SUPERIOR COURT
OF THE
STATE OF DELAWARE
PAUL R. WALLACE LEONARD L. WILLIAMS JUSTICE CENTER
JUDGE 500 N. KING STREET, SUITE 10400
WILMINGTON, DELAWARE 19801
(302) 255-0660
Submitted: August 3, 2026*
Decided: August 21, 2026
Richard L. Renck, Esquire David E. Ross, Esquire
Robert M. Palumbos, Esquire (argued) S. Reiko Rogozen, Esquire
Rebecca E. Bazan, Esquire A. Gage Whirley, Esquire
DUANE MORRIS LLP ROSS ARONSTAM & MORITZ LLP
1201 North Market Street, Suite 501 1313 North Market Street, Suite 1001 Wilmington, Delaware 19801 Wilmington, Delaware 19801
Hugh Q. Gottschalk, Esquire
Eric L. Robertson, Esquire (argued)
Danielle L. Trujillo, Esquire
WHEELER TRIGG O’DONNELL LLP
370 Seventeenth Street, Suite 4500
Denver, Colorado 80202
RE: Magellan Pipeline Company, L.P. v. Suncor Energy (U.S.A.) Inc., et al.
C.A. No. N25C-02-418 PRW CCLD
Magellan Pipeline Company, L.P.’s Motion to Dismiss Counterclaims and to
Strike Affirmative Defenses
Dear Counsel:
This Letter Decision and Order addresses Magellan’s Motion to Dismiss
Suncor Energy (U.S.A.) Inc.’s two fraud-related counterclaims and several
affirmative defenses arising from those counterclaims (D.I. 65). For the reasons Magellan Pipeline Company, L.P. v. Suncor Energy (U.S.A.) Inc. et al.
C.A. No. N25C-02-418 PRW CCLD
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explained now, the Motion is GRANTED in part and DENIED in part.
I. FACTUAL BACKGROUND1
A. PARTIES
Suncor is a Delaware corporation, with its principal place of business in
Colorado.2 Suncor owns and operates refining assets in Colorado.3
Magellan is a limited partnership organized under the laws of Delaware.4
Magellan owns and operates the Dupont Terminal in Colorado.5
B. LEAD UP TO THE AGREEMENTS AND THE PIPELINE EXPANSION “CONCEPT”
In early 2023, Suncor and Magellan entered into several agreements to
transport, store, and load gasoline from Commerce City, Colorado, to the Dupont
Terminal.6 After signing those agreements, Aaron Cissell, Magellan’s Vice President
*
While the Court initially believed it would need to consider this matter fully submitted only upon docketing of the hearing transcript (D.I. 74), it has found that its notes and review of all other motion materials has sufficed.
1
The Court draws the following facts from the well-pleaded allegations and documents incorporated by reference in Suncor’s Counterclaim. The Court has also laid out some of this background in its earlier decision on Defendants’ motions to dismiss. See Magellan Pipeline Co., L.P. v. Suncor Energy (U.S.A.) Inc., 2026 WL 766429, at *1–3 (Del. Super. Ct. Feb. 26, 2026). 2
Countercl., ¶ 12 (D.I. 58).
3
Id., ¶ 13.
4
Id., ¶ 14.
5
Id.
6
Id., ¶ 18.
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of Commercial, Refined Products, contacted Suncor agents to discuss further
strategic opportunities between Suncor and Magellan.7 Suncor agreed to a meeting
to discuss additional opportunities regarding gasoline supply.8
Before the meeting, Suncor employee James Piscatelli talked to Magellan
representative Fawn McWilliams about a winter fill agreement.9 Under the proposed
winter fill agreement, Suncor would store gasoline in Magellan tanks in Colorado
during the winter to capitalize on lower gasoline supply in the Denver area during
the summer months.10
At the meeting, Magellan representatives presented a slide deck that included
a reference to a “Front Range Supply Optimization Concept.”11 The Magellan
representatives explained that the concept contemplated Magellan potentially
building a pipeline from Scott City, Kansas, to Denver International Airport.12 The
Magellan reps referred to this idea only as a “concept” and didn’t share any plans
7
Id., ¶ 19.
8
Id., ¶ 20.
9
Id., ¶¶ 21–22.
10
Id., ¶ 22.
11
Id., ¶ 25.
12
Id.
