Amada Family Limited Partnership v. Pomeroy: Colorado Court of Appeals expressly affirms the continuing viability of the common-law after-acquired title doctrine and expressly recognizes utility easements by necessity

On May 27, 2021, a division of the Colorado Court of Appeals issued its opinion in Amada Family Limited Partnership v. Pomeroy, 2021 COA 73.  In that case, the court decided two significant issues that apparently had never been expressly ruled on by a Colorado appellate court before: (1) that Colorado’s common-law after-acquired title doctrine was not abrogated by adoption of the after-acquired interest statute; and (2) that utility easements may be implied by necessity.

As is often the case in matters involving access and implied property rights, the facts and history underlying Amada are complicated, but the case’s two most significant rulings are not.  Instead, the basic legal principles established (or confirmed) in Amada appear to be broadly applicable, and real property practitioners should take note of these significant developments (or clarifications) in the law.

Background

To provide just a bit of background, Amada involves four parcels in Montrose, Colorado.  Two of these parcels (C and D) were once owned by the federal government, and two (A and B) were owned by the McGees.  Amada, ¶¶ 2-4 (see demonstrative map included below).  In 2007, the McGees transferred one parcel (parcel A) to Amada, along with an express easement for access and utilities over Parcel B, which was the only other relevant parcel owned by the McGees’ at the time.  Id. at ¶¶ 5-6.   Importantly, the covenants in this 2007 express easement grant included the following terms: (1) although the McGees did not own parcel C at the time, the easement would include the land currently permitted for access (Parcel C) if the McGees acquired that land, and (2) Grantor (the McGees) and their assigns are compelled to “allow a 50 foot easement for ingress, egress and utilities to benefit the Grantee … in the event Grantor acquires property [incorporating the current access road] from the Government.”  Id. at ¶¶ 6, 42.

Then, in 2012, the McGees bought Parcels C and D from the federal government.  Id. at ¶ 7.  A couple of years later, the McGees sold Parcel D to Amada. Id. at ¶ 8.  Testimony at trial established that this was essentially a “continuation” of the 2007 transaction and that the parties intended that Parcel A’s express easement continue over Parcel C, as necessary for access to the nearest road.  Id. at ¶¶ 8, 55, 61-62.  Shortly thereafter, the McGees sold Parcels B and C to the Pomeroys (the defendants and appellants in Amada).  Id. at ¶ 9.

Amada continued using the road for access, and in 2017, it constructed a spur across parcel C (which spur had been anticipated since 2007) to connect Parcel A with the existing access road.  Id. at ¶¶ 5, 10.  The Pomeroys responded by placing a gate across this spur road and locking a gate at the entrance to the access road, “effectively denying Amada access to its parcels.”  Id. at ¶ 11.  Amada responded by filing an action for declaratory judgment and trespass.  Id.

Amada’s Most Significant Rulings

Again, while these facts are somewhat convoluted, the legal principles announced in Amada are both straightforward and broadly applicable.

First, the court determined that adoption of the after-acquired interest statute did not abrogate Colorado’s common-law after-acquired interest doctrine, and that the doctrine applied to extend the express 2007 easement over property subsequently acquired by the McGees (Parcel C) under the express language of the original easement grant.  Amada, ¶¶ 23-42.  This ruling is significant due to the limited scope of the after-acquired title statute compared to that of the common-law doctrine.  Specifically, “[o]ne notable difference between the statute and the common law doctrine is that the doctrine applies ‘[w]here one conveys lands with warranty, but without title,’ Phillippi [v. Leet, 35 P. 540, 541 (Colo. 1893)] (emphasis added) … while the statute applies where one purports to convey ‘an estate in fee simple absolute,’ § 38-30-104 (emphasis added).”  Id. at ¶ 25.  Since an easement is not a fee estate but instead a usufructuary right to enter and use land possessed by another, the after-acquired interest statute arguably does not apply to easements.[1]  The court concluded, however, that the common-law after-acquired interest doctrine can be applied to easements “under principles of estoppel or estoppel by deed.”  Id. at ¶ 39.

After explaining why it mattered to the case at hand, Amada then expressly confirmed for the first time that the common-law after-acquired interest doctrine remained viable in Colorado and had not been abrogated by the after-acquired interest statute.  Id. at ¶¶ 27-34.  It did so because (1) the after-acquired interest statute did not expressly abrogate the common-law doctrine or necessarily abrogate it by implication, (2) the legislative history of the statute indicated that the after-acquired interest statute was intended to clarify a different point in law altogether and not to abrogate the common-law doctrine, and (3) prior Colorado cases had impliedly acknowledged the continued viability of the common-law after-acquired interest doctrine.  Id.  In light of the express covenants in the 2007 easement grant, Amada then ruled that the express easement over Parcel B in favor of Parcel A also extended to burden Parcel C under the common-law after-acquired interest doctrine.  Id. at ¶¶ 40-41.

Second, for what appears to be the first time in a Colorado appellate decision, the court expressly ruled that “An Access and Utility Easement Arose By Necessity.”  See id., Part III.B Heading; ¶¶ 57-65.  This ruling established an easement by necessity for utilities as well as access over Parcels B and C in favor of Parcel D.  Id.  After noting that under Colorado law, “the permissible uses of an easement by necessity vary according to what rights are necessary to enable a grantee to use the land as intended and reasonably expected,” the court explicitly recognized for the first time “that an easement by necessity may include utilities.”  Id. at ¶¶ 59-60.  It further noted that support for recognizing utility easements by necessity is “especially strong where a parcel is already in residential use or a parcel was conveyed for residential purposes, making the necessity of utility rights reasonable and foreseeable.” Id. at ¶ 60.

Here, the Court noted that it was “not a secret” that Amada intended to use Parcel D for residential purposes. Id. at ¶ 61.  Hence, because (1) “the scope of an easement by necessity is set according to the purpose of the conveyance” and (2) the trial court’s finding that Parcel D was conveyed for residential purposes had evidentiary support, Amara affirmed the trial court’s ruling “recognizing that Amada’s easement on Parcels B and C in favor of Parcel D includes utility rights.”  Id. at ¶ 65.

Given its recent issuance, Amada is still subject to challenge through a petition for certiorari to the Colorado Supreme Court, and it is possible that these significant holdings will not survive any subsequent review.  Nevertheless, Amada is a notable case given the significant issues that it addressed for what appears to be the first time in Colorado.


 

Capture(demonstrative from Amada depicting Parcels A (green), B (blue), C (yellow), and D (orange), plus the main access road (solid line), the spur road (dotted line),  and an elk fence (dashed line))


 

[1] The Amada court declined to address “whether the after-acquired interest statute applies to easements incorporated in a fee simple deed” since the common-law issue was squarely before it and was sufficient to resolve that portion of the appeal.  Id. at ¶ 26 n.3.

Author: Luke Mecklenburg | Leave a comment Tagged , , , , ,

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