My Landlord Stole My Business

In Colorado, the tort of misappropriation of business value prohibits the use of another’s expenditure of labor, skill, and money for their own benefit.  This tort is also sometimes characterized as unfair competition or deceptive trade practices.  The classic case in Colorado addressing the law in this area involved the “Denver Gift and Jewelry Show” which was held at the Denver Merchandise Mart.[1]  In this case, the plaintiff/tenant negotiated a lease with the Denver Merchandise Mart (the “Mart”) which allowed it to hold the Denver Gift and Jewelry Show at the property twice a year. The tenant had an option to extend the lease, but it failed to exercise the option on time. After the tenant’s rights expired, the Mart held and promoted its own gift and jewelry show. At trial, the tenant established that it spent significant time and money in promoting and planning the show. The evidence showed that after the Mart began running its show in 1986, it used the tenant’s advisory committee, floor plan, fee structure, seniority system, and program format. The tenant was entitled to recover the greater of its lost profits or the profits earned by the Mart and other statutory damages.

There are many situations where the misappropriation of business value may arise. One example would be an employee who uses his former employer’s goodwill and systems that the employer spent time and money developing to compete against the former employer. In this situation, the employer may have a claim against the employee for misappropriation of business value even in the absence of an enforceable non-compete agreement.

Disclaimer: The foregoing discussion is not intended to constitute legal advice but is provided solely for informational purposes. You should consult with a competent attorney regarding any of the issues discussed herein.

©Gregory M. O’Boyle. Greg O’Boyle is a Colorado Springs attorney who practices primarily in the area of commercial litigation.  Greg is a partner at Alpern Myers Stuart LLC.  He can be contacted at grego@coloradolawyers.net, or an appointment can be made by calling his assistant, Adrienne, at 719-226-7745.

[1]Heller v. Lexton Ancira Real Estate Fund, Ltd., 809 P.2d 1016 (1990), reversedLexton-Ancira Real Estate Fund, 1972 v. Heller, 826 P.2d 819 (Colo. 1992).