Grant Brothers Ranch, LLC v. Antero Resources Piceance Corp

COLORADO COURT OF APPEALS 2016COA178

Court of Appeals No. 15CA2063

Garfield County District Court No. 14CV30180

Honorable James B. Boyd, Judge

Grant Brothers Ranch, LLC,

Plaintiff-Appellant,

v.

Antero Resources Piceance Corporation, a withdrawn Colorado corporation,

and Ursa Operating Company, LLC, a Delaware corporation,

Defendants-Appellees.

JUDGMENT AFFIRMED IN PART, REVERSED IN PART,

AND CASE REMANDED WITH DIRECTIONS

Division VI

Opinion by JUDGE FOX

Bernard and Richman, JJ., concur

Announced December 1, 2016

Dufford, Waldeck, Milburn & Krohn, LLP, Nathan A. Keever, Grand Junction,

Colorado, for Plaintiff-Appellant

Beatty & Wozniak, P.C., Michael J. Wozniak, Karen L. Spaulding, Malinda

Morain, Denver, Colorado, for Defendants-Appellees

¶1 Plaintiff, Grant Brothers Ranch, LLC (Grant Brothers), sued

defendants, Antero Resources Piceance Corporation (Antero) and

Ursa Operating Company, LLC (Ursa) (collectively, Operators), to

recover its share of proceeds derived from the production and sale

of oil and gas. Concluding that Grant Brothers was required and

failed to exhaust its administrative remedies available under the Oil

and Gas Conservation Act, §§ 34-60-101 to -130, C.R.S. 2016 (the

Act), the district court held that it lacked subject matter jurisdiction

over the action and granted summary judgment in favor of

Operators. Grant Brothers appeals the judgment dismissing its

claims with prejudice. We affirm in part, reverse in part, and

remand with directions to correct the judgment.

I. Background

¶2 Antero, an oil and gas exploration and production company,

received approval from the Colorado Oil and Gas Conservation

Commission (the Commission) to establish a drilling and spacing

unit to produce oil and gas in Garfield County. Grant Brothers

owned property within this unit. Antero wished to produce the oil

and gas underlying Grant Brothers’ property, but Grant Brothers

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refused Antero’s offer to lease the minerals or participate in their

production.

¶3 As a result, Antero requested that the Commission pool all

nonconsenting interests in the unit and allow Antero to produce

and sell the oil and gas of the nonconsenting owners. Grant

Brothers asked the Commission to deny Antero’s request. After a

hearing, the Commission issued an order pooling all of the

nonconsenting interests in the unit.

¶4 About a year and a half after issuing this pooling order, the

Commission approved Antero’s request to establish another drilling

and spacing unit within the same lands as the first unit in order to

produce oil and gas from a deeper formation. Again, Antero asked

Grant Brothers to lease the minerals or participate in their

production and, again, Grant Brothers refused. Antero requested

that the Commission pool all nonconsenting interests in the second

unit. After a hearing, the Commission issued an order pooling all

nonconsenting interests in the second unit.

¶5 As a result of the Commission’s pooling orders, Grant Brothers

became a nonconsenting owner pursuant to section 34-60-116(7),

C.R.S. 2016, of the Act. In pertinent part, this meant that Grant

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Brothers was entitled to receive its interest in the proceeds derived

from the production and sale of oil and gas from wells in the units.

However, Grant Brothers would receive payment only after these

wells reached “payout,” in other words after Antero recovered the

costs allowed by section 34-60-116(7). The pooling orders required

Antero to furnish Grant Brothers with monthly statements

containing information about its costs and its proceeds.

¶6 Almost three years after the Commission issued its last

pooling order, Grant Brothers asked Antero for permission to audit

its books and records regarding the wells at issue. Antero refused,

noting that it had been sending Grant Brothers the required

monthly statements.

