Illegal Attorney Fees Focus of Latest Lawsuit Against Eviction Firm Tschetter Sulzer

In the most recent lawsuit hurled at Tschetter Sulzer, P.C. — a law firm that advertises itself as "#1 in Colorado evictions" on its website — five plaintiffs aiming for class certification allege that Tschetter Sulzer illegally collects attorney fees and court costs from tenants facing eviction, even if their cases don’t go to court.

The complaint, filed on June 5 by Haddon, Morgan and Foreman, P.C., and Colorado Poverty Law Project, says tenants who pay their back rent before a judgment is made in their eviction cases are still charged between $300 and $500 for attorney and court fees.

That's illegal in Colorado, the lawsuit argues.

“If there is no judgment or no prevailing-party finding, and therefore no prevailing party, the landlord may not recover attorney fees,” the suit claims.

The plaintiffs describe specific Colorado law governing rental agreements that states that those agreements may not contain fee-shifting clauses that award attorney and court costs only to one party.

According to that state law, “Any fee-shifting clause contained in a rental agreement must award attorney fees to the prevailing party in a court dispute concerning the rental agreement, residential premises, or dwelling unit.” Tschetter Sulzer is known for preparing leases for landlords that often include clauses saying that pre-judgment fees and costs are owed by the tenant on the date a landlord files an eviction, which allegedly violates the law.

The named plaintiffs are Courtney Woodruff, Gheri Smith, Cristobal Zambrano, Casey Hodges and Joshua Shipley. All of them faced eviction but paid their back rent, which resulted in their cases being dismissed.

Still, they each had to pay varying attorney fees.

“As Defendants know, few tenants who already have fallen behind in rent have the resources to pay the illegally charged attorney fees and costs or to retain a lawyer to secure the return of their landlords’ illegally charged fees and costs,” their lawsuit says.

Because the five plaintiffs aren’t the only people impacted, the suit will aim for a class action — with the potential to win back thousands of dollars for Colorado renters. The impact of having to pay those attorney fees on people trying to avoid eviction is significant.

“For example, while a financially strapped tenant might be able to raise $1,800 to pay rent-in-arrears, she may be unable to raise an additional $400 in attorney fees and costs demanded of her by Defendants to enable her to exercise the statutory right to cure,” the suit says. “Additionally, even if a tenant is able to raise both rent-in-arrears and hundreds of dollars in illegal prejudgment fees and costs demanded by Defendants, such an effort might impair his ability to pay the following month’s rent.”

Plaintiff Woodruff had lived in her apartment for six years before losing her job in the restaurant industry during the pandemic. She fell behind on rent and was given an eviction demand in December 2022. She paid her back rent by January 31 after taking a hardship withdrawal from her 401k, but still had to pay $398 in attorney fees and costs.

The other plaintiffs tell similar stories.

Smith got the money to pay her back rent by getting an advance on her vacation pay and borrowing $1,900 from her employer. She paid $348 in attorney fees.

Hodges, a service-industry worker at Ball Arena, ended up facing eviction because, says the suit, his wages fluctuate based on ticket sales for events at the arena. He paid $398 in attorney fees, which was not returned to him even after he signed a stipulation form given to him by Tschetter Sulzer that said he agreed to leave and pay his back rent without the need for a court date.

Adding insult to injury, these fees don’t represent the actual cost to the landlord of hiring Tschetter Sulzer, the suit claims.

“Upon information and belief, Tschetter Sulzer charges many of its landlord-clients a standard, flat fee of about $283 to commence an [forcible entry and detainer] action,” the suit says. “Tschetter Sulzer knows its landlord-clients mark up its flat fee of $283 to between $300 and $500 when they issue their Demand to their tenants.”

Therefore, tenants end up paying more for Tschetter Sulzer's services than their landlords actually did. Three landlords who have used Tschetter Sulzer are also named in the lawsuit: Cornerstone Apartment Services, Redpeak Properties and Echelon Property Group.

And this isn’t the only legal action against Tschetter Sulzer; there are two other cases that could have implications for this one.

Another case in Colorado District Court — Tina Franklin v Tschetter Sulzer — made similar allegations regarding Tschetter Sulzer illegally collecting attorney fees before the conclusion of a case. In that court battle, Tschetter Sulzer argued that it can charge attorney fees before a case’s conclusion if those fees were included in the original demand notice.

Although lawyers on the new case expect that the firm may attempt to use that reasoning again, they note that in an April 21 order related to the Franklin case, Judge Scott Varholak cast doubt on the argument.

“Indeed, Defendant seems to argue that requiring the payment of even patently illegal amounts to halt eviction would be permissible, so long as those patently illegal amounts were first demanded in the notice,” Varholak wrote. “The statute does not state this. Rather, the statute states the tenant must pay all amounts due ‘according to the notice.'”

Parties are still appealing the decision Varholak made on April 21.

Another related case concerns a stipulation form used by Tschetter Sulzer in evictions — the same form used by two plaintiffs in the June 5 case to avoid a court date in their eviction proceedings.

That lawsuit, which lists Shawnte Warden as a class representative, was allowed to move forward in March after Tschetter Sulzer attempted to have it tossed out. The suit, filed in January 2022, alleges that Tschetter Sulzer’s stipulation form illegally misleads tenants to believe that by signing the form they won’t have an eviction on their record and that they will have more time to vacate their homes.

The new case also mentions the stipulation, naming it as part of the deceitful way Tschetter Sulzer charges attorney fees.

“Nowhere does the Stipulation Summary inform the defendant-tenant that if she discharges her obligations under the Stipulation, the judgment entered against her pursuant to the Stipulation will be vacated and the landlord-tenant’s retention of attorney fees and costs it charged and collected as part of the Stipulation would be illegal,” the suit says

Tschetter Sulzer did not respond to a request for comment.

Carol Kennedy, a housing attorney with Colorado Poverty Law Project, says that the practices employed by Tschetter Sulzer unfairly harm tenants who did everything they could to pay back what they owe, putting them back on the housing instability carousel.

“The reality is that these tenants figure out a way to get the money together to pay the back rent in time, only to find out that hundreds of dollars in attorney fees and costs have been added to this total,” she concludes. “The effect of that is it makes it harder for these tenants to catch up, and that, in turn, leads to housing instability.”