Court Opinion

ID: 9392473
Source: CourtListenerOpinion
Date Created: 2023-05-04 23:03:04.071245+00
Date Added: 2024-06-11T17:18:46.116084
License: Public Domain

IN THE
              ARIZONA COURT OF APPEALS
                            DIVISION TWO

                         IN RE THE ESTATE OF
                   SUSAN RUTH CHALKER, DECEASED

                LEONARD KARP AND ANNETTE EVERLOVE,
                        Petitioners/Appellants,

                                  v.

             DAVID CHALKER, AS PERSONAL REPRESENTATIVE
               OF THE ESTATE OF SUSAN RUTH CHALKER,
                         Respondent/Appellee.

                        No. 2 CA-CV 2022-0061
                          Filed May 4, 2023

            Appeal from the Superior Court in Pima County
                           No. PB20050931
                 The Honorable Kenneth Lee, Judge

                   VACATED AND REMANDED

                             COUNSEL

Waterfall, Economidis, Caldwell, Hanshaw & Villamana P.C., Tucson
By Corey B. Larson and Cindy K. Schmidt
Counsel for Petitioners/Appellants

David Chalker, Tucson
In Propria Persona
                       IN RE ESTATE OF CHALKER
                           Opinion of the Court

                                  OPINION

Presiding Judge Eppich authored the opinion of the Court, in which
Chief Judge Vásquez and Judge Gard concurred.

E P P I C H, Presiding Judge:

¶1             Leonard Karp and Annette Everlove (“petitioners”) appeal
from the trial court’s denial of their Rule 60(b)(5), Ariz. R. Civ. P., motion
for relief from the judgment. They contend the court erred by refusing to
vacate an award of attorney fees granted to the estate of Susan Chalker and
by denying their request for attorney fees pursuant to A.R.S. § 12-341.01(A).
For the following reasons, we vacate the attorney fee award to the estate
and remand for proceedings consistent with this opinion.

                    Factual and Procedural Background

¶2               The history underlying this litigation has been well
summarized in one opinion and two memorandum decisions from two
prior appeals to this court, In re Estate of Chalker, 245 Ariz. 410 (App. 2018),
In re Estate of Chalker, No. 1 CA-CV 17-0109 (Ariz. App. Sept. 20, 2018) (mem.
decision), In re Estate of Chalker, No. 2 CA-CV 2020-0013 (Ariz. App. Sept.
23, 2020) (mem. decision). We recite only the facts relevant to this appeal.

¶3              Petitioners represented Chalker in her divorce, which
resulted in a dissolution decree in 1995. Due in part to protracted litigation
concerning multiple Fidelity investment accounts subject to the decree,
Chalker owed approximately $273,000 in legal fees to petitioners by early
1999. Chalker consented to an amended fee agreement, which provided
that if petitioners recovered the Fidelity accounts, she would pay them half
of the recovered funds.

¶4            At the time of Chalker’s death in 2005, the litigation regarding
the Fidelity accounts had not resolved. It was not until 2014 that Fidelity
transferred the accounts to Chalker’s estate. Those accounts were
subsequently liquidated and yielded more than $1.2 million.

¶5           Petitioners pursued claims against the estate for half of the
funds. Prior to trial, the estate made a written offer of $300,000 to
petitioners to settle the case.     Petitioners rejected the offer and

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                       IN RE ESTATE OF CHALKER
                           Opinion of the Court

counteroffered to settle for $475,000. The estate declined, and the case
proceeded to trial.

¶6             In 2016, the trial court determined petitioners were not
entitled to half the funds because they had not been responsible for
recovering the Fidelity accounts. It concluded petitioners were entitled to
the reasonable value of their legal services, totaling $196,071, based on a
theory of quantum meruit, but were not entitled to prejudgment interest on
that amount. It also awarded petitioners costs, and interest related to those
costs, totaling $275,438.33. The court further determined that the estate was
entitled to an award of $190,000 for its attorney fees beginning from the day
of its settlement offer because the final judgment had been for less than the
rejected offer.

