COLORADO COURT OF APPEALS 2017COA42
Court of Appeals No. 15CA0852
Otero County District Court No. 12CV63
Honorable Mark A. MacDonnell, Judge
Farm Credit of Southern Colorado, ACA; and Farm Credit of Southern
Colorado, FLCA,
Plaintiffs-Appellees,
v.
James C. Mason, a/k/a Jim Mason,
Defendant-Appellant.
ORDERS AND JUDGMENT AFFIRMED
Division V
Opinion by JUDGE FOX
Román and Booras, JJ., concur
Announced April 6, 2017
Snell & Wilmer L.L.P., Scott C. Sandberg, John O’Brien, Denver, Colorado, for
Plaintiffs-Appellees
James M. Croshal, Attorney At Law, James M. Croshal, Pueblo, Colorado;
Mullans Piersel and Reed, PC, Shannon Reed, Pueblo, Colorado, for Defendant-
Appellant
¶1 After Farm Credit of Southern Colorado, ACA, and Farm Credit
of Southern Colorado, FLCA (collectively, Farm Credit), refused to
loan Zachary Mason1 additional funds for his farming operations,
Zachary’s father, James C. Mason, took control of crops that
constituted collateral for some of Zachary’s loans. Farm Credit
sued James, and James filed counterclaims. The trial court found
James liable for converting the collateral and awarded damages.
James appeals the trial court’s orders denying his request for a jury
trial and admitting evidence of Zachary’s loan debt to Farm Credit.
He also appeals the judgment. We affirm.
I. Background
¶2 Zachary funded his farming operations in Colorado’s Arkansas
Valley with Farm Credit loans. By the spring of 2012, Zachary was
having difficulty paying his debt to Farm Credit and had planted
crops on seven farms for the coming harvest. Written agreements
between Farm Credit and Zachary granted Farm Credit a perfected
security interest in Zachary’s crops (Crop Collateral) and their
1 Because two persons in this case have the last name “Mason,” we
refer to them by their first names to avoid confusion.
1
proceeds. In early March, Farm Credit refused to continue funding
Zachary’s farming operations.
¶3 Without additional loans from Farm Credit, Zachary was
unable to cultivate the Crop Collateral. In May, James — who also
funded his farming operations by borrowing from Farm Credit for
about forty-six years — took over the cultivation of the Crop
Collateral. During that time, James also executed documents to
transfer Zachary’s United States Department of Agriculture benefits
to himself and began harvesting and selling the Crop Collateral.
James never attempted to transfer the Crop Collateral or its
proceeds to Farm Credit.2 Farm Credit became aware that James
had taken control of the Crop Collateral by late spring or early
summer. Without James’ cultivation, to which Farm Credit
“acquiesced,” the Crop Collateral would not have been harvested.
¶4 On May 21, Farm Credit filed a complaint against Zachary and
other parties, but not James. The complaint contained claims for
judgment on Zachary’s notes, foreclosure of real property collateral,
replevin, conversion of insurance proceeds, civil theft of said
2Farm Credit discovered arrangements that James made to sell a
crop (triticale), part of the Crop Collateral, through a third party,
and it was able to attach those proceeds.
2
proceeds, and fraud. At Farm Credit’s request, the trial court
issued a temporary order to preserve the collateral the complaint
described. This preservation order was to be served on “any third
party . . . that [Farm Credit] determine[d] may be in possession of or
have control over” the property detailed in the complaint. Farm
Credit served this order on James.
¶5 On August 1, after the parties engaged in unsuccessful
settlement negotiations and James closed his accounts with Farm
Credit, Zachary filed for bankruptcy, which halted Farm Credit’s
efforts to recover the collateral. The bankruptcy court later allowed
Farm Credit to continue its efforts to replevy personal property
collateral and foreclose real property collateral. On November 13,
as part of a bankruptcy adversary proceeding, Farm Credit filed an
amended complaint alleging that Zachary transferred the Crop
Collateral to James and asserting claims for relief under 11 U.S.C.
§ 523 (2012).
¶6 On March 13, 2013, Farm Credit amended the state trial court
complaint to add James as a defendant and include claims for
replevin and conversion against James, accounting by James,
foreclosure, and appointment of a receiver.
3
¶7 James’ answer raised the affirmative defenses of waiver,
estoppel, abandonment, and consent, and requested a jury trial.
Farm Credit filed a motion to strike James’ demand for a jury trial,
which the trial court granted, finding that the “basic thrust of this
action is equitable.”
