Opinion
No. 1 CA-CV 14-0540
12-08-2015
UNITED PHOENIX FIREFIGHTERS ASSOCIATION, LOCAL 493; PETE GORRAIZ, JR., Plaintiffs/Appellees, v. CITY OF PHOENIX, Defendant/Appellant.
COUNSEL Coppersmith Brockelman, PLC, Phoenix By L. Keith Beauchamp, Roopali H. Desai, Shelley Tolman Counsel for Plaintiffs/Appellees Sherman & Howard, LLC, Phoenix By John Alan Doran, Lori Wright Keffer, Matthew A. Hesketh Counsel for Defendant/Appellant
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 UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE. Appeal from the Superior Court in Maricopa County
No. CV2014-005225
The Honorable Sally Schneider Duncan, Judge
AFFIRMED
COUNSEL Coppersmith Brockelman, PLC, Phoenix
By L. Keith Beauchamp, Roopali H. Desai, Shelley Tolman
Counsel for Plaintiffs/Appellees Sherman & Howard, LLC, Phoenix
By John Alan Doran, Lori Wright Keffer, Matthew A. Hesketh
Counsel for Defendant/Appellant
MEMORANDUM DECISION
Presiding Judge Randall M. Howe delivered the decision of the Court, in which Judge Jon W. Thompson and Judge Lawrence F. Winthrop joined. HOWE, Judge:
¶1 The City of Phoenix ("City") appeals the trial court's order awarding United Phoenix Firefighters Association, Local 493; and Pete Gorraiz, Jr. (collectively, "Local 493") their taxable costs and attorneys' fees. For the following reasons, we affirm.
FACTS AND PROCEDURAL HISTORY
¶2 Local 493 is a labor organization that represents professional firefighters. Every other year, the City and Local 493 negotiate a new memorandum of understanding ("MOU"), which governs the firefighters' wages, hours, and other conditions of employment. See Phoenix, Ariz., Code art. XVII, §§ 2-209, -210(11), -210(12), -214, -215, -218 (1976). In April 2012, Local 493 and the City approved an MOU effective July 2012 to July 2014. The MOU provided for "release time," which is time firefighters are released from their duties for the City to allow them to perform union activities.
¶3 In January 2014, the City and the Phoenix Law Enforcement Association ("PLEA"), another labor organization representing police officers, were litigating whether the use of release time in their MOU violated the Gift Clause in the Arizona Constitution. The trial court in that case enjoined the City and PLEA from entering into future MOUs with release time, unless, among other requirements, the MOU contained mandatory language obligating PLEA to perform specific duties in exchange for the release time (the "Cheatham order"). In that order, the trial court stated that although the City had MOUs with other labor unions and those "MOUs [were] not before [it], the law regarding City-funded release time applies to these unions as well as PLEA. The City should review its MOUs with these unions to ensure that these agreements [were] consistent with [its] rulings here."
For the details and disposition of that case, see Cheatham v. Diciccio, 238 Ariz. 69, 356 P.3d 814 (App. 2015). --------
¶4 Consequently, the City notified Local 493 and other labor associations it had MOUs with that it was implementing changes to their MOUs to ensure compliance with the Cheatham order and noted that the changes were "required as a result of [that] order." The changes included returning to their departments all employees on full-time release and precluding the associations from using any release time. Local 493 responded that the City was not authorized to alter any terms of their MOU because the Cheatham order (1) did not address the release time provisions in its MOU and (2) did not bind Local 493 because it was not a party in that litigation. Local 493 noted that the City's action would constitute a breach of the parties' agreement and a breach of the City's implied duty of good faith and fair dealing.
¶5 Because the City intended to implement the changes regardless of Local 493's objection, Local 493 moved for a temporary restraining order ("TRO"). The trial court granted the motion. Local 493 then filed suit, requesting (1) a continuation of the TRO and preliminary injunction to enjoin the City from unilaterally changing the release time provisions contained in their MOU; (2) a declaratory judgment stating that the City's changes would violate the MOU and that the Cheatham order did not apply to Local 493; and (3) taxable costs and attorneys' fees incurred as a result of the litigation pursuant to A.R.S. §§ 12-341 and 12-341.01.
¶6 The parties unsuccessfully engaged in mediation and negotiation. The City subsequently moved to dismiss the complaint, arguing that Local 493 was barred from bringing the suit because it had failed to exhaust its mandated remedies as provided in the MOU, and in the alternative, requesting that the trial court stay the proceedings until Local 493 exhausted its contractual remedies.
