Yale v. AC Excavating, Inc., 259 P.3d 470 (Colo. 2013) involved interpretation of the Colorado Trust Fund Statute (C.R.S. sec. 38-22-127). The Colorado Trust Fund Statute requires all funds disbursed to a contractor on a construction project be held in trust for the payment of subcontractors, laborers, and material suppliers. The statute is designed to protect owners from having to pay for work twice. The specter of paying twice arises where a contractor fails to pay subcontractors, laborers, and material suppliers and those parties file mechanic's liens against the property. The statute provides that violation of this statutory trust constitutes civil theft for which treble damages are recoverable - a significant hammer against dishonest contractors and their management.
The issue in Yale was whether a loan to a developer (LLC) made by one of its members was subject to the Colorado Trust Fund Statute. During the course of developing a residential project, the LLC was struggling to meet its obligations. Realizing this, Yale, a member of the LLC and its sole manager, deposited $157,500 into the LLC's account, which he described at trial as a "survival loan." A portion of the funds were applied to general business expenses and to some outstanding invoices related to the project. Yale later gave up on the project and paid the remaining funds back to himself in partial repayment of the "survival loan."
The trial court held that Yale's loan was not made to the LLC for the purpose of funding the construction project, but rather was a loan made to a struggling entity to keep it afloat, and, therefore, Yale could not be held personally liable for the LLC's debt to the plaintiff (AC Excavating) under the Colorado Trust Fund Statute. The trial court also noted that applying the Colorado Trust Fund Statute to loans made by members or managers regardless of the purpose for which the funds were advanced would provide a disincentive for managers and members of development companies from investing additional funds to salvage them.
The Court of Appeals reversed the trial court's decision, reasoning that the Colorado Trust Fund Statute applies "irrespective of the disburser's intended use of the funds." The Supreme Court rejected this reasoning and ruled that the purpose of the loan was a relevant factor. Reversing the Court of Appeals decision, the Supreme Court determined that the record established that the loan was not disbursed "on [a] construction project," but instead was made to the LLC to be used at the discretion of the manager to pay general obligations. The Supreme Court stated that trial courts should consider a "totality of circumstances" for determining whether funds were disbursed "on a construction project," including, who disbursed the funds, the relationship of the disburser and the contractor, whether the funds were earmarked for the project, whether conditions were placed on disbursement, and any other evidence of the disburser's intent.
Posted By: Brent W. Houston, Esq.
Monday, May 20, 2013
Monday, February 4, 2013
NEW 3.8 PERCENT NET INVESTMENT INCOME TAX - EFFECTIVE JANUARY 1, 2013
The Affordable Care Act enacted on March 23, 2010, colloquially known as "Obamacare," is funded, in part, through new taxes and tax increases that start in 2013.
The most talked about new tax in real estate circles is the 3.8 Percent Net Investment Income Tax (NII Tax). NII Tax applies to individuals, estates and trusts that have "Net Investment Income" and adjusted modified gross incomes above certain statutory threshold amounts. "Net Investment Income" generally includes all income derived from investments and passive activities, including, without limitation, interest, dividends, capital gains, and rental and royalty income. The thresholds for single taxpayers and married taxpayers filing jointly are modified adjusted gross income over $200,000 and $250,000, respectively.
For an individual taxpayer who has modified adjusted gross income above the threshold summarized above, NII Tax is based on the lessor of the taxpayer's modified adjusted gross income exceeding the threshold or the taxpayer's Net Investment Income. For example, for a single filer who has $170,000 in wages and $70,000 in Net Investment Income from the sale of real property (other than a personal residence), NII Tax will apply to $40,000 of income (i.e., the amount by which the taxpayer's income exceeds $200,000), rather than the whole amount of the Net Investment Income (i.e., $70,000).
Homeowners will be encourage to know that NII Tax does not apply to gain on the sale of a personal residence to the extent that the gain is exclude from gross income under IRC section 121, which excludes the first $250,000 ($500,000 for married taxpayers) of gain recognized on the sale.
Posted By: Brent W. Houston, Esq.
The most talked about new tax in real estate circles is the 3.8 Percent Net Investment Income Tax (NII Tax). NII Tax applies to individuals, estates and trusts that have "Net Investment Income" and adjusted modified gross incomes above certain statutory threshold amounts. "Net Investment Income" generally includes all income derived from investments and passive activities, including, without limitation, interest, dividends, capital gains, and rental and royalty income. The thresholds for single taxpayers and married taxpayers filing jointly are modified adjusted gross income over $200,000 and $250,000, respectively.
