Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_07-cv-01371/USCOURTS-azd-2_07-cv-01371-1/pdf.json

Nature of Suit Code: 422
Nature of Suit: Bankruptcy Appeals Rule 28 USC 158
Cause of Action: 28:0158 Notice of Appeal re Bankruptcy Matter (BAP)

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

In re:

Michael Keith Schugg, dba Schuburg

Holsteins, 

Debtor. _________________________________

In re: 

Debra Schugg,

Debtor. _________________________________

Wells Fargo Bank, N.A., 

Appellant, 

vs.

Michael Keith Schugg, dba Schuburg

Holsteins,

Appellee. 

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No. CV 07-1371-PHX-JAT

ORDER

BK No. 2-04-13226-PHX-GBN

BK No. 2-04-19091-PHX-GBN

(Jointly Administered and Substantively

Consolidated)

Pending before the Court is Michael Keith Schugg's Amended Motion for Attorneys'

Fees (Doc. # 55). The parties have fully briefed this motion.

I. Background

On July 16, 2007, Wells Fargo appealed an order of the U.S. Bankruptcy Court

finding Wells Fargo liable to the bankruptcy estate for attorneys' fees. This Court

subsequently dismissed the appeal for lack of subject matter jurisdiction, finding that the

Case 2:07-cv-01371-JAT Document 58 Filed 06/26/08 Page 1 of 3
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 Wells Fargo also argues that Schugg's motion is procedurally improper. Schugg

filed his motion for attorneys' fees pursuant to Federal Rule of Civil Procedure 54(d) and

Local Rule of Civil Procedure 54.2. Wells Fargo maintains that neither of these rules

provides an appropriate procedural basis for Schugg's motion, suggesting instead that the

Local Rules of Bankruptcy Appeal Procedure ("LRBankr") apply and because they are silent

on attorneys' fees, pursuant to LRBankr 8018-1 the appropriate procedural basis would have

to come from the Rules of the United States Court of Appeals for the Ninth Circuit and the

Federal Rules of Appellate Procedure. Because the Court concludes that Schugg may not

recover fees under A.R.S. § 12-341.01, the Court does not address this issue.

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underlying order of the Bankruptcy Court was interlocutory. Thereafter, Schugg filed the

present motion pursuant to Federal Rule of Civil Procedure 54(d) and Local Rule of Civil

Procedure 54.2 seeking to recover the attorneys' fees he incurred in opposing Wells Fargo's

improvidently taken appeal.

II. Discussion

Schugg contends that he is entitled to recover his attorneys' fees under section 12-

341.01 of the Arizona Revised Statutes ("A.R.S."). Under this statute, a court may award

"reasonable attorney fees" to "the successful party" in "any contested action arising out of

contract." Schugg maintains that this appeal "arises out of contract" because the underlying

action in Bankruptcy Court arose out of contract, and that he is the "successful party"

because the Court dismissed Wells Fargo's appeal for lack of jurisdiction. Wells Fargo

argues that this appeal does not "arise out of contract" because the underlying action in

Bankruptcy Court did not "arise out of contract," and that Schugg is not the "successful

party" in this appeal because the Court did not address the merits of the appeal.1

Even assuming for the sake of argument that this appeal "arises out of contract,"

Schugg may not recover his attorneys' fees under A.R.S. § 12-341.01 because he is not a

"successful party" within the meaning of the statute. A party may recover attorneys' fees as

the "successful party" on appeal from an interlocutory order only "if the appeal process

finally determines an issue of law sufficiently significant that the appeal may be considered

as a separate unit." Wagenseller v. Scottsdale Mem'l Hosp., 710 P.2d 1025, 1048-49 (Ariz.

1985). Because the Court dismissed the appeal from the Bankruptcy Court's interlocutory

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order for lack of subject matter jurisdiction, the Court did not determine "an issue of law

sufficiently significant that the appeal may be considered . . . a separate unit." Therefore,

Schugg is not a "successful party" within the meaning of A.R.S. § 12-341.01 and may not

recover attorneys' fees under this statute.

For the foregoing reasons,

IT IS ORDERED that the Amended Motion for Attorneys' Fees (Doc. # 55) is

DENIED.

DATED this 26th day of June, 2008.

Case 2:07-cv-01371-JAT Document 58 Filed 06/26/08 Page 3 of 3