author: Justice HOBBS

text:
    Eric L. SZALOCZI, Michael P. Batzer, Jay Crist, Robert S. Pfeiffer, Allan Wise, Michael Caskey, Roland DeBruyn, Jeffrey Weber, and Bruce Williams, Petitioners v. JOHN R. BEHRMANN REVOCABLE TRUST, Respondent.
    No. 02SC911.
    Supreme Court of Colorado, En Banc.
    May 24, 2004.

      Holme Roberts & Owen, LLP, David S. Steefel, Michael J. Hofmann, Denver, Colorado, Attorneys for Petitioner.
    Benjamin, Bain & Howard, LLC, James W. Bain, Wesley B. Howard, Greenwood Village, Colorado, Attorneys for Respondent.
   Justice HOBBS

delivered the Opinion of the Court.

We granted certiorari in this case to review the court of appeals decision in John R. Behrmann Revocable Trust v. Szaloczi, 74 P.3d 371 (Colo.App.2002). A former shareholder of a closely held corporation, John R. Behrmann Revocable Trust (“the Behrmann Trust”), brought this compensatory damages action in the district court for breach of fiduciary duty and “conspiracy” against the officers and directors of the corporation that sold its assets to another corporation (“compensatory damages action”).

The complaint alleges that the “Defendants arranged to take substantially more than [the Behrmann Trust], a minority shareholder in a closed corporation, from the sale of substantially all the corporate assets, by paying themselves as officers rather than as shareholders.” The prayer for relief is only for compensatory damages. Having brought this compensatory damages suit, the Behrmann Trust elected, under § 7-113-102(1), 2 C.R.S. (2003), to dissent from the sale and obtain fair value for its shares under the prescribed statutory procedures. When the Behrmann Trust contested the amount of payment the corporation had tendered, the corporation initiated a judicial appraisal suit under § 7-113-301, 2 C.R.S. (2003). In that separate action, now pending review in the court of appeals, another division of the district court — utilizing the services of a special master — set the compensation owed to the Behrmann Trust for its shares (“appraisal action”).

The trial court dismissed the Behrmann Trust’s action for compensatory damages now before us, ruling that its sole remedy under these circumstances is the statutory appraisal remedy. The court of appeals reversed and reinstated the action. In doing so, the court of appeals relied on the exception to the statute’s exclusivity provision contained in § 7-113-102(4), 2 C.R.S. (2003). The statute provides that the shareholder may challenge the “corporate action” if that action is “unlawful or fraudulent with respect to the shareholder or the corporation.”

We agree with the trial court and disagree with the court of appeals. We hold - that, because the Behrmann Trust failed to bring an action for equitable relief on the basis of illegality or fraud, it has not invoked the exception to the exclusivity provision of the statute’s appraisal remedy. Because the Behrmann Trust is bound by the exclusivity provision, the trial court did not err in dismissing this action for compensatory damages. Accordingly, we reverse the judgment of the court of appeals.

I.

Preston Reynolds & Company, Inc. (“PRC”), was a closely held Colorado corporation engaging in the oil and gas exploration and leasing business. The Behrmann Trust was a minority shareholder of PRC. John Behrmann, the sole trustee of the Behrmann Trust, also served as Chairman of the PRC Board of Directors. On November 1, 1999, the other shareholders of PRC voted to remove Behrmann as Chairman. However, the Behrmann Trust remained a PRC shareholder.

As required by the Colorado Dissenters’ Rights Act (“the Act”), PRC provided notice to the shareholders of a meeting on April 17, 2000 to vote on the sale of substantially all of PRC’s assets to WBI Production, Inc. (‘WBI”). In accordance with the Act, the Behrmann Trust delivered written notice to PRC indicating its intent to demand payment for its shares if the WBI sale was effectuated. At the April 17th meeting, the Behrm-ann Trust voted all of its shares against the sale as required under the Act. However, the majority of shareholders approved the sale.

On April 26, 2000, PRC sent out its dissenters’ notice which informed the Behrmann Trust that it was entitled to dissent and must deliver its demand for payment together with the share certificates to PRC.

On May 24, 2000, before the Behrmann Trust delivered its demand for payment, it filed this compensatory damages action against the officers and directors of PRC for breach of fiduciary duty and conspiracy to deprive- it of the value of its shares. The complaint requested compensatory damages and did not seek equitable relief. The nature of the complaint is that the other shareholders structured the asset sale for their personal benefit. The Behrmann Trust alleged that the other shareholders, acting in their capacity as officers and directors: (1) withheld information; (2) granted themselves stock options below market value; (3) extended stock options beyond the expiration dates; (4) negotiated personal employment contracts for themselves in connection with the sale; and (5) arranged to take more from the sale of assets by paying themselves as officers rather than as shareholders. According to the complaint, these events leading up to the sale of the corporate assets, which the Behrmann Trust voted against, affected the value of the Behrmann Trust’s interest in the corporation.

On May 26, 2000, two days after the Behrmann Trust filed its compensatory damages action, it demanded payment for its shares in PRC and delivered the trust stock certificates, pursuant to the Act.

On July 7, 2000, PRC paid the Behrmann Trust, in the amount of $6,145,191.31, pursuant to section 7-113-206, 2 C.R.S. (2003). This amount represented PRC’s estimate of fair value and accrued interest. The Behrm-ann Trust accepted this payment, but demanded additional payment from PRC claiming that PRC paid less than fair value for the shares.

In turn, PRC commenced the statutory appraisal action in another division of the district court to determine the fair value of the shares and accrued interest, pursuant to section 7-113-301, 2 C.R.S. (2003). Utilizing the services of a special master, the district court entered its decision regarding the fan-value of the Behrmann Trust shares. The special master found that the Behrmann Trust was entitled to an additional $681,174 for the fair value of its shares. The district court adopted the special master’s findings and conclusions of law. The Behrmann Trust is currently challenging the adequacy of that award by appeal to the court of appeals.

The trial court dismissed the compensatory damages action now before us. In doing so, it ruled that the appraisal remedy under sections 7-113-101 to -301 of the Act is the Behrmann Trust’s sole remedy under the circumstances. Relying on Delaware Law, the court of appeals reversed. It agreed that the Behrmann Trust could not “pursue a separate action for certain types of mismanagement.” But, it characterized the complaint as alleging a claim for “constructive fraud regarding actions unrelated to the WBI sale.” John R. Behrmann Revocable Trust, 74 P.3d at 375. The court of appeals did not address whether the complaint requested equitable relief or the effects of requesting compensatory damages; it simply construed the breach of fiduciary duty allegations as an implied allegation of “constructive” fraud and concluded that the cause of action' fell within the exception for fraud, which the trial court should not have dismissed.

The issue in this case is whether, under the Colorado Dissenters’ Rights Act, a shareholder who dissents from a sale of corporate assets and seeks payment for the fair value of its shares may also pursue a separate claim for compensatory damages against the officers and directors who acted for the corporation in approving the sale.

II.

We agree with the trial court and disagree with-the court of appeals. We hold that, because the Behrmann Trust failed to bring an action for equitable relief on the basis of illegality or fraud, it has not invoked the exception to the exclusivity provision of the statute’s appraisal remedy. Because the dissenting shareholder is bound by the exclusivity provision, the trial court did not err in dismissing this action for compensatory damages. Accordingly, we reverse the judgment of the court of appeals.

A. Standard of Review

The issue before us requires construction of the Act’s exclusivity provision. This is a question of law we review de novo. Leonard v. McMorris, 63 P.3d 323, 326 (Colo.2003). We must construe the statute to effectuate the General Assembly’s intent; in doing so, we examine the statute as a whole, harmonizing where possible all of its parts. Id.

In interpreting our statute, we draw upon fundamental principles of statutory construction. When our statute is patterned upon the law of other jurisdictions or model codes, we may draw upon applicable precedent in conducting our analysis. Pueblo Bancorporation v. Lindoe, Inc., 63 P.3d 353, 368 (Colo.2003). “Because the legislature has consistently relied on the [Model Business Corporation Act] when fashioning the corporate laws of this state we find the views of the MBCA on this issue to be persuasive.” Id. We assume that the General Assembly was aware of the prior decisional law of other jurisdictions that the drafters of the MBCA relied on when enacting the MBCA. See Semendinger v. Brittain, 770 P.2d 1270, 1272 (Colo.1989) (“The General Assembly is presumed to be cognizant of prior decisional law when enacting or amending statutes”). Moreover, we presume that the General Assembly’s intent is the same as the intent of the MBCA drafters. Pueblo Bancorpomtion, 63 P.3d at 368 (citing Copper Mountain Inc. v. Poma of America, Inc., 890 P.2d 100 (Colo.1995)). Thus, we now examine the relevant, case law that the MBCA drafters relied upon when drafting the exclusivity provision.

B. Colorado Dissenters’ Rights Act

The Colorado Dissenters’ Rights Act sets forth a special statutory procedure by which a shareholder may dissent from certain corporate actions and obtain payment of fair value for its shares; such corporate actions include a sale of the corporation’s assets. § 7-113-102(l)(c) & (d). We refer to this procedure as the statutory appraisal remedy.

1. Procedures

This special statutory design sets out a series of deadlines and procedures to ensure that the corporation can timely pursue new opportunities while minority shareholders are promptly compensated for the fair value of their shares.