¶7 The trial court then held a hearing to determine the scope of a preliminary injunction hearing. After oral argument, the court found that the Cheatham order did not apply to or bind non-parties, including Local 493, and granted declaratory relief to Local 493 that the Cheatham order did not apply to it. The court noted that beyond that order for declaratory relief, it had nothing more to do. The court declined to address the breach of contract issues. It explained that the City had not made the changes, and so it would not "delve into action on an advisory basis." The court thus also found that the City's motion to dismiss was moot, denied Local 493's claim for a preliminary injunction, and vacated the hearing for a preliminary injunction. Consequently, the City made no changes to the MOU with Local 493 and the contract expired without modifications.
¶8 The City moved for attorneys' fees and taxable costs pursuant to A.R.S. §§ 12-332, -341, and -341.01, because it was the successful party. The City argued that it prevailed because the trial court's ruling "dissolved the temporary injunction and returned the parties back to the status quo." Local 493 objected and also moved for attorneys' fees and taxable costs pursuant to A.R.S. §§ 12-341 and -341.01. Local 493 argued that it was the successful party because it sued to prevent the City from changing the parties' MOU before the contract term expired and Local 493 did so as a result of the TRO and declaratory relief that the Cheatham order did not apply or bind it.
¶9 The trial court held a hearing on the motion. The City argued that Local 493 was not the successful party because the parties ended up at the status quo. Specifically, the City contended that the TRO did not prevent it from unilaterally changing the release time provisions in the MOU and that the declaratory relief order did not state that the City's changes would violate the MOU. The City also stated that it agreed with Local 493 from the beginning of the suit that the Cheatham order did not apply to Local 493.
¶10 The trial court found that Local 493 was the successful party. The court noted that the TRO and declaratory relief "ke[pt] things at the status quo so that it would be consistent with the contract that the City had with [Local 493]." The court recognized that the City argued that the Cheatham order compelled it to review its MOU with Local 493. The court explained, however, that even though the City disagreed with the Cheatham order and agreed with the parties in this litigation that the order did not apply to Local 493, the City nonetheless proposed the changes to the MOU and unilaterally applied the order to Local 493. Moreover, the City precipitated the lawsuit by announcing the changes to the contract before the contract term expired. Because Local 493 accomplished its goal of preventing the City from implementing the changes, Local 493 prevailed. Consequently, the court granted Local 493's application for attorneys' fees and taxable costs. The City timely appealed.
DISCUSSION
¶11 The City argues that the trial court abused its discretion in awarding Local 493 attorneys' fees pursuant to A.R.S. § 12-341.01 because Local 493's claim did not arise out of a contract, Local 493 was not the successful party, no reasonable basis supports the award of fees, and the fees were unreasonable. We review the trial court's ruling for an abuse of discretion and will affirm unless the evidence, which we view in the light most favorable to sustaining the court's decision, does not support the ruling. Merkens v. Fed. Ins. Co., 237 Ariz. 274, 279 ¶ 22, 349 P.3d 1111, 1116 (App. 2015). But we review de novo the application of A.R.S. § 12-341.01. Assyia v. State Farm Mut. Auto. Ins. Co., 229 Ariz. 216, 220 ¶ 10, 273 P.3d 668, 672 (App. 2012). Because Local 493's claim arose out of the MOU between the parties and a reasonable basis supports the trial court's finding that Local 493 was the successful party and its award of fees, the court did not abuse its discretion in awarding Local 493 fees pursuant to A.R.S. § 12-341.01.
1. Attorneys' Fees at Trial
1a. Whether Local 493's Claim Arose Out of Contract
¶12 The City first argues that the trial court erred by awarding Local 493 fees under A.R.S. § 12-341.01 because Local 493's claim did not arise out of a contract. A.R.S. § 12-341.01 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." The meaning of "arises out of a contract" is broad for the purposes of this statute. Rudinsky v. Harris, 231 Ariz. 95, 101 ¶ 27, 290 P.3d 1218, 1224 (App. 2012). For example, an action is considered to have arisen out of contract when the plaintiff asserted a contract, but the defendant successfully proved that no contract existed. See id. Moreover, a trial court may award fees even on contract claims that are interwoven with tort claims. See Sparks v. Republic Nat. Life Ins. Co., 132 Ariz. 529, 543, 647 P.2d 1127, 1141 (1982). The test to determine if an action arises out of a contract is whether the plaintiff would have a claim "even in the absence of a contract." ML Servicing Co., Inc. v. Coles, 235 Ariz. 562, 570 ¶ 31, 334 P.3d 745, 753 (App. 2014). In other words, an action "arises out of contract if it could not exist but for the contract." Kennedy v. Linda Brock Auto. Plaza, Inc., 175 Ariz. 323, 325, 856 P.2d 1201, 1203 (App. 1993).
