Court Opinion

ID: 156723
Source: CourtListenerOpinion
Date Created: 2010-08-14 04:45:06+00
Date Added: 2024-06-11T09:41:41.852567
License: Public Domain

F I L E D
                                                                  United States Court of Appeals
                                                                          Tenth Circuit
                     UNITED STATES COURT OF APPEALS
                                                                          AUG 6 1998
                                 TENTH CIRCUIT
                                                                     PATRICK FISHER
                                                                              Clerk

 AUDIOTEXT COMMUNICATIONS
 NETWORK, INC.; CONNECTIONS
 U.S.A., INC.,
                                                  Nos. 97-3050, 97-3053
          Plaintiffs-Counter-Defendants-       (D.C. Civ. No. 94-2395-GTV)
          Appellants/Cross-Appellees,                    (D. Kan.)
 v.

 U.S. TELECOM, INC., doing business
 as Sprint Telemedia, Inc., formerly
 known as Sprint Gateways,
       Defendant-Counter-Claimant-
       Appellee/Cross-Appellant.

                            ORDER AND JUDGMENT *

Before TACHA, McWILLIAMS, and KELLY, Circuit Judges.

      Plaintiffs-Appellants Audiotext Communications Network, Inc. (Audiotext)

and Connections U.S.A., Inc. (Connections) appeal after a jury verdict in their

favor, alleging several errors in both the judgment and in the court’s award of

attorney’s fees. Defendant-Appellant U.S. Telecom, Inc. (Sprint) cross-appeals

from the judgment against it. Our jurisdiction arises under 28 U.S.C. § 1291, and

      *
        This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. This court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
we affirm as to everything but attorney’s fees.

      Audiotext and Connections are known, in telecommunications argot, as

information providers (IPs). They offer interactive messages and live operators,

on a pay-per-call basis, via long distance 900 numbers. Audiotext and

Connections offered sports information and psychic, astrological, dating, and

pornographic programs. The consumer placing calls is known as the end user.

Audiotext and Connections each entered into two consecutive information

provider contracts (IP contracts) with Sprint for long-distance pay-per-call

service. Sprint, an interexchange carrier (IXC), was obliged under the contracts

to carry Plaintiffs’ 900 calls over its long distance network, bill and collect

charges from the end users, and remit the monies to Plaintiffs. In return,

Plaintiffs paid Sprint transport and billing and collection fees. Over the duration

of the contracts, Plaintiffs paid Sprint more than $3,000,000 in service fees.

      Evidence presented at trial indicated Sprint induced Plaintiffs to enter into

the contracts by representing that it could supply 900-number coverage for the

whole country, except for insignificant rural pockets where Plaintiffs were not

advertising anyway. It became apparent during the course of the contracts,

however, that Sprint was not remitting payment to the IPs for a significant volume

of calls the IPs serviced. Further evidence showed large areas of unequal

access—areas in which AT&T had the ability to bill and collect for 900 calls but

                                          -2-
other carriers did not. In these areas Sprint needed to enter into a contract with

the local telephone company (LEC) and regional Bell operating company (RBOC)

in order to bill to and collect from the end user. When Sprint began offering 900

service in 1989, it had no billing agreements with any LEC or RBOC. During

1990 Sprint entered into billing contracts with only six of the 1200 to 1400 LECs

and RBOCs in the United States. Sprint created internal reports and maps of

unequal access areas, showing where it did and did not have the ability to bill and

collect for 900 calls. Although it could have opened up 900 access to its long

distance network only in areas in which it could bill for calls directly or had

contracted with a LEC and RBOC for billing services, Sprint deliberately opened

900 access to calls from the entire country.

      Connections entered into its first IP contract with Sprint in 1989, and

Audiotext followed in 1990. Although its inability to collect and bill for unequal

access calls was well-known to Sprint, it failed to inform the IPs of the problem.

      When Audiotext and Connections became aware of the substantial disparity

between the number of calls they serviced and the number Sprint paid them for,

they brought the problem to Sprint’s attention. Sprint responded with surprise

and assured Audiotext and Connections that the problem was not caused by any

deficiency on its part. When the problem persisted and Plaintiffs pursued their

complaints, Sprint gave a variety of excuses, transferred Plaintiffs’ accounts to

                                         -3-
other Sprint representatives, and released misleading reports about the non-equal

access issue.

      In July 1991, Audiotext installed equipment which allowed it to recognize

whether incoming 900 number calls were accompanied by complete billing

information, or ANI, which included the end user’s name and address. It became

immediately apparent Sprint was transporting a significant number of calls

unaccompanied by ANI. For each of these calls Sprint collected from Audiotext

its transport and billing fees but could not bill the end user, and so could not

remit to Audiotext its charge for the call. Audiotext set up its equipment to block

calls without complete ANI, and confronted Sprint with the problem. Sprint

admitted it was unable to bill in most non-equal access areas. Connections

independently discovered the non-equal access problem in September 1991.

Sprint withdrew from the 900 number business within the next month.

