ROBERTO DOBLES AN INDIVIDUAL v. BLACK HILLS CORPORATION BLACK HILLS EXPLORATION AND PRODUCTION INC MOC OIL COMPANY SUCURSAL COSTA RICA BLACK HILLS GAS RESOURCES INC DAVID EMERY AN INDIVIDUAL LINDEN EVANS AN INDIVIDUAL AND RANDY HARRIS AN INDIVIDUAL (2025)

OPINION AND ORDER DENYING RENEWED MOTION TO DISMISS, GRANTING MOTION TO AMEND COMPLAINT AND DISMISSING ALL BUT CLAIM FIVE

Before this Court is Defendant Black Hills Corporation's (“BHC”) renewed motion to dismiss, Doc. 47, and Plaintiff Roberto Dobles's motion to amend his Complaint, Doc. 51. For the following reasons, the motion to dismiss is denied, the motion to amend is granted, and all but Claim Five ¹ of the proposed Amended Complaint, Doc. 51-1, will be dismissed.

I. Legal Standard

To survive a motion to dismiss for failure to state a claim under Rule 12(b)(6), a complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). Courts must accept the plaintiff's factual allegations as true and make inferences in the plaintiff's favor but need not accept the plaintiff's legal conclusions. Retro Television Network, Inc. v. Luken Commc'ns, LLC, 696 F.3d 766, 768–69 (8th Cir. 2012). Although detailed factual allegations are unnecessary, the plaintiff must plead enough facts to “state a claim to relief that is plausible on its face[,]” meaning “the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Therefore, the “factual allegations must be sufficient to raise a right to relief above the speculative level.” Cook v. George's, Inc., 952 F.3d 935, 938 (8th Cir. 2020) (cleaned up and citation omitted).

II. Background

A. Factual Allegations in the Complaint

In the late 1990s, the government of Costa Rica opened bidding for hydrocarbon exploration and production contracts for 2.3 million acres of potential oil and gas reserves in the northern part of the country (“the Concessions”). Doc. 1 ¶¶ 13–15. In November 1999, Defendant Mallon Oil Company Sucursal Costa Rica (“MOC”) submitted a bid to explore the Concessions for oil and gas along with a proposal containing all the field work activities MOC committed to do on the project. Id. ¶¶ 16, 18. Around April 2000, Costa Rica notified MOC that MOC had won the right to explore and extract the Concessions, which gave MOC the exclusive right under Costa Rica's Adjudications Act and Hydrocarbon Law to explore for oil and gas in the Concessions after performing environmental impact analyses and paying a bond of $275,000 renewed annually. Id. ¶ 24. Under its agreement with the Costa Rican government, MOC had to perform a field environmental impact study (“Field EIS”) and submit it to SETENA, the Costa Rican equivalent to the United States Environmental Protection Agency. Id. ¶¶ 26–28. In July 2000, MOC submitted to SETENA geological, topographic, physical, and geophysical information about the Concessions area lacking field work activity, which the Complaint calls the “Desk EIS.” Id. ¶ 33. SETENA in October 2000 approved the Desk EIS but made clear that it lacked field work information necessary for the required Field EIS. Id. ¶¶ 35–36.

In March 2003, BHC, a publicly traded American public utilities company, acquired MOC and its rights to explore the Concessions. Id. ¶¶ 42–44. BHC acquired MOC primarily because MOC had a large oil and gas lease in New Mexico. Id. ¶ 45. The Complaint alleges that BHC originally assigned no value to the Concessions and did not disclose to its shareholders this interest in the Concessions, but at some point “learned ․ the potential value of the Concessions in Costa Rica was immense.” Id. ¶¶ 46–47, 55, 58. MOC—later renamed Defendant Black Hills Gas Resources, Inc. (“BHGR”) but continuing to do business as MOC in Costa Rica—and another BHC subsidiary, Defendant Black Hills Exploration and Production, Inc. (“BHE&P”), sought to hire a well-respected and knowledgeable Costa Rican to help them with the Costa Rican regulatory process. Id. ¶¶ 43, 50, 60. Defendants chose Plaintiff Roberto Dobles based on his knowledge and experience with oil and gas exploration in Costa Rica. Id. ¶¶ 61–63.

On January 1, 2010, BHE&P and BHGR/MOC signed a Consultant Agreement with Dobles. Id. ¶¶ 67, 71, 73. The Consultant Agreement was for a one-year term but was renewed for an additional six months by mutual agreement. Doc. 28-7 ¶ 2.a. Colorado and Costa Rican law governed the Consultant Agreement, Id. ¶ 16.a. Under the Consultant Agreement, Dobles received $4,000 per month as an independent contractor for services plus reimbursement for expenses and committed to work with Defendants toward the completion and execution of a formal agreement between MOC and Costa Rica covering the Concessions. Doc. 28-2 at 3. Also on January 1, 2010, Dobles, BHE&P, and BHGR/MOC executed a “Royalty Agreement,” which among other things entitled Dobles to up to a three percent royalty interest from the sale of oil and natural gas from lands covered by the Concessions “[u]pon final execution of the Concession Agreement by the government of Costa Rica.” Doc. 28-6 ¶ 1.

