March 6, 2015

Colorado Court of Appeals: Reformation of Conservation Deed Appropriate to Correct Mutual Mistake

The Colorado Court of Appeals issued its opinion in Ranch O, LLC v. Colorado Cattlemen’s Agricultural Land Trust on Thursday, February 26, 2015.

Conservation Easement—Summary Judgment—Reformation of Deed Based on Mutual Mistake.

Craig Walker was the sole manager and 99% membership owner of Walker I-Granby, LLC (LLC). Walker owned certain property that he conveyed to the LLC. Walker and the Colorado Cattlemen’s Agricultural Land Trust (Land Trust) then signed a deed of conservation easement (Conservation Deed) that purported to give the Land Trust a conservation easement on the subject property. The Conservation Deed named Walker as the grantor, but Walker had previously conveyed the subject property to his LLC. The LLC should have been the grantor. Neither Walker nor the Land Trust was aware of this error.

Walker, on the LLC’s behalf, then entered into discussions with Ranch O, LLC’s principal about selling the subject property to Ranch O. Walker informed Ranch O of the Land Trust’s conservation easement.

Ranch O bought the subject property from the LLC. The deed conveying the property noted that the subject property was encumbered by a conservation easement held by the Land Trust and noted the recording information for the Conservation Deed.

Ranch O requested a declaratory judgment that the Conservation Deed was invalid and had no force and effect because Walker had no ownership interest in the subject property at the time the Conservation Deed was signed and recorded. The Land Trust answered, seeking a declaratory judgment that the Conservation Deed was valid and enforceable despite the scrivener’s error and reformation of the Conservation Deed to correct any error regarding the identity of the grantor. The Land Trust claimed any error was the result of mutual mistake. The district court granted the Land Trust’s motion for summary judgment and denied Ranch O’s request.

On appeal, Ranch O argued that the undisputed facts precluded the district court from reforming the Conservation Deed based on a mutual mistake of fact. The Court of Appeals disagreed. It found that the evidence clearly and unequivocally showed that reformation was appropriate because both parties to the Conservation Deed mistakenly believed that it correctly identified the grantor and that the grantor had the authority to convey the conservation easement. The mutual mistake justified reforming the Conservation Deed.

Ranch O also argued that reformation violated the policies and purposes behind Colorado’s race-notice statute. The Court disagreed, noting that Ranch O had actual notice of the Conservation Deed before it purchased the subject property. It was also advised of the Conservation Deed in the LLC’s deed to Ranch O. Ranch O, given its actual knowledge of the Conservation Deed, cannot simply ignore it and then seek to defeat its reformation in this action. Reformation is an equitable remedy and equity demands that the Conservation Deed be reformed. The judgment was affirmed.

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

Colorado Court of Appeals: Claims Against Developers Could Lie in Tort; CGIA May Apply

The Colorado Court of Appeals issued its opinion in First National Bank of Durango v. Lyons on Thursday, February 26, 2015.

Securities Fraud—Subject Matter Jurisdiction—Colorado Securities Act Claims Lie in Tort—Scope of “Public Employment.”

Defendants William S. Lyons, Jr., William S. Lyons III, and others comprised the Board of Directors of Lincoln Creek Metropolitan District (District). The District is a special district formed to provide public facilities to Lincoln Creek Village. Defendants’ company, LCV, LLC, owned almost all of the property in the District and was the developer of Lincoln Creek Village.

In March 2006, plaintiffs (collectively, Banks) purchased $4.13 million of General Obligation Tax Bonds issued by the District to partially fund construction of Lincoln Creek Village. In July 2008, the bank that held the deed of trust securing the development loan foreclosed on the encumbered Lincoln Creek Village property. The Banks then filed this action against defendants, LCV, and the bond underwriter.

The Banks alleged that defendants misrepresented and omitted material facts in connection with the offer and sale of the bonds, in violation of CRS § 11-51-501(1) of the Colorado Securities Act (CSA). Defendants asserted the defense of governmental immunity and filed a CRCP 12(b)(1) motion to dismiss for lack of subject matter jurisdiction, arguing that the Banks had failed to provide notice of the claims to the District, a jurisdictional prerequisite under the Colorado Governmental Immunity Act (CGIA). The district court denied the motion to dismiss, concluding that the CSA claims do not sound in tort and therefore the CGIA is inapplicable.

