May 26, 2016

Colorado Court of Appeals: Choice of Law Provision Unambiguously Governs Contract

The Colorado Court of Appeals issued its opinion in Mountain States Adjustment v. Cooke on Thursday, May 19, 2016.

Summary Judgment—Debt Collection—Choice of Law Provision.

In August 2004, Cooke signed a note (Note) with Commercial Federal Bank (CFB) for a home equity loan. Cooke resided in Colorado and the home that was collateral for the Note (subject property) was in Colorado. CFB was headquartered in Nebraska and the Note stated that it was “governed by federal law, and to the extent applicable, the laws of Nebraska.”

CFB merged into Bank of the West, a California bank, in December 2005. Cooke’s  repayment terms under the Note didn’t change as a result nor was he asked to sign a new agreement. In April 2009, the company holding the first mortgage on the subject property commenced foreclosure proceedings. Bank of the West did not participate, but on June 19, 2009, Bank of the West sent a “30 Day Notice of Demand and Intent to Accelerate” letter to Cooke.

On February 14, 2014, Bank of the West assigned Cooke’s note to Mountain States Adjustment (MSA). On July 15, 2014, MSA filed this collection action against Cooke in Denver District Court. Cooke answered and alleged an affirmative defense that MSA’s claim was barred by the applicable statute of limitations.

In January 2015, MSA filed a motion for summary judgment alleging that Cooke admitted to being the signatory under the Note and that the facts were undisputed that he was in default. Cooke filed a cross-motion for summary judgment asserting that MSA’s claim was barred by the five-year statute of limitations set forth in Nebraska law. The district court decided that Colorado law and its six-year statute of limitations applied and entered summary judgment in MSA’s favor. The sole issue on appeal was whether it was error to hold that Colorado law applied.

The Court of Appeals found the choice of law terms in the Note were clear, express, and unambiguous. As a matter of law, Nebraska law governs the statute of limitations issue because the undisputed record shows both that Nebraska had a substantial relationship to the parties or the transaction and that there was a reasonable basis for the contracting parties’ choice of law. Because it was undisputed that MSA filed its complaint outside of the applicable Nebraska limitations period, MSA’s claim was barred and Cooke was entitled to entry of judgment in his favor.

The judgment was reversed and the case was remanded.

Summary provided courtesy of The Colorado Lawyer.

Colorado Supreme Court: Colorado Governmental Immunity Act Does Not Apply to Prospective Injury

The Colorado Supreme Court issued its opinion in Open Door Ministries v. Lipschuetz on Monday, May 23, 2016.

Colorado Governmental Immunity Act—Injury—Nature of Action.

The Supreme Court held that the Colorado Governmental Immunity Act (CGIA), CRS §§ 24-10-101 to -120, does not bar claims for prospective relief from a future injury. Open Door Ministries (Open Door) had not suffered an injury by the time it filed its cross-claims against the City and County of Denver. Therefore, Open Door’s cross-claims—which sought prospective relief to prevent a future injury—were not subject to the CGIA. Open Door was not required to comply with the CGIA’s notice provision, and the trial court had jurisdiction over the cross-claims.

Summary provided courtesy of The Colorado Lawyer.

Unaccompanied Homeless Youth Tuition Bill, Debt-Free Schools Act Bill, and More Signed

On Tuesday, May 17, 2016, Governor Hickenlooper signed five bills into law. To date, he has signed 177 bills this legislative session. The bills signed Tuesday include a bill to determine domicile status for in-state tuition purposes for unaccompanied homeless youth, a bill to consider whether health plans should be offered based on a single geographic area, and more. The bills signed Tuesday are summarized here.

  • HB 16-1100 – Concerning the Ability of Unaccompanied Homeless Youth to Determine Domicile for Purposes of In-State Tuition Status at Institutions of Higher Education, by Reps. Brittany Pettersen & Daneya Esgar and Sen. John Cooke. The bill adds “unaccompanied homeless youth” to the list of persons who are qualified to determine their own domicile and to be classified as a resident for tuition purposes at state supported institutions of higher education.
  • HB 16-1276 – Concerning the Division of Reclamation, Mining, and Safety’s Ability to Conduct Emergency Responses at Legacy Hard Rock Mining Sites, by Reps. Millie Hamner & Don Coram and Sens. Ellen Roberts & Kerry Donovan. The bill allows the Division of Reclamation, Mining, and Safety to use funds from the Emergency Response Cash Fund to conduct an emergency response when circumstances exist at a legacy mine site that create a danger to public health or welfare, or to the environment.
  • HB 16-1336 – Concerning the Creation of a Single Geographic Rating Area for Health Insurers to Use When Establishing Rates for Individual Health Insurance Plans, by Reps. Millie Hamner & Bob Rankin and Sen. Kerry Donovan. The bill requires the Commissioner of Insurance to conduct a study to determine the impacts and viability of establishing a single geographic area for use in determining the premium rates for individual health insurance plans issued in Colorado.
  • HB 16-1354 – Concerning Authorization for a School District to Impose an Additional Mill Levy for the Sole Purpose of Funding Capital Construction, New Technology, Existing Technology Upgrade, and Maintenance Needs of the District Without Borrowing Money, by Reps. Diane Mitsch Bush & Jon Becker and Sen. Jerry Sonnenberg. The bill, known as the “Debt-Free Schools Act,” authorizes a school district, with voter approval, to impose an additional mill levy for the sole purpose of cash funding its capital construction and facility maintenance needs without borrowing money.
  • SB 16-021 – Concerning Recognition of the Third Saturday in May as a State Holiday, and, in Connection Therewith, Designating the Third Saturday in May as “Public Lands Day,” by Sen. Kerry Donovan and Reps. Diane Mitsch Bush & KC Becker. The bill creates a new holiday, “Public Lands Day,” on the third Saturday in May.

