Colorado Real Estate Case Law 2001-2002
COLORADO REAL ESTATE CASE LAW
2001-2002
20
th
Annual Real Estate Symposium
Colorado Bar Association
CLE in Colorado, Inc.
July 19, 2002
Frederick B. Skillern
Arapahoe County Justice Center
7325 S. Potomac Street
Centennial, Colorado 80112
TABLE OF CONTENTS
2. BOUNDARY/ADVERSE POSSESSION .................................................................. 3
4. CONSTRUCTION/MECHANIC LIEN/WARRANTY ............................................... 5
5. CONTRACTS/SPECIFIC PERFORMANCE/FRAUD ................................................ 5
6. COVENANTS/CCIOA/ASSOCIATIONS ................................................................. 9
10. JUDGMENTS/FRAUDULENT TRANSFER ...................................................... 19
12. MALPRACTICE/PROFESSIONAL CONDUCT ................................................ 21
13. PREMISES LIABILITY/TRESPASS/NUISANCE ............................................. 21
14. PROPERTY TAXATION AND ASSESSMENTS ............................................... 22
15. TAX SALES/TREASURY DEEDS .................................................................... 23
16. TITLES/TITLE INSURANCE/QUIET TITLE.................................................... 23
17. ZONING/LAND USE CONTROL ..................................................................... 27
i
Citations
Alexander v. McClellan , 39 P.3d 1265 (Colo. App. 2001) .................................... 25
Animas Valley Sand and Gravel, Inc. v. Board of County Comm'rs of the County of La Plata , 38 P.3d 59 (Colo. 2001) .............................................. 3
Beach v. Beach , 2002 Colo. App. LEXIS 106 ...................................................... 15
Beeftu v. Creekside Ventures LLC., 37 P.3d 526 (Colo. App. 2001) ..................... 5
Board of County Comm'rs (Arapahoe) v. City of Greenwood Village ,
30 P.3d 846 (Colo. App. 2001) ............................................................................ 27
Board of County Comm'rs (Douglas) v. Gartrell Investment Co., LLC ,
33 P.3d 1244 (Colo. App. 2001) .......................................................................... 27
Brotman v. East Lake Creek Ranch, L.L.P.
, 31 P.3d
886 (Colo. 2001) ................................................................................................. 28
Brush Grocery Kart, Inc v. Sure Fine Market, Inc, 2002
Colo. LEXIS 437 ................................................................................................ 8
City and County of Denver v. Board of Adjustment , 2002
Colo. App. LEXIS 856 ........................................................................................ 29
City of Boulder v. Fowler Irrevocable Trust 1992-1 , 2002
Colo. App. LEXIS 5 ............................................................................................ 4
City of Englewood v. Denver Waster Transfer, L.L.C., 2002
Colo. App. LEXIS 260 ........................................................................................ 5
Colorado Homes, Ltd. v. Loerch-Wilson , 43 P.3d 718 (Colo. App. 2001) ............ 10
Columbus Investments v. Lewis , 2002 Colo. LEXIS 514 ...................................... 23
Cornforth v. Larsen , 2002 Colo. App. LEXIS 26 ................................................. 3
E-470 Public Highway Authority v. Argus Real Estate Partners, Inc.
,
2002 Colo. App. LEXIS 372 ................................................................................ 25
Filho v. Rodriguez , 36 P.3d 199 (Colo. App. 2001) .............................................. 17
Ford v. Summertree Lane LLC , 2002 Colo. App. LEXIS 1066 ............................. 9
GE Life and Annuity Assurance Co. v. Fort Collins Assemblage, Ltd.
,
2001 Colo. App. LEXIS 2014 .............................................................................. 17 ii
In re Marriage of Gorman , 36 P.3d 211 (Colo. App. 2001) .................................. 24
Johnson Realty v. Bender , 39 P.3d 1215 (Colo. App. 2001) ................................. 2
Kellum v. RE Services, LLC, 30 P.3d 875 (Colo. App. 2001) ................................ 16
Kerns v. Kerns , 2002 Colo. LEXIS 427 ............................................................... 26
Lobato v. Taylor , 2002 Colo. LEXIS ___ ............................................................. 14
Lee v. Masner , 45 P.3d 794 (Colo. App. 2001) .................................................... 13
Littlefield v. Bamberger , 32 P.3d 615 (Colo. App. 2001) ..................................... 11
Martini v. Smith, 42 P.3d 629 (Colo. 2002).......................................................... 13
McKenzie v. Pope , 33 P.3d 1277 (Colo. App. 2001) ............................................. 23
Mortgage Investment Corp. v. Battle Mountain Corp.
, 2001 Colo.
App. LEXIS 1088 ............................................................................................... 16
National Real Estate Investment, LLC v. WYSE Financial
Services, Inc.
, 2002 Colo. App. LEXIS 580 ........................................................ 19
Nielson v. Scott , 2002 Colo. App. LEXIS 571 ...................................................... 7
Ocmulgee Properties, Inc. v. Jeffery , 2001 Colo.
App. LEXIS 1670 ............................................................................................... 24
Olson v. Hillside Community Church , 42 P.3d 52 (Colo
App. 2001) .......................................................................................................... 28
Pierson v. Black Canyon Aggregates , Inc., 2002 Colo. LEXIS 424 ...................... 22
Public Service Company of Colorado v. Van Wyk, 27 P.3d
377 (Colo. 2001) ................................................................................................ 21
Reid v. Pyle , 2002 Colo. App. LEXIS 564 ........................................................... 26
Roaring Fork Club, L.P. v. St. Jude's Co., 36 P.3d
1229 (Colo. 2001) ............................................................................................... 12
Roberts v. Adams , 2001 Colo. App. LEXIS 2168 ................................................. 20
Robertson v. Westminster Mall Co., 2001 Colo. App.
LEXIS 1574 ........................................................................................................ 20 iii
Sandstone Investments I, LLC v. A. Everett Williams
1963 Trust , 2001 Colo. App. LEXIS 1817 ........................................................... 6
Schneider v. Drake , 44 P.3d 256 (Colo. App. 2001) ............................................. 9
Schreck v. T & C Sanderson Farms, Inc., 37 P.3d 510
(Colo. App. 2001) ............................................................................................... 5
Spencer v. The Board of County Comm'rs (Montezuma County) ,
39 P.3d 1272 (Colo. App.2001) ........................................................................... 29
Strole v. Guymon , 37 P.3d 529 (Colo. App. 2001) ................................................ 12
Sussman v. Stoner , 143 F. Supp. 2d 1232 (10 th
Cir. 2001) .................................... 2
Telluride Resort and Spa, L.P. v. Colorado Department of Revenue , 40 P.3d 1260 (Colo. 2002) ................................................................ 18
Turkey Creek LLC v. Anglo America Consolidated Corp.
,
43 P.3d 701 (Colo. App. 2001) ............................................................................ 17
W.O. Brisben Companies, Inc. v. Krystkowiak , 2002 Colo.
App. LEXIS 252 ................................................................................................. 29
Welby Gardens Co. v. Adams County Board of Equalization , 2002
Colo. App. LEXIS 8 ............................................................................................ 22
West v. Evergreen Highlands Ass'n , 2001 Colo. App. LEXIS 1892 ...................... 10
Wilber v. The Board of County Comm'rs of the County of La Plata ,
42 P.3d 49 (Colo. App. 2001) ............................................................................ 22
Wilcox v. Clark , 2001 Colo. App. LEXIS 1607 .................................................... 20 iv
Introduction
Where a Pacific citation (West) is available, it is given; otherwise we offer the LEXIS cite. In addition, the date of each decision is given in the text, so that the cases can be conveniently located in the Colorado Lawyer or the Colorado Bar Association’s excellent web pages, www.cobar.org/coappcts/ctappndx.htm
and www.cobar.org/coappcts/scndx.htm.
The cases are placed in chronological order by subject. Case coverage is current through June 24, 2002. Unless otherwise noted, supreme court means the Colorado
Supreme Court, and court of appeals means the Colorado Cour t of Appeals.
As a judge, please understand that anything that I write or say about these cases is simply my opinion, as a student of the subject, and does not reflect any judicial policy or refer to how I or any judge would rule on these issues in the fu ture. Some effort has been taken to present these cases in a way that real estate experts and non -specialists alike will get something out of this presentation, and so that this summary may be useful as a research tool. Again, any opinions expressed here a re strictly my own, and are given only to make the subject matter more interesting.
I want to thank my law clerk, Cassie Peterson, for her help in researching and editing this year’s update. Ms. Peterson is a 2nd year law student at the University of Den ver
College of Law.
Fred Skillern
Arapahoe County Justice Center
7325 S. Potomac Street
Division 8 frederick.skillern@judicial.state.co.us
(303) 649-6170
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BROKERS/FIDUCIARY DUTY
Johnson Realty v. Bender, Colorado Court of Appeals, September 27, 2001. 39 P.3d
1215 (Colo. App. 2001). Broker commission; fiduciary duty; conflict of interest.
This is another case involving interpretation of the 1994 broker statute creating the non agent “transaction broker.” We know that a broker that assists parties in a real estate transaction without a written agency agreement is deemed to be a transaction broker, and is not an agent of either party. C.R.S. §12-61-802(6), -803(2) and -807(1). Suppose the parties had a written listing agreement, but it expires, and also suppose that the sales contract in question is signed before but closes after the effective date of the 1994 statute? Is the broker with the expired listing an agent, or a “mere” trans action broker?
It matters here, because the disgruntled buyer sues the seller and the broker for fraudulent misrepresentations. The defendants win that trial, but the broker incurs substantial costs and attorney fees. The broker then brings another action against the seller for reimbursement. Bottom line - broker wins, if he is an agent, because although his contract was not clear enough to specifically afford him a right of indemnification, the law of agency provides that agents have the right to be in demnified by his or her principal.
The court holds that broker remained an agent, despite the new statute, and even though the listing had expired. Why? This is what the parties intended. As a result, he gets his litigation fees and expenses from his principal.
Sussman v. Stoner, US District Court Tenth Circuit, March 2, 2001. 143 F. Supp.
