February 18, 2018

Colorado Court of Appeals: City Had Power to Convey Park Not Dedicated to Public Use

The Colorado Court of Appeals issued its opinion in Save Cheyenne v. City of Colorado Springs on Thursday, February 2, 2018.

Land Exchange—Home Rule Cities.

The Colorado Springs City Council adopted a resolution approving a land exchange between the City, on the one hand, and the Broadmoor Hotel, Inc.; the Manitou and Pike’s Peak Railway Company; the COG Land & Development Company; and PF, LLC (collectively, the Broadmoor) on the other hand. As relevant here, a 189.5 acre parcel within Cheyenne Park known as “Strawberry Fields” was transferred to the Broadmoor for construction of a private equestrian center on an 8.5 acre building envelope within the parcel. As a condition of the transfer, the Broadmoor is required to allow continued public access to Strawberry Fields, with the exception of the land within the building envelope. In exchange, the Broadmoor transferred to the City more than 300 acres of land and trail easements to be added to the City’s park system.

Plaintiff, a local nonprofit corporation, filed suit, seeking a declaration that the resolution authorizing the land exchange was null and void, and injunctive relief preventing the land exchange. It also alleged a zoning violation. The City and the Broadmoor moved to dismiss under C.R.C.P. 12(b)(5), for failure to state any claims, and under C.R.C.P. 12(b)(1), arguing that the zoning challenge was unripe. The district court granted the motion.

The court of appeals first rejected defendants’ motion to dismiss plaintiff’s appeal based on mootness. Plaintiff argued that the resolution was an ultra vires act of the City Council because Cheyenne Park had previously been dedicated as a public park, and as a consequence, the City holds the park in trust for the public and cannot convey the park’s land. The Court concluded that no valid statutory dedication of Cheyenne Park occurred, and that any common law dedication was abrogated. The City Council had the power to convey Strawberry Fields when it authorized the land exchange.

Plaintiff next argued that under C.R.S. § 31-15-713(1)(a) no conveyance of the parkland could be made unless it was authorized by a vote in a public election. Colorado Springs is a home rule city and therefore in matters of local concern, a home-rule ordinance supersedes a conflicting state statute. The Colorado Springs City Code provides that land exchanges are to be reviewed by the City Council and approved by resolution. The Code provision applies, and the City was not required to hold an election before making the land transfer.

The court also rejected plaintiff’s argument that the resolution and land exchange violated article XI, section 2 of the Colorado Constitution, which prohibits transfers of city property without consideration. Here, the City received consideration for the parkland.

Plaintiff next contended that the City Council’s resolution approving the land exchange violates the City Charter. The Charter sections at issue only regulate granting franchises and leases on public property and city-owned parklands. The transaction here did not create a lease or franchise on City property, and these provisions do not apply to the conveyance.

Lastly, the court concluded that plaintiff’s claim of zoning violations is not yet ripe for review. The record does not demonstrate that a final zoning decision has been made regarding the permitted uses of Strawberry Fields. The district court properly dismissed this claim.

The judgment was affirmed.

Summary provided courtesy of Colorado Lawyer.

Colorado Court of Appeals: When Liability Based on Respondeat Superior, Settlement with Agent is Setoff Against Jury Verdict for Principal

The Colorado Court of Appeals issued its opinion in Marso v. Homeowners Realty on Thursday, February 8, 2018.

Respondeat Superior—Agent—Amendment of Answer—Affirmative Defense—Setoff—Settlement—Statutory Prejudgment Interest.

