Little Wing Ranch v. Carroll

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

LITTLE WING RANCH, LLC, an Arizona limited liability company,
Plaintiff/Appellee,

v.

STEVEN W. and DIANNA L. CARROLL, husband and wife; BRENT
ERDMANN and THOMAS FIELD, husband and husband; and JANET A.
CHRISP as trustee of the JANET A. CHRISP LIVING TRUST
dated September 6, 2011, Defendants/Appellants.

_________________________________

BRENT ERDMANN and THOMAS FIELD, husband and husband;
STEPHEN SAUNDERS as trustee of the STEPHEN LAWRENCE
SAUNDERS 1999 REVOCABLE TRUST DATED 05/06/99; STEVEN W.
CARROLL and DIANNA L. CARROLL, husband and wife; and JANET A.
CHRISP as trustee of the JANET A. CHRISP LIVING TRUST
dated September 6, 2011, Plaintiffs/Appellants,

v.

LITTLE WING RANCH, LLC, an Arizona limited liability company;
JEFFREY A. MCKENNA, ELIZABETH MCKENNA, husband and wife,
Defendants/Appellees.

No. 1 CA-CV 22-0320
FILED 5-23-2023

Appeal from the Superior Court in Coconino County
No. S0300CV202000348
No. S0300CV202000431
The Honorable Cathleen Brown Nichols, Judge
 VACATED AND REMANDED IN PART

COUNSEL

Koeller, Nebeker, Carlson & Haluck LLP, Phoenix
By J. Daniel Campbell
Counsel for Plaintiffs/Appellants

Conant Law Firm, PLC, Phoenix
By Paul A. Conant, Melissa A. Emmel
Counsel for Defendants/Appellees

MEMORANDUM DECISION

Judge Michael J. Brown delivered the decision of the Court, in which
Presiding Judge Paul J. McMurdie and Judge Michael S. Catlett joined.

B R O W N, Judge:

¶1 Steven and Dianna Carroll, Brent Erdmann, Thomas Field,
Stephen Saunders as trustee of the Stephen Lawrence Saunders 1999
Revocable Trust, and Janet Chrisp as trustee of the Janet A. Chrisp Living
Trust, (collectively “the Neighbors”), challenge the superior court’s denial
of their attorney fee applications stemming from consolidated litigation
against Little Wing Ranch, LLC, and its members, Jeffrey and Elizabeth
McKenna (collectively “Little Wing”). Because the court erred, we vacate
that portion of the court’s amended judgment and remand for further
proceedings on the Neighbors’ fee claim.

BACKGROUND

¶2 The parties owned neighboring parcels in the “Elk Tank Road
Area” in northern Arizona. Little Wing sued the Carrolls in July 2020,
alleging they had obstructed an access easement. The Neighbors sued Little
Wing two months later, alleging it was “operating a for profit commercial
guest ranch” in violation of the applicable covenants, conditions, and
restrictions (“CC&Rs”). Little Wing counterclaimed, seeking declaratory
relief and alleging abuse of process.

¶3 The Neighbors moved for summary judgment on their claim
that Little Wing had breached the CC&Rs by using its property as a
vacation rental. On Little Wing’s motion, the superior court consolidated

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the two cases and later issued a minute entry stating that it was granting
the Neighbors’ motion. The court also directed them to file a proposed form
of judgment.

¶4 The Neighbors did so and applied to recover attorneys’ fees
under paragraph 32 of the CC&Rs, which states that in a legal action filed
to enforce the CC&R’s, “the prevailing party in such action shall be entitled
to recover its costs and attorney’s fees.” The Neighbors supported their
application with a declaration from counsel that attached billing
statements, listed each attorneys’ billing rates, and opined that those rates
were reasonable. In the declaration, counsel stated she was “informed and
believe[d] that the clients have paid or have agreed to pay the . . . attorneys’
fees claimed herein.”

¶5 Over the next two months, the parties voluntarily dismissed
or withdrew all other pending claims and counterclaims. The Neighbors
then filed a supplemental fee application seeking additional fees. They
supported this application with a new declaration signed by a different
attorney who stated, as the first attorney declarant did, that he was
“informed and believe[d] that the clients have paid or have agreed to pay
the . . . attorneys’ fees claimed herein.”

