CSMN Invs., LLC v. Cordillera Metro. Dist.

• Decision Date: 28 April 2020
• Docket Number: 19-1094
• Parties: CSMN INVESTMENTS, LLC, a Colorado limited liability company; CSMN Operations, LLC, a Colorado limited liability company, Plaintiffs - Appellants, v. CORDILLERA METROPOLITAN DISTRICT, a political subdivision of the State of Colorado; Cordillera Property Owners Association, Inc., a Colorado nonprofit corporation; David Bentley ; David Davies; Robert Egan; Kitty George; Larry Kyte; Judith G. McBride; Rachel Oys; Ed Shriner; Bruce Smathers; Patrick Wilhelm; Tom Wilner, Defendants - Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

956 F.3d 1276

CSMN INVESTMENTS, LLC, a Colorado limited liability company; CSMN Operations, LLC, a Colorado limited liability company, Plaintiffs - Appellants,

v.CORDILLERA METROPOLITAN DISTRICT, a political subdivision of the State of Colorado; Cordillera Property Owners Association, Inc., a Colorado nonprofit corporation; David Bentley ; David Davies; Robert Egan; Kitty George; Larry Kyte; Judith G. McBride; Rachel Oys; Ed Shriner; Bruce Smathers; Patrick Wilhelm; Tom Wilner, Defendants - Appellees.

19-1094

United States Court of Appeals, Tenth Circuit.

FILED April 28, 2020

Brian J. Connolly (Andrew L.W. Peters, Bill E. Kyriagis, J. Thomas Macdonald, and Thomas J. Ragonetti with him on the briefs), Otten, Johnson, Robinson, Neff & Ragonetti, P.C., Denver, Colorado, for Plaintiffs-Appellants.

Debra J. Oppenheimer (Jeffrey B. Smith with her on the brief), of Altitude Community Law P.C., Lakewood, Colorado, for Defendant-Appellees, Larry Kyte, Bruce Smathers, Patrick Wilhelm, and Tom Wilner.

Lisa F. Mickley and Gillian Dale of Hall & Evans, L.L.C., Denver, Colorado (Miles L. Buckingham and Ronald H. Nemirow, Nemirow Perez, Lakewood, Colorado with them on the brief), for Defendants-Appellees, Cordillera Metropolitan District, Cordillera Property Owners Association, David Bentley, David Davies, Robert Egan, Kitty George, Judith G. McBride, Rachel Oys, and Ed Shriner.

Before PHILLIPS, McHUGH, and MORITZ, Circuit Judges.

PHILLIPS, Circuit Judge.

The First Amendment guarantees the people a right "to petition the Government for a redress of grievances." The right immunizes litigants from liability for their petitioning activities, unless the petitioning is a sham. In this appeal, we consider the exception for sham petitioning. Applying the Noerr - Pennington doctrine, the district court concluded that Appellees’ petitioning was entitled to immunity because it was objectively reasonable and, thus, not a sham. We agree that Appellees are immune. Exercising jurisdiction under 28 U.S.C. § 1291, we affirm the district court’s dismissal of this case.

BACKGROUND

Nestled in the Rocky Mountains of Eagle County, Colorado is the residential community of Cordillera, which features a private lodge and spa (the "Lodge") and a village center (the "Village"). For many years, the Lodge offered its dues-paying members certain amenities, including a golf course and spa. In addition, it offered the public a restaurant and lodge. And the Village offered "open space, tennis courts and hiking paths, which all residents and their guests ... enjoy[ed]." App. vol. 3 at 601. But in 2013, after years of monetary losses, the owner of both parcels, Behringer Harvard Cordillera, LLC (BHC), listed them for sale. In 2016, CSMN Investments, LLC (CSMN) contracted with BHC to purchase both properties. CSMN planned to open a private addiction-treatment center—its plan would close the properties to other uses. Patients would stay in the Lodge while receiving treatment at nearby facilities located on both the Lodge and Village parcels. The treatment center would serve people with conditions ranging from eating disorders to chemical dependency.

Before closing on the sale, CSMN sought confirmation from Eagle County’s Planning Director (the "Director") that its planned use—operating an inpatient addiction-treatment center—was an allowed use under the "Cordillera Subdivision Eleventh Amended and Restated Planned Unit Development Control Document" (PUD). App. vol. 1 at 155. Most recently amended in December 2009, the PUD "sets forth the land uses and development standards for all properties of Cordillera." App. vol. 3 at 457. For the Lodge and Village, the PUD lists thirty-four uses-by-right, including a "Clubhouse and Lodge"; "Professional Offices"; "Lodging and Accommodations"; various residential uses; and "Medical Offices/Facilities, limited to clinic and outpatient facilities for non-critical care, including, without limitation, for outpatient plastic surgery and other cosmetic procedures." App. vol. 3 at 467–68 (Lodge), 473–74 (Village) (emphasis added).

