Laleh v. Johnson
2017 CO 93
| Colo. | 2017Background
- Brothers Khalil and Ali Laleh litigated a complex dispute over commingled business funds; the trial court appointed Gary Johnson as a court-appointed accounting expert (later special master).
- Each brother signed an engagement agreement with Johnson specifying services, payment, invoice dispute procedure, and a clause that the prevailing party in any dispute is entitled to reasonable attorney fees, costs, and expenses.
- Johnson worked, billed the brothers, and was partially paid; the brothers settled the underlying case before Johnson completed his reports and directed him to stop.
- After dismissal, the brothers refused to pay about $74,000 in outstanding pre-settlement fees; Johnson incurred additional post-settlement fees and collection-related costs (including attorney fees) seeking payment.
- The trial court found Johnson’s fees reasonable and ordered the brothers to pay the post-settlement collection costs, relying on the engagement agreement’s “all fees and expenses” language. The court of appeals affirmed but rejected that contract interpretation and instead upheld the award under the court’s inherent authority. The Colorado Supreme Court affirmed, but on different grounds.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the engagement agreement authorized Johnson’s post-settlement collection costs | Laleh: contract does not authorize collection costs; “fees” limited to services which ended when Johnson was told to stop | Johnson: agreement’s fees/costs language (and other provisions) covers attorney fees and post-settlement collection costs | Held: Yes — the agreement’s “Governing Law and Jurisdiction” clause (prevailing party entitled to reasonable attorney fees, costs and expenses) authorized awarding those post-settlement costs to Johnson |
| Whether the trial court could instead rely on the engagement agreement’s general “all fees and expenses” Fees provision to cover post-settlement collection costs | Laleh: “all fees and expenses” does not expressly cover post-settlement collection costs | Johnson: Fees provision supports recovery of fees and expenses incurred in relation to the engagement | Held: Supreme Court did not rely on this Fees provision; it found and relied on the separate prevailing-party clause instead |
| Whether the court of appeals properly invoked the trial court’s inherent authority to award post‑settlement collection costs | Laleh: inherent authority does not extend to collection costs after dismissal; doctrine was invoked for first time on appeal | Johnson: inherent authority supports orders necessary to make prior court orders effective | Held: Court of appeals erred to reach inherent authority; Supreme Court avoided the doctrine because contract clause already authorized the award |
| Whether Johnson’s later appointment as special master changed the parties’ contractual obligations or entitlement to fees | Laleh: special master status altered the relationship so post-settlement collection costs are improper | Johnson: appointment did not change contractual fee entitlements | Held: Trial court correctly rejected the argument that the special-master appointment altered the contractual obligations; contract provision authorized cost award |
Key Cases Cited
- Pena v. Dist. Court, 681 P.2d 953 (Colo. 1984) (describing courts’ inherent powers and limits)
- Kort v. Hufnagel, 729 P.2d 370 (Colo. 1986) (discussing inherent judicial powers)
- Am. Water Dev., Inc. v. City of Alamosa, 874 P.2d 352 (Colo. 1994) (trial court’s fee awards reviewed for abuse of discretion)
- Rasheed v. Mubarak, 695 P.2d 754 (Colo. App. 1984) (masters’ costs assessed under trial court discretion)
- Trinity Universal Ins. Co. v. Streza, 8 P.3d 613 (Colo. App. 2000) (appellate review of expert/master cost awards)
- Fed. Deposit Ins. Corp. v. Fisher, 292 P.3d 934 (Colo. 2013) (contract interpretation is reviewed de novo)
- People v. Aarness, 150 P.3d 1271 (Colo. 2006) (appellate court may affirm on any ground supported by the record)
- Farmers Grp., Inc. v. Williams, 805 P.2d 419 (Colo. 1991) (judgment may be defended on any ground supported by the record)