¶6 On November 30, 2021, the superior court entered judgment
permanently enjoining Little Wing from using its property as a rental or
vacation rental. The court certified the judgment as final under Arizona
Rule of Civil Procedure (“Rule”) 54(c), stated that the Neighbors were “the
prevailing part[ies] as to” their complaint, and ruled that they were
“entitled to a Judgment for attorneys’ fees against [Little Wing].” But the
court did not enter a fee award; instead, it stated that “[f]ees and costs will
be awarded in a separate subsequent judgment.” The next day, the court
entered an order denying the Neighbors’ first and supplemental fee
applications, concluding that they did not disclose the terms of their fee
agreements as required by Rule 54(g)(4).

¶7 Several weeks later the Neighbors filed a second fee
application, citing the court’s findings that they were the prevailing parties
and were “entitled to awards of fees and costs.” The Neighbors supported
this application with a new counsel declaration in which counsel again
stated he was “informed and believe[d] that the clients have paid or have
agreed to pay the . . . attorneys’ fees claimed herein.” The Neighbors also
provided a redacted fee agreement between counsel and the Carrolls. Little
Wing opposed the second fee application on several grounds, including
that (1) it was duplicative of the earlier applications, (2) it was an untimely

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motion to alter or amend the judgment or for reconsideration, and (3) it still
did not disclose the terms of the relevant fee agreements. Little Wing also
contended the Neighbors were not the prevailing parties because the
parties had withdrawn or voluntarily dismissed nearly all their competing
claims.

¶8 The court denied the second fee application “for the reasons
stated in [Little Wing’s] Response.” The Neighbors filed a notice of appeal
challenging that ruling. We stayed the appeal to allow the superior court
to enter a proper final judgment. The court did so. In its July 2022 amended
judgment, the court repeated that the Neighbors were the prevailing parties
in the second case and were entitled to apply to recover attorneys’ fees. The
court again denied the Neighbors’ first and supplemental applications
based on non-compliance with Rule 54(g)(4) and denied the second
application “for the reasons stated in [Little Wing’s] Response.” We have
jurisdiction over the Neighbors’ appeal under A.R.S. § 12-2101(A)(1).

DISCUSSION

I. Compliance With Court Rules

¶9 The Neighbors argue paragraph 32 of the CC&Rs is
“mandatory” and thus obligated the superior court to award attorneys’
fees. We review de novo whether a party is entitled to recover fees.
Thompson v. Corry, 231 Ariz. 161, 163, ¶ 4 (App. 2012).

¶10 Generally, the superior court lacks the discretion to refuse to
award fees under a contractual provision. Chase Bank of Ariz. v. Acosta, 179
Ariz. 563, 575 (App. 1994); see also Heritage Heights Home Owners Ass’n v.
Esser, 115 Ariz. 330, 333–34 (App. 1977) (“Having found the restriction valid
and having required its enforcement, the trial court was obliged by the
contract to assess attorneys’ fees and costs in favor of the enforcing party.”).
But the existence of a contractual fee provision does not absolve parties of
their responsibility to comply with the applicable rules when requesting
fees. See Bocchino v. Fountain Shadows Homeowners Ass’n, 244 Ariz. 323, 326,
¶ 15 (App. 2018) (rejecting argument that fees could be assessed under a
contractual provision without “judicial approval”); McDowell Mountain
Ranch Cmty. Ass’n, Inc. v. Simons, 216 Ariz. 266, 270–71, ¶ 20 (App. 2007)
(allowing fee recovery under a contractual provision because the applicant
“submitted . . . fee applications consistent with the requirements”). We
therefore reject the Neighbors’ contention that the CC&Rs precluded the
court from considering whether their applications complied with Rule
54(g)(4).

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II. First and Supplemental Fee Applications

¶11 Under Rule 54(g)(4), the movant’s affidavit “must disclose the
terms of any fee agreement for the services for which the claim is made.”
Ariz. R. Civ. P. 54(g)(4). The word “must” means that courts should award
fees only if this requirement is met. See In re Restated Tr. of Crystal H. W.,
249 Ariz. 355, 358, ¶ 8 (App. 2020). That said, we construe procedural rules
liberally and reasonably to obviate delay and administer speedy justice.
Jobe v. King, 129 Ariz. 195, 198 (App. 1981); see also Ariz. R. Civ. P. 1.

¶12 As noted, the declarations supporting the Neighbors’ first and
supplemental fee applications stated that “the clients have paid or have
agreed to pay the . . . attorneys’ fees claimed herein.” This statement,
standing alone, does not disclose the terms of any applicable fee agreement.
The Neighbors contend, however, that they adequately disclosed those
terms elsewhere in the declarations, citing Magic Ranch Estates Homeowners
Association v. Huffman, No. 2 CA-CV 2018-0142, 2019 WL 6332422 (Ariz. Ct.
App. Nov. 22, 2019). In Magic Ranch, the defendant argued the plaintiff’s
failure to disclose the terms of its fee agreement left the superior court “to
guess and speculate as to what [fee] amounts relate to the issues of this case,
which are fraudulent,” and “who did the work.” Id. at *9, ¶ 41. We rejected
that argument because the supporting affidavit “included a description of
the fees as well as the work performed, and by whom.” Id.

