Court Opinion

ID: 4651932
Source: CourtListenerOpinion
Date Created: 2021-01-15 17:02:05.098021+00
Date Added: 2024-06-11T08:01:43.685799
License: Public Domain

The summaries of the Colorado Court of Appeals published opinions
  constitute no part of the opinion of the division but have been prepared by
  the division for the convenience of the reader. The summaries may not be
    cited or relied upon as they are not the official language of the division.
  Any discrepancy between the language in the summary and in the opinion
           should be resolved in favor of the language in the opinion.

                                                                  SUMMARY
                                                            January 14, 2021

                                 2021COA2

No. 19CA0438, McWhinney Centerra v. Poag & McEwen —
Torts — Economic Loss Doctrine — Intentional Torts —
Fraudulent Concealment — Intentional Interference with
Contractual Obligations — Intentional Inducement of Breach of
Contract

     A division of the court of appeals considers whether the

district court erroneously applied the economic loss rule in

dismissing common law intentional tort claims. In light of the

Colorado Supreme Court’s opinion in Bermel v. BlueRadios, Inc.,

2019 CO 31, the division concludes that in most instances the

economic loss rule will not bar intentional tort claims.

     The division also considers whether a breach of contract

occurred, applying Delaware law. The division concludes that a

breach of contract did occur in this case.
COLORADO COURT OF APPEALS                                          2021COA2

Court of Appeals No. 19CA0438
Larimer County District Court No. 11CV1104
Honorable Thomas R. French, Judge

McWhinney Centerra Lifestyle Center LLC, a Colorado limited liability
company,

Plaintiff-Appellee and Cross-Appellant,

v.

Poag & McEwen Lifestyle Centers-Centerra LLC, a Delaware limited liability
company,

Defendant-Appellant and Cross-Appellee.

                JUDGMENT AFFIRMED, ORDER REVERSED,
                 AND CASE REMANDED WITH DIRECTIONS

                                  Division II
                          Opinion by JUDGE ROMÁN
                          Fox and Gomez, JJ., concur

                         Announced January 14, 2021

Brownstein Hyatt Farber Schreck LLP, Jonathan G. Pray, Denver, Colorado;
Hanson Bridget LLP, Gary A. Watt, Adam W. Hofmann, Anthony J. Dutra, San
Francisco, California, for Plaintiff-Appellee and Cross-Appellant

Peters Schulte Odil & Wallshein LLC, Jennifer Lynn Peters, Timothy R. Odil,
Greeley, Colorado; Senn Visciano Canges P.C., Frank W. Visciano, Charles E.
Fuller, Denver, Colorado, for Defendant-Appellant and Cross-Appellee
¶1    Poag & McEwen Lifestyle Centers-Centerra LLC (P&M) appeals

 the district court’s judgment in favor of McWhinney Centerra

 Lifestyle Center LLC (MCLC) on MCLC’s contract claim following a

 trial to the court. MCLC cross-appeals the district court’s order

 dismissing its tort claims under the economic loss rule. Applying

 Delaware law pursuant to the parties’ choice of law agreement, we

 affirm the district court’s judgment and award of damages on the

 breach of contract claim. Applying Colorado law to the tort claims,

 we affirm the district court’s order dismissing MCLC’s civil

 conspiracy claim. We reverse, however, the district court’s order

 dismissing MCLC’s tort claims of fraudulent concealment,

 intentional interference with contractual obligations, and

 intentional inducement of breach of contract and remand for

 further proceedings. In reinstating these intentional tort claims, we

 expressly hold that the economic loss rule generally does not bar

 these types of common law intentional tort claims and, thus, we

 decline to follow prior divisions that have held otherwise.

                           I.   Background

¶2    This action arises from a failed joint venture to build and

 operate The Promenade Shops at Centerra (the Shops), an upscale

                                   1
 shopping center in Loveland. The parties have been in contentious

 litigation since 2011. Consequently, this case has a complex

 factual and procedural history.

¶3    In 2004, McWhinney Holding Company, LLLP (McWhinney)

 and Poag and McEwen Lifestyle Centers, LLC (PMLC), through their

 subsidiaries MCLC and P&M, respectively, formed Centerra LLC to

 acquire, develop, own, and operate the Shops. MCLC provided the

 capital, land, and an established public-private partnership with

 city and county entities for infrastructure financing. P&M served as

 the managing member of the joint venture. An operating agreement

 (the Agreement) was created to govern Centerra LLC. MCLC and

 P&M signed the Agreement, and McWhinney and PMLC signed as

 guarantors of certain provisions.

¶4    The Agreement required P&M to obtain a construction loan for

 Centerra LLC and later a permanent loan before the maturity of the

 construction loan. In 2005, P&M obtained a construction loan for

 $116 million in accordance with the terms of the Agreement, and

 the Shops opened in October 2005. In 2006, P&M purchased a

 $155 million forward swap on behalf of Centerra LLC without

 obtaining a permanent loan. The forward swap in this case was an

                                     2
 agreement between Centerra LLC and a bank to exchange interest

 in February 2008 at a rate of 5.4125 percent.

¶5    In 2007, P&M entered into a $40 million mezzanine loan

 agreement.1 The district court found that P&M used the $40

 million mezzanine loan for personal interests — namely, for Dan

 and Josh Poag to buy out their co-founder, Terry McEwen — and

 that P&M intentionally concealed the buyout and its intention to

 use these self-dealings to fund it.2 The court further found that

 MCLC was given limited and misleading or no information regarding

 these dealings.

¶6    The mezzanine loan agreement pledged fifty percent of P&M’s

 ownership interest in Centerra LLC to a different subsidiary of

 1 Generally, a mezzanine loan is a type of financing that pledges
 equity in a company to a lender in exchange for a loan. The plan
 was that P&M would obtain a mezzanine loan secured by its
 ownership interests in Centerra LLC, and all of the proceeds from a
 future permanent loan would go toward paying the mezzanine loan.
 2 The district court found that this agreement gave lenders the

 impression that P&M would find $155 million in permanent
 financing before the swap, as that would be necessary to pay the
 interest, but that P&M was in fact not close to finding a permanent
 loan in this amount. At trial, an expert for MCLC testified that “in
 [his] thirty years in the banking and financing industry he had
 never seen anyone purchase a forward swap without either having a
 loan already in place or close to closing.”

