Court Opinion

ID: 4521871
Source: CourtListenerOpinion
Date Created: 2020-04-02 17:02:46.678846+00
Date Added: 2024-06-11T12:06:06.179783
License: Public Domain

The summaries of the Colorado Court of Appeals published opinions
  constitute no part of the opinion of the division but have been prepared by
  the division for the convenience of the reader. The summaries may not be
    cited or relied upon as they are not the official language of the division.
  Any discrepancy between the language in the summary and in the opinion
           should be resolved in favor of the language in the opinion.

                                                                   SUMMARY
                                                                 April 2, 2020

                                2020COA58

No. 18CA2307, Western Stone & Metal Corp. v. DIG HP1, LLC —
Attorney Fees; Contracts — Fee-shifting Provisions

     Following a dispute between a landlord and tenant arising

under their commercial lease, both parties filed motions requesting

attorney fees and costs. Their lease contains a fee shifting provision

that awards attorney fees and costs to the “prevailing party,” as

defined in the contract. In declining to award attorney fees and

costs to either party, the court applied the common law definition

for “prevailing party,” which provides that the prevailing party is the

one who received a favorable ruling on the question of liability. A

division of the court of appeals now holds that the common law

definition of “prevailing party” should give way to the definition

specified in the parties’ contract, where available.
COLORADO COURT OF APPEALS                                          2020COA58

Court of Appeals No. 18CA2307
Arapahoe County District Court No. 16V32119
Honorable Elizabeth Beebe Volz, Judge

Western Stone & Metal Corp.,

Plaintiff-Appellee and Cross-Appellant,

v.

DIG HP1, LLC,

Defendant-Appellant and Cross-Appellee.

                       ORDER REVERSED AND CASE
                       REMANDED WITH DIRECTIONS

                                 Division V
                        Opinion by JUDGE GRAHAM*
                        Román and Grove, JJ., concur

                           Announced April 2, 2020

Fairfield and Woods, P.C., Lee Katherine Goldstein, Jason B. Robinson,
Matthew S. Rork, Denver, Colorado, for Plaintiff-Appellee and Cross-Appellant

Snell & Wilmer L.L.P., Daniel R. Frost, Luke W. Mecklenburg, Denver,
Colorado, for Defendant-Appellant and Cross-Appellee

*Sitting by assignment of the Chief Justice under provisions of Colo. Const. art.
VI, § 5(3), and § 24-51-1105, C.R.S. 2019.
¶1    This appeal arises from the trial court’s decision declining to

 award attorney fees and costs to either party in the underlying

 landlord-tenant contract dispute. On appeal, DIG HP1, LLC (DIG)

 argues the trial court erred because it reached this decision without

 applying the provision in the parties’ commercial lease agreement

 that awards attorney fees to the “prevailing party” as defined in the

 contract, opting instead for a common law definition. We now

 clarify that the common law definition should give way to the

 specific contractual definition of “prevailing party,” where available.

 We therefore reverse and remand for the trial court to determine

 which party — if either — is entitled to attorney fees and costs

 according to the terms of the lease.

                           I.    Background

¶2    The lease between landlord, DIG, and tenant, Western Stone &

 Metal Corp. (WSMC), contains a fee-shifting provision. In the event

 that either party brings a cause of action arising under the lease,

 that provision allocates attorney fees and litigation costs to the

 prevailing party. The provision defines “prevailing party” in detail,

 specifying which party will have prevailed in light of particular

 conduct and litigation outcomes. Among other circumstances

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 described in the provision, a party could prevail if it “initiated the

 litigation and substantially obtained the relief” it sought; or

 alternatively, the party that did not initiate litigation could prevail if

 the initiating party nevertheless did not obtain judgment in its

 favor, did not substantially obtain the relief it sought, or withdrew

 its claims without having obtained the relief it sought.

¶3    In the midst of a contract dispute, WSMC initiated litigation,

 bringing a number of claims all arising under the lease. Neither

 party was successful on every claim. The court found in WSMC’s

 favor on some claims, and in DIG’s favor on others; and by the end

 of trial, WSMC had withdrawn a number of its claims. WSMC was

 awarded damages on one claim that the court later described as

 arising from the “controlling issue” in the case.

¶4    After trial, both parties submitted motions seeking attorney

 fees and costs as the prevailing party. The parties’ competing

 motions debated how the court should apply the contractual

 prevailing party provision. Namely, the parties disputed how the

 court should view the fact that WSMC withdrew a number of its

 claims, as well as the fact that WSMC did prevail on the “controlling

 issue” but received significantly less money than originally sought.

                                     2
 In ruling that neither party had prevailed, the court found that

 “each of the parties could be considered the prevailing party on

 different claims.”

                        II.   Trial Court’s Ruling

¶5    On appeal, DIG argues the court’s analysis was based on the

 wrong standard — one that has been developed by courts to

 implement contract provisions that allocate attorney fees to the

 “prevailing party” but that also do not elaborate on the term. DIG

 argues the court should have instead determined the prevailing

 party by applying the definition spelled out in the parties’ lease.

