Court Opinion

ID: 4174126
Source: CourtListenerOpinion
Date Created: 2017-06-02 17:11:33.274239+00
Date Added: 2024-06-11T09:27:37.949392
License: Public Domain

COLORADO COURT OF APPEALS                                         2017COA64

Court of Appeals No. 15CA1030
Adams County District Court No. 10CV2032
Honorable C. Scott Crabtree, Judge

Taylor Morrison of Colorado, Inc., f/k/a Morrison Homes of Colorado, Inc.,

Plaintiff-Appellant and Cross-Appellee,

v.

Terracon Consultants, Inc.,

Defendant-Appellee and Cross-Appellant.

            JUDGMENT AFFIRMED IN PART, REVERSED IN PART,
                AND CASE REMANDED WITH DIRECTIONS

                                  Division V
                      Opinion by JUDGE LICHTENSTEIN
                       Román and Freyre, JJ., concur

                           Announced May 18, 2017

Snell & Wilmer L.L.P., Michael E. Lindsay, Jessica E. Yates, Bethany Gorlin,
Denver, Colorado, for Plaintiff-Appellant and Cross-Appellee

McDowell, Rice, Smith, & Buchanan, P.C., Thomas R. Buchanan, Jason L.
Buchanan, Linda C. McFee, Kansas City, Missouri, for Defendant-Appellee and
Cross-Appellant
¶1    This case requires us to address for the first time how a trial

 court should adjust a jury verdict awarding damages for breach of

 contract when there is both a setoff for the amount recovered from

 other liable parties and a contractual limitation on a defendant’s

 liability.1 We conclude the correct approach is to first apply the

 setoff against the jury verdict and then apply the contractual

 limitation against this reduced amount.

¶2    We therefore reverse the judgment as to the final award, and

 remand with directions. In all other respects the judgment and

 orders of the trial court are affirmed.

                             I.    Background

¶3    Plaintiff, Taylor Morrison of Colorado, Inc. (Taylor), appeals the

 judgment entered following a jury trial on a breach of contract

 theory against defendant Terracon Consultants, Inc. (Terracon).

¶4    Taylor was the developer of a residential subdivision known as

 Homestead Hills. In 2004, Taylor contracted with Terracon to

 provide geotechnical engineering and construction materials testing

 services for the development of the subdivision. Through two

 1 We are using the term “setoff” in the broad sense to describe a
 reduction from an amount otherwise owed.
                                    1
 contracts, Taylor and Terracon agreed that Terracon was

 responsible for testing the soil for compliance with project

 specifications and building codes. Taylor and Terracon further

 agreed to a contractual limitation on liability (Limitation). The

 Limitation capped Terracon’s total aggregate liability to Taylor at

 $550,000 for any and all damages or expenses arising out of its

 services or the contract.

¶5    By 2010, many of the homeowners notified Taylor about

 cracks in the drywall of their houses. Taylor investigated the

 complaints and then sued Terracon and other contractors for

 damages relating to those defects.

¶6    The court rejected Taylor’s pretrial arguments that the

 $550,000 Limitation was either invalid or inapplicable to the

 action.2 The court then granted Terracon’s motion to dismiss it as a

 defendant after authorizing Terracon to deposit $550,000 into the

 court’s registry, rendering Taylor’s claims moot.

 2 Taylor raised three challenges to the $550,000 cap on liability: (1)
 the Homeowner’s Protection Act of 2007 (HPA) invalidated the
 Limitation; (2) Terracon’s willful and wanton conduct is excluded
 from the Limitation; and (3) any payments from Terracon’s
 Commercial General Liability (CGL) policy are excluded from the
 Limitation.
                                    2
¶7     Taylor proceeded to trial against the other contractors. One of

  these other contractors was Bemas Construction, which performed

  site grading, including overlot and subexcavation work. The jury

  returned a verdict in Bemas’ favor.

