Free Response in Opposition to Motion - District Court of Arizona - Arizona

Robert M. Frisbee #018779 FRISBEE & BOSTOCK, PLC 2 1747 East Morten Avenue, Suite 108 Phoenix, Arizona 85020 3 Phone: (602) 354-3689 Fax: (602) 266-7744 4 [email protected] Attorneys for Greg and Linda Hancock
1 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Meritage Homes Corporation, a Maryland Corporation, formerly d/b/a Meritage Corporation; Hancock-MTH Builders, Inc., an Arizona corporation; Hancock-MTH Communities, Inc., an Arizona corporation d/b/a/ Meritage Homes Construction, Inc.; and Meritage Homes of Arizona, Inc., an Arizona Corporation, Plaintiffs, vs. ) ) ) ) ) ) ) ) ) ) ) Ricky Lee Hancock and Brenda ) Hancock, husband and wife; Gregory ) S. Hancock and Linda Hancock, ) husband and wife; Rick Hancock Homes ) LLC, an Arizona limited liability ) company; RLH Development, LLC, an ) Arizona limited liability company; and ) J2H2, LLC, an Arizona limited ) liability company, ) Defendants, ) and ) ) Greg Hancock, an individual, ) ) Defendant, Counter) Claimant and Third) Party Plaintiff, ) vs. ) ) Steven J. Hilton, an individual; John R. ) Landon, in individual; Larry W. Seay, ) an individual; and Snell & Wilmer, LLP, ) an Arizona professional ) corporation, ) Third-Party Defendants. ) )
Document 304

Case No. CV-04-0384-PHX-ROS

GREG HANCOCK'S RESPONSE TO MOTION FOR INTERIM ATTORNEY FEES

Case 2:04-cv-00384-ROS

Filed 04/19/2006

Page 1 of 5

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
from it.

Greg Hancock, through undersigned counsel, herewith responds and objects to the motions of Meritage and its executives for interim fees and costs. Said Response is based upon all the files, records and proceedings herein and the attached Memorandum of Points and Authorities. MEMORANDUM OF POINTS AND AUTHORITIES A. Meritage Has Not Yet Prevailed On The Contract Issues. It is true, as Meritage suggests, that many of Greg Hancock's counter-claims against Meritage are based on several contracts between it and Greg Hancock. But so are many of Meritage's claims against Greg Hancock based on the same contracts1, and it is yet to be determined who is the "prevailing party." Even assuming Greg Hancock's claims are not reinstated on appeal2, he may well prevail against Meritage's claims by way of summary judgment (the motion for which the Court denied without prejudice), directed verdict or jury verdict. In those events, since it was Meritage which instigated the contract litigation, it will be Greg Hancock who is the "prevailing party," and he is the one who will be entitled to fees and costs. In any event, until the entire matter is concluded and the "prevailing party" finally determined, an award of interim fees and costs to Meritage is premature. B. Hancock's Claims Against Meritage's Officers Do Not Arise Out of Contract. Meritage claims in its Motion that simply because there were contracts in play, Hancock's claims against Meritage's executives "arose out of" them. In fact, there is not a single allegation alleging breach of contract against any of them. Rather, all of the allegations sound in tort, and the contention that they are "interwoven" with the contracts is

See Third, Eighth, Ninth, and Tenth Causes of Action of Meritage's Second Amended Complaint, which sound in or arise from contract.
2

1

Greg Hancock will appeal the Court's March 31, 2006 dismissal Order or the judgment arising

