United States v. Colorado & Eastern Railroad Co.

FILED
United States Court of Appeals
Tenth Circuit
February 23, 2018
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
UNITED STATES OF AMERICA; STATE
OF COLORADO,
Plaintiffs,
v. No. 16-1374
COLORADO & EASTERN RAILROAD
COMPANY,
Defendant - Appellee.
NDSC INDUSTRIAL PARK, LLC,
Intervenor - Appellant,
DENVER ROCK ISLAND RAILROAD;
UNION PACIFIC RAILROAD
COMPANY; THOMAS Z. MARS,
Intervenors - Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
(D.C. NO. 1:98-CV-01600-WYD)
Adam L. Massaro (Michael D. Plachy with him on the briefs), Lewis Roca
Rothgerber Christie LLP, Denver, Colorado, for Intervenor-Appellant.
Kathryn A. Reilly, Wheeler Trigg O’Donnell LLP, Denver, Colorado, Attorney
for Union Pacific Railroad (Stephanie Loughner and Bethany A. Johnson, Moye
White LLP, Denver, Colorado, Attorneys for Colorado & Eastern Railroad Co.;
and William M. Schell, Opperman & Schell, P.C., Littleton, Colorado, Attorney
for Thomas Z. Mars and Denver Rock Island Railroad, with her on the brief), for
Defendant/Intervenors-Appellees.
Before MORITZ, KELLY, and MURPHY, Circuit Judges.
MURPHY, Circuit Judge.
I. INTRODUCTION
NDSC Industrial Park, LLC (“NDSC”) appeals from an order of the district
court dismissing its “Consent Decree Order Motion.” The district court dismissed
the motion because NDSC lacked standing to enforce the terms of the consent
decree. On appeal, NDSC asserts the district court erred in concluding it (1) was
attempting to enforce the consent decree, as opposed to seeking a limited
declaration regarding the meaning of the consent decree; and (2) did not have
standing to seek a declaration that a conveyance of property violated the terms of
the consent decree. This court exercises jurisdiction pursuant to 28 U.S.C. § 1291and affirms the district court’s order of dismissal.
II. BACKGROUND
A. The Consent Decree
In the late 1990s, the United States and the State of Colorado each filed
complaints against Colorado & Eastern Railroad Company (“C & E”) under
-2-
CERCLA. 1 These complaints sought reimbursement of response costs associated
“with the release or threatened release of hazardous substances at the Sand Creek
Industrial Site located in Commerce City and Denver, Colorado.” In an effort to
avoid protracted litigation, the parties entered into a partial consent decree (the
“Consent Decree”) on April 13, 1999. Pursuant to the Consent Decree, C & E
agreed to sell two parcels of land, the OU3/6 Property and the OU1/5 Property
(collectively the “Properties”), and pay the net proceeds of the sales to the United
States and Colorado. 2 The Consent Decree gave the United States a two-and-one-
half-year period during which time it could identify a potential purchaser of the
Properties and obligate C & E to sell to the identified purchaser. Although the
Consent Decree allowed C & E to also seek out potential purchasers of the
Properties during this time period, it prohibited C & E from selling or conveying
“any Property without the prior written approval of the United States, unless the
1
CERCLA is the Comprehensive Environmental Response, Compensation,
and Liability Act, 42 U.S.C. § 9601-9675. The complaints filed by the United
States and Colorado were based on § 9607, the CERCLA provision that allows
“[p]arties that have expended funds to respond to hazardous waste releases [to]
. . . recoup their costs from parties that might be liable under the statute.”
Morrison Entrs. v. McShares, Inc., 302 F.3d 1127, 1132 (10th Cir. 2002).
2
The property at issue in this appeal, a railroad right-of-way, runs across,
but is legally distinct from, the OU3/6 and OU1/5 Properties. The record reveals
the existence of a substantial question as to whether the right-of-way, or at least a
part of the right, was excluded from the terms of the Consent Decree.
Nevertheless, because NDSC lacks standing to seek a declaration as to the
meaning of, or to enforce the provisions of, the Consent Decree, this court lacks
jurisdiction to reach and resolve this issue on appeal.
