Free Memorandum - District Court of Arizona - Arizona

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RYLEY CARLOCK & APPLEWHITE One North Central Avenue, Suite 1200 Phoenix, Arizona 85004-4417 Telephone: 602/258-7701 Telecopier: 602/257-9582 Michael D. Moberly ­ 009219 Andrea G. Lisenbee - 019882 Attorneys for Defendant/Counterclaimant IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA
AMMAR HALLOUM, Plaintiff, vs. INTEL CORPORATION, Defendant. INTEL CORPORATION, Counterclaimant, vs. AMMAR HALLOUM and SAWSAN HAMAD, Counterdefendants. DEFENDANT/ COUNTERCLAIMANT'S MEMORANDUM IN SUPPORT OF MOTION FOR ATTORNEYS' FEES No. CIV-02-02245-PHX-EHC

In

accordance

with

A.R.S.

§ 12-341.01

and

LRCiv

54.2,

defendant/counterclaimant Intel Corporation ("Intel" or the "Company") hereby submits its Memorandum in Support of its Motion for Attorneys' Fees filed on February 1, 2007.1 For the reasons set forth herein, Intel respectfully requests that the Court enter an award of attorneys' fees in the amount of $4,814.37, which reflects attorneys' fees it reasonably incurred in successfully pursuing its counterclaims arising out of contract
1

The Statement of Consultation required by LRCiv 54.2(d)(1) is attached hereto as Exhibit "A."
744355.1

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against plaintiff/counterdefendant Ammar Halloum ("Halloum"), as well as an amount it reasonably incurred in connection with the preparation of this fee application.
I.

Eligibility Intel has prevailed on all aspects of this litigation, including both

Halloum's claims against the Company and the Company's counterclaims against Halloum. In particular, the Company was awarded partial summary judgment on a portion of the claims asserted by Halloum on March 31, 2005, and on January 19, 2007, after trial, Intel was awarded judgment on Halloum's remaining claims and on its counterclaims against Halloum. The primary basis for this Court's exercise of jurisdiction was Halloum's assertion of federal claims under Title VII of the Civil Rights Act of 1964, as amended ("Title VII"), 42 U.S.C. §§ 2000e to 2000e-17. Thus, the potentially applicable federal attorneys' fee statute is 42 U.S.C. § 2000e-5(k). In applying that statute, the Ninth Circuit has found that "an award of attorneys' fees to a prevailing defendant is appropriate only when the plaintiff's claim is frivolous, unreasonable, or without foundation." Dosier v. Miami Valley Broadcasting Corp., 656 F.2d 1295, 1301 (9th Cir. 1981). The Court did not specifically find Halloum's case to be frivolous. However, because Intel asserted various state law counterclaims over which the Court had supplemental jurisdiction, a state attorneys' fee statute, A.R.S. § 12-341.01, also applies here. See Winter v. Coor, 144 Ariz. 56, 65, 695 P.2d 1094, 1103 (1985). That statute authorizes an award of reasonable attorneys' fees to the successful party "[i]n any contested action arising out of a contract." A.R.S. § 12341.01.A. It is upon this statute, as well as the express terms of the parties' contractual agreement, that Intel's request for an award of fees is based. See Bennett v. Appaloosa Horse Club, 201 Ariz. 372, 378, 35 P.3d 426, 432 (App. 2001) ("The awarding of attorneys' fees to a prevailing party pursuant to a contract between the parties is mandatory.").

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II.

Entitlement A. Intel Prevailed on All Counts All of Halloum's claims have been dismissed on the merits in favor of