BHGR/MOC and Costa Rica never executed a Concession Agreement. Doc. 28-2 at 3. BHGR/MOC never obtained a Field EIS, and in turn never initiated oil and gas exploration in the Concessions. Doc. 1 ¶ 139. Dobles alleges that there existed a “dichotomy and inherent tension between BHC's conservative utility business (that provides a steady and predictable return) and its oil and gas exploration and production business (that experiences extreme fluctuations in its income), making the Defendants concerned about what might happen to BHC's stock price and bond rating if it pursued oil and gas ventures. Id. ¶ 52–54. BHC knew that upon Costa Rican approval of a Field EIS and issuance of a start order, Defendants would have to start field operations within six months, thereby costing several million dollars for initial exploratory activity. Id. ¶ 74. Dobles alleges that BHC embarked on a strategy of delaying filing a Field EIS, by taking the untenable position that the Desk EIS was sufficient and then litigating over that issue for several years. Id. ¶¶ 81–110. In 2014, Defendants finally filed with SETENA an application for a Phase I Field EIS. Id. ¶ 111. In September 2015, the Supreme Court of Costa Rica affirmed that the Concession was valid and unaffected by a moratorium and that a Field EIS was required. Id. ¶ 113–114. A few weeks later, Defendants halted efforts to obtain a Field EIS and “fired or defunded its consultants.” Id. ¶ 116. Defendants terminated the Consulting Agreement with Dobles in November 2015. Id. ¶ 117.

Defendants continued to renew the annual bond to retain their interest in the Concessions with the last annual $275,000 bond payment made in July 2019. Id. ¶ 138. In 2019, BHC proposed transferring both MOC and the Concessions to Dobles and George Mallon (the namesake for MOC) if they were able to partner with additional new investors; with Defendants’ knowledge, Dobles and Mallon then met with potential investors about acquiring the Concessions. Id. ¶¶ 140–141. Defendants chose not to renew the bond in January of 2020, which resulted in expiration and termination of the Concessions opportunity and consequently Dobles's hopes for royalties. Id. ¶ 142. Dobles alleges he lost out on a significant royalty interest potentially worth tens of millions of dollars because of Defendants’ refusal to pursue a Field EIS and begin exploration of the Concessions. Id. ¶ 148.

B. Prior Litigation

In September 2021, Dobles filed claims in Colorado state court against these same defendants—BHC, BHE&P, MOC, BHGR, David Emery, Linden Evans, and Randy Harris; those claims were nearly identical to what he filed in this case. Dobles's Colorado state court complaint asserted ten claims for relief against the Defendants: Claim One alleged breach of contract against BHE&P and BHGR/MOC; Claim Two alleged breach of the implied covenant of good faith and fair dealing against BHE&P and BHGR/MOC; Claim Three alleged interference with contractual relations against BHC; Claim Four alleged interference with contractual relations against BHE&P; Claim Five alleged interference with prospective business advantage against BHC; Claim Six was a third party beneficiary cause of action against BHC, BHGR, MOC, and BHE&P; Claim Seven alleged fraudulent misrepresentation, nondisclosure, and concealment against BHC, BHGR, MOC, and BHE&P; Claim Eight alleged BHC, BHGR, MOC, and BHE&P are all alter egos of each other; Claim Nine alleged a conspiracy against the three individual Defendants, David Emery, Linden Evans, and Randy Harris, and other co-conspirators not yet identified; and Claim Ten alleged civil theft against BHC, BHE&P, and BHGR/MOC. Doc. 28-1.

In November 2021, Defendants filed a motion to dismiss the state court lawsuit under Colorado Rule of Civil Procedure 12(b)(5) (the state court analog to a motion to dismiss for failure to state a claim upon which relief may be granted under Federal Rule of Civil Procedure 12(b)(6)). Doc. 28-2. Simultaneous with the Rule 12(b)(5) motion, Defendants BHC, Emery, and Evans filed a separate motion to dismiss under Colorado Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction. Doc. 28-3. On December 7, 2021, the Defendants and Dobles filed a “Joint Motion and Stipulation to Stay Briefing on Rule 12(b)(2) Motion.” Doc. 35-1. In that motion, Defendants and Dobles agreed that “full consideration of the Rule 12(b)(2) motion may require discovery, and an evidentiary hearing” and that “a ruling in Defendants’ favor on a portion or all of their Rule 12(b)(5) motion may relieve [the state court] of determining the merits of the 12(b)(2) motion by disposing of these claims.” Id. ¶ 3. The parties requested that the state court stay further briefing on the Defendants’ Rule 12(b)(2) motion pending a decision on the Rule 12(b)(5) motion for the sake of “judicial efficiency.” Id. ¶ 4.

In March 2022, the Colorado state court issued an opinion and order (“March 2022 order”) granting Defendants’ motion to dismiss for failure to state a claim on eight of Dobles's ten claims,² deferring ruling on the claim for alter ego,³ and denying Defendants’ motion to dismiss the claim against BHC for interference with prospective business advantage. Doc. 28-2. In sum, the court concluded that neither the Royalty Agreement nor the Consultant Agreement obligated the Defendants to execute a finalized Concessions agreement with the Costa Rican government or to use their best efforts to do so. Id. at 4–5. The court ruled that Dobles “failed to set forth a plausible claim for breach of contract.” Id. at 5. The court further determined that Dobles was not an intended third-party beneficiary to the Concessions award granted by Costa Rica to MOC and that his “conclusory allegations that Defendants harbored a present intention not to pursue a Field EIS and Concession Agreement” did not allege fraud with sufficient particularity to survive the motion to dismiss. Id. at 9–10. The court then dismissed the claims for conspiracy and civil theft. Id. at 12–13.

The Colorado court, however, denied Defendants’ motion to dismiss Claim Five against BHC for interference with prospective business advantage. Id. at 8–9. In the court's view, Dobles's allegations that “BHC, a nonparty to the Consultant Agreement and Royalty Agreement, interfered with his ‘sufficiently definite contractual expectation, specifically the expectation that a royalty would be paid, Field EIS would be pursued, and the pre-approved Concession Agreement executed” sufficiently stated a claim that was plausible on its face. The court rejected Defendants’ argument that Dobles's complaint “failed to allege that the duty to pay him a royalty was sufficiently definite under the Agreements” and that Dobles's “allegations of intentional and improper conduct [were] conclusory.” Id. at 9. In a footnote, the court remarked that it found no “reported cases in Colorado that require proof [of] ‘the existence of a valid business relationship or a prospective advantage or expectancy sufficiently definite, specific, and capable of acceptance in the sense that there is a reasonable probability of it maturing into a future economic benefit to the plaintiff[.]’ ” Id. at 9 n.8 (second alteration in the original).