2d 1232 (10 th Cir. 2001). Transaction broker; written contract; negligence.
I include this case from last year, as it was not in the outline for last year’s presenta tion before this group. This is an interesting case arising out of the sale of a development parcel near Fort Collins, including the (very valuable) water rights appurtenant to the land. The Sussmans are the sellers in this scenario. They live out-of-state, and acquired this land and the water as an investment in 1988. The parcel consists of 230 acres of unimproved land, a number of shares in a ditch company, and several acre -feet of other water rights. A broker (Johnson) was involved in the 1988 sale, an d was hired in 1999 to market the property as exclusive listing agent for the Sussmans. Johnson is successful in locating a buyer, and a contract is ultimately signed with a corporation owned primarily by a Mr. Stoner. Since Mr. Stoner is a licensed broker, the contract provided that he would receive a 3% commission, presumably from the seller, upon the closing of the sale.
While the deal progressed to closing, the value of the water shares spiked upward, unbeknownst to the Sussmans. Apparently the contr act price for the water shares was
$14,000/share. In the months prior to closing, the value went up as high as
$32,000/share; two months prior to closing, the listing broker, Johnson, advised
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Sussman that the value of the water shares had risen, in his op inion, to $22,000 per share. The deal closed on the terms of the contract.
After the closing, the Sussmans filed this action against all of the brokers, the
Sussmans’ attorney, and the title company. Among the claims was an allegation that
Stoner - the principal of the purchaser and a broker receiving a commission -- was negligent or fraudulent in failing to disclose to the Sussmans the fact that the value of the water shares had increased after execution of the contract. The federal district court applies the 1994 transaction-broker statute and dismisses the claims against Johnson, ruling that (a) Stoner was a transaction broker, since he did not have a written contract indicating otherwise, C.R.S. §12-61-807(1); (b) a transaction broker has only those specific duties outlined by statute, which do not include keeping either party abreast of changes in land (or water) values once the land is under contract; and (c) a transaction broker does not have a duty to inform a seller that his property is worth mor e than the asking price. The lawsuit also alleges that Stoner acted fraudulently, regardless of his statutory duties as a transaction broker. This requires proof of a duty to disclose certain information - the law relating to common-law fraud is that one party to a contract must disclose to the other party material facts which one in “equity and good conscience” should disclose. The court holds, because of the statute, that a transaction broker has no such duty to disclose post-contract changes in the market. Similarly, Stoner could not be held liable for professional negligence.
1.
BOUNDARY/ADVERSE POSSESSION
Cornforth v. Larsen, Colorado Court of Appeals, January 17, 2002. 2002 Colo.
App. LEXIS 26. Surveyor; statute of repose.
A lawsuit against a surveyor, filed in 1998 and based on an allegedly incorrect 1983 survey, is not barred by the ten-year statute of repose in C.R.S. §13-80-105 if the surveyor did not include the required notice on the face of the survey. Absent the warning, the statute of limitations applies - a claim must be brought within three years after discovery of the defect in the survey.
2.
CONDEMNATION
Animas Valley Sand and Gravel, Inc. v. Board of Count Comm’rs of the County of La
Plata , C olorado Supreme Court, December 17, 2001. 38 P.3d 59 (Colo. 2001).
Inverse condemnation; regulatory taking; two-tiered takings inquiry.
This is a significant decision involving an inverse condemnation claim by a landowner.
The supreme court, applying Palazzio v. Rhode Island , 533 U.S. 606 (2001), holds that what is known as a “two-tiered takings inquiry” applies to a regulatory takings claim.
In other words, a court must first determine whether a landowner has proved a per se takings claim either by showing (a) that the regulation has no legitima te purpose, or (b)
3
by showing that the regulation leaves his or her land without reasonable economic value. That used to be the end of the story. Indeed, the trial court dismissed the claim in this case (prior to the ruling in Palazzio ) for failure to prevail on the economic viability test. Now, however, a claimant may still prevail, even if it cannot establish a per se taking, by proving its case under a “fact specific” inquiry - the second tier, so to speak.
Of what does this inquiry consist? In a prior case, it was suggested by our supreme court in dicta that a regulation which does not prevent all economic use may also constitute a taking if it goes “too far.” This is an “ad hoc, factual inquiry, based on a complex of factors” including: the regulation’s economic effect on the landowner; the extent to which the regulation interferes with reasonable investment -backed expectations; and the character of the government action. The level of interference of the government regulation must be very high; a me re decrease in property value is not enough. The purpose is to provide an avenue of redress for a landowner whose property retains value that is “slightly greater than de minimus
.” This second tier is therefore meant to provide a “safety valve” to protect the landowner in the truly unusual case.
Finally, this analysis must take place with regard to all of the landowner’s property interests - not just that portion of the land most keenly impacted by the regulation.
City of Boulder v. Fowler Irrevocable Trust 1992-1, Colorado Court of Appeals,
January 3, 2002. 2002 Colo. App. LEXIS 5. Inverse condemnation; project influence rule.
Enough already! This is our third time in reviewing this case. As you will recall,
Boulder takes 3.09 acres of private property for twenty-six months, without Fowler’s permission, for use as a construction staging area for a flood control project. The City does not restore the property to its pre-taking condition. The supreme court last year remanded the case for a new trial regarding the fair rental value of the property during the temporary taking period, instructing the jury to consider the limitations on the property’s use resulting from the fact that the property is in the floodplain. If I read the case right, the commission, on re-trial, awards Fowler a sum far in excess of the original verdict. This appeal considers the trial court’s instruction to the commission regarding the effect of the “high hazard” and floodway designations. The trial court instructed the commission that it could not consider that condition, because those were specific designations arrived at as a part of the same project for which the city was taking the property. Under the “project influence rule,” just compensation cannot include any enhancement or reduction in value that arises from the very project for which the property is being acquired. The court’s finding that the designations reducing value were a direct result of Boulder’s activities is supported by evidence in the record and affirmed.
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City of Englewood v. Denver Waster Transfer, L.L.C ., Colorado Court of Appeals,
February 28, 2002.
2002 Colo. App. LEXIS 260. Eminent domain; land residual method of valuation.
Condemnation specialists will appreciate this case, which approves the use of the “land residual method” of valuing real property subject to condemnation. This is a variant of the income capitalization method, and is noted by the American Institute of Real Estate
Appraisers handbook as useful in certain circumstances where sales data may be lacking. The appeals court also holds that this method of valuing property is not speculative - under appropriate guidelines, any reasonable future use may be considered by the commission to determine the present value of property. Property valuation based on a hypothetical income stream from a business not yet in operation can be accepted when the evidence is sufficiently specific to allow an appraiser to make reasonable and informed decisions as to value .
Here, the owner’s appraiser used cost estimates taken from a similar business in Denver owned (or controlled) by respondent, and was found to be sufficient.
3.
CONSTRUCTION/MECHANIC LIEN/WARRANTY
Beeftu v. Creekside Ventures LLC., Colorado Court of Appeals, November 8, 2001.
37 P.3d 526 (Colo. App. 2001). Implied warranty; sale of lot.
Homeowners/purchasers sue builder over defects in construction, relating to seepage of water into a walk-out basement. They also sue the subdivision developer on theories of negligence and breach of implied warranty relating to drainage design. Homeowners settle with the builder, and proceed with their claims against the developer. The appeals court assumes without deciding that the implied warranty of habitability extends from a developer to a distant purcha ser of the lot, but concludes that dismissal of this claim was appropriate because there was no evidence that the lot was unsuitable for the building of a residence. The evidence simply showed that the lot was unsuitable for a house with a walk-out basement. The developer played no part in the construction of the house. The jury found that developer was negligent, but that it did not cause any of the damages suffered by plaintiffs.
4.
CONTRACTS/SPECIFIC PERFORMANCE/FRAUD
Schreck v. T & C Sanderson Farms, Inc., Colorado Court of Appeals, September 27,
2001. 37 P.3d 510 (Colo. App. 2001). Option contract; oral notice; specific performance.
This is a case for specific performance of a purchase option in a lease for a quarter section of property, “excluding the house and out buildings,” in Rio Grande County.
The court affirms the summary judgment order entered by the trial court - which held that the lessee-plaintiff had timely exercised its option. The lease provisions were
5
sparse, not addressing with specificity the legal description of the excepted pieces of land, the “Senate Bill 35” implications of the property split, the process for determining the purchase price, and whether any party was required to provide a title commitment or policy. The court holds that an option must be exercised in strict compliance with its terms, but the exercise - which is actually acceptance of the irrevocable offer to sell -- need not be written, unless required by the agreement. Here, oral notice was given several months before expiration of the lease, and was deemed sufficient as a matter of law. The court determined that the contract was sufficiently definite for the purpose of specific performance, even though it did not set a fixed price. Rather, it called for an appraisal to set the purchase price. Finally, the description of the property was sufficiently definite, even though the legal description was not in the agreement, and certain “excepted” property was not described. After trial, the court held that the partie s each “understood” what was intended, and ordered a survey to be prepared at seller’s expense. Next, the court affirms the trial court’s ruling that the sale could be enforced, even though the “excepted” parcel was less than 35 acres; the trial court acte d within its equitable power in ordering the seller to pay for and prepare the “necessary paperwork” for an exemption under C.R.S. §30-28-110(4). [Query: without the exemption, is the contract illegal and therefore voidable?] However, the appeals court doe s reverse the trial court’s order that the seller also provide and pay for a title insurance policy, since the contract did not require this to be done. The seller’s obligation under the common law is to provide marketable title.
Sandstone Investments I, LLC v. A. Everett Williams 1963 Trust, Colorado Court of
Appeals, November 8, 2001. 2001 Colo. App. LEXIS 1817. Contract; specific performance; waiver.
This is a case dealing with that elusive animal, the “backup” contract. The Trust
(actually multiple trusts, but I’ll use the singular) entered into a contract to sell a parcel to one of its beneficiaries, Petur. The closing was to occur on July 1, 1999. The Trust then entered into a contract with Sandstone. This contract acknowledged the first or
“primary” contract, and provided that if the first contract was “not consummated” by
July 1, 1999, seller’s broker was to notify Sandstone, which then had until July 6 in which to deposit $25,000; closing would be on or before July 23. Petur did not close on the first contract on July 1. Rather, on June 30, he requested an extension. On July 6, broker advises Sandstone of that fact, and adds that Petur had requested the extension.
