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044 City of Boulder's Opening Brief COLORADO COURT OF APPEALS 2 East 14th Avenue Denver, CO 80203 720-625-5150 Appeal from: DISTRICT COURT, BOULDER COUNTY, COLORADO The Honorable Thomas F. Mulvahill Case No. 2019-CV-030637, Division 5 Appellant: CITY OF BOULDER, a Colorado Home Rule City, Appellees: PUBLIC SERVICE CO. OF COLORADO, a Colorado Corporation, d/b/a XCEL ENERGY; MORGAN GUARANTY TRUST COMPANY OF NEW YORK; and PAUL WEISSMANN, in his official capacity as Treasurer of Boulder County. Attorneys for Appellant: Donald M. Ostrander, No. 12458 Richard F. Rodriguez, No. 25105 Hamre, Rodriguez, Ostrander & Dingess, P.C. 3600 S. Yosemite Street, Suite 500 Denver, Colorado 80237 Phone Number: 303.779.0200 Fax Number: 303.779.3662 Email: mail@hrodlaw.com Co-Attorneys for Appellant: Thomas A. Carr, No. 42170 Kathleen E. Haddock, No. 16011 Office of the Boulder City Attorney P.O. Box 791 Boulder, Colorado 80306 Phone Number: 303.441.3020 Email: carrt@bouldercolorado.gov haddock@bouldercolorado.gov COURT USE ONLY Court of Appeals Case Number: 2019CA1940 OPENING BRIEF ii CERTIFICATE OF COMPLIANCE I hereby certify that this brief complies with all requirements of C.A.R. 28 or C.A.R. 28.1, and C.A.R. 32, including all formatting requirements set forth in these rules. Specifically, the undersigned certifies that: The brief complies with the applicable word limits set forth in C.A.R. 28(g) or C.A.R. 28.1(g).  It contains 9,202 words (principal brief does not exceed 9,500 words; reply brief does not exceed 5,700 words). The brief complies with the standard of review requirements set forth in C.A.R. 28(a)(7)(A) and/or C.A.R. 28(b).  For each issue raised by the appellant, the brief contains under a separate heading before the discussion of the issue, a concise statement: (1) of the applicable standard of appellate review with citation to authority; and (2) whether the issue was preserved, and, if preserved, the precise location in the record where the issue was raised and where the court ruled, not to an entire document.  In response to each issue raised, the appellee must provide under a separate heading before the discussion of the issue, a statement indicating whether appellee agrees with appellant’s statements concerning the standard of review and preservation for appeal and, if not, why not. I acknowledge that my brief may be stricken if it fails to comply with any of the requirements of C.A.R. 28 or 28.1, and C.A.R. 32. HAMRE, RODRIGUEZ, OSTRANDER & DINGESS, P.C. S/ RICHARD F. RODRIGUEZ’S DULY SIGNED PHYSICAL COPY OF THIS DOCUMENT IS ON FILE AT THE OFFICE OF HAMRE, RODRIGUEZ, OSTRANDER & DINGESS, P.C. PURSUANT TO CRCP RULE 121, SECTION 1-26(9) By: iii TABLE OF CONTENTS TABLE OF AUTHORITIES ........................................................................... vi-ix STATEMENT OF THE ISSUES..................................................................... 1 STATEMENT OF THE CASE ........................................................................ 2 I. NATURE OF THE CASE ..................................................................... 2 II. FACTUAL AND PROCEDURAL HISTORY ..................................... 3 A. Boulder initiates its municipalization project. ............................ 3 B. The initial PUC proceedings. ...................................................... 3 C. The First Condemnation Action. ................................................. 6 D. The subsequent PUC proceedings. .............................................. 7 E. The PUC decision that satisfied the requirements of the PUC Appeal Decision. ......................................................................... 9 F. Boulder’s satisfaction of the imposed conditions. ...................... 11 G. The Second Condemnation Action. ............................................ 13 H. The District Court’s decision in the Second Condemnation Action. ......................................................................................... 16 SUMMARY OF ARGUMENT ....................................................................... 16 ARGUMENT ................................................................................................... 17 I. The District Court erred when it concluded issue preclusion applied to bar this action because no identity of issue exists between the Second Condemnation Action and the First Condemnation Action. .... 17 A. Standard of review and preservation of the issue. ...................... 17 B. For issue preclusion to apply, the issue raised in the second proceeding must be identical to an issue actually litigated in the prior proceeding..................................................................... 18 iv C. The issues in the Second Condemnation Action and the First Condemnation Action are not “identical” as that term is construed for issue preclusion purposes. ..................................... 20 D. The PUC Appeal Decision did not actually litigate and necessarily adjudicate whether a home-rule city operating a utility wholly within the city’s limits must obtain PUC approval prior to filing a condemnation action. .......................... 21 II. The District Court erred when it determined Boulder had to obtain PUC approval prior to filing the Second Condemnation Action. ......... 23 A. Standard of review and preservation of the issue. ...................... 23 B. A home-rule city does not have to seek PUC approval to condemn property where the city seeks to establish a utility that serves customers wholly within the city’s jurisdictional boundaries. .................................................................................. 23 C. An electrical utility condemnor generally does not have to seek PUC approval prior to condemning property and a condemnor’s failure to obtain permits or approvals prior to filing a condemnation action is not a viable defense to the action. .......................................................................................... 29 III. Even if Boulder had to obtain the PUC’s approval prior to filing the Second Condemnation Action, it had already obtained the approval before it filed the action. ........................................................................ 33 A. Standard of review and preservation of the issue. ...................... 33 B. The 2017 PUC Decision satisfied Judge LaBuda’s requirements in the PUC Appeal Decision. ................................ 35 C. Boulder satisfied the PUC Appeal Decision’s conditions prior to filing the Second Condemnation Action. ................................ 37 IV. To the extent the District Court required Boulder to obtain further approvals from the PUC prior to filing the Second Condemnation Action, Boulder’s constitutional rights were abrogated. ....................... 38 v A. Standard of review and preservation of the issue. ...................... 38 B. Forcing Boulder to endure a seemingly endless regulatory quagmire abrogates Boulder’s constitutional rights. ................... 39 V. The District Court erred when it granted Xcel’s motion to dismiss without holding an evidentiary hearing. ................................................ 41 A. Standard of review and preservation of the issue. ...................... 41 B. A trial court must hold an evidentiary hearing on a Rule 12(b)(1) motion where disputed issues need to be resolved prior to a ruling on the motion. ................................................... 42 C. There were disputed issues that needed to be resolved prior to the District Court’s ruling on the motion. ................................... 43 CONCLUSION ................................................................................................ 44 vi TABLE OF AUTHORITIES Cases Asphalt Specialties, Co. v. City of Commerce City, 218 P.3d 741 (Colo. App. 2009) ....................................................................42 Barnett v. Elite Props. of Am., 252 P.3d 14 (Colo. App. 2010) ..............................34 Bebo Constr. Co. v. Mattox & O’Brien, P.C., 990 P.2d 78 (Colo. 1997) ..................19 Boyle v. Governor’s Veterans Outreach & Assistance Center, 925 F.2d 71 (3d Cir. 1991) ............................................................................42 Bristol Bay Prods. v. Lampack, 312 P.3d 1155 (Colo. 2013) .......................... 19, 20 Buck v. District Ct., 608 P.2d 350 (Colo. 1980)........................................................32 Chostner v. Colo. Water Quality Control Comm’n, 327 P.3d 290 (Colo. App. 2013) ....................................................................34 City and County of Denver v. Pub. Util. Comm’n, 507 P.2d 871 (Colo. 1973) ........25 City of Aspen v. Kinder Morgan, Inc., 143 P.3d 1076 (Colo. App. 2006) ..................................................... 23, 33, 38 City of Boulder v. Pub. Serv. Co. of Colo., 420 P.3d 289 (Colo. 2018) .................33 City of Fort Morgan v. Colorado Pub. Util. Comm’n, 159 P.3d 87 (Colo. 2007) ......................................................................... 24, 25 vii City of Loveland v. Pub. Util. Comm’n, 580 P.2d 381 (Colo. 1978) ........................24 Colorado & S.R. Co. v. Dist. Ct., 493 P.2d 657 (Colo. 1972) ............................ 