Cases of Note Archive 2017

City of Arvada v. Denver Health & Hosp., Colorado Supreme Court No. 16SC184 (October 10, 2017)

Holding: Section 16-3-401 (2) does not create a private right of action against a governmental entity for a health care provider who treats a person in custody.

Case Summary: Arvada police arrested a severely injured man and transported him to Denver Health for treatment. After the man and his estate were unable to pay the costs of treatment, Denver Health sued Arvada to recover the costs. Denver Health argued that section 16-3-401, C.R.S., which requires law enforcement agencies to provide medical treatment to persons in custody if necessary, also requires such agencies to pay for such treatment. The Colorado supreme court held that section 16-3-401 does not create a private cause of action for a medical care provider. However, the court also held that any remedy for Denver Health's claim lies in contract law rather than tort law, and therefore the claim is not barred by the Colorado Governmental Immunity Act. Because Denver Health may yet prevail on a claim of unjust enrichment, the court remanded the case for further proceedings. In the majority opinion, Justice Hood stated that the issues in the case "cry out for resolution" by the General Assembly.

Fuentes-Espinoza v. People, Colorado Supreme Court No. 13SC128 (October 10, 2017)

Holding: The court holds that section 18-13-128, C.R.S., is preempted by federal law under the doctrines of both field and conflict preemption and, accordingly, reverses the defendant's convictions.

Case Summary: In 2007, petitioner Fuentes-Espinoza was arrested in Wheat Ridge, Colorado, with a van full of people whom he was transporting from Arizona to Kansas. He was charged with, and later convicted of, seven counts of human smuggling in violation of section 18-13-128, C.R.S. He appealed his convictions, arguing that the statute is preempted by the federal "Immigration and Nationality Act", 8 U.S.C. sec. 1101-1537 (2017) (INA).

The court of appeals rejected Fuentes-Espinoza's preemption argument, concluding that he could not raise the argument on appeal because he did not assert it before the trial court. However, the Colorado Supreme Court chose to exercise its discretion to review the argument, and the supreme court agreed with Fuentes-Espinoza that section 18-13-128, C.R.S., is preempted by the INA. Accordingly, the court reversed his convictions on all counts.

The U.S. Supreme Court has recognized three forms of federal preemption: express, field, and conflict preemption. In Fuentes-Espinoza's case, the Colorado Supreme Court found that Colorado's human smuggling statute is preempted under the doctrines of both field and conflict preemption.

As to field preemption, the court found that the comprehensive nature of the INA demonstrates Congress's intent to "maintain a uniform, federally regulated framework for criminalizing and regulating the transportation, concealment, and inducement of unlawfully present aliens, and this framework is so pervasive that it has left no room for the states to supplement it."

As to conflict preemption, the court found that Colorado's human smuggling statute "stands as an obstacle to the accomplishment and execution of Congress's purposes and objectives in enacting the INA" because the statute (1) conflicts with the "careful calibration" of the INA's penalty scheme and (2) "sweeps more broadly" than the INA by criminalizing a wider range of conduct. "In doing so," said the court, "the Colorado statute disrupts Congress's objective of creating a uniform scheme of punishment because some human smuggling activities . . . are punishable in Colorado but not elsewhere."

Pineda-Liberato v. People, Colorado Supreme Court No. 15SC374 (October 2, 2017)

Holding: A court does not have the authority to collect unpaid fees and court costs after the completion of a deferred judgment and dismissal of the case.

Case Summary: This case involves the district court's authority to collect unpaid restitution and court costs and fees ordered as part of a deferred sentence after the completion of the deferred sentence. The prosecution moved to terminate defendant's deferred judgment while the defendant still owed restitution and court costs and fees. After the court granted the prosecution's motion to terminate defendant's deferred judgment, the court raised the issue, on its own, whether it still had the authority to collect restitution from the defendant. The court ruled that it did not. After that ruling, the defendant asked the court to consider whether the court had the authority to collect unpaid court-ordered fees and costs after completion of the deferred judgment and the court ruled it did not and vacated the court costs and fees. Shortly thereafter, the General Assembly passed HB14-1035, An Act Concerning Collection of Restitution Ordered Pursuant to a Deferred Judgment. The act amended the restitution statute to make it clear that restitution orders remain in effect after the termination of deferred judgment or deferred adjudication.

