1972, June, Pg. 19. Recovery of Attorneys' Fees in a Civil Case: A Proposed Colorado Statute.

• Author: by A. Thomas Elliott, Jr.

1 Colo.Law. 19

Colorado Lawyer

1972.

1972, June, Pg. 19.

Recovery of Attorneys' Fees in a Civil Case: A Proposed Colorado Statute

19Vol. 1, No. 8, Pg. 19

Recovery of Attorneys' Fees in a Civil Case: A Proposed Colorado Statuteby A. Thomas Elliott, Jr.A. Thomas Elliott, Jr., Denver, is an associate with the firm of Hodges, Harrington, Kerwin & Otten. Mr. Elliott is a member of the Colorado Bar Association Committee on Availability of Legal Services to the Poor and to People of Moderate Means.The Colorado Bar Association Committee on Availability of Legal Services to the Poor and to People of Moderate Means has been attempting to determine whether the Colorado General Assembly should be asked to enact a statute by which the successful party in a civil action will be able to recover his attorney's fees as an item of damages or costs. This article represents the struggle of one member of the Committee with this perplexing problem.

Present Status of Colorado LawThe general rule in this country and in Colorado is that, in the absence of a statute or contract to the contrary, a court may not award attorneys' fees to the successful party at trial.(fn1) Most European countries have some Variation of an opposite rule. Early colonial America appears to have followed the English rule under which the prevailing party recovered his lawyer's fees. In the colonies, however, the amount of such fees was fixed by statute and the amounts were not increased to compensate for the decline in the value of money. Further, the states which later joined the Union generally did not authorize the recovery of counsel fees. Therefore, the American tradition became that attorneys' fees generally were not recoverable, and where allowed were very nominal.

The usual reason given for the American refusal to permit an award of attorneys' fees is the belief that free access to the courts for resolving disputes should be encouraged. Under this view, the possibility that a successful party might recover his counsel fees would deter the right to litigate arguable claims or defenses.

The courts have recognized exceptions to this general rule. For example, recovery may usually be had in a separate lawsuit against a person who by his wrongful conduct (be it tort or breach of contract) has caused the plaintiff to defend or prosecute previous legal proceedings.(fn2) Further, it is well recognized that one who successfully sues to benefit a common fund, either by protecting or increasing it, can recover his attorneys' fees from the fund.(fn3) Examples are creditors' and stockholders' suits, suits for the protection of a trust fund or estate, and similar actions

20where a party has created, preserved, protected or increased a fund which others may share with him. In some jurisdictions, the counsel fees of the successful litigant in a suit in which exemplary damages are recoverable may be included in those damages.(fn4)Colorado StatutesMost states provide further exceptions to the above general rule by statute.(fn5) Such statutes are enacted to achieve a variety of social policies including, but not limited to, the desire to equalize perceived disparities in bargaining and financial power between individuals and large institutions, to encourage private litigation of claims the assertion of which gives effect to some general social policy, to increase the remedy for and thereby deter certain wrongs which are viewed with particular legislative distaste, and to protect rights viewed as peculiarly valuable in the particular jurisdiction.

There are a substantial number of these statutory exceptions to the general rule in Colorado. Appendix A to this article lists and briefly describes Colorado statutes allowing an award of attorneys' fees. The list is the product of a page-by-page review of the Colorado Revised Statutes of 1963, as amended through the 1971 Session Laws.

Generally, the Colorado approach to the question of indemnity for attorneys' fees has been piecemeal, unsystematic, and disorganized. Recovery of attorneys fees is allowed in certain situations which seem to be logically indistinct from other situations in which such recovery is not authorized. Frequently, the Statutes allow "the prevailing party" to recover his fees. However, often it is only one party who may receive indemnification for his counsel fees. Sometimes, a statute states that such fees "shall" be awarded, but just as frequently, it is provided that the court has discretion in the matter. Some of the statutes limit the amount of the attorneys' fee which is recoverable. Obviously, some logical and systematic statutory approach to the problem is needed in Colorado.

