## F I LED United States C ourt of Appeals Tenth Circuit 

### S e p t e m b e r5,2006 Elisab eth A. Shumaker C l erk of C ourt PU BL I SH UNI TED S TATES CO URT O F AP PEALS

T E N T H C IR C U IT

TI M O TH Y C. H O I LES,

P lai n ti ff-C o u n terl aim - D e fe n d a n t- A p p e lle e , v. J OS E P H M . AL I OT O,

D efen d an t- C o u n terclai m - P la in tiff-A p p e lla n t. N o. 05- 1376

A ppeal from t he U ni t ed St at es D i s t ri ct C ourt

for t he D i s t r i c t of

C ol or ado ( D . C . N o. 04 - C V - 00 43 8 PSF- O ES) R onal d S. R auchbe r g, Pr os kauerR os e LL P, N ew Y or k, N ew Y or k ( N or m an B row n stei n , T im o thyR . B ey er, R icha rd P . B ark ley , Jo sep h ine S an d ler, B r ow ns t ei n H y at t& Farber , P. C . , D enver , C ol or ado, I an L. Saffe rand C had K i ng, T o w n sen d & T o w n sen d & C rew , L L P , D en v er, C o lorad o , S co ttL . L ev in, Fish er, S w eetbau m & L evin, P . C . , D env er, C olor ado , E l i se A . Y ablonski , P roskauer R ose L L P , N e w Y o r k , N e w Y o r k , D a n i e l R e e s S h u l m a n , G r a y P l a i n t , M o o ty, M o t ty & B enn et t , P . A . , M i nn eapo l i s, M i nn esot a, M axw el l M . B l echer, John E . A nd rew s, B l eche r& C ol l i ns , P. C . , L os A ngel es , C al i forni a, w i th hi m on the br i efs ) , for D e fe n d a n t-C o u n ter c laim -P lain tiff-A p p e llan t. E . G l en J ohns on, K el l yH art& H al l m an LL P, For tW or th, T exas ( B ar tA . R ue, F ra n k P . G re e n h a w IV , K e llyH a rt & H a llm a n L L P , F o rt W o rth , T e x a s, K e n n e th B . S iege l, S h erm an & H o w ard , L . L . C . , D en v er, C o lorad o , w ith h im o n the b ri ef), forPl ai nt i ff- C ount er cl ai m - D efe ndant - A ppel l ee.- 2-

B efor e M UR P HY , BA LD OCK , and M c CO NNELL , C i rcui tJudg es. M UR P HY , C i r cui tJ udge.

I . I nt roduct i on T hi s appea l ar i s es outof a c ont i ngentfee agr eement( the “Fee A gr eement ”) ent er ed i nt o byPl ai nt i ff- A ppel l ee Ti m othyH oi l es , a r es i dentof C ol or ado, and D e fe n d a n t-A p p e llan t Jo se p h A lio to , an a tto rn e ylice n se d to p ra c tice law in C al i forni a. H oi l es hi r ed A l i ot o t o as s i s thi m i n s el l i ng s t ock he ow ned i n a pr i vat e, fami l y - ow ned medi a company , Fr eedom C om m uni cat i ons , I nc. ( “Fr eedom”) . A ppr oxi m at el yt w o y ear s aft ert he part i es ent er ed i nt o the Fee A g re e m e n t, F re e d o m w a s re c a p italiz e d , en a b lin g H o iles to e x c h a n g e h is s h a re s in the c o m p an yfo r ca sh . H o il es su b seq u en tl yfil ed su itsee k ing a d ec laratory j udgm entt hatA l i ot o w as notent i t l ed t o a cont i ngentfee bas ed on the s el l i ng pri ce of t he st ock . A l i oto coun t ercl ai m ed, assert i ng breach o f con tract , unj ust enr i chment , fr aud, and negl i gentm i s r epr es ent at i on. T he U ni t ed St at es D i s tr i ct C o u rt fo r th e D istric t o f C o lo ra d o d e ter m in e d C o lo ra d o law g o v e rn e d a ll i ss u e s in t he ca s e and thatt he Fee A gr eementw as unenfor cea bl e underC ol or ado l aw . T he di s t r i ctcourtal s o di s m i s s ed A l i ot o’ s fr aud and ne gl i gentm i s r epr es ent at i on c laim s. T h e c a se p ro c e e d e d to trial, a n d th e ju ryfo u n d in fa v o r o f A lio to o n h is unj us tenr i chmentcl ai m . A l i ot o chal l enges s ever al of the di s tr i ctcourt ’ s rul i ngs- 3-

on appea l . W e as s ertj ur i s di ct i on pur s uantt o 28 U . S. C . § 1291. B eca us e the di s t r i ctcourterr ed i n appl y i ng C ol or ado l aw t o det erm i ne the val i di tyof the Fee A gr eement , w e rever se t he di s t r i ctcourt ’ s di s m i s s al of A l i ot o’ s br eac h of contr actcl ai m . W e r e m and w i t h i ns truct i ons fort he di s tr i ctcourtt o det erm i ne w hethert he Fee A gr eementi s enfor cea bl e underC al i forni a l aw . W e al s o rever se t he di s t r i ctcour t ’ s di s m i s s al of A l i ot o’ s fr aud and ne gl i gentm i s r epr es ent at i on c la im s . I I . Backg r ound I n 2001, Fr eedom w as a cl os el y - hel d m edi a congl om er at e ow ni ng var i ous n e w s p a p e rs , m a g a z in e s , a n d b ro a d c a s t te le v is io n s ta tio n s th ro u g h o u t th e c o u n tr y . T i m ot hyH oi l es , t he gr ands on of Fr eedom’ s founder , ow ned 511, 221 s har es i n t he company . H oi l es ’ ex- w i fe a nd t w o daught er s ( the “D avi ds on D efe ndant s ”) ow ned a t ot al of 155, 740. 5 s har es . H oi l es ’ and the D avi ds on D efe ndant s ’ s har es r epr es ent ed appr oxi m at el y8. 6% of the out s t andi ng s har es of Fr eedom; t he re m a in in g s h a re s w e re o w n e d b yo th e r d e s c e n d a n ts o f H o ile s ’ g ra n d fa th e r. H oi l es bel i eved mi s m anage m entof the companyand fa m i l ys har ehol derdi s put es w e re d a m a g in g th e v a lu e o f F re e d o m ’s s to c k . T h e re fo re , h e h ire d a c o n su ltan t, J os eph B ar l et t a, t o devel op a pl an t o i m pr ove Fr eedom’ s oper at i ons s o H oi l es cou l d sel l his shares ata fai r pr i ce and exitt he co m pan y . H oil es’ rel at i ves, how ever , w er e unw i l l i ng t o payw hatH oi l es cons i der ed a fai rpr i ce a nd out s i de b u y e rs w e re re lu c ta n t to p u rc h a s e a m in o ri ty in te re s t in a fa m ily-o w n e d c o m p a n y .- 4-

A tH oi l es ’ di r ect i on, B ar l et t a cont act ed J os eph A l i ot o, an att orneyl i cens ed t o pr act i ce l aw i n C al i forni a, aboutthe pos s i bi l i tyof pr ovi di ng l egal re p re se n tatio n o n a c o n tin g e n t fe e b a sis . H o iles su b se q u e n tly tra v e led f ro m h is hom e i n C ol or ado t o m eetw i t h A l i ot o i n C al i forni a. T he part i es di s put e the s ubs t ance of thei rconver s at i on. A ccor di ng t o H oi l es , t he part i es di s cus s ed pu rs uing a l aw sui tagainstF reedom shareholder s t o fo rce the p urchase of H oil es’ s t o c k . A l i o t o c l a i m s H o i l e s w a n t e d h i m t o t a k e a n y a c t i o n t h a tw a s n e c e s s a ry, i ncl udi ng butnotl i m i t ed t o fi l i ng a l aw s ui t , t o for ce the pur chas e of H oi l es ’ and t he D avi ds on D efe ndant s ’ i nt er es ti n Fr eedom. A tt he end of t he meet i ng, t he par t i es r eac hed an or al agr eementw her ebyA l i ot o w oul d r epr es entH oi l es on a c o n tin g e n t fe e b a sis . H o iles p a id a $ 5 0 0 ,0 0 0 re tain e r a n d a d v a n c e d A lio to $ 1 0 0 ,0 0 0 fo r e x p e n s e s a n d c o s ts . S e v e ra l w e e k s a f

ter th e m e e tin g , A lio to fa x e d a lette r to H o iles in C ol or ado, m emori al i zi ng t he t erm s of the l egal r epr es ent at i on. T he l et t er i ndi cat ed A l i ot o’ s fi r m w oul d r epr es entH oi l es i n the “Fr eedom C om m uni cat i ons m at t er . ” I tpr ovi ded A l i ot o w as t o r ece i ve “[ f] i ft een pe r cent( 15% ) of anythi ng r ecove r ed befor e the fi l i ng of a c om pl ai nt ; 20% of anythi ng r ecove r ed af t ert he fi l i ng of a c om pl ai ntbutbefor e the comm ence m entof the tr i al ; and 25% of anyt hi ng r ecove r ed af t ert he comm ence m entof the tr i al . ” I f H oi l es w i thdr ew fr om ordi s m i s s ed the ca s e, orr efus ed t o s et t l e aga i ns tA l i ot o’ s r ecomm endat i on, he w as obl i gat ed t o paya r eas onabl e hour l yr at e of $1000 forA l i ot o’ s t i m e and- 5-

