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Colorado Court of Appeals Opinions || January 14, 2016 Colorado Court of Appeals -- January 14, 2016
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Court of Appeals No. 14CA2033 Khalil Laleh and Leila Tabrizi, Third Party Defendants-Appellants, and Ali Laleh, Defendant-Appellant, v. Gary C. Johnson and Gary C. Johnson and Associates, LLC, Appellees.
JUDGMENT AFFIRMED IN PART, REVERSED IN PART,
Division III Announced January 14, 2016 Evans Case, LLP, Larry Jacobs, Denver, Colorado; Kimball and Nespor, P.C., Charles J. Kimball, Arvada, Colorado, for Third Party Defendant-Appellant Khalil Laleh Leonard Berenato, Douglas Fogler, Denver, Colorado, for Third Party Defendant-Appellant Leila Tabrizi Wortsell and Associates Law Offices, David L. Worstell, Thomas Connell, Denver, Colorado, for Defendant-Appellant Ali Laleh Evans & McFarland, LLC, Scott C. Evans, Denver, Colorado, for Appellees  ¶1        After several family business deals soured, Ali Laleh, Khalil Laleh, and Leila Tabrizi became involved in contentious litigation. They now appeal a judgment granting all of court-appointed expert and special master Gary C. Johnsonâs fees and costs. We affirm the judgment in part, reverse in part, and vacate in part, and remand with directions. I. Background ¶2        Ali Laleh and his brother Khalil Laleh (collectively, the brothers) each own various small businesses. Leila Tabrizi is married to Ali and owns related business entities. The litigation started from a forcible entry and detainer (FED) action and an accounting dispute between the brothers about various business dealings. For years the brothers commingled hundreds of thousands of dollars between themselves and their entities. ¶3        Because of how the case was litigated, the trial court found it necessary to exercise extensive supervision. The trial court issued orders to help organize the parties, their claims, and eventually restricting further frivolous filings. When it became apparent that the partiesâ business dealings and finances were difficult to decipher, the trial court appointed Gary Johnson, MBA, CPA, CFF, initially pursuant to Colorado Rule of Evidence 706, as the courtâs expert to help sort out the various entitiesâ financial and business affairs. The brothers each signed an engagement agreement with Gary C. Johnson and Associates, LLC, outlining the scope of Johnsonâs work and payment. ¶4        The trial court later appointed Johnson as special master pursuant to Colorado Rule of Civil Procedure 53 to enable Johnson to obtain information regarding the lease(s) prepared by an attorney, relevant to the FED claims, where the attorney had refused to provide despite valid waivers of attorney-client privilege. ¶5        Johnson first incurred attorney fees in connection with his court-appointed duties in December 2013 when the brothersâ former attorney refused to honor a court-issued subpoena. Johnsonâs attorney accompanied him when sworn statements were given and was copied on Johnsonâs correspondence with the parties. Beginning with Johnsonâs January 2014 invoice to the brothers and continuing at least through Johnsonâs May 2014 invoice to the brothers, Johnsonâs itemized invoices included a line item under âexpensesâ specifying amounts billed to Johnson by Johnsonâs attorney. The brothers paid portions of these invoices before they settled the underlying case in February 2014. The brothers raised no objection to the content of Johnsonâs billings or to the itemization of attorney fees billed to Johnson by Johnsonâs attorney until Khalil Laleh sent Mr. Johnson a letter dated March 9, 2014. The letter expressed concern about the inclusion of Johnsonâs attorney fees in his billings. ¶6        After the settlement, the trial court granted the partiesâ stipulated motions to dismiss and dismissed the case with prejudice on February 24, 2014. At that time, Johnson had significant unpaid billings and reported to the trial court that he had not been paid. The court issued an order to show cause why Johnsonâs invoices had not been paid and held a hearing to determine the reasonableness of Johnsonâs fees. The record indicates that the brothers did not lodge an objection to Johnsonâs itemized expenses with the court before their March 20, 2014, responses to the trial courtâs show cause order. After the hearing, the trial court issued a September 2, 2014, order finding, among other things, that the fees charged were reasonable and ruling that, pursuant to the engagement agreements, the brothers were jointly and severally responsible for Johnsonâs fees.1 The trial court then ordered Johnson to submit a proposed order âin the form which would best enable Mr. Johnson to collect these sums from the parties should the parties fail to pay.â Johnson submitted a proposed order on September 13, 2014, and the trial court adopted Johnsonâs proposed order on September 16, 2014. ¶7        The parties did not pay Johnsonâs fees and Johnsonâs request for contempt citations were stayed by this appeal. In accordance with the September 16 order, the parties and Tabrizi, who had been dismissed from the litigation in a February 24, 2014, order, provided financial information required in the event of the brothersâ nonpayment. They also filed this appeal primarily challenging the trial courtâs September 2 and September 16 orders.
