Sisters v. ACM

23CA1785 Sisters v ACM 09-19-2024

COLORADO COURT OF APPEALS

Court of Appeals No. 23CA1785
City and County of Denver District Court No. 22CV31321
Honorable Martin F. Egelhoff, Judge

Sisters of Color United for Education, d/b/a HEAL Denver, a Colorado
nonprofit corporation,

Plaintiff-Appellee,

v.

ACM Park Hill JV VII, LLC, a Delaware limited liability company,

Defendant-Appellant.

JUDGMENT AFFIRMED

Division VII
Opinion by JUDGE SCHUTZ
Tow and Pawar, JJ., concur

NOT PUBLISHED PURSUANT TO C.A.R. 35(e)
Announced September 19, 2024

Achieve Law Group, LLC, Aaron A. Boschee, Jerome A. DeHerrera, David C.
Kelley, Benjamin P. Meade, Denver, Colorado, for Plaintiff-Appellee

Holley, Albertson & Polk, P.C., Dennis B. Polk, Eric E. Torgersen, Lakewood,
Colorado, for Defendant-Appellant
¶1 Defendant, ACM Park Hill JV VII, LLC (ACM), appeals the trial

court’s judgment in favor of plaintiff, Sisters of Color United for

Education, d/b/a HEAL Denver (Sisters of Color). We affirm the

judgment.

I. Background and Procedural History

¶2 This appeal arises out of a lease relationship between ACM

and Sisters of Color. The dispute centers on whether Sisters of

Color was entitled to occupy the clubhouse1 on Park Hill Golf

Course (golf course) without paying rent until such time as Sisters

of Color had recouped the value of significant improvements that it

paid for to renovate the clubhouse. The negotiations and

representations among the parties and their principals led to the

creation of the disputed lease. Many of the entities involved in

these negotiations acted through specific individuals, some of whom

acted on behalf of multiple entities.

¶3 To assist the reader in understanding the interplay between

the entities and individuals involved, we include the following table:

1 The record is not clear whether the leased premises included all or

a portion of the clubhouse.

1
Entity Employees Role
Sisters of Color Adrienna Lujan Executive Director
ACM Kenneth Ho Golf course manager
Westside Investment Kenneth Ho Principal
Partners (Westside) Megan Waldschmidt Vice President

Holleran Property Norman Harris Manager
Management and Tyrone Hubbard Executive
Development, LLC
(Holleran)

A. Agreement Between the Parties

¶4 At the completion of a bench trial, the court entered a detailed

and thoughtful order, which includes the following factual findings.

¶5 ACM is a limited liability company. In 2019, ACM acquired

title to the golf course. The golf course and clubhouse were in a

state of disrepair when ACM took possession of the property.

Particularly, the clubhouse was severely dilapidated, was overrun

with rodents and pests, had standing gray water in the kitchen, and

had mold damage. Rather than fronting the costs of renovating the

property, ACM sought tenants who were willing to pay for

clubhouse improvements in exchange for free or reduced rent until

the expenses for the improvements were recovered.

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¶6 Westside is a part owner of ACM. The trial court found that

Westside “controls [the golf course] and development project,

including ACM.”

¶7 Sisters of Color is a nonprofit corporation with the broad

mission to provide services to underserved communities. Sisters of

Color was looking for rental space to locate its operations.

¶8 In spring 2020 ACM, Harris, and Hubbard worked together

informally to organize meetings to develop community support for

the development of the golf course, including the clubhouse.

Hubbard invited Lujan to the community meetings.

¶9 In October 2020 Westside and ACM hired Holleran as a

consultant to find prospective tenants. Holleran received a monthly

commission and an equity interest in the development as a part of

the agreement. Hubbard met with representatives of

ACM/Westside weekly to discuss the status of the efforts to develop

and lease the clubhouse.

¶ 10 In November 2020 Hubbard and Lujan started seriously

discussing the terms of a potential lease between ACM and Sisters

of Color. With respect to these negotiations, the trial court found as

follows:

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Due to its dilapidated condition and Holleran
and ACM/Westside’s position on renovations,
it was the clear expectation and intent of Ms.
Lujan that Sisters of Color would fund and
oversee the necessary renovations required to
render the [c]lubhouse suitable for community
use in lieu of rental payments. That was
likewise the clear and expressed intent of
Hubbard, acting on behalf of Holleran, as well
as ACM/Westside.

