Londen Land Company, LLC v. Title Resources Guaranty Company et al, No. 2:2009cv00980 - Document 69 (D. Ariz. 2011)
Court Description: ORDER granting in part and denying in part Defendant's 56 Motion for Attorneys' Fees and Related Non-Taxable Expenses; TRGC is awarded attorneys' fees in the amount of $10,569.25. Signed by Magistrate Judge Michelle H Burns on 2/11/11.(REW)
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Londen Land Company, LLC v. Title Resources Guaranty Company et al 1 Doc. 69 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 10 11 12 13 14 Londen Land Company, LLC, an Arizona) ) limited liability company, ) ) Plaintiff, ) ) vs. ) Title Resources Guaranty Company, a) ) Texas corporation, ) ) Defendant. ) CIV-09-980-PHX-MHB ORDER 15 Pending before the Court is Defendant Title Resources Guaranty Company’s 16 (“TRGC”) Application for Award of Attorneys’ Fees and Related Non-Taxable Expenses 17 (Doc. 56). 18 On January 7, 2010, Plaintiff Londen Land Company, LLC, (“Londen”) filed a First 19 Amended Complaint against TRGC – a title insurance company – alleging one count of 20 breach of contract for TRGC’s failure to pay the diminution in value to approximately 142.23 21 acres of unimproved real property located Northwest of the Northwest Corner of Highway 22 79 and the Hunt Highway in Florence, Arizona (the “Property”) as a result of a restrictive 23 easement, recorded in favor of Salt River Project, which encumbered approximately 2.64 24 acres of the Property (“SRP Easement”). TRGC filed a Motion for Summary Judgment on 25 January 26, 2010, asserting that it was only contractually obligated to cover losses in 26 accordance with the terms and conditions set forth in the Policy of Title Insurance (“Policy”), 27 and that at the time Londen made its claim under the Policy, it was not afforded any 28 Dockets.Justia.com 1 coverage. On August 3, 2010, the Court granted TRGC’s Motion for Summary Judgment, 2 and Judgment was entered that same day. Thereafter, TRGC filed an Application for Award 3 of Attorneys’ Fees and Related Non-Taxable Expenses (Doc. 56). Londen filed an Objection 4 (Doc. 59) and TRGC filed a Reply to Londen’s Objection (Doc. 62). 5 Under Arizona law, “[i]n any contested action arising out of a contract, express or 6 implied, the court may award the successful party reasonable attorney fees.” A.R.S. § 12- 7 341.01(A). Courts have discretion to award attorneys’ fees to the prevailing party based on 8 six factors outlined by the Arizona Supreme Court in Associated Indemnity Corp. v. Warner, 9 694 P.2d 1181, 1184 (Ariz. 1985). If a court finds that an award of attorneys’ fees is 10 appropriate, it must then determine whether the amount of fees requested is reasonable. See 11 Schweiger v. China Doll Rest., Inc., 673 P.2d 927, 931 (Ariz. Ct. App. 1983). This Court’s 12 local rules provide thirteen factors under which courts assess the reasonableness of an 13 attorneys’ fees award. See LRCiv 54.2. 14 In this case, there is no dispute that TRGC is the successful party or that the case 15 arises out of a contract dispute. The parties dispute whether this Court should, as a matter 16 of discretion, grant TRGC an attorneys’ fees award and, if so, the reasonableness of such an 17 award. 18 A. 19 20 Appropriateness of Fees Award In Associated Indemnity, the Arizona Supreme Court announced six factors that courts should use to determine whether an award is appropriate: 21 (1) whether the unsuccessful party’s claim or defense was meritorious; 22 (2) whether the litigation could have been avoided or settled and the successful party’s efforts were completely superfluous in achieving that result; 23 24 (3) whether assessing fees against the unsuccessful party would cause an extreme hardship; 25 (4) whether the successful party prevailed with respect to all the relief sought; 26 (5) whether the legal question was novel and whether such claim or defense has previously been adjudicated in this jurisdiction; and 27 28 -2- 1 2 (6) whether the award 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 attorneys’ fees. 3 Newberry Corp. v. Fireman’s Fund Ins. Co., 95 F.3d 1392, 1405-06 (9th Cir. 1996) (citing 4 Associated Indemnity Corp., 694 P.2d at 1184 (Ariz. 1985)). 