If a proposed corporate action giving rise to dissenters’ rights is submitted to a vote at a shareholder meeting, the corporation must give notice to all shareholders. § 7-113-201(1). The notice must include a statement that all shareholders are entitled to dissent. Id. Before the vote is taken, shareholders who dissent must give written notice of their intent to demand payment in the event the proposed corporate action is effectuated. § 7-113-202(l)(a).

If the corporate action is subsequently authorized, the corporation — no later than ten days after the effective date of the corporate action — must give written notice to all shareholders who are entitled to demand payment. § 7-113-203(1). The notice must include, among other matters, a date by which the corporation must receive the payment demand. § 7-113-203(2)(e). This date cannot be less than thirty days after this notice is given. Id.

Upon receiving such notice, the dissenting shareholder must demand payment. § 7-113-204(l)(a). After the effective date of the corporate action, the shareholder has only the right to receive fair value for the shares. § 7-113-204(2). “Fair value” means the value of the dissenter’s shares “immediately before the effective date of the corporate action to which the dissenter objects, excluding any appreciation or depreciation in anticipation of the corporate action except to the extent that exclusion would be inequitable.” § 7-113-101(4). The demand for payment is irrevocable unless: (1) the effective date of the corporate action does not occur within sixty days after the date set by the corporation; or (2) the corporation fails to make payment within sixty days after the date set by the corporation for receiving the payment demand. § 7-113-204(3).

Upon the effective date of the corporate action, or upon receipt of the payment demand, whichever is later, the corporation must pay each dissenting shareholder the amount that the corporation estimates to be the fair value of the shareholder’s shares. § 7-113-206(1). If a dissenting shareholder is dissatisfied with the payment, it must give written notice of its estimate of fair value. § 7-113-209(1).

Within sixty days after receiving the dissenting shareholder’s estimate of fair value, the corporation may commence an action in court to determine the fair value of the shares. § 7-113-301(1). If the corporation does not commence the proceeding within this time period, it must pay each dissenting shareholder the amount demanded. Id. The jurisdiction of the court is plenary and exclusive. § 7-113-301(4). The dissenting shareholder is entitled to fair value for its shares as determined by the court. § 7-113-301(5).

2. Exclusivity Provision

Once the shareholder elects to dissent and demand payment, the Act prohibits a challenge to the corporate action except for a narrow exception for unlawful or fraudulent conduct. Section 7-113-102(4), also known as the “exclusivity provision,” states:

A shai'eholder entitled to dissent and obtain payment for the shareholder’s shares . under this article may not challenge the corporate action creating such entitlement unless the action is unlawful or fraudulent with respect to the shareholder or the corporation.

§ 7-113-102(4) (emphasis added).

Whether the exception permits a dissenting shareholder to bring an action for compensatory damages in addition to invoking the statutory 'appraisal remedy is a matter of first impression in this court. Thus, we now turn to the Act and case law to construe this provision.

In 1993, the General Assembly repealed the entire Colorado Corporate Code and enacted the Revised Model Business Corporation Act of 1984 (“MBCA”). Pueblo Bancorporation, 63 P.3d at 368. In doing so, the General Assembly adopted the MBCA’s exclusivity provision. Compare § 7-113-102(4), with Model Bus. Corp. Act § 13.02(b)(1984). The official comment to the MBCA' explains that the Act “basically adopts the New York formula as to exclusivity of the dissenters’ remedy....” Model Bus. Corp. Act § 13.02 cmt. at 1366 (1984).

The MBCA drafters designed the exclusivity section to “recognize and preserve the principles that have developed in the case law of Delaware, New York and other states with regard to the effect of dissenters’ rights on other remedies of dissident shareholders.” Id. at 1367. The official comment - summarizes the principles that developed from this case law:

The [appraisal] remedy is the exclusive remedy unless the transaction is “unlawful” or “fraudulent”.... If the corporation attempts an action in violation of the corporation law on voting, in violation of clauses in articles of incorporation prohibiting it, by deception of shareholders, or in violation of fiduciary duty ... the court’s freedom to intervene should be unaffected by the presence or absence of dissenters’ rights under this chapter.

Id. at 1366.

The “New York formula” provides that appraisal is the exclusive remedy, except that an individual may bring a proceeding iii equity when corporate action is alleged to be fraudulent or illegal. Breed v. Barton, 429 N.E.2d 128, 129-31 (N.Y.1981); Theodore Trust U/A Dated December v. Smadbeck, 277 A.D.2d 67, 717 N.Y.S.2d 7, 8 (2000). The dissenting shareholder must seek some form of equitable relief; it is not sufficient to plead a cause of action over which equity has jurisdiction. Walter J. Schloss Assocs. v. Arkwin Industries, Inc., 61 N.Y.2d 700, 472 N.Y.S.2d 605, 460 N.E.2d 1090, 1090, (1984) (adopting dissent of Walter J. Schloss Assocs. v. Arkwin Industries Inc., 90 A.D.2d 149, 455 N.Y.S.2d 844, 847, 850 (1982)(Mangano, J., dissenting)).

Moreover, dissenting shareholders cannot obtain relief in the form of compensatory damages. Breed, 444 N.Y.S.2d 609, 429 N.E.2d at 130. Rather, “any monetary recovery, if available at all, can only be ancillary to a grant of some form of equitable relief’ from the corporate action. Id. at 131; Burke v. Jacoby, 981 F.2d 1372, 1380 (2d Cir.1992) (interpreting New York Law and dismissing the dissenting shareholder’s complaint because it made no attempt to obtain traditional equitable relief but only requested compensatory and punitive damages). The New York Court of Appeals explained that the policy behind prohibiting an action for compensatory damages, in addition to invoking the statutory appraisal remedy, is to avoid duplicate damages. The appraisal action is the forum for full monetary recovery of the dissenting shareholder’s shares:

Allowing the prosecution of a legal action for damages after the exercise of the right of appraisal would be unnecessarily dupli-cative in that full and proper monetary recovery of the fair value of the dissenters’ shares may be obtained in the appraisal proceeding.

Breed, 444 N.Y.S.2d 609, 429 N.E.2d at 130.

New York and Delaware share the same basic principle that the exclusivity exception to the statutory appraisal remedy permits equitable relief and does not allow a separate claim for compensatory damages. See Weinberger v. UOP, Inc., 457 A.2d 701, 714 (Del.1983); Ryan v. Tad’s Enters., Inc., 709 A.2d 682, 698-99 (Del.Ch.1996).

Delaware has a long history of equitable actions in the corporate setting. Where fraud, misrepresentation, self-dealing, deliberate waste of corporate assets, or gross and palpable overreaching are involved, a dissenting shareholder may bring an equitable action. Weinberger, 457 A.2d at 714. In Delaware, a dissenting shareholder may receive rescissory damages in an equitable action. Id. In this situation, the court awards rescis-sory damages when a traditional form of equitable relief, like rescission, is not feasible. Nagy v. Bistricer, 770 A.2d 43, 56 (Del.Ch.2000) (“Only in an equitable action can [the plaintiff] possibly obtain rescission or rescissory damages.”).

Nevertheless, where the dissenting shareholder seeks an appraisal and equitable relief, the Delaware court limits the dissenting shareholder to a single recovery judgment. Cede & Co. v. Technicolor, Inc., 542 A.2d 1182, 1191 (Del.1988); see also William M. Fletcher, Cyclopedia Corporations § 5906.30 (perm.ed., rev.vol.2000). Moreover, Delaware law, like New York law, prevents a dissenting shareholder from maintaining an action for compensatory damages in addition to the statutory appraisal remedy.

The MBCA specifically states that it follows the New York formula. The official comment referred to the court’s equitable powers when it stated that “the court’s freedom to intervene should be unaffected by the presence or absence of dissenters’ rights.” § 13.02 at 1366. In making this statement, the drafters were summarizing the principles from the New York and Delaware cases that only an equitable action may be brought under the exception to the exclusivity provision of the appraisal statute, not an additional claim for compensatory damages to supplement the appraisal remedy. Grace v. Rosenstock, 228 F.3d 40,. 50 (2d Cir.2000) (stating that New York only permits an “appropriate” equitable action under the illegality or fraud exception to the exclusivity provision).

In adopting the MBCA, which in turn adopted New York’s exclusivity provision, our General Assembly confirmed that the statutory appraisal remedy provides the dissenting shareholder full and proper monetary recovery for the value of its shares. Breed, 444 N.Y.S.2d 609, 429 N.E.2d at 130. Additionally, by adopting this special statutory proceeding which contains strict deadlines and detailed procedures, the General Assembly intended to allow corporations to continue with business even-though minority shareholders- dissented from the corporate action. In order to provide a speedy and fair resolution, the legislature provided the appraisal remedy. In doing so, it prevented dissenting shareholders from challenging the corporate action based on the common law,’unless such actions were unlawful or fraudulent and merit equitable relief. This construction of the exception to the exclusivity provision conforms to the intent of. the General Assembly. § .7-113-102(4).

