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| Echo Acceptance Corp. v. Household Retail Services, Inc., |
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PAUL KELLY, JR., Circuit Judge. Defendant Household Retail Services, Inc. (“HRSI” or “Household”), appeals from a jury verdict in favor of Plaintiffs Echo Acceptance Corporation and Echosphere Corporation (collectively, “Echo”) on Echo's breach of contract claim. The district court's jurisdiction was based on 28 U.S.C. § 1332. We have jurisdiction under 28 U.S.C. § 1291 and we affirm in part, reverse in part, and remand. BackgroundThe plaintiffs in this case are Echosphere Corporation (“Echosphere”), which manufactures and sells home satellite television systems, and Echo Acceptance Corporation (“EAC”), an Echosphere subsidiary organized to facilitate the financing of such sales.FN1 While some Echosphere customers no doubt make their own financial arrangements, Echosphere referred many of its customers to EAC. EAC would then enter a loan agreement with the customer, pursuant to which EAC agreed to finance the system for the customer. EAC then *1074 sold the loan agreements to an ultimate financier. Until 1989, that financier was the Central Bank of Denver, which purchased the agreements from EAC for a flat, up-front fee. J.A. 249. FN1. Both EAC and Echosphere are subsidiaries of EchoStar Communications Corporation. J.A. 2331 (Tr. at 245-46). On July 7, 1989, EAC entered a Merchandise Financing Agreement (“MFA”) with the defendant, Household, a private label credit card company. Pursuant to the MFA, a customer interested in purchasing Echosphere equipment on credit submitted an application to Echosphere, which was transmitted to EAC and then to Household for credit approval. Upon approval, EAC purchased the customer's financing contract, then resold and assigned that agreement to Household, which thereafter assumed the credit relationship with the customer. Upon assignment, the MFA typically relieved EAC from liability for the customer's default. Household then issued a credit card to the approved customer to be used for future purchases of Echosphere equipment. The customer's contract provided for finance charges on the credit account. Household also offered credit insurance to customers, for a separate charge. Through the arrangement just described, Household provided funding for credit purchases of Echosphere equipment. The customers made monthly payments on their account balances toward principal, finance charges, and in some cases, insurance premiums. Aplt. Br. at 4. In its initial pricing letter, HRSI confirmed the execution of the MFA and reiterated that it would “purchase from time to time revolving credit contracts at the price agreed upon from time to time and as outlined below: 1) The consumer Annual Percentage Rate will be 17.88% with a per contract discount of .85% [charged by HRSI]. 3) HRSI will pay EAC a percent of billed finance charges equivalent to 30% (thirty percent) of billed insurance charges. 4) HRSI understands that EAC does not initiate retail installment sales or revolving credit sales directly to the consumer. However, HRSI will respond to EAC as though EAC initiates all contracts per the Merchandise Financing Agreement. J.A. 3013 (Pl.Ex.6); see also id. at 3006-07 (Pl.Ex.3) (Merchandise Financing Agreement). Collectively, the credit agreements originated by EAC and sold to HRSI were referred to as the “EAC Portfolio”. Id. at 2333 (Tr. at 254). Echo contends, and the district court agreed, that merchant and insurance participation payments were part of the price HRSI paid for EAC's accounts. Aplee. Br. at 40-43; J.A.1907-08. Accordingly, the court held that payments on each individual account by HRSI to EAC were to continue for the life of that particular financing arrangement- i.e., as long as HRSI continued to receive revenue from the account. J.A.1906-07. On the other hand, HRSI maintains that the payments were designed merely as incentives to encourage sales. Aplt. Br. at 38. In HRSI's view, its payment obligation ended with its interest in encouraging future sales- i.e., when it stopped purchasing new accounts from EAC. Id. Procedural History As the district court aptly noted: “The word ‘simple’ should not be used in any sentence involving this case. [T]here's nothing simple about this. It's convoluted and ... it's a beast with a strange heartbeat.” J.A. 2449 (Tr. at 633). We will *1075 attempt to simplify the procedural history nonetheless, reciting only those motions, orders, and proceedings relevant to our analysis. Of the four causes of action alleged in Echo's First Amended Complaint, FN2 only a portion of the first claim-for breach of contract-is at issue in this appeal. Specifically, we are concerned with Echo's contention that HRSI was contractually obligated to make merchant participation and insurance percentage payments for the life of each individual loan in the EAC portfolio, and that HRSI's