Elk Creek Ranch Owners Ass'n v. Elk Creek Ranch Dev., Inc.

• Court: Colorado Court of Appeals
• Decided: July 9, 2026
• Docket: 25CA0943
• Status: Unpublished

Opinion

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 July 9, 2026

2026 COA 58

No. 25CA0943, Elk Creek Ranch Owners Ass’n v. Elk Creek Ranch Dev., Inc. — Appeals — Court of Appeals — Jurisdiction — Final Appealable Order; Attorney Fees — Multiple Parties

A division of the court of appeals addresses a novel issue of

finality and appellate jurisdiction in the context of postjudgment

proceedings for attorney fees. In this case, in which multiple

parties made multiple fee requests, the division holds that the

district court’s order denying a request for attorney fees and costs

against one party was not final and appealable until the district

court had resolved all parties’ fee requests.

Turning to the merits, the division holds that the district court

misinterpreted a contractual fee-shifting provision by equating an

undefined reference to “default” with a specifically defined

contractual term. The division further holds that a breach of the implied duty of good faith and fair dealing constitutes a “default”

under the fee-shifting clause.

Finally, the division holds that the district court erred in its

methodology for awarding attorney fees to one of the parties by

calculating the lodestar amount using an unreasonable number of

hours and only afterward applying a percentage reduction for

excessive, unnecessary, or overstaffed work. The division holds

that this approach is inconsistent with established law, which

requires excluding unreasonable hours before calculating the

lodestar.

Accordingly, the division reverses the district court’s orders

and remands the case for further proceedings consistent with this

opinion. COLORADO COURT OF APPEALS 2026 COA 58

Court of Appeals No. 25CA0943 Rio Blanco County District Court No. 17CV30015 Honorable Denise Lynch, Judge

Elk Creek Ranch Owners Association, a Colorado nonprofit corporation,

Plaintiff-Appellant,

v.

Elk Creek Ranch Development, Inc., a Colorado corporation; and YZ Ranch, LLC, a Colorado limited liability company,

Defendants-Appellees.

ORDERS REVERSED AND CASE REMANDED WITH DIRECTIONS

Division V Opinion by JUDGE YUN Lipinsky and Schutz, JJ., concur

Announced July 9, 2026

Forbes Law Group, LLC, Peter C. Forbes, Denver, Colorado; GableGotwals, Byron C. Keeling, Houston, Texas, for Plaintiff-Appellant

Womble Bond Dickinson (US) LLP, Kris J. Kostolansky, Caitlin C. McHugh, Frances Staadt, Denver, Colorado, for Defendants-Appellees ¶1 This appeal concerns postjudgment attorney fee proceedings

following extensive litigation over the administration of Elk Creek

Ranch, a private fishing and hunting community. The Elk Creek

Ranch Owners Association (the Association) challenges two rulings

of the district court: (1) the denial of its motion to recover attorney

fees and costs from YZ Ranch, LLC (YZ Ranch), under a fee-shifting

provision in a fishing lease; and (2) the award of $1,261,649.10 in

attorney fees to Elk Creek Ranch Development, Inc. (ECRD).1

¶2 As an initial matter, we address a novel issue of finality and

appellate jurisdiction in the context of postjudgment proceedings for

attorney fees. In this case, in which multiple parties made multiple

fee requests, we hold that the district court’s order denying the

Association’s request for attorney fees and costs against YZ Ranch

was not final and appealable until the district court had resolved all

parties’ fee requests.

¶3 Turning to the merits, we conclude that the district court erred

in two respects:

1 The Association does not appeal the district court’s award of costs

to ECRD.

1 (1) The court erred by denying the Association’s request for

attorney fees against YZ Ranch. It misinterpreted the

contractual fee-shifting provision by equating an

undefined reference to “default” with a specifically

defined lease term, thereby improperly restricting the

Association’s right to recover fees. We further hold that a

breach of the implied duty of good faith and fair dealing

constitutes a “default” under the fee-shifting clause,

entitling the Association to reasonable attorney fees and

costs from YZ Ranch.

(2) The court also erred in its methodology for awarding

attorney fees to ECRD. It calculated the lodestar amount

using an unreasonable number of hours and only

afterward applied a percentage reduction for excessive,

unnecessary, or overstaffed work. We hold that this

approach is inconsistent with established law, which

requires excluding unreasonable hours before calculating

the lodestar.

