Opinion ID: 166827
Heading Depth: 2
Heading Rank: 4

Heading: Mr. Gorog’s Verdict

Text: Mr. Gorog claims that the district court erred in denying his Rule 59 motion because the jury verdicts cannot logically be reconciled. He asks this court to enter judgment against Goodyear on the issue of liability and for a new trial limited to Goodyear’s statute of limitations defense and damages. We review a trial court’s ruling on a motion for new trial or to alter or amend judgment under an abuse of discretion standard. See Anaeme v. Diagnostek, Inc., 164 F.3d 1275, 1284 (10th Cir. 1999); Minshall, 323 F.3d at 1287. Accordingly, this court will not reverse a decision of the district court unless the district court made a “clear error of judgment or exceeded the bounds of permissible choice in the circumstances.” Minshall, 323 F.3d at 1287 (citations omitted). As previously discussed, we are required to reconcile verdicts where reasonably possible. The district court denied Mr. Gorog’s motions on two grounds: (1) the jury instructions and verdict form could be interpreted to mean that the jury found in favor of Goodyear on its statute of limitations defense, and (2) the jury could have concluded that Mr. Gorog, unlike the other homeowners, failed to prove causation or damages. The jury instructions defined the elements of each claim and stated that if the homeowner proved the relevant elements then its verdict must be for the -39- homeowner on that claim. J.A. at 755-64. These instructions continued: As to plaintiff [Mr. Gorog] only, you must also consider Goodyear’s affirmative defense of the expiration of the statute of limitation. If you find that this affirmative defense has been proved by a preponderance of the evidence, then your verdict must be for Goodyear and against plaintiff [Mr. Gorog]. Id. at 756, 759 (emphasis supplied). 6 As to each of the claims, the verdict form asked whether Mr. Gorog had proven his claim against Goodyear. The verdict form instructed the jury that if it answered “no” to these questions, then it was not to answer the statute of limitations questions. The jury returned a verdict against Mr. Gorog on all claims. It did not answer the statute of limitations questions. The district court, noting its “duty to attempt to reconcile jury’s answers to special verdict questions in order to avoid the need for retrial,” citing Palmer, 31 F.3d at 1505, determined: It is reasonable to conclude that the jury read [the] instruction[s] to require it to answer ‘no’ as to Mr. Gorog’s claims because it found in favor of Goodyear on the basis of its defense – in lieu of answering ‘yes’ to Mr. Gorog’s claims and answering ‘yes’ as to Goodyear’s defense to defeat those claims. J.A. at 1878. 6 As Goodyear points out, and Mr. Gorog does not challenge, the specific jury instruction on negligent failure to warn did not mention Goodyear’s statute of limitations defense. J.A. at 763. Instead, the jury was told that a manufacture’s or seller’s failure to exercise reasonable care to warn of harmful or injurious products constituted negligence. Id. Thus, the failure to warn instruction was to be read with the general instruction on negligence, which did reference Goodyear’s statute of limitations defense. -40- Understandably, the district court first sought to reconcile the verdict with the statute of limitations evidence. But in reconciling the verdicts, the district court disregarded the jury’s express theory of denial and embraced one not addressed by the jury. The jury simply did not answer the statute of limitations question on the verdict form. By concluding that the jury found in favor of Goodyear on this defense, the district court stepped beyond reconciling the verdict with a reasonable view of the case, Palmer, 31 F.3d at 1505, into the impermissible realm of speculation as to what the jury actually determined in violation of Mr. Gorog’s Seventh Amendment right to a jury trial. See Carr v. Wal-Mart Store, Inc., 312 F.3d 667, 675 (5th Cir. 2002). Relying on Domann v. Vigil, 261 F.3d 980, 983 (10th Cir. 2001), Goodyear argues that a “failure by a jury to answer some of the questions in a special verdict does not vitiate an otherwise unanimous verdict where the unanimous answers to the verdict conclusively dispose of the case.” (Goodyear Ans. Br. at 48). The principle espoused in Domann does not, however, apply when questions on the verdict form that are vital to the disposition of the case remain unanswered. The district court based its first ground for reconciling the verdict on