December 8, 2016

Privileges and Confidentiality in the Attorney-Client Relationship

EthicsConfidentiality is one of the cornerstones of the attorney-client relationship. It allows clients to feel comfortable discussing sensitive issues with their attorney without fear of disclosure. Colorado Rule of Professional Conduct 1.6 provides, “A lawyer shall not reveal information relating to the representation of a client unless the client gives informed consent, the disclosure is impliedly authorized in order to carry out the representation, or the disclosure is permitted [in certain enumerated circumstances].” The counterpoint to this is the privilege that protects attorney-client communications. The attorney-client privilege in Colorado is governed by C.R.S. § 13-90-107(1)(b), which states, “An attorney shall not be examined without the consent of his client as to any communication made by the client to him or his advice given thereon in the course of professional employment.”

These seemingly straight-forward rules have many nuances, including the scope of confidentiality versus the attorney-client privilege, the lawyer’s responsibility to reveal information to prevent a client’s misconduct, the lawyer as witness, the lawyer’s duty to prevent the disclosure of client information, and the extension of the attorney-client privilege to others in the attorney’s office.

The Colorado Bar Association Ethics Committee has tackled some of these issues in Formal Opinion 108, “Inadvertent Disclosure of Privileged or Confidential Documents,” and Formal Opinion 90, “Preservation of Client Confidences in View of Modern Communications.” As this guidance suggests, attorneys must always be aware of when issues of privileges and confidentiality may arise in their practices.

At 8:30 am on Wednesday, December 14, 2016, attorney John Palmeri will discuss the intricacies of privileges and confidentiality in one-hour CLE program co-sponsored by the CBA Lawyers Professional Liability Committee. Attendees will also receive a copy of Mr. Palmeri’s chapter inLawyers’ Professional Liability in Colorado with further discussion of the topic. Register here or by clicking the links below.

 

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CLE Program: Privileges and Confidentiality

This CLE presentation will occur on December 14, 2016, at the CBA-CLE offices (1900 Grant Street, Third Floor), from 8:30 to 9:30 a.m. Register for the live program here or register for the webcast here. You may also call (303) 860-0608 to register.

Can’t make the live program? Order the homestudy here: MP3Video OnDemand.

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: Treasurer Should Use Diligent Efforts to Notify Occupant of Property Tax Deed

The Colorado Court of Appeals issued its opinion in Red Flower, Inc. v. McKown on Thursday, November 3, 2016.

Kevin McKown owned 320 acres of farmland in rural Baca County. From 2004 to 2011, he had an oral sharecrop agreement with Don Lohrey to farm the property. Lohrey visited the property every week or two to check on his crops, but he lived about ten miles away. McKown failed to pay his county property taxes, and the county treasurer sold tax liens for the real property and the mineral rights. Red Flower bought the liens in November 2007. In August 2010, Red Flower applied for treasurer’s deeds. The treasurer unsuccessfully attempted to notify McKown and published notice in the local paper in September 2010. In December 2010, she issued the deeds to Red Flower.

The following year, Red Flower filed a C.R.C.P. 105 action to quiet title to the property. McKown appeared and defended on the grounds that the tax liens were defective due to insufficient notice to himself and Lohrey. The district court determined the treasurer had made a diligent inquiry to find McKown, and a division of the Colorado Court of Appeals affirmed that ruling, but remanded for determination of whether the treasurer had complied with the separate requirement to notify the property’s occupant, Lohrey. On remand, the district court struggled with the statutory language, and ultimately concluded that the treasurer’s notice to Lohrey was deficient and the tax deeds were void.

Red Flower appealed, arguing that the district court’s construction cannot be squared with the language or intent of the statutory scheme. The court of appeals agreed with Red Flower that the district court’s reasoning was incorrect as to the mineral deed. After analyzing C.R.S. § 39-11-128, the court concluded that it was illogical to require the treasurer to put forth more effort to locate the occupant of the property than the property owner. The court, however, noted that it was presumed that the occupant of the property could be found on the property. The court found that the district court correctly concluded that treasurer need not conduct “diligent inquiry” to determine the location of the occupant, but it erred in determining that the treasurer had some limitless duty to locate the occupant. The court instead may simply serve notice to occupants at the property. Because Lohrey was not an actual occupant of the property, but the parties stipulated to his occupancy, the court of appeals remanded for a determination of whether the treasurer made a “diligent inquiry” as to his whereabouts before conveying the mineral deed.

