v. Shenandoah Homeowners Ass'n

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
February 20, 2020
2020COA31
No. 18CA1592, Kroesen v. Shenandoah Homeowners Ass’n —
Real Property — Easements Appurtenant — Common Interest
Communities — Colorado Common Interest Ownership Act
On a matter of first impression, a division of the court of
appeals analyzes the amount of specificity necessary in a recorded
document to establish an enforceable easement within a common
interest community. The division specifically evaluates whether the
developer of two subdivisions created a valid easement for property
owners of one subdivision to use certain roads within the other
subdivision when the plats for the subdivision burdened by the
easement did not expressly refer to the easement. Because the
Colorado Common Interest Ownership Act contains specific
statutory requirements for creating an easement and supplements
traditional common law principles, the division addresses whether
the developer complied with the requirements of the Act and the
common law. The division holds that the developer complied with
the Act and the common law and, thus, created an enforceable
easement.
The division additionally analyzes whether a party is entitled to
recover lost profits on a claim for intentional interference with a real
estate sales contract. Because the subject property had not become
unmerchantable, the division holds that the party was not entitled
to recover lost profit damages and affirms the district court’s
calculation of damages.
COLORADO COURT OF APPEALS 2020COA31
Court of Appeals No. 18CA1592
La Plata County District Court No. 17CV30018
Honorable Todd P. Norvell, Judge
Ronald J. Kroesen and Patricia L. Kroesen,
Plaintiffs-Appellees and Cross-Appellants,
v.
Shenandoah Homeowners Association, Inc., a Colorado nonprofit corporation,
and Ronald Burris, in his official capacity as Director of the Shenandoah
Homeowners Association, Inc.,
Defendants-Appellants and Cross-Appellees.
JUDGMENT AFFIRMED
Division VII
Opinion by JUDGE LIPINSKY
Fox and Berger, JJ., concur
Announced February 20, 2020
Goldman, Nicholson & Mack, P.C., Lindsey K.S. Nicholson, Josh W. Mack,
Durango, Colorado, for Plaintiffs-Appellees and Cross-Appellants
Campbell, Wagner, Frazier & Dvorchak, LLC, Colin C. Campbell, Greenwood
Village, Colorado, for Defendants-Appellants and Cross-Appellees
¶1 Plaintiffs, Ronald J. and Patricia L. Kroesen, owners of land in
the Shenandoah Highlands Subdivision (Highlands Subdivision) in
La Plata County, seek to access their property over two roads in the
adjoining Shenandoah Subdivision. The Kroesens argue they have
an easement over the roads based on language in plats that the
developer of both subdivisions recorded as amendments to each
subdivision’s declarations.
¶2 Defendants, Shenandoah Homeowners Association, Inc. and
Ronald Burris, the president of the Association (jointly, Shenandoah
Association), respond that the developer failed to comply with the
statutory requirements for creating an easement in a common
interest community. Shenandoah Association specifically argues
that the developer failed to provide future owners of lots in
Shenandoah Subdivision the required record notice of the
easement.
¶3 The Kroesens also assert an intentional interference with
contract claim against Shenandoah Association. They allege that
Shenandoah Association’s refusal to recognize the easement caused
the Kroesens to lose a contract to sell their property to a third
1
party. The Kroesens seek lost profits and other damages on that
claim.
¶4 Following a bench trial, the district court entered judgment in
favor of the Kroesens on their claims for declaratory judgment and
intentional interference with contract. The court found that the
developer complied with the requirements for creating an easement
and that Shenandoah Association intentionally interfered with the
Kroesens’ contract to sell their property. It awarded the Kroesens
damages for intentional interference with contract, including the
cost of holding and maintaining the property from the date of the
interference until two years following the judgment. But the court
did not award the Kroesens lost profits.
¶5 Shenandoah Association appeals the judgment entered in
favor of the Kroesens. The Kroesens appeal the district court’s
denial of their request for lost profits.