¶8 In November 2013, in response to James’ interrogatories,
Farm Credit disclosed the amount of Zachary’s outstanding debt
owed to Farm Credit as of June 2013. The response indicated that
the debt, including principal and unpaid interest through June
2013, exceeded $7,000,000, and it provided the interest rates that
continued to compound daily. Even though discovery in the
underlying action, bankruptcy proceedings and settlement
negotiations involving other defendants, and Farm Credit’s replevin
and foreclosure efforts were simultaneously ongoing, Farm Credit
never supplemented its response or updated the disclosed amount
of Zachary’s outstanding debt.
¶9 Discovery disputes, including the one regarding Farm Credit’s
disclosures of Zachary’s outstanding debt, were addressed by a
court-appointed special master during a mediation in March 2014.
The record does not indicate that the special master issued written
4
findings or a written order, and the transcript does not reflect the
entire proceeding. After the 2014 mediation, Farm Credit never
disclosed an updated calculation of Zachary’s debt, to which James
did not object until the middle of trial.
¶ 10 Farm Credit’s suit against James went to trial in December
2014. On December 31, 2014 — after the evidence had been
presented but before the trial court issued a judgment — the
bankruptcy court issued its ruling in the adversary proceeding
against Zachary.3 James promptly filed a motion for a directed
verdict based upon the bankruptcy court’s findings. The trial court
denied this motion, concluding that there was “no identity of the
issues actually litigated and necessarily adjudicated” in the
bankruptcy adversary proceedings and in the trial court
proceedings.
¶ 11 The trial court subsequently entered a judgment against
James, finding him liable for converting the Crop Collateral and
awarding Farm Credit $251,435 plus 8% interest accruing from
3The bankruptcy adversary proceeding went to trial in November of
2014, while the proceedings against James in the trial court were
ongoing.
5
November 1, 2012, through April 6, 2015, the date of the
judgment.4
II. Request for a Jury Trial
¶ 12 James argues that the trial court erred in striking his demand
for a jury trial. James asserts that, when deciding whether he was
entitled to a jury trial under C.R.C.P. 38(a), the court should have
considered only the claims against James, not the equitable claims
against other parties. We disagree.
A. Preservation, Standard of Review, and Applicable Law
¶ 13 The parties agree that James has preserved this issue.
¶ 14 We review de novo a party’s asserted right to a jury trial in a
civil case. Stuart v. N. Shore Water & Sanitation Dist., 211 P.3d 59,
61 (Colo. App. 2009).
¶ 15 “The right to a trial by jury in civil actions exists only in
proceedings that are legal in nature.” Id.; see also C.R.C.P. 38(a).
Courts look to the “nature of the relief” sought to determine whether
a party is entitled to a jury trial. Stuart, 211 P.3d at 61 (citation
4Farm Credit’s expert valued the Crop Collateral at over $495,000
at harvest — when the alleged conversion occurred. After deducting
James’ estimated expenses to produce the crops, the expert arrived
at a damages value of $251,435.
6
omitted). “Actions for money damages are considered legal, and
actions seeking to invoke the coercive powers of the court are
considered equitable.” Id. at 62. But, “not all forms of monetary
relief need necessarily be characterized as legal relief for purpose of
the jury trial requirement.” Watson v. Pub. Serv. Co. of Colo., 207
P.3d 860, 865 (Colo. App. 2008) (citation and alteration omitted). A
party is not necessarily entitled to a jury trial, even where a plaintiff
seeks to recover money damages. People v. Shifrin, 2014 COA 14,
¶ 17.
¶ 16 The original complaint, not any counterclaims or defenses,
fixes the nature of the action. See Carder, Inc. v. Cash, 97 P.3d
174, 187 (Colo. App. 2003) (considering only the original complaint,
not the amended complaint, when affirming the denial of a demand
for a jury trial). Where a party seeks legal and equitable remedies,
courts “must determine whether the basic thrust of the action is
equitable or legal.” Am. Family Mut. Ins. Co. v. DeWitt, 216 P.3d 60,
63 (Colo. App. 2008), aff’d, 218 P.3d 318 (Colo. 2009).
B. Analysis
¶ 17 We agree with the trial court that the basic thrust of the
underlying action was equitable.
