2016 Symposium Case Law FINAL

COLORADO REAL ESTATE CASE LAW UPDATE
2016
For the 34th Annual
Real Estate Symposium
Sponsored by the Real Estate Section of the Colorado Bar
Association and
CLE in Colorado, Inc.
Breckenridge, Colorado
July 22, 2016
Frederick B. Skillern
Montgomery Little & Soran, P.C.
Greenwood Village, Colorado
fskillern@montgomerylittle.com

INTRODUCTION
Welcome back! This is my 18th
attempt at summarizing the work of the
Colorado appellate courts in interpreting our laws and developing our body
of law relating to real estate. I feel more honored than ever to appear before
this impressive group of professionals.
Support your Real Estate Section, and get involved!
A few notes on format. The cases are divided by subject area, roughly.
No attempt is made to cross reference to other subject areas involved in the
case. Citation form is generally the 2016 CO/COA __ used by our courts,
and citation form is casual, for easy reading. As always, the CBA website
has ready access to the decisions of our two appellate courts. In referring to
the Supreme Court, I mean the Colorado Supreme Court, unless otherwise
noted.
Thanks once again to my assistant, Vicki Fields, for her assistance in
putting all of this project together, year after year.
Enjoy!
Fred Skillern
Montgomery Little & Soran, P.C.
fskillern@montgomerylittle.com
(303) 779-2758

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TABLE OF CONTENTS
Page
1. ARBITRATION, MEDIATION AND ADR................................................................... 1
No reported cases.
2. BOUNDARIES AND ADVERSE POSSESSION........................................................ 1
Aspen Springs Metropolitan District v. Keno, 2015 COA 97
3. BROKERS ................................................................................................................. 2
In re the Disciplinary Action Against the Real Estate Broker’s
License of McDonnell v. Colorado Real Estate Commission,
2015 COA 137
4. COMMON INTEREST COMMUNITIES, COVENANTS AND CCIOA........................ 3
Hauer v. McMullin, 2015 COA 90
Houston v. Wilson Mesa Ranch HOA, 2015 COA 113
5. CONDEMNATION, EMINENT DOMAIN .................................................................... 5
Regional Transportation District v. 750 West 48th Avenue, LLC,
2015 CO 57
Town of Silverthorne v. Lutz, 2016 COA 17
6. CONTRACTS, PURCHASE AND SALE, TRANSACTIONS ..................................... 7
Ravenstar LLC v. One Ski Hill Place LLC, 2016 COA 11
Rocky Mountain Exploration v. Davis Graham & Stubbs, 2016 COA
33
7. CONSERVATION EASEMENTS AND TAX CREDITS............................................ 11
No reported cases.
8. CONSTRUCTION DEFECTS................................................................................... 11
Rogers v. Forest City Stapleton, 2015 COA 167
9. EASEMENTS AND PUBLIC ROADS...................................................................... 12
Gold Hill Development Company v. TSG Ski & Golf, 2015 COA 177
Wal-Mart Stores, Inc. v. United Food and Commercial Workers
International Union, 2016 COA 72
10. ESTATES AND PARTITION.................................................................................. 14
No reported cases.

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11. FORECLOSURE, DEBTOR-CREDITOR, RECEIVERS, LENDER
LIABILITY............................................................................................................. 14
McClure v. JP Morgan Chase Bank, 2015 COA 117
Liberty Mortgage Corp. v. Fiscus, 2016 CO 31
Hutchins v. La Plata Mountain Resources, Inc., 2016 CO 45
12. JUDGMENTS AND FRAUDULENT TRANSFER .................................................. 18
No reported cases.
13. LAWYERS AND PROFESSIONAL LIABILITY ..................................................... 18
J. Tucker, Trustee, v. Town of Minturn, 2015 CO 61
Baker v. Wood, Ris & Hames 2016 CO 5,
Laleh v. Johnson, 2016 COA 4
Calvert v. Mayberry, 2016 COA 60
State v. The Castle Law Group LLC, 2016 CO 54
14. LEASING AND EVICTION..................................................................................... 21
Zeke Coffee, Inc. v. Pappas-Alstad Partnership, 2015 COA 104
15. PREMISES LIABILITY, TRESPASS AND NUISANCE......................................... 22
Lopez v. Trujillo, 2016 COA 53
16. PROPERTY TAXATION AND ASSESSMENTS.................................................... 23
Landmark Towers Association, Inc. v. UMB Bank, 2016 COA 61
17. TAX SALES AND TREASURER DEEDS.............................................................. 24
Sandstrom, Arapahoe County Treasurer v. Solen, 2016 COA 29
Klingsheim v. Cordell, 2016 CO 18
18. TITLES AND TITLE INSURANCE......................................................................... 29
Oldham v. Pedrie, 2015 COA 95
Owens v. Tergeson, Trustee, 2015 COA 164
19. ZONING AND LAND USE CONTROL................................................................... 31
City of Longmont v. Colorado Oil and Gas Association, 2016 CO 29
Open Door Ministries v. Lipschuetz, 2016 CO 37

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1. ARBITRATION, MEDIATION AND ADR
No reported cases.
2. BOUNDARIES AND ADVERSE POSSESSION
Aspen Springs Metropolitan District v. Keno
Colorado Court of Appeals, July 16, 2015
2015 COA 97
Metropolitan district; fence law, C.R.S. § 35-46-101 et seq.; district’s right to
enjoin willful trespass.
A special district, by statute, has the power to regulate its property. Aspen Springs
Metropolitan District was organized as a parks and recreation district. It has statutory
authority to regulate the use of its real property to preserve or conserve open space. The
story here begins when a neighboring sheep rancher desires to continue grazing on the
District’s land, arguing that Colorado’s Fence Law allows the grazing, where the District
does not “fence out” the hungry animals.
The Fence Law, as it is described by the court, was enacted in the late 1800’s to reject
the strict liability faced by owners of trespassing livestock under the English common law.
But the Fence Law modified the common law of Colorado only “to the extent embraced
in the statute, which may not be extended by construction, nor its application extended
beyond its specific terms.” Therefore, the statute modifies actions in trespass by making
the maintenance of a “lawful fence” a condition precedent to recovery of specified
damages caused by trespassing livestock, C.R.S. § 35–46–102(1). However, the statute
did not preclude common-law injunction actions against livestock owners for willful
trespass. In short – the court holds that the Fence Law is “not a license for livestock
owners to graze their animals anywhere they please.” The court cites Colorado cases
going back to 1895 in support of this distinction between willful and non-willful conduct.
The lower court issued two injunction orders which the rancher violated, leading to a
finding of contempt. The court affirms the lower court’s imposition of attorney fees and
costs as a remedial sanction, and a jail sentence as a punitive sanction. The former
award was reversed, as an order under C.R.C.P. 107, for remedial sanctions must have
a “purge clause” – and in this case, the sheep were already gone, so there was nothing
to “purge.” The discussion on these points is useful in categorizing the different remedies
available for contempt.

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3. BROKERS
In re the Disciplinary Action Against the Real Estate Broker’s License of
McDonnell v. Colorado Real Estate Commission
Colorado Court of Appeals, September 24, 2015
2015 COA 137, 361 P.3d 1138
License suspension; embezzlement of HOA funds.
In 2010 and 2011, while serving as president of the Pinecliff Homeowners Association
(HOA), McDonnell writes four checks totaling $10,000 on the HOA’s account payable to
himself or his business. McDonnell was a licensed real estate broker. When the treasurer
discovered one of these checks, McDonnell claimed he had written the check by mistake
and repaid the HOA. When the treasurer’s term ended, McDonnell took custody of the
HOA’s accounting records and refused to appoint a new treasurer. A year later, an HOA
board member calls for a meeting to discuss accounting issues. McDonnell declines to
attend, resigns, and deposits the remaining $8,000 of the association’s money back into
the HOA bank account.
The HOA board discovered the checks, and reported McDonnell to the police and the
Colorado Real Estate Commission. No criminal charges were filed, but the Commission
opened an investigation and subsequently charged McDonnell with four violations of the
Colorado Real Estate Broker License Law. McDonnell appeals the Commission’s order
sanctioning him on some of those counts.
The court of appeals concludes that the Commission has the authority to sanction
McDonnell for his conduct, even though that conduct did not involve “selling, exchanging,
buying, renting, or leasing” real estate. The court first rejected McDonnell’s contention
that the Commission did not have authority to sanction him for conduct that does not
involve “selling, exchanging, buying, renting or leasing” real estate. The court cites
numerous provisions that allow the Commission to sanction a broker’s improper conduct
outside of the real estate context, particularly when it speaks to the broker’s honesty,
dignity, or moral character. See, among others, C.R.S. § 12-61-113(1)(g) (sanctions for
failure to properly account for funds); and C.R.S. § 13-16-113(1)(g.5) (discipline for
conversion of funds of others and diverting funds of others without authorization). The
Commission’s conclusion that McDonnell took the funds from the HOA without
authorization and used them was amply supported in the record. The court agreed with
McDonnell that he could not be disciplined under C.R.S. § 12-61-113(1)(n) (providing for
discipline for incompetency or endangerment to the public). The administrative rule
implementing this section provides an exhaustive list of grounds for unworthiness or
incompetence, none of which were done by McDonnell.

