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Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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P U B L I S H 

UNITED STATES COURT OF 

TENTH CIRCUIT 

ESTATE OF ROBERT W. KORF, 

SR. and MINNIE KORF, 

) 

) 

) 

) 

) 

) 

) 

) 

v. 

Plaintiffs, Appellees, 

Cross-Appellants 

A.O. SMITH HARVESTORE PRODUCTS,) 

INC., a Delaware corporation, ) 

Defendant, Appellant, 

Cross-Appel lee 

) 

) 

) 

PJLri1' United S ., .. ~ V 

;r:gc~, Coon of Appeals Tenth Circuit · 

NOV 6 UIRO 

APPEAj 

OBERT L. HOECKER 

Clerk 

Nos. 89-1135 

89-1136 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE.DISTRICT OF COLORADO 

(D. C. No. 84-Z-1620) 

Donald E. Egan (Lee Ann Watson, Paul c. Miltenberger, Michael F. 

Smetana of Katten Muchin & Zavis, Chicago, Illinois, Michaels. 

Porter, Jon M. Leader of Howe & Porter, Denver, Colorado, and 

Francis A. Benedetti, Wray, Colorado, with him on the brief) for 

Defendant, Appellant, Cross-Appellee. 

E. Gregory Martin of Wood, Ris & Hames, Denver, Colorado (Wilfred 

R. Mann with him on the brief) of Boulder, Colorado, for 

Plaintiffs, Appellees, Cross-Appellants. 

Before MOORE and McWILLIAMS, Circuit Judges, and BRA'.M.'ON, Senior 

District Judge.* 

PER CURIAM. 

*The Honorable Howard c. Bratton, Senior United States District 

Judge for the District of New Mexico, sitting by designation. 

Appellate Case: 89-1135 Document: 01019945192 Date Filed: 11/06/1990 Page: 1 
This action arises out of the purchase of a Harvestore 

agricultural feed and storage structure by Robert W. Korf, Sr. The 

Harvestore structure was manufactured by A. o. Smith Harvestore 

Products, Inc. ("AOSHPI") and sold to the Korfs by Big Horn 

Harvestore Systems, Inc. ("Big Horn"), an independent Harvestore 

dealer. The Korfs claimed at trial that the structure did not 

function as represented and that, as a result of AOSHPI's 

fraudulent misrepresentations, their farming operation suffered 

financial losses. At trial, the jury found in favor of the Korfs 

and awarded them compensatory damages in the amount of $171,091.46 

and punitive damages of $580,000. The claimed errors on appeal 

revolve around the damage award. With regard to the jury's award 

of compensatory damages for the alleged fraud, AOSHPI claims that 

the trial court erred in denying its motion for a directed verdict 

on the ground that the Korfs failed to prove an element of value 

required by Colorado law. AOSHPI challenges the punitive damage 

award on three grounds. AOSHPI claims: 1) that the trial court 

improperly instructed the jury as to punitive damages, 2) that the 

punitive damage award was excessive, and 3) that the punitive 

damage award violated AOSHPI 's due process rights. The Korfs 

cross-appeal, alleging that the trial court erred in failing to 

award prejudgment interest on the compensatory damage portion of 

their verdict. As to the issues on direct appeal, we affirm. We 

reverse and remand as to the issue of prejudgment interest asserted 

on cross-appeal. 

2 

Appellate Case: 89-1135 Document: 01019945192 Date Filed: 11/06/1990 Page: 2 
I. 

Prior to the death of Robert Korf, Sr., the Korf family jointly 

farmed land owned by Robert Korf, Sr. and his wife, Minnie Korf, 

as well as the acreage of their two sons, Robert, Jr. and Eldon. 

In 1979, a Harvestore salesman from Big Horn approached the Korfs 

about purchasing a Harvestore silo for storing their corn crop. 

Robert Korf, Sr. and his two sons viewed an AOSHPI film and were 

provided with brochures on the Harvestore system. AOSHPI 

represented in this literature that the Harvestore silo reduced or 

prevented oxygen from coming in contact with stored grain in the 

silo, thus permitting the storage of grain at a higher moisture 

content, for a longer . time, and at a reduced storage cost. 

Al though the equivalent storage space in the more traditional 

storage bins would cost only $30,000, the Korfs believed the 

$125,000 price of the Harvestore structure was justified by the 

savings it would permit. 

silo. 

