Court Opinion

ID: 5157999
Source: CourtListenerOpinion
Date Created: 2022-01-02 02:27:26.006783+00
Date Added: 2024-06-11T08:25:28.775887
License: Public Domain

Justice EID,
concurring in the judgment.
{15 I agree with the majority that Fisher's fraud and contractual good faith and fair dealing claims fail, but reach that conclusion on grounds other than those cited by the majority. I therefore concur only in the result it reaches.
{16 The majority concludes that it need not reach the question of whether CASOF bars the extrinsic evidence offered by Fisher to support his claims 1 because the contract at issue here unambiguously adopts a 86 percent default interest rate, and therefore the extrinsic evidence would be barred under general principles of contract interpretation. Maj. op. 111. The majority does not cite authority in this regard, but presumably it is relying on the general notion that extrinsic evidence is not admissible to contradiet unambiguous contractual terms. But fraud is an exception to that rule. Seq, eg., Tr. Co. v. Bresnahan, 119 Colo. 311, 317, 203 P.2d 499, 502 (1949) ("[The general rule is that parol evidence to establish fraud between the parties to the instrument is admissible as an exception to the general rule against the admission of parol evidence to vary a written contract."); Brody v. Bock, 897 P.2d 769, 775 (Colo.1995) (observing that the "succession statute, like the statute of frauds, must not be allowed to shield the commission of fraud"). Thus, the general rule upon which the majority relies would not apply here even if, as the majority concludes, the contract in this case were unambiguous. But Fisher's claims fail for other reasons.
17 As the trial court found, the primary "essence" of Fisher's fraud claim is that Community Banks fraudulently and "surreptitiously" inserted the 86 percent default interest rate into the Second and Third Extensions without his knowledge. Before this Court, however, Fisher concedes that the evidence shows that the 86 percent default rate was mistakenly inserted into the agreements by a software error. Therefore, the insertion of the software error amounted to a scrivener's error or mutual mistake. But a claim of fraud requires an intentional and knowing misrepresentation or omission, Morrison v. Goodspeed, 100 Colo. 470, 477-78, 68 P.2d 458, 462 (1987), and, by definition, a *939scerivener's error or mutual mistake would not meet that requirement. This allegation of fraud therefore simply fails on the merits.2
118 Fisher also alleges that Community Banks acted fraudulently when it told him in March 2004 that it would not foreclose on the loan, thereby inducing him to abandon his efforts to find alternate financing. Fisher concedes in his briefing to this Court, however, that CASOF bars such a claim. And indeed it does. As we made clear in Schoen v. Morris CASOF bars any attempt to "maintain ... a claim relating to a credit agreement" that is not signed and in writing. 15 P.3d 1094, 1097 (Colo.2000); § 88-10-124(2), C.R.S. (2012). In this instance, Fisher is attempting to enforce an oral promise not to foreclose upon the loan. That promise would amount to an attempt to enforce an unwritten credit agreement barred by CA-SOF. See Premier Form Credit v. W-Cattle, LLC, 155 P.3d 504, 515-16 (Colo.App.2006).
T19 Fisher also alleges that Community Banks falsely represented to a third party-Western, the loan purchaser who eventually foreclosed upon the note-that the 86 percent default interest rate was a "heavily negotiated" term. As a result of this fraudulent misrepresentation, the theory continues, Fisher was forced to enter into a settlement agreement with Western at an elevated 14 percent rate, instead of the six percent rate he believes should control. The fatal flaw in this theory of liability, however, is that alleged fraudulent statement was made to Western, not to Fisher, inducing Western to act to its detriment. See Morrison, 100 Colo. at 478, 68 P.2d at 462 (explaining that elements of fraud require plaintiff to have acted upon the misrepresentation to his detriment). In sum, this alleged fraud claim would belong to Western, not Fisher. This theory of fraud therefore fails on the merits.
T 20 Fisher offers two final, and interrelated, fraud theories According to Fisher, Community Banks should have disclosed to him that it was selling the loan to a third party using a 36 percent default interest rate. Fisher points to no provision of the contract that would have required Community Banks to inform Fisher that it was selling his loan to a third party or to disclose the terms of the sale. And when Western began foreclosure proceedings against Fisher, he argued that the 86 percent was void, negotiating a lower rate in a settlement with Western. Thus even assuming that Community Banks had an obligation to inform Fisher that it was selling the loan to a third party at 36 percent, he fails to identify the action (or inaction) that the alleged fraudulent omission induced on his part. See, eg. Kopeikin v. Merchs. Mortg. & Trust Corp., 679 P.2d 599, 602 (Colo.1984) (noting that fraudulent omission must induce action or inaction on plaintiffs part).
T 21 Finally, Fisher argues that Community Banks should have informed him that the loan documents contained a 36 percent default interest rate. But the rate was contained in the loan documents, and Fisher does not argue otherwise. Even assuming there was an ambiguity created by the "all terms remain the same" language earlier in the documents, there is no basis for placing a duty on Community Banks to inform Fisher of language that the loan documents already contained. On this point, I agree with the majority that Fisher had an obligation to read the documents he had signed. Maj. op. T 11.
T 22 Fisher implies that, even if his allegations are not actionable under a fraud theory, Community Banks's "dishonest and commercially unreasonable conduct" would be covered by his claim for contractual good faith and fair dealing. But Fisher misunderstands the seope of contractual good faith and fair dealing. Indeed, in the contractual context, the implied covenant is quite narrow, and applies "only when the manner of performance under a specific contract term allows for discretion on the part of either party." Amoco Oil Co. v. Ervin, 908 P.2d 493, 498 (Colo.1995). It is therefore not the general *940prohibition on commercially unreasonable conduct that Fisher suggests.3 Instead, in this case, as the trial court correctly held, the only discretionary term in the contract was the 36 percent default interest rate, which allowed Community Banks to charge up to 36 percent. This claim proceeded to the jury, which found in favor of Community Banks. But even if Fisher were permitted to introduce evidence that the 36 percent rate was a mistake and therefore unenforceable, the fact is that Community Banks never invoked the 36 percent against Fisher; indeed, as Fisher concedes in his briefing to this Court, Community Banks at all times, including in writing, negotiated with him based upon the six percent interest rate contained in the first change agreement.
23 In the end, I agree with the majority that we should largely avoid the question of whether CASOF bars Fisher from introducing extrinsic evidence in this case because, for the most part, the parties do not focus on what the extrinsic evidence actually is in this case. Instead, they argue abstractly that the evidence is either all in (according to Fisher) or all out (according to Community Banks). Given this posture, I would find that, for various reasons, Fisher's fraud and contractual good faith and fair dealing claims fail. Accordingly, I respectfully concur only in the judgment reached by the majority.

. - Although the majority does not specify which of Fisher's claims are before us, the court of appeals stated that only Fisher's contractual good faith and fair dealing and fraud claims are at issue on appeal. Fisker v. Community Banks of Colo., Inc., - P.3d , -- (Colo.App.2010) (selected for official publication). 1 therefore proceed on that assumption.

. The usual remedy for mutual mistake or scrivener's error is reformation of the contract. See Maryland Cas. Co. v. Buckeye Gas Products Co., Inc., 797 P.2d 11, 13 (Colo.1990). That remedy is not available in this case, as Fisher's counsel conceded at oral argument, because the loan was sold to a third party, Western, who in turn foreclosed upon it.

. Fisher's allegation that Community Banks acted in a commercially unreasonable manner in seeking to foreclose both collateral properties at the same time (the Stanford home and the Telluride vacation property) would not be actionable under a theory of good faith and fair dealing because the foreclosure would not be based on a discretionary term in the contract.