COLORADO COURT OF APPEALS                                     2016COA118

Court of Appeals No. 15CA1055
Park County District Court No. 14CV30056
Honorable Stephen A. Groome, Judge


Indian Mountain Corporation,

Plaintiff-Appellant,

v.

Indian Mountain Metropolitan District,

Defendant-Appellee.


          JUDGMENT AFFIRMED IN PART AND REVERSED IN PART
               AND CASE REMANDED WITH DIRECTIONS

                                  Division I
                         Opinion by JUDGE FREYRE
                       Taubman and Dailey, JJ., concur

                         Announced August 11, 2016


Adam Davenport, Golden, Colorado, for Plaintiff-Appellant

Hill & Robbins, P.C., Peter J. Ampe, Matthew A. Montgomery, Denver,
Colorado, for Defendant-Appellee
¶1    Plaintiff, Indian Mountain Corporation (IMC) appeals the trial

 court’s judgment imposing a constructive trust on its water rights

 and augmentation Plan for the benefit of defendant, Indian

 Mountain Metropolitan District (IMMD), based on a theory of unjust

 enrichment. IMC also appeals the court’s finding that IMMD is

 compliant with its service Plan.

¶2    This case presents the unusual circumstance of a private

 company (successor of the original developer) holding legal title to

 the water rights and augmentation Plan for the benefit of a

 subdivision rather than a mandatory homeowners association, as is

 the customary practice, and its desire to be compensated for

 providing water services to the subdivision. It also presents a

 unique situation in which a special district asserts unjust

 enrichment on behalf of some of the constituents it was created to

 serve. Because we conclude that IMC is the legal title holder to the

 water rights and augmentation Plan and that the elements of unjust

 enrichment have not been proved, we reverse that part of the

 court’s judgment imposing a constructive trust. We affirm the

 court’s finding that IMMD is in compliance with its service Plan.




                                    1
                           I.   Background

¶3    This case arose out of a dispute concerning the ownership of

 water rights and a corresponding water augmentation Plan in Park

 County. In 1970, Park Development Company (later Meridian

 Property and hereafter developer) purchased 10,000 acres of

 property, including water rights, with the vision of creating an

 upscale residential subdivision situated within a community of

 outdoor amenities, including an executive golf course, a ski resort,

 equestrian trails, and hiking trails. The water rights encompassed

 the Slater Ditch and two reservoirs (Tarryall Ranch Reservoirs 1

 and 2).

¶4    The Indian Mountain Subdivision (subdivision) currently

 comprises approximately 2,450 lots zoned for residential use. Each

 lot is served by a residential well. The groundwater pumped by the

 wells reduces the stream flow in Tarryall Creek, which flows into

 the South Platte River. The South Platte River is over-apportioned,

 meaning that the demand for water exceeds the available supply.

¶5    In 1972, after residential construction had begun, the

 Colorado General Assembly enacted new legislation (Senate Bill 35)

 in response to the recognition that land development was outpacing


                                   2
 available water supplies. As relevant here, this new legislation

 required that water depleted by subdivision lots of less than

 thirty-five acres be replenished or augmented by a

 water-court-approved augmentation Plan. This new legal

 requirement caused the sale of subdivision lots to cease until the

 developer could secure a court-approved augmentation Plan.

¶6    In January 1974, Water Court Division 1 approved the Indian

 Mountain Augmentation Plan (the Plan). The Plan required that

 portions of developer’s water rights be used solely for the benefit of

 the subdivision, and it guaranteed a household well permit to each

 lot owner upon the payment of a $5 application fee. Importantly,

 the PLAN did not address the remaining water rights in the Slater

 Ditch or the reservoirs and did not require the transfer of the Plan

 Decree to a mandatory homeowners association1 or to a

 metropolitan district.

¶7    Thereafter, development of the subdivision resumed.

 Crucially, the plat filings for the subdivision and the lot deeds



 1The subdivision currently has a voluntary homeowners
 association that requires 75% approval of its members to implement
 changes.

                                    3
 addressed water services and informed prospective buyers that “[a]ll

 utilities (Elec., Water, Sewer, Gas and Telephone) shall be provided

 at the individual lot owner’s expense.”

¶8      The costs associated with obtaining the Plan left the developer

 with too much debt to continue the development project. Thus, in

 1976, the developer sold its interest (including debts) in the platted

 and unplatted lands, the water rights, and the Plan to IMC and its

 principal owner, James Campbell. IMC sold the remaining lots

 (totaling 2,450) in the subdivision to pay off the debts it had

 assumed.