C. Application of the Dissenters’ Rights Statute

1. The Behrmann Trust’s Failure to Seek Equitable Relief

The Behrmann Trust argues that the officers and directors engaged in self-dealing in connection with the sale. Specifically, it argues that the officers and directors negotiated their own employment agreements with WBI, granted themselves benefits in connection with the sale that created a conflict of interest, and withheld information about the sale in the proxy notice.

The nature of the complaint is that the Behrmann Trust would have been paid more money for the value of its shares if the officers and directors had hot breached their fiduciary duty in connection with the sale of the assets. However, having elected the statutory appraisal remedy and not having sought equitable relief 'from the corporate action, the Behrmann Trust has trigged the exclusivity provision. A dissenting shareholder may not seek eompensátory damages in addition to the appraisal remedy when the complaint “boils down to nothing more than a complaint about stock price.”’ Grace Brothers, Ltd. v. Farley Industries, Inc., 264 Ga. 817, 821, 450 S.E.2d 814 (1995).

The complaint in this case does not seek to rescind the sale. Walter J. Schloss Assocs., 455 N.Y.S.2d at 852 (Mangano, J., dissenting opinion) (dismissing complaint that alleged fraud and breach of fiduciary duty by majority shareholder because “there [was] a fatal absence of any primary request for equitable relief.”) (citations omitted). Other forms of equitable relief might have been injunction, reformation and rescission of instruments, and specific performance of contracts. Id. at 851 n. 4. The complaint does not seek any of these.

We have long held that equity will not act if there is a plain, speedy, adequate remedy at law. Hoffman v. Colorado State Bd. of Assessment Appeals, 683 P.2d 783, 787 n. 13 (Colo.1984); People ex rel. Winbourn v. District Court, 87 Colo. 316, 323, 287 P. 849, 850 (1930). In its compensatory damages action, the Behrmann Trust seeks to receive additional compensation for the fair value of its shares that it has already received in the appraisal action. The statutory appraisal remedy provides an adequate legal remedy for this cause of action.

2. Pre-existing Shareholder Claims

The Behrmann Trust filed this compensatory damages action two days before it tendered its shares in PRC and dissented from the asset sale. Because it filed the compensatory damages action before it dissented, the Behrmann Trust argues that the Act does not extinguish or even address preexisting shareholder claims. The Behrmann Trust relies on section 7-113-204(2) for the proposition that a dissenting shareholder retains the right to bring fiduciary claims against directors and officers even after the effective date of the proposed corporate action giving rise to the shareholder’s right to dissent.

The officers and directors argue that section 7-113-204(2) is plainly written tó provide that a dissenting shareholder gives up all the rights of a shareholder but the right “to receive payment for the shares.” § 7-113-204(2). The court of appeals agreed with the officers and directors in this regard, holding that, although the Behrmann Trust argued that it has an action separate and distinct from the appraisal action, the “trust surrendered its shares in PRC two days after it filed [the compensatory damages action] and, thus, lost its right to sue for breach of-fiduciary duty through mismanagement of assets, self-dealing, waste, or looting.” John R. Behrmann Revocable Trust, 74 P.3d at 374. The court of appeals held, and we agree, that under section 7-113-204(2), the appraisal remedy provided the Behrmann Trust with an exclusive remedy.

Section 7-113-204(2) states:

A shareholder who demands payment in accordance with subsection (1) of this section retains all rights of a shareholder, except the right to transfer the shares, until the effective date of the proposed corporate action giving rise to the shareholder’s éxercise of dissenters’ rights and has only the right to receive payment for the shares after the effective date of such corporate action.

§ 7-113-204(2) (emphasis added).

After the effective date of the corporate action, the dissenting shareholder’s only right is to receive payment for its shares. § 7-113-204(2); Breed, 444 N.Y.S.2d 609, 429 N.E.2d at 129 (“When [shareholders] exercise the right under [the appraisal statute] to have their stock appraised in a judicial proceeding, they abandoned their alternative rights as shareholders.”). This section, when read together with the exclusivity provision, demonstrates that the General Assembly intended to prevent dissenting shareholders, who invoke the statutory appraisal remedy, from maintaining compensatory claims in addition to the appraisal action. § 7-113-204(2); Robert J. Brown, Jr., Colorado Corporation Law & Practice § 10.3 (1990) (once the corporate action is effectuated, “dissenting shareholders no longer have rights as shareholders, but have only the right to obtain payment for their shares.”)

Thus, even though the Behrmann Trust -filed its compensatory damages action two days before it tendered its shares, those pre-existing claims must be dismissed unless they fall within the narrow exception to the statute’s exclusivity provision. As discussed above, the Behrmann Trust did not request an equitable remedy against the corporate action as its primary form of relief. Thus, the trial court properly dismissed its compensatory damages action.

3. Action Against Directors and Officers

The Behrmann Trust argues that section 7-113-102(4) does not bar its compensatory damages action because PRC is not a party and this action is against the officers and directors. The officers and directors argue that section 7-113-102(4) is not “a defendant-identifying provision that applies only to suits against- the corporation itself,” but applies when the corporation is - the alleged victim. Thus, the officers and directors contend that- the statute’s exclusivity provision covers actions against the corporation, officers, and directors. We agree.

The relevant section of the exclusivity provision states that a shareholder entitled to dissent “may not challenge the corporate action creating such entitlement unless the action is unlawful or fraudulent-” § 7-113-102(4) (emphasis added). New York has always barred claims against officers and directors under the exclusivity provision if the complaint does not fall within the exception.

In the New York Breed and Burke cases, the minority shareholders brought an action against the directors of the corporation. Burke v. Jacoby, 981 F.2d 1372, 1374 (2d Cir.1992)(shareholder brought claims against the corporation’s former president and board chairman, Robert Jacoby); Breed v. Barton, 54 N.Y.2d 82, 444 N.Y.S.2d 609, 429 N.E.2d 128, 129 (1981)(shareholders brought an action against individual, George Barton). In both cases, the coürt held that the exclusivity rule barred their claims. Burke, 981 F.2d at 1380-81; Breed, 444 N.Y.S.2d 609, 429 N.E.2d at 131.

Similarly, in more recent New York cases where shareholders brought actions against individuals, New York courts have not distinguished between those claims and claims brought against the corporation. Theodore Trust, 717 N.Y.S.2d at 7-8 (dismissing complaint against individuals because a dissenting shareholder brought only an action seeking money damages and the court held that the exclusivity rule prohibited this); In re Lazar, 262 A.D.2d 968, 692 N.Y.S.2d 539, 540-41 (N.Y.App.Div.1999) (permitting dissenting shareholders to bring claims against directors because their complaint sought equitable relief as its primary form of relief).

The drafters of the MBCA adopted the New York formula, and New York law is clear that the Act applies to actions brought against officers and directors. Thus, the statute’s exclusivity provision prohibits the Behrmann Trust from bringing this action.

4. Request to Amend Complaint

In this court, the Behrmann Trust argues for the first time that we should remand the case to the trial court and instruct the court to permit it to amend its complaint. The Behrmann Trust alleges that its complaint put the officers and directors on notice that it was seeking equitable relief.

The Behrmann Trust could have amended its complaint in the trial court under C.R.C.P. 15(a). See Davis v. Paolino, 21 P.3d.870, 873 (Colo.App.2001) (“For purposes of this rule, a motion to dismiss does not constitute a responsive pleading.”). Because the Behrmann Trust seeks to amend its complaint for the first time on appeal, we will not grant the leave to amend its corn-plaint. See Fladung v. City of Boulder, 165 Colo. 244, 248, 438 P.2d 688, 690 (1968) (holding that the plaintiff was precluded from raising the- issue for the first time on appeal.)

III.

The complaint seeks compensatory damages in addition to the statutory appraisal remedy it invoked against the corporate action. When the Behrmann Trust elected to dissent from the corporate sale, and obtain payment of fair value for them, without seeking equitable relief from the corporate action, it fell within the exclusivity provision of the statutory appraisal remedy and not its exception. Having surrendered its shareholder status, it may not, in the guise of a suit against the officers and directors, maintain a suit for pre-existing claims it may have had as a shareholder. The trial court properly construed the complaint in this action as alleging that a series of acts preceding the sale of assets had the effect of devaluing its shares; these are matters encompassed by the appraisal remedy. Accordingly, we reverse the judgment of the court of appeals and return this case to that court with directions to reinstate the trial court’s dismissal order.

      . The certiorari issue is "Whether the court- of appeals erred by holding that a shareholder who dissented from a corporate action and sought the fair value of its shares in a statutory appraisal suit also may maintain legal claims for money damages allegedly arising from the dissented-from transaction.”

      . Award of compensatory damages is a legal remedy. Kirk v. Denver Publ'g. Co., 818 P.2d 262, 265 (Colo.1991). Equitable remedies include actions such as rescission, injunctions, and reformation. Dan B. Dobbs, Law of Remedies §§ 2.1(6), 3.1 (2d ed.1993).

      . Section 7-113-102(4), also known as the "exclusivity provision," states:
      A shareholder entitled to dissent and obtain payment for the shareholder's shares under this article may not challenge the corporate action creating such entitlement unless the action is unlawful or fraudulent with respect to the shareholder or the corporation.
      § 7-113-102(4).

      . Under section 7-113-102, a sale of substantially all of the corporation’s assets invokes a shareholder’s right to dissent. § 7-113-102(c), 2 C.R.S. (2003).