¶13 Here, the supporting declarations disclosed which attorneys
worked on the case, their hourly rates, and what work was performed and
billed. See Barth v. Cochise County, 213 Ariz. 59, 64, ¶ 19 (App. 2006) (stating
that a fee affidavit “should include the hourly rate, the dates on which
services were provided, the names of the persons who performed the
services, what services were rendered, and the number of hours spent
performing each one”). Little Wing nonetheless contended:

Arguments an opponent would make, and adjustments a
court would make, if the fee agreement terms were not
shrouded in silence, are blocked by the nondisclosure. A fee
application opponent is unfairly prejudiced in responding,
and a reviewing court is left to guess or make assumptions,
on significant issues.

But Little Wing objected to more than three-quarters of the Neighbors’
initial fee application and nearly the entire supplemental application,
belying its contention that its ability to object was “blocked by the
nondisclosure.”

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¶14 Little Wing also contends it was entitled to know “with whom
the agreement to pay was made [and] who had made the payments.” But
it only vaguely contends, without citation to authority, that the failure to
provide this information raises “a material issue” that “bear[s] on a court’s
decision about whether to award fees” and “deprives the opponent of
grounds for objections.” Contrary to Little Wing’s contention, a fee award
need not “equal or relate to the attorney fees actually paid or contracted.”
A.R.S. § 12-341.01(B). Moreover, fee awards “mitigate[] the burden of the
expense of litigation by offsetting the amount due [to] the attorney,” not
amounts any particular clients paid. Sparks v. Republic Nat’l Life Ins. Co., 132
Ariz. 529, 545 (1982) (emphasis added). Little Wing does not show that it
suffered prejudice from not knowing which Neighbors paid the claimed
fees.

¶15 For these reasons, the superior court erred by denying the
Neighbors’ first and supplemental fee applications for noncompliance with
Rule 54(g)(4). See Jobe, 129 Ariz. at 198 (stating that the Rules of Civil
Procedure “were intended to abolish technicalities in order to secure a just
determination of every action.”).

III. Second Fee Application

¶16 The Neighbors’ second fee application sought to recover the
same fees as the first and supplemental applications plus approximately
$7,500 billed in August, September, and October 2021. We therefore
address it separately.

A. Invited Error

¶17 Little Wing contends the second fee application was the result
of invited error. The invited error doctrine bars a party who “deliberately
leads the court to take certain action” from “assign[ing] that action as error”
on appeal. Sunland Dairy LLC v. Milky Way Dairy LLC, 251 Ariz. 64, 70, ¶ 24
(App. 2021) (quotation omitted).

¶18 Little Wing cites the Neighbors’ inclusion of the statement
that “[f]ees and costs will be awarded in a separate subsequent judgment”
in their proposed forms of judgment, which the court included in its
November 2021 judgment. It then correctly points out that the Neighbors
cited this language as justification for filing the second fee application. The
Neighbors do not contend on appeal, however, that the court’s decision to
include this language in the November 2021 judgment was error. We
therefore decline to apply the invited error doctrine.

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B. Timeliness

¶19 Little Wing also contends the second fee application was an
untimely motion to alter or amend the November 2021 judgment. Under
Rule 59(d), parties must file a motion to alter or amend a judgment within
15 days after the entry of judgment. Ariz. R. Civ. P. 59(d). But the limitation
only applies to judgments and orders from which an appeal lies. Ariz. R.
Civ. P. 54(a); Jaynes v. McConnell, 238 Ariz. 211, 214, ¶ 8 (App. 2015).

¶20 The November 2021 judgment did not resolve the Neighbors’
fee claim. The court instead denied the first and supplemental applications
in a separate order entered the next day. We have already determined that
the order was not appealable. We therefore reject Little Wing’s contention
that the second fee application was an untimely motion to alter or amend
the November 2021 judgment.

C. Rule 54(g)(4) Objections

¶21 Little Wing also reasserts its Rule 54(g)(4) objections. Like the
first and supplemental applications, the Neighbors supported the second
application with billing statements, this time for the newly incurred
August–October 2021 fees, and a declaration setting forth the billing rates
for each attorney. The Neighbors also provided a redacted fee agreement
between their counsel and the Carrolls. The Neighbors also disclosed that
their counsel “billed . . . on a monthly basis and expected to be paid within
15 days of the date of the invoice.”