For a complete list of Governor Hickenlooper’s 2016 legislative decisions, click here.

Colorado Supreme Court: Holder-in-Due-Course Status Does Not Preclude Forgery Defense

The Colorado Supreme Court issued its opinion in Liberty Mortgage Corp. v. Fiscus on Monday, May 16, 2016.

Negotiable Instruments—Holders in Due Course—Forgery—Ratification—Negligent Contribution.

Respondent Fiscus’s wife forged his name on three powers of attorney and used them to procure a promissory note that was ultimately assigned to petitioner Branch Banking and Trust Company. The note was secured by a deed of trust purporting to encumber property held in Fiscus’s name alone. Branch Banking and Trust claimed holder-in-due-course status under Article 3 of Colorado’s Uniform Commercial Code, and Fiscus raised a forgery defense. The Court of Appeals held that Article 3 does not apply to deeds of trust because they are not “negotiable instruments” as defined in the Code. The Supreme Court held that, even assuming Article 3 applies to such deeds of trust, holder-in-due-course status does not preclude a purported maker from asserting a forgery defense. Thus, because Fiscus had a valid forgery defense, not barred by any negligence or ratification on his part, the Court affirmed the judgment of the Court of Appeals but on different grounds. The Court did not address the negotiability of deeds of trust that secure promissory notes under Article 3.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Permanent Injunction Barring Trespass Not Preempted by NLRA

The Colorado Court of Appeals issued its opinion in Wal-Mart Stores, Inc. v. United Food & Commercial Workers International Union on Thursday, May 5, 2016.

Unions—Trespass—Permanent Injunction—National Labor Relations Act—Preemption—Subject Matter Jurisdiction.

United Food and Commercial Workers International Union (UFCW) and Organization United for Respect at Walmart (collectively, unions) engaged in demonstrations at Walmart stores at several locations in Colorado. In response, Walmart mailed a letter to UFCW’s general counsel asking him to direct the unions to immediately cease protesting on Walmart’s property. When the activities continued, Walmart filed an unfair labor practice charge (labor charge) with the National Labor Relations Board (Board), claiming that the unions violated the National Labor Relations Act (NLRA). This charge was later dismissed by Walmart. However, Walmart then filed a complaint for injunctive and declaratory relief from trespass in district court, requesting a permanent injunction enjoining the unions from engaging in certain types of activities on Walmart’s property. The unions filed a motion to dismiss under C.R.C.P. 12(b)(1), claiming the NLRA preemption deprived the district court of subject matter jurisdiction. The court denied the motion and then granted Walmart’s motion for summary judgment.

On appeal, the unions argued that the district court erred in denying their motion to dismiss because Walmart’s lawsuit is preempted by the NLRA. The federal issue in Walmart’s labor charge is unrelated to the trespass issue in Walmart’s state claim, and therefore the controversies are not identical. The NLRA does not arguably prohibit, and thus does not preempt, Walmart’s state claim to enjoin the unions from trespassing on its premises.

The unions also argued that, assuming the district court has subject matter jurisdiction over their activities, it applied the incorrect legal standard and erred by granting Walmart’s motion for summary judgment and permanently enjoining the unions from trespassing at Walmart-owned stores that are subject to Walmart’s nonexclusive easements over the property. The unions contended that because the properties contain nonexclusive easements, Walmart does not have exclusive possession of them and the district court should have required Walmart to show that the unions’ activity unreasonably interfered with Walmart’s use and enjoyment of the property. The unions do not dispute that Walmart possesses and has title to the property in question. Thus, to sustain its trespass claim, Walmart only had to prove that the unions entered its property without its permission. Accordingly, the court did not abuse its discretion by issuing the injunction.

The judgment was affirmed.

Summary provided courtesy of The Colorado Lawyer.