As to the real property deeds, the court of appeals found an error in publication. The court noted that the statute requires publication once a week for three weeks, and publication must take place not more than five months nor less than three months before the tax deeds may issue. Because the tax deeds issued less than three months after publication, the notice was deficient. The court declined to say the deeds were void, since the taxing authority had jurisdiction to issue them, but instead determined the deeds were voidable. The court affirmed summary judgment to McKown as to the real property deed.

The court of appeals affirmed in part, reversed in part, and remanded for further proceedings.

Colorado Court of Appeals: Donor and Transferee Are One Entity for Conservation Easement Tax Credit Purposes

The Colorado Court of Appeals issued its opinion in Medved v. Colorado Department of Revenue on Thursday, October 20, 2016.

Conservation Easement Tax Credit—Statute of Limitations—Notice of Disallowance.

The Medveds purchased a conservation easement (CE) tax credit from Whites Corporation (Whites). The appraised value of the tax credit was $130,000. Whites was the CE donor and the Medveds were the CE transferees. On October 23, 2006, the Medveds filed their 2005 Colorado tax returns and claimed a $130,000 credit based on the CE. On October 30, 2007, Whites filed a Colorado State C Corporation income tax return and claimed a $260,000 credit based on the same CE.

On March 4, 2011, the Colorado Department of Revenue (Department) issued a notice of disallowance to Whites and the Medveds, disallowing the credit in its entirety. The Medveds appealed to the district court and argued the notice of disallowance was barred by the four-year statute of limitation in C.R.S. § 39-21-107(2). The Department argued that the Medveds and Whites were subject to the same statute of limitations that was triggered when the donor filed its tax return under C.R.S. § 39-22-522(7)(i). The district court found that the donor and the transferee were a single entity and were bound as to all issues concerning the tax credit to the four-year statute of limitations, which was triggered by the donor’s tax claim. Because Whites filed its return on October 30, 2007, the Department’s notice of disallowance was within the statute of limitations.

On appeal, the Medveds claimed they were not bound by the same statute of limitations as Whites. The court of appeals agreed with the Department that a donor and transferee are considered a single entity under the statute and are bound by the same statute of limitations. The Medveds also argued that the first claim filed triggers the four-year statute of limitations. Finding the statutory language ambiguous, the court considered its legislative intent and purposes and concluded that the General Assembly intended that the first claim filed, either by the donor or transferee, begins the four-year statute of limitations period. Because the Department’s notice of disallowance was beyond the four-year limitations period, the Department’s disallowance was untimely and statutorily barred.

The judgment was reversed and the case was remanded for dismissal.

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: Trial Court Lacked Subject Matter Jurisdiction Over Plaintiff’s Claims

The Colorado Court of Appeals issued its opinion in Golden Run Estates, LLC v. Town of Erie on Thursday, October 6, 2016.

Annexation—Subject Matter Jurisdiction—Contract Claims—Annexation Act.

Defendant Town of Erie entered into a pre-annexation agreement with Harber for his property located in unincorporated Boulder County. Harber intended his company, Golden Run Estates, to develop a mixed-use community over approximately 50 years. An annexation agreement and a detailed development plan were supposed to follow the pre-annexation agreement. Golden Run Estates and Harber sued Erie after an annexation agreement was not reached following annexation of the property. They brought two contract claims, a claim for declaratory relief, and a claim for a judicial disconnection decree. The trial court found it had subject matter jurisdiction over the contract claims and entered a judgment for damages. It also ordered judicial disconnection, but concluded it did not have subject matter jurisdiction over the declaratory relief claim.

The sole issue on appeal was the jury award on the two contract claims. Erie argued that the trial court erred in concluding that it had subject matter jurisdiction over the contract claims and in upholding the breach of contract verdict because plaintiffs did not bring their claims within the 60-day limitation period under C.R.S. § 31-12-116(2)(a)(I). The court of appeals determined that the C.R.S. § 31-12-116(2)(a)(I) limitation period is jurisdictional and its time limits cannot be tolled or waived.

Erie also raised arguments relating to the sufficiency of the evidence concerning lost opportunity costs and the property manager’s testimony. Because the court determined that the trial court did not have subject matter jurisdiction over plaintiffs’ contract claims, it did not address these contentions.

