Tessler v. Progressive

NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE

BRIAHNA TESSLER, Petitioner/Appellant/Cross-Appellee,

v.

PROGRESSIVE PREFERRED INSURANCE COMPANY,
Respondent/Appellee/Cross-Appellant.

No. 1 CA-CV 14-0397
FILED 9-24-2015

Appeal from the Superior Court in Maricopa County
No. CV2013-011613
The Honorable John Christian Rea, Judge

AFFIRMED

COUNSEL

Law Office of Larry A. Zier P.C., Scottsdale
By Larry A. Zier
Counsel for Petitioner/Appellant/Cross-Appellee

Law Offices of Collin T. Welch, Phoenix
By Collin T. Welch
Counsel for Respondent/Appellee/Cross-Appellant
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Decision of the Court

MEMORANDUM DECISION

Presiding Judge Kenton D. Jones delivered the decision of the Court, in
which Judge Samuel A. Thumma and Judge Peter B. Swann joined.

J O N E S, Judge:

¶1 Briahna Tessler appeals from the trial court’s order denying
her motion to vacate, amend, or set aside an arbitration decision awarding
her $7,500 in damages for injuries sustained in a car accident. Tessler’s car
insurance carrier, Progressive Preferred Insurance Company (Progressive),
cross-appeals the trial court’s order denying its request for an award of
attorneys’ fees and costs. For the following reasons, we affirm.

FACTS1 AND PROCEDURAL HISTORY

¶2 In October 2008, Tessler was involved in an accident
involving two cars which allegedly injured her right knee. The adverse
driver conceded liability, and Tessler made a claim of $15,000, the full
amount of the adverse driver’s insurance policy coverage, as compensation
for her injuries. Contending she had not been fully compensated, Tessler
made an underinsured motorist claim under her own insurance policy with
Progressive alleging total medical damages of $25,524.59.

¶3 Progressive agreed to cover the costs of Tessler’s emergency
room treatment and follow-up visit with her primary care physician but
denied that the other medical treatment, including knee surgery, was
causally related given Tessler’s pre-existing injuries. Pursuant to the
controlling arbitration provision in the insurance contract, Tessler and
Progressive submitted the dispute to arbitration.

¶4 The arbitration was held before a three-person panel in May
2013 but was apparently not recorded in any fashion. Because the

1 We view the facts in the light most favorable to upholding the trial
court’s confirmation of an arbitration award. Park Imperial, Inc. v. E.L.
Farmer Constr. Co., 9 Ariz. App. 511, 513-14 (1969). Because the hearing was
not recorded or transcribed, we rely on the facts set forth in the arbitration
decision and other documents filed during the arbitration and trial court
proceedings.

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proceeding was not recorded, the precise evidence presented to the panel
is not clear. However, the record on appeal reveals the evidence presented
at the arbitration included testimony by hired expert Dr. Jeffrey Becker,
deposition testimony by Tessler’s treating orthopedist Dr. Michael
Steingart, and an independent medical examination report by hired expert
Dr. Michael Domer.

Dr. Becker’s Testimony2

¶5 Dr. Becker, a neurohospitalist,3 apparently appeared at the
arbitration telephonically and testified as an expert witness to support
Tessler’s claims that her knee injury was attributable to the car accident,
and her subsequent treatment, including the knee surgery, was reasonable
and necessary. Progressive objected based on Dr. Becker’s personal
relationship with Tessler’s counsel and his incomplete review of Tessler’s
medical records, but the arbitrators allowed him to testify. Dr. Becker
ultimately concluded, to “a degree of medical certainty,” that Tessler’s knee
injuries were caused by the car accident and her medical treatment,
including surgery, was reasonable and necessary.

2 The parties did not submit any written report or testimony presented
at the arbitration by Dr. Becker. Tessler’s pre-hearing arbitration statement
indicates Dr. Becker was expected to testify but Progressive has not
referenced Dr. Becker’s testimony, nor did the trial court ever make
reference to that testimony. An affidavit was signed and sworn to by Dr.
Becker stating he testified in support of Tessler’s claim at the arbitration,
but the affidavit was signed in August 2013, about three months after the
arbitration concluded. Only Tessler refers to Dr. Becker’s testimony,
referencing it in both her petition to the trial court and opening brief on
appeal.

