August 17, 2017

Archives for May 9, 2016

Colorado Court of Appeals: Announcement Sheet, 5/5/2016

On Thursday, May 5, 2016, the Colorado Court of Appeals issued five published opinions and 27 unpublished opinions.

People v. Galang

People v. Janis

People v. Villanueva

In re Marriage of Vittetoe

Wal-Mart Stores, Inc. v. United Food & Commercial Workers International Union

Summaries of these cases are forthcoming, courtesy of The Colorado Lawyer.

Neither State Judicial nor the Colorado Bar Association provides case summaries for unpublished appellate opinions. The case announcement sheet is available here.

Tenth Circuit: Descendants of Sand Creek Massacre Victims Not Entitled to Reparations Accounting

The Tenth Circuit Court of Appeals issued its opinion in Flute v. United States on Tuesday, December 22, 2015.

As described by the Tenth Circuit, this case arose “out of an ignominious event in the history of this Nation.” In 1864, the United States Army conducted an unprovoked attack on a group of unarmed Indians of the Arapaho and Cheyenne Tribes, who had relocated to an area next to the Sand Creek River in the Territory of Colorado at the direction and under the protection of the Territorial Governor and Superintendent of Indian Affairs, John Evans. When what has become known as the Sand Creek Massacre was over, most of the Indians were dead, including many women and children.

After an investigation, the United States publicly acknowledged its role in the tragedy and agreed to pay reparations to certain survivors of the massacre. On October 14, 1865, the United States entered into the Treaty of Little Arkansas, which expresses the United States’ condemnation of “the gross and wanton outrages perpetrated against certain bands of Cheyenne and Arrapahoe Indians . . . at Sand Creek, Colorado Territory.” On July 26, 1866, the U.S. Congress appropriated funds to pay the reparations detailed in the Treaty of Little Arkansas.

According to Plaintiffs, the funds appropriated by Congress were insufficient to compensate all the victims of the massacre. Moreover, instead of paying reparations directly to the affected individuals as directed, the Secretary of the Interior paid some of the money directly to the Tribes. What funds were not distributed to the Tribes were returned to surplus on August 30, 1872. The United States has never provided an accounting of the reparations paid or attempted to identify the individuals to whom reparations were still owed.

Plaintiffs are descendants of the victims of the Sand Creek Massacre. They brought a class action on behalf of themselves and others similarly situated, alleging the United States acted in the capacity of a trustee over the funds appropriated under the Treaty of Little Arkansas and the 1866 Appropriations Act. Plaintiffs argue the Defendants are in breach of their trust obligations for failing to provide an accounting of the reparations funds held in trust for Plaintiffs’ ancestors. The district court dismissed Plaintiffs’ complaint under Rule 12(b)(1), finding it lacked jurisdiction because the United States had not waived sovereign immunity. This appeal followed.

The Tenth Circuit began its analysis with a discussion of sovereign immunity. The sovereign immunity enjoyed by the United States and its officers extends to injunctive relief, and therefore, it bars the relief sought by Plaintiffs here—an order directing the government to provide an accounting. Thus, to proceed against the government, the Plaintiffs must identify some statutory text that expressly and unequivocally waives sovereign immunity.

The Plaintiffs argued the United States’ waiver of sovereign immunity can be found in a series of statutes enacted by Congress appropriating funds to the Department of Interior (the most recent of which occurred in a 2009 appropriations act, hereinafter “2009 Act”), including some funds specifically appropriated for programs associated with Indian tribes (hereinafter collectively referred to as “the Appropriations Acts”). The Tenth Circuit held the 2009 Act, standing alone, does not waive sovereign immunity as the text of the 2009 Act never mentions sovereign immunity, nor does the 2009 Act relieve a plaintiff of the independent obligation to identify an express waiver of sovereign immunity in order to maintain an action against the government.

Second, despite the complete absence of an express waiver of sovereign immunity, Plaintiffs insisted that the 2009 Act constitutes a waiver of sovereign immunity, relying on the Federal Circuit Case Shoshone II. The court rejected Plaintiffs’ interpretation of Shoshone II, reasoning a plaintiff must satisfy two separate requirements to pursue a claim against the government: (1) identification of an express waiver of sovereign immunity, and (2) initiation of the suit before the statute of limitations for the plaintiff’s claim runs and effectively negates that waiver. Even if the 2009 Act were applicable here, the Tenth Circuit reasoned, Plaintiffs could meet only one of these requirements because the 2009 Act contains no express waiver of sovereign immunity.

