Peters v. Smuggler-Durant Min. Corp., SMUGGLER-DURANT

• Decision Date: 06 April 1995
• Docket Number: No. 2,SMUGGLER-DURANT,Nos. 93CA0040,93CA0496,I,2,s. 93CA0040
• Citation: 910 P.2d 34
• Parties: Frank PETERS, Plaintiff-Appellee and Cross-Appellant, v.MINING CORPORATION and Last Chancenc., Defendants-Appellees and Cross-Appellants, and Golden Rule Resources, Inc., Intervenor-Appellant and Cross-Appellee. . V
• Court: Colorado Court of Appeals

Page 34

910 P.2d 34

Frank PETERS, Plaintiff-Appellee and Cross-Appellant, v. SMUGGLER-DURANT MINING CORPORATION and Last Chance No. 2 Inc., Defendants-Appellees and Cross-Appellants and Golden Rule Resources, Inc., Intervenor-Appellant and Cross-Appellee.

Nos. 93CA0040, 93CA0496.

Colorado Court of Appeals,

Div. V.

April 6, 1995. ^*

As Modified on Denial of Rehearing

June 29, 1995. ^**

Certiorari Denied Feb. 12, 1996.

Cross-Petition for Certiorari

Granted Feb. 12, 1996.

Myler, Stuller & Schwartz, Sandra M. Stuller, Aspen, for plaintiff-appellee and cross-appellant.

Krabacher, Hill & Edwards, P.C., Thomas C. Hill, Joseph E. Edwards, Jr., Joseph E. Edwards, III, Aspen, for defendants-appellees and cross-appellants.

Coleman, Jouflas & Williams, Joseph Coleman, Gregory Jouflas, Grand Junction, for intervenor-appellant and cross-appellee.

Opinion by Judge ROTHENBERG.

In the first part of this consolidated action, Golden Rule Resources, Inc., (Golden Rule) appeals from the decree of the trial court quieting title to certain real property in Frank Peters. Peters cross-appeals from that judgment.

In the second part of this action, Smuggler-Durant Mining Corporation and Last Chance No. 2, Inc., appeal from a judgment granting Golden Rule specific performance of a contract for the sale of property encompassing the land subject to quiet title decree. Golden Rule cross-appeals from that judgment. We affirm in part, reverse in part, and remand with directions.

I.

Golden Rule's Appeal re: Peters and Peters' Cross-Appeal

In January 1970, Smuggler-Durant entered into a mining lease with Rheco-Lenado, Inc. Through a series of assignments, Golden Rule became the lessee in October 1983. The mining lease granted the lessee the right of exclusive possession to the real property and the right to purchase the property pursuant to the terms of a right of first refusal. Several cabins were located on the leased property.

On March 12, 1982, Frank A. and William J. Loushin executed a quitclaim deed in favor of Frank Peters, transferring their interest in the "cabin and land beneath, located on [property description]."

On September 23, 1983, Peters first paid taxes on the property.

On February 22, 1990, Peters filed a complaint against Smuggler-Durant under C.R.C.P. 105 claiming he was entitled to possession of the property as a result of his adverse possession for eighteen years and his payment of taxes and color of title for seven consecutive years.

On September 30, 1991, Peters filed an amended complaint adding Last Chance No. 2, Inc., as a defendant, reducing the amount of land claimed to 4.2 acres, and providing a detailed metes and bounds description of the 4.2. acres.

Following a trial to the court, the court entered a quiet title decree in favor of Peters finding: (1) Frank Loushin executed and delivered to Frank Peters a quitclaim deed, which Peters recorded, conveying "cabin and land beneath"; (2) Peters remained in possession of and paid taxes on three acres (more or less) of land and cabins numbered 1, 2, 3 for seven successive years before filing the claim; and (3) the deed was sufficient to constitute color of title to the 4.2 acres claimed by Peters. The court rejected Peters' claim of title by adverse possession of eighteen years.

A.

Golden Rule first claims the trial court erred in finding Peters was entitled to possession of the property through the payment of taxes for seven successive years. More specifically, Golden Rule claims Peters paid taxes only for six years, four months and twenty-seven days before filing his complaint. We agree.

Initially, we reject Peters' assertion that Golden Rule has waived this argument by failing to raise it in a timely manner until it filed a post-trial motion for relief.

C.R.C.P. 16 requires each party to file a disclosure certificate setting forth, inter alia, a statement of claims or defenses and a brief and concise statement of all points of law that are to be relied upon by that party, citing pertinent statutes and cases. See C.R.C.P. 16(a)(I) and (IV). The information provided in a party's disclosure certificate is binding on that party. C.R.C.P. 16(c). Compliance with C.R.C.P. 16 is mandatory. See J.P. v. District Court, 873 P.2d 745 (Colo.1994).

