HomeMy WebLinkAbout2018CV149 - SUTHERLAND V. CITY OF FORT COLLINS, STEVE MILLER & IRENE JOSEY - 030 - CITY OF FORT COLLINS MOTION TO DISMISSDISTRICT COURT, LARIMER COUNTY, COLORADO
Court Address: 201 La Porte Avenue
Fort Collins, CO 80521
Phone Number: (970) 494-3500
▲COURT USE ONLY▲
Plaintiff: ERIC SUTHERLAND, pro se
v.
Defendants: THE CITY OF FORT COLLINS, a home rule
municipality in the State of Colorado; STEVE MILLER, in his
capacity as the Larimer County Assessor and all successors in
this office; IRENE JOSEY, in her capacity as the Larimer
County Treasurer and all successors to this office; and
Indispensable Parties: THE TIMNATH DEVELOPMENT
AUTHORITY, an Urban Renewal Authority; and COMPASS
MORTGAGE CORPORATION, an Alabama company doing
business in Colorado.
Attorneys for Defendant City of Fort Collins:
John W. Mill (#22348)
Amanda Levin Milgrom (#47871)
Sherman & Howard L.L.C.
633 17th Street, Suite 3000
Denver, CO 80202
Phone Number: (303) 297-2900
Email: jmill@shermanhoward.com
amilgrom@shermanhoward.com
Case No.: 2018CV149
Courtroom/Division: 3C
MOTION TO DISMISS OF THE CITY OF FORT COLLINS
The City of Fort Collins (the “City”), by and through its counsel, Sherman & Howard
L.L.C., moves to dismiss all of Mr. Eric Sutherland’s claims against the City for lack of standing,
under C.R.S. § 11-57-210, and for failure to state a claim upon which relief may be granted.
Certificate of Conferral: Pursuant to C.R.C.P. 121, § 1-15(8), on July 17, 2018, the
City’s undersigned counsel sent an email to Plaintiff to confer regarding this Motion. As of the
time of filing this Motion, Plaintiff had not responded so his position on this Motion is unknown.
DATE FILED: July 18, 2018 8:12 PM
FILING ID: BF0E70FBC34B1
CASE NUMBER: 2018CV149
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I. BACKGROUND
Mr. Sutherland does not have standing to bring any of his claims against the City.
Standing is a jurisdictional prerequisite and because it “involves a consideration of whether a
plaintiff has asserted a legal basis on which a claim for relief can be predicated, the question of
standing must be determined prior to a decision on the merits.” Hickenlooper v. Freedom from
Religion Found., Inc., 338 P.2d 1002, 1005 (Colo. 2014). Mr. Sutherland has the burden of
proving that he has standing, and he has failed to meet that burden. His alleged injury is too
remote and too speculative and his claims must be dismissed pursuant to C.R.C.P. 12(b)(1).
Second, C.R.S. § 11-57-210 provides that as a matter of law the bonds have been validly issued.
Finally, Plaintiff’s claims must be dismissed for failure to state a claim pursuant to Rule 12(b)(5).
II. LEGAL STANDARD
On a motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1), “the
plaintiff has the burden to prove jurisdiction and the trial court is authorized to make appropriate
factual findings.” Medina v. State, 35 P.3d 443, 452 (Colo. 2001) (citing City of Lakewood v.
Brace, 919 P.2d 231, 244 (Colo. 1996)) (internal citations omitted); see also Assoc. Gov’ts of
Northwest Colo. v. Colo. Pub. Util. Com’n, 275 P.3d 646, 648 (Colo. 2012). A court “need not
treat the facts alleged by the non-moving party as true as it would under C.R.C.P. 12(b)(5).” Id.
(quoting Brace, 919 P.2d 231).
The City’s Electric Utility Enterprise issued the bonds being challenged by Plaintiff
pursuant to the Supplemental Public Securities Act, C.R.S. §§ 11-57-201 et seq. Pursuant to § 11-
57-210, as a matter of law the bonds were validly issued.
Under Rule 12(b)(5), a court “properly dismisses a claim if the factual allegations in the
complaint, taken as true and viewed in the light most favorable to the plaintiff, do not present
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plausible grounds for relief.” Begley v. Ireson, 399 P.3d 777, 779 (Colo. App. 2017) (citing
Warne v. Hall, 373 P.3d 588 (Colo. 2016)).