its conclusion that the jury must have found for Goodyear on its statute of limitations defense. Thus, the jury’s answer to the statute of limitations question was necessarily vital to the district’s disposition of the case. The principle in -41- Domann is inapposite. We briefly consider the district court’s alternative holding. The conclusion that the jury simply could have concluded that Mr. Gorog, unlike the other homeowners, failed to prove causation or damages does not inspire confidence when viewed in the context of the record. Goodyear argues that Mr. Gorog’s damages may have been caused by the Dayco hose installed in his home, rather than Entran II hose. (Goodyear Ans. Br. at 49). However, Goodyear offered materially the same evidence regarding Dayco hose in response to the claims of both Mr. Gorog and the Holzwarths. Yet, the jury found for the Holzwarths on their claims of defective product, negligence, and negligent failure to warn. We therefore find it unreasonable to conclude that the jury accepted Goodyear’s defense regarding Dayco hose as to Mr. Gorog only. Accordingly, we turn to the relief sought by Mr. Gorog. He, like Ms. Glas, maintains that the jury’s findings of liability against Goodyear on the claims of other homeowners is “law of the case” controlling his claims and that a new trial would be unnecessary on the issue of liability. We reject this contention for the same reasons already discussed with regards to Ms. Glas. We therefore remand Mr. Gorog’s claims for a new trial. V. Goodyear’s Cross-Appeal for Recalculation of Prejudgment Interest Goodyear’s cross-appeal questions the district court’s calculation of -42- prejudgment interest. The district court granted Homeowners’ motion for prejudgment interest under Colo. Rev. Stat. § 5-12-102(1)(b) (2004). The district court determined that prejudgment interest on the jury awards should accrue from the dates on which the Homeowners’ heating systems were originally installed. Goodyear maintains that the district court should have set the accrual date on one of two alternate dates: (1) when the Homeowners paid for their repair or replacement costs; or (2) when the Homeowners’ claims accrued for purposes of the statute of limitation. The standard by which we review the district court’s grant of prejudgment interest is well established. “A federal court sitting in diversity applies state law, not federal law, regarding the issue of prejudgment interest.” Atlantic Richfield Co. v. Farm Credit Bank of Wichita, 226 F.3d 1138, 1156 (10th Cir. 2000) (quoting Chesapeake Operating, Inc. v. Valence Operating Co., 193 F.3d 1153, 1156 (10th Cir. 1999)). An award of prejudgment interest “is generally subject to an abuse of discretion standard of review on appeal.” Driver Music Co. v. Commercial Union Ins. Companies, 94 F.3d 1428, 1433 (10th Cir.1996). However, “any statutory interpretation or legal analysis underlying such an award is reviewed de novo.” Id. Whether a particular factual circumstance falls within the terms of the prejudgment interest statute is a question of law reviewed de novo. United Int’l Holdings, 210 F.3d at 1233. We hold that the district court -43- did not err in its calculation of prejudgment interest based on the date of installation. Under Colorado law, prejudgment interest in non-personal injury actions is available “at the rate of eight percent per annum compounded annually for all moneys or the value of all property after they are wrongfully withheld or after they become due to the date of payment or to the date judgment is entered, whichever first occurs.” Colo. Rev. Stat. § 5-12-102(1)(b) (emphasis supplied). The district court held that “Goodyear’s defective product – whether functional for a time or not – was defective from the time of installation. Accordingly, funds owed for such replacement were wrongfully withheld starting at the time of installation.” Loughridge v. Goodyear Tire & Rubber Co., 281 F. Supp. 2d 1252, 1256 (D. Colo. 2003). Although we would be remiss not to say that we are concerned with the equities of allowing a purchaser to enjoy the use of a functional product for years before damages manifest, and then award the purchaser prejudgment interest from the date of purchase, the district court’s disposition is consistent with Colorado law and this circuit’s precedent. The Colorado Supreme Court in Mesa Sand & Gravel Co. v. Landfill, Inc., 776 P.2d 362, 353-66 (Colo. 1989) cited a portion of § 5-12-102’s legislative history indicating that the legislature intended prevailing