7
¶ 18 The May 21, 2012, complaint contained claims for judgment
on Zachary’s notes, foreclosure of real property collateral, replevin
of personal property collateral, conversion of insurance proceeds
paid after collateral was damaged or destroyed by fire, civil theft of
those proceeds, and fraud regarding those proceeds. The complaint
evidences that the action involved a debtor in default, and the relief
requested mainly concerned judgment on promissory notes and the
foreclosure and disposition of collateral. Under these
circumstances, Farm Credit’s “remedy is in the nature of a
foreclosure, an equitable action which is to be tried to the court.”
See W. Nat’l Bank of Casper v. ABC Drilling Co., 42 Colo. App. 407,
413, 599 P.2d 942, 947 (1979) (The right to a jury trial under
C.R.C.P. 38 “is not intended to extend to actions involving the
repossession of collateral by a secured party.”). That such
foreclosure-like proceedings typically involve calculations of debt
and “a personal monetary award against the debtor founded in
contract” does not undercut our conclusion that the basic thrust of
the action was equitable. See First Nat’l Bank of Meeker v. Theos,
794 P.2d 1055, 1059 (Colo. App. 1990); see also Shifrin, ¶ 17.
8
¶ 19 We reject James’ contention that the trial court erred in
considering the May 21, 2012, complaint’s claims because Farm
Credit did not name James as a defendant until it filed the March
13, 2013, amended complaint. While a party may invoke its right to
a jury trial in a civil action where all other parties have waived this
right, a party may only assert a demand for a jury trial in actions
where it is entitled to one; if no right to a jury trial exists because
the basic thrust of the action is equitable, as it is here, no party
may invoke that right. See In re Trust of Malone, 658 P.2d 284, 286
(Colo. App. 1982); see also Simpson v. Digiallonardo, 29 Colo. App.
556, 488 P.2d 208 (1971).
¶ 20 Accordingly, we conclude that the basic thrust of the
underlying action was equitable and that the trial court did not err
in striking James’ demand for a jury trial. See Stuart, 211 P.3d at
61; see also DeWitt, 216 P.3d at 63.
III. Evidence of Zachary’s Debt to Farm Credit
¶ 21 James asserts that the trial court erred in admitting evidence
of Zachary’s debt because Farm Credit did not disclose it before
trial, and this nondisclosure was intentional and material. We are
not persuaded.
9
A. Relevant Facts
¶ 22 During direct examination, Farm Credit asked its chief credit
officer if he was “familiar with the remaining amounts owing on”
Zachary’s debt. Before the officer answered, James objected on the
grounds that (1) Farm Credit never disclosed this information in
discovery; (2) the November 2013 interrogatory response had never
been updated; and (3) when James asked Farm Credit for this
information, it was never provided. James emphasized that, as of
the date of trial, if Farm Credit was “owed nothing, they get
nothing” in damages.
¶ 23 The trial court asked Farm Credit if the answer to the question
today was “going to be materially different” than the November 2013
interrogatory response. Farm Credit replied that it did not believe
so. Ultimately, the court ruled that it would allow the officer to
answer the question. But, if “the answer . . . is materially different
and the Court determines that it should have been updated as part
of the discovery process, the Court will strike the answer.”
¶ 24 The officer then testified that Zachary’s outstanding debt
totaled “[a]proximately four million” dollars. James renewed his
10
objection, and the trial court ruled that it would allow James to
provide the court with the November 2013 interrogatory response.
¶ 25 The next day, James repeated his objection while moving to
dismiss “all of the claims for conversion and replevin” because of
Farm Credit’s alleged discovery violation of failing to disclose an
updated total for Zachary’s debt.
¶ 26 Farm Credit responded that it was seeking from James
damages equivalent to the value of the Crop Collateral at the time of
conversion — not the full value of the debt Zachary owed it. Thus,
with Zachary’s debt exceeding $7,000,000 in June 2013 (and
interest accruing daily to date), no amount of security interest
proceeds would decrease the debt balance below $495,000 (Farm
Credit’s approximated value of the Crop Collateral when converted).
¶ 27 After noting that there was no complete transcript or written
order from the mediation, the trial court found that the amounts of
debt detailed in the November 2013 interrogatory response and the
chief credit officer’s trial testimony “far exceed[] the amount that’s
at issue in this litigation.” Accordingly, the trial court declined to
dismiss the action for discovery violations.
11
B. Preservation, Standard of Review, and Applicable Law
¶ 28 The parties agree that James has preserved this issue.
