1 WO 2 3 4 5 6 7 IN THE UNITED STATES DISTRICT COURT 8 FOR THE DISTRICT OF ARIZONA 9 Maria Vasquez, ) 10 ) Plaintiff, ) No. CIV 19-536-TUC-CKJ 11 ) vs. ) 12 ) ORDER Ameriprise Insurance Company, ) 13 ) Defendant. ) 14 ) 15 16 Pending before the Court is a Motion and Application for Attorneys' Fees and Taxable 17 Costs (Doc. 23) filed by Defendant Ameriprise Insurance Company ("Ameriprise"). Plaintiff 18 Maria Vasquez ("Vasquez") has filed a response (Doc. 24). 19 20 I. Factual and Procedural History 21 On or about December 31, 2018, Vasquez's polybutylene plumbing system ruptured 22 causing water damage to Vasquez's residence. At the time, Vasquez was insured by 23 Ameriprise under policy number HI01975533 ("the Policy") which covered Vasquez's 24 residence. After learning that the pipes were considered defective and could cause more 25 problems at a later time, Vasquez decided to replace the entire plumbing system, including 26 portions that were not leaking. Vasquez subsequently filed an insurance claim seeking to 27 cover the entire tear-out expenses claiming that tearing out the entire system was necessary 28 to repair the system. Ameriprise denied coverage of the claim to which Vasquez filed a 1 complaint against Ameriprise alleging breach of contract and breach of Ameriprise's duty of 2 good faith and fair dealing with Vasquez. 3 Ameriprise's subsequent Motion for Summary Judgment was granted March 31, 4 2021, Order (Doc. 21). The Court found "the plain and ordinary meaning" of the Policy's 5 exclusions applied. Specifically, because Exclusion 3 made clear Ameriprise did not cover 6 losses caused directly or indirectly from defective construction or materials, Exclusion 3 7 precluded coverage. Further, even if Exclusion 3 was not applicable, Exclusion 4's "plain 8 and ordinary meaning" of repair resulted in the exclusion of Vasquez's claim. 9 Ameriprise timely filed a Motion/Application for Attorneys' Fees and Taxable Costs 10 (Doc. 23), pursuant to A.R.S. §12-341.01, seeking $21,858.50. Vasquez replied (Doc. 24) 11 that the costs seem appropriate but asks the Court to consider the financial disparities 12 between the parties and that both parties pay their own legal fees. 13 14 II. Legal Standard – Attorney Fees, Non-Taxable and Taxable Costs 15 Under Arizona law, a court may award reasonable attorney fees to a successful party 16 in any actions arising out of a contract. See Ariz. Rev. Stat. Ann. §12-341.01(A). A party 17 will be deemed successful where they obtain relief following a summary judgment in their 18 favor. See True Ctr. Gate Leasing, Inc. v. Gate, L.L.C., 427 F. Supp. 2d 946 (D. Ariz. 2008). 19 However, "there is no presumption that a successful party should be awarded attorney fees 20 under §12-341.01." Motzer v. Escalante, 228 Ariz. 295, 296 (Ct. App. 2011). Therefore, 21 A.R.S §12-341.01 affords a court substantial discretion when deciding whether or not to 22 award attorney fees. See Associated Indem. Corp. v. Warner, 143 Ariz. 567, 570 (1985); 23 Harris v. Maricopa County Superior Court, 631 F.3d 963 (9th Cir. 2010). The award "should 24 be made to mitigate the burden of the expense of litigation to establish a just claim or a just 25 defense." Ariz. Rev. Stat. Ann. §12-341.01 (B). Attorney fees incurred in preparing the 26 motion and application for attorney fee awards are also recoverable. See Gametech Int'l, Inc. 27 v. Trend Gaming Sys., L.L.C., 380 F.Supp.2d 1084, 1101 (D. Ariz. 2005). 28 1 To determine whether to grant or deny an award for attorney fees pursuant to A.R.S. 2 § 12-341.01, a court will consider the factors established by Associated Indem. Corp. v. 3 Warner, 143 Ariz. 567 (1985), which include: 4 (1) the merits of the claim or defense presented by the unsuccessful party; (2) the novelty of the legal question presented, and whether such claim or defense had 5 previously been adjudicated in this jurisdiction; (3) whether the litigation could have been avoided or settled and the successful party's efforts were completely superfluous 6 in achieving the result; (4) whether assessing fees against the unsuccessful party would cause extreme hardship; (5) whether the successful party prevailed full or 7 partial relief; (6) whether awarding fees would discourage future litigants from bringing tenable claims or defenses from litigating or defending legitimate contract 8 issues, for fear of incurring liability for substantial amounts of attorney's fees. 9 Associated Indem. Corp., 143 Ariz. at 570. No one factor is determinative in the Court's 10 decision. See Motzer, 228 Ariz. at 296. 