They jointly decided to purchase the 

Shortly after storing their 1979 fall corn crop in the Harvestore 

silo, the Korfs noted signs of serious spoilage in the Harvestorestored corn due to oxygen exposure. The Korfs were forced to sell 

this corn at prices well below the market price. Once emptied, Big 

Horn resealed the entire Harvestore structure, hoping to alleviate 

the oxygen influx into the silo. The Korfs placed a portion of 

their 1982 fall corn crop in the silo. Once again the corn spoiled 

and after March, 1983, the Korfs were unable to sell any of the 

corn. They ceased using the Harvestore silo in early 1984. 

3 

Appellate Case: 89-1135 Document: 01019945192 Date Filed: 11/06/1990 Page: 3 
At trial experts for the Korfs testified that, in fact, the 

Harvestore increases rather than decreases the amount of air in 

contact with the stored feed. These experts reviewed numerous 

AOSHPI internal reports and engineering studies documenting the 

failure of the Harvestore silo to prevent the access of oxygen into 

the moisture-rich grain inside. They introduced AOSHPI patents, 

dating as early as 1946, some of which acknowledged this defect and 

detailed its basic cause. Apparently, when the unloader door at 

the bottom -0f the silo is opened to remove feed, breather bags in 

the structure collapse, causing air to rush into the silo. This 

process pumps oxygen into the feed mass itself instead of merely 

exposing the surface grain to air, as would be the case in a 

conventional silo. 

Further, the experts testified that because of its dark color, 

the Harvestore silo becomes hotter on its sunny side, creating 

moisture movement through the feed mass. Consequently, they 

concluded that it should not ever be used for dry corn storage. 

II. 

AOSHPI first argues that the trial court erred in denying its 

motion for a directed verdict on the ground that the Korfs failed 

to prove a requisite element of value necessary to calculate 

compensatory damages. We disagree and, further, find that AOSHPI 

waived this error. 

In Colorado, the well-settled measure of damages for fraud is the 

so-called "benefit of the bargain" doctrine. Otis & Co. v. Grimes, 

97 Colo. 219, 48 P.2d 788 (1935). In the instant case, the trial 

4 

Appellate Case: 89-1135 Document: 01019945192 Date Filed: 11/06/1990 Page: 4 
court properly applied this doctrine in instructing the jury that 

the measure of actual damages is the difference between the actual 

value of the silo at the time of the purchase and its value at that 

time had the representation been true. See Otis & Co., 97 Colo. 

219, 48 P.2d at 791. Accord Colorado Performance Corp. v. Mariposa 

Assoc., 754 P.2d 401, 408 (Colo. App. 1987). 

In assessing the sufficiency of the evidence regarding 

compensatory damages, it is necessary that evidence exist as to 

both sides of the equation, i.e., the actual value of the property 

at the time of purchase and the value of the property as 

represented must be indicated of record. Farmer v. Norm "Fair 

Trade" Stamp, Inc. , 164 Colo. 156, 433 P. 2d 490, 492-93 ( 1967) . 

Wagner v. Dan Unfug Motors., Inc., 35 Colo. App. 102, 529 P.2d 656, 

658 (1974). 

At trial, AOSHPI moved for a directed verdict after the Korfs' 

case-in-chief, claiming that the Korfs had failed to prove the 

actual value of the Harvestore at the time of purchase. The 

district court deemed the motion "absurd," pointing to the 

testimony of Minnie Korf and her two sons that the Harvestore was 

utterly without value (or of negative value while situated on Eldon 

Korfs' property) since it rotted rather than preserved corn. 

Interestingly, AOSHPI abandoned its argument as to the lack of 

proof of actual value and now asserts on appeal that the Korf s 

failed to prove the value element on the opposite end of the 

5 

Appellate Case: 89-1135 Document: 01019945192 Date Filed: 11/06/1990 Page: 5 
equation, i.e., the value of the Harvestore as represented. 1 A 

review of the record clearly shows that the court, the Korfs' 

counsel, and even counsel for AOSHPI consistently referred 

throughout the trial to the purchase price as satisfying this 

element. Indeed, this was an imminently reasonable assumption 

because the purchase price is often proffered as proof of the value 

of a product as represented. See Wagner, 35 Colo. App. 102, 529 

P.2d at 658 ("The purchase price was only evidence of the 

represented value of the vehicle .. . ' not its actual value"); 

Farmer, 164 Colo. 156, 433 P.2d at 492 (purchase price accepted as 

value of equipment as represented); Shirley v. Merritt, 147 Colo. 

301, 364 P.2d 192, 194-95 (1961). 