On interlocutory appeal, defendants argued that the Banks’ CSA claims lie in tort or could lie in tort. The Court of Appeals noted that defendants are public employees for purposes of the CGIA and that the CGIA requires that written notice of claims against a public employee must first be provided within the statutory period to the public entity where the employee is employed. Failure to comply with the notice requirement forever bars the action against the employee. It was undisputed that the Banks did not provide notice to the District of their claims against defendants. The question then became whether the claims against defendants lie in tort or could lie in tort.

The Court found that the complaint demonstrated that the injury underlying the Banks’ CSA claims was tortious in nature. Essentially, the Banks alleged that they relied on a misrepresentation of material fact by defendants. This is injury arising out of tortious conduct.

The Banks also argued that the misrepresentations were made by defendants in their capacity as private developers and not within the scope of any “public employment” with the District; therefore, the CGIA notice requirement does not apply. Defendants countered that this issue was not decided by the district court. The Court agreed with defendants and remanded the case to the district court to decide whether the claims against them are based on acts or omissions that occurred within the scope of their public employment. If it finds the misrepresentations alleged were made by defendants within the scope of their employment with the District, then it must dismiss the Banks’ claims. However, if the claims were premised on misrepresentations made by defendants as private developers and outside the scope of their employment with the District, the CGIA does not apply and statutory notice was not required.

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

Colorado Court of Appeals: Statutory Employer Not Liable for Workplace Injury Where Workers’ Compensation Benefits were Paid

The Colorado Court of Appeals issued its opinion in Monell v. Cherokee River, Inc. on Thursday, February 26, 2015.

Dismissal of Negligence Claims—Attorney Fees Award Under CRS § 13-17-201—Statutory Employer Under CRS § 8-41-401.

Plaintiff was hired by N.J. Liming, a subcontractor to defendant Cherokee River, Inc. (CRI), for the construction of a steel building. Plaintiff was working near high-voltage overhead electrical lines when electricity arced from the lines and electrocuted him, causing severe burns, shock, and temporary heart stoppage.

Plaintiff received workers’ compensation benefits from N.J. Liming. He then sued the landowner, the companies that furnished the electricity and maintained the electrical lines, and CRI. He asserted two negligence claims against CRI. CRI moved to dismiss for failure to state a claim, because it was plaintiff’s statutory employer under CRS § 8-41-401. The district court agreed and dismissed the negligence claims against CRI. CRI moved for attorney fees and costs under CRS § 13-17-201. The district court awarded CRI fees and costs related to defending the tort action and litigating the fees and costs motion.

On appeal, plaintiff argued that the district court erred because CRI was not his statutory employer. The Court of Appeals disagreed. It noted that the workers’ compensation statute immunized employers from tort liability for a workplace injury if the injured worker collects workers’ compensation benefits. Here, it was clear that plaintiff’s injuries arose from an activity that was within the scope of CRI’s business and work. Because CRI was plaintiff’s statutory employer, it was immune to tort liability for his injury.

Plaintiff contended that CRS § 13-17-201 provides that the defendant shall have judgment for his or her reasonable attorney fees. Also, because CRI’s insurer paid the attorney fees, CRI had incurred no attorney fees that plaintiff could pay. He also argued that CRI’s insurer was ineligible for a fees award because it was not a defendant in the case. The Court disagreed. The purpose of the attorney fees statute is to discourage the institution or maintenance of unnecessary tort claims. To whom plaintiff pays the fee award is irrelevant to this purpose.

Plaintiff further argued it was error to award fees for litigating the fees and costs motion, because CRS § 13-17-201 only authorizes an award of fees incurred “in defending the action.” The Court agreed. A defendant is entitled to fees for litigating a CRS § 13-17-201 motion for fees only if the plaintiff’s defense to the motion is substantially frivolous, substantially groundless, or substantially vexatious. There was no such finding here.

Finally, CRI requested appellate attorney fees. The Court granted CRI its reasonable fees relating to the defense of the dismissal order but denied its request for fees relating to its defense of the court’s fee award.

The order granting the motion to dismiss and the fees award for litigating it was affirmed. The fee award for litigating the fees and costs motion was reversed, and the case was case remanded with directions.

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

Colorado Court of Appeals: Announcement Sheet, 3/5/2015

On Thursday, March 5, 2015, the Colorado Court of Appeals issued no published opinion and 17 unpublished opinions.

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

Colorado Court of Appeals: Constitutionality of Life Without Parole for Juvenile Offenders Must Be Determined on Case-by-Case Basis

The Colorado Court of Appeals issued its opinion in People v. Wilder on Thursday, February 26, 2015.

