Bull Riders, Inc. v. AutoZone, Inc.

United States Court of Appeals for the Tenth Circuit · Contracts

ContractsStatute of Fraudsoral contractstatute of fraudsone-year provisiontermination clausecertified questionColorado law

Facts

PBR prepared a written sponsorship agreement for 2001 and 2002 stating that the term would run from December 29, 2000 to December 31, 2002, but that Autozone could elect to terminate effective at the end of the 2001 Finals by giving written notice no later than August 15, 2001. Autozone never executed the writing, but PBR alleged that Autozone tacitly accepted its terms and that the parties therefore formed an oral agreement mirroring the written terms. It appears undisputed that in January 2002 Autozone notified PBR that it would not sponsor PBR events in 2002. The district court held the alleged oral agreement unenforceable because, by its terms, it lasted two years and thus could not be performed within one year.

Issue

Whether, under Colo. Rev. Stat. § 38-10-112(1)(a), an oral agreement is void when it contemplates a definite term longer than one year but gives the party to be charged an option to terminate within less than a year, and that party does not exercise the option. More specifically, the question is whether such a termination provision takes the agreement outside Colorado's one-year statute of frauds.

Rule

This opinion does not establish a substantive rule on the statute-of-frauds question. It holds that where Colorado law provides no controlling precedent on whether an oral agreement for more than one year is void despite a within-one-year termination option, the proper course is to certify that important and potentially determinative question to the Colorado Supreme Court.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Mira Solis sued Front Range Venue Group in federal court in Denver, alleging breach of an oral marketing agreement under Colorado law. The alleged deal called for a 30-month term but allowed Front Range Venue Group to cancel effective at month 10 if it gave notice by month 8; no Colorado published decision squarely addresses whether that clause avoids the one-year statute of frauds, and the issue will likely decide the contract claim.

What is the most appropriate course for the federal appellate court?

Explanation. The majority opinion did not decide the merits of the statute-of-frauds issue. It held that when a potentially determinative Colorado-law question lacks controlling precedent—specifically, the effect of a within-one-year termination option on an oral agreement otherwise extending beyond one year—the proper course is certification to the Colorado Supreme Court. Unpublished Colorado appellate decisions are not binding precedent, and the Tenth Circuit declined to choose between competing substantive views itself. (Derived from Bull Riders, Inc. v. AutoZone, Inc. (n.d.).)