Thommi v. Fisher

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

GEORGE THOMMI, et al., Plaintiffs/Appellants,

v.

RICHARD FISHER, et al., Defendants/Appellees.

No. 1 CA-CV 18-0146
FILED 10-25-2018

Appeal from the Superior Court in Maricopa County
No. CV2017-094815
The Honorable David King Udall, Judge

VACATED AND REMANDED

COUNSEL

Snell & Wilmer, L.L.P., Phoenix
By Edward J. Hermes
Counsel for Plaintiffs/Appellants

Beus Gilbert, P.L.L.C., Phoenix
By Paul E. Gilbert, Cory L. Broadbent, Cassandra H. Ayres
Counsel for Defendants/Appellees
 THOMMI, et al. v. FISHER, et al.
Decision of the Court

MEMORANDUM DECISION

Presiding Judge Kenton D. Jones delivered the decision of the Court, in
which Vice Chief Judge Peter B. Swann and Judge David D. Weinzweig
joined.

J O N E S, Judge:

¶1 George and Mary Thommi challenge the trial court’s award
of attorneys’ fees to Appellees (collectively, Chew-Fisher). For the
following reasons, we vacate the award and remand for entry of an order
denying Chew-Fisher’s request for fees.

FACTS AND PROCEDURAL HISTORY

¶2 In August 2017, the Thommis filed a complaint against Chew-
Fisher, seeking contract damages arising from its failure to perform duties
prescribed by various operating agreements in the course of managing a
real estate investment project. In lieu of answering the complaint, Chew-
Fisher moved to dismiss for lack of personal jurisdiction, improper venue,
and failure to state a claim. See Ariz. R. Civ. P. 12(b)(2), (3), (6). Chew-
Fisher did not request an award of attorneys’ fees in its motion or reply.

¶3 After the case was dismissed, Chew-Fisher filed an
application for attorneys’ fees, asserting entitlement pursuant to Arizona
Revised Statutes (A.R.S.) § 12-341.01(A)1 (authorizing an award of
attorneys’ fees to the successful party in a contract action). The trial court
granted the application over the Thommis’ objection. The Thommis timely
appealed the final judgment, and we have jurisdiction pursuant to A.R.S.
§§ 12-120.21(A)(1) and -2101(A)(1).

DISCUSSION

¶4 The Thommis argue the trial court erred by awarding Chew-
Fisher attorneys’ fees because Chew-Fisher did not timely assert a claim for
fees under Arizona Rule of Civil Procedure 54(g). Whether attorneys’ fees
are available under A.R.S. § 12-341.01 presents a question of law we review
de novo. See Dooley v. O’Brien, 226 Ariz. 149, 152, ¶ 9 (App. 2010) (quoting

1 Absent material changes from the relevant date, we cite the current
version of rules and statutes.

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Ariz. Tile, L.L.C. v. Berger, 223 Ariz. 491, 498-99, ¶ 35 (App. 2010)); see also
King v. Titsworth, 221 Ariz. 597, 598, ¶ 8 (App. 2009) (reviewing a party’s
compliance with Rule 54(g) de novo) (citing In re Reymundo F., 217 Ariz. 588,
590, ¶ 5 (App. 2008)).

¶5 Arizona law provides that, “[i]n any contested action arising
out of a contract, express or implied, the court may award the successful
party reasonable attorney fees.” A.R.S. § 12-341.01(A). But even where it is
undisputed that an action arises out of contract, there is no presumption
that attorneys’ fees will be awarded. Associated Indem. Corp. v. Warner, 143
Ariz. 567, 569 (1985). The fee-shifting provision exists to:

(1) mitigat[e] the burden of the expense of litigation to
establish a just claim or a just defense; (2) encourag[e] more
careful analysis prior to filing suit by imposing the risk of
paying the opposing party’s attorneys’ fees where legitimate
settlement offers are rejected; and (3) promot[e] settlement
and thus reduc[e] caseloads involving contractual matters.

Am. Power Prods., Inc. v. CSK Auto, Inc., 242 Ariz. 364, 369, ¶ 20 (2017)
(quoting Hall v. Read Dev., Inc., 229 Ariz. 277, 282, ¶ 18 (App. 2012)). These
purposes are not served “[u]nless each party is on notice before each stage
of the [lawsuit] that its opponent intends to ask for attorney’s fees.” King,
221 Ariz. at 600, ¶ 14 (quoting Wagenseller v. Scottsdale Memorial Hosp., 147
Ariz. 370, 391 (1985), superceded in other respects by A.R.S. § 23-1501); accord
Robert E. Mann Constr. Co. v. Liebert Corp., 204 Ariz. 129, 133, ¶ 10 (App.
2003) (“It is fair to require parties to request fees earlier in the litigation
process so that both sides may accurately assess the risks and benefits of
litigating versus settling. In this way, the opportunity for out of court
settlement may be enhanced.”) (citing Wagenseller, 147 Ariz. at 391).

