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Grease Monkey International, Inc. v. Montoya

Colorado Supreme Court

904 P.2d 468 (1995)

Facts

Arthur Sensenig served as the president, CEO, and chairman of the board for Grease Monkey International, Inc. (defendant) for eight years. During his tenure, Sensenig defrauded potential investors in Grease Monkey using his position of authority at the company. Sensenig instructed potential investors to make payments to his personal bank account. To persuade Montoya (plaintiff) to invest, Sensenig gave a presentation to Montoya at the Grease Monkey offices. Sensenig did not provide any of the funds to Grease Monkey. Instead, Sensenig kept the money for personal benefit. Sensenig employed a detailed scheme to shield the fraud from detection, including delivery of promissory notes and subsequent interest payments among other fraudulent acts. Montoya filed a lawsuit against Grease Monkey for fraud and misrepresentation (in addition to other claims that were dismissed). The trial court held Grease Monkey liable to Montoya because Montoya reasonably relied on Sensenig’s apparent authority to raise capital for the company as president, CEO, and chairman. The court of appeals affirmed the trial court, finding that Sensenig had acted within the scope of his apparent authority as an agent of Grease Monkey. Grease Monkey appealed to the Colorado Supreme Court.

Rule of Law

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Holding and Reasoning (Erickson, J.)

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Concurrence (Mullarkey, J.)

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