United States District Court, D. Arizona
11333, Inc., f/k/a Investors Mortgage Holdings, Inc., Plaintiff,
Certain Underwriters at Lloyd's, London, Subscribing to Policy Numbers MBB0756586A08, MBB0856586A09, and B066456586B09; HUB International Insurance Services, Inc., Defendants.
V. Wake, Senior United States District Judge
the Court is Defendant Certain Underwriters at Lloyd's,
London Subscribing to Policy Number MBB0756586A08's
Supplemental Motion for Award of Attorneys' Fees (Doc.
214), 11333 Incorporated's response, and
March 30, 2018, the Court granted Underwriters' motion
for award of attorney fees under A.R.S. § 12-341.01(A)
in the amount of $1, 099, 011.50 so far. (Doc. 211.) In their
motion Underwriters had excluded most of the amounts charged
to and paid by Underwriters for attorney time incurred during
air travel. The Court overruled 11333's objections to the
amounts charged for attorney air travel time that
Underwriters had claimed, invalidating the Local Rule that
purported to exclude such attorney fees from awards under
that state statute. The Court permitted Underwriters to file
a supplemental request for attorney fees to include
previously omitted attorney air travel time and any
additional services incurred on their fee motion.
supplemental motion requests an additional $56, 820.00 for
attorney air travel time that was withheld from their initial
fee motion and $47, 828.50 for attorney fees incurred on the
initial fee motion. 11333 objects that attorney air travel
time ordinarily should not be charged unless other work was
done at the same time. Local Rule LRCiv 54.2(e)(2)(D). 11333
also contends some of the attorney air travel time was
unreasonable and unnecessary. Finally, 11333 requests
reduction of the award because same of the services are
inadequately described. Local Rule LRCiv 54.2(e)(2).
FEE AWARDS UNDER ARIZONA LAW FOR ATTORNEY TRAVEL
courts sitting in diversity apply state substantive law and
federal procedural law. CRST Van Expedited, Inc. v.
Werner Enterprises, Inc., 479 F.3d 1099, 1111 (9th Cir.
2007). State statutes are substantive when they authorize fee
awards to litigants in a particular class of cases, as A.R.S.
§ 12-341.01 does for actions arising out of contract.
district courts may “prescribe rules for the conduct of
their business, ” that is, local rules of procedure. 28
U.S.C. § 2071(a). No rule may be prescribed by a
district court other than under 28 U.S.C. § 2071. 28
U.S.C. § 2071(b). A district court must enforce local
rules prescribed under § 2017 if substantial rights are
at stake. Prof'l Programs Grp. v. Dep't of
Commerce, 29 F.3d 1349, 1353 (9th Cir. 1994); All.
of Nonprofits for Ins., Risk Retention Grp. v. Kipper,
712 F.3d 1316, 1327 (9th Cir. 2013). But 28 U.S.C. §
2071 only authorizes district courts to prescribe rules for
“the conduct of their business.” It gives no
authority to district courts to prescribe rules that modify
the substantive law to be applied.
substantive law provides district courts with discretion to
award reasonable attorney fees in contract litigation. A.R.S.
§ 12-341.01(A) states: “In any contested action
arising out of a contract, express or implied, the court may
award the successful party reasonable attorney fees.”
The statute provides broad judicial discretion: “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. §
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). Reasonableness of fees is a fact question based on the
market and practices of attorneys and clients. It is
customary and routine for commercial attorneys working on an
hourly rate basis, including insurance attorneys, to charge
their clients for their time necessarily traveling on the
matter, whether or not other legal work is done on the
airplane. Clients universally pay for that time, as did
Underwriters here. That is part of the
“reasonable” fee that the Court may award in its
discretion, provided it does “not exceed the amount
paid or agreed to be paid.” A.R.S. § 12-341.01(A)
Rule LRCiv 54.2 establishes the procedure for requesting
award of attorney fees and related non-taxable expenses in
the U.S. District Court for the District of Arizona. LRCiv
54.2(d) requires movants to submit supporting documentation,
including a task-based itemized statement of attorney fees
and expenses. LRCiv 54.2(e)(2) states: “The party
seeking an award of fees must adequately describe the
services rendered so that the reasonableness of the charge
can be evaluated.” It further states: “If the
time descriptions are incomplete, or if such descriptions
fail to adequately describe the service rendered, the court
may reduce the award accordingly.” For this case the
Arizona statute gives the court substantive discretion to
award fees up to the lower of what is
“reasonable” or what does “not exceed the
amount paid or agreed to be paid.” A.R.S. §
12-341.01(A) and (B). Local Rule LRCiv 54.2(e) provides the
procedure to supply the district court with the information
it needs to decide whether the requested fees are reasonable.
LRCiv 54.2(e)(2)(D) goes beyond enabling the court to
determine reasonableness. It also excludes fees for attorney
air travel time as beyond what the Arizona statute authorizes
for compensation, though the market shows them to be
reasonable and charged and paid in fact. The rule states:
(D) Travel Time. Ordinarily air travel time should not be
charged. If services were performed during such time, then
describe such services rather than charging for the travel
case under A.R.S. § 12-341.01(A), this application of
LRCiv 54.2(e)(2)(D) to exclude fees that are compensable
under A.R.S. § 12-341.01(A) exceeds the district
court's authority under 28 U.S.C. § 2071(a) to