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Nelson v. Elway - 908 P.2d 102 (Colo. 1995)

Rule:

To establish a civil conspiracy in Colorado, a plaintiff must show: (1) two or more persons; (2) an object to be accomplished; (3) a meeting of the minds on the object or course of action; (4) an unlawful overt act; and (5) damages as to the proximate result. The court will not infer the agreement necessary to form a conspiracy; evidence of such an agreement must be presented by the plaintiff. Additionally, the purpose of the conspiracy must involve an unlawful act or unlawful means. A party may not be held liable for doing in a proper manner that which it had a lawful right to do.

Facts:

Plaintiff Nelson owned two automobile dealerships. General Motors Acceptance Corporation (GMAC) provided all the financing for both dealerships. The dealerships were having financial difficulties. In July of 1990, Nelson hired Pico to represent him in selling or refinancing one or both of the dealerships. Pico entered into negotiations to sell the dealerships to Defendant John Elway. Elway could not afford Nelson’s asking price. Pico proposed a “service agreement” under which Nelson would sell Elway the dealerships at a greatly reduced price in exchange for Elway’s agreement to pay Nelson $50.00 for every vehicle sold by the dealerships for seven years. Nelson and Elway orally agreed to this arrangement, but did not reduce it to a signed writing. Nelson and Elway did, however, execute a written “buy-sell agreement” outlining the terms of the sale of the dealerships by Nelson to Elway.

When Nelson and Elway met to sign the agreement, GMAC informed Elway that it would pull all financing for the dealerships if Nelson received any proceeds from the sale of the dealerships. After receiving this information from GMAC, Elway informed Nelson that he would not sign the service agreement after all. Thus, the buy-sell agreement did not contain the terms of the service agreement. The buy-sell agreement did, however, contain a merger clause stating that the written agreement constituted the final agreement of Nelson and Elway and represented all previous discussions of the parties. After the sale of the property was finalized, Elway refused to abide by the terms of the oral service agreement. Nelson brought suit in Colorado state court against Elway, seeking damages for breach of contract,fraud and misrepresentation, dual agency, civil conspiracy, and punitive damages. The trial court granted summary judgment for defendants on all counts. The intermediate appellate court reversed in part, finding factual disputes regarding the promissory estoppel claim. Nelson petitioned for certiorari review.

Issue:

Did the trial court err when it granted summary judgment for defendants?

Answer:

No

Conclusion:

The Supreme Court of Colorado reversed the appellate court's decision, ruleing that defendants were entitled to summary judgment on the civil conspiracy claim because plaintiffs failed to allege an unlawful overt act. The Court also ruled that summary judgment on the contract claim was proper because the integration clause in the final agreement demonstrated the parties intent to be bound solely by that agreement, and not by the unsigned service agreement. As for the promissory estoppel claim, the Court ruled that it was unreasonable for plaintiffs to rely on the promises in the service agreement because they were conditioned upon the approval of the financing company, which never occurred.

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