January 20, 2018

Archives for March 11, 2014

e-Legislative Report: March 10, 2014

CBA Legislative Policy Committee

For readers who are new to CBA legislative activity, the Legislative Policy Committee (LPC) is the CBA’s legislative policy-making arm during the legislative session. The LPC meets weekly during the legislative session to determine CBA positions on requests from the various sections and committees of the Bar Association.

Action taken at the LPC meeting on Friday, March 7:

  • The Committee voted to take a neutral position on HB 14-1285. Concerning a requirement that a professional tax preparer provide certain disclosures to a client when preparing tax documents for the client but suggest amendments to exclude attorneys from the application of the act.
  • The Committee voted to support and offer amendments to SB 14-98 Concerning clarifications to statutory language on crimes against at-risk elders.

At the Capitol—Week of March 3

A scorecard of the committee and floor work follows.

In the House

Monday, March 3

Passed 3rd Reading:

  • HB 14-1171. Concerning rules on forensic medical evidence in sexual assault cases. Vote: 59 yes, 0 no, and 6 excused.
  • SB 14-48. Concerning use of the most recent United States census bureau mortality table as evidence of the expectancy of continued life of any person in a civil action in Colorado. Vote: 59 yes, 0 no, and 6 excused.
  • HB 14-1002. Concerning the establishment of a grant program under the “Colorado Water Quality Control Act” to repair water infrastructure impacted by a natural disaster, and, in connection therewith, making an appropriation. Vote: 51 yes, 8 no, and 6 excused.
  • HB 14-1003. Concerning the exemption from state income tax of income that is earned by a nonresident individual working temporarily in the state to assist with disaster emergency relief activities, and, in connection therewith, making an appropriation. Vote: 59 yes, 0 no, and 6 excused.
  • HB 14-1006. Concerning the remittance of the marketing and promotion tax collected by lodging establishments in a local marketing district, and, in connection therewith, making an appropriation. Vote: 53 yes, 3 no, and 6 excused.

Tuesday, March 4

Passed 3rd Reading:

  • SB 14-83. Concerning reimbursement to be paid by a county to the state for costs incurred by the state in connection with the reappraisal of property in the county. Vote: 60 yes, 0 no, and 5 excused.
  • HB 14-1206. Concerning modifications to the “Colorado Charitable Solicitations Act,” and, in connection therewith, prohibiting certain charitable solicitation practices, modifying the secretary of state’s fining authority, adjusting registration statement requirements, and specifying requirements for appointing registered agents. Vote: 60 yes, 0 no, and 5 excused.
  • HB 14-1017. Concerning measures to expand the availability of affordable housing in the state, and, in connection therewith, making modifications to statutory provisions establishing the housing investment trust fund, the housing development grant fund, and the low-income housing tax credit; and making an appropriation. Vote: 36 yes, 24 no, and 5 excused.

Thursday, March 6

Passed on 3rd Reading:

  • HB 14-1186. Concerning the release of medical records to a person other than the patient, and, in connection therewith, setting reasonable fees to be paid for the release of the medical records. Vote: 58 yes, 0 no, and 7 absent or excused.
  • HB 14-1089. Concerning the qualification for a person to use the 10th mountain division license plate. Vote: 53 yes, 8 no, and 4 absent or excused.
  • HB 14-1148. Concerning guidelines for ensuring the rights of victims of crime to participate in the criminal justice system. Vote: 61 yes, 0 no, and 4 absent or excused.
  • SB 14-105. Concerning the elimination of the requirement that a portion of the fees collected for the water resources cash fund be transferred to the state general fund. Vote: 61 yes, 0 no, and 4 absent or excused.
  • SB 14-107. Concerning the continuation of the department of law’s authority to accept gifts, grants, and donations. Vote: 61 yes, 0 no, and 4 absent or excused.
  • SB 14-120. Concerning the continuous appropriation of certain amounts in the state employee workers’ compensation account in the risk management fund. Vote: 52 yes, 9 no, and 4 absent or excused.
  • HB 14-1274. Concerning the modification of certain limitations on the managers of a bank chartered by Colorado. Vote: 61 yes, 0 no, and 4 absent or excused.
  • HB 14-1271. Concerning extending a mental health provider’s duty to warn to include specific entities that, if purposefully damaged or attacked as a result of a mental health patient’s violent behavior, would jeopardize public health and safety. Vote: 61 yes, 0 no, and 4 absent or excused.
  • SB 14-59. Concerning eliminating the statute of limitations for offenses that accompany sex offenses that are not subject to a statute of limitations. Vote: 58 yes, 3 no, and 4 absent or excused.
  • SB 14-9. Concerning a disclosure of possible separate ownership of the mineral estate in the sale of real property. Vote: 46 yes, 15 no, and 4 absent or excused.

