Bill Barrett Corp. v. Lembke , 2018 COA 134 ( 2018 )

The summaries of the Colorado Court of Appeals published opinions
constitute no part of the opinion of the division but have been prepared by
the division for the convenience of the reader. The summaries may not be
cited or relied upon as they are not the official language of the division.
Any discrepancy between the language in the summary and in the opinion
should be resolved in favor of the language in the opinion.
SUMMARY
September 6, 2018
2018COA134
No. 17CA1616 Barrett Corp. v. Lembke — Government —
Special Districts — Inclusion of Territory — Material
Modification of Service Plan; Civil Procedure — Injunctions —
Preliminary Injunctions
This case addresses denial of a preliminary injunction, for
failure to show a reasonable probability of success on the merits, to
prevent a special district from taxing minerals held by owners of a
severed mineral estate and extracted by their surface lessees. The
division agrees with the trial court that section 32-1-401(1)(a),
C.R.S. 2017, of the Special District Act does not require consent of
mineral estate owners and their lessees to expand the boundaries of
a special district. The division also agrees that the special district’s
power to tax was not limited by an overlap in services with another
district.
However, the division concludes that a reasonable probability
of success was shown as to the special district’s failure to obtain
the board of county commissioners’ approval of a material change
in its service plan as required by section 32-1-207(2)(a), C.R.S.
2017, of the Special District Act. The case is remanded for the trial
court to make further findings under the other Rathke factors and
to reconsider whether a preliminary injunction should be entered.
COLORADO COURT OF APPEALS 2018COA134
Court of Appeals No. 17CA1616
Adams County District Court No. 17CV68
Honorable Jaclyn C. Brown, Judge
Bill Barrett Corporation and Bonanza Creek Energy, Inc.,
Plaintiffs-Appellants,
and
Noble Energy, Inc.,
Intervenor-Appellant,
v.
Robert Lembke; 70 Ranch L.L.C.; South Beebe Draw Metropolitan District,
f/k/a Bromley Park Metropolitan District No. 1; and United Water and
Sanitation District,
Defendants-Appellees.
JUDGMENT AFFIRMED, ORDER VACATED,
AND CASE REMANDED WITH DIRECTIONS
Division A
Opinion by JUDGE WEBB
Berger and Nieto*, JJ., concur
Announced September 6, 2018
Davis Graham & Stubbs, LLP, R. Kirk Mueller, Paul D. Swanson, Denver,
Colorado, for Plaintiffs-Appellants
Hogan Lovells US, LLP, Elizabeth H. Titus, Lacy G. Brown, Denver, Colorado,
for Intervenor-Appellant
Shook, Hardy & Bacon, LLP, S. Kirk Ingebretsen, Denver, Colorado, for
Defendants-Appellees Robert Lembke and 70 Ranch L.L.C.
Brown Dunning Walker PC, Douglas W. Brown, David C. Walker, Drew P. Fein,
Denver, Colorado; Wass Campbell Rivera Johnson Velasquez LLP, Darrell G.
Waas, Mikaela V. Rivera, Denver, Colorado, for Defendant-Appellee South
Beebe Draw Metropolitan District
Hamre Rodriguez Ostrander Dingess PC, Donald M. Ostrander, Richard F.
Rodriguez, Joel M. Spector, Denver, Colorado; Wass Campbell Rivera Johnson
Velasquez LLP, Darrell G. Waas, Mikaela V. Rivera, Denver, Colorado, for
Defendant-Appellee United Water and Sanitation District
*Sitting by assignment of the Chief Justice under provisions of Colo. Const. art.
VI, § 5(3), and § 24-51-1105, C.R.S. 2017.
¶1 Plaintiffs Bill Barrett Corporation and Bonanza Creek Energy,
Inc., and intervenor Noble Energy, Inc., (collectively, lessees) appeal
the trial court’s order denying their motion for a preliminary
injunction to prevent defendant South Beebe Draw Metropolitan
District (South Beebe) from taxing oil and gas that lessees produce
from the mineral estate underlying an approximately 13,000-acre
tract (the 70 Ranch) located in unincorporated Weld County.
Defendants Robert Lembke and 70 Ranch L.L.C. (the L.L.C.) own
the surface estate, where all of lessees’ well heads are located.1
Lessees also appeal the court’s entry of summary judgment on one
of their claims.
¶2 We affirm the entry of summary judgment, vacate the denial of
the motion for preliminary injunction, and remand for further
findings consistent with this opinion.
I. Nature and Course of Proceedings
¶3 On appeal, lessees raise three challenges to South Beebe’s
taxing authority. The trial court entered summary judgment on the
1The exact role of defendant United Water and Sanitation District
was not developed at the hearing, but according to the amended
complaint, “tax revenue collected from [lessees] by [South Beebe]
have [sic] been spent and/or channeled to Defendant United
Water.”
1
first of these issues.
 Under section 32-1-401, C.R.S. 2017, the severed mineral
estate2 underlying the 70 Ranch could not be included within
South Beebe because all the owners and lessees of that estate
did not petition for and consent to inclusion.
 By including the 70 Ranch within its boundaries to further its
regional operations in several counties, South Beebe modified
its service plan, but did not obtain statutorily required
approval from the board of county commissioners (BOCC) in
each of the affected counties.
 By including the 70 Ranch within its boundaries, South Beebe
violated section 32-1-107(2), C.R.S. 2017, because its services
overlapped with those of Sand Hills Metropolitan District
(Sand Hills).
¶4 Preservation of these contentions is undisputed.
¶5 Lessees obtained a temporary restraining order in the Weld
County District Court that prohibited the Weld County Treasurer,
who had collected the disputed taxes, from disbursing the monies
2 “[A] conveyance which severs a mineral interest from the surface
estate creates a separate and distinct estate.” Notch Mountain Corp.
v. Elliott, 898 P.2d 550, 556 (Colo. 1995).
2
to South Beebe. Venue was transferred to the Adams County
District Court. That court held an evidentiary hearing on lessees’
motion for a preliminary injunction. Finding that lessees had not
shown a reasonable probability of success on the merits, the court
denied the motion for a preliminary injunction and dissolved the
temporary restraining order. Later, the court entered a final
judgment under C.R.C.P. 54(b) and 56(h) against lessees on their
section 32-1-401 claim.
¶6 Lessees appealed. They requested that this court preserve the
status quo by enjoining the treasurer from disbursing taxes
collected to South Beebe. A motions division of this court granted
the requested relief, expedited briefing, and ruled that the appeal
would be decided without oral argument.
II. Background
¶7 In 2009, Sand Hills included the 70 Ranch within its
boundaries and began assessing ad valorem taxes on the oil and
gas extracted from the mineral estate. Much as lessees have done
in this case, they challenged the taxes levied by Sand Hills and
obtained summary judgment in Weld County District Court. Both
sides appealed.
3
¶8 In Bill Barrett Corp. v. Sand Hills Metropolitan District, 2016
COA 144, the division agreed with the district court that when Sand
Hills included the 70 Ranch, the combination of its change in
purpose and its complete shift in geography constituted a material
departure from its 2004 service plan under section 32-1-207(2)(a),
C.R.S. 2017. Id. at ¶¶ 21, 23, 30. The division also agreed that this
material modification of the existing service plan required — but
Sand Hills had not obtained — approval from the Weld County
BOCC. Id. at ¶ 32. For these reasons, the division held that Sand
Hills lacked taxing authority after 2009. Id. at ¶ 37.
