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February 27, 2019

Dropping All Pretext: Finding Bad Faith, Colorado Courts Reject City’s Attempted Condemnation

Courts have historically been reluctant to look behind a condemnor’s stated purpose for taking property but, in City of Lafayette v. Town of Erie, a Colorado trial court decided to lift that curtain. When it realized Lafayette’s stated purpose for the condemnation did not match its prior actions or statements, the court dismissed the city’s petition in condemnation — even though the city articulated a valid public purpose for the property in question. On February 11, 2019, the Colorado Supreme Court denied a writ of certiorari in the case, leaving in place the Colorado Court of Appeals’ holding that “if bad faith is at issue, courts may look behind an entity’s stated condemnation purpose and finding of necessity.” City of Lafayette v. Town of Erie, 2018 COA 87, ¶ 19. 

The Backstory

The City of Lafayette and the Town of Erie are two neighboring Colorado municipalities in an area of the state where preserving open space is a high priority. Lafayette filed a petition to condemn 22 acres of property from Erie based on a stated public purpose of preserving open space and creating a buffer between the two communities. In support of this stated purpose, Lafayette pointed to the fact that 84 percent of its residents had recently voted in favor of acquiring property for open space. But Erie questioned Lafayette’s true motive for bringing the condemnation action and moved for dismissal of the petition.

The property Lafayette sought to acquire was part of a proposed development referred to as Nine Mile Corner. At a hearing before the trial court, Erie presented evidence that:

  • The subject property was not previously included on Lafayette’s list of open space priorities.
  • Erie had taken steps toward development of Nine Mile Corner.
  • A major grocery store was considering relocating from Lafayette to Nine Mile Corner.
  • Lafayette’s representatives had expressed concerns about the grocery store leaving the city.

The trial court reasoned that Lafayette’s articulated purpose of creating a community buffer was inconsistent with its previous actions allowing commercial development of other nearby sites. Instead, the court concluded, Lafayette’s actions more closely aligned with a previously articulated goal to prevent Erie from developing Nine Mile Corner. The court dismissed Lafayette’s petition in condemnation, finding the condemnation lacked a public purpose and was brought in bad faith.

The Colorado Court of Appeals affirmed, reasoning that “[t]he stated public purpose of an open space buffer is valid, but blocking Erie’s planned development — planning that predated Lafayette’s condemnation petition — is not lawful.” City of Lafayette v. Town of Erie, 2018 COA 87, ¶ 22. Although a condemning entity’s determination of the necessity to acquire particular property is not reviewable absent a showing of fraud or bad faith, the court concluded that Erie sufficiently alleged specific facts supporting a showing of bad faith in its motion to dismiss and at the two-day evidentiary hearing. As a result, the trial court concluded — and the Court of Appeals confirmed — that it was appropriate to delve behind Lafayette’s stated purpose and hear evidence about Lafayette’s true motives behind its taking.

Key Takeaways

The City of Lafayette decision demonstrates that a valid articulated public purpose will not save an otherwise improper motive behind a condemnation. It also reaffirms the principle that the existence of an incidental public benefit from a condemnation does not prevent a court from finding bad faith and defeating a condemnor’s attempt to take property for improper purposes.

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