James Ingalls purchased the Indian Mountain Corporation (IMC) in August 2013 and began charging the Indian Mountain Metro District (IMMD) in Como for the sub-division’s water augmentation plan. IMMD did not agree with the charges and Ingalls took the sub-division to court.
In a decision rendered by District Court Judge Stephen A. Groome March 16, the judge sided with the defendants and ruled, “the court finds and concludes that the facts of this case ‘cry out’ for the court to impose the equitable remedy of a constructive trust.”
The ruling by Groome finds that “IMC received a benefit (proceeds from lot sales) from the purchasers of the lots, and that IMC would be unjustly enriched by charging ongoing fees forty (40) years later for use of the augmentation water.”
The ruling when on to state, “IMC holds title to the Augmentation Plan and its associated rights as trustee for the express benefit of the Indian Mountain property owners, the beneficiaries.”
In a statement to the Indian Mountain Property Owner’s Association, Roger Mattson and the ad hoc water committee thanked all those who helped with the case.
“The ad hoc water committee, Peter Ampe, Glenn Haas, Roger Mattson and Susan Stoval, extends its congratulations and thanks to all who aided this effort with their good will and donations,” Mattson said.
IMC is entitled to be reimbursed for its actual and reasonable expenses for maintenance, repair and operation of the plan or may delegate this task to IMMD but IMC cannot profit from the plan.
The corporation, if it elects to do so, can turn over ownership of the plan to IMMD, after which IMC’s ongoing obligations regarding the plan shall cease.
James Campbell was the owner of IMC and the augmentation plan from 1976 through 2013. During that period, IMC operated the plan at its own expense, receiving no compensation from IMDD or the individual lot owners.
In August 2013, Campbell sold IMC and all of its assets to Ingalls and Mark Goosmann of Bar Star LLC for $290,000. Ingalls bought out Goosmann December 2013 and became the sole owner of IMC.
November 2013, Ingalls sent IMDD invoices for the years 2012 and 2013. IMDD was billed $143,000 each year for the water plan.
IMDD contended that since 1972, in order for IMC to sell its lots, it was required to have an approved augmentation plan so that lot owners would have a source of potable water via well permits and IMC was compensated for the plan by the sale of lots.
From the 1970s until fall of 2013, IMC never implemented a charge for the water plan and none of IMC’s promotional material ever indicated that lot owners would be required to pay an additional cost for the plan.
The judge concluded, “To charge ongoing fees for using the water is ‘double-dipping,’ is unconscionable, and would result in IMC being unjustly enriched … For the reasons stated above, the court finds and concludes that IMC has failed to establish a prima facie case for unjust enrichment and finds in favor of IMMD and against IMC.”
In 1972, Senate Bill 35 was implemented when it was realized that land development in the state was outpacing available water supplies. The bill required that a subdivision of lots less than 35 acres in size needed a water augmentation plan to offset water usage.
In a phone conservation with The Flume, Ingalls stated, “We’re disappointed in the ruling and my lawyers are exploring our legal options.”
IMC has the right to file an appeal with the Colorado Court of Appeals. An appeal must be filed within 49 days of the date of the judge’s ruling.