February 4, 2012

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Tenth Circuit: Trust Deeds Explicitly Granted Authority to Foreclose, Even If Securitization Deprived Implicit Power to Do So

February 1, 2012 By Leave a Comment

The Tenth Circuit Court of Appeals published its opinion in Commonwealth Property Advocates, LLC v. Mortgage Electronic Registration Systems, Inc. on Tuesday, January 31, 2012.

The Tenth Circuit affirmed the district court’s decision. Petitioner acquired title to three pieces of real property in Utah from three defaulting borrowers and then filed three diversity lawsuits against various Respondents who held interests in the property, seeking to prevent foreclosure. Petitioner argued that Respondents “had no authority to foreclose because the notes in each case had been securitized and sold on the open market. Because the security follows the debt, [Petitioner] argued, once [Respondents] sold the security they could not foreclose absent authorization from every investor who had purchased an interest in the securitized note.” Respondents filed motions to dismiss, which the district court granted.

The Court agreed with the district court’s decision. “Even assuming [Petitioner] is correct that securitization deprives [Respondents] of their implicit power to foreclose as holders of the trust deeds, the trust deeds explicitly granted [Respondents] the authority to foreclose. Contrary to [Petitioner]’s contention, § 57-1-35 in no way prohibits such an authorization. The statute merely says the transfer of a debt operates as the transfer of the security. It says nothing about who is or is not authorized to foreclose on a trust deed.” The Utah Court of Appeals has said that the statute does not prohibit parties from contracting for such arrangements, and the state court’s decision is consistent both with the statute and with numerous federal district court cases that have addressed the same arguments. Because the Court saw nothing to suggest the Utah Supreme Court would reach a different conclusion, it deferred to the Utah Court of Appeals’ decision. “Because [Petitioner]’s diversity jurisdiction claims have no legal basis under Utah law, the district court properly dismissed all three complaints.”

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Colorado’s Justice Crisis

December 16, 2011 By Leave a Comment

It’s a perfect storm.  Although overused, that metaphor so accurately captures what is happening with respect to Colorado’s legal aid delivery system that it is difficult to avoid.  Just as in a perfect storm, a rare combination of circumstances has resulted in a crisis of unprecedented magnitude.

Colorado Legal Services (CLS) is the only program in the state that provides free legal assistance (advice, brief service, and full representation) in civil matters to low-income individuals and families in every Colorado county.  With 14 offices around the state, it operates like a legal emergency room, serving low income Coloradans at greatest risk and in greatest need.  In 2010 alone, CLS provided assistance to over 11,000 indigent clients facing serious legal problems that directly implicated their health, safety, stability and sufficiency.  With few exceptions, CLS clients live at or below 125% of the federal poverty guideline (which translates to an annual income of $13,613 for an individual and $27,938 for a family of four).  They include senior citizens, victims of domestic violence, veterans, persons with mental and physical disabilities, and other particularly vulnerable Coloradans.

Even before the recession, the need for legal aid among the poor outstripped available resources.  A study in 2005 found that for every client served by CLS, at least one person seeking help was turned away because of insufficient resources.  The Great Recession and its aftermath have made the situation dramatically worse, as more and more low-income Coloradans experience the significant legal problems that accompany acute economic distress and prolonged unemployment.  With the deterioration of the labor and housing markets, rising fuel and food costs, and depleted savings, more Coloradans are facing eviction, foreclosure, delinquent child support, hunger, financial distress, bankruptcy, and domestic violence.  In addition, prolonged un- or under-employment means that the number of people eligible for legal aid continues to rise.  The most recent Census Bureau survey found that there are now over 750,000 Coloradans who are income-eligible for services.

Amidst this rising tide of need, CLS is experiencing devastating funding losses that threaten to compromise its ability to meet even the most serious legal needs of the poor.  Federal funding, with strong bipartisan support, has long been a financial foundation for legal aid.  Yet, notwithstanding the increased need for legal services and the value of those services in stabilizing families in crisis, just before Thanksgiving, Congress approved a budget bill for 2012 that includes a 14.85% cut in funding for legal aid programs such as CLS.  This translates into a loss for Colorado of over $605,000.

This latest reduction in federal funding comes on top of other funding losses suffered over the last two years totaling nearly $1 million.  Most notable among these is the drop in funding from COLTAF, the Colorado Lawyer Trust Account Foundation.  The extended period of very low interest rates that we are experiencing (now expected to continue until at least mid-2013) has decimated COLTAF’s revenue, which is comprised solely of the interest earned on lawyers’ trust accounts, and although COLTAF has a reserve, built in better times for just such times as these, it is rapidly being depleted.  Even with the reserve, COLTAF funding for CLS has dropped by $630,000 over the course of the last two years, and COLTAF is projecting another cut to CLS of at least $520,000 in 2012.

