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Battle North, LLC v. Sensible Housing Co.

Court of Appeals of Colorado, Second Division

June 18, 2015

Battle North, LLC, Petitioner-Appellee,
v.
Sensible Housing Company, Respondent-Appellant

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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         Editorial Note:

         This Opinion is subject to revision upon final publication.

          Eagle County District Court No. 12CV330. Honorable Mark D. Thompson, Judge.

          ORDER AFFIRMED IN PART, REVERSED IN PART, AND CASE REMANDED WITH DIRECTIONS.

         Hamil/Martin LLC, Michael G. Martin, Denver, Colorado, for Petitioner-Appellee.

         The Law Offices of Theodore W. Brin, Theodore W. Brin, Denver, Colorado, for Respondent-Appellant.

         Opinion by JUDGE J. JONES. Casebolt and Bernard, JJ., concur.

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         JONES, JUDGE

          [¶1] Respondent, Sensible Housing Company (Sensible), appeals the district court's order determining that a stock certificate and two quitclaim deeds are spurious documents under sections 38-35-201(3) and -204, C.R.S. 2014. We conclude that because the stock certificate was " filed" only as an exhibit in a court proceeding and does not affect petitioner Battle North, LLC's real property, it is not a spurious document within the meaning of the applicable statutes. But we also conclude that the quitclaim deeds, which Sensible recorded in Eagle County, are. Therefore, we affirm the order in part and reverse the order in part. We also remand the case to the district court for a determination of Battle North's reasonable appellate attorney fees incurred in defending the judgment as to the quitclaim deeds.

         I. Background

          [¶2] This case concerns a dispute over ownership of real property in Eagle County which the parties and the courts have referred to as the Pine Martin parcel. The history of that dispute is rather complicated.[1] It essentially began, at least from a litigation perspective, in 1998, when Mortgage Investment Corporation (MIC) filed for judicial foreclosure on a deed of trust encumbering the Pine Martin parcel and another piece of real property referred to as the Piney Lumber parcel. The foreclosure complaint named numerous defendants that might claim ownership of the parcels, including, as relevant in this case, Pine Martin Mining Company (PMMC) and Piney Lumber Company (PLC). PMMC and PLC answered, claiming ownership of the Pine Martin parcel and the Piney Lumber parcel, respectively. They asserted counterclaims and cross-claims alleging fee ownership of the parcels and sought declarations that they are the fee owners of the parcels. The 1998 foreclosure case thus morphed into a quiet title action, and we will refer to it as such as we discuss the issues raised in this appeal.

          [¶3] In 2000, PMMC and PLC moved for partial summary judgment on their quiet title claims in the quiet title action. MIC filed a cross-motion for partial summary judgment. In 2004, while the cross-motions for summary judgment remained pending, MIC assigned its interest in the matter to Ginn Battle Lender, LLC (Ginn), and Ginn was substituted as a party. PMMC and PLC purported to transfer their interests in the parcels to Sensible by quitclaim deeds, which Sensible recorded in the Eagle County Clerk and Recorder's Office. (Sensible was then substituted for PMMC and PLC.) Two of those quitclaim deeds, one recorded in 2006 and the other recorded in 2008, were from PMMC to Sensible and concerned the Pine Martin parcel. They are the quitclaim deeds at issue in this case.

          [¶4] The parties in the quiet title action stipulated to a procedure to resolve the case. The court adopted the stipulation. In the course of identifying and briefing the outstanding issues in the quiet title action, Sensible filed as an exhibit with the district court a purported 1915 Stock Certificate certifying that 1,251,000 shares of the capital stock of PMMC had been issued to Charles Bouvier. Sensible's principal, Jeff Tucker, claimed that he had obtained the shares represented by the 1915 Stock Certificate from Mr. Bouvier's heir in 1996. Claiming authority to act on PMMC's behalf by virtue of that transfer, Mr. Tucker created and recorded, or caused to be created and recorded, the 2006 and 2008 quitclaim deeds to Sensible.

          [¶5] In 2009, the district court granted Ginn's cross-motion for summary judgment and denied Sensible's motion for partial summary judgment. The court struck Sensible's pleadings, concluding that the 1915 Stock Certificate and other documents purporting to convey the stock represented by that certificate first to Mr. Tucker and then to a

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newly-formed PMMC were incredible as a matter of law, and therefore Sensible had no interest in either parcel.

          [¶6] Sensible appealed. A division of this court affirmed the summary judgment as to the Piney Lumber parcel, but reversed the summary judgment as to the Pine Martin parcel. Ginn Battle Lender, LLC v. Sensible Hous. Co., (Colo.App. Nos. 10CA0114 & 10CA2158, Apr. 21, 2011) (not published pursuant to C.A.R. 35(f)). With respect to the Pine Martin parcel, the division concluded that, contrary to the district court's ruling, the 1915 Stock Certificate, through which Sensible purported to derive its ownership interest, was not " so incredible that no reasonable jury could believe it." Accordingly, the division remanded the case " for further proceedings as to that parcel."

