Niman v. GPS USA, Inc. et al

Filing 148

ORDER granting in part and denying in part 132 Motion to Alter Judgment; denying 144 Motion for Judgment as a Matter of Law by Judge R. Brooke Jackson on 4/27/15.(jdyne, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge R. Brooke Jackson
Civil Action No 13-cv-2725-RBJ
AARON NIMAN,
Plaintiff,
v.
GPS USA, INC, a Nevada corporation, d/b/a GPS USA Division,
ROZANN ZELKEY, aka Rozanne Zelke, and
PETER J. SWENSON,
Defendants.

ORDER

Before the Court are plaintiff’s Motion to Alter or Amend Judgment Pursuant to Fed. R.
Civ. P. 59(e) [ECF No. 132] and defendants’ Renewed Motion for Judgment as a Matter of Law
or, in the Alternative, Motion for a New Trial [ECF No. 144]. For the reasons laid out below, the
plaintiff’s motion is granted in part and denied in part, and the defendants’ motion is denied.
I. Plaintiff’s Motion to Alter or Amend Judgment Pursuant to Fed. R. Civ. P. 59(e)
The plaintiff’s motion asks the Court to (1) increase the principal amount of the judgment
from $400,000 to $800,000 and (2) enter mandatory prejudgment interest pursuant to C.R.S. § 512-102(1)(b) at a rate of 8% per annum compounded annually. The request to increase the
principal amount of the judgment to $800,000 is based on the plaintiff’s position that the jury
instructions and verdict form should not have included instructions on the comparative fault of
Mr. Hendricks in causing the plaintiff’s injury. See ECF No. 132 at 2–4. The parties and the
1

Court discussed this issue extensively during two pretrial conferences and multiple jury
instruction conferences, and the Court declines to consider it further at this time. The plaintiff’s
motion is denied as to this request.
Turning to the issue of prejudgment interest, the plaintiff seeks interest on the full amount
of the judgment accruing from September 19, 2011, the date the contract was breached. The
parties agree that C.R.S. § 5-12-102(1)(b) governs. Under the statute, “[i]nterest shall be at the
rate of eight percent per annum compounded annually for all moneys or the value of all property
after they are wrongfully withheld . . . to the date judgment is entered.” The Colorado Supreme
Court has explained that “‘[w]rongful withholding’ indicates that the aggrieved party lost or was
deprived of something to which she was otherwise entitled.” Goodyear Tire & Rubber Co. v.
Holmes, 193 P.3d 821, 825 (Colo. 2008). A plaintiff’s money or property is “wrongfully
withheld” at the time when “the damages, if then paid, would make the plaintiff whole.” Id. at
827. This point in time may be some time after the plaintiff’s injury occurred. Id. Thus, “the
prejudgment interest accrual date depends on the measure of damages insofar as different
measures of damages may quantify the plaintiff’s injury as of different dates.” Id.
In the present case, Mr. Niman’s damages claims were based on (1) reasonable costs he
incurred in his earlier litigation with Mr. Hendricks and (2) half the value of the partnership
between Mr. Hendricks and Mr. Niman on September 19, 2011. ECF No. 122, Instruction No.
21. Defendants argue that interest on both categories of damages should be measured from a
date later than September 19, 2011. As to the first category, the Court agrees with defendants’
theory. To the extent the jury awarded Mr. Niman damages to compensate him for attorney’s
fees incurred in his earlier litigation with Mr. Hendricks, Mr. Niman was not deprived of those
2

funds until he actually made payments to his attorneys. Thus the prejudgment interest should in
theory be measured from the dates on which Mr. Niman made those payments. See Goodyear
Tire & Rubber Co., 193 P.3d at 827.
Turning to the second measure of damages, the Court sees no merit in the defendants’
argument. Their motion contends that the only evidence that the partnership had any value on
September 19, 2011 was expert testimony based on the VAS report, the validity of which was
dependent on the company’s future financial performance. ECF No. 138 at 7. Thus, on
defendants’ theory, Mr. Niman’s damages for the lost value of half the partnership are based on
the business’s projected growth; because Mr. Niman could not have received a significant
amount of compensation until after 2014, he cannot collect more than two months’ interest. Id.
However, the jury instructions explicitly state that the jury should award damages based on “the
value, if any, of the partnership . . . as of September 19, 2011.” ECF No. 122, Instruction No.
21. Thus to the extent the damages are based on the value of the partnership, they reflect the
jury’s estimation of the value of that asset on September 19, 2011. Defendants’ argument is little
more than a contention that this asset was highly illiquid and its value was speculative, and the
Court finds it unpersuasive. For this reason, insofar as Mr. Niman’s damages reflect the value of
his interest in the partnership, the interest began accruing on September 19, 2011.
Of course, the verdict form reflects only a single sum, not separate categories of
damages, and the Court therefore has no basis for apportioning the damages between the two
types for purposes of calculating prejudgment interest. 1 In such circumstances, the Colorado

1

Both parties agreed to the verdict form used. Although plaintiff’s reply represents that the plaintiff
tendered a verdict form with more specific interrogatories, ECF No. 142 at 8, the plaintiff’s only