11 "Once the decision to award attorney's fees has been made, subsection B of the statute 12 grants the trial court broad discretion in determining the amount of the award." Marcus v. 13 Fox, 150 Ariz. 333, 334 (1986). The amount awarded "need not equal or relate to the attorney 14 fees actually paid or contracted, but the award may not exceed the amount paid or agreed to 15 be paid." Id. To determine a "reasonable amount," courts utilize the Associated Indemnity 16 factors as well as the factors listed in Local Rule 54.2(c)(3) to determine an award amount. 17 See e.g. Thompson v. Dignity Health, No. CV-17-01607-PHX-ROS, 2020 WL 353659, at *3- 18 4 (D. Ariz. Jan. 21, 2020) (discussing the various factors to determine reasonable amount). 19 "The party seeking an award of fees must adequately describe the services rendered so that 20 the reasonableness of the charge can be evaluated." LRCiv. 54.2(e)(2). A court must 21 consider whether the submitted task-time sheet provides a sufficient description of the task 22 for a court to understand what was performed and whether the time spent on the task was 23 reasonable or not. See Schweiger v. China Doll Restaurant, 138 Ariz. 183, 188-89 (Ct. App. 24 1983). Generally, courts have found that the agreed upon rates between the client and the 25 attorney are "the best indicator of what reasonable fees under the circumstances of [a] 26 particular case. Id at 188. 27 28 1 III. Application of Factors Pursuant to Associated Indemnity 2 This case involved a dispute arising directly out of an expressed insurance contract 3 as to whether the plain language of the policy's exclusions applied to Vasquez's claim 4 regarding the tearing out of her entire polybutylene pipe system. As such, Ameriprise was 5 successful in achieving full relief against Vasquez following the Court's ruling on 6 Ameriprise's summary judgment and is thus entitled to an award of attorney fees pursuant to 7 A.R.S. §12-341.01. 8 A. Factors 9 First, the Court finds that Vasquez's claims were not well taken. Vasquez asserted 10 through her expert that the polybutylene pipes are recognized as defective and that this 11 motivated her to tear out the entire system, including undamaged pipes, to avoid possible 12 future ruptures. (Doc. 18). This admission is against the "plain and ordinary" meaning of the 13 Policy's scope of coverage, namely Exclusion 3, which excludes coverage of "faulty, 14 inadequate or defective" materials. (Doc. 17-1 at 19).
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1 WO 2 3 4 5 6 7 IN THE UNITED STATES DISTRICT COURT 8 FOR THE DISTRICT OF ARIZONA 9 Maria Vasquez, ) 10 ) Plaintiff, ) No. CIV 19-536-TUC-CKJ 11 ) vs. ) 12 ) ORDER Ameriprise Insurance Company, ) 13 ) Defendant. ) 14 ) 15 16 Pending before the Court is a Motion and Application for Attorneys' Fees and Taxable 17 Costs (Doc. 23) filed by Defendant Ameriprise Insurance Company ("Ameriprise"). Plaintiff 18 Maria Vasquez ("Vasquez") has filed a response (Doc. 24). 19 20 I. Factual and Procedural History 21 On or about December 31, 2018, Vasquez's polybutylene plumbing system ruptured 22 causing water damage to Vasquez's residence. At the time, Vasquez was insured by 23 Ameriprise under policy number HI01975533 ("the Policy") which covered Vasquez's 24 residence. After learning that the pipes were considered defective and could cause more 25 problems at a later time, Vasquez decided to replace the entire plumbing system, including 26 portions that were not leaking. Vasquez subsequently filed an insurance claim seeking to 27 cover the entire tear-out expenses claiming that tearing out the entire system was necessary 28 to repair the system. Ameriprise denied coverage of the claim to which Vasquez filed a 1 complaint against Ameriprise alleging breach of contract and breach of Ameriprise's duty of 2 good faith and fair dealing with Vasquez. 