October 19, 2017

Top Ten Programs and Homestudies of 2016: Real Estate Law

The year is drawing to a close, which means that the compliance period is ending for a third of Colorado’s attorneys. Still missing some credits? Don’t worry, CBA-CLE has got you covered.

Today, we are featuring the Top Ten Programs and Homestudies for Real Estate Law. There are many great programs offered in the Real Estate area, and CBA-CLE offers several informative books authored by some of Colorado’s preeminent real estate attorneys. Visit cle.cobar.org/Practice-Area/Real-Estate to find the real estate program, homestudy, or book you need.

There are many great programs and homestudies for real estate practitioners, but our top ten are as follows.

10. Landlord Tenant Law: What to Do When Vacancy Rates are Low and Rents are High
While the media focuses on higher rents, the truth is that as inventory in housing grows, more and more Landlords are offering concessions such as free month’s rent and $1000 gift card to offset rent for qualified renters willing to sign a 1 year lease. To stay competitive with amenities in Denver, landlords are adding putting greens, outdoor living areas, composting gardens, dog washes, dog runs, bike maintenance stations, yoga classes, gourmet kitchens, and specialty pools. So landlord and tenant attorneys need to be educated on the current “higher rent” market as well as the coming “overbuilt” market which will again change the dynamics of the housing market tremendously. Order the Video OnDemand here, the CD homestudy here, and the MP3 here. Available for 7 general credits.

9. Mineral Interests: Real Estate Fall Update 2015
Whether you practice in the area of mineral interests or not, if you are a real estate lawyer, you need to know about this area of the law. Although the focus of this program is not fracking, the issue has brought mineral interests to the forefront of the Rocky Mountain legal landscape, and fracking will certainly be a part of the day’s discussion. Order the Video OnDemand here, the CD homestudy here, and the MP3 here. Available for 6 general credits, including 1 ethics credit.

8. Anatomy of a Residential Real Estate Transaction: Know the New CFPB Regulations
Some of the most experienced real estate professionals in Colorado explain residential real estate practice – from offer and acceptance to closing. This is a course not only for the practitioner who is new to the area of real estate, but for anyone who needs to know about the new CFPB regulations. Whether you represent the buyer or seller, you need the right tools. The faculty takes you through common problems that need to be solved, including the appropriate forms, title policy issues, types of conveyance deeds, how to read and land survey … and more. Order the Video OnDemand here, the CD homestudy here, and the MP3 here. Available for 7 general credits, including 1 ethics credit.

7. Anatomy of a Commercial Real Estate Transaction: Real Estate Spring Update 2015
When it comes to a commercial real estate transaction, there is a complex array of materials, forms and buyer/seller due diligence that you need to be aware of to properly and effectively represent the best interests of your clients. The knowledge base of a commercial real estate lawyer comes from many years of training and transaction experience, and involves a general understanding of technical matters. Whether it’s the areas of construction, zoning, environmental issues, leasing or site plan approval, if you’re going to be involved in a commercial real estate transaction, you’ll have to be aware of these many areas, along with the legal ones. The faculty members at the Real Estate Spring Update are the area experts for this myriad of issues in commercial real estate transactions. Order the Video OnDemand here, the CD homestudy here, and the MP3 here. Available for 7 general credits.

6. Foreclosure Law – All the Latest and Greatest
In 2011, Colorado had among the 10 highest foreclosure rates in the nation, according to a report from RealtyTrac Inc. Since then, rising home prices fueled by one of the strongest economies in the nation and low interest rates have caused foreclosures to wane in Colorado and the Denver area. Despite the improvement in Colorado’s economy, and the decrease in foreclosures, real estate lawyers and professionals still need to be aware of Colorado’s foreclosure process, because it is unique compared to other states, and foreclosure is always a consideration when representing clients. Order the Video OnDemand here, the CD homestudy here, and the MP3 here. Available for 7 general credits.

