Bill Barrett Corporation and Bonanza Creek Energy, Inc., Plaintiffs-Appellants,
Robert Lembke; 70 Ranch L.L.C.; South Beebe Draw Metropolitan District, f/k/a Bromley Park Metropolitan District No. 1; and United Water and Sanitation District, Defendants-Appellees. and Noble Energy, Inc., Intervenor-Appellant,
County District Court No. 17CV68 Honorable Jaclyn C. Brown,
Graham & Stubbs, LLP, R. Kirk Mueller, Paul D. Swanson,
Denver, Colorado, for Plaintiffs-Appellants
Lovells US, LLP, Elizabeth H. Titus, Lacy G. Brown, Denver,
Colorado, for Intervenor-Appellant
Hardy & Bacon, LLP, S. Kirk Ingebretsen, Denver,
Colorado, for Defendants-Appellees Robert Lembke and 70 Ranch
Dunning Walker PC, Douglas W. Brown, David C. Walker, Drew P.
Fein, Denver, Colorado; Wass Campbell Rivera Johnson
Velasquez LLP, Darrell G. Waas, Mikaela V. Rivera, Denver,
Colorado, for Defendant-Appellee South Beebe Draw
Rodriguez Ostrander Dingess PC, Donald M. Ostrander, Richard
F. Rodriguez, Joel M. Spector, Denver, Colorado; Wass
Campbell Rivera Johnson Velasquez LLP, Darrell G. Waas,
Mikaela V. Rivera, Denver, Colorado, for Defendant-Appellee
United Water and Sanitation District
1 Plaintiffs Bill Barrett Corporation and Bonanza Creek
Energy, Inc., and intervenor Noble Energy, Inc.,
(collectively, lessees) appeal the trial court's order
denying their motion for a preliminary injunction to prevent
defendant South Beebe Draw Metropolitan District (South
Beebe) from taxing oil and gas that lessees produce from the
mineral estate underlying an approximately 13, 000-acre tract
(the 70 Ranch) located in unincorporated Weld County.
Defendants Robert Lembke and 70 Ranch L.L.C. (the L.L.C.) own
the surface estate, where all of lessees' well heads are
located.Lessees also appeal the court's entry
of summary judgment on one of their claims.
2 We affirm the entry of summary judgment, vacate the denial
of the motion for preliminary injunction, and remand for
further findings consistent with this opinion.
Nature and Course of Proceedings
3 On appeal, lessees raise three challenges to South
Beebe's taxing authority. The trial court entered summary
judgment on the first of these issues.
. Under section 32-1-401, C.R.S. 2017, the
severed mineral estate underlying the 70 Ranch could not be
included within South Beebe because all the owners and
lessees of that estate did not petition for and consent to
. By including the 70 Ranch within its
boundaries to further its regional operations in several
counties, South Beebe modified its service plan, but did not
obtain statutorily required approval from the board of county
commissioners (BOCC) in each of the affected counties.
. By including the 70 Ranch within its
boundaries, South Beebe violated section 32-1-107(2), C.R.S.
2017, because its services overlapped with those of Sand
Hills Metropolitan District (Sand Hills).
4 Preservation of these contentions is undisputed.
5 Lessees obtained a temporary restraining order in the Weld
County District Court that prohibited the Weld County
Treasurer, who had collected the disputed taxes, from
disbursing the monies to South Beebe. Venue was transferred
to the Adams County District Court. That court held an
evidentiary hearing on lessees' motion for a preliminary
injunction. Finding that lessees had not shown a reasonable
probability of success on the merits, the court denied the
motion for a preliminary injunction and dissolved the
temporary restraining order. Later, the court entered a final
judgment under C.R.C.P. 54(b) and 56(h) against lessees on
their section 32-1-401 claim.
6 Lessees appealed. They requested that this court preserve
the status quo by enjoining the treasurer from disbursing
taxes collected to South Beebe. A motions division of this
court granted the requested relief, expedited briefing, and
ruled that the appeal would be decided without oral argument.
