26 CO 52, 25SC21 Veolia Water Techs v. Antero Treatment

OCR transcription for search; preserved printed pages are authoritative

The opinion summaries are not part of the Colorado Supreme
Court's opinion. They have been prepared solely for the reader's
convenience. As such, they may not be cited or relied upon. If
there is any discrepancy between the language in the summary
and the opinion, the language in the opinion controls.

ADVANCE SHEET HEADNOTE
June 23, 2026

2026 CO 52

No. 25SC21, Veolia Water Techs., Inc. v. Antero Treatment LLC -Economic Loss
Rule-Interrelated Contracts - Fraudulent Inducement.

In this case concerning a dispute that followed a series of contracts between
two commercial entities, the supreme court granted certiorari to consider whether
the economic loss rule bars a fraud claim when the parties were in a contractual
relationship, the fraud claim allegedly sought the same relief as a breach of
contract claim, and the fraud allegedly concerned a party's performance under the
contract.

The court now concludes that because (1) the interrelated contracts doctrine
does not apply to a series of contracts between two parties when each contract
represents a stand-alone transaction and (2) the fraud alleged here occurred prior
to the formation of the pertinent contract and, on the facts presented, induced the
other party to sign that contract, the economic loss rule does not bar the fraud
claim in this case.

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Accordingly, the court affirms the court of appeals division's decision
below, albeit on other grounds, and remands this case with instructions to return
the case to the trial court for a determination of the reasonable attorney fees to be
awarded to the prevailing party under the pertinent contract's fee-shifting
provision.

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# The Supreme Court of the State of Colorado 2 East 14th Avenue . Denver, Colorado 80203

2026 CO 52

Supreme Court Case No. 25SC21
Certiorari to the Colorado Court of Appeals
Court of Appeals Case No. 23CA897

Petitioner:

Veolia Water Technologies, Inc.,

V.

Respondents:
Antero Treatment LLC, Antero Resources Corporation, Antero Midstream
Partners LP, and Antero Midstream Corporation.

Judgment Affirmed
en banc
June 23, 2026

Attorneys for Petitioner:

Fox Rothschild LLP

Marsha M. Piccone

Risa B. Brown

Denver, Colorado

Mayer Brown LLP

Nicole A. Saharsky

Minh Nguyen-Dang

Washington, District of Columbia

Troutman Pepper Locke LLP
Misha Tseytlin
Chicago, Illinois

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Troutman Pepper Locke LLP
Ralph A. Finizio
Robert A. Gallagher
Pittsburgh, Pennsylvania

Attorneys for Respondents:
Marie R. Yeates
Houston, Texas

Vinson & Elkins, LLP
James D. Thompson, III
Stephanie L. Noble
Matthew C. Hoffman
Garrett T. Meisman
Houston, Texas

Vinson & Elkins, LLP
Michael A. Heidler
Austin, Texas

Womble Bond Dickinson (US) LLP
Kendra N. Beckwith
Kenneth F. Rossman, IV
Denver, Colorado

Davis Graham & Stubbs LLP
James R. Henderson
Denver, Colorado

Attorneys for Amicus Curiae Colorado Defense Lawyers Association:
Montgomery | Amatuzio
Christopher R. Reeves
Denver, Colorado

Attorneys for Amicus Curiae Gregory Klass:
Berg Hill Greenleaf Ruscitti LLP
Geoffrey C. Klingsporn
Boulder, Colorado

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JUSTICE GABRIEL delivered the Opinion of the Court, in which CHIEF
JUSTICE MÁRQUEZ, JUSTICE BOATRIGHT, JUSTICE HOOD, JUSTICE
SAMOUR, JUSTICE BERKENKOTTER, and JUSTICE BLANCO joined.

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JUSTICE GABRIEL delivered the Opinion of the Court.

11
This dispute arises from a series of agreements between and among Antero
Treatment LLC, Antero Midstream Partners LP, Antero Midstream Corporation,
and Antero Resources Corporation (collectively "Antero"), on the one hand, and
Veolia Water Technologies, Inc. ("Veolia"), on the other, that led to the design and
construction of a facility to treat wastewater from hydraulic fracturing ("fracking")
operations. Antero asserts claims against Veolia for, among other things, breach
of contract and fraud. We granted certiorari to consider whether the economic loss
rule bars Antero's fraud claim when, according to Veolia, the parties were in a
contractual relationship, the fraud claim sought the same relief as Antero's
contract claim, and the fraud concerned Veolia's performance under the contract.

