May 23, 2017

Colorado Supreme Court: Exculpatory Clauses Did Not Exculpate Property Owners Association

The Colorado Supreme Court issued its opinion in McShane v. Stirling Ranch Property Owners Association on Monday, May 1, 2017.

Exemption from Liability—Exculpatory Contracts— Corporation as Distinct Entity—Corporate Actions through Agents—Vicarious Liability.

The Colorado Supreme Court addressed whether a homeowners association may benefit from exculpatory clauses in the community’s declaration and bylaws when those clauses do not name the association as a protected party. Because the plain language of the exculpatory clauses at issue in this case does not limit the association’s liability, and the association, as an entity distinct from internal boards acting as its agents, cannot benefit from exculpatory clauses protecting those agents, the court concluded that petitioners may bring their claims against the association. Accordingly, the court of appeals’ decision was reversed and the case was remanded.

Summary provided courtesy ofThe Colorado Lawyer .

Colorado Court of Appeals: Condominium Declarations Control Over Contrary Provision in CCIOA

The Colorado Court of Appeals issued its opinion in Francis v. Aspen Mountain Condominium Association, Inc. on Thursday, February 23, 2017.

Condominium Declaration—Common Expenses—Amendment—Colorado Common Interest Ownership Act—Motion for Leave to Amend—Indispensable Parties.

The Francis parties are trusts and their fiduciaries and other individuals with ownership interests in the Aspen Mountains Condominiums. The parties’ dispute arose from a contested 2010 vote that amended the original 1972 condominium declaration to reallocate the common interest shares and common expenses. The 1972 declaration had originally allocated common interest shares and common expenses based on unit size, and the amended declaration reallocated common interest shares equally among all units. Common expenses increased for the Francis parties, and they later filed suit, seeking a judgment voiding the reallocation of the common interest shares. The trial court ruled in favor of the Aspen Mountain Condominium Association, Inc. (AMCA), finding that the 2010 amendment had been properly adopted.

On appeal, the Francis parties first contended that the trial court erred by partially granting AMCA’s motion for a determination of law. Here, the declaration required a unanimous vote to alter the percentage of the undivided interests in the general common elements. The trial court erred by holding that the Colorado Common Interest Ownership Act, which went into effect in 1992, nullified the 1972 declaration’s requirement of a unanimous vote to alter ownership interests in the common elements.

The Francis parties also contended that the trial court erred in denying their motion for leave to amend the complaint to assert additional breach of fiduciary duty claims against AMCA. The motion was submitted after the discovery deadline and only a few months before trial. Further, the case had been pending for more than five years, and the Francis parties had already amended the complaint five times and could have added the newly asserted claim at any point. Therefore, the court did not abuse its discretion in denying leave to amend.

Next, the Francis parties argued that the trial court erred by denying their CRCP 59(a) motion to amend the judgment based on failure to join as indispensable parties the beneficiaries of the various trusts included among the Francis parties. The proposed additional parties were alleged to be beneficiaries of trusts that were already parties to the action and were represented by their respective trustees. As a matter of law, the beneficiaries’ interests were sufficiently protected by the trustees’ participation in the action on their behalf.

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

Summary provided courtesy of The Colorado Lawyer.

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: Preliminary Injunction Appropriate Where HOA Board Amending Bylaws Without Proper Notice

The Colorado Court of Appeals issued its opinion in Anderson v. Applewood Water Association, Inc. on Thursday, November 3, 2016.

Homeowners Association—Open Meetings—Notice—Colorado Common Interest Ownership Act—Colorado Revised Nonprofit Corporations Act.

Plaintiffs filed for a preliminary injunction to enjoin defendant Applewood Water Association, Inc. (Association) from (1) conducting special meetings of the board of directors (board) in violation of its bylaws and (2) submitting an amended declaration of covenants for a full membership vote, based on their belief that the amended declaration illegally conveyed certain property rights. The owners presented evidence to support their contention that the board conducted special meetings without giving required notice set forth in the Colorado Common Interest Ownership Act (CCIOA) and the Colorado Revised Nonprofit Corporations Act (CRNCA). They also presented evidence that those meetings concerned amendments to existing covenants. The trial court denied both requests.

