DISTRICT COURT, BOULDER COUNTY, COLORADO

Case No. 95 CV 635

ORDER RE PLAINTIFFS’ MOTION FOR ATTORNEYS’ FEES AGAINST MCSTAIN ENTERPRISES

JOHN C. DEAN and DOROTHY H. DEAN,

Plaintiffs,

v.

McStain Enterprises, Inc., a Colorado corporation, Beauprez Piszek Limited Partnership, a Colorado limited partnership,

Defendants.

Plaintiffs’ Motion for Attorneys’ Fees was heard on April 22, 1998. The Court took the matter under advisement and now issues the following order. Defendant Beauprez’s motion for fees and the Plaintiffs’ motion for costs will be ruled on shortly by separate order.

Plaintiffs (“the Deans”) request attorneys’ fees in the amount of $203,017 against McStain Enterprises, Inc. (“McStain”) pursuant to C.R.S. 6-1-113(b).

The jury entered its verdict on November 26, 1997, awarding the Plaintiffs damages in the amount of $154,162. The Jury apportioned the damages and determined that McStain should pay 30% and Beauprez Piszek Limited Partnership should pay 40%. Judgment entered against Beauprez Piszek for $61,664.80. Because the jury found McStain liable under the C.R.S. 6-1-105, Colorado Consumer Protection Act, Deceptive Trade Practice, the Court trebled the award against McStain and entered judgment in the amount of $138,744. The total judgment was $200,408.80

The jury found against McStain on four claims: negligence, negligent misrepresentation, deceit based on fraud, and deceptive trade practice. Because the jury found against McStain on the deceptive trade practice claim pursuant to C.R.S. 6-1-105, the Deans are entitled to reasonable attorneys’ fees. C.R.S. 6-1-113.

FINDINGS OF FACT

The Deans attempted to discuss their concerns with McStain before filing suit. Their concerns were that an inordinate number of golf balls were coming onto and striking their property. Their home abutted the eighteenth hole of the Indian Peaks Golf Course.

On June 8, 1995, the Deans filed suit against the City of Lafayette, Rodney Tarullo, McStain, Beauprez Piszek Limited Partnership, Robert L. Beauprez, Hale Irwin Golf Services, Inc., David Jensen Associates, Inc., and Richard M. Phelps. The Complaint was amended in March, 1996. The claims brought against McStain were fraud, negligent misrepresentation, negligence, deceptive trade practice, civil conspiracy, trespass, nuisance, breach of contract, and promissory estoppel. All but the first four were removed from the case by court order.

The Court held a hearing on the Deans’ motion for preliminary injunction against the City on June 16, 17, and 18, 1995. Agents for several of the defendants testified for the City asserting that no standards or industry rules existed for golf course construction and that, in any event, the eighteenth hole was constructed in an appropriate and careful manner. The Court denied the motion for preliminary injunction.

The Court entered an order after the preliminary injunction hearing requiring that the parties depose each witness only once. As a result of the order, all Defendants were required to participate in a group deposition taken of each witness. Because of the Court’s order, McStain was present at and participated in several depositions even before the City settled. These include the depositions of Rod Tarullo, Richard Phelps, Thomas Hoyt, Steve Hanson, Robert Beauprez, Donald Searls, Craig Stephens, Rex Paulson, and David Jensen. These transcripts reveal that questions related directly or indirectly to the deceptive trade practices claim were asked at these depositions.

The defendants entered into a so-called joint defense agreement. The City of Lafayette settled with the Deans in June, 1996. During the ensuing one and one-half years, the Deans and the defendants engaged in substantial discovery including a large number of depositions and the production of voluminous documents.

Virtually on the eve of trial, McStain disclosed a January 9, 1996 mitigation report, prepared by James Dullea, who was employed by McStain to prepare such a report. The report discusses safety corridors and golf course widths and makes recommendations. Mr. Dullea relied upon Urban Land Institute publications to arrive at his conclusions. Although the recommendations relate to Filing 10 on the opposite side of the eighteenth hole from the Deans’ house, the report shows that the standards existed. The report shows that McStain knew that the standards existed and knew of the feasibility of mitigation techniques.

CONCLUSIONS OF LAW

The Deans are entitled to an award of attorneys’ fees for all the time their attorneys reasonably expended to prevail on their deceptive trade practices claim. Robinson v. Lynmar Racquet Club, Inc., 851 P.2d 274, 280 (Colo. App. 1993).