III. PLAINTIFF DOES NOT HAVE STANDING TO BRING HIS CLAIMS
Mr. Sutherland does not have standing to bring his claims against the City because his
alleged injury-in-fact is too speculative and remote in time to satisfy the first prong of the standing
analysis. Mr. Sutherland argues that he has standing because he is a citizen of the City and “may
reasonably be expected to pay electric bills to the City of Fort Collins and the amount paid on
those bills as to rates or total charges will undoubtedly be increased by the repayment of
unlawfully authorized debt as complained of here.” (Cmplt., ¶ 8.) The “debt” Plaintiff refers to
results from the City’s Electric Utility Enterprise Board issuing Tax-Exempt Revenue Bonds,
Series 2018A and Taxable Revenue Bonds, Series 2018B (collectively, the “2018 Bonds”),
authorized pursuant to ordinance of the Board of Directors of the City’s Electric Utility Enterprise
(the “Board”) adopted on April 3, 2018 (the “Bond Ordinance”) (attached as Exhibit 1).1
A plaintiff may not bring a claim in court unless he has standing to sue. Standing is a
component of subject matter jurisdiction and is a prerequisite to maintaining a lawsuit. Maralex
Res., Inc. v. Chamberlain, 320 P.3d 399, 401 (Colo. App. 2014). To have standing, a plaintiff
must show that he (1) was injured in fact, and (2) the injury was to a legally protected interest. In
1 In considering a motion to dismiss, a Court may look not only to facts alleged in the pleading but also to “matters
outside the pleading,” such as documents attached as exhibits or incorporated by reference, and matters proper for
judicial notice, without converting the motion to a motion for summary judgment. Norton v. Rocky Mountain Planned
Parenthood, Inc., 409 P.3d 331, 334 (Colo. 2018) (en banc). The Court may also consider documents “referred to” in
the complaint and central to the plaintiff’s claim, notwithstanding that the documents are not formally incorporated by
reference or attached to the complaint. Walker v. Van Laningham, 148 P.3d 391, 397 (Colo. App. 2006) (citing Yadon
v. Lowry, 126 P.3d 332, 336 (Colo. App. 2005)); see also Dallasta v. Dep’t of Highways of State of Colo., 387 P.2d
25, 27 (Colo. 1963) (taking judicial notice of the charter of the City and County of Denver); Walker, 148 P.3d at 397
(considering ordinance when plaintiff specifically referred to it in the complaint and defendant attached a copy of the
Ordinance to its motion to dismiss).
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re Estate Owen, 2017 WL 1404226, at *2 (Colo. App. 2017). Here, Mr. Sutherland does not meet
the first prong of the standing test.
Under Colorado law, it is required that “the alleged injury be sufficiently direct and
palpable to allow a court to say with fair assurance that there is an actual controversy proper for
judicial resolution.” O’Bryant v. Pub. Util. Com’n of State of Colo., 778 P.2d 648, 653 (Colo.
1989). “[A]n injury that is overly ‘indirect and incidental’ to the defendant’s action will not
convey standing, nor will the remote possibility of a future injury.” Hickenlooper, 338 P.3d at
1006 (quoting Ainscough v. Owens, 90 P.3d 851, 856 (Colo. 2004)). “If from the allegations of
the complaint it is speculative whether the harm complained of will result from the challenged
governmental action, the complaint fails to satisfy the injury in fact requirement.” Opie v. Denver
Classroom Teachers Ass’n, 701 P.2d 872, 874 (Colo. App. 1985) (citing Simon v. Eastern Ky.
Welfare Rights Org., 426 U.S. 26 (1976)). Here, Mr. Sutherland’s alleged injury—that he might
have to pay higher electric bills—is speculative and too remote to confer standing to sue.