Also important is a loss of $165,000 in state funding for legal services for victims of domestic violence.  Whether the state will be in a position to restore that funding for fiscal year 2013 remains to be seen, but an actual increase in the state appropriation, and certainly one anywhere near the magnitude necessary to cover for other losses, is not in the cards, given the state’s current budget constraints.  All told, by the end of 2012, CLS will likely be down over $2 million, or more than 20% of its funding just two years ago.

All of these funding losses mean that CLS, already woefully understaffed, will shrink further, which will necessarily reduce the legal assistance available to low-income Coloradans, regardless of their legal need.  Already, where there were six CLS lawyers doing family law cases in the Denver metro area, which has an indigent population of nearly 300,000, now there will be only five;  where there were four lawyers handling evictions and other housing issues, three will have to suffice; and where there were three doing foreclosure defense, now there will be two.  Other parts of the state are faring no better.  In Grand Junction, with an indigent population in Mesa County of about 17,000, there are now only two CLS lawyers, where formerly there were three.  The CLS offices in Colorado Springs and Alamosa have each lost a paralegal, and the Durango office has lost the sole member of its support staff, leaving just three lawyers and a paralegal to serve the entire southwest corner of the state, including the Southern Ute and Ute Mountain Ute Indian Reservations.  This serious understaffing is only going to get worse.

Bar-sponsored pro bono programs alone cannot be expected to pick up this much slack, particularly since they too are suffering from cuts in their COLTAF funding.  Nor can the court system, also suffering from inadequate funding, be expected to seamlessly absorb ever larger numbers of pro se litigants, especially if timely legal assistance would have eliminated the need for them to be there in the first place.  It is true that to maximize access for those in greatest need, a well-functioning civil legal aid delivery system must have well-managed pro bono programs; it must have a legal community committed to providing pro bono services to the poor; it must have self-help resources that make courts and administrative agencies accessible for those who are proceeding pro se; and it must maximize its use of technology to improve access in rural areas and otherwise.  But the backbone of any well-functioning system must be an adequately-funded, staffed legal aid program, with lawyers and paralegals, who are expert in dealing with the problems unique to low-income populations, and who are available on demand when low-income families are in crisis and time is of the essence.

The legal profession has a singular responsibility to respond to this crisis in our civil justice system.  CLS is the place of last resort for low-income families, the disabled, veterans and military families, and seniors who are facing serious civil legal problems.  If turned away, these Coloradans are effectively denied the rights, remedies, and protections afforded by the law, sometimes with devastating consequences – lethal injuries at the hands of an abusive spouse, a home lost to an unscrupulous lender, life on the street because of a wrongful denial of disability benefits.  As lawyers, we understand that the rule of law is in jeopardy when the protections of the law are not available to increasingly large numbers of our most vulnerable citizens.

The leadership of lawyers – whether in private practice or in-house corporate counsel, large firm or solo practice, government or nonprofit – is more important than ever in fulfilling our nation’s promise of equal justice for all.  The effect of CLS’ funding losses is calculable in terms of dollars lost, staff positions eliminated, and additional applicants for service turned away.  But the actual impact on the lives of low-income Coloradans, the damage to our communities, the tarnishing of our nation’s fundamental promise of equal justice, and the risk to our civil justice system and the rule of law is immeasurable.

Here are some things you can do to help:

  1. Give generously to the Legal Aid Foundation (http://www.legalaidfoundation.org/).
  2. Take a pro bono case from Metro Volunteer Lawyers (http://www.metrovolunteerlawyers.org/).
  3. Speak to your elected representatives (federal and state) about the importance of public funding for civil justice.
  4. Speak with your banker to ensure that the interest rate on your COLTAF account is as generous as possible.
Diana Poole is the Executive Director of the Legal Aid Foundation, which raises money for Colorado Legal Services, and COLTAF, which administers Colorado’s IOLTA program. She is also a member of the Colorado Access to Justice Commission.
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Tenth Circuit: Competition and Contract Terms Were Valid Considerations in Determining to Not Proceed with Proposed Casino

December 14, 2011 By Leave a Comment

The Tenth Circuit Court of Appeals issued its opinion in Kansas Penn Gaming, LLC v. HV Properties of Kansas, LLC on Tuesday, December 13, 2011.