II. Khalil Lalehâs and Ali Lalehâs Shared Claims ¶8        The brothers contend that the trial court violated their rights to due process when it entered Johnsonâs proposed order three days after it was filed. We generally do not address unpreserved civil issues. Berra v. Springer & Steinberg, P.C., 251 P.3d 567, 570 (Colo. App. 2010); Yeiser v. Ferrellgas, Inc., 214 P.3d 458, 461 (Colo. App. 2008), revâd on other grounds, 247 P.3d 1022 (Colo. 2011). Here, because the brothersâ due process claim did not arise until after the trial court entered the challenged order, we review the order. Bailey v. Airgas-Intermountain, Inc., 250 P.3d 746, 752 (Colo. App. 2010). ¶9        We need not determine whether the entry of the order violated the brothersâ rights to due process because the entry of the order violated the procedural rule that governs such orders. ¶10        The trial court entered Johnsonâs proposed order three days after Johnson served it on the brothers. C.R.C.P. 121, section 1-16 allows a party seven days from the time of service to object to the form of a proposed order. Therefore, the trial court erred when it issued the proposed order before allowing the brothers seven days to object as mandated by C.R.C.P. 121. ¶11        We therefore vacate the judgment as it pertains to the portion of the September 16 order that relates to the brothers and, because some of the brothersâ objections require factual determinations best addressed to the trial court in the first instance, we remand for the trial court to consider the brothersâ timely filed objections and reÂenter an appropriate order. Regardless of what order may be entered on remand, we expect at least some of the remaining legal issues raised in this appeal to persist, given that we are not disturbing the September 2 order. Accordingly, we address those issues here. B. Johnsonâs Attorney Fees and Post-Settlement Fees ¶12        The brothers argue that the trial court erred in (1) ordering that they pay Johnsonâs attorney fees incurred without express court approval as a part of Johnsonâs service as a court-appointed expert and special master and during Johnsonâs attempt to collect his past-due billings; and (2) awarding Johnsonâs fees incurred after the parties to the underlying litigation settled their claims. We disagree with both contentions. 1. Trial Courtâs Appointment of Experts and Special Masters ¶13        This case comes to us in a unique posture because it concerns the scope of the courtâs authority in appointing an expert and a special master. Judges are charged with administering the âjust, speedy, and inexpensive determinationâ of every action. See C.R.C.P. 1; Fed. R. Civ. P. 1. There is very little established law in Colorado regarding expenses and fees of court-appointed experts and special masters. CRE 706(b) speaks to compensation of a court-appointed expert, but does not specifically address fees incurred by experts in carrying out their duties.2 C.R.C.P. 53 is similarly silent about expenses, although it does authorize expert compensation more generally.3 However, federal courts have addressed the question of fees and costs in similar circumstances and because the Colorado rules are based on, and are very similar to, the federal rules, we will look to the federal cases for guidance. Garcia v. Schneider Energy Servs., Inc., 2012 CO 62, ¶7. ¶14        It is fundamental that trial courts are vested with certain inherent powers necessary for courts to act efficiently. Peña v. Dist. Court, 681 P.2d 953, 956 (Colo. 1984). These inherent powers include all powers reasonably necessary to allow the court to efficiently perform its judicial functions and to make its lawful actions effective. Id. ¶15        Under the American Rule, attorney fees are generally borne by the parties incurring them, rather than by a losing party. See City of Holyoke v. Schlachter Farms R.L.L.P., 22 P.3d 960, 964 (Colo. App. 2001) (citing Bunnett v. Smallwood, 793 P.2d 157, 161 (Colo. 1990)); see also Allison v. Bank One-Denver, 289 F.3d 1223, 1244Â45 (10th Cir. 2002). We do not challenge this basic premise of American law. But, the award of fees and expenses of an impartial court-appointed expert or special master are different than the ordinary application of the American Rule because the expert or master is not a party to the litigation precisely because he is appointed by the court, under the courtâs authority. The relationship between the court-appointed expert or special master and the litigants is not wholly or even primarily a contractual relationship governed by contract law. Instead, nonpayment of the court-appointed expert or master when the appointing court has ordered the litigants to pay the expert or master directly implicates the authority of the appointing court.4 a. Trial Courtâs Award of Attorney Fees i. Pre-Settlement Attorney Fees ¶16        The brothers challenge whether Johnson was authorized to hire a lawyer, as part of his court-appointed duties, without court approval. Johnson has not cited nor have we found any rule, statute, or Colorado case that authorized him to hire counsel (with the expectation that counselâs fees would be passed on to the litigants). But, it is not necessary for us to decide that question