United States District Court, D. Arizona
G. Campbell, United States District Judge
First Allied Securities, Inc. asks the Court to award
attorneys' fees and costs against Petitioner Michael
DiPietro pursuant to Federal Rule of Civil Procedure 54(d)
and Local Rule 54.2(b). Doc. 89. The motion has been fully
briefed (Docs. 89, 90, 92, 94), and neither party has
requested oral argument. For the reasons that follow, the
Court will grant First Allied's motion in part.
October 8, 2004, the parties entered into an Independent
Contractor Agreement (“ICA”) which provided that
DiPietro would sell securities and other services on behalf
of First Allied. Doc. 24-2 at 2. The ICA also included a
broad provision under which DiPietro agreed to indemnify
First Allied for losses, costs, and expenses related to
disputes arising out of the agreement. Doc. 92-1 at 6; Doc.
94 at 5. On September 19, 2012, Martina Hutchinson filed a
claim against First Allied in a FINRA arbitration related to
investments purchased through DiPietro and First Allied. Doc.
24-3; Doc. 90 at 5. Pursuant to FINRA rules, the arbitration
was assigned to Phoenix, Arizona. Doc. 92 at 2. First Allied
filed an answer and a third-party claim against DiPietro
seeking indemnification under the ICA. Doc. 24-4. DiPietro
filed a response and counterclaims against First Allied for
abuse of process and malicious prosecution. Doc. 24-11.
Hutchinson's claims against First Allied were settled.
Doc. 90 at 5; Doc. 92 at 2. The arbitration between First
Allied and DiPietro continued, resulting in a unanimous
three-member panel decision in favor of First Allied. Doc.
24-19. The panel found that DiPietro was liable to First
Allied for $100, 000 in compensatory damages, post-judgment
interest at the rate of 8%, $56, 047.55 in attorneys'
fees, and $1, 456.24 in witness fees. Id. at 3.
DiPietro's counterclaims were denied. Id.
March 12, 2014, DiPietro filed a motion with this Court to
vacate or modify the arbitration award. Doc. 1. The Court
denied the motion and confirmed the arbitration award. Doc.
68. First Allied filed a subsequent motion for attorneys'
fees (Docs. 76, 77), which was denied without prejudice while
the Ninth Circuit considered the Court's order on an
appeal from DiPietro. Doc. 81. The Court instructed First
Allied that a renewed motion for attorneys' fees could be
filed within 30 days of the issuance of the mandate on
appeal. Id. The Ninth Circuit affirmed the
Court's decision (Doc. 88-2) and denied DiPietro's
subsequent petition for panel rehearing and en banc
review (Doc. 88-1). The Ninth Circuit also granted First
Allied's motion to transfer consideration of the
attorneys' fees on appeal to this Court. Id. The
mandate affirming the Court's decision was issued, and
First Allied filed this renewed motion for attorneys'
Allied seeks an award of attorneys' fees in the amount of
$157, 630.33. Doc. 94 at 10. First Allied argues that it is
entitled to these fees under three different sources: (1)
A.R.S. § 12-1514; (2) A.R.S. § 12-341.01; and (3)
the IRC. Doc. 89, ¶ 6. DiPietro argues that the Court
may not award attorneys' fees because (1) California law
governs the dispute under the terms of the ICA, and
California law does not allow for attorneys' fees related
to an appeal of an arbitration award; and (2) the Court does
not have power to determine attorneys' fees under the
IRC, which must instead be submitted to the arbitrator. Doc.
92. DiPietro also contends that the amount of attorneys'
fees sought by First Allied is unreasonable. Id.
California Law and the ICA.
argues that, under the express terms of the ICA, California
law governs this dispute. Doc. 92 at 9. First Allied contends
that “the parties have relied on Arizona law throughout
this litigation” and “DiPietro has waived his
right to enforce the ICA's choice of law
provision.” Doc. 94 at 3. Even if the Court applies
California law, however, First Allied is entitled to an award
of fees related to DiPietro's challenge of the
arbitration decision in this Court and the Ninth Circuit.
DiPietro concedes, California law allows for an award of
attorneys' fees when such fees are authorized by
contract, statute, or law. Cal. Civ. Proc. Code §
1033.5; see also Cal. Civ. Proc. Code § 1021
(in judicial proceedings relating to arbitration, “the
measure and mode of compensation of attorneys and counselors
at law is left to the agreement, express or implied, of the
parties”); Carole Ring & Assocs. v.
Nicastro, 104 Cal.Rptr.2d 519, 523 (Cal.Ct.App. 2001).
California courts have awarded attorneys' fees to
prevailing parties in state court suits for confirmation or
modification of arbitration awards if a valid contract
between the parties provides for such fees. See,
e.g., Corona v. Amherst Partners, 132
Cal.Rptr.2d 250, 254 (Cal.Ct.App. 2003) (“A court must
award costs in a judicial proceeding to confirm, correct or
vacate an arbitration award. Attorney fees are recoverable as
costs if authorized by contract.”) (citations omitted);
Carole Ring, 104 Cal.Rptr.2d at 523 (finding that
the court was required to award the prevailing party
attorneys' fees related to post-arbitration judicial
proceedings confirming an arbitration award when the contract
provided for such fees).
parties agree that their dispute in this Court and the Ninth
Circuit is “a continuation of the underlying
arbitration case” and, as a result, the terms of the
ICA apply to the motion for attorneys' fees related to
this dispute. Doc. 90 at 9; Doc. 92 at 9 (citing First
Allied's brief, Doc. 90 at 9). As a result, the Court
will look to the language of the ICA to determine whether
First Allied is eligible for attorneys' fees. Doc. 92-1.
provides that “[a]ny dispute between [DiPietro] and
First Allied which cannot be settled by the parties will be
arbitrated[.]” Id. at 7. DiPietro argues that,
pursuant to this clause, the Court cannot decide the motion
for attorneys' fees; instead the motion must be submitted
to the arbitrators for determination. Doc. 92 at 9. The Court
does not agree. The language of the ICA does not prohibit a
party from challenging an arbitration award in federal court,
as DiPietro has done here. Nor does it preclude a federal
court from awarding attorneys' fees related to such a
challenge. Moreover, if motions for attorneys' fees
related to district court proceedings modifying or confirming
an arbitration award had to be submitted to the arbitrators,
an absurd result could occur. Assuming the parties would
always challenge the arbitrators' decision in the federal
courts, the parties would find themselves in an unending
back-and-forth between the arbitrators and the federal
courts, unable to obtain complete relief.
position that only the arbitrators can determine a motion for
attorneys' fees is further contradicted by precedent from
the California state courts. In Carole Ring, the
parties' contract “contained an arbitration clause,
requiring binding arbitration of any dispute or claim arising
out of th[e] contract.” 104 Cal.Rptr.2d at 521
(quotation marks omitted and alterations incorporated). One
of the parties sought review of an arbitration decision in
the California superior court, and that arbitration decision
was ultimately confirmed by the California court of appeal.
Id. The prevailing party filed a subsequent motion
for attorneys' fees with the superior court, which was
denied. Id. The appellate court reversed, concluding
that the superior court was ...