Free Motion for Attorney Fees - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO

Civil Action No. 03-cv-1973-PSF-MJW (Consolidated with 04-cv-02112-PSF-MJW) THE WALKER GROUP, INC. Plaintiff, v. FIRST LAYER COMMUNICATIONS, INC. and J.E.H. KNUTSON Defendants.

PLAINTIFF'S APPLICATION FOR ATTORNEYS' FEES AND COSTS

Plaintiff The Walker Group, Inc. ("Walker Group) submits this application for attorneys' fees and costs pursuant to the direction of the Court in the Order Directing Entry of Judgment entered on November 10, 2005. PRELIMINARY STATEMENT In the Judgment, entered on November 14, 2005, the Court ordered that judgment be entered in favor of Walker Group and against Defendant J.E.H. Knutson ("Defendant" or "Mr. Knutson") on Walker Group's claim for breach of guaranty "in the amount of $671,336.56, plus prejudgment statutory interest at the rate of 8% per annum from July 9, 2003 through the date of this judgment," and that post judgment interest accrue at the legal

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rate of 4.32% from the date of entry of the judgment. (Judgment at 4 (Nov. 14, 2005)). In its prior Order Directing Entry of Judgment, the Court determined that neither party was entitled to costs under Federal Rule of Civil Procedure 54(d)(1), but expressly stated that this denial "is not intended to preclude Walker from recovering costs in connection with enforcement of the obligations as may be permitted under the terms of the Original Guaranty." (Order Directing Entry of J. at 9 (Nov. 10, 2005)). This Fee Application sets forth the amount of costs, including expert witness and attorneys' fees, Walker Group has incurred in connection with the prosecution and defense of this case during the past two and a half years. Walker Group demonstrates here the

reasonableness of its attorneys' fees in light of the complexity, contentiousness and length of the case; the experience and expertise of its counsel; and the results obtained following a trial by jury. The Application is supported by the affidavits of Walker Group's counsel and the detailed monthly invoices previously submitted to and paid by Walker Group. For the reasons set forth in detail below, Walker Group respectfully requests that Defendant Knutson be ordered to reimburse Walker Group for its payment of $463,076.68 in attorneys' fees and $86,063.48 in costs (including $69,276.11 in expert witness fees and costs).1 A. Legal Standard

The Tenth Circuit has noted that the "right to recover attorneys' fees is substantive, and therefore determined by state law in diversity cases." Public Serv. Co. of Colo. v. Cont'l
Walker Group reserves the right to supplement this Fee Application and seek reimbursement for additional fees and costs incurred in connection with post-judgment motions and, if filed, an appeal.
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Cas. Co., 26 F.3d 1508, 1520 (10th Cir. 1994). Colorado follows the American Rule, which provides that a prevailing party in a contract or tort action may not recover attorneys' fees unless there is a statute, court rule or private contract to the contrary. Roberts v. Adams, 47 P.3d 690, 697 (Colo. Ct. App. 2001). As the Court noted in its Order Directing Entry of Judgment, in the present case, the contract between the parties provides for Walker Group to recover costs and attorneys' fees. (Order at 9 (Nov. 10, 2005)). Mr. Knutson's Guaranty specifically provides that the "Guarantor will pay all reasonable costs and expenses, including attorneys' fees paid or incurred by [Walker Group], its successors, or assigns, in connection with the enforcement of the [Guarantor's] Obligations." (Guaranty ¶ 3 (Trial Ex. 4)). Furthermore, "where the court is merely enforcing a contractual provision authorizing attorneys' fees, the fees are routinely awarded and the contract is enforced according to its terms." Public Serv. Co., 26 F.3d at 1520 (citation omitted). The Tenth Circuit has further instructed: the award should make the injured party whole and the court may consider the amount in controversy, the length of time required to represent the client effectively, the complexity of the case, the value of the legal services to the client, and the usage in the legal community concerning fees in similar cases. Id. at 1520 (citing Heller v. First Nat'l Bank of Denver, N.A., 657 P.2d 992, 999-1000 (Colo. Ct. App. 1982)); see also Hartman v. Cmty. Responsibility Ctr., Inc., 87 P.3d 254, 257 (Colo. Ct. App. 2004). In determining the reasonableness of a fee, courts are encouraged also to consider the factors listed in Rule 1.5(a) of the Colorado Rules of Professional Conduct, including:

