Plains Metro. Dist. v. Ken–caryl Ranch Metro. Dist.

• Decision Date: 18 March 2010
• Docket Number: No. 09CA0425.,09CA0425.
• Citation: 250 P.3d 697
• Parties: PLAINS METROPOLITAN DISTRICT, a quasi-municipal corporation and political subdivision of the State of Colorado, Plaintiff–Appellee,v.KEN–CARYL RANCH METROPOLITAN DISTRICT, a quasi-municipal corporation and political subdivision of the State of Colorado, Defendant–Appellant,andJan Rousselot; Ruth Sunderberg; and Patricia Lynch, Intervenors–Appellants.
• Court: Colorado Court of Appeals

250 P.3d 697

PLAINS METROPOLITAN DISTRICT, a quasi-municipal corporation and political subdivision of the State of Colorado, Plaintiff–Appellee,

v.KEN–CARYL RANCH METROPOLITAN DISTRICT, a quasi-municipal corporation and political subdivision of the State of Colorado, Defendant–Appellant,andJan Rousselot; Ruth Sunderberg; and Patricia Lynch, Intervenors–Appellants.

No. 09CA0425.

Colorado Court of Appeals, Div. IV.

March 18, 2010.

Ryley Carlock & Applewhite, John L. Watson, Olivia D. Lucas, Denver, Colorado, for Plaintiff–Appellee.Shearer & Call, P.C., Richard L. Shearer, J. Alan Call, Denver, Colorado, for Defendant–Appellant and Intervenors–Appellants.Mary G. Zuchegno, Denver, Colorado, for Amicus Curiae Special District Association of Colorado.Opinion by Judge CONNELLY.

This dispute, regarding the duty to construct neighborhood recreational facilities, involves adjoining metropolitan districts in Jefferson County, Colorado. The claims now before us were filed by Ken–Caryl Ranch Metropolitan District (KC) and three of its taxpayers against Plains Metropolitan District (Plains). After a bench trial, the trial court entered judgment for Plains.

The principal dispute involves whether a service plan providing that Plains “will” build specified recreational facilities obligates Plains to build those facilities. We hold that it does, unless Plains can demonstrate that plan compliance is no longer “practicable.”

Our holding is based on the mandatory language in the plan itself and on a statutory provision stating that special district facilities and services “shall conform so far as practicable to the approved service plan.” § 32–1–207(1), C.R.S.2009. We further hold that a special district's violation of its service plan can be remedied under section 32–1–207(3)(a), C.R.S.2009. We finally hold that, even though KC's claims might otherwise have been untimely, KC's right to assert them as compulsory counterclaims was revived by section 13–80–109, C.R.S.2009. We accordingly reverse the judgment for Plains and remand for further proceedings.

I. Background

All property owners within the KC and Plains districts must belong to the Ken–Caryl Ranch Master Association (Association). The Association could have used homeowners' dues to build facilities and perform services for the community. But funding those activities through special district taxes, rather than association dues, provided tax benefits to property owners.

Plains was created as a special district within the Ken–Caryl community by a 1986 court order. The order approved a 1985 service plan that previously had been reviewed and approved by Jefferson County authorities.

The 1985 service plan provided that “[t]he recreational facilities to be designed and constructed by [Plains] will include a swim and tennis facility and a ball field park” consisting of three fields. These facilities were to be operated, maintained, and ultimately owned by the Association. The service plan called for the facilities to be included in the first construction phase in 1986, but also contained a “flexibility” provision allowing Plains to “postpone” construction “if necessitated by a slowdown of development as caused by economic or other factors.”

KC, in turn, was created as a special district by a 1988 court order. It too was located within the Ken–Caryl community, but its boundaries did not overlap with the Plains district. Excluding the properties located in Plains from the new KC district benefited the Plains property owners by allowing them to avoid being taxed for services that KC would provide to the entire Ken–Caryl community.

By 1996, Plains still had not built the recreational facilities. In January 2002, Plains indicated that it would dissolve as a district in 2004 (when the existing bond debt was due to be paid off), without building the recreational facilities. Litigation ensued.

KC asserted the claims now at issue, involving the recreational facilities, as counterclaims to Plains' lawsuit against KC. Plains' lawsuit had challenged KC's expansion of its district boundaries to include property within Plains. Plains' lawsuit was later settled, with the districts agreeing to maintain their prior boundaries.

The case proceeded to a bench trial on KC's counterclaims, which were joined in by three KC taxpayers. The court ruled for Plains by reasoning that the service plan was simply a “permissive” “guide”—one providing “authority to act but not requiring [Plains] to do so.” It ruled, alternatively, that the claims were time barred.

