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Attorneys’ Fees in Civil Lawsuits in Denver and Colorado Courts

 

In civil litigation, parties frequently are curious about being reimbursed their attorneys’ fees, especially if they end up as the prevailing party. However, U.S. courts abide by the “American Rule” meaning that each party is responsible for paying their own attorneys’ fees unless the law provides otherwise. In other words, the default rule in civil litigation in U.S. courts is that attorneys’ fees will not be awarded to either side. Nonetheless, despite that general rule, attorneys’ fees can be awarded under certain circumstances in Colorado and Denver courts.

Generally speaking there are 3 main circumstances where attorneys’ fees can be awarded:

  • A contract provides for it;
  • An award of attorneys’ fees is provided for by statute; or
  • The lawsuit was frivolous, vexatious, or without merit

A contract provides for it

A common circumstance where attorneys’ fees can be awarded to the prevailing party is in a contract dispute where the contract provides for an award of attorneys’ fees. This is often known as a “fee-shifting provision” and is frequently used in modern contracts.

In order for attorneys’ fees to be awarded in a contract dispute, the contract must explicitly contain a fee-shifting provision that awards those fees to the prevailing party. An example of a fee-shifting provision is:

“The prevailing party shall have the right to collect from the other party its reasonable costs and necessary disbursements and attorneys’ fees incurred in enforcing this Agreement.”

Practically speaking, almost all modern contracts contain some sort of fee-shifting provision. Examples of common contracts that frequently include these provisions are lease contracts, contracts for consumer goods, and contracts for services.

Notably, unilateral fee-shifting provisions – that is, where the contract provides that only one party can recover their attorneys’ fees – are [enforceable].

Attorneys’ fees are provided by statute

Another circumstance where attorneys’ fees can be awarded to the prevailing party is where a statute explicitly provides for it.  Some examples of these types of actions are:

  • 42 U.S.C. § 1983 actions – where a state entity or organization is being sued for deprivation of a person’s constitutional rights
  • 28 U.S.C. § 7430 – administrative or court actions relating to the collection or imposition of taxes or penalties
  • R.S. § 38-12-103 – lawsuits brought to recover the return of a security deposit where the landlord has unlawfully withheld it
  • R.S. § 12-14-113 – lawsuits brought based on violations of the Colorado Fair Debt Collections Practices Act
  • R.S. § 6-1-113 – actions brought under the Colorado Consumer Protections Act for unlawful business practices.
  • R.S. § 14-10-119 – provides for courts to award attorneys’ fees to one party or another in dissolution of marriage actions

Generally speaking, where a statute does provide for an award of attorneys’ fees to the prevailing party, the award is typically limited to “reasonable attorneys’ fees.” Reasonable attorneys’ fees are generally limited to the market rate of attorneys’ in that area – thus, attorneys’ can’t simply escalate their billing or hourly rate when an award of attorneys’ fees is provided for. A hearing may be necessary or requested to determine or dispute what reasonable attorneys’ fees would be in any particular case.

The lawsuit was frivolous, vexatious, or without merit

Under circumstances where the court determines the lawsuit was brought frivolously, vexatiously, or without merit, the court may award attorneys’ fees to the prevailing party. In particular, under C.R.S. §  13-17-102, Colorado and Denver courts are authorized to award attorneys’ fees “in any civil action of any nature . . . against any attorney or party who has brought or defended civil action, either in whole or in part, that the court determines lacked substantial justification.”  A claim or defense lacks substantial justification where it is frivolous, groundless, or vexatious in nature. C.R.S. § 13-17-102(4).

A “frivolous” claim or defense is one where the proponent can present no rational argument based on the evidence or law in support of that claim or defense. Double Oak Constr., L.L.C. v. Cornerstone Dev. Int’l, L.L.C., 97 P.3d 140 (Colo. App. 2003).

In contrast, a “groundless” claim or defense is one where the allegations made are sufficient to survive a motion to dismiss – that is, dismissal in the early stages of the lawsuit – but is not supported by any credible evidence at trial. Wheeler v. T.L. Roofing, Inc., 74 P.3d 499 (Colo. App. 2003).

Additionally, a “vexatious” claim  is one brought or maintained in bad faith to annoy or harass and may include conduct that is arbitrary, abusive, stubbornly litigious or disrespectful of truth. Mitchell v. Ryder, 104 P.3d 316 (Colo. App. 2004).

Further, in determining whether a claim is frivolous, groundless, or vexatious in nature, courts are required to consider certain factors under C.R.S. § 13-17-103. Those factors are:

  • The extent of any effort made to determine the validity of any action or claim before said action or claim was asserted;
  • The extent of any effort made after the commencement of an action to reduce the number of claims or defenses being asserted or to dismiss claims or defenses found not to be valid within an action;
  • The availability of facts to assist a party in determining the validity of a claim or defense;
  • The relative financial positions of the parties involved;
  • Whether or not the action was prosecuted or defended, in whole or in part, in bad faith;
  • Whether or not issues of fact determinative of the validity of a party’s claim or defense were reasonably in conflict;
  • The extent to which the party prevailed with respect to the amount of and number of claims in controversy; and
  • The amount and conditions of any offer of judgment or settlement as related to the amount and conditions of the ultimate relief granted by the court.

Lastly, Colorado statutes provide that in personal injury or tort actions, including actions brought as the result of death or injury to a person, “where any such action is dismissed on motion of the defendant prior to trial under 12(b) of the Colorado Rules of Civil Procedure, such defendant shall have judgment for his reasonably attorney fees in defending the action.”  C.R.S. § 13-17-201. Accordingly, where a personal injury action is dismissed under C.R.C.P. 12(b) prior to trial, the defending party is entitled to reasonable attorney’s fees as provided by statute.

© 2016 J.D. Porter, LLC; Jordan Porter. Denver, Colorado.

Disclaimer: The information on this website is intended to be general information only and not legal advice. Laws change frequently and the information on this website may not be up to date, nor is the information intended to be fully comprehensive. For legal advice specific to your case please contact J.D. Porter, LLC or another licensed attorney.