April 24, 2015

Tenth Circuit: Extender Statute Cannot be Tolled by Agreement of the Parties

The Tenth Circuit Court of Appeals issued its opinion in National Credit Union Administration Board v. Barclays Capital, Inc. on Tuesday, March 3, 2015.

The National Credit Union Administration Board (NCUA), acting in its role as conservator for failing credit unions, investigated the failure of two major credit unions and found they had failed because they had relied upon misrepresentations in offering documents about residential mortgage-backed securities (RMBS) that were essentially junk loans. The NCUA began pursuing remedies against the issuers and underwriters of the RMBS and began settlement negotiations with Barclays and other defendants (collectively, Barclays). During the pendency of the settlement negotiations, the NCUA entered into contracts with Barclays that averred the statute of limitations would be tolled during the settlement negotiations and also that Barclays would not assert untimeliness as a defense in any ensuing litigation.

When the settlement negotiations failed, the NCUA initiated these actions, asserting violations of Sections 11 and 12(a)(2) of the Securities Act, as well as state securities claims under the blue sky laws of Kansas and California. Barclays moved to dismiss for failure to state a claim on several grounds, including untimeliness. Barclays initially honored the tolling agreement but argued the claims were time-barred by the Securities Act’s three-year statute of repose. The NCUA responded that the statute of repose was inapplicable to these cases and instead the Federal Credit Union Act’s “Extender Statute” applied, providing a three-year statute of limitations.

While the actions were pending, the district court issued an opinion in a different case, ruling that contractual tolling was not authorized under the extender statute. Barclays then amended its motion to dismiss based on the different ruling. The district court granted the motion to dismiss, holding the claims were covered by the Extender Statute and not the statute of repose, and that tolling could not be contractually waived. The NCUA appealed.

The Tenth Circuit first determined that the district court correctly applied the Extender Statute and not the statute of repose. The Tenth Circuit recently ruled that the Extender Statute supplants all other time limits. Explaining the difference between statutes of limitations and repose, the Tenth Circuit noted that statutes of repose cannot be equitably tolled and act as an absolute time-bar, whereas statutes of limitations are frequently tolled and are affirmative defenses rather than absolute bars. After analyzing the specific language of the Extender Statute, however, the Tenth Circuit found it explicitly and unambiguously stated it could not be tolled by contract. Nevertheless, the Tenth Circuit reversed the district court’s dismissal, finding that Barclays promised not to assert the affirmative defense of the statute of limitations and it should be held to its promise.

The Tenth Circuit reversed and remanded for further proceedings consistent with its opinion.

Tenth Circuit: Six-Year Statute of Repose for Breach of Fiduciary Duty in ERISA Contains Exception for Fraud or Concealment

The Tenth Circuit Court of Appeals issued its opinion in Fulghum v. Embarq Corporation on Tuesday, February 24, 2015.

A class of retirees (plaintiffs) of Sprint-Nextel Corporation, Embarq Corporation, or a predecessor or successor of those companies (collectively, defendants) brought suit after defendants altered or eliminated health and life insurance benefits for retirees. Plaintiffs asserted defendants violated ERISA by breaching their obligation to provide vested health and life insurance benefits, breached their fiduciary duty by misrepresenting the terms of multiple welfare benefit plans, and violated the ADEA and state laws by reducing or eliminating health and life insurance benefits. The district court granted summary judgment to defendants on the breach of fiduciary duty claims, the ADEA claims, the state-law age discrimination claims, and some of the contractual vesting claims. Plaintiffs obtained a Rule 54(b) certification and appealed.

The Tenth Circuit examined the applicable insurance contracts and summary plan descriptions (SPDs). Defendants organized 32 SPDs into five groups based on language and coverage similarities, and the district court used these groupings in its analysis of plaintiffs’ claims. Because plaintiffs did not object to the groupings, the Tenth Circuit also based its analysis on the defendants’ classifications.

The first group of SPDs contained 16 documents, each including a statement that the retiree’s coverage ends upon death and a reservation of rights clause where the employer reserved the right to modify or terminate benefits at any time. Plaintiffs argued the plan language was ambiguous because it both offered coverage until death and reserved the right to modify or terminate benefits. The Tenth Circuit found the language unambiguously informed plaintiffs of defendants’ right to modify or terminate coverage, and therefore affirmed the district court’s summary judgment as to group 1.

Next, the Tenth Circuit analyzed the three SPDs in group 2, and found none containing “clear and express language” promising vested benefits. Plaintiffs pointed to language in the SPDs, but the Tenth Circuit found the language more pertinent to amount of benefits and not duration. The Tenth Circuit affirmed summary judgment as to group 2, finding the SPDs unambiguously contemplated termination of the plans.

The third group contained 4 SPDs regarding medical benefits. Plaintiffs claimed entitlement to lifetime benefits because the plans contained language that they “will be insured” and benefits “will continue after retirement.” The Tenth Circuit found the language insufficient to confer lifetime benefits, since it did not clearly and expressly promise unaltered lifetime benefits. The Tenth Circuit also noted that each SPD contained reservation of rights language. The district court’s summary judgment was affirmed as to group 3.

