United States District Court, D. Colorado
ORDER DENYING PLAINTIFF'S MOTION FOR ATTORNEY
FEES
CHRISTINE M. ARGUELLO UNITED STATES DISTRICT JUDGE
This
matter is before the Court on Plaintiff Fifth Third
Bank's Motion for Damages for Conspiracy. (Doc. # 67.)
Because Colorado law does not support the award Plaintiff
requests, the motion is denied.
I.
BACKGROUND
This
case stems from a defaulted bank loan by Defendant Lucy
Morales and the subsequent fraudulent transfer of real
property (the Montrose Property) from Ms. Morales and her
Trust to Ms. Morales's daughters, Defendants Marie
Korallus and Marie Ludian. (Doc. # 64.) On December 19, 2017,
this Court granted Plaintiff's Motion for Summary
Judgment, finding the existence of a fraudulent transfer and
a civil conspiracy to effectuate that transfer as a matter of
law. (Id. at 12, 14.) The Court then set the matter
for a hearing on damages. (Id. at 15; Doc. # 65.)
At that
hearing, Plaintiff argued to the Court that it was entitled
to attorney fees as actual, compensatory damages stemming
from Defendants' conspiracy.[1] The Court requested briefing
on the matter, which was thereafter submitted and is now ripe
for ruling. (Doc. ## 67, 68, 69.)
II.
DISCUSSION
In
support of its request for attorney fees as actual
compensatory damages flowing from Defendants' conspiracy,
Plaintiff relies heavily on the Tenth Circuit decision in
Hetronic Int'l, Inc. v. Rempe, 697 Fed.Appx. 589
(2017), and the Colorado Court of Appeals ruling in
Double Oak Const., LLC v. Cornerstone Dev. Intern.,
LLC, 97 P.3d 140 (2003).
Specifically,
Plaintiff urges this Court to award attorney fees as actual
damages in accordance with Hectronic Int'l, a
case in which the Tenth Circuit reversed the decision of a
district court in the Western District of Oklahoma denying a
plaintiff's request for attorney fees as actual
compensatory damages stemming in part from defendants'
conspiracy. Id. at 591. The panel held that because
Oklahoma law provides for the recovery of attorney fees under
certain conditions “as one of the elements of damages
flowing from the wrongful act of the defendant, ” the
district court should not have denied plaintiff's request
for such an award. Id. at 590.
Plaintiff
asserts that, pursuant to the Colorado Court of Appeals
decision in Double Oak, Colorado courts, like
Oklahoma courts, provide for attorney fees as actual
compensatory damages on a conspiracy claim. (Doc. # 67 at
3-4.) However, after thoroughly reviewing Hectronic,
Double Oak, and other relevant Colorado and Oklahoma
cases, the Court finds no legal support for an award of the
legal fees that Plaintiff requests in this case.
Hectronic
Int'l cites three Oklahoma cases standing for the
proposition that attorney fees are recoverable as damages
flowing from the wrongful act of the defendant: Barnes v.
Oklahoma Farm Bureau Mut. Ins. Co., 11 P.3d 162, 181
(Okla. 2000); Griffin v. Bredouw, 420 P.2d 546, 547
(Okla. 1966); and Sec. State Bank of Comanche v. W.R.
Johnston & Co., 228 P.2d 169, 173 (Okla. 1951). All
of those cases, and Hectronic Int'l, however,
rely on a proposition that Plaintiff appears to overlook:
attorney fees are recoverable as damages only “where
the wrongful acts of the defendant have involved the
plaintiff in litigation with others, or have
placed him in such relation with others as
to make it necessary for him to incur attorney fees to
protect his interests.” Barnes, 11 P.3d at 181
(emphasis added); see also Hectronic, Int'l, 697
Fed.Appx. at 590; Griffin, 420 P.2d at 559; Sec.
State Bank of Comanche, 228 P.2d at 173.
“Others” cannot be the wrongdoer defendant;
indeed, an award is not permitted when “the litigation
for which [the plaintiff] seeks to recover attorney fees is
with the defendant [rather than a] third party.”
Sec. State Bank of Commanche, 228 P.2d at 173. This
proposition is commonly known as the wrong-of-another
doctrine.
In
Double Oak, which Plaintiff urges us to equate with
Hectronic, Int'l and the above-mentioned
Oklahoma cases, the Colorado Court of Appeals did not apply
the wrong-of-another doctrine; it is not even mentioned in
the opinion. Double Oak involved litigation between
a construction company (plaintiff) and the developer of a
shopping plaza, among others, (defendants) over defendants
allegedly fraudulent sale of the plaza to shield the property
from being used to pay a large arbitration award owed to
plaintiff. Id. at 144-45. Like here, plaintiff
brought claims of conspiracy and a violation of CUFTA, and
plaintiff prevailed. Id. at 145. Plaintiff then
sought, and the trial court awarded, attorney fees as damages
on the conspiracy claim. Id. at 149-50.
The
Colorado Court of Appeals upheld that award but not under the
wrong-of-another doctrine set forth in Hectronic or
Oklahoma law. Instead, the Court of Appeals emphasized
long-standing Colorado precedent demonstrating that
Colorado follows the American rule under which a party cannot
recover his or her legal fees, whether as ‘costs'
or ‘damages,' unless there is some exception to the
general rule. . . . In the absence of a statute or
contractual agreement, attorney fees are not ordinarily
recoverable as an element of damages in a tort or contract
action.
Id. at 150; Silverstein v. Sisters of Charity of
Leavenworth Health Servs. Corp., 38 Colo.App. 286, 290
(1976) (“[F]ees are not recoverable as an item of
damages in the absence of express contractual or statutory
liability.”). The Double Oak Court then
discussed exceptions to the American Rule that applied in the
context of a conspiracy lawsuit: (1) when an action or claim
is substantially frivolous, groundless, or vexatious,
pursuant to Colorado Revised Statute § 13-17-101, et
seq.; or (2) under the obdurate behavior doctrine where
“the losing party has acted in bad faith or for
oppressive reasons.” Id. at 150-51. The Court
upheld the trial court's fee award under both exceptions,
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