-3-
United States agrees otherwise in writing.” Relevant to this appeal, the Consent
Decree specifically provided that its terms “shall” not “be construed to create any
rights in, or grant any cause of action to, any person not a Party” to the
agreement. The district court approved and entered the Consent Decree on
September 9, 1999. In so doing, the district court “retain[ed] jurisdiction over
this matter for the purpose of interpreting and enforcing the terms of [the]
Consent Decree.”
B. The Mars Transaction
During the relevant time periods, C & E was a wholly owned subsidiary of
Great Northern Transportation Company (“Great Northern”). C & E owned
certain railroad rights of way, including the right-of-way over the Properties that
would eventually become subject to the Consent Decree. Denver Terminal
Railroad Company (“Denver Terminal”) was also a subsidiary of Great Northern.
Pursuant to a 1989 easement granted by C & E to Denver Terminal, Denver
Terminal operated a railroad on approximately six miles of the right-of-way. In
1993, Great Northern entered into an agreement to sell Thomas Z. Mars all of
Denver Terminal’s stock and assets. Pursuant to the agreement, Mars would pay
for Denver Terminal, in part, by a promissory note. Of particular relevance to the
instant proceedings, the agreement specifically provided that upon payment in full
of the promissory note, Great Northern would require C & E to convey fee title to
-4-
the railroad right-of-way (i.e., the part of the right-of-way covered by the 1989
easement granted by C & E to Denver Terminal) for the payment of one dollar.
A dispute arose between Great Northern and Mars over the payment of the
promissory note and whether Denver Terminal actually owned all of the assets set
forth in the purchase agreement. This dispute resulted in state-court litigation.
That litigation was settled in June 2001, when the parties entering into an
agreement which modified the amount remaining due under the promissory note
to $100,000; provided for a new payment period for the revised amount to be paid
to Great Northern; and confirmed that upon payment in full of the revised
amount, C & E would convey fee title to the right-of-way to Mars. After the
revised amount was paid by Mars to Great Northern, the railroad right-of-way was
conveyed from C & E to Mars by quitclaim deed dated November 2, 2001. None
of the proceeds received by Great Northern from Mars were paid over to the
United States or Colorado.
C. Sale of Property Subject to the Consent Decree
In 2002, the remediated OU1/5 and OU3/6 Properties were put up for
auction by the United States pursuant to the Consent Decree. NDSC was the
winning bidder. Prior to closing on the purchase of the Properties, NDSC was
made aware that C & E had already conveyed its fee interest in the right-of-way
to Mars. Indeed, the quitclaim deed conveying the Properties from C & E to
NDSC expressly excluded the railroad right-of-way previously conveyed to Mars.
-5-
NDSC did not, during that relevant time period, ask the United States to enforce
the Consent Decree by, for instance, seeking an order from the district court
voiding the conveyance from C & E to Mars. Nor is there any indication in the
record that Colorado or the United States would have taken any such action. 3
Likewise, there is no indication in the record NDSC sought to renegotiate the
purchase price of the transaction based on the fact the deed conveying the
Properties to it specifically excluded the railroad right-of-way. Instead, in 2003,
NDSC proceeded with the purchase of the Properties for the previously agreed-to
sum.
D. The Instant Litigation
In 2014, NDSC filed suit in Colorado state court to quiet title to the
railroad right-of-way against C & E, Mars, and Mars’s assigns and/or successors-
3
The United States and Colorado filed a “Joint Submission” in the district
court. In that Joint Submission, they noted “it appears” C & E’s conveyance to
Mars violated the Consent Decree, at least as regards the OU1/5 Property. The
Joint Submission recognizes, however, that both the United States and NDSC
were aware of the conveyance to Mars and that “[d]espite the issues surrounding
title to the OU1/5 Property . . . , NDSC went through with the purchase.” Finally,
the Joint Submission disclaims any intent on the part of the United States or
Colorado to enforce the terms of the Consent Decree:
[C & E’s] apparent violation of the Partial Consent Decree . . .
neither significantly impacts the interests of the [United States or
Colorado] nor the consideration that [they] received under the Partial
Consent Decree. Therefore, [they] have not and, based on the facts
known to [them] today, do not intend to initiate a contempt
proceeding or take other action against [C & E] for its apparent
violation of the Partial Consent Decree.