failure to make any such payments after the termination of the MFA constituted a breach. Id. at 66-69. FN2. Echo's First Amended Complaint stated claims for: (1) breach of contract, (2) misrepresentation/fraudulent concealment, (3) promissory estoppel, and (4) wanton and willful misconduct. J.A. 66-74. In December 1995, Echo moved for partial summary judgment on that portion of its breach claim, id. at 136-70 [hereinafter “Echo's Breach Motion”]; in February 1996, HRSI filed a cross-motion for summary judgment on the same issue. Id. at 472-510 [hereinafter “HRSI's Cross-Motion”]. Simultaneous with its Cross Motion, HRSI also filed a separate motion for summary judgment, arguing that all four claims were barred by Colo.Rev.Stat. § 38-10-124, the statute of frauds for credit agreements. Id. at 443-61 [hereinafter “HRSI's Statute of Frauds Motion”].FN3 Three years later, the district court entered an order on the foregoing and other motions, denying HRSI's Statute of Frauds Motion, granting Echo's Breach Motion, and denying HRSI's Cross-Motion. Id. at 1899-1919. In pertinent part, the court held that § 38-10-124 was inapplicable to Echo's claims as a matter of law. Id. at 1903-04. The court also found that the MFA unambiguously provided for payments to continue post-termination, and that HRSI's failure to make such payments was a breach of contract. Id. at 1906-08. Finally, the court noted that the determination of the applicable rates for post-termination payments was “a question of fact, appropriately decided by a jury....” Id. at 1913. FN3. At about the same time, HRSI also moved to dismiss Count IV in part, J.A. 940-42, and for summary judgment as to Count III. Id. at 866-83. Those motions are not relevant to this appeal. Prior to trial, Echo filed a preemptive Motion in Limine, requesting the exclusion of evidence relating to certain defense theories that the court had already rejected as a matter of law. Id. at 2147-54. The court granted the motion in part, confirming that it would not admit evidence or allow arguments concerning: (1) HRSI's statute of frauds defense, or (2) HRSI's claim that post-termination payments were intended as incentives, rather than part of the purchase price. Id. at 2230-31 (Order on Mot. in Limine); cf. id. at 1903-04, 1907-08 (Order on Mots. for Summ. J.). The remainder of Echo's motion was taken under advisement. Id. at 2231-32 (Order on Mot. in Limine). In a conference with counsel at the close of Echo's case, the court clarified that “the only fact issue here is what's the percentage that applies.” Id. at 2446 (Tr. at 623). In HRSI's view, this announcement constituted a “restructuring” of the trial, which prejudiced its case in a variety of ways. Aplt. Br. at 18-19, 44-50. Accordingly, HRSI moved the court: (1) for a “curative instruction,” advising the jury to disregard evidence relating to the monetary amount of damages, J.A. at 2459, 2488 (Tr. at 672-75, 788-89) (oral motion); (2) to strike specified testimony and exhibits relating to the amount of damages, id. at 2461-62, 2488 (Tr. at 683-86, 788) (oral motion); see *1076 also id. at 2431-41 (brief); and (3) to declare a mistrial. Id. at 2487-88 (Tr. at 786-89); see also id. at 2755-2814 (brief). HRSI also moved that the court enter judgment in its favor as a matter of law, arguing that Echo had failed to establish any agreement between the parties as to post-termination rates. Id. at 2485-86 (Tr. at 779-81) (oral motion); see also id. at 2731-54 (brief). Subject to the foregoing motions, HRSI rested its case. Id. at 2489 (Tr. at 792). All four motions were denied. Id. at 2882-89 (denying motions for mistrial and for judgment as a matter of law); id. at 2462, 2527 (Tr. at 684-86, 798-99) (denying motions to strike and for curative instruction). But cf. id. at 2626 (Inst. 15: “You need not be concerned with the actual monetary amount owed by HRSI to EAC....”). In response to a special interrogatory, the jury found that Echo “had proven, by a preponderance of the evidence, that the applicable merchant participation rate was 10% and the applicable insurance participation rate was 30%, as agreed upon by the parties and evidenced by a letter from Defendant [.]” Id. at 2523 (emphasis added). The court then applied the jury's percentage to the stipulated value of the portfolio, granted Echo's motion for prejudgment interest, and entered judgment for Echo in the amount of $4,840,609-$3,965,534 in past damages, $730,824 in prejudgment interest, and $144,251 in future damages. Id. at 2991-92. The court awarded prejudgment interest at the statutory rate of eight percent, but reduced the interest award by one-third “in the interest of fairness,” due to the court's delay in ruling on the parties' motions for summary judgment. Id. at 2887. Both parties filed motions to alter or amend the judgment. See Fed.R.Civ.P. 59(e). HRSI objected to the court's methodology in calculating damages. J.A. 2896-2914. Echo objected to