Farm Credit of Southern Colorado, ACA v. Mason
2017 COA 42
| Colo. Ct. App. | 2017Background
- Farm Credit held perfected security interests in crops (Crop Collateral) grown by Zachary Mason and sued to recover collateral after Zachary defaulted and Farm Credit stopped lending in March 2012.
- Zachary could not cultivate the crops; his father James C. Mason took over cultivation, transferred USDA benefits to himself, harvested and sold the crops, and retained proceeds; Farm Credit served a May 2012 preservation order on James.
- Farm Credit sued various parties in May 2012 and amended the state complaint to add James in March 2013 for replevin, conversion, accounting, foreclosure, and receiver appointment; James asserted defenses including waiver, estoppel, abandonment, and consent and demanded a jury trial.
- At trial, Farm Credit’s chief credit officer testified to Zachary’s outstanding debt (approximately $4 million), though Farm Credit’s prior interrogatory in Nov. 2013 showed a larger figure and was not updated; James objected as an undisclosed change.
- The trial court struck James’s jury demand (finding the action’s basic thrust equitable), admitted the debt testimony as harmless nondisclosure, found James liable for conversion, and awarded $251,435 (crop value at harvest minus production costs) plus interest; the Court of Appeals affirmed.
Issues
| Issue | Plaintiff's Argument (Farm Credit) | Defendant's Argument (Mason) | Held |
|---|---|---|---|
| Whether James was entitled to a jury trial | Action is foreclosure-like and equitable; jury not required | Only claims against James should govern jury right; demand timely | Denied: look to original complaint; basic thrust equitable, no jury right |
| Whether admission of testimony about Zachary’s debt was improper nondisclosure | Testimony was harmless; debt figures exceeded collateral value so no prejudice | Failure to update interrogatory was intentional and prejudicial; warrants exclusion or dismissal | Admission upheld: nondisclosure was harmless under C.R.C.P. 37(c); trial court did not abuse discretion |
| Whether James’s defenses (waiver, consent, abandonment, estoppel) defeat conversion claim | Farm Credit effectively acquiesced when it did not harvest; James acted to save crops | Any waiver or consent would have to be written under the Statute of Frauds; Farm Credit sought preservation order and never relinquished interest | Defenses rejected: no written waiver/consent; actions show preservation not abandonment; factual findings supported |
| Whether bankruptcy adjudication precluded state claims (collateral estoppel) | Bankruptcy ruling should bar relitigation | Bankruptcy addressed different legal issues (Zachary’s discharge/fraud), not James’s state-law conversion | Denied: issues not identical; collateral estoppel inapplicable |
| Appropriate date and measure of damages for conversion | Damages should be assessed at time of conversion; James argued conversion occurred when he took control | Farm Credit: value at harvest minus production costs is proper measure | Affirmed: court reasonably used harvest date (when James harvested) and expert valuation to compute damages |
Key Cases Cited
- Stuart v. N. Shore Water & Sanitation Dist., 211 P.3d 59 (Colo. App. 2009) (right to jury depends on whether action is legal or equitable)
- Watson v. Public Service Co. of Colorado, 207 P.3d 860 (Colo. App. 2008) (monetary relief not always legal for jury-trial purposes)
- Carder, Inc. v. Cash, 97 P.3d 174 (Colo. App. 2003) (original complaint fixes nature of action for jury-trial analysis)
- First National Bank of Meeker v. Theos, 794 P.2d 1055 (Colo. App. 1990) (foreclosure-like proceedings are equitable despite monetary components)
- Western National Bank of Casper v. ABC Drilling Co., 599 P.2d 942 (Colo. App. 1979) (repossession/foreclosure proceedings are to the court, not jury)
- Todd v. Bear Valley Village Apartments, 980 P.2d 973 (Colo. 1999) (factors for harmlessness/prejudice under discovery rules)
- Pinkstaff v. Black & Decker (U.S.) Inc., 211 P.3d 698 (Colo. 2009) (sanctions under C.R.C.P. 37 should be proportional and consider full record)
- Stanton v. Schultz, 222 P.3d 303 (Colo. 2010) (elements and application of collateral estoppel)