Regardless, AOSHPI did not advance at trial the argument now 

asserted. Its motions for directed verdict at the end of the 

Korfs' case-in-chief and at the conclusion of the presentation of 

all evidence failed to address this claimed error. The point is, 

1

The sufficiency of the evidence as to actual value of the 

Harvestore at the time of purchase is technically not before us on 

appeal; however, AOSHPI addresses the issue in its reply brief. 

We merely note that, considering the evidence in a light most 

favorable to the Korfs, see Black v. Hieb's Enters., Inc., 805 F.2d 

360~ 364 (10th Cir. 1986), sufficient evidence of actual value does 

exist to support the jury's verdict. An owner's testimony of the 

value of prop~rty can be probative of value under some 

circumstances, unless the owner's special knowledge is somehow 

negated by his or her own testimony. United States v. 10,031.98 

Acres of Land, 850 F.2d 634, 637 (10th Cir. 1988). Minnie Korf 

indicated she had little basis for assessing the Harvestore as 

valueless. However, the valuations by Robert Korf, Jr. and Eldon 

Korf, as lifelong farmers and joint operators of the farm, are 

probative. Additionally, evidence that the Harvestore silo 

increased rather than decreased spoilage, was unsuitable even for 

dry storage, and remained unused for the five years prior to trial 

further support the valuation. 

6 

Appellate Case: 89-1135 Document: 01019945192 Date Filed: 11/06/1990 Page: 6 
therefore, not preserved on appeal. 2 Neu v. Grant, 548 F.2d 281, 

286 (10th cir. 1977); Christiansen v. Farmers Ins. Exch., 540 F.2d 

472, 477 (10th Cir. 1976). 

III. 

In addition, AOSHPI requests a new trial with respect to the 

punitive damage award. It challenges the award on three separate 

grounds. 

A. 

AOSHPI f.irst claims that the trial court improperly instructed 

the jury as to punitive damages. 3 When reviewing claimed error as 

to an instruction, we must "consider all that the jury heard and, 

from the standpoint of the jury, decide, 'not whether the charge 

was faultless in every particular, but whether the jury was misled 

in any way and whether it had an understanding of the issues and 

its duty to determine these issues.'" Robinson v. Audi NSU Auto 

Union Aktiengesellschaft, 739 F. 2d 1481, 1486 ( 10th Cir. 1984) 

quoting Durflinger v. Artiles, 727 F.2d 888, 895 (10th Cir. 1984) 

2

AOSHPI also contends that the lower court erred in its 

instructions to the jury on compensatory damages and in its 

response to questions from the jury concerning the Korfs' damage 

claim. AOSHPI raised no objections with the trial court concerning 

these additional matters; they are, therefore, waived. Chevron, 

U.S.A., Inc. v. Hand, 763 F.2d 1184, 1186 (10th Cir. 1985); Fed. 

R. civ. P. 51. 

3

The court instructed in pertinent part: 

If you also find beyond a reasonable doubt that the 

injury complained of was attended by circumstances of 

fraud, then in addition to any actual damages, you may 

also award the plaintiffs a reasonable sum as exemplary 

damages. 

7 

Appellate Case: 89-1135 Document: 01019945192 Date Filed: 11/06/1990 Page: 7 
quoting Alloy Int'l Co. v. Hoover-NSK Bearing Co .• Inc., 635 F.2d 

1222, 1226-27 (7th Cir. 1980). This determination must be made "in 

the light, not only of the instructions as a whole, but of the 

allegations of the complaint, the opening statements, the evidence, 

and the closing arguments." Joyce v. Atlantic Richfield Co., 651 

F.2d 676, 682 (10th Cir. 1981) quoting Alloy Int'l, 635 F.2d at 

1226. 

The instruction challenged as insufficient repeats almost 

verbatim the Colorado pattern instruction on punitive damages. 

See c. J. I. civ. 3d 5:3 (1989) Further, the critical language in 

the instruction is drawn directly from the statute regarding 

punitive damages in effect at the time of trial. See Colo. Rev. 

Stat. 13-21-102 (1973). 

Despite the virtual identity of language with both the Colorado 

pattern instruction and the pertinent statute, AOSHPI asserts that 

the court's instruction did not reflect the prevailing law in 

Colorado and should, accordingly, have been modified. See 

Boettcher DTC Bldg. Joint Venture v. Falcon Ventures, 762 P.2d 788, 

790-91 (Colo. App. 1988) (trial court must modify pattern 

instructions in accordance with prevailing law). As AOSHPI points 

out, various Colorado cases have discussed circumstances justifying 

an award of punitive damages and have employed varying language. 