On appeal, the owners contended that the trial court erred as a matter of law when it found that it had no legal authority to enjoin future violations of civil statutes. The CCIOA and CRNCA create a legally protected interest in open meetings. The plain language of both statutes gives a court the authority to enjoin the violation of their provisions where a movant can show noncompliance and harm. Therefore, the trial court has the authority to enjoin the Association from holding special board meetings without providing the notice required under CCIOA and CRNCA. The trial court’s order as to that preliminary injunction request was reversed and the case was remanded for further factual findings.

The Court of Appeals concluded that the second injunction request is moot because a vote on the amended declaration has already occurred. That portion of the appeal was thus dismissed.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: CCIOA Requires Substantial, not Strict, Compliance when Subdividing Units

The Colorado Court of Appeals issued its opinion in Perfect Place v. Semler on Thursday, October 20, 2016.

Colorado Common Interest Ownership Act—Strict or Substantial Compliance—Quiet Title—Unclean Hands—Fraudulent Conveyance—Attorney Fees.

This action concerns title to three parking spaces. In 2000, Blake Street Condominium (Blake Street) bought a mixed use residential and commercial building and recorded a written declaration subjecting the property to the provisions of the Colorado Common Interest Ownership Act (CCIOA). A majority interest in the building was sold to Quail Street Company, LLC (Quail Street). Quail Street’s sole shareholder was Watson. Watson made multiple changes to the building, including subdividing the garage into three individual parking spaces (C, D, and E) by painting yellow dividing lines on the garage wall. Spaces C and D were normal sized, and E was able to accommodate only a motorcycle or very small car.

Watson sold the individual parking spaces, as part of condominium units, to different buyers who subsequently sold or mortgaged them. The City and County of Denver taxed each space individually, the Blake Street homeowners association (association) separately assessed dues for each space, and title insurance separately insured the spaces.

Semler claimed title to space C from a 2007 foreclosure proceeding and space D through a different foreclosure proceeding. In 2010, the association’s attorney notified Semler and Perfect Place, LLC (Perfect Place) of clouded title concerning spaces D and E. Semler paid for a quitclaim deed from the former record owner of space D and recorded that in 2012. He claimed title to space E from a different deed in lieu of foreclosure.

Perfect Place is a member of the association. Perfect Place claimed title to all three spaces from a 2011 quitclaim deed it received and recorded from Watson. Watson issued a correction deed in 2013 (correction deed). It also claimed title to spaces D and E from a series of conveyances originating from a wild deed.

Perfect Place sued to quiet title to the three parking spaces in the Blake Street property. The trial court found that Watson subdivided the garage into three parking spaces and that Perfect Place procured the 2011 deed by fraud, concealment, and unclean hands. The court concluded that Semler owned spaces C and D. Title to space E was resolved in favor of Perfect Place by agreement of the parties. The court ordered Semler to draft a proposed amendment to the Blake Street declaration memorializing the decision.

Semler submitted a proposed map allotting space C 132 square feet, space D 132 square feet, and space E 90 feet. Semler relied on the historical boundaries of spaces C and D and the dimensions of space E set forth in a recorded parking space agreement. Perfect Place objected, a hearing was held, and the court allotted space C 129 square feet, space D 114 square feet, and space E 122 square feet. Perfect Place appealed the trial court’s finding that Semler owned parking spaces C and D. Perfect Place argued that the absence of a formal application to the association’s board describing reapportionment of the common elements, as well as the absence of an amended declaration or condominium map that strictly complies with CCIOA, violates C.R.S. § 38-33.3-213. Semler argued that Watson substantially complied with CCIOA when he subdivided the garage into three spaces.

The Colorado Court of Appeals looked at the plain language of C.R.S. § 38-33.3-213 and the purposes of CCIOA as a whole to find that substantial rather than strict compliance with the provision was required. In particular, it noted that statutory interpretation of CCIOA should give way to flexibility where strict adherence to provisions that create uniformity would render title unmarketable. Here, because Watson was the majority owner and board member of the homeowners association, any application that he would have submitted would have been submitted to himself. The declaration also gave him the authority, as the first purchaser from the grantor, to subdivide the garage. Moreover, a map identifying the spaces (though not their dimensions) was recorded. All of this amounted to substantial compliance.

