Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-3_07-cv-08103/USCOURTS-azd-3_07-cv-08103-6/pdf.json

Nature of Suit Code: 442
Nature of Suit: Civil Rights Employment
Cause of Action: 42:1983 Civil Rights Act

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Manuel Madrid, 

Plaintiff, 

vs. 

Concho Elementary School District No. 6 

of Apache County, an Arizona political 

subdivision; and Concho Elementary 

School District No. 6 of Apache County 

Governing Board Members Carl Dye, 

Cecilia Roberts, Tracy Candelaria, Angela 

Murphy, and John Rebello, 

Defendants.

No. CV-07-8103-PCT-DGC

ORDER 

 

 Manuel Madrid worked as the superintendent for Concho Elementary School 

District No. 6 beginning in July 2005. His contract with the District provided for 

employment through June 30, 2008. The District’s Governing Board terminated his 

employment on September 18, 2007. 

 Plaintiff filed a complaint against the District and individual Board members on 

October 3, 2007. The complaint asserted claims for injunctive and declaratory relief, 

breach of contract, violation of Arizona’s Open Meeting Law, violation of 42 U.S.C. 

§ 1981, discrimination in violation of Title VII of the Civil Rights Act of 1964, and due 

process violations under 42 U.S.C. § 1983. Doc. 1. 

 On May 17, 2010, the Court granted summary judgment on all claims in favor of 

Defendants. Doc. 75. Defendants filed a motion for attorneys’ fees the next day. 

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Doc. 77. Before briefing was complete, Plaintiff filed an appeal with the Ninth Circuit on 

June 16, 2010. Doc. 81. In the interest of judicial economy, the Court denied 

Defendants’ motion without prejudice to re-file within 30 days after the Ninth Circuit’s 

disposition of the appeal. Doc. 85. See Fed. R. Civ. P. 54(d), Advisory Comm. Note 

(1993 amendments) (“If an appeal on the merits of the case is taken, the [district] court 

may rule on the claim for fees, may defer its ruling on the motion, or may deny the 

motion without prejudice, directing under subdivision (d)(2)(b) a new period for filing 

after the appeal has been resolved.”). The Ninth Circuit affirmed the Court’s grant of 

summary judgment and the appeal terminated on July 11, 2011. Doc. 86-1. 

 Pursuant to the Court’s order (Doc. 85), Defendants re-filed a motion for 

attorneys’ fees within 30 days of the termination of Plaintiff’s appeal. Doc. 87. The 

motion has been fully briefed. Docs. 87, 88, 89, 91. No party has requested oral 

argument. For reasons that follow, the Court will grant the motion. 

 The arbitration clause in the parties’ contract provides: “For any dispute arising 

under the terms of this contract, the parties agree to use arbitration pursuant to A.R.S. 

§ 12-133(D).” Doc. 33-1, Exhibit A, ¶ 14. This language indicates that the parties 

intended to adopt the arbitration procedures set forth in § 12-133. Plaintiff’s appeal of 

the arbitration award confirms the parties’ intent. Doc. 50. The appeal notes that the 

parties chose to be governed by Arizona law, that Arizona law generally does not permit 

binding arbitration of employment disputes, and that contracts with the Arizona state 

government typically include non-binding arbitration procedures under § 12-133. Id. at 

2. Plaintiff’s appeal further states: “[I]t is clear that the reference to A.R.S. § 12-133(D) 

provides for appealable or non-binding arbitration as provided in A.R.S. § 12-133(E).” 

Id. 

 Because the parties contractually chose the arbitration procedures provided in 

§ 12-133, the Court exercises its discretion not to award attorneys’ fees under 42 U.S.C. 

