WSL v. Flagstaff Acquisitions

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NOTICE: THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES. See Ariz. R. Supreme Court 111(c); ARCAP 28(c); Ariz. R. Crim. P. 31.24 DIVISION ONE FILED: 01/26/2012 RUTH A. WILLINGHAM, CLERK BY: DLL IN THE COURT OF APPEALS STATE OF ARIZONA DIVISION ONE WSL ASSOCIATES, a Wyoming corporation, ) ) ) Plaintiff/Appellant,) ) v. ) ) FLAGSTAFF ACQUISITIONS, LLC, an ) Arizona limited liability ) company, ) ) Defendant/Appellee. ) ) __________________________________) 1 CA-CV 10-0895 DEPARTMENT D MEMORANDUM DECISION (Not for Publication Rule 28, Arizona Rules of Civil Appellate Procedure) Appeal from the Superior Court in Maricopa County Cause No. CV2008-028074 The Honorable Sam J. Myers, Judge AFFIRMED Zeitlin & Zeitlin PC by Dale S. Zeitlin Attorneys for Plaintiff/Appellant Phoenix Gammage & Burnham P.L.C. by Richard K. Mahrle Attorneys for Defendant/Appellee Phoenix P O R T L E Y, Judge ¶1 WSL Associates ( WSL ) challenges the award attorneys fees to Flagstaff Acquisitions, L.L.C. ( FA ). of WSL argues that FA is not entitled to fees because FA did not, and was not obligated to, pay attorneys fees. For the reasons that follow, we affirm the order. FACTUAL AND PROCEDURAL HISTORY ¶2 to Vanderbilt Farms, L.L.C. hired WSL in the late 1990s perform work at Flagstaff, Arizona. Pine Canyon, a residential community in Approximately ten years later, WSL sued Vanderbilt Farms alleging a breach of contract. In the interim, through a series of assignments of property interest initiated by Vanderbilt Farms, acquired Pine Canyon. 1 Lone Tree Investments, L.L.C. ( LTI ) LTI, however, had borrowed money from FA to purchase the property, and FA subsequently became LTI s sole member. 2 ¶3 FA. WSL amended its complaint in 2009 and added LTI and LTI and FA explained that they had not been part of any alleged agreement with WSL and filed a motion for more definite statement to clarify the basis of the claims against them. court denied judgment. the motion and LTI and FA moved for The summary WSL secured an extension, took depositions, and then 1 Vanderbilt Farms assigned its interest in Pine Canyon to Lone Tree Developments, L.L.C., which assigned its interest to LTI. Because the parties agreement was binding on their successors and assigns, these assignments did not affect its enforceability. 2 Later, the entity that became FA s president received a onepercent membership interest in FA and LTI, its only asset; FA retained a ninety-nine percent interest in LTI. 2 filed its response 3 to LTI s motion. WSL, however, stipulated to dismiss WSL its claims against FA. and Vanderbilt Farms subsequently settled their dispute. ¶4 After the stipulation, recover its attorneys fees. FA filed an application to In its application, 4 FA stated that it and LTI had been jointly represented and LTI had paid its legal bills. WSL objected to the request, but the trial court observed that [WSL] conceded that [FA s] motion was well-taken and awarded FA $17,890 in fees. WSL appealed, and we have jurisdiction pursuant to Article 6, Section 9, of the Arizona Constitution and Arizona Revised Statutes ( A.R.S. ) section 122101(B) (West 2012). DISCUSSION A. ¶5 Standard of Review Whether the fee award is proper under A.R.S. § 12- 341.01 (West 2012) is a matter of statutory interpretation that we review de novo. Zeagler v. Buckley, 223 Ariz. 37, 38, ¶ 5, 219 (App. P.3d 247, 248 2009) (citation omitted). If the statute authorizes the award, however, we will affirm if the record reasonably supports the ruling. Grand Real Estate, Inc. v. Sirignano, 139 Ariz. 8, 14, 676 P.2d 642, 648 (App. 1983) 3 LTI subsequently filed for bankruptcy protection. FA requested $26,485.78 in its fees application but submitted a reduced request, for $24,169.78, after removing inapplicable time entries. 4 3 (citations omitted). We review the amount of fees for an abuse of discretion, mindful of the court s substantial discretion to set the amount of the award. Associated Indem. Corp. v. Warner, 143 Ariz. 567, 570, 694 P.2d 1181, 1184 (1985) (court s broad discretion to set fees limited by § 12-341.01(B), which prohibits an award in excess of the amount paid or agreed to be paid ). B. ¶6 Fees Under § 12-341.01 WSL argues that FA cannot recover the fees paid by LTI, a non-prevailing party. 