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Medical Protective Co. v. Pang

United States District Court, D. Arizona

March 19, 2014

Medical Protective Company, Plaintiff,
v.
Herman Pang, et al., Defendants

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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For Medical Protective Company, a foreign corporation, Plaintiff: Steven Plitt, LEAD ATTORNEY, John Kristian Wittwer, Joshua D Rogers, Kunz Plitt Hyland & Demlong PC, Phoenix, AZ.

For Herman Pang, M.D., Defendant: Timothy G Kasparek, LEAD ATTORNEY, Timothy G Kasparek PLLC, Goodyear, AZ.

For Lisa LaVoie, Barbara Villa, Movants: Paul Sullivan Gerding, Sr., LEAD ATTORNEY, Kutak Rock LLP, Scottsdale, AZ.

For James Michael Low, Movant: Christy Chism Brown, Chism Brown Law, Phoenix, AZ.

For Medical Protective Company, a foreign corporation, Counter Defendant: John Kristian Wittwer, Joshua D Rogers, Steven Plitt, Kunz Plitt Hyland & Demlong PC, Phoenix, AZ.

OPINION

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ORDER

James A. Teilborg, Senior United States District Judge.

Pending before the Court is Defendant Herman Pang's motion for attorneys' fees (Doc. 329), filed pursuant to the Ninth Circuit Court of Appeals mandate (Doc. 336) (opinion published at Med. Protective Co. v. Pang, 740 F.3d 1279, 1284 (9th Cir. 2013)).

I. BACKGROUND

The Ninth Circuit has succinctly summarized the factual and procedural background underlying this claim:

Pang bought medical malpractice insurance from the Medical Protective Company (" Medical Protective" ). In June 2002, Pang applied for a substantial increase in his malpractice coverage, and disclaimed that he had knowledge of any claims or potential claims against him. Medical Protective approved the coverage increase on July 3, 2002. On July 25, 2002, Pang received notice that a patient, Kymberli Williamson, was suing him for malpractice in Arizona state court (the " Williamson suit" ).
On September 21, 2005, Medical Protective filed this action in the District of Arizona seeking rescission of the coverage increase on the ground that Pang allegedly new of, but failed to disclose, Williamson's pending malpractice claim when he applied for the increase. Pang filed a counterclaim against Medical Protective for bad faith. Both Medical Protective and Pang moved for summary judgment, and the district court granted each party's motion in part. The court identified six unresolved issues--relating to both Medical Protective's rescission claim and Pang's counterclaim--that remained for trial.
Before the trial in the federal action, Pang obtained a favorable jury verdict in the Williamson suit. Williamson then appealed the verdict to the Arizona Court of Appeals. On March 25, 2008, while Williamson's appeal was pending, Pang and Medical Protective alerted the district court that they had reached a settlement in their coverage

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dispute. According to the terms of the settlement, both Medical Protective's rescission claim and Pang's bad faith counterclaim would be dismissed without prejudice. Depending on the outcome of Williamson's appeal, the parties were permitted either to reopen the action or to dismiss it with prejudice.
At the parties request, the district court entered an order on March 26, 2008, dismissing both claims without prejudice (the " March 26 Order" ). The March 26 Order specified that, no later than thirty days after the Arizona Court of Appeals issued a mandate in the Williamson suit,
one of the parties herein shall file a motion in this action requesting: (1) that the Court enter a final order dismissing this action with prejudice; or (2) requesting that this action be re-opened for final pre-trial conference and trial; or (3) requesting that the non- final order of dismissal without prejudice and the Court's jurisdiction continue until after re-trial of the Williamson case and termination of all appeals therefrom; or (4) such other orders as may be appropriate.
If neither party filed such a motion, the March 26 Order would " automatically become a self-executing final order of dismissal with prejudice thirty-one (31) days after the filing of such mandate."
Williamson eventually succeeded on her appeal. The Arizona Court of Appeals overturned the jury verdict in favor of Pang and remanded the case for a new trial.[1] The Arizona Supreme Court subsequently denied Pang's petition for review. As a result, on February 25, 2010, the Arizona Court of Appeals issued its mandate in the Williamson suit.
Neither Pang nor Medical Protective moved to re-open the federal action within thirty days after the issuance of the mandate. As a consequence, the March 26 Order became final according to its terms, and the action was dismissed with prejudice.
The parties filed four post-judgment motions following the final order of dismissal. First, Pang moved for $126,590.93 in attorney's fees pursuant to Section 12-341.01, a statute granting courts discretion to award attorney's fees to the " successful party" in suits arising from contract. The district court denied Pang's fee motion, holding that there was " no 'successful party' within the meaning of Section 12-341.01" because the court had " never resolved the merits of either party's claims." Med. Protective Co. v. Pang, 271 F.R.D. 624, 628 (D. Ariz. 2010). The court determined that the case had been dismissed with prejudice based on a voluntary settlement agreement, and held that " [s]uch a result does not produce a 'successful party' within the meaning of Section 12-341.01." Id.
Second, Pang sought $9,000.76 in costs. After the Clerk of the Court refused to award costs because no final judgment had been issued in the case, the district court denied Pang's motion to " revise" the Clerk's denial of its Bill of Costs, reasoning that Local Rule 54.1(d) governed Pang's request, and that provision made costs unavailable in cases terminated by voluntary settlement. Alternatively, the Court denied Pang's request for costs for the same reasons that it denied Pang's request for fees.
Third, one week after Pang filed his first fee motion, Medical Protective moved to amend the judgment under