Intel, and judgment has been entered accordingly. Halloum received none of the relief he sought. Intel was also the successful party on its counterclaims against Halloum. Specifically, the Court ruled in favor of Intel on its breach of contract and fraud claims (and found that, in light of its ruling on the contract claim, it need not address Intel's unjust enrichment claim), and entered judgment in favor of Intel in the amount of $955.00. B. Halloum Agreed to Pay Attorneys' Fees Arising from Relocation Agreement. Intel's counterclaims arise from Halloum's breach of Intel's U.S. Relocation Agreement ("Relocation Agreement"), which Halloum signed on October 13, 2000. See Trial Exhibit 257. The Relocation Agreement, which Halloum certified he had read and understood, contains a provision whereby he specifically agreed "to pay reasonable attorneys' fees incurred by Intel and costs awarded by the court" in an action brought by Intel "to collect any monies due" under the agreement. Id. at ¶ 10. This is a valid agreement to pay fees. See FDIC v. Adams, 187 Ariz. 585, 595, 931 P.2d 1095, 1105 (App. 1996) ("A contractual provision for attorneys' fees will be enforced according to its terms.").2 C. Intel is Entitled to Attorneys' Fees Arising from the Breach of Contract and Fraud Claims, and for Time Spent in Preparing This Fee Application.

2

To the extent California law may be deemed to apply due to the choice of law provision contained in the Relocation Agreement, the law, and the outcome, are the same: "In any action on a contract, where the contract specifically provides that attorney's fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract . . . shall be entitled to reasonable attorney's fees in addition to other costs." Cal. Civ. Code § 1717(a).
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In addition to the express terms of the Relocation Agreement, A.R.S. § 12341.01.A authorizes an award of reasonable attorneys' fees to the successful party "[i]n any contested action arising out of a contract, express or implied." "The statute

obviously applies to express claims for breach of contract." Ramsey Air Meds, L.L.C. v. Cutter Aviation, Inc., 198 Ariz. 10, 13, 6 P.3d 315, 318 (App. 2000). Thus, under this statute, Intel may receive attorneys' fees due to Halloum's breach of the Relocation Agreement. An award of attorneys' fees attributable to time Intel's attorneys spent successfully asserting Intel's fraud claim is also appropriate under A.R.S. § 12341.01.A. This is because the fraud claim arises out of the Relocation Agreement. "It is well-established that a successful party on a contract claim may recover not only attorneys' fees expended on the contract claim, but also fees expended in litigating an `interwoven' tort claim." Ramsey Air Meds, 198 Ariz. at 13, 6 P.3d at 318 (citing Pettay v. Ins. Mktg. Servs., Inc., 156 Ariz. 365, 368, 752 P.2d 18, 21 (App. 1987); see also Jerman v. O'Leary, 145 Ariz. 397, 403, 701 P.2d 1205, 1211 (App. 1985) (holding that it was "proper to award attorney's fees pursuant to A.R.S. § 12-341.01" to a party who prevailed upon "a tort for wrongful conduct amounting to fraud," because "the relationship between the parties was founded on [a] contract"). Intel also seeks an award of fees for the time spent preparing this fee application. Although A.R.S. § 12-341.01 is silent on this issue, the Arizona Court of Appeals has held that "[f]ees expended by a party to establish its entitlement to fees . . . are compensable." Larkin v. Arizona ex rel. Rottas, 175 Ariz. 417, 429, 857 P.2d 1271, 1283 (App. 1992). The Ninth Circuit has likewise held that "statutory fee award

provisions should be read as authorizing compensation for time spent litigating fee awards." In re Nucorp Energy, Inc., 764 F.2d 655, 660 (9th Cir. 1985). D. Attorneys' Fees are Appropriate in this Situation. As the prevailing party in this lawsuit, Intel is entitled to attorneys' fees "to mitigate the burden of the expense of litigation to establish a just claim or a just
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defense." A.R.S. 12-341.01.B. That is true even though Intel was the defendant in an employment case, and presumably is the party more readily able to bear the economic expense of litigation. See Mullins v. Southern Pac. Transp. Co., 174 Ariz. 540, 543, 851 P.2d 839, 842 (App. 1982) (rejecting the contention "that an employee, if the unsuccessful party, should not be required to pay attorney's fees"); Schwartz v. Farmers Ins. Co., 166 Ariz. 33, 38, 800 P.2d 20, 25 (App. 1990) ("A.R.S. § 12-341.01.A is remedial in nature and such relief is equally available to those who successfully defend an action as to those who successfully seek affirmative relief."); Moses v. Phelps Dodge Corp., 826 F. Supp. 1234, 1236 (D. Ariz. 1993) (holding that "the federal policies limiting an award of fees . . . do not apply to an award of fees to a prevailing defendant under § 12-341.01.A"). An award of fees is particularly appropriate in this case in order to deter future fraudulent conduct of the type in which Halloum was found to have engaged. See Canon School District No. 50 v. W.E.S. Construction Co., Inc., 177 Ariz. 431, 442, 868 P.2d 1014, 1025 (App. 1993) (noting "the Legislature's compensatory and deterrent purposes" in enacting A.R.S. § 12-341.01.A), vacated on other grounds, 180 Ariz. 148, 882 P.2d 1274 (1994); cf. Boyd v. Goffoli, 608 S.E.2d 169, 186 (W. Va. App. 2004) ("An obvious purpose of awarding attorney fees and costs in a case involving fraud is that intentional conduct such as fraud should be punished and discouraged.").
III.