in this case. ¶17        Had the brothers raised any objection to Johnsonâs hiring (and their obligation to pay) counsel as soon as they learned of counselâs role, the trial court could have disallowed the hiring or established boundaries on Johnsonâs counsel (e.g., a limit on hours, amount billed, etc.) before Johnson incurred these expenses. To be sure, the preferred option would have been to set the boundaries of the court-appointed expert or special masterâs duties and authority to hire outside professional assistance in the courtâs order of appointment. See Bridgeport Guardians, Inc. v. Delmonte, 537 F.3d 214, 218 (2d Cir. 2008) (noting that a special master has broad power to take necessary measures to do his job); Reed v. Cleveland Bd. of Educ., 607 F.2d 737, 746 (6th Cir. 1979) (if master and outside consultants are deemed necessary, the better practice is to set the fees at the time of appointment); Acad. of Court Appointed Masters, Appointing Special Masters and Other Judicial Adjuncts: A Handbook for Judges and Lawyers (2d ed. 2009), http://perma.cc/V2XF-5NB6(listing items to include in appointment orders).5 ¶18        Johnsonâs January 3, 2014, invoice for his services performed in December 2013 was the first invoice that included the line item for Johnsonâs attorney fees incurred by Johnson as expenses. The billing clearly showed a charge of $3932.50 from Evans & McFarland, LLC, Johnsonâs lawyers. Upon receipt of the invoice, the brothers raised no objection to the inclusion of the attorney fees on the itemized bill and indeed each of the brothers made payments on that invoice. ¶19        Similarly, Johnsonâs February 3, 2014, invoice included a line item for attorney fees â this time totaling $10,042.50. The brothers did not object to the content of this invoice. And, before any invoicing, the court and the parties were aware of Johnsonâs attorney, as he appeared in court and out of court on Johnsonâs behalf. ¶20        The brothers did not challenge Johnsonâs appointment as a CRE 706 expert or as C.R.C.P. 53 special master. They did not timely challenge Johnsonâs hiring of a lawyer. The first time they objected to the content of any billing was when Khalil Laleh sent his personal letter to Johnson in mid-March. Under these circumstances, even if the brothers had a valid objection to paying Johnsonâs attorney fees, they waived it. See, e.g., Campbell v. Summit Plaza Assocs., 192 P.3d 465, 475 (Colo. App. 2008); see also In re Cmty. Bank of N. Va., 622 F.3d 275, 287 n.12 (3d Cir. 2010) (concluding that the challenge to appointment of the special master was waived and declining to address it on appeal); Fajarado Shopping Ctr., S.E. v. Sun All. Ins. Co. of P.R., Inc., 167 F.3d 1, 5-6 (1st Cir. 1999) (lack of timely objection to appointment of a special master amounts to consent)6; Adriana Intâl Corp. v. Thoeren, 913 F.2d 1406, 1410 (9th Cir. 1990) (objection to the appointment of a special master must be timely or it is waived); Constant v. Advanced Micro-Devices, Inc., 848 F.2d 1560, 1566 (Fed. Cir. 1988) (same). ¶21        We therefore hold that the brothersâ belated objection to Johnsonâs attorney fees for work performed by the attorney before the settlement of the case was waived by the brothersâ failure to timely object to Johnsonâs retention of a lawyer and by the prior payment of at least some of those fees. ii. Post-Settlement Attorney Fees ¶22        The brothers also challenge the courtâs award of Johnsonâs fees incurred after the parties settled their claims. Most, but not all, of these fees post-dated the brothersâ belated objection to the payment of such fees. The attorney fees, which Johnson incurred after the settlement was reached and the partiesâ dismissal stipulations were given effect, were proper pursuant to the trial courtâs inherent authority, discussed further below, to give effect to its prior orders. See, e.g., Feigin v. Colo. Natâl Bank, N.A., 897 P.2d 814, 820 (Colo. 1995) (trial court has authority to craft rules to enforce its orders); Lauren Corp. v. Century Geophysical Corp., 953 P.2d 200, 203-04 (Colo. App. 1998) (fee award was within trial courtâs inherent authority). b. Trial Courtâs Award of Johnsonâs Post-Settlement Fees ¶23        After the courtâs appointment, the brothers each signed identical engagement agreements with Johnson that governed Johnsonâs services and fees as the court-appointed expert and special master.7 The agreement outlined the professional relationship, scope of services, and fees: GARY C. JOHNSON AND ASSOCIATES has been retained to provide the Services set out below . . . . . . . . Although the Services are subject to change, as mutually agreed between us, the Services shall include: Performance as a court appointed expert in [the underlying case]. . . . . You agree that you, Kahlil Laleh and Ali Laleh are jointly and severally liable for the timely and complete payment of all fees and expenses of GARY C. JOHNSON AND ASSOCIATES. . . . . We will also bill you reasonable out-of-pocket expenses. ¶24        In determining that the engagement agreement allowed Johnson to collect costs and expenses incurred in the collection of his past due fees, the trial court held that the engagement agreementâs terms speak explicitly to the issue. The trial court held that the reference to the brothersâ joint and several liability for the payment of âall fees and expensesâ encompasses time spent collecting past due monies. ¶25        We disagree that the contract so clearly speaks to the issue of costs incurred in the collection of past due fees. Nothing in the relevant language of the contract explicitly mentions collection costs. ¶26        Zambruck v. Perlmutter 3rd Generation Builders, Inc., cited by the trial court as authority for the proposition that a party who is entitled to a judgment for fees is also entitled to costs incurred collecting those costs, is not entirely on point. 