Mulberry Frontage Metropolitan District v. Sunstate Equipment Co.
2023 COA 66. No. 22CA0680. Eminent Domain—Owner Attorney Fees—Lessee Attorney Fees.
July 13, 2023
Mulberry Frontage Metropolitan District (the district) filed a condemnation petition against the Niesje J. Van Heusden Revocable Trust (the owner), Sunstate Equipment Co. (the lessee), and the Larimer County Treasurer, seeking to condemn real property in Fort Collins (the property) for public street improvements. The property was part of a larger parcel that the lessee rented under a long-term lease to operate an equipment rental business. The property is burdened by a recorded deed of covenant held by the Colorado Department of Transportation (CDOT) prohibiting any construction or improvements in anticipation of a future highway project. The district identified the covenant in its petition but didn’t name CDOT as a respondent. The lessee moved for joinder of CDOT or dismissal of the case for failure to join CDOT and requested attorney fees and costs under CRS § 38-1-122(1). The court denied the motion to dismiss, granted the request for joinder and directed the district to join CDOT, and denied the request for attorney fees and costs because the lessee is not the property owner. The district joined CDOT, and the owner and the lessee jointly moved for dismissal on grounds that the proposed project conflicted with CDOT’s covenant. They also jointly requested attorney fees and costs under CRS § 38-1-122(1). The lessee asked the court to reconsider its fees request under CRS § 38-1-122(1) and requested, in the alternative, an attorney fees award under CRS § 13-17-102. The court dismissed the amended petition and awarded attorney fees and costs to the owner but didn’t address the lessee’s request for attorney fees under CRS § 13-17-102. The district moved for clarification of the court’s ruling on the lessee’s attorney fees request. The court reaffirmed that the lessee was not entitled to fees under CRS § 38-1-122(1) but didn’t address the lessee’s alternative attorney fee request under CRS § 13-17-102.
On appeal, the lessee contended that the trial court erred by denying its request for attorney fees and costs under CRS § 38-1-122(1). The lessee maintained that it qualifies as a “property owner” within the meaning of the statute and therefore is entitled to an award of its reasonable attorney fees and costs. Under CRS § 38-1-122(1), when a court rejects a condemnation petition on grounds that the petitioner isn’t authorized to acquire the subject property, “the property owner who participated in the proceedings” is entitled to recover its reasonable attorney fees and costs. Thus, the plain language of CRS § 38-1-122(1) provides for recovery of attorney fees and costs only by property owners, not lessees. Accordingly, the trial court did not err.
The lessee also argued that the trial court erred by not addressing its request for attorney fees under CRS § 13-17-102. Subsections (2) and (4) provide for the recovery of attorney fees when a court finds that an action, defense, or part thereof is substantially frivolous, groundless, or vexatious. Here, the trial court didn’t rule on the lessee’s request for fees and costs under CRS § 13-17-102 but implicitly denied the request without explanation. Given the lack of explanation, the court of appeals was unable to determine whether the trial court properly exercised its discretion.
The lessee requested an appellate attorney fees award under CRS § 38-1-122(1). However, because the lessee isn’t entitled to attorney fees below under CRS § 38-1-122(1), the court denied its related request for appellate attorney fees.
The attorney fees order was affirmed to the extent that it denied the lessee’s request for attorney fees and costs under CRS § 38-1-122(1). The attorney fees order was reversed to the extent that it implicitly denied the lessee’s request for attorney fees under CRS § 13-17-102, and the case was remanded for the trial court to make findings on that request.