What Happened: Upon learning that it had closed its coffee shop, a shopping center landlord sued a tenant and guarantor for violating the “continuous operations” clause of the lease. After winning at trial, the landlord moved for attorneys’ fees to cover its costs in enforcing the lease, citing two fee-shifting clauses in the agreement: 

• Section 20(B), stating that: “[i]n addition to all other remedies of Landlord. . ., Landlord shall be entitled to reimbursement upon demand of all reasonable attorney’s fees and expenses incurred by Landlord in connection with any default”; and
•  Section 40(I), providing that: “[i]f any party hereto is required to commence any action or proceeding against the other in order to enforce or interpret the provisions hereof, the prevailing pa[r]ty in such action shall be awarded, in addition to any amounts or relief otherwise awarded, all reasonable costs incurred in connection therewith, including attorney’s fees.”

The guaranty included similar language.

The court denied the motion. Fees incurred to prove entitlement to attorney’s fees don’t count as fees incurred “in connection with any default” on the lease under Section 20(B), the court reasoned. 

Ruling: The Colorado appeals court found the ruling erroneous and reversed it.

 Reasoning: The trial court based its ruling entirely on Section 20(B) without even considering Section 40(I) allowing for recovery of attorney’s fees and costs incurred in “any action or proceeding . . . [brought] to enforce or interpret the [lease’s] provisions.” Section 20(B) was clearly one of the lease’s “provisions.” Noting the absence of Colorado caselaw on the subject, the court ruled that, based on cases from other states (including CT, KA, MT, and NY) a fee-shifting clause entitling a landlord to “fees on fees” is enforceable. So, the tenant and guarantor were liable for the landlord’s reasonable attorney’s fees in an amount that the lower court would have to determine.

• 1046 Munras Props., L.P. v. Kabod Coffee, 2025 COA 71, 2025 Colo. App. LEXIS 1105, 2025 LX 371044