As for the benefits for group 4, the Tenth Circuit found the plaintiffs “wholly failed” to point to any language in the plans promising lifetime benefits. The Tenth Circuit found as to all groups that “no reasonable person in the position of a plan participant would have understood any of the language identified by Plaintiffs as a promise of lifetime health or life insurance benefits,” and that the same reasonable person would have understood defendants’ rationale for amending the plans.

The Tenth Circuit similarly rejected plaintiffs’ attempt to incorporate by reference arguments made in district court regarding why the district court’s denial of plaintiffs’ motion for reconsideration was abuse of discretion, commenting “this is not acceptable appellate procedure.” The Tenth Circuit deemed this argument waived. The Tenth Circuit conceded defendants were only entitled to summary judgment on the claims presented to the district court based on SPDs considered by the district court, and reversed the grant of summary judgment to the extent a class member’s claim for benefits arose from an SPD not presented to the court.

Turning to the breach of fiduciary duty claims, the district court had dismissed all claims as untimely, but the Tenth Circuit found that the district court applied the wrong statutory analysis. The Tenth Circuit reversed the district court’s dismissal of the breach of fiduciary duty claims. The Tenth Circuit examined 29 U.S.C. § 1113, finding the six-year statute of repose undisputed by the parties, but discovered a circuit split on whether § 1113’s statute of limitations applies solely to claims where a fiduciary fraudulently conceals the alleged breach of fiduciary duty or if it applies where the underlying breach of fiduciary duty claim involves allegations of fraud. The Tenth Circuit declined to conflate “fraud or concealment” to “fraudulent concealment” and also declined to consider the clause a separate statute of repose. Instead, the Tenth Circuit found the language to create an exception to the six-year statute of repose for instances when the breach of fiduciary duty resulted from fraud or concealment. The Tenth Circuit found support for its construction in the legislative purpose of ERISA.

Applying its framework to the instant case, the Tenth Circuit did not find evidence of concealment by defendants, and instead looked at whether there was fraud. The district court dismissed plaintiffs’ breach of fiduciary duty claims based on defendants’ claim that the argument was not properly briefed. The Tenth Circuit reversed on this point, finding instead that defendants did not move to dismiss plaintiffs claims on the basis on which the district court granted dismissal, resulting in error.

Finally, the Tenth Circuit addressed plaintiffs claims that the reduction or termination of benefits violated the ADEA because it constituted disparate impact discrimination based on age. Defendants produced evidence of effecting the policy changes based on reasonable factors other than age, and the district court granted summary judgment to defendants. The Tenth Circuit affirmed, finding that the narrow scope of ADEA disparate impact claims only required a showing that defendants’ decision was based on reasonable factors other than age and defendants made that showing.

The Tenth Circuit affirmed in part, reversed in part, and remanded for further proceedings.

Colorado Supreme Court: Lone Pine Orders Not Allowable Under Colorado Rules of Civil Procedure

The Colorado Supreme Court issued its opinion in Antero Resources Corp. v. Strudley on Monday, April 20, 2015.

CRCP 16—Lone Pine Orders.

In this decision, the Supreme Court granted certiorari to consider whether a specialized type of modified case management order known as a “Lone Pine order” is authorized under the Colorado Rules of Civil Procedure. After the initial exchange of Rule 26 disclosures, Antero Resources Corporation asked the trial court to enter a modified case management order requiring the Strudleys to present prima facieevidence that they suffered injuries attributable to the natural gas drilling operations of Antero Resources. The trial court granted the motion and issued a Lone Pine order directing the Strudleys to provide prima facie evidence to support their allegations of exposure, injury, and causation before the court would allow full discovery. The trial court determined that the Strudleys failed to present sufficient evidence and dismissed their case with prejudice. The court of appeals reversed, concluding that, as a matter of first impression, Lone Pine orders “are not permitted as a matter of Colorado law.”

The Court affirmed the court of appeals’ judgment. The Court held that the Colorado Rules of Civil Procedure do not allow a trial court to issue a modified case management order that requires a plaintiff to present prima facie evidence in support of a claim before a plaintiff can exercise its full rights of discovery under the Colorado Rules.

Summary and full case available here, courtesy of The Colorado Lawyer.

Tenth Circuit: Election of Remedies Doctrine Inapplicable Where Plaintiffs Neither Affirmed Nor Repudiated Contract

The Tenth Circuit Court of Appeals issued its opinion in Donner v. Nicklaus on Thursday, February 19, 2015.

Legendary golfer Jack Nicklaus lent his name to a golf course and luxury development, claiming in a press release he was so impressed with the land that he became a “founding charter member” of the development and urging others to purchase charter memberships at $1.5 million. The Donners are a married couple who purchased a charter membership. When the developer’s parent company declared bankruptcy, the developer was not able to build the golf course or luxury development. The Donners settled with the parent company in its bankruptcy proceedings, then sued Jack Nicklaus and Jack Nicklaus Golf Club, LLC for intentional misrepresentation, negligent misrepresentation, and violation of the Interstate Land Sales Full Disclosure Act.