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(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly; (2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer; (3) the fee customarily charged in the locality for similar legal services; (4) the amount involved and the results obtained; (5) the time limitations imposed by the client or the circumstances; (6) the nature and length of the professional relationship with the client; (7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and (8) whether the fee is fixed or contingent. Colo. Rules of Prof'l Conduct Rule 1.5; Mau v. E.P.H. Corp., 638 P.2d 777, 779 (Colo. 1981); Newport Pac. Capital Co., Inc. v. Waste, 878 P.2d 136, 141 (Colo. Ct. App. 1994). Guided by these standards, Walker Group respectfully submits that the fees and costs for which it now seeks reimbursement are more than reasonable. Walker Group engaged skilled and experienced lawyers at firms with special expertise in commercial litigation matters. These counsel worked effectively and efficiently to investigate the parties' causes of action and defenses and then to prosecute Walker Group's claims, defend against and ultimately defeat all of Mr. Knutson's claims, and ultimately try the case. In doing so, they dealt not only with the complicated legal and factual issues raised by this case, but also with Defendant's efforts to delay and obstruct. 1. The Experience, Reputation and Ability of Walker Group's Counsel

Walker Group was represented in this case by two law firms: Kilpatrick Stockton LLP ("Kilpatrick Stockton"), through lawyers in its Winston-Salem, North Carolina office, and the Maximon Law Firm, LLC (the "Maximon Firm"), in Broomfield, Colorado. As noted in the Affidavits of Richard S. Gottlieb (of Kilpatrick Stockton) and Joshua Maximon (of the Maximon Firm), both of these firms have extensive experience in the litigation of

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complex commercial issues, and they worked closely together to prosecute and defend this case on behalf of Walker Group. Kilpatrick Stockton served as national counsel for Walker Group and lead counsel in this particular case. (Aff. of Richard S. Gottlieb ¶¶ 6-7 (attached as Exhibit A)). Firm-wide, Kilpatrick Stockton maintains a large group of attorneys who specialize in the representation of businesses in complex commercial litigation across the country in both state and federal courts. (Id. at ¶ 2). Richard Gottlieb, Laura Greer and Kristin Major2 work out of Kilpatrick Stockton's Winston-Salem office, and all focus their practice almost exclusively on complex commercial litigation. (Id. at ¶¶ 3, 8). Mr. Gottlieb is a partner and regularly represents both large and small corporations in connection with complex business disputes. (Id. at ¶¶ 1, 3). Kristin Major, who joined Kilpatrick Stockton in 2000, became involved in this case immediately upon Defendant's service of the complaint in the Colorado action. (Id. at ¶ 8). Ms. Major has extensive experience in the federal courts, and clerked for the United States Court of Federal Claims. (Id.) Laura Greer, now a third-year associate, became involved in this case in December 2003. (Id.) Upon Ms. Major's departure in June 2004, Ms. Greer became the primary associate on this case. (Id.) Walker Group also received the benefit of Kilpatrick Stockton's intimate knowledge of Walker Group's operations and the formation and eventual demise of Walker Group's relationship with First Layer and Mr. Knutson.
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(Id. at ¶ 6).

Kilpatrick Stockton has

Ms. Major is no longer practicing with Kilpatrick Stockton. She moved from the Winston-Salem area in June 2004.

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represented Walker Group and its subsidiary Walker and Associates for over 15 years, and participated in the drafting of the agreements at issue in this case, including the Revolving Convertible Promissory Note, Defendant's Guaranty and the amendments thereto. (Id.) Joshua Maximon, has significant trial experience and has represented a variety of business clients in complex commercial matters. (Aff. of Joshua Maximon ¶ 2 (attached as Exhibit B)). He brought to Walker Group his substantial trial experience and intimate knowledge of local customs and practices. (Id. at ¶ 4). Mr. Maximon was involved in the drafting of every pleading filed with this Court and served with Mr. Gottlieb as co-counsel during the trial. (Id.) 2. Customary Fees for Similar Work

