Court Opinion

ID: 9792294
Source: CourtListenerOpinion
Date Created: 2023-08-31 02:26:41.204239+00
Date Added: 2024-06-11T07:37:41.803653
License: Public Domain

Chief Justice ROVIRA,
dissenting.
The majority holds that where a claim exists for a contractual violation, the party in whose favor the decision or verdict on liability is rendered is the prevailing party for purposes of attorney fees. Maj. op. at 327. In so holding the majority reversed the court of appeals ruling that Spencer Contractor was not a prevailing party because the jury failed to award Spencer Contractor damages for Aurora’s breach of the parties’ settlement agreement.
The majority’s holding is based on the assumption that in every lawsuit there must be a prevailing party who would be entitled to attorney fees. Because I believe a prevailing party cannot be identified in every lawsuit I respectfully dissent. The rule adopted by the majority obligates courts to award attorney fees based solely on liability without consideration of the damages flowing from the breach. This rule fails to consider defendants who successfully defend against damage claims. I believe a more sensible approach would be to require a plaintiff seeking damages to establish both breach and be awarded actual damages in order to be considered a prevailing party for attorney fee purposes. Under this view neither Aurora nor Spencer Contractor prevailed.1
I
A
The majority adopts a rule that defines prevailing party based upon a finding of liability alone and explains that this view reflects the majority approach, maj. op. at 331, relying on MFD Partners v. Murphy, 9 Haw.App. 850 P.2d 713 (1992) and the cases cited therein for this conclusion. Upon close examination of decisions that define prevailing party I am convinced a majority view cannot be readily identified.
In MFD the court considered a landlord’s claims that a tenant breached its lease contract. The court explained it must determine whether either party prevailed on a “disputed main issue” and engaged in a qualitative review of the landlord’s claims. Only after examining the two principal issues raised in the pleadings did the court decide the landlord prevailed because the jury rendered a favorable verdict. Here, the majority summarily concluded the disputed main issue was breach of contract. I believe, however, that when a plaintiff seeks damages alone no more important issue exists than whether injury occurred and damages were awarded.
Miles v. F.E.R.M. Enterprises Inc., 29 Wash.App. 61, 627 P.2d 564 (1981), also cited by the majority, does not support its position because Miles involved a claim of racial discrimination based upon unfair housing practices. The Miles court explained that racially motivated discrimination established a wrong notwithstanding the award of only nominal damages. Id. at 568. As the majority has rejected the civil rights analysis to determine a prevailing party Miles provides little guidance.2
Atlantic Richfield Co. v. Long Trusts, 860 S.W.2d 439, 450 (Tex.App.—Texarkana 1993), *336also relied upon by the majority, involved an interpretation of the Texas recovery of attorney’s fees statute.3 Though the court explained that a finding of zero damages does not preclude the award of attorney fees, the Texas rule is unsettled. A different appeals district interpreting the same statute has held a party must satisfy two requirements to obtain an award of attorney fees: first, the party must prevail on the cause of action for which attorney fees are recoverable, and second, the party must recover damages. Rodgers v. RAB Investments, Ltd., 816 S.W.2d 543 (Tex.App.—Dallas 1991); see also Cook v. Layne Texas Co., 495 S.W.2d 377 (Tex.Civ.App.—Waco 1973) (where no recovery was awarded plaintiff no attorney fees were authorized). Thus, Atlantic Richfield provides little assistance in interpreting the Texas statute.4
The majority also relies on I.A Schafer v. Southern Railway Co., 266 N.C. 285, 145 S.E.2d 887 (1966). In this trespass case the court held that a verdict of nominal damages would carry with it liability for costs. Costs, not attorney fees were disputed. Further, the court failed to cite any authority for this proposition.
I find no support for the rule that liability alone determines a prevailing party in Brown v. Richards, 840 P.2d 143 (Utah App.1992). In Brown the court was called upon to decide whether a party prevailed when awarded less than the full amount of damages requested. The court explained a party prevails when the court renders an affirmative judgment, “even if the amount is less than originally sought.” Id. at 155. (emphasis supplied). While the court discussed the importance of culpability in deciding who prevails, it did not state that liability is the sole determinant of who prevails.5
Finally, both Three-Seventy Leasing Corp. v. Ampex Corp., 528 F.2d 993 (5th Cir.1976) and Buza v. Columbia Lumber Co., 395 P.2d 511 (Alaska 1964) deal with who prevails for the award of costs under the rules of civil procedure.6 I am not convinced however that the prevailing party for costs under the rules of civil procedure provide adequate guidance to decide the prevailing party in attorney fee cases. Costs do not ordinarily include attorney fees. E.g., In re Marriage of Wright, 841 P.2d 358 (Colo.App.1992). Further, trial courts have great discretion in awarding costs to a prevailing party. See 6 J. Moore, Federal Practice Manual ¶ 54.70 (2d ed. 1994). While parties sometimes are ordered to bear their own litigation costs,7 under the majority view a prevailing party *337for attorney fees will always be recognized.8 Additionally, the plain language of our cost statutes supports a rule that requires plaintiffs to recover damages before receiving an award of attorney fees. Section 13-16-104, 6A C.R.S. (1987 Repl.Vol.) provides that when a plaintiff “recovers any debt or damages in such [civil] action, then the plaintiff or demandant shall have judgment to recover against the defendant his costs to be taxed.” (emphasis supplied). Conversely, section 13-16-105 provides that when “a verdict is passed against [the plaintiff], then the defendant shall have judgment to recover his costs against the plaintiff....”9