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4. COMMON INTEREST COMMUNITIES, COVENANTS AND CCIOA
Hauer v. McMullin
2015 COA 90
CCIOA, open space; unincorporated association.
Hauer brings this action on behalf of an unincorporated homeowner association to quiet
title to a parcel described on a recorded plat as common “open space.” First, the court
holds that the trial court acted properly in declaring that a recorded final plat, deeds
recorded pursuant to the plat, and a recorded subdivision agreement established an
implied common interest community and an unincorporated homeowners association.
The trial court relied on the statutory definitions of a common interest community in the
CCIOA, which are interesting, and the Supreme Court’s decision in Evergreen Highlands
Ass’n v. West, 73 P.3d 1 (Colo. 2003), in which the court found a common interest
community by implication, with the ability to assess members for expenses, even in the
absence of a provision in the recorded Declaration granting such power.
Here, the court relies on dicta in Evergreen Highlands concerning the court’s broad power
to recognize the creation of a common interest community by implication. Restatement
(Third) of Property: Servitudes § 6.2 cmt. a. The court concludes that a recorded
subdivision agreement between the original landowner and the County (referencing a “to
be named homeowners association”), a recorded plat identifying 17 acres as common
open space, and the original sales contract to lot owners are sufficient, taken together, to
create a common interest community. Put differently, the court concludes that these
maps and plats and documents can meet the legal requirement for a “declaration,” which
is required for creation of a common interest community. The court reasons:
However, the declarations satisfied many of the statute’s applicable
requirements: they identified the common interest community as the “Two
Rivers Estates,” § 38–33.3–205(1)(a); they stated that the property is
located in Rio Blanco County, §(1)(b); they contained a legal description of
the property, §(1)(c); they described the boundaries of each unit and
identified each with a lot number, §(1)(e); and they identified the “common
elements,” including the [Common Open Space], §(1)(f).
Judge Gabriel, now with the Supreme Court, dissents:
Here, unlike in Evergreen, we have no protective covenants and no
homeowners’ association that was created for the purpose of managing
common property or enforcing use restrictions and design controls.
Accordingly, we have no homeowners’ association that was required to
carry out functions on behalf of individual lot owners but that lacked a
mechanism for raising the funds to do so. Thus, I perceive no basis for
implying an obligation to levy assessments, which was what [Evergreen
Highlands] concerned. Unlike the majority, I do not read that case so

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broadly as to allow us to imply the existence of a common interest
community itself, notwithstanding the absence of a declaration and a
homeowners’ association tasked with acting on behalf of individual lot
owners.
Stay tuned!
Certiorari granted, March 21, 2016, Justice Gabriel not participating.
Summary of Issue [Reframed]:
Whether the court of appeals erred in holding that Two Rivers Estates is a common
interest community by implication.
Houston v. Wilson Mesa Ranch HOA
Colorado Court of Appeals, August 13, 2015
2015 COA 113, 360 P.3d 255
Restrictive covenants; association action to bar short term rentals.
Judge Vogt of the court of appeals takes on an emerging hot topic, which is now being
fought out in various city councils across the state. Here, an owners’ association
attempted to address the evils of short term renters by enforcing a restrictive covenant
prohibiting commercial use of single family homes. The appeals court panel affirms the
San Miguel County District Court’s ruling that a restrictive covenant provision prohibiting
commercial use of subdivision homes cannot be used to enjoin or prevent short-term
rentals of a home. Mere temporary or short-term use of a house by vacation renters does
not preclude the use from being “residential,” and an amendment to association by-laws
that precluded unapproved short-term rentals and imposed fines for violations was
unenforceable.
The lower court reasons that “nothing in the covenants prohibited short-term rentals,
either expressly or by implication; that the covenant language was ambiguous regarding
the permissibility of short-term rentals; and that, because such ambiguity required that all
doubts be resolved in favor of the free and unrestricted use of property, the covenants
did not prohibit or limit Houston’s short-term vacation rentals.”
The Association argues that the district court erred in finding that the by-law amendment
was arbitrary and therefore unenforceable. The court disagrees, holding the by-law
provision was unenforceable because the board did not have the authority to adopt a
procedure to enforce a nonexistent covenant provision.

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5. CONDEMNATION, EMINENT DOMAIN
Regional Transportation District v. 750 West 48th Avenue, LLC
Colorado Supreme Court, September 14, 2015 (Chief Justice Rice, 7-0)
2015 CO 57, 357 P.3d 179
Eminent domain trial before commissioners; evidentiary rulings of
commissioners.
In the usual manner, in an eminent domain case in which the landowner elects to have
the issue of valuation for a taking heard by a three-member commission of freeholders,
the district court here heard in limine motions as to the admissibility of aspects of the
valuation evidence. In that hearing, the trial judge excluded evidence offered by RTD
from Appraiser 1 as to a valuation based on comparable sales, because the valuation
was not submitted within a required deadline, but allowed testimony from that witness on
an income-based approach, which apparently had been disclosed. The court’s ruling
allowed the balance of the appraiser’s opinions, which included opinions based on an
“average value” and an income analysis; it did not state whether the evidence based on
comparable sales was relevant. At the commission trial, when RTD began offering the
allowed evidence of average income of comparable properties through the appraiser, the
owner objected to the appraiser’s opinions on relevance grounds (as opposed to objecting
based on the court’s previous order); the commission chair sustained the objection, even
though the district court had allowed the evidence.
A second disputed piece of evidence involved the RTD’s evidence of the value of property
acquired by the landowner in a different part of town in order to operate its business. This
replacement property did not have certain luxury amenities that landowner had built into
his original property. The commission allowed this evidence. However, after trial, the
court issued an instruction to the commissioners to disregard this evidence as irrelevant.
RTD appealed on both issues. The court of appeals affirmed both rulings, but the
Supreme Court reverses on the first issue. The question of whether and when the
commission is empowered to make its own evidentiary rulings stems from a potential
conflict between C.R.S. § 38–1–101(2)(a)‘s mandate that the judge make every
determination except the final award of compensation, and § 38–1–105(2)‘s statement
that the commission “may request the court to make rulings upon the propriety of the
proof or objections of the parties.” The court agrees with the district court that these
provisions implicitly authorize the commission to make some evidentiary rulings, but the
court takes a firm stand in support of the ultimate power of the district court to issue both
in limine, pre-trial rulings on admissibility of evidence, and to revise rulings post-trial and
instruct the commission to disregard individual items of evidence.
The Supreme Court holds that pre-hearing (“in limine”) evidentiary rulings by the trial
judge control in eminent domain valuation hearings. A valuation commission is bound by
the supervising court’s evidentiary rulings. A supervising judge’s explicit denial of a
motion to exclude certain expert testimony on relevance grounds – meaning that the
evidence should be admitted – precludes the commission from sustaining an objection to

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that evidence. The court reverses the portion of the lower court’s ruling that permitted the
commission to effectively alter the judge’s in limine evidentiary ruling sustaining an
objection to evidence that the district court had already approved, to the detriment of the
RTD. The court holds:
We reject the court of appeals’ likening of the commission to a “successor
judge” for two reasons: first, commissioners need not have any legal
knowledge or training and so should not be granted equal footing with the
judge regarding legal questions such as the admissibility of evidence; and
second, the judge is still on the case and is available to reconsider prior
rulings, so there is no judicial entity for the commission to succeed.
Therefore, although a commission may rule on evidence if the judge has
not already done so, when a judge issues a definitive ruling on the
admissibility of evidence – either on a motion or through [post-trial]
instructions – the commission is bound to follow the judge’s ruling. (Author
emphasis added).
On the second issue, the Supreme Court affirmed the ruling of both lower courts that the
district court can instruct the commissioners, much as it would instruct a jury, to disregard
evidence that the commissioner had agreed to hear over one party’s objection.
Town of Silverthorne v. Lutz
Colorado Court of Appeals, February 11, 2016
2016 COA 17, 370 P.3d 368
Immediate possession hearing; evidence of source of condemnor’s funds.
This case involves a dispute between owners of land along the Blue River and the Town
of Silverthorne, over the Town’s desire to construct a portion of its Blue River Trail on the
owners’ land.
As a preliminary matter, the trial court ruled, and the appeals court affirms, that a party
does not waive any legal defenses by failing to file an answer within the time required by
the rules of procedure. Why? The statutes enforce constitutional rights. M. Patrick
Wilson, Eminent Domain Law in Colorado, 35 Colo. Law. 65, 72 (2006) (“Technically,
there is no need to file an answer in a condemnation case, but it is good practice to do
so.”).
On the merits, the owners object that the Town lacked authority to condemn the easement
in question because it was relying on funds from the Great Outdoor Colorado Trust Fund.
The “GOCO amendment,” Article XXVII, section 9 of the Colorado Constitution, bars a
GOCO fund recipient from using its funds to acquire property by condemnation. This
defense fails, based on established authority from the Colorado Supreme Court.
In an immediate possession hearing, a district court hears challenges to a
public entity’s condemnation based on an alleged lack of authority. . . .
However, during condemnation proceedings, district courts may not

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consider the source of the condemning authority’s funds. See Public
Service Company v. City of Loveland, 79 Colo. 216, 245 P. 493, 500–01
(1926). As the supreme court explained in City of Loveland, ”these
questions present details of corporate finance that are wholly alien to a
special statutory condemnation proceeding and they are not cognizable
here.” Id. Condemnation actions are special statutory proceedings that
must be conducted strictly according to statutory procedures, Story v.
Bly, 217 P.3d 872, 876 (Colo.App.2008), aff’d, 241 P.3d 529 (Colo.2010),
“and no issue can be injected into the case which will change its
character,” City of Loveland, 79 Colo. at 234, 245 P. at 501 (citation
omitted). The supreme court in City of Loveland made clear that evidence
pertaining to project funding sources is the type of evidence which must be
excluded under this reasoning.
The court notes that the Town is a home rule city with eminent domain powers. It has the
power to condemn if it satisfies the necessary elements of the claim, which require proof
of “good faith negotiations” and a public necessity. The Town’s initial offer to a group of
landowners to acquire the requisite easements for the proposed trail was not evidence of
a “bad faith” negotiation because a portion of the funds that would pay the offered sum
were from GOCO.
The second requirement is that the condemning authority act in good faith in determining
the necessity of the project. “The question of necessity simply involves the necessity of
having the property sought to be taken for the purpose intended.” Mortensen v.
Mortensen, 135 Colo. 167, 170-71, 309 P.2d 197, 199 (1957). The court affirms the lower
court’s rulings on these issues.
6. CONTRACTS, PURCHASE AND SALE, TRANSACTIONS
Ravenstar LLC v. One Ski Hill Place LLC
Colorado Court of Appeals, January 28, 2016
2016 COA 11
Condominium purchase and sale agreement; liquidated damage clause not
unenforceable because party has option of both actual and liquidated damages;
attorney fees for prevailing party; lodestar calculation; fees awarded for in-house
counsel.
In another case from Summit County, a group of unit purchasers brought an action against
a developer for breach of contract after purchasers were unable to obtain financing for
the full purchase prices and developer retained the purchasers’ deposits as liquidated
damages. These deposits were substantial, roughly 15% of the cost of purchase.
In Colorado, a liquidated damages provision is valid and enforceable if three elements
are met: (1) the parties intended to liquidate damages; (2) when the contract was made,
the amount of liquidated damages was a reasonable estimate of presumed actual

