When a condemnor is told "no" (or voluntarily drops an eminent domain lawsuit), many jurisdictions require it to pay attorney fees to the parties on the target end of the vs.
Colorado is one of those jurisdictions, and as the Colorado Court of Appeals noted in Mulberry Frontage Metro. Dist. v. Sunstate Equip. Co., No. 22CA0680 (July 13, 2023), the "[t]he General Assembly has provided that when a court rejects a condemnation petition on the grounds that the petitioner isn't authorized to acquire the subject property, 'the property owner who participated in the proceedings' is entitled to recover their reasonable attorney fees and costs." Slip op. at 2. Sounds good, Colorado.
Clear enough when the "property owner" claiming fees is the title (fee) owner. And here, the trial court concluded that Mulberry did not have the power to take. The fee owner plainly had the right to recover fees under the statute. But what about lessees?
Nope, not covered held the court. Yes, a lease is property. And yes, lessees are defendants in eminent domain cases (here, the condemnation petition didn't name the lessee, but it successfully sought joinder as a defendant, asserting its interests were at stake). Kind of sounds like a property interest, with the lessee being the owner of that interest.
So what gives? After all, the Colorado statute provides:
If the court finds that a petitioner is not authorized by law to acquire real property or interests therein sought in a condemnation proceeding, it shall award reasonable attorney fees, in addition to any other costs assessed, to the property owner who participated in the proceedings.
But the statute "doesn't define an 'owner' of property," so the court applied the "common useage[.]" Slip op. at 11. An "owner" owns something. Check out pages 12-13 of the slip opinion for more. The key stuff is on pages 13 and 14:
The lessee’s reliance on general property law principles is misplaced. It is true that a leasehold is a property interest. See Better Baked, LLC v. GJG Prop., LLC, 2020 COA 51, ¶ 24 (A “lease create[s] interests in real property for [the] tenant.”); Kunz v. Cycles W., Inc., 969 P.2d 781, 783 (Colo. App. 1998) (“A commercial lease is both a conveyance of an interest in real property and a contract.”). But that doesn’t make a lessee a property owner. A lessee’s interest is in the possession — not the ownership — of property. See Wilson v. Marchiondo, 124 P.3d 837, 840 (Colo. App. 2005) (recognizing a lessee’s possessory interest in leased property); Rare Air Ltd., LLC v. Prop. Tax Adm’r, 2019 COA 134, ¶ 25 (noting that “[a] possessory interest is ‘[t]he present right to control property, including the right to exclude others, by a person who is not necessarily the owner’” (quoting Black’s Law Dictionary 1353 (10th ed. 2014))); see also Cantina Grill, JV v. City & Cnty. of Denver Bd. of Equalization, 2012 COA 154, ¶ 7 (recognizing a distinction between possessory interests and ownership interests), aff’d on other grounds, 2015 CO 15; People v. Barefield, 804 P.2d 1342, 1345 (Colo. App. 1990) (same); Restatement (First) of Prop. § 7 (describing possessory interests in land).
Slip op. at 13-14.
And the court acknowledged that "lessees are generally entitled to receive compensation for any taking of their property interest in condemnation proceedings." Slip op. at 14.
But this, the court concluded "merely signifies that a lessee's possessory interest in property must be compensated if it's taken through condemnation, unless a lessor and lessee have provided in their lease. It doesn't signify that the lessee is an owner of property." Slip op. at 15 (citation omitted).
The legislature only said "owner," and not, for example, "holders of other property interests[.]" Slip op. at 20. So if you want this statute to include lessees, lessee, then take it up with the General Assembly. Slip op. at 21 ("Those arguments present a policy choice that is for the General Assembly -- not this court -- to make.").
But all was not lost: the court remanded the case for consideration of whether the lessee might be entitled to recover fees under a separate statute, which gives the courts discretion to award attorney fees in any civil action.
So what do you think about this? Does one "own" a lease, or merely "possess" it? And is there any real difference?
Mulberry Frontage Metro. Dist. v. Sunstate Equip. Co., No. 22CA0680 (Colo. App. July 13, 2023)