The Tenth Circuit affirmed the district court’s decision. Respondent entered into a real estate sale contract with Petitioner, “pursuant to which [Respondent] purchased from [Petitioner] parcels of land in southeast Kansas for $2.5 million for the purpose of seeking to develop a lottery gaming facility on the land. [Respondent] ultimately chose not to develop a lottery gaming facility on the land. [Petitioner] thus did not receive $37.5 million of payments that it had hoped to receive . . .  under the contract.”

Respondent filed this diversity action seeking a declaratory judgment that it did not breach the terms of the contract, and Petitioner filed a counterclaim alleging that Respondent breached the terms of the contract. The district court granted summary judgment in favor of Respondent.

The Court concluded that “competition from other nearby casinos, or the threat of such competition, would have, under the terms of the Sale Contract, been a valid consideration for [Respondent] in assessing the reasonable acceptability of the terms of the Management Contract it executed with the Lottery Commission”; Respondent had the right to decide whether the negotiated and executed management contract was “reasonably acceptable,” and in turn to withdraw if necessary. Sufficient evidence exists to show that Respondent reasonably did not believe that, due to the combination of the downstream casino and terms in the executed management contract, the proposed casino would be sufficiently viable to justify the investment.

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Colorado Court of Appeals: Economic Loss Rule Does Not Apply to These Claims Regarding Duties a Residential Broker Owes a Landlord

December 12, 2011 By Leave a Comment

The Colorado Court of Appeals issued its opinion in Wahrman v. Golden West Realty, Inc. on December 8, 2011.

Interlocutory Review—C.A.R. 4.2.

Barbara Wahrman petitioned for interlocutory review of the district court’s order that the economic loss rule barred her breach of fiduciary duty and negligence claims against defendants Golden West Realty, Inc. and Kathleen Smith. The petition was denied.

Defendants acted as Wahrman’s broker in leasing and managing her residential rental property. According to Wahrman, the tenants significantly damaged the property during and in connection with the termination of the tenancy. She alleged defendants were liable because they obtained an adverse credit report on the tenants but failed to inform Wahrman, inspected the property but failed to note the damage, consented to violations of the lease, and advocated on the tenants’ behalf.

On defendants’ Motion for Determination of Question of Law, the trial court requested briefing on the economic loss rule and then held that it barred the breach of fiduciary duty and negligence claims. It then granted Wahrman’s Motion for Interlocutory Appeal without making any findings.

C.A.R. 4.2 allows an interlocutory appeal when (1) immediate review may promote a more orderly disposition or establish a final disposition of the litigation; (2) the order from which an appeal is sought involves a controlling question of law; and (3) the order from which an appeal is sought involves an unresolved question of law. The Court of Appeals found that whether the economic loss rule applies to claims regarding the duties a residential broker owes to a landlord appeared to be a question of first impression in Colorado and, therefore, assumed it was an unresolved question of law.

However, the Court found nothing to suggest why the economic loss question is a controlling question of law in this case. The petition could have been denied for this reason alone. The Court also found that the assertion that immediate review may support more orderly disposition based on the specter of retrial and attendant additional cost was not a reason that would support interlocutory review. The petition was denied and the appeal was dismissed.

This summary is published here courtesy of The Colorado Lawyer. Other summaries for the Colorado Court of Appeals on December 8, 2011, can be found here.

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Colorado Court of Appeals: Assessors Must Adjust Data for Time when Using Comparative Sales Data to Appraise Taxable Real Property

November 14, 2011 By Leave a Comment

The Colorado Court of Appeals issued its opinion in Kidder III v. Chaffee County Board of Equalization on November 10, 2011.

Real Property—Assessment—Value—Time Adjustment Analysis.

The Chaffee County Board of Equalization (BOE) appealed an order of the Board of Assessment Appeals (BAA) reducing the 2009 tax year value of a vacant land parcel in Buena Vista (property). The order was reversed and the case was remanded.

Fred D. Kidder III and Diann K. Kidder (collectively, taxpayers) own the property in question. The Chaffee County Assessor originally assigned a 2009 tax year value of $146,484 to the property. The taxpayers filed a petition with the BOE challenging the valuation. Following the BOE’s denial of the petition, the taxpayers appealed to the BAA.

The BOE contended that the BAA’s order failed to comply with the time adjustment requirements of CRS §39-1-104(10.2)(a) and (d). When assessors use comparative sales data to appraise taxable real property, the data must be adjusted for time. Here, the BAA removed the BOE’s time adjustment for the comparative data before reaching a conclusion on the value of the property. Because the statutory language clearly imposes a duty to value property using a time adjustment analysis, the order was reversed and the case was remanded so that a time adjustment may be included.

