Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_22-cv-01196/USCOURTS-azd-2_22-cv-01196-2/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1446 Petition for Removal - Breach of Contract - Insurance

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Industrial Park Center LLC,

Plaintiff,

v. 

Great Northern Insurance Company, et al.,

Defendants.

No. CV-22-01196-PHX-MTL

ORDER 

Plaintiff Industrial Park Center, LLC (“Industrial Park”) filed a breach of contract 

claim and a breach of the covenant of good faith and fair dealing claim against Defendant 

Great Northern Insurance Company (“GNIC”), its commercial property insurer. (Doc. 1-

3.) The Court granted GNIC’s motion for summary judgment on both claims, directing the 

Clerk of Court to enter judgment in GNIC’s favor and close this case. (Doc. 110).

GNIC now seeks to recover its attorneys’ fees under A.R.S. § 12-341.01(A) and 

nontaxable costs under Rule 54(d)(1), Fed. R. Civ. P. (Doc. 116 at 3.) GNIC requests a 

total of $237,160.00 for its attorneys’ fees and $45,820.00 for its nontaxable costs. (Id. at 

2.) The Court rules as follows.

I. Attorneys’ Fees

Arizona Revised Statutes § 12-341.01(A) allows for the prevailing party in an action 

arising out of a contract to recover its reasonable attorneys’ fees from the losing party.

Industrial Park argues that GNIC is not entitled to fees because Industrial Park’s claims 

were meritorious, the claim at issue was novel, and the fee award would deter other 

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insureds from making meritorious claims. (Doc. 120 at 3-6.) Industrial Park also argues 

that GNIC’s litigation strategy needlessly increased the costs of this litigation and that 

GNIC did not provide sufficient detail for the fees billed.

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(Id. at 6-8.) 

The Court has broad discretion in awarding attorneys’ fees under § 12-341.01 and 

considers the following factors:

(1) the merits of the unsuccessful party’s claim, (2) 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.

Nationwide Mut. Fire Ins. Co. v. Jones, 695 F. Supp. 2d 978, 986 (D. Ariz. 2010) (citing 

Assoc. Indemn. Corp v. Warner, 143 Ariz. 567, 570 (1985)). The Court considers all factors 

in exercising its discretion, and no single factor should be determinative. Id. (citing Wilcox 

v. Waldman, 154 Ariz. 532, 538 (App. 1987)).

To determine the reasonableness of attorneys’ fees, courts consider the following 

factors: 

(1) the qualities of the advocate: his ability, his training, 

education, experience, professional standing and skill;

(2) the character of the work to be done: its difficulty, its 

intricacy, its importance, time and skill required, the 

responsibility imposed and the prominence and character of the 

parties where they affect the importance of the litigation;

(3) the work actually performed by the lawyer: the skill, time 

and attention given to the work;

(4) the result: whether the attorney was successful and what 

benefits were derived.

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Industrial Park also asks the Court to defer any ruling on attorneys’ fees until after 

Industrial Park’s appeal. (Id. at 9-10.) As the issue is fully briefed, the Court will resolve 

the motion now.

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Schweiger v. China Doll Rest. Inc., 138 Ariz. 183, 188 (App. 1983) (emphasis removed) 

(quoting Schwartz v. Schwerin, 85 Ariz. 242, 245-46 (1959)).

This action arises out of a contract. (Doc. 1-3 at 6-7, Doc. 110.) Industrial Park does 

not argue that paying attorneys’ fees would cause cause undue hardship. Industrial Park 

also does not contest that GNIC successfully defended against Industrial Park’s claims, 

making GNIC the prevailing party. (See generally Doc. 120; see also Doc. 1-3 at 6-7, Doc. 

110.) The Court therefore reviews the following disputed factors: (1) the merits of 

Industrial Park’s claim, (2) whether the successful party’s efforts were superfluous, 

(3) whether the issue was novel, and (4) whether a fee award would discourage others from 

litigating tenable claims.

The merits and novelty of Industrial Park’s claim weigh against awarding fees. 

Industrial Park’s breach of contract claim was not frivolous—Industrial Park exhausted its 

administrative remedies and provided logical reasons and evidence for why the claim 

should not have been denied under the exclusions applied by GNIC. (See generally 

Docs. 1-3, 101, 103.) Instead, the Court found that it need not reach whether the exclusions 

applied because Industrial Park’s loss was not fortuitous and was excluded under an allrisk insurance policy as a matter of law. (Doc. 110 at 5-8.) In addition, Industrial Park’s 

legal question was novel in part—neither the Court nor the parties found analogous, 

published case law on the issue of fortuity within Arizona. As such, the Court relied on 

analogous case law outside Arizona for its ruling. (Id.)

Nonetheless, GNIC’s efforts were not superfluous and were in response to the 

numerous filings by Industrial Park. Early in the lawsuit, Industrial Park filed discovery 

disputes and a motion for sanctions—many of which, including the sanctions motion, were 

resolved in GNIC’s favor. (See generally Docs. 19, 21, 24, 26, 31, 37.) GNIC also 

responded to two motions for partial-summary judgment because Industrial Park filed its 

first motion before the close of discovery. (See Docs. 13, 22, 36, 101, 102.)