                                   3
 PMLC, Centerra & Dos Lagos Venture, LLC, who likewise pledged

 fifty percent of its ownership interest in Centerra LLC to the

 mezzanine loan lender — I&G Promenade Shops Lender, LLC,

 which was a subsidiary of the bank.

¶7    The district court further found that because of the impending

 cost of the forward swap and P&M’s desire to pay off the mezzanine

 loan, P&M did not seek a permanent loan below $155 million,

 despite only needing $116 million to refinance the construction

 loan. Moreover, the court found P&M did not seek permanent

 financing after 2007. Centerra LLC was forced to pay $7.5 million

 to settle the forward swap, and P&M never obtained permanent

 financing.

¶8    In mid-2008, the real estate market collapsed and Centerra

 LLC defaulted on its construction loan. Ultimately, the Shops were

 foreclosed by the lender and sold in foreclosure to a third party.

¶9    In 2011, after the joint venture failed, MCLC sued P&M,

 asserting a breach of contract claim based on the Agreement and

                                   4
  seven tort claims.3 The district court dismissed all seven tort

  claims under the economic loss rule.4 In 2014, on interlocutory

  appeal, a division of this court affirmed the dismissal of four of

  those claims based on the economic loss rule, and reinstated the

  other three claims. See McWhinney Holding Co., LLLP v. Poag &

  McEwen Lifestyle Ctrs.-Centerra, LLC, (Colo. App. No. 13CA0850,

  July 10, 2014) (not published pursuant to C.A.R. 35(f)).5

¶ 10   In 2017, and in light of the supreme court’s opinion in Van

  Rees v. Unleaded Software, Inc., 2016 CO 51, MCLC moved for

  3 MCLC, McWhinney, Centerra LLC, SMP4 Investments, Inc., and
  Centerra Retail Sales Fee corporations are listed as plaintiffs on the
  complaint. P&M, PMLC, and Poag Lifestyle Centers, LLC are listed
  as defendants. In this opinion we refer to plaintiffs collectively as
  MCLC and defendants collectively as P&M.
  4 The dismissed tort claims were fraudulent concealment, breach of

  fiduciary duty, intentional interference with contractual obligations,
  intentional inducement of breach of contract, two fraudulent
  inducement claims, and civil conspiracy.
  5 The four dismissed claims the division affirmed were fraudulent

  concealment, breach of fiduciary duty, intentional interference with
  contractual obligations, and intentional inducement of breach of
  contract. The division reinstated the two pre-contractual
  fraudulent inducement claims. It also reinstated the civil
  conspiracy claim specifically against Poag Lifestyle Centers, LLC
  while affirming the dismissal of the civil conspiracy claim against
  P&M and PMLC.

                                     5
  reconsideration of the dismissal order as to three of its tort claims.

  The district court denied the motion.

¶ 11      Then, as relevant here, after a thirteen-day bench trial, the

  district court concluded P&M breached both its fiduciary duties and

  contractual obligations under the Agreement and awarded

  $42,006,032.50 to MCLC in damages plus interest.

                                II.   Analysis

¶ 12      On appeal, P&M contends the district court erred when it

  entered judgment in favor of MCLC on MCLC’s breach of contract

  claim. It also challenges the damages awarded based on the breach

  of contract. MCLC contends on cross-appeal that the district court

  erred when it dismissed MCLC’s fraudulent concealment,

  intentional interference with contractual duties, intentional

  inducement of breach of contract, and civil conspiracy tort claims

  under the economic loss rule. We first discuss P&M’s breach of

  contract claims on appeal infra Part II.A, and then turn to MCLC’s

  claim on cross-appeal regarding the economic loss rule, infra Part

  II.B.

                                       6
                           A.    P&M’s Claims

¶ 13   P&M contends the district court erred when it found P&M

  breached the Agreement because the court improperly (1) imposed

  fiduciary duties on P&M; (2) found that P&M breached its

  obligations under the Agreement; and (3) calculated damages.

  Applying Delaware law, as the Agreement requires, we examine

  these contentions.

              1.   Standard of Review and Applicable Law

¶ 14   Parties may contract for the application of a state’s law to

  determine particular issues. Hansen v. GAB Bus. Servs., Inc., 876

  P.2d 112, 113 (Colo. App. 1994). Here, the parties agreed that

  Delaware law would apply. Choice of law is an issue we review de

  novo. Paratransit Risk Retention Grp. Ins. Co. v. Kamins, 160 P.3d

  307, 314 (Colo. App. 2007). “[W]e will apply the law chosen by the

  parties [in their contract] unless there is no reasonable basis for

  their choice or unless applying the chosen state’s law would be

  contrary to the fundamental policy of the state whose law would

  otherwise govern.” Target Corp. v. Prestige Maint. USA, Ltd., 2013

  COA 12, ¶ 14. We will thus apply Delaware law to all substantive

                                     7
  legal matters based in contract law in this case, including the relief

  granted. See id. at ¶¶ 15-16, 18.

¶ 15   However, we apply Colorado law to “all matters of judicial

  administration, including . . . the rules prescribing how litigation

  shall be conducted” and the applicable standard of review. Id. at

  ¶¶ 15, 19. And, we review a judgment following a bench trial as a

  mixed question of fact and law. Premier Members Fed. Credit Union

  v. Block, 2013 COA 128, ¶ 26. “[W]e defer to the trial court’s

  credibility determinations and will disturb its findings of fact only if

  they are clearly erroneous and are not supported by the record.”

  Amos v. Aspen Alps 123, LLC, 2012 CO 46, ¶ 25. We review de novo

  the court’s conclusions of law, Block, ¶ 27, including its conclusions

  on questions of contract interpretation, Gagne v. Gagne, 2014 COA

  127, ¶ 50.

¶ 16   With regard to the substantive contract law to be applied in

  this case, under Delaware law, a party is excused from performance

  of its contractual obligations if the other party commits a material

  breach of the contract. BioLife Sols., Inc. v. Endocare, Inc., 838 A.2d

  268, 278 (Del. Ch. 2003). The elements of a breach of contract

  claim are (1) a contractual obligation; (2) a breach of that obligation

                                      8
  by the defendants; and (3) resulting damages to the plaintiff.

  Kuroda v. SPJS Holdings, L.L.C., 971 A.2d 872, 883 (Del. Ch. 2009).

