment Term”) shall be for a term commencing on the Ef fective Date and, unless terminated ear lier as provided in Section 5 hereof, ending on the third anniversary of the E ffective Date (the “Original Employment Term”) one (1) year period ; unless, at least sixty (60) days prior to the end of the original employment term Rice [Honey] or [Mr.] Hawley has notified the other in writing that the Employment Term shall terminate at the end of that current term . If not so termin ated, then the Employment Term shall be automatically extended, subject to earlier termination as provided in Section 5 hereof, for an additional two (2) year period (the “Additional Terms”). Appellant’s App’x, vol. V, at 846 (emphasis ad ded). In one place, the contract stated that the employme nt term would end on “the third anniversary of the [e ]ffective [d]ate.” Id. In the same sentence, however, the contract stated that the employment term would be a “one (1) year period.” Id. Rice Honey soon became di senchanted with Mr. Hawley and notified him that the employment would not be renewed after one year. Mr. Hawley viewed this notification as a premature termination, theorizing that the base term was three years rather than one year. This disagreement led to the litigation. After Rice Honey presented its tria l evidence, Mr. Hawley moved for judgment as a matter of law on Rice Honey’s cl aims. The district court granted the motion, awardi ng judgment to Mr. Hawl ey not only on Rice Honey’s claims but also on the coun terclaim. On the counterclaim, the4 court awarded Mr. Hawley $412,000 ($250, 000 for liquidated damages and $162,000 for actual da mages). In these ru lings, the court he ld for the first time that even if the contract had on ly a one-year term , Rice Honey would be obligated to pay the amount specified in the co ntract for a termination without cause. Rice Honey appealed.
II. Standard of Review and the Applicable Substantive Law We engage in de novo re view of a district cour t’s grant of judgment as a matter of law, ap plying the same legal stan dards that governed in district court. Elm Ridge Expl. Co. v. Engle , 721 F.3d 1199, 1216 (10th Cir. 2013). Under these st andards, we can uphold the district court’s ruling only if all of the evidence points one way and precludes a reasonable inference supporting Rice Honey. See id. In this diversity case, we consider the evidence based on Colorado’s substantive law. See McKissick v. Yuen , 618 F.3d 1177, 1184 (10th Cir. 2010). 2 In defining Colorado’s substantiv e law, we are gu ided primarily by the opinions of the Colorado Supreme Court. Belnap v. Ia sis Healthcare , 844 F.3d 1272, 1294 (10th Cir. 2017).
III. Rice Honey’s Claim for Breach of Contract Rice Honey argues that its contract claim should have been submitted to the jury. For this argume nt, Rice Honey theorizes that

2 The parties agree on the applicability of Co lorado’s substantive law.5  the jury could conclude that th ere was no meeting of the minds and

