United States District Court, D. Arizona
G. CAMPBELL, UNITED STATES DISTRICT JUDGE
Christine Arnold asks the Court to award attorneys' fees
and costs against Defendants Standard Pacific of Arizona,
Inc. and HSP Arizona, Inc. pursuant to Federal Rule of Civil
Procedure 54(d) and Local Rule 54.2(b). Doc. 31. The motion
has been fully briefed (Docs. 31, 32, 33, 36), and neither
party has requested oral argument. For the reasons that
follow, the Court will grant Plaintiff's motion in part.
purchased a single-family home in Avondale, Arizona, entering
into a purchase contract with Defendant Standard Pacific of
Arizona, Inc. Doc. 25 at 18. The purchase contract and
addenda provided that any disputes, claims, or controversies
relating to the contract would be settled by arbitration,
which in turn would be governed by the procedures set forth
in the contract's limited warranty. Doc. 20-2 at 9.
According to this warranty, Defendants contracted with an
entity known as Professional Warranty Service Corporation
(“PWC”), and PWC alone would select the service
that would arbitrate any potential claims. Doc. 25. The
contract also contained a fallback provision that would take
effect if the arbitration provision was determined
unenforceable. Id. at 26. The fallback provision
stated that any disputes between the parties would be
submitted to the American Arbitration Association
August 2015, Plaintiff filed a demand for arbitration with
the AAA, alleging construction defects in her home. Doc. 16,
¶ 20. Defendants filed a motion to dismiss, alleging
that Plaintiff was not entitled to proceed under the fallback
provision because the warranty arbitration provision had not
been found invalid. Id., ¶ 21. Jeffrey S.
Cates, the arbitrator appointed by the AAA, granted the
motion and stayed the arbitration. Doc. 20-6 at 3. Plaintiff
then filed a complaint with this Court seeking declaratory
relief concerning the validity and enforceability of the
warranty arbitration provision. Doc. 1. The Court granted
summary judgment in favor of Plaintiff and found that the
provision was unenforceable as a matter of law. Doc. 29.
seeks an award of attorneys' fees in the amount of $28,
265.35, as well as $466.65 in taxable costs. Doc. 33 at 9.
Defendants argue that Plaintiff is not entitled to fees and
costs and, even if she were, the requested award is not
reasonable. Doc. 32.
the parties agree that the Federal Arbitration Act
(“FAA”) governs arbitration proceedings between
them, they disagree about whether the FAA prohibits an award
of attorneys' fees in this case. Doc. 32 at 3; Doc. 33 at
4. Plaintiff contends that “the contractual rights of
the parties for the underlying contracts are subject to
Arizona law” and she “seeks attorneys' fees
directly related to her action in district court to enforce
her contractual right to fair arbitration.”
Id. at 3. Because she is “not seeking costs
associated with the actual arbitration, ” she contends,
the FAA does not apply. Id. at 4. Defendants
disagree, and argue that “Arizona's fee shifting
statute is not applicable here” because “the FAA
preempts inconsistent or contrary state law. . . [and
i]nterpretive case law makes clear that the FAA does not
provide for an award of attorneys' fees.” Doc. 32
underlying dispute between the parties was governed by state
law. According to the FAA, an arbitration provision
“shall be valid, irrevocable, and enforceable, save
upon such grounds as exist at law or in equity for the
revocation of any contract.” 9 U.S.C. § 2. The
Supreme Court has held that “generally applicable
contract defenses, such as fraud, duress, or
unconscionability, may be applied to invalidate arbitration
agreements without contravening § 2.”
Doctor's Associates, Inc. v. Casarotto, 517 U.S.
681, 687 (1996). As a result, “state law, whether of
legislative or judicial origin, is applicable [to an
agreement to arbitrate] if that law arose to govern
issues concerning the validity, revocability, and
enforceability of contracts generally.” Perry v.
Thomas, 482 U.S. 483, 492 n.9 (1987) (emphasis in
original). Arizona unconscionability law applies to contracts
broadly and is not targeted at arbitration agreements.
AT&T Mobility LLC v. Concepcion, 563 U.S. 333,
339 (2011) (citing Doctor's Associates, 517 U.S.
at 687). The Ninth Circuit agrees that “state law is
not entirely displaced from federal arbitration
analysis.” Ticknor v. Choice Hotels Int'l,
Inc., 265 F.3d 931, 936-37 (9th Cir. 2001).
cite Clausen v. Watlow Elec. Mfg. Co., 242 F.Supp.2d
877 (D. Or. 2002), for the proposition that although state
law principles apply to the validity and enforceability of a
contract, “whether and how to apply those defenses is a
matter of federal law.” Doc. 32 at 3 (also referring to
Clausen for the conclusion that the “scope and
enforcement of arbitration agreement is a matter of federal
substantive law”). The Clausen court
determined whether the arbitration provision at issue bound
the plaintiff signatory in his individual capacity or solely
as a representative of his corporation. 242 F.Supp.2d at 883.
The issue before the court was not the enforceability or
validity of the arbitration provision, but its meaning and
scope. The court made clear that the “FAA . . . does
not preempt state law regarding the validity, revocability
and enforceability of contracts generally. Thus, to resolve
the issue whether the parties entered into a valid and
enforceable written agreement to arbitrate, the court must
apply general, state-law principles of contract
interpretation.” Id. at 882 (internal
quotation marks and citation omitted). Defendants make no
effort to explain how Plaintiff's claim, like the claim
in Clausen, involved the scope of the parties'
agreement. It involved the enforceability of the warranty
arbitration provision. Consequently, the Court will apply
also argue that Arizona law providing for the award of
attorneys' fees is inconsistent with the FAA, which does
not provide such awards. Doc. 32 at 3. Defendants cite to a
decision by the District Court for the District of Hawaii,
which found that “[a]ttorneys' fees are not
available under the Federal Arbitration Act.”
Metzler Contracting Co. LLC v. Stephens, 774
F.Supp.2d 1073, 1089 (D. Haw. 2011). But the petition in
Metzler was seeking confirmation of an arbitration
award and requested attorneys' fees related to such
efforts. In concluding that the petitioner could not recover
attorneys' fees under Hawaii law, the court noted that
“the Federal Arbitration Act governs the Court's
evaluation of both [petitioner's] motion to confirm and
the [respondent's] petition to vacate.”
Id. at 1089. Plaintiff in this case did not seek
confirmation of an arbitration award. She asserted the
invalidity of the warranty arbitration provision, and her
claim was governed by Arizona law, not the FAA.
Defendants argue that the parties' “clearly stated
intent was for there to be no fee shifting with respect to
the resolution of any disputed issues.” Doc. 32 at 9.
But the contract provisions cited by Defendants specifically
provide that each party will bear its own costs and fees for
arbitration under the terms of the contract. Doc. 31
at 4 n.3. This case was not an arbitration, but a dispute
concerning the enforceability of a contract provision that
was governed by Arizona law.
law provides that, “[i]n any contested action arising
out of a contract, express or implied, the court may award
the successful party reasonable attorneys' fees.”
A.R.S. § 12-341.01(A). An award of attorney's fees
under this statute is discretionary with the trial court.
Wilcox v. Waldman, 744 P.2d 444, 450 (Ariz.Ct.App.
1987). Arizona law similarly allows a successful party in a
civil action to recover costs. A.R.S. §§ 12-341,
12-332. Because Plaintiff was a successful party in a
contract dispute governed by Arizona law, the Court may
exercise its discretion to award reasonable attorneys'
fees and costs.
determining whether to exercise its discretion to award
attorneys' fees under A.R.S. § 12-341.01(A), the