Sandstone immediately deposited the $25,000. On July 9, Seller and Petur agreed o n an extension of the first contract to August 2. Sandstone was not informed of this agreement. Ultimately, Petur never closed on the first contract, as the Trust decided that the property should not be sold, for tax reasons. Instead, it exchanged the pr operty with an insider entity, which in turn leased the property to an entity controlled by Petur.
Sandstone sues for specific performance, loses in the trial court, but wins on appeal.
The appeals court holds that a “backup” contract is just as good as an y contract; that the word “consummate” was not ambiguous, and that the only condition precedent to the effectiveness of Sandstone’s contract was the failure of Petur to close by July 1. This
6
makes sense, since if the parties to the first contract could ex tend Petur’s closing deadline without Sandstone’s consent, the July 6 deadline in Sandstone’s contract would be meaningless.
Finally, the court rejected an argument that Sandstone waived its right to object to the extension of the first contract by reason of a “confidential” statement made by
Sandstone’s principal to its attorney that “. . . as its practical ‘bottom line’, while it might not object to a tax-free exchange of properties, rather that a sale to Petur, if the property is not conveyed only to Petur by 8/3, we get it.” However this little bit was made public we do not know. In any event, the court reasoned that this was only a
(supposedly) confidential discussion of settlement positions that was not communicated to the Trust or Petur at the time, and was not intended as a waiver.
Roberts v. Adams, Colorado Court of Appeals, December 20, 2001. 2001 Colo. App.
LEXIS 2168. Promissory note; conditions precedent; attorney fees.
Roberts, a small custom-home builder, sues his customer, Adams, on a “c onditional” note for $200,000. The note was signed in connection with a contract to build a home for Adams (the Cordillera home) for $1 million. The note and the contract were signed together, and the note was to provide for additional payment to the bui lder, depending on how successfully Adams was able to settle an earnest money dispute with a different builder over the construction of a different home (the Alcazar home). The note to
Roberts had two conditions, either of which, if satisfied, would trigg er liability for the
$200,000. The conditions were: A, if Adams settled with the Alcazar builder for a lump sum in excess of $200,000, or B, if Adams were unable to settle for any lump sum. You guessed it, Adams settles with the first builder for a lump sum of $180,000, which triggers neither of the conditions. Judge Hart accurately calls the deal “bizarre”, but determines that the note is not ambiguous, that the conditions were not met, and therefore Roberts loses. This is affirmed. The court also affirms an award of attorney fees to Adams under the initial contract (the note had no attorney fee clause), which calls for attorney fees to the prevailing party in any dispute “arising out of” the sales contract. Even though the contract did not refer specifically to the note, the court reasons that the note would not have been made had it not been for the contract.
As a side note for litigators - the court holds, for the first time, that the trial court is required to hold a hearing on the amount of attorney fees awarded pursuant to contract if requested by either party. Although C.R.C.P. 121, section 1-22 specifically allows the judge to dispense with such a hearing in its discretion, the courts have held that a hearing is required in fee claims under th e “frivolous and groundless” statute and in divorce cases, and extends the rule here to fee claims based on contract.
Nielson v. Scott, Colorado Court of Appeals, April 11, 2002. 2002 Colo. App.
LEXIS 571. Fraud; “as is”; duty to investigate.
7
The buyer of a RV park brings this action for fraudulent concealment against the seller.
The case is dismissed by the district court on summary judgment, a rare enough occurrence for a fraud case, and the appeals court affirms. The RV park in question was not in compliance with CDOH Water Quality Control Division standards at the time of the negotiations leading up to the sale. Sellers had applied for a permit - relating to their leach field - two years prior to sale, and never told the buyers that a permit was required. Sellers never turned over documents to the buyer about past dealings with the
WQCD, despite request. However, the buyers noticed standing water over the leach field; submitted offers that required sellers to remedy problems with the septic system , all of which were rejected; and consulted an engineer, who expressed concerns about the need for a permit and the need to obtain site approval for expansion of the septic system (the engineer was not hired). The contract advised buyers to consult their own engineer, and provided that buyers agreed to rely solely on that investigation as to the condition of the property, the sale being “as is.” In addition, buyers’ attorney contacted
WQCD directly prior to the purchase, learning of the permit requirement , and was told that WQCD would likely impose significant requirements in order to bring the site into compliance. After closing (without counsel, different story all together), buyers learned that they would either have to connect to the city sewage system , or construct their own sewage disposal plant.
The trial court dismisses the complaint, finding as a matter of law that the buyer knew of the state regulatory issues or had sufficient notice of septic system problems that they should have conducted an investigation. The buyers are charged with all knowledge that they might have obtained about the RV park had they pursued their investigation “with diligence and completeness.” Note - the court relies heavily on cases from the older age of “buyer beware,” including
Cherrington v. Woods , 132 Colo.
500, 290 P.2d 226 (1955).
Brush Grocery Kart, Inc v. Sure Fine Market, Inc, Colorado Supreme Court, June 3,
2002. 2002 Colo. LEXIS 437. Purchase and sale contract; risk of casualty loss.
Lessee exercises an option to purchase the leasehold property. The parties are not able to agree on a purchase price as required by contract. This action is filed, seeking appointment of a master to determine the purchase price. While the litigation is pending, the underlying lease expires, and lessee vacates the property, allowing its insurance to lapse. The owner does not insure the property; the lease does not require anyone to maintain insurance. As luck would have it, a hail storm causes substantial damage. Who bears the risk of loss, in the absence of a contract provision? The court of appeals, as reviewed last year, applied the doctrine of equitable conversion, in which equitable title is considered to pass to the lessee at the time the option is exercised.
Under that reasoning, the buyer (lessee) would bear the risk of loss. The court reviews
C.R.S.§38-60-107, as did the lower court, and holds that this statute does not address the point at issue here. The court then surveys the common law extensively, see
Annotation, Risk of Loss by Casualty Pending Contract for Conveyance of Real
Property - Modern Cases , 85 A.L.R.4th 233 (2001)(majority rule places the risk of loss
8
on the vendee from the moment of contracting, on the rationale that once an equitable conversion takes place, the vendee must be treated as owner for all purposes). The court notes a substantial minority of cases adopting a “Massachusetts Rule”, under which the seller continues to bear the risk until actual transfer of the title, absent an express agreement to the contrary. The supreme court opts for a more flexible rule which bases the legal consequences of no-fault casualty loss on the right to possession of the property at the time the loss occurs, an approach adopted in the Uniform Vendor and Purchaser Risk Act. The court holds that where Brush was not an equitable owner in possession at the time of the casualty loss, it was entitled to rescind its contract with
Sure Fine. At least under the circumstances of this case, where Brush chose to go forward with the contract under a stipulation as to loss from the hail damage, it was also entitled to specific performance with an abatement of the purchase price equal to the casualty loss.
Ford v. Summertree Lane LLC, Colorado Court of Appeals, June 20, 2002. 2002
Colo. App. LEXIS 1066. Contract; fraud; personal property.
The Fords (and others) sue developer Summertree for fraud, relating to representations to the buyers of various lots in developer’s subdivision that the lots had “lake views.”
The lots overlook an artificial lake. Shortly after Ford builds a house on his lot, the lake is drained. Unbeknownst to the purchasers, the government had warned (prior to
Ford’s purchase) that the dam holding the water in the lake was deficient, and that it would have to be replaced, or the lake drained. After learning of this fact, but before filing suit, the Fords’ sold their property. Developer-defendant moves for summary judgment on the theory that the warranty deed from Ford to his grantee conveyed Ford’s tort claims along with the property. The deed states in pertinent part:
“TOGETHER with all and singular hereditaments and appurtenances thereunto . . . and all the estate, right, title, interest, claim and demand whatsoever of the grantor, either in law or in equity, of, in and to the above bargained premises , with the heraditaments and appurtenances.”
(emphasis added).
The trial court agrees, granting summary judgment for defendant, but the appeals court reverses, holding that a chose in action is pers onal property. The deed conveyed real property. As a matter of law, personal claims for relief were not included in the conveyance. The case is remanded for trial.
5.
COVENANTS/CCIOA/ASSOCIATIONS
Schneider v. Drake, Colorado Court of Appeals, July 19, 2001. 44 P.3d 256 (Colo.
App. 2001). Covenants; declaratory judgment; attorney fees.
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Schneider, the owner of lots in a subdivision, brings a declaratory judgment action to determine his right to create, through further subdivision, additional lots. The ori ginal subdivision covenants prohibit this. A 1995 amendment to the covenants exempts
Schneider from the original restriction, but a 1996 amendment revokes that amendment.
The appeals court holds the 1995 amendment was effectively annulled by the 1996 amendment, which affirmed the original covenants in their entirety. No new lots. The trial court also properly exercised its equitable powers in allowing the earlier subdivision of certain lots to continue, although in violation of the original covenants, because the action and resulting construction was done with the knowledge and consent of all other owners in the subdivision at that time. Since plaintiff Schneider loses on the majority of his claims, the trial court awards attorney fees to the defendants, as the covenants provide for recovery of fees for the prevailing party in litigation against any person “ . . . violating or threatening to violate the covenants.” This order is reversed, since Schneider took no action before or after filing the complaint to further develop the subdivision, and therefore it did not violate or threaten to violate the covenants.
Question: same result on the attorney fee question under C.R.S. §38 -33.3-123?
West v. Evergreen Highlands Ass’n, Colorado Court of Appeals, November 23,
2001. 2001 Colo. App. LEXIS 1892. Covenants; modify restrictions; assessment of dues.
