Court Opinions: Colorado Court of Appeals Opinions for June 22

Editor’s Note: Law Week Colorado edits court opinion summaries for style and, when necessary, length.

Hagerty Insurance Agency, LLC et al. v. Luxury Asset Capital, LLC

The Colorado Court of Appeals unanimously affirmed in part and reversed in part a judgment connected to the purchase of a vehicle.

According to the appeals court opinion, in January 2019, Luxury Asset Capital, LLC, a pawnbroker doing business in Colorado, provided a loan to someone secured by a 2015 Rolls Royce. When that person pawned the vehicle, Luxury Asset Capital took possession of it, but agreed the borrower could reclaim it by paying a certain sum in a timely fashion. The person who got the loan failed to make the required payments and Luxury Asset Capital advertised the vehicle for sale online.

Robert Mortenson responded to the advertisement and negotiated the purchase of the car with Luxury Asset Capital’s chief underwriting officer. After agreeing to the purchase price of $127,000, Mortenson paid to transport the car to Nevada, where he lived. The underwriting officer went to Nevada to complete the transaction, including transferring the title to Mortenson.

In February 2020, the Nevada Department of Motor Vehicles informed Mortenson the vehicle identification number on the car was forged and a search using the authentic VIN from the vehicle’s on-board computer revealed the car was stolen. The vehicle was impounded and wasn’t returned to Mortenson. The car was insured under a policy issued by Hagerty Insurance Agency, LLC, which paid Mortenson the policy limit of $50,000.

Mortenson sued Luxury Asset Capital for breach of contract (specifically for breach of the warranty of good title), promissory estoppel, negligence, negligent misrepresentation and negligence per se. Hagerty brought a claim for equitable subrogation against Luxury Asset Capital.

After discovery, the parties filed motions for partial summary judgment and the district court granted Mortenson’s motion and denied Luxury Asset Capital’s motion. The court decided Luxury Asset Capital hadn’t disclaimed the statutorily imposed warranty of title by specific language and the warranty hadn’t been disclaimed by the circumstances of the transaction. The court granted summary judgment for Mortenson on his breach of contract claim and for Hagerty on its equitable subrogation claim.

The court denied Luxury Asset Capital’s motion for summary judgment on Mortenson’s remaining claims and those claims have since been dismissed pursuant to the parties’ stipulation.

Luxury Asset Capital appealed the grant of summary judgment in favor of Mortenson and Hagerty. 

The Colorado Court of Appeals considered whether the warranty of title imposed by Colorado Revised Statute 4-2-312 may be excluded by contractual language announcing a good is sold “as is” and without any express or limited warranties. The appeals court concluded such language isn’t sufficient to exclude the warranty of title. The appeals court explained the warranty may be excluded only by specific language or by the circumstances described in 4-2-312(2). 

The appeals court held the district court erred by granting summary judgment to the buyer on the question of whether the circumstances gave “the buyer reason to know that the person selling [did] not claim title in himself or that he [was] purporting to sell only such right or title as he or a third person may have,” according to an excerpt from 4-2-312(2).

The appeals court found a genuine dispute of material fact on this question precluded summary judgment. The appeals court affirmed the district court’s ruling that the warranty of title wasn’t excluded by specific language, but reversed the lower court’s ruling as to whether the warranty was excluded by the circumstances surrounding the sale at issue.

The judgment was affirmed in part, reversed in part and remanded for further proceedings.

People v. Neustel

The Colorado Court of Appeals unanimously affirmed an order in a case connected to attempted sexual assault on a child.

Zachary Neustel pleaded guilty to added counts of sexual exploitation of a child and attempted sexual assault on a child in exchange for the dismissal of his original charges. Neustel was originally charged with two counts of internet luring of a child and two counts of internet exploitation of a child.

The district court sentenced him to four years in prison and designated him a sexually violent predator. According to the appeals court opinion, by doing that, the district court determined Neustel established a relationship with his fictional victim primarily for the purpose of sexual victimization.

Neustel appealed the district court’s order designating him an SVP, arguing the court erred by finding his relationship with the fictional victim satisfied the relation criterion of the SVP statute.

The appeals court affirmed. The appeals court considered whether a defendant who is convicted of attempted sexual assault on a child, but whose “victim” was a fictional child persona created by law enforcement for a sting operation, may be designated an SVP under CRS 18-3-414.5(1)(a).

The appeals court concluded such a persona could be a “victim [who] was . . . a person with whom the offender established a relationship” for the purposes of an SVP designation under 18-3-414.5(1)(a)(III).

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