31, 33 Cook v. City of Delta, 64 P.2d 1257 (Colo. 1937) ..................................................23 Craig v. Public Util. Comm’n, 656 P.2d 1313 (Colo. 1983) .....................................32 Currier v. Sutherland, 218 P.3d 709 (Colo. 2009) ...................................................42 Daniel v. City of Colo. Springs, 327 P.3d 891 (Colo. 2014) ...................................34 Direct Mail Services, Inc. v. Colorado, 557 F. Supp. 851 (D. Colo. 1983) ...............27 Godding v. Hall, 140 P. 165 (Colo. 1914) .................................................................36 Hansen v. Long, 166 P.3d 248 (Colo. App. 2007) ..................................................41 In re Estate of Erl, 491 P.2d 108 (Colo. App. 1971) ..................................................36 Kaiser v. Market Square Discount Liquors, Inc., 992 P.2d 636 (Colo. App. 1999) ...38 Lyons v. Longmont, 129 P. 198 (Colo. 1913) ...........................................................24 Medina v. State, 35 P.3d 443 (Colo. 2001)..............................................................34 Miller v. Public Service Co., 272 P.2d 283 (Colo. 1954) ..........................................30 People v. Rodriguez, 112 P.3d 693 (Colo. 2005) ............................................. 23, 38 Public Service Co. of Colorado v. City of Loveland, 245 P. 493 (Colo. 1926) .. 28, 29 Public Service Co. v. Shaklee, 784 P.2d 314 (Colo. 1989) .......................................30 Rector v. City and County of Denver, 122 P.3d 1010 (Colo. App. 2005) ..............43 Stanton v. Schultz, 222 P.3d 303 (Colo. 2010)........................................................17 viii Thornton by Util. Bd. v. Farmers Reservoir & Irrigation Co., 575 P.2d 382 (Colo. 1978) ..............................................................................26 Thornton Development Auth. v. Upah, 640 F. Supp. 1071 (D. Colo. 1986) ..........26 Town of Holyoke v. Smith, 226 P. 158 (Colo. 1924) ................................................25 Town of Silverthorne v. Lutz, 370 P.3d 368 (Colo. App. 2016)................................27 Town of Telluride v. San Miguel Valley Corp., 185 P.3d 161 (Colo. 2008) ... 23, 39 Trinity Broad. of Denver, Inc. v. City of Westminster, 848 P.2d 916 (Colo. 1993) .............................................................................42 Tulips Invs., LLC v. State ex. rel Suthers, 340 P.3d 1126 (Colo. 2015) .................33 U.S. Disposal Sys. Inc. v. City of Northglenn, 567 P.2d 365 (Colo. 1977) ...............25 U.S. West Commc’n Inc. v. City of Longmont, 948 P.2d 509 (Colo. 1997) .............26 Uptime Corp. v. Colo. Research Corp., 420 P.2d 232 (Colo. 1966) .......................34 Villas at Highland Park Homeowners Ass’n v. Villas at Highland Park, LLC, 394 P.3d 1144 (Colo. 2017) .................................................................... 18, 19 Werth v. Heritage Int’l Holdings, 70 P.3d 627 (Colo. App. 2003) .........................42 Wilson v. Prentiss, 140 P.3d 288 (Colo. App. 2006) .................................................36 Statutes C.R.S. § 38-1-104 .....................................................................................................40 C.R.S. § 38-1-105(4) .................................................................................................40 ix C.R.S. § 40-5-101, et seq. .........................................................................................39 Other Authorities Boulder Charter Art. I, § 2(d) ..................................................................................24 Lewis on Eminent Domain (3rd Ed.) at 1063 .............................................................28 Rules C.R.C.P. 12(b) ..........................................................................................................43 C.R.C.P. 12(b)(1) ............................................................................. 14, 33, 34, 41, 42 Regulations 4 CCR 723-3-3104 ....................................................................................................39 Constitutional Provisions Colo. Const. Art. V § 35 ...........................................................................................25 Colo. Const. Art. XX ..................................................................................... 6, 23, 24 Colo. Const. Art. XX, § 1 ................................................................................. 23, 24 Colo. Const. Art. XX, § 6 ........................................................................................23 Colo. Const. Art. XXV ............................................................................ 6, 24, 25, 26 Colo. Const. Art. XXVII § 9 .....................................................................................27 STATEMENT OF THE ISSUES 1. Did the District Court err when it applied issue preclusion principles to deprive Boulder of its constitutional home-rule power to begin condemnation proceedings for a public project where the commencement of condemnation proceedings in no way infringed upon any other party’s constitutional or statutory rights? 2. Did the District Court err when it determined Boulder has to obtain various permits or approvals from the PUC before it could commence its condemnation action, contrary to numerous Colorado Supreme Court precedents holding that failure to obtain regulatory approvals is not a viable defense to a condemnation action? 3. Did the District Court err when it failed to conduct an evidentiary hearing on Xcel’s motion to dismiss despite Boulder’s explicit request for such a hearing and when a hearing was necessary to resolve disputed factual issues and the court simply summarily adopted Xcel’s legal reasoning and conclusions in its dismissal order? 2 STATEMENT OF THE CASE I. NATURE OF THE CASE This is an eminent domain action filed by the City of Boulder, a home-rule municipality (“Boulder”), per Boulder’s authority under Colorado’s Constitution and Boulder’s home-rule charter. Boulder seeks to condemn certain real property assets and equipment from its existing utility service provider, Public Service Company of Colorado d/b/a Xcel Energy (“Xcel”). Boulder intends to operate a municipal electric utility to serve customers solely within Boulder’s city limits. Xcel moved to dismiss the case for lack of subject matter jurisdiction. Xcel asserted two arguments. First, Xcel argued issue preclusion barred this action as a result of a certain Boulder County District Court decision from a prior case. Second, Xcel argued that even if issue preclusion did not bar this action, the action still cannot proceed because Boulder still needed to complete certain proceedings before the Colorado Public Utilities Commission (the “PUC”). In support of its motion, Xcel attached numerous exhibits including, among other things, various documents from certain PUC proceedings. In response, Boulder argued the prior decision did not bar the condemnation action because the facts are different in this action. Further, Boulder argued the PUC’s constitutional authority did not and cannot trump Boulder’s home-rule 3 constitutional authority. Boulder requested an evidentiary hearing to resolve disputed facts. Less than 24 hours after Xcel filed its reply, the District Court granted Xcel’s motion to dismiss and refused Boulder’s request for an evidentiary hearing. The District Court provided no written analysis, findings, or conclusions. Rather, it simply adopted the legal reasoning and arguments in Xcel’s legal briefing. Boulder now appeals. II. FACTUAL AND PROCEDURAL HISTORY A. Boulder initiates its municipalization project. In 2010 the Boulder City Council decided not to renew Xcel’s franchise and placed a tax on the ballot to support exploration of Boulder’s right to create a municipal electric utility (referred to as “municipalization”). (CF, p.911.) The ballot measure passed with 68.4% of the vote. Id. Since the initial vote in 2011 Boulder voters have approved extension of the tax and exploring municipalization five times. (CF, p.911-912.) B. The initial PUC proceedings. In May 2013, Xcel filed a petition with the PUC that requested the PUC issue certain declaratory rulings concerning Boulder’s municipalization effort which, at that time, sought to serve residents within Boulder’s city limits and 4 residents in unincorporated Boulder County (the “2013 PUC Proceeding”). As pertinent here, the PUC issued a decision that stated Boulder’s plans to serve unincorporated Boulder County residents was subject to PUC approval. (CF, pp.500-515.)1 After Boulder filed an application for rehearing, reargument, and reconsideration, the PUC issued a decision denying the application. (CF, pp.517- 530.) Among other things, the PUC started proceedings before it to address whether transfer of plant equipment, and facilities used to provide service to customers located in unincorporated Boulder County must be completed before Boulder initiates condemnation for such property. (CF, p.518.)2 Seeking to challenge the PUC’s above-decisions in the 2013 PUC Proceeding, Boulder filed a petition for writ of certiorari review with the Boulder County District Court, which was assigned to the Honorable Judith LaBuda (the “PUC Appeal”).3 (CF, p.484.) Judge LaBuda issued an Order that affirmed the PUC’s decisions in the 2013 PUC Case (the “PUC Appeal Decision”).4 (CF, pp.484-495.) Judge LaBuda ultimately concluded: 1 PUC Decision No. C13-0498E, dated October 29, 2013. 2 PUC Decision No. C13-1550, dated December 11, 2013. 3 Boulder’s appeal was filed in Boulder County District Court, Case No. 2014 -CV- 30047 on January 15, 2014 (the “PUC Appeal”). 4 Order Re: Judicial Review of the Colorado Public Utilities Commission Decisions, dated February 13, 2015 (the “First Dismissal Order”). 