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

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PUBLISH 

UNITED STATES COURT OF APPEALS 

TENTH .CIRCUIT 

BUSINESS .SYSTEMS LEASING, INC., a 

Maryland corporation; DISPLAY DATA 

CORPORATION, a Maryland corporation, 

Plaintiffs-Appellees, 

v. 

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) 

) 

) 

) 

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) 

) 

FILED 

United States Court of Appeals 

Tenth Circuit 

SEP 2? 1989 

ROBERT L. HOECKER 

Clerk 

) 

) 

No. 88-1923 

FOOTHILLS AUTOMOTIVE PLAZA, INC., ) 

a Colorado corporation, doing ) 

business as Foothills Chrysler, ) 

Plymouth, Dodge, Saab, doing business ) 

as Foothills Saab, Inc., doing business ) 

as Foothills Chrysler, Plymouth, ) 

Dodge, Inc., ) 

Defendant-Appellant, 

and 

FOOTHILLS, INC., a Colorado 

corporation, doing business as 

Foothills Chrysler, Plymouth, Dodge, 

Saab, doing business as Foothills 

Saab, Ince, doing business as 

Foothills Chrysler, Plymouth, 

Dodge, Inc.; MACK w. OLSEN; DAVID J. 

MATHEWS, 

Defendants-Appellees. 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF COLORADO 

(D.C. No. 83-C-2465) 

Appellate Case: 88-1923 Document: 01019936287 Date Filed: 09/27/1989 Page: 1 
Submitted on the briefs: 

Miles M. Gersh and Laurie K. Rottersman, of Gersh & Danielson, 

Denver, Colorado, for Plaintiffs-Appellees. 

Kenneth L. Keene, Jr., 

Colorado, and Robert 

Defendant-Appellant. 

of 

K. 

Keene, 

Gruber, 

Munsinger 

Denver, 

& Smith, Denver, 

Colorado, for 

Ralph H. Coyte, Fort Collins, Colorado, for Defendants-Appellees. 

Before MOORE, ANDERSON, and BRORBY, Circuit Judges. 

PER CURIAM. 

After examining the briefs and appellate record, this panel 

has determined unanimously that oral argument would not materially 

assist the determination of this appeal. See Fed. R. App. P. 

34(a); 10th Cir. R. 34.1.9. The cause is therefore ordered 

submitted without oral argument. 

Defendant Foothills Automotive Plaza, Inc. (Automotive Plaza) 

appeals the judgment of the district court in a breach of contract 

action awarding damages and attorney's fees to the plaintiffs, 

Business Systems Leasing, Inc. (BSL) and the Display Data 

Corporation (Display Data). 1 Automotive Plaza contends that the 

court erred in finding that BSL had no duty to mitigate its 

damages by attempting to resell a computer system which it had 

leased to Automotive Plaza. It further argues that the court 

incorrectly concluded that Display Data was entitled to damages 

1 Defendants Foothills, Inc., Mack w. Olsen, 

Mathews do not appeal the district court's ruling. 

2 

and David J. 

Appellate Case: 88-1923 Document: 01019936287 Date Filed: 09/27/1989 Page: 2 
for Automotive Plaza's breach of the maintenance agreement for the 

system, and it 

the plaintiffs. 

issue. 

contests the court's award of attorney's fees to 

We affirm the district court's ruling on each 

In September, 1981, Foothills, Inc. (Foothills), an 

automobile dealership located in Ft. Collins, Colorado, entered 

into an Equipment Leasing Agreement (the equipment agreement) with 

BSL for a computer system which was to provide accounting services 

for the dealership. The obligations under the equipment agreement 

were guaranteed by defendants David Mathews and Mack Olsen, 

president ·and chairman of the board, respectively, of Foothills. 

BSL perfected a security interest in the system to secure 

Foothills' obligations under the agreement. The equipment 

agreement additionally provided that it was to be construed under 

Maryland law. 