3 A neurohospitalist is a physician “dedicated to providing and
improving inpatient neurologic care. . . . Neurohospitalists evaluate and
treat a multitude of conditions including altered mental status, acute stroke,
seizure disorders, nervous system cancer, headaches, and neuromuscular
respiratory failure.” Kevin M. Barrett & William D. Freeman, Emerging
Subspecialties in Neurology: Neurohospitalist, 74 Neurology e9, e9 (Mitchell
S.V. Elkind, ed., 2010), available at http://www.neurology.org/content/74/
2/e9.short. They may also “diagnose and comanage patients with critical
illness polyneuropathy/myopathy, coma, complications of solid-organ
transplantation, or increased intracranial pressure.” Id.

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Dr. Steingart’s Deposition

¶6 Dr. Steingart, an orthopedic surgeon, performed Tessler’s
knee surgery. His deposition testimony revealed he first examined Tessler
in 2009. At that time, she reported she began experiencing pain in her right
knee more than two years prior, after she had a fall. Although it is unclear
when Dr. Steingart learned of the car accident, he diagnosed Tessler with
synovitis which “could” have been caused by the accident. However, he
was unable or unwilling to conclude with any degree of certainty that
Tessler’s knee injury was caused by the accident.

Dr. Domer’s Report

¶7 Dr. Domer, an orthopedic surgeon hired by Progressive,
completed an independent examination of Tessler and reviewed her
medical records. In his report, Dr. Domer noted that while Tessler
complained of some pain in both her knees in the emergency room
immediately following the accident, she was still “ambulating normally on
them.” Dr. Domer also identified a record of an MRI of Tessler’s right knee,
conducted in May 2007 after a “slip and fall at school.” Tessler thereafter
reported the slip and fall as a cause of her persistent knee pain to her
doctors, even after the car accident. In fact, Dr. Domer identified a medical
form signed by Tessler after the car accident, wherein she indicated her
knee pain began after her 2007 slip and fall, but made no mention of the car
accident.

¶8 Based on his review, Dr. Domer concluded Tessler suffered
from a patella-femoral mal-alignment, a condition pre-existing the car
accident and the slip and fall. He reported that neither the car accident nor
her prior slip and fall would have caused more than a “transient increase”
in her pain. Although Dr. Domer acknowledged Tessler’s knee injury
“could be said to have occurred to a reasonable degree of medical
probability as a direct result of her motor vehicle accident,” his report
indicates he did not agree with that conclusion.

¶9 Following the arbitration, Tessler was awarded $7,500 in a
two-to-one decision. The dissenting arbitrator requested reconsideration of
the matter, and after some discussion, reconsideration was denied by a two-
to-one vote.4 The decision effectively awarded Tessler nothing from

4 To support her position, Tessler relies on an email from the
dissenting arbitrator who raised concerns about the majority decision.

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Progressive’s underinsured coverage because the $7,500 award represented
the panel’s determination of the full value of Tessler’s claim which could be
wholly satisfied by the limits of the other driver’s insurance policy.

¶10 Tessler filed a petition in the trial court to set aside, vacate, or
amend the arbitration award. The court denied Tessler’s motion, and
Progressive filed a motion for attorneys’ fees and costs incurred during the
confirmation proceedings, which was also denied. Tessler timely appealed,
and Progressive timely cross-appealed. We have jurisdiction pursuant to
Arizona Revised Statutes (A.R.S.) sections 12-120.21(A)(1)5 and -2101(A)(1).

DISCUSSION

I. The Trial Court Did Not Abuse its Discretion in Denying Tessler’s
Petition to Set Aside, Vacate, or Amend the Arbitration Award.

¶11 Tessler argues the trial court erred in denying her motion to
vacate, amend, or set aside the arbitration award. When considering the
trial court’s order confirming an arbitration award, we view the trial court’s
order in the light most favorable to upholding the decision and will affirm
unless the court abused its discretion. Atreus Comtys. Grp. of Ariz. v. Stardust
Dev., Inc., 229 Ariz. 503, 506, ¶ 13 (App. 2012) (citing Brake Masters Sys., Inc.
v. Gabbay, 206 Ariz. 360, 364 n.3, ¶ 12 (App. 2003), and Park Imperial, 9 Ariz.
App. at 513-14). However, the interpretation of statutes is an issue of law
which we review de novo. Hahn v. Indus. Comm’n, 227 Ariz. 72, 74, ¶ 5 (App.
2011) (citing State Comp. Fund v. Superior Court (Hauser), 190 Ariz. 371, 374-
75 (App. 1997)).

¶12 As Tessler correctly asserts, “judicial review of an arbitration
award is severely limited by statute.” Atreus, 229 Ariz. at 506, ¶ 13 (citing
Einhorn v. Valley Med. Specialists, P.C., 172 Ariz. 571, 572-73 (App. 1992)).
The limited grounds for challenging an arbitration award in an insurance
context are codified at A.R.S. § 12-1512(A), within Arizona’s Uniform

However, this email is not part of the record on appeal, and we do not
consider it. State v. Schackart, 190 Ariz. 238, 247 (1997) (“Because our court
does not act as a fact-finder, we generally do not consider materials that are
outside the record on appeal.”); ARCAP 11(a) (governing composition of
record on appeal).