5 The City’s constitutional right to eminent domain over property outside of its territory does not extend to serving those outside the municipality. The City’s constitutional right is not unfettered because the PUC has constitutional authority to regulate public utilities for those outside the municipality. . . . Therefore it is necessary and appropriate for the PUC to determine how facilities should be assigned divided, or jointly used to protect the system’s effectiveness, reliability and safety. Such a determination must be made prior to the City’s condemnation of property for utility municipalization. This finding does not abrogate the City’s constitutional right to eminent domain, but rather just delays the City’s constitutional right, a delay that would necessarily occur at some point in the process. (CF, pp.494-495.) In reaching the PUC Appeal Decision, Judge LaBuda made clear that her decision did not apply if the underlying facts were different in that Boulder was going to be serving only customers within the city: the court noted: (a) Boulder’s “intended municipal utility’s service area includes the City of Boulder as well as part of unincorporated Boulder County.”; (b) Boulder’s City Council amended its City Charter specifically “allow the City to include non-resident customers in the City’s utility area.”; (c) Boulder’s City Council had adopted an ordinance that authorized condemnation of Xcel’s utility system “that currently serves the intended municipal utility’s service area” as well as Boulder’s voters’ approval of Xcel’s utility system “located in the municipality’s intended service area” if bonds for the purchase did not exceed a certain amount; (d) “Boulder, as a home-rule city, has a constitutional right to use the power of eminent domain to create and operate a municipal utility.” 6 (citations omitted); (e) “if Boulder were seeking to create a municipal utility to serve City of Boulder residents only, it could do so without any PUC involvement.” (citations omitted); (f) “[i]t is clear that the PUC does not have jurisdiction to exercise its authority under Article XXV when a municipality operates a utility solely within its boundaries under Article XX.” (citations omitted); and (g) “municipal utilities servicing areas outside of the boundaries of the municipality are subject to the jurisdiction of the PUC” (citations omitted). (CF, p.489.) C. The First Condemnation Action. Meanwhile, prior to receiving Judge LaBuda’s decision and in accordance with its voters’ will, Boulder negotiated with Xcel to acquire the real property and equipment assets Boulder needed to serve customers both inside and outside of Boulder’s city limits, and when the negotiations failed, Boulder filed a condemnation action in Boulder County District Court to condemn those assets in July 2014 (the “First Condemnation Action”).5 (CF, p.12.) In the First Condemnation Action, Xcel filed a motion to dismiss in August, 2014. Relying on her PUC Appeal Decision, Judge LaBuda granted Xcel’s motion. (CF, p.497.) Specifically, Judge LaBuda ruled, in pertinent part, as follows: 5 The First Condemnation Action was filed in Boulder District Court, Case No. 2014- CV-30890 on July 17, 2014 and was assigned to Judge LaBuda. 7 On January 15, 2015, the Court affirmed the Public Utility Commission’s October 29, 2013 and December 11, 2013 Decisions in case 2014CV30047. The January 14, 2015 Order permits the Public Utility Commission to determine how facilities should be assigned, divided, or jointly used to protect the utility system’s effectiveness, reliability, and safety. The Court noted that such a determination must be made prior to the City’s condemnation of property for utility municipalization. (Id.) Judge LaBuda’s dismissal order in the First Condemnation Action is referred to as the “First Dismissal Order.” D. The subsequent PUC proceedings. Later, in accordance with the First Dismissal Order, Boulder filed with the PUC its Verified Application for Approval of the Transfer of Certain Assets Owned by Xcel (the “2015 PUC Proceeding”). (CF, p.912.)6 Boulder’s application was unprecedented, as the PUC had never previously asserted authority over the separation and transfer of existing assets to create two separate electric distribution systems, nor had the PUC adopted any rule governing such an application. (CF, p.913.) Boulder filed under the transfer of assets rule, which governs consensual transfer of assets between utilities. From the outset, Boulder forged a new path with no guidance in Colorado statutes or state regulations.7 6 The Verified Application was filed on July 17, 2015. 7 While Boulder took these various actions, the voters considered and passed an extension of the tax used to fund Boulder’s continued exploration of the feasibility of municipalization. (CF, p.912.) 8 Xcel moved to dismiss the 2015 PUC Proceeding, in part, because Boulder’s application contemplated service to customers outside of Boulder’s city limits. (CF, p.913.) In December 2015, the PUC issued a decision that dismissed the part of Boulder’s application that included facilities that only served customers outside of Boulder but it also permitted Boulder to file a supplemental application. (CF, p.914.) In an unprecedented decision, the PUC held Boulder could not require Xcel to serve out-of-city customers over facilities operated by Boulder. Later, Boulder filed a Second Supplemental Verified Application to provide for the complete separation of the existing facilities into two separate systems: one to serve only customers within Boulder’s city limits; and the other to provide service to those Xcel customers outside city limits that Xcel would continue to serve. (CF, pp.914, 1021-1025.)8 About eight months later, Boulder filed a Third Supplemental Verified Application.9 In short, the application eliminated proposed financing structures for purchase of the system and a proposed gradual departure plan from Xcel. (CF, pp. 914, 1021-1025.) Significantly, Boulder reiterated it did not seek to serve any customers located outside of Boulder’s jurisdictional boundaries. (CF, p.914.) 8 The Second Supplemental Verified Application was filed on September 28, 2016. 9 The Third Supplemental Verified Application was filed on April 19, 2017. 9 Rather, Boulder requested only the electric distribution facilities and real property interests necessary for Boulder to serve customers located within city limits. (Id.) E. The PUC decision that satisfied the requirements of the PUC Appeal Decision. In September 2017, the PUC issued a 90-page decision that covered a wide range of topics (the “2017 PUC Decision”). (CF, pp.931-1020.)10 Most significantly, the PUC stated its decision satisfied the requirements of the PUC Appeal Decision: Our decision satisfies the requirements stemming from the Boulder District Court in Order Re: Judicial Review of the Colorado Public Utilities Commission Decision, City of Boulder v. Pub. Utils. Comm’n, Case No. 14CV30047 (Boulder Dist. Ct., January 14, 2015) (Boulder District Court Decision). (CF, p.934 ¶ 4.) The PUC further stated it “determines—to the extent necessary at this time—how [Xcel’s] facilities should be assigned, divided, or jointly used to protect [Xcel’s] electric distribution system’s effectiveness, reliability, and safety.” Id. The PUC’s approval of the designation of assets to be transferred from Xcel to Boulder was subject to Boulder’s demonstration of compliance with three conditions: 10 The 2017 PUC Decision followed an eight-day hearing held in July and August of 2017 at which 21 witnesses testified. 10 To secure final approval of the designation of these assets for transfer, Boulder shall: (1) file an agreement(s) reached between Boulder and Public Service Company of Colorado (Public Service) that provides Public Service permanent non-exclusive easements and other necessary real property rights for the location of Public Service’s electric facilities within Boulder’s city limits that are necessary for Public service to provide service to its customers after separation; (2) correct the errors and omissions from the list of assets for transfer outside of the substations and resubmit the revised list of assets for final approval; and (3) file an agreement (or multiple agreements) between Boulder and Public Service that address(es) the payment by Boulder to Public Service of the costs incurred by Public Service to effectuate the separation of the systems. The filing of the agreements and revised list of assets for transfer shall be made no later than 90 days from the effective date of this Decision. Boulder may file a request for additional time for good cause shown. (CF, pp.1018-1019 ¶ 2.) Significantly, nowhere did the 2017 PUC Decision say Boulder could not initiate condemnation proceedings prior to demonstrating compliance with the PUC’s three conditions. To the contrary, the 2017 PUC Decision expressly contemplated Boulder would file a condemnation proceeding while “final approval” was to occur later. For example, the PUC contemplated that with respect to assets inside substations the parties would resolve any differences through FERC’s regulatory processes.11 See, e.g., CF, p.935 ¶ 2. As another example, the PUC also 11 “FERC” refers to the Federal Energy Regulatory Commission. 