¶9      IMC’s lot purchase agreements included a “Developer’s

 Property Report,” which informed buyers that water would be

 supplied by individual wells, that the state engineer would issue a

 well permit upon payment of an application fee,2 and that water use

 was governed by the covenants. It further stated that there was “no

 assurance that wells [could] be drilled and operated successfully in

 the subdivision,” and provided that in the event no well could be

 drilled or operated successfully “no refund of the purchase price of



 2   IMC’s subdivision fact sheet also guaranteed a well permit.

                                     4
  [the] lot [would] be made.” Finally, it did not guarantee the purity of

  the water and contained a warning stating as follows: “THERE IS

  NO ASSURANCE OF A SUFFICIENT SUPPLY OF WATER FOR THE

  ANTICIPATED POPULATION OF THE SUBDIVISION.”

¶ 10   Attached to the purchase agreement was the “Developer’s

  Statement,” which set forth specific items a purchaser

  acknowledged by his or her signature. As relevant here, item three

  stated

            I/we hereby understand that a well and septic
            tank are not included in the price of the site and
            when and if these facilities are installed, that
            the cost shall be born[e] by the purchaser(s).


¶ 11   Although the deeds and developer’s materials stated that the

  cost of water was a lot owner’s expense, IMC did not separately

  advise prospective buyers that they would be charged for operation

  of the Plan. Indeed, from 1974 to 2013, both the developer and IMC

  maintained and operated the Plan for the subdivision at their own

  expense. This entailed cleaning out and repairing the water

  diversion ditches leading into the reservoirs and releasing water

  downstream when requested by the district water engineer. No one




                                    5
  disputes that the lot owners have always received uninterrupted

  water services under the Plan.

¶ 12   In 1972, the developer spearheaded the creation of the Indian

  Mountain Park and Recreation District (IMPRD)3 to assume

  maintenance of and to eventually purchase the common areas

  through a tax assessment. Importantly, because the IMPRD did not

  have the legal authority to acquire water rights or to provide water

  services, its service plan did not include water services. Campbell

  eventually deeded the common areas to the IMPRD for $17,000.

¶ 13   Through the years, Campbell encouraged the subdivision lot

  owners to explore ways for the homeowners to assume

  responsibility for the Plan. Homeowners association minutes and

  newsletters reflect the subdivision’s recognition that it faced being

  assessed a charge for the Plan and that several options were

  available for management of the Plan, including sale of the water

  rights and Plan to a third party, sale to a water district, or sale to

  an entity within the Indian Mountain community.




  3 See infra Part IV discussing special districts, including parks and
  recreation districts.

                                      6
¶ 14   In 2012, members of the IMPRD suggested converting to a

  metropolitan district that could legally purchase and provide water

  services.4 The Park County Board of County Commissioners

  approved the conversion and the amended service plan in January

  2013. Then, the district court entered an order approving the

  board’s actions and converting the district’s name to the Indian

  Mountain Metropolitan District.

¶ 15   Negotiations for IMMD’s acquisition of the Plan from Campbell

  began, but no agreement could be reached. Campbell believed the

  water rights possessed monetary value and wished to be

  compensated accordingly. IMMD, on the other hand, believed that

  Campbell’s involvement in amending the service plan and IMC’s

  operation of the Plan for forty years at no expense to the lot owners

  obligated him to convey the water rights and Plan to the district for

  the benefit of the lot owners at no cost.5




  4 See infra Part IV defining the responsibilities of a metropolitan
  district.
  5 E-mail exchanges between Campbell and IMMD during this time

  reflected IMMD’s position that it was willing to continue receiving
  the benefit of Campbell’s free water services if the parties could not
  reach an agreement.

                                     7
¶ 16   In August 2013, the owners of Bar Star Land, Jim Ingalls and

  Mark Goosman, approached Campbell about his willingness to sell

  the reservoir6 because they had purchased 142 acres abutting the

  reservoir for their cattle ranch operations. Campbell informed

  Ingalls of his failed negotiations with IMMD, and both parties

  believed a new face would improve relations. Campbell sold all of

  IMC’s assets, including the remaining property, the mineral rights,

  the water rights, and the Plan to Bar Star for $290,000.

¶ 17   Following the sale, Ingalls entered into negotiations with IMMD

  to either lease or sell the water rights and Plan in accordance with

  the amended service Plan. He complied with the Plan by cleaning

  out the diversion ditches and releasing water at the water engineer’s

  request. At IMMD’s insistence that there be clear title to the water

  rights, Ingalls also incurred legal fees for the execution of a

  quitclaim deed (recorded in April 2014) confirming the previous

  conveyance of the developer’s interest in the water rights to IMC.