¶ 11 In anticipation of Sisters of Color commencing work on the

clubhouse, Waldschmidt emailed Lujan a form lease agreement that

she intended Hubbard to use in preparing a lease with Sisters of

Color. In February 2021 Holleran executed a three-year lease with

Sisters of Color. The lease was based on the standard form but

unbeknownst to Hubbard and Sisters of Color, the lease did not

reflect their negotiated agreement that Sisters of Color would be

reimbursed for the cost of improving the clubhouse through rental

credits. As the trial court explained:

Despite all parties’ intent and expectation that
renovation costs would be funded by Sisters of
Color in lieu of rent, the agreement as
executed contained a base rent over a three-
year lease term of $30,00[0] for the first year,
$36,000 for the second year, and $42,000 for
the third year. Mr. Hubbard testified credibly
that the provision was added to reflect Sister[s]
of Color’s offsetting payments for the amount
of work that it would subsequently fund for

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[c]lubhouse improvements, but that the
amounts would be “zeroed-out” by the
renovation costs. The base rate, totaling
$108,000 over the three-year period, was
based upon Sister[s] of Color’s estimated
renovation costs, with an expectation that an
addendum modifying the base rent would later
be executed to reflect the actual renovation
cost.

Contrary to the parties’ intent, the executed lease also included

provisions stating that the tenant accepted the property “AS-IS,

WHERE IS AND WITH ALL FAULTS” and that any improvements to

the premises would be paid for by the tenant.

¶ 12 In accordance with its understanding of the lease agreement,

Sisters of Color paid for the renovations to the clubhouse, including

addressing electrical, plumbing, and structural issues, and mold

and vermin remediation. In total, Sisters of Color spent

$196,157.06 on the renovations.

¶ 13 Ho, Hubbard, and Waldschmidt met weekly to discuss Sisters

of Color’s progress on the renovations. Waldschmidt represented to

a potential renter that the clubhouse was temporarily closed from

February until April for “much needed repairs and improvements.”

In March 2021, in anticipation of the renovations — and with

ACM’s prior conferral and approval — Hubbard and Harris

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published an editorial in the Denver Post discussing Sisters of

Color’s renovation efforts. The editorial stated that Westside and

Holleran were working as “codevelopers.”

¶ 14 At no point during the construction process did ACM,

Westside, or Holleran object to the improvements that Sisters of

Color funded.

B. Post-Renovation

¶ 15 In June 2021, Sisters of Color attempted to hold a meeting in

the newly renovated space but was told that another group had

been in contact with Westside and was given permission to use the

space at the same time. When Lujan called Waldschmidt to discuss

the double booking, Waldschmidt told her that Sisters of Color had

no right to use the space until it entered into a new lease

agreement. That August, Sisters of Color tried to use the clubhouse

for another event and was again told that it could not use the

renovated space.

¶ 16 At around the same time, Sisters of Color reviewed the lease

agreement and realized that it did not contain a provision

addressing the reimbursement of its expenditures on the clubhouse

through rental credits. Throughout the summer, the parties

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attempted to renegotiate the lease, but they were unable to reach an

agreement.

C. Trial and Subsequent Appeals

¶ 17 Sisters of Color’s complaint named ACM and Holleran as

defendants. Sisters of Color asserted nine claims2 for relief,

including — in pertinent part — an unjust enrichment claim

against Holleran and ACM and a breach of contract claim against

Holleran.3 Sisters of Color requested an award of damages in the

amount of the improvements it paid for and costs.

¶ 18 In response, ACM claimed that Sisters of Color could not

maintain any direct claims against it because Holleran lacked

actual and apparent authority to act on ACM’s behalf, Holleran’s

2 In addition to the breach of contract and unjust enrichment

claims at issue on appeal, the complaint asserted seven additional
claims: tortious interference (against ACM); promissory estoppel
(against Holleran); civil theft (against Holleran); conversion (against
Holleran); constructive eviction (against Holleran); breach of the
implied covenant of quiet enjoyment (against Holleran); and
vicarious liability. Before the trial, Sisters of Color withdrew its civil
theft, conversion, and constructive eviction claims against Holleran.
The trial court dismissed the tortious interference claim against
ACM at the completion of the evidence.
3 The trial court entered judgment against Holleran on Sisters of

Color’s promissory estoppel claim; however, we do not address the
claim’s merits because Holleran dismissed its appeal.