¶4 We therefore reverse the district court’s denial of fees and

costs to the Association against YZ Ranch and its award of fees to

2 ECRD, and we remand the case for further proceedings consistent

with this opinion.

I. Background

¶5 William H. Wheeler and his company ECRD established Elk

Creek Ranch near Meeker. Elk Creek Ranch began selling lots in

2007, with each lot owner becoming a member of the Association.

Wheeler formed Elk Creek Operations, LLC (ECO), to serve as the

Association’s management company. Wheeler and his family also

established YZ Ranch, and, in 2006, YZ Ranch and ECO2 entered

into a long-term fishing lease granting Association members the

right to fish on property owned by YZ Ranch.

¶6 In 2017, several individual Association members sued

Wheeler, ECRD, ECO, and YZ Ranch. As relevant here, they

asserted that ECRD failed to pay assessments owed to the

Association; ECO breached its management agreement with the

Association by failing to ensure that ECRD paid its assessments;

Wheeler breached his fiduciary duties to the Association; and YZ

2 For purposes of this litigation, the parties to the fishing lease are

YZ Ranch and the Association. The court instructed the jury that “[t]he Association has a long-term fishing lease with YZ Ranch.”

3 Ranch breached the fishing lease and the implied covenant of good

faith and fair dealing contained therein by improperly restricting

Association members’ access to fishing. The Association later

joined the lawsuit, the individual members withdrew, and the

Association was the sole plaintiff by the time of trial.

¶7 Trial began in October 2020. At the close of evidence, the

district court dismissed the Association’s claim against ECRD on

statute of limitations grounds. The remaining claims went to the

jury, which found that (1) ECO breached the management

agreement; (2) Wheeler breached his fiduciary duties; and (3) YZ

Ranch breached the duty of good faith and fair dealing but did not

breach the specific terms of the fishing lease.

¶8 After trial, the district court denied the Association’s request

for permanent injunctive relief against YZ Ranch. The Association

appealed, and a division of this court reversed the order denying the

Association’s request for a permanent injunction and remanded the

case “for findings on all of the relevant injunction factors, including

whether the association actually succeeded on the merits of its

claims against YZ [Ranch].” Elk Creek Ranch Owners Ass’n. v.

Wheeler, slip op. at ¶ 23 (Colo. App. No. 21CA0426, June 23, 2022)

4 (not published pursuant to C.A.R. 35(e)). On remand, the district

court granted a permanent injunction in favor of the Association

and against YZ Ranch.

¶9 The district court then turned to the parties’ requests for

attorney fees and costs. The court said that it would bifurcate the

fee proceedings into a liability phase (in which it would determine

which parties, if any, were entitled to recover fees and costs) and a

damages phase (in which it would determine the amount of fees and

costs, if any, it would award).

¶ 10 On August 20, 2024, the court issued its order addressing the

parties’ entitlement to fees and costs. As relevant here, it

determined that (1) the Association was entitled to recover fees and

costs from ECO; (2) ECRD was entitled to recover fees and costs

from the Association; and (3) the Association was not entitled to

recover fees and costs from YZ Ranch.

¶ 11 On April 4, 2025, following an evidentiary hearing, the district

court issued its order addressing the amount of attorney fees and

costs awarded. In particular, it ordered the Association to pay

ECRD $1,261,649.10 in attorney fees.

5 ¶ 12 The Association appealed, and ECRD and YZ Ranch (together,

defendants) cross-appealed. This court then ordered all parties to

show cause why those portions of the appeal and cross-appeal

seeking review of the district court’s August 2024 order should not

be dismissed as untimely filed.3 After the parties responded, a

motions division of this court deferred the order to the merits

division for resolution.

II. Appellate Jurisdiction

¶ 13 Defendants contend that we lack jurisdiction to review the

district court’s August 2024 order denying the Association’s request

for an award of attorney fees and costs against YZ Ranch. They

contend that because the August 2024 order fully resolved this

action as it relates to YZ Ranch, it constituted a final, appealable

postjudgment order, making the Association’s notice of appeal —

filed nine months later, on May 21, 2025 — untimely. We disagree.