¶6 The appeals raise an issue of first impression in this state —
the amount of specificity necessary in a recorded document to
establish an enforceable easement within a common interest
community.
¶7 We affirm.
2
I. The Two Subdivisions
¶8 In 1984, Shenandoah Limited (the developer) began developing
a 993-acre parcel (original property) in La Plata County. As relevant
to this appeal, the developer divided the original property into two
subdivisions — Shenandoah Subdivision, created in 1989, and
Highlands Subdivision, created in 1994 — by recording declarations
for each. (A “declaration” is a “recorded instrument[] . . . that
create[s] a common interest community . . . including . . . plats and
maps.” § 38-33.3-103(13), C.R.S. 2019. A “plat” is the “part of a
declaration that . . . depicts all or any portion of a common interest
community in two dimensions . . . .” § 38-33.3-103(22.5).) The
developer established a homeowner’s association for each
subdivision.
¶9 The developer also recorded plats that depicted the two roads
at issue, known as Colonial Drive (or Colonial Road) and Blue Ridge
Road. Portions of the roads follow the boundary between the two
subdivisions. The plats also created an easement (the Subject
Easement) that arguably allowed the owners of lots in Highlands
Subdivision to access their properties over the roads.
3
¶ 10 The pre-1994 plats amending the declaration for Shenandoah
Subdivision referenced the Subject Easement, albeit in general
terms, as they pre-dated the creation of Highlands Subdivision.
Those plats described the Subject Easement as:
• an access road easement “dedicated to [the developer
and] the Shenandoah Homeowners Association”;
• consisting of “General Common Elements . . . for the use
and benefit of [the developer], the owners of the lots
within [Shenandoah Subdivision and] adjacent
subdivisions”;
• “for the use of [the developer]” and the owners of each lot
created by the plat for the original property; and
• dedicated to the developer and “the present and future
owners of [Shenandoah Subdivision].”
None of the pre-1994 plats described “adjacent subdivisions” with
greater specificity.
¶ 11 After the developer created Highlands Subdivision, the
developer and the then owner of the Kroesens’ lot (the former
owner) each independently recorded a plat relevant to our analysis.
The developer recorded a plat entitled “Shenandoah Highlands
4
Subdivision No. 2 Project 95-88” (Highlands Plat) that created new
tracts, including Tracts A and B, within Highlands Subdivision;
asserted that the developer owned Colonial Drive and Blue Ridge
Road; and expressly stated that “[n]ormal access for Tract A will be
via Blue Ridge and Colonial Drive to County Road 141.”
¶ 12 The former owner recorded a plat consolidating Tracts A and B
into Tract AB (Tract AB Plat). Residential construction on Tract AB
was limited to the portion that was formerly Tract A.
¶ 13 According to the Highlands and Tract AB Plats, not only is
Tract AB adjacent to Shenandoah Subdivision, but it abuts Blue
Ridge Road:
5
6
Blue Ridge Road merges into Colonial Drive north of Tract AB.
¶ 14 Before the former owner consolidated Tracts A and B, the
Board of Directors of Shenandoah Homeowners Association
approved an easement over Blue Ridge Road to benefit Tract A.
(The record does not specify whether the Board approved a similar
easement over Colonial Drive.) Although the Board’s action appears
in its meeting minutes, no recorded document reflects the Board’s
approval of the Subject Easement. The members of Shenandoah
Homeowners Association did not ratify the Board’s approval of the
Subject Easement or otherwise authorize an easement to benefit
Tract AB.
¶ 15 In 1999, the Kroesens purchased Tract AB from the former
owner for $160,000. In 2015, the Kroesens signed a contract to sell
Tract AB for $188,500. Before the closing on the sale, however,
Burris, in his capacity as president of the Board of Directors of
Shenandoah Homeowners Association, told the Kroesens’ real
estate agent that the owners of Tract AB had no right to use either
road.
