Payan v. Nash Finch Co.

• Docket Number: 11CA0570
• Decision Date: 16 August 2012
• Citation: 310 P.3d 212,2012 COA 135 M
• Parties: Rosa PAYAN; Guadalupe Arroyo; Saloman Martinez; Debra Gomez; Antonio Esquibel; and Julia Morgan, Plaintiffs–Appellants, v. NASH FINCH COMPANY, d/b/a Avanza Supermarket, Defendant–Appellee.
• Court: Colorado Court of Appeals

310 P.3d 212

2012 COA 135 M

Rosa PAYAN; Guadalupe Arroyo; Saloman Martinez; Debra Gomez; Antonio Esquibel; and Julia Morgan, Plaintiffs–Appellants,

v.NASH FINCH COMPANY, d/b/a Avanza Supermarket, Defendant–Appellee.

No. 11CA0570

Colorado Court of Appeals, Div. VII.

Aug. 16, 2012.

As Modified on Denial of Rehearing Nov. 8, 2012.

Rehearing Denied Dec. 27, 2012.

David J. Dansky, Denver, Colorado, for Plaintiffs–Appellants.

Davis Graham & Stubbs LLP, Andrew M. Low, Geoffrey C. Klingsporn, Denver, Colorado, for Defendant–Appellee.

Opinion by Judge TERRY.

¶ 1 Plaintiffs, Rosa Payan, Guadalupe Arroyo, Saloman Martinez, Debra Gomez, Antonio Esquibel, and Julia Morgan, appeal the trial court's order awarding attorney fees in their favor against defendant, Nash Finch Company, doing business as Avanza Supermarket (Nash Finch). Because we conclude the trial court erred in part of its calculation of the fee award, we affirm in part, reverse in part, and remand with directions.

I. Background

¶ 2 In June 2008, Nash Finch implemented a misleading pricing scheme in two of its Denver metro area supermarkets. Customers were led to believe they would receive an additional 10% savings compared to regular prices, when in fact, the cashier added 10% to the price at check-out. Plaintiffs were customers at these supermarkets who did not immediately realize they had paid more than the advertised price.

¶ 3 In October 2008, the Colorado Department of Agriculture (DOA) initiated an informal investigation into Nash Finch's pricing system, which culminated in DOA's request that Nash Finch voluntarily discontinue the misleading pricing system. After receiving DOA's request, Nash Finch continued to add 10% at check-out, but changed its signage to state, "A charge of 10% will be added at the cash register."

¶ 4 Also in October 2008, attorneys Craig Silverman and David Olivas filed a class action complaint and jury demand against Nash Finch in Denver District Court. The complaint alleged the following five claims for relief: deceptive trade practices; fraudulent misrepresentation; negligent misrepresentation; civil theft; and violation of the Colorado Consumer Protection Act (CCPA), § 6–1–113(2), C.R.S.2011. The complaint was not served on Nash Finch, and the class action suit was voluntarily dismissed.

¶ 5 In November 2008, plaintiffs' counsel filed a complaint in Adams County District Court on behalf of plaintiffs Rosa Payan and Guadalupe Arroyo. That complaint was later amended to add Saloman Martinez as a plaintiff. Claims were asserted against Nash Finch for violation of the CCPA, common law unfair trade practices, fraud, negligent misrepresentation, and civil theft. A third attorney, William Silverman, entered an appearance on behalf of all plaintiffs.

¶ 6 Nash Finch moved to dismiss the complaint under C.R.C.P. 12(b)(5) for failure to state a claim upon which relief could be granted. The court entered an order dismissing without prejudice plaintiffs' claims for violation of the CCPA, negligent misrepresentation, and civil theft, and allowed plaintiffs to amend the complaint. Plaintiffs' common law claim for unfair trade practices was dismissed with prejudice. Plaintiffs filed a second amended complaint in March 2009.

¶ 7 Plaintiffs' counsel also filed a complaint in Denver District Court raising claims against Nash Finch for violation of the CCPA, fraud, negligent misrepresentation, and civil theft on behalf of plaintiffs Debra Gomez, Antonio Esquibel, and Julia Morgan. The Adams County complaint and Denver County complaints were consolidated in the Adams County District Court.

¶ 8 The court scheduled a seven-day jury trial. Prior to trial, plaintiffs withdrew their intentional and negligent misrepresentation claims, noting that the misrepresentation claims largely overlapped with the CCPA claim, and the CCPA remedies were superior. Thus, only the CCPA and civil theft claims remained at the time of trial.

¶ 9 Nash Finch filed a motion for summary judgment, which was denied. Three days before trial, Nash Finch filed an admission of liability and confession of judgment for the full amount of the statutory damages sought by plaintiffs, a total of $4,200.

¶ 10 Plaintiffs moved to recover attorney fees under section 6–1–113(2)(b), which provides for a mandatory award of reasonable attorney fees and costs incurred in pursuing successful claims under the CCPA. According to the motion, plaintiffs' fee agreement with counsel stated only that plaintiffs would not be billed for attorney fees.