This summary is published here courtesy of The Colorado Lawyer. Other summaries for the Colorado Court of Appeals on November 10, 2011, can be found here.

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Colorado Court of Appeals: Negligence Causation Established by Showing that Plaintiff Would Have Been Better Off by Retaining Asset Lost through Transactional Malpractice

November 14, 2011 By Leave a Comment

The Colorado Court of Appeals issued its opinion in Ludlow v. Gibbons on November 10, 2011.

Real Property—Listing Agreement—Professional Negligence—Contract—Proximate Cause—Injury—Breach of Fiduciary Duty—Transaction Broke—Nonparty Fault Designation.

Plaintiffs (collectively, sellers) appealed the district court’s order granting summary judgment in favor of defendants (collectively, brokers), along with the court’s award of attorney fees and costs to the brokers. The brokers conditionally cross-appealed the district court’s order striking their nonparty fault designations. The summary judgment on the sellers’ negligence claims was vacated, the summary judgment on the sellers’ breach of fiduciary duty claim was affirmed, the award of attorney fees and costs was vacated, and the order striking the brokers’ nonparty fault designations was affirmed.

The sellers entered into an exclusive listing agreement with Gibbons-White, Inc. for the sale of land in Boulder County. The sellers entered into a contract to sell the land to Actis, LLC. The sellers later sued the lawyers and the brokers for professional negligence, claiming that they failed to timely advise the sellers of the contract provision giving Actis a $1,615,909.95 credit against the purchase price at closing for “infrastructure costs.” The district court granted the brokers’ motion for summary judgment as to all claims.

The sellers argued that the district court erred in granting summary judgment to the brokers on their negligence claim. The brokers claimed to be entitled to summary judgment based on the absence of evidence of causation of injury. A plaintiff must prove that but for the professional’s negligence, the plaintiff would have achieved a better result. A plaintiff may prove a more favorable result by proving that he or she would have been better off merely by retaining an asset lost through transactional malpractice. Here, the sellers argued that they would not have sold the property to Actis if the brokers had timely informed them of the infrastructure credit provisions, which was sufficient to establish a genuine issue of material fact as to proximate cause. Therefore, the summary judgment on the sellers’ negligence claims was vacated, along with the award of attorney fees and costs to the brokers.

The sellers also contended that the district court erred by granting summary judgment in the brokers’ favor on the breach of fiduciary duty claim, because the record demonstrated a genuine issue of material fact as to whether the brokers acted as the sellers’ agents in connection with this real estate transaction. A transaction broker is not in a fiduciary relationship with any party to a real estate transaction. Here, there was no written agreement between the brokers and the sellers creating an agency relationship between the parties. Therefore, because the relevant statute precludes the imputation of fiduciary duties to the brokers without a valid written agreement, the brokers had no fiduciary responsibilities to the sellers as a matter of law, and the district court correctly granted summary judgment in the brokers’ favor on the sellers’ breach of fiduciary duty claim.

The brokers argued on cross-appeal that the district court erred in striking their nonparty fault designations. The brokers filed a designation of nonparty fault, pursuant to CRS §13-21-111.5, naming Richard Groves, the president and chief executive officer of Actis, based on the theory of the designation that he had a duty to disclose to the sellers that he had inserted the infrastructure credit provisions in the contracts. However, Groves did not have a fiduciary relationship with the sellers, and the brokers failed to allege any facts that would show he had somehow concealed the provisions from the sellers or in any way had misled the sellers. Therefore, the district court did not err in striking the brokers’ nonparty designations.

This summary is published here courtesy of The Colorado Lawyer. Other summaries for the Colorado Court of Appeals on November 10, 2011, can be found here.

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Colorado Court of Appeals: Property Encumbered By a Valid Lien Not Asset under Colorado Uniform Fraudulent Transfer Act

November 1, 2011 By Leave a Comment

The Colorado Court of Appeals issued its opinion in Board of County Commissions of the County of Park v. Park County Sportsmen’s Ranch, LLP on October 27, 2011.

Colorado Uniform Fraudulent Transfer Act—Jury Verdict—Evidence—Asset—Lien—Successor Liability—Foreclosure—Notice—Accommodation Party.

Defendants appealed the jury verdicts and trial court judgments in favor of plaintiffs on their claims of fraudulent conveyance, civil conspiracy, successor liability, and quiet title. The judgment was affirmed in part and reversed in part, and the case was remanded for further findings.