Olson v. City of Golden, 53 P.3d 747, 750–52 (Colo. App. 2002), provides a useful
analogy. The Olson court held that the plaintiff did not have standing because the possibility of
the alleged future injury was too remote. The taxpayer had challenged the actions of an urban
renewal authority when it conveyed property for less than fair value, resulting in an alleged
reduction in the authority’s revenue. Id. at 750. Plaintiff alleged that this decrease in revenue
would in turn lead the city to spend a greater amount of tax revenue to pay its obligations, thereby
depriving taxpayers of such tax revenue. Id. The court analyzed the sale of land and how it would
affect taxes. It concluded that if redevelopment of the land was successful, the city could enhance
tax revenues so that the loss of tax revenues caused by the transaction would not occur. Id. at
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752. Or, if the redevelopment was not successful, the alleged tax loss may occur and may never
be recovered. Id. But, the court held, “the outcome in either event will not be known until a
remote time in the future, and therefore, plaintiff’s claim of damage from lost tax revenues is mere
speculation at this time.” Id. See also Friends of Richland Cty. v. Richland Cty., 727 N.W.2d 549,
at *3 (Wis. Ct. App. Dec. 21, 2006) (concluding that plaintiff’s “suggested pecuniary losses that
its members may someday incur due to lost tax credits is simply too remote and speculative” for
the court to conclude that the plaintiffs are likely to sustain damages due to the illegal zoning
actions); Manning v. Pioneer Sav. Bank, 55 N.Y.S.3d 587, 593 (N.Y. Sup. Ct. 2016) (“allegations
of injuries based on speculative future risks that Plaintiffs will be victims of identity theft” are
“too remote” because plaintiffs have only alleged “potential exposure.”).
Similarly, Plaintiff’s alleged potential injury due to the Board’s issuance of the 2018
Bonds is likewise merely speculative.2
There are a myriad of variables that affect the analysis.
Under the majority of scenarios, the City’s electric utility enterprise will not have to raise electric
rates at all. For example, if the “take rate”3
of the city-offered internet service meets its expected
take rate of 28.2% and meets its budgeted costs, then the City will not have to raise electric utility
rates. The evidence suggests this is the most likely outcome. (See Exhibit B (S&P PowerPoint)
attached to Ex. 2.) Even if the take rate is 15% and the costs are on budget, the City will not have
2 The Court recently addressed the question of standing in its Order Granting Defendants Timnath Development
Authority and Compass Mortgage Corporation’s Joint Motion to Dismiss. (Timnath Order, July 11, 2018.) As
against Timnath and Compass, Mr. Sutherland’s “claimed injury centered on his belief that Poudre School District
will raise taxes in the future due to lost revenue.” (Id., at 3.) This Court held that Mr. Sutherland did not have
standing because his alleged injury “cannot be determined until a remote time in the future” and that is “not
sufficiently direct and palpable to support a finding of injury-in-fact.” (Id.) Mr. Sutherland’s alleged injury against
the City is equally remote and speculative, and the Court’s analysis applies here as well.
3 The “take rate” is one measure of success for municipal broadband projects. It is defined as the actual number of
subscribers divided by the total potential subscribers. (Exhibit A (Broadband Business Plan) to Exhibit 2 (Affidavit
of Michael Beckstead), at 23.)
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to raise electric rates. (See Ex. 2, ¶ 11.) Only in the unlikely scenario where the City completely
builds out the broadband network and facilities and the take rate is less than 15%, could there be a
potential impact on the rate payers. (See Ex. B.).
The fact that the City’s electric utility enterprise has acknowledged to the public that there
is a small risk that electric rates could go up as a result of the City-provided broadband facilities
and services, (Ex. A at 66), does not change the analysis. See In re Science Applications Int’l
Corp. (SAIC) Backup Tape Data Theft Litig., 45 F. Supp. 3d 13, 28 (D.D.C. 2014) (holding that
“increased risk of harm alone does not constitute injury in fact”). The City had a duty to inform
the public of all possible outcomes, no matter how remote some of them might be. The
Broadband Business Plan, which notified the public of all outcomes, and the assumptions in the
S&P PowerPoint, show how unlikely the City is to reach the point at which the rate payers would
be impacted. (See Exs. A, B to Ex. 2.)
First, the evidence shows that any alleged injury is speculative. According to the City’s
Broadband Business Plan, the City estimates that the residential take rate will be 28.2%. (Ex. A,
at 25, 57.) It arrived at these numbers after conducting a statistically-valid phone survey, which
the City’s consultants have since updated the results of twice in light of changing variables. (Id. at
19, 23.) The City estimates that commercial subscribers will reach a take rate of 45%. (Id. at 25.)