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for actual construction.13
Suncor didn’t like the “concept.” Mr. Piscatelli rejected it and indicated that
Suncor wouldn’t back the idea because it would hurt Suncor’s summer gasoline
margins.14 The parties didn’t discuss the concept further and instead continued
discussing the winter fill agreement plan.15 Suncor left the meeting understanding
that the concept and the winter fill agreement were mutually exclusive options—that
is, if Suncor agreed to the winter fill agreement then Magellan wouldn’t pursue the
“concept.”16 Eventually, Suncor and Magellan entered into the winter fill plan
through the DuPont Storage and Terminalling Agreement (“Terminalling
Agreement”) and Amendment I to the Ethanol Storage Services Agreement
(“Ethanol Agreement”) (collectively, “Agreements”).17
C. MAGELLAN ANNOUNCES PIPELINE EXPANSION PROJECT
Several months after executing the Agreements, Magellan issued a press
release introducing the Pipeline Expansion Project.18 That Project was the Kansas13
Id.
14
Id., ¶ 26.
15
Id., ¶¶ 26–28.
16
Id.
17
Id., ¶ 32.
18
Id., ¶ 36.
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to-Denver pipeline “concept” discussed at the meeting.19 After some back-and-forth,
Suncor told Magellan to stop all work associated with the Agreements.20 Suncor
then notified Magellan that Suncor was electing to rescind the Agreements, and
Magellan responded with a notice of default, a notice of termination, and a demand
for payment.21
D. RELEVANT CONTRACT PROVISIONS
In the Terminalling Agreement, Suncor disclaimed reliance on any of
Magellan’s extra-contractual representations:
No Warranty; No Reliance. Except as expressly provided in this
Agreement, Magellan makes no representations or warranties, express
or implied, including any implied warranty of merchantability or fitness
for a particular purpose. In entering into this Agreement, Customer is
relying upon its own judgment, and Customer is not relying upon, and
disclaims any reliance upon, any representation made by or on behalf
of Magellan that is not specified in this Agreement.22
The Parties also agreed in the Terminalling Agreement that they had no
express relationship:
No Partnership. There is no partnership, joint venture, association or
special relationship of any kind, or intent to create one, between or
among the parties or their respective Affiliates with respect to the
19
Id.
20
Id., ¶ 40.
21
Id., ¶¶ 42–43.
22
Compl., Ex. A [hereinafter the “Terminalling Agreement”] Sched. B, § 7 (D.I. 1). Magellan Pipeline Company, L.P. v. Suncor Energy (U.S.A.) Inc. et al.
C.A. No. N25C-02-418 PRW CCLD
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arrangements contemplated by this Agreement, and the parties
expressly disclaim the formation of any such relationship. Neither this
Agreement nor any discussions, conduct or interactions between or
among them may be interpreted as creating such a relationship or intent,
which may instead only arise when and if documented and approved by
the respective boards or other governing bodies of each of the parties.
Neither party will be or become liable or bound by any representation,
act or omission of the other party.23
Finally, the Terminalling Agreement contains an integration clause:
Entire Agreement; Amendment. This Agreement states the entire
agreement between the parties with respect to the subject matter hereof,
and supersedes all prior agreements, negotiations and understandings,
whether oral or written, between the parties with respect to such subject
matter. This Agreement may not be amended except by written
instrument executed by the parties hereto.24
E. SUNCOR’S FRAUDULENT MISREPRESENTATION AND FRAUDULENT
NONDISCLOSURE COUNTERCLAIMS
In this action, Suncor now brings two counterclaims against Magellan for:
(1) fraudulent misrepresentation; and (2) fraudulent nondisclosure.25 For Count I,
Suncor alleges that Magellan fraudulently misrepresented the truth about Magellan’s
intentions concerning the expansion project.26 For Count II, Suncor asserts that
Magellan had a duty to disclose and failed to reveal that the expansion concept was
23
Terminalling Agreement § 23.
24
Id., § 24.
25
Countercl., ¶ 47.
26
Id., ¶¶ 49–52.