Defendants contended that the jury’s verdict under the Colorado Uniform Fraudulent Transfer Act (CUFTA) was not supported by sufficient evidence. A fraudulent transfer under CUFTA includes the transfer of an asset; however, an asset does not include “property to the extent it is encumbered by a valid lien.” Here, because defendant Park County Sportsmen’s Ranch, LLP (PCSR)was encumbered by valid liens that exceeded its value at the time of foreclosure, it was not an asset under CUFTA. Further, defendants signed the 2002 note as accommodation to the parties under CRS § 4-3-419, because they did not receive any direct benefit from the loan. Therefore, the verdict was not supported by the evidence, and the judgment was reversed. Additionally, the jury’s verdict on civil conspiracy was reversed because it was based on the alleged fraudulent transfer.

Defendants contended that the jury’s verdict on successor liability must be reversed. Generally, a corporation that acquires the assets of another corporation does not become liable for its debts. Here, however, the indirect transfer of assets through a foreclosure sale supports successor liability despite the fact that the property lacked any equity. Additionally, the evidence supports the jury’s verdict that defendant JJWM, LLP was liable as a successor corporation, because (1) the original four partners of PCSR, the previous corporation, also were the only four partners of JJWM; (2) both partnerships had the same purpose; (3) JJWM acquired the sole asset of PCSR; and (4) PCSR also was JJWM’s sole asset. This evidence was sufficient to support the jury’s verdict on successor liability under the mere continuation exception.

Defendants argued that the trial court erred by reattaching plaintiffs’ original judgment liens to the ranch owned by JJWM. Because the individual defendants were accommodation parties, the foreclosure sale was valid and, except for Thornton’s lien due to defective notice, the foreclosure extinguished the other plaintiffs’ judgment liens. Based on this conclusion, the trial court’s order attaching plaintiffs’ original judgment liens to the ranch was reversed, except as to Thornton.

Defendant City of Aurora contended that the trial court erred by (1) finding lack of notice to Thornton of the foreclosure; and (2) voiding Aurora’s quitclaim deed from JJWM for a portion of the ranch. Because the record shows that the notice to Thornton was defective, the foreclosure did not extinguish its judgment lien. Because no fraudulent transfer occurred under CUFTA, the court’s order voiding the quitclaim deed was reversed.

This summary is published here courtesy of The Colorado Lawyer. Other summaries for the Colorado Court of Appeals on October 27, 2011, can be found here.

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Colorado Court of Appeals: Merger of Title Doctrine Does Not Extinguish a Prescriptive Easement when Sole Owner of Servient Estate Holds Title to Dominant Estate in Joint Tenancy with Spouse

October 17, 2011 By Leave a Comment

The Colorado Court of Appeals issued its opinion in Westpac Aspen Investments, LLC v. Residences at Little Nell Development, LLC on October 13, 2011.

Preliminary Injunction—Merger of Title—Prescriptive Easement.

This case presented an issue of first impression as to whether the merger of title doctrine extinguishes a prescriptive easement when the sole owner of the servient estate holds title to the dominant estate in joint tenancy with his spouse. The Court of Appeals concluded it does not.

Westpac Aspen Investments, LLC (Westpac) sued Preston and Betty Henn (the Henns) for injunctive relief requiring the Henns to remove a fence and locked gate blocking access to an express easement, and to quiet title to a prescriptive easement across the Henns’ lot for pedestrian access to Westpac’s property. The trial court entered a preliminary injunction against the Henns prohibiting them from obstructing access to Westpac’s property.

On appeal, the Court was asked to decide whether it was error for the trial court to have granted the preliminary injunction. To decide that, the Court had to determine whether there was error by the trial court regarding the factual and legal conclusions on which the injunction depended. It held there was no error and affirmed.

Westpac and the Henns own neighboring residential lots in the Tipple Woods subdivision at the base of Aspen Mountain, adjacent to the Aspen Resort ski area. The subdivision was created in 1959 and comprised five lots, three of which were on a steep slope inaccessible by motor vehicles. In 1960, to enable access to the upper lots, the original owners created an express easement on which they built a tramway and a staircase. The tram terminated in the highest lot (Lot 3), now owned by the Henns.

In 1984, the owner of the adjacent lower lot divided it into two lots. Westpac now owns Lot 2, adjacent to Lot 3, which Westpac claims enjoys the benefit of a prescriptive pedestrian easement across Lot 3 that had been in use since the early 1960s. The 1984 plat that created Lot 2 and the lower lots also contained the express tram and staircase easement. The terrain prevented direct access to Lot 2 from the easement. Because the tram ended within Lot 3, pedestrian access to Lot 2 was by way of a footpath across a portion of Lot 3. No express easement was created for this path.

