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Crestwood Capital Corp. v. Andes Industries, Inc.

United States District Court, D. Arizona

January 3, 2018

Crestwood Capital Corporation, Plaintiff,
v.
Andes Industries, Inc., Defendant.

          ORDER

          NEIL V. WAKE SENIOR UNITED STATES DISTRICT JUDGE.

         Before the Court is Crestwood Capital Corporation's Motion for an Award of Attorneys' Fees and Non-Taxable Costs (Doc. 330).

         I. BACKGROUND

         This case arises out of a promissory note dated December 20, 2009 (“December 2009 Note”) by which Andes Industries, Inc., promised to pay Cheng-Sun Lan the principal sum of $3, 000, 000.00 with interest. The December 2009 Note provides that it shall be governed by the laws of the State of Arizona. Andes made partial payments on the December 2009 Note. On April 1, 2015, Cheng-Sun Lan transferred to Crestwood Capital Corporation all of his rights, title, and interest in and to the December 2009 Note, including all rights to enforce the note and to recover and collect all amounts due thereunder.

         On April 3, 2015, Crestwood sued Andes for breach of contract to recover and collect all amounts due under or arising from enforcement of the December 2009 Note. On September 5, 2017, the Court granted summary judgment in Crestwood's favor. On October 4, 2017, judgment was entered in favor of Crestwood and against Andes in the amount of: (1) the principal amount of $2, 500, 000.00, plus (2) pre-judgment interest to October 4, 2017, in the amount of $1, 663, 823.75 at the rate of 10% per annum simple interest, plus (3) post-judgment interest on $4, 163, 823.75 (the sum of amounts (1) and (2)) at the rate of 10% per annum from the date of entry of judgment (October 4, 2017) until paid. The October 4, 2017 judgment awarded Crestwood all of the relief it sought.

         The December 2009 Note includes the following:

ATTORNEY'S FEES. If this Note is given to an attorney for collection or enforcement, or if suit is brought for collection or enforcement, or if it is collected or enforced through probate, bankruptcy, or other judicial proceeding, then Borrower shall pay Payee all costs of collection and enforcement, including reasonable attorney's fees and court costs in addition to other amounts due.

(Doc. 1-1 at 4.) Crestwood seeks award of attorney's fees and related non-taxable expenses as provided by the December 2009 Note and A.R.S. § 12-341.01(A).

         II. LEGAL STANDARD

         A.R.S. § 12-341.01(A) provides: “In any contested action arising out of a contract, express or implied, the court may award the successful party reasonable attorney fees. . . . This section shall not be construed as altering, prohibiting or restricting present or future contracts or statutes that may provide for attorney fees.” The statute does not apply when the parties have provided in their contract the conditions under which attorney's fees may be recovered if the statute “effectively conflicts with an express contractual provision governing recovery of attorney's fees.” Am. Power Prods., Inc. v. CSK Auto, Inc., 242 Ariz. 364, 368, 396 P.3d 600, 604 (2017). But “rather than being completely supplanted by any attorney fee provision in the parties' contract, the statute- consistent with its plain language-applies to ‘any contested action arising out of contract' to the extent it does not conflict with the contract.” Id. To the extent that § 12-341.01(A) does not conflict with the parties' contract, it is incorporated into the contract. Id.

         Although an award of reasonable attorney fees is discretionary under § 12-341.01(A), it is mandatory under the December 2009 Note. To determine reasonable attorney's fees in commercial litigation, courts begin by determining the actual billing rate that the lawyer charged in the particular matter. Schweiger v. China Doll Rest., Inc., 138 Ariz. 183, 187, 673 P.2d 927, 931 (Ct. App. 1983). “In corporate and commercial litigation between fee-paying clients, . . . the rate charged by the lawyer to the client is the best indication of what is reasonable under the circumstances of the particular case.” Id. at 187-88, 673 P.2d at 931-32. However, in determining reasonable rates, courts are not bound by the parties' agreements. Id. at 188, 673 P.2d at 932.

         III. ANALYSIS

         A. Reasonable Attorney Fees

         Crestwood entered into engagement agreements with its counsel through which it agreed to pay 70% of counsel's standard hourly rates upon receipt of monthly invoices and to pay all out-of-pocket costs and expenses. Crestwood agreed to pay a contingent fee consisting of the remaining 30% of counsel's standard hourly rates if Crestwood's claim was resolved, plus 20% of the net amount recovered as a result of resolution of Crestwood's claim. Andes does not dispute that Crestwood is eligible for and entitled to award of reasonable attorney fees. Andes does not contend that the requested hourly rates or hours expended are unreasonable. Andes ...


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