Plaintiffs argued that their contract claims did not challenge the annexation of the property but were to enforce the terms of the pre-annexation agreement, so C.R.S. 31-12-116 was inapplicable. The court found plaintiffs’ claims were actually impermissible collateral attacks on the annexation and there was no separate breach of contract claim that wasn’t an argument regarding the annexation itself. The court held that the trial court did not have subject matter jurisdiction over the contract claims and vacated that part of the judgment and the damages award. The case was remanded with directions to grant Erie’s motion for directed verdict and for a determination of the amount of attorney fees incurred by Erie in the appeal.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Notice of Appeal Timely Filed 49 Days After Denial of Motion for Reconsideration

The Colorado Court of Appeals issued its opinion in Semler v. Hellerstein on Thursday, October 6, 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, LLC are both members of the 1940 Blake Street Condominium Association (Association). Defendant Hellerstein owns and controls both Perfect Place, LLC and Bruce S. Hellerstein, CPA P.C. (collectively, Perfect Place defendants). 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.

The current litigation 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 parking spaces C and D. Semler’s first amended complaint alleged claims only 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 a 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 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 to pursue alleged fraud or misrepresentation against the prior owner of the parking spaces and awarded attorney fees in favor of defendants.

On appeal, defendants asserted that Semler’s notice of appeal was untimely and, therefore, the Colorado Court of Appeals lacked jurisdiction to consider the appeal. The court determined that Semler timely filed his notice of appeal 49 days after the court denied his C.R.C.P. 59 motion for reconsideration.

Semler contended that the trial court erred by denying his motion for leave to amend his complaint a second time. The court’s dismissal of the action was specifically premised on Semler’s fraud claims, which were new to the second amended complaint. It was therefore apparent to the court that although the trial court denied the motion to amend, it 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. Semler’s fraud, concealment, and misrepresentation claims were all premised on conversations and transactions between the prior owner of the parking spaces and defendants in which Semler was not involved. Semler lacked standing to bring those claims. 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 against Bewley because a director cannot conspire with the corporation that he serves, which is the premise of Semler’s argument. 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 survives 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 award under this statute 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.

Colorado Court of Appeals: Town’s Special District Cannot Include Unincorporated Land Without County Approval

The Colorado Court of Appeals issued its opinion in Bill Barrett Corp. v. Sand Hills Metropolitan District on Thursday, October 6, 2016.

Summary Judgment—Special District Act—Altering District Boundaries and Service Plan—Material Modification Requiring Approval of County Commissioners.

In 2004, the town of Lochbuie approved a proposed service plan (2004 plan) and the district court issued an order and decree organizing the Altamira Metropolitan District No. 6 (the Altamira District). The Altamira District’s boundaries were entirely within Lochbuie. The Altamira development was to include single family homes and commercial space within Lochbuie’s boundaries, but it never occurred.

70 Ranch, LLC owns acreage approximately 30 miles northeast of Lochbuie in unincorporated Weld County. In 2009, the district purported to include the 70 Ranch property within its boundaries, and the district court granted the inclusion. In 2010, the district changed its name from Altamira District to the Sand Hills Metropolitan District. In 2011, the court entered an order granting the district’s exclusion from its boundaries of all the land in Lochbuie that originally comprised the Altamira District. Through this sequence of events, the district relocated itself from Lochbuie to encompass only the 70 Ranch property. No notice was given or approval obtained from the Board of County Commissioners of Weld County.

Bill Barrett Corporation and Bonanza Creek Energy (taxpayers) and Noble Energy, an involuntary plaintiff-appellee (Noble), are oil and natural gas exploration companies that lease mineral interests at 70 Ranch. In 2008, the district’s board of directors approved certification of a mill levy for the district’s general operating expenses. Taxpayers have paid millions of dollars since 2009 (when 70 Ranch was included) in ad valorem taxes to the district.

