Court Opinion

ID: 2655326
Source: CourtListenerOpinion
Date Created: 2014-03-04 01:00:58.909404+00
Date Added: 2024-06-11T09:12:02.190838
License: Public Domain

NOT FOR PUBLICATION

                    UNITED STATES COURT OF APPEALS                            FILED
                            FOR THE NINTH CIRCUIT                             MAR 03 2014

                                                                          MOLLY C. DWYER, CLERK
                                                                            U.S. COURT OF APPEALS

NATIONAL UNION FIRE INSURANCE                    No. 12-15524
COMPANY OF PITTSBURGH,
PENNSYLVANIA, a Pennsylvania                     D.C. No. 2:11-cv-01212-DGC
corporation,

              Plaintiff - Appellant,             MEMORANDUM*

  v.

757BD, LLC,

              Defendant - Appellee.

                   Appeal from the United States District Court
                            for the District of Arizona
                   David G. Campbell, District Judge, Presiding

                     Argued and Submitted February 14, 2014
                            San Francisco, California

Before: TALLMAN and RAWLINSON, Circuit Judges, and GARBIS, Senior
District Judge.**

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
       **
              The Honorable Marvin J. Garbis, Senior United States District Judge
for the District of Maryland, sitting by designation.
      Plaintiff-Appellant National Union Fire Insurance Company of Pittsburgh,

Pennsylvania, appeals the district court’s award of attorney’s fees to Defendant-

Appellee, 757BD, LLC. National Union filed suit in the U.S. District Court for the

District of Arizona seeking a declaratory judgment that it had no duty to defend or

indemnify another party, Aero Jet Services, LLC, relating to claims alleged by

757BD in an underlying state court lawsuit. National Union was not a party to the

state court action. 757BD moved to dismiss National Union’s complaint based on

the court’s discretionary authority to decline jurisdiction over declaratory judgment

actions. The district court granted the motion and awarded 757BD its attorney’s

fees under Arizona Revised Statute § 12-341.01, a fee-shifting statute triggered in

“any contested action arising out of a contract[.]”1 National Union argues that

A.R.S. § 12-341.01 is preempted by federal law when used to award fees for this

type of non-merits, discretionary dismissal. Preemption aside, it claims that fees

were inappropriate because the action was not “contested” on the merits and

757BD did not succeed on the merits. We have jurisdiction pursuant to 28 U.S.C.

§ 1291, and we affirm.

      1
        A.R.S. § 12-341.01 provides, in pertinent part: “In any contested action
arising out of a contract, express or implied, the court may award the successful
party reasonable attorney fees.”
      A.R.S. § 12-341.01 is not preempted. It does not conflict with a federal

statute or rule of court,2 and it represents a substantial and substantive policy of the

state. See Chambers v. NASCO, Inc., 501 U.S. 32, 52 (1991) (“[I]n an ordinary

diversity case where the state law does not run counter to a valid federal statute or

rule of court, and usually it will not, state law denying the right to attorney’s fees

or giving a right thereto, which reflects a substantial policy of the state, should be

followed.” (citations and quotations omitted)). Even as applied to this case, the

statute “permits a prevailing party in certain classes of litigation to recover

fees”—here, actions arising out of a contract—rather than allowing fees based on

“how the parties conduct themselves during the litigation.” Id. at 52-53.3

      757BD was also a “successful party” in a “contested action” as required by

the statute. We recently explained that a party “need not ‘prevail on the merits of

      2
         A.R.S. § 12-341.01 is, in fact, complementary to both Federal Rule of
Civil Procedure 54(d), which anticipates a party’s reliance on fee-shifting statutes,
and the “American Rule,” which applies “unless a statute or contract provides
otherwise,” Marx v. Gen. Revenue Corp., 133 S. Ct. 1166, 1175 (2013) (emphasis
added) (quoting Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, 253
(2010)).
      3
        National Union did not make its federal preemption argument below, and
we typically do not consider new arguments on appeal. See Martinez v. Signature
Seafoods Inc., 303 F.3d 1132, 1137 (9th Cir. 2002) (recognizing our discretion to
entertain arguments that involve pure legal questions). To the extent National
Union believes it has raised preemption arguments not captured by our analysis,
we exercise our discretion not to entertain them. See id.

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the underlying claims’ in order to be deemed a successful party under [§ 12-

341.01].” Medical Protective Co. v. Pang, No. 11-17384, — F.3d —, 2013 WL

5763205, at *4 (9th Cir. Oct. 25, 2013) (quoting Mark Lighting Fixture Co. v. Gen.

Elec. Supply Co., 745 P.2d 123, 128 (Ariz. Ct. App. 1986), vacated on other

grounds, 745 P.2d 85 (1987)). “It is not relevant under the terms of [A.R.S. § 12-

341.01] whether the dismissal . . . operates as a complete dismissal . . . or whether

the underlying claim is still viable and will be determined in a subsequently filed

action.” Mark Lighting, 745 P.2d at 129. While National Union may reassert its

claims in state court, 757BD succeeded in getting the federal action dismissed. See

id. (“The only relevant point is that the defendants were successful in the particular

action in question.”).

      757BD also contested the action, even if not on the merits. “[A] contested

action is one in which the defendant has appeared and generally defends against

the claims and demands made by the plaintiff.” Morrison v. Shanwick Int’l. Corp.,

804 P.2d 768, 775 (Ariz. Ct. App. 1990). 757BD defended against National

Union’s claims and demands by seeking and obtaining a jurisdiction-based

dismissal. See Fulton Homes Corp. v. BBP Concrete, 155 P.3d 1090, 1093, 1906

(Ariz. Ct. App. 2007) (affirming a fee award where the defendant persuaded the

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plaintiff to voluntarily dismiss its action).4 The Arizona legislature knows how to

restrict fee awards to parties who prevail after an adjudication on the merits, see

A.R.S. § 12-348, and could have required that an action be contested (or won) on

the merits to earn fees under A.R.S. § 12-341.01. It did not, and we doubt the

Arizona Supreme Court would read this requirement into the statute.

      Finally, we review the district court’s award of fees for an abuse of

discretion. Velarde v. PACE Membership Warehouse, Inc., 105 F.3d 1313, 1318

(9th Cir. 1997). The district court correctly identified the six Wagenseller factors.

See United States v. Hinkson, 585 F.3d 1247, 1261-62 (9th Cir. 2009); Wagenseller

v. Scottsdale Mem’l Hosp., 710 P.2d 1025, 1049 (Ariz. 1985) (in banc), superseded

by statute on other grounds by A.R.S. § 23-1501 (1996). Its application of those

factors was not illogical, implausible, or without support from evidence in the

record. See Hinkson, 585 F.3d at 1262. It did not err by considering National

Union’s claim as intertwined with the court’s discretionary jurisdiction; National

Union knew or should have known that the district court’s discretion to dismiss

was a hurdle to its success in federal court. While we find no abuse of discretion,

      4
       We recognize that BBP Concrete contested the merits in that case—at least
to some degree. We disagree that this distinction makes a difference under A.R.S.
§ 12-341.01.

                                          5
we take no position on whether a district court confronting the same unique facts

would abuse its discretion by declining a party’s fee request.

      AFFIRMED.

      Each party to bear its own costs on appeal.

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