32 Colo. App. 276, 280-82, 510 P.2d 472, 475-76 (1973). In Zambruck, the contracts at issue contained a specific collection cost clause stating that in the event collection was necessary, the client agreed to pay all costs and attorney fees incurred in collection. Id. at 280-81, 510 P.2d at 475. The court there held that in accordance with the terms of the contract, it was proper to award collection costs. Id. at 281, 510 P.2d at 476. ¶27        Unlike the contract in Zambruck, the engagement agreement contains no language explicitly addressing collection costs. Therefore, reliance on Zambruck is misplaced. At the same time, the engagement agreement does not prohibit the award of costs of collection to Johnson; the contract is silent on the issue. ¶28        Although we disagree with the trial courtâs interpretation of the terms of the engagement agreement, under the special circumstances presented we do not think the trial court abused its discretion in awarding Johnsonâs collection costs. Rush Creek Sols., Inc. v. Ute Mountain Ute Tribe, 107 P.3d 402, 406 (Colo. App. 2004) (â[W]e may affirm the trial courtâs ruling based on any grounds that are supported by the record.â). The courtâs inherent authority has been consistently applied in situations sufficiently similar to the circumstances presented here. See, e.g., Feigin, 897 P.2d at 820; Lauren Corp., 953 P.2d at 203-04. Accordingly, we conclude the trial court had the authority to require the brothers to pay Johnsonâs collection costs. ¶29        In Feigin, the supreme court held that under a trial courtâs equitable authority, it could condition its denial of a motion to quash an administrative subpoena on the partyâs payment of costs related to the opponentâs expenses incurred in producing the desired information. 897 P.2d at 820. The trial court issued a subpoena duces tecum ordering the bank to produce various financial records. Id. at 816. The bank moved that the commissioner requesting the information should pay the bankâs reasonable expenses incurred in complying with the subpoena. Id. The trial court agreed and ordered the bank to produce the documents on the condition that the commissioner pay the bankâs costs. Id. On appeal, the supreme court agreed that the trial court was vested with authority to enforce administrative subpoenas and to craft rules to ensure their enforcement. Id. at 820. Citing the trial courtâs equitable authority to ensure enforcement of its orders, the supreme court upheld the trial courtâs action as within its inherent authority. See id. ¶30        In Lauren Corp., a division of this court held that, pursuant to the trial courtâs inherent power to ensure the effectiveness of its orders, the trial court could properly impose attorney fees and costs as a discovery sanction. 953 P.2d at 204. The trial court had imposed sanctions for discovery misconduct but did not issue a specific discovery order pursuant to C.R.C.P. 37. Id. at 203. On appeal, the division upheld the trial courtâs award of fees as valid under the trial courtâs inherent authority to administer justice. Id. at 204. The division noted that denying the trial court the inherent power to award sanctions, including attorney fees, in the specific circumstance would encourage misconduct by unscrupulous litigants. Id. ¶31        The situation here is similar to what the Lauren Corp. division faced. We have not found any case in Colorado that explicitly allows a court, as a valid exercise of its inherent powers, to award costs incurred in the collection of the fees of a court-appointed expert or special master. And the parties do not cite to any case that disallows such an award. But, the trial court here ordered that the brothers pay Johnsonâs fees for work performed before the underlying litigation settled. Therefore, the courtâs order that the brothers pay for Johnsonâs costs involved in collecting those monies owed is an order which serves to give effect to the trial courtâs earlier order that the fees be paid. This type of action is within the trial courtâs inherent authority to administer justice and to make its actions effective. See Feigin, 897 P.2d at 820; Peña, 681 P.2d at 956; Lauren Corp., 953 P.2d at 203-04. ¶32        Fairness and efficient operation of the judicial system dictate that we ensure that those appointed by the court to assist the court are appropriately compensated. See Norris v. Green, 317 F. Supp. 100, 102 (N.D. Ala. 1965); Valenstein v. Bayonne Bolt Corp., 6 F.R.D. 363, 365-66 (E.D.N.Y. 1946). This includes honoring the trial courtâs discretion to grant such fees as it deems necessary to collect outstanding balances due to a court-appointed expert or special master. A contrary holding would create a