Laleh v. Johnson
2016 Colo. App. LEXIS 18
Colo. Ct. App.2016Background
- Ali and Khalil Laleh (the brothers) and Leila Tabrizi were embroiled in litigation over business/lease disputes; the trial court appointed Gary C. Johnson (an accountant) as a court expert under CRE 706 and later as a special master under C.R.C.P. 53.
- Each brother signed an engagement agreement with Johnson agreeing to pay his fees; invoices beginning January 2014 included attorney fees Johnson had incurred.
- The underlying case settled in February 2014; substantial Johnson fees (pre- and post-settlement) remained unpaid. The trial court held hearings and entered orders finding Johnson’s fees reasonable and directing payment; Johnson submitted a proposed order which the court entered three days after service.
- The trial court awarded Johnson his fees and collection costs and ordered the brothers jointly and severally liable; it also ordered financial disclosures from the parties and from Tabrizi (who had been dismissed).
- On appeal, the court affirmed parts of the fee award, vacated portions relating to procedural defects and Tabrizi, and remanded for further consideration of timely objections.
Issues
| Issue | Plaintiff's Argument (Lalehs/Tabrizi) | Defendant's Argument (Johnson) | Held |
|---|---|---|---|
| Trial court violated due process by entering Johnson’s proposed order three days after service | The court rushed entry and denied the parties the seven-day opportunity to object under C.R.C.P. 121. | Entry was timely and parties had notice; fees were reasonable. | Vacated as to the portion of the Sept. 16 order relating to the brothers; remand for consideration of timely objections because C.R.C.P. 121 requires seven days to object. |
| Validity of attorney fees Johnson incurred (hiring counsel) and whether brothers must pay pre-settlement counsel fees | Johnson was not authorized to hire counsel without court approval; brothers objected to paying those fees. | Fees were reasonable; brothers waived objection by not timely raising it and by partially paying invoices; appointment and engagement made counsel’s involvement known. | Pre-settlement attorney-fee challenge waived; trial court did not abuse discretion in awarding those fees. |
| Award of post-settlement collection costs and whether engagement agreement authorized them | Collection costs were not expressly authorized by contract; not permissible to force brothers to pay collection costs absent explicit contract term. | Even if contract silent, trial court has inherent authority to enforce its prior fee order and to award collection costs to ensure appointed helpers are compensated. | Although contract did not explicitly authorize collection costs, the court affirmed award of collection costs as within the trial court’s inherent authority to give effect to its orders. |
| Liability allocation and nonparty disclosure (Khalil’s and Tabrizi’s claims) | Khalil: court should allocate several liability rather than joint and several because unequal use of Johnson’s services. Tabrizi: court lacked jurisdiction to order financial disclosure after her dismissal. | Johnson: engagement agreement states brothers are jointly and severally liable; disclosures were necessary to collect fees. | Court may impose joint and several liability (not obliged to); remanded to consider objections. Order directing Tabrizi (a nonparty at that time) to disclose was vacated because the court lacked jurisdiction over her post-dismissal. |
Key Cases Cited
- Feigin v. Colo. Nat’l Bank, N.A., 897 P.2d 814 (Colo. 1995) (trial court may condition compliance with subpoena on payment of producing party’s costs; inherent power to enforce orders)
- Lauren Corp. v. Century Geophysical Corp., 953 P.2d 200 (Colo. App. 1998) (trial court’s inherent authority can support fee awards as sanctions or to enforce orders)
- Reed v. Cleveland Bd. of Educ., 607 F.2d 737 (6th Cir. 1979) (better practice to set fees/authority for outside consultants at appointment)
- Ledford v. Sullivan, 105 F.3d 354 (7th Cir. 1997) (trial court has discretion under Fed. R. Evid. 706 to apportion expert costs among parties)
- McKinney v. Anderson, 924 F.2d 1500 (9th Cir.) (trial court discretion to appoint and compensate Rule 706 experts and allocate costs)