¶9 Following the entry of summary judgment and before the Sand
Hills appeal was filed, Lembke and the L.L.C. petitioned South
Beebe to include the 70 Ranch. Lessees were not notified of this
action. South Beebe resolved to include the 70 Ranch, agreed to
assume development and construction of the regional water
infrastructure commenced by Sand Hills, and committed to provide
services to the 70 Ranch. The Adams County District Court
approved inclusion of the 70 Ranch into South Beebe, as required
by section 32-1-401(1)(c)(I), which states that “[i]f a petition [for
inclusion] is granted [by the district’s board] . . . , the board shall
4
. . . file [an order] with the clerk of the court, and the court shall
thereupon order the property to be included in the special district.”
(Emphasis added.)3
III. Law
A. Preliminary Injunction Standard
¶ 10 “Preliminary injunctive relief is an extraordinary remedy
designed to protect a [party] from sustaining irreparable injury and
to preserve the power of the district court to render a meaningful
decision following a trial on the merits.” Rathke v. MacFarlane, 648
P.2d 648, 651 (Colo. 1982).
¶ 11 Preliminary “injunctive relief should not be indiscriminately
granted”; rather, it should be granted sparingly, cautiously, and
with the trial court’s full conviction of the urgent necessity for the
relief. Id. at 653. Before granting relief, the trial court must find
that the moving party has shown:
(1) a reasonable probability of success on the
merits;
(2) a danger of real, immediate, and irreparable
injury which may be prevented by injunctive
relief;
3 The order is not at issue in this appeal.
5
(3) that there is no plain, speedy, and adequate
remedy at law;
(4) that the granting of a preliminary
injunction will not disserve the public interest;
(5) that the balance of equities favors the
injunction; and
(6) that the injunction will preserve the status
quo pending a trial on the merits.
Id. at 653-54 (citations omitted). If the moving party fails to
establish any criterion, injunctive relief is not available. Id. at 654.
B. Special District Act
¶ 12 The General Assembly enacted the Special District Act (the
Act) with the intent that special districts “promote the health,
safety, prosperity, security, and general welfare” of their inhabitants
and of the State of Colorado. § 32-1-102(1), C.R.S. 2017; see also
Sand Hills, ¶ 15; Todd Creek Vill. Metro. Dist. v. Valley Bank & Tr.
Co., 2013 COA 154, ¶ 37. Special districts are political
subdivisions of the state that possess proprietary powers. Todd
Creek, ¶ 38. But they possess only those powers expressly
conferred on them. Sand Hills, ¶ 15.
¶ 13 Once established, a special district must conform to its service
plan “so far as practicable.” § 32-1-207(1). Any material
6
modifications to the service plan must be approved by the
appropriate governing authority. § 32-1-207(2)(a).
IV. Standard of Review
¶ 14 Statutory interpretation is a question of law subject to de novo
review. See, e.g., Jefferson Cty. Bd. of Equalization v. Gerganoff,
241 P.3d 932, 935 (Colo. 2010). Likewise, appellate courts review
de novo the application of law to undisputed facts. See Camp Bird
Colo., Inc. v. Bd. of Cty. Comm’rs, 215 P.3d 1277, 1281 (Colo. App.
2009). And the de novo standard applies to review of summary
judgments. Rocky Mountain Expl., Inc. v. Davis Graham & Stubbs
LLP, 2018 CO 54, ¶ 27.
¶ 15 “The grant or denial of a preliminary injunction lies within the
sound discretion of the trial court.” MDC Holdings, Inc. v. Town of
Parker, 223 P.3d 710, 716 (Colo. 2010). Generally, the conclusion
reached by the trial court will be not overturned unless it is
manifestly unreasonable, arbitrary, or unfair. Evans v. Romer, 854
P.2d 1270, 1274 (Colo. 1993). “If, however, the issue being
reviewed concerns only legal, rather than factual questions, a trial
court’s preliminary injunction ruling is subject to de novo appellate
review.” State ex rel. Salazar v. Cash Now Store, Inc., 31 P.3d 161,
7
164 (Colo. 2001). The same is true when the ruling rested only on
stipulated facts or documentary evidence. MDC Holdings, 223 P.3d
at 716.
¶ 16 On review of a preliminary injunction, the trial court’s factual
findings will be upheld unless they are so clearly erroneous as to
find no support in the record. Phoenix Capital, Inc. v. Dowell, 176
P.3d 835, 846 (Colo. App. 2007).
¶ 17 Whether a special district’s action constitutes a “material
modification” of the service plan presents a question of law. Indian
Mountain Corp. v. Indian Mountain Metro. Dist., 2016 COA 118M,
¶¶ 59, 61-62. A court looks to the language of the service plan and
gives effect to its plain and ordinary meaning. See Todd Creek,
¶¶ 10-11.
¶ 18 The standard of review as to whether material modifications
were approved by the appropriate BOCC is unresolved. But in
Friends of the Black Forest Regional Park, Inc. v. Board of County
Commissioners, the division noted, “[t]he application of particular
facts to a statute involves a mixed question of fact and law.” 80
P.3d 871, 882 (Colo. App. 2003). Because whether the requisite
approval was obtained will turn on particular facts, the mixed
8
question standard of review applies. See also Hawes v. Colo. Div. of
Ins., 65 P.3d 1008, 1017 (Colo. 2003) (case-by-case issue is mixed
question). In mixed-question cases, an appellate court reviews the
district court’s factual findings for clear error and its legal
conclusions as to those facts de novo. Sheridan Redevelopment
Agency v. Knightsbridge Land Co., 166 P.3d 259, 262 (Colo. App.
2007).
¶ 19 According to South Beebe, because the trial court’s denial of a
preliminary injunction is not a final judgment on the merits, review
of the second and third issues can be only for an abuse of
discretion. To the extent that some of the court’s conclusions
rested on documentary evidence or undisputed facts, however, we
review de novo. And in any event, “[a] trial court abuses its
discretion when it . . . misapplies the law.” Clubhouse at Fairway
Pines, L.L.C. v. Fairway Pines Estates Owners Ass’n, 214 P.3d 451,
456 (Colo. App. 2008).
V. Discussion
A. Application of Section 32-1-401(1)(a) to Owners and Lessees of
Severed Mineral Estates
¶ 20 According to lessees, without their consent — as “fee owners”
9
— and that of the other mineral estate owners, the 70 Ranch — or
at least the underlying mineral estate — could not have been
included within South Beebe. South Beebe responds that because
the mineral and surface estates are severed, only the surface
owners needed to petition for and consent to inclusion, and all of
them did.4 Alternatively, South Beebe asserts that because lessees’
well heads are located on the 70 Ranch, it could tax lessees’ oil and
gas production for that reason alone.
¶ 21 The following facts are undisputed. The mineral estate
underlying the 70 Ranch has been severed from the surface estate.
Lembke and the L.L.C. owned some but not all of the mineral
estate. No other mineral estate owner petitioned for or consented to
including this property within South Beebe. Nor did lessees.
¶ 22 In resolving this issue against lessees, the trial court found
that the services provided by South Beebe did not benefit the
subsurface mineral estate. Lessees do not challenge this finding.
¶ 23 First, we address whether mineral estate owners and lessees
4Lembke and the L.L.C., South Beebe, and United Water and
Sanitation District filed separate but similar answer briefs. To the
extent that their arguments differ, breaking arguments out by party
would be purposeless.
10
are “fee owners.” We answer affirmatively only as to mineral estate
owners. Because the parties agree — and the record supports —
that not all of the mineral estate owners consented to the 70
Ranch’s inclusion, we next consider whether South Beebe’s services
can benefit the mineral estate. But since lessees do not argue that
the mineral estate can benefit, we further conclude that lack of
consent by all mineral estate owners does not preclude South Beebe
from taxing lessees.
1. Law
¶ 24 Section 32-l-401(1)(a) provides:
The boundaries of a special district may be
altered by the inclusion of additional real
property by the fee owner or owners of one
hundred percent of any real property capable
of being served with facilities of the special
district filing with the board a petition in
writing requesting that such property be
included in the special district. The petition
shall set forth a legal description of the
property, shall state that assent to the
inclusion of such property in the special
district is given by the fee owner or owners
thereof, and shall be acknowledged by the fee
owner or owners in the same manner as
required for conveyance of land.