 DIG further argues that the lease’s prevailing party definition will

 not accommodate the trial court’s finding that neither party

 prevailed, and urges this court to find DIG the prevailing party

 under the lease.

¶6    WSMC disagrees, arguing that the court was correct to rely on

 the common law prevailing party test. WSMC also argues that the

 trial court did not entirely ignore the prevailing party definition in

 the lease, and that the lease’s definition does allow for a finding that

 neither party prevailed. In the alternative, on cross-appeal WSMC

 urges us to deem WSMC the prevailing party under the lease.

                                    3
             A.    Applicable Law and Standard of Review

¶7    Generally, the prevailing party in a contract or tort action may

 not recover attorney fees from the other party. Harwig v. Downey,

 56 P.3d 1220, 1221 (Colo. App. 2002). Parties to a contract may

 agree, however, to a fee-shifting provision that allocates fees and

 costs to the prevailing party. S. Colo. Orthopaedic Clinic Sports Med.

 & Arthritis Surgeons, P.C. v. Weinstein, 2014 COA 171, ¶ 10.

¶8    But not all contracts with a prevailing party provision define

 the term. To aid in the application of these bare prevailing party

 provisions, the Colorado Supreme Court has furnished a test for

 when the contract awards fees and costs to the “prevailing party”

 but does not define the term for purposes of the contract. See, e.g.,

 Dennis I. Spencer Contractor, Inc. v. City of Aurora, 884 P.2d 326,

 329 n.7 (Colo. 1994) (highlighting that the contract at issue did not

 define the term “prevailing party”). The test provides that, for

 purposes of attorney fees, the prevailing party is the one who

 received a favorable ruling on the question of liability. Id. at 332.

¶9    This common law test notwithstanding, parties to a contract

 may agree to redefine the term for disputes arising under their

 agreement. See Bledsoe Land Co. v. Forest Oil Corp., 277 P.3d 838,

                                    4
  843-45 (Colo. App. 2011) (a technical term with a generally

  accepted meaning may be redefined for purposes of a particular

  contract, by mutual assent of the parties). And just like any

  contract provision, courts interpret prevailing party provisions so as

  to best effectuate the parties’ intent. Klun v. Klun, 2019 CO 46,

  ¶¶ 18-19 (examining a contractual fee-shifting provision).

¶ 10   Unambiguous contract terms must be applied as written,

  according to their plain and ordinary meaning. USI Props. E., Inc. v.

  Simpson, 938 P.2d 168, 173 (Colo. 1997) (“It is axiomatic that in

  construing a document courts should not rewrite the provisions of

  an unambiguous document, but must enforce an unambiguous

  contract in accordance with the plain and ordinary meaning of its

  terms.”). This principle applies equally to prevailing party

  provisions. Morris v. Belfor USA Grp., Inc., 201 P.3d 1253, 1259-61

  (Colo. App. 2008) (the contractual fee-shifting provision should have

  been applied as written, identifying a single party that could

  potentially recover but not allowing the other party to recover under

  any circumstance).

                                    5
   B.    The Trial Court Abused Its Discretion by Failing to Apply the
                             Terms of the Lease

¶ 11    In this case, the trial court functionally rewrote the fee-shifting

  provision in the parties’ lease. It did so by applying a definition

  from case law analyzing contracts that do not resemble the one at

  issue here. For example, the contract in Dennis I. Spencer allocated

  attorney fees to the “prevailing party,” without any further

  elaboration. 884 P.2d at 329 n.7. By contrast, the lease between

  DIG and WSMC lays out in detail which party should be deemed

  “prevailing” under a number of specific circumstances. Thus, the

  court’s analysis defies the interpretive principle that this provision

  must be enforced as written, not as if the parties had failed to

  furnish their own prevailing party definition.

¶ 12    We decline to decide which party — if either — is the

  prevailing party under the lease. Although we interpret contractual

  fee-shifting provisions de novo, the trial court has discretion to

  determine the prevailing party under such a provision. See Klein v.

  Tiburon Dev. LLC, 2017 COA 109, ¶¶ 19-21 (highlighting this

  distinction).

                                      6
¶ 13    In a case like this one, where both parties received a favorable

  ruling on some claims and the parties dispute the significance of

  WSMC’s withdrawn claims, the trial court is in the best position to

  determine which party prevailed under the terms of the contract.

  See Wheeler v. T.L. Roofing, Inc., 74 P.3d 499, 504 (Colo. App. 2003)

  (the trial court was best positioned to determine the prevailing

  party, where both parties partially prevailed on the question of

  liability).

                             III.   Conclusion

¶ 14    We therefore reverse and remand for the court to determine

  which party — if either — is entitled to fees and costs, according to

  the prevailing party provision in the lease.

        JUDGE ROMÁN and JUDGE GROVE concur.

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