Monday, July 16, 2012

Allowing the use of a general verdict form in a construction defect case could subject your client to prejudgment interest.


A recent opinion from the Colorado Court of Appeals is a cautionary tale concerning the calculation of pre-judgment interest.  See Hendricks v. Allied Waste Transportation, Inc., 2012 WL 1881004 (Colo. App. 2012).  The Hendricks sued Allied after one of its drivers backed into the corner of their home with an Allied garbage truck.  At trial, a jury awarded the Hendricks $160,100 in damages.  Although the jury was instructed on the cost of repairs, diminution in value, and non-economic damages, the parties agreed to a general verdict form that did not ask the jury to specify the types of damages awarded.  Id. at *1.  The Hendricks sought to amend the judgment to include prejudgment interest and costs, which the trial court granted.

Allied appealed, arguing that the trial court erred by awarding the Hendricks prejudgment interest from the date their property was damaged.  Id. at *7.  The Colorado Court of Appeals found no error, and affirmed.  In its opinion, the Court of Appeals acknowledged that the trial court’s award of prejudgment interest was pursuant to C.R.S. § 5-12-102.  The pertinent portion of this statute provides:

(1)   Except as provided in section 13-21-101, C.R.S., when there is no agreement as to the rate thereof, creditors shall receive interest as follows:
* * *

(b) Interest shall be 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 the date judgment is entered, whichever first occurs.              

C.R.S. § 5-12-102(1)(b). 
Allied argued that the trial court should have awarded interest from the date of the verdict pursuant to Goodyear Tire & Rubber Co. v. Holmes, 193 P.3d 821 (Colo. 2008), and Hildebrand v. New Vista Homes II, LLC, 252 P.3d 1159 (Colo. App. 2010).  The Court of Appeals found Allied’s reliance on these cases misplaced as these cases concern damages for the cost of repairs whereby interest accrues from the date repairs are made.  Importantly, the Court of Appeals pointed out that in Goodyear and Hildebrand, the juries returned special verdict forms, which allowed the courts to calculate interest based specifically on the cost of repairs.  Id

In the Hendricks case, the parties agreed to a general verdict form whereby the jury was instructed on the cost of repairs, as well as diminution of property value, and noneconomic damages.  As a result, the Court of Appeals could not determine which portion of the verdict, if any, was for the cost of repairs.  In its opinion, the Court of Appeals referred to a recent Colorado Supreme Court case, Ferrellgas, Inc. v. Yeiser, 247 P.3d 1022 (Colo. 2011), wherein the Supreme Court affirmed the trial court’s calculation of prejudgment interest from the date the plaintiff’s home was initially damaged since the jury’s general verdict form lacked any basis to distinguish between the amount of damages awarded for the reasonable cost of repair and diminution in value concerning the calculation of prejudgment interest.  In accordance with these recent Colorado opinions, those defending property damage claims should insist on the use of a special verdict from to limit the exposure to their clients stemming from prejudgment interest.  

For additional information regarding Colorado construction litigation, please contact David M. McLain at (303) 987-9813 or by e-mail at mclain@hhmrlaw.com.

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The information contained in this blog is provided for informational purposes only. It is not legal advice and should not be construed as providing legal advice on any subject matter.