Does a restrictive covenant provision that the owners of 75% of the lots subject to the covenants “may change or modify any one or more of the restrictions” in the covenants authorize the association to require for the first time that all lot owners join an association and pay dues? No, says Judge Ney. No such obligation existed in the original 1972 covenants. Changing or modifying is one thing; making a new restri ction is quite another. As a matter of construction, any doubt as to the meaning of a covenant
“must be resolved in favor of the unrestricted use of property.” The court also holds that a 1982 amendment to the covenants, recorded before plaintiff’s purcha se in 1986, did not expand the power to amend the covenants simply by reciting that the original covenants could be “amended” by 75% of the lot owners - only a “restriction” could be amended. The result does not change because plaintiff may have had const ructive or actual notice of the existence of a homeowner association when he acquired the property.
Colorado Homes, Ltd. v. Loerch-Wilson , Colorado Court of Appeals, December 20,
2001. 43 P.3d 718 (Colo. App. 2001). Covenants; breach of fiduciary duty; attorney fees.
This is a complex dispute between disgruntled home purchasers (the Wilsons) and a homebuilder, which bought multiple lots in an existing development and built homes for resale. As the decision notes, the dispute escalated when the Wilson s began picketing in the neighborhood, complaining of builder’s failure to perform warranty work. Claims
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for restraining orders and criminal complaints followed, culminating in a multi -week jury trial before Judge Stuart. Colorado Homes wins, recovering s ubstantial verdicts against the Wilsons on claims for negligence, intentional interference with business relationships, and slander. The jury also returned a verdict in favor of the builder and against the HOA for $1, on a breach of contract theory. For o ur purposes, the following holdings are worthy of note:
The trial court erred in dismissing the builder’s claims against the HOA for breach of fiduciary duty in failing to enforce residential covenants. The claim is not barred by the economic loss rule, i.e., by the fact that the HOA had a contractual duty to the homeowners, through the covenants, to enforce the covenants. “Otherwise, the home buyer making the most important purchase of a lifetime would be protected from latent defects created by the buil der under the
Cosmopolitan decision, but not from the arbitrary enforcement of covenants that could have an equally or possibly more adverse impact on the value of a residence.” Since this claim was dismissed on summary judgment, there is no discussion of defenses available to the HOA under the covenants or CCIOA.
Plaintiff was not entitled to recover attorney fees under CCIOA, C.R.S. §38 -
33.3-123 for its tort claims against Wilson, as these claims did not deal directly with enforcement of the covenants.
The HOA and the management company, in a re -trial on breach of contract and breach of fiduciary duty claims, will be allowed to assert a defense based on the business judgment rule, i.e., its actions must be in good faith and not arbitrary.
Finally, the builder, as a lot owner, cannot sustain a claim against the management company for failing to enforce the covenants pursuant to its contract with the HOA under the theory that it is a third party beneficiary of the management contract.
On to another trial.
6.
EASEMENTS/ROADS
Littlefield v. Bamberger, Colorado Court of Appeals, August 2, 2001. 32 P.3d 615
(Colo. App. 2001). Public road; recording of road petition; inquiry notice; adverse use.
The parties own two adjoining ranch properties in Elbert County. The opinion suggests that a section line divides the two properties. On the north half of this line is a sixtyfoot-wide road designated as County Road 113. The south half of the line, the area in dispute, consists of a sixty-foot-wide grassy strip, with tire ruts in the middle and fences on each side. In the past, previous owners of the respective properties and their neighbors and hunters had used “the strip” to access different parts of their properties,
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graze cattle, and to hunt. Bamberger, believing the strip to be a public road, subdivides a portion of his ranch, obtains permits and builds a road encompassing most of the strip.
Littlefield sues for trespass, seeking restoration of the road to its former, rustic state.
Littlefield wins, and the appeals court affirms. The road is not a public road, despite the fact that a road petition was granted by county commissioners in 1921. The court holds that creation of the road by petition was authorized by statute - but evidence in the record supports the trial court’s finding that placement of the petition in the road book, but without recording in the grantor-grantee indices of the clerk and recorder, failed to put subsequent purchasers on notice. City of Lakewood v. Mavromatis , 817 P.2d 90
(Colo. 1991). On very contested facts, the trial court also held that Littlefield did not have actual or inquiry notice of the existence of the road, finding that a reasonable search by a purchaser would have proven to be futile. This ruling is affirmed.
The court also affirms the trial court’s holding that there was insufficient evidence of adverse public use for twenty years under C.R.S. §43-2-201(1)(c). There was evidence of occasional maintenance by the county and continual use by various neighbors, but there was also an occasional challenge to use by “strangers.”
Strole v. Guymon, Colorado Court of Appeals, November 8, 2001. 37 P.3d 529
(Colo. App. 2001). Easement; water ditch; modification by court of equity.
Two adjoining parcels with water rights in a ditch co mpany dispute the right to deliver water through two ditches across Guymans’ property to the Strole property. The court finds that customary delivery through two ditches had not achieved status as an easement, without really explaining the basis for this h olding, and affirms the trial court’s “equitable” solution to the dispute, which involves a balancing of interests in delivering the water right to the Strole property. The opinion is confusing to read, but has some interesting language regarding a court’s equitable powers, especially in cases where the facts are a jumble.
Roaring Fork Club, L.P. v. St. Jude’s Co. , Colorado Supreme Court, November 19,
2001. 36 P.3d 1229 (Colo. 2001). Water ditch; modification without consent.
The Roaring Fork Club purchases property upstream from Plaintiff’s ranch (“Ranch”), all of which is used for agricultural purposes. The adjacent owners share an interest in three irrigation ditches, which flow through the Club property on the way to the Ranch.
In developing its property for recreational development, the Club unilaterally realigns ditch channels, excavates within the Ranch’s easement, pipes portions of the ditches, and commits other acts of trespass, according to the trial court. In crafting an equitable remedy, the trial court gives the Club two choices: (1) restore the original ditches and remove all developments that interfere appreciably with the Ranch’s right to maintain its easement, or (2) assume all duty for repair and maintenance of the easement and assume responsibility for delivery to Ranch, on demand, its allotted water right. Club
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takes the latter option, and Ranch appeals. The court of appeals upholds the findings of trespass, but reverses as to the remedy. The supreme court reverses as well, and remands to the trial court for further finding on the remedy, holding that the owner of property burdened by a ditch easement may not move or alter that easement unless that owner (1) obtains the consent of the owner of the easement, or (2 the owner of the servient estate (i.e., Club) first obtains a declaratory judgment that the proposed changes will not significantly lessen the utility of the easement, increase the burdens on the owner of the easement, or frustrate the purpose for which the easement was creat ed.
Also, the right to inspect, operate, and maintain a ditch easement is a right that cannot be abrogated by alteration or change to the ditch. The court does a thorough review of
Brown v. Bradbury and Valley Development Co. v. Weeks , and relies heavily on the
Restatement (Third) of Property ( Servitudes) sec. 4.8 (2000). The court specifically rejects the “self-help” remedy employed by the Club. If the trial court determines that the Ranch suffered damage, taking into account both maintenance and water ri ght benefits, then the court must order restoration of the original ditches. If not, the alterations may remain. And, in the future, don’t expect a second chance, says the supreme court.
Lee v. Masner, Colorado Court of Appeals, December 20, 2001. 45 P.3d 794 (Colo.
App. 2001). R.S. 2477 road; withdrawal from public domain; relation back.
Masner claims that an historic access across the Lee property is a public road, under
R.S. 2477 (formerly 43 U.S.C. 1769, repealed by 43 U.S.C. 1769), an express federal dedication of roads over public land, where the roads were established by public use.
The road must have been established before the land was withdrawn from the public domain. The question here is the date upon which the Lees’ property was removed from the public domain and appropriated to private use. If the road was established before that date, it is a public road. The court holds that the determinative date is not the date upon which the homesteader first takes possession of the land, nor the d ate on which the patent is issued. Rather, title is deemed to “relate back” to the date of “entry,” which the court holds (after a thorough and interesting review of the law) to be the date that the settler’s Homestead Entry form is certified in the Land O ffice. In this case, the
Lees’ predecessor took possession of the land in 1911, built the road (used by the public) in 1919, filed the Homestead Entry form in 1926, and received a patent in 1932.
Held - a public road.
Martini v. Smith, Colorado Supreme Court, March 11, 2002. 42 P.3d 629 (Colo.
2002). Subdivision streets; vacation; C.R.C.P. 105 disclaimer; abandonment.
A subdivision road lies undeveloped and unused for decades after a subdivision is platted. Who owns and who gets to use the road? The subdivision plat contains roads dedicated to public use. The plat is accepted by the Town of Palmer Lake in 1955. The court determines that fee title to the road vested in the Town upon initial acceptance of
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the plat. C.R.S. §31-23-107. In 1964, the Town enacted and recorded an ordinance stating that all property on this particular plat was “detached and disconnected” from the Town. The supreme court holds that the trial court improperly concluded that the ordinance effectively vacated the road under the v acation statutes (now C.R.S. §43-2-
303(1)(a)). The court notes that the ordinance clearly demonstrates the Town’s intent to “de-annex” the subdivision, but that the language is insufficient to operate as a vacation of the streets in the subdivision. Such an ordinance must, at a minimum, sufficiently identify the affected roadways to put a person searching county records on notice that they have been vacated. The de-annexation of the subdivision simply transferred control of the streets in the subdivision to El Paso County.
The court also determines that El Paso County did not “vacate” Simpson Road by filing a C.R.C.P. 105 disclaimer in this quiet title action. A procedural rule does not change substantive law regarding property rights. C.R.S. §43-2-303(2)(b) provides the means for vacating a road - by means of a resolution passed by the county commissioners upon proper notice, unless , under subsection (e) of the statute, it appears that the roadway has never been used. This is to be determined by the trial court on remand. If the road has been used, the county must go through formal vacation proceedings. The trial court can also determine whether the road has been abandoned. Abandonment requires adequate proof of intent to abandon by the county as well as proof of non-use by the public. The court does not address the interesting (to me) conceptual problem of how one abandons land to which title is held in fee. Nevertheless, the notion of abandonment of public roads without formal vacation proceedings ha s support in the older cases. Uhl v.
McEndaffer , 123 Colo. 69, 225 P.2d 839 (1950).