¶ 29 Because James’ arguments in the trial court concerned the
exclusion of evidence or the dismissal of the action as sanctions for
discovery violations, we understand James’ contention to be
grounded in C.R.C.P. 37(c).5 We review a trial court’s decision
whether to impose sanctions under C.R.C.P. 37 for an abuse of
discretion. Pinkstaff v. Black & Decker (U.S.) Inc., 211 P.3d 698,
702 (Colo. 2009). An abuse of discretion occurs when a trial court’s
ruling is manifestly arbitrary, unreasonable, or unfair, or if it
misapplies the law. People v. Relaford, 2016 COA 99, ¶ 25.
Additionally, we may affirm on any grounds supported by the
record. Makeen v. Hailey, 2015 COA 181, ¶ 21.
5 Although the record demonstrates that James requested the
amount of Zachary’s debt in an interrogatory and updated totals of
the outstanding debt after June 2013, the record does not indicate
that James made any related motions to compel or for sanctions for
failure to comply with a court order, pursuant to C.R.C.P. 37(a) and
(b) respectively. See C.R.C.P. 37(a)(2)(B) (if a deponent fails to
answer a question noticed in a C.R.C.P. 30(b)(6) deposition, the
party seeking discovery may move for an order compelling an
answer); C.R.C.P. 37(a)(4) (authorizing sanctions if the discovering
party’s motion is granted or if the requested discovery is provided
after the motion was filed).
12
¶ 30 C.R.C.P. 37(c) addresses potentially excluding nondisclosed
evidence unless the failure to disclose is justified or harmless to the
other party. Although a prior motion is not required to impose
sanctions, the burden is on the nondisclosing party to establish
that its nondisclosure was substantially justified or harmless.
Miller v. Rowtech, LLC, 3 P.3d 492, 496 (Colo. App. 2000).
¶ 31 When evaluating whether a failure to disclose is harmless
under C.R.C.P. 37(c), the inquiry is whether the failure to disclose
will prejudice the opposing party by denying him an adequate
opportunity to defend against that evidence. Todd v. Bear Valley
Vill. Apartments, 980 P.2d 973, 979 (Colo. 1999). In this
determination, courts consider various factors, including:
(1) the importance of the witness’s testimony;
(2) the explanation of the party for its failure to
comply with the required disclosure; (3) the
potential prejudice or surprise to the party
against whom the testimony is offered that
would arise from allowing the testimony; (4)
the availability of a continuance to cure such
prejudice; (5) the extent to which introducing
such testimony would disrupt the trial; and (6)
the non-disclosing party’s bad faith or
willfulness.
Id. at 978.
13
¶ 32 Generally, sanctions under C.R.C.P. 37 “should be applied in a
manner that effectuates proportionality between the sanction
imposed and the culpability of the disobedient party.” Pinkstaff,
211 P.3d at 702 (citation omitted). “[T]he trial judge must craft an
appropriate sanction by considering the complete range of
sanctions and weighing the sanction in light of the full record in the
case.” Id. (quoting Nagy v. Dist. Court, 762 P.2d 158, 161 (Colo.
1988)). The sanction selected should be the least severe one that
will ensure full compliance with a court’s discovery orders and be
commensurate with the prejudice caused to the opposing party. Id.
Because “[t]he harshest of all sanctions is dismissal or entry of a
default judgment,” such sanctions “should be imposed only in
extreme circumstances.” Nagy, 762 P.2d at 161.
C. Analysis
¶ 33 Even if C.R.C.P. 26 required Farm Credit to disclose the
current amount of Zachary’s debt through the trial date, the record
supports a conclusion that this nondisclosure was harmless.
¶ 34 The trial court considered the parties’ contentions and the
information available to James regarding Zachary’s debt. The trial
court found no material difference between the interrogatory
14
response and the chief credit officer’s testimony because both
indicated an amount of debt that “far exceed[ed]” the most
optimistic estimate given for the Crop Collateral’s value at the time
of conversion. This supports the conclusion that the nondisclosure
did not deny James an adequate opportunity to defend against
Farm Credit’s assertion that the outstanding debt exceeded the
value of the subject collateral. See Todd, 980 P.2d at 979.
¶ 35 Additionally, the record shows that this evidence constituted a
brief answer to a single question from a witness whom James had
deposed multiple times. Although the trial court condemned Farm
Credit’s behavior in discovery generally and issued sanctions for
other disputes, it made no findings as to whether Farm Credit acted
in bad faith in this particular discovery dispute and, in any event,
this factor is undercut by the considerations noted above. See id. at
978; see also Nagy, 762 P.2d at 161; Makeen, ¶ 21.