The Colorado litigation ended in June 2022 when the court issued a second opinion and order (“June 2022 order”) granting a motion to dismiss for lack of personal jurisdiction Claim Five against BHC for interference with a prospective business advantage, the sole surviving claim (other than the alter ego claim) from the March 2022 order. Doc. 28-3. The Colorado court found it had neither specific nor general personal jurisdiction over BHC, a South Dakota corporation with its principal place of business in Rapid City, South Dakota. Id. at 6. The court alternatively held that even if it could exercise specific personal jurisdiction over BHC that it “would not comport with traditional notions of fair play and substantial justice” to do so. Id. at 8.

C. Federal Lawsuit and Pending Motion

On September 8, 2022, Dobles filed this federal lawsuit against the same Defendants he previously sued in Colorado. Doc. 1. Dobles's federal complaint alleged ten claims for relief against the various Defendants, all of which are virtually identical to his state court claims.⁴ Defendants filed a joint motion to dismiss, Doc. 26, asserting that Dobles's federal complaint was barred by res judicata, and alternatively, failed to state any claims upon which relief may be granted. On September 29, 2023, this Court issued its Opinion and Order Granting Defendants’ Motion to Dismiss Except to Claim Five and Staying Case (“2023 Opinion and Order”). Doc. 41. In the 2023 Opinion and Order, this Court held that, in light of the Colorado state court decision of March 2022, Claims One, Two, Three, Four, Six, Seven, Nine, and Ten as to all Defendants except BHC were barred by res judicata. This Court further dismissed Claims Three, Six, Seven, and Ten against BHC for failure to state a claim. This Court also dismissed Claim Eight for “alter ego,” recognizing it as a form of remedy rather than a separate claim for relief.

The sole remaining claim then was Claim Five for tortious interference with a prospective business advantage against BHC. Prior to this Court issuing its 2023 Opinion and Order, the Defendants notified this Court that the Colorado Court of Appeals had before it in Black Hills Corp. v. GT Resources, LLC (“GT Resources”) the issue of whether a “wrongful means” standard under Restatement (Second) of Torts § 769 should apply when a plaintiff, as Dobles did in Claim Five, alleges that a parent company tortiously interfered with a prospective business advantage involving its subsidiary. Doc. 40. Rather than rule on dismissal of Claim Five, this Court stayed the case while awaiting the decision in GT Resources, which could clarify whether Colorado law recognized a claim for tortious interference with prospective business advantage under circumstances such as those alleged by Dobles. Doc. 41 at 24.

On October 19, 2023, the Colorado Court of Appeals issued its unpublished opinion in GT Resources, but the losing party filed a petition for writ of certiorari with the Supreme Court of Colorado. BHC then requested that the stay in this case be continued until the Supreme Court of Colorado decided whether to grant the petition. Doc. 43. This Court granted the request. Doc. 44. On October 8, 2024, the BHC provided a status update, informing this Court that the Supreme Court of Colorado denied the petition for writ of certiorari in GT Resources and renewed its motion to dismiss Claim Five. Doc. 47.

In its renewed motion to dismiss, BHC argues that that the Colorado Court of Appeals, in the unpublished GT Resources opinion, adopted the financial interest privilege under Restatement (Second) of Torts § 769 and established that to state a claim for tortious interference with a prospective business advantage, Dobles must plead that BHC engaged in “wrongful means.” Id. at 1. BHC asserts that Dobles has not done so, and thus, Claim Five should be dismissed. In response, Dobles first argues that this Court cannot consider the GT Resources opinion when deciding whether he has sufficiently pled a claim for tortious interference because it is unpublished and has no precedential value. Doc. 50 at 5. Dobles further argues that, because the GT Resources opinion was unpublished, the law has not changed and that he does not need to plead BHC engaged in wrongful means. Dobles further argues he pleaded sufficient facts to support a claim for tortious interference with a prospective business advantage, regardless of whether he must plead that BHC engaged in “wrongful means” or not. Finally, Dobles requests leave to amend his Complaint should this Court adopt the “wrongful means” standard. Doc. 51. BHC opposes granting Dobles leave to amend his Complaint. Doc. 58.

D. GT Resources Facts and Procedural History

The issues raised in GT Resources stem from the same oil and gas exploration activities as the present case. Indeed, GT Resources involves many of the same facts and issues here, including several of the same parties. In 1999, after MOC submitted a bid for the Concessions, MOC and Mallon entered into a contract (“Letter Agreement”) which granted Mallon a 3% royalty interest in the value of hydrocarbons produced by MOC. Doc. 47-1 at 2. As noted above, BHC acquired MOC and merged MOC into BHGR. In 2013, Mallon assigned his interest in the Letter Agreement to GT Resources. Id. at 3. Thus, GT Resources and BGHR became parties to the Letter Agreement. After BHC decided to divest its oil and gas interests, it entered into negotiations, through corporate officer Randy Harris, with GT Resources regarding transfer of the Concessions. Id. at 5. Mallon testified that Harris initially told Mallon that BHC would convey the Concessions to GT Resources with “no strings attached.” Id. However, BHC ultimately conditioned the conveyance of the Concessions on Mallon's execution of a release and waiver of all claims against BHC arising from an unrelated dispute. Id. Mallon refused to execute the release, and BHC ultimately surrendered the Concessions to the Costa Rican government. Id. at 6. GT Resources then sued BHC, BHE&P, and BHGR raising several claims against the defendants, including breach of the Letter Agreement, breach of implied duty of good faith, and intentional interference with contractual obligations and a prospective business advantage. Id.

