August 24, 2019

Colorado Court of Appeals: Bringing Malpractice Claim to Reduce Liability for Attorney Fees is Not Abuse of Process

The Colorado Court of Appeals issued its opinion in Parks v. Edward Dale Parrish, LLC on Thursday, February 7, 2019.

Torts—Malpractice—Abuse of Process—Breach of Fiduciary Duty—Attorney Fees—Expert Witness

Parrish and Edward Dale Parrish LLC (defendants) represented plaintiff in two cases, a partition case and a dissolution case, against plaintiff’s former, long-term girlfriend. Plaintiff was not satisfied with the results. After he failed to pay Parrish for his legal services, Parrish filed a notice of attorney’s lien in the partition case. In response, plaintiff filed this case against defendants, alleging that they provided negligent representation and breached their fiduciary duty to him in both cases. Defendants counterclaimed for breach of contract (seeking an award of fees incurred in previously representing plaintiff) and abuse of process (based on plaintiff bringing this case).

At the close of plaintiff’s evidence, defendants moved for directed verdicts on all of his claims. The district court concluded that the breach of fiduciary duty claim was duplicative of the negligence claim and dismissed that claim. Plaintiff moved for a directed verdict on the counterclaims, which the court denied. The jury returned verdicts for defendants on all claims and counterclaims. The court also awarded defendants costs for their expert witness. Plaintiff moved for judgment notwithstanding the verdict (JNOV). This motion was deemed denied when the district court did not timely act on it. 

On appeal, plaintiff first contended that the district court erred in denying his motion for directed verdict and motion for JNOV on defendants’ abuse of process counterclaim. Bringing a malpractice case to obtain a result that such an action is designed to achieve doesn’t constitute an improper use of process, regardless of the motive. Here, the district court erred in reasoning that the jury could find an abuse of process if it found merely that defendants didn’t provide negligent representation. Given the lack of evidence of any improper use of process, the district court should have granted plaintiff’s motion for a directed verdict or motion for JNOV on the abuse of process counterclaim.

Plaintiff next contended that the district court erred in dismissing as duplicative his breach of fiduciary duty claim relating to the partition case. Where the professional negligence claim and breach of fiduciary duty claim arise from the same material facts and the allegations pertain to an attorney’s exercise of professional judgment, the breach of fiduciary duty claim should be dismissed as duplicative.  Here, plaintiff alleged that Parrish breached his fiduciary duty by entering into a stipulation without his consent. The same allegation underlies in part the negligence claim and implicates Parrish’s exercise of professional judgment. Therefore, the district court did not err in dismissing the breach of fiduciary duty claim.

Plaintiff also contended that the district court erred in denying his motion for a directed verdict on defendants’ breach of contract counterclaim. Defendants claimed that plaintiff breached a contract by failing to pay them attorney fees. Plaintiff argued that defendants had to prove the reasonableness of the fees they sought through expert testimony, and because defendants didn’t present any such testimony, the claim necessarily fails. When breach of contract damages are unpaid attorney fees, laypersons can determine the reasonableness of fees without an expert’s help. Here, Parrish testified about the services rendered, the reasonableness of the time spent on the services, and the fees charged for the services, and the jury considered the bills to plaintiff. Thus, the jury had sufficient evidence to assess the reasonableness of the claimed fees.

The judgment in favor of defendants on the abuse of process counterclaim was vacated. The judgment was affirmed in all other respects. The case was remanded for the district court to enter judgment in plaintiff’s favor on the abuse of process counterclaim and to amend the judgment as to damages accordingly.

Summary provided courtesy of Colorado Lawyer.

Rule 1.5 of Colorado Rules of Professional Conduct Amended in Rule Change 2019(05)

On January 31, 2019, the Colorado Supreme Court adopted Rule Change 2019(05), amending Rule 1.5, “Fees,” of the Colorado Rules of Professional Conduct. Rule 1.5 was amended by the addition of a subsection (h), which deals with flat fees:

(h) A “flat fee” is a fee for specified legal services for which the client agrees to pay a fixed amount, regardless of the time or effort involved.