disincentive to those whose assistance the court may seek in various capacities. ¶33        The trial court acted within its inherent authority when it ordered the brothers to pay Johnsonâs collection costs. Because the trial courtâs action was not arbitrary or contrary to law, there was no abuse of discretion in the courtâs grant of these fees. See Trinity Universal Ins. Co., 8 P.3d at 619. c. Reasonableness of the Collection Costs ¶34        The brothers concede that their argument that the trial court erred in refusing to adjust Johnsonâs hourly cost to that of a collection professional was not made in the trial court. However, the brothers argue that we should nonetheless address their argument to avoid unequivocal and manifest injustice. See Wycoff v. Grace Cmty. Church of Assemblies of God, 251 P.3d 1260, 1269 (Colo. App. 2010). ¶35        Appellate review of unpreserved civil claims is extremely limited. Id. This type of review is only appropriate in a rare case involving special circumstances and only when necessary to prevent unequivocal and manifest injustice. Id. ¶36        The brothers contend that because the trial court did not specifically rule on the reasonableness of Johnsonâs normal hourly rate for time spent attempting collection, and because Johnson testified that he charged the same rate agreed on in the engagement letter for time spent attempting collection, this is the type of manifest injustice that warrants our review absent proper preservation. We disagree. This situation does not meet the demanding standard articulated above. Id. Therefore, we will not address the brothersâ argument. C. Judgment for Individual or Entity ¶37        The brothers further argue that because Johnson was appointed individually to serve as the court expert and special master, the trial court erred when it entered judgment for Gary C. Johnson and Associates, LLC. Because we have reversed the judgment as it relates to the challenged order and we do not know what order may be entered in its stead, we decline to address this argument. D. Colorado Rules of Civil Procedure 69 and 107 ¶38        The brothers next argue that the trial court erred when it ordered them to disclose significant personal and business financial information without utilizing the subpoena provision of C.R.C.P. 69 and the motion provisions of C.R.C.P. 107. Because we have reversed the judgment as it relates to this order, and we do not know what order may be entered in its stead, we decline to address this question.
III. Khalil Lalehâs Additional Claims ¶39        Kahlil Laleh claims that the trial court erred when it ordered that the brothers were jointly and severally liable for the payment of Johnsonâs fees rather than ordering an allocation of several, but not joint, liability. Because this issue is likely to arise again when the court enters a substitute order, we address this issue. 1. Standard of Review and Preservation ¶40        The parties dispute which standard of review we should apply to evaluate the trial courtâs allocation of Johnsonâs costs and fees jointly and severally between the brothers. While no Colorado case speaks specifically to the applicable standard of review for the present claim of error, which involves the trial courtâs award of court-appointed expert or special master fees and application of the contractual terms of the engagement agreement, federal courts have interpreted the language of Fed. R. Evid. 706 â which is substantially similar to CRE 706 â as granting the trial court discretion to also apportion the costs incurred by the expert among the parties. See, e.g., Ledford v. Sullivan, 105 F.3d 354, 360-61 (7th Cir. 1997) (upholding trial courtâs discretionary action regarding costs of a Fed. R. Evid. 706 expert); Steele v. Shah, 87 F.3d 1266, 1271 (11th Cir. 1996) (trial court had discretion to appoint and compensate Fed. R. Evid. 706 expert); McKinney v. Anderson, 924 F.2d 1500, 1511 (9th Cir.) (same), vacated and remanded on other grounds by Monroe Clinic v. Nelson, 502 U.S. 903 (1991); Webster v. Sowders, 846 F.2d 1032, 1038-39 (6th Cir. 1988) (same); U.S. Marshals Serv. v. Means, 741 F.2d 1053, 1059 (8th Cir. 1984) (same). Therefore, we review the trial courtâs assignment of compensation as well as allocation of payment of a court-appointed expert under CRE 706 for an abuse of discretion. ¶41        It is undisputed that Khalil Laleh preserved this issue for appeal. 2. Law and Analysis ¶42        In addition to deferring to the discretion of the trial court in appointing, and determining the compensation of, an expert under Fed. R. Evid. 706(c), the federal courts hold that it is also within the discretion of the trial court to allocate the costs among the parties. See, e.g., Ledford, 105 F.3d at 360-61; McKinney, 924 F.2d at 1511. This includes the ability of a trial court to, within its discretion, apportion all of the costs to one side. McKinney, 924 F.2d at 1511. Given the nearly identical language in CRE 706 and Fed. R. Evid. 706, we will apply the same approach and analysis as the federal courts apply to similar issues regarding cost apportionment under the federal rule. See Garcia, ¶7. ¶43        The engagement agreement stated clearly that the brothers âare jointly and severally responsible for the timely and complete payment of all fees and expenses . . . .