Free Motion for Miscellaneous Relief - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 1:01-CV-00083-REB-CBS CABEZA DE VACA LAND & CATTLE CO., LLC, a Colorado limited liability company, Plaintiff, vs. STOCKMAN WATER COMPANY, LLC, a Colorado limited liability company, Defendant, -andRELATED CASES. MOTION FOR RELIEF FROM ORDER OR IN THE ALTERNATIVE FOR ENTRY OF JUDGMENT Defendant American Water Development, Inc. ("AWDI") through its counsel, LOTTNER RUBIN FISHMAN BROWN & SAUL, P.C., moves for relief from the Court's Order of Dismissal pursuant to Fed. R. Civ. P. 60(b) or in the alternative for an entry of judgment pursuant to Fed. R. Civ. P. 58(d) as follows: D.C.COLO.LCivR 7.1(A) CERTIFICATE In conformity with D.C.COLO.LCivR 7.1(A), AWDI's counsel has, in good faith, conferred with oppopsing counsel regarding this Motion. Counsel agreed that filing this Motion was an appropriate procedure to bring the issue to this Court's attention.

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I.

INTRODUCTION

AWDI seeks relief from this Court's Order of Dismissal that was based on an interpretation of law that has since been repudiated by the United States Supreme Court. In dismissing AWDI's claims, this Court relied exclusively on the Rooker-Feldman doctrine. However, while the appeal of that Order was pending in the Tenth Circuit, the United States Supreme Court issued a unanimous ruling which clarified the Rooker-Feldman doctrine in a manner that unquestionably precludes its application to the facts of this case. Without

addressing the merits of the appeal whatsoever, the Tenth Circuit dismissed AWDI's appeal, holding only that the Fed. R. Civ. P. 54(b) certification was deficient for lack of a final judgment, thus depriving the appellate court of jurisdiction. Fed. R. Civ. P. 60(b) provides this Court the perfect opportunity to revisit its Order of Dismissal in light of the Supreme Court's decision in Exxon Mobile Corp. v. Saudi Basic Industries Corp.. During the appeal, the parties each discussed collateral estoppel as constituting an alternate basis for dismissal. However, as will be explained in this Motion, collateral estoppel cannot support dismissal in this case. Accordingly, AWDI seeks relief from the Order of Dismissal and requests the parties now be allowed to proceed to trial. II. PROCEDURAL HISTORY

On January 11, 2001, Stockman's Water Company, LLC ("Stockman's") filed its Verified Complaint against Vaca Partners, L.P. ("Vaca"), Farallon Capital Management, LLC ("Farallon"), and Jason Fish. AWDI's Motion to Intervene as Third-Party Plaintiff Pursuant to Fed. R. Civ. P. 20(a) was granted on April 13, 2001 and its Complaint in Intervention was filed. The federal litigation proceeded through discovery and motions practice, including two motions 2
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for summary judgment filed by Defendants, both of which AWDI defeated. The parties were on the cusp of trial in the fall of 2002 when the trial, through no fault of AWDI, was postponed. On August 8, 2003, Defendants filed Defendants' Suggestion that the Court Lacks Subject Matter Jurisdiction over the Claims of Peter Hornick and American Water Development, Inc. arguing that the Rooker-Feldman doctrine stripped this Court of jurisdiction over AWDI's claims. On December 31, 2003 this Court ruled that Rooker-Feldman divested the Court of jurisdiction to hear AWDI's claims ("Order of Dismissal"). AWDI appealed the Order of Dismissal to the Tenth Circuit Court of Appeals. To maintain appellate jurisdiction, AWDI moved this Court for entry of final judgment and for Fed. R. Civ. P. 54(b) certification. This Court granted Rule 54(b) certification on May 18, 2004. During the briefing of the appeal in the Tenth Circuit, the United States Supreme Court granted certiorari in Exxon Mobil Corp. v. Saudi Basic Industries Corp., 364 F.3d 102 (3rd. Cir. 2004). Since the Exxon case involved the determination of the scope of the Rooker-Feldman doctrine and would be relevant to the current appeal, the parties sought a stay of the appellate proceedings until the Supreme Court ruled in Exxon. The Tenth Circuit granted the parties' Joint Motion for Stay on December 9, 2004. After the Supreme Court ruled on the scope of the Rooker-Feldman doctrine on March 30, 2005 in Exxon Mobile Corp. v. Saudi Basic Industries Corp., ___U.S.___, 125 S.Ct. 1517 (2005), supplemental briefing in the Tenth Circuit was completed. However, the Tenth Circuit ultimately failed to address the Rooker-Feldman issue holding that this Court's Rule 54(b) certification was deficient. Therefore, the Tenth Circuit concluded that it lacked jurisdiction and dismissed the appeal. AWDI now moves this Court for relief from the Order of Dismissal under 3
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Fed. R. Civ. P. 60(b) due to the change in controlling authority so it may proceed to trial or, in the alternative, requests entry of judgment pursuant to Fed. R. Civ. P. 58(d) in order to again pursue the issue in the Tenth Circuit.