(1) The terms of a flat fee shall be communicated in writing before or within a reasonable time after commencing the representation and shall include the following information:

(i) A description of the services the lawyer agrees to perform;

(ii) The amount to be paid to the lawyer and the timing of payment for the services to be performed;

(iii) If any portion of the flat fee is to be earned by the lawyer before conclusion of the representation, the amount to be earned upon the completion of specified tasks or the occurrence of specified events; and

(iv) The amount or the method of calculating the fees the lawyer earns, if any, should the representation terminate before completion of the specified tasks or the occurrence of specified events.

(2) If all or any portion of a flat fee is paid in advance of being earned and a dispute arises about whether the lawyer has earned all or part of the flat fee, the lawyer shall comply with Rule 1.15A(c) with respect to any portion of the flat fee that is in dispute.

(3) The form Flat Fee Agreement following the comment to this Rule may be used for flat fee agreements and shall be sufficient. The authorization of this form shall not prevent the use of other forms consistent with this Rule.

A new form Flat Fee Agreement was also added in the rule change.

A redline and clean version of Rule Change 2019(05) is available here. For all of the court’s adopted and proposed rule changes, click here.

Colorado Supreme Court: Burden to Prove Collectability of Judgment in Underlying Case Lies with Claimant

The Colorado Supreme Court issued its opinion in LeHouiller v. Gallegos on Monday, January 28, 2019.

Attorney Malpractice—Burden of Proof—Tort.

In this attorney malpractice case founded on professional negligence, the supreme court was asked to decide who—the client or the attorney—bears the burden to prove that any judgment that could have been obtained against the underlying defendant would or would not have been collectible. The court held that because the collectibility of the underlying judgment is essential to the causation and damages elements of a client’s negligence claim against an attorney, the client-plaintiff bears the burden of proving that the lost judgment in the underlying case was collectible.

Here, the record shows that client-plaintiff failed to prove that the underlying judgment would have been collectible. However, given the absence of a clear statement from this court regarding client-plaintiff’s burden to prove collectibility at the time of trial, and given that the issue was not raised in this case until after client-plaintiff had presented her case-in-chief, the court reversed the court of appeals’ judgment and remanded the case for a new trial.

Summary provided courtesy of Colorado Lawyer.

Colorado Supreme Court Issues Three Rule Changes, Affecting Rules Governing Admission to Bar, Criminal Procedure Rules, and More

On Friday, January 25, 2019, the Colorado Supreme Court issued Rule Changes 2019(02), 2019(03), and 2019(04). All of the rule changes are effective immediately.

Rule Change 2019(02) amends Rule 5, “Preliminary Proceedings,” of the Colorado Rules of Criminal Procedure. The change specifies that current Armed Forces members or veterans may be entitled to receive mental health treatment, substance use treatment, or other services as a veteran.

Rule Change 2019(03) amends several rules in Rules Governing Admission to the Practice of Law in Colorado. Many of the changes involve a move of the provision on the mandatory professionalism course from Rule 203.2 to Rule 203.1, and amending several of the rules to update cross-references. Many other cross-references were updated in the rule change, and Rule 205.6, “Practice Pending Admission,” was updated to clarify the requirements of payment of fees. Rule 211.2(10) regarding reinstatement requirements was repealed.

Rule Change 2019(04) amends three of the Colorado Rules of Procedure Regarding Attorney Discipline and Disability Proceedings, Colorado Attorneys’ Fund for Client Protection, and Mandatory Continuing Legal Education and Judicial Education. Rule 250.7, “Compliance,” was amended to update a cross-reference and to delete the reinstatement requirement of taking the bar exam in subsection (10). Rule 251.31, “Access to Information Concerning Proceedings Under These Rules,” was amended to specify in subsection (r) that Regulation Counsel’s records regarding sexual harassment allegations will be available to complainant and respondent if they are not otherwise privileged. Rule 252.5, “Composition and Officers of the Board,” was completely repealed and reenacted.

