and County of Denver District Court No. 13CV33733 Honorable
Catherine A. Lemon, Judge
Ridley, McGreevy & Winocur, PC, Robert T. Fishman,
Denver, Colorado, for Plaintiffs-Appellants
Penny, Jr., P.C., Roy W. Penny, Jr., Denver, Colorado, for
Defendant-Appellee Tiburon Development LLC
Law Office of Lauren A. Burnett, P.C., Lauren A. Burnett,
Avon, Colorado, for Defendant-Appellee David Sell
1 This is this case's second visit to this court. Last
time around, a division of this court affirmed the district
court's judgment on the merits. The present appeal
involves the district court's decision to award one side
their attorney fees and deny the other side theirs.
Specifically, Beth and James Klein (the Kleins) appeal the
district court's judgment refusing to award them their
attorney fees and costs pursuant to a line of credit
agreement (LOC) between them and Tiburon Development LLC
(Tiburon). They also appeal certain parts of the attorney
fees award entered against them and their law firm in favor
of David Sell (Sell). We affirm in part, reverse in part, and
remand for further proceedings.
Background A. History Preceding Prior Appeal
2 In 2005, the Kleins and their friends, David King, Betty
King, Sell, and Sell's brother, formed a limited
liability company, Tiburon, to build a vacation home in Costa
Rica. The Kleins, the Kings, Sell, and Sell's brother
(the members) each owned 25% of Tiburon.
3 In 2011, Tiburon acquired a Costa Rican corporation that
owned a vacation home (VC5) in Costa Rica. In conjunction
with the acquisition, the members entered into an operating
plan to govern Tiburon's use of VC5. The members agreed
to split the operating costs for VC5 in proportion to their
shares in Tiburon.
4 The operating plan incorporated the LOC executed by the
members as a means of paying for furnishing and outfitting
VC5. Under the LOC, the Kleins and the Kings each loaned
Tiburon $15, 000, with interest to accrue on any unused
outstanding balance at a rate of 5.25% per year.
5 The members furnished the Costa Rican corporation with
funds from the LOC and by making purchases for VC5 with their
own money. When a member purchased something for VC5, the
member would send the receipt to David King (who voluntarily
did the accounting for Tiburon), and he would credit that
purchase to the purchasing member's Tiburon capital
6 All was not well in paradise. Disagreements between the
members arose when they began decorating VC5. And those
disagreements worsened over time.
7 In December 2012, the Kleins purchased their own vacation
home in Costa Rica and stopped using VC5. In July 2013, the
Kleins offered their interest in Tiburon for purchase by the
other members, with the offer remaining open for thirty days.
The other members did not accept the offer. Also in July, the
Kleins requested that the outstanding balance on the LOC be
paid. David King performed the accounting necessary to
calculate the outstanding balance on the LOC by equalizing
all of the members' capital contributions over the years.
According to that accounting, Sell and his brother
collectively owed the Kleins $4686 to satisfy the outstanding
balance on the LOC. Sell and his brother paid the Kleins
$4686 on August 7, 2013.
8 In August 2013, the Kleins stopping paying their share of
VC5's operating costs. They sued Tiburon, asserting the
following claims: (1) request for a judicial dissolution of
Tiburon; (2) request for an independent accounting; (3)
breach of the LOC; and (4) civil theft. The Kleins also sued
Sell for civil theft. Tiburon counterclaimed for 25% of
VC5's operating costs, alleging that the Kleins had
failed to pay such sums since August 2013. All parties
requested awards of attorney fees and costs.
9 While the case was pending, the district court dismissed
the Kleins' claim for judicial dissolution because they
had caused an extrajudicial dissolution of Tiburon.
10 In October 2014, following a trial to the court, the court
ruled as follows on the remaining claims:
. Tiburon did not breach the LOC by
offsetting the members' capital contributions against the
outstanding balance. The contracts governing Tiburon provided
for the members' capital contributions to be equalized
and David King's accounting satisfied that provision.
. Tiburon breached the LOC by not paying the
Kleins interest on the loan. The Kleins, however, failed to
prove actual damages for this breach; thus, the court awarded
them nominal damages of one dollar.
. David King's accounting was
substantially fair and accurate, and any inaccuracies were
immaterial. Therefore, an independent accounting was
. The Kleins' civil theft claims against
Tiburon and Sell were meritless. There was no evidence that
any member had stolen the Kleins' personal property or
that the Kleins had been denied access to VC5.
. The Kleins breached the operating plan by
not paying their share of VC5's operating costs. The
court awarded Tiburon $2510 - 25% of VC5's operating
costs since August 2013.
. Tiburon and Sell were entitled to their
costs as prevailing parties.
. It was premature to make a determination
regarding attorney fees, and the parties were free to file