August 18, 2017

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.

Colorado Supreme Court: Third-Party Claims in Construction Defect Case Timely Under C.R.S. § 13-80-104(1)(b)(II)

The Colorado Supreme Court issued its opinion in In re Goodman v. Heritage Builders, Inc. on Monday, February 27, 2017.

Construction Defects—Statute of Repose—Statute of Limitations.

In this case, the Colorado Supreme Court considered the parameters for timeliness of third-party claims in construction defect cases. The court concluded that such claims are timely, irrespective of both the two-year statute of limitations in C.R.S. § 13-80-102 and the six-year statute of repose in C.R.S. § 13-80-104(1)(a), so long as they are brought at before the 90-day time frame outlined in C.R.S. § 13-80-104(1)(b)(II). Accordingly, the court made its rule to show cause absolute.

Summary provided courtesy of The Colorado Lawyer.

SB 17-097: Broadening Application of Presumption of Conveyance for Adjacent Rights-of-Way

On January 27, 2017, Sen. Beth Martinez Humenik and Rep. James Coleman introduced SB 17-097, “Concerning the Presumption that a Conveyance of an Interest in Land also Conveys an Interest in Adjoining Property Consisting of a Vacated Right-of-Way.”

Under current law, a conveyance by warranty deed carries the presumption that the grantor’s interest in an adjoining vacated street, alley, or other right-of-way is included with the property whose legal description is contained in the deed. However, this presumption does not apply to other types of deeds or to a lease, mortgage, or other conveyance or encumbrance.

The bill removes the language containing the presumption from the warranty deed statute and relocates it, with amendments, so as to broaden the application of the presumption of conveyance of an adjoining vacated right-of-way to include not only warranty deeds but also all forms of deeds, leases, and mortgages and other liens.

The bill was introduced in the Senate and assigned to the Judiciary Committee. It was amended in committee and referred to the Senate Committee of the Whole for Second Reading. The bill passed Second Reading with amendments and passed Third Reading with no further amendments. The bill was introduced in the House and assigned to the Local Government Committee.

Colorado Court of Appeals: Lessee of Real Property Lacks Standing to Challenge Property Tax Determination

The Colorado Court of Appeals issued its opinion in Traer Creek-EXWMT LLC v. Eagle County Board of Equalization on Thursday, February 9, 2017.

Traer Creek-EXWMT (Traer) has been a lessee of property in Eagle County since 2002. Traer has reimbursed the property owner for property taxes each year since assuming the lease. On May 1, 2015, the Eagle County Assessor mailed a notice of valuation to the property owner. Traer initiated the statutory protest and adjustment process to challenge the 2015 valuation. The assessor declined to adjust the valuation, and Traer appealed to the Board, which also upheld the valuation. Traer appealed to district court.

The Board moved to dismiss under C.R.C.P. 12(b)(1) on the theory that a mere lessee does not have standing to challenge a property tax valuation of the sort issued by the assessor. The district court agreed and dismissed the case.

On appeal, Traer argued that because it “owns” a leasehold interest in the subject property, it has standing to protest the valuation. The Colorado Court of Appeals disagreed, finding that the relevant statutes convey standing only to the property owner/taxpayer. The court similarly rejected Traer’s argument that C.R.S. §§ 39-1-102(16) and (14) could be read to grant authority to a lessee to challenge a property valuation. The court concluded that the county assessor did not value Traer’s “property” — i.e., its leasehold interest — instead, the assessor valued the fee interest in the property. Therefore, Traer was not a “person” whose “property has been valued too high.”

Traer also argued it had common law standing because it pays taxes on the property and because the owner had granted it agency authority to challenge the valuation. The court noted that Traer’s argument failed at the outset because when a statute limits standing, the court may not disregard the statute by employing common law notions.

The district court judgment was affirmed.

Top Ten Programs and Homestudies of 2016: Real Estate Law

The year is drawing to a close, which means that the compliance period is ending for a third of Colorado’s attorneys. Still missing some credits? Don’t worry, CBA-CLE has got you covered.

Today, we are featuring the Top Ten Programs and Homestudies for Real Estate Law. There are many great programs offered in the Real Estate area, and CBA-CLE offers several informative books authored by some of Colorado’s preeminent real estate attorneys. Visit cle.cobar.org/Practice-Area/Real-Estate to find the real estate program, homestudy, or book you need.