III.

STATEMENT OF THE FACTS

The overall dispute among the many parties involved here has been carried on in several forums. Among the other proceedings was a foreclosure, a state court action, an arbitration, an appeal in the Colorado Court of Appeals and the recent Tenth Circuit appeal that was dismissed for lack of jurisdiction. All disputes involve various rights and duties granted by an Assignment of Gross Revenue Interest ("AGRI"). Pursuant to the AGRI, Cabeza de Vaca Land & Cattle Co., LLC ("Cabeza")1 was not permitted to make any Disposition of the Water Assets without having first obtained a release ("Release") from AWDI of certain security documents, including AWDI's senior Deed of Trust and an Assignment of Rents ("Security Documents") which secured the AGRI. (See AGRI, §II(A), Exhibit A.) This Federal Action was first filed by Cabeza and Stockman's against Defendants. AWDI intervened in April 2001. By its complaint in intervention, AWDI asserted that

Defendants had failed, and caused Cabeza to fail, to develop the Water Assets, thereby breaching the AGRI and its implied covenant of good faith and fair dealing, and that the Defendants had

1

In June 2001, Cabeza was dismissed from the Federal Action. 4

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tortiously interfered with Cabeza's performance under the AGRI. Defendants twice sought ­ and were twice denied ­ summary judgment on AWDI's claims in the Federal Action. In an effort to gain control of the Ranch and Water Assets, Vaca filed a separate action against Cabeza to foreclose its junior deed of trust on the Ranch due to non-payment of the Note executed by Cabeza (of which Vaca is a member). In the face of several pending lawsuits and in light of the existence of AWDI's senior Deed of Trust, there was no third-party bid at the public trustee's sale and, with its full credit bid of $34,367,145.67, Vaca became the record owner of the Ranch upon issuance of a Public Trustee's Deed following a foreclosure sale on May 30, 2002. While the Federal Action was ongoing, AWDI and Cabeza arbitrated the limited issue of the allocation of the value of the Water Assets under the AGRI. The arbitration panel held that the value of the Water Assets was $6,940,000 and awarded AWDI its 10% allowed under the AGRI of $694,000. The arbitration panel, however, was never authorized to determine either

