The "finality" of an Order When a Request for Attorney Fees Remains Outstanding
| Publication year | 2014 |
| Pages | 41 |
The Civil Litigator
The "Finality" of an Order When a Request for Attorney Fees Remains Outstanding
By John A. Criswell.
The Civil Litigator articles address issues of importance and interest to litigators and trial lawyers practicing in Colorado courts. The Civil Litigator is published six times a year.
Coordinating Editor
Timothy Reynolds, Boulder, of Bryan Cave HRO—(303) 417-8510, timothy.reynolds@bryancave.com
If a trial court enters an order resolving all substantive issues but leaves the request for attorney fees unresolved, a serious question of whether the order is "final" is presented.
Generally, an appeal by right to a Colorado appellate court will lie only from a final judgment of the district court.[1] For this purpose, a final judgment has been considered to be an order that disposes of the entire litigation, leaving nothing for the trial court to do but execute the judgment.[2] However, an order may be considered to be a final judgment and, therefore, immediately subject to the appeal procedures, if the order disposes of all substantive issues, leaving only the issue of costs to be decided.[3] Indeed, it has been said that no issue remaining to be decided after the entry of an order ending the litigation on its merits will prevent that order from being considered a final judgment, if resolution of that remaining issue "will not change or moot the determination contained in the order disposing of the merits of the controversy."[4]
This latter concept is important because once an order becomes a "final judgment," the time begins to run for the filing of a notice of appeal with the appellate court. If such a notice is not filed "within 45 days of the date of the entry of the judgment, decree or order from which the party appeals," as required by CAR4(a)(1), the appeal must be dismissed.[5] Although CAR4(a) authorizes the appellate court to extend the time for the filing of the notice for an additional thirty days on a showing of "excusable neglect," negligence of counsel is generally not considered to be such.[6]
Therefore, if the trial court enters its order disposing of all the substantive claims and defenses but there remains an issue yet to be determined, whether the court's order constitutes a final judgment depends on the nature of that outstanding issue. In many instances, the remaining issue relates to a request for the award of attorney fees for services rendered during the course of that litigation. This question can be considered only after the substantive issues are resolved, because the right to the recovery of such fees may depend on the resolution of the substantive issues and because the amount of the fees cannot be known until the litigation is completed.[7]
In the federal courts, the existence of an issue of an award of attorney fees for services attributable to the litigation in which they are sought, irrespective of the nature of those fees, will not prevent the preceding substantive order from being a final judgment.[8] Initially, the Colorado Supreme Court also adopted that same rule.[9]
Later, however, the Colorado court seemingly retreated from this clear, uniform rule and suggested that, whether a remaining issue of attorney fees will prevent a prior award on the merits from being a final judgment depends on the nature of the fees requested.[10] This approach would mean that, in each case, the particular statute or contract provision that provides for an award of fees must be examined and some conclusion reached as to how the pertinent statutory or contract provision characterizes those fees. Given the number of Colorado statutes providing for such an award and the differing approaches taken by the Colorado appellate courts resolving this question, there are today many instances in which, at the time the trial court enters an order disposing of all substantive issues, counsel cannot be assured whether that order constitutes a final judgment requiring rather immediate action to invoke the jurisdiction of the appellate court.
This article reviews the jurisprudential history of final judgments for appellate purposes and analyzes the present state of that jurisprudence. It then suggests that a return to the uniform rule initially adopted by the Colorado Supreme Court would help remove confusion and provide certainty for both counsel and the courts.
The Bases for Fee Awards
Under the so-called "American Rule," attorney fees are generally not awarded to a prevailing party.[11] Nevertheless, there are certain circumstances under which an award of fees is either authorized or required.
The most common exception to this rule is where there is a fee-shifting provision in a contract[12] or applicable statute. In Colorado there are numerous statutes providing for the award of attorney fees to the prevailing party.[13]
In addition, Colorado courts have authorized the award of attorney fees as a matter of the common law in several instances. These include where the successful claim is based on a breach of fiduciary duties,[14] in an action by a public official against another government agency to determine the powers of his or her office,[15] or where the action has resulted in a common fund that benefits other parties, as well.[16]
While the bases for the award of fees in each of these instances may differ, they share a significant common characteristic. Each award is dependent on the outcome of the litigation; it is only after there has been a determination of the substantive claims that the issue of the entitlement to fees may be resolved. Further, because the fees to be awarded are based on services rendered in the litigation in which the award is to be made, there can be no determination of the amount of fees due until all such services, including those performed on a post-trial basis, have been completed. Hence, it has been said that:
Whether [an award] of attorney fees is authorized by statute or by contract, if the award is dependent upon the achievement of a successful result in the litigation in which they are to be awarded and the fees are for services rendered in connection with that litigation, a determination of the propriety of an award of fees need not be made until that litigation is completed and the result is known. Indeed, until the litigation is completed, it may be impracticable to calculate the proper amount of fees to be awarded, either because the extent of the remaining services to be rendered cannot be ascertained until the dispute is settled or because the result achieved may, itself, impact upon the proper amount of fees to be awarded.[17]
This means that such a "fee-shifting" award will necessarily be made after the order disposing of all of the substantive issues is entered.
There is, however, another category of attorney fees that generally differs from those that are designed to compensate for services rendered in the instant litigation. These are fees that have been expended because "the natural and probable consequence of a wrongful act has been to involve plaintiff in litigation with others."[18] Accordingly, fees expended in that other litigation have been recognized as a proper item of damages to be awarded in later litigation against the wrongdoer.[19] The procedure for the award of such fees differs considerably from the procedure for the award of fees attributable to the litigation in which they are to be awarded.
Fees under a fee-shifting contract or statutory provision are generally considered to be a type of "cost," so that they are assessed by the court on a post-trial basis.[20] In contrast, fees incurred in other proceedings that are sought to be recovered in later litigation are looked on as "damages." Hence, evidence respecting these fees must be presented during the course of the trial, and it is the fact-finder who includes them as a part of the verdict.[21] Generally, fees incurred in the action to recover this type of damages are not themselves recoverable; they fall under the general American Rule.[22]
There are occasions, however, in which the underlying claim is combined in the same litigation with the claim against the wrongdoer to recover the fees and costs incurred in prosecuting that underlying claim. An example is where a claim for a contract breach is joined with a claim against a third party for its intentional interference with that contract.[23] In such cases, because the fees incurred in prosecuting or defending the underlying claim are recoverable, and the fees incurred in seeking the recovery of those fees are not, any award must apportion the fees to be awarded. In these instances, however, because the fees are for services rendered in the instant litigation, the procedure is the same as the procedure for an award based on a fee-shifting provision. In both instances, the award must await the final determination of the substantive claims and defenses.
Therefore, irrespective of the purpose of the award, whether the award is simply a fee-shifting device or is compensation for damages for a wrongful act, as long as the award is for services rendered in the litigation in which the award is to be made, determination of the issue of fees must await the full disposition of the substantive issues. The nature of the fees to be awarded does not, in these instances, change the procedure for their award.
The Federal Rule
Nationally, the pivotal case on whether an unresolved issue of attorney fees prevents an otherwise final order from being considered a final judgment is Budinich v. Becton Dickinson and Company.[24] Before Budinich, the federal circuits had issued a series of conflicting decisions as to when an award on the merits of a claim becomes final judgment, if a request for attorney fees is...
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