There are many great programs and homestudies for real estate practitioners, but our top ten are as follows.

10. Landlord Tenant Law: What to Do When Vacancy Rates are Low and Rents are High
While the media focuses on higher rents, the truth is that as inventory in housing grows, more and more Landlords are offering concessions such as free month’s rent and $1000 gift card to offset rent for qualified renters willing to sign a 1 year lease. To stay competitive with amenities in Denver, landlords are adding putting greens, outdoor living areas, composting gardens, dog washes, dog runs, bike maintenance stations, yoga classes, gourmet kitchens, and specialty pools. So landlord and tenant attorneys need to be educated on the current “higher rent” market as well as the coming “overbuilt” market which will again change the dynamics of the housing market tremendously. Order the Video OnDemand here, the CD homestudy here, and the MP3 here. Available for 7 general credits.

9. Mineral Interests: Real Estate Fall Update 2015
Whether you practice in the area of mineral interests or not, if you are a real estate lawyer, you need to know about this area of the law. Although the focus of this program is not fracking, the issue has brought mineral interests to the forefront of the Rocky Mountain legal landscape, and fracking will certainly be a part of the day’s discussion. Order the Video OnDemand here, the CD homestudy here, and the MP3 here. Available for 6 general credits, including 1 ethics credit.

8. Anatomy of a Residential Real Estate Transaction: Know the New CFPB Regulations
Some of the most experienced real estate professionals in Colorado explain residential real estate practice – from offer and acceptance to closing. This is a course not only for the practitioner who is new to the area of real estate, but for anyone who needs to know about the new CFPB regulations. Whether you represent the buyer or seller, you need the right tools. The faculty takes you through common problems that need to be solved, including the appropriate forms, title policy issues, types of conveyance deeds, how to read and land survey … and more. Order the Video OnDemand here, the CD homestudy here, and the MP3 here. Available for 7 general credits, including 1 ethics credit.

7. Anatomy of a Commercial Real Estate Transaction: Real Estate Spring Update 2015
When it comes to a commercial real estate transaction, there is a complex array of materials, forms and buyer/seller due diligence that you need to be aware of to properly and effectively represent the best interests of your clients. The knowledge base of a commercial real estate lawyer comes from many years of training and transaction experience, and involves a general understanding of technical matters. Whether it’s the areas of construction, zoning, environmental issues, leasing or site plan approval, if you’re going to be involved in a commercial real estate transaction, you’ll have to be aware of these many areas, along with the legal ones. The faculty members at the Real Estate Spring Update are the area experts for this myriad of issues in commercial real estate transactions. Order the Video OnDemand here, the CD homestudy here, and the MP3 here. Available for 7 general credits.

6. Foreclosure Law – All the Latest and Greatest
In 2011, Colorado had among the 10 highest foreclosure rates in the nation, according to a report from RealtyTrac Inc. Since then, rising home prices fueled by one of the strongest economies in the nation and low interest rates have caused foreclosures to wane in Colorado and the Denver area. Despite the improvement in Colorado’s economy, and the decrease in foreclosures, real estate lawyers and professionals still need to be aware of Colorado’s foreclosure process, because it is unique compared to other states, and foreclosure is always a consideration when representing clients. Order the Video OnDemand here, the CD homestudy here, and the MP3 here. Available for 7 general credits.

5. HOA Basics: Common Interest Communities
If your clients have purchased a condominium, townhouse or other type of property in a planned development or subdivision, chances are they are obligated to join that community’s homeowners’ association (HOA) and pay monthly or annual HOA fees for the upkeep of common areas and the building. If you represent, or are considering representing, clients who own these types of properties, there are many facets you should be aware of – how do homeowners’ associations work, and what are the rules and regulations if something goes wrong?  This seminar  provides not only an overview of common interest communities, but also the details of collection actions, covenant enforcement, transparency and governance, and much more. Order the Video OnDemand here, the CD homestudy here, and the MP3 here. Available for 7 general credits, including 1 ethics credit.