the prejudgment interest award, contending that the court abused its discretion by failing to award “moratory interest” at a rate higher than the statutory minimum, and reducing the total interest award. Id. at 2960-66. HRSI's motion was granted; Echo's was denied. Id. at 2980-87. This appeal followed. Discussion On appeal, HRSI claims that the court erred-as a matter of law and of procedure-in holding that the MFA is not subject to Colo.Rev.Stat. § 38-10-124. Second, HRSI contests the district court's holding that the MFA unambiguously provides for merchant participation and insurance percentage payments to continue after the MFA has itself been terminated. Based on the foregoing arguments, HRSI insists that it was entitled to summary judgment on the portion of the breach claim at issue. Third, HRSI argues that the evidence adduced by Echo did not provide the jury with an adequate basis to determine damages, and that HRSI was therefore entitled to judgment as a matter of law. In the alternative, HRSI claims that the uncertainty of Echo's damages precluded any award beyond nominal damages. Fourth, HRSI claims that various trial errors caused such prejudice to its case that they resulted in a mistrial. Echo disagrees with each of the foregoing arguments, and cross-appeals from the court's prejudgment interest award on the same grounds asserted in its Rule 59(e) motion. I. HRSI's Statute of Frauds Defense [1]  Under Colo.Rev.Stat. § 38-10-124, claims “relating to a credit agreement involving a principal amount in excess of twenty-five thousand dollars” are barred unless the credit agreement is in writing. Colo.Rev.Stat. § 38-10-124(2). According to HRSI, the MFA is a “credit agreement,” and the statute therefore bars *1077 Echo's claims “relating to” the MFA.FN4 Aplt. Br. at 25-29. In the alternative, HRSI contends that even if the MFA is not a credit agreement, § 38-10-124 is still applicable because Echo's claims “relate to” the individual credit agreements assigned to HRSI. Id. at 29. In its order on the parties' respective motions for summary judgment, the district court concluded that the § 38-10-124 was inapplicable as a matter of law. J.A.1903-04. Upon de novo review, see Medina v. City & County of Denver, 960 F.2d 1493, 1500 (10th Cir.1992), we agree with the district court's conclusion.FN4. On August 11, 2000, HRSI moved this court to certify the question of whether the MFA and letters incorporated therein “constitute a ‘credit agreement,’ between a statutory ‘debtor’ and ‘creditor,’ to which § 38-10-124, C.R.S. applies” to the Colorado Supreme Court. On February 8, 2001, HRSI filed an unopposed motion to withdraw its Motion to Certify. The Motion to Withdraw is granted. As is evident from our analysis above, the parties' dispute as to the propriety of the arguments contained in the Motion to Withdraw is moot. [2] HRSI must establish three elements to invoke § 38-10-124:(1) that at least one plaintiff is a statutory “creditor or debtor,” (2) that Echo's claims relate to a credit agreement, and (3) that the underlying credit agreement involves a principal amount in excess of $25,000. Colo.Rev.Stat. § 38-10-124(2) (“[N]o debtor or creditor may file or maintain an action or a claim relating to a credit agreement involving a principal amount in excess of twenty-five thousand dollars unless the credit agreement is in writing and is signed by the party against whom enforcement is sought.”). Both at trial and on appeal, the parties' primary focus has been the second element: whether the claims relate to a credit agreement.FN5FN5. We decline to address HRSI's conclusory assertion that Echosphere is “not a proper party on the claim for post-termination participation,” which only appears in a footnote to HRSI's opening brief. Aplt. Br. at 29 n. 3. We have consistently held that “[a]rguments inadequately briefed in the opening brief are waived....” Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 679 (10th Cir.1998). A. Echo's Claims Do Not Relate to a Credit Agreement The MFA plainly indicates that HRSI is purchasing commercial paper (“Contract and Slips”). See J.A. 3006 (“Seller [EAC] desires [Household] to purchase from time to time said Contracts and Slips at the price agreed upon from time to time by Seller and Household and evidenced by Household's letter.”). Thus, the claims in this case relate to the purchase of commercial paper. As the defendant conceded at oral argument, there is no Colorado authority to support the construction of the MFA itself as a credit agreement, and in the absence of such authority, we decline to treat it as one. Section 38-10-124 defines “credit agreement,” in pertinent part, as “[a] contract, promise, undertaking, offer, or commitment to lend, borrow, repay, or forbear repayment of money, to otherwise extend or receive credit, or to make any other financial accommodation ....” Colo.Rev.Stat. § 38-10-124(1)(a)(I) (emphasis added). In HRSI's view, our interpretation