Tracy v. Surofchek

Opinion

24CA1583 Tracy v Surofchek 07-10-2025

COLORADO COURT OF APPEALS

Court of Appeals No. 24CA1583 El Paso County District Court No. 20CV30335 Honorable Amanda J. Philipps, Judge

George Tracy and Amy Tracy,

Plaintiffs-Appellants,

v.

David T. Surofchek and Amy Surofchek,

Defendants-Appellees.

ORDERS AFFIRMED

Division III Opinion by JUDGE BROWN Dunn and Schock, JJ., concur

NOT PUBLISHED PURSUANT TO C.A.R. 35(e) Announced July 10, 2025

Gordan Rees Scully Mansukhani LLP, John R. Mann, Denver, Colorado, for Plaintiffs-Appellants

Sparks Willson, P.C., Eric V. Hall, Robert J. Bucknam, Colorado Springs, Colorado, for Defendants-Appellees ¶1 Plaintiffs, George Tracy and Amy Tracy (the Tracys), appeal the

district court’s orders denying their request for attorney fees and

awarding attorney fees and costs to David T. Surofchek and Amy

Surofchek (the Surofcheks). We affirm.

I. Background and Procedural History

¶2 After the Surofcheks moved into a house next to the Tracys, a

dispute arose over who owned a bordering corner of property. The

parties entered into a settlement agreement, under which the

Surofcheks paid the Tracys $15,000 for a quitclaim deed to the

contested area. A few weeks later, the Tracys sued the Surofcheks,

claiming (1) trespass; (2) conversion and destruction of property;

and (3) breach of covenants of the homeowners’ association’s

bylaws. The Surofcheks counterclaimed for breach of the

settlement agreement and abuse of process.

¶3 In April 2022, after a four-day trial, a jury returned a verdict

in favor of the Surofcheks on all claims and counterclaims and

awarded the Surofcheks $208,542 in damages for breach of the

settlement agreement and $950,000 in damages for abuse of

process. After the district court entered judgment on the jury

verdict, the Tracys moved for, and the court granted, a stay on

1 execution of the judgment pending appeal. The Tracys secured the

judgment with letters of credit. In May, the court amended the

judgment to include prejudgment interest and costs.

¶4 The Tracys appealed only the judgment entered on the

Surofcheks’ abuse of process counterclaim. See Tracy v. Surofchek,

(Colo. App. No. 22CA0910, July 6, 2023) (not published pursuant to

C.A.R. 35(e)) (Surofchek I).1 Based on a jury instruction error, a

division of this court reversed and remanded for a new trial on the

abuse of process counterclaim. Id. at ¶ 33. The portions of the

judgment the Tracys had not appealed remained undisturbed. Id.

at ¶ 36. The division did not resolve the Tracys’ contention that the

evidence presented was insufficient to support the jury’s verdict on

the abuse of process counterclaim, declining to speculate whether a

properly instructed jury would have found in favor of the

Surofcheks. Id. at ¶ 34 n.6. The case mandated on August 28,

2023.

1 The Tracys filed a second appeal involving recovery of the costs

incurred during the first appeal that is not relevant to our analysis. See Tracy v. Surofchek, 2025 COA 21.

2 ¶5 About a month later, the Surofcheks moved to certify the

breach of settlement agreement judgment as final under C.R.C.P.

54(b), so they could collect on it while the abuse of process

counterclaim was pending. The court denied the motion, reasoning

only that “the reversal of that part of the judgment [on the abuse of

process counterclaim] and remand for new trial on that claim

means that there is no ‘final judgment’ in this case.”

¶6 In February 2024, the Surofcheks moved to dismiss their

abuse of process counterclaim with prejudice, citing personal

reasons. The Tracys partially opposed the motion only to the extent

that it affected their right to request attorney fees and costs. On

February 29, the court granted the motion, vacated the scheduled

trial, and dismissed the abuse of process counterclaim with

prejudice. In March, the Surofcheks moved to amend the judgment

to include additional postjudgment interest and costs and to reflect

that the abuse of process counterclaim had been dismissed. On

April 23, the court entered the second amended judgment.

