Law Firm Defends Fraud Claims Before Supreme Court

Davis Graham & Stubbs targeted in suit for keeping secret an ‘undisclosed principal’

Denver law firm Davis Graham & Stubbs was party to a lawsuit before the Colorado Supreme Court earlier in January. The case, heard by the high court Jan. 9, questions whether Davis Graham & Stubbs committed fraud by keeping up appearances that it was representing a party in a land deal.

In actuality, DGS was representing another company that [hired the other company] to be an agent. With the lawyers arguing before the court seeming to disagree on facts of the case, the matter might be as simple as “seller’s remorse,” according to the attorney arguing on behalf of DGS.

BACKGROUND FACTS
In the underlying issue in Rocky Mountain Exploration v. Davis Graham & Stubbs, plaintiff Rocky Mountain Exploration sold land and mineral rights to Lario Oil and Gas Company. Lario, however, was not buying the land wholly on its own. The company kept a portion of the land itself and was also acting as an agent for an “undisclosed principal,” an unnamed buyer in a transaction, Tracker Resource Exploration.

According to Rocky Mountain, though, had it known of Tracker’s involvement, the sale wouldn’t have happened. The case came down to a key interaction, when the plaintiff alleges Lario referred to Davis Graham & Stubbs as its counsel in an email and DGS didn’t speak up to set the record straight. According to DGS, though, the law firm was still acting in the interests of its undisclosed principal and the omission was immaterial to the deal.

To read this story and other complete articles featured in the January 22, 2017 print edition of Law Week Colorado, copies are available for purchase online.