The Residences at Little Nell Development, LLC, and related developer entities (collectively, Little Nell) wanted to build luxury condominiums on the three lower lots. In 2005, it filed an Amended Plat that consolidated the three lower lots, designating them the “Residence Lot” and assigning the current numbers to the lots Henn and Westpac now own. Little Nell removed the tram and built a pedestrian staircase that ends within the Henns’ lot in essentially the same location as the historic tram and staircase. They obtained a temporary access easement during construction from adjacent property owners for the benefit of the upper lots.

After construction of the staircase was completed, Westpac resumed accessing its property by way of the footpath across the Henns’ property and, without proper permits, installed a heated sidewalk on the path. The Henns then, also without proper permits, installed a fence and locked gate across the path leading to the Westpac property, thereby preventing access to the staircase. Westpac filed this lawsuit, seeking to quiet title to an easement based on the footpath and to require the Henns to remove the gate and fence. The court granted a preliminary injunction.

On appeal, the Henns argued that Westpac did not demonstrate a reasonable probability that it would prevail on the merits of its claim for a prescriptive easement. The Court disagreed. The Henns did not challenge the findings that the use of the path was open and notorious, but argued Westpac could not establish it was used continuously without effective interruption because it was not used during construction of the new house on Lot 2 in 2000 and during the Little Nell construction in 2005. The Court noted that intermittent use on a long-term basis satisfies the requirement for continuous use. The trial court found the owners of Lot 2 used the path for at least forty-three continuous and uninterrupted years from 1962 to 2005; therefore, the prescriptive period was fulfilled in 1980 (eighteen years after its commencement in 1962).

The Henns argued that the use was not adverse because the owners of Lot 3 gave permission for the path’s use. The Court noted that an owner’s acquiescence of use is not permission. The trial court found and the testimony reflected that the path was used for forty-three years without permission being explicitly sought or received. Thus, the trial court did not err in finding a reasonable probability that the Henns’ property is subject to a prescriptive easement benefiting Westpac’s property.

The Henns contended that in 1989, the owner of Lot 2 also owned Lot 3, and that under the doctrine of merger, adverse use of the footpath ended, any easement was terminated, and any subsequent use did not qualify for a new prescriptive easement. The Court noted that the common ownership for the doctrine of merger to apply must be absolute and that was not the case here. In 1978, William Yarbrough took title to Lot 3. On June 27, 1989, Yarbrough and his wife, Julia, bought Lot 2 and took title as joint tenants. Eleven days later, on July 7, 1989, the Yarbroughs conveyed Lot 2 to the Julia Kinloch Yarbrough Revocable Trust. On September 5, 1989, Yarbrough sold Lot 3 to a third party. Westpac bought Lot 2 in 2002, and the Henns acquired Lot 3 in 2004. The Henns’ argument was that William Yarbrough’s ownership interest in both lots during the eleven days in July 1989 resulted in a merger of title that terminated the prescriptive easement for the footpath and restarted the prescriptive period. The Court agreed with the trial court that because William Yarbrough was never the sole owner of both lots, the easement was not extinguished.

The Henns also argued that the lack of use of the easement during the construction in 2000 and 2005 extinguished the prescriptive easement. The Court disagreed, finding no evidence of any intent on the part of Westpac or its predecessor to abandon the easement during construction.

The Court rejected the Henns’ argument that the trial court erred by granting a preliminary injunction. The trial court thoroughly analyzed the situation and made findings on each of the Rathke factors, all of which were supported by the record. [Rathke v. MacFarlane, 648 P.2d 648, 653-54 (Colo. 1982).]

This summary is published here courtesy of The Colorado Lawyer. Other summaries for the Colorado Court of Appeals on October 13, 2011, can be found here.

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Team CBA-CLE Scores a “Hat Trick” with Three International Awards, Including One for Legal Connection

September 26, 2011 By Leave a Comment

The staff of Colorado Bar Association Continuing Legal Education (CBA-CLE) has so many enthusiastic hockey fans (including recreational players, coaches, referees, and those who just watch) that we thought it appropriate to have a hockey theme to celebrate when we won three awards in 2011. The “Hat Trick” from the international organization, the Association for Continuing Legal Education (ACLEA), included awards in the categories of Publications, Technology (for this blog!), and Public Interest.

Dawn McKnight, Assistant Executive Director of CBA-CLE says, “Our staff does an incredible job and we could not have won the awards without the help of the hundreds of attorneys and legal professionals in Colorado who contribute their time and resources to the projects.  There are too many people to name that volunteer countless hours for us, but we are extremely grateful and lucky to work with such talented and dedicated people. It’s very rewarding to be recognized by this international organization for the work we do and especially to win three in one year!  We’ll continue to work hard to achieve our ‘goals’ of providing quality legal education programs and publications for our legal community.”

