Court Opinion

ID: 9958612
Source: CourtListenerOpinion
Date Created: 2024-04-09 18:02:46.195671+00
Date Added: 2024-06-11T08:18:31.771176
License: Public Domain

IN THE
              ARIZONA COURT OF APPEALS
                                DIVISION ONE

                      TALKING ROCK LAND, LLC,
                      Plaintiff/Appellant/Cross-Appellee,

                                       v.

               INSCRIPTION CANYON RANCH, LP, et al.,
                  Defendants/Appellees/Cross-Appellants.

                            No. 1 CA-CV 22-0712
                             FILED 4-9-2024

           Appeal from the Superior Court in Maricopa County
                          No. CV2019-056128
                   The Honorable Sara J. Agne, Judge
                 The Honorable Danielle J. Viola, Judge

                                 AFFIRMED

                                  COUNSEL

Himmelstein & Adkins, LLC, Scottsdale
By David E. Shein, Erik D. Smith
Counsel for Plaintiff/Appellant/Cross-Appellee

Stinson LLP, Phoenix
By Lonnie J. Williams, Jr., Timothy S. Lauxman
Co-Counsel for Defendant/Appellee/Cross-Appellant

Holdsworth Law Firm, P.C., Prescott
By Lori Marschke
Co-Counsel for Defendant/Appellee/Cross-Appellant
           TALKING ROCK v. INSCRIPTION CANYON, et al.
                            Opinion

                                 OPINION

Judge Samuel A. Thumma delivered the opinion of the Court, in which
Presiding Judge D. Steven Williams and Judge Paul J. McMurdie joined.

T H U M M A, Judge:

¶1            In this declaratory judgment action, plaintiff Talking Rock
Land (TRL) appeals from the grant of summary judgment for defendant
Inscription Canyon Ranch (ICR) resolving the meaning of the parties’
detailed written contracts, issues addressed in a separate memorandum
decision affirming that judgment. This opinion addresses ICR’s cross-
appeal arguing the superior court erred in reducing the attorneys’ fees it
sought under the contracts. For the reasons that follow, the fee award is
affirmed.

                 FACTS AND PROCEDURAL HISTORY

¶2             TRL and ICR have had a contractual relationship, lasting a
generation, involving the development of homes on 3,450 acres (more than
five square miles) of land near Prescott. The separate memorandum
decision affirms the superior court’s grant of summary judgment in favor
of ICR and against TRL, declaring that the contract required TRL to pay for
all the lots “prior to the end of 2027” and awarding ICR attorneys’ fees,
citing both the terms of the parties’ contract and Arizona Revised Statute
(A.R.S.) section 12-341.01 (2024).1

¶3            After those rulings by the superior court, ICR filed a request
seeking $921,290 in fees (later supplemented to seek $981,318.50 in fees) and
$14,262.14 in taxable costs. After full briefing, the court awarded ICR
$700,000 in fees pursuant to the contract and A.R.S. § 12-341.01 and
$14,262.14 in taxable costs. In addressing fees, the court cited the parties’
contract that “allows for reimbursement for ‘all of its out-of-pocket
expenses incurred in pursuing collection,’” also citing A.R.S. § 12-341.01. In
awarding less than the amount of fees requested, the court noted some time
entries lacked requisite detail, some fees sought were for billing on other

1 Absent material revisions after the relevant dates, statutes cited refer to

the current version unless otherwise indicated.

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            TALKING ROCK v. INSCRIPTION CANYON, et al.
                             Opinion
matters, and that ICR’s fees were disproportional to TRL’s fees, supporting
“a finding that the fees are clearly excessive and subject to reduction.”

¶4           This court has jurisdiction over ICR’s timely cross-appeal
pursuant to Article 6, Section 9, of the Arizona Constitution and A.R.S. §§
12-120.21(A) and -2101(A)(1).

                               DISCUSSION

¶5             ICR argues that the superior court erred by awarding it
$700,000 in attorneys’ fees rather than the full $981,318.50 it requested, an
issue this court reviews for an abuse of discretion. Associated Indem. Corp. v.
Warner, 143 Ariz. 567, 570-71 (1985). ICR argues the superior court failed to
consider its supplemental fee application and erred by awarding a reduced
amount of fees “without any analysis or findings;” “reducing ICR’s fee
award as ‘disproportional’ without finding any of ICR’s fees were ‘clearly
excessive’” and “relying on TRL’s disproportionality argument, which is
deficient as a matter of law.”

       A.     The Superior Court Considered ICR’s Supplemental Fee
              Application.

¶6             ICR argues that the superior court erred “when it implicitly
disallowed the entirety of the $60,028.50 in fees ICR sought in its
supplemental application.” The court, however, acknowledged ICR’s
supplemental application, specifically noting “ICR’s Application and
Supplemental Application” for fees. As ICR argues, that same minute entry
contained a math error, with a total that did not include the $60,028.50
requested in the supplemental application. But given the court expressly
stated it considered the supplemental application, ICR has not shown that
the court erred by failing to consider it.

       B.     The Superior Court Did Not Abuse Its Discretion in
              Finding Some of ICR’s Requested Fees Were “Clearly
              Excessive.”

