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Thompson v. United Securities Alliance, Inc.

Court of Appeals of Colorado, Second Division

September 8, 2016

Mark L. Thompson and Rosalin Rogers, Plaintiffs-Appellants,
v.
United Securities Alliance, Inc., Defendant, and Concerning Catlin Insurance Company (UK) Ltd., Garnishee, Appellee.

         City and County of Denver District Court No. 09CV7321 Honorable Michael A. Martinez, Judge

          Sherman & Howard L.L.C., Christopher R. Mosley, Jennifer M. Morris, Denver, Colorado, for Plaintiff-Appellant

          Gordan & Rees LLP, John R. Mann, Denver, Colorado, for Appellee

          OPINION

          HARRIS JUDGE

         ¶ 1 Plaintiffs Mark L. Thompson and Rosalin Rogers obtained a judgment against United Securities Alliance, Inc., and then instituted garnishment proceedings against United's insurer, defendant Catlin Insurance Company (UK) Ltd. 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.

         ¶ 2 On appeal, plaintiffs contend the district court erred in its determination of reasonable attorney fees and in declining to award pre- and post-judgment interest. Whether prejudgment interest can be awarded in a garnishment proceeding is an unresolved issue in Colorado. We affirm.

         I. Background

         ¶ 3 Catlin issued a liability insurance policy to United, covering claims that might arise from United's business as a securities broker. The policy allows Catlin to deduct from the policy's liability limit the "reasonable and necessary fees and costs incurred . . . in the defense of a Claim."

          ¶ 4 Plaintiffs received a damages award in an arbitration proceeding against United, which the district court confirmed. To collect on this judgment, plaintiffs then served a writ of garnishment action on Catlin as United's insurer.

         ¶ 5 In an October 2010 order, the district court ordered Catlin to pay the damages award and found that Catlin could deduct "zero" defense fees and costs from the policy's limits. According to the district court, the heavily redacted invoices submitted by Catlin failed to establish that the fees were "reasonable and necessary."

         ¶ 6 On appeal, a division of this court affirmed the liability judgment, but remanded for the district court to determine the amount of expenses that Catlin had reasonably incurred in the arbitration, to deduct that amount from the $1 million policy limit, and to order Catlin to pay the plaintiffs, from the remaining policy limit, the amounts due under the judgment. Thompson v. Catlin Ins. Co. (UK) Ltd., slip op. at 14 (Colo.App. No. 10CA2554, Feb. 12, 2012) (not published pursuant to C.A.R. 35(f)) (Thompson I).

         ¶ 7 On remand, the district court found that Catlin had reasonably incurred fees and costs but, faced with the same heavily redacted invoices (which it found largely "indiscernible"), the court calculated Catlin's expenses based on the amount of fees incurred by plaintiffs' counsel in the underlying arbitration. Using this method, the court found that Catlin could deduct $320, 000 in attorney fees from the policy limits.

         ¶ 8 Catlin again appealed. A division of this court reversed a second time, concluding that the district court's order did not include sufficient findings of facts to support its determination. Thompson v. Catlin Ins. Co. (UK) Ltd., slip op. at 8 (Colo.App. No. 13CA2037, Oct. 16, 2014) (not published pursuant to C.A.R. 35(f)) (Thompson III).[1]

         ¶ 9 Before recalculating the reasonable amount of fees and costs on remand, the district court accepted additional briefing from the parties. This time, along with its briefing, Catlin provided the unredacted copies of the invoices for the two arbitrations, stating that it had finally located them from defense counsel "[a]fter an exhaustive search." Plaintiffs moved to strike the unredacted invoices as outside the scope of the mandate, and the court denied the motion.

         ¶ 10 In a thorough and carefully reasoned opinion, the district court relied on record evidence, including the unredacted invoices, to calculate Catlin's reasonable attorney fees and costs, making specific deductions for redundant entries, excessive hours, and other discretionary factors. The court found $452, 107.15 of Catlin's requested $545, 136.27 reasonable and necessary and deducted this amount from the policy limit. After subtracting amounts Catlin had previously paid plaintiffs, the court ordered Catlin to pay $96, 287.68. It denied plaintiffs' requests for pre- and post-judgment interest.

         ¶ 11 On appeal, plaintiffs contend that the district court acted beyond the scope of the mandate in Thompson III by considering the unredacted invoices, and that it erred in denying interest to which they are statutorily entitled.

         II. Unredacted Invoices

         ¶ 12 Plaintiffs contend that the district court acted beyond the scope of the Thompson III mandate because, by considering the unredacted invoices, the district court expressly disregarded the mandate's instruction to review "the existing record." In light of the unusual circumstances of this case, we disagree.

         ¶ 13 Trial courts have no discretion to disregard binding appellate rulings. Consequently, we review de novo whether a trial court has complied with a prior appellate ruling. City Council of City of Cherry Hills Vill. v. S. Suburban Park & Recreation Dist., 219 P.3d 421, 423 (Colo.App. 2009).

         ¶ 14 When determining the meaning of a remand order, we consider the disposition and context of the entire opinion. See In re Marriage of Balanson, 107 P.3d 1037, 1044 (Colo.App. 2004) (interpreting remand order "in the context of the entire opinion"); In re Marriage of Ashlock, 663 P.2d 1060, 1062 (Colo.App. 1983) ("The meaning of a remand is to be determined from the reviewing court's disposition of the issues before it.").

         ¶ 15 We acknowledge that, in most cases, an instruction to the district court to "review the existing record, " and to make a determination "from this record, " would amount to an order prohibiting the district court from considering additional evidence. But given the unusual procedural posture of this case, we construe the language as permissive rather than restrictive - in our view, the remand order meant that the district ...


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