¶ 16 The prospective purchaser refused to close on the purchase of
the Kroesens’ property after learning that the owners of Tract AB
7
may not have an easement over the roads. The Kroesens claim
that, after the sale fell through, they were unable to find a
purchaser willing to buy Tract AB without access to the roads.
II. Procedural History
¶ 17 The Kroesens sued to obtain, among other relief, (1) a
declaratory judgment that the owners of Tract AB have an easement
over the roads; (2) a permanent injunction enjoining Shenandoah
Association from interfering with their access to Tract AB over the
roads; (3) an award of their expenses associated with the failed sale
of their property and lost profits for Shenandoah Association’s
intentional interference with their purchase contract; and (4)
damages for slander of title arising from Shenandoah Association’s
assertion, through Burris, that the owners of Tract AB did not have
an easement over the roads.
¶ 18 The district court granted summary judgment to the Kroesens
on their declaratory judgment claim. (The parties expressly agreed
there were no disputed issues of material fact.) In a well-reasoned
order, the court ruled that the plats for Shenandoah Subdivision
were sufficient to establish an easement over the roads benefitting
8
Tract AB. However, the court’s order did not expressly resolve
whether the Kroesens were entitled to a permanent injunction.
¶ 19 The court resolved the Kroesens’ claims for intentional
interference with contract and slander of title following a bench
trial. The court awarded the Kroesens damages on the intentional
interference with contract claim to compensate them for their
inability to sell the property. The damages took the form of
approximately five years of maintenance expenses. The court
declined to award lost profits, however, because it concluded that
the Kroesens would eventually be able to sell the property at or
above the $188,500 purchase price specified in the terminated
contract.
¶ 20 The court resolved the slander of title claim in favor of
Shenandoah Association because the Kroesens had not proved the
element of malice.
¶ 21 Following the bench trial, Shenandoah Association appealed
the district court’s declaratory judgment holding, and the Kroesens
cross-appealed the court’s denial of their request for lost profits.
¶ 22 After discovering that the district court may not have resolved
the Kroesens’ second claim, thus depriving this court of
9
jurisdiction, see Richmond Am. Homes of Colo., Inc. v. Steel Floors,
LLC, 187 P.3d 1199, 1202 (Colo. App. 2008) (noting that as a
general rule, “an entire case must be resolved by a final judgment
before an appeal is brought”), a division of this court remanded the
case to the district court. The division instructed the district court
to ensure that a final judgment entered on all of the Kroesens’
claims. The district court then entered an order dismissing the
Kroesens’ second claim and noting that a final judgment had been
entered on all of their claims.
III. The District Court Correctly Determined that Tract AB Was the
Beneficiary of an Easement to Use the Roads
¶ 23 Shenandoah Association’s appeal raises three principal issues.
¶ 24 First, we consider and reject the Kroesens’ contention that
Shenandoah Association failed to preserve its argument that the
recorded documents did not put good faith purchasers of property
in Shenandoah Subdivision on notice of the Subject Easement.
¶ 25 Second, we decide whether, under common law principles, the
plats amending the declaration for Shenandoah Subdivision
contained sufficient specificity to create an easement over the roads
benefitting Tract AB. Although we agree with the district court that
10
“‘adjacent subdivisions, and future subdivisions’ is a thin
description of a dominant estate,” we conclude the language is
sufficient in light of the “surrounding circumstances, the situation
of the parties, and the objects to be obtained.” Lewitz v. Porath
Family Tr., 36 P.3d 120, 123 (Colo. App. 2001).
¶ 26 Third, because Shenandoah Subdivision and Highlands
Subdivision are common interest communities subject to the
Colorado Common Interest Ownership Act (CCIOA), §§ 38-33.3-101
to -402, C.R.S. 2019, we also address whether the developer
complied with the CCIOA’s requirements for creating an easement.
The common law and CCIOA tests apply to easements in common
interest communities. See § 38-33.3-108, C.R.S. 2019 (stating that
the “law of real property . . . supplement[s] the provisions of [the
CCIOA], except to the extent inconsistent with [the CCIOA]”);
§ 38-33.3-115, C.R.S. 2019 (explaining that the CCIOA “applies to
all common interest communities created within this state”).
