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City of Aurora v. 1405 Hotel, LLC

Court of Appeals of Colorado, First Division

April 7, 2016

City of Aurora, Colorado; Aurora Urban Renewal Authority; and RIDA Development Corp, Plaintiffs-Appellants and Cross-Appellees,
1405 Hotel, LLC; 550 15th Owner, LLC; Broadmoor Hotel Inc.; Brown Palace Hotel Associates Limited Partnership; Cheyenne Mountain Conference Resort; CHSP Denver LLC; DiamondRock Cherry Creek Tenant LLC; DiamondRock Denver Downtown Tenant LLC; HEP Denver Ltd., d/b/a Magnolia Hotel; Oxford Hotel 2005 Holdings LLC; and Westminster Boulevard Finance, LLC, Defendants-Appellees and Cross-Appellants

          Arapahoe County District Court No. 13CV31506. Honorable Charles M. Pratt, Judge.

         Kutak Rock LLP, Thomas W. Snyder, Daniel C. Lynch, Michael M. Frandina, Denver, Colorado; Michael J. Hyman, City Attorney, Aurora, Colorado, for Plaintiffs-Appellants and Cross-Appellees City of Aurora, Colorado and Aurora Urban Renewal Authority.

         Fairfield & Woods, P.C., John M. Tanner, Denver, Colorado, for Plaintiff-Appellant and Cross-Appellee RIDA Development Corp.

         Lewis Roca Rothgerber Christie LLP, James M. Lyons, Hilary D. Wells, Jessica L. Fuller, Hermine Kallman, Denver, Colorado, for Defendants-Appellees and Cross-Appellants.


         TAUBMAN, JUDGE.

          [¶1] In July 2013, eleven hotels[1] along Colorado's Front Range (collectively, the Hotels) submitted a petition to the Colorado Economic Development Commission (CEDC) requesting that CEDC require the City of Aurora (Aurora) to submit a new application for an $81 million tax subsidy (the Gaylord Project) after the initial company that had been awarded the subsidy, the Gaylord Entertainment Company, assigned its interest to RIDA Development Corporation (RIDA). The Attorney General (AG) denied the petition on behalf of the CEDC.[2] The Hotels filed an action in the Denver District Court (Denver lawsuit). Both the Denver District Court and a division of our court affirmed the AG's denial of the Hotels' petition. 1405 Hotel, LLC v. Colo. Econ. Dev. Comm'n, 2015 COA 127, P.3d ( 1405 Hotel I ). However, in response to the Hotels' alleged " conspir[acy] . . . to interfere with the financing and development of the [p]roject," plaintiffs, the City of Aurora, the Aurora Urban Renewal Authority, and RIDA (collectively, the Aurora parties), sued the Hotels in October 2013.

          [¶2] The Aurora parties now appeal the judgment of the Arapahoe District Court (district court), which dismissed their complaint after the court found the Hotels' complaint in the Denver lawsuit was immunized under the First Amendment based on Protect Our Mountain Environment, Inc. v. Dist. Court, 677 P.2d 1361 (Colo. 1984) ( POME ). We affirm.

         I. Background

          [¶3] The underlying facts of this case are set forth in 1405 Hotel I. In the Denver lawsuit, the Hotels sued the CEDC and Aurora alleging four claims for relief: (1) a claim in the nature of mandamus brought under C.R.C.P. 106(a)(2) to compel the CEDC to require Aurora to submit a new application for the Gaylord Project, as required by the Colorado Regional Tourism Act (RTA); (2) a claim brought pursuant to the State Administrative Procedure Act (APA), section 24-4-106(4), C.R.S. 2015, seeking review of the CEDC's denial of their petition for reconsideration and approving the Gaylord Project; (3) a claim for declaratory relief pursuant to C.R.C.P. 57 and section 13-51-105, C.R.S. 2015, challenging the constitutionality of section 309 of the RTA, section 24-46-309, C.R.S. 2015; and (4) a claim seeking a declaration that procedural irregularities in the CEDC's approval of the initial Gaylord Project invalidated the RTA award.

          [¶4] In December 2013, Aurora moved for a C.R.C.P. 12(c) judgment on the pleadings, asserting that the Hotels lacked standing to bring claims one, two, and four. Aurora conceded that the Hotels had standing to bring their third claim, but maintained that the third claim should be resolved in Aurora's favor on the merits. Following a hearing in March 2014, the Denver court granted Aurora's C.R.C.P. 12(c) motion in an oral ruling. In July 2014, the Denver District Court entered a written order denying the Hotels' C.R.C.P. 59 motion. A division of our court affirmed in 1405 Hotel I, ¶ 1, __ P.3d at __.

          [¶5] However, after the Hotels filed their appeal in the Denver lawsuit but before the 1405 Hotel I decision, the Aurora parties filed this lawsuit before the Arapahoe District Court, asserting claims against the Hotels for intentional interference with contract, intentional interference with business expectancy, abuse of process, and civil conspiracy. First, the Hotels filed an answer and asserted several counterclaims. Later the same day, the Hotels moved to dismiss pursuant to C.R.C.P. 12(b)(5), arguing their initial complaint was protected by the First Amendment privilege to petition the government for redress of grievances as described in POME. Also on the same day, the Hotels filed a separate C.R.C.P. 12(b)(5) motion to dismiss against RIDA's claims individually.

          [¶6] The court granted the Hotels' POME motion and dismissed all four of the Aurora parties' claims. Although the court held that one of the claims brought by the Hotels in the Denver lawsuit lacked a cognizable basis in law and was therefore a " sham," it nevertheless granted the Hotels' motion because it concluded that POME requires an entire lawsuit to be frivolous in order to remove the First Amendment privilege.

