Ferrell v. Glenwood Brokers, Ltd., 92SC107

• Decision Date: 29 March 1993
• Docket Number: No. 92SC107,92SC107
• Citation: 848 P.2d 936
• Parties: Bonnie C. FERRELL, Petitioner, v. GLENWOOD BROKERS, LTD., a Colorado Corporation, Respondent.
• Court: Colorado Supreme Court

Page 936

848 P.2d 936

Bonnie C. FERRELL, Petitioner, v. GLENWOOD BROKERS, LTD., a Colorado Corporation, Respondent.

No. 92SC107.

Supreme Court of Colorado,

En Banc.

March 29, 1993.

Elwyn F. Schaefer, Steven Clymer, Elwyn F. Schaefer, P.C., Denver, for petitioner.

Robert M. Noone, Margaret O'Donnell, Delaney & Balcomb, P.C., Glenwood Springs, for respondent.

Justice MULLARKEY delivered the Opinion of the Court.

In the Garfield County Court, respondent, Glenwood Brokers, Ltd. (Glenwood), brought an action against petitioner, Bonnie C. Ferrell (Ferrell), to recover a real estate brokerage commission of $3,900 due after Ferrell breached a real estate listing contract. The contract also provided for an award of reasonable attorney fees to the prevailing party in case of litigation or arbitration arising out of the contract. The county court entered judgment in favor of Glenwood, and, in addition to the $3,900 real estate commission, awarded attorney fees of $4,794 to Glenwood. Ferrell appealed to the district court, contending that the award of attorney fees brought the damages awarded to Glenwood above the then-existing $5,000 jurisdictional limit of the county court. The district court affirmed the county court and we granted certiorari. We affirm.

I.

Glenwood, a Colorado corporation, is a real estate brokerage firm in Glenwood Springs, Colorado. Mark Kister is a shareholder and director of Glenwood, and a duly licensed real estate broker. Ferrell is a dentist who lives and practices in Denver.

In his capacity as a real estate broker, and as an agent of Glenwood, Kister entered into an Exclusive Right to Sell Listing Contract (Listing Contract) with Ferrell on August 12, 1989, for the purpose of selling her condominium unit in Glenwood Springs. Among other terms, the Listing Contract provided that a six percent commission would be earned upon Glenwood's procuring a ready, willing and able buyer, and that in the event of litigation over its enforcement, the prevailing party is entitled to attorney's fees.

Kister procured an offer to purchase the subject property from a ready, willing and able purchaser for the condominium. Subsequently, both the purchasers and Ferrell reneged on the deal, however, the commission had already been earned and was due and payable at the time of the scheduled closing, October 27, 1989.

Glenwood commenced an action in the Garfield County Court, seeking the commission, as well as interest, costs, and attorney fees. After a bench trial, the court entered judgment in Glenwood's favor for $3,900 with interest, and costs in the amount of $5,235.57, including $4,794 in attorney fees. ¹ Ferrell appealed the judgment to the district court, which affirmed the county court judgment. We granted certiorari, and now affirm the district court judgment.

II.

At the time this case was filed, section 13-6-104, 6A C.R.S. (1987) ² provided in relevant part:

(1) The county court shall have concurrent jurisdiction with the district court in civil actions, suits, and proceedings in which the debt, damage, or value of the personal property claimed does not exceed five thousand dollars....

Thus, the jurisdiction of the county courts of the state was limited to actions, suits, and proceedings in which the debt, damage, or value of the personal property claimed did not exceed five thousand dollars. § 13-6-104(1). In the case at bar, Ferrell claims that the Garfield County Court had jurisdiction of this matter only to the extent that the total amount awarded, including attorney fees accrued during the course of the litigation and payable to the prevailing party pursuant to contract, were less than or equal to five thousand dollars. We reject this argument as fundamentally flawed because it ignores settled precedent regarding when jurisdiction is determined. ³

In Denver Brick Manufacturing Co. v. McAllister, 6 Colo. 326 (1882), this court construed a constitutional provision and a statute which were almost identical to the jurisdictional limit statute at issue here except for the amount of the limit. We held "that the amount specified as the statutory limitation of the jurisdiction in question must be taken to mean the amount due the plaintiff, or the value or amount of his claim, or the value of the property sought to be recovered at the time of bringing the action." Id. at 329-30 (emphasis added). We reasoned that it "would be a most lame and impotent conclusion" to say that a court could be ousted of jurisdiction of a case which was within its jurisdiction when commenced, or a plaintiff could be forced either to remit part of the recovery or to seek another forum late in the proceedings. Id. at 328.