Dilbeck was employed by or associated with Homeowners Realty, Inc., d/b/a/ Coldwell Banker Home Owners Realty, Inc. (Coldwell) and acted as the Marsos’ agent in their purchase of a house. Two years after the purchase, the Marsos discovered that uranium tailings had been used as fill material, creating a potential health hazard. The Marsos filed a complaint against Dilbeck and Coldwell alleging negligence against Dilbeck and respondeat superior liability against Coldwell. Before the scheduled trial date, the Marsos settled with Dilbeck for $150,000, inclusive of interest. The jury was instructed to determine the total amount of damages sustained by the Marsos and was not informed of the amount of the settlement with Dilbeck. The jury returned a verdict of $120,000 against Coldwell. In post-trial proceedings, the trial court set off the settlement payment of $150,000 against the $120,000 jury verdict, resulting in a zero recovery for the Marsos. Because the settlement payment exceeded the jury verdict, the court entered judgment in favor of Coldwell and later entered a cost award against the Marsos of approximately $30,000.

On appeal, the Marsos contended that the court abused its discretion in allowing Coldwell to amend its answer to assert the affirmative defense of setoff over the Marsos’ timeliness objection. Because Coldwell did not obtain the settlement agreement until shortly before trial and the Marsos had no right to rely on the absence of a setoff, the amendment did not result in legal prejudice to the Marsos. Under these circumstances, the court did not abuse its discretion in allowing Coldwell to pursue its setoff defense.

The Marsos next argued that the trial court erred when it set off the settlement payment against the jury verdict. When a party’s liability is based entirely on respondeat superior, a settlement with the agent is setoff against the jury verdict entered against the principal. Therefore, the trial court did not err in this regard.

The Marsos also contended that the trial court erred when it set off the settlement payment before statutory prejudgment interest accrued on the jury verdict. Statutory prejudgment interest accrues on the jury verdict before the setoff. Here, the court must calculate the interest that accrued on the jury’s verdict from the date of the Marsos’ injury to the date of Dilbeck’s settlement payment and add it to the jury verdict

The judgment and cost award in Coldwell’s favor was reversed, and the case was remanded for further proceedings.

Summary provided courtesy of Colorado Lawyer.

Interview with Eric Nesbitt: Real Estate Attorney, CBA-CLE Board Member, Basketball Afficionado

Editor’s Note: In honor of Black History Month, we will be interviewing faculty and authors throughout February. Stay tuned each Wednesday for a new faculty/author profile.

By Mary Dilworth

Colorado Bar Association CLE (CBA-CLE) is providing an interview series with several of our African-American faculty and authors. Our hope is that this series is able to inspire others by sharing the journey and achievements of these successful attorneys.

Our first interview is with Eric Nesbitt, an active member of the Colorado Bar Association, a CBA-CLE board member and a talented member of the CBA-CLE faculty, who has spoken at several CLE conferences including the annual Real Estate Symposium and Business Law Institute.

Eric is the sole shareholder of the Law Offices of Eric L. Nesbitt, P.C., which focuses on real estate law matters. He is also the owner of The Nesbitt Commercial Group, a commercial real estate brokerage firm affiliated with Keller Williams DTC. Originally from Chicago, Eric moved to Colorado in 1996 to become the General Counsel and Director of Business Affairs for USA Basketball, the governing body for the sport of basketball in the United States. In that position, he was the attorney for the 1996 and 2000 Men’s Olympic Basketball “Dream Teams.” He loved Colorado so much, he decided to make it his home.

What inspired you to become an attorney? I visited Los Angeles and Beverly Hills as a kid and was in awe of all of the big houses and abundance of wealth. I asked my parents what job could I get as an adult to get a big house, and they told me to consider becoming a doctor or a lawyer. I thought being a doctor would be too gory, so I set my aspirations to be a lawyer. In addition, as a kid I always saw lawyers on the CBS show “60 Minutes,” and it seemed like a cool profession.

What do you enjoy about the practice of law? I really like helping people. I receive genuine satisfaction when I meet with clients and I can solve their problems or address their legal needs. It’s a very uplifting feeling. I also appreciate how legal training has provided me with the flexibility to pursue other business interests, such as commercial real estate brokerage and athlete representation. Being a lawyer prepares you to do practically anything!

