Court Opinion

ID: 4421485
Source: CourtListenerOpinion
Date Created: 2019-07-31 15:02:28.765555+00
Date Added: 2024-06-11T14:51:16.571552
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
                                                                July 25, 2019

                               2019COA115

No. 18CA1316, SG Interests I, Ltd. v. Kolbenschlag — Torts —
Defamation — Libel

     In this libel action, a division of the court of appeals holds that

defendant’s online comment to a newspaper article is substantially

true and, thus, that plaintiffs failed to prove the elements of

defamation. It further concludes that there was no basis for

plaintiffs to depose the defendant under C.R.C.P. 56(f). The division

remands the case for the district court to determine and award

reasonable appellate attorney fees.
COLORADO COURT OF APPEALS                                          2019COA115

Court of Appeals No. 18CA1316
Delta County District Court No. 17CV30026
Honorable Steven L. Schultz, Judge

SG Interests I, Ltd., a Texas limited partnership, and SG Interests VII, Ltd., a
Texas limited partnership,

Plaintiffs-Appellants,

v.

Peter T. Kolbenschlag, a/k/a Pete Kolbenschlag,

Defendant-Appellee.

                         JUDGMENT AFFIRMED AND CASE
                          REMANDED WITH DIRECTIONS

                                   Division VI
                           Opinion by JUDGE FREYRE
                           Fox and Welling, JJ., concur

             Prior Opinion Announced June 27, 2019, WITHDRAWN

     OPINION PREVIOUSLY ANNOUNCED AS “NOT PUBLISHED PURSUANT TO
     C.A.R. 35(e)” ON June 27, 2019, IS NOW DESIGNATED FOR PUBLICATION

                          Petition for Rehearing DENIED

                            Announced July 25, 2019

Abadie & Schill P.C., Andrew D. Schill, William E. Zimsky, Durango, Colorado,
for Plaintiffs-Appellants

Ballard Spahr, LLP, Steven D. Zansberg, Denver, Colorado, for Defendant-
Appellee
¶1       In this libel action, plaintiffs, SG Interests I, Ltd., and SG

 Interests VII, Ltd., (collectively SGI) appeal the district court’s order

 granting summary judgment for defendant, Peter T. Kolbenschlag,

 also known as Pete Kolbenschlag. SGI challenges the court’s

 findings that Mr. Kolbenschlag’s online comments were

 substantially true and immaterial. It also challenges the court’s

 refusal to order Mr. Kolbenschlag’s deposition under C.R.C.P. 56(f).

 We affirm the court’s judgment and remand for the determination

 and award of reasonable appellate attorney fees.

                              I.    Background

                 A.    Prior Federal Actions and Settlement

¶2       SGI and a competitor, Gunnison Energy Corporation (GEC),

 separately acquired and developed oil and gas leases in the Ragged

 Mountain Area of western Colorado. SGI focused its efforts on the

 eastern side while GEC focused on the southern side. Eventually,

 their interests collided and resulted in litigation between an SGI

 affiliate and GEC in 2004. As part of settling this litigation, SGI

 and GEC agreed to collaborate in developing the Ragged Mountain

 Area.

                                       1
¶3    In 2005, SGI and GEC executed a Memorandum of

 Understanding (MOU) concerning four leases offered by the Bureau

 of Land Management (BLM) in which they agreed that only SGI

 would submit a bid, and, if it won the bid, SGI would then assign

 50% of the interest in the acquired leases to GEC. They further

 agreed to establish a business plan to develop the leases within

 ninety days of acquiring them.

¶4    SGI successfully bid on the four leases and certified that its

 bid was calculated “independently and without collusion for the

 purpose of restricting competition.” It then assigned a 50% interest

 in the leases to GEC. After the assignment, SGI and GEC executed

 additional agreements to share 50% of any oil and gas interests

 acquired in the area at cost and to work together on permitting

 pipelines to service the area.1 Neither SGI nor GEC informed the

 BLM of these agreements.

¶5    In October 2009, a former vice president of GEC (relator) filed

 a qui tam complaint under the False Claims Act (FCA) alleging that

 1 The additional agreements include the Area of Mutual Interest
 Agreement (AMIA) and the Option and Participation Agreement
 (OPA), and they are not the subject of this litigation.