¶7 About two years after Antero refused the request for an audit,

Grant Brothers sued Operators in district court.1 Grant Brothers’

complaint requested an equitable accounting and alleged that the

wells had reached payout, but Operators had yet to pay Grant

Brothers. Operators filed a motion for summary judgment,

asserting that Grant Brothers was required to exhaust its

1Antero drilled and operated the wells within the units until

December of 2012, when Ursa assumed operation of the wells.

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administrative remedies available under the Act and had failed to

do so before filing its complaint. Operators argued that the district

court lacked subject matter jurisdiction over the action and should

dismiss it with prejudice. The court agreed and granted summary

judgment, dismissing the action with prejudice.

II. Summary Judgment

¶8 Grant Brothers first contends that the district court

improperly granted summary judgment because Grant Brothers

was not required to exhaust its administrative remedies, and, thus,

the court had subject matter jurisdiction over the action. We

disagree. Second, Grant Brothers argues that it was inappropriate

for the district court to dismiss the action with prejudice on the

basis that the court lacked subject matter jurisdiction over the

action. We agree that dismissal with prejudice was error.

A. Administrative Exhaustion

¶9 Grant Brothers argues that the Act does not contain a clear

manifestation of legislative intent requiring an involuntarily pooled

mineral rights owner to exhaust administrative remedies before

seeking an equitable accounting in district court regarding the

amount of proceeds owed after the wells at issue reach payout.

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Grant Brothers asserts that the Act’s language and legislative

history — including the 1998 amendments to the Act and related

testimony from Senator Tilman Bishop, the sponsor of the

amendments2 — and the Commission’s rules support this position.

1. Preservation

¶ 10 The parties agree that Grant Brothers properly preserved this

argument, except to the extent that Grant Brothers uses Senator

Bishop’s testimony to support its contention.

¶ 11 We do not consider “arguments never presented to, considered

or ruled upon by” the district court. Core-Mark Midcontinent Inc.

v. Sonitrol Corp., 2016 COA 22, ¶ 24 (citation omitted). All that is

needed to preserve an issue for appeal is for the issue to be brought

to the district court’s attention so that the court has an opportunity

to rule on it. Berra v. Springer & Steinberg, P.C., 251 P.3d 567, 570

(Colo. App. 2010).

¶ 12 Responding to the motion for summary judgment, Grant

Brothers argued that the legislature did not intend for the

2 In 1998, Senator Bishop sponsored a bill, S.B. 98-159, that

amended several parts of the Act, including provisions in section

34-60-118.5, C.R.S. 2016, concerning the Commission’s

jurisdiction over certain disputes. See Ch. 186, sec. 1,

§ 34-60-118.5, 1998 Colo. Sess. Laws 636.

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Commission’s jurisdiction over disputes like the one at issue to be

exclusive or, relatedly, to require administrative exhaustion. Grant

Brothers supported this argument by discussing the Act’s 1998

amendments. On appeal, Grant Brothers merely presents relevant

legal research — Senator Bishop’s testimony — to further support

the argument previously made to the district court.3 Therefore, we

conclude that Grant Brothers’ argument was properly preserved.

2. Review Standard

¶ 13 Although Operators moved for summary judgment, their

motion argued that the district court lacked subject matter

jurisdiction over the action. The district court granted Operators’

motion solely on this basis. The district court’s order left

unresolved significant factual disputes, such as whether payout

had occurred. Given these facts, Operators’ motion was effectively a

3 Although Senator Bishop’s testimony was not specifically

presented to the district court, the arguments regarding legislative

intent and related legislative history were brought to the court’s

attention such that it had an opportunity to rule on this issue. See

Berra v. Springer & Steinberg, P.C., 251 P.3d 567, 570 (Colo. App.

2010). We will not address the remainder of the arguments that

Grant Brothers raised for the first time either on appeal or in its

reply brief. See Core-Mark Midcontinent Inc. v. Sonitrol Corp., 2016

COA 22, ¶ 24; see also People v. Czemerynski, 786 P.2d 1100, 1107

(Colo. 1990) (refusing to address issues not raised in an appellant’s

original brief but raised for the first time in the reply brief).

