July 30, 2015
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. See Redd 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 within the
court's discretion. Beren v. Beren, 2015 CO 29,
¶ 12, 349 P.3d 233.
[¶12] Because Pappas-Alstad challenges the
amount of restitution awarded rather than the
propriety of restitution as the appropriate remedy, we review
the district court's award for an abuse of discretion.
Id. A court abuses its discretion only if its
decision is manifestly arbitrary, unreasonable, or unfair, or
is based on an erroneous view of the law. DeJean v.
Grosz, 2015 COA 74, ¶ 14.
[¶13] Restitution is an equitable remedy
which provides " a measure of damages which restores a
party to his/her prior status. It is available as a remedy
when the injured party is due reimbursement for a benefit
conferred upon another." Montoya v. Grease Monkey
Holding Corp., 883 P.2d 486, 489 (Colo.App. 1994),
aff'd, 904 P.2d 468 (Colo. 1995). It is used to
" 'deprive the defendant of benefits that in equity
and good conscience he ought not to keep, even though he may
have received those benefits honestly in the first instance,
and even though the plaintiff may have suffered no
demonstrable losses.'" Fleer Corp. v. Topps
Chewing Gum, Inc., 539 A.2d 1060, 1063 (Del. 1988)
(quoting Mass Transit Admin. v. Granite Constr.
Co., 57 Md.App. 766, 471 A.2d 1121, 1125 (Md. Ct. Spec.
[¶14] " 'A person who has conferred
a benefit upon another in compliance with a judgment, or
whose property has been taken thereunder, is entitled to
restitution if the judgment is reversed or set aside, unless
restitution would be inequitable.'" Beren,
¶ 47 (quoting Restatement (First) of Restitution §
[¶15] Where the judgment has been reversed
or set aside on appeal, " comment m to [section 74 of
the Restatement (First) of Restitution] provides that if the
judgment creditor acted in good faith, the sale was properly
conducted, and the property was acquired by a bona fide
purchaser, the judgment debtor is entitled to recover only
the proceeds from the sale, plus interest."
Tuscany, LLC v. W. States Excavating Pipe & Boring,
LLC, 128 P.3d 274, 281 (Colo.App. 2005) (emphasis
[¶16] Relying on the rationale of
Tuscany, the district court in this case determined
that " an equivalent approach -- the proceeds from the
[new tenant's] lease, plus interest -- should apply
here." It concluded that " the conditions for the
application of Tuscany and comment m of the
Restatement apply" because Pappas-Alstad had acted in
good faith reliance on a presumably valid judgment for
possession when it evicted Zeke and re-leased the premises to
a bona fide lessee within six weeks of the eviction.
[¶17] The court concluded that "
[Pappas-Alstad]'s gain is what it has received from the
lease proceeds from the new tenant . . . up to the present,
and what it will receive from leasing the Premises through
the remainder of the term of [Zeke]'s lease," i.e.,
until May 2019, plus interest.
[¶18] We perceive no error in this ruling.
[¶19] If a judgment ordering an eviction is
reversed on appeal, " 'a party is in general
entitled to restitution of all the things lost by reason of
the judgment in the lower court; and, accordingly, the courts
will, where justice requires it, place him as nearly as may
be in the condition in which he stood previously.'"
Stockton Theatres, Inc. v. Palermo, 121
Cal.App.2d 616, 264 P.2d 74, 78 (Cal. Ct.App. 1953) (quoting
Ward v. Sherman, 155 Cal. 287, 100 P. 864, 865 (Cal.
1909)) (cited with approval in PSM Holding Corp. v.
Nat'l Farm Fin. Corp., 743 F.Supp.2d 1136, 1141-43
(C.D. Cal. 2010)).
[¶20] But where, as here, a tenant has been
erroneously evicted from a premises that has since been
re-leased to a third party or sold, the court cannot
equitably restore the exact thing lost by execution of the
erroneous judgment, i.e., possession of the premises.
See Munoz v. MacMillan, 195 Cal.App.4th
648, 124 Cal.Rptr.3d 664, 671-72 (Cal. Ct.App. 2011). Thus,
" for all practical purposes, the only appropriate
remedy for vacating tenants who prevail on appeal, but who
failed to obtain a stay, may be a monetary award sufficient
to compensate [the tenant] for the property rights not
restored." Id. at 672 (emphasis and internal
quotation marks omitted).
