December 11, 2018

Archives for October 9, 2018

Colorado Court of Appeals: Restrictive Covenant Is Not Compensable Property Interest in Eminent Domain Case

The Colorado Court of Appeals issued its opinion in Town of Monument v. State of Colorado on Thursday, October 4, 2018.

Real Property—Eminent Domain—Restrictive Covenant—Compensable Property Interest.

The Town of Monument (the Town) bought a parcel of real property in a residential subdivision. The Town intended to construct a municipal water storage tank on the lot, but a restrictive covenant prohibiting such structures applied to all lots in the subdivision. The Town filed this case, seeking to use its power of eminent domain to have the court declare its property free of the restrictive covenant. Some lot owners in the subdivision intervened in the case and argued that because the restrictive covenant benefits all property in the subdivision, the Town cannot eliminate the restrictive covenant on its lot without paying every property owner in the subdivision an amount compensating each of them for the loss in value to their respective properties. The district court agreed with the landowners, and the parties stipulated to a dismissal of the case with prejudice.

On appeal, the Town argued that the district court erred in finding that the restrictive covenant was a compensable property interest to the surrounding landowners. The court of appeals determined that under Smith v. Clifton Sanitation District, 300 P.2d 548 (Colo. 1956), a restrictive covenant banning certain uses of property is not a compensable property interest in an eminent domain case.

The judgment was reversed and the case was remanded.

Summary provided courtesy of Colorado Lawyer.

Colorado Court of Appeals: City Improperly Imposed Use Tax on Purchases from Wholesalers that were Later Sold at Retail

The Colorado Court of Appeals issued its opinion in Big Sur Waterbeds, Inc. v. City of Lakewood on Thursday, October 4, 2018.

Sales and Use TaxDisplayed Furniture—Primary Purpose of Purchase.

The City of Lakewood (Lakewood) imposes use tax on tangible personal property purchased at retail and used in the city. The use tax does not apply to wholesale purchases (i.e., purchases for resale to others). Big Sur Waterbeds, Inc., Denver Mattress Co., LLC, and Sofa Mart, LLC (collectively, plaintiffs) purchase furniture tax-free from wholesalers worldwide and resell it in stores, including in Lakewood. At each Lakewood store, plaintiffs provide a showroom where they display furniture for customers to peruse and try out. Plaintiffs also maintain warehouses where they store the bulk of their inventory. Plaintiffs ultimately sell all the furniture, including the displayed furniture, and fill customer orders from either the warehouses or the showrooms. Plaintiffs’ customers pay Lakewood’s sales tax on each purchase.

Lakewood assessed use tax on plaintiffs’ purchases of displayed furniture from 2012 to 2015, on the theory that plaintiffs purchased the displayed furniture at retail for their own use in advertising their products. Plaintiffs challenged the assessments in the district court, which entered judgment in their favor.

On appeal, Lakewood contended that while plaintiffs’ inventory purchases were initially treated as exempt wholesale purchases, when a portion of this wholesale inventory was withdrawn for use as demonstration and promotion tools, the transactions were properly recharacterized as taxable retail transactions. Lakewood relied on its Initial Use Regulation and regulation 3.01.300(1)(b), pertaining to initial use of property, which focus on the primary purpose of the purchase. The court of appeals employed the “primary purpose” test from A.B. Hirschfeld Press, Inc. v. City and County of Denver, 806 P.2d 917, 918–26 (Colo. 1991), and determined that the totality of plaintiffs’ conduct indicates that they purchased the displayed furniture primarily for resale in an unaltered condition and basically unused. Because plaintiffs purchased the displayed furniture primarily for resale, not for their own use or consumption, the Initial Use Regulation does not apply. Similarly, regulation 3.01.300(1)(b), which pertains to tax-free purchases for resale that are later removed from inventory for the purchaser’s own use, does not apply because the displayed furniture was always available for resale and eventually sold. Therefore, Lakewood’s use tax does not apply to the retailers’ purchases and minor use of the furniture for display.

The judgment was affirmed.

Summary provided courtesy of Colorado Lawyer.

Colorado Court of Appeals: Entry of Charge Based on Jury’s Special Interrogatory Answers Violated Defendant’s Constitutional Right to Jury Trial

The Colorado Court of Appeals issued its opinion in People v. Oliver on Thursday, October 4, 2018.

Criminal Law—Possession of a Weapon by a Previous Offender—Right to Jury Trial—Waiver.

Defendant was tried on two felony menacing charges. Before trial, the parties agreed to bifurcate a possession of a weapon by a previous offender (POWPO) count. However, near the end of the trial, defense counsel agreed with the court’s suggestion of using a special interrogatory on possession instead of having a separate trial on the POWPO count after the jury returned its verdict on the menacing counts. Counsel also stipulated that defendant was a previous offender. The jury was not instructed on the POWPO charge. The jury acquitted defendant on one count and hung on the other. Based on the stipulation and the jury’s “yes” answer to the special interrogatory that asked whether defendant had possessed a firearm, the trial court entered a judgment of conviction for POWPO.

On appeal, defendant argued that the trial court directed a verdict on the POWPO charge in violation of his federal and state constitutional rights to a jury trial, which he did not personally waive. To return a verdict, a jury must have been instructed on the offense. Here, even if counsel stipulated to the prior offender element, defendant did not personally waive his right to have the jury return a verdict on the POWPO charge, and the trial court never told the jury that it was deciding the POWPO charge. Therefore, the judgment of conviction on the POWPO charge violated defendant’s constitutional right to a jury trial.

The judgment was reversed and the case was remanded for a new trial on this charge.

Summary provided courtesy of Colorado Lawyer.