Thornton Development Authority v. Upah

• Citation: 640 F. Supp. 1071
• Decision Date: 31 July 1986
• Docket Number: Civ. A. No. 85-K-2124.
• Parties: THORNTON DEVELOPMENT AUTHORITY, Petitioner, v. Richard F. UPAH, Trustee; Richard F. Upah; and Helen Hill, as Treasurer of Adams County, Colorado, Respondents.
• Court: U.S. District Court — District of Colorado

640 F. Supp. 1071

THORNTON DEVELOPMENT AUTHORITY, Petitioner, v. Richard F. UPAH, Trustee; Richard F. Upah; and Helen Hill, as Treasurer of Adams County, Colorado, Respondents.

Civ. A. No. 85-K-2124.

United States District Court, D. Colorado.

July 31, 1986.

COPYRIGHT MATERIAL OMITTED

Marlin D. Opperman, William M. Schell, Opperman & Associates, P.C., Denver, Colo., for petitioner.

David J. Richman, John M. Richilano, Coghill & Goodspeed, P.C., Denver, Colo., for respondents.

MEMORANDUM OPINION AND ORDER

KANE, District Judge.

Petitioner Thornton Development Authority is an urban renewal authority established pursuant to Colo.Rev.Stat. §§ 31-25-101 et seq. TDA brought this condemnation proceeding against respondent Richard Upah pursuant to the eminent domain procedures set forth in Colo.Rev.Stat. §§ 38-1-101 et seq.

The only issue to be presented at a condemnation trial is what price the petitioner must pay for the land sought to be acquired. All other matters are decided in advance of trial by the court. See Colo. Rev.Stat. § 38-1-101; Kaschke v. Camfield, 46 Colo. 60, 63-64, 102 P. 1061 (1909). The property owner is entitled to controvert the petitioner's right to condemn, and when he does, the burden is on the petitioner to maintain his right to condemn by proper proof. Kashke, 46 Colo. 60, 64, 102 P. 1061.

In the instant case, Upah filed a motion to dismiss raising several issues regarding jurisdiction and the regularity of the condemnation proceedings. Briefly, Upah asserts this action must be dismissed because: 1) TDA failed to comply with certain statutory requirements and, thus, TDA lacks the power to condemn his land; 2) this taking is for a purely private, and, therefore, improper purpose; and 3) this taking violates his constitutional rights. These issues are preliminary in nature and must be resolved before trial.

Specifically, Upah argues TDA's petition in condemnation must be dismissed for the following reasons:

1. Jurisdiction is lacking because TDA failed to negotiate for purchase of Upah's land in good faith;

2. TDA's attempted exercise of eminent domain is not necessary for the public health, safety, and welfare;

3. TDA intends to use improperly its power of eminent domain for a private, rather than public, purpose in violation of Upah's rights under Colo. Const., Art. II., § 14;

4. TDA's attempted exercise of eminent domain is an arbitrary and capricious exercise of its power since the petition is based on an improper and unfounded determination of "blight" within the meaning of Colo.Rev.Stat. § 31-25-103(2);

5. TDA failed to comply with Colo.Rev. Stat. § 31-25-107(6) which deals with the development of open land by an urban renewal authority;

6. TDA failed in its obligation under Colo.Rev.Stat. § 31-25-106(2) to submit the issue of development of the subject property to competitive bidding;

7. TDA failed to provide Upah with adequate notice and an opportunity to be heard, thereby depriving him of due process as required by the Fourteenth Amendment and Colo. Const., Art. II, § 25;

8. TDA's attempted exercise of eminent domain violates Upah's rights under Colo.Const., Art. II, § 15 and the Fourteenth Amendment.

1. Jurisdictional Prerequisite of Failure to Agree on Price

Colo.Rev.Stat. § 38-1-102(1) states that a petition for condemnation may be filed

in all cases where the right to take private property for public or private use without the owner's consent ... is conferred by general laws or special charter upon any ... municipal authority ... and the compensation to be paid for, in respect of property sought to be appropriated or damaged for the purposes mentioned, cannot be agreed upon by the parties interested. . . .

The question whether the parties failed to agree upon compensation is jurisdictional in nature. City of Thornton v. Farmers Reservoir & Irrig. Co., 194 Colo. 526, 575 P.2d 382, 392 (1978); Kaschke, 46 Colo. 60, 64, 102 P. 1061. The burden of proof is on the petitioner in a condemnation proceeding to establish there was a failure to agree upon the compensation, after negotiations, to be paid for the property. Stalford v. Board of County Commissioners, 128 Colo. 441, 447, 263 P.2d 436 (1953). Generally, the petitioner must show

that the condemning authority made a reasonable good faith offer to reach an agreement with the owner of the property for its purchase. Lengthy or face-to face negotiations are not required. The making of a reasonable offer to purchase in good faith by for example letter and allowing the property owner time to respond is sufficient. If the property owner remains silent or rejects the offer without making an acceptable counter-offer, a condemnation action may be instituted.

