## Facts

- Echosphere Corporation sold home satellite television systems; Echo Acceptance Corporation (a subsidiary) arranged consumer financing for those sales.
- Echo and Household Retail Services, Inc. entered a Merchandise Financing Agreement (MFA) under which Echo originated consumer financing contracts and assigned approved contracts to Household.
- Pricing letters executed over time specified economic terms for the contract purchases, including “participation payments” tied to finance charges and, when applicable, credit insurance profits.
- Household terminated the MFA and stopped making participation payments on loans it had already purchased, even though those customer accounts remained outstanding and continued generating finance and insurance charges.
- Echo sued for breach of contract and related theories; the litigation centered on whether participation payments were owed after termination for the remaining life of already-purchased loans.
- The district court granted summary judgment for Echo on breach-of-contract liability, ruling the MFA and pricing letters unambiguously required continued participation payments for the life of the loans; a jury determined applicable rates under various pricing letters and awarded damages.
- Household appealed contract interpretation, statute-of-frauds issues, jury instructions, evidentiary rulings, and damages; Echo cross-appealed the prejudgment interest ruling.

## Issues

1. Whether the MFA and incorporated pricing letters unambiguously required Household to continue participation payments on purchased accounts after termination, for the life of the loans.
2. Whether participation payments were part of the purchase price for assigned contracts or merely time-limited sales incentives.
3. Whether the statute of frauds barred enforcement of life-of-loan participation obligations, and whether the MFA and pricing letters satisfied any writing requirement.
4. Whether alleged instructional, evidentiary, or damages errors required reversal.
5. Whether Colorado prejudgment interest law required the statutory rate for the full period of wrongful withholding.

## Decision

- Affirmed the district court’s liability ruling that the written agreements imposed a continuing, post-termination obligation to pay participation amounts for the life of loans already purchased.
- Rejected Household’s characterization of participation payments as discretionary incentives that ended with termination; the documents treated them as part of the economic terms of the contract purchases.
- Rejected the statute-of-frauds defense because the signed MFA and pricing letters, read together, sufficiently memorialized the essential terms.
- Found no reversible error in the jury instructions, evidentiary rulings, or the jury’s findings on participation rates and damages.
- Reversed in part and remanded on prejudgment interest: Echo was entitled to Colorado’s statutory prejudgment interest rate for the entire period of wrongful withholding, but not to any higher rate.

## Legal Principles

- When unambiguous written financing documents tie revenue-sharing or participation payments to the purchased accounts, the obligation may survive termination and continue for the life of the accounts already acquired.
- Contract interpretation is a question of law when the agreement is unambiguous; extrinsic evidence cannot be used to contradict the written terms.
- Statute-of-frauds requirements may be satisfied by multiple signed writings that collectively state the essential terms of the obligation.
- In diversity cases, state prejudgment interest rules apply as substantive law; courts must award the statutory rate and period absent a lawful basis to depart, and a party seeking more than the statutory rate bears the burden to establish entitlement.

## Conclusion

The Tenth Circuit held that Household’s obligation to pay participation amounts on assigned consumer accounts continued after termination because the MFA and pricing letters unambiguously made those payments part of the purchase terms for life-of-loan revenues, affirmed the jury-based rates and damages, and remanded solely to correct prejudgment interest to Colorado’s statutory rate for the full withholding period.


Echo Acceptance Corp. v. Household Retail Servs., Inc., 267 F.3d 1068 (10th Cir. 2001)