In comparison with comparable law firms in Denver (the location of Defendant's counsel), the hourly rates charged by the Kilpatrick Stockton attorneys in this case, which ranged from $165 to $310 (depending on the level of attorney experience), were certainly reasonable. See PricewaterhouseCoopers LLP 2005 Billing Rate & Associate Salary Survey pp. 3-4 (Oct. 2005) (attached as Exhibit C). As of July 1, 2005, the median billing rates in large Denver law firms ranged from $285 to $473 for partners and from $185 to $293 for associates. Id. Furthermore, according to a recent national survey, as of December 2004, the Denver firm Holme, Roberts & Owen, with over 215 attorneys and a substantial complex commercial litigation practice, was charging as much as $550 an hour. See Firm-by-firm sampling of billing rates nationwide, National Law Journal (Dec. 6, 2004) (attached as

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Exhibit D). The Maximon Firm's rates also compare favorably with those of comparable firms in similar geographic areas. Id.; see also PricewaterhouseCoopers Survey at 3. Moreover, the hours charged to this case by counsel were reasonable in light of the complexities of the case, the difficulties encountered during the course of litigation, and the results obtained after a four-day jury trial. The hours charged are detailed in the

contemporaneously recorded time sheets that are part of the monthly invoices previously submitted to and paid by Walker Group. In connection with this fee application, Walker Group is filing these invoices with the Court as Exhibits E and F and providing them to Defendant.3 3. The Complexity of the Case a. Complexity of Legal and Factual Issues

This case presented complex legal, factual and procedural issues. The complexity of the factual issues arose from a variety of circumstances, including (a) the need to piece together the condition of First Layer's business operations two years after the company ceased operations; (b) the need to develop proof at trial of certain facts that Mr. Knutson refused to admit or stipulate to, but for which he put on no contrary evidence; and (c) expert reports that used various economic models to value the assets First Layer transferred to Walker Group when it ceased operations. Walker Group's counsel's investigation of Mr. Knutson's own finances and ability to support his Guaranty also was detailed and required extensive discovery. As a result of this
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Defendant has agreed that Walker Group's production of these invoices will not constitute a waiver of any privilege, including the attorney-client and work product privileges, and has also agreed to keep the information confidential. A copy of the letter of agreement is attached as Exhibit G.

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work, Walker Group learned that Mr. Knutson has transferred assets to his wife's trust during the course of this litigation in an apparent effort to render himself judgment-proof. In addition to such affirmative discovery, Walker Group's attorneys also defended multiple depositions, and both sides have produced thousands of pages of documents, all of which had to be reviewed and analyzed. The legal issues in this case were also numerous and complex, and made more so by Defendant's reliance on expert valuation methods that had no relevance to the facts of this case. Among the many legal issues Walker Group's attorneys were required to address in this case, many of which had to be examined under federal as well as Colorado and North Carolina state law, were issues related to: (1) choice-of-law; (2) personal jurisdiction; (3) proper parties; (4) discoverability of personal financial and tax information; (5) admissibility of expert testimony; (6) whether fraud could be based on promises of future work; (7) whether equitable or promissory estoppel was applicable to the circumstances of the case; and (8) how the value the jury determined Walker Group received from First Layer's assets should be applied to the judgments against First Layer or Mr. Knutson. This listing of legal issues is by no means exhaustive, but it illustrates the extent to which Mr. Knutson attempted to defend against any obligation under his Guaranty. b. Procedural Complexity

In spite of the factual and legal complexities involved, the procedural aspects of this case should have been simple. Defendant, however, made them complex by engaging in