The Colorado Supreme Court ruled that a restitution order remains in effect after the termination of a deferred sentence. On the question of whether the district court could still collect the unpaid court costs and fees, the supreme court looked at each of the statutes that authorized the particular fee or court cost and found that none of the statutes contained similar language to the language in the restitution statute added by HB 14-1035 that makes it clear that the obligation to pay that fee or court cost continues after the completion of a deferred judgment and dismissal of the charges. So, the supreme court ruled that a district court does not have the authority to collect unpaid fees and court costs after the completion of a deferred judgment and dismissal of the case.

People v. Stanley, Colorado Court of Appeals No. 16CA1612 (September 7, 2017)

Holding: Court should hold a hearing to determine the amount of settlement proceeds to be offset against restitution order at which the defendant bears the burden of establishing the amount of any offset and the victim has the opportunity to rebut by proving how settlement proceeds were used.

Case Summary: The trial court ordered the defendant to pay $30,000 in restitution as a result of a traffic accident. The victim received $25,000, the full policy limits, from the defendant's auto insurer in settlement of all claims for personal injuries, loss of services, and property damage resulting from the accident.. The trial court offset the full $25,000 against the defendant's restitution order. The court of appeals found that the trial court should have held a hearing to allow the victim to rebut the inference of having received a double recovery by proving that she applied the settlement proceeds to costs that were not covered by the defendant's restitution. One judge found that the victim has all of the evidence and therefore a defendant may never be able to bear the burden of establishing that an amount paid in settlement of claims covers the same costs paid for by restitution and should therefore be offset. He suggested that the General Assembly should clarify what must be proven and by whom to trigger a trial court's discretion to order an offset.

Keim v. Douglas County Sch. Dist., Colorado Supreme Court No. 15SC502 (July 3, 2017)

Holding: A school district did not make a prohibited contribution in a school board election campaign under section 1-45-117 (1)(a) of the Fair Campaign Practices Act and the definition of "contribution" in article XXVIII, section 2(5)(a)(IV) of the state constitution.

Case Summary: In this case, the matter is of significant policy interest to members of the General Assembly and other major participants in the state's political process who regularly seek guidance in knowing whether and to what extent governmental bodies and their elected leaders may advocate for, and undertake action in support of, policy objectives without violating the provisions of section 1-45-117 (1)(a)(I) of the Fair Campaign Practices Act ("FCPA"). In relevant part, section 1-45-117 (1)(a)(I), C.R.S., prohibits the state and its political subdivisions from making contributions in election campaigns.

In February 2013, using public money, the Douglas County School District ("District") commissioned and paid for a "white paper" report that was prepared by a national public policy think tank supportive of the District's educational reform agenda. The report ultimately became known as the "Hess Report" after one of its two co-authors. In September of that year, the District emailed its weekly newsletter to approximately 85,000 residents of Douglas County. The newsletter provided a link through which readers could download and access the Hess Report. Shortly thereafter, Julie Keim, a candidate in the 2013 District school board elections, filed a campaign finance complaint against the District alleging that the Hess Report was a prohibited "indirect contribution" because it provided an indirect benefit to four school board candidates who were associated with a "reform slate." An administrative law judge ("ALJ") concluded that the District violated the FCPA by contracting for and disseminating the Hess Report. The District appealed and the Court of Appeals reversed in a divided opinion. Ms. Keim filed a petition for certiorari with the Supreme Court. The Supreme Court granted certiorari review and affirmed the Court of Appeals.