What black historical figure do you admire? Thurgood Marshall and Martin Luther King, Jr. are probably the black historical figures I admire the most.

What about someone from today who inspires you? Oprah Winfrey and President Obama are people who inspire me today.

Favorite Book? Why Should White Guys Have All the Fun, by Reginald Lewis.

Favorite Movie? The Godfather.

What do you do in your spare time for fun? What spare time? I like hanging out with my family, wining and dining my wife, and traveling when I can get away. I also try to fit in a round of golf in when I can.

What advice would you give to new attorneys? Work hard, develop relationships, and have fun when you can.

Colorado Court of Appeals: Easement Deed Valid Even Without Description of Dominant Estate

The Colorado Court of Appeals issued its opinion in City of Lakewood v. Armstrong on Thursday, December 28, 2017.

Real Property—Easements Appurtenant—Dominant Estate—Servient  Estate—Statute of Frauds—Constructive Notice—Extrinsic Evidence—Reverter Clause.

In 1984, Mackey executed a deed (Mackey deed) purporting to convey to Jefferson County a permanent public easement over a portion of the southeast corner of her property. Jefferson County executed a deed to the City of Lakewood (Commissioners deed) conveying the Mackey deed easement using the same legal description. The Commissioners deed contained a reverter clause that required Lakewood to use the easement exclusively for public open space, park, and recreational purposes. In 2011, the Armstrongs bought the property from Mackey’s successor in interest and occupied it. After the Armstrongs attempted to obstruct the easement’s use by locking a gate at one entrance to it, Lakewood filed suit. The district court entered summary judgment for Lakewood, finding that the easement was a valid express easement appurtenant.

On appeal, the Armstrongs asserted that the district court erred in granting Lakewood’s motion for summary judgment because the Commissioners deed violates the statute of frauds and is void for failing to legally describe the easement itself or the dominant estate. An easement does not require the precise description that a possessory interest does. While an instrument must identify with reasonable certainty the easement created and the dominant and servient estates, no particular words are necessary. Here, although the Commissioners deed does not expressly describe a dominant estate, it describes the entire servient estate and describes the easement itself with reasonable certainty and is not rendered invalid by any deficiency in the easement’s description. Further, the easement was recorded in the Jefferson County Clerk and Recorder’s Office over 25 years before the Armstrongs’ purchase of the property. Therefore, the Armstrongs had constructive notice of the easement.

The Armstrongs also contended that the district court impermissibly looked to extrinsic evidence to interpret the Commissioners deed. However, a court may consider extrinsic evidence to determine whether the description of an easement in a deed is reasonably certain or instead is invalid for vagueness. The district court did not err in considering undisputed extrinsic evidence to determine that the easement’s description encompassed the entire servient estate and what, if any, dominant estate the easement served for the purpose of determining whether the easement was identified with reasonable certainty and was therefore valid.

The Armstrongs further contended that the district court erred in enforcing the Commissioners deed because the reverter clause in the deed had been triggered, so the deed expired. The easement’s use is the determinative factor for triggering the reverter clause, not the zoning of the land benefited. Lakewood produced undisputed evidence showing that the dominant estate served by the easement has been continuously used exclusively for public open space, park, and recreational purposes. The reverter clause was not triggered.

The Armstrongs additionally argued that the Commissioners deed was void because Jefferson County did not have the authority to purchase the easement for use by Lakewood. Here, Jefferson County had the authority to purchase an easement for access to a public park or open space owned by Lakewood under its implied powers to promote public projects or public open space and parkland.

The order was affirmed.

Summary provided courtesy of Colorado Lawyer.

Colorado Court of Appeals: County Treasurer Must Exercise Due Diligence When Notice Returned Undelivered

The Colorado Court of Appeals issued its opinion in Wells Fargo Bank Financial Colorado, Inc. v. Olivas on Thursday, December 14, 2017.

TaxationSale of Tax LiensTax DeedNoticeDiligent Inquiry.

