Chapter 2 - § 2.4 • GOOD FAITH NEGOTIATIONS
| Jurisdiction | Colorado |
Colorado's eminent domain statute, C.R.S. § 38-1-102, allows the filing of a condemnation petition when the "compensation to be paid for" the property "cannot be agreed upon by the parties interested." In Thornton Development Authority v. Upah, the U.S. District Court for Colorado discussed how this statutory provision relates to the generally accepted principle in Colorado that a condemnor has a duty to negotiate with an owner in "good faith" prior to instituting a condemnation action.76 As stated by the U.S. District Court with respect to this issue:
The Colorado courts have made the waters murky in this area by failing to distinguish between failure to agree and good faith negotiations. The statute only requires a failure to agree but the courts seem to have implied a duty on the condemning authority to negotiate on a good faith basis.77
Consistent with the observations of the federal court in Upah, early Colorado case law merely discussed the inability of a condemnor and owner to "agree" on the amount of compensation prior to a condemnation case being filed, as required by C.R.S. § 38-1-102. In 1916, in Mulford v. Farmers Reservoir & Irrigation Co., the Colorado Supreme Court confirmed the failure to "agree" standard when it stated:
It is apparent from these express provisions of the statute that failure to agree upon compensation to be paid for land sought to be taken or damaged is made a condition precedent to the right to institute and maintain proceedings thereunder at all, and is clearly jurisdictional. . . .78
Similarly, in Old Timers Baseball Ass'n v. Housing Authority of City & County of Denver, in citing Mulford, the Colorado Supreme Court held that a housing authority had engaged in negotiations with the owner "in an effort to reach an agreement as to the value of the property" before filing the condemnation action.79 The negotiation evidence in Old Timers consisted of an offer by the authority, a statement by the owner that the offer was "ridiculously low" and "unreasonable," and a further statement by the owner that the "property was not for sale."80
In Stalford v. Board of County Commissioners, a condemnor failed to engage in any negotiations with a landowner prior to filing its original condemnation petition.81 It then sought to correct its failure by sending out negotiation letters to the owner after the filing of the case, which it made reference to in a subsequently filed amended condemnation petition. In finding the amended petition to be "wholly incompetent, irrelevant and immaterial" and the letters to be "unavailing" in support of the county's assertion that the parties could not reach an agreement on compensation, the court dismissed the action.82
The concept of "futility," as it concerns a condemnor's duty to engage in negotiations with the owner became a part of Colorado jurisprudence in 1963, under Vivian v. Board of Trustees of Colorado School of Mines.83 In rejecting the owner's claim that adequate negotiations with the condemning entity had not occurred, the supreme court not only held that there had been a "failure to reach agreement through negotiations," but that further negotiations with the owner would have been "futile." With respect to this issue, the court stated:
There is ample evidence to warrant the conclusion that further negotiations would have been futile, and that the respondents had placed conditions upon a transfer by deed which the Board had clearly rejected, and that, in fact, negotiations had broken down.84
The concept of "good faith negotiations" between condemnor and owner, as opposed to a mere failure to "agree," was first mentioned in Interstate Trust Building Co. v. Denver Urban Renewal Authority.85 In determining that DURA had negotiated "on a good-faith basis" with the owner, the court referred to DURA's initial offer to purchase that was subsequently increased, as well as DURA's invitation to the owner "to get together and negotiate."86 The court held that "it takes more than one to negotiate" and that from the record, "it would certainly appear that Interstate was never in a negotiating mood."87
Years later, based on the "good faith" language of the Interstate case, the Colorado Supreme Court further defined and clarified a condemnor's responsibility to conduct pre-condemnation negotiations with an owner in City of Thornton v. Farmers Reservoir & Irrigation Co.88 The language used by the court to clarify this issue, i.e., that a "reasonable good faith offer" must be made by the condemnor, has now become the standard by which most courts judge whether this statutory requirement has been satisfied. As the court stated in City of Thornton:
The prerequisite of a failure to agree upon the purchase price for the property sought to be condemned generally requires only that the condemning authority make a reasonable good faith offer to reach an agreement with the owner of the property for its purchase. Lengthy or face-to-face negotiations are not required. The making of a reasonable offer to purchase in good faith by letter and allowing the property owner time to respond is sufficient. If the property owner remains silent or rejects the offer without making an acceptable counter-offer, a condemnation action may be instituted.89
The standard for conducting good faith negotiations, as enunciated in City of Thornton, was applied several years later in City of Holyoke v. Schlachter Farms R.L.L.P.90 There, following a valuation trial, an owner appealed the denial of its attorney fees under both the "just compensation" provisions of Article II, Section 15 of the Colorado Constitution and the frivolous and...
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