the value of the Ranch or the value of the interests secured by the AGRI for all purposes and under all circumstances. The arbitration panel did not, and could not, properly consider the scope of Cabeza's obligation under the AGRI, including the scope of its obligations of good faith and fair dealing, which claim had by then twice survived summary judgment in the Federal Action. Instead, it merely allocated the proceeds from the proposed sale of the property. Ignoring any interest or claim secured by AWDI's Deed of Trust other than the 10% interest in proceeds from the proposed Disposition of the Water Assets, on January 22, 2003, Cabeza tendered a check in the amount of $694,000 to AWDI, as "payment of the debt ordered to be paid" by the arbitration panel and demanded AWDI's release of the Security Documents. 5
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On January 23, 2003, AWDI returned the check along with a letter stating that the tender was premature because AWDI had pending claims in the Federal Action that were also secured by the Security Documents. Almost a full year after AWDI intervened in the Federal Action, and after Farallon and Vaca failed twice at summary judgment in the Federal Action, Cabeza, this time in concert with Vaca and Farallon, filed the State Action against AWDI on March 22, 2002. Ten months later, on January 10, 2003, AWDI filed its Motion for Appointment of Receiver ("Receiver Motion") in the State Action, alleging that Cabeza would be in default under the Deed of Trust if it made a Disposition (such as the foreclosure) of the Water Assets without having first obtained a release from AWDI. On January 24, 2003, Cabeza, Vaca and Farallon filed a combined response to AWDI's Receiver Motion and petitioned the State Court to have AWDI's Security Documents declared spurious under C.R.S. §§ 38-35-204(1) and 109(3). Cabeza, Vaca and Farallon maintained that AWDI's senior lien was improperly interfering with the proposed sale after AWDI refused Cabeza's tender. On March 18, 2003, the State Court held a show-cause hearing under Colorado's Spurious Lien Act. The sole issue was the application of the Spurious Lien Act and the court neither addressed, nor needed to address, AWDI's federal court claims for declaratory judgment of AWDI's rights under the AGRI, tortious interference and breach of covenant of good faith and fair dealing, nor did the court address directly, or need to address, AWDI's state court claim for breach of the AGRI and Deed of Trust. The Receiver Motion was denied on May 8, 2003 and, in an Order dated May 9, 2003 (together the "May Orders"), the State Court found the Security 6
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Documents to be spurious liens and ordered the Security Documents released. In the second Order, the State Court remarked that AWDI was in breach of the AGRI by failing to have released the Security Documents upon Cabeza's tender. (See May 9, 2003 Order attached as Exhibit B.) By an Order dated August 7, 2003, the State Court certified the May Orders as a final judgment under Colo. R. Civ. P. 58, but clarified the limited scope of the May Orders. The Court explained: However [Cabeza, Vaca and Farallon's] desire to have the Court enter a Final Judgment on all claims is premature. Had the parties addressed all issues under Rule 56, the Court might have been able to address them all. But this Court does not have the benefit of those procedures and the Court is not prepared to say that the existing Order from May 9, 2003, does or does not make moot or resolve all claims. (Emphasis added). The Colorado Court of Appeals affirmed the trial court's May 9, 2003 Order. However, although the State Court denied AWDI's Receiver Action and ordered AWDI to release its senior lien, the State Court has not yet entered any judgment with respect to the remaining claims pleaded. On August 8, 2003, Defendants filed a motion under Colo. R. Civ. P. 12(h) with this Court suggesting that it lacked jurisdiction over AWDI's claims under the Rooker-Feldman doctrine, arguing that the federal claims effectively sought appellate review of the State Court's May Orders. Defendants based this argument on the fact that the State Court had said in its May 9, 2003 Order that AWDI had breached the AGRI. On December 30, 2003, this Court issued an order dismissing the AWDI complaint in intervention, determining that it lacked jurisdiction to hear AWDI's claims under the Rooker-Feldman doctrine. On March 11, 2004 AWDI filed a Motion Under Fed. R. Civ. P. 54(b) for Entry of Final Judgment on AWDI's Claims. On May 7
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18, 2004 this Court granted AWDI's Motion and certified the Order of Dismissal as a final judgment pursuant to Fed. R. Civ. P. 54(b). AWDI appealed the issue to the Tenth Circuit which stayed the appeal pending a decision by the Supreme Court in Exxon. The Supreme Court definitively held that the Rooker-Feldman doctrine can never apply to a federal action that was commenced before the state court ruling at issue. See Exxon, 125 S.Ct. at 1520. In the case at bar, not only was the Federal Action commenced before the state court ruling, but it was filed before the State Action had even been initiated. Defendants have conceded that Exxon barred application of the Rooker-Feldman doctrine in this case stating in their Brief to the Tenth Circuit: Because the judgment entered in the state court action was rendered after the federal district court proceedings were commenced ­ in fact, the state court action was filed after the federal court action was filed ­ the Rooker-Feldman doctrine is inapplicable. (See Supplemental Brief, p. 3, attached here to as Exhibit C.) Defendants, however, argued that collateral estoppel also barred AWDI's claims. The Tenth Circuit failed to address any of the issues on the merits and simply ruled that the Rule 54(b) certification for the Order of Dismissal was deficient and dismissed the appeal. Now that the Supreme Court ruling in Exxon bars application of the Rooker-Feldman doctrine in this case, AWDI seeks relief from the Order of Dismissal in order to finally resolve the substantive issues in this case at trial as the parties were ready to do immediately prior to the entry of the Order of Dismissal. IV. A. ARGUMENT

Fed. R. Civ. P. 60(b) Provides This Court With the Perfect Opportunity to Revisit Its Order of Dismissal in Light of New Controlling Authority.

