Contrada, Inc. v. Parsley et al
Filing
176
ORDER. ORDERED Plaintiff Contrada Inc.'s post-trial Motion for Attorneys' Fees, Costs and Interest 170 is GRANTED IN PART and DENIED IN PART. ORDERED that Plaintiff Contrada Inc.'s Motion for Hearing 175 is DENIED AS MOOT by Chief Judge Wiley Y. Daniel on 10/31/12.(jjhsl, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Chief Judge Wiley Y. Daniel
Civil Action No. 10-cv-00646-WYD-CBS
CONTRADA, INC.,
Plaintiff,
v.
ROBIN L. PARSLEY; and
N SKY LIVING, INC.,
Defendants.
ORDER
THIS MATTER comes before me on Plaintiff Contrada Inc.’s post-trial Motion for
Attorneys’ Fees, Costs and Interest [DE-170]. On June 8, 2012, the jury returned a
verdict finding that Defendant Robin L. Parsley (“Defendant”) breached a contract with
Plaintiff Contrada, Inc. (“Contrada”). The jury awarded Contrada $975,000 in damages.
Contrada now seeks $181,409.47 in attorney’s fees and costs and prejudgment interest
in the amount of $488,595.21. Defendant does not oppose the request for legal fees and
costs, but objects to the award of prejudgment interest. [DE-171]. I have reviewed the
parties’ papers and the applicable law, and for the reasons set forth below, I will grant in
part and deny in part Contrada’s motion. Specifically, I will grant the request for legal
fees and costs and deny the request for pre-judgment interest.
I.
BACKGROUND
The dispute in this case involved approximately $6,000,000 Contrada loaned to
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Endeavor Highrise, L.P. (“Endeavor”) to provide financing for the construction of a high
rise residential condominium tower. Per the terms of the loan, interest accrued at a rate
of 17% per annum and increased by an additional 4% in the event of a default. Parsley
executed the agreement and note on behalf of Endeavor and also executed a Personal
Guaranty (“Guaranty”) for the loaned funds. Per the terms of the Guaranty, Parsley
personally guaranteed “[o]ne half of the full value of all Obligations” loaned to Endeavor.
On January 15, 2010, Contrada declared the loans in default and demanded repayment
from Parsley. At the time, Contrada’s attorneys maintained that more than $9,598,328
was owed, which represented $9,141,265.45 in principal and interest at 17% plus alate
fee. Contrada demanded that Parsley repay one-half of the total amount owed
($4,799,164.36) per the terms of the Guaranty. Parsley failed to tender payment or
otherwise honor the Guaranty and Contrada filed suit in this Court against Parsley on
March 19, 2010, for breach of the Guaranty.
As it relates to the instant motion, the parties raised the issue of prejudgment
interest and attorney’s fees with me during the May 16, 2012 trial preparation
conference. Counsel for Parsley indicated that the parties had a “fundamental
disagreement” as to whether the Court or the jury should award attorney’s fees and
prejudgment interest.1 Parsley’s attorney argued that the Court, not the jury, should
decide both prejudgment interest and attorney’s fees. Id. at 11:02:08-11:02:04.
Contrada’s counsel, however, attempted to distinguish between prejudgment interest and
interest “calculated under the note.” Id. at 11:02:20-11:02:24. Contrada’s counsel
1
See Unofficial Bridge transcript of May 16, 2012, at 11:01:52-11:02:12.
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maintained that interest calculated under the promissory note was a jury question. I
ordered the parties to refrain from referring to the amount of attorney’s fees that should
be awarded as damages, but made no similar ruling as to prejudgment interest or
interest under the note. Id. at 11:03:26-11:04:00.
During opening statements, Contrada’s counsel argued that the total amount due
under the loan and note exceeds $16,000,000. Contrada arrived at this figure by taking
the principal and adding interest at 17%, default interest at 4% and the penalty at 5%.
Br. Tr. of June 4, 2012, at 14:42:20-14:42:52. Contrada’s witness, Thomas E. Wengh,
similarly testified as to the calculation of interest, default interest and the penalty under
the loan and note. Id. at 16:15:08-16:16:44; 16:24:30-16:25:30.
Moreover, during the charge conference on June 7, 2012, I discussed the
insertion of language into the verdict form that the jury should not award interest or
attorney’s fees. Br. Tr. of June 7, 2012, at 14:26:46-14:26:46. Contrada’s counsel
objected to this language to the extent that it removed the award of interest from the
jury’s consideration. Because Contrada had repeatedly argued and introduced evidence
regarding interest, I ultimately agreed with Contrada’s counsel and allowed the jury to
consider interest in awarding damages. The final verdict form submitted to the jury only
provided, “Do not include attorney’s fees.” See Verdict Form, p. 2 [DE 158-1]. The jury
concluded that Parsley breached his agreement with Contrada and awarded
$975,000.00 in damages.
Because Parsley does not oppose Contrada’s request for attorney’s fees and
costs, I will address those issues at the end of this Order. I turn now to the request for
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prejudgment interest.
II.
LEGAL STANDARD
In diversity actions, a district court looks to state law in order to determine the
allowability of prejudgment interest on a recovery. Lowell Staats Min. Co., Inc. v. Pioneer
Uravan, Inc., 878 F.2d 1259, 1268 (10th Cir. 1989). In Colorado, “[t]he right to interest,
independent of an agreement to pay it, is statutory.” Id. (citing Weaver v. First Nat'l
Bank, 138 Colo. 83, 330 P.2d 142, 149 (1958)). As noted in Wood v. Hazelet, the court
or the jury may decide the issue of prejudgment interest:
[W]here it is unquestionably clear that the jury allowed no interest, or where
the court reserved the question of allowance of interest until after verdict,
and it is clearly ascertainable from the verdict or from uncontroverted facts,
the court may make the computation, and add the interest to the verdict.