      A jury found Sprint had fraudulently induced and breached its IP contracts

with both Audiotext and Connections. The jury awarded compensatory damages

on all claims except Connections’ fraud claim. After a separate inquiry the jury

awarded Audiotext $15,000,000 in punitive damages, but the district court

reduced the amount to $2,222,368.20 pursuant to Fla. Stat. Ann. § 768.73 (West

1996). The court refused the jury’s request for permission to change its verdict to

award Connections compensatory fraud damages, and also denied Plaintiffs’

                                         -4-
request for prejudgment interest. The court later granted in part the Plaintiffs’

motion for attorney’s fees, but awarded only $401,280.00 of the requested

$1,618,294.49.

      Plaintiffs contend the district court erred in (1) refusing to allow the jury to

amend its verdict, (2) reducing the award of punitive damages, (3) denying

prejudgment interest under Kansas law, and (4) reducing the award of attorney’s

fees. In its cross-appeal, Sprint first raises several reasons why the district court

erred in denying its motion for judgment as a matter of law on Audiotext’s fraud

claim. Second, Sprint argues the court erred in failing to limit contract damages

as required under the terms of the IP contracts, and, third, erred in failing to

enforce an IP contract provision regarding chargebacks. Finally Sprint argues for

a new trial on the ground that the inappropriately admitted fraud evidence tainted

the contract verdict. The parties agree that in this diversity case Florida law

governs the tort claims and Kansas law controls the contract claims. Because

Sprint’s issues, if they have merit, would be dispositive, we address them first.

      We review de novo the denial of judgment as a matter of law. See Taylor

v. Cooper Tire and Rubber Co., 130 F.3d 1395, 1399 (10th Cir. 1997). Judgment

as a matter of law is appropriate “[i]f during a trial by jury a party has been fully

heard on an issue and there is no legally sufficient evidentiary basis for a

reasonable jury to find for that party on that issue.” Fed. R. Civ. P. 50(a)(1). In

                                          -5-
support of its contention that judgment as a matter of law should have been

granted against Audiotext’s fraud claim, Sprint argues first that the plain language

of the IP contracts precludes reliance on its precontractual misrepresentations.

Relying on the general rule that representations preceding or accompanying a

written contract are merged into the final written contract, Sprint argues its pre-

contract misrepresentations as to coverage could not be relied upon in light of this

contract language: Sprint “will use its best efforts to maximize coverage for

billing and collection by entering into billing and collection agreements with as

many LECs as possible.” XV Aplt. Exh. App. at 3802; XIX Aplt. Exh. App. at

4591. This clause, according to Sprint, clearly informed Audiotext that Sprint did

not have full billing and collection capability, because otherwise there would be

no need for Sprint to make further efforts to maximize billing coverage.

      A claim of fraud based on oral misrepresentations is barred if a later

contract adequately deals with the alleged misrepresentation. See Englezios v.

Batmasian, 593 So. 2d 1077, 1078 (Fla. Dist. Ct. App. 1992). Sprint’s

misrepresentations had to do with “coverage,” an ambiguous term that was never

clarified in the oral representations or defined in the parties’ contract. The

misrepresentations obscured Sprint’s extensive areas of non-equal access, which

were never addressed in the contract. Sprint’s contractual promise was to

“maximize coverage” by contracting with LECs. Because the contract neither

                                         -6-
defined coverage nor addressed non-equal access, it did not adequately deal with

the oral misrepresentations, and consequently did not bar the fraud claim based on

them.

        Sprint also points to the merger and integration clauses in the IP contracts,

which provide that the written contracts supersede all prior representations and

constitute the parties’ whole agreement. It is well settled in Florida that such

clauses will not bar evidence of fraud in the inducement of the contract. See

Nobles v. Citizens Mortgage Corp., 479 So. 2d 822 (Fla. Dist. Ct. App. 1985).

        Sprint’s next contention is that there was no evidence Audiotext’s first IP

contract was fraudulently induced, and that particular claim should not have been

submitted to the jury. Although the substantive fraud issues are governed by

Florida law, federal law determines whether the evidence is sufficient to submit

the case to a jury. See Taylor, 130 F.3d at 1399.

        Judgment as a matter of law is proper only when the evidence and all
        inferences from it, viewed in the light most favorable to the
        nonmoving party, is ‘so patently in favor of the moving party that a
        jury verdict in favor of the opposing party would be improper and
        would have to be set aside by the trial judge.’

Id. (quoting Peterson v. Hager, 724 F.2d 851, 853-54 (10th Cir.1984)). Sprint

argues that Mr. Gifford, Audiotext’s president at the time of its first IP contract

and the officer who executed the contract, did not testify at trial, and

consequently no evidence exists that Sprint misrepresented anything to him or

                                          -7-
omitted to tell him anything. Sprint’s argument turns on its further allegation that

Mr. Gifford was the only Audiotext representative involved in the first IP

agreement. But here it is mistaken. Sprint’s own employee, Diane Thomas

Bland, testified it was she who began Sprint’s business relationship with

Audiotext, and she dealt with Michael Pardes at Audiotext before the first IP

agreement. See XI Aplt. App. at 2546-48. She testified she made representations

about coverage to Mr. Pardes at that time. See id. The court did not err in

submitting this claim to the jury.