¶ 18   Unlike Campbell, who was willing to absorb the expenses of

  managing the Plan with the hope of future reimbursement, Ingalls


  6 The original two reservoirs had been consolidated into a single
  reservoir by the time this case began.

                                     8
  expected reimbursement. Ingalls valued his water rights at $1.6

  million based upon his research of comparable water rights located

  in South Park and conversations with representatives from the

  Head Waters Authority of the South Platte (HASP) and Still Water

  Resources. He presented IMMD with two purchase options and

  three lease options.7

¶ 19   When Ingalls and IMMD could not reach an agreement on the

  proposed options, Ingalls submitted two invoices to IMMD (one for

  2012 and one for 2013) each in the amount of $143,0008 for the

  operation of the Plan on behalf of the subdivision. This charge

  reflected an annual per well cost of $178.75 (based on 800 existing




  7 Option 1 involved sale of the water rights for $550,000 and
  operation of the Plan for $19.95 per well per year. Option 2
  involved sale of the water rights for $390,000 in exchange for
  conveyance of the community center and golf course back to IMC
  and operation of the Plan for $19.95 per well per year. Option 3
  involved a 1-year lease for $30 per well per month, a 3-year lease
  for $20 per well per month or a 10-year lease for $10 per well per
  month.
  8 This amount included expenses plus a 10% return on investment.



                                   9
  wells) or per lot cost of $58.37 (2,450 lots). IMMD refused to pay

  the invoices.9

¶ 20   IMC filed this action in district court seeking a declaratory

  judgment that as between IMC and IMMD, IMC is the legal owner of

  the water rights and Plan and that IMMD have no right, title, or

  interest in them. IMC also alleged that IMMD had been unjustly

  enriched by not paying IMC for water services in 2012 and 2013

  that IMMD had been specifically created to provide. Thereafter,

  IMMD filed an answer and a counterclaim seeking a declaratory

  judgment that the Indian Mountain lot owners, not IMMD or IMC,

  own the Plan and associated water rights as beneficiaries of a

  constructive trust.

¶ 21   As relevant here, the district court issued an order in favor of

  IMMD, finding that IMC held the water rights and the Plan in a

  constructive trust for the benefit of the lot owners, that costs

  related to the Plan were part of the lot sales price, and that IMC

  would be unjustly enriched if it was permitted to charge lot owners



  9 Thereafter, IMC sent invoices to the lot owners seeking
  reimbursement for operating the Plan, and numerous lot owners
  paid those invoices at a cost of $25 per well per month.

                                    10
  for operating the Plan. It also concluded that IMMD was in

  compliance with the amended service plan. IMC filed a

  post-judgment motion requesting a hearing on the amount of

  reasonable fees it could charge IMMD for ongoing operation of the

  Plan which the court denied.

                        II.   Procedural Posture

¶ 22   Initially, we note that this case comes before us in an unusual

  procedural posture. Both parties sought competing declaratory

  judgments under C.R.C.P. 57(a). IMC sought declaratory relief as to

  ownership of the water rights and Plan. IMMD sought declaratory

  relief in its counterclaim under the theory that IMC held the water

  rights in a constructive trust for the benefit of the lot owners and

  would be unjustly enriched by continuing to hold, control, and

  charge for operation of the Plan. While a declaratory judgment is

  the proper vehicle to determine the relative rights between the

  parties, it is usually based on the interpretation of a written

  instrument or statute. Am. Family Mut. Ins. Co. v. Bowser, 779 P.2d

  1376, 1379 (Colo. App. 1989); see also C.R.C.P. 57(b).

¶ 23   Here, rather than basing its theory of ownership on a written

  instrument, IMMD pleaded a theory of ownership based on


                                    11
  “constructive trust.” However, such trusts are remedial in nature

  and are not appropriately pleaded as a separate cause of

  action. See Bryant v. Cmty. Choice Credit Union, 160 P.3d 266, 276

  (Colo. App. 2007). Nonetheless, a district court may impose a

  constructive trust as a remedy for unjust enrichment, and the

  district court did so here, construing IMMD’s claim as one alleging

  that IMC had been unjustly enriched. Accordingly, we review the

  court’s order under the law of unjust enrichment — “an equitable

  remedy [that] does not depend on any contract, oral or written”—

  not as a declaratory judgment based on a written instrument or

  statute. Lewis v. Lewis, 189 P.3d 1134, 1141 (Colo. 2008).

¶ 24   Further, we note that the lot owners, who received and

  continue to receive the benefit of the Plan, are not parties to this

  action. The lot owners were not joined in the district court, and a

  joinder issue was not preserved for appeal. Accordingly, our review

  is limited to the relative rights of IMC and IMMD. 

                       III.   Unjust Enrichment

¶ 25   IMC contends the district court erred in finding that it held the

  water rights and Plan in a constructive trust and that it would be




                                    12
  unjustly enriched by seeking reimbursement for the costs of

  maintaining and operating the Plan. We agree.

