June 27, 2017

Colorado Court of Appeals: Forbearance Fees and Interest Charges on Loan Were Not Usurious

The Colorado Court of Appeals issued its opinion in Blooming Terrace No. 1, LLC v. KH Blake Street, LLC on Thursday, May 18, 2017.

Usury—Motion to Dismiss—Attorney Fees.

KH Blake Street, LLC and Kresher Holdings, LLC (collectively, lender) loaned Blooming Terrace No. 1 LLC (borrower) $11 million for an origination fee of $220,000. The loan was secured by a deed of trust and memorialized by a promissory note (note) that contained an accrual interest rate of 11% per annum, a default interest rate of 21% per annum, a 5% late charge on any late monthly payments, and an $110,000 exit fee. The note required monthly interest payments calculated at the rate of 8% per annum, with none of the monthly payments being applied to the principal.

Borrower defaulted. The parties executed a forbearance agreement whereby lender agreed to forbear from foreclosing on the deed of trust in exchange for a $110,000 forbearance fee plus continued accrual of default interest, late charges, and certain additional fees. At that time, the amount of all outstanding charges was $778,583.33. The loan was not paid when due, and the forbearance agreement was amended for $220,000. Borrower then paid off the loan, including all outstanding interest, fees, and costs.

Borrower sued lender, claiming that the fees, interest, costs, and expenses exceeded the 45% per annum interest allowable under Colorado’s usury law. Lender moved to dismiss under C.R.C.P. 12(b)(5), arguing the loan fees did not constitute interest above the maximum allowable rate. The district court agreed, concluding that the effective rate of interest was 12.924% based on the total amount of interest charged during the life of the loan. The complaint was dismissed. Lender sought attorney fees pursuant to the note, and the district court awarded attorney fees in the amount of $15,407.20 to lender.

On appeal, borrower argued that the court of appeals should annualize the forbearance charges. The district court had measured the interest charged on a purely per annum rate based on the entire amount of interest charges over the life of the loan. The court concluded that borrower’s computation would not accurately reflect the rate of interest actually charged. Although it found the district court overlooked some charges, the court agreed with the district court’s computation approach and calculated an interest rate of 17.60%. The court concluded that the interest charges were not usurious and the complaint failed to state a claim for which relief could be granted

Borrower then argued it was error to grant attorney fees, asserting that because the forbearance agreements were not loan documents, the litigation regarding those agreements was not related to any loan document. The note provided for attorney fees incurred in any litigation related to any “Loan Document.” This litigation concerned the interest charged by lender under both the note and the forbearance agreements. Therefore attorney fees were properly awarded.

Borrower further contended that the district court abused its discretion in calculating the fees awardable to lender. The court rejected this contention.

The judgment was affirmed and the case was remanded for determination of the amount of reasonable appellate attorney fees to be awarded to lender.

Summary provided courtesy of The Colorado Lawyer.

Colorado Supreme Court: Attorneys’ Charging Liens May Attach to Spousal Maintenance Awards

The Colorado Supreme Court issued its opinion in Stoorman & Associates, P.C. v. Dixon on Monday, May 15, 2017.

Attorneys’ Liens—Dissolution of Marriage.

In this case, the supreme court considered whether attorneys’ charging liens may attach to spousal maintenance awards under Colorado’s attorney’s lien statute. The court applied the plain language of the attorney’s lien statute, C.R.S. § 12-5-119, which provides that attorneys shall have a lien on “any judgment they may have obtained or assisted in obtaining,” and held that an attorney’s charging lien may attach to an award of spousal maintenance. Accordingly, the court reversed the court of appeals’ judgment and remanded this case to that court with instructions to return the case to the trial court for proceedings consistent with this opinion.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Denial of Attorney Fees Not Error in Close Case with No Vexatious, Groundless Claims

The Colorado Court of Appeals issued its opinion in In re Estate of Fritzler on Thursday, January 12, 2017.

Wills—Business Records Exception—Jury Instruction—Presumption of Undue Influence—Attorney Fees—Costs.