-6-
in-interest. The state trial court determined the resolution of NDSC’s quiet title
action turned on the question whether C & E’s conveyance of the railroad right-
of-way to Mars in 2001 violated the terms of the Consent Decree. 4 According to
the state court, “only the U.S. District Court for the District of Colorado has the
power to ‘interpret and enforce’” the Consent Decree. Given this jurisdictional
ruling, the state court administratively closed the case. It did, however, stay its
order dismissing NDSC’s claims, “subject to the outcome of any federal lawsuit.”
Thereafter, NDSC sought permission to intervene in the action that led to
the entry of the Consent Decree. NDSC’s motion to intervene specifically
requested that the district court interpret the Consent Decree and enter an order
enforcing the Consent Decree against C & E, Mars, and Mars’s assignee. The
district court allowed NDSC to intervene, but concluded as follows: “[I]n order to
4
In so concluding, the state court specifically rejected NDSC’s assertion
that its quiet title action represented nothing more than a simple property dispute
within the state court’s jurisdiction:
NDSC’s characterization of this dispute as one only involving
real property is somewhat misleading. It is true that, in the most
general terms, NDSC[’s] first and third claims are part of a quiet title
action. However, the “linchpin” of these claims is whether [C & E]
violated the terms of the Consent Decree when it conveyed the
property at issue to Mars. The Consent Decree is thus essential to
resolving who has title to the property, and any jurisdictional
questions must involve which court has jurisdiction to resolve
disputes that involve interpreting or enforcing the terms of the
Consent Decree.
-7-
obtain the Court’s consideration, NDSC shall refile its Motion to Enforce Consent
Decree Order as a separate motion allowing a proper response and reply.”
After NDSC filed such a separate motion and the matter was fully briefed
by the parties, the district court entered an order concluding NDSC’s motion
could only be interpreted as a request to enforce the Consent Decree and that
NDSC lacked standing to seek such relief. In particular, the district court
concluded as follows: (1) the terms of the Consent Decree described the parties
thereto and NDSC was not such a party; (2) NDSC could not “piggyback” on the
standing of one of the described parties to the Consent Decree because there was
no current case or controversy pending before the court on the part of those
parties; and (3) NDSC did not have standing as a purported intended beneficiary
of the Consent Decree because the terms of the Consent Decree made absolutely
clear it did not create any rights in individuals or entities that were not parties to
the Decree.
III. ANALYSIS
On appeal, NDSC asserts the district court erred in determining it (1) was
seeking enforcement of the Consent Decree and (2) lacked standing to seek a
declaration that the conveyance of the railroad right-of-way from C & E to Mars
in 2001 violated the Consent Decree. For purposes of resolving this appeal, this
court will assume NDSC requested nothing more from the district court than a
simple declaration that C & E violated the Consent Decree when it conveyed the
-8-
right-of-way to Mars. 5 Furthermore, because it does not address the issue on
appeal, NDSC has forfeited any argument the district court erred in concluding it
lacks standing to seek enforcement of the Consent Decree. Thus, the only
question left on appeal is whether NDSC has standing to seek a mere declaration
that the 2001 conveyance from C & E to Mars violated the terms of the Consent
Decree. The answer to that question is an unequivocal “no.”
5
For all those reasons set out in the district court’s order denying NDSC’s
Motion for Reconsideration, this is a dubious assumption. As noted by the
district court,
Although NDSC argues in its present Motion that it “sought no
further relief” in its initial motion other than an interpretation by the
Court of the Consent Decree and whether the 2001 land conveyance
violated the terms of the Decree, it is clear that it sought something
more, specifically that the Court would “find that the [Consent
Decree] was violated and, as such, that the purported conveyance
from [C & E] to Mr. Mars is invalid and void.” In its initial motion,
NDSC argued that the Court has the power to “enforc[e] the order
against those who violate or interfere with it.” Further, NDSC
argued that the Court has the power to “interpret[] its own order and
issu[e] commands to effectuate that order.” NDSC urged the Court
to find that [C & E] violated the Consent Decree by making an
unauthorized conveyance, and by failing to pay sale proceeds to the
United States, and that since the conveyance was allegedly made in
violation of the Consent Decree, the Court should find it invalid and
void. What NDSC asked the Court to do was more than just
interpreting terms of the Consent Decree. It asked the Court to
enforce the terms of the Decree against [C & E] by finding that
[C & E’s] conveyance is invalid and therefore void.
