2018 COA 71
Colo. Ct. App.2018Background
- Colorado AG sued Robert J. Hopp, his law firms, affiliated title companies, and Safehaus alleging violations of the Colorado Consumer Protection Act (CCPA) and Colorado Fair Debt Collection Practices Act (CFDCPA) for inflating/charging unincurred title and foreclosure-related costs to mortgage servicers and homeowners.
- The district court entered judgment for the State on most claims, but found insufficient evidence to hold Lori Hopp personally liable; plaintiffs sought statutory attorney fees and costs under the CCPA and CFDCPA.
- Plaintiffs requested $933,277 in fees and $35,648 in costs; the trial court reduced staffing charges, applied a 25% reduction, and awarded $677,329.50 in fees and $33,685.97 in costs.
- Robert Hopp had obtained a Chapter 7 discharge before the State’s enforcement action was filed and argued the discharge barred any postpetition award of attorney fees against him.
- The district court denied Lori Hopp’s request for fees under Colorado’s anti-frivolous-claims statute (sections 13-17-101 to -106), finding the State’s claims against her were not substantially groundless.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Hopp’s bankruptcy discharge barred the postpetition award of attorney fees and costs | Fees are civil penalties under state law and thus nondischargeable; award may be entered despite prepetition discharge | Discharge barred collection of any claims for fees that were reasonably contemplatable prepetition | Held: Fees under CCPA/CFDCPA are penalties nondischargeable under 11 U.S.C. § 523(a)(7); award valid |
| Whether the trial court should have vacated fee judgment as void under 11 U.S.C. § 524(a)(1) | § 524(a)(1) does not void penalties that are nondischargeable | Discharge rendered any personal-liability judgment void and unenforceable | Held: § 523(a)(7) makes these fees nondischargeable; § 524(a)(1) does not void them here |
| Whether fees should be reduced for work on unpursued or unsuccessful claims (claim segregation) | Plaintiffs’ successful and unsuccessful claims arose from a common core of facts so fees need not be segregated | Defendants sought reduction for time spent on distinct unsuccessful/withdrawn claims | Held: No reduction required; claims arose from common core and related theories so segregation inappropriate |
| Whether Lori Hopp was entitled to fees under § 13-17-102 for defending groundless claims | State’s claim against Lori was fact-based and supported by credible evidence and was not substantially groundless | Lori argued claims against her lacked substantial justification and she should receive fees | Held: Trial court did not abuse discretion; claims were not substantially groundless so no fee award to Lori |
Key Cases Cited
- In re Jensen, 395 B.R. 472 (Bankr. D. Colo. 2008) (CCPA attorney-fee awards are penal and nondischargeable under § 523(a)(7))
- Castellino Villas, A.K.F., LLC v. City of Lake Forest, 836 F.3d 1028 (9th Cir. 2016) (prepetition litigation may make attorney-fee claims reasonably contemplatable and dischargeable)
- Siegel v. Federal Home Loan Mortgage Corp., 143 F.3d 525 (9th Cir. 1998) (analysis on fair contemplation of prepetition claims for attorneys’ fees)
- Hall v. Walter, 969 P.2d 224 (Colo. 1998) (CCPA’s purposes include deterrence and punishment)
- Rocky Mountain Festivals, Inc. v. Parsons Corp., 242 P.3d 1067 (Colo. 2010) (fee awards and claim segregation; common core rule)
- Hensley v. Eckerhart, 461 U.S. 424 (1983) (principles for awarding attorney fees when claims overlap)