Fritzler and his wife executed numerous wills during the last 10 years of their lives. The last will was drafted just a few years before they each passed away. In all of the wills, the Fritzlers sought to distribute their farm in a generally equitable manner among their five children, but the last will increased son Glen’s portion over son Steven’s portion. Steven contested the will, contending that Glen unduly influenced Fritzler. After a lengthy trial, a jury concluded that the will was valid. Following the verdict, the estate and the personal representative (PR) sought attorney fees and costs. The court denied the award of fees, finding that the case was “close” and Steven did not lack substantial justification. The court partially denied costs, concluding that it lacked equitable authority to grant fees without concurrent statutory authority.

On appeal, Steven contended that the trial court abused its discretion by excluding Fritzler’s hospital medical records because they were admissible under the business records exception. Although the exclusion was an abuse of discretion, any error was harmless because the records were cumulative of other admitted evidence.

Steven also contended that the trial court erred by refusing to instruct the jury on the presumption of undue influence. However, the PR offered sufficient evidence to rebut this presumption. Thus it would have been improper for the court to instruct the jury thereon.

The PR contended that the trial court erred by denying her request for attorney fees under C.R.S. § 13-17-102 and by denying her certain costs as the prevailing party under C.R.C.P. 54(d). The trial court noted that this was a close case and found that even though Steven did not prevail, his claims were not groundless, frivolous, or vexatious. Therefore, the court did not err by denying the request for fees. As to the costs, the trial court awarded most of the requested costs to the PR after a hearing, denying only some that it found to be unreasonable. Therefore, the court did not err in its award of costs.

The judgment and orders were affirmed.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: District Court Lacked Authority to Award Fees for Unjustified Claim in Foreign Court

The Colorado Court of Appeals issued its opinion in Bruce v. Roberts on Thursday, December 15, 2016.

Trust—Frivolous Lawsuit—Attorney Fees—Foreign Court—Work Product.

James Roberts assisted his mother Della Roberts with forming the Della I. Roberts Trust in Colorado, where she lived. Upon Della’s death eight days later, James, the designated trustee, was supposed to divide the trust’s assets into two equal shares—one to benefit James and his wife, Mary Sue Roberts, and the second to benefit Della’s grandchildren, James and Mary Sue’s children. James did not properly administer the trust, but apparently, no one expressed concern about his administration until after he died.

After James’s death, Mary Sue assumed the role of trustee pursuant to the trust’s provisions. The grandchildren, who were ultimately appointed as trustees (trustees) objected and promptly removed Mary Sue as trustee. Although the Colorado court assumed jurisdiction, Mary Sue filed a separate case in West Virginia, where she lived, which was later dismissed for lack of jurisdiction. Bruce represented Mary Sue in both the Colorado and West Virginia matters. The district court in Colorado accepted a final accounting of the trust filed by trustees, ordered all assets remaining in the trust be distributed to the grandchildren in equal shares, and found that the trust could recover administrative costs and attorney fees incurred in litigating both the Colorado and West Virginia cases, pursuant to CRS § 13-17-102, from Bruce and Mary Sue. It also assessed $54,565 in fees against Bruce for the West Virginia action.

Bruce appealed the district court’s order only as it pertains to attorney fees awarded for the West Virginia action. He contended that CRS § 13-17-102 did not authorize the court to award attorney fees incurred solely in the West Virginia case. CRS §13-17-102 does not authorize a Colorado court to award attorney fees incurred in an action in a foreign court, unless work product created for use in the foreign court is also used in the Colorado court. Neither the district court’s order nor the record clarifies whether the trustees used work product created for the West Virginia action in the Colorado proceedings.

The portion of the order awarding $54,565 for attorney fees incurred in the West Virginia action was vacated, and the case was remanded for the district court to determine whether the trustees used work product created for the West Virginia action in the Colorado proceedings.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Attorney Fee Award Appropriate Where Claims Lacked Substantial Justification

The Colorado Court of Appeals issued its opinion in In re Estate of Shimizu on Thursday, November 3, 2016.

Decedent—Deed–Undue Influence—Lack of Capacity—Attorney Fees—Groundless—Vexatious—C.R.S. § 13-17-102.