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duplicative, wasteful, and at times, frivolous litigation, all of which increased the costs of Walker Group's prosecution and defense. As an initial matter, Walker Group was forced to litigate multiple issues twice because of Mr. Knutson's refusal to abide by the Court's rulings. For example, in July 2004, Walker Group moved to compel production of relevant financial documents and deposition testimony from Defendant and filed two briefs in support of the motion, which was granted. Nevertheless, when Walker Group later served its Second Set of Interrogatories and Requests for Production asking Mr. Knutson to update the financial information he produced pursuant to the Court's order, Defendant responded with the same objections and refusals to answer that the Court rejected just two months before. Thus, Walker Group was forced to file a second motion to compel in January 2005, which resulted in the Court again overruling Defendant's unfounded objections and granting Walker Group's motion to compel updated financial information. Similarly, Mr. Knutson's untimely Third and Fourth Supplemental Disclosures necessitated the filing of a Motion to Strike and accompanying briefs by Walker Group. In its Order granting Walker Group's Motion to Strike Mr. Knutson's Third and Fourth Supplemental Disclosures, the Court catalogued the "numerous delays" Mr. Knutson caused in this case: [Mr. Knutson] has filed eight (8) prior motions for extensions of time. In addition, [Mr. Knutson] sought and was granted, by this court, a stay of discovery from April 30 to May 26, 2004. Moreover, [Mr. Knutson] has filed two (2) motions to extend the expert disclosure deadlines as well as two (2) motions for extensions of time to respond to discovery.

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(Minute Order (Apr. 12, 2005)). Furthermore, despite Walker Group's pending Motion to Strike the untimely disclosures, Defendant served purported Fifth and Sixth Supplemental Disclosures in late March 2005, necessitating yet another Motion to Strike by Walker Group, which was granted in part during the final pretrial conference on April 28, 2005. Finally, in contrast to Walker Group's successful motions for partial summary judgment and to exclude Defendant's expert testimony, Defendant filed a flurry of unsuccessful motions in the weeks before trial, including a motion to reconsider or to continue trial and several motions in limine. The most frivolous of these motions was Defendant's Motion in Limine to Exclude Walker Group's Expert Evidence, filed on May 9, 2005, which mainly argued that Walker Group's expert, Ronald Haas, a CPA who has devoted nearly 100% of his time over the past ten years to valuing the revenue streams of telecommunications businesses, was unqualified to offer an opinion on the value of First Layer's assets. After Walker Group's attorneys spent a significant amount of time briefing the response in opposition to Defendant's motion to exclude Mr. Haas' testimony, Defendant withdrew the motion at the final trial preparation conference on October 14, 2005, and then attempted to subpoena Mr. Haas to testify at trial.4 Mr. Knutson similarly withdrew his Motion in Limine Regarding Alleged Fraudulent Conveyances only after counsel for Walker Group incurred additional attorneys' fees briefing its response to the motion. The remainder of Defendant's pre-trial motions, including the motion to reconsider exclusion of Mr.

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Defendant's efforts to subpoena Mr. Haas were unsuccessful because Mr. Haas was out of town when service was attempted.

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Knutson's expert or, in the alternative, to continue trial, were denied at the final trial preparation conference. 4. The Amount in Controversy and Results Obtained in the Lawsuit

The amount in controversy and the results obtained in this lawsuit support the full award of attorneys' fees and costs in this case. Not only was Walker Group successful on its breach of guaranty claim, including the jury's findings that Mr. Knutson was liable under both the first and second amendments to his guaranty, Walker Group also was successful in obtaining summary judgment in its favor on all of Mr. Knutson's affirmative claims for relief alleged in his Second Amended Complaint. In addition, Walker Group was successful with respect to the majority of the motions filed in this case, significantly Walker Group's motion for partial summary judgment and motion to exclude Mr. Knutson's proposed expert testimony, as well as Defendant's motions in limine and motion for reconsideration or to continue trial. See e.g., August 12, 2005 Order on Walker Group's Motion for Partial Summary Judgment; September 7, 2005 Order on Walker Group's Motion to Exclude Expert Testimony; October 10, 2004 Minute Order. When considering the reasonableness of fees and costs, courts also look beyond the results in a case to the pretrial efforts at settlement. Counsel and representatives of Walker Group twice traveled to Denver for settlement conferences; in fact, Mr. Knutson suggested the second conference. However, on both occasions Mr. Knutson refused to make any meaningful settlement offer. Other settlement efforts, all of which Walker Group initiated, were unsuccessful. Rather than made a genuine attempt to settle this case, Mr. Knutson

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preferred to put Walker Group through the costly paces of pushing this case to and through a jury trial. B. Chronology of Fees Incurred