¶8     Taylor ultimately recovered $592,500 through a settlement

  with the remaining contractors.

¶9     Taylor appealed the trial court’s dismissal of Terracon as a

  defendant. In Taylor Morrison of Colo., Inc. v. Bemas Constr., Inc.,

  2014 COA 10 (Taylor I), a division of this court remanded the case

  to the trial court to determine if Taylor should have been permitted

  to introduce evidence of Terracon’s willful and wanton conduct to

  overcome the contract’s Limitation clause, and, if so, to order a new

  trial against Terracon.3

¶ 10   On remand, the trial court considered the issue and ordered a

  new trial on Taylor’s breach of contract claim against Terracon.

  Although the court allowed evidence of willful and wanton conduct,

  it excluded opinion testimony from Taylor’s experts that

  3The division also held that the HPA could not constitutionally be
  applied to retroactively invalidate the Limitation clauses in the
  contracts between Taylor and Terracon, as such application would
  be impermissibly retrospective. Taylor Morrison of Colo., Inc. v.
  Bemas Constr., Inc., 2014 COA 10, ¶¶ 15-31.
                                    3
  characterized Terracon’s conduct as “willful and wanton.” The jury

  awarded Taylor $9,586,056 in damages, but also found that

  Terracon’s conduct was not willful and wanton.

¶ 11   After the court subsequently reviewed the parties’ extensive

  post-trial briefing on damages, it entered a final judgment of zero

  dollars. It arrived at this figure by first concluding that the

  $550,000 Limitation includes costs and prejudgment interest. It

  then concluded that the Limitation must be applied to reduce the

  jury’s $9,586,056 damages award to $550,000. Finally, it deducted

  the $592,500 settlement (received from the other liable parties) to

  arrive at zero dollars.

¶ 12   The court found that neither party prevailed for the purposes

  of awarding statutory costs. It also concluded that neither

  Terracon’s deposit of the $550,000 into the court registry nor its e-

  mail to Taylor addressing a mutual dismissal constituted a

  statutory “offer of settlement” that would have allowed Terracon an

  award of actual costs and fees under section 13-17-202(1)(a)(II),

  C.R.S. 2016.

¶ 13   Taylor now appeals and Terracon cross-appeals.

                                     4
                            II.   Taylor’s Appeal

              A.    Prior Challenges to the $550,000 Limitation

¶ 14   As an initial matter, Taylor reasserts arguments it made in the

  2012 litigation that challenged the validity of the Limitation under

  the Homeowner’s Protection Act of 2007 (HPA) as well as its

  applicability to any payments Terracon received from its

  Commercial General Liability (CGL) insurer. For the reasons stated

  below, we decline to address them.

¶ 15   Taylor first requests that we revisit Taylor I, which held that

  the HPA could not be retroactively applied to invalidate the

  Limitation because such application would be unconstitutionally

  retrospective.4

¶ 16   True, a division of this court may review another division’s

  ruling in the same case where “the previous decision is no longer

  sound because of changed conditions or law, or legal or factual

  error, or if the prior decision would result in manifest injustice.”

  4 The HPA, enacted in 2007, states that, “[i]n order to preserve
  Colorado residential property owners’ legal rights and remedies, in
  any civil action . . . , any express waiver of, or limitation on, the
  legal rights, remedies, or damages provided by the ‘Construction
  Defect Action Reform Act’ . . . [is] void as against public policy.”
  § 13-20-806(7)(a), C.R.S. 2016 (footnotes omitted).
                                     5
  Core-Mark Midcontinent, Inc. v. Sonitrol Corp., 2012 COA 120, ¶ 10

  (quoting Vashone-Caruso v. Suthers, 29 P.3d 339, 342 (Colo. App.

  2001)).

¶ 17    After considering Taylor’s arguments, however, we conclude

  that none of these extraordinary circumstances exist here. Indeed,

  the division in Taylor I considered, and ultimately rejected, the

  arguments that Taylor repeats in this appeal. We are persuaded

  that the ruling in Taylor I correctly stated the law, thus we decline

  to revisit it.

