Colantuno v. A. TENENBAUM & COMPANY, INC.

• Decision Date: 21 May 2001
• Docket Number: No. 00SC56.,00SC56.
• Citation: 23 P.3d 708
• Parties: Joseph F. COLANTUNO, Petitioner, v. A. TENENBAUM & COMPANY, INC., and John P. Dikeou, Respondents.
• Court: Colorado Supreme Court

23 P.3d 708

Joseph F. COLANTUNO, Petitioner, v. A. TENENBAUM & COMPANY, INC., and John P. Dikeou, Respondents.

No. 00SC56.

Supreme Court of Colorado, En Banc.

May 21, 2001.

Steve A. Miller, P.C., Denver, CO, Attorney for Petitioner.

Aronowitz & Ford, LLP, Timothy C. Ford, Denver, CO, Attorneys for Respondent A. Tenenbaum & Company, Inc.

Lance P. Vanzant, Denver, CO, Attorney for Respondent John P. Dikeou.

Justice RICE delivered the Opinion of the Court.

We issued a writ of certiorari to review the court of appeals' judgment in A. Tenenbaum & Co., Inc. v. Colantuno, 3 P.3d 456 (Colo. App.1999). This appeal arose from a suit brought by A. Tenenbaum & Company, Inc. ("Tenenbaum") against Robert Isham, Joseph Colantuno and John Dikeou for failing to pay on a promissory note. After the trial court entered judgment against the defendants, both on the promissory note debt and for attorney fees, Tenenbaum released Isham from all liability in consideration of a payment Isham had made. Tenenbaum then filed a motion for supplemental attorney fees. The trial court entered a judgment against Colantuno and Dikeou for the supplemental fees without apportioning the fees between the two or considering the effect of Tenenbaum's releasing Isham from liability. The court of appeals affirmed the trial court's award of supplemental attorney fees but reversed the judgment to the extent that it did not apportion those fees.

We granted certiorari to determine whether the Colorado Joint Rights and Obligations Act (the "Act") requires that a joint debtor's proportionate share of indebtedness on a promissory note imposing joint and several liability be calculated on a percentage interest basis or on a per capita basis when one debtor settles with the creditor. We also granted certiorari to determine whether the Act applies to all debtors implicated by an action, or only to judgment debtors.

We now affirm the court of appeals and hold that a joint debtor's proportionate share of indebtedness under the Act should be calculated on a per capita basis. We further hold that such a calculation should not consider a debtor who settled prior to a suit, when the judgment at issue is for attorney fees generated after the suit.

FACTS AND PROCEDURAL HISTORY

In January 1996, a trial court entered a judgment in favor of Tenenbaum for liability on a promissory note executed by E & A Associates ("E & A"). The judgment was entered against Robert Isham, Joseph Colantuno and John Dikeou, who were former partners of E & A. Another former partner, Robert Silverberg, had previously satisfied his pro rata share of the note debt by making a payment to Tenenbaum, and was thus not named as a defendant in the suit. The trial court determined that Tenenbaum was entitled not only to payment on the promissory note itself, but also to attorney fees incurred while pursuing collection on the note.

In May 1996, the trial court awarded Tenenbaum attorney fees for legal services he had received between February 1993 and December 1995. Later that year, Tenenbaum released Isham from liability for both the note debt and the attorney fees in exchange for a $450,000 payment.

In June 1997, Tenenbaum filed a motion for supplemental attorney fees incurred from January 1996 through March 1997. The trial court awarded Tenenbaum judgment on these supplemental attorney fees, but against only Colantuno and Dikeou. The award did not apportion the fees between the two, nor did it consider the effect of Tenenbaum's releasing Isham from liability. Colantuno and Dikeou appealed the award, arguing in part that the trial court had erred by failing to apportion the attorney fee award as required under section 13-50-103, 5 C.R.S. (2000).

The court of appeals affirmed in part and reversed in part, holding that the judgment of attorney fees was properly awarded to Tenenbaum, but that it should have been apportioned pursuant to section 13-50-103. The court reasoned that the promissory note had originally imposed joint and several liability on the defendants for attorney fees, but that such liability was severed by operation of law under section 13-50-103, when Tenenbaum released Isham from liability. Colantuno, 3 P.3d at 458-59. The court held that because Isham's release included attorney fees, he was deemed to have satisfied his proportionate share of any liability for such fees. Id. Thus, the court concluded that Colantuno and Dikeou were each only liable for their proportionate share of the attorney fees judgment, and were not jointly liable for the entire deficiency. Id.