11
The parties have not cited Colorado authority, nor have we found
any, applying this section in the context of severed mineral estate
owners or the interests of mineral lessees.
2. Application
a. Is an Owner or a Lessee of a Severed Mineral Estate a “Fee
Owner” Under the Statute?
¶ 25 Answering this question — which the trial court decided
against lessees — involves statutory interpretation and application
of law to undisputed facts, both subjects of de novo review. We first
conclude that an owner of a severed mineral estate is a “fee owner.”
¶ 26 “[W]hile in place, minerals are real property.” Smith v. El Paso
Gold Mines, Inc., 720 P.2d 608, 609 (Colo. App. 1985).
Unsurprisingly, then, our supreme court has concluded that “[a]n
estate in oil and gas may be severed from the remainder of the
realty, and as severed owned in fee simple.” Corlett v. Cox, 138
Colo. 325, 333, 333 P.2d 619, 623 (1958); accord Clevenger v. Cont’l
Oil Co., 149 Colo. 417, 420, 369 P.2d 550, 551 (1962) (“Oil, gas and
other mineral rights in lands may be severed and held by other
than the owner of the surface, and a fee simple title thereto may
vest in the person to whom said rights are granted.”).
12
¶ 27 South Beebe’s attempt to distinguish Corlett, on which
Clevenger relied, as limited to interpreting the phrase “reserves 1/2
of the usual 1/8 royalty” in a deed, falls short. After all, the
supreme court framed the issue as follows:
Does the Holcomb-Hamilton deed reserve an
estate in fee simple to 1/16% of the oil and gas
under the land in question, as found by the
trial court, or do these words merely reserve
the right to share in such oil and gas after it
has been severed from the land and reduced to
possession?
Corlett, 138 Colo. at 329, 333 P.2d at 621 (emphasis added). Then
it rejected a request to overrule Simson v. Langholf, 133 Colo. 208,
217, 293 P.2d 302, 307 (1956), which noted, “an estate in fee
simple is thus created.”
¶ 28 Of course, we are bound by our supreme court’s case law.
Bernal v. Lumbermens Mut. Cas. Co., 97 P.3d 197, 203 (Colo. App.
2003). And in any event, South Beebe cites no contrary Colorado
authority.
¶ 29 South Beebe’s reliance on statutes other than the Act, where
the legislature supposedly “distinguishes between fee owners and
mineral interest owners,” is misplaced. “[D]efinitions of somewhat
similar terms in other, generally unrelated statutes . . . do not
13
assist in deciding what the Legislature meant in this specific
context.” Coal. of Concerned Cmtys., Inc. v. City of Los Angeles, 101
P.3d 563, 566 (Cal. 2004); see also Bertrand v. Bd. of Cty. Comm’rs,
872 P.2d 223, 228 (Colo. 1994) (“[T]he interpretation of one statute
by reference to an unrelated statute is an unreliable means of
ascertaining legislative intent.”).
¶ 30 For example, South Beebe cites section 24-65.5-101, C.R.S.
2017. But that section is limited to “surface development.” And in
any event, section 24-65.5-102(4), C.R.S. 2017, describes a
“mineral estate” as an “interest in real property.”
¶ 31 True, for purposes of municipal annexations, section
31-12-103(6), C.R.S. 2017, also cited by South Beebe, limits
“landowner” to “the owner in fee of an undivided interest in the
surface estate.” But this subsection also recognizes an “undivided
interest in the mineral estate” as being owned “in fee.” Id.
¶ 32 Nor does South Beebe’s parade of horribles that would
supposedly flow from treating a severed mineral interest as fee
ownership under section 32-1-401(1)(a) persuade us to read Corlett
and Clevenger narrowly. Owners of the severed mineral estate
underlying property to be included in a special district can be
14
identified through title examination and given notice. If the
positions of surface and subsurface owners on inclusion diverge,
the Act provides a remedy. See, e.g., § 32-1-401(2)(a) (notice to all
affected property owners, public hearings, and petitions to be
excluded); § 32-1-401(3) (board of county commissioners decides
petitions for exclusion based on the best interests of the district).5
¶ 33 In contrast, our supreme court has not addressed whether a
severed mineral estate lessee also holds a fee simple interest. We
conclude that such a lessee does not.
¶ 34 Lessees rely on Maralex Resources, Inc. v. Chamberlain, 2014
COA 5, ¶ 14, where the division acknowledged that “interests in oil
and gas leases [are] characterized as interests in real property.”
However, the division did not reach the fee simple question, instead
merely declining “to consider an oil and gas lessee’s interest under
common law landlord-tenant principles.” Id. at ¶ 16. And in any
event, the division held only that the lessee had standing to seek a
prescriptive easement.
¶ 35 Still, lessees assert that a majority of states — or at least those
5Of course, marching this parade before the General Assembly
could produce a legislative solution.
15
in the West — hold mineral interest leaseholds to be fee interests of
the mineral estate. Yet, they cite cases from only three states. See
Somont Oil Co. v. A & G Drilling, Inc., 49 P.3d 598, 604 (Mont. 2002)
(“[O]il and gas leases transfer to the lessee a fee simple
determinable estate with the lessor retaining a possibility of
reverter.”), overruled on other grounds by Johnson v. Costco
Wholesale, 152 P.3d 727 (Mont. 2007); Maralex Res., Inc. v.
Gilbreath, 76 P.3d 626, 630 (N.M. 2003) (“The typical oil and gas
lease grants the lessee a fee simple determinable interest in the
subsurface minerals . . . .”); Anadarko Petroleum Corp. v. Thompson,
94 S.W.3d 550, 554 (Tex. 2002) (“A Texas mineral lease grants a fee
simple determinable to the lessee.”).
¶ 36 South Beebe responds that a broad reading of Maralex is
foreclosed by Coquina Oil Corp. v. Harry Kourlis Ranch, 643 P.2d
519, 522 (Colo. 1982) (holding that a federal oil and gas lessee
cannot assert the power of condemnation under Colorado
Constitution article II, section 14 and section 38-1-102(3), C.R.S.
2017). Distinguishing lessees from owners, the supreme court
explained that giving lessees condemnation powers “creates the
possibility that the [property owners] will be subjected repeatedly to
16
the disruptive effect and expense of litigation as successive lessees
attempt to secure a temporary right-of-way.” Id. By contrast,
“condemnation of a right-of-way by the fee owner of the landlocked
estate does not create the same potential for a multiplicity of
lawsuits. If the fee owner condemns the right-of-way, the taking is
permanent and the appropriate compensation for the interests
condemned is established in one proceeding.” Id. The court added,
“[w]hile the lessee’s concern for both the leased property and the
surrounding lands is limited in both subject matter and duration,
the fee owner of the property will consider the broader implications
of his actions over a more extensive period.” Id. at 523; cf. Precious
Offerings Mineral Exch., Inc. v. McLain, 194 P.3d 455, 455 (Colo.
App. 2008) (rejecting easement claims by owner of unpatented
mining claims).
¶ 37 The Coquina rationale is persuasive here. Because a mineral
estate lessee’s interest is temporary, its perspective on being
included in a special district would be short term and potentially
myopic. As well, a special district would possibly have to secure
consent from each successive lessee. Thus, we agree that Maralex
cannot be read as broadly as lessees assert.
17
¶ 38 Given all this, we decline to treat mineral lessees as fee owners
for purposes of the statute.6 Still, our conclusion that each owner
of the severed mineral estate beneath the 70 Ranch is a “fee owner”
under the statute does not end the inquiry.
b. Does a Severed Mineral Estate Constitute “Real Property
Capable of Being Served With Facilities of the Special District”
Under the Statute?