¶7 Meanwhile, the Surofcheks moved for attorney fees and costs

under a fee-shifting provision in the settlement agreement. They

argued that the fees and costs were related to the enforcement and

3 collection of the breach of settlement agreement judgment. They

requested $21,280.44 in fees and costs from August 28, 2023 (the

date of the Surofchek I mandate) through March 20, 2024 (the date

they filed the motion) but reserved the right to request future fees

and costs incurred to collect the judgment.

¶8 In May, the Tracys filed their own motion for attorney fees

under section 13-17-102(2), C.R.S. 2024, seeking to recover all fees

incurred after July 6, 2023 (the date Surofchek I was announced)

and arguing that the Surofcheks’ pursuit of their abuse of process

counterclaim on remand was substantially frivolous, groundless,

and vexatious.

¶9 After full briefing on both motions, the district court held a

hearing. On August 26, the court granted the Surofcheks’ motion2

and denied the Tracys’ motion. The Tracys contend that the court

erred in both respects.

2 On September 5, 2024, the district court issued an amended order

nunc pro tunc to August 26, correcting clerical errors in the original order.

4 II. Standard of Review

¶ 10 We review de novo a trial court’s interpretation of a

contractual fee-shifting provision. In re Estate of Gattis, 2013 COA

145, ¶ 35. But we review a court’s decision whether to award

attorney fees and costs for an abuse of discretion. S. Colo.

Orthopaedic Clinic Sports Med. & Arthritis Surgeons, P.C. v.

Weinstein, 2014 COA 171, ¶ 8 (reviewing a trial court’s decision to

award attorney fees); Front Range Res., LLC v. Colo. Ground Water

Comm’n, 2018 CO 25, ¶ 15 (reviewing a trial court’s decision to

deny attorney fees). A court abuses its discretion when its decision

is manifestly arbitrary, unreasonable, or unfair or is based on a

misapplication of the law. Front Range, ¶ 15.

III. The Surofcheks’ Attorney Fees and Costs

¶ 11 The Tracys contend that the district court erred by awarding

the Surofcheks the attorney fees and costs they incurred on remand

attempting to collect the breach of settlement agreement judgment

because those fees and costs were not (1) recoverable under the

settlement agreement’s fee-shifting provision or (2) reasonable and

necessary. We reject these contentions.

5 A. Applicable Law

¶ 12 “In the absence of a specific statute, court rule, or contract

provision to the contrary, attorney fees are not recoverable by a

prevailing party in a contract or tort action.” Wheeler v. T.L.

Roofing, Inc., 74 P.3d 499, 503 (Colo. App. 2003). But a contract

may include a fee-shifting provision entitling a prevailing or

nonbreaching party to recover attorney fees and costs. Weinstein,

¶ 10. Even if such a provision directs the trial court to award fees

and costs to the prevailing or nonbreaching party, however, the

court must still determine whether the requested fees and costs

were reasonable and necessary. See E-470 Pub. Highway Auth. v.

Revenig, 140 P.3d 227, 230 (Colo. App. 2006) (“In Colorado, a

‘reasonably necessary’ consideration has been explicitly recognized

to be part of a cost-shifting assessment and implicitly recognized to

be part of an attorney fee-shifting assessment.”) (citation omitted);

see also Weinstein, ¶ 11.

B. Additional Background

¶ 13 The settlement agreement between the Surofcheks and the

Tracys includes the following fee-shifting provision: “Any

non-breaching [p]arty to this [a]greement shall be entitled to recover

6 from the breaching [p]arty all attorney’s fees and costs incurred as a

result of any breach of this [a]greement.” It is undisputed that the

Surofcheks prevailed on their counterclaim for breach of the

settlement agreement, making the Surofcheks the “non-breaching

[p]arty” and the Tracys the “breaching [p]arty.”

¶ 14 In their motion for attorney fees and costs, the Surofcheks

argued that the fee-shifting provision entitled them to recover all

their fees and costs “incurred to collect upon the contract breach.”

The Tracys opposed the motion, arguing that (1) the fee-shifting

provision did not entitle the Surofcheks to attorney fees and costs

for collection; (2) the Surofcheks already received attorney fees as

“damages” as part of the May 2022 judgment, which was

undisturbed by the appeal; (3) the doctrine of merger barred further

requests for fees and costs; and (4) any fees or costs incurred after

the appeal could only relate to the abuse of process counterclaim.