Buyers signed a deed of trust with Wells Fargo Financial Colorado, Inc. (WFFC) to secure a mortgage and an open-end deed of trust to Wells Fargo Financial Bank (WFFB) to secure a line of credit. Beginning in 2008, buyers failed to pay both the monthly mortgage installments to WFFC and the property taxes on their house. WFFC did not pay the taxes after September 2009, and Housman paid the 2009 taxes on October 20, 2010, when the Treasurer, Olivas, sold a tax lien on the house by public auction. Housman also paid taxes on the property for tax years 2010, 2011, and 2012. In 2013, Housman applied for a tax deed. In early January 2014, the Treasurer took steps pursuant to C.R.S. § 39-11-128 to notify all parties with an interest in the property of an impending issuance of a tax deed and a right to redeem. The notice to WFFC was returned as undeliverable as addressed. The notice to WFFB was not returned to the Treasurer. Believing that he had provided the required notice because one Wells Fargo entity had received the notice, the Treasurer issued Housman a tax deed on May 28, 2014. Housman sold the property to Moran a few weeks later, and Housman continued to hold a deed of trust on the property. In May 2015, WFFC filed a complaint for declaratory relief seeking to void the tax deed to Housman, the special warranty deed from Housman to Moran, and the deed of trust held by Housman. WFFC moved for summary judgment, and Housman and Moran cross-moved for summary judgment asserting, among other things, that WFFC’s complaint should be barred by laches. The district court granted summary judgment for defendants, concluding that Housman’s tax deed was valid.

On appeal, WFFC contended that the district court erred in granting summary judgment to defendants. A reasonably diligent treasurer should know that secured parties on different deeds of trust that secure different loan amounts, with different names and addresses, may not be so closely affiliated that notice to one may be assumed to effect notice to the other. The Treasurer failed, as a matter of law, to perform his statutory duty to exercise reasonable diligence in seeking an alternative address for WFFC. When notice is defective because it was given without the diligent inquiry required by law, the tax deed is voidable.

The judgment was reversed and the case was remanded for further proceedings on the affirmative defense of laches. If the court concludes that laches does not bar WFFC’s claims, it shall address the request for declaratory relief. If recovery of the land conveyed by the tax deed is effected by this suit, the court shall consider whether C.R.S. § 39-12-101 applies.

Summary provided courtesy of Colorado Lawyer.

Rule Change 2017(12) Issued, Amending Colorado Rules of Civil Procedure

On Thursday, December 7, 2017, the Colorado Supreme Court issued Rule Change 2017(12), amending the Colorado Rules of Civil Procedure.

Rule 16 was amended to reference new forms available to use when offering records of regularly conducted activity pursuant to CRE 902(11) and (12). The new forms, Form 37 and Form 38, were introduced, and Forms 10 and 11 were amended. These changes are effective immediately.

Rule 53, “Masters,” was introduced, effective January 1, 2018. The rule provides guidelines for the appointment of masters. Rule 121, § 1-15 was also amended effective January 1, 2018, to delete specific page requirements of briefs and instead refer to Rule 10(d), and also to add information about self-represented parties.

Finally, Rule 120, “Orders Authorizing Foreclosure Sale Under Power in a Deed of Trust to the Public Trustee,” was significantly amended. These changes are effective March 1, 2018.

A redline and clean copy of the rule change is available here. For all of the Colorado Supreme Court’s adopted and proposed rule changes, click here.

Colorado Court of Appeals: Roaring Fork Transportation Authority Possessed Eminent Domain Power by Statute

The Colorado Court of Appeals issued its opinion in Sos v. Roaring Fork Transportation Authority on Thursday, November 16, 2017.

Eminent Domain—Inverse Condemnation Claim—Compensable Damages—Restoration Damages—Diminution in Value.