      Sprint’s next argument against Audiotext’s fraud claim is that the alleged

misrepresentations concern the heart of the parties’ agreement in the IP contracts,

and consequently Florida’s economic loss rule limits Audiotext to its rights under

the contracts. The Florida Supreme Court has held that a claim for fraud in the

inducement of a contract is an independent tort which is not barred by the

economic loss rule, and which may proceed alongside a claim for breach of the

contract. See HTP, Ltd. v. Lineas Aeras Costarricenses, S.A., 685 So. 2d 1238,

1240 (Fla. 1996).

      Fraud in the inducement presents a special situation where parties to
      a contract appear to negotiate freely—which normally would
      constitute grounds for invoking the economic loss doctrine—but
      where in fact the ability of one party to negotiate fair terms and make
      an informed decision is undermined by the other party’s fraudulent
      behavior. . . .

Id. (quoting Huron Tool & Engineering Co. v. Precision Consulting Servs., Inc.,

                                        -8-
532 N.W.2d 541, 545 (Mich. Ct. App. 1995). Sprint makes a further distinction:

if the substance of the alleged fraudulent misrepresentations is inseparable from

what is promised in the contract, an action for fraud is barred and the plaintiff

must rely on the promises for which he bargained. See Hotels of Key Largo, Inc.

v. RHI Hotels, Inc., 694 So. 2d 74, 78 (Fla. Dist. Ct. App.), review denied, 700

So. 2d 685 (Fla. 1997). Conversely, if the misrepresentations are distinct from

the promises in the contract, the fraud claim is not barred by the economic loss

rule. See HTP, 685 So. 2d at 1239. In our view this is merely another avenue to

arrive at our earlier conclusion: Sprint’s fraudulent misrepresentations were not

adequately addressed in the contract. Because the fraud is distinct from the

substance of the IP contracts, the claim was not barred by the economic loss

doctrine. See id. at 1239-40.

      Sprint argues Audiotext failed to prove fraud damages that are separate and

distinct from its contract damages. We review the district court’s decision on

whether the damage award was duplicative for clear error, because of the factual

nature of the inquiry. See Mason v. Oklahoma Turnpike Auth., 115 F.3d 1442,

1459 (10th Cir. 1997), appeal decided by Mason v. Oklahoma Turnpike Auth.,

124 F.3d 217 (10th Cir. 1997). “[I]t is firmly established that damages for fraud

may not be recovered when they merely duplicate those sustained as a result of a

concomitant breach of contract.” National Aircraft Servs., Inc. v. Aeroserv Int’l,

                                         -9-
Inc., 544 So. 2d 1063, 1065 (Fla. Dist. Ct. App. 1989). Audiotext’s contract

damages compensated it for service fees paid to Sprint in return for which Sprint

did not perform its obligations. Among these failures was the thirteen percent

deviation between the number of billable calls that reached Audiotext’s 900

programs and the number of calls Sprint actually billed. Although no unbilled

calls reached Audiotext after it began blocking calls without ANI, Audiotext

continued to receive a smaller volume of business than it would have had Sprint

not misrepresented its billing capacity. Audiotext’s fraud damages compensated

it for revenue lost because of this smaller volume of calls after blocking. The

district court made this distinction and ordered remittitur of fraud damages that

duplicated the contract recovery. The remaining fraud damages were properly

recovered. See Williams v. Peak Resorts Int’l Inc., 676 So. 2d 513, 516 (Fla.

Dist. Ct. App. 1996).

      Sprint next complains that the district court improperly held it had a duty to

disclose to Audiotext any material fact which Audiotext did not have an equal

opportunity to discover. It argues the proper standard is that it need only have

disclosed what Audiotext could not have learned through diligent inquiry. Sprint

also complains the court did not properly distinguish between active

misrepresentation and nondisclosure. That distinction has been severely criticized

by the Florida Supreme Court. See Johnson v. Davis, 480 So. 2d 625, 628 (Fla.

                                        - 10 -
1985) (“[W]here failure to disclose a material fact is calculated to induce a false

belief, the distinction between concealment and affirmative representations is

tenuous. Both proceed from the same motives and are attended with the same

consequences; both are violative of the principles of fair dealing and good faith;

both are calculated to produce the same result; and, in fact, both essentially have

the same effect.”). The standard of diligent inquiry Sprint attempts to impose on

Audiotext was rejected by the Florida Supreme Court eighteen years ago. See

Besett v. Basnett, 389 So. 2d 995, 998 (Fla. 1980) (“We hold that a recipient may

rely on the truth of a representation, even though its falsity could have been

ascertained had he made an investigation, unless he knows the representation to

be false or its falsity is obvious to him.”). In Johnson, the court stated Florida

law held “that where the parties are dealing at arm’s length and facts lie equally

open to both parties, with equal opportunity of examination, mere nondisclosure

does not constitute a fraudulent concealment.” Johnson, 480 So. 2d at 628

(emphasis added). Although the court criticized this rule as not in conformity

“with current notions of justice, equity and fair dealing,” and in the context of

residential real estate transactions imposed a higher duty of disclosure, see id. at

628-29, it follows even from the narrower rule that where the parties do not have

equal opportunity to examine, nondisclosure may be fraudulent.