[2 We now conclude that because (1) the interrelated contracts doctrine does
not apply to a series of contracts between two parties when each contract
represents a stand-alone transaction and (2) the fraud alleged here occurred prior
to the formation of the pertinent contract and, on the facts presented, induced
Antero to sign that contract, the economic loss rule does not bar Antero's fraud
claim in this case.

13 We therefore affirm the court of appeals division's decision below, albeit on
other grounds, and we remand this case with instructions to return the case to the
trial court for a determination of the reasonable attorney fees to be awarded to

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Antero as the prevailing party under the pertinent contract's fee-shifting
provision.

## I. Facts and Procedural History

14 Antero Treatment is an indirect, wholly owned subsidiary of Antero
Midstream Corporation, a company that owns, operates, and develops midstream
energy assets for Antero Resources, a natural resources company engaged in oil
and gas extraction and production. In the summer of 2014, Antero began
investigating alternative disposal options for wastewater produced from its
fracking operations, which it had previously discarded by trucking the wastewater
to disposal wells, a method that was economically and environmentally
problematic. Antero approached Veolia, a company that designs and constructs
water treatment facilities, to discuss options for the disposal of Antero's
wastewater. Veolia subsequently presented Antero with a proposal to build a
facility that would use Veolia's technology to separate and crystallize the solids
within the wastewater, creating a waste salt that could be landfilled and leaving
behind water that was clean enough to reuse or discharge into surface waterways.

15
Antero and Veolia initially agreed on a "Bench Scale Proposal" under which
Veolia would conduct a study and preliminary engineering for such a wastewater
treatment facility. Antero paid Veolia $355,000 to conduct this Bench Scale Study,
which culminated in Veolia's issuing two "Bench Scale Reports." Throughout this

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study period, Veolia represented to Antero that the facility's waste salt would be
solid and stable, with "zero liquid waste," such that the salt would be suitable for
landfill disposal. In light of these representations, and at Veolia's suggestion,
Antero retained a consultant to design and complete a landfill permit application.
This application was based on the information and samples that Veolia had
provided regarding the waste salt's physical characteristics.

16 After the Bench Scale Proposal work, Antero provided Veolia with two
"Limited Notice to Proceed" agreements ("LNTPs"), under which Antero agreed
to pay Veolia $1.5 million to conduct additional design work. Following these
exploratory agreements, and throughout the summer of 2015, Antero and Veolia
negotiated the terms of what would become the parties' Design/Build Agreement
("DBA"), under which Veolia would design and build a turnkey water treatment
facility called "Clearwater" for Antero.

17 As initially envisioned, the Clearwater facility would treat Antero's
wastewater in three stages. First, a pretreatment stage would use chemicals to
remove solids and dissolved metals from the water. Second, a thermal stage
would crystallize and separate salt from the chemically treated water. This stage
would use four sequential chambers, or "effects," in which wastewater would be
heated and crystallized waste salt would be separated. This stage would also use
"chillers," which would consume significant power, for cooling purposes. Finally,

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a post-treatment stage would remove any remaining volatile organic compounds
to produce water capable of reuse in oil and gas operations or discharge into
freshwater streams. This process would satisfy Antero's objective of producing
waste salt that could be landfilled.

18 In addition, because the cost of power would be passed through to Antero,
Antero made clear to Veolia that any agreement would need to satisfy certain
specified power consumption limits.

19 As the parties were negotiating the DBA, Veolia became concerned about
the potential power consumption required for the chillers used in Clearwater's
crystallization process. Veolia specifically became concerned about its ability to
satisfy Antero's power consumption requirements. Because of these concerns, and
without notifying Antero, Veolia began to redesign Clearwater to split the fourth
effect in the second stage of treatment from one chamber to two, to reduce the need
for the power-demanding chillers.

110 Thereafter, and before the parties entered into the DBA, Veolia further
discovered that it had underestimated the chillers' daily power requirements by a
significant margin, exacerbating its power consumption concerns. Despite
determining that the facility's power consumption would likely exceed Antero's
specified maximum consumption requirements, Veolia did not share its
calculations with Antero. Instead, it moved forward with the DBA negotiations,

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knowing full well that its most recent calculations exceeded Antero's
requirements.

