Stern v. Farncombe

24CA0474 Stern v Farncombe 03-06-2025

COLORADO COURT OF APPEALS

Court of Appeals No. 24CA0474
Boulder County District Court No. 21CV30913
Honorable Stephen A. Groome, Judge

Daniel B. Stern,

Plaintiff-Appellee,

v.

Matthew W. Farncombe, Aurum LLC, a Colorado limited liability company, and
16518808 LLC, a Colorado limited liability company,

Defendants-Appellants.

JUDGMENT REVERSED AND CASE
REMANDED WITH DIRECTIONS

Division IV
Opinion by JUDGE GROVE
Harris and Pawar, JJ., concur

NOT PUBLISHED PURSUANT TO C.A.R. 35(e)
Announced March 6, 2025

Gray Bugos & Schroeder LLC, J. Lee Gray, Littleton, Colorado, for Plaintiff-
Appellee

Faegre Drinker Biddle & Reath LLP, Desmonne A. Bennett, Brian J. Paul,
Lawrence G. Scarborough, Maria S. Downham, Denver, Colorado, for
Defendants-Appellants
¶1 In this dispute over the start-up and operation of a home

technology company, defendants, Matthew W. Farncombe, Aurum

LLC (Aurum), and 16518808 LLC (1651), appeal the district court’s

judgment entered in favor of plaintiff, Daniel B. Stern, after a jury

trial. The district court’s final judgment reduced the damages the

jury awarded to defendants for their breach of contract

counterclaim and ruled in favor of Stern on an equitable claim for

constructive fraud that was not submitted to the jury. We reverse

the judgment and remand the case with directions.

I. Background

¶2 The dispute between Stern and defendants concerns Aurum

LLC, a home technology company that Stern and Farncombe

formed in 2016. In April of that year, 1651 (which, according to

defendants, is “an entity in which Farncombe has an ultimate

ownership stake”) made a capital contribution of $500,000 to

Aurum.

¶3 That same month, Farncombe lent $500,000 to Stern; a

promissory note (the April 2016 note) explained that the loan “will

be repaid in Full on or before 02/24/2021” at which point Stern

“shall be entitled to 50% equity of Aurum LLC . . . per the ‘Aurum

1
Agreement’”. The record does not include a written “Aurum

Agreement.” Nonetheless, according to Stern, the arrangement

described in the April 2016 note reflected his and Farncombe’s

understanding that Stern “would invest his sweat equity to build

revenue for the business” and ensured that Stern would have “skin

in the game.” Specifically, Stern maintains that the “Aurum

Agreement” cited in the April 2016 note referred to “Farncombe[’s]

indicat[ion] that the note would be repaid through company

proceeds” rather than by Stern personally.

¶4 In September 2016, Farncombe (via MWF Investments Corp.,

“another entity Farncombe owns,” according to defendants) lent

$500,000 to Aurum; a second promissory note (the September 2016

note) explained that the loan “will be repaid in full [by Aurum] on or

before 02/24/2021.”

¶5 Stern testified that he initially earned an annual salary of

$300,000 while holding four positions at Aurum: CEO, president,

managing member, and head of sales. The company was not

immediately profitable, however, and in April 2021, Farncombe and

Stern signed a new employment agreement that demoted Stern to

sales manager with a base annual salary of $310,400. Around the

2
same time, the parties also amended the “Aurum LLC Equity

Conversion Agreement” and executed a third promissory note (April

2021 note) that refinanced the $732,099 that Stern owed to

Farncombe (Aurum had made no payments on the April 2016 note)

and secured Stern’s financial obligation under the refinanced

promissory note by a deed of trust on his home.

¶6 Farncombe remained dissatisfied with Stern’s performance,

and in the fall of 2021, he placed Stern on administrative leave

before firing him. That December, Stern commenced this litigation.

¶7 Stern’s amended complaint sought to quiet title to his home

and nullify several agreements between Stern and defendants,

including the April 2016 note. Stern alleged several causes of

action, of which the following are relevant to this appeal: (1) fraud

against defendants; (2) constructive fraud against defendants (an

equitable claim); (3) negligent misrepresentation against

defendants; and (4) breach of fiduciary duty against Farncombe.