      Sprint also quotes Watkins v. NCNB Nat’l Bank, 622 So. 2d 1063, 1065-66

                                         - 11 -
(Fla. Dist. Ct. App. 1993), review denied, 634 So. 2d 629 (Fla. 1994) in support

of its nondisclosure standard. However Watkins states, immediately following the

passage Sprint quotes, that the plaintiff in that case failed to plead any facts

supporting an unequal opportunity to discover. The district court did not err in

formulating Florida law.

      Sprint next argues several infirmities in the award of contract damages.

First, it argues the court failed to limit damages in accord with contractual

limitation clauses. Second, it argues that the court improperly reversed itself after

trial by holding that certain language in the limitation clauses was ambiguous.

Third, it argues the court improperly held that the jury had decided the ambiguous

question when the jury had not been instructed to do so.

      We review contractual language and the determination of ambiguity de

novo. See Mid-West Conveyor Co. v. Jervis B. Webb Co., 92 F.3d 992, 995 (10th

Cir. 1996). The IP agreements provided: “IN NO EVENT SHALL [SPRINT] BE

LIABLE FOR: (1) ANY INCIDENTAL, INDIRECT, SPECIAL OR

CONSEQUENTIAL DAMAGES INCLUDING, BUT NOT LIMITED TO, ANY

DAMAGES RESULTING FROM THE INTERRUPTION OR

DISCONTINUANCE OF THE SERVICES FURNISHED BY [SPRINT] . . . OR

ANY LOST REVENUES OR PROFITS OF IP. . . .” II Aplt. Exh. App. at 323;

XV Aplt. Exh. App. at 3639, 3802; XIX Aplt. Exh. App. at 4592. Sprint argues

                                         - 12 -
Plaintiffs’ contract damages were for lost profits or revenues, in violation of its

contractual exemption from “consequential damages.” Id. We agree with the

district court that Plaintiffs’ contract damages do not arise from lost profits or

revenues. Although Audiotext’s fraud damages compensated it for lost revenue,

the contract damages for both Plaintiffs arose from service fees Sprint charged

them and which, under the contract, were subject to recovery in the event of

Sprint’s breach.

      The contract also provided as follows: “[Sprint’s] entire liability resulting

from [its] failure to perform any of its obligations under this Agreement shall be

IP’s actual, direct damages as might be provable in a court of law, but not to

exceed the amount paid to [Sprint] for monthly services pursuant to this

Agreement.” II Aplt. Exh. App. at 323; XV Aplt. Exh. App. at 3639, 3802; XIX

Aplt. Exh. App. at 4592. The district court first held the monthly services

limitation was an unambiguous contract provision which it would apply as a

matter of law. In response to a motion for reconsideration, the court reversed

itself and acknowledged there was more than one reasonable interpretation of

what amounts were properly included within “monthly services.” Because

ambiguous contract provisions are questions of fact for the jury, the court held

that all parties had had the opportunity to present their interpretations to the jury,

and the jury had obviously found Plaintiffs’ evidence convincing.

                                         - 13 -
      The district court was correct in concluding “monthly services” was

ambiguous. See City of Wichita v. Southwestern Bell Tel. Co., 24 F.3d 1282,

1287 (10th Cir. 1994) (applying Kansas law and holding the contract term “gross

receipts from noncompetitive services” ambiguous). The two competing

reasonable interpretations were that the term included either all monthly charges

paid to Sprint, or only flat fees recurring each month. Sprint argues the latter

view is the unambiguous plain meaning of the clause because Plaintiffs’

interpretation—that the amount includes the total monthly fees paid to

Sprint—would render the word “monthly” superfluous. We disagree. Under

Plaintiffs’ interpretation monthly services are still distinguished from one-time

flat fees paid to Sprint to begin service. See II Aplt. Exh. App. at 328.

      Sprint argues the court erred in determining after trial that the issue had

been decided by the jury even though no instruction was given on the matter.

Sprint did not timely object to the court’s failure to give an instruction, however,

and has thus waived its claim. See Fed. R. Civ. P. 51. Although Sprint suggests

it was prejudiced by the court’s initial determination that the provision was

unambiguous, depriving it of the opportunity to present evidence on the matter,

we note that Sprint called an expert in billing charges to testify as to the meaning

of the monthly services limitation. We find no plain error. See Unit Drilling Co.

v. Enron Oil & Gas Co., 108 F.3d 1186, 1190-91 (10th Cir. 1997).

                                        - 14 -
      Sprint’s next major argument is that the district court failed to enforce a

provision of the IP contracts relating to chargebacks, and thus improperly allowed

Plaintiffs damages under this rubric. Chargebacks refer to 900 fees billed to and

disputed by the end user, which, as a result of that dispute, are deemed

uncollectible. A multitude of reasons could support the determination that a 900

fee was uncollectible; the end user might deny all knowledge of the call, for

example, or claim a minor had made the call, or he might simply refuse to pay.