 the contract was ambiguous. But these theories woul d not create a jury que stion on Rice Honey’s contract claim. In district court, Rice Honey ha d based its contract claim on Mr. Hawley’s continued work for Liberty Institute, false representations to Walmart and Sam’s Club, and dishonest and disloy al conduct. But Rice Honey’s appellate argument s would not support these theories of liability. For example, in defending its contract claim, Ri ce Honey argues that the jury could have found that there was no meeting of the minds. Bu t if there was no meeting of the mi nds, Rice Honey could no t have prevailed on its contract claim. Similarly, Rice Honey argues that the alleged contract was ambiguous regarding the duration of the employment term and the effect of the “termination without cause” provi sion. But ambiguity of those terms would not have affected th e viability of Rice Hone y’s contract claim. In the absence of any other pertinent argu ment, we affirm the district court’s award of judgment as a matter of law to Mr. Hawley on Rice Honey’s contract claim. IV. Rice Honey’s Claim for Breach of Fiduciary Duty The district court also properly gr anted judgment as a matter of law to Mr. Hawley on Rice Honey’s claim for breach of fiduciary duty.6 A. Rice Honey had to es tablish four elements. On this claim, Rice Ho ney needed to show that (1) Mr. Hawley had acted as a fiduciary, (2) Mr. Hawl ey had breached a fiduciary duty, (3) Rice Honey had incurred damages, and (4) these damages had been caused by Mr. Hawley’s brea ch of a fidu ciary duty. See Rupert v. Clayton Brokerage Co. , 737 P.2d 1106, 1109-1100 (Colo. 1987) (en banc). B. Rice Honey alleges two theories of breach of fiduciary duty. Rice Honey alleges two theories of how Mr. Hawley breached a fiduciary duty: (1) by making material misrepresentations to Walmart and Sam’s Club, and (2) by con tinuing to work for Liberty after December 31,
2012. C. The evidence did not suppo rt liability for breach of fiduciary duty based on Mr. Hawley’s alleged misrepresentations to Wa lmart and Sam’s Club. The first theory i nvolves Mr. Hawley’s allege d misrepresentations to Walmart and Sam’s Club. Th is theory fails as a ma tter of law based on the absence of any resulting damages. The alleged misrepresentations app eared in a letter from Mr. Hawley to Walmart and Sam’s Club: “After an extensive review by an outside firm regarding our pricing and terms to existing customers in like classes of trade, it was brought to our attention that we are in violation of the federal law passed in 1936 to ou tlaw price discrimination. ” Appellant’s App’x,7 vol. V, at 898. 3 Rice Honey presented eviden ce that this statement was false because there had not been an outs ide review of pricing. For the sake of argument, we may assu me without decidi ng that Mr. Hawl ey acted as a fiduciary and that this misrepresentat ion breached a fiduciary duty to Rice Honey. Even with that assumption, th is theory would fail as a matter of law because Rice Honey did not incur any damages. Under Colorado law, Rice Honey must prove “the fact of damages or injury” with “a reas onable degree of persuasiveness.” W. Cities Broad., Inc. v. Schueller , 849 P.2d 44, 48 (Colo. 1993) (en banc). This proof must go “beyond a mere possib ility or speculation.” Gibbons v. Ludlow , 304 P.3d 239, 246 (Colo. 2013) (en banc). Generalized op inions regarding lost sales are insufficient in the absence of an explanation. See Roberts v. Holland & Hart , 857 P.2d 492, 497 (Colo. Ap p. 1993) (holding that an affiant’s projection of net profit was too speculative without an explanation for how the total had been calculated). At trial, the vice-presid ent of operations for Rice Honey testified that there had been no injury from Mr. Hawley’s misrepresentations: Q. Let’s move down a little furthe r. Did he--here’s the next question. It says here on Item B, “Intentionally engaged

3 Rice Honey also alle ges that Mr. Hawley en gaged in other “actions and omissions that . . . caused [Rice Honey] to lose substantial sales at their biggest customer, WalMart/Sam’s Club.” Appellant’s Opening Br. at 12. But Rice Honey ma kes no further reference to other alleged actions and omissions.8 in conduct which is demonstrab ly and material ly injurious to Rice.” Okay. Then it goes into various conditions and so forth like this, talking about fraud or dishonesty or theft against Rice, okay. And your testim ony earlier, sir, had to do with this Robinson/Patmen [sic] communication on the pricing. An d the question I have for you is: was there a demonstrable and ma terial injury for Rice? A. No, sir. Q. Did you lose any sales because of that? A. No, sir. Q. Did you lose any profits? A. No, sir. Q. Okay. Did you lose a customer? A. No, sir. Q. Okay. So there really was no injury there, was there?
A. You’re correct. Appellant’s App’x, vol. IV, at 593; see also id . at 562-63 (similar testimony by the same individual). 4 The only contrary evid ence consisted of testim ony by a co-owner of Rice Honey, who expresse d a thought or feeling that the company had incurred damages. The co-o wner’s thought or feelin g regarding lost sales constitutes speculati on, which is insufficient und er Colorado law to prove