5. HOA Basics: Common Interest Communities
If your clients have purchased a condominium, townhouse or other type of property in a planned development or subdivision, chances are they are obligated to join that community’s homeowners’ association (HOA) and pay monthly or annual HOA fees for the upkeep of common areas and the building. If you represent, or are considering representing, clients who own these types of properties, there are many facets you should be aware of – how do homeowners’ associations work, and what are the rules and regulations if something goes wrong?  This seminar  provides not only an overview of common interest communities, but also the details of collection actions, covenant enforcement, transparency and governance, and much more. Order the Video OnDemand here, the CD homestudy here, and the MP3 here. Available for 7 general credits, including 1 ethics credit.

4. Advanced HOA Issues: Triple Crown, Developer Trifecta, & Changes on the Horizon
Your day will begin with a comprehensive case law and legislative update on the latest in HOA issues. Then you will hear some of the areas of CCIOA that have proven difficult or open to interpretation or are simply messier than some of us might prefer. Next, find out what strategies to use in the case of a stalled development: for example, when a property is foreclosed unfinished or unannexed. Learn what you need to know about Triple Crown, Vallagio and local construction defect ordinances. And that’s not all – learn the latest trends in document drafting in owner-controlled Associations: marijuana, emotional support animals, water/mold Issues, individual assessment, and more. Finally, what changes do the experts see on the horizon? Get the regulatory, developer, and Association perspectives on condominium conversions. Order the Video OnDemand here, the CD homestudy here, and the MP3 here. Available for 7 general credits.

3. 25 Cases Every Real Estate Lawyer Should Know – With Fred Skillern
From the obscure attorney disciplinary case (who would know?) that declares the law on the recording of attorney liens, to the well-publicized Lazy Dog Ranch case that revolutionized how we think about easement disputes (with the assistance of the new Restatement) … from statutory interpretation cases dealing with our common interest communities to cases in equity that at times seem to “rewrite” our statutes … our appellate courts have given us a healthy menu of cases on which real estate lawyers of all stripes can and should feast.  Order the Video OnDemand here, the CD homestudy here, and the MP3 here. Available for 3 general credits.

2. Quiet Title Actions: The Basics Plus Selected Advanced Topics
An action to quiet title is brought to establish a party’s title to real property, thereby “quieting” any challenges to the title. When the cloud on the title is removed, the plaintiff is free of claims against the property. Experienced experts will walk you through the quiet title process. You will learn the mechanics of the quiet title lawsuit, and about the more advanced issues when handling a quiet title case. From service of process and identification of the parties, to the most successful strategies in defending a quiet title action, you will get what you need to best serve your clients. Each homestudy order receives a copy of the CLE book, Colorado Quiet Title Actions, 3rd Edition, as part of the course materials for this program. Please note the book will be provided in PDF. Order the Video OnDemand here, the CD homestudy here, and the MP3 here. Available for 7 general credits.

1. 34th Annual Real Estate Symposium
For the past 33 years, the Real Estate Symposium has been established as an institution not to be missed by any real estate professional in the Rocky Mountain region. Join more than 400 of your friends and colleagues for this once-a-year opportunity to talk about the most important issues you face in your real estate practice today. Order the Video OnDemand here, the CD homestudy here, and the MP3 here. Available for 16 general credits, including 3 ethics credits. SAVE THE DATE! The 35th Annual Real Estate Symposium will be held July 13 through 15, 2017, at the Vail Marriott Resort and Spa.

Colorado Court of Appeals: Holder of Evidence of Debt May Initiate Foreclosure with Copy of Evidence of Debt

The Colorado Court of Appeals issued its opinion in Edwards v. Bank of America, N.A. on Thursday, August 25, 2016.

Mortgage—Foreclosure—Standing—Summary Judgment—Affidavit.

