July 22, 2019

Colorado Court of Appeals: Insufficient Notice of Tax Lien Renders Tax Deed Voidable

The Colorado Court of Appeals issued its opinion in Sandstrom v. Solen on Thursday, February 25, 2016.

Validity of a Tax Deed—Void or Voidable—Redemption Rights of Tenants in Common—Summary Judgment—Duty of Diligent Inquiry.

Bradford appealed the summary judgment concluding that the Arapahoe County Treasurer (Treasurer) properly invalidated a tax deed in his favor. Bradford also appealed the grant of summary judgment quieting title to the subject property in favor of Solen and Ibbotson.

The subject parcel was assessed as a 50% undivided interest in mineral rights beneath surface property owned by Bradford. That undivided interest was conveyed as two undivided interests to Solon and his sister Ibbotson. Because of an error on the part of the assessor, the Treasurer had billed the parcel by mailing tax bills to Solon only. The taxes went unpaid for tax years 2004 through 2007. In 2005, Bradford purchased the 2004 tax lien.

On August 30, 2008, Bradford applied for a tax deed for the parcel. Before a deed is issued to a purchaser, CRS § 39-11-128(1)(a) requires the treasurer to serve a notice of the purchase of a tax lien on all persons having an interest or title of record in or to the property if “upon diligent inquiry” the residence of such persons can be determined. Here, the Treasurer sent notice to Solen of the application for tax deed but did not obtain title work for the parcel or check the county clerk and recorder’s records. On February 26, 2009, the Treasurer issued a tax deed transferring the entire undivided one-half interest in the mineral estate to Bradford.

In 2013, an oil and gas lessee of Ibbotson’s notified the Treasurer that she claimed ownership of the parcel. On August 26, 2013, the Treasurer issued and recorded a declaration of invalid treasurer’s deed that purportedly invalidated Bradford’s tax deed. In December 2013, the Treasurer filed this action seeking a declaratory judgment that the declaration of invalid treasurer’s deed was a valid document, thereby canceling title in Bradford. The Treasurer’s complaint admitted that she had failed to conduct diligent inquiry prior to issuing the tax deed. Bradford counterclaimed against the Treasurer and cross-claimed against Solen and Ibbotson for a decree quieting title in the parcel. The district court entered summary judgment in favor of the Treasurer, Solen, and Ibbotsen.

On appeal, Bradford argued the district court erred in finding that the tax deed issued to her was invalid and void. The Court of Appeals concluded that the tax deed was voidable for failure to provide Ibbotson with notice. Because the statutory requirements of CRS § 29-11-128(1) were not met, the district court properly voided the tax deed.

Bradford also argued that it was error to conclude that as tenants in common, Ibbotson and Solen were entitled to quiet title in the parcel and that because Solen received notice of the requested tax deed, he was estopped from challenging her title under the tax deed. The Court disagreed, noting that a tenancy in common is a form of ownership in which each cotenant owns a separate fractional share of undivided property. The parcel was assessed as a single parcel, and Solen and Ibbotson each owned an undivided interest in the entire parcel. The tax deed purported to convey the entire parcel, and therefore either cotenant had the right to notice and to redeem the entire parcel. It is irrelevant whether Solen is estopped because Ibbotson was willing and ready to redeem if she had received notice.

Bradford also contested Solen’s standing, but the Court found that Solen had standing.

The Court affirmed the order.

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

Colorado Court of Appeals: Oil and Gas Lessee Had Standing to Bring Claim Because of Legally Protected Property Interest in Mineral Estate Under Lease

The Colorado Court of Appeals issued its opinion in Maralex Resources, Inc. v. Chamberlain, Public Trustee of Garfield County on Thursday, January 2, 2014.

Lessee—Oil and Gas Lease—Prescriptive Easement—Adverse Use—Quiet Title—Standing.

Since 1996, Maralex Resources, Inc. (Maralex) has been the lessee under oil and gas leases issued by the United States. Under the leases, Maralex operates and maintains various oil and gas wells located on land owned by the federal government. To access the wells, Maralex and its predecessors in interest historically have traversed two roads located on what is now Nona Jean Powell’s property, which is adjacent to the federal land. After issues arose between Maralex and Powell regarding access to the roads on Powell’s property, Maralex filed an action seeking a declaration that it is the owner, by prescription, of access easements across Powell’s property. Maralex also sought a decree quieting title for its continued use of the easements. The trial court concluded that Maralex lacked standing to assert a prescriptive easement claim. In addition, despite concluding that it lacked jurisdiction over Maralex’s claims, the court considered and resolved the merits of the suit “to promote judicial economy and to avoid multiple appeals.” The court 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, Maralex contended that the trial court erred in concluding that it lacked standing. The Court of Appeals agreed. An oil and gas lessee has a legally protected property interest in the mineral estate covered by the leases. Thus, the trial court erred in finding Maralex did not have standing to maintain its prescriptive easement claim.

