December 12, 2017

Archives for June 13, 2011

Colorado Court of Appeals: Injunctive Relief Appropriate as HOA Covenant Language Prohibited a Broad Range of Commercial Pet-Related Activities, Including those Conducted by Plaintiff

The Colorado Court of Appeals issued its opinion in K9Shrink, LLC v. Ridgewood Meadows Water and Homeowners Ass’n on June 9, 2011.

Summary Judgment—Declaratory and Injunctive Relief—Issue Preclusion.

Plaintiffs K9Shrink, LLC and Gail Clark appealed the trial court’s summary judgment in favor of defendant Ridgewood Meadows Water and Homeowners Association (HOA), as well as the court’s order denying declaratory and injunctive relief to plaintiffs and granting an injunction and attorney fees to the HOA. The judgment and order were affirmed.

Clark, a canine behavioral psychologist, operates K9 Shrink on her property. Clients bring their dogs to Clark’s home, where she counsels the owners on communicating with and training their dogs. Clark’s home is subject to the HOA’s Covenants (Covenants).

Clark and K9Shrink filed this action after the HOA required them to cease K9Shrink’s activities after determining they constituted commercial pet-related activity that was prohibited by the Covenants, as amended in 2007 (Amendments). Plaintiffs sought a declaratory judgment that the Amendments were unenforceable and an injunction prohibiting enforcement against plaintiffs. The HOA counterclaimed for an injunction to prevent plaintiffs from conducting their activities.

The trial court granted partial summary judgment to the HOA with respect to plaintiffs’ claim for declaratory judgment regarding the enforceability of the Covenants. Following trial, the court issued an order on January 11, 2010 (January order) determining that K9Shrink’s activities violated the Covenants and denying relief to plaintiffs. Plaintiffs appealed.

The Amendments became effective in 2007 after the district court entered an order amending the 1973 and 1977 declarations under CRS §38-33.3-217(7). Plaintiffs argued it was error for the trial court to rule that their challenge to the Amendments was barred by issue preclusion.

Issue preclusion bars the re-litigation of an issue when (1) the same issue was litigated in a previous proceeding; (2) the party against whom preclusion is asserted was a party to, or in privity with a party to, the previous proceeding; (3) that proceeding resulted in a final judgment on the merits; and (4) the party against whom preclusion is asserted previously had a full and fair opportunity to litigate the issue. [Lazy Dog Ranch v. Telluray Ranch Corp., 965 P.2d 1229 (Colo. 1998).] Plaintiffs challenged only the trial court’s application of the second and fourth Lazy Dog factors, and only as applied to Clark.

The Court of Appeals found that Clark had notice, standing, and an opportunity to be heard in the 2007 court proceeding and therefore was a party to the proceeding in which the court approved the Amendments. The Court reviewed the factors set forth in Bebo Construction Co. v. Mattox & O’Brien, P.C., 990 P.2d 78 (Colo. 1999) to determine whether Clark was given a full and fair opportunity to litigate. The Court found that, as to her declaratory judgment claim, Clark could have brought the same alleged defects in the Amendments in the 2007 case that she raised in the instant action and therefore was given a full and fair opportunity to litigate.

Plaintiffs then argued that the trial court erred in its interpretation of Part II, paragraph 5(c) of the Covenants. The Court disagreed. The Covenant at issue stated: “Commercial livestock husbandry or animal processing operations are prohibited upon any lot, as are any commercial pet-related activities, such as dog boarding kennels, catteries or commercial breeding operations.” The Court agreed with the trial court that the language prohibits a broad range of commercial pet-related activities, which would include the activities of K9Shrink.

The Court also rejected plaintiffs’ argument that it was error to grant injunctive relief to prevent them from conducting commercial pet-related activities on Clark’s property. The Court found that the trial court addressed each of the necessary findings in a well-reasoned manner. The HOA established that: (1) it has achieved actual success on the merits; (2) irreparable harm will result unless the injunction is issued; (3) the threatened injury outweighs the harm that the injunction may cause the opposing party; and (4) the injunction, if issued, will not adversely affect the public interest. The judgment and order were affirmed.

This summary is published here courtesy of The Colorado Lawyer. Other summaries by the Colorado Court of Appeals on June 9, 2011, can be found here.

Colorado Court of Appeals: Plaintiffs’ Tort Claims Properly Barred by the Economic Loss Rule

The Colorado Court of Appeals issued its opinion in A Good Time Rental, LLC v. First American Title Agency, Inc. on June 9, 2011.

Economic Loss Rule—Contract—Negligent Misrepresentation.

In this action involving a failed commercial real estate transaction, plaintiffs, A Good Time Rental, LLC, Noble Petroleum, LLC, and Arugula Investment, LLC, appealed from the summary judgment in favor of defendant First American Title Agency, Inc., doing business as First American Heritage Title Company, Inc. (American Heritage). The judgment was affirmed.

A Good Time Rental and Noble Petroleum owned a fee simple interest and a leasehold interest, respectively, in adjacent parcels of real estate in Douglas County, Colorado. Restaurant Operating Company, LLC (ROC) proposed to exchange two properties located in California for the two Colorado properties. The deal fell through, and plaintiffs brought negligence and negligent misrepresentation claims against American Heritage, alleging that it had negligently breached the duty to “exercise reasonable care and competence” in conducting the closing or making sure all necessary documents had been received and reviewed. The trial court barred plaintiffs’ claims under the economic loss rule.