¶13 Here, Local 493's claim arose out of a contract—the MOU with the City—and its claim would not have existed but for the MOU. For over thirty years, the City and Local 493 entered into MOUs—contracts that governed the firefighters' condition of employment. After the City received the Cheatham order to "review its MOUs with [other] unions," the City attempted to implement changes unilaterally to its MOU with Local 493. Local 493 thereafter objected and told the City that its action would constitute a breach of the parties' agreement. The City persisted, however, and as a result, Local 493 moved for a TRO and declaratory relief to protect its contractual rights under the MOU. Consequently, Local 493's claim could not have existed "but for" the MOU with the City.
¶14 The City countered more specifically at oral argument that because the trial court never reached the contract issues, the court's ruling was purely procedural, and therefore, Local 493's claim did not arise out of contract. But the City cited no authority—nor are we able to find any—that provides the rule the City proposes. Instead, the case law expressly provides that the test to determine whether an action arises out of contract is simply whether the plaintiff's claim would have existed but for the contract. See ML Servicing, 235 Ariz. at 570 ¶ 31, 334 P.3d at 753; Kennedy, 175 Ariz. at 325, 856 P.2d at 1203. Further, to the extent that the City relies on cases in which this Court denied an attorneys' fees request because a decision on the merits had not been made, those cases specifically involved situations in which no party had yet been successful, so the award was premature. See, e.g., U.S. Insulation, Inc. v. Hilro Const. Co., Inc., 146 Ariz. 250, 259, 705 P.2d 490, 499 (App. 1985) ("[W]e interpret A.R.S. § 12-341.01 to mean that the ultimate prevailing party in an underlying action arising out of contract may be awarded attorney's fees. No decision on the merits has been made in this case and, therefore, we make no ruling on the attorneys' fees issue at this time."); Austin v. Austin, -- Ariz. -- ¶ 34, 348 P.3d 897, 906-07 (App. 2015) (same); Braillard v. Maricopa Cty., 224 Ariz. 481, 499 ¶ 60 n.20, 232 P.3d 1263, 1281 n.20 (App. 2010) (same); Esmark, Inc. v. McKee, 118 Ariz. 511, 514, 578 P.2d 190, 193 (App. 1978) (same). Here, in contrast, Local 493 was the successful party, and therefore, the trial court's award of fees was appropriate. See infra at ¶¶ 16-18.
¶15 The City further supports its argument by contending that Local 493's claim arose because the City was compelled to follow the Cheatham order with respect to Local 493, not because of a dispute between the parties regarding the MOU. But the City's distinction is one without a difference. Because of the City's attempt to comply with the Cheatham order—an attempt which was overly broad given that the order said "review"—it tried to unilaterally change the MOU with Local 493. Local 493 accordingly moved to protect its rights under its contract with the City. Local 493's claim could not have existed but for the MOU. Moreover, the City apparently believed that the matter did arise out of contract because it moved for attorneys' fees in this Court and the trial court on this very basis. Consequently, the trial court did not err by applying A.R.S. § 12-341.01 because Local 493's claim arose out of contract.
1b. Whether Local 493 was the Successful Party
¶16 The City next contends that the trial court abused its discretion by awarding fees to Local 493 because Local 493 was not the successful party. "Determining who is the successful party for purposes of awarding attorneys' fees [under A.R.S. § 12-341.01] is within the sole discretion of the trial court, and will not be disturbed on appeal if any reasonable basis exists for it." Berry v. 352 E. Va., L.L.C., 228 Ariz. 9, 13-14 ¶ 22, 261 P.3d 784, 788-89 (App. 2011). We defer to the trial court because that court is better able to evaluate the parties' positions during the litigation and to determine which party has prevailed. Id. at 13 ¶ 22, 261 P.3d at 788.
¶17 Here, the trial court did not abuse its discretion. The record shows that Local 493 clearly achieved the result sought in litigation by obtaining the TRO and declaratory relief. Local 493 brought the lawsuit to prevent the City from unilaterally implementing changes to their MOU before the contract expired. To this end, the trial court granted the TRO, which temporarily prevented the City from implementing changes, and then granted Local 493 declaratory relief, which provided that the Cheatham order did not apply to Local 493 and therefore further prevented the City from implementing changes. Ultimately, the contract expired without the City's proposed changes.