      . The court can hear both the appraisal action and an action for equitable relief, if brought.

      . New York's exclusivity provision is the same today as it was when the MBCA was drafted. N.Y. Business Corporation Law § 623(k)(McKin-ney 1981); see N.Y. Business Corporation-Law § 623(k)(McKinney 2003). That provision states that a dissenting shareholder can "bring or maintain an appropriate action to obtain relief on the ground that such corporate action will be or is unlawful or fraudulent as to him.” Id.

      . In Weinberger, the minority shareholder sought to rescind the merger, or in the alternative, res-cissory damages. The court held that the long completed transaction was too involved to undo and held that the Chancellor had discretion to award relief in the form of monetary damages. Although the question of whether the shareholder could recover both the appraisal remedy and legal damages was not before the court, the court's opinion points to appraisal as being the primary financial remedy. Weinberger v. UOP, Inc., 457 A.2d 701, 714 (Del.1983).

      . Rescission is a traditional form of equitable relief that "restores the parties to the status quo before sales of the shares were made....” Lynch v. Vickers Energy Corp., 429 A.2d 497, 501 (Del.1981) (reversed on other grounds). When a party recovers money damages in connection with rescission, those damages are more accurately called restitution:
      The term rescission refers to the avoidance of the transaction or the calling off of the deal, and not to the particular form of restitution that may be granted once the transaction is avoided.... Very commonly the restitution granted when the term rescission is used is restitution in money.
      Dobbs, supra, § 4.3(6).

      . The court of appeals held that the complaint alleged constructive fraud and thus fell within the exception to the exclusivity rule. However, it is not enough to plead a cause of action over which equity has jurisdiction; the dissenting shareholder must request equitable relief. Walter J. Schloss Assocs., 455 N.Y.S.2d at 850.

      . Despite this ruling,' the court of appeals reversed the trial court's order because it then held that the Behrmann Trust's complaint fell within the exception for unlawful or fraudulent conduct as to "actions unrelated to the sale.” 74 P.3d at 374. The court of appeals did not identify which allegations of the complaint assert such "unrelated actions.” In any event, the complaint's recitation of corporate actions prior to the sale include the granting of bonuses and stock options ■ to the officers and directors as events devaluing its shareholder interest, which is the subject of the statutory appraisal remedy.

      . C.R.C.P. 15(a) states:
      A party may amend his pleading once as a matter of course at any time before a responsive pleading is filed.... Otherwise, a party may amend his pleading only by leave of court or by written consent of the adverse party.

      . In Delaware, even where rescissory damages have been timely sought in equity for breach of fiduciary duty, in addition to the appraisal remedy, delay in pursuing that relief can defeat the equitable claim. Ryan v. Tad's Enters., Inc., 709 A.2d 682, 698-99 (Del.Ch.1996). Because the Behrmann Trust did not seek an equitable remedy, we need not decide in this case whether Colorado, applying the exception to the exclusivity provision of the statutory appraisal remedy, might recognize rescissory damages as a remedy in addition to the payment of fair value for the dissenting shareholder's shares.


source: Caselaw Access Project

author: Justice MARTINEZ

license: Public Domain

text:
    TOWN OF FRISCO, Colorado, a homerule municipality, Petitioner, v. Harry BAUM, Respondent.
    No. 03SC181.
    Supreme Court of Colorado, En Banc.
    May 24, 2004.
    Gorsuch Kirgis, LLP, Thad W. Renaud, Denver, Colorado, Attorneys for Petitioner.
    Bendelow Law Firm, P.C., Peter H. Ziemke, Denver, Colorado, Attorneys for Respondent.
    Municipal League, Carolynne C. White, Denver, Colorado, Attorneys for Amicus Curiae The Colorado Municipal League.
   Justice MARTINEZ

delivered the Opinion of the Court.

I. Introduction

In this case, we consider the authority of a home rule city to create and define the jurisdiction of a municipal court. We find that the Colorado Constitution authorizes town councils of the home rule cities to create municipal courts and define the jurisdiction of those courts as long as it is limited to matters of local and municipal concern.

II. Facts and Procedure

This ease arises from a decision of the Frisco town council to approve a conditional land use development application. Respondent, Harry Baum, who lived next to the property approved for development, filed a complaint pursuant to C.R.C.P. 106(a)(4) in the Summit County District Court challenging the town council’s authority to consider and decide on the application. Baum sought an order vacating the decision of the town council.

The district court dismissed the complaint for lack of subject matter jurisdiction.' It held that the town charter of Frisco granted the Frisco municipal court “exclusive original jurisdiction over all matters arising under this Charter, the ordinances, and other enactments of the Town,” including Respondent’s land use claims. The district court found that article XX, section 6, of the Colorado Constitution authorizes the town to grant such jurisdiction to its municipal court. The district court therefore dismissed the complaint and granted the Town of Frisco’s motion to dismiss for lack of subject matter jurisdiction.

The court of appeals reversed the district court, holding that although the town council generally has the authority to set the jurisdiction of its municipal courts, there are limits on that power. The court of appeals reasoned that by granting exclusive original jurisdiction for all claims arising under its charter, ordinances, and other enactments, the town attempted to remove jurisdiction from the district courts. Finding that the jurisdiction of the state courts is of statewide concern, the court of appeals held that the town did not have authority to divest the district courts of original jurisdiction over all such claims. Thus, the court of appeals reversed and remanded the case back to the district court.

The Town of Frisco then petitioned this court for certiorari, which we granted. We now reverse the court of appeals and remand with directions to reinstate the order of the district court.

III. Analysis

The town council of Frisco vested its municipal court with “exclusive original jurisdiction over all matters arising under [Frisco’s Town] Charter, the ordinances, and other enactments of the Town.” The question before us is whether that grant of jurisdiction was a proper exercise of municipal authority under the Colorado Constitution. We decide that the town council acted within the powers granted to it by the' Colorado Constitution. First, our constitution delineates the boundaries of the powers of municipalities in our state. The constitution grants to municipalities great authority over matters of local and municipal concern as well as the power to create courts with jurisdiction over such matters. Second, our statutes and case law reinforce the grant of power to municipalities within the realm of local and municipal matters. Because the town council of Frisco did not exceed the limits of this authority by granting the Frisco municipal court exclusive original jurisdiction over matters of local concern arising under enactments of the town council, we reverse.

A. Origins of Municipal Court Jurisdiction

Municipal court jurisdiction is grounded in our constitution. The Colorado Constitution specifically provides for municipal courts and authorizes town councils to define the limits of that jurisdiction within the province of local and municipal matters. The General Assembly has reinforced this authority by providing a statutory framework to guide municipal courts in the exercise of their jurisdiction. Thus, we find that a municipality’s authority to create a municipal court and to define its jurisdiction is firmly rooted in our law.

Initially, we note that we must consider the constitution as a whole and give effect to every part. “[I]t is essential that we take the Constitution as it is, including every part thereof relating to the subject-matter under consideration, and construe the instrument as a whole, causing it, including the amendments thereto, to harmonize, giving to every. word as far as possible its appropriate meaning and effect.” Dixon v. People, 53 Colo. 527, 530, 127 P. 930, 932 (1912); see also People ex rel. Graves v. Dist. Court, 37 Colo. 443, 450, 86 P. 87, 89 (1906) (constitution must be construed as a whole); Reale v. Bd. of Real Estate Appraisers, 880 P.2d 1205, 1208 (Colo.1994) (each phrase in the constitution included for a purpose).

Several provisions of our constitution relate to the power of home rule municipalities to determine the jurisdiction of their courts. When analyzed as a whole, these constitutional provisions clearly provide home rule cities the power to define the jurisdiction of their municipal courts. First, article XX, section 6, grants home rule cities the power to “provide, regulate, conduct, and control ... the creation of municipal courts: the definition and regulation of the jurisdiction, powers and duties thereof.” This section authorizes home rule cities to establish municipal courts. Further, it allows the home rule city to define the jurisdiction of its municipal court within the realm of local and municipal matters. Specifically, article XX, section 6, states that municipalities shall have the power to create a municipal court and to define its jurisdiction. A home rule city or town shall have:

powers necessary, requisite or proper for the government and administration of its local and municipal matters, including power to legislate upon, provide, regulate, conduct, and control ...
(c) The creation of municipal courts; the definition and regulation of the jurisdiction, powers and duties thereof, and the election or appointment of the officers thereof....

Colo. Const. Art. XX, § 6. In essence, this section gives municipalities all the powers of the General Assembly with regard to local and municipal matters.

Two additional sections in the constitution support this grant of authority to the municipal court. Article VI, section 9, grants the district courts original jurisdiction over civil matters “except as otherwise provided herein.” Next, article VI, section 1, establishes general jurisdiction in the district courts, but notes that such a grant of jurisdiction shall not “restrict or diminish the powers of home rule cities and towns granted under article XX, section 6 of this constitution to create municipal and police courts.” Thus, taken together with the grant, of authority in article XX, section 6, these provisions unmistakably grant home rule municipalities the" power to define the jurisdiction of their courts.