¶ 27 We hold that the developer complied with both sets of
requirements for creating an easement and, therefore, conclude
that Tract AB benefits from the Subject Easement.
11
A. Shenandoah Preserved Its Notice Argument
¶ 28 Because Shenandoah Association raised the notice issue in
the district court in its briefing on summary judgment, and because
the court considered and rejected the argument, Shenandoah
Association is entitled to appellate review of the ruling on whether
the owners of land in Shenandoah Subdivision received record
notice of the Subject Easement. See Brown v. Am. Standard Ins. Co.
of Wis., 2019 COA 11, ¶ 21, 436 P.3d 597, 600 (“If a party raises an
argument to such a degree that the [trial] court has the opportunity
to rule on it, that argument is preserved for appeal.”).
¶ 29 Thus, we hold that Shenandoah Association preserved its
notice argument.
B. We Affirm the District Court’s Ruling That, Under the Common
Law Test for Creating an Easement, Tract AB Benefits From an
Easement Over the Roads
1. Legal Authority
¶ 30 We review de novo the court’s ruling on summary judgment
that Tract AB benefits from an easement over the roads. See City of
Lakewood v. Armstrong, 2017 COA 159, ¶ 7, 419 P.3d 1005, 1008.
Summary judgment is appropriate when there is no genuine issue
of material fact and the moving party is entitled to judgment as a
12
matter of law. C.R.C.P. 56(c); Pulte Home Corp. v. Countryside
Cmty. Ass’n, 2016 CO 64, ¶ 22, 382 P.3d 821, 826.
¶ 31 Similarly, we review de novo the district court’s interpretation
of recorded instruments. Ryan Ranch Cmty. Ass’n v. Kelley, 2016
CO 65, ¶ 24, 380 P.3d 137, 142. We give words and phrases their
common meanings and will enforce recorded instruments as written
if their meaning is clear. Pulte Home, ¶ 23, 382 P.3d at 826.
¶ 32 “An easement is a right conferred by grant, prescription or
necessity authorizing one to do or maintain something on the land
of another . . . .” Lazy Dog Ranch v. Telluray Ranch Corp., 965 P.2d
1229, 1234 (Colo. 1998). No particular words are necessary to
grant an easement, so long as the instrument identifies with
“reasonable certainty” the easement created and the dominant and
servient tenements. Hornsilver Circle, Ltd. v. Trope, 904 P.2d 1353,
1356 (Colo. App. 1995). (A dominant estate is the property that
benefits from the easement, while the servient estate is the property
on which the easement is located. Lazy Dog, 965 P.2d at 1234.)
“When interpreting an easement, we must consider the language
used in the instrument, the circumstances surrounding its
13
creation, and the purpose for which it was created.” Lewitz, 36
P.3d at 122.
2. Application
¶ 33 Shenandoah Association contends that the “isolated, generic
reference” to the roads being for the benefit of the developer and
“adjacent subdivisions” in the amended declaration for Shenandoah
Subdivision does not place good faith purchasers of property within
Shenandoah Subdivision on notice of the Subject Easement. It
argues that, because Lewitz held that a valid easement requires
notice to good faith purchasers of the nature and extent of the
easement, see id. at 124, the Subject Easement fails the common
law notice test. We disagree.
¶ 34 The Kroesens contend that plats amending the declaration for
Shenandoah Subdivision created the Subject Easement. They point
to the plat entitled “Shenandoah Category 1 Project 88-130,” which
stated that “General Common Elements . . . [are] for the use and
benefit of the Developer, the owners of the lots within this
subdivision, subdivisions previously filed, [and] adjacent
subdivisions . . . .” (Emphasis added.) (“General Common
Elements” include easements. See § 38-33.3-103(5)(b), (25).)
