Lowell Staats Min. Co. v. Pioneer Uravan, Inc.

• Decision Date: 16 October 1986
• Docket Number: Civ. A. No. 82-K-2039.
• Citation: 645 F. Supp. 254
• Parties: LOWELL STAATS MINING COMPANY, INC., a Colorado corporation, Plaintiff and Third Party Plaintiff, v. PIONEER URAVAN, INC., a Texas corporation, Defendant, and Pioneer Corporation and Pioneer Nuclear, Inc., Third Party Defendants.
• Court: U.S. District Court — District of Colorado

645 F. Supp. 254

LOWELL STAATS MINING COMPANY, INC., a Colorado corporation, Plaintiff and Third Party Plaintiff, v. PIONEER URAVAN, INC., a Texas corporation, Defendant, and Pioneer Corporation and Pioneer Nuclear, Inc., Third Party Defendants.

Civ. A. No. 82-K-2039.

United States District Court, D. Colorado.

October 16, 1986.

Joseph Coleman, Coleman, Brown & Jouflas, William G. Waldeck, Dufford, Waldeck, Ruland & Milburn, Grand Junction, Colo., for plaintiff and third party plaintiff.

Gregory K. Hoskin and Theodore Allegra, Nelson, Hoskin, Groves & Prinster, Grand Junction, Colo., for defendant.

James Golden, Golden, Mumby Summers & Livingston, Grand Junction, Colo., for third party defendants.

MEMORANDUM OPINION AND ORDER

KANE, District Judge.

Plaintiff Staats brought this action for breach of a mining contract. Following trial to a jury, a judgment of $629,512.00 was entered in favor of Staats. Pioneer Uravan's counterclaim was dismissed, as was Staats' third-party complaint. The judgment additionally provided plaintiff with costs, postjudgment interest at 7.03% per year, and prejudgment interest at 8% per year. On June 18, 1986, the judgment was amended to correct the time period during which prejudgment interest accrued.¹ The amended judgment was amended yet again, on June 20, 1986, so as to delete the award of prejudgment interest. Staats subsequently filed a motion under Fed.R.Civ.P. 60 to amend the second amended judgment by reinstating the award of prejudgment interest.

Staats has also filed a motion for a new trial on its claims against the third party defendants. This Fed.R.Civ.P. 59 motion is denied.

The parties agree I ordered, on the ninth day of trial, that the interest issue would be determined following receipt of the verdict. See Plaintiff's Motion to Amend the Second Amended Judgment, at ¶ 4(b); Pioneer Uravan's Response at ¶ 4. Staats now contends I should not have deleted the award of prejudgment interest because it "has a right to the 8% per annum interest from September 15, 1981 to June 16, 1986, pursuant to C.R.S. 5-12-102."² Plaintiff's Motion, at ¶ 5(a). However, in the same paragraph, Staats cites as authority Davis Cattle Co., Inc. v. Great Western Sugar Company, 544 F.2d 436 (10th Cir.1976), cert. denied, 429 U.S. 1094, 97 S.Ct. 1109, 51 L.Ed.2d 541 (1977). In Davis Cattle, the circuit court affirmed an award of moratory interest made by Judge Winner of this court. Plaintiff's motion fails to distinguish between statutory interest under § 5-12-102 and moratory interest.

When Judge Winner decided Davis Cattle Co., Inc. v. Great Western Sugar Co., 393 F.Supp. 1165 (D.Colo.1975), C.R.S. § 5-12-102 read:

Creditors shall be allowed to receive interest, when there is no agreement as to the rate thereof, at the rate of six percent per annum, for all moneys after they become due, on any bill, bond, promissory note, or other instrument of writing, or on any judgment recovered before any court or magistrate authorized to enter the same within this state, from the day of entering said judgment until satisfaction thereof be made; also on money due on mutual settlement of accounts from the date of such settlement, on money due on account from the date when the same became due, and on money received to the use of another and retained without the owners' consent, expressed or implied, from the receipt thereof; and on money taken or retained and fraudulently converted to the taker's use from the time of taking.

Judge Winner conducted an exhaustive survey of the cases decided under the statute and came "to the inescapable conclusion that in Colorado, statutory interest cannot be awarded under '73 C.R.S. 5-12-102 on an unliquidated claim." Davis Cattle, 393 F.Supp. at 1186. However, Judge Winner did find Colorado common law to recognize an additional kind of interest to statutory interest, namely "moratory interest or the allowance of interest as damages." Id., at 1188.

The Colorado Supreme Court has recently affirmed Judge Winner's perception of the distinction between statutory and moratory interest. In Acme Delivery Service v. Samsonite Corporation, 663 P.2d 621 (Colo.1983), Acme received 715 pieces of luggage from Samsonite for transportation to the consignee, May D & F. Instead of delivering the luggage, however, Acme discarded it in a dump. Only 78 of the 715 pieces were salvaged. Id., at 622. Samsonite understandably brought a breach of contract action against Acme.

