Bill Barrett Corp. v. Sand Hills Metro. Dist., Court of Appeals No. 15CA0765

• Decision Date: 06 October 2016
• Docket Number: Court of Appeals No. 15CA0765
• Citation: 411 P.3d 1086
• Parties: BILL BARRETT CORPORATION and Bonanza Creek Energy, Inc., Plaintiffs-Appellees and Cross-Appellants, and Noble Energy, Inc., Plaintiff-Appellee, v. SAND HILLS METROPOLITAN DISTRICT, f/k/a Altamira Metropolitan District No. 6 ; United Water and Sanitation District; and Town of Lochbuie, Defendants-Appellants and Cross-Appellees.
• Court: Colorado Court of Appeals

411 P.3d 1086

BILL BARRETT CORPORATION and Bonanza Creek Energy, Inc., Plaintiffs-Appellees and Cross-Appellants,andNoble Energy, Inc., Plaintiff-Appellee,

v.SAND HILLS METROPOLITAN DISTRICT, f/k/a Altamira Metropolitan District No. 6 ; United Water and Sanitation District; and Town of Lochbuie, Defendants-Appellants and Cross-Appellees.

Court of Appeals No. 15CA0765

Colorado Court of Appeals, Div. VI.

Announced October 6, 2016

Davis Graham & Stubbs LLP, R. Kirk Mueller, Mark E. Champoux, Denver, Colorado, for Plaintiffs-Appellees and Cross-Appellants

Hogan Lovells US LLP, Scot W. Anderson, Elizabeth H. Titus, Denver, Colorado, for Plaintiff-Appellee

Waas Campbell Rivera Johnson & Velasquez LLP, Darrell G. Waas, Mikaela V. Rivera, Kathryn I. Hopping, Denver, Colorado, for Defendants-Appellants and Cross-Appellees

Collins Cockrel & Cole, Eric C. Jorgenson, Denver, Colorado, for Amicus Curiae Special District Association of Colorado

Opinion by JUDGE FOX

¶ 1 Sand Hills Metropolitan District (the district), United Water and Sanitation District,¹ and the Town of Lochbuie (Lochbuie), Colorado (collectively Sand Hills) appeal the trial court's partial grant of motions for summary judgment filed by Bill Barrett Corporation and Bonanza Creek Energy, Inc. (collectively Taxpayers).² Taxpayers cross-appeal the trial court's partial grant of Sand Hills' motion for summary judgment. We affirm in part, reverse in part, and remand to the trial court.

I. Background

¶ 2 The district was originally organized in 2004 as Altamira Metropolitan District No. 6 (Altamira District). When organized, the district's boundaries were entirely within Lochbuie. On October 6, 2004, Lochbuie approved a proposed service plan (the 2004 plan), and the Weld County District Court issued an order and decree organizing the district.

¶ 3 According to the 2004 plan, the purpose of the district was to "finance the construction of local and regional public improvements for the use and benefit of the Altamira Development's residents and taxpayers." The plan also required the district to "provide for maintenance of certain public improvements." Specifically, the plan proposed "the construction, acquisition and installation of local and regional public improvements, including streets and traffic signals, and water, sewer, storm drainage and park and recreation facilities ... for the Altamira Development." The Altamira Development was to include 1496 single family homes and 70,000 square feet of commercial space within Lochbuie's boundaries. The development never occurred.

¶ 4 70 Ranch, LLC (70 Ranch) owns 13,000 acres located approximately 30 miles northeast of Lochbuie in unincorporated Weld County. In 2009, the district purported to include the 70 Ranch property within its boundaries. The district's board of directors approved the inclusion, and the Weld County District Court issued an order granting the inclusion on April 29, 2009. In 2010, the district changed its name from the Altamira District to the Sand Hills Metropolitan District. Then, in 2011, the district excluded from its boundaries all of the land, located in Lochbuie, that originally comprised the Altamira District. The district's board of directors approved the exclusion, and the Weld County district court issued an order granting the exclusion on April 28, 2011. Through this sequence of actions, the district relocated itself from Lochbuie to encompass only the 70 Ranch property. The district did not give notice to, or seek approval from, the Board of County Commissioners of Weld County.

¶ 5 Taxpayers and Noble are oil and natural gas exploration companies that lease mineral interests at 70 Ranch. 70 Ranch owns some, but not all, of the subsurface mineral rights below the 70 Ranch property. 70 Ranch leases its mineral rights to Taxpayers, and Taxpayers also lease subsurface mineral rights below the 70 Ranch property from other mineral estate owners.

¶ 6 In 2008, the district's board of directors approved certification of a mill levy of 51.118 mills for the district's general operating expenses. Since 2009, when 70 Ranch was included, Taxpayers have paid millions of dollars in ad valorem taxes to the district.