Murder—Sentence—Unconstitutional—Juvenile.

In 1998, at the age of 17, defendant conspired to murder his codefendant’s husband and landlord. Defendant and his codefendant invited the two men to the house they were renting. The husband did not arrive, but the landlord arrived with a friend. After an argument, the codefendant shot both the landlord and his friend several times. The landlord’s friend died from the gunshot wounds. Defendant killed the landlord by repeatedly bludgeoning his head with a baseball bat.

On appeal, defendant asserted that his mandatory sentence to life in prison without the possibility of parole for the first-degree murder conviction was unconstitutional. Because defendant was a juvenile at the time of the crimes, the Court of Appeals was required to make an individualized determination of whether life without parole was appropriate, given the particular qualities of the juvenile being sentenced. Here, the trial court sentenced defendant to life without the possibility of parole for the first-degree murder conviction, under the 1999 mandatory provision of CRS § 18-1.3-401(4)(a). Defendant’s sentence was vacated and his case was remanded to the trial court for an individualized determination of whether life without parole is an appropriate sentence.

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

Colorado Court of Appeals: DNA Swab Evidence from Juvenile Offender Need Not Be Suppressed

The Colorado Court of Appeals issued its opinion in People v. Casillus on Thursday, February 26, 2015.

Deferred Adjudication—Juvenile—Probation—DNA Collection—Suppression of Evidence—Fourth Amendment.

A juvenile court placed defendant Ismael Casillas on a deferred adjudication. The terms of the deferred adjudication required him to be under the supervision of the juvenile probation department with standard terms and conditions. Defendant’s juvenile probation officer later swabbed his cheek for a DNA sample. This DNA sample led to defendant—now an adult—being first linked to a carjacking and, ultimately, being convicted of criminal mischief, which he now appeals.

Defendant contended that evidence of his DNA should be suppressed because its collection violated the juvenile DNA collection statute and the Fourth Amendment. Because defendant stipulated to a one-year deferred adjudication and sentence on his juvenile charge and successfully completed his deferred adjudication, he was not required to submit to a cheek swab. Therefore, the cheek swab violated the juvenile DNA collection statute and the Fourth Amendment. However, because defendant has not established that any violation of the juvenile DNA collection statute was willful and recurrent, the trial court did not err by denying his motion to suppress based on a statutory violation. Furthermore, the suppression of the DNA evidence obtained from the juvenile probation officer’s cheek swab was only a supervisory function under the direction of the juvenile court and would have no deterrent value. As a result, suppression of the DNA evidence was neither a necessary nor appropriate remedy for violation of defendant’s Fourth Amendment rights. The trial court’s denial of defendant’s motion to suppress the DNA sample was affirmed.

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

Colorado Court of Appeals: Business Records Properly Authenticated by Facebook Under CRE 901

The Colorado Court of Appeals issued its opinion in People v. Glover on Thursday, February 26, 2015.

Facebook—Evidence—CRE 901(b)—Admissions—Expert Testimony.

Defendant was the 36-year-old leader of a street family of homeless and runaway teens and young adults. The dead body of one of the young adults was discovered by the police in a gully next to an apartment complex. Among the victim’s injuries was the severing of one of his fingers.

Jordan Rowland was arrested on the day the body was found, but on an unrelated matter. In his pocket, however, police found the victim’s missing finger. The prosecution’s theory was that Rowland killed the victim at defendant’s behest.

On appeal, defendant contended that the trial court erroneously admitted printouts from his Facebook account of communications relating to the murder. The lead detective testified that he had subpoenaed records of defendant’s Facebook activity, and that Facebook complied with the subpoena and sent the detective compact discs containing the requested records. Therefore, sufficient evidence was presented under CRE 901(b) to conclude that the printouts contained content from Facebook. Additionally, sufficient evidence was presented under CRE 901(b) to permit the jury to conclude that the account belonged to defendant and that he sent the messages contained in the printouts. Further, the statements from defendant’s Facebook were admissions, which is an exception to the hearsay rule. Consequently, the Facebook records were properly admitted.

Defendant also contended that reversal was required because the lead police detective on the case gave unendorsed expert testimony. Here, the detective’s understanding of Facebook and its features does not appear to have been the result of any specialized knowledge; rather, it appears to have been based on an investigation uncovering information, experience, or knowledge common among ordinary people using, or considering the use of, Facebook. Further, any error resulting from the detective’s testimony was neither “obvious” nor “seriously prejudicial.” Therefore, reversal was not required.