7 In 2009, Sand Hills included the 70 Ranch within its
boundaries and began assessing ad valorem taxes on the oil
and gas extracted from the mineral estate. Much as lessees
have done in this case, they challenged the taxes levied by
Sand Hills and obtained summary judgment in Weld County
District Court. Both sides appealed.
8 In Bill Barrett Corp. v. Sand Hills Metropolitan
District, 2016 COA 144, the division agreed with the
district court that when Sand Hills included the 70 Ranch,
the combination of its change in purpose and its complete
shift in geography constituted a material departure from its
2004 service plan under section 32-1-207(2)(a), C.R.S. 2017.
Id. at ¶¶ 21, 23, 30. The division also
agreed that this material modification of the existing
service plan required - but Sand Hills had not obtained -
approval from the Weld County BOCC. Id. at ¶
32. For these reasons, the division held that Sand Hills
lacked taxing authority after 2009. Id. at ¶
9 Following the entry of summary judgment and before the
Sand Hills appeal was filed, Lembke and the L.L.C.
petitioned South Beebe to include the 70 Ranch. Lessees were
not notified of this action. South Beebe resolved to include
the 70 Ranch, agreed to assume development and construction
of the regional water infrastructure commenced by Sand Hills,
and committed to provide services to the 70 Ranch. The Adams
County District Court approved inclusion of the 70 Ranch into
South Beebe, as required by section 32-1-401(1)(c)(I), which
states that "[i]f a petition [for inclusion] is granted
[by the district's board] . . ., the board shall . . .
file [an order] with the clerk of the court, and the court
shall thereupon order the property to be included in
the special district." (Emphasis added.)
Preliminary Injunction Standard
10 "Preliminary injunctive relief is an extraordinary
remedy designed to protect a [party] from sustaining
irreparable injury and to preserve the power of the district
court to render a meaningful decision following a trial on
the merits." Rathke v. MacFarlane, 648 P.2d
648, 651 (Colo. 1982).
11 Preliminary "injunctive relief should not be
indiscriminately granted"; rather, it should be granted
sparingly, cautiously, and with the trial court's full
conviction of the urgent necessity for the relief.
Id. at 653. Before granting relief, the trial court
must find that the moving party has shown:
(1) a reasonable probability of success on the merits;
(2) a danger of real, immediate, and irreparable injury which
may be prevented by injunctive relief;
(3) that there is no plain, speedy, and adequate remedy at
(4) that the granting of a preliminary injunction will not
disserve the public interest;
(5) that the balance of equities favors the injunction; and
(6) that the injunction will preserve the status quo pending
a trial on the merits.
Id. at 653-54 (citations omitted). If the moving
party fails to establish any criterion, injunctive relief is
not available. Id. at 654.
Special District Act
12 The General Assembly enacted the Special District Act (the
Act) with the intent that special districts "promote the
health, safety, prosperity, security, and general
welfare" of their inhabitants and of the State of
Colorado. § 32-1-102(1), C.R.S. 2017; see also Sand
Hills, ¶ 15; Todd Creek Vill. Metro. Dist. v.
Valley Bank & Tr. Co., 2013 COA 154, ¶ 37.
Special districts are political subdivisions of the state
that possess proprietary powers. Todd Creek, ¶
38. But they possess only those powers expressly conferred on
them. Sand Hills, ¶ 15.
13 Once established, a special district must conform to its
service plan "so far as practicable." §
32-1-207(1). Any material modifications to the service plan
must be approved by the appropriate governing authority.
Standard of Review
14 Statutory interpretation is a question of law subject to
de novo review. See, e.g., Jefferson Cty. Bd. of
Equalization v. Gerganoff, 241 P.3d 932, 935 (Colo.