8
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Whether the Order of Dismissal constitutes a final judgment remains an issue. However, whether or not the Order of Dismissal is a final judgment does not affect the availability of Fed. R. Civ. P. 60(b) to allow for relief due to the recent change in controlling legal authority. Therefore, AWDI seeks relief so it may proceed to trial on its claims. Fed. R. Civ. P. 60(b) allows AWDI to file a motion for relief from order within a "reasonable time" on the grounds of "mistake, inadvertence, surprise, or excusable neglect ... a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application" or for "any other reason justifying relief from the operation of the judgment." The court in Watson v. Symons Corp., 121 F.R.D. 351 (N.D. Ill. 1988) held that it was a proper use of Rule 60 to call attention to the trial court an intervening controlling appellate decision: [A] 60(b)(1) motion filed within the time for an appeal is a proper means for calling the trial court's attention to an intervening controlling appellate decision ... [since] [t]his practice allows the trial court to correct a decision that would otherwise be corrected by a timely appeal. Id. at 353, citing Peacock v. Board of School Commissioners of Indianapolis, 721 F.2d 210, 214 (7th Cir. 1983); D.C. Federation of Civil Associations v. Volpe, 520 F.2d 451 (D.C. Cir. 1975). In addition to the D.C. and Seventh Circuits cited above, other jurisdictions and treatises have looked at this exact issue and found that a Rule 60(b) Motion is appropriate where the legal authority the trial court relied on was subsequently overruled: Under such circumstances there is indeed good sense in permitting the trial court to correct its own error and, if it refuses, in allowing a timely appeal from the refusal; no good purpose is served by requiring the parties to appeal to a higher court, often requiring remand for further trial proceedings, when the trial court is equally 9
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able to correct its decision in the light of new authority on application made within the time permitted for appeal. Schildhaus v. Moe, 335 F.2d 529, 531 (2nd Cir. 1964), citing Tarkington v. U.S. Lines Co., 222 F. 2d 358, 359 (2nd Cir. 1955) (holding district court should have properly treated motion for new trial as motion under Rule 60 since the motion was based on the fact that recent United States Supreme Court holding was in conflict with law relied upon by district court). The district court found that it could entertain Pruitt's motion for reconsideration under the provisions of Rule 60(b) of the Federal Rules of Civil Procedure. The district court adopted a construction of that rule which read the term "mistake" to encompass judicial mistake in applying the appropriate law. This view of the rule is that urged by the most noted commentators, 3 Barron & Holtzoff, Federal Practice & Procedure, ¶ 1325 at 407 (Wright ed. 1958); 7 Moore's Federal Practice, ¶ 60.22(3) (1971), and has, apparently, been accepted by this court. Meadows v. Cohen, 5 Cir. 1969, 409 F.2d 750; McDowell v. Celebrezze, 5 Cir. 1962, 310 F.2d 43. Oliver v. Home Indem. Co., 470 F.2d 329, 330 (5th Cir. 1972). The exact situation cited above exists here. This Court issued its Order of Dismissal on December 31, 2003 expressly relying on the Rooker-Feldman doctrine holding that if the issues between the state and federal courts are "inextricably intertwined" then it is irrelevant that the Federal Action was commenced before the state court ruling. (See Order of Dismissal, Exhibit B, p. 8.) The Tenth Circuit ultimately dismissed the appeal on October 12, 2005 on the basis that the Rule 54(b) certification was defective and, thus, the Order of Dismissal was not an appealable final judgment. Since the Order of Dismissal arguably became a final judgment on September 28, 2005, upon the stipulated dismissal of the remaining claims in the Federal Action, AWDI is within its appeal deadline, which is October 28, 2005 notwithstanding the filing of this Rule 60 Motion. 10
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Since this Court issued its Order of Dismissal, the United States Supreme Court has ruled that in order for the Rooker-Feldman doctrine to strip a federal court of jurisdiction, the state court ruling at issue must have been issued prior to the commencement of the Federal Action: The Rooker-Feldman doctrine, we hold today, is confined to cases of the kind from which the doctrine acquired its name: cases brought by state court losers complaining of injuries caused by state court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments. See Exxon, 125 S.Ct. at 1521-22 (emphasis added). Defendants admitted in their appellate brief that the Exxon ruling bars application of the Rooker-Feldman doctrine to this case. Therefore, no doubt exists that the Rooker-Feldman doctrine cannot be the basis for a dismissal of AWDI's claims in this case. Accordingly, AWDI seeks relief from the Order of Dismissal and requests that it be allowed to proceed to trial. While AWDI is able to again appeal the issue to the Tenth Circuit, which will certainly rule that the Rooker-Feldman doctrine is inapplicable, Rule 60(b) allows this court to properly vacate the Order of Dismissal to avoid any waste of time and expense for the parties, the Tenth Circuit, and this Court and to allow this case to properly proceed to trial. B. AWDI's Claims Are Not Barred By Collateral Estoppel.