            2.    Did P&M Owe Fiduciary Duties to MCLC?

¶ 17   We start our analysis by deciding whether P&M owed fiduciary

  duties to MCLC under the Agreement. We conclude that it did.

¶ 18   Under Delaware law, the drafters of an LLC may expand,

  restrict, or eliminate a member or manager’s duties, including

  fiduciary duties. Del. Code Ann. tit. 6, § 18-1101(c) (West 2020);

  Feeley v. NHAOCG, LLC, 62 A.3d 649, 661 (Del. Ch. 2012). Unless

  the LLC agreement’s terms include express language to eliminate

  those duties, Delaware LLC managers owe traditional fiduciary

  duties of loyalty and care to the LLC and its managers. Feeley, 62

  A.3d at 660. In other words, “[d]rafters of an LLC agreement ‘must

  make their intent to eliminate fiduciary duties plain and

  unambiguous.’” Id. at 664 (citation omitted).

¶ 19   P&M insists that the drafting of the Agreement before us

  intended to eliminate its fiduciary duties. We conclude, however,

  that no such intention is plainly and unambiguously revealed. To

  the contrary, section 6 of the Agreement contemplates P&M’s duties

  as the manager and a member, providing, in relevant part, that

                                    9
 P&M “will owe a duty in carrying out its duties and

  responsibilities under this Agreement of good faith, loyalty,

  and fair dealing to” Centerra LLC;

 P&M “shall manage or cause the affairs of the Company to be

  managed in a prudent and businesslike manner” but “shall

  not be restricted in any manner from participating in any

  other business activities, notwithstanding the fact that the

  same might be competitive with the business of [Centerra

  LLC]”;

 “[i]n carrying out its powers and duties hereunder, [P&M]

  shall exercise its best efforts, [and] shall owe a duty of good

  faith and fair dealing to [Centerra LLC] and to [MCLC]”; and

 P&M “shall not be liable to [Centerra LLC] or [MCLC] for any

  actions taken on behalf of [Centerra LLC] in good faith and

  reasonably believed to be in the best interest of [Centerra LLC]

  or for errors of judgment made in good faith,” but shall be

  liable to Centerra LLC and MCLC for “actions and omissions

  involving actual fraud, gross negligence, or willful misconduct

  or from which such Member derived improper personal

  benefit.”

                              10
¶ 20   The district court found that these provisions, read together

  with the contract as a whole and in conjunction with Delaware law,

  meant P&M owed fiduciary duties of care and loyalty to Centerra

  LLC and MCLC. Based on our reading of Feeley, the district court’s

  conclusions are supported by the record and Delaware law.

¶ 21   Not surprisingly then, we reject P&M’s assertion that the

  Agreement expressly eliminates its fiduciary duties to Centerra LLC

  and MCLC. Simply put, we discern nothing in the contract that

  conveys P&M’s “plain and unambiguous” intent to eliminate

  fiduciary duties to MCLC. Id. Instead, sections 6.1, 6.4, and 6.6 of

  the Agreement provide that P&M owed fiduciary duties of care and

  loyalty to Centerra LLC and MCLC. Thus, under Delaware law, the

  Agreement itself provides for the fiduciary duties P&M owed to

  MCLC.

¶ 22   Moreover, section 6.6(a) of the Agreement provides that P&M

  shall be liable for actions or omissions involving “actual fraud, gross

  negligence, or willful misconduct or from which [P&M] derived

  improper personal benefit.” Once again applying the logic in Feeley,

  the Agreement here “assumes that those obligations already exist”

  through fiduciary duties. Id. at 665.

                                    11
¶ 23   We also disagree with P&M that the provision in section 6.4(a)

  of the Agreement that P&M “shall not be restricted in any manner

  from participating in any other business activities, notwithstanding

  the fact that the same may be competitive with the business of the

  company” eliminated or significantly lessened its fiduciary duty of

  loyalty to MCLC. The district court correctly concluded that this

  language modified P&M’s duty of loyalty but did not displace or

  eliminate it. Indeed, section 6.1 of the Agreement expressly

  provides that P&M owed a duty of loyalty to Centerra LLC.

  Additionally, section 6.6(a) provides relief to MCLC for “actions or

  omissions involving willful misconduct or from which [P&M] derived

  improper personal benefit”; this liability stems from an assumed

  duty of loyalty. See Feeley, 62 A.3d at 664-65; see also Kuhn

  Constr., Inc. v. Diamond State Port Corp., 990 A.2d 393, 396-97 (Del.

  2010) (noting that contracts must be construed as a whole).

¶ 24   We therefore agree with the district court that P&M owed the

  fiduciary duties of care and loyalty to MCLC under the Agreement.

  We next turn to whether the district court’s findings of breach of

  contract were proper.

                                    12
           3.   Obligations and Duties Under the Agreement

¶ 25   P&M next asserts the district court erred when it concluded

  that P&M breached fiduciary duties of care and loyalty to MCLC.

  Again, we disagree.

¶ 26   The district court found that P&M breached the Agreement on

  multiple occasions, including when it (1) purchased the forward

  swap on behalf of Centerra LLC; (2) entered into the $40 million

  mezzanine loan; and (3) failed to secure permanent financing. We

  address each of these findings in turn.

                    a.   $155 Million Forward Swap

¶ 27   The district court found that P&M breached its obligations

  under the Agreement when it purchased the $155 million forward

  swap on behalf of Centerra LLC. In so finding, P&M contends the

  district court contravened the business judgment rule, improperly

  substituting its own judgment for P&M’s.

¶ 28   The business judgment rule in Delaware is based on the

  presumption that, in making a decision, the manager of a company

  “acted on an informed basis, in good faith, and in the honest belief

  that the action taken was in the best interests of the company.” In

  re Walt Disney Co. Derivative Litig., 906 A.2d 27, 52 (Del. 2006)

                                    13
  (quoting Aronson v. Lewis, 473 A.2d 805, 812 (Del. 1984)).

  However, this presumption can be rebutted if a plaintiff

  demonstrates that the manager breached the fiduciary duties of

  loyalty or care or acted in bad faith. See id.

¶ 29   The duty of loyalty requires that the best interest of the

  company and its members take precedence over any of the

  manager’s individual interests. Cede & Co. v. Technicolor, Inc., 634

  A.2d 345, 361 (Del. 1993). As discussed, while the parties in this

  case modified the duty of loyalty to allow P&M to participate in

  “other business activities,” the duty of loyalty was not eliminated.

