## Facts

- United Telecommunications, Inc. exchanged its interest in a cable television company for 175,000 unregistered shares of American Television & Communications Corp. (ATC).
- The agreement gave United a post-closing right to demand registration of the shares; ATC promised to use its “best efforts” to prepare, file, and keep effective a registration statement upon demand.
- ATC warranted that performance of the agreement would not conflict with, or breach, any other agreement binding ATC; the warranty was to be true at closing and survive closing.
- The transaction closed on August 16, 1972, and United immediately demanded registration.
- ATC had preexisting contractual obligations that restricted its ability to register additional shares without another party’s consent, impairing ATC’s ability to promptly register United’s shares.
- United’s purpose was to sell registered shares to raise cash to retire debt; when registration was delayed, United borrowed funds and incurred financing costs.
- United sued in federal court (diversity), alleging breach of contract (failure to use best efforts to register) and breach of warranty (non-conflict representation), seeking damages including borrowing and financing costs.
- A jury awarded United $2,021,500; ATC appealed.

## Issues

1. Whether sufficient evidence supported the jury’s findings that ATC breached its “best efforts” registration obligation and breached its non-conflict warranty.
2. Whether United’s borrowing and financing costs were recoverable as actual damages under Colorado law or were barred as impermissible prejudgment interest.
3. Whether the district court’s damages instructions improperly permitted the jury to award those borrowing-related amounts.

## Decision

- The Tenth Circuit affirmed the judgment for United.
- The evidence permitted a reasonable jury to find ATC breached the “best efforts” registration commitment and breached the non-conflict warranty given ATC’s known preexisting contractual restrictions.
- The district court properly allowed the jury to treat United’s borrowing and financing costs as compensable damages rather than barred prejudgment interest.
- No reversible instructional error was shown, and the damages award was upheld.

## Legal Principles

- A “best efforts” obligation to accomplish a regulatory or transactional result can support liability where the promisor, aware of preexisting constraints, fails to take sufficient steps to perform as promised.
- A warranty that performance will not conflict with other agreements is breached if, at closing, existing agreements in fact restrict the warranted performance, particularly when the warranty survives closing.
- Under Colorado law, borrowing and financing costs incurred because a breach prevents an anticipated source of funds may be awarded as actual (including consequential) damages when they are foreseeable and proximately caused.
- Prejudgment interest is distinct from substantive damages; a statute limiting prejudgment interest does not bar out-of-pocket financing costs that are part of the underlying loss rather than interest on an already-determined damages sum.
- A directed verdict is improper where reasonable jurors could differ based on the evidence and inferences regarding breach, causation, and damages.

## Conclusion

The court affirmed a jury verdict for United, holding that ATC’s failure to timely effect registration supported findings of breach of a best-efforts undertaking and a non-conflict warranty, and that United’s borrowing-related financing costs were recoverable damages under Colorado law rather than barred prejudgment interest.


United Telecomms., Inc. v. Am. Television & Commc'ns Corp., 536 F.2d 1310 (10th Cir. 1976)