$ 5 0 0 fo r c o -c o u n se l’s tim e . T h e F e e A g re e m e n t als o re q u ire d H o iles to p a ya ll o u t-o f-p o c k e t an d lit ig a tio n e x p e n se s. H o iles sig n e d th e F e e A g re e m e n t in C o lo ra d o a p p ro x im a te ly six m o n th s a f te r r e c e iv in g it. T w o y e a rs la ter , F re e d o m e n ter e d in to a re c a p italiz a tio n a g re e m e n t w ith B lac k sto n e /P ro v id e n c e M e rg e r C o rp . T h e c a u se o f th e re c a p italiz a tio n is di s put ed. A l i ot o cont ends t he r eca pi t al i zat i on of Fr eedom w as i ns t i gat ed bythe fo llo w in g a c tio n s o n h is p a rt : ( 1 ) h is d ra f tin g o f, a n d th re a te n in g to file , a c o mp l a i n ta g a i n s tF r e e d o m s h a r e h o l d e r s ; a n d ( 2 ) h i s h i r i n g o f Ch r i s t o p h e rS h a w, a n E n g lis h n e w s p a p e r b ro k e r, t o g e n e ra te m a rk e t in te re s t in th e s a le o f F re e d o m . H oi l es , on t he otherhand, cl ai m s A l i ot o’ s contr i but i on t o the r ecapi t al i zat i on w as m i ni m al . I ns t ead, he cont ends t he r ecapi t al i zat i on w as the r es ul tof an in d e p e n d e n t e ffo rt b ys h a re h o ld e rs to re s tru c tu re th e o w n e rs h ip o f F re e d o m . W h a tev e r its c a u se , the re c a p italiz a tio n e n a b led a ll F re e d o m sh a re h o ld e rs to excha nge thei rs har es forcas h ors har es i n a new l y - form ed corpor at i on. H oi l es and the D avi ds on D efe ndant s el ect ed the ca s h opt i on and r ece i ved $212. 71 per s h a re , a to ta l o f

$ 1 4 1 ,8 6 9 ,3 8 0 .6 7 . A ft ert he r eca pi t al i zat i on, H oi l es as ked A l i ot o t o s ubm i ta bi l l i ng s t at ement fo r h is s e rv ice s a t $ 1 0 0 0 p e r h o u r in a c c o rd a n c e w ith th e F e e A g re e m e n t. A lio to re sp o n d e d b yd e m a n d in g a $ 2 8 .4 m ill io n c o n tin g e n t fe e . H o iles su b se q u e n tly file d s u it in C o lo ra d o s ta te c o u rt s e e k in g , in tera lia , a dec l ar at i on thatA l i ot o w as n o t entit led to a c o n ti n g en t fee . A li o to rem o v ed the c ase to fed era l distri ct co u rt- 6-

i n C ol or ado bas ed on di ver s i t y , and then fi l ed hi s ow n s ui tagai ns tH oi l es and the Da v i d s o n De fe n d a n t s i n Ca l i fo r n i a s t a t e c o u r t . Al i o t o ’ s c o mp l a i n ta s s e r t e d c l a i ms fo r b re a c h o f

c o n tr a c t, u nju s t e n ri c h m e n t, f ra u d , a n d n e g lig e n t m is re p re s e n ta tio n . H o iles re m o v e d A lio to ’s C a lifo rn ia s tate c o u rt a c tio n to fe d e ra l d istric t co u rt in C al i forni a. T he part i es then fi l ed duel i ng m ot i ons t o di s m i s s forl ack of per s onal j ur i s di ct i on, A l i ot o i n t he C ol or ado ca s e and H oi l es i n the C al i forni a ca s e. E ach m ot i on al t ernat i vel yas ked thatt he venue be tr ans ferr ed t o the otherfede r al di s t r i ctcourt . T he C ol or ado fe der al di s tr i ctcour tdeni ed A l i ot o’ s m ot i on, and the Ca l i fo r n i a fe d e r a l d i s t r i c tc o u r tt r a n s fe rr e d Al i o t o ’ s s u i tt o Co l o r a d o . T h e two cas es w er e cons ol i dat ed i n t he U ni t ed St at es D i s tr i ctC our tforthe D i s tr i ctof C ol or ado. A li o to su b seq u en tl yfil ed co u n terclai m s in C o lorad o fe d era l distri ct co u rt t h a tm i r r o r e d h i s c l a i m s i n h i s o r i g i n a l C a l i fo rn i a s t a t e c o u r ta c t i o n . S p e c i fi c a l l y, he al l eged H oi l es and the D avi ds on D efe ndant s br eac hed the Fee A gr eementby fai l i ng t o payhi m fi ft een pe r centof the amounttheyr ece i ved fr om the s al e of t hei rFr eedom sha r es . I n t he eve ntthe Fee A gr eementw as deemed unenfor cea bl e, A l i ot o as s ert ed H oi l es and the D avi ds on D efe ndant s had bee n unj us t l yenr i ched byhi s effor t s . Fi nal l y , i f i tw as det erm i ned H oi l es l acke d author i tyt o r epr es ent t he D avi ds on D efe ndant s ’ s har es , A l i ot o cl ai m ed H oi l es m i s r epr es ent ed thi s fac t and w as t her efor e obl i gat ed t o payA l i ot o’ s cont i ngentfee w i th r es pectt o the D avidson D efen dan t s’ shares .H oi l es ’ cl ai m forr ei m bur s ementof exc es s i ve and unr eas onabl e expe ns es 1 paid t o A l i oto w as al so t ri ed. T he d i stri ctcou rt , ho w ever, grant ed judge m ent as a m at t erof l aw forA l i ot o on t hi s cl ai m att he cl os e of a l l t he evi dence .

- 7- T he di s t r i ctcour tdi s m i s s ed al l of A l i ot o’ s cl ai m s agai ns tthe D avi ds on D efen dan t s, and A l i oto does n ot appeal this rul i ng . T he d i stri ctcou rtal so di s m i s s ed A l i ot o’ s br eac h of contr act , fr aud, and negl i gentm i s r epr es ent at i on cl ai m s agai ns tH oi l es . A ppl y i ng C ol or ado’ s confl i ctof l aw rul es , the di s tr i ct co u rtd eterm ined C o lorad o law g o v ern ed all issue s in the ca se. T h e d istri ct co u rt fur t herdet erm i ned, as a mat t erof l aw , thatthe Fee A gr eementdi d not s u b s ta n tia lly c o m p ly w ith C o lo ra d o ’s ru le s g o v e rn in g c o n tin g e n t fe e a g re e m e n ts . See C ol o. R . G overni ng C ont i ngentFees ch. 23. 3. T hus , the Fee A gr eementw as deemed unenfor cea bl e, and A l i ot o’ s br eac h of contr actcl ai m w as di s m i s s ed. T he d i s t r i c tc o u r ta l s o d i s mi s s e d Al i o t o ’ s f r a u d a n d n e g l i g e n tmi s r e p r e s e n t a t i o n c l a i ms s t at i ng, “[t ] hi s i s notgoi ng t o be a t or tcas e. ” The cas e pr ocee ded t o tr i al on the i s s ue of w hether A l i ot o w as ent i t l ed t o quantum m erui t . T he j ur yr eturned a 1 ver di cti n favorof A l i ot o for$1, 150, 000, w hi ch the di s tr i ctcourtr educe d byt he $500, 000 r et ai nerH oi l es had pr evi ous l ypai d. I I I . D i s cus s i on A . C hoi c e of