Statutory enactments clarify the constitutional grant of authority to municipal courts. §§ 13-10-101-13-10-125, 5 C.R.S. (2003). Section 13-10-104 provides that “[t]he municipal governing body of each city or town shall create a municipal court to hear and try all alleged violations of ordinance provisions of such city or town.” The municipal governing body shall appoint a judge who, if the municipal court is a court of record, must be admitted to and licensed in the practice of law in Colorado. §§ 13-10-105, 13-10-102(3). Appeals may be taken from a qualified municipal court of record to the district court pursuant to section 13-6-310. Section 13 — 6— 310(1) directs the district court to review the record made in the municipal court. The district court may then affirm, reverse, remand, or modify the judgment, remand the case for a new trial, or direct that the case be tried de novo before the district court. § 13-6-310(2). Consistent with the constitutional grant of authority, this statutory structure provides a framework for the exercise of municipal jurisdiction.

Both our constitution and our statutes authorize municipalities to exercise jurisdiction over local and municipal matters. Consequently, we hold that the Town of Frisco possesses the authority to define and exercise jurisdiction as long as it limits its jurisdiction to matters of local and municipal concern. We will examine the particulars of those limitations next.

B. Limitations on Municipal Court Jurisdiction

Necessarily, the constitution limits the authority of municipal courts to local and municipal matters so that there is not a conflict between the jurisdiction of state courts and that of municipal courts. Our case law provides examples of the limits of a municipal court’s jurisdiction. First, a municipal court can only exercise jurisdiction over matters that are of local or municipal concern. Second, within the sphere of matters of local and municipal concern, a municipal court may only exercise the jurisdiction granted to it in a town charter or ordinances. When the municipal court attempts to exercise jurisdiction over matters outside either of those categories, we have found them to be exceeding their authority.

First, municipal town councils must limit the jurisdiction of their courts to local and municipal matters. In City & County of Denver v. Bridwell, 122 Colo. 520, 524, 224 P.2d 217, 218 (1950), for example, we held that a home rule city’s ordinance, which attempted to reserve power in the municipality to change the appellate process of the state courts, exceeded the bounds of the municipality’s power to define jurisdiction over matters of local concern. In that case, the municipality enacted an ordinance that stated that the City and County of Denver’s municipal court would have original jurisdiction over all cases arising under the ordinances of the City and County of Denver. Id. at 523, 224 P.2d at 218. Further, the ordinance stated that “until changed by ordinances, the procedure relating to appeals prescribed [in the existing statutory provisions] shall, so far as applicable, govern the said municipal court and appeals therefrom.” Id., 224 P.2d at 218.

In reviewing these provisions, we did not find it necessary to consider the section relating to the municipal court’s original jurisdiction. Instead, we addressed only the provision regarding the municipal court’s ability to change the appellate process by home rule ordinance. Noting that the jurisdiction of appellate courts was a matter of statewide and not local concern, we held that the municipal court could not legislate in that area.

[I]t is doubtful that the municipality could be (sic) ordinance effectively or legally provide the right of appeal to a state court, since that would have the effect of creating a part of the jurisdiction of a state court and would be the exercise of an extraordinary power not included within the powers of local self-government.

Id. at 524, 224 P.2d at 218. Thus, while we noted that it would be unlikely that a home rule city could pass an ordinance changing the jurisdiction of the state courts, a matter of statewide concern, we did not dispute that the municipal court could control its own jurisdiction, a matter of local concern. Rather, we merely reiterated what the constitution already states: home rule cities may only define the jurisdiction of their municipal courts, not the jurisdiction of state courts. Id., 224 P.2d at 218; see also Williams, 38 Colo, at 506, 88 P. at 466 (home rule city cannot legislate with respect to the jurisdiction of state courts); Hardamon v. Municipal Court, 178 Colo. 271, 276, 497 P.2d 1000, 1002 (1972) (broad powers granted to home rule cities to create, control, and define the jurisdiction of municipal courts are limited to matters which are local and municipal in nature; consequently, home rule cities may not deny substantive rights granted to all citizens of the state). Thus, municipal courts must define them jurisdiction so that it is within the sphere of purely local and municipal matters.

Second, we have allowed municipal courts to exercise only the jurisdiction that the town council has granted to the court in the town charter or ordinances. Therefore, even if an issue is one of local concern, if the town has not included it within the jurisdiction of the municipal court, a municipal court cannot hear the matter. Rather, the municipal court must leave it to the general jurisdiction of the district court. See Denver County Court v. Lee, 165 Colo. 455, 458, 439 P.2d 737, 738 (1968) (where statutes creating court do not confer jurisdiction over certain matters, should not presume such jurisdiction'to exist); City of Englewood v. Parkinson, 703 P.2d 626, 628 (Colo.App.1985) (where town did not include civil claims for money within jurisdiction of municipal court, court not authorized to hear such claims). Consequently, by defining the jurisdiction of its court, the town council plays a critical role in determining which cases of local and municipal concern will fall within the ambit of the municipal court’s jurisdiction.

C. Interplay between Municipal and District Court Jurisdiction

Despite the limitations imposed by the constitution, a municipal court’s exercise of its jurisdiction may affect the jurisdiction of the district courts. A review of the interplay between a municipal court’s exercise of jurisdiction and the jurisdiction of district courts, however, illustrates that there is no conflict between the jurisdiction of these courts. The constitution specifically grants municipalities the authority to define; municipal court jurisdiction and limits the jurisdiction of district courts insofar as the municipal court may exercise its jurisdiction.

Nonetheless, because this effect is specifically provided for in the constitution, the municipal court’s exercise of its jurisdiction is not outside the bounds of its authority. When a municipality exercises jurisdiction to address local and municipal matters in its municipal court, the district court will consequently be denied original jurisdiction over those matters. Where a municipality has not exercised jurisdiction, however, the district court may hear local and municipal matters in the first instance. Thus, although a municipality may affect the jurisdiction of the district courts, the constitution has specifically provided for such an outcome. The district courts are courts of “general jurisdiction, and shall have original jurisdiction in all civil, probate, and criminal cases, except as otherwise provided herein.” Colo. Const, art. VI, § 9 (emphasis added). Thus, the constitution specifically allocates jurisdiction to the district courts except as otherwise provided. As the constitution specifically provides for municipal court jurisdiction, there is no conflict between the authority of the municipal and district courts.

Article XX, section 6, gives municipalities “every power theretofore possessed by the legislature to authorize municipalities to function in local and municipal affairs.” City and County of Denver v. State, 788 P.2d 764, 767 (Colo.1990) (quoting Four-County Metro. Capital Improvement Dist. v. Bd. of County Comm’rs, 149 Colo. 284, 294, 369 P.2d 67, 72 (1962)). Although the legislature retains supreme authority over statewide concerns, municipalities are not inferior to the General Assembly regarding matters of local and municipal concern. Id. “With respect to purely local and municipal matters, the charter may be, and doubtless is, the paramount law....” Williams, 38 Colo, at 506, 88 P. at 466. Moreover, “[i]n purely local and municipal matters, home rule cities may exercise exclusive jurisdiction by passing ordinances which supercede state statutes.” Vela v. People, 174 Colo. 465, 466, 484 P.2d 1204, 1205 (1971). Thus, due to the constitution’s specific grant of authority to the municipalities to define the jurisdiction of their courts, the effect on the district courts is not prohibited.

If we were to decide otherwise, we would render meaningless article XX, section 6, which specifically grants to home rule cities the power to define the jurisdiction of their municipal courts. Every time a municipality decides to exercise the power given to it, and creates a municipal court, it necessarily affects the jurisdiction of the district court over local and municipal matters. “It is [ ] a maxim of the law that the mention of one thing is the exclusion of the other. This maxim is particularly applicable when that which is expressed is creative, for then it becomes exclusive.” Graves, 37 Colo, at 450, 86 P. at 89. In short, it would be impossible for one court to exercise jurisdiction without somehow affecting the jurisdiction of another court.

D. Application to the Frisco Municipal Court

The ease before us provides an illustration of the interplay between municipal and state court jurisdiction. Respondent brought his claim under C.R.C.P. 106(a)(4), challenging the authority of the town council to decide upon an application for development, and alleging violations of the town’s ordinances. If there had not been a municipal court, Respondent would have properly filed his claim in the district court. However, because the town council created a municipal court and defined its exclusive original jurisdiction to include matters arising under the town’s ordinances, Respondent was required to file first in the municipal court with a right of appeal to the district court. Thus, the original jurisdiction of the district court is certainly affected by the creation of the municipal court. However, were we to decide otherwise and allow a claimant to file immediately in district court, we would usurp the authority granted to the municipal court by article XX, section 6. As we must give effect to every provision of the constitution, such a result is not tenable.

Consequently, because the Town of Frisco has properly created a municipal court and granted to that court exclusive original jurisdiction of all claims arising under enactments of the town pertaining to matters of local concern, review of the town council’s alleged violation of town ordinances must be filed in the first instance in the Frisco Municipal Court.

IY. Conclusion

Accordingly, the decision of the court of appeals is reversed and the case is remanded with directions to reinstate the order of the district court.

