CAROUSEL FARMS METROPOLITAN DISTRICT, a quasi-municipal corporation and political subdivision of the State of Colorado, Petitioner,
WOODCREST HOMES, INC., a Colorado corporation, Respondent.
[Copyrighted Material Omitted]
Certiorari to the Colorado Court of Appeals, Court
of Appeals Case No. 15CA1956
for Petitioner: Alderman Bernstein LLC, Jody Harper Alderman,
Carrie S. Bernstein, Amanda E. Bradley, Steven M. Nagy,
for Respondent: Dymond Reagor, PLLC, David D. Schlachter,
Greenwood Village, Colorado
for Amicus Curiae Institute for Justice: Diana Simpson,
Jeffrey Redfern, Arlington, Virginia
A subdivision development contemplated by Woodcrest Homes
seems to have been yet another casualty of the 2007-2008
financial crisis. Before the economic downturn, Woodcrest was
poised to construct the new development adjacent to the town
of Parker. But with the economy in dire straits, Woodcrest
secured only a small parcel— known as Parcel C—
stuck between two larger parcels that were necessary for
completion of the project. Now, over a decade after the
failed development, a special metropolitan district
controlled by a competitor, Century Communities, seeks to
condemn Parcel C and finish what Woodcrest started.
But Woodcrest objects. It claims that the entire condemnation
proceeding is really a sham designed to benefit Century.
Woodcrest maintains that the condemnation violates both the
public use protections of the Colorado Constitution and the
statutory prohibition on economic development takings.
According to Woodcrest, the purpose of the taking, at the
time it occurred, was to satisfy contractual obligations
between Century and Parker. Because the public would not be
the beneficiary at the time of the taking, Woodcrest
contends that this condemnation violates the Colorado
Constitution. Moreover, it argues, the taking effectively
transfers the condemned land to Century, which violates
section 38-1-101(1)(b)(I), C.R.S. (2018), the states
anti-economic development takings statute.
We disagree. The centerpiece of our jurisprudence on takings
and public use is that the taking must, at its core, benefit
the public. The condemnation of Parcel C will do just that,
with the intended construction of various utilities, public
rights of way, and sidewalks. There is nothing in the
Colorado Constitution that prohibits private parties from
incidentally benefiting from any particular condemnation.
Additionally, Colorados prohibition on economic development
takings has no bearing on the condemnation at issue here: The
plain language of section 38-1-101(1)(b)(I) prevents public
entities from transferring condemned land to private
entities. But there was no transfer, and the only entity
involved was a public one, the special district.
Before reaching any of those issues, however, the parties ask
us to clarify whether clear error or de novo review applies
to a trial courts public use determination. Because public
use is ultimately a legal question, we review it de novo,
to the trial court on underlying historical facts.
Therefore, we hold as follows. First, takings questions
present mixed issues of law and fact, with public use being a
question of law that is reviewed de novo. Second, takings
that essentially benefit the public will survive
constitutional scrutiny, even if, at the time of the taking,
there is an incidental private benefit. As a result, the
taking here is valid. Third, the plain language of section
38-1-101(1)(b) only limits the transfer of condemned land to
a private entity and, because there was no transfer and no
private entity involved here, that section is inapplicable.
I. Facts and Procedural History
In 2006, the respondent, Woodcrest Homes, began the process
of securing three parcels to build a new development that
would be annexed into the town of Parker. Woodcrest purchased
Parcel C, a small parcel around twenty feet wide that totaled
about 0.65 acres, sandwiched between two approximately
twenty-acre parcels known as Parcels A and B. This sliver of
land offered Woodcrest an opportunity to plan utilities for
its development, as Parcel C already contained a sewer line,
a water line easement, and a natural drainage system with
culverts. Although Woodcrest was under contract to purchase
Parcels A and B, the "weak housing market" left
Woodcrest unable to move ahead.
Fast forward to 2012, when Century acquired Parcels A and B.
In 2013, Century offered to purchase Parcel C from Woodcrest,
tendering nearly $ 45,000. Woodcrest rebuffed the offer,
remarking that it subsidized, at great cost, Centurys
ability to complete the development, given that Century
intended to use Woodcrests plans for the development.
Undeterred, Century told Woodcrest that it would continue to
pursue development and that, if Woodcrest didnt accept some
offer, Century would condemn Parcel C with the "Town
Councils support." Then, using nearly identical plans
to Woodcrests— which included using an already
encumbered Parcel C for sewage, roads, and other public
improvements— Century approached Parker. Century asked
for the same deal that Woodcrest had in 2006, and Parker
agreed that it would annex the development and approve the
developments plat, if Century owned all three parcels.
Century then created a metropolitan district called Carousel
Farms (the District). This quasi-municipal structure
empowered the District to raise revenue through municipal
bonds and, more importantly, condemn property through eminent
domain. The District was run solely by Century employees and
officers. The District made a final offer to Woodcrest, which
Woodcrest rejected. Then, the District sought to condemn
Parcel C. But, before it could do so, the District needed to
amend the agreement with Parker so that it was the Districts
possession of Parcel C, not Centurys, that was the
prerequisite for plat approval and annexation. Parker
obliged, and the District initiated condemnation proceedings.
At the immediate possession hearing in district court,
Woodcrest argued that the District was acting as a puppet for
Century. To Woodcrest, the District was a mere faç ade
designed to empower Century to acquire Parcel C and complete
the development, making the taking not for a public use but
for a private one. The district court disagreed, holding that
the taking was indeed for public use. The court subsequently
adopted the Districts proposed findings of fact and
conclusions of law, verbatim or almost verbatim.
A division of the court of appeals disagreed and reversed.
First, it concluded that, in condemnation proceedings, the
district courts findings of fact were reviewed for clear
error and its legal conclusions reviewed de novo.
Carousel Farms Metro. Dist. v. Woodcrest Homes,
Inc., 2017 COA 149, ¶ 32, __ P.3d __. However, it
reasoned that the district courts findings were subject to
heightened scrutiny because the district court adopted the
prevailing partys proposed
findings of fact and conclusions of law
Second, the division held that the taking was not for public
use, as the taking "itself" was to satisfy the
Districts contractual obligations, which were, under any
metric, not a public use. Id. at ¶¶ 36 -38. The
eventual dedication for utilities and roads was a "step
removed" and couldnt save the taking from infirmity.
Id. at ¶ 37.
Third, the division concluded that the taking was not
necessary to accomplish a public use, as there was no public
use even in play. Id. at ¶ 41. Moreover, the
division reasoned that, because the District was composed of
Century employees only, formed after Century couldnt
privately acquire Parcel C, and only ...