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

Colorado Court of Appeals: Defendant’s Right to Testify Not Unconstitutionally Usurped by Counsel

The Colorado Court of Appeals issued its opinion in People v. Thomas on Thursday, February 26, 2015.

Self-Defense—Right to Testify—Prejudice.

Thomas had opposed self-defense, and throughout the trial he remained consistent that he wanted to testify to his actual innocence. His attorneys had told him that choosing self-defense was their prerogative, and they told him that once they advanced this defense in opening statement, his testifying to actual innocence would destroy the credibility of the defense. Thomas alleged that his trial counsel rendered ineffective assistance by pursuing a self-defense theory over his objection.

Thomas argued that trial counsel’s self-defense strategy usurped his constitutional right to testify because, if not foreclosed by this strategy, he would have testified that he had not shot the victim.Even assuming that counsel’s decision to proceed with self-defense constituted deficient performance, Thomas made no showing of prejudice. Therefore, his argument fails.

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

Colorado Court of Appeals: Trial Court Has Authority to Allow Defense Discovery of Crime Scene

The Colorado Court of Appeals issued its opinion in People in Interest of E.G. on Thursday, February 26, 2015.

Sexual Assault of a Child—Juvenile Offender—Access to Crime Scene—Privacy Interests—Cross-Examination—Sentence.

E.G. was charged with two counts of sexual assault of a child and two pattern of abuse sentence enhancers for sexually assaulting his younger cousins over a two-year period in the home of their mutual grandmother. Because E.G. was a juvenile, his case originated in juvenile court. E.G. was later charged as an aggravated juvenile offender and his case was transferred to district court.

On appeal, E.G. argued that the trial court erred when it denied, based on lack of authority, his motion requesting court-ordered access to the crime scene in the basement of his grandmother’s home. A trial court has the authority to allow discovery of a crime scene to the defense, even if the discovery implicates constitutionally protected privacy rights of a nonparty, provided that the defendant’s justification for the information, which derives from his constitutional rights to due process and to present a defense, outweighs the privacy interests. Because E.G. previously lived at the home and was provided photographs of the crime scene before trial, he failed to meet this standard. The trial court, therefore, properly denied E.G.’s motion.

E.G. next contended that the trial court reversibly erred in limiting E.G.’s cross-examination of the forensic interviewer. Because the forensic interview tapes were already in evidence and counsel had already impeached the victims during prior cross-examination of them, it was needless to question the forensic interviewer on her recollection of those same interviews or what the forensic interviewer did and did not ask. Therefore, the court did not abuse its discretion in excluding the evidence as cumulative. It was also not an abuse of discretion to exclude cross-examination that did not show actual bias of the forensic interviewer.

E.G. also contended that the trial court reversibly erred when it sentenced him directly to Department of Corrections (DOC) custody absent statutory authority to do so. A trial court must sentence an aggravated juvenile offender according to CRS § 19-2-601. Here, however, because E.G. was 22 years old at the time of sentencing, he had already aged out of Department of Human Services (DHS) custody and DHS could not exercise jurisdiction over him. Therefore, certain portions of § 19-2-601(8), which do not require the participation of DHS, may apply to defendants who fall within the statute’s gap. Because the record does not include the court’s consideration of all requirements under § 19-2-601(8), the case was remanded for additional findings concerning the missing factors to determine whether the court’s decision to sentence E.G. directly to DOC custody was proper.

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

Colorado Court of Appeals: Announcement Sheet, 2/26/2015

On Thursday, February 26, 2015, the Colorado Court of Appeals issued eight published opinions and 24 unpublished opinions.

People v. Wilder

People v. Casillas

People v. Glover

People v. Thomas

People in Interest of E.G.

First National Bank of Durango v. Lyons

Ranch O, LLC v. Colorado Cattlemen’s Agricultural Land Trust

Monell v. Cherokee River, Inc.

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

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

Frederick Skillern: Real Estate Case Law — Foreclosure, Debtor-Creditor, Receivers, Lender Liability

Editor’s note: This is Part 12 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

Colorado Community Bank v. Hoffman
Colorado Court of Appeals, November 7, 2013
2013 COA 146

Receiver; order for sale certified as final judgment; C.R.C.P. 54(b); deadline to appeal; abuse of process; civil conspiracy.