The district court dismissed the action, holding the complaint failed to state a valid claim for relief and the defendants were entitled to summary judgment because the Donners elected their remedies by entering into a settlement agreement with the other parties. The Donners appealed, and the Tenth Circuit addressed five issues: (1) Defendants’ argument that the claims were untimely; (2) the district court’s dismissal of claims under the Interstate Land Sales Full Disclosure Act because the purchase of a charter membership did not concern a “lot”; (3) the district court’s dismissal of the Donners’ intentional misrepresentation claims; (4) the district court’s dismissal of the Donners’ negligent misrepresentation claims; and (5) the district court’s grant of summary judgment to Defendants on the grounds that the Donners elected the remedy of settlement.

The Tenth Circuit dismissed Defendants’ argument that the Donners’ claims were untimely because it was raised for the first time in district court in a reply brief. The District of Utah does not allow parties to assert new arguments in a reply brief, so the argument was waived.

Next, the Tenth Circuit addressed the Donners’ claims that they bought a lot based on Mr. Nicklaus’ fraudulent misrepresentations. However, under the Interstate Land Sales Full Disclosure Act, the misrepresentations must concern a lot, which Mr. Nicklaus’ statements did not. The Donners were promised an estate lot certificate with the purchase of a charter membership in the development, but the certificate did not refer to a specific parcel of land. No lots were ever developed and the Donners never had an opportunity to redeem their certificates, so the Interstate Land Sales Full Disclosure Act did not apply. The Tenth Circuit affirmed the district court’s dismissal of this argument.

Turning to the intentional misrepresentation claims, the Tenth Circuit found the Donners adequately alleged misrepresentation of Mr. Nicklaus’ membership status. The Donners purportedly relied on Mr. Nicklaus’ purchase of a charter membership when deciding to purchase a charter membership in the development due to his statements about being a “founding charter member.” The Tenth Circuit found that Mr. Nicklaus’ statements implied that he had purchased a charter membership, and that the Donners reasonably relied on those statements, and reversed the dismissal of the intentional misrepresentation claims pertaining to Mr. Nicklaus’ membership status. The Tenth Circuit found no other basis for intentional misrepresentation.

The Donners invoked the economic loss doctrine to support their claims for negligent misrepresentation. The Tenth Circuit found that the Donners did not adequately allege any duty of Mr. Nicklaus or Jack Nicklaus Golf Club, LLC outside of their contractual obligations, and affirmed dismissal on the negligent misrepresentation claims. No special relationship existed between the Donners and Defendants to support an outside duty.

Finally, the Tenth Circuit found erroneous the district court’s grant of summary judgment to Defendants on the grounds that the Donners elected their remedies against Defendants through the settlement agreement. Defendants argued the Donners were seeking inconsistent remedies involving both affirmance and repudiation of the charter membership agreement, but the Tenth Circuit found the Donners did neither by settling with the developer. Because the election of remedies doctrine was inapplicable, summary judgment failed.

The district court’s judgment was affirmed in part, reversed in part, and remanded for further proceedings.

Tenth Circuit: Sua Sponte Amendment of Original Opinion by Tenth Circuit

The Tenth Circuit Court of Appeals re-issued its opinion in ConAgra Foods, Inc. v. Americold Logistics, LLC on Thursday, April 9, 2015. The opinion was originally published on January 27, 2015, but the court sua sponte amended a sentence in the conclusion of the decision. Read the previous Legal Connection summary here.

Crowdfunding, Medical Testing of Assault Victims, and PERA Supplemental Needs Trust Bills Signed

As the 2015 legislative session continues, Governor Hickenlooper continues to sign legislation that crosses his desk. To date, the governor has signed 136 bills this legislative session. The bills signed in the past week are summarized here.

April 10, 2015

  • HB 15-1008 – Concerning the Classification of Agricultural Land When the Land is Destroyed by a Natural Cause, by Rep. Millie Hamner and Sen. Ellen Roberts. The bill allows agricultural land destroyed by natural causes to retain its agricultural classification for the year of destruction and four more property tax years.
  • HB 15-1256 – Concerning the Reclassification of Routt County to a Category II County for the Purpose of Establishing the Salaries of County Officers, by Rep. Diane Mitsch Bush and Sen. Randy Baumgardner. The bill recategorizes Routt County as a category II county for the purpose of setting salaries for county officers.
  • HB 15-1073 – Concerning Allowing a Driver to Challenge the Validity of a Law Enforcement Officer’s Initial Contact With the Driver, by Rep. Joseph Salazar and Sen. Jessie Ulibarri. The bill allows drivers who successfully challenge an officer’s initial stop in an administrative hearing to avoid revocation.
  • HB 15-1197 – Concerning Limitations on Indemnity Obligations in Public Construction Contracts, by Rep. Jack Tate and Sen. Cheri Jahn. The bill clarifies the manner in which indemnification clauses may be used in public construction contracts.
  • HB 15-1224 – Concerning Accounting for State Moneys Received by Public Postsecondary Institutions That Do Not Participate in the College Opportunity Fund Program, by Rep. Diane Mitsch Bush and Sens. Owen Hill & Nancy Todd. The bill separates the appropriation allocation for the two local district junior colleges affected.
  • HB 15-1183 – Concerning the Admission of a Child’s Statements Describing Attempted Acts of an Unlawful Sexual Offense, by Rep. Rhonda Fields and Sen. Lucia Guzman. The bill allows admission of a child’s statements regarding attempted sexual offenses.
  • HB 15-1191 – Concerning the Addition of Dentists to the “Physician Designation Disclosure Act,” by Rep. Brittany Pettersen and Sen. Kevin Grantham. The bill specifies that the standards and requirements for health care entities that assign designations to physicians based on performance assessments also apply to dentists.