      . We granted certiorari on the following two issues:
      (1) Whether a Colorado home rule municipality, pursuant to an express .constitutional authorization to regulate and define the jurisdiction of its municipal court in local matters, may provide that its municipal court has exclusive original jurisdiction over a matter that arises under the charter, ordinances or other enactments of the municipality.
      (2) Whether the court of appeals erred in failing to construe the Colorado Constitution as a whole and harmonize the provisions of article XX, section 6, concerning the authority of a home rule municipality to define the jurisdiction of its municipal court, with the provisions of article VI, concerning the vestment of judicial authority of the state in the state courts.

      . For the most part, these statutory provisions may be superceded by charter or ordinance enacted by a home rule city..§ 13-10-103, 5 C.R.S. (2003). There are exceptions to that rule, however, such as the requirement that there be a right to a jury trial for petty offenses.- Id.

      . The Frisco Municipal Court is a court of record.

      . Although there is not a conflict between the jurisdiction of the municipal and district courts, there may be some confusion as to where a claimant should file if it is not clear whether the matter at issue is one of local or municipal concern versus one of state or mixed concern. See Town of Telluride v. Lot Thirty-Four Venture, L.L.C., 3 P.3d 30, 37 (2000). Thus, it is possible that a claimant would be justified in filing in district court if s/he reasonably believed that the matter was of state or mixed concern. Nonetheless, we decline to address such a possibility further as that scenario is not before us in this case.

      . Apparently attempting to provide a procedure for review of civil actions, the Town of Frisco adopted C.R.C.P. 106, which allows for review of governmental action as well as other types of review. Although the town merely adopted C.R.C.P. 106 without change, which renders its application somewhat ambiguous, it appears that the town’s intent was to adopt the rule so as to provide a mechanism for review of civil actions in its municipal courts. To the extent that it attempts to do more than provide for review of a civil action such as the one before us, we do not address its application.

      . The underlying matter at issue in this case is undeniably one of local concern. Respondent challenged a decision of the town council, under the Frisco Town Code, regarding an application for -a conditional land use development which was presented to the town pursuant to town ordinances. Thus, not only did Respondent's claim arise under the town ordinances, but it concerns zoning, a matter of local concern. "In purely local and municipal matters, home rule cities may exercise exclusive jurisdiction by passing ordinances which supersede state statutes.” Vela v. People, 174 Colo. 465, 466, 484 P.2d 1204, 1205 (1971). This court has definitively stated that zoning is generally a local and municipal matter under article XX, section 6. Roosevelt v. City of Englewood, 176 Colo. 576, 586, 492 P.2d 65, 70 (1971); see also City of Northglenn v. Ibarra, 62 P.3d 151, 155-56 (Colo.2003) (zoning a matter of local concern but preempted to the extent it regulates a matter of statewide concern: in that case for example, the residence of adjudicated delinquent children in foster homes). As the issue in this case concerns only local zoning decisions and does not interfere with a matter of statewide concern, the underlying matter is clearly one of local concern.

      .As mentioned above, on appeal the district court may remand to the municipal court for a new trial or may direct that the case be tried de novo before the district court. §§ 13-10-116(2), 13-6-310.


author: Chief Justice MULLARKEY

text:
    Harlen AINSCOUGH; Michael Coulter; Barbara Johnson; Ron Parker; Robert Becker; Lorraine Surprenant; Colorado Federation of Public Employees; Colorado Association of Public Employees; and American Federation of State, County, and Municipal Employees, Colorado Council 76, Petitioners v. Bill OWENS, Governor, State of Colorado; and Jeffrey M. Wells, Executive Director of the Colorado Department of Personnel and General Support Services, Respondents.
    No. 03SC164.
    Supreme Court of Colorado, En Banc.
    May 24, 2004.

      Brauer, Buescher, Goldhammer & Kelman, P.C., Thomas B. Buescher, Joseph M. Gold-hammer, Denver, Colorado, Attorneys for the Petitioners.
    Hogan & Hartson, L.L.P., Ty Cobb, Peter H. Walsh, Denver, Colorado, Attorneys for Bill Owens, Governor of the State of Colorado.
    Perkins Coie, L.L.P., Robert N. Miller, Stephanie E. Dunn, Denver, Colorado, Michael E. McLachlan, Durango, Colorado, Attorneys for Jeffrey M. Wells, Executive Director of the Colorado Department of Personnel and General Support Services.
   Chief Justice MULLARKEY

delivered the Opinion of the Court.

The question before us is whether individual state employees and their labor organizations have standing to sue the Governor and the Executive Director of the Department of Personnel to challenge a 2001 Executive Order and ensuing Personnel Policy that eliminated employee payroll deductions for union dues. In the trial court, the employees asserted eight claims for relief. They claimed that the policy violated three provisions of the Colorado Constitution (separation of powers, free speech, and state personnel system provisions) and two statutes (a payroll deduction law and the Administrative Procedure Act). The Governor moved to dismiss on the grounds that the employees lacked standing to sue him, that the claims were moot, and that the payroll deduction policy did not violate the Colorado Constitution or state statutes. The Executive Director also moved to dismiss. He did not assert standing or mootness, but, like the Governor, he contended that the policy did not violate any law.

The trial court granted the motions to dismiss without stating any reason for the ruling. On appeal, the court of appeals affirmed the trial court’s order on the basis that the employees lacked standing to sue either the Governor or the Executive Director even though the Executive Director had not challenged the employees’ standing to sue. Ainscough v. Owens, 77 P.3d 761 (Colo.App.2003). We reject the court of appeals’ analysis.

Colorado has a tradition of conferring standing to a wide class of plaintiffs. In addition to the traditional legal controversies, our trial courts frequently decide general complaints challenging the legality of government activities and other cases involving intangible harm. Moreover, we have long recognized that state officials can be sued in their official capacities to challenge the validity of constitutional provisions, statutes, and administrative policies. This is especially true for the Governor who is defined by our Constitution as the supreme executive of the state. In this case, the Executive Director quite properly did not raise standing below because there are numerous eases allowing such suits.

The court of appeals cites no Colorado cases holding that plaintiffs adversely affected by administrative agency action lack standing to sue the agency and the state, and we know of none. Accordingly, we reverse the judgment of the court of appeals and remand the case with directions to return it to the trial court for further proceedings consistent with this opinion.

I. Facts and Procedural History

From the 1930s until 2001, the state allowed its employees to sign up for payroll deductions, including union dues. The state deducted the dues from employees’ paychecks and forwarded the money collected to the employee associations. This process is known as “dues checkoff.” Dues checkoff became a statutory right in 1973 with the passage of House Bill 1320. Ch. 119, sec. 1, § 26 — 1—4(l)(fo) & (c), 1973 Colo. Sess. Laws 421, 421. House Bill 1320 directed the state official responsible for paying salaries and wages to deduct dues money from employees’ paychecks whenever such a request was made by the employees and their associations. Id. In 1975, the General Assembly passed Senate Bill 466, which instructed the state controller to “regulate, approve, and review all payroll deductions for all state employees.” Ch. 209, sec. 1, § 24-30-202(23)(a), 1975 Colo. Sess. Laws 801, 801. This mandatory regulation, however, exempted “deductions expressly authorized by statute,” such as the dues checkoff deductions. Id.

In 1996, the General Assembly enacted Senate Bill 96-228, which reorganized the Department of Perspnnel. This bill repealed both of the statutes described, above and replaced them with section 24-50.3-104(8). Ch. 273, see. 26, § 24-50-104(1)0?) & (c), 1996 Colo. Sess. Laws 1493, 1507;' Ch. 273, sec. 27, § 24-50.3-104(8), 1996 Colo. Sess. Laws 1493, 1507. This new subsection continued to require the Executivé Director of the Personnel Department to “regulate, approve, and review all payroll deductions for all state employees,” and continued to exempt deductions that were “expressly authorized by statute, or state-sponsored.” Ch. 273, sec. 27, § 24-50.3-104(8), 1996 Colo. Sess. Laws 1493, 1508. Because .the dues checkoff statute was repealed, however, it was no longer “expressly authorized by statute” and no longer exempt from review. Thus, under.the new law, the employee associations no longer had a statutory right to automatic payroll deductions.

In 1998, House Bill 98-1312 repealed section 24-50.3-104(8) and reenacted it at its current location, section 24-50-104(8); Ch. 194, sec. 1, §.24-50-104, 1998 Colo. Sess. Laws 668, 675;;f Ch. 194, sec. 7, § 24-50.3-104,1998 Colo. Sess. Laws 668, 677.

Despite the statutory changes affecting automatic payroll deductions, .the program continued basically unchanged, and employee associations as well as many other entities continued to utilize the program until 2001. For example, in addition to union dues, payroll deductions were taken for recreation and athletic dues¡ ’ athletic tickets, art and music subscriptions, charitable donations, and savings bonds.

In May of 2001, five years after the latest substantive statutory change, the Governor issued Executive Order D00701 regarding automatic payroll deductions. This Executive Order “defin[ed] the policy of the State regarding payroll deductions” saying ■ that:

[S]tate government should not use taxpayer resources to duplicate services that can be provided by the private sector. Payroll deduction services should be used for administrative convenience to the State to reduce the burdens on state government in providing employment related services to its employees. Individuals who choose to deduct from their accounts for personal reasons have the ability to arrange for personal deductions through their private financial institutions.

