1046 Munras Properties, L.P. v. Kabod Coffee.
2025 COA 71. No. 24CA0934. Leased Premises—Contracts—Attorney Fees—Fee-Shifting Provisions—Fees-on-Fees.
August 7, 2025
Kabod Coffee (tenant) entered into a lease with 1046 Munras Properties, L.P. (landlord) for retail space to operate a coffee shop (the premises) at landlord’s shopping center. Hailemariam (guarantor) guaranteed tenant’s performance under the lease (collectively, tenant and guarantor are the Kabod parties). The lease required tenant to continuously operate in the premises during the lease term. It also stated that a default occurred if tenant did not perform any of its nonmonetary obligations under the lease, and in the event of default, landlord could reenter the premises and remove tenant. Further, the lease had two fee-shifting provisions, and the guaranty contained one. Landlord learned that tenant had closed its coffee shop in the premises, and it subsequently filed a complaint against the Kabod parties alleging, among other facts, that tenant had breached the lease’s continuous operations clause. The Kabod parties counterclaimed for damages for landlord’s alleged breach of the covenant of good faith and fair dealing. The district court found in landlord’s favor on its claims for breach of the lease and breach of the guaranty; ruled for landlord on the Kabod parties’ counterclaim; and entered judgment for landlord against the Kabod parties, jointly and severally. Landlord also moved for attorney fees and costs (the attorney fees motion) under the fee-shifting provisions in the lease and the guaranty. Landlord later filed a supplement to the attorney fees motion, adding to its request the attorney fees and costs it incurred after the trial, including attorney fees and costs it incurred in connection with drafting and filing the attorney fees motion (fees on fees). The district court reduced by 50% the amount of attorney fees landlord initially requested under the three contractual fee-shifting provisions and rejected landlord’s fees-on-fees request.
As an initial matter on appeal, landlord argued for de novo review of the court’s 50% reduction of the fees it requested in the attorney fees motion, maintaining that the court of appeals was reviewing the trial court’s interpretation of a contractual fee-shifting provision. However, the court’s reduction of the attorney fees amount awardable to landlord did not require interpretation of the fee-shifting provisions of the parties’ contracts. Rather, in reducing landlord’s fee request, the court was engaging in a reasonableness analysis, which is reviewed for abuse of discretion.
On the merits, landlord contended that the court erred by reducing the fee request in the attorney fees motion by 50% because a court may not mandate that a party give up its contractual rights to mitigate damages. Contractual fee-shifting provisions are generally valid under Colorado law. Here, the court abused its discretion because it did not make sufficient findings for the appellate court to determine whether the record supports its 50% reduction in landlord’s attorney fees request.
Landlord also asserted that the court misinterpreted the fee-shifting provisions and erred in concluding that landlord was not entitled to recover fees on fees. Here, the court erred by interpreting the lease to mean that landlord was not entitled to recover the attorney fees and costs it incurred to enforce the fee-shifting provisions of the lease. Accordingly, the court erred by denying landlord the attorney fees it incurred in enforcing the lease’s fee-shifting provisions and by awarding landlord only two-thirds of the amount of costs landlord sought. And because the court concluded that the lease did not authorize an award of fees on fees, it failed to make findings on the reasonableness of the attorney fees and costs landlord sought in the supplement.
Lastly, the court awarded landlord its request for appellate attorney fees and costs because the lease and the guaranty entitle landlord to such award. The court denied the Kabod parties request for their appellate attorney fees and costs because they did not prevail in this appeal.
The orders were affirmed in part and reversed in part, and landlord was awarded its appellate attorney fees and costs. The case was remanded for additional findings on the reasonableness of the attorney fees and costs that landlord incurred in successfully pursuing its chosen legal strategy and on the reasonable amount of fees on fees to which landlord is entitled against tenant and guarantor, jointly and severally. The court must also determine the amount of landlord’s reasonable appellate attorney fees and costs.