                                   2
 SGI and GEC had falsely certified to the BLM that the bids for the

 leases did not violate 18 U.S.C. § 1860 (2018), and that they were

 not for the purpose of restricting competition. The relator had

 drafted and executed all of the agreements on behalf of GEC.

¶6    The Department of Justice (DOJ) then initiated an

 investigation into SGI’s bidding practices with respect to federal oil

 and gas leases in the Ragged Mountain Area. It filed a complaint in

 February 2012 against SGI and GEC alleging that the companies

 had violated section 1 of the Sherman Act by executing the MOU on

 the eve of the auction and that, consequently, the United States had

 received less revenue than it would have received had SGI and GEC

 competitively bid for the leases. The DOJ offered to settle both the

 Sherman Act violation and the FCA violation for $550,000 and

 issued a press release stating:

            The Department of Justice today announced
            that it has reached a settlement with
            Gunnison Energy Corporation (GEC), SG
            Interests I Ltd. and SG Interests VII Ltd. (SGI)
            that requires the companies to pay a total of
            $550,000 to the United States for antitrust
            and False Claims Act violations related to an
            agreement not to compete in bidding for four
            natural gas leases sold at auction by the U.S.
            Department of Interior’s Bureau of Land
            Management (BLM). Today’s action marks the

                                    3
            first time the Department of Justice has
            challenged an anticompetitive bidding
            agreement for mineral rights leases.

¶7    The government received seventy-six public comments, and on

 December 12, 2012, a federal district court judge rejected the

 proposed settlement, finding “[t]here is no basis for saying that the

 approval of these settlements would act as a deterrence to these

 defendants and others in the industry, particularly as GEC

 considers ‘joint bidding’ to be common in the industry.” The court

 concluded “the settlement of this civil action for nothing more than

 the nuisance value of this litigation is not in the public interest.”

¶8    The parties then reached a second proposed settlement, which

 required SGI and GEC to each pay $275,000 in the Sherman Act

 case and SGI to pay $206,250 and GEC pay $245,000 in the FCA

 case. It also required SGI and GEC to provide advance notice to the

 government of any intention to bid for future leases with another

 company for a period of five years.

¶9    The agreement also stated that “[t]he United States contends

 that it has certain civil claims against SG arising from the Covered

 Conduct” and “[t]his Settlement Agreement is neither an admission

 of liability by SG nor a concession by the United States that its

                                    4
  claims are not well founded.” It also declared that the parties had

  entered the settlement agreement “[t]o avoid the delay, uncertainty,

  inconvenience, and expense of protracted litigation.”

¶ 10   The DOJ’s motion for entry of final judgment stated:

             The revised settlements constitute meaningful
             relief that compensate the United States for
             damages it incurred as a result of the alleged
             antitrust violations, serve as a deterrent to
             these Defendants from engaging in joint
             bidding that violates the antitrust laws, and
             put others in the industry on notice that such
             anticompetitive conduct will not be tolerated.

  The DOJ explained that the antitrust suit was an issue of first

  impression and that it wanted to quickly resolve the litigation to

  “deter others from crossing the line from appropriate to illegal joint

  bidding at BLM auctions” and specifically to deter SGI and GEC

  from crossing this line in the future. It acknowledged that the AMIA

  and OPA agreements did not violate the Sherman Act because those

  agreements involved “a collaboration through which pro-competitive

  efficiencies arise.” However, it found that the MOU “reflected a

  deviation from common industry practice, as the MOU was merely a

  naked restraint that allowed Defendants to avoid a bidding war.”

  And the DOJ noted that under this second proposed settlement

                                     5
  agreement, “SGI and GEC will have paid more than twelve times

  their original cost of acquisition of the four parcels,” an amount

  exceeding actual damages. It acknowledged that the charges were

  not proven at trial and that “[t]he monetary amount is a product of

  settlement and accounts for litigation risk and costs.”

¶ 11   The federal district court judge accepted this second proposed

  settlement on April 23, 2013. Thereafter, numerous publications

  reported that SGI had paid a fine to the federal government, and

  several stated that the fine was for violating antitrust laws. See,

  e.g., Jon B. Dubrow, Natural Gas Companies Settle Antitrust Suit

  Stemming from Joint Bidding, Nat’l L. Rev. (Apr. 28, 2013) (noting

  that SGI and GEC “will each pay a fine of $275,000 to the DOJ to

  settle allegations of agreeing not to bid against each other in

  violation of antitrust law”); infra Part II.B n.2. SGI never brought a

  defamation action against these commentators.