                    A.   Standard of Review and Law

¶ 26   A district court must engage in fact-based inquiries and make

  “extensive factual findings” when determining an unjust enrichment

  claim. Id. at 1140-41; Martinez v. Colo. Dep’t of Human Servs., 97

  P.3d 152, 159 (Colo. App. 2003). Because the power to devise

  remedies lies within a district court’s discretion, we review a district

  court’s findings of fact and its determination that a party was

  unjustly enriched for an abuse of discretion. Lewis, 189 P.3d at

  1140-41. Nonetheless, the district court’s discretion in equity

  determinations is not unlimited. Id. at 1141. The court must apply

  the appropriate legal test in order to find unjust enrichment. Redd

  Iron, Inc. v. Int’l Sales & Servs. Corp., 200 P.3d 1133, 1136 (Colo.

  App. 2008). Thus, we review de novo whether the district court

  applied the proper legal test for determining the existence of unjust

  enrichment. Id.; see also Harris Grp., Inc. v. Robinson, 209 P.3d

  1188, 1205 (Colo. App. 2009).

¶ 27   Unjust enrichment is a judicially created remedy designed “to

  avoid benefit to one to the unfair detriment of another.” Lawry v.


                                     13
  Palm, 192 P.3d 550, 564 (Colo. 2008). A person is unjustly

  enriched when he or she benefits as a result of an unfair detriment

  to another. Salzman v. Bachrach, 996 P.2d 1263, 1265 (Colo.

  2000). The proper remedy when unjust enrichment occurs is to

  restore the harmed party “to the position he [or she] formerly

  occupied either by the return of something which he [or she]

  formerly had or by the receipt of its equivalent in money.”

  Restatement (First) of Restitution § 1 cmt. a (Am. Law Inst. 1937);

  see also Redd Iron, 200 P.3d at 1136 (“[T]he party who has received

  the benefit is ordinarily required to make restitution in the amount

  of the enrichment received.”).

¶ 28   To succeed on a claim of unjust enrichment, the moving party

  must establish that (1) the nonmoving party received a benefit (2) at

  the moving party’s expense (3) under circumstances that would

  make it unjust for the nonmoving party to retain the benefit without

  commensurate compensation to the moving party. Lewis, 189 P.3d

  at 1141.

¶ 29   The district court issued an order concluding that




                                   14
 Ingalls, by purchasing IMC, stepped into Campbell’s

  shoes and was bound by the significant history of the

  subdivision’s development;

 none of the developer’s promotional materials or the

  Housing and Urban Development (HUD) disclosure

  documents mentioned an ongoing fee for operation of the

  Plan, and IMC was “estopped from asserting such a right

  forty (40) years later”;

 IMC received its return on investment (profit) and its

  reimbursement of expenses for operating the Plan from

  the lot sales, and permitting IMC to charge ongoing fees

  for water use would constitute “double-dipping,” would

  be unconscionable, and would unjustly enrich IMC;

 the Plan was established for the benefit of the lot owners

  so that they could drill wells for potable water and

  although lot owners could purchase water from another

  source at considerable expense, this was not what they

  bargained for when purchasing their property;




                             15
           while IMC was the legal owner of the water rights and

            Plan, it held these rights in a constructive trust for the

            benefit of the lot owners;

           as long as IMC elected to retain ownership, it was entitled

            to be reimbursed for its actual and reasonable expenses

            for maintenance, repair, and operation of the Plan,

            although IMC could delegate this task or “turn over

            ownership” to IMMD; and

           IMMD’s service plan permitted but did not require that it

            take over management of the Plan; therefore, its

            provision of other water services outside of the Plan

            complied with its service plan and the statute.

                        B.   Receipt of a Benefit


¶ 30   A benefit may be the performance of services beneficial to or at

  the request of another, or it may be anything that adds to another’s

  security or advantage. Cablevision of Breckenridge, Inc. v.

  Tannhauser Condo. Ass’n, 649 P.2d 1093, 1097 (Colo. 1982); see

  also Restatement (Third) of Restitution and Unjust Enrichment § 1

  cmt. d (Am. Law Inst. 2011) (“Restitution is concerned with the



                                   16
  receipt of benefits that yield a measurable increase in the recipient’s

  wealth.”). Thus, the word benefit denotes any form of advantage.

  Cablevision of Breckenridge, Inc. v, 649 P.2d at 1097.

¶ 31   Usually, decisions of a district court regarding factual disputes

  are accorded great deference. Quintana v. City of Westminster, 56

  P.3d 1193, 1196 (Colo. App. 2002). However, this court may

  determine that a finding of fact is clearly erroneous if there is (1) no

  support for it in the record, see Cont’l W. Ins. Co. v. Jim’s Hardwood

  Floor Co., Inc., 12 P.3d 824, 828 (Colo. App. 2000); or (2) evidence to

  support it, but we are nonetheless left, after a review of the entire

  evidence, with the firm and definite conviction that a mistake has

  been made, In re Estate of Schlagel, 89 P.3d 419, 422 (Colo. App.