The City’s projections illustrate that the take rate should be sufficient to pay for the broadband
facilities and services. (See Ex. 2, ¶¶ 7, 8, 16.) The City’s Chief Financial Officer has “a high
degree of confidence there will be no impact on electric rate payers.” (Ex. 2, ¶ 16.) The evidence
also shows that costs appear to be low. As of the date of this filing, the construction costs of the
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network are lower than the City had estimated, which further supports the City’s projections and
makes any impact to the rate payers even more unlikely. (See Ex. 2, ¶ 14.)
Second, the evidence shows that any potential injury is too remote in time. Construction is
estimated to begin in November, 2018 and expected to be done by the end of 2021. (See Ex. 2,
¶ 13.) Thus, the network will not be completed for at least three years. Also contributing to the
remoteness in time is the timing of when the debt on the bonds becomes due. For the first thirty
months, the City does not have to make any payments from operations. (Ex. 2, ¶¶ 10, 11.) This
means that the first bond payment is not due until January 2021—2.5 years in the future.
Moreover, “[i]t will be 5 to 8 years before it can be determined whether there will be any impact
on electric utility rates.” (Ex. 2, ¶ 16.) Any risk of increased electric rates is highly speculative,
and any possible injury will not be known until a remote time in the future. Thus, Plaintiff’s
alleged injury is too remote and speculative to provide him with standing, and this Court does not
have subject matter jurisdiction.
IV. C.R.S § 11-57-110 BARS PLAINTIFF FROM CHALLENGING THE VALIDITY
OF THE BONDS AFTER THEIR DELIVERY
Mr. Sutherland is barred from raising any of his claims because C.R.S. § 11-57-210 bars
any challenge to the bonds after their delivery. Section 11-57-210 provides:
An act of issuance providing for the issuance of public securities or an indenture
may provide that the securities shall contain a recital that they are issued pursuant
to the supplemental public securities act. Such recital shall be conclusive evidence
of the validity and the regularity of the issuance of such public securities after their
delivery for value.
Here, the Bond Ordinance satisfies the statute. First, “an act of issuance” as defined in section 11-
57-203 “means an ordinance.” Thus, the Bond Ordinance constitutes an “act of issuance.”
Second, the Bond Ordinance contains a recital stating that it is issued pursuant to the supplemental
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public securities act. (See Ex. 1, at A-2.) This recital acts as “conclusive evidence of the validity”
of the issuance of the 2018 Bonds after their delivery for value. Third, the 2018 Bonds have been
“deliver[ed] for value.” On June 14, 2018, the City issued the bonds and received the proceeds.
(See Ex. 2, ¶ 15.) Thus, as a matter of law, the 2018 Bonds have been issued validly.
V. CLAIMS 13-19 MUST BE DISMISSED FOR FAILURE TO STATE A CLAIM
In addition, all of Plaintiff’s claims against the City must be dismissed for failure to state a
claim upon which relief may be granted. This section V addresses claims 13-19 and the following
section VI addresses claim 12.4
Pursuant to Rule 12(b)(5), Plaintiff fails to state a claim upon
which relief may be granted for claims 13-19. He fails to articulate any legal claims and he fails to
provide a single factual allegation to support these non-existent legal claims.
The Colorado Supreme Court adopted the plausibility standard as set forth by the U.S.
Supreme Court. See N.M. by and through Lopez v. Trujillo, 397 P.3d 370, 373 (Colo. 2017)
(citing Warne v. Hall, 373 P.3d 588, 595 (Colo. 2016)). Under the plausibility standard, a
complaint may be dismissed if the plaintiff’s allegations do not, as a matter of law, support a claim
for relief. Pena v. Am. Family Mut. Ins. Co., --P.3d--, 2018 WL 1959600, at *3 (Colo. App. April
19, 2018) (citing Denver Post Corp. v. Ritter, 255 P.3d 1083, 1088 (Colo. 2011)).