                         B.    Current Litigation

¶ 12   Mr. Kolbenschlag is an environmental activist from Paonia,

  Colorado, who manages Mountain West Strategies, Ltd., a website

  that “specializes in public outreach and community engagement” in

  western Colorado. In 2016, the BLM cancelled eighteen of SGI’s gas

                                     6
  leases in Colorado. The Glenwood Springs Post Independent

  newspaper published an article about the cancellation. John

  Stroud, Divide Lease Decision Likely to Land in Court, Glenwood

  Springs Post Independent, Nov. 28, 2016, https://perma.cc/6WM9-

  GK9J. The article discussed how SGI vowed to take legal action

  “based on evidence it says points to collusion between the Obama

  administration and environmental interests to reach a

  ‘predetermined political decision.’” Id.

¶ 13   Mr. Kolbenschlag posted a reader comment to the article on

  the newspaper’s website in which he noted the irony of SGI’s

  collusion allegation and stated:

             While SGI alleges “collusion” let us recall that
             it, SGI, was actually fined for colluding (with
             GEC) to rig bid prices and rip off American
             taxpayers. Yes, these two companies owned by
             billionaires thought it appropriate to pad their
             portfolios at the expense of you and I and every
             other hard-working American.

  The comment included a link to the DOJ press release describing

  the first settlement agreement for antitrust and FCA violations

  related to anticompetitive bidding by SGI and GEC.

¶ 14   Four months later, SGI filed this lawsuit. Mr. Kolbenschlag

  filed a motion to dismiss, contending that his comment was

                                     7
  substantially true and that SGI had not pleaded actual malice.

  After SGI filed an amended complaint, Mr. Kolbenschlag renewed

  his motion to dismiss. The district court converted the motion to

  one for summary judgment under C.R.C.P. 56 and set an expedited

  briefing schedule. Mr. Kolbenschlag then withdrew the portion of

  his motion seeking judgment on actual malice. Thereafter, SGI filed

  a response and sought leave to take Mr. Kolbenschlag’s deposition

  under C.R.C.P. 56(f) concerning his factual basis for stating the

  comments were substantially true.

¶ 15   The district court granted the motion for summary judgment,

  denied SGI’s request to depose Mr. Kolbenschlag, and in a separate

  hearing not at issue here, awarded Mr. Kolbenschlag attorney fees

  finding that the lawsuit was frivolous and vexatious. This appeal

  followed.

              II.   Summary Judgment Properly Granted

¶ 16   SGI first contends that the district court erroneously

  concluded that Mr. Kolbenschlag’s comments were substantially

  true and immaterial. We disagree.

                                    8
                      A.   Standard of Review and Law

¶ 17   We review grants of summary judgment de novo. Morrison v.

  Goff, 91 P.3d 1050, 1052 (Colo. 2004); SMLL, L.L.C. v. Peak Nat’l

  Bank, 111 P.3d 563, 564 (Colo. App. 2005). Summary judgment is

  a drastic remedy and is appropriate only when the pleadings and

  the supporting documents show that no genuine issue of material

  fact exists and that the moving party is entitled to judgment as a

  matter of law. W. Elk Ranch, L.L.C. v. United States, 65 P.3d 479,

  481 (Colo. 2002).

¶ 18   A “material fact” is one that will affect the outcome of the case

  or claim. Thompson v. Md. Cas. Co., 84 P.3d 496, 501 (Colo. 2004).

  In determining whether a genuine issue of material fact exists, we

  consider “the pleadings, depositions, answers to interrogatories,

  and admissions on file, together with the affidavits, if any.”

  C.R.C.P. 56(c). All favorable inferences that can be drawn from the

  record must be resolved in favor of the non-moving party. People in

  Interest of S.N., 2014 CO 64, ¶¶ 15-16.

¶ 19   “Defamation is a communication that holds an individual up

  to contempt or ridicule thereby causing him to incur injury or

  damage.” Lawson v. Stow, 2014 COA 26, ¶ 15 (quoting Keohane v.