Monday, April 13, 2015

  • HB 15-1245 – Concerning the Authority of the State Board of Land Commissioners to Use a Specified Portion of the Investment and Development Fund Moneys for Asset Maintenance, by Rep. Edward Vigil and Sen. Jerry Sonnenberg. The bill allows the State Board of Land Commissioners to spend up to $1 million from the Investment and Development Fund for certain maintenance projects.
  • HB 15-1246 – Concerning the Authorization of Crowdfunding of Intrastate Securities, by Reps. Pete Lee & Dan Pabon and Sens. Mark Scheffel & Owen Hill. The bill creates the Colorado Crowdfunding Act, which allows online investments in Colorado companies through a simple regulatory regime.

Thursday, April 16, 2015

  • SB 15-005 – Concerning Medical Testing for Certain First Degree Assault Cases, by Sen. John Cooke and Rep. Mike Foote. The bill requires a defendant in a first degree assault to submit to blood testing for communicable diseases if his or her bodily fluids contact another person.
  • SB 15-015 – Concerning a Clarification of Benefits for Autism Spectrum Disorders in Health Benefit Plans Issued in this State, by Sen. John Kefalas and Rep. Dianne Primavera. The bill allows mental health benefits under health benefit plans for autism spectrum disorders, and removes caps on the number of visits.
  • SB 15-030 – Concerning Removing Culpability for Prostitution for a Victim of Human Trafficking, by Sen. Morgan Carroll and Rep. Mike Foote. The bill creates an affirmative defense of human trafficking for those charged with prostitution and establishes a procedure to petition courts to seal records.
  • SB 15-058 – Concerning Statewide Policies and Procedures for Law Enforcement Agencies that Conduct Eyewitness Identifications, by Sen. Lucia Guzman and Rep. Elena Kagan. The bill requires law enforcement agencies to develop policies and procedures regarding eyewitness identifications.
  • SB 15-097 – Concerning the Eligibility of a Supplemental Needs Trust to Receive Certain Public Employees’ Retirement Association Benefits, by Sen. Irene Aguilar and Rep. Lois Landgraf. The bill allows a PERA member to designate a supplemental needs trust as a co-beneficiary.
  • SB 15-099 – Concerning Eliminating Certain Duties for Probation Officers, by Sen. John Cooke  and Rep. Polly Lawrence. The bill eliminates  certain duties of probation officers to conform to actual practice.
  • SB 15-105 – Concerning the Continuation of the Regulation of Respiratory Therapists by the Director of the Division of Professions and Occupations in the Department of Regulatory Agencies, and, in Connection Therewith, Implementing the Recommendations of the Department in its Sunset Review of and Report on the Profession, by Sen. Beth Martinez Humenik and Rep. Diane Primavera. The bill makes changes to licensing of respiratory therapists as recommended by the sunset review committee.
  • SB 15-126 – Concerning Medical Tests for Victims of Crimes of Assault, by Sens. John Cooke & Michael Johnston and Rep. Mike Foote. The bill requires defendants in second or third degree assault cases to undergo medical testing for communicable diseases if their bodily fluids came in contact with another person.
  • SB 15-171 – Concerning the Continuation of the “Private Occupational Education Act of 1981″, and, in Connection Therewith, Implementing the Recommendations of the 2014 Sunset Review by the Department of Regulatory Agencies, by Sen. Owen Hill and Rep. Dominick Moreno. The bill extends the Private Occupational School Board and the Division of Private Occupational Schools.
  • SB 15-186 – Concerning the Exemption of Yoga Teacher Training from Regulation Under Statutes Governing Private Occupational Education and, in Connection Therewith, Reducing an Appropriation, by Sen. Laura Woods and Reps. Timothy Dore & Alec Garnett. The bill exempts yoga teacher training from the Private Occupational Education Act.
  • SB 15-187 – Concerning Authorization for the High-Performance Transportation Enterprise to Deposit Money Received as a Loan from the State Highway Fund to a Separate Account Within the Statewide Transportation Enterprise Special Revenue Fund, by Sen. Kevin Grantham and Rep. Dave Young. The bill allows money loaned from the State Highway Fund to the High Performance Transportation Enterprise to be deposited into the Statewide Transportation Enterprise Operating Fund.
  • SB 15-188 – Concerning the Use of the First Tier of Statutorily Allocated Tobacco Litigation Settlement Money, and in Connection Therewith, Making an Annual Statutory Allocation of Such Money to the Tobacco Settlement Defense Account of the Tobacco Litigation Settlement Cash Fund and Making an Offsetting Reduction in the Annual Statutory Allocation of Such Money to the Children’s Basic Health Plan Trust, Authorizing the Department of Revenue to Use Money in the Tobacco Settlement Defense Account for Settlement Enforcement Related Activities, and Making an Appropriation, by Sen. Pat Steadman and Rep. Bob Rankin. The bill allocates tobacco settlement funds from the Children’s Basic Health Plan Trust to the defense fund for tobacco litigation.
  • SB 15-189 – Concerning the Repeal of Consolidated Tobacco Settlement Program Monitoring and Reporting Requirements and, in Connection Therewith, Reducing an Appropriation, by Sen. Pat Steadman and Rep. Bob Rankin. The bill repeals the current requirement that the State Board of Health monitor programs receiving funding from the state’s tobacco settlement fund.
  • SB 15-190 – Concerning the Repeal of the Requirement that the Executive Director of the Department of Personnel Promulgate Rules to Establish State Archives’ Fees, by Sen. Kevin Grantham and Rep. Millie Hamner. The bill eliminates a statutory requirement that fees for the State Archives must be established through a formal rulemaking process.