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motion to dismiss for lack of subject matter jurisdiction more

properly brought under C.R.C.P. 12(b)(1) than C.R.C.P. 56. See

Trinity Broad. of Denver, Inc. v. City of Westminster, 848 P.2d 916,

925 (Colo. 1993) (reasoning that a court’s determination under Rule

12(b)(1) reveals whether it has power to hear the case, while its

determination under Rule 56 results in an adjudication on the

merits); cf. Winslow v. Walters, 815 F.2d 1114, 1116 (7th Cir. 1987)

(“Seeking summary judgment on a jurisdictional issue . . . is the

equivalent of asking a court to hold that because it has no

jurisdiction the plaintiff has lost on the merits. This is a

nonsequitur.”).

¶ 14 Because the record contains all necesary information, we

apply Rule 12(b)(1) to the record before us and resolve these issues

as a matter of law. See Trinity Broad. of Denver, Inc., 848 P.2d at

925; W.O. Brisben Cos. v. Krystkowiak, 66 P.3d 133, 137 (Colo.

App. 2002) (citing Norsby v. Jensen, 916 P.2d 555, 559 (Colo. App.

1995)), aff’d on other grounds, 90 P.3d 859 (Colo. 2004).

¶ 15 We employ a mixed standard of review to motions to dismiss

for lack of subject matter jurisdiction. Hanson v. Colo. Dep’t of

Revenue, 140 P.3d 256, 257-58 (Colo. App. 2006). We review

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factual findings for clear error, and such findings will be upheld

unless they have no support in the record. Id. However, we review

legal conclusions de novo. Id. We also review a district court’s

interpretation of a statute de novo. Anderson v. Vail Corp., 251 P.3d

1125, 1127-28 (Colo. App. 2010). In construing legislation, we look

first to the plain language of the statute, reading it as a whole.

Young v. Brighton Sch. Dist. 27J, 2014 CO 32, ¶ 11. Then, if the

language is ambiguous, we “construe the statute in light of the

General Assembly’s objective,” presuming “that the legislature

intended a consistent, harmonious, and sensible effect.” Anderson,

251 P.3d at 1127-28.

3. Applicable Law

¶ 16 In the Act, the Colorado Legislature granted the Commission

“the authority to regulate: . . . the drilling, producing, and plugging

of wells and all other operations for the production of oil or

gas . . . .” § 34-60-106(2)(a), C.R.S. 2016.4 The Act’s declaration

4 The Commission also regulates “[t]he spacing of wells . . . and

. . . [l]imit[s] the production of oil or gas, or both, from any pool

or field for the prevention of waste, and [limits] and [allocates] the

production from such pool or field among or between tracts of

land having separate ownership therein, on a fair and equitable

basis so that each such tract will be permitted to produce no

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gives the Commission a broad grant of jurisdiction. See

§ 34-60-105(1), C.R.S. 2016 (“The commission has jurisdiction over

all persons and property, public and private, necessary to enforce

the provisions of this article, and has the power to make and

enforce rules, regulations, and orders pursuant to this article, and

to do whatever may reasonably be necessary to carry out the

provisions of this article.”); see also Oborne v. Cty. Comm’rs, 764

P.2d 397, 401 (Colo. App. 1988) (stating that the Act is a

comprehensive statute intended to regulate development,

production, and utilization of gas and oil).

¶ 17 The Act further provides that “[a]bsent a bona fide dispute

over the interpretation of a contract for payment, the oil and gas

conservation commission shall have jurisdiction to determine . . .

[ t]he date on which payment of proceeds is due” and any “amount

of proceeds” or interest due. § 34-60-118.5(5)(a) and (c), C.R.S.