                                     9
  Stewart, 882 P.2d 1293, 1297 (Colo. 1994)). “A statement may be

  defamatory if it tends so to harm the reputation of another as to

  lower him in the estimation of the community or to deter third

  persons from associating or dealing with him.” Sky Fun 1 v.

  Schuttloffel, 27 P.3d 361, 369 n.3 (Colo. 2001) (alteration omitted)

  (quoting Burns v. McGraw-Hill Broad. Co., 659 P.2d 1351, 1357

  (Colo. 1983)).

¶ 20   The elements of defamation are:

             (1) a defamatory statement concerning
             another; (2) published to a third party; (3) with
             fault amounting to at least negligence on the
             part of the publisher; and (4) either
             actionability of the statement irrespective of
             special damages or the existence of special
             damages to the plaintiff caused by the
             publication.

  McIntyre v. Jones, 194 P.3d 519, 523-24 (Colo. App. 2008) (quoting

  Williams v. Dist. Court, 866 P.2d 908, 911 n.4 (Colo. 1993)).

¶ 21   Substantial truth is a complete defense to defamation. Gordon

  v. Boyles, 99 P.3d 75, 81 (Colo. App. 2004). A defendant need only

  show that “the substance, the gist, the sting of the matter is true.”

  Id. (citation omitted). So, the question is whether “there is a

  substantial difference between the allegedly libelous statement and

                                    10
  the truth; or, stated differently whether the statement produces a

  different effect upon the reader than that which would be produced

  by the literal truth of the matter.” Gomba v. McLaughlin, 180 Colo.
232, 236, 504 P.2d 337, 339 (1972). This inquiry focuses on an

  “average reader” and asks whether “the challenged statement

  produces a different effect upon the [average] reader than that

  which would be produced by the literal truth of the matter.” Fry v.

  Lee, 2013 COA 100, ¶ 23.

¶ 22   In Colorado, the plaintiff in a defamation case must prove that

  a statement is false and material. Bustos v. A & E Television

  Networks, 646 F.3d 762, 764 (10th Cir. 2011) (applying Colorado

  law). To be material, “the alleged misstatement must be likely to

  cause reasonable people to think ‘significantly less favorably’ about

  the plaintiff than they would if they knew the truth; a misstatement

  is not actionable if the comparative harm to the plaintiff’s

  reputation is real but only modest.” Id. at 765 (citation omitted).

¶ 23   Because “protracted litigation could have a chilling effect upon

  constitutionally protected rights of free speech,” it is appropriate to

  “prompt[ly] resolv[e] . . . defamation actions . . . by summary

                                     11
  judgment.” Barnett v. Denver Publ’g Co., 36 P.3d 145, 147 (Colo.

  App. 2001).

                              B.   Application

¶ 24   SGI asserts that the comment, “was actually fined for

  colluding (with GEC) to rig bid prices and rip off American

  taxpayers,” was not substantially true because (1) it had settled the

  antitrust suit for nuisance value; (2) the claims had not proceeded

  to trial; (3) there were no actual findings of illegal conduct; (4) the

  DOJ had expressed concerns about its ability to succeed at trial;

  and (5) SGI did not admit any wrongdoing and, therefore, any

  statement that it was “fined for colluding” was materially false. We

  are not persuaded.

¶ 25   First, we reject SGI’s claim that it settled the case for nuisance

  value. The record shows that the federal judge rejected the first

  settlement agreement precisely because it reflected a nuisance

  value settlement that would not deter the parties or others in the

  industry from engaging in illegal bidding. The federal judge

  concluded that a nuisance value settlement was not in the public

  interest.

                                     12
¶ 26   Moreover, the DOJ explained its reasons for settling: (1)

  stating that this was an issue of first impression; (2) proving the

  claim would be costly; (3) settling would compensate the

  government for the violations by reimbursing it more money than it

  lost at auction; and (4) settling would deter SGI, GEC, and other

  companies from executing these illegal agreements. And the record

  reveals that SGI and GEC paid twelve times the cost of the four

  leases subject to the antitrust claim, an amount that directly

  refutes SGI’s claim that the payment was simply a business

  decision and the amount paid was for nuisance value.

