Cedar Lane Investments v. American Roofing Supply of Colorado Springs, Inc.

Judge KAPELKE

concurring in part and dissenting in part.

Because I disagree with the conclusion reached by the majority in Part II B of its opinion, I respectfully dissent as to that part.

The trial court determined that American Roofing was not entitled to relief on its claim of unjust enrichment because Cedar Lane *886was a bona fide purchaser for value. In my view, the trial court’s conclusion is supported by the record and the applicable law.

As our supreme court recognized in In re Marriage of Allen, 724 P.2d 651, 658 (Colo.1986), “neither an equitable lien nor a constructive trust is available against a bona fide purchaser for value.” That principle is dis-positive here.

In consideration for its receipt of the $50,-000 down payment on the installment land contract, Cedar Lane conferred upon the Cappses: the right to obtain clear title to the property upon satisfying the conditions of the contract; the right to lock in the purchase price for the next two and one-half years regardless of market conditions; and the right to occupy the property. The transaction between Cedar Lane and the Cappses was undertaken without knowledge on the part of Cedar Lane of the claims of American Roofing.

Under these circumstances, I would agree with the trial court that Cedar Lane was a bona fide purchaser for value, rather than an “innocent donee.” Accordingly, American Roofing is not entitled to either a constructive trust or equitable lien remedy. In re Marriage of Allen, supra.

The supreme court held in In re Marriage of Allen, supra, that a wife who had received certain embezzled funds in a dissolution proceeding had not given value for such funds and was therefore an innocent donee rather than a bona fide purchaser. Accordingly, the victim of the embezzlement was entitled to an equitable lien or imposition of a constructive trust on the funds.

Here, the majority agrees that Cedar Lane was a bona fide purchaser with respect to the initial installment land contract and its receipt of the down payment. The majority goes on to conclude, however, that because Cedar Lane later regained possession of the property, as a result of the Cappses’ default on the installment land contract, Cedar Lane’s status changed from that of a bona fide purchaser to that of an innocent donee.

In my view, Cedar Lane retained its status as a bona fide purchaser for value and, in regaining possession of the property and keeping the down payment, it was simply exercising the contractual rights for which it had bargained in an arms-length transaction. It was not unjustly enriched.

While Cedar Lane did receive benefits, including some improvements to the property added by the Cappses, the benefits were not accepted or received under circumstances that would make it inequitable for Cedar Lane to retain them. See Ninth District Production Credit Ass’n v. Ed Duggan, Inc., 821 P.2d 788 (Colo.1991) (recognizing that a secured creditor is not unjustly enriched by receiving collateral that has increased in value without expense to the second creditor).

Finally, the majority concluded that American Roofing may be equitably subrogated to the claim of the Cappses as a defaulting purchaser and may therefore seek equitable relief from the terms of the installment land contract.

Like the equitable lien and constructive trust remedies, equitable subrogation is not available as against a bona fide purchaser. See 1 D. Dobbs, Law of Remedies § 4.71 at 661 (2d ed. 1993). Because, in my view, Cedar Lane is a bona fide purchaser for value, I see no basis for the subrogation remedy here.

Moreover, in its pleadings in the trial court, American Roofing did not assert a claim based on equitable subrogation. Nor did it allege that the Cappses, as purchasers under the installment land contract, had acquired a substantial equitable interest in the property so as possibly to give rise to a right of equitable redemption or other such remedy. See Ulander v. Allen, 37 Colo.App. 279, 544 P.2d 1001 (1976).

I would therefore affirm the judgment of the trial court.