4. Advanced HOA Issues: Triple Crown, Developer Trifecta, & Changes on the Horizon
Your day will begin with a comprehensive case law and legislative update on the latest in HOA issues. Then you will hear some of the areas of CCIOA that have proven difficult or open to interpretation or are simply messier than some of us might prefer. Next, find out what strategies to use in the case of a stalled development: for example, when a property is foreclosed unfinished or unannexed. Learn what you need to know about Triple Crown, Vallagio and local construction defect ordinances. And that’s not all – learn the latest trends in document drafting in owner-controlled Associations: marijuana, emotional support animals, water/mold Issues, individual assessment, and more. Finally, what changes do the experts see on the horizon? Get the regulatory, developer, and Association perspectives on condominium conversions. Order the Video OnDemand here, the CD homestudy here, and the MP3 here. Available for 7 general credits.

3. 25 Cases Every Real Estate Lawyer Should Know – With Fred Skillern
From the obscure attorney disciplinary case (who would know?) that declares the law on the recording of attorney liens, to the well-publicized Lazy Dog Ranch case that revolutionized how we think about easement disputes (with the assistance of the new Restatement) … from statutory interpretation cases dealing with our common interest communities to cases in equity that at times seem to “rewrite” our statutes … our appellate courts have given us a healthy menu of cases on which real estate lawyers of all stripes can and should feast.  Order the Video OnDemand here, the CD homestudy here, and the MP3 here. Available for 3 general credits.

2. Quiet Title Actions: The Basics Plus Selected Advanced Topics
An action to quiet title is brought to establish a party’s title to real property, thereby “quieting” any challenges to the title. When the cloud on the title is removed, the plaintiff is free of claims against the property. Experienced experts will walk you through the quiet title process. You will learn the mechanics of the quiet title lawsuit, and about the more advanced issues when handling a quiet title case. From service of process and identification of the parties, to the most successful strategies in defending a quiet title action, you will get what you need to best serve your clients. Each homestudy order receives a copy of the CLE book, Colorado Quiet Title Actions, 3rd Edition, as part of the course materials for this program. Please note the book will be provided in PDF. Order the Video OnDemand here, the CD homestudy here, and the MP3 here. Available for 7 general credits.

1. 34th Annual Real Estate Symposium
For the past 33 years, the Real Estate Symposium has been established as an institution not to be missed by any real estate professional in the Rocky Mountain region. Join more than 400 of your friends and colleagues for this once-a-year opportunity to talk about the most important issues you face in your real estate practice today. Order the Video OnDemand here, the CD homestudy here, and the MP3 here. Available for 16 general credits, including 3 ethics credits. SAVE THE DATE! The 35th Annual Real Estate Symposium will be held July 13 through 15, 2017, at the Vail Marriott Resort and Spa.

Colorado Court of Appeals: 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: Evidence of Project Funds Inadmissible in Condemnation Proceeding

The Colorado Court of Appeals issued its opinion in Town of Silverthorne v. Lutz on Thursday, February 11, 2016.

Matthew Lutz and Edward Lutz (landowners) own a stretch of land over which the Town of Silverthorne wanted to build a trail. The town applied for and received funds from the Great Outdoors Colorado Program (GOCO) to use in construction of the trail. Landowners objected to having a portion of the trail built on their land. The town offered landowners $6,000 to purchase an easement, but landowners did not respond. The town next offered $75,000 for two easements, but landowners again did not respond. The town then filed a condemnation action under its eminent domain powers, and the matter proceeded to an immediate possession hearing and subsequent valuation trial. The district court granted the town’s motion for immediate possession and the landowners were compensated according to the jury’s valuation.

On appeal, the town initially argued the landowners waived any defense by failing to challenge the condemnation proceedings or make a counteroffer. The court of appeals found no error in the district court’s allowance for the landowners to reply to the condemnation proceedings out of time. The court noted, “Technically, there is no need to file an answer in a condemnation case, but it is good practice to do so.” Next, the court addressed the landowners’ assertion that the town was barred from exercising eminent domain power because of its receipt of GOCO funds, and the district court erred in granting the town’s motion in limine to exclude evidence of the source of funds. The court found it was bound by the Colorado Supreme Court’s decision in Pub. Serv. Co. v. City of Loveland, 79 Colo. 216, 233, 245 P. 493, 500-01 (1926), to exclude evidence of the source of funding for the eminent domain action, finding that the source of funds requires analysis of corporate finance which is wholly separate from a home rule city’s eminent domain authority. The court found no error in the district court’s grant of the town’s motion in limine to exclude evidence of the source of funds.