Even though collateral estoppel was not argued by Defendants to this Court in its Suggestion that the Court Lacks Subject Matter Jurisdiction, and even though this Court never addressed or relied on collateral estoppel in its Order of Dismissal, Defendants argued in a supplemental brief to the Tenth Circuit that collateral estoppel barred AWDI's claims. However, collateral estoppel clearly provides no such bar. The statement by the State Court in its May 9, 2003 Order that AWDI was in breach of the AGRI related only to the Petition under the Spurious 11
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Lien Act -- specifically pertaining to AWDI's refusal to accept Cabeza's tender -- and not the entire case on the merits, and certainly not to AWDI's claims in the Federal Action. Even the State Court has refused to hold that its statements in the May 9, 2003 Order are conclusive to AWDI's state court claims against Cabeza and Vaca for breach of the AGRI. Indeed, the May 9, 2003 Order was a specific order on a specific issue which was neither intended by the State Court, nor works to, deprive AWDI of the ability to fully litigate its federal claims against Defendants. Generally, the doctrine of collateral estoppel precludes relitigation of an issue that was already litigated and decided in a previous proceeding.2 See Grynberg v. Arkansas Oklahoma Gas Corp., 116 P.3d 1260, 1263 (Colo. App. 2005). The following factors must be satisfied to apply the doctrine of collateral estoppel: (1) the issue precluded is identical to an issue actually determined in the prior proceeding; (2) the party against whom estoppel is asserted was a party in the prior proceeding; (3) there is a final judgment on the merits in the prior proceeding; and (4) the party against whom estoppel is asserted had a full and fair opportunity to litigate the issue in the prior proceeding. Id. While AWDI is a party to the state court proceeding under the second prong, none of the remaining three prongs are met here to justify the application of collateral estoppel. 1. There Has Been No Final Judgment On The Merits in the Prior Proceeding.

The third prong for the application of collateral estoppel is that "there is a final judgment on the merits in the prior proceeding." Grynberg, 116 P.3d at 1263. Defendants have argued that the state court finding is a final judgment since the May 9, 2004 Order was affirmed on

2

Collateral estoppel issues in diversity cases are governed by state law. Gates Learjet Corp. v. Duncan Aviation, 851 F.2d 303, 305 (10th Cir. 1998).

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appeal. However, only the issue of whether the liens asserted by AWDI were spurious was certified and appealed to the Colorado Court of Appeals. The broader issue of whether the parties breached any aspect of the AGRI has not been the subject of any final judgment. Indeed, the State Court has specifically and expressly refused to issue a final judgment on AWDI's claims for breach of the AGRI. Defendants' state court Motion for Entry of Final Judgment, arguing this exact issue, has been rejected. The State Court has similarly refused to rule on Defendants' Motion for Summary Judgment again arguing this issue. In effect, Defendants would have this Court give greater weight to the state court order than that very State Court is willing to give. It may be true that the issue of whether AWDI asserted spurious liens or not has been reduced to final judgment; but that is an issue that is not before this Court. However, it cannot be said that the issue of Defendants' breach of the AGRI has been similarly reduced to a final judgment, especially while that exact issue remains in dispute in state court. Since the State Court has refused to find that its statements in the May 9, 2003 Order constitute a final judgment on AWDI's state court claims, this Court should similarly refuse to make such a finding. Since the breach of contract claims have not been reduced to a final judgment, collateral estoppel cannot apply. Indeed, that is why Defendants tried to invoke Rooker-Feldman to begin with. 2. The State Court Dicta is Neither Identical to the Issues Here, Nor Was it Actually or Necessarily Determined By the State Court.