¶ 7 Despite the district's 2009 and 2011 actions, it did not prepare a revised service plan until 2013 (the 2013 plan) to reflect its new location and adjusted purpose. The 2013 plan acknowledges the district's 2009 and 2011 geographical shift to the 70 Ranch property in Weld County and articulates its new purpose to provide "an important site for water facilities and storage." The 2013 plan indicates that the district "will provide for the construction, acquisition and installation of local and regional public improvements, including streets and traffic signals, and water, sewer, storm drainage and park and recreation facilities." The plan reiterates an intent to provide for the improvements (costing approximately $19,315,008.90) as contemplated by the Altamira District in Lochbuie. The 2013 plan states the district's intent "to cooperate with other local governments, authorities and enterprises to develop infrastructure resources of benefit on a regional basis." The plan lists examples of the district's potential regional reach, including repairing and reconstructing Lake Henry (in Lochbuie), constructing various water truck depots in Weld County, constructing a water pipeline in Weld County, and constructing a reservoir and recharge site in Weld County. The 2013 plan states, however, that the district is not obligated to complete any of these potential improvements.

¶ 8 Taxpayers sued Sand Hills in 2013 claiming that Sand Hills exceeded its authority and violated parts of the Special District Act, §§ 32-1-101 to -1807 (the Act), C.R.S. 2016, and the Colorado Constitution. Taxpayers moved for partial summary judgment and Sand Hills cross-moved for summary judgment.

¶ 9 In a detailed written order, the trial court found:

• After April 28, 2011—when the district unilaterally removed itself entirely from Lochbuie—the district lost its legal authority to collect taxes. Thus, the trial court granted Taxpayers' motion for partial summary judgment with respect to any district actions taken after that date.

• Taxpayers are entitled to a tax refund for taxes paid for tax years 2011, 2012, and 2013.

• From April 29, 2009, until April 28, 2011—when the district's boundaries included the 70 Ranch property and the original Altamira District property—the district had the authority to tax Taxpayers. Thus, as to this time period, the trial court granted Sand Hills' motion for summary judgment.

¶ 10 Sand Hills and Taxpayers appeal the adverse components of the trial court's order on their respective motions.

II. Special District Taxing Authority

¶ 11 Sand Hills contends that the trial court erred in concluding that the district lost authority to tax when it relocated itself in 2011 to encompass only the 70 Ranch property. On cross-appeal, Taxpayers argue that the trial court erred in concluding that the district had authority to impose taxes on their mineral interests from 2009 until 2011, when the district's geographic boundary expanded to include the 70 Ranch property.

A. Preservation and Standard of Review

¶ 12 The parties agree that the relevant arguments were preserved for appeal.

¶ 13 We review de novo a trial court's order granting summary judgment. Lewis v. Taylor , 2016 CO 48, ¶ 13, 375 P.3d 1205. "Summary judgment is appropriate only if ‘the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.’ " Id. (quoting C.R.C.P. 56(c) ).

¶ 14 Additionally, we review questions of statutory interpretation de novo. Id. at ¶ 14. When construing a statute, we effectuate the intent of the General Assembly by looking to the plain meaning of the statutory language and considering it within the context of the statute as a whole. Bly v. Story , 241 P.3d 529, 533 (Colo. 2010). We construe the entire statutory scheme to give consistent, harmonious, and sensible effect to all parts. Climax Molybdenum Co. v. Walter , 812 P.2d 1168, 1174 (Colo. 1991). And, we avoid interpretations that would lead to an absurd result. Crandall v. City & Cty. of Denver , 238 P.3d 659, 662 (Colo. 2010). If the statutory language is clear, we apply it as written.

Specialty Rests. Corp. v. Nelson , 231 P.3d 393, 397 (Colo. 2010). If the statutory language is ambiguous, we may use other tools of statutory interpretation to determine the General Assembly's intent. Crandall , 238 P.3d at 662.

B. Applicable Law

¶ 15 The Act was enacted "with the intent that special districts would ‘promote the health, safety, ... and general welfare’ of their inhabitants and the state of Colorado." S. Fork Water & Sanitation Dist. v. Town of South Fork , 252 P.3d 465, 468 (Colo. 2011) (quoting § 32-1-102(1), C.R.S. 2016 ). Special districts possess only those powers expressly conferred upon them. Id.

¶ 16 As relevant here, the Act provides:

The board of county commissioners of each county which has territory included within the proposed special district, other than a proposed special district which is contained entirely within the boundaries of a municipality, shall constitute the approving authority under this part 2 and shall review any service plan filed by the petitioners of any proposed special district.

§ 32-1-203(1), C.R.S. 2016. Moreover, sections 32-1-201 to - 209, C.R.S. 2016, apply "except where a petition for the organization of a special district confined exclusively within the boundaries of any existing municipality has been approved by a resolution of the governing body of the municipality." § 32-1-201.

¶ 17 And, section 32-1-207, C.R.S. 2016, provides the procedures governing when and how a special district may alter its service plan. A special district's governing body may...