Because section 24-50-104(8) does not define which deductions are “state-sponsored for all state employees” and thus statutorily entitled to automatic deductions, the Governor, in his Order, designated the Colorado Combined Campaign “as the only entity ‘state-sponsored for all state employees’ ” and thus, the only non-statutory program to be exempted from executive review and approval. The Governor’s Order also directed the Executive Director to “conduct the statutorily required review of all requests for payroll deductions within the director’s authority, consistent with the policy expressed in this Executive Order” and to “continue all deductions that are ‘state-sponsored for all state employees,’ consistent with the designation contained in this Executive Order,” Thus, only the Colorado Combined Campaign, and not employee association dues, was deductible.

In response to the Executive Order, the Executive Director of the Personnel Department (“Executive Director” or “Personnel Director”) established a working group to study the matter and recommend action. On August 27, 2001, the Personnel Director issued a “Payroll Deduction Policy” to “provide[ ] interpretative guidance to state agencies and institutions of higher education regarding permissible payroll deductions for all state employees.” In this document, the Personnel Director stated that:

State agencies and institutions of higher education shall not permit or process payroll deductions except as expressly authorized in this Policy. Payroll deductions are permitted only when:
1) required by federal law or state statute (e.g. tax withholdings, garnishments, court ordered child support);
2) authorized by federal or state statute (e.g. employee benefits, “eco passes,” tax treatment elections);
3) expressly authorized for state sponsorship by executive order of the governor and available to all state employees (e.g. Colorado Combined Campaign); or
4) the deduction is for the purpose of facilitating the reimbursement of monies owed to the state from an employee (e.g. higher education tuition, uniforms, salary overpayments)

(emphasis added). The Policy concluded by stating that “[t]his policy shall be effective immediately, subject to a grace period for implementation of not later than November 1, 2001.”

To recapitulate the history, employees had the right to automatic payroll deductions until 1996 — first informally, and then by law. In 1996, this automatic right was eliminated and the Personnel Director was given authority to decide whether to allow the automatic deductions, but the state continued the payroll deductions unchanged. Finally, in 2001, the state employees’ right to automatic deductions was largely eliminated when the Personnel Director cancelled all automatic deductions except those authorized by statute or executive order and those repaying money owed to the state.

On November 2, 2001, employees and their associations (“petitioners”) filed suit against the Governor and the Personnel Director in their official capacities in an attempt to contest the new policy strictly limiting automatic payroll deductions. The petitioners claimed that the Governor’s Executive Order: violated the constitutional doctrine of separation of powers; was beyond the authority of the Governor; and violated the policy set forth in section 24-50-104(8)(c). The employees and associations also alleged that the Personnel Director’s Policy: violated section 24-50-104(8)(c); was outside of the scope of the powers of the Personnel Director; violated the processes required by the Colorado Administrative Procedure Act; and violated the petitioners’ free speech rights.

In response to this complaint, both the Governor and the Personnel Director filed motions to dismiss for failure to state a claim under Colorado Rule of Civil Procedure 12(b)(5). The Governor also filed a motion to dismiss based on C.R.C.P. 12(b)(1) arguing that the employees and their associations did not have standing to challenge the Executive Order. After all briefs were filed, the district court judge granted the defendants’ motions to dismiss. The judge’s written ruling stated, in its entirety: “The motions of defendants to dismiss are granted. Defendants are dismissed with prejudice.”

The employees and their associations appealed, and the Governor again argued that petitioners lacked standing to challenge the Executive Order and failed to state a claim against him. The Personnel Director argued that petitioners failed to state a claim against him as well, but did not argue that they lacked standing.

In January of 2003, the court of appeals upheld the trial court’s dismissal of the case, holding that the employees and the associations lacked standing to challenge both the Governor’s Executive Order and the Personnel Director’s Policy. Ainscough, 77 P.3d at 763. The court reasoned that in order to have standing, the employees and their associations must have suffered an injury-in-fact to a legally protected right. Id. The court decided that the employees and associations did not have guaranteed statutory or constitutional rights to automatic payroll deductions and, without reaching the question of injury-in-fact, held that the petitioners lacked standing against both defendants. Id.

We granted certiorari to decide whether the employees and their associations have standing to challenge the Governor’s Executive Order and the Personnel Director’s Policy. We now hold that they have standing to challenge both. As a result, we return the case to the court of appeals with instructions to remand to the trial court to proceed with the merits.

II. Analysis

In this case, the employees and their associations, as plaintiffs below, brought eight claims against two defendants, asking the court to enjoin implementation and enforcement of both the Executive Order and the Personnel Director’s Policy. To decide whether petitioners have standing to sue, we must decide whether petitioners’ claims satisfy the two prongs of Colorado’s test for standing: the plaintiff suffered (1) an injury-in-fact, (2) to a legally protected interest. In the sections below, we first examine the legal requirements for standing in more detail. We then examine whether the petitioners alleged injury-in-fact to a legally protected interest. We hold that the employees and their associations have standing to bring all eight of their claims. Moreover, we hold that both the Governor and the Executive Director in their official capacities are properly named defendants in this suit.

A. The Law of Standing

In order for a court to have jurisdiction over a dispute, the plaintiff must have standing to bring the case. Standing is a threshold issue' that must be satisfied in order to decide a case on the merits. HealthONE v. Rodriguez ex rel. Rodriguez, 50 P.3d 879, 892 (Colo.2002). Standing is a judicially developed test; although an actual injury is required in order to maintain the separation of powers of state government, much of the standard is a prudential exercise of judicial restraint. Conrad v. City and County of Denver, 656 P.2d 662, 668 (Colo.1982). In Colorado, parties to lawsuits benefit from a relatively broad definition of standing.

In Wimberly v. Ettenberg, we. held that a plaintiff must satisfy two criteria in order to establish standing. 194 Colo. 163, 168, 570 P.2d 535, 539 (1977). First, the plaintiff must have suffered an injury-in-fact, and second, this harm must have been to a legally protected interest. Id. The first prong is necessary under the separation of powers doctrine in article III of the Colorado Constitution. Conrad, 656 P.2d at 668. Without this prong, courts might encroach on the power of the legislature to make prospective laws. Id.

We have interpreted the first prong of Colorado’s test for standing to require “a concrete adverseness which sharpens the presentation of issues that parties argue to the courts.” City of Greenwood Village v. Petitioners for Proposed City of Centennial, 3 P.3d 427, 437 (Colo.2000) (internal quotation omitted). Standing is conveyed by neither the remote possibility of a future injury nor an injury that is overly “indirect and incidental” to the defendant’s action. Brotman v. E. Lake Creek Ranch, L.L.P., 31 P.3d 886, 890-91 (Colo.2001). The injury may be tangible, such as physical damage or economic harm; however, it may also be intangible, such as aesthetic issues or the deprivation of civil liberties. Cloverleaf Kennel Club, Inc. v. Colo. Racing Comm’n, 620 P.2d 1051, 1058 (Colo.1980). Deprivations of many legally created rights, although themselves intangible, are nevertheless injuries-in-fact.

Colorado case law provides, for example, broad taxpayer standing in the trial and appellate courts. Colo. State Civil Serv. Employees Ass’n v. Love, 167 Colo. 436, 444, 448 P.2d 624, 627 (1968). In Love, we held that citizens may sue to protect a “great public concern” regarding the constitutionality of a law. Id. We reasoned that “a precept of constitutional law is that a self-executing constitutional provision ipso facto affords the means of protecting the right given and of enforcing the duty imposed.” Id. In these taxpayer standing cases, we have interpreted Wimberly only to require a generalized injury-in-fact: the “injury flowing from governmental violations of constitutional provisions that specifically protect the legal interests involved.” Conrad, 656 P.2d at 668. Thus, we have interpreted Wimberly to confer standing when a plaintiff argues that a governmental action that harms him is unconstitutional. Id.; see also Nicholl v. E A70 Pub. Highway Auth., 896 P.2d 859, 866 (Colo.1995) (noting that “even where no direct economic harm is implicated, a citizen has standing to pursue his or her interest in ensuring that governmental units conform to the state constitution”); Dodge v. Dept. ofSoc. Srvs., 198 Colo. 379, 600 P.2d 70 (1979).

Having described the injury-in-fact prong of the Wimberly test, we now turn to the second prong. The second prong' of Colorado’s standing test requires that the plaintiff have a legal interest protecting against the alleged injury. Wimberly, 194 Colo, at 168, 570 P:2d at 539. This is a question of whether the plaintiff has a claim for relief under the constitution, the common law, a statute, or a rule or regulation. Bd. of County Comm’rs v. Bowen/Edwards Assocs., Inc., 830 P.2d 1045, 1053 (Colo.1992). A legally protected interest may be tangible or economic such as “one of property, one arising out of contract, one protected against tor-tious invasions, or one founded on a statute which confers a privilege.” Wimberly, 194 Colo, at 166, 570 P.2d at 537 (quoting Tenn. Elec. Power Co. v. Tenn. Valley Auth., 306 U.S. 118, 59 S.Ct. 366, 83 L.Ed. 543 (1939)). On the other hand, the right may protect something intangible such as an interest in free speech or expression, or an interest in having a government that acts within the boundaries of our state constitution. Nic-holl, 896 P.2d at 866. Thus, legally protected rights encompass all rights arising from constitutions, statutes, and case law.

