Opinion
Civil Action No. 10-cv-2637-JLK.
February 23, 2011
ORDER
This matter is currently before me on Respondent's Motion for Attorney Fees (doc. 11). Having reviewed the parties' briefs and the relevant law and given careful consideration to the matter, I hereby GRANT Respondent's Motion for Attorney Fees pending submission of the requisite documentation regarding costs incurred.
Background
On October 28, 2010, Petitioner D L Stained Glass Supply filed a complaint in this Court requesting review of an Arbitration Award. On November 18, 2010, Respondent Colorado Commercial Contracting requested via email that Plaintiff consider dismissing the instant claim due to lack of subject matter jurisdiction. Respondent's Exhibit B (doc. 14-2), at 3. Defendant further provided Plaintiff with the relevant case law to support this request. Id. The following morning, Plaintiff denied Defendant's request. Instead, Plaintiff offered to agree to the dismissal if Defendant would stipulate that the date the complaint was filed constituted the appeal date with regard to the statute of limitations under the Federal Arbitration Act for the claim filed in state court. Respondent's Exhibit D (doc. 14-4), at 1. That same day Plaintiff sent an additional request that if Defendant filed a Motion to Dismiss, it would include Plaintiff's request to have the matter removed to state court. Respondent's Exhibit A (doc. 14-1), at 2. No authority for such action exists. On November 22, 2010, once it became apparent that Plaintiff had no intention to dismiss the matter voluntarily, Defendant filed a Motion to Dismiss (doc. 11) in addition to a Memorandum of Law in Support of the Motion to Dismiss (doc. 11-1). Plaintiff did not file a response, and I dismissed the action for lack of jurisdiction. Defendant now seeks approximately $25,000.00 in attorney fees.
Analysis
Pursuant to Colorado law, I may award "reasonable attorney fees against any attorney or party who has brought or defended a civil action, either in whole or in part, that the court determines lacked substantial justification." Colo. Rev. Stat. § 13-17-102(2) (2005). The term "lacked substantial justification" is defined as "substantially frivolous, substantially groundless, or substantially vexatious." Colo. Rev. Stat. § 13-17-102(4) (2005). Additionally, I must "liberally construe the provisions of this article to effectuate substantial justice and comply with the intent set forth in this section." Colo. Rev. Stat. § 13-17-101 (2005).
Defendant argues that Plaintiff engaged in substantially frivolous, substantially groundless and substantially vexatious conduct. I begin and end my analysis by discussing the frivolity of Plaintiff's claim.
In determining whether Plaintiff engaged in substantially frivolous conduct, I consider, among other factors, "[t]he extent of any effort made to determine the validity of any action or claim before said action or claim was asserted" and "[t]he 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 not found to be valid within an action." Colo. Rev. Stat. § 13-17-103 (2005). As clarified by the Colorado Supreme Court, "[A] claim or defense is frivolous if the proponent can present no rational argument based on the evidence or law in support of that claim or defense." W. United Reality, Inc. v Isaacs, 679 P.2d 1063, 1069 (Colo. 1984). Thus, one purpose of awarding attorney fees is "to punish an attorney or party who engages in conduct improperly instigating or prolonging litigation." In re Marriage of Aldrich, 945 P.2d 1370, 1378 (Colo. 1997); see also City of Aurora v. Colo. State Eng'r, 105 P.3d 595, 618 (Colo. 2004).
In this case, Plaintiff did not make the requisite effort to determine the validity of the claim before filing his action in this Court. Plaintiff brought this claim under the Federal Arbitration Act, 9 U.S.C. 1, et seq., which does not confer jurisdiction in federal court. See, e.g. Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 26 n. 32 (1983); Image Software, Inc., v. Reynolds Co., 459 F.3d 1044, 1049 (D. Colo. 2006); U.S. Energy Corp. v. Nukem, Inc., 400 F.3d 822, 829 (D. Colo. 2005). As Defendant states, "[t]his is settled law," and has been for over 25 years. Memorandum of Law in Support of Respondent's Motion for Attorney Fees (doc. 11-1), at 5. Therefore, Plaintiff could make no rational argument based on the evidence or the law in support of its claim.
Plaintiff does not deny committing error by filing in federal court, but instead attempts to blame such misconduct on the "misleading" language of the FAA that, according to Plaintiff, is "a trap for the unwary." Response to Respondent's Motion for Attorney Fees (doc. 12), at 4. I find this argument unavailing. Defendant informed Plaintiff that the court lacked jurisdiction and provided Plaintiff's Counsel with relevant case law justifying that conclusion. In spite of these efforts, Plaintiff refused to either dismiss the case voluntarily or stipulate to Defendant's Motion to Dismiss. Instead, Plaintiff requested that Defendant in fact stipulate to issues relating to the statute of limitations in exchange for its agreement to stipulate to dismissal. Respondent's Exhibit D (doc. 14-4), at 1. Plaintiff also requested that the case be removed to state court; an action for which no authority exists. Respondent's Exhibit A (doc. 14-1), at 2.
Plaintiff had the opportunity to avoid paying attorney fees. Although not entirely relevant to my analysis, I think it worth noting that had Plaintiff filed a Motion to Dismiss after learning that the claim lacked subject matter jurisdiction, the motion for attorney fees would be moot. Colo. Rev. Stat. § 13-17-102(5) (2005) (Disallowing the assessment of attorney fees when the attorney or party filing the claim later files a voluntary motion to dismiss after becoming apprised of the fact that he would not prevail on the claim).
Plaintiff failed to determine the validity of the claim before filing in federal court. Even after Defense Counsel notified him of the defect in his claim, Plaintiff took no steps to reduce the burden on opposing counsel or the Court. Where a party files an action over which a court has no subject matter jurisdiction, an award of attorney fees may be appropriate. See Gardner v. City and County of Denver, 671 F. Supp. 713, 713 (D. Colo 1987) (holding that when Plaintiff knew, or should have known, that the court lacked subject matter jurisdiction, such conduct lacked substantial justification, and the court may properly award attorney fees). I find this to be just such a case. Plaintiff engaged in substantially frivolous conduct, and attorney fees shall be awarded to Defendant pending submission of requested documentation regarding the amount of costs incurred.
Because I find Plaintiff's claim frivolous, I need not address Defendant's arguments regarding groundlessness and vexatiousness.
Based on the foregoing, IT IS ORDERED THAT
1. Defendant shall file an affidavit of counsel itemizing the amounts requested in the various categories, in addition to an affidavit from a disinterested expert attesting to the reasonableness of the costs and attorney fees requested as well as the necessity of their expenditure for the recovery attained no later than March 4, 2011. Plaintiff's response, with rebuttal affidavit(s), is due on or before March 25, 2011. The parties are strongly encouraged to negotiate an informal resolution of this question before March 25, 2011. If a resolution is not met by this date, I will refer this case to a magistrate for further proceedings and include the costs and attorney fees of further unnecessary proceedings either in addition to or as subtraction from the costs and fees already incurred as the circumstances may warrant. Dated: February 23, 2011