WESTER HOLDINGS PARTNERSHIP v. Reece, 98CA1093.

• Decision Date: 28 October 1999
• Docket Number: No. 98CA1093.,98CA1093.
• Citation: 991 P.2d 328
• Parties: WESTAR HOLDINGS PARTNERSHIP, a Colorado partnership, Plaintiff-Appellant, v. Fred D. REECE, an individual, Defendant-Appellee.
• Court: Colorado Court of Appeals

991 P.2d 328

WESTAR HOLDINGS PARTNERSHIP, a Colorado partnership, Plaintiff-Appellant, v. Fred D. REECE, an individual, Defendant-Appellee.

No. 98CA1093.

Colorado Court of Appeals, Div. II.

October 28, 1999.

Dufford & Brown, P.C., S. Kirk Ingebretsen, Denver, Colorado, for Plaintiff-Appellant.

E. Hil Margolin, Denver, Colorado, for Defendant-Appellee.

Opinion by Judge RULAND.

Plaintiff, Westar Holdings Partnership, appeals from the judgment of the trial court determining that the notice of lis pendens filed by defendant, Fred D. Reece, was not a "spurious document" for purposes of § 38-35-204, C.R.S.1999. Plaintiff also appeals the award of attorney fees to defendant. We reverse and remand the case for further proceedings.

Plaintiff entered into a contract to sell real property to defendant. However, defendant failed to tender the down payment required under the contract, and the sale did not close.

Plaintiff filed a complaint against defendant alleging breach of contract. Defendant answered and asserted three counterclaims including one for specific performance. In connection with this claim, defendant filed a notice of lis pendens against the property.

In response, plaintiff commenced a separate action against defendant pursuant to § 38-35-204 by filing a petition for order to show cause why the notice of lis pendens should not be declared invalid as a spurious document. Following a two-day evidentiary hearing, the trial court concluded that the notice of lis pendens was not a spurious document because defendant's specific performance counterclaim affected title to real property and because a rational argument could be made to support the claim. Specifically, defendant alleged that plaintiff had breached certain obligations in the contract and that a closing had never been scheduled.

The trial court limited its review, however, to an analysis of the pleaded allegations of the counterclaim and legal arguments in support of that claim. It made no findings of fact relative to the evidence presented by the parties.

Based upon this review, the trial court discharged the order to show cause, and awarded attorney fees to defendant pursuant to the statute. The court then consolidated plaintiff's statutory proceeding with the original suit pending between the parties.

Later, the court granted plaintiff's motion for summary judgment on defendant's counterclaim for specific performance and dismissed that claim. The trial court then certified its ruling on plaintiff's claim under § 38-25-204 as a final judgment pursuant to C.R.C.P. 54(b). This appeal followed.

I.

Plaintiff contends that, in determining whether the notice of lis pendens was a "spurious document" under § 38-35-204, the trial court erred by not considering the merits of its petition based on the evidence presented at the hearing. In support of the judgment, however, defendant contends that a § 38-35-204 hearing is analogous to a hearing under C.R.C.P. 105(f), and that a determination must be made based upon the pleadings only. We agree with plaintiff.

Section 38-35-204 provides a mechanism for challenging any "spurious document" filed against real property. A "spurious document" is defined as "any document that is forged or groundless, contains a material misstatement or false claim, or is otherwise patently invalid." Section 38-35-201(3), C.R.S.1999.

A similar statute prohibiting recordation of invalid liens contains language identical to that used to define "spurious documents" in § 38-35-201. See § 38-35-109(3), C.R.S.1999. Relative to that statute, a division of this court held that a "groundless document" was one for which a proponent can advance no rational argument based on evidence or the law to support the claim of a lien. Harris v. Hanson, 821 P.2d 821 (Colo. App.1991). We perceive no reason why the same definition should not be applicable to § 38-35-204, and thus, we adopt it here as did the trial court.

Contrary to defendant's contention, however, we conclude that the court erred in limiting its review to the pleaded allegations and legal argument.

Section 38-35-204(3), C.R.S.1999, provides:

If, following the hearing on the order to show cause, the court determines that the lien or document is not a spurious lien or spurious document, the court shall issue an order so finding and enter a monetary judgment in the amount of any respondent's costs, including reasonable attorney fees, against any petitioner .... (emphasis supplied)

The term "hearing" is not defined. Therefore, we must interpret the statute according to established principles of statutory construction.

Our primary task in construing a statute is to ascertain and give effect to the intent of the General Assembly. To determine that intent, we first look to the plain language of the statute and construe the words according to their plain and ordinary meaning. People v. District Court, 713 P.2d 918 (Colo.1986).

However, if the meaning of the words used is unclear or ambiguous, we may look to legislative history and other rules of statutory construction for guidance in ascertaining the legislative intent. See Martin v. Montezuma-Cortez School District RE-1, 841 P.2d 237 (Colo.1992).

Finally, as pertinent here, in interpreting the statute we must presume that the General Assembly intended a just and reasonable result. State Engineer v. Castle Meadows, Inc., 856 P.2d 496 (Colo.1993).

In Brown v. Brown, 161 Colo. 409, 422 P.2d 634 (1967), our supreme court adopted a definition of "hearing" in interpreting a custody statute. The court held that use of this term included both the privilege to be present when a case is being considered and the right to present and support one's contentions by evidence and argument. Based upon Brown, this court construed the term "hearing" to include the introduction of evidence in a statutory proceeding to determine whether a district attorney must prosecute a particular suspect. Moody v. Larsen, 802 P.2d 1169 (Colo.App.1990).

We perceive no reason why a similar interpretation should not apply here. Further, even if we assume that the term "hearing" is somehow ambiguous, we find additional support for this interpretation in the legislative history of the statute.

Hearings on the proposed statute reveal that the purpose of the Act was to protect...