"To satisfy the first element of collateral estoppel, the issue to be precluded must be identical to an issue actually litigated and necessarily adjudicated in the prior proceeding." Id. citing Bebo Constr. Co. v. Mattox & O'Brien, P.C., 990 P.2d 78 (Colo. 1999). The sole issue before the State Court was the application of the Spurious Lien Act. The State Court was charged with determining whether the liens AWDI had on the property were valid or spurious. 13
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The only breach of the AGRI that was at issue in the State Court was whether AWDI had to release the Security Documents. This was only one of the many issues with respect to various claimed breaches under the AGRI. Defendants have focused on the statement by the State Court, that "AWDI knows that it is breaching its contractual obligations to release, and hence knows that its Security Documents are groundless and invalid," even though this statement on its face addresses only the Security Documents ultimately released. It was not intended to encompass all of AWDI's claims for breach of the AGRI and Deed of Trust. Further, it is noteworthy that the Federal Action concerns only facts that occurred prior to the State Action being filed, and the State Action concerns only facts that occurred after the Federal Action was filed, demonstrating the distinct nature of the two actions. The remark made by the State Court in its May 9, 2003 Order and the broader issues of both contract and tort in this Federal Action are clearly not identical. In this case AWDI is asserting claims for declaratory judgment under the AGRI, tortious interference against Defendants for interfering with Cabeza's performance of the AGRI, and breach of covenant of good faith and fair dealing. These claims have little, if anything, to do with the issue of a spurious lien and/or the Security Documents. Just as the State Court has declined to hold that its statements in the May 9, 2003 Order that were particular to the issues of the spurious lien motion control on the broader breach of contract issues, this Court should similarly determine that such a particular finding is not controlling here. Additionally, the broader breach of contract issues were not actually litigated as the only issue before the State Court was whether the Security Documents constituted spurious liens. And further, since only the validity of the liens and Security Documents were at issue in the state 14
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court proceeding, the statement by the State Court that AWDI was in breach of the AGRI, especially as it might relate to areas of the AGRI that were not discussed, was not necessary to the state court's ruling under the Spurious Lien Act. 3. Since AWDI's Broader Claims Were Not at Issue at the SpuriousLien Hearing, It Has Not Had a Full and Fair Opportunity to Litigate All Issues relating to any Breach of the AGRI.