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more than just a concept.27 Suncor also pleads affirmative defenses of fraudulent
inducement, fraudulent concealment, frustration of purpose, and failure of
consideration.28
II. PARTIES’ CONTENTIONS
Magellan argues that the Court should dismiss the fraud counterclaims
because Suncor disclaimed reliance on Magellan’s representations in the
Terminalling Agreement.29 Magellan also contends that inquiry notice prevents
Suncor from establishing justifiable reliance.30
Turning to the fraudulent misrepresentation counterclaim, Magellan asserts
that Suncor fails to identify a misrepresentation of a material fact. 31 For the
fraudulent nondisclosure counterclaim, Magellan posits it didn’t have a duty to
unveil its pipeline project intentions.32 Magellan also avers that Suncor’s fraudulent
inducement, fraudulent concealment, frustration, and lack-of-consideration
affirmative defenses should be dismissed because they are not well pleaded, and the
27
Id., ¶ 61.
28
Defs.’ Affirmative Defenses 2–3, 6–7 (D.I. 58).
29
See generally Magellan Op. Br. at 9–17 (D.I. 66).
30
See generally id. at 17–21.
31
See generally id. at 21–24.
32
See generally id. at 25–32.
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fraud-related defenses fail for the same reasons as the fraud-related counterclaims.33
In response, Suncor counters that it has pled all the elements of fraudulent
misrepresentation and fraudulent nondisclosure, and that the non-reliance clause
isn’t specific enough to disclaim reliance.34 Likewise, Suncor replies that the nonreliance provision doesn’t cover Magellan’s undisclosed intentions relating to the
pipeline expansion project.35 As to the affirmative defenses, Suncor insists they are
well-pleaded at the motion-to-dismiss stage.36
In reply, Magellan reiterates that the Terminalling Agreement’s non-reliance
provision is broad enough to cover both claims, and Suncor was otherwise on inquiry
notice about the pipeline project, so Suncor cannot prove reliance.37 Magellan
maintains that Suncor fails to plead a false representation under its fraudulent
misrepresentation counterclaim, and cannot establish that Magellan had a duty to
disclose under the fraudulent nondisclosure claim based on the Restatement
(Second) of Torts.38 Finally, Magellan posits that the Court should dismiss Suncor’s
33
See generally id. at 32–34.
34
See generally Suncor’s Opp’n at 6–30 (D.I. 71).
35
See generally id. at 25–26.
36
See generally id. at 31–34.
37
See generally Magellan’s Reply at 2–11 (D.I. 72).
38
See generally id. at 11–21.
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affirmative defenses that are derivative of the faulty fraud-related counterclaims
under Superior Court Civil Rule 12(f).39
The Parties agree that Colorado law governs.40
III. STANDARD OF REVIEW
Magellan seeks to dismiss both counterclaims under Rule 12(b)(6) for failure
to state a claim upon which relief can be granted.41 The governing standard requires
the Court to “(1) accept all well pleaded factual allegations as true, (2) accept even
vague allegations as ‘well pleaded’ if they give the opposing party notice of the
claim, [and] (3) draw all reasonable inferences in favor of the non-moving party.”42
The Court need not “accept every strained interpretation of [Suncor’s] allegations”43
or conclusory statements “unsupported by allegations of specific facts.”44 Dismissal
is appropriate only if Suncor “would not be entitled to recover under any reasonably
39
See generally id. at 21–23.
40
Magellan Op. Br. at 1 n.2; Suncor’s Opp’n at 7 n.1.
41
D.I. 65.
42
Cent. Mortg. Co. v. Morgan Stanley Mortg. Cap. Hldgs. LLC, 27 A.3d 531, 535 (Del. 2011) (citing Savor, Inc. v. FMR Corp., 812 A.2d 894, 896–97 (Del. 2002)).
43
Gen. Motors (Hughes) S’holder Litig., 897 A.2d 162, 168 (Del. 2006) (quoting Malpiede v. Townson, 780 A.2d 1075, 1083 (Del. 2001)).
44
In re Lukens Inc. S’holders Litig., 757 A.2d 720, 727 (Del. Ch. 1999), aff’d sub nom., Walker v. Lukens, Inc., 757 A.2d 1278 (Del. 2000).
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conceivable set of circumstances susceptible of proof.”45
Magellan also seeks to dismiss several of Suncor’s affirmative defenses under
Rule 12(f). Rule 12(f) permits the Court to “‘order stricken from any pleading any
insufficient defense or any redundant, immaterial, impertinent, or scandalous
matter.’”46 Motions to strike an insufficient defense “focus on the form of the
pleading and not its substance.”47 When ruling on such motion, the Court construes
all facts in favor of the nonmoving party and denies the motion if the defense is
sufficient under law.48 The Court disfavors motions to strike.49
IV. ANALYSIS
Suncor’s fraudulent misrepresentation counterclaim fails because Suncor
disclaimed reliance on all Magellan representations in the Terminalling Agreement.