Law for D e t e r m i ni ng t he V al i di t y of t he Fee A gr e e m e nt A l i ot o ar gues t he di s t r i ctcourterr ed i n appl y i ng C ol or ado l aw t o det erm i ne w h e th e r th e F e e A g re e m e n t w a s e n fo rc e a b le; h e c o n ten d s C a lifo rn ia la w sh o u ldN eith er p artych all en g es th e d istri ct co u rt ’s de cisi o n to ap p lyC o lorad o ’s 2 choi ce of

l aw pr i nci pl es i n det erm i ni ng w hi ch s t at e’ s s ubs t ant i ve l aw governs t he p a rt ie s ’ c la im s . C

f . D oer i ng ex r el . B ar r et tv. C opperMountai n, Inc. , 259 F. 3d 1 2 0 2 , 1 2 0 9 (1 0 th C ir. 2 0 0 1 ) (n o tin g , “w h e n a d istric t co u rt tra n sfe rs a c a se to anotherforum , t he tr ans fer ee c our tm us tfol l ow t he choi ce of l aw rul es of the tr an sfe ror c o u rt ” u n less the tran sfe ror c o u rtlack s p erso n al j u ri sd ict ion ).

- 8- go vern t he is sue. W e revi ew cho i ce of l aw determ i nati on s de novo . D oer i ng ex r el . B ar r et tv. C opperMountai n, Inc. , 259 F. 3d 1202, 1209 ( 10th C i r . 2001) . T he under l y i ng fac tual det erm i nat i ons of the di s tr i ctcourt , how ever , ar e r evi ew ed for c le a r e rr o r. Id . B eca us e the Fee A gr eementdoes notcont ai n a choi ce of l aw pr ovi s i on, t he d istric t co u rt w a s re q u ire d to a p p lyth e c h o ice o f law p rin c ip les o f

th e sta te in w hi ch i t s i t s , i . e. , C ol or ado. C entur y 21 RealEs tat e C or

p. v. Mer ajInt ’ lInv. 2 C or p. , 31 5 F . 3d 12 71 , 12 81 (10t h C i r. 20 03 ). C olor ado has ado pted the “m ost s i gni fi cantr el at i ons hi p” appr oach of t he R es t at ement( Second) of C onfl i ctof L a w s (“ R e s ta te m e n t” ) fo r r e s o lv in g c o n flic t o f la w s q u e s tio n s in c o n tr a c t c a s e s . Wood B r os . Hom es , Inc. v. WalkerA dj us tm entB ur eau , 601 P. 2d 1369, 1372 ( C ol o. 1979) . T hi s appr oach r equi r es court s t o appl yt he l aw of the s t at e w hi ch, w ith re sp e c t to th e p a rticu lar iss u e in d isp u te, h a s th e m o st s ig n ifica n t re latio n sh ip t o the transact i on and t he p art i es. R est at em ent ( S econ d) of C on fl i ctof L aw s § 188( 1) ( 1971) . T he s t at e w i t h t he mosts i gni fi cantr el at i ons hi p i s det erm i ned by c o n sid e rin g th e fo llo w in g fa c to rs:

(a) t he n eeds of

t he int ers t at e and i nternati on al sy st em s,- 9- (b ) t h e re le v a n t p o lic ie s o f th e fo ru m , ( c) t he r el evantpol i ci es of otheri nt er es t ed s t at es and the r el at i ve i nt er es t s of thos e s t at es i n the det erm i nat i on of the part i cul ar i s s ue, (d) t he p rot ect i on of just i fi ed ex pectat i on s, ( e ) t h e b a s i c p o l i c i e s u n d e r l y i n g th e p a r t i c u l a rfi e l d o f l a w, ( f) cert ai nt y , pr edi ct abi l i tyand uni form i tyof r es ul t , and ( g) eas e i n t he det erm i nat i on and appl i cat i on of the l aw t o be appl i ed. Id . §§ 6( 2) , 188( 1) . I n eval uat i ng thes e fa ct or s court s t ake i nt o acc ountthe pl ace of contr act i ng; t he pl ace of negot i at i on of the contr act ; the pl ace of per form ance ; t he l ocat i on of the s ubj ectm at t erof the contr act ; and the domi ci l e, r es i dence , n a tio n a lity, p la c e o f

in c o rp o ra tio n , a n d p la c e o f b u s in e s s o f

th e p a rt ie s . Id . § 1 8 8 (2 ). T he fi r s tfac t or— t he nee ds of the i nt er s t at e and i nt ernat i onal sy ste m s— se e k s “ to f

u rth e r h a rm o n io u s re latio n s b e tw e e n sta tes a n d to fa c ili tate comm er ci al i nt er cour s e betw een them. ” Id . § 6 cmt . d. T hi s fac t orfavor s the a p p lica tio n o f

C a lifo rn ia la w in th is c a se . A lio to d id n o t so licit b u sin e ss in C o lo ra d o . In ste a d , H o iles tra v e led to C a lifo rn ia to re tain a law y e r lice n se d to p ra c tice law in C a lifo rn ia. T h e m ajo rityo f th e leg a l se rv ice s re n d e re d p u rsu a n t to t he Fee A gr eementw er e per form ed i n C al i forni a. St r at egym eet i ngs and t el ephone c onfer ence s t ook pl ace orw er e arr anged f r om C al i forni a. Par tof A l i oto’ s r epresent at i on entai l ed co nsi derat i on of a p ossi ble l aw sui tagainst Fr eedom sha r ehol der s . A l t hough s ui tw as neverfi l ed, A l i ot o dr aft ed a c om pl ai nt t o b e fi l ed in C al i forni a st at e cou rtthat al l eged viol at i on s of a C al i forni a anti trustA l t hough t he maj or i t yof s ervi ces w er e per form ed i n C al i forni a, t he Fee 3 A g r e e m e n td i d n o te x p l i c i t l yr e q u i r e s e r v i c e s t o b e p e r fo r m e d i n C a l i fo rn i a . We th e re fo re d e c lin e to re ly o n § 1 9 6 o f th e R e s ta te m e n t to re s o lv e th is d is p u te . S ect i on 19 6 ap pli es t o co ntr act s for the rend i t i on of servi ces; i tcreat es a r ebut t abl e pr es um pt i on r equi r i ng appl i cat i on of the l aw of the s t at e w her e the co n tr ac t r eq u ir es th e se rvice s to b e re n d ere d u n less so m e o ther state h as a m o re s i gni fi cantr el at i ons hi p t o t he tr ans act i on and the part i es . R es t at ement( Second) of C onfl i ctof Law s § 196 ( 1971) . T he pr es um pt i on onl yappl i es , how ever , w hen

- 10- sta tu te. T h e m ajo rityo f sh a re h o ld e rs n a m e d in th e c o m p lain t w e re C a lifo rn ia re s id e n ts . H oil es neve rtheles s contends a si gn i fi cant port i on of servi ces w ere al so per form ed i n C ol or ado. H e ar gues A l i ot o’ s r epr es ent at i on s tr at egyr equi r ed everyt hi ng t o come outof H oi l es ’ offi ce i n C ol or ado t o ens ur e the i nt er fac e w as betw een H oi l es and Fr eedom, notH oi l es ’ att or ney s and Fr eedom. T o thi s end, A li o to reg u larl yd ict ated let ters t o H o il es’ staff in C o lorad o fo r th em to p rep are and mai l . H oi l es not es he al s o per form ed s ubs t ant i al backgr ound r es ear ch and gather ed document s i n C ol or ado. A l though H oi l es and hi s s t aff di d s ubs t ant i al w or k i n C ol or ado, t he Fee A gr eementati s s ue her e w as a contr actforthe r endi t i on of A l i ot o’ s l egal s ervi ces . T her efor e, per form ance of the Fee A g re e m e n t o c c u rre d lar g e lyin C a lifo rn ia w h e re A lio to d icta ted th e lette rs to H o iles ’ sta ff

a n d p ro v id e d o th e r le g a l ad v ice . L e g a l se rv ice s w e re re n d e re d in C o lo ra d o o n o n lyo n e o c c a sio n : a m e m b e r o f A lio to ’s le g a l tea m tra v e led to H oi l es ’ offi ce i n C ol or ado forone dayt o r evi ew document s . A l i ot o hi m s el f neve r w ent t o C ol or ado. T hus , s i gni fi cant s ervi ces w er e not per form ed i n C ol or ado. 3t he contr actexpr es s l ys t at es w her e s ervi ces ar e t o be per form ed orthe pl ace of