¶ 39 Answering this question — which the trial court decided
against lessees — also involves application of law to undisputed
facts. Specifically, on appeal lessees do not dispute the trial court’s
finding that
[m]ineral estates, located far beneath the
surface, are not real property capable of being
served with the facilities of the special district.
Practically, the district cannot provide water
and sanitary sewer[,] . . . park and recreation
services[,] or any other services authorized by
C.R.S. § 32-1-103(10) to the subsurface estate.
The surface estate is the only real property in
need of and capable of being provided the
district’s services.7
6 Having decided this question against lessees, we need not address
the numerous administrative and other practical problems that
would allegedly ensue if mineral lessees are fee owners, which in
any event are implied from the policy concerns in Coquina.
7 Because lessees do not dispute this finding, we express no opinion
on whether a district’s services could actually benefit subsurface
mineral estates.
18
¶ 40 Instead, they argue, first, that by statute only property capable
of being benefitted by the special district may be taxed; and,
second, that taxing property that cannot benefit from tax-funded
services violates due process, citing Landmark Towers Ass’n v. UMB
Bank, N.A. for support. 2018 COA 100, ¶ 29 (“Colorado law makes
clear that imposing a special assessment on property that doesn’t
specially benefit from the funded improvements violates those
property owners’ rights to due process.”). We address, and reject,
each argument in turn.
¶ 41 Lessees’ first argument focuses on the phrase, “real property
capable of being served with facilities of the special district.”
§ 32-1-401(1)(a). But this argument ignores that “capable of being
served” modifies “fee . . . owners of . . . any real property.” Id.
Thus, the phrase tells special districts which owners must petition
for inclusion. It does not limit what property may be included.
¶ 42 Lessees essentially ask us to read the statute as: “The
boundaries of a special district may be altered by the inclusion of
additional real property capable of being served with the facilities of
the special district.” Yet, “[a]bsent constitutional infringement, it is
not our province to rewrite the statutes.” Dove Valley Bus. Park
19
Assocs., Ltd. v. Bd. of Cty. Comm’rs, 945 P.2d 395, 403 (Colo. 1997).
¶ 43 Turning to lessees’ due process argument, they do not provide
a record reference to where they raised this issue in the trial court.
And in any event, they did not mention it in their written closing
argument, nor did the trial court rule on it.8 See McGihon v. Cave,
2016 COA 78, ¶ 16 (“[I]n civil cases . . . ‘[w]e do not consider
constitutional issues raised for the first time on appeal.’” (quoting
City & Cty. of Broomfield v. Farmers Reservoir & Irrigation Co., 239
P.3d 1270, 1276 (Colo. 2010))). And even if an appellate court may
choose to take up such an unpreserved issue as a matter of
discretion, we need not do so here. See Tyra Summit Condos. II
Ass’n v. Clancy, 2017 COA 73, ¶ 8 (“Whether we address
unpreserved constitutional challenges is always a matter of
discretion.”). However, the following observations may be relevant
to the merits of the trial.
¶ 44 First, even were we to take up this unpreserved argument,
under the injury-in-fact test, whether lessees would have standing
8 Although Landmark was decided after the hearing, and after
lessees had filed their opening brief, the decision lists several cases
holding that property owners’ due process rights are violated when
their property does not benefit from special assessments.
Landmark Towers Ass’n v. UMB Bank, N.A., 2018 COA 100, ¶ 29.
20
to raise this issue on behalf of owners of the severed mineral estate
is at best doubtful. This is not a case implicating unconstitutional
spending, which can contribute to injury-in-fact. Conrad v. City &
Cty. of Denver, 656 P.2d 662, 668 (Colo. 1982).
¶ 45 Second, assuming lessees have standing, this due process
argument does not limit true ad valorem taxes. See Landmark, ¶ 31
(distinguishing such taxes from special assessments, which “fund
local improvements that benefit particular property”).
¶ 46 Third, Landmark involved a special assessment on one small
area to benefit another small area. In contrast, South Beebe’s
service area encompasses thousands of acres and its water projects
will benefit many inhabitants. See Millis v. Bd. of Cty. Comm’rs, 626
P.2d 652, 659 (Colo. 1981) (“A water district is organized not for the
improvement of land or to benefit only landowners.”); see also
Friends of Chamber Music v. City & Cty. of Denver, 696 P.2d 309,
321 (Colo. 1985) (“As long as the proceeds are devoted to public and
governmental purposes, otherwise valid taxes may be imposed upon
a group of people who will not necessarily benefit from the funds
collected.”).
¶ 47 So, while ownership of a mineral estate is a fee simple interest,
21
we further conclude that it is not “real property capable of being
served with facilities of the special district” under the statute.
Therefore, the owners of the severed mineral estate underlying the
70 Ranch did not have to petition for or consent to the inclusion.
c. Do Other Statutes Provide a Separate Basis for Ad Valorem
Taxation?
¶ 48 Having rejected lessees’ challenge to the 70 Ranch’s inclusion
based on the lack of all mineral estate owners’ consent, we need not
address other statutes that South Beebe advances as alternative
bases for taxing lessees. See § 32-1-1101(1)(a), C.R.S. 2017;
§ 39-7-101(1), C.R.S. 2017.
3. Conclusion
¶ 49 The petition’s failure to show consent of all severed mineral
estate owners did not preclude including the 70 Ranch within the
boundaries of South Beebe and did not invalidate South Beebe’s
taxing authority. Thus, we affirm the trial court’s entry of summary
judgment as to lessee’s section 32-1-401(1)(a) claim.
B. Application of Section 32-1-207(2)(a) to a Change in South
Beebe’s Original Service Plan
¶ 50 The trial court held that lessees had not shown a reasonable
probability of successfully establishing that South Beebe had
22
violated section 32-1-207(2)(a) by failing to obtain BOCC approval
for a material change in its original service plan. The court found
that although South Beebe had continued to provide the same
services, it had materially modified its service plan in 2013 by
describing a regional role in its revised service plan. Even so, the
court concluded that South Beebe had secured the requisite
approval from the Adams County Planning & Development
Department (planning commission). As for including the 70 Ranch
in 2015, the court found that a material change had not occurred.
¶ 51 Lessees challenge both rulings. We conclude that South
Beebe did not comply with section 32-1-207(2)(a). However, we
agree with the trial court that including the 70 Ranch did not
constitute a material modification.
1. Additional Background
a. Expansion of Services in 2013
¶ 52 The trial court first found that South Beebe had not made any
“addition to the types of services provided by the special district,”
an event that categorically qualifies as a material modification
under section 32-1-207(2)(a). It made the following subsidiary
findings, with record support.
23
¶ 53 South Beebe was organized, along with other districts, in 1985
under a “Consolidated Service Plan” (original service plan). The
original service plan outlined the proposed service area as “the
proposed development known as ‘Bromley Park’ . . . located in
northern Adams County, Colorado, generally between the City of
Brighton and Interstate 76.” The original service plan contemplated
that the districts would enter into intergovernmental agreements to
“effectively and efficiently provide the services and/or facilities
outlined” in the original service plan.
¶ 54 Bromley Park Metropolitan District #1, South Beebe’s former
name, proposed to provide “[t]he sanitary sewer, storm drainage
and surface and flood control, street, water and park and recreation
plans for the District.”
¶ 55 Since its formation, South Beebe has expanded its geographic
scope and purpose. In 2003, the district changed its name to South
Beebe to better describe the regional nature of the services and
facilities the district provided. In 2013, South Beebe prepared an
“Updated and Revised Service Plan” (revised service plan) that
reflected many of these changes.
¶ 56 At that time, the property located within the boundaries of
24
South Beebe was much smaller — less than one acre in Adams
County. But the revised service plan contemplated adding other
property so that, as development progressed, South Beebe could
provide regional service to those developments and for operation
and maintenance of South Beebe’s overall storm drainage system.
