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Laleh v. Johnson

Supreme Court of Colorado, En Banc

October 2, 2017

Khalil Laleh and Ali Laleh, Petitioners
v.
Gary C. Johnson and Gary C. Johnson and Associates, LLC. Respondents

         Certiorari to the Colorado Court of Appeals Court of Appeals Case No. 14CA2033

          Attorneys for Petitioner Khalil Laleh: Evans Case, LLP Larry Jacobs Denver, Colorado Kimball & Nespor, P.C. Charles J. Kimball Arvada, Colorado

          Attorneys for Petitioner Ali Laleh: Worstell & Associates David Worstell Denver, Colorado

          Attorneys for Respondents: Evans & McFarland, LLC Scott S. Evans Greenwood Village, Colorado TNS & Associates, P.C. Michael J. Norton Katelyn B. Ridenour Denver, Colorado

          OPINION

          MARQUEZ JUSTICE

         ¶1 This case concerns a fee dispute between a pair of litigants and a court-appointed expert. In 2012, Khalil Laleh brought a forcible entry and detainer action against his brother, Ali Laleh. The litigation later grew so unwieldy that the trial court appointed Gary Johnson as an accounting expert (and later as a special master) to resolve the feuding brothers' complex accounting claims.

         ¶2 The Laleh brothers signed an engagement agreement with Gary C. Johnson and Associates, LLC, setting forth the scope of Johnson's services and payment. Johnson commenced work, but before he completed his accounting reports for the trial court, the brothers settled their case and the court dismissed the suit. Johnson later informed the trial court that Khalil and Ali refused to pay both his outstanding fees and his costs incurred post-settlement in attempting to collect the outstanding fees. Following a hearing, the trial court issued an order ruling that Johnson's fees were reasonable, and that he was entitled to the post-settlement costs he incurred in trying to collect his outstanding fees. In reaching the latter conclusion, the trial court relied on language in the engagement agreement stating that the Lalehs "are jointly and severally responsible for the timely and complete payment of all fees and expenses" to Johnson. (Emphasis added.)

         ¶3 In a published, split opinion, the court of appeals affirmed the trial court's order ruling that the brothers were jointly and severally liable for Johnson's fees and costs. Laleh v. Johnson, 2016 COA 4, ¶ 58, P.3d . The panel majority disagreed with the trial court's interpretation of the agreement and instead concluded that the agreement was silent as to collection costs incurred after the case was dismissed. Id. at ¶¶ 27-28. The majority nevertheless concluded that the trial court did not abuse its discretion in awarding Johnson's post-settlement collection costs, reasoning that the trial court had the inherent authority to require the brothers to pay such costs Id. at ¶ 28 Judge Webb dissented on this point, arguing that an appellate court may not invoke the doctrine of inherent authority for the first time on appeal Id. at ¶ 59 (Webb, J, concurring in part and dissenting in part).

         ¶4 We granted Khalil's and Ali's petitions for certiorari review.[1] Because we conclude that a separate provision of the engagement agreement authorized the award of the disputed post-settlement collection costs, we affirm the award of these costs to Johnson, albeit on different grounds.

         I. Facts and Procedural History

         ¶5 Brothers Khalil Laleh and Ali Laleh each own multiple small businesses- primarily convenience stores and gas stations. For years, the brothers commingled hundreds of thousands of dollars between themselves and their businesses and kept few financial records of these dealings. In 2012, Khalil brought an action against Ali in county court for forcible entry and detainer alleging that Ali failed to pay rent on a leased commercial space. After Ali responded with counterclaims that sought sums exceeding the county court jurisdictional limit, the case was removed to the Jefferson County District Court ("the trial court").

         ¶6 By the time the court barred the parties from filing further claims, the contentious case had expanded to involve at least thirteen claims, nine parties, and six attorneys. Seven of these claims concerned the brothers' commingled funds. The trial court issued several orders to organize the parties' claims and to preclude further "sue first, ask questions later" claims.[2] After requesting suggested names from the parties, the trial court appointed Gary Johnson as an accounting expert "to untangle the parties' finances" and ordered that Khalil and Ali each pay one-half of Johnson's fees.

         ¶7 Each brother signed an engagement agreement with Gary C. Johnson and Associates, LLC, setting forth the scope of Johnson's services and the brothers' obligation for payment. Relevant here, the agreement provided that Johnson would "continue as expeditiously as possible until [Johnson] completed [his] services, or [has] been instructed by [the brothers] to discontinue." Next, the brothers agreed they were "jointly and severally responsible for the timely and complete payment of all fees and expenses of [Johnson]" (the "Fees" provision). (Emphasis added.) The brothers also agreed to pay Johnson's "reasonable out-of-pocket expenses." The agreement provided that periodic invoices would be issued to the brothers, and that the brothers were required to communicate any disagreement with an invoice in writing within thirty days of the invoice date. Finally, under the paragraph titled "Governing Law and Jurisdiction, " the agreement provided that, "[t]he prevailing party in any dispute is entitled to an award of reasonable attorney fees, costs and expenses."[3]

         ¶8 Soon after Johnson began work in late September 2013, he had difficulty obtaining requested information from the brothers' former counsel. In December 2013, without objection from the brothers, the court appointed Johnson as a special master under C.R.C.P. 53 to authorize him to obtain the requested information.

         ¶9 Johnson continued to encounter significant resistance from the brothers, their counsel, and other witnesses. He ultimately retained his own counsel to assist his investigatory efforts and informed the brothers' counsel that he had done so. The brothers did not object. Johnson began billing the brothers for the cost of his counsel in January 2014, and the brothers paid subsequent invoices without protest.

         ¶10 On February 7, 2014, the brothers settled the case and directed Johnson to stop his work. The court granted the brothers' joint request to dismiss all claims on February 24, 2014. When Johnson ceased his work in early February, he had reviewed more than 12, 000 pages of material and his report was 120 pages long. The trial court later noted that it was clear that the resolution of the brothers' claims "was attributable ...


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