2011 ACLEA AWARDS

  • Public Service Category:   Senior Law Day Project
  • Senior Law Day is an annual event for the public, held in several different locations each year around the state and offers workshops taught by attorneys and other professionals on critical topics  to seniors including Medicare, Medicaid, Social Security, Estate Planning and many other issues.
  • Publications Category:   Residential Construction Law in Colorado, Third Edition
  • Written by noted attorneys Ronald M. Sandgrund, Scott F. Sullan, and Leslie A. Tuft, this timely and well-written book reviews critical issues with homeowners’ legal rights and remedies arising from the design, construction, marketing, and sale of single-family homes and multi-family communities.
  • Technology Category:   CBA-CLE Legal Connection Blog – www.cbaclelegalconnection.com
  • A free resource for the Colorado legal community to get the latest Colorado legal news easier and faster from one centralized, searchable resource.

DEFINITION OF A HAT TRICK: Three goals scored by one player in a single game.

ABOUT ACLEA: Established in 1964, ACLEA is an international association providing educational opportunities and professional interaction for its members.  The organization includes members in the United States, Canada, the United Kingdom, Australia, New Zealand, Africa, and Mexico. Administrators, trainers, managers, educators, publishers, programmers and meeting professionals are all members of ACLEA.

ABOUT CBA-CLE:  Colorado Bar Association CLE [CBA-CLE] is the nonprofit education arm of the Colorado Bar Association and the Denver Bar Association. We produce high-quality continuing legal education programs and legal publications for attorneys and legal professionals in Colorado and the Rocky Mountain Region.

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State Judicial Posts Information about Conservation Easement Tax Credit Appeals for Land Owners

September 15, 2011 By Leave a Comment

HB 11-1300, which was passed in the 2011 Legislative Session, created an appeal process in the District Court for land owners related to conservation easement tax credits.

Colorado State Judicial has posted the following information about Conservation Easement Case Processing:

What is a Conservation Easement Case?

House  Bill 11-1300 provides that persons who hold tax credits derived from a conservation easement and who have received a notice of deficiency, disallowance, or rejection of their credit may appeal that decision through the person or entity that created the conservation easement, called the Tax Matters Representative.

The Act permits the Tax Matter Representative to appeal through either the District Court or an enhanced administrative process.

Cases filed with the District Courts generally fall into one of two categories.

  1. The first group includes litigants that choose to leave the Department of Revenue’s (DOR) administrative appeal process without receiving a final ruling to instead have the District Court rule on the issues. It is anticipated that the majority of cases filed will fall in this group. These cases must be filed by October 1, 2011.
  2. The second group is composed of litigants that may choose to stay in the DOR appeal process, including those who may want to appeal the DOR ruling in District Court per HB 11-1300. This type of appeal will be filed at a later date.

How do I file a case if I choose to proceed through the District Court?

Cases are filed in the District Court in the county in which the property is located. If the cases are filed by an attorney, it is mandatory that they are filed electronically (e-filed) . If a litigant is proceeding without an attorney, documents must be filed in the clerk’s office at the courthouse where the property is located. In both instances, a civil filing fee applies ($224).

Who will represent the Department of Revenue?

The Attorney General will represent the Department of Revenue in cases filed in District Court.

What happens during the course of the case?

The District Court will determine, in this order:

  1. Whether the tax credit claimed was valid;
  2. The value of the tax credit, along with any outstanding taxes, penalties, and interest due;
  3. How the tax credit, outstanding taxes, penalties, and interest are apportioned among the credit holders (if applicable); and
  4. Any other outstanding disputes between tax credit holder and land owner as determined by the Court.

What counties are in each region?

HB 11-1300 divides Colorado into three regions for the purpose of conservation easement filings. The regions include the following judicial districts:

  • Region 1: 1st, 2nd, 8th, 13th, 17th, 18th, 19th, and 20th
  • Region 2: 3rd, 4th, 10th, 11th, 12th, 15th, and 16th
  • Region 3: 5th, 6th, 7th, 9th, 14th, 21st, and 22nd

Click here to see a map of the districts: District Court Map

Who do I contact with questions?

The regional Clerk of Court or his/her designee:

Where can I get more information?

Further information may be obtained by reading House Bill 11-1300 as signed by the Governor. Additional information on HB11-1300 also can be obtained at the following websites. (NOTE: the Judicial Department is not the controlling authority on these websites, thus does not endorse any information on these sites.)