Both parties asserted that the trial court abused its discretion in crafting equitable relief. Perfect Place contended that the court abused its discretion in (1) reforming the deeds of Watson and Quail Street to validly convey property and (2) voiding the 2011 quitclaim deed from Watson to Perfect Place by declaring it a fraudulent conveyance. Semler argued that it was an abuse of discretion for the trial court to increase the size of space E at the expense of space D, thereby benefitting Perfect Place, a party it had found to have unclean hands. The trial court’s reformation of deeds from Quail Street to grantees (that should originally have been from Watson to grantees) was not an abuse of discretion based on the finding that any conveyance errors by the grantors was inadvertent. The trial court also did not abuse its discretion in finding the 2011 quitclaim deed from Watson to Perfect Place was a fraudulent conveyance. Watson believed he was merely correcting a technical defect in title and Perfect Place’s attorney fostered that belief (which was false). Thus the record supported the finding that the quitclaim deed was obtained by “fraud in the factum” and was therefore void. But the court of appeals held that the award of additional area to space E and Perfect Place was an abuse of discretion because this equitable remedy benefitted a party with unclean hands.

Semler also sought attorney fees under the CCIOA. The court found the trial court erred in denying Semler’s request for attorney fees because he was required to defend his title under the provisions of CCIOA.

The judgment quieting title to spaces C and D in Semler was affirmed. The judgment adjusting the boundaries of spaces D and E was reversed. The case was remanded for the trial court to return the boundaries of spaces D and E to their historical dimensions and to determine and award Semler attorney fees.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Specific Proviso in Condominium Declaration Precluded Certain Non-unanimous Amendments

The Colorado Court of Appeals issued its opinion in DA Mountain Rentals, LLC v. The Lodge at Lionshead Phase III Condominium Association, Inc. on Thursday, October 6, 2016.

The Lodge at Lionshead Condominium Association established a Condominium Declaration years before the adoption of the Colorado Common Interest Ownership Act, which it attempted to amend in 2012 to establish a condominium community. The Association’s proposed amendment was adopted by a supermajority of owner-members. DA Mountain Rentals, an owner of one of the condominium units, protested that the amendments could only be adopted by unanimous consent of the members pursuant to a specific proviso in the Declaration. DA sought a declaratory injunction in district court prior to the Association’s recording of the amendments, and the amendments have not yet become effective due to the litigation.

After discovery, the Association moved for determination of law pursuant to C.R.C.P. 56(h). The court granted the motion and determined that the 2012 Amendments had been validly adopted and the 67 percent voting requirement they imposed did not violate the terms of the Declaration or CCIOA. The Association next moved for summary judgment, which the court also granted. DA filed two appeals. The first appeal challenged the district court’s grant of the Rule 56 motion and the summary judgment motion. The second appeal challenged post-judgment attorney fee and cost awards. The Association moved to dismiss the second appeal because the attorney fee issue was not ripe. A division of the court of appeals partially granted the Association’s motion to dismiss as to the attorney fee issue and consolidated the remaining issues.

The court of appeals first addressed whether the 2012 amendments were valid under the Declaration and the CCIOA, since they would eliminate unanimous member and lender consent requirements for shared expenses and determining obsolescence. The court first considered whether the amendments were permitted under the Declaration without unanimous consent. Because the 2012 amendments could affect the members’ common expenses, the court found that those provisions affecting the common expenses were not allowable under the Declaration. As to the 2012 amendments concerning obsolescence, those were not subject to the unanimous consent requirement and were allowable.

The court next considered whether the construction of the Declaration conflicted with the CCIOA, and determined that it did not. The court evaluated the unanimity requirement as related to the CCIOA and found that there was no conflict between the Declaration and the CCIOA. The court similarly concluded that the obsolescence amendments did not conflict with the CCIOA. The court next evaluated the mandatory buyout provision in the 2012 amendments and found that it was valid. The court rejected DA’s arguments about attorney fees and costs.

The court then considered the Association’s cross-appeal on whether the district court abused its discretion by ordering the production of documents the Association contended were privileged. The court engaged in a lengthy analysis of the sequence of events in district court, and whether subsequent Colorado Supreme Court precedent required the court to retroactively engage in a proportionality review. The court of appeals found that the district court had actively managed discovery after the Association asserted privilege, and the district court retained discretion to do so as it saw fit. The court found no abuse of discretion by the district court.

The court affirmed in part, reversed in part, and remanded with directions.