  Rather, the duty of loyalty here required P&M to affirmatively

  protect Centerra LLC’s interests. Id. The duty of loyalty carries the

  subsidiary requirement that the manager act in good faith. In re

  Rural/Metro Corp. Stockholders Litig., 102 A.3d 205, 252-53 (Del.

  Ch. 2014).

¶ 30   Additionally, the duty of care requires that a manager act on

  an “informed basis.” In re Walt Disney Co. Derivative Litig., 906

  A.2d at 52; In re Rural/Metro Corp. Stockholders Litig., 102 A.3d at

  252-53. In section 6.4 of the Agreement, the parties in this case

                                    14
  expanded this obligation, requiring P&M to act in a “prudent and

  businesslike manner.”

¶ 31   We are unpersuaded by P&M’s contention that the corporate

  fiduciary duties imposed in the duty cases cited here or by the

  district court are in any way distinct from the “traditional fiduciary

  duties” imposed on managers of LLCs. See Feeley, 62 A.3d at 660

  & n.1.

¶ 32   The district court found that P&M breached the Agreement

  when it purchased the forward swap on behalf of Centerra LLC but

  it was not a material breach of the Agreement because it did not “go

  to the root or essence of the [A]greement.” However, the district

  court found that P&M was nonetheless liable to MCLC because

  P&M derived an improper personal benefit from the swap because

  P&M used it “as a tool to obtain the $40 million mezzanine loan.”6

  6 We disagree with P&M’s contention that the district court’s
  determination was illogical and inconsistent where the court found
  that P&M’s breach was not material, but was grossly negligent and
  constituted willful misconduct. The district court’s findings that
  the purchase of the swap was not a material breach means that
  MCLC was not excused from performance at the time P&M
  purchased the forward swap and, thus, could not have recovered
  expectation damages for breach of contract. However, under
  section 6.6(a) of the Agreement, MCLC is entitled to indemnification

                                    15
  In this regard, the district court found the business judgment rule

  did not apply because MCLC demonstrated that P&M’s decision to

  enter the forward swap was a breach of P&M’s fiduciary duties of

  loyalty and care.

¶ 33   In support of its findings, the court found the swap breached

  P&M’s duties of loyalty and care because the forward swap was for

  the individual benefit of P&M, Dan Poag, and Josh Poag, and for

  PMLC, as it was “an effort by Josh Poag to convince private

  investors that he had or was close to permanent financing for $155

  million so he could obtain $40 million to purchase McEwen’s share

  of the Poag and McEwen businesses.”

¶ 34   The district court further found that P&M breached its duty of

  care to act in a “prudent and businesslike manner” in its

  management of Centerra LLC. The court found that evidence

  presented at trial — including expert testimony that purchasing the

  swap was a “cart before the horse . . . kind of situation” that was

  for acts of gross negligence or willful misconduct, or acts from
  which P&M derived an improper personal benefit — regardless of
  whether they constituted material breaches or not. Thus, MCLC
  was entitled to damages under this provision of the Agreement, as
  discussed in Part II.A.4.a, infra.

                                    16
  “very risky” and “made no sense” and Josh Poag’s own testimony

  that forward swaps generally were “aggressive” and “unnecessarily

  risky” — established that P&M breached its duty of care.

¶ 35   Contrary to P&M’s contentions, the district court did not

  ignore Delaware’s business judgment rule. It made detailed

  findings, supported by the record, to determine that the business

  judgment rule was rebutted because P&M breached its duties of

  loyalty and care to MCLC. Accordingly, we discern no error in the

  district court’s determination that the business judgment rule was

  rebutted as to the forward swap.

                         b.   Mezzanine Loan

¶ 36   P&M also contends that the district court erred by finding

  P&M materially breached the Agreement when it obtained the

  mezzanine loan. According to P&M, the district court erred by

  finding that P&M owed MCLC traditional fiduciary duties of care

  and loyalty. P&M also contends that the court imposed a more

  onerous disclosure burden than Delaware law requires. But we

  have already concluded that the district court properly found that

  P&M owed MCLC traditional fiduciary duties of care and loyalty.

                                     17
¶ 37   As relevant here, the district court found that “P&M’s entry

  into, and concealment of, the [m]ezzanine [l]oan constituted

  material breaches of its fiduciary duties to MCLC and Centerra

  LLC.” In support of its findings, the district court found that the

  loan improperly gave the lending bank “significant authority over

  the management of Centerra LLC and the Shops” without MCLC’s

  consent. The court further found that this breached P&M’s duties

  of loyalty and good faith, as the decision was “solely for the benefit

  of [P&M] and was not in the best interest of Centerra LLC.” These

  findings are supported by the record.

¶ 38   The district court also found that P&M purposefully concealed

  the purpose of the loan — that is, P&M only revealed to MCLC that

  it was a “corporate financing.” The court found that the evidence

  and testimony was “unequivocal” that P&M wanted to keep the fact

  that the loan was to buy out McEwen’s interest secret from MCLC.

  Thus, the district court concluded that P&M’s conduct was a

  violation of the duties of fair dealing and candor and constituted “at

  least willful misconduct” and “may have amounted to fraud.” In

  addition, the district court found that P&M’s concealment of

  significant details, including the effect of the loan on Centerra LLC,

                                    18
  and its misrepresentations of material facts while obtaining MCLC’s

  agreement for the loan constituted another breach of fair dealing

  and candor, that this was willful misconduct, and that P&M derived

  an improper personal benefit from its actions. These findings, too,

  are supported by the record.

¶ 39      Finally, the district court found with record support that the

  mezzanine loan had a negative effect on P&M’s ability to obtain

  permanent financing pursuant to the Agreement, because all

  permanent financing offers P&M received after 2007 were

  insufficient to pay off both the mezzanine loan and the construction

  loan.

¶ 40      We conclude, moreover, that P&M had a duty to disclose

  material facts related to the mezzanine loan to MCLC. In Delaware,

  LLC managers are not required to disclose every decision or reason

  for their decisions, but they must give “a picture that is materially

  accurate, and in which the imperfections and inconsistencies are

  not airbrushed away.” Appel v. Berkman, 180 A.3d 1055, 1061-62

  (Del. 2018). This did not happen here.