¶ 27   Next, we are not persuaded that the absence of a trial requires

  a different result or that the record shows there was no improper

  conduct. Initially, we note that SGI does not dispute that it

  executed the MOU with GEC on the eve of the auction and that it

  did not disclose the MOU to the BLM. While we acknowledge that

  the FCA agreement states the agreement is not an admission of

  liability by SGI, importantly, it also states that it is not a concession

  by the United States that its claims are not well founded. Moreover,

  the agreement specifically provides that “[n]othing in this

  Agreement releases SG from any liability for the Covered Conduct

                                     13
  under Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1.” And

  paragraph six of the agreement lists ten separate claims from which

  SGI was not released. Finally, the agreement required SGI to waive

  and not assert any defenses it may have to any future criminal

  prosecution or administrative action.

¶ 28   As well, the antitrust settlement specifically addressed the

  wrongful conduct by declaring up front that “the United States

  determined that SGI’s and GEC’s agreement to bid jointly pursuant

  to the MOU constituted a per se violation of the Sherman Act.” It

  also addressed the companies’ defenses, stating that

            [t]he United States determined that [SGI’s]
            purported . . . defense amounted to little more
            than a contention that by successfully
            colluding under the MOU at the February and
            May 2005 auctions, the Defendants eventually
            learned to overcome their mutual distrust.
            However, the mere hope that parties might
            someday come to an understanding on terms
            of a legitimate venture does not justify their
            agreeing to a naked restraint of trade in the
            interim.

¶ 29   Moreover, the antitrust agreement set forth “punishment”

  related to the improper bidding — not only the monetary damages

  SGI and GEC had to pay, but also the further requirement that

  “GEC and SGI agree to provide thirty days advance notice to the

                                   14
  United States of any joint bidding, either between themselves or

  with another party, at a BLM auction. Upon the United States’

  request, each must provide additional information to the United

  States regarding its plans to bid jointly.”

¶ 30   As well, the DOJ explained its reasoning for not proceeding to

  trial in the antitrust case, which had nothing to do with the

  strength of its case or the absence of misconduct. Instead it

  explained that

             [t]he improper joint bidding by Defendants
             occurred nearly eight years ago and since that
             time they have been engaged in a legitimate
             venture that has resulted in substantial
             development of the Ragged Mountain Area. . . .
             [T]he goal of a civil antitrust remedy is to
             terminate the violation, undo its effects and, in
             cases where the United States is the injured
             party, obtain compensation for its injury.

¶ 31   Accordingly, we conclude that viewing the evidence favorably

  for SGI and GEC, Mr. Kolbenschlag’s comment that SGI and GEC

  “colluded to rig bid prices,” as understood by the average reader, is

  substantially true and is well supported by the record. See Gomba,
180 Colo. at 236, 504 P.2d at 339; see also Brokers’ Choice of Am.,

  Inc. v NBC Universal, Inc., 861 F.3d 1081, 1107 (10th Cir. 2017)

  (“The law of defamation overlooks inaccuracies and focuses on

                                     15
  substantial truth.” (quoting Schwarz v. Am. Coll. of Emergency

  Physicians, 215 F.3d 1140, 1146 (10th Cir. 2000))); Fry, ¶¶ 39-40

  (concluding that “caught up in plagiarism charge” was substantially

  true because the plain language would not lead an average reader

  to conclude that criminal charges were brought against the

  plaintiff); see also Merriam-Webster Dictionary,

  https://perma.cc/TGU7-9M69 (defining colluding as “to work

  together secretly especially in order to do something illegal or

  dishonest”).

¶ 32   Finally, we are not persuaded that Mr. Kolbenschlag’s use of

  the word “actually fined” requires a different result. The word “fine”

  means “a sum imposed as punishment for an offense” or “a

  forfeiture or penalty paid to an injured party in a civil action.”