[¶21] " [T]he measure of the loss
sustained by the judgment debtor under the erroneous decree
for which restitution was allowed was exactly that which was
gained by the judgment creditor either in money, property, or
the rents, issues, or profits derived therefrom . . . ."
Mann v. Thompson, 118 So.2d 112, 115 (Fla. Dist.
Ct.App. 1960) (cited with approval in Tuscany, 128
P.3d at 281); see Stockton Theatres, 264
P.2d at 78-79 (tenant entitled to all profits realized by
landlord during landlord's period of possession under
erroneous order); cf. Tuscany, 128 P.3d at
281 (the rightful possessor is entitled to recover all
proceeds gained from the sale of the disputed property under
an erroneous order).
[¶22] Pappas-Alstad argues, however, that
the court's award to Zeke of actual and potential rental
income was unjust because it did not " account for the
full [financial] effect of the erroneous judgment" on
both of the parties. In its view, the court should not have
awarded Zeke rental payments that Zeke would have made anyway
had the eviction never occurred and should have reduced any
restitution award by the expenses Papas-Alstad incurred in
re-leasing the premises and the rent it did not
collect, amounts which, in the end, would cause
it to incur a loss, or, " at best, a
'wash'" during the time from Zeke's eviction
to the latest possible end date for Zeke's lease. We are
[¶23] Initially, we reject
Pappas-Alstad's assertion that restitution should not
include an amount representing rental payments the tenant
would have made had it not been improperly evicted. In
Stockton Theatres, the California Court of Appeals
determined that a tenant, who had been erroneously evicted
from its leased movie theatre, was entitled to restitution in
the form of the landlord's profits from the theatre
during the landlord's period of possession. 264 P.2d at
79. The court reasoned that only the landlord's full
profits, rather than a reduced measure arrived at by
subtracting the tenant's rental rate, would adequately
restore what the tenant lost:
There might be circumstances under which such a measure of
[reduced] recovery would not only be necessary but would also
be just; but it does not lie in the mouth of [the landlord]
to say that the [tenant] either could have been or should
have been limited to such recovery. It was renting the
property from [the landlord] as a moving picture theater and
the building was designed and equipped for that purpose. [The
landlord], therefore, took over something more than bare
walls and empty seats. The fundamental purpose of the court
in responding to the demand for restitution was to do equal
and exact justice in sofaras that could be done to the
corporation which, by judicial error, had been deprived
of its property, its business and its business
opportunity. We cannot say on this record that the means
adopted, that is, an accounting of the profits of the
business . . . was not fully warranted. On the contrary, it
would appear from the record herein that no less a measure of
recovery would have been responsive to the just demands of
Id. at 78-79 (emphasis added); see also
Erickson v. Boothe, 127 Cal.App.2d 644, 274 P.2d
460, 463 (Cal. Ct.App. 1954) (rejecting " [a]n identical
contention" regarding reduction of restitution by the
agreed rental rate for a cattle ranch because " the
fundamental purpose of the court in responding to the demand
for restitution was to do equal and exact justice insofar as
that could be done to [the rightful possessor] who, by
judicial error, had been deprived of his property, his
business and his business opportunity" ) (cited with
approval in PSM Holding Corp., 743 F.Supp.2d at
[¶24] Similarly, in this case, Zeke was
operating its coffee shop on the premises and lost its
ability to run that business there as a result of the
erroneous judgment permitting his eviction. Although Zeke
would have had to pay rent to Pappas-Alstad had the erroneous
judgment never been entered, it also would have been able to
maintain its coffee business and the business income
opportunities associated with it. Thus, like the courts in
Boothe and Stockton Theatres, we cannot say
that the district court abused its discretion in not reducing
Pappas-Alstad's rental income by the rent it would have
otherwise received from Zeke. See Boothe,
274 P.2d at 463; Stockton Theatres, 264 P.2d at
[¶25] Nor was the court, acting in its
discretion, required to reduce from the award
Pappas-Alstad's expenses or losses in re-leasing the
[¶26] " As a general rule, the party to
whom property has been awarded under an erroneous judgment
may, upon reversal, deduct expenses that he necessarily
incurred in the protection of that property and the payment
of taxes and liens." Aye v. Fix, 192 Mont. 141,
626 P.2d 1259, 1262 (Mont. 1981) (citing Restatement (First)
of Restitution § 74, cmt. e (1937)) (rental payments to
state government could be reduced from restitution owed).
