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Logixx Automation9/12/2002
irst occurs; or, at the election of the claimant,
(b) Interest shall be at the rate of eight percent per annum compounded annually for all moneys or the value of all property after they are wrongfully withheld or after they become due to the date of payment or to the date judgment is entered, whichever first occurs.
In Mesa Sand & Gravel Co. v. Landfill, Inc., 776 P.2d 362, 365-66 (Colo. 1989), the supreme court determined that the phrase "wrongfully withheld" is ambiguous and held that ยง 5-12-102(1)(b) is to be given a broad, liberal construction to effectuate the legislative purpose of compensating parties for the loss of money or property to which they are entitled.
In Westfield Development Co. v. Rifle Investment Associates, 786 P.2d 1112 (Colo. 1990), the supreme court awarded prejudgment interest on lost profits associated with a tortious interference with contract claim. Cf. South Park Aggregates, Inc. v. Northwestern Nat'l Ins. Co., 847 P.2d 218 (Colo. App. 1992)(refusing to award prejudgment interest on an entire award of compensatory damages and only awarding interest on the amount of damages that reflects the benefit to plaintiff under the contract).
In light of this precedent, we conclude that the trial court properly awarded prejudgment interest on the full damages amount, which reflected the total of lost net profits the companies would have realized but for breach of the settlement agreement.
Nevertheless, Michels argues that the prejudgment interest was excessive because the damages award was improperly based on future damages. While we agree that a trial court may not award prejudgment interest on future damages, there was evidence in the record from which the jury could have determined the damages award without considering future damages. See Curragh Queensland Mining Ltd. v. Dresser Indus., Inc., ___ P.3d ___, ___ (Colo. App. No. 00CA1049, Apr. 25, 2002)("prejudgment interest is allowed only on past, not future, losses").
Finally, Michels contends that the trial court erred in awarding prejudgment from March 31, 1996, even though no damages occurred until 1998 when the first Return Shop was sold. We disagree.
A non-breaching party is entitled to recover prejudgment interest from the time of the breach. Mesa Sand & Gravel Co. v. Landfill, Inc., supra.
Here, the trial court concluded that the breach occurred in March 1996. This finding is supported by evidence in the record that in March 1996, Michels and the other board member formed the partnership under which they developed the Return Shop. Thus, we conclude that the trial court did not err.
VI. Covenant Not to Compete
Michels next contends that the settlement agreement is unenforceable because it contains an overbroad covenant not to compete. We conclude that, as applied to this case, the covenant not to compete is not overly broad.
The interpretation of a contract is a matter of law, which we review de novo. State Farm Mut. Auto. Ins. Co. v. Stein, 940 P.2d 384, 387 (Colo. 1997).
Covenants not to compete are disfavored in Colorado, and exceptions to the general rule are narrowly construed. Nat'l Propane Corp. v. Miller, 18 P.3d 782 (Colo. App. 2000).
Here, the covenant not to compete was not overly broad as it applied to the Preformer and the Return Shop product lines and the market area of sign manufacturing. It specifically identified the functions of the machine (roll forming, metal uncoiling and bending, and related software) and the prohibited activities (design, sell, build, distribute, or market).
Michels contends that the agreement is ov
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