The court determined that Colantuno and Dikeou's proportionate shares of the supplemental attorney fee judgment were to be calculated by dividing the award by the number of judgment debtors who were formerly jointly and severally liable, that is, Isham, Colantuno and Dikeou. Id. In doing so, the court effectively utilized a per capita apportionment schedule. Id. The court noted that any perceived inequity in this approach would be ameliorated by the ability of the debtors to sue one another for contribution. Id. at 460. The court concluded that Isham, Colantuno and Dikeou's proportionate shares should be determined without considering Silverberg, because he was never a judgment debtor to Tenenbaum, and because the fees at issue were generated in pursuit of collection only against Isham, Colantuno and Dikeou. Id. Thus, because Isham was deemed to have satisfied his share of the judgment, the court held that Tenenbaum was entitled to collect one third of the total supplemental fee judgment from Colantuno and one third from Dikeou. Id.

We granted certiorari to determine whether, under the Act, a joint debtor's proportionate share of indebtedness should be calculated on a percentage interest basis or on a per capita basis when one debtor settles with the creditor. We also granted certiorari to determine whether the Act applies to all debtors, or only to judgment debtors.¹

ANALYSIS

This case presents an opportunity for us to address the manner in which a joint debtor's proportionate share of liability under the Act should be calculated when one debtor settles with the creditor. Because we have not previously considered this issue, our analysis encompasses an examination of statutes and cases from other jurisdictions involving similar issues.

I. Standard of Review

The issues in this case involve statutory interpretation, and therefore constitute matters of law. Fogg v. Macaluso, 892 P.2d 271, 273 (Colo.1995); Colo. Div. of Employment & Training v. Parkview Episcopal Hosp., 725 P.2d 787, 790 (Colo.1986). We therefore review the court of appeals' decision below de novo. Ryals v. St. Mary-Corwin Reg'l Med. Ctr., 10 P.3d 654, 659 (Colo.2000); Fogg, 892 P.2d at 273.

The Act, which is found at sections 13-50-102 to -105, 5 C.R.S. (2000), governs the rights and obligations of a creditor and its joint debtors when one or more of those debtors is released from liability. The Act provides that a creditor's release of one joint debtor fully discharges that debtor's obligation to the creditor, but does not affect the liability of the remaining debtors:

A creditor of joint debtors may release one or more of such debtors, and such release shall operate as a full discharge of such debtor so released, but such release shall not release or discharge or affect the liability of the remaining debtor. Such release shall be taken and held to be a payment in the indebtedness of the full proportionate share of the debtor so released.

§ 13-50-102. Indeed, the Act specifically provides that when a debtor is released, none of the remaining debtors will be liable for more than his proportionate share of the indebtedness, unless the released debtor is a surety of one of the remaining debtors. § 13-50-103. The terms "proportionate share" and "debtor" are not defined under the Act, nor does the Act provide for a method of calculating the remaining debtors' proportionate shares.

II. Proportionate Share

Colantuno argues that his proportionate share of the supplemental attorney fees award should be calculated based upon his percentage interest in the E & A partnership, rather than on a per capita basis. Tenenbaum argues that a per capita calculation is more appropriate. We agree with Tenenbaum that the court of appeals correctly held that Colantuno's proportionate share under the Act should be calculated on a per capita basis, by dividing the award evenly among the debtors.

The Act does not set forth the method by which a debtor's proportionate share should be calculated. Nor does legislative history provide guidance on the issue.² While the Uniform Contribution Among Tortfeasors Act provides that the pro rata shares of liability of joint tortfeasors should be calculated based upon their relative degrees of fault, no such guidance is provided with regard to calculating the proportionate shares of liability for joint debtors, whose common obligation is defined by contract. See § 13-50.5-103, 5 C.R.S. (2000) ("The relative degrees of fault of the joint tortfeasors shall be used in determining their pro rata shares.").

The promissory note at issue in this case contractually imposed joint and several liability on the debtors. Thus, upon default, Tenenbaum could have sought full payment on the note from one or all of the debtors. See Bohrer v. DeHart, 961 P.2d 472, 475 (Colo.1998)

(noting that under the common law rule of joint and several liability, any one responsible party may be liable for all losses incurred by a plaintiff). As the court of appeals correctly noted, however, the joint and several liability contractually imposed on the defendants by the promissory note was severed by operation of law when Tenenbaum released Isham from liability. § 13-50-102; Tenenbaum,

3 P.3d at 458-59. Thus, the remaining debtors were no longer jointly liable, but were only liable for their "proportionate shares" of the debt. § 13-50-103. The Act,...