II. Discussion

A. Merits

The trial court's ruling that Plains had no judicially enforceable obligation to construct the facilities rested on an interpretation of both this specific service plan and the law governing special districts. Our review of both points is de novo. See Wolf Ranch, LLC v. City of Colorado Springs, 220 P.3d 559, 563 (Colo.2009) (statutory interpretation is de novo); Denver Found. v. Wells Fargo Bank, 163 P.3d 1116, 1122 (Colo.2007); Montoya v. Connolly's Towing, Inc., 216 P.3d 98, 102 (Colo.App.2008).

1. The Mandatory Language of Plains' Service Plan

The language in the 1985 service plan regarding the building of recreational facilities is not phrased in merely permissive terms. The plan provides that “[t]he recreational facilities to be designed and constructed by [Plains] will include a swim and tennis facility and a ball field park,” that they “ will include a swim pool, 2 tennis courts and a restroom and mechanical building,” and that the “ball field park will consist of 3 combination softball/soccer field[s].” (Emphases added.)

Statutory provisions that an entity “will” do something typically are construed, like those using the term “shall,” as mandatory. See, e.g., Hewitt v. Helms, 459 U.S. 460, 471, 103 S.Ct. 864, 74 L.Ed.2d 675 (1983) (statute and regulations went “beyond simple procedural guidelines” by using “language of an unmistakably mandatory character, requiring that certain [prison] procedures ‘shall,’ ‘will,’ or ‘must’ be employed”), abrogated in part by Sandin v. Conner, 515 U.S. 472, 115 S.Ct. 2293, 132 L.Ed.2d 418 (1995); In re Airadigm Communications, Inc., 519 F.3d 640, 656 (7th Cir.2008) (describing “shall” and “will” as “mandatory terms”); Britell v. United States, 372 F.3d 1370, 1378 (Fed.Cir.2004) (“mandatory language” such as “ ‘will pay’ and ‘shall pay’ creates the necessary ‘money-mandate’ ” to waive sovereign immunity).

Likewise, contractual provisions that a party “will” do something usually create mandatory obligations. See, e.g., McDonnell Douglas Corp. v. Islamic Republic of Iran, 758 F.2d 341, 346–47 (8th Cir.1985); Terra International, Inc. v. Mississippi Chemical Corp., 922 F.Supp. 1334, 1373–74 (N.D.Iowa 1996), aff'd, 119 F.3d 688 (8th Cir.1997). In contrast, “use of the term ‘may’ is indicative of a grant of discretion or choice among alternatives.” People v. Triantos, 55 P.3d 131, 134 (Colo.2002).

The mandatory obligation to build the recreational facilities is confirmed by the service plan's “flexibility” clause allowing Plains to “postpone construction of improvements if necessitated by a slowdown in development as caused by economic or other factors.” Absent an obligation to construct the facilities, Plains would not need authority to “postpone construction.” Accepting Plains' contention would render this flexibility provision meaningless and thereby contravene normal rules of construction. See Copper Mountain, Inc. v. Industrial Systems, Inc., 208 P.3d 692, 697 (Colo.2009) (courts “harmonize” and “give effect to all provisions so that none will be rendered meaningless”) (internal quotations omitted).

Plains implicitly recognized the mandatory nature of its plan when it tried to amend the language from “will” to “may” in 2005. But Plains indisputably did not follow the procedures for “material modifications of the service plan,” § 32–1–207(2), C.R.S.2009. The trial court, while criticizing Plains' “disingenuous” action, deemed the amendments immaterial because “will” meant the same as “may” in this context. For reasons set forth above, however, “will” is different than “may” in the 1985 service plan. Accordingly, Plains' attempted 2005 amendments were material—and legally invalid.

2. The Enforceability of Mandatory Service Plans

The question, therefore, is whether courts can compel special districts to comply with mandatory terms of their service plans. We hold such plans are enforceable under the Special District Act.

The General Assembly has provided that “the facilities, services, and financial arrangements of the special district shall conform so far as practicable to the approved service plan.” § 32–1–207(1). This statutory language, like the 1985 service plan, uses mandatory language (“shall conform”). The extent of required conformance is prescribed as “so far as practicable.” Thus, unless for some reason it is not practicable to do so, special districts must conform to their service plans.

Section 32–1–207(3)(a) empowers a court—acting sua sponte or upon motion of the county or municipal board or “any interested party”—to enjoin a district's material departure from the plan. Plains has not argued that the recreational facilities were only an immaterial part of the plan. Accordingly, injunctive relief is expressly authorized by statute. And where the material departure from a service plan involves inexcusable inaction, such relief may take the form of a mandatory injunction. See C.R.C.P. 65(f).

The parties disagree whether it remained “practicable” for Plains to build the facilities. Because the trial court made no finding on this issue, we agree with Plains' alternative suggestion that the case should be remanded to the trial court to decide this issue in the first instance. The trial court, after hearing any further evidence on this point that it may deem necessary, should issue findings and conclusions as to the practicability of Plains' building the...