2010). Likewise, appellate courts review de novo the
application of law to undisputed facts. See Camp Bird
Colo., Inc. v. Bd. of Cty. Comm'rs, 215 P.3d 1277,
1281 (Colo.App. 2009). And the de novo standard applies to
review of summary judgments. Rocky Mountain Expl., Inc.
v. Davis Graham & Stubbs LLP, 2018 CO 54, ¶ 27.
15 "The grant or denial of a preliminary injunction lies
within the sound discretion of the trial court." MDC
Holdings, Inc. v. Town of Parker, 223 P.3d 710, 716
(Colo. 2010). Generally, the conclusion reached by the trial
court will be not overturned unless it is manifestly
unreasonable, arbitrary, or unfair. Evans v. Romer,
854 P.2d 1270, 1274 (Colo. 1993). "If, however, the
issue being reviewed concerns only legal, rather than factual
questions, a trial court's preliminary injunction ruling
is subject to de novo appellate review." State ex
rel. Salazar v. Cash Now Store, Inc., 31 P.3d 161, 164
(Colo. 2001). The same is true when the ruling rested only on
stipulated facts or documentary evidence. MDC
Holdings, 223 P.3d at 716.
16 On review of a preliminary injunction, the trial
court's factual findings will be upheld unless they are
so clearly erroneous as to find no support in the record.
Phoenix Capital, Inc. v. Dowell, 176 P.3d 835, 846
17 Whether a special district's action constitutes a
"material modification" of the service plan
presents a question of law. Indian Mountain Corp. v.
Indian Mountain Metro. Dist., 2016 COA 118M,
¶¶ 59, 61-62. A court looks to the language of the
service plan and gives effect to its plain and ordinary
meaning. See Todd Creek, ¶¶ 10-11.
18 The standard of review as to whether material
modifications were approved by the appropriate BOCC is
unresolved. But in Friends of the Black Forest Regional
Park, Inc. v. Board of County Commissioners, the
division noted, "[t]he application of particular facts
to a statute involves a mixed question of fact and law."
80 P.3d 871, 882 (Colo.App. 2003). Because whether the
requisite approval was obtained will turn on particular
facts, the mixed question standard of review applies. See
also Hawes v. Colo. Div. of Ins., 65 P.3d 1008,
1017 (Colo. 2003) (case-by-case issue is mixed question). In
mixed-question cases, an appellate court reviews the district
court's factual findings for clear error and its legal
conclusions as to those facts de novo. Sheridan
Redevelopment Agency v. Knightsbridge Land Co.,
166 P.3d 259, 262 (Colo.App. 2007).
19 According to South Beebe, because the trial court's
denial of a preliminary injunction is not a final judgment on
the merits, review of the second and third issues can be only
for an abuse of discretion. To the extent that some of the
court's conclusions rested on documentary evidence or
undisputed facts, however, we review de novo. And in any
event, "[a] trial court abuses its discretion when it .
. . misapplies the law." Clubhouse at Fairway
Pines, L.L.C. v. Fairway Pines Estates Owners
Ass'n, 214 P.3d 451, 456 (Colo.App. 2008).
Application of Section 32-1-401(1)(a) to Owners and Lessees
of Severed Mineral Estates
20 According to lessees, without their consent - as "fee
owners" - and that of the other mineral estate owners,
the 70 Ranch - or at least the underlying mineral estate -
could not have been included within South Beebe. South Beebe
responds that because the mineral and surface estates are
severed, only the surface owners needed to petition for and
consent to inclusion, and all of them did. Alternatively,
South Beebe asserts that because lessees' well heads are
located on the 70 Ranch, it could tax lessees' oil and
gas production for that reason alone.
21 The following facts are undisputed. The mineral estate
underlying the 70 Ranch has been severed from the surface
estate. Lembke and the L.L.C. owned some but not all of the
mineral estate. No other mineral estate owner petitioned for
or consented to including this property within South Beebe.
Nor did lessees.
22 In resolving this issue against lessees, the trial court
found that the services provided by South Beebe did not
benefit the subsurface mineral estate. Lessees do not
challenge this finding.
