March 4, 2015

Colorado Court of Appeals: Condemnors Have Absolute Right to Abandon Proceedings at Any Time Before Title Vests

The Colorado Court of Appeals issued its opinion in Sinclair Transformation Co. v. Sandberg on Thursday, June 5, 2014.

Condemnation—Interest on Attorney Fees—Surface Damage Bond—Dismissal by Petitioner.

Sinclair Pipeline Company (Sinclair) owns a pipeline system that transports petroleum products from Wyoming to Denver. Sinclair uses an easement that passes through respondents’ (landowners) property. Sinclair initiated this condemnation proceeding to secure the rights to lay a second pipeline on landowners’ property and use some of their property that, though underlying the original pipeline, was not within the easement. The district court found that Sinclair had condemnation authority to build the new pipeline and entered an order allowing it to take immediate possession of the properties to install it while continuing to use the original pipeline. In 2007, while the case was on appeal, Sinclair installed the new pipeline but did not put it to use.

Five years later, the Supreme Court concluded that Sinclair did not have statutory condemnation authority under CRS § 38-5-105. On remand, landowners sought $192,573.95 in attorney fees and costs, plus interest. Before the court ruled, Sinclair paid all the fees and costs without interest, which the district court determined landowners were not entitled to.

Sinclair filed a notice of abandonment of condemnation proceedings and a declaratory judgment action seeking to enjoin the landowners from removing the new pipeline and seeking recognition of its rights under the easement to operate the new pipeline. Landowners objected and filed counterclaims. The district court dismissed the condemnation action.

On appeal, landowners argued it was error to deny them interest on their attorney fees and costs. The Court disagreed. The fees were awarded under CRS § 38-1-122. There is no provision in any sections pointed to by landowners for a right to interest. Therefore, the district court correctly denied the request.

Landowners also argued it was error to dismiss the condemnation action instead of consolidating it with the declaratory judgment action. The Court disagreed. Condemnors have an absolute right to abandon condemnation proceedings at any point before title has vested.

Landowners further argued it was error for the district court not to determine their surface damages and apply Sinclair’s surface damage bond to reimburse them before dismissing the condemnation action. The district court based its decision on agreement by the parties that there were issues of material fact concerning the surface damages that could be resolved in the declaratory judgment action. Moreover, the surface damage bond and additional money deposited by Sinclair as security for its taking immediate possession of the property was transferred to the court registry for the declaratory judgment action. The Court perceived no error in proceeding in this manner. The judgment of dismissal and the orders were affirmed.

Summary and full case available here.

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