¶ 15 In granting the Surofcheks’ motion, the district court first

determined that the fee-shifting provision did not “limit the award of

fees to those fees and costs incurred prior to the entry of judgment.”

The court also determined that the Tracys had breached the

settlement agreement but had not yet paid the judgment and that

7 the Surofcheks “incurred additional attorneys’ fees and costs

seeking certification of the contract breach judgment, attempting to

collect the amounts owed for the contract breach, and discussing

settlement of the amounts owed for the contract breach.” The court

reasoned that “[n]ot awarding attorneys’ fees would allow the Tracys

as judgment debtors to dilute the initial award by drawing out

collection efforts.” The court indicated that it had reviewed the

relevant filings and exhibits, considered the parties’ arguments at

the hearing, and determined that the Surofcheks “only submitted

those fees and costs associated with the contract breach claim.” It

awarded the Surofcheks a total of $21,280.44 in attorney fees and

costs as requested.

C. The Fee-Shifting Provision Allows Recovery of Attorney Fees and Costs Incurred for Collection Efforts

¶ 16 The Tracys contend that the settlement agreement’s

fee-shifting provision is not a broad prevailing party provision

entitling the Surofcheks to recover attorney fees and costs incurred

in collecting the breach of settlement agreement judgment or in

securing an award of fees. Instead, they argue that the Surofcheks

already recovered attorney fees “in the form of damages” as part of

8 the May 2022 judgment and that any fees or costs incurred

postjudgment were not incurred “as a result of [the] breach.” For

four reasons, we are not persuaded.

1. “As a Result of” Broadly Allows Recovery of Attorney Fees and Costs Causally Connected to a Breach

¶ 17 First, we do not read the fee-shifting provision so narrowly. In

interpreting the provision de novo, Gattis, ¶ 35, we give words and

phrases their “plain and ordinary meaning” and interpret them “in a

‘common sense manner,’” Weinstein, ¶ 11 (citation omitted). The

provision plainly entitles a nonbreaching party to recover “all”

attorney fees and costs incurred “as a result of” any breach of the

agreement. “[A]s a result of” is broad; it means “because of

something.” Merriam-Webster Dictionary, https://perma.cc/K9DK-

JSJP; see Plemmons v. People, 2022 CO 45, ¶ 25 (When a term is

not defined by statute and does not have a technical or

particularized meaning, “we may consider a definition in a

recognized dictionary.” (quoting Cowen v. People, 2018 CO 96,

¶ 14)); see also Tidwell ex rel. Tidwell v. City & Cnty. of Denver, 83

P.3d 75, 86 (Colo. 2003) (broadly interpreting the similar phrase

9 “resulting from” to mean “as a consequence or effect of” something

else).

¶ 18 The phrase “as a result of” is a causal connector. Cf. Cyprus

Amax Mins. Co. v. Lexington Ins. Co., 74 P.3d 294, 306 (Colo. 2003)

(referring to “resulting from” as a “causal connector” between

conduct and loss); Lopez v. City of Grand Junction, 2018 COA 97,

¶ 20 (“‘Resulting from’ is construed broadly to require only a

‘minimal causal connection’ between the injuries and the specified

conduct.” (quoting Tidwell, 83 P.3d at 86)). So long as there is a

minimal causal nexus between the attorney fees and costs claimed

and the breach, the fees and costs are recoverable. See Cyprus

Amax Mins. Co., 74 P.3d at 306; Lopez, ¶ 20. And the fee-shifting

provision entitles the nonbreaching party to “all” such fees and

costs. Thus, we conclude that, under the provision’s broad

language, attorney fees and costs incurred to collect the judgment

for breach of the settlement agreement are incurred “as a result of”

that breach.