Plaintiff obtained a loan to finance the purchase of property. When she defaulted on the loan, defendant sold the house through foreclosure. During the foreclosure proceedings, plaintiff filed a complaint alleging that defendant lacked standing to file a C.R.C.P. 120 motion and to commence foreclosure proceedings. The district court granted defendant’s summary judgment motion and subsequently denied plaintiff’s motion to reconsider the judgment.

On appeal, plaintiff contended that the district court erred in granting defendant’s summary judgment motion. The holder of an evidence of debt may initiate foreclosure proceedings with a copy of the evidence of debt and deed of trust, rather than the original documents. Here, defendant produced sufficient evidence to establish that it was entitled to foreclose and that plaintiff failed to demonstrate there was a genuine issue of material fact as to defendant’s standing to foreclose. Accordingly, the district court did not err in granting defendant’s motion for summary judgment.

Plaintiff also contended that the district court erred in denying her motion to reconsider summary judgment because the court prematurely granted summary judgment without giving her sufficient opportunity to conduct discovery. C.R.C.P. 56(f) allows a party who cannot produce facts essential to its opposition to a motion for summary judgment to submit an affidavit explaining why it cannot do so. Plaintiff did not submit a C.R.C.P. 56(f) affidavit. Accordingly, the district court properly denied plaintiff’s motion to reconsider summary judgment.

The judgment was affirmed.

Summary provided courtesy of The Colorado Lawyer.

Tenth Circuit: Lower-Rung Participant in RICO Association-in-Fact Enterprise Can Play Part in Carrying Out Affairs

The Tenth Circuit Court of Appeals issued its opinion in George v. Urban Settlement Services on Monday, August 15, 2016.

Plaintiffs Richard George, Steven Leavitt, Sandra Leavitt, and Darrell Dalton asserted claims under the Racketeer Influenced and Corrupt Organizations Act (RICO) against Bank of America (BOA) and Urban Settlement Services, along with a promissory estoppel claim against BOA, based on the defendants’ allegedly fraudulent administration of the Home Affordable Modification Program (HAMP). BOA was required to participate in HAMP and comply with the program guidelines because it received funds pursuant to the Emergency Economic Stabilization Act of 2008. BOA contracted with third parties, including Urban, to administer its HAMP program. Each of the four plaintiffs had a home mortgage through BOA and applied for home loan modifications through HAMP, interacting with BOA and Urban representatives during the application process. Despite various misleading representations from BOA and Urban, the plaintiffs were unable to obtain HAMP relief, depriving them of opportunities to sell their homes or pay off other debts.

Plaintiffs brought RICO claims against BOA and Urban, alleging defendants formed a RICO enterprise with the common goal of wrongfully denying HAMP loan modifications to qualified homeowners by developing a scheme to obstruct and delay borrowers’ HAMP loan modification requests. Plaintiffs also asserted promissory estoppel claims against BOA, alleging BOA made clear promises in Trial Period Plan (TPP) documents and on its website promising permanent loan modifications to qualified borrowers who completed TPPs. BOA and Urban filed Rule 12(b)(6) motions to dismiss. BOA argued the plaintiffs failed to sufficiently allege a RICO enterprise distinct from BOA, while Urban argued they failed to sufficiently allege Urban participated in the enterprise. Both defendants argued plaintiffs failed to sufficiently allege a pattern of racketeering activity. The district court granted both defendants’ motions and dismissed plaintiffs’ claims.

On appeal, plaintiffs argued the factual allegations in their amended complaint state facially plausible RICO claims against BOA and Urban and the district court erred in dismissing the claims. The plaintiffs argued that because they alleged an association-in-fact enterprise consisting of independently owned and operated companies, the alleged enterprise is sufficiently distinct from BOA. The Tenth Circuit agreed. The plaintiffs contend the enterprise’s common purpose was to extend as few HAMP modifications as possible while appearing to comply with program rules. The district court concluded that Urban employees were BOA’s agents, who did nothing more than follow BOA’s instructions, but the Tenth Circuit disagreed. The Tenth Circuit found that plaintiffs sufficiently showed that BOA and Urban formed an association-in-fact enterprise, and that by orchestrating and operating a scheme to deny HAMP modifications, BOA and Urban furthered the enterprise’s scheme to delay modifications.

