The Colorado Supreme Court answered that question in Laleh v. Johnson, No. 16SC134, (2017 CO 93).
This case is about a fee dispute between a pair of litigants and a court-appointed expert. In 2012, Khalil Laleh (“Laleh”) brought a forcible entry and detainer action against his brother, Ali Laleh. The litigation was so contentious that the trial court appointed an accounting expert (and later a special master), Gary Johnson (“Johnson”) to resolve the brothers’ accounting claims.
The Laleh brothers signed an agreement with Gary C. Johnson and Associates, LLC, setting the scope of Johnson’s services and payment. Johnson began working, but before he finished his accounting reports for the trial court, the brothers settled their case and the court dismissed the suit. Johnson later informed the trial court that the Laleh brothers refused to pay his fees and his costs incurred post-settlement in attempting to collect the outstanding fees. The trial court issued an ruling that Johnson’s fees were reasonable, and that he was entitled to the costs he incurred in trying to collect his outstanding fees. The trial court cited language in the agreement saying that the Lalehs are jointly and severally responsible for the timely and complete payment of all fees and expenses to Johnson.
The appeals court affirmed the trial court’s ruling. The Supreme Court reviewed it.
This Court looked at the agreement between the Laleh brothers and Johnson and noted the language saying Johnson was to work expeditiously and to continue until the work was complete or the brothers told him to stop. The agreement also stated that the brothers were responsible for the fees and expenses. If there was a disagreement with Johnson over his fees and expenses, the brothers were to notify him within 30 days. Finally, under the paragraph titled “Governing Law and Jurisdiction,” the agreement said the prevailing party in any dispute is entitled to an award of reasonable attorney fees, costs and expenses.
Johnson was trying to do the work and was getting resistance from the brothers, their counsel, and other witnesses. He ultimately hired his own counsel to assist his investigations and informed the brothers that he had done so. The brothers did not object. Johnson began billing the brothers for the cost of his counsel in January 2014, and the brothers paid subsequent invoices without protest.
In February of 2014, the brothers settled the case and directed Johnson to stop his work. When he stopped, Johnson had reviewed more than 12,000 pages of material and his report was 120 pages long. The brothers refused to pay the $74,000 in fees and expenses. The trial court ruled for Johnson and the appeals court affirmed.
The trial court based its ruling on the ‘all fees and expenses’ language in the agreement. This Court bases its conclusion on the ‘Governing Law and Jurisdiction’ section of the agreement.
First, this is a dispute between Johnson and the brothers. Although the original litigation was between the brothers, the issue arose when Johnson asked the trial court’s help in collecting his outstanding fees and costs. Second, Johnson is the prevailing party in this dispute. Third, Johnson’s post-settlement fees and collection costs were “fees, costs and expenses” covered by the language in the “Governing Law and Jurisdiction” provision of the agreement.
The Court holds that the language in the “Governing Law and Jurisdiction” provision of the agreement authorized the trial court to order the brothers to pay the disputed post-settlement collection costs at issue here. The ruling is affirmed and the case is remanded for further proceedings.
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