Marin Metro. Dist. v. Landmark Towers Ass'n, Inc.

• Decision Date: 27 March 2014
• Docket Number: Court of Appeals No. 13CA0211,13CA0751
• Citation: 2014 COA 40
• Parties: Marin Metropolitan District, Appellee, and Colorado Bondshares – Tax-Exempt Fund, Intervenor-Appellee, v. Landmark Towers Association, Inc., a Colorado nonprofit corporation, by EWP-GV, LLC, as Receiver for 7677 East Berry Avenue Associates, LP, its Declarant, Intervenor-Appellant.
• Court: Colorado Court of Appeals

2014 COA 40

Marin Metropolitan District, Appellee,andColorado Bondshares – Tax-Exempt Fund, Intervenor-Appellee,

v. Landmark Towers Association, Inc., a Colorado nonprofit corporation, by EWP-GV, LLC, as Receiver for 7677 East Berry Avenue Associates, LP, its Declarant, Intervenor-Appellant.

Court of Appeals No. 13CA0211 13CA0751

COLORADO COURT OF APPEALS

Announced March 27, 2014

Arapahoe County District Court No. 07CV1793

Honorable Charles M. Pratt, Judge

ORDERS AFFIRMED

Division II

Opinion by JUDGE RICHMAN

Casebolt and Vogt*, JJ., concur

McNamara Law Firm, P.C., John McNamara Jr., Denver, Colorado, for Appellee and Intervenor-Appellee

Kutak Rock LLP, Neil L. Arney, Denver, Colorado, for Intervenor-Appellee

Burg Simpson Eldridge Hersh & Jardine, P.C., Diane Vaksdal Smith, Brian K. Matise, Nelson P. Boyle, Englewood, Colorado, for Intervenor-Appellant

*Sitting by assignment of the Chief Justice under provisions of Colo. Const. art. VI, § 5(3), and § 24-51-1105, C.R.S. 2013.

¶1 In this action involving a special metropolitan district, intervenor-appellant Landmark Towers Association, Inc. (Landmark), appeals the district court’s denial of its motion to set aside the order which created the Marin Metropolitan District (District), appellee, and its related order awarding costs to the District and to a bond issuer for the district, Colorado Bondshares (Bondshares). We affirm.

I. Background

¶2 In 2007, a developer and five affiliated individuals (organizers) commenced proceedings under section 32-1-101 to -1807, C.R.S. 2013, to form a special metropolitan district within the boundaries of Greenwood Village. The organizers filed a service plan with the municipality and the city council approved it pursuant to section 32-1-204.5, C.R.S. 2013, on August 27, 2007.

¶3 On September 5, 2007, a petition for organization was filed with the Arapahoe County District Court pursuant to section 32-1301, C.R.S. 2013. The court set the petition for hearing on October 4, 2007. Notice of the hearing was published in the local newspaper, and the Clerk of the Court issued a notice of the hearing on September 13, 2007.

¶4 On October 4, 2007, the district court entered an order directing an organizational election be held on November 6, 2007. The election was held, and on December 6, 2007, the district court entered findings, and an order and decree creating the special district. The order included within the special district the Landmark Towers condominium properties which were then under construction. Approximately 130 persons had contracted to purchase condominiums therein, but no sales had been completed as of December 2007.

¶5 According to Landmark, a homeowners’ association comprised of Landmark Towers condominium owners, it was not until several years after the District was formed that the owners discovered facts indicating that the District had been organized through alleged misrepresentations to the municipality and an asserted fraud on the court. In 2012, Landmark intervened and moved pursuant to C.R.C.P. 60 (b)(2), (3), and (5) to set aside the December 2007 order for alleged fraud on the court, a lack of subject matter jurisdiction to approve the special district, and invalidity of the order due to lack of due process.

¶6 The court held a three-day evidentiary hearing and by written order entered on December 17, 2012, dismissed Landmark’s motion. The court concluded that it was barred from setting aside the order by section 32-1-305(7), C.R.S. 2013. That subsection provides:

If an order is entered declaring the special district organized, such order shall be deemed final, and no appeal or other remedy shall lie therefrom. The entry of such order shall finally and conclusively establish the regular organization of the special district against all persons except the state of Colorado in an action in the nature of quo warranto commenced by the attorney general within thirty-five days after entry of such order declaring such special district organized and not otherwise. The organization of said special district shall not be directly or collaterally questioned in any suit, action, or proceeding except as expressly authorized in this subsection (7).