In its complaint, GT Resources alleged that it had a sufficiently definite contractual expectation to receive the Concessions from BHGR free and clear of costs if BHGR decided to relinquish or abandon the Concessions. Id. at 25. GT Resources alleged this contractual expectation was captured by Exhibit C to the Letter Agreement, which stated the following:

If [MOC] at any time elects to abandon or relinquish any Hydrocarbon Contract subject to the Royalty Interest it shall first give Mallon 45 days prior written notice of such election, and Mallon shall have the option, exercisable by written notice within 60 days after its receipt of such notice from [MOC], to receive an assignment of such Hydrocarbon Contract from [MOC], free and clear of all costs, expenses and obligations arising prior to the date of the assignment to Mallon.

Id. GT Resources further alleged that BHC and BHE&P interfered with this contractual expectation by later imposing a condition on transferring the Concessions. Id. BHC moved for summary judgment, and the Colorado state district court granted summary judgment for BHC on all claims except the good faith and intentional interference with prospective business advantage claims. Id. at 6. In its order granting summary judgment, the court interpreted “Hydrocarbon Contract” as used in Exhibit C to mean an exploration or drilling contract and that the grant of Concessions was not a “Hydrocarbon Contract.” Id. at 26. The court also found that an exploration and drilling contract was never executed. Id. As a result, the court held that no contractual obligation existed between GT Resources and BHGR that BHC and BHE&P could interfere with. Id. Thus, the court granted summary judgment on the interference with a contractual obligation claim.

However, the court held that there was a genuine issue of material fact as to whether BHC and BHE&P improperly interfered with BHGR's offer of the Concessions by conditioning the conveyance. Id. The court reasoned that stating a claim for intentional interference with a prospective business advantage does not require proof of breach of the Letter Agreement. Rather the court determined that the allegation that BHGR initially offered to convey the Concessions to GT Resources with “no strings attached” and that BHC ultimately conditioned the offer on the execution of a release and waiver of certain claims was sufficient to state a claim for intentional interference with a prospective business advantage. Id. at 26–27. Importantly, BHC, in its motion for summary judgment, argued that parent companies are privileged under Restatement (Second) of Torts § 769 to interfere with the business of their subsidies. Id. at 27. Indeed, the district court acknowledged BHC's argument, quoting Affordify, Inc. v. Medac, Inc. No. 19-cv-02082, 2020 WL 6290375 (D. Colo. Oct. 27, 2020) which held a parent company's privilege to interfere with a subsidiary's contract was a question of fact appropriate for resolution by the fact finder. Id.

GT Resource good faith and intentional interference with a prospective business advantage claims went to trial. At trial, BHC requested jury instructions on the financial interest privilege, labeling it as both an element of the claim and as an affirmative defense. See Black Hills’ Opening Brief at 31, Black Hills Corp. v. GT Resources. LLC, Case No. 2022CA1221 (Colo. App. 2023). The court denied the instructions, and the jury found BHC liable for the good faith and intentional interference claims. Doc. 47-1 at 6, 28.

BHC appealed. Id. at 7. In its challenge to the verdict on the intentional interference with a prospective business advantage claim, BHC argued that the district court erred by denying the financial interest privilege jury instructions. Id. at 20. The Colorado Court of Appeals agreed, ruling that the denial of the jury instruction was an abuse of discretion and was not a harmless error. Id. at 28. The Colorado Court of Appeals found the district court's decision to be “fundamentally inconsistent” with its summary judgment order where it stated the applicability of the financial interest privilege was to be determined by the factfinder. Id. at 29. In its decision, the Colorado Court of Appeals acknowledged “few, if any Colorado cases have explicitly recognized the [financial interest privilege],” but could not conclude that the denial of the instruction was “within the sound discretion of the district court on these facts.” Id. at 30. The Colorado Court of Appeals reversed and remanded the case for a new trial on the intentional interference claim, ordering the district court to give jury instructions on the financial interest privilege. Id. at 32.

III. Discussion

A. Use of Unpublished Colorado Court of Appeals Opinion

In his response to BHC's renewed motion to dismiss, Dobles contends that because the GT Resources is unpublished, this Court “cannot consider the holding in GT Resources when determining whether Plaintiff has sufficiently pled a claim for tortious interference.” Doc. 50 at 5. Dobles is mistaken. A federal court sitting in diversity applies the substantive law of the forum state, including choice-of-law rules. See Cicle v. Chase Bank USA, 583 F.3d 549, 553 (8th Cir. 2009). In South Dakota, parties may bind themselves to the law of a particular state with a valid choice-of-law clause. See Dunes Hosp., L.L.C. v. Country Kitchen Int'l, Inc., 623 N.W.2d 484, 488. Here, the parties cite to and accept that Colorado law (specified to govern the Consultant Agreement) governs all the claims, including the tort claims, and choice of law principles point to applying Colorado substantive law. Thus, Colorado law governs.