The Supreme Court initially held that under article XXVIII, section 2(5)(a)(IV) of the state constitution, a "contribution" requires that 1) something of value 2) be given to a candidate, directly or indirectly, (3) for the purpose of promoting the candidate's nomination, retention, recall, or election. Here, the District did not make a prohibited contribution to a campaign under article XXVIII, section 2(5)(a)(IV) of the state constitution and section 1-45-117(1)(a)(I), C.R.S., when it broadly disseminated an email of the report to county residents. The Court assumed that the Hess Report constituted a "thing of value" for purposes of the definition of "contribution." However, the District did not give the Hess Report, directly or indirectly, to any school board candidate, as required by the applicable definition of "contribution," when it distributed the email to county residents. The Supreme Court rejected the notion that something of value can be "given to" a candidate when it is publicly distributed, even if the candidate happens to be among the public to which the thing of value has become available. The definition of "contribution" cannot be construed so broadly to encompass anything of value that might "indirectly benefit" a candidate's nomination, retention, recall, or election. Accordingly, the ALJ erred in concluding that the District violated section 1-45-117(1)(a)(I), C.R.S., by contracting for and disseminating the Hess Report to Douglas County residents.

Nicholls v. People, Colorado Supreme Court No. 13SC68 (June 19, 2017)

Holding: In light of the U.S. Supreme Court's holding in Davis v. Washington, 547, U.S. 813 (2006), the court rules that Colorado's confrontation clause applies only to testimonial statements.

Case Summary: Defendant's husband set fire to the couple's home while defendant was at work, killing the couple's three children and destroying the home. Defendant and her husband were charged and tried separately for multiple counts of murder, arson, and other crimes. While awaiting trial, the husband confessed to his cellmate that he and the defendant had acted together to burn down the house and kill their children to collect insurance proceeds. The defendant and her husband were convicted separately of multiple offenses, including the murders.

Defendant appealed her convictions, arguing that her husband's statements to his cellmate were inadmissible hearsay and the trial court's admission of the statements violated her right to confront her accusers. ("Hearsay" is an out-of-court statement that is offered to prove the truth of the matter asserted.) The court upheld the defendant's conviction, holding that the husband's statements were admissible.

In rejecting her arguments, the Colorado supreme court noted that in Davis v. Washington, 547 U.S. 813 (2006), the U.S. Supreme Court held that the Confrontation Clause of the Sixth Amendment  to the U.S. Constitution, under which an accused has the right to confront his or her accuser, applies only to "testimonial" statements, or statements made in the course of formal testimony or interrogation, and not to "nontestimonial" statements. The Davis court relied upon the Court's own prior reasoning in Crawford v. Washington, 541 U.S. 36 (2004), where it declined to offer a precise definition of "testimony" but stated that it typically means "a solemn declaration or affirmation made for the purpose of establishing or proving some fact". (Crawford, at 51.)

Relying on Davis, the Colorado supreme court held that nontestimonial statements similarly do not implicate the confrontation clause (i.e., section 16 of article II) of the Colorado state constitution. Thus, the court overruled Compan v. People, 121 P.3d 876 (Colo. 2005), in which the court had held otherwise.

Because the husband's statements were undisputedly nontestimonial, the court next examined whether his statements fit under an existing exception to the general rule prohibiting the admission of hearsay. In determining that the husband's statements qualified as a statement against his own interest and were therefore admissible, the court revisited its standards for the admission of statements against interest that are offered to inculpate the accused. Specifically, the court reconsidered whether corroborating circumstances must exist that demonstrate the trustworthiness of the statement. The court concluded that, in light of its holding that nontestimonial statements do not implicate Colorado's confrontation clause, such corroborating circumstances are not required for the admission of nontestimonial statements against interest. Thus, the court overruled People v. Newton, 966 P.2d 563 (Colo. 1998), in which it had held otherwise.

People v. Lente, Colorado Supreme Court No. 15SA331 (June 19, 2017)

Holding: Hash-oil extraction is manufacturing, not processing, and is protected by Amendment 64 only for licensed individuals or entities.