111 Four days after Veolia discovered this significant but undisclosed
miscalculation, the parties signed the DBA, with Antero ultimately agreeing to pay
Veolia $255,765,253 once the facility was completed.

112 The DBA contained a number of requirements and provisions that are
pertinent to this case.

113 First, the DBA included two key operating requirements for the Clearwater
facility: (1) the DBA's waste salt and sludge specifications required "Free
Liquids -Pass, No free liquids" and "Total Solids -no limit, must pass paint filter
test," reflecting Antero's requirement that the waste salt be suitable for landfilling;
and (2) the facility's power consumption could not exceed 505,500 kilowatt-hour
("kWh") per day with its chillers on or 340,000 kWh per day with the chillers off.

114 Second, the DBA had an integration clause, which specifically incorporated
the prior Bench Scale Proposal and LNTPs into the DBA. This integration clause
provided, in pertinent part, "This Agreement together with each LNTP, the
Benchscale Study (excluding the confidentiality provisions contained therein) and
the Existing Confidentiality Agreements, sets forth the entire agreement between
the Parties with regard to the subject matter of this Agreement .... "

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115 Finally, the DBA included a damages cap clause that limited Veolia's
liability to sixty percent of the contract sum for most claims but explicitly provided
that this limitation did not apply in the case of, among other things, either party's
"gross negligence, fraud or willful misconduct." (Emphasis added.)

116 After the parties signed the DBA, Veolia's senior management began
developing a "plan" to "sell" its proposed design change (i.e., splitting the fourth
effect into two separate chambers) as "a WIN/WIN Scenario and benefit for the
project." In the course of its internal conversations, however, Veolia had identified
a significant risk that splitting the fourth effect might compromise the waste salt's
quality and render the waste salt too unstable for Antero's landfill plans. Veolia
did not disclose this risk to Antero.

117 Then, just eight days after the DBA was signed, Veolia proposed to Antero
Change Order 1 to modify the original design of Clearwater by splitting the fourth
effect. Consistent with its plan to sell this design change as a win, Veolia presented
it to Antero as "design optimizations" and listed the proposed change's alleged
benefits. Again, however, Veolia never communicated the potential risk that this
design change posed to the waste salt's quality. To the contrary, Veolia repeatedly
assured Antero that the salt quality would be of suitable stability for Antero's
envisioned landfill strategy. Ultimately, having not been advised of (or having

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been misled as to) the material facts, Antero agreed to Change Order 1, and Veolia
began constructing Clearwater.

118 Two years after the DBA was signed, Clearwater began treating wastewater
and producing waste salt. Consistent with the risks that Veolia had identified
internally (but did not disclose to Antero) before Change Order 1 was signed,
Clearwater produced a "soupy salt" as a result of the splitting of the fourth effect.
This salt quality caused a number of problems for Antero. Among other things,
the salt leaked out of transport trucks and storage buildings. In addition, the
"soupy salt" could not be landfilled using the standard landfilling techniques and
equipment that Antero had envisioned. Rather, the salt could be landfilled only
after difficult and expensive solidification efforts that had never been part of
Antero's landfill strategy.

119 As a result of the issues arising from the waste salt's quality, as well as from
other mechanical, design, and process-based failures that arose at the facility,
Clearwater never satisfied a number of the critical terms of the DBA.
Subsequently, Veolia informed Antero that the salt quality would not improve and
that it was Antero's problem. Antero terminated the DBA the next day and
eventually "mothballed" Clearwater.

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120
Antero and Veolia thereafter filed suit against one another, and the cases
were consolidated. As pertinent here, Antero brought claims against Veolia for
both breach of contract under the DBA and for fraud.

121 The case proceeded to a bench trial, after which the trial court found that,
prior to the execution of the DBA, Veolia knew that Clearwater would not meet
Antero's required power consumption guarantee, had fraudulently concealed that
fact from and intentionally failed to disclose that fact to Antero, and had failed to
disclose to Antero its plan to split the fourth effect, all to induce Antero to execute
the DBA. The court further determined that the economic loss rule did not bar
Antero's claim for this fraudulent inducement. In its analysis, the court noted that
Colorado case law excepts from the economic loss rule "a defendant's
pre-contractual conduct because, at that time, there was no contract that could
have subsumed identical tort duties."

