Town of Carbondale v. Gss Properties, LLC, No. 03CA2523.

• Decision Date: 08 September 2005
• Docket Number: No. 03CA2523.
• Citation: 140 P.3d 53
• Parties: The TOWN OF CARBONDALE, a Colorado municipal corporation, Plaintiff-Appellee, v. GSS PROPERTIES, LLC, a North Carolina limited liability company, Defendant-Appellant.
• Court: Colorado Court of Appeals

140 P.3d 53

The TOWN OF CARBONDALE, a Colorado municipal corporation, Plaintiff-Appellee, v. GSS PROPERTIES, LLC, a North Carolina limited liability company, Defendant-Appellant.

No. 03CA2523.

Colorado Court of Appeals, Div. II.

September 8, 2005.

Certiorari Denied July 17, 2006.

COPYRIGHT MATERIAL OMITTED

Caloia, Houpt & Hamilton, P.C., Mark E. Hamilton, Glenwood Springs, Colorado; Robert B. Emerson, P.C., Robert B. Emerson, Carbondale, Colorado, for Plaintiff-Appellee.

Walter H. Sargent, P.C., Walter H. Sargent, Colorado Springs, Colorado, for Defendant-Appellant.

VOGT, J.

In this action for violation of a watershed protection ordinance, defendant, GSS Properties, LLC, appeals the trial court judgment directing that a decree of abatement issue against it and in favor of plaintiff, the Town of Carbondale. We reverse and remand with directions.

In 1999, GSS purchased a fifty-five-acre parcel located above the Town's Nettle Creek water plant. GSS began construction and earthmoving activities on the property and started using herbicides and other chemicals to eradicate noxious weeds and dandelions.

In June 2001, the Town filed this action against GSS. It sought damages on a theory of negligence, alleging that GSS's construction activities had allowed dirt to spill into the creek and eventually caused ruptures of the Town's water main. The complaint also alleged that GSS's construction work and use of chemicals on the property constituted a public nuisance that the Town was entitled to abate under its ordinances. The Town sought, as relevant here, preliminary and permanent injunctive relief "restraining the use or storage of chemical herbicides or pesticides on the Property without implementing the necessary application and storage controls to prevent contamination of the Town's public water supply."

The parties entered into a stipulation intended to resolve the dispute. The stipulation included a provision for a plan regarding the use of herbicides and other agricultural chemicals on the property. GSS subsequently presented such a plan, but the Town determined it was unacceptable.

GSS moved to enforce the stipulation. In March 2003, the trial court denied the motion. Trial was set for October 2003.

In June 2003, GSS moved to amend its answer to add, as an affirmative defense, that the Town's ordinance was preempted by state law. It also asserted preemption as a basis for a motion for partial summary judgment on the Town's claim for injunctive relief precluding the use of agricultural chemicals on the property.

In August 2003, the trial court denied the motion to amend as untimely, stating: "To allow the amendment at this stage would substantially change the nature of the trial and put the trial date in jeopardy." It also denied GSS's motion for partial summary judgment. However, in its order, the court "recognize[d] that the issues raised in the motion may be appropriate to address at mid-trial or other appropriate stages of the trial to the court."

A bench trial was held in October 2003. Because the issues regarding GSS's construction activities had been largely resolved, the focus of the trial was on whether, based on the Town's watershed protection ordinance, GSS should be enjoined from using any herbicides, chemical pesticides, or fertilizers on the property. The trial court refused to permit GSS to introduce evidence or present argument regarding state and federal standards for water quality and use of agricultural chemicals, or regarding the Town's authority to promulgate its ordinance. The court considered these issues irrelevant in light of its denial of GSS's motion to amend and the Colorado Supreme Court's refusal to grant relief from that ruling pursuant to C.A.R. 21. Those rulings, the trial court stated, were now the "law of the case."

At the conclusion of the trial, the court concluded that GSS had violated the Town's ordinance by conducting "a business which will pollute or lead to the contamination or pollution . . . of an area five miles above the point from which water is taken by the Town's Nettle Creek intake system." However, it expressed "no conclusion as to whether the Town's authority to pass such an ordinance is consistent with state law as that issue was not properly raised in the case."

The court entered judgment for the Town in the amount of $8389 on its negligence claim. GSS does not challenge that portion of the judgment on appeal.