Finally, the Court finds that there is no indication that awarding fees to GNIC would 

have a chilling effect on future plaintiffs with legitimate claims against insurers, especially 

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now that the Court’s ruling gives some additional guidance on the issue of fortuity. On 

balance, the factors weigh in favor of awarding GNIC attorneys’ fees. 

As for the reasonableness of the fees, Industrial Park does not contest the qualities 

of the counsel, the character of the work, or the result. (See generally Doc. 120.) Instead, 

Industrial Park challenges the total work performed. (Id. at 6-8.) Specifically, whether the 

total hours billed should be paid based on the lack of detail GNIC provided for its billing 

entries. (Id.)

The Court finds that GNIC did not provide sufficient descriptions for some time

entries to support its requested award. “In order for the [C]ourt to make a determination 

that the hours claimed are justified, the fee application must be in sufficient detail to enable 

the [C]ourt to assess the reasonableness of the time incurred.” Schweiger, 138 Ariz. at 188; 

see also LRCiv 54.2(e)(2) (“The party seeking an award of fees must adequately describe 

the services rendered so that the reasonableness of the charge can be evaluated.”).

Industrial Park identified in Exhibit 1 of its sur-reply $35,010.00 from GNIC’s 

exhibits that include vague descriptions and duplicative entries. (Doc. 126-1.) For example, 

on February 12, 2024, two separate entries exist for “analyze insured’s arguments” with no 

other specificity as to the length of time reviewing such arguments nor detail about the 

origin of these arguments. (Id. at 6-7.) Entries from July 12, 2022, and July 13, 2022, 

include descriptions of “Begin review and assessment of claim file and notes for fire loss,” 

but nothing in the record indicates that the insurance dispute arose from a fire loss. (Id. at 

1; Doc. 110; Doc. 121-1 at 10.) Industrial Park also identified sixteen entries with no 

description that totaled $3,916.00 in fees. (Id. at 1, 5, 6.) The Court reviewed the entries 

identified by Industrial Park and agrees that the information provided is insufficient to 

warrant fees for these activities. See LRCiv 54.2(e)(2) (“If the time descriptions are 

incomplete, or if such descriptions fail to adequately describe the service rendered, the 

court may reduce the award accordingly.”).

Accordingly, the Court will award GNIC $198,234.00 in attorneys’ fees, which is 

GNIC’s requested attorneys’ fee award minus the $38,926.00 requested from the 

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insufficient time entries.

II. Nontaxable Costs

GNIC requests to recover nontaxable costs of $45,820.00 under Rule 54(d)(1), Fed. 

R. Civ. P., and A.R.S. § 12-341. (Doc. 116 at 2-3.) Specifically, GNIC seeks to recover 

copying fees ($1,117.31), expert fees ($40,400.38), travel expenses ($1,652.31), and 

mediation costs ($2,650). (Doc. 116-3 at 4.) Industrial Park argues that GNIC fails to 

provide any applicable legal authority for the recovery of nontaxable costs. (Doc. 120 at 

2-3.)

Under Federal Rule of Civil Procedure 54(d)(1), costs other than attorneys’ fees 

should be allowed to the prevailing party unless a federal statute, the rules, or a court order 

provides otherwise. Marx v. Gen. Revenue Corp., 568 U.S. 371, 375-76 (2013). This rule 

establishes a presumption in favor of awarding costs to the prevailing party, but it does not 

grant courts unrestricted discretion to award any costs they deem appropriate. Id. at 377.

Local Rule of Civil Procedure 54.2(c) governs the requirements for claiming 

nontaxable costs. “The memorandum of points and authorities in support of a motion 

for . . . non-taxable expenses shall include a discussion . . . [of] the applicable factors 

deemed relevant in determining whether attorneys’ fees and related non-taxable expenses 

should be allowed, with citation(s) to the relevant legal authority.” LRCiv 54.2(c).

GNIC cites A.R.S. § 12-341 as its legal authority for awarding nontaxable costs. 

(Doc. 116 at 3.) Section 12-341 states that “[t]he successful party to a civil action shall 

recover from his adversary all costs expended or incurred therein unless otherwise provided 

by law.” A.R.S. § 12-341 (emphasis added). Yet, the successful party in a contract action 

may not recover its nontaxable costs as part of the statutory attorneys’ fees award under 

A.R.S. § 12-341.01. Ahwatukee Custom Estates Mgmt. Ass’n, Inc. v. Bach, 193 Ariz. 401, 

403-04 (1999); see also arrivia Inc. v. Rowley, No. CV-23-01039-PHX-DLR, 2024 WL 

3010935 (D. Ariz. June 14, 2024) (denying request for nontaxable costs as prohibited under 

A.R.S. § 12-341.01); Jarman v. Am. Fam. Ins. Co., No. CV-18-00526-PHX-SMB, 2021 

WL 1947509 (D. Ariz. May 14, 2021) (same).

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Accordingly, the Court will deny GNIC’s request for nontaxable costs.

IT IS THEREFORE ORDERED granting in part and denying in part GNIC’s 

motion for attorneys’ fees (Doc. 116) as stated in this Order. GNIC is awarded $198,234.00 

in attorneys’ fees, only.

Dated this 19th day of December, 2024.

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