Western States Enterprises, Inc. et al v. Land et al

Filing 33

OPINION AND ORDER GRANTING, IN PART, AND DENYING, IN PART, MOTION FOR ATTORNEY FEES: IT IS THEREFORE ORDERED that 1. Defendants' Motion for an Award of Attorney Fees and Sanctions 31 is GRANTED IN PART AND DENIED IN PART. 2. T he Defendants are awarded attorney fees in the amount of $31,817.50 payable jointly and severally by the Plaintiffs and their counsel within ten days of the date of this Order. 3. If such fees are not timely paid, upon request, the Defendants may request that such award be reduced to Judgment in their favor and jointly and severally against the Plaintiffs and their counsel. by Judge Marcia S. Krieger on 6/12/12.(msksec, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Honorable Marcia S. Krieger
Civil Action No. 11-cv-00719-MSK-KLM
WESTERN STATES ENTERPRISES, INC., and
STEPHANIE DIETTE,
Plaintiffs,
v.
LLOYD LAND, and
EILEEN LAND,
Defendants.

OPINION AND ORDER GRANTING, IN PART, AND DENYING, IN PART, MOTION
FOR ATTORNEY FEES

THIS MATTER comes before the Court on Defendants’ Motion for an Award of
Attorney Fees and Sanctions (#31). Plaintiffs did not respond to the motion. Having considered
the same, the Court FINDS and CONCLUDES the following.
I.

Background

The full background of the case is set forth in the Court’s Order (#25) granting the
Defendants’ Motion to Dismiss. In brief summary, this dispute arises out of assessments, fines,
penalties, and liens imposed by a homeowners’ association on four residential properties located
in Riverdale Peaks, a planned community in Colorado governed by the Colorado Common
Interest Ownership Act (“CCOIA”), C.R.S. § 38-33.3.-101, et seq. The homes were constructed
by Plaintiff Western States Enterprises (“WSE”). One was acquired by Plaintiff Stephanie
Diette.

Defendant Lloyd Land is the President of the Riverdale Peaks Homeowners’ Association
(the “HOA”). In his capacity as President of the HOA, Mr. Land filed Notice of Assessment
liens against properties owned by Ms. Diette and constructed by WSE in an effort to collect past
due fees, dues, and other costs. The HOA ultimately sued on the liens in state court [are these
the four lawsuits referred to below?], and obtained a judgment and an award of attorney fees.
In this action, the Plaintiffs asserted a claims against Mr. and Mrs. Land under the federal
Racketeering Influenced and Corrupt Organization Act (“RICO”) and under the Colorado
Organized Crime and Control Act “COCCA”), the RICO state analogue. The claims were
dismissed on the grounds that the allegations in the Complaint were insufficient under Fed. R.
Civ. P. 9 and Fed. R. Civ. P. 12(b)(6) to state a claim.
The Defendants now seek an award of attorney fees. The Defendants contend that the
Plaintiffs’ claims were frivolous from the outset, and were asserted solely for the purpose of
harassment and/or to gain leverage against the HOA in the state proceedings. The Plaintiffs did
not respond to the motion.
II.
A.

Analysis

Entitlement to Award of Fees
Although the Defendants assert several legal bases for an award of attorney fees, the most

relevant appears to be C.R.S. § 13-17-102(4)1, which provides:
The court shall assess attorney fees if, upon the motion of any
party or the court itself, it finds that an attorney or party brought or
defended an action, or any part thereof, that lacked substantial
justification or that the action, or any part thereof, was interposed

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The statute applies to a civil proceeding brought in “any court of record in this state.”
C.R.S. § 13-17-102(1).
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for delay or harassment or if it finds that an attorney or party
unnecessarily expanded the proceeding by other improper conduct,
including, but not limited to, abuses of discovery procedures
available under the Colorado rules of civil procedure or a
designation by a defending party under section 13-21-111.5(3) that
lacked substantial justification. As used in this article, “lacked
substantial justification” means substantially frivolous,
substantially groundless, or substantially vexatious.

