Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_12-cv-01176/USCOURTS-azd-2_12-cv-01176-1/pdf.json

Nature of Suit Code: 195
Nature of Suit: Contract Product Liability
Cause of Action: 28:1332 Diversity-Product Liability

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 In addition, Peter Kohm and Agrifabrics LLC move for attorneys' fees based on the

contract between plaintiff and Precision (dba Agrifabric). The attorneys' fees provision in the

contract applies to actions initiated by Precision. Because plaintiff, not Precision, initiated

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Sandstone Marketing, Inc., 

Plaintiff, 

vs.

Precision Converters, Inc.; Peter Kohm;

Agrifabrics LLC, 

Defendants. 

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No. CV 12-01176-PHX-FJM

ORDER

Plaintiff filed this action asserting products liability and breach of contract claims.

On September 13, 2012 we dismissed the action without prejudice (doc. 16). We now have

before us defendant Precision Converters Inc.'s ("Precision") motion for attorneys' fees (doc.

18), plaintiff's response (doc. 22), Precision's reply (doc. 24), defendants Peter Kohm and

Agrifabrics LLC's motion for attorneys' fees (doc. 19), plaintiff's response (doc. 21), and

Kohm and Agrifabrics LLC's reply (doc. 23). Because these motions raise nearly identical

issues, we consider them together.

Defendants move for attorneys' fees as the prevailing parties in a matter arising out

of a contract, pursuant to A.R.S. § 12-341.01.1 Plaintiff argues that under choice of law

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this action, we find Peter Kohm and Agrifabrics LLC are not entitled to attorneys' fees under

the contract.

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principles South Carolina law governs the award of attorneys' fees. In a diversity case, such

as the one here, the availability of attorneys' fees is governed by the statutory law of the state

in which the action was brought. See Diamond v. John Martin Co., 753 F.2d 1465, 1467 (9th

Cir. 1985). Here, plaintiff filed this action in Arizona. Therefore, A.R.S. § 12-341.01

applies. 

A.R.S. § 12-341.01 authorizes a court to award reasonable attorneys' fees to the

"successful party" in a contested action arising out of contract. Plaintiff argues that the

contract in this action is not disputed, and that defendants are not "successful" parties within

the meaning of the statute. A "contested action is one in which the defendant has appeared

and generally defends against the claims and demands made by the plaintiff." Morrison v.

Shanwick Intern. Corp., 167 Ariz. 39, 46, 804 P.2d 768, 776 (Ct. App.1990). A defendant

against whom a contract action is dismissed without prejudice is considered a "successful

party." Britt v. Steffen, 220 Ariz. 265, 267, 205 P.3d 357, 359 (Ct. App. 2008). Here,

defendants filed a motion to dismiss plaintiff's claims, thereby making this a contested action.

We found that plaintiff's claims against defendants are subject to arbitration, and dismissed

the contested action without prejudice. Therefore, defendants are "successful" parties within

the meaning of § 12-341.01. 

A court has wide discretion in deciding whether to award fees under § 12-341.01. The

award of fees “should be made to mitigate the burden of the expense of litigation to establish

a just claim or a just defense.” A.R.S. § 12-341.01(B). “It need not equal or relate to the

attorney fees actually paid or contracted.” Id. In deciding whether to award fees under § 12-

341.01, we consider factors such as (1) whether the unsuccessful party's claims were

meritorious; (2) whether the litigation could have been avoided or settled; (3) whether

assessing fees would cause extreme hardship; (4) whether the successful party prevailed with

respect to all relief sought; (5) whether the legal question was novel; and (6) whether an

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award would discourage other parties with tenable claims from litigating them. Associated

Indem. Corp. v. Warner, 143 Ariz. 567, 570, 694 P.2d 1181, 1184 (1985). 

After considering each of the Warner factors, we conclude that an award of fees in this

case is appropriate. Plaintiffs’ contentions with respect to arbitration were not entirely

meritorious. Plaintiff did not dispute defendants' argument that the claims against Precision

are subject to arbitration. Instead, plaintiff argued that we could not dismiss the breach of

contract claim because it was also asserted against Peter Kohm and Agrifabrics LLC, nonsignatories to the contract. But Kohm was Precision's agent and Agrifabrics was a division

of Precision. Plaintiff could have avoided the action by submitting the matter to arbitration

pursuant to the arbitration clause in the contract. The question of whether the arbitration

provision in the contract is enforceable is not novel. Defendants prevailed, and an award of

fees would not discourage other parties from filing meritorious actions. Indeed, an award of

attorneys' fees might discourage parties from ignoring arbitration provisions. Plaintiff has

not argued that an assessment of fees would result in extreme hardship. All of these factors

favor an award of fees.

We now turn to the reasonableness of the requested fees. Precision seeks $4,282.00

in fees. Precision’s insurance company, Cincinnati Insurance Company, employed two

attorneys with hourly rates of $165 and $140 an hour, to represent the interests of its insured.

These rates are within the range of prevailing rates in Phoenix. Moreover, the attorneys

expended a reasonable amount of time–a total of 28.3 hours–in defending Precision's right

to arbitrate this matter. Peter Kohm and Agrifabrics LLC seek $3,912.00 in fees. Peter

Kohm and Agrifabrics LLC retained one attorney with an hourly rate of $195, which is

within the range of prevailing rates in Phoenix. The attorney expended a total of 18.40 hours

on implementing a joint legal strategy with Precision. Plaintiff argues that certain time

entries in defendants' counsel's billing statement are improperly block-billed. We disagree.

Counsel properly billed for various tasks, and the time spent on each task is reasonable.

IT IS ORDERED GRANTING Precision's motion for an award of attorneys’ fees

(doc. 18), and awarding fees in the amount of $4,282.00.

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IT IS ORDERED GRANTING Peter Kohm and Agrifabrics LLC motion for an

award of attorneys’ fees (doc. 19), and awarding fees in the amount of $3,912.00.

Of course, nothing we say here in any way affects the merits of the underlying claims

against defendants. The arbitrator will resolve those claims. Our fee award relates only to

the choice of forum. If plaintiff prevails on its underlying contract claim, it may seek an

award of fees against defendants. 

DATED this 12th day of December, 2012.

Case 2:12-cv-01176-FJM Document 25 Filed 12/13/12 Page 4 of 4