July 21, 2018

Colorado Court of Appeals: Prior Public Use Doctrine Precludes Condemnation that would Eliminate Public Use

The Colorado Court of Appeals issued its opinion in CAW Equities, L.L.C. v. City of Greenwood Village  on Thursday, March 22, 2018.

Eminent DomainPrivate CondemnationPrior Public Use DoctrineColorado Constitution Article XVI, Section 7.

CAW Equities, L.L.C. (CAW) sought private condemnation of a public equestrian and pedestrian trail (public trail) that bisects two of its adjacent properties to construct a ditch from the Highline Canal to the southern end of its properties. The City of Greenwood Village (City) owned the public trail from a plat dedication and separate dedication for equestrian and pedestrian use. The City moved to dismiss under CRCP 12(b)(1).The district court denied the petition and awarded the City attorney fees and costs.

On appeal, CAW argued that the district court erred in holding that CAW lacked the authority to condemn the public trail. The Court of Appeals agreed with the district court, finding that the legislature, through the eminent domain statutes, may regulate Colo. Const. art. XVI, section 7 (Section 7) so long as it does not unnecessarily limit or curtail the constitutional right.

CAW also argued that Section 7 is self-executing and cannot be limited or curtailed by the eminent domain statutes. The Court concluded that while Section 7 may be self-executing, well-settled law recognizes the legislature’s ability to regulate private condemnation, and the eminent domain statutes properly regulate the exercise of this right under Section 7.

CAW alternatively argued that even if the eminent domain statutes apply, its proposed plan does not violate them. It claimed that Section 7 does not require it to show a ditch is necessary, and that it provides an absolute right to condemn. The Court did not decide whether CAW must prove the ditch is necessary to access its water rights to be able to condemn the ditch because the land CAW sought to condemn was already in public use as a public trail. The Court decided, as a matter of first impression, that the prior public use doctrine applies to private condemnation proceedings under Section 7. Though Section 7 grants general authority to condemn public property for a right-of-way to access water, it does not expressly grant the authority to extinguish an existing public use on such property; it merely grants express authority to a right-of-way if that right-of-way does not extinguish the public use. Further, the right to condemn an entire tract of public land in public use is not a necessary implication of the general right to privately condemn a right-of-way for a ditch. Here, there were other ways of transporting the water without interfering with the public trail. Where a private condemnor can obtain a right-of-way without extinguishing the existing public use, the condemnation power does not necessarily imply such a power. The district court was correct in finding that CAW failed to (1) allege express authority for its right to condemn all of the public trail; (2) prove that the right to condemn property already in public use was a necessary implication of its private condemnation right; and (3) prove that some public exigency existed to justify the necessity of condemning the public trail.

The Court also affirmed the City’s award of its attorney fees and costs.

The judgment was affirmed.

Summary provided courtesy of Colorado Lawyer.

Tenth Circuit: Lack of Economic Marketability Does Not Equate to Unmarketable Title

The Tenth Circuit Court of Appeals issued its opinion in Fidelity National Title Insurance Co. v. Woody Creek Ventures, LLC on Tuesday, July 26, 2016.

Woody Creek acquired two parcels of land in Pitkin County and purchased two title insurance policies from Fidelity, insuring, among other things, access and marketability of title. The two parcels were separated by a tract of land owned by the Bureau of Land Management, but Woody Creek assumed it could access the more remote parcel via a roadway crossing the BLM’s tract. It subdivided the parcels and sought prospective buyers. When a prospective buyer expressed concern about access to the remote lot, Woody Creek discovered that it had no legal right of access.

Woody Creek submitted a claim to Fidelity under the title insurance policies, and Fidelity retained counsel on Woody Creek’s behalf. Counsel ultimately negotiated the purchase of a 30-year revocable right-of-way grant from the BLM to allow Woody Creek access to the remote parcel. Woody Creek maintained that it suffered a covered loss because the lack of permanent access significantly diminished the value of the remote parcel. Fidelity filed an action for declaratory judgment that Woody Creek was not entitled to coverage for its alleged losses because the right-of-way cured the access issue. Woody Creek counterclaimed for declaratory judgment on the existence of coverage, breach of contract, and bad faith breach of insurance contract. The parties filed cross-motions for partial summary judgment on the coverage issues.