11 contemplated the parties would seek final approval of the asset transfers prior to Boulder’s operation of the utility. (CF, p.935 ¶ 10.) Importantly, one condition not imposed on Boulder was a requirement that Boulder refrain from filing a condemnation action. (CF, p.935 at ¶¶ 4 and 6.) Rather, the PUC implied the exact opposite. For example, when the PUC said the parties shall file an application for final PUC approval of the transfer of assets prior to the Cut-Over date12, the PUC also said “[n]othing in this Decision shall be used by either party in any condemnation proceeding as a finding or opinion of the Commission as to whether or not there are damages to any remainder interest of Public Service in the assets.” (CF, p.1018.) F. Boulder’s satisfaction of the imposed conditions. Boulder spent over 13 months negotiating agreements with Xcel and preparing corrected lists of assets and property interests. (CF, p.917.) Between September 2017 and October 2018, Boulder and Xcel’s respective negotiators met 21 times, with Boulder paying all expenses, including payments totaling $944,315 to Xcel for its work performed during this period. Id. In October 2018, to demonstrate compliance with the PUC’s conditions, Boulder and Xcel filed a Joint Notice of Filing, with the following three agreements 12 The PUC defined the “Cut Over date” as “the time when Boulder begins to operate its municipal electric utility.” (CF, p.942.) 12 and two corrected asset lists attached as exhibits: (1) the Agreement Concerning Permanent, Non-Exclusive Easements and Other Necessary Real Property Rights (“Permanent Easement Agreement”); (2) the Interim Agreement for Payment of Certain Municipalization Costs (Conditions Work); (3) the Agreement for Payment of Costs (“Cost Sharing Agreement”); (4) Exhibit 5A, a list of facilities outside substations; and (5) Exhibit 5B, a list of Xcel’s real property interests, recorded and unrecorded, proposed for transfer. (CF, p.917.) Several weeks later, Boulder and Xcel filed a fourth agreement, the Easement Sharing Agreement. Id. No party objected to any of the four agreements between Boulder and Xcel that were filed with the Commission. Id. In January 2019, Xcel abruptly reversed course and filed a Notice of Withdrawal from the Joint Notice of Filing. (CF, p.917.) As reasons for its withdrawal, Xcel cited “recent events” and its discovery of what it claimed to be “new” information. Id. Xcel’s Notice of Withdrawal represented a stark and concerning departure from what had appeared to be good faith efforts to satisfy the PUC’s conditions. Id. For the next several months, Boulder attempted to obtain from Xcel its specific disagreements with the List of Assets. (CF, p.917.) After Xcel failed to provide any comments within its specified timeframe of two to three months for delivery of the 13 comments, Boulder filed a list of facilities known as Exhibit 5A, after Xcel advised that it had no changes to the version filed in October 2018. Later, Boulder filed an updated list upon receipt from Xcel. (Id.) Thereafter, Xcel filed a notice with the PUC stating it was Xcel’s position that Boulder had not satisfied the 2017 PUC Decision’s three conditions. (CF, p.918.)13 G. The Second Condemnation Action. After five years of protracted and difficult negotiations with Xcel and with no Xcel or PUC resolution in sight, particularly given Xcel’s position on various issues, and with Boulder needing to accomplish condemnation prior to an upcoming election on its municipalization project, Boulder felt it needed to file a second condemnation proceeding. This decision was based on Boulder’s belief: (1) it had demonstrated compliance with the 2017 PUC’s Decision’s three conditions; (2) that Xcel’s reneging of the Joint Notice of Filing was for the purpose of delay as it had not disclosed any specific error in the list of facilities; (3) the PUC 2017 Decision stated the filing was all that was required to satisfy Judge LaBuda’s 2015 Order; (4) nothing in 2017 PUC Decision prohibited it from commencing a condemnation proceeding while any remaining regulatory processes occurred simultaneously or later; and (5) the current acquisition, different than that in 2014, did not include serving any 13 Subsequently, on October 28, 2019, the PUC issued a final decision and closed its proceeding. 14 customers outside the city boundaries so Judge LaBuda’s PUC Appeal Decision did not apply. On June 28, 2019, Boulder filed a Petition in Condemnation in this instant case (the “Second Condemnation Action”). (CF, p.3.) On July 22, 2019, Boulder amended its Petition in Condemnation (“Second Petition in Condemnation”). (CF, p.266.) In the Second Petition in Condemnation, Boulder stated it sought to acquire Xcel’s property to separate Xcel’s existing electrical distribution system into two separate systems from the substation to the customer meter: one system serving only customers within Boulder’s city limits; and the other system serving Xcel’s customers, with each system independent of the other (the “Project”). (CF, p.267, at 6.). Boulder specifically alleged “[a]fter completion of the Project, the Property defined herein will not serve any customers outside of the City boundaries; it will only serve customers within the City boundaries.” (CF, p.278, at 67.) On August 5, 2019, Xcel filed a motion to dismiss under Rule 12(b)(1) of the Colorado Rules of Civil Procedure for lack of subject matter jurisdiction. (CF, pp.462-480.) In short, Xcel argued the Second Condemnation Action was barred by the PUC Appeal Decision under the doctrine of issue preclusion. Xcel further argued that under the 2017 PUC Decision Boulder must obtain additional PUC approvals before Boulder could condemn Xcel’s assets. (CF, p.462.) Xcel’s motion attached 15 numerous exhibits including prior decisions by Judge LaBuda and the PUC. (CF, pp.483-601.)14 On August 26, 2019, Boulder filed a response in opposition. (CF, pp. 907- 923.) Boulder argued issue preclusion did not apply because the issues in the Second Condemnation Action were not identical to the issues in the First Condemnation Action, most notably because Boulder no longer sought to serve customers outside of Boulder’s city limits. Boulder further argued (1) it had fully complied with the PUC Appeal Decision and the 2017 PUC Decision; (2) no additional PUC proceedings were necessary; and (3) even if additional proceedings were necessary, the Second Condemnation Action could proceed simultaneously and in parallel with any remaining required regulatory proceedings. (Id.) Boulder supported its response with numerous exhibits including an affidavit of its electrical engineer that disputed allegations in Xcel’s motion. (CF, pp.931-1034.) Finally, Boulder requested an evidentiary hearing before the court ruled on Xcel’s motion and presented specific facts it contended were in dispute to be presented at a hearing. (CF0923-0924.) On September 3, 2019, Xcel filed a reply. (CF, pp.1187-1202.) In short, in reply Xcel argued the issue in the Second Condemnation Action is the same issue 14 The PUC and certain other parties attempted to intervene in support of Xcel’s motion to dismiss or to file a separate motion to dismiss. 16 Judge LaBuda addressed in the PUC Appeal Decision. Additionally, Xcel argued that even if issue preclusion were not dispositive, the court should dismiss the matter so as not to undermine the PUC’s authority. Finally, Xcel contested Boulder’s argument that disputed factual issues necessitated an evidentiary hearing. (Id.) Xcel did not include any affidavit or other allegation of facts that disputed the affidavit provided by Boulder. H. The District Court’s decision in the Second Condemnation Action. A mere day after Xcel filed its reply brief, Judge Mulvahill (the “District Court”) issued a two-paragraph order that granted Xcel’s motion to dismiss (the “District Court’s Order”). (CF, p.1287.) The District Court granted Xcel’s motion “[f]or the reasons stated in the Motion to Dismiss and the reply thereto, which legal reasoning and conclusions the Court adopts as its own…” (Id.) Boulder now challenges the District Court’s Order. SUMMARY OF ARGUMENT The Court should reverse the District Court’s Order for numerous reasons. First, the District Court erred when it concluded issue preclusion barred this Second Condemnation Action; there is no identity of issue between this action to acquire facilities to serve only customers within Boulder and the First Condemnation Action to acquire facilities to serve customers inside and outside of 17 Boulder. Second, Boulder was not obligated to obtain further PUC approval prior to filing this Second Condemnation Action to serve only customers within Boulder. The PUC lacks constitutional power and jurisdiction over such a municipal-owned utility. Furthermore, as a matter of well-established condemnation law, neither the PUC nor Xcel has any right to determine the property Boulder needs to condemn for its public project. Third, the PUC had determined how existing facilities should be divided, assigned and jointly used and Boulder satisfied the PUC’s imposed conditions prior to filing the Second Condemnation Action. Fourth, it is not a viable defense to a condemnation action that regulatory approvals are required before filing a condemnation. Finally, to the extent the District Court ordered Boulder to obtain further PUC approvals, that decision is inconsistent with the PUC Appeal Decision and unconstitutionally abrogated Boulder’s constitutional rights. ARGUMENT I. The District Court erred when it concluded issue preclusion applied to bar this action because no identity of issue exists between the Second Condemnation Action and the First Condemnation Action. A. Standard of review and preservation of the issue. Issue preclusion is a question of law that the Court reviews de novo. Stanton v. Schultz, 222 P.3d 303, 307 (Colo. 2010). This issue was preserved in the 18 parties’ briefing on Xcel’s motion to dismiss (see above Statement of the Case at pages 20-22) and was ruled upon in the District Court’s Order (CF, p.1287). B. For issue preclusion to apply, the issue raised in the second proceeding must be identical to an issue actually litigated in the prior proceeding. Issue preclusion, formerly referred to as collateral estoppel, bars litigation of previously decided issues in certain circumstances. Villas at Highland Park Homeowners Ass’n v. Villas at Highland Park, LLC, 394 P.3d 1144, 1151 (Colo. 2017). By barring successive litigation, the doctrine protects litigants from needless litigation of the same issues, furthers judicial economy, and promotes the integrity of the judicial system by affirming that one can rely on judicial decrees because they are final. Id. For issue preclusion to apply, the party seeking to bar a second action must show the following: (1) the issue is identical to an issue actually litigated and necessarily adjudicated in the prior proceeding; (2) the party against whom estoppel was sought was a party to or was in privity with a party to the prior proceeding; (3) there was a final judgment on the merits in the prior proceeding; and (4) the party against whom the doctrine is asserted had a full and fair opportunity to litigate the issues in the prior proceeding. Id. at 1152.15 15 The first element is the element at issue in this matter. 