¶ 18    Taylor next argues that the Limitation is not applicable to the

  extent damages are paid under Terracon’s CGL policy. Thus, Taylor

  contends that the trial court erred when it rejected Taylor’s request

  to enter a judgment allowing it to pursue Terracon’s CGL insurer.

¶ 19    But, as the trial court observed, it had already ruled on the

  CGL insurance issue in the 2012 litigation.5 Taylor did not then

  request the court to reconsider its ruling, and Taylor did not appeal

  5The trial court reviewed the CGL policy and found there was no
  coverage for professional services, the type of services Terracon had
  provided to Taylor. Therefore it rejected Taylor’s request to pursue
  Terracon’s CGL insurer.
                                     6
  it. We agree with the trial court that Taylor had abandoned the

  issue.

¶ 20   In the 2012 litigation, Taylor raised the CGL insurance issue

  as one of two bases for objecting to Terracon’s dismissal as a

  defendant upon its $550,000 deposit into the court registry.6

  Taylor appealed the court’s dismissal of Terracon, but only pursued

  one of its two objections to the dismissal: that the $550,000

  Limitation would not apply to Terracon’s alleged willful and wanton

  conduct. See Taylor I, ¶¶ 8, 35-38.

¶ 21   Taylor could have appealed the CGL insurance ruling in Taylor

  I, but did not do so. Thus, Taylor abandoned it. See Giampapa v.

  Am. Family Mut. Ins. Co., 64 P.3d 230, 245-46 (Colo. 2003) (finding

  appellant waived a damages cap issue in part because the appellant

  did not raise the issue in its previous appeal); Fed. Lumber Co. v.

  Hanley, 33 Colo. App. 18, 21, 515 P.2d 480, 482 (1973) (declining

  to consider an appellate challenge to the denial of a motion when an

  appeal had previously been taken from the same denial of that

  motion); In re Marriage of Tognoni, 313 P.3d 655, 658 (Colo. App.

  6 Taylor had argued that it would be premature to enforce the
  $550,000 cap because the Limitation only applied to the extent that
  the CGL policy did not provide coverage.
                                    7
  2011) (finding no error where court declined to revisit issue when

  husband had failed to appeal the previous order addressing the

  same issue); see also Crocker v. Piedmont Aviation, Inc., 49 F.3d
735, 739 (D.C. Cir. 1995) (“We have several times said that

  appellate courts are precluded from revisiting . . . those prior

  rulings of the trial court that could have been but were not

  challenged on an earlier appeal.”).

                 B.    Contractual Limitation and Setoff

¶ 22   Taylor contends that the trial court erroneously deducted the

  $592,500 setoff from Terracon’s contractual $550,000 limit on

  liability instead of deducting it from the $9,586,056 jury damages

  verdict. We agree.

¶ 23   The proper measure of damages presents a question of law

  subject to de novo review. Colo. Ins. Guar. Ass’n v. Sunstate Equip.

  Co., LLC, 2016 COA 64, ¶ 128; see Ferrelgas, Inc. v. Yeiser, 247
P.3d 1022, 1026-27 (Colo. 2011) (considering the propriety of a

  setoff under de novo standard of review).

¶ 24   No case in Colorado has addressed how a trial court should

  adjust a jury verdict awarding damages for breach of contract when

                                     8
  there is both a setoff for the amount recovered from other liable

  parties and a contractual limitation on a defendant’s liability.

¶ 25   We conclude that a court must first apply the setoff against

  the jury verdict to ascertain the allowable amount of recovery, and

  then apply any contractual limitation against this reduced amount.

  This approach prevents double recovery by the plaintiff, preserves

  the parties’ right to have the terms of a contract enforced, and best

  gives effect to the jury verdict.