Third, the Plaintiffs argued that the Treaty of Little Arkansas, in combination with the Appropriations Acts, created an enforceable trust relationship such that they are now entitled to an accounting from the Secretary of the Interior. The court rejected this argument, noting the Appropriations Acts are limited to claims for misappropriation of trust assets, and neither the Treaty of Little Arkansas nor the 1866 Appropriations Act imposes fiduciary trust obligations on the government. And in the absence of such a trust relationship, any purported waiver of immunity contained in the 2009 Act is inapplicable to Plaintiffs’ claims. As such, even if we agreed with Plaintiffs that the 2009 Act expressly waives the United States’ immunity, the court stated, it could not do so in this case. Accordingly, Plaintiffs were unable to identify a waiver of the United States’ sovereign immunity. Absent such a waiver, the courts lack the power to grant Plaintiffs relief, the Tenth Circuit held, thereby affirming the district court’s dismissal of the action for lack of subject matter jurisdiction.

Tenth Circuit: Bankruptcy Creditor Has Standing to Object to Potentially Fraudulent Conveyance of Real Property

The Tenth Circuit Court of Appeals issued its opinion in In re Lavenhar: Lavenhar v. First American Title Insurance Co. on Thursday, December 17, 2015.

On October 28, 2010, First American Title Insurance Company (“First American”) earned a judgment and damages award in its favor in the amount of $434,913.39, plus interest, in Colorado state court against Jeffrey Lavenhar. During the pendency of this litigation, Jeffrey and his then-wife Laurie initiated dissolution proceedings, resulting in the issuance of a divorce decree in November 2010, which incorporated a separation agreement dated October 26, 2010. The separation agreement required Jeffrey pay Laurie $4,400 per month in spousal maintenance, and also contained a provision stating the property located on Antelope Ridge Trial is and always has been the sole property of the Laurie H. Lavenhar Living Trust.

In seeking to collect its damages, First American filed suit against the Lavenhars and the Laurie H. Lavenhar Living Trust, asserting the transfer of Jeffrey’s interest in the Antelope Ridge Trail property to the Laurie H. Lavenhar Living Trust was a fraudulent conveyance. In addition to that independent lawsuit, First American sought to intervene in the Lavenhars’ divorce, seeking a declaration that the Lavenhars’ divorce proceeding was a fraud upon the court designed to hinder its ability to collect on the judgment against Jeffrey. The state divorce court granted First American’s motion to intervene.

Before the resolution of the various legal proceedings instituted by First American against the Lavenhars, Jeffrey filed a Chapter 7 bankruptcy petition. In response, First American filed a motion to lift the automatic stay as to the Antelope Ridge Trail property, asserting it should be able to litigate its state-court fraudulent conveyance action. The bankruptcy court denied the motion, concluding only the Chapter 7 Trustee had standing to bring such an action. Shortly thereafter, Laurie filed in the bankruptcy court a priority unsecured claim for domestic support obligations in the amount of $347,400. First American then filed a new motion to lift the automatic stay, seeking permission to litigate its complain in intervention of the Lavenhars’ divorce proceeding, which was granted in part by the bankruptcy court such that both First American and the Chapter 7 Trustee could litigate the complaint in intervention as to the single issue that would affect the validity of Laurie’s proof of claim, but not as to any other issues resolved in the divorce decree.

The district court affirmed the bankruptcy court’s partial lifting of the automatic stay, and Laurie appealed, asserting the bankruptcy and district courts erred in concluding First American has standing to litigate the validity of the component of the divorce decree addressing domestic support obligations via its state-court complaint in intervention.

On appeal, the Tenth Circuit Court of Appeals determined First American has standing to object to Laurie’s potentially fraudulent proof of claim for domestic support obligations. Next, the Tenth Circuit affirmed the order of the bankruptcy court partially lifting the automatic stay to allow the state divorce court to declare whether or not the Lavenhars’ divorce decree was obtained through fraud on the court. In so ruling, the Tenth Circuit reasoned there is no indication that the state divorce court cannot or will not comply with the limited scope of the bankruptcy court’s order lifting the stay. In rejecting Laurie’s argument that the validity of the property division is not separable from the validly of the spousal maintenance provision, both of which are contained in the separation agreement, the Tenth Circuit noted the Antelope Ride Trial property is and always has been the sole property of the Laurie H. Lavenhar Living Trust. Thus, the court reasoned it is simply not true that the issue the bankruptcy court allowed to proceed in the motion in intervention is inseparably intertwined with the property-transfer issues to be litigated by the Chapter 7 Trustee in the fraudulent conveyance action. Lastly, the court noted a ruling on First American’s behalf on the limited issue the bankruptcy court allowed to be litigated in the complaint in intervention would benefit all creditors equally, such that there exists no danger of intrusion on the exclusive prerogatives of the Chapter 7 Trustee.

Max Montag is a 2016 J.D. Candidate at the University of Denver Sturm College of Law.

