2019 CO 23
Colo.2019Background
- Calvert, a lawyer later disbarred for multiple ethical violations, gave ~ $193,000 to his former client Mayberry after securing her title to her house; he later sued her for breach of an alleged oral loan agreement.
- Calvert did not advise Mayberry to seek independent counsel and did not reduce any agreement to writing, both requirements of Colo. RPC 1.8(a).
- A disciplinary board found Calvert violated Rule 1.8(a); Calvert conceded to this Court that he did not meet two Rule 1.8(a) requirements and declined to relitigate compliance.
- Trial court granted summary judgment for Defendants, holding the agreement void as against public policy and awarding trial-level attorney’s fees as groundless and brought in bad faith.
- The court of appeals affirmed on the merits and fee award but remanded to determine appellate fees; the Supreme Court granted certiorari.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1. Whether issue preclusion bars relitigation of Rule 1.8(a) compliance | Calvert contested preclusion (argued relitigation allowed) | Defendants argued the discipline board finding should preclude relitigation | Court declined to decide because Calvert judicially admitted noncompliance; issue preclusion not reached |
| 2. Whether a contract formed in violation of Colo. RPC 1.8(a) is enforceable | Calvert argued Rule preamble forbids treating rule violations as creating civil presumptions; contract should be enforceable | Defendants argued Rule 1.8(a) reflects public policy and invalidates the contract | Court held such contracts are presumptively void as against public policy but presumption is rebuttable |
| 3. Standard and burden to overcome presumption of voidness | Calvert argued technical noncompliance should not automatically void contracts | Defendants urged that rule violation defeats enforcement absent strong proof to the contrary | Court held attorney seeking enforcement must prove by preponderance that (1) terms fair/reasonable, (2) terms unambiguous, and (3) no undue influence/overreaching; only (1) and (2) analyzed here and not met |
| 4. Appropriateness of attorneys’ fees at trial and on appeal | Calvert contended sanctions improper because issues were novel | Defendants sought fees for groundless litigation and for frivolous appeals | Court affirmed trial-level fee award (claims groundless, brought in bad faith) but denied appellate fees (appeals presented legitimately appealable questions) |
Key Cases Cited
- Bailey v. Lincoln Gen. Ins., 255 P.3d 1039 (Colo. 2011) (standard of review for public policy in contracts)
- Rocky Mountain Hosp. & Med. Serv. v. Mariani, 916 P.2d 519 (Colo. 1996) (professional ethical rules may, in limited circumstances, express public policy)
- LK Operating, LLC v. Collection Grp., LLC, 331 P.3d 1147 (Wash. 2014) (holding that contract made in violation of rule 1.8(a) is presumptively unenforceable but may be upheld if it does not offend underlying public policy)
- Succession of Cloud, 530 So.2d 1146 (La. 1988) (treating attorney-client transaction violating ethics rule as void)
- Evans v. Luptak, PLC v. Lizza, 650 N.W.2d 364 (Mich. Ct. App. 2002) (same)