[¶27] But a landlord who relies on a
judgment with respect to matters other than
protecting the property or paying taxes or liens -- including
making the best use of the premises -- assumes the risk and
expense associated with those actions when its right to
possession has been appealed. Judge -- later United States
Supreme Court Justice -- Benjamin Cardozo recognized this,
writing on behalf of the New York Court of Appeals in
Golde Clothes Shop v. Loew's Buffalo Theatres,
236 N.Y. 465, 141 N.E. 917 (N.Y. 1923) (cited with approval
in PSM Holding Corp., 743 F.Supp.2d at 1143). In
that case, the court refused to reduce restitution for an
erroneously evicted tenant by the amount of money expended by
the landlord in making extensive improvements to the leased
premises because " [t]he defendant knew, when it made
the improvements, that its right to the possession was
contested by the tenant. It knew that an appeal was pending.
It took the risk, and went ahead." Id. at 919;
see also Boothe, 274 P.2d at 463 (declining
to discount the amount of restitution to which the rightful
possessor was entitled by the cattle profits made by the
party in possession under an erroneous order beyond those
that would have been made by the rightful possessor,
reasoning that " [a]lthough [the party in erroneous
possession] was guilty of no wrongdoing when she retook the
property, she knew that judgment was not final; she knew that
if the appeal were successful she would be subject to an
accounting and full restitution" ).
[¶28] Pappas-Alstad does not argue that the
re-leasing expenses were necessary to protect the land,
unlike the rental payments to the state in Fix.
Instead, the expenses are closer to the renovation expenses
and higher profits in Golde Clothes Shop and
Boothe, respectively -- the expenses were incurred
to make the best and highest use of the property while
Pappas-Alstad was in possession and to mitigate
Pappas-Alstad's potential damages.
[¶29] Further, as noted by Pappas-Alstad, it
is a landlord's obligation to make reasonable
efforts to re-lease a premises following eviction as a
mitigation measure. See Schneiker v.
Gordon, 732 P.2d 603, 611 (Colo. 1987). Because such an
expense is directly tied to Pappas-Alstad's erroneous
efforts to evict Zeke and the corresponding duty to mitigate
for its own benefit, it should not be deducted from
[¶30] Nor was the court required to reduce
the award by rent Pappas-Alstad did not receive between the
time of Zeke's eviction and the time the new tenant
started paying rent. As the district court explained in
declining to reduce the award by this unrealized rent, "
a measurement of [Pappas-Alstad]'s gain may involve the
reasonable rental value of the property during the full
leasehold term during which [Pappas-Alstad] had or could
have received rent, and that [Pappas-Alstad]'s
(apparent) decision to leave the premises unrented and
unoccupied may not represent the true measure of [its]
gain." (emphasis in original)).
[¶31] Indeed, because Pappas-Alstad's
possession under the erroneous order permitted it to obtain a
replacement, rent-paying tenant as soon as Zeke had been
evicted, we cannot say that the court abused its discretion
in concluding that the proper measure of Pappas-Alstad's
gain was the value of rental potential for the
premises during that time.
[¶32] Pappas-Alstad nonetheless argues that,
contrary to principles of equity, the restitution award
impermissibly left it " materially worse off" than
if the erroneous judgment had never been entered, which, in
turn, gave Zeke a " windfall." We disagree.
[¶33] Initially, we note that
Pappas-Alstad's argument is premised on the assertion
that it qualifies as the kind of " innocent
recipient" who should not be required to make
restitution of its gains and who cannot be left " worse
off . . . than if the transaction with the claimant had never
taken place." See Restatement (Third) of
Restitution and Unjust Enrichment § 1, cmt. d (2011).
[¶34] Pappas-Alstad qualifies as an "
innocent recipient," it says, because it (1) sought and
enforced the erroneous judgment of eviction in good faith and
without wrongdoing and (2) bore no responsibility
for its unjust enrichment. See Restatement (Third)
of Restitution and Unjust Enrichment at § 50(1)
(defining an " innocent recipient" as
" one who commits no misconduct in the transaction . . .
and who bears no responsibility for the unjust enrichment in
question" (internal quotation marks omitted)).
[¶35] Only the second circumstance cited
above is at issue here. Pappas-Alstad asserts that it bore no
responsibility for the unjust enrichment because Zeke's
eviction was a result of the district court's actions
rather than those of Pappas-Alstad. It was, Pappas-Alstad
says, the district court -- an institution of the state --
that ordered Zeke's eviction and denied Zeke's
request for a stay of execution on the judgment.
