Castle Law Defendants Awarded $1.9M in Legal Fees

The years-long saga surrounding the state of Colorado’s lawsuit against Castle Law Group has reached another milestone. On Friday, Judge Morris Hoffman awarded the case’s defendants, including Castle Law and two related entities, another victory in awarding legal fees totaling $1.9 million as a result of the specified claims filed by the State which the Judge had found to be substantially frivolous and groundless claims.

The Court awarded 100 percent of the fees that The Castle Law Group, Caren Castle, and Larry Castle requested, and indicated that the methodology used by Castle Law in applying for the fees was conservative. Here’s how the awarded fees broke down; defendants from the Castle Law Group were awarded $1,454,809 in fees. The case also involved two other defendant entities: Absolute Posting & Process Services, LLC, a posting company employed by the Castle Law Group; and Colorado American Title, LLC, (CAT) a title company employed by Castle Law. Judge Hoffman awarded the Absolute defendants $445,256 in fees and the CAT defendants $19,979 in fees.

In his opinion Friday, Judge Hoffman cited the enormous amount of work the defendants had to put in while navigating the multiyear case. “Just organizing this ocean of discovery was a massive undertaking, let alone making sense of it and developing litigation strategies and tactics based on it. Defending this case required enormous commitments of time and extraordinary skill.”

Larry Pozner, Partner at Reilly Pozner LLP and lead defense attorney in the case, exclusively told DS News, “Law firms who practice in the foreclosure space have enormous responsibilities to the lenders. The cases have to be done rapidly, right, repeatedly, and the law firms must do them at their own risk. The foreclosure law firms survive by providing excellence to the lending market, and excellence will always cost more than the cheapest alternative. How dare the state tell a law firm what quality it must hire or what sacrifices it should make to please the state. The clients were satisfied with the services they were receiving.”

In State of Colorado v. The Castle Law Group, LLC, et al., Colorado Attorney General Cynthia Coffman claimed that the defendants (which included not only the foreclosure law firm but also former partners Larry and Caren Castle) padded billings in order to take in millions in illegitimate profits from the banks they represented, as well as the affected homeowners and real estate investors who later bought the foreclosed houses at auction. In April 2017, Denver District Judge Morris Hoffman ruled against the state, arguing in a 92-page opinion that neither the Castles nor the other defendants took advantage of the position banks were in to move foreclosures quickly during the housing crisis.

“These foreclosure law firms were not Wall Street firms with their own economic power,” Hoffman said at the time. “For the most part they were small, local firms specializing in foreclosures, whose very existence depended on the willingness of their clients to keep referring foreclosures to them. As a result, the lenders and servicers could, and did, dictate the terms they would accept from their foreclosure law firms, with virtually no negotiation.”

The case reached its next fork in November 2017, when Judge Hoffman ordered the state of Colorado to pay the defendants’ legal fees, criticizing the state’s case and noting, “The evidence, or lack of evidence, at trial, was nothing short of breathtaking, especially compared to the investigative build-up and the serious and pervasive allegations in the complaint.”

“The consumer fraud department of the Colorado AGs decided they knew better than the law firms who should be hired and what should be charged,” Pozner told DS News. “They put the Castle Firm out of business, they cost hundreds of people their jobs, and they wasted millions of dollars of taxpayer money. The real fraud here is that, on Monday morning, the assistant attorneys general who perpetrated this injustice will still have their jobs.”