For redlines and clean versions of Rule Changes 2019(02), 2019(03), and 2019(04), click here. For all of the Colorado Supreme Court’s adopted and proposed rule changes, click here.

Colorado Supreme Court: Unnecessary Presence of Parents at Initial Consultation Voids Attorney-Client Privilege

The Colorado Supreme Court issued its opinion in In re Fox v. Alfini on Monday, December 3, 2018.

In this original proceeding pursuant to C.A.R. 21, the court reviews the district court’s order compelling production of a recording of the Petitioner’s initial consultation with her attorney. The district court determined that the recording was not subject to the attorney-client privilege because her parents were present during the consultation and their presence was not required to make the consultation possible. Further, the district court refused to consider several new arguments that the Petitioner raised in a motion for reconsideration.
The supreme court issued a rule to show cause and now concludes that the presence of a third party during an attorney-client communication will ordinarily destroy the attorney-client privilege unless the third party’s presence was reasonably necessary to the consultation or another exception applies. Here, because the record supports the district court’s finding that the Petitioner had not shown that her parents’ presence was reasonably necessary to facilitate the communication with counsel, the court perceives no abuse of discretion in the district court’s ruling that the recording at issue was not protected by the attorney-client privilege.
The court further concludes that, under settled law, the district court did not abuse its discretion in refusing to consider the new arguments that the Petitioner raised in her motion for reconsideration.
Accordingly, the court discharges the rule to show cause.

Summary provided courtesy of Colorado Lawyer.

Colorado Court of Appeals: Language in Fee Agreement Insufficient to Terminate Counsel’s Representation

The Colorado Court of Appeals issued its opinion in People v. Lancaster on Thursday, November 29, 2018.

Criminal ProcedureConstitutional LawSixth AmendmentNotice of AppealIneffective Assistance of CounselCrim. P. 44(e)Termination of Representation.

Newell represented Lancaster at a criminal trial. The fee agreement between Newell and Lancaster included a provision that representation terminated at the conclusion of trial. A jury found Lancaster guilty on six of seven counts and he was sentenced in 2007. Following trial, Newell informed Lancaster that he would not represent him on appeal, but Newell did not withdraw from the representation. Thereafter, Lancaster did not timely file a notice of appeal. In 2010, Lancaster filed a pro se Crim. P. 35(c) motion alleging that Newell had been constitutionally ineffective by failing to file a notice of appeal. The motion was denied after a hearing.

On appeal, Lancaster contended that Newell was constitutionally ineffective in failing to file a notice of appeal on his behalf. Trial counsel’s representation of a criminal defendant terminates only as provided under Crim. P. 44(e), notwithstanding the fee agreement; therefore, trial counsel’s duty to perfect the defendant’s appeal is not discharged until the representation terminates pursuant to Crim. P. 44(e). Here, Newell’s failure to either file a notice of appeal on Lancaster’s behalf or withdraw pursuant to Crim. P. 44(d) and secure the appointment of the public defender to represent Lancaster on direct appeal constituted ineffective assistance of trial counsel. Because the ineffective assistance of trial counsel deprived Lancaster of his right to direct appeal of his conviction, he is entitled to pursue a direct appeal out of time pursuant to C.A.R. 4(b).

The order was reversed.

Summary provided courtesy of Colorado Lawyer.

Rule Change 2018(16) Adopted, Amending C.R.C.P. 252.10

On Thursday, October 4, 2018, the Colorado Supreme Court issued Rule Change 2018(16), amending Rule 252.10, “Eligible Claims,” of the Colorado Rules of Procedure Regarding Attorney Discipline and Disability Proceedings, Colorado Attorneys’ Fund for Client Protection, and Mandatory Continuing Legal Education and Judicial Education.