¶ 57 Then the court turned to whether South Beebe’s providing
services beyond the geographic boundaries of Bromley Park to the
larger South Beebe Draw area constituted a change of a basic or
essential nature. The court found, again with record support, that
the revised service plan anticipated including property in both
Adams and Weld Counties. Although the services that South Beebe
contemplated providing were of a type for which the district had
been originally formed, the benefitted residents of Adams and Weld
Counties far exceeded those within the district’s original
geographical boundaries.
¶ 58 The court concluded:
South Beebe’s shift in purpose, from providing
facilities and services for the proposed Bromley
Park residential and commercial development
located near Brighton, Colorado to a regional
district reaching beyond Brighton and
providing benefits to Adams County (and
contemplating providing services to Weld
25
County) constituted a change to the basic and
essential nature of the 1985 Original Service
Plan.
South Beebe does not challenge this conclusion.
¶ 59 Next, the court concluded that the revised service plan
constituted a material modification requiring approval by the
Adams County BOCC. The court relied on Sand Hills, which stated
that “the district’s shift in purpose, reflected in the 2013 plan, from
a localized district providing for residential and commercial
development in Lochbuie to a regional district reaching beyond
Lochbuie and providing regional benefits to the county constituted
a change to the basic and essential nature of the 2004 plan.” ¶ 23.
South Beebe does not challenge this conclusion either.
¶ 60 Then the court turned to whether South Beebe had obtained
the requisite approval. It found that in response to South Beebe’s
submitting the revised service plan to the planning commission for
approval, South Beebe had received a letter from the planning
commission.9 According to this letter, Adams County had
9South Beebe points us to two other sources of approval from
Adams County — statements from the Adams County Attorney and
a separate letter from the Adams County Community and Economic
26
determined that South Beebe was not seeking a material
modification. But the letter continued:
[South Beebe] has expressly stated that it does
not wish to do any of those things that would
constitute a material modification under State
Statute. Rather, the district simply would like
to replace its current Service Plan in its
entirety, to describe their ongoing and future
services to users of the District’s
infrastructure. So long as the replacement
Service Plan does not contemplate anything
constituting a material modification, then the
County is without the authority to approve it.
¶ 61 The court noted that under section 32-1-202(1)(a), C.R.S.
2017, a service plan must be “referred to the planning commission,”
if required by the policy of the county. However, because at the
preliminary injunction hearing no party had called a witness from
the planning commission or the Adams County BOCC, the court
recognized that it did not know whether Adams County has such a
policy, whether the planning commission had actually reviewed the
revised service plan, or whether (as might be inferred from the
letter) it had relied only on the representation by South Beebe that
the district was not doing “any of those things that would constitute
Development Director. The trial court made no findings as to either
source.
27
a material modification under State Statute.”
¶ 62 Despite these reservations, the court further concluded, “it
appears that South Beebe sought approval from the appropriate
governing authority10 for the 2013 Revised Service Plan.” The court
explained that in this way, this case was distinguishable from Sand
Hills. So, it ruled that lessees had failed to show a reasonable
probability of success on the merits.
b. Including the 70 Ranch
¶ 63 The court also considered whether including the 70 Ranch in
2015, if effective, was a material modification of the revised service
plan requiring approval from both the Adams and Weld County
BOCCs. It found that no such modification had occurred. The
court made the following findings, again with record support.
¶ 64 In 2013, South Beebe and Weld County entered into an
“Intergovernmental Agreement Concerning Inclusion of Property”
(IGA), which recognized the expanded regional scope of the district’s
facilities and services. As acknowledged by the IGA, and not
disputed at the hearing, South Beebe received petitions to include
10Because South Beebe had not yet expanded into Weld County,
only Adams County BOCC approval was required for the 2013
revised service plan.
28
certain property located in unincorporated Weld County to be used
for storm drainage ponds and facilities to serve anticipated
development in the area.
¶ 65 The IGA recitals provide:
D. South Beebe has no other property within
its boundaries that lies in unincorporated
Weld County, therefore, pursuant to statute,
South Beebe advised the County of the
petitions and requested that the County find
that the inclusions do not constitute material
modifications of the South Beebe service plan.
E. The County is willing to consent to the
inclusion of property into South Beebe within
Weld County pursuant to this IGA.
¶ 66 In paragraph 2 of the IGA, Weld County conditioned its
consent to including land in the county on the following:
a. South Beebe receives a petition from a
landowner for such inclusion;
b. South Beebe acts in accordance with the
provisions of § 32-1-207, [C.R.S.], with regard
to overlapping special districts;
c. South Beebe acts in conformance with the
provisions of § 32-1-207(2)(b)-(d), [C.R.S.], with
regard to the provision of service in
unincorporated Weld County and, in
particular, South Beebe shall not impose
extraterritorial fees on any landowner in
unincorporated Weld County without the
written consent of such landowner; and
29
d. South Beebe does not attempt to include
property without the consent of the landowner
utilizing the provisions of § 32-1-401(2),
[C.R.S.].
¶ 67 With respect to material modification, paragraph 3 provides:
South Beebe Draw agrees that if the inclusion
of property into its boundaries that lies within
unincorporated Weld County occurs in
contravention of any of the provisions of
paragraph 2 above, such action shall
constitute a material modification of its service
plan and South Beebe shall be subject to a
service plan amendment process with the
County and the inclusion of property which
triggers such service plan amendment shall be
ineffective until such time as the [BOCC] of
Weld County approve such service plan
amendment.
¶ 68 But South Beebe did not petition to include any Weld County
property in 2013 or 2014, after the IGA was executed. Then on
April 1, 2015, South Beebe told the Weld County BOCC that it had
received a petition for inclusion of Weld County property from
Highland Equities, L.L.C. Weld County responded by noting that no
further action was required in light of the IGA. On that basis,
South Beebe motioned the Weld County District Court and received
an order for inclusion of the Highland Equities property on April 17,
2015. No party at the preliminary injunction hearing argued that
the Highland Equities property was not properly included in South
30
Beebe.
¶ 69 On April 5, 2015, in response to the trial court’s summary
judgment against Sand Hills, Lembke and the L.L.C. petitioned to
include the 70 Ranch in South Beebe. South Beebe did not give
Weld County notice of the petition. On April 28 and 29, 2015,
South Beebe motioned the court to add more Weld County property
to the district — including the 70 Ranch. The court granted the
motions on April 29, 2015.
¶ 70 The trial court recognized that while section 32-1-207(1)
requires the “facilities, services, and financial arrangements” of the
special district to conform to the approved service plan, that section
does not mention the “geographic boundaries” of a special district.
The court also noted that section 32-1-207(2)(a) indicates approval
for modification “shall not be required . . . for changes in the
boundary of the special district.” Still, “inclusion of property that is
located in a county . . . with no other territory within the special
district may constitute a material modification of the service plan.”
§ 32-l-207(2)(a).
¶ 71 The statute also prescribes the procedure to include property
located in a county having no other property within the special
31
district. If a special district changes its boundaries
to include territory located in a county . . .
with no other territory within the special
district, the special district shall notify the
[BOCC] of such county . . . of such inclusion.
The [BOCC] . . . may review such inclusion
and, if it determines that the inclusion
constitutes a material modification, may
require the governing body of such special
district to file a modification of its service plan
in accordance with the provisions of this
subsection (2).
§ 32-1-207(2)(a) (emphasis added).
¶ 72 Based on these statutes and the IGA, the court further found
that South Beebe had notified Weld County of its original intent to
include Weld County property within its boundaries in 2013 and
Weld County had the opportunity to determine whether that
inclusion constituted a material modification. As reflected in the
IGA, Weld County determined that the proposed inclusion was not a
material modification, so South Beebe could include the property
without formal service plan modification approval, subject to the
conditions identified in the IGA.
