Zeke Coffee, Inc., a Colorado corporation, and Darren Spreeuw, Plaintiffs-Appellees and Cross-Appellants,
Pappas-Alstad Partnership, Defendant-Appellant and Cross-Appellee
[Copyrighted Material Omitted]
Opinion is subject to revision upon final publication.
and County of Denver District Court No. 09CV11786. Honorable
Edward D. Bronfin, Judge.
AFFIRMED AND CASE REMANDED WITH DIRECTIONS.
J. Culhane, LLC, Daniel J. Culhane, Denver, Colorado, for
Plaintiffs-Appellees and Cross-Appellants.
LLC, David R. Eason, Bruce E. Rhode, Denver, Colorado, for
Defendant-Appellant and Cross-Appellee.
by JUDGE DAILEY. Lichtenstein and Fox, JJ., concur.
[¶1] In this landlord-tenant dispute,
defendant, Pappas-Alstad Partnership, appeals the district
court's restitutionary award of $167,024 plus statutory
interest to plaintiffs, Zeke Coffee, Inc., d/b/a Perk Hill
Cafe, and Darren Spreeuw, president of Zeke Coffee
(collectively, Zeke). We affirm and remand for an award of
[¶2] The underlying facts of the case are
fully set forth in Zeke Coffee, Inc. v. Pappas-Alstad
Partnership, (Colo.App. Nos. 11CA0744 & 11CA2317, Apr.
26, 2012) (not published pursuant to C.A.R. 35(f)) ( Zeke
[¶3] As pertinent here, in March 2004, Zeke
leased, for five years, a retail space from Pappas-Alstad to
use as a coffee shop. In September 2008, Zeke notified
Pappas-Alstad of its intent to exercise an option to extend
the lease for an additional five-year term. Pappas-Alstad,
however, said Zeke had breached a term of the lease and,
after Zeke refused to cure the alleged breach, it notified
Zeke that the lease had been terminated and converted into a
month-to-month tenancy. In June 2009, Pappas-Alstad served a
three-day demand for compliance or possession on Zeke, again
alleging that Zeke had breached the lease. Zeke acted to cure
the alleged breaches.
[¶4] Several months later, Zeke filed an
action in the district court seeking a declaratory judgment
that the lease remained in effect and that Pappas-Alstad had
breached it. In response, Pappas-Alstad served Zeke with a
notice to quit under the forcible entry and detainer statute,
section 13-40-107, C.R.S. 2014, and included in its amended
answer a counterclaim seeking Zeke's eviction.
[¶5] The district court entered judgment in
favor of Pappas-Alstad on the counterclaim and issued a writ
of eviction restoring possession of the property to
Pappas-Alstad. After Pappas-Alstad successfully opposed
Zeke's requests for a stay of execution of judgment,
Pappas-Alstad evicted Zeke from the premises.
[¶6] On appeal, a division of this court
reversed and remanded the case with directions. See Zeke
I. The division held, among other things, that
o the district court erroneously determined that Zeke's
alleged breaches of the lease supported Pappas-Alstad's
rejection of Zeke's exercise of the five-year option on
o Zeke had properly exercised the option, meaning that the
lease had not been converted to a month-to-month tenancy and
was " in full force and effect on the date of
judgment" ; and
o Zeke was " entitled to an appropriate remedy for this
Id. at 14, 21-22. The division remanded the case so
the district court could determine an " appropriate
remedy." Id. at 22.
[¶7] On remand, the parties disagreed as to
the appropriate remedy. Zeke argued that, because it had been
wrongfully evicted, it should be awarded actual,
consequential, and special damages for the loss of its
business, as well as possible punitive damages; Pappas-Alstad
argued that because, in evicting Zeke, it was relying on a
validly entered but ultimately erroneous court order at the
time of the eviction, Zeke should receive only restitution
equal to any benefit realized by Pappas-Alstad.
[¶8] In a written order, the district court
determined that, because Zeke had lost its right to
possession of the retail space as a result of an erroneous
court order, restitution was the appropriate remedy. After an
evidentiary hearing at which both parties presented expert
testimony on the amount of restitution owed, the court
awarded Zeke $167,024 (plus 8% statutory interest from the
date of eviction), representing the value of (1) the rent
Pappas-Alstad had received from its new tenant in the retail
space; (2) the rent it would receive through the remainder of
Zeke's lease term (i.e., through April 30, 2019),
discounted at the rate yielded by United States Treasury
Bills; and (3) the rent Pappas-Alstad would have received had
the new tenant moved in and begun making payments immediately
following the eviction.
[¶9] Pappas-Alstad appeals and Zeke
conditionally cross-appeals. In its appeal, Pappas-Alstad
contends that the court erroneously calculated the amount of
restitution Zeke was due by (1) basing it on actual and
potential rental income from the premises and (2) using the
Treasury Bill rate to discount the amount of future rent
proceeds to present value. In its cross-appeal, Zeke contends
that if we conclude that the court erred in determining the
amount awarded, then, but only then, should we remand the
case with directions to the district court to apply damages
for a " wrongful eviction" as the appropriate
remedy, not restitution.
Pappas-Alstad's Appeal: Calculating Restitution
Actual and Potential Rental Income as Bases for the
[¶10] Pappas-Alstad first contends that the
district court erred in using its actual and potential rental
income from the premises as a measure of the appropriate
restitution because this measure (1) did not " account
for the full effect of the erroneous judgment" and the
gain actually realized by Pappas-Alstad; (2) left
Pappas-Alstad " worse off" than if the erroneous
judgment had never occurred; (3) provided a corresponding
windfall to Zeke; and (4) violates public policy. We are not
[¶11] Whether the district court has applied
the correct legal standard in determining the
availability of a particular equitable remedy is
reviewed de novo. SeeRedd Iron, Inc. v.
Int'l Sales & Serv. Corp., 200 P.3d 1133, 1136
(Colo.App. 2008). But the power to determine the
components of such a remedy is ...