19 Although issue preclusion applies only to “identical” issues, one of the mo st difficult issue preclusion questions is to delineate the issue on which litigation is, or is not, foreclosed by the prior judgment. Villas at Highland Park, 394 P.3d at 1152 (quoting Bristol Bay Prods. v. Lampack, 312 P.3d 1155, 1159 (Colo. 2013)). The identity or non-identity of issues turns on the elements that the claimant must establish to prove his or her substantive claim or defense. Id. To be “identical,” the issue in the second action must have been actually litigated and necessarily adjudicated in a prior proceeding. Bebo Constr. Co. v. Mattox & O’Brien, P.C., 990 P.2d 78, 84-86 (Colo. 1997). An issue is “actually litigated” if it is one that a party, by an appropriate pleading, asserts through a claim or cause of action against the other or is tried with the consent of the parties. Id. at 85. An issue is “necessarily adjudicated” when a determination on that issue was necessary to a judgment.” Id. at 86. If an issue could have been, but was not litigated in the prior proceeding, it was not “actually litigated” for purposes of issue preclusion. Id. at 85-86. Finally, the “basic tenet” that issue preclusion applies only to identical issues “means that a difference in facts may change the issue and render issue preclusion inapplicable.” Bristol Bay Prods., 312 P.3d at 1160 (“[C]hanges in facts essential to a judgment will render [issue preclusion] inapplicable to a subsequent action raising 20 the same issue.”). “A change in facts may render issue preclusion inapplicable in one context but not another – the question is whether the change in facts matters in light of the elements needed to prove the claim.” Id. C. The issues in the Second Condemnation Action and the First Condemnation Action are not “identical” as that term is construed for issue preclusion purposes. In the Second Condemnation Action, Boulder’s sole “claim” sought to condemn certain assets of Xcel in furtherance of its public project to operate a utility system that serves customers entirely within Boulder’s city limits. (See Section II.G. above.) Thus, the issue in the case is whether a home-rule city that establishes a utility to serve customers wholly within the city’s limits must obtain PUC approval prior to filing its condemnation action. In the First Condemnation Action, Boulder did not assert through its sole “claim” that Boulder could condemn assets to operate a system to serve customers entirely within Boulder’s city limits. The Court also obviously did not try that issue with the consent of the parties. Rather, the First Dismissal Order was based on the PUC Appeal Decision that specifically stated it did not apply to a situation where the condemnation was to serve customers only inside Boulder’s city limits. Thus, for purposes of issue preclusion, whether Boulder must obtain the PUC’s approval before filing a condemnation action to serve customers wholly 21 within Boulder’s city limits was not previously “actually litigated” or “necessarily adjudicated.” The District Court erred when it failed to recognize the facts and issues in the Second Condemnation Action were different than the facts and issues in the First Condemnation Action. Accordingly, issue preclusion does not apply to bar the Second Condemnation Action. D. The PUC Appeal Decision did not actually litigate and necessarily adjudicate whether a home-rule city operating a utility wholly within the city’s limits must obtain PUC approval prior to filing a condemnation action. Relying entirely on the legal arguments and reasoning that Xcel made in its briefing on the motion to dismiss, the District Court dismissed the Second Condemnation Action. As noted above, in its motion to dismiss, Xcel argued issue preclusion applied because of the First Dismissal Order, which relied entirely on the prior PUC Appeal Decision. But similar to the First Condemnation Action, Boulder and Xcel did not “actually litigate” in the PUC Appeal whether a home-rule city creating a city utility to serve customers entirely within a city’s limits must obtain PUC approval before filing a condemnation action. Furthermore, the PUC Appeal Decision did not “necessarily adjudicate” that issue, as the decision repeatedly stated it addressed only whether PUC approval is required when Boulder seeks to acquire assets to serve customers both within and 22 without the city limits. (CF, pp. 485-486.) (six of the seven paragraphs of the background section mention Boulder’s intent to serve customers outside of Boulder’s city limits). Furthermore, the PUC Appeal Decision expressly stated the parties were not litigating and, thus, the Court was not addressing a situation where a home-rule city was establishing a utility to serve residents entirely within a city’s limits. (CF, pp.489-490.)16 Finally, the PUC Appeal Decision stated it was addressing the parties’ constitutional rights only as they pertained to the particular facts at issue in the case. (CF, p.489.) Because whether Boulder needed PUC approval before condemning property to serve customers wholly within Boulder’s city limits was not an issue actually litigated or necessarily adjudicated in the First Condemnation Action or the PUC Appeal, issue preclusion cannot bar this Second Condemnation Action. Accordingly, the District Court erred when it dismissed the case under the doctrine of issue preclusion. 16 As noted elsewhere, Judge LaBuda did repeatedly state, however, the PUC would have no authority over Boulder in that different scenario. To the extent Xcel disagrees with Judge LaBuda’s prior statements in this regard, it is their arguments, and not the Second Condemnation Action, that would be barred by issue preclusion. 23 II. The District Court erred when it determined Boulder had to obtain PUC approval prior to filing the Second Condemnation Action. A. Standard of review and preservation of the issue. This issue involves an interpretation of the Colorado Constitution. Accordingly, it is purely a legal issue that this Court reviews de novo. City of Aspen v. Kinder Morgan, Inc., 143 P.3d 1076, 1078 (Colo. App. 2006); People v. Rodriguez, 112 P.3d 693, 695 (Colo. 2005). The issue was preserved in the briefing on Xcel’s motion to dismiss (see above Statement of the Case at pages 20 - 22) and was ruled upon in the District Court’s Order (CF, p.1287). B. A home-rule city does not have to seek PUC approval to condemn property where the city seeks to establish a utility that serves customers wholly within the city’s jurisdictional boundaries. Article XX, § 1 of the Colorado Constitution granted the City and County of Denver the following broad powers: [T]he power, within or without its territorial limits, to … condemn … light plants, power plants, … and any other public utilities or works or ways local in use and extent, in whole or in part, and everything required therefore, for the use of said city and county [of Denver] and the inhabitants thereof …. Colo. Const. Art. XX, § 1. Article XX, § 6 of the Colorado Constitution extended these same powers to all home rule cities. Town of Telluride v. San Miguel Valley Corp., 185 P.3d 161, 165 (Colo. 2008); see Cook v. City of Delta, 64 P.2d 1257, 1260 (Colo. 1937) (Article XX is self-executing); see also Boulder Charter Art. I, § 24 2(d) (containing condemnation powers language identical to Article XX, § 1 of the Constitution). The PUC has the constitutional authority to regulate private utilities wholly or partially within a home-rule municipality. Art. XXV of the Colorado Constitution (noting that “nothing herein shall be construed to apply to municipally owned utilities.”). Unlike Article XX of the Colorado Constitution, no court has held Article XXV is self-executing, and it likely is not. Lyons v. Longmont, 129 P. 198, 200 (Colo. 1913) (“Constitutional provisions are self-executing when it appears that they shall take immediate effect, and ancillary legislation is not necessary to the enjoyment of the right thus given.”). Thus, as far as the PUC’s constitutional authority is concerned, the General Assembly must adopt legislation to give the PUC’s constitutional rights effect. The Supreme Court has consistently held the PUC