Each cause of action centered on Stern’s contention that he was led

to believe that the documents he signed

were necessary for [Stern] to have a one-half
ownership interest in [Aurum], that [Stern]
would obtain a one-half ownership interest in

3
[Aurum] based on his “sweat equity” instead of
financial contribution, and that the $500,000
loan purportedly made on [Stern’s] behalf to
[Aurum] would be paid by [Aurum] instead of
personally by [Stern].

¶8 Defendants asserted several affirmative defenses and

counterclaims. The affirmative defenses relevant to this appeal

included the following: (1) the absence of any duty owed to Stern;

(2) waiver, estoppel, and ratification; (3) setoff; (4) statute of frauds;

and (5) failure to mitigate damages. The counterclaims relevant to

this appeal were (1) breach of fiduciary duty and (2) breach of

contract.

¶9 After the district court granted summary judgment on several

matters not before us, the case proceeded to trial. As relevant to

this appeal, the jury’s verdict reflected the following:

• Stern did not prevail on his negligent misrepresentation

claim.

• Stern did not prevail on his fraud claim (although the

jury found that Farncombe had committed fraud, it also

found in Farncombe’s favor on his defenses of ratification

and statute of limitations).

4
• Stern prevailed on his breach of fiduciary duty claim,

receiving a damages award of $269,000 (the jury found in

Farncombe’s favor on his defense of failure to mitigate

damages and reduced the damages award accordingly).

• Defendants prevailed on their breach of contract

counterclaim, receiving a damages award of $1.678

million.

• Defendants prevailed on their breach of fiduciary duty

counterclaim, receiving a damages award of $0.

¶ 10 The district court entered judgment reflecting the jury’s

verdict. With Stern’s equitable claim of constructive fraud still

outstanding, the parties filed competing post-trial motions — both

initially styled as C.R.C.P. 59 motions1 — requesting that the

district court rule on that claim in their favor. In his post-trial

motion, Stern requested $7.3 million in damages, $7 million of

which “represent[ed] the value of half of the company that [Stern]

lost due to Farncombe’s misrepresentations,” and $300,000 of

1 Later, Stern filed a motion asking the court to convert his “Rule 59

motion to Amend Judgment filed on December 5, 2023, to a ‘Motion
for Entry of Judgment under Rule 58’ on the outstanding
constructive fraud claim.”

5
which “represent[ed] six years of a $50,000 per year salary

reduction” that Stern accepted when he departed his previous

position to work for Aurum. In addition, Stern’s post-trial motion

sought to reduce the damages the jury awarded to defendants for

their successful breach of contract counterclaim from $1.678

million to $807,111 (the amount Stern owed on the April 2016

promissory note) because Aurum’s losses for breach of contract

were expressly limited by the parties’ contract “to the amount of

[Stern’s] direct or indirect ownership of Aurum, which is

undisputedly zero.”

¶ 11 The district court later ruled on the parties’ post-trial motions

and entered final judgment on all claims. Ruling in Stern’s favor on

his constructive fraud claim, the district court awarded him $1.5

million — half the amount that Stern testified Farncombe told him

Aurum was worth in 2017. The court declined to award Stern the

$7 million that he sought because “that would result in a windfall

for [Stern] especially in light of the jury finding that [Stern]

breached his contract.” The court also granted Stern’s request to

apply the contract’s “liability limitation provision” and reduced

defendants’ damages to $807,111. Finally, the court denied

6
defendants’ request for attorney fees and costs “[s]ince both parties

prevailed on a portion of their respective claims.”

II. Jurisdiction to Enter Final Judgment

¶ 12 We address, at the outset, defendants’ contention that the

district court waited too long to rule on the parties’ post-trial

motions and therefore lost jurisdiction to rule in Stern’s favor on his

constructive fraud claim or to reduce the jury’s damages award for

Stern’s breach of contract.