5 determinative, and the Court must weigh all factors when determining whether to award 6 attorneys’ fees. See Wilcox v. Waldman, 744 P.2d 444, 450 (Ariz. Ct. App. 1987); see also 7 Moedt v. Gen. Motors Corp., 60 P.3d 240, 246 (Ariz. Ct. App. 2002) (“the weight given to 8 any one factor is within the Court’s discretion”). When weighing the above factors, the party 9 requesting attorneys’ fees has the burden of proving entitlement. See Woerth v. City of 10 No single factor is Flagstaff, 808 P.2d 297, 305 (Ariz. Ct. App. 1990). 11 1. Whether Londen’s Claim Was Meritorious 12 Londen’s claim was not meritorious. The Court notes, however, that a claim can have 13 merit, even if it does not succeed. See Scottsdale Mem’l Health Sys., Inc. v. Clark, 791 P.2d 14 1094, 1099 (Ariz. Ct. App. 1990). For example, in Clark the Arizona Court of Appeals 15 found that a losing claim did have merit because the losing litigant had prevailed at both the 16 trial and appellate court, only to be reversed by the Arizona Supreme Court. See id. Even 17 the Arizona Supreme Court remarked in the same case that it “must choose ... among two 18 plausible statutory interpretations,” urged by each party. Scottsdale Mem’l Health Sys. v. 19 Clark, 759 P.2d 607, 615 (Ariz. 1988). 20 In its Response to TRGC’s Motion for Summary Judgment, Londen raised two 21 arguments in support of its claim. Having analyzed the Arizona Limited Liability Company 22 Act, the Policy, and the Special Warranty Deed transferring the Property from Londen to 23 Florence Ventures, LLC (“Florence Ventures”), the Court found no merit in either argument. 24 As such, Londen’s claim was not meritorious. Therefore, this factor weighs in favor of 25 awarding attorneys’ fees to TRGC. 26 \\\ 27 \\\ 28 -3- 1 2. 2 Although the parties were almost $250,000 apart in the determination of the 3 diminution in value to the Property as a result of the SRP Easement, it appears from the facts 4 and circumstances surrounding Londen’s claim that this case could have avoided litigation. 5 Because neither party made adequate efforts to avoid litigation or settle the case, this factor 6 does not weigh in favor of either party. Whether Litigation Could Have Been Avoided 7 3. 8 Londen contends that fees assessed against it “would likely cause substantial hardship, 9 especially in light of the damages it has already suffered as a result of TRGC’s failure to 10 identify the existence of, or except from coverage, a restrictive easement recorded in favor 11 of Salt River Project.” Londen, however, has not shown that awarding attorneys’ fees to 12 TRGC would cause an extreme hardship. “[A]lthough the party requesting fees has the 13 burden of proving his entitlement to an award of fees, the party asserting financial hardship 14 has the burden of coming forward with prima facie evidence of financial hardship.” Woerth, 15 808 P.2d at 305. Unsworn and unproven assertions are not facts admissible in evidence; 16 plaintiffs are required to present specific facts by affidavit or testimony. See id. Because 17 Londen failed to produce any evidence regarding why the award of fees would constitute an 18 extreme hardship, Londen is unable to prove that such hardship exists. Therefore, this factor 19 weighs in favor of awarding attorneys’ fees to TRGC. Whether Award Would Cause Extreme Hardship 20 4. 21 It is undisputed that TRGC prevailed on all forms of relief sought. Therefore, this 22 Whether TRGC Prevailed On All Forms of Relief Sought factor weighs in favor of TRGC. 23 5. Whether The Legal Question Was Novel 24 Londen asserts that the legal question presented herein was novel, given that TRGC, 25 by its own admission, made a glaring error when it issued the Policy to Londen, failed to 26 identify the SRP Easement, and refused to compensate its insured for the full amount of the 27 diminution in value assessed by Londen’s independent appraiser. Londen claims that since 28 -4- 1 it “retained a beneficial interest in the Property” despite the transfer to Florence Ventures, 2 “it understandably believed it remained the insured on the Property, which raised a novel 3 legal theory for the Court to assess.” 4 While there are no reported cases in Arizona dealing with these particular facts, 5 TRGC contends that Londen’s assertion that its position was “novel” overstates the 6 complexity of the issue. TRGC states that when reduced to its substance, the case at bar 7 involved interpretation of the plain language of a title insurance policy, and therefore did not 8 present a novel legal theory. The Court finds however, that the case presented novel facts, 9 which might not have made the application of a non-novel legal theory readily apparent. 