¶ 36 The trial court’s refusal to dismiss the action as a result of
Farm Credit’s harmless nondisclosure was not manifestly arbitrary,
unreasonable, or unfair, and it did not misapply the law. See
Relaford, ¶ 25. Therefore, the trial court did not abuse its
discretion. See id.
15
IV. The Judgment
¶ 37 James next contends that the trial court reversibly erred in
determining that several of his defenses were unavailable; rejecting
his argument that the bankruptcy court’s decision was dispositive
of the legal issues in the state litigation; and determining, when
assessing damages, that the date of conversion was the date that
James harvested the Crop Collateral. We disagree.
A. Defenses
¶ 38 The trial court erred, according to James, when it determined
that the defenses of abandonment, estoppel, waiver, and consent
did not relieve him of liability for conversion because the evidence
allegedly established that Farm Credit “acquiesced” to James’
taking control of the Crop Collateral. James also argues that the
trial court misapplied the law regarding his stated defenses to
conversion. We discern no error.
1. Preservation, Standard of Review, and Applicable Law
¶ 39 James raised the defenses of abandonment, estoppel, waiver,
and consent in his answer, during the trial management
proceedings, and in his trial brief. In addition, he presented related
16
evidence at trial, upon which the trial court ruled.6 We therefore
conclude that James sufficiently preserved this issue. See Berra
v. Springer & Steinberg, P.C., 251 P.3d 567, 570 (Colo. App. 2010)
(“[T]o preserve the issue for appeal all that was needed was that the
issue be brought to the attention of the trial court and that the
court be given an opportunity to rule on it.”).
¶ 40 We review a trial court’s factual findings for clear error, and its
conclusions of law de novo. Former TCHR, LLC v. First Hand Mgmt.
LLC, 2012 COA 129, ¶ 37. Factual findings are clearly erroneous
“only if there is nothing in the record to support” them. Loveland
Essential Grp., LLC v. Grommon Farms, Inc., 251 P.3d 1109, 1117
(Colo. App. 2010).
¶ 41 Conversion is “any distinct, unauthorized act of dominion or
ownership exercised by one person over personal property belonging
to another.” Stauffer v. Stegemann, 165 P.3d 713, 717 (Colo. App.
6 The trial court explicitly rejected James’ defenses of consent and
waiver. We conclude that the trial court rejected James’
abandonment and estoppel defenses when it found that “Farm
Credit promptly obtained [the preservation order] and sought to
enforce that Order to prevent the loss of the . . . Crop Collateral[,
which] was the best and arguably only measure Farm Credit could
take in the short time between Zachary’s default and his
bankruptcy petition.” See Berra v. Springer & Steinberg, P.C., 251
P.3d 567, 570 (Colo. App. 2010).
17
2006). Where its interest has priority, a secured party may bring a
claim for conversion against a party who “wrongfully obtained and
sold property in which the secured party has a security interest.”
Former TCHR, ¶ 38.
¶ 42 Credit agreements involving a principal amount in excess of
$25,000 are subject to the Credit Agreement Statute of Frauds (the
Statute). § 38-10-124, C.R.S. 2016. Under the Statute, “credit
agreements” include “[a]ny amendment of, cancellation of, waiver
of, or substitution of any or all of the terms or provisions of any of
the credit agreements.” § 38-10-124(1)(a)(II) (emphasis added). No
“debtor or creditor may . . . maintain . . . a claim relating to a credit
agreement [subject to the Statute] unless the credit agreement is in
writing and is signed by the party against whom enforcement is
sought.” § 38-10-124(2). Importantly, a “credit agreement may not
be implied under any circumstances.” § 38-10-124(3).
2. Analysis
¶ 43 We agree that the written agreements evidencing Farm Credit’s
perfected security interest in the Crop Collateral are “credit
18
agreements” within the meaning of the Statute.7 See
§ 38-10-124(1)(a)(I); see also § 4-9-315(a)(2), C.R.S. 2016 (“A
security interest attaches to any identifiable proceeds of
collateral.”). Thus, any waiver involving Farm Credit’s rights to the
Crop Collateral, including proceeds, would need to be in writing in
order to be effective. See United States v. Winter Livestock Comm’n,
924 F.2d 986, 993 (10th Cir. 1991) (noting that the receiver of
collateral bears the risk of “fail[ing] to obtain release” and
concluding that “ignorance” of the security interest “is not a
defense” to conversion of collateral). The record supports the trial
court’s finding that a written waiver “was never made.”
