June 22, 2018

Colorado Court of Appeals: Actual and Potential Rental Income Properly Used as Measure of Restitution

The Colorado Court of Appeals issued its opinion in Zeke Coffee, Inc. v. Pappas-Alstad Partnership on Thursday, July 30, 2015.

Commercial Lease—Eviction—Erroneous Judgment—Restitution—Discount Rate.

In March 2004, plaintiffs (collectively, Zeke) entered into afive-year lease agreement with Pappas-Alstad Partnership to operate a coffee shop. In September 2008, Zeke notified Pappas-Alstad of its intent to exercise an option to extend the lease for an additional five years. Pappas-Alstad said Zeke had breached a term of the lease and, after Zeke refused to cure the alleged breach, it notified Zeke that the lease had been terminated and converted into a month-to-month tenancy. In June 2009, Pappas-Alstad served a three-day demand for compliance or possession on Zeke. Zeke filed an action in district court seeking a declaratory judgment that the lease remained in effect and that Pappas-Alstad had breached it. Pappas-Alstad served Zeke a notice to quit and included in its amended answer a counterclaim seeking Zeke’s eviction. The district court issued a writ of eviction restoring possession of the property to Pappas-Alstad. A division of this Court of Appeals reversed, finding that Zeke had properly exercised the option to extend the lease and had been wrongfully evicted. In a written order, the district court determined that restitution was the appropriate remedy. Pappas-Alstad was required to restore everything it gained through the erroneous judgment.

On appeal, Pappas-Alstad contended that the district court erred in using its actual and potential rental income from the premises as a measure of the appropriate restitution. Zeke would have had to pay rent to Pappas-Alstad had the erroneous judgment never been entered. However, Zeke also would have been able to maintain its coffee business and the business income opportunities associated with it. Therefore, the district court did not abuse its discretion in not reducing Pappas-Alstad’s rental income by the rent it would have otherwise received from Zeke. The court also was not required to reduce from the award Pappas-Alstad’s expenses or losses in re-leasing the property.

Pappas-Alstad argued that the court erred in selecting the Treasury Bill rate as the discount rate to determine the present value of its future cash flow. The district court determined that the value of all future rent proceeds through the end of Zeke’s lease (from 2014 to 2019) should be calculated using a discount rate. The Treasury Bill rate has been recognized as a valid method for discounting future cash flows to present value. Therefore, the court’s decision to use the Treasury Bill rate was not an abuse of discretion. The order was affirmed and thecase was remanded to district court to award Zeke a reasonable amount of attorney fees incurred on appeal.

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

Colorado Supreme Court: Primary Tenant of Medical Building Not “Landowner” Under Premises Liability Act

The Colorado Supreme Court issued its opinion in Jordan v. Panorama Orthopedics & Spine Center, PC on Monday, April 13, 2015.

Premises Liability Act—Statutory Definition of “Landowner.”

In this case, the Supreme Court considered whether a clinic that was the main tenant at a medical campus qualified as a “landowner,” as defined by the Premises Liability Act, of a common area sidewalk where petitioner fell and sustained injuries. The Court determined that the clinic was not in possession of the sidewalk because it had only a right of non-exclusive use of the sidewalk and the landlord retained responsibility for maintaining that area. The Court then concluded that, under the terms of the lease and the facts of this case, the clinic was not legally responsible for the condition of the sidewalk or for the activities conducted or circumstances existing there. Therefore, the clinic was not the landowner within the meaning of the Premises Liability Act. The judgment was affirmed.

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

Colorado Court of Appeals: Landlord Granted Security Interest in Decedent’s Personal Property As Described in the Lease

The Colorado Court of Appeals issued its opinion in In re Estate of Wheeler on Thursday, June 20, 2013.

Lease—Security Interest—Personal Property—Collateral.

Mary Beth Wheeler, personal representative of the Estate of David Wheeler, appealed the trial court’s grant of summary judgment to Tower Building, LLC and Lorraine E. Ring (collectively, Landlord). The judgment was affirmed.

David was the sole proprietor of a jewelry store located in a building owned by Landlord. After David died, Landlord filed a claim to recover unpaid rent and interest. Landlord asserted that David’s lease for his jewelry store granted it a security interest in David’s personal property located in the store at the time of his death.

Mary Beth contended that Landlord did not have an enforceable security interest in David’s personal property, because the lease did not sufficiently describe the property. A security interest is enforceable against the debtor and third parties if the security agreement provides a sufficient description of the collateral. Here, the lease described the collateral as all of debtor’s personal property and identified the location of the property as the leased premises. Therefore, the lease for use of Landlord’s building created an enforceable security interest in David’s personal property, which was located in his jewelry store when he died.

Summary and full case available here.

e-Legislative Report: Week Nine, March 12, 2012

In this week’s Legislative Video Update, Michael Valdez discusses discusses SB 12-102, which would repeal the crime of libel, as well as an overview of the week at the Capitol, which includes pre-trial detention of minors, legal separation procedures, judicial oversight of guardians and conservators, and more.

