SDI, Inc. v. Pivotal Parker Commercial, LLC

• Decision Date: 11 October 2012
• Docket Number: No. 11CA0134.,11CA0134.
• Citation: 292 P.3d 1165
• Parties: SDI, INC., a Colorado corporation, Plaintiff–Appellee, v. PIVOTAL PARKER COMMERCIAL, LLC, a Delaware corporation, Defendant–Appellant.
• Court: Colorado Court of Appeals

292 P.3d 1165

SDI, INC., a Colorado corporation, Plaintiff–Appellee,

v.PIVOTAL PARKER COMMERCIAL, LLC, a Delaware corporation, Defendant–Appellant.

No. 11CA0134.

Colorado Court of Appeals, Div. IV.

Oct. 11, 2012.

Silver & DeBoskey, P.C., Joe L. Silver, Martin D. Beier, Ruba M. Forno, Denver, Colorado, for Plaintiff–Appellee.

Seter & Vander Wall P.C., Kim J. Seter, Jeffrey E. Erb, Greenwood Village, Colorado; Reutzel & Associates, LLC, Karen V. Reutzel, Littleton, Colorado, for Defendant–Appellant.

Opinion by Judge FURMAN.

¶ 1 In this dispute over the terms of several contracts, defendant, Pivotal Parker Commercial, LLC (Pivotal), appeals the trial court's entry of judgment following a bench trial in favor of plaintiff, SDI, Inc. (SDI). We reverse and remand.

I. The Stroh Ranch Development

¶ 2 In 1984, the Town of Parker annexed a parcel of undeveloped land known as Stroh Ranch. To facilitate development and construction of public infrastructure within Stroh Ranch, the Town of Parker authorized the formation of the Cherry Creek South Metropolitan District No. 1 (the District) under Colorado's Special District Act, sections 32–1–101 to –1807, C.R.S.2012. One of the District's specific functions was to obtain financing for developing the public infrastructure within Stroh Ranch. To this end, the District entered into a series of Bond Anticipation Notes and Reimbursement Agreements with one of the original developers of Stroh Ranch (later called Stroh Ranch Development, LLC, or SRD). In total, the District incurred an obligation to SRD in a final amount of $11,130,000.

¶ 3 To settle this obligation, the District and SRD entered into the “Seventh Amendment to Restated Reimbursement Letter Agreement Dated June 26, 1989” (Seventh Amendment). The Seventh Amendment was intended to document the final liquidation of all obligations existing between SRD and the District. In paragraph 6 of the Seventh Amendment, the District assigned to SRD “the right to receive, the following revenues that the District would otherwise have received as a result of the District's development of infrastructure within the District, including but not limited to development fees.” After entering into the Seventh Amendment, SRD began assessing eight percent interest on the development fee “receivable” assigned to it. The District took no part in determining this amount. SRD later assigned the right to receive development fee revenue to SDI by a purchase and sale agreement.

II. The SDI–Pivotal Contract

¶ 4 In 2004, SDI, then an owner of certain real property in Stroh Ranch, listed the property for sale and received an offer from Pivotal. The parties entered into a real estate purchase and sale contract (SDI–Pivotal Contract) for this property, including certain property designated as “Filing Nos. 14 and 15.” During negotiations of the SDI–Pivotal Contract, the parties agreed to exclude several assets from the sale. Exhibit L to the SDI–Pivotal Contract listed, as an excluded asset, “The receivable for Development Fees for Filings # 14 and # 15 ... and the balance and records thereof.” These development fees were the same fees assigned to SDI through the Seventh Amendment.

¶ 5 Before the SDI–Pivotal Contract closed, SDI, acting under its trade name, AscentPointe Development, Inc., entered into a separate contract (E & T Contract) to sell a parcel of land located within Filing No. 15 (E & T Property), which the buyer assigned to E & T Li, LLC (E & T). Pivotal was aware of, and did not object to, the E & T Contract.

¶ 6 The SDI–Pivotal contract closed in December 2004. Because Pivotal had purchased Filing No. 15, in which the E & T Property was located, SDI then assigned all of its right, title, and interest in the E & T Contract to Pivotal (E & T Contract Assignment). The E & T Contract Assignment did not contain any language excluding the development fees from the assignment.

¶ 7 The E & T Contract closed a few months later. At the closing, Pivotal, as assignee of SDI's rights in the E & T Contract, received the purchase price of $866,162, as well as $24,500 for the cost of water resource tolls and water taps, as set forth in the E & T Contract. Thereafter, E & T obtained a building permit for the E & T Property.