¶ 14 “Under C.A.R. 4(a), a party in a civil case must file a notice of

appeal within forty-nine days after the entry of a final judgment or

order, unless the deadline is extended by a timely filed C.R.C.P. 59

3 Defendants’ cross-appeal was later dismissed for failure to

prosecute.

6 motion.” Mulberry Frontage Metro. Dist. v. Sunstate Equip. Co., 2023

COA 66, ¶ 13. “A party’s failure to file a timely notice of appeal

generally deprives this court of jurisdiction to review the merits of

the appeal.” Id.

¶ 15 Colorado courts use a two-part test to determine the finality of

postjudgment orders such as those addressing requests for attorney

fees and costs. Id. at ¶ 16. First, we ask whether the order ends

“the particular part of the action in which it is entered, leav[ing]

nothing further for the court pronouncing it to do in order to

completely determine the rights of the parties as to that part of the

proceeding.” Luster v. Brinkman, 250 P.3d 664, 667 (Colo. App.

2010). And second, we consider whether the order is “more than a

ministerial or administrative determination” — that is, whether it

“affects rights or creates liabilities not previously resolved by the

adjudication of the merits.” Id.

¶ 16 An order granting attorney fees is not final until the district

court sets the amount of fees. Axtell v. Park Sch. Dist. R-3, 962 P.2d

319, 322 (Colo. App. 1998). But no published Colorado case has

addressed the question presented here: whether, in a case involving

multiple fee requests by multiple parties, the portion of an order

7 denying a fee request as to one party is final for purposes of appeal

while other fee requests remain unresolved.

¶ 17 We conclude that the portion of the district court’s order

denying the Association’s request for fees against YZ Ranch was not

final under the first prong of the test articulated in Luster because it

did not end “the particular part of the action in which it [was]

entered” — namely, the postjudgment action for attorney fees and

costs. Luster, 250 P.3d at 667. Although, in the August 2024

order, the court denied the Association’s fee request against YZ

Ranch, it granted the Association’s fee request against ECO and

ECRD’s fee request against the Association. Until those granted fee

requests were reduced to sums certain, we cannot say that there

was “nothing further for the court . . . to do in order to completely

determine the rights of the parties as to that part of the

proceeding.” Id.

¶ 18 Our conclusion is supported by federal cases directly

addressing the finality of postjudgment orders resolving fee requests

against fewer than all parties. See id. at 666-67 (noting that federal

appellate jurisdiction also depends on finality, and “[a]ccordingly,

we may turn to federal cases to assist us in determining the

8 appropriate test”); Baldwin v. Bright Mortg. Co., 757 P.2d 1072,

1074 (Colo. 1988) (looking to the federal law discussing finality as

persuasive authority).

¶ 19 In Mayer v. Wall Street Equity Group, Inc., the Eleventh Circuit

Court of Appeals held that “[o]nly if a postjudgment order is

‘apparently the last order to be entered in the action’ is it final and

appealable.” 672 F.3d 1222, 1224 (11th Cir. 2012) (quoting

Delaney’s Inc. v. Ill. Union Ins. Co., 894 F.2d 1300, 1304 (11th Cir.

1990)). Accordingly, in that case, an order denying two parties’

requests for attorney fees was not final and appealable when a third

party’s fee request remained pending before the district court. Id.

at 1223. “For us to hold otherwise,” the court noted, would invite

“litigants to appeal every attorney’s fee order, even if other requests

remain outstanding, resulting in a proliferation of piecemeal or

repetitious appeals.” Id. at 1224.

¶ 20 Likewise, in In re Syngenta AG MIR 162 Corn Litigation,

61 F.4th 1126, 1171 (10th Cir. 2023), the Tenth Circuit Court of

Appeals held that individual orders allocating portions of an

aggregate attorney fee award in complex multidistrict litigation were

not final and appealable until the court allocated the entire award.

9 Relying on Mayer, the court concluded that the fee proceedings

“constitute[d] one, post-judgment litigation that only concluded with

the filing” of the final allocation order. Id. at 1173. Thus, appeals

filed before the final allocation order were premature, “such that at

the time when they were filed, [the court] did not have jurisdiction

to review them.” Id. at 1173-74.