Reasonableness A. Intel is Only Pursuing Attorneys' Fees Attributable to the Pursuit of Its Counterclaims. The reasonableness of Intel's requested award is discussed in detail in the

accompanying Affidavit of Attorneys' Fees (Exhibit "B"), which is incorporated herein by reference. Among other things, the affidavit reflects that the hourly rates applicable in this case are significantly discounted from Intel's attorneys' standard hourly rates. See generally Schweiger v. China Doll Restaurant, Inc., 138 Ariz. 183, 187-88, 673 P.2d 927, 931-32 (App. 1983) (When analyzing attorneys' fees for reasonableness, the
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Court must determine that: (1) the hourly billing rate is reasonable and (2) the hours expended on the case are reasonable and observing that "the rate charged by the lawyer to the client is the best indication of what is reasonable under the circumstances of the particular case.").3 In addition, Intel's attorneys reviewed the billing statements for the past four and a half years, the duration of this lawsuit. Only the fees incurred in pursuit of the Company's counterclaims and in the preparation of this fee application are included. The fees requested are a small fraction of the total fees expended by the Company (and, presumably, also by the plaintiff) over the course of this dispute. B. Factors to Consider in Determining the Reasonableness of Fees. In considering Intel's request for attorneys' fees, the Court should also take into account the factors identified in Associated Indemnity Corp. v. Warner, 143 Ariz. 567, 694 P.2d 1181 (1985). Those factors are (1) the merits of the claims

presented by the unsuccessful party; (2) whether the litigation could have been avoided or settled; (3) whether assessing fees against the plaintiff would impose an extreme hardship; (4) whether the successful party prevailed with respect to all of the relief sought; (5) the novelty of the legal questions involved; and (6) whether a fee award would discourage other parties from litigating tenable claims. Id. at 570, 694 P.2d at 1184. No particular one of these factors is dispositive. See Wilcox v. Waldman, 154 Ariz. 532, 538, 744 P.2d 444, 450 (App. 1987) ("The [Associated Indemnity] court did not state that any one particular factor was necessarily determinative of whether fees should be awarded, and the trial court should consider all the relevant factors in exercising its discretion."). On balance, the Associated Indemnity factors clearly favor an award of the fees being requested in this case.

3

See also Kadish v. Arizona State Land Department, 177 Ariz. 322, 332, 868 P.2d 335, 345 (App. 1993) (finding that "$200.00 per hour [was] reasonable" for work performed during the period "from 1981 to 1991").

