Universal Services of America LP v. Mazzon

District Court, D. Arizona·Decided October 4, 2024·No. 2:23-cv-00463·Unknown

Opinion

1 WO 2 3 4 5

9 Universal Services of America LP, et al., No. CV-23-00463-PHX-JAT

10 Plaintiffs, ORDER

11 v.

12 Daniel Mazzon,

13 Defendant. 14 15 Pending before the Court is Defendant Daniel Mazzon’s (“Defendant”) Motion for 16 Attorneys’ Fees under Arizona Revised Statutes (“A.R.S.”) §§ 12-341, 12-341.01, and 12- 17 349. (Doc. 90). Universal Services of America LP, Universal Protection Service LP, and 18 Universal Building Maintenance LP (collectively, “Plaintiffs”) filed a response. (Doc. 93). 19 Defendant filed a reply. (Doc 94). The Court now rules. 21 Plaintiffs are three related “security, janitorial, and other building maintenance 22 services” companies: Universal Services of America, LP (“Universal”), Universal 23 Protection Service, LP (“UPS”), and Universal Building Maintenance, LLC (“AUJS”). 24 (Doc. 1-2 p. 15-16). Defendant was employed at AUJS, a “janitorial services company,” 25 as a Business Development Manager beginning in May 2016. (Doc. 1-2 p. 16; Doc. 34 p. 26 2). Defendant filed articles of organization for his new company, Mazzon Industries, 27 effective December 28, 2022. (Doc. 80-6 p. 2). Plaintiffs alleged that Defendant formed 28 Mazzon Industries to compete with AUJS and UPS, used his AUJS-assigned laptop to pitch 1 services to prospective Mazzon Industries clients, and solicited AUJS clients to stop doing 2 business with AUJS and instead do business with a Mazzon Industries client. (Doc. 1 p.18- 3 23, 25). Defendant resigned from his employment with AUJS on January 4, 2023, effective 4 January 18, 2023; Defendant’s last day at work was January 5, 2023. (Doc. 1-2 p. 18). 5 Plaintiffs filed the instant action in Maricopa County Superior Court, alleging three 6 counts: (1) breach of contract, (2) tortious interference with contract, and (3) breach of the 7 duty of loyalty. (Doc. 1-2). The action was subsequently removed to federal court. (Doc. 8 1). The Court dismissed Plaintiffs’ breach of contract claim, leaving the tortious 9 interference with contract and breach of duty of loyalty claims remaining. (Doc. 32). The 10 Court granted Defendant summary judgment on the tortious interference with contract and 11 breach of duty of loyalty claims. (Doc. 83). Defendant now seeks $64,067.00 in attorneys’ 12 fees and $1,481.61 in court costs. (Doc. 90 p. 14). 14 “A federal court sitting in diversity applies the law of the forum state regarding an 15 award of attorneys’ fees.” Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 883 (9th 16 Cir. 2000) (citations omitted). Under Arizona law, “[i]n any contested action arising out of 17 contract, express or implied, the court may award the successful party reasonable attorney 18 fees.” A.R.S. § 12-341.01(A). Therefore, to exercise its discretion to award attorneys’ fees 19 under this statute, the Court must find that this action arose out of contract, that Defendant 20 is the “successful” or prevailing party, that an award of attorneys’ fees is appropriate, and 21 that the requested fees are reasonable. See Lexington Ins. Co. v. Scott Homes Multifamily 22 Inc., No. CV-12-02119-PHX-JAT, 2016 WL 5118316, at *2 (D. Ariz. 2016). 23 Here, the parties do not dispute that this case arises out of a contract.1 The parties 24 also do not dispute that Defendant is the successful party. As such, the Court must decide 25 whether an award of attorneys’ fees is appropriate and whether the requested fees are 26 reasonable.