4 Rice Honey points out that this individual also testified regarding lost sales in 400 Walmart stores. But Rice Honey did not present any evidence tying the lo st sales to Mr. Hawley’s alleged misrepresentations.9 the fact of damages. See Nevin v. Bates , 347 P.2d 776, 777-78 (Colo. 1959). Considering the testimony in the li ght most favorabl e to Rice Honey, we conclude that no r easonable jury could have found damages from Mr. Hawley’s alleged misrepresentations to Walmart and Sam’s Club. Thus, Rice Honey’s first theory fa ils as a matter of law. D. The economic-loss rule pr events recovery for breach of fiduciary duty on Rice Honey’s second theory. Rice Honey’s second theory is base d on Mr. Hawley’s alleged work for Liberty after Decembe r 31, 2012. At that po int, Mr. Hawley was serving as the president of Rice Honey. For the sake of argument, we may assume without deciding that Rice Honey has satisfied each of the four elements for this th eory. Nonetheless, this theo ry would fail as a matter of law under Colorado’s economic-loss rule. The economic-loss ru le allows a tort recovery only if the underlying duty is independent of a duty arising out of a contract. See Haynes Trane Serv. Agency, Inc. v. Am. Standard, Inc. , 573 F.3d 947, 962 (10th Cir. 2009) (applying Co lorado law); Town of Alma v. AZCO Constr., Inc. , 10 P.3d 1256, 1262-63 (Col o. 2000) (en banc). Here the alleged duty to stop working for Liberty was directly tied to the underlying contract. In district court, Mr. Hawley di d not invoke the ec onomic-loss rule. Thus, the threshold issue is whether we can consider Mr. Hawley’s newly10 presented argument as an alternative basis to affirm th e ruling. We enjoy discretion to affirm on alternative grounds. Hernandez v. Starbuck , 69 F.3d 1089, 1093-94 (10th Cir. 1995). In determining whether to exercise this discretion, we consider (1) whether the ground was fully briefed here and in district court, (2) whether our decision woul d involve only questions of law, and (3) whether the parties had a fair opportunity to develop the factual record. Elkins v. Comfort , 392 F.3d 1159, 1162 (10t h Cir. 2004). The firs t factor cuts both ways, but the second and third factors support use of our discretion to consider Mr. Hawley’s new argume nt on the econo mic-loss rule. The first factor cuts both ways because the economic-loss rule is fully briefed on appeal but was not raised in district court. The second factor s upports consideration of the issue, for the applicability of the economic-loss rule is a question of law. See Haynes Trane Serv. Agency, Inc. v. Am. Standard, Inc. , 573 F.3d 947, 962 (10th Cir. 2009); accord Bohler-Uddeholm Am., Inc. v. Ellwood Grp., Inc. , 247 F.3d 79, 106 (3d Cir. 2001) (stating that the economic-lo ss doctrine involves a question of law); Grynberg v. Questar Pipeline Co. , 70 P.3d 1, 10 (Utah 2003) (“The distri ct court’s interpretation and application of the economic loss doctrine is a question of law . . . .”). The third factor also supports consideration be cause the i ssue does not involve any factual questions. Without a fact ual component to the11 issue, Rice Honey would suffer no pr ejudice if we were to consider the issue in the fi rst instance. In light of the second and third fact ors, we exercise our discretion to consider this issue. See United States v. Damato , 672 F.3d 832, 845 (10th Cir. 2012) (considering po tential affirmance on an issue raised sua sponte based on the second and third factors). We ultimately conclude that the economic-loss rule applies. Under this rule, the underlying duty must arise from a s ource independent of the

contract. Town of Alma v. AZCO Constr., Inc. , 10 P.3d 1256, 1262-63 (Colo. 2000) (en banc). And even when the underly ing duty would arise in the absence of the contract , the duty is not consider ed independent if it is memorialized in the contract. See Haynes Trane Serv. Agency, Inc. v. Am. Standard, Inc. , 573 F.3d 947, 962 (10th Cir. 2009) (applying Colorado law). In its reply brief, Rice Honey argues that the economi c-loss rule does not apply to claims invo lving a breach of fiduciary duty. We disagree, for the Colorado Court of A ppeals has applied the econo mic-loss rule to claims for breach of fiduciary duty. See Casey v. Colo . Higher Educ. Ins. Benefits All. Tr. , 310 P.3d 196, 204 (Colo. App. 2012) (“Any tort claim for breach of fiduciary duty that th e employees attempt to interject into this case concerning the trustees would be barred by operat ion of the economic loss rule.”); A Good Time Rental , LLC v. First Am. Title Agency, Inc. , 259 P.3d12 534, 540 (Colo. App. 2011) (stating that a “fiduciary duty between contracting parties” does not necessarily create a special relationship that “trumps the economic loss rule”). Rice Honey argues that if the econo mic-loss rule applies to claims for breach of fiduciary duty, the Colorado Supreme Court must have missed the issue in Jet Courier Service, Inc. v. Mulei , 771 P.2d 486 (Colo. 1989) (en banc), and Rupert v. Clayton Brokerage Co. of St. Louis, Inc. , 737 P.2d 1106 (Colo. 1987) (en banc). But Colora do appellate courts “[‘]normally decide only questions presen ted by the parties.’” Zeke Coffee, Inc. v. Pappas- Alstad P’ship , 370 P.3d 261, 269 (Colo. App. 2015) (quoting Greenlaw v. United States , 554 U.S. 237, 243- 44 (2008)). Thus, the Colorado Supreme Court has expr essly declined to consider an economic-loss argument that th e parties had not presented. A.O. Smith Harvestore Prods. , Inc. v. Kallsen , 817 P.2d 1038, 1039 (Colo. 1991) (en banc). We have no indication that the pa rties raised the economic-loss rule
in Jet Courier Service, Inc. or in Rupert . Thus, we have no reason to think that the Colorado Supreme Court missed the issue. Instead, we can reasonably assume that none of the parties i nvoked the economic-loss rule in these cases. If they didn’t, the Colorado Supr eme Court would not be expected to address the issue. Our ca se is different, for Mr. Hawley has raised the economic-loss rule on appeal.13 In our view, Mr. Hawley’s new argu ment is supported by Colorado’s treatment of the economic-loss rule. Colorado courts have identified certain special relationships that auto matically trigger an independent duty of care that supports tort liability even when the parties ha ve entered into a