Sos owns property on which he owns and operates a tire business. The Roaring Fork Transportation Authority (RFTA) built a bus station on the property north of and adjacent to his property. Before RFTA began construction, an earthen embankment rested on the property line between Sos’s and RFTA’s properties. Sos regularly sold tires and other items on the embankment and, with the previous owner’s permission, on the northern property. As part of its construction, RFTA removed the embankment and built a wall on its property, and then restored the embankment, which the wall relies on for lateral support. Sos then wanted to remove the embankment to facilitate his business. He brought an inverse condemnation claim against RFTA because the bus station wall relies on his property for lateral support. RFTA moved for summary judgment and Sos moved for partial summary judgment, regarding whether a compensable taking or damages had occurred. The district court denied RFTA’s motion and granted Sos’s motion, determining that the force the bus station wall permanently imposed on the embankment constituted compensable damage under article II, section 15 of the Colorado Constitution, and that the proper measure of damages was restoration damages rather than diminution in value.

On appeal, RFTA argued that the district court erred in determining that RFTA possessed the power of eminent domain because the General Assembly had not granted RFTA this power expressly or by clear implication, and because it does not possess the power of eminent domain, Sos cannot establish an inverse condemnation claim. Pursuant to the plain language of C.R.S. § 43-4-604, RFTA has the power of eminent domain by clear implication.

RFTA next asserted that the district court erred in concluding that RFTA’s bus station wall caused compensable damage because the wall’s construction did not substantially diminish the value of Sos’s property or substantially change Sos’s use of his property. The district court found, with record support, that RFTA authorized the building of the bus station wall and that RFTA incorporated the embankment’s support into the bus station wall’s design and construction. The court, therefore, properly determined that the imposition of force on Sos’s embankment was the natural consequence of RFTA’s intentional construction of the bus station wall. Further, the record, including RFTA’s own expert opinions, supported the district court’s finding that the bus station wall imposed a new force on Sos’s embankment to such a degree that an engineered remedy was now required before the embankment could be excavated. The district court properly determined that RFTA damaged Sos’s property.

RFTA next contended that the district court erred in ruling that restoration costs rather than diminution of value was the proper measure of damages. The record shows that the diminution in value of Sos’s property after RFTA built the bus station was de minimis. But RFTA’s construction substantially limited Sos’s use and enjoyment of the embankment area. Therefore, the district court properly determined Sos’s damages under the measure of restoration costs.

RFTA further argued that the district court erred in allowing evidence of Sos’s business and personal uses for his property because such interests are non-compensable in condemnation cases. RFTA contended that Sos presented no admissible evidence regarding restoration costs or supporting the damages award. The Court of Appeals concluded that the district court’s damages award is supported by competent record evidence.

RFTA also argued that the district court erred in rejecting its proposed instructions regarding diminution of value being the proper measure of damages. The district court’s decision was supported by competent evidence and did not cause the commissioners to be inaccurately instructed on the law.

The judgment was affirmed.

Summary provided courtesy of Colorado Lawyer.

Colorado Supreme Court: Taxpayer Entitled to File Statutory Claim for Relief After Expiration of Protest Period

The Colorado Supreme Court issued its opinion in OXY USA, Inc. v. Mesa County Board of Commissioners on Monday, November 13, 2017.

Tax Law—Taxpayer Error—Overvaluation

The supreme court holds that section 39-10-114(1)(a)(I)(A), C.R.S. (2017), allows abatement and refund for illegally or erroneously levied taxes based on overvaluation caused by taxpayer error. This result follows from the statute’s plain text that allows abatement for “overvaluation” without making a distinction between government- and taxpayer-caused overvaluations. The court rejects the court of appeals’ holding that Coquina Oil Corp. v. Larimer County Board of Equalization, 770 P.2d 1196 (Colo. 1989), and Boulder County Board of Commissioners v. HealthSouth Corp., 246 P.3d 948 (Colo. 2011), require a different result. Coquina was superseded by the 1991 legislative amendment that added “overvaluation” as a ground for abatement, and HealthSouth’s holding was limited to intentional taxpayer overvaluations. The supreme court reverses the judgment of the court of appeals and remands for further proceedings.