For a complete list of Governor Hickenlooper’s 2015 legislative decisions, click here.

Colorado Supreme Court: Hotel Has Duty of Reasonable Care to Intoxicated Guests During Lawful Eviction

The Colorado Supreme Court issued its opinion in Westin Operator, LLC v. Groh on Monday, April 13, 2015.

Summary Judgment—Negligence—Innkeeper–Guest Special Relationship—First Impression Duty of Care During Eviction—Colorado Dram Shop Act.

Through her parents, Jillian Groh sought to hold the Westin Hotel responsible for serious injuries she sustained in a drunk-driving accident following a lawful eviction from the Westin. The Westin filed a motion for summary judgment, which the trial court granted. The court of appeals initially affirmed the summary judgment order. The court of appeals then granted Groh’s petition for rehearing. A different panel withdrew the first court of appeals opinion, held that a hotel has a duty to evict a guest “in a reasonable manner,” and reversed the summary judgment order with respect to Groh’s claims of negligence and negligent hiring and training.

For the first time, the Supreme Court examined the duty of care a hotel owes a guest during a lawful eviction. Based on the special relationship that exists between an innkeeper and guest, the Court held that a hotel that evicts a guest has a duty to exercise reasonable care under the circumstances. This requires the hotel to refrain from evicting an intoxicated guest into a foreseeably dangerous environment. Whether a foreseeably dangerous environment existed at the time of eviction depends on the guest’s physical state and the conditions into which he or she was evicted, including the time, the surroundings, and the weather. In this case, genuine issues of material fact preclude summary judgment on Groh’s negligence-related claims.

The Court also considered whether the Dram Shop Act of the Colorado Liquor Code, CRS § 12-47-801, applies to this case. The Court concluded that the Act does not apply because it is undisputed that the Westin did not serve alcohol to Groh. Consequently, the Court affirmed the judgment of the court of appeals and remanded the case for further proceedings.

Summary and full case available here, courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Separate Challenge to Attorney Fee Award Not Prerequisite to Filing C.R.C.P. 60 Motion

The Colorado Court of Appeals issued its opinion in Oster v. Baack on Thursday, April 9, 2015.

Employment Agreement—Attorney Fees—First Impression—Challenge Under CRCP 60.

Doctors Oster and Baack owned and practiced medicine at Horizon Women’s Care. Oster and Horizon severed Baack’s employment following the loss of her medical license and brought a declaratory judgment action seeking a declaration that Baack’s employment had been terminated “for cause,” which meant that Baack would only be entitled to 25% of the value of her ownership interest in Horizon. The court entered judgment in favor of Oster and Horizon and ordered Baack to pay their attorney fees. This decision was reversed on appeal, and Baack thereafter filed a CRCP 60 motion to vacate the attorney fees award. The trial court denied the motion to vacate.

This case raised an issue of first impression—whether a party who has not directly appealed from an order awarding attorney fees and costs may still challenge that award under CRCP 60. The trial court had jurisdiction to consider Baack’s CRCP 60 motion, and Baack did not need to separately appeal the attorney fees award before filing her CRCP 60 motion. Because the appellate court reversed the underlying judgment, the trial court had awarded fees and costs under the prevailing party provision of the Employment Agreement, and the remaining agreements between the parties did not entitle Oster and Horizon to an attorney fees award. Accordingly, the attorney fees award in favor of Oster and Horizon was vacated and the case was remanded to the trial court to award Baack a reasonable amount of attorney fees and costs incurred on appeal.

Summary and full case available here, courtesy of The Colorado Lawyer.

Special District Transparency, Home Services Contracts, Recorking Wine, and More Bills Signed

On Wednesday, April 8, 2015, Governor Hickenlooper signed 11 bills into law. To date, he has signed 113 bills this legislative session. The bills signed Wednesday are summarized here.