To conclude this description of Colorado’s law of standing, a plaintiff has standing to sue if he or she has suffered an injury-in-fact to a legally protected interest. Although necessary, the test in Colorado has traditionally been relatively easy to satisfy.

B. Application

Because standing is a question of law, we review the issue de novo. Corsentino v. Cordova, 4 P.3d 1082, 1087 (Colo.2000). In the following sections, we consider the two standing prongs in reverse order. We begin, as the court of appeals did, by examining the question of whether there was a legally protected interest. After deciding that the petitioners have satisfied this prong, we examine whether there was an injury-in-fact, and conclude that there was. Finally, we determine that both the Governor and the Personnel Director were properly named defendants in this case.

1. Legally Protected Right

■ First, we examine whether petitioners asserted a legally protected interest. The court of appeals found that there was not. We reject its analysis. The court of appeals found merely that because no statute expressly authorized, as a matter of right, the deduction of union dues from employee paychecks, the plaintiffs alleged no injury to a legally protected right. This analysis, however, failed to consider whether the plaintiffs were entitled by constitution or statute to a discretionary determination by the personnel director of their requests for payroll deduction of union dues.

In examining whether the plaintiffs suffered injury to a legally protected right, we look not to the policy being challenged, but to the right that it is alleged to have injured. A statutory or constitutional right to a non-arbitrary exercise of discretion in considering their applications is all that is. needed for a legally protected interest. If that were not true, a disappointed applicant for a discretionary governmental benefit would never have standing to challenge an abuse of, or refusal to exercise, discretion by the executive or administrative officer charged with that duty. That is clearly not the ease. See Cloverleaf Kennel Club, 620 P.2d at 1058-59.

While the Governor has challenged the adequacy of the complaint’s allegations that his actions were the cause of any injury and both he and the Director dispute the allegations of any injury-in-fact at all, neither of them suggests that section 24 — 50—104(8)(c) does not give the Director discretion to grant or deny requested payroll deductions. Because the complaint in this case alleges that the Personnel Director’s Policy and the Governor’s Executive Order deprived employees and organizations of the right to even be considered for a payroll deduction, the allegations are adequate to satisfy this prong of the standing test.

2. Injury-in-Fact

Having found that petitioners satisfied the requirement for a legally protected interest, we must now address the question of whether there was an injury-in-faet. To determine whether there is an injury-im-faet, we accept as true the allegations set forth in the complaint. Dunlap v. Colo. Springs Cablevision, Inc., 829 P.2d 1286, 1289 (Colo.1992). In this case, the individual employees allege that they have all unsuccessfully requested that the State Personnel Department automatically deduct their union dues from their paychecks. In the past, the state has honored such request's and deducted the dues and then forwarded them to the appropriate employee associations; The associations have been using this service to collect dues since 1937.

Now, in compliance with the Executive Order and the Personnel Policy, the Personnel Department no longer allows automatic payroll deductions for employee association dues. The employee associations allege that “[t]he cessation of payroll deductions for dues and other purposes will significantly impair the ability of the organizational plaintiffs to collect dues and represent their members.” In addition to these injuries, the associations claim that prohibiting automatic payroll deductions will disrupt their ability to collect dues to the extent that it will “impair their ability to exercise their right of free speech and association....”

When accepted as true, these allegations satisfy Colorado’s injury-in-fact requirement. The employees and associations specifically allege that they were using a state-provided service — some for decades— but are now precluded from doing so by a change in government policy and practice. In order to show an injury-in-fact, it is unnecessary for the plaintiffs to credibly allege that they have an automatic right to receive a payroll deduction or even that they would likely be successful in receiving one. It is enough if they claim they were deprived of a right to apply for a deduction and receive a non-arbitrary ruling on their application. Thus, we hold that the petitioners alleged injuries sufficient to satisfy the injury-in-fact prong of the standing test.

3. Properly Named Defendants

Finally, we turn to the question of whether the Governor is a properly named defendant. Because he has been sued in his official capacity, we find that he is. As the court of appeals has correctly,recognized, an “official capacity suit” is “merely ‘another way of pleading an action against the entity of which an officer is an agent.”’ Oten v. Colo. Bd. of Soc. Srvs., 738 P.2d 37, 40 (Colo.App.1987) (quoting Monell v. Dept. of Soc. Srvs., 436 U.S. 668, 98 S.Ct. 2018, 56 L.Ed.2d 611 (1978)). The Governor of Colorado is unique in that he is the “supreme executive,” and it is his responsibility to ensure that the laws are faithfully executed. Colo. Const, art IV, § 2 (“The supreme executive power of the state shall be vested in the governor, who shall take care that the laws be faithfully executed.”). Therefore, when a party sues to enjoin or mandate enforcement of a statute, regulation, ordinance, or policy, it is not only customary, but entirely appropriate for the plaintiff to name the body ultimately responsible for enforcing that law. Moreover, when that body is an administrative agency, or the executive branch of government, or even the state itself, the Governor, in his official capacity, is a proper defendant because he is the state’s chief executive. For litigation purposes, the Governor is the embodiment of the state.

In each of the following cases, the Governor of Colorado was a named defendant. The variety of the cases illustrates how widespread and well-established this practice is. E.g., Romer v. Evans, 517 U.S. 620, 116 S.Ct. 1620, 134 L.Ed.2d 855 (1996) (challenging validity of voter initiated constitutional amendment under federal equal protection); Ramos v. Lamm, 639 F.2d 559 (10th Cir.1980) (challenging constitutionality of living conditions at state penitentiary); City of Commerce City v. State, 40 P.3d 1273 (Colo.2002) (home-rule city challenging validity of statute regulating the use of automated vehicle identification systems); Morrissey v. State, 951 P.2d 911 (Colo.1998) (challenging constitutionality of a voter initiated constitutional amendment pertaining to term limits); Romer v. Board of County Comm’rs, 897 P.2d 779, 781 (Colo.1995) (challenging a Department of Social Service’s interpretation of a statute); Dempsey v. Romer, 825 P.2d 44 (Colo.1992) (state employees challenging constitutionality of a statute setting salary levels); Urbish v. Lamm, 761 P.2d 756 (Colo.1988) (challenging constitutionality of statute and Department of Social Services Rule); Partridge v. State, 895 P.2d 1183 (Colo.App.1995) (challenging Racing Commission decision to suspend an owner/trainer).

In fact, this court has decided a suit procedurally similar to this one in which state employees sued the Governor, the Executive Director of the Personnel Department, the Personnel Department itself, and the State Personnel Board. Colo. Ass’n of Pub. Employees v. Lamm, 677 P.2d 1350 (Colo.1984). In that case, the Personnel Department promulgated rules in accordance with the newly-passed State Personnel System Act. Id. at 1352. The employees then challenged both the Act and the Rules, claiming that they were unconstitutional for a variety of reasons. Id. at 1353. The propriety of naming the Governor as a defendant was not challenged even though there was neither an executive order involved nor any other specific action on the part of the Governor. This case and the many others like it clearly demonstrate that when" challenging the constitutionality of a statute or the lawfulness of an administrative rule, the Governor is an appropriate defendant due to his constitutional responsibility to uphold the laws of the state and to oversee Colorado’s executive agencies. - Therefore, we hold that the Governor in his official capacity is an appropriate defendant for all of the claims in this case.

III. Remand

Although appellate courts review trial courts’ rulings on motions to dismiss de novo, we return this case to the trial court for further proceedings. In this case, the Governor moved to dismiss the case, arguing -that the petitioners lacked standing and that their claims were moot. His brief also argued, in detail, that the petitioners’ claims must fail under C.R.C.P. 12(b)(5) because each failed to state a claim upon which relief could be granted. The Personnel Director also urged the trial court to dismiss the case, arguing that, even when the allegations of the complaint were taken as true, none of the claims against the Personnel Director’s Policy stated a claim upon which relief could be granted.

Despite the number of claims and the variety of arguments raised by the defendants, the trial court dismissed the complaint with prejudice and stated no grounds for its order. The court of appeals sought to find a common basis for dismissing all of the petitioners’ claims, and arrived at the standing analysis that we have reversed in this opinion.

In the interests of judicial economy, we direct the court of appeals to return this case to the district court. The defendants, if they choose, may file new motions to dismiss based on grounds other than those already resolved on appeal. Otherwise, the defendants should answer the complaint and the case should proceed to trial.

IV. Conclusion

Because the employees and employee associations have satisfied both the injury-in-fact and legally protected right prongs of the standing test for all claims, we hold that they have standing to challenge the payroll deduction Policy. Moreover, we hold that not only the Personnel Director, but also the Governor, is a properly named defendant in this case. Hence, we reverse this judgment of the court of appeals and remand the ease with directions to return the case to the trial court for further proceedings consistent with this opinion.

      . The Colorado Combined Campaign is a fund-raising program in which state employees may donate money either to an umbrella organization comprising a variety of charities or to the individual charities themselves.

        . Article III says, in its entirety:
      The powers of the government of this state are divided into three distinct departments, — the legislative, executive and judicial; and no person or collection of persons charged with the exercise of powers properly belonging to one of these departments shall exercise any power properly belonging to either of the others, except as in this constitution expressly directed or permitted.
      Colo. Const, art III.