Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_05-cv-01337/USCOURTS-cand-3_05-cv-01337-3/pdf.json

Parties Involved:
Brown Family Communities
Defendant
Chris Williams
Plaintiff

Document Text:

United States District Court

For the Northern District of California

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

CHRIS WILLIAMS,

Plaintiff,

v.

BROWN FAMILY COMMUNITIES,

Defendant.

____________________________________/

No. C-05-1337 JCS

ORDER GRANTING MOTION FOR

AWARD OF ATTORNEYS’ FEES

[Docket No. 23] 

I. INTRODUCTION

On July 11, 2005, this Court granted Defendant’s Motion to Dismiss for Lack of Personal

Jurisdiction, or, Alternatively, Motion to Transfer Venue and dismissed Plaintiff’s complaint without

prejudice on the basis that the Court lacked personal jurisdiction over Defendant. Defendant now brings a

Motion for Award of Attorneys’ Fees (“the Motion”). For the reasons stated below, the Motion is

GRANTED. Defendant is awarded $12,616.55 in fees and costs.

II. BACKGROUND

Plaintiff Chris Williams, a California resident, entered into a contract (“the Purchase Agreement”) to

purchase a home to be built in a Phoenix, Arizona, subdevelopment by Defendant, Brown Family

Communities (“Brown”). On February 28, 2005, Williams brought a breach of contract action in California

Superior Court. Brown removed the action to this Court and subsequently brought a Motion to Dismiss for

Lack of Personal Jurisdiction. On July 12, 2005, the Court granted Brown’s Motion, and dismissed the

action without prejudice for lack of personal jurisdiction, pursuant to Rule 12(b)(2) of the Federal Rules of

Civil Procedure.

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 In the Motion, Plaintiff seeks a total of $15,077.33. It is not clear how this number was obtained.

The documents supporting the Motion reflect attorneys’ fees in the amount of $12,707.50 and costs in the

amount of$1,179.80 (including the $250.00 filing fee). See Motion, Ex. A (Affidavit inSupport ofAttorneys’

Fees(“Holland Decl.”)) at Ex. 1. The “Grand Total” of $15,077.33 on the last page of the exhibit appears to

be a clerical error.

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On July 25, 2005, Brown filed a Motion For Award Of Attorneys’ Fees, seeking an award of

attorneys’ fees under the terms of the contract and also under Ariz. Rev. Stat. § 12-341.01. Motion at 1. 

With respect to the contractual obligation, Brown cited to a paragraph in the Purchase Agreement signed

by both parties that states as follows:

If any party hereto obtains legal counsel or institutes an action in arbitration

or otherwise to enforce the terms of this Agreement or to recover damages

for its breach, the non-prevailing party in such action shall pay to the

prevailing party all of such prevailing party’s costs and expenses incurred,

including but not limited to reasonable attorneys’ fees and costs of court,

and any arbitrator in any arbitration hereunder is hereby specifically

empowered to award to the prevailing party in such arbitration such

prevailing party’s costs and expenses incurred, including but not limited to

reasonable attorneys’ fees and costs of court.

Holland Decl., Ex. B. Brown also cites to Harris v. Reserve Life Ins. Co., 158 Ariz. 380, 385 (Ariz. Ct.

App. 1988) for the proposition it is entitled to attorneys’ fees even though the Court didn’t reach the merits

of Plaintiff’s claims.

In support of the Motion, Brown provides detailed time sheets documenting $12,707.50 in fees

and $1,179.80 in costs.1 These fees were incurred by three attorneys – James Holland, Jeff Goulder and

John Hendricks – whose respective billing rates are $180.00/hour, $300.00/hour and $290.00/hour. Id.,

¶¶ 3, 5. According to Holland, the amount of time billed was reduced by 13% to ensure that the fees

sought are reasonable. The time spent preparing the attorneys’ fees motion was not included. Id., ¶ 9. 

In his Opposition, Williams asserts that Brown is not entitled to attorneys’ fees because the Court

dismissed his complaint on jurisdictional grounds, without prejudice, rather than on the merits and

therefore, Brown is not a “prevailing party” under the contract or Ariz. Rev. Stat. § 12-341.01. Williams

argues that Harris is distinguishable and relies instead on another Arizona case, U.S. Insulation, Inc. v.