And Colorado enforces non-reliance provisions that expressly disclaim reliance.
45
Savor, 812 A.2d at 896–97; Priveterra Capital, Mgmt., LLC v. Pixium Vision, LLC, 2026 WL 940227, at *3 (Del. Super. Ct. Apr. 7, 2026).
46
DDS Striker Holdings, LLC v. Verisk Analytics, Inc., 2024 WL 3983973, at *3 (Del. Super. Ct. Aug. 29, 2024) (quoting Super. Ct. Civ. R. 12(f)).
47
Columbus Life Ins. Co. v. Wilmington Tr. Co., 2021 WL 537117, at *5 (Del. Super. Ct. Feb. 15, 2021).
48
Id. (citation modified).
49
Heisenberg Principals Fund IV, LLC v. Bellrock Intelligence, Inc., 2018 WL 3460433, at *1 (Del. Super. Ct. July 17, 2018) (citing Vannicola v. City of Newark, 2010 WL 5825345, at *8 (Del. Super. Ct. Dec. 21, 2010))
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But the fraudulent nondisclosure counterclaim endures. While Suncor
disclaimed reliance on Magellan’s representations, Suncor didn’t disclaim reliance
on Magellan’s unstated true intentions about the expansion project. And Suncor has
otherwise stated a reasonably conceivable counterclaim of fraudulent nondisclosure.
Finally, Suncor’s affirmative defenses are well-pleaded. The fraudulent
nondisclosure counterclaim is well-pleaded. And because the affirmative defenses
relate to that well-pleaded counterclaim, they survive this early stage of litigation on
the same grounds.
A. SUNCOR’S FRAUDULENT MISREPRESENTATION COUNTERCLAIM FAILS TO
STATE A CLAIM AS SUNCOR UNAMBIGUOUSLY DISCLAIMED RELIANCE ON
ANY MAGELLAN REPRESENTATIONS.
To prevail on a fraud claim, under Colorado law, a party must prove: (1) that
the opposing party made a false representation of a material fact; (2) that the one
making the representation knew it was false; (3) that the person to whom the
representation was made was ignorant of the falsity; (4) that the representation was
made with the intention that it be acted upon; and (5) that the reliance resulted in
damage to the plaintiff.50
For the reliance element, a party must show actual reliance, the reasonableness
50
Bristol Bay Prods., LLC v. Lampack, 312 P.3d 1155, 1160 (Colo. 2013).
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of the reliance, and that the reliance caused damage.51 Contract language that clearly
and specifically disclaims precontract representations or omissions can preempt
fraud claims which are based on those statements or omissions.52 A general
integration clause alone will not suffice.53 Instead, a non-reliance provision “must
be couched in clear and specific language.”54
Here, the Terminalling Agreement has an integration clause.55 And Suncor
disclaimed reliance on “any representation made by or on behalf of Magellan that is
not specified in this Agreement.”56 Suncor’s fraudulent misrepresentation
counterclaim rests entirely upon its reliance on Magellan’s representation that the
expansion was only a concept and not a definite plan. The Agreements don’t
mention the pipeline expansion project. So Suncor could not have reasonably relied
on this representation, since it disclaimed reliance on any Magellan representations
outside the Agreements. Because Suncor cannot prove reasonable reliance on this
51
Id.
52
Keller v. A.O. Smith Harvestore Products, Inc., 819 P.2d 69, 74 (Colo. 1991); LBI Grp., LLC v. Scanlan, 2024 WL 3947026, at *5 (Colo. App. July 11, 2024).
53
LBI Grp., 2024 WL 3947026, at *5.
54
Keller, 819 P.2d at 74; Colorado Coffee Bean, LLC v. Peaberry Coffee Inc., 251 P.3d 9, 19 (Colo. App. 2010), as modified on denial of reh’g (Apr. 1, 2010).
55
Terminalling Agreement § 24.
56
Terminalling Agreement Sched. B, § 7
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representation, Counterclaim Count I is DISMISSED.