¶ 21 We find these cases persuasive and conclude that

postjudgment fee proceedings are not final for purposes of appeal

until the district court has resolved all outstanding issues

concerning all parties’ fee requests. To hold otherwise, as the

Eleventh Circuit cautioned in Mayer, 672 F.3d at 1224, would lead

to “piecemeal or repetitious appeals”: here, for instance, the

Association would have had to appeal twice in a single fee

proceeding — once after the district court’s August 2024 order

denying its fee request against YZ Ranch and again after the court’s

April 2025 order reducing the granted fee and cost awards to sums

certain. Such a result cannot be reconciled with Luster’s

requirement that a postjudgment order is not final unless it ends

“the particular part of the action in which it is entered, leav[ing]

nothing further for the court pronouncing it to do in order to

10 completely determine the rights of the parties as to that part of the

proceeding.” Luster, 250 P.3d at 667.

¶ 22 Accordingly, the Association’s notice of appeal filed on May 21,

2025 (less than forty-nine days after the court’s April 4, 2025,

order) was timely, and we have jurisdiction over the appeal. We

now turn to the Association’s contentions.

III. The Association’s Request for Fees and Costs Under the Fishing Lease

¶ 23 The Association contends that the district court erred by

determining that it could not recover attorney fees and costs from

YZ Ranch under the fishing lease. We agree.

A. Additional Background

¶ 24 Section 11.15 of the fishing lease contains the following fee-

shifting provision:

Attorney’s Fees. In the event of a default on the part of either party in the performance of any of the terms and conditions of this Lease, the defaulting party agrees to pay any and all attorneys’ fees and expenses incurred by the non-defaulting party as a result of such default, including attorneys’ fees and expenses incurred by the non-defaulting party in connection with any litigation or negotiations resulting from such default or breach of the terms of this Lease.

11 The Association argued that it was entitled to recover its attorney

fees and costs because the jury’s finding that YZ Ranch breached

the implied duty of good faith and fair dealing amounted to a

default in the performance of any of the terms and conditions of the

fishing lease.

¶ 25 But instead of relying on the plain meaning of the word

“default,” the district court looked to a different provision of the

fishing lease — section 8.1 — which defines “Default” (with a capital

“D”). Under that provision, a “Default” means a “Default by

Tenant,” which may occur in several ways, including the Tenant’s

failure to pay rent. “Tenant,” another defined term, means ECO,

the Association’s management company. The district court

reasoned that, because YZ Ranch had not committed (and, indeed,

could not commit) a “Default” as defined in section 8.1 — that is, a

“Default by Tenant” — its breach of the duty of good faith and fair

dealing was not a “default” for purposes of the fee-shifting provision

in section 11.15.

B. Standard of Review

¶ 26 We review a district court’s interpretation of a contractual fee-

shifting provision de novo. S. Colo. Orthopaedic Clinic Sports Med. &

12 Arthritis Surgeons, P.C. v. Weinstein, 2014 COA 171, ¶ 8. In doing

so, “[w]e should give an unambiguous fee-shifting provision its plain

and ordinary meaning, and we should interpret it in a ‘common

sense manner.’” Id. at ¶ 11 (quoting Morris v. Belfor USA Grp., Inc.,

201 P.3d 1253, 1259 (Colo. App. 2008)). Further, we should avoid

“[a]ny construction that would render any clause or provision

unnecessary, contradictory, or insignificant.” In re Estate of Gattis,

2013 COA 145, ¶ 36 (quoting Mapes v. City Council, 151 P.3d 574,

577 (Colo. App. 2006)).

C. Discussion

¶ 27 The Association argues — and we agree — that the district

court erred by equating the undefined term “default” in section

11.15 with the defined term “Default” in section 8.1, effectively

rendering the fee-shifting provision meaningless for the Association.

Under section 11.15, fee-shifting is triggered by “a default on the

part of either party in the performance of any of the terms and

conditions of this Lease.” By holding that YZ Ranch by definition

could not commit a default, the district court’s interpretation

nullified any possibility of the fee-shifting provision operating in the

Association’s favor. This approach contradicts the plain language of

13 section 11.15, which clearly contemplates an award of attorney fees

in favor of the nondefaulting party upon “a default on the part of

either party.” (Emphasis added.) See Gattis, ¶ 36; see also Mapes,

151 P.3d at 577 (“To determine the meaning of a contract, courts

are guided by the general rules of contract construction and should

seek to give effect to all provisions so that none will be rendered

meaningless.”).