A claim is frivolous if the proponent can present no rational argument based on the
evidence or law in support of the claim. Remote Switch Systems, Inc. v. Delangis, 126 P.3d 269,
275 (Colo.App. 2005). A claim is groundless if the allegations in the complaint, while sufficient
to survive a motion to dismiss for failure to state a claim, are not supported by any credible
evidence. Id.
In determining whether to make an attorney fee award under this section, the Court is
required to consider the following factors:
(a) The extent of any effort made to determine the validity of any
action or claim before said action or claim was asserted;
(b) The extent of any effort made after the commencement of an
action to reduce the number of claims or defenses being asserted or
to dismiss claims or defenses found not to be valid within an
action;
(c) The availability of facts to assist a party in determining the
validity of a claim or defense;
(d) The relative financial positions of the parties involved;
(e) Whether or not the action was prosecuted or defended, in whole
or in part, in bad faith;
(f) Whether or not issues of fact determinative of the validity of a
party’s claim or defense were reasonably in conflict;
(g) The extent to which the party prevailed with respect to the
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amount of and number of claims in controversy;
(h) The amount and conditions of any offer of judgment or
settlement as related to the amount and conditions of the ultimate
relief granted by the court.
C.R.S. § 13-17-103(1).
As the Plaintiffs did not respond to the Motion, the Court deems its factual averments to
be true. In addition, it appears that the dispute has always been about the HOA fees and
penalties which were the subject of the state court actions. The Plaintiffs’ disagreement with the
HOA were raised as counterclaims in the state court actions initiated by the HOA, which claims
were resolved in such actions against the Plaintiffs. Thus, this action was unnecessary.
The Plaintiffs’ contention that the Defendants and the HOA were an enterprise engaged
in a pattern of criminal racketeering activity, was not adequately alleged, much less supported by
evidence. Indeed, the Plaintiffs have presented no argument or evidence to rebut the
Defendants’ contention that this lawsuit was initiated for the sole purpose of gaining leverage in
settling the underlying state litigation, and was unsupported by any good faith factual basis from
the outset. The Court therefore finds that Plaintiffs’ claims in this action were both substantially
groundless and frivolous. This entitles the Defendants to an award of attorney fees.
The statute permits fees to be levied against both parties and attorneys. This record
shows that the same attorney represented the Plaintiffs in the state proceedings. Presumptively
such attorney was therefore fully informed of resolution of the dispute in state court, and the
absence of any justification for the claims brought in this action. Accordingly, the attorney fee
award is properly assessed against both the Plaintiffs and their counsel.
B.

Reasonableness of Fees Sought

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The Defendants seek an award $39,880 for attorney fees incurred in drafting the Motion
to Dismiss and Reply brief, this Motion for Attorney’s Fees, and various other status updates and
related matters. The request is supported by an affidavit from Robert Kitsmiller (#31-1) and
contemporaneous billing records (#31-2). The affidavit provides evidence that the rates of the
attorneys involved in the work were reasonable and verifies the number of hours spent on the
tasks at issue.
Although the request is unopposed, only reasonable attorney fees can be awarded. In this
regard the Court finds that some time entries do not demonstrate reasonable charges. For
example, an entry on August 2, 2011, reflects .2 hours of time (i.e., approximately 12 minutes,
and a total of $60) for a task described as “Review Re-assignment Order of RICO Case.” The
reassignment order of that date (#23) is a three-sentence text order informing the parties that the
case has been reassigned and that the initials on the case caption should reflect the current
assignment. It is difficult to understand why any time, much less .2 hours, was charged for
review such Order. Its review and notation is essentially a ministerial task requiring no legal
expertise. For this review and other such ministerial tasks the requested compensation is not
reasonable.
In addition, there appears to have been no necessity or benefit associated with charges for
intra-firm conferences. These appear to be related to management of work assignments within
the firm. In the absence of any showing that such conferences were necessary or beneficial, the
fees charged for them are not reasonable.
Finally, at least some of the research entries appear to be related to the state court
litigation, rather than this case. See, e.g., 5/11/11 entry (RESEARCH re: whether association can

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file lien without a hearing). Presumably these fees were or could have been sought in the state
court matters, and will not be included in the award.
After excluding the items identified above, the Court finds that the Defendants
reasonably incurred the sum of $31,817.50 in attorney fees.
IT IS THEREFORE ORDERED that
1.

Defendants’ Motion for an Award of Attorney Fees and Sanctions (#31) is
GRANTED IN PART AND DENIED IN PART.

2.

The Defendants are awarded attorney fees in the amount of $ 31,817.50 payable
jointly and severally by the Plaintiffs and their counsel within ten days of the date
of this Order.

3.

If such fees are not timely paid, upon request, the Defendants may request that

such award be reduced to Judgment in their favor and jointly and severally against the
Plaintiffs and their counsel.
Dated this 12th day of June, 2012
BY THE COURT:

Marcia S. Krieger
United States District Judge

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