Colorado court rules “Fees on Fees” recoverable in contractual disputes, breaking new ground on attorney fee awards

On Aug. 6, the Colorado Court of Appeals recently addressed a question that had never been definitively answered in the state: whether a prevailing party can recover attorney fees incurred to enforce a contractual fee-shifting provision itself, known as “fees on fees.” In 1046 Munras Properties, L.P. v. Kabod Coffee (2025COA71), the court answered with a resounding yes, establishing important precedent for contract litigation in Colorado.

Case background

The dispute arose from a straightforward lease agreement gone wrong. Kabod Coffee, operating a coffee shop, closed its doors during the COVID-19 pandemic. The lease contained a “continuous operations clause” requiring the tenant to keep the business running, and when Kabod failed to reopen after 10 days’ notice, the landlord sued for breach.

After winning at trial and obtaining a judgment of $157,058.59, the landlord sought attorney fees under three different contractual provisions: two in the lease and one in the personal guaranty. The trial court initially awarded only about half the requested fees, then faced a second motion seeking additional fees, including the costs of pursuing the first fee award itself. The trial court balked at this “fees on fees” request, ruling that such costs weren’t covered by the contract’s language requiring fees “in connection with any default.” This interpretation would prove to be in error.

Court of Appeals’ reasoning: Broad language means broad coverage

The Colorado Court of Appeals focused on the sweeping language in Article 40(I) of the commercial lease, which entitled the prevailing party to recover attorney fees incurred in “any action or proceeding against the other in order to enforce or interpret the provisions hereof.”

The court’s logic was simple: if fee-shifting provisions are themselves “provisions” of the contract (which they undeniably are), then any action to enforce those provisions falls squarely within the contract’s fee-shifting language. As the court noted, “There is no dispute that, in this action, landlord sought to recover the attorney fees and costs it incurred in enforcing the contractual remedies,” including the fee provisions themselves.

This interpretation aligns with the fundamental purpose of contractual fee-shifting provisions: ensuring the non-breaching party is made whole. As the court explained, a party “would not be made whole if, at the conclusion of the litigation, it prevailed but nonetheless faced a legal bill for attorney fees and costs that it would not have incurred absent the breach.”

Rejecting the trial court’s narrow interpretation

The trial court had read the contract’s “in connection with any default” language restrictively, concluding that fees incurred to establish a fee award weren’t sufficiently connected to the original breach. The appellate court rejected this interpretation as inconsistent with the contract’s broader fee-shifting provision. The appeals court emphasized that contractual interpretation must consider “the entire instrument and not by viewing clauses or phrases in isolation.” When read together, the multiple fee-shifting provisions created a comprehensive framework for fee recovery that couldn’t be artificially limited.

Learning from other jurisdictions

Notably, neither Colorado’s Supreme nor court of appeals had previously addressed this issue directly, though they have routinely awarded appellate attorney fees to parties defending fee awards on appeal. The court thus looked to persuasive authority from other jurisdictions, finding a split among courts nationwide. Some courts, like those in Montana and New York, had taken restrictive approaches, distinguishing between fees incurred in the underlying dispute versus fees incurred in fee litigation itself. Others, including federal circuit courts, had adopted broader interpretations similar to Colorado’s new approach.

The Colorado court sided with the broader interpretation, influenced by authorities emphasizing that fee-shifting provisions should be read to accomplish their essential purpose: deterring breach and making the non-breaching party whole.

Practical implications for Colorado transactional and litigation practitioners

The Munras Properties decision has several important implications for Colorado attorneys and their clients:

For contract drafting: While the court’s interpretation favors broad fee-shifting language, careful drafters must still be explicit about including fees on fees if that’s the intent. Clear language prevents litigation over scope.

For fee petitions: Prevailing parties can now confidently seek fees incurred in pursuing fee awards, provided their contracts contain sufficiently broad language. However, these fees must still meet reasonableness standards.

For strategic considerations: Knowing that fee disputes themselves may generate additional fee liability, losing parties may be more motivated to settle or less likely to challenge reasonable fee requests.

For trial court practice: Courts must now consider fee-shifting provisions holistically rather than parsing individual clauses in isolation. The decision also emphasizes the need for adequate factual findings to support any fee reductions.

Looking forward

The Munras Properties decision fills an important gap in Colorado law and provides clarity for commercial litigants with respect to attorneys’ fees. By establishing that broad contractual fee-shifting provisions encompass fees on fees, the court has strengthened the deterrent effect of such provisions and ensured that prevailing parties can truly be made whole. For businesses entering contracts with fee-shifting provisions, this decision reinforces the importance of such clauses in protecting against breach-related litigation costs. For attorneys, it provides a new tool for ensuring complete fee recovery in appropriate cases, though always subject to reasonableness requirements and the specific language of the underlying contract.

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