5 Absent material revisions from the relevant date, we cite a statute’s
current version.

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Arbitration Act, A.R.S. §§ 12-1501 through -1518.6 See also Hirt v. Hervey, 118 Ariz. 543, 545 (App. 1978) (“[T]he grounds for attack of an arbitration
award are codified in A.R.S. § 12-1512(A).”). Pursuant to this statute, the
trial court must decline to enter judgment upon an arbitration award if the
arbitrators “refused to hear evidence material to the controversy.” A.R.S.
§ 12-1512(A)(4). Tessler, as the challenging party, bears the burden of
proving sufficient grounds to vacate the arbitration award. See Fisher ex rel.
Fisher v. Nat’l Gen. Ins. Co., 192 Ariz. 366, 369, ¶ 12 (App. 1998) (citing Wages
v. Smith Barney Harris Upham & Co., 188 Ariz. 525, 530 (App. 1997)).

¶13 Tessler asserts the arbitrators “refused to hear evidence
material to the controversy” by ignoring, omitting, or rejecting “undisputed
and uncontroverted evidence” that her knee injury was caused by the car
accident. The record reveals otherwise. Although an arbitration award
which completely disregards undisputed and uncontroverted evidence
might present sufficient grounds for challenging the award, cf. Mead v. Am.
Smelting & Refining Co., 90 Ariz. 32, 38 (1961) (setting aside award where
“the [Industrial] Commission arbitrarily disregards the only reasonable
inference”), the evidence of causation in this case was anything but
undisputed or uncontroverted. Tessler’s expert, Dr. Becker, was the only
medical expert who explicitly supported Tessler’s claim. Dr. Steingart was
unable to conclude as to the cause of Tessler’s knee injury. And,
Progressive’s expert, Dr. Domer unequivocally reported Tessler’s knee
injury did not result from the car accident but, rather, resulted from a pre-
existing condition.

¶14 This evidence is clearly in conflict and gives rise to a number
of reasonable inferences regarding causation and the existence of a prior
injury, both questions of fact which Tessler concedes must be resolved by
the arbitrators. See New Pueblo Constructors, Inc. v. Lake Patagonia Recreation
Ass’n, 12 Ariz. App. 13, 18 (App. 1970) (acknowledging that arbitration
agreements may grant arbitrators “full power to decide both questions of
law and fact”) (citing Funk v. Funk, 6 Ariz. App. 527, 530 (App. 1967)); Verdex
Steel & Constr. Co. v. Bd. of Supervisors, Maricopa Cnty., 19 Ariz. App. 547, 552

6 Although Tessler also relies on the provisions of A.R.S. § 12-3023 for
grounds upon which an arbitration award can be challenged, the Revised
Uniform Arbitration Act provides that “[b]eginning January 1, 2011 this
chapter shall not apply to an agreement to arbitrate any existing or
subsequent controversy . . . contained in a contract of insurance.” A.R.S.
§ 12-3003(B)(2). Because the parties’ agreement to arbitrate was contained
within an insurance contract executed after the subject date, only the
provisions of the Uniform Arbitration Act apply here.

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(App. 1973) (“Even though a court reviewing the award of a board of
arbitration might consider some rulings on questions of law to be error, the
rulings so made are binding subject only to the limited grounds for review
set forth in A.R.S. § 12-1512.”).

¶15 Even if all the evidence conclusively proved causation, we
would remain reluctant to find reversible error because the arbitrators
could have made other reasonable findings of fact resulting in the reduction
or increase in the amount of the award, such as whether the treatment was
reasonably necessary or whether the treatment was reasonably priced. See
State v. Buccheri-Bianca, 233 Ariz. 324, 334, ¶ 38 (App. 2013) (“It is not the
province of an appellate court to reweigh evidence or reassess the
witnesses’ credibility.”) (citations omitted); see also Pawlicki v. Farmers Ins.
Co., 127 Ariz. 170, 173 (App. 1980) (finding the trial court erred in setting
aside an arbitration award based on the basis that the award did not
conform to evidence); Hirt, 118 Ariz. at 545 (noting that absent fraud,
corruption, or exceeding the scope of the arbitration agreement, arbitration
decisions on both questions of law and fact are final and conclusive).

¶16 Because the evidence clearly conflicts and the arbitrators had
broad discretion to determine the amount of the final award, the trial court
did not abuse its discretion in confirming the arbitration award.