¶ 19 We are not persuaded otherwise by the Tracys’ argument that

some of the attorney fees and costs claimed by the Surofcheks were

caused in part by the abuse of process counterclaim. The Tracys

10 argue, for example, that the Surofcheks would not have tried to

certify the breach of settlement agreement judgment as final under

C.R.C.P. 54(b) if the abuse of process counterclaim had not been

pending on remand. According to the Tracys, the fees and costs

associated with that effort were actually incurred “as a result of” the

abuse of process claim and are not awardable under the fee-shifting

provision. But Colorado law recognizes and tolerates the fact that a

particular result may have multiple contributing causes. See, e.g.,

Vititoe v. Rocky Mountain Pavement Maint., Inc., 2015 COA 82,

¶¶ 39-41 (recognizing that causation in fact may be established

even when multiple causes contributed to an injury so long as the

defendant’s conduct was a “substantial factor” and “a cause without

which the injury would not have occurred” (first quoting Rupert v.

Clayton Brokerage Co. of St. Louis, 737 P.2d 1106, 1112 (Colo.

1987); and then quoting Reigel v. SavaSeniorCare L.L.C., 292 P.3d

977, 985 (Colo. App. 2011))). We see no reason to subject the broad

language in the fee-shifting provision to a more rigid standard.

¶ 20 We are also not persuaded by the Tracys’ reliance on Laleh v.

Johnson, 2016 COA 4 (Laleh I), aff’d on other grounds, 2017 CO 93

(Laleh II), to argue that the provision must explicitly provide for the

11 recovery of collection fees and costs. In Laleh I, ¶¶ 23-25, a division

of this court disapproved of an order requiring the parties to pay

costs incurred by a court-appointed expert in collecting the fees he

was owed under his engagement agreement. The provision of the

agreement the division analyzed made the parties “jointly and

severally liable for the timely and complete payment of all fees and

expenses.” Id. at ¶ 23. The division reasoned that “[n]othing in the

relevant language of the contract explicitly mentions collection

costs.” Id. at ¶ 25.

¶ 21 But the relevant provision in the settlement agreement is not a

simple fee payment provision like the one analyzed in Laleh I.

Instead, it is a fee-shifting provision like the one the supreme court

focused on in Laleh II: “The prevailing party in any dispute [between

the expert and the parties] is entitled to an award of reasonable

attorney fees, costs and expenses.” Laleh II, ¶ 27 (alteration

omitted). Based on this separate provision, the supreme court

concluded that the expert was entitled to recover collection costs.

Id. at ¶ 31. Like the provision in Laleh II, the fee-shifting provision

here entitles the Surofcheks to recover attorney fees and costs

incurred in collecting the breach of settlement agreement judgment.

12 2. The Fee-Shifting Provision is a Prevailing Party Provision

¶ 22 Second, we disagree with the Tracys that the fee-shifting

provision does not constitute a “prevailing party” provision.

“Fee-shifting provisions are expressly designed to reject the

otherwise applicable rule that the losing party does not have to pay

the winner’s attorney fees.” Wheeler, 74 P.3d at 503. This purpose

does not change when a fee-shifting provision uses the term “non-

breaching party” rather than “prevailing party” because the

provision still shifts the risk of incurring fees to the losing

(breaching) party. See id.; see also Morris v. Belfor USA Grp., Inc.,

201 P.3d 1253, 1260 (Colo. App. 2008) (“No ‘formulaic language’ is

required to constitute a valid fee-shifting provision, so long as the

provision ‘clearly informs the parties that a breach . . . may result

in an award of attorney fees.’”) (citation omitted).

¶ 23 Here, the jury determined that the Tracys breached the

settlement agreement, so the Tracys were the “breaching

party”/losing party, and the Surofcheks were the “non-breaching

party”/prevailing party entitled to recover their attorney fees and

costs.

13 3. The Fee-Shifting Provision Allows Recovery of Attorney Fees Categorized as “Costs”

¶ 24 Third, we reject the Tracys’ argument, as best we understand

it, that the fee-shifting provision does not allow the Surofcheks to

recover attorney fees incurred after the May 2022 judgment

because the provision only entitles them to recover attorney fees

that are categorized as “damages,” not those that are categorized as

“costs,” and they already recovered attorney fees as part of the

judgment.

¶ 25 Attorney fees are considered damages if they are “part of the

substance of a lawsuit, that is, the legitimate consequences of

the . . . breach of contract sued upon.” Chartier v. Weinland Homes,

Inc., 25 P.3d 1279, 1281 (Colo. App. 2001). This category of

attorney fees is decided by the trier of fact at the damages stage of

the proceedings. Id. A contractual fee-shifting provision is not

necessary for a party to recover attorney fees as damages. See

L.H.M. Corp., TCD v. Martinez, 2021 CO 78, ¶ 26 (discussing “the

wrong-of-another doctrine” that entitles a plaintiff to recover

attorney fees incurred in a separate litigation against a third party

as an appropriate measure of compensatory damages).