3 Ameriprise's subsequent Motion for Summary Judgment was granted March 31, 4 2021, Order (Doc. 21). The Court found "the plain and ordinary meaning" of the Policy's 5 exclusions applied. Specifically, because Exclusion 3 made clear Ameriprise did not cover 6 losses caused directly or indirectly from defective construction or materials, Exclusion 3 7 precluded coverage. Further, even if Exclusion 3 was not applicable, Exclusion 4's "plain 8 and ordinary meaning" of repair resulted in the exclusion of Vasquez's claim. 9 Ameriprise timely filed a Motion/Application for Attorneys' Fees and Taxable Costs 10 (Doc. 23), pursuant to A.R.S. §12-341.01, seeking $21,858.50. Vasquez replied (Doc. 24) 11 that the costs seem appropriate but asks the Court to consider the financial disparities 12 between the parties and that both parties pay their own legal fees. 13 14 II. Legal Standard – Attorney Fees, Non-Taxable and Taxable Costs 15 Under Arizona law, a court may award reasonable attorney fees to a successful party 16 in any actions arising out of a contract. See Ariz. Rev. Stat. Ann. §12-341.01(A). A party 17 will be deemed successful where they obtain relief following a summary judgment in their 18 favor. See True Ctr. Gate Leasing, Inc. v. Gate, L.L.C., 427 F. Supp. 2d 946 (D. Ariz. 2008). 19 However, "there is no presumption that a successful party should be awarded attorney fees 20 under §12-341.01." Motzer v. Escalante, 228 Ariz. 295, 296 (Ct. App. 2011). Therefore, 21 A.R.S §12-341.01 affords a court substantial discretion when deciding whether or not to 22 award attorney fees. See Associated Indem. Corp. v. Warner, 143 Ariz. 567, 570 (1985); 23 Harris v. Maricopa County Superior Court, 631 F.3d 963 (9th Cir. 2010). The award "should 24 be made to mitigate the burden of the expense of litigation to establish a just claim or a just 25 defense." Ariz. Rev. Stat. Ann. §12-341.01 (B). Attorney fees incurred in preparing the 26 motion and application for attorney fee awards are also recoverable. See Gametech Int'l, Inc. 27 v. Trend Gaming Sys., L.L.C., 380 F.Supp.2d 1084, 1101 (D. Ariz. 2005). 28 1 To determine whether to grant or deny an award for attorney fees pursuant to A.R.S. 2 § 12-341.01, a court will consider the factors established by Associated Indem. Corp. v. 3 Warner, 143 Ariz. 567 (1985), which include: 4 (1) the merits of the claim or defense presented by the unsuccessful party; (2) the novelty of the legal question presented, and whether such claim or defense had 5 previously been adjudicated in this jurisdiction; (3) whether the litigation could have been avoided or settled and the successful party's efforts were completely superfluous 6 in achieving the result; (4) whether assessing fees against the unsuccessful party would cause extreme hardship; (5) whether the successful party prevailed full or 7 partial relief; (6) whether awarding fees would discourage future litigants from bringing tenable claims or defenses from litigating or defending legitimate contract 8 issues, for fear of incurring liability for substantial amounts of attorney's fees. 9 Associated Indem. Corp., 143 Ariz. at 570. No one factor is determinative in the Court's 10 decision. See Motzer, 228 Ariz. at 296. 11 "Once the decision to award attorney's fees has been made, subsection B of the statute 12 grants the trial court broad discretion in determining the amount of the award." Marcus v. 13 Fox, 150 Ariz. 333, 334 (1986). The amount awarded "need not equal or relate to the attorney 14 fees actually paid or contracted, but the award may not exceed the amount paid or agreed to 15 be paid." Id. To determine a "reasonable amount," courts utilize the Associated Indemnity 16 factors as well as the factors listed in Local Rule 54.2(c)(3) to determine an award amount. 