contract. Town of Alma v. AZCO Constr., Inc. , 10 P.3d 1256, 1263 (Colo. 2000) (en banc). These sp ecial relationships ofte n “entail a fiduciary relationship.” A Good Time Rental, LLC v. First Am. Title Agency, Inc. , 259 P.3d 534, 540 (Colo. App. 2011). Bu t “not every fidu ciary relationship implicates a risk of damages for which contract la w cannot provide a remedy.” Id . Here the employment contract provided a suita ble remedy for Mr. Hawley’s a lleged work for Liberty after December 31, 2012. The contract arguab ly required Mr. Hawley to wrap up his consulting work for Liberty by De cember 31, 2012, and the jury could reasonably infer that continued cons ulting work for Liberty in 2013 would constitute a breach of contract. For the sake of argument, we can ev en assume that a contractual breach would also entail a breach of fiduciary duty. However the cause of action is framed, the contract would provide a perfectly suitable remedy. Thus, th e economic-loss rule prevents recovery under Rice Honey’s second theory of a breach of fi duciary duty.14 V. Mr. Hawley’s Counterclaim for Breach of Contract The district court awarded judgment as a matter of law to Mr. Hawley on his countercla im for breach of contract. For two reasons, this ruling was erroneous:
1. A reasonable jury could have found that Mr. Hawley had materially breached the contract prior to Rice Honey’s alleged breach.
2. The contract was ambiguous re garding the du ration of the employment term. 5

5 Rice Honey also argues that a jury could reasonably find that there was no meeting of the minds. We disagree. Rice Honey contends that it was unaware of Mr. Hawley’s revisions before signing the contract. If Rice Ho ney signed before the contract was altered, the alteration might arguably render the contr act unenforceable. But Rice Honey does not s uggest that it signed be fore the contract was altered. Instead, Rice Honey alleges th at it signed the contract unaware that the latest draft had alread y been altered by Mr. Hawley. Even if Rice Honey signed the contra ct unaware of an alteration, the contract would not be vitia ted, for the failure to re ad what one signs does not ordinarily prev ent enforcement. See Rasmussen v. Freehling , 412 P.2d 217, 219 (Colo. 1966) (stati ng that parties may not avoid enforcement of a contract just because they had failed to read the contract). An exception exists when the parties were mutu ally mistaken about the contract. Kuper v. Scroggins , 257 P.2d 412, 413-14 (Colo. 1953 ) (en banc); see Smith v. Whitlow , 268 P.2d 1031, 1035 (Colo. 1954) (en banc ). But Rice Honey does not suggest that Mr . Hawley was mistaken about the contract terms. Thus, the signed contract would bind th e parties even if Rice Honey had not read the latest ve rsion before signing.15 A. A reasonable jury could have found that Mr. Hawley had materially breached the contract. The district court erred in entering judgment as a matter of law to Mr. Hawley on his counterclaim for br each of contract, for a reasonable jury could have found that Mr. Hawley had ma terially breached the contract prior to Rice Honey’s alleged breach. Mr. Hawley alleges that Rice Honey breached the contract by prematurely terminati ng the employment withou t paying the amount specified in the contract for early termination. But Rice Honey could avoid performance if Mr. Hawley had previous ly failed to subs tantially perform his own contractual duties. See Kaiser v. Mkt. Squa re Disc. Liquors, Inc. , 992 P.2d 636, 641 (Colo. App. 1999). Th is principle would create a jury issue, for a reasonable ju ry could have found that Mr. Hawley had already committed a material breac h by continuing to wo rk for Liberty after December 31, 2012. 6
Here the existence of a contract ual breach by Mr. Hawley turns on two questions:
1. Did the contract prevent Mr. Ha wley from working for Liberty after Decemb er 31, 2012?
2. If the contract preven ted such work, did Mr. Hawley continue to work for Liberty after December 31, 2012?

