Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_12-cv-00548/USCOURTS-azd-2_12-cv-00548-2/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1441 Petition for Removal- Breach of Contract

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

HM Hotel Properties, 

Plaintiff, 

v. 

Peerless Indemnity Insurance Company, 

Defendant.

No. CV-12-00548-PHX-DGC

ORDER 

 Defendant Peerless Indemnity Insurance Company has filed a motion for 

attorneys’ fees in relation to its successful motion to dismiss (Doc. 8) and its successful 

motion for summary judgment (Doc. 56). Doc. 72. The motion is fully briefed. For the 

reasons that follow, the Court will grant the motion.1

 

I. Background. 

Plaintiff filed a complaint on February 9, 2012, alleging breach of contract, breach 

of the implied covenant of good faith and fair dealing, intentional infliction of emotional 

distress, negligent infliction of emotional distress, fraud, negligent misrepresentation, and 

declaratory relief. Doc. 1-1. The Court dismissed five of the seven claims on June 18, 

2012. Doc. 15. The Court granted summary judgment on the remaining claims on 

August 23, 2013. Doc. 68. Defendant now asks the Court to award attorneys’ fees in the 

amount of $129,413.31, in connection with this action, and has filed a memorandum and 

 

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 Defendant’s request for oral argument is denied because the issues have been 

fully briefed and oral argument will not aid the Court’s decision. See Fed. R. Civ. P. 

78(b); Partridge v. Reich, 141 F.3d 920, 926 (9th Cir. 1998). 

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documentation in support of its motion. Doc. 72. 

II. Legal Standard. 

Under Arizona law, “[i]n any contested action arising out of a contract, express or 

implied, the court may award the successful party reasonable attorney fees.” A.R.S. 

§ 12-341.01(A). The trial court has discretion regarding an award of attorneys’ fees. See 

Wilcox v. Waldman, 744 P.2d 444, 450 (Ariz. Ct. App. 1987). To determine whether an 

award is appropriate, courts consider: 

 1. the merits of the unsuccessful party’s claim; 

 2. whether the litigation could have been avoided or settled and whether the 

successful party’s efforts were completely superfluous in achieving the 

ultimate result; 

 3. whether assessing fees against the unsuccessful party would cause extreme 

hardship; 

 4. whether the successful party prevailed with respect to all relief sought; 

 5. whether the legal question presented was novel or had been previously 

adjudicated; and 

 6. whether a fee award would discourage other parties with tenable claims 

from litigating. 

Velarde v. PACE Membership Warehouse, Inc., 105 F.3d 1313, 1319-20 (9th Cir. 1997);

Associated Indemn. Corp. v. Warner, 694 P.2d 1181, 1184 (Ariz. 1985) (en banc); 

Uyleman v. D.S. Rentco, 981 P.2d 1081, 1086 (Ariz. Ct. App. 1999). No single factor is 

to be considered determinative, and the Court must weigh all of the factors in exercising 

its discretion. See Wilcox, 744 P.2d at 450.

III. Analysis. 

 A. Appropriateness of awarding fees. 

The parties do not dispute that this action arose out of contract. Doc. 73 at 2. The 

Court will individually consider each of the six factors outlined above. 

 

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 1. Whether Plaintiff’s claim was meritorious. 

The Court dismissed five of Plaintiff’s seven claims, finding that Plaintiff had 

failed to state a claim. Doc. 15. The Court granted summary judgment on the remaining 

two claims. Doc. 68. Plaintiff’s briefing on this matter appears to be nothing more than a 

rearguing of its positions. The Court has already concluded that these positions lacked 

merit. Without more, the Court cannot find that Plaintiff’s claims were meritorious. This 

factor favors Defendant. 

 2. Whether the litigation could have been avoided. 

Defendant notes that it did not file this litigation and simply acted to defend itself. 

Doc. 72 at 6. Plaintiff argues that “Defendant made litigation inevitable by failing to 

properly and accurately adjust Plaintiff’s claim.” Doc. 73 at 5. Plaintiff again reiterates 

evidence it presented in its opposition to summary judgment and argues that “Defendant, 

in bad faith, failed to honor its contractual obligations.” Id. at 6. The Court did not find 

that Defendant acted in bad faith or failed to honor its contractual obligations. Plaintiff 

has not shown that Defendant could have avoided this litigation. This factor favors 

Defendant. 

 3. Whether assessing fees would cause extreme hardship. 

Plaintiff contends that the fees claimed by Defendant are “extreme and 

unreasonable.” Id. Plaintiff argues that it “provided evidence of over $400,000 worth of 

storm damage repair,” and to add the requested fees “to that amount would create a 

strong hardship on Plaintiff.” Id. at 7. The Court has already concluded, however, that 

Plaintiff presented no admissible evidence of damages. See Doc. 68 at 6. “[T]he party 

asserting financial hardship has the burden of coming forward with prima facie evidence 

of financial hardship.” Woerth v. City of Flagstaff, 808 P.2d 297, 305 (Ariz. Ct. App. 

