IN THE



## A RIZONA 

## C OURT OF 

## A PPEALS

D IVISION O NE

KENNETH FIELDS, et al., Plaintiffs/Appellees
,

v.

ELECTED OFFICIALS RETIREMENT P LAN,

Defendant/Appellee
,

_________________________________ STATE OF ARIZONA, Defendant/Appellant

.
N o . 1 CA

- CV 18

- 0 126

Appeal from the Superior Court in Maricopa County

No. CV 2017

- 001200 The Honorable Timothy J. Thomason
, Judge

AFFIRMED

COUNSEL

Osborn Maledon, P.A., Phoenix By Colin F. Campbell Counsel for Plaintiff

s /Appel lees

Arizona Attorne y General’s Office
, Phoenix By Paula S. Bickett, Andrew G. Pappas , Nancy M. Bonnell, Charles A. G rube, Eryn M. McCarthy C ounsel for Defendant

/Appell ant State of Arizona FILED 2-6-2020FIELDS, et al. v. EORP, et al. Opinion of the Court

2 OPINION
Judge David D. Weinzweig delivered the opinion of the Court, in which Presiding Judge Kent E. Cattani and Chief Judge Peter B. Swann joined.

W E I N Z W E I G , Judge:

¶1 A.R.S. § 12

- 341.01 allows the superior court to award reasonable attorney fees to the successful party in a contested action arising out of contract. Courts have held that fees may only be awarded under the statute if the successful party has a “genuine f inancial obligation” to compensate an attorney. At issue here is what that means.

¶2 Plaintiffs and their attorneys entered a contingent fee agreement here that limited attorney compensation to any potential court

ordered fee award under the stat ute. The superior court found that Plaintiffs assumed a genuine financial obligation to compensate their attorneys under this agreement and granted their request for reasonable attorney fees under § 12

- 341.01. We affirm.

FACTS AND PROCEDURAL BACKGROUND

¶3 P laintiffs Ken Fields and Gerald Porter are retired state court judges and members of t he Elected Officials Retirement Plan (EORP)
, a defined benefit retirement plan for judges and other elected officials , which is funded by various sources, including emplo yer and employee contributions. The legislature modified EORP in 2013 to cap employer contributions at 23.5 percent of aggregate payroll. See A.R.S. § 38

- 810 (2014). Before then, employer contributions were set and made based on actuarial methods and as sumptions consistent with generally accepted accounting standards.

A. The Fee Agreement

¶4 Plaintiffs retained the Osborn Maledon law firm in January 2017 to pursue claims for declaratory and injunctive relief but not damages “arising from [the] 2013 statutory change capping employer contributions to the EORP.” Plaintiffs and Osborn Maledon entered a written contingen t f ee a greement . T he law firm agreed to “limit recovery of [its attorney ] fees to those fees and costs awarded by the [superior court] under any applicable fee shifting statute.”FIELDS, et al. v. EORP, et al. Opinion of the Court

3 ¶5 To that end, the fee agreement obligated Plaintiffs , if ultimately successful, to request a court

- ordered award of attorney fees under A.R.S. § 12

- 341 .01 and to surrender any award to counsel :

If the case is succ essfully prosecuted or settled
, Clients shall petition the Court for fees and costs under any applicable fee shifting statute.

** ** **

Client [ s ] agree to pay those fees and costs over to Attorneys . Attorneys’ fees will be payable only out of recovery, and if no recovery is obtained, no fees shall be payable to Attorneys.
(Emphasis added).

B. The Lawsuit

¶6 Plaintiffs sued EORP and the State of Arizona for a declaratory judgment that the statutory cap on employer contributions breached their contract and violated the Arizona Constitution, and sought a mandatory injunction against EORP to set employer contribution rates as required by the law. Plaintiffs sought no money damages but did request an award of attorney fees and costs under A.R.S. § 12

- 341.01 and the private attorney general doctrine.

¶7 After a bench trial, the superior court held the State ’s statutory cap on EORP contribut ions violated Plaintiffs’ contract and the Arizona Constitution. See Ariz. Const. art. 29, § 1 (A)

. The court ordered the State to “set the employer contribution rates and other funding for EORP, as a whole, based on actuarial methods and assumptions that are consistent with generally accepted accounting standards.”