per form ance can be i nferr ed fr om the contr act ’ s t erm s , the natur e of the s ervi ces in v o lv e d , o r o th e r c ir c u m s ta n c e s . Id . § 196 cmt . a. T he Fee A gr eementdoes not ind icate w h ere A li o to’s serv ices w ere to b e re n d ere d . M o reo v er, th e d istri ct co u rt di d notdet erm i ne w hethert he ant i ci pat ed pl ace of per form ance coul d be i nferr ed fr om t he contr act ’ s t erm s orot herci r cumst ance s . B eca us e i ti s notnece s s aryfor u s t o d e c i d e t h i s q u e s t i o n o f fa c ti n th e fi r s ti n s t a n c e t o r e s o l v e th i s c a s e , we d e c lin e to d o s o . T he t erm s of the Fee A gr eementw er e negot i at ed i n C al i forni a dur i ng 4 H oi l es ’ and A l i ot o’ s i ni t i al m eet i ng. A tt hi s m eet i ng, t he part i es r eac hed an or al agr eementt hatA l i ot o s ubs equent l yr educe d t o w r i t i ng. B eca us e the w r i t t en agr eementw as exec ut ed byH oi l es i n C ol or ado, t he pl ace of contr act i ng for p u rp o s e s o f

a p p lyin g th e R e s ta te m e n t is C o lo ra d o . See R es t at ement( Second) of C onfl i ctof Law s § 188 cmt . e ( i ndi cat i ng the pl ace of contr act i ng i s t he pl ace

- 11- A ppl y i ng C ol or ado l aw underthes e ci r cumst ance s w oul d l i kel yi m pede the i n t e r s t a t e p r a c t i c e o f

l a w th e r e b yc r e a t i n g d i s c o r d a n tr e l a t i o n s b e twe e n s t a t e s . An at t or neyw ho i s l i cens ed t o pr act i ce l aw onl yi n C al i forni a, does nottr avel out s i de C a lifo rn ia to so licit b u sin e ss , an d p e rfo rm s le g a l se rv ice s m a in lyin C a lifo rn ia is notl i kel yt o ent eri nt o at t or ney - cl i entr el at i ons hi ps w i th ci t i zens fr om others t at es i f he i s r equi r ed t o conform t o eac h s t at e’ s uni que cont i ngentfee agr eement r equi r ement s m er el ybeca us e hi s cl i enti s a r es i dentof anothers t at e. T he nee ds o f th e in te rs ta te s y s te m th e re fo re fa v o r t h e a p p lic a tio n o f C a lifo rn ia la w h e re . T he s econd a nd t hi r d fac t or s cons i derand compar e the pol i ci es of s t at es havi ng an i nt er es ti n t he di s put e. R es t at ement( Second) of C onfl i ctof Law s § 6 c m ts. e , f. H e re , b o th C o lo ra d o a n d C a lifo rn ia h a v e so m e in ter e st in th e v a lid ity of the Fee A gr eementbeca us e the agr eementw as negot i at ed i n C al i forni a and ex ec u ted in C o lorad o b y cit izen s o f ea ch stat e. H o il es c o n tend s C o lorad o ’s 4w h e re , u n d e r th e fo ru m ’s r u les o f o ffe r a n d a c c e p tan c e , the las t ac t n e c e ss a ryto g ive th e c o n tr ac t bind ing effe ct oc cu rred ).

- 12- in ter e st is m o re c o m p e lli n g th a n C a lifo rn ia’ s b e c a u se o f C o lo ra d o ’s n e e d to prot ecti t s ci t i zens w ho enteri nto conti ng ent fee agreem ents . C olor ado ’s i nter est i n pr ot ect i ng i t s ci t i zens i s at t enuat ed i n thi s cas e, how ever , beca us e H oi l es t r avel ed out s i de of Col or ado t o s ol i ci tr epr es ent at i on byan att or neyw ho r es i des i n, and i s l i cens ed t o pr act i ce l aw i n, C al i forni a. C ol or ado’ s i nt er es ti s fur ther dil uted becau se C al i forni a al so has en act ed st atutes t o p rot ectcl i ents , regar dles s o f th e ir sta te o f

re sid e n c e , w h o e n ter in to c o n tin g e n t fe e a g re e m e n ts w ith at t or ney s l i cens ed t o pr act i ce l aw i n C al i forni a. C al . B us . & Pr of. C ode § 6147; s ee als o A lder m an v. Ham i l t on , 2 5 2 C a l. R p tr . 8 4 5 , 8 4 7

– 4 8 (C a l. C t. A p p . 1 9 8 8 ). M o r e o v e r , C a l i fo r n i a h a s a n i n t e r e s ti n e n fo r c i n g th e s e ru l e s a g a i n s ta t t o rn e ys lice n se d to p ra c tice law in C a lifo rn ia. C a lifo rn ia’ s in ter e st is e sp e c ially com pell i ng w here, as here, t he att orneydo es not l eave the st at e t o soli ci tbu si ness a n d p e rfo rm s th e m ajo ri ty o f th e s e rv ic e s re q u ir e d b yth e a g re e m e n t in C a lifo rn ia . C ol or ado, on t he otherhand, has no s i gni fi canti nt er es ti n enfor ci ng i t s rul es re g u latin g c o n tin g e n t fe e a g re e m e n ts a g a in st a tto rn e y s w h o a re n o t li c e n se d to p rac ti ce law in C o lorad o , d o n o t soli citb u sine ss in C o lorad o , an d d o n o t perfo rm le g a l s e rv ic e s in C o lo ra d o . See G oldf ar b v. Va. Stat e Bar , 421 U . S. 773, 792 ( 1975) ( not i ng “St at es have a compel l i ng i nt er es ti n the pr act i ce of pr ofes s i ons w i thi n thei rboundar i es ” (e m p h a sis a d d e d )); Int ’ lTel e-Mar i ne C or p. v. Mal one &- 13-

A s s ocs . , Inc. , 8 4 5 F . S u p p . 1 4 2 7 , 1 4 3 1 (D . C o lo. 19 9 4 ) (co n clud ing C o lorad o ’s i nt er es ti n r egul at i ng at t or ney s l i cens ed and pr act i ci ng i n C ol or ado i s gr eat erthan F l ori da’s i nter estw hen no l egal s ervi ces w ere perfor m ed in Flor i da). B ecause C al i forni a’ s i nt er es t s ar e more deepl yaffect ed bythi s di s put e, fac t or s tw o and th re e a ls o fa v o r t h e a p p lic a tio n o f C a lifo rn ia la w . T h e fo u rt h fa c to r s e e k s to p ro te c t th e p a rt ie s ’ j u s tifie d e x p e c ta tio n s . R estatem en t ( S ec o n d ) of C o n fli ct of

L aw s § 6 (2)(d ). A lth o u g h the p arti es h ere cont es tt he meani ng of the Fee A gr eement , nei therpartydi s put es thatthey in ten d e d to e n ter in to a c o n tin g e n t fe e a g re e m e n t. H o iles tra v e led to C a lifo rn ia s peci fi cal l yt o l ocat e an a t t or neyw i l l i ng t o r epr es enthi m on a cont i ngentfee bas i s . T he part i es s ubs equent l yent er ed i nt o an agr eementthatexpl i ci t l ypr ovi ded for a fee b ased on a percentage of “a ny thing recovered. ” P rot ect i ng the p art i es’ e x p e c tatio n s th e re fo re re q u ire s a p p lica tio n o f w h ich e v e r sta te’ s la w w ill u p h o ld t he val i di t yof the Fee A gr eement . A l i ot o conce des the Fee A gr eementi s not e n fo rc e a b le u n d e r C o lo ra d o law . T h e p a rties c o n tes t th e a g re e m e n t’s v a lid ity u n d e r C a lifo rn ia la w . T h e re fo re , o n lyth e a p p lica tio n o f C a lifo rn ia la w w ill pr es erve the pos s i bi l i t yof pr ot ect i ng the part i es ’ j us t i fi ed expe ct at i on thatthey e x e c u te d a v a lid c o n tin g e n t fe e a g re e m e n t. S e e id . § 6 cmt . g. T he fifth fac t or r equ i res con si derat i on of w hich st at e’s l aw “w i l l best achi eve the bas i c pol i cy , orpol i ci es , under l y i ng the part i cul arfi el d of l aw in v o lv e d ” in th e d is p u te . R e s ta te m e n t ( S e c o n d ) o f C o n flic t o f

