Free Memorandum - District Court of Arizona - Arizona

1 RYLEY CARLOCK & APPLEWHITE One North Central Avenue, Suite 1200 2 Phoenix, Arizona 85004-4417 Telephone: 602/258-7701 3 Telecopier: 602/257-9582 4 Charles L. Chester ­ 002571 Matthew T. Clarke ­ 018281 5 Attorneys for Defendants 6 7 8 9 10 11 12 13 14 15 16 UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA JOHN KILLINGSWORTH, a married man, Plaintiff, vs. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, and DAVE GONZALES, Defendants. The Honorable Neil V. Wake Now Come Defendants, by and through undersigned counsel and pursuant to

No. CIV-03-1950-PHX-NVW DEFANDANTS' MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANTS' MOTION FOR ATTORNEYS' FEES

17 Fed.R.Civ.Proc., Rule 54(d) and Local Rules of Civil Procedure 54.2, hereby submit 18 their Memorandum of Points and Authorities in support of their Motion for Attorneys' 19 Fees filed on October 12, 2005. 20 21 22 23 24 25 26 27 28
657354.2 12/1/2005 Case 2:03-cv-01950-NVW

DATED this 1st day of December, 2005. RYLEY CARLOCK & APPLEWHITE

By

/s/ Matthew T. Clarke Charles L. Chester Matthew T. Clarke One North Central Avenue, Suite 1200 Phoenix, Arizona 85004-4417 Attorneys for Defendants

Document 294

Filed 12/01/2005

Page 1 of 13

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MEMORANDUM OF POINTS AND AUTHORITIES I. ELIGIBILITY FOR AWARD OF FEES AND COSTS: A. Judgment Upon Which Defendants Seek Fees

Defendants seek fees as the successful parties to this litigation. This Court

6 dismissed a portion of Plaintiff's claims by way of summary judgment on October 15, 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 October 3, 2005. B. Description of the Nature of The Case Plaintiff sued Defendants alleging several federal antidiscrimination claims as well as several pendent state law tort and contract related claims. Plaintiff claimed injury resulting from: (1) his demotion from the position of Area Field Executive ("AFE") to Area Field Consultant ("AFC") effective July 1, 2001; (2) what he deemed his constructive discharge; (3) what he deemed a refusal to appoint him the Eggert agency; and (4) his proposed but never implemented demotion from AFC to AFS. Defendants denied liability on all counts, offering legitimate, non-discriminatory reasons for their actions, including the decision to discipline Plaintiff. Defendants denied liability under each and all of Plaintiff's state tort and contract related theories, denying the existence of any contract related rights as alleged by Plaintiff. Finally, Defendants denied that Plaintiff was constructively discharged. C. Statutory Basis for Award of Fees 1) Right to Attorneys' Fees - §12-341.01(A) 2004, and dismissed Plaintiff's remaining claims by way of summary judgment on

Pursuant to Arizona statute, A.R.S. § 12-341.01 (A), "[i]n any contested action

25 arising out of contract, express or implied, the court may award the successful party 26 reasonable attorneys fees...." 4 Ariz. Rev. Code Ann. §12-341.01(A). The statute 27 applies to contracts that are either express or implied, including breach of contract, 28 breach of the implied covenant of good faith and fair dealing, and intentional
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1 interference with contract claims. See Smith v. American Exp. Travel Related Services 2 Co., Inc., 179 Ariz. 131, 876 P.2d 1166 (App. 1994) (employer entitled to award of 3 attorneys' fees for defending against employee's breach of contract and breach of 4 implied covenant of good faith and fair dealing claims); Rutledge v. Arizona Board of 5 Regents, 147 Ariz. 534, 711 P.2d 1207 (App. 1985) (where intentional interference with 6 contract claim can not exist but for a the existence of a contractual relationship between 7 the parties, attorneys' fees are available under A.R.S. §12-341.01(A)). Alone, a

