Colorado Supreme Court Weighs in on Murky Statutory Settlement Interest Rates

The Colorado Supreme Court room. A courtroom with seven seats and red textiles in front of a podium with benches
The Colorado Supreme Court on Tuesday took its third swing at Colorado’s statute over how interest should be calculated on civil monetary awards. / Law Week file.

The Colorado Supreme Court on June 21 took its third swing at Colorado’s statute over how interest should be calculated on civil monetary awards. 

A 4-2 en banc majority of the state Supreme Court found parties that appeal a judgment against them, no matter the appeal outcome, trigger the accrual of market-rate interest on the judgment as opposed to a higher 9% interest rate set by the Colorado General Assembly that applies before the appeal. 

Tuesday’s decision is the third time the state’s high court has interpreted the statute, which in past cases, has created more questions than it’s answered. The appeal was closely watched by Colorado’s legal community, with the Colorado Defense Lawyers Association, the Colorado Civil Justice League, the Colorado Trial Lawyers Association and the American Tort Reform Association joining as amicus curiae in the case. 

Ford Motor Company v. Forrest Walker arose out of a 2009 car accident where Forrest Walker was rear-ended while stopped in traffic in his 1998 Ford Explorer. He sued Ford in 2013, claiming that the driver’s seat of his car was defective and the defect caused or contributed to the permanent injuries he sustained after the crash. A jury awarded Walker $2.9 million in damages but Ford appealed the verdict, after taking issue with instructions given to the jury. The Colorado Supreme Court agreed with the auto manufacturer and a new trial was held, with the jury awarding a nearly identical amount of damages in 2019. 

Created in 1975, Colorado Revised Statutes 13-21-101 lays out how interest on damages are calculated and requires a 9% interest rate to be applied from the date an injury happened to the satisfaction of the judgment. A 1982 amendment to the statute carved out an exception for a lower, market-rate interest to be applied when “a judgment for money in an action to recover damages for personal injuries is appealed by a judgment debtor and the judgment is modified or reversed with a direction that a judgment for money be entered in the trial court.” 

Walker asked a district court to apply the statutory 9% interest rate for a 10year period from his injury in 2009 through the second trial in 2019, totaling $3.6 million in interest on top of damages. Ford, on the other hand, asked the court to apply the 9% interest from 2009 through 2013 but switch to a market-rate interest from 2013 through 2019, arguing that by appealing the jury’s trial, the company triggered the statute’s market-rate conditions. 

The district court ruled in favor of Walker and Ford appealed to the Colorado Court of Appeals which upheld the lower court’s order, reasoning that a plain language reading of the statute supported applying at 9% interest rate. 

Appealing again, Ford asked the Colorado Supreme Court to weigh in on the issue, arguing that the statute is ambiguous and that by including the market-rate interest exception, the Colorado General Assembly meant to neutralize financial disincentives to appeal cases. 

This case isn’t the first time the Colorado Supreme Court has been asked to interpret CRS 13-21-101. First in 1996 and then again in 2009, an en banc state Supreme Court reviewed the statute. 

In the 1996 case, Rodriguez v. Schutt, the Colorado Supreme Court found that the 1986 amendment to the statute created two distinct types of judgments under the statute. The court attempted to factor in the general assembly’s legislative intent when it created the amendment and rewrote a portion of the statute in an attempt to fix what it saw as a constitutional violation in the law. 

Then in 2009, the Colorado Supreme Court undid the 1996 rewritten statute. In re-writing the statute, the Colorado Supreme Court created multiple definitions for pre- and post-judgment time periods, the justices found, creating further confusion. The 2009 ruling in Sperry v. Field found post-judgment interest is owed from the date a judgment is entered, rather than when an injury occurs, until it’s satisfied.  

Despite previous confusion caused when the state Supreme Court attempted to fold in the legislative intent behind CRS 13-21-101, the majority of the state Supreme Court explained that it needed to do so since the statute is ambiguous. 

“What has proven problematic in the past, however, hasn’t been our attempts to ascertain and effectuate the legislative intent in section 13-21-101; it’s been our rewriting of the statute on two separate occasions—once in Rodriguez, to cure a constitutional infirmity, and once in Sperry, to cure an ambiguity that our redrafting in Rodriguez inadvertently created,” wrote Justice Carlos Samour in the majority opinion joined by Justices Brian Boatright, William Hood and Richard Gabriel. 

The justices agreed with the Colorado Court of Appeals that a plain-language reading of the statute supported Walker’s position, but it could also support Ford’s position, it found. By not considering this, the Colorado Court of Appeals didn’t consider the statute’s ambiguity.

Turning to the legislative intent, the court found that the 1982 amendment was added in order to “neutralize the economic benefits and detriments of appeal under the statutorily-set rate of interest.” The only way to read CRS 13-21-101 and maintain this intent, the court ruled, would be to apply market-rate interest to any period of time after a party appeals. The case was remanded for recalculated interest. 

Dissenting from the majority, Justice Monica Márquez, joined by Justice Melissa Hart, wrote in support of the Colorado Court of Appeals’ finding. The subsequent judgment overrode the original judgment, Márquez found, and therefore there wasn’t a period to trigger the market-rate interest specified by state law. They added that the Colorado Supreme Court has previously tried to understand legislative intent behind the statute, and has only made the issue less clear. 

“How to fashion an interest scheme that neutralizes the financial incentives (or disincentives) to appeal while ensuring that a successful tort plaintiff is fully compensated is a complex policy issue,” wrote Márquez. “However, I would leave the role of balancing these competing legislative objectives where it properly belongs, with the General Assembly, and simply apply the statute as written.”

While the June 21 decision cleared up some questions in Colorado’s legal community around interest and appeals, this case spoke to a larger issue around the murky statute, according to the CDLA, which joined the appeal as amicus curiae in support of Ford. 

“CDLA appreciates the efforts of the Supreme Court majority to bring clarity to one of many issues involving the clutter of statutes governing interest on claims and judgments in Colorado,” said Robert Hinckley, a shareholder at Buchalter in a statement on behalf of the CDLA. “However, what this case really demonstrates is the very real need for the legislature to revise the many statutes into a system that befits a coherent civil justice system.”    

On the other side of the matter, the CTLA, which joined as amicus curiae in support of Walker said it’s disappointed by the position the court took and language used by Samour in the majority opinion. 

“The Supreme Court’s opinion is disappointing, not only because of its legal analysis but also because the underpinnings of the opinion perpetuate an outdated stereotype about injured plaintiffs and their attorneys,” said Kylie Schmidt, an associate at Ogborn Mihm LLP and co-author of the CTLA’s amicus brief, in a statement. 

Specifically, Schmidt took issue with Samour’s opening sentence (“Watch TV long enough and you’ll eventually encounter a well-known figure of our justice system—the personal injury plaintiff.”) and another sentence describing the amount of money in dispute (“The difference matters—in this case, for nearly two million reasons.”).  “This type of charged language is inappropriate and it’s appalling that four of Colorado’s Supreme Court justices condoned it,” said Schmidt. “Mr. Walker, like many of the Colorado citizens represented by CTLA members, spent years living with some very serious injuries suffered at the hands of corporate misconduct, and our Supreme Court should be focused on ensuring that the most powerful in our society, these corporations and their well-heeled insurers, are on an equal playing field as those whose lives are upended by the faults of others. It adds insult to injury when a Colorado citizen’s decade-long experience in our legal system concludes with prose from our highest court suggesting that justice isn’t blind.” 

 Justice Maria Berkenkotter did not participate in the court’s opinion; Berkenkotter served as the judge in the 2013 trial in Boulder County District Court.

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