The fourth prong that must be satisfied for collateral estoppel is that AWDI must have had "a full and fair opportunity to litigate the issue in the prior proceedings." Grynberg, 116 P.3d at 1263. Defendants argue that the State Court's statement in the May 9, 2003 Order demonstrates that Defendants were never in breach of the AGRI. Clearly this broader issue was not before the State Court at the spurious lien hearing and AWDI has yet to have a full and fair opportunity to litigate the issue. In order to determine if a party against whom estoppel is asserted had a full and fair opportunity to litigate the issue claimed to have been decided in a previous proceeding, the following factors are considered: (1) whether the remedies and procedures of the first proceeding are substantially different from the proceeding in which collateral estoppel is asserted, (2) whether the party against whom collateral estoppel is asserted had sufficient incentive to litigate vigorously, and (3) the extent to which the issues are identical. Id. at 1265. The spurious lien hearing was not an evidentiary hearing on the merits for all of AWDI's claims. To allow counsel to expand the limited scope of the hearing, after the fact, and use it to preclude AWDI from litigating its remaining claims and issues would violate AWDI's right to due process. Bebo Constr. Co. v. Mattox & O'Brien, P.C. et al., 990 P.2d 78, 87 (Colo. 1999) ("An inquiry into whether a party received a full and fair opportunity to litigate an issue must 15
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look to whether the individual proceeding was so inadequate or so narrow as to deprive an individual of his or her due process rights should application of the doctrine of collateral estoppel be used to bar relitigation of that issue."); Pomeroy v. Waitkus, 517 P.2d 396, 400 (Colo. 1997) ("[A]lthough the policy of limiting litigation is sound, it should not be applied so as to deprive a party of procedural due process ­ the right of a full and fair opportunity to litigate the ultimate issue in the case ... ."). In enacting C.R.S. § 38-35-201, the intent of the General Assembly was to halt the filing of invalid liens against real property. People v. Marston, 772 P.2d 615, 617 (Colo. 1989). "The relevant inquiry at the preliminary hearing on probable cause is whether [a person] knew or had reason to know the filing of the document would unjustifiably cloud the property's title." Id. at 617. The preliminary hearing to show cause is conducted pursuant to C.R.S. § 38-35-204, which provides in pertinent part: (1) Any person whose real or personal property is affected by a recorded or filed lien or document that the person believes is a spurious lien or spurious document may petition the State Court ... for an order to show cause why the lien or document should not be declared invalid ... The order to show cause may be granted ex parte and shall: (a) Direct any lien claimant and any person who recorded or filed the lien or document to appear as respondent before the court at a time and place certain not less than ten days nor more than twenty days after service of the order to show cause why the lien or document should not be declared invalid and why such other relief provided for by this section should not be granted; (b) State that, if the respondent fails to appear at the time and place specified, the spurious lien or spurious document will be declared invalid and released; and 16
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(c) State that the court shall award costs, including reasonable attorney fees, to the prevailing party. C.R.S. § 38-35-204(1) (emphasis added). C.R.S. § 38-35-204(2) provides that following a hearing on an order to show cause: If ... the court determines that the lien or document is a spurious lien or spurious document, the court shall make findings of fact and enter an order and decree declaring the spurious lien or spurious document and any related notice of lis pendens invalid, releasing the recorded or filed spurious lien or spurious document, and entering a monetary judgment in the amount of the petitioner's costs, including reasonable attorney fees, against any respondent and in favor of the petitioner. A court's determination pursuant to C.R.S. § 38-35-204(2) is limited solely: (1) to declare whether the lien or document is (or is not) spurious; and (2) to award costs and attorney fees to the prevailing party. Here, the State Court found that AWDI breached the AGRI by refusing to accept Cabeza's tender, and that such refusal rendered the Security Documents spurious. (See May 9th Order, Exhibit B.) Consequently, the court declared the Security

Documents invalid and ordered that they be released. Id. No other issues were before the State Court. These preliminary hearings under the Spurious Lien Act are analogous to a hearing for a preliminary injunction. "In granting a preliminary injunction, the court should not attempt to do what can be done only after a full hearing and final decree." Litinsky v. Querard, 683 P.2d 816, 818 (Colo. Ct. App. 1984). The grant or denial of a preliminary injunction does not amount to an adjudication of the ultimate rights in controversy. Id. Factual findings made in a preliminary

injunction hearing may not sua sponte be used to dispose of an action. Governor's Ranch Professional Ctr., Ltd. v. Mercy of Colorado, Inc., 793 P.2d at 650. 17
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While the State Court received information at the hearing regarding the spurious lien and breach claims of Cabeza, this information went solely to the narrow issue then before the court. Based upon the limited evidence presented at the hearing, the State Court denied AWDI's request for a receiver and declared the Security Documents spurious. The State Court's

determination at the preliminary hearing neither amounted to an adjudication or a sua sponte disposition of all of AWDI's claims, as evidenced by the State Court's refusal to issue a final judgment on the claims or to rule on summary judgment. Thus, it is especially true that the even broader issues presented in this Federal Action for injunctive relief, declaratory judgment, tortious interference and breach of covenant of good faith and fair dealing have not been fully litigated and should not be precluded. Defendants, in raising collateral estoppel as an affirmative defense, are attempting to take an out-of-context statement, made by a state court judge for a particular and limited purpose, and expand it to bar AWDI from ever being able to litigate its claims in any fashion in any court. A determination of whether liens are spurious is simply not identical to the entirety of AWDI's claims in this matter. The proceedings were particular to spurious lien issues and the issue AWDI was charged to defend was merely the validity of its liens, not the entirety of its case. Most notably, the fact that the State Court has refused to find that the May 9, 2003 Order constitutes or supports a final judgment on AWDI's breach of contract claims demonstrates that the issue has not been fully and fairly litigated. Accordingly, collateral estoppel cannot be used to bar AWDI's ability to properly, and finally, litigate its claims. C. If Relief Under Rule 60(b) is Not Granted, AWDI Requests Entry of Final Judgment.