¶ 13 According to defendants, the district court’s judgment became

final on December 6, 2023, when it entered its “Amended Entry of

Judgment Per C.R.C.P. Rule 58(a)” (December 6 order) that reflected

both the jury’s verdicts and the court’s pretrial rulings on summary

judgment. The December 6 order did not address Stern’s

constructive fraud claim. Even so, defendants contend the court’s

judgment was final as of that date because the outcome of the

constructive fraud claim was dictated by the jury’s verdicts on the

issues that were submitted to it, meaning that “[a]ll that was left

was for the court to make a clerical notation” to reflect that

defendants had prevailed on the constructive fraud claim. Thus,

defendants argue, even though the post-trial motions were filed

7
before the court entered its December 6 order (which did not, in any

event, address the constructive fraud claim), the parties’ competing

post-trial motions were properly cognizable under C.R.C.P. 59. This

matters, according to defendants, because the court did not rule on

those motions until it issued its “Second Amended Entry of

Judgment Per C.R.C.P. 58(a)” on February 27, 2024 (February 27

judgment) — eighty-four days after the parties filed their competing

post-trial motions invoking C.R.C.P. 59. As defendants see it, the

parties’ post-trial motions were “deemed denied” on February 6,

2024 (i.e., once sixty-three days had passed after the motions’ filing

without a ruling, see C.R.C.P. 59(j)), meaning that the court’s

February 27 judgment was of no effect. Ultimately, the defendants

maintain that because the district court lost jurisdiction to amend

its December 6 order by failing to timely address the parties’ post-

trial motions, the February 27 judgment is void and the December 6

order — which does not address the constructive fraud claim —

controls.

¶ 14 We are unpersuaded. Contrary to defendants’ assertion, the

final judgment was the February 27 judgment, the written

judgment signed by the district court that disposed of all the claims

8
against all parties. See C.R.C.P. 58(a), 54(b). Regardless of its title,

the December 6 order was not final because it adjudicated “fewer

than all the claims or the rights and liabilities of fewer than all the

parties” and therefore did “not terminate the action as to any of the

claims, or parties.” C.R.C.P. 54(b); see Smeal v. Oldenettel, 814

P.2d 904, 908-09 (Colo. 1991). The fact that the parties invoked

C.R.C.P. 59 in their subsequent competing post-trial motions is

inconsequential. See Church v. Am. Standard Ins. Co. of Wis., 742

P.2d 971, 972 (Colo. App. 1987) (“Where motions filed following a

jury trial pertain to unresolved, substantive claims raised in the

complaint, they are not actually directed at obtaining post-

judgment relief, and accordingly, the provisions of C.R.C.P. 59 do

not apply.”). Accordingly, the sixty-three-day deadline for the

determination of post-trial motions mandated by C.R.C.P. 59(j) was

inapplicable. The district court had jurisdiction to, and did, enter

final judgment when it issued its February 27 judgment.

III. Constructive Fraud

¶ 15 Turning to the merits, defendants challenge the district court’s

ruling on the constructive fraud claim from several different angles.

Because we agree with defendants that the damages the court

9
awarded Stern for constructive fraud were duplicative of — and

limited by — the damages that the jury awarded Stern on his

breach of fiduciary duty claim, we need not reach defendants’

remaining challenges to the constructive fraud ruling.

A. Additional Facts

¶ 16 In alleging that Farncombe breached the fiduciary duty he

owed to Stern, Stern’s amended complaint described this duty as

arising “in the formation of the joint venture.” The complaint

claimed that “Farncombe breached his fiduciary duties to [Stern]

by . . . falsely representing that [Stern] would earn his 50%

ownership interest in [Aurum] by ‘sweat equity’ instead of a

financial contribution and that [Aurum] would repay the $500,000

investment purportedly made on behalf of [Stern].” Per the

complaint, “Farncombe also breached his fiduciary duties by

requiring [Stern] to sign” the April 2016 note, the April 2021 note,

and the deed of trust “when Farncombe did not loan any funds or

provide anything of value to [Stern].” And, the complaint stated,

“Farncombe’s breach has caused and will cause [Stern] damages in

an amount to be proven at trial.”

