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
1 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.
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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
1 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.