Samuel A. Marso and Audrey S. Marso, Plaintiffs-Appellants,
Homeowners Realty, Inc., d/b/a Coldwell Banker Home Owners Realty, Inc., Defendant-Appellee.
County District Court No. 11CV4626 Honorable Thomas M.
Announced February 8, 2018 Earl G. Rhodes, LLC, Earl G.
Rhodes, Grand Junction, Colorado for Plaintiffs-Appellants
& Davlin, LLC, Shawn M. Davlin, Durango, Colorado for
Defendant-Appellee Homeowners Realty, Inc.
1 This case requires us to decide whether a monetary
settlement made with an agent must be set off against a jury
verdict returned against the principal when the
principal's liability is entirely dependent on the
doctrine of respondeat superior. And, if such a setoff is
required, is the setoff made before or after statutory
prejudgment interest accrues on the jury verdict?
2 We hold that Colorado law requires a setoff and that the
setoff is made after statutory prejudgment interest accrues
on the jury verdict. While the trial court correctly ruled
that a setoff was required, it erroneously concluded that
statutory interest did not accrue until after the setoff was
made. Accordingly, we reverse the judgment and remand the
case for further proceedings.
Relevant Facts and Procedure
3 Elly Dilbeck, who was employed by or associated with
Homeowners Realty, Inc., d/b/a/ Coldwell Banker Home Owners
Realty, Inc. (Coldwell),  acted as Sam and Audrey Marso's
agent in their purchase of a house. At the time of purchase,
the Marsos did not know that the builder used radioactive
uranium mill tailings as fill material.
4 Two years after the purchase, the Marsos discovered that
uranium tailings had been used, creating a potential health
hazard. The Marsos filed a complaint against Dilbeck and
Coldwell alleging negligence against Dilbeck and respondeat
superior liability against Coldwell.
5 Sometime before the scheduled trial date, the Marsos
settled with Dilbeck for $150, 000, inclusive of interest. In
connection with the settlement, Dilbeck filed a written
admission that her failure to disclose that uranium mill
tailings may have been used in the Marsos' house fell
below the standard of care for a real estate agent. The
settlement expressly preserved all claims against Coldwell,
and a jury trial was then held only between the Marsos and
6 The jury was instructed to determine the total amount of
damages sustained by the Marsos and was not informed of the
amount of the settlement with Dilbeck. The jury returned a
verdict of $120, 000 against Coldwell.
7 In post-trial proceedings, the trial court set off the
settlement payment of $150, 000 against the $120, 000 jury
verdict, resulting in a zero recovery for the Marsos. The
court rejected the Marsos' argument that statutory
prejudgment interest accrues on the jury verdict
before the setoff. Because the settlement payment
exceeded the jury verdict, the court entered judgment in
favor of Coldwell and later entered a cost award against the
Marsos of approximately $30, 000.
The Trial Court Did Not Abuse Its Discretion in Allowing
Coldwell to Amend Its Answer and Assert the Affirmative
Defense of Setoff
8 Shortly after learning of the settlement between Dilbeck
and the Marsos, Coldwell moved to amend its answer to assert
the affirmative defense of setoff. See C.R.C.P.
8(b)-(c); Ochoa v. Vered, 212 P.3d 963, 972
(Colo.App. 2009) (Setoff "must be pled as an affirmative
defense or [it] is waived."). The court granted the motion
over the Marsos' timeliness objection. The Marsos contend
the court abused its discretion in allowing this late
9 "Under well-established law, leave to amend is a
discretionary matter which is left to the trial court to
determine." Polk v. Denver Dist. Court, 849
P.2d 23, 25 (Colo. 1993). Thus, we review the court's
determination for an abuse of discretion. Id.
"A court abuses its discretion when its ruling is
(1) based on an erroneous understanding or application of the
law; or (2) manifestly arbitrary, unreasonable, or
unfair." Francis v. Aspen Mountain Condo. Ass'n,
Inc., 2017 COA 19, ¶ 25.
10 "Trial courts may permit amendments to pleadings at
any stage of the litigation process so long as undue delay
does not result and other parties are not prejudiced by such
amendments." Nelson v. Elway, 971 P.2d 245, 249
11 The Marsos do not contend that Coldwell's amendment
caused an undue delay, but they do claim prejudice resulting
from its timing. Although Coldwell's pleading of the
affirmative defense of setoff ultimately reduced the final
judgment entered in the Marsos' favor, for two reasons
the amendment did not result in legal prejudice to the
12 First, Coldwell did not obtain the settlement agreement
until shortly before trial and so could not have properly
raised the defense previously. Second, while the setoff
obviously detrimentally affected the Marsos, they had no
right to rely on the absence of a setoff given the
uncertainties in the substantive law regarding such setoffs.
Nor have they explained how, if at all, the possibility of a
setoff would have affected their litigation strategy or
13 Under these circumstances, we discern no abuse of the
court's discretion in allowing Coldwell to pursue its
The Trial Court Correctly Set Off Dilbeck's Settlement
Payment Against the Jury's Verdict
14 The Marsos next argue that the trial court erred when it
set off the settlement payment against the jury verdict. We
reject this contention.
15 Two Colorado statutes arguably address when a trial court
must set off "compensation paid to avoid the risk of
being held liable in tort" from a jury verdict against
any nonsettling defendants. Smith v. Zufelt, 880
P.2d 1178, 1183 (Colo. 1994).
16 The first of these statutes is the "percentage
statute, " § 13-50.5-105, C.R.S. 2017.
Zufelt, 880 P.2d at 1181. This statute implements,
in part, the General Assembly's 1986 abrogation (with
exceptions) of the doctrine of joint and several liability
among tortfeasors and replaces that regime with one of
proportionate fault. See id. The ...