¶7            Petitioners appealed, arguing the trial court had erred by
failing to add prejudgment interest to the quantum meruit award. We
agreed and remanded on that limited issue. Chalker, 245 Ariz. 410, ¶¶ 15,
21. On remand, the court awarded prejudgment interest on the quantum
meruit award to petitioners, but only after first subtracting the estate’s
$190,000 attorney fee award. The court determined the estate’s attorney fee
award was not an issue on appeal and did not disturb it. After the court
denied petitioners’ motion for a new trial, which asserted the estate’s fee
award was erroneous, petitioners again appealed.

¶8             In their second appeal, petitioners argued that the trial court
had erred on remand by subtracting the $190,000 attorney fee award before
calculating prejudgment interest and by failing to re-examine which party
was eligible for an award of attorney fees in light of the addition of
prejudgment interest on the quantum meruit award. Chalker, No. 2 CA-CV
2020-0013, ¶¶ 7, 14. They stated they “were cognizant of the mandatory
interest . . . when rejecting the Estate’s pre-litigation offer” and had
determined that their award, if correctly calculated, would be greater than
both written offers of settlement and would make them the successful
party. Appellant’s Opening Brief, ¶¶ 27-29, 49, Chalker, No. 2 CA-CV 2020-
0013. They requested we instruct the court to recalculate the interest on the
quantum meruit award and to vacate the estate’s attorney fee award and
remand for the court to award fees in their favor. Id. ¶¶ 45-46, 54.

¶9            We agreed with petitioners that the trial court had
miscalculated the prejudgment interest but concluded the issue regarding
the estate’s fee award should have been raised in the first appeal and
petitioners had failed to properly do so, waiving the issue for the
subsequent appeal. Chalker, No. 2 CA-CV 2020-0013, ¶¶ 12, 16. With

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                       IN RE ESTATE OF CHALKER
                           Opinion of the Court

specific instructions, we remanded to the court to recalculate the interest on
the quantum meruit award by applying prejudgment interest to the award
before subtracting the $190,000 in fees owed to the estate. Id. ¶¶ 12, 27.

¶10           On remand in November 2021, the trial court entered a final
judgment, consistent with our directive, which awarded $585,094.47 to
petitioners, and then subtracted the $190,000 attorney fee award to the
estate as well as costs paid, for a final judgment of $352,655.88 in favor of
petitioners. Petitioners filed a Rule 60(b)(5) motion for relief from the
judgment requesting that the court vacate the estate’s $190,000 attorney fee
award. They asserted that, prior to the court’s subtraction of costs already
paid and the estate’s fee award, the “real value” of their quantum meruit
award was $585,094.47. And because the estate’s pretrial offer of $300,000
was significantly less than the final judgment they received as a result of
our appellate decisions, they argued the estate was never the successful
party and was not entitled to a fee award. They also filed a motion seeking
attorney fees in their favor.

¶11            The trial court denied the requests. It concluded the issue of
the estate’s fee award had “twice been” to our court and we had determined
it waived in the second appeal. The court noted that our court’s directions
regarding calculations on remand were so specific that entering judgment
was merely a “ministerial act” and that petitioners’ request for attorney fees
was too late. Finally, it observed that the initial merit award had been
created in equity and that “altering one aspect of a judgment based on
equitable findings without reconsideration of the whole, can lead to
unintended results.” This appeal followed, and we have jurisdiction
pursuant to A.R.S. §§ 12-120.21(A)(1) and 12-2101(A)(2).

                                 Discussion

¶12            On appeal, petitioners assert the trial court erred by denying
their Rule 60(b)(5) motion to vacate the estate’s attorney fee award and by
denying their request for attorney fees pursuant to § 12-341.01(A) based on
the corrected final judgment. We review de novo the applicability of a fee
statute, see Burke v. Ariz. State Ret. Sys., 206 Ariz. 269, ¶ 6 (App. 2003), but
we will not disturb a court’s successful party designation for the purpose
of awarding fees if a reasonable basis for it exists, Berry v. 352 E. Virginia,
LLC, 228 Ariz. 9, ¶ 21 (App. 2011). We will also sustain a court’s denial of
a Rule 60 motion for relief from judgment “unless ‘undisputed facts and
circumstances require a contrary ruling.’” City of Phoenix v. Geyler, 144 Ariz.
323, 330 (1985) (quoting Coconino Pulp & Paper Co. v. Marvin, 83 Ariz. 117,
121 (1957)).