Basing prevailing party status on breach and recovery of damages also finds support in case law. See Malagon v. Solari, 566 So.2d 352, 353 (Fla.App. 4 1990) (“It is well settled that a plaintiff is considered the prevailing party if he recovers less than he sued for, so long as he recovered something ” applying a quasi-civil rights analysis.); see also Militana v. Ladd, 605 So.2d 580 (Fla.App.1992) (defendants in a negligence action were “parties recovering judgment” where the jury awarded nothing to the plaintiffs even though defendants admitted to liability); cf. Bachovchin v. Stingley, 504 N.W.2d 288 (Minn.App.1993) (interpreting Minnesota consumer protection statute that awards attorney fees to an injured party, concluding one is not injured unless damages are shown).
B
As no clear majority view regarding the definition of a prevailing party for attorney fee purposes exists, I would adopt a rule that requires a plaintiff who seeks attorney'fees as a prevailing party to establish both a breach and an award of actual damages.
Initially, I recognize contracting parties remain free to define a prevailing party. See Magnetic Copy Serv. v. Seismic Specialists, Inc., 805 P.2d 1161, 1163 (Colo.App.1990) (“an unambiguous agreement must be enforced according to its express terms”). Because no definition is provided in this case the policies promoted by fee shifting provisions are significant. Both Aurora and Spencer Contractor agree that fee shifting provisions encourage compliance with contracts and discourage unfounded lawsuits. See also Ferrell v. Glenwood Brokers, Ltd., 848 P.2d 936, 940 (Colo.1993) (fee shifting agreements serve to “discourage non-meritorious contract disputes and to encourage settlement”); Hartman v. Freedman, 197 Colo. 275, 280, 591 P.2d 1318, 1322 (1979) (statutory fee shifting in employment law serves two purposes; to indemnify the employee against the necessity of paying an attorney’s fee when he is successful and to protect the employer against nuisance litigation).10
Common sense suggests that a plaintiff seeking damages does not prevail when no damages are awarded. Indeed, the district court and the court of appeals applied this rationale in awarding the City of Aurora attorney fees. A plaintiffs inability to prevail on the damage issue does not, however, automatically convert the defendant into a *338prevailing party. As the majority points out, it would be unjust to award attorney fees to a defendant found liable for breach. Maj. op. at 333; see also Nouri v. Wester & Co., 833 P.2d 848 (Colo.App.1992).
When claims against a defendant are dismissed, however, the defendant achieves two significant results — one with respect to liability and one with respect to damages. Thus, a prevailing defendant can show he was forced to defend against an unfounded claim, promoting the policy of deterring baseless suits. Similarly, a plaintiff who seeks and receives damages achieves two significant results — one with respect to liability and one with respect to damages.11 A plaintiff who proves liability alone, absent an award of actual damages, has not prevailed with respect to the desired outcome and, I believe, should not be a prevailing party for attorney fee purposes.12 I would therefore affirm the court of appeals ruling that Spencer Contractor was not the prevailing party, and consistent with the majority, reverse the court of appeals’ ruling that Aurora was a prevailing party. Here, no party prevailed.
II
The plain language of the settlement agreement, the parties’ stipulation regarding attorney fees, contract principles13 and disputed jury verdict forms do not compel a different result.
The majority contends that Spencer Contractor prevailed in “enforcing” the settlement agreement because the jury expressly found that Aurora had breached the agreement. Maj. op. at 332. This argument suffers the same frailties as the majority’s definition of prevailing party. The parties do not define “enforcement.” Black’s law dictionary defines enforcement as “putting something such as law into effect; ... the carrying out of a mandate or command.” Black’s Law Dictionary 528 (6th ed. 1990). Here, the jury issued no command with respect to the settlement agreement. Spencer Contractor did not seek enforcement of the agreement through declaratory or injunctive relief. Instead, Spencer Contractor sought to enforce the agreement by seeking damages for its breach, but received none. I am not convinced that Spencer Contractor enforced the settlement agreement solely because the jury found the agreement had been breached.
I also disagree with the majority’s conclusion that the jury instructions support the decision that Spencer Contractor prevailed. Maj. op. at 333-334. The form of jury instructions given at trial is within the discretion of the trial court. Armentrout v. FMC Corp., 842 P.2d 175, 186 (Colo.1992). To decide whether instructional error requires reversal, the jury instructions must be considered together to determine whether they adequately informed the jury of the law applicable to the case. Id. Spencer Contractor argues that the jury verdict forms precluded the jury from awarding damages on both contracts. As the court of appeals correctly pointed out, the jury verdict form “did not as Spencer contends, suggest that the jury should apportion the damages resulting from each breach; instead, the verdict form merely required the jury to determine whether any damages were incurred.” Op. at 338. Further, the instruction stating that *339“you may award damages only once for the same damages or losses” does not make the instructions when read together erroneous.14 Much of the dispute over the jury instructions results from the parties’ stipulation pri- or to trial that the party who prevails on the settlement agreement would be the party entitled to attorney fees. Each party now asserts that it prevailed; Spencer Contractor becaus^of the verdict that Aurora breached the agreement, and Aurora because it avoided paying damages. The following language of the stipulation implies that for Spencer Contractor to prevail an award of damages would be appropriate:
2. Spencer’s Second Claim for Relief against Aurora in this action is for breach of the Settlement Agreement. Accordingly, Spencer has requested an award of attorneys’ fees, in addition to any damages it is awarded, if it is the prevailing party on its Second Claim for Relief, (emphasis supplied).
I agree with the court of appeals that the parties cannot now complain that the settlement agreement was used as a standard to decide the prevailing party. Slip op. at 3. Accordingly, I would remand this case to the district court to award costs as appropriate and to dismiss both party’s motions for attorney fees.