§ 1988(b) and A.R.S. § 12-341.01. Nor does the Court find that Plaintiff unreasonably 

delayed proceedings or that his claims were so lacking in substantial justification as to 

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warrant attorneys’ fees under A.R.S. § 12-349. See E.E.O.C. v. Bruno’s Restaurant, 13 

F.3d 285, 287 (9th Cir. 1993) (“[I]t is important that a district court resist the 

understandable temptation to engage in post hoc reasoning by concluding that, because a 

plaintiff did not ultimately prevail, his action must have been unreasonable or without 

foundation.” (quoting Christianberg Garment Co. v. Equal Emp’t Opportunity Comm’n, 

434 U.S. 412, 421-22 (1978)). 

 Consistent with the parties’ chosen procedure, the Court applies A.R.S. § 12-133 

to determine whether to award attorneys’ fees and the amount of the award. Section 12-

133(I) provides: 

If the judgment on trial de novo is not at least twenty-three percent more 

favorable than the monetary relief or other type of relief granted by the 

arbitration award, the court shall order . . . that the appellant pay . . . the 

following costs and fees: 

1. To the county, the compensation actually paid to the arbitrator. 

2. To the appellee, those costs taxable in any civil action and reasonable 

attorney fees as determined by the trial judge for services necessitated by 

the appeal. 

A.R.S. § 12-133(I). 

 Plaintiff did not obtain a judgment on appeal that was at least twenty-three percent 

more favorable than the monetary relief granted by the arbitration award. Plaintiff was 

awarded 30 days’ lost wages through arbitration proceedings. Doc. 48, Exhibit A, at 6. 

On appeal, the Court granted Defendants’ motion for summary judgment and dismissed 

all of Plaintiff’s claims. Doc. 75. 

 Defendants incurred $1,716.19 in arbitrator’s fees based on invoices and 

disbursements records. Doc. 88, Exhibit 5. These fees were paid on behalf of 

Defendants by Gallagher & Kennedy, P.A., and therefore should be reimbursed to 

Gallagher & Kennedy, P.A. Section 12-133 provides for recovery of those attorneys’ 

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fees “necessitated by the appeal.” A.R.S. § 12-133(I)(2). Defendants incurred 

$34,194.55 in attorneys’ fees after Plaintiff’s March 5, 2009 appeal of the arbitration 

award to the Court. Doc. 88, Exhibit 4. The Court finds that these attorneys’ fees are 

reasonable. The itemized charges are appropriate. Doc. 88-1, Exhibit 4. The rate 

charged by Defendants’ lead attorney was well below his normal billing rate. Doc. 88-1, 

Exhibit 6, ¶5. 

 Section 12-133 does not require reimbursement of costs and fees in the event that 

“the court finds on motion that the imposition of the costs and fees would create a 

substantial economic hardship as not to be in the interest of justice.” A.R.S. § 12-133(I). 

Plaintiff has not made the requisite showing of substantial economic hardship. Indeed, 

Plaintiff does not address the economic hardship issue in his response. The response does 

mention in passing that Plaintiff has lost his house and his cars (Doc. 89, at 4), but 

provides no substantiation of this claim or any other explanation concerning economic 

hardship. 

 Finally, third party payment of attorneys’ fees does not preclude recovery of fees 

incurred if Defendants assumed a contingent obligation to repay in the event of recovery. 

See Morrison v. Comm’r of Internal Revenue, 565 F.3d 658, 659 (9th Cir. 2009) (“[A]n 

individual may ‘incur’ fees even if those fees are paid initially by a third party.”). A 

defendant who must reimburse a third party insurer in the event that the defendant 

recovers attorneys’ fees has “incurred” compensable legal expenses as defined by the 

Ninth Circuit. Parenteau v. Prescott Unified Sch. Dist., 2009 WL 2169154 at *5-6 (D. 

Ariz. July 17, 2009). Here, as in Parenteau, Defendants are insured by the Arizona 

School Risk Retention Trust. The Trust initially paid for Defendants’ legal fees, and 

Defendants are obligated to turn over an award of attorneys’ fees to the Trust. 

Defendants may recover attorneys’ fees because they have assumed a contingent 

obligation to repay their third party insurer. 

IT IS ORDERED: 

1. Defendants’ motion for attorneys’ fees (Doc. 87) is granted pursuant to 

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A.R.S. § 12-133(I). 

2. Gallagher & Kennedy, P.A. is awarded $1,716.19 in arbitrator’s fees. 

3. Defendants are awarded $34,194.55 in attorneys’ fees to reimburse Arizona 

School Risk Retention Trust, Inc. 

 Dated this 30th day of September, 2011. 

 

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