The district court also concluded that plaintiffs failed to show Urban’s participation in the enterprise. The district court characterized Urban as an outside entity having no participation in BOA’s enterprise. The Tenth Circuit noted that this mischaracterization failed to appreciate that BOA was not the alleged enterprise. Plaintiffs alleged Urban was a lower-rung participant knowingly carrying out BOA’s orders, and the Tenth Circuit agreed, noting that even a bit part participant can play some part in carrying out the enterprise’s affairs.

Defendants alternatively argued that the Tenth Circuit could affirm the district court because plaintiffs failed to show a pattern of racketeering activity. Plaintiffs alleged several acts of mail and wire fraud, but defendants argued plaintiffs failed to show particularity. As to BOA, the Tenth Circuit disagreed, noting that plaintiffs had illustrated several conversations with various BOA employees about their HAMP modifications. As to Urban, the Tenth Circuit found it was a close call. Plaintiffs argued that they were unable to show particularity without further discovery, because Urban employees frequently held themselves out as BOA employees. The Tenth Circuit found this sufficient to survive a motion to dismiss. The Tenth Circuit reversed the district court’s dismissal of plaintiffs’ RICO claims and remanded for further proceedings.

Turning to the promissory estoppel claims against BOA, the Tenth Circuit again found the district court erred. Plaintiffs described BOA’s unambiguous promises to provide permanent HAMP modifications for borrowers who complied with their TPPs. The district court found that BOA made no promise, but the Tenth Circuit determined this to be in error. Screenshots of the BOA website and TPP documents unambiguously promised borrowers permanent modifications if they complied with their TPPs. The Tenth Circuit found this sufficient to satisfy the first step of the promissory estoppel analysis. Because the district court did not address the remaining factors, the Tenth Circuit remanded for further proceedings.

The Tenth Circuit reversed the district court’s dismissal of plaintiffs’ RICO and promissory estoppel claims, and remanded for further proceedings consistent with its opinion.

Tenth Circuit: Title Insurance Does Not Cover Loss of Property at Foreclosure Sale

The Tenth Circuit Court of Appeals issued its opinion in BV Jordanelle, LLC v. Old Republic National Title Insurance Co. on Tuesday, July 26, 2016.

In 2008, BV loaned $6.3 million to PWJ Holdings, which owned the Aspens Property in Wasatch, Utah. In exchange for the loan, BV received a mortgage for one parcel in the Aspens Property, and obtained a title insurance policy through Old Republic. PWJ defaulted on the loan, and BV foreclosed on the property in 2009, acquiring title to the property at a trustee’s sale. The property was located in an improvement district, but PWJ did not pay the assessments for the improvement district, and the district initiated foreclosure proceedings in 2010. BV sued the district in state court, seeking to stop the foreclosure and retain title, but the court issued a decree in 2012 allowing the district to complete the foreclosure. Because Utah law holds that improvement district liens are superior to all other liens, the improvement district obtained title to the insured property, extinguishing BV’s interest.

BV did not learn about the improvement district’s lien until 2010, after it had acquired title to the property. When it learned of the lien, BV sought compensation from Old Republic under the title insurance policy, but Old Republic denied coverage. BV sued Old Republic, contending Old Republic had breached the insurance policy by refusing to compensate it for the loss of the property and by failing to defend BV in the state court litigation with the improvement district. The district court granted judgment on the pleadings to Old Republic, concluding that the policy did not entitle BV to recovery for loss of the property or defense in the state court suit. BV appealed.

The Tenth Circuit applied Utah law in affirming the district court. BV contended it was entitled to coverage based on six different covered risks: loss caused by a defect in title, loss by encroachments that affect title, loss caused by unmarketable title, loss caused by enforcement of subdivision regulations, loss caused by a governmental taking, and loss caused by the imposition of a statutory lien for services, labor, or material used in construction. The Tenth Circuit found that none of the covered risks applied.

