Town of Carbondale v. Gss Properties, LLC

• Decision Date: 15 October 2007
• Docket Number: No. 05SC749.,05SC749.
• Citation: 169 P.3d 675
• Parties: The TOWN OF CARBONDALE, a Colorado home rule municipal corporation, Petitioner, v. GSS PROPERTIES, LLC, a North Carolina limited liability company, Respondent.
• Court: Colorado Supreme Court

169 P.3d 675

The TOWN OF CARBONDALE, a Colorado home rule municipal corporation, Petitioner, v. GSS PROPERTIES, LLC, a North Carolina limited liability company, Respondent.

No. 05SC749.

Supreme Court of Colorado, En Banc.

October 15, 2007.

Caloia Houpt & Hamilton, P.C., Mark E. Hamilton, Glenwood Springs, Colorado, Jean E. Dubofsky, P.C., Jean E. Dubofsky, Boulder, Colorado, Attorneys for Petitioner.

Walter H. Sargent, P.C., Walter H. Sargent, Colorado Springs, Colorado, Attorney for Respondent.

Colorado Municipal League, Geoffrey T. Wilson, Denver, Colorado, Attorney for Amicus Curiae Colorado Municipal League.

Holme Roberts & Owen, LLP, Colin G. Harris, Boulder, Colorado, Attorney for Amici Curiae Colorado Farm Bureau and Colorado Horsemen's Council, Inc., t/a Colorado Horse Council, Inc.

Justice EID delivered the Opinion of the Court.

Petitioner the Town of Carbondale ("the Town") filed suit against Respondent GSS Properties, LLC ("GSS") concerning GSS's construction activities and use of agricultural chemicals on a tract of land located above the Town's water supply. The Town asserted, inter alia, that its local watershed ordinance prohibited the use of such chemicals. Shortly before trial, GSS moved to amend its answer to state a preemption defense. In particular, GSS asserted an operational conflict between the Town's ordinance and various state statutes. Before the court ruled on GSS's motion to amend, GSS reasserted its operational preemption defense in a motion for partial summary judgment.

The trial court denied GSS's motion to amend, subsequently denied GSS's motion for partial summary judgment, and did not permit consideration of the preemption defense at trial. On appeal, the court of appeals reversed and remanded. See Town of Carbondale v. GSS Props., LLC, 140 P.3d 53, 57 (Colo.App.2005). The court held that, while the trial court was within its discretion to deny the motion to amend, it should have permitted GSS to present the operational preemption defense at trial because GSS had raised the defense in a motion for summary judgment and because there would have been no prejudice to the Town. The court of appeals also raised the question of whether the affirmative defense of operational preemption is in fact waivable.

We now reverse the court of appeals. We hold that the fact that the operational preemption defense was raised in a summary judgment motion did not, in and of itself, constructively amend GSS's answer. We also hold that, because the Town would have been prejudiced by the untimely defense, the trial court did not abuse its discretion in not allowing GSS to proceed with the defense at trial. Finally, we hold that GSS's operational preemption defense is waivable because it does not challenge the subject matter jurisdiction of the trial court. In other words, the trial court would have retained jurisdiction over the lawsuit regardless of whether state law or the Town's ordinance was applied. Because we conclude that GSS's operational preemption defense was not successfully raised, we do not consider the merits of that defense.

I.

In 1999, GSS purchased a fifty-five acre tract of land in Pitkin County, Colorado for the purpose of creating a ranching operation and mountain resort. Shortly thereafter, GSS began construction on the land and instituted a weed management program intended to eradicate noxious weeds and dandelions from the property.

On June 15, 2001, the Town filed suit in Pitkin County District Court, alleging that dirt from the construction site polluted Nettle Creek, the primary source of drinking water for the Town, and that GSS's use of herbicides, fertilizers, and pesticides threatened to cause additional contamination. The Town further alleged that GSS's activities constituted a public nuisance and sought to enjoin these activities under the Town's watershed protection ordinance until GSS implemented "the necessary application and storage controls to prevent contamination of the Town's public water supply."

On June 22, 2001, the Town and GSS entered into a stipulation to resolve the dispute over GSS's use of herbicides and other agricultural chemicals. However, the Town's newly elected board ultimately rejected this compromise in May 2002, stating that its goal was to preclude the use of all agricultural chemicals on the property. The trial court subsequently denied GSS's motion to enforce the stipulation. GSS had filed its answer on September 19, 2001, and the time for amending pleadings under the case management order had lapsed in January 2002. The court had set the case for trial in October 2003.