5 the fact that the Although WSL does not challenge litigation arose out of a contract, it contends that FA is not entitled to an award because FA did not pay and was not responsible for paying attorneys fees. FA argues, to however, that a successful party is personally pay fees to qualify for an award. not required FA also argues that the award was proper because it owns LTI, had loaned LTI the funds that financed their joint legal defense, and would have been responsible for paying the fees if LTI had not. 5 WSL argues that FA is not entitled to fees or costs but does not develop an argument as to costs. Therefore, any claim as to the costs award is waived. See Ariz. R. Civ. App. P. 13(a)(6); State v. Moody, 208 Ariz. 424, 452 n.9, ¶ 101, 94 P.3d 1119, 1147 n.9 (2004) ( Merely mentioning an argument is not enough to significantly develop a claim and typically constitutes abandonment and waiver); Ace Auto. Prods., Inc. v. Van Duyne, 156 Ariz. 140, 143, 750 P.2d 898, 901 (App. 1987) ( It is not incumbent upon the court to develop an argument for a party. ). 4 ¶7 WSL cites Lisa v. Strom, 183 Ariz. 415, 904 P.2d 1239 (App. 1995), and Moedt v. General Motors Corp., 204 Ariz. 100, 60 P.3d 240 (App. 2002), for the proposition that a party must have an actual obligation to pay fees in order to be eligible to receive a fees award. 6 obligation to represented it. We agree, but find that FA had a genuine compensate the law firm and lawyers who FA had an attorney-client relationship with the firm and accepted the benefits of the representation. As a result, FA had an obligation to pay the firm for its services. See Journal-Miner Pub. Co. v. Curley, 31 Ariz. 280, 283, 252 P. 187, 188 (1927); see also W.R. Habeeb, Annotation, What Constitutes Acceptance or Ratification of, or Acquiescence in, Services Rendered by Attorney so as to Raise Implied Promise to Pay Reasonable Value Thereof, § 5, Knowingly Accepting Benefits, 78 A.L.R. 2d 318 (1961). The fact that FA s obligation was periodically extinguished by a third party does not signify that the obligation never existed or preclude an award of fees. ¶8 WSL also argues that the fees award violated § 12- 341.01(B) because it did not mitigate the burden of the expense of litigation. We disagree, and are guided by our decision in 6 In Lisa, we held that an attorney who represented himself and his wife could not recover fees under A.R.S. § 12-349 because the financial obligation to repay the community was illusory. 183 Ariz. at 419-20, 904 P.2d at 1243-44. In Moedt, we extended the genuine financial obligation requirement to all attorneys fees requests and held that a contingency fee agreement created such an obligation. 204 Ariz. at 104, ¶¶ 11-12, 60 P.3d at 244. 5 Catalina Foothills Ass n v. White, 132 Ariz. 427, 646 P.2d 312 (App. 1982). ¶9 though In Catalina Foothills, we affirmed a fee award even a title company had paid the prevailing defendants litigation expenses pursuant to a policy agreement. at 428, 646 P.2d at 313. 132 Ariz. We stated that [w]e do not hold that the trial court cannot properly consider such fact, i.e., that someone else may be obligated to bear the expense, but we find the weight to be accorded that fact to be wholly within the trial court's discretion. ¶10 Id. (citations omitted). Here, WSL, like the plaintiffs in Catalina Foothills, argued that the award did not mitigate the financial burden of litigation because LTI, like the title company in Catalina Foothills, paid or was responsible to pay the attorneys fees. We rejected the argument in Catalina Foothills, and likewise reject it here; the statute applies even if the prevailing party does not personally pay the fees. See id. Additionally, as we observed in Moedt, fee-shifting statutes such as § 12-341.01 vest[] the interest in the award in the litigant, attorney, regardless of what fee [them]. 