Barch v. Barch
| Decision Date | 14 November 2022 |
| Docket Number | Civil Action 1:18-cv-03016-RBJ-MDB |
| Parties | DAVID JOSHUA BARCH Plaintiff, v. MACKIE A. BARCH and TRELLIS HOLDINGS MARYLAND, INC. Defendants. |
| Court | U.S. District Court — District of Colorado |
ORDER ON MOTION TO AMEND JUDGMENT
This matter is before the Court on plaintiff's motion to alter or amend the judgment under Federal Rule of Civil Procedure 59(e). See ECF No. 177. Plaintiff's motion is GRANTED IN PART and DENIED IN PART. It is granted to the extent that post-judgment interest is awarded in accordance with 28 U.S.C. § 1961. It is denied as to prejudgment interest.
A bench trial in this case was conducted July 11-14, 2022. The Court then issued Findings of Fact and Conclusions of Law, finding in favor of plaintiff on his claim for breach of contract and awarding 6.4 million dollars in compensatory damages. See ECF No. 175. A judgment in that amount, plus reasonable costs, was entered on September 7, 2022. See ECF No. 175. The parties now dispute whether an additional award of prejudgment interest is appropriate. See, generally, ECF Nos. 177, 180. There appears to be no dispute that post-judgment interest is accruing under the formula set out in 28 U.S.C. § 1961.
Rule 59(e) of the Federal Rules of Civil Procedure permits a motion to alter or amend the judgment, provided that the motion is “filed no later than 28 days after the entry of the judgment.” The motion here to amend the judgment was filed 7 days after the judgment was entered, so it is permissible under Rule 59(e).
Plaintiff's motion to amend the judgment requests that the court determine and impose pre- and post-judgment interest. See ECF No. 177 at 4. In a federal action under diversity jurisdiction, prejudgment interest is determined by state law and post-judgment interest is determined by federal law-specifically, by 28 U.S.C. § 1961. See Youngs v American Nutrition, Inc., 537 F.3d 1135, 1146 (10th Cir. 2008); see also Advanced Optics Elect., Inc. v Robins, 769 F.Supp.2d 1285, 1306 (D. N.M. 2010) (“In a diversity action, post-judgment interest is calculated in accord with the formula set out in 28 U.S.C. § 1961(a),” while “the prejudgment interest rate is set by state law.”).
In diversity actions, the Court must apply the choice-of-law rules of the forum state, because those rules are substantive law. See Berry & Murphy, P.C. v. Carolina Cas. Ins. Co., 586 F.3d 803, 808 (10th Cir. 2009). Colorado's choice-of-law rules generally require applying the law that contracting parties selected to govern their relations “unless there is no reasonable basis for their choice or unless applying the law of the state so chosen would be contrary to the fundamental policy of a state whose law would otherwise govern.” Brown v. Fryer, 2013 WL 1191405 at *2 (D. Colo. Mar. 22, 2013) (citing Hansen v. GAB Bus. Servs., Inc., 876 P.2d 112, 113 (Colo.App. 1994).
Here, it is unclear from an initial impression whether the parties intended the oral contract that was the subject of the breach of contract claim to be governed by Colorado law or Maryland law. The February 2021 agreement in which Mackie Barch transferred his Culta shares to two family trusts was explicitly governed by Maryland law. See ECF No. 177-1 at 3. This fact might be read as an indicator of intent-at least on Mackie's part-that the recent prior oral agreement between Mackie and plaintiff for the sale and purchase of the same shares would likewise be governed by Maryland law. See, e.g., Sys. Material Handling Co. v. Greenstein, 84 F.Supp.2d 1203, 1214 (D. Kan. 2000) (citing Bradley v. Dean Witter Realty, Inc., 967 F.Supp. 19, 24 (D. Mass. 1997) (). This argument would be colorable if not entirely persuasive.
However, the parties in their briefs on this motion seem to assume and acknowledge that Colorado substantive law governs the award of prejudgment interest on this claim. See, e.g., ECF No. 177 at 2 (); see also ECF No. 180 at 2-3 (). Therefore, I proceed with the understanding that the parties agree that prejudgment interest is here determined by Colorado law. See Berry, 586 F.3d at 808.