14
¶ 35 Although, as noted above, no particular language is required
to create an easement, the language must still describe the
easement, dominant estate, and servient estate “with reasonable
certainty.” Hornsilver Circle, 904 P.2d at 1356. The amendments to
the declaration for Shenandoah Subdivision referring to “General
Common Elements,” noting “the purpose of ingress and egress” and
creating Colonial Drive and Blue Ridge Road, describe the nature of
the Subject Easement with reasonable certainty. The plats also
provide reasonable certainty as to the identity of the servient estate
— Shenandoah Subdivision — where the roads are located.
¶ 36 Further, the reference to “adjacent subdivisions” is sufficient
to describe a dominant estate — Highlands Subdivision — and
specifically those tracts in Highlands Subdivision that abut one of
the roads. Only under the narrowest possible reading of the plats
could a reference to “adjacent subdivisions” not encompass a tract
carved out of the original property, such as Tract AB, that borders
Blue Ridge Road.
¶ 37 Thus, we agree with the district court’s holding that the
language of the plats for Shenandoah Subdivision places good faith
purchasers of tracts in Shenandoah Subdivision on notice of the
15
Subject Easement. We reach this conclusion based on the
“language used in the instrument, the circumstances surrounding
[the easement’s] creation, . . . the purpose for which [the easement]
was created,” and the record notice in Shenandoah Subdivision’s
chain of title describing the Subject Easement. Lewitz, 36 P.3d at
122.
¶ 38 Lastly, in light of our reading of the amendments to the
declaration for Shenandoah Subdivision, we need not address
whether the vote of the Board of Directors of Shenandoah
Homeowners Association was sufficient, with or without a vote of
approval by the members of the Shenandoah Homeowners
Association, to create a valid easement over the roads. And we need
not reach Shenandoah Association’s argument that the developer
and the former owner believed that the owner of Tract AB did not
benefit from an easement. Even if this contention is correct, which
we cannot determine from the record, it is irrelevant to the
existence of an easement.
C. The Developer Also Complied With the CCIOA’s Requirements
for Creating an Easement
16
¶ 39 Because the developer created the Subject Easement in plats
amending the declaration to Shenandoah Subdivision, we must
next consider whether the developer complied with the CCIOA’s
requirements for creating an easement. The Subject Easement
would be invalid if the developer did not comply with the common
law and CCIOA requirements for easements.
See §§ 38-33.3-108, -115.
1. Legal Authority
¶ 40 The meaning and effect of statutes are questions of law that
we review de novo. Ryan Ranch, ¶ 25, 380 P.3d at 142. When
interpreting statutory provisions, “[o]ur objective is to effectuate the
intent and purpose of the General Assembly.” Perfect Place, LLC v.
Semler, 2018 CO 74, ¶ 40, 426 P.3d 325, 332 (quoting Trujillo v.
Colo. Div. of Ins., 2014 CO 17, ¶ 12, 320 P.3d 1208, 1212-13). “To
determine the legislature’s intent, we look first to the plain language
of a statutory provision.” Id. Where clear, “we apply the plain and
ordinary meaning of the provision,” id., “because the General
Assembly is presumed to have meant what it plainly said,” Miller v.
Curry, 203 P.3d 626, 629 (Colo. App. 2009) (quoting Silverview at
Overlook, LLC v. Overlook at Mt. Crested Butte Ltd. Liab. Co., 97 P.3d
17
 252, 255 (Colo. App. 2004)). When “reading a statute . . . or a
recorded instrument, we consider the text as a whole, harmonizing,
when possible, all sections or provisions.” McMullin v. Hauer, 2018
CO 57, ¶ 13, 420 P.3d 271, 274.2.
2. Application
¶ 41 Shenandoah Association contends that the developer did not
comply with the requirements for creating easements found in the
CCIOA. See Perfect Place, ¶¶ 41-48, 426 P.3d at 332-34; Ryan
Ranch, ¶¶ 33-52, 380 P.3d at 144-48. It specifically asserts that
the developer did not properly exercise its “development rights”
when it sought to create the Subject Easement. In support of this
argument, Shenandoah Association alleges that the developer (1)
failed to include a legally sufficient description of the Subject
Easement in the plats amending the declaration for Shenandoah
Subdivision and (2) did not record the Highlands Plat — the only
plat expressly referencing an easement for the benefit of the owners
of Tract AB — in the chain of title for Shenandoah Subdivision.