¶6 Our supreme court adopted the requirement of notice in a
1999 amendment to Rule 54(g) stating “[a] claim for attorneys’ fees shall be
made in the pleadings.”2 Ariz. R. Civ. P. 54(g) (1999) (effective Dec. 1, 1999).
The current version of Rule 54(g), in effect at the time the Thommis filed
their complaint, clarifies that “a claim for attorney’s fees must be made in
the pleadings or in a Rule 12 motion filed before the movant’s responsive

2 The prior version of Rule 54(g) ambiguously provided that “[c]laims
for attorneys’ fees and related nontaxable expenses shall be made by motion
unless the substantive law governing the action provides for the recovery
of such fees as an element of damages to be proved at trial.” Ariz. R. Civ.
P. 54(g) (1996).

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pleading.” Ariz. R. Civ. P. 54(g) (emphasis added). The new language
codifies this Court’s holding in Balestrieri v. Balestrieri, 232 Ariz. 25, 27, ¶ 8
(App. 2013), that Rule 54(g)(1) authorizes a fee request be made in a
successful Rule 12 motion filed in lieu of a responsive pleading because
“[s]uch a motion effectively takes the place of an answer for as long as it
remains pending” and “puts the opposing party on immediate notice that
he or she risks a fees award if the case is not settled before the court decides
the motion.” See Ariz. R. Civ. P. 54 cmt. to 2017 amends.

¶7 Chew-Fisher argues the heading “generally” indicates
“flexibility in this rule” of when a claim for fees “must be made” that would
allow the trial court to exercise its discretion to award fees under A.R.S.
§ 12-341.01 notwithstanding a timely claim. We disagree. This Court has
repeatedly held that the notice requirement promulgated by Rule 54(g)(1)
is mandatory, not discretionary, see, e.g., Balestrieri, 232 Ariz. at 28, ¶ 11;
King, 221 Ariz. at 599, ¶ 11, and has already rejected the suggestion that
A.R.S. § 12-341.01 is sufficiently broad to allow an award of fees
notwithstanding noncompliance with Rule 54(g)(1), King, 221 Ariz. at 600,
¶ 15. Moreover, “titles and headings ‘are but tools available for the
resolution of a doubt[;] they cannot undo or limit that which the text makes
plain.’” Phillips v. O’Neil, 243 Ariz. 299, 302, ¶ 12 (2017) (quoting Bhd. of R.R.
Trainmen v. Balt. & O.R. Co., 331 U.S. 519, 528-29 (1947), and State ex rel.
Romley v. Hauser, 209 Ariz. 539, 542-43, ¶ 16 (2005)); see also A.R.S. § 1-212
(“[H]eadings to sections . . . are supplied for the purpose of convenient
reference and do not constitute part of the law.”).

¶8 We reject Chew-Fisher’s argument that requiring its
compliance with Rule 54(g)(1) impermissibly “elevates form over
substance” for much the same reason. Both the plain language of Rule
54(g)(1) and the policy underlying the fee-shifting statute require that a
claim for fees be timely made in the pleadings or Rule 12 motion in order
to put the opposing party on notice of the claim and increase the
opportunity for settlement. The requirement for notice, and the timing and
form thereof, are precisely the sort of procedural matters that will “secure
the just, speedy, and inexpensive determination” of an action, and are
therefore appropriate for resolution through procedural rules. Ariz. R. Civ.
P. 1; see also Ariz. Const. art. 6, § 5(5) (granting our supreme court the
authority “to make rules relative to all procedural matters in any court”).
Accordingly, we find no offense in either the plain language or strict
enforcement of Rule 54(g)(1).

¶9 Finally, Chew-Fisher argues the notice requirement is
satisfied because the Thommis asserted a claim for attorneys’ fees in their

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own complaint and therefore should have anticipated Chew-Fisher would
claim fees on the same basis. Chew-Fisher cites no authority for the
suggestion that one party may be relieved of its responsibility to make a
timely and Rule 54(g)-compliant claim for attorneys’ fees through the
diligence of the opposing party.

¶10 In sum, a party who does not assert the claim to fees in his
responsive pleading or motion to dismiss forfeits his claim. Balestrieri, 232
Ariz. at 27, 28, ¶¶ 6, 11 (“Certainly Rule 54(g)(1) forbids a request [for
attorneys’ fees] first made in a post-trial motion.”); see also King, 221 Ariz. at
599, ¶ 11. Chew-Fisher did not timely assert a claim for attorneys’ fees
within its motion to dismiss, and the trial court erred in awarding fees.

CONCLUSION

¶11 The trial court’s order awarding attorneys’ fees to Chew-
Fisher is vacated and the case is remanded with instructions to enter an
order denying Chew-Fisher’s motion for fees.

¶12 Both parties request an award of attorneys’ fees and costs
incurred on appeal pursuant to A.R.S. § 12-341.01. Chew-Fisher is not the
prevailing party, and its request is denied. We award the Thommis their
reasonable attorneys’ fees and costs incurred on appeal upon compliance
with ARCAP 21(b).

AMY M. WOOD • Clerk of the Court
FILED: AA

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