10
¶ 17 Similarly, Stern alleged that defendants committed

constructive fraud “during discussions leading up to and at the

time [Stern] signed the April 2016 Note, the Equity Conversion

Agreement, and 2017 [Line of Credit] Agreement.” The complaint

further stated,

Farncombe, acting on behalf of himself and the
other [defendants], falsely represented to
[Stern] that these documents were necessary
for [Stern] to have a one-half ownership
interest in [Aurum], that [Stern] would obtain a
one-half ownership interest in [Aurum] based
on his “sweat equity” instead of financial
contribution, and that the $500,000 loan
purportedly made on his behalf to [Aurum]
would be paid by [Aurum] instead of personally
by [Stern].

¶ 18 In the portion of the trial management order where the parties

itemized the damages and relief sought, Stern specified “rescission

damages,” “[m]onetary loss . . . due to defamatory statements,”

“[c]osts incurred in pursuing this litigation to have . . . Farncombe’s

invalid Deed of Trust removed,” “[n]oneconomic [d]amages due to

reputational harm,” and “[p]rejudgment and postjudgment interest

on all damages awarded.” He described the remaining $7 million in

desired damages as “[c]onsequential damages related to the loss of

11
50% value of Aurum, in the event that the agreements at issue in

this case are not rescinded.”

¶ 19 The jury instructions at trial explained the following:

• Stern asserted a claim for “breach of fiduciary duty based

on a confidential relationship against . . . Farncombe

related to the startup of Aurum.”

• Defendants asserted an affirmative defense of waiver to

Stern’s claims for fraud, negligent misrepresentation, and

breach of fiduciary duty, which applied to the signing of

the April 2016 note.

• Defendants asserted setoff as an affirmative defense to

Stern’s claims for fraud, negligent misrepresentation, and

breach of fiduciary duty, which applied in part if the jury

found that “[Stern’s] damages [we]re based on [his]

entitlement to equity in Aurum . . . or an equivalent to an

equity interest in Aurum.”

• Defendants asserted an affirmative defense of failure to

mitigate damages to Stern’s claims for fraud, negligent

misrepresentation, and breach of fiduciary duty, which

applied in part if the jury found that “[Stern] failed to

12
take reasonable steps to cause Aurum to be profitable so

that the profits could be used to repay the [promissory

notes].”

• Stern “sued for the same damages and losses on three

different claims for relief,” which were “fraud, negligent

misrepresentation, and breach of fiduciary duty,” and

thus, “[i]f [the jury found] for [Stern] on more than one

claim for relief, [it could] award him damages only once

for the same damages and losses.”

• In determining Stern’s damages for his breach of

fiduciary duty claim, the jury had to consider both

economic and noneconomic losses.

¶ 20 The jury found in favor of Stern on his breach of fiduciary duty

claim. In assessing damages for this claim, however, the jury found

in favor of Farncombe on his failure to mitigate defense and, taking

that into account, awarded Stern $269,000.

¶ 21 Two months later, the district court ruled in Stern’s favor on

his constructive fraud claim and awarded him $1.5 million in

damages. The court explained that the damages award represented

13
one half of Aurum’s value based on the valuation that Stern

testified Farncombe provided him in 2017.

B. Standard of Review and Applicable Law

¶ 22 Generally, determining the amount of damages is within the

trial court’s discretion, and its decision will not be overturned

absent an abuse of that discretion. McDonald’s Corp. v. Brentwood

Ctr., Ltd., 942 P.2d 1308, 1311 (Colo. App. 1997). But the proper

measure of damages is a question of law subject to de novo review.

Taylor Morrison of Colo., Inc. v. Terracon Consultants, Inc., 2017 COA

64, ¶ 23.

¶ 23 A plaintiff may not receive a double recovery for the same

injuries or losses arising from the same conduct. Lexton-Ancira

Real Est. Fund, 1972 v. Heller, 826 P.2d 819, 823 (Colo. 1992);

Quist v. Specialties Supply Co., 12 P.3d 863, 866 (Colo. App. 2000).

