Opinion ID: 2204353
Heading Depth: 1
Heading Rank: 9

Heading: Background to Dispute Between Respondent's Clients and their Homeowners Association

Text: Spring Creek Ranch (SCR), real property located in Summit County, was initially developed in the 1980s. As part of a planned unit development (PUD), the developer built seven homes in Phase I and applied for, and received, a water decree in case number 80CW504, which included a proposed Phase II, an undeveloped portion of SCR. [3] This decree allowed the lot owners, a total of 300 contemplated units on the 6000 acres of property, to use 175 acre-feet of water per year when SCR was at full development. However, before the developer undertook the development of Phase II, he defaulted on the mortgage for SCR. At that point, the mortgage holder foreclosed on the SCR development, which included the undeveloped portion, Phase II. The mortgage holder then sold part of the undeveloped land to Nelson and Catherine Lane. At the same time, the mortgage holder, the Lanes, individual lot owners in SCR, and the SCR Homeowners Association (HOA) signed a settlement agreement (1989 Settlement Agreement) in May 1989. Under the agreement, the Lanes purchased SCR from the mortgage holder excluding Phase I, the community well thereon, and certain real property deeded to SCR HOA. The Lanes' portion of the property was rezoned as open ranch space and the Summit County Board of Commissioners then passed a resolution making SCR HOA responsible for the PUD in Phase I. Shortly after signing the 1989 Settlement Agreement, the parties discovered that the well the developer had dug in Phase I had not been properly certified. In 1993, the SCR HOA went to water court, case number 93CW213, in an effort to resolve issues concerning the well and assure a sufficient water supply for the development. In about 1997, a dispute between two factions of the then existing seven Phase I lot owners led to the selection of a new board of directors for the SCR HOA. The three former board members became the protesting lot owners and later hired Respondent to serve as their counsel from this point forward. In 1999, the Lanes sold part of their property to Elk Dance Colorado, LLC (Elk Dance or the adjacent land owner). Elk Dance took possession of the land and the water rights ostensibly allotted to the Lanes in the original augmentation plan (80CW504). In order to settle any questions about water use and rights issues amongst the parties, the new SCR HOA and Elk Dance proposed an addendum (2000 Addendum) to the 1989 Settlement Agreement. As part of the 2000 Addendum, Elk Dance agreed to provide Phase I lot owners up to 5.85 consumptive acre feet of water from Elk Dance's water if the Phase I lot owners could not obtain water from a contracted source, Green Mountain Reservoir, as provided in a 40-year contract the SCR HOA entered into with the U.S. Bureau of Reclamation, Department of Interior in 1993. The protesting lot owners refused to sign the Addendum, claiming that they, not Elk Dance, owned the water rights decreed in 80CW504.