Thus, according to Shenandoah Association, the Subject Easement
is not binding on any property within Shenandoah Subdivision. We
consider and reject these arguments below.
18
a. The Developer Properly Exercised Development Rights When It
Created the Subject Easement
¶ 42 The developer properly exercised development rights when it
sought to create the Subject Easement through amendments to the
declaration for Shenandoah Subdivision. Section
38-33.3-103(14)(b) defines “development rights” as “any right or
combination of rights reserved by a declarant in the declaration
to . . . [c]reate . . . common elements, or limited common elements
within a common interest community.” Section 38-33.3-103(5)(b)
defines “common elements” as “any real estate within a planned
community owned or leased by the association, other than a unit.”
And the definition of “real estate” in section 38-33.3-103(25)
includes “interests that, by custom, usage, or law, pass with a
conveyance of land.” Such interests include appurtenant
easements, such as the Subject Easement, which run with a
particular property. See Restatement (Third) of Property: Servitudes
§ 1.5 (Am. Law Inst. 2000) (distinguishing between “appurtenant
easements,” which are tied to ownership or occupancy of a
particular parcel, and “easements in gross,” which are not).
19
¶ 43 The developer reserved for itself a development right to
“establish a non-exclusive easement and right of way [over] all or
any portion of the [original property]” in the declaration for
Shenandoah Subdivision and later exercised that right in plats
amending the declaration.
¶ 44 Shenandoah Association misquotes section 38-33.3-209,
C.R.S. 2019, in arguing that “each map or plat shall contain a
legally sufficient description of all easements serving or burdening
any portion of the common interest community.” (Emphases added
by Shenandoah Association.)
¶ 45 Rather, section 38-33.3-209(2)(e) says that “each map shall
show the following, except to the extent that such information is
contained in the declaration or on a plat: . . . To the extent feasible,
a legally sufficient description of all easements serving or burdening
any portion of the common interest community.” Thus, if “a legally
sufficient description of all easements” appears in “the declaration
or on a plat,” the plain language of section 38-33.3-209(2)(e) does
not require duplicative language in every plat amending a
declaration.
20
¶ 46 Shenandoah Association does not dispute that the amended
declaration for Shenandoah Subdivision generally describes the
Subject Easement. Under the CCIOA, the developer was not
required to expressly reference the Subject Easement in each plat.
§ 38-33.3-209(1) (specifying that “[t]he requirements of this section
shall be deemed satisfied so long as all of the information required
by this section is contained in the declaration, a map or a plat, or
some combination of any two or all of the three”); § 38-33.3-
209(2)(e); Ryan Ranch, ¶ 34, 380 P.3d at 144.
¶ 47 Shenandoah Association essentially challenges the sufficiency
of the description of the Subject Easement in the amended
declaration for Shenandoah Subdivision. As explained above,
under the common law rule, the developer adequately put the
owners of lots in Shenandoah Subdivision on notice that the future
owners of lots adjacent to Shenandoah Subdivision would benefit
from an easement over the roads.
¶ 48 Unlike the other requirements for maps set forth in the
CCIOA, descriptions of easements need only be “legally sufficient.”