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damages; and (3) at the time of contract, it was difficult to ascertain the amount of actual
damages that would result from a breach. Here, the unit owners conceded that the
amount of liquidated damages was a reasonable estimate. The court holds, as a matter
of first impression, that the mere presence of an option to elect between the liquidated
and actual damages does not render the former unenforceable. The only Colorado cases
cited on the issue involved the remedy for a vendor under an installment land contract.
The choice of remedies there, the court reasons, is more a choice of damages vs. specific
performance. The court notes a split of authorities in cases from other states. Some
courts hold that the mere fact that one party has an option shows that there is no
“agreement” on fixed damages. Other courts support the right of parties to agree on
alternate remedies. This court allows a scholar, in a way, to break the tie, quoting from
Dan B. Dobbs, HANDBOOK ON THE LAW OF REMEDIES § 12.11, at 855–56 (1973):
The presence of a liquidated damages provision does not automatically
prevent the vendor from claiming his actual damages, and in the absence
of any indication to the contrary, it probably should be assumed that the
vendor is free to claim liquidated or actual damages, as its option.
With victory comes the spoils, and the developer gets to recover its attorney fees as
provided in the fee-shifting provision of the sale contracts. Of note is a discussion on two
issues. First, “block billing” – “Block billing does not preclude a fee award, but a district
court retains discretion to reduce hours billed in that format if the court is unable to
determine whether the amount of time spent on various tasks was reasonable.” Second,
“the in-house counsel” conundrum – these guys and gals are on salary! The court joins
the growing trend to focus, even in commercial cases, on the “lodestar,” rather than actual
fees charged and paid.
The lodestar method provides an initial estimate of a reasonable attorney
fee, whether the attorney is salaried or charges fees under a fee
agreement. [Balkind v. Telluride Mountain Title Co., 8 P.3d 581, 587–88
(Colo. App. 2000)]. It is based on the number of hours reasonably
expended multiplied by a reasonable hourly rate. . . . Where a fee
agreement exists, it is merely a factor to be considered in determining
reasonableness. Tallitsch v. Child Support Servs., Inc., 926 P.2d 143, 147
(Colo.App.1996) (A fee agreement “does not, of itself, require a court to
award the amount agreed upon between the attorney and client.”).
Significantly, the court holds that it was not error for the court to award fees for in-house
attorneys based on the lodestar method. Four attorneys from the defendant’s parent
company, The Vail Corporation, worked on the case. As employees, they are exempt
from having to produce a fee agreement. They had records of time expended, and an
affidavit described their experience. The court did not abuse its discretion in awarding
fees for the work of counsel employed by a parent company.

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Rocky Mountain Exploration v. Davis Graham & Stubbs
Colorado Court of Appeals, March 10, 2016
2016 COA 33
Agency law; liability of agent for undisclosed or unidentified principal in purchase
and sale contract.
This is a case arising out of the recent North Dakota oil boom. We note it here because
counsel for one of the parties in a purchase and sale transaction is sued for engaging in
a civil conspiracy, fraud, and aiding and abetting the purchaser in breaching fiduciary
duties alleged to be owed between buyer and seller arising out of oil field participation
agreements. The real rub is this – does an attorney representing an undisclosed principal
(the purchaser) in a transaction have a duty to disclose to the seller that the purported
purchaser is merely the agent for another entity, where the purchase and sale agreement
is silent on the subject of whether the purchaser is an agent and does not prohibit
assignment of the purchaser’s contract rights or limit its right to sell its interests after
closing? In a thorough opinion, relying heavily on a text authored by two University of
Colorado law professors and the Restatement (Third) of Agency, the court affirms a
summary judgment ruling of a Denver district court judge finding that a law firm that drafts
documents for a transaction and closes the transaction in its offices in Denver had no
duty to disclose to the seller that the firm represented a third company, for which the
purchaser was acting as agent and “straw man” purchaser. This mattered a lot to the
seller, Rocky Mountain Exploration, because it had a past relationship with the
undisclosed principal, and would not have voluntarily done business with that entity.
In 2006, Rocky Mountain (RMEI) sold 80% of its vast holdings to Tracker Resource
Exploration ND, LLC (Tracker). The two companies entered into a joint operating
agreement that expressly disclaimed any joint venture or fiduciary relationship between
the parties. In 2009, Tracker offered to buy RMEI’s remaining 20% interest in the
leaseholds, but the parties were unable to reach an agreement, as RMEI held out for
$15M, and Tracker did not want to go that high. In May, 2010, Tracker and Lario Oil and
Gas Company (Lario) agreed to “jointly attempt” to acquire RMEI’s 20% interest. Due to
a strained relationship between Tracker and RMEI, Tracker’s involvement was not
disclosed to RMEI. RMEI signed an agreement to sell its 20% interest to Lario for
$14.25M.
After the agreement was entered into, Lario asked RMEI if it had any objection to Lario
being represented by the Davis Graham firm, which was actually Tracker’s attorney. It is
unclear why this inquiry was made; there is no direct inference that Davis Graham had a
relationship with RMEI. In any event, RMEI had no objection. The firm, however, decided
that it could not represent Lario, because this would create a conflict of interest with
Tracker. That was not communicated to RMEI.
Davis Graham drafted the closing documents and handled the closing in its offices.
Before the sale closed, in communications with RMEI, Lario referred to Davis Graham as
“our attorney.” Although the attorneys were aware of the communication, it did not clarify
that it represented only Tracker.

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After the sale closed, Lario and Tracker auctioned all of the interests (Tracker now owned
all 100%) in the North Dakota leaseholds, and realized a substantial profit.
RMEI sued Lario, Tracker and DGS. RMEI alleged that DGS (1) engaged in a civil
conspiracy to use Lario as a strawman purchaser; (2) aided and abetted Tracker’s breach
of its fiduciary duty to RMEI; (3) committed fraud; (4) aided and abetted fraud; and (5)
engaged in a civil conspiracy to commit fraud.
Our main interest is in the holding that the law firm could not be held liable for a civil
conspiracy because the use of a “strawman purchaser” was not unlawful. An agent may
act on behalf of an undisclosed principal. There are two exceptions to this rule, according
to the Restatement of Agency, which, if established, can allow the third party to void the
contract. These are: (1) the agent falsely represents that it does not act on behalf of a
principal and (2) the principal or agent had notice that the third party would not have dealt
with the principal. Restatement (Third) of Agency § 6.03 (2006). The court holds that
neither exception applies here. Because the use of a strawman purchaser was lawful,
there was no duty disclose this arrangement “in equity and good conscience” – the test
in fraudulent concealment cases.
The court emphasizes the distinction between undisclosed and unidentified principals.
The exceptions apply only to undisclosed principals. By contrast, Tracker was an
unidentified principal, as Lario had disclosed earlier to RMEI that it had “other investors
or partners.” In addition, Lario had a right to assign its interests to third-party participants
in the transaction. RMEI did not ask if Lario was acting as an agent for a principal, and it
did not ask whom the “third parties” were. Furthermore, neither Lario nor the attorneys
stated that the firm was not acting on behalf of Tracker.
The court notes that there is “no suggestion” in Colorado case law that acting on behalf
of an undisclosed or unidentified principal is fraudulent. The following quotes from the
case, straight from the text by Professors J. Dennis Hynes & Mark J. Lowenstein, AGENCY,
PARTNERSHIP, AND THE LLC: THE LAW OF UNINCORPORATED BUSINESS ENTERPRISES 351–52
(6th ed. 2003), restate the law and provide attorneys with guidance for dealing with this
issue in the transactional world.
To the contrary, the ability of an agent to act on behalf of an unidentified or
undisclosed principal has “practical importance.” Restatement § 6.03 note
b. For example, by dealing as [an] undisclosed principal, [a] person
interested in assembling [a] tract of land from multiple owners for [a] large-
scale project can overcome [the] problem of hold-out owners who, once
[the] buyer’s interest becomes known, may exploit [the] buyer’s vulnerability
by demanding prices well in excess of current market value. Id.
Nevertheless, a third party may avoid a contract entered into by an agent acting
for an undisclosed principal if (1) the agent falsely represents that it does not act

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on behalf of a principal and (2) “the principal or agent had notice that the third party
would not have dealt with the principal.” Id. § 6.11(4).
In all but such narrow circumstances, however, a third party may not rescind the
contract. This is so because, ordinarily, “[i]f a third party wishes certainty that the
party with whom it deals will be the only party with rights and liabilities under the
contract, the third party may insist that the contract so provide.” Id. Restatement
at cmt. d. Moreover, the third party may “insist on a provision prohibiting
assignment of the contract.” Id. Lastly, the third party is always free to “ask the
person with whom it deals whether that person acts as agent for an undisclosed
principal.” Id.
7. CONSERVATION EASEMENTS AND TAX CREDITS
No reported cases.
8. CONSTRUCTION DEFECTS
Rogers v. Forest City Stapleton
Colorado Court of Appeals, November 19, 2005, as modified
2015 COA 167
Implied warranty of suitability; residential lot suitable for a house with a finished
basement; warranty extends to subsequent purchasers.
Here, developer Forest City Stapleton sells a lot to a homebuilder, and Rogers buys a
new home from the builder. Rogers claims that the lot was not suitable because it could
not support a basement. Rogers paid the builder an extra fee to include a basement that
could later be finished. The home also included a foundation drain system designed to
collect ground water into a sump pit and be pumped out into the yard by a sump pump.
After Rogers moved into the home, replete with the planned basement, he noticed that
the sump pump was operating more often than he expected and, after hiring engineers
to investigate, discovered that the ground water level was higher than he had believed it
to be.
Rogers sues Forest City for breach of implied warranty, nuisance and negligent
misrepresentation. On the warranty claim, he argues that Forest City impliedly warranted
to him that the lot was suitable for a home with a basement that could be finished. The
nuisance claim is based on the use of recycled concrete aggregate base course (RABC)
in the roads in Stapleton, which apparently can leach a mineral called calcite, which
interferes with the foundation drain system.
The jury found for Rogers, and Forest City appeals. The appeals court, in a 2-1 decision,
reverses the verdict on the breach of warranty claim, and remands for a new trial. The
trial court improperly instructed the jury that a breach of implied warranty runs from a

12
developer to a homeowner in these circumstances. Applying the reasoning in two prior
cases, the implied warranty can apply in this kind of case – but does the warranty extend
to a homeowner who is not a first purchaser? The court concludes that it can, applying
the reasoning of an Indiana case, Jordan v. Talaga, 532 N.E. 2d 1174 (Ind. App. 1989).
An implied warranty of suitability exists between a developer of a vacant lot and the owner
of a home on that lot who is not the first purchaser if: (1) the developer improves the lot
for a particular purpose, and (2) all subsequent purchasers rely on the developer’s skill
or expertise in improving the lot for that particular purpose. Here, the trial court failed to
instruct the jury on what it means to “impliedly warrant.” Specifically, the trial court did
not instruct the jury that if Forest City improved the lot for a particular purpose, an implied
warranty would exist that the lot was suitable for that particular purpose if the subsequent
purchasers relied on Forest City’s expertise and skill in improving the lot.
The court holds that the developer must improve and sell a lot for a particular purpose
and the lot must be unsuitable for that same particular purpose. The court suggests a
form of instruction, which ultimately must tie the claim into “the particular purpose for
which the lot was improved.” One can only hope that this ties into whether the developer’s
purpose was single family homes with finished basements.
The judgment on the nuisance claim is reversed without a remand, because a special
district, not Forest City, constructed the roads and placed RABC in the road base.
Regardless of whether Forest City caused the special district to be created or the extent
to which it may control the district, the district is a separate legal entity, and Forest City
could not be liable under the terms of the court’s own jury instructions.
Two judges file dissents, one on the nuisance issue, and one on the breach of warranty
issue. On the implied warranty issue, Judge Furman disagrees with the majority that
Forest City could be liable to Rogers on the claim of implied warranty of suitability because
(1) Rogers was not the first purchaser of the lot; (2) Rogers did not rely on Forest City’s
expertise; and (3) the lot at issue was generally suitable for the purpose of residential
construction. He concludes that the evidence presented at trial also was insufficient, as
a matter of law, to support the claim of implied warranty against Forest City. Stay tuned.
9. EASEMENTS AND PUBLIC ROADS
Gold Hill Development Company v. TSG Ski & Golf
Colorado Court of Appeals, December 17, 2015
2015 COA 177
RS 2477, public road by prescription, implied easements.
A developer, Gold Hill, owned several patented mining claims in San Miguel County in
the vicinity of various properties owned by the TSG defendants, who also owned a variety
of mining claims. Gold Hill alleged that access to its mining properties was historically
accomplished by means of a trail known as Gold Hill Road, which traverses a portion of

13
TSG’s properties. Gold Hill claimed the right to use and maintain the route where it
crossed over TSG’s mining lode properties.
Gold Hill brought claims against TSG and the County, seeking the declaration of, in the
alternative, an express easement; an implied easement by prior use; a way of necessity;
a public road pursuant to R.S. 2477, and public road pursuant to CRS §§ 43-2-201(1) and
43-1-202. San Miguel County 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 Gold
Hill’s express easement claim and ruled against Gold Hill on all other claims. The court
also granted the County’s R.S. 2477 counterclaims for a public road on a portion of the
road, and a “public prescriptive easement” as to another portion of the road.
On appeal, Gold Hill argues that the trial court erred in imposing additional requirements
not supported by Colorado law for its R.S. 2477 claim across the TSG properties. It
argued that the trial court erred in concluding that Gold Hill failed to show the public was
using the route. However, the appeals court found sufficient evidence in the record to
support the court’s findings, and affirms.
The trial court’s findings were based on maps and mineral surveys, the testimony of a
mining geologist, as well as on extensive testimony from multiple witnesses regarding the
use and nonuse of the various routes. As one finds in similar cases, mining traffic in
certain mountain communities in the 1880-1910 period was chaotic and ill-defined.
Wal-Mart Stores, Inc. v. United Food and Commercial Workers International Union
Colorado Court of Appeals, May 5, 2016
2016 COA 72
Labor union protests; land subject easement; trespass.
A district court in Jefferson County enjoined a union from engaging in protests and
“entering onto or inside any store, facility, or other property in the State of Colorado,
including any apron sidewalk or parking lot, that is owned, operated, or controlled by
Walmart or any of their subsidiaries, affiliates or operating entities” without permission or
authorization from Walmart for any purpose other than shopping for and/or purchasing
Walmart merchandise. While the labor and First Amendment issues are well beyond our
ken in the real estate bar, I note this case briefly for how it treats the subject of easements.
For example, if Walmart owns or leases property, it has standing to complain of a
trespass. However, if it only has a nonexclusive easement over the land on which
customers park, is entry on that land by noncustomers for a labor protest a trespass?
Put differently, must Walmart, in order to prevail on a claim for an injunction to stop a
“trespass,” have the right to exclusive possession of the property, or if it is sufficient that
Walmart has an easement for use of associated parking lots and driveways? The court
does not clearly state which situation applies here.

14
The appeals court affirms the lower court’s injunction. A plaintiff bringing a suit for
trespass must show that she or he has either actual or constructive possession of the
land. . . . “Constructive possession is generally established through ownership of title,
while actual possession is demonstrated by occupancy or control over the land, but does
not require ownership.” Once [it] proves possession, a trespass plaintiff must prove the
elements of the tort of trespass, which, as we stated above, are “a physical intrusion upon
the property of another without the proper permission from the person legally entitled to
possession of that property.”
Here is where the analysis gets sticky. A dominant user, with easement access and rights
of use, may or may not be in “possession,” or have rights to exclude other users, absent
an exclusive easement. Without discussing this distinction, or really fleshing out the
particular easement right at issue, the court holds:
We have not located, and the unions have not cited, any Colorado statute
or case law dictating a different standard for owners of land subject to
nonexclusive easements or those who lack exclusive possession
generally. To the contrary, a “party with title may sue for trespass.” [cite
omitted] A landlord-tenant relationship does not foreclose the landlord’s
right to bring an action for trespass.). The unions do not dispute that
Walmart possesses and has title to the property in question. . . . To
sustain its trespass claim, Walmart needed only prove that the unions
entered its property without its permission. It was not required to show that
the unions unreasonably interfered with its use and enjoyment of the
property.”
This is a little confusing. It seems that the court holds that if Walmart owns the property,
and the unions do not have an easement, it should not matter whether others with an
easement – say, an adjoining shop owner or legitimate customers – are inconvenienced.
The owner may evict a trespasser at its will. If Walmart has only an easement, however,
the question might arise as to whether it has standing to complain of a trespass. It would
not be a party “in title.”
10. ESTATES AND PARTITION
No reported cases.
11. FORECLOSURE, DEBTOR-CREDITOR, RECEIVERS, LENDER LIABILITY
McClure v. JP Morgan Chase Bank
Colorado Court of Appeals, August 13, 2015
2015 COA 117
LLC charging order; relative lien priority; enforcement of foreign judgments.

15
By their nature, charging orders are a clumsy way to collect judgments against individual
creditors, for several reasons. One must be persistent – unlike a garnishment, there is
no simple form, and no easy recipe. Here, the claim against a wealthy individual and his
defunct corporation operating out of Arizona presents interesting facts, and the
opportunity for Judge Terry of the court of appeals to develop some new law in Colorado.
Reginald Fowler and Spiral Broadcasting LLC, an Arizona corporation with broad financial
interests and an amazing network of privately held business interests in a variety of
industries, owned or controlled investments in a variety of commercial buildings in
Colorado, owned in a variety of in limited liability entities.
Both McClure and Chase sue in state court and get judgments. The race for the Colorado
assets begins. Chase gets a judgment and obtains a charging order against Fowler’s
interests in one or more Colorado LLC’s. Fowler is served with that order, and McClure
then seeks to domesticate the judgment and the order in Colorado under the Uniform
Enforcement of Foreign Judgments Act.
McClure takes a different tack, taking his Arizona judgment to the Colorado district court
in Arapahoe County, domesticating the judgment, and obtaining a charging order from
the Arapahoe County court. The charging order is then served on Fowler. The key: while
the Chase charging order (from the Arizona court) is served on the judgment debtor first,
McClure was first to serve a charging order that was both issued by a court with
jurisdiction and domesticated in Colorado.
The court holds that the first lien on the Fowler/Spiral membership interest in the Colorado
LLC’s is held by McClure. The basic reasoning is that the charging orders were not
enforceable in Colorado until they were issued in Colorado, either in aid of a judgment
issued by a Colorado court or in aid of a foreign judgment “domesticated” in Colorado
under the procedures set out in the Uniform Act. In short: The court held the priority of
charging orders issued against Colorado LLCs is determined by first-in-time service of
charging orders enforceable in Colorado.
Liberty Mortgage Corp. v. Fiscus
Colorado Supreme Court, May 16, 2016 (Justice Eid, 4-2, two justices dissent)
2016 CO 31
Deed of trust; forgery; Article 3 of UCC inapplicable; holder in due course status
does not bar forgery defense.
We reported on the lower court decision in 2014. The Supreme Court accepted review
on this issue:
Whether a lender in possession of a promissory note secured by a deed of trust on real
property may assert a holder-in-due-course defense under section 4–3–305, C.R.S.
(2014), to a claim that the deed of trust was forged.
Briefly, Ray and Vickie marry. Ray buys a house in 1987, which they live in for many
years. Ray finances the purchase with a mortgage. Vickie does all the finances for the

16
family. In 2008 she signs Ray’s name on several powers of attorney, including one
specifically for real estate. She uses the forged powers to refinance the mortgage loan
for a larger sum in 2008, and refinanced again with Liberty Mortgage in 2009 for a larger
sum. That mortgage was then assigned to Branch Banking & Trust.
Ray ultimately learns of his problems when Vickie began withdrawing funds from Ray’s
IRA. He filed an identity theft complaint with the sheriff and discovered the unauthorized
loans in a credit check. He then sued Liberty and Branch Banking & Trust under the
spurious lien statute, C.R.S. § 38-35-201, seeking to have the 2009 deed of trust
invalidated. The trial court found the deed of trust to be invalid and spurious, as it was
not “created, suffered or assumed” by Ray, and contained a material misstatement, Ray’s
signature. It rejected Branch Banking’s defense that it was a holder in due course of the
deed of trust, which it characterized as a negotiable instrument. It also found that Ray
had not ratified the 2009 loan transaction.
The court of appeals affirmed, and the Supreme Court does likewise, but on different
grounds, resulting in a split decision with two justices (Hood and Marquez) partially
dissenting, and with Coates concurring.
The majority concludes that it does not matter whether a deed of trust is a negotiable
instrument, because Ray has a valid forgery defense to any claim that the lender could
raise as a holder in due course, and that this defense is not precluded by any negligence
or ratification on Ray’s part. The court holds that a forgery defense addresses the
existence of the obligation itself, and not the right to enforce the obligation, which is the
issue in the holder in due course statue. The governing authority is C.R.S. § 4-3-403(a)
– an unauthorized signature does not bind a person whose name is signed absent
ratification. The court explains that this is why forgery is not listed as a defense to
enforcement under section 3-305 of the UCC.
The debate in the concurring decisions between Justices Hood and Coats is heated, by
standards of this court, and makes for good reading. Justice Coats seems to get the
better of the argument, pointing out that his colleague overlooks the fact that pre-UCC
case law has been displaced by not only the UCC but by the express terms of the spurious
lien statute. “In light of the legislature’s express provision for the removal of any lien that
is “spurious,” however, even if a deed of trust collateralizing a promissory note could be
considered a combination lien and negotiable instrument, the lien would nevertheless be
subject to removal, as long as it was “not created, suffered, assumed, or agreed to by the
owner of the property it purports to encumber.”
Justice Coats concludes:
[The] contention that the reasoning of cases pre-dating our adoption of the
commercial code remains valid today seems to me best explained as an
attempt to substitute a court-devised solution to the dilemma of the bona
fide purchaser for the one chosen by the legislature. With regard to the
class of which this case stands as a good example, it is a mystery to me

17
how one could find greater equities to lie with a trader in commercial paper
than with a homeowner who has been victimized by forgery.
By contrast, Justice Hood would find with four other jurisdictions that have held that a
deed of trust securing a promissory note is a negotiable instrument, subject to the
protections of the UCC, and remand for a hearing as to whether Ray was, under the
provisions of Code section 3-406.
Hutchins v. La Plata Mountain Resources, Inc.
Colorado Supreme Court, June 20, 2016 (Justice Coats, 4-3)
2016 CO 45
Statute of limitations on enforcement of deed of trust; acknowledgement of
existing debt.
In this appeal from a 2013 unreported decision of the court of appeals, the Supreme Court
holds that a debtor’s written, signed acknowledgement of the underlying debt owed to two
individual creditors was sufficient to set a new accrual date for a legal action to foreclose
on the collateral securing the debt. The debtor argued that the purported
acknowledgement was contained in a proposed amendment to the debt instrument which
never became effective, for failure to achieve consent of a sufficient percentage of all
holders of the company’s debt.
The case was tried before Judge Romero in Lake County, and concerns a series of
convertible “debentures” given by Leadville Mining to evidence loans made to the mining
company by two individuals, Hutchins and Gasper, other investors who had subsequently
converted their debt instruments into stock, and a company, La Plata Mountain
Resources, who had timely commenced foreclosure in 2003. All of the various
debentures were secured by a single deed of trust. The trial judge ruled that the debtor’s
“acknowledgement” was signed and acknowledged the debt, but only as part of a
document which undertook to amend the terms of the debentures. That agreement never
came into effect, according to the lower court, because the parties failed to get written
consent of holders of at least two-thirds “in aggregate principal amount of outstanding
Debentures.” The lower courts interpreted this to mean two-thirds of the current
outstanding debt, not two-thirds of the outstanding debentures, many of which had been
converted to stock and were no longer in force.
The court reverses on a narrow margin, holding that a written acknowledgement of the
debt by the debtor constituted a new promise to pay, establishing a new accrual date and
a new limitations period. The court goes through an exhaustive review of the history of
the acknowledgment of debt doctrine. Justice Hood, writing for the three dissenters,
would hold that the failed amendments to the debentures were void, and therefore the
“attempted acknowledgement” of the debt failed as well.

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12. JUDGMENTS AND FRAUDULENT TRANSFER
No reported cases.
13. LAWYERS AND PROFESSIONAL LIABILITY
J. Tucker, Trustee, v. Town of Minturn
Colorado Supreme Court, October 26, 2015
2015 CO 61
Trustees; pro se litigants; unauthorized practice of law.
The Supreme Court considers whether a non-attorney trustee of a trust may appear and
make arguments before the water court on behalf of the trust. Put differently, may a trust
appear and argue in a lawsuit “pro se”? The water court’s order was predictable. As
trustee of a trust, Mr. Tucker was not permitted to proceed pro se because he was
representing the interests of others. Tucker appealed the water court’s order on this
issue, and the substantive issues relating to the water court’s finding of reasonable
diligence in connection with a conditional water right. He asserted that the water court
erred in granting his adversary’s application because its supporting affidavit was deficient.
The court concludes that the water court correctly ruled that a non-attorney trustee cannot
proceed pro se on behalf of a trust. In light of this determination, the court declined to
reach the merits of the dispute, and affirmed.
Baker v. Wood Ris & Hames
Colorado Supreme Court, January 19, 2016 (Justice Gabriel, 7-0)
2016 CO 5, 364 P.3d 872
Claim by estate beneficiary against counsel for testator; strict privity rule.
In this case, the Supreme Court recently upholds the “strict privity” rule for legal
malpractice claims by non-clients. Without privity – without an attorney-client relationship
- there must be evidence of fraud, malicious conduct, or negligent misrepresentation in
order to sustain a tort claim by a non-client. Many states have moved away from this rule
in recent times. Colorado does not follow the trend.
Do dissatisfied beneficiaries of a testator’s estate have standing to bring legal malpractice
or contract claims against the attorney who drafted the testator’s estate planning
documents? Here, Baker and a sibling seek to bring malpractice and contract claims
against a law firm and two of its attorneys. The attorneys were retained by their father,
Floyd Baker, to prepare his estate plan. They believe that their father intended assets to
be distributed in a way not reflected in the final will. The plaintiffs ask the court to abandon
what has come to be called the “strict privity rule,” which precludes attorney liability to
non-clients absent fraud, malicious conduct, or negligent misrepresentation. This rule
has been applied in several recent court of appeals decisions. Glover v. Southard, 894
P.2d 21, 23 (Colo.App.1994);

19
Southard, 892 P.2d 417, 418–19 (Colo.App.1994). They urge the court instead to adopt
the so-called “California Test,” and to adopt an extension of the third-party beneficiary
theory of contract liability frequently called the “Florida–Iowa Rule.” They argue that both
theories would allow them, as alleged intended beneficiaries of their father’s estate, to
sue the attorneys for legal malpractice and breach of contract.
The court, in an interesting opinion by Justice Gabriel, declines to abandon the strict
privity rule, and reaffirms that where potential beneficiaries are concerned, an attorney’s
liability is generally limited to the narrow set of circumstances in which the attorney has
committed fraud or some other malicious or tortious act, which may include negligent
misrepresentation. The court explains the policy reasons for the ruling in this way:
While the testator/client is alive, the lawyer owes him or her a “duty of
complete and undivided loyalty.” The strict privity rule protects an attorney’s
obligation to direct his or her full attention to the needs of the client. An
attorney’s preoccupation or concern with potential negligence claims by
third parties might result in a diminution in the quality of the legal services
received by the client as the attorney might weigh the client’s interests
against the attorney’s fear of liability to a third party.
Such a result, in turn, would tend to undermine the purpose of the attorney-
client relationship, which requires that an attorney act in his or her client’s
best interest.
The court notes that the Colorado Probate Code provides a means by which disappointed
beneficiaries can litigate what they believe to be the testator’s true intent. In C.R.S. § 15-
11-806, a court is authorized to “reform the terms of a governing instrument, even if
unambiguous, to conform the terms to the transferor’s intention if it is proved by clear and
convincing evidence that the transferor’s intent and the terms of the governing instrument
were affected by a mistake of fact or law, whether in expression or inducement.”
Laleh v. Johnson
Colorado Court of Appeals, January 14, 2016
2016 COA 4
Attorney fees of court-appointed special master.
This case is noted briefly to assist those among us who may accept appointment as a
special master or a court appointed expert in matters relating to real estate. In this case,
a court initially appointed Gray Johnson as a court-appointed expert to assist the court in
sorting out the affairs of three small family-run businesses in a dispute over a lease of
property. The two brothers had commingled “hundreds of thousands of dollars between
themselves and their entities. Johnson, a certified public accountant, was appointed to
sort out the accounts as an expert under C.R.E. 706. Johnson had both brothers sign an
engagement agreement, in which they agreed to be jointly and severally liable for his
fees. Subsequently, Johnson was appointed special master by the court under C.R.C.P.
53. Johnson engaged counsel to assist in certain functions required in his capacity as

20
special master. At the conclusion of the case, Johnson obtained an order from the court
ordering the parties to pay his professional fees, as well as the fees charged by Johnson’s
attorney in pursuing collection.
The appeals court affirms the orders of the trial court and orders payment of the special
master, as well as attorney fees incurred by him in pursuing collection of his fees, even
though the engagement agreement did not call for a fee recovery. The court construes
the award of fees as within the trial court’s discretion in upholding the dignity of the court.
Fairness and efficient operation of the judicial system dictate that we ensure
that those appointed by the court to assist the court are appropriately
compensated. This includes honoring the trial court’s discretion to grant
such fees as it deems necessary to collect outstanding balances due to a
court-appointed expert or special master. A contrary holding would create a
disincentive to those whose assistance the court may seek in various
capacities. The trial court acted within its inherent authority when it ordered
the brothers to pay Johnson’s collection costs. Because the trial court’s
action was not arbitrary or contrary to law, there was no abuse of discretion
in the court’s grant of these fees.
Calvert v. Mayberry
Colorado Court of Appeals, April 21, 2016
2016 COA 60
Illegal contract rule; public policy; contract between attorney and client violating
Rule 1.8(a) of the Rules of Professional Conduct is void and unenforceable.
In a 2009 disciplinary proceeding, the Colorado Supreme Court disbarred Mr. Calvert
after a hearing board determined he had committed ethical violations involving two former
clients. People v. Calvert, 280 P.3d 1269 (Colo.O.P.D.J. 2011). As relevant to this case,
the hearing board found that the attorney had “plied a vulnerable client” - the former client
in this particular case - “with loans in excess of one hundred thousand dollars.” Id. at
1272. To secure his interest in those loan funds, Calvert recorded a false deed of trust
on the former client’s home in a second client’s name without the clients’ knowledge or
consent. He then attempted to persuade the second client to assign the deed of trust to
Calvert’s real estate company which, taken together with his earlier acts, signaled a
calculated scheme to deprive the former client of her home.
In the disciplinary case, the hearing board expressly found that Calvert had not complied
with Colo. RPC 1.8(a) when he made the loans to the former client.
Not deterred by the order of disbarment, Calvert then filed this case to recoup money he
had loaned to the former client, claiming that he had an oral agreement with the client for
repayment of the loans, and alternatively asserting that the trial court should impose an
equitable lien on the former client’s house. The claim exceeded $100,000. The trial court
granted summary judgment for the former client and her daughter (to whom she had
quitclaimed her interest in the house), finding that because the oral contract between the

21
former client and the attorney violated Colo. RPC 1.8(a), the attorney was legally
prohibited from enforcing that agreement.
This ruling is affirmed on appeal. The court of appeals holds that the loan agreement is
unlawful and in violation of public policy, and is therefore unenforceable. The reasoning
is similar to cases refusing to enforce gambling debts, or to award real estate commission
to unlicensed brokers. The court remands this case to the trial court for a determination
as to whether the appeal was brought for the sole purpose of delaying lawful collection
efforts.
State v. The Castle Law Group LLC
Colorado Supreme Court, July 5, 2016 (Justice Marquez, 5-2)
2016 CO 54
Colorado Consumer Protection Act; deceptive trade practice; disclosure of true
facts; foreclosure related services.
This case appears to be another step in the continuing saga of the state’s actions against
the leading foreclosure law firms concerning past practices in how charges for process
service and other necessary costs were incurred by the firms and passed on to lenders
and third-parties purchasing at foreclosure sales and borrowers who attempted to cure a
default. While specialists will already have read this carefully, for the real estate
generalist, it is helpful to know the court’s holding. Disclosure by the law firm to its client
or to loan servicers of the amount paid to a vendor (whether an independent third party
or an entity that is controlled or owned by principals of the law firm), even if accurate,
does not insulate the firm and its attorneys from a claim that the price is deceptive.
Evidence of market rates charged to law firms by unaffiliated vendors is directly relevant
to establishing whether the costs invoiced by the vendors were the actual or reasonable
costs of such services. The case was brought by the Attorney General under C.A.R. 21
to challenge a pre-trial order of the trial court excluding such evidence of “reasonable
market rates” as irrelevant. The case goes forward.
14. LEASING AND EVICTION
Zeke Coffee, Inc. v. Pappas-Alstad Partnership
2015 COA 104
Commercial lease; damages remedy for tenant where eviction order reversed on
appeal.
Zeke rented space in a building for a coffee shop. At the end of its initial five-year lease,
Zeke sought to exercise an option to renew for another five year term. Landlord refused
to recognize the option, and claimed that Zeke was on a month-to-month lease. Zeke
brought a declaratory judgment action to enforce its right to renew the lease for another
five year term. Landlord counterclaims, seeking eviction. The trial court in a first round
agrees with landlord, and the tenant is evicted. Tenant appeals, and the eviction order is
reversed. However, in the meantime, the landlord had leased the space to a new
occupant. On remand, a different judge awards $168,000 in restitution to the tenant,

22
which apparently included all potential rental income received by landlord after the
eviction, discounted to present value, but without deducting expenses as one would in a
loss of profits analysis.
The court affirms, holding that the trial court did not abuse its discretion by failing to
subtract from the restitution award the rent that the tenant would have paid if the eviction
had not occurred, or by failing to subtract expenses the landlord incurred in re-letting the
premises, or by failing to subtract rent the landlord did not receive in the gap between the
order for eviction and the location of a new tenant. The court reasons: “A person who
has conferred a benefit upon another in compliance with a judgment, or whose property
has been taken thereunder, is entitled to restitution if the judgment is reversed or set
aside, unless restitution would be inequitable (quoting RESTATEMENT (FIRST) OF
RESTITUTION § 74 (1937)) . . . . Where the judgment has been reversed or set aside on
appeal, “comment m to [section 74 of the Restatement] provides that if the judgment
creditor [i.e., the landlord after winning in the trial court] acted in good faith, the sale was
properly conducted, and the property was acquired by a bona fide purchaser, the
judgment debtor is entitled to recover only the proceeds from the sale, plus interest.”
15. PREMISES LIABILITY, TRESPASS AND NUISANCE
Lopez v. Trujillo
2016 COA 53
Vicious dog; proximate cause; injury to child on sidewalk.
The court of appeals, in a split decision, affirms the dismissal of a complaint against a
dog owner for failure to state a claim for relief under C.R.C.P. 12(b)(5). Two children
were walking down a sidewalk in front of the defendant’s home. The sidewalk was
separated from defendant’s yard by a four-foot-high chain link fence. The dogs, according
to the complaint, jumped up on and rattled the fence. The dogs did not jump over the
fence or touch the children. One of the children, scared by the pit bulls, “darted from the
sidewalk out into [the street]” and was struck by a service van. According to the majority,
“while the injuries were tragic, their likelihood was not foreseeable.” Judge Vogt writes
an articulate dissent, relying heavily on the test in Taco Bell v. Lennon, 744 P.2d 43, 46
(Colo. 1987) for determining whether a duty exists.

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16. PROPERTY TAXATION AND ASSESSMENTS
Landmark Towers Association, Inc. v. UMB Bank
2016 COA 61
Municipal bond financing; challenge by HOA under TABOR; waiver of affirmative
defense not argued at trial.
A real estate developer created a special district, the Marin Metropolitan District, as a
vehicle for financing the infrastructure of a to-be-developed residential community next to
the Landmark Towers known as the European Village. The District issued bonds to
finance the development, which were to be paid for by property taxes imposed on
landowners within the District. A group of condominium owners at Landmark Towers who
did not live in the European Village learned that their properties had been included in the
District under “suspicious circumstances.” The condominium owners received no benefit
from the European Village development, and had not been notified of the elections to
create the District and approve the bonds and taxes. Acting through their homeowners
association, the Landmark Towers Association, they brought two actions; one to
invalidate the creation of the District (see Marin Metropolitan District v. Landmark Towers
Association, 2014 COA 40, §11) and the other - this case - to invalidate the approval of
the bonds and taxes and to recover taxes they had paid to the District.
Following a bench trial and a “TABOR refund hearing,” the district court granted Landmark
part of the relief it requested, ordering partial refund of taxes paid and enjoining the District
from continuing to collect taxes from the Landmark condominium owners. The appeals
court affirms in part. It holds that the special district election was invalid, in that some
voters in the election were not eligible electors, and that the condominium purchasers
were eligible electors who were not notified of their rights to vote. The court holds that
the defendants waived the thirty-day time bar set out in C.R.S. § 11-57-212. Although
the District cited § 11-57-212 in its answer and in the trial management order, it did not
raise the issue at trial. The case is remanded for further proceedings.
This case received a bit of publicity when it came out, with concerns raised about the
marketability of municipal bonds if the short statute of limitations is not scrupulously
observed. If this is your line of work, a close reading of the case is advised.

24
17. TAX SALES and TREASURER DEEDS
Sandstrom, Arapahoe County Treasurer v. Solen
Colorado Court of Appeals, February 25, 2016
2016 COA 29
Voidable tax deed; diligent inquiry to locate and give notice to owners; redemption
rights of tenants in common.
Greg Solen and his sister owned mineral rights beneath a forty acre parcel of land in
eastern Arapahoe County. The land was purchased in 1972 by their father Albert. He
acquired the entire surface interest and a 50% interest in the mineral rights. The other
50% interest in minerals had been reserved by the seller. In 1973, Albert sold the surface
estate to Mr. and Mrs. Thomas, but reserved the mineral rights – 50% of the whole. The
County assessor created a new parcel number. In 1984, Albert passed away, and the
mineral rights passed to Greg Solen and Colorado National Bank as trustee for his sister
(Bank) by personal representative deed. Each received an undivided one-half interest in
the mineral rights as tenants in common, and unity of ownership in the assessed Parcel,
which itself was one-half of the original mineral estate.
In 1994, the Trustee conveyed its interest to the beneficiary, Greg’s sister Patti, according
to the terms of the trust established by Albert.
As luck would have it, the assessor failed to note the address of Greg’s sister, Patti
Ibbotson, in its records. It is unclear why – her address in Littleton, where she still lives,
is on the face of the trustee’s deed. As a result, only Greg got the annual property tax
bills on the account.
Greg paid the tax bills annually from 1984 through 2004. However, the taxes were not
paid in 2005 for the 2004 tax year, and subsequent tax years through 2007. The surface
owner, Bradford, was notified of the tax debt, and purchased the tax lien certificate for
2004 and each year through 2007. In 2008, Bradford applied for a treasurer’s deed. The
Treasurer sent notice to Greg of the application for the tax deed – which was returned as
“undeliverable” – but did not obtain title work for the Parcel or check the County Clerk and
Recorder’s records for the address of Patti. On February 26, 2009, without a redemption
by Greg or Patti, a tax deed was issued to Bradford by the Treasurer. The deed
transferred all mineral interests taxed under the assessed Parcel, that is, the entire
undivided one-half interest in the mineral estate.
In 2013, the Treasurer was notified by an oil and gas lessee that Patti claimed an
ownership interest in the Parcel that was the subject of the Bradford tax deed. On August
26, 2013, 4 ½ years after the treasurer’s deed was issued, the Treasurer issued and
recorded a declaration of invalid treasurer’s deed, purporting to invalidate the tax deed
given to Bradford.
In December 2013, the Treasurer filed the current action seeking a declaratory judgment
that the declaration of invalid treasurer’s deed was a valid document, thereby cancelling