¶ 28 A defined term in a contract carries the specific meaning that

the parties assigned to it. In contrast, an undefined term is no

different than any other term and must be given its plain and

ordinary meaning. The Third Circuit Court of Appeals’ decision in

Derry Finance N.V. v. Christiana Companies, 797 F.2d 1210 (3d Cir.

1986), is instructive on this point. There, the Third Circuit rejected

an argument that the undefined term “default” was interchangeable

with the defined term “Event of Default” in a series of promissory

notes. Id. at 1213. The court held that “the unambiguous meaning

of default is its plain meaning, failure to pay or perform.” Id. The

court noted that “an examination of the purposes served by the two

terms further convinces us that they are not functional

equivalents.” Id. at 1214.

14 ¶ 29 Here, the capitalized term “Default” in section 8.1 is defined as

a “Default by Tenant” and governs YZ Ranch’s rights and remedies

in the event of certain actions by the Association. The uncapitalized

term “default” in section 11.15 is undefined and is used to describe

the action, by either party, that will trigger the fee-shifting

provision. “[T]he purposes served by the two terms” are not the

same. Id. We thus conclude that the district court erred by

determining that a “default” under section 11.15 could occur only

in the event of a “Default” under section 8.1.

¶ 30 Because section 8.1’s definition of “Default” does not apply to

section 11.15, we must interpret the word “default” according to its

plain and ordinary meaning. See W. Stone & Metal Corp. v. DIG

HP1, LLC, 2020 COA 58, ¶ 10. The term is commonly understood

as a failure to do something required by duty or law or a failure to

fulfill an obligation. See Merriam-Webster’s Collegiate Dictionary

325 (11th ed. 2004) (defining “default” as “failure to do something

required by duty or law”); Webster’s Third New International

Dictionary 590 (2002) (same); Oxford Dictionary of English 457 (3d

ed. 2010) (defining “default” as “failure to fulfil an obligation,

especially to repay a loan or appear in a law court”); see also

15 Black’s Law Dictionary 526 (12th ed. 2024) (defining “default” as

“[t]he omission or failure to perform a legal or contractual duty”).

¶ 31 Jones v. Riche, 2009 UT App 196, ¶ 2, is instructive in

determining whether “default” includes a breach of contract. In

that case, the fee-shifting provision — using language materially

similar to section 11.15 — stated that “in the event of default by

either party,” the “defaulting party shall pay all costs and expenses

of enforcing the same, including reasonable attorney’s fees.” Id.

The Jones court held that, under the plain meaning of that clause,

“default” was synonymous with breach of contract. Id. at ¶ 3. Proof

of a breach therefore rendered the breaching party liable for the

other party’s attorney fees and costs. Id. As the court explained,

The jury in this case, by special verdict, found that the Riches breached the contract. Because the rental agreement clearly provided that the defaulting party must pay the other side’s attorney fees, the jury’s finding that the Riches breached the rental agreement unavoidably leads to the conclusion that the Riches were the defaulting parties, and as such would be responsible for the Joneses’ attorney fees incurred in enforcing the agreement.

Id. (footnotes omitted).

16 ¶ 32 In this case, the parties’ intent to treat “breach” and “default”

as synonymous under the fishing lease is even more evident.

Section 11.15 explicitly equates the terms by providing that, in the

event of a default, the defaulting party must pay the “attorneys’ fees

and expenses incurred by the non-defaulting party . . . in

connection with any litigation . . . resulting from such default or

breach.” (Emphasis added.)

¶ 33 Given this definition, the next question is whether YZ Ranch

defaulted in “the performance of any of the terms and conditions of

[the fishing lease].” In light of the jury’s finding that YZ Ranch

breached the duty of good faith and fair dealing, the answer is yes.