City of Thornton, 575 P.2d 382, 392 (citing Interstate Trust Bldg. Co. v. Denver Urban Renewal Authority, 172 Colo. 427, 473 P.2d 978 (1970)); see also Board of County Commissioners v. Blecha, 697 P.2d 416, 417 (Colo.App.1985) (to satisfy this jurisdictional prerequisite, the condemning authority must show that it made a reasonable good faith offer to reach agreement on the price with the property owner).

In City of Thornton, the petitioner sent a letter to the organization representing the property owners offering to purchase the property for a certain amount and requesting a response within two weeks. The property owners never responded. The condemnation proceeding was filed six weeks after the letter had been sent. Two years later, the petitioner sent letters to the individual property owners offering to purchase their interest in the property. Only three out of 270 shareholders responded. The trial court found the failure-to-agree prerequisite had been met. The Colorado Supreme Court upheld this determination. City of Thornton, 575 P.2d 382, 392.

In Interstate, the Colorado Supreme Court stated:

The argument that there was no showing of good faith negotiation prior to the institution of the condemnation proceedings is not borne out by the record. DURA made an initial offer to Interstate for the property here in question of $197,500 and later raised that offer. Interstate eventually rejected these offers and by its actions declined DURA's invitation "to get together and negotiate." The fact that at the hearing for immediate possession DURA's appraiser testified that the market value of the property as of the date of the hearing was $215,000 does not mean that DURA had previously failed to negotiate on a good-faith basis. It takes more than one to negotiate and from the record before us it would certainly appear that Interstate was never in the negotiating mood.

Interstate, 473 P.2d 978, 981.

In Blecha, the petitioner made an offer in writing to the property owner to which no reply was made. Thereafter, the petition in condemnation was filed. The Colorado Court of Appeals held, under these circumstances, the petitioner negotiated in good faith. Blecha, 697 P.2d 416, 418.

Finally, in Board of County Commissioners v. Auslaender, 710 P.2d 1180 (Colo. App.1985), the petitioner sent a letter to the property owner on June 29, 1983 offering to buy the owner's land. Five days later, the county attorney filed the condemnation action. On August 18, 1983, the county commissioners ratified the bringing of the action. Thereafter, the property owner filed a motion to dismiss, arguing the county failed to pursue good faith negotiations. The motion to dismiss was granted. The property owner then moved for attorney fees. The trial court denied this request, finding that bringing the action was not frivolous.

On appeal, the Colorado Court of Appeals reversed the denial of attorney fees stating:

The County's argument, presented at the hearing on the motion to dismiss, was that good faith negotiations prior to institution of an eminent domain action are not required if such negotiations would be futile. Under different circumstances, such an argument might have had a reasonable basis. However, here, a condemnation action was initiated only a few days after an offer was mailed and only five days after the County stated its intent to initiate good faith negotiations. Thus, the County's assertion concerning the futility of negotiations is not factually sustainable since no reasonable time for negotiations was provided.

Auslaender, 710 P.2d 1180, 1182.

The Colorado courts have made the waters murky in this area by failing to distinguish between failure to agree and good faith negotiations. The statute only requires a failure to agree but the courts seem to have implied a duty on the condemning authority to negotiate on a good faith basis. The Colorado cases are also not too helpful in that, in each case, the property owner failed to respond to the condemning authority's initial offer of purchase. I think, however, that the Colorado standard is whether the petitioner made a "reasonable effort to agree upon the compensation to be paid...." Kaschke, 46 Colo. 60, 65, 102 P. 1061. This standard gives substance to the requirement of failure to agree and it includes a minimal notion of good faith negotiations.

In the instant case, it is undisputed that TDA established an offering price of $592,500 for Upah's land. Paul Benedetti, TDA's special counsel, was appointed by TDA as its negotiator. On July 19, 1985, Benedetti made this offer to Upah. On August 1, 1985, Upah's attorney responded that Upah was seeking $1,000,000 for the land. Benedetti presented this counteroffer to TDA for its review. It was not willing to pay this amount and did not make a counteroffer. On August 19, 1985, Benedetti filed this condemnation action on behalf of TDA against Upah.

Upah contends these facts demonstrate that TDA did not negotiate in good faith and, thus, the jurisdictional prerequisite of failure to agree has not been met. TDA, on the other hand, draws a distinction between failure to agree and negotiating in good faith, arguing the latter is not required under Colorado law. TDA argues further that...