Tenth Circuit: Mandamus Unavailable when Appeal in Normal Course will Supply Remedy

The Tenth Circuit Court of Appeals issued its opinion in Feinberg v. Commissioner of Internal Revenue on Friday, December 18, 2015.

Petitioners Neil Feinberg, Andrea Feinberg, and Kellie McDonald operate Total Health Concepts, or THC, an authorized Colorado marijuana dispensary. After the Internal Revenue Service (“IRS”) disallowed their business expense deductions and sent them a large bill, on the ground that their conduct violates federal criminal drug laws, the petitioners challenged that ruling in tax court. In the tax court proceedings, the IRS issued discovery requests asking the petitioners about the nature of their business in order to establish that petitioners are indeed trafficking in marijuana. The petitioners resisted these requests by asserting that their Fifth Amendment privilege against self-incrimination relieved them of the duty to respond. In response, the IRS filed with the tax court a motion to compel production of the discovery it sought, arguing because the Department of Justice’s memorandum on the legalization of marijuana by the states generally instruct federal prosecutors not to prosecute cases like this one, the petitioners should be forced to divulge the requested information. The tax court granted the motion to compel and ordered the petitioners to produce the requested discovery. In seeking to overturn this ruling, because the tax court proceedings were ongoing, the petitioners sought a writ of mandamus from the Tenth Circuit Court of Appeals.

The Tenth Circuit ultimately denied the petition for a writ of mandamus made by petitioners. The court based this denial on two independent grounds. First, the court invoked the rule that a writ of mandamus isn’t available when an appeal in the normal course would suffice to supply any necessary remedy, and more specifically, the rule established in Mid-America’s Process Service v Ellison, that any error in a court’s order compelling production of civil discovery that the petitioners believed protected the Fifth Amendment could be satisfactorily redressed in an appeal after final judgment. The court found the rule in Mid-America’s Process Service is controlling and dispositive of the issue.

Alternatively, the Tenth Circuit determined even if Mid-America’s Process Service didn’t control this case at bar, the petitioners offered no persuasive reason for thinking an appeal after final judgment would fail to remedy any wrong they might suffer. The court left open the possibility that a future party in this context may be able to put fourth a convincing argument as to why the immediate remedy of mandamus is necessary to prevent an irreparable injury. However, the petitioners here were unable to do so. And that by itself, the court reasoned, supplies an independent reason – beyond the controlling precedent of Mid-America’s Process Service – to withhold the extraordinary remedy of mandamus in this case.

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.

Top Ten Reasons to Attend the Rocky Mountain Intellectual Property Institute

Each year, Colorado Bar Association CLE hosts the Rocky Mountain Intellectual Property & Technology Institute, the “place to be for the best IP.” In case you haven’t yet registered for this year’s event, here are the Top Ten Reasons to Attend:

Top Ten Reasons to Attend the 2016 Intellectual Property & Technology Institute

10. Anyone who’s anyone will be there! And if you’re not there, anyone who’s anyone will know.
9. Patents … Trademarks …Copyrights … Licensing …Technology & Transactions!
8. Learn best practices and practical tips that you can apply immediately.
7. Special panels of USPTO patent judges and SPEs discussing developments at the USPTO.
6. Over 40 sessions presented by an all-star faculty of leading IP practitioners.
5. Grow your professional contacts through networking opportunities with IP attorneys from … well … from all over!
4. Receive the digital course materials AND the MP3 audio download for the ENTIRE Institute!
3. Some of the best from across the nation come together to share their knowledge & insights with you!
2. Annual case law updates of all branches of IP law.
1. This Institute has quickly become “the place to be for the best IP” in the western United States!

If that wasn’t enough to convince you, watch this video of Rocky Mountain Regional U.S. Patent & Trademark Office Director Molly Kocialski and Program Chair Nate Trelease explaining what you’ll learn at the Institute:

Don’t miss the 14th Annual Rocky Mountain Intellectual Property & Technology Institute! Register today.

CLE Program — 14th Annual Rocky Mountain Intellectual Property & Technology Institute

This CLE presentation will occur on June 2-3, 2016, at the Westin Westminster Hotel. Register online or call (303) 860-0608. Can’t make the live program? Order the homestudy here: CDMP3

Long Appropriations Bill, SCFD Bill, and Many More Signed by Governor

On Wednesday, May 4, 2016, Governor Hickenlooper signed 24 bills into law. Many of the bills signed Wednesday addressed transfers of moneys and financing. Some of the other bills signed Wednesday include a bill addressing the location where competency evaluations should be completed, a bill enacting statutory changes recommended by the Child Support Commission, and a bill regarding transfers of property rights on death.

