Colorado Court of Appeals Court Opinions: Oct. 4, 2018

Editor’s Note: Court opinions are summarized by Law Week Colorado.

People v. Oliver 
This case called on the Colorado Court of Appeals to distinguish between defense counsel’s power to stipulate to an element of an offense and the defendant’s sole prerogative to personally waive the right to trial by jury on that offense.

After a jury trial on two felony menacing charges against John Oliver, the jury acquitted him on one count and hung on the other. Then the trial court entered a judgment of conviction for possession of a weapon by a previous offender — a charged offense on which the jury had not been instructed. The court did so based only on the jury’s “yes” answer to a special interrogatory, which had been approved by Oliver’s counsel, that asked whether Oliver had possessed a firearm, plus counsel’s stipulation that Oliver was a previous offender.

The Court of Appeals concluded that because Oliver did not personally waive his right to have the jury return a verdict on the POWPO charge, even if counsel attempted to waive this right on Oliver’s behalf, entry of the POWPO conviction violated Oliver’s constitutional right to trial by jury. The court concluded that the conviction must be reversed and the case remanded for a new trial on that charge.

 

Big Sur Waterbeds v. City of Lakewood 
Big Sur Waterbeds, Denver Mattress Co. and Sofa Mart purchase furniture (tax free) from wholesalers worldwide and resell it in stores across the country, including in the City of Lakewood. At each Lakewood store, plaintiffs provide a showroom where they display some furniture for customers to peruse and try out.

Plaintiffs also maintain warehouses, where they store the bulk of their inventory. They ultimately sell all the furniture — including the displayed furniture — and fill customer orders from either the warehouses or the showrooms. Plaintiffs’ customers pay Lakewood’s sales tax on each purchase.

Lakewood assessed use tax on plaintiffs’ purchases of the displayed furniture from 2012 to 2015 on the theory that plaintiffs purchased the displayed furniture at retail for their own use in advertising their products. Plaintiffs challenged the assessments in the district court, which held a bench trial. They argued that, like all the furniture they buy, they purchased the displayed furniture at wholesale and thus those purchases were exempt from use tax. Employing the “primary purpose” test from A.B. Hirschfeld Press, Inc. v. City and County of Denver, the court agreed with plaintiffs and cancelled Lakewood’s use tax assessments.

Addressing an issue of first impression, the Court of Appeals concluded that plaintiffs purchased the displayed furniture primarily for resale. The court affirmed the judgment cancelling the assessments.

 

Town of Monument v. State of Colorado 
The Town of Monument bought a parcel of real property in a residential subdivision, intending to construct a municipal water storage tank on the lot, but a restrictive covenant prohibiting such structures applies to all lots in the subdivision. Monument filed this case, seeking to use its power of eminent domain to have the court declare its property free of the restrictive covenant.

Other owners of lots in the subdivision, however, intervened in the case. They said because the restrictive covenant benefits all property in the subdivision, Monument can’t eliminate the restrictive covenant on its lot without paying every property owner in the subdivision an amount compensating each of them for the loss in value to their respective properties.

The State Board of Land Commissioners, which owns several lots in the subdivision, presented an even greater obstacle to Monument’s goal. It asserted that because the restrictive covenant is a compensable interest in the property, and the power of eminent domain can’t be used against the state, Monument can’t eliminate the restrictive covenant on3its lot. Monument claimed that the restrictive covenant isn’t a compensable interest in property in the context of an eminent domain case.

Everyone recognized that the case came down to deciding whether the Colorado Supreme Court’s decision in Smith v. Clifton Sanitation District or the Colorado Court of Appeals’ decision in City of Steamboat Springs v. Johnson controls.

In Smith, an eminent domain case, the court held that a restrictive covenant wasn’t a compensable property interest. In Steamboat Springs, also an eminent domain case, the division said that a restrictive covenant was a compensable property interest.

The district court agreed with the intervening landowners. It reasoned that Smith, which involved property owners who agreed to a restrictive covenant for the clear purpose of preventing a condemnation, must be limited to its particular facts; this case doesn’t involve comparable facts; and Johnson sets forth the better rule. This ruling rendered Monument’s condemnation action untenable for several practical reasons, but also because the power of eminent domain can’t be exercised against the State. As a result, the parties stipulated to a dismissal of the case with prejudice. The court granted the stipulation. Monument appealed from the dismissal, raising only the issue whether Smith controls.

The Court of Appeals held that the holding and underlying reasoning of Smith aren’t limited to that case’s particular facts. The court in Smith announced a rule of law — that a restrictive covenant isn’t a compensable property interest in an eminent domain case — and the rule isn’t limited to situations where the affected property owners agree to the restrictive covenant in a clear attempt to thwart acquisition of property by a public entity for public use. The appellate curt reversed and remanded the case for further proceedings.