Despite its 2009 and 2011 actions, the district did not prepare a revised service plan to reflect its new location and adjusted purpose until 2013. Taxpayers sued Sand Hills (the district, United Water and Sanitation District, and Lochbuie (collectively Sand Hills))  in 2013, claiming it exceeded its authority and violated parts of the Special District Act, C.R.S. §§ 32-1-101 to -1807, and the Colorado Constitution. Cross-motions for summary judgment were filed and each was granted in part. The trial court found that (1) the district lost its legal authority to collect taxes after April 28, 2011 when it unilaterally removed itself entirely from Lochbuie, so taxpayers are entitled to a tax refund for taxes paid for tax years 2011, 2012, and 2013; and (2) the district had the authority to tax taxpayers from April 29, 2009 until April 28, 2011, when the District’s boundaries included the 70 Ranch property and the original Altamira District property.

On appeal, Sand Hills argued that it was error to find that the district lost its authority to tax when it relocated itself in 2011. On cross-appeal, taxpayers argued that it was error to find that the district had authority to impose taxes on their mineral interests from 2009 to 2011.

The Colorado Court of Appeals’ analysis of the case focused on applying the plain meaning of C.R.S. § 32-1-207(2)(a), which provides a nonexhaustive list of factors specifying when a district’s modification of its service plan is considered material and requires a petition to and approval from the board of county commissioners. The district court concluded, and the court of appeals agreed, that the district’s failure to comport with the purposes of the 2004 plan along with its complete geographic overhaul in 2011 constituted a material departure from the original service plan. The district was required to obtain approval from the board of county commissioners for such a change. Therefore, the court affirmed the trial court’s grant of taxpayers’ motions for summary judgment as to the time period after April 28, 2011.

The court also concluded that the district’s geographic shift in 2009 to include the 70 Ranch property was a material modification of the district’s 2004 plan that required, but did not receive, the approval of the board of county commissioners. Therefore, the district also did not have taxing authority after 2009. The court reversed the trial court’s judgment as it relates to Sand Hills’ motion for summary judgment for the time period from 2009 until 2011.

The court further concluded that the relief granted to taxpayers applies also to Noble.

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

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.

Ask the Experts: Why Do Lawyers Get Sued?

EthicsThe ABA Standing Committee on Lawyers’ Professional Liability compiled a comprehensive Profile of Legal Malpractice Claims, evaluating claims from 2008 through 2011. According to the Committee’s report, real estate lawyers held the dubious honor of having the highest percentage of malpractice claims, followed by family law, trust and estate, and personal injury law. Forty-five percent of all malpractice claims were filed due to substantive errors, like failure to know or properly apply the law, discovery errors, procedural choice errors, missing deadlines, and conflicts of interest. Administrative errors counted for the second-highest reason for claims, including procrastination in performance or follow-up (read: not returning phone calls), lost files, calendaring errors, and other clerical errors. Together, nearly three-quarters of all legal malpractice claims filed during the Committee’s study period were due to errors. That is a frightening statistic.

One way to avoid becoming the subject of a malpractice claim is to choose clients carefully. Everyone has experienced “problem” clients—clients who won’t leave you alone, who lack the ability to pay, and who seem to criticize your every move. Attorney Sally Field (no relation to the actress) compiled a list of the top ten warning signs for problem clients:

  1. Clients who want to change lawyers in the middle of the case;
  2. Clients who trash the lawyer they just left;
  3. Clients who are reluctant to answer basic questions;
  4. Clients who are overly opinionated about the law without justification;
  5. Clients who have unreasonable expectations;
  6. Clients who micromanage everything;
  7. Clients who won’t let you end an excessively long initial client interview;
  8. Clients who want to exact revenge or punishment through the legal system;
  9. Clients who make negative comments about judges, courts, and the judicial system; and
  10. Companies with unusually high turnover of key staff or unusual corporate structures.

Bottom line? Many potential malpractice claims can be avoided by refusing to represent those clients who seem like trouble from the outset. Avoiding mistakes is helpful, too.

Sally Field, along with John Palmeri, will discuss common reasons for lawyer malpractice lawsuits in a panel discussion moderated by Heather Kelly. Join us for this interesting and informative breakfast CLE on Tuesday, September 27, 2016. Call (303) 860-0608 to register, or click the links below.

 

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CLE Program: Why Lawyers Get Sued

This CLE presentation will occur on September 27, 2016, at the CBA-CLE offices (1900 Grant Street, Third Floor), from 8:30 a.m. to 9:30 a.m. Register for the live program here or register for the webcast here. You may also call (303) 860-0608 to register.

Can’t make the live program? Order the homestudy here: MP3Video OnDemand.