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Calvert v. Mayberry

Supreme Court of Colorado, En Banc

April 8, 2019

David R. Calvert, Petitioner
v.
Diane L. Mayberry a/k/a Diane Marie Laba-Mayberry and Desiree L. Mayberry. Respondents

          Certiorari to the Colorado Court of Appeals Court of Appeals Case No. 14CA1559

          Attorneys for Petitioner: Gill & Ledbetter, LLP Anne Whalen Gill Castle Rock, Colorado

          Attorney for Respondent Diane L. Mayberry: Eric M. James Fort Collins, Colorado

          Attorneys for Respondent Desiree L. Mayberry: Miller & Steiert, P.C. Christopher J. Forrest Gary M. Clexton Stephen J. Woolsey Littleton, Colorado

          OPINION

          BOATRIGHT, JUSTICE

         ¶1 David Calvert was disbarred for various ethical violations, including entering into an oral agreement with a client without complying with the requisite safeguards of Colorado Rule of Professional Conduct 1.8(a). After being disbarred, Calvert sued his former client, Diane Mayberry, for breach of that same oral agreement, claiming that there was a contract between them. The trial court granted Mayberry's motion for summary judgment, and the court of appeals affirmed. Calvert now asks us to consider three questions related to this dispute: (1) whether an attorney who was found to have violated Rule 1.8(a) in a disciplinary proceeding is estopped from relitigating the same factual issues in a civil proceeding; (2) whether a contract between an attorney and a client entered into in violation of Rule 1.8(a) is enforceable; and (3) whether the trial court abused its discretion in awarding attorney's fees against Calvert after finding his lawsuit groundless and frivolous.[1]

         ¶2 First, because Calvert conceded that he could not relitigate whether he entered into an agreement with a client without meeting Rule 1.8(a)'s requirements, we decline to answer whether issue preclusion applies to those factual findings. Second, we hold that when an attorney enters into a contract without complying with Rule 1.8(a), the contract is presumptively void as against public policy; however, a lawyer may rebut that presumption by showing that, under the circumstances, the contract does not contravene the public policy underlying Rule 1.8(a). Finally, we hold that the trial court did not abuse its discretion in awarding attorney's fees at the trial level because the record supports the court's finding that the case was groundless, frivolous, and brought in bad faith. But as to attorney's fees at the appellate level, because the questions of whether issue preclusion applied in this proceeding and whether a contract made in violation of Rule 1.8(a) is void as against public policy are legitimately appealable issues, we hold that appellate attorney's fees are not appropriate.

         ¶3 Therefore, we affirm the judgment of the court of appeals as to the merits on other grounds, affirm the award of attorney's fees at the trial level, and reverse the court of appeals' order remanding for a determination of appellate attorney's fees.

         I. Facts and Procedural History[2]

         ¶4 When Mayberry's husband died, she retained Calvert to help her secure title in her name to the house that she and her husband jointly owned. After Calvert successfully secured title, Mayberry informed Calvert that she was planning to move out of the state and wished to sell her house. Purportedly to aid Mayberry, Calvert alleges in his complaint that he gave her approximately $193, 000 in various increments to renovate the house. Despite testifying at the disciplinary hearing that he had no agreement with Mayberry, [3] Calvert alleged in this subsequent lawsuit that the parties agreed that Mayberry would repay Calvert the money from the proceeds of the house after she sold it. Calvert did not counsel Mayberry to seek independent legal advice before entering into this agreement, nor did he memorialize the agreement in writing.[4]

         ¶5 After Calvert gave the money to Mayberry, he approached the Weinhauers, another set of his clients, and suggested that they loan additional funds to Mayberry and then secure their loan with a deed of trust on Mayberry's house. The Weinhauers declined. Nevertheless, Calvert presented a promissory note and a deed of trust in favor of the Weinhauers to Mayberry for her signature; she signed both documents. After Mayberry signed the deed, Calvert recorded it without the Weinhauers' signatures or knowledge.[5]

         ¶6 After recording the deed, Calvert once again approached the Weinhauers. This time, Calvert attempted to persuade them to assign the deed to him or his company, Calvert & Co., presumably to secure an interest in Mayberry's house. The Weinhauers once again declined. Unbeknownst to Calvert, after the deed of trust was recorded, Mayberry transferred title to the house to her daughter, who continues to own the house. ¶7 Calvert's actions, combined with other ethical violations, ultimately led to disciplinary proceedings and his eventual disbarment. Following his disbarment, Calvert filed a civil suit against Mayberry and her daughter (collectively, "Defendants"), seeking either repayment of the money he gave to Mayberry as damages on his breach-of-contract claim or an equitable lien on Mayberry's house. He also alleged that the daughter had intentionally interfered with his agreement with Mayberry, asserting that she had convinced Mayberry to transfer title to the house to her in order to deprive Calvert of his interest.

         ¶8 Defendants moved for summary judgment. Noting that the attorney discipline hearing board found that Calvert had violated Rule 1.8(a), Defendants argued that the doctrine of issue preclusion prevented Calvert from relitigating this finding. Defendants then argued that the Colorado Rules of Professional Conduct are an expression of public policy and that, because Calvert had violated Rule 1.8(a), the contract was void as against public policy. Finally, Defendants sought attorney's fees, arguing that Calvert's claims were groundless and frivolous.