Additionally, on May 3, Governor Hickenlooper signed the Long Appropriations Bill for 2016-17, HB 16-1405, and on April 29, Governor Hickenlooper signed SB 16-016, which will allow the submission of a ballot question to voters regarding extending the funding for the Scientific and Cultural Facilities District for twelve more years. To date, the governor has signed 167 bills this legislative session. The bills signed by Governor Hickenlooper this past week are summarized here.

April 29, 2016

  • SB 16-016 – Concerning the Scientific and Cultural Facilities District, and, in Connection Therewith, Amending the Ballot Question Concerning the Extension of the District to be Submitted to the Voters and Modifying Statutory Provisions Concerning the Administration of the District, by Sens. Pat Steadman & Bill Cadman and Reps. Dickey Lee Hullinghorst & Polly Lawrence. The bill allows the SCFD to submit a ballot question to district voters at the 2016 or 2017 November election authorizing the extension of the tax for 12 years through June 30, 2030, and changes the SCFD funding formula.

May 2, 2016

  • HB 16-1405 – The 2016-17 Long Appropriations Bill, by Rep. Millie Hamner and Sen. Kent Lambert. The bill sets forth the budget for the 2016-17 fiscal year.

May 3, 2016

  • HB 16-1048 – Concerning Modifications to the Business Enterprise Program to be Administered by the Department of Labor and Employment Under its Authority to Administer Vocational Rehabilitation Programs, by Rep. Dianne Primavera and Sen. Kevin Lundberg. The bill establishes a working group in the Colorado Department of Labor and Employment to study ways to expand opportunities for Business Enterprise Program vendors.
  • HB 16-1158 – Concerning Continuation Under the Sunset Law of the Identity Theft and Financial Fraud Board, by Rep. Pete Lee and Sen. Chris Holbert. The bill extends the sunset of the Identity Theft and Financial Fraud Board until September 1, 2025.
  • HB 16-1159 – Concerning Continuation Under the Sunset Law of the Colorado Fraud Investigators Unit, by Rep. Pete Lee and Sen. Chris Holbert. The bill extends the sunset of the Colorado Fraud Investigators Unit until September 1, 2025.
  • HB 16-1165 – Concerning Statutory Changes Based on the Recommendations in the Report of the 2013-2015 Colorado Child Support Commission, by Reps. KC Becker & Lois Landgraf and Sen. Larry Crowder. The bill amends child support guidelines and related statutes based on the findings of the Colorado Child Support Commission, including allowing discovery of insurance claims, requiring an annual exchange of financial information between parents, changing the formula to determine gross income, limiting the period in which a party can seek retroactive child support, and more.
  • HB 16-1268 – Concerning District Attorney’s Representation in Certain Hearings Arising from Interstate Supervision Contracts, by Rep. Mike Foote and Sen. John Cooke. The bill clarifies that a district attorney must appear on behalf of the state and counties of his or her district in any probable cause hearing for a matter under the Interstate Compact for Adult Offender Supervision or the Interstate Compact for Juveniles.
  • HB 16-1298 – Concerning Changes in Permissible Vehicle Dimensions, by Rep. Jovan Melton and Sen. John Cooke. The bill changes the maximum permissible vehicle dimensions.
  • HB 16-1317 – Concerning Clarifying the Types of Transactions that May Be Included in a Motor Vehicle Service Contract, by Rep. Angela Williams and Sen. Chris Holbert. The bill authorizes certain services to be included in a motor vehicle service contract, including tire and windshield repair, key fob repair, and more.
  • HB 16-1379 – Concerning the Criteria Under Which the State Board of Psychologist Examiners May Award Professional Development Credit for Specific Activities Currently Included in the Continuing Professional Development Program for Licensed Psychologists, by Rep. Tracy Kraft-Tharp and Sen. Beth Martinez Humenik. The bill clarifies and amends portions of the continuing professional development program for licensed psychologists, including allowing credit hours for teaching or giving presentations; allowing credit hours for writing, editing, or reviewing psychology publications; and limiting the award of credit hours to review of peer review journal articles.
  • HB 16-1406 – Concerning Department of Corrections Reimbursement of Expenses of County Coroners, and, in Connection Therewith, Making an Appropriation, by Rep. Dave Young and Sen. Kevin Grantham. The bill requires the Department of Corrections (DOC) to reimburse a county for reasonable and necessary costs related to investigations or autopsies for persons who were in the custody of the DOC at the time of their death. Costs may include transportation, refrigeration, and body bags.
  • HB 16-1407 – Concerning the Continuation of the Medicaid Payment Reform and Innovation Pilot Program, and, in Connection Therewith, Changing the Time Frames, Eliminating the Repeal Date of the Pilot Program, Enhancing the Reporting Requirements of the Department of Health Care Policy and Financing, and Making an Appropriation, by Rep. Dave Young and Sen. Kevin Grantham. The bill removes the July 1, 2013, deadline for HCPF to review and select payment projects for inclusion in the Medicaid Payment Reform and Innovation Pilot Program, and removes the June 30, 2016, deadline by which payment projects must be completed.