A review of claims 13-19 shows that Plaintiff has failed to plead any cognizable legal
claims or any facts supporting those claims. For example, in claim 13, Mr. Sutherland alleges
only: “Electric Utility Enterprise Board has no power to defease existing revenue bonds. It may
only issue revenue bonds and other obligations pursuant to Article V section 19.3.” (Cmplt, ¶ 40.)
This is merely a statement of the Board’s authority. Plaintiff has alleged no cognizable legal
4 The Court has dismissed claims 1-11 against Timnath and Compass. See Timnath Order at 3-4. The only claims
against the City are claims 12-19.
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claim, and even if the Court were to infer a legal claim, Plaintiff did not include a single factual
allegation to support his claim. The same is true for claims 14 through 19.5
For example, claim 14
complains of “[t]he absence of a comma.” In claims 16 and 17, Plaintiff tacks a proper noun on
the end of each claim with not a word of explanation. (See Cmplt, at ¶¶ 43, 44.) For example,
claim 16 states: “Council violated a prohibition of the City Charter by appropriating money to a
private industrial organization; Woodward.” (Id. ¶ 43.) Again, this claim is deficient; it fails to
allege a cognizable legal claim. Moreover, for claims 13-19 there are no factual allegations
supporting these vague claims that could put the City on notice of what it is defending against.
See Scott v. Scott, --P.3d--, 2018 WL 1007957, at *4 (Colo. App. Feb. 22, 2018). Therefore,
claims 13-19 of the Complaint must be dismissed under Rule 12(b)(5) for failure to state a claim.
VI. CLAIM 12 MUST BE DISMISSED FOR FAILURE TO STATE A CLAIM
The meat of Plaintiff’s Complaint against the City is the 12th Claim. Mr. Sutherland
alleges that the City:
• Failed to comply with various provisions in the City’s Home Rule Charter (“City Charter”)
and the Municipal Code of the City (the “City Code”) authorizing the City to adopt the Bond
Ordinance. (Cmplt., ¶¶ 36–37).
• Illegally obligated the City to a multiple-fiscal year direct or indirect debt without adequate
present cash reserves. (Id. ¶ 37).
5 Claims 14 and 15 also are barred by res judicata because Mr. Sutherland already litigated these claims against the
City in Larimer County District Court Case No. 17cv219 in which he challenged the ballot question presented by City
Council to the voters in Ordinance No. 101, 2017. (See Ex. 3, (Petition for a Contest Concerning the Form and
Content of the City of Fort Collins Broadband Authorization Election Ballot Question.) The Court denied Mr.
Sutherland’s petition and ruled against him on the merits. (See Ex. 4, (Order re Petition for a Contest Concerning the
Form and Content of the City of Fort Collins Broadband Authorization Election Ballot Question, at 9–11, 17, (Sept. 4,
2017), French, J.).) The Court also denied Mr. Sutherland’s Motion for Post-Trial Relief. (See Ex. 5, (Order Denying
Motion for Post-Trial Relief (Oct. 24, 2017).) The Court issued a final judgment on these claims; therefore, claims 14
and 15 are barred by res judicata. Moreover, as the Court explicitly provided in its Order, challenges to the form or
content of a ballot title or submission clause fixed by the City Council for an initiated or referred ballot measure are to
be brought under C.R.S. § 1-11-203.5 and “this is the exclusive manner for such legal challenges.” (Ex. 4, at 2.)
Thus, even if these claims were not barred by res judicata, Mr. Sutherland cannot raise them here.
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• Failed to hold the Enterprise Board meeting concurrently with the City Council meeting. (Id. ¶
37).
• Violated the Colorado Constitution by not electing someone president of the Board. (Id. ¶ 38).
Dispositive of this claim is that the Court is not required to accept as true legal conclusions
or factual claims that are “at variance” with the express terms of documents referenced in the
Complaint. See Stauffer v. Stegemann, 165 P.3d 713, 716 (Colo. App. 2006). In other words, the
legal effect of documents referred to in a complaint is determined by their contents rather than by
allegations in the complaint. Id.
A. Bond Ordinance Background.
In 1993, the City Council passed Ordinance No. 60, 1993 establishing the electric utility as
an enterprise. (Exhibit 6, (Ordinance No. 60, 1993).) In 2010, the City Council passed Ordinance
No. 38, 2010, which established that any ordinance authorizing revenue bonds of the electric
utility enterprise shall be adopted in the same manner as an ordinance of the City Council.