  Merriam-Webster Dictionary, https://perma.cc/6792-KGWE; see

  also Knapp v. Post Printing & Publ’g Co., 111 Colo. 492, 497-98, 114
P.2d 981, 984 (1943) (the meaning of an allegedly defamatory

  statement is determined by the plain and ordinary meaning of the

  word). Given that SGI and GEC paid twelve times the amount of

  the government’s actual damages to settle the antitrust and FCA

  claims, we have little difficulty concluding that an average reader

                                     16
  would find no substantial difference between SGI settling civil

  claims brought against it for money and paying a fine. Indeed,

  many commentators described this payment as a fine for alleged

  misdeeds at the time of the settlement, and SGI does not explain

  why it did not pursue defamation claims against those

  commentators at that time. 2

¶ 33   Even if we were to conclude that the “gist” of the comment was

  false, we agree with the district court that any inaccuracy is

  immaterial. See Bustos, 646 F.3d at 764 (“Where truth was once

  2 While many of the articles described SGI’s conduct as “alleged,”
  many did not. For example, one article stated that “the companies
  were implicated for a 2005 collusion scheme” and “[t]he two
  companies were found to have conspired to buy federal leases for
  lower prices.” Competition Policy International, US: Gas Cos Agree
  to Even Steeper Penalty, Fine Nearly Doubled, Apr. 22, 2013,
  https://perma.cc/MF2D-EN7V. A Durango Herald newspaper
  article stated that SGI and GEC “agreed to pay a $550,000 fine to
  settle an antitrust lawsuit by the Justice Department for agreeing
  not to compete in a 2005 auction of drilling rights in Western
  Colorado.” Joe Hanel, Driller Starts Super PAC to Support Tipton,
  Durango Herald, Oct. 28, 2012, https://perma.cc/PD68-22AG.
  And a Crested Butte News article reporting on the settlement titled
  the article “North Fork gas drillers fined by feds for collusion.”
  North Fork Gas Drillers Fined by Feds for Collusion, Crested Butte
  News, Feb. 22, 2012, https://perma.cc/ME47-46DW. Although
  this article later stated that the parties settled the federal antitrust
  lawsuit “alleging the two companies cooperated in submitting
  winning bids,” id., the title of the article is almost identical to Mr.
  Kolbenschlag’s statement.

                                     17
strictly a defense, now the plaintiff must shoulder the burden in his

case-in-chief of proving the falsity of a challenged statement if he is

a public figure or the statement involves a matter of public

concern.”). Mr. Kolbenschlag’s comment included a link to the DOJ

press release stating that the settlement “requires the companies to

pay a total of $550,000 to the United States for antitrust and False

Claims Act violations related to an agreement not to compete in

bidding for four natural gas leases sold at auction by the U.S.

Department of Interior’s Bureau of Land Management (BLM).”

(Emphasis added.) We conclude that the press release’s “pay for

antitrust and False Claims Act violations” language and Mr.

Kolbenschlag’s “fined for colluding” comment are virtually

indistinguishable. And, if a reasonable person knew all of the

undisputed facts apart from the comment, including the DOJ’s

reasons for settling, the federal district court’s rejection of the first

nuisance value settlement, and the additional requirement that SGI

inform the DOJ of future joint bidding agreements, Mr.

Kolbenschlag’s statement is not “likely to cause reasonable people

to think ‘significantly less favorably’ about the plaintiff than they

would if they knew the truth.” Bustos, 646 F.3d at 764-65 (citation

                                    18
  omitted); Jankovic v. Int’l Crisis Grp., 429 F. Supp. 2d 165, 177 n.8

  (D.D.C. 2006) (explaining that an allegedly defamatory statement

  was clarified by two internet links and “[w]hat little confusion the

  sentence could possibly cause is easily dispelled by any reader

  willing to perform minimal research”), aff’d in part, rev’d in part and

  remanded, 494 F.3d 1080 (D.C. Cir. 2007).

¶ 34   We are not persuaded that Mr. Kolbenschlag’s comment that

  SGI was actually fined is problematic when compared to other

  articles describing a fine for allegations for the reasons described

  above. The undisputed record demonstrates that SGI paid twelve

  times the actual amount of damages to settle two civil claims

  related to its illegal bidding practices in the MOU and that it agreed

  to additional restrictions to its bidding practices in future joint

  bidding ventures. Therefore, the absence of the word “alleged” is

  immaterial and does not affect the substantial truth of the

  comment.

             III.   Deposition Would Not Alter the Outcome

¶ 35   SGI next contends that the district court erroneously denied

  its discovery request to depose Mr. Kolbenschlag. It reasons that a

  deposition would shed light on whether Mr. Kolbenschlag could

                                     19
  validate his claim that the comment was substantially true.

