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Watson v. Cal-Three, LLC

Colorado Court of Appeals
254 P.3d 1189 (2011)


In 1999, Brandon Park, LLC (Brandon Park) borrowed funds from First United Bank (FUB) to develop townhomes. Watson (plaintiff) guaranteed repayment of the loan in return for a fee. Brandon Park hired Calahan Construction Company (Calahan) as the general contractor. After Brandon Park experienced difficulty paying Calahan, Brandon Park agreed to transfer all its rights in the project to Cal-Three, LLC (Cal-Three) (defendant), an entity created by Calahan’s principal. This agreement was arranged for in a series of new agreements. Watson participated in the negotiation of these new agreements. In August 2002, Watson sent Cal-Three a notice stating that Cal-Three was in default of the new agreements, in part for failing to pay the outstanding balance due to FUB. On October 24, 2002, a completed townhome in the project was due to close. The title company requested a payoff letter from Watson for the specific townhouse in connection with the closing. Watson instead sent the title company a payoff amount for the entire project. As a result, the sale of the townhome did not occur. Watson then brought the instant suit against Cal-Three requesting a receiver for the property. Watson afterwards paid the balance owed to FUB and filed an action to foreclose the deed of trust on December 2002. A foreclosure sale was held in February 2003, at which time Watson purchased the property. Watson later sold the completed townhomes for $414,326.55 and the remaining land for $783,000. At trial in the instant action, the court found that Cal-Three had not been in default of the new agreements when Watson sent the default letter in August 2002. The trial court found in favor of Cal-Three and awarded it the amount of profits it realized from the sale, which amounted to $414,326.55 for the townhomes and $783,000 for the land. Watson appealed, arguing that the damages awarded to Cal-Three were erroneously calculated.

Rule of Law


Holding and Reasoning (Casebolt, J.)

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