¶ 41      Section 6.6 of the Agreement explicitly provides that P&M

  owed a duty of fair dealing to MCLC, which necessarily imposed a

                                      19
  duty of candor — sometimes referred to as a duty of disclosure. See

  Weinberger v. UOP, Inc., 457 A.2d 701, 711 (Del. 1983). The district

  court made detailed findings — all supported by the record — that

  P&M purposefully withheld, concealed, and misrepresented

  material facts about the loan and its effect on Centerra LLC’s

  operations in order to get MCLC’s consent. Thus, we conclude that

  the district court’s findings that P&M failed to give MCLC a

  complete or accurate picture of how the loan affected the operation

  of Centerra LLC under the Agreement were supported by the record.

  We thus affirm the district court’s finding that P&M breached its

  duty of fair dealing to MCLC in obtaining the mezzanine loan.

       c.      Failure to Obtain or Provide Notice of a Permanent Loan

¶ 42        P&M next contends that the district court erred when it

  concluded that P&M breached its obligations to MCLC when P&M

  failed to obtain or provide notice of a permanent loan before the

  construction loan’s maturity date. In particular, P&M contends the

  district court erred by concluding that (1) P&M breached the

  Agreement when it failed to secure permanent financing in 2007; (2)

  P&M breached the Agreement when it failed to issue a permanent

  loan impasse notice; and (3) P&M’s affirmative defense of

                                       20
  impossibility failed. We agree with the district court’s legal

  conclusions for three reasons.

¶ 43   First, the district court noted section 7.3(a) of the Agreement

  provides that, prior to the maturity date of the construction loan,

  P&M “shall submit to [MCLC] in writing the terms proposed for the

  Permanent Loan, including the maximum loan amount, maturity

  date, interest rate, fees to the lender, repayment terms and other

  material terms (the ‘Permanent Loan Notice’).”

¶ 44   The district court found that P&M breached this contractual

  obligation when it ultimately failed to secure a permanent loan or

  submit a proper permanent loan notice prior to the maturity date of

  the construction loan. The district court found, separately, that

  P&M breached its fiduciary duties in 2007 when it abandoned its

  search for permanent financing, which was part of a cascade of

  breaches stemming from the initial breaches regarding the forward

  swap and mezzanine loan.

¶ 45   Contrary to P&M’s contention, the district court did not

  conclude that “P&M breached the Agreement by not closing a

  permanent loan before April 2007.” Rather, the district court found

  that the maturity date for the construction loan was January 23,

                                    21
  2009, and that P&M was obligated to provide notice of permanent

  financing before that date, which it did not do.

¶ 46   Second, the district court also found that P&M breached its

  contractual obligations when it failed to give notice of permanent

  financing before the need for an impasse notice arose under the

  Agreement. But even if we assume, without deciding, that the

  district court erred in this respect, any error was harmless, as it did

  not “substantially influence[] the outcome of the case.” Laura A.

  Newman, LLC v. Roberts, 2016 CO 9, ¶ 3; see also C.R.C.P. 61.7

¶ 47   Finally, we reject P&M’s contention that the district court

  erred when it rejected P&M’s impossibility defense with respect to

  the permanent loan. Under Delaware law, a promisor’s contractual

  obligations can be released from liability for breach of contract

  when further performance is impossible. Martin v. Star Publ’g Co.,

  7The district court found that P&M breached these obligations
  twice: first, when P&M failed to provide MCLC notice of a
  permanent loan pursuant to and in compliance with the Agreement;
  and second, when P&M failed to provide MCLC a permanent loan
  impasse notice. The result is the same, however, because the
  district court based its award of damages on entirely separate
  breaches — namely, when P&M entered the mezzanine loan without
  making material disclosures to MCLC, and when P&M purchased
  the forward swap.

                                    22
  126 A.2d 238, 242 (Del. 1956). This defense is applicable only

  when the party claiming the defense establishes the impossibility of

  performance is caused by a fortuitous event and not by an act of

  the promisor’s own volition. Id. The Restatement of Contracts

  defines “impossibility” not only as strict impossibility, but

  “impracticability because of extreme and unreasonable difficulty,

  expense, injury, or loss.” Restatement (First) of Contracts § 454

  (Am. L. Inst. 1932).

¶ 48   In this case, the district court found P&M’s impossibility

  defense failed because there was substantial evidence that it could

  have obtained a permanent loan for the entire amount of the

  construction loan. Specifically, the district court found:

        P&M received “numerous” permanent loan offers in 2006

          and 2007 that would have fully paid off the construction

          loan;

        P&M was able to secure permanent financing for another,

          similar property with similar occupancy during that period;

          and

        there were loans available in 2008 and 2009, and, even if

          those loans did not have favorable terms, they would have

                                    23
          allowed P&M to substantially perform its obligations in the

          Agreement.

¶ 49   The district court then concluded that, because P&M “waited

  too long and sought to leverage the property too high,” it was

  ultimately responsible for the breach and failed to establish

  impossibility. The record supports the district court’s findings.

¶ 50   P&M passed on multiple opportunities for permanent

  financing that were available through January 2009. See In re

  BankAtlantic Bancorp, Inc. Litig., 39 A.3d 824, 846 (Del. Ch. 2012)

  (“[A] party cannot ‘abrogate a contract, unilaterally, merely upon a

  showing that it would be financially disadvantageous to perform

  it . . . .’”) (citation omitted). Thus, P&M failed to establish its own

  actions were not the cause of its ultimate failure to perform and,

  therefore, its impossibility defense fails. Martin, 126 A.2d at 242.

¶ 51   Accordingly, we affirm the district court’s supported findings

  that P&M breached its contractual obligations.

¶ 52   Having affirmed the district court’s conclusion that P&M

  breached its contractual obligations under the Agreement, we next

  consider whether the calculation of damages was correct.

                                     24
                       4.    Calculation of Damages

¶ 53   P&M next contends the district court erred when it calculated

  MCLC’s damages related to (1) funds lost as a result of P&M’s

  decision to enter a forward swap and (2) MCLC’s lost equity as a

  result of P&M’s breach.8

¶ 54   The proper measure of damages presents a question of law

  subject to de novo review. Taylor Morrison of Colo., Inc. v. Terracon

  Consultants, Inc., 2017 COA 64, ¶ 23. However, “[i]n determining

  the issues of causation of injury, the trier of fact is vested with

  broad discretion and its assignment . . . will not be set aside absent

  a showing that it abused that discretion.” Vento v. Colo. Nat’l Bank-

  Pueblo, 907 P.2d 642, 646 (Colo. App. 1995). We further afford the

  district court’s damages award “considerable deference and will set

  it aside only if clearly erroneous.” Colo. Ins. Guar. Ass’n v. Sunstate

  Equip. Co., 2016 COA 64, ¶ 128 (cert. granted in part Oct. 31, 2016).