Colorado Supreme Court: Purported Annexation Failed to Comply with Colorado Common Interest Ownership Act

The Colorado Supreme Court issued its opinion in Ryan Ranch Community Association, Inc. v. Kelley on Monday, September 26, 2016.

Colorado Common Interest Ownership Act—Creation, Alteration, and Termination of Common Interest Communities.

The Colorado Supreme Court considered whether a developer annexed several lots into a common interest community such that the lot owners would owe assessments to the community’s homeowners association. The court concluded that the lots were not annexed because the purported annexation failed to comply with the Colorado Common Interest Ownership Act, C.R.S. §§ 38-33.3-101 to -402. The lot owners therefore were not liable for the association’s assessments.

Summary provided courtesy of The Colorado Lawyer.

Colorado Supreme Court: Developer’s Recordation of Covenants and Plat Did Not Create Common Interest Community

The Colorado Supreme Court issued its opinion in Pulte Home Corp. v. Countryside Community Association, Inc. on Monday, September 28, 2016.

Colorado Common Interest Ownership Act—Creation, Alteration, and Termination of Common Interest Communities—Management of the Common Interest Community.

The Supreme Court addressed when and how common interest communities are 16 formed under the Colorado Common Interest Ownership Act, CRS §§ 38-33.3-101 to -402. In particular, the Court analyzed whether the declarant developer was liable for past-due assessments for maintenance of the developer’s unsold properties and related common elements. The Court concluded that, on the facts presented, the developer’s recordation of the covenants and plat did not create a common interest community. Rather, the community was created when the developer first subjected property to the covenants, and the remaining property could not become part of the community until the developer added it in accordance with certain prescribed steps. The developer’s property was therefore not part of the community and was not subject to assessments. The Court also concluded that the homeowners association had no remedy for unjust enrichment because its covenants fully allocated responsibility for assessment costs.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Reformation of Covenants Agreement Placed Parties in Position with CCIOA-Compliant Agreement

The Colorado Court of Appeals issued its opinion in Arrabelle at Vail Square Residential Condominium Association, Inc. v. Arrabelle at Vail Square LLC on Thursday, August 25, 2016.

Development—Association—Colorado Common Interest Ownership Act—Small Planned Community—Reformation—Special Master.

The Arrabelle at Vail Square (Arrabelle) is a luxury development built and managed by Vail Resorts Development Company and Arrabelle at Vail Square LLC (Vail Resorts). Arrabelle includes multi-million dollar residential condominiums, a boutique hotel, restaurants, retail shops, an ice-skating rink, a spa, parking, and other amenities. At the time of development, Vail Resorts recorded a plat establishing seven separate real estate parcels collectively titled “Lot 1” and “Airspace Lots A-F” at Arrabelle. Vail Resorts then entered into a Reciprocal Easements and Covenants Agreement (RECA) governing those parcels and creating two lots—the Airspace Lot (which would be developed into condominiums) and the Project Lot (the remainder of the property). The RECA establishes benefits, burdens, and cost allocations between both lots, and it regulates the use and enjoyment of both lots. Immediately after recording the RECA, Vail Resorts recorded a condominium plat creating 67 condominiums in the Airspace Lot and a condominium declaration creating the Arabelle at Vail Square Condominium Association, Inc. (Association). Problems soon developed between Vail Resorts and the Association. The Association subsequently filed this action seeking a declaratory judgment allowing it to terminate the RECA or, alternatively, ruling that the RECA was in violation of the Colorado Common Interest Ownership Act (CCIOA), requiring reformation. Among other things, the trial court (1) ruled that Arrabelle is not a small planned community under C.R.S. § 38-33.3-116(2), because it was subject to development rights; (2) reformed the RECA to adjust the cost allocation ratio between the lots; and (3) had a special master draft an amendment to the RECA.

On appeal, Vail Resorts argued that the trial court erred in ruling that Arrabelle is not a “small planned community” under CCIOA § 38-33.3-116(2) because Vail Resorts reserved development rights under the RECA. By definition, the Arrabelle, which contains 67 units, is not a small planned community containing fewer than 20 units under CCIOA.