Decedent died intestate and was survived by his half-sister, Szoke. Szoke challenged the validity of a deed that decedent had executed near the end of his life. In that deed, decedent purported to convey his house to three of his close friends (the recipients). The probate court rejected Szoke’s claims, finding the recipients’ case far more persuasive because it was based on evidence from persons who had direct contact with decedent near or at the time the deed was executed, and not all of whom were interested in the outcome of the case. The court also determined that the recipients were entitled to an award of attorney fees under C.R.S. § 13-17-102 because Szoke’s claims “lacked substantial justification” and were “groundless, in that she presented valid theories of undue influence and lack of capacity, but offered little or nothing to support those claims.” The probate court awarded the recipients attorney fees.

On appeal, Szoke contended that the probate court erroneously awarded attorney fees to the recipients under C.R.S. § 13-17-102. The probate court found that Szoke’s claims were “groundless” because she did not present much evidence to support her claims, and the court did not believe her evidence in light of the recipients’ evidence. Based on the evidence presented by Szoke, a reasonable fact finder could have found undue influence and lack of capacity. Because Szoke presented some credible evidence in support of her claims, her claims were not sanctionable as groundless under C.R.S. § 13-17-102. On the other hand, although the trial court did not explicitly characterize Szoke’s action as “vexatious,” that was the gist of its findings and conclusions. Because the court’s findings are supported by the record, the court did not abuse its discretion in awarding fees for conduct that was “stubbornly litigious, or disrespectful of the truth,” and, thus, “substantially vexatious.”

The award of attorney fees was affirmed.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Specific Proviso in Condominium Declaration Precluded Certain Non-unanimous Amendments

The Colorado Court of Appeals issued its opinion in DA Mountain Rentals, LLC v. The Lodge at Lionshead Phase III Condominium Association, Inc. on Thursday, October 6, 2016.

The Lodge at Lionshead Condominium Association established a Condominium Declaration years before the adoption of the Colorado Common Interest Ownership Act, which it attempted to amend in 2012 to establish a condominium community. The Association’s proposed amendment was adopted by a supermajority of owner-members. DA Mountain Rentals, an owner of one of the condominium units, protested that the amendments could only be adopted by unanimous consent of the members pursuant to a specific proviso in the Declaration. DA sought a declaratory injunction in district court prior to the Association’s recording of the amendments, and the amendments have not yet become effective due to the litigation.

After discovery, the Association moved for determination of law pursuant to C.R.C.P. 56(h). The court granted the motion and determined that the 2012 Amendments had been validly adopted and the 67 percent voting requirement they imposed did not violate the terms of the Declaration or CCIOA. The Association next moved for summary judgment, which the court also granted. DA filed two appeals. The first appeal challenged the district court’s grant of the Rule 56 motion and the summary judgment motion. The second appeal challenged post-judgment attorney fee and cost awards. The Association moved to dismiss the second appeal because the attorney fee issue was not ripe. A division of the court of appeals partially granted the Association’s motion to dismiss as to the attorney fee issue and consolidated the remaining issues.

The court of appeals first addressed whether the 2012 amendments were valid under the Declaration and the CCIOA, since they would eliminate unanimous member and lender consent requirements for shared expenses and determining obsolescence. The court first considered whether the amendments were permitted under the Declaration without unanimous consent. Because the 2012 amendments could affect the members’ common expenses, the court found that those provisions affecting the common expenses were not allowable under the Declaration. As to the 2012 amendments concerning obsolescence, those were not subject to the unanimous consent requirement and were allowable.

The court next considered whether the construction of the Declaration conflicted with the CCIOA, and determined that it did not. The court evaluated the unanimity requirement as related to the CCIOA and found that there was no conflict between the Declaration and the CCIOA. The court similarly concluded that the obsolescence amendments did not conflict with the CCIOA. The court next evaluated the mandatory buyout provision in the 2012 amendments and found that it was valid. The court rejected DA’s arguments about attorney fees and costs.

The court then considered the Association’s cross-appeal on whether the district court abused its discretion by ordering the production of documents the Association contended were privileged. The court engaged in a lengthy analysis of the sequence of events in district court, and whether subsequent Colorado Supreme Court precedent required the court to retroactively engage in a proportionality review. The court of appeals found that the district court had actively managed discovery after the Association asserted privilege, and the district court retained discretion to do so as it saw fit. The court found no abuse of discretion by the district court.

The court affirmed in part, reversed in part, and remanded with directions.

Colorado Court of Appeals: Trial Court Did Not Err in Considering Unredacted Invoices on Remand

The Colorado Court of Appeals issued its opinion in Thompson v. United Securities Alliance, Inc. on Thursday, September 8, 2016.