Hilro Constr. Co., 146 Ariz. 250 (Ariz. Ct. App. 1985), which Plaintiff asserts stands for the proposition

that a party may be awarded attorneys’ fees as a prevailing party only after there has been a decision on the

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merits. Williams also relies on Arizona Rule of Civil Procedure 54(g)(2). That rule provides, in part, that

“[w]hen attorneys’ fees are claimed, the determination as to the claimed attorneys’ fees shall be made after

a decision on the merits of the cause.” Williams argues further that the contractual attorneys’ fees clause

does not apply because it allows only an arbitrator to award fees and not a court. Finally, Williams asks

the Court to impose sanctions under Rule 11 of the Federal Rules of Civil Procedure on the basis that

Brown filed its Motion without reasonable inquiry and cited only one case which, according to Williams, is

distinguishable. Williams does not challenge any of the fees and costs sought by Brown on the basis that

they are unreasonable.

In its Reply, Brown argues that U.S. Insulation, cited by Williams, has been abrogated and cites

two additional cases in support of its position that a party may be “prevail” under Arizona law even in the

absence of a ruling on the merits: Mark Lighting Fixture Co. v. Gen. Elec. Supply Co., 155 Ariz. 65, 71

(Ariz. Ct. App. 1986), vacated on other grounds, 155 Ariz. 27 (1987); and Wagenseller v. Scottsdale

Mem’l Hosp., 147 Ariz. 370, 392 (1985). Brown also argues that Arizona Rule of Civil Procedure

54(g)(2) is irrelevant because Arizona state court procedural rules have no applicability in a federal court in

California. Finally, Brown rejects Plaintiff’s contention that the Purchase Agreement only authorizes an

arbitrator to award attorneys’ fees, arguing that when the attorneys’ fees provision is read as a whole,

recovery is allowed for both arbitration and litigation fees. 

III. ANALYSIS

A. Applicable Law

Jurisdiction in this case is based upon the diversity of the parties. Accordingly, the Court applies

the choice of law rules of California. See Liew v. Official Receiver and Liquidator, 685 F.2d 1192,

1195 (9th Cir. 1982). Here, the Purchase Agreement specifies that it “is governed by the laws of the State

of Arizona.” Holland Decl., Ex. B at 8. California courts enforce contractual choice of law provisions

where: 1) there is a substantial relationship between the state whose law has been selected; and 2)

enforcement of the contract is not “contrary to a fundamental public policy of California.” See Hughes

Elecs. Corp. v. Citibank Delaware, 120 Cal. App. 4th 251, 258 (2004). Here, it is undisputed that both

of these requirements are met. Accordingly, the Court applies Arizona law in determining whether Brown

is entitled to an award of attorneys’ fees.

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B. Applicability of Ariz. Rev. Stat. § 12-341.01

Brown has requested attorneys’ fees under both the Purchase agreement and Ariz. Rev. Stat. § 12-

341.01. Section 12-341.02 allows a court, in its discretion, to award a “successful party” reasonable

attorneys’ fees “[i]n any contested action arising from a contract.” Arizona courts have, held, however, that

where there is an attorneys’ fees provision in the contract, § 12-341.01 does not apply. See Sweis v.

Chatwin, 120 Ariz. 249 (Ariz. Ct. App. 1978). The court in Sweis explained that to apply § 12-341.01 in

cases in which there is a contractual attorneys’ fees provision “would in effect cancel the unqualified

contractual right to recover attorneys’ fees given to the successful party by their agreement, and substitute in

its place the purely discretionary or permissive right given by the statute.” Id. at 252. Therefore, the Court

concludes that § 12-341.01 does not apply to Brown’s request for attorneys’ fees.

C. Availability of Fees Under Contract as “Prevailing Party” Where Action is

Dismissed for Lack of Personal Jurisdiction

Brown asserts that it is entitled to attorneys’ fees under the contract because it obtained a dismissal

of the action based on lack of personal jurisdiction and thus, is the “prevailing party.” Williams, on the

other hand, asserts that Brown did not “prevail” because it did not obtain a judgment on the merits. The

Court concludes that Brown is correct.

Under Arizona law, contractual fees provisions are to be interpreted broadly. Kammert Bros.

Enters. v. Tanque Verde Plaza Co., 102 Ariz. 301, 308 (1967). Although contract terms should be read

in light of the parties’ intentions, where a standardized form prepared by one party is used, the provisions of

the agreement will apply even if the other party did not read the “fine print,” so long as the boilerplate terms

do not contradict express agreements of the parties.” Darner Motor Sales., Inc., v. Universal

Underwriters Ins. Co., 140 Ariz. 383, 393 (1984).

