2016 COA 52
Colo. Ct. App.2016Background
- In July 2013, eleven hotels (the Hotels) petitioned the Colorado Economic Development Commission (CEDC) to require the City of Aurora to submit a new application for an $81 million tax subsidy for the Gaylord Project after Gaylord assigned its interest to RIDA. The Attorney General denied the petition and the Hotels sued in Denver (the Denver lawsuit).
- The Hotels asserted four claims in the Denver lawsuit: (1) mandamus under C.R.C.P. 106 to compel CEDC/Aurora to reapply, (2) APA review under §24-4-106(4) of the CEDC denial, (3) an as-applied constitutional challenge to §309 of the RTA under Colo. Const. art. II, §11, and (4) declaratory relief that procedural irregularities invalidated the RTA award.
- While the Hotels’ appeal in the Denver case was pending, Aurora, Aurora Urban Renewal Authority, and RIDA (Aurora parties) sued the Hotels for intentional interference (contract and business expectancy), abuse of process, and civil conspiracy, alleging the Hotels conspired to interfere with the Gaylord Project’s financing and development.
- The Hotels moved to dismiss under C.R.C.P. 12(b)(5) asserting First Amendment petitioning immunity under Protect Our Mountain Environment, Inc. v. Dist. Court (POME). The district court granted the motion, holding POME barred the Aurora parties’ claims even though it found one of the Hotels’ Denver claims to be a sham.
- On appeal the court considered (a) whether the POME dismissal should have been converted to summary judgment, (b) the denial of discovery/hearing, (c) whether the dispute was public or purely private, and (d) whether each of the Hotels’ four Denver claims was objectively baseless (a “sham”). The court affirmed dismissal.
Issues
| Issue | Plaintiff's Argument (Aurora) | Defendant's Argument (Hotels) | Held |
|---|---|---|---|
| Should a POME-based 12(b)(5) dismissal be converted to summary judgment? | POME requires conversion to summary judgment so parties can present extrinsic evidence. | Conversion unnecessary here; outcome would be same either way. | No reversible error; outcome would be same under either standard. |
| Was the denial of discovery and a hearing an abuse of discretion? | Aurora needed discovery to rebut the objective prong of POME and show claims were baseless. | First prong is an objective legal inquiry; Aurora failed to show discovery would produce facts defeating it. | Denial of discovery not an abuse of discretion. |
| Is the dispute purely private (so POME inapplicable)? | The dispute is private between competitors; POME shouldn't apply. | The underlying challenge targeted state agency action awarding public taxpayer subsidies—a public dispute. | Dispute was public, not purely private; POME applies. |
| Were the Hotels’ four Denver claims objectively baseless (sham) so First Amendment immunity is lost? | Three (or more) claims lacked reasonable factual support or legal basis; one was conceded sham by court. | All four claims had reasonable factual or legal support, including the as-applied constitutional claim under §309. | All four claims had objectively reasonable factual/legal support (court reverses finding the third claim was a sham); POME immunity applies and dismissal affirmed. |
Key Cases Cited
- Protect Our Mountain Envt., Inc. v. Dist. Court, 677 P.2d 1361 (Colo. 1984) (establishes POME test and procedure for First Amendment petition-immunity/sham litigation analysis)
- Krystkowiak v. W.O. Brisben Cos., Inc., 90 P.3d 859 (Colo. 2004) (summary judgment often appropriate procedure to resolve First Amendment sham-litigation defenses)
- Prof'l Real Estate Inv'rs, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49 (U.S. 1993) (objective baselessness/sham litigation framework informing POME)
- Denver Post Corp. v. Ritter, 255 P.3d 1083 (Colo. 2011) (standard of review for 12(b)(5) dismissals)
- Boyer v. HealthGrades, Inc., 359 P.3d 25 (Colo. 2015) (distinguishes purely private disputes from matters of public concern)