  • HB 16-1408 – Concerning the Allocation of Cash Fund Revenues to Health-Related Programs, and, in Connection Therewith, Modifying and Streamlining the Allocation of Tobacco Litigation Settlement Moneys by Replacing the Current Two-Tier Allocation System that Includes Both Percentage-Based and Fixed Amount Allocations of Settlement Moneys with a Single Set of Exclusively Percentage-Based Allocations and Replacing Settlement Moneys Funding for Specified Programs with Marijuana Tax Cash Fund Funding; Allocating Additional Settlement Moneys to the University of Colorado Health Sciences Center for Cancer Research Only; Transferring a Specified Amount from the Children’s Basic Health Plan Trust to a Newly Created Primary Care Provider Sustainability Fund on July 1, 2016; and Making and Reducing Appropriations, by Rep. Bob Rankin and Sen. Pat Steadman. The bill establishes a new formula for the allocation of the annual payment received by the state as part of the Tobacco Master Settlement Agreement, allocating revenue by percentage shares, rather than the hybrid scheme of fixed dollar amounts and capped percentage shares in multiple tiers.
  • HB 16-1409 – Concerning the Transfer of Forty-Two Million Eight Hundred Thousand Dollars on June 30, 2016, from the Unclaimed Property Trust Fund for State Programs, by Rep. Bob Rankin and Sen. Pat Steadman. The bill transfers $42,800,000 out of the Unclaimed Property Trust Fund and places it in the General Fund and the Adult Dental Fund.
  • HB 16-1410 – Concerning Matters Related to the Location Where a Competency Evaluation is Conducted, and, in Connection Therewith, Making and Reducing Appropriations, by Rep. Dave Young and Sen. Kevin Grantham. The bill changes procedures around competency evaluations in criminal proceedings, including requiring the court to order the evaluation to take place on an outpatient basis or, if the defendant is in custody, at the place where the defendant is in custody.
  • HB 16-1411 – Concerning the Supportive Residential Community Program Operated at the Fort Lyon Property, and, in Connection Therewith, Requiring a Longitudinal Evaluation of the Program; and Making an Appropriation, by Rep. Bob Rankin and Sen. Pat Steadman. The bill repeals the supportive residential community for individuals who are homeless at the Fort Lyon property in Bent County, and requires a longitudinal study of the program prior to its repeal.
  • HB 16-1413 – Concerning the Financing of the Water Pollution Control Program, and, in Connection Therewith, Making an Appropriation, by Rep. Bob Rankin and Sen. Kevin Grantham. The bill repeals the Water Quality Control Fund and creates a separate cash fund for each of the six clean water sectors, which will receive the fees specific to its sector.
  • HB 16-1415 – Concerning the Manner in which the State Funds Driver and Vehicle Services by the Division of Motor Vehicles in the Department of Revenue, and, in Connection Therewith, Making and Reducing an Appropriation, by Rep. Millie Hamner and Sen. Pat Steadman. The bill changes the way the state funds driver and vehicle services in the DMV, by increasing the fees charged for services, allowing for funding through the Highway Users Tax Fund, eliminating the end of the year transfer of the excess reserve from the Licensing Services Cash Fund to the HUTF, and exempting the LCSF from the limit on cash reserves.
  • HB 16-1417 – Concerning Capital-Related Transfers of Moneys, by Rep. Millie Hamner and Sen. Kent Lambert. The bill makes three FY 2016-17 transfers to the Capital Construction Fund from several sources.
  • HB 16-1418 – Concerning a Transfer from the Marijuana Tax Cash Fund to the General Fund, by Rep. Bob Rankin and Sen. Pat Steadman. The bill transfers $26,277,661 from the Marijuana Tax Cash Fund (MTCF) to the General Fund.
  • HB 16-1419 – Concerning a Reduction in the Amount of the General Fund Reserve Required for the Fiscal Year 2015-16, by Rep. Millie Hamner and Sen. Kent Lambert. The bill reduces the FY 2015-16 statutory General Fund reserve from 6.5 percent to 5.6 percent.
  • SB 16-058 – Concerning the Regulation of Certain Foods, and, in Connection Therewith, Exempting Certain Food Producers from Licensure, Inspection, and Other Regulation, and Making an Appropriation, by Sen. Owen Hill and Rep. KC Becker. The bill modifies the “Colorado Cottage Foods Act,” which allows homemade food producers to sell certain food products directly to consumers, by eliminating the tiered system and the State Board of Health’s authority to make rules governing the production of tier two foods, which currently consist of pickled vegetables, and by expanding the type of foods that may be sold by producers under the Cottage Foods Act to include other nonpotentially hazardous foods and encouraging, rather than mandating, a producer to take a food safety course.
  • SB 16-126 – Concerning Parity of State-Chartered Banks with Federally Chartered Banks Regarding Frequency of Meeting, by Sen. Ellen Roberts and Reps. Alec Garnett & Dan Nordberg. Under current law, the board of directors for a state bank is required to meet monthly. This bill requires those meetings to be held at least quarterly unless the board specifies a different schedule.
  • SB 16-133 – Concerning the Transfer of Property Rights Upon the Death of a Person, and, in Connection Therewith, Clarifying Determination-of-Heirship Proceedings in Probate, by Sen. Jack Tate and Reps. Dan Pabon & Yeulin Willett. The bill changes procedures for affirming the death of a decedent with shared ownership of real property, and makes changes to probate law for determining heirs, devisees, and property interests. It changes the definition of “interested person” to include an owner by descent or succession and to exclude any person holding a non-ownership interest in a decedent’s property. The bill also enacts portions of the “Uniform Power of Appointment Act.”
  • SB 16-137 – Concerning a Clarification of the Authority of the Parks and Wildlife Commission to Enter Into an Agreement with a Private Landowner, by Sens. Mike Johnston & Jerry Sonnenberg and Rep. Timothy Dore. The bill clarifies that the preference program does not limit the Colorado Parks and Wildlife Commission from entering into an agreement with a private landowner for public hunting and fishing and including the issuance of a hunting license in that agreement.