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conduct could not be attributed to ACM, and Sisters of Color acted

at its own peril by making the clubhouse improvements.

¶ 19 In resolving the parties’ claims, as material on appeal, the trial

court specifically found as follows:

• ACM, Westside, Holleran, and Sisters of Color understood

and agreed that Sisters of Color would facilitate the

clubhouse renovations and that the costs incurred by

Sisters of Color would be in lieu of rent.

• The lease agreement between ACM and Sisters of Color

mistakenly failed to incorporate a provision that added

base rental payments to reflect the value of the

anticipated renovation costs. Thus, the February 2021

executed lease agreement failed to include the

agreement’s essential terms; and therefore, there was not

an enforceable contract.

• Because the lease agreement was not an enforceable

contract, Sisters of Color’s breach of contract claim

failed.

The trial court entered judgment in Sisters of Color’s favor on its

unjust enrichment claim, finding as follows:

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• Sisters of Color’s tenant improvements enhanced the

clubhouse by making the property suitable for ACM’s and

its subsequent tenants’ use.

• An appreciable portion of the clubhouse improvement

costs — including plumbing, electrical, and mold and

vermin remediation — are readily apparent.

• It would be unjust to allow ACM, Westside, and Holleran

to retain the benefit conferred by Sisters of Color without

paying its value.

• The value of the improvements conferred by Sisters of

Color to ACM’s benefit was $196,157.06 — the total

amount Sisters of Color paid for the improvements to the

clubhouse.

The trial court held Holleran and ACM jointly and severally liable

for $196,157.06 and awarded costs and postjudgment interest.

¶ 20 ACM and Holleran appealed the trial court’s judgment. ACM

also separately appealed the trial court’s award of postjudgment

9
interest and costs.4 Holleran was dismissed from the appeal, so we

only address ACM’s claims of error.

II. Analysis

¶ 21 As a threshold matter, ACM contends that the trial court

erroneously concluded that the lease agreement between Sisters of

Color and ACM was not an enforceable contract. If the lease

agreement is valid, ACM’s argument continues, then the unjust

enrichment claim fails as a matter of law. ACM also contends that

the trial court erred by concluding that Sisters of Color established

its unjust enrichment claim. We address these issues in turn.

A. Standard of Review and Applicable Law

¶ 22 If a written document is a complete and accurate expression of

the agreement between the contracting parties, then the court may

not admit evidence that varies or contradicts the essential terms of

the written document. Aztec Sound Corp. v. W. States Leasing Co.,

510 P.2d 897, 898-99 (Colo. App. 1973). The rule does not apply to

writings that do not contain all the terms and conditions of the

parties’ agreement. Id. If the court determines that the written

4 We separately address ACM’s postjudgment interest and cost

arguments in Case No. 23CA2129.

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agreement fails to include the essential terms of an agreement, it

may admit parol evidence — including the parties’ conduct — to

determine the intent of the parties. Harmon v. Waugh, 414 P.2d

119, 121 (Colo. 1966). Resolution of that disputed evidence

presents a question of fact that we review for clear error. See E-470

Pub. Highway Auth. v. 455 Co., 3 P.3d 18, 22 (Colo. 2000).

¶ 23 We review de novo whether the trial court applied the proper

legal test for determining whether a party has established its claim

for unjust enrichment. Indian Mountain Corp. v. Indian Mountain

Metro. Dist., 2016 COA 118M, ¶ 26. “Unjust enrichment is a

judicially created remedy designed to avoid benefit to one to the

unfair detriment of another.” Martinez v. Colo. Dep’t of Hum. Servs.,

97 P.3d 152, 159 (Colo. App. 2003). To prevail on an unjust

enrichment claim the plaintiff must show that “(1) at the plaintiff’s

expense, (2) the defendant received a benefit, [and] (3) under

circumstances that would make it unjust for the defendant to retain

the benefit without paying.” Id.

¶ 24 When a trial court resolves factual disputes to apply the

elements of an unjust enrichment claim, we review such factual

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findings for clear error. R.A.S. Builders, Inc. v. Euclid &

Commonwealth Assocs., 965 P.2d 1242, 1243 (Colo. 1998).