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The Order of Dismissal was issued on December 31, 2003. AWDI requested Rule 54(b) certification of a final judgment to appeal the issue, which this Court granted on May 18, 2004. As the parties to the appeal were awaiting a pending ruling from the Tenth Circuit, this Court granted a Stipulated Dismissal and dismissed the remaining claims without prejudice on September 28, 2005. On October 12, 2005, the Tenth Circuit issued its ruling that the Rule 54(b) certification was defective and dismissed the appeal. AWDI is now faced with the situation where its appeal has been dismissed for a lack of a final judgment. Therefore, in order to assure that AWDI may properly present the issue for appeal, and if relief under Fed. R. Civ. P. 60(b) is not granted, AWDI requests this Court issue a final judgment pursuant to Fed. R. Civ. P. 58(d). IV. CONCLUSION

The Supreme Court ruling in Exxon unquestionably precludes the application of the Rooker-Feldman doctrine to the case at bar since AWDI's Federal Action was commenced before the state court ruling at issue. Therefore, this Court's Order of Dismissal relying on the Rooker-Feldman doctrine, issued without the benefit of the Supreme Court's decision in Exxon, cannot properly be based on the now-clarified scope of the Rooker-Feldman doctrine. Now that the Tenth Circuit has dismissed the appeal for the lack of a final judgment under Rule 54(b), this Court has the opportunity to revisit the Order of Dismissal. Since the Rooker-Feldman doctrine, as well as collateral estoppel, cannot be used to properly dismiss AWDI's claims, this Court should vacate the Order of Dismissal and allow the claims to finally proceed to trial. If this Court chooses not to grant AWDI relief from the Order of Dismissal, AWDI respectfully requests this Court enter a final judgment pursuant to Fed. R. Civ. P. 58(d) so that AWDI may properly resolve the issue on appeal. 19
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WEHREFORE, AWDI respectfully requests this Court vacate the Order of Dismissal issued on December 31, 2004 and allow AWDI to proceed to trial on its remaining claims, or in the alternative, issue a final judgment on the Order of Dismissal so that the issue can be properly resolved on appeal.

_____s/____________________________________ Richard I. Brown Patrick J. Casey LOTTNER RUBIN FISHMAN BROWN & SAUL, PC 633 Seventeenth Street, Suite 2700 Denver, CO 80202 Telephone (303) 292-1200

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CERTIFICATE OF SERVICE The undersigned hereby certifies that on this 20th day of October 2005 a true and correct copy of the foregoing MOTION FOR RELIEF FROM ORDER was served via the CM/ECF system, addressed as follows: Allan L. Hale, Esq. John G. Lubitz, Esq. Robert G. Hoban, Esq. HALE FRIESEN, LLP 1430 Wynkoop St., Suite 300 Denver, CO 80202 Attorneys for Stockman's Water Co. and Gary Boyce Stanley L. Garnett, Esq. A. W. Victoria Jacobs, Esq. Susan P. Klopman, Esq. Annie T. Kao, Esq. BROWNSTEIN HYATT & FARBER, PC 410 17th St., Suite 2200 Denver, CO 80202-4437 Attorneys for Vaca Partners, LP and Farrallon Capital Mgmt., LLC, and Jason Fish Scott Sundrstrom, Esq. NYEMASTER GOOD VOIGTS WEST HANSELL & O'BRIEN 700 Walnut Street, Ste. 1600 Des Moines, IA 50399-3899 Attorneys for Vaca Partners, LP and Farrallon Capital Mgmt., LLC, and Jason Fish

Elliot R. Peters, Esq. Michael S. Kwun, Esq. KEKER & VAN NEXT, LLP 710 Sansome Street San Francisco, CA 94111-1704 Attorneys for Vaca Partners, LP and Farrallon Capital Mgmt., LLC, and Jason Fish Robert J. Bruce, Esq. LINDSEY & BRUCE, P.C. 730 17th Street, Ste. 370 Denver, CO 80202 Attorneys for Peter Hornick

s/ Ed Wesselhoff

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