Landowners also argued the town acted in bad faith by planning the development of its trail in such a way as to receive all GOCO funds before commencing the eminent domain action. The landowners argue this is a jurisdictional challenge to the town’s condemnation suit. The court found several flaws with the landowners’ arguments that the town failed to act in good faith, and again affirmed the district court’s decision to exclude evidence of the GOCO funds. The court also rejected landowners’ contention that the district court erred in denying their motion for attorney fees.

The court of appeals affirmed the district court.

Comment Period Open for Proposed Changes to Rule 120

The Colorado State Judicial Branch announced proposed changes to Rule 120 of the Colorado Rules of Civil Procedure, “Orders Authorizing Sales Under Powers.” The changes are extensive, and include changing the title of the rule to be “Orders Authorizing Foreclosure Sale Under Power in a Deed of Trust to the Public Trustee.”A redline of the proposed changes is available here.

The supreme court is now accepting comments on the proposed changes to Rule 120. Comments may be made in writing via email to Christopher Ryan, the Clerk of the Supreme Court, or via U.S. Mail at 2 E. 14th Ave., Denver, CO 80203. Comments must be received no later than 5 p.m. on April 6, 2016. Comments will be posted on the State Judicial website after the close of the comment period.

Top Ten Real Estate Programs and Homestudies

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

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

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

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

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

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

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

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

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

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

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

Colorado Court of Appeals: Special District May Regulate Use of Property It Owns

The Colorado Court of Appeals issued its opinion in Aspen Springs Metropolitan District v. Keno on Thursday, July 16, 2015.

Metropolitan District—Real Property—Trespass—Willful—Fence Law—Contempt—Remedial Sanctions—Purge Clause.

Keno maintained a flock of sheep and grazed it on a parcel of land known as the “Greenbelt.” The Greenbelt was owned by Aspen Springs Metropolitan District (Aspen Springs). In 2011, the Aspen Springs Board passed a resolution prohibiting the grazing or tethering of livestock on the Greenbelt without the Board’s prior written permission. Keno continued to graze his sheep on the Greenbelt, and Aspen Springs sought an injunction preventing the grazing. Keno nonetheless continued to pasture his sheep on the Greenbelt and had twice been found in contempt by the time the court issued its final judgment permanently enjoining Keno from allowing his animals to graze on the Greenbelt.

On appeal, Keno contended that, as a special district and creature of statute, Aspen Springs lacks authority to regulate the use of property it owns. Among the express powers granted to special districts are the powers “[t]o acquire, dispose of, and encumber real and personal property including, without limitation, rights and interests in property, leases, and easements necessary to the functions or the operation of the special district.” The right to own property is necessary to these express powers. Property ownership generally includes the power to exclude others. Therefore, a special or metropolitan district may regulate the use of and access to property it owns. Accordingly, the district court did not err in holding that Aspen Springs has the power to prohibit and limit grazing activities on the Greenbelt.

Keno also contended that the district court erred in concluding that the Fence Law protects Aspen Springs from a willful trespass onto the Greenbelt, despite the fact the Greenbelt is unenclosed by a lawful fence. The Fence Law does not protect livestock owners who deliberately pasture their livestock on unenclosed lands of another, particularly when done against the owner’s will. Accordingly, the district court did not err in concluding that the Fence Law protects Aspen Springs from willful trespass onto its property.

Keno further asserted that the court erred in awarding attorney fees and costs as a remedial sanction after finding him in contempt a second time for violating the preliminary injunction. A remedial sanction must include a purge clause. Because the sheep grazing activities that resulted in Keno’s contempt citation were not ongoing at the time of the contempt hearing, Keno could not purge his contempt because he could not undo what he had done. Therefore, remedial sanctions, such as the assessment of costs and attorney fees, could not be imposed against Keno under these circumstances, and the trial court erred in awarding them. Instead, the court could impose only punitive sanctions. The judgment was affirmed in part and the order was vacated in part.

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

Tenth Circuit: Army Corps of Engineers Appropriately Considered Risks of Oil Pipeline Under Clean Water Act

The Tenth Circuit Court of Appeals issued its opinion in Sierra Club, Inc. v. Bostick on Friday, May 29, 2015.

The U.S. Army Corps of Engineers issued a nationwide permit (NWP 12) for construction of an oil pipeline pursuant to its permitting authority under § 404(e) of the Clean Water Act (CWA). TransCanada Corporation, relying on the permit and subsequent Corps verification letters, constructed the Gulf Coast Pipeline, a southern segment of the Keystone XL Pipeline, which traverses 485 miles and crosses approximately 2,000 waterways. Sierra Club, along with two other environmental groups, challenged the validity of NWP 12 and the verification letters, but the district court rejected the challenges.

