Ferrellgas Inc. v. Yeiser

• Decision Date: 21 March 2011
• Docket Number: No. 08SC997.,08SC997.
• Citation: 247 P.3d 1022
• Parties: FERRELLGAS, INC., a Delaware Corporation operating under the trade name Thermogas, Petitionerv.Ellen YEISER, Respondent.
• Court: Colorado Supreme Court

247 P.3d 1022

FERRELLGAS, INC., a Delaware Corporation operating under the trade name Thermogas, Petitioner

v.Ellen YEISER, Respondent.

No. 08SC997.

Supreme Court of Colorado, En Banc.

Feb. 28, 2011.Rehearing Denied March 21, 2011.

Senter Goldfarb & Rice, L.L.C., Tiffaney A. Norton, Denver, Colorado, Attorney for Petitioner.The Fowler Law Firm, LLC, Timms R. Fowler, Fort Collins, Colorado, Bendinelli Law Office, P.C., Marc F. Bendinelli, W. Joseph Lapham II, Denver, Colorado, Attorneys for Respondent.Husch Blackwell Sanders LLP, Christopher L. Ottele, Christopher Brady, Denver, Colorado, Attorneys for Amicus Curiae Colorado Civil Justice League.Justice RICE delivered the Opinion of the Court.

In this appeal, we review the court of appeals' decision regarding a complex series of post-verdict damages adjustments, all stemming from a breach of contract action by respondent Ellen Yeiser against petitioner Ferrellgas, Inc. We reverse the court of appeals' failure to set off the full amount of a settled subrogation claim by Yeiser's insurer, non-party Farmers Insurance Group (“Farmers”). We also hold that the trial court did not properly set off the amount of the settled claim when calculating pre-judgment interest, and remand for a recalculation of the proper amount of pre-judgment interest and a redetermination of whether Ferrellgas is entitled to costs in light of its pre-trial settlement offer to Yeiser.

I. Facts and Procedural History

A. Pre–Litigation Events

Yeiser contracted with Ferrellgas to deliver propane to her vacation house in Silverthorne, Colorado. Ferrellgas failed to timely deliver the propane and, as a result, the house's pipes froze and burst, causing substantial water damage to the house.

Yeiser carried a homeowner's insurance policy with Farmers, under which Farmers reimbursed Yeiser and her contractors for a total of $212,071.94 for the damage. Farmers then asserted a subrogation claim against Ferrellgas for the $212,071.94 amount. Ferrellgas settled the claim by paying Farmers $172,657.55—$39,414.39 less than Farmers paid to Yeiser and her contractors. Yeiser was not a party to the settlement.

B. Pre–Trial Proceedings

Yeiser subsequently sued Ferrellgas for negligence, bad faith, and breach of contract. After Ferrellgas contested the negligence and bad faith claims, Yeiser withdrew them, and Ferrellgas admitted liability on the breach of contract claim. Ferrellgas, however, disputed Yeiser's claimed damages, and the case proceeded on that issue. Farmers was not joined as a party. Several months prior to trial, Ferrellgas made Yeiser a settlement offer of $197,000 inclusive of costs and interest, which Yeiser did not accept.

Yeiser filed a motion in limine seeking to preclude Ferrellgas from introducing evidence of Farmers's payment to Yeiser and her contractors, arguing that consideration or setoff of the payment was barred by the collateral source doctrine. The trial court denied the motion, holding that Ferrellgas effectively contributed to the payment by settling Farmers's subrogation claim, thus rendering the collateral source doctrine inapplicable. The trial court held that it would perform a post-verdict setoff ¹ and ordered the parties not to introduce evidence of or otherwise mention Farmers's payment or the subrogation settlement to the jury.

Notwithstanding its order in limine, the trial court did not intervene as both parties repeatedly explained the details of Farmers's payment and the subrogation settlement and discussed how the jury should handle the setoff issues arising therefrom. To address the potential confusion, the parties agreed to a formal jury instruction that stated: “[Y]ou should not reduce the amount of damages by amounts either paid to or by Farmers....”

The jury then returned a general verdict of $314,323.21 for Yeiser, inclusive of the reasonable cost of repair damages to the home and her loss of use of the home and rental income during the reasonable time required to make the repairs.

C. Post–Verdict Setoff Proceedings

Ferrellgas filed a post-verdict motion to set off the $212,071.94 that Farmers paid Yeiser and her contractors. In response, Yeiser argued that Ferrellgas was only entitled to set off the $172,657.55 that Ferrellgas paid Farmers to settle Farmers's subrogation claim. The trial court granted the motion, ordering setoff of the $212,071.94 amount.