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                       IN RE ESTATE OF CHALKER
                           Opinion of the Court

¶13            A court may award a successful party reasonable attorney
fees in a contested action arising out of contract. § 12-341.01(A). A party is
successful from the date of the offer when its “written settlement offer is
rejected and the judgment finally obtained is equal to or more favorable to
the offeror than an offer made in writing to settle.” Id. A court may relieve
a party from a final judgment if it is based on an earlier judgment that has
been reversed or vacated, Ariz. R. Civ. P. 60(b)(5), even after a trial court
has entered final judgment pursuant to an appellate court mandate,
Minjares v. State, 223 Ariz. 54, ¶¶ 20, 22 (App. 2009).

¶14             The issue raised by petitioners in this appeal was raised in the
last appeal to this court.1 See Chalker, No. 2 CA-CV 2020-0013, ¶¶ 14-16.
There, petitioners argued that, “in light of the proper amendments to the
judgment, [the trial court] would have been compelled to conclude that
they, not the estate, were the successful party, and accordingly would have
omitted the fee award to the estate and included fee awards to them.”
Id. ¶ 14. We determined the issue should have been raised in petitioners’
first appeal, but it was not, and thus was waived. Id. ¶ 16; see also Thompson
v. Better-Bilt Aluminum Prods. Co., 187 Ariz. 121, 126 (App. 1996) (we generally
“will not consider on second appeal a matter which could and should have
been raised on first appeal”).

¶15            Petitioners now assert that although they attempted to raise it
before, their argument was not actually ripe for adjudication until the
November 2021 judgment was entered demonstrating that they were, in
fact, the successful party. Because this was a result of our decisions vacating
the prior judgments, they assert Rule 60 is the proper mechanism for relief.

¶16           Arizona’s Rule 60(b)(5) provision is identical to the federal
rule. Compare Fed. R. Civ. P. 60(b)(5), with Ariz. R. Civ. P. 60(b)(5). “Although
a federal court’s interpretation of a federal procedural rule is ‘not binding
in the construction of our rule,’ we recognize its instructive and persuasive
value and that ‘uniformity in interpretation of our rules and the federal
rules is highly desirable.’” Flynn v. Campbell, 243 Ariz. 76, ¶ 9 (2017)
(quoting Orme Sch. v. Reeves, 166 Ariz. 301, 304 (1990)).

       1In addition to raising this issue in the second appeal, petitioners also
argued that they had properly raised it in the first appeal, and our court
had “left the issue open by not squarely addressing it.” Chalker, No. 2 CA-
CV 2020-0013, ¶ 14.

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                       IN RE ESTATE OF CHALKER
                           Opinion of the Court

¶17            Petitioners rely on California Medical Ass’n v. Shalala, 207 F.3d
575 (9th Cir. 2000), which considered whether Rule 60(b)(5), Fed. R. Civ. P.,
was an appropriate mechanism to vacate a fee award after the underlying
merits judgment had been appealed and reversed, despite no challenge to
the fee award in the appeal.2 The United States Court of Appeals for the
Ninth Circuit determined that the affected party need not appeal a fee
award to obtain relief under Rule 60 after the merits judgment is reversed.
Id. at 576-78 (“A separate appeal of the fee award would have been a
meaningless formality, as [the petitioner] had no quarrel with the award
beyond her contention that she should have prevailed on the merits, and
thus owed no fees at all.”). It reasoned that “[s]ince the fee award is based
on the merits judgment, reversal of the merits removes the underpinnings
of the fee award” and that if Rule 60(b)(5) was inapplicable under those
circumstances, the court would be “hard pressed to figure out where it ever
would apply.” Id. at 577-78. It ultimately concluded that although a Rule 60
motion is subject to discretionary review, the trial court had erred in
denying it on equitable grounds. Id. at 578-79.

¶18           Other state courts applying rules identical in all material
respects to our Rule 60(b)(5) have also concluded that an appeal of a fee
award is not a prerequisite to relief when the challenge is based on a vacated
judgment. See, e.g., Oster v. Baack, 351 P.3d 546, ¶ 26 (Colo. App. 2015)
(petitioner challenged successful party basis and not aspect of award itself;
thus, Rule 60 proper and appeal not necessary); Travelers Com. Ins. Co. v.
Harrington, 187 So. 3d 879, 885 (Fla. Dist. Ct. App. 2016) (“when a merits
judgment is reversed or vacated, a judgment for attorneys’ fees flowing
from that judgment should be reversed” through motion for relief from
judgment).

