HR BRIARGATE, LLC v. Colorado Springs Orthopaedic Association, P.C. et al

Filing 66

ORDER accepting and adopting the stipulations contained in 60 Stipulated Petition for Interest, Costs, Expenses and Attorney Fees. The Clerk will prepare a form of Amended Final Judgment consistent with this order. by Judge R. Brooke Jackson on 5/9/14. (jdyne, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge R. Brooke Jackson
Civil Action No. 12-cv-02636-RBJ
HR BRIARGATE, LLC, a Delaware limited liability company,
Plaintiff,
v.
COLORADO SPRINGS ORTHOPEDIC GROUP,
Defendant.

ORDER

This matter comes before the Court in the form of a “Stipulated Petition for Interest,
Costs, Expenses and Attorney Fees” [ECF No. 60] following a judgment in the plaintiff’s favor
[ECF No. 51]. The parties have been unable to agree as to what interest rate should apply to the
judgment—though they have agreed to all other fees and costs owed—and each has filed a brief
in support of their assessment of the applicable interest rate. [ECF Nos. 63, 64]. The Court
exercises jurisdiction pursuant to 28 U.S.C. § 1332.
BACKGROUND
This case originally concerned whether defendant CSOG owed plaintiff HRB unpaid rent
under the guaranty provision of a commercial lease. On cross-motions for summary judgment,
the Court ruled in favor of HRB. [ECF No. 51]. The parties are here today simply because they
cannot agree as to the interest rate owed on the late rent payments.
Under Section 2.4 of the Lease, rent that is not paid within five (5) days after being due
“shall bear interest from the date due to the date paid at the rate of twenty-four percent (24%) per
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annum or, if higher, the highest rate permitted by law.” [ECF No. 44-1 at § 2.4]. The Guaranty
provides for the Guarantor to pay interest in addition to unpaid rent but does not include a
provision regarding the amount of interest due. [See generally ECF No. 33-1].1 CSOG argues
that the Guaranty should be read independently of the Lease and, because the Guaranty did not
list an interest rate, the statutory rate should apply. [ECF No. 63]. In response, HRB contends
that the Lease and the Guaranty must be read together, and that the interest rate listed in the
Lease should apply to the Guaranty. [ECF No. 64]. The Court agrees with HRB.
CSOG argues that because the Guaranty does not reference the interest rate specified in
the Lease, and because no rate is listed, the parties are bound to use the statutory interest rate set
by state and federal law. It cites two provisions of the Guaranty in support of its argument.
First, the Guaranty states: “The liability of the undersigned hereunder shall be so limited [to the
$250,000 rent cap], but shall also and in addition include interest, costs, expenses and attorneys’
fees described herein.” Id. at § 1 (emphasis added). A second provision states: “Although this
Guaranty is related to the Lease as stated above, the obligations of this Guaranty are separate and
independent of the obligations under the Lease, and shall survive any termination of the Lease . .
. .” Id. at § 6. Based on these two provisions, CSOG argues that the parties never intended for
the interest rate listed in the Lease to apply to the Guaranty.
HRB asserts the opposite, arguing that the parties did in fact intend for the Lease interest
rate to apply to the Guaranty. It points out that the Guaranty begins: “WHEREAS, to induce
[HRB] to fund some of the cost of Tenant Improvements to the leased premises, the Guarantor
has agreed with [the Tenant] and [HRB] to guarantee the payment of rent, additional rent, and
other sums payable under the Lease, up to a maximum of $250,000.00 of rent and additional rent
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The Court cites the Guaranty attached to a previous motion because the copy of the Guaranty attached to
defendant’s most recent motion is missing its third page. [See ECF No. 63-1]
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pursuant to the provisions hereof.” Id. at 1 (emphasis added). According to HRB, this language
sets forth the parties’ intention to make the guarantor responsible for the same payments the
tenant owes under the Lease. HRB adds that the provision making the obligations of the
Guaranty “separate and independent of the obligations under the Lease” simply means that the
guarantor may be sued directly on the Guaranty.
The Court finds another provision also to be helpful in resolving this dispute. The Lease
itself references the Guaranty, stating: “As additional consideration for, and as a condition of,
Landlord’s entry into this Lease, Colorado Springs Orthopaedic [sic] Group, LLC has executed a
Guaranty in the form attached hereto as Exhibit ‘G’. Each and every exhibit attached to this
Lease is incorporated into this Lease by reference, and constitutes a part of this Lease.” [ECF
No. 44-1 at § 47].
ANALYSIS
“Interpretation of a written contract and the determination of whether a provision in the
contract is ambiguous are questions of law. . . .” Fibreglas Fabricators, Inc. v. Kylberg, 799
P.2d 371, 374 (Colo. 1990). “The primary goal of contract interpretation is to determine and
give effect to the intent of the parties.” Ad Two, Inc. v. City and Cnty. of Denver ex rel. Manager
of Aviation, 9 P.3d 373, 376 (Colo. 2000) (en banc). The starting point for any search for the
intent of the parties should be the plain language of the contract. Id.; see also East Ridge of Fort
Collins, LLC v. Larimer & Weld Irrigation Co., 109 P.3d 969, 973 (Colo. 2005); Union Rural
Elec. Ass’n v. Pub. Utilities Comm’n, 661 P.2d 247, 251 (Colo. 1983); Radiology Prof’l Corp. v.
Trinidad Area Health Ass’n, 577 P.2d 748, 750 (Colo. 1978). Courts must construe the contract
as a whole without viewing individual clauses in isolation. Level 3 Commc’ns, LLC v. Liebert
Corp., 535 F.3d 1146, 1154 (10th Cir. 2008).

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The Court concludes that the Guaranty constitutes a part of the Lease, and that therefore
the two must be read together. The provision stating that the obligations of the Guaranty are
separate and independent of the obligations under the Lease merely signals an independent
covenant to uphold the provisions of the Guaranty. It does not enfeeble the language of the
Lease, which explicitly incorporates the Guaranty and makes it a “part of the Lease.” Further,
the Guaranty itself includes an introductory provision stating that its purpose is to guarantee the
payment of “rent, additional rent, and other sums payable under the Lease.” The interest owed
on late rent payments constitutes another sum payable under the Lease. CSOG has not explained
how this provision, which introduces the terms of the Guaranty, is limited or altered by other
sections of the Guaranty, or how it tolerates the argument that the Guaranty be read
independently of the Lease. Reading the contract as a whole—the Lease alongside the
Guaranty—the Court finds that the plain language indicates that the interest on late payments
was to accrue at 24% per annum.
ORDER
The Court accepts and adopts the stipulations contained in the Stipulated Petition for
Interest, Costs, Expenses and Attorney Fees [ECF No. 60] and amends its final judgment
accordingly. It further concludes that the applicable rate of interest on the guaranteed rent
payments is 24% per annum and amends its final judgment to include this conclusion as well.
The Clerk will prepare a form of Amended Final Judgment consistent with this order.
DATED this 9th day of May, 2014.

BY THE COURT:

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___________________________________
R. Brooke Jackson
United States District Judge

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