¶ 73 When South Beebe first included Weld County property in
2015, Weld County did not require formal approval at that time,
referencing the IGA. And once South Beebe had Weld County
32
property within its boundaries, including more Weld County
property, specifically the 70 Ranch, presumptively was not a
material modification under section 32-1-207(2)(a). On this basis,
the court concluded that the case was distinguishable from Sand
Hills.
¶ 74 For these reasons, the court ruled that lessees did not have a
reasonable probability of success on the merits as to their claim
that South Beebe’s including the 70 Ranch was an unapproved
material modification of the service plan.
2. Law
¶ 75 As set forth above, the Act determines most questions
involving material modifications to service plans and the requisite
approvals. The Act defines “material modifications” as
changes of a basic or essential nature,
including but not limited to the following: Any
addition to the types of services provided by
the special district; a decrease in the level of
services; a decrease in the financial ability of
the district to discharge the existing or
proposed indebtedness; or a decrease in the
existing or projected need for organized service
in the area.
Indian Mountain, ¶ 61 (quoting § 32-1-207(2)(a)). And if South
Beebe made such a modification without obtaining the requisite
33
approval, then it “did not have taxing authority.” Sand Hills, ¶ 37.
And a court may enjoin action constituting a material modification.
§ 32-1-207(3)(a).
3. Application
a. Expansion of Services in 2013
¶ 76 South Beebe does not challenge the trial court’s finding,
discussed in Part V.B.1.a, supra, that “the district’s provision of
services beyond the geographic boundaries of Bromley Park to the
larger South Beebe Draw area constituted a change of a basic or
essential nature,” and thus materially modified its service plan.
This finding means that South Beebe had to obtain BOCC approval.
§ 32-1-207(2)(a). The only question, then, is whether — as the
court concluded — actions by the planning commission, the Adams
County Attorney, and the Community and Economic Development
Director satisfied this requirement. We conclude that they did not.
¶ 77 The facts as found by the trial court are undisputed. South
Beebe submitted the revised service plan only to the planning
commission. The planning commission responded that the district
“is not seeking a material modification.” But the BOCC did not take
34
any action.11
¶ 78 In support of its argument that the planning commission’s
letter was sufficient approval, South Beebe relies on section
32-1-202(1)(a) — “the service plan shall be referred to the planning
commission.” But this statute affords South Beebe no shelter for at
least three reasons.
¶ 79 First, because the parties did not offer any evidence that
Adams County had a policy of referring service plans to the
planning commission, the trial court found its existence
indeterminable for the purposes of the preliminary injunction.
Second, section 32-1-202(1)(a) requires the planning commission to
make a recommendation to the BOCC, which did not happen. And
third, the BOCC never set, much less held, a public hearing — the
final requirement in section 32-1-202(1)(a).
¶ 80 Given these procedural defects, South Beebe seeks to rely on
the Adams County Attorney’s purported determination that the
revised service plan was not a material modification. But the
11Contrast this total lack of Adams County BOCC action with the
IGA the Weld County BOCC entered into with South Beebe, in
which Weld County acknowledged South Beebe’s proposed
inclusions and determined they were not material modifications.
35
county attorney did not testify, and the trial court made no such
finding. As well, the testimony cited by South Beebe concerning
purported action by the Adams County Attorney is double hearsay
and conflates such action with the letter discussed in the following
paragraph.
¶ 81 South Beebe also refers to a letter from the Community and
Economic Development Director saying that, as to the revised
service plan, “we do not find the need to process these changes
through any formal Adams County review process.” But the statute
does not allow the director to act for the BOCC. § 32-1-207(2)(a)
(“[M]aterial modifications . . . may be made . . . only by petition to
and approval by the board of county commissioners . . . . ”)
(emphasis added); UMB Bank, N.A. v. Landmark Towers Ass’n, 2017
CO 107, ¶ 22 (courts do not add to or subtract words from a
statute).
¶ 82 Based on supposed action by the Adams County Attorney and
the letter from the director, South Beebe asserts that, “[i]n essence,
the Adams County [BOCC] exercised its discretion . . . consistent
with the permissive language of C.R.S. § 32-1-207(2)(a).” This
assertion misses the mark, both factually and legally.
36
¶ 83 First, whatever South Beebe means by “in essence” is unclear.
The statute requires ultimate, not delegated, action by the BOCC.
§ 32-1-207(2)(a) (“[M]aterial modifications . . . may be made . . . only
by petition to and approval by the [BOCC] . . . .”) (emphasis added);
see also Weitz Co. v. Mid-Century Ins. Co., 181 P.3d 309, 313 (Colo.
App. 2007) (“‘[O]nly’ is a term of limitation.”). And that did not
occur.
¶ 84 Second, South Beebe conflates two separate provisions of this
section. A special district may make a material modification “only
by petition to and approval by the [BOCC].” § 32-1-207(2)(a). Still,
approval is not required “for changes in the boundary of the special
district,” although “[t]he [BOCC] . . . may review such inclusion.”
Id. (emphasis added). The latter discretionary language applies only
to boundary changes; it does not change the approval mandated for
other changes. And the boundary change question is addressed
separately below.
¶ 85 But even accepting all of South Beebe’s arguments, the trial
court still found, albeit only for purposes of the preliminary
injunction, that the revised service plan was a material
modification. True, “findings made by a trial court after a
37
preliminary injunction hearing are not determinative of the ultimate
merits of the case.” Phoenix Capital, 176 P.3d at 839. But we do
not understand, nor does South Beebe explain, why a similar
finding after a trial on the merits would not trump contrary
determinations by the county attorney, if any, and the director.
¶ 86 The trial court also noted that under the revised service plan,
South Beebe would submit any potential material modification to
“the County Planning and Development staff for determination of
whether the modification is material.” But section 32-1-207(2)(a)
does not refer to action by a county planning commission. It
mandates “approval by the [BOCC].” South Beebe cites no
authority, nor are we aware of any in Colorado, holding that a party
subject to a statutory requirement can somehow unilaterally dilute
that requirement.
¶ 87 Finally, South Beebe’s assertion that “because the Trial Court
found that the District properly sought approval from the Adams
County [BOCC], the Trial Court did not abuse its discretion” misses
the mark in two ways.
¶ 88 First, the court referred to “the appropriate governing
authority,” not to “the Adams County BOCC.” If the court
38
considered the planning commission to be “the appropriate
governing authority,” it made an error of law.
¶ 89 Second, and more importantly, to the extent that the court
focused on South Beebe’s having “sought approval,” the statutory
requirement of BOCC approval is not measured by a special
district’s efforts to obtain that approval. § 32-1-207(2)(a) (“by
petition to and approval by the [BOCC]”) (emphasis added); UMB
Bank, ¶ 22. In other words, even if in good faith South Beebe had
perceived the planning commission as a stand in for the BOCC,
South Beebe made a legal error. And the trial court’s analysis
overlooked it.
¶ 90 For all of these reasons, we conclude that lessees have a
reasonable probability of success in establishing that South Beebe
did not obtain the requisite Adams County BOCC approval.12
Because the trial court dissolved the temporary restraining order
and denied a preliminary injunction on this ground alone, without
reaching the other Rathke factors, we remand the case to the court
12 Our holding is limited to the particular facts presented. We
express no opinion on the outcome under other scenarios, such as
if the planning commission had gone to the BOCC and been told
there was no material modification or if a BOCC refuses to take
further action on a proper application by a special district.
39
to consider the other Rathke factors, make findings as to those
factors, and reconsider whether a preliminary injunction should be
entered. See Anderson v. Applewood Water Ass’n, 2016 COA 162,
¶ 1.
b. Inclusion of the 70 Ranch
¶ 91 Lessees also assert that the trial court erred in concluding that
South Beebe’s including the 70 Ranch was not a material
modification. We reject this assertion.