¶ 55   Under Delaware law,

             the standard remedy for breach of contract is
             based upon the reasonable expectations of the
             parties ex ante. This principle of expectation

  8The district court also awarded damages related to the costs of
  P&M’s improper tax appeal. P&M does not challenge this
  determination on appeal.

                                     25
              damages is measured by the amount of money
              that would put the promisee in the same
              position as if the promisor had performed the
              contract. Expectation damages thus require
              the breaching promisor to compensate the
              promisee for the promisee’s reasonable
              expectation of the value of the breached
              contract, and, hence, what the promisee lost.

  Duncan v. Theratx, Inc., 775 A.2d 1019, 1022 (Del. 2001) (footnote

  omitted).

¶ 56   Because contract damages are based on the injured party’s

  expectation interest, the extent of the loss is determined in

  reference to the plaintiff’s particular circumstances. See

  Restatement (Second) of Contracts § 347 (Am. L. Inst. 1981); see

  also Duncan, 775 A.2d at 1022 (adopting the Restatement (Second)

  of Contract’s definition of expectation damages). Courts must (1)

  quantify the loss suffered by the injured party, measured at the

  date of the breach; and (2) subtract the costs or other losses

  avoided by the non-breaching party. Restatement (Second) of

  Contracts § 347 cmts. a, b.

¶ 57   We turn now to the district court’s calculation of damages

  related to the swap and MCLC’s lost equity.

                                    26
                          a.     Forward Swap

¶ 58   The district court found P&M breached the Agreement by

  purchasing the forward swap. See supra Part II.A.3.a. Because the

  district court made detailed findings supported by the record that

  the decision to purchase the swap caused MCLC’s loss, as opposed

  to falling interest rates as P&M contends, we affirm its award of

  damages for half of the loss that resulted from the swap — $3.75

  million. See Henkel Corp. v. Innovative Brands Holdings, LLC, No.

  CIV.A. 3663-VCN, 2013 WL 396245, at *4 (Del. Ch. Jan. 31, 2013)

  (unpublished opinion) (“Expectation damages are calculated as the

  amount of money that would put the non-breaching party in the

  same position that the party would have been in had the breach

  never occurred.”).

                            b.    Lost Equity

¶ 59   The district court calculated damages based on its finding that

  P&M materially breached the Agreement on April 23, 2007, when it

  entered the mezzanine loan agreement. The court then measured

  the value of the breach based on the value of the Shops on that

  date — $192.5 million — and then subtracted the $116 million

  construction loan in place at the time of breach. The district court

                                   27
  accordingly concluded the Shops were valued at $76.5 million and

  MCLC’s equity was half that amount — $38.25 million. Therefore,

  the district court awarded MCLC $38.25 million for its lost equity in

  Centerra LLC.

¶ 60   According to P&M, the district court’s conclusion that P&M’s

  breach caused MCLC’s lost equity required a series of improperly

  speculative conclusions and ignored the 2008 financial crisis as a

  proximate, intervening cause of MCLC’s loss. We discern no error.

¶ 61   Contrary to P&M’s contentions, the district court considered

  causation at length as follows:

            (1) Josh Poag and Dan Poag, through P&M,
            used [Centerra LLC] and the Shops to secretly
            secure a $40 million loan from [the bank], and
            used the proceeds of that loan to buy out
            McEwen’s interest in P&M;

            (2) The Poags, through P&M, intentionally
            kept important details and the purpose of the
            $40 million loan from McWhinney for more
            than two years;

            (3) The $40 million loan agreement secretly
            gave [the bank] significant authority to make
            management decisions for [Centerra LLC].
            This change in decision making amounted to
            de facto changes in the Operating Agreement.
            McWhinney did not consent [to] or know of
            these changes when they were agreed to by
            P&M;

                                    28
(4) The proceeds from the $40 million loan
were used solely for the benefit of P&M and the
Poags, and did not benefit the Shops,
[Centerra LLC], or McWhinney;

(5) As part of the $40 million loan, P&M
required MCLC to sign an amendment to the
Operating Agreement. However, P&M obtained
the consent of MCLC without disclosing
material facts concerning the $40 million loan;

(6) P&M failed to disclose to McWhinney that
in order to get the loan, P&M had to approve
agreements giving [the bank] veto power over
the future refinancing of the construction loan;

(7) P&M obtained the $40 million loan
proceeds and immediately used those proceeds
to acquire McEwen’s ownership interest in
P&M;

(8) Days after P&M received and paid the
$40 million to McEwen in 2007, P&M secretly
informed [the bank] that P&M was no longer
interested in obtaining a permanent loan for
the Shops and [Centerra LLC], and then
demanded McWhinney purchase P&M’s
interest in [Centerra LLC];

(9) After that time, P&M did not make good
faith efforts to obtain permanent financing for
[Centerra LLC] before [Centerra LLC] defaulted
on the Construction Loan;

(10) . . . Josh Poag, on behalf of P&M, told the
CFO for P&M that he “let the [construction]
loan go into default” and that he “had the
ability to get a permanent loan” before the
default on the Construction Loan;

                       29
            (11) P&M’s inability to secure permanent
            financing before April 2007 was the result of
            its attempts to secure a loan which would pay
            off the $116 million construction loan and pay
            $40 million to P&M so that it could buy out
            McEwen’s interest in P&M. . . .

¶ 62   The district court further found that

            [t]his series of breaches between 2006 and
            2010 also resulted in, led to, and caused
            losses because if P&M had not actively
            concealed their breaches from [MCLC], [MCLC]
            would have fired P&M as the manager
            pursuant to Section 6.5 of the Operating
            Agreement, and [MCLC] would have obtained
            permanent financing for the Shops in 2006 or
            2007, which would have avoided foreclosure of
            the Shops.