During that same December term of the court, we also decided Cramer v. McDowell, 6 Colo. 369 (1882). There, the plaintiff filed his action before a justice of the peace, who did not have jurisdiction of any case where the amount in controversy exceeded $300. At the time of filing, $300 principal and approximately $4 interest were due on the notes at issue. After trial, judgment was entered in the plaintiff's favor for $305.10. This court held that the judgment was void and no execution could issue. We reached this result because the subject matter amount exceeded the justice's jurisdiction when the action was filed, and the plaintiff did not make a timely offer to remit part of the judgment and bring the amount in controversy within the justice's jurisdiction. Id. at 371.

The element of recovery which made the judgment exceed the jurisdictional limit in Denver Brick was interest accumulating after the action was commenced on a note secured by a deed of trust. Here, it is attorney fees agreed to by contract. At the time the present action was commenced by filing a complaint on November 29, 1989, the record shows that Glenwood's attorney had performed 5.7 hours of billed work, worth $484.50, and only 33 days of interest, at $.85 per day, totalling $28.05 (this court's calculation), had accumulated by November 29, 1989, for a grand total of $4,412.55, well within the jurisdictional limit. ⁴

Under these facts and our reasoning in Denver Brick, the county court had jurisdiction when the complaint was filed. Once a court has jurisdiction over a case, the court does not lose jurisdiction simply because the case is litigated and attorney fees are incurred. When Glenwood commenced its action against Ferrell, the total sum sought including the amount owed on the debt, interest thereon, and attorney fees payable by contract was within the jurisdictional limit. The county court did not lose jurisdiction because Ferrell contested the case.

Furthermore, we cannot agree with Ferrell's contention that, once its attorney fees had accumulated sufficiently so that the potential judgment exceeded $5,000, Glenwood should have transferred the action to the district court. Implementing such a rule would be a waste of judicial resources. Under that theory, cases properly filed in county court would be transferred to district court at any stage of the litigation, even on the eve of (or during) trial. Two, rather than one, courts would be required to process the same case before it was resolved. Such a rule also would encourage bad faith litigation and discourage settlement because fee-shifting contracts would be enforceable only to a very low limit. Furthermore, such contracts, which are clearly enforceable and serve to discourage non-meritorious contract disputes and to encourage settlement, would be ineffective to serve those purposes.

Because the debt, damage, or value of the personal property claimed by Glenwood, including pre-complaint interest and attorney fees, was within the jurisdictional limit of $5,000 when Glenwood filed its complaint, the county court had jurisdiction over the complaint. It was not ousted of its jurisdiction solely because, at the time judgment was entered, the amount of attorney fees and underlying debt sued upon exceeded $5,000.

III.

There also is a separate, independent ground for upholding the county court's judgment. Under the law applicable to this case, the county court properly found the attorney fees to be costs which may be awarded over and above the county court's $5,000 jurisdictional limit. Ferrell argues that attorney fees cannot be awarded here as "costs," because section 13-16-122(1)(h), 6A C.R.S. (1987), does not expressly permit contractually-authorized attorney fees to be awarded as costs. ⁵ Ferrell argues that, if the General Assembly had intended the award of contractually authorized attorney fees as costs, it would not have qualified the award of such fees by providing for them "when authorized by statute or court rule." Instead, the General Assembly would have simply said that "costs may include any attorney fees." We do not agree. Ferrell's proposed statutory language easily could be misinterpreted as a wholesale abolition of the "American rule," whereby parties in litigation generally pay their own legal fees. In the American system, a party cannot recover his or her legal fees, whether as "costs" or "damages," unless there is some exception to the general rule. The list of expenses that may be awarded as costs under section 13-16-122, however, is illustrative and not exclusive. Church v. American Standard Ins. Co. of Wisconsin, 764 P.2d 405, 406 (Colo.App.1988). In general, absent a specific prohibition, the trial court has discretion over the awarding of costs. Id.; see Rossmiller v. Romero, 625 P.2d 1029, 1030 (Colo.1981).

This court, like most if not all jurisdictions, has given various classifications to attorney fees, depending on the context of the case. Two cases are illustrative. In Leadville Water Co. v. Parkville Water District, 164 Colo. 362, 436 P.2d 659 (1967), we noted that an owner of property being taken by eminent domain was entitled to his or her costs in addition to the fair and reasonable value of the property. With regard to attorney fees,...