To further aid the Court in its assessment of the reasonableness of the fees Walker Group has paid to its attorneys, counsel set forth below a chronology that generally describes the work performed during particular time periods and the amounts Walker Group expended for attorneys' fees during each time period. All of this information is detailed in the monthly invoices filed with Mr. Gottlieb's and Mr. Maximon's affidavits. 1. August 2003 through January 2004 ­ Approximately $63,000

The fees incurred during this time period generally related to the drafting of the motion to dismiss Mr. Knutson's original Complaint, without prejudice, for failure to name the proper party; the drafting of Walker Group's complaint in the North Carolina action that was ultimately combined with the Colorado action; research regarding preliminary substantive, procedural and jurisdictional issues and the drafting of motions based on procedural and jurisdictional concerns; and the collection of information that was needed to formulate the basis of Walker Group's claims. 2. February through June 2004 ­ Approximately $90,000

The fees incurred during this time period initially related to contesting Mr. Knutson's motion for leave to file a second amended complaint, as well as his two separate motions to extend the expert disclosure deadline (the second of which was denied). In addition, the fees incurred during this time period related in large part to the four discovery depositions that

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took place. Walker Group prepared for and conducted the deposition of Mr. Knutson, during which counsel for Defendant repeatedly instructed him not to respond to questions that the Court ultimately held were relevant to the issues in this case. In addition, Walker Group identified and prepared two separate witnesses in response to Mr. Knutson's 30(b)(6) deposition notices, and prepared for and defended a third deposition of Walker Group's president, Mark Walker. The fees incurred during this time period also relate to Walker Group's attendance in person at the initial settlement conference. Finally, a substantial portion of this time was devoted to drafting and responding to written discovery, including the drafting of Walker Group's First Set of Interrogatories and Request for Production of Documents to Mr. Knutson; the review of Mr. Knutson's responses to documents requests and interrogatories; the review and analysis of documents produced by Mr. Knutson; and the collection, review and production of documents to Mr. Knutson. 3. July through November 2004 ­ Approximately $45,000

The fees incurred during this time period relate to a wide array of work. Walker Group drafted and filed its first motion to compel discovery responses from Mr. Knutson and accompanying briefs, and responded to a motion to compel by Mr. Knutson. Walker Group then devoted time to reviewing Mr. Knutson's supplemental discovery responses following the Court's order on the motion to compel, reviewing and analyzing the documents produced by Mr. Knutson, and drafting additional written discovery and requests for admission to

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Defendant. In addition, the Court consolidated the Colorado and North Carolina cases during this time period. 4. December 2004 through April 2005 ­ Approximately $125,000

The fees and costs incurred during this time period related in large part to the disclosure of expert witnesses and attendant discovery. Mr. Knutson disclosed his expert's report on December 2, 2004, and Walker Group's attorneys and expert spent the next several days reviewing Ms. Masten's opinion and methods. Walker Group then prepared for and conducted Ms. Masten's deposition in January 2005 at defense counsel's offices in Denver. Based on the review of Defendant's expert's opinion and her deposition testimony, Walker Group researched the issue of whether Ms. Masten's proferred testimony was admissible. Walker Group then filed a motion to exclude Defendant's expert testimony along with accompanying briefs. As the Court is aware, Walker Group's motion to exclude Defendant's expert was granted in September 2005. During this time period, Walker Group also worked with its own expert witness, Mr. Ronald Haas, in the preparation of his expert report, which was disclosed on December 30, 2004. Walker Group also prepared Mr. Haas for his deposition. In addition, the fees incurred during this time period related to continuing discoveryrelated efforts and motions. After reviewing Mr. Knutson's objections to Walker Group's second set of written discovery, Walker Group was forced to file a second motion to compel discovery responses from Mr. Knutson. The nature of the information sought in the

discovery requests was identical to that which the Court previously had ordered Defendant to