Lobato v. Taylor, Colorado Supreme Court, June 24, 2002. 2002 Colo. LEXIS
_____. Implied profits; easements by prescription and estoppel; implied easements.
[As this case was just reported, and because the case will be discussed in detail elsewhere in this program, this report will be brief.] This is the appeal of the trial on the merits in the Taylor Ranch case. In Rael v. Taylor , 876 P.2d 1210 (Colo. 1994), the supreme court held that certain plaintiffs claiming the right to use the Taylor Ranch for a variety of uses may not have received adequate notice in a prior Torrens case quieting title in the owners of the ranch. The court remanded to the trial court for tria l to determine which plaintiffs received adequate notice in the Torrens action and to hold a trial on the merits for those who did not have proper notice. The trial court dismissed the claims of most plaintiffs during the “due process” phase of the trial, and denied class certification. It allowed the claims of seven plaintiffs to go to trial on the merits.
After a trial, the court held that plaintiffs did not establish an easement by prescription, because their use was not adverse. The court held that cer tain historic documents did not effectively create an express easement or profit, and that the evidence did not support claims for implied easements or profits.
The court of appeals affirmed, but the supreme court reverses on the merits of the claims, finding that the evidence at trial is sufficient to establish prescriptive
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easements, easements by estoppel, implied profits, and easements implied from prior use. The easements and profits are limited to access for reasonable grazing and the harvesting of reasonable amounts of firewood and timber, consistent with the limited, residential character of historic use. The court orders a new round of briefing in the supreme court - bypassing the court of appeals this time around - on the due process issues which affect the size of the group that may benefit from this ruling.
On a brief reading, the case is significant in these respects. First, it relies first on the
Restatement (Third) of Property: Servitudes (1998), and then on prior Colorado cases, of which there are many, in reaching its holdings. Second, the court recognizes implied profits, which may be created in the way that any other implied easement is created - by necessity, by prior use, or by reference to a plat, or perhaps other means. Finally, it holds that adversity is not a required element for proving a claim for a prescriptive easement, at least in cases where the access is pursuant to an intended (but “imperfectly executed”) grant. Whether this needlessly confuses the concept of prescriptive vs. implied easements is almost beside the point; this is the approach taken by the
Restatement.
7.
ESTATES/PARTITION
Beach v. Beach, Colorado Court of Appeals, January 31, 2002. 2002 Colo. App.
LEXIS 106. Partition; life estate; valuation.
Mother sues daughter for partition of property. It all starts when daughter moves mom and dad into her home, building an addition to her house for this purpose. They have an oral agreement that parents will pay for the addition, in return for the right to live there for the remainder of their lives. After father dies, mother and daughter have a falling out. The parties do not dispute that mother has a life estate. Mother seeks partition of the addition and sues for conversion of personal property. Daughter counterclaims to quiet title. The appeal court reverses the trial court’s judgment dismissing the partition claim, holding that the owner of a life estate has statutory right to partition. The court holds that the right to partition may be waived, expressly (not the ca se here) or by implication, when partitioning the interest would undermine a contract between the parties, but reverses the trial court’s holding that there was a waiver. Accordingly, the case goes back to the district court for a trial on the petition cla im. Finally, the court reverses the lower court’s calculation of the present value of the life estate, which was entered as a “damage” award “to give guidance to the parties.” The court directs the lower court on remand to adopt the valuation method in fe deral regulations concerning estate and gift taxes, 26 CFR, 20.2031-7(a), which involves a determination of current fair market value, multiplied by a life interest period (based on age and life expectancy) and a “section 7520 interest rate” calculated monthly by the IRS. This technique has been applied by other courts, and is adopted here. The trial court has power to make equitable adjustments based on the facts of each case.
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8.
FORECLOSURE, LIENS, RECEIVERS
Mortgage Investment Corp. v. Battle Mountain Cor p., Colorado Court of Appeals,
July 5, 2001. 2001 Colo. App. LEXIS 1088. Judicial foreclosure; six -year statute of limitations.
This is another chapter in the continuing saga of the Gilman property in Eagle County.
The central issue, involving the statute of limitations, is simple enough. The opinion is made complex by the recitation of the facts of the case.
Mortgage Investments files a judicial foreclosure action in 1998. The underlying note and deed of trust were created in 1983. Those instruments came into the hands of the
FDIC in the late 1980’s. The FDIC sued on the note in California, and obtained a judgment in 1990. The California judgment was domesticated in Colorado in 1991. In
1993, the FDIC assigns the judgment and the trust deed to Mo rtgage Investments. In
1994, a judicial foreclosure action was filed by one Turkey Creek, L.L.C. (never identified in the opinion - presumably the holder of a different trust deed). It is unclear if either FDIC or Mortgage Investments were named as partie s to the 1994 case, though
I suspect not, judging from the way the opinion is written. Anyway, Mortgage
Investments records its interest in the judgment and the trust deed in 1995. Mortgage
Investments brings this action in 1998 to foreclose the deed of t rust and the judgment lien. The 1998 action is then consolidated with the 1994 action (it is unclear if this was motivated by concerns over the statute of limitations). In any event, the court holds that the six-year limit set out in C.R.S. §13-80-103.5 for actions to enforce instruments evidencing or securing a debt applies, reversing the trial court on this point. The appeals court says that the record is not clear when the claim accrued, but infers properly that the note must have been in default in 199 0 when the FDIC sued on the note, presumably because of a default, and obtained a judgment. Since this claim was filed in 1998, more than six years later, it is time barred. The court rejects the argument that the 15-year curative statute, C.R.S. §38-39-201, allows a greater period of time.
This court acknowledges that this issue was resolved with some certainty in Martinez v.
Continental Enterprises, Inc ., 730 P.2d 308 (Colo. 1986). The latter statute places an outside limit on the time that the statute of limitations may be tolled.
Finally, the court of appeals reverses the trial court’s summary judgment order striking the debtor’s pleadings on the grounds that a principal of the company had no authority to act for the company in defending the lawsuit. This is a claim of ultra vires action; since a suit by a creditor against a debtor corporation is not one of the proceedings in which this issue may be raised (under the provisions of C.R.S. §7 -103-104), it was error to strike Battle Mountain’s pleadings.
Kellum v. RE Services, LLC, Colorado Court of Appeals, July 19, 2001. 30 P.3d 875
(Colo. App. 2001). Redemption; standing to challenge.
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Kellum purchases a Denver house at a public trustee foreclosure sale. The owner does not redeem within the 75-day redemption period, which expired February 8, 1999. On that day, the owner gives, as seems to be the fashion, four deeds of trust to various parties. The last of these is in favor of RE Services, securing a $15,000 note. Only RE filed a proper notice of intent to redeem, recorded at 4:50 p.m. on February 8. The public trustee set redemption periods for all the junior lienors, and RE redeems within the time set for it to redeem by the public trustee. The redemption funds are delivered to
Kellum by the public trustee; Kellum neither rejects nor returns the funds.
Well, as it turns out, RE had a side agreement with the owner, including repurchase rights under certain circumstances. Kellum, learning of this deal, files an action to invalidate RE’s lien and to enjoin the issuance of the public trustee’s deed. The appeals court affirms the trial court’s dismissal on summary judgment; although Kellum might have had standing to challenge the validity of RE’s lien, he gave up that right by accepting the redemption proceeds. Under the statute, having accepted the redemption money, Kellum cannot seek a deed to the foreclosed property. Because of that holding, the court declines to consider the validity of RE’s lien.
Turkey Creek LLC v. Anglo America Consolidated Cor p., Colorado Court of
Appeals, October 11, 2001. 43 P.3d 701 (Colo. App. 2001). Recording invalid liens; res judicata, privity.
This is another case on the Gilman property - different parties, same lawyers. Here,
Turkey Creek owns a portion of the property, and sues a number of entities (collectively
“Tucker”) that record a number of trust deeds against the property. Turkey Creek had earlier acquired title to this rather infamous land through foreclosure. In earlier litigation, it had obtained judgment against other entities, not parties here, for filing similar, invalid trust deeds against the property. Subsequently, Turkey Creek brings this action, seeking damages against Tucker and his entities under C.R.S. §38 -35-109(3), which imposes liability on any person who “offers” to have recorded or filed any document, knowing that the document is “forged, groundless... or is otherwise invalid.”
In affirming summary judgments in favor of Turkey Creek and against Tucker, the court holds that Turkey Creek is not barred under the principle of res judicata from proceeding in this action against Tucker, despite the fact that it had sued others on identical claims in an earlier action, since the defendants here were not in privity with the defendants in the earlier case. Next, the court holds that Tucker could be held individually liable for the recording of the trust deeds, despite the fact that his corporate entities were beneficiary, since he authorized the action and the payment of the recording fees.
GE Life and Annuity Assurance Co. v. Fort Collins Assemblage, Ltd. , Colorado
Court of Appeals, December 6, 2001. 2001 Colo. App. LEXIS 2014. Receivers; ex
parte appointment; requirement of notice.
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Foreclosing lender goes to the district court for an order appointi ng a receiver ex parte.
Although lender states in its complaint and motion that telefax notice of the application for the receivership order was given to the debtor, apparently that notice was not given.
A receiver is appointed; within several weeks the owner is able to cure the default, and the parties stipulates to an order vacating the receivership. After the receiver is discharged, the owner files counterclaims against lender for wrongful foreclosure and wrongful receivership, on the theory that the foreclosure was not justifiable. The defenses mentioned by the owner were waiver and estoppel. The district court dismisses those claims on summary judgment, but the appeals court reverses, finding that the trial court abused its discretion in appointing a receiver ex parte , where the deed of trust did not contain language authorizing such appointment without notice. Language in the trust deed authorizing appointment of a receiver “ . . . as a matter of right and regardless of the adequacy of the security for the indebtedness hereby secured” is not sufficient for this purpose. The court flirts with cases from other jurisdiction that argue that receiverships may never be approved ex parte, but stops short of that holding.
Absent “ ex parte ” language in the security documents, a court should not appoint a receiver without notice, an opportunity to be heard, or some showing of emergency circumstances threatening the value of the property. On remand, if the court finds that lender was entitled to foreclose its trust deed and therefore entitled to appointment of a receiver, the counterclaims will be dismissed. Otherwise, the owner may proceed with its claims.
