Court Opinion

ID: 9559689
Source: CourtListenerOpinion
Date Created: 2023-08-21 17:33:49.081879+00
Date Added: 2024-06-11T09:11:33.503172
License: Public Domain

Judge HUME
concurring in part and dissenting in part.
I concur in all parts of the majority opinion, save one. I respectfully disagree with the application of “equitable principles” adopted in Part II C. Thus, I would reverse the deemed denial of Ridgeway’s motion and would remand with instructions that his request for a setoff be granted.
I agree with the majority’s position that, in the absence of any controlling provision in the statutes governing bankruptcy, Ridgeway’s right to a setoff must be determined by application of general legal principles. However, I disagree that equitable considerations preclude the granting of such relief.
One who is fraudulently induced to enter into a contract is afforded various remedial options. He may elect to disaffirm or rescind the contract and seek remedial relief in equity to restore the parties to their pre-contractual status and condition. Trimble v. City & County of Denver, 697 P.2d 716 (Colo.1985).
Alternatively, such a defrauded party may affirm the contract and sue either for damages for its subsequent breach under principles of contract law or for damages caused by the fraudulent misrepresentation in a tort action. Trimble v. City & County of Denver, supra.
However, one seeking to remedy fraudulent inducement must elect either to rescind or to affirm the contract in its entirety. Since the two remedies are inherently inconsistent, he cannot pursue the benefits of both affirmance and disaffirmance of the contract. Aaberg v. H.A. Harman Co., 144 Colo. 579, 358 P.2d 601 (1960); Holscher v. Ferry, 131 Colo. 190, 280 P.2d 655 (1955).
Here, the Arguelleses elected to affirm the contract and seek damages caused by Ridgeway’s fraudulent misrepresentations. They tried the cause and received benefits that the jury determined were the equivalent of Ridgeway’s performance if the motel had been as he represented. Accordingly, the Arguelleses cannot thereafter seek to disaffirm their own obligations derived from the terms of the same contract. See Elk River Associates v. Huskin, 691 P.2d 1148 (Colo.App.1984).
In my view, the effect of the deemed denial of Ridgeway’s claim for a setoff improperly allowed the Arguelleses the benefits of both an affirmance and disaffir-mance of various portions of the same contract: their award of damages for fraud can only be sustained if premised on an affirmance of the contract, and their avoidance of their obligation to perform can only be premised upon a disaffirmance or rescission of that contract.
Thus, I believe the trial court’s belated action in granting Ridgeway’s motion for setoff was substantively correct. The deemed denial of the motion by operation of C.R.C.P. 59(j) renders the final judgment *559erroneous as to the issue of Ridgeway’s entitlement to setoff. Hence, I would also reverse the judgment as to that issue and remand with directions to allow the setoff claimed by Ridgeway.