Accordingly, the court entered judgment for Yeiser for $102,251.27—the $314,323.21 verdict amount minus the $212,071.94 amount. Because the amount of the judgment was less than Ferrellgas's rejected $197,000 settlement offer, the court awarded Ferrellgas $30,841.62 in costs. The trial court neglected to consider the issue of pre- or post-judgment interest, and Yeiser appealed that issue to the court of appeals. The court of appeals remanded the case back to the trial court to determine interest and amend the judgment.

Over Ferrellgas's objection, the trial court amended the judgment to include pre-judgment interest. The court added interest on the full verdict amount of $314,323.21 for the 366–day period between when Yeiser's house was damaged and when Ferrellgas paid Farmers pursuant to the subrogation settlement, for a running total of $339,543.46. Then, the court set off the $212,071.94 that Farmers paid Yeiser and her contractors, for a running total of $127,471.52. Next, the trial court added interest for the several years that had elapsed between Ferrellgas paying Farmers and the court's order of costs, reaching a running total of $176,654.47. Finally, the court deducted Ferrellgas's $30,841.62 cost award, for a final sum of $145,812.85. The court denied Ferrellgas any interest on its cost award and Yeiser any post-judgment interest.

D. Appellate Proceedings

Yeiser then appealed to the court of appeals for a second time, arguing that the trial court's setoff of the $212,071.94 was barred under the common law collateral source rule, and that the trial court erred by granting Ferrellgas costs since it compared Ferrellgas's $197,000 settlement offer to the post-setoff verdict amount of $102,251.27 rather than the pre-setoff verdict amount of $314,323.21.

The court of appeals held:

1) That, under the common law collateral source rule, Ferrellgas was entitled to setoff of only the $172,657.55 amount that it paid Farmers and not of the $212,071.94 that Farmers paid Yeiser and her contractors;

2) That Ferrellgas was not entitled to costs since Ferrellgas's $197,000 settlement offer was less than the pre-setoff verdict amount of $314,323.21; and

3) That the trial court correctly calculated the pre-judgment interest, except for the offset of the $212,071.94 amount instead of the $172,657.55 amount.

Accordingly, the court of appeals ordered the trial court to reduce the setoff of the $212,071.94 amount to $172,657.55, recalculate pre-judgment interest, and reenter judgment. The court of appeals affirmed the judgment in all other respects.

Ferrellgas petitioned this Court for certiorari review, arguing that it was entitled to setoff of the entire $212,071.94 that Farmers paid Yeiser and her contractors and that the setoff should have been factored into the assessment of pre-judgment interest prior to the time that Ferrellgas settled Farmers's subrogation claim and the determination of whether Ferrellgas was entitled to costs in light of its settlement offer. We granted certiorari to review those issues.²

II. Issues Presented

We begin under the assumption that the jury's verdict was an accurate finding of the cost to repair the damage to Yeiser's house and compensate her for the loss of use and rental income during the time reasonably required to make repairs. Although we acknowledge the troublesome nature of the confusing presentation to the jury regarding the collateral source setoff process and the potential for such information to taint the jury's verdict, that issue is not before us and we therefore decline to consider it. See Colo. Permanente Med. Group, P.C. v. Evans, 926 P.2d 1218, 1229 (Colo.1996).

Proceeding from our initial assumption, we first consider how much of Farmers's insurance payments to Yeiser and her contractors, if any, should be set off in light of Colorado's collateral source doctrine and the law of subrogation. We then turn to the proper application of that setoff with respect to pre-judgment interest and costs under Colorado's settlement statute.

III. Standard of Review

When faced with a mixed question of fact and law, we defer to the trial court's findings of fact as long as they are sufficiently supported by the record, but review its conclusions of law de novo. People v. Vickery, 229 P.3d 278, 281 (Colo.2010) (citation omitted). Here, we defer to the trial court's findings:

(1) That Ferrellgas's breach of its contract with Yeiser caused $314,323.21 in damages inclusive of the reasonable cost to repair Yeiser's house and her loss of use and rental income during time reasonably required to make repairs;

(2) That Farmers paid Yeiser and her contractors $212,071.94 under her homeowners insurance to reimburse her for the damage;

(3) That Farmers had some subrogation interest in its reimbursement to Yeiser and her contractors;

(4) That Ferrellgas paid Farmers $172,657.55 to settle that subrogation interest; and (5) That Ferrellgas offered Yeiser $197,000 inclusive of costs and interests to settle her claim several months prior to trial.

Considering the resultant legal issues de novo, we conclude that the trial court properly set off the $212,071.94 that Farmers paid Yeiser and her contractors from Yeiser's damage award against Ferrellgas, and reverse the court of appeals' holding to the contrary. We further hold that the trial court erred by failing to set off the $212,071.94 prior to calculating pre-judgment interest, and remand for a proper determination of interest. Finally, we instruct the trial court on remand to reconsider whether Ferrellgas is entitled to...