## Facts

- Buell Development Corporation (BDC) and the Temple Hoyne Buell Foundation retained the law firm Holland & Hart and one of its attorneys to represent them in a transaction involving the sale of Kings County Development Corporation (KCDC) stock to a KCDC stockholder, John Rocovich.
- As part of the transaction, BDC negotiated for a right to receive a percentage of KCDC’s mineral interests if KCDC ever chose to distribute those mineral interests to its shareholders.
- Holland & Hart drafted an option agreement intended to give BDC the agreed right to acquire a portion of the minerals upon such a distribution.
- KCDC later decided to distribute its mineral interests to its shareholders, and BDC attempted to enforce the option.
- KCDC refused to honor the option, asserting that it was void because it violated the common-law rule against perpetuities (RAP).
- BDC and the Foundation brought a legal-malpractice action against Holland & Hart and the individual attorney, alleging negligence and breach of contract based on the drafting of the option.
- Before trial, Holland & Hart sought a ruling that the option did not violate the RAP. The trial court instead ruled that the RAP applied and that the option violated the RAP.
- The case proceeded to a jury trial. The jury returned a verdict for plaintiffs, awarding more than $3 million in damages and more than $2 million in prejudgment interest.
- Defendants appealed, challenging (among other things) the trial court’s RAP ruling. Plaintiffs cross-appealed from a portion of the judgment denying certain costs.

## Issues

1. Whether the trial court erred in ruling, as a matter of law, that the option contract was subject to and violated the rule against perpetuities.
2. Whether the malpractice judgment could stand when the jury’s causation and damages findings were premised on the trial court’s determination that the option was void under the RAP.
3. Whether plaintiffs’ cross-appeal regarding costs required review given the disposition of the merits.

## Decision

- The Colorado Court of Appeals held that the option did not violate the rule against perpetuities.
- The court reversed the judgment entered on the jury verdict and remanded for a new trial.
- In light of the reversal and remand, issues tied to costs were left for reconsideration after further proceedings rather than resolved as if the original judgment remained in place.

## Legal Principles

- The rule against perpetuities is aimed at preventing property interests from vesting too remotely; its application depends on the nature of the interest created and the terms governing when it vests or fails.
- A court must analyze the specific commercial arrangement and the contract’s operative events before declaring an option void under the RAP; an overbroad application of the RAP to a business option can be legal error.
- In a legal-malpractice case, the plaintiff must prove causation and loss by showing that, absent the alleged attorney error, the plaintiff would have obtained a better result on the underlying right or claim (the “case within a case” requirement).
- When a trial court’s incorrect ruling on an underlying legal question supplies the foundation for the jury’s causation and damages analysis in a malpractice action, the resulting verdict cannot stand and a new trial may be required.

## Conclusion

Because the trial court incorrectly concluded that BDC’s mineral-distribution option was void under the rule against perpetuities, the verdict and judgment in the malpractice action rested on a wrong legal premise about the enforceability and value of the underlying option; the Colorado Court of Appeals therefore reversed and remanded for a new trial.


Temple Hoyne Buell Foundation v. Holland & Hart, 851 P.2d 192 (1992)