lacks constitutional authority when a municipality operates a municipal utility solely within its boundaries. City of Fort Morgan v. Colorado Pub. Util. Comm’n, 159 P.3d 87, 93 (Colo. 2007) (“[Article XXV] grants the PUC authority to regulate non-municipally owned facilities operating within home rule cities, while exempting municipally owned utilities operating within municipal boundaries from PUC regulation.”); City of Loveland v. Pub. Util. Comm’n, 580 P.2d 381, 383 (Colo. 1978) (“…the PUC 25 may not constitutionally regulate utilities operated by a municipality within its boundaries. The PUC may not interfere with municipal decisions about purchasing, selling, or building public utility facilities.”); U.S. Disposal Sys. Inc. v. City of Northglenn, 567 P.2d 365, 367 (Colo. 1977) (the city’s engaging of trash removal services constituted the operation of a public utility and the “Commission has no jurisdiction over municipally owned utilities.”); City and County of Denver v. Pub. Util. Comm’n, 507 P.2d 871, 874-75 (Colo. 1973) (“…there is no intention to give the General Assembly authority to regulate a municipally owned public utility within the corporate limits of the municipality.”); Town of Holyoke v. Smith, 226 P. 158, 161 (Colo. 1924) (the PUC has no authority to set rates for a lighting plant owned and operated by a municipality). The power of home rule cities to operate their own utilities is also protected by Article V, Section 35 of the Colorado Constitution. City of Fort Morgan, 159 P.3d at 93. “This [constitutional] provision prevents the legislature from vesting regulatory authority in any quasi-legislative commission that would enable it to interfere with home rule improvements such as municipal utilities.” Id. Thus, while Article XXV provides the PUC with broad power to regulate utilities, that power is “delimited” by those city powers specified in Article XXV’s constitutional provision. U.S. West Commc’n Inc. v. City of Longmont, 948 P.2d 26 509, 520 (Colo. 1997) (concluding the “nothing herein” language of Article XXV delimits the PUC’s authority to regulate Longmont’s constitutional general police power and related statutory powers). The PUC’s power vis-à-vis condemnation rights is also delimited by general long-standing eminent domain principles. Colorado courts have repeatedly held, absent circumstances not present here, a condemnor has the absolute discretion to determine the property it needs to condemn under the “determination of necessity” doctrine.17 “The determination of necessity is an essential part of the power of eminent domain and, once necessity is determined by legislative act, no further finding or adjudication is required.” Thornton by Util. Bd. v. Farmers Reservoir & Irrigation Co., 575 P.2d 382, 389 (Colo. 1978). A condemnor’s determination of necessity is not reviewable by the judiciary absent a showing of fraud or bad faith. Id. (citing six prior Supreme Court precedents). The “determination of necessity doctrine” has been applied even when a property owner has challenged a condemnation action based upon another constitutional provision. Town of Silverthorne v. Lutz, 370 P.3d 368, 372 (Colo. 17 “Basically, necessity involves the selection of the location of the property to be acquired and the quantity of the land required.” Thornton Development Auth. v. Upah, 640 F. Supp. 1071, 1076 (D. Colo. 1986). 27 App. 2016). In Lutz, certain landowners challenged a home-rule city’s condemnation because the condemnation required use of certain funds that the city allegedly was prohibited from using in condemnation per Article XXVII, Section 9 of the Colorado Constitution. Id. The Court of Appeals rejected the owners’ arguments. Id. The Court of Appeals stated that district courts may not consider the source of a condemnation authority’s funds and, thus, whether the owner’s challenge is based upon “law [] set forth in a municipal ordinance, Colorado statutes, or the constitution makes no difference.” Lutz, 370 P.3d at 373. Just as the source of a condemning authority’s funds is inadmissible in an eminent domain proceeding, so too is evidence challenging the condemning authority’s necessity determination, absent fraud or faith, which Xcel did not argue and cannot argue here. Thus, for purposes of the Second Condemnation Action, it matters not whether the PUC has constitutional authority generally to regulate public utilities in the state. The PUC’s authority to regulate utilities or determine how facilities shall be divided assigned and jointly used cannot trump Boulder’s determination of necessity. See generally Direct Mail Services, Inc. v. Colorado, 557 F. Supp. 851, 854 (D. Colo. 1983) (“The power of eminent domain is an inherent 28 attribute of sovereignty limited only by applicable portions of the state and federal constitutions.”). Furthermore, the Supreme Court has also determined a private utility company cannot dictate which property a home-rule city may condemn where a city condemns a portion of a private utility company’s assets to operate a city utility that serves customers entirely within the city limits. Public Service Co. of Colorado v. City of Loveland, 245 P. 493 (Colo. 1926). In Loveland, a home rule city sought to condemn assets from a private utility company to operate its own electric lighting system. Id. The private utility company argued it should dictate the property the city acquired. Id. at 496. The Supreme Court disagreed. Per the Supreme Court, the city acted within its power in the inclusion of the property in question in the condemnation proceeding. “A large discretion is necessarily vested in it, in determining what property to take and how much is necessary.” Id. at 500 (quoting Lewis on Eminent Domain (3rd Ed.) at 1063.). When the private utility company further objected because the city’s taking impacted extensions and improvements the private utility company had previously installed, the Supreme Court simply said the company had the right to receive the 29 actual cash value of the property being taken and allowable damages to the residue. Id. at 499. While Loveland admittedly did not address the PUC’s regulatory authority in the matter, the case stands for the proposition that a home-rule city dictates the property to be taken for a city utility project, not the private utility company. As far as Boulder is aware, no Colorado authority explicitly or implicitly holds the PUC or anyone else may dictate the property a home-rule city may condemn when establishing a city utility that will serve customers wholly within the city’s limits. In sum, the PUC has no regulatory authority over Boulder’s establishment of a utility that serves customers wholly within Boulder’s city limits. Boulder determines the property it needs to condemn for its Project and neither the PUC nor Xcel can dictate otherwise. The District Court’s Order impermissibly disregards Boulder’s constitutional rights. C. An electrical utility condemnor generally does not have to seek PUC approval prior to condemning property and a condemnor’s failure to obtain permits or approvals prior to filing a condemnation action is not a viable defense to the action. The Supreme Court has consistently held it is not a viable defense to a condemnation action for a landowner to argue the government has failed to obtain necessary approvals prior to condemnation. And this has occurred even in the specific context of utility condemnations. 30 For instance, in Miller v. Public Service Co., 272 P.2d 283, 284 (Colo. 1954), a utility company sought to condemn land for construction of a new electric generating plant. The trial court denied the owner’s motion to dismiss. Id. Upon the owner’s petition for review and for an order to show cause, the Supreme Court determined the utility company did not need to first obtain a certificate of public convenience from the PUC before seeking condemnation because the “certificate is not necessary for the purposes of the condemnation and relates solely to the question of use after the property has been acquired by the condemnation.” Id. at 285. Accordingly, the Supreme Court discharged the rule so the utility’s proceedings to condemn the owner’s property could go forward. Id. at 287. As another example, in Public Service Co. v. Shaklee, 784 P.2d 314, 315 (Colo. 1989), the Supreme Court reviewed a utility company’s attempt to condemn an easement over certain private property to provide electrical service to another property owner for mining activities. In an original proceeding, the Supreme Court again held the obtaining of a certificate of public convenience “is not required to go forward with a condemnation proceeding.” Id. at 317. Thus, in the specific context of electrical utility condemnations, the Supreme Court has repeatedly determined an electric utility condemnor need not obtain the PUC’s approval before the electric utility condemnor may initiate a condemnation 31 proceeding. Accordingly, the District Court erred when it determined Boulder has to obtain various permits or approvals from the PUC before it could commence its condemnation action. In support of its motion to dismiss, Xcel relied on Colorado & S.R. Co. v. Dist. Ct., 493 P.2d 657 (Colo. 1972) (“Southern Railway”) to argue the PUC must determine the division and transfer of assets before Boulder’s condemnation. (CF, p.475.) Southern Railway is easily distinguishable. Southern Railway did not involve a home-rule city’s establishment of a utility wholly within the city’s limits per its constitutional authority. Rather, the case involved a railroad company’s