2016. Relatedly, the very next provision, subsection 5.5, provides:

Before hearing the merits of any proceeding

regarding payment of proceeds pursuant to

this section, the oil and gas conservation

commission shall determine whether a bona

more than its just and equitable share from the pool . . . .”

§ 34-60-106(2)(c) and (3)(a), C.R.S. 2016.

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fide dispute exists regarding the interpretation

of a contract defining the rights and

obligations of the payer and payee. If the

commission finds that such a dispute exists,

the commission shall decline jurisdiction over

the dispute and the parties may seek

resolution of the matter in district court.

§ 34-60-118.5(5.5).

¶ 18 In relation to whether payout has occurred, the Act states

that, “[i]n the event of any dispute” as to the costs allowed to be

recovered before having to pay the nonconsenting owners, “the

[C]ommission shall determine the proper costs[.]” § 34-60-116(7)(a).

It also states that, during the period of cost recovery occurring

before the wells reach payout, “the [C]ommission shall retain

jurisdiction to determine the reasonableness” of such costs.

§ 34-60-116(7)(d).

¶ 19 An exception to the Commission’s jurisdiction concerns

disputes over the interpretation of a payment contract. The

Commission shall “decline jurisdiction over the dispute,” and the

parties can “seek resolution of the matter in district court,” if the

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dispute involves a contract. § 34-60-118.5(5.5) (emphasis

added).5

¶ 20 If “complete, adequate, and speedy” administrative remedies

are available, a party generally must exhaust these remedies before

filing suit in district court.6 City & Cty. of Denver v. United Air

Lines, Inc., 8 P.3d 1206, 1212 (Colo. 2000). The administrative

exhaustion doctrine “enables the agency to make initial

determinations on matters within its expertise and to compile a

record that is adequate for judicial review” so as to “prevent

piecemeal application of judicial relief and to conserve judicial

resources.” State v. Golden’s Concrete Co., 962 P.2d 919, 923 (Colo.

1998); accord Great W. Sugar Co. v. N. Nat. Gas Co., 661 P.2d 684,

690 (Colo. App. 1982) (explaining that primary jurisdiction allows

an agency to decide “in the first instance . . . technical questions of

fact uniquely within the agency’s expertise and experience”)

(citation omitted).

5 The legislature limited the Commission’s jurisdiction over lawsuits

for damages or injunctive relief, but this is not at issue in this case.

See § 34-60-114, C.R.S. 2016.

6 There are exceptions to administrative exhaustion, but none was

invoked here.

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¶ 21 However, when the administrative agency does not have the

authority to grant the relief requested by the party seeking judicial

action, and the available administrative remedies are “ill-suited” for

providing the relief requested, administrative exhaustion is not

required. Brooke v. Rest. Servs., Inc., 906 P.2d 66, 71 (Colo. 1995)

(citation omitted). In determining whether a court has subject

matter jurisdiction over a claim where a party did not exhaust

administrative remedies available to it, courts examine whether: (1)

the claim was filed pursuant to the relevant statute; (2) this statute

provides a remedy for the claim asserted; and (3) the legislature

intended this statute to provide a “comprehensive scheme”

addressing the issues underlying the claim. Id. at 68-71; see

Pfenninger v. Exempla, Inc., 17 P.3d 841, 843-44 (Colo. App. 2000).

4. Analysis

¶ 22 We conclude that the district court was right to dismiss the

action for the reasons stated below.

¶ 23 First, in determining whether the claim at issue was filed

pursuant to the relevant statute, Brooke, 906 P.2d at 68-71, we

understand Grant Brothers’ claim as one for payment of proceeds

arising under sections 34-60-116 and -118.5 of the Act. At issue is:

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(1) whether payout has been reached; (2) if so, the date on which

payment proceeds became due; and (3) the amount owed (plus

interest) to Grant Brothers. § 34-60-118.5(5) and (5.5). It is

undisputed that Grant Brothers is a nonconsenting owner seeking

payment of funds acquired by Operators by extracting and selling

natural gas from the wells at issue. Consequently, Grant Brothers

qualifies as a “payee” entitled to payment of proceeds from

Operators, the “payers.” See §§ 34-60-116(7), -118.5(1)(a) and (b).