When applying the substantive law of a state, this Court must follow decisions of the state's supreme court interpreting the forum's law. See Brill as Tr. for Brill v. Mid-Century Ins. Co., 965 F.3d 656, 659 (8th Cir. 2020). But if a state's supreme court “has not spoken on an issue, [this Court] must predict how [the state supreme court] would decide the issue.” Id. In making that prediction, this Court “may consider relevant state precedent, analogous decisions, consider[ ] dicta ․ and any other reliable data.” Id. (cleaned up and citation omitted). “Although federal courts are not bound to follow the decisions of intermediate state courts when interpreting state law, state appellate court decisions are highly persuasive.” Baxter Int'l, Inc. v. Morris, 976 F.2d 1189, 1196 (8th Cir. 1992). This Court may “follow decisions of the intermediate state court when they are the best evidence of [Colorado] law.” Spagna v. Phi Kappa Psi, Inc., 30 F.4th 710, 716 (8th Cir. 2022). “Intermediate state court decisions should not be disregarded unless [this court is] convinced by other persuasive data that the highest state court would decide ․ otherwise.” First Tenn. Bank Nat. Ass'n v. Pathfinder Expl. LLC, 754 F.3d 489, 491 (8th Cir. 2014) (cleaned up and citation omitted). The Supreme Court of Colorado has not spoken on the issue of whether a plaintiff must allege “wrongful means” to state a claim for tortious interference with a prospective business advantage in the context of corporate affiliates. Nevertheless, BHC asks this Court to refer to the GT Resources opinion from the Colorado Court of Appeals. Although this Court is not bound by an opinion from the Colorado Court of Appeals, such an opinion is still persuasive authority.

Moreover, this Court is not precluded from considering a Colorado Court of Appeals opinion simply because the opinion is unpublished. In Colorado, unpublished opinions “have no value as precedent.” Welby Gardens v. Adams Cty. Bd. of Equalization, 71 P.3d 992, 999 (Colo. 2003) (citing C.A.R. 35(f)). Indeed, “a trial court remains free to disregard them entirely if it so chooses.” Patterson v. James, 454 P.3d 345, 353 (Colo. App. 2018). However, unpublished opinions by the Colorado Court of Appeals may still constitute persuasive authority. Id. at 348 (“[W]e also make clear that a trial court may consider unpublished opinions of this court to the extent the trial court finds such opinions persuasive.”). Thus, this Court looks to the GT Resources opinion to the extent that it can be persuasive authority in deciding BHC's motion to dismiss.

B. Financial Interest Privilege

Drawing from the Restatement (Second) of Torts § 766B, Colorado recognizes a cause of action for tortious interference with prospective business advantage. See MDM Group Assocs. v. CX Reinsurance Co. Ltd., 165 P.3d 882, 886 (Colo. App. 2007); Dolton v. Capitol Fed. Sav. & Loan Assoc., 642 P.2d 21, 23 (Colo. App. 1981). The Restatement (Second) of Torts § 766B states:

One who intentionally and improperly interferes with another's prospective contractual relation (except a contract to marry) is subject to liability to the other for the pecuniary harm resulting from loss of the benefits of the relation, whether the interference consists of

(a) inducing or otherwise causing a third person not to enter into or continue the prospective relation or

(b) preventing the other from acquiring or continuing the prospective relation.

Amoco Oil Co. v. Ervin, 908 P.2d 493, 500 (Colo. 1995) (quoting Restatement (Second) of Torts § 766B (1979)). To state a claim for tortious interference with prospective business advantage, there must be not only a prospective contractual relation, but also an intentional and improper act of interference. Restatement (Second) of Torts § 766B (1979). “[T]here must be a showing of improper and intentional interference by the defendant that prevented the formation of a contract between the plaintiff and a third party.” Omedelena v. Denver Options, Inc., 60 P.3d 717, 721 (Colo. App. 2002). Colorado law looks to the various factors provided for in Restatement (Second) of Torts § 767 to determine whether a defendant's interfering conduct was improper:

(a) the nature of the actor's conduct, (b) the actor's motive, (c) the interests of the other with which the actor's conduct interferes, (d) the interests sought to be advanced by the actor, (e) the social interests in protecting the freedom of action of the actor and the contractual interests of the other, (f) the proximity or remoteness of the actor's conduct to the interference and (g) the relations between the parties.

Amoco Oil, 908 P.2d at 500–01 (quoting Restatement (Second) of Torts § 767 (1979)).

Citing GT Resources, BHC argues that Colorado law also recognizes the financial interest privilege found in Restatement (Second) of Torts § 769, which states:

One who, having a financial interest in the business of a third person intentionally causes that person not to enter into a prospective contractual relation with another, does not interfere improperly with the other's relation if he

(a) does not employ wrongful means and

(b) acts to protect his interest from being prejudiced by the relation.

Restatement (Second) of Torts § 769. Section 769 is a “a special application of the general test for determining whether an interference with a prospective contractual relation is improper,” which is one of the elements of the claim. Restatement (Second) of Torts § 769 cmt. a. As such, BHC argues that when a plaintiff alleges that a parent company tortiously interfered with a prospective business advantage involving its subsidiary, a plaintiff must plead that the parent company employed “wrongful means” to overcome the privilege.

The financial interest privilege is one of several established privileges for the tort of interference. See Harris Groups, Inc. v. Robinson, 209 P.3d 1188, 1196 (Colo. App. 2009) (stating the privileges are found in §§ 768–774 in the Restatement (Second) of Torts). “The Restatement (Second) of Torts recognizes that under certain circumstances, interference with contract relations or prospective economic advantage is privileged and is therefore not improper as a matter of law.” Omedelena, 60 P.3d at 726. Although the Supreme Court of Colorado has not officially adopted the financial interest privilege found in § 769, it has recognized other privileges, including the business competition privilege in § 768. See Amoco Oil Co., 908 P.2d at 501–03. In Amoco Oil Co., the Supreme Court of Colorado held that “the specific language of the Restatement (Second) of Torts § 768 supplants the generalizations of [§] 767” in determining whether the interference is improper. Id. at 501. Additionally, the Colorado Court of Appeals has acknowledged the “privilege to act for the welfare of a third person” described in § 770. See Omedelena, 60 P.3d at 726. Each of these privileges, including the financial interest privilege, can be overcome if the defendant employed wrongful means.