. I agree with the majority decision to reverse the award of attorney fees to Aurora because Aurora breached its contract. This ruling is not inconsistent with the conclusion that Spencer was not a prevailing party, nor is it inconsistent with the rule I propose.

. See maj. op. at 330 n. 10 and accompanying text. I agree the award of attorney fees for civil rights cases implicates civil rights policies not present in contractual agreements to shift attorney fees. While not directly applicable here the recent Supreme Court decision in Farrar v. Hobby, -U.S.-, 113 S.Ct. 566, 121 L.Ed.2d 494 (1992) is instructive on the policy of discouraging nonmeritorious claims. In Farrar the Court concluded that even though a plaintiff who receives only nominal damages can be considered a prevailing party, a technical victory may be so insignificant as to be insufficient to support "prevailing party” status. Id. at-, 113 S.Ct. at 574.

. Tex. [Civil Practice & Remedies] Code Ann. § 38.001 (West 1986) provides in pertinent part:
A person may recover reasonable attorney’s fees from an individual or a corporation, in addition to the amount of a valid claim and costs, if the claim is for: ... (8) an oral or written contract, (emphasis supplied).

. Nevada courts interpreting a similar attorney fee statute make the award of a money judgement a prerequisite for any fee award. Nev.Rev. Stat.Ann. § 18.010 (Michie 1986); e.g., National Union Fire Ins. Co. v. Pratt & Whitney Can., Inc., 107 Nev. 535, 815 P.2d 601 (1991) (money judgment a prerequisite to an award of attorney fees).