For a complete list of Governor Hickenlooper’s 2016 legislative decisions, click here.

SB 16-197: Allowing Liquor-License Drugstores to Open Five Additional Stores on Same License

On April 22, 2016, Sen. Pat Steadman introduced SB 16-197Concerning the Retail Sale of Alcohol Beverages. The bill was assigned to the Senate Business, Labor, & Technology Committee.

The bill establishes a number of requirements with respect to the licensing of alcohol retailers, as well as establishing requirements for the distribution and sale of alcohol by licensed wholesalers, retailers, and their employees.

First, on or after January 1, 2017 and before January 1, 2027, a liquor-licensed drugstore (“LLD”) seeking to obtain an additional LLD license must apply to the state and local licensing authorities, as part of a single application, for a transfer of ownership of two retail liquor stores, a change of location, and a merger and conversion of the two retail liquor stores. A LLD licensee may make said application only if: (1) the LLD pays a minimum purchase price of $350,000 per retail liquor store to acquire ownership of the two licensed retail liquor stores; (2) the two retail liquor stores are located within the same local licensing authority jurisdiction as the premises for which the applicant is seeking a LLD license; and (3) the premises for which the LLD license is sought is not located within 2,500 feet of another licensed premises.

Further, in making its determination on the application, the local licensing authority may consider the reasonable requirements of the neighborhood. A local licensing authority may conduct a hearing on the application for transfer of ownership after notifying the applicant of the hearing at least 10 days before the hearing by posting – or directing the license applicant to post – a notice of the hearing in a conspicuous location on the licensed premises for a least 10 consecutive days before the hearing. A LLD applying for a license merger and conversion is ineligible for a temporary permit, and a local licensing authority shall not issue a temporary permit to a LLD that has acquired ownership of licensed retail stores in accordance with this section of the bill.  The state licensing authority shall establish fees for a transfer or ownership, change of location, and license merger and conversion not to exceed $1000.

Second, a LLD on or after January 1, 2017 shall have a least one permitted manager conduct the LLD’s purchase of alcohol from a licensed wholesaler. The state licensing authority may issue a manager’s permit to an individual who is employed by a LLD and who will be in actual control of the alcohol beverage operations, as long as the individual demonstrates that he or she: (1) has not been convicted of a crime involving the sale or distribution of alcohol within 8 years of submission of the application; (2) has not been convicted of a felony within 5 years of submission of the application; (3) is at least 21 years of age; (4) has not had a manager’s permit or similar permit revoked by the issuing authority within 3 years of submission of the application; and (5) is certified as a responsible alcohol vender. It is unlawful for an individual with a manager’s permit to be directly or indirectly interested in a licensed wholesaler, a licensed manufactured, or any business that has had its license revoked by the state issuing authority within 8 years of submission of the application for a manager’s permit. For each manager’s permit, an annual fee of $100 shall be paid in advance to the Department of Revenue. The state licensing authority shall also establish fees for applications for manager’s permits.

Third, an employee of a LLD who is involved in selling alcohol must obtain and maintain a certification as a responsible alcohol vender. An employee of a LLD who is under 21 years of age shall not have any contact with malt, vinous, and spirituous liquors (“liquors” or “liquor”) offered for sale. A LLD shall not store alcohol off the licensed premises. A LLD shall not comingle the liquors it offers with any other products, and the LLD shall shelve and display the liquors separately from other nonalcoholic beverages.