¶ 24 Grant Brothers’ entitlement, however, is subject to a condition

precedent. Where, as here, an operator and a nonconsenting owner

have no contract addressing the issue, “[t]he date on which

payment of proceeds is due” is the date the wells reach payout. §

34-60-118.5(5). Grant Brothers receives payment only if and when

payout occurs.

¶ 25 Reading subsections -118.5(5) and -118.5(5.5) together, as we

must, and applying the statutory language, Young, ¶ 11, we

conclude that the Act’s comprehensive scheme means that primary

jurisdiction for the present dispute remains with the Commission.

See Great W. Sugar Co., 661 P.2d at 690. If one party is dissatisfied

with the results of the administrative process, that party can then

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seek judicial review. See § 34-60-111, C.R.S. 2016 (providing that

any final order of the “[C]ommission shall be subject to judicial

review”); see also Dep’t of Nat. Res. Reg. 501(c), 2 Code Colo.

Regs. 404-1 (adopting the State Administrative Procedure Act

(APA), sections 24-4-101 to -108, C.R.S. 2016); Dep’t of Nat. Res.

Reg. 503(b)(8), 2 Code Colo. Regs. 404-1 (allowing a mineral interest

owner to file an application to the Commission for the purpose of

seeking a hearing on provisions related to measurement); Dep’t of

Nat. Res. Reg. 503(b)(10), 2 Code Colo. Regs. 404-1 (allowing an

aggrieved interest owner to file an application for relief for any

other matter not described in the regulation); Dep’t of Nat. Res.

Reg. 522, 2 Code Colo. Regs. 404-1 (allowing a mineral owner to

file a complaint requesting the issuance of a violation notice

directing an operator to voluntarily remedy the violation).

¶ 26 Second, as to whether the relevant statute provides a remedy

for the claim asserted, Brooke, 906 P.2d at 68-71, the Act provides

a remedy for claims for the payment of proceeds where the parties

have no contract addressing the issue.

¶ 27 Here, there is no contract; thus, there is no contract dispute.

See, e.g., Atl. Richfield Co. v. Farm Credit Bank of Wichita, 226 F.3d

14

1138, 1157 (10th Cir. 2000) (applying Colorado law); Anderson

Living Trust v. ConocoPhillips Co., LLC, 952 F. Supp. 2d 979, 1054

(D.N.M. 2013) (applying Colorado law); Grynberg v. Colo. Oil & Gas

Conservation Comm’n, 7 P.3d 1060, 1062-63 (Colo. App. 1999)

(finding the Commission had jurisdiction to calculate the amount of

proceeds due to a payee and to enforce timely payment, but lacked

jurisdiction to resolve a contractual dispute over whether operators

were entitled under a lease to deduct post-production expenses in

computing royalties due to owners).

¶ 28 A payee contesting the payment (or nonpayment) of proceeds

must first submit a written request, such as Commission Form 37,

to the payer(s) requesting certain information regarding the costs of

installing and operating the well. § 34-60-118.5(2.5); Dep’t of Nat.

Res. Reg. 329, 2 Code Colo. Regs. 404-1. After submitting Form 37,

if the dispute remains unresolved, the payee may then submit Form

38 to request a hearing before the Commission. Any final order

resulting from such a hearing is subject to judicial review pursuant

to the APA, sections 24-4-101 to -108. See § 34-60-111; see also

Dep’t of Nat. Res. Reg. 501, 2 Code Colo. Regs. 404-1.

