CEDAR LANE INVESTMENTS V. AMERICAN ROOFING SUPPLY OF COLORADO SPRINGS, INC. 919 P.2d 879 (1996) CASE BRIEF

CEDAR LANE INVESTMENTS V. AMERICAN ROOFING SUPPLY OF COLORADO SPRINGS, INC.

919 P.2d 879 (1996)

NATURE OF THE CASE: This was a quiet title action. American Roofing (D) appealed the judgment. Cedar Lane Investments (P) brought an action to quiet title against D. D counterclaimed, seeking recovery of money taken from it by the purchaser and paid to the seller pursuant to Colo. Rev. Stat. 18-4-405 (1995). The District Court of El Paso County entered a judgment in favor of the seller.

FACTS: Capps, a stockholder and employee of D, embezzled more than $200,000 from the company. Approximately $50,000 of this amount was used as a down payment on commercial real estate that he and his wife purchased from Cedar Lane pursuant to an installment land contract. The contract required, in addition to the $50,000 down payment, that the Cappses pay $750 in monthly interest and make a balloon payment of $100,000 after two and a half years. Thirty payments were made totaling $22,500 and constructed improvements on the real estate costing in excess of $16,000 were done. The cost of the improvements was funded courtesy of D. The Cappses defaulted on the installment land contract by failing to make the balloon payment. P then commenced a forcible entry and detainer action. D filed a lis pendens and a judgment lien against the real estate. However, while its counsel attended the detainer hearing, D did not formally intervene. The court concluded that the Cappses had no right, title, or interest in the property, terminated the installment land contract, and granted P immediate possession. P then commenced this quiet title action. D filed a counterclaim seeking recovery of the money taken from it by Allan Capps and paid to P. It set forth a claim for relief based on 18-4-405, C.R.S. (1995 Cum. Supp.) and another based on a claim of unjust enrichment. P asserted status as a bona fide purchaser without knowledge that Capps had stolen the money invested in the property, and argued that D had no right, title, or interest in the property and requested that title be quieted in it. D argued it was entitled either to recover its funds under 118-4-405 or to equitable relief for unjust enrichment. It requested that the court impose a constructive trust or equitable lien on the real estate. The trial court concluded that, because P was no longer in actual possession of the stolen funds, D was not entitled to relief under 18-4-405. It also ruled that D was not entitled to equitable relief because P had received the funds from the Cappses without knowledge of any claim by D. the court found that P was not unjustly enriched by the improvements to the real estate because P had not initiated them.

ISSUE:

RULE OF LAW:

HOLDING AND DECISION:

LEGAL ANALYSIS:

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