II. The Trial Court Did Not Err in Denying Progressive’s Request for
Attorneys’ Fees and Costs.

¶17 Progressive cross-appeals the denial of its motion for
attorneys’ fees and costs. The interpretation and application of statutes
authorizing an award of attorneys’ fees and costs are questions of statutory
interpretation, which we review de novo. See Democratic Party of Pima Cnty.
v. Ford, 228 Ariz. 545, 547, ¶ 6 (App. 2012) (citing Zeagler v. Buckley, 223 Ariz.
37, 38, ¶ 5 (App. 2009)). But we review the denial of an award of attorneys’
fees and costs for an abuse of discretion. Id. (citing Orfaly v. Tucson
Symphony Soc’y, 209 Ariz. 260, 265, ¶ 18 (App. 2004)).

A. Attorneys’ Fees

¶18 Progressive argues its attorneys’ fees are recoverable under
A.R.S. § 12-341.01(A) which permits a fee award in a “contested action
arising out of contract.” Progressive asserts this dispute is an action arising
out of contract because it is analogous to that presented in Assyia v. State
Farm Mutual Automobile Insurance Co., in which this Court held that a
dispute over an insurer’s refusal to cover damages claimed under an
underinsured driver insurance policy “arose out of” contract for purposes

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of awarding attorneys’ fees under A.R.S. § 12-341.01. 229 Ariz. 216, 220-21,
¶¶ 10-14 (App. 2012). We disagree.

¶19 Unlike the dispute in Assyia, this case was submitted to
arbitration. Our supreme court has held A.R.S. § 12-341.01(A) does not
apply to arbitration challenge proceedings because the Uniform Arbitration
Act provides the proper statutory basis for awarding attorneys’ fees in
A.R.S. § 12-1514. Canon Sch. Dist. No. 50 v. W.E.S. Constr. Co., 180 Ariz. 148,
153 (1994). Section 12-1514 states:

Upon the granting of an order confirming, modifying or
correcting an award, judgment or decree shall be entered in
conf[o]rmity therewith and be enforced as any other
judgment or decree. Costs of the application and of the
proceedings subsequent thereto, and disbursements may be
awarded by the court.

Although the statute does not explicitly contain the term “attorneys’ fees,”
our supreme court has interpreted A.R.S. § 12-1514 to authorize the trial
court to make an award for attorneys’ fees incurred during arbitration
challenge proceedings. Canon School Dist., 180 Ariz. at 154. This award is
subject to the discretion of the trial court. See A.R.S. § 12-1514 (“Costs of the
application and of the proceedings subsequent thereto, and disbursements
may be awarded by the court.”) (emphasis added).

¶20 Determining whether the trial court abused its discretion in
denying a request for attorneys’ fees incurred in the course of arbitration
challenge proceedings under A.R.S. § 12-1514 is an issue of first impression.
We find it appropriate to apply the established principles governing the
review of a court’s decision to decline an award of attorneys’ fees pursuant
to A.R.S. § 12-341.01. Therefore, although neither the parties nor the court
recognized the applicability of A.R.S. § 12-1514, the court acted within its
discretion so long as it had reasonable grounds for denying Progressive’s
motion. See Associated Indem. Corp. v. Warner (Warner II), 143 Ariz. 567, 570-
71 (1985) (noting that, in review of a decision to grant or deny attorneys’
fees, courts should ask “whether a judicial mind, in view of the law and
circumstances, could have made the ruling without exceeding the bounds
of reason”) (quoting Davis v. Davis, 78 Ariz. 174, 179 (1954) (Windes, J.,
specially concurring)). Several factors have been recognized as useful in
determining whether an award of attorneys’ fees is appropriate, including:

The merits of the claim or defense presented by the
unsuccessful party[; t]he litigation could have been avoided

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or settled and the successful party’s efforts were completely
superfluous in achieving the result[; a]ssessing fees against
the unsuccessful party would cause an extreme hardship[;
t]he successful party did not prevail with respect to all of the
relief sought[;] . . . the novelty of the legal question
presented[;] . . . whether such claim or defense had previously
been adjudicated in this jurisdiction[;] . . . [and] whether the
award in any particular case would discourage other parties
with tenable claims or defenses from litigating or defending
legitimate . . . issues for fear of incurring liability for
substantial amounts of attorney’s fees.

Id. at 570 (quoting Associated Indem. Corp. v. Warner (Warner I), 143 Ariz. 585,
589 (App. 1983), and citing Wistuber v. Paradise Valley Unified Sch., 141 Ariz.
346, 350 (1984)).