  The district court also rejected P&M’s claim that the 2008 financial

  crisis was the cause of MCLC’s loss, finding that the mezzanine loan

  prevented P&M from finding permanent financing by the deadline

  and that, while the financial crisis would have made it difficult or

  less profitable to obtain a permanent loan, it was not an

  impossibility. See supra Part II.A.3.b-c. Because these findings are

  supported by the record, we discern no error.

¶ 63   We also reject P&M’s contention that the district court erred in

  its method of calculating MCLC’s expectation damages. While

  “expectation damages must be proven with reasonable certainty . . .

                                    30
  the injured party need not establish the amount of damages with

  precise certainty ‘where the wrong has been proven and injury

  established.’” Siga Techs., Inc. v. PharmAthene, Inc., 132 A.3d 1108,

  1131 (Del. 2015) (citation omitted). Further, a court may use post-

  breach evidence “in order to aid in its determination of the proper

  expectations as of the date of the breach.” Id. at 1133.

¶ 64   Here, the district court attributed MCLC’s lost equity in

  Centerra LLC to P&M’s first material breach in April 2007, and,

  accordingly, it calculated damages based on that date. Because

  Centerra LLC’s value fluctuated at the time of breach, the district

  court took the average of the value of the Shops over the year

  surrounding the breach. We conclude this method of calculating

  damages was not speculative — it was a “sparing[]” use of post-

  breach evidence to determine MCLC’s proper expectations at the

  time of breach. Id. Contrary to P&M’s contentions, the district

  court properly ignored post-breach evidence — namely, the rising

  value of the Shops, and then the financial crisis — as irrelevant to

  discerning MCLC’s approximate equity in Centerra LLC at the time

  of breach. Accordingly, because the district court’s method of

                                   31
  calculating damages complied with Delaware’s law on expectation

  damages, we affirm.

¶ 65   We now turn to MCLC’s cross-appeal.

                        B.   MCLC’s Cross-Appeal

¶ 66   On cross-appeal, MCLC contends that the district court erred

  by dismissing MCLC’s common law intentional tort claims after

  applying the economic loss rule. Based on Van Rees, 2016 CO 51,

  and Bermel v. BlueRadios, Inc., 2019 CO 31, MCLC further

  contends that a division of this court on interlocutory appeal erred

  when it affirmed the district court’s dismissal in McWhinney

  Holding, No. 13CA0850. With one exception, we agree with MCLC.

¶ 67   Departing from prior divisions, we conclude today that in most

  instances the economic loss rule will not bar intentional tort claims.

  Accordingly, with the exception of the civil conspiracy claim, we

  deem the interlocutory decision in this case no longer sound

  because of changed conditions of law that substantially alter the

  application of the economic loss rule in Colorado.9

  9We are aware that, in a case involving separate claims, the same
  parties presented the same issue to a federal district court. In that
  case, the district court concluded that Bermel substantially

                                    32
              1.    Standard of Review and Applicable Law

¶ 68   We review a district court’s grant of a motion to dismiss de

  novo, “accepting the factual allegations contained in the complaint

  as true and viewing them in the light most favorable to the

  plaintiff.” Van Rees, ¶ 9.

¶ 69   While the Agreement is governed by and construed in

  accordance with Delaware law, we agree with the district court and

  the division of this court on interlocutory appeal that the choice of

  law provision of the Agreement applies only to contract claims, and

  not to related tort claims. McWhinney Holding, No. 13CA0850, slip

  op. at 7. Accordingly, Colorado law applies. See URS Grp., Inc. v.

  Tetra Tech FW, Inc., 181 P.3d 380, 391 (Colo. App. 2008) (applying

  New Jersey law, based on a contractual choice of law provision, to

  contract claims, but applying Colorado law to tort claims).

¶ 70   “When a court issues final rulings in a case, the ‘law of the

  case’ doctrine generally requires the court to follow its prior relevant

  changed the economic loss rule in Colorado and stands for the
  proposition that “intentional torts depend on duties independent of
  contract and therefore are not barred by the economic loss rule.”
  Mcwhinney Holding Co., LLLP v. Poag, Civ. A. No. 17-CV-02853-
  RBJ, 2019 WL 9467529, at *2 (D. Colo. Dec. 6, 2019).

                                    33
  rulings.” Giampapa v. Am. Fam. Mut. Ins. Co., 64 P.3d 230, 243

  (Colo. 2003). However, the law of the case doctrine is “merely

  discretionary when applied to a court’s power to reconsider its own

  prior rulings.” Id. “[A] court may decline to apply the doctrine if a

  previous decision is no longer sound because of changed conditions

  of law.” Id. (stating that the court of appeals should have declined

  to apply the law of the case doctrine to its own prior decision in the

  same case in light of significant developments in the law).

¶ 71   In Colorado, the economic loss rule provides that “a party

  suffering only economic loss from the breach of an express or

  implied contractual duty may not assert a tort claim for such a

  breach absent an independent duty of care under tort law.” Town

  of Alma v. AZCO Constr., Inc., 10 P.3d 1256, 1264 (Colo. 2000). The

  purpose of the rule is to “maintain a distinction between contract

  and tort law.” Id. at 1262. “To decide whether the economic loss

  rule bars a tort claim, courts must first determine the source of the

  duty at issue.” Bermel, ¶ 53 (Gabriel, J., dissenting).

¶ 72   As the supreme court has made clear, tort claims based on

  theories of negligence and negligent misrepresentation necessarily

  stem from duties created by a contract between parties and,

                                    34
  therefore, the economic loss rule often applies. See Town of Alma,

  10 P.3d at 1264-65 (negligence); BRW, Inc. v. Dufficy & Sons, Inc.,

  99 P.3d 66, 67-68 (Colo. 2004) (negligence and negligent

  misrepresentation); Grynberg v. Agri Tech, Inc., 10 P.3d 1267, 1268

  (Colo. 2000) (negligence).

¶ 73   This same principle, however, works in the opposite direction

  when it comes to common law intentional torts. In Bermel, ¶ 37,

  the supreme court held that the economic loss rule did not bar a

  tort claim where a state statute created a cause of action. The

  court’s opinion hinged on a concern that interpreting the economic

  loss rule — a judicially created doctrine — to bar a statutory claim

  would undermine separation of powers principles. Id. at ¶ 20 n.6.

  But, in reviewing its own case law on the economic loss rule, the

  court pointed out that it had only ever applied the economic loss

  rule “to bar common law tort claims of negligence or negligent

  misrepresentation.” Id. at ¶ 21.