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Federal Rule of Civil Procedure 59(e) or to vacate the judgment under Federal Rule of Civil Procedure 60(b). The district court denied Medical Protective's motion. Id. at 627, 628.
Fourth, after the district court denied Medical Protective's motion, Pang filed a second motion for attorney's fees--this time seeking compensation for legal expenses incurred in opposing Medical Protective's post-judgment motion to set aside the March 26 Order. Pang argued that, as the successful party on the post-judgment motion, he was entitled to attorney's fees pursuant to Section 12-341.01. The district court denied Pang's second motion because it did not " trigger[] a new action arising out of contract" ; consequently, the court's prior holding that Pang was not the successful party also barred Pang from recovering attorney's fees on his second fee motion. Med. Protective Co. v. Pang [" Pang I " ], 2011 WL 3903096, at *4 (D. Ariz. 2011).
Pang timely appealed.

Med. Protective Co. v. Pang (" Pang II " ), 740 F.3d 1279, 1280-82 (9th Cir. 2013); see Pang I, previous orders of the Court. (Docs. 305, 321).

The Ninth Circuit affirmed the Court's denial of Pang's motion for costs, but reversed the Court's denial of Pang's Motion for attorneys' fees. Pang II, 740 F.3d at 1284. Specifically, the Ninth Circuit held that the Court did not apply the correct legal standard in determining the " successful party" under Ariz. Rev. Stat. § 12-341.01. Id. at 1280. On remand, the Court must determine " (1) whether Pang was the 'successful party' as defined bye Arizona law, and (2) if so, whether the district court should exercise its discretion to award attorneys' fees." Id.

II. LEGAL STANDARD

Rule 54(d) of the Federal Rules of Civil Procedure provides a procedural mechanism for moving for attorneys' fees due under state law. See Fed.R.Civ.P. 54(d)(2)(B)(ii). Arizona Revised Statute § 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." Ariz. Rev. Stat. § 12-341.01(A) (emphasis added). Following Arizona law, the Court must decide whether there is a " successful party." If the Court finds that a party is the " successful party" as envisioned in the statute, then the Court exercises its discretion on whether to award reasonable attorneys' fees. See Associated Indem. Corp. v. Warner, 143 Ariz. 567, 694 P.2d 1181, 1184 (Ariz. 1985) (in banc).

A. " Successful" Party

The trial court has substantial discretion to determine who is a successful party. Fulton Homes Corp. v. BBP Concrete, 214 Ariz. 566, 155 P.3d 1090, 1096 (Ariz. Ct. App. 2007) (citing Pioneer Roofing Co. v. Mardian Constr. Co., 152 Ariz. 455, 733 P.2d 652, 664 (Ariz. Ct. App. 1986)). " The decision as to who is the successful party for purposes of awarding attorneys' fees is within the sole discretion of the trial court, and will not be disturbed on appeal if any reasonable basis exists for it." Maleki v. Desert Palms Prof'l Properties, L.L.C., 222 Ariz. 327, 214 P.3d 415, 422 (Ariz. Ct. App. 2009) (quoting Sanborn v. Brooker & Wake Prop. Mgmt., Inc., 178 Ariz. 425, 874 P.2d 982, 987 (Ariz. Ct. App. 1994); accord Hale v. Amphitheater Sch. Dist. No. 10, 192 Ariz. 111, 961 P.2d 1059, 1065 (Ariz. Ct. App. 1998).

" [S]uccessful parties" are " not limited to those who have a favorable final judgment at the conclusion of the" action. Wagenseller v. Scottsdale Mem'l Hosp., 147 Ariz. 370, 710 P.2d 1025, 1048 (Ariz. 1985) (in banc), superseded by statute on other

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grounds, Ariz. Rev. Stat. § 12-341.01. As such, " [a]n adjudication on the merits is not a prerequisite to recovering attorneys' fees under [§ 12-341.01]." Fulton Homes, 155 P.3d at 1096.

B. Discretion to Award Attorneys' Fees

If the Court finds that a party is the successful party, " there is no presumption that a successful party should be awarded attorney fees under § 12-341.01." Motzer v. Escalante, 228 Ariz. 295, 265 P.3d 1094, 1095 (Ariz. Ct. App. 2011) (citing Warner, 694 P.2d at 1183).

Additionally, when a case involves several claims based upon different facts or legal theories, the court may decline to award fees " for those unsuccessful separate and distinct claims." Schweiger v. China Doll Rest., Inc., 138 ...


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