On appeal, Acme argued, inter alia, that the trial court had "erred in awarding Samsonite interest from the date of loss, because there was no statutory authorization for such damages." Id., at 625. The supreme court did not address the issue of statutory authorization. Instead, it took refuge in "moratory interest, or interest by way of damages." Id., at 626. Samsonite was entitled to moratory interest because

part of the loss suffered by Samsonite was the loss of the use of its money from the date of the loss until the date of judgment. Unless Samsonite is awarded interest as damages for this period, it could hardly be said that it was put in the same position it would have been in had the loss not occurred.

Id., at 626.

In I.M.A., Inc. v. Rocky Mountain Airways, Inc., 713 P.2d 882 (Colo.1986), the supreme court again distinguished statutory interest from moratory interest. I.M.A. was a breach of contract action. The supreme court denied I.M.A.'s appeal for statutory interest under the 1975 version of C.R.S. § 5-12-102 because I.M.A.'s request for damages resulting from contractual repudiation or unjust enrichment did not bring the case within the provisions of the statute. Id., at 893. The supreme court did note: "In some circumstances ... we have recognized a nonstatutory right to interest by way of damages, or moratory interest." Id., at 893, n. 9. The court did not consider the issue of moratory interest, however, because I.M.A. had made no claim for it. Id., at 893, n. 9.

Clearly, Staats' right, if any, to § 5-12-102 statutory interest is distinct from any entitlement it may have to common law moratory interest.³ I must therefore come to grips with each type of interest.

I. Moratory Interest

Davis Cattle is authoritative in deciding whether moratory interest should be awarded to Staats. In Davis Cattle, a certified class of sugar beet growers sued Great Western, a sugar refining company, on a breach of contract theory. By the express terms of the contract, Great Western was obligated to make initial payments by November 20 for beets the growers delivered before November 5. These payments were to be made "at the highest rate per ton that the Company may deem to be justified taking into consideration anticipated returns from the sale of sugar and the sugar content of beets." Id., at 1168-1169.

Judge Winner held Great Western to be in breach of this commitment because "in deciding upon the amount of initial payment the Company would and did make," it "did not fairly take into consideration anticipated returns from the sale of sugar." Id., at 1175. Great Western had violated the express terms of the contract because it did not pay the growers the money they were owed as of November 20. The growers were entitled to interest on this sum not as a statutory right, but by way of damages as moratory interest. Id., at 1193.

Staats is not entitled to moratory interest under Davis Cattle. Staats' action was for breach of a contract to mine ore. Staats' claims "allege various breaches by Pioneer through its failure to perform or its inadequate performance of its obligations under the contract." Lowell Staats Mining Co. v. Pioneer Uravan, Inc., 596 F.Supp. 1428, 1429 (D.Colo.1984). Nothing in these claims entitles Staats to interest as part of the damages collected. "Davis Cattle had to do with a defendant using money equitably owned by the plaintiffs." EEOC v. Trailways, Inc., 530 F.Supp. 54, 28 FEP Cases 553 (D.Colo.1981) (Winner, J.). That issue is simply not present in this case.⁴ Therefore an award of moratory interest is inappropriate.

Stated more generally, moratory interest is warranted as part of a contractual damage award only where the aggrieved party would not be made whole in the absence of such interest. Acme Delivery, at 626; Hein Enterprises, Ltd. v. San Francisco Real Estate Investors, 720 P.2d 975, 982 (Colo.App.1986) (trial court erred in awarding moratory interest where consequential damages made injured party whole).

In this case, there is no question that the jury verdict, plus the postjudgment interest, has already fully compensated Staats for its expectation damages. The jury was instructed to grant Staats either its lost net profits or its out of pocket losses if it found Pioneer Uravan to have committed a breach. Staats alleged out of pocket expenses of approximately $250,000.00. Staats' lost net profits ranged from $326,103.00 to $1,282,515.00, depending on the jury's finding of the length of delay caused by Pioneer Uravan. Jury Instruction No. 4. Since the verdict was for $629,512.00, Staats was compensated for its expectation damages. Therefore Staats has been "put in the same position it would have been in had the loss not occurred." Acme Delivery, at 626. Staats is not entitled to further damages in the form of moratory interest.

Finally, the "allowance of moratory interest is a matter committed to the sound discretion of a court in consideration of the equities of a case." E.B. Jones Construction Company v. City and County of Denver, 717 P.2d 1009, 1015 (Colo.App. 1986). The jury verdict in this case was substantial. Further, it fell well within the instructed range of expectation damages. The equities do not call for further damages.

II. Statutory Interest

Having decided Staats is not entitled to moratory interest, I must next address Staats' rights under § 5-12-102. In 1979, several years after Judge Winner decided Davis Cattle, the statute was revamped by the General...