After a hearing, the district court granted Fidelity’s motion and denied Woody Creek’s. The court concluded that the 30-year right-of-way fell within the plain meaning of “access” and left the question of whether Fidelity may be required to pay for future loss of access for another day. The court concluded that the possibility of future litigation did not render the title unmarketable, and rejected Woody Creek’s bad faith claims as a matter of law. Woody Creek appealed.

The Tenth Circuit first addressed Woody Creek’s argument that Fidelity’s purchase of a 30-year right-of-way did not cure the access issue because the right-of-way was revocable and temporary. Fidelity argued that although the title insurance policy guaranteed access, it did not guarantee unrestricted, unregulated, or permanent access. The Tenth Circuit construed the phrase “right of access” and determined that permanent, unrestricted access was not contemplated by the phrase. The Tenth Circuit decided that the Colorado Supreme Court would have construed the phrase “right of access” to include the 30-year right-of-way obtained by Fidelity.

The Tenth Circuit next considered whether the lack of permanent access supported Woody Creek’s claim for unmarketability of title, and concluded it did not. Woody Creek cited a treatise on title insurance law for the proposition that lack of access makes title unmarketable. Fidelity disagreed and suggested that Colorado case law supported its position that even complete lack of access does not render title unmarketable. The Tenth Circuit evaluated the cases and affirmed the district court’s decision, noting the distinction between economic marketability and marketability of title. The Tenth Circuit noted that a parcel of land could be worth no money but have clear title.

The Tenth Circuit affirmed the district court.

Colorado Court of Appeals: Ample Evidence in Record Supported Trial Court’s Findings of No Easement

The Colorado Court of Appeals issued its opinion in Gold Hill Development Co., L.P. v. TSG Ski & Golf, LLC on Thursday, December 22, 2015.

R.S. 2477—Easement Claims—Public Prescriptive Easement

Plaintiff (GHDC) owned several mining lode properties in the vicinity of various properties owned by defendants (collectively, TSG). GHDC alleged that access to its mining properties was historically made by means of the Gold Hill Road (route), which traverses a portion of TSG’s properties. GHDC claimed the right to use and maintain the route where it crossed over TSG’s mining lode properties.

GHDC brought claims against TSG, including express easement, implied easement, implied easement by prior use, way of necessity, public road pursuant to R.S. 2477, and public road pursuant to CRS §§ 43-2-201(1) and 43-1-202. San Miguel County (SMC) was added as a party and defended against some of the claims regarding a public highway.

Following a bench trial, the court granted TSG’s motion for a directed verdict as to GHDC’s express easement claim and dismissed all of GHDC’s other claims. The court also granted SMC’s R.S. 2477 counterclaims for a public road as to a portion of the road and a public prescriptive easement as to another portion of the road. On appeal, GHDC contended that the trial court erred in imposing additional requirements not supported by Colorado law for its R.S. 2477 claim across the TSG properties.

GHDC argued that the trial court erred in concluding that GHDC failed to show the public was using the route. However, the Court of Appeals found ample evidence in the record to support the court’s finding and perceived no error.

GHDC argued that the trial court was inconsistent because at times it credited the absence of certain trails to deny public use, while at other times it failed to acknowledge the absence of other trails on surveys and maps presented at trial. The trial court’s findings were based on maps and mineral surveys, as well as on extensive testimony regarding the use and nonuse of the various routes. Because there was support in the record for the trial court’s findings, the Court perceived no error.

GHDC contended that the trial court erred in finding a public prescriptive easement across GHDC’s properties. CRS § 43-2-201(1)(c) requires showing (1) a “claim of right,” (2) public use adverse to the landowner’s interest, (3) such use continued for 20 years, and (4) actual or implied knowledge of the public use by the landowner and no objection to such use. Again, the Court found ample support for the trial court’s findings in the record.

GHDC argued that trial court erred in failing to find a public highway across TSG’s property under CRS §§ 43-2-201(1)(e) and 43-1-202. The Court agreed with the trial court that GHDC had essentially the same burden of proof as for its RS 2477 claim and for the same reasons (lack of public use on the route before the relevant removal dates) it failed to meet its burden.

GHDC argued that it was error to dismiss its express easement claim for failing to demonstrate the intent to convey an express easement. The Court found no error in the trial court’s interpretation of the unambiguous language in the patents.

GHDC argued that the trial court had effectively created USFS trails. The Court disagreed. The finding that these were public roads granted no rights in them to the USFS. The judgment and order were affirmed.