CBA Legislative Policy Committee

The LPC met on Friday, March 9, and considered a light docket of bills:

SB 12-102 – Repeal the Crime of Libel
The LPC followed the recommendation of the Civil Rights Committee and voted to support SB 12-102 – Repeal the Crime of Libel. The LPC had delayed action on the bill to allow the Civil Rights Committee and staff to research and report additional information to the LPC. The research turned up several facts: the statute is rarely used by prosecutors, DAs and the AG had no objection to the elimination of the crime of libel, and remedies still exist for harassment and in the civil arena.

At the Capitol – Week Eight – Quick Roundup:

On Monday, March 5

  • HB 12-1139 – Pretrial Detention Of Children Tried As Adults passed on 3rd reading 34-0 with one excused in the Senate.
  • HB 12-1074 – Judicial Oversight of Guardians & Conservators passed on the 2nd Reading Consent calendar in the Senate.
  • The Senate Judiciary Committee approved CBA sponsored HB 12-1233 – Legal Separation Court Appearance Procedure. Later in the week the Senate passed the bill on 2nd Reading (Thursday) and 3rd Reading (Friday.) Since the bill was approved on 3rd Reading without amendment the next stop is the governor’s desk for signature. Congrats to the Family Law Section!

On Tuesday, March 6

  • Both Houses had early dismissal to allow Democrats to get to their caucuses; each House spent about 30 minutes on the floor.
  • Before knocking off for the day, the Senate adopted on 3rd and final reading HB 12-1074 – Judicial Oversight of Guardians & Conservators. The bill moved back to the House for consideration of the amendment added to the bill in Senate Judiciary.

On Wednesday, March 7

  • On a 35-0 vote, the Senate approved HB 12-1005 – Concerning investment of public funds.
  • The Senate Judiciary Committee approved a “strike below” version, i.e. an entirely new bill, of SB 12-070 – Uniform Residential Landlord & Tenant Act.

On Thursday, March 8

  • The House and Senate celebrated March 8, 2012 as “National Agricultural Day” with HJR 12-1015 – Concerning recognition of March 8, 2012 as “National Agricultural Day.” The resolution was adopted unanimously by the House and Senate after Representatives testified to the importance of agriculture to Colorado.
  • The House Judiciary Committee heard nearly four-and-a-half hours of testimony before amending and approving (9-2 vote), HB 12-1271 – Juvenile Direct File Limitations. The amended bill moves to the Appropriations Committee for consideration of the fiscal impact on the state.

On Friday, March 9

  • On 3rd Reading, the House unanimously adopted HB 12-1304 – Concerning measures to prevent organized retail theft. Also adopted on 3rd Reading but by a closer vote (45-20), HB 12-1175 – Concerning the encouragement of a state agency to pursue Colorado-specific solutions in lieu of federal regulation whenever possible, and, in connection therewith, requiring a state agency to report annually regarding opportunities for waiver from newly adopted federal regulations.
  • Not wasting any time after having received the Senate version of HB 12-1074 – Judicial Oversight of Guardians & Conservators, the House concurred with the Senate amendments to the bill. This ends the legislative journey for the bill – the bill moves to the governor’s desk for signature next.

SB 12-070: Describing Obligations of Landlords and Tenants Under Uniform Residential Landlord and Tenant Act

On January 19, 2012, Sen. Irene Aguilar introduced SB 12-070 – Concerning Residential Landlords and Tenants, And, In Connection Therewith, Enacting the “Uniform Residential Landlord and Tenant Act.” This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

The bill enacts the “Uniform Residential Landlord and Tenant Act”. The Act includes, among other things, provisions related to:

  • A statement of purpose and rules of construction;
  • Exclusions from the application of the Act;
  • An obligation of good faith;
  • The effect of an unsigned or undelivered rental agreement;
  • Prohibited provisions in rental agreements;
  • A landlord’s obligation to make disclosures, deliver possession of a dwelling unit, and maintain a premises;
  • A tenant’s obligation to maintain a dwelling unit, to allow a landlord access to a dwelling unit, and to use and occupy a dwelling unit;
  • Rules and regulations adopted by a landlord;
  • A tenant’s remedies for a landlord’s noncompliance with his or her obligations;
  • A prohibition on retaliatory conduct; and
  • The repeal of existing inconsistent law relating to landlord and tenant relations

The bill does not include a provision related to security deposits that was approved by the national conference of commissioners on uniform state laws. The bill requires the official comments of the national conference of commissioners on uniform state laws to be published along with the Act as nonstatutory matter. The bill also confers authority on a county court and a small claims court, respectively, to grant injunctive relief as permitted under the Act, and the bill modifies the current deadlines for giving notice to quit a tenancy in order to be consistent with the deadlines in the Act. The bill modifies the existing security deposit law by:

  • Eliminating the requirement that a tenant must give notice to a landlord of his intention to file legal proceedings a minimum of 7 days prior to filing said action;
  • Limiting the total security deposit that a landlord demand or receive security to one month periodic rent; and
  • Requiring a landlord in all instances to return a security deposit to a tenant within one month after the termination of a lease or surrender and acceptance of the premises, whichever occurs last, by eliminating the ability of the parties to specify in the lease agreement a longer period of time, up to 60 days.

Note: The sponsor of the bill has hosted several stakeholder meetings and is considering limiting the bill to amendments to the warranty of habitability provisions of the landlord tenant laws. The Senate Judiciary Committee will hear the bill on Wednesday, February 22 at 1:30 p.m.

Summaries of other featured bills can be found here.