¶ 44 Although Farm Credit may have “acquiesced” to James’
cultivating the Crop Collateral to prevent its ruin before harvest, the
record evidences that Farm Credit never effectively waived its rights
to proceeds of the collateral. That James was not a party to these
agreements and that Farm Credit’s conversion claim sounds in tort
7 The collateral detailed in the security agreement between Farm
Credit and Zachary included numerous livestock and multiple
pieces of farming equipment. Setting this additional collateral
aside, even the conservative $146,000 early estimated value of the
Crop Collateral, which James referenced in the trial court, exceeds
the Statute’s $25,000 threshold.
19
do not change the fact that James took control of, sold, and
retained the proceeds from property in which Farm Credit retained
a perfected security interest. See § 38-10-124(1)(a)(II); see also
Former TCHR, ¶ 38 (noting that a security interest generally
survives the disposition of collateral). Indeed, the record supports
the trial court’s finding that, by obtaining the May 2012
preservation order and seeking its enforcement, Farm Credit
pursued its “best and arguably only measure” to prevent the loss of
the Crop Collateral “in the short time between Zachary’s default and
his bankruptcy petition.” The preservation order was “to prevent
the subject property from being transferred, sold, moved, relocated,
assigned, conveyed, or otherwise disposed of” and was served on
Zachary and James. Accordingly, we conclude that the trial court
did not err in rejecting James’ waiver defense.
¶ 45 For similar reasons, we conclude that the trial court properly
rejected James’ consent defense. First, a complete relinquishment
of Farm Credit’s security interest in the Crop Collateral would need
to be in writing. See § 38-10-124(2)-(3). Second, the record shows
that Farm Credit’s actions did not constitute consent to the total
disposition of collateral to James and the elimination of its security
20
interest.8 See § 4-9-315(a)(1) (“A security interest or agricultural
lien continues in collateral notwithstanding . . . disposition thereof
unless the secured party authorized the disposition free of the
security interest or agricultural lien.”) (emphasis added). While the
record shows that Farm Credit acquiesced to James’ cultivation and
harvest of the otherwise doomed Crop Collateral, it does not show
that Farm Credit consented to its security interest being completely
extinguished; rather, the record shows that Farm Credit sought to
protect its security interest by seeking the preservation order
shortly after it became aware of James’ actions. Thus, this case is
distinguishable from cases where a creditor consented to the
disposition of collateral and lost its security interest as a result.
See First Nat’l Bank of Brush v. Bostron, 39 Colo. App. 107, 110,
564 P.2d 964, 966 (1977) (determining that a creditor lost its
8 Although the trial court incorrectly stated that “acquiescence by a
property owner is not a defense to conversion,” see Colo. Bank & Tr.
Co. v. W. Slope Invs., Inc., 539 P.2d 501, 504 (Colo. App. 1975)
(noting that “acquiescence or consent” constitute a defense to the
conversion of collateral), we conclude that this statement was
merely ancillary to the court’s decision that the facts were
insufficient to show consent or acquiescence to James’ taking
possession of the collateral free of Farm Credit’s security interest.
Moreover, James did not present acquiescence as a defense
separate from consent in the trial court or on appeal.
21
security interest in cattle feed when it “authorized the use of the
feed” by a third party who was free to destroy the feed by giving it to
cattle).
¶ 46 On this record, the trial court did not err in rejecting James’
consent defense.
¶ 47 Next, we discern no error in the trial court’s rejection of James’
abandonment defense. The trial court found that, rather than
abandoning the Crop Collateral or its security interest, Farm Credit
undertook to prevent the loss of the Crop Collateral (or proceeds) by
obtaining the May 2012 preservation order, seeking its
enforcement, and serving it on Zachary and James. Even with this
notice, James took the risk of continuing to cultivate and harvest
the Crop Collateral.
¶ 48 The trial court did not find that Farm Credit manifested intent,
or took action, to abandon the Crop Collateral and related claims at
any point, including during the bankruptcy adversary proceeding.
The trial court’s finding that the Crop Collateral “would have
perished” without James’ actions did not require it to find that
Farm Credit intentionally abandoned that collateral; Farm Credit’s
failure to harvest does not necessarily mean it intended to abandon
22
its interest in the proceeds of the Crop Collateral. See Hoff
v. Girdler Corp., 104 Colo. 56, 59, 88 P.2d 100, 102 (1939)
(“Abandonment consists of two factors, the intention and the act.”).