77 Colo. 442, 237 P. 151, 152 (1925).
III.
LEGAL ANALYSIS
Contrada seeks an award of prejudgment interest - either at the 21% rate
provided for in the loan agreement or at the statutory rate of 8% provided for in Colorado
Revised Statute § 5-12-102(2). Pursuant to Contrada’s calculations, Parsley would owe
$488,595.21 at the contractual rate or $186,131.51 at the statutory rate “if the court finds
the contractual rate does not apply.” Pl.’s Mot., pp. 5-6 [DE-170]. Parsley vehemently
opposes any further award of prejudgment interest. Relying on Contrada’s successful
arguments before and during trial that prejudgment interest was a matter for the jury not
the Court, Parsley argues that a post-trial award of prejudgment interest would be
duplicative of the jury’s award. Parsley maintains that Contrada is “not entitled to recover
prejudgment interest twice.” In its reply brief, Contrada argues that Parsley
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misapprehends its request for prejudgment interest. In an attempt to clarify its demand,
Contrada states:
The interest sought by Plaintiff’s Motion pending before the Court is either
the default interest from the date of default or statutory prejudgment
interest from the date of default. Plaintiff’s Motion does not seek contract
interest for the term of the Note.
Pl.’as Reply. p 3 [DE-172].
Contrada’s request requires no clarification and must be denied. First, Contrada
is not entitled to the contractual default interest rate because it has already submitted
that request to the jury. Contrada asked the jury to award default interest during opening
statements, the case in chief and during closing arguments. See supra, Sec. I. The jury
then awarded Contrada $975,000 in damages. Because the default interest rate
damages were submitted to the jury, and I cannot say it is “unquestionably clear” that the
jury awarded no interest, Contrada’s request for default interest must be denied. Wood,
237 P. at 152.
Moreover, there is no basis to award statutory prejudgment interest to Contrada
pursuant to Colorado Revised Statute § 5-12-102(2). In Colorado, statutory prejudgment
interest is only available where the parties have no agreement for the payment of
prejudgment interest. Lowell Staats, 878 F.2d at 1268; C.R.S. § 5-12-102(2)(“when
there is no agreement as to the rate thereof, creditors shall receive interest as
follows...”). To rule otherwise would allow a windfall to prevailing parties such as
Contrada. They would be able to recover prejudgment interest under their contract and
also statutory prejudgment interest under C.R.S. § 5-12-102(2). The law in Colorado
does not allow for such a double recovery. Finally, Contrada’s request conflicts with the
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purpose of C.R.S. § 5-12-102(2). As the Colorado Supreme Court has recognized:
The purpose of section 5-12-102 is to discourage a person responsible for
payment of a claim to stall and delay payment until judgment or settlement.
Section 5-12-102 recognizes the time value of money. It represents a
legislative determination that persons suffer a loss when they are deprived
of property to which they are legally entitled.
Mesa Sand & Gravel Co. v. Landfill, Inc., 776 P.2d 362, 364 (Colo. 1989). There is no
need for statutory prejudgment interest in this case as the parties’ contract already
permitted Contrada to recover it. Contrada submitted that issue to the jury and was
awarded damages. Accordingly, I will also deny Contrada’s request for statutory
prejudgment interest.
IV.
COSTS AND ATTORNEY’S FEES
As the prevailing party, Contrada is entitled to attorney’s fees and costs under the
terms of Parsley’s Guaranty. See Guaranty, ¶6(b) [DE 170-2]. The guaranty provides
that:
[Parsley] further agrees to indemnify [Contrada] for all expenses, including
without limitation reasonable attorney’s fees, court costs and legal
expenses incurred by [Contrada] in endeavoring to collect the Guaranteed
Amount, or any amount thereof, or enforcing this Guaranty.
Id. In Parsley’s Response, he indicates that he does not oppose Contrada’s request for
attorney’s fees and costs.
After determining that a party is the prevailing party for purposes of attorney's
fees, a court must determine the amount of reasonable attorney's fees that it should
award. See generally, Phelps v. Hamilton, 120 F.3d 1126, 1129 (10th Cir.1997). To
determine the reasonableness of attorney's fees, the Tenth Circuit has adopted a
framework that “requires the district court to determine the relevant indicia of success by
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examining: (1) the difference between the judgment recovered and the judgment sought;
(2) the significance of the legal issue on which the plaintiff prevailed’; and (3) the public
purpose served by the litigation.” Brandau v. Kansas, 168 F.3d 1179, 1181 (10th Cir.
1999)(quotations omitted). Here, however, I need not perform the analysis set forth in
Brandau given Parsley’s stipulation to the reasonableness of Contrada’s fee request. In
an abundance of caution, however, I have reviewed Contrada’s submissions and find the
request for attorney’s fees and costs reasonable.
V.
CONCLUSION
Based on the foregoing, it is
ORDERED THAT Plaintiff Contrada Inc.’s post-trial Motion for Attorneys’ Fees,
Costs and Interest [DE-170] is GRANTED IN PART and DENIED IN PART. The motion
is GRANTED as to the request for attorney’s fees and costs. Specifically, Contrada is
entitled to an award of attorney’s fees and costs in the amount of $181,409.47. The
motion is DENIED as to the request for prejudgment interest. It is
FURTHER ORDERED that Plaintiff Contrada Inc.’s Motion for Hearing [DE-175] is
DENIED AS MOOT.
Dated: October 31, 2012
BY THE COURT:
s/ Wiley Y. Daniel
Wiley Y. Daniel
U. S. District Judge
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