The first IP agreements provide that if any single phone number’s monthly

chargebacks exceeded $20.00, the IP would bear the loss, and where the

chargebacks per phone number per month were less, Sprint would bear them. The

second IP contracts lowered the threshold to $10.00. Sprint argues the Plaintiffs

calculated their damages to include chargebacks that were properly assessed to

them under these contract provisions.

      Some disagreement, however, existed as to the definition of “chargeback.”

Plaintiffs point to a Factoring Agreement between Sprint and Audiotext which

defines chargeback as “the amount of any IP Account for any Billing Period

which is disputed by an end-user and which is determined by [Sprint] to be

uncollectible.” XIX Aplt. Exh. App. at 4574 (emphasis added). Plaintiffs

maintain their chargeback damages were based on those instances in which Sprint

failed to “determine” the charges to be “uncollectible.” Plaintiffs proved this at

                                        - 15 -
trial through Sprint’s witnesses and by offering in evidence the reason code Sprint

listed next to each chargeback, along with the reason code tables. The reasons for

the chargebacks indicate many of them—although disputed by the end user—were

not determined by Sprint to be uncollectible. Plaintiffs’ evidence also indicated

that callers repeatedly took advantage of their programs, denied all knowledge or

refused to pay, and requested an adjustment. See I Aplt. Supp. App. at 72–163,

III Aplt. Supp. App. at 675–822. Although Sprint contends that adjustments were

granted by LECs, and Sprint was bound by their decisions on billing matters,

Sprint’s private arrangements with LECs did not bind the Plaintiffs. Plaintiffs’

billing agreements were with Sprint, and they were entitled to hold Sprint to its

word. Sprint presented its view of chargebacks to the jury, and the jury

apparently believed that much of what Sprint failed to collect from end users were

not “chargebacks” under the IP agreements, and thus not subject to the

chargeback threshold.

      Sprint’s final argument is that the improper submission of fraud claims

tainted the jury’s consideration of the contract claims. This argument fails in the

wake of our holding that the fraud claims were properly submitted to the jury.

      We turn now to the issues raised by Plaintiffs in the main appeal. We

review for abuse of discretion Connections’ claim that the court erred in refusing

to resubmit to the jury the verdict on its compensatory fraud damages. See Unit

                                        - 16 -
Drilling, 108 F.3d at 1192. Although the jury found that Sprint fraudulently

induced Connections to enter the IP contracts, it entered zero in the space for

Connections’ compensatory fraud damages. On the special verdict form

immediately following these findings, an interrogatory stated that if the jury had

found Sprint defrauded Connections, and if it awarded Connections compensatory

fraud damages, then it should decide whether Connections was entitled to punitive

damages. Although it had not satisfied both parts of the question’s predicate, the

jury answered that Connections was entitled to punitive damages. See V Aplt.

App. at 957-58. When the jury realized that its finding of no compensatory fraud

damages prevented it from awarding punitive damages to Connections, it wrote

the court a note:

      it was not our intention to absolve Sprint from punitive damages with
      regard to Connections’ fraud claim against them—we simply could
      not decipher the fraud amount asked for. The verdict forms for
      Connections asked for 7 figures—we were able to derive 6 figures
      from Art Levinson’s testimony and Exhibit number 1980. Missing
      was the figure for damages due to fraud. We all agreed to award the
      entire amounts asked for plus punitive damages . . . . We were not
      aware that by leaving the fraud amount at zero Sprint would not have
      to pay punitive damages to Connections.

XII Aplt. App. at 3049.

      Connections argues the special verdict was inconsistent and the court was

required to resubmit it to the jury for clarification. See Unit Drilling, 108 F.3d at

1191. In reviewing this claim we must accept any reasonable view of the case

                                         - 17 -
that will conform to the verdict. See Patton v. TIC United Corp., 77 F.3d 1235,

1241 (10th Cir.), cert. denied, 518 U.S. 1005 (1996). We think it clear the jury

simply failed to follow the court’s instructions in the special interrogatory.

According to those instructions the jury’s factual finding of zero compensatory

fraud damages precludes its determination that punitive damages were

appropriate. See Stoddard v. School Dist. No. 1, 590 F.2d 829, 835 (10th Cir.

1979). Where predicate factual findings have been rendered in special

interrogatories, an erroneous legal conclusion by the jury may be disregarded.

See Ratigan v. New York Central R.R., 291 F.2d 548, 555 (2d Cir.), cert. denied,

368 U.S. 891 (1961). The jury’s misperception of the legal effect of its

compensatory damages finding provides no basis on which to allow it to alter that

factual finding. From the jury’s note it is apparent that Connections failed in its

burden of persuasion on this issue, and the court was well within its discretion in

refusing to send the issue back to the jury. Although Connections argues in its

reply brief that under Florida law punitive damages for fraud may be awarded in

the absence of compensatory fraud damages, see Ault v. Lohr, 538 So. 2d 454,

456 (Fla. 1989), it did not raise this point in the district court. Because

Connections has not complied with Tenth Cir. R. 28.2(b) by demonstrating where

in the 13,000-page record it was raised and ruled on, we deem the point waived.