¶19           The estate asserts Shalala is distinguishable because here
petitioners challenged the fee award in a prior appeal, and we determined

       2Although     Rule 60, Fed. R. Civ. P., has since been amended, the rule
as applied in Shalala was materially the same as the current rule. Compare
Fed. R. Civ. P. 60(b)(5) (1999) (“On motion and upon such terms as are just,
the court may relieve a party . . . from a final judgment, order, or proceeding
[because] . . . a prior judgment upon which it is based has been reversed or
otherwise vacated . . . .”), with Fed. R. Civ. P. 60(b)(5) (“On motion and just
terms, the court may relieve a party . . . from a final judgment, order, or
proceeding [because] . . . it is based on an earlier judgment that has been
reversed or vacated . . . .”).

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                        IN RE ESTATE OF CHALKER
                            Opinion of the Court

the issue had been waived. The estate therefore argues that the trial court
appropriately applied law of the case.

¶20          Law of the case is when a court “refuse[s] to reopen questions
previously decided in the same case by the same court or a higher appellate
court.” Associated Aviation Underwriters v. Wood, 209 Ariz. 137, ¶ 40 (App.
2004) (quoting State v. Wilson, 207 Ariz. 12, ¶ 9 (App. 2004)). When applied
to decisions of the same court, it is a discretionary procedural doctrine,
rather than a substantive limitation. Id.; Powell-Cerkoney v. TCR-Montana
Ranch Joint Venture, II, 176 Ariz. 275, 278 (App. 1993). We will not apply
law of the case if “an error in the first decision renders it manifestly
erroneous or unjust.” Wood, 209 Ariz. 137, ¶ 40 (quoting Wilson, 207 Ariz.
12, ¶ 9).

¶21             Although we concluded in the prior appeal that this issue was
waived, it would be manifestly unjust to apply that waiver where a final
judgment has since been entered demonstrating that the estate would never
have been the successful party had the judgment been correctly calculated
in the first instance. See Amfac Distrib. Corp. v. J.B. Contractors, Inc., 146 Ariz.
19, 27 (App. 1985) (award of attorney fees should await trial court
determination after remand “so that the ultimately successful party can be
determined”); see also 15B Charles Alan Wright, Arthur R. Miller & Edward
H. Cooper, Federal Practice and Procedure § 3915.6 (2d ed. 2022 update)
(enforcing fee award based on judgment that has been vacated is “unseemly
spectacle”); cf. Cal X-Tra v. W.V.S.V. Holdings, L.L.C., 229 Ariz. 377, ¶ 74
(App. 2012) (vacating judgment necessarily vacated award of fees flowing
from judgment). We agree with petitioners that Rule 60 is an appropriate
means to challenge a fee award based on a reversed or vacated merits
judgment later amended. Because the undisputed facts require a contrary
ruling, the trial court’s order refusing to vacate the fee award to the estate
was improper. See Geyler, 144 Ariz. at 330.

¶22            In addition to vacating the estate’s fee award, petitioners
request we “make a fee award” to them. They assert the trial court abused
its discretion in denying the request, and that they should have been
awarded fees as the successful party pursuant to § 12-341.01(A). An award
of fees to the successful party pursuant to § 12-341.01(A) is discretionary
and best left to the trial court in the first instance. On remand, the court can
consider petitioners’ fee request and determine whether an award of fees in
their favor is appropriate.

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                      IN RE ESTATE OF CHALKER
                          Opinion of the Court

                   Attorney Fees and Costs on Appeal

¶23            Pursuant to § 12-341.01 and Rule 21, Ariz. R. Civ. App. P.,
petitioners and the estate both request attorney fees and costs expended in
this appeal. The estate is represented by its personal representative, David
Chalker, who has appeared in propria persona and is not the successful party
on appeal, and thus is not entitled to a fee award. In our discretion, we
deny petitioners’ request for attorney fees. However, as the successful
party, petitioners are entitled to their costs on appeal upon compliance with
Rule 21(b).

                                Disposition

¶24          For the foregoing reasons, we vacate the attorney fee award
to the estate and remand for further proceedings consistent with this
opinion.

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