Thus, it is far from clear that NDSC preserved the argument it now advances on
appeal. Nevertheless, because NDSC’s assertion that it has standing to seek a
declaration as to the meaning of the consent decree clearly fails on the merits, it
is unnecessary to resolve the question of preservation.
-9-
Article III standing is a fundamental requirement for any party seeking
relief in federal court. City of Colo. Springs v. Climax Molybdenum Co., 587 F.3d
1071, 1078 (10th Cir. 2009) (“Any party, whether original or intervening, that
seeks relief from a federal court must have standing to pursue its claims.”
(quotation omitted)). As the party seeking to proceed in a federal forum, NDSC
bears the burden of establishing the existence of standing. Colo. Outfitters Ass’n
v. Hickenlooper, 823 F.3d 537, 544 (10th Cir. 2016). To do so, NDSC must show
(1) it has an injury in fact to a legally protected right, (2) the claimed injury was
caused by the actions of C & E, and (3) the relief requested from the district court
will redress the injury. Nova Health Sys. v. Gandy, 416 F.3d 1149, 1154 (10th
Cir. 2005). Whether NDSC has established the existence of standing is a question
of law subject to de novo review. Colo. Outfitters, 823 F.3d at 544.
Because the record conclusively establishes that the relief requested by
NDSC will not redress any assumed injury to it caused by C & E, we resolve
NDSC’s appeal on that basis. Even under the ‘lightened” burden for establishing
standing at the pleading stage, Cressman v. Thompson, 719 F.3d 1139, 1144 (10th
Cir. 2013), the record conclusively establishes that a declaration on the part of the
district court that the C & E conveyance to Mars in 2001 violated the Consent
Decree will not, to any degree, redress NDSC’s alleged injury.
In support of its assertion such a declaration will redress its alleged injury,
NDSC asserts that having obtained such a declaration, it “will return to the state
-10-
court to ask the court to hold that NDSC has established a superior claim of title
over Mars” and Mars’s assignee. The problem with this assertion is the state
court has already made clear that whether a violation of the Consent Decree
would lead to the conclusion the deed from C & E to Mars is void or voidable is a
question of enforcement within the exclusive jurisdiction of the federal district
court. NDSC has not pointed to anything in the record indicating the state court
would deviate from this commonsense ruling merely because the federal district
court issued a limited interpretive declaration as to the meaning of the Consent
Decree. Instead, NDSC asserts, in entirely ipse dixit fashion, that any actions it
takes in the future in state court to obtain superior title to Mars and Mars’s
assignee would not amount to enforcement of the Consent Decree because it is not
directed at any of the Consent Decree’s signatories. This assertion is entirely
unconvincing. As made clear above, the quitclaim deed under which NDSC
acquired the Properties from C & E specifically excluded the railroad right-of-
way previously conveyed to Mars. The only legal theory upon which NDSC
claims superior title to the right-of-way over Mars is that the Consent Decree
renders the deed from C & E to Mars void or voidable. Thus, in seeking superior
title to the right-of-way, NDSC is, most certainly, seeking to enforce the terms of
the Consent Decree. It is for this very reason that the state court concluded it
lacked jurisdiction over NDSC’s quiet title action.
-11-
Because NDSC has not demonstrated even the slightest possibility that the
declaration it seeks could lead toward the redress of its alleged injury, it has
failed to demonstrate it has standing to seek such a declaration.
IV. CONCLUSION
For those reasons set out above, the order of the district court dismissing
NDSC’s Consent Decree Order Motion for lack of standing is hereby
AFFIRMED.
-12-