L a w s § 6 c m t. h .- 14-

Th e p a r t i e s d i s a g r e e a s t o t h e p a r t i c u l a rfi e l d o f l a w a ti s s u e h e r e . Ho i l e s c l a i ms t h e a p p r o p r i a t e fi e l d o f l a w i s a t t o rn e y - c l i e n tc o n t i n g e n tfe e a g r e e me n t s . He cont ends t he pol i ci es under l y i ng thi s fi el d of l aw i ncl ude pr ot ect i on of the cl i ent b y f u l l , w r i t t e n d i s c l o s u r e ; a s s u m p t i o n b y th e a t t o rn e y o f th e r i s k o f

n o r e c o v e r y; and compens at i on fort he att or neyonl yupon t he occ urr ence of an a gr eed- upon cont i ngency . A l i ot o cont ends t he appr opr i at e fi el d of l aw i s contr act s . H e ur ges us t o achi eve the funda m ent al goal of contr actl aw — gi vi ng effectt o the i nt entof t he part i es — byappl y i ng C al i forni a l aw t o uphol d the val i di tyof the Fee A gr eement . T he l aw of cont i ngentfee agr eement s i s m er el ya s ubs etof contr act l aw . T he Fee A gr eementi s bot h a contr actand, m or e s peci fi cal l y , a cont i ngent fee agr eement . T her efor e, t he pol i ci es under l y i ng both fi el ds of l aw ar e r el evant in d e te rm in in g th e v a lid ity o f th e F e e A g re e m e n t. T h e law g o v e rn in g c o n tin g e n t fe e a g re e m e n ts in C o lo ra d o a n d C a lifo rn ia is s i m i l ar . B ot h s t at es r equi r e cont i ngentfee agr eement s t o be i n w r i t i ng and c o n ta in s p e c ific in fo rm a tio n to e n s u re f u ll d is c lo s u re to th e c lie n t. C a l. B u s . & Pr of. C ode § 6147; C ol o. R . G overni ng C ont i ngentFees ch. 23. 3. O nce a cont i ngentfee agr eementi s deemed val i d, both s t at es i nt erpr etthe agr eementby l ooki ng t o i t s expr es s l anguage t o as cert ai n the i nt entof the part i es . C al . C i v. C o d e § 1 6 3 8 ; E as tR i dge of For tC ol l i ns , LLCv. Lari m er& Weld Ir r igat i on C o. , 109 P. 3d 969, 974 ( C ol o. 2005) . B oth C ol or ado and Cal i forni a al s o cons true any a m b ig u o u s la n g u a g e in th e a g re e m e n t in fa v o r o f th e c lie n t. Lane v. Wi lki ns , 40- 15-

C a l. R p tr. 3 0 9 , 3 1 5 (C a l. C t. A p p . 1 9 6 4 ); E l l i ot tv. Joyc e , 889 P. 2d 43, 46 ( C ol o. 1994) . N evert hel es s , t he des cr i pt i on of i nform at i on thatm us tbe di s cl os ed i n a cont i ngentfee agr eementunderC ol or ado l aw i s m or e exa ct i ng than thatw hi ch m us tbe di s cl os ed underC al i forni a l aw . C ol or ado l aw ther efor e ar guabl ybet t er ens ur es ful l di s cl os ur e of a l l pert i nenti nform at i on t o the cl i ent . A s a r es ul t , the pol i ci es under l y i ng t he l aw of cont i ngentfee agr eement s ar guabl yfavorthe ap p li ca ti o n o f C o lorad o law . W e n ee d n o t definit ivelyd ec ide th is i ssu e, ho w ev er, beca us e the pol i ci es under l y i ng the l aw of contr act s favorthe appl i cat i on of C al i forni a l aw i n t hi s cas e. C ontr actl aw s tr i ves t o “[pr ot ect ] the j us t i fi ed expec t at i ons of the part i es . ” R es t at ement( Second) of C onfl i ctof Law s § 188 cmt . b. A s di s cus s ed above , t he appl i cat i on of C al i forni a l aw m i ghtful fi l l the par t i es ’ expec t at i on t hatt heyexec ut ed a va l i d cont i ngentfee agr eementw her eas t he ap pli cat i on of C olor ado l aw w i l l cl earl ydefe atthe p art i es’ exp ect at i on . T hu s, even i f the pol i ci es under l y i ng t he l aw of cont i ngentfee agr eement s favorthe appl i cat i on of C ol or ado l aw , t hi s fi fth fac t ordoes notfavorthe appl i cat i on of C o lorad o law b ec au se th e p o li cies u n d erly ing the law o f c o n tr ac ts, w h ich a re e q u a lly re le v a n t, fa v o r C a lifo rn ia la w . A t m o s t, th is fa c to r i s n e u tr a l. T h e six th fac tor— ce rt ainty , p red ict ab il ity , an d u n ifo rm ityo f re su lt

— fa v o rs t he ap pli cat i on of C al i forni a l aw . R est at em ent ( S econ d) of C on fl i ctof L aw s § 6 (2 )(f). In th is c a se , a c iti z e n tra v e led f ro m h is re sid e n c e in C o lo ra d o to C a lifo rn ia to so licit re p re se n tatio n f ro m a n a tto rn e ylice n se d to p ra c tice law o n lyH oi l es cont ends ot herr el evantcont act s w i th C ol or ado i ncl ude the 5 fol l ow i ng: H oi l es pai d al l expens es i ncurr ed byA l i ot o undert he Fee A gr eement fr om C ol or ado; i f H oi l es br eac hed the Fee A gr eementbynotpay i ng the cont i ngentfee , t he br eac h occurr ed i n C ol or ado; and the s ubj ectm at t erof the Fee A g re e m e n t, H o iles ’ F re e d o m sh a re s, w e re lo c a ted in C o lo ra d o . T h e se c o n tac ts ar e notper s uas i ve. Fi r s t , t he or i gi n of paym ent s undera contr actand the l ocat i on of the br eac h ar e notr el evantcont act s under§ 188 of the R es t at ement . Second, al t hough t he l ocat i on of the s ubj ectm at t erof the contr acti s r el evant , i tdoes not c a rr yg re a t w e ig h t in th is c a s e . See R est at em ent ( S econ d) of C on fl i ctof L aw s § 188( 2) ( not i ng “cont act s ar e t o be eva l uat ed ac cor di ng t o thei rr el at i ve i m por t ance w i t h r es pectt o the part i cul ari s s ue” i n di s put e) . A l i ot o and H oi l es ent er ed i nt o a cont i ngentfee agr eementw her ebyA l i ot o w oul d per form l egal s ervi ces w i th the ai m of ena bl i ng H oi l es t o s el l hi s Fr eedom sha r es . T he maj or i tyof the l egal s e rv ic e s re n d e re d p u rs u a n t to th e F e e A g re e m e n t w e re p e rfo rm e d in C a lifo rn ia . F re e d o m , the c o m p a n yw h o se sto c k H o iles o w n e d , is in c o rp o ra ted in C a lifo rn ia and has i t s pri ncipl e place of bu si ness i n C al i forni a. U nd er these ci rcum st ances, t he fa ctt hatH oi l es ’ s t ock ce r t i fi cat es w er e l ocat ed i n C ol or ado i s of l i m i t ed re le v a n c e .