Judgment—Garnishment—Mandate—Prejudgment Interest—Post-judgment Interest.

Plaintiffs obtained a judgment against United Securities Alliance, Inc. (United), and then instituted garnishment proceedings against Catlin Insurance Company (UK) Ltd. (Catlin), United’s insurer. The district court deducted from the policy limit the amount of attorney fees incurred by Catlin in defending the underlying arbitrations against United, and entered judgment for plaintiffs for the remainder of the policy. The court denied plaintiffs’ requests for pre- and post-judgment interest.

On appeal, plaintiffs contended that the district court acted beyond the scope of the court of appeals’ mandate because, by considering the unredacted attorney fees invoices submitted after the mandate, the district court expressly disregarded the mandate’s instruction to review “the existing record.” Given the unusual procedural posture of this case and the largely “indiscernible” unredacted invoices, the language to review “the existing record” was permissive rather than restrictive, and the remand order meant that the district court could rely exclusively on the existing record to calculate reasonable fees, not that it had to. Accordingly, the district court did not err in considering the unredacted invoices.

Plaintiffs next contended that the district court erred in declining to award prejudgment interest pursuant to C.R.S. § 5-12-102(1). This statute, however, governs contract and property damage cases. Because garnishment actions do not result in damages to the garnishor, prejudgment interest is not appropriate.

Plaintiffs also argued that an award of post-judgment interest was mandatory under C.R.S. § 5-12-106(1)(b) and the district court erred by denying their request. Because the court of appeals’ mandate did not direct the district court to award post-judgment interest and plaintiffs did not request that the court amend its mandate, the district court correctly held that it lacked jurisdiction to make such an award.

The judgment was affirmed.

Summary available courtesy of The Colorado Lawyer.

Tenth Circuit: Attorney Fee Award Appropriate Where Oil and Gas Well Sustained Physical Damage

The Tenth Circuit Court of Appeals issued its opinion in Sundance Energy Oklahoma, LLC v. Dan D. Drilling Corp. on Friday, September 2, 2016.

Sundance contracted with Dan D. to drill several oil and gas wells, and used a standard International Association of Drilling Contractors (IADC) form for each individual well. Dan D. was unable to drill several of the wells because it could not acquire permits, so Sundance asked Dan D. to drill a different group of wells instead, including the Rother well, under the supervision of Tres Management. Although Dan D. did not have a contract, it began drilling the Rother well in December 2012 under the supervision of a Tres company man. Days later, Dan D.’s drill pipe became stuck in the hole. After several failed attempts to remove the pipe, the company man instructed the Dan D. employees to stop pulling on the pipe. A driller ignored the instructions and continued pulling on the pipe, causing the drilling line to break and throw debris, killing the driller. A medical examiner later determined the driller had substantial amounts of methamphetamine in his blood at the time of his death.

A subsequent OSHA investigation suspended all drilling at the Rother well, concluding that the drilling failure resulted from progressive fatigue on the drill line. OSHA issued a citation to Dan D. for failing to inspect and properly maintain the drill line. After the OSHA investigation concluded, Sundance attempted to fish out the stuck drill pipe, but the wellbore had deteriorated and the well was ultimately plugged and abandoned as a total loss.

Sundance sued Dan D. for damages, asserting that Dan D.’s negligence, gross negligence, and breach of implied contract to drill the well in a workmanlike manner resulted in the loss of the hole. Dan D. filed several motions in limine prior to trial, including objecting to the admission of the OSHA narratives and the medical examiner’s toxicology report. The district court denied the motion to suppress the toxicology report and partially denied the motion to suppress the OSHA reports, allowing only portions of the documents to be used. At trial, Sundance’s expert witness testified that Dan D.’s failure to log and track the ton miles of the drill line was “unheard of” in the industry, and that Dan D. should have slipped and cut the drill line to prevent the accident. Sundance relied on Dan D.’s gross negligence caused the line failure and the ultimate loss of the hole. Dan D. disagreed, arguing the fault should lie with Tres and the company man. Dan D. also argued that the IADC contract’s exculpatory provisions state that Sundance was liable for any loss or damage to the hole. Dan D. also asked the district court to instruct the jury that it should impute negligence to Tres, but the district court declined to do so. The district court instead instructed the jury that if it did not find Dan D. was grossly negligent, it should not consider whether an implied contract between the parties incorporated the IADC contract’s exculpatory provisions.