â ¶44        Khalil Laleh argues that the trial courtâs initial intention, articulated in its omnibus order of September 18, 2013, was to order that the brothers each pay one half of Johnsonâs fees and, therefore, that each brother is only liable for his own half of the fees. We disagree. The trial court stated this intention before the engagement agreement existed and the brothers knowingly signed the engagement agreement which clearly mentioned joint and several liability. Additionally, the trial courtâs decision to accept the terms of the engagement agreement and then order that the brothers were jointly and severally responsible for Johnsonâs fees was within its discretionary authority to grant and apportion fees under CRE 706(b). ¶45        We therefore hold that the trial court may (but is not required to) impose joint and several liability when it enters a substitute order. B. Equitable Adjustment of Fees ¶46        Kahlil Laleh further contends that the trial court erred in refusing to consider, and in failing to grant him, an equitable adjustment of his liability for Johnsonâs fees. He argues that Johnson incurred more fees working with Ali Laleh and consequently it was not fair to apportion liability for costs equally between the brothers. The issue may be raised again on remand, and we do not know what order may be later entered, so we decline to address this argument. IV. Ali Lalehâs Claim of Impartiality ¶47        Ali Laleh requests that, upon remand, a different trial court judge be appointed to handle the case due to biases of the trial court judge. We decline the request. ¶48        Whether disqualification is necessary is a legal determination which we review de novo. Wilkerson v. Dist. Court, 925 P.2d 1373, 1376 (Colo. 1996). Disqualificaiton of a judge in a civil case is governed by C.R.C.P. 97. However, the brothers did not file a motion to disqualify the trial judge. Therefore, there is nothing before us to review. V. Leila Tabriziâs Appeal ¶49        Tabrizi contends that the trial court erred when it ordered her to disclose significant personal and business financial information because she was not a party when the order was entered and she was not then subject to the jurisdiction of the court. We agree. ¶50        Tabrizi was dismissed as a party to the lawsuit as a part of the trial courtâs February 2014 order which dismissed with prejudice all claims. The only matters remaining after the dismissal order were matters of fees and costs, which did not affect the finality of the dismissal order. C.R.C.P. 58(a); Baldwin v. Bright Mortg. Co., 757 P.2d 1072, 1074 (Colo. 1988). ¶51        As a nonparty to any remaining collateral matters in the lawsuit, the trial court lacked jurisdiction over Tabrizi, as a party, to order Tabrizi to turn over her personal financial information. Upon proper application, Tabrizi, like any other nonparty, is subject to the provisions of C.R.C.P. 69, but that is not the basis upon which the court entered its order against Tabrizi. ¶52        We therefore vacate the portion of the judgment that pertains to the trial courtâs order of September 16 as it relates to Tabrizi. VI. Johnsonâs Appellate Attorney Fees ¶53        Johnson requests that we award his attorney fees incurred in defending this appeal because the claims made and argued on appeal are frivolous and vexatious. ¶54        Because the engagement agreement does not speak to attorney fees incurred in defending frivolous or meritless claims, we cannot award fees based on the engagement agreement. ¶55        Under section 13-17-102(4), C.R.S. 2015, this court must assess attorney fees if a party has âbrought or defended an action . . . that lacked substantial justification.â âAn action lacks substantial justification if it is âsubstantially frivolous, substantially groundless, or substantially vexatious.ââ Castillo v. Koppes-Conway, 148 P.3d 289, 292 (Colo. App. 2006) (quoting § 13-17-102(4)). â[A]n appeal âlacks substantial justificationâ and is âsubstantially frivolousâ under [section] 13-17-102(4) when the appellantâs briefs fail to set forth, in a manner consistent with C.A.R. 28, a coherent assertion of error, supported by legal authority.â Id. ¶56        Due to the merit of the brothersâ C.R.C.P 121 argument and the absence of controlling law on many of their other claims, we cannot say that the brothersâ claims are substantially frivolous, groundless, or vexatious. See id. The brothersâ action therefore does not lack substantial justification. See id. Tabriziâs action is similarly meritorious. ¶57        Johnsonâs request for appellate attorney fees is denied. VII. Conclusion ¶58        The judgment is affirmed in part, reversed in part, and vacated in part, and the case is remanded as we have directed here. The judgment is affirmed as it concerns the trial courtâs September 2, 2014, order. The judgment is reversed as it pertains to the trial courtâs September 16, 2014, order, as that order relates to the brothers, but on remand the trial court may enter a substitute order against the brothers after considering all of the brothersâ timely filed objections. The judgment is vacated as it pertains to the trial courtâs September 16, 2014 order, as that order relates to Tabrizi. Johnsonâs request for appellate attorney fees is