17 See e.g. Thompson v. Dignity Health, No. CV-17-01607-PHX-ROS, 2020 WL 353659, at *3- 18 4 (D. Ariz. Jan. 21, 2020) (discussing the various factors to determine reasonable amount). 19 "The party seeking an award of fees must adequately describe the services rendered so that 20 the reasonableness of the charge can be evaluated." LRCiv. 54.2(e)(2). A court must 21 consider whether the submitted task-time sheet provides a sufficient description of the task 22 for a court to understand what was performed and whether the time spent on the task was 23 reasonable or not. See Schweiger v. China Doll Restaurant, 138 Ariz. 183, 188-89 (Ct. App. 24 1983). Generally, courts have found that the agreed upon rates between the client and the 25 attorney are "the best indicator of what reasonable fees under the circumstances of [a] 26 particular case. Id at 188. 27 28 1 III. Application of Factors Pursuant to Associated Indemnity 2 This case involved a dispute arising directly out of an expressed insurance contract 3 as to whether the plain language of the policy's exclusions applied to Vasquez's claim 4 regarding the tearing out of her entire polybutylene pipe system. As such, Ameriprise was 5 successful in achieving full relief against Vasquez following the Court's ruling on 6 Ameriprise's summary judgment and is thus entitled to an award of attorney fees pursuant to 7 A.R.S. §12-341.01. 8 A. Factors 9 First, the Court finds that Vasquez's claims were not well taken. Vasquez asserted 10 through her expert that the polybutylene pipes are recognized as defective and that this 11 motivated her to tear out the entire system, including undamaged pipes, to avoid possible 12 future ruptures. (Doc. 18). This admission is against the "plain and ordinary" meaning of the 13 Policy's scope of coverage, namely Exclusion 3, which excludes coverage of "faulty, 14 inadequate or defective" materials. (Doc. 17-1 at 19). Additionally, Vasquez's motivation 15 to tear out and replace the entire system to avoid future possible leaks, although prudent, was 16 not covered in Exclusion 4 which limited the scope of coverage to tear-out costs "necessary 17 to repair the system." Id. The Court finds that because there was no ambiguity as to the plain 18 and ordinary language of the insurance contract and its exclusions, Vasquez's claims, 19 although not frivolous, were meritless. See generally Thompson, 2020 WL 353659, at *3 (D. 20 Ariz. 2020) (after the court's previous finding that defendant did not breach "the plain terms 21 of the employee contract," the court determined that plaintiff's claims were not meritorious 22 when deciding whether to award attorney fees). 23 Second, the legal question in this case was relatively novel. Polybutylene pipes are 24 well known throughout the insurance industry as being uninsurable and usually excluded 25 from coverage. A similar issue was raised in Guadiana v. State Farm Fire & Cas. Co., No. 26 CIV 07-326 TUC FRZ, 2012 WL 243737, at *1 (D. Ariz. Jan. 25, 2012), report and 27 recommendation adopted, No. 07-326-TUC-FRZ-LAB, 2012 WL 4361412 (D. Ariz. Sept. 28 1 25, 2012). In that case the court found that the policy was ambiguous in terms of "necessary 2 to repair." Here, however, Ameriprise's policy differs from the State Farm policy by 3 including an "anti-concurrent clause" which unambiguously delineates Vasquez's coverage. 4 (Doc. 21). Because the Policy in this case did have such exclusion, ambiguity was resolved. 5 In other words, the legal issue in this case was straightforward. Nonetheless, the Guadiana 6 case could reasonably have elevated the ambiguity as to the application of the exclusion. 7 Third, neither party mentions whether there were settlement efforts between them. 8 However, as the issue in this case appears to be to determine the applicability of Guadiana, 9 the Court finds it is not likely the litigation could have been avoided. 