Elrick v. Merrill
| Decision Date | 25 May 2000 |
| Docket Number | No. 99CA0467.,99CA0467. |
| Citation | 10 P.3d 689 |
| Parties | Maryln A. ELRICK, County Treasurer and Ex-Officio Public Trustee of Washington County, Colorado, Plaintiff-Appellee, v. Richard D. MERRILL, a/k/a Richard Merrill, Barbara P. Merrill; The United States of America acting through the Farmers Home Administration and The United States of America, acting through the Farm Service Agency, as successor in interest to the Farmers Home Administration under Public Law 103-354; and Shawn Osthoff and Crystal Osthoff; Defendants-Appellees, and Robert F. Parker and Ilona W. Parker, Defendants-Appellants. |
| Court | Colorado Court of Appeals |
W.B. Paynter, P.C., William Paynter, Akron, Colorado, for Plaintiff-Appellee.
Brandenburg Law Office, Dennis L. Brandenburg, Brush, Colorado, for Defendants-Appellees Richard D. Merrill a/k/a Richard Merrill, Barbara P. Merrill.
Duane K. Ross, Office of the General Counsel, Denver, Colorado, for Defendants-Appellees The United States of America acting through the Farmers Home Administration, The United States of America, acting through the Farm Service Agency.
Anderson and Chapin, P.C., Robert B. Chapin, Brush, Colorado, for Defendants-Appellees Shawn Osthoff and Crystal Osthoff.
Sara Allen, Ft. Morgan, Colorado, for Defendants-Appellants. Opinion by Judge TAUBMAN.
In this interpleader action, defendants, Robert F. and Ilona W. Parker, appeal the trial court's judgment dismissing their cross-claims against defendants, Shawn and Crystal Osthoff; the United States of America, Farmers Home Administration, n/k/a Farm Service Agency (FSA); and Richard D. and Barbara P. Merrill. The Parkers further appeal the trial court's judgment granting the Merrills and the Osthoffs' requests for attorney fees. We affirm in part, reverse in part, and remand for further proceedings.
This case arose from an interpleader action filed by the Washington County treasurer and ex-officio public trustee, plaintiff, Maryln A. Elrick, as a result of excess proceeds held by her following a foreclosure sale. The trial court dismissed the Parkers' cross-claims against the Osthoffs and FSA and ruled in favor of the Merrills following a bench trial.
The trial court made findings of fact as follows. On or about June 3, 1981, the Merrills executed a promissory note and deed of trust secured by the property in question. The principal amount of the note was $338,390, payable to FSA. Subsequently, FSA granted the Merrills additional loans secured by the wheat crop growing on the property in 1997, as well as other equipment on the property. These loans totaled $230,420.
On or about October 15, 1995, the Merrills entered a lease agreement with the Osthoffs which expired by its terms on December 1, 1996. However, the lease permitted the Osthoffs to enter the property to harvest a winter wheat crop in the summer of 1997 that would be planted in the fall of 1996. The Osthoffs did plant this crop in the fall of 1996, and harvested the wheat in July 1997.
On February 9, 1996, the Merrills received a chapter 7 discharge of their debts in bankruptcy, including a discharge of their obligations pursuant to three separate deeds of trust secured by the property at issue here. As a result of their insolvency, the Merrills defaulted on the promissory note secured by the third deed of trust, and a proper Notice of Election and Demand for Sale was filed. The encumbered property was sold at a public sale on December 18, 1996. Robert Parker was the high bidder at $221,000. He was issued a certificate of purchase, which was later assigned to Robert F. Parker and Ilona W. Parker. From the amount collected, the public trustee paid the entire balance on the promissory note — $201,019.87 — to FSA. This left a balance of $19,980.13 to be held by the public trustee until the six month redemption period expired on June 18, 1996.
After the public sale, the Parkers purchased the promissory note secured by the first deed of trust, and obtained an assignment of the second deed of trust.
On April 16, 1997, FSA filed with the public trustee a notice of claim to redeem the excess proceeds as payment for the debt secured by the crop and other equipment. However, FSA did not redeem.
On May 27, 1997, the Parkers filed with the public trustee a notice of claim for the excess proceeds and a notice seeking payment of that balance as an overpayment. Also on May 27, 1997, the Merrills filed with the public trustee a claim for the excess funds pursuant to the homestead exemption, § 38-38-111, C.R.S.1999.
