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Wise Services, Inc. v. Atlas Copco Drilling Solutions LLC

United States District Court, D. Colorado

April 17, 2018



          Michael E. Hegarty, United States Magistrate Judge.

         On December 28, 2017, the Court granted Defendant Atlas Copco Drilling Solutions LLC's (“Atlas”) motion to dismiss the three claims Plaintiff Wise Services, Inc. (“Plaintiff”) brought against Atlas in the operative Amended Complaint. Order, ECF No. 57. Here, citing a state statute, Atlas seeks an award of attorney's fees incurred in filing the motion to dismiss. The Court agrees that Atlas is entitled to a fee award, but finds its fee request is unreasonable in certain respects. Thus, the Court will grant in part and deny in part Atlas' motion for attorney's fees.

         I. Background

         Plaintiff brings nine claims for relief against the various Defendants but asserted only three of those claims against Atlas-Claim 1 for product liability, Claim 3 for breach of implied warranty of fitness for a particular purpose, and Claim 4 for negligence-based on the following allegations:

Atlas was the manufacturer of the Predator Drilling System (the “Predator Drill Rig” or the “Rig”) at issue in this lawsuit. Am. Compl. ¶¶ 11, 18, ECF No. 6. The Predator Drill Rig was a prototype, but Atlas did not label or otherwise mark it as such. Id. ¶¶ 14, 19. Defendant Dallas-Morris Drilling, Inc. (“Dallas-Morris”) was the original purchaser or lessor of the Rig. Id. ¶ 20. In 2015, Plaintiff entered into a contract to purchase the Rig from Dallas-Morris for a price of $1.7 million. Id. ¶¶ 11, 33. When it purchased the Rig, Plaintiff had no knowledge that it was a prototype. Id. ¶¶ 34-37.
Plaintiff began having problems with the Rig almost immediately. It first used the Rig to fulfill a contract to drill four surface holes. Id. ¶ 40. While drilling the first hole, the Rig failed and required replacement parts. Id. ¶¶ 41-44. After those repairs, the Rig's computer control system failed while drilling the second hole. Id. ¶ 46. Plaintiff was unable to use the Rig to complete the four-hole contract and subcontracted the remaining job to a third party. Id. ¶ 48.
Plaintiff repaired the Rig at its expense and entered into a new drilling contract with a new third party. Id. ¶¶ 55-56. However, immediately after the Rig began to drill, its computer system failed again. Id. ¶ 57. After chronic failures of both the Rig's mechanical and computer systems, the third party terminated the contract. Id. ¶ 59. During subsequent contracts, the same problems persisted, and Plaintiff continued to incur significant expenses repairing the Rig. Id. ¶¶ 60-65, 67.

         Order, ECF No. 57. During the briefing on the motion to dismiss, Plaintiff voluntarily withdrew its first claim, conceding it was subsumed by the breach of implied warranty claim. The Court then determined that Plaintiff failed to state plausible third and fourth claims against Atlas pursuant to Fed.R.Civ.P. 12(b)(6). Id.

         Atlas timely filed the present motion seeking an award of attorney's fees pursuant to Colo. Rev. Stat. § 13-17-201. Atlas argues that Plaintiff's claims were primarily tort-based and, thus, the applicable statute mandates a fee award. Mot. 2-3. Plaintiff counters that the essence of its action actually sounds in contract and, thus, § 13-17-201 does not apply; alternatively, Plaintiff contends Atlas' fee request is not reasonable. Atlas' reply opposes both points.

         II. Legal Standards

         When exercising jurisdiction over diversity cases, such as this, federal courts apply the substantive law of the forum state. Jones v. Denver Post Corp., 203 F.3d 748, 757 (10th Cir. 2000). “In the Tenth Circuit, attorney fee statutes are considered substantive.” Id. (citing Boyd Rosene & Assocs. v. Kan. Mun. Gas Agency, 174 F.3d 1115, 1118 (10th Cir. 1999)). The Court finds, and Plaintiff does not object, that it is proper to look to Colorado law, including Colorado's fee recovery provision § 13-17-201, for potential application in this case. See Infant Swimming Research, Inc. v. Faegre & Benson, LLP, 335 Fed.Appx. 707, 715 (10th Cir. 2009) (unpublished). Section 13-17-201 states,

In all actions brought as a result of a death or an injury to person or property occasioned by the tort of any other person, where any such action is dismissed on motion of the defendant prior to trial under rule 12(b) of the Colorado rules of civil procedure, such defendant shall have judgment for his reasonable attorney fees in defending the action . . . .