Vail Resorts also argued that the trial court erred in reforming the cost allocation and RECA and master association documents because those documents contain terms not required by CCIOA. Because the 59.7% cost allocation to the Association did not correspond to the formula established in RECA section 6(b), and because that allocation discriminated in favor of Vail Resorts’ Project Lot without properly disclosing that the allocation substantially benefited that lot, the trial court did not err in reforming RECA section 6(b) pursuant to the Association’s expert’s recommendation based on as-built drawings of the Arrabelle.

Vail Resorts also contended that additional court-ordered reformations to the RECA exceeded the authority of the court. Principles of equity support the trial court’s conclusion that reformations were necessary for the RECA to comply with CCIOA, and the trial court did not abuse its discretion in adopting the special master’s reformations. The court placed Vail Resorts and the Association in the position they would have been had Vail Resorts initially created a CCIOA-compliant common interest community.

The judgment was affirmed.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Law Firm Breached Contract Not to Represent One Association Member Against Another

The Colorado Court of Appeals issued its opinion in Semler v. Hellerstein on Thursday, August 25, 2016.

Notice of Appeal—Timeliness—Amended Complaint—Jurisdiction—Motion to Dismiss—Fraud—Concealment—Misrepresentation—Civil Conspiracy—Breach of Fiduciary Duty—Breach of Contract—Third Party Beneficiary—Attorney Fees.

Plaintiff Semler and defendant Perfect Place are both members of the 1940 Blake Street Condominium Association (Association). Defendant Hellerstein owns and controls both Perfect Place and Bruce S. Hellerstein, CPA P.C. Hellerstein also served as treasurer of the Association. Defendant Bewley is an attorney employed by defendant law firm Berenbaum Weinshienk, P.C. At all relevant times, Bewley represented Hellerstein and his two corporate entities.

This case stems from a related quiet title action in which Perfect Place asked the court to determine that it was the rightful owner of parking spaces C, D, and E. The court presiding over the quiet title action determined that Semler owned parking spaces C and D, while Perfect Place owned parking space E. Semler then brought the current suit, claiming that Bewley and Hellerstein devised a scheme to gain title to Semler’s building parking spaces C and D. Semler’s first amended complaint alleged claims for breach of fiduciary duty against Hellerstein, aiding and abetting that breach against Bewley, and civil conspiracy against all defendants. The court granted defendants’ motions to dismiss. Semler then moved to amend his complaint for the second time, proposing to add claims for fraud, nondisclosure and concealment, negligent misrepresentation, negligent supervision, vicarious liability, and breach of contract. He also more clearly explained that he was seeking damages for the lost income opportunities he suffered as a result of having to defend against the quiet title action. The court denied Semler’s second motion to amend based on lack of standing and awarded attorney fees in favor of defendants.

On appeal, defendants asserted that Semler’s notice of appeal was untimely and, therefore, the Court of Appeals lacked jurisdiction to consider the appeal. The Court determined that Semler timely filed his notice of appeal.

Semler contended that the trial court erred by denying his motion for leave to amend his complaint a second time. The court, however, considered the claims in the second amended complaint when ruling on the motion to dismiss.

Semler argued that the trial court erred in granting defendants’ motions to dismiss. The Court reviewed the trial court’s dismissal of the action based on Semler’s second amended complaint. Semler’s fraud, concealment, and misrepresentation claims were all premised on conversations and transactions between a third party and defendants in which Semler was not involved. Semler lacked standing to bring these claims. Moreover, Semler’s claims for lost opportunity damages are too remote and unforeseeable to be recoverable under these claims. Therefore, these claims failed to state a claim upon which relief could be granted and should have been dismissed under C.R.C.P. 12(b)(5).

Semler also contended that defendants conspired with each other to obtain his parking spaces. He is not entitled to relief on a civil conspiracy claim because a director cannot conspire with the corporation which he serves, which is the premise of Semler’s argument. Semler’s claim for breach of fiduciary duty against Bewley failed to state a claim upon which relief can be granted. Additionally, because Hellerstein was not acting in his role as treasurer when he engaged in the allegedly fraudulent conduct, Semler’s breach of fiduciary duty claim against Hellerstein fails. Because these claims fail, Semler’s aiding and abetting breach of fiduciary duty claim against Bewley and negligent supervision and vicarious liability claims against Bewley’s law firm, Berenbaum Weinshienk, fail as well.