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

Colorado Supreme Court: Water Court’s Conditional Decree of Non-Consumptive Hydropower Right Affirmed

The Colorado Supreme Court issued its opinion in Concerning the Application for Water Rights of Tidd: Frees v. Tidd on Monday, June 1, 2015.

Ditch Easement—Dominant and Servient Interests—Alterations to a Ditch—Conditional Water Right for Non-Consumptive Hydropower Use—Declaratory Judgment and Conditional Water Right Decree With Conditions to Protect Against Injury to Ditch and Water Right Interests—Water Right Determination and Administration Act of 1969.

The Supreme Court upheld the water court’s judgment entering a conditional water right decree for a non-consumptive hydropower use water right with a 2010 priority for 0.41 cfs diverted from Garner Creek through the headgate of Garner Creek Ditch No. 1 in Saguache County, Water Division No. 3. Charles and Barbara Tidd properly obtained a judicial declaration of no material injury to ditch and water right interests owned by the Frees in connection with a ditch easement located on the Tidds’ property. The Court upheld the water court’s finding that water is available for the non-consumptive conditional appropriation under the terms of the Water Right Determination and Administration Act of 1969, and the conditions included in the water court’s judgment and decree were sufficient to protect against injury to senior adjudicated water rights and the Frees’ ditch rights.

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

Frederick Skillern: Real Estate Case Law — Easements and Public Roads (2)

Editor’s note: This is Part 11 of a series of posts in which Denver-area real estate attorney Frederick Skillern provides summaries of case law pertinent to real estate practitioners (click here for previous posts). These updates originally appeared as materials for the 32nd Annual Real Estate Symposium in July 2014.

By Frederick B. Skillernfrederick-b-skillern

Maralex Resources, Inc. v. Chamberlain, Public Trustee of Garfield County Colo. App January 2, 2014 2014 COA 5 Oil and gas lease; prescriptive easement for access to wells; adverse or permissive use of roads; standing. Since 1996, Maralex has been a lessee under a series of federal oil and gas leases in Rio Grande County. Maralex operates and maintains various oil and gas wells located on federal land. To access the wells, Maralex and its predecessors in interest have historically used two roads crossing private property now owned by Nona Jean Powell. The Powell property is adjacent to the federal land. After issues arose between Maralex and Powell regarding use of the roads, Maralex filed a quiet title action seeking a decree that it has prescriptive easements over the roads for ingress and egress to the oil leaseholds. The trial court first found that Maralex lacked standing, as a real property lessee, to assert a prescriptive easement claim. Notwithstanding that finding, the court went on to consider the merits of the easement claims as a matter of judicial economy. It found that Maralex’s use of the roads was permissive and not adverse, and that Maralex did not establish the existence of the asserted prescriptive easements. On appeal, the court reverses the holding on standing. Citing a long string of cases, an oil and gas lessee has standing to bring a quiet title action and to enforce easement rights. One can even draw an analogy to surface cases in which use by a tenant may be tacked on to prior use by the fee owner in proving possession for the prescriptive period. The court finds sufficient evidence in the record to affirm the finding that the use by Maralex and its predecessors was permissive, not adverse. It was conceded that oil operators on the government land openly and continuously used the roads on Powell’s property for the statutory period. However, because Powell previously permitted the use, the use was not adverse. What made the use permissive? Like so many cases of this sort, we have gates on the roads, and cattle on a ranch. At one point a former owner of the Powell property gave keys to the oil company, telling a grazing tenant that he wanted to oil operation to be successful, but that he did not want his tenant’s herd to be impacted. Over the course of decades, there was all manner of evidence of a problematic nature, sufficient that the court could go either way on the “adversity” issue. The trial court resolved it like this – “By giving someone a key, it seems to the Court that the only reasonable interpretation is that ‘I want to keep people out, but not you. You have permission to use my road. Here is a key.’” The appeals court also notes that this could also be a recognition of a right of the user to access, with acquiescence by the easement claimant to blockage of use by others. The court goes along with the trial judge.   Sinclair Transportation Company d/b/a Sinclair Pipeline Company v. Sandberg Colorado Court of Appeals, June 5, 2014 2014 COA 76 Pipeline easement; assignability of easement in gross; proof of assignment of easement rights by parol evidence; abandonment. This is one in a series – one might say a family – of cases involving Sinclair’s pipeline between oil fields in Wyoming and Denver. At one point, the pipeline crosses land in Weld County, creating friction with residential development, and with owners of land such as the Sandbergs. Sinclair seeks to upgrade its pipeline from 6” to 10” according to terms of the written pipeline easement, which dates back to 1963. The easement was in favor of the original servient owner and its “successors and assigns.” In an extensive opinion, the court affirms a partial summary judgment ruling in favor of Sinclair on defenses raised by the landowners, who sought to block any expansion or to require movement of the easement in order to minimize its impact on their residential development. The first issue deals with the use of parol evidence to prove a part of Sinclair’s interest (ownership of a series of assignments from partial owners of the pipeline). The court upholds a ruling that Sinclair could prove a part of its chain of title by proving assignment of one 50 percent interest in the line through testimony of an attorney representing one of the parties to the assignment. The court holds that no statute of frauds bars oral testimony to prove of an assignment of an easement. More importantly, the court holds that an easement in gross, especially one created for commercial uses, is assignable. The court relies on the modern trend in case law and comments in the Restatement of Property (Servitudes) § 4.6(1)(c) (“a benefit in gross is freely transferable”), as well as C.R.S. § 38-30-101 (“any person . . . entitled to hold . . . any interest in real estate whatever, shall be authorized to convey the same to another”). The court cites a Utah case, Crane v. Crane, 683 P.2d 1062 (Utah 1984) which surveys the easement in gross case law as it applies to pipelines and other commercial uses. For those interested in the industry, the court goes on to discuss interpretation of the easement document in regard to how a pipeline company can expand and improve its pipeline – whether a pipeline company must “remove, then replace” or “replace, then remove.” Finally, the court holds that Sinclair’s attempt in a parallel case to condemn a way across the land in question did not effect an abandonment of its deeded easement rights. The attempt to condemn was derailed in a 2012 decision of the Colorado Supreme Court discussed in this space. Another court of appeals decision (not discussed in this outline) deals with the pipeline condemnation issues.