204 Ariz. at 104, ¶ 13, 60 P.3d at 244 (citation omitted). Therefore, the trial court did not err when it found arrangement exists not the between that FA was eligible to receive attorneys fees under A.R.S. § 12-341.01. 6 ¶11 In addition to finding that FA is not precluded from recovering fees as a matter of law, we find that the court did not err by ordering the award. Our supreme court has identified six factors that a trial court should consider when ruling on a fees request. 7 1184. 7 Associated Indem., 143 Ariz. at 570, 694 P.2d at In its application, FA addressed each factor and argued T]he Court of Appeals listed several factors which we agree are useful to assist the trial judge in determining whether attorney's fees should be granted under the statute: 1. The merits of the claim or defense presented by the unsuccessful party. 2. The litigation could have been avoided or settled and the successful party's efforts were completely superfluous in achieving the result. 3. Assessing fees against the unsuccessful party would cause an extreme hardship. 4. The successful party did not prevail with respect to all of the relief sought. Associated Indemnity [Corp. v. Warner, 143 Ariz. 585, 589, 694 P.2d 1199, 1203 (App. 1983)]. In addition to these factors, we would include: the novelty of the legal question presented, and whether such claim or defense had previously been adjudicated in this jurisdiction. We also believe that the trial court should consider whether the award in any particular case would discourage other parties with tenable claims or defenses from litigating or defending legitimate contract issues for fear of incurring liability for substantial amounts of attorney's fees. See Wistuber v. Paradise Valley Unified School, 141 Ariz. 346, 687 P.2d 354 (1984). Associated Indem., 143 Ariz. at 570, 694 P.2d at 1184. 7 that its motion for more definite statement had alerted WSL that its claims against FA were meritless. FA also pointed out that it was forced to participate in numerous depositions before WSL conceded that prejudice. its claims against FA could be dismissed with Consequently, the record contains a reasonable basis for the decision to award fees and the court did not abuse its discretion in doing so. C. ¶12 Amount of Fees WSL also challenges the amount of fees awarded by the trial court. It argues that because FA s representation did not expand the litigation, the award merely allows FA to recover fees expended for LTI. ¶13 The trial court has broad discretion to determine what amount Ariz. We disagree. of at attorneys 570, 694 fees P.2d to at award. 1184. Associated In the Indem., exercise of 143 that discretion, the court should consider the Associated Indemnity factors and other relevant information. For example, in Catalina Foothills, we noted that the court may consider who paid the fees when setting a reasonable fee award. 428, 646 P.2d at 313 (citations omitted). 132 Ariz. at Here, because FA had disclosed its joint representation agreement with LTI, and LTI had paid FA s legal bills until it filed for bankruptcy, the court was free to consider this information when deciding the amount of the award. 8 ¶14 We find that the discretion in the fee award. trial court did not abuse its FA did not attempt to recover all of the attorneys fees expended, but only two-thirds to account for the joint representation. The court then reduced the requested amount by approximately $6,000, which represents an almost equal split of fees between FA and LTI. Consequently, it is clear that the court exercised its discretion and considered the factors in Associated Indemnity and Catalina Foothills. We find no error. ¶15 our FA has requested fees on appeal. discretion, appellate costs we decline upon to compliance award with fees In the exercise of but Arizona award Rule of FA its Civil Appellate Procedure 21. CONCLUSION ¶16 Based on the reasons discussed above, the judgment of the trial court is affirmed. /s/ _____________________________ MAURICE PORTLEY, Judge CONCURRING: /s/ ________________________________ JON W. THOMPSON, Presiding Judge /s/ ________________________________ JOHN C. GEMMILL, Judge 9

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