  • HB 15-1046 – Concerning Authorization for the Executive Director of the Department of Transportation to Waive Department Project Cost Estimate-Based Statutory Contract Amount Limits When Awarding a Highway Project Contract, by Rep. Dominick Moreno and Sen. Ray Scott. The bill allows the executive director of the DOT to contract for highway projects when there are fewer than three bids even if the bids are above the CDOT cost estimate.
  • HB 15-1067 – Concerning the Establishment of a Continuing Professional Development Program for Licensed Psychologists, by Reps. Tracy Kraft-Tharp & Lois Landgraf and Sen. Linda Newell. The bill requires licensed psychologists to complete at least 40 hours of continuing education for each two-year compliance period.
  • HB 15-1074 – Concerning the Liability of an Individual Member of a Board of County Commissioners in a Legal Proceeding in which the Board is Found Liable, by Rep. Ed Vigil and Sen. Larry Crowder. The bill protects board members from having judgments against the board enforced individually.
  • HB 15-1092 – Concerning the Transparency of Title 32, Colorado Revised Statutes, Special Districts, by Rep. Steve Lebsock and Sens. Beth Martinez Humenik & John Kefalas. The bill makes several changes to the law regarding special districts in order to increase transparency.
  • HB 15-1145 – Concerning the Regulation of Radioactive Materials, and, in Connection Therewith, Implementing an Audit Report Issued by the Federal Nuclear Regulatory Commission, by Rep. Bob Rankin and Sen. Mary Hodge. The bill modifies Colorado’s radiation control statutes as required by the federal Nuclear Regulatory Commission.
  • HB 15-1164 – Concerning the Postponement of Jury Service for a Person who is Breast-Feeding a Child, by Rep. Brittany Petterson and Sen. Andy Kerr. The bill allows a person who is breastfeeding a child to postpone jury service for up to two 12-month periods.
  • HB 15-1184 – Concerning the Operation of Charter School Networks, by Rep. Susan Lontine and Sen. Owen Hill. The bill allows charter schools to work with other charters in a charter school network and establishes guidelines for charter school networks.
  • HB 15-1202 – Concerning the Ability of a Licensing Authority to Reissue Expired Alcohol Beverage Licenses, by Rep. Jonathan Singer and Sen. Laura Woods. The bill allows a licensing authority to reissue liquor licenses that have been expired more than 90 days but less than 180 days if the licensee pays extra fines.
  • HB 15-1213 – Concerning Clarifications in Connection with the Responsibilities of the Office of Information Technology, by Reps. Jack Tate & Max Tyler and Sens. Beth Martinez Humenik & Tim Neville. The bill makes changes related to the Office of Information Technology, specifically defining “enterprise agreement” and allowing procurement of enterprise facilities.
  • HB 15-1223 – Concerning the Extension of Current Standards Regarding Home Services Contracts to New Homes, by Rep. Angela Williams and Sens. David Balmer & Cheri Jahn. The bill extends the regulation of home warranty service products for preowned homes to include new homes.
  • HB 15-1244 – Concerning the Ability of Members of a Club Licensed Under the “Colorado Liquor Code” to Remove from the Club a Resealed Container of Partially Consumed Vinous Liquor Purchased at the Club, by Reps. Jonathan Singer & Dan Nordberg and Sens. Cheri Jahn & Kevin Lundberg. The bill adds clubs to the list of liquor licensees who are allowed to recork wine bottles and send them with the customer.

For a complete list of Governor Hickenlooper’s 2015 legislative decisions, click here.

Bills Regarding Vesting of Real Estate Title, Audit of Health Exchange, and More Signed

On Friday, April 3, 2015, Governor Hickenlooper signed 13 bills into law. To date, the governor has signed 102 bills this legislative session. The bills signed Friday are summarized here.