The Tenth Circuit specifically found that a Utah Supreme Court opinion precluded BV’s claims regarding the defect in title, as that case held the defect must be present at the time of acquisition of the property. BV argued that because the improvement district was contemplated before it acquired the property, the defect was present, but the Tenth Circuit disagreed. The Tenth Circuit also rejected BV’s claims due to loss caused by encroachment, noting those claims were not raised in BV’s complaint. Similarly, the Tenth Circuit refused to consider BV’s claim for loss caused by unmarketable title because it was not raised in district court. The Tenth Circuit disposed of the remaining claims by finding that the improvement district’s notice to enforce a subdivision regulation was not in effect at the time BV acquired title, any governmental taking would have happened after BV acquired title, and the improvement district’s lien was not for any services, labor, or materials used in construction.

The Tenth Circuit affirmed the district court.

Colorado Court of Appeals: Tender of Funds in Satisfaction of Lien Before Redemption Period Must Be Accepted by Creditor

The Colorado Court of Appeals issued its opinion in Mortgage Investment Enterprises, LLC v. Oakwood Holdings, LLC on Thursday, July 14, 2016.

Foreclosure—Lien—Redemption.

The debtors purchased the property at issue and subsequently defaulted on their obligation to pay monthly fees to the Kimblewyck Village Owners Association (Kimblewyck). Kimblewyck filed a lien against the property. The property was also encumbered by (1) a lien filed by the Fox Run Owners Association and (2) two judgments entered in favor of Community Management Association, Inc. (CMA). Kimblewyck obtained a judgment and decree of foreclosure. Mortgage Investments Enterprises LLC (Mortgage Investments) was the successful bidder at the foreclosure sale. On the day before the foreclosure sale, Oakwood Holdings, LLC (Oakwood) purchased the Fox Run lien and both CMA judgments. Oakwood subsequently filed notices of intent to redeem the Fox Run lien and one of the CMA judgments. Mortgage Investments tendered, on behalf of the debtor, pursuant to a valid power of attorney, lien satisfaction payments to Oakwood. Although Oakwood’s period to redeem had not yet begun, it refused to accept the payments. Mortgage Investments filed a complaint for a declaratory judgment that Oakwood was required to accept Mortgage Investments’ tenders on behalf of the debtor. Oakwood subsequently redeemed the property, and the district court granted Oakwood’s motion for summary judgment.

On appeal, Mortgage Investments argued that the district court erred in concluding that Oakwood had no duty to accept tender of payment in satisfaction of its liens. Prior to the start of Oakwood’s period to redeem and before it tendered redemption funds, Oakwood had a duty to accept Mortgage Investments’ tender of payment, on behalf of the debtor, in satisfaction of the lien Oakwood sought to redeem. The district court’s judgment was reversed and the case was remanded with directions to enter summary judgment in favor of Mortgage Investments.

Summary provided courtesy of The Colorado Lawyer.

Colorado Supreme Court: Disclosed Costs Can Be Actionable Under CCPA if Costs Are Not Actual, Necessary, and Reasonable

The Colorado Supreme Court issued its opinion in State v. The Castle Law Group, LLC on Monday, July 5, 2016.

In this C.A.R. 21 original proceeding, the State appealed from the trial court’s order barring testimony of market rate prices. The State brought CCPA claims against Castle and several affiliated vendors, alleging that the vendors conspired with Castle to charge above market rate prices for various foreclosure-related services, and the inflated charges were eventually carried by mortgage servicers and the public because they relied on Castle’s representation that the costs were “actual, necessary, and reasonable.”