¶22 Little Wing contends the redacted fee agreement did not
establish who was obligated to pay the fees. This overlooks significant
record evidence suggesting the Carrolls paid the fees. First, the redacted
fee agreement states that the Carrolls had retained counsel and that counsel
would bill for their services. Second, the supporting declaration attached
“true and correct copies of the billing entries sent and paid,” most of which
identify the Carrolls as the clients. (Emphasis added.) The declaration also
included a local counsel invoice that indicates it was submitted to the
Carrolls. Third, the Neighbors acknowledged in their reply supporting the
second fee application that the Carrolls had “agreed to pay all the attorney’s
fees and costs” because they “had the wherewithal to pay to defend the
neighborhood.”

¶23 Little Wing also quotes the following passage from its
objections to the second fee application, contending it was “unfairly
prejudiced by the Neighbors’ ongoing non-compliance with Rule 54(g)(4)”:

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What language might the extensive redactions preclude us
and the court from seeing? Key language that would bear
directly on the central issues which must be determined in an
attorneys’ fee application setting. For example, did someone
else other than Steven and Dianna Carroll take on primary
responsibility to pay attorneys’ fees? Were the Carrolls only
required to make fee payments in the event that the other
party failed to pay, as a backup? . . . . Did the Carrolls find
someone else to pay the fees in this case for them? Is it possible
that the Carrolls paid no fees to attorney Campbell and his
law firm? Or that they only paid a very small amount of
attorneys’ fees to Campbell and his law firm, much less than
what the Court has been asked to award?

Little Wing speculates on appeal that the Carrolls’ realtor, or perhaps his or
her insurer, may have paid some or all of the claimed fees but cites no
evidence to support that contention. In any event, “the fact that fees may
ultimately be borne by third parties pursuant to an insurance or indemnity
agreement does not prevent the successful party from meeting the
requirements of A.R.S. § 12-341.01(B).” Wilcox v. Waldman, 154 Ariz. 532,
538 (App. 1987); see also Orfaly v. Tucson Symphony Soc’y, 209 Ariz. 260, 267,
¶ 27 (App. 2004) (“[T]hat some portions of appellees’ attorney fee expense
was covered by insurance does not preclude the fee awards to appellees or
otherwise establish any abuse of discretion in those awards.”).

D. Prevailing Party Determination

¶24 Citing the superior court’s statement that it denied the second
application “for the reasons stated in [Little Wing’s] Response,” Little Wing
reasserts its contention that the Neighbors were not the prevailing parties
in the superior court.

¶25 The July 2022 amended judgment states that the Neighbors
“are the prevailing part[ies]” in the case they filed. Little Wing contends
this finding is “not dispositive,” but we cannot interpret that judgment in a
way that would obviate it. See Title Ins. Co. of Minn. v. Acumen Trading Co.,
Inc., 121 Ariz. 525, 526 (1979) (“If possible, a construction will be adopted
that supports the judgment, rather than one that destroys it.”). Nor can we
say the court abused its discretion in determining the Neighbors had
prevailed, as they won the only claim that was not withdrawn or
voluntarily dismissed. See Maleki v. Desert Palms Pro. Props., L.L.C., 222 Ariz.
327, 334, ¶ 35 (App. 2009) (prevailing party determination “will not be
disturbed on appeal if any reasonable basis exists for it.”). For these

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reasons, we conclude the superior court erred in denying the second fee
application.

IV. Attorneys’ Fees and Costs on Appeal

¶26 Little Wing requests its attorneys’ fees incurred in this appeal
under section 32 of the CC&Rs and A.R.S. § 12-341.01(A). Because Little
Wing has not prevailed on appeal, we deny its request.

¶27 The Neighbors request attorneys’ fees under section 32 of the
CC&Rs. We grant their request contingent upon compliance with ARCAP
21, although we reserve the discretion to limit the award to a reasonable
amount. Geller v. Lesk, 230 Ariz. 624, 627, ¶ 10 (App. 2012). The Neighbors
are also awarded taxable costs, subject to compliance with ARCAP 21.

CONCLUSION

¶28 We vacate the portion of the July 2022 amended judgment
denying the Neighbors’ applications for attorneys’ fees and direct the
superior court to reconsider the applications and determine the amount of
fees to be awarded to the Neighbors. We express no opinion on whether
the amounts claimed are reasonable.

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

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