statutory efforts to condemn an easement over another railroad company’s tracks. Upon the condemnee railroad company’s motion to dismiss, the condemnor railroad company brought an original proceeding before the Supreme Court to determine whether the public utilities law statute trumped the statute upon which the condemnor railroad company relied for its’ taking authority. Southern Railway, 493 P.2d at 658. The Supreme Court held the public utilities statute trumped the condemnor’s statute because the utilities statute set forth the PUC had the power to determine what property the condemning railroad can use at the “particular point of crossing.” Southern Railway, 493 P.2d at 659; see also Craig v. Public Util. Comm’n, 656 P.2d 32 1313, 1316-17 (Colo. 1983) (the PUC’s decision to close railroad crossings in the interest of public safety was not an adjudication of property rights in the crossing but a condition precedent to such an adjudication). In Buck v. District Ct., 608 P.2d 350 (Colo. 1980), the Supreme Court addressed an owners’ efforts to dismiss a railroad company’s condemnation action with respect to the owners’ lands. The owners argued the railroad company had to obtain the PUC’s approval of dust levees as a condition precedent to the institution of a condemnation action. Id. at 351. Rejecting the owners’ argument, the Supreme Court held “such approval is not required as a prerequisite to the condemnation of lands required for the proposed construction.” Id. at 352. Thus, in the context of railroad company condemnations, the Supreme Court has said the PUC has the statutory power to determine the property needed for a “particular point of crossing” before a railroad company may exercise its statutory power to file a condemnation action; however, a railroad company need not obtain the PUC’s prior approval to condemn property for other railroad company project purposes. Boulder is not a railroad company and it has not sought to condemn property for a railroad crossing per Colorado statutory rights. Rather, Boulder seeks to establish a city electrical utility per Boulder’s constitutional rights. But even if 33 Southern Railway applies and required Boulder to obtain the PUC’s approval prior to filing the Second Condemnation Action, Boulder obtained such approval prior to filing the action. III. Even if Boulder had to obtain the PUC’s approval prior to filing the Second Condemnation Action, it had already obtained the approval before it filed the action. A. Standard of review and preservation of the issue. Typically, an appellate court reviews a trial court’s dismissal under C.R.C.P. 12(b)(1) for abuse of discretion. City of Aspen, 143 P.3d at 1078. But where the parties dispute only the characterization of the complaint at issue and not the jurisdictional facts alleged within it, or where there are no disputed facts, however, the trial court’s decision is a matter of law and the appellate court’s review is de novo. City of Boulder v. Pub. Serv. Co. of Colo., 420 P.3d 289, 293 (Colo. 2018) (standard where parties dispute characterization of the complaint); Tulips Invs., LLC v. State ex. rel Suthers, 340 P.3d 1126, 1130 (Colo. 2015) (standard where no disputed facts). Here, Xcel challenges the characterization of the Second Petition in Condemnation and asserts there are no disputed facts. Additionally, the District Court adopted the legal reasoning and arguments Xcel raised in its briefs. Thus, the District Court’s ruling effectively adopted the factual assertions and legal conclusions contained in Xcel’s papers. See Barnett v. 34 Elite Props. of Am., 252 P.3d 14, 22 (Colo. App. 2010). Where a trial court adopts a parties’ arguments as its own, an appellate court must scruti nize the order more carefully. See Chostner v. Colo. Water Quality Control Comm’n, 327 P.3d 290, 297 (Colo. App. 2013); see also Uptime Corp. v. Colo. Research Corp., 420 P.2d 232, 235 (Colo. 1966). Where, as here, a trial court order was sparse and simply adopted a party’s arguments, and where a trial court refused to hold an evidentiary hearing, the appellate court reviews the trial court decision de novo. See Daniel v. City of Colo. Springs, 327 P.3d 891, 894 (Colo. 2014). Finally, under the present circumstances and context of a sparse trial court order where no hearing was held, for purposes of its analysis here, the Court must assume the facts alleged in the Second Petition in Condemnation are true. Daniel, 327 P.3d at 894 at n. 2; cf. Medina v. State, 35 P.3d 443, 452 (Colo. 2001) (normally on a Rule 12(b)(1) motion the allegations of the complaint have no presumption of truthfulness). For all of these reasons, the Court should review the District Court’s Order de novo and the Court must assume the facts alleged in the Second Petition in Condemnation are true. This issue was preserved in the briefing on Xcel’s motion 35 to dismiss (see above Statement of the Case at pages 20 -22) and was ruled upon in the District Court’s Order (CF, p.1287). B. The 2017 PUC Decision satisfied Judge LaBuda’s requirements in the PUC Appeal Decision. As noted above, when Boulder filed its Second Application with the PUC, Boulder asserted it no longer intended to acquire assets to serve customers outside of Boulder’s city limits. Thus, from that point forward, Boulder legally no longer needed to complete any further PUC proceedings before it was able to file its condemnation action, as the above-law provides.18 But even assuming for the sake of argument that Boulder still needed to obtain the PUC’s approval before filing the Second Condemnation Action, Boulder did obtain that approval. Boulder obtained the PUC’s approval when it obtained the 2017 PUC Decision. As noted above, the 2017 PUC Decision does not say the PUC Appeal Decision will be satisfied at some later date. The 2017 PUC Decision also does not say the PUC Appeal Decision will be satisfied only when certain conditions are met. Rather, the PUC Appeal Decision explicitly states it “satisfies the requirements” stemming from the PUC Appeal Decision. (CF, p.934 ¶ 4.) 18 Nonetheless, out of an abundance of caution, Boulder decided to participate in additional PUC hearings. 36 While the 2017 PUC Decision was subject to three conditions, they were conditions subsequent, not conditions precedent, to the decision. A condition is precedent when performance thereof must by necessity precede the vesting of a right. See, e.g., In re Estate of Erl, 491 P.2d 108, 109 (Colo. App. 1971). In contrast, a condition that requires a course of continuous action on the part of a party following the vesting of a right is deemed a condition subsequent. Id. A failure to satisfy or non-performance of a condition subsequent works a forfeiture of a vested right only upon express terms, and is generally disfavored. Id.; Godding v. Hall, 140 P. 165, 172 (Colo. 1914) (“It is hardly necessary to add that conditions subsequent are not favored by the law…”); Wilson v. Prentiss, 140 P.3d 288, 292 (Colo. App. 2006) (“The forfeiture of property rights is disfavored”). Here, the 2017 PUC Decision’s three conditions required a course of continuous action on the parts of Boulder and Xcel. Thus, they constituted conditions subsequent to the PUC’s decision. Thus, any failure to satisfy or non- perform the condition subsequent could not work a forfeiture of Boulder’s rights unless expressly provided otherwise. The 2017 PUC Decision nowhere expressly provides Boulder’s failure to satisfy or perform the three conditions would operate to invalidate the PUC’s decision or its explicit determination that the decision “satisfies the requirements” stemming from the PUC Appeal Decision. 37 C. Boulder satisfied the PUC Appeal Decision’s conditions prior to filing the Second Condemnation Action. But even assuming for the sake of argument Boulder was required to satisfy the 2017 PUC Decision’s three conditions prior to filing the Second Condemnation Action, Boulder satisfied those conditions. As noted above, the 2017 PUC Decision was not subject to Boulder obtaining “final approval,” it was subject to Boulder filing certain documents with the PUC intended to secure “final approval.” Also as noted above, Boulder spent over a year attempting to negotiate with Xcel over the three conditions and then filed a Joint Notice of Filing (between Boulder and Xcel) to the PUC, which attached various agreements and lists that collectively, demonstrating compliance with the PUC’s conditions. While Xcel later withdrew from the Joint Notice of Filing, this does not mean Boulder failed to comply with the conditions. Xcel’s withdrawal was abrupt and in stark contrast with its prior negotiations and arguably in disregard of its obligation to cooperate in good faith. (CF, p.1019) (“[Xcel] is directed to assist Boulder in good faith in Boulder’s efforts to satisfy the condition set forth in this Decision for securing final Commission approval of the designation of assets for transfer outside of the substations.”). Where Xcel abruptly changed its position, failed to provide an explanation for its changed position within its communicated timeframe, and failed to provide even a 38 reasonable timeframe upon which an explanation would be given, the District Court should have rejected Xcel’s argument that Boulder failed to satisfy the three conditions. See, e.g., Kaiser v. Market Square Discount Liquors, Inc., 992 P.2d 636, 641 (Colo. App. 1999) (a failure to satisfy a condition may be waived by words or unequivocal acts). In sum, to the extent Boulder was required to satisfy the 2017 PUC Decision’s three conditions prior to filing the Second Condemnation Action, Boulder complied with the conditions or Xcel has waived the right to argue Boulder failed to meet the conditions. IV. To the extent the District Court required Boulder to obtain further approvals from the PUC prior to filing the Second Condemnation Action, Boulder’s constitutional rights were abrogated. A. Standard of review and preservation of the issue. Whether Boulder was required to obtain further approvals from the PUC or other regulatory bodies prior to filing the Second Condemnation Action involves an interpretation of constitutional law, which the Court reviews de novo. City of Aspen, 143 P.3d at 1078; People v. Rodriguez, 112 P.3d at 695. This issue was preserved in the briefing on Xcel’s motion to dismiss (see above Statement of the Case at pages 20-22) and ruled upon in the District Court’s Order. (CF, p.1287.) 