In predicting whether the Supreme Court of Colorado would adopt the financial interest privilege, this Court considers how the Colorado Court of Appeals addressed the issue in GT Resources. BHC argues that the court in GT Resources definitively adopted the financial interest privilege. However, the Colorado Court of Appeals stopped just short of explicitly adopting the financial interest privilege, and it acknowledged that “few, if any Colorado cases have explicitly recognized the [financial interest privilege].” Doc. 47-1 at 30. Rather, it was the Colorado district court that appeared to adopt the privilege when it approvingly cited to the Affordify opinion in denying summary judgment on the claim for interference with prospective business advantage. Id. at 27. The Colorado Court of Appeals held that the district court then erred in denying the financial privilege jury instruction after stating in its summary judgment order that the applicability of the financial interest privilege should be determined by the fact finder. Id. at 29. The Colorado Court of Appeals viewed the denial as “fundamentally inconsistent” with the summary judgment ruling. Id. Although the Colorado Court of Appeals ordered the district court to provide the financial interest privilege instruction on remand, its holding was limited “on these facts”⁵ where “the privilege was central throughout the litigation.” Id. at 30–31.

While not explicitly adopting the financial interest privilege in GT Resources, the Colorado Court of Appeals certainly did not reject it. Indeed, had the Colorado Court of Appeals adopted the financial interest privilege, such a decision would be entirely consistent with previous Supreme Court of Colorado cases applying other sections of Chapter 37 in the Restatement (Second) of Torts relating to tortious interference, including the cause of action itself. See Amoco Oil Co., 908 P.2d at 500 (citing §§ 766B, 767, and 768 of the Restatement (Second) of Torts). The adoption by the Supreme Court of Colorado of various sections of the Restatement (Second) relating to tortious interference with prospective business advantage without rejecting other sections suggests that it would adopt § 769 as well if called upon to do so. Given the Supreme Court of Colorado's consistent reliance on Chapter 37 of the Restatement (Second) of Torts in developing the tort of interference with prospective business advantage, this Court predicts that the Supreme Court of Colorado would adopt the financial interest privilege as described in Restatement (Second) of Torts § 769.

C. Element of Claim or Affirmative Defense

The next issue framed by the motion to dismiss is whether Dobles must allege that BHC employed “wrongful means” in the Complaint to survive a motion to dismiss. BHC argues that Dobles must allege that BHC employed wrongful means, describing it as an “element of the claim.” Doc. 57 at 13. Dobles argues that, should this Court recognize the financial interest privilege, BHC must raise the privilege as an affirmative defense. Doc. 50 at 9. Whether the financial interest privilege requires Dobles to plead wrongful means or if it is properly asserted as an affirmative defense is an important distinction because, at the motion to dismiss stage, “a defendant [generally] cannot render a complaint defective by pleading an affirmative defense,” and “the possible existence of [an affirmative] defense is not ordinarily a ground for Rule 12(b)(6) dismissal.” Weatherly v. Ford Motor Co., 994 F.3d 940, 943 (8th Cir. 2021) (cleaned up and citation omitted). However, “[i]f an affirmative defense such as a privilege is apparent on the face of the complaint, ․ that privilege can provide the basis for dismissal under Rule 12(b)(6).” Noble Sys. Corp. v. Alorica Cent., LLC, 543 F.3d 978, 983 (8th Cir. 2008), see also Indep. Tr. Corp. v. Stewart Info. Servs. Corp., 665 F.3d 930, 935 (7th Cir. 2012) (“[W]hen a plaintiff's complaint nonetheless sets out all of the elements of an affirmative defense, dismissal under Rule 12(b)(6) is appropriate.”).

“[T]here is considerable disagreement on who has the burden of pleading and proving ․ the existence and effect of [a privilege].” Restatement (Second) of Torts ch. 37 Intro. Note (1979). The Restatement (Second) of Torts “draw[s] a more particularized line depending upon whether the precise matter goes more specially to the culpability of the actor's conduct in general or to its justification under the specific facts.” § 767. Specifically,

[t]he question of whether the actor was competing with the other for the prospective business of a third person might be treated as a matter of culpability ․, for which the burden of pleading and proving would be on the plaintiff, while the question of whether there was a special relation existing between the actor and the third party making it appropriate for the actor to advise freely with the third party might be treated as a matter of justification for which the burden would be on the defendant.

Id. The financial interest privilege, which requires the actor to have a financial interest in the business of the third party, is more analogous to the latter where its applicability turns on the relationship between the actor and a third party. As such, it would seem appropriate to place the burden of pleading and proving the. privilege on the defendant.

There are no Colorado state court opinions directly addressing this issue. In GT Resources, BHC characterized the financial interest privilege as both an element of the claim and an affirmative defense in its requested jury instructions in the GT Resources dispute. Doc 471 at 28. The district court in denying summary judgment relied on Affordify, Inc., 2020 WL 6290375, which held that “[t]he issue of whether a parent's interference with a subsidiary's contract is proper or not (so as to make any interference privileged) is a question of fact.” Id. at *6. The Affordify opinion cited to another District of Colorado case, Rodriguez v. Bar-S Food Co., 539 F. Supp. 710 (D. Colo. 1982), which dealt with the applicability of the financial interest privilege as it related to a claim of tortious interference with contractual relations. There, the defendant moved to dismiss the tortious interference claim, arguing a parent company is privileged to interfere with a subsidiary's contractual relations. Id. at 718. The court denied the motion to dismiss, finding the privilege is “more properly raised as an affirmative defense, to be considered by the finder of fact.” Id. In GT Resources, the Colorado Court of Appeals ordered the district court to give jury instructions on the financial interest privilege on remand and retrial, but it did not specify which of the proposed jury instructions should be given. Thus, GT Resources does not provide much guidance on this issue.