122 In reaching this conclusion, the trial court rejected Veolia's assertion that
under Colorado case law, the DBA was part of a "network of contracts" between
the parties extending back to the Bench Scale Proposal and LNTPs, such that any
misrepresentations occurred during the course of contract performance. The court
distinguished the case law on which Veolia had relied, finding that the DBA was
not a part of a network of interrelated contracts. Rather, it was the governing

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contract, and it was not entered into until after the pertinent misrepresentations
were made.

123 In light of the foregoing findings, the trial court ultimately ordered Veolia
to pay Antero $215.2 million in damages. The court also awarded Antero attorney
fees under the DBA's fee-shifting clause, which provided, among other things, that
the prevailing party in a lawsuit arising out of or in connection with the DBA was
entitled to recover its reasonable attorney fees.

124 Veolia appealed, arguing, among other things, that the trial court had erred
in finding that the economic loss rule did not bar Antero's fraud claims. A division
of the court of appeals affirmed the trial court's judgment, but on different
grounds. Veolia Water Techs., Inc. v. Antero Treatment LLC, 2024 COA 126, 11 2, 95,
157, 564 P.3d 1089, 1095, 1108, 1117.

125 In its analysis, the division determined, contrary to the trial court, that the
Bench Scale Proposal, LNTPs, and DBA functioned as an interrelated network of
contracts, such that Veolia's misrepresentations were made after the contracts
were executed. Id. at 1 95, 564 P.3d at 1108. The division further determined,
however, that the economic loss rule did not bar Antero's fraud claims because the
DBA excepted such claims in its damages cap provision and the tort duties that
Veolia had violated were independent of its contractual duties. Id. at | 107,
564 P.3d at 1110.

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126 On this latter point, the division concluded that Veolia's duty to refrain from
fraudulently concealing or misrepresenting material facts was independent of
Veolia's implied duty of good faith and fair dealing in the allegedly interrelated
contracts. Id. at | 98, 564 P.3d at 1109. The division reasoned that the implied duty
applies only to a party's discretionary authority to determine certain terms of a
contract. Id. at 1 99, 564 P.3d at 1109. Here, however, Veolia had no discretion to
modify the DBA's salt quality or power consumption guarantees. Id. at [[ 100-01,
564 P.3d at 1109. Accordingly, there was no overlap in Veolia's common law tort
duty and its implied contractual duty. Id. at | 101, 564 P.3d at 1109. The division
thus affirmed, albeit on other grounds, the trial court's determination that Antero's
fraud claims were not barred by the economic loss rule. Id. at [{ 104, 107, 564 P.3d
at 1110.

127 Veolia then petitioned this court for certiorari, and we granted its petition.

## II. Analysis

128 We begin by setting forth the applicable standard of review. We then
discuss the pertinent principles of the economic loss rule. Finally, we apply these
principles to the facts before us, ultimately concluding that Antero's fraudulent
inducement claim is not barred by the economic loss rule.

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### A. Standard of Review

129 The application of the economic loss rule presents a question of law that we
review de novo. Mid-Century Ins. Co. v. HIVE Constr., Inc., 2025 CO 17, 1 21,
567 P.3d 153, 158. We, however, defer to the trial court's factual findings unless
they are clearly erroneous, and we will not overturn such factual findings unless
they are unsupported by the record. Ralph L. Wadsworth Constr. Co. v. Reg'l Rail
Partners, 2026 CO 19, 1 21, 587 P.3d 658, 663.

### B. The Economic Loss Rule

130
The economic loss rule developed to maintain the boundary between
contract and tort law. Town of Alma v. AZCO Constr., Inc., 10 P.3d 1256, 1259 (Colo.
2000). Under the rule, a party that suffers only economic loss from the breach of
an express or implied contractual duty may not assert a tort claim for that breach
absent an independent duty of care under tort law. Id. at 1264. The rule thus
serves to enforce the expectancy interests created by the parties' contractual
promises so that the parties may allocate risks and costs during bargaining, and it
ensures predictability in commercial transactions. Id. at 1262.