[¶36] " In our adversary system, . . .
we rely on the parties to frame the issues for decision and
assign to courts the role of neutral arbiter of matters the
parties present. . . . '[Courts] do not, or should not,
sally forth each day looking for wrongs to right. We wait for
cases to come to us, and when they do we normally decide only
questions presented by the parties.'" Greenlaw
v. United States, 554 U.S. 237, 243-44, 128 S.Ct. 2559,
171 L.Ed.2d 399 (2008) (quoting United States v.
Samuels, 808 F.2d 1298, 1301 (8th Cir. 1987) (R. Arnold,
J., concurring in denial of reh'g en banc). Consequently,
a court ordinarily " will not sua sponte afford a party
relief that it has not requested." Planned
Parenthood of Ind. & Ky., Inc. v. Comm'r, Ind. Dep't
of Health, 64 F.Supp.3d 1235, 1257 n.7 (S.D. Ind. 2014).
[¶37] In the present case, the district
court did not sua sponte order Zeke's eviction or deny
its request for stay. The court made these decisions only at
Pappas-Alstad's urging. Pappas-Alstad cannot now blame
the district court for Zeke's losses or its gain.
See Casey v. Galli, 94 U.S. 673, 680, 24
L.Ed. 168, 24 L.Ed. 307 (1876) (" Parties must take the
consequences of the position they assume." ); Hansen
v. State Farm Mut. Auto. Ins. Co., 957 P.2d 1380, 1385
(Colo. 1998) (" [A] party may not later complain where
he or she has been the instrument for injecting error in the
case; instead, the party is expected to abide the
consequences of his or her acts." ); Graves v.
Bonness, 97 Minn. 278, 107 N.W. 163, 165 (Minn. 1906)
(" In accordance with the general principle that parties
must abide by the consequences of their own acts, a party
cannot, on appeal, complain of an error in the lower court
which he was instrumental in causing or which he invited,
whether error was committed by himself alone or by the
court at his instance." (emphasis added)); see
also, e.g., State v. A.R., 213 N.J. 542, 65
A.3d 818, 830 (N.J. 2013) (The invited error doctrine applies
to preclude relief when a defendant " 'in some way
has led the court into error.'" (quoting State
v. Jenkins, 178 N.J. 347, 840 A.2d 242, 249 (N.J.
2004))); State v. Chappell, 97 Ohio App.3d 515, 646
N.E.2d 1191, 1204 (Ohio Ct.App. 1994) (" A party who
invites an error at trial has no one to blame but himself . .
. ." ); State v. Ferguson, 201 Or.App. 261, 119
P.3d 794, 799 (Or. Ct.App. 2005) (" The point of the
[invited error] doctrine is to ensure that parties do not
'blame the court' for their intentional or strategic
trial choices that later prove unwise . . . ." );
Mounger v. Mounger, No. E2010-02168-COAR3CV, 2012 WL
764913, at *3 (Tenn. Ct.App. Mar. 12, 2012) (" [W]e do
not give relief on appeal to a party who is responsible for
an alleged error that he or she blames on the trial
court." ); Havill v. Woodstock Soapstone Co.,
Inc., 177 Vt. 297, 865 A.2d 335, 349 (Vt. 2004) ("
Plaintiff cannot blame the court for an error that is of her
own creation . . . ." ).
[¶38] Restitution after an erroneous
judgment is based " upon the theory that, in equity, the
party who receives money or property in good faith under an
erroneous judgment, thereafter reversed, should be
required to restore what he has received, and not upon
the theory of a supposed wrong committed." Stockton
Theatres, 264 P.2d at 77 (internal quotation marks
omitted). Thus, although Pappas-Alstad would not qualify as a
wrongdoer, it must still restore everything it
gained through an erroneous judgment. See Topps
Chewing Gum, Inc., 539 A.2d at 1063 (" Restitution
may require not only the restoration of the property to its
rightful owner but also compensation or reimbursement for the
benefits enjoyed by the defendant through the use or
possession of plaintiff's property regardless of
whether or not the defendant is classified as a
wrongdoer." (emphasis added)).
[¶39] Pappas-Alstad provides no authority,
other than the inapposite " innocent recipient"
provision of the Restatement, to support its argument that an
equitable remedy cannot inure to a party's detriment
where that party obtained an erroneous judgment. Thus, we
conclude that Pappas-Alstad's responsibility for
Zeke's restitution, leaving it " worse off"
than if no judgment of eviction had been entered, provides no
basis to disturb the award.
