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EZconn Corp. v. PCT International, Inc.

United States District Court, D. Arizona

January 3, 2018

EZconn Corporation, Plaintiff,
PCT International, Inc., Defendant.



         Before the Court is EZconn Corporation's Motion for an Award of Attorneys' Fees and Related Non-Taxable Expenses (Doc. 22).

         I. BACKGROUND

         This case arises out of a business relationship between EZconn and PCT International, Inc., which included contracts for EZconn to manufacture and provide products to PCT. During 2012 and 2013, EZconn supplied products to PCT, and PCT made partial payments on some of the invoices for those products. After credit for partial payments and offsets, the total unpaid amount of outstanding invoices was $6, 629, 046.55 and the accrued interest through October 31, 2016, on the unpaid balance was $2, 283, 535.87. PCT did not dispute the amount owed for the unpaid invoices or the amount of accrued interest EZconn claimed on the unpaid invoices.

         On February 24, 2016, EZconn sued PCT for breach of contract to recover and collect all amounts due regarding the unpaid invoices. On August 30, 2017, the Court granted summary judgment in EZconn's favor. Judgment was entered in favor of EZconn and against PCT for (1) the principal amount of $6, 629, 046.55, plus (2) pre-judgment interest to August 30, 2017, in the amount of $2, 833, 837.54 at the rate of 10% per annum simple interest, plus (3) post-judgment interest on $9, 462, 884.09, the sum of amounts (1) and (2), at the federal rate of 1.23% per annum from the date of entry of judgment (August 30, 2017) until paid. The August 30, 2017 judgment awarded EZconn all of the relief it sought.

         EZconn 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.

         EZconn contends, and PCT does not dispute, that all of the relevant factors weigh in favor of awarding EZconn attorney fees under § 12-341.01. EZconn was entirely successful in this action. The legal questions were not novel, and many breach of contract claims had previously been adjudicated in this jurisdiction. PCT did not dispute the amount it owed EZconn for the unpaid invoices and could have avoided this litigation by paying its debt. PCT does not assert that a fee award would cause it extreme hardship.

         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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