Fourth, a person licensed to sell malt, vinous, and spirituous liquors (“liquors” or “liquor”) shall: (1) not sell liquors at a price below the cost to purchase the liquors; (2) not allow consumers to purchase liquors at a self-checkout; (3) require purchasers of liquors to present a valid, government-issued identification verifying the purchaser is 21 years of age; and (4) not sell clothing or accessories imprinted with advertising, logos, slogans, trademarks, or messages related to alcoholic beverages. A person licensed on or after January 1, 2017, shall not purchase liquors from a wholesaler on credit, and shall effect payment upon delivery of the liquors.

Fifth, a licensed wholesaler: (1) shall make all deliveries of alcohol to LLD in compliance with the bill; (2) shall take orders for alcohol only from a permitted manager of a LLD; (3) may unload alcohol at a LLD’s loading dock at any time that the location is open to the public; (4) shall make available to all licensed retailers in the state all liquors and brands of alcohol sold by the wholesaler; and (5) may establish purchase requirements, unless the requirements have the effect of excluding a majority of licensed retailers from purchasing a brand of alcohol.

Seventh, in addition to selling liquors, a retail liquor store may sell, without limitation: nonalcoholic beverages; liquor-filled candy; snack food items; kegs and growlers; beer/wine/spirit-making kits and supplies; lemons, limes, cherries, olives, and other food items used in preparing or garnishing alcoholic beverages; clothing or accessories imprinted with advertising, logos, slogans, trademarks, or messages related to alcoholic beverages; lottery tickets; tobacco products; and other merchandise not related to the consumption of alcohol, but only if the annual gross revenues from the sale of such other merchandise does not exceed 20% of the store’s total annual gross revenues. A retail liquor store shall not sell retail marijuana.

Eighth, an owner, part owner, shareholder, or person directly or indirectly interested in a LLD may have an interest in (1) up to five additional LLD licenses if obtained on or after January 1, 2017 and before January 1, 2027, and (2) an unlimited number of additional LLD licenses if obtained on or after January 1, 2027. An owner, part owner, shareholder, or person directly or indirectly interested in a retail liquor store may have an interest in up to five additional retail liquor store licenses.

Tenth, it is unlawful for any licensed retailer: (1) to sell fermented malt beverages to any person between the hours of midnight and 8:00 AM (previously, midnight to 5:00 AM); (2) to employ a person who is at least 18 years of age but under 21 years of age to sell or dispense liquor, unless the employee is supervised by another person who is on the licensed premises and is at least 21 years of age; (3) if licensed as a tavern, retail liquor store, or LLD, to permit an employee who is under 21 years of age to sell liquor; or (4) if licensed as a LLD, to permit an employee who is under 21 years of age to have any contact with liquors offered for sale, or sold and removed from, the licensed premises of the LLD. It is not unlawful for a retail licensee or his or her employee to sell liquor to a consumer who is or reasonably appears to be over the age of 50 and who failed to present identification.

Lastly, the bill removes the requirement that a “fermented malt beverage” be no more than three and two-tenths percent alcohol by weight or four percent alcohol by volume. With respect to “malt liquors,” the bill replaces the requirement that the malt liquor contain no more than three and two-tenths percent alcohol by weight or four percent alcohol by volume with the requirement that the malt liquor contain “not less than one-half of one percent alcohol by volume.”

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

Colorado Court of Appeals: High Net Worth First-Party Insured Must Bear Loss Resulting from Insolvent Insurer

The Colorado Court of Appeals issued its opinion in Colorado Insurance Guaranty Association v. Sunstate Equipment Co., LLC on Thursday, April 21, 2016.

Recoupment—Insolvent Insurer—High Net Worth—First Party Insured—Equal Protection—Procedural Due Process—Special Legislation—Summary Judgment—Attorney Fees.

This was a recoupment action under C.R.S. § 10-4-511(4)(a)(I) (net worth provision) in which the trial court entered summary judgment in favor of plaintiff Colorado Insurance Guaranty Association (CIGA) and against defendant Sunstate Equipment Company, LLC for workers’ compensation benefits that CIGA paid to a Sunstate employee. Sunstate had paid the benefits after its workers’ compensation insurer became insolvent and was liquidated. The court allowed Sunstate an offset based on liquidation proceeds paid to CIGA and refused to award CIGA its attorney fees incurred in connection with the employee’s claim.

Sunstate appealed on four grounds: (1) the net worth provision is unconstitutional; (2) the immunity created by C.R.S. § 10-4-517 (immunity provision) is unconstitutional special legislation, and the trial court erred in holding that it bars Sunstate from raising affirmative defenses based on CIGA’s alleged mishandling of the employee’s claim; (3) it was error to decline to require CIGA to show that it had reviewed the applicable insurance policy to determine the “covered benefits” to which the employee was entitled; and (4) the trial court miscalculated the offset. On cross-appeal, CIGA asserted that the trial court erred in allowing Sunstate any offset for the liquidation proceeds and refusing to award CIGA its attorney fees.

