Brock v. Weidner

• Decision Date: 08 April 2004
• Docket Number: No. 02CA2519.,02CA2519.
• Citation: 93 P.3d 576
• Parties: John R. BROCK, Jr., and Ann W. Brock, Plaintiffs-Appellees, v. John E. WEIDNER and Peggy S. Weidner, Defendants-Appellants, and Discovery Homeowners Association and Architectural Control Committee, Defendants-Appellees.
• Court: Colorado Court of Appeals

93 P.3d 576

John R. BROCK, Jr., and Ann W. Brock, Plaintiffs-Appellees, v. John E. WEIDNER and Peggy S. Weidner, Defendants-Appellants, and Discovery Homeowners Association and Architectural Control Committee, Defendants-Appellees.

No. 02CA2519.

Colorado Court of Appeals, Div. A.

April 8, 2004.

Rehearing Denied May 13, 2004.

Mulliken, Gleason, Weiner, Whitney & Jolivet, P.C., Steven K. Mulliken, Gregory M. O'Boyle, Colorado Springs, Colorado, for Plaintiffs-Appellees.

Daniel Stageman, P.C., Daniel B. Stageman, Colorado Springs, Colorado, for Defendants-Appellants.

Susemihl, McDermott & Cowan, P.C., C. David McDermott, Colorado Springs, Colorado, for Defendants-Appellees.

Opinion by Chief Judge DAVIDSON.

Defendants, John E. Weidner and Peggy S. Weidner, appeal from the judgment dismissing an action filed against them by plaintiffs, John R. Brock, Jr., and Ann W. Brock. Specifically, defendants appeal the portion of the judgment declining to award them costs and attorney fees under a contractual fee-shifting provision. We reverse that portion of the judgment and remand.

Plaintiffs filed a complaint seeking injunctive and declaratory relief and damages arising from defendants' plans to build an addition to their home. Plaintiffs alleged that the proposed construction would violate the restrictive covenants of the subdivision, and that certain preliminary tree removal had already violated the covenants.

Plaintiffs named as additional defendants the Discovery Homeowners Association and its architectural control committee (collectively DHA). Plaintiffs alleged that DHA improperly ratified or failed to prohibit defendants' actions. Plaintiffs also sought to recover their costs and attorney fees pursuant to a fee-shifting provision in the covenants, which provides as follows: "[The] successful party in any proceeding to enforce these covenants, conditions and restrictions shall be entitled to recover the costs of said proceeding including reasonable attorney's fees."

Following an evidentiary hearing on plaintiffs' motion for a preliminary injunction, the trial court denied that request. The court found that defendants proceeded properly in seeking approval for the project and that DHA acted in a reasonable and good faith manner when it construed ambiguous provisions of the covenants and allowed defendants to continue with the project.

Plaintiffs sought a jury trial on their remaining claims, which prompted objections from defendants and DHA. Noting that the basic thrust of the action was equitable, the trial court denied the jury demand.

Plaintiffs then filed a motion for partial summary judgment citing three allegedly undisputed breaches of the covenants by defendants and DHA. The trial court denied plaintiffs' motion after concluding that there were disputed material issues of fact, and plaintiffs then set the case for trial.

Approximately two months later, plaintiffs and DHA filed a joint motion seeking dismissal of the action based on a settlement agreement they had reached. The settlement agreement provided that it became effective only if the trial court dismissed the action and it required all parties, including defendants, to pay their own attorney fees. The motion indicated that defendants would object to the requested relief.

Defendants filed an objection, arguing that any dismissal should be conditioned on plaintiffs being required to pay defendant's attorney fees under the fee-shifting provision in the covenants.

Thereafter, the trial court entered an order dismissing the action under C.R.C.P. 41(a)(2). The order specified that the dismissal was "with prejudice" as to plaintiffs' claims against DHA and that all parties would pay their own costs and attorney fees.

Defendants filed a timely C.R.C.P. 59 motion asking the trial court to modify the order to provide that (1) dismissal of the claims against them also be with prejudice and (2) they be allowed to recover their costs and attorney fees pursuant to the fee-shifting provision in the covenants.

Plaintiffs then filed an amended motion that sought dismissal of all claims with prejudice, and the trial court entered an amended dismissal order granting that motion. In its amended order, the trial court found that the issues were "close and difficult" and concluded that an award of attorney fees was not warranted. Defendants contend that the trial court abused its discretion in declining to require plaintiffs to pay their attorney fees either as a condition of dismissal under C.R.C.P. 41(a)(2) or pursuant to the fee-shifting provision in the covenants. We agree that an award of attorney fees to defendants was proper under the covenants.

I. Attorney Fees under C.R.C.P. 41(a)(2)

Initially, we perceive no error or abuse of discretion by the trial court insofar as it declined to award attorney fees as a condition of dismissal pursuant to C.R.C.P. 41(a)(2). Absent exceptional circumstances, such as repeated harassing suits by a plaintiff, a defendant may not recover attorney fees when a plaintiff obtains dismissal of an action with prejudice under that rule. See AeroTech, Inc. v. Estes, 110 F.3d 1523, 1528 (10th Cir.1997)

(applying substantially similar federal counterpart to C.R.C.P. 41(a)(2)); see also 8 J.W. Moore, Moore's Federal Practice ¶ 41.40[10][d] (2003); 9 C. Wright & A. Miller, Federal Practice and Procedure § 2366 (1995).

Because the trial court dismissed the action with prejudice and because no exceptional circumstances were present in this case, the trial court properly declined to require plaintiffs to pay defendants' attorney fees as a condition of the dismissal under C.R.C.P. 41(a)(2). See AeroTech, Inc. v. Estes, supra.

II. Attorney Fees under the Covenants

However, we conclude that the trial court abused its discretion in not requiring plaintiffs to pay defendants' reasonable costs and attorney fees as the "successful part[ies]" in the proceeding under the fee-shifting provision in the covenants.

In the absence of a specific statute, court rule, or contract provision to the contrary, attorney fees are not recoverable by a prevailing party in a contract or tort action. Bernhard v. Farmers Ins. Exch., 915 P.2d 1285, 1287 (Colo.1996).

Fee-shifting provisions are expressly designed to override the otherwise applicable rule that the losing party does not have to pay the winner's attorney fees. These provisions generally contemplate that the "prevailing party" will be entitled to recover its attorney fees and that there will be one winner and one loser regarding payment of those fees. See Wheeler v. T.L. Roofing, Inc., 74 P.3d 499, 503-04 (Colo.App.2003)

.

The determination of which party succeeded or prevailed under a contractual fee-shifting provision is committed to the discretion of the trial court subject, however, to an abuse of discretion standard of review on appeal. See Dennis I. Spencer Contractor, Inc. v. City of Aurora, 884 P.2d 326, 328 (Colo.1994)

.

Here, defendants achieved substantial success in the litigation. Indeed, it is difficult to see how defendants could have...