DENVER (Legal Newsline) - The Colorado Supreme Court on Monday reversed a ruling by the state Court of Appeals affirming a lower court's reduction of exemplary damages in a woman's defamation lawsuit.

The state's high court said both the district court and the appeals court were under the impression that a section of Colorado's revised statutes limits Monica Vickery's exemplary damages to an amount equal to the compensatory damages figure returned by the jury, before any adjustment for prejudgment interest.

However, the Court said the amount of the actual damages awarded, to which reasonable exemplary damages are statutorily limited, does not refer to the jury's assessment of total compensatory damages.

Instead, it refers to the compensatory damages awarded against the defendant as the direct result of that assessment, which "necessarily include" statutorily mandated prejudgment interest, the Court said.

Vickery filed a lawsuit against her mother-in-law and sister-in-law after her husband's death and what is described in court papers as "contentious litigation" regarding the disposition of his property.

Vickery sued the two for malicious prosecution and defamation.

After a 10-day trial, the jury returned verdicts for Vickery on one claim of malicious prosecution and multiple claims of defamation, finding exemplary damages in excess of compensatory damages on a number of the defamation claims.

In her motion for entry of judgment, Vickery argued that the district court was obligated to add statutorily mandated prejudgment interest to the jury's assessment of compensatory damages to determine the actual damages to which exemplary damages would be statutorily limited.

The district court denied her motion, entering judgment for exemplary damages on each of the claims in an amount equal only to the compensatory damages assessed by the jury, without any further adjustment.

The court then added prejudgment interest to the amount of compensatory damages assessed by the jury, solely for the purpose of determining Vickery's full compensatory damages award.

The state Court of Appeals affirmed, saying because reasonable exemplary damages are statutorily precluded from exceeding the amount of actual damages, for the district court to have included prejudgment interest in the calculation of actual damages "would have been tantamount to allowing prejudgment interest on the exemplary damages themselves" and would conflict with a previous ruling by the state Supreme Court.

The appeals court, in coming to its decision, acknowledged the "logical impact" of the Court's reasoning in Lira v. Davis, but declined to apply that reasoning to prejudgment interest in the absence of "any more express statutory direction," Justice Nathan B. Coats wrote for the majority.

"The amount of compensatory damages ultimately awarded against the defendant is positively and invariably determined by the jury's assessment of total compensatory damages and its allocation of fault among the defendant, the victim, and any responsible third parties," he wrote.

"It is inconsequential to the ultimate determination of this amount whether the statutorily mandated arithmetic calculations producing a final figure are made by the court or by the jury itself, after proper instruction."

Justice Allison H. Eid dissented, calling the majority's opinion "misguided."

First, she said it conflicts with the language of section 13-21-102(1)(a), which caps exemplary damages at the amount of actual damages awarded by the "jury," not the court.

Also, it permits prejudgment interest to be paid on exemplary damages in direct conflict with the Court's holdings in the Lira case.

"The question here is whether the 'amount of the actual damages awarded' is the amount awarded by the jury, or the amount of the jury award together with prejudgment interest on that award set by the court. In my view, the statutory language compels the former result, and precludes the latter," Eid wrote.

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