8 promissory estoppel claim does not arise from contract sufficient to invoke §129 341.01(A). Double AA Builders, Ltd. V. Grand State Construction. LLC., 210 Ariz. 503, 10 114 P.3d 835 (App. 2005) However, because Plaintiff's promissory estoppel claim is so 11 interwoven into the breach of contract claim, State Farm is entitled to recover fees 12 expended defending that claim as well. See e.g., Ramsey Air Meds LLC v. Cutter 13 Aviation, Inc., 198 Ariz. 10, 13, 6 P.3d 315, 318 (App. 2000) ("It is well-established that 14 a successful party to a contract claim may recover not only attorneys' fees expended on 15 the contract claim, but also fees expended in litigating an `interwoven' tort claim."). A 16 party may be properly deemed a successful party for purposes of §12-341.01(A), when 17 a matter terminates in favor of that party by way of summary judgment. Orfaly v. 18 Tucson Symphony Society, 209 Ariz. 260, 99 P.3d 1030 (App. 2004). 19 In cases involving both federal and pendent state claims, A.R.S. §12-341.01 (A)

20 is applicable, at least as to the state-law claims. See, Newlson v. Pima Community
th 21 College, 83 F.3d 1075 (9 Cir. 1996) (fees awarded under statute for defense of pendent

22 contract-based claims); Moses v. Phelps Dodge Corp., 826 F.Supp. 1234 (D. Ariz. 23 1993) (same). 24 Wherefore, pursuant to A.R.S. §12-341.04(A), and as the successful parties to

25 this litigation, Defendants move for an award of attorneys' fees incurred defending each 26 of Plaintiff's contract based claims. 27 28 D. Standard for Determination of Eligibility for Fees An award of attorneys' fees pursuant to A.R.S. §12-341.01(A) is discretionary.
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Case 2:03-cv-01950-NVW

1 Marvin Johnson P.C., v. Shoen, 888 F.Supp. 1009, 1018 (D.Ariz. 1995), citing, Layne v. 2 Transamerica Financial Services, Inc., 146 Ariz. 559, 707 P.2d 963, 966 (App. 1985). 3 The trial court has broad discretion to award attorney fees under A.R.S. §12-341.01(A), 4 Robert E. Mann Const. Co v. Liebert Corp., 204 Ariz. 129, 60 P.3d. 708 (App. 2003), 5 and the trial court's decision in this regard will not be reversed on appeal absent a clear 6 abuse of discretion. Schwartz v. Farmers Ins. Co of Arizona, 166 Ariz. 33, 800 P.2d 20, 7 25 (App. 1990). In reviewing a trial court's discretion "the question is not whether the 8 judges of this court would have made an original like ruling, but whether a judicial 9 mind, in view of the law and circumstances, could have made the ruling without 10 exceeding the bounds of reason." McEvoy v. Aerotek, Inc . 201 Ariz. 300, 34 P.3d 979, 11 981 (App. 2001) (citation omitted). 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 B. Factors to Consider in Determining whether to Award Fees II. ENTITLEMENT TO FEES: A. Defendants Prevailed on All Counts

Defendants moved for summary judgment on two occasions. This Court granted summary judgment in favor of Defendants on October 15, 2004, dismissing the improper interference with contract, §1985, Title VII age, race and national origin discrimination, and wrongful discharge claims. The Court subsequently granted summary judgment in favor of Defendants on October 3, 2005, dismissing Plaintiff's remaining claims, including the breach of contract, promissory estoppel, and covenant of good faith and fair dealing claims, as well as the §1981 race claim, the age discrimination claim, and the constructive discharge claim. All matters have been dismissed on the merits in favor of Defendants and judgment entered accordingly. Plaintiff received none of the relief sought. Defendants are the successful parties to this litigation.

The Arizona Supreme Court identified seven factors courts should consider in

28 determining whether to award a successful party attorneys' fees under §12-341.01(A):
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1 (1) the merits of the claim or defense presented by the unsuccessful party; (2) whether 2 the litigation could have been avoided or settled and the successful party's efforts were 3 completely superfluous in achieving the result; (3) whether assessing fees against the 4 unsuccessful party would cause an extreme hardship; (4) whether the successful party 5 prevailed with respect to all of the relief sought; (5) the novelty of the legal question 6 presented; (6) whether such a claim or defense had been previously litigated in this 7 jurisdiction; and (7) whether the award in any particular case would discourage other 8 parties with tenable claims from litigating them for fear of incurring substantial fees. 9 Associated Indemnity Corporation v. Warner, 143 Ariz. 567, 570, 694 P.2d 1184, 1184 10 (1985). In weighing each of these factors, the scales tip heavily in favor of awarding 11 Defendants their attorneys' fees. 12 13 1. The merits of the claim presented by the unsuccessful party The allegations making up Plaintiff's contract based claims were manifestly

