Deterrents to Frivolous Litigation in Colorado Courts Nov 29, 2016
By Reed F. Morris:
We’re often asked whether or not attorney fees are recoverable in a case where a statute or “prevailing party” attorney fees clause in the contract at issue does not provide for it. In some instances, you may be awarded fees in U.S. District Court cases I litigate in Colorado if “the losing party has acted in bad faith, vexatiously, wantonly or for oppressive reasons.”[1] Such is an inherent authority of the federal judiciary, and may only be used when there is “clear evidence” the loser’s claim was:
(1) ‘entirely without color’ and
(2) ‘asserted wantonly for purposes of harassment or delay, or for other improper purposes.’[2]
The U.S. District Court in Colorado will consider the application of this doctrine as being “exceedingly narrow” and the winning party must meet a “high bar” to claim their fees. On policy grounds, the courts have expressed concern that the application of awarding fees against losing parties could be a deterrent from novel, colorable, legal claims from being tested in federal court.[3]
Lawyers may be assessed fees and costs reasonably incurred because of conduct that “multiplies the proceedings in any case unreasonably and vexatiously.” 28 U.S.C. § 1927. To reach this standard, the trial court must find that the multiplication of the proceedings be “vexatious,” meaning “without reasonable or probable cause or excuse; harassing; annoying.”[4]
To cross this high bar, the trial judge must make a finding of bad intent or improper motive. What’s in the subjective in the mind of a party to a case is difficult to prove, and the motive of one bringing a case is often hard to even discover—many judges consider such in a commercial context to be irrelevant, and there is even some case law in the abuse of process vein supporting that proposition. The objective frivolousness of a claim can, itself, be evidence to reflect the (subjectively) impermissible conduct,[5] but given the reluctance of the court to apply the standard so as to not discourage testing colorable challenges to existing law, the bar remains high in this category as well.
It’s frustrating to federal court litigants that what is considered “frivolous” or “vexatious” conduct and thus sanctioned is terribly hard to prove. This is not unlike the similarly high standard applied in Colorado state court cases under Colo. Rev. Stat. §13-17-102. Courts face the accusation that a claim is groundless or frivolous, or tactics are used improperly on a routine basis. Litigating whether a claim is frivolous is often an aside—if the loser’s claim doesn’t have merit, then you’ve already won the case. Avoiding adding to the ongoing, contentious and expensive nature of civil litigation is often why post-case re-litigation of the litigation is often not pursued any further. The deterrents to frivolous civil litigation are out there; however, most of the bad-actors know reaching a deterrent result is difficult to actually apply. 
Mallon & Lonnquist, LLC, is a business and real estate law firm. Reed F. Morris is a Colorado business and real estate litigation attorney with Mallon & Lonnquist, based in Denver, Colorado. Reed regularly represents businesses and individuals in business transactions and disputes, from pre-filing through trial, and can be reached at rmorris@mallon-lonnquist.com.
[1] Timmons v. Lockheed Martin Corp., 2014 WL 235597 at*4 (D. Colo. Jan 22, 2014).
[2] Id. (quoting (quoting F.T.C. v. Kuykendall, 466 F.3d 1149, 1152 (10th Cir. 2006)).
[3] Mountain W. Mines, Inc. v. Cleveland-Cliffs Iron Co., 470 F.3d 947, 954 (10th Cir. 2006).
[4] United States v. Lain, 640 F.3d 1134, 1137, (10th Cir. 2011) (quoting Black’s Law Dictionary 1596 (8th ed. 2004)).
[5] Rutledge v. Sunderland, 671 F.2d 377, 382 (10th Cir.1982) (a claim may be “so frivolous as to reflect impermissible conduct…”).