  Because we conclude that Mr. Kolbenschlag’s subjective belief is

  not relevant, and because SGI has failed to allege any additional

  facts it could have discovered through a deposition, we discern no

  abuse of discretion by the district court in denying the request.

                    A.    Standard of Review and Law

¶ 36   “Whether to grant a request for discovery pursuant to C.R.C.P.

  56(f) lies within the discretion of the trial court.” A-1 Auto Repair &

  Detail, Inc. v. Bilunas-Hardy, 93 P.3d 598, 604 (Colo. App. 2004). A

  district court abuses its discretion when it refuses to grant a party a

  reasonable continuance to permit utilization of the discovery

  procedures provided by the rules of civil procedure and when it is

  premature to grant a motion for summary judgment. Holland v. Bd.

  of Cty. Comm’rs, 883 P.2d 500, 508 (Colo. App. 1994). However,

  “[i]t is not an abuse of discretion to deny a C.R.C.P. 56(f) request if

  the movant has failed to demonstrate that the proposed discovery is

  necessary and could produce facts that would preclude summary

  judgment.” A-1 Auto Repair, 93 P.3d at 604.

                                     20
                             B.      Application

¶ 37   The district court found that SGI had failed to articulate how

  Mr. Kolbenschlag’s deposition would reveal facts that could change

  the outcome. See id. Indeed, it found that Mr. Kolbenschlag’s

  deposition was irrelevant to the objective question whether his

  comment was substantially true; that actual malice (the subjective

  issue) was no longer part of the litigation; and that Mr.

  Kolbenschlag had no personal, special, or unique knowledge of the

  prior litigation that would cause him to know more about the

  substantial truth of it. We discern no abuse of discretion in the

  court’s finding for two reasons.

¶ 38   First, Mr. Kolbenschlag’s subjective reasons for the comment

  have no bearing on the question whether a reasonable person

  would find his comment substantially true or materially false. This

  is particularly so since the burden of proving material falsity is on

  the plaintiff. See Brokers’ Choice of Am., 861 F.3d at 1110 (applying

  Colorado law). SGI’s assertion that the deposition would “determine

  any objective criteria upon which he can validate that his statement

  was substantially true” is illogical and misconstrues both the

  burden and the objective standard applicable to defamation. And,

                                      21
  because actual malice was not an issue for summary judgment, Mr.

  Kolbenschlag’s reasons for making the comment are simply

  irrelevant. Even assuming he acted out of malice or had no reason

  to believe the truth of what he said, his subjective intent is

  irrelevant to whether the comment itself was substantially true.

  See Fry, ¶ 34 (explaining that the substantial truth test requires a

  court to determine “how the publication would have been

  understood by a reasonable or average law reader”) (emphasis

  added).

¶ 39   Second, nothing in the records shows that Mr. Kolbenschlag

  had any special or unique knowledge of the prior litigation. SGI

  argues that Mr. Kolbenschlag may have followed the litigation

  closely because he worked on issue campaigns and some of the

  commenters in the antitrust litigation had “endorsed” his LinkedIn

  page. These assertions are speculative. And, even if proven, they

  are irrelevant to the issue whether the comment itself is

  substantially true. Because Mr. Kolbenschlag’s comment does not

  constitute defamation, his intent in making it is irrelevant; thus, we

  affirm the district court’s order denying SGI’s deposition request.

                                    22
                      IV.   Appellate Attorney Fees

¶ 40   Relying on C.A.R. 38(d) and 39.1, Mr. Kolbenschlag asks us to

  award him attorney fees and costs on appeal. He contends that

  SGI’s appeal is groundless, frivolous, and vexatious. We agree that

  the appeal is groundless and frivolous and, therefore, we do not

  need to consider whether it is vexatious.

¶ 41   In any civil action, a court shall award “reasonable attorney

  fees against any attorney or party who has brought or defended a

  civil action, either in whole or in part, that the court determines

  lacked substantial justification.” § 13-17-102(2), C.R.S. 2018.

¶ 42   Appeals can be frivolous in two ways: (1) they may be frivolous

  as filed where the judgment by the court below is so plainly correct

  and the legal authority contrary to appellant’s position so clear that

  there is really no appealable issue; or (2) an appeal may be frivolous

  as argued where the appellant commits misconduct in arguing the

  appeal. Averyt v. Wal-Mart Stores, Inc., 2013 COA 10, ¶ 40.