(Exhibit 7, (Ordinance No. 38, 2010).) On November 3, 2015, the City voters approved a ballot
question giving the City authority to provide telecommunication facilities and services, including
broadband internet. (Exhibit 8, (Ballot Item Approved by Voters, Nov. 3, 2015).) On August 15,
2017, the City Council adopted Ordinance No. 096, 2017, which called for a special municipal
election for November 7, 2017. (Exhibit 9, (Ordinance No. 96, 2017).) It also adopted Ordinance
No. 101, 2017, which submitted to voters Charter Amendment No. 1 adding a new Section 7 to
Article XII of the City Charter regarding telecommunication facilities and services. (Exhibit 10,
(Ordinance No. 101, 2017).) This new Section 7, which the voters approved, granted the City
Council the authority to provide various kinds of telecommunications facilities and services,
including broadband Internet, and to issue revenue and other debt, not to exceed $150 million, to
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fund these facilities and services. (Id.) As evidenced by this history, the citizens of Fort Collins
approved the City’s Electric Utility Enterprise Board offering broadband internet service and
issuing the 2018 Bonds. Mr. Sutherland seeks to invalidate the will of the voters, but he has
suffered no injury and failed to state any valid legal claim.
B. The City complied with various provisions of the City Charter and the City Code.
Section 19.3(b) of the City Charter Article V provides that the City Council may, by
ordinance, authorize the Electric Utility Enterprise, “acting by and through the Council, sitting as
the board of the enterprise,” to issue its own revenue bonds and, in doing so, those bonds “shall be
issued by ordinance of the board of the enterprise, adopted in the same manner as . . . ordinances
of the City Council.” (Exhibit 11 (City Charter, Art. V, §19.3).) Consistent with these Charter
provisions, City Code Section 26-392 provides that the Enterprise “may, by ordinance of the City
Council, acting ex officio as the board of the enterprise, issue its own revenue bonds” and that
such ordinance “shall be adopted in the same manner . . . as ordinances of the City Council.” (See
Exhibit 12 (City Code, § 26-392).)
Accordingly, the Bond Ordinance was required to be adopted
by the City Council acting as the Board of the Electric Utility Enterprise and to be adopted in the
“same manner . . . as ordinances of the City Council,” so it is the Board that is to adopt an
ordinance issuing revenue bonds for the Electric Utility Enterprise, and this is what occurred.
First, Article II, Section 6 of the City Charter requires that ordinances be formally
introduced at a regular or special council meeting in written or printed form by any member of the
council and considered on first reading and action taken thereon. (Exhibit 13, (City Charter, Art.
II, § 6).) In this case, the Bond Ordinance was formally introduced in printed form at a regular
meeting of the Board held on March 20, 2018, and it was considered on first reading and adopted
by a vote of 6-0. (Exhibit 14, (March 20, 2018 Minutes of the Board).)
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Second, Article II, Section 6 of the City Charter requires that second reading or final
passage of ordinances shall be at a regular council meeting. (Ex. 13.) In this case and in
accordance with Section 19.3(b) of Charter Article V and City Code Section 26-392, final passage
of the Bond Ordinance occurred at a regular meeting of the Board held on April 3, 2018, by a vote
of 7-0. (Exhibit 15, (April 3, 2018 Minutes of the Board).)
Third, Article II, Section 7 of the City Charter requires that proposed ordinances be
published in a newspaper of general circulation. ((Exhibit 16 (City Charter, Art. II, § 7).) The
Bond Ordinance was published in the Fort Collins Coloradoan on March 25, 2018, and again on
April 8, 2018. (Exhibit 17 (Affidavits of the Fort Collins Coloradoan).)