The trial court limited the State’s ability to provide market rate comparisons because it ruled that charging high prices is not illegal, and as long as Castle disclosed everything it charged, there was no deception. The Colorado Supreme Court disagreed with the trial court’s characterization of the CCPA claims. The court ruled that the trial court misperceived the alleged deception: that the prices charged were not “actual, necessary, and reasonable.” Because market rate comparison evidence directly impacts the determination of whether the charges were “actual, necessary, and reasonable,” the supreme court made its Order to Show Cause absolute and remanded to the trial court for further proceedings.

Colorado Court of Appeals: Economic Loss Rule Bars Tort Claims Against Mortgage Lender

The Colorado Court of Appeals issued its opinion in Miller v. Bank of New York Mellon on Thursday, June 16, 2016.

Dual Tracking—Failure to State a Claim for Relief—Economic Loss Rule—Implied Duty of Good Faith and Fair Dealing—Intentional Infliction of Emotional Distress—Fraud—Negligence.

The Millers obtained a note and deed of trust in 2004 to purchase a house, and the loan was transferred several times. They began missing payments in 2007 and filed for bankruptcy and received discharges in 2009. Bank of America, N.A. (BANA) then told the Millers to vacate their house, but they stayed and eventually entered into negotiations with BANA regarding a loan modification. In February 2012, Bank of New York Mellon (BNY Mellon) moved for an order authorizing the public trustee to proceed with a foreclosure sale, pursuant to C.R.C.P. 120. While this Rule 120 action was pending, the Millers filed a complaint against five financial institutions (collectively, the Banks) to quiet title to the house in their favor. The Millers alleged that the Banks improperly subjected them to dual tracking (a process under which banks pursue foreclosure on a home while negotiating a loan modification) in violation of the consent judgment that resulted from the National Mortgage Settlement, which generally prohibits dual tracking. The district court dismissed for failure to state a claim for relief. The court in the Rule 120 action authorized the sale in July 2012, but the Millers kept negotiating a loan modification with BANA. In 2013, BANA and the Millers agreed to a loan modification, the Millers began making payments, and BNY Mellon dismissed the Rule 120 action. In October 2014, the Millers amended their complaint, asserting claims for breach of the implied duty of good faith and fair dealing, intentional infliction of emotional distress, fraud, and negligence. The Banks moved to dismiss, and the court granted the motion.

On appeal, the Millers argued that the court erred in determining that the economic loss rule barred their tort claims. The economic loss rule provides that “a party suffering only economic loss from the breach of an express or implied contractual duty may not assert a tort claim for such a breach absent an independent duty of care under tort law.” Here, the consent judgment in a federal case challenging dual tracking did not create a private cause of action for third parties and there was no special relationship between the parties that established an independent duty.

The Millers also argued that the court erred in dismissing their contract claim, because they had a reasonable expectation that the Banks would not engage in dual tracking and would modify their loan. Although there is an implied duty of good faith and fair dealing in every contract, there was no reasonable expectation on the part of the Millers that their loan would be modified or that the Banks would refrain from dual tracking. Neither allegation has any basis in their contractual agreement.

The judgment was affirmed.

Summary provided courtesy of The Colorado Lawyer.

Colorado Supreme Court: Written Extensions of Acknowledgments of Debt Extended Statute of Limitations for Foreclosure

The Colorado Supreme Court issued its opinion in Hutchins v. La Plata Mountain Resources, Inc. on Monday, June 20, 2016.

Limitations of Actions—Acknowledgments of Existing Debt—Form and Essential Elements of Acknowledgements.

Hutchins and Gasper petitioned for review of the Court of Appeals’ judgment affirming the district court’s ruling in favor of La Plata Mountain Resources, Inc. (La Plata), in an action brought by La Plata to collect on certain debentures issued by Leadville Mining and foreclose on a deed of trust securing the debts. Although Leadville’s authorized agent had signed documents acknowledging its obligations for the amounts owed on other similar debentures held by Hutchins and Gasper, which were secured by the same deed of trust, the Court of Appeals reasoned that because these documents lacked the two-thirds consent required for modification of the debentures, the included acknowledgments were insufficient to restart the applicable limitations period. The Court of Appeals therefore concluded that the statute of limitations had run on any action by Hutchins and Gasper to collect on the debts or foreclose on the deed of trust.