Double recovery occurs when a plaintiff is compensated for the

same wrong under different theories or for equivalent damages

based on the same acts. Lexton-Ancira, 826 P.2d at 824; see also

Farmers Grp., Inc. v. Williams, 805 P.2d 419, 426 n.9 (Colo. 1991)

(insured could not receive double recovery for the same wrong

under both a statutory bad faith claim and a common law tort

14
claim); DeBose v. Bear Valley Church of Christ, 890 P.2d 214, 223

(Colo. App. 1994) (jury’s award for breach of fiduciary duty that

included damages jury had already awarded for extreme and

outrageous conduct claims were improperly duplicative), rev’d on

other grounds, 928 P.2d 1315 (Colo. 1996). This general rule

prohibiting double recovery for the same injury or losses applies in

cases involving multiple defendants as well as in cases involving

multiple claims against a single defendant. Quist, 12 P.3d at 866.

C. Analysis

¶ 24 Although Stern’s claims for breach of fiduciary duty and

constructive fraud were not identical, both claims overlapped such

that they alleged the same injuries or losses arising from the same

conduct. For both claims, Stern’s amended complaint sought

monetary damages for injuries that he alleged arose during the

formation of Aurum — specifically, Farncombe’s misrepresentations

regarding Stern’s ownership interest in Aurum and the repayment

of the April 2016 note. In the trial management order, Stern

requested damages of $7 million in “[c]onsequential damages

related to the loss of 50% value of Aurum,” without linking that

amount to any particular cause of action. The jury instructions

15
expressly stated that Stern “sued for the same damages and losses”

on his claims for fraud, negligent misrepresentation, and breach of

fiduciary duty, and that the jury was therefore permitted to award

Stern damages “only once for the same damages and losses.” And

Stern’s post-trial motion sought “$7,000,000 as damages for the

constructive fraud claim, which represents the value of half of the

company that he lost due to Farncombe’s misrepresentations.”

¶ 25 Despite this extensive overlap and the jury’s verdict for Stern

on his breach of fiduciary duty claim (which included $269,000 in

damages), the district court ruled for Stern on his constructive

fraud claim and awarded him $1.5 million in damages as

compensation for his loss of a one-half ownership interest in

Aurum. Because of the jury’s earlier verdict, however — which had

valued Stern’s interest in the company at a maximum of $269,000

via its findings on the breach of fiduciary duty claim — the district

court’s damages award gave Stern an impermissible double

recovery.

¶ 26 Stern argues on appeal that the damages awarded by the

district court were not duplicative of the damages awarded by the

jury. According to Stern, although the jury instructions required

16
the jury to consider both economic and noneconomic losses when

awarding damages for the breach of fiduciary duty claim, “the jury’s

damage award may have consisted solely of the non-economic

damages Stern was seeking on his breach of fiduciary duty claim.”

Therefore, he contends, the district court’s economic damages

award for the same injuries or losses arising from the same conduct

was not duplicative.

¶ 27 In support of his contention, Stern points out that the jury is

presumed to have followed the instructions before it. Yet if we were

to accept his argument, we would have to reach the opposite

conclusion. Indeed, we cannot interpret the jury’s verdict as

awarding noneconomic damages alone without overlooking the fact

that the court instructed the jury to take both economic and

noneconomic losses into account. And while the absence of any

evidence to the contrary is sufficient for us to presume that the jury

did in fact follow the court’s instructions to award damages

encompassing economic and noneconomic losses, that conclusion

is further buoyed by the jury’s finding in favor of Farncombe on his

failure to mitigate defense — which was applicable only to economic

damages.

17
¶ 28 Stern also argues that his breach of fiduciary duty and

constructive fraud claims were “factually separable” and therefore

not duplicative. This is so, according to Stern, because the facts

supporting the former were limited to pre-April 2016 conduct while

the facts supporting the latter were “also based on conduct that

occurred after Stern signed the [April 2016 note].” However, the

post-April 2016 conduct that supposedly distinguished the

damages awarded for these claims appears only in Stern’s one-

sentence assertion in his post-trial motion regarding his

constructive fraud claim that “even after having retained counsel [in

2017], Stern continued to trust Farncombe and his representations

when he signed the later documents in 2017.” This lone

assertion — when both claims were otherwise consistently grouped

together, dealt with the April 2016 note and sought the same

damages for Stern’s claimed ownership interest in Aurum — is

insufficient to differentiate these claims such that the damages

awarded for both were not duplicative. This is especially true

because the district court’s order granting Stern’s constructive

fraud claim made no such distinction between the conduct forming

18
the basis of each claim and instead discussed at length the conduct

leading up to the signing of the April 2016 note.