Case Summary: Austin Lente was trying to extract hash oil from marijuana using butane. The butane exploded and burned down his laundry room. Mr. Lente was charged with illegally processing or manufacturing marijuana. Mr. Lente argued that Amendment 64 amended the constitution to make processing marijuana legal, and he argued that extracting hash oil is a form of processing. The district court agreed and dismissed the charge. The state appealed to the Supreme Court, which held that Mr. Lente was engaged in manufacturing, not processing, which is legal under Amendment 64 only if the manufacturer holds a license. Mr. Lente did not hold a license. To give effect to the voters' intent in adopting Amendment 64, the Court looked to the definitions of "processing" and "manufacturing" that were in place when Amendment 64 passed. Because Amendment 64 did not separately define manufacturing and processing, the voters are presumed to have adopted the accepted meanings existing at the time. There was no definition for processing, but there was one for manufacturing, which the Court found included extracting hash oil. The Court reversed the district court's holding and remanded the case to the district court for further proceedings.

Vallagio at Inverness v. Metro. Homes, Colorado Supreme Court No. 15SC508 (June 5, 2017)

Holding: In this case involving construction defect claims raised by the Vallagio at Inverness Residential Condominium Association, against Metropolitan Homes, Inc., the Colorado Supreme Court affirmed the Colorado Court of Appeals' decision that provisions of a common interest community's declaration that require all construction defect claims to be submitted to binding arbitration and specify that the binding arbitration provision may only be amended with the declarant's consent do not violate the Colorado Common Interest Ownership Act (CCIOA) or the Colorado Consumer Protection Act (CCPA).

Case Summary: A provision of a common interest community's original declaration required all construction defect claims to go through binding arbitration. Another provision prohibited the unit owners of the common interest community from amending the provision establishing the binding arbitration requirement without the declarant's consent. After a construction defect dispute arose, at least 67% of the unit owners, in accordance with section 38-33.3-217, C.R.S., which establishes a 67% voting threshold for amending a declaration, voted to amend the declaration to remove the binding arbitration requirement. Thereafter, the unit owner's association, the Vallagio at Inverness Residential Condominium Association (association) filed a civil complaint against Metropolitan Homes, Inc. (declarant) in district court asserting the construction defect claims. The declarant moved to compel arbitration, arguing that the amendment removing the binding arbitration requirement was invalid because the unit owners had not obtained the declarant's consent to the amendment. The association argued that the declarant consent requirement violated the CCIOA and that the binding arbitration requirement violated the CCPA. The district court denied the declarant's motion to compel arbitration, and the declarant filed an interlocutory appeal. The Colorado Court of Appeals reversed the district court's determination, concluding that the amendment consent and binding arbitration provisions did not violate either the CCIOA or the CCPA and were therefore valid and enforceable. The Colorado Supreme Court granted the association's petition for certiorari and affirmed the court of appeals' decision.

The supreme court held that the provision of the declaration requiring the declarant's consent to any amendment to the binding arbitration provision of the declaration did not violate the CCIOA's provision requiring a 67% vote of unit owners to amend the declaration. The court rejected the association's argument that the CCIOA provision set forth the exclusive procedure for amending a declaration and concluded that the statutory language in the CCIOA was clear and unambiguous in establishing a percentage threshold only; it did not prohibit additional requirements that did not affect the percentage of unit owners required to affirmatively vote for or agree to an amendment of the declaration. The court further held that the amendment consent requirement did not violate the CCIOA's prohibition against restricting an association's dealings with the declarant more stringently than its dealings with a third party because the amendment consent requirement affected a power held by the unit owners and not the association. Finally, the court held that the CCPA's right to a civil action, i.e. a court proceeding, is waivable because the general assembly did not elect to make the rights afforded by the CCPA non-waivable and that CCPA claims therefore may be adjudicated through binding arbitration. Having held that the binding arbitration provision and provision requiring the consent of the declarant to amend that provision requirements of the declaration were valid, the supreme court remanded the case so that the construction defect claims could proceed through binding arbitration.