Frederick B. Skillern, Esq., is a director and shareholder with Montgomery Little & Soran, P.C., practicing in real estate and related litigation and appeals. He serves as an expert witness in cases dealing with real estate, professional responsibility and attorney fees, and acts as a mediator and arbitrator in real estate cases. Before joining Montgomery Little in 2003, Fred was in private practice in Denver for 6 years with Carpenter & Klatskin and for 10 years with Isaacson Rosenbaum. He served as a district judge for Colorado’s Eighteenth Judicial District from 2000 through 2002. Fred is a graduate of Dartmouth College, and received his law degree at the University of Colorado in 1976, in another day and time in which the legal job market was simply awful.

Colorado Court of Appeals: Condemnors Have Absolute Right to Abandon Proceedings at Any Time Before Title Vests

The Colorado Court of Appeals issued its opinion in Sinclair Transformation Co. v. Sandberg on Thursday, June 5, 2014.

Condemnation—Interest on Attorney Fees—Surface Damage Bond—Dismissal by Petitioner.

Sinclair Pipeline Company (Sinclair) owns a pipeline system that transports petroleum products from Wyoming to Denver. Sinclair uses an easement that passes through respondents’ (landowners) property. Sinclair initiated this condemnation proceeding to secure the rights to lay a second pipeline on landowners’ property and use some of their property that, though underlying the original pipeline, was not within the easement. The district court found that Sinclair had condemnation authority to build the new pipeline and entered an order allowing it to take immediate possession of the properties to install it while continuing to use the original pipeline. In 2007, while the case was on appeal, Sinclair installed the new pipeline but did not put it to use.

Five years later, the Supreme Court concluded that Sinclair did not have statutory condemnation authority under CRS § 38-5-105. On remand, landowners sought $192,573.95 in attorney fees and costs, plus interest. Before the court ruled, Sinclair paid all the fees and costs without interest, which the district court determined landowners were not entitled to.

Sinclair filed a notice of abandonment of condemnation proceedings and a declaratory judgment action seeking to enjoin the landowners from removing the new pipeline and seeking recognition of its rights under the easement to operate the new pipeline. Landowners objected and filed counterclaims. The district court dismissed the condemnation action.

On appeal, landowners argued it was error to deny them interest on their attorney fees and costs. The Court disagreed. The fees were awarded under CRS § 38-1-122. There is no provision in any sections pointed to by landowners for a right to interest. Therefore, the district court correctly denied the request.

