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Andes Industries, Inc. v. EZconn Corp.

United States District Court, D. Arizona

April 5, 2018

Andes Industries, Inc., and PCT International, Inc., Plaintiffs,
v.
EZconn Corporation and eGtran Corporation, Defendants.

          ORDER

          NEIL V. WAKE, SENIOR UNITED STATES DISTRICT JUDGE

         Before the Court is EZconn Corporation's Motion for an Award of Attorneys' Fees (Doc. 42), PCT's opposition to the Motion (Doc. 43), EZconn's reply (Doc. 49), and EZconn's supplement to the Motion (Doc. 54).

         The Motion and supplement seek an award based on attorney fees invoiced to EZconn for legal services provided on behalf of EZconn, eGtran Corporation, Cheng-Sun Lan, and Polar Star Management Ltd. during January 2016 through February 2018 by its counsel Hagens Berman Sobol Shapiro LLC related to CV-15-01810-PHX-NVW and CV-15-02549-PHX-NVW. EZconn does not seek reimbursement for any of the attorney fees invoiced to eGtran Corporation during September 2013 through March 2016 by its counsel Ruttenberg IP Law, PC, related to CV-14-00400-APG-GWF (transferred to this Court as CV-15-02549-PHX-NVW), which are the subject of a separate fee application (Doc. 46) and order.

         I. BACKGROUND

         Andes Industries, Inc., owns PCT International, Inc., which develops, manufactures, and sells products for broadband telecommunications networks. Andes and PCT are Nevada corporations and have their principal place of business in Mesa, Arizona. eGtran Corporation is a British Virgin Islands corporation with its principal place of business in Taiwan. EZconn Corporation is a Taiwanese corporation with places of business in Taiwan and the People's Republic of China. At relevant times, eGtran Corporation held an ownership interest in EZconn. For a number of years, EZconn manufactured broadband telecommunications products for PCT and also for its competitor Holland Electronics, LLC.

         On March 18, 2014, Andes and PCT sued EZconn, eGtran Corporation, Cheng-Sun Lan, Polar Star Management Ltd., Chi-Jen (Dennis) Lan, and Kun-Te Yang in the District of Nevada (CV-14-00400-APG-GWF). Andes and PCT pled twelve claims, alleging a conspiracy among all Defendants and seeking a judgment holding the Defendants jointly and severally liable. Among other things, Andes and PCT alleged that EZconn breached its contracts with PCT by disclosing PCT's confidential and proprietary information to Holland Electronics. On March 25, 2015, the Nevada district court dismissed Andes and PCT's claims against EZconn and eGtran Corporation for lack of personal jurisdiction.

         On September 10, 2015, Andes and PCT sued EZconn and eGtran Corporation in this court (CV-15-01810-PHX-NVW), alleging the same twelve claims that the Nevada district court had dismissed for lack of personal jurisdiction. On December 14, 2015, upon motion by Andes and PCT, the Nevada district court transferred the remainder of CV-14-00400-APG-GWF to this Court, which was opened as CV-15-02549-PHX-NVW.

         On June 24, 2016, the Court dismissed with prejudice all claims by Andes and PCT against eGtran Corporation, Polar Star Management Ltd., and Cheng-Sun Lan and all claims against EZconn except for claims of breach of contract and breach of the implied duty of good faith and fair dealing. On July 22, 2016, Andes and PCT filed an appeal from the June 24, 2016 Order, noting that the appeal likely was premature because a final judgment had not been entered. On August 23, 2016, Andes and PCT filed a motion to resolve jurisdiction or, in the alternative, to stay the appeal. On October 18, 2016, the Ninth Circuit dismissed the appeal for lack of jurisdiction.

         On September 14, 2017, the Court granted summary judgment in EZconn's favor on the claims of breach of contract and breach of the implied duty of good faith and fair dealing, and judgment was entered. On September 28, 2017, judgment was entered in favor of eGtran Corporation and against Andes and PCT. The judgments awarded EZconn and eGtran Corporation all of the relief they sought.

         EZconn seeks award of attorney fees under A.R.S. § 12-341.01(A) in the total amount of $443, 400.90, which were incurred defending itself, eGtran Corporation, Cheng-Sun Lan, and Polar Star Management Ltd. in CV-15-01810-PHX-NVW and CV-15-02549-PHX-NVW and defending appeal No. 16-16340 in the United States Court of Appeals for the Ninth Circuit. EZconn seeks to recover only fees that it was charged and has paid in full.

         II. ANALYSIS

         A. A.R.S. § 12-341.01(A) Permits Award of Attorney Fees Related to All of Andes and PCT's Claims Against EZconn, eGtran Corporation, Polar Star Management Ltd., and Cheng-Sun Lan.

         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.” Under § 12-341.01(A), attorney fees may be awarded based upon facts that show a breach of contract, the breach of which may also constitute a tort. Sparks v. Republic Nat. Life Ins. Co., 132 Ariz. 529, 543, 647 P.2d 1127, 1141 (1982). Intertwining of contract and tort legal theories does not preclude a fee award if the cause of action in tort could not exist but for the breach of contract. Id.; Ramsey Air Meds, L.L.C. v. Cutter Aviation, Inc., 198 Ariz. 10, 13, 6 P.3d 315, 318 (Ct. App. 2000). “[W]hen two claims are so intertwined as to be indistinguishable, a court has discretion to award attorney fees under § 12-341.01 even though the fees attributable to one of the causes of action would not be recoverable under this statute.” Zeagler v. Buckley, 223 Ariz. 37, 39, 219 P.3d 247, 249 (Ct. App. 2009). “Moreover, when, as here, claims are so interrelated that identical or substantially overlapping discovery would occur, there is no sound reason to deny recovery of such legal fees.” Id.

         In CV-14-00400-APG-GWF, CV-15-01810-PHX-NVW, and CV-15-02549-PHX-NVW, Andes and PCT pled the following twelve claims against eGtran Corporation, EZconn, Cheng-Sun Lan, Polar Star Management Ltd., Chi-Jen (Dennis) Lan, and Kun-Te Yang: breach of fiduciary duty, aiding and abetting a breach of fiduciary duty, usurpation of corporation opportunities, breach of contract, tortious interference with contract, tortious interference with prospective economic advantage, fraud, ...


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