True, even if only one counterclaim endured the motion-to-dismiss stage,
discovery would proceed in largely the same manner. Likewise, Rule 12(b)(6) asks
only whether the complaint states a claim upon which relief can be granted, not
whether every theory states a claim on which relief can be granted.57
There can be significant value in dispensing with meritless claims at the
pleading stage. But a court need not examine the sufficiency of every
count in a complaint or consider every argument that a defendant has
advanced. That is particularly true when an issue will not result in the
dismissal of a defendant from the case and where the case involves a
common nucleus of operative fact that will be the focus of discovery in
any event. In that setting, the case can readily proceed past the pleading
stage.58
The counterclaims here indeed arise from the same nucleus of fact. And discovery
overlaps substantially since both counterclaims revolve around what was said during
the presentation and in the lead-up to the Terminalling Agreement. But it is
impossible for Counterclaim Count I to ultimately succeed because the disclaimer
expressly covers representations. Even if the “concept” was a done deal at the
presentation, and Magellan knew that referring to the done deal as a “concept” was
false, the disclaimer encompasses any extra-contractual representations. This is also
57
In re EngageSmart, Inc. Stockholder Litig., 354 A.3d 796, 863 (Del. Ch. 2026) (cleaned up). 58
Cygnus Opportunity Fund, LLC v. Washington Prime Grp., LLC, 302 A.3d 430, 464 (Del. Ch. 2023).
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true if Magellan represented that the pipeline project and the winter fill plans were
mutually exclusive since, again, this is an extra-contractual representation by
Magellan. The Court need not punt this counterclaim to summary judgment because
further testing of the facts is unnecessary for this counterclaim. 59 Accordingly,
Suncor’s fraudulent misrepresentation counterclaim fails as a matter of law.60
B. BUT SUNCOR’S FRAUDULENT NONDISCLOSURE COUNTERCLAIM SURVIVES,
AS THE NON-RELIANCE PROVISION DOESN’T COVER OMISSIONS THAT
MAGELLAN KEPT TO ITSELF.
To succeed on a fraudulent nondisclosure or concealment claim under
Colorado law,61 a party must demonstrate: (1) the concealment or nondisclosure of
a material existing fact that in equity and good conscience should be disclosed;
(2) knowledge on the part of the party against whom the claim is asserted that such
a fact is being concealed or not disclosed; (3) ignorance of that fact on the part of
59
See, e.g., Powers v. Office of Child Support, 795 A.2d 1259, 1263 (Vt. 2002) (“The purpose of a motion to dismiss is to test the law of the claim, not the facts which support it.”); see also Total Containment, Inc. v. Environ Products, Inc., 1992 WL 208981, at *1 (E.D. Pa. Aug. 19, 1992) (same).
60
See In re Gen. Motors (Hughes) S’holder Litig., 897 A.2d at 169 (“It is well established that a claim may be dismissed if allegations in the complaint or in the exhibits incorporated into the complaint effectively negate the claim as a matter of law.”) (quotations omitted). 61
See generally Wisehart v. Zions Bancorporation, 49 P.3d 1200, 1204 (Colo. App. 2002) (acknowledging that the terms fraudulent concealment and fraudulent nondisclosure are used interchangeably and require essentially the same elements). Here, nondisclosure is more accurate because Suncor alleges that Magellan had a duty to disclose that it planned to proceed with the pipeline expansion project.
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the one from whom the fact is concealed or not disclosed to; (4) the intention that
the concealment or nondisclosure be acted upon; and (5) action on the concealment
or nondisclosure resulting in damages.62
For the first element, a party must show that the other party held a duty to
disclose the material information.63 Colorado courts look to the Restatement
(Second) of Torts § 551(2) to determine whether there was a duty to disclose in
equity and good conscience.64 Relevant to Suncor’s counterclaim, a party has a duty
to disclose “matters known to him that he knows to be necessary to prevent his partial
or ambiguous statement of the facts from being misleading.”65
1. The non-reliance clause only covers representations—not omissions.
Unlike the fraudulent misrepresentation counterclaim, the fraudulent
concealment claim avers that Magellan failed to divulge that the pipeline expansion
project was more than just a notion. The non-reliance clause doesn’t cover this, or
any, omission. The clause only covers Magellan’s actual representations—not
omissions that Magellan never conveyed to Suncor.
