February 18, 2019

Colorado Court of Appeals: C.R.S. § 32-1-1001(1) Does Not Grant Special District the Right to Assign its Right to Receive Revenue

The Colorado Court of Appeals issued its opinion in SDI, Inc. v. Pivotal Parker Commercial, LLC on Thursday, October 11. 2012.

Breach of Contract—Assignment—CRS § 32-1-1001(1).

In this dispute over the terms of several contracts, defendant Pivotal Parker Commercial, LLC (Pivotal) appealed the trial court’s entry of judgment following a bench trial in favor of plaintiff SDI, Inc. (SDI). The judgment was reversed and the case was remanded.

In 1984, the Town of Parker annexed a parcel of undeveloped land known as Stroh Ranch. Cherry Creek South Metropolitan District No. 1 (District) thereafter incurred an obligation to one of the original developers of the Stroh Ranch (later called Stroh Ranch Development, LLC, or SRD) for $11,130,000. SRD later assigned the right to receive development fee revenue to SDI by a purchase and sale agreement (Seventh Amendment). SDI entered into a real estate purchase and sale contract with Pivotal (SDI–Pivotal Contract) for “Filing Nos. 14 and 15.” SDI later sought a declaratory judgment and damages for unpaid development fees pursuant to the Seventh Amendment and the SDI–Pivotal Contract. Following a bench trial, the trial court entered judgment in favor of SDI.

On appeal, Pivotal contended that the trial court erred when it determined that the District validly assigned its right to receive development fee revenue to SDI, and that SDI was entitled to collect, and charge interest on, that amount. The trial court erred in concluding it must look to common law to fill in the statutory silence in CRS § 32-1-1001(1), which defines a special district’s common powers. The statute does not give the District the power to assign its right to receive revenue to a private party. The District’s assignment to SDI in paragraph 6 of the Seventh Amendment, therefore, went beyond the District’s statutory and constitutional powers. Consequently, paragraph 6 of the Seventh Amendment is void, and the trial court erred when it determined that the District validly assigned its right to receive development fee revenue to SDI, and that SDI was entitled to collect, and charge interest on, that amount. The trial court further erred when it declared that SDI has a perpetual lien on Filing Nos. 14 and 15.

Pivotal also argued that the trial court erred when it concluded that Pivotal breached its contract with SDI. Neither the SDI–Pivotal Contract, the E&T Contract, nor the E&T Contract Assignment provided that Pivotal must transfer a portion of the purchase price of the E&T Contract to SDI as development fees. Therefore, Pivotal did not breach the contract.

Summary and full case available here.

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