For an individual taxpayer who has modified adjusted gross income above the threshold summarized above, NII Tax is based on the lessor of the taxpayer's modified adjusted gross income exceeding the threshold or the taxpayer's Net Investment Income. For example, for a single filer who has $170,000 in wages and $70,000 in Net Investment Income from the sale of real property (other than a personal residence), NII Tax will apply to $40,000 of income (i.e., the amount by which the taxpayer's income exceeds $200,000), rather than the whole amount of the Net Investment Income (i.e., $70,000).
Homeowners will be encourage to know that NII Tax does not apply to gain on the sale of a personal residence to the extent that the gain is exclude from gross income under IRC section 121, which excludes the first $250,000 ($500,000 for married taxpayers) of gain recognized on the sale.
Posted By: Brent W. Houston, Esq.
Friday, January 4, 2013
NEW YEAR, NEW RECORD KEEPING REQUIREMENTS FOR COLORADO HOAS
Effective as of January 1, 2013, owners' associations governed by the Colorado Common Interest Ownership Act (CCIOA) must maintain the following records, in addition to the other records required to be maintained under CCIOA:
1. Detailed records of receipts and expenditures affecting the operation and administration of the Association;
2. Records of claims for construction defects and amounts received pursuant to settlement of those claims;
3. Minutes of all meetings of its unit owners and executive board, a record of all actions taken by the unit owners and executive board without a meeting, and a record of all actions taken by any committee of the executive board;
4. Certain written communications among, and the votes cast by, executive board members;
5. A list of the names and mailing addresses of the unit owners showing the number of votes each unit owner is entitled to vote, or the owner thereof, if the unit is a time-share;
6. Financial statements for the past three years and tax returns for the past seven years, to the extent available;
7. A list of the names, e-mail addresses and regular mail addresses of the current executive board members and officers;
8. The most recent annual report delivered to the Colorado Secretary of State, if any;
9. The Association's most recent reserve study, if any;
10. Current written contracts to which the Association is a party and contracts for work performed for the Association within the past two years;
11. Records of executive board or committee actions to approve or deny an request for design or architectural approval from unit owners;
12. Ballots, proxies, and other records related to voting by unit owners for one year after the election or action;
13. Resolutions adopted by its board of directors relating to the characteristics, qualifications, rights, limitations, and obligations of members or any class or category of members; and
14. All written communications within the past three years to all unit owners generally as unit owners.
See, C.R.S. sec. 38-33.3-317 (repealed and reenacted, with amendments, by H.B. 12-1237, Eff. Jan. 1., 2013).
New Section 38-33.3-317 also sets forth procedures for inspection and copying of records by unit owners and their agents, identifies certain records that the Association may withhold from inspection and copying (e.g., current contracts, architectural plans, communications with legal counsel), and provides that, without the consent of the Association, information contained in the records may not be sold to third parties, used to solicit money or property (except where the money or property is to be used for solicitation of votes), or used for any other commerical purpose.
Posted By: Brent W. Houston, Esq.
1. Detailed records of receipts and expenditures affecting the operation and administration of the Association;
2. Records of claims for construction defects and amounts received pursuant to settlement of those claims;
3. Minutes of all meetings of its unit owners and executive board, a record of all actions taken by the unit owners and executive board without a meeting, and a record of all actions taken by any committee of the executive board;
4. Certain written communications among, and the votes cast by, executive board members;
5. A list of the names and mailing addresses of the unit owners showing the number of votes each unit owner is entitled to vote, or the owner thereof, if the unit is a time-share;
6. Financial statements for the past three years and tax returns for the past seven years, to the extent available;
7. A list of the names, e-mail addresses and regular mail addresses of the current executive board members and officers;
8. The most recent annual report delivered to the Colorado Secretary of State, if any;
9. The Association's most recent reserve study, if any;
10. Current written contracts to which the Association is a party and contracts for work performed for the Association within the past two years;
11. Records of executive board or committee actions to approve or deny an request for design or architectural approval from unit owners;
12. Ballots, proxies, and other records related to voting by unit owners for one year after the election or action;
13. Resolutions adopted by its board of directors relating to the characteristics, qualifications, rights, limitations, and obligations of members or any class or category of members; and
14. All written communications within the past three years to all unit owners generally as unit owners.
See, C.R.S. sec. 38-33.3-317 (repealed and reenacted, with amendments, by H.B. 12-1237, Eff. Jan. 1., 2013).