Colorado Coalition of Land Trusts
Colorado Department of Revenue
CBA-CLE Legal Connection

Click here to read these Conservation Easement Case Processing on the State Judicial Website.

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Colorado Supreme Court: To Condemn Private Way of Necessity for Access to Property for Future Development, Scope and Purpose of Condemnation Must Be Presented

September 12, 2011 By Leave a Comment

The Colorado Supreme Court issued its opinion in The Glenelk Association, Inc. v. Lewis on September 12, 2011.

Colo. Const. art. II, § 14—CRS § 38-1-1-2—Private Way of Necessity—Private Condemnation—Purpose—Indispensability—Trial Court Findings of Fact—Scope of and Necessity for Way of Necessity—Burden on Condemnee’s Property.

The District Court for Jefferson County dismissed a condemnation petition for a private way of necessity because the developer of the allegedly landlocked parcel did not sufficiently define the scope of and the necessity for the proposed condemnation. Evidence showed that the development might vary from one to thirty residential dwellings. Applicable roadway and easement requirements in Jefferson County mountain areas are based on how many lots will be served by the development.

The district court found that the developer’s failure to sufficiently define the purpose of the way of necessity prevented the court from entering a condemnation order that would minimize the burden to be placed on the condemnee’s property. The court of appeals ruled that the condemnation could proceed based only on the zoning of the condemnor’s property.

The Supreme Court disagreed with the court of appeals and reinstated the district court’s judgment. The Court held that, when a petitioner seeks to condemn a private way of necessity for access to property it wishes to develop in the future, it must demonstrate a purpose for the condemnation that enables the trial court to examine both the scope of and the need for the proposed condemnation, so that the burden to be imposed on the condemnee’s property may be ascertained and circumscribed through the trial court’s condemnation order. The record in this case supported the trial court’s dismissal of the condemnation petition.

Summary and full case available here.

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James Johnson: Colorado Amends “Agricultural Land” Classification

September 9, 2011 By Leave a Comment

Post by James T. Johnson and Kimberly A. Martin

In May of this year, Governor Hickenlooper signed into law House Bill 11-1146, which amends the statutory definition of “agricultural land” for property tax purposes.  Historically, land underlying a residence located on a parcel of property that otherwise was classified as “agricultural land” was also classified as agricultural land for property tax purposes.  This classification resulted in the residence being qualified for more favorable “agricultural” property tax treatment as compared to the residential classification.

Under House Bill 11-1146, now excluded from the classification of “agricultural land” is up to two acres of land upon which a “residential improvement” is located if the residential improvement is not “integral to an agricultural operation” conducted on the land.  Any such excluded land will be classified as “residential land” for property tax purposes, but the remainder of the property would retain its agricultural classification.  If the residence is integral to the operation of a farm or ranch, the classification does not change.  Further, vacant land or any other land upon which a residence is not located, whether or not subdivided, is not affected by this legislation.

House Bill 11-1146 does not expressly define “integral” but provides that a residence is deemed integral to an agricultural operation if the person occupying such residence “either regularly conducts, supervises, or administers material aspects of the agricultural operation or is the spouse or a parent, grandparent, sibling, or child” of such person. As with all classifications of property for taxation purposes, the applicable county assessor is responsible for making the determination of whether property underlying a residence should be classified as “agricultural land” or “residential land,” in other words, whether the residence is “integral” to a farm or ranch operation. The determination may be appealed to the applicable county board of equalization.

Implementation of House Bill 11-1146 may implicate the Taxpayer Bill of Rights (TABOR), in that it may result in an increase in tax revenues to local governments and/or special districts in excess of the revenue limits prescribed by TABOR. If the local government or special district previously has not obtained voter approval to retain and spend excess revenues (known as “de-Brucing”) and determines that the implementation of House Bill 11-1146 will cause a net property tax gain that exceeds TABOR’s limits, House Bill 11-1146 provides that the government or district may place the issue before the voters for approval. If the voters do not approve the retention of the excess revenues, or if the government or district does not submit the issue to the voters, it must adjust its mill levy to eliminate any such net property tax revenue gain.

House Bill 11-1146 will apply to the 2012 property tax year and all subsequent tax years.

James Johnson is a Shareholder in Otten Johnson’s land use, real estate, and litigation groups. He represents clients in all aspects of real estate development and related issues, including disputes regarding entitlement approvals and eminent domain.

Kimberly Martin is s an associate in the firm’s land use and real estate practice groups. Her practice focuses on all aspects of entitlement matters.

They contribute to the firm’s Rocky Mountain Real Estate Law blog, where this post (and a client alert) originally appeared on August 23, 2011.
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