14 unsupportable and were in fact directly contradicted by the plain language of his 15 employment contract and by his own tape-recorded statements. This Court determined 16 that none of Plaintiff's contract claims (or federal discrimination claims) were supported 17 by the facts in evidence, and consequently dismissed Plaintiff's claims on summary 18 judgment. This factor weighs in favor of Defendants. 19 20 2. Whether litigation could have been settled or avoided Plaintiff made a settlement offer on or about September 7, 2004, in the amount of

21 $7.45 million (Exhibit "A"). On November 22, 2004, Defendants sent Plaintiff a letter 22 explaining Defendants' position on all claims, identifying the lack of evidence 23 supporting any of Plaintiff's causes of action, and offering to settle this matter for 24 $90,000 (Exhibit "B"). Defendants' claim was reasonable and designed to resolve this 25 matter without the need for prolonged litigation. Plaintiff rejected Defendants' offer of 26 settlement. Plaintiffs claims were deemed unsupported by evidence and were dismissed 27 entirely. This factor weighs in favor of Defendants. 28
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3. Whether assessing fees would cause an extreme hardship upon Plaintiff Plaintiff is, by his own admission, a successful businessman. He operates no less

3 than three businesses. Plaintiff brought this cause of action, fully aware of the risks and 4 the expenses associated with litigation. Plaintiff was tenacious in his prosecution of this 5 matter, expending thousands of dollars on discovery. Indeed, Plaintiff repeatedly

6 sought to extend discovery and drag this matter out. Plaintiff was fully aware of the 7 costs associated with his aggressive prosecution of his claims. 8 Plaintiff was fully aware of the possibility that the prevailing party would be

9 entitled to petition the Court for an award of attorneys' fees and cost, as is evidenced by 10 the fact Plaintiff sought attorneys' fees and costs as part of his prayer for relief in his 11 Complaint. Plaintiff's decision to pursue this litigation, and the risks associated with 12 same, was informed. And while an award of attorneys' fees may be unwelcome by 13 Plaintiff, nothing in the record suggests that it would be a hardship. This factor weights 14 in favor of Defendants or is neutral. 15 16 4. Whether the successful party prevailed with respect to the relief sought Since day one Defendants denied wrongdoing. Plaintiff alleged numerous causes

17 of action in pursuit of millions of dollars in alleged damages. None of Plaintiff's claims 18 were sufficient to survive summary judgment and Plaintiff received zero dollars. 19 Defendants prevailed completely with respect to Plaintiff's claims. This factor weighs 20 in favor of Defendants. 21 22 5. The novelty of the legal issues presented The causes of action raised by Plaintiff, though complex and resulting in

1 23 significant discovery were not novel.

24 25 26 27 With the exception that the contract statute of limitations issue was an issue of first 28 impression.
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6.

Whether such a claim or defense had been previously litigated in this jurisdiction

Plaintiff filed breach of contract claims and federal discrimination claims. There was nothing novel about the claims filed, and the law on the claims raised by Plaintiff, while in evolution, provided appropriate guidance to the Court and counsel. 7. Whether awarding fees would have a daunting effect An award of attorneys' fees to Defendants will not discourage other parties from advancing tenable claims. If anything, an award of fees will encourage parties to reconsider filing spurious lawsuits. Again, Plaintiff was aware of the possibility that fees could be awarded; he sought fees as a remedy in his Complaint. This factor weights in favor of Defendants. Overall, the Associated Indemnity factors weigh in favor of awarding attorneys' fees and costs to Defendants as the prevailing parties in this matter. III. REASONABLENESS OF REQUESTED FEES AWARD: In determining the reasonableness of the fees requested, the Ninth Circuit has