¶7 The court interpreted the statute, giving weight to its plain meaning, as follows:

The language chosen by the Legislature in adopting C.R.S. §32-1-305(7) is clear and unambiguous – once the final order is signed only the attorney general may challenge the order, and no appeal or other remedy is available.

¶8 The court also determined that the relief Landmark sought —to set aside the order based on fraud on the court, or because the order was void, and because there was a lack of due process — all fell within the phrase “other remedy” as used in the statute, and the relief requested was not available. As the court explained, “[f]or the Legislature to choose to deprive parties of the right to appeal an order after it becomes final is extraordinary and demonstrates the breadth of the prohibition the Legislature intended.”

¶9 Thus, the court acknowledged that it was required to deny Landmark’s motion on the statutory basis alone.

¶10 Nevertheless, the court went on to address Landmark’s other arguments. With respect to Landmark’s argument that it had been denied due process, the court mentioned that “there is little doubt, based upon the evidence presented to this court to date, that efforts were made [to] prevent the individuals who had entered into purchase contracts from finding out about the developer’s intentions and efforts to create the District and the related tax liability which would burden the property they were purchasing.” However, the court clarified that regardless of any efforts to prevent individuals from learning about the formation of the District, theLegislature clearly chose to deprive parties of the right to appeal or attack an order after it became final.

¶11 With respect to the order being void and therefore subject to being set aside under C.R.C.P. 60(b)(3), the court stated:

It appears to the Court that Landmark has established that the creation of the District was never approved by taxpaying electors [,] which is a prerequisite to the court’s December 17, 2007 Order. Because such would render the order void there would be no Rule 60(b)(3) time bar.

The court again clarified that, nonetheless, “the court lacks jurisdictional authority to enter an order finding the December 17, 2007 Order void.”

¶12 With respect to the issue of Landmark’s timely filing of its motion under C.R.C.P. 60(b)(5), the court remarked that although the evidence presented to date strongly suggested that fraud had occurred, the time bar of C.R.C.P. 60(b)(2) would apply to preclude relief. And again the court clarified that it was jurisdictionally unable to reach the issue.

¶13 In a separate order, the court awarded $5,905.36 in costs to the District and to the other intervenor, Bondshares, as costsnecessarily incurred because of the litigation and for the proper preparation for trial. This appeal followed.

II. Statute Providing for Organization of Special Districts

¶14 In order to address Landmark’s arguments, we first set forth pertinent provisions of the statutes providing for the formation of special districts.

¶15 The legislative declaration pertaining to special districts provides that the organization of special districts providing the services and having the purposes, powers, and authority provided in Article 32 will serve a public use and will promote health, safety, prosperity, security, and general welfare of the inhabitants of such districts. § 32-1-102(1), C.R.S. 2013. Special districts have the power to borrow money and incur indebtedness by the issuance of bonds, section 32-1-1001, C.R.S. 2013, to levy taxes and collect revenues whenever indebtedness has been incurred, and to create a fund for meeting the obligations of the district for bond repayment and interest, section 32-1-1101, C.R.S. 2013.

¶16 In order to form a special district, the persons proposing the organization must prepare and file a service plan setting forth the contents specified in section 32-1-202. Pursuant to section 32-1- 203, C.R.S. 2013, the board of county commissioners of each county which has territory included within the proposed special district shall review the plan according to criteria set forth in the statute, unless the “proposed special district . . . is contained entirely within the boundaries of a municipality.” § 32-1-203(1). If the boundaries of the special district “are wholly contained within the boundaries of a municipality,” the district may not be organized except upon adoption of a resolution of approval by the governing body of the municipality. § 32-1-204.5.

¶17 If the special district is subject to review by the county commissioners, a public hearing must be held pursuant to section 32-1-204, C.R.S. 2013.¹ Section 32-1-204(1.5) provides that not more than thirty nor less than twenty days before the hearing, “the petitioners for the organization of the special district shall send letter notification of the hearing to the property owners within the proposed special district as listed on the records of the county assessor on the date requested unless the petitioners represent one hundred percent of the property owners.” The hearing shall be open to the public, and all interested parties, as defined by the statute, shall be given an opportunity to be heard. § 32-1-204.5(3). Within twenty days after completion of the hearing, the board shall advise the petitioners in writing as to its action on the proposed service plan. Id.

¶18 If the petition for organization is approved, a petition for organization of the special district may be filed in any district court pursuant to the provisions of section 32-1-301, accompanied by the resolution of the governing municipality approving the service plan. § 32-1-205(1), C.R.S. 2013. The approved service plan and resolution of approval shall be...