B. The Enforceability of the Lease

¶ 25 In concluding that the lease failed as a matter of law, the trial

court found,

[T]he evidence overwhelmingly establishes that
the clear intention of ACM/Westside, in
conjunction with its de facto partner and co-
developer Holleran, was to engage one or more
non-profit organizations to renovate and
activate the dilapidated [c]lubhouse for
community uses, as an essential component of
their broader development of the [golf course].
The evidence clearly establishes that
ACM/Westside, Holleran, and Sisters of Color
all understood and agreed that the ultimate
tenant, here Sisters [of Color], would have
broad discretion to facilitate the [c]lubhouse
renovations and that the costs of such
renovations would be incurred by Sisters of
Color in lieu of rent.

These findings enjoy record support and we are bound by them on

appeal. See Lyon v. Amoco Prod. Co., 923 P.2d 350, 355 (Colo. App.

1996).

¶ 26 Despite the parties’ clear intent, the court found that “the form

lease agreement that was ultimately executed by the parties

included provisions that were contrary to the express intentions of

12
the parties, particularly as they pertained to Sisters’ rights and

obligations regarding improvements to the facility.”

¶ 27 Based on its findings, which are supported by the record, the

trial court concluded “that the written instrument executed by the

parties on February 4, 2021, fails to include essential terms

contemplated by the parties” and therefore “cannot form the basis

of an enforceable contract by any party to this action.” We perceive

no error in this conclusion.

¶ 28 We also reject ACM’s argument that the trial court erred by

admitting parol evidence in light of the lease’s integration clause.

As the supreme court has explained,

[W]hen a contract has been expressed in
writing, to which both parties have assented as
a complete and accurate expression of their
agreement, evidence, whether parol or
otherwise, of antecedent understandings and
negotiations is not admissible for the purpose
of varying or contradicting the terms of the
writing. But where, as here, the issue is
whether the parties have made a contract, and
whether such contract is expressed in a
particular writing and, if so, whether the
writing has been assented to as the complete
and accurate expression of their agreement,
any evidence tending to explain or clarify the
intent and purpose of the parties is admissible.

13
Miller v. L. C. Fulenwider, Inc., 362 P.2d 570, 574 (Colo. 1961). The

trial court’s admission of the parol evidence in this case was

consistent with these principles.

¶ 29 We discern no error in the trial court’s findings of fact, or in its

legal conclusion that the lease was unenforceable as a matter of law

because it failed to express the intention of the parties. See

Harmon, 414 P.2d at 121.

C. The Unjust Enrichment Claim

¶ 30 ACM argues that the trial court erroneously found that Sisters

of Color satisfied the elements of its unjust enrichment claim. As

previously noted, the claim required proof that (1) at Sisters of

Color’s expense; (2) ACM received a benefit; and (3) under

circumstances that would make it unjust for ACM to retain the

benefit without paying. See Martinez, 97 P.3d at 159.

¶ 31 It is undisputed that Sisters of Color paid $196,157.06 for the

clubhouse improvements, so the first element is satisfied.

1. The Received Benefit

¶ 32 As it relates to the second element, we perceive no error in the

trial court’s conclusion that ACM received a benefit from Sisters of

Color’s renovations. As best we understand its argument, ACM

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contends that Sisters of Color made the renovations for its specific

purpose and that the improvements did not benefit ACM. Relatedly,

ACM argues that the trial court erred by equating the amount spent

on the improvements with the unjust benefit bestowed on ACM. We

disagree with both contentions.

¶ 33 The trial court found that “the tenant improvements performed

by Sisters of Color enhanced the value of the property by making

previously unusable spaces within the [c]lubhouse suitable for use

by . . . ACM/Westside and/or its subsequent tenants.” Prior to the

renovations, the clubhouse had numerous structural and cosmetic

deficiencies. Sisters of Color paid to fix these defects. Moreover,

the objective benefit of the improvements was manifested by ACM’s

ability to lease the improved space to third-party tenants once

Sisters of Color was no longer allowed to use the clubhouse. And

the subjective value of the improvements was reflected by the fact

that ACM began using the space shortly after Sisters of Color was

forced out.

¶ 34 Based on these findings the court concluded that “to place

Sisters of Color in the position it previously occupied requires that

the parties in receipt of the benefit conferred, here ACM/Westside

15
and Holleran, compensate Sisters for the total amount of

$196,157.06 that it expended in renovating and improving the . . .

[c]lubhouse.” Given the trial court’s findings, we cannot conclude

that it erred by equating the cost of the improvements paid for by

Sisters of Color with the value conferred upon ACM.