Here, Golden Rule concedes it did not comply with this rule. Nevertheless, Peters' assertion is inaccurate because Golden Rule did give notice of this issue, albeit on the eve of trial, when it specifically included the issue in its trial brief and submitted dispositive authority in support of its position.

Moreover, Golden Rule denied the allegation in the complaint that Peters was entitled to the property by virtue of payment of seven years taxes and color of title. Consequently, Peters' assertion of title based upon the seven-year statute was contested and at issue for trial.

Given the denial in the complaint and the submission of Golden Rule's trial brief, we conclude that the issue was not waived.

We next address and reject Peters' contention that Golden Rule lacks standing to bring this appeal because Golden Rule did not have an ownership interest in the property claimed by Peters.

We note that, in its brief, Golden Rule asserted that Peters failed to raise the standing issue at trial and, therefore, may not raise it here. However, the record shows that Peters did raise the standing issue in a pleading entitled "Plaintiff's Answer to Counterclaim and Counterclaim" and again raised it in his trial data certificate.

In any event, lack of standing is a jurisdictional issue and may be raised at any time. Clinic Masters, Inc. v. District Court, 192 Colo. 120, 556 P.2d 473 (1976); Bennett v. Board of Trustees, 782 P.2d 1214 (Colo.App.1989).

The resolution of standing requires a court to determine whether a plaintiff was injured in fact and whether the injury was to a legally protected right. Wimberly v. Ettenberg, 194 Colo. 163, 570 P.2d 535 (1977).

In March 1990, shortly after Peters filed his action to quiet title, Golden Rule moved to intervene, asserting that it had an interest in the property claimed by Peters and that it would sustain an injury in fact to a legally protected right if Peters prevailed. More specifically, Golden Rule claimed that: (1) it had a leasehold interest in the property under a mining lease which entitled Golden Rule to exclusive possession; and (2) the lease gave Golden Rule a right of first refusal to purchase the property.

No objections were filed to Golden Rule's motion to intervene and, in May 1990, the trial court granted it.

On November 14, 1991, Golden Rule sent a letter to Smuggler-Durant advising it that Golden Rule had elected to exercise its right of first refusal and to purchase the property.

On November 29, 1991, Peters filed a responsive pleading, as noted earlier, raising the issue of whether Golden Rule had standing to challenge Peters' claims.

A right of first refusal differs in significant respects from an option to purchase. An option to purchase gives the option holder the power to compel the owners to sell at a stipulated price, whether the owners are willing or not. See Kroehnke v. Zimmerman, 171 Colo. 365, 467 P.2d 265 (1970).

In contrast, the holder of a right of first refusal has an interest in land which is to vest, if at all, sometime in the future. The right of first refusal ripens into an option upon the happening of a contingency: the decision of the obligated party to accept a third-party's offer for the property. It does not, at the time it is given, include an operative offer. Instead, the right of first refusal involves a future offer to be made if and when the owners decide to sell the property to a third party at an agreed upon price. Morrison v. Piper, 77 N.Y.2d 165, 565 N.Y.S.2d 444, 566 N.E.2d 643 (1990). See Atchison v. City of Englewood, 193 Colo. 367, 568 P.2d 13 (1977).

Thus, because one with a right of first refusal may never receive the opportunity to purchase the property, we agree with Peters that Golden Rule's right of first refusal and its leasehold interest did not confer standing upon it to contest Peters' claims of adverse possession.

However, when a right of first refusal is involved, once the owners evidence an intent to sell the property, the right of first refusal is activated and converted into an irrevocable option to purchase. Vorpe v. Key Island, Inc., 374 So.2d 1035 (Fla.App.1979). An option to purchase is an interest affecting title to property. See Province v. Johnson, 894 P.2d 66 (Colo.App.1995).

Thus, when a right of first refusal is ignored and the property held subject to it is sold to a third party without first giving notice to the holder of the right of first refusal and an opportunity to buy the property, the holder of the right is entitled to relief. See Atchison v. City of Englewood, supra.

Here, by the time Peters filed his pleading raising the issue of standing, a third party had made an offer to purchase the property and the owner, Smuggler-Durant had evidenced an intent to accept that offer, thereby activating Golden Rule's right of first refusal and converting it to an irrevocable option to purchase. Vorpe v. Key Island, Inc., supra. Nevertheless, the owner, Smuggler-Durant, had not notified Golden Rule of the offer, but Golden Rule had indirectly learned of it and had sent a letter to Smuggler-Durant stating its intent to exercise its right of first refusal and to purchase the property.

Despite Golden Rule's exercise of its right to purchase, Smuggler-Durant refused to sell the property to Golden Rule, resulting in a lawsuit by Golden Rule against Smuggler-Durant to enforce its right to purchase the property.

Further, Smuggler-Durant chose not to defend against Peters' claims to the property and did not even appear at trial to contest them.

Under these circumstances, we therefore conclude that, by the time the matter was in issue, Golden Rule met the general standing requirements...