14 ¶ 26 On the other hand, “if attorney fees are simply the

consequence of a contractual agreement to shift fees to a prevailing

party, they are to be treated as costs.” Chartier, 25 P.3d at 1281.

This category of damages may be awarded by the trial court after

the entry of judgment on the merits. See id.; C.R.C.P. 121,

§ 1-22(2)(a). A contractual fee-shifting provision is necessary for a

party to recover attorney fees as costs. See Wheeler, 74 P.3d at

503; Weinstein, ¶ 10.

¶ 27 The fee-shifting provision here does not limit recoverable

attorney fees to those categorized as damages and awarded as part

of the merits judgment. No contract provision would be required for

the Surofcheks to recover that category of attorney fees. Instead,

because the attorney fees at issue here are recoverable as a

consequence of the fee-shifting provision, they are appropriately

treated and awarded as costs.

¶ 28 The parties seem to agree that the district court awarded the

Surofcheks some attorney fees as part of the merits judgment

entered on the breach of settlement agreement counterclaim. We

are not able to determine based on the record before us what fees

were awarded then or why. But to the extent those fees were

15 appropriately categorized as damages, they were recoverable by the

Surofcheks without regard to the fee-shifting provision. To the

extent those fees were more appropriately categorized as costs, they

were recoverable by the Surofcheks under the fee-shifting provision,

regardless of whether the court chose to liquidate and award them

as part of the original merits judgment or to defer their

consideration until after judgment entered. See Chartier, 25 P.3d at

1281. Moreover, that some attorney fees may have already been

awarded does not prevent the Surofcheks from applying for an

additional, nonduplicative fee award.

4. The District Court Exercised Discretion in Awarding Attorney Fees and Costs under the Fee-Shifting Provision

¶ 29 Fourth, we are not persuaded by the Tracys’ argument that

the district court erred because it believed it had no discretion to

deny the requested attorney fees and costs given the mandatory

language of the fee-shifting provision. The Tracys rely on Grynberg

v. Agri Tech, Inc., 985 P.2d 59, 64-65 (Colo. App. 1999), aff’d on

other grounds, 10 P.3d 1267 (Colo. 2000), to argue that the phrase

“shall be entitled” is permissive and vests the court with discretion

to award fees and costs. We are not required to follow Grynberg,

16 see Chavez v. Chavez, 2020 COA 70, ¶ 13 (one division of the court

of appeals is not bound by another), and we find Brock v. Weidner,

93 P.3d 576, 580 (Colo. App. 2004), more persuasive. Brock

declined to follow Grynberg, reasoning that a provision containing

both “entitled” and “shall be” is “more properly construed as

requiring the trial court to award attorney fees to the prevailing

party.” Brock, 93 P.3d at 580.

¶ 30 Even so, nothing in the record suggests that the district court

believed it lacked discretion to deny the Surofcheks’ request for

attorney fees and costs. Instead, the record reflects that the court

exercised its discretion to award fees and costs because the Tracys

“refused to pay the judgment and forced additional litigation” and

should not be allowed to “dilute” the judgment.

¶ 31 Accordingly, we perceive no error in the district court’s

determination that the fee-shifting provision in the settlement

agreement entitled the Surofcheks to recover additional attorney

fees and costs incurred in connection with postjudgment efforts to

collect the breach of settlement agreement judgment. See Gattis,

¶ 35; Front Range, ¶ 15.

17 D. The Attorney Fees and Costs Were Reasonable and Necessary

¶ 32 The Tracys next contend that the attorney fees and costs the

district court awarded were not reasonable or necessary because

the Surofcheks were not entitled to collect on the breach of

settlement agreement judgment while the abuse of process

counterclaim remained pending. Relatedly, the Tracys appear to

argue that any fees and costs incurred post-remand were

necessarily related to the abuse of process counterclaim. The

Tracys do not dispute the “reasonableness of the amount of fees or

costs awarded” but only “whether [the fees and costs] were

reasonably and necessarily incurred in litigating” the Surofcheks’

breach of settlement agreement counterclaim.