¶ 29 Accordingly, we conclude that the district court erroneously

awarded Stern duplicative damages when it awarded him damages

for his constructive fraud claim after the jury had already awarded

Stern damages for his breach of fiduciary duty claim. In short, the

jury found that Stern’s interest in the company was worth, at most,

$269,000. Irrespective of the merits of Stern’s constructive fraud

claim, the court could not award him any more than the jury had

already determined his interest was worth.

¶ 30 Our conclusion eliminates the need to reach defendants’

remaining challenges to the constructive fraud ruling. We note,

however, that we would arrive at the same destination if we

accepted defendants’ contention that the jury’s finding in their favor

on Stern’s claims for negligent misrepresentation and fraud

foreclosed the district court’s ruling in Stern’s favor on his

constructive fraud claim. Under either approach, Stern’s damages

for losing his ownership interest in Aurum would be limited to the

jury’s award of $269,000: The district court could have either ruled

against Stern on the constructive fraud claim, or it could have ruled

19
in favor of Stern on that claim but declined to award him additional

damages in light of the jury’s determination.

IV. Reduction of Damages

¶ 31 Defendants next contend that the district court erroneously

reduced the jury’s damages award because the court based its

ruling on an argument that Stern waived. We agree.

A. Additional Facts

¶ 32 In addition to seeking a favorable ruling on his constructive

fraud claim, Stern’s post-trial motion requested that the district

court reduce the jury’s damages award on defendants’ breach of

contract counterclaim. Specifically, Stern sought to reduce the

award from $1.678 million to $807,111 “by subtracting the

damages related to the purported losses of [Aurum] because those

damages were expressly limited by the Amended and Restated

Operating Agreement to the amount of [Stern’s] direct or indirect

ownership of Aurum, which is undisputedly zero.” Stern had not

raised this issue at any previous point in the litigation, either as an

affirmative defense, in his summary judgment briefing, in the trial

management order, or at trial.

20
¶ 33 In their response, defendants argued, among other things,

that Stern had waived the issue by failing to raise it earlier in the

litigation. The district court nonetheless granted Stern’s request,

explaining that the amended operating agreement cited by Stern

“clearly limits [Stern’s] liability to an amount equal to his ownership

interest in the company. Since [Stern] never received any

ownership interest in the company, his liability for breach of

contract is zero.”

B. Standard of Review and Applicable Law

¶ 34 “Ordinarily, waiver is a factual matter determined by the trial

court,” Avicanna Inc. v. Mewhinney, 2019 COA 129, ¶ 24, and we

review factual waiver issues for an abuse of discretion, Shoen v.

Shoen, 2012 COA 207, ¶ 12. However, when, as here, “the facts

bearing on waiver are uncontested and the evidence before the trial

court is entirely documentary, waiver becomes a matter of law, and

we are not bound by the trial court’s findings.” Avicanna, ¶ 24.

¶ 35 Waiver is the intentional relinquishment of a known right or

privilege. Id. at ¶ 25. “A party waives a contractual right . . . if the

party acts inconsistently with the right and prejudice accrues to the

other parties to the contract.” Id. “Waiver may be express, or it

21
may be implied when a party’s actions manifest an intent to

relinquish a right or privilege.” Venard v. Dep’t of Corr., 72 P.3d

446, 450 (Colo. App. 2003).

¶ 36 Pursuant to C.R.C.P. 8(c), “a party shall set forth

affirmatively . . . any . . . matter constituting an avoidance or

affirmative defense.” Moreover, “[a]ny mitigating circumstances to

reduce the amount of damage shall be affirmatively pleaded.” Id.

C. Analysis

¶ 37 Defendants argue that, because Stern did not assert that his

damages were contractually limited until after the trial was over, he

waived his argument that any damages assessed against him

related to Aurum’s losses could not exceed the value of his

ownership interest in the company, which was zero. Thus,

according to defendants, it was error for the district court to grant

Stern’s request to reduce the jury’s damages award to defendants

for their breach of contract counterclaim.

¶ 38 Under the circumstances, we agree that Stern waived this

argument by waiting to raise it until after the trial had concluded.