6 Rice Honey makes this argument on appeal with respect to Mr. Hawley’s counterclaim, but not with respect to Rice Honey’s own contract claim.16 The jury could reasonably answer “yes” to both qu estions, finding a contractual breach from Mr . Hawley’s continued wo rk for Liberty after December 31, 2012. First, the jury could r easonably find that the contr act prevented Mr. Hawley from working fo r Liberty after December 31, 2012. The contract did not generally prevent Mr. Hawley from working for another employer while working for Rice Honey. 7 But the contract argu ably suggested that Mr. Hawley’s right to wo rk for Liberty might be limited to approximately 31⁄2 months. The contract was signed by the par ties on September 13, 2012 and stated: “[Rice Honey] recognizes that [Mr.] Ha wley will need to spend modest amounts of time until December 31, 2012 at Liberty Institute completing the shutdown of the consulting aspects of his business.” Appellant’s App’x, vol. V, at 846. By stating that Mr. Hawley would need to continue working for Liberty un til December 31, 2012, the contract could have been implying that Mr. Ha wley was to stop wo rking for Liberty by that date. Second, the jury co uld reasonably find that Mr. Hawley had continued to work for Li berty after December 31, 2012. For example, Rice Honey presented eviden ce that in 2013 , Mr. Hawley had organized

7 Mr. Hawley could not work for another employer involved in the honey business. But Rice Honey does not suggest th at Liberty was in the honey business.17 interviews and researched resumes for candidates hoping to land a position with Liberty as Chief Op erating Officer. In add ition, six emails between Mr. Hawley and Liberty management suggested that Mr. Hawley was continuing to work for Liberty in a managerial position after December 31,
2012:
1. One email (April 18, 2013) referred to Mr. Hawley as part of the management team and notified him of an upcoming meeting.
2. A second email (April 19, 2013 ) contained Mr. Hawley’s response, which reflect ed help in planning the meeting and in giving input on the matters to be discussed.
3. A third email (May 2, 2013) consisted of Mr. Hawley’s transmission of an of fer to hire a Chief Operating Officer for Liberty.
4. A fourth email (May 3, 2013) thanked Mr. Ha wley for his hard work.
5. A fifth email (May 13, 2013) referred to Mr. Hawley’s participation in a meeting to “r eview 2013 KPIs and create new ones for 2014.” Ap pellant’s App’x, vol. VI, at 970.
6. A sixth email (May 15, 2013) referred to Mr. Hawley’s participation in a management meeting. The resulting issue is whether a jury could reasonably find the fact of damage from Mr. Hawley’s alleged wo rk for Liberty after December 31, 2012. In our view , such a finding would have been reasonable. Rice Honey continued to pay Mr. Hawley after December 31, 2012. Part of these continued payments could constitute damages, for the jury could reasonably infer that Rice Honey had paid more than it would have if it had18 known that Mr. Hawley was continuing to serve Li berty in a managerial capacity. Thus, the existence of damage s constituted a fact ual issue for the jury to decide. In sum, a reasonable jury could find that Mr. Hawley had breached the contract and that this breach of contract had caused damages. Thus, the district court erred in en tering judgment as a matte r of law for Mr. Hawley on his counterclaim for breach of co ntract. In our view, the jury could reasonably find that Mr . Hawley had materially breached the contract before Rice Honey premat urely terminated the co ntract. Such a finding could have excused Rice Honey from continued performance under the

contract. B. A jury could also have rea sonably found that Rice Honey had not breached the contract. A jury could also have reasonab ly found that Ri ce Honey had not breached the contract b ecause the duration of the contract was ambiguous. In interpreting the contract, we must determine whether it was ambiguous. See Boyer v. Karakehian , 915 P.2d 1295, 1300 (Colo. 1996) (en banc). The contract was ambiguous if it was sus ceptible to two or more reasonable interpretations. B&B Livery, Inc. v. Riehl , 960 P.2d 134, 136 (Colo. 1998) (en banc). If the contract was ambiguous, interpretation would involve an issue of fact. See Ad Two, Inc. v. C ity & Cty. of Denver ex rel. Manager of Aviation , 9 P.3d 373, 381 (Col o. 2000) (en banc)19 (“Interpretation of the intent of the parties in an ambiguous contract becomes an issue of fact fo r the trial court to decide in the same manner as other disputed factual issues.”). The district court rule d that the contract is ambiguous on how long it was to last. We agree based on Paragr aph (1) of the cont ract. What is a term “ending on the thir d anniversary of the Eff ective Date . . . one (1) year period”? The phrase appears to be a nonsensical resu lt of the parties’ failure to fully revise the contractual term of employment. Mr. Hawley wanted a three-year term ; Rice Honey wanted a one- year term. At the end of the negotiation process, the partie s apparently ended up with language suggesting a duration of bo th one year and three year s. In this respect, the contract language was ambiguous. 8 Resolution of that ambiguity turns on the parties’ intent, which is a question of fact. See Ad Two, Inc. v. City & Ct y. of Denver ex rel. Manager of Aviation , 9 P.3d 373, 381 (Colo. 2000 ) (en banc). A jury might reasonably agree w ith Mr. Hawley, finding that the contract term was three years. Or, a jury might reasonably ag ree with Rice Honey, finding that the term was one year. Depending on whether the contract was one year or three years, Rice Honey could let the contract come to a natural end by timely exercising its