  “Standards for determining whether an appeal is frivolous should

  be directed toward penalizing egregious conduct . . . .” Mission

  Denver Co. v. Pierson, 674 P.2d 363, 365 (Colo. 1984). C.A.R. 38(d)

  should, therefore, only be used to impose sanctions in clear and

                                    23
  unequivocal cases when the appellant presents no rational

  argument, or when the appeal is prosecuted for the sole purpose of

  harassment or delay. Wood Bros. Homes, Inc. v. Howard, 862 P.2d
925, 934-35 (Colo. 1993); Mission Denver Co., 674 P.2d at 365-66.

¶ 43   We begin with SGI’s appeal of the second issue — the court’s

  refusal to order Mr. Kolbenschlag’s deposition — and conclude that

  it is frivolous because there is no proper legal basis for SGI’s

  argument. See Mitchell v. Ryder, 104 P.3d 316, 323 (Colo. App.

  2004) (“An appeal is frivolous if the proponent can present no

  rational argument based on the evidence and law or the appeal is

  prosecuted for the sole purpose of harassment or delay.”). Once Mr.

  Kolbenschlag withdrew his actual malice argument, his subjective

  belief in the truth of his comment was plainly irrelevant. We

  therefore discern no basis in law or in fact for SGI to pursue an

  appeal of that ruling.

¶ 44   SGI asserts repeatedly that Mr. Kolbenschlag’s deposition was

  relevant because he “may have had knowledge regarding the

  underlying federal litigation and its eventual outcome.” It argues

  that Mr. Kolbenschlag “is not a random person” but is “a seasoned

  media professional and the owner of” an issue group. And it asserts

                                     24
  that Mr. Kolbenschlag knew some of the individuals that

  commented on the initial settlement agreement because they had

  “endorsed the Defendant on LinkedIn” and therefore he may have

  “provided assistance or advice to some commenters.” However, as

  described above, Mr. Kolbenschlag’s subjective reasons for

  commenting on the news article are simply irrelevant to whether his

  comment was substantially true.

¶ 45   For similar reasons, we award appellate attorney fees for the

  libel claim. SGI’s claim on appeal that its settlement was purely a

  “business decision” for “nuisance value” and that it did not engage

  in misconduct is directly refuted by the undisputed record. These

  undisputed facts are

         • SGI and GEC competed for oil and gas leases.

         • SGI and GEC executed the MOU agreeing not to compete

            against each other for four leases.

         • SGI and GEC never disclosed the MOU to the BLM.

         • Representatives from both SGI and GEC attended the

            auction where SGI secured the successful bid.

         • The successful bids were less than market value.

                                    25
• SGI conveyed 50% of the leases to GEC after the bidding

  process.

• Emails among GEC executives congratulated themselves

  on avoiding a bidding war with SGI by way of the

  undisclosed MOU.

• A GEC executive brought a federal qui tam action alleging

  illegal collusion between SGI and GEC in the MOU and

  SGI’s false certification that there had been no bid

  rigging.

• The DOJ concluded the MOU constituted a per se

  restraint of trade, violated section 1 of the Sherman Act,

  and commenced an antitrust lawsuit.

• A federal judge rejected the first settlement proposal

  concluding it was for nuisance value, provided

  insufficient deterrence to the parties and others in the

  industry, and, thus, was not in the public interest.

• The settlement entered required SGI and GEC to pay

  twelve times the amount of damages actually incurred

  and required them to give the government advance notice

  of any proposed joint bidding practices for five years.

                         26
¶ 46      Because the overwhelming record refutes SGI’s libel claims, we

  conclude there is no reasonable basis for it. See § 13-17-102(2)

  (attorney fees proper where the court determines a party “lacked

  substantial justification”). Accordingly, we order that attorney fees

  be awarded jointly and severally against SGI and its counsel. § 13-

  17-102(3). We exercise our discretion under C.A.R. 39.1 to remand

  the case to the district court for a determination and award of

  reasonable appellate attorney fees.

                              V.   Conclusion

¶ 47      The judgment is affirmed, and the case is remanded for the

  district court to determine and award reasonable appellate attorney

  fees.

          JUDGE FOX and JUDGE WELLING concur.

                                     27