Friday, March 7

Passed on 3rd Reading:

  • HB 14-1042. Concerning access by birth parents to records relating to the relinquishment of parental rights, and, in connection therewith, making an appropriation. Vote: 61 yes, 0 no, and 4 excused.
  • HB 14-1257. Concerning the authority of the state auditor to conduct a performance audit of the Colorado health benefit exchange. Vote: 60 yes, 1 no, and 4 excused.
  • SB 14-43. Concerning the inclusion of certain land areas used to grow products that originate above the ground within the classification of “all other agricultural property” for property tax purposes. Vote: 61 yes, 0 no, and 4 excused.

In the Senate

Tuesday, March 4

Passed on 3rd Reading:

  • Consent Calendar: Vote: 34 yes, 0 no, and 1 excused.
    1. HB 14-1112. Concerning limited authorization for a county clerk and recorder to redact the first five digits of a social security number from a public document recorded with the clerk and recorder at the request of the individual to whom the social security number is assigned.
    2. HB 14-1051. Concerning a strategic plan for enrolling all eligible persons with intellectual and developmental disabilities into programs at the time services and supports are needed, and, in connection therewith, requiring the department of health care policy and financing to develop and implement the strategic plan and to report annually on the number of persons waiting for services and supports.
    3. HB 14-1174. Concerning the sunset review of the natural areas council. Vote: 33 yes, 1 no, and 1 excused.
  • SB 14-22. Concerning certified community development financial institutions, and, in connection therewith, authorizing such institutions to serve as a qualified holder and to present a request for full or partial release of collateral pledged without presentation of the original promissory note. Vote: 19 yes, 15 no, and 1 excused.
  • HB 14-1073. Concerning the recording of legal documents. Vote: 33 yes, 1 no, and 1 excused.
  • HB 14-1052. Concerning an increase in the enforcement authority of ground water management districts. Vote: 22 yes, 12 no, 1 excused.
  • HB 14-1122. Concerning provisions to keep legal marijuana from underage persons. Vote: 34 yes, 0 no, and 1 excused.
  • HB 14-1166. Concerning the renewal of concealed handgun permits by Colorado county sheriffs. Vote: 34 yes, 0 no, and 1 excused.

Wednesday, March 5

Passed on 3rd Reading:

  • HB 14-1065. Concerning limits on indemnification provisions in motor carrier transportation contracts. Vote: 33 yes and 2 no.
  • HB 14-1121. Concerning notice requirements for county highway contract bid solicitations, and, in connection therewith, increasing the threshold value of a contract for which a county must advertise in a newspaper in the county or post notice in the county courthouse from five thousand dollars to the amount at which a contract requires a contractor’s bond. Vote: 22 yes and 13 no.

Friday, March 7

Passed on 3rd Reading:

  • Consent Calendar: Vote 34 yes, 0 no and 1 excused.
    1. HB 14-1229. Concerning authorizing sharing information between state and local government agencies related to legal marijuana.
    2. HB 14-1215. Concerning the ability of a federal home loan bank to enforce its rights with regard to collateral subject to a security agreement.
    3. HB 14-1183. Concerning the reinstatement of the authority for active military personnel to practice professionally. Vote: 33 yes, 1 no, and 1 excused.

Stay tuned for ten bills of interest.

CBA Diversity in the Legal Profession Committee Inaugural Reception

The CBA Diversity in the Legal Profession Committee would like to welcome new members at its inaugural reception on Thursday, March 27, 2014. The committee is revamped and reenergized and has a new agenda. All are welcome to attend this reception. Please join committee chair Catherine Chan and other committee members for complimentary cocktails and appetizers, and find out more about the exciting new direction for the committee. Email lunches@cobar.org or call (303) 860-1115, ext. 727, to RSVP.

The Diversity in the Legal Profession (DILP) Committee is comprised of dedicated attorneys from the Denver and Colorado legal communities as well as representatives from the University of Colorado School of Law and the University of Denver College of Law.  Its mission is to break down the long-standing barriers that have prevented diverse attorneys from succeeding in the legal profession.  DILP’s goal is to cultivate diversity within the legal community and work with law schools, law students, practicing lawyers, and legal employers throughout Colorado to promote diversity at all levels.

