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Case 1:17-cv-02512-RM-GPG Document 102 Filed 02/12/19 USDC Colorado Page 1 of 9

IN THE UNITED STATES DISTRICT COURT


FOR THE DISTRICT OF COLORADO
Judge Raymond P. Moore

Civil Action No. 1:17-cv-02512-RM-GPG

CSMN INVESTMENTS, LLC, a Colorado limited liability company, and


CSMN OPERATIONS, LLC, a Colorado limited liability company,

Plaintiffs,

v.

CORDILLERA METROPOLITAN DISTRICT, a political subdivision of the State of Colorado,


CORDILLERA PROPERTY OWNERS ASSOCIATION, INC., a Colorado nonprofit
corporation,
DAVID BENTLEY,
DAVID DAVIES,
ROBERT EGAN,
KITTY GEORGE,
LARRY KYTE,
JUDITH G. MCBRIDE,
RACHEL OYS,
ED SHRINER,
BRUCE SMATHERS,
PATRICK WILHELM, and
TOM WILNER,

Defendants.
______________________________________________________________________________

ORDER
______________________________________________________________________________

This matter is before the Court on two motions to dismiss that were filed or joined by all

Defendants. (ECF Nos. 83, 85, 86.) The motions are fully briefed. (ECF Nos. 94, 95, 97, 99,

100.) The Court has reviewed the case file and applicable law and, for the reasons below, grants

the motions.
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I. LEGAL STANDARD

In evaluating a motion to dismiss under Fed. R. Civ. P. 12(b)(6), a court must accept as

true all well-pleaded factual allegations in the complaint, view those allegations in the light most

favorable to the plaintiff, and draw all reasonable inferences in the plaintiff’s favor. Brokers’

Choice of America, Inc. v. NBC Universal, Inc., 757 F.3d 1125, 1136 (10th Cir. 2014); Mink v.

Knox, 613 F.3d 995, 1000 (10th Cir. 2010). However, conclusory allegations are insufficient.

Cory v. Allstate Ins., 583 F.3d 1240, 1244 (10th Cir. 2009). The complaint must allege a

“plausible” right to relief. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 569 n.14 (2007); see also

id. at 555 (“Factual allegations must be enough to raise a right to relief above the speculative

level.”). To determine whether a claim is plausible, a court considers “the elements of the

particular cause of action, keeping in mind that the Rule 12(b)(6) standard doesn’t require a

plaintiff to set forth a prima facie case for each element.” George v. Urban Settlement Servs.,

833 F.3d 1242, 1247 (10th Cir. 2016) (quotation omitted).

II. BACKGROUND

The following facts are either taken from the Second Amended Complaint (ECF No. 80)

or undisputed. Cordillera is a residential community in Eagle County, Colorado, that contains

single-family residences, vacant residential lots, a golf course, a lodge, and other improvements.

(Id. at ¶ 19.) Defendant Cordillera Metropolitan District (“CMD”), a Colorado special district,

provides services to Cordillera. (Id. at ¶ 3.) Defendant Cordillera Property Owners Association,

Inc. (“CPOA”) is responsible for managing and maintaining the Cordillera community. (Id.

at ¶ 5.) Defendant Rachel Oys was, at all times relevant to this action, the district manager of

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CMD. The remaining Defendants are individuals who were, at all times relevant to this action,

either elected members of the CMD Board or appointed members of the CMD Legal Committee.

Plaintiffs (collectively, “CSMN”) purchased the lodge at Cordillera “for the express

purpose of operating an upscale residential rehabilitation center for persons recovering from drug

and alcohol addiction, eating disorders, and other psychiatric conditions.” (Id. at ¶ 31.)

Previously, the lodge had been operated as a hotel with various amenities, which community

members had access to at discounted rates, but it had ceased to be profitable. Defendants’ efforts

to oppose the rehab center are the basis for this lawsuit. A substantial part of the underlying

dispute hinges on the interpretation of the zoning ordinances contained in the Cordillera Planned

Unit Development Control Document (“PUD”).

In 2009, the PUD was amended to allow thirty-four different uses of the lodge parcel. In

June 2016, CSMN obtained a letter from the community development director, stating that the

rehab center was an allowable use of the lodge under the PUC. (Id. at ¶ 34.) Defendants CMD

and CPOA voted to appeal that interpretation to the Board of County Commissioners (“BOCC”)

and also agreed to form the CMD Legal Committee. CSMN contends these actions were taken

“with the intent to discriminate against CSMN and its prospective clients.” (Id. at ¶¶ 37, 38.) In

addition, Defendant Oys notified community members about the proposed rehab center, many of

whom responded with disapproving emails. 1 (Id. at ¶ 40.) Plaintiffs characterize these emails as

being “of a discriminatory nature, and demonstrative of animus toward CSMN and its

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By way of example, one community member wrote: “Catastrophe for the community. Heroin addicts moving in
with other unbalanced individuals and the predators that surround such facilities. This should be stopped at all
costs—if not, our house is going on the market and we are willing to take a substantial loss to avoid such a changed
neighborhood. I would not be comfortable allowing our grandchildren outside unguarded.” (ECF No. 80 at ¶ 40.)
The complaint contains quotes from more than a dozen emails expressing similar sentiments. (Id.)