3

Supreme Court has approved of an approach that calculates interest from the date on which the
plaintiff was wronged. 2 See Ferrellgas, Inc. v. Yeiser, 247 P.3d 1022, 1029 (Colo. 2011)
(“Because we lack any basis to distinguish between the amount of damages awarded for
reasonable cost of repair and diminution in value, we affirm in general the trial court’s method of
calculating interest dating from the time that [the plaintiff’s] house was initially damaged.”). See
also Hendricks v. Allied Waste Transp., Inc., 282 P.3d 520, 528 (Colo. App. 2012) (finding it
appropriate to calculate interest from date of wrong where parties agreed to a general verdict
form and court could not determine what portion of damages corresponded to each damages
theory). In the present case, the defendants agreed to the general verdict form that was presented
to the jury, 3 and thus the Court finds it appropriate to calculate prejudgment interest from the
date the plaintiff was wronged: September 19, 2011, when the contract with which defendants
tortiously interfered was breached. Cf. Mesa Sand & Gravel Co. v. Landfill, Inc., 776 P.2d 362,
365 (Colo. 1989) (“[S]ection 5-12-102(1)(b) . . . permit[s] a nonbreaching party [in a contract
case] to recover prejudgment interest . . . from the time of the breach.”). The Court accordingly
awards the plaintiff prejudgment interest in the amount of $122,024.65.

objection to the verdict form drafted by the Court involved the non-party at fault question. At no point
did the plaintiff raise the issue of prejudgment interest.
2

Although usually in a case involving a general verdict the Court would make findings regarding the
basis on which damages were due to determine the appropriate amount of prejudgment interest, see
Netquote, Inc. v. Byrd, No. CIV.A. 07-CV-00630DM, 2009 WL 902437, at *12 (D. Colo. Apr. 1, 2009),
here the Court finds that there is no possible basis for distinguishing between the two theories of
damages. Attempting to determine how much, if any, of the damages award is based on the jury’s
assessment of what portion of Mr. Niman’s attorney’s fees in the earlier litigation was reasonable would
be an exercise of pure speculation.

3

According to my notes, during discussion of the proposed verdict form with the general damages
inquiry, defense counsel stated “I have no objection to this form.”

4

II. Defendants’ Renewed Motion for Judgment as a Matter of Law or, in the
Alternative, Motion for a New Trial
Defendants’ motion consists largely of arguments that the Court has already considered
and rejected, and the Court declines to revisit any of its earlier rulings at this time. However, the
motion appears to raise two new points: (1) Mr. Swenson’s speech was protected by the First
Amendment and (2) there was no evidence of the amount of fees incurred on the breach of
contract claim in Mr. Niman’s earlier litigation with Mr. Hendricks. Neither point is persuasive.
Beginning with the first point, in addition to the fact that this is the first mention of any
First Amendment defense in this case, the argument is clearly misplaced here. Although
defendants are correct that a plaintiff cannot succeed on a tortious interference claim predicated
on speech protected by the First Amendment, see Jefferson Cnty. Sch. Dist. No. R-1 v. Moody’s
Investor’s Servs., Inc., 175 F.3d 848 (10th Cir. 1999), they make no real argument for why any
of Mr. Swenson’s speech was protected here. See ECF No. 144 at 17. As a general matter, “the
First Amendment is no bar to liability under the general common law prohibition of tortious
interference with [prospective business], which . . . is directed against conduct, not speech.”
SMJ Grp., Inc. v. 417 Lafayette Rest. LLC, No. 06 CIV. 1774 (GEL), 2006 WL 2516519, at *7
(S.D.N.Y. Aug. 30, 2006) (quoting Jews for Jesus, Inc. v. Jewish Cmty. Relations Council of
N.Y., Inc., 968 F.2d 286, 296 (2d Cir.1992)). The Court sees no basis for considering any of Mr.
Swenson’s statements at issue here to be protected speech or expressive conduct and thus finds
the defendants’ First Amendment argument unpersuasive. 4

4

Indeed, neither case the defendants cite provides any basis for the Court to find Mr. Swenson’s speech
protected here. In Jefferson Cnty. Sch. Dist. No. R-1 v. Moody’s Investor’s Servs., Inc., the court analyzed
the defendant’s publication as a statement from a media defendant on a matter of public concern under
Milkovich v. Lorain Journal Co., 497 U.S. 1 (1990). 175 F.3d 848, 852 (10th Cir. 1999). Such an

