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Preston Collection Inc. v. Youtsey

United States District Court, D. Arizona

January 3, 2018

Preston Collection Inc., Plaintiff,
v.
Steven Youtsey, Defendant.

          ORDER

          Neil V. Wake Senior United States District Judge

         Before the Court is Preston Collection Inc.'s Motion for an Award of Attorneys' Fees and Non-Taxable Costs (Doc. 66).

         I. BACKGROUND

         This case arises out of an agreement dated December 29, 2009 by which Steven Youtsey acknowledged his personal debt to Kun-Te Yang in the amount of $1, 142, 500.00 (“Youtsey Personal Loan”). On March 19, 2015, Yang transferred to Preston Collection Inc. all of his rights, title, and interest in and to the Youtsey Personal Loan, including all rights to enforce the loan and to recover and collect all amounts due thereunder.

         On April 3, 2015, Preston sued Youtsey for breach of contract to recover and collect all amounts due under or arising from enforcement of the Youtsey Personal Loan. On September 5, 2017, the Court granted summary judgment in Preston's favor. On October 4, 2017, judgment was entered in favor of Preston and against Youtsey in the amount of: (1) the principal amount of $1, 142, 500.00, plus (2) pre-judgment interest to October 4, 2017, in the amount of $866, 108.77 at the rate of 10% per annum simple interest, plus (3) post-judgment interest on $2, 008, 608.77 (the sum of amounts (1) and (2)) at the federal rate of 1.31% per annum from the date of entry of judgment (October 4, 2017) until paid. The October 4, 2017 judgment awarded Preston all of the relief it sought.

         Preston seeks award of attorney fees under A.R.S. § 12-341.01(A).

         II. ANALYSIS

         A. Whether to Award Attorney Fees

         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.” An award of fees under § 12-341.01 is discretionary. Fulton Homes Corp. v. BBP Concrete, 214 Ariz. 566, 569, 155 P.3d 1090, 1093 (Ct. App. 2007). The statute does not establish a presumption that attorney fees be awarded in contract actions. Associated Indem. Corp. v. Warner, 143 Ariz. 567, 569, 694 P.2d 1181, 1183 (1985). In determining whether attorney fees should be granted under § 12-341.01, trial courts may consider the following factors: the merits of the unsuccessful party's case, whether the litigation could have been avoided or settled, whether assessing fees against the unsuccessful would cause an extreme hardship, the degree of success by the successful party, any chilling effect the award might have on other parties with tenable claims or defenses, the novelty of the legal questions presented, and whether such claim had previously been adjudicated in this jurisdiction. Id. at 570, 694 P.2d at 1184.

         Youtsey does not contend that Preston should be awarded no attorney fees. Preston was entirely successful. The legal questions were not novel, and many breach of contract claims had previously been adjudicated in this jurisdiction. Youtsey admitted that he signed a document acknowledging that he owed Kun-Te Yang a balance of $1, 142, 500.00 on a personal loan. He did not assert that he had made any subsequent payments on his debt to Yang. Youtsey could have avoided the litigation by paying his debt. Yang does not explicitly assert that a fee award would cause him an extreme hardship, and he provides no evidence regarding his financial condition. These factors weigh in favor of awarding Preston attorney fees under A.R.S. § 12-341.01(A).

         B. What Constitutes Reasonable Attorney Fees

         “Once a litigant establishes entitlement to a fee award, the touchstone under § 12-341.01 is the reasonableness of the fees.” Assyia v. State Farm Mut. Auto. Ins. Co., 229 Ariz. 216, 222, 273 P.3d 668, 674 (Ct. App. 2012). “The award of reasonable attorney fees pursuant to [§ 12-341.01] should be made to mitigate the burden of the expense of litigation to establish a just claim or a just defense. It need not equal or relate to the attorney fees actually paid or contracted, but the award may not exceed the amount paid or agreed to be paid.” A.R.S. § 12-341.01(B).

         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). If persuaded that the contracted hourly rates are unreasonable, courts may use a lesser rate. Id. at 188, 673 P.2d at 931.

         Under the Arizona Supreme Court's Rules of Professional Conduct, factors to be considered in determining the ...


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