¶ 26   We begin by acknowledging that a jury verdict must be given

  effect if possible. See Tyler v. Dist. Court, 200 Colo. 254, 256, 613
P.2d 899, 901 (1980). Nonetheless, a court must adjust a jury’s

  damages verdict to ensure that a plaintiff’s recovery does not exceed

  the amount of recovery permitted under the law.

¶ 27   As pertinent here, a plaintiff may not receive double recovery

  for the same losses arising from the same injury. Lexton-Ancira

  Real Estate Fund, 1972 v. Heller, 826 P.2d 819, 823 (Colo. 1992);

  Quist v. Specialties Supply Co., Inc., 12 P.3d 863, 866 (Colo. App.

  2000). Thus, in order to prevent double recovery, a court must set

  off a loss by the amount of compensation a party already received

                                      9
  from another liable party for the same injury. See Andrews v.

  Picard, 199 P.3d 6, 11 (Colo. App. 2007).

¶ 28   Once the court determines the amount of a plaintiff’s allowable

  recovery, then any bargained-for damages cap comes into play. See

  Alhilo v. Kliem, 2016 COA 142, ¶ 71 (holding, in a comparative

  negligence tort case, that the amount of proper recovery for a loss

  must be ascertained before addressing a statutory damages cap).

¶ 29   Applying the setoff before any contracted damages cap ensures

  that that the amount of damages does not exceed the recovery

  allowable under the law. It also ensures that the parties’

  bargained-for agreement will be enforced. Core-Mark Midcontinent,

  ¶ 13 (a limitation of liability clause is generally enforceable because

  it represents the parties’ bargained-for agreement regarding the

  allocation of risks and costs in the event of a breach or other failure

  of the contemplated transaction).

¶ 30   But here, the trial court applied the $550,000 contractual

  limitation on damages before deducting the $592,500 setoff for the

  amounts received from other parties, resulting in a final judgment

  of zero dollars for Taylor. This result effectively rendered the jury’s

  damages finding meaningless. See Alhilo, ¶ 73 (citing Atkins v.

                                     10
  Strayhorn, 273 Cal. Rptr. 231, 238 n.8 (Cal. Ct. App. 1990)).

  Neither the terms of the contract nor the prohibition on double

  recovery requires this result.

¶ 31   Had the trial court first applied the setoff against the jury

  verdict and then applied the contractual limitation, the court would

  have applied the $592,500 setoff against the $9,586,056 jury

  damages verdict, resulting in new total of $8,993,556. The trial

  court then would have capped Terracon’s liability according to the

  Limitation, and reached a final judgment of $550,000 for Taylor.

¶ 32   This approach prevents double recovery because Taylor’s

  recovery from Terracon and the other parties did not exceed the loss

  actually sustained (some nine and one half million dollars). This

  approach also preserves Terracon’s rights to enforce the terms of

  the contract because Terracon would not have paid more than the

  Limitation agreed upon in the contract. And it is more consistent

  with the jury verdict because it avoids an even greater disparity

  between the actual loss and the recovery. See id. at ¶ 74 (The

  plaintiff “is already receiving an amount less than the jury

  determined he was damaged.” (quoting Atkins, 273 Cal. Rptr. at

  238)).

                                    11
¶ 33   We are not persuaded by Terracon’s argument that Lira v.

  Davis, 832 P.2d 240 (Colo. 1992), settled the issue of whether

  double recovery refers to the jury verdict or the final judgment, and

  therefore also settled whether to apply setoffs to jury verdicts or

  final judgments. Lira involved statutory interpretation of an

  amendment to section 13-21-102(1)(a), C.R.S. 2016, which was part

  of the tort reform legislation capping exemplary damages at one-to-

  one with compensatory damages. Id. at 245. There, the supreme

  court compared the statutory phrases “damages assessed” and

  “actual damages awarded” and concluded that by using these

  distinct phrases, the legislature intended that different meanings

  attach to them. Id. It held, for purposes of that statute, that

  “damages assessed” is synonymous with the amount of

  compensatory damages determined by the jury and “damages

  awarded” with the reduced amount of compensatory damages. Id.