Fourth, the Bond Ordinance was signed by the Board President of the Enterprise. Plaintiff
alleges that the Bond Ordinance did not comply with the City Charter because it was not signed by
the Mayor. However, the Mayor is also the President of the Enterprise. (Exhibit 18 (Affidavit of
Rita Knoll, ¶ 6).) As discussed above, Section 19.3(b) in Article V of the City Charter provides
that revenue bonds shall be issued by ordinance of the Board, adopted in the same manner as
ordinances of the Council. (Ex. 11.) Accordingly, the Board must adopt the ordinance, not the
Council. Article II, Section 7 of the City Charter requires that City Council ordinances be signed
by the Mayor. (Ex. 16.) In order for the Board to adopt the Bond Ordinance in the same manner
as ordinances adopted by the City Council, the President of the Enterprise (as the presiding officer
of the Board) rather than the Mayor (as the presiding officer of the Council) is the appropriate
person to sign the Bond Ordinance. Here, the President of the Board, who is also the Mayor,
signed the Bond Ordinance, in compliance with all legal requirements.
C. The City Code does not prohibit the City from issuing the 2018 Bonds because
they are an obligation of the Enterprise and not the City.
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Plaintiff alleges that the Bond Ordinance “purported to bind the City to perform an
obligation relating to the electrical utility system that is a multiple-fiscal year direct or indirect
debt or other financial obligation of the City without adequate present cash reserves pledged
irrevocably and held for payments in all future years, which is specifically prohibited by the
Code.” (Cmplt., ¶ 37.) Section 26-392(c) of the City Code provides that:
the enterprise shall also be authorized to . . . bind the City to perform an obligation
relating to the electrical utility system other than any multiple-fiscal year direct or
indirect debt or other financial obligation of the City without adequate present cash
reserves pledged irrevocably and held for payments in all future years.
(Ex. 12 (emphasis added).)
The critical distinction here is that the 2018 Bonds are not a debt or other obligation of the
City. The 2018 Bonds are only an obligation of the Electric Utility Enterprise. Section 203 of the
Bond Ordinance specifically states that “the Bonds shall not constitute a debt or indebtedness
within the meaning of any constitutional, charter, or statutory provision or limitation; and the
Bonds shall not be considered or held to be general obligations of the Enterprise or the City but
shall constitute special obligations of the Enterprise.” (Ex. 1 (emphasis added).) The Bond
Ordinance further provides in Section 204 that “no such covenant of the Enterprise on behalf of
the City that would constitute such a direct or indirect debt or other financial obligation of the City
may be enforced against the City.” (Id.) Therefore, the Bond Ordinance clearly does not fall
within the prohibition cited in City Code section 26-392.
D. The City substantially complied with the City Charter and the City Code by
holding the Board meeting the same day and immediately after the City Council
meeting.
Plaintiff alleges that the City violated the City Code because “the meeting of the Electric
Utility Enterprise Board was not held concurrent with a regular or special City Council meeting.”
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(Cmplt, ¶ 37.) The City Code provides that “the enterprise shall also be authorized to have and
exercise the following powers in furtherance of its purposes: to hold meetings concurrently with
regular or special meetings of the City Council.” (Ex. 12.)
In this case, the Bond Ordinance was formally introduced at a regular meeting of the Board
held on March 20, 2018, which was held at the same date and location as the regular meeting of
the City Council meeting. (Compare Ex. 14 (Board Minutes) with Exhibit 19 (City Council
Minutes).) Similarly, the Bond Ordinance was finally passed at a regular meeting of the Board
held on April 3, 2018, which was held at the same date and location as the regular meeting of the
City Council meeting. (Compare Ex. 15 (Board Minutes) with Exhibit 20 (City Council
Minutes).) While it is true that the meetings did not happen at the exact same time, but rather
back-to-back, the intent of the City Code was substantially complied with.
To determine whether there has been substantial compliance with a statute, the court
considers whether the complained-of acts fulfilled the statute’s purpose. Grandote Golf &
Country Club, LLC v. Town of La Veta, 252 P.3d 1196, 1203 (Colo. App. 2011); see also People
v. Stanley, 169 P.3d 335, 337–38 (1977) (“substantial compliance is actual compliance in respect
to the substance essential to every reasonable objective of the statute, as distinguished from mere
technical imperfections of form”) (citations omitted). In Miller v. City & Cty. of Denver, 5 P.2d
875 (Colo. 1931), the court applied the substantial compliance standard to determine whether the
city had complied with its charter for the purposes of the required notice of hearing. Id. at 877.