- 16- i n C al i forni a. T he maj or i t yof l egal s ervi ces per form ed pur s uantt o the cont i ngent fe e a g re e m e n t th e p a rt ie s s u b s e q u e n tly e n te re d in to w e re p e rfo rm e d in C a lifo rn ia . U ndert hes e ci r cumst ance s , i ti s pr edi ct abl e thatC al i forni a l aw w oul d govern t he F ee A greem ent. A pp l i cat i on of C olor ado l aw , on the o ther han d, i s l ess p re d icta b le. T h e re lev a n t co n tac ts w ith C o lo ra d o a re lim ited . A lth o u g h H o iles is a C ol or ado r es i dentand the Fee A gr eementw as s i gned byH oi l es i n C ol or ado, t hes e tw o cont act s do notm ake the appl i cat i on of C ol or ado l aw pr edi ct abl e w hen compar ed t o t he num er ous cont act s w i th C al i forni a pr es ent i n thi s cas e. S e e id . § 5 18 8(2) ( l i st i ng con t act s t o b e t aken i nto accou nt i n d et erm i ning st at e w i th m ost sign ifi ca n t r elati o n sh ip).- 17-

T h e a p p lica tio n o f

C a lifo rn ia la w in th is c a se w o u ld a lso c re a te c e rta in ty a n d u n i fo r mi t yo f

r e s u l t . Al i o t o i s l i c e n s e d t o p r a c t i c e l a w o n l yi n Ca l i fo rn i a . He di d notl eave C al i forni a t o s ol i ci tbus i nes s i n anothers t at e. T he l egal s ervi ces he ren d ere d p u rsua n t t o the F ee A g ree m en t w ere p erfo rm ed large lyin C ali fo rnia. In part i cular , he d raft ed a co m plai nt as ser t i ng cl ai m s und er a C al i forni a anti trust st atute for fi l i ng i n C al i forni a st at e cou rt . A l i oto i s ent i t l ed, un der these c irc u m sta n c e s, to a n ticip a te th a t C a lifo rn ia la w w ill g o v e rn a n d d ra f t h is cont i ngentfee agr eementacc or di ngl y . R equi r i ng an att or neyt o conform t o the l aw of w hi cheve rs t at e a c l i enthappens t o r es i de i n w hen the att or neyi s not l i cens ed t o pr act i ce i n t hats t at e, does nots ol i ci tbus i nes s i n thats t at e, and does n o t p e rfo rm le g a l s e rv ic e s in th a t s ta te w o u ld c re a te u n n e c e s s a ry u n c e rt a in ty. T he s eventh and fi nal fac t ordoes notfavorthe appl i cat i on of ei ther C ol or ado orC al i forni a l aw . T hi s fac t oreval uat es the ea s e i n det erm i ni ng and app l y i ng each int eres t ed st at e’s l aw . R est at em ent ( S econ d) of C on fl i ctof L aw s § 6( 2) ( g) . B ot h C ol or ado and Cal i forni a have s t atut es expl i ci t l yenumer at i ng the re q u ir e m e n ts fo r a v a lid a n d e n fo rc e a b le c o n tin g e n t fe e a g re e m e n t. C a l. B u s . & Pr of. C ode § 6147; C ol o. R . G overni ng C ont i ngentFees ch. 23. 3. T her efor e, nei t hers t at e’ s l aw w oul d be di ffi cul tt o det erm i ne orappl yi n as s es s i ng the v a lid ity o f

th e F e e A g re e m e n t. Fi ve of the s even fact or s foras cert ai ni ng the s t at e w i th the mosts i gni fi cant re latio n sh ip u n d e r § 6 o f th e R e sta tem e n t w e ig h in fa v o r o f a p p ly in g C a lifo rn ia- 18-

law in th is c a se . T h e re m a in in g tw o fa c to rs a re n e u tra l. A c c o rd in g ly , C a lifo rn ia has t he mosts i gni fi cantr el at i ons hi p t o the tr ans act i on and the part i es , and i t s l aw s h o u ld h a v e b e e n a p p lie d in d e te rm in in g th e v a lid ity o f th e F e e A g re e m e n t. A l i ot o ar gues , i f thi s courtdet erm i nes the di s tr i ctcour t ’ s choi ce of l aw rul i ng w as err oneous , w e s houl d pr ocee d t o det erm i ne w hetherthe Fee A gr eement is e n fo rc e a b le u n d e r C a lifo rn ia la w . H e c o n ten d s th e F e e A g re e m e n t is enfor cea bl e and obl i gat es H oi l es t o payhi m fi ft een pe r centof the amountH oi l es a n d t h e Da v i d s o n De fe n d a n t s r e c e i v e d f r o m th e s a l e o f

th e i rF r e e d o m s h a r e s . He t her efor e ur ges t hi s courtt o r emand t he ca s e t o the di s tr i ctcourtw i th i ns truct i ons t o aw ar d A l i ot o $21, 293, 121. 84. H oi l es , how ever , cont es t s the val i di tyof the Fee A g re e m e n t ev e n u n d e r C a lifo rn ia la w . H e c laim s th e F e e A g re e m e n t fa ils to c o m p lyw ith C a lifo rn ia’ s s tatu to ryre q u ire m e n ts b e c a u se it d o e s n o t su fficie n tly des cr i be the cont i ngentfee r at e ordi s cus s r el at ed mat t er s notcover ed bythe Fee A g re e m e n t. A ltern a tiv e ly , if th e F e e A g re e m e n t is e n fo rc e a b le u n d e r C a lifo rn ia l aw , H oi l es ar gues t he cont i ngencycont empl at ed bythe agr eementnever o cc u rred , an d thu s, A li o to is on lyen ti tl ed to q u an tum m eru it . T h e d istri ct co u rt has notas s es s ed w hethert he Fee A gr eementi s enfor cea bl e underC al i forni a l aw or eval uated the p art i es’ com peti ng i nterpret at i on s of t he ag reem ent. B ecause th e se a re iss u e s b e st re so lv e d in d istric t co u rt in th e first in sta n c e , w e d e c lin e to a d d re s s th e m h e re . See Uni t ed Stat es v. R x D epot, Inc. , 4 3 8 F .3 d 1 0 5 2 , 1 0 6 1 n .6 ( 10t h C i r . 2006) . W e ther efor e r ever s e the di s tr i ctcourt ’ s det erm i nat i on thatthe- 19-

Fee A gr eementi s unenfor cea bl e, and r emand forfur therpr ocee di ngs cons i s t ent w ith th is o p in io n . B. M i s r e p r e s e n t a t i o n Cl a i ms A l i ot o al s o cont ends t he di s tr i ctcourterr ed i n di s m i s s i ng hi s fr aud and neg l i gen tm i sr epresent at i on cl ai m s. In hi s breach of c on tractand unj ust enr i chmentcl ai m s , A l i ot o al l eged he w as ent i t l ed t o a cont i ngentfee bas ed on the s a le o f b o th H o ile s ’ a n d th e D a v id s o n D e fe n d a n ts ’ s to c k

— a to ta l o f 6 6 6 ,9 6 1 .5 s har es . A l i ot o cl ai m ed H oi l es exec ut ed the Fee A gr eementw i th actual or appar entauthor i t yt o acton behal f of the D avi ds on D efe ndant s and thatt he agr eementcont empl at ed a c ont i ngentfee bas ed on amount s r ecove r ed fr om t he s al e of a ppr oxi m at el y667, 000 s har es . I n the eve nti tw as found H oi l es l acke d author i t yt o acton behal f of the D avi ds on D efe ndant s , A l i ot o pl ed al t ernat i ve th e o ri e s o f

f ra u d a n d n e g lig e n t m is re p re s e n ta tio n . A lio to c la im e d , befor e the part i es ent er ed i nt o the [Fee ] A gr eement , and thr oughout t he co urse of [A l i oto’ s] eng agem ent for over tw o y ears , [H oil es] re p e a ted lyre p re se n ted to [ A lio to ] th a t [ H o iles ] h a d a u th o rityto re p re se n t an d a c t o n b e h a lf o f th e in ter e sts o f

a ll ap p ro x im a tely 667, 000 H oi l es Shar es , i ncl udi ng the s har es of [the D avi ds on D efen d an ts] . A l i ot o al l eged he r eas onabl yr el i ed on thes e i nt ent i onal l y , know i ngl y , or negl i gent l yfal s e r epr es ent at i ons t o hi s detr i m enti n ent er i ng i nt o the Fee A g re e m e n t an d c o n tin u in g to p e rfo rm se rv ice s p u rsu a n t to th e a g re e m e n t. A lio to soug ht bot h actual and pu nit i ve d am ages.T h e d istric t co u rt su b se q u e n tlyc o n c lu d e d th e F e e A g re e m e n t w a s in v a lid 6 u n d e r C o lo ra d o law a n d lim ited A lio to ’s r e c o v e ryto q u a n tu m m e ru it.