Consistent with C.R.C.P. 8(c)’s directive that “a party shall set forth

affirmatively . . . any . . . matter constituting an avoidance or

22
affirmative defense” and that “[a]ny mitigating circumstances to

reduce the amount of damage shall be affirmatively pleaded,” Stern

should have listed the contract’s liability limitation as an affirmative

defense at the outset of the case. Cf. Farmers Ins. Exch. v. Taylor,

45 P.3d 759, 763 (Colo. App. 2001) (“[P]olicy limits and setoff

amounts were affirmative defenses to the insurer’s obligation to pay

benefits to the insured,” and thus within the scope of C.R.C.P. 8(c),

“because, if applicable, those limits and setoffs would have

considerably reduced the arbitration award.”). He did not do so,

however, and never moved to amend his answer to include the

defense. Thus, he arguably waived the issue even at that early

stage of the proceedings. See Town of Carbondale v. GSS Props.,

LLC, 169 P.3d 675, 681 (“If a defense is not raised in the answer or

through a successful amendment of the answer, it is waived.”);

Soicher v. State Farm Mut. Auto. Ins. Co., 2015 COA 46, ¶ 21.

¶ 39 Nor did Stern assert his contractual limitations defense at the

summary judgment stage, which he might have been able to do if

the defendants failed to object. See Tarco, Inc. v. Conifer Metro.

Dist., 2013 COA 60, ¶ 17 (noting that a party may raise an

affirmative defense for the first time in summary judgment

23
pleadings if (1) the opposing party does not object to the untimely

defense, and (2) the opposing party is not prejudiced by the delay in

raising it). And if there was any doubt left about the status of the

defense as trial approached, Stern’s failure to include the defense in

the trial management order — which stated that “[a]ll claims and

defenses not listed [are] withdrawn” — put the matter to rest. See

Blood v. Qwest Servs. Corp., 224 P.3d 301, 327 (Colo. App. 2009)

(holding that the defendant waived an affirmative defense when it

was listed in the answer but not included in the trial management

order or raised at trial), aff’d, 252 P.3d 1071 (Colo. 2011). Because

defendants objected to Stern’s tardy assertion of the defense and

argued that they would be prejudiced if the court applied the

contractual limitation, the trial court erred by considering it. See

Tarco, ¶ 17.

¶ 40 We are not persuaded otherwise by the holding in Taylor

Morrison of Colorado v. Terracon Consultants, Inc., 2017 COA 64,

which, according to Stern, approved a party’s decision to raise the

issue of a contractual damage limitation for the first time in post-

trial briefing. In that case, the contractual cap was litigated

extensively before trial, see id. at ¶ 6, n.2 (“Taylor raised three

24
challenges to the $550,000 cap on liability.”); moreover, no party

appears to have objected to the issue of the limitation’s applicability

being resolved after the jury had rendered its verdict. As a result,

the Taylor Morrison division did not even consider, much less

resolve, whether there might be circumstances under which a party

could assert a contractual damage limitation for the first time in a

post-trial motion.2

V. Attorney Fees and Costs

¶ 41 Finally, defendants argue that the district court erred by

denying their motion for attorney fees and costs based on its finding

that “both parties prevailed on a portion of their respective claims.”

Given our disposition of this appeal, we agree that the order bears

reexamination. We reverse the order on attorney fees and costs and

remand that question to the district court for further consideration.

2 Vista Resorts, Inc. v. Goodyear Tire & Rubber Co. is also

distinguishable because the constitutionality of the statute at issue
in that case, which was raised for the first time in a post-trial
motion, “was not ripe until the jury returned its verdict and the
court imposed [statutory] treble damages at Vista’s request, in lieu
of punitive damages awarded by the jury.” 117 P.3d 60, 74 (Colo.
App. 2004).

25
VI. Disposition

¶ 42 We reverse the district court’s reduction of defendants’

damages for their breach of contract counterclaim. We also reverse

the district court’s award of damages to Stern for his constructive

fraud claim. Finally, we reverse the order on attorney fees and

costs and remand the case for further proceedings consistent with

this opinion.

JUDGE HARRIS and JUDGE PAWAR concur.

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