¶18 The trial court found that because Local 493's purpose for bringing the suit was served, it was the successful party and accordingly awarded fees to Local 493. Although Local 493 did not receive all the relief it sought in its complaint, this does not preclude it from being the successful party. See Berry, 228 Ariz. at 14 ¶ 24, 261 P.3d at 789 ("Partial success does not preclude a party from prevailing and receiving a discretionary award of attorneys' fees."); Sanborn v. Brooker & Wake Prop. Mgmt., Inc., 178 Ariz. 425, 430, 874 P.2d 982, 987 (App. 1994) (providing that even if a party does not recover the full measure of relief it requested does not mean that it is not the successful party). Consequently, because a reasonable basis supports the trial court's determination that Local 493 was the successful party and its decision to award Local 493 fees, the court did not abuse its discretion.
1c. Whether a Reasonable Basis Exists for the Award
¶19 The City also argues that the trial court abused its discretion in awarding fees because it did not consider the factors our supreme court has "dictate[d] that courts utilize . . . when deciding whether to award attorneys' fees" in Associated Indemnity Corp. v. Warner, 143 Ariz. 567, 570, 694 P.3d 1181, 1184 (1985). We reject this argument because "[a]s long as the record reflects a reasonable basis for the award, we will uphold it." Orfaly v. Tucson Symphony Soc'y, 209 Ariz. 260, 267 ¶ 25, 99 P.3d 1030, 1037 (App. 2004). A trial court has broad discretion to award fees to the successful party in a contested contract action under A.R.S. § 12-341.01(A). Warner, 143 Ariz. at 570, 694 P.3d at 1184.
¶20 In Warner, our supreme court provided factors that are "useful to assist the trial judge in determining whether attorneys' fees should be granted," including but not limited to the merits of the unsuccessful party's claim, whether awarding fees would cause the unsuccessful party extreme hardship, and the novelty of the legal question presented. Id. But consideration of these factors is merely permissive, Merkens, 237 Ariz. at 279 ¶ 23, 349 P.3d at 1116, and the trial court need not make findings on the record, Hawk v. PC Village Ass'n, Inc., 233 Ariz. 94, 100 ¶ 21, 309 P.3d 918, 924 (App. 2013). In reviewing the exercise of the trial court's discretion, we "cannot substitute our discretion for that of the trial judge," but rather consider "whether a judicial mind, in view of the law and circumstance, could have made the ruling without exceeding the bounds of reason." Warner, 143 Ariz. at 571, 694 P.2d at 1185. Here, the trial court's fees award was clear and within the bounds of reason: Local 493 was the successful party because it accomplished the result sought in the litigation.
1d. Whether the Award Amount was Reasonable
¶21 The City further contends that the fee application was based on inadequate time records that contained overstaffing and block-billing, fees incurred in a separate legal proceeding, and time attributed to non-legal work. We reject this argument because Local 493's fee application was sufficient to allow the trial court to assess the reasonableness of the hours and tasks claimed. In a fee application, "counsel should indicate the type of legal service provided, the date the service was provided, the attorney providing the service . . . , and the time spent in providing the service." Schweiger v. China Doll Rest., Inc., 138 Ariz. 183, 188, 673 P.2d 927, 932 (App. 1983). For the court to make a determination that the hours claimed are justified, the fee application must merely contain sufficient detail to enable the court to assess the reasonableness of the time incurred. Orfaly, 209 Ariz. at 266 ¶ 23, 99 P.3d at 1036.
¶22 Here, the trial court did not abuse its discretion because Local 493's fee application complied with China Doll and contained sufficient detail to support a reasonableness finding. The fee application included the date the service was rendered, the attorney providing the service, the time spent and amount billed, and a description of the legal service provided. Moreover, in response to the City's argument about the inadequate time records, Local 493 sufficiently explained the number of attorneys involved and alleged block-billing, work incurred in a separate legal proceeding, and non-legal work in its fee application before the trial court as it was considering the conflicting applications, responses, and oral argument. Consequently, because a reasonable basis supports the trial court's finding that Local 493 was the successful party and its award of fees, the court did not abuse its discretion.
2. Attorneys' Fees on Appeal
¶23 The City requests attorneys' fees incurred on appeal pursuant to A.R.S. § 12-341.01, but because the City is not the successful party, we deny its request. Local 493 also requests attorneys' fees incurred on appeal pursuant to A.R.S. § 12-341.01. Because Local 493 is the successful party, we grant its request upon compliance with Arizona Rule of Civil Appellate Procedure 21.
CONCLUSION
¶24 For the foregoing reasons, we affirm.