- 20- H o ile s file d a m o tio n s e e k in g s u m m a ry ju d g e m e n t o n , in tera lia , A li o to’s fr aud and ne gl i gentm i s r epr es ent at i on cl ai m s . I n a rul i ng fr om the benc h, the di s t r i ctcourtdeni ed H oi l es ’ m ot i on. T he di s tr i ctcourtnot ed ther e w er e “r ampant di s put ed fa ct s on i s s ues of ca us at i on and otheri s s ues , i ncl udi ng the [Fee A g ree m en t] . ” A fter ind icati n g itw as d en y ing H o il es’ m o ti o n fo r sum m ary j udgm ent , t he di s t r i ctcour tneverthel es s pr ocee ded t o di s m i s s A l i ot o’ s fr aud and n e g lig e n t m is re p re s e n ta tio n c la im s w ith p reju d ic e . T h e c o u rt s ta te d , I w i l l al l ow [A l i ot o] t o s eek a cont i ngentfee bas ed on the 667, 000 sh a re s a s o p p o se d to [ H o iles ’] 5 1 1 ,2 1 0 sh a re s, o n th e b a sis th a t it w as r epr es ent ed t o hi m , orther e w as atl eas ts om e fa ctual i s s ues r egar di ng t he s cope of t he ful l num berof s har es thatw er e the s ubj ect o f [ the F ee A g ree m en t] . I w ill to s s th e f

ra u d a n d n e g lig e n t m is re p re s e n ta tio n . . . c laim s. T h is is n o t g o in g to b e a to rt c a se , an d th e re is n o t g o in g to be any puni t i ve damage cl ai m i n thi s cas e. 6 T he di s t r i ctcour tt her efor e expl i ci t l ys t at ed ther e w er e di s put ed i s s ues of m at er i al fac tr egar di ng H oi l es ’ r epr es ent at i ons as t o the numberof s har es cont empl at ed by th e F e e A g re e m e n t. H o ile s d o e s n o t c o n te s t th is d e te rm in a tio n o n a p p e a l. I ns t ead, he ar gues t he di s t r i ctcourt ’ s di s m i s s al of A l i ot o’ s fr aud and ne gl i gent m isr ep rese n tat ion claim s sh o u ld b e a ffirm ed o n o ther g rou n d s. In p arti cu lar, H oi l es as s ert s ( 1) A l i ot o’ s r el i ance on the al l eged mi s r epr es ent at i ons w as u n re a so n a b le a s a m a tter o f law ; (2 ) A lio to d id n o t su ffe r a n yd a m a g e s a s a re su lt- 21-

of the al l eged mi s r epr es ent at i ons ; and ( 3) anyerr ori n di s m i s s i ng the fr aud and n e g lig e n t m isre p re se n tatio n c laim s w a s h a rm les s b e c a u se A lio to ’s q u a n tu m m e ru it r ecove r yencompas s ed s ervi ces r ender ed w i th r es pectt o bot h H oi l es ’ and the D avidson D efen dan t s’ shares . H o il es’ fir st pro p o sed g rou n d fo r affirm ing the d istri ct co u rt ’s deci s i on— t hatA l i ot o’ s r el i ance on the al l eged mi s r epr es ent at i ons w as unr eas onabl e as a mat t erof l aw — i s pr emi s ed on Fas i ng v. LaFond , 944 P. 2d 608 ( C ol o. C t . A pp. 1997) . I n Fas i ng , an att orneyor al l yagr eed t o r epr es enta cl i ent o n a c o n tin g e n t fe e b a s is . Id . at610. T he att or neydr aft ed a c ont i ngentfee a g re e m e n t, b u t th e c lie n t n e v e r s ig n e d it. Id . W hen the under l y i ng cas e s et t l ed, t he cl i entfi l ed s ui t , s eeki ng a dec l ar at i on thatno val i d cont i ngentfee agr eement e x is te d . Id . T he att or neyas s ert ed var i ous count er cl ai m s , i ncl udi ng fr audul ent m is re p re s e n ta tio n . Id . at611. Speci fi cal l y , the att or neyal l eged the cl i enthad in ten tio n a llym isre p re se n ted to h im th a t th e yh a d a v a lid a n d e n fo rc e a b le c o n tin g e n t fe e a g re e m e n t. Id . T he tr i al courtdi s m i s s ed the fr audul ent m is re p re s e n ta tio n c la im , a n d th e a p p e lla te c o u rt a ffir m e d . Id . at611–12. C i t i ng C o lorad o ’s rules g o v ern ing co n ti n g en t fee ag ree m en ts, the a p p ell ate c o u rt obs erved C ol or ado pl ace s “the bur den t o ens ur e the val i di tyof a c ont i ngentfee agr eement. . . s quar el yand s ol el yupon t he att or ney . ” Id .; s ee als o Co l o . R. G overni ng C ont i ngentFees ch. 23. 3. A ccor di ngl y , the courtdet erm i ned i tw as- 22-

u n rea so n ab le as a m att er o f law fo r an att o rne yto relyo n a c li en t’ s re p re s e n ta tio n s re g a rd in g th e v a lid ity o f a c o n tin g e n t fe e a g re e m e n t. Id . a t 6 1 2 . I ti s uncl earw hetherC ol or ado court s w oul d appl ythe r eas oni ng of Fas i ng , w hi ch s peci fi cal l yr el i ed on C ol or ado’ s rul es and pol i ci es governi ng cont i ngent fee agr eement s , t o t he pr es entcas e i n w hi ch C al i forni a l aw governs the val i di tyof t he Fee A gr eement . H oi l es di d notr ai s e Fas i ngb e lo w , an d th e p a rties ’ a p p e llate br i efs do notdi s cus s w hetherC al i forni a’ s rul es and pol i ci es governi ng cont i ngent fee agr eement s s uppor tt he conc l us i on r eac hed i n Fas i ng . B e c a u se th is iss u e is bes taddr es s ed byt he di s t r i ctcourti n the fi r s ti ns t ance aft ers uffi ci entbr i efi ng by t he part i es , w e dec l i ne t o aff i r m the di s m i s s al of A l i ot o’ s fr aud and ne gl i gent m is re p re s e n ta tio n c la im s o n th is g ro u n d . See Maldonado v. C i t y of A l t us , 433 F. 3d 1294, 1302–03 ( 10t h C i r . 2006) ( i ndi cat i ng “w e have di s cr et i on t o aff i r m on anygr ound adequa t el ys uppor t ed bythe r ecor d, s o l ong as the part i es have ha d a fai roppor tuni t yt o addr es s thatgr ound” ( al t er at i on, quot at i on, and ci t at i on o m itte d )) . H oi l es ’ s econd a nd t hi r d pr opos ed gr ounds foraff i r m i ng the di s m i s s al of A l i oto’ s fr aud and neg l i gen tm i sr epresent at i on cl ai m s ar e rel at ed. H oil es ar gu es a pl ai nt i ff c l ai m i ng fr aud and ne gl i gentm i s r epr es ent at i on can onl yr ecove rout - ofpocketexpens es and cons equent i al damages underC ol or ado l aw . H e cont ends A lio to d id n o t in c u r a n yo u t-o f-p o c k e t ex p e n se s b e c a u se H o iles w a s re q u ire d to advanc e orr ei m bur s e al l of A l i ot o’ s out - of- pocketexpens es underthe t erm s ofA l i ot o does notcont es ton appea l t he di s tr i ctcourt ’ s appl i cat i on of 7 C o lo ra d o la w to h is to rt c la im s . See United Int ’lHoldi ngs, Inc. v. Wha rf ( Holdi ngs

) Ltd. , 946 F. Supp. 861, 866 ( D . C ol o. 1996) ( i ndi cat i ng “[c ] hoi ce of law in a g iv e n c a se is n o t m a d e o n c e fo r a ll i ss u e s” ). N e v e rth e les s, w e n o te C a lifo rn ia la w a ls o p e rm its re c o v e ry o f b e n e fit- o f-t h e -b a rg a in d a m a g e s fo r f ra u d . R obi ns on Hel i copt erC o. v. D ana C or p. , 1 0 2 P . 3 d 2 6 8 , 2 7 5 (C al. 2 0 0 4 ).

