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Hardy v. Flood

United States District Court, D. Colorado

February 21, 2019

STEVEN HARDY, and JODY WHITSON-HARDY, Plaintiffs,
v.
MERVIN J. FLOOD, and SUSAN S. FLOOD, Defendants.

          ORDER DENYING DEFENDANTS' MOTION FOR COSTS AND ATTORNEYS' FEES

          CHRISTINE M. ARGUELLO UNITED STATES DISTRICT JUDGE

         This matter is before the Court on Defendants Mervin Flood and Susan Flood's Motion for Costs and Attorneys' Fees. (Doc. # 65.) For the following reasons, the Court denies Defendants' request for costs and fees.

         I. BACKGROUND

         The Court's previous Order (Doc. # 64), United States Magistrate Judge Michael Watanabe's Recommendation (Doc. # 62), and United States Magistrate Judge N. Reid Neureiter's Recommendation (Doc. # 107) provide detailed recitations of the factual background of this case and are incorporated herein. The Court details the procedural history of this case only to the extent necessary to address Defendants' Motion for Costs and Fees.

         Plaintiffs Steven Hardy and Jody Whitson-Hardy initiated this action in a Colorado state court on December 28, 2016, and asserted three claims for relief against Defendants: (1) breach of contract; (2) fraud; and (3) negligent misrepresentation. (Doc. # 3 at 4-7.) Defendants removed the action to this Court on March 16, 2017. (Doc. # 1.)

         Defendants filed a Motion for a More Definite Statement under Federal Rule of Civil Procedure 12(e) shortly thereafter, arguing that Plaintiffs' Complaint was not sufficiently particular to satisfy Rule 9(b)'s pleading requirements for allegations of fraud. (Doc. # 7.) Plaintiffs responded on April 11, 2017 (Doc. # 14), to which Defendants replied on April 25, 2017 (Doc. # 15). Magistrate Judge Watanabe denied Defendants' Motion for a More Definite Statement on May 5, 2017. (Doc. # 23.) He concluded that that Plaintiffs' Complaint complied with Rule 8(d)(1)'s requirement that claims for relief contain a short and plain statement of the claim showing that the pleader is entitled to relief and giving the defendant fair notice of the claim. (Id. at 1-2.) Magistrate Judge Watanabe did not address Rule 9(b). Defendants did not appeal his Order.

         Approximately two weeks later, on May 17, 2017, Defendants filed a Motion to Dismiss, seeking dismissal of all three claims on five grounds. (Doc. # 26.) Plaintiffs filed an Amended Complaint on June 9, 2017 (Doc. # 32), mooting Defendants' Motion to Dismiss, see (Doc. # 34). The Amended Complaint included for the first time a demand for punitive and exemplary damages. See (Doc. # 33-1.) It did not contain any novel substantive allegations.

         On June 12, 2017, Defendants filed a second Motion to Dismiss, reprising the same five arguments they made in their first motion. (Doc. # 35.) Relevant here, Defendants' third argument was that the Complaint “contain[ed] mere conclusions, [and was] not entitled to the assumption of truth.” (Id. at 11.) Plaintiffs responded on June 13, 2017, and argued that they sufficiently pled their claims. (Doc. # 37 at 7.) Plaintiffs noted that the Court had already denied Defendants' Motion for a More Definite Statement and had rejected Defendants' argument about the sufficiency of Plaintiff's Complaint. (Id.) Defendants replied in support of their Motion to Dismiss two weeks later. (Doc. # 42.)

         In a Report and Recommendation issued February 2, 2018, Magistrate Judge Watanabe recommended that the Court deny Defendants' Motion to Dismiss. (Doc. # 62.) With respect to Defendants' third argument about the conclusory nature of Plaintiffs' Complaint, the Magistrate Judge stated that while he was “sympathetic to Defendants' argument that Plaintiffs' allegations fail to meet the Iqbal/Twombley pleading standards, ” he was satisfied that Plaintiffs' “allegations raise a reasonable expectation that discovery will reveal evidence to support the elements of the claims asserted.” (Id. at 9.) Magistrate Judge Watanabe therefore recommended that “Plaintiffs' Amended Complaint not be dismissed as conclusory.” (Id.)

         Defendants filed an Objection to the Recommendation on February 15, 2018. (Doc. # 63.) They argued that under Rule 9(b), which “articulates the pleading requirements for fraud, ” Plaintiffs are required to “plead exactly what statements they allege constitute the fraud in this matter” but failed to do so in their Complaint. (Id. at 2.)

         On February 23, 2018, this Court rejected Magistrate Judge Watanabe's Recommendation and granted Defendants' Motion to Dismiss. (Doc. # 64.) The Court determined that the particularity requirement of Rule 9(b) applied to all three of Plaintiffs' claims, including breach of contract and negligent misrepresentation, because Plaintiffs alleged that Defendants' conduct was fraudulent. (Id. at 8.) The Court then held that “Plaintiffs' Amended Complaint [did] not plead the three causes of action with particularity and therefore [did] not satisfy Rule 9(b)'s heightened pleading standard.” (Id. at 9.) It therefore agreed with Defendants that “Plaintiffs' action must be dismissed for failure to state a claim for relief under Rule 12(b)(6).” (Id.) In its conclusion, the Court restated that “Plaintiffs' claims are . . . dismissed without prejudice.” (Id. at 10.) However, the Court ordered that, “should Plaintiff wish to file a Second Amended Complaint specifically addressing the pleading deficiencies identified in this Order, it shall be filed no later than March 23, 2018, or this case will be dismissed with prejudice.” (Id.) Plaintiffs filed a Second Amended Complaint on March 22, 2018. (Doc. # 66.) The Second Amended Complaint is presently the operative complaint, and the parties are preparing for a five-day jury trial to begin on May 20, 2019.[1] See (Doc. # 129.)

         On March 3, 2018, Defendants filed the Motion for Costs and Attorneys' Fees presently before the Court. (Doc. # 65.) They are that they “are entitled to a mandatory award of costs and reasonable attorneys' fees incurred in defending Plaintiffs' Amended Complaint as provided by Colorado Revised Statutes §§ 13-16-107 and 13-17-201, respectively.” (Id. at 1.) Defendants request an award of $7, 691.76 in costs and $80, 518.75 in attorneys' fees. (Id. at 9.) Plaintiffs responded in opposition to Defendants' request on April 9, 2018 (Doc. # 75), to which Defendants replied on April 23, 2018 (Doc. # 81).

         II. DISCUSSION

         A. COLORADO'S COSTS ...


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