Tenth Circuit: Appellant Entited to Evidentiary Hearing on Ineffective Assistance of Counsel Claim

The Tenth Circuit Court of Appeals published its opinion in Milton v. Miller on Friday, March 7, 2014.

Appellant Antonio Milton is an Oklahoma state prisoner serving a life sentence without parole for drug-trafficking-related convictions. After exhausting his state court remedies, Milton filed a petition for writ of habeas corpus pursuant to 28 U.S.C. § 2254 alleging that his counsel on direct appeal was ineffective for failing to assert a claim of ineffective assistance of trial counsel, specifically that Milton’s trial counsel failed to inform Milton of a favorable pretrial plea offer. The district court denied Milton’s petition, but the Tenth Circuit granted Milton a certificate of appealability to challenge the district court’s ruling.

The Tenth Circuit concluded that the Oklahoma state courts’ resolution of Milton’s ineffective assistance claim could not survive scrutiny under 28 U.S.C. § 2254(d)(1), and that unresolved issues of fact prevented the court from completing its de novo review of the claim. The court concluded that reasonable jurists could debate the merit of Petitioner’s claim of ineffective assistance based on the counsel’s alleged failure to inform him of the plea offer.

Milton argued on appeal that the OCCA’s resolution of his ineffective assistance of appellate counsel claim was contrary to, or an unreasonable application of, clearly established federal law. In turn, Milton argued, he was entitled to a federal evidentiary hearing to resolve his claim.

Milton correctly identified Strickland v. Washington, 466 U.S. 668 (1984) as the clearly established federal law applicable to his ineffective assistance of appellate counsel claim. Milton challenged the Oklahoma Court of Appeals (OCCA’s) analysis of his ineffective assistance of appellate counsel claim, arguing that the OCCA’s decision was both contrary to and an unreasonable application of clearly established federal law because the OCCA misstated the legal tests governing the proper inquiry under federal law.

The Tenth Circuit agreed with Milton that the OCCA misstated the standard for analyzing the issue of whether appellate counsel’s performance was deficient. The result was the requirement that the Tenth Circuit review de novo Milton’s ineffective assistance of counsel claim, rather than deferring to the OCCA’s resolution of that claim.

In applying the two-pronged Strickland test, the Tenth Circuit agreed with Milton that Milton’s appellate counsel clearly performed deficiently in failing to promptly and meaningfully convey to Milton the existence of a plea offer made by the prosecution at some point prior to the October 30, 2007 preliminary hearing. The focus then turned to the second prong of the Strickland analysis, i.e., whether Milton was prejudiced by his appellate counsel’s deficient performance. The court concluded there was conflicting evidence in the record regarding the precise nature of the plea offer that was purportedly made by the prosecution prior to the October 30, 2007 preliminary hearing. The court concluded there was a reasonable probability that, had Milton’s appellate counsel raised on direct appeal the issue of whether trial counsel failed to inform Milton of the pre-preliminary hearing plea bargain, Milton would have prevailed on this issue in his direct appeal.

The Tenth Circuit held that Mr. Milton was entitled to a federal evidentiary hearing to resolve the disputed factual issues relating to his ineffective assistance of appellate counsel claim, since disputed issues of fact existed that precluded the court from completing its de novo review of Milton’s ineffective assistance of appellate counsel claim.

The Tenth Circuit REVERSED and REMANDED to the district court with directions to conduct an evidentiary hearing on, and to subsequently review on the merits, Milton’s ineffective assistance of appellate counsel claim.

Tenth Circuit: Tax Court Did Not Err in Concluding Highest and Best Use for Property Was Agriculture Before Conservation Easement Was Granted

The Tenth Circuit Court of Appeals published its opinion in Esgar Corporation v. Commissioner of Internal Revenue on Friday, March 7, 2014.

On December 17, 2004, the Taxpayers (Esgar Corporation, George and Georgetta Tempel, and Delmar and Patricia Holmes) each donated a conservation easement over their respective property to the Greenlands Reserve. The donations granted a perpetual easement over the properties, giving Greenlands the right to preserve the natural condition of the land and protect its biological, ecological, and environmental characteristics.