Likewise, there seems to be no dispute that the applicable statute is C.R.S. § 5-12-102(1)(b). The statute provides that “[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.” Plaintiff asserts that § 5-12-102(1)(b) “operates in a mandatory fashion.” See ECF No. 177 at 2 (citing Pers. Dep't, Inc. v. Pro Staff Leasing Corp., 297 Fed.Appx. 773, 789-90 (10th Cir. 2008) (unpublished)). This contention is somewhat misleading. Although it is true that “divisions of [the state] court have treated such an award as mandatory rather than discretionary,” Safeco Ins. Co. v. Westport Ins. Corp., 214 P.3d 1078, 1080-81 (Colo.App. 2009), the Tenth Circuit has repeatedly indicated that the federal trial courts retain discretion over whether to award prejudgment interest, even when sitting in diversity and applying state law. See AE, Inc. v. Goodyear Tire & Rubber Co., 576 F.3d 1050, 1055 (10th Cir. 2009); U.S. Indus. v. Touche Ross & Co., 854 F.2d 1223, 1255 & n.43 (10th Cir. 1988).
Similarly, courts routinely refer to the award of statutory prejudgment interest in permissive rather than mandatory terms. See, e.g., Herod v. Colorado Farm Bureau Mut. Ins. Co., 928 P.2d 834 (Colo.App. 1996) (discussing an award of prejudgment interest under a different provision of the same statute, § 5-12-102(1), and noting that “[w]hen insurer improperly denies claim, prejudgment interest is permitted on amount of compensatory damages reflecting [the wrongfully withheld] benefit”) (emphasis added); see also Wood v. Hazelet, 237 P. 151, 152 (Colo. 1925) () (emphasis added). And courts retain discretion to adjust the amount of prejudgment interest to account for uncertainty regarding the true value of the property withheld or other equitable factors. See, e.g., Buckley Powder Co. v. State, 70 P.3d 547, 564 (Colo.App. 2002) ().
In any event, that distinction is not dispositive, because even if § 5-12-102(1)(b) did mandate award of prejudgment interest when its criteria are satisfied, its criteria are not satisfied here. In the context of § 5-12-102(1), a plaintiff is wronged when he sustains an injury caused by the defendant, while wrongful withholding occurs when “plaintiff's injury is measured” and damages “if then paid, would make the plaintiff whole.” See Goodyear, 193 P.3d at 827. The wrong may or may not occur at the same time as the wrongful withholding. See id. Where damages are measured as of the date of injury, the date of the “wrong” is the same as the date of “wrongful withholding,” and prejudgment interest begins to accrue as of that time. Id. If, however, the damages are measured as of some time after the date of the injury, the damages award may already account for the harm caused by the deprivation of property and thereby serve as “a functional substitute of prejudgment interest” for that subset of the total period that plaintiff was without his rightful property. See id. at 829.
Because prejudgment interest is awarded only to the extent necessary for compensation, it is not warranted where the judgment already accounts for the economic harm of the deprivation. See id. (citing Mesa Sand & Gravel Co. v. Landfill, Inc., 776 P.2d 362, 365 (Colo. 1989)) ( ); see also Cartel Asset Mgmt. v. Ocwen Fin. Corp., 01-CV-01644-REB-CBS, 2011 WL 1134714, at *4 (D. Colo. Mar. 29, 2011) (citing Witt v. State Farm Mut. Auto. Ins. Co., 942 P.2d 1326, 1327 (Colo.App. 1997)) (emphasizing that “prejudgment interest is a form of compensatory damages” and therefore may not be imposed where the harm has been fully redressed).
Plaintiff here argues that because “the transaction on which the Court based its valuation” of the disputed Culta shares took place on February 5, 2021, that date represents the time at which the value of the withheld shares became “readily ascertainable” and therefore the time at which prejudgment interest began to accrue. See ECF No. 183 at 2. Then, plaintiff argues, an award of prejudgment interest is mandatory for the period from February 5, 2021 until the judgment was entered on September 7, 2022. See ECF No. 177 at 4.
This argument is flawed in several respects. First, it conflates the time at which evidence relevant to the Court's valuation became available with the time as...
To continue reading
Request your trial