¶ 33 After reviewing the exhibits and conducting a hearing, the

district court determined that all the claimed fees were “incurred as

a result of” the Tracys’ breach of the settlement agreement. We

perceive no abuse of discretion.

¶ 34 To be sure, although the Tracys seek to characterize the

claimed attorney fees and costs as relating to improper efforts to

collect on a nonfinal judgment, the district court did not award fees

or costs for traditional execution or enforcement efforts — for

18 example, issuing debtor interrogatories and conducting a debtor

deposition under C.R.C.P. 69, preparing writs of execution and

garnishment, or recording a transcript of judgment and seeking to

foreclose on the Tracys’ assets. Instead, as reflected in the exhibits

the Surofcheks filed in support of their motion, the court awarded

fees and costs incurred in connection with (1) efforts to secure a

final judgment on the breach of settlement agreement counterclaim,

including seeking C.R.C.P. 54(b) certification; (2) attempts to reach

a global settlement; and (3) the underlying fee request. We disagree

with the Tracys that these categories of fees and costs should have

been denied.

¶ 35 First, the Surofcheks’ efforts to secure a final judgment on

their breach of settlement agreement counterclaim so that they

could collect on it were efforts undertaken “as a result of” the

breach. The Surofcheks had a final, collectable judgment on their

counterclaims until Surofchek I unwound part of that judgment.

Because the abuse of process counterclaim remained pending on

remand, the Surofcheks no longer had a final judgment on which to

execute. See L.H.M., ¶ 14 (“[A]s a general rule, a judgment is final

and therefore appealable if it disposes of the entire litigation on its

19 merits, leaving nothing for the court to do but execute the

judgment.”) (citation omitted). To try to begin collecting on the

portion of the judgment that remained undisturbed after the

appeal, the Surofcheks filed a C.R.C.P. 54(b) motion asking the

district court to certify the breach of settlement agreement

judgment as final. See Musick v. Woznicki, 136 P.3d 244, 250 (Colo.

2006) (a correct C.R.C.P. 54(b) certification is required for a

litigation involving multiple claims in a single action to be

considered final and appealable).

¶ 36 Frankly, we do not understand why the court denied the Rule

54(b) motion; the only rationale it articulated was that there was

“no ‘final judgment’ in this case.” But the lack of a final judgment

was exactly why the Surofcheks sought to obtain Rule 54(b)

certification. Under these circumstances, the court acted within its

discretion in recognizing that the Surofcheks’ attempt to certify the

judgment as final was a legitimate strategy, even if it was

unsuccessful.3 See Hartman v. Cmty. Resp. Ctr., Inc., 87 P.3d 254,

3 We note that the judge who awarded the Surofcheks their attorney

fees and costs was a different judge than the one that denied their C.R.C.P. 54(b) motion.

20 257 (Colo. App. 2004) (“The determination of the reasonableness of

attorney fees is a question of fact for the trial court and will not be

disturbed on appeal unless patently erroneous and unsupported by

the evidence.” (quoting Porter v. Castle Rock Ford Lincoln Mercury,

Inc., 895 P.2d 1146, 1150 (Colo. App. 1995))); cf. Payan v. Nash

Finch Co., 2012 COA 135M, ¶ 34 (recognizing circumstances under

which attorney fees may be awarded for unsuccessful claims). The

Tracys provide no controlling authority to support their assertion

that a court cannot award fees for an unsuccessful motion.

¶ 37 Second, we acknowledge that the Surofcheks’ efforts to secure

a global settlement necessarily included the abuse of process

counterclaim and that attorney fees incurred in connection with

that counterclaim are not covered by the settlement agreement’s

fee-shifting provision. However, once the Surofcheks’ efforts to

secure Rule 54(b) certification failed, they had to resolve both

counterclaims to obtain a final judgment on which to collect. A

global settlement is one way to achieve that end. And the

settlement efforts included offers to compromise claims for attorney

fees and costs that the Surofcheks otherwise would have been

entitled to in connection with the breach of settlement agreement

21 counterclaim (presumably including the claim the Surofcheks

pursued that is the subject of this appeal). Thus, the district

court’s decision to award attorney fees related to these settlement

efforts was not manifestly arbitrary, unreasonable, or unfair. See

Front Range, ¶ 15.