On appeal, the environmental groups raised three sets of claims: (1) the Corps violated the National Environmental Policy Act (NEPA) by issuing NWP 12 without considering the risk of oil spills and the cumulative environmental impacts of the pipelines, and issued the verification letters without first conducting a NEPA analysis; (2) the Corps violated the CWA by authorizing activities with more-than-minimal environmental impact and unlawfully deferring the minimal-impact analysis to project management personnel; and (3) the Corps issued NWP 12 without analyzing cumulative effects and documenting the analysis. The Tenth Circuit addressed and rejected each set of claims.

The Tenth Circuit first addressed the NEPA claims. The environmental groups argued the Corps failed to consider the risks of oil spills in its environmental analysis, and failed to conduct an environmental analysis when it verified the pipeline was permissible under the nationwide permit. The Tenth Circuit found the environmental groups’ arguments that the Corps failed to consider the risk of oil spills and the cumulative impacts of the pipelines waived, since the groups did not raise these concerns during the comment period. The environmental groups argued that the risk of oil spills is obvious, but they instead were required to show an obvious flaw in the Corps’ evaluation, which they did not do. The Tenth Circuit found this argument waived. The groups also pointed to comments about the Keystone XL pipeline about oil spills, but the Tenth Circuit noted these comments were directed to other agencies, and in those comments no one questioned the Corps’ assessment. Similarly, the Tenth Circuit found the environmental groups’ arguments about the cumulative impacts of the pipeline waived, since they were not raised in the comment period. Although the cumulative effects were discussed in other contexts, they were never mentioned regarding the Corps’ work in dry land areas.

Next, the environmental groups argued the Corps should have prepared a NEPA analysis for the entire pipeline before issuing the verification letters. The Tenth Circuit disagreed, finding the verifications did not constitute “major federal action” necessitating NEPA review, since the verifications did not result in significant impact. The Tenth Circuit held that the Corps neither acted like a “gatekeeper” nor approved the whole project. Instead, it simply verified that TransCanada’s work was covered by NWP 12. The groups next contend the Corps should have evaluated the impacts of the whole project because the agency had “control and responsibility” over the project. However, the Tenth Circuit found the appendix to NEPA relied on by the environmental groups was inapplicable, and even if it had applied the Corps did not have “control and responsibility” over the entire project.

The Tenth Circuit next addressed the environmental groups’ argument that the Corps’ issuance of NWP 12 violated § 404(e) of the Clean Water Act by authorizing linear projects with significant environmental impact and by deferring part of the minimal-impact analysis to project-level personnel. Again disagreeing, the Tenth Circuit found that the Corps’ conclusion regarding the minimal environmental impacts involved the agency’s technical expertise, and the environmental groups were required to show the agency’s determination lacked any substantial basis in fact, which they did not do. The Corps, in analyzing the future impacts of dredge-and-fill activity, required project-level personnel to ensure that particular activities would not have more than a minimal impact on the aquatic environment. These were additional safeguards, and the Tenth Circuit found no error in the Corps’ delegation.

Finally, the Tenth Circuit addressed the environmental groups’ argument that the Corps violated the terms of its own permit by failing to document analysis of cumulative impacts in the verification letters or administrative record. The Tenth Circuit found no error. Although the district engineers were required to analyze cumulative impacts, they need not document their analysis in the verification letters. The Tenth Circuit noted that although the letters did not contain the analysis, it appeared in the record, and the Corps’ issuance of the verifications was not arbitrary or capricious.

The Tenth Circuit affirmed the district court’s judgment.

Colorado Court of Appeals: Use of Stock Certificate as Exhibit Does Not Qualify as a Filing or Recording

The Colorado Court of Appeals issued its opinion in Battle North, LLC v. Sensible Housing Co. on Thursday, June 18, 2015.

Spurious Documents—CRS §§ 38-35-201(3) and -204.

This case involves a dispute over ownership of real property in Eagle County (Pine Martin parcel). In 1998, Mortgage Investment Corporation (MIC) filed for judicial foreclosure on a deed of trust encumbering the Pine Martin parcel and the Piney Lumber parcel. Defendants included Pine Martin Mining Company (PMMC) and Piney Lumber Company (PLC). PMMC claimed ownership of the Pine Martin parcel and PLC claimed ownership of the Piney Lumber parcel. This essentially converted the foreclosure case to a quiet title action.

