July 16, 2019

Colorado Court of Appeals: Trial Court Failed to Reduce Attorney Fees Award Proportionately

The Colorado Court of Appeals issued its opinion in Planning Partners Int’l, LLC v. QED, Inc. on October 27, 2011.

Breach of Contract—Attorney Fees—Counterclaims.

In this breach of contract case, defendant QED, Inc. (QED) appealed the trial court’s judgment awarding $188,748.80 in attorney fees to plaintiff Planning Partners International, LLC (PPI). The judgment was reversed and the case was remanded with directions.

QED, an electrical supply company, decided to host a Mediterranean cruise for its employees and customers. QED hired PPI to plan and coordinate the air travel from Colorado to Spain. PPI entered into a standard charter agreement with Omni Air International, Inc. (Omni), a charter flight company. Three days before the scheduled departure, Omni informed PPI that it was assessing a fuel surcharge of $122,428 and threatened to delay service until it received payment pursuant to the charter agreement. PPI agreed to pay it on QED’s behalf if QED signed a promissory note and loan agreement (Agreement), which it did. In July 2008, PPI filed this lawsuit alleging that QED had refused to repay PPI. QED filed counterclaims against PPI for breach of contract relating to the letter of agreement, breach of fiduciary duty, and negligence. The jury returned a verdict awarding PPI $137,725 on its breach of contract claim and awarding QED $58,535 on its breach of contract counterclaim, for a net judgment to PPI of $79,190.

QED argued that a significant portion of PPI’s attorney fees were incurred in defending all of its counterclaims, including the ancillary ones, and that the trial court erred as a matter of law in refusing to apportion the fees on that basis. The attorney fee provision at issue here shifts the burden of fees to the borrower (QED), regardless of which party prevails. Where reasonable attorney fees are provided for in a promissory note or contract and the judgment based on the note or contract has been reduced by a counterclaim arising out of the transaction, an apportionment of attorney fees is required in proportion to the amount recovered on the note less the amount recovered on the counterclaim. The trial court found that PPI incurred reasonable and necessary attorney fees of $188,748.80, but it erred in failing to reduce PPI’s award proportionately. The judgment was reversed and the case was remanded for correction of the award of attorney fees.

This summary is published here courtesy of The Colorado Lawyer. Other summaries for the Colorado Court of Appeals on October 27, 2011, can be found here.

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