10 Fourth, Vasquez has not shown that assessing attorney fees against her would cause 11 extreme hardship. Vasquez's counsel asks the Court to consider the financial disparity 12 between the two parties but provides no evidence of Vasquez's financial situation. See e.g., 13 Rudinsky v. Harris, 231 Ariz. 95, 102, (App. 2012) (“[T]he party asserting financial hardship 14 has the burden of coming forward with prima facie evidence of financial hardship,” by 15 “present[ing] specific facts by affidavit or testimony.”), citation omitted; but see Haller v. 16 Wells Fargo Bank NA, No. CV 11-01381-PHX-FJM, 2011 WL 6820196, at *2 (D. Ariz. Dec. 17 28, 2011) (attorney fee award reduced because of presumed hardship). Therefore, the Court 18 finds this factor is neutral in determining whether an award is appropriate. 19 Fifth, Ameriprise has received full relief on all the claims sought against them 20 following the favorable summary judgement. 21 Sixth, Vasquez's attorney does not argue that awarding fees in this matter would 22 discourage future litigants from tenable claims or from litigating legitimate contract disputes. 23 However, as this was a relatively novel issue and the reach of Guadiana may have been 24 questioned, the Court finds this factor weighs in favor of denying attorneys' fees. 25 B. Consideration of Factors 26 Although the Court finds the merits of Vasquez's claim were weak, a basis for the 27 legal argument was conceivable in light Guadiana. However, the issue had been litigated 28 1 previously with the overwhelming authority in contravention of Vasquez's argument, with 2 Ameriprise obtaining full relief. Although the Court considers it likely Vasquez would suffer 3 a hardship, relative to Ameriprise, should attorneys' fees be awarded, the Court does not 4 consider this as no evidence to support this claim has been presented. Lastly, the Court finds 5 an award may discourage future litigants. 6 Balancing these factors, the Court finds an award of attorneys' fees is appropriate. 7 Accordingly, the Court shall grant attorney fees for Ameriprise pursuant to A.R.S §12- 8 341.01. 9 10 IV. Reasonable Amount 11 After determining an award of attorneys' fees is appropriate, a court must then 12 determine the reasonable amount to award. LRCiv 54.2(c)(3). This rule states various 13 factors bear on the reasonableness of a requested award, including, but not limited to, the 14 following: 15 (A) The time and labor required of counsel; (B) The novelty and difficulty of the questions presented; (C) The skill requisite to perform the legal service properly; (D) 16 The preclusion of other employment by counsel because of the acceptance of the action; (E) The customary fee charged in matters of the type involved; (F) Whether 17 the fee contracted between the attorney and the client is fixed or contingent; (G) Any time limitations imposed by the client or the circumstances; (H) The amount of 18 money, or the value of the rights, involved, and the results obtained; (I) The experience, reputation and ability of counsel; (J) The "undesirability" of the case; (K) 19 The nature and length of the professional relationship between the attorney and the client; (L) Awards in similar actions; and (M) Any other matters deemed appropriate 20 under the circumstances. 21 LRCiv 54.2(c)(3). Vasquez states, "The billings submitted appear to be appropriate and in 22 order." Response (Doc. 24, p.1). The Court agrees with Vasquez, but finds it appropriate 23 to also consider that, because the weighing of the Associated Indemnity was fairly even, the 24 award should be reduced. 25 The Court finds an award of attorneys' fees in the amount of $14,000.00 is appropriate 26 in light of Associated Indemnity and the local rule. 27 28 l Accordingly, IT IS ORDERED: 2 1. The Motion and Application for Attorneys' Fees and Taxable Costs (Doc. 23) is 3 || GRANTED IN PART AND DENIED IN PART. Ameriprise is awarded $14,000.00 in 4 || attorneys’ fees to be paid by Vasquez. 5 2. The Clerk of Court shall enter judgment in favor of Ameriprise and against 6 || Vasquez in the amount of $14,000.00 for attorneys’ fees. 7 DATED this 14th day of March, 2022. ° Lat, JO saaneooee 10 Cindy K. Jorgénso United States District Judge 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -7-