See Harolds Stores, Inc. v. Dillard Dep’t Stores, Inc., 82 F.3d 1533, 1540 n.3

                                         - 18 -
(10th Cir.), cert. denied, 117 S. Ct. 297 (1996).

      We review de novo Audiotext’s claim that the district court misinterpreted

Fla. Stat. Ann. § 768.73 by applying it to Audiotext’s award of punitive damages.

See City of Wichita v. United States Gypsum Co., 72 F.3d 1491, 1495 (10th Cir.

1996). The statute provides:

             (1) (a) In any civil action based on negligence, strict liability,
      products liability, misconduct in commercial transactions,
      professional liability, or breach of warranty, and involving willful,
      wanton, or gross misconduct, the judgment for the total amount of
      punitive damages awarded to a claimant may not exceed three times
      the amount of compensatory damages awarded to each person
      entitled thereto by the trier of fact, except as provided in paragraph
      (b).
             (b) If any award for punitive damages exceeds the limitation
      specified in paragraph (a), the award is presumed to be excessive and
      the defendant is entitled to remittitur of the amount in excess of the
      limitation unless the claimant demonstrates to the court by clear and
      convincing evidence that the award is not excessive in light of the
      facts and circumstances which were presented to the trier of fact.

Fla. Stat. Ann. § 768.73(1)(b) (West 1996). Audiotext raises four arguments on

this claim. First, it argues its fraudulent inducement claim does not constitute

“misconduct in commercial transactions,” id., and thus the statute does not apply

to its punitive damage award. Second, it argues that even if the statute does

apply, the district court erred in trebling only Audiotext’s compensatory fraud

damages instead of its total compensatory damages in arriving at the statutory

cap. Third, it argues the district court erred in finding it had not rebutted by clear

and convincing evidence the presumption of excessiveness under § 768.73(1)(b).

                                         - 19 -
Fourth, it contends that even if the court did not commit a legal error in applying

the statute, it abused its discretion in denying Audiotext’s motion to alter or

amend the judgment by removing the punitive damages cap.

      The statute does not define “misconduct in commercial transactions” and

Florida courts have not addressed the issue presented to us, but we think the

statute’s plain meaning covers Sprint’s fraud in its commercial relationship with

Audiotext. The Florida Supreme Court has held that a legitimate objective of

§ 768.73 is to “discourage punitive damage claims.” Gordon v. State, 608 So. 2d

800, 802 (Fla. 1992), cert. denied, 507 U.S. 1005 (1993). It has also held that

“misconduct in commercial transactions” covers intentional torts, in particular the

tort of malicious prosecution. See Alamo Rent-A-Car, Inc. v. Mancusi, 632 So.

2d 1352, 1357-58 (Fla. 1994). In Mancusi, the plaintiff thought he had rented a

car from Alamo for one month; however the rental contract indicated a rental

period of one week. Sometime after the week had elapsed, Alamo had Mancusi

arrested and prosecuted. Mancusi sued Alamo for malicious prosecution, won

compensatory and punitive damage awards, and the Florida Supreme Court held

that “misconduct in commercial transactions” covered the punitive award. See id.

at 1354-58. 1 We believe this indicates a flexible and common-sense reading of

      1
       Although Audiotext asserts Mancusi’s holding on this point is dictum
because the court ultimately held the statute did not apply retroactively to
Mancusi’s cause of action, we believe it still provides an authoritative indication

                                         - 20 -
the misconduct phrase. Audiotext argues that because the phrase says

“misconduct in a commercial transaction,” it does not apply to its misconduct

before the IP agreements. While this textual argument has appeal, we do not

think the Florida courts would read the statute in such a technical fashion. The

entire relationship between Sprint and Audiotext was commercial, and we believe

their pre-contract negotiations fall within the ordinary meaning of “commercial

transaction.” In Mancusi, the Court held that an intentional tort which occurred

after the expiration of the one-week rental contract was “during the course of the

commercial transaction” and was “the direct result of that commercial

transaction.” Id. at 1357. Similar logic brings commercial contract negotiations

within the scope of the statutory phrase. But Audiotext’s technical argument is

perhaps better met with another: an element of fraudulent inducement is damages,

see Baker v. United Servs. Auto. Ass’n, 661 So. 2d 128, 131 (Fla. Dist. Ct. App.

1995), review denied, 669 So. 2d 252 (Fla. 1996) and damages did not begin to

accrue until the IP contracts were executed. Therefore part of Sprint’s

misconduct occurred “in” the commercial transactions. Audiotext also relies on

Scheidt v. Klein, 956 F.2d 963, 970 (10th Cir. 1992), in which we included the

dictum “common law fraud does not appear to fall within the explicitly delimited

scope of section 768.73(1) . . . .” Id. Scheidt was decided prior to Mancusi, and

of how Florida courts would interpret the statute.