See Pizza v. Wolf Creek Ski Dev. Corp., 711 P.2d 671, 684 (Colo. 

1985) (wrongful act must be done with evil intent and purpose of 

injuring the plaintiff, or with such wanton and reckless disregard 

of rights to evidence wrongful motive); Ress v. Rediess, 130 Colo. 

8 

Appellate Case: 89-1135 Document: 01019945192 Date Filed: 11/06/1990 Page: 8 
572, 278 P.2d 183, 187 (1954) ("To justify a recoveri of exemplary 

damages, the act causing the injuries must be done with an evil 

intent and with the purpose of injuring the plaintiff . . ") 

citing Gray v. Linton, 38 Colo. 175, 88 P. 749, 750 (1906). These 

cases, many of which pre-date by decades the drafting of the 

pattern instruction, in no way suggest that the language of the 

pattern instruction does not adequately reflect the statutorily 

mandated circumstances in which punitive damages may be awarded. 

See Colo. Rev. Stat. 13-21-102 (1973). 

assertion of error. 4 

B. 

We thus reject AOSHPI's 

As further grounds for a new trial, AOSHPI asserts that the 

$580,000 punitive damage award was excessive and bears no 

reasonable relation to the amount of actual_damages which should 

have been awarded. We have already concluded that the actual 

damage award was proper and · now hold likewise as to punitive 

damages. 

"Although the proper justifications for punitive damages are a 

matter of state law, the determination of whether a jury award of 

punitive damages was excessive is a matter of federal law." The 

4we further reject AOSHPI's complaint as to the wording of the 

punitive damage section in Special Verdict Form B. AOSHPI argues 

that the form did not allow the jury the option of awarding actual 

damages even while denying punitive damages. AOSHPI lodged an 

objection to the verdict form, but it did so on other grounds. 

Even were we to accept the objection raised as sufficient to 

preserve this error, the record indicates that the court thoroughly 

and clearly explained the jury's various options in awarding 

damages and that no prejudice resulted. R. Vol. XX, at 1465-66. 

9 

Appellate Case: 89-1135 Document: 01019945192 Date Filed: 11/06/1990 Page: 9 
Post Office v. Portee. Inc., No. 88-2836, slip op. at 14 (10th Cir. 

Aug. 27, 1990). An award is determined to be excessive when it 

"shock(s] the judicial conscience" and raises an "irresistible 

inference that passion, prejudice, corruption or other improper 

cause invaded the trial." Id. quoting Specht v. Jensen, 832 F.2d 

1516, 1528 (10th Cir. 1987) quoting Malandris v. Merrill Lynch, 

Pierce. Fenner & smith, Inc., 703 F.2d 1152, 1168 (10th Cir. 1981); 

cf. Frick v. Abell, 198 Colo. 508, 602 P.2d 852, 854 (1979) (similar 

examination mandated under Colorado law). 

We are guided in our determination as to the excessiveness of a 

punitive damage award by viewing factors, including the nature of 

the act which caused the injury, the economic status of the 

defendant, and the deterrent effect of the award on others. 

Malandris, 703 F.2d at 1177; Palmer v. A.H. Robins co., Inc., 684 

P.2d 187, 220 (Colo. 1984). In addition, Colorado courts require 

that the punitive damages bear some relation to the compensatory 

award. Id. 

Initially, we note that the relation of the punitive to actual 

damages in this case bears a ratio of only slightly over 3 to 1. 

Although this is comfortably within a range previously found 

acceptable both in this circuit and in Colorado state courts, it 

is clear from our prior case law that the ratio is only one factor 

in determining the excessiveness of the punitive damage award. 

Compare The Post Office v. Portee. Inc., No. 88-2836, slip op. at 

18 (10th Cir. Aug. 27, 1990) (punitive damage award remitted to a 

ratio of 6:1), and Bradbury v. Phillips Petroleum Co., 815 F.2d 

10 

Appellate Case: 89-1135 Document: 01019945192 Date Filed: 11/06/1990 Page: 10 
1356, 1366 (10th cir. 1987) (ratios of 50,000:1 and 50:1 upheld), 

with Malandris, 703 F.2d at 1177 (ratio of 3:1 found excessive). 

See also Palmer, 684 P.2d at 220 (ratio of 10:1 upheld); Coale v. 

