Category Archives: Colorado Court of Appeals

Appealing Links – August 29, 2014

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  • Another city’s fracking ban is struck down, relying on a 1992 decision from the Colorado Supreme Court, Voss v. Lundvall Bros., Inc. (KUNC; Daily Camera)
  • And a different city is appealing (Longmont Times-Call)
  • New human trafficking legislation in response to the Colorado Court of Appeals decision earlier this year in People v. Cardenas (Denver Post)

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Colorado Court of Appeals – August 28, 2014

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The court published one civil decision today.

In Sure-Shock Electric v. Diamond Lofts Venture (12-CA-1655 & 12-CA-2200), the court affirmed the trial court judgment allowing Sure-Shock to foreclose on a mechanic’s lien. Sure-Shock was the primary electrical contractor on a building developed and owned by Diamond Lofts Venture (DLV). It filed a mechanic’s lien against the property in October 2007, and amended the lien the same day to add interest. The lien identified DLV as the only owner charged with the lien, even though DLV already had sold 22 of the units in the building.

After Sure-Shock filed a complaint against DLV, the parties arbitrated their dispute, and both the trial court and the court of appeals affirmed the arbitration award. The court of appeals, however, remanded the case for a determination of whether the lien was procedurally valid. On remand, the trial court determined that it was valid, apportioned the award according to the percentage of total square footage the 7 units owned by DLV occupied, and entered a decree of foreclosure allowing the 7 units to be sold to satisfy Sure-Shock’s lien. The court of appeals affirmed. It held that the notice given by Sure-Shock was sufficient, even though it amended the mechanic’s lien to change the amount without giving new notice; the property description was sufficient because it identified DLV as the owner against whom the lien would be enforced; and Sure-Shock did not act in bad faith by filing a lien for the entire amount, even though the lien would affect only the 7 units owned by DLV. The court further held that the trial court did not abuse its discretion when it apportioned the lien amount according to the degree to which each unit enjoyed the benefit of Sure-Shock’s work. Nor did it abuse its discretion when it awarded Sure-Shock costs as the prevailing party.

Appealing Links – August 16, 2014

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  • Rest in peace, Judge Carrigan. (Daily Camera)
  • A summary of (and text of the Court of Appeals briefing in) the Red Rocks case. (Westword)
  • Lest you thought the Rule Against Perpetuities only exists in first-year property class. (JD Supra)

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Colorado Court of Appeals – August 14, 2014

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The court released 4 published civil opinions today.

In Pioneer Natural Resources USA, Inc. v. Department of Revenue (No. 12CA1703, 2014 COA 101), the court affirmed summary judgment in favor of Pioneer on a sales tax exemption. The Department of Revenue and its Executive Director both ruled that Pioneer’s natural gas pipelines and fittings were not exempt from state sales tax because they did not fall under the definition of “manufacturing” in the pertinent statutes. That determination was reversed upon judicial review, the district court finding that Pioneer’s pipelines and fittings qualified for the sales tax exemption because they “are in direct use in the manufacturing of natural gas.” The court of appeals agreed.

In re Estate of Foiles (No. 12CA2436, 2014 COA 104) considered an issue of first impression in Colorado, and held:

[I]n the absence of a trust provision that would allow ratification by a co-trustee of otherwise invalid actions of a trustee, only the consent of all the beneficiaries, with full capacity to give such consent and full knowledge of the relevant facts, could ratify an action of a trustee that is in violation of the express terms of a trust.

The case arose in the context of a beneficiary’s challenge to two Section 1031 property exchanges of real property made by a co-beneficiary who also served as co-trustee of a family trust. After a bench trial, the district court found that the co-trustee/co-beneficiary had not breached his fiduciary duties to the trust; ordered termination of both trusts; and directed the distribution of the trust assets. The plaintiff beneficiary appealed the district court’s ruling that there was no breach of fiduciary duty with respect to only one of the Section 1031 exchanges. The court of appeals reversed, holding that the district court erred when it concluded that the Bank co-trustee’s ratification of the exchange precluded a claim for breach of fiduciary duty, and when it failed to recognize that the plaintiff beneficiary had established a prima facie case of breach of fiduciary duty, such that the defendant co-trustee/co-beneficiary was required to present evidence that the transaction was reasonable and fair. Because the defendant co-trustee/co-beneficiary had taken an action that was voidable under the explicit terms of the trust documents, and the trust documents did not allow for ratification by a co-trustee, the Bank co-trustee’s ratification was insufficient.

Wainscott v. Centura Health Corporation (No. 12CV749, 2014 COA 105) addressed whether substantial compliance with the Hospital Lien Statute was sufficient to create a valid lien. In this case, the medical provider complied with the notice and filing requirements in the statute, except serving notice on the tortfeasors responsible for the injuries sustained by the plaintiff. As a threshold question, the Court held that the plaintiff had  standing to challenge the lien–a valid lien would decrease the settlement money he would receive because the lien amount would be disbursed first. The Court of Appeals then held that substantial compliance with the statute fulfilled the purposes of the statute and created a valid lien, reversing the lower court. On cross-appeal, the Court of Appeals affirmed the dismissal of the plaintiff’s Colorado Consumer Protection Act and fraudulent concealment claims for failure to state a claim.

In TABOR Foundation v. Colorado Bridge Enterprise (No. 13CA1621, 2014 COA 106), the Court of Appeals addressed whether a bridge safety surcharge was a permissible fee or a tax prohibited by the Taxpayer’s Bill of Rights (TABOR). The plaintiff contended that (1) the Colorado Bridge Enterprise’s (CBE) bridge safety surcharge was a tax and the CBE levied it without first seeking voter approval; and (2) the CBE does not qualify as a TABOR-exempt enterprise, since it has the power to tax and it received more than ten percent of its 2011 revenue from state grants.

The Court of Appeals rejected both contentions. As to whether the surcharge was a tax or a fee, the court looked to (1) the primary purpose of the charge; (2) the primary purpose for raising revenue; and (3) the relationship between the charge and the service. It concluded that all three inquiries led to the conclusion that the surcharge was a fee and not a tax. As to whether the CBE qualified as a TABOR-exempt enterprise, the court concluded that “the CBE is a business because it pursues a benefit and generates revenue by collecting fees from service users,” and it did not receive more than 10 percent of its 2011 revenue from state grants.