During this case, the Deans have had several lawyers. Their first lawyer was Michael E. Lindsay. In order to determine his attorneys’ fees request, Mr. Lindsay began with the billable time for his representation of the Deans. The value of his time was $96,321. He discounted his fees and billed the Deans $68,271. He then identified $32,843 as fees which were unrelated to the deceptive trade practices claim. The Deans request $35,428 for his fees related to the deceptive trade practices claim.

The Deans also retained the services of Frank Dubofsky, who represented them from January, 1997, until August, 1996. The value of his time on the case is $64,412. He discounted his fees to $56,256. He reviewed his billings and concluded that $33,754 of these fees were unrelated to the deceptive trade practices claim. The Deans request $22,502 for the work performed by Mr. Dubofsky.

Although the Deans were subsequently represented by a third attorney, they are not asking for his fees.

Finally, the Deans retained Daniel Patterson who represented them at trial and represents them to this day. He states that the value of his services is $178,660. He reduced his fees to $174,055. He deleted from his bill any time associated with transition from prior counsel, research and briefing on summary judgment motions filed by other defendants, preparation for and taking of the depositions of Robert Graves and of Floyd Tanaka (experts whose testimony does not relate to deceptive trade practices), and any research and communications relating exclusively to defendants other than McStain. He attributed $28,968 of his fees to matters unrelated to the deceptive trade practices claim. The Deans request $145,087 in fees for Mr. Patterson’s work.

The initial estimate by a court of a reasonable attorney fee is the calculation of the “lodestar” amount. This amount is the number of hours expended multiplied by a reasonable hourly rate. This amount carries a strong presumption of reasonableness. Spensieri, supra at 270.

After this initial determination, a court may raise or lower the calculation based upon other factors. Id., at 270.

In determining the reasonableness of fees, the Court must consider the following factors: the complexity of the case, the time and labor required, the novelty and difficulty of the questions involved, the skill required to perform the legal services properly, the fee customarily charged in the community, the amount involved and results obtained, the time limitations imposed by the client or by the circumstances, the experience, reputation and ability of the lawyer or lawyers performing the services; and whether the fee is fixed or contingent. Robinson, supra at 280, Hartman v. Freedman, 591 P.2d 1318 (Colo. 1979). No one factor is determinative. Spensieri v. Farmers Alliance Mutual Insurance Company, 804 P.2d 268, 271 (Colo. App. 1990).

The deceptive trade practice claim in this case is complex and novel and, as such, required superior skill and ability from the lawyers involved. It was asserted to the Court by the Deans, and not contradicted by McStain, that this verdict is the first such verdict against a golf course developer in the United States. The jury’s verdict may have far-reaching influence on the willingness of developers to place homes on fairways and to design communities without considerations of safety.

The case was complex not only because of the number of defendants, but also because the defendants engaged in conduct which exacerbated the complexity of the case. Paradoxically, each insisted that the Dean’s problem was either solely their own or was some other defendant’s problem, yet all the defendants entered into a joint defense agreement. The combination of these actions created an almost impenetrable wall of defense against the Deans.

The complexity of this case required superior skills. All of the Dean’s attorneys demonstrated those skills. Mr. Dubofsky, of course, is former Colorado Court of Appeals judge, whose legal research and writing skills cannot be questioned. Mr. Patterson, who requests the most fees, did a remarkable job of presenting the evidence at trial. His decision to dismiss all the defendants except for Robert Beauprez, Beauprez Piszek Limited Partnership, and McStain before trial dismantled the joint defense agreement and helped to produce truthful testimony at trial.

McStain has not disputed the hourly rates charged by any attorney for whom fees are requested.

As a result of their attorneys’ work in this matter, the Deans were awarded over $200,000. It can be fairly stated that the Deans achieved substantial success at trial.

McStain argues that the Court should depart from the lodestar amount for several reasons. First, it asserts that the Deans’ attorneys have not adequately identified the billings related to the deceptive trade practice claim. The attorneys herein introduced detailed billing records kept contemporaneously with the work done. They each performed a detailed examination of their bills and deleted any work which was specifically related to other claims or other defendants. In addition, they offered the testimony of an expert witness who was also called upon to review their records and take exception to bills improperly attributed to the deceptive trade practices claim. In his opinion the billings were properly identified.