                                        - 21 -
the quoted statement was not necessary to our decision because we held the

argument to which it applied had been waived. See id.

      Audiotext argues next that the district court erred in trebling only its

compensatory fraud damages and excluding contract damages when calculating

the punitive damage cap. Audiotext relies on the language of the statute and

Christenson & Assocs. v. Palumbo-Tucker, 656 So. 2d 266 (Fla. Dist. Ct. App.

1995) for its contention that the total compensatory damage award for all claims

should have been trebled to calculate the cap. The relevant statutory language

states: “the total amount of punitive damages awarded to a claimant may not

exceed three times the amount of compensatory damages awarded to each person .

. . .” Fla. Stat. Ann. § 768.73(1)(a). Christenson held that prejudgment interest

should be included in the compensatory damage award before trebling. See

Christenson, 656 So. 2d at 266 (“Certainly, there is nothing in section 768.73

authorizing judges to separate the various elements composing the bundle of

compensatory damages and discard from the punitive damages formula those

elements that the judge personally deems unwise.”). Although Christenson’s

language is broad, it does not support Audiotext’s reading. Section 768.73

appears under the statutory chapter “Torts,” and we believe it must be read in that

context. Under Audiotext’s interpretation, unrelated claims compensated in one

lawsuit would all be trebled so long as punitive damages were awarded on one of

                                        - 22 -
the claims. Further, Audiotext’s interpretation would violate Florida’s rule that

punitive damages may not be recovered for breach of contract. See Lewis v.

Guthartz, 428 So. 2d 222, 223 (Fla. 1982). Punitive damages are recoverable for

the independent tort of fraud, and it is to that claim the statute refers.

      Audiotext next complains that the district court erred in finding it had not

met its statutory burden of demonstrating to the court by clear and convincing

evidence that the punitive damage award was not excessive. We review the

court’s finding for clear error. See FDIC v. Hamilton, 122 F.3d 854, 860 (10th

Cir. 1997). Further, we owe deference to the district court’s opportunity to judge

the credibility and weight of evidence, see Salve Regina College v. Russell, 499

U.S. 225, 233 (1991), and we may not substitute our judgment for that of the trial

court, see Anderson v. City of Bessemer City, 470 U.S. 564, 574 (1985). We

have reviewed the record and cannot say the court clearly erred in finding

Audiotext did not meet its high burden. 2 Moreover, having reviewed de novo the

district court’s interpretation of Fla. Stat. Ann. § 768.73, we see no reason to

traverse the same ground using the more deferential abuse of discretion standard

      2
        In its effort to convince us the punitive damage award was not excessive,
Audiotext cites more than once to Continental Trend Resources, Inc. v. OXY
USA Inc., 44 F.3d 1465 (10th Cir. 1995). That decision was vacated and
remanded by the Supreme Court. See OXY USA Inc. v. Continental Trend
Resources, Inc., 517 U.S. 1216 (1996), on remand, Continental Trend Resources,
Inc. v. OXY USA Inc., 101 F.3d 634 (10th Cir. 1996) (reducing punitive damages
from $30,000,000 to $6,000,000), cert. denied, 117 S. Ct. 1846 (1997).

                                          - 23 -
under which Audiotext complains about the denial of its motion to alter or amend

the judgment.

      Both Audiotext and Connections contend the district court erred in denying

them prejudgment interest on their contract damages under Kansas law. We

review the denial of prejudgment interest for abuse of discretion, see Frymire v.

Ampex Corp., 61 F.3d 757, 772 (10th Cir. 1995), cert. dismissed, 519 U.S. 1182

(1996), but consider the underlying question of statutory interpretation de novo,

see Driver Music Cos. v. Commercial Union Ins. Co., 94 F.3d 1428, 1433 (10th

Cir. 1996). Kan. Stat. Ann. § 16-201 (West 1996) provides:

      Creditors shall be allowed to receive interest . . . for any money after it
      becomes due; for money lent or money due on settlement of account, from
      the day of liquidating the account and ascertaining the balance; . . . for
      money due and withheld by an unreasonable and vexatious delay of
      payment or settlement of accounts . . . .

Id. Plaintiffs argue they are entitled to prejudgment interest on both statutory

grounds: first, that the contract damages due them were liquidated; second, that

Sprint unreasonably and vexatiously withheld payments which were due and

owing to Plaintiffs.

      “A claim becomes liquidated when both the amount due and the date on

which it is due are fixed and certain, or when the same become definitely

ascertainable by mathematical computation.” Plains Resources, Inc. v. Gable, 682

P.2d 653, 657 (Kan. 1984). Disputes as to underlying liability are irrelevant

                                        - 24 -
provided the amount of damages is certain. See Royal College Shop, Inc. v.

Northern Ins. Co., 895 F.2d 670, 674 (10th Cir. 1990). The amount of damages

was the subject of extensive trial testimony and involved complex statistical

procedures and aggregations, some of which were hotly disputed. Audiotext’s

own representative testified as to how he had arrived at the 73% damage figure

for excessive chargebacks: “Yeah. What I felt was reasonable is what came out to

about 73—.” I Aplee. App. at 133. We think it obvious the damages were not

liquidated.