2 Case 2:04-cv-00384-ROS Document 304 Filed 04/19/2006 Page 2 of 5

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

made without any legal support at all. It is not enough for attorney fees recovery under A.R.S. § 12-341.01(A) that tort, or other theories outside the statute, and contract liabilities be "interwoven" in a transactional sense. Rather, the non-compensable claims must be interwoven with the breach of contract such that there would be no other liability without the breach of contract liability. Sparks v. Republic National Life Insur. Co., 132 Ariz. 529, 543, 647 P.2d 1127, 1131 (1982). The "interwoven" cases and factors are well reviewed and summarized by Judge Ackerman in Ramsey Air Meds, LLC v. Cutter Aviation, Inc., 198 Ariz. 10, 15, 6 P.3d 315, 320 (App. 2000): "From these authorities, we distill the following principles for determining whether a tort claim `arises out of a contract.' In analyzing this issue, the court should look to the fundamental nature of the action rather than the mere form of the pleadings. The existence of a contract that merely puts the parties within tortious striking range of each other does not convert ensuing torts into contract claims. Rather, a tort claim will `arise out of a contract' only when the tort could not exist `but for' the breach or avoidance of the contract. When the duty breached is one implied by law based on the relationship of the parties, that claim sounds fundamentally in tort, not contract. In such cases, it cannot be said that the plaintiff's claim would not exist `but for' the contract. The test is whether the defendant would have a duty of care under the circumstances even in the absence of a contract." Put even more succinctly, where a contract merely is a factual predicate to the action, but not the essential basis of it, an award of fees is improper. In re Bertola, 9th Cir. BAP (Ariz. 2004). It can be said fairly that but for the employment relationship between Hancock and Meritage this dispute would not have occurred. However, that does not change Meritage's or its executives' common law duties not to interfere with contract, not to abuse process, or maliciously prosecute a claim into contract claims. Those duties would be present "even in the absence of a contract." By way of further example, claims for tortious interference with contract generally do not come within the reach of the fees statute because the duty not to interfere is imposed by law, rather than the contract. Bar J Bar Cattle Co. v. Pace, 158 Ariz. 481, 486, 763 P.2d 545, 550 (App. 1988). In summary, Hancock's claims against the third party defendants unquestionably are
3 Case 2:04-cv-00384-ROS Document 304 Filed 04/19/2006 Page 3 of 5

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

tort claims entirely independent of the employment relationship, which merely put them "within tortious striking range,"and an award of attorneys' fees is inappropriate. C. The Fees and Costs Sought Are or Will Be Excessive. Meritage predicts that a "fair estimate" of the fees it will seek "may reach $395,000.00." If past applications for fees made here and in state court are any measure, one cannot say, "Surely you jest!" As will be seen, even the Interim Bill of Costs is vastly overstated. The Court must closely examine fees and expenses to assure both reasonableness and relation to the dispute. See, e.g., Am. Hangar, Inc. v. Basic Line, Inc., 105 F.R.D. 173, 178 (D.Mass. 1985)(amount of attorney time reduced from 13.5 hours to four hours); E.E.O.C. v. Accurate Mechanical Contractors, Inc., 863 F. Supp. 828, 834-835 (E.D. Wis. 1994)(attorney time reduced from 22 hours to 5 hours based on needless assistance and uncomplicated nature of dispute); Gordon v. Castle Oldsmobile and Honda, Inc., 157 F.R.D. 438, 439 (E.D. Ill. 1994)(request for 41 hours of attorney's time unreasonable and reduced to 8). A learned discussion of the excessive fee request problem may be found in Brown v. State of Iowa, 152 F.R.D. 168, 174-75 (S.D. Iowa 1993), where a "grossly excessive" fee request for a simple motion to compel was reduced from over $2,000 to just over $300. Indeed, where a fee request is so excessive as to be intolerable, the court may deny the requested fees and expenses entirely as a prophylactic measure. Brown v. Stecker, 612 F.2d 1057 (7th Cir. 1980) and Lewis v. Kendrick, 944 F.2d 949, 958 (1st Cir 1991). The only requested interim costs set forth on Meritage's Memorandum of Interim Bill of Costs which might be appropriate at this point are the four transcripts of proceedings, totalling $954.30. The remaining claimed total taxable costs of $8,463.19 are simply not awardable now because none of the depositions or documents were cited or utilized in the dismissal matter, and all but the very first entry was incurred after Meritage first filed its
4 Case 2:04-cv-00384-ROS Document 304 Filed 04/19/2006 Page 4 of 5

1 2 3 4 5 6 7 8 9 10 11 12 13 14

Motion to Dismiss on January 14, 2005. D. Conclusion. A "prevailing party" has not yet been determined on the contract claims between the parties, as Meritage may still lose by court action or verdict. The other claims are tort claims, not "intertwined" with the contract claims, and not fees or costs are collectible. The cost bill is invalid for the same reasons, but also because none of the stated costs were incurred in obtaining the dismissal. RESPECTFULLY SUBMITTED this 19th day of April, 2006.

\s\ Robert M. Frisbee Robert M. Frisbee Attorneys for Greg Hancock

The foregoing Response to Motion For Interim Attorney Fees was electronically filed this 19th day of April, 2006, and copy 16 thereof mailed to the Honorable Judge Silver
15 17

\s\ Robert M. Frisbee
18 19 20 21 22 23 24 25 26 5 Case 2:04-cv-00384-ROS Document 304 Filed 04/19/2006 Page 5 of 5