  2003); Quintana, 56 P.3d at 1196.

¶ 32   The parties do not dispute that IMC stepped into the shoes of

  Campbell and the developer or that the Plan was created for the

  benefit of the subdivision. Therefore, we conclude the court

  correctly determined that when Ingalls purchased the assets of

  IMC, he also assumed the legal rights and obligations associated

  with the Plan decree.




                                     17
¶ 33   We note that the district court did not articulate the factual

  basis for its finding that the lot prices included the Plan as is

  required in an unjust enrichment analysis. See Lewis, 189 P.3d at

  1140-41. At oral argument, IMMD’s counsel suggested that basis

  was Copeland’s testimony; however, our review of the record shows

  that Haas and Mattson offered relevant testimony as well. And,

  although they all opined that the lot prices included the costs of

  operating the Plan, each did so under a slightly different theory that

  is directly refuted by documentary evidence in the record.

  Therefore, we are left, after reviewing the entire record, with a firm

  and definite conviction that a mistake has been made and that the

  evidence does not support the court’s finding of unjust enrichment.

  See Mendiola v. United States, 994 F.2d 409, 410 (7th Cir. 1993)

  (“Findings are clearly erroneous if the district court’s interpretation

  of the facts is . . . contradicted by documentary or other extrinsic

  evidence.”).

                        1.    Mattson’s Testimony

¶ 34   Mattson opined that because the legal descriptions of the

  subdivision (which included the water rights) contained in the Plan

  and in the 1975 order creating the IMPRD were identical, the order


                                     18
  creating the IMPRD transferred both the facilities and the water

  rights to it. To the extent the district court reached the same

  conclusion after conducting its own review of the documents, we

  note that we are not bound by a district court’s (or a witness’)

  construction of a document and are in the same position as a

  district court to interpret it. See Darnall v. City of Englewood, 740

  P.2d 536, 537 (Colo. App. 1987) (“Appellate courts are not bound by

  a trial court’s construction of charters and ordinances.”). Upon our

  review of the Plan and the 1975 order, we conclude that the legal

  descriptions served other purposes and did not evidence the intent

  to transfer water rights to the district.

¶ 35   As discussed in Part IV, a parks and recreation district does

  not have the statutory authority to acquire or manage water rights.

  However, it has the authority to tax residents in its service area and

  a duty to provide the services set forth in its service plan to those

  residents. Thus, we conclude that the legal description in the 1975

  order defined the boundaries of the district’s taxing authority and

  its service area, but did not evidence an intent to convey the water

  rights or the Plan to the district.




                                        19
¶ 36   Similarly, the legal description in the Plan decree describes its

  property boundaries and, as noted above, contains no conveyance

  language or any conveyance requirement. We cannot read

  conveyance language that does not exist into the 1975 order or the

  PLAN. See USI Props. E., Inc. v. Simpson, 938 P.2d 168, 173 (Colo.

  1997) (it is axiomatic that when construing an unambiguous

  document courts should not rewrite its provisions); cf. Dubois v.

  Abrahamson, 214 P.3d 586, 588 (Colo. App. 2009) (“[W]e may not

  read additional terms into, or modify, the plain language of a

  statute.”). Accordingly, to the extent the district court relied on

  Mattson’s opinion to find the lot prices included the cost of the

  Plan, we conclude that the court clearly erred.

                          2.    Haas’ Testimony

¶ 37   Haas advanced three theories under which he believed the lot

  prices included the Plan: (1) the community amenities added

  market appeal which increased IMC’s lot sales and profits; (2) the

  well permit and Plan were a “package,” and the developer’s

  guarantee of a well permit necessarily included the Plan as part of

  the lot price; and (3) the 1975 parks and recreation district order

  evidenced conveyance of the water rights to the district. For the


                                    20
  reasons stated above, we reject the third theory and address the

  alternative theories below.

¶ 38   While no one disputes that IMC sold lots and received a

  monetary benefit from the sales, we conclude the record shows that

  the wells and any associated water services (Plan) were intended to

  be a separate expense from the lots themselves and were not part of

  a “package.” Indeed, the post-Plan lot purchase agreements

  referenced the property report which promised a well permit and

  provided cost estimates for drilling. It did not, however, guarantee

  the existence of water or that a well could be successfully drilled.

  Moreover, it stated that the failure to successfully drill a well would

  not be a basis for a refund of the lot purchase price. Nowhere did the

  purchase agreement suggest that the price of the lot included water

  rights or water services.

¶ 39   Additionally, the recorded land plats and deeds specifically

  informed lot owners that they would be responsible for the costs of

  utilities including water, and showed that water and water services

  were contemplated as a separate expense from the cost of the lots

  themselves. This is further corroborated by the developer’s

  statement in which buyers acknowledged their understanding that


                                    21
  the cost of the well and septic tank were not included in the price of

  the site and that they would be separately responsible for those

  costs.