16 instructed courts to consider the following eleven factors: (1) the time and labor 17 required; (2) the novelty and difficulty of the issues; (3) the skill requisite to perform the 18 legal service properly; (4) the preclusion of employment by the attorney due to 19 acceptance of the case; (5) the customary fee; (6) whether the fee agreement is 20 contingent; (7) time limitations imposed by the client or the circumstances; (8) the 21 amount of money involved and the results obtained; (9) the "undesirability" of the case; 22 (10) the nature and length of the professional relationship with the client; and (11) 23 awards in similar cases. Van Gerwen v. Guarantee Mutual Life Co., 214 F.3d 1041, 24 1045 (9th Cir. 2000) (citations omitted). 25 26 1. Time and Labor Required Attached hereto as Exhibit "E" is a Task-Based Itemized Statement of Fees, The attorney, hourly rate and hours per

27 included pursuant Local Rule 54.2(d)(3). 28 attorney are broken down as follows:
Case 2:03-cv-01950-NVW

Document 294 7 Filed 12/01/2005

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1 2 3 4 5 6 7 8 9 10 11 Attorney Charles Chester Michael Moberly Matthew Clarke Mariette Spence Darla Smith Travis Waldron Lisa VanBockern Rate $275 $275 $225 $180 $175 $110 $110 Hours 86.0 3.6 113.6 76.8 42.0 17.4 21.9 Total___ $ 23,650 $ 990

$ 25,560 $ 13,824 $ 7,350 $ 1,914 $ 2,409 $ 75,697

Total Attorneys' Fees

Defense of the contract related claims required Ryley Carlock & Applewhite

12 ("RCA") to devote approximately 360 hours of attorney time. In total, three partners,
2 13 three associates, and one paralegal worked on this matter. Defendants do not seek

14 reimbursement for the majority of time spent defending this case as a whole 15 (specifically the discrimination claims), though under Arizona law this Court would be 16 justified in awarding fees incurred defending tort claims interwoven into the contract 17 claims. See Ramsey Air Meds, L.L.C. v. Cutter Aviation, Inc., 198 Ariz. 10, 6 P.3d 315 18 (App. 2000) (a successful party on a contract claim may recover not only attorney fees 19 expended on the contract claim, but also fees expended in litigating an "interwoven" tort 20 claim). 21 22 2. Novelty and Difficulty of Questions Presented The contract related claims were not particularly unusual, except: (1) the

23 question of which statute of limitations applied was a question of first impression, and 24 (2) the question of whether the alleged entitlement to an agency was an employee 25 contract or a separate contract and how the two were related, required additional legal 26 work and factual analysis. 27
2

28 v. Palmer Johnson, Inc., 153 Ariz. 250, 735 P.2d 1373 (App. 1987).
Case 2:03-cv-01950-NVW

Courts may award reimbursement for paralegal services as part of a §341.01(A) award. Aries

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3. Skill Requisite to Perform the Legal Services Properly Recognizing this fee application relates only to contract claims, the underlying discrimination claims can not be ignored. Because of the exceptional imagination and tenacity of Plaintiff's counsel, defense of this case required very substantial skill, advocacy, and content specific expertise. 4. Preclusion of Other Employment by Counsel Because of Acceptance of this Action. It is not possible to separate the contract claims from the discrimination claims for

8 preclusion of employment analysis. That being the case, this matter was highly 9 contested and required substantial expenditure of time that precluded, to some extent, 10 the involved RCA staff from seeking other employment opportunities. 11 12 5. Customary Fee Charged in Matters of the Type Involved On information and belief, RCA's fees are at least commensurate with the fees

13 charged by other firms of its size, locally, regionally, and nationally. See, e.g., Marvin 14 Johnson PC v. Shoen, 888 F.Supp. 1009, 1020 (D.Airz.1995) ($250 for partners, $200 15 for associates, and $75 for paralegals deemed appropriate). In addition, RCA gave 16 Defendants a considerable discount off the rates otherwise charged by Charles Chester 17 and Michael Moberly. 18 19 20 21 6. Whether Fee contracted between Counsel and Defendants was Contingent The fee agreement between RCA and Defendants was not contingent. 7. Time Limitations Imposed by the Client or the Circumstances Given the nature and complexity of this case, as well as the large volume of

22 discovery sought, this case progressed on a reasonable time table. 23 24 8. Amount of Money Involved and Results Obtained Plaintiff's expert valued the contract claims among others, at between $1 million Plaintiff also sought punitive damages. Plaintiff's claims were

25 and $2 million.