Here, there is no evidence in the record that the parties had any express agreement regarding the

meaning of the attorneys’ fees provision in the Purchase Agreement. Nor has the Court found any Arizona

case that is on point providing guidance on the specific question at issue here, namely, where a defendant

obtains a dismissal without prejudice on the basis of lack of personal jurisdiction, is the defendant entitled to

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2 The Court hasfound two casesinwhichcourts have found a party was not a prevailing party where

it obtained a dismissal based on lack of personal jurisdiction. See Lichtenheld v. Juniper Features, Ltd.,

1996WL685443(N.D. Ill.);Catalina Mktg. Int’l, Inc. v. Coolsavings.com, Inc., 2004 WL421739(N.D.

Ill.). The Court declines to follow these cases, however, because both involve requests for fees under federal

statutes rather than contractual provisions. Further, the holdings in these cases rest on the assumption that a

party may not be a prevailing partywhere anactionis dismissed without prejudice because the action may be

refiled. As discussed below, however, Arizona courts appear to have rejected this proposition.

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attorneys’ fees where a contract provides that a prevailing party shall be entitled to attorneys’ fees.2 Under

these circumstances, the task of this Court is to predict how the Arizona Supreme Court would decide the

issue. See In re Kirkland, 915 F.2d 1236, 1238 (9th Cir. 1990). To do so, the Court looks to Arizona

appellate and supreme court decisions which have addressed the meaning of the words “prevailing party” in

other contexts.

In Wagenseller v. Scottsdale Memorial Hosp., 147 Ariz. 370 (1985), the Arizona Supreme

Court addressed whether a plaintiff who obtained reversal on appeal of the trial court’s grant of summary

judgment to defendant on several claims could be awarded attorneys’ fees under § 12-341.01 as a

“successful party” even though she had not yet prevailed on those claims on the merits. The court

concluded that she could, pointing to the fact that § 12-341.01 allows fees to be awarded to a “successful

party” without specifically requiring that the party prevail on the merits. Id. at 392. In contrast, the

Wagenseller court noted, many other statutes, such as A.R.S. § 12-348, permit fees only where a party

has prevailed “by an adjudication on the merits.” Id. 

An Arizona appellate court followed Wagenseller in Mark Lighting Fixture Co., 155 Ariz. 65

Ariz. Ct. App. 1986). In that case, the court addressed whether the defendants could be considered

“successful parties” under § 12-341.01 and § 12-341 (allowing a “successful party” to a civil action to

recover costs) where the case had been dismissed without prejudice on the basis of the plaintiff’s failure to

prosecute. The court concluded they could, relying, in part, on the conclusion of the Wagenseller court

that § 12-341.01 does not require that a party prevail on the merits to be “successful.” Id. at 70. The

court went on to consider whether the fact that a dismissal is without prejudice – thus allowing for a

possible future action on the same claims – changes the result. Id. Citing numerous cases from other

jurisdictions in which courts have awarded attorneys’ fees where a plaintiff has voluntarily dismissed its case

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without prejudice, the court concluded that a dismissal without prejudice does not prevent a party from

being considered “successful.” Id. at 71. It went on to affirm the trial court’s award of attorneys’ fees. 

On appeal, the Arizona Supreme Court reversed the court of appeal in Mark Lighting on the basis

that the request for attorneys’ fees was untimely. 155 Ariz. 27, 31. However, it expressly reserved the

question of whether “attorneys’ fees may be awarded under A.R.S. § 12-341.01 where the complaint is

not disposed on the merits.”

In Harris v. Reserve Life Ins. Co., 158 Ariz. 380 (Ariz. Ct. App. 1988), another Arizona court of

appeal followed the court of appeal’s decision in Mark Lighting. In Harris, the plaintiff had voluntarily

dismissed the action after the defendant filed a summary judgment motion, apparently because deposition

testimony revealed a significant problem with the plaintiff’s case. Id. at 382. The trial court granted the

voluntary dismissal and awarded attorneys’ fees under A.R.S. §12-349 on the basis that the action was

filed without “substantial justification.” Id. The court awarded costs under § 12-341 on the basis that the

defendant was a “successful party.” On appeal, the court affirmed the trial court and specifically held that

the cost award was proper because “the fact that the action is dismissed without prejudice and that plaintiff

can refile is not relevant.” Id. at 385 (citing Mark Lighting).