8 The district court called the contract language “strange” and “meaningless.” Appellant’s Ap p’x, vol. VII, at 1117-18.20 right not to renew the employment term. Or, Ri ce Honey could terminate the contract (with or w ithout cause) by ending Mr . Hawley’s employment prior to expiration of the term. If the term was only one year, Rice Honey could have provided Mr. Hawley with notice of nonre newal at least 60 days before the term was to end. Rice Honey provided such notice. So, if the term was only one year, there would not have been a “termina tion without cause” or a contractual breach by Rice Honey. Instead, the co ntract would simply have expired. But if the contract term was th ree years, Rice Honey’s notice of nonrenewal could be considered a term ination without ca use because the term would have had two more years. Mr. Hawley argues that even if the contract were one year, there would have been a “termination.” For th is argument, Mr. Ha wley points to a snippet of testimony by Rice Hone y’s vice-president of operations: Q. (by Mr. Burg) But what I’ m getting at is, you know, we construe contracts I think by what the words are that are used, okay, and this says “t erminated.” Now, even if you were to terminate this thing, even if we construe this contract the way that Rice wa nts to construe it, which I suppose is that it is a contract terminable at the end of a one-year term with 60 days notice. I assume that’s your position, right?
A. Correct. Q. That is a termination, right?
A. Correct.21 Appellant’s App’x, vol. IV , at 585. But, as the dist rict court explained, the vice-president’s understanding did not matter if the “termination without cause” provision had been unambiguous. See Appellant’s App’x, vol. VII, at 1119-20 (the district court’s explan ation that the word “termination” is unambiguous and that “Ric e’s understanding” is i mmaterial because the court could interpret the provision for “termination w ithout cause” as a matter of law). 9

9 The district court apparently changed its view of the case after hearing the testimony of Rice Honey’ s vice-president of operations. On cross-examination, the vice-president testified that Rice Honey had terminated Mr. Hawley without cause. After excusing the jury, the district court told counsel that “i n light of [the vice-president’s] testimony, I think he undercut your case entirely.” Appella nt’s App’x, vol. IV, at 633. And when Rice Honey rested its case th e next day, the district court commented, “Plaintiff rests, all right,” and turned to Mr. Hawley’s motion under Fed. R. Civ. P. 50 . Appellant’s App’x, vol. VII, at 1115-16. In this motion, Mr. Hawley did not address his counterclaim , for he ha d not even presented a case. Noneth eless, the district co urt sua sponte granted judgment as a matter of law to Mr. Hawley on hi s counterclaim. See p. 3, above. In explaining this ruling, the district court noted that it was “somewhat taken aback by wh at [it had] heard is th e evidence in this case and particularly, as respect to [R ice Honey’s attorney] and also as respecting [Rice Honey’s vice-president of operations].” Appellant’s App’x, vol. V II, at 1117. If the district court had intended to rely on its under standing of the vice-president’s testimony , this reliance would have been misguided. Rice Honey’s vice-president and co-owner testified extensively about the decision not to renew Mr. Hawley’s employment. For example, the vicepresident testified that in the days before nonrenewal, Mr. Hawley repeatedly asked if his employment term would be renewed. In addition, Rice Honey’s co-owner testified that he had told Mr. Hawl ey orally and in writing that his employment would not be renewed. Almost two weeks22 The district court was correct in viewing the vice-president’s testimony as immaterial in light of the unambiguous language in the