Landowners also argued it was error to dismiss the condemnation action instead of consolidating it with the declaratory judgment action. The Court disagreed. Condemnors have an absolute right to abandon condemnation proceedings at any point before title has vested.

Landowners further argued it was error for the district court not to determine their surface damages and apply Sinclair’s surface damage bond to reimburse them before dismissing the condemnation action. The district court based its decision on agreement by the parties that there were issues of material fact concerning the surface damages that could be resolved in the declaratory judgment action. Moreover, the surface damage bond and additional money deposited by Sinclair as security for its taking immediate possession of the property was transferred to the court registry for the declaratory judgment action. The Court perceived no error in proceeding in this manner. The judgment of dismissal and the orders were affirmed.

Summary and full case available here.

Colorado Court of Appeals: Incidental Use Doctrine Permits Railroad to Lease Right-of-Way if Consistent with Railroad Purpose

The Colorado Court of Appeals issued its opinion in Durango & Silverton Narrow Gauge Railroad v. Wolf on Thursday, August 1, 2013.

Railroad Right-of-Way—Non-Exclusive Easement—Summary Judgment—Incidental Use Doctrine.

Defendants Timothy Wolf and Katherine Turner (collectively, Wolf) appealed the trial court’s summary judgment in favor of plaintiff Durango & Silverton Narrow Gauge Railroad (DSNGRR). The Court of Appeals affirmed.

In 1881, DSNGRR’s predecessor in interest acquired a right-of-way from plaintiff’s predecessor in interest. In 2009, DSNGRR agreed to grant the City of Durango a nonexclusive easement to extend a public recreation trail over its right-of-way and adjacent to the railroad tracks (which are still in use), part of which would run through Wolf’s property. In return, Durango paid DSNGRR $1 million specifically for continued operations and maintenance. The trail also will promote safe use of the right-of-way by pedestrians and bicyclists who walk and ride directly on the railroad tracks.

Wolf opposed the agreement, arguing that the 1881 right-of-way permitted use only for “railroad purposes” and that a recreation trail is not such a purpose. On cross-motions for summary judgment, the trial court held that the original deed conveyed an easement that gave DSNGRR exclusive use and control of its right-of-way as long as it continues to operate a railroad. It also found that the use by the public was a railroad purpose, because it eliminated safety and liability problems and increased efficiency on any rail repairs.

On appeal, the Court agreed with the trial court that the right-of-way was more expansive than a typical easement and that DSNGRR had the right to exclusive use and control of it. The Court noted Colorado and federal precedent that railroad rights-of-way are more expansive than ordinary easements and include the right to exclusive use and control. This expansive easement includes the right to lease portions of the right-of-way.

The Court did not address whether a public recreation trail is a “railroad purpose,” because it found the trail satisfied the incidental use doctrine. This doctrine, applied here for the first time in Colorado, states that a railroad may lease a portion of its right-of-way where the use is incidental to or not inconsistent with the railroad’s continued use of its right-of-way for railroad purposes. The public recreation trail meets both of these criteria.

Wolf then argued that the trial court erred by not requiring the joinder of five indispensable parties whose property also was subject to DSNGRR’s right-of-way and were affected by the public recreation trail. The Court disagreed, finding that this dispute centered on the interpretation of the deed from Wolf’s predecessor, which only concerned the right-of-way on Wolf’s property. The judgment was affirmed.

Summary and full case available here.

HB 13-1013: Prohibiting Landowners from Conditioning Rights-of-Way on Relinquishment of Water Rights

On Wednesday, January 9, 2013, Rep. Jerry Sonnenberg and Sen. Robert Baumgartner introduced HB 13-1013 – Concerning Limitations on a Landowner’s Ability to Impose Conditions on a Water Right Owner as a Condition of Permission to Use Land. This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

Water Resources Review Committee.

The bill specifies, in the contexts of rights-of-way for water rights and the basic tenets of Colorado water law, that:

  • A landowner cannot demand as a condition of granting a right-of-way or special use permit, and a court cannot order as a condition of an eminent domain proceeding, that a water right or conditional water right owner assign to the landowner partial or joint ownership of the water right or limit the alienability of the water right; and
  • Any such condition is void and unenforceable as against public policy.

Assigned to the Agriculture, Livestock, & Natural Resources Committee.