Chapter 19 - § 19.1 • CIRCUMSTANCES JUSTIFYING AWARD OF ATTORNEY FEES

• Jurisdiction: Colorado

§ 19.1 • CIRCUMSTANCES JUSTIFYING AWARD OF ATTORNEY FEES

There are five exceptions to the American Rule potentially applicable to product liability actions: (1) attorney fees for the prevailing defendant on a motion to dismiss, (2) attorney fees to the prevailing plaintiff under a Colorado Consumer Protection Act claim, (3) attorney fees under a contractual provision, (4) attorney fees for actions or defenses that lack substantial justification, and (5) attorney fees for conduct during litigation. Each exception is addressed in turn below.

§ 19.1.1—Prevailing Defendant Attorney Fees On Motion To Dismiss

Unlike many states, Colorado has a statutory award of attorney fees for defendants who prevail on a motion to dismiss under Rule 12(b).² This statute is largely self-explanatory. It states:

In all actions brought as a result of a death or an injury to person or property occasioned by the tort of any other person, where any such action is dismissed on motion of the defendant prior to trial under rule 12(b) of the Colorado rules of civil procedure, such defendant shall have judgment for his reasonable attorney fees in defending the action. This section shall not apply if a motion under rule 12(b) of the Colorado rules of civil procedure is treated as a motion for summary judgment and disposed of as provided in rule 56 of the Colorado rules of civil procedure.³

This statute applies to federal diversity actions, despite the reference to the Colorado Rules of Civil Procedure.⁴ As explicitly stated in the statute, the fees awarded must be reasonable, and are not awardable if the motion to dismiss is converted by the court into a summary judgment motion.⁵

An attorney fees award under this statute is mandatory.⁶ The award applies to a defendant who obtains dismissal under Rule 12(b), even if the plaintiff still has remaining claims pending as to other defendants in the case.⁷ However, an attorney fees award is not appropriate if a defendant obtains dismissal of some, but not all, of a plaintiff's tort claims.⁸

Practice Pointer
Unlike many states, a defendant in a tort action is automatically entitled to an attorney fees award if it prevails on a motion to dismiss all of the plaintiff's claims against it.

§ 19.1.2—Attorney Fees For Prevailing Plaintiff In CCPA Action

If the plaintiff prevails on a CCPA claim, he or she is entitled to recover his or her attorney fees.⁹ The fees awarded must be reasonable.¹⁰ Attorney fees are not awardable, however, in a class action under the CCPA.¹¹

§ 19.1.3—Attorney Fees In Contract

In cases in which one commercial entity sues another commercial entity under product liability law, an attorney fees clause in the contract between the two entities may exist. Accordingly, assuming the economic loss rule does not bar the product liability claims as discussed in § 11.9, this section briefly addresses contractual attorney fees provisions.¹²

Contractual attorney fee-shifting provisions are generally enforceable in Colorado.¹³ Courts use a common sense approach in interpreting such provisions, and there is no "formulaic language" requirement so long as the clause "clearly informs the parties that a breach of the [contract] may result in an award of attorney fees."¹⁴ Unilateral fee-shifting clauses are likewise enforceable.¹⁵

§ 19.1.4—Attorney Fees For Claims Or Defenses That Lack Substantial Justification

Colorado has a statutory scheme that addresses frivolous, groundless, and vexatious actions or defenses.¹⁶ Colorado federal courts apply this Colorado statutory scheme to state law...