¶ 40   While we agree with the court’s finding that the HUD

  disclosure document did not inform prospective buyers that they

  would be responsible for the costs of operating the Plan, it also did

  not say that water services would be provided at no expense.

  Moreover, it contained other language informing prospective buyers

  that future changes to the water plan, including the creation of a

  municipality or a metropolitan district, could involve additional,

  undeterminable expenses to the lot owners. This language is

  consistent with the language of the deeds, the property report, the

  developer’s statement, and the covenants,10 and demonstrates that

  water services were intended to be a separate expense from the lot.

  Because we conclude the documentary evidence shows that the lot

  prices did not include the cost of the Plan, the increased number of

  lots sold due to the amenities (theory one) is irrelevant to the unjust

  enrichment analysis.


  10The covenants do not separately address the PLAN or its
  operating costs.

                                    22
¶ 41   Accordingly, after reviewing the entire record, we are left with

  the firm and definite conviction that to the extent the district court

  relied on Haas’ opinion to find the lot sales included the costs of the

  Plan, it clearly erred because the documentary evidence contradicts

  this conclusion. See Mendiola, 994 F.2d at 410.

                         3.   Copeland’s Testimony

¶ 42   Copeland opined that the ability to drill a well increased the

  value of a lot and that IMC was able to charge more for a lot (profit)

  because it guaranteed a well permit. Similar to Haas, he tied the

  value of the lots to the guaranteed well permit, which he opined

  included the Plan as a package. For the reasons stated above, we

  reject that opinion.

¶ 43   Finally, substantial evidence showed that other Park County

  residential well owners had always paid for water augmentation

  either through mandatory homeowners association fees or through

  contracts with water service providers. In contrast, the undisputed

  evidence showed that the developer incurred substantial debt in

  obtaining the Plan for the subdivision and that IMC assumed those

  debts and absorbed the Plan’s operating expenses for forty years

  without reimbursement. Therefore, on this record, we conclude


                                    23
  that IMMD failed to prove the first element of unjust enrichment

  and that the district court clearly erred in finding that the lot prices

  included the costs of the Plan.

                   C.    At the Moving Party’s Expense


¶ 44   Satisfaction of the second element of unjust enrichment

  requires that the nonmoving party’s receipt of a benefit be at the

  expense of the moving party or “as a result of an unfair detriment to

  another.” Lewis, 189 P.3d at 1141.

¶ 45   The district court’s order did not address how IMC benefited at

  IMMD’s expense. Indeed, the order stated the contrary: “IMMD has

  not paid any money to IMC.” Critically, no evidence shows that

  IMMD stood in the shoes of the lot owners (the contracting parties).

  IMMD never pleaded or presented evidence that it stood in “privity”

  with the subdivision lot owners or that its interests in carrying out

  its service plan substantially aligned with the lot owners’ interests.

  See Mitchell v. Tex. Gulf Sulphur Co., 446 F.2d 90, 105 (10th Cir.

  1971) (privity or direct personal dealings required for recovery of

  restitution in unjust enrichment); see also Pub. Serv. Co. of Colo. v.

  Osmose Wood Preserving, Inc., 813 P.2d 785, 788 (Colo. 1991)



                                     24
  (finding indemnity agreement does not always create privity); see

  also Landstrom v. Shaver, 561 N.W.2d 1, 13 (S.D. 1997) (holding

  that a minority shareholder in a close corporation may have

  different interests than a majority shareholder).

¶ 46   At oral argument, IMMD argued that privity existed based on

  its taxing authority over the lot owners. However, this argument

  was not made in the district court or raised in the briefs, and we

  may not consider arguments raised for the first time at oral

  argument. See Bumbal v. Smith, 165 P.3d 844, 847-48 (Colo. App.

  2007). Because IMMD stipulated that it had never paid IMC for

  water services and the court found likewise, we conclude no record

  evidence shows that IMC benefited at IMMD’s expense and thus the

  second element of unjust enrichment is not satisfied.

             D.   Circumstances Making IMC’s Retention of
                         Water Rights Unjust


¶ 47   The third element of the unjust enrichment analysis, whether

  it would be unjust for IMC to retain the water rights and Plan,

  “creates difficult questions for trial courts.” Redd Iron, 200 P.3d at

  1136 (quoting Lewis, 189 P.3d at 1142). That is because “[t]he

  notion of what is or is not ‘unjust’ is an inherently malleable and


                                    25
  unpredictable standard.” DCB Constr. Co., Inc. v. Cent. City Dev.

  Co., 965 P.2d 115, 120 (Colo. 1998).