      The trial court has discretionary power to award interest as an element of

damages even if the primary damages are not liquidated. See Lightcap v. Mobil

Oil Corp., 562 P.2d 1, 16 (Kan.), cert. denied, 439 U.S. 876 (1977). Guided by

considerations of fairness and equity, such an award is intended to fully

compensate a party injured through vexatious withholding of monies owed. See

id. at 16. The award is dependent, of course, on the trial court’s discretion, to

which we defer because it had the opportunity to scrutinize the evidence, assess

credibility and probativeness, and balance the equities. See Royal College Shop,

895 F.2d at 675–76. We find no abuse of that discretion.

      Plaintiffs finally argue the district court abused its discretion in awarding

them a substantially reduced amount of attorney’s fees. The IP agreements

provided that “[i]n the event of legal action by either of the parties hereto,” the

                                         - 25 -
party in whose favor final judgment is entered is entitled to attorney fees, costs,

and expenses from the losing party. See, e.g., XIX Aplt. Exh. App. at 4596.

Plaintiffs’ counsel requested compensation for 7,160 hours at an average rate of

$236.75, for a total of $1,618,294.49, plus $332,865.55 in expenses. The district

court awarded $350,000 in fees and $51,280 in expenses. Plaintiffs protest the

court’s decision to award fees only for claims on which they succeeded, its failure

to fully explain its reductions to the fee award, its failure to consider the degree

of success they achieved, and its decision to “simply make a general reduction”

instead of cutting particularized hours based on specific findings. VIII Aplt. App.

at 2031.

      When a court awards attorney fees pursuant to a contract, as opposed to a

statute, we have recognized that its duty is to ensure the nonbreaching party is

made whole and receives the benefit of its bargain. See United States ex rel.

C.J.C., Inc. v. Western States Mechanical Contractors, Inc., 834 F.2d 1533, 1547-

48 (10th Cir. 1987). Because these purposes are fundamentally different from

those underlying statutory fee awards, we have held that the close scrutiny applied

to statutory fee awards should not be applied to contractual awards, see id.; Public

Serv. Co. of Colo. v. Continental Cas. Co., 26 F.3d 1508, 1520 & n.11 (10th Cir.

1994), which should be routinely awarded. See Public Serv. Co. of Colo., 26 F.3d

at 1520-21. The trial court’s task is not to fix a reasonable fee, as it is in

                                          - 26 -
statutory awards, but only to determine whether the requested fee is “inequitable

or unreasonable,” in which case it may reduce the fee accordingly. See C.J.C.,

Inc., 834 F.2d at 1549. Kansas law governs the contractual award of fees. See

Public Serv. Co. of Colo., 26 F.3d at 1520.

      The district court properly stated Kansas standards for determining the

reasonableness of the fee, and we cannot find that it abused its discretion in

fixing a rate or in separating reasonable from unreasonable categories of fees.

Nor did the court abuse its discretion in declining to give great weight to the

plaintiffs’ degree of success. See C.J.C., Inc., 834 F.2d at 1547-50 (holding court

is not bound to consider federal statutory fee factors). However the court refused

to subtract the categories of unreasonable billings from the total in order to arrive

at a reasonable fee. Instead it simply picked a figure it thought reasonable. We

consider such a general reduction an abuse of discretion. The court must

articulate some rational method by which it arrives at a reasonable fee. See

C.J.C., Inc., 834 F.2d at 1550 (holding that in contractual fee award “it remains

important for the district court to provide a ‘concise but clear explanation’ of its

reasons for any adjustments to the fee award.”) (quoting Mares v. Credit Bureau

of Raton, 801 F.2d 1197, 1201 (10th Cir.1986) (quoting Hensley v. Eckerhart, 461

U.S. 424, 437 (1983))).

      Although the court stated that Plaintiffs had not totaled their billings for

                                         - 27 -
each separate claim, and refused to “scour through nearly 500 pages of unindexed

billing statements,” VIII Aplt. App. at 2030, we know of nothing requiring

Plaintiffs to index or segregate their charges for various claims. We have held

that contractual fee claimants need not meticulously describe each task billed.

See Public Serv. Co. of Colo., 26 F.3d at 1520 (“While the absence of specific

task descriptions may preclude an award of fees in cases arising under a federal

fee-shifting statute . . . the same degree of specificity is not required in the

context of contractual fee awards.”). Cf. id. at 1521 (holding court need not comb

voluminous billing records to ferret out certain hours which opposing party

complained about but failed to draw to the court’s attention). If the court wishes

to cut time spent on claims which were not ultimately successful, it should do so

and recalculate the fee to arrive at a reasonable figure. See id. (affirming trial

court’s use of lodestar approach and specific deduction of unreasonable billings).

      AFFIRMED in part, REVERSED in part, and REMANDED.

                                         Entered for the Court

                                         Paul J. Kelly, Jr.
                                         Circuit Judge

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