of the phrase “financial accommodation” is not limited by the other terms in the definition. See Aplt. Br. at 25 (“[T]he statutory definition is not limited only to a lending of money or an extension of credit....”). We disagree. [3] Colorado courts interpret statutory language to “reach a reasonable result consistent with the General Assembly's intent, and ... [to] give harmonious effect to *1078 all of the statute's parts.” Sky Fun 1 v. Schuttloffel, 27 P.3d 361, 370 (Colo.2001) (internal quotations and citation omitted); see also Colo. Dept. of Revenue v. Cray Computer Corp., 18 P.3d 1277, 1281 (Colo.2001) (“[W]e consider statutes as a whole in order to effectuate legislative intent, and give consistent, harmonious, and sensible effect to all the statute's parts.”) (internal quotations, citation, and alteration omitted). The Colorado Supreme Court has held that the purpose of § 38-10-124 is to “discourage lender liability litigation and to promote certainty [in] credit agreements involving sums of more than $25,000.” Schoen v. Morris, 15 P.3d 1094, 1098 (Colo.2000). Because HRSI's broad construction of “financial accommodation” would effectively graft an all-encompassing catch-all onto an otherwise specific statute, thereby eviscerating the statute's focus on credit agreements, we must reject it. See Matter of Title, Ballot Title & Submission Cl., Summ. for 1997-98 No. 62, 961 P.2d 1077, 1079 (Colo.1998) (“We must read and interpret statutory language in its context.”).[4] An agreement for the purchase of commercial paper, such as the MFA, is not a “financial accommodation” as that term is used in § 38-10-124. “Financial accommodation” must be construed in light of the overall purpose of the statute, in a manner that is consistent with the rest of the statutory language. That language is clearly concerned with transactions and agreements that involve the extension or receipt of credit, and “financial accommodation” cannot be read without that context in mind. Cf. Beecham v. United States, 511 U.S. 368, 371, 114 S.Ct. 1669, 128 L.Ed.2d 383 (1994) (“That several items in a list share an attribute counsels in favor of interpreting the other items as possessing that attribute as well.”). We therefore agree with the district court's conclusion that the MFA is not a credit agreement. J.A.1904, 2071.B. Echo's Claims Do Not “Relate To” the Underlying Customer Credit Agreements for Purposes of § 38-10-124 In the alternative, HRSI argues that even if the MFA itself is not a credit agreement, Echo's claims still “relate to” a credit agreement in that the claims “relate to” the MFA, which in turn, “relates to” the individual credit agreements and the balances assigned to HRSI. Cf. Univex, 914 P.2d at 1358. This argument also fails. We agree with the district court's legal conclusion that the once-removed connection between Echo's claims and the credit agreements is too attenuated to justify the application of § 38-10-124. J.A.1904. To permit such a broad reading of the phrase “relating to a credit agreement” would be inconsistent with the statute's exclusive concern with discouraging lender liability litigation and promoting certainty in credit agreements. Schoen, 15 P.3d at 1098; see generally Stephanie J. Shafer, “Limiting Lender Liability Through the Statute of Frauds,” 18 Colo. Law. 1725 (1989). Accordingly, we do not believe the Colorado Supreme Court would adopt the interpretation urged by HRSI, and we affirm the district court's conclusion that Colo.Rev.Stat. § 38-10-124 is inapplicable.FN6 FN6. HRSI's once-removed theory also fails because the individual credit agreements at issue involved principal amounts in the $2200 to $2500 range-far below the statutory threshold of $25,000. J.A. 3014 (Pl.Ex.18) (showing average new sales on a monthly basis from Sept. 1989 to May 1990); id. at 3017 (Pl.Ex.24) (same, for 1990); id. at 3035 (Pl.Ex.80) (same, for 1991 and 1992); id. at 3038 (Pl.Ex.81) (same, for 1993 and 1994); id. at 3044 (Pl.Ex.82) (same, for 1994 and 1995). There is nothing in the record to indicate that any individual credit agreement entered by EAC and sold to HRSI under the MFA involved a principal amount in excess of $25,000, and the individual agreements cannot be aggregated to meet the statutory minimum. Cf. J.A. 454 (Def. Mot. for Summ. J. on All Claims Pursuant to C.R.S. § 38-10-124: “[T]he principal amount is not, and should not be, calculated by reference to amount of any individual consumer loan. Rather, the amount is determined by the entire principal sum of the financial accommodation between defendant and plaintiffs.”). The plain language of the statute indicates that the phrase “involving a principal amount in excess of twenty-five thousand” qualifies the term “credit agreement,” not “claim.” Colo.Rev.Stat. § 38-10-124(2); accord Schoen, 15 P.3d at 1098 (noting legislative purpose of promoting certainty with respect to “credit agreements involving sums of more than $25,000”). |
