Canon Sch. Dist. v. WES CONSTR. CO. IV

882 P.2d 1274, 180 Ariz. 148
CourtArizona Supreme Court
DecidedOctober 20, 1994
DocketCV-93-0399-PR
StatusPublished

This text of 882 P.2d 1274 (Canon Sch. Dist. v. WES CONSTR. CO. IV) is published on Counsel Stack Legal Research, covering Arizona Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Canon Sch. Dist. v. WES CONSTR. CO. IV, 882 P.2d 1274, 180 Ariz. 148 (Ark. 1994).

Opinion

180 Ariz. 148 (1994)
882 P.2d 1274

CANON SCHOOL DISTRICT NO. 50, a political subdivision of the State of Arizona, Plaintiff-Appellant,
v.
W.E.S. CONSTRUCTION COMPANY, INC., an Arizona corporation, Defendant-Appellee.

No. CV-93-0399-PR.

Supreme Court of Arizona, En Banc.

October 20, 1994.

*149 Horne, Kaplan & Bistrow, P.C. by Thomas C. Horne, Martha B. Kaplan, Phoenix, and Favour, Moore, Wilhelmsen, Payette & Schuyler, P.A. by David K. Wilhelmsen, Prescott, for plaintiff-appellant.

Dillingham, Keilp & Cross, P.C. by John L. Dillingham, Phoenix, for defendant-appellee.

OPINION

MOELLER, Vice Chief Justice.

FACTS AND PROCEDURAL HISTORY

This case has a tortured procedural history. W.E.S. Construction Company, Inc. (W.E.S.) contracted with Canon School District No. 50 (the District) to build a school building in Black Canyon City, Arizona. The contract contained an arbitration clause. When disputes arose, W.E.S. demanded arbitration. The District filed suit in superior court to stay arbitration, contending that certain statutes and rules of the Board of Education rendered the arbitration agreement unenforceable. The trial court rejected the District's contentions and ordered arbitration. On appeal by the District, the court of appeals held that some of W.E.S.'s claims were arbitrable and some were not. Canon Sch. Dist. v. W.E.S. Constr. Co., 174 Ariz. 269, 848 P.2d 848 (App. 1992) (Canon I). We granted review, vacated the court of appeals' opinion, and affirmed the trial court's order to arbitrate. Canon Sch. Dist. v. W.E.S. Constr. Co., 177 Ariz. 526, 869 P.2d 500 (1994) (Canon II). The parties then prepared to arbitrate.

Shortly before the scheduled arbitration hearing, W.E.S. added a new issue, namely, whether the state fire marshal had given proper approval for the construction and, if so, when. The state fire marshal was a client of the Attorney General and had been represented on previous occasions by Charles Pierson, the Assistant Attorney General representing the District in the arbitration.

Based on a perceived conflict of interest, Mr. Pierson moved to withdraw as attorney for the District and to reset the arbitration hearing to a later date. Both motions were denied after oral argument on a Wednesday, and the arbitration hearing began the following Monday. Mr. Pierson associated outside counsel on the intervening Friday, and that attorney, Mr. Horne, handled the arbitration proceedings for the District.

The arbitrators ruled in favor of W.E.S., awarding it $107,651.68 plus certain prejudgment interest, costs, and expenses. The arbitration agreement did not include an attorney's *150 fees provision, and no attorney's fees were awarded by the arbitrators. In confirmation proceedings in superior court, W.E.S. requested attorney's fees of $72,242.50, which included $54,521.50 for fees incurred in the arbitration and $17,721.00 for fees incurred in confirming the award. The superior court confirmed the arbitrators' award and also granted judgment for all the requested attorney's fees.

The District then filed a second appeal. The court of appeals held that the arbitrators had abused their discretion in denying the motion to continue the arbitration hearing, but because no prejudice to the District resulted, the trial court had properly confirmed the award. The court of appeals went on to affirm the trial court's award of attorney's fees in its entirety without distinguishing between those fees incurred in the arbitration and those incurred in the confirmation. Canon Sch. Dist. v. W.E.S. Constr. Co., 177 Ariz. 431, 868 P.2d 1014 (App. 1993) (Canon III). We granted review and have jurisdiction pursuant to Ariz. Const. art. 6, § 5(3) and A.R.S. § 12-120.24. For reasons which follow, we conclude that the trial court properly confirmed the arbitrators' award and properly awarded attorney's fees for the confirmation proceedings, but erred by awarding attorney's fees for the arbitration itself.

QUESTIONS PRESENTED

1. Whether the trial court erred by confirming the arbitration award.

2. Whether the trial court erred by awarding attorney's fees incurred in the arbitration proceeding.

3. Whether the trial court erred by awarding attorney's fees incurred in the confirmation proceeding.

DISCUSSION

1. Confirmation of the Arbitration Award

The court of appeals held that the arbitrators should have allowed Mr. Pierson to withdraw and should have continued the arbitration so that the District could associate new counsel. Canon III, 177 Ariz. at 440, 868 P.2d at 1023. The court held that the "arbitration panel abused its discretion when it denied the motion to continue." Id. Nevertheless, the court found this abuse of discretion harmless because it did not prejudice the District's substantial rights. Id. at 441, 868 P.2d at 1024. Thus, "the arbitrators' error did not warrant denial of confirmation of the award, and accordingly the superior court did not abuse its discretion by confirming the award." Id.

After reviewing the record, we agree with the court of appeals that the District was not prejudiced by the arbitrators' denial of the motions to withdraw and to continue. Because there was no prejudice, the arbitration panel did not abuse its discretion in denying the motions, nor did the trial court abuse its discretion in confirming the award.

2. The Trial Court's Award of Attorney's Fees Incurred in the Arbitration Proceeding

The trial court awarded attorney's fees incurred in the arbitration pursuant to A.R.S. § 12-341.01(A), which authorizes fees in contested contractual actions.[1] Whether that statute applies to arbitrations under the Uniform Arbitration Act, which Arizona adopted in 1962, is an issue of first impression in Arizona.[2] The court of appeals held *151 that § 12-341.01(A) did apply to arbitration proceedings under the Uniform Arbitration Act. The appellate court reasoned that arbitration proceedings under the Act qualified as contested "actions" under § 12-341.01(A) and that no provision of the Uniform Arbitration Act precluded the trial court from awarding attorney's fees, although the court of appeals acknowledged that the arbitrators themselves were precluded from awarding such fees. Canon III, 177 Ariz. at 442, 868 P.2d at 1025. We need not decide whether arbitration is an "action" within the meaning of § 12-341.01(A), although we note that Semple v. Tri-City Drywall, Inc., 172 Ariz. 608, 838 P.2d 1369 (App. 1992), relied upon by the court of appeals, suggests that it is not. Rather, we hold that the terms of the Uniform Arbitration Act itself, properly interpreted and applied, preclude trial courts from awarding attorney's fees for the arbitration proceeding when fees are not included in the agreement to arbitrate.

We start with A.R.S.

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882 P.2d 1274, 180 Ariz. 148, Counsel Stack Legal Research, https://law.counselstack.com/opinion/canon-sch-dist-v-wes-constr-co-iv-ariz-1994.