Telluride Resort and Spa, L.P. v. Colorado Department of Revenue , Colorado
Supreme Court, February 11, 2002. 40 P.3d 1260 (Colo. 2002). Sales tax; assignment of certificate of purchase.
This case concerns some $245,000 in state sales taxes sought by the Colorado
Department of Revenue when a hotel in Telluride goes to foreclosure. The opinion assumes that all personal property is included in the sale. Lender purchases at the foreclosure sale. Lender then sells the certificate of purchase to an investor, who acquires title to the hotel (and all personal property, by agreement of the parties, under
C.R.S. §4-9-604) at the end of the redemption period.
The appeals court holds that the sale of the certificate of purchase is subject to state sales tax. A “repossession of personal property by a chattel mortgage holder or foreclosure by a lien holder” is exempt from the definition of a “sale” in the sales tax statutes. The court reasons that the exemption would apply for the benefit of a foreclosing lender, but not for a third party that purchases the certificate of purchase.
The purchase of the certificate is, to the court, the functional equivalent of the purchase of this ongoing hotel business, with all of its personal property, notwithstanding C.R.S.
§38-38-403, which provides that a certificate may be assigned, and that the assignee shall be treated “for all purposes” as the original holder of such certificate.
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National Real Estate Investment, LLC v. WYSE Financial Services, Inc. , Colorado
Court of Appeals, April 11, 2002. 2002 Colo. App. LEXIS 580. Redemption; payment of underlying lien.
This is a redemption dispute over a home in Douglas County that goes to foreclosure.
The property is subject to a first lien deed of trust and a junior judgment lien. The holder of the former (“Financial Services”) initiates foreclosure, and purchases at the sale. Owner does not redeem within the 75 day redemption period. On the 75 th
day,
National Real Estate buys an assignment of the judgment lien, and files a notice of intent to redeem. Under the statute, National would have until day 85 to redeem, as the
“next in line” in terms of priority. On day 78, National tenders redemption funds of
$405,000 to the public trustee; a certificate of redemption issues on day 82, and recorded the same day. Financial Services, trying to block the redemption, scurries to satisfy the underlying judgment. On day 84, it requests the county court (apparently from whence the judgment came) to accept a deposit of the total due on the judgment.
The court denies the motion for deposit, apparently ordering that the funds go to counsel for judgment creditor (who, we recall, had assigned the judgment). Financial then pays the full amount of the judgment to counsel for the judgment creditor
(assignor), who acknowledges satisfaction. It is not clear whether counsel understood that his client had already assigned its rights in the judgment lien. The acknowledgement is filed with the public trustee on day 85.
Understandably, the public trustee refuses to take further action, given the conflicting interests. National, as the redeeming party, fil es this action for an order to vacate the acknowledgement of satisfaction of judgment, and seeking a decree quieting its title in the property, based on the public trustee’s deed. The district court ruled for the
Financial, thinking there was no right to redeem, since the judgment was satisfied within the redemption period . The appeals court reverses, holding that under C.R.S.
§38-38-304(3), the rights of the owner and prior lien holders terminate upon recording of the certificate of redemption. The public trustee need not wait until the last day of the lienors’ redemption period (i.e., day 85 in this scenario) in order to issue a certificate of redemption. There is such a requirement for redemption within an owner’s redemption period, C.R.S. §38-38-303, a situation not applicable here. Because no other lienors redeemed, title vested in National on the 85 th
day.
9.
JUDGMENTS/FRAUDULENT TRANSFER
No cases reported.
10.
LEASES/EVICTION
Filho v. Rodriguez, Colorado Court of Appeals, September 27, 2001. 36 P.3d 199
(Colo. App. 2001). Landlord liability; partially disclosed principal.
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The appeals court reverses the trial court’s ruling that the owner of rental house has no standing to sue tenants that damage the house, where the tenant’s lease was executed in the name of owner’s management company. Where the lease is executed by “Property
Manager, agent of Owner,” the tenant is liable to the partially disclosed agent as if the contract were with the principal, unless the principal is excluded as a party by the contract, which is not the case here. Restatement (Second) of Agency section 292. The same rule applies for fully disclosed principals, unless the principal’s existence is fraudulently concealed or unless there is a setoff against the agent.
Wilcox v. Clark, Colorado Court of Appeals, September 27, 2001. 2001 Colo. App.
LEXIS 1607. Eviction; scope of attorney fee award.
We reviewed this case last year. The dispute arises out of an apartment built over a residential garage in Aspen. Tenant is the original owner of the house and its detached garage/apartment. He sells the property, but leases back the garage and apartment. The property then changes hands, and a new owner is led to believe that the apartment is illegal. He starts an eviction action, and a jury ultimately concludes that the City’s purported approval of the apartment was forged. Anyhow, the landlord gets a judgment for possession - along with an attorney fee bill (from his counsel) in excess of $90,000.
The lease has no attorney fee provision specific to this claim, so the landlord seeks fees under the statute, C.R.S. §13-40-123, which provides that one who prevails in an unlawful detainer action “ is entitled
” to recover damages, reasonable attorney fees, and costs. The court of appeals initially held - perhaps to the surprise of some - that this language made a fee award discretionary with the court, not mandatory. The appeals court withdraws its earlier decision, holding that the statute makes attorney fees an item of compensatory damage (a bit of dicta that creates some procedural problems), and the prevailing party to the litigation here is entitled to fees. All of them - if reasonable.
Robertson v. Westminster Mall Co., Colorado Court of Appeals, September 27,
2001. 2001 Colo. App. LEXIS 1574. Free speech; shopping mall regulations.
This case addresses the rights of shopping mall patrons to free speech. Westminster
Mall attempted by regulation to limit the rights of religious groups to “witness”. This involves contacting shoppers and engaging them in discussion of the gospel of Jesus
Christ. You will recall that the First Amendment to the United States Constitution has been held not to protect the distribution of handbills on the premises of a privately owned shopping center, although our nation’s high court has noted that state constitutions may go further in their protection of certain frees speech activities. The trial court here issued an injunction against the mall owner, under Article II, Section 10 of the Colorado Constitution. The Colorado Constitution has greater protection for freedom of speech activities than does the First Amendment, providing: “No law shall be passed impairing the freedom of speech; every person shall be free to speak, write or publish whatever he will on any subject, being responsible for all abuse of that liberty.” In
Bock v. Westminster Mall Co ., 819 P.2d 55 (Colo. 1991), our supreme court
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held that the mall was obligated to provide a forum for individuals expressing their free speech rights. The court also stated that the mall was free to impose restrictions on the time, place and manner of such speech activities, provided the restrictions were content neutral and narrowly tailored, address a significant interest, and left open ample channels of communication.
Under this test, certain mall regulations are held by this court to comply with Bock test, and certain are not. If you own a mall, this is the latest, so you will want to study this in detail. In short form, the mall owners: (1) could lawfully limit this type of free speech activity to designated locations in the mall, e.g., the food court; (2) a requirement that the proponent of the speech activity apply for a permit twenty-four hours in advance of such activity, and that the permit would last for six months, passes the constitutional test, though a forty-eight hour requirement would not; and (3) the mall’s requirement that the speech purveyor have a liability policy of a certain size was never applied to this particular group, so this issue was not ripe for constitutional adjudication.
11.
MALPRACTICE/PROFESSIONAL CONDUCT
No cases reported.
12.
PREMISES LIABILITY/TRESPASS/NUISANCE
Public Service Company of Colorado v. Van Wyk, Colorado Supreme Court, July 2,
2001. 27 P.3d 377 (Colo. 2001). Transmission lines; nuisance.
This is another stage in a continuing battle over the attempt by Public Service (now
Xcel Energy) to build larger electric transmission lines through the Daniels Park area in
Douglas County. This is a class action brought by 150 pr operty owners who claim to be affected by increased noise, electromagnetic fields, and radiation waves encroaching on their property. This action was commenced after construction of the lines. Prior to construction, the district court had twice overruled the approval of the lines by the
PUC, and had twice been reversed by the Colorado Supreme Court, thus leading to construction of the lines and this lawsuit. This will no doubt be the leading case for some time to come. The issue is before the court on the trial court’s dismissal of the three main claims for failure to state a claim. Those claims are: inverse condemnation, trespass and nuisance. The court first holds that the quasi -judicial determination of the
PUC approving the line upgrades over the objection of many of these same citizens does not preclude these claims. While PUC regulations and adjudications generally (by statute) preempt local government decisions concerning utilities, the questions raised in this action affect individual property rights and tort damages relating to those rights which were not addressed by the PUC . Accordingly, the claims are not preempted.
Next, the court reviews the various claims, and finds that the inverse condemnation and trespass claims fail to state a claim, but that the nuisance claim is sufficient and may proceed to litigation. To state a claim, an intangible intrusion such as that alleged here
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must be intentional. The court adopts Restatement of Torts (Second) section 822, in a many -page analysis; three justices dissent.
Pierson v. Black Canyon Aggregates, Inc., Colorado Supreme Court, May 20, 2002.
2002 Colo. LEXIS 424. Premises liability; independent contractor.
Pierson drives down a road. The road suddenly stops, and he drives over a 17 -foot embankment into a gravel pit on property managed by the defendant. He is badly injured. The property where the gravel pit is located is owned by a third party, and leased to Montrose County. Black Canyon Aggregates operates a gravel crushing facility under contract with the county. Pierson and his wife sue Black Canyon, alleging liability for negligence under the premises liability statute. The trial court dismisses the case, holding that the operator, being an independent contractor, is not a “landowner” under the statute, C.R.S. §13-21-115(1). The appeals court affirmed, but the supreme court reverses, holding that an independent contractor conducting lawful operations on property or creating conditions on property at the behest of the owner can be a
“landowner” for purposes of receiving both the benefits and the burdens offered by the statute. Since the protections of the statute are broad reaching, “its responsibilities must be coextensive.” That person or entity need not a lessee or be in exclusive possession of the entire property.
13.