And in Board of County Comm’rs, Adams County v. City & County of Denver, 548 P.2d 922, 927
(Colo. App. 1976), the court held that there was substantial compliance with the pertinent
provisions of the statute because all persons affected by the annexation had notice and the
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resolution of intent describing the area to be annexed was published. Any variance in the notice
was immaterial.
Here, a City Council meeting was held on March 20, 2018 from 6:00 p.m. to 9:00 p.m.,
and immediately thereafter the Board meeting began at 9:00 p.m. (See Exs. 19, 14.) The meetings
were held in the same location on the same date, so that any person at the City Council meeting
would automatically be in attendance at the beginning of the Board meeting. The same occurred
on April 3, 2018 for the final passage of the bond ordinance. (See Exs. 20, 15.) Therefore, the
City substantially complied with the City Code provision regarding “concurrent” meetings.
E. Neither the Colorado Constitution, the City Charter, nor the City Code requires
that a person be elected president of the Board.
Plaintiff’s final allegation in the 12th Claim is that the City violated the Colorado
Constitution because “no person has ever been duly elected or appointed to the position of
‘president’ of the Electric Utility Enterprise Board.” (Cmplt., ¶ 38.)
The mayor of the City is the president of the Enterprise as provided by the Bond
Ordinance. (Ex. 1, at § 101(A), at 12.; see also Ex. 18, ¶¶ 6, 7.) Moreover, the Colorado
Constitution does not require that a person be elected or appointed as “president” of the Enterprise.
Even if the Bond Ordinance did not appoint the Mayor as President of the Enterprise,
under Colorado law the Mayor would be considered to be the de facto President of the Enterprise.
For all of the City’s enterprises as established in 1993 by separate ordinances of the City Council,
the Mayor has acted as President for each of the City’s enterprises, including the City’s Electric
Utility Enterprise. (Ex. 18, ¶ 7.) This consistent course of conduct for twenty-five years has
clearly established that the Mayor is acting as the de facto President of the Enterprise. In People v
Sherrod, the Colorado Supreme Court stated that “[t]he de facto officer doctrine confers validity
16
upon acts performed by a person acting under the color of official title even though it is later
discovered that the legality of that person's appointment or election to office is deficient.” 204
P.3d 466, 471 (Colo. 2009) (quoting Ryder v. U.S., 515 U.S. 177, 180 (1995)); see also Butler v.
Phillips, 88. P. 480, 481 (Colo. 1906).
Therefore, the City did not violate the Colorado Constitution because the Constitution does
not require that the President be elected or appointed to the Enterprise. Further, the City did
appoint the Mayor as the President of the Enterprise. And finally, even if the foregoing had not
occurred, a court would uphold the Mayor’s acts as President of the Enterprise under the de facto
officer doctrine.
VII. CONCLUSION
For the foregoing reasons, the Court must dismiss all of Plaintiff’s claims against the City
for lack of standing or, alternatively, for failure to state a claim upon which relief may be granted.
Dated this 18th
day of July, 2018.
SHERMAN & HOWARD L.L.C.
By:/s/ John W. Mill
John W. Mill (#22348)
Amanda Levin Milgrom (#47871)
633 17th Street, Suite 3000
Denver, CO 80202
Telephone: (303) 297-2900
Email: jmill@shermanhoward.com
amilgrom@shermanhoward.com
ATTORNEYS FOR CITY OF FORT COLLINS
17
Active/48681254.11
CERTIFICATE OF SERVICE
I hereby certify on the 18th
day of July, 2018, that a true and correct copy of the foregoing
MOTION TO DISMISS OF THE CITY OF FORT COLLINS was served via ICCES e-filing
system, upon the following:
Eric Sutherland, pro se
3520 Golden Currant Boulevard
Fort Collins, CO 80521
(By email and US Mail)
Eric R. Burris, Esq., pro hac vice
Cole J. Woodward, Esq.
Brownstein Hyatt Farber Schreck, LLP
410 Seventeenth Street, Suite 2200
Denver, CO 80202
Jeannine S. Haag, Esq.
George H. Hass, Esq.
Larimer County Attorney’s Office
224 Canyon Ave., Suite 200
Post Office Box 1606
Fort Collins, Colorado 80522
/s/ Stephanie Hendrickson
Stephanie Hendrickson, Legal Assistant