62
BP Am. Prod. Co. v. Patterson, 263 P.3d 103, 109 (Colo. 2011); Morrison v. Goodspeed, 68 P.2d 458, 462 (Colo. 1937).
63
Mallon Oil Co. v. Bowen/Edwards Associates, Inc., 965 P.2d 105, 111 (Colo. 1998). 64
Id.
65
RESTATEMENT (SECOND) OF TORTS § 551(2)(b) (A.L.I. 1977).
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And under Colorado law, a non-reliance provision in an agreement bars fraud
claims only when a party expressly disclaims reliance. For instance, in Colorado
Coffee Bean, LLC v. Peaberry Coffee Inc.,66 the Colorado Court of Appeals held that
the trial court erred by holding that a non-reliance clause barred reliance on
nondisclosure of losses. There, the plaintiff bought a retail coffee shop franchise
after receiving the defendant’s uniform franchise offering circular (UFOC), which
disclosed the gross sales of existing stores, but stated that it contained no data on
profits and no guarantee of profitability and advised prospective franchisees to
conduct their own financial analyses.67 The franchise agreement was integrated and
contained general exculpatory clauses disclaiming reliance on representations not
found in the agreement.68 The plaintiff asserted a claim for fraudulent nondisclosure
based on two theories—that the franchisor had concealed: (1) losses at existing
stores; and (2) the franchisor’s own losses.69
The appellate court determined that “clear and specific language” in the
UFOC or the franchise agreement could prove the absence of reasonable reliance on
66
251 P.3d 9, 19 (Colo. App. 2010), as modified on denial of reh’g (Apr. 1, 2010). 67
Id. at 15–18.
68
Id. at 20–21.
69
Id. at 18.
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the purported omissions.70 The court thus concluded that the UFOC’s statements
precluded reasonable reliance under the first theory, but that the UFOC and franchise
agreement contained no terms that nullified reasonable reliance under the second
theory.71 The reason was that while the plaintiffs disclaimed reliance on affirmative
representations outside the transactional documents, there was no disclaimer
concerning a failure to disclose material information.72 In doing so, the court
distinguished between disclaiming reliance on affirmative representations outside
the transactional documents and a failure to disclose material information.73
Here, the non-reliance provision only covers Magellan’s representations.
Suncor alleges that Magellan failed to disclose that the pipeline expansion project
was a sure thing. Although this counterclaim relates to the representation that the
pipeline expansion was only a concept, and Suncor disclaimed reliance on this
representation:
[a] statement that is partial or incomplete may be a misrepresentation
because it is misleading, when it purports to tell the whole truth and
does not. So also may a statement made so ambiguously that it may
have two interpretations, one of which is false. When such a statement
70
Id. at 19–20.
71
Id. at 19–22.
72
Id. at 19.
73
Id. at 19–21; see also id. at 21 (noting that “neither clause disclaims reliance on undisclosed but material information.”).
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has been made, there is a duty to disclose the additional information
necessary to prevent it from misleading the recipient. In this case there
may be recovery either on the basis of the original misleading statement
or of the nondisclosure of the additional facts.74
Magellan’s failure to disclose the additional facts may entitle Suncor to recovery.
And the disclaimer here doesn’t apply to facts that Magellan failed to represent to
Suncor. The disclaimer also doesn’t state that Suncor is disclaiming reliance on the
completeness of Magellan’s representations. So the Terminalling Agreement’s nonreliance clause doesn’t bar the fraudulent non-disclosure counterclaim since the nonreliance clause doesn’t cover undisclosed material facts.
2. It is reasonably conceivable that Magellan had a duty to correct its
statement that the pipeline project was only a “concept.”
Next, Magellan insists that the fraudulent nondisclosure counterclaim fails as
it didn’t have a duty to disclose that the pipeline expansion project was more than
just a concept. Under the Restatement, Magellan had a duty to disclose matters it
knew were necessary to prevent its partial or ambiguous statement of the facts from
misleading Suncor. Based on the well-pleaded facts in Counterclaim Count II, it is
reasonably conceivable that Magellan stated only that there was a pipeline expansion
project concept when it had far more definitive plans to complete the project and
74
RESTATEMENT (SECOND) OF TORTS § 551 cmt. 2(g) (A.L.I. 1977) (emphasis added). Magellan Pipeline Company, L.P. v. Suncor Energy (U.S.A.) Inc. et al.