          [¶7] Apparently, nothing of consequence has happened in the quiet title action since. But on April 6, 2012, Battle North filed a petition for an order to show cause pursuant to section 38-35-204 and C.R.C.P. 105.1, instituting this case, and alleging that the 1915 Stock Certificate is a spurious document. The petition sought an order directing Sensible to show cause why the 1915 Stock Certificate should not be declared invalid, and an order following a hearing declaring the stock certificate to be invalid. Battle North subsequently filed an amended petition alleging that the two quitclaim deeds also are spurious documents, which the court should declare invalid. The district court conducted an evidentiary hearing on the amended petition. It then issued a detailed written order with findings of fact and conclusions of law. As now most relevant, the court found:

o Mr. Tucker created the 1915 Stock Certificate;
o Mr. Tucker's testimony as to the " recreation of the 1915 Stock Certificate" was " unconvincing and wholly incredible" ;
o " [T]he 1915 Stock Certificate is a sham and not a genuine copy of anything" ;
o Sensible filed the 1915 Stock Certificate in Eagle County District Court on July 21, 2008, as an exhibit to a brief;
o The quitclaim deeds were recorded in the Eagle County Clerk and Recorder's office in 2006 and 2008;
o Mr. Tucker claimed to have derived his authority to act on behalf of the newly-created PMMC (incorporated by Mr. Tucker in South Dakota in 1996) in creating and recording the quitclaim deeds from the purported 1915 Stock Certificate;
o Mr. Tucker did not have any authority to act on behalf of the original PMMC, and, consequently lacked authority to execute and record the quitclaim deeds;
o The quitclaim deeds " are not what they purport to be, to wit, legitimate quitclaim deeds executed by [PMMC]" ;
o After the original PMMC failed to pay taxes on the property, the Pine Martin parcel was sold at a tax sale and treasurer's deeds for that parcel were issued to new owners in 1932;
o Battle North's claim of title derives from those treasurer's deeds;
o Battle North owns the Pine Martin parcel; and
o Battle North is in possession of the Pine Martin parcel.

          [¶8] Based on these findings (and others), the court concluded that the 1915 Stock Certificate and the quitclaim deeds are spurious documents. The court declared the 1915 Stock Certificate and the quitclaim deeds invalid and " released" them. The court also awarded Battle Mountain attorney fees and costs pursuant to section 38-35-204(2).

         II. Discussion

          [¶9] Sensible raises a host of issues on appeal. Some challenge the district court's decision to act on the petition and amended petition and others challenge the legal merits of the court's ruling. Sensible does not appear to challenge any of the district court's underlying findings of fact. We first address Sensible's challenges to the district court's decision to act, reject those challenges, and then address its challenges to the legal merits of the district court's determinations that the 1915 Stock Certificate and quitclaim

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deeds are spurious documents within the meaning of sections 38-35-201(3) and -204.

         A. This Action Is Not Barred by the Priority Rule

          [¶10] The priority rule holds that " [w]here two courts may exercise jurisdiction over the same parties and subject matter, . . . the first action filed has priority of jurisdiction, and . . . the second action must be stayed until the first is finally determined." Town of Minturn v. Sensible Hous. Co., 2012 CO 23, ¶ 19, 273 P.3d 1154. " The purpose of the priority rule is to promote judicial efficiency and 'avoid unnecessary duplication and multiplicity of suits.'" Id. (quoting in part Pub. Serv. Co. of Colo. v. Miller, 135 Colo. 575, 577, 313 P.2d 998, 999 (1957)).

          [¶11] Sensible argues that the priority rule required the district court to stay this case pending resolution of the quiet title action.

          [¶12] The district court rejected that argument because (1) " neither the parties or the subject matter is identical" and (2) staying the case would be contrary to the intent of section 38-35-204 and C.R.C.P. 105.1 to provide " a swift resolution to a discrete issue." We conclude that the priority rule does not apply in these circumstances, though our reasoning differs somewhat from the district court's. See Newflower Mkt., Inc. v. Cook, 229 P.3d 1058, 1061 (Colo.App. 2010) (" If the trial court reached the correct result, we may affirm its determination on different grounds." ).

         1. Preservation and Standard of Review

          [¶13] Battle North argues that Sensible did not preserve this issue for appellate review because it did not move to consolidate the two cases or move for a stay of this case. The record shows, however, that Sensible repeatedly raised the priority rule and requested a stay. There is some ambiguity in the record whether Sensible requested a stay only as to the quitclaim deeds, but the district court construed Sensible's requests for a stay as applying to the entire case and ruled on the issue with that understanding. We therefore regard the issue as preserved. See Target Corp. v. Prestige Maint. USA, Ltd., 2013 COA 12, ¶ 23, 351 P.3d 493 (where issue was brought to the district court's attention and the court ruled on it, it was preserved for appellate review; no talismanic language is required to preserve an issue).

          [¶14] Case law is not clear as to the standard of appellate review of an order denying a stay requested pursuant to the priority rule. The supreme court has used mandatory language in characterizing the district court's obligation to stay the second proceeding. See, e.g., Town of Minturn, ¶ 19 (" the second action must be stayed" (emphasis added)); Wiltgen v. Berg, 164 Colo. 139, 145, 435 P.2d 378, 381 (1967) (same). But in the same context the supreme court has approved of certain considerations " that may serve the trial court in the exercise of its discretion in granting or denying a stay." Town of Minturn, ¶ 19; see also Nationwide Mut. Ins. Co. v. Mayer, 833 P.2d 60, 62 (Colo.App. 1992) (addressing such considerations where cases are pending in two different states; cited with approval in Town of Minturn, ¶ 19).

          [¶15] The priority rule derives from the inherent power of courts to stay proceedings before them. SeeTown of Minturn, ¶ 18. That power is commonly understood as discretionary. SeeIn ...


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