¶21 Progressive argues the court abused its discretion by only
considering one of these factors — the hardship that an award of attorneys’
fees would impose upon Tessler. See Warner II, 143 Ariz. at 570.
Progressive’s argument is unpersuasive. Although the trial court “should
consider all the relevant factors in exercising its discretion,” it is not
required to make an explicit finding regarding each one. See Uyleman v.
D.S. Rentco, 194 Ariz. 300, 305, ¶ 27 (App. 1999) (upholding a denial of
attorneys’ fees “[a]lthough the trial court gave no reasons for denying the
request for fees”). To the contrary, we presume the trial court knows and
follows the law, regardless of the status of the record. Fuentes v. Fuentes, 209 Ariz. 51, 58, ¶ 32 (App. 2004) (citing State v. Trostle, 191 Ariz. 4, 22
(1997)); see Wilcox v. Waldman, 154 Ariz. 532, 538 (App. 1987) (“The trial
court’s decision will be upheld unless there exists no reasonable basis in the
record upon which its decision could have been made.”). We therefore find
the trial court need not have explicitly stated that it considered each factor
in denying Progressive’s motion for attorneys’ fees, so long as the grounds
for its decision were reasonable.

¶22 Progressive argues “undue hardship,” as articulated by the
trial court is an unreasonable ground for denial of its motion because it does
not equate to “extreme hardship” as stated in Warner II. However, no court
has ever made such a semantic distinction in applying this factor, and we
find no reason to distinguish the terms. Simply stated, if the hardship was

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not extreme, it would not be “undue.”7 As long as the party claiming undue
hardship “com[es] forward with prima facie evidence of financial hardship,”
we will not disturb the trial court’s decision to deny an award of attorneys’
fees. See Woerth v. City of Flagstaff, 167 Ariz. 412, 420 (App. 1990) (holding a
claim of undue hardship was insufficient where no specific supporting facts
were presented by affidavit or testimony). In opposition to Progressive’s
motion for attorneys’ fees, Tessler submitted an affidavit wherein she
declared that she is unemployed, has over $60,000.00 in debt, and does not
have any real estate or similar assets, satisfying her burden of presenting
prima facie evidence of hardship.

¶23 We conclude the trial court’s decision to deny Progressive’s
motion for attorneys’ fees is supported by reasonable evidence,
notwithstanding application of the incorrect statute, and find no error.

B. Costs

¶24 Progressive also argues the trial court erred by refusing to
award it costs and asserts that under A.R.S. § 12-341, “[a] cost award ‘is
mandatory in favor of the successful party.’” Assyia, 229 Ariz. at 223, ¶ 32
(quoting In re Estate of Miles, 172 Ariz. 442, 444 (App. 1992)). We again find
that Progressive seeks a remedy under the wrong statute.

¶25 In an arbitration subject to the Uniform Arbitration Act,
A.R.S. § 12-1514 governs the award of costs in arbitration challenge
proceedings. And unlike A.R.S. § 12-341, an award of costs incurred during
an arbitration challenge proceeding is discretionary. See A.R.S. § 12-1514
(“Costs of the application and of the proceedings subsequent thereto, and
disbursements may be awarded by the court.”) (emphasis added).
Applying the same principles governing discretionary awards as discussed
supra ¶¶ 19-22, we will not disturb the trial court’s exercise of discretion in
denying costs where, as here, reasonable grounds for denying the award
exist. We therefore affirm the court’s denial of Progressive’s motion for
costs.

III. Attorneys’ Fees and Costs Are Not Awarded on Appeal.

¶26 The parties each request attorneys’ fees and costs incurred in
this appeal pursuant to A.R.S. §§ 12-341, -341.01, and -343 and ARCAP 21.
Although Progressive prevailed on appeal, these statutes do not provide a

7 Indeed, “undue” is defined as “erring by excess; excessive;
unreasonable; immoderate; as, . . . an undue rigor in the execution of law.”
Webster’s New Universal Unabridged Dictionary 1195 (2d ed. 1983).

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basis for an award of attorneys’ fees or costs incurred in arbitration
challenge proceedings. See ARCAP 21(a)(2) (authorizing the appellate
court to decline an award of attorneys’ fees where the party fails to
“specifically state the statute, rule, decisional law, contract, or other
authority for an award of attorneys’ fees”). Even if Progressive had
identified the appropriate statutory basis, we would exercise our discretion
to deny an award of attorneys’ fees and costs because of the undue hardship
such an award would impose upon Tessler.

CONCLUSION

¶27 For the foregoing reasons, we affirm the judgment of the trial
court.

:ama

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