¶ 92 Because section 32-1-207(2)(a) exempts “changes in the
boundary of the special district” from the BOCC approval
requirement for material modifications, boundary changes alone are
presumptively not material modifications. See Beeghly v. Mack, 20
P.3d 610, 613 (Colo. 2001) (“[T]he inclusion of certain items implies
the exclusion of others.”).
¶ 93 In contrast, a change that involves “inclusion of property that
is located in a county . . . with no other territory within the special
district may constitute a material modification.” § 32-1-207(2)(a)
(emphasis added). In this latter situation, the district must give the
county notice; but the county need not approve the inclusion. Id.
(“The [BOCC] . . . may review such inclusion . . . .”) (emphasis
40
added). And “‘may’ denotes a grant of discretion.” Gerganoff, 241
P.3d at 937. And as for including additional property in a county
that the special district already occupies, the statute does not even
require that the district give notice.
¶ 94 Lessees push back on the presumption that boundary changes
are not material modifications. As they see it, Sand Hills held that
an inclusion of “substantial acreage” — such as the 70 Ranch’s
13,000 acres — is in and of itself a material modification. But Sand
Hills does not bear the weight lessees place on it.
¶ 95 Granted, the division did say that the “geographic shift in
2009 to include the 70 Ranch property . . . was . . . a material
modification,” and that “inclusion of the 70 Ranch property . . .
changed [Sand Hills’] basic or essential nature, because new,
substantial acreage (13,000 acres)” was added. Sand Hills,
¶¶ 32-33. But the division did not rest its conclusion solely on the
fact or size of the inclusion. Rather, it focused on three aspects of
the district’s conduct: “the 2009 addition of the 70 Ranch property,”
“the 2011 complete geographic shift to the 70 Ranch property
(removing all Lochbuie property),” and “the district’s shift from a
local focus with the purpose of providing local necessities for the
41
construction of the Altamira Development to a regional focus
providing services beyond Lochbuie’s boundaries.” Id. at ¶ 20.
¶ 96 The 70 Ranch property was the same when South Beebe later
included it. But unlike Sand Hills, South Beebe did not have only a
“local focus,” limited to servicing the needs of a particular
development, before it included the 70 Ranch. Rather, as the trial
court found,
[o]ver the many years since its formation,
South Beebe entered into a number of
intergovernmental agreements and expanded
its geographic scope and purpose. In 2003,
the district changed its name to South Beebe
to better describe the regional nature of the
services and facilities being provided.
¶ 97 As well, the trial court concluded that South Beebe’s 2013
revised service plan described “a shift in purpose” from a local to a
regional service provider. On this basis, Sand Hills is
distinguishable. Unlike in Sand Hills, South Beebe’s shift from a
local to a regional service provider was incremental, beginning in
2003 — long before the 70 Ranch was included. But Sand Hills
remained a local provider until it included the 70 Ranch. Thus, the
mere size of the 70 Ranch did not make its inclusion a material
modification; rather, the inclusion changed the “basic or essential
42
nature” of Sand Hills. In contrast, because South Beebe had
already taken on a regional role, the inclusion simply expanded the
region South Beebe served.
¶ 98 Still persisting, lessees argue that the exemption from BOCC
approval should be limited by the word “only.” See § 32-1-207(2)(a)
(“Approval for modification shall not be required for changes
necessary only for the execution of the original service plan or for
changes in the boundary of the special district . . . .”) (emphasis
added). In other words, according to lessees, boundary changes
could be material modifications requiring BOCC approval if those
changes necessarily encompass other changes, particularly “[a]ny
addition to the types of services provided.” Id.
¶ 99 To bolster this interpretation, lessees explain that along with
including the 70 Ranch, South Beebe undertook other projects
begun by Sand Hills that found no mention in South Beebe’s
original service plan, such as “construction of a 6,000 acre foot
reservoir” located on the 70 Ranch. And lessees assert that this
undertaking added to the types of services South Beebe provided, a
modification the statute explicitly labels as material. See § 32-1-
207(2)(a).
43
¶ 100 To begin, the word “only” in section 32-1-207(2)(a) modifies the
phrase “for the execution of the original service plan,” not “for
changes in the boundary of the special district.” See Holliday v.
Bestop, Inc., 23 P.3d 700, 705 (Colo. 2001) (“Words and phrases [in
our statutes] shall be . . . construed according to the rules of
grammar and common usage.” (quoting § 2-4-101, C.R.S. 2017))
(alteration in original).13
¶ 101 Even so, we perceive no basis on which to interpret the
exemption clause — “[a]pproval for modification shall not be
required . . . ” — as precluding application of the prior sentence
requiring approval for certain identified material modifications —
“approval of modifications shall be required [as to] . . . changes of a
basic or essential nature, including but not limited to the following:
. . . .” § 32-1-207(2)(a); see also City of Aurora ex rel. Util. Enter. v.
Colo. State Eng’r, 105 P.3d 595, 608 (Colo. 2005) (“Exceptions to the
general laws should be narrowly construed. The legislature, not the
court, should expand these exceptions if desirable.”) (citation
13 Although we have not found a Colorado case dealing with a
similar grammatical structure, in comparing the two phrases, each
describes a separate category of change; and “only” appears in the
first category, but not the second.
44
omitted). In other words, we agree with lessees to the extent that if
a boundary change also resulted in other changes of “a basic or
essential nature,” BOCC approval would be required.
¶ 102 Still, this interpretation leads to the question whether South
Beebe added to its types of services when it took over projects
previously proposed by Sand Hills for the 70 Ranch. The trial court
expressly found that South Beebe had not added to the types of
services provided. The record supports this conclusion.
¶ 103 Sand Hills’ 2013 revised service plan — which lessees argue
was applicable to the 70 Ranch — proposed to provide
“construction, acquisition and installation of local and regional
public improvements, including street and traffic signals, and
water, sewer, storm drainage and park and recreation facilities.”
Likewise, South Beebe’s 2013 revised service plan proposed
“construction, acquisition, installation and maintenance of streets
and safety control, street lighting, landscaping, storm drainage,
television relay, water, sanitary sewer, transportation, mosquito
control, and park and recreation improvements and facilities.”
¶ 104 Every type of service Sand Hills had proposed was also
proposed by South Beebe. By including the 70 Ranch, South Beebe
45
did not propose any services beyond what Sand Hills had proposed.
And to the extent minor variations in the proposed services
language exist, the court’s conclusion is still consistent with the
definition of “type.” See State v. Kalman, 887 A.2d 950, 955 (Conn.
App. Ct. 2006) (“According to the American Heritage Dictionary of
the English Language (New College Ed. 1981), the word ‘type’ is
defined as: ‘1. A group of persons or things sharing common traits
or characteristics that distinguish them as an identifiable group or
class; a kind; category.’”).
¶ 105 Lessees attempt to shift the focus away from types of services
to specific projects Sand Hills planned on completing. This
argument falls short. The statute does not address — and the trial
court properly did not consider — the addition of specific projects.
¶ 106 Given all this, we agree with the trial court that because South
Beebe’s including the 70 Ranch was not a material modification, no
BOCC approval was required. And unlike in Sand Hills, because
South Beebe had previously included other property in Weld
County, it did not even have to provide notice to Weld County before
including the 70 Ranch.
¶ 107 Lessees assert that in the IGA, Weld County had improperly
46
given advance consent to a material modification — which ripened
when South Beebe included the 70 Ranch. But the trial court
found that in the IGA, South Beebe had given Weld County notice of
its intent to include property located in that county. As well, South
Beebe gave specific notice of its intent to include the Highland
Equities property. The county responded that no further action
would be necessary. These findings are undisputed. Nor have
lessees raised any procedural defects in the Highland Equities
property inclusion.