23 First, we address whether mineral estate owners and
lessees are "fee owners." We answer affirmatively
only as to mineral estate owners. Because the parties agree -
and the record supports - that not all of the mineral estate
owners consented to the 70 Ranch's inclusion, we next
consider whether South Beebe's services can benefit the
mineral estate. But since lessees do not argue that the
mineral estate can benefit, we further conclude that lack of
consent by all mineral estate owners does not preclude South
Beebe from taxing lessees.
24 Section 32-l-401(1)(a) provides:
The boundaries of a special district may be altered by the
inclusion of additional real property by the fee owner or
owners of one hundred percent of any real property capable of
being served with facilities of the special district filing
with the board a petition in writing requesting that such
property be included in the special district. The petition
shall set forth a legal description of the property, shall
state that assent to the inclusion of such property in the
special district is given by the fee owner or owners thereof,
and shall be acknowledged by the fee owner or owners in the
same manner as required for conveyance of land.
The parties have not cited Colorado authority, nor have we
found any, applying this section in the context of severed
mineral estate owners or the interests of mineral lessees.
an Owner or a Lessee of a Severed Mineral Estate a "Fee
Owner" Under the Statute?
25 Answering this question - which the trial court decided
against lessees - involves statutory interpretation and
application of law to undisputed facts, both subjects of de
novo review. We first conclude that an owner of a severed
mineral estate is a "fee owner."
26 "[W]hile in place, minerals are real property."
Smith v. El Paso Gold Mines, Inc., 720 P.2d 608, 609
(Colo.App. 1985). Unsurprisingly, then, our supreme court has
concluded that "[a]n estate in oil and gas may be
severed from the remainder of the realty, and as severed
owned in fee simple." Corlett v. Cox, 138 Colo.
325, 333, 333 P.2d 619, 623 (1958); accord Clevenger v.
Cont'l Oil Co., 149 Colo. 417, 420, 369 P.2d 550,
551 (1962) ("Oil, gas and other mineral rights in lands
may be severed and held by other than the owner of the
surface, and a fee simple title thereto may vest in the
person to whom said rights are granted.").
27 South Beebe's attempt to distinguish Corlett,
on which Clevenger relied, as limited to
interpreting the phrase "reserves 1/2 of the usual 1/8
royalty" in a deed, falls short. After all, the supreme
court framed the issue as follows:
Does the Holcomb-Hamilton deed reserve an estate in fee
simple to 1/16% of the oil and gas under the land in
question, as found by the trial court, or do these words
merely reserve the right to share in such oil and gas after
it has been severed from the land and reduced to possession?
Corlett, 138 Colo. at 329, 333 P.2d at 621 (emphasis
added). Then it rejected a request to overrule Simson v.
Langholf, 133 Colo. 208, 217, 293 P.2d 302, 307 (1956),
which noted, "an estate in fee simple is thus
28 Of course, we are bound by our supreme court's case
law. Bernal v. Lumbermens Mut. Cas. Co., 97 P.3d
197, 203 (Colo.App. 2003). And in any event, South Beebe
cites no contrary Colorado authority.
29 South Beebe's reliance on statutes other than the Act,
where the legislature supposedly "distinguishes between
fee owners and mineral interest owners," is misplaced.
"[D]efinitions of somewhat similar terms in other,
generally unrelated statutes . . . do not assist in deciding
what the Legislature meant in this specific context."
Coal. of Concerned Cmtys., Inc. v. City of Los
Angeles, 101 P.3d 563, 566 (Cal. 2004); see also
Bertrand v. Bd. of Cty. Comm'rs, 872 P.2d 223, 228
(Colo. 1994) ("[T]he interpretation of one statute by
reference to an unrelated statute is an unreliable means of
ascertaining legislative intent.").
30 For example, South Beebe cites section 24-65.5-101, C.R.S.
2017. But that section is limited to "surface
development." And in any event, section 24-65.5-102(4),
C.R.S. 2017, describes a "mineral estate" ...