15

¶ 29 Third, with regard to whether the legislature intended the

statutory remedy to be the primary remedy for the claim asserted,

Brooke, 906 P.2d at 68-71, the legislature has said, by the Act’s

language and structure, that a proceeding before the Commission,

as described above, is the primary remedy for nonconsenting

owners’s claims for the payment of proceeds where there is no

germane contract between the parties. See §§ 34-60-

118.5(5), -118.5(5.5), and -116(7). The comprehensive statutory

scheme detailed above — addressing when payout has occurred,

the date when payment of proceeds is due, and the amount of

proceeds due where the parties have no contract regarding the

payment of proceeds — evidences this intent. See Brooke, 906 P.2d

at 68-71; Egle v. City & Cty. of Denver, 93 P.3d 609, 612 (Colo. App.

2004). The scheme establishes a typical administrative process

allowing for rulemaking, hearings, and eventual judicial review of

disputes within the Commission’s area of expertise.

¶ 30 Contrary to Grant Brothers’ suggestion, the 1998 amendments

do not evidence a change in the legislature’s intent regarding the

primacy of the Commission’s jurisdiction over disputes like this

one. Before the amendments, the Act stated that the Commission

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“shall have exclusive jurisdiction to determine . . . [t]he date on

which payment of proceeds is due a payee[;] . . . [t]he existence or

nonexistence of an occurrence . . . [justifying] a delay in payment;

and . . . [t]he amount of proceeds plus interest, if any, due a payee

by a payor.” § 34-60-118.5(5), C.R.S. 1997 (emphasis added). After

the amendments, the Act states that, “[a]bsent a bona fide dispute

over the interpretation of a contract for payment, [the Commission]

shall have jurisdiction to determine” the same three issues outlined

in the older version of the Act. § 34-60-118.5(5), C.R.S. 2016. The

1998 amendments did not change the Commission’s primary

jurisdiction over disputes for the payment of proceeds such as the

one before us. Rather, they clarified that disputes involving a “bona

fide dispute over the interpretation of a contract for payment”

should be brought in the district court. See §§ 34-60-118.5(5)

and -118.5(5.5). The history of the 1998 amendments to the Act,

implemented through Senate Bill 98-159,7 reveals the following:

7 Although we conclude that the Act’s language evidences its

underlying legislative purpose, we examine the legislative history of

the 1998 amendments in order to fully address the issues Grant

Brothers raises on appeal. See Kisselman v. Am. Family Mut. Ins.

Co., 292 P.3d 964, 969 (Colo. App. 2011) (“[W]e may consider

legislative history when there is substantial legislative discussion

17

 Senator Bishop repeatedly stated that the thrust of the bill

was to ensure that royalty owners received more information

regarding the payments from operators so that they could

ensure the sufficiency of the payments of proceeds. See

Hearings on S.B. 98-159 before the Conf. Comm., 61st Gen.

Assemb., 2nd Sess. (Apr. 16, 1998) (comments of Senator

Bishop); Hearings on S.B. 98-159 before the S. Agricultural

Comm., 61st Gen. Assemb., 2nd Sess. (Feb. 4, 1998)

(comments of Senator Bishop). Bishop, along with the

Member of the House who worked with him on the bill, also

stressed multiple times that the bill was not meant to change

any substantive contractual rights established by oil and gas

leases, but it would change some procedural rights (such as

how payments should be made and what information should

be disclosed regarding such payments). Hearings on S.B.

98-159 before the Conf. Comm., 61st Gen. Assemb., 2nd Sess.

(Apr. 16, 1998) (comments of Senator Bishop). Bishop also

emphasized that the Commission should not be asked to

surrounding the passage of a statute, and the plain language

interpretation of a statute is consistent with legislative intent.”).

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resolve disputes that are better addressed by courts (e.g.,

interpretation of contract provisions). Id.

 Walter Fees, who worked with Bishop on the bill, authored a

letter discussing changes to section 34-60-118.5, which

states, “[a]fter my talk with [Senator] Bishop[,] he feels the

[Commission] should have exclusive jurisdiction over the

payment of proceeds.” See Hearings on S.B. 98-159 before the

S. Agricultural Comm., 61st Gen. Assemb., 2nd Sess. (Feb. 4,

1998) (letter to Richard Griebling, referenced at the hearing).