¶ 34   Lira’s holding is inapposite because it was limited to the

  language of the exemplary damages statute in the context of tort

  reform legislation. Further, Lira never analyzed or even mentioned

  the prohibition on double recovery. Thus, it would be inappropriate

  to extend Lira’s holding on statutory exemplary damages in tort

                                    12
  cases to this breach of contract case. This is especially true when

  the practical effect would result in damages judgments that

  insufficiently compensate plaintiffs for losses sustained while

  relieving defendants of their bargained-for liability.

¶ 35      For these reasons, we reverse the judgment as to damages and

  remand with instructions to apply the setoff to the jury damages

  verdict before applying the contractual limitation and enter a final

  judgment of $550,000 for Taylor.

                           C.        Costs and Interest

¶ 36      Taylor next contends that the trial court erred when it

  concluded that the $550,000 Limitation, by its terms, includes

  statutory costs and prejudgment interest. We perceive no error.

                                1.     Preservation

¶ 37      The parties dispute whether Taylor sufficiently preserved this

  claim. However, we need not resolve this dispute because the trial

  court issued a thorough order addressing this claim, and we

  conclude no error occurred. See People v. Vasseur, 2016 COA 107,

  ¶ 12.

                                          13
                         2.    Standard of Review

¶ 38   We review a trial court’s interpretation of a contract de novo.

  Nat’l Propane Corp. v. Miller, 18 P.3d 782, 786 (Colo. App. 2000).

¶ 39   The Limitation reads:

             Client and Consultant have evaluated the risks
             and rewards associated with this project,
             including Consultant’s fee relative to the risks
             assumed, and agree to allocate certain of the
             risks so, to the fullest extent permitted by law,
             the total aggregate liability of Consultant (and
             its related corporations and employees) to
             Client and third parties granted reliance is
             limited to the greater of [$550,000] or its fee, for
             any and all injuries, damages, claims, losses,
             or expenses (including attorney and expert fees)
             arising out of Consultant’s services or this
             agreement, regardless of cause(s) or the theory
             of liability, including negligence, indemnity, or
             other recovery.

  (Emphasis added.)

                                 3.   Costs

¶ 40   Taylor argues that because the Limitation is silent as to

  statutory costs, the parties intended to exclude them from the

  agreed-upon cap. We are not persuaded.

¶ 41   The pertinent language in the contract states that the

  Limitation applies to “any and all” expenses “including attorney and

  expert fees.”

                                      14
¶ 42   Section 13-16-122, C.R.S. 2016, identifies statutory costs

  available in civil actions. It specifically lists among the items

  includable as statutory costs “attorney fees” and “charges for expert

  witnesses.” § 13-16-122(1)(e), (h). Because the Limitation identifies

  attorney fees and expert fees as examples of “any and all . . .

  expenses,” we interpret it to include statutory costs.

¶ 43   Taylor nonetheless argues that the Limitation applies only to

  cap the remedial costs resulting from Terracon’s defective services.

  We disagree. The Limitation caps expenses “arising out of

  Consultant’s services or this agreement.” (Emphasis added.) Thus,

  the Limitation’s language covers costs associated with interpreting

  and enforcing the contract — i.e. the costs of litigation, which are

  statutory costs.

¶ 44   We also are not persuaded by Taylor’s argument that the

  phrase “certain of the risks” indicates that the Limitation did not

  cover statutory costs. As explained above, by including “any and all

  . . . expenses,” the parties bargained to include statutory costs as

  part of the “certain” risks that the Limitation covers.