In June 2003, approximately four months prior to the commencement of trial, GSS filed a motion to amend its answer to state an affirmative defense that the Town's ordinance was preempted by state law. Specifically, GSS asserted that there was an operational conflict between the application of the Town's watershed ordinance and various state statutes. The Town opposed GSS's motion to amend, arguing that the new defense would require significant additional discovery and the retention of additional experts. Before the trial court ruled on this motion and approximately three months before trial, GSS filed a motion for partial summary judgment, reasserting, inter alia, the preemption defense.¹

On August 4, 2003, the trial court denied GSS's motion to amend, reasoning that the amendment would "substantially change the nature of the trial and put the trial date in jeopardy." GSS then sought relief from this court pursuant to C.A.R. 21, which we denied.

On August 15, 2003, the Town responded to GSS's summary judgment motion. In pertinent part, the Town argued,

The Court ruled in its Order of August 4, 2003 [denying GSS's motion to amend the answer], that these defenses may not be asserted by GSS in this case at this juncture due to the close proximity of trial. . . . As such, the Town does not presently intend to further respond to the preemption issue unless the Court determines that GSS' preemption defenses may go forward.

Two months later, on October 3, 2003, the trial court also denied GSS's motion for partial summary judgment. The order did not specifically address GSS's operational preemption defense, although it "recognize[d] that the issues raised in the [summary judgment] motion may be appropriate to address at mid-trial or other appropriate stages of the trial to the court." Because GSS had asserted a number of issues in its summary judgment motion, the court's order was ambiguous as to whether GSS could argue its operational preemption defense at trial.

The ambiguity, however, was resolved at the outset of trial. When counsel for the Town attempted to discuss the preemption issue in his opening argument, the trial court immediately stopped him, saying,

Excuse me, my order having denied the amendment to the answer and the Supreme Court's refusal to grant an Order of Prohibition puts this issue to rest, does it not? The question is not one of whether the Town has authority . . . . That has been litigated. That is done. That is the law of the case.

Later, the trial court referred to GSS's operational preemption defense as an "interesting and complex question which was not successfully raised in the pleadings in this case and will not be reached by this court." Counsel for GSS did not argue preemption or attempt to introduce evidence on the issue at trial.

Following the bench trial, the court concluded that GSS violated the Town's watershed ordinance and ordered GSS "restrained from storing, mixing, applying or disposing of pesticides, herbicides, fertilizers or chemical compounds on the property in any manner that would pollute the Town's water supply as defined in the ordinance."²

GSS appealed and the court of appeals reversed, ruling that GSS should have been permitted to present its operational preemption defense at trial. The court remanded the case to the trial court because it determined that additional fact-finding was necessary before ruling on the merits of GSS's preemption defense. We now reverse the court of appeals.

II.

The court of appeals gave two grounds for its decision. First, the court reasoned that although the trial court was within its discretion to deny GSS's motion to amend its answer to add the operational preemption defense,³ GSS had constructively amended its answer by raising the defense again in its motion for partial summary judgment. The court also found "no basis" in the record for concluding that such a constructive amendment would prejudice the Town. Second, the court raised the question of whether the affirmative defense of operational preemption could actually be waived. We disagree with both grounds.

A.

The Town contests the court of appeals' holding that GSS's operational preemption defense was incorporated into the answer — despite the trial court's previous denial of GSS's motion to amend — because GSS raised the defense in its motion for partial summary judgment. The court cited two of our decisions to support this proposition: Bebo Construction Co. v. Mattox & O'Brien, P.C., 990 P.2d 78 (Colo.1999), and Cox v. Pearl Investment Co., 168 Colo. 67, 450 P.2d 60 (1969).

Previous court of appeals' opinions have also suggested that an affirmative defense asserted for the first time in a summary judgment motion will be treated as incorporated into the pleadings. See, e.g., Trujillo v. Farmers Ins. Exch., 862 P.2d 962, 965 (Colo. App.1993) ("However, if an affirmative defense is asserted in a motion for summary judgment, it is deemed incorporated into the answer."); Slabey v. Colo. Real Estate Comm'n, 762 P.2d 734, 735 (Colo.App.1988) ("[E]ven if the notice requirement is considered an affirmative defense, it may nevertheless be raised by motion for summary judgment . . . ."); Mountain Gravel & Constr. Co. v. City of Cortez, 721 P.2d 698, 700 (Colo. App.1986) ("[E]ven if [the notice requirement] is considered an...