On the constitutional issues, the Colorado Court of Appeals looked at opinions from other states that have net worth statutes similar to Colorado’s and held that there was no violation of equal protection or procedural due process.

On the immunity provision, the court determined that providing CIGA with immunity is rationally and reasonably related to a legitimate government purpose and concluded Sunstate did not show beyond a reasonable doubt how the immunity provision violates the constitutional ban on special legislation. The court also concluded that under the immunity provision, the court properly barred Sunstate from raising its affirmative defenses.

The argument that CIGA failed to prove covered benefits by reference to the insurance policy was without merit.  But while CIGA was entitled to recover for covered claims, the trial court erred in concluding that CIGA was immune from challenges to whether payments were for covered claims, and it was error to simply accept the spreadsheet provided as a basis for entering summary judgment on the amount. This issue was therefore remanded for further proceedings.

The court held as a matter of law that Sunstate was not entitled to an offset. Under the net worth provision, CIGA had the right to recover from Sunstate “the amount of any covered claim.” Sunstate argued that allowing CIGA to recover the full amount of the claimant’s claims without accounting for the early access distributions (EADs) in the bankrupt insurer’s bankruptcy would result in a double recovery for CIGA. But California law, which controlled the liquidation of the bankrupt insurer, does not allow for such a double recovery; to the extent that CIGA recovered its payments on the claim from Sunstate, it would have to return any EADs paid to the bankruptcy estate.

Finally, the court rejected CIGA’s assertion that the attorney fees it incurred in defending and handling the claim were part of a “covered claim” and therefore were recoverable from Sunstate. The court concluded that the plain language of the Colorado Insurance Guaranty Association Act precludes including such attorney fees in a covered claim.

The judgment was affirmed in part and reversed in part, and the case was remanded.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Court Within Jurisdiction to Assert Long-Arm Statute Against Foreign Business Selling Products in United States

The Colorado Court of Appeals issued its opinion in Boustred v. Align Corp. Ltd. on Thursday, April 21, 2016.

Interlocutory Appeal—CRCP 12(b)(2) Lack of Personal Jurisdiction—Minimum Contacts—Due Process Clause.

Align Corporation Limited is a Taiwanese company that manufactures and sells remote control helicopters and related parts. Align has no physical corporate presence in the United States, but it engages U.S. distributors to sell its products to retailers, which then sell them to consumers. One of Align’s distributors was defendant Horizon Hobby, Inc.

Boustred purchased a remote control helicopter and a main rotor holder, manufactured by Align, through Horizon. Boustred alleged the main rotor holder broke during testing and caused him to lose an eye. He filed strict liability and negligence claims against Align and Horizon in Larimer County. After service in Taiwan, Align asked the trial court to quash service and dismiss all claims against it for lack of personal jurisdiction. The trial court found that under Archangel Diamond Corp. v. Lukoil it could assert specific jurisdiction over Align, and denied the motion. This interlocutory appeal followed. Align petitioned the court of appeals to address the effect of the U.S. Supreme Court’s plurality opinion in J. McIntyre Machinery, Ltd. v. Nicastro on Colorado’s personal jurisdiction framework under Archangel.

Colorado’s long-arm statute is intended to confer the maximum jurisdiction allowable by the Due Process clauses of the United States and Colorado constitutions. Specific jurisdiction exists when the alleged injuries resulting in litigation arise out of and are related to a defendant’s activities that are significant and purposefully directed at residents of the forum state. If the requisite minimum contacts are established, a court must determine whether its exercise of personal jurisdiction over a defendant is reasonable and comports with notions of fair play and substantial justice. Align argued that merely placing a product into the stream of commerce, without more, is insufficient for a court to assert personal jurisdiction.

The court cited World-Wide Volkswagon v. Woodson, which held that a “forum State does not exceed its powers under the Due Process Clause if it asserts personal jurisdiction over a corporation that delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum State.” Subsequent Supreme Court plurality decisions have differed on the scope of this theory. The court concluded that the narrowest grounds articulated in the plurality opinions, those of Justice Breyer in J. McIntyre and Justice Brennan in Asahi Metal Industry Co. v. Superior Court are controlling and together hold that World-Wide Volkswagon remains the prevailing decision articulating the stream of commerce theory.

Applying that standard, the court found that Boustred made a sufficient prima facie showing of Colorado’s specific jurisdiction over Align and that asserting such jurisdiction is reasonable and does not offend traditional notions of fair play and substantial justice.

The order was affirmed.

Summary provided courtesy of The Colorado Lawyer.