The jury returned a verdict for Sundance, finding Dan D. was grossly negligent and breached an implied contract to drill the well in a workmanlike manner. The jury attributed 75% of the loss to Dan D.’s negligence and 25% to Tres’ negligence, awarding Sundance $1.2 million in damages. Dan D. moved for a new trial under F.R.C.P. 59(a). The district court denied the motion and Dan D. appealed that order. Sundance then filed a motion for attorney fees, which the district court granted. Dan D. also appealed the attorney fee award. The appeals were consolidated.

Dan D. first argued the district court erred in instructing the jury that it need not consider whether the implied contract included the allocation of risk provisions if it found Dan D. grossly negligent, and refusing to impute Tres’ negligence to Sundance. The Tenth Circuit analyzed Dan D.’s claims for abuse of discretion and found none. The district court based its instruction regarding gross negligence on an Oklahoma Supreme Court case where a federal district court certified a question to the Oklahoma Supreme Court regarding whether an exculpatory provision was valid and enforceable. The Oklahoma Supreme Court ruled it was not enforceable in cases involving, among other things, gross negligence. The Tenth Circuit approved of the district court’s reliance on this case and found no abuse of discretion.

Dan D. also argued the district court should have granted a new trial based on its refusal to give Dan D.’s proposed instructions on whether Sundance owed Dan D. a non-delegable duty. The Tenth Circuit found that even if it agreed with Dan D. that the district court erred by not giving the proposed instruction, the error did not prejudice Dan D. because the jury’s verdict for Sundance on the breach of implied contract claim independently supported the damages award. Accordingly, any imputation of negligence would not have affected the breach of contract award.

The Tenth Circuit also found no error in the district court’s admission of the toxicology report or OSHA narratives. Because Dan D. did not object to the admission of any other evidence, and other evidence showed Dan D.’s failures, Dan D. could not show prejudice by the admission of the toxicology report or OSHA narratives.

Finally, the Tenth Circuit addressed Dan D.’s challenge to the attorney fee award. The Tenth Circuit evaluated Okla. Stat. tit. 12, § 940(A), which provides for attorney fees to the prevailing party in any action related to the negligent or willful injury to property, and found the statute applicable in the instant action. The Tenth Circuit noted the physical deterioration of the Rother well during the 12-day OSHA investigation was precisely the type of injury contemplated under § 940(A). Because Sundance prevailed in the action regarding physical injury to a well, the attorney fee award was appropriate.

The Tenth Circuit affirmed the district court.

Colorado Court of Appeals: Trust Beneficiaries Can Recover for Breach of Fiduciary Duty Owed to Settlor

The Colorado Court of Appeals issued its opinion in In the Matter of Donald C. Taylor and Margaret Ann Taylor Trust on Thursday, June 30, 2016.

Revocable Trust—Fiduciary Duty—Breach—Standing—Attorney Fees—Exception to American Rule.

Donald and Margaret Ann Taylor were married to each other. They each had children from prior marriages: defendant is Donald’s son, and plaintiff and intervenor (plaintiffs) are Margaret Ann’s children. Donald and Margaret Ann created a revocable trust, the primary purpose of which was to benefit whichever spouse survived the other. Upon the death of the surviving spouse, half of the trust’s remaining assets were to be distributed to Donald’s children, with the other half going to Margaret Ann’s children. Donald and Margaret Ann also each had investment accounts, which would pass to only their respective children upon death. Upon Donald’s death, defendant became co-trustee with Margaret Ann. Shortly before her death, Margaret Ann, at defendant’s urging, transferred into the trust monies that she had separately placed in her investment accounts and designated as payable upon death only to her children. A jury found that defendant had breached his fiduciary duty. The court entered judgment and awarded attorney fees to plaintiffs.

On appeal, defendant contended that the trial court erroneously allowed plaintiffs to recover damages when there was no evidence of a breach of fiduciary duty to Margaret Ann. Because plaintiffs here alleged an injury-in-fact to a legally protected interest, they had standing to assert the breach of fiduciary claims. Therefore, plaintiffs could pursue a claim for a breach of fiduciary duty that proved harmful to them, even though the duty was owed to Margaret Ann.