PROPERTY TAXATION AND ASSESSMENTS
Wilber v. The Board of County Comm’rs of the County of La Plata , Colorado Court of Appeals, August 16, 2001. 42 P.3d 49 (Colo. App. 2001). Property tax assessment; TABOR amendment.
This case is of interest only in that it involves property taxes. Wilber files a petition for abatement or refund of taxes, alleging that certain ballot measures passed in La Plata
County to relieve the county of restrictions imposed by Colo. Const. art. X, § 20
(Taxpayer Bill of Rights, or TABOR in common parlance) did not supersede the mill levy limitations of C.R.S. §29-1-301(1) for the 1996-98 property tax years. The county denied the petition, and the state board denied taxpayer’s subsequent appeal. On appeal,
Wilber argues that a statement in the ballot measures that the mill levy rate would not be increased means that the levy cannot be increased over that authorized by C.R.S.
§29-1-301(1), rather than over the then-existing rate. The court of appeals affirms, noting that the ballot measures stated that the existing mill levy would be retained during the period covered, and that the further statement in the ballot measure exempting the county from TABOR or “any other law” is sufficient to exempt the county from C.R.S. §29-1-301(1).
Welby Gardens Co. v. Adams County Board of Equalization , Colorado Court of
Appeals, January 3, 2002. 2002 Colo. App. LEXIS 8. Agricultural vs. commercial.
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Welby Gardens is a typical nursery, consisting of an 8000 square foot retail gar den center with public parking, together with various greenhouses and greenhouse support buildings. Welby produces vegetables, flowers, and fruiting plant starts. Most products are grown in the greenhouses, although certain plants are grown in the ground in a three acre “test field.” The soil from the property is not used in the greenhouse containers.
The county classified the property as commercial land and improvements. The Board of
Assessment Appeals reversed, ruling that the property should be classif ied as agricultural, which of course requires that the property be used as a “farm or ranch.”
The appeals court reverses. A “farm” under C.R.S. §39-1-102(3.5) is “ . . . a parcel of land which is used to produce agricultural products that originate from the land’s productivity for the primary purpose of obtaining a monetary profit.” Since the land here only provides a site for the greenhouse buildings, the land is not properly classified as agricultural. The court distinguishes a case involving chickens a nd eggs,
Morning Fresh Farms v. Weld County Bd. of Equalization , 794 P.2d 1073 (Colo. App.
1990).
14.
TAX SALES/TREASURY DEEDS
Columbus Investments v. Lewis, Colorado Supreme Court, June 17, 2002. 2002
Colo. LEXIS 514. Treasurer deed; notice; record interest or title in property.
Lewis fails to pay property taxes for a period of years, while keeping his mortgage loan current. After the requisite three years and then some, the holder of the tax certificates applies for a deed. The county treasurer determines - correctly -- that notice of the sale should only go to the collateral assignee of the mortgage, not the original mortgagee.
The court of appeals held that the failure to give notice to the original mortgagee rendered the tax deed void, and subject to attack by the owner, as the mortgagee has a sufficient “interest or title of record” in the property to receive notice. The court of appeals reasoned that the collateral assignment of the note and deed of trust is a security interest in instruments, which is personal property, and that the interest of the collateral assignee does not ripen into an interest in real property until there is a default. By this reasoning, it was unnecessary to give notice to the mortgagee’s lender.
Now, the supreme court reverses, saying that the treasurer had it right all along. When the original mortgagee assigned
“ . . . all right, title and interest in and to” the deed of trust, it indeed transferred an interest in real property, even though its transaction with the lender is also governed by
Article 9 of the UCC.
Of course, as we noted in reviewing the lower court’s opinion last year, counsel for the deed applicant and/or the treasurer may wish to be less discerning next time, and give notice to all with a record interest of any kind.
15.
TITLES/TITLE INSURANCE/QUIET TITLE
McKenzie v. Pope, Colorado Court of Appeals, September 13, 2001. 33 P.3d 1277
(Colo. App. 2001). Adverse possession; statute of limitations; permissive use.
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This is a basic adverse possession case, involving 3.5 acres of land lying between other property of the two parties. In 1978, a predecessor to Pope traded a truck to McKenzie in return for the disputed land. There was no deed or writing. McKenzie fenced the property, excluding all neighbors. When Pope acquired title to his property in 1994,
McKenzie demanded a deed. There were conversations that hinted at permissive use, to the effect that Pope “didn’t mind if McKenzie used it.” McKenzie did not argue the point. He simply walked away. The trial court did not make any factual findings on whether the use of the property, initially adverse, became permissive at that point. It only said that the issue was “difficult.” Rather, the trial court gave judgment to
McKenzie, on the notion that it was up to Pope to sue to regain possession before 18 years ran. It is a statute of limitations, after all. The court of appeals reverses on this point. The period of adverse possession may be interrupted in many ways, only one of which is by filing suit. Another is by having the record owner give permission for the adverse claimant’s use, if that permission is followed by inaction or protest by the adverse claimant. The court remands for further findings on this issue.
In re Marriage of Gorman, Colorado Court of Appeals, October 11, 2001. 36 P.3d
211 (Colo. App. 2001). Marital property; vested interest in trust.
A divorce case? This might be of interest because of the analysis employed by the court in determining whether husband’s interest as beneficiary of a revocable trust controlled by his mother is marital property. The trust is subject to defeasance in that the mother has the power to invade, and even deplete, the corpus of the trust. It is nevertheless characterized as a vested remainder interest. And, because the interest is vested, it is marital property. Just try placing a value on it.
Ocmulgee Properties, Inc. v. Jeffery, Colorado Court of Appeals, October 11, 2001.
2001 Colo. App. LEXIS 1670. Adverse possession; record owner’s claim to title.
In another adverse possession case, the parties stipulate that the adverse claimant
(Jeffery) has been in continuous, adverse possession of the property for 18 years. The only issue is whether the period of possession is interrupted, as a matter of law, b y the action of the record title owner (Ocmulgee) in including the disputed property in an application for a new subdivision. Jeffery receives notice of the application and makes no protest, all the while remaining in exclusive, physical possession of the property.
The trial court says yes, holding for the record owner and against the claim of adverse possession. The appeals court reverses, finding that a successful land use application does not constitutes an exercise of control over property sufficient t o disrupt the period of adverse possession. Recognition of another’s record title to the property does not reflect an intent to abandon an adverse claim; it does not, as a matter of law, mean that the possession is not “hostile.” It would seem that Jeffery gets away with “protesting not enough,” this time. Compare McKenzie v. Pope , infra.
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Alexander v. McClellan, Colorado Court of Appeals, December 6, 2001. 39 P.3d
1265 (Colo. App. 2001). Vacated road; title upon conveyance adjacent land.
If a platted street is vacated, and the adjoining parcel is later conveyed by deed without reference to the adjacent strip of land, does title to the former street remain in the grantor. According to CBA Title Standard 8.3.1, and the case of Morrissey v. Achziger ,
147 Colo. 510, 364 P.2d 187 (1961), the answer is YES, and this court so holds. The rationale is that the vacated roadway may have independent value to the grantor, especially where (as here) it is contiguous to other land owned by the grantor. Grantee argues, without success, that a different rule should apply where the plat is that of an unincorporated town, as opposed to a situation where there had been a formal dedication and acceptance of a street by a city. The court holds that the same rule applies, whether the roadway is an easement or whether it is owned by a city in fee.
E-470 Public Highway Authority v. Argus Real Estate Partners, Inc. , Colorado Court of Appeals, March 14, 2002. 2002 Colo. App. LEXIS 372. Unvested interest; reversion vs. option vs. right of first refusal; rule against perpetuities.
Britton Ranch owns property in the path of the E-470 toll road, and entered into an agreement to donate property, whereby it conveyed by “gift deed” approximately 5 acres of land to the Authority for use as a highway. Although the deed was absolute by its terms, in that it purported to convey all title to the property, including “. . . the reversion and reversions, remainder and remainders . . . and all estate, right , title . . .”, the separate agreement had this language:
“If the Authority no longer has a need for all or any portion of the Property Rights acquired pursuant to this agreement, after passing an appropriate Resolution the Authority shall offer the Property Rights, or any portion of th em for which it no longer has a need to the Landowner, or its successors and assigns, by quit claim deed without charge.”
Britton Ranch assigned its rights under the Agreement to Argus. The Authority, perhaps having plans for the property, brought an action to quiet title to its fee interest in the property, arguing that any interest conferred on Britton or Argus under the agreement was void under the rule against perpetuities. The trial court and the court of appeals agree, holding that the fee interest transferred by the gift deed is absolute, with no reversion or “reversionary interest” remaining in the grantor; and that the conditions precedent to the quitclaim of the property under the agreement, i.e., that the Authority deems that it no longer needs the property, might occur beyond twenty-one years after a life in being at the time of the Agreement. The court holds that the transaction is subject to the rule against perpetuities, that it violates the rule, and that the charitable gift exception to the rule does not apply, since neither Argus nor the authority are charities. The decision makes no mention of the date of this transaction, nor does it consider the Uniform Statutory Rule Against Perpetuities, C.R.S. §15 -11-1102
(superceding the common-law rule effective May 31, 1991).
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Questions:
Is this a fee simple subject to a condition subsequent, which is not subject to the common -law rule against perpetuities? If so, is the interest of Britton
Ranch void because it was transferred?
Is this a preemptive right, for which courts have frequently been a bit more lenient? Cambridge Co. v. East Slope Inv. Corp., 700 P.2d 537 (Colo. 1985).
Why go through this exercise at all? Any interest created prior to 1991 which is held to violate the rule against perpetuities shall be reformed, under C.R.S.
§15-11-1104, “ . . . in the manner that most closely approximates the transferor’s manifested plan of distribution and is within the ninety years allowed by § 15-11-1102 . . . ?”
Kerns v. Kerns, Colorado Supreme Court, May 28, 2002. 2002 Colo. LEXIS 427.
Notice of lis pendens; foreign action.