The Taxpayers claimed charitable deductions on their 2004, 2005, and 2006 tax returns for “qualified conservation contributions” under I.R.C. §170(f)(3)(B)(iii). The Taxpayers engaged William Milenski to appraise their contributions. Mr. Milenski concluded that, had the conservation easements not been granted, the properties would have realized their greatest potential as a gravel mining operation. Based on the value of that relinquished use, Mr. Milenski valued each of the Taxpayers’ conservation easements. Also as a result of their donations, the Taxpayers received transferable tax credits from the State of Colorado. Within two weeks of receiving the credits, the Taxpayers sold portions of their credits to third parties.

After an audit of the Taxpayers’ 2004, 2005, and 2006 returns, the Commissioner determined that the Taxpayers’ conservation easements were in fact valueless and that the sales proceeds from their state tax credits should be reported as ordinary income. The Commissioner issued notices of deficiency for the 2004, 2005, and 2006 tax years.

A trial was held where the only issue was the highest and best use of  property before the easement. The Commissioner argued it was agriculture and the Taxpayers argued it was gravel mining. The Tax Court sided with the Commissioner and this appeal followed.

The Taxpayers first argued that the Tax Court erred by placing on them the burden of proving the before value of their properties. Generally, deductions are a matter of legislative grace, and a taxpayer bears the burden of proving entitlement to any claimed deduction. However, Section 7491(a) of the I.R.C. shifts the burden of proof to the Commissioner on any factual issue that the taxpayer supports with credible evidence. The Taxpayers argued that they introduced credible evidence that gravel mining was their properties’ highest and best use, thus shifting the burden to the Commissioner. However, the Tenth Circuit held that Section 7491 does not require burden shift when, as here, both parties produced evidence and the evidence weighed in the Commissioner’s favor.

The Taxpayers also argued that the Tax Court erred by drawing an adverse factual inference against them. The Tax Court stated: “Neither [the Taxpayers] nor their experts provided us with an estimate of remaining aggregate. [The Taxpayers] own the land on which the Midwestern Farms Pit is situated and chose not to provide information on the amount of aggregate remaining. Their failure to introduce evidence “which if true, would be favorable to . . . [them], gives rise to the presumption that if produced it would be unfavorable.”

The Taxpayers argued that it was impermissible to use this “missing evidence” inference against them, given that the burden of proof rested with the Commissioner. The Tenth Circuit disagreed. It is the function of the Tax Court to draw appropriate inferences, and choose between conflicting inferences in finding the facts of a case.

Next, the Taxpayers argued that the Tax Court applied erroneous legal standards to value their conservation easements. They made two arguments: (1) that the Tax Court erred by adopting the properties’ current use as its highest and best use rather than taking a “development-based approach,” and (2) that the Tax Court erred by citing eminent domain principles in reaching its valuation determination.

Valuation does not depend on whether the owner actually has put the property to its highest and best use. Rather, courts must focus on the highest and most profitable use for which the property is adaptable and needed or likely to be needed in the reasonably near future. After taking into account the properties’ current use and the fact that the likelihood of development was remote, the Tax Court certainly could find that the properties’ current use, agriculture, was its highest and best use. The Tax Court applied the correct highest and best use standard, looking for the use that was most reasonably probable in the reasonably near future, and it did not clearly err by concluding that use was agriculture.

The Taxpayers argued that eminent domain principles—standards used to value property to determine just compensation—were inapplicable when valuing conservation easements. Just compensation valuation requires an identical finding, i.e., the “highest and most profitable use” for which the property was suited before the taking. The objective assessment that the Treasury Regulations require do not materially differ from those used to determine the highest and best use of property for just compensation valuation.

Finally, the Taxpayers argued that their state tax credits, which they held for about two weeks, were long-term capital assets. However, the Tenth Circuit held that the Tax Court correctly concluded that the Taxpayers had no property rights in a conservation easement contribution State tax credit until the donation was complete and the credits were granted. The credits never were, nor did they become, part of the Taxpayers’ real property rights. Instead, the Taxpayers’ holding period in their credits began at the time the credits were granted and ended when petitioners sold them. Since petitioners sold their State tax credits in the same month in which they received them, the capital gains from the sale of the credits were short term.

AFFIRMED.

Tenth Circuit: Unpublished Opinions, 3/7/2014

On Friday, March 7, 2014, the Tenth Circuit Court of Appeals issued three published opinions and three unpublished opinions.

United States v. Norwood

Wildearth Guardians v. Bidegain

United States v. Bustamante-Conchas

Case summaries are not provided for unpublished opinions. However, published opinions are summarized and provided by Legal Connection.