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produce, but Mr. Knutson nevertheless asserted the identical objections the Court previously rejected. This second motion to compel was granted. Walker Group also spent time

answering Defendant's second set of written discovery, and collecting, reviewing and producing documents responsive to Defendant's additional requests. Counsel for Walker Group also prepared for three depositions, including the 30(b)(6) deposition of third-party ADC Telecommunications. In addition, Walker Group was forced to file two separate motions to strike Defendant's untimely third, fourth, fifth and sixth "supplemental disclosures," which purported to disclose the existence of documents that were responsive to Walker Group's initial written discovery requests, but which were not produced until after the January 31, 2005 close of fact discovery. Another significant portion of the fees incurred during this time period is represented by Walker Group's Motion for Partial Summary Judgment and supporting brief, which were filed on February 28, 2005. Walker Group was successful on this motion, and in August 2005 the Court entered an order granting Walker Group's motion in part and entering judgment in Walker Group's favor on all of Mr. Knutson's affirmative claims for relief, thereby making Walker Group the plaintiff in this action and Mr. Knutson the defendant. Finally, Walker Group performed a significant amount of work in preparation for the pre-trial conference held at the end of April 2005. This included the drafting of pre-trial documents requested by the Court as well as extensive communications with Mr. Knutson's counsel regarding the proposed pre-trial order.

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5.

May through August 2005 ­ Approximately $24,000

The fees incurred during this time period primarily related to Walker Group's preparation of trial exhibits included in the pre-trial order, review of Mr. Knutson's proposed trial exhibits, and drafting of objections to Defendant's proposed trial exhibits. In addition, Walker Group opposed Mr. Knutson's Motion in Limine to Exclude [Walker Group's] Expert Evidence, which Mr. Knutson withdrew at the final pre-trial conference, but only after Walker Group's attorneys spent considerable time researching and briefing the issues raised. 6. September through October 2005 ­ Approximately $116,000

The fees incurred during this time period related to Walker Group's preparations for trial and the trial itself, including drafting trial outlines, preparing exhibits and communicating with witnesses and the client. In addition, Walker Group opposed

Defendant's motions in limine, which the Court either denied or Defendant withdrew during the final pre-trial conference. Similarly, Walker Group opposed Mr. Knutson's motion for reconsideration of the Court's order excluding his expert testimony or to continue trial, which also was denied. Counsel also drafted the trial documents required by Judge Figa's rules, including Proposed Jury Instructions, the Terminology List, the Witness List, Proposed Voir Dire Questions, and Joint Designations and Objections to Deposition Testimony. In addition to the four days spent in the courtroom, the tasks undertaken by Walker Group's counsel included the preparation of four motions in limine, multiple meetings with all witnesses, the completion of trial and witness outlines, and finalizing drafts of the opening

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statement. Counsel also drafted and conducted research in support of its proffered jury instructions and the proposed verdict sheet, as well as in opposition to the counterparts proposed by Mr. Knutson. Counsel for Walker Group also researched and briefed issues related to the jury instructions at the Court's request. After the verdict, research was

conducted regarding the application of the value of First Layer's assets to the judgments, as well as the applicability of pre- and post-judgment interest. D. Summary of Costs

In addition to attorneys' fees, Walker Group also seeks costs incurred in the amount of $86,063.48, including $69,276.11 in expert witness fees and costs.5 As indicated above, Mr. Knutson's Guaranty specifically provides that the "Guarantor will pay all reasonable costs and expenses . . . incurred by [Walker Group], its successors, or assigns, in connection with the enforcement of the [Guarantor's] Obligations." (Guaranty ¶ 3). Costs other than those associated with Walker Group's expert are itemized in the monthly invoices filed with Mr. Gottlieb's and Mr. Maximon's affidavits. Following the issuance of Defendant's expert's report, Walker Group retained PricewaterhouseCoopers ("PwC") and Ronald D. Haas, Jr., a certified public accountant and director of PwC, to review and rebut Lari Masten's Report and to "assist in analyzing the value of assets allegedly received by [Walker Group] from First Layer . . . ." (Expert Report of Ronald D. Haas, Jr., CPA, p. 2 (Dec. 30, 2004) ("Haas Report") (attached to Pl.'s Mot. in Limine to Exclude Def.'s Expert Evid. (May 9, 2005) as Exhibit A)). Walker Group

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Copies of the invoices from PricewaterhouseCoopers LLP are attached as Exhibit H.