This action arises from the judicial dissolution of certain companies in the course of a receivership proceeding. The companies were formed to develop golf courses. The bank sought appointment of a receiver when the companies defaulted on development loans. Certain individuals intervened and joined in the motion for appointment of a receiver. The companies asserted counterclaims for abuse of process and civil conspiracy.

The court granted a motion by the receiver for the companies to sell the golf courses to an entity controlled by the intervening individuals. The district court certified the sale orders as final under C.R.C.P. 54(b) to allow an appeal. The sale orders disposed of an “entire claim for relief” for purposes of C.R.C.P. 54(b) certification. Is a sale order in the course of a receivership action an “entire claim”? It can be, reasons the court. It states that prior cases have suggested that orders concerning property ownership can properly be certified. In Corporon v. Safeway Stores, Inc., 708 P.2d 1385 (Colo. App. 1985), the court held that “a quiet title claim is separable from slander and defamation claims, and therefore, properly certifiable under C.R.C.P. 54(b).” Because defendants did not appeal this order within forty-five days of the certification, but rather waited until the counterclaims had been resolved, the court of appeals lacked jurisdiction over this issue and that portion of the appeal was dismissed.

The court affirms the summary judgment order dismissing the abuse of process and civil conspiracy claims. Although the evidence might have proved that the interveners had an ulterior motive in bringing the receivership action, it did not establish the requisite improper use of process element. The rule was recently stated in Sterenbuch v. Goss, 266 P.3d 428 (Colo. App. 2011):

If the action is confined to its regular and legitimate function in relation to the cause of action stated in the complaint there is no abuse, even if the plaintiff had an ulterior motive in bringing the action or if he knowingly brought suit upon an unfounded claim.

The court agrees with the trial court that the claims failed this test. Because the companies’ conspiracy claims were based on the alleged underlying wrong of abuse of process, this claim also failed.

 

Armed Forces Bank v. Hicks
Colorado Court of Appeals, June 5, 2014
2014 COA 74

Guarantor; waiver of anti-deficiency rights; C.R.S. 38-38-106(6); good faith bid at foreclosure sale.

The bank makes a $6 million loan to a closely held, single asset company to build a condominium project in Glenwood Springs. The loan is personally guaranteed by Mr. and Mrs. Hicks, the principals of the company. After the loan goes into default in 2009, the bank agrees to several loan extensions, after which the company remained in default for failure to make certain payments and failure to obtain planning department approval of a condominium plat. After a trip by the company through bankruptcy court, the bank forecloses. At the foreclosure sale, the bank bids $3.7 million, leaving a $6 million deficiency, after all interest, costs and the like are added to the final tab. The bank files a civil action to collect the deficiency against Hicks. The Hicks attempt to assert defenses based on failure to make a bid based on a good faith estimate of fair market value, and alleging that the bank violated its duty of good faith and fair dealing by refusing to approve the plat ten months after the borrowers’ default. In effect, they argue that the bank failed to mitigate its damages by not allowing the plat to be recorded, even if the borrowers were in default, because the property would be more valuable at that point and the receiver would be able to lease the property, generating income to apply to the loan balance.

The court of appeals affirms the trial court’s grant of summary judgment in favor of the bank, holding that the guaranty contained a specific, and very broad, waiver of any right to challenge the bank’s bid at the foreclosure sale based on a “one action or antideficiency law.” In a case of first impression, the court holds that the statutory duty of a creditor under C.R.S. § 38-38-106(6) to bid its good faith estimate of fair market value may be waived, and that such an agreement is not void for violation of public policy. The court contrasts this statute, which has no provision barring a contractual waiver of its terms, with C.R.S. § 38-38-703, which explicitly prohibits agreements to waive, inter alia, the right of cure and redemption. The court notes that there is still a common law duty to make a good faith bid, under Chew v. Acacia Mutual Life, 165 Colo. 43, 437 P.2d 339 (1968) (bid not made in good faith on the basis of what the security could reasonably be expected to produce on sale at its fair market price), but the guaranty signed by Mr. and Mrs. Hicks included a waiver of “any defenses given to guarantors in law or in equity” except for payment of the indebtedness.

It will be interesting to see if the Supreme Court wants to take a look at this.

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.

Colorado Court of Appeals: Announcement Sheet, 2/19/2015

On Thursday, February 19, 2015, the Colorado Court of Appeals issued no published opinion and 45 unpublished opinions.

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