Onder the terms of the equipment agreement, Foothills was 

required to contract with a third party for the maintenance of the 

computer system. In September, 1981, it entered into a Sales, 

License and Maintenance Agreement (the maintenance agreement) with 

Display Data, whereby Display Data was to provide maintenance and 

software services for the system. Foothills made the required 

payments under both the equipment and maintenance agreements 

through December, 1981. 

In January, 1982, Foothills began to experience financial 

difficulties, and it commenced negotiations with Automotive Plaza 

for the sale of the distributorship. From January through May, 

1982, Automotive Plaza operated the distributorship under a 

3 

Appellate Case: 88-1923 Document: 01019936287 Date Filed: 09/27/1989 Page: 3 
management agreement with Foothills. On or about May 20, 1982, 

Automotive Plaza purchased the dealership from Foothills. Under 

paragraph l.2(f) of the Purchase and Sale Agreement (the purchase 

agreement) governing the transaction, Automotive Plaza agreed to 

assume the obligations of Foothills under "[t]hat certain Lease 

Agreement with Display Data pertaining to Seller's Display Data 

Computer." 

Approximately one year after Automotive Plaza took control of 

the dealership, a dispute arose as to the payments Automotive 

Plaza owed to BSL and to Display Data under the equipment and 

maintenance agreements. Unable to resolve its differences with 

the plaintiffs, Automotive Plaza disconnected the computer from 

its modem and obtained another system from a different vendor. 

After negotiations to settle the dispute failed, BSL and Dis~lay 

Data brought this action against Foothills and Automotive Plaza 

alleging a breach of the equipment and maintenance agreements. 

They additionally claimed that Mr. Mathews and Mr. Olsen were 

liable to BSL under their guaranty of the equipment agreement. 

Foothills, Mr. Mathews, and Mr. Olsen then cross-claimed for 

judgment against Automotive Plaza, pursuant to Automotive Plaza's 

agreement to assume the obligations relating to the computer 

system. 

On May 16, 1988, after trial to the court, the district court 

ruled in favor of the plaintiffs, awarding them damages and 

attorney's fees. It additionally ordered judgment over against 

Automotive Plaza on the remaining defendants' cross-claim. In 

holding for the plaintiffs, the district court found that 

4 

Appellate Case: 88-1923 Document: 01019936287 Date Filed: 09/27/1989 Page: 4 
Automotive Plaza had expressly agreed, by virtue of paragraph 

l.2(f) of the purchase agreement, to assume Foothills' obligations 

under both the equipment and maintenance agreements. It rejected 

Automotive Plaza's argument that BSL was not entitled to recover 

because it had not mitigated its damages by repossessing and 

re-leasing the computer. The court noted that the equipment 

agreement provided that BSL was not obligated to mitigate damages 

and that it was entitled to exercise any of its rights under the 

Uniform Commercial Code (UCC), including the right to proceed with 

a judgment against Automotive Plaza in lieu of repossession and 

resale. It further concluded that Display Data was entitled to 

recover from the defendants for unjust enrichment and as a third 

party beneficiary under the purchase agreement. Finally, the 

court awarded the plaintiffs reasonable attorney's fees and costs, 

as provided under both the equipment and maintenance agreements. 

Automotive Plaza now appeals on three grounds. First, it 

contends that, as a matter of law, BSL had the duty to mitigate 

its damages, which duty could not be waived. Second, it argues 

that Display Data was not entitled to recover because it failed to 

preserve its claim for damages in the pretrial order and because 

it was not a third party beneficiary under the purchase agreement. 

Third, Automotive Plaza asserts that the award of attorney's fees 

was improper because the court made no findings to support its 

conclusion that Automotive Plaza had employed delaying tactics 

during the course of the litigation. We review the legal issues 

regarding BSL's duty to mitigate and Display Data's damages claim 

5 

Appellate Case: 88-1923 Document: 01019936287 Date Filed: 09/27/1989 Page: 5 
de novo. See Heins v. Ruti-Sweetwater, Inc. (In re RutiSweetwater, Inc.), 836 F.2d 1263, 1266 (10th Cir. 1988). We 

generally address the district court's ruling as to attorney's 

fees under an abuse of discretion standard, Supre v. Ricketts, 792 

F.2d 958, 961 (10th Cir. 1986); however, the underlying factual 

findings in support of the district court's award of attorney's 

fees are reversible only where clearly erroneous, id.; see also 

Dreiling v. Peugeot Motors of Am., Inc., 768 F.2d 1159, 1165 (10th 

Cir. 1985)(award of attorney's fees under 28 u.s.c. § 1927). 