131 To determine whether the economic loss rule applies, courts look not to the
nature of the damages but to the source of the duty allegedly breached, i.e., the
contract or some other source. Mid-Century Ins., 1 24, 567 P.3d at 158. To do so,
courts consider whether (1) the relief sought in tort is the same as the contractual

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relief; (2) there exists a recognized common law duty of care in tort; and (3) the tort
and contractual duties differ in any way. Id. at | 25, 567 P.3d at 158. "If the parties
have memorialized the applicable duty of care in their contract (i.e., if the duty is
contained within or imposed under the contract), then no duty exists independent
of the contract, and the economic loss rule will apply to bar a tort claim." Id. If,
however, a recognized common law tort duty exists independent of any
contractual obligations, then the economic loss rule does not apply and does not
bar a tort claim asserting a violation of that independent duty of care. See Town of
Alma, 10 P.3d at 1263.

132 Applying these principles, we concluded in Van Rees v. Unleaded Software,
Inc., 2016 CO 51, 115, 373 P.3d 603, 607, that tort claims based on
misrepresentations made prior to the formation of a contract and that allegedly
induced the plaintiff to enter into that contract violated an independent duty in
tort and, thus, such claims were not barred by the economic loss rule. In so
concluding, we observed that an important distinction exists between "failure to
perform the contract itself, and promises that induce a party to enter into a contract
in the first place." Id. at | 13, 373 P.3d at 607.

133 Although questions regarding the application of the economic loss rule
frequently arise in disputes involving one-to-one contractual relationships,
"[c]ontractual duties arise just as surely from networks of interrelated contracts as

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from two-party agreements." BRW, Inc. v. Dufficy & Sons, Inc., 99 P.3d 66, 72 (Colo.
2004).

134 With these principles in mind, we turn to the facts before us.

### C. Application

135 Veolia contends that the economic loss rule bars Antero's fraud claims
because (1) Veolia and Antero were parties to a network of interrelated contracts
that established a broad and ongoing contractual relationship; and (2) any
misrepresentations were made in the course of that relationship and were
therefore governed by the parties' contractual duties, particularly the implied
covenant of good faith and fair dealing. We disagree with each premise of Veolia's
argument, and thus we disagree with Veolia's conclusion.

136 As an initial matter, we disagree with Veolia's assertion that Veolia and
Antero were parties to a network of interrelated contracts for purposes of the
economic loss rule. As noted above, the parties entered into a series of distinct and
stand-alone contracts, none of which obligated either party to proceed to a
subsequent contract. Specifically, under the Bench Scale Proposal, Veolia agreed
to conduct a study and preliminary engineering for Clearwater to validate the
process design and confirm Veolia's proposed treatment approach. Nothing
obligated either party to proceed thereafter. Similarly, the LNTPs obligated Veolia
to conduct additional design work. Again, however, nothing in those LNTPs

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obligated the parties to proceed further. The DBA then followed as a stand-alone
agreement.

137 BRW, 99 P.3d at 72-74, on which Veolia principally relies in arguing that the
contracts at issue comprised a network of interrelated contracts, is distinguishable.
In BRW, we addressed whether the economic loss rule applied in a tort suit for
claims of negligent breach of a duty and negligent misrepresentation brought by
a subcontractor against a design engineer and its agent when no contract existed
between the subcontractor and those parties. Id. at 67 & n.1. We began by noting
that multiple parties are frequently involved in large construction projects and that
"[t]hese parties typically rely on a network of contracts to allocate their risks,
duties, and remedies." Id. at 72. We further observed that in this context, the
parties have the opportunity to define their rights and remedies in a contractual
relationship. Id. Thus, even though a subcontractor might not have the
opportunity to negotiate directly with the engineer or architect, it has the chance
to allocate the risks of following specified plans when it contracts with a party
involved in the network of contracts. Id. In this way, the "application of the
economic loss rule encourages a subcontractor to protect itself from risks, holds
the parties to the terms of their bargain, enforces their expectancy interests, and
maintains the boundary between contract and tort law." Id.