¶ 8 Following the issuance of a building permit to E & T, SDI demanded a development fee for the E & T Property from either E & T or Pivotal. When the development fee was not paid, SDI filed suit against Pivotal and E & T. SDI first sought a declaratory judgment that it was entitled to development fees on Filing Nos. 14 and 15, pursuant to the Seventh Amendment and the SDI–Pivotal Contract. SDI also sought damages, based on a breach of contract, for the development fees on the E & T Property. The parties stipulated that the development fees had been included as part of the purchase price of the E & T Contract, and E & T was dismissed with prejudice.

¶ 9 Following a bench trial, the trial court entered judgment in favor of SDI. The trial court determined that the development fees were validly assigned to SDI, as authorized by statute; SDI was entitled to add interest, at eight percent per annum, compounded annually, to the amount assigned to it under the Seventh Amendment; and the development fees assigned to SDI, until paid, constituted a perpetual lien that runs with the land. As to SDI's request for damages based on breach of contract, the trial court concluded that Pivotal had breached the SDI–Pivotal Contract by failing to pay the development fee portion of the purchase price of the E & T Contract to SDI. It then awarded damages to SDI in the amount of $358,602.13, plus post judgment interest at eight percent per annum.

III. Standard of Review

¶ 10 We review a judgment following a bench trial as a mixed question of fact and law. Lawry v. Palm, 192 P.3d 550, 558 (Colo.App.2008). “We defer to the court's credibility determinations and will disturb its findings of fact only if they are clearly erroneous and not supported by the record.” Id. (citing M.D.C./Wood, Inc. v. Mortimer, 866 P.2d 1380, 1383 (Colo.1994)). We review the court's conclusions of law de novo. Id.

IV. The Judgment

¶ 11 Pivotal contends the trial court erred in entering judgment in favor of SDI. Pivotal raises three main issues on appeal, contending the trial court erred when it

(1) determined that the District validly assigned its right to receive development fee revenue to SDI, and that SDI was entitled to collect, and charge interest on, that amount;

(2) determined that SDI has a perpetual lien on Filing Nos. 14 and 15; and

(3) concluded that Pivotal breached its contract with SDI.

¶ 12 SDI requests an award of appellate attorney fees pursuant to the terms of the SDI–Pivotal Contract.

¶ 13 We address each contention and request in turn.

A. Assignment of Development Fees

¶ 14 We first consider whether the trial court erred when it determined that the District validly assigned its right to receive development fee revenue to SDI, and that SDI was entitled to collect, and charge interest on, that amount. We conclude that it did.

1. Special District Act

¶ 15 The trial court's determination rested in part on its interpretation of the Special District Act. As relevant here, the trial court concluded:

Since the Special District Act grants broad powers to special districts but is silent as to the effect of assignments, this Court must look to the common law to determine if SDI was entitled to take the place of the District and do that which the District was not barred from doing.

¶ 16 We first note that the trial court erred in concluding it must look to common law to fill-in the statutory silence in section 32–1–1001(1), C.R.S.2012, which defines a special district's common powers. Special districts are creatures of statute and, as such, “may only exercise those powers that are expressly conferred or exist by necessary implication.” South Fork Water & Sanitation Dist. v. Town of South Fork, 252 P.3d 465, 469 (Colo.2011). Though we liberally construe the Special District Act “to effect its purposes,” see§ 32–1–113, C.R.S.2012, we cannot read powers into the statute which are neither expressly enumerated nor necessarily implied, see id.; see also City of Aurora v. Bogue, 176 Colo. 198, 200–01, 489 P.2d 1295, 1296 (1971)(noting that doubts as to the existence of the entity's power must be resolved against the entity).

¶ 17 Because we review the trial court's conclusions of law de novo, Lawry, 192 P.3d at 558, we now turn to the question of whether section 32–1–1001(1) provides the District with the power to assign its right to receive revenue to a private party. We conclude it does not.

¶ 18 Statutory interpretation is a question of law that we review de novo. Fischbach v. Holzberlein, 215 P.3d 407, 409 (Colo.App.2009). To determine the meaning of a statute, we “first look to the plain language of the statute.” Douglas Cnty. Bd. of Equalization v. Clarke, 921 P.2d 717, 721 (Colo.1996). If the statute is unambiguous, we look no further. Devora v. Strodtman, 2012 COA 87, ¶ 10, 282 P.3d 528, 531.

¶ 19 Section 32–1–1001(1) is unambiguous. It provides special districts with the following authority.

(d) (1) To enter into contracts and agreements affecting the affairs of the special district except as otherwise provided in this Part 10....

....

(j)(I) To fix and from time to time to increase or decrease fees, rates, tolls, penalties, or charges for services, programs, or facilities furnished by the special district.... The board may pledge such revenue for the payment of any indebtedness of the special district. Until paid, all such fees, rates, tolls, penalties, or charges shall constitute a perpetual lien on and against the property served, and any such lien may be foreclosed in the same manner as provided by the laws of this state for the foreclosure of mechanics' liens.

....

(n) To have and exercise all rights and powers necessary or incidental to or implied from...