As to his breach of contract claim, although Semler was not a party to the contract between Berenbaum Weinshienk and the Association in which Berenbaum Weinshienk agreed that it would not represent one Association member against another, Semler sufficiently pleaded a third-party beneficiary breach of contract claim pursuant to this agreement. Therefore, the case was remanded to the trial court for further proceedings on this claim.

Semler also contended that if the dismissal order is reversed, the attorney fees award in favor of defendants must also be reversed. Only Semler’s breach of contract claim survived C.R.C.P. 12(b) dismissal. Thus, because that claim was not pleaded against the Perfect Place defendants, the attorney fees award to them remains undisturbed. The order awarding fees to Bewley and Berenbaum Weinshienk was reversed.

The orders were affirmed in part and reversed in part, and the case was remanded with directions.

Summary provided courtesy of The Colorado Lawyer.

Bills Limiting Foreclosure Finder’s Fee, Clarifying Documentary Recording Fees, and More Signed by Governor

On Friday, April 15, 2016, Governor Hickenlooper signed 15 bills into law. To date, he has signed 117 bills this legislative session. Some of the bills signed Friday include a bill reducing finder’s fees for public trustee foreclosures, a bill treating sexual trafficking of a child as child abuse for dependency and neglect cases, a bill clarifying how to calculate filing fees for recording grants or conveyances of real property, and more. The bills signed Friday are summarized here.

  • HB 16-1011 – Concerning the Removal of Restrictions on the Authority of a Board of a Metropolitan District to Provide Activities in Support of Business Development Within the District, by Rep. Ed Vigil and Sens. Leroy Garcia & Kevin Grantham. The bill removes the specified minimum valuation of commercial property for which a board of a metropolitan district can provide activities in support of business recruitment, management, and development.
  • HB 16-1066 – Concerning an Habitual Domestic Violence Offender, by Rep. Kit Roupe and Sen. Linda Newell. Currently, a judge must make a finding of fact regarding whether a defendant is a habitual domestic violence offender. The bill specifies that the trier of fact (judge or jury) may determine habitual status.
  • HB 16-1073 – Concerning the Qualifications of Licensed Electricians, by Reps. Crisanta Duran & Brian DelGrosso and Sens. Lucia Guzman & Mark Scheffel. The bill creates new renewal requirements for people seeking to renew licenses as master electricians, journeyman electricians, or residential wiremen. Renewal applicants will be required to complete 24 hours of continuing education rather than passing a competency evaluation.
  • HB 16-1090 – Concerning the Conditions Under Which a Person May Assist Another for Compensation in Obtaining the Proceeds of a Foreclosure Sale After All Liens Have Been Satisfied, by Rep. Beth McCann and Sen. Cheri Jahn. The bill limits the premium, or finder’s fee, that a person may charge for offering assistance in recovering the balance of the purchase price of a foreclosed property after all liens and claims against the property have been satisfied.
  • HB 16-1098 – Concerning Updates to Provisions Relating to School Discipline Reporting, by Rep. Polly Lawrence and Sen. Linda Newell. The bill modifies school discipline reporting requirements, requiring that agencies of the Judicial Department make information regarding expunged juvenile delinquency proceedings available to the Division of Criminal Justice, specifies that the attorney general’s requirement to report names of students given criminal citations or diversion is exempt from statutes prohibiting dissemination of confidential information, and allows aggregation of data about incidents involving law enforcement on school property.
  • HB 16-1103 – Concerning Clarifying License Pathways for the Mental Health Professional Workforce, by Reps. Tracy Kraft-Tharp & Lois Landgraf and Sens. Beth Martinez Humenik & Nancy Todd. The bill specifies that candidates seeking licensure as mental health professionals may, but are not required to, register with the database of registered psychotherapists after completing their degree.
  • HB 16-1106 – Concerning the Authority of a County to Designate Public Roads as a Section of a Pioneer Trail, by Rep. Jim Wilson and Sens. Kevin Grantham & Leroy Garcia. The bill allows a board of county commissioners to designate by resolution any public roads in the county as a pioneer trail, with certain conditions.
  • HB 16-1145 – Concerning the Determination of the Documentary Fee Imposed for Recording a Grant or Conveyance of Residential Real Property, by Rep. Steve Lebsock and Sen. Jack Tate. The bill clarifies that the filing fee for a residential real property conveyance is calculated based on the total sales price, as listed on the conveyance document, and if there is no sales price listed or the amount is less than $500, the documentary fee is calculated based on the total sales price listed on the declaration form.
  • HB 16-1149 – Concerning a Requirement that the Executive Board of a Common Interest Community Created in Colorado Before July 1, 1992, Comply with the Budget Reporting Provision of the “Colorado Common Interest Ownership Act”, by Rep. Jovan Melton and Sen. Linda Newell. Currently, common interest communities established before July 1, 1992 are exempt from certain reporting requirements. The bill removes the exemption.
  • HB 16-1170 – Concerning the Continuation of the Division of Racing Events in the Department of Revenue, and, in Connection Therewith, Implementing Recommendation 1 of the 2015 Sunset Report of the Department of Regulatory Agencies, by Reps. Ed Vigil & Don Coram and Sens. Jerry Sonnenberg & Leroy Garcia. The bill extends the sunset of the Division of Racing Events and the Colorado Racing Commission until September 1, 2023.
  • HB 16-1189 – Concerning the Regulation of Bingo-Raffle Licenses, by Rep. Cole Wist and Sen. Ellen Roberts. The bill makes changes to the Secretary of State’s regulation of bingo-raffle licenses. Specifically, the bill allows people whose license was denied to appeal to an ALJ within 60 days, clarifies when consolation prizes must be reported, and removes a restriction on the number of games a person can be a game manager for.
  • HB 16-1224 – Concerning Child Abuse Involving Human Trafficking of Minors, by Rep. Paul Lundeen and Sen. Laura Woods. The bill adds human trafficking of a minor for sexual servitude or commercial sexual exploitation to the definition of child abuse for purposes of dependency and neglect. The bill also requires county departments of human services to immediately offer services to children who are victims of human trafficking when appropriate and to file petitions in juvenile court on the child’s behalf.
  • HB 16-1236 – Concerning Continuation of the Infection Control Advisory Committee, by Rep. Dianne Primavera and Sen. Larry Crowder. The bill extends the sunset of the Infection Control Advisory Committee until July 1, 2021.
  • SB 16-013 – Concerning Statutory Changes Related to the Office of the Child Protection Ombudsman, by Sen. Linda Newell & Rep. Jonathan Singer. The bill makes several statutory changes regarding the Office of the Child Protection Ombudsman, including clarifying its board’s advisory nature, clarifying certain duties and the relationship between the office and the Judicial Department, and removing an audit requirement.
  • SB 16-125 – Concerning the Governance of Credit Unions, and, in Connection Therewith, Authorizing the Appointment of an Audit Committee in Lieu of a Supervisory Committee and Allowing the Reasonable Compensation of a Director for His or Her Service to the Credit Union, by Sen. Chris Holbert and Rep. Tracy Kraft-Tharp. The bill allows the board of directors of a credit union to appoint an audit committee in lieu of a supervisory committee.