         “The attorney fee-shifting statute is intended to apply only to ‘a narrow category of baseless tort cases, namely those cases that were so lacking in substance that they could not survive a motion to dismiss for failure to state a claim upon which relief could be granted.'” Bristol Bay Prods., LLC v. Lampack, 312 P.3d 1155, 1165 (Colo. 2013) (quoting Krystkowiak v. W.O. Brisben Cos., 90 P.3d 859, 869 (Colo. 2004)). The provision requires that the trial court award reasonable attorney's fees to a defendant when two conditions are met: (1) the action lies in tort; and (2) the action is dismissed pursuant to Rule 12(b). Infant Swimming Research, Inc., 335 Fed.Appx. at 715; see also Gagne v. Gagne, 338 P.3d 1152, 1166 (Colo.App. 2014). The statute “applies not only to tort actions involving death or injury to person or property, but also to tort actions involving mere economic injury.” Nero v. Am. Family Mut. Ins. Co., No. 11-cv-02717-PAB, 2013 WL 5323191, at *7 (D. Colo. 2013) (quoting Houdek v. Mobil Oil Corp., 879 P.2d 417, 424 (Colo.App. 1994)).

         “Although the statute speaks of dismissals pursuant to Rule 12 of the Colorado Rules of Civil Procedure, the statute nevertheless applies to dismissals under Fed.R.Civ.P. 12(b)(6) as well. Similarly, although the statute speaks of an ‘action' being dismissed, the 10th Circuit has interpreted that language to permit an award of fees in circumstances where all claims against a single defendant are dismissed on Rule 12 grounds, even though claims continue against other defendants.” Torres v. Am. Family Mut. Ins. Co., 606 F.Supp.2d 1286, 1287 (D. Colo. 2009) (citing Jones, 203 F.3d at 757, n.6). In other words, “a defendant must prevail on the entire action as to that defendant under Rule 12(b)[.]” Jones v. Haga, No. 05-cv-02268-PSF, 2007 WL 433126, at *2 (D. Colo. 2007).

         III. Analysis

         Plaintiff challenges the present motion arguing first that the statute does not apply and, second, that the fees requested are unreasonable. The Court will address each challenge in turn.

         A. Is Atlas Entitled to a Fee Award Under § 13-17-201?

         The only challenge Plaintiff makes to the application of § 13-17-201 in this case is to argue his claims were primarily contractual in nature. To determine whether a “tort action” has been pled for the purposes of § 13-17-201, “district courts focus on the manner in which the plaintiff's claims are pled.” Nero, 2013 WL 5323191 at *7 (citing Dubray v. Intertribal Bison Co-op., 192 P.3d 604, 607 (Colo.App. 2008)). Courts examine the face of the pleading, rather than the underlying logic of the claims. Torres, 606 F.Supp.2d at 1291. “It makes the plaintiff the master of his pleading: if the plaintiff chooses to plead claims in tort, he runs the risk of C.R.S. § 13-17-201 applying; if he wishes to avoid the application of the statute, he must refrain from pleading tort claims.” Id. Thus, “[w]hen a party has pleaded both tort and non-tort claims, a court must determine, as a matter of law, whether the essence of that party's action was one in tort, in order to ascertain if section 13-17-201 applies.” Gagne, 338 P.3d at 1167. In so determining, “the court should focus on the manner in which the claims were pleaded” . . ., “should rely on the pleading party's characterization of its claims[, ] and should not consider what the party should or might have pleaded.” Id.

         No party here disputes that Plaintiff's Claim Three for breach of implied warranty is grounded in contract and that Claim Four for negligence is a tort claim; however, citing the Colorado Court of Appeals, Plaintiff asserts that the “essence” of its claims against Atlas are based on contract and that Atlas conceded as much in its Motion to Dismiss. Resp. 2-3. Atlas counters not only that Plaintiff originally pleaded two tort claims against ...

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