Summary provided courtesy of Colorado Lawyer.

Colorado Eminent Domain Practice: The Essential Guide to Condemnation Law and Practice in Colorado

Colorado Eminent Domain Practice, the essential guide to condemnation law and practice in Colorado, will be updated and released this fall. Authored by Leslie Fields, a nationally renowned eminent domain practitioner who retired from Faegre Baker Daniels after 33 years of practice, the updated treatise includes insights into new and important eminent domain case law. On November 16th Ms. Fields will join with current FaegreBD partners, Jack Sperber, Brandee Caswell, and Sarah Kellner, as well as other eminent domain experts, to teach a course entitled Colorado Eminent Domain Practice: Books in Action. The course will draw from the key concepts and developments highlighted in the updated text.

Among the many cases featured in the updated treatise will be last year’s Colorado Court of Appeals decision in Town of Silverthorne v. Lutz, 370 P.3d 368 (Colo. App. 2016). In Lutz, the court upheld the trial court’s exclusion of evidence that the town had received funds from the Great Outdoors Colorado Program (GOCO) for the recreational trail project necessitating the taking of the Lutz property. Even though a state constitutional provision barred GOCO funds from being used to acquire property by condemnation, the court held that evidence of the special funding was not relevant to the town’s authority to condemn the easements under long established case law. The court further reasoned that a condemnation action is a special statutory proceeding that must be conducted according to statutory procedures, and the parties may not raise issues, such as project funding, which would change the character of a condemnation action. The court also stated that while the constitution prohibits GOCO funds from being used to pay the just compensation for condemned property, it does not preclude the use of the funds for other aspects of the project. Therefore, evidence of GOCO funding was properly excluded.

Finally, the Lutz court also rejected the property owners’ argument that evidence of GOCO funding was admissible to show that the town acted in bad faith in deciding that their property was necessary for construction of the trail project. For more on bad faith necessity challenges, as well as the other issues raised in Lutz, refer to the updated Colorado Eminent Domain Practice by Leslie Fields, and register for Thursday’s program using the links below.

CLE Program: Colorado Eminent Domain Practice

This CLE presentation will occur on Thursday, November 16, 2017, at the CLE Large Classroom (1900 Grant St., 3rd Floor) from 9:00 a.m. to 3:15 p.m. Register for the live program here and the webcast here. You may also call (303) 860-0608 to register.

Can’t make the live program? Order the homestudy here — CD Homestudy • Video OnDemandMP3 Audio

Colorado Supreme Court: Failure to Pay Funds to Third Party Constituted Knowing Conversion by Attorney

The Colorado Supreme Court issued its opinion in In the Matter of Kleinsmith on Monday, October 30, 2017.

Colorado Rules of Professional Conduct—Attorney Discipline—Conversion—Due Process—Equal Protection.

This attorney disciplinary proceeding required the supreme court to determine whether an attorney commits knowing conversion, in violation of Colorado Rules of Professional Conduct (Rules) 1.15A and 8.4(c), when he bills a client for services performed by a third party and then uses for his own purposes the client funds he received that were intended to pay for the third party’s services. This proceeding further required the court to determine whether the Presiding Disciplinary Judge’s reading of the Rules violated the attorney’s rights to due process and equal protection. The court concluded that in the circumstances presented here, the attorney’s actions constituted knowing conversion in violation of the Rules and that the Presiding Disciplinary Judge’s construction of the Rules to reach the same result did not violate any of the attorney’s constitutional rights. Accordingly, the court affirmed the orders of the Presiding Disciplinary Judge and the hearing board, including the order disbarring the attorney from the practice of law.

Summary provided courtesy of Colorado Lawyer.