39 B. Forcing Boulder to endure a seemingly endless regulatory quagmire abrogates Boulder’s constitutional rights. In its motion to dismiss, among other things, Xcel argued Boulder still needed to obtain express “approval” from the PUC that the 2017 PUC Decision’s three conditions were met before Boulder could file the Second Condemnation Action. Not so. To the extent the PUC was to exercise additional “approval” of the three conditions, it would be under the PUC’s statutory authority, as Boulder filed its application under the PUC’s transfer of assets rule and regulations. See, e.g., C.R.S. § 40-5-101, et seq. (statute that governs transfer of utility assets); 4 CCR 723-3-3104 (administrative regulation that sets forth procedure for transfer of utility assets). The Supreme Court has held a legislature cannot abrogate a home rule city’s constitutional power. Town of Telluride, 185 P.3d at 169. An abrogation occurs when the condemnation power is curtailed. Id. at 171. When legislative or administrative limitations are not reasonably tailored to advance the public welfare or they absolutely abrogate competing rights, they are unconstitutionally prohibitive. Town of Telluride, 185 P.3d at 172 (Coats, J., concurring.) As noted above, for over five years Boulder has participated in lengthy and unprecedented PUC proceedings. In addition to its submittal of multiple verified applications or supplemental applications, in part driven by decisions by Xcel or the 40 PUC, Boulder participated in numerous extensive and ongoing hearings, negotiations, and other discussions, all in an attempt to bring the PUC’s regulatory processes to a close. Boulder informed the District Court that any further delay in approval of the assets for transfer could imperil the Project. As Boulder noted, Boulder voters required another vote to authorize issuance of debt to acquire Xcel’s assets and the vote was to be informed by the just compensation determination in the condemnation action. (CF, p. 912, 922.) If Boulder were to complete all regulatory processes before it could condemn, the will of its voters would be frustrated, the Project costs would likely be dramatically increased, and Boulder might never get to exercise its constitutional power. Notably, the filing of a condemnation action does not convey title to the property being acquired. The property is not actually transferred until months or over a year later, after a valuation trial, and after the trial court enters a rule and order. C.R.S. § 38-1-105(4). Thus, even if later additional PUC proceedings could have resulted in the need for Boulder to alter the assets it was condemning from Xcel, Boulder could have simply amended its petition to accomplish the same, a practice expressly allowed and contemplated in eminent domain proceedings. C.R.S. § 38-1- 104. Furthermore, the “actual” transfer of assets and construction would not occur 41 until after the separation occurred, which the parties estimated would take a matter of several years. The District Court failed to recognize or ignored Boulder’s substantial efforts undertaken as of the time Boulder filed its Second Condemnation Action and the likely harms that would result if Boulder were forced to continue with indefinite and uncertain regulatory proceedings. Instead, the District Court told Boulder it must continue with the regulatory processes and eventually it might be able to exercise its constitutional rights. The District Court’s Order results in an abrogation of Boulder’s constitutional rights. V. The District Court erred when it granted Xcel’s motion to dismiss without holding an evidentiary hearing. A. Standard of review and preservation of the issue. In response to Xcel’s motion to dismiss, Boulder requested an evidentiary hearing because disputed facts needed to be resolved before the District Court could rule on the motion. In reply, Xcel contended no hearing was necessary because no facts were in dispute. When jurisdictional facts are in dispute and a district court dismisses a case under C.R.C.P. 12(b)(1) without holding an evidentiary hearing, the trial court’s order is reviewed de novo. Hansen v. Long, 166 P.3d 248, 250-51 (Colo. App. 2007); Asphalt Specialties, Co. v. City of Commerce City, 218 P.3d 741, 744 42 (Colo. App. 2009). This issue was preserved in the briefing on Xcel’s motion to dismiss (see above Statement of the Case at pages 20-22) and ruled upon in the District Court’s Order (CF, p.1287). B. A trial court must hold an evidentiary hearing on a Rule 12(b)(1) motion where disputed issues need to be resolved prior to a ruling on the motion. Subject matter jurisdiction involves the court’s authority to deal with the class of cases in which it renders judgment. Currier v. Sutherland, 218 P.3d 709, 712 (Colo. 2009). On a Rule 12(b)(1) motion to dismiss, a court is “free to weigh the evidence and satisfy itself as to the existence of its power to hear the case.” Trinity Broad. of Denver, Inc. v. City of Westminster, 848 P.2d 916, 925 (Colo. 1993) (quoting Boyle v. Governor’s Veterans Outreach & Assistance Center, 925 F.2d 71, 74 (3d Cir. 1991)). The Supreme Court has held it is reversible error for a trial court to fail to hold an evidentiary hearing to resolve issues of fact necessary to determine subject matter jurisdiction. Trinity, 848 P.2d at 927; Werth v. Heritage Int’l Holdings, 70 P.3d 627, 629 (Colo. App. 2003) (when subject matter jurisdiction is questioned under Rule 12(b)(1), and there are contested issues of fact, “the trial court is required to hold an evidentiary hearing to resolve those issues.”). 43 C. There were disputed issues that needed to be resolved prior to the District Court’s ruling on the motion. Boulder requested an evidentiary hearing to address contested facts that would address subject matter jurisdiction, including, but not limited to, the status of the separation, the nature of the separation, the plan for substations, and the ongoing proceedings before the PUC. (CF, pp.923-924.) Among other reasons, the above-facts were relevant to whether dismissal was proper because one of Xcel’s arguments was that Boulder failed to satisfy the 2017 PUC Decision’s three conditions. Because the parties d isputed whether Boulder had satisfied those conditions prior to filing the Second Condemnation Action, the District Court was required to hold an evidentiary hearing to resolve the parties’ factual dispute. While an appellate court ordinarily would consider a remand in this situation, because the Court can decide the issues as a matter of law, a remand is unnecessary. Rector v. City and County of Denver, 122 P.3d 1010, 1013 (Colo. App. 2005) (“When a trial court does not engage in the proper C.R.C.P. 12(b) analysis, a reviewing court need not remand if it can resolve the issues as a matter of law.”). The Court should reverse. 44 CONCLUSION For the above reasons, Boulder respectfully requests the Court reverse the District Court’s Order that dismissed the case. Respectfully submitted this 11th day of February 2020. HAMRE, RODRIGUEZ, OSTRANDER & DINGESS, P.C. S/ RICHARD F. RODRIGUEZ’S DULY SIGNED PHYSICAL COPY OF THIS DOCUMENT IS ON FILE AT THE OFFICE OF HAMRE, RODRIGUEZ, OSTRANDER & DINGESS, P.C. PURSUANT TO CRCP RULE 121, SECTION 1-26(9) By: Donald M. Ostrander, No. 12458 Richard F. Rodriguez, No. 25105 ATTORNEYS FOR APPELLANT OFFICE OF THE BOULDER CITY ATTORNEY Thomas A. Carr, No. 42170 Kathleen E. Haddock, No. 16011 CO-ATTORNEYS FOR APPELLANT 45 CERTIFICATE OF SERVICE I hereby certify that on this 11th day of February 2020, a true and correct copy of the foregoing OPENING BRIEF was sent via Colorado Courts E-Filing or placed in the United States mail, first class, postage prepaid, and properly addressed to the following: John R. Sperber Brandee L. Caswell Sarah M. Kellner Katharine M. Gray Matthew D. Clark FAEGRE DRINKER BIDDLE & REATH, LLP 1144 Fifteenth Street, Suite 3400 Denver, CO 80202 jack.sperber@faegredrinker.com brandee.caswell@faegredrinker.com sarah.kellner@faegredrinker.com katharine.gray@faegredrinker.com matthew.clark@faegredrinker.com Attorneys for Public Service Company of Colorado (Sent via Colorado Courts E-Filing) MORGAN GUARANTY TRUST COMPANY OF NEW YORK Registered Agent: CT Corporation 4400 Easton Commons Columbus, OH 43219 (Sent via US Mail) Olivia D. Lucas Boulder County Attorney’s Office P.O. Box 471 Boulder, CO 80306 olucas@bouldercounty.org Respondent Paul Weissmann, in His Official Capacity as Treasurer of Boulder County (Sent via Colorado Courts E- Filing) Clerk of the Court of Appeals Ralph L. Carr Judicial Center 2 East 14th Avenue Denver, CO 80203 (Sent via Colorado Courts E-Filing) HAMRE, RODRIGUEZ, OSTRANDER & DINGESS, P.C. s/ Lori A. Argo By: