Two decisions this fall by divisions of the Colorado Court of Appeals applied rules adopted this year and last governing interlocutory appeals in civil cases.  Both times, the court of appeals rejected the application and declined to decide the appeal.

These recent rule changes in Colorado have clarified the grounds upon which litigants may seek interlocutory review of issues arising in ongoing lawsuits.  But interpretive case law has shown that the court of appeals will not exercise its discretionary authority to hear such appeals without good grounds to do so.  While interlocutory appeals may serve a useful purpose in civil litigation, the availability of such relief will likely be highly selective and limited.

Normally, matters decided by a trial court are not ripe for appeal until final judgment has been entered in the case.  But under special circumstances, Colorado law permits issues that arise in the course of an ongoing lawsuit to be decided by an appellate court.  Such intermediate decisions are called “interlocutory appeals.” 

In the summer of 2010, the Colorado General Assembly enacted sec. 13-4-102.1, which set forth standards for the Colorado Court of Appeals to conduct discretionary review of interlocutory appeals.  The same standards were subsequently adopted by the Colorado Supreme Court in January 2011, when it promulgated Appellate Rule 4.2.

Interlocutory appeals may be presented to the court of appeals either when the appeal is certified by the trial court, or by stipulation of the parties.  There are three necessary grounds for certifying and allowing an interlocutory appeal.  They are (1) that disposition of the issue might “promote a more orderly disposition or establish a final disposition of the litigation; (2) the issue involves a “controlling question of law;” and (3) the question of law is unresolved.  An unresolved question of law is defined as “a question that has not been resolved by the Colorado Supreme Court or determined in a published decision of the Colorado Court of Appeals, or a question of federal law that not been resolved by the United States Supreme Court.”

In Adams, et al. v. Corrections Corporation of America, 11 CA 1505 (Sept. 15, 2011), the court of appeals held that the issue presented was not appropriate for decision by interlocutory appeal because it did not involve a controlling question of law.  Suit was brought by 201 present and former inmates of the Crowley County Correctional Facility, which was operated by the Corrections Corporation of America (CCA).  The plaintiffs alleged that CCA had negligently failed to prevent a control a prison riot in which the complaining inmates had not been involved. 

CCA deposed 118 of the plaintiffs and indicated its intention to depose the remainder.  The plaintiffs reserved their rights to review the deposition transcripts, but asserted that they were indigent and unable to purchase the transcripts.  The trial court certified for interlocutory appeal the question of whether the plaintiffs were entitled to obtain copies of the deposition transcripts at no cost.

In reviewing the standards for allowing interlocutory appeals, the court of appeals found that the first required ground, that the district court’s order involved an unresolved question of law regarding the interplay of two different procedural rules, one allowing a deposed party to review their transcript, and another requiring the court report to provide a transcript to any party willing to pay for it.  But the court of appeals went on to hold that although the legal question was unresolved, it was not “controlling.”  It reasoned that the issue presented by the inmates was not of “widespread public interest,” it did not implicate any parallel litigation that would be impacted by an appellate ruling, and it did not involve any “extraordinary facts.”  Because the issue presented was not controlling, the court of appeals dismissed the appeal.

About a month later, the question of interlocutory appeals was revisited in Tomar Development v. Bent Tree, LLC, 11 CA 1847 (Oct. 27, 2011).  The case involved a complex series of financial transactions, a subordination agreement entered into between two lienholders, and an attempt by one of the lienholders to foreclose on a deed of trust.  At issue in the case was the relative priority of the various lienholders following execution of the subordination agreement.  Among other things, the parties disputed whether Colorado should follow the “partial” or “complete” subordination approach to realigning lien priorities.  The district court dismissed the plaintiffs’ request for declaratory relief, holding that Colorado appellate courts would most likely adopt the partial subordination approach, which would favor the result urged by the defendants.  The petition for interlocutory appeal followed.

The court of appeals denied the plaintiffs’ petition upon determining that the grounds for allowing the interlocutory appeal were not satisfied.  It gave two reasons. 

First, the court of appeals noted that the litigation involved numerous claims, counterclaims, cross-claims and third-party claims, including ones that would not be affected by the issues concerning the choice of subordination approach.  As a result, the court of appeals ruled that the first required ground, that resolution of the interlocutory appeal would promote a more orderly disposition of the litigation, was not met.

Second, the court of appeals found that the district court, in denying the plaintiffs’ application for declaratory relief, indicated that it would grant them leave to amend their complaint to assert other theories in support of their claim for lien priority.  Moreover, the district court had denied a motion by the defendants to dismiss claims brought by the plaintiffs on equitable grounds.  “Regardless of what we might decide,” the court of appeals reasoned, it would not dispose of the dispute because the plaintiffs could still seek the relief they wanted under other legal theories.