Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_11-cv-00546/USCOURTS-azd-2_11-cv-00546-5/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 28:1441 Petition for Removal- Fraud

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Michael Wilson, 

Plaintiff, 

vs.

GMAC Mortgage LLC; Homecomings

Financial LLC, 

Defendants. 

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CV 11-00546-PHX-FJM

ORDER

The court has before it defendants' motion for attorneys' fees (doc. 79) and

memorandum in support of their motion (doc. 84), plaintiff's response (doc. 86), and

defendants' reply (doc. 87).

This action arose out of a settlement agreement signed by plaintiff and defendant

GMAC Mortgage LLC to reinstate the mortgage on plaintiff's property after plaintiff's

property was sold to GMAC at a trustee's sale. The parties agreed to enter into a loan

modification as described in Exhibit A to the agreement. However, the settlement agreement

did not contain an Exhibit A.

Plaintiff's first amended complaint asserted claims for (1) actual fraud, (2)

constructive fraud, (3) breach of contract, (4) intentional infliction of emotional distress

("IIED"), (5) negligence, (6) deceptive practices, and (7) unjust enrichment. We granted

defendants' motion to dismiss claims one, two, four, five, and six (doc. 44). Summary

Case 2:11-cv-00546-FJM Document 88 Filed 07/13/12 Page 1 of 4
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 The statute relating to attorneys' fees was amended by the Arizona legislature in May

2012. See 2012 Ariz. Legis. Serv. 305 (West). Because the new Act will not be effective

until December 31, 2012, we apply the current version of A.R.S. § 12-341.01. 

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judgment was granted to defendants on the remaining claims (doc. 76). The parties

stipulated to the dismissal of defendants' counterclaim for abuse of process without prejudice

(doc. 67). Defendants now seek an award of attorneys' fees under A.R.S. § 12-341.01 in the

total amount of $84,346.00, representing over 400 hours of work. This includes a request

for $72,552.50 in fees expended defending this action, as well as $11,793.50 spent

responding to the parallel proceedings plaintiff initiated with the Arizona Attorney General's

Office and the Consumer Financial Protection Bureau.

Under A.R.S. § 12-341.01(A), a court may award reasonable attorney fees to the

prevailing party in any action "arising out of a contract."1

 A court is not required to award

the amount of attorney fees "actually paid," but may impose an award of fees "to mitigate the

burden of the expense of litigation to establish. . . a just defense." Id. § 12-341.01(B). We

consider several factors when deciding whether attorneys' fees should be granted, including

(1) the merits of the unsuccessful party's claims; (2) whether this action could have settled

or been avoided; (3) whether an award of fees would cause extreme hardship; (4) whether

the successful party prevailed on all claims; (5) whether the action involved novel legal

questions; and (6) whether an award of fees would discourage others from pursuing

meritorious claims. Associated Indem. Corp. v. Warner, 143 Ariz. 567, 570, 694 P.2d 1181,

1184 (1985).

The first Warner factor favors an award of fees. Plaintiff's tort claims, although not

entirely frivolous, were not meritorious. We dismissed plaintiff's fraud claims in the First

Amended Complaint because they were not pled with particularity. Order on Mot. to

Dismiss at 4-5. We dismissed plaintiff's negligence claim because he failed to plead

plausible facts that defendants owed him a duty. Id. at 6-7. Plaintiff's IIED claim was

dismissed for failure to allege inherently extreme and outrageous conduct. Id. at 7-8.

Moreover, plaintiff's breach of contract and unjust enrichment claims were resolved as a

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matter of law on summary judgment by applying basic principles of contract law.

Accordingly, although plaintiff "presented arguable issues. . . [t]o a court fully informed as

to the facts and the law, it should have been apparent that the claim was untenable." Grand

Real Estate, Inc. v. Sirignano, 139 Ariz. 8, 15, 676 P.2d 642, 649 (Ct. App. 1983). 

We turn to the remaining factors. It is unclear whether the parties could have settled.

The parties engaged in some settlement negotiations. Plaintiff's ultimate goal was to secure

a loan modification. Plaintiff initially proposed a settlement that was rejected as

unreasonable, and defendants did not complete plaintiff's new loan modification application

prior to the end of this action. Defendants fault plaintiff for being unwilling to discuss

settlement sooner and plaintiff faults defendants for not timely processing his application.

As a result, this factor is neutral. Next, plaintiff has not argued that the assessment of fees

would result in extreme hardship. See Woerth v. City of Flagstaff, 167 Ariz. 412, 420, 808

P.2d 297, 305 (Ct. App. 1990). Accordingly, this factor does not weigh in favor of plaintiff.

Defendants prevailed on all of plaintiff's claims. Moreover, the legal questions presented,

involving basic contract and tort law, were not novel. And an award of fees in this case

would not discourage other plaintiffs with meritorious actions from pursuit of their claims.

In sum, after considering each of the Warner factors, we conclude that on balance an award

of attorneys' fees is appropriate.

Plaintiff asks that we exclude fees relating to defendants' counterclaim. We need only

consider the relative merit of the unsuccessful party's claims when deciding whether any

award of fees is appropriate. See Warner, 143 Ariz. at 570, 694 P.2d at 1184. However, an

award "should be made to mitigate the burden. . . to establish a just claim or a just defense,"

and can be less than the total amount expended. A.R.S. § 12-341.01(B). Plaintiff argues that

the counterclaim was unfounded. Because the counterclaim was dismissed by stipulation,

we did not rule on its merits, and do not do so here. We will, however, deduct the $3,799.00

defendants spent litigating (and ultimately dismissing) their counterclaim, because these fees

were incurred voluntarily and are separate from defendants' burden to defend against

plaintiff's claims.

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We decline, however, to award any fees incurred in litigating the extraneous

complaints plaintiff filed with the Arizona Attorney General's Office and the Consumer

Financial Protection Bureau. Defendants argue that plaintiff's conduct in instituting parallel

proceedings vexatiously multiplied proceedings, warranting a sanction in this court. We

decline to sanction plaintiff for initiating proceedings in other forums which had no impact

on these proceedings. Accordingly, we will not award the $11,793.50 incurred in connection

with these other proceedings.

Plaintiff does not otherwise object to the reasonableness of the fees. Accordingly, IT

IS ORDERED GRANTING defendants' motion for attorneys' fees (doc. 79). The Clerk

shall enter judgment awarding defendants $68,753.50 in attorneys' fees.

DATED this 12th day of July, 2012.

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