¶ 45   And we disagree with Taylor’s argument that Heil Valley

  Ranch, Inc. v. Simkin, 784 P.2d 781 (Colo. 1989), requires us to

                                     15
  strictly construe the Limitation against Terracon. Simkin did not

  address a limitation clause, but instead addressed an exculpatory

  clause that released the defendant for all liability from any claims

  based on negligence and breach of warranty. Id. at 783. Nor are we

  persuaded by Taylor’s contention that including statutory costs in

  the Limitation would convert it into an unbargained-for exculpatory

  agreement. While the clause in this case limited Terracon’s total

  liability, it did not act as a waiver of any claim that Taylor chose to

  bring. See, e.g., U.S. Fire Ins. Co., v. Sonitrol Management Corp.,

  192 P.3d 543, 548 (Colo. App. 2008) (acknowledging limitation of

  liability clauses, liquidated damages clauses, and exculpatory

  clauses as distinct categories).

¶ 46   Finally, because Taylor cannot recover statutory costs over

  and above the $550,000 cap, we need not address its challenge to

  the court’s finding that it was not a prevailing party for purposes of

  awarding such costs.

¶ 47   We affirm the trial court’s order denying the award of costs to

  Taylor on the basis that the $550,000 Limitation included statutory

  costs.

                                     16
              4.   Prejudgment and Postjudgment Interest

¶ 48   Taylor also argues the trial court erred when it ruled that the

  Limitation does not include prejudgment interest within its cap on

  liability. Again, we disagree.

¶ 49   Prejudgment interest is an element of damages; its primary

  purpose is to compensate the plaintiff. AE, Inc. v. Goodyear Tire &

  Rubber Co., 168 P.3d 507, 512 (Colo. 2007) (citing Farmers

  Reservoir & Irrigation Co. v. City of Golden, 113 P.3d 119, 132-33

  (Colo. 2005)).

¶ 50   The Limitation caps Terracon’s liability for “any and all

  injuries, damages, claims, losses, or expenses.” (Emphasis added.)

  Because prejudgment interest is a form of damages, and because

  the Limitation includes language that it applies to “damages,” we

  conclude that the Limitation covers prejudgment interest.

¶ 51   Finally, Taylor asserts that postjudgment interest is not

  covered by the Limitation. We agree.

¶ 52   Distinct from prejudgment interest, postjudgment interest is

  not an element of compensatory damages. See Allstate Ins. Co. v.

  Starke, 797 P.2d 14, 21 (Colo. 1990) (recognizing there is a

  substantive difference between prejudgment interest — which is an

                                   17
  element of compensatory damages — and postjudgment interest —

  which is not).

¶ 53   Taylor raised, but the trial court did not rule on, the issue of

  postjudgment interest. However, our decision reverses the

  judgment of the trial court, and directs it to enter a final judgment

  of $550,000 for Taylor. Therefore, we direct the trial court on

  remand to determine the proper postjudgment interest payable on

  that amount. See C.A.R. 37; In re Marriage of Gutfreund, 148 P.3d
136, 142 (Colo. 2006); see also Thompson v. United Sec. All., Inc.,

  2016 COA 128, ¶ 35 (citing § 5–12–106(1), C.R.S. 2016).

                         D.    Expert Testimony

¶ 54   Taylor appeals the trial court’s exclusion of expert testimony

  concerning willful and wanton conduct. Taylor argues this error

  requires a new trial. We disagree.

                        1.    Standard of Review

¶ 55   A trial court has broad latitude to determine the admissibility

  of evidence. Davis v. People, 2013 CO 57, ¶ 13. We review such

  decisions for an abuse of discretion. Quintana v. City of

  Westminster, 8 P.3d 527, 530 (Colo. App. 2007). A trial court

                                    18
  abuses its discretion if its decision is manifestly unreasonable,

  arbitrary, or unfair. Davis, ¶ 13.