Dow Chemical Co., 701 P.2d 885, 889 (Colo. App. 1985) (ratio of 

almost 7:1 upheld). The crucial question is whether the verdict 

is shocking to the conscience or leads to the inescapable inference 

of improper jury passion or prejudice. Bearing in mind all the 

relevant factors, we are unconvinced that the award in the instant 

case was excessive. 

AOSHPI 's own engineering studies, tests and patent documentation, 

as well as complaints from farmers similarly situated to the Korfs, 

reveal AOSHPI's long-standing knowledge that grain stored in 

Harvestore silos was subject to excessive spoilage. This evidence 

betrays AOSHPI's blatant disregard for the potentially devastating 

effect to farmers such as the Korfs, who, after incurring the 

substantial cost for the Harvestore, lose both the use of the silo 

and the stored crop inside. Given these facts, it is reasonable 

to surmise that the jury acted to discourage such activity. An 

award of $580,000 in exemplary damages against AOSHPI, the seller 

of 70, ooo Harvestore silos world-wide and "the world's largest 

manufacturer of automated livestock feeding systems," does not 

appear shocking. 

c. 

Finally, AOSHPI raises a due process challenge against Colo. 

Rev. Stat. § 13-21-102 (1973), under which this punitive damage 

11 

Appellate Case: 89-1135 Document: 01019945192 Date Filed: 11/06/1990 Page: 11 
award was granted. 5 We recently addresed this issue in The Post 

Office v. Portee. Inc., No. 88-2836 (10th Cir. Aug. 27, 1990), 

where we stated: 

This court has previously upheld the Colorado punitive 

damage statute under a due process challenge. In Malandris 

v. Merrill Lynch. Pierce, Fenner & Smith. Inc., 703 F.2d 1152, 

1172-73 (10th Cir. 1981), we held that the old Colorado 

statute did not violate the due process clauses of the federal 

or state constitutions. See also Palmer v. A.H. Robins Co .• 

Inc., 684 P.2d 187, 214-17 (Colo. 1984). Defendant points to 

no Supreme Court action that requires us to question our prior 

holding supporting the Colorado statute. Thus, our prior 

opinion is controlling in this case, and the constitutionality 

of the Colorado statute is affirmed. 

Slip op. at 13. 

Accordingly, we affirm the statute. 

IV. 

The Korfs raise one issue on cross-appeal. They claim that the 

district court erred in failing to award prejudgment interest on 

the compensatory damage portion of their award. We agree. 

At the time of its decision the lower court was without the 

benefit of the Colorado Supreme Court's decision in Mesa Sand & 

Gravel Col. v. Landfill, Inc., 776 P.2d 362 (Colo. 1989). In Mesa 

Sand & Gravel the Colorado Supreme Court reviewed Colo. Rev. Stat. 

§ 5-12-102(1) (b) (Supp. 1989), under which prejudgment interest is 

provided to prevailing parties for money or the value of property 

wrongfully withheld. It would appear from the Colorado Supreme 

Court's analysis that victims of tortious conduct are clearly 

5

The Colorado legislature has promulgated a new punitive damage 

statute which limits punitive damage awards generally to an amount 

equal to the actual damages. The new statute applies to actions 

accruing after 1987. See Colo. Rev. Stat. § 13-21-102 (1987). 

12 

Appellate Case: 89-1135 Document: 01019945192 Date Filed: 11/06/1990 Page: 12 
entitled to prejudgment interest under the statute. Id. at 364-

66. See also Westfield Dev. Co. v. Rifle Inv. Assoc., 786 P.2d 

1112, 1122 (Colo. 1990). 

Thus, establishing the date interest began to accrue is the 

only issue of moment remaining. The Colorado Supreme Court in Mesa 

Sand & Gravel cited a portion of the statute's legislative history 

indicating that prevailing parties were intended to recover 

prejudgment interest from the time of the wrong. 776 P.2d at 365. 

Under the ins.tant facts, money was wrongfully withheld from the 

Korfs on the date they were fraudulently induced to undertake the 

obligation for the defective Harvestore silo. In accordance with 

the direction of the state's high court, we c~~strue the statute 

liberally and conclude that the. Korfs are entitled to prejudgment 

interest from the date they undertook the financial obligation for 

the Harvestore structure. See Westfield, 786 P.2d at 1122. 

In conclusion, we AFFIRM.as to all issues except the issue on 

cross-appeal regarding prejudgment interest. We REVERSE and REMAND 

as to that issue with directions that prejudgment interest be 

awarded from the date of the Korfs' purchase of the Harvestore 

structure. 

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Appellate Case: 89-1135 Document: 01019945192 Date Filed: 11/06/1990 Page: 13