In 2000, PMMC and PLC moved for partial summary judgment and MIC filed a cross-motion for partial summary judgment. In 2004, the motions still pending, MIC assigned its interest in the matter to Ginn Battle Lender, LLC (Ginn). PMMC and PLC purported to transfer their interests in the parcels to respondent Sensible Housing Company (Sensible) by quitclaim deeds that Sensible recorded in the Eagle County Clerk and Recorder’s Office. Two of the deeds, one recorded in 2006 and one in 2008, were from PMMC to Sensible and concerned the Pine Martin parcel. These deeds are at issue in this case.

Pursuant to an approved stipulation for how to proceed to resolve the quiet title case, Sensible filed as an exhibit a purported 1915 Stock Certificate certifying that 1,251,000 shares of the capital stock of PMMC had been issued to Bouvier. Sensible’s principal, Tucker, claimed he had obtained those shares from Bouvier’s heir in 1996. On that authority, Tucker created and recorded the 2006 and 2008 quitclaim deeds.

In 2009, the district court granted Ginn’s cross-motion for summary judgment and denied Sensible’s motion. It found the 1915 Stock Certificate and related documents were incredible as a matter of law and therefore Sensible had no interest in either parcel. Sensible appealed, and a division of the Court affirmed summary judgment as to the Piney Lumber parcel but reversed as to the Pine Martin parcel, finding the 1915 Stock Certificate not “so incredible that no reasonable jury could believe it.”

In April 2012, Battle North, LLC (Battle North) filed a petition for an order to show cause pursuant to CRS § 38-35-204 and CRCP 105.1, alleging the 1915 Stock Certificate was a spurious document and requesting an order directing Sensible to show cause why it should not be declared invalid. Battle North amended the petition to request that the two quitclaim deeds also be declared invalid as spurious documents. Following a hearing, the district court made extensive findings, including that the 1915 Stock Certificate was created by Tucker and was a sham, and that both it and the two quitclaim deeds were spurious documents; the court therefore “released” the three documents. The court also awarded Battle Mountain attorney fees and costs pursuant to CRS § 38-35-204(2).

On appeal, Sensible argued that the priority rule required the district court to stay this case pending resolution of the quiet title action. The Court disagreed, holding that CRCP 105.1 allowed Battle North to bring this petition in a separate action and that staying the case would not further the policies behind the priority rule.

Sensible then argued that allowing Battle North to litigate this action contravened the mandate of the Court in an earlier appeal of the quiet title action where it remanded for further proceedings as to the Pine Martin parcel. The Court found nothing in that order precluding Battle North form proceeding as permitted by CRS § 38-35-204 and CRCP 105.1.

Sensible contended that its use of the 1915 Stock Certificate as an exhibit in the quiet title action did not entitle Battle North to relief under CRS § 38-35-204; filing a document as an exhibit in a civil case does not qualify as recording or filing a document within the meaning of the statute. The Court agreed. It held that “recorded or filed” as used in CRS § 38-35-204(1) is limited by its having to affect a person’s real or personal property. The filing of an exhibit in a civil case does not affect a person’s real property. Moreover, there would be no way to “release” such a document (the remedy in the statute). Thus, although the Court did not disturb the finding that the 1915 Stock Certificate was a sham, it was error to rule it was a spurious document under the statute, and that part of the order was reversed.

Sensible argued that the quitclaim deeds were not spurious because a quitclaim deed can convey only the title or interest that the grantor had, and the district court determined that the newly created PMMC had no title or interest to convey. Therefore, Battle North’s property could not have been affected by the recording of the quitclaim deeds. The Court found this argument to be without merit. Sensible argued that unless a document was a valid lien or encumbrance against real property, it cannot be a spurious document, because it cannot affect real property. However, in that case, the document would not be spurious.

Sensible argued that Battle North is not a “person whose real . . . property is affected by” the 1915 Stock Certificate and quitclaim deeds because it does not own the Pine Martin parcel. This argument was based on deficiencies in the treasurer’s deeds by which Battle North claimed title. The Court rejected those arguments on multiple grounds.

The Court also awarded Battle Mountain reasonable appellate attorney fees for defending the judgment as to the quitclaim deeds. The case was remanded to the district court for a determination of that amount.

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