                              2.   Analysis

¶ 56   Under CRE 704, witness testimony “[o]therwise admissible is

  not objectionable because it embraces an ultimate issue to be

  decided by the trier of fact.” However, CRE 704 does not allow a

  witness to “tell the jury what result to reach.” People v. Gaffney,

  769 P.2d 1081, 1087 (Colo. 1989) (quoting Fed. R. Evid. 704

  advisory committee’s note). Nor does it allow a witness to testify

  about whether a particular legal standard has been met. People v.

  Collins, 730 P.2d 293, 306 (Colo. 1986).

¶ 57   Here, the trial court allowed Taylor’s experts to present their

  opinions concerning the quality of Terracon’s performance under

  the contract for engineering services. The experts’ pretrial reports,

  however, opined that Terracon acted willfully and wantonly. Yet,

  during depositions, all of the experts admitted that “willful and

  wanton” is not an engineering concept. Despite previous experience

  as expert witnesses in engineering, none had ever offered an

  opinion about willful and wanton conduct before this case.

                                       19
¶ 58   Based on these facts, the trial court issued a pretrial order

  excluding testimony from the experts that characterized Terracon’s

  conduct as willful and wanton. The trial court permitted the

  experts “to identify the acts or omissions which they claim breached

  the contract or fell below the standard adopted in Terracon’s

  contract” but did not to permit the experts to “characterize those

  acts or omissions as willful and wanton conduct. . . . [o]r

  fraudulently, or with wrongful intent.” Again at trial, the court

  clearly stated: “I’m not going to preclude any party from eliciting

  what they claim are these, sort of, egregious acts.” But the court

  stated that one of the experts “expressed his opinion that it’s willful

  and wanton conduct. I think he can say anything short of that.”

¶ 59   During the trial, Taylor’s experts provided detailed testimony

  describing how Terracon’s supervision of technicians, soil testing,

  and review of test results failed to meet the relevant standards of

  care. The experts’ testimony included opinions that Terracon’s

  performance “doesn’t even come close to what should have been

  done in order to provide assurances,” “was a complete disregard of

  their responsibility,” and was “as bad as I’ve seen anywhere, by far

  in – in 40 years of practice.”

                                    20
¶ 60   These experts were allowed to discuss all relevant facts and

  opinions on Terracon’s performance using characterizations within

  their expertise, even if they were not permitted to testify whether

  this conduct met the legal standard of “willful and wanton

  conduct.” See Collins, 730 P.2d at 306. Thus, on this record, we

  conclude the trial court’s decision was not manifestly arbitrary,

  unreasonable, or unfair. The trial court’s decision appropriately

  prevented Taylor’s experts from testifying about legal concepts

  outside their expertise and violating CRE 704 by testifying about

  whether a legal standard was met.

                       III.   Terracon’s Cross-Appeal

¶ 61   Terracon raises three issues on cross-appeal. Based on our

  disposition of this case, we need not address Terracon’s two issues

  raised conditionally in the event the case was remanded for a third

  trial. However, we do consider Terracon’s third issue: whether the

  trial court should have awarded Terracon costs under Colorado’s

  settlement statute. We affirm the trial court’s order concluding that

  Terracon did not make an offer of settlement as contemplated by

  the statute, and therefore it was not entitled to costs.

                                    21
¶ 62   Terracon claims that the trial court erred in refusing to award

  it costs under Colorado’s settlement statute. § 13-17-202. As

  pertinent here, this statute provides:

             If the defendant serves an offer of settlement in
             writing at any time more than fourteen days
             before the commencement of the trial that is
             rejected by the plaintiff, and the plaintiff does
             not recover a final judgment in excess of the
             amount offered, then the defendant shall be
             awarded actual costs accruing after the offer of
             settlement to be paid by the plaintiff.

  § 13-17-202(1)(a)(II).

¶ 63   We review issues of statutory construction and application de

  novo. Strunk v. Goldberg, 258 P.3d 334, 336 (Colo. App. 2011).

¶ 64   Terracon claims that it made two settlement offers. We will

  examine each in turn.