In Colorado, other privileges are treated as affirmative defenses. The Colorado Pattern Civil Jury Instructions, which are promulgated by the Supreme Court of Colorado, characterizes the business competition privilege under Restatement (Second) of Torts § 768 as an affirmative defense. Colo. Jury Instr., Civil 24:6. Indeed, the Source and Authority for Instruction 24:6 states that “[o]nce the plaintiff has established a prima facie case of liability, the burden of establishing that the defendant's conduct was justified, i.e., privileged, shifts to the defendant.” Moreover, the Supreme Court of Colorado held that even after a plaintiff has made out a claim for intentional interference with contract, “the interferer may still escape liability by establishing, as an affirmative defense, that he or she was asserting a bona fide claim,” a recognized privilege under Restatement (Second) of Torts § 773. Westfield Development Co. v. Rifle Inv. Associates, 786 P.2d 1112, 1118 (Colo. 1990).

Given Colorado's treatment of other privileges, this Court predicts that the Supreme Court of Colorado would characterize the financial interest privilege as an affirmative defense. Accordingly, at the pleading stage, Dobles need only allege the elements of interference with a prospective business advantage to establish a prima facie case. The burden then shifts to BHC to establish that its conduct was justified under the financial interest privilege. In most circumstances, the failure of a complaint to plead negation of an affirmative defense does not justify granting a Rule 12(b)(6) motion to dismiss.

As noted earlier though, the financial interest privilege “can provide the basis for dismissal under Rule 12(b)(6)” if the “privilege is apparent on the face of the complaint.” Noble Sys. Corp., 543 F.3d at 983. “To determine whether the plaintiff has ‘pled [himself] out of court’ regarding the financial interest privilege, the court must examine what [BHC] must establish to assert that it is entitled to the privilege.” Medline Indus., Inc. v. Diversey, Inc., 563 F. Supp. 3d 894, 933 (E.D. Wis. 2021). To assert the privilege, BHC must establish that it (1) had “a financial interest in the business of [BHGR];” (2) did not “employ wrongful means;” and (3) “act[ed] to protect [its] interest from being prejudiced by the relation.” Restatement (Second) of Torts § 769. Thus, if the Complaint negates just one of these elements, Dobles has not pled himself out of court. BHC asserts that “whether BHC acted to protect its own interests without using wrongful means is apparent from the Complaint.” Doc. 57 at 14. BHC argues that Dobles failed to allege that BHC employed wrongful means and that Dobles “admitted that [BHC's] acts were taken in furtherance of its interests.” Doc. 40 at 2 (citing Doc. 1 at ¶ 190).

Courts routinely hold that a parent company has a financial interest in the business of its subsidiary. See Bendix Corp. v. Adams, 610 P.2d 24, 29 (Alaska 1980) (“[T]here is general agreement that a corporate shareholder ․ would have a sufficient economic interest in a subsidiary corporation to interfere in some of the subsidiary's business relationships.”); Assembly Component Sys., Inc. v. Platinum Equity, L.L.C., No. 09–CV–778, 2010 WL 2719978, at *8 (E.D. Wis. Jul. 7, 2010) (holding that “[t]here [was] no debate that [parent company] had a financial interest in [subsidiary]”). Thus, by alleging that BHC was the parent company of BHGR, Doc. 1 at 6, the Complaint establishes that BHC had a financial interest in the business of BHGR.

Looking next at whether BHC acted to protect its interest in the business of BHGR from being prejudiced by the relation with Dobles, the Complaint explicitly alleges that BHC interfered with the prospective business advantage in furtherance of BHC's effort to protect its stock price. Id. at 24. The Complaint alleges that BHC's oil and gas exploration and production business was a source of concern to BHC's management due to the volatility of the industry and that BHC believed the business impacted BHC's stock price. Id. at 7. The Complaint further alleges that BHC concealed from its shareholders its ownership in the Concessions to avoid exacerbating negative perceptions investors had in its oil and gas business. Id. at 8. The Complaint also alleges that BHC ultimately decided to divest from all oil and gas business in November 2017, id. at 16, and then let the Concessions expire and terminate without trying to sell them, id. at 18. As this court noted in its 2023 Opinion and Order, “little criticism can be made for a publicly traded company choosing to abandon a business opportunity to protect its stock price.” Doc. 41 at 23.

However, Dobles argues that “BHC was not protecting its interests from ‘being prejudiced by the relation’ between BHGR and Dr. Dobles” because “the conduct harmed BHC's bottom line by relinquishing tens of billions of dollars of oil and gas interests.” Doc. 50 at 7. Indeed, the Complaint alleges that BHC learned that the value of the Concessions was immense and that BHC shareholders would have been furious had BHC sold the Concessions and the Concessions proved to be worth their estimated value. Doc. 1 at 8, 16. The Complaint also alleges that BHC's stalling tactics were costly. Id. at 16. These allegations cast doubt on whether BHC was acting to protect its interests. The financial interest privilege is “essentially a state-of-mind privilege and therefore its existence cannot normally be satisfactorily determined on the basis of pleadings alone.” Celador Int'l Ltd. v. Walt Disney Co., No. 2:04–cv–3541, 2009 WL 10429760, at *16 (C.D. Cal. Mar. 6, 2009). Further, on a motion to. dismiss, all inferences must be made in favor of the plaintiff. Thus, the Complaint does not establish that BHC acted to protect its interest in the business of BHGR from being prejudiced by the relation with Dobles. Accordingly, Dobles has not pled himself out of court by establishing the elements of the financial interest privilege in the Complaint.