¶8 The superior court also ruled that Plaintiffs were “entitled to at least some of their reasonable costs and attorneys’ fees under the private attorney general doctrine and A.R. S. § 12

- 341.01
, ” and directed Plaintiffs to file a fee affidavit. Plaintiffs requested $62,943 in attorney fees and $2
, 355.30 in costs

. T he S tate countered that fees should be denied or “greatly reduce [d] ” for various reasons, including that Plaintiffs “had no obligation to pay any fees to Osborn Maledon, [and] instead agree [d] that the firm could have any fees that a court might assess against the defendants.” After more briefing
, the court held “[t]he private attorney general doctrine [did] not apply,” but still awarded fees under A.R.S. § 12

-FIELDS, et al. v. EORP, et al. Opinion of the Court

4 341.01 , reasoning that Plaintiffs had assumed a “sufficient financial obligation” under the contingent fee agreement because they “agree[d] to pay any attorney fees awarded to the lawyers

. ” Even so, t h e court reduced the award by twenty percent because Plaintiffs had not secured all relief requested

. ¶9 T he court eventually entered a revised final judgment for Plaintiffs
, awarding $46,088.80 in attorney fees, $1,899 in costs and post

judgment interest at 5.25 percent. The State timely appealed

. We have jurisdiction pursuant to A.R.S. § 12

- 2101(A)(1).

DISCUSSION

¶10 The State contends that Plaintiffs did not qualify for an award of attorney fees under A.R.S. § 12

- 341.01 . W e interpret and appl y the statute de novo

. Ramsey Air Meds, L.L.C. v. Cutter Aviation, Inc. , 198 Ariz. 10, 13, ¶ 12 (App. 2000).

¶11 Section 12

– 341.01(A) provides that a court may award reasonable attorney fees to the successful party in any contested action arising out of a contr act

. The statute further directs that a fee award “ need not equal or relate to the attorney fees actually paid or contracted, but the award may not exceed the amount paid or agreed to be paid. ” A.R.S. § 12

- 341.01(B). To recover fees under the statute, the successful party must therefore show it entered an attorney

- client relationship and assumed a genuine financial obligation to compensate the attorney. Moedt v. General Motors Corp. , 204 Ariz. 100, 10 3 , ¶ 11 (App. 200 2)

. ¶12 The State does not contest that Plaintiffs entered an attorney

client relationship with the Osborn Maledon law firm or that Plaintiffs succeeded in a contested action arising out of a contract

. Rather, t he State argues that Plaintiffs cannot recover a ny attorney fee s because they “never paid or agreed to pay their lawyers ” under § 12

- 341.01(B)

. We disagree.

¶13 Plaintiffs “agreed to [pay]” counsel here and thus qualified for an award of fees not to exceed that amount. A.R.S. § 12

- 341.01(B). We interpret a statute to achieve the legislature’s intent , which is best expressed by its plain language. SolarCity Cor p. v. Ariz

. Dep’t of Revenue , 243 Ariz. 477, 480, ¶ 8 (2018). Plaintiffs entered a written fee agreement with the law firm that required Plaintiffs to perform two affirmative acts if successful in the lawsuit . P laintiffs promised first to “petition ” the superior court for an award of attorney fees and costs under the fee

- shifting statute , and promised then to surrender “those fees and cost s over to” counsel

. Th ose twin promises are contractually enforceable under Arizona law andFIELDS, et al. v. EORP, et al. Opinion of the Court

5 represent a genuine financial obligation to compensate counsel. Sparks v. Republic Nat’l Life Ins. Co. , 132 Ariz. 529, 545 (1982)

. ¶14 T he conditional nature of payment does not diminish the genuine financial obligation

. Arizona courts have long recognized that attorney fees are recoverable under § 12

- 341.01 “when the contract between the party and the attorney is a contingency

- fee agreem ent,” reasoning that “[a]fter obtaining a judgment, a client who has retained counsel on a contingency basis must surrender the agreed upon percentage of the judgment as remuneration.” Id.