¶ 108 For these reasons, this assertion need not be resolved. And
because the IGA is not in play, we also need not decide whether
South Beebe failed to comply with the IGA by acting on a petition
that did not include all owners of the mineral estate underlying the
70 Ranch.
¶ 109 In the end, we conclude that because including the 70 Ranch
was not a material modification, the trial court acted within its
discretion in ruling that lessees had not shown a reasonable
probability of success in challenging inclusion of the 70 Ranch as
an unapproved material modification.
47
C. Application of Section 32-1-107(2) to Possible Overlap of South
Beebe’s and Sand Hills’ Services Within the 70 Ranch
¶ 110 Lastly, lessees contend that under section 32-1-107(2), South
Beebe cannot levy and collect taxes to support services if those
services are already being provided by another special district.
Specifically, they continue, because the 70 Ranch property remains
within Sand Hills, South Beebe is unlawfully taxing them to provide
some of the same services that Sand Hills provides.
1. Additional Background
¶ 111 The trial court concluded that lessees had not shown a
reasonable probability of success on the merits of this claim for two
reasons.
¶ 112 First, the trial court considered the Sand Hills division’s
conclusion that because the 2009 geographic shift from a local to a
regional service provider was a material modification, the attempted
inclusion of 70 Ranch into Sand Hills without the approval of the
Weld County BOCC violated the Act. The court explained that “[a]
natural reading of the Court of Appeals’ decision is that inclusion of
70 Ranch was ineffective absent appropriate approval. Thus, it is
unclear to the Court whether the 70 Ranch property is within or
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without the geographic boundaries of Sand Hills.”
¶ 113 Second, the court read section 32-1-107(2) as “not necessarily
preclud[ing] one district from including property within the
boundaries of another district; rather the statute prohibits one
district from providing the same service as another district.” Then
the court observed “it was not controverted at the preliminary
injunction hearing that Sand Hills currently is not developing or
constructing the regional water infrastructure or providing the
regional water services South Beebe intends to provide.”
¶ 114 Lessees assert that the 70 Ranch remained in Sand Hills and
that they raised with the trial court whether South Beebe provided
services overlapping those of Sand Hills.
2. Law
¶ 115 Under section 32-1-107(2), subject to an exception not
relevant to this case, “no special district may be organized wholly or
partly within an existing special district providing the same service.”
(Emphasis added.) This section “prohibits the creation of a new
district within an overlapping geographical area being served by an
existing district rendering similar services.” Jefferson Ctr. Metro.
Dist. No. 1 v. N. Jeffco Metro. Recreation & Park Dist., 844 P.2d
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 1321, 1325 (Colo. App. 1992) (emphasis added); see also Plains
Metro. Dist. v. Ken-Caryl Ranch Metro. Dist., 250 P.3d 697, 702
(Colo. App. 2010) (“That Act prevents a district from organizing
within the boundaries of ‘an existing special district providing the
same service,’ unless various approvals are received.”) (emphasis
added) (citation omitted). The parties have not cited, nor have we
found, any other authority interpreting this statute.
3. Application
¶ 116 As to the trial court’s first reason, the Sand Hills division did
not say whether Sand Hills’ violation of section 32-1-207(2)(a) — by
adding the 70 Ranch property without notice to or approval by Weld
County — voided the inclusion of that property. The division’s
silence on this point is consistent with the parties’ claims, which
dealt only with the district’s legal authority to collect taxes and a
possible refund.
¶ 117 Recall, under section 32-1-207(3)(a), a court may enjoin action
constituting a material modification. But the Act neither empowers
a court to void a material modification for lack of approval nor
provides that such a modification made without the required BOCC
approval is void. The parties do not cite, nor have we found,
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Colorado authority answering this question.
¶ 118 In Upper Bear Creek Sanitation District v. Board of County
Commissioners, 715 P.2d 799, 802 (Colo. 1986), the court said “[a]s
a special district organized pursuant to the 1965 Act, the District’s
modified service plan required approval of the Board before the
changes contemplated therein could be implemented.” Like the Act,
the supreme court could have said that the modified service plan
was void for lack of approval, but it did not do so.
¶ 119 For these reasons, we decline the invitation to decide whether
the Sand Hills decision voided the 70 Ranch’s inclusion into Sand
Hills. Thus, because, at the time of the preliminary injunction
hearing, the 70 Ranch could have remained in Sand Hills, we turn
to the trial court’s second reason.
¶ 120 Beginning where the trial court did, we also read section
32-1-107(2) as prohibiting overlapping services, not merely
overlapping territory. As to the court’s finding that overlapping
services was not raised at the preliminary injunction, an appellate
court “is obligated to search the record for evidence to support the
findings of fact.” Bockstiegel v. Bd. of Cty. Comm’rs, 97 P.3d 324,
328 (Colo. App. 2004). And we will decline to consider an issue
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raised for the first time on appeal. See, e.g., State of Colo. Dep’t of
Health Care Policy & Fin. v. S.P., 2015 COA 81, ¶ 29.
¶ 121 The question of overlapping services was raised before the
hearing. Intervenor Noble Energy’s reply in support of the motion
for a preliminary injunction noted, “South Beebe attempts to argue
that it is not providing overlapping services in violation of C.R.S.
§ 32-1-107(2).” However, the thrust of this argument was whether
the 70 Ranch remained in Sand Hills: “the Weld County District
Court’s orders make clear that South Beebe may not include and
provide services for [the] 70 Ranch while it is still within Sand Hills,
which is organized to provide the same services.” Noble Energy’s
reply brief did not discuss any evidence of overlapping services.
And as noted above, lessees’ written closing argument did not
mention overlapping services.
¶ 122 True, after the hearing, lessees filed a notice of supplemental
authority “relevant to Plaintiffs’ argument that the same property
cannot be included within two districts providing the same
services.” Defendants objected to the supplemental authority,
arguing in part:
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Given that Sand Hills [lost] its taxing authority
and ability to receive revenue, it is
indisputable that Sand Hills can no longer
provide services. Thus, there can be no
overlapping services with South Beebe and
exclusion of [the] 70 Ranch from Sand Hills is
immaterial to whether the inclusion of [the] 70
Ranch into South Beebe is proper.
¶ 123 But none of these filings called the trial court’s attention to
services that were — or were not — overlapping. Instead, the
parties alerted the trial court to the legal question of whether the 70
Ranch remained in Sand Hills. And no party asked the court to
resolve the factual question of overlapping services.
¶ 124 Therefore, we conclude that the question of whether services
overlapped is not properly before us. See Qwest Servs. Corp. v.
Blood, 252 P.3d 1071, 1087 (Colo. 2011) (To preserve an issue for
appeal, the attorney must present arguments that “alert[] the trial
judge to the impending error.” (quoting Am. Family Mut. Ins. Co. v.
DeWitt, 218 P.3d 318, 325 (Colo. 2009))).
VI. Conclusion
¶ 125 The trial court’s entry of summary judgment on the lessees’
claim under section 32-1-401(1)(a) is affirmed. The court’s order
denying lessees’ motion for a preliminary injunction is vacated
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based on our holding that the lessees established a reasonable
likelihood of success on the merits as to whether South Beebe
violated section 32-1-207(2)(a) by failing to obtain Adams County
BOCC approval.
¶ 126 On remand, the trial court must consider the remaining
Rathke factors, make findings of fact on each of those factors, and
reconsider whether to enter a preliminary injunction. The
temporary injunction previously entered by this court, subject to
compliance with any bonding orders entered by the trial court, will
remain in effect until the trial court enters its renewed ruling on the
motion for preliminary injunction. The temporary injunction
entered by this court will automatically dissolve upon the entry of
the trial court’s order on remand granting or denying the motion for
preliminary injunction.
JUDGE BERGER and JUDGE NIETO concur.
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