Automotive Plaza's first claim, that BSL had an absolute duty 

to mitigate its damages by reselling or re-leasing the computer 

system, is without merit. The equipment agreement provided that 

"[t]o the extent permitted by applicable law, Lessee hereby waives 

any rights now or hereafter conferred by statute or otherwise 

which may 

equipment 

require Lessor 

in mitigation 

to sell, lease or otherwise use any 

of Lessor 's damages • • • " 

Consequently, as Lessee under the equipment agreement by virtue of 

its assumption of Foothills' obligations thereunder, Automot~ve 

Plaza expressly agreed to waive any claim it may have with respect 

to BSL's failure to mitigate damages. 

Automotive Plaza argues, however, that the duty to mitigate 

damages may not be waived by agreement between the parties, yet it 

provides no authority to this effect. We think such a conclusion 

would be unsound. First, Automotive Plaza's characterization of 

the common law concept of mitigation as an absolute duty is not 

entirely accurate: 

6 

Appellate Case: 88-1923 Document: 01019936287 Date Filed: 09/27/1989 Page: 6 
Since there is no judicial penalty, however, for [the 

injured party's] failure to make this effort, it is not 

desirable to say that he is under a ''duty". His 

recovery against the defendant will be exactly the same 

whether he makes the effort and mitigates his loss, or 

not; but if he fails to make the reasonable effort, with 

the result that his injury is greater than it would 

otherwise have been, he cannot recover judgment for the 

amount of this avoidable and unnecessary increase. 

Corbin on Contracts§ 1039 at 242 (1964). Viewed as a principle 

relating to the reduction of damages, and not as an immutable 

requirement, we see no barrier to upholding the parties' 

contractual agreement to limit damages for the failure to 

mitigate. 2 In a similar context, we have held that the waiver of 

the debtor's right to contest the manner or diligence of a 

creditor's disposition of collateral is not commercially 

unreasonable under the UCC. See United States v. New Mexico 

Landscaping, Inc., 785 F.2d 843, 846-47 (10th Cir. 1986). 

Furthermore, in addition to the fact that the equipment 

agreement obviates BSL's duty to mitigate, the agreement also 

provides that BSL may exercise "any other right or remedy which 

may be available under the Uniform Commercial Code • including 

the right to recover damages for the breach of the agreement." 

Under section 9-501 of the ucc, when a debtor is in default, a 

secured party "may reduce his claim to judgment, foreclose or 

2 Even disregarding this contractual limitation, it is 

Automotive Plaza's burden to demonstrate that the damages claimed 

by BSL could have been reduced had BSL taken mitigating actions. 

Kruvant v. Dickerman, 18 Md. App. 1, 305 A.2d 227, 229-30 (1973); 

Voles, Ltd. v. Setera, 264 Md. 155, 286 A.2d 101, 112 (1972). It 

has failed to do so in this case. The evidence before the 

district court suggests that, at the time BSL determined that 

Automotive Plaza would not fulfill its obligations under the 

equipment contract, the computer system had little or no value on 

resale. Thus, any effort by BSL to sell or lease the system would 

have had a limited effect in reducing its damages. 

7 

Appellate Case: 88-1923 Document: 01019936287 Date Filed: 09/27/1989 Page: 7 
otherwise enforce the security interest by any available judicial 

procedure [and] the rights and remedies referred to in this 

section are cumulative." See Md. Com. Law Code Ann. § 9-501(1) 

(1975). By choosing to proceed toward a judgment and not to 

repossess the system, BSL was simply exercising one of its 

statutory remedies under the ucc. Upon electing this course of 

action, BSL was under no duty to take further action in mitigation 

of its damages. See Acushnet Fed. Credit Union v. Roderick, 530 

N.E.2d 1243, 1246 (Mass. App. Ct. 1988). Consequently, we concur 

with the district court's conclusion that the waiver of BSL's duty 

to mitigate is enforceable and that the BSL damages are not 

diminished by its failure to repossess and resell or re-lease the 

system. 