1990). Plaintiff has failed to meet this burden. This factor favors Defendant. 

 4. Whether Defendant prevailed with respect to all relief sought. 

Plaintiff argues that success on a motion for summary judgment “does not equate 

to being the successful party,” but cites no authority for this proposition. Plaintiff is 

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incorrect. Defendant clearly prevailed with respect to all the relief sought. This factor 

favors Defendant. 

 5. Whether the legal question presented was novel. 

Plaintiff concedes that the questions of breach of contract and breach of the duty 

of good faith and fair dealing are not novel questions of law, but then attempts to argue 

that because this case “surrounds a contract of adhesion,” it is more novel than other 

breach of contract cases. Doc. 73 at 8. The Court does not agree. This factor favors 

Defendant. 

 6. Whether a fee award would discourage other litigants. 

Plaintiff argues that awarding fees to Defendant “will demonstrate to thousands of 

other Arizonians that their properties damaged by the hail and wind storm on October 5, 

2010 . . . that not only will they have to pay to repair the damage themselves, but 

litigation could cost them $129,413.31.” Id. at 9. Defendant counters that Plaintiff has 

failed to explain how its non-meritorious action would discourage “parties with 

meritorious claims from bringing suit,” and notes that many Arizona courts have awarded 

fees to insurers. Doc. 74 at 5. The Court agrees with Defendant. Plaintiff has not 

demonstrated how an award of fees would discourage individuals from litigating 

meritorious claims. This factor also favors Defendant. 

 In sum, the Court finds that all six factors favor Defendant and concludes that an 

award of fees is appropriate in this case. 

B. Reasonableness of the requested fees. 

 Plaintiff presents few arguments on the issue of reasonableness. Plaintiff alleges 

that the amount of the requested fees is “exuberant,” that the rates at which paralegal time 

was billed is “overvalued,” and that Defendant is requesting to be paid for a video 

deposition that was “unneeded.” Doc. 73 at 7. Plaintiff also contends that Defendant’s 

request for fees is “extreme and unreasonable” because the case “involved almost no 

motion practice and counsel participated in limited communications,” and because 

Defendant allegedly did not produce any records and only took seven depositions. Id. 

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Local Rule 54.2(f) states that a memorandum in opposition to a motion for an award of 

attorney’s fees “shall identify with specificity all disputed issues of material fact and shall 

separately identify each and every disputed time entry or expense item.” Plaintiff has 

specifically identified only one disputed expense – the purportedly unnecessary video 

deposition. Plaintiff, however, does not explain why the video deposition was not 

necessary. 

 Defendant discusses the factors outlined in Schweiger v. China Doll Restaurant, 

Inc., 673 P.2d 927, 932 (Ariz. Ct. App. 1983), including (1) the qualities of the advocate; 

(2) the character of the work, including its difficulty and importance; (3) the work 

actually performed, including the skill, time and attention given to the work; and (4) the 

result. Defendant contends that the hours expended in litigating this case “would have 

been undertaken by a reasonable and prudent lawyer to advance or protect his client’s 

interests,” and were incurred “in the most economical manner it could.” Doc. 72 at 7. 

Defendant further contends that the billing rates charged by its attorneys were below their 

customary billing rates and are similar to rates charged by other Phoenix law firms. Id. at 

8. Defendant notes that its attorneys have a combined twenty five years of experience 

litigating in the area of insurance coverage and bad faith, and notes that both paralegals 

“regularly assist with commercial litigation matters.” Id. at 8-9. 

 The Court finds the hourly rates charged by Defendant’s legal team to be 

reasonable for the Phoenix market and for attorneys of the skill and experience needed 

for a case such as this. The Court also finds the time records provided by defense counsel 

to be sufficiently detailed, and the hours incurred in defending this case to be reasonable. 

Having considered the record as a whole and the relevant fee award factors, see Warner, 

694 P.2d at 1184, the Court finds the requested fee award to be reasonable and 

appropriate. See also LRCiv 54.2(c)(3)(A)-(M) (listing factors bearing on the 

reasonableness of a fee award). 

IT IS ORDERED: 

1. That Defendant’s motion for attorneys’ fees (Doc. 72) is granted. 

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2. Defendant is awarded attorneys’ fees in the amount of $129,413.31 

pursuant to A.R.S. § 12-341.01(A). 

 Dated this 30th day of December, 2013. 

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