¶ 38 Third, although we did not locate published Colorado caselaw

approving of an award of fees on fees under a contractual fee-

shifting provision, courts in Colorado “have upheld awards of ‘fees-

on-fees’” under statutory fee-shifting provisions “based on the

compensatory purpose of fee-shifting.” Stresscon Corp. v. Travelers

Prop. Cas. Co. of Am., 2013 COA 131, ¶ 122, rev’d on other grounds,

2016 CO 22M; see also Mau v. E.P.H. Corp., 638 P.2d 777, 778-81

(Colo. 1981) (upholding an award of fees on fees under section 38-

12-103(3)(a), C.R.S. 1981). We see no reason to treat an award of

fees on fees under a contractual fee-shifting provision differently

than those awarded under a statutory fee-shifting provision.

¶ 39 Notably, as to the “fees on fees” issue, the Tracys do not argue

that the difference between a statutory and a contractual fee-

shifting provision matters; they argue only that the Surofcheks were

not entitled to any post-appeal fees and that the fees were not

22 reasonably or necessarily incurred. We have already rejected those

arguments. Thus, we conclude the district court did not abuse its

discretion by awarding the Surofcheks attorney fees incurred in

preparing and submitting their motion for fees and costs. See Front

Range, ¶ 15.

¶ 40 Finally, the Tracys take issue with certain line items in the

Surofcheks’ billing exhibit, which they assert relate only to the

abuse of process counterclaim — specifically, fees for litigating the

Tracys’ bill of costs on appeal, opposing the release of the Tracys’

letters of credit, and communicating with the Surofcheks. But the

line items to which the Tracys point also include efforts to collect on

the breach of settlement agreement judgment, for which attorney

fees were appropriately awarded under the fee-shifting provision.

The Tracys also argue that block billing makes it difficult to

ascertain what fees relate to what work, but block billing is not

prohibited, and the court can make reductions based on block

billing if it cannot “determine whether the amount of time spent on

various tasks was reasonable.” Payan, ¶ 29. The district court

here chose not to make such a reduction. And the Tracys have not

carried their burden to demonstrate that the court acted manifestly

23 arbitrarily, unreasonably, or unfairly in determining that these

amounts, too, were incurred “as a result of” the Tracys’ breach of

the settlement agreement. See Weinstein, ¶ 8; Front Range, ¶ 15.

IV. The Tracys’ Motion for Attorney Fees

¶ 41 The Tracys contend that the district court erred by denying

their motion for attorney fees under section 13-17-102 because the

court failed (1) to make sufficient findings for review on appeal and

(2) to consider evidence in the record that the Surofcheks’ abuse of

process counterclaim was groundless as a matter of law.4 We reject

both contentions.

A. Applicable Law

¶ 42 Under section 13-17-102(4), a court “shall assess attorney

fees” against a party who brought an action “that lacked substantial

justification.” An action “[l]ack[s] substantial justification” when it

is “substantially frivolous, substantially groundless, or substantially

4 The Tracys’ original motion for attorney fees argued that the

Surofcheks’ abuse of process counterclaim was “substantially frivolous, groundless, and vexatious,” but on appeal, they contend only that the counterclaim was “groundless as a matter of law,” so we consider the other grounds abandoned. See Armed Forces Bank, N.A. v. Hicks, 2014 COA 74, ¶ 38 (arguments raised in the trial court and not pursued on appeal are deemed abandoned).

24 vexatious.” § 13-17-102(9)(a). “A claim is groundless ‘if the

allegations in the complaint, while sufficient to survive a motion to

dismiss for failure to state a claim, are not supported by any

credible evidence at trial.’” Hamon Contractors, Inc. v. Carter &

Burgess, Inc., 229 P.3d 282, 300 (Colo. App. 2009) (quoting W.

United Realty, Inc. v. Isaacs, 679 P.2d 1063, 1069 (Colo. 1984)).

The trial court is in the best position to determine whether an

action satisfies these standards because “[w]hether a claim lacked

substantial justification is a question of fact for the trial court.”