Maralex also argued that the trial court erred in finding that Maralex did not establish a prescriptive easement across Powell’s property. The parties did not dispute that Maralex and its predecessors openly and continuously used the roads on Powell’s property for the statutory period. However, because Powell previously permitted the use, which included giving Maralex a key to the locked gate to enter the property, the use was not adverse, which is required to establish a prescriptive easement. The trial court’s finding that Maralex’s use was permissive was sufficiently supported by the record. The judgment was affirmed.

Summary and full case available here.

Tenth Circuit: Interlocutory Appeal Dismissed for Lack of Jurisdiction

The Tenth Circuit published its opinion in United States v. Copar Pumice Company on Monday, May 6, 2013.

This case involves the parties’ nearly ten-year legal dispute involving mining operations in the New Mexico Santa Fe National Forest. The claims are based on allegations that the Cooks and Copar removed and used undersized pumice from a mine in violation of a settlement agreement with the United States, the Jemez National Recreation Area Act (“JNRAA”), 16 U.S.C. § 460jjj, and applicable regulations. Although the case remains pending in the district court, the Cooks and Copar have filed an interlocutory appeal from discovery orders requiring their former and present law firms to produce documents containing legal advice counsel gave to them regarding the legality of mining, transporting, processing, and marketing pumice from their mine. Specifically, the Cooks and Copar appeal the denial of their motion for protective order and their motion to quash subpoenas, contending that this court has appellate jurisdiction under the collateral order, Perlman, and pragmatic finality doctrines. The United States has filed a motion to dismiss this appeal for lack of jurisdiction.

This Court’s jurisdiction is limited to review of “final decisions of the district courts.” 28 U.S.C. § 1291. A decision is “‘final’ when it ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.” In re Motor Fuel Temperature Sales Practices Litig., 641 F.3d 470, 481 (10th Cir. 2011) (quotation omitted), cert. denied, 132 S. Ct. 1004 (2012). Also, orders for the production of documents during the course of litigation are not ‘final orders’ subject to immediate appellate review. In certain limited circumstances, however, the Court has exercised jurisdiction over an interlocutory appeal under the collateral order doctrine (also known as the Cohen doctrine), the Perlman doctrine, and the pragmatic finality doctrine. Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541 (1949); Perlman v. United States, 247 U.S. 7 (1918). The Tenth Circuit concluded that none of these doctrines applied to this case.

Accordingly, the Tenth Circuit granted the government’s motion and dismissed the appeal for lack of jurisdiction.

Environmental Concerns in Estate Planning and Real Estate Conveyancing

When constructing an estate plan, property conveyance is an important feature. However, devising property can sometimes create unanticipated problems when the property is subject to environmental laws such as the Clean Water Act,  Endangered Species Act, and the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).

The Clean Water Act (CWA) regulates the discharge of pollutants into natural waters and regulates quality standards for surface waters. The CWA originated in 1948, but was significantly amended into the current CWA in 1972. There are numerous provisions of the CWA that may affect a landowner’s conveyance, but the most likely scenario encountered is the necessity of obtaining a Section 404 permit, which can authorize discharge of dredge or fill material into waters.

The Endangered Species Act (ESA) intends to protect and recover endangered or imperiled species in order to maintain the natural ecosystem. It has been described as the most far-reaching wildlife preservation act in the world. Although the ESA does not prevent conveyance of property, it has significant potential to inhibit development of land. If an endangered or threatened species resides on the land to be conveyed, the ESA could prohibit any changes to the natural ecosystem of that species.

CERCLA, the Comprehensive Environmental Response, Compensation, and Liability Act, was created by Congress in 1980. CERCLA creates penalties for the release of hazardous substances. It also encourages individuals to clean up waste in order to recover cleanup costs from others. CERCLA’s provisions can extend to inherited property, trusts, estates, and trustees or fiduciaries, so it has broad application to estate planning.

Strategies for addressing these environmental acts will be discussed at the CLE offices on Friday, March 9, 2013, at the “Natural Resource Issues in Estate Planning” seminar. Water law topics, real estate conveyancing, conveyance of mineral interests, oil and gas planning, and hard minerals will also be discussed. To register, click the link below or call the CLE offices at (303) 860-0608.

CLE Program: Natural Resource Issues in Estate Planning

This CLE presentation will take place on Friday, March 8, 2013, at 9:00 a.m. Click here to register for the live program, and click here to register for the webcast.

Can’t make the live program? Click here to order the homestudy.