Tenth Circuit: Declaratory Judgment Action Moot where Business Interests Sold During Litigation

The Tenth Circuit Court of Appeals issued its opinion in Schell v. OXY USA, Inc. on Monday, December 14, 2015, and modified the opinion on February 9, 2016.

The plaintiff class (appellees and cross-appellants in the Tenth Circuit) consists of approximately 2200 surface owners of Kansas land burdened by oil and gas leases held or operated by OXY, the appellant and cross-appellee. The leases contained a “free gas” clause that, in substance, purported to grant the lessor access to free gas for domestic use. In August 2007, OXY sent letters warning free gas users that their gas may become unsafe to use, either because of high hydrogen sulfide content or low pressure at the wellhead, as a result of the well reaching the end of their productive life.

On August 31, 2007, leaseholders David Schell, Donna Schell, Howard Pickens, and Ron Oliver filed this action on behalf of themselves and others similarly situated, seeking a permanent injunction and a declaratory judgment based on alleged breaches of mineral leases entered into with OXY for failure to supply free usable gas. The district court certified a class of all surface owners of Kansas land burdened by oil and gas leases held or operated by OXY which contain a free gas clause. Plaintiffs and OXY then filed cross-motions for summary judgment. The district court denied OXY’s motion for summary judgment and granted the plaintiffs’ motion for summary judgment. The district court granted the plaintiffs declaratory relief requiring OXY to provide free useable gas under the contract; however, the district court denied the plaintiffs’ motion for a permanent injunction.

Because the district court found that the free gas clauses were ambiguous and interpreted them according to principles of Kansas law, OXY moved to vacate the judgment to permit it to discover extrinsic evidence of the clauses’ meaning. The district court agreed and vacated its judgment. The district court subsequently granted plaintiffs’ resubmitted motion for summary judgment. It also denied plaintiffs’ motion for attorneys’ fees, expenses, and incentive awards. OXY then filed this appeal, and the plaintiffs cross-appealed. After the appeal and cross-appeal were filed, OXY sold all of its interests in the Kansas leases to Merit Hugoton, L.P. (“Merit”). The plaintiff class filed a motion to dismiss the appeal as moot based on this sale. The Tenth Circuit Court of Appeals permitted the appeal to proceed to briefing and oral argument. One week after oral argument, Merit filed a motion to intervene as an appellant and cross-appellee, which was denied by the Tenth Circuit.

The Tenth Circuit concluded the appeal is moot, thereby granting the motion of the plaintiff class to dismiss the appeal, reasoning OXY’s sale of the leases to Merit leads to the conclusion that its conduct cannot be affected by a declaratory judgment concerning the same leases. The Tenth Circuit dismissed OXY’s argument that the leaseholders could sue OXY over its prior conduct during the time when it was operating the wells, considering the fact that allowing OXY to continue the present litigation in order to protect itself from hypothetical unfiled future litigation would render the instant declaratory judgment action a prohibited advisory opinion. Further, the court stated Merit’s request to intervene does not change the conclusion that the declaratory judgment action is moot, in that the record is devoid of any evidence suggesting that a judgment against OXY would bind Merit with respect to the plaintiff class.

Next, the Tenth Circuit determined it was appropriate to dismiss the appeal without vacating the district court’s granting of the plaintiff class’s declaratory judgment action. Although the general rule is to vacate the judgment below when the case becomes moot on appeal, the court found OXY’s intentional conduct (i.e., selling of the leases to Merit) caused the issue over the free gas clauses of the leases to be moot, and that no other entity was more responsible for mooting the controversy, thereby justifying the equitable resolution of leaving in place the district court’s judgment granting the plaintiffs declaratory relief. To act otherwise, the court noted, would permit OXY to benefit from its voluntary act by wiping away a loss.

Lastly, with respect to plaintiffs’ cross-appeal challenging the district court’s denial of their motion for attorneys’ fees, expenses, and an incentive award, the Tenth Circuit determined it had jurisdiction over the matter, as the issue of attorneys’ fees (and related issues) was not moot, despite the mootness of the merits of the appeal. The Tenth Circuit then affirmed the district court’s holding that the plaintiff class has not shown a legally sound basis for an award of attorneys’ fees and other related relief. In so holding, the court found that neither the common-benefit exception to the American Rule nor 28 U.S.C. § 2202 was applicable. Because OXY sold all of the leases to Merit, the common benefit exception does not apply, as an award of attorneys’ fees under the exception would be an impermissible penalty on OXY. The Tenth Circuit affirmed the district court’s statement that there is no independent statutory or contractual basis for attorneys’ fees under § 2202.

Max Montag is a 2016 J.D. Candidate at the University of Denver Sturm College of Law.

Tenth Circuit: Unpublished Opinions, 5/6/2016

On Friday, May 6, 2016, the Tenth Circuit Court of Appeals issued no published opinion and one unpublished opinion.

Laurson v. Lind

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