¶ 48   We agree with the district court’s conclusion that IMC holds

  legal title to the Plan; however, for the reasons stated in Part III.B,

  we disagree that there was sufficient evidence to establish that IMC

  benefited from the sale of the lots or would be unjustly enriched by

  charging ongoing fees to operate the Plan. No one disputes that

  whoever holds title to the Plan is obligated to operate it for the

  benefit of the subdivision. The record shows that the lot owners

  have always received uninterrupted augmentation water services

  since the water court issued the Plan decree.

¶ 49   Additionally, the record demonstrates that the Division of

  Water Resources and the water commissioner would hold IMC

  accountable for any failure to comply with the Plan. Further, the

  water court may impose remedial sanctions for any failure to

  comply with its augmentation decree. See C.R.C.P. 107(a)(5)

  (stating that a court may impose sanctions to force compliance with

  a lawful order). Thus, contrary to the district court’s finding, we

  conclude that the lot owners are not “over a barrel” and may enforce

  their rights under the Plan. And, as the district court found and as


                                     26
  the record shows, the lot owners are not required to obtain water

  under the Plan, but may purchase water from another water service

  provider if they so choose. Accordingly, we conclude that the

  elements of IMC’s unjust enrichment were not proved and that the

  district court erred in concluding otherwise.

¶ 50   Having concluded that IMC was not unjustly enriched at

  IMMD’s expense, we also conclude that no basis exists to impose

  the equitable remedy of a constructive trust. See Lawry, 192 P.3d

  at 562 (constructive trust is an equitable remedy that can be

  imposed as a form of restitution to remedy unjust enrichment).

  Therefore, we reverse the court’s judgment imposing a constructive

  trust on IMC’s water rights, including the Plan. We conclude that

  IMC holds legal title to the water rights and Plan and that it is

  entitled to assess charges for operating the Plan from 2012

  onward.11

¶ 51   Finally, while both parties raise arguments concerning the

  appropriate amount IMC can charge lot owners for operating the



  11Both in the trial court and at oral argument IMC agreed that,
  absent a constructive trust, it had no basis to charge lot owners for
  previous Plan services.

                                    27
  Plan, we decline to address this issue because the lot owners were

  not joined as parties. We note, however, that absent regulations

  governing water fees, IMC, as a private entity, may charge whatever

  price for its services the market will bear, particularly given lot

  owners’ ability to purchase water from several different sources.

                     IV.   Service Plan Compliance

¶ 52   IMC contends that the district court erred in denying its

  request to enjoin IMMD from operating as a metropolitan district

  due to IMMD’s noncompliance with its service plan. IMC argues

  that the service plan required IMMD to provide two services, that

  the service plan was created to allow IMMD to purchase or operate

  the Plan, and that IMMD’s failure to acquire or operate the Plan is a

  material modification to its service plan and is contrary to statute.

  We disagree and affirm the court’s order.

                           A.    Relevant Facts


¶ 53   As set forth above, the IMPRD was converted to a metropolitan

  district so that the district could legally acquire and maintain water

  rights. The rationale IMPRD presented to the county




                                     28
commissioners for modifying the service plan included four reasons

relevant to this appeal:

           (1) The 1972 service plan did not include the

           management of 450 acres of parklands, forests, open

           space, waterways, ponds, and wetlands.

           (2) The 1972 service plan did not adequately reflect

           water storage and transfer assets associated with the

           district or show that the district managed two ponds,

           two dams, wetlands, and a section of Tarryall Creek.

           (3) The 1972 service plan did not include management of

           the Plan, and IMMD was exploring ways it could own or

           manage the Plan and thereby ensure that lot owners

           would always have augmentation services.

           (4) The most significant concern of the homeowners

           association’s approximately 700 members was control of

           the Plan and its associated resources. Because the

           association could not purchase or manage the Plan, it

           supported changing the service plan to enable IMMD to

           do so.




                                 29
¶ 54   The language of the amended service plan required IMMD to

  provide two services — parks and recreation services and water

  services. Parks and recreation services included maintenance of

  the wetlands, ponds, waterways, and IMMD’s facilities. Those

  facilities included a comfort station, restrooms, potable water, a

  small overnight cabin, a community center, and a library.

¶ 55   Water services included the maintenance of two earthen dams,

  wetland corridors, a section along the Tarryall Creek, and the

  seasonal ponds. The water services provision also gave IMMD the

  authority to acquire ownership of, finance, and maintain the PLAN,

  including the water rights, storage reservoirs, and all other

  appurtenant facilities.

¶ 56   Additionally, the service plan stated that IMMD “shall have the

  power and authority to contract with other private and

  governmental entities to provide any or all of the services associated

  with” the Plan.