- 23- t he Fee A gr eement . H oi l es fur t heras s er t s A l i ot o w as compensa t ed forany cons equent i al damages he s uffe r ed bythe quantum m erui taw ar d, w hi ch i ncl uded compensa t i on fors ervi ces r ender ed byA l i ot o w i th r es pectt o the D avi ds on D e fe n d a n ts ’ s h a re s . H oi l es ’ ar gum enti s bas ed on a mi s s t at ementof C ol or ado l aw . A l though C ol or ado onl yperm i t s r ecove r yof out - of- pocketexpens es and cons equent i al d a m a g e s fo r a n e g lig e n t m isre p re se n tatio n c laim , ita llo w s b e n e fit-o f-th e -b a rg a in damages i n an act i on for fr aud. B al l ow v. PH IC O Ins . C o. , 878 P. 2d 672, 677 7 (C o lo . 1 9 9 4 ); see also R es t at ement( Second) of Tort s § 549( 2) ( di s cus s i ng benef i t - of- t he- bar gai n damages as “damages s uffi ci entt o gi ve [the r eci pi entof a f ra u d u le n t m is re p re s e n ta tio n ] t h e b e n e fit o f h is c o n tr a c t w ith th e m a k e r” ). N ei t herH oi l es ’ paym entof A l i ot o’ s out - of- pocketexpens es norA l i ot o’ s quantum m erui tr ecove r yar e s uffi ci entt o gi ve A l i ot o the bene fi tof the bar gai n he a lle g e d ly str u c k in th e F e e A g re e m e n t, i.e ., p a ym e n t o n a c o n tin g e n t fe e b a s is . T h e re fo re , H o iles ’ c laim th a t A lio to d id n o t su ffe r a n yd a m a g e s to su p p o rt h is f ra u d c la im fa ils .A ddi t i onal l y , i f the di s t r i ctcourtdet erm i nes on r emand t hatt he Fee 8 A gr eementi s enfor cea bl e underC al i forni a l aw , t he quantum m erui taw ar d w i l l be vacated. D ue to this po ssi bil i t y , w e cann ot use the q uan tum m erui taw ard as a bas i s forhol di ng anyerr ori n t he di s m i s s al of A l i ot o’ s negl i gent m is re p re s e n ta tio n c la im h a rm le s s .

- 24- H oi l es al s o cannotdemonstr at e thatthe quantum m erui taw ar d r ender s any e rro r in d ism iss in g A lio to ’s n e g lig e n t m isre p re se n tatio n c laim h a rm les s. If A lio to is suc ce ssf

u l on h is ne g li g en t m isr ep rese n tat ion claim , h e c an rec o v er a r eas onabl e hour l yr at e fort he s ervi ces he r ender ed w i th r es pectt o the D avi ds on D e fe n d a n ts ’ s h a re s . See W. C i t i es B r oad. , Inc. v. Schuel l er , 849 P. 2d 44, 49 (C o lo. 19 9 3 ) (en b an c). A lth o u g h the ju ryw as a ll o w ed to co n side r A li o to’s effor t s i n s el l i ng t he D avi ds on D efe ndant s ’ s har es i n cal cul at i ng the quantum m e ru it aw a rd , itw a s n o t re q u ire d to in d ica te th e a m o u n t o f th e a w a rd a ttribu tab le to w o rk p erfo rm ed o n b eh alf o f th e D av idso n D efen d an ts’ sh are s. Itis th ere fo re i m pos s i bl e t o det erm i ne w hetheranypor t i on of the quantum m erui taw ar d w as i nt ended t o compensa t e A l i ot o fors ervi ces r ender ed on beha l f of the D avi ds on D e fe n d a n ts’ s h a re s. B e c a u se th e q u a n tu m m e ru it aw a rd d o e s n o t n e c e ss a rily compensa t e A l i ot o forcons equent i al damages ar i s i ng fr om anynegl i gent m i s r epr es ent at i on, anyerr ori n di s m i s s i ng A l i ot o’ s negl i gentm i s r epr es ent at i on cl ai m w as not harm l ess. 8 I n s um , H oi l es ’ pr opos ed al t ernat i ve gr ounds foraff i r m i ng the di s m i s s al of A lio to ’s f

ra u d a n d n e g lig e n t m is re p re s e n ta tio n c la im s a re u n p e rs u a s iv e .- 25-

M o reo v er, H o il es d o es n o t con testthe d istri ct co u rt ’s de term ination that there are di s put ed i s s ues of m at er i al fac tr egar di ng H oi l es ’ r epr es ent at i ons as t o the number of s har es cont empl at ed byt he Fee A gr eement . W e ther efor e ac ceptthe di s tr i ct cour t ’ s det erm i nat i on t hatan i s s ue of mat er i al fac texi s t s . B eca us e w e ca n di s cern no ot herj us t i fi cat i on fordi s m i s s i ng A l i ot o’ s fr aud and ne gl i gent m isr ep rese n tat ion claim s fro m the re co rd b efo re u s, w e re v erse the d istri ct co u rt ’s d is m is s a l o f

th o s e c la im s . C . E vi dent i ary R ul i ngs A li o to’s rem ainin g claim s o f e rror co n ce rn th e juryinstruction s o n A li o to’s unj us tenr i chmentcl ai m . A s an i ni t i al m at t er , A l i ot o ar gues hi s unj us tenr i chment cl ai m i s governed byC al i forni a l aw . H e neve r thel es s cl ai m s t he j ur yi ns truct i ons w e re e rro n e o u s u n d e r b o th C o lo ra d o a n d C a lifo rn ia la w . In p a rticu lar , A lio to chal l enges t he di s t r i ctcour t ’ s i ns truct i on thatt he j urycoul d notcons i dert he cont i ngentfee per cent age c ont ai ned i n the Fee A gr eementoranyother per cent age, orw hetherA l i ot o’ s fee w as fi xed orcont i ngent , i n cal cul at i ng a rea so n ab le qu an tum m eru itaw ard . A d d it ion all y , A li o to claim s the d istri ct co u rt erred in instruc ti n g the ju rythat it s q u an tum m eru itaw ard m u st be b ase d o n w o rk A l i ot o per s onal l yper form ed and c oul d notacc ountforw or k per form ed by A lio to ’s c o -c o u n se l. R ecove r yi n quantum m erui ti s perm i t t ed onl yi n the abs ence of a va l i d, e x p re s s c o n tr a c t. L e m o g e E lec . v. Sa n Ma teo C o u n ty , 2 9 7 P .2 d 6 3 8 , 6 4 1 (C a l.W e a lso d e c lin e to a d d re ss w h e th e r C o lo ra d o o r C a lifo rn ia la w a p p lies to 9 A l i ot o’ s quantum m erui tcl ai m beca us e the part i es have nots uffi ci ent l ybr i efe d th e iss u e o n a p p a l. If n e c e ss a ryo n re m a n d , the d istric t co u rt sh o u ld a d d re ss th is i s s ue i n l i ghtof ourchoi ce of l aw det erm i nat i on r egar di ng the val i di tyof the Fee A g re e m e n t. See s upr a p p . 7

– 1 9 .

- 26- 1 9 5 6 ) (e n b a n c ); D udding v. Nort on Fri ckey & A ssocs. , 11 P. 3d 441, 444 ( C ol o. 2000) ( en banc ) . T her efor e, t he j ur ytr i al dur i ng w hi ch the cha l l enged i ns t ruct i ons w er e gi ven w as nece s s aryonl ybeca us e the di s tr i ctcour tdet erm i ned t h e F e e Ag r e e me n twa s u n e n fo r c e a b l e . Be c a u s e , a s s e to u tmo r e f u l l ya b o v e , we re v e rse th e d istric t co u rt’s d e ter m in a tio n th a t th e F e e A g re e m e n t is u n e n fo rc e a b le and r emand fora det erm i nat i on of w hetherthe agr eementi s val i d under C a lifo rn ia la w , w e n e e d n o t ad d re ss th e p ro p rie tyo f th e ju ryin stru c tio n s a t th is t i m e. 9 I V . C oncl usi on Fort he for egoi ng r eas ons , w e R EV ER SE t he di s tr i ctcourt ’ s det erm i nat i on t hatC ol or ado l aw governs t he val i di tyof the Fee A gr eementand the di s tr i ct cour t ’ s di s m i s s al of A l i ot o’ s br eac h of contr actcl ai m . W e RE M AND w ith in stru c tio n s fo r th e d istric t co u rt to d e ter m in e w h e th e r th e F e e A g re e m e n t is enfor cea bl e underC al i forni a l aw . W e al s o R EV ER SE the d istri ct co u rt ’s dis m i ssal of A l i oto’ s fr aud and neg l i gen tm i sr epresent at i on cl ai m s. W e exp res s n o o p inion o n A li o to’s claim s o f e rror w ith resp ec t t o the q u an tum m eru itjury i nst ruct i on s.