[¶40] Nor do we agree with
Pappas-Alstad's assertion that the award rose to the
level of a punitive judgment. Pappas-Alstad simply does
" not explain how having to return something to which
[it was] not legally entitled can be a
'penalty.'" Strong v. Laubach, 443 F.3d
1297, 1300 (10th Cir. 2006).
[¶41] Even so, the district court explicitly
recognized that Pappas-Alstad relied on the erroneously
entered eviction order in good faith, which is consistent
with the above-cited law that those who have acted on
erroneous judgments in their favor are not
wrongdoers to be punished. This does not mean,
however, that such reliance was well-advised or without risk,
particularly after Pappas-Alstad learned that the order had
been appealed. See Golde Clothes Shop, 141
N.E. at 919.
[¶42] Finally, we reject Pappas-Alstad's
assertion that Zeke necessarily received a windfall as a
result of the district court's award. In the first
instance, Pappas-Alstad's assertion is based on the
testimony of its expert indicating that the value of the Zeke
lease was only $8141; Zeke's expert, however, testified
that such value was approximately $232,000. Although the
court did not award Zeke all of its claimed losses, as noted
above, Zeke lost the ability to run its coffee business on
the premises when Pappas-Alstad received the judgment in its
favor permitting Zeke's eviction. Consequently, Zeke is
entitled to restitution in some form for its loss of
possession, income, and business opportunity. See,
e.g., Stockton Theatres, 264 P.2d at 78-79.
Pappas-Alstad simply provides no reason why rental income
from the premises is not an appropriate measure to compensate
that loss or why, in light of that loss, it should be
considered a " windfall."
[¶43] Pappas-Alstad also argues that the
court's measure of restitution here is " unworkable
as a matter of policy." Specifically, it suggests that
the award " runs directly counter to" (1) the
principle favoring finality of judgment and (2) the
requirement that landlords act expediouosly to re-lease
premises following an eviction.
[¶44] According to Pappas-Alstad, because
the award did not adhere to these policy concerns, landlords
can only obtain the benefit of an unstayed judgment granting
an eviction if they act on it and it is affirmed on appeal.
Otherwise, they will either be left worse off by a judgment
of restitution, have a " fallow" premises and an
eviction that they failed to mitigate, or be responsible for
paying never-received, " phantom rent" to an
erroneously evicted tenant.
[¶45] Pappas-Alstad again overlooks that
these kinds of risks are inherent in executing on any
judgment that is not yet final on appeal. See, e.g.,
Strong, 443 F.3d at 1300 (" By executing on
[its] judgment and receiving the [the property] during the
pendency of the appeal, the [plaintiff] assumed the risk that
[it] might have to repay the money if [defendants] prevailed
on appeal." ); PSM Holding Corp., 743 F.Supp.2d
at 1141 (" [Plaintiff] was not required to execute on
the judgment pending appeal and took a risk in doing
[¶46] Pappas-Alstad's payment of
restitution, in consequence of undertaking these risks by
opposing the stay of an erroneously entered order of
eviction, is not against public policy. See
Boothe, 274 P.2d at 463 (" [I]n view of the
record before us, we cannot say that the means adopted, that
is, the accounting for the profits of the cattle business,
was not warranted" where the party in possession acted
knowing the judgment was not final.); Stockton
Theatres, 264 P.2d at 79 (" [The landlord] knew
that if the appeal was successful he would be subject to a
demand by the theatre company that he account for all that he
had received through his enforcement of the questioned
judgments. We see nothing unjust in the court's holding
him to such an accounting." ).
[¶47] For these reasons, we discern no error
in the court's calculation of the measure of restitution.
[¶48] We are also not persuaded by
Pappas-Alstad's contention that the court erred in
selecting the Treasury Bill rate as the discount rate to
determine the present value of its future cash flow.
[¶49] Pappas-Alstad recognizes that no
Colorado case appears to have addressed the appropriate
standard of review for a court's selection of the rate by
which future cash flows should be discounted to present
value. Other courts, however, have reviewed the issue for an
abuse of discretion. See, e.g., Scott v. United
States, 884 F.2d 1280, 1287 (9th Cir. 1989);
Tiverton Power Assocs. Ltd. P'ship v. Shaw Grp.,
Inc., 376 F.Supp.2d 21, 28 (D. Mass. 2005); Gaskill
v. Robbins, 361 S.W.3d 337, 340 (Ky. Ct.App. 2012);
Caruso v. Russell P. LeFrois Builders, Inc., 217
A.D.2d 256, 260, 635 N.Y.S.2d 367 (N.Y.App.Div. 1995). We,
too, adopt this standard.