Based on the decisions discussed above, the Court concludes that the fact that Brown obtained a

dismissal without prejudice does not preclude it from being considered a “prevailing party” under Arizona

law. First, the reasoning of Wagenseller – that the statute does not limit the term “successful party” to a

party that prevails on the merits – also applies here. Had the parties chosen to limit the attorneys’ fees

provision in this manner they could have done so. Second, there is no evidence in the record or language in

the Purchase Agreement suggesting that the parties intended the attorneys’ fees provision to limit the fees

that would otherwise be available under § 12-341.01 if there were no attorneys’ fees provision in the

contract. Indeed, it would make little sense to include such a provision in the contract if the practical result

of such a provision were to reduce the availability of attorneys’ fees. Third, Arizona appellate courts

appear to agree that Wagenseller allows for attorneys’ fees even where there is a dismissal of an action

without prejudice.

Nor is the Court persuaded that the decision of an Arizona court of appeal in U.S. Insulation, Inc.

v. Hilro Constr. Co., Inc., 146 Ariz. 250 (Ariz. Ct. App. 1985) requires a contrary result. In that case,

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which was decided a year before Wagenseller, the court of appeal reversed an order of the trial court

denying the defendant’s motion to compel arbitration. Id. at 259. The defendant sought attorneys’ fees

under § 12-341.01 on the basis that it had successfully appealed the trial court’s order. Id. However, the

court of appeal denied the request on the basis that § 12-341.01 allowed for an award of attorneys’ fees

only where there had been a decision on the merits. Id. The Court concludes that on this issue, Hilro is no

longer good law in light of the Arizona Supreme Court’s holding in Wagenseller that a “successful party”

under § 12-341.01 need not prevail on the merits.

Finally, the Court rejects Plaintiff’s reliance on Arizona Rule of Civil Procedure 54(g)(2). Even if

this state law rule of civil procedure were relevant here, Plaintiff has failed to cite any case suggesting this

rule was meant to limit the holdings of the cases discussed above.

Therefore, the Court concludes that Brown is a “prevailing party” under the terms of the Purchase

Agreement.

D. Authority of Court to Award Fees Under Contract

Williams argues that the Purchase Agreement does not authorize an award of attorneys’ fees by a

federal court, citing the section of the attorneys’ fees provision that reads “any arbitrator in any arbitration .

. . is empowered to award to the prevailing party . . . reasonable attorneys’ fees and costs.” The Court

disagrees.

 Contract provisions must be interpreted in a way that gives meaning to all material terms and not

render any superfluous. Miller v. Hehlen, 109 Ariz. 462, 466 (Ariz. Ct. App. 2005). Phrases in a

contract provision should be considered as included by the parties’ intent. Id at 466. Read in its entirety,

the attorneys’ fees provision in the Purchase Agreement allows for an award of attorneys’ fees by an

arbitrator or a court. In particular, it begins by providing that “If any party hereto obtains legal counsel or

institutes an action in arbitration or otherwise to enforce the terms of this Agreement or to recover

damages for its breach, the non-prevailing party shall pay to the prevailing party . . . reasonable attorneys’

fees and costs.” (emphasis added). Plaintiff’s reading of the attorneys’ fees provision is overly narrow and

fails to give effect to all of the words in the provision. Therefore, the Court concludes the attorneys’ fees

provision allows the Court to award attorneys’ fees.

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E. Reasonableness of Fees and Costs Sought

The Court has reviewed the fees sought by Defendant and finds both the rates billed and the time

spent to be reasonable with the exception that the time billed for communications between the three

attorneys who worked on the case suggests some duplication of work. Accordingly, the Court reduces the

attorneys’ fees sought by 10%. In addition, the costs sought are reasonable. The Court notes that Plaintiff

has not objected to the amount of fees or costs sought in any respect. Therefore, the Court awards

$11,436.75 in attorneys’ fees and $1,179.80 in costs.

F. Plaintiff’s Request for Rule 11 Sanctions

Plaintiff has requested that the Court impose sanctions under Rule 11 on the basis that Defendant’s

Motion is not supported by any relevant legal authority. The Court denies Plaintiff’s request, both on the

merits (for the reasons stated above) and because Plaintiff failed to file a separate motion for sanctions, as

required under Civil Local Rule 7-8(a).

IV. CONCLUSION

For the reasons stated above, the Motion is GRANTED. Defendant is awarded $12,616.55 in

attorneys’ fees and costs.

IT IS SO ORDERED.

Dated: October 21, 2005

 

JOSEPH C. SPERO

United States Magistrate Judge

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