Colorado Court Of Appeals Confirms: Prevailing Parties Can Recover "Fees On Fees" — Reinforcing Why Builders Should Strike Attorneys' Fee Clauses From Their Contracts

Colorado developers, builders, and contractors should take notice of a recently published Colorado Court of Appeals decision that increases the financial exposure created by prevailing party attorneys' fee clauses. In 1046 Munras Properties, L.P. v. Kabod Coffee, 2025 COA 71, the Court held, for the first time in a published Colorado case, that a prevailing party may recover not only contractual attorneys' fees, but also the attorney fees incurred to obtain those fees. In short: "fees on fees" are now recoverable when a contract contains a broad fee shifting clause.

This development underscores the same warning sounded years ago in a prior HHMR blog post titled, Attorney Fee Clauses Are Engraved Invitations to Sue. If prevailing party fee provisions already encouraged litigation, the Munras decision supercharges that incentive.

What Happened in Munras v. Kabod Coffee?

In Munras, a commercial landlord sued a tenant for breaching a "continuous operations" clause in a retail lease. After winning possession and monetary damages, the landlord sought its attorneys' fees under three fee shifting provisions, two in the lease and one in a personal guaranty.

When the landlord requested post-trial fees (including the fees incurred in preparing its original fee motion), the trial court refused to award them. On appeal, the Court of Appeals reversed in part and held: "Under the parties' contractual fee shifting clauses, the landlord was entitled to recover the attorney fees it incurred in enforcing the fee shifting provisions themselves."

The Court emphasized that the lease allowed the prevailing party to recover all reasonable attorneys' fees incurred in "any action or proceeding ... to enforce or interpret" the lease. Because enforcing a fee shifting provision is enforcing the contract, fees on fees were recoverable.

The Court of Appeals surveyed national authority, noting that courts routinely permit fees on fees when contractual language is broad, particularly when the contract allows recovery for efforts to "enforce" contractual rights. It then held: "The prevailing party is entitled to an award of fees on fees."

This is now the law in Colorado whenever a contract contains comparably broad fee shifting language. To show how egregious this can be, the trial court entered judgment against the defendants in the amount of $157,058.59 for breaching its lease. Munras then sought $128,571.50 in attorneys' fees as the prevailing party and another $15,352.50 in attorneys' fees incurred in fighting for the $128,571.50 in attorneys' fees, i.e., the fees on fees.

Why This Matters for Builders and Contractors

Years ago, in an earlier HHMR post, we wrote that prevailing-party attorneys' fee clauses are "engraved invitations to sue." They embolden plaintiffs, often homeowners or homeowners associations, because they convert the normal American Rule (each party pays its own fees) into a litigation subsidy. With fee shifting in place, a claimant can threaten: "If I win even partially, you will pay my lawyer."

The Munras decision makes this exposure significantly worse. Under Munras:

1. The fee award now includes the fight over the fee award.

If a contractor loses even one disputed issue, the claimant can recover not only the underlying fees but also everything the claimant spent preparing motion practice, attending fee hearings, and briefing appeals over fees.

2. Plaintiffs have greater leverage during pre-suit and Notice of Claim phases.

A homeowner or HOA lawyer can now credibly threaten that protracted litigation will produce exponentially escalating fee exposure.

3. Insurers may question coverage for these fee expansions.

Liability policies often cover "damages," not fee awards. Contractors may face uncovered exposure caused entirely by their own contract language.

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Conclusion

Munras v. Kabod Coffee provides Colorado's first published confirmation that fees on fees are recoverable under broad contractual fee shifting clauses. Builders, developers, and general contractors should review their standard contracts immediately and, whenever possible, remove fee shifting provisions entirely. If there is anything more infuriating than paying a plaintiffs' attorney to sue you, it is paying the plaintiffs' attorney to argue with you about how much you owe them for having sued you.

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