DeJean et al v. Grosz et al

Filing 37

ORDER denying 30 Defendants' Motion to Dismiss Pursuant to F.R.C.P. 12(b)(1), by Magistrate Judge Boyd N. Boland on 5/21/2014. (eseam)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Magistrate Judge Boyd N. Boland
Civil Action No. 13-cv-02381-BNB-MJW
FELIX A. DEJEAN, III, and
CAROLYNE DEJEAN,
Plaintiffs,
v.
COLLEN A. GROSZ, as Trustee of the Declaration of Trust for Benefit of Colleen A. Grosz,
dated 8/11/1989,
TIMOTHY C. RODELL, an individual, and
MARJORIE M. RODELL, an individual,
Defendants.
______________________________________________________________________________
ORDER
______________________________________________________________________________
This matter arises on Defendants’ Motion to Dismiss Pursuant to F.R.C.P. 12(b)(1)
[Doc. # 30, filed 1/31/2014] (the “Motion to Dismiss”), which is DENIED.
I.
This action concerns the enforceability of a restrictive covenant contained in a 1957 Deed
which provided that not more than one detached single family dwelling could be constructed on
Lot 5 in Block 1, Promontory Subdivision, Aspen, Colorado (the “Property”). Complaint [Doc.
# 1] at ¶16.1 The restrictive covenant is recorded in the real property records of Pitkin County,
Colorado. Id. at ¶15. Contrary to the restrictive covenant, however, the Property was
subdivided as a condominium development in 1979, and a duplex has existed on the Property

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The 1957 Deed contains a second restrictive covenant that “no structure placed on this
lot shall exceed twenty feet in height (chimneys excluded). . . .” Deed [Doc. # 31-1].

since 1979. Id. at ¶¶19-20.
From August 1988 until February 1994, both units of the duplex were owned by a single
individual. Subsequently, defendant Grosz, as trustee for a trust, acquired title to Unit A of the
duplex. Id. at ¶4. The plaintiffs own Unit B of the duplex. Id. at ¶2. Unit A of the duplex is
known as 211 East Midland Avenue, Aspen, Colorado; Unit B of the duplex is known as 215
East Midland Avenue; and the Rodells own real property known as 201 Midland Avenue. Id. at
¶¶2, 4, and 6.
The plaintiffs allege that the existence of the restrictive covenant “adversely affects the
marketability of the [Property].” Id. at ¶21
The Complaint’s single claim for relief seeks a declaration that the restrictive covenant
“has terminated and is not applicable as an encumbrance” on the Property. In support, the
plaintiffs cite the Colorado adverse possession statute, which provides in part:
No person shall commence or maintain an action . . . to enforce or
to establish any right or interest of or to real property . . . unless
commenced within eighteen years after the right to bring such
action . . . has first accrued.
Section 38-41-101(1), C.R.S.
The defendants move to dismiss the Complaint arguing that (1) there is no present case or
controversy concerning the enforceability of the restrictive covenant and (2) this court lacks
subject matter jurisdiction because the $75,000 amount in controversy requirement of 28 U.S.C.
§ 1332 is not satisfied.
II.
A motion to dismiss based on the absence of a case or controversy under Article III of the
Constitution is treated as a motion under Rule 12(b)(1), Fed. R. Civ. P. Bateman v. City of West
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Bountiful, 89 F.3d 704, 706 (10th Cir. 1996). Similarly, the defendants’ jurisdictional challenge
based on the plaintiffs’ alleged failure to satisfy the amount in controversy requirement also is
made under Rule 12(b)(1). Enbridge Pipelines (Ozark), LLC v. Bailey, 2009 WL 1941966 *1
(N.D. Okla. July 2, 2009).
The Tenth Circuit Court of Appeals has explained:
Rule 12(b)(1) motions generally take one of two forms. First, a
moving party may make a facial attack on the complaint’s
allegations as to the existence of subject matter jurisdiction. In
reviewing a facial attack, the district court must accept the
allegations in the complaint as true. Second, a party may go
beyond allegations contained in the complaint and challenge the
facts upon which subject matter jurisdiction is based. . . . In
reviewing a factual attack, a court has wide discretion to allow
affidavits, other documents, and a limited evidentiary hearing to
resolve disputed jurisdictional facts. In the course of a factual
attack under Rule 12(b)(1), a court’s reference to evidence outside
the pleadings does not convert the motion into a Rule 56 motion.
Stuart v. Colorado Interstate Gas Co., 271 F.3d 1221, 1225 (10th Cir. 2001)(internal quotations
and citations omitted).
Here, the parties have offered affidavits and other documents in connection with the
Motion to Dismiss, creating a factual attack to the court’s subject matter jurisdiction.
III.
This declaratory judgment action is based on diversity jurisdiction. Consequently,
“federal law will be applied and will control whether or not the court can render a declaratory
judgment, [but] state law is to be applied to the underlying substantive issues.” Ins. Co. of the
State of Pennsylvania v. Hanover Ins. Co., 2014 WL 1515551 *1 (D. Colo. Apr. 18, 2014).
The Federal Declaratory Judgment Act provides that “[i]n a case of actual controversy
within its jurisdiction, . . . any court of the United States, upon the filing of an appropriate
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pleading, may declare the rights and other legal relations of any interested party seeking such
declaration, whether or not further relief is or could be sought.” 28 U.S.C. § 2201(a). “The
phrase ‘case of actual controversy’ in the Act refers to the type of ‘Cases’ or ‘Controversies’ that
are justiciable under Article III of the United States Constitution.” Coumbian Fin. Corp. v.
BancInsure, Inc., 650 F.3d 1372, 1376 (10th Cir. 2011)(internal citations omitted). Our circuit
court has cautioned that “Article III has long been interpreted as forbidding federal courts from
rendering advisory opinions.” Id. “It is not the role of federal courts to resolve abstract issues of
law. Rather, they are to review disputes arising out of specific facts when the resolution of the
dispute will have practical consequences to the conduct of the parties.” Id. The central question
in deciding whether a declaratory judgment action satisfies the case or controversy requirement
is “whether the facts alleged, under all the circumstances, show that there is a substantial
controversy, between parties having adverse legal interests, of sufficient immediacy and reality
to warrant the issuance of a declaratory judgment.” MedImmune, Inc. v. Genetech, Inc., 549
U.S. 118, 127 (2007).
This case presents a substantial controversy between landowners with competing
interests. The plaintiffs claim that as a result of more than 18 years of inaction, the defendants
have lost the right to enforce the restrictive covenant contained in the 1957 deed and recorded in
the real property records of Pitkin County, Colorado. There is nothing hypothetical about the
dispute, and a declaration will be more than a mere advisory opinion.
My conclusion that the parties have competing property interests is bolstered by the fact
that in 2008 the defendants (and others) brought suit to enforce against the Zales, who are not
parties here, the related height restriction contained in the 1957 Deed. Motion to Dismiss [Doc.

