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November 2013

Gordon & Rees Denver Team Wins at Colorado Court of Appeals

Gordon & Rees Denver partner John M. Palmeri and senior counsel Heather K. Kelly successfully defended a prominent Denver law firm in defense of a legal malpractice and breach of fiduciary duty claim in connection with a real estate development deal. 

The plaintiffs were several entities created by two high-profile businessmen.  Two of the plaintiff-entities hired the law firm to draft the development agreement.  During the development, numerous disputes arose among the principals.  The law firm continued to represent the two plaintiff-entities in their dispute. 

Five years after the parties entered into the development deal, an arbitrator reformed the deal into a joint venture.  The partners and the joint venture then sued the law firm alleging negligence and breach of fiduciary duty in the underlying representation.  Gordon & Rees represented the defendant law firm and attorney. 

After coordinating a settlement with the law firm’s former client, Gordon & Rees filed two motions for summary judgment on the remaining claims.  First, Gordon & Rees argued that an attorney-client relationship did not exist with the joint venture and the law firm because the representation of one party to a joint venture did not establish an attorney-client relationship with the joint venture.  Second, Gordon & Rees argued that any claim was time-barred because the claim accrued when the alleged client learned the law firm represented one member of the joint venture adverse to the alleged client’s interests. 

The District Court for the City & County of Denver concluded the plaintiffs’ claims failed as a matter of law because there was no attorney-client relationship and their claim was time-barred.  On appeal, the Colorado Court of Appeals affirmed.  The Court of Appeals issued a well-reasoned opinion, concluding the claim was time-barred because it accrued when the alleged client learned the attorneys were taking a position adverse to them.  Having affirmed summary judgment on the statute of limitations, the Court of Appeals declined to address the attorney-client relationship.

John M. Palmeri