¶ 74   While the supreme court’s decision in Bermel was limited to

  statutory tort claims, we conclude the court’s opinion is instructive

  on the economic loss rule’s applicability to common law intentional

  tort claims. Notably, the Bermel court observed that “[a]lthough our

                                     35
cases have emphasized the need to ‘prevent tort law from

“swallowing” the law of contracts,’ we have been equally clear that

we must also ‘be cautious of the corollary potential for contract law

to swallow tort law.’” Bermel, ¶ 20 n.6 (first quoting Town of Alma,

10 P.3d at 1260; and then quoting Van Rees, ¶ 19). The Bermel

court elaborated that “the economic loss rule generally should not

be available to shield intentional tortfeasors from liability for

misconduct that happens also to breach a contractual obligation.”

Id.; see also Van Rees, ¶ 12 (concluding that the economic loss rule

did not necessarily apply where a party’s tort claims were related to

contractual obligations, but the tort claims flowed from an

independent duty under tort law).10

10 While we acknowledge that, generally, parties may agree to
exculpatory provisions in contracts that may shield tortfeasors from
liability, we note that such provisions are subject to the close
scrutiny of reviewing courts. See Bermel v. BlueRadios, Inc., 2019
CO 31, ¶ 20 n.6; see also Jones v. Dressel, 623 P.2d 370, 376 (Colo.
1981); Rhino Fund, LLLP v. Hutchins, 215 P.3d 1186, 1191 (Colo.
App. 2008) (“Most courts will not enforce exculpatory and limiting
provisions . . . if they purport to relieve parties from their own
willful, wanton, reckless, or intentional conduct.”).

                                   36
                            2.   Discussion

¶ 75   With these principles in mind, we conclude that the district

  court erred when it applied the economic loss rule to bar MCLC’s

  common law intentional tort claims of fraudulent concealment,

  intentional interference with contractual obligations, and

  intentional inducement of breach of contract because each of these

  claims stems from a duty based in tort law independent of the

  Agreement.11 While the conduct underlying each of these claims

  may also support a breach of contract claim in this case, we are not

  persuaded that the economic loss rule should “shield intentional

  tortfeasors from liability for misconduct that happens also to

  breach a contractual obligation.” Bermel, ¶ 20 n.6 (emphasis

  added).

¶ 76   Nonetheless, we agree with the district court that the

  economic loss rule barred MCLC’s civil conspiracy claim. MCLC

  alleged P&M and PMLC conspired to breach the Agreement. As

  signatories to the contract, however, P&M and PMLC’s duty not to

  11We note that MCLC’s claims of interference with contractual
  obligations and intentional inducement of breach of contract alleged
  P&M interfered with MCLC’s performance of, or induced MCLC’s
  breach of, contracts that were separate from the Agreement.

                                   37
  conspire to breach the contract stemmed solely from the Agreement

  itself. See Logixx Automation, Inc. v. Lawrence Michels Fam. Tr., 56

  P.3d 1224, 1231 (Colo. App. 2002); see also Grynberg, 10 P.3d at

  1268 (noting that the focus in an analysis under the economic loss

  rule is on the source of the duties alleged to have been breached).

  In other words, P&M and PMLC had no independent duty in tort

  law not to conspire to breach the Agreement with another signatory

  to the Agreement. Thus, the economic loss rule bars MCLC’s civil

  conspiracy claim. See Top Rail Ranch Ests., LLC v. Walker, 2014

  COA 9, ¶ 40 (economic loss rule barred claim against an individual

  who was a member of the contracting entity).

¶ 77   Town of Alma supports our conclusion that, generally, the

  economic loss rule does not bar common law intentional tort

  claims. There, the supreme court acknowledged that fraud claims

  are based on violations of independent duties rather than

  contractual ones. Town of Alma, 10 P.3d at 1263 (“We have also

  recognized that certain common law claims that sound in tort and

  are expressly designed to remedy economic loss may exist

  independent of a breach of contract claim.”); see also Glencove

  Holdings, LLC v. Bloom (In re Bloom), ___ B.R. ___, 2020 WL

                                   38
  5507485, at *46 (Bankr. D. Colo. Sept. 10, 2020) (interpreting

  Bermel and Town of Alma to conclude that “intentional torts depend

  on duties independent of contract and thus are not barred by the

  economic loss rule”).

¶ 78   We recognize that our conclusion today is contrary to a trilogy

  of conclusions from divisions of this court that concluded the

  economic loss rule barred common law intentional tort claims

  similar to the claims raised in this case. See Hamon Contractors,

  Inc. v. Carter & Burgess, Inc., 229 P.3d 282, 289 (Colo. App. 2009),

  as modified on denial of reh’g (June 11, 2009) (concluding that the

  “economic loss rule can apply to fraud or other intentional tort

  claims based on post-contractual conduct”); Former TCHR, LLC v.

  First Hand Mgmt. LLC, 2012 COA 129, ¶ 29 (holding that the

  economic loss rule barred fraud and concealment claims because

  they did not arise out of an independent duty); Walker, ¶ 40.

  However, those divisions did not have the benefit of Bermel to guide

  their analysis. Thus, we decline to follow them. See People v.

  Zubiate, 2013 COA 69, ¶ 48 (we are not bound by another division’s

  holding), aff’d, 2017 CO 17.

                                   39
¶ 79   As discussed, our conclusion is also largely contrary to

  another division’s conclusions on interlocutory appeal from this

  case. See McWhinney Holding, No. 13CA0850. Because of the

  significant developments in the law pertaining to the economic loss

  rule’s applicability to intentional torts, we decline to follow the law

  of the case here. See Giampapa, 64 P.3d at 243.

¶ 80   Accordingly, we conclude that the district court erred when it

  applied the economic loss rule to dismiss MCLC’s claims of

  fraudulent concealment, intentional interference with contractual

  obligations, and intentional inducement of breach of contract. We

  thus reverse and reinstate those claims.

                             III.   Conclusion

¶ 81   We affirm the judgment and award of damages in the breach

  of contract claim. We affirm the order dismissing MCLC’s tort claim

  of civil conspiracy, but we reverse the order dismissing MCLC’s tort

  claims of fraudulent concealment, intentional interference with

  contractual obligations, and intentional inducement of breach of

  contract, and remand for further proceedings on those claims.

       JUDGE FOX and JUDGE GOMEZ concur.

                                     40