Defendant also contended that the trial court erred in awarding plaintiffs attorney fees under C.R.S. § 15-10-504(2). Here, the jury determined that defendant had breached a fiduciary duty owed to Margaret Ann and the undisputed evidence was that defendant was a trustee, Margaret Ann was a trust beneficiary, and defendant and his siblings stood to personally gain by the inclusion of the challenged property in the trust. Under these circumstances, the requirements for recovery of attorney fees under the breach of trust exception to the American Rule are satisfied.

The judgment and order awarding attorney fees were affirmed.

Summary provided courtesy of The Colorado Lawyer.

Colorado Supreme Court: Attorney’s Lien Void When he was Terminated for Cause

The Colorado Supreme Court issued its opinion in Martinez v. Mintz Law Firm on Tuesday, May 31, 2016.

Contingent Fees—Charging Liens—Proper Civil Action.

In this dispute regarding an attorney’s charging lien, a contingent fee plaintiff’s former attorneys asserted a lien against any settlement or judgment entered in the underlying action and in favor of plaintiff. After the underlying action was settled, successor counsel moved to void the lien, and initial counsel moved to strike successor counsel’s motion and to compel arbitration, based on an arbitration clause contained in initial counsel’s contingent fee agreement with plaintiff. The Supreme Court concluded that successor counsel’s motion to void the lien at issue was properly filed in the underlying action and that the underlying action was a “proper civil action” within the meaning of C.R.S. § 12-5-119. As a result, the Court further concluded that the lien dispute was between initial and successor counsel. Therefore, the matter (1) was not subject to arbitration pursuant to the arbitration clause in initial counsel’s contingent fee agreement with the plaintiff and (2) was properly before the district court. Finally, the Court concluded that the record supported the district court’s finding that initial counsel was not entitled to recover the fees that it was seeking. Accordingly, the Court reversed the judgment of the Court of Appeals and remanded the case for further proceedings consistent with this opinion.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Costs of Defending Lawsuit Not Campaign Expenditures

The Colorado Court of Appeals issued its opinion in Campaign Integrity Watchdog v. Coloradans for a Better Future on Thursday, April 7, 2016.

Reporting Contributions and Spending—Fair Campaign Practices Act.

In 2012, Arnold lost the Republican primary election for University of Colorado Regent to Davidson. During the run-up to the election, Coloradans for a Better Future (CBF) purchased a radio advertisement supporting Davidson and other radio advertisements unfavorable to Arnold. After the election, Arnold, and later Campaign Integrity Watchdog (CIW) with Arnold as its principal officer, filed a series of complaints with the Colorado Secretary of State (Secretary) alleging violations of Colorado’s Fair Campaign Practices Act (FCPA). This is the third such complaint.

Specifically, CIW challenged CBF’s failure to report funds donated to CBF to pay Arnold’s court costs from an earlier case, arguing those funds were a contribution and spending and were incorrectly reported in CBF’s initial January 2014 contributions and expenditures report. The administrative law judge (ALJ) dismissed the complaint. The ALJ found that on January 22, 2014, CBF filed a contribution and expenditures report with the Secretary. Its report wasn’t due until May 5, but it intended to terminate its activities as a political organization and thus filed early. On the same day, CBF’s legal counsel sent an email to the Secretary seeking to amend the report to show that Colorado Justice Alliance (CJA) contributed $200.20 to pay Arnold’s court costs. The Secretary’s electronic reporting system didn’t allow the change to be made by CBF, and the Secretary’s staff couldn’t change the report either. CIW filed its complaint on March 3, 2014 and CBF’s report was publicly amended on March 6, 2014. The ALJ concluded that CBF had already reported the CJA contribution to the Secretary when CIW filed its complaint and that the complaint was premature because the report was not due until May 2014. The ALJ further concluded that the payment of Arnold’s court costs did not meet the FCPA definition of spending and did not have to be reported as such.