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138 Applying these principles to the facts in that case, we observed that the
interrelated contracts at issue contained the duties of care owed by the engineer
and its agent and that the subcontractor's remedies therefore existed in contract.
Id. at 74. Accordingly, we concluded that the economic loss rule barred the
subcontractor's negligence claims against the engineer and its agent. Id .; see also
S K Peightal Eng'rs, LTD v. Mid Valley Real Est. Sols. V, LLC, 2015 CO 7, 1 10,
342 P.3d 868, 872-73 (concluding, in a case in which a later-created entity that
acquired title to a spec home sued two soil engineers that had subcontracts with
the home's developer but not with the entity, that the economic loss rule could
apply to an entity that did not exist at the time the contracts containing the duties
at issue were formed if that entity was a party to or a third-party beneficiary of the
contract or an interrelated contract).

139 Unlike BRW, this case does not involve multiple parties entering into a
network of interlocking contracts to perform a large transaction or project and in
which certain of the parties contracted directly with some but not all of the other
parties. Rather, this case involves two parties that entered into a series of contracts
with each other. Moreover, the parties' contracts were not interlocking
agreements forming parts of a larger transaction or project. To the contrary,
although the Bench Scale Proposal and LNTPs were related to the DBA, the DBA
was a stand-alone, fully integrated agreement governing the construction of

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Clearwater, and, thus, it constituted its own distinct and separate transaction. Our
case law on the interrelated contracts doctrine is therefore inapposite here.

140 Notwithstanding Veolia's assertion to the contrary, the DBA's integration
clause does not establish otherwise. As noted above, that clause merely restated
as duties under the DBA duties that the parties had undertaken in their prior
agreements. The parties, however, were not required to incorporate those duties
into the DBA. They did so after separately negotiating the latter agreement.

141 Nor are we persuaded by Veolia's reliance on Dream Finders Homes LLC v.
Weyerhaeuser NR Co., 2021 COA 143, 506 P.3d 108. In that case, a division of our
court of appeals expanded the interrelated contracts doctrine beyond the context
of a complex, multi-party, interrelated transaction in which no contract existed
between certain of the parties to the transaction. Id. at 11 45-48, 506 P.3d at 119-20.
We have not explicitly endorsed such an approach. Even if we did, however,
Dream Finders, too, is distinguishable.

142 Dream Finders involved a scenario in which none of a series of documents
between and among a joist manufacturer, its distributor, and joist purchasers set
forth all of the terms and conditions of the parties' purchase agreement. Id. at
TT 46-47, 506 P.3d at 119. In these circumstances, the division agreed with the
joist manufacturer that the documents constituted a single agreement governing
the sales of the joists. Id. at 1 48, 506 P.3d at 120. Having thus concluded, the

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division further determined that any misrepresentations alleged by the purchasers
were post-contractual (because the misrepresentations occurred after the earliest
of the documents on which the parties had agreed). Id. at 11 50-52, 506 P.3d at
120. And because the tort duties alleged by the purchasers to have been breached
mirrored the duties set forth in the parties' contract, the economic loss rule barred
the purchasers' misrepresentation and fraudulent concealment claims. Id. at
TT 53-83, 506 P.3d at 120-26.

143 Here, unlike in Dream Finders, Veolia does not allege that the DBA failed to
include all of the terms of the parties' agreement. Indeed, it appears undisputed
that the DBA represented a complete recitation of the parties' agreement for
Clearwater's construction. Accordingly, even if the Dream Finders division's
understanding of the interrelated contracts doctrine were correct -an issue that
we need not address here - that case does not assist Veolia.

144 Lastly, we note that were we to accept Veolia's argument that the contracts
in this case were interrelated such that they constitute a broad and ongoing
contractual relationship, the economic loss rule would essentially bar fraud claims
whenever parties happen to have had a preexisting contractual relationship
relating to a particular project or undertaking. Such a rule would require
contracting parties to bargain preemptively to allocate risks and costs for

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unknown future contracts. We have never extended the economic loss rule or the
interrelated contracts doctrine that far, and we decline to do so now.

145 For these reasons, we conclude that Veolia and Antero were not parties to a
network of interrelated contracts establishing an ongoing contractual relationship
that subsumed the violation of a duty to refrain from fraudulent
misrepresentations. (To the extent that the division below concluded that Veolia
and Antero were parties to a network of interrelated contracts under BRW, we
respectfully disagree with that conclusion.) Rather, the parties signed a series of
independent agreements, and the pertinent misrepresentations occurred prior to,
and, on the facts presented, induced Antero to enter into, the DBA. Specifically,
Veolia failed to disclose its inability to meet Antero's power consumption
requirements prior to the execution of the DBA. And as the trial court found, with
ample record support, the power consumption guarantee was critical to Antero
and without that guarantee, Antero would not have signed the DBA.