May a party to a foreign action seeking a constructive trust over real property in
Colorado record a notice of lis pendens in the county in Colorado where the property is located? Yes, says our highest court, interpreting C.R.S. §38 -35-110 (1995). Whether relief is claimed that affects title to real property depends on the facts of each case, not on whether or not the action is in a court of another state without in rem jurisdiction over the property. The court holds that the claim for a constructive trust affects title to property in Colorado. Factually, the plaintiffs had contributed money to defendant for the purchase of ranch properties in a number of western states, including Colorado, to promote an elk farming operation. Plaintiffs allege that the operation was a sham, and seek return of their money, and a constructive trust on the ranch properties. The court discusses the history of the common-law doctrine of lis pendens , and finds that this interpretation furthers the protection of innocent buyers, creates economy of scale in litigation, and simplifies title searches. The court adopts an expansive interpretation of what “affects title” to real property, and concludes that an equitable claim for a constructive trust has the potential to “affect” title, albeit indirectly, by an order requiring one party to transfer title to another. This decision appears to be in line with the highest courts in most of our neighboring states. In a footnote, the court notes the protection provided by the spurious lien statute, C.R.S. §38-35-104, in the event those seeking to cloud title get too ambitious.
Reid v. Pyle, Colorado Court of Appeals, April 11, 2002. 2002 Colo. App. LEXIS
564. Deed to cotenant; equitable mortgage.
This is a living example of the mess that can be created when lawyers are not consulted on the front end of a deal. Reid and Pyle pool resources to build a home, on property owned by Reid. They live in the home themselves for various periods of time, and ultimately end in litigation over disposition of the property. Prior to litigation, in what
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appears to be a final accounting and settlement, Reid gives Pyle a quit claim deed to the property, in consideration of “one dollar and other considerations”, along with a promissory note, obligating Reid to pay Pyle $40,000 upon sale of the house. Reid remains in possession. Pyle records the deed, believing he now owns the property and the note for $40,000, and brings an FED action to evict Reid. Reid files this quiet title action, and the claims are consolidated. The court determines - rather confusingly - that the note reflects Pyle’s contribution to the asset, and that the deed was an equitable mortgage to secure the loan. The court holds that the note could become due prior to sale of the house, if Reid blocks efforts to sell the house - an apparent possibility as he remains in possession. The case is remanded for that determination; if the note is deemed to be due, the court may award Pyle a decree of foreclosure on his equitable mortgage.
16.
ZONING/LAND USE CONTROL
Board of County Comm’rs (Arapahoe) v. City of Greenwood Village, Colorado Court of Appeals, July 5, 2001. 30 P.3d 846 (Colo. App. 2001). Annexation; con tiguity requirement.
This is a review of an annexation by Greenwood Village of an eighty acre -parcel of land. Review by the district court is limited to a determination of whether the city council abused its discretion, based on the written record. Arapah oe County challenges the annexation, arguing that the annexation fails to meet the one -sixth contiguity requirement of the Annexation Act, C.R.S. §31-12-104(1)(a). To satisfy the requirement that not less than one-sixth of the perimeter of the area to be annexed be contiguous with the annexing municipality, the City de -annexed a small lot and then reannexed the lot along with the parcel in dispute. At the same time, the City divided the smaller lot into multiple one-foot strips of land in order to satisf y the contiguity requirement. A map would have helped understand the decision - we can only imagine the ingenuity applied to the task. The appeals court affirms the ruling approving the annexation, finding that, “while unusual,” there is no statutory prohi bition against such surveying gymnastics.
Board of County Comm’rs(Douglas) v. Gartrell Investment Co., LLC, Colorado
Court of Appeals, August 2, 2001. 33 P.3d 1244 (Colo. App. 2001). Annexation; regulation by county.
Gartrell, seeking to develop large piece of land in northeast Douglas County, petitions to annex to Aurora. Douglas County seeks to require compliance with its land use regulations, and in particular its requirement that Gartrell obtain a “new communities permit” under the Areas and Activities of State Interest Act, C.R.S. §24-65.1-101, et seq., and specifically §104(13). The BOCC files an action to enjoin the development.
Gartrell prevails, and the appeals court affirms, because the provisions of the AASIA relied upon by the county deals with the regulation of “unincorporated areas .”
Annexation is not an area of state interest that counties authorized to regulate, says the
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court.
Municipal and land use lawyers will want to study this more carefully - a more thorough discussion is beyond the interest of most real estate practitioners.
Brotman v. East Lake Creek Ranch, L.L.P., Colorado Supreme Court, September
10, 2001. 31 P.3d 886 (Colo. 2001). Sale of school lands; private cause of action; standing.
Who has standing to complain about a sale of state school lands believed to be in violation of state law prohibiting direct sales of the trust property? Reversing the court of appeals and the trial court, the supreme court says that a neighbor does not. At least not this neighbor.
The section at issue earns about $400 a year from a grazing lease from the adjoining land owner, East Lake. Brotman is willing to pay $1.8 million for the land, notwithstanding the fact that the section is land locked, given the proximity of the land to Arrowhead ski area. East Lake fears that Brotman will immediately sue to condemn a private way of necessity, and wants to block the sale (postured as an exchange for reasons having to do with the regulations at issue on the merit of the claim). The court reasons that East Lake lacks standing because it has suffered no “injury in fact” -
Brotman might sue another neighbor for access. It does not have indirect standing as a general taxpayer. “[B]ecause the Land Board’s management - or mismanagement - of school lands has no effect on the state’s funding of schools through the taxing power, management decisions of the Land Board have no effect on the Ranch as a taxpayer.”
And, it does not have standing as a beneficiary of the school trust, as it is a limited liability partnership, and, as such, does not send its kids to school, i.e., it is not a beneficiary of the school lands trust funds. Only a beneficiary of a trust can maintain a suit against a trustee to enforce trust responsibilities or to enjoin or obtain re dress for breach of trust. Restatement (Second) of Trusts § 200. The exchange goes forward.
The opinion contains some nice historical information about state school lands.
Olson v. Hillside Community Church, Colorado Court of Appeals, September 13,
2001. 42 P.3d 52 (Colo App. 2001). Private cause of action for zoning violation; doctrine of relative hardships.
Hillside Community Church builds an addition to its church, aspects of which disturb its residential neighbors. The primary concerns are the height of the modified structure, the height of a fence, and the quantity of parking. The problem? The church apparently ignores the building department’s permit requirements, in the process failing to comply with “a plethora” of building and zoning code requirements. The City of Golden is sympathetic, however, and grants a variance after the fact - without following its own requirement that there be a public hearing. The City issues a certificate of occupancy.
The neighbors then sue, seeking a mandatory injunction for restoration of the structure to its original shape and size. The trial court finds for the neighbors on most factual issues, but applies the doctrine of “relative hardship” to let the structure stand. The
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appeals court reverses on the latter point - the church cannot rely on the doctrine of relative hardship because the record does not reflect that the church acted in good faith.
This is a condition precedent under the rule in Hargreaves v. Skrbina , 662 P.2d 1078
(Colo. 1983). The court calls the trial court’s determination that the church acted in good faith “untenable,” because the church began construction without investigation planning and zoning requirements and without obtaining a building permit, despite receiving a variety of complaints from the neighbors and the City. The case is remanded with direction to order the church to modify the building to comply with all building and zoning requirements.
Spencer v. The Board of County Comm’rs (Montezuma County), Colorado Court of
Appeals, December 20, 2001. 39 P.3d 1272 (Colo. App. 2001). C.R.C.P. 106; time limit for post-judgment motions.
Spencer has a small parcel of land. He gets subdivision approval for one split of less than thirty-five acres, and sells a piece of the whole. He then wishes to subdivide the remaining parcel again - but runs into an informal rule of the BOCC that he first seek approval of the neighbors - his first vendee. The BOCC denies his subdivision request, and Spencer seeks review in the district court under C.R.C.P. 106. The district court vacates the ruling, mainly because the BOCC was unable to cite any authority for its decision other than “custom.” The BOCC then starts reading its own land use code, and files a motion for post-judgment relief under C.R.C.P. 59. It then files a second motion to the same effect, finally citing some authority in its own ordinances to support its decision. Too late. Because the second motion was filed more than fifteen days after the court’s decision, and because the district court’s ultimate decision in favor of the
BOCC came more than sixty days after the first motion was filed (after which it is deemed denied under the rule), the district court did not have jurisdiction to grant the second motion. Spencer wins - the court’s original ruling vacating the BOCC ruling stands.
W.O. Brisben Companies, Inc. v. Krystkowiak, Colorado Court of Appeals, February
28, 2002. 2002 Colo. App. LEXIS 252.
On April 4, 2002, this opinion was withdrawn, and petition for rehearing granted .
City and County of Denver v. Board of Adjustment , Colorado Court of Appeals, May
23, 2002. 2002 Colo. App. LEXIS 856. Zoning appeal; time limit.
The case concerns the construction of a multifamily residential development as a use by right in a sub-area of the Platte River Valley (PRV) zoning district. The sub -area zoning standards are set forth in §59-502E of the Denver Revised Municipal Code (the code).
On November 5, 1999, the zoning administrator approved developer’s zoning permit for construction of the development. The application for the permit was submitted as a small development under the code, which excused developer from providing notice to
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all landowners in the sub-area. The adjoining landowners therefore were not notified of developer’s application, nor of its approval. When developer began construction on
February 11, 2000, the neighbors jumped into action. On February 16, 2000, neighbor filed an objection with the zoning administrator, requesting that the permit be revoked because it violated the code. The zoning administrator denied the request in a letter the next day, which informed neighbor that he could appeal to the board. On February 24,
2000, neighbor appealed from the denial of his request for revocation and asked that the board revoke the permit and direct developer to cease construction pending the outcome of the review. The board scheduled an evidentiary hearing. Following the evidentiary hearing, the board unanimously reversed the zoning administrator’s decision and revoked the zoning permit. The city sought review pursuant to C.R.C.P. 106(a)(4), and developer intervened. The district court reversed the findings and conclusions of the board. Neighbor appeals from that decision. The appeals court holds that the denial of a request for revocation is an appealable order under the code, and that the appeal here was timely, notwithstanding the period of time that passed between approval of the developer’s zoning and the start of construction.
3049064_1.DOC
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