denied. JUDGE BERGER concurs. JUDGE WEBB concurs in part and dissents in part. 1 Although the appeal purports to focus on Johnsonâs post-settlement fees, the parties conceded during oral argument that pre-settlement fees also remain unpaid. According to the parties, the brothers owed Johnson $75,000, as of the date of settlement, and $39,000 in post-settlement fees. 2 CRE 706(b) states: Expert witnesses so appointed are entitled to reasonable compensation in whatever sum the court may allow. The compensation thus fixed is payable from funds which may be provided by law in criminal cases and civil actions and proceedings involving just compensation under the fifth amendment. In other civil actions and proceedings the compensation shall be paid by the parties in such proportion and at such time as the court directs, and thereafter charged in like manner as other costs. 3 C.R.C.P. 53(a) notes: The compensation to be allowed to a master shall be fixed by the court, and may be charged upon such of the parties . . . . [W]hen the party ordered to pay the compensation allowed by the court does not pay it[,] after notice and within the time prescribed by the court, the master is entitled to a writ of execution against the delinquent party. 4 We recognize that a failure by the litigants to pay the court-ordered fees to an expert or master may be remedied through the courtâs contempt power under C.R.C.P. 107. A finding of remedial contempt also could justify a court order requiring the contemnor to pay the expertâs or masterâs attorney fees. But as discussed in the text, we conclude that the inherent authority of the court under the circumstance presented also gives the court power to order payment of collection expenses even without a finding of contempt. 5 As Johnson was not an attorney, he was not generating duplicate fees. In Reed v. Rhodes, 691 F.2d 266, 269-70 (6th Cir. 1982), the court disallowed a special master, who was an attorney, to collect both his own fees incurred in defending the district courtâs fee award and fees incurred from hiring outside counsel to defend the action. The Sixth Circuit held that this sort of âdoubling upâ of fees was not allowed because the work of the master and his attorney was essentially the same. As an accounting expert, Johnson did not duplicate his attorneyâs work. 6 In addition to concluding the parties consented to the appointment of the special master, the court also indicated that the failure to timely raise the issue to the trial court waived the objection on appeal. Fajarado Shopping Ctr., S.E. v. Sun All. Ins. Co. of P.R., Inc., 167 F.3d 1, 5-6 (1st Cir. 1999). 7 The interpretation of a contract is a question of law which we review de novo. Fed. Deposit Ins. Corp. v. Fisher, 2013 CO 5, ¶9. However, the decision to award fees, including expert witness fees, is within the sound discretion of the trial court, and we will not reverse the award absent a clear abuse of discretion. Trinity Universal Ins. Co. v. Streza, 8 P.3d 613, 619 (Colo. App. 2000).  JUDGE WEBB, concurring in part and dissenting in part. ¶59        As to both Mr. Johnsonâs own time and fees of the attorney whom he retained â without court permission â incurred after he was notified that because the case had settled, he should cease work, the inherent authority doctrine should not be applied for the first time on appeal to affirm the order that the Lalehs pay these sums. In any event, this order was also contrary to the contract â prepared by Mr. Johnson â that he and the Lalehs entered into. Therefore, and with respect, I dissent from those portions of the majority opinion that affirm the courtâs order holding the Lalehs liable for collection costs. I. Introduction ¶60        The factual background for this separate opinion is undisputed. ¶61        Upon his court appointment, Mr. Johnson and the Lalehs entered into a contract for his professional services. Before the case settled, Mr. Johnson retained an attorney. Neither the contract nor the order of appointment authorized him to do so. Yet, he failed to request court permission or obtain the Lalehsâ consent. ¶62        When the case settled, the Lalehs promptly notified Mr. Johnson of the settlement and directed him to cease all work. Shortly thereafter, one of the Lalehs questioned a billing that included fees for Mr. Johnsonâs attorney. At that point, Mr. Johnsonâs only ongoing relationship to the Lalehs was of creditor to debtors. ¶63        Like any other creditor, he invested some of his own time and incurred legal expenses in the collection effort. The reasonableness of those efforts was undisputed below, and the majority properly declines to address it for the first time on appeal. But neither the contract nor the appointment order authorized Mr. Johnson to recover collection costs. II. Law ¶64        The majority describes this case as having âcome[] to us in a unique posture.â Be that as it may, neither Mr. Johnsonâs brief nor the majority opinion includes any authority expressly upholding an ex post facto order allowing a special master or similar court appointee to recover costs of collection. Alone, this void gives me pause. ¶65        The majority also makes two concessions that give me further pause.
