2018 COA 15
Colo. Ct. App.2018Background
- Sam and Audrey Marso purchased a house; their agent, Elly Dilbeck, allegedly failed to disclose use of radioactive uranium mill tailings as fill.
- The Marsos sued Dilbeck for negligence and Coldwell (her broker, Homeowners Realty, Inc.) under respondeat superior; the Marsos later settled with Dilbeck for $150,000 and obtained a written admission of agent negligence; the settlement preserved claims against Coldwell.
- A jury, unaware of the settlement amount, returned a $120,000 verdict against Coldwell.
- At post-trial the district court applied a setoff of the $150,000 settlement against the $120,000 verdict (yielding zero recovery) and held that statutory prejudgment interest did not accrue before the setoff; the court entered judgment for Coldwell and awarded costs against the Marsos.
- On appeal the Colorado Court of Appeals affirmed that a setoff is required when the principal’s liability rests solely on respondeat superior, but reversed the timing ruling and held prejudgment interest accrues on the jury verdict before the setoff.
Issues
| Issue | Plaintiff's Argument (Marso) | Defendant's Argument (Coldwell) | Held |
|---|---|---|---|
| Whether a settlement with an agent must be set off against a verdict against a principal whose liability is solely vicarious | No setoff; statutes interpreted to bar setoff here or otherwise plaintiff should not lose full recovery | Setoff required to avoid double recovery; setoff may be common-law based | Setoff required under common-law rule (Restatement §885(3) rationale) when principal is vicariously liable |
| Whether the statutory "percentage" statute (§13-50.5-105) applies to reduce verdict by settlement with agent | Percentage statute should not apply because Coldwell is not a joint tortfeasor | Coldwell argued statutes or common law justify reduction | Percentage statute does not apply to respondeat superior liability; it governs joint tortfeasors only |
| Whether the statutory "amount" statute (§13-21-111.6) requires or forbids setoff of a settlement paid to avoid liability | Amount statute requires/permits setoff (Marsos argued interest should accrue before setoff) | Coldwell relied on prior authority to support setoff timing differentials | Supreme court precedent (Zufelt) interpreted amount statute as not covering payments to avoid liability; thus it did not provide setoff here |
| Whether prejudgment statutory interest accrues on the jury verdict before or after the setoff | Interest accrues on the full jury verdict before setoff; setoff must be applied against verdict plus accrued interest | Setoff may be made before interest accrues (trial court relied on Ferrellgas) | Interest accrues on the jury verdict before computing setoff; setoff must be applied after adding prejudgment interest accrued to date of settlement (and further interest computed if unpaid balance remains) |
Key Cases Cited
- Smith v. Zufelt, 880 P.2d 1178 (Colo. 1994) (interpreting interaction of percentage and amount statutes concerning setoffs)
- Ferrellgas, Inc. v. Yeiser, 247 P.3d 1022 (Colo. 2011) (subrogation context for timing of interest; distinguished)
- Kaiser v. Allen, 746 N.W.2d 92 (Mich. 2008) (applied common-law setoff for vicarious-liability settlements)
- Villarini-Garcia v. Hosp. del Maestro, 112 F.3d 5 (1st Cir. 1997) (applied modern/common-law setoff to prevent double recovery)
- Ochoa v. Vered, 212 P.3d 963 (Colo. App. 2009) (procedural discussion that setoff is an affirmative defense)
- Van Waters & Rogers, Inc. v. Keelan, 840 P.2d 1070 (Colo. 1992) (legislative intent to limit double recoveries)
- Kirk v. Denver Pub. Co., 818 P.2d 262 (Colo. 1991) (prejudgment interest as component of compensatory damages)