On appeal, CIW contended that the $200.20 CJA donated to help CBF satisfy its obligation to pay Arnold’s court costs was a contribution that was incorrectly reported on the initial report. Specifically, CIW argued that the ALJ (1) invented findings of fact, (2) misrepresented facts regarding CBF’s request to amend its report, and (3) erred in concluding the complaint was premature. As to the first argument, CIW failed to cite specific findings or record support; as to the second argument, the allegation concerned a question of law rather than fact; and as to the third argument, the court concluded the report was corrected on January 22, when CBF notified the Secretary of its mistake. CIW also argued that CBF violated the FCPA because it listed the payee of the $200.20 as the Denver District Court rather than Arnold; the court found this too insignificant to amount to a violation of the reporting law. Thus, the Court concluded that the ALJ did not err when he concluded CBF correctly reported the $200.20.

CIW also argued that the $200.20 CBF paid to Arnold constituted spending and should have been reported. The court found the funds were not “expended influencing or attempting to influence the selection, nomination, election, or appointment of any individual to any state or local public office in the state,” and thus concluded they were not reportable spending.

CIW’s request for costs and fees was denied. CBF’s request for attorney fees was denied, but its request for costs was granted.

The judgment was affirmed.

Summary provided courtesy of The Colorado Lawyer.

Colorado Court of Appeals: Claim Preclusion Bars Suit Against Attorney for Disclosure of PRE Report

The Colorado Court of Appeals issued its opinion in Foster v. Plock on Thursday, March 10, 2016.

Claim Preclusion—Attorney Fees.

This case stemmed from Foster’s dissolution of marriage action but also involved related criminal and tort cases. Plock represented Foster’s wife (wife) in the dissolution action, but was not a named party in any of the other cases.

Wife filed to dissolve her marriage to Foster, and a temporary civil protection order was issued by the domestic relations court barring Foster from contacting wife.

The court ordered a Parental Responsibilities Evaluation (PRE), which reported that Foster had an extensive criminal history. The PRE recommended that the court grant wife sole decision-making authority for the minor child. Foster requested a second evaluator, who noted that it was questionable whether all the crimes in the first report had actually been committed by Foster, but made the same recommendation. Both PREs were confidential and not to be “made available for public inspection” without court order.

Two misdemeanor criminal cases arose against Foster from multiple violations of the domestic court’s temporary civil protection order. In May 2013, the district attorney in one of those cases contacted Plock and asked whether he had any information that would be helpful to the criminal court in sentencing if Foster was convicted. Plock emailed him both PREs without Foster’s knowledge or consent, and without a court order releasing the PREs. The PREs were used in sentencing and, on Foster’s motion, ordered to be sealed.

In November 2013, Plock filed a motion with the domestic relations court admitting that he had disclosed the PREs to the prosecuting attorney, and in July 2014 the court sanctioned Plock and ordered him to pay Foster’s attorney fees associated with responding to Plock’s motion in which he admitted disclosing the PREs to the prosecutor.

During this time period, Foster filed 11 separate lawsuits regarding the first PRE alleging libel, slander, and outrageous conduct. These cases were all consolidated and all defendants moved to dismiss. Foster then filed 11 amended complaints against wife and the first investigator alleging that each had caused the disclosure of the PREs to the prosecutor in the criminal case. Plock wasn’t named in any of these cases, but in the complaint against wife, it was alleged that she, through her attorney, caused the PREs to be disclosed. In May 2014 the district court dismissed all of Foster’s complaints. Foster appealed but then voluntarily dismissed the appeal.

Four months after the dismissal and 10 months after he learned that Plock had disclosed the PREs to the prosecutor, Foster filed this action against Plock alleging invasion of privacy, defamation, and outrageous conduct. The court granted Plock’s motion to dismiss based on both claim and issue preclusion.

On appeal, Foster argued that it was error to conclude that his claims were barred by claim preclusion because there was no identity of subject matter, claims, or parties. The Court of Appeals disagreed. Specifically, the Court found that all of the elements of claim preclusion had been met: (1) finality of the first judgment, (2) identity of subject matter, (3) identity of claims for relief, and (4) identity or privity between parties to the actions.

Foster and Plock both requested attorney fees. The Court denied Foster’s request, but agreed that Plock was entitled to a mandatory award of attorney fees and costs on appeal under CRS §§ 13-17-201 and 13-16-113(2).

The judgment was affirmed and the case was remanded for a determination of reasonable attorney fees to be awarded to Plock.

Summary and full case available here, courtesy of The Colorado Lawyer.