McStain argues that the litigation focused on the City until June of 1996, and, therefore, discovery done before that date cannot be attributed to it. The Deans have adequately demonstrated that, because of the Court’s one witness-one deposition rule, the questions which McStain wished to ask regarding the deceptive trade practices claim were asked throughout the litigation.

The Court finds that the attorneys have provided a rational basis for ascribing their time to the deceptive trade practices claim.

Second and central to McStain’s objections to the Deans’ attorneys’ fees request is the notion that the deceptive practices claim is but one of four claims sustained by the jury; yet, Mr. Lindsay requests 52% of his total billings, Mr. Dubofsky requests 40% of his total billings, and Mr. Patterson requests 83% of his total billings. The average percentage is 68%. McStain argues that the attorneys have not appropriately segregated the claims.

This case was particularly fact intense. The number of facts to be discovered and organized was enormous. With very few exceptions, the facts which the Deans were required to discover were the same regardless of whether they were pursuing their negligence claim, their negligent misrepresentation claim, their fraud claim, or their deceptive trade practices claim. The jury found that McStain knew that the Deans property was unsafe and that they negligently and intentionally represented otherwise. It is impossible to apportion the factual underpinning of this case among the four theories or to ascribe certain facts to certain of the theories. The presentation of facts at trial was the same for all four theories.

Stated in a different way, if the attorneys’ fees award were attached to the negligence claim or to the negligent misrepresentation claim or to the fraud claim or to the deceptive trade practices claim, the Deans request for fees would be the same. If McStain is right, then under these circumstances, plaintiffs would never be entitled to any fees because they could not establish a set of facts which were independent of the facts supporting the other claims. Such a result would be absurd in light of the legislative directive to award reasonable fees for violation of the deceptive trade practices act. Accordingly, the Court holds that when multiple claims arise out of the same facts, circumstances, and transactions and the proof of the claims requires the presentation of essentially the same facts, segregation is not required, and the entire amount of fees may be recovered. See, Aetna Casualty and Surety v. Wild, 944 S.W.2d 37 (Tx. App. 1997).

Several other facts convince the Court that reduction of the fee request is inappropriate. First, the City alone expended over $300,000 defending this action. To say that the Deans fees were unreasonable suggests that the defendants paid unreasonable fees as well.

Second, this Court both heard the preliminary injunction and presided over the trial. The testimony at the preliminary injunction hearing of agents of certain defendants with whom McStain formed a joint defense agreement differed markedly from the testimony presented at trial. This Court can say without reservation that if it had heard at the preliminary injunction hearing what it heard at the trial, it would have entered the preliminary injunction. If that had occurred, at least the City and McStain would have taken prompt action to remedy the condition of the eighteenth hole in order to protect their current and future revenue. The Court cannot, of course, say that the litigation would not have proceeded, but it would have been less costly for the Deans. To a substantial degree, therefore, McStain could have protected itself from a large fee award.

Third, the Mitigation Report, Exhibit H-13, was disclosed almost on the eve of trial. Although McStain argued that the report was irrelevant and immaterial so that its late disclosure had no prejudicial effect, the Court found otherwise. The report, commissioned by McStain, advises McStain that the Deans home is in a “problem area” and provides McStain with mitigation methods for its new development. Timely presentation of the report would have saved the Deans time and money.

Finally, the Deans, who are lawyers, did enormous amounts of work on their case. If they had not, the attorneys’ fees would have been many times greater and McStain would have been ordered to pay much more. McStain is receiving the benefit of their work. In addition, McStain is receiving the benefit of the discounts given the Deans by their lawyers.

CONCLUSION AND ORDER

In this long and bitterly-contested case, McStain at no time accepted its responsibility for consumer practices which caused harm to the Deans. If it and the other defendants had acted reasonably, the matter could have been resolved. Instead, hundreds of thousands of dollars, some of it taxpayer money, were expended in the prosecution and defense of the Deans’ claims. The purpose of the Colorado Consumer Protection Act provision for attorneys’ fees is to assist individual consumers who have valid deceptive trade practices claims to bring those claims. The Deans are entitled to their fees. The Court finds that the attorneys’ fees claim for $203,017 has been proven to be reasonable by a preponderance of the evidence and awards the Deans $203,017 in attorneys’ fees against McStain.

Dated: May 21, 1998 By the Court

___________________

R. Bailin, District Court

cc: Patterson

Fowler

The above and foregoing were placed into

the normal mailing process to the persons

or attorneys indicated.

MAY 21 1998

By: KVD