10 Therefore, this factor does not weigh in favor of either party. 11 6. 12 The Court has considered the issue and has determined that awarding attorneys’ fees 13 would not discourage other parties with tenable claims or defenses from litigating or 14 defending legitimate contract issues for fear of incurring liability for substantial amounts of 15 attorneys’ fees. As with the instant matter, the Arizona Revised Statutes provide for a 16 recovery of attorneys’ fees and costs to the prevailing party. Thus, Londen had notice of the 17 potential liability and took the risk when it filed its claim. Therefore, this factor weighs in 18 favor of awarding attorneys’ fees. Whether The Award Would Discourage Other Valid Litigants 19 After weighing the applicable factors, the Court finds that an award of attorneys’ fees 20 is appropriate in this case. The Court now addresses the reasonableness of the amount of fees 21 sought. 22 B. Reasonableness of Fee Award 23 As to reasonableness, Londen asserts that the number of hours billed by TRGC’s 24 counsel and staff is excessive, and that the hourly rates charged by counsel and staff are 25 unreasonable. This Court’s Local Rule lists 12 factors that courts should consider when 26 determining whether the amount of attorneys’ fees is reasonable. See LRCiv 54.2(c)(3). 27 These factors are: 28 -5- 1 (A) The time and labor required of counsel; 2 (B) The novel and difficulty of the questions presented; 3 (C) The skill requisite to perform the legal service properly; 4 (D) The preclusion of other employment by counsel because of the acceptance of the action; 5 (E) The customary fee charged in matters of the type involved; 6 7 (F) Whether the fee contracted between the attorney and the client is fixed or contingent; 8 (G) Any time limitations imposed by the client or the circumstances; 9 (H) The amount of money, or the value of the rights, involved, and the results obtained; 10 (I) The experience, reputation and ability of counsel; 11 (J) The “undesirability” of the case; 12 13 (K) The nature and length of the professional relationship between the attorney and the client; 14 (L) Awards in similar actions; and 15 (M) Any other matters deemed appropriate under the circumstances. 16 LRCiv 54.2(c)(3). Once a party submits an itemized list of fees with sufficient detail and 17 establishes entitlement to fees, the burden then shifts to the party challenging the fees to 18 show that the fees are unreasonable. See Nolan v. Starlight Pines Homeowners Ass’n, 167 19 P.3d 1277, 1286 (Ariz. Ct. App. 2007). 20 The Court has considered the aforementioned factors coupled with Londen’s specific 21 objections and finds that 8.2 hours to “review all previous pleadings,” “compile list of 22 changes” between Londen’s responses to TRGC’s dispositive motions, “confer with 23 [counsel] re: same,” and spending time drafting the reply in support of TRGC’s second 24 Motion for Summary Judgment is unreasonable. The Court also finds that 6.7 hours to 25 “research case law regarding title insurance coverage when insured property has been 26 transferred” which despite “the lengthy time spent researching this issue, TRGC cited only 27 a single case (from a Texas appeals court) which spoke to the issue” is unreasonable. 8.2 28 -6- 1 hours multiplied by $200.00 per hour equals $1,640.00 and 6.7 hours multiplied by $100.00 2 per hour equals $670.00.1 Thus, TRGC’s suggested attorneys’ fees award of $12,879.25 is 3 reduced by $2,310.00 to $10,569.25. 4 Despite Londen’s remaining arguments regarding number of hours billed and hourly 5 rates charged by TRGC’s counsel and staff, the Court finds nothing else unreasonable or 6 excessive about TRGC’s fee request. Accordingly, an attorneys’ fees award of $10,569.25 7 is both appropriate and reasonable. 8 9 10 11 12 IT IS ORDERED that TRGC’s Application for Award of Attorneys’ Fees and Related Non-Taxable Expenses (Doc. 56) is GRANTED in part and DENIED in part; IT IS FURTHER ORDERED that TRGC is awarded attorneys’ fees in the amount of $10,569.25. DATED this 11th day of February, 2011. 13 14 15 16 17 18 19 20 21 22 23 24 25 1 27 The 8.2 hours were performed by Associate Erik V. Lemmon who bills at a rate of $200.00 per hour and the 6.7 hours were performed by Nelson Mixon who bills at a rate of $100.00 per hour. 28 -7- 26
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