          [¶7] On appeal, the Aurora parties seek reversal of the district court's order and contend: (1) the court abused its discretion in refusing to allow discovery and a hearing; (2) the court erred in determining that three of the Hotels' claims in the Denver lawsuit had reasonable factual support or a cognizable basis in law; and (3) the court erred in dismissing their complaint despite concluding that one of the Hotels' claims from the Denver lawsuit was a " sham." We disagree.

          [¶8] In their cross-appeal, the Hotels contend (1) the court erred in concluding that the Hotels lacked probable cause to bring an as-applied constitutional challenge to section 309 of the RTA under Colorado Constitution article II, section 11 and therefore their third claim was not a sham; and (2) we should affirm the C.R.C.P. 12(b)(5) dismissal of RIDA's claims. We agree with the Hotels' first contention and do not address their second contention.

         II. Nature of the Hotels' Motion

          [¶9] At the outset, in considering what standard of review to apply to the POME motion to dismiss, we need to consider whether the Hotels' POME motion was properly decided as a motion to dismiss or whether it should have been converted into a motion for summary judgment. The Aurora parties contend that POME requires a motion to dismiss be converted into a motion for summary judgment. Because the outcome would be the same regardless of whether the motion was treated as a C.R.C.P. 12(b)(5) motion or as a motion for summary judgment, we perceive no reversible error.

         A. Standard of Review

          [¶10] We review de novo a court's order granting a motion to dismiss under C.R.C.P. 12(b)(5). Denver Post Corp. v. Ritter, 255 P.3d 1083, 1088 (Colo. 2011). We also review de novo questions of constitutional fact and law. In re Foster, 253 P.3d 1244, 1250 (Colo. 2011) (addressing de novo whether the lower court properly applied POME ).

          [¶11] We review a district court's entry of summary judgment de novo. McIntyre v. Bd. of Cty. Comm'rs, 86 P.3d 402, 406 (Colo. 2004). Summary judgment should only be entered " when there is no disputed issue of material fact and the moving party is entitled to judgment as a matter of law." Id. In reviewing a summary judgment, " the nonmoving party is entitled to the benefit of all favorable inferences that may be drawn from the undisputed facts, and all doubts as to the existence of a triable issue of fact must be resolved against the moving party." Busse v. City of Golden, 73 P.3d 660, 665 n.10 (Colo. 2003).

         B. Applicable Law

          [¶12] A C.R.C.P. 12(b)(5) motion to dismiss tests the formal sufficiency of a plaintiff's complaint. Dorman v. Petrol Aspen, Inc., 914 P.2d 909, 911 (Colo. 1996). A motion to dismiss is properly granted only when it appears beyond doubt that no set of facts can prove that the plaintiff is entitled to relief. Id. Thus, we may affirm a district court's decision to grant a defendant's motion to dismiss when the factual allegations do not, as a matter of law, support the plaintiff's claim for relief. Id.

          [¶13] In reviewing a motion to dismiss, the court must accept all factual allegations as true and view them in the light most favorable to the plaintiff. Denver Post, 255 P.3d at 1088. The court is not permitted to consider any information or facts outside the confines of that pleading. Allen v. Steele, 252 P.3d 476, 481 (Colo. 2011). Nevertheless, a court may consider documents referenced in a complaint and matters of which it may take judicial notice without converting a motion to dismiss into a motion for summary judgment. Walker v. Van Laningham, 148 P.3d 391, 397 (Colo.App. 2006).

          [¶14] The First Amendment immunity defense raises the question of whether a plaintiff's complaint states a claim upon which relief can be granted; therefore, courts should give the parties a reasonable opportunity to present all material pertinent to the motion and, when appropriate, should treat the motion as one for summary judgment. POME, 677 P.2d at 1368-69. Under summary judgment, the parties may present materials outside the pleadings, including affidavits and other records. Krystkowiak v. W.O. Brisben Cos., Inc., 90 P.3d 859, 870 (Colo. 2004).

         C. Analysis

          [¶15] The district court treated the POME motion to dismiss as a C.R.C.P. 12(b)(5) motion. The Aurora parties contend that POME requires a motion to dismiss be converted into a motion for summary judgment. The Hotels, in their appellate briefs, contended that their motion did not need to be converted to a motion for summary judgment and that the trial court properly dismissed the complaint under C.R.C.P. 12(b)(5); however, at oral argument, the Hotels argued that the district court should have converted the motion to one for summary judgment but that there was no reversible error.

          [¶16] However, we need not decide whether the trial court properly dismissed the motion under C.R.C.P. 12(b)(5) or should have converted the motion to one for summary judgment because we conclude, under the circumstances of this case, that the outcome would have been the same under either rule.[3]

          [¶17] We note that in describing the POME procedures, the Krystkowiak court indicated that " summary judgment is often the appropriate procedure for determining the merits of a First Amendment defense because it allows courts to consider matters outside the pleadings, while at the same time, eliminate sham claims and defenses in an expedited manner." Krystkowiak, 90 P.3d at 870 (emphasis added). This quoted language supports the conclusion that the supreme court's language in POME indicating that a motion to dismiss based on First Amendment allegations should be converted into a summary judgment motion does not apply to every case.

          [¶18] Therefore, either the trial court did not err and properly dismissed the Hotels' C.R.C.P. 12(b)(5) motion, or, even if the Hotels' motion should have been converted into one for summary judgment, because the Aurora parties failed to prove the first objective prong of the POME test, which is a question of law, as discussed below, any error did not affect the ...

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