[¶50] The district court determined that the
value of all future rent proceeds through the end of
Zeke's lease, i.e., from 2014 to 2019, should be
calculated using a discount rate. " [A] 'discount
rate' is a way of estimating the time value of money, an
important factor that is used in the process of determining
the present value of a future cash flow." Liriano v.
Hobart Corp., 960 F.Supp. 43, 44-45 (S.D.N.Y. 1997).
[¶51] The district court then determined
that the rate at which the future rent proceeds should be
discounted was the Treasury Bill rate, which " is the
rate at which the government borrows money by daily auctions
of Treasury bills. It is risk-free because there is no risk
that the government will not pay its debts." Golden
State Transit Corp. v. City of Los Angeles, 773 F.Supp.
204, 216 n.18 (C.D. Cal. 1991). The Treasury Bill rate is
often used to discount, to present value, awards of future
damages. See, e.g., Liriano, 960 F.Supp. at
45-46 (noting that the Treasury Bill rate is New York's
" favored method" to reduce awards of future
damages to present value); Moeller v. Bertrang, 801
F.Supp. 291, 296 (D.S.D. 1992) (applying Treasury Bill rate
to determine present value of future retirement benefits).
[¶52] Pappas-Alstad argues that the rate
suggested by its expert would have been more appropriate
because it is more suited to " highly illiquid,"
risky income from real estate than the Treasury Bill rate
suggested by Zeke's expert. But it does not explain why
the court's decision to use the Treasury Bill rate was an
abuse of discretion, other than to state that its use is
" contrary to reason and the available evidence."
[¶53] The record, however, suggests
otherwise. Zeke's expert testified that the Treasury Bill
rate was " a very good way to measure the time value of
money" in this case. It was for the district court to
determine which expert's testimony to use in selecting
the appropriate rate. See Borer v. Lewis,
91 P.3d 375, 383 (Colo. 2004) ( " 'It is the
function of the trial court, and not the reviewing court, to
weigh evidence and determine the credibility of the
witnesses.'" (quoting People v. Pitts, 13
P.3d 1218, 1221 (Colo. 2000))). Additionally, the Treasury
Bill rate has been recognized as a valid method for
discounting future cash flows to present value. See
Liriano, 960 F.Supp. at 45-46.
[¶54] Because Pappas-Alstad has not shown
why the application of the Treasury Bill rate was arbitrary,
unreasonable, or unfair, we discern no reason to disturb the
court's use of that rate instead of the one suggested by
Pappas-Alstad's expert. See Hudak v. Med.
Lien Mgmt., Inc., 2013 COA 83, ¶ 8, 305 P.3d 429
(Under an abuse of discretion standard, " we do not
consider whether we would have reached a different result,
but only whether the district court's decision fell
within the range of reasonable options." ).
[¶55] Because we conclude that the court did
not abuse its discretion in calculating the restitution owed
to Zeke, we need not consider Zeke's conditional
Attorney Fees on Appeal
[¶56] Zeke requests -- and is entitled to --
an award of attorney fees incurred on appeal
pursuant to the attorney fee provision of the lease and
section 13-40-123, C.R.S. 2014. Because the district court is
better situated to address the necessary factual
determinations related to the attorney fee request, we
exercise our discretion under C.A.R. 39.5 and direct the
district court on remand to award Zeke a reasonable amount of
attorney fees incurred on appeal.
[¶57] The district court's order is
affirmed, and the case is remanded to the district court with
directions to award Zeke a reasonable amount of attorney fees
incurred in this appeal.
LICHTENSTEIN and JUDGE FOX concur.
The court also awarded Zeke $360,962 in
attorney fees. Pappas-Alstad does not, however, appeal the
attorney fee award.
Courts determine what was gained by
the landlord during the period of its possession through the
duration of the tenant's lease:
A leases Blackacre to B for five years. After four
years, under a claim that B has not performed the covenants
in the lease, A obtains a judgment awarding him possession
of Blackacre and takes possession. A year later the
judgment is reversed. B is entitled to restitution for
the period of A's occupancy up to the expiration of the
lease period, but is not entitled to regain possession
Restatement (First) of Restitution § 74 cmt. c,
illus. 8 (1937) (emphasis added).
This encompasses rent not collected during
(1) the six weeks the premises were vacant, following
Zeke's eviction; and (2) the threemonth rent abatement
Pappas-Alstad gave the new tenant of the premises at the
beginning of its lease term.