contract. See Denver Found. v. Wells Fargo Bank, N.A. , 163 P.3d 1116, 1126 (Colo. 2007) (en banc) (stating that “intent mu st be dete rmined from contract language itself, and an unambiguous docu ment cannot be explained by extrinsic evidence so as to dispute its plain meaning”). But we disagree with the district court’s interpretation of the provisions for termination and nonrenewal. The contract unambiguously addresse s payment obligations if Rice Honey were to terminate the contract before it would otherwise expire. These obligations would vary depending on whether the termination is with cause or without cause. But neither ki nd of termination took place if the contract term had been one year. If the term we re only one year, Rice Honey would simply have exercised its contractual right not to renew the contract, letting it expire. Expiration of the contract would not have been a termination by either party. later, Mr. Hawley responded, expressing surprise at the reasons given “not to renew [his] contract.” Appell ant’s App’x, vol. IV, at 570. The testimony by Rice Honey’s vi ce-president and co-owner could support a finding that th e parties treated Mr. Hawl ey’s termination as a nonrenewal (a termination with at least 60 days’ no tice and continued payment through the one-y ear term rather than an “early” termination under the contract). Thus, the district court could not gr ant judgment as a matter of law to Mr. Hawley based on a snippet of the vice-president’s testimony.23 As a result, the existence of a contractual breach turns on the duration of the term, one year or three years. B ecause the duration of the contract is ambiguous, the district co urt should have al lowed the jury to decide whether Ri ce Honey had breach ed the contract. 10
VI. Guidance Regarding Damages for Mr. Hawley’s Co unterclaim for Breach of Contract The parties disagree about issues related to the da mages that Mr. Hawley could obtain if he prevails on his countercla im for breach of contract. The disagreement involves the duty to mitigate damages, the enforceability of a liquida ted-damages clause, and th e availability of both liquidated damages and th e sum specified in the contract. Because these issues may reappear on remand, we pr ovide the district court with some guidance. See Fletcher v. United States , 730 F.3d 1206, 1214 (10th Cir. 2013). A. Mr. Hawley had no duty to mitigate damages. The existence of a duty to mitigate damages i nvolves a question of law. See Cherry v. A- P-A Sports, Inc. , 662 P.2d 200, 202 (Colo. App. 1983) (deciding the ex istence of a duty to mitigate as a matter of law). On this question, we conclude that Mr. Hawley did not bear a duty to mitigate damages.

10 On remand, Mr. Hawley could prev ail on his counterc laim for breach of contract only if the jury determin es that the durati on is three years rather than one year.24 1. The common law did not require mitigation of damages. In urging a duty to mitigate damages, Rice Honey relies on the common law. Under Colo rado’s common law, a party injured from a contractual breach must ordinarily ma ke a reasonable ef fort to mitigate damages. Tull v. Gundersons, Inc. , 709 P.2d 940, 946 (Colo. 1985) (en banc). Thus, when a contract is breached, the amoun t avoided through mitigation should ordina rily be deducted from the eventu al award. Saxonia Mining & Reducti on Co. v. Cook , 4 P. 1111, 1113 (Col o. 1884). But there is no duty to make a de duction when the contra ct specifies the amount owed to the injured party. See Drews v. Denver Recycling Co. , 727 P.2d 1121, 1124 (Colo. App. 1986); Cherry , 662 P.2d at 202. Here the amount owed was specifie d in the contract, precludi ng a common-law duty to mitigate. Rice Honey relies on Technical Computer Serv ices, Inc. v. Buckley , 844 P.2d 1249, 1255 (Colo. App. 1992). Buckley addressed mitigation in different circumstances. There an employee was terminated and successfully sued for breach of the em ployment contract. Buckley , 844 P.2d at 1249, 1251. On appeal, the employee argued that his award should not be reduced by the amoun t earned elsewhere. Id . at 1255. The Colorado Court of Appeals rejected this argument, reasoning that the employee could not (1) treat the em ployment contract as continuing and (2) sue for wages as they accrued. The co urt reasoned that recove ry for continued wages25 would be contrary to the policy of mitigation and permit a multiplicity of lawsuits. Id at 1255-56. The court distinguished Cherry v. A-P-A Sports, Inc. , 662 P.2d 200 (Colo. App. 1983). Buckley , 844 P.2d at 1256. In A-P-A Sports , the mitigation doctrine did no t apply because the empl oyer had promised to pay a specific amount upon nonrene wal of the employment term. Id. That principle was inapplicable in Buckley because there th e payment had not been guaranteed. Id

. Our case closely resembles A-P-A Sports . Here the amount owed to Mr. Hawley had al legedly been guaranteed upon early termination without cause. Mr. Hawley’s theory is that he was entitl ed to the guaranteed payment regardless of whether he obta ined employment el sewhere, for the contract called for payment of a set am ount. As Mr. Hawley points out, the contract stated that Ri ce Honey’s early termination without cause would require payment of the ba se salary for on e year ($162,000 ), along with $250,000 in liquidate d damages. Thus, Buckley would not support a deduction from his potential recovery on the contract claim. In sum, Colorado’s co mmon law did not create a duty for Mr. Hawley to mitigate damages.26 2. Rice Honey does not alle ge that the contract would independently create a duty to mitigate. A potential issue could ha ve arisen about the effect of the contract. The contract stated th at the measure of dama ges for Mr. Hawley was “subject to the mitigation provisions set forth below.” Appellant’s App’x, vol. V, at 851. Bu t there were no mitigation prov isions “set forth below.” Rice Honey preemptively argues that this set of pr ovisions did not vitiate the common-law duty to mitiga te damages. This argument assumes that the common law creat ed a duty to mitigate. But we have elsewhere concluded that no such duty existed at common law. As a result, the contract does not bear on the duty to mitigate. 11 B. The enforceability of the liquidated-damage s clause in volved a fact-issue for the jury to decide. The contract contained a liquidated-damages clause that required Rice Honey to pay Mr. Hawley $250, 000 upon a termination without