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knew that calling the expansion a concept would make it seem less like the expansion
was already going to happen. It is also reasonably conceivable that Magellan knew
the pipeline expansion was a done deal and that Suncor wouldn’t sign the
Terminalling Agreement if it knew the pipeline expansion was happening. Under
these facts, Magellan may have had a duty to correct its partial or ambiguous
description of the pipeline project as a concept.
3. It is reasonably conceivable that Suncor didn’t know that the pipeline
expansion project was going to happen.
Magellan also asserts that Suncor cannot state a claim for fraudulent
nondisclosure since Suncor cannot establish ignorance of the pipeline expansion
project. Magellan cites Nielson v. Scott75 to support this contention. There, the
plaintiffs, buyers of an RV park, sued the seller for misrepresenting the seriousness
of a wastewater problem in the park. The seller verbally assured the buyers that a
$15,000 upgrade could solve the problems with the park’s septic system. 76 But the
buyers’ attorney learned the park needed a groundwater discharge permit from a
state agency and that this agency suspected the RV park didn’t comply with state
75
55 P.3d 777, 780 (Colo. App. 2002).
76
Id. at 778.
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water quality laws.77 Despite the attorney’s warnings, the buyers proceeded with the
purchase, and acknowledged in the sales contract that their “due diligence
inspection,” including environmental and water issues, had been completed to their
satisfaction.78 When the buyers learned that the septic system did not follow state
regulations, and that the problem could not be solved by expanding the septic
system, the plaintiffs sued the sellers for fraudulent misrepresentation.79 The trial
court granted the sellers’ motion for summary judgment, and the Colorado Court of
Appeals affirmed since any reliance on the sellers’ representation was not justifiable
because the buyers knew there were problems and should have investigated further.80
Here, Suncor alleges it didn’t know that Magellan was definitely completing
the pipeline project and thought if the Parties agreed to the winter fill plan, then the
pipeline project wouldn’t happen. No doubt, Suncor shoulders a heavy burden to
prove that it was under the impression that the pipeline was only a “concept” and
that a thorough investigation and due diligence—or even just a few more follow-up
questions at the meeting with Magellan—wouldn’t have shown that the project was
77
Id. at 778–79.
78
Id.
79
Id.
80
Id.
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more than just that. But this case is only at the motion-to-dismiss stage. And Suncor
has set forth facts showing that it didn’t know the pipeline project was a sure thing
and that Magellan created an impression that the pipeline project was only a potential
idea during negotiations.81 Accordingly, Suncor has stated a reasonably conceivable
counterclaim for fraudulent nondisclosure, and the Court DENIES the Motion as to
Counterclaim Count II.
C. SUNCOR’S AFFIRMATIVE DEFENSES ARE WELL-PLEADED BECAUSE A
FRAUD THEORY REMAINS IN PLAY.
Magellan also moves to dismiss Suncor’s affirmative defenses of fraudulent
inducement, fraudulent concealment, frustration, and lack of consideration because
they are derivative of Suncor’s faulty counterclaims.
Here, only Suncor’s fraudulent misrepresentation counterclaim fails. The
fraudulent concealment counterclaim and its related defenses are still alive and
relevant to this action. And the only challenged defenses are those that depend on
the Court dismissing both fraud-related counterclaims. But there is still a fraudrelated theory in play, and the affirmative defenses linked to the surviving well81
See Wisehart, 49 P.3d at 1206–07 (holding that trial court erred when ruling that reliance was unjustified at summary judgment when there was a factual dispute over whether the plaintiff availed himself of the invitation to seek more information); see also Franklin Bank, N.A. v. Bowling, 74 P.3d 308, 313 n.11 (Colo. 2003), as modified on denial of reh’g (Aug. 4, 2003) (recognizing that “inquiry notice depends on extrinsic factual inquiry.”).
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pleaded counterclaim are also well-pleaded. So, Magellan’s Motion is DENIED as
to Suncor’s affirmative defenses.
VI. CONCLUSION
For these reasons, the Court GRANTS Magellan’s Motion, in part, and
DENIES it, in part. Only Counterclaim Count I is DISMISSED.
IT IS SO ORDERED.
/s/ Paul R. Wallace
Paul R. Wallace, Judge
cc: All Counsel via File and Serve