¶ 65   First, Terracon’s argues that its deposit of $550,000 into the

  court registry, pursuant to C.R.C.P. 67(a), constituted a settlement

  offer. The trial court rejected this argument, as do we. Terracon

  moved the court for dismissal on the basis that, as a matter of law,

  the maximum amount of its liability to Taylor was $550,000. But

  this was not an offer to Taylor, and Taylor did not have the option to

  reject it. Because the settlement statute requires both an offer and

                                    22
  rejection, Terracon’s actions did not trigger the statute, and

  Terracon is not entitled to costs.

¶ 66   Terracon also argues that an e-mail on December 10, 2014,

  from Terracon’s counsel to Taylor’s counsel constituted a settlement

  offer. The e-mail stated as follows:

              Our client would agree to a mutual dismissal
              with prejudice, with full releases, and each
              side to pay their own costs and fees, provided
              it is accepted promptly.

              Aside from any other exposure Taylor Morrison
              might have, we believe Terracon will be the
              prevailing party when a willful and wanton
              finding does not occur and Terracon’s
              recoverable costs will be easily twice the
              amount Taylor Morrison was required to pay to
              Bemas.

¶ 67   The trial court ruled that Terracon’s alleged offer of settlement

  in this e-mail did not comply with section 13-17-202 because it

  contained nonmonetary conditions — such as an agreement for

  “mutual dismissal” and “full releases” — which extended the offer

  beyond the claims at issue.7 Under the circumstances of this case,

  we agree.

¶ 68   The purpose of section 13-17-202 is to encourage the

  7The court also concluded that the settlement offer’s requirement of
  a “prompt” response did not comport with the statute.
                                       23
  settlement of litigation by encouraging reasonable settlement offers

  by all parties. Strunk, 258 P.3d at 336. However, provisions

  included in an offer of settlement that “extend[] the scope of the

  offer beyond the claims at issue” are contrary to the purposes of

  section 13-17-202. Id. (quoting Martin v. Minnard, 862 P.2d 1014,

  1019 (Colo. App. 1993)).

¶ 69   If a settlement offer injects terms beyond the settlement of

  existing claims, it does not fall under the statute but constitutes a

  settlement agreement based upon contract principles. Martin, 862
P.2d at 1019. Such an offer will not allow the offering party to

  recover costs under the statute. Id.

¶ 70   Here, the only claim at issue was Taylor’s breach of contract

  claim. The e-mail referenced “full releases” without limiting the

  releases to this claim. “Full releases” could include future claims

  arising from any other “exposure Taylor might have” from other

  litigants — a possibility which the e-mail obliquely referenced. See

  URS Grp., Inc. v. Tetra Tech FW, Inc., 181 P.3d 380, 392 (Colo. App.

  2008) (“[B]y requiring a release of all ‘future claims’ related to the

  project, TTFW imposed a nonmonetary condition that took its offer

  outside the scope of section 13-17-202.”).

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¶ 71   Further, by referencing a “mutual dismissal,” the full release

  also could apply to the dismissal of any possible counterclaims that

  Terracon had not yet brought, again injecting terms beyond the

  settlement of the breach of contract claim. See Martin, 862 P.2d at

  1019; see also Dillen v. HealthOne, L.L.C., 108 P.3d 297, 303 (Colo.

  App. 2004) (Dailey, J., specially concurring) (A party’s offer of

  settlement under section 13-17-102 should include enough

  information “so that the other party is properly alerted to the

  consequences of rejecting the offer.”).

¶ 72   Accordingly, we affirm the trial court’s order denying the

  award of costs to Terracon.

                                IV.   Conclusion

¶ 73   The judgment of the trial court is reversed as to the final

  award and remanded with instructions to apply the setoff to the

  jury damages verdict before applying the contractual limitation, and

  to determine the proper postjudgment interest payable on that

  amount. In all other respects the judgment and orders of the trial

  court are affirmed.

       JUDGE ROMÁN and JUDGE FREYRE concur.

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