parties to recover prejudgment interest from the time of the wrong. Estate of Korf v. A.O. Smith -44- Harvestore Prod., Inc., 917 F.2d 480, 486 (10th Cir. 1990). Prejudgment interest is awarded in property damage cases from the date the injured party was wronged. Fed. Ins. Co. v. Ferrellgas, Inc., 961 P.2d 511, 514 (Colo. Ct. App. 1997). However, prejudgement interest may not be awarded for future lost profits or earnings, Bennett v. Greeley Gas Co., 969 P.2d 754, 766 (Colo. Ct. App. 1998), nor for consequential damages until such damages are actually incurred, Pegasus Helicopters, Inc. v. United Techs. Corp., 35 F.3d 507, 513 (10th Cir. 1994). That said, we are mindful that section 5-12-102 is to be liberally construed to permit recovery of prejudgment interest. See Mesa Sand & Gravel, 776 P.2d at 365. Accordingly, we must determine when the Homeowners were wronged in the context of this case given the theories of recovery–sale of a defective product, negligence, and negligent failure to warn. The Colorado Court of Appeals opinion in Coleman v. United Fire & Gas. Co., 767 P.2d 761 (Colo. Ct. App. 1988), although involving a breach of contract claim, is instructive here. In Coleman, the Colorado Court of Appeals addressed the accrual date of prejudgment interest where plaintiffs recovered against an insurer for a faulty roof replacement and subsequent repairs. Id. at 764. The substandard roof was originally installed in 1981 but did not show signs of leaking until 1983. Id. at 762-63. The plaintiffs made numerous repairs on the roof up to 1985 when they learned their replacement roof was inferior to their original roof. Id. at 763. For -45- the cost to replace the roof, the Colorado Court of Appeals affirmed the trial court’s award of prejudgment interest from the date of the initial substandard roof replacement, not the date on which the problem manifested itself. Id. Like the plaintiffs in Coleman, the Homeowners sought repair and replacement costs to remedy a wrong, i.e., the installation of a defective product in their home. Prejudgment interest properly accrued, therefore, from the date of the wrong, the date when Entran II was installed in their homes. Similarly, in Estate of Korf, we considered the appropriate accrual date in a case involving the plaintiffs’ purchase of a defective product, a grain silo. 917 F.2d at 486. Shortly after storing their first crop in the silo, the plaintiffs noted signs of serious spoilage in the silo-stored corn. The plaintiffs successfully sued the silo manufacturer for benefit of the bargain damages and sought prejudgment interest from the date of purchase. Id. at 482. We held that “money was wrongfully withheld from [plaintiffs] on the date they were fraudulently induced to undertake the obligation for the defective silo.” Id. at 486. Although the damages sought in Estate of Korf are different than in this case, our determination of when the wrong occurred is the same: the date the defective product was installed. Goodyear counters by arguing “a tort plaintiff who obtains damages solely for [] repair costs is entitled to prejudgment interest for those costs from the date -46- on which those costs were incurred.” (Goodyear Op. Br. at 12). Goodyear supports this contention by drawing on In re Oil Spill by the Amoco Cadiz Off the Coast of France on March 16, 1978, 954 F.2d 1279, 1331 (7th Cir. 1992), where the Seventh Circuit addressed the issue of prejudgment interest under federal and British prejudgment interest law. The Seventh Circuit stated “[v]ictims who finance their own cleanup lend to themselves; forced to devote money to a project not of their own choosing (money they otherwise could have lent out at the market rate of interest), they are entitled to compensation for the ‘hire’ of this capital.” Id. However, as the Homeowners accurately point out, the only issues on appeal in In re Oil Spill regarding prejudgment interest were the applicable interest rate and whether it was to be compounded, not the determination of the accrual date. Moreover, no matter the lure of the Seventh Circuit’s discussion regarding prejudgment interest in In re Oil Spill, sitting in diversity, we recognize the supremacy of Colorado law on this issue, and we are bound to apply it regardless of our opinions as to the wisdom or fairness of that law. Goodyear further argues that the Homeowners are not entitled to prejudgment interest from the date of installation because they did not, and could not, have a claim for repair costs then because such a claim would