The changes to Rule 252.10 affect subparagraphs (a), (e), and (f), and reflect circumstances in which claims may be accepted and paid by the Board, including accepting claims in circumstances in which the loss is caused by the death or disability of the attorney and paying claims when client funds are no longer in the attorney’s trust account.

For a redline and clean version of Rule Change 2018(16), click here. For all of the Colorado Supreme Court’s adopted and proposed rule changes, click here.

Colorado Supreme Court: Strict Privity Rule Bars Claims Against Attorneys by Non-Clients

The Colorado Supreme Court issued its opinion in Bewley v. Semler on Monday, September 24, 2018.

Strict Privity—Standing—Pleading.

In this case, the supreme court considered whether the strict privity rule bars claims against attorneys by non-clients absent a showing of fraud, malicious conduct, or negligent misrepresentation. The court held that, absent any wrongdoing, the strict privity rule does bar claims against attorneys by non-clients because holding otherwise may force attorneys to place non-clients’ interests ahead of clients’ interests. Here, because Semler did not allege any fraud, malicious conduct, or negligent misrepresentation, he lacked standing to assert a breach-of-contract claim.

Summary provided courtesy of Colorado Lawyer.

Rule Changes Adopt Colorado Lawyer Self-Assessment Program, Amend Public Access and Water Court Rules

The Colorado Supreme Court has issued three new rule changes that have recently been released by the Colorado State Judicial Branch.

Rule Change 2018(08) amends Rules 11, 12, and 13 of the Uniform Local Rules for All State Water Court Divisions. Rule 11 was amended by the addition of a comment to specify that January 1, 2018, changes to the rule require expert witness disclosures to be made earlier than were previously required. Rule 12, “Procedure Regarding Decennial Abandonment Lists,” is new and sets forth specifications for publication and protest of decennial abandonment lists. Rule 13 was unchanged except to be renumbered; formerly, it was Rule 12.

Rule Change 2018(09) amends Rule 2 of Chapter 38 of the Colorado Rules of Civil Procedure, “Public Access to Information and Records.” Rule 2, “Public Access to Administrative Records of the Judicial Branch,” had minor amendments in sections 1 and 2. Section 3 of the rule dealing with exceptions and limitations on access to records had several amendments. The changes to Section 4 were relatively minor, and Section 5 was unchanged.

Rule Change 2018(10) adds Rule 256, “The Colorado Lawyer Self-Assessment Program,” to the Colorado Rules of Civil Procedure. Rule 256 establishes the Colorado Lawyer Self-Assessment Program and sets forth guidelines and definitions for compliance with the program. The rule specifies that lawyers who utilize the program will be subject to confidentiality and immunity.

For a complete list of the Colorado Supreme Court’s adopted and proposed rule changes, click here.

Colorado Supreme Court: Attorney Violated Colo. RPC 1.8(a)(3) by Not Obtaining Informed Consent for Business Transaction

The Colorado Supreme Court issued its opinion in In the Matter of James C. Wollrab on Monday, June 25, 2018.

Colorado Rules of Professional Conduct—Attorney Discipline—Colo. RPC 1.8—Colo. RPC 4.2.

In this attorney discipline proceeding, the supreme court was confronted with questions as to what Colorado Rules of Professional Conduct 1.8 and 4.2 require of an attorney who enters into a business relationship with his client. The court concluded that the attorney in this case violated Rule 1.8(a)(1) when he signed a lease with his client’s company without complying with any of Rule 1.8(a)’s prophylactic requirements. The attorney also violated Rule 1.8(a)(3) when he entered into an option agreement with his client without obtaining his client’s informed, written consent to his role in the deal. However, because the attorney had the implied consent of his client’s independent counsel for the purposes of the option agreement, he did not violate Rule 1.8(a)(1) or (2) or Rule 4.2 in that transaction. The court remanded the case to the hearing board for determination of the appropriate sanction in light of its conclusions.

Summary provided courtesy of Colorado Lawyer.