See § 38-33.3-209(2)(e). This caveat demonstrates that section
38-33.3-209(2)(e) does not impose a more stringent requirement for
21
descriptions of easements than those required under the common
law. Thus, we conclude that the developer satisfied the
requirements for describing an easement set forth in the CCIOA.
b. The Developer’s Recorded Plats Comply with Section 38-33.3-
217
¶ 49 We also disagree with Shenandoah Association’s argument
that the developer ran afoul of the requirements of section 38-33.3-
217, C.R.S. 2019. Section 38-33.3-209(6) requires the declarant to
record an amendment to the original declaration for the subdivision
when exercising a development right. Section 38-33.3-217(3), in
turn, requires that “[e]very amendment to the declaration must be
recorded in every county in which any portion of the common
interest community is located.” Under the plain language of section
38-33.3-217(3), the developer satisfied its obligation under the
CCIOA to amend the declaration for Shenandoah Subdivision when
it exercised its development rights by creating the Subject
Easement. The developer recorded in La Plata County amendments
to the declaration for Shenandoah Subdivision that referenced the
Subject Easement and said that the “General Common Elements,”
22
which included the Subject Easement, were “for the use and benefit
of . . . adjacent subdivisions.”
c. Prospective Buyers of Shenandoah Subdivision Tracts Are on
Record Notice of the Easement From Shenandoah
Subdivision’s Plats
¶ 50 We do not agree that a prospective buyer of property in
Shenandoah Subdivision would lack notice of the Subject
Easement. As explained above, the plats amending the declaration
for Shenandoah Subdivision created a valid easement. The Subject
Easement is valid even though the amendments to the declaration
for Shenandoah Subdivision did not expressly say that the Subject
Easement benefits the owners of Tract AB (or the owners of any
other lot adjacent to Shenandoah Subdivision).
¶ 51 It is of no consequence that the Highlands Plat does not
appear in a title search for Shenandoah Subdivision because the
search would reveal documents in the chain of title for Shenandoah
Subdivision that created the Subject Easement and indicated it and
the other “General Common Elements” benefited adjacent
subdivisions.
23
¶ 52 In sum, we hold that the district court did not err by granting
summary judgment to the Kroesens on their claim for a declaratory
judgment regarding the existence of the Subject Easement.
IV. The Kroesens Are Not Entitled to Recover Lost Profits on Their
Claim for Intentional Interference with Contract
¶ 53 The Kroesens contend that the district court erred by holding
they are not entitled to recover lost profits on their claim for
intentional interference with contract. They argue that the
Colorado Supreme Court has approved an award of lost profits in
cases involving similar facts. See, e.g., Westfield Dev. Co. v. Rifle
Inv. Assocs., 786 P.2d 1112, 1119-20 (Colo. 1990).
¶ 54 The Kroesens ask us to extend the narrow holding of Westfield
Development, which involved property whose value had plummeted
after a proposed sale fell through. They contend that lost profits are
a proper measure of damages in claims involving intentional
interference with a real estate contract, even where the subject real
estate has not become unmerchantable. We decline to do so and
affirm the district court’s decision on the damages awardable to the
Kroesens on their intentional interference claim.
24
A. Standard of Review
¶ 55 A judgment following a bench trial presents a mixed question
of fact and law. Sandstead-Corona v. Sandstead, 2018 CO 26, ¶ 37,
415 P.3d 310, 317. We review the trial court’s factual findings
under a clear error standard, but review its legal conclusions de
novo. Jordan v. Panorama Orthopedics & Spine Ctr., PC, 2013 COA
87, ¶ 13, 350 P.3d 863, 867, aff'd, 2015 CO 24, 346 P.3d 1035.
¶ 56 We also review de novo the trial court’s “application of
governing legal standards,” Morris v. Belfor USA Grp., Inc., 201 P.3d
1253, 1257 (Colo. App. 2008), including “[t]he proper measure of
damages,” Taylor Morrison of Colo., Inc. v. Terracon Consultants, Inc.,
2017 COA 64, ¶ 23, 410 P.3d 767, 772. “However, the fact finder
has the sole prerogative to assess the amount of damages and its
award will not be set aside unless it is manifestly and clearly
erroneous.” Morris, 201 P.3d at 1257.
B. Legal Authority
¶ 57 The standard measure of damages for the breach of a contract
for the sale of real estate is the difference between the contract price
and the fair market value of the property at the time of breach.