New Section 38-33.3-317 also sets forth procedures for inspection and copying of records by unit owners and their agents, identifies certain records that the Association may withhold from inspection and copying (e.g., current contracts, architectural plans, communications with legal counsel), and provides that, without the consent of the Association, information contained in the records may not be sold to third parties, used to solicit money or property (except where the money or property is to be used for solicitation of votes), or used for any other commerical purpose.
Posted By: Brent W. Houston, Esq.
Tuesday, November 20, 2012
Securities Remedies for Governmental Purchasers Clarified
Public Entity Securities Purchaser Denied Commission Disgorgement Remedy
In May 2012 the Colorado Supreme Court overturned two lower courts by holding that brokers who sold unrated Collateralized Mortgage Obligations ("CMOs") to a County in violation of a state statute could not be held liable to disgorge their commissions under a common law restitution theory. Capital Securities of America, Inc. v. Griffin, Treasurer of Jefferson County, 278 P. 3d 342, 2012 CO 39 (2012). The Supreme Court noted that the statute in question, C. R. S. § 24-75-601.3, prohibited for the first time public entities from purchasing securities of the type Capital Securities sold to Jefferson County. That is, such purchases and sales were not unlawful at common law, and prior to the statute taking effect Capital Securities had no obligation not to sell unrated CMOs to public entities.
The Court found this fact significant. It held when the General Assembly places statutory duties on governmental entities which were "unknown at common law", the legislature must provide a "clear expression of legislative intent" in order to impose a civil damages remedy. The Court pointed out the General Assembly had considered the availability of damages, equitable remedies and regulatory remedies, yet did not provide a disgorgement remedy under a common law restitution theory in passing § 24-75-601.3. The Court therefore found that the General Assembly intended to exclude restitution as a remedy.
In deciding this holding the Supreme Court distinguished cases applying a statutory construction canon relied upon by the Court of Appeals in the decision below. That canon requires statutes to express a clear intent to negate preexisting common law rights in order for those rights to be negated. The Supreme Court pointed out the canon was inapposite to the case at bar because no common law right of rescission existed for public entities regarding the type of securities purchase at issue prior to enactment of the statute making their purchase illegal.
The Court noted that at the time of the district court judgment Jefferson County could not enforce its statutory right to have the broker repurchase the securities because the County had sold the CMOs at a $2,500,000 profit during the pendency of the action. The Court also noted the district court finding that the sale of the CMOs, though unlawful, was not "reprehensible, dangerous nor particularly blameworthy." Although these salient facts did not determine the outcome or figure directly in the Court's legal analysis, this may be an example of the Court finding a way to do justice by adhering to Colorado's long-standing policy of judicial deference to legislative intent where equities will not be ravaged in the process.
Posted by: Wes Howard
In May 2012 the Colorado Supreme Court overturned two lower courts by holding that brokers who sold unrated Collateralized Mortgage Obligations ("CMOs") to a County in violation of a state statute could not be held liable to disgorge their commissions under a common law restitution theory. Capital Securities of America, Inc. v. Griffin, Treasurer of Jefferson County, 278 P. 3d 342, 2012 CO 39 (2012). The Supreme Court noted that the statute in question, C. R. S. § 24-75-601.3, prohibited for the first time public entities from purchasing securities of the type Capital Securities sold to Jefferson County. That is, such purchases and sales were not unlawful at common law, and prior to the statute taking effect Capital Securities had no obligation not to sell unrated CMOs to public entities.
The Court found this fact significant. It held when the General Assembly places statutory duties on governmental entities which were "unknown at common law", the legislature must provide a "clear expression of legislative intent" in order to impose a civil damages remedy. The Court pointed out the General Assembly had considered the availability of damages, equitable remedies and regulatory remedies, yet did not provide a disgorgement remedy under a common law restitution theory in passing § 24-75-601.3. The Court therefore found that the General Assembly intended to exclude restitution as a remedy.
In deciding this holding the Supreme Court distinguished cases applying a statutory construction canon relied upon by the Court of Appeals in the decision below. That canon requires statutes to express a clear intent to negate preexisting common law rights in order for those rights to be negated. The Supreme Court pointed out the canon was inapposite to the case at bar because no common law right of rescission existed for public entities regarding the type of securities purchase at issue prior to enactment of the statute making their purchase illegal.