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# 30] at pp. 2-3.
Nor does there appear to be another way for the plaintiffs to obtain clarity as to their
rights and obligations with respect to the property. The defendants have failed to enforce the
single family dwelling requirement for more than 18 years despite the presence of a nonconforming duplex. The plaintiffs now seek to sell their interest in the Property, but the
restrictive covenant certainly burdens that interest. In fact, there is evidence that the restrictive
covenant renders the plaintiffs’ interest unmarketable or, at a minimum, adversely affects its
value. Affidavit of Mary Anne Meyer [Doc. # 31-2] (the “Meyer Aff.”) at ¶¶9, 12.
I find that there is a real and immediate controversy concerning the enforceability of the
restrictive covenant which warrants the issuance of a declaratory judgment.
IV.
The defendants also challenge the jurisdiction of the court arguing that the plaintiffs have
not satisfied the $75,000 amount in controversy requirement of 28 U.S.C. § 1332.
Federal courts are courts of limited jurisdiction, and there is a presumption against the
exercise of federal jurisdiction. Merida Delgado v. Gonzales, 428 F.3d 916, 919 (10th Cir.
2005). The party invoking federal jurisdiction has the burden to allege jurisdictional facts
demonstrating the existence of federal subject matter jurisdiction. Montoya v. Chao, 296 F.3d
952, 955 (10th Cir. 2002). When federal subject matter jurisdiction is challenged based on the
amount in controversy requirement, “all the plaintiff needs to do is allege an amount in excess of
$75,000 and he will get his way, unless the defendant is able to prove to a legal certainty that the
plaintiff’s claim cannot recover the alleged amount. McPhail v. Deere & Co., 529 F.3d 947, 953
(10th Cir. 2008). In addition, the “sum claimed by the plaintiff controls if the claim is apparently

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made in good faith.” St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289 (1938).
There is a “strong presumption favoring the amount alleged by the plaintiff” and “it is difficult
for a dismissal to be premised on the basis that the requisite jurisdictional amount is not
satisfied.” Woodmen of World Life Ins. Society v. Manganaro, 342 F.3d 1213, 1216-17 (10th
Cir. 2003). In cases seeking declaratory relief, “the value of the object of the litigation” is “the
pecuniary effect an adverse declaration will have on either party to the lawsuit.” City of Moore
v. Atchison, Topeka & Santa Fe Ry. Co., 699 F.2d 507, 509 (10th Cir. 1983).
Here, the Complaint alleges that “[t]he amount in controversy in this civil action is
approximately $500,000.00, which is more than the $75,000.00 minimum required under federal
law.” Complaint [Doc. # 1] at ¶9. The allegations of the Complaint are supported by the Meyer
Aff. [Doc. # 31-2], prepared by a licensed real estate agent in the Aspen market, which indicates
that the property, listed at $2.7 million, is “unmerchantable,” id. at ¶¶5, 9, and “[a]s a result of
the single-family deed restriction, prospective purchasers . . . seek steep price concessions in
excess of $75,000.00 from the listed price. . . .” Id. at ¶12. Although the defendants have
offered evidence which contradicts the allegations of the Complaint and the Meyer Affidavit, I
cannot say “to a legal certainty” that the plaintiffs cannot recover the jurisdictional amount of
$75,000 or that the sum claimed by the plaintiffs is not made in good faith.
IT IS ORDERED that the Motion to Dismiss [Doc. # 30] is DENIED
DATED May 21, 2014.
BY THE COURT:

s/ Boyd N. Boland
United States Magistrate Judge

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