Because these findings have record support, we conclude that the
trial court did not err in finding that the evidence was insufficient to
establish James’ abandonment defense. See Loveland Essential
Grp., 251 P.3d at 1117; see also Hoff, 104 Colo. at 59, 88 P.2d at
102.
¶ 49 Finally, the trial court did not err in rejecting James’ estoppel
defense. As we have explained, Farm Credit did not consent to the
total disposition of the Crop Collateral to James or waive its
security interest under the credit agreements; thus, waiver or
consent do not provide grounds for an estoppel defense here. See
18 Am. Jur. 2d Conversion § 111 (2017). While the trial court
found that Farm Credit “acquiesced” to James’ cultivating the
crops, it also found that Farm Credit obtained and sought to
enforce the preservation order against James with notice to James
before the 2012 harvest. Thus, the trial court properly rejected an
23
estoppel defense grounded in any benefit James conferred to Farm
Credit.9 See id.
B. Bankruptcy Court Decision and Collateral Estoppel
¶ 50 James contends that the trial court erred when it determined
that the bankruptcy court’s decision did not preclude Farm Credit
from recovering on its claims and denied James’ motion for a
directed verdict. We are not persuaded.
1. Preservation and Standard of Review
¶ 51 The parties agree that James properly preserved this issue.
¶ 52 We review collateral estoppel claims de novo. See Stanton
v. Schultz, 222 P.3d 303, 307 (Colo. 2010). But, we examine the
trial court’s factual findings for clear error. Goluba v. Griffith, 830
P.2d 1090, 1091 (Colo. App. 1991).
2. Discussion
¶ 53 Collateral estoppel, or issue preclusion, bars relitigating an
issue when a court has already decided that issue. A-1 Auto Repair
& Detail, Inc. v. Bilunas-Hardy, 93 P.3d 598, 600 (Colo. App. 2004).
¶ 54 Collateral estoppel precludes an issue’s relitigation where:
9 The trial court allowed James to recover the estimated expenses
incurred to produce and harvest the Crop Collateral.
24
(1) the issue is identical to an issue actually
litigated and necessarily adjudicated in the
prior proceeding; (2) the party against whom
estoppel was sought was a party to or was in
privity with a party to the prior proceeding; (3)
there was a final judgment on the merits in the
prior proceeding; and (4) the party against
whom the doctrine is asserted had a full and
fair opportunity to litigate the issues in the
prior proceeding.
Stanton, 222 P.3d at 307. In cases involving the same factual
issues, if not the same legal issues, “[t]he doctrine of issue
preclusion applies to the relitigation of “factual . . . matters” that a
court previously litigated and decided.” Calvert v. Mayberry, 2016
COA 60, ¶ 15 (citation and alteration omitted).
¶ 55 Here, the legal issues before the bankruptcy court were
different from those before the trial court. The bankruptcy court
decided Farm Credit’s claims objecting to the discharge of Zachary
pursuant to 11 U.S.C. § 523 and alleging fraud, embezzlement, and
intentional injury to property. The trial court, in contrast, decided
Farm Credit’s conversion claims against several defendants
grounded in state common law tort and in Farm Credit’s rights
provided by its security agreements. The record supports the trial
court’s finding that “the focus of the [bankruptcy court’s]
25
conclusions of law remain[ed] on Zachary[’s] actions regarding the
crops,” not James’. The issues litigated in the two proceedings at
issue were not “identical.” See Stanton, 222 P.3d at 307; see also In
re Musgrave, No. ADV.09-01006, 2011 WL 312883, at *11 (B.A.P.
10th Cir. Feb. 2, 2011) (unpublished opinion) (“Although conversion
of property of another can serve as grounds for nondischargeability
under § 523(a)(6), not every conversion constitutes a willful and
malicious injury within the meaning of § 523(a)(6).”) (footnote
omitted). Therefore, although the trial court applied the doctrine of
collateral estoppel to certain factual issues decided by the
bankruptcy court, the trial court correctly determined that
collateral estoppel did not apply to the legal issues before it. The
trial court, therefore, properly denied James’ motion for a directed
verdict. Even if the bankruptcy court loosely used the term
“acquiesce” in describing Farm Credit’s actions concerning the Crop
Collateral, it did not adjudicate the legal effect of the preservation
order that Farm Credit sought and enforced. See Calvert, ¶ 15.