On appeal, plaintiffs argued that the trial court erred in granting summary judgment in favor of American Heritage based on the economic loss rule. The Court of Appeals disagreed. American Heritage was obligated to exercise reasonable care, skill, and faithfulness in transferring the property subject to the closing and as instructed. This duty, however, was not independent of the parties’ contract—namely, the closing instructions prepared by plaintiffs. The “foreseeable damages” that American Heritage allegedly failed to avoid through the exercise of reasonable care amounted to plaintiffs’ loss of the benefit they expected under the contract: a promissory note as consideration for their real property. Thus, the tort duty allegedly breached imposed the same duty of care as the parties’ contract: to act as necessary to obtain the note from ROC and deliver it to plaintiffs, thus avoiding the very loss about which they complain. This duty, therefore, was implicit in their contract and plaintiffs’ tort claims were properly barred by the economic loss rule. Additionally, even if American Heritage had a fiduciary relationship with plaintiffs, its contractual duty to provide closing and settlement services cannot serve as the basis of any tort claim seeking additional compensation for its alleged failure to perform that same contractual obligation.

This summary is published here courtesy of The Colorado Lawyer. Other summaries by the Colorado Court of Appeals on June 9, 2011, can be found here.

Conduct Unbecoming: When Knowing the Rules Isn’t Enough

It is common knowledge among attorneys that violation of one of the Colorado Rules of Professional Conduct (Rules) can result in sanctions against the attorney, ranging from private admonition to disbarment. But many attorneys are not aware that they can also face disciplinary proceedings for conduct that is not specifically barred by the Rules.

Under C.R.C.P. 251.5, grounds for discipline include:

1)            Any act or omission that violates the Rules of Professional Conduct;
2)            Any act or omission that violates criminal laws of Colorado or the United States;
3)            Any act or omission that violates the Rules of Civil Procedure;
4)            Any act or omission that violates a previous disciplinary order; and
5)            Absent good cause, failure to respond to a request by one of several disciplinary bodies.

The rule goes on to specify that the list of conduct constituting grounds for discipline is not exhaustive. Therefore, if an attorney engages in conduct that does not fall into one of the above categories, he or she may still face disciplinary proceedings.

There is plenty of case law from Colorado and other jurisdictions that proves attorneys can face discipline for more than outright violations of the Rules. In re Sather, 3 P.3d 403 (Colo. 2000), is one such case. Sather had charged his client a non-refundable fee, which, at the time, was not prohibited. Using case law from other jurisdictions, and a secondary source article, the Colorado Supreme Court characterized Sather’s behavior as “dishonest” and therefore a violation of Colo. RPC 8.4(d).

Another example is In re Foster, No. 10SA89, 2011 Colo. LEXIS 429 (Colo. May 23, 2011). In that case, Foster, during a divorce, filed several post-dissolution proceedings. The disciplinary hearing board determined that these proceedings constituted harassment, and charged Foster with violations of Colo. RPC 3.1 and 8.4(d). So, although it is legal and ethical to file post-dissolution proceedings, it is unethical to do so during a drawn out court battle with an ex-spouse.

This is only a small sampling of the case law available on this topic. For more information, there will be a one-hour CLE program at noon on Tuesday, June 14, “Conduct Unbecoming: When Knowing the Rules Isn’t Enough,” presented by George S. Meyer, Esq.

June 14: Conduct Unbecoming: When Knowing the Rules Isn’t Enough

This CLE presentation will take place at noon on June 14, 2011. Participants may attend live in our classroom or watch the live webcast.

If you can’t make the live program or webcast, the program will also be available as a homestudy in two formats: video on-demand and mp3 download.

Colorado Supreme Court: Week of June 12, 2011 (No Opinions)

The Colorado Supreme Court issued no opinions for the week of June 12, 2011.

Colorado Court of Appeals: Doctrine of Ab Initio Not Applied to Civil Judgements Created by Restitution Orders as Restitution is Designed to Survive Defendant’s Death

The Colorado Court of Appeals issued its opinion in People v. Daly on June 9, 2011.

Restitution—Death of Defendant—Doctrine of Abatement Ab Initio.

Defendant was convicted at trial of a felony and was ordered to pay restitution to the victim; however, he died while his direct appeal was pending. The Court of Appeals raised the issue of whether defendant’s case should be remanded to the trial court to set aside the conviction and dismiss the charges against defendant.

The Attorney General argued that the doctrine of abatement ab initio should be abandoned and not applied to defendant’s conviction because defendant was ordered to pay restitution to the victim of his crime at the sentencing hearing. This presented an issue of first impression in Colorado. The Court concluded that defendant’s criminal conviction should be abated ab initio because he died before his direct appeal was resolved. However, because restitution is designed to survive a defendant’s death, the doctrine of ab initio does not apply to civil judgments created by restitution orders, such as the one here. The motion was granted in part and denied in part, and the appeal was dismissed in part.

This summary is published here courtesy of The Colorado Lawyer. Other summaries by the Colorado Court of Appeals on June 9, 2011, can be found here.

Tenth Circuit: Unpublished Opinions, 6/10/11

On Friday, June 10, 2011, the Tenth Circuit Court of Appeals issued no published opinions and six unpublished opinions.

Unpublished

McGinnis v. Freudenthal

Wonderly v. Franklin

United States v. Montoya

United States v. Rogers

United States v. Mason

McGregor v. Snyder, Jr.

No case summaries are available for unpublished opinions. However, published opinions are summarized and provided by Legal Connection.