Argo v. Hemphill, 2022 COA 104, ¶ 51 (quoting Mitchell v. Ryder,

104 P.3d 316, 320 (Colo. App. 2004)).

B. The District Court Made Sufficient Findings

¶ 43 The Tracys contend that the district court failed to make

sufficient findings for meaningful appellate review. We disagree.

¶ 44 Under section 13-17-103(1), C.R.S. 2024, a court must make

“specific factual findings” regarding the enumerated factors “only

when granting an award of fees, not when denying an award.”

Munoz v. Measner, 247 P.3d 1031, 1032 (Colo. 2011). “[W]hen

denying attorney fees, the trial court must make sufficient findings

such that adequate appellate review can be exercised.” Id.

25 ¶ 45 The Tracys requested attorney fees related to the Surofcheks’

pursuit of their abuse of process counterclaim after that portion of

the original judgment was reversed. They argued that, after the

appeal, the Surofcheks “were absolutely on notice that their claim

was not actionable.”

¶ 46 In denying the Tracys’ motion, the court first recounted that,

in the first trial, the Surofcheks had prevailed on their abuse of

process counterclaim and were awarded almost $1 million in

damages by the jury before a division of this court reversed. Next, it

set forth the standard for determining whether a claim is

groundless. It then explained that “[t]he appellate opinion

addressed” the issue of whether the Surofcheks’ counterclaim

lacked substantial justification “to some degree.” The court noted

that the division did not decide whether the Surofcheks presented

sufficient evidence to support their abuse of process

counterclaim — that remained “an open question.” The court also

noted that the division declined to speculate on whether the jury

would have found for the Surofcheks had it been properly

instructed. Finally, it concluded that the Tracys had not met their

26 burden to prove that the abuse of process counterclaim was

groundless.

¶ 47 The Tracys argue that the district court’s “sole articulated

basis” for denying their motion for attorney fees was Surofchek I’s

“dictum” declining to speculate on whether a properly instructed

jury would have found in favor of the Surofcheks on the abuse of

process claim. But given the district court’s consideration of the

Surofcheks’ success in the first trial, the procedural history of the

case, and the Surofchek I division’s opinion, we understand it to

have denied the Tracys’ motion because it did not know what

evidence the Surofcheks would present at a second trial or whether

a jury, guided by the legal standards articulated in Surofchek I,

would enter a verdict in the Surofcheks’ favor. In other words, the

court could not say that the Surofcheks’ abuse of process

counterclaim was “not supported by any credible evidence at trial.”

Hamon Contractors, 229 P.3d at 300 (emphasis added) (citation

omitted). Because we can discern the basis for the court’s decision,

we conclude that the court made sufficient findings to allow for

meaningful appellate review. See Munoz, 247 P.3d at 1032.

27 C. The District Court Did Not Fail to Consider the Evidence

¶ 48 The Tracys contend that the district court failed to review the

evidence in the record establishing that the Surofcheks’ abuse of

process counterclaim was groundless as a matter of law. They

argue that they presented “ample evidence” from the first trial for

the court to make the determination without speculating on what a

properly instructed second jury would do. We are not persuaded.

¶ 49 The Tracys focus on the “improper use” element of the abuse

of process claim, arguing that merely bringing a baseless, meritless,

or unfounded lawsuit by itself cannot satisfy that element. See

Parks v. Edward Dale Parrish LLC, 2019 COA 19, ¶ 13; see also

Surofchek I, No. 22CA0910, slip op. at ¶ 29. They argue that “there

was absolutely no evidence at trial of any improper use of process

by [the Tracys] in prosecuting their claims.” Even if that were true,

the Surofcheks were not bound to present the exact same evidence

in a second trial. Under these circumstances, we perceive no abuse

of discretion by the district court in declining to conclude that the

Surofcheks’ claim would not have been supported by credible

evidence at the second trial. See Weinstein, ¶ 8; Front Range, ¶ 15.

28 V. Disposition

¶ 50 We affirm the district court’s orders (1) granting the

Surofcheks’ motion for attorney fees and costs and (2) denying the

Tracys’ motion for attorney fees.

JUDGE DUNN and JUDGE SCHOCK concur.