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prospective Clients . . . indicating their displeasure with the prospect of the [rehab center] and

CSMN’s prospective Clients in Cordillera.” (Id.) Defendant Oyes responded by thanking the

community members for expressing their concerns and assuring them that Defendants CMD and

CPOA were “united in actively pursuing all options to halt” the rehab center. (Id.)

On June 28, 2016, representatives of CSMN met with Defendant Oys and some of the

other individual Defendants and told them that their prospective clients were protected under the

ADA and FHA. (Id. at ¶ 45.) Nevertheless, Defendants filed their appeal with the BBOC the

following day. On June 30, 2016, Defendants CMD and CPOA held a joint meeting attended by

over 200 community members. (Id. at ¶ 48.) In response to remarks by the community

members, some individual Defendants and representatives of Defendants CMD and CPOA

cautioned that “discriminatory remarks” should be avoided when discussing the rehab center.

(Id. at ¶¶ 49, 52.)

The BOCC held a hearing in September 2016, at which many community members

voiced their concerns about the rehab center. (Id. at ¶¶ 61-62.) The BOCC affirmed the

director’s interpretation that the rehab center was allowed under the PUD (id. at ¶¶ 63, 65) but

issued a resolution modifying that interpretation to require “that the clinic component be

operated as an outpatient facility” (ECF No. 80-6 at 6).

In November 2016, Defendants CMD and CPOA appealed the BOCC’s decision in state

court under Colorado Rule of Civil Procedure 106(a)(4). (ECF No. 80 at ¶ 68.) In

September 2017, the state district court affirmed the BOCC’s decision in a thirty-page order.

Defendant CPOA unsuccessfully appealed that decision. Benson v. Eagle County,

No. 17CA1973, 2018 WL 6241502 (Colo. App. Nov. 29, 2018) (unpublished).

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CSMN initiated this action in October 2017. The gravamen of the complaint is that

Defendants’ opposition to the rehab center was discriminatory and violated various statutes.

CSMN alleges that Defendant CMD violated the Americans with Disabilities Act, 42 U.S.C.

§§ 12101-12213, because CSMN’s potential clients are entitled to protection under that statute.

It alleges that all Defendants violated the Fair Housing Act, 42 U.S.C. §§ 3601-3619, because

they restricted CSMN’s efforts to provide residential services to people with disabilities and

retaliated against CSMN by engaging in coercion, intimidation, threats, or interference in their

opposition to the rehab center. And it alleges that Defendants (except for CPOA) violated the

Civil Rights Act of 1871 by “conspiring to deprive, failing to stop the deprivation, or depriving

CSMN and its future Clients of equal protection of the laws and due process of law.” (ECF

No. 80 at ¶ 102.)

III. ANALYSIS

Defendants make several arguments in favor of dismissal. With respect to all but one of

CSMN’s claims, the Court concludes Defendants are immune from liability based on the

Noerr-Pennington doctrine. See E. R.R. Presidents Conference v. Noerr Motor Freight, Inc.,

365 U.S. 127 (1961); United Mine Workers v. Pennington, 381 U.S. 657 (1965). With respect to

CSMN’s remaining claim that certain Defendants retaliated against them under the FHA by

encouraging opposition the rehab center, the Court concludes CSMN has failed to state a claim

under Fed. R. Civ. P. 12(b)(6).

A. Noerr-Pennington Immunity

“[T]he Noerr-Pennington doctrine protects litigation, lobbying, and speech,” and it

“applies fully to municipal activities.” New West, L.P. v. City of Joliet, 491 F.3d 717, 722

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(7th Cir. 2007); see also Tri-Corp Housing Incorporated v. Bauman, 826 F.3d 446 (7th Cir.

2016) (“Public officials . . . enjoy the right of free speech under the First Amendment, applied to

the states through the Fourteenth.”). Although “the right to petition . . . does not provide an

absolute immunity from liability for actions based on petitioning activity, the Supreme Court has

held that such liability cannot be imposed in the absence of a finding that the position taken

lacked any reasonable basis.” Herr v. Pequea Twp., 274 F.3d 109, 115 (3d Cir. 2001) (citations

omitted), abrogated on other grounds by United Artists Theatre Circuit, Inc. v. Twp. of

Warrington, 316 F.3d 392, 400 (3d Cir. 2003). Thus, “efforts to influence government activity

cannot be the basis of legal penalties[] unless the proposal to the governmental body is a sham.”

