Westec Construction Management Co. v. Postle Enterprises I, Inc.

68 P.3d 529, 2002 Colo. App. LEXIS 1960, 2002 WL 31478054
CourtColorado Court of Appeals
DecidedNovember 7, 2002
Docket01CA1055, 01CA1632
StatusPublished
Cited by3 cases

This text of 68 P.3d 529 (Westec Construction Management Co. v. Postle Enterprises I, Inc.) 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
Westec Construction Management Co. v. Postle Enterprises I, Inc., 68 P.3d 529, 2002 Colo. App. LEXIS 1960, 2002 WL 31478054 (Colo. Ct. App. 2002).

Opinion

Opinion by

Judge DAVIDSON.

In this breach of contract action, defendant, Postle Enterprises I, Inc., appeals from the trial court's judgment on remand determining that it failed to mitigate its damages against plaintiff, Westee Construction Management Company. Westec separately appeals the trial court's awards of post-judgment interest, attorney fees, and costs to Postle, and Postle cross-appeals the caleulation of per diem interest. The two appeals have been consolidated. We affirm in part, reverse in part, and remand.

In 1995, Westee contracted to build a fast-food restaurant for Postle. Although Postle was responsible for the cost of marking the property boundaries under the contract, Westec hired a surveyor to set the property pins. After the foundation was built, Westee discovered that it was in the wrong location and encroached on neighboring property, and Westee stopped construction. Westee disclaimed any liability for the mistake, but the surveyor acknowledged its error.

With minimal involvement from Westec, Postle and the surveyor began discussing possible remedies. Within a few days, the surveyor obtained an estimate from Westee and agreed to pay the cost of demolishing and relocating the foundation, with any consequential damages to be negotiated later. Postle rejected the offer, indicating that it would settle only the entire controversy, including its claims for lost profits, staffing costs, and other damages caused by the delay in completion. The parties also discussed the possibility of acquiring part of the neighboring property, which Postle viewed as the more expedient option.

After the surveyor requested an estimate, Westee sent Postle a change order that increased the contract sum by over $60,000 and the contract time by forty-six days, and Wes-tee indicated that it could commence work on the project the following week if given notice to proceed. Postle did not sign the change order or give Westee notice to proceed, but continued to negotiate with the surveyor.

The following month, Postle's lender notified it that a continued construction stoppage would constitute a default and indicated that if Postle did not reach an agreement with the surveyor and move forward with the demolition and reconstruction, the lender would accelerate the balance of the loan. Postle did not respond, and the property was ultimately foreclosed upon.

Subsequently, Westee redeemed the property, and the surveyor purchased part of the neighboring lot and suggested that Postle allow construction to commenee in the present location and negotiate consequential damages later. Postle rejected the offer, but eventually, after this lawsuit was filed, Wes-tee conveyed the property to Postle, and construction was recommenced. The restaurant was completed approximately twenty-seven months after the date called for in the contract.

Westee sued Postle for payment under the contract, and Postle counterelaimed for breach of contract. Westec's claims for payment were settled before trial. After a bench trial, the court entered judgment for Postle in the amount of $168,371, which primarily represented damages for relocation of the foundation, staffing costs, and lost profits. However, the court refused to award any additional damages to Postle for the twenty-seven-month delay because < Postle failed to give notice to Westee as provided in a provision of the contract.

Postle appealed, and another division of this court determined that the failure to give notice was not a proper basis to limit those damages. The division remanded the case for a determination of whether Postle otherwise failed to mitigate those damages and for an award of prejudgment interest. Westec Constr. Mgmt. Co. v. Postle Ents. I, Inc., (Colo.App. No. 98CA1997, Jan. 27, 2000)(not published pursuant to C.A.R. 835(f))(Westec I).

On remand, the trial court again found that Postle had failed to mitigate its damages and, accordingly, awarded no additional damages. The trial court awarded prejudgment *532 interest and subsequently awarded certain postjudgment costs and attorney fees, as well as postjudgment interest on the prejudgment interest from the date of the original judgment.

Postle appeals from the trial court's determination that it failed to mitigate its damages and the calculation of the per diem amount of postjudgment interest. Westec appeals the award of postjudgment interest on the prejudgment interest and the amount of attorney fees and costs awarded. We reverse those parts of the judgment awarding postjudgment interest prior to the date of the judgment on remand and calculating the per diem amount, and otherwise we affirm.

L.

Postle contends that because allowing demolition and reconstruction of the foundation would have required it to sign Westec's change order, the trial court erred in concluding that Postle failed to mitigate its damages. Postle argues that signing the change order would have required it to abandon a right of action against Westee and, therefore, was not a reasonable mitigation alternative as a matter of law. We disagree.

A party seeking recovery under a contract has a duty to mitigate its damages. La Casa Nino, Inc. v. Plaza Esteban, 762 P.2d 669 (Colo.1988). "The defense of failure to mitigate damages applies when a plaintiff has failed to exercise reasonable care and diligence to minimize or lessen damages occasioned by defendant's conduct." Berger v. Sec. Pac. Info. Sys., Inc., 795 P.2d 1380, 1385 (Colo.App.1990).

"A plaintiffs failure to mitigate damages is excused, however, if mitigation would require inordinate or unreasonable measures or if there were reasonable grounds for the failure to mitigate." Fair v. Red Lion Inn, 943 P.2d 431, 437 (Colo.1997). For example, a party "need not accept a modified contract in mitigation of its damages when the modified offer includes abandonment of any right of action for a prior breach as a condition of acceptance." Stanspec Corp. v. Jelco, Inc., 464 F.2d 1184, 1187 (10th Cir.1972).

Ultimately, whether a party made reasonable efforts to mitigate its damages is a determination of fact, which will not be disturbed on appeal unless it is clearly erroneous. See Fair v. Red Lion Inn, supra.

In determining that Postle failed to mitigate its damages, the trial court noted that Postle:

declined to authorize the work to correct the placement of the footings and foundation, declined to accept the offer by [surveyor] to pay for the necessary demolition and reconstruction, declined to accept [surveyor's] offer to preserve the issue of all consequential damages and began negotiations with [surveyor] to purchase the additional lot and demanded resolution of all consequential damages prior to commene-ing the correction of the construction problem. This continued through April of 1996. At that point in time, Postle was estimating its consequential damages in the amount of $385,000 to $485,000.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

U.S. Welding, Inc. v. Advanced Circuits, Inc.
2018 CO 56 (Supreme Court of Colorado, 2018)
Thompson v. United Securities Alliance, Inc
2016 COA 128 (Colorado Court of Appeals, 2016)
People v. Shifrin
2014 COA 14 (Colorado Court of Appeals, 2014)

Cite This Page — Counsel Stack

Bluebook (online)
68 P.3d 529, 2002 Colo. App. LEXIS 1960, 2002 WL 31478054, Counsel Stack Legal Research, https://law.counselstack.com/opinion/westec-construction-management-co-v-postle-enterprises-i-inc-coloctapp-2002.