¶66        The majority holds that the Lalehs waived any objection to payment of attorney fees incurred by Mr. Johnson because they did not question them until about three weeks after the case had been dismissed. While I concur in that portion of the opinion, the rationale does not warrant recovery of post-settlement attorney fees, for two reasons. ¶67        First, because Mr. Johnson incurred most â if not all â of the post-settlement attorney fees after one of the Lalehs objected to having been billed for such fees, this objection ends the waiver. And more importantly, acquiescence in Mr. Johnsonâs use of an attorney to facilitate discharge of his special master duties hardly consents to being liable for the fees of a collection attorney. ¶68        Second, the majority rejects the trial courtâs view âthat [Mr. Johnsonâs] contract so clearly speaks to the issue of costs incurred in the collection of past due fees. Nothing in the relevant language of the contract explicitly mentions collection costs. . . . [W]e disagree with the trial courtâs interpretation of the terms of the engagement agreement.â I agree. ¶69        The majority fills this gap by invoking the doctrine of inherent authority, citing Feigin v. Colorado National Bank, N.A., 897 P.2d 814, 820 (Colo. 1995); Rush Creek Solutions, Inc. v. Ute Mountain Ute Tribe, 107 P.3d 402, 406 (Colo. App. 2004); and Lauren Corp. v. Century Geophysical Corp., 953 P.2d 200, 203-04 (Colo. App. 1998). But the trial court did not mention this doctrine, much less rely on it. Nor was it argued below by Mr. Johnson. ¶70        Everyone would agree that appellate courts can and often do uphold lower court actions for a different reason from that relied on by the lower court, provided the new reason finds support in the record. But the exercise of inherent power is a matter of discretion. Randleman Excavating Co., Inc. v. Hoder, 522 P.2d 1240, 1241 (Colo. App. 1974) (not published pursuant to C.A.R. 35(f)) (âThis inherent power rests in the sound discretion of the trial court.â). Who can say whether the trial court would have done so, had it concluded â as the majority does â that Mr. Johnsonâs contract with the Lalehs did not cover collection costs? ¶71        With only this much for guidance, the order should be vacated as to collection costs and the case remanded for the trial court to exercise its discretion. See Glover v. Innis, 252 P.3d 1204, 1211 (Colo. App. 2011) (âBecause of its interpretation of the statute, the trial court did not determine whether . . . those statements themselves would be independently admissible. On remand, the trial court must exercise its discretion under the statute in accordance with this opinion.â); McCallum Family L.L.C. v. Winger, 221 P.3d 69, 79 (Colo. App. 2009) (â[W]hether to exercise that discretion must be determined in the first instance by the trial court, and thus we remand for the trial court to consider this issue.â). ¶72        Still, in my view remand would be futile because even if a trial courtâs order allowing a special master or similar court appointee to recover collection costs might under some circumstances be justified using the inherent power doctrine, I would decline to do so here for one additional reason: allowing Mr. Johnson to recover collection costs violates the Lalehsâ contract with him, on which the trial court expressly relied in rejecting the Lalehsâ arguments invoking the American Rule, (âThe court finally finds that Mr. Johnsonâs legal fees constitute part of âall fees and expensesâ of Mr. Johnson . . . .â). ¶73        Of course, a court may decline to enforce a contract for many reasons. But Mr. Johnson has not sought to disavow his contract. To the contrary, and at his urging, the trial court relied on it â mistakenly, as the majority correctly holds â to afford him recovery of collection costs. ¶74        Because the contract was bilateral, both Mr. Johnson and the Lalehs had obligations under it. Analytical Design & Constr. Grp., Inc. v. Murray, 690 P.2d 269, 272 (Colo. App. 1984) (âHere, Capitolâs loan commitment was not a bilateral contract creating mutual obligations . . . .â). And the Lalehsâ obligations to Mr. Johnson did not extend to paying his costs of collection, including attorney fees. See generally Allison v. Bank One-Denver, 289 F.3d 1223, 1244-45 (10th Cir. 2002) (applying Colorado law to disallow recovery of attorney fees incurred in enforcing an indemnity agreement). ¶75        Thus, in choosing to contest â rather than pay â Mr. Johnsonâs claims for his fees and those of his attorney, the Lalehs had no reason to include in their risk analysis being held liable for his collection costs. âCourts cannot make contracts for parties and then order them specifically performed.â Schreck v. T & C Sanderson Farms, Inc., 37 P.3d 510, 514 (Colo. App. 2001). Yet, by affirming under the doctrine of inherent judicial authority, the majority does just that here. Thus, I would reverse the collection costs portion of the order as an unlawful modification of a valid contract. These opinions are not final. They may be modified, changed or withdrawn in accordance with Rules 40 and 49 of the Colorado Appellate Rules. Changes to or modifications of these opinions resulting from any action taken by the Court of Appeals or the Supreme Court are not incorporated here. Colorado Court of Appeals Opinions || January 14, 2016 Back |