¶ 57   The undisputed evidence showed that IMMD provided all

  services stated in the amended service plan except for acquisition or

  operation of the Plan. Because IMC does not dispute that IMMD

  properly provided parks and recreation services and water services


                                    30
  related to the wetlands, dams, ponds, and a section of Tarryall

  Creek, we do not address that part of the amended service plan.

  The district court found that while the primary purpose for

  amending the service plan was to allow IMMD to take over the Plan,

  the language of the service plan was permissive and did not require

  IMMD to manage the Plan. We agree.

                             B.    Discussion

¶ 58   We review a district court’s interpretation of a service plan de

  novo. Plains Metro. Dist. v. Ken-Caryl Ranch Metro. Dist., 250 P.3d

  697, 699 (Colo. App. 2010).

¶ 59   The General Assembly enacted the Special District Act with

  the intent that special districts “promote the health, safety,

  prosperity, security, and general welfare” of their inhabitants and of

  the State of Colorado. § 32-1-102(1), C.R.S. 2015; see also Todd

  Creek Vill. Metro. Dist. v. Valley Bank & Trust Co., 2013 COA 154,

  ¶ 37. Special districts are political subdivisions of the state that

  possess proprietary powers. Todd Creek, ¶ 38. But, they possess

  only those powers expressly conferred on them. SDI, Inc. v. Pivotal

  Parker Commercial, LLC, 2012 COA 168, ¶ 16, rev’d on other

  grounds, 2014 CO 80.


                                    31
¶ 60    Persons intending to form a special district must submit a

  service plan to the board of county commissioners. See § 32-1-202,

  C.R.S. 2015. When the special district is a metropolitan district,

  the service plan must state a minimum of two services it intends to

  provide. § 32-1-1004(2), C.R.S. 2015. A list of the services a plan

  shall include is set forth in section 32-1-1004(2) and, as relevant

  here, includes “parks or recreational facilities or programs as

  specified in section 32-1-103(14),” § 32-1-1004(2)(c), and “water as

  specified in section 32-1-103(25),” § 32-1-1004(2)(j).

¶ 61         Once established, a special district must conform to its

  service plan “so far as practicable.” § 32-1-207(1), C.R.S. 2015.

  Further, any material modifications to the service plan must be

  approved by the board of county commissioners. § 32-1-207(2)(a).

  The Special District Act defines “material modifications” as

             changes of a basic or essential nature,
             including but not limited to the following: Any
             addition to the types of services provided by
             the special district; a decrease in the level of
             services; a decrease in the financial ability of
             the district to discharge the existing or
             proposed indebtedness; or a decrease in the
             existing or projected need for organized service
             in the area.

  Id.


                                    32
¶ 62   The determination of whether IMMD’s failure to operate the

  Plan constitutes a “material modification” involves a question of law

  that we review de novo. We look to the language of the service plan

  and give effect to its plain and ordinary meaning. People in Interest

  of J.G., 2016 CO 39, ¶ 13.

¶ 63   The service plan language at issue here is “shall have the

  power and authority to finance, design, construct, acquire, install,

  maintain and provide services associated with the ownership and

  administration of the Indian Mountain water augmentation Plan.”

  The term “shall” in a service Plan is construed to impose an

  obligation. Plains Metro. Dist., 250 P.3d at 700. In contrast, the

  use of the term “may” is “indicative of a grant of discretion.” Id.

¶ 64   We conclude that the word “shall” is part of the phrase “shall

  have the power and authority” and cannot be construed to relate to

  the infinitive verb forms of finance, design, construct, acquire,

  install, maintain, and provide. Thus, “shall” does not obligate

  IMMD to acquire or operate the Plan, but, instead, grants

  unconditional authority to IMMD to do so. IMMD’s failure to

  acquire or operate the Plan does not constitute a material

  modification of its service plan because it does not decrease or


                                    33
  otherwise alter the services it provides. Accordingly, we conclude

  that the service plan did not require IMMD to acquire or operate the

  Plan, and that IMMD properly provided two services in compliance

  with its service plan. We affirm the court’s order finding for IMMD

  on this issue.

                    V.   IMC’s Remaining Contentions

¶ 65   Having reversed the district court’s findings of unjust

  enrichment and constructive trust, we need not reach IMC’s

  remaining contentions. Therefore, we do not address whether the

  district court erred in admitting witness testimony absent personal

  knowledge or whether it erred in its findings under the Interstate

  Land Sales Act.

                            VI.   Conclusion

¶ 66   We affirm the district court’s judgment declaring that IMC

  holds legal title to the water rights and Plan and finding IMMD in

  compliance with its service plan. We reverse that part of the court’s

  judgment finding that IMC was unjustly enriched and imposing a

  constructive trust, and we instruct the district court to enter a

  judgment in favor of IMC consistent with this opinion.

       JUDGE TAUBMAN and JUDGE DAILEY concur.


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