Tri-Corp Housing, 826 F.3d at 450.

In this context, “sham” litigation means “the pursuit of claims so baseless that no

reasonable litigant could realistically expect to secure favorable relief.” Prof’l Real Estate

Inv’rs, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 62 (1993). “Only if challenged

litigation is objectively meritless may a court examine the litigant’s subjective motivation.” Id.

at 60. Based on this rationale, several courts have concluded that the Noerr-Pennington doctrine

blocks suits under the FHA arising out of allegedly biased litigation or lobbying by

municipalities. See New West, 491 F.3d at 722 (listing cases).

Here, the allegations do not establish that Defendants’ petitioning activity was objectively

baseless. As noted by the state district court, the PUD contains several relevant terms that are

not defined within the PUD. (ECF No. 80-7 at 9.) The proper interpretation of the PUD as

revised in 2009 and CSMN’s intention to designate different portions of the lodge for different

uses (constituting a significant departure from how the lodge had previously been operated)

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presented issues that were appropriate for adjudication. Moreover, the BOCC appeal was

partially successful, causing the BOCC to modify its previous approval of the rehab center by

requiring “that the clinic component be operated as an outpatient facility.” (ECF No. 80-6 at 6.)

Although the BOCC rejected most of Defendants’ arguments, the Court finds no grounds for

deeming those arguments objectively baseless. With respect to Defendant CMD (and to any

extent which the complaint alleges violations of the individual Defendants in their official

capacities), the BOCC appeal is merely an instance where “officials of one governmental body

tried to persuade officials of a different public body to act in particular way.” Tri-Corp.

Housing, 826 F.3d at 450. Such conduct is protected under the Noerr-Pennington doctrine.

CSMN asserts that the appeal to the state district court was objectively baseless, but it has

not provided factual allegations to support this assertion. The complaint references the district

court’s decision, a thirty-page, detailed analysis of the arguments presented. Though those

arguments were ultimately rejected and the BOCC’s resolution was affirmed, the district court

did not conclude that the appeal was baseless. CSMN’s arguments with respect to the appeal to

the state appellate court are insufficient for the same reasons—the appellate court affirmed the

district court’s appeal but did not rule that Defendant CPOA lacked a realistic expectation of

obtaining favorable relief. The mere fact that CSMN prevailed in those proceedings does not

establish that they were a sham. See New West, 491 F.3d at 722.

The complaint does not contain allegations from which the Court could conclude that

Defendants abused the litigation process. Cf. California Motor Transp. Co. v. Trucking

Unlimited, 404 U.S. 508, 513, 516 (1972) (concluding allegations fell within sham exception

where factfinder could conclude administrative and judicial processes had been abused). Indeed,

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CSMN takes the position that the litigation was motivated by discriminatory animus, not by an

intent to deprive CSMN of access to administrative and judicial processes. This case does not

present “a pattern of baseless, repetitive claims” that would constitute an abuse of administrative

and judicial processes. And because the litigation was not objectively baseless, Defendants’

subjective motivation is irrelevant. See Prof’l Real Estate Inv’rs, 508 U.S. at 60-61 (outlining

two-step process for evaluating “sham” litigation).

Therefore, CSMN’s claims based on Defendants’ petitioning activity must fails as a

matter of law. See id. at 63 (“Where . . . there is no dispute over the predicate facts of the

underlying legal proceeding, a court may decide probable cause as a matter of law.”).

B. FHA Retaliation

To the extent CSMN alleges Defendants retaliated against them under the FHA through

conduct not covered by the right to petition—e.g., allegations about “Defendants’actions in

encouraging community sentiment and action” against the rehab center (ECF No. 80 at ¶ 47) and

Defendant Oys’ circulation of “talking points” to community members (id. at ¶ 43)— the Court

concludes the complaint fails to state a claim.

Pursuant to 42 U.S.C. § 3617, it is “unlawful to coerce, intimidate, threaten, or interfere

with any person in the exercise or enjoyment of, or on account of his having exercised or

enjoyed, or on account of his having aided or encouraged any other person in the exercise or

enjoyment of, any right granted or protected” under FHA. The court is not persuaded that the

comments by community members fall within the conduct proscribed by this statute, but even if

they did, CSMN’s allegations do not establish that any Defendant caused any proscribed

conduct. In other words, the complaint contains no specific allegations that any Defendant

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coerced, intimidated, or threatened anyone, or that any Defendant interfered with anyone’s rights

protected under the FHA.

IV. CONCLUSION

The motions to dismiss (ECF Nos. 83, 85) are GRANTED. The Clerk is directed to close

the case.

DATED this 12th day of February, 2019.

BY THE COURT:

____________________________________
RAYMOND P. MOORE
United States District Judge