As the previous Elk Creek division explained, “The implied duty of

good faith and fair dealing is not separate from the contract; it is

part of it. Indeed, it is well established that the duty of good faith is

inherent in every contract and that a breach of the duty of good

faith breaches the contract itself.” Elk Creek, No. 21CA0426, slip

op. at ¶ 17 (citations omitted); see also Eggett v. Wasatch Energy

Corp., 2004 UT 28, ¶ 14 (noting that a violation of an implied

covenant of good faith and fair dealing is a breach of contract);

Fishoff v. Coty Inc., 634 F.3d 647, 653 (2d Cir. 2011) (“A breach of

17 the duty of good faith and fair dealing is considered a breach of

contract.”). Accordingly, a breach of the duty of good faith and fair

dealing constitutes a breach of contract.

¶ 34 We are not persuaded otherwise by defendants’ argument that

“[t]he duty of good faith and fair dealing is not . . . a ‘term and

condition’ of a contract” and that, although YZ Ranch admittedly

breached the contract, it did not breach the contract’s “terms and

conditions.” As an initial matter, YZ Ranch did not raise this

argument below, and “[a]rguments never presented to . . . a trial

court may not be raised for the first time on appeal.” Est. of

Stevenson v. Hollywood Bar & Cafe, Inc., 832 P.2d 718, 721 n.5

(Colo. 1992). But even exercising our discretion to consider this

argument, see Deutsche Bank Tr. Co. Ams. v. Samora, 2013 COA

81, ¶ 38 (“An appellate court may affirm the trial court’s ruling

based on any grounds that are supported by the record.”), we

conclude that it is inconsistent with Colorado law governing the

duty of good faith and fair dealing.

¶ 35 In Colorado, every contract includes an implied duty of good

faith and fair dealing. Amoco Oil Co. v. Ervin, 908 P.2d 493, 498

(Colo. 1995). The duty of good faith and fair dealing applies “when

18 the manner of performance under a specific contract term allows for

discretion on the part of either party.” Id. The purpose of this

doctrine is to ensure the intentions of the parties are honored and

their reasonable expectations are met. Id. However, it cannot be

used to “contradict terms or conditions for which a party has

bargained.” Id.

¶ 36 The previous Elk Creek division identified several discretionary

provisions in the fishing lease: (1) the Landlord “may, from time to

time, designate reasonable ingress and egress points for Tenant to

use” to protect agricultural and ranching interests; (2) “during big

game hunting season, for safety reasons, fishing access may be

limited by Landlord”; and (3) “[d]uring spawning season, Landlord

may restrict fishing in spawning sensitive areas.” Elk Creek,

No. 21CA0426, slip op. at ¶ 10 (emphases added). The division

noted that “the jury’s breach of good faith finding” was supported

by evidence that YZ Ranch breached these provisions by failing to

exercise its discretionary authority in good faith and in a reasonable

manner. Id. at ¶¶ 10-11, 20. Accordingly, under section 11.15, YZ

Ranch’s breach of the duty of good faith and fair dealing constituted

19 “a default . . . in the performance” of the contract’s terms and

conditions. (Emphasis added.)

¶ 37 We thus conclude that the Association may recover its

reasonable attorney fees and costs from YZ Ranch under section

11.15 of the fishing lease.

IV. The Fee Award to ECRD

¶ 38 The Association contends that the district court erred by

awarding $1,261,649.10 in attorney fees to ECRD. We agree.

¶ 39 As previously discussed, the district court dismissed the

Association’s claim against ECRD on statute of limitations grounds

at the close of evidence. As a result, the court determined that

ECRD, as the prevailing party, was entitled to recover its attorney

fees and costs from the Association under the fee-shifting provision

in section 21.16 of the “Declaration of Protective Covenants for Elk

Creek Ranch.” That provision states, in relevant part, as follows:

Costs and Attorneys’ Fees. If any proceedings are instituted in a court of law in connection with the rights of enforcement and remedies provided in this Declaration, the prevailing party in such proceedings shall be awarded by the court reimbursement of its costs and

20 expenses, including reasonable attorneys’ fees, in connection therewith.