 Jack Rigg, associated with Amoco and the Rocky Mountain Oil

and Gas Association, also testified that the Commission

should not be involved in private contract disputes and that

one of the main purposes of the amendment was to clarify that

the Commission was not to interpret contract terms in place of

a court. See id. (comments of Jack Rigg). He never suggested

that the Commission should not continue to have primary

jurisdiction over noncontractual disputes over the payment of

proceeds. Id.

We are thus unpersuaded by Grant Brothers’ arguments to the

contrary.

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¶ 31 While section 34-60-118.5 alone does not create an

entitlement to proceeds, Grynberg, 7 P.3d at 1063, a final order

from the Commission recognizing one’s status as a nonconsenting

owner pursuant to section 34-60-116 does. Grant Brothers’

entitlement to payment is not at issue; the issues are if and when

Grant Brothers is to receive payment and in what amount.

¶ 32 To allow parallel judicial proceedings on these same issues,

rather than giving the Commission the first opportunity to decide

them, see Great W. Sugar Co., 661 P.2d at 690, would go against

the legislative intent revealed by the Act’s declaration (§ 34-60-

105(1)), language (§ 34-60-118.5), and administrative processes (see

Dep’t of Nat. Res. Regs. 501, 503(b)(8), 503(b)(10), 522, 2 Code

Colo. Regs. 404-1). And, requiring Grant Brothers and similarly

situated claimants to exhaust administrative remedies promotes the

policy objectives at the heart of the doctrine of administrative

exhaustion. See Golden’s Concrete Co., 962 P.2d at 923

(expounding on the doctrine’s policy objectives, including the

conservation of judicial resources). The determination Grant

Brothers seeks concerning key details of the oil and gas production

process is well within the expertise of the Commission, and allowing

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the Commission to develop a record in resolving this dispute will

conserve judicial resources and result in a more optimal application

of judicial relief, should the claim undergo later judicial review. See

id.

¶ 33 We therefore conclude that Grant Brothers was required to

exhaust its administrative remedies and did not do so before filing

suit in the district court. As a result, we conclude that the district

court properly dismissed the action.

B. Dismissal With Prejudice

¶ 34 Grant Brothers contends that the district court erred in

dismissing its claim with prejudice solely on the basis that the court

lacked subject matter jurisdiction. We agree.

¶ 35 A dismissal under C.R.C.P. 12(b)(1) is not an adjudication on

the merits, but rather is the result of a court lacking the power to

hear the claims asserted. See Trinity Broad. of Denver, Inc., 848

P.2d at 925. Because we have determined that the issue of subject

matter jurisdiction raised by Operators’ motion should have been

addressed pursuant to Rule 12(b)(1), the dismissal we affirm is

necessarily without prejudice, which the district court shall correct

upon remand. Grant Brothers therefore retains the ability to seek

21

further relief from the Commission, whose orders are then subject

to judicial review. See Dep’t of Nat. Res. Reg. 501, 2 Code Colo.

Regs. 404-1.

III. Operators’ Request for Costs

¶ 36 Operators requested their costs pursuant to C.A.R. 39.

Because we affirm in part and reverse in part, we conclude that the

trial court should determine what amount of appellate costs, if any,

to award upon remand. See C.A.R. 39(a)(4) (“[I]f a judgment is

affirmed in part, . . . costs are taxed only as ordered by the trial

court.”) (emphasis added).

IV. Conclusion

¶ 37 The judgment is affirmed in part and reversed in part, and the

case is remanded to the district court with directions to correct the

judgment to clarify that the dismissal is without prejudice and to

make a determination regarding Operators’ request for costs

pursuant to C.A.R. 39.

JUDGE BERNARD and JUDGE RICHMAN concur.

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