The Court noted that at the time of the district court judgment Jefferson County could not enforce its statutory right to have the broker repurchase the securities because the County had sold the CMOs at a $2,500,000 profit during the pendency of the action. The Court also noted the district court finding that the sale of the CMOs, though unlawful, was not "reprehensible, dangerous nor particularly blameworthy." Although these salient facts did not determine the outcome or figure directly in the Court's legal analysis, this may be an example of the Court finding a way to do justice by adhering to Colorado's long-standing policy of judicial deference to legislative intent where equities will not be ravaged in the process.
Posted by: Wes Howard
Street Address in Recorded Deeds of Trust Not Enough
` Colorado Supreme Court Holds "Legal Descriptions" Necessary in Deeds of Trust to Put Subsequent Purchasers on Notice of Security Interests
In June 2012 the Colorado Supreme Court held that a recorded deed of trust containing a street address but not a legal description does not provide sufficient notice to a subsequent purchaser of another's security interest in the real estate. In re Rivera, 2012 CO 43, 11SA261. The Court observed that the result may appear harsh since in that case the omission was unintentional. However, the Court observed its holding was consistent with Colorado's recording statutes and longstanding practices. The Court found that no other conclusion conferred the necessary respect for Colorado's real property system's need for "certainty and stability."
The Court had agreed to answer the question at bar upon request by the United States Bankruptcy Court for the District of Colorado, pursuant to C. A. R. 21.1. The Court assumed the deed of trust was "properly recorded" only in the sense it was properly indexed in the grantor-grantee index, not that it was "free of all defects that might render it invalidly recorded." The Court concluded the trust deed was defectively recorded and could not provide constructive notice to a subsequent purchaser of the security interest referred to therein.
The Court founded its conclusions on Colorado's race-notice recording state which provides "no ... unrecorded instrument or document" shall be valid against a purchaser without notice who records first. C. R. X. § 38-35-109(1). Although that provision does not specify what information the instrument must contain, the reference to "legal description of the property" in section 38-35-122(1)(a), C. R. S. (2011) convinced the Court there was presumption that a valid deed of trust must necessarily contain a legal description in addition to a street address. The Court noted that actual notice of another's interest in property will defeat a purchaser from obtaining property free and clear of the encumbrance. However, a bankruptcy provision prevented that knowledge from being imputed to the plaintiff bankruptcy trustee in the case at bar.
A dissenting justice pointed out that "legal description" is not specifically defined by any statute. He also observed a street address might be considered one form of "legal description" that would satisfy the requirements for effectively recorded instruments or documents. The dissenter opined that if the legislature had intended "legal description" to adhere to a specific method or formula of description, it would have specified the formula or method. However, the single dissent was greatly outweighed by the unanimous joining by the other justices in the majority opinion.
Posted by: Wes Howard
In June 2012 the Colorado Supreme Court held that a recorded deed of trust containing a street address but not a legal description does not provide sufficient notice to a subsequent purchaser of another's security interest in the real estate. In re Rivera, 2012 CO 43, 11SA261. The Court observed that the result may appear harsh since in that case the omission was unintentional. However, the Court observed its holding was consistent with Colorado's recording statutes and longstanding practices. The Court found that no other conclusion conferred the necessary respect for Colorado's real property system's need for "certainty and stability."
The Court had agreed to answer the question at bar upon request by the United States Bankruptcy Court for the District of Colorado, pursuant to C. A. R. 21.1. The Court assumed the deed of trust was "properly recorded" only in the sense it was properly indexed in the grantor-grantee index, not that it was "free of all defects that might render it invalidly recorded." The Court concluded the trust deed was defectively recorded and could not provide constructive notice to a subsequent purchaser of the security interest referred to therein.
The Court founded its conclusions on Colorado's race-notice recording state which provides "no ... unrecorded instrument or document" shall be valid against a purchaser without notice who records first. C. R. X. § 38-35-109(1). Although that provision does not specify what information the instrument must contain, the reference to "legal description of the property" in section 38-35-122(1)(a), C. R. S. (2011) convinced the Court there was presumption that a valid deed of trust must necessarily contain a legal description in addition to a street address. The Court noted that actual notice of another's interest in property will defeat a purchaser from obtaining property free and clear of the encumbrance. However, a bankruptcy provision prevented that knowledge from being imputed to the plaintiff bankruptcy trustee in the case at bar.
A dissenting justice pointed out that "legal description" is not specifically defined by any statute. He also observed a street address might be considered one form of "legal description" that would satisfy the requirements for effectively recorded instruments or documents. The dissenter opined that if the legislature had intended "legal description" to adhere to a specific method or formula of description, it would have specified the formula or method. However, the single dissent was greatly outweighed by the unanimous joining by the other justices in the majority opinion.