5

As for the argument that there was no evidence of the amount of fees incurred
specifically on the breach of contract claim in the earlier litigation, the Court finds that no such
evidence was necessary because Mr. Niman was entitled to recover all of his attorney’s fees. 5
“Colorado—like many states—has long-recognized that litigation expenses and attorneys’ fees
incurred by a party in one case may, in certain circumstances, be an appropriate measure of
damages against a third party in a subsequent action.” Rocky Mountain Festivals, Inc. v. Parsons
Corp., 242 P.3d 1067, 1071 (Colo. 2010), as modified (Dec. 13, 2010). In Rocky Mountain
Festivals, the Colorado Supreme Court outlined a methodology for determining when a plaintiff
can claim fees based only on a particular claim in an earlier litigation, as opposed to all of his
fees from the earlier case. Id. at 1073. Adopting the test from a U.S. Supreme Court case
addressing a fee-shifting statute, the court explained that:
The [Supreme] Court determined that, where a plaintiff had brought multiple
claims involving a common core of facts or based on related legal theories,
counsel’s efforts on an individual claim could not be distinguished from work on
the whole of the litigation . . . On the other hand, where the plaintiff presented
distinctly different claims for relief that [were] based on different facts and legal
theories . . . a fee award that contemplated only those claims on which the
plaintiff had succeeded was both practicable and necessary to affect the purpose
of the fee-shifting statute.
Id. (internal citations and quotations omitted).
Applying this test in the context of the wrong-of-another doctrine, the court reasoned that

analysis is inapplicable to the present facts. Additionally, Henderson v. Times Mirror Co. involved a
football coach who called an agent a “sleaze-bag” who “slimed up from the bayou,” and thus it provides
no basis for finding any First Amendment protection in the present case. 669 F. Supp. 356, 357 (D. Colo.
1987) aff'd, 876 F.2d 108 (10th Cir. 1989).
5

The Court notes that the present motion is also the first time defendants have raised this argument.
Indeed, defense counsel did not object to Jury Instruction No. 21, which stated that the jury could award
damages for “[a]ny reasonable costs incurred by Mr. Niman in his litigation with Mr. Hendricks.” ECF
No. 122, Instruction No. 21.

6

“where the claims for which a plaintiff seeks wrong-of-another damages cannot be conceptually
distinguished from the remainder of the underlying dispute, no award tailored to a subset of
claims shall issue.” Id. at 1073–74. However, if the subset of claims for which a plaintiff seeks
litigation costs was “founded in a distinct core of facts and premised on distinct legal theories,”
the plaintiff may recover costs associated only with the claim or claims at issue. Id. at 1073–74.
The determination of whether the claims in the earlier litigation are interrelated or segregable is
“inherently sensitive to the facts of both the case at bar and those of the underlying dispute . . .
[and must] be made on the basis of all the circumstances of the litigation.” Id. at 1074.
Thus the issue of whether Mr. Niman was entitled to recover all of his attorney’s fees
from the earlier litigation or just the portion corresponding to his breach of contract claim turns
on whether the claim was grounded in a distinct core of facts and premised on a distinct legal
theory. 6 As the jury instructions from the earlier litigation make clear, all three claims—breach
of contract, fraudulent inducement, and breach of fiduciary duty—involved a common core of
facts surrounding the alleged partnership between Mr. Niman and Mr. Hendricks. See ECF No.
41, Ex. 2, Jury Instructions, Instruction No. 2. Although each claim was premised on a distinct
legal theory, the claims were all closely related, both as a matter of law and of fact. See id.
Indeed, according to my notes, Mr. Niman’s counsel from the earlier litigation, Mr. Jones,
testified that the breach of contract and fraudulent inducement claims were alternative claims
based on the same statements that Mr. Hendricks made to Mr. Niman. According to Mr. Jones,
6

The relevant case law makes clear that the Court decides this issue. See Lipsett v. Blanco, 975 F.2d 934,
941 (1st Cir. 1992) (“In reviewing determinations that claims are or are not interrelated for purposes of an
award of attorneys’ fees, we have exhibited great deference to the trial court’s discretion. This deference
is motivated by our conviction that the decision as to how to separate the wheat from the chaff in a fees
contest, within broad limits, is a matter for the district court’s discretion.”) (cited by the Colorado
Supreme Court in Rocky Mountain Festivals, Inc., 242 P.3d at 1074).

7

if Mr. Hendricks made statements about forming a partnership but did not intend to follow
through, he was liable for fraudulent inducement; if he did intend to follow through, he was
liable for breach of contract. Furthermore, the breach of fiduciary duty claim was premised on
the existence of a partnership between Mr. Niman and Mr. Hendricks, which was also an element
of the breach of contract claim. Thus the legal and factual bases for the three claims were all
intertwined, and the Court finds that, considering all the circumstances of the earlier litigation
and the present one, Mr. Niman was entitled to recover his attorney’s fees in their entirety.
In sum, the Court has already rejected the majority of the arguments in defendants’
motion, and the two new points raised are unpersuasive. Defendants’ motion is therefore denied.
III. Order
Plaintiff’s Motion to Alter or Amend Judgment Pursuant to Fed. R. Civ. P. 59(e) [ECF
No. 132] is GRANTED IN PART and DENIED IN PART. The plaintiff is awarded
prejudgment interest in the amount of $122,024.65. Defendants’ Renewed Motion for Judgment
as a Matter of Law or, in the Alternative, Motion for a New Trial [ECF No. 144] is DENIED.
DATED this 27th day of April, 2015.
BY THE COURT:

___________________________________
R. Brooke Jackson
United States District Judge

8