Subsequently, the Parkers filed their cross-claim for waste against the Merrills. The cross-claim alleged that the Merrills had caused $7,500 worth of damage to various items of personalty on the property.
Two months after the public trustee filed this action, the Parkers amended their cross-complaint and joined the Osthoffs as defendants, alleging that the Parkers had acquired ownership of a wheat crop on the property that had been planted, cultivated, and harvested by the Osthoffs. The amended cross-complaint also requested reimbursement from the Merrills for taxes and interest owed on the property that the Parkers had paid during the redemption period.
Pursuant to § 38-38-302(3), C.R.S. 1999, the period of redemption expired on June 18, 1997, and at that time, a public trustee deed was issued to the Parkers. However, under § 38-38-303(1), C.R.S. 1999, FSA still had ten days after June 18, 1997, within which to redeem the property. Therefore, on June 18, 1997, the Parkers obtained title to the property subject to FSA's right to redeem. After June 28, 1997, the Parkers obtained title to the property free of FSA's redemption rights. See Graham v. Alcoves, Inc., 148 Colo. 379, 366 P.2d 375 (1961) ().
The trial court dismissed the Parkers' claims against the Osthoffs, concluding that the Osthoffs did not receive notice of the foreclosure sale, and thus their lease to the 1997 winter wheat crop was not extinguished by it.
The trial court then granted the Osthoffs' request for attorney fees against the Parkers and their attorney, jointly and severally, concluding that the Parkers' claims were frivolous, groundless, and without substantial justification.
The trial court also dismissed the Parkers' claims against FSA, finding that the Parkers did not meet their burden of showing that FSA had waived its sovereign immunity. Accordingly, the court concluded that it lacked jurisdiction to adjudicate the cross-claims against FSA.
In addition, after a bench trial, the court dismissed the claims against the Merrills, determining that the Parkers had not established their claim for damages. The trial court then awarded attorney fees against the Parkers and their attorney in favor of the Merrills on the same basis that it had awarded the Osthoffs' attorney fees.
The Parkers assert the trial court erred in concluding they had not met their burden to show that FSA had waived its sovereign immunity by entering an appearance and requesting the excess proceeds from the foreclosure sale. We disagree. Absent an express and unequivocal waiver, sovereign immunity protects the federal government and its agencies from suit. A waiver of a federal agency's sovereign immunity must be strictly construed in favor of the government entity. See Department of Army v. Blue Fox, Inc., 525 U.S. 255, 119 S.Ct. 687, 142 L.Ed.2d 718 (1999)
.
A trial court's conclusion as to whether immunity has been waived is a determination as to subject matter jurisdiction, and is subject to a mixed standard of review. The trial court's factual findings will not be reversed on appeal unless clearly erroneous. However, the existence of subject matter jurisdiction is a question of law and is therefore subject to de novo review. City of Boulder v. Public Service Co., 996 P.2d 198 (Colo.App. 1999); Smith v. Town of Estes Park, 944 P.2d 571 (Colo.App.1996). The party seeking to establish a government agency's liability has the burden of proving jurisdiction. Mason v. Adams, 961 P.2d 540 (Colo.App.1997).
It is undisputed that FSA is a federal government agency protected by the doctrine of sovereign immunity. The Parkers nevertheless argue that because FSA entered an appearance to request the excess proceeds, it waived its sovereign immunity, and therefore, was subject to the jurisdiction of the trial court.
The trial court determined that the Parkers did not meet their burden to prove FSA had waived its immunity. We conclude that the record supports the trial court's factual determinations. We further agree with the trial court's legal conclusion that FSA did not waive its sovereign immunity merely by requesting the excess proceeds from the foreclosure sale.
Based on this disposition, we do not address any of the Parkers' cross-claims against FSA, nor do we address any responses raised by FSA, other than sovereign immunity.
The Parkers next assert the trial court erred in refusing to remove this case to federal court. We disagree.
Pursuant to 28 U.S.C. § 1441(a) (1994), a defendant may remove a civil case brought in state court to federal district court if the case could have been originally brought in federal court. Although a defendant may remove a case to federal court, a plaintiff may not request such removal. National Cigarette Service Co. v. Farr, 42 Colo. App. 356, 594 P.2d 603 (1979) ().
Here, only FSA had the authority to request removal to federal court. Because FSA did not make such a request, and instead sought dismissal based on lack of subject matter jurisdiction, the trial court did not err.
The Parkers contend the trial court erred in dismissing...
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