For all of Governor Hickenlooper’s 2016 legislative decisions, click here.

Top Ten Real Estate Programs and Homestudies

As the end of the year approaches, and the end of the compliance period looms for a third of Colorado’s attorneys, we continue examining the Top Ten Programs and Homestudies in several areas of law. In case you missed it, we already profiled the Top Ten Ethics Programs and Homestudies, the Top Ten Family Law Programs and Homestudies, and the Top Ten Trust & Estate Programs and Homestudies. Today we turn to real estate law. Although there are many great programs to choose from, we have narrowed down our list to these ten programs.

10. HOA Basics: Common Interest Communities. HOA law is a booming subset of real estate law. This program details the basics of representing a client in an HOA, or representing an HOA as your client, including providing an overview of common interest communities and the Colorado Common Interest Ownership Act (CCIOA), collection actions for HOA dues, covenant enforcement, transparency, and ethical issues related to representing HOAs and developers. Seven general credits, including one ethics credit; available as CD homestudy, MP3 audio download, and Video OnDemand.

9. Eminent Domain Law for Pipelines in Colorado. In 2012, the Colorado Supreme Court ruled that a 100-year-old pipeline condemnation statute was not applicable to petroleum pipelines, only electrical conduits. The petroleum industry unsuccessfully petitioned to legislatively overturn the decision in 2013 and 2014. In this one-hour course, learn about the history of pipeline condemnation statutes and the powers they grant, as well as important safety considerations. One general credit; available as MP3 audio download and Video OnDemand.