  • SB 15-002 – Concerning an Extension of the Date by which the Executive Director of the Department of Public Safety Must Submit to the Joint Budget Committee a Report Regarding Statewide Radio Communications, by Sen. Ellen Roberts and Rep. J. Paul Brown. The bill extends the time in which the Department of Public Safety must report to the Joint Budget Committee regarding statewide radio communications.
  • SB 15-013 – Concerning Extending the Deadline for Peace Officers to Complete Dog Encounter Training to June 30, 2015, by Sen. David Balmer and Reps. Lois Court & Don Coram. The bill postpones the deadline for mandatory peace officer dog training to June 30, 2015.
  • SB 15-019 – Concerning the Authority of the State Auditor to Conduct a Performance Audit of the Colorado Health Benefit Exchange, by Sens. Jerry Sonnenberg & Cheri Jahn and Rep. Dan Nordberg. The bill gives the Office of the State Auditor authority to conduct a full performance evaluation of the Colorado health benefits exchange.
  • SB 15-043 – Concerning Clarifying Changes to the Prosecution Fellowship Program, by Sen. Rollie Heath and Rep. Dan Pabon. The bill clarifies that fellows in the prosecution fellowship program are contract employees.
  • SB 15-047 – Concerning Notification to Legislators About the Adoption of Executive Branch Agency Rules that Implement Newly Enacted Legislation, by Sen. Pat Steadman and Rep. Beth McCann. The bill allows members of the General Assembly to opt out of notifications from the Office of Legislative Legal Services when bills they have sponsored advance.
  • SB 15-049 – Concerning the Vesting of Title to Real Estate in a Grantee that is an Entity that has Not Yet Been Formed Once the Entity Has Been Formed, by Sen. Beth Martinez Humenik and Rep. Jon Keyser. The bill allows title to real estate to vest in an entity once the entity has been formed, prior to incorporation.
  • SB 15-051 – Concerning Legal Recourse for a Student Who is Sanctioned or Found Ineligible to Participate in an Extracurricular Activity, by Sen. Nancy Todd and Rep. Kevin Priola. The bill changes procedures for appeals by students who are sanctioned or found ineligible to participate in extracurricular activities.
  • SB 15-053 – Concerning the Ability to Furnish a Supply of Emergency Drugs for Purposes of Treating Individuals Who May Experience an Opiate-Related Drug Overdose Event, by Sen. Irene Aguilar and Reps. Beth McCann & Susan Lontine. The bill allows licensed opiate prescribers and dispensers to dispense overdose prevention drugs to relatives or others who will in good faith help the opiate addict.
  • SB 15-071 – Concerning the Ability of a Pharmacist to Substitute an Interchangeable Biological Product for a Prescribed Biological Product when Certain Conditions are Satisfied, by Sens. Cheri Jahn & Owen Hill and Reps. Beth McCann & Lois Landgraf. The bill permits pharmacists to substitute similarly equivalent and interchangeable biological products.
  • SB 15-103 – Concerning Continuation of the Compliance Advisory Panel, and, in Connection Therewith, Implementing the Recommendations of the Department of Regulatory Agencies as Contained in the 2014 Sunset Report, by Sen. Kevin Lundberg and Rep. KC Becker. The bill continues the Compliance Advisory Panel until September 1, 2026, and implements the panel’s recommendations.
  • SB 15-111 – Concerning the Continuous Appropriation to the Department of Education of Moneys in the Educator Licensure Cash Fund, by Sen. Kent Lambert and Rep. Millie Hamner. The bill grants the Department of Education continuous appropriation of funds in the Educator Licensure Cash Fund, rather than making the appropriation annually.
  • SB 15-116 – Concerning Needle-Stick Prevention, by Sen. Pat Steadman and Rep. Alec Garnett. The bill creates an exception for arrests for drug possession or drug paraphernalia possession when a person voluntarily relinquishes hypodermic needles with drug residue.
  • SB 15-161 – Concerning a Supplemental Appropriation to the Department of Revenue, by Sen. Kent Lambert and Rep. Millie Hamner. The bill makes a supplemental appropriation to the Department of Revenue.

For a complete list of Governor Hickenlooper’s 2015 legislative decisions, click here.

Frederick Skillern: Real Estate Case Law — Titles and Title Insurance (1)

Editor’s note: This is Part 16 of a series of posts in which Denver-area real estate attorney Frederick Skillern provides summaries of case law pertinent to real estate practitioners (click here for previous posts). These updates originally appeared as materials for the 32nd Annual Real Estate Symposium in July 2014.

frederick-b-skillernBy Frederick B. Skillern

Grosboll v. Grosboll (In re Estate of Grossboll)
Colorado Court of Appeals, October 24, 2013
2013 COA 141

Partnership property; statute of frauds.

Jo Ann Grosboll, decedents’ daughter, appeals the district court’s order finding that the sales proceeds of an apartment building are an asset of the parents’ estates rather than an asset of Grosboll Manor, L.L.L.P., a limited partnership formed by Jo Ann and her parents. Jo Ann’s brother, understandably, argues that the apartments are property of the estate. The key issue revolves around the fact that there is no deed of conveyance to the partnership.

As a matter of first impression, the court considers whether real property owned individually by one who enters into a partnership with others may become a partnership asset without a written conveyance sufficient to satisfy the statute of frauds. The court holds that a written conveyance (such as a deed) from a partner to the partnership is not necessarily required.

The court reviews the historical development of the entity theory of partnerships and the Uniform Partnership Act. The current version of the partnership act allows real property titled in an individual partner’s name to be deemed an asset of the partnership. The trust relationship between partners provides adequate protection against fraud in oral agreements making a partner’s real property a partnership asset. As a result, by statute, the intention of the partners determines whether such real property is a partnership asset. The existence of a written conveyance is a factor for a court to consider in evaluating that intent.

Jo Ann contended that, according to the terms of the written partnership agreement and the intention of the partners, Loma Vista was a partnership asset. The partnership agreement provided that (1) title to all assets of the partnership shall be deemed to be owned by the partnership”; (2) record title to any or all assets of the partnership may be held in the name of . . . one or more nominees”; and (3) all assets of the partnership shall be recorded as the property of the partnership in the books and records of the partnership, irrespective of the name in which record title to such assets is held.” Jo Ann testified that when the partnership was established, she and her parents had agreed to make Loma Vista a partnership asset. Additionally, the accountant for the partnership testified that he treated Loma Vista as a partnership asset on the partnership books. Therefore, Jo Ann asserted she was entitled to the sale proceeds because decedents’ wills devised their interests in the partnership to her.