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specifically chose Mr. Haas because of his extensive experience with the telecommunications industry. As previously stated, over the past ten years Mr. Haas has devoted nearly 100 percent of his practice to valuing the revenue streams of telecommunications businesses. (Deposition of Ronald D. Haas, Jr., pp. 7-8 (Jan. 28, 2005) (attached to Walker Group's Mem. of Law in Opposition to Pl.'s Mot. in Limine to Exclude Def.'s Expert Evid. (Jun. 10, 2005) as Exhibit C)). He, thus, was imminently qualified to offer an opinion that was relevant to the determination of damages in this case.6 This Court may award Walker Group the costs associated with PwC's and Mr. Haas' services even though Mr. Haas did not testify at trial; it must find only that such costs were reasonable. Bainbridge, Inc. v. Douglas County Bd. of Comm'rs, 55 P.3d 271, 274 (Colo. Ct. App. 2002) (holding award was reasonable where expert offered advice that may have been relevant to trial preparation). In Management Specialists, Inc. v. Northfield Insurance Co., 117 P.3d 32 (Colo. Ct. App. 2004), the Colorado Court of Appeals upheld an award of expert witness fees where the expert was never deposed and did not testify. Id. at 38-39. "A trial court's discretion to award costs is not restricted to witnesses who testify at trial. Rather, the trial court has broad discretion to determine the costs reasonably necessary for trial preparation." Id. at 39. The Court of Appeals determined that the award of expert witness fees was proper because the insurance expert's testimony would have been useful had the issues not been decided on summary judgment. Id.

In fact, it appears that even Mr. Knutson believed Mr. Haas' opinion to be valuable based on Defendant's withdrawal of his motion in limine to exclude Mr. Haas' testimony and subsequent attempt to subpoena Mr. Haas to testify at trial.

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In the present case, Mr. Haas was deposed by Defendant, but did not testify at trial. Mr. Haas' evaluation and advice, nevertheless, were invaluable to Walker Group's trial preparation and instrumental in Walker Group's success on its motion to exclude Mr. Knutson's expert and motion for partial summary judgment. See e.g., Mem. of Law in Support of Walker Group's Mot. to Exclude Expert Evid. & Testimony of Lari B. Masten (Feb. 28, 2005); Aff. of Ronald D. Haas, Jr. (Feb. 28, 2005). Because PwC's and Mr. Haas' services were reasonably necessary for Walker Group's trial preparation, an award of expert witness fees in this case is reasonable and proper. CONCLUSION Walker Group respectfully submits that the costs incurred and fees of its counsel and experts are reasonable in light of the complexities and contentiousness of this case, as well as the expertise and skill of the attorneys for Walker Group. Having litigated this case for more than two years and having obtained both summary judgment and a substantial jury verdict, Walker Group is entitled, under the terms of the Guaranty, to be reimbursed for all of the fees and expenses it incurred in defending Mr. Knutson's claims and prosecuting its own. Respectfully submitted, this the 5th day of December, 2005.

s/ Richard S. Gottlieb Richard S. Gottlieb Laura A. Greer Kilpatrick Stockton LLP 1001 West Fourth Street Winston-Salem, North Carolina 27101-2400 Telephone: (336) 607-7300 Attorneys for Plaintiff Walker Group, Inc.

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Joshua Maximon, Esq. The Maximon Law Firm, LLC 12202 Airport Way, Suite 170 Broomfield, Colorado 80021 Telephone: (303) 991-3344

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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO CERTIFICATE OF SERVICE (CM/ECF) I hereby certify that on December 5, 2005, I electronically filed the foregoing PLAINTIFF'S APPLICATION FOR ATTORNEYS' FEES AND COSTS with the Clerk of Court using the CM/ECF system which will send notification of such filing to the following email addresses: [email protected] [email protected], and I hereby certify that I have mailed or served the document or paper to the following by first class mail addressed as follows: Michael R. McCurdy, Esq. Colin A. Walker, Esq. Fairfield and Woods, P.C. Wells Fargo Center, Suite 2400 1700 Lincoln Street Denver, Colorado 80203-4524

s/ Richard S. Gottlieb Richard S. Gottlieb Attorney for Plaintiff Walker Group, Inc. Kilpatrick Stockton LLP 1001 West Fourth Street Winston-Salem, North Carolina 27101-2400 Telephone: (336) 607-7300 [email protected]
02560-207219 9036797.3

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