C. Damages Assessment
¶ 56 Lastly, James argues that the trial court misapplied the law
when assessing damages by determining that the date of conversion
26
was the date of harvest. James asserts that the trial court should
have found that the date of conversion occurred no later than the
end of the spring of 2012 when James took over the crops’
cultivation. We disagree.
1. Preservation, Standard of Review, and Applicable Law
¶ 57 James preserved this issue for appeal.
¶ 58 The trial court “has the sole prerogative to assess the amount
of damages, and its award will not be set aside unless it is
manifestly and clearly erroneous.” Lawry v. Palm, 192 P.3d 550,
565 (Colo. App. 2008). The trial court also has the discretion to
determine the appropriate measure of damages, taking “the goal of
reimbursement of the plaintiff for losses actually suffered” as its
principal guidance. Heritage Vill. Owners Ass’n, Inc. v. Golden
Heritage Inv’rs, Ltd., 89 P.3d 513, 516 (Colo. App. 2004). Whether
the trial court misapplied the law when determining the measure of
damages presents a question of law which we review de novo. See
Freedom Colo. Info., Inc. v. El Paso Cty. Sheriff’s Dep’t, 196 P.3d 892,
894 (Colo. 2008) (reasoning that a trial court erred as a matter of
law when it applied the wrong legal standard); see also Antero Res.
Corp. v. Strudley, 2015 CO 26, ¶ 14.
27
¶ 59 “The measure of damages for conversion is generally the value
of the converted property at the time and place of the
misappropriation plus interest at the legal rate from the time of the
conversion until the time of trial.” Glenn Arms Assocs. v. Century
Mortg. & Inv. Corp., 680 P.2d 1315, 1317 (Colo. App. 1984).
Conversion is not a continuing tort. Emp’rs’ Fire Ins. Co. v. W.
Guar. Fund Servs., 924 P.2d 1107, 1111 (Colo. App. 1996).
2. Analysis
¶ 60 The trial court found that James began harvesting the Crop
Collateral as early as May 2012. According to the court, calculating
the value of the Crop Collateral was difficult because James claimed
that he kept no records of “his 2012 farming activities” — a claim
which the trial court found “lack[ed] credibility.” James presented
no evidence in the trial court regarding an estimation of his cost,
minus Zachary’s prior contributions, to cultivate the Crop
Collateral.10 As a result, the trial court had to calculate damages
10Instead, James seemed to advocate during trial that the court
should adopt Farm Credit’s preliminary valuation made in April
2012, before the harvest, totaling $146,000, rather than Farm
Credit’s trial expert’s valuation exceeding $495,000. See Carder,
Inc. v. Cash, 97 P.3d 174, 185 (Colo. App. 2003) (“The trial court, as
fact finder, has broad discretion in determining the amount of
28
based on the expert valuations provided by Farm Credit alone.
Under these circumstances, we agree that the proper measure of
damages is “the estimated value of the crop at the time of harvest
minus the estimated cost to produce the crop.” See Roberts v. Lehl,
37 Colo. App. 351, 352-55, 149 P. 851, 852 (1915) (applying this
measure of damages to a case involving the destruction of crops);
see also W. W. Allen, Annotation, Measure of Damages for Injury to
or Destruction of Growing Crop, 175 A.L.R. 159 (originally published
in 1948) (noting judicial exceptions regarding the measure of
damages for damages involving crops, due to the unique nature of
assessing the value of growing crops); 2A Stephen A. Hess, Colorado
Practice Series: Methods Of Practice § 81:49 (6th ed. 2016) (same).
¶ 61 Because we conclude that the trial court applied the correct
standard in assessing damages, we defer to its factual findings that
are supported by the record and discern no error with the damages
award. See Lawry, 192 P.3d at 565.
damages.”); see also Brandt v. MacLellan, 495 P.2d 250, 251 (Colo.
App. 1972) (not published pursuant to C.A.R. 35(f)) (refusing to
substitute the reviewing court’s judgment for the trial court’s where
the trial court’s findings were supported by some parts of the
evidence and conflicted by others).
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V. Conclusion
¶ 62 The orders and judgment are affirmed.
JUDGE ROMÁN and JUDGE BOORAS concur.
30
Farm Credit of Southern Colorado, ACA v. Mason
Combined Opinion