¶ 11 Plaintiffs asserted that $350 per hour was an appropriate hourly rate for each of the three plaintiffs' attorneys, and stated that the attorneys had spent a total of 2,258 hours litigating the case. Plaintiffs requested total fees of $790,647, and asked that a multiplier of 1.5 to 3 times be applied to that figure, given the circumstances of the case. Thus, their total requested fees ranged from $1,185,970 to $2,371,941.

¶ 12 Nash Finch contested the reasonableness of the fee request. Both parties disclosed expert opinions on the reasonableness of plaintiffs' requested attorney fees.

¶ 13 Four days after Nash Finch filed its response contesting plaintiffs' fee request, plaintiffs moved for expedited discovery of information pertaining to Nash Finch's own fees and costs. The trial court received briefing from both sides on the merits of the motion, and ultimately denied plaintiffs' discovery request.

¶ 14 The trial court held a one-day hearing on the motion for attorney fees, at which both sides presented expert witness testimony and argument. The trial court entered a detailed, twenty-page, single-spaced order awarding plaintiffs a total of $88,427 in attorney fees.

II. Attorney Fee Award

¶ 15 Plaintiffs assert that the trial court's fee award was in error in numerous respects. As detailed below, we agree with some of their arguments, but not with others.

¶ 16 We review the reasonableness of a trial court's award of attorney fees for an abuse of discretion. See Hartman v. Cmty. Responsibility Ctr., Inc., 87 P.3d 254, 257 (Colo.App.2004). The determination of reasonableness of attorney fees is a question of fact for the trial court, and its ruling will not be disturbed on review unless patently erroneous and unsupported by the evidence. Tallitsch v. Child Support Servs., Inc., 926 P.2d 143, 147 (Colo.App.1996). Where a trial court misapplies the law, it abuses its discretion. DeLong v. Trujillo, 25 P.3d 1194, 1197 (Colo.2001).

A. Calculation of the Lodestar Amount

¶ 17 Plaintiffs contend the trial court did not take the proper arithmetical steps in calculating the lodestar amount before it made subsequent adjustments to that amount. Plaintiffs argue that this error resulted in an improperly reduced fee award. While we commend the trial court for aiding our appellate review by making detailed findings, we agree that the court erred in some of its calculations of the fees to be awarded.

¶ 18 A court makes an initial estimate of a reasonable attorney fee by calculating the lodestar amount. Tallitsch, 926 P.2d at 147. The lodestar amount represents the number of hours reasonably expended on the case, multiplied by a reasonable hourly rate. Id. The court's calculation of the lodestar amount carries with it a strong presumption of reasonableness. Id.; see also Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983).

1. Reduction of Billed Hours

¶ 19 Here, the trial court separated its findings into three main sections. The court first explained how it determined a reasonable hourly rate for plaintiffs' attorneys. The court then gave its rationale for determining how many hours were reasonably expended for the case. In a third section, the court explained its adjustments to the lodestar amount, and showed its calculations. The last page of the order shows the following chart representing the calculation of fees to be awarded:

Item % $ Notes

Total request	790,647
Less request for hearing	–49,620	Reasonable amount = $12,100
August 30, 2010 request	741,017
Reduced to $350 & $200/hour	508,850
Adjustments
Block billing	–20
Redundancies	–10
Excessive conferences	–15
Non-statutory claims (class action, fraud, etc.)	–12
Amount in controversy	–8
Complexity	–5
Awards in similar cases	–5
Degree of success achieved	0
Fixed or contingent fee	0
Public importance	–10
Total Percentage reduction	85%	$508,850 × 85% = $432,523
$76,327	508,850 - 432,523 = $76,327
Add back fee hearing award	$12,100
Total fee award	$88,427

¶ 20 As these calculations show, the court multiplied the number of hours billed by plaintiffs' counsel (2,258) by what it deemed to be appropriate hourly rates for the various attorneys on the case to establish a baseline amount of $508,850.

¶ 21 However, as stated in Tallitsch, the court, in its broad discretion as the overseer of the litigation, must begin by determining the reasonable number of hours expended by counsel in working on the case. 926 P.2d at 147; see also Hensley, 461 U.S. at 434, 103 S.Ct. 1933. The reasonable number of hours is then to be multiplied by the reasonable hourly rate to calculate the lodestar amount. Tallitsch, 926 P.2d at 147.

¶ 22 Here, the court's calculations reflect that it essentially used the $508,850 figure as the lodestar amount, and made deductions from that amount. In so doing, the court erred, because, as the court's order indicates, the lodestar calculation included an unreasonable number of hours. The court made deductions of flat percentages from the lodestar amount based on the unreasonableness of the time expended. This is reflected in the deductions of 20% for block billing, 10% for redundancies, 15% for excessive conferences, and 12% for non-statutory claims. Added together, these deductions constitute a 57% reduction.

¶ 23 As the Supreme Court stated in Hensley, "[t]he district court ... should exclude from [the] initial [lodestar] calculation hours that were not ‘reasonably expended.’ " 461 U.S. at 434, 103 S.Ct. 1933. Deductions that should be taken...