Colorado Court of Appeals: Hunting and Fishing Club, Not Individual Members, is True Landowner and Bears Tax Burden

The Colorado Court of Appeals issue its opinion in HDH Partnership v. Hinsdale County Board of Equalization on Thursday, October 19, 2017.

Taxation of Hunting and Fishing Memberships—County Assessment—Real Property Taxes.

Owners of fishing and hunting memberships (petitioners) were taxed on the parcels of real estate allocated to them in their membership agreements. The parcels are part of a larger tract of land used as a hunting and fishing club (club). Membership in the club is granted to those who hold a deed to one of the parcels that collectively comprise the club grounds. Members cannot make improvements on their parcels or exclude other club members. The club retains control over the grounds and grants all members equal access, regardless of the parcel to which they hold title. A member’s right to access the grounds can be revoked if the member owes money or violates club rules.

Petitioners initiated this action after they disagreed with the county’s assessment of their parcels. The Hinsdale County Board of Equalization (BOE) affirmed the assessor’s valuation. Petitioners appealed to the Board of Assessment Appeals (BAA), which affirmed the BOE’s decision.

On appeal, petitioners argued that the law permits the court to look beyond the title to the substance of the parties’ rights when determining ownership. The Colorado Court of Appeals concluded that the club was the true property owner because it enjoyed the most significant incidents of ownership. The members effectively had a license to use club grounds, even though they held bare legal title to the parcels. Therefore it was the club, and not the members, that had to bear the real property tax burden. Further, the BAA erred in affirming the assessor’s valuation because it was based on the personal property value of petitioners’ licenses to use club grounds rather than the value of the parcels as real property.

The order was reversed and the case was remanded with directions.

Summary provided courtesy of Colorado Lawyer.

Colorado Court of Appeals: District Court Correctly Characterized Water Storage Plan as Frustrated Plan in Condemnation Action

The Colorado Court of Appeals issued its opinion in Board of County Commissioners of County of Weld v. DPG Farms on Thursday, June 15, 2017.

Condemnation—Highest and Best Use—Lost Income—Costs.

The Board of County Commissioners of Weld County (the County) filed a petition in condemnation to extend a public road over 19 acres of DPG Farms, LLC’s 760-acre property (the property). When condemnation proceedings were initiated, the property was used primarily for agricultural and recreational purposes. The parties stipulated to the County’s immediate possession of the 19 acres and proceeded to a valuation trial. The dispute centered on the highest and best use of 280 acres that contained gravel deposits. DPG’s experts testified about the highest and best use of the property. The district court determined, as a matter of law, that the evidence was too speculative to support a finding that water storage was the highest and best use of the relevant area (Cell C); instead, it determined that the highest and best use of those acres was gravel mining, but not water storage as well. The jury awarded DPG $183,795 in damages for the condemned property and nothing for the residue. DPG then requested costs. The district court rejected a substantial portion of the costs on grounds that they were disproportionate to DPG’s success and that certain expert evidence had been excluded.

On appeal, DPG contended that the district court erred in rejecting water storage as the highest and best use of certain portions of the property. The Court of Appeals reviewed the evidence that the district court’s determination was based on and concluded that the district court did not err in determining, as a matter of law, that the evidence was too speculative to support a jury finding that water storage was the highest and best use of Cell C.

DPG also argued that the trial court erred in excluding evidence of lost income, arguing that it was admissible pursuant to an income capitalization approach to valuing the property. DPG’s evidence of a potential income stream was admissible not as the measure of its damages but rather as a factor that could inform the fair market value of the property. And both the appraiser and the mining expert testified that the potential income stream from mining informed their fair market valuations. Because the lost income evidence, on its own, did not reflect the proper measure of damages, the district court correctly excluded it.

Finally, because the income valuation evidence presented by DPG’s experts was properly excluded, the district court did not abuse its discretion in limiting DPG’s award of costs on this basis.

The judgment and cost order were affirmed.

Summary provided courtesy of The Colorado Lawyer.