Proactive Technologies, Inc. v. Denver Place Associates Ltd. Partnership

141 P.3d 959, 60 U.C.C. Rep. Serv. 2d (West) 546, 2006 Colo. App. LEXIS 1016, 2006 WL 1766844
CourtColorado Court of Appeals
DecidedJune 29, 2006
DocketNo. 04CA2613
StatusPublished
Cited by4 cases

This text of 141 P.3d 959 (Proactive Technologies, Inc. v. Denver Place Associates Ltd. Partnership) is published on Counsel Stack Legal Research, covering Colorado Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Proactive Technologies, Inc. v. Denver Place Associates Ltd. Partnership, 141 P.3d 959, 60 U.C.C. Rep. Serv. 2d (West) 546, 2006 Colo. App. LEXIS 1016, 2006 WL 1766844 (Colo. Ct. App. 2006).

Opinion

Opinion by

Judge TAUBMAN.

In this case concerning the recovery of consequential damages for the commercially unreasonable sale of collateral, plaintiff, Proactive Technologies, Inc., appeals the trial [960]*960court’s summary judgment in favor of defendant, Denver Place Associates Limited Partnership. We affirm.

In 1994, Denver Place leased space to Proactive under a commercial lease. In 1995, Proactive defaulted twice on its obligations under the lease, and in November of that year, it entered into a settlement agreement obligating it to make payments to Denver Place, in return for which it could remain in possession of the premises. The agreement provided that Denver Place could lock Proactive out of the leased space and deny it access to the leased space and its equipment if it failed to comply with any of the terms of the agreement or lease.

Denver Place locked Proactive out of its leased space in December 1995 when Proactive was unable to meet the terms set forth in the settlement agreement. In March 1996, Denver Place auctioned Proactive’s property, but Proactive alleged that three of its computers and the contents of a lateral file cabinet were not made part of the auction or accounted for.

According to Proactive, two of its computers contained fully functional versions of software used in sales and training presentations by its employees, and the remaining computer contained the only then current electronic version of the software source code, which was necessary for Proactive to customize the software to meet the needs of its customers. Additionally, Proactive claimed that the lateral file cabinet contained the only then current written version of the software source code.

As relevant here, in 1998, Proactive filed an amended complaint against Denver Place, asserting claims for relief related to, inter alia, Denver Place’s conduct in the sale of its personal property. Specifically, Proactive asserted that Denver Place breached the Uniform Commercial Code (UCC) by failing to dispose of Proactive’s three computers and lateral file cabinet in a “commercially reasonable manner.”

In August 2004, Denver Place filed a motion for summary judgment on Proactive’s UCC claim, arguing that the computers and file cabinet were not part of the sale. In the alternative, Denver Place argued that, even if Proactive could maintain a claim for failure to dispose of the property in a commercially reasonable manner, it was not entitled to recover consequential damages in the form of lost profits under the UCC.

In September 2004, the trial court denied Denver Place’s motion for summary judgment on the ground that retention of collateral for an excessive period of time without disposition may be commercially unreasonable in violation of the UCC and may give rise to a claim for damages, regardless of whether the collateral was part of an auction or sale. Without addressing the measure of damages which might have been available in this case, the trial court then stated that consequential damages were not recoverable under the UCC, Colo. Sess. Laws 1965, eh. 330, § 4-9-507(1) at 1476 (now amended and recodified as § 4-9-625(b), C.R.S.2005), for failure to dispose of collateral in a commercially reasonable manner.

In November 2004, the parties stipulated to an entry of judgment wherein Proactive was found liable to Denver Place for breach of the lease and owed $290,572.34 in damages. Denver Place stipulated to liability on Proactive’s claim for breach of the UCC and conceded $13,511.10 in damages. Proactive now appeals part of the trial court’s judgment.

Proactive contends that the trial court erred in ruling that it could not recover consequential damages in the form of lost profits under the former § 4-9-507(1) of the UCC for Denver Place’s failure to dispose of the three computers and lateral file cabinet in a commercially reasonable manner. We disagree.

Colo. Sess. Laws 1963, ch. 330, § 4-9-504(3) at 1474 (now amended and recodified as § 4-9-610(b), C.R.S.2005), states, in relevant part, that “[disposition of the collateral may be by public or private proceedings,” but “every aspect of the disposition including the method, manner, time, place, and terms must be commercially reasonable.” The former § 4-9-507(1) stated, in pertinent part:

If it is established that the secured party is not proceeding in accordance with the provisions of ... this article, disposition may be ordered or restrained on appropriate [961]*961terms and conditions. If the disposition has occurred, the debtor or any person entitled to notification or whose security interest has been made known to the secured party prior to the disposition has a right to recover from the secured party any loss caused by a failure to comply with the provisions of said sections.

(Emphasis added.) See also Alamosa Nat’l Bank v. San Luis Valley Grain Growers, Inc., 756 P.2d 1022 (Colo.App.1988) (if secured party acts in commercially unreasonable manner regarding collateral, debtor has right to recover any resulting loss proved by debtor).

When a statute is interpreted, the adjective “any” is generally understood to mean “all.” Winslow v. Morgan County Comm’rs, 697 P.2d 1141 (Colo.App.1985). “Any” is a term of expansion without restriction or limitation in statutory construction. In re L.F., 56 P.3d 1249 (Colo.App.2002).

However, § 4-1-106(1), C.R.S.2005, states, in relevant part:

The remedies provided by this title shall be liberally administered to the end that the aggrieved party may be put in as good a position as if the other party had fully performed, but neither consequential or special nor penal damages may be had except as specifically provided in this title or by other rule of law.

(Emphasis added.) Moreover, the official commentary to § 4-1-106(1) states, in pertinent part: “Subsection (1) is intended to. make it clear that compensatory damages are limited to compensation. They do not include consequential or special damages, or penal damages; and the Act elsewhere makes it clear that damages must be minimized.”

Furthermore, the underlying purposes and policies of the UCC are “[t]o simplify, clarify, and modernize the law governing commercial transactions”; “[t]o permit the continued expansion of commercial practices through custom, usage, and agreement of the parties”; and “[t]o make tmiform the law among the various jurisdictions.” Section 4-l-102(2)(a)(c), C.R.S.2005 (emphasis added).

Although no Colorado cases discuss whether consequential damages may be awarded under the former § 4-9-507(1), one federal court has held that consequential damages are not available under the UCC for the commercially unreasonable sale of collateral because they are not expressly provided for as a remedy for such an infraction. Suffield Bank v. LaRoche, 752 F.Supp. 54 (D.R.I.1990).

In construing a statute, an appellate court must read and consider the statute as a whole and interpret it to give harmonious effect to all its parts. People v. Novitskiy,

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141 P.3d 959, 60 U.C.C. Rep. Serv. 2d (West) 546, 2006 Colo. App. LEXIS 1016, 2006 WL 1766844, Counsel Stack Legal Research, https://law.counselstack.com/opinion/proactive-technologies-inc-v-denver-place-associates-ltd-partnership-coloctapp-2006.