Opinion ID: 3065723
Heading Depth: 3
Heading Rank: 1

Heading: Contracts Claims

Text: Arizona Revised Statute § 12-341.01 provides that “[i]n any contested action arising out of a contract, express or implied, the court may award the successful party reasonable attorney fees” in order “to mitigate the burden of the expense 2 In Tutor-Saliba Corp. v. City of Hailey, we determined that where a plaintiff in a § 1983 action alleges multiple interrelated claims based on the same underlying facts, and some of those claims are frivolous and some are not, a court may award defendants attorneys fees with respect to the frivolous claims only when those claims are not “intertwined.” See 452 F.3d at 1063-64. We determined that the claims in that case were not “intertwined” because they were “distinct” in that “the merits of each claim could easily be evaluated separately,” in significant part because the facts were both simple and undisputed; and the claims were argued separately throughout the case. Id. at 1064. The circumstances in this case are quite different. The facts are neither undisputed nor simple, and the research required to evaluate and develop arguments with respect to many of Harris’s purportedly frivolous claims was substantially the same as that necessary to the defense against his nonfrivolous discrimination claims, including disparate treatment, retaliation, and equal protection. Nevertheless, because Harris does not assert that his frivolous and nonfrivolous claims were so intertwined as to make a fee award with respect to the frivolous claims inappropriate, we do not reach that issue here and express no view as to which if any of Harris’s frivolous claims might be exempted from reimbursement of defendants’ fees under Tutor-Saliba. In cases in which particular frivolous claims are determined to be intertwined with nonfrivolous claims, the Tutor-Saliba approach may make it unnecessary to examine the particular work performed to the extent required under the rules set forth above, if at all. In contrast, where the Tutor-Saliba approach is not applicable, it will be necessary to apply the principles enumerated herein. HARRIS v. MARICOPA COUNTY SUPERIOR COURT 1101 of litigation to establish a just claim or a just defense.” Ariz. Rev. Stat. § 12-341.01(A), (B). It is not, however, a fee shifting statute; as the Arizona Supreme Court has stated, “[m]ere eligibility [under § 12-341.01(A)] does not establish entitlement to fees.” Wagenseller v. Scottsdale Mem’l Hosp., 710 P.2d 1025, 1049 (Ariz. 1985) (en banc). Instead, a court deciding whether to award fees under the statute must consider the multifactor standard outlined in Associated Indemnity Corporation v. Warner, 143 Ariz. 567 (Ariz. 1985).3 Harris’s chief claim with regard to the fees for the claims for which the district court awarded fees under § 12.341.01(A) is that the claims did not “aris[e] out of a contract.” The proper inquiry for determining whether a claim “arise[s] out of a contract” is whether the “claim could not exist ‘but for’ the breach or avoidance of contract.” Ramsey Air Meds, L.L.C. v. Cutter Aviation, Inc., 198 Ariz. 10, 15 (Ariz.App. Div. 1, 2000); see also A.H. By and Through White v. Arizona Property and Cas. Ins. Guar. Fund, 190 Ariz. 526, 529 (1997) (en banc). It is well established, moreover, that a defendant is entitled to attorney’s fees if the plaintiff’s claims arise out of an alleged contract that is proven not to exist. See Chevron U.S.A. Inc. v. Schirmer, 11 F.3d 1473, 1480 (9th Cir. 1993). [6] Here, Harris’s claims for breach of contract and the 3 The Associated Indemnity factors are: “(1) whether the unsuccessful party’s claim or defense was meritorious; (2) whether the litigation could have been avoided or settled and the successful party’s efforts were completely superfluous in achieving the result; (3) whether assessing fees against the unsuccessful party would cause an extreme hardship; (4) whether the successful party prevailed with respect to all of the relief sought; (5) whether the legal question presented was novel and whether such claim or defense have previously been adjudicated in this jurisdiction; and (6) whether the award would discourage other parties with tenable claims or defenses from litigating or defending legitimate contract issues for fear of incurring liability for substantial amounts of attorney’s fees.” Wagenseller, 710 P.2d at 1049. 1102 HARRIS v. MARICOPA COUNTY SUPERIOR COURT duty of good faith and fair dealing were explicitly premised on the existence of an implicit contract that the district court found did not exist, and thus were eligible for a fee award under A.R.S. § 12-341.01. Additionally, while different courts might reasonably reach different determinations as to whether a fee award was appropriate under the Associated Indemnity factors, we see no abuse of discretion in the district court’s decision to award fees for these two claims. As we explained above, however, because this is a civil rights case, in awarding such fees, the district court must under Arizona law include only fees for legal work that was not performed in whole or in part in order to defend against the nonfrivolous civil rights claims. See Sees, 148 Ariz. at 369. Thus, the award of fees in connection with this claim must be vacated as well. [7] Fees were not appropriate at all under § 12-341.01(A) for Harris’s due process claim. “To state a cognizable due process claim” Harris was required to show “a recognized liberty or property interest at stake.” Guzman v. Shewry, 552 F.3d 941, 953 (9th Cir. 2009) (internal quotation marks and citation omitted). Harris alleged that defendants deprived him of a property interest in continued employment, a claim apparently based on contract, but also alleged a liberty interest in being free from defamation. See id. at 955 (“A person’s liberty interest is implicated if the government levels a charge against him that impairs his reputation for honesty or morality” (internal quotation marks and citations omitted)). While the asserted property interest relied on the alleged contract, the liberty interest did not. Accordingly, Harris’s due process claim was not dependent on the existence of a contract: it could have advanced merely on the asserted liberty interest. Thus, fees were not available under § 12-341.01 for the due process claim.4 4 Defendants contend that Harris waived this argument by failing to raise it below. Harris did suggest in district court that the only claims for which fees under § 12-341.01 might be appropriate were the breach of contract and the breach of the covenant of good faith and fair dealing claims, but HARRIS v. MARICOPA COUNTY SUPERIOR COURT 1103