. I agree that a plaintiff seeking damages need not recover the entire amount sought. Under the rule I propose a plaintiff must be awarded actual damages of more than one dollar. This formulation accommodates Colorado law. We have long held that in a suit for breach of contract a defendant's breach itself entitles the plaintiff to nominal damages. Hoehne Ditch Co. v. John Flood Ditch Co., 76 Colo. 500, 233 P. 167 (1925). This rule is reflected in CJI-Civ.2d 30:35 which provides "2. If you find in favor of the plaintiff, but do not find any actual damages, you shall nonetheless award (him) (her) nominal damages in the sum of one dollar.” By law, nominal damages are one dollar. See e.g., Overland Dev. Co. v. Marston Slopes Dev. Co., 773 P.2d 1112 (Colo.App.1989). Requiring an award of actual damages in any amount over one dollar ensures the defendant did not successfully defend against the claim, and avoids any qualitative examination of the actual damages awarded.

. In MFD the court also heavily relies on authority addressing who prevails for cost purposes to decide who prevails for attorney fee purposes.

. See Farrar v. Hobby,-U.S. at-, 113 S.Ct. at 577-78 (O'Connor, J., concurring) ("Circumstances justifying denial of costs to the prevailing party [exist] where the judgment recovered was insignificant in comparison to the amount actually sought, ... [and] [j]ust as a pyrrhic victor would be denied costs under Rule 54(d), so too should it be denied fees under § 1988.”) (internal quotations and citations omitted).

. The majority correctly points out that there can be but one prevailing party on any liability claim, maj. op. at 13, but prevailing on liability should not automatically translate to prevailing for attorney fee purposes. While an argument exists that the trial court could, in equity, reduce the amount of attorney fees awarded when the plaintiff achieves only limited success, I believe requiring trial courts to consider fees when clearly no party prevailed only prolongs litigation and further burdens the trial court. Making the threshold requirement that a plaintiff seeking damages prevail only when awarded actual damages provides a more equitable resolution.

. See also W.H. Woolley & Co. v. Bear Creek Manors, 735 P.2d 910 (Colo.App.1986) (when several claims are asserted and both parties prevail the award or allocation of costs is solely in the discretion of the trial court, (citing §§ 13-16-108 to -109, 6A C.R.S. (1987 Repl.Vol.)).

.The majority correctly addresses one of the policies underlying contractual fee shifting agreements, to encourage compliance with a contract, maj. op. at 333 n. 14. Because the recovery of any amount over one dollar would entitle a prevailing plaintiff to attorney fees, I believe requiring recovery adequately encourages compliance. I remain concerned with the majority's failure to consider the coexistent policy of discouraging nonmeritorious actions. Under the majority view a contracting party could use any breach, however insignificant, to bring an action and ensure the award of attorney fees. I do not believe contracting parties intend for a breach that causes no injury to be used to coerce, or as a basis for needless litigation.

. This rule does not address every combination of claims a plaintiff may bring when an action involves more than a prayer for damages. Every combination need not be decided today, as Spencer requested only damages. Although Spencer attempts to recast its complaint as one that in effect seeks only declaratory or injunctive relief, these matters were never plead and never decided by the trial court. I only suggest that a plaintiff who requests damages alone does not prevail when none are received.

. The court of appeals holding in Roa v. Miller, 784 P.2d 826 (Colo.App.1989), is consistent with a decision not to award attorney fees in this case. Maj. op. at 332 n. 12. While the majority infers successful result means success regarding liability, Roa does not define a successful result. A successful result could be defined as being awarded damages or successfully defending against a damage claim.

.I agree with the majority’s conclusion that basic contract principals support the denial of attorney fees to Aurora. Maj. op. at 332-333.

. Jury instruction no. 40 provided as follows: The plaintiff, Dennis I. Spencer Contractor, Inc., has sued for some of the same damages and losses on two different claims for relief. The claims for relief on which Spencer has sued and on which you have been instructed are: breach of the Alameda Parkway construction contract and breach of a Settlement Agreement. If you find for Spencer on more than one claim for relief, you may award it damages only once for the same damages or losses, (emphasis supplied).