D. Whether Dobles Stated a Claim

Having established that Dobles need not allege that BHC employed wrongful means, this Court must now determine whether Dobles has stated a claim for tortious interference with prospective business advantage. “One who intentionally and improperly interferes with another's prospective contractual relation is subject to liability to the other for the pecuniary harm resulting from loss of the benefits of the relation.” Hertz v. Luzenac Group, 576 F.3d 1103, 1119 (10th Cir. 2009) (cleaned up and citation omitted). “While the existence of an underlying contract is not required for this tort, there must be a showing of improper and intentional interference by the defendant that prevents the formation of a contract between the plaintiff and a third party.” MDM Group Assocs., Inc., 165 P.3d at 886. “The defendant can interfere either by inducing or causing a third party not to enter into or continue relations, or by preventing the plaintiff from acquiring or continuing the relations.” Klein v. Grynberg, 44 F.3d 1497, 1506 (10th Cir. 1995). For tortious interference with prospective business advantage to be claimed, there must be a prospective contractual relation. Further, absent the interference, there must be “a reasonable likelihood or reasonable probability that a contract would have resulted.” Id. “[T]here must be something beyond a mere hope.” Id.

Dobles alleges he had an entitlement to royalties upon extraction of hydrocarbons from the Concessions based on a business relationship between Dobles and the BHC subsidiaries. Doc. 1 at 24–25. Dobles further alleges that absent BHC's decision to direct its subsidiaries not to pursue a Field EIS and not to renew the bond, his prospective interest in large royalty payments would have come to fruition. Id. at 24. Dobles has sufficiently alleged the existence of a prospective contractual relation. Dobles further alleges that “BHC's conduct and interference was done in furtherance of its illegitimate effort to protect its stock price by sacrificing significant assets owned by its subsidiaries, which assets Plaintiff was entitled to a 3% royalty on.” Id. The alleged improper conduct included delaying and not getting a Field EIS which ultimately led to the Concessions expiring. Id. As this Court noted in its 2023 Opinion and Order, “Dobles's allegations do not present a compelling case for finding an improper and intentional interference under the Restatement (Second) of Torts § 767 factors, but this Court is ruling on a motion to dismiss here, where well-pleaded factual allegations are taken as true and inferences taken in the plaintiff's favor.” Doc. 41 at 23. Thus, Dobles has stated a claim for tortious interference with a prospective business advantage.

E. Motion to Amend

Though “wrongful means” need not be alleged in the complaint to state a claim for tortious interference with a prospective business advantage under these circumstances, Dobles has moved to amend his Complaint largely to make those allegations explicitly. Doc. 51-1 at 30–31. Under Rule 15(a)(2) of the Federal Rules of Civil Procedure, a “court should freely give leave [to amend] when justice so requires.” “[D]enial of leave to amend pleadings is appropriate only in those limited circumstances in which undue delay, bad faith on the part of the moving party, futility of the amendment, or unfair prejudice to the non-moving party can be demonstrated.” Hillesheim v. Myron's Cards and Gifts, Inc., 897 F.3d 953, 955 (8th Cir. 2018) (cleaned up and citation omitted). BHC opposes the motion, arguing Dobles's amendments are futile.

“A district courts denial of leave to amend a complaint may be justified if the amendment would be futile,” and “[a]n amendment is futile if the amended claim could not withstand a motion to dismiss under Rule 12(b)(6).” Mt. Hawley Ins. Co. v. City of Richmond Heights, 92 F.4th 763, 769 (8th Cir. 2024) (cleaned up and citation omitted). This Court has already determined that Claim Five survives BHC's motion to dismiss. As such, any amendment to the complaint is not made in an effort to save an otherwise meritless claim. The proposed amended complaint alleges more factual detail relating to the claim of tortious interference with prospective business relations and alleges “wrongful means” as well. Dobles's proposed amendments are not futile. Moreover, there is no scheduling order in place as BHC has not answered, nor any apparent discovery undertaken. As long as this Court applies its previous ruling dismissing all but one claim to the amended complaint, there appears to be no true prejudice to BHC or any other person named.

IV. Conclusion

For the foregoing reasons, it is

ORDERED that the Renewed Motion to Dismiss, Doc. 47, is denied. It is further

ORDERED that Dobles's Motion to File Amended Complaint, Doc. 51, is granted, but the 2023 Opinion and Order dismissing all claims but Claim Five applies to the amended complaint. Defendants need not re-file another motion to dismiss. The amended complaint is to be filed within 14 days of this opinion and order. Unless otherwise ordered, BHC—the lone defendant named in Claim Five of the amended complaint—has 21 days to answer.

DATED this 27th day of February, 2025.

FOOTNOTES

1.   This Court had determined that the “alter ego” allegations were not a separate claim and thus the only claim that survived the prior motion to dismiss was Claim Five.

2.   The only material change that the proposed Amended Complaint makes to the section pleading the ten claims is to Claim Five itself. Doc. 51-1.

3.   The state court noted that “[a] claim based on alter ego ‘is not a separate and independent cause of action, but rather is merely a procedure to enforce an underlying judgment’ ” under Colorado law. Doc. 28-2 at 11. The court “question[ed] the applicability of the alter ego doctrine” to Dobles's sole surviving claim for intentional interference with prospective business advantage against BHC and deferred ruling on the issue. Doc. 28-2 at 12.

4.   Because the state and federal claims are substantively identical and alleged in the same order (e.g., “Claim Five” pertains to the interference with prospective business advantage relationship cause of action against BHC), this Court refers to Dobles's federal claims by the same title as the state claims but will make clear which litigation is being discussed.

5.   The facts in GT Resources as described in this opinion closely parallel the facts of the case.

ROBERTO A. LANGE CHIEF JUDGE