8. Foreclosure Law — All the Latest and Greatest. In 2011, Colorado had one of the highest foreclosure rates in the nation. Since then, foreclosures have waned in the metro area, but despite the decrease in foreclosure proceedings, real estate lawyers need to be aware of the ins and outs of foreclosure law, especially because Colorado’s foreclosure process is unique compared to other states. This program details Colorado’s public trustee foreclosure process from start to finish, and also addresses issues such as bankruptcy, tax liens, and receiverships, that are commonly seen alongside foreclosures. Seven general credits; available as CD homestudy, MP3 audio download, and Video OnDemand.

7. The Life of a Residential Real Estate Transaction. Everything you need to know about residential real estate practice, from the offer to the closing, is explained in this helpful program. Learn about the Colorado Real Estate Commission forms and how to use them, get an overview of title commitments and title policy issues, learn about types of conveyance deeds and when to use each type, hear about mortgage lender concerns and issues, and discuss the ethics of being both an attorney and a real estate broker. Seven general credits, including one ethics credit; available as CD homestudy, MP3 audio download, and Video OnDemand.

6. Eminent Domain. Eminent domain involves the acquisition of private property by public entities for public projects or, in certain specific circumstances, by private parties for private use. Learn about key aspects of representing condemning authorities or private landowners during the various stages of eminent domain proceedings in this informative program, including immediate possession hearings, eminent domain appraisals, and ethical considerations in condemnation actions. Three general credits, including one ethics credit; available as CD homestudy, MP3 audio download, and Video OnDemand.

5. 25 Cases Every Real Estate Lawyer Should Know. Fred Skillern, seasoned practitioner and former judge, hand-picked 25 cases from the repertoire he has amassed by doing the case law update at the Real Estate Symposium for the last 16 years. From an obscure attorney discipline case that sets precedent on recording attorney liens to a well-publicized case that revolutionized easement disputes, from cases that interpret statutes to cases that seem to rewrite the law, Fred Skillern discusses it all. Three general credits. This program will take place January 21, 2016. Click here to register for the live program and click here to register for the webcast. Also available as CD homestudy, MP3 audio download, and Video OnDemand after the program.

4. Colorado Real Estate Practice with Willis Carpenter. No list of real estate programs would be complete without mention of Willis Carpenter’s legendary 10-week course, “Colorado Real Estate Practice.” Although this was Willis’s last year teaching the class, we hope to continue his legacy in 2016. Stay tuned. Eighteen general credits, including four ethics credits.

3. Anatomy of a Commercial Real Estate Transaction — Real Estate Spring Update 2015. Commercial real estate transactions are complex, and present a different array of issues than residential transactions. This program offers a look at the commercial real estate contract, including key provisions, due diligence, and common issues, as well as leasing issues, financing the transaction, construction and construction defects, environmental concerns, zoning, and more. Seven general credits; available as CD homestudy, MP3 audio download, and Video OnDemand. NOTE: The Real Estate Spring Update occurs annually with a different theme. Click here for the 2014 program.

2. Hot Topics! — Real Estate Fall Update 2015. The ABA, ACMA, and ACREL developed guidelines for typical and appropriate real estate opinions, which were discussed at this Hot Topic update. Also covered were HOA assessment lien priority, available insurance products for clients, and recent changes in conservation easement and urban renewal laws. Six general credits, including one ethics credit; available as CD homestudy, MP3 audio download, and Video OnDemand. NOTE: The Real Estate Fall Update is repeated annually with different themes. Click here for the 2014 program, and click here for the 2013 program.

1. Annual Real Estate Symposium. For 33 years, the annual Real Estate Symposium has been THE event for Colorado’s real estate lawyers, with top-notch presentations, wine tasting, and beautiful scenery in the Colorado mountains. For the 2015 Symposium, topics discussed included legislative and case law updates, ditch rights, section 1031 exchanges, recent changes to foreclosure law, ethics, eminent domain, and more. The 2016 Symposium is scheduled for July 21-23 in Breckenridge. Registration is not yet open but keep an eye on http://cle.cobar.org/realestatesymposium for details. 2015 Symposium—20 general credits, including 2.7 ethics credits; available as CD homestudy, MP3 audio download, and Video OnDemand.