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As discussed above, Intel has prevailed on all of the claims asserted in this action. In addition, the claims for which fees are being requested were, from the perspective of the unsuccessful party, neither meritorious nor novel. Moreover, the litigation of the counterclaims easily could have been ­ and indeed should have been ­ avoided, because Halloum obviously was aware of his own intentional fraudulent actions. The requested fee award also is unlikely to impose an undue hardship on Halloum. In relation to the total amount of fees incurred in this litigation, the amount being requested is modest. Halloum initiated this case, presumably fully aware of the risks and expense associated with litigation, and was (and remains) tenacious in his litigation of the matter. While an award of attorneys' fees may be objectionable to Halloum, nothing in the record suggests that it would impose an undue hardship on him. In any event, "the hardship that an award of fees would impose on a party . . . is only one of several factors to be considered by the trial court." Pettay, 156 Ariz. at 368, 752 P.2d at 21. Thus, despite the parties' differing economic positions, an award of attorneys' fees to Intel to "mitigate the burden of the expense of [the] litigation" would clearly be appropriate in this case. A.R.S. § 12-341.01.B; see also Grand v. Cigna Property & Cas. Cos., 172 Ariz. 419, 423, 837 P.2d 1154, 1158 (App. 1992) ("[A] trial court is charged with examining several factors when a fee request is made, none of which is whether the requesting party suffered a burden in defending the case."); First Nat'l Bank of Arizona v. Continental Bank, 138 Ariz. 194, 199, 673 P.2d 938, 943 (App. 1983) (rejecting the "proposition that A.R.S. § 12-341.01 is only meant to allow fees to those who could not otherwise afford to litigate"). Finally, there is no basis for concluding that the award requested in this case would discourage future meritorious litigation. See Moses, 826 F. Supp. at 1237 (indicating that an award of fees to the prevailing defendant "would neither encourage nor discourage future contract-based litigation"). On the contrary, the requested award would properly discourage future unmeritorious litigation.
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IV.

Amount of the Award Intel is only seeking to recover a portion of the fees it incurred in

connection with the pursuit of its counterclaims. Intel recognizes that the amount it is requesting nevertheless exceeds the amount of damages it recovered in connection with those claims. However, a significant portion of the time for which the Company is requesting reimbursement of fees is attributable to an unavoidable need to respond to Halloum's meritless motion to dismiss its counterclaims. In addition, Intel's counterclaims were asserted, and a substantial amount of the fees it is requesting were incurred, prior to the time Halloum repaid Intel a portion of the amount at issue in partial satisfaction of his criminal sentence. Prior to that partial repayment (and thus at the time many of Intel's fees were incurred), the economic value of Intel's counterclaims was substantially larger than the amount it subsequently sought, and ultimately recovered, at trial. Cf. Altfillisch Construction Co. v. Torgerson Construction Corp., 120 Ariz. 438, 440, 586 P.2d 999, 1001 (App. 1978) (attorneys' fees may be awarded under A.R.S. § 12-341.01.A even when the prevailing party did not obtain a "net monetary judgment"). Finally, by requesting an award of a specific amount of fees, Intel certainly does not mean to invade the Court's province in any respect. Intel fully recognizes that the determination of the proper amount of any fee award lies entirely within the Court's discretion. See Pettay, 156 Ariz. at 368, 752 P.2d at 21 ("The trial court has broad discretion in fixing the amount of attorney's fees. This discretion is limited only to the extent that such award may not exceed the amount paid or agreed to be paid.") (internal quotation marks and citations omitted). Intel merely requests that the Court exercise that discretion to award it fees attributable to the successful pursuit of its counterclaims in some amount the Court deems just and reasonable.

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CONCLUSION For the foregoing reasons, Intel request that its fee application be granted, and that it be awarded attorneys' fees in an amount the Court deems appropriate. DATED this 16th day of March, 2007. RYLEY CARLOCK & APPLEWHITE

By s/ Michael D. Moberly Michael D. Moberly Andrea G. Lisenbee One North Central Avenue, Suite 1200 Phoenix, Arizona 85004-4417 Attorneys for Intel Corporation

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CERTIFICATE OF SERVICE I hereby certify that on March 16, 2007, I electronically transmitted the attached document to the Clerk's Office using the CM/ECF System for filing. I hereby certify that on March 16, 2007, I served the attached document by mail on the following, who are not registered participants of the CM/ECF System:

Ammar Halloum P.O. Box 26662 Tempe, AZ 85285 Plaintiff/Counterdefendant Sawsan Hamad 260 W. Buena Vista Dr. Tempe, Arizona 85284 Counterdefendant s/ Michael D. Moberly Michael D. Moberly

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