¶15 Even so, t he State contends this case is different than Sparks bec ause the clients there sought damages and entered a contingen t fee agreement that required them to compensate counsel “out of whatever [damages] they recover , ” rather than merely “ turn over whatever attorney fees a court awards .” But § 12

- 341.01 only requ ires an agreement to pay counsel

— it never mentions or limits the source of payment. And client s remain on the hook u nder either arrangement because payment must be surrendered

— whether from an independent fee award (here) or as a percentage of the damages award (there)

. ¶16 If contingen t fee clients must seek and recover money damages to qualify for an award of attorney fees under § 12

- 341.01, and recovery of declaratory and injunctive relief is not enough
, the result will be an unintended and undesirab le emphasis on damages

. Section 12

- 341.01 was enacted to mitigat e the “expense of litigation to establish a just claim or a just defense
, ” not to encourage more lawsuits for money damages in lieu of meaningful injunctive or declaratory relief. Cf. Blanch ard v. Bergeron
, 489 U.S. 87, 95 (1989) (rejecting strict limitation on fee awards in civil rights litigation )

. ¶17 Another consequence of the State’s argument, if accepted, would be to curtail public interest litigation where individuals band together and retain contingent fee counsel to pursue contract

- related injunctive and declaratory relief, but have no money damage s

. For clients who lack the means to retain competent representation, a cont ingent fee agreement to surrender any fee

- shift award re presents the only economic option

— shifting the risk and expense of litigation to counsel. Cf. Arnold v. Ariz

. Dep’t of Health Servs. , 160 Ariz. 593, 608 (1989) (“Attorney’s fees should not be limited by the fact that the plaintiffs are indigent and that their attorneys accepted the case on a pro bono basis.”). Nothing in § 12

- 341.01 shows this fee arrangement is outside its reach.FIELDS, et al. v. EORP, et al. Opinion of the Court

6 ¶18 The State also insists that Plaintiffs’ award of attorney fees represe nts a “windfall” that contravene s the purpose of fee award s under § 12

- 341.0 1

. But Plaintiffs’ fee award tracks the express and recognized purposes of § 12

- 341.01 , which are to “mitigat e the burden of the expense of litigation to establish a just claim or a just defense
, ” and to encourage an early and ongoing assessment of the merits and facilitate settlement

. Chaurasia v. Gen. Motors Corp. , 212 Ariz. 18, 29, ¶ 43 ( App. 2006)

. A fee

awar d here mitigate s the burden of litigation expenses incurred by counsel to establish Plaintiffs’ claims. Neither the statute nor common law require s clients to personally assum e “ the burden of the expense
, ” Catalina Foothills Ass ’ n, Inc. v. White , 132 Ariz. 427, 428 ( App. 1982)
, which if required would defeat the rationale of contingent fee agreements. And given the contingent fee agreement, it was imperative for all counsel to perform an early, comprehensive appraisal of claims and defenses

. ¶19 Meanwhi le, t he State asserts that § 12

- 341.01 is intended to make litigants whole for having to pay attorney fees from their own pocket

. But the State arrogate s that purpose from a different statute
, A.R.S. § 12

- 349 , as applied in Lisa v. Strom
, 183 Ariz. 415, 4 17 (App. 1995), where attorney fees were awarded as a sanction against defendants for pressing a groundless defense and abusing discovery

. And e ven there, the court only mentions the rationale to justify its denial of attorney fees to self

represented “attorney

- litigants

. ” Id

. at 4 20 (“[A] financial obligation from the community to itself is no obligation at all. An award of fees is therefore inappropriate. ”).

¶20 Nor can the fee award be characterized as an unreasonable or unearned “wind fall.” The statute independently requires any f ee award to be reasonable , both as to the number of hours devoted and billing rates

. See A.R.S. § 12

- 341.01(A) , (B) . The State again misrelies on Lisa , which warned about the perception of “ windfalls ” w here self

- represented “attorney

litigants” seek to recover attorney fees for representing themselves

. 183 Ariz. at 419 (“ The general rule against awarding fees to attorney

- litigants is based upon a perception that such awards are windfalls to persons who have spent no money and incurred no debt for legal representation. ”). Th is case raises no such concern because Plaintiffs were represented by Osborn Maledon and contractually bound to surrender any fee award to them

. ¶21 The superior court did not abuse its discretion in awarding attorney fees to Plaintiffs

.FIELDS, et al. v. EORP, et al. Opinion of the Court

7 CONCLUSION

¶22 We affirm the superior court’s fee award to Plaintiffs

. We grant Plaintiffs their costs and reasonable attorney fees on appeal under A.R.S. §§ 12

- 341 and

- 341.01 upon compliance with Arizona Rule of Civil Appellate Procedure 21.