2. The Unjust Benefit

¶ 35 Finally, as it relates to the third element, we reject ACM’s

contention that the trial court erred by concluding that it would be

unjust for ACM to retain the benefits of the clubhouse renovation

without paying Sisters of Color for the costs of the improvements.

¶ 36 ACM mistakenly relies on DCB Construction Co. v. Central City

Development Co., in which the supreme court held that in some

situations involving tenant improvements, a landlord may not be

held responsible on a theory of unjust enrichment unless the

landlord has engaged in “improper, deceitful, or misleading

conduct.” 965 P.2d 115, 122 (Colo. 1998). The supreme court

developed the rule in recognition of the fact that tenants often

contract for improvements to a leased property independently of

any involvement or wrongful action by the landlord. Id. at 121. In

such circumstances, even though there may be some benefit to the

16
landlord, the court reasoned it would be inequitable to saddle a

landlord with the obligation of being a de facto guarantor of any

improvements procured by a tenant. Id.

¶ 37 But the supreme court later clarified that the rule it

articulated in DCB does not apply to all unjust enrichment claims

arising out of a tenant’s payment for improvements to a leased

property. See Lewis v. Lewis, 189 P.3d 1134, 1142 (Colo. 2008).

Rather, the rule is limited to situations in which the tenant

improvements were made without any involvement or wrongdoing

by the landlord. See id.

¶ 38 The trial court recognized these principles and then applied

them to the unique factual circumstances of this dispute. In

contrast to the scenario addressed in DCB, the trial court

recognized that in this case, the subject improvements were not

undertaken independently of ACM. The trial court reasoned that

the very essence of ACM and Holleran’s
business model was to facilitate the
development and ultimate usage of the
[c]lubhouse through tenant-funded
renovations in lieu of rental payments. Unlike
DCB . . . , where the risk of loss among two
“innocent” parties must be allocated, the
parties in this case clearly anticipated that
Sisters of Color would confer a benefit to the

17
property and its owners/landlords through its
expenditures for renovations, and thereafter
recoup the reward of the benefit via its
utilization of the space.

¶ 39 As the trial court found, ACM was fully aware of and

supported Sisters of Color’s renovations. Indeed, it actively

pursued a tenant like Sisters of Color to front the improvement

costs in exchange for future use of the clubhouse without the

obligation to pay rent until the value of the improvements had been

recouped.

¶ 40 ACM — both through its agents and directly— was aware that

Sisters of Color paid for the improvements pursuant to the very

structure that ACM solicited. Indeed, as the trial court found, “the

claim in this case is being made by a purported tenant who, after

fully compensating contractors for improvements made by the

tenant at the behest of the owner/landlord, is seeking compensation

for the benefit conferred upon the owner/landlord that was

incurred at the tenant’s expense and to its detriment.” Thus, the

tenant improvements were not made independently of ACM and the

factual predicate for the DCB rule is not present.

18
¶ 41 But even if the limited rule of DCB applied to this case, the

trial court’s factual findings support the conclusion that ACM

engaged in “improper, deceitful, or misleading conduct” related to

the tenant improvements. ACM solicited a tenant who would front

the cost of the tenant improvements, which Sisters of Color did.

ACM and its principals were aware of and approved the

improvements as they were being constructed. ACM was also aware

that Sisters of Color would be permitted to use the leased premises

rent free until such time as it had recovered the value of the

expenditures it made for the tenant improvements.

¶ 42 Despite these circumstances, when Sisters of Color began to

occupy the space, ACM denied the existence of a reimbursement

agreement and refused to allow Sisters of Color to occupy the space

unless it negotiated a new lease. When Sisters of Color refused,

ACM took over the leased space for its own operations and to obtain

other tenants.

¶ 43 These findings support the conclusion that, at the very least,

ACM engaged in “improper” or “misleading” conduct relative to the

construction and subsequent use of the tenant improvements. See

DCB, 965 P.2d at 122. Thus, we see no error in the trial court’s

19
conclusion that “given the unique circumstances of this case, . . .

having conferred the benefit of the enhanced value of the

[c]lubhouse upon ACM . . . , it would be unjust for [ACM] to retain

the benefit without commensurate compensation.”

III. Disposition

¶ 44 The trial court’s judgment is affirmed.

JUDGE TOW and JUDGE PAWAR concur.

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