25
title in Bradford. The Treasurer’s complaint admitted that she had failed to conduct
diligent inquiry pursuant to C.R.S. § 39-11-128(1)(a) prior to issuing the tax deed in favor
of Bradford and requested the court to approve her declaration of invalid treasurer’s deed.
The Treasurer named Bradford, Solen, and Ibbotson as defendants. Bradford and cross-
claimed against Solen and Ibbotson for a decree quieting title in the Parcel.6 Solen and
Ibbotson answered and claimed the mineral rights interest as equal tenants in common.
Ultimately, the district court concluded:
There is no dispute that the Treasurer failed to determine all persons having
title of record of the property and failed to provide notice to those persons,
specifically ... Ibbotson. The evidence fully justifies that the Treasurer did
not make “diligent inquiry” to locate ... Ibbotson. Had the Treasurer obtained
title work for the mineral rights or checked the County Clerk and Recorder’s
records ... Ibbotson could have been served. Accordingly, the Treasurer’s
Deed issued on or about February 26, 2009 is invalid and void and the
Declaration of Invalid Treasurer’s Deed issued on August 23, 2013, is valid.
The court ordered the County assessor to pay to Bradford redemption funds that had
been tendered to the assessor by Ms. Ibbotson.
On appeal, the court of appeals affirms, in a detailed and articulate opinion by Judge
Graham.
First, the court rejects Bradford’s argument that Solen lacked standing, because proper
notice was sent to him, though there is no evidence of actual receipt. However, Solen
has standing because he was sued by Bradford in the quiet title action. Traditional
standing rules do not apply to defendants.
Second, the court holds that C.R.S. § 39-11-128(1) requires that notice to all owners of
the mineral interest was required, and that Ms. Ibbotson’s address was of record with the
county clerk and recorder, discoverable in a grantor and grantee search. When given
notice of the past due taxes in 2013, Ms. Ibbotson tendered the past due tax payments
with interest and costs to the assessor. A redemption by one cotenant is a redemption
by all. The court rejects Bradford’s argument that the County assessor should have set
up a separate tax account for each cotenant, and that the district court should have “at
least” awarded Solen’s one-half interest to Bradford. Bradford was unable to cite any
statutory authority for requiring a treasurer or an assessor to give each cotenant of real
property a separate tax parcel number.
Finally, the court rejects Bradford’s argument that the tax deed could not be set aside
because it is not “void,” under the test set out in Lake Canal Reservoir Co. v. Beethe, 227
P.3d 882, 886 (Colo. 2010). Although that case holds that a tax deed is voidable, not
void, for failure to conduct diligent inquiry, the court of appeals ultimately concludes here,
as did the district court, that the tax deed issued to Bradford was voidable for failure to
provide Ibbotson with notice, and void upon a fact finding that notice was insufficient.

26
What is the practical difference between a “void” deed and a “voidable” deed? The latter
must be proven to be void in a court action filed within five years of the recording of the
treasurer’s deed. Here, the Treasurer filed her action within the five year limitation,
allowing Solen and Ibbotson to keep their property and receive rental income. There
being no issues of fact, the court of appeals the district court’s summary judgment order,
voiding the treasure’s deed and quieting title in Greg and Patti.
Note – author represented one of the parties in the trial court and on appeal.
Klingsheim v. Cordell
Colorado Supreme Court, April 4, 2016
2016 CO 18
Treasurer deeds; treasurer statutory duty of diligent inquiry to give notice of
forthcoming issuance of deed unless owner or interested party redeems
We reported on this case last year, and noted that this fact pattern presents a sort of post
script to the supreme court’s decision in Lake Canal Reservoir Company v. Beethe, 227
P.3d 882 (Colo. 2010). Both cases deal with the issue of notice to a property owner, and
in the earlier Beethe case, notice to parties claiming an interest in the property, such as
easement holders or adverse possessors, of the pending issuance of a treasurer deed.
Such a deed is powerful, in that it creates a new “original” title in the tax lien purchaser
after an extended three-year redemption period. The requirement that the treasurer give
notice to all record interest holders is set out in C.R.S. § 39-11-128, and the failure to give
adequate notice can result in an order setting aside the treasurer deed, according to fairly
well developed case law, which was perhaps best summarized before Beethe in the 1963
case of Siler v. Investment Securities Company. The court in Siler held that failure of the
treasurer to make diligent inquiry to locate an owner pursuant to the statute rendered a
treasurer deed “void,” and was a jurisdictional requirement. In Beethe, the Court stepped
into what I termed a quagmire, trying to draw a “void vs. voidable” distinction between
questionable treasurer deeds, delving back into a different but related body of
jurisprudence dealing with such deeds that are “void on their face.” Fortunately, the court
in this case helps to clarify some of the confusion caused by the court’s earlier decision,
on an interesting, well developed set of facts.
I will copy the pertinent portions of the statute, because we have two cases this year
dealing with the text: Section 39–11–128 provides, in pertinent part:
(1) Before any purchaser, or assignee of such purchaser, of a tax lien on
any land ... sold for taxes or special assessments due either to the state or
any county ... at any sale of tax liens for delinquent taxes levied or
assessments authorized by law is entitled to a deed for the land ... so
purchased, he shall make request upon the treasurer, who shall then
comply with the following:
(a) The treasurer shall serve or cause to be served, by personal service or
by either registered or certified mail, a notice of such purchase on every
person in actual possession or occupancy of such land and also on the
person in whose name the same was taxed or specially assessed if, upon

27
diligent inquiry, such person can be found in the county or if his residence
outside the county is known, and upon all persons having an interest or title
of record in or to the same if, upon diligent inquiry, the residence of such
persons can be determined....
(b) In all cases or instances where the valuation for assessment of the
property is five hundred dollars or more, the treasurer shall publish such
notice [at designated times] ..., and he shall send by registered or certified
mail a copy of such notice to each person not found to be served whose
address is known or can be determined upon diligent inquiry.
Now to the facts. Carl and Wanda Cordell were the record owners of a tract of land in La
Plata County (Tract 1). Carl Cordell also owned the adjoining Tract 2. The Cordells failed
to pay the taxes owed on the two properties, and Brenda Heller purchased the tax liens
on the properties at the annual tax lien sale. Heller assigned the tax liens to Klingsheim,
who later filed the necessary request for issuance of a treasurer’s deed after the requisite
three-year redemption period. The county treasurer attempted to send the notice to the
Cordells of the plan to issue the treasurer’s deeds. C.R.S. §39-11-128 sets forth specific
requirements for this notice.
The notice was sent, sort of, to the last known address for the Cordells as shown in the
La Plata County records. The Treasurer properly sent the notices by certified mail to 705
N. Vine, Farmington, New Mexico, the address listed for them in the county tax rolls. The
return receipts from the mailings, however, indicated that the notices were not delivered
to 705 N. Vine, and were not directly delivered to Carl and Wanda. Rather, the receipts
indicated that the notices were delivered to a Cleo Cordell at 703 N. Vine. The box for
“agent” on the return receipts had not been checked.
Despite this discrepancy, the treasurer conducted no further inquiry to determine whether
705 N. Vine was indeed the plaintiffs’ residence. As a result, the Cordells never got the
required notice of their right to redeem the tax liens. After discovering that treasurer
deeds were issued to Klingsheim, the Cordells filed an action seeking a declaratory
judgment that the treasurer’s deeds are void. The district court granted the requested
relief, and this judgment was affirmed in a 2-1 decision.
Klingsheim, the lien purchaser, argues on appeal that the trial court erred in concluding
that the county treasurer had failed to undertake diligent inquiry to determine where the
Cordells lived, as required by statute. The majority holds that the failure of the treasurer
to inquire further after learning that the notices were not delivered either to plaintiffs or to
a person claiming to be their “agent” does not constitute “diligent inquiry” in attempting to
effect notice on the taxpayers. Because a treasurer’s “full compliance” with the
requirements of C.R.S. § 39-11-128 is jurisdictional, the trial court properly set aside the
deeds as void. It may be noted that the United States Supreme Court addressed a similar
situation in Jones v. Flowers, 547 U.S. 220 (2006), with the same result. In Jones, the
notice was also sent by certified mail to the property owner, but the property was rented
to a tenant, and returned “undeliverable – no such addressee.”

28
In an interesting dissent, Judge Jerry Jones notes first that Cleo was Carl’s mother, and
that the record had sufficient evidence to lead him to conclude that Cleo was Carl’s agent
as a matter of law. Second, he notes that Mrs. Cordell (Wanda) lived in Illinois, not New
Mexico, and that further inquiry in the Colorado public records would have been futile.
Put differently, further inquiry “would not have made a difference.” Given that premise,
failure to make the additional inquiry did not violate section 128 or deprive Ms. Cordell of
due process. “Though I agree with the majority that “full compliance” with the statute is
required [citing Siler v. Investment Securities Company, 125 Colo. 438 at 444], I do not
believe such compliance requires futile efforts. It is not enough to say that the treasurer
did not re-check county records, we must ask whether doing so would have furthered the
obvious goal of the notice statute to provide notice.”
The Supreme Court accepted review and reverses the trial court and the appeals court,
adopting in large part the views of Judge Jones. The court focuses on the relative paucity
of cases addressing the statutory and due process requirements of due diligence after
the treasurer learns that its notice did not get to the owner. This question was left open
in the U.S. Supreme Court’s decision in Jones v. Flowers, where the record showed that
the property owner did not receive notice – and the Court held only that the treasurer at
that point has to do something further, without defining what that means, and intentionally
avoiding a decision on whether there is a duty to go beyond the county’s own property
records to locate a “good” address for the owner.
Here, the court is persuaded that the record indicates that (a) the return receipt did not
prove that Cleo did not receive notice, and that (b) since neither Cleo nor Wanda lived in
Colorado, and the only address the officials had was the address they used, and (c) that
Cleo intended for his mother to receive such official mail for him when he was out of town,
that any further search in the county records for a way to reach Cleo would have been
futile.
Cases are accumulating on this topic across the country, motivated in part by the
increasing ability of anyone to locate people through internet searches, and in part by the
potential liability of county officials under our federal civil rights statutes, especially 42
U.S.C. 1983, which provides a claim enforceable in state or federal courts for land owners
deprived of property without due process. [See an interesting commentary by Robert L.
Shuman, Esq. on the use of the civil rights statutes in this situation at 111 W. Va. L. Rev.
707 at 753]. The Solen case, above, shows how proactive a responsible county official
can be when she learns that her office failed to give adequate notice to a property owner.
More and more county treasurers are going to considerable lengths to make sure proper
notices are given, even to the point of paying title examiners for title searches.