The partnership act provides a rebuttable presumption that a partner’s property is separate if it is not acquired with partnership assets:

Property acquired in the name of one or more of the partners, without an indication in the instrument transferring title to the property of the person’s capacity as a partner or of the existence of a partnership and without use of partnership assets is presumed to be separate property, even if used for partnership purposes.

C.R.S. § 7-64-204(4).

Because the UPL and UPA specifically contemplate that real property titled in an individual partner’s name may be deemed an asset of the partnership, the appeals court holds here that a written conveyance from a partner who originally brings real estate into the partnership, although a factor to consider, is not required to convert real property into partnership property.

Frederick B. Skillern, Esq., is a director and shareholder with Montgomery Little & Soran, P.C., practicing in real estate and related litigation and appeals. He serves as an expert witness in cases dealing with real estate, professional responsibility and attorney fees, and acts as a mediator and arbitrator in real estate cases. Before joining Montgomery Little in 2003, Fred was in private practice in Denver for 6 years with Carpenter & Klatskin and for 10 years with Isaacson Rosenbaum. He served as a district judge for Colorado’s Eighteenth Judicial District from 2000 through 2002. Fred is a graduate of Dartmouth College, and received his law degree at the University of Colorado in 1976, in another day and time in which the legal job market was simply awful.

Bills Regarding Trustee Notification, Recorded Documents, and More Signed

On Wednesday, March 18, 2015, Governor Hickenlooper signed nine bills into law. Governor Hickenlooper has now signed 58 bills this legislative session. The bills signed Wednesday are summarized here.

  • HB 15-1010 – Concerning a Presumption that a Trustee has Notified a Beneficiary when the Trustee has Adopted a Beneficiary Notification Procedure, and, in Connection Therewith, Clarifying that a Trustee May Deliver Information to Beneficiaries Electronically, by Reps. Tracy Kraft-Tharp & Dan Nordberg and Sen. Cheri Jahn. The bill creates a presumption that a beneficiary of a trust has received notifications about the status of a trust when the trustee has notification procedures in place, and also allows electronic notifications for beneficiaries who elect electronic notifications.
  • HB 15-1022 – Concerning Juveniles Charged with Certain Minor Offenses, by Rep. Beth McCann and Sens. Pat Steadman & John Cooke. The bill allows police officers to issue petty offense tickets to juveniles if certain conditions are met.
  • HB 15-1028 – Concerning Repeal of the Mercantile Licensing Standards, by Rep. Jon Keyser and Sen. Cheri Jahn. The bill repeals licensing requirements for merchants because the requirements are not enforced.
  • HB 15-1062 – Concerning Increasing the Penalties for Persons who Engage in Animal Fighting, by Reps. Jovan Melton & Steve Lebsock and Sens. David Balmer & Jerry Sonnenberg. The bill requires mandatory fines for convictions for animal fighting.
  • HB 15-1064 – Concerning Access to the Safe Deposit Box of a Decedent, and, in Connection Therewith, Limiting the Obligations of Custodians who Access the Box, by Rep. Dan Nordberg and Sen. Chris Holbert. The bill clarifies who has access to a decedent’s safe deposit box under the Colorado Probate Code and and clarifies that the custodian is not deemed to have knowledge about the contents of the box.
  • HB 15-1069 – Concerning Information Required to be Included in Recorded Written Instruments Filed with the County Clerk and Recorder to Claim a Homestead Exemption, by Rep. Su Ryden and Sen. Chris Holbert. The bill adds a requirement that a property owner’s name be included on a homestead exemption document.
  • HB 15-1071 – Concerning Clarification that, Following a Merger of Entities, the Surviving Entity is Entitled to Control the Premerger Attorney-Client Privileges of a Constituent Entity, by Rep. Jon Keyser and Sen. Owen Hill. The bill specifies that a corporation that merges with another entity inherits the attorney-client privilege from the other entity.
  • SB 15-057 – Concerning the Reporting Requirements of the Colorado Clean Claims Task Force, by Sen. David Balmer and Rep. Angela Williams. The bill changes the reporting requirements for the Colorado Medical Clean Claims Task Force so that the reports will go to the Commissioner of Insurance and the business committee of the General Assembly.
  • SB 15-142 – Concerning a Change in State Law to Make Requirements for Moneys Held in Escrow for the Payment of Ad Valorem Property Taxes the Same as the Requirements of the Federal “Real Estate Settlement Procedures Act of 1974″, by Sen. Ellen Roberts and Rep. Dan Pabon. The bill conforms state law to the requirements of the federal Real Estate Settlement Procedures Act, specifically repealing May 30 date for final settlement and changing the provision to reference RESPA.

For a complete list of Governor Hickenlooper’s 2015 legislative decisions, click here.