27 1 The Court dismissed Plaintiffs’ breach of contract claim. (Doc. 32). However, because Plaintiffs do not dispute Defendant’s assertion that Plaintiffs’ remaining claims for tortious 28 interference and breach of duty of loyalty arose out of “Defendant’s employment contract with Plaintiffs,” (Doc. 90 p. 7), the Court deems Plaintiffs to have waived this argument. 1 a. Discretion in Awarding Attorneys’ Fees 2 In determining whether to exercise its discretion to award attorneys’ fees under 3 A.R.S. § 12-341.01(A), a court must consider the following six factors: (1) the merits of 4 the unsuccessful parties’ claim or defense; (2) whether litigation could have been avoided 5 or settled; (3) whether assessing fees against the unsuccessful party would cause extreme 6 hardship; (4) whether the successful party prevailed with respect to all relief sought; (5) 7 the novelty of the issues; and (6) whether the award will overly deter others from bringing 8 meritorious suits. Velarde v. PACE Membership Warehouse, Inc., 105 F.3d 1313, 1319 9 (9th Cir. 1997) (citing Associated Indem. Corp. v. Warner, 694 P.2d 1181, 1184 (Ariz. 10 1985)). “[T]he weight given to any one factor is within the court’s discretion.” Moedt v. 11 Gen. Motors Corp., 60 P.3d 240, 245 (Ariz. Ct. App. 2002). Each factor is discussed below. 12 i. Whether Plaintiffs’ Claims Were Meritorious 13 The first factor, the merits of the unsuccessful party’s claims, weighs in favor of an 14 award of attorneys’ fees. Defendant argues that Plaintiffs’ claims lacked validity because, 15 despite Plaintiffs having “sole possession, custody[,] and control” of all evidence, 16 “Plaintiffs never produced (1) a single one of the contracts discussed;2 (2) the ‘AUJS 17 resources’ Defendant purportedly used in breaching his duty of loyalty; or (3) a single piece 18 of evidence they had suffered any damages as a result of the matters discussed in their 19 complaint.” (Doc. 90 p. 3 (emphasis in original); Doc. 94 p. 4). According to Defendant, 20 “Plaintiffs pursued this litigation out of spite against a former employee, rather than out of 21 any good faith basis.” (Doc. 90 p. 10). 22 In response, Plaintiffs note that “[c]laims can have merit even if they do not 23 ultimately prevail.” (Doc. 93 p. 4) (citing Vera v. Wells Fargo Bank, N.A., No. CV-10- 24 01568-PHX-JWS, 2011 WL 2200820, at *1 (D. Ariz. June 7, 2011)). Plaintiffs also note 25 that “[c]laims have merit where, as here, the unsuccessful party relies on relevant case law 26 2 Plaintiffs did produce “one (1) contract between itself and ‘LBA RV-Company,’” but 27 “presented no evidence that the . . . contract had been breached, much less that Defendant was the cause of an such breach.” (Doc. 94 p. 4). The contract “was entered into prior to 28 Defendant’s employment with AUJS and, by its own terms, terminated during Defendant’s employment with AUJS.” (Doc. 94 p. 4) (emphasis in original). 1 and cites to the record in support of its arguments.” (Doc. 93 p. 4) (citing RSUI Indem. Co. 2 v. Assoc. Elec. & Gas Ins. Servs., Ltd., No. CV-05-2962-PHX-JAT, 2008 WL 681837, at 3 *2 (D. Ariz. March 7, 2008). In RSUI, the parties presented a “precise issue” never before 4 addressed by an Arizona court. 2008 WL 681837, at *2. 5 The Court thinks this case is distinguishable from the cases cited by Plaintiffs. First, 6 the Court cannot say this case presented a precise issue never before addressed by an 7 Arizona court. Second, the Court did not dismiss Plaintiffs’ claim for breach of contract 8 “on an esoteric and rarely litigated legal issue.” (Doc. 93 p. 6). The Court dismissed the 9 breach of contract claim because the contract Plaintiffs presented gave UPS, not AUJS, 10 “the right to have Defendant refrain from soliciting certain customers.” (Doc. 32 p. 7).

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