26 dismissed and Plaintiff received zero dollars. 27 28 9. Experience, Reputation and Ability of Counsel The experience, reputation, and ability of counsel involved in defending this case
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Case 2:03-cv-01950-NVW

1 is summarized in the affidavit of Charles L. Chester, attached hereto as Exhibit "F." 2 3 10. Undesirability of the Case There was nothing particularly undesirable about this case, as it was the type of

4 case RCA handles on a regular basis. 5 6 7 8 9 10 11 12 IV. RIGHT TO COSTS ­ 28 U.S.C.A. § 1920 / 4 A.R.S. §12-341: Defendants are entitled to recover costs incurred pursuant to A.R.S. §12-341, 12. Award in Similar Actions See, Section III (5) above. 11. Nature and Length of Professional Relationship Between RCA and Defendants. Defendants retained undersigned for the purpose of representing Defendants on this action. RCA has had no long-standing relationship with Defendants.

13 which provides that the "successful party to a civil action shall recover from his 14 adversary all costs expended or incurred therein unless otherwise provided by law." 4 15 Ariz. Rev. Code Ann. §12-341. The plain language of §12-341 allowing the successful 16 party to a civil action to recover its costs is mandatory and the trial court has no 17 discretion to deny costs to the prevailing party. Roddy v. County of Maricopa, 184 Ariz. 18 625, 911 P.2d 631 (App. 1996). "Determining the 'prevailing party' for purposes of

19 awarding fees and costs is quite simple. Plaintiff sues defendant for money damages; if 20 plaintiff is awarded a judgment, plaintiff has prevailed, and if defendant successfully 21 defends and avoids an adverse judgment, defendant has prevailed." Gametech Intern., 22 Inc. v. Trend Gaming Systems, L.L.C. 380 F.Supp.2d 1084 (D.Ariz., 2005) (citation 23 omitted). In addition, 28 U.S.C. § 1920 provides that a successful party may recover 24 taxable costs. 25 For the reasons stated above, Defendants were the successful parties to this

26 litigation and are thus entitled to an award of taxable costs. Defendants timely filed a 27 Bill of Costs. Plaintiff objected to $866.53 for deposition miniscript copies,

28 DVD/Video costs for video recorded depositions, ASCII Summation disks of
Case 2:03-cv-01950-NVW Document 294 10Filed 12/01/2005 Page 10 of 13

1 depositions as non-taxable costs. Defendants contend those deposition related costs are 2 taxable. To the extent the Bill of Costs has not been granted, Defendants request the 3 Court order the clerk to enter an award of taxable costs in the amount of $15,442.53 as 4 previously filed with the Clerk of the Court, including the $866.53 objected to by 5 Plaintiffs. 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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V. SUPPORTING DOCUMENTATION: Pursuant to L.R. 54.2(d) the following documentation is attached hereto: Exhibit "C" Statement of Consultation Exhibit "D" Fee Agreement Exhibit "E" Task-Based Itemized Statement of Fees Exhibit "F" Affidavit of Counsel. VI. CONCLUSION Wherefore, for the foregoing reasons, and for good cause shown, Defendants move this Court for an Order granting Defendants their reasonable attorneys' fees in the amount of $75,697 and taxable costs in the amount of $15,442.53. DATED this 1st day of December, 2005. RYLEY CARLOCK & APPLEWHITE

By

/s/ Matthew T. Clarke Charles L. Chester Matthew T. Clarke One North Central Avenue, Suite 1200 Phoenix, Arizona 85004-4417 Attorneys for Defendants

1

CERTIFICATE OF MAILING

I hereby certify that on December 1, 2005, I electronically transmitted the 2 attached MOTION FOR ATTORNEYS' FEES AND NON-TAXABLE EXPENSES to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of 3 Electronic Filing to the following CM/ECF registrants: 4 5 John Gabroy & Garry Bryant Attorneys for Plaintiffs

6 And a courtesy copy mailed via first class mail to: 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
Case 2:03-cv-01950-NVW Document 294 12Filed 12/01/2005 Page 12 of 13
By /s/ Lisa Lopez

The Honorable Neil V. Wake U.S. District Court, Phoenix Division 401 West Washington Street, SPC 52 Phoenix, Arizona 85003

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