Two justices dissented, concluding that the legislative intent of section 38-33.3.-217, C.R.S., is to require no more than 67% of unit owners' votes to amend a declaration and that the declarant consent requirement of the declaration at issue contravened this legislative intent by "effectively allowing the Declarant to grant itself permanent veto power over a supermajority of unit owners and thus unilaterally control the Association's ability to amend the declaration."

Martinez v. Colo. Oil and Gas Conservation Comm'n, Colorado Court of Appeals No. 16CA0564 (March 23, 2017)

Holding: The Colorado oil and gas conservation commission erred when it denied a petition to adopt a rule on the basis that it lacked statutory authority to adopt the proposed rule to prohibit issuance of a well permit if the permit would adversely impact public health or impair the environment, including wildlife. The plain meaning of the statute authorizes the commission to foster the development of oil and gas resources in a manner consistent with the protection of public health, safety, and welfare, including the protection of the environment and wildlife resources.

Case Summary: Plaintiffs petitioned for a rule that would require the commission to deny a well permit unless the drilling can occur in a manner that does not cumulatively impair Colorado's atmosphere, water, wildlife, and land resources, does not adversely impact human health, and does not contribute to climate change. The commission denied the petition, determining that the commission lacked statutory authority to adopt the proposed rule. The district court upheld the commission's determination, finding that the statute requires the commission to balance developing oil and gas resources with protecting public health, safety, and welfare.

The court of appeals reversed based on its analysis of the oil and gas statute's legislative declaration, which states that it is in the public interest to foster the "responsible, balanced development, production, and utilization of the natural resources of oil and gas in the state of Colorado in a manner consistent with protection of public health, safety, and welfare, including protection of the environment and wildlife resources." The court construed the word "balanced" as applying only to the phrase "development, production, and utilization" and concluded that the development of oil and gas resources is in the public interest only when it occurs in a manner consistent with the protection of public health, safety, and welfare, including the protection of the environment and wildlife resources. The court held that "in a manner consistent with" does not indicate a balancing test but rather a condition that must be fulfilled. The court construed a substantive portion of the statute in a similar manner, finding that the commission's authority to regulate "[o]il and gas operations so as to prevent and mitigate significant adverse environmental impacts . . . to the extent necessary to protect public health, safety, and welfare . . . taking into consideration cost-effectiveness and technical feasibility" supports the conclusion that the general assembly intended to elevate the importance of public health, safety, and welfare above a mere balancing test.

Broomfield Senior Living Owner, LLC v. R.G. Brinkmann Co., Colorado Court of Appeals No. 16CA0101 (March 9, 2017).

Holding: Broomfield Senior Living Owner, LLC, although it is an entity and not an individual, is a "residential property owner" and therefore is entitled to the benefit of the "Homeowner Protection Act", which voids certain contractual provisions limiting claims for construction defects.

Case Summary: Broomfield Senior Living Owner, LLC, acquired rights under a contract for the construction of a senior living community with multiple residential units, which Broomfield would rent out to individual tenants. Brinkmann Constructors was the builder. The project was completed in 2009. In late 2012, Broomfield became aware of the likelihood of plumbing problems, i.e., broken pipes under a concrete floor, and notified Brinkmann of the defect. Brinkmann disputed liability and Broomfield sued.

The contract contained time limits and notice requirements for any claims against Brinkmann. The time limits were shorter than the statutory limitation periods that would otherwise apply if Broomfield were a "residential property owner"; therefore, those time limits would be void under the "Homeowner Protection Act of 2007". This raised the question of whether Broomfield, as a commercial enterprise, was a "residential property owner" within the intended meaning of the "Homeowner Protection Act". The trial court held that it was not and granted summary judgment to Brinkmann based on the shorter contractual limitation periods.

The Colorado Court of Appeals reversed, concluding that Broomfield did meet the definition of a "residential property owner" entitled to the protection of the "Homeowner Protection Act". While there is no definition of "residential property owner" or of "residential property", the court of appeals found that the common usage of the term was unambiguous and a companion statute defines "commercial property" as property zoned for "commercial, industrial, or office"  use, none of which were permitted uses of the property in question. Therefore, the property was "residential property" and Broomfield, as its owner, was a "residential property owner".