have been for future losses, citing Curragh Queensland Mining Ltd. v. Dresser Indus., Inc., 55 -47- P.3d 235 (Colo. Ct. App. 2002). We think Curragh is distinguishable. In Curragh, the Colorado Court of Appeals addressed the issue of prejudgment interest in the context of a buyer’s warranty claim for repairs. Id. at 242. The court noted that the buyer’s claim for approximately $12 million in costs to correct the defects in a product (referred to by the court as “true fix” damages) included $3.4 million in lost future profits. Id. at 241. The court concluded, “because the jury’s award of ‘true fix’ damages were based on the [b]uyer’s anticipated, rather than past, expenditures, it could not be a basis for awarding prejudgment interest.” Id. at 242 (emphasis supplied). The court remanded the case for an award of prejudgment interest on past repair costs, but not the “true fix” damages. Id. In this case, we have no lost profits mixed in with the damage awards which represent compensation for past injury. That the Colorado Court of Appeals was concerned with the timing of the damages is evident by its citation to James v. Coors Brewing Co., 73 F. Supp. 2d 1250, 1257 (D. Colo. 1997). The court in Coors Brewing dealt with the issue of prejudgment interest in the context of an employee who was awarded lost wages, both past and future. The Coors Brewing court granted prejudgment interest on the amount of wages the employee lost before trial, but denied prejudgment interest for the portion of the jury award that represented future wages the employee would not earn. Id. at 1257-58. Here, -48- Homeowners sought damages to remedy their past, not future, injury arising from the defective product. Moreover, to the extent Curragh could be construed to support Goodyear’s proposition, it is not in step with other Colorado cases. See, e.g., Coleman, 767 P.2d at 764; Ferrellgas, 961 P.2d at 514 (insurer, in a subrogation action, was entitled to prejudgement interest from the date house was destroyed by a gas explosion, not the date when the insurer paid the insured); Isbill Assocs., Inc. v. City & County of Denver, 666 P.2d 1117, 1122 (Colo. Ct. App. 1983) (owner of technical drawings was entitled to prejudgment interest from the date of a flooding accident which damaged the drawings, not from the date the drawings were replaced). Goodyear also emphasizes that prejudgment interest accrues at different times for different types of damages. Relying on Pegasus Helicopters, Goodyear maintains that the repair and replacement costs incurred by the Homeowners are akin to consequential damages and thus prejudgment interest is not allowed until the Homeowners incurred these costs. While Goodyear properly points out that prejudgment interest accrues at different times for different types of damages, the damages the Homeowners sought here, i.e., the cost to repair and replace their defective Entran II hose, were not contingent upon an incident occurring in the future. Rather, they were the remedy to fix damages arising out of the installation of a defective product and the failure to warn, and the Homeowners had a right to -49- have the product repaired or replaced from the moment of installation. Last, Goodyear’s alternative argument that prejudgment interest could not accrue before the Homeowners’ tort claims accrued for the purposes of the statute of limitations is unavailing. “The date when a claim accrues for statute of limitations purposes is independent from the date of the wrongful withholding for the purpose of awarding interest.” Eads v. Dearing, 874 P.2d 474, 478 (Colo. Ct. App. 1993). And, although the dates may be the same, they need not be. Id.; Porter Const. Serv., Inc. v. Ehrhardt, Keefe, Steiner, & Hottman, P.C., — P.3d —, 2005 WL 2046223  (Colo. Ct. App. 2005). Here, the wrongs giving rise to the Homeowners’ damages occurred when the Entran II was installed in their respective homes, well before the statute of limitations began to run. Accordingly, because § 5-12-102 is to be liberally construed to permit the recovery of prejudgment interest, Mesa Sand & Gravel, 776 P.2d at 365, for the purposes of calculating prejudgment interest, we give effect to the date of the wrong, not the date when statute of limitation began to accrue. We therefore hold that the district court did not err in awarding prejudgment interest from the time Entran II was installed in the Homeowners’ respective homes. We remand, however, for a recalculation of prejudgment interest as to the Holzwarths and Sutterley/Kilgore.