¶7             A contractual provision for attorneys’ fees “will be enforced
in accordance with the terms of the contract,” First Fed. Sav. & Loan Ass’n of
Phoenix v. Ram, 135 Ariz. 178, 181 (App. 1982), recognizing A.R.S. § 12-
341.01(A) supplements such a provision, Am. Power Prods., Inc., v. CSK Auto,
Inc., 242 Ariz. 364, 369 ¶ 16 (2017). Such a contractual provision “should not
be enforced when the amount requested is ‘obviously excessive.’” McDowell
Mountain Ranch Cmty. Ass’n, Inc. v. Simons, 216 Ariz. 266, 270 (App. 2007)
(2-1 decision) (citing Elson Dev. Co. v. Ariz. Sav. & Loan Ass’n, 99 Ariz. 217

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           TALKING ROCK v. INSCRIPTION CANYON, et al.
                            Opinion
(1965)). Applying these standards, the court awarded ICR $700,000 in fees
of the $981,318.50 it requested in a six-page ruling detailing its analysis.

¶8            ICR argues that the award “violates McDowell Mountain
because the court did not specify any fees that were clearly excessive.
Instead, the court made a single, generally applicable finding regarding the
total amount of ICR’s fees which rendered them ‘clearly excessive.’” To
support its argument, ICR cites a sentence in McDowell Mountain stating
“[o]n remand, the trial court may conduct a hearing . . . and then enter an
award to the Association of all its attorneys’ fees that were properly
incurred in this matter except as to those fees the court expressly finds are
clearly excessive.” 216 Ariz. at 271 ¶ 22. ICR argues this language required
the superior court here to award “‘all of its attorneys’ fees that were
properly incurred’ and make specific findings on those which [are] not.”
ICR further argues that, absent such specific findings, a superior court
could reduce requested fees as “excessive without any basis” and
“impermissibly strike the term ‘all’ from the contract.” ICR also argues that
such action “would essentially amount to an ordinary reasonableness
analysis despite McDowell Mountain expressly prohibiting that action.”

¶9              ICR’s argument is misplaced. McDowell Mountain did not
create a legal standard requiring courts to make findings about which
specific fee entries are “clearly excessive” when awarding fees. No Arizona
case has imposed the requirement ICR advances, and no published decision
has read McDowell Mountain as including such a requirement. Nor has ICR
suggested any applicable procedural rule that would require the findings
of fact it alleges the superior court should have made here. Cf. Ariz. R. Civ.
P. 52(a)(1) (allowing a party to request findings of fact and conclusions of
law, “if requested before trial” in “an action tried on the facts without a jury
or with an advisory jury”).

¶10           The McDowell Mountain language cited by ICR was a specific
instruction about proceedings on remand in that case. It did not impose an
express finding requirement for each disallowed entry in a fee request. No
such findings are required by contract or statute, and this court will not read
McDowell Mountain as mandating such a requirement. 216 Ariz. at 271 ¶ 22.
So long as the record reflects a reasonable basis for the court’s decision in
awarding fees, there is no abuse of discretion. See, e.g., Tucson Ests. Prop.
Owners Ass’n, Inc. v. McGovern, 239 Ariz. 52, 56 ¶ 12 (App. 2016); Hawk v.
PC Vill. Ass’n, Inc., 233 Ariz. 94, 100 ¶ 21 (App. 2013); Orfaly v. Tucson
Symphony Soc’y, 209 Ariz. 260, 266 ¶ 21 (App. 2004).

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            TALKING ROCK v. INSCRIPTION CANYON, et al.
                             Opinion
       C.      The Superior Court Did Not Err by Relying on TRL’s
               Disproportionality Argument.

¶11          ICR argues that (1) “TRL failed to carry its burden” of
“showing ICR’s fees were ‘clearly excessive’” and (2) the superior court
abused its discretion by “compar[ing] the parties’ fees and determin[ing]
ICR’s fees were the problem.”

¶12           Relying on In re Indenture of Tr. Dated Jan. 13, 1964, 235 Ariz.
40, 53 ¶47-48 (App. 2014), ICR asserts that “TRL had the burden of showing
ICR’s fees were ‘clearly excessive’ by presenting arguments, beyond mere
conclusions, with factual support.” ICR has not shown that the superior
court erred in concluding TRL met this burden. In its response and
objection to ICR’s fee application, TRL outlined hours reflected on ICR’s
timesheet that it argued represented an “inordinate amount of time and
expense,” and for example, pinpointed 47.8 hours of block billing, 14.8
hours of work performed for related cases, 12.2 hours of administrative
matters for unrelated cases, and others. TRL’s response included more than
“mere conclusions” and was thus proper for the superior court to consider.

¶13            ICR also has not shown that the superior court abused its
discretion by relying on TRL’s disproportionality argument and comparing
the parties’ fees. TRL argued that the disproportionality between the fees
requested by ICR and TRL show that ICR’s fees are “grossly unreasonable.”
Under Ethical Rule 1.5, one factor to consider when determining the
reasonableness of a fee is the fee customarily charged in the locality for
similar legal services. Ariz. R. Sup. Ct. 42, ER 1.5(a)(3). TRL’s fees are at least
some evidence of such similar legal services.

¶14            To be sure, TRL’s objection was summary, stating without
support that “[t]he $1,000,000.00 in fees sought by ICR are approximately
150% greater than the $400,000 in fees incurred by TRL.” TRL’s objection
failed to provide details for this assertion, such as hourly rates or hours of
billable time spent on comparable tasks. The better practice would be for a
party making a disproportionality argument to provide such detail. And a
superior court could, in exercising its discretion, determine that more than
what TRL provided was needed. On this record, however, ICR has not
shown that the superior court abused its discretion by considering TRL’s
fees when determining that ICR’s fees were “clearly excessive.”

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          TALKING ROCK v. INSCRIPTION CANYON, et al.
                           Opinion
                             CONCLUSION

¶15           The superior court’s award to ICR of $700,000 in attorneys’
fees and $14,262.14 in taxable costs is affirmed.

                        AMY M. WOOD • Clerk of the Court
                        FILED: AA

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