Sherman & Howard Public Finance Advisory: UMB Bank, N.A. v. Landmark Towers Association

December 15, 2017

By Chris Jackson and Matt Gray

On Monday, December 11, 2017, the Colorado Supreme Court issued an important decision with respect to the election process that is necessary for much of Colorado public finance. The case arises out of an election held pursuant to Colorado’s Taxpayer Bill of Rights, or “TABOR,” which generally requires voters to approve taxes and bonds.

One of the Petitioners, Marin Metropolitan District, is a special district created to finance the infrastructure of a proposed new residential community. The District’s organizers called for a TABOR election to seek approval for new bonds and a new property tax on all landowners within the District’s boundaries. The election was held, the voters approved both the bond and the property tax, and the District proceeded to issue bonds and levy taxes. Months later, a group of condominium owners learned that their properties had been added to the District’s boundaries—thus requiring them to pay the new tax—but the owners claimed that they were never informed about the TABOR election or given a chance to vote in it. They sued the District (as well as the owner of the District’s bonds) and asked the trial court to invalidate the approval of the new bonds and the tax. The defendants responded by invoking C.R.S. § 1-11-213(4), a state statute that requires any challenge to an election to be filed within 10 days after the returns come in. In its decision, the trial court agreed with this defense, but nevertheless, for other reasons, ordered the District to issue a partial refund to the condominium owners and enjoined the District from assessing them any taxes going forward.

The case went up on appeal. The Court of Appeals held that the 10-day challenge period statute did not apply, and concluded that the bonds and taxes were invalid. The Supreme Court granted a petition for certiorari and issued its decision on December 11. It held that § 1-11-213(4) governed and that the condominium owners’ lawsuit was time barred. It first concluded that the doctrine of equitable tolling did not apply because § 1-11-213 is a “non-claim statute,” which absolutely prohibits the initiation of litigation after a specific period of time. The Court also determined that one of its previous decisions, Cacioppo v. Eagle County School District, did not relieve the condominium owners from their duty to comply with § 1-11-213(4). Because this challenge was not about the substance of the ballot issue, but instead was a challenge to its means, it was subject to the 10-day limitations period.

This case provides a significant amount of comfort for all local governments holding elections in Colorado. Combined with the Cacioppo decision, it shows the Colorado Supreme Court strongly enforces the 10-day statute of limitations for election challenges, and gives comfort to anyone relying on a previous election once the ten day period has run.

In addition, the Court specifically noted that the thirty day statute of limitations in the Supplemental Public Securities Act (§ 11-57-212) was applicable as well in this matter even though it wasn’t necessary to resolve the case. The Court remanded the case back to the lower courts and indicated that the Court of Appeals should consider additional issues in the case in light of the Court’s ruling.

If you would like more information or have any questions regarding the impact of the Marin Metropolitan District ruling, please reach out to Chris Jackson of Sherman & Howard’s appellate practice or any member of our Public Finance Group.

Sherman & Howard has prepared this advisory to provide general information on recent legal developments that may be of interest. This advisory does not provide legal advice for any specific situation and does not create an attorney-client relationship between any reader and the Firm.