The court also concluded that the Town had established its nuisance claim based on GSS's violation of the ordinance, and that the appropriate remedy for the violation was abatement of the nuisance. Accordingly, as pertinent here, the court ordered that GSS was "restrained from storing, mixing, applying or disposing of pesticides, herbicides, fertilizers or chemical compounds on the property in any manner that may pollute the Town's water supply as defined in the ordinance."

I.

GSS contends the trial court erred when, in reliance on its denial of the motion to amend the answer and on the supreme court's refusal to review that ruling, it precluded GSS from introducing evidence of county, state, and federal statutes, regulations, and standards for water quality and the use of agricultural chemicals. We agree.

A.

The supreme court's refusal to issue a rule to show cause upon a request for relief pursuant to C.A.R. 21 has no substantive significance. It does not indicate either approval or disapproval of the trial court ruling that is the subject of the original proceeding. Atlantic Richfield Co. v. District Court, 794 P.2d 253 (Colo.1990); Estate of Milstein v. Ayers, 955 P.2d 78 (Colo.App.1998). Therefore, the supreme court's denial of GSS's C.A.R. 21 petition did not become the law of the case or preclude the trial court from considering GSS's arguments and proffered evidence in support of its preemption defense.

B.

We further conclude that the trial court erred in relying on its prior denial of GSS's motion to amend to preclude GSS from introducing its proffered evidence at trial.

Affirmative defenses must ordinarily be specifically pleaded in the answer. However, "in some instances, an affirmative defense asserted for the first time in a motion for summary judgment will be deemed to be incorporated into the defendant's answer." Bebo Construction Co. v. Mattox & O'Brien, P.C., 990 P.2d 78, 84 (Colo.1999); see Trujillo v. Farmers Insurance Exchange, 862 P.2d 962 (Colo.App.1993); Slabey v. Colorado Real Estate Commission, 762 P.2d 734 (Colo. App.1988); Mountain Gravel & Construction Co. v. City of Cortez, 721 P.2d 698 (Colo.App. 1986). In such cases, if the defendant loses the motion for summary judgment but wishes to continue to assert the affirmative defense, the trial court is required to permit the defendant to amend its answer. Bebo Construction Co. v. Mattox & O'Brien, P.C., supra; see also Cox v. Pearl Investment Co., 168 Colo. 67, 450 P.2d 60 (1969).

We conclude that application of the rule allowing affirmative defenses to be raised for the first time in a summary judgment motion is particularly appropriate in cases where, as here, the defense is preemption. See Halprin v. Equitable Life Assurance Society, 267 F.Supp.2d 1030 (D.Colo.2003)(noting absence of authority for proposition that a preemption defense premised upon statutory application can be waived); Johnston v. Davis Security, Inc., 217 F.Supp.2d 1224, 1227 (D.Utah 2002)(rejecting contention that defendants waived preemption affirmative defense by not raising it in their answer, where issue was raised in motion for partial summary judgment).

Thus, in the circumstances presented here, even though the trial court initially had discretion to deny GSS's motion to amend its answer, the court should have allowed GSS to present evidence and argument on preemption after it denied GSS's timely summary judgment motion based on preemption.

Most of the authorities cited above note that the plaintiff was not prejudiced by the late assertion of the affirmative defense. We need not decide whether lack of prejudice to the plaintiff is a requirement for allowing assertion of an affirmative defense in a summary judgment motion, because, even assuming there is such a requirement, the record affords no basis for concluding that the Town would have been prejudiced in this case.

First, GSS's motion to amend was filed more than four months before trial. The Town opposed amendment on the basis that the motion was untimely and that there was no preemption, but it did not claim it would be prejudiced by the late amendment; rather, it requested that, if amendment were permitted, it be allowed additional time to retain experts, pursue discovery, and file its own dispositive motion on preemption. GSS did not oppose that request. Similarly, when GSS filed its summary judgment motion three months before trial, the Town did not claim prejudice but simply argued that the preemption issue had been rendered moot by the trial court's intervening order denying leave to amend.

Second, in its order denying summary judgment the trial court expressly stated that the issues raised might be "appropriate to address" at trial. This language put the parties on notice that preemption might be argued at trial, and the trial transcript suggests that the Town was prepared to address the issue. In his opening statement, the Town's counsel attempted to direct the court's attention to authorities supporting local control over environmental issues, but the trial court told him to move on because the issues of the Town's authority and preemption were no longer in the case. Later, counsel for the Town attempted to elicit testimony from the Town's expert regarding federal and state laws concerning protection of source water, but the court again admonished him that these issues were "not going to be litigated in the case."

We therefore conclude that the trial court erred in precluding evidence and argument at trial...