         ¶9 The trial court granted Defendants' motion for summary judgment, finding that issue preclusion applied and that the alleged contract was void as against public policy.[6]It also issued sanctions of attorney's fees and costs against Calvert, finding it "disturbing" that when Calvert's original scheme to deprive Mayberry of her home led to his disbarment, he then turned to the court system, still hoping to benefit from his unethical conduct.

         ¶10 Calvert appealed. As relevant here, he argued that (1) issue preclusion did not apply; (2) the contract was not void because the Rules of Professional Conduct have never been deemed an expression of public policy, and the Preamble to the Rules states that they do not give rise to a civil cause of action; and (3) sanctions were inappropriate because his lawsuit raised novel legal issues. Defendants opposed Calvert's appeal and moved for appellate attorney's fees, arguing that Calvert pursued the appeal for the sole purpose of harassment or delay.

         ¶11 The court of appeals agreed with the trial court, holding that issue preclusion barred Calvert from relitigating his Rule 1.8(a) violation and that, because the underlying contract was made in violation of Rule 1.8(a), the contract was void as against public policy. Calvert v. Mayberry, 2016 COA 60, ¶¶ 23, 33, P.3d . The court of appeals also affirmed the trial court's award of attorney's fees, concluding that the evidence "support[ed] the trial court's determination that this case lacked substantial justification and that [Calvert] brought it in bad faith." Id. at ¶ 44. Regarding appellate attorney's fees, however, the court of appeals could not determine from the existing record whether Calvert filed his appeal for the sole purpose of harassment or delay. Id. at ¶ 51. It thus remanded the case to the trial court to make this determination and award fees consistent with its conclusion. Id.

         ¶12 We granted certiorari.

         II. Standard of Review

         ¶13 We review de novo whether a contract violates public policy. See Bailey v. Lincoln Gen. Ins., 255 P.3d 1039, 1045 (Colo. 2011). We review a court's award of attorney's fees for an abuse of discretion and will reverse an award only if it is not supported by the evidence. Spring Creek Ranchers Ass'n v. McNichols, 165 P.3d 244, 246 (Colo. 2007).

         III. Law and Analysis

         ¶14 At the heart of this dispute is whether the alleged contract between Calvert and Mayberry is enforceable. Because Calvert conceded at oral argument that he could not relitigate whether he complied with Rule 1.8(a) and further admitted in his opening brief that he entered into an oral agreement with his client without advising her or memorializing the agreement, we decline to address the question of issue preclusion. Those facts are no longer in dispute. Hence, we begin our analysis by accepting Calvert's admission that he did not comply with Rule 1.8(a).

         ¶15 Next, we consider the enforceability of a contract entered into without complying with Rule 1.8(a). We hold that when an attorney enters into a contract without complying with Rule 1.8(a), the contract is presumptively void as against the public policy underlying the Rule. We further hold that an attorney may rebut this presumption by showing that, under the circumstances, the contract does not contravene the public policy underlying Rule 1.8(a).

         ¶16 Finally, we hold that the trial court did not abuse its discretion in awarding attorney's fees. However, appellate attorney's fees, for appeals pursued at both the court of appeals and this court, are inappropriate, as the appeals raised legitimate legal questions.

         A. Calvert's Admission That He Failed to Comply with Rule 1.8(a)'s Requirements

         ¶17 In determining that the oral agreement violated public policy, both courts below gave preclusive effect to the hearing board's finding that Calvert violated Rule 1.8(a). But we decline to determine whether issue preclusion applies to the board's findings, because Calvert admitted in his briefing before this court that he did not fulfill two of Rule 1.8(a)'s requirements and conceded during oral arguments that he could not relitigate whether he complied with Rule 1.8(a)'s requirements. This constitutes a judicial admission.

         ¶18 "A judicial admission is a formal, deliberate declaration which a party or his attorney makes in a judicial proceeding for the purpose of dispensing with proof of formal matters or of facts about which there is no real dispute." Kempter v. Hurd, 713 P.2d 1274, 1279 (Colo. 1986). In Calvert's opening brief to this court, he stated that "[h]e did not advise [Mayberry] to seek independent legal advice about the loans and did not reduce any of their discussions to writing." Because Rule 1.8(a) requires lawyers to both advise their clients of the desirability of seeking independent legal advice and reduce their agreements to writing, Calvert's statement that he did neither of these is an admission that he did not comply with Rule 1.8(a). When asked at oral argument if Calvert could relitigate whether he complied with the requirements of Rule 1.8, Calvert's counsel replied that he could not.[7] Because Calvert admitted that he failed to comply with Rule 1.8(a)'s requirements, we need not reach the question of issue preclusion. ¶19 Now we turn to the question of whether the loan contract Calvert claims he entered into with Mayberry is enforceable.

         B. Enforceability of the Contract

         ¶20 To make that determination, we first consider whether Rule 1.8(a) is an expression of public policy. After concluding that it is, we hold that when an attorney enters into a contract without complying with Rule 1.8(a), the contract is presumptively void as against the public policy underlying the Rule. We further hold that an attorney may rebut this presumption by showing that, under the circumstances, the contract does not contravene the public policy underlying Rule 1.8(a). Finally, we apply this holding to the case at bar and conclude that the oral agreement Calvert entered into ...


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