29
18. TITLES AND TITLE INSURANCE
Oldham v. Pedrie
2015 COA 95
Real property lien priority; probate code claim procedures.
Under the Colorado and Michigan probate codes, the court addresses an unanswered
question – what happens when a mortgagee holding a first lien deed of trust on Colorado
property, files a claim in the Michigan probate proceeding administering the mortgagor’s
estate that is denied in part. The case concerns an “unconditional claim” – a claim that
seeks to satisfy a claim from the assets of the estate without stating that the claim is
contingent on enforcement of the security interest. If the mortgagee (1) files such a claim
in a foreign proceeding, (2) the claim is disallowed by the personal representative, and
(3) the mortgagee does not contest the disallowance, is the mortgagee precluded from
foreclosing on the security in a Colorado non-judicial foreclosure proceeding?
The court agrees with the mortgagee, and holds that the security against the property
survives. A secured creditor’s lien on real property is not extinguished when the creditor
presents an unconditional claim against a decedent’s estate but does not pursue a
disallowed claim in the probate court (here, in Michigan) within sixty-three days. The
creditor in this situation may forfeit a claim against assets of the estate, but does not forfeit
the underlying security, the deed of trust on the Colorado land.
A second issue arises due to a transaction in 2005 intended to renew the underlying debt.
The original note and deed of trust were executed in 1976. In 2005, the mortgagee had
the debtor sign a new note, with the apparent intent that the deed of trust continue to
secure the replacement note. The property owners (taking title through the probate
proceeding) argue that this transaction was a novation, and, without a new deed of trust,
the lien of the 1976 deed of trust terminated. The court disagrees, and remands the case
to the trial court for a determination of the amount due on the secured debt.
Owens v. Tergeson, Trustee
Colorado Court of Appeals, November 5, 2015
2015 COA 164, 363 P.3d 826
Deed interpretation; mineral rights reservation in habendum clause; warranty and
reddendum clauses; quiet title decree void as to party not served where public
records contained an address for the party in a nearby state.
Holy habendum, Professor! In the 1950’s, two deeds conveyed four parcels of land in
Weld County from A to B. Language in the habendum clause reserved all mineral rights
to A, the grantor. So what is the habendum clause? And what must a deed contain?
And is this a problem for poor A and his successors in title, who now stand to collect
profits from mineral development?

30
A deed has few formal requirements in the common law – like a contract, the deed must
identify the grantor and the grantee, must describe land, must have some words
evidencing an intent to convey title, and it must have the grantor’s signature.
Consideration language is, in most states, optional. However, the forms that have
survived over the decades follow a more precise format, including in addition to the above
basics:
• a granting clause, describing the land and the estate;
• an habendum clause (from the Latin habendum et tenendum, or “to have and to
hold”), noting any limitations to the estate, i.e., describing whether something less
than fee simple is intended;
• a reddendum clause, noting any reservation of some part of the estate being
conveyed; and
• a warranty clause (“warrants the title . . . subject to . . . “).
Of course, modern forms frequently combine the latter three clauses into one long
sentence with a big blank at the end, where attentive parties with counsel usually not
exceptions to the general warranty described in the deed. In particular, the reddendum
clause suffers the most, having no real “blank” to fill. See Cunningham, Stoebuck &
Whitman, THE LAW OF PROPERTY § 11.1 at 764 (West Hornbook Series, 1993). As Prof.
Cunningham notes, “. . . none of this formality is necessary . . . . No habendum nor
reddendum is required, although of course the grantor must say so if he wishes to limit
the estate or make a reservation.”
Given this hornbook law background, one might think that the reservation of mineral rights
might fit nicely in a reddendum clause. As many of us have experienced, especially after
a recent decade-long run up in oil prices, mineral reservations seem to end up just about
anywhere. In this case, B’s successors claim the attempted reservation of mineral rights
by A was ineffective, and that the rights passed to B and her successors. The argument
from B is that the language in the 1950’s deeds reserving all oil, gas, etc. appeared in the
habendum clause, not in the granting clause, where it (presumably) belonged. The
appeals court disagrees, noting the “clear modern trend” in favor of reading the deed as
a whole, and that noting the reservation in the habendum clause works nicely, so long as
the intent is clear. Title to the minerals is quieted in A’s successors.
The court distinguishes the favorite case of some trial lawyers, O’Brien v. Village Land
Co., 794 P.2d 246, 251 (Colo. 1990) (exceptions inserted only in the covenant of warranty
cannot limit the estate or title described in the granting clause).
On a second issue, the court holds that a 1973 decree in a quiet title action was void
as against A’s successors in title, as A was named in the quiet title action (involving
only one of the 4 lots), but served only by publication. Note that it was common practice
under the former version of Rule 4 to routinely serve out of state parties by publication.

31
See Willis Carpenter, “The Rules Have Changed for Quiet Title Actions,” 27 COLO. LAW
69 (May 1998). The court here noted that A’s address was listed as “Tulsa Oklahoma”
on the 1950 deeds, and that a recorded 1960 mineral lease reflected A’s street address
in Tulsa. The court voided the 1973 action judgment for failure to use due diligence in
searching for an address and withholding pertinent information when moving for service
by publication. The appeals court panel agrees with the district court’s analysis. It
rejects an argument by defendants that they only had to demonstrate that there was no
address in Colorado for the defendants in the 1973 action.
A rule to remember: “[A] clear and special designation of the particular estate conveyed,
whether contained in the granting or in the habendum clause, will prevail over conflicting
but merely general or formal language of the opposing clause.” The reddendum be
darned!
19. ZONING AND LAND USE CONTROL
City of Longmont v. Colorado Oil and Gas Association
Colorado Supreme Court, May 2, 2016 (Justice Gabriel, 7-0).
2016 CO 29
Fracking; city bans preempted by state law.
Although this is not a real estate case, the supreme court’s recent decision on the
preemption by state law of local ordinances banning or regulating “fracking” received a
fair amount of publicity, and is good reading. Justice Gabriel reviews the law on
preemption, the questions raised as to whether such bans are matters of statewide, local
or mixed concern, and whether a determination of these issues is a question of fact for
the district court or a question of law. The former would involve a complex factual inquiry
into how regulations, ordinances and state statutes interact “on the ground,” while a purely
legal review looks only at how the state and local regulatory schemes play out “on paper.”
The rather courageous decision of the Boulder district court judge in ruling against
Longmont’s ordinance is affirmed.
Open Door Ministries v. Lipschuetz
Colorado Supreme Court, May 23, 2016 (Chief Justice Rice, 7-0)
2016 CO 37
Neighbor seeking revocation of permit for rooming and boarding permit; Colorado
Governmental Immunity Act does not bar claim for injunctive relief as to
prospective damage.
In an important case, the Supreme Court holds that the Colorado Governmental Immunity
Act (CGIA) does not apply to bar a claim by an individual for injunctive relief directed at a
governmental entity to prevent future injury. This may be of interest to real estate
attorneys encountering a need to take enforcement action in boundary disputes and other
cases involving rights and interests in real property.
Mr. Lipschuetz challenged the validity of a rooming and boarding permit that the City and
County of Denver issued to Open Door Ministries. Lipschuetz, who owns a property

32
adjacent to Open Door’s property, filed claims against the City and Open Door seeking
revocation of the permit. Open Door filed cross-claims against the City, seeking
declaratory and injunctive relief to prevent the revocation of its permit. The trial court
concluded that the City should not have issued the permit, but stayed its order to revoke
the permit until Open Door’s cross-claims were resolved. Several months later, the trial
court reversed course and granted summary judgment in favor of Open Door on its claim
for injunctive relief against the City. The question is whether Open Door’s claim against
Denver for injunctive relief is a claim which may “could lie in tort” and is therefore barred
by the CGIA for failure to give a prescribed statutory notice.
On appeal, Lipschuetz argues that Open Door’s cross-claims against the City are barred
by the CGIA because they “could lie in tort.” C.R.S. § 24–10–106. To make a claim under
the CGIA, a party must notify the governmental entity prior to filing the claims. § 24–10–
109(1). This notice requirement is jurisdictional. Because Open Door did not notify the
City prior to filing its cross-claims, Lipschuetz argued that the trial court lacked subject
matter jurisdiction over the cross-claims.
The court of appeals, in an unpublished decision, agreed with Lipschuetz and held that
the trial court lacked subject matter jurisdiction over the cross-claims. The Supreme
Court reverses, holding that the court should have determined whether, at the time of
filing, Open Door had suffered a monetary injury that would subject its cross-claims to the
CGIA. It holds that the CGIA does not apply to Open Door’s request for prospective relief
to prevent future injury – its claim to enjoin future action that could cause damage to Open
Door. Because Open Door had not suffered an injury before it filed its cross-claims, the
CGIA did not bar its cross-claims seeking prospective relief from future injury, and the
trial court had jurisdiction over the cross-claims.
This is of some interest to real estate attorneys in cases where a local entity may have a
boundary or easement dispute with an adjacent landowner that happens to be a school
district, a recreation center, or some other governmental or quasi-governmental entity.
For example, does a claim to enjoin interference with an easement right involve a
“trespass,” which “could lie in tort”?
July 8, 2016
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