cause. 12 The district court held that this clause was enforceable as a matter

11 Rice Honey does not argue on appeal that the contract independently created a duty to mitigate.

12 If the “termination without cause” provision applied, it would also require Rice Honey to pay one year’s base salary ($162,000). One could reasonably view this payment as part of the liquidated damages. But both parties have treated the liquidat ed damages as $250 ,000, with the additional $162,000 as actual damages. We address below the related issue of whether Mr. Hawley might be able to recover both liquidated damages ($250,000) and actual damages ($162,000).27 of law. In our view, how ever, the enforceability of the liquidat ed-damages clause involved a fact-issue for the jury to decide. Liquidated-damages provisions are enforceable if they reasonably estimate the amount of act ual damages and do no t constitute a penalty. Rohauer v. Little , 736 P.2d 403, 410 (Colo. 19 87) (en banc). Unless the contract “on its face establishes that the stipulated liquidated damages are so disproportionate to an y possible loss as to constitute a penalty, the party challenging the liquidated damages provision bears the burden of proving that fact.” Id. ; see also Chisholm v. Reitler , 352 P.2d 794, 796 (Colo. 1960) (en banc) (stating th at the burden of proo f falls on the party characterizing a liqu idated-damages clau se as a penalty). The pertinent factors fo r the enforceability of a liquidated damages provision are
1. whether the parties intended to liqui date damages,
2. whether the amount of liquidated damages, when viewed as of the time that the cont ract was made, was a reasonable estimate of the presumed actual damage s that the breac h would cause, and
3. whether it was difficult at that time to ascertain the amount of actual damages that would result from a breach. Rohauer , 736 P.2d at 410. The enforceability of a liquidated-damages clause involves a question of fact unless the contract shows on its face that the liquidated damages constitute a penalty. Klinger v. Adams Cty. Sch.
Dist. No. 50 , 130 P.3d 1027, 1034 (Col o. 2006) (en banc).28 The district court decided as a matter of law that the liquidateddamages clause was enforceable withou t hearing any evidence on the issue. Rice Honey never had an opportunity to support its position with evidence. The district court erred by prematurely deciding this fact -issue prior to the presentation of evidence on the relationship betw een the liquidateddamages amount and the possible loss. C. If Mr. Hawley prevails on his counterclaim, he may be entitled to bo th liquidated damages and payment for a specified debt. Liquidated damages may be recoverable in lieu of actual damages.
See 11 Joseph M. Perillo, Corbin on Contracts: Damages § 58.9, at 446 (2005). Thus, an election between the two is ordina rily required. See Stewart v. Blanning , 677 P.2d 1382, 1384 (Colo. App. 1984) (stating that the doctrine of election of remedies “is invoked where remedial rights sought in a given situation are so inco nsistent that the assertion of one necessarily repudiates the assertion of the other”). But payment for a specified debt is treated differently, for it is awardable regardless of the employee’s opportunity to mitigate damages. See Drews v. Denver Recycling Co. , 727 P.2d 1121, 1124 (Colo. Ap p. 1986) (holding that no duty to mitigate existed to collect payments required under a terminated employment contract); Cherry v. A-P-A Sports, Inc. , 662 P.2d 200, 202 (Colo. App. 1983) (holding that no duty to mitigate existed when the29 employer had promised to pay a specified amount upon nonrenewal of the contract); see also Part VI(A)(1), above. Rice Honey lumps together the clai ms for liquidated damages and payment of a specified debt, pointing out that both ar e premised on a breach of contract. We disagree wi th this approach. If Mr. Hawley prevails, Rice Honey would owe money fo r a specified debt arising out of a contractual obligation. Thus, Mr. Hawley would be entitled to the contractual payment of th e specified debt even if he were to receive liquidated damages. Because our case involves rights to payment of a debt and liquidated damages, Mr. Hawley could receive both if (1) the jury conc ludes that the liquidated damages do not constitute a penalty and (2) Mr. Hawley ultimately prevails on his counterclaim.
VII. Conclusion The district court awarded judgment as a matter of law to Mr. Hawley on Rice Honey’s claims. We affirm this aspect of the district court’s ruling. But we reverse an d remand for a new trial on

 Mr. Hawley’s counterclaim fo r breach of contract and

 the enforceability of the li quidated-damag es clause. Entered for the Court,

Robert E. Bacharach Circuit Judge