The Supreme Court reversed. The documents in question were in writing, were signed by Leadville, and contained a clear and unqualified acknowledgement of the debt owed to Hutchins and Gasper. Therefore, they constituted a new promise to pay, establishing a new accrual date and effectively extending the limitations period on collection of the debt.

Summary provided courtesy of The Colorado Lawyer.

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.

Comment Period Open for Proposed Changes to Rule 120

The Colorado State Judicial Branch announced proposed changes to Rule 120 of the Colorado Rules of Civil Procedure, “Orders Authorizing Sales Under Powers.” The changes are extensive, and include changing the title of the rule to be “Orders Authorizing Foreclosure Sale Under Power in a Deed of Trust to the Public Trustee.”A redline of the proposed changes is available here.

The supreme court is now accepting comments on the proposed changes to Rule 120. Comments may be made in writing via email to Christopher Ryan, the Clerk of the Supreme Court, or via U.S. Mail at 2 E. 14th Ave., Denver, CO 80203. Comments must be received no later than 5 p.m. on April 6, 2016. Comments will be posted on the State Judicial website after the close of the comment period.

Colorado Court of Appeals: Secured Creditor With Disallowed Claim Against Estate Can Enforce Underlying Security

The Colorado Court of Appeals issued its opinion in Oldham v. Pedrie on Thursday, July 16, 2015.

Real Property—Promissory Note—Deed of Trust—Probate—Notice of Claim—Disallowance—Foreclosure—Novation.

This appeal involves a parcel of land in Teller County first purchased by Lorna Oldham in 1976 from Donald Pedrie in exchange for a promissory note. In 2005, Lorna Oldham signed a second promissory note to replace the first promissory note. In 2007, she died, and Pedrie filed a notice of claim against the Estate of Lorna Oldham for the amount owing on the promissory note. The personal representative disallowed a portion of Pedrie’s claim, Pedrie threatened foreclosure of the property, and the trial court allowed him to proceed with his foreclosure proceedings.

On appeal, the Oldhams and the Estate contended that the 1976 Deed of Trust was extinguished when Pedrie declined to contest the disallowance in the Michigan court. Under the Colorado and Michigan probate codes, the requirement to file a notice of claim in an estate proceeding does not affect or prevent the right of a secured creditor to enforce a mortgage or other liens on estate property. Further, a secured creditor is not required to pursue an unconditional claim that is disallowed. Therefore, a secured creditor’s lien on real property is not extinguished when the creditor presents an unconditional claim against a decedent’s estate but does not pursue a disallowed claim within sixty-three days. The secured creditor may still pursue a foreclosure action to enforce the lien. Therefore, the district court did not err when it found that Pedrie held a valid deed of trust on the Teller County property.

The Oldhams also contended that Pedrie’s 1976 lien on the Teller County property was extinguished under CRS § 38-39-207, either because Pedrie accepted a new promissory note in 2005 that was not secured by a deed of trust or because there was a novation. The record contains unrebutted testimony that the principal plus interest due on the first note was greater than the amount due on the 2005 promissory note. Under these circumstances, the 2005 promissory note did not constitute a novation and did not extinguish the 1976 Deed of Trust.

Finally, the Oldhams contended that the district court erred by not making a finding on the total amount owed on the debt secured by the deed of trust. Pursuant to CRCP 120, the district court was not required to determine the amount remaining on secured debt. The Trial Management Order (TMO), however, required the court to determine the payoff amount. Therefore, the district court erred in not complying with the TMO in this regard. The judgment was affirmed in part and reversed in part, and the case was remanded to the district court to determine the amount owed by the Oldhams on the 1976 Deed of Trust.

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.