Posted by: Wes Howard
Tuesday, May 17, 2011
INDEMNIFYING YOUR LANDLORD FOR ITS OWN NEGLIGENCE
A recent Colorado Supreme Court case, Constable v. Northglenn, LLC, Case No. 09CS1063 (March 21, 2011), is instructive on why it is important for a tenant to fully understand the indemnification provisions in his or her lease.
In the Constable case, a woman who slipped and fell on ice in a shopping center parking lot sued the owner of the shopping center, Northglenn, LLC, for negligence. Northglenn, LLC in turn filed an indemnity claim against Constable, a tenant in the shopping center, under Constable's lease.
The indemnity provision in Constable's lease required Constable to indemnify Northglenn, LLC for injuries sustained in Constable's space or elsewhere in the shopping center if the person was present in the shopping center for the purpose of visiting Constable's space. The indemnity provision also provided that Constable had no indemnification obligation if the harm resulted from Northglenn, LLC's own gross negligence or intentional torts.
The trial court held that indemnity was unenforceable because it purported to make Constable responsible for the parking lot, which was in the exclusive control of Northglenn, LLC, and that it did not clearly define the injuries that would trigger the indemnification obligations of Constable.
The Court of Appeals reversed, concluding that the indemnity provision made it clear that the parties intended that Constable indemnify Northglenn, LLC for injuries sustained in the parking lot by Constable's customers, whether or not the injuries resulted from Northglenn, LLC's own negligence.
The Supreme Court upheld the Court of Appeals ruling, finding that the indemnity provision was not void as against public policy by requiring Constable to indemnify Northglenn, LLC for its own negligence. The Supreme Court recognized that it is against public policy to enforce an agreement indemnifying an actor for his or her own "intentional or willful wrongful acts," but that an agreement indemnifying a party against liability for his or her own negligence is enforceable if the agreement contains "a clear and unequivocal expression that the parties intended that result."
The indemnity language in Constable did not specifically state that the indemnity applied to claims resulting from Northglenn, LLC's own negligence. The Supreme Court found that the language in the indemnity covering "any and all"claims, and the specific exclusion of gross negligence and intentional torts, was a sufficiently clear expression of the parties' intent that Constable would indemnify Northglenn, LLC for its own negligence.
It is not uncommon for a landlord to require indemnity for claims arising out of the use of the premises, even where the claims arise out of landlord's own negligence. It is less common for the provision to require indemnification for causes of action arising outside of the premises where the plaintiff is not an agent, employee or contractor of the tenant.
From a tenant's perspective, because of the lack of control over customers and over common areas of the shopping center, an indemnity provision like that in the Constable case should be carefully considered and negotiated out of the less if possible.
From a landlord's perspective, if the tenant agrees on a provision like that in the Constable case it would be advisable to specifically state in the indemnity provision that it applies to "any and all" claims, whether or not based on the landlord's negligence.
Posted By: Brent W. Houston, Esq.
In the Constable case, a woman who slipped and fell on ice in a shopping center parking lot sued the owner of the shopping center, Northglenn, LLC, for negligence. Northglenn, LLC in turn filed an indemnity claim against Constable, a tenant in the shopping center, under Constable's lease.
The indemnity provision in Constable's lease required Constable to indemnify Northglenn, LLC for injuries sustained in Constable's space or elsewhere in the shopping center if the person was present in the shopping center for the purpose of visiting Constable's space. The indemnity provision also provided that Constable had no indemnification obligation if the harm resulted from Northglenn, LLC's own gross negligence or intentional torts.
The trial court held that indemnity was unenforceable because it purported to make Constable responsible for the parking lot, which was in the exclusive control of Northglenn, LLC, and that it did not clearly define the injuries that would trigger the indemnification obligations of Constable.
The Court of Appeals reversed, concluding that the indemnity provision made it clear that the parties intended that Constable indemnify Northglenn, LLC for injuries sustained in the parking lot by Constable's customers, whether or not the injuries resulted from Northglenn, LLC's own negligence.
The Supreme Court upheld the Court of Appeals ruling, finding that the indemnity provision was not void as against public policy by requiring Constable to indemnify Northglenn, LLC for its own negligence. The Supreme Court recognized that it is against public policy to enforce an agreement indemnifying an actor for his or her own "intentional or willful wrongful acts," but that an agreement indemnifying a party against liability for his or her own negligence is enforceable if the agreement contains "a clear and unequivocal expression that the parties intended that result."