Mandatory Continuing Legal and Judicial Education Age Requirements Changing July 1, 2018

On March 15, 2018, the Colorado Supreme Court adopted changes to the Colorado Rules of Civil Procedure affecting mandatory continuing legal and judicial education. One of the changes that will have the broadest application is a change to the age requirements for mandatory continuing legal and  judicial education.

The current rules specify that attorneys who attain the age of 65 years are no longer required to obtain or track CLE credits. The rule change extends that age to 72 years, and attorneys who are currently exempt from tracking CLE credits due to their age will once again be required to comply with CLE reporting requirements until they attain 72 years of age.

The Office of Attorney Regulation Counsel released a helpful guide on how to proceed if you are between the ages of 65 and 72 years:

How will this work?

If you are currently exempt from mandatory CLE based on your age and are not yet 72 years old, you will again become subject to the requirements and your compliance period begins this year and ends December 31, 2021. For those of you who will be turning 65 this year or in 2019 and have not yet become exempt, your compliance period will automatically be extended to December 31, 2021. Once you turn age 72, you will again become exempt from the CLE requirements.

What happens if you turn age 72 before December 31, 2021?

You will become exempt during your first re-entry compliance period, and therefore it is up to you to what extent you wish to enter your CLE activities on your official transcript. Additionally, pursuant to the new rule, even once you become exempt, you will continue to be able to enter your CLE activities on your official transcript. This will allow you to continue to track your CLE, even though not required, for your own use. The Office of Continuing Legal and Judicial Education will be making changes to your CLE record over the next few months and will be ready for the July 1, 2018 effective date, so that you may begin entering your CLE credits online at that time.

CBA-CLE Classic Pass

CBA-CLE has developed a “Classic Pass” geared exclusively toward attorneys who were previously exempt from CLE reporting requirements. The Classic Pass is a subscription service that will allow attorneys to fulfill their CLE requirements for a reasonable price. For more information about the Classic Pass or to order your subscription, please contact Mary Dilworth at mdilworth@cobar.org.

Colorado Supreme Court: Formerly Secretary of State Properly Subject to Jurisdiction of Independent Ethics Commission

The Colorado Supreme Court issued its opinion in Gessler v. Smith on Monday, June 4, 2018.

Amendment 41—Independent Ethics Commission—Jurisdiction.

The supreme court considered whether Colorado’s Independent Ethics Commission (the IEC) had jurisdiction pursuant to article XXIX of the Colorado Constitution to hear a complaint based on allegations that then-Secretary of State Scott Gessler (the Secretary) breached the public trust by using money from his statutorily provided discretionary fund for partisan and personal purposes. The IEC investigated the complaint, held an evidentiary hearing, and determined that the Secretary’s conduct breached the public trust. The Secretary sought judicial review of the IEC’s ruling, arguing that the IEC lacked jurisdiction over the case, the relevant jurisdictional language must be narrowly construed to avoid unconstitutional vagueness, and the IEC violated his procedural due process rights. Both the district court and the court of appeals affirmed the IEC’s ruling.

The court held that relevant jurisdictional language in Colo. Const. art. XXIX, § 5 authorizes the IEC to hear complaints involving ethical standards of conduct relating to activities that could allow covered individuals, including elected officials, to improperly benefit financially from their public employment. The court further held that C.R.S. § 24-18-103 is one such ethical standard of conduct. This provision establishes that the holding of public office or employment is a public trust, and that a public official “shall carry out his duties for the benefit of the people of the state.” Because the allegations against the Secretary clearly implicated this standard, the court concluded that the complaint fell within the IEC’s jurisdiction and rejected the Secretary’s jurisdictional and vagueness challenges. Additionally, the court rejected the Secretary’s procedural due process claim because he failed to demonstrate that he suffered any prejudice as a result of the alleged violation.

The court of appeals’ judgment was affirmed.

Summary provided courtesy of Colorado Lawyer.