Westfield Dev., 786 P.2d at 1120. But intentional interference with
25
contract is a tort. Id. Thus, for such claims, “[t]he measure of
damages may . . . depart from contractual damages when necessary
to make the innocent party whole.” Id. (emphasis added).
¶ 58 “A bedrock goal of tort law is to ‘make the plaintiff whole.’”
LeHouillier v. Gallegos, 2019 CO 8, ¶ 44, 434 P.3d 156, 164. Tort
law disfavors windfall damage awards that put the plaintiff in a
better financial situation than his or her position before the injury.
Id. “[A] plaintiff may not receive double recovery for the same losses
arising from the same injury.” Taylor Morrison, ¶ 27, 410 P.3d at
773.
B. Analysis
¶ 59 The record and legal precedent support the district court’s
determination that the Kroesens are not entitled to recover lost
profits. In Westfield Development, the supreme court held that lost
profit damages are awardable in intentional interference with
contract cases “when necessary to make the innocent party whole.”
786 P.2d at 1120. This rule gives district courts flexibility in
computing damages, so they can fashion remedies that “make the
plaintiff whole” under “unique circumstances.” See LeHouillier,
¶ 44, 434 P.3d at 164; Westfield Dev., 786 P.2d at 1120.
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¶ 60 We agree with the district court that the facts underlying the
Kroesens’ case differ from those in Westfield Development. In that
case, the supreme court affirmed an award of lost profits because of
“unique circumstances” that rendered the real estate
unmerchantable and a sale at the contract price impossible.
Westfield Dev., 786 P.2d at 1120. The property at issue in Westfield
Development was “unmerchantable” because of the “very limited
number of [potential] buyers”; the defendant had reduced the
number of potential buyers after selling a similar property to the
same entity, which had declined to purchase the subject property;
and, after the plaintiff sought to mitigate its damages by selling the
property, “the bottom fell out of the market,” thereby making a sale
at the contract price impossible. Id.
¶ 61 Westfield Development’s unique circumstances are not present
here. The district court did not award lost profits to the Kroesens
because, as the Kroesens’ expert witness explained, the value of
Tract AB at the time of the trial was “difficult to tell on the evidence
the Court has received,” and an award of lost profits would be
“speculative.” The court noted that the Kroesens planned to sell,
and had already listed, Tract AB at a higher price than the price
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specified in the terminated contract. The court reasoned that an
award of lost profits to the Kroesens would likely result in a double
recovery.
¶ 62 Instead of lost profits, the court awarded the Kroesens their
cost of maintaining Tract AB for approximately five years
(approximately three years before the judgment and two years
thereafter). Because it had taken the Kroesens approximately five
years to enter into the contract to sell Tract AB and there was no
record evidence of a material decline in the value of their property
or the local real estate market, the record supports the court’s
calculation of damages.
¶ 63 Unlike the property in Westfield Development, as the district
court found, Tract AB still had market value and would likely
eventually be sold. Although it may be unclear when that sale will
occur, the Kroesens will likely recover the loss of their anticipated
profits when they sell the property.
¶ 64 The Kroesens further contend that, in calculating damages,
the district court erred by comparing Tract AB to a nearby lot that
was sold in October 2017. They assert that this error invalidates
the court’s determination that they are not entitled to lost profits
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because their property has lost value since 2015 and they will be
forced to sell their land for less than the price specified in the
terminated contract.
¶ 65 We do not agree. While the Kroesens’ expert testified that the
comparative tract had “similar views” to, and was “more level” than,
Tract AB, she also testified that, unlike Tract AB, the comparative
lot does not have “half of [a] pond.” Because the expert’s testimony
was unclear as to the comparative value of Tract AB and the other
lot, coupled with the record evidence that Tract AB retained market
value and would eventually sell at or above the contract price
specified in the terminated contract, we perceive no error in the
district court’s measure of damages.
V. Conclusion
¶ 66 The district court’s judgment is affirmed.
JUDGE FOX and JUDGE BERGER concur.
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