Automotive Plaza's second claim in this appeal is that 

Display Data is not entitled to recover for the breach of the 

maintenance agreement because it failed to preserve its claim that 

it was a third party beneficiary under the purchase agreement. 3 

This argument overlooks the district court's ruling _that Display 

Data was entitled to recovery on both a third party beneficiary 

theory and an unjust enrichment theory. Automotive Plaza 

3 Despite its argument that Display Data's claim was not 

preserved in the pretrial order, Automotive Plaza failed to 

designate the pretrial order as part of the record on appeal 

pursuant to its burden under Fed. R. App. P. lO(b). See Kopunec 

v. Nelson, 801 F.2d 1226, 1228 (10th Cir. 1986). Normally, such a 

failure would be fatal to Automotive Plaza's claim. See United 

States v. Hubbard, 603 F.2d 137, 140 (10th Cir. 1979). -We need 

not consider this issue, however, as the district court's ruling 

can be sustained on the alternative basis that Automotive Plaza 

was unjustly enriched. See Bath v. National Ass'n of 

Intercollegiate Athletics, 843 F.2d 1315, 1317 (10th Cir. 

1988)(court of appeals may affirm on any grounds supported by the 

record). 

8 

Appellate Case: 88-1923 Document: 01019936287 Date Filed: 09/27/1989 Page: 8 
contends, however, that there was "no evidence of any action by 

Display Data in conferring a benefit upon Automotive Plaza" to 

permit its recovery under an unjust enrichment theory. Opening 

Brief for the Appellant at 18. Such a contention is untenable in 

the face of undisputed evidence that Display Data provided 

maintenance and support of the computer system continuously from 

the period of time that Automotive Plaza operated or owned the 

dealership to the time it disconnected the system. Therefore, the 

district court committed no error in awarding damages to Display 

Data for the breach of the maintenance agreement. 

Automotive Plaza's final argument in this appeal is that the 

district court abused its discretion in awarding attorney's fees 

to the plaintiffs. Automotive Plaza does not dispute that the 

hourly fee of plaintiffs' counsel was reasonable and that counsel 

spent 194 hours preparing for the case. Instead, Automotive Plaza 

complains that the fees awarded were excessive in light of the 

fact that trial took only two days. We note, however, that the 

court specifically found that the time spent in litigating this 

action was not excessive in light of the fact that Automotive 

Plaza had engaged in "delaying tactics." Automotive Plaza argues 

that the court was nevertheless required to make specific findings 

relating to Automotive Plaza's delaying tactics pursuant to Colo. 

Rev. Stat. § 13-17-101 (1989)(permitting an award of attorney's 

fees in frivolous, groundless, or vexatious actions), and that the 

record would not support such findings. We disagree. 

The court's award of attorney's fees in this case was not 

based on Colo. Rev. Stat. § 13-17-101, but on the provisions for 

9 

Appellate Case: 88-1923 Document: 01019936287 Date Filed: 09/27/1989 Page: 9 
such an 

Specific 

Automotive 

award in the equipment 

to support 

delayed the 

findings 

Plaza had 

and maintenance agreements. 

the court's conclusion that 

proceedings were therefore 

unnecessary and would have 

manifestly evident from the 

been superfluous, given that it is 

record in this case that this 

litigation has taken a dilatory course. The district court is in 

the best position to evaluate the complexity of litigation in 

support of an attorney's fees award. We conclude that the 

district court's factual findings with respect to the award of 

attorney's fees are not clearly erroneous, and that it did not 

abuse its discretion in awarding attorney's fees to the plaintiffs 

as provided in the equipment and maintenance agreements. 

The judgment of th·e United States District Court for the 

District of Colorado is AFFIRMED. 

The mandate shall issue forthwith. 

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Appellate Case: 88-1923 Document: 01019936287 Date Filed: 09/27/1989 Page: 10