On June 1, 2016,¹ the Director issued his written interpretation of the PUD, concluding that CSMN could operate "a clinic including inpatient , non-critical care, for treatment of a variety of conditions including, but not limited to, eating disorders, alcoholism, chemical dependency, and behavioral health conditions with a focus on health and fitness, including fitness facilities, yoga, nutrition and recreation." App. vol. 1 at 155 (emphasis added). He based his interpretation on the PUD’s approved use for "Medical Offices/Facilities, limited to clinic and outpatient facilities for non-critical care, including, without limitation, for outpatient plastic surgery and other cosmetic procedures." Id. (emphasis omitted). He concluded that CSMN’s use fit this description because it excluded critical care and required treatment in a clinical setting. Further, he concluded that an addiction-treatment center qualified because the PUD allowed clinical care "without limitation," notwithstanding its specific reference to "plastic surgery and other cosmetic procedures." Id. (emphasis omitted).

I. Challenging the Director’s Interpretation

In response to the Director’s interpretation, community members expressed dismay and outrage at the opening of an addiction-treatment center² in Cordillera and the closure of the Lodge and Village parcels to the public. Illustrative of the local sentiment, one community member labeled CSMN’s plans a "[c]atastrophe for the community[,]" believing the center’s opening "should be stopped at all costs," while another labeled "[t]he presence of such a facility in our community ... poisonous to the essential values of the community by introducing a population destructive to our neighborhood’s peace of mind, real estate values, and carefully cultivated reputation." App. vol. 3 at 566, 581. Other members voiced concern for the safety of their children and grandchildren: "I ... don’t feel comfortable with the idea of my grandchildren playing outside or hiking in the neighborhood where persons with addictions could be as well as ‘dealers’ who might be trying to reach the ‘patients’ inside!" Id. at 587. Yet others, who were club members at the Lodge, were "devastated" by the sale, because the Lodge was the main reason that they moved to Cordillera in the first place. Id. at 584. They could not believe that it would now be closed to paying community members.

In view of the overwhelming community response, Cordillera Property Owners Association (CPOA) and Cordillera Metropolitan District (CMD) jointly appealed the Director’s PUD interpretation to the Board of County Commissioners (the "Board").³ To assist in this appeal, CMD created the Legal Committee, which was comprised of Larry Kyte, Ed Shriner, Bruce Smathers, Patrick Wilhelm, and Tom Wilner. The appeal raised four challenges to the Director’s interpretation: (1) allowing a use inconsistent with the PUD’s purpose of serving a resort, residential community; (2) failing to "give effect to the legislative intent governing the use of the [Lodge and Village] requiring [the parcels] to be used as a focal point and social gathering place for the residents and guests of Cordillera"; (3) failing "to apply the actual language of the PUD which would preclude inpatient treatment and the proposed uses are something other than a clinic"; and (4) allowing a use of the Lodge and Village so far beyond what PUD allows as to amount to a "wrongful Major Modification," which would require "approval" from the CPOA "and formal amendment to the PUD." App. vol. 3 at 594.

After a hearing, the Board affirmed the Director’s interpretation on all but one point. Addressing CMD and CPOA’s third basis for appeal, the Board reversed the Director’s interpretation that CSMN could use the property as an inpatient -treatment center, concluding that the PUD permitted only outpatient clinical uses. So in a modified interpretation, the Board required that CSMN’s "clinic component be operated as an outpatient facility[,]" not inpatient, as CSMN had proposed. Id. at 598.

On November 8, 2016, CMD and CPOA took their case to Colorado state court, seeking review of the Board’s ruling under Colorado Rule of Civil Procedure 106(a)(4).⁴ The Colorado state district court affirmed the Board’s decision. Though CMD did not appeal, CPOA did, and on November 29, 2018, the Colorado Court of Appeals affirmed the Board and the district court in an unpublished decision.⁵ See Benson v. Eagle County , No. 17CA1973, 2018 WL 6241502 (Colo. App. Nov. 29, 2018). And on August 19, 2019, the Colorado Supreme Court denied certiorari.

See Benson v. Eagle County , No. 18SC893, 2019 WL 3934442 (Colo. Aug. 19, 2019).

II. Civil Rights Actions Against CPOA, CMD, and Associated Individuals

On December 28, 2017, with the state-court appeals pending, CSMN turned the tables, filing a civil-rights action in Colorado federal district court against CPOA, CMD, and various associated people—the CMD board members, the CMD district manager, and the Legal Committee members. CSMN’s complaint contains three claims, each against a different subset of defendants.

First, CSMN alleges that CMD violated the Americans with Disabilities Act (ADA).⁶ It asserts that the ADA protects both CSMN’s future clients—drug- and alcohol-addicted people—and CSMN (as a "service provider" to those individuals). App. vol. 2 at 446. By this view, CMD’s legal actions restricted CSMN’s "use of the Property ... due to [CSMN’s] efforts to provide residential services to persons with disabilities," so CMD had engaged in "intentional discrimination against CSMN and its future clients[,] in violation of Title II of the ADA[.]" Id. Second, CSMN alleges that all Appellees violated the Fair Housing Act (FHA) by seeking to prevent CSMN’s future clients from residing at the property (which CSMN calls a "dwelling" under the FHA) due to their disabilities. Id. at 447. CSMN...