¶ 40 Defendants’ counsel did not attempt to calculate the fees

incurred specifically “in connection” with the Association’s claim

against ECRD. Instead, counsel claimed that ECRD was entitled to

recover fifty percent of all fees incurred by all defendants in

defending against all of the Association’s claims. At the fee hearing,

defendants’ counsel acknowledged that he did not attempt to

identify and eliminate billing entries for work performed solely on

the Association’s claims under the fishing lease or against ECO, on

which the Association prevailed at trial.

¶ 41 In its April 2025 order, the district court found that “the

method used by [defendants’ counsel] to allocate fees to . . . ECRD

is not reasonable.” Specifically, the court found that defendants’

counsel “made little to no effort to actually determine what fee

entries actually related to the ECRD claim”; claimed fees that “were

actually spent on the fishing lease issues only”; and “included 50%

of time spent on ECO issues even though they were not awarded

attorney fees on the ECO claims.” The court also found the case

was overstaffed. The court then determined that, “[b]ased on the

21 overstaffing and the failure to review the individual entries to

determine what work was actually attributable to the ECRD claim,”

it would “apply[] a 25% reduction to the fee request.” Accordingly,

the court awarded $1,261,649.10 in attorney fees to ECRD against

the Association.

¶ 42 “We review the reasonableness of a trial court’s award of

attorney fees for an abuse of discretion.” Payan v. Nash Finch Co.,

2012 COA 135M, ¶ 16. A court abuses its discretion when it

misapplies the law or when its “actions are manifestly arbitrary,

unreasonable, or unfair.” Id.; Plan. Partners Int’l, LLC v. QED, Inc.,

2013 CO 43, ¶ 12.

¶ 43 “A court makes an initial estimate of a reasonable attorney fee

by calculating the lodestar amount.” Payan, ¶ 18. “The lodestar

amount represents the number of hours reasonably expended on

the case, multiplied by a reasonable hourly rate.” Id.

¶ 44 In calculating the lodestar amount, the court “must begin by

determining the reasonable number of hours expended by counsel

in working on the case.” Id. at ¶ 21. At this first step, the court

22 should exclude hours that were not “reasonably expended” and

make “deductions for overstaffing and for hours that are ‘excessive,

redundant, or otherwise unnecessary.’” Id. at ¶ 23 (quoting

Hensley v. Eckerhart, 461 U.S. 424, 434 (1983)). Then, after

applying such deductions as necessary, “[t]he reasonable number of

hours is . . . to be multiplied by the reasonable hourly rate to

calculate the lodestar amount.” Id. at ¶¶ 21, 23.

¶ 45 In Payan, the division held that the district court erred by

beginning its lodestar calculation with a number of hours it found

to be unreasonable and then applying deductions “based on the

unreasonableness of the time expended.” Id. at ¶ 22. The

Association argues, and we agree, that the district court here made

the same error: It started with an unreasonable number of hours —

due to overstaffing and inclusion of time spent defending against

claims for which ECRD was not entitled to fees — and then made a

deduction only after calculating the lodestar. Instead, the court

should have excluded hours not reasonably expended before

calculating the lodestar. As in Payan, this approach resulted in

error.

23 ¶ 46 We are not persuaded otherwise by defendants’ argument that

the court’s methodology was proper because roughly half of

counsel’s time was spent on “intertwined” claims “arising from

alleged accounting misconduct” by ECRD, ECO, and Wheeler. Even

if that is true, ECRD cannot recover attorney fees for time spent

litigating the Association’s claims against ECO. On the contrary, in

a ruling not contested on appeal, the court found that the

Association, as the prevailing party, was entitled to recover attorney

fees from ECO.

¶ 47 We thus conclude that the district court’s fee award of

$1,261,649.10 to ECRD constituted an abuse of discretion.

V. Disposition

¶ 48 The district court’s orders (1) ruling that the Association could

not recover attorney fees and costs from YZ Ranch and (2) awarding

$1,261,649.10 in attorney fees to ECRD are reversed. We remand

the case to the district court to determine (1) the amount of

reasonable attorney fees and costs the Association is entitled to

recover from YZ Ranch; and (2) the amount of reasonable attorney

fees ECRD is entitled to recover from the Association, beginning

with the reasonable number of hours spent litigating the

24 Association’s claim against ECRD before multiplying by a

reasonable hourly rate to calculate the lodestar amount.

JUDGE LIPINSKY and JUDGE SCHUTZ concur.