Federal LawAn exhaustive discussion of federal law on the allowance of attorneys' fees is beyond the scope of this article and the energies of its author. However, it should be noted that there are a number of federal statutes allowing an award of attorneys' fees to be made.(fn6) Further, certain of these statutes may provide the substantive basis for a Colorado state court suit.(fn7) Other federal statutes are part of legislation creating rights of action over which the federal courts have exclusive jurisdiction.(fn8)

Beyond such statutory authority, it has been held that federal courts have general authority to award attorneys' fees to the prevailing party where an action or defense has been maintained in bad faith, vexatiously, wantonly, or for oppressive reasons.(fn9) This authority is bottomed on the historic equity jurisdiction of the federal courts to award counsel fees to the prevailing party "in exceptional cases and for dominating reasons of justice."

Colorado Rules of Civil ProcedureThe Colorado Supreme Court has provided at several points in the Colorado Rules of Civil Procedure for an award of attorneys' fees to one party or the other. In general, the policy seems to have been a desire to punish negligent or intentional misconduct in the course of litigation. For example, Rule 3(a) provides in part:

"The complaint must be filed within ten days after the summons is served, or the action may be dismissed without notice, and in such case, the court may, in its discretion, if it shall be of the opinion that the action was vexatiously commenced, tax a reasonable attorney's fee as costs, in favor of the defendant, to be recovered of the plaintiff or his attorney."Rule 30(g) provides that if the party giving notice that an oral deposition is to be taken either fails to attend the deposition and conduct it or, where a witness' deposition is to be taken, fails to serve a subpoena upon the witness resulting in his

21nonattendance, and another party attends personally or by an attorney pursuant to the notice, "the Court may order the party giving the notice to pay to such other party the amount of the reasonable expenses incurred by him and his attorney in so attending, including reasonable attorney's fees."Rule 37(a)(4) provides for an award of expenses in connection with a motion for order compelling discovery. Depending upon whether the motion was granted or denied, the Rule states that "the Court shall after opportunity for hearing" require "the party or deponent whose conduct necessitated the motion or the party or attorney advising such conduct or both of them" (where the motion is granted) or "the moving party or the attorney advising the motion or both of them" (where the motion is denied) "to pay . . . the reasonable expenses" of the other in connection with the motion "including reasonable attorneys' fees unless the court finds that opposition to the motion" (motion granted) or "the making of the motion" (motion denied) " was substantially justified or that other circumstances make an award of expenses unjust." The subsection further states that "[i]f the motion is granted in part and denied in part, the court may apportion the reasonable expenses incurred in relation to the motion among the parties and persons in a just manner." (Emphasis supplied throughout.)

Rule 37(a)(4) is interesting for several reasons. It is mandatory in its direction to the court that the question of assessment of reasonable expenses including attorneys' fees be considered. Further, the court must consider the reasonableness of the losing party's conduct in either making or opposing the motion. And finally, the court is given discretion on the question of expenses to avert injustice or where neither party clearly prevails.

Rule 37(c) deals with the subject of expenses on failure to admit the genuineness of any documents or the truth of any matter pursuant to a request for admissions under Rule 36. The party requesting an admission which another party fails to admit may apply to the court for an award of expenses, "including reasonable attorney' fees," in having successfully proved the matter as to which an admission was sought. The court is required to make the award unless it finds that:

"(1) The request is held objectionable pursuant to Rule 36(a); or (2) The admission sought was of no substantial importance; or (3) The party failing to admit had reasonable ground to believe that he might prevail on the matter; or (4) There was other good reason for the failure to admit."Subsection (g) of Rule 56 on summary judgments requires the court to order a party presenting affidavits pursuant to the Rule "in bad faith or solely for the purpose of delay" to pay the other party "the amount of the reasonable expenses which the filing of the...