146 In short, the facts before us demonstrate that Antero's fraud claim amounts
to a straightforward fraudulent inducement claim. Accordingly, we conclude that
Van Rees, TT 13-15, 373 P.3d at 607, controls and, therefore, the economic loss rule
does not bar that claim.

147 In light of this determination, we need not address whether Veolia also
fraudulently induced Antero to sign Change Order 1. But for the fraudulent

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inducement of the DBA, the parties would not have been in a position to agree to
Change Order 1.

148 Finally, we note that even if Veolia's misrepresentations and fraudulent
concealment could be said to have been post-contractual, we would reach the same
result because, as the division below opined, the covenant of good faith and fair
dealing, on which Veolia relies, does not apply to nondiscretionary contract terms
like those at issue here. See Veolia Water Techs., 11 99-101, 564 P.3d at 1109. Thus,
Antero would not have a viable claim for breach of that implied covenant. See id.
149 Specifically, as noted above, Veolia contends that if its misrepresentations
were post-contractual, then any tort duty to refrain from such misrepresentations
would be subsumed by either its express or implied contractual duties and barred
by the economic loss rule. Here, however, the parties' agreements did not contain
any express duties to refrain from making misrepresentations. In fact, the DBA
explicitly contemplated the parties' ability to bring separate claims for fraud, given
the damages cap exception for "gross negligence, fraud or willful misconduct."
Accordingly, if Veolia had a contractual duty to refrain from making
misrepresentations, then that duty had to arise, if at all, from the contract's implied
covenant of good faith and fair dealing. See Former TCHR, LLC v. First Hand Mgmt.
LLC, 2012 COA 129, 1 29, 317 P.3d 1226, 1232 (concluding that the disclosure
duties that the plaintiff claimed to have been breached arose from and were

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expressly described by the parties' preexisting agreement or were subsumed
within that agreement's implied covenant of good faith and fair dealing); Hamon
Contractors, Inc. v. Carter & Burgess, Inc., 229 P.3d 282, 289 (Colo. App. 2009) (noting
that the implied covenant of good faith and fair dealing prohibits fraud in the
performance of contractual obligations as to which a party has discretionary
authority and, thus, the covenant may preclude fraud claims arising out of the
party's contractual performance).

150 As we have previously recognized, however, "[t]he duty of good faith and
fair dealing applies when one party has discretionary authority to determine certain
terms of the contract, such as quantity, price, or time." Amoco Oil Co. v. Ervin,
908 P.2d 493, 498 (Colo. 1995) (emphasis added). In this context, "discretionary
authority" refers to a party's ability after contract formation to set or control the
terms of performance, and discretion occurs when, at contract formation, the
parties defer a decision regarding performance terms of the contract. Id.

151 Here, as the division below observed, Veolia had no discretion to modify
Clearwater's core requirements under the DBA (e.g., the salt quality requirements
or power guarantees) without Antero's written consent. Veolia Water Techs.,
TT 100-01, 564 P.3d at 1109. As a result, under the settled law described above,
Veolia did not owe Antero an implied contractual duty to refrain from making
misrepresentations regarding these matters. Consequently, even if Veolia's

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misrepresentations were post-contractual, no contractual duty would have
subsumed Veolia's common law tort duty to refrain from making
misrepresentations, and the economic loss rule still would not bar Antero's fraud
claim. See Town of Alma, 10 P.3d at 1263 (noting that the economic loss rule does
not apply when the court has recognized the existence of a duty independent of
any contractual obligations).

## III. Conclusion

152 For the foregoing reasons, we conclude that (1) the interrelated contracts
doctrine does not apply to a series of contracts between two parties when each
contract represents a stand-alone transaction and (2) the fraud alleged here
occurred prior to the formation of the DBA and, on the facts presented, induced
Antero to sign that contract. Accordingly, under Van Rees, 11 13-15, 373 P.3d at
607, the economic loss rule does not bar Antero's fraud claim in this case.

153 We therefore affirm the division's judgment below, albeit on other grounds,
and we remand this case with instructions that the case be returned to the trial
court for a determination of the reasonable attorney fees to be awarded to Antero
pursuant to the DBA's fee-shifting provision.