Lewis v. Taylor, Colorado Court of Appeals No. 13CA0239 (February 9, 2017)

Holding: If an investor gives reasonably equivalent value for the receipt in good faith of profits from an investment in a Ponzi scheme, the transfer of the profits to the investor is not voidable.

Case Summary: Steve Taylor (defendant) invested money in a Ponzi scheme. Before the scheme was shut down and without knowing that it was an illegal arrangement, he received substantial profits and withdrew all of his principal. After the Ponzi scheme was discovered and shut down, the trial court appointed a receiver. The receiver sued the defendant in Denver District Court under the "Colorado Uniform Fraudulent Transfer Act" (CUFTA) to void the transfers of the profits to him so that those profits could be used to provide restitution to later investors in the Ponzi scheme who lost some or all of the principal amounts of their investments. The defendant argued that the receiver's claim was not timely and that even if it were timely the transfers of profits were not voidable because he received the profits in good faith and gave reasonably equivalent value for them.

The district court granted summary judgment to the receiver, holding that the claim was timely and that the transfers of profits to the defendant were voidable. The Court of Appeals reversed the trial court, holding that the receiver's claim was not timely. The Supreme Court reversed the Court of Appeals, holding that the receiver's claim was timely, and remanded the case to the Court of Appeals to determine whether the transfers of profits to the defendant were voidable.

The Court of Appeals, in what it said was a case of first impression in Colorado, held that if an investor gives reasonably equivalent value for the receipt in good faith of profits from an investment in a Ponzi scheme, transfers of the profits to the investor are not voidable. The court declined to follow federal case law that construed other states' versions of the "Uniform Fraudulent Transfer Act" so that "reasonably equivalent value" can never be given for profits from a Ponzi scheme. Those cases reasoned that upholding transfers of profits depletes the assets of the scheme operator, thus depriving subsequent investors of the return of their principal. But the Court of Appeals noted that upholding transfers of principal has the exact same effect of depleting the assets and reducing other parties' restitution and further reasoned that the time-value of money could constitute reasonably equivalent value. Finding the relevant provision of CUFTA, section 38-8-109 (1), C.R.S., which states that "[a] transfer or other obligation is not voidable . . . against a person who took in good faith and for a reasonably equivalent value . . .", to be clear, it remanded the case to the district court to make particularized findings of fact as to whether reasonably equivalent value was given for each individual transfer of profits. The Court of Appeals also suggested hat the General Assembly may wish to enact a new statute if it finds that the current statute does not provide sufficiently equitable remedies for victims of Ponzi schemes.

People v. Crouse, Colorado Supreme Court No. 14SC109 (January 23, 2017)

Holding: Section 14(2)(e) of article XVIII of the state constition that requires law enforcement to return marijuana after an acquittal based on a medical marijuana defense is unconstitutional.

Case Summary: The defendant was charged with cultivating and possessing marijuana with the intent to distribute. The police seized drug paraphernalia, 55 marijuana plants, and approximately 2.9 kilograms of marijuana from the defendant's home. The defendant asserted the defense that he was a medical marijuana patient authorized to cultivate and possess marijuana. The jury acquitted the defendant. The defendant requested the police return the seized marijuana paraphernalia and marijuana plants pursuant to section 14(2)(e) of article XVIII of the state constitution. That section requires "marijuana and paraphernalia seized by state or local law enforcement officials from a patient . . . in connection with the claimed medical use of marijuana shall be returned immediately upon . . . the dismissal of charges, or acquittal". The people opposed the motion arguing that it conflicts with and is preempted by the Federal Controlled Substances Act. The Supreme Court agreed with the people that the return provision of the constitution requires police officers to violate federal law by distributing marijuana when they return the marijuana to the acquitted person. The Supreme Court declared there was a positive conflict between state and federal law and therefore the state law was preempted by the Federal Controlled Substances Act.