The indemnity language in Constable did not specifically state that the indemnity applied to claims resulting from Northglenn, LLC's own negligence. The Supreme Court found that the language in the indemnity covering "any and all"claims, and the specific exclusion of gross negligence and intentional torts, was a sufficiently clear expression of the parties' intent that Constable would indemnify Northglenn, LLC for its own negligence.
It is not uncommon for a landlord to require indemnity for claims arising out of the use of the premises, even where the claims arise out of landlord's own negligence. It is less common for the provision to require indemnification for causes of action arising outside of the premises where the plaintiff is not an agent, employee or contractor of the tenant.
From a tenant's perspective, because of the lack of control over customers and over common areas of the shopping center, an indemnity provision like that in the Constable case should be carefully considered and negotiated out of the less if possible.
From a landlord's perspective, if the tenant agrees on a provision like that in the Constable case it would be advisable to specifically state in the indemnity provision that it applies to "any and all" claims, whether or not based on the landlord's negligence.
Posted By: Brent W. Houston, Esq.
Tuesday, November 9, 2010
WHAT TO DO IF YOUR PROPERTY IS LANDLOCKED
A recent Colorado Supreme Court Case, Bly v. Story, 09SC189 (Oct. 18, 2010), is instructive to landowners who find themselves without access to their property. In the Bly case, the plaintiffs, the Storys, owned a 45 acre parcel in Western Jefferson County that was accessed by a road traversing the property of the defendants, the Blys. The Storys discovered that they had no legal right to use the road and commenced a private condemnation action to obtain legal access.
Article II, Section 14 of the Colorado Constitution prohibits the taking of private property for private use "unless by consent of the owner" or "except for private ways of necessity," among other exceptions. The procedure for commencing a private condemnation proceeding is set forth in Section 38-1-102 of the Colorado Revised Statutes.
Unable to reach an agreement with the Blys, the Storys filed a petition in the district court to establish an access easement over the existing road pursuant to the Colorado Constitution and C.R.S. sec. 38-1-102. The district court granted the Storys petition and awarded the Blys $3,300 for the easement and $9,200 for damages to the residue.
On appeal, the Blys asserted that the trial court erred in denying their motion to dismiss because the Storys failed to adequately describe the easement in their petition, and also that the trial court erred in not presenting evidence to the jury regarding the construction cost of the road for purposes of valuing the easement.
The Supreme Court, in upholding the trial court's decision, stated that Colorado law does not require the petitioner to provide a legal description of the property in the petition and that the Storys' general description of the dimension and location of the easement (i.e. 20 foot easement across the existing dirt road) was sufficient. Further, the Court stated that the Storys were not required to specify in detail the intended use of the condemned property and that the Storys' general statement that the easement was sought "to provide access to [their] landlocked property in order to permit the use and enjoyment of [their] property" was sufficient.
As to the issue of presenting the construction cost valuation method to the jury, the Supreme Court held that the trial court did not abuse its discretion in denying that evidence, but such evidence is admissible.
Post By: Brent W. Houston, Esq.
Article II, Section 14 of the Colorado Constitution prohibits the taking of private property for private use "unless by consent of the owner" or "except for private ways of necessity," among other exceptions. The procedure for commencing a private condemnation proceeding is set forth in Section 38-1-102 of the Colorado Revised Statutes.
Unable to reach an agreement with the Blys, the Storys filed a petition in the district court to establish an access easement over the existing road pursuant to the Colorado Constitution and C.R.S. sec. 38-1-102. The district court granted the Storys petition and awarded the Blys $3,300 for the easement and $9,200 for damages to the residue.
On appeal, the Blys asserted that the trial court erred in denying their motion to dismiss because the Storys failed to adequately describe the easement in their petition, and also that the trial court erred in not presenting evidence to the jury regarding the construction cost of the road for purposes of valuing the easement.
The Supreme Court, in upholding the trial court's decision, stated that Colorado law does not require the petitioner to provide a legal description of the property in the petition and that the Storys' general description of the dimension and location of the easement (i.e. 20 foot easement across the existing dirt road) was sufficient. Further, the Court stated that the Storys were not required to specify in detail the intended use of the condemned property and that the Storys' general statement that the easement was sought "to provide access to [their] landlocked property in order to permit the use and enjoyment of [their] property" was sufficient.
As to the issue of presenting the construction cost valuation method to the jury, the Supreme Court held that the trial court did not abuse its discretion in denying that evidence, but such evidence is admissible.
Post By: Brent W. Houston, Esq.
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