United States District Court, D. Arizona
REPORT AND RECOMMENDATION
HONORABLE JACQUELINE M. RATEAU, UNITED STATES MAGISTRATE
before the Court is Defendant Life Care Centers of America,
Inc.'s unopposed Motion for Award of Attorneys' Fees
(Doc. 64). The Magistrate Judge recommends that Life
Care's Motion be granted in part and award Defendant
attorneys' fees in the amount of $3, 452.85.
Factual and Procedural Background
filed his original complaint on October 10, 2016, asserting
two claims: (1) wrongful termination under the Arizona
Employment Protection Act (AEPA), and (2) breach of the
implied covenant of good faith and fair dealing. After
Plaintiff filed his Complaint and before Defendant filed any
responsive pleading, the parties exchanged settlement offers,
but were unable to resolve the case. Fiore Decl. ¶ 13.
moved to dismiss the case in its entirety on December 21,
2016. Doc. 10. In response, Plaintiff filed an Amended
Complaint alleging the same two causes of action. Doc. 12.
The parties then stipulated to the filing of the Amended
Complaint and giving Defendant 30 days to answer or otherwise
respond to the Amended Complaint. Docs. 15 (Stipulated
Motion), 16 (Order granting motion). Defendant did not renew
the Motion to Dismiss; rather, it filed an Answer to the
Amended Complaint on February 27, 2017. Doc. 17.
2, 2017, the Court issued a scheduling order and the parties
proceeded to conduct discovery. See Docs. 21, 30,
38, 49, 50 (Plaintiff's discovery notices); 20, 27, 28,
29, 31, 32, 33, 34, 35, 37, 43, 44, 45 (Defendant's
discovery notices). During discovery, Defendant inquired
about settlement. Plaintiff made a revised settlement demand,
to which Defendant responded on December 14, 2017. Fiore
Decl. ¶ 15. Plaintiff's counsel stated that he would
relate the offer to his client and respond, but he never
responded. Id. Defendant's counsel subsequently
called Plaintiff's counsel to inquire about the offer and
to move settlement discussions forward. Id. On March
6, 2018, Defendant's counsel sent a letter to
Plaintiff's counsel that reiterated the December 14, 2017
settlement offer and noted that Plaintiff had yet to respond
to it. Id. Defendant specifically noted that it
hoped to resolve the case prior to the parties incurring
significant fees associated with a motion for summary
judgment. Id. Plaintiff neither responded to the
letter nor made any new settlement overture. Id.
March 30, 2018, after the close of discovery, Defendant filed
its Motion for Summary Judgment requesting dismissal of the
two claims alleged in the Amended Complaint. Doc. 51.
Plaintiff responded to the motion, arguing that summary
judgment should not be granted on his claim under the AEPA,
but offering no argument in support of his claim for breach
of the implied covenant of good faith and fair dealing. Doc.
56. Defendant replied in support of the motion and noted that
Plaintiff had made no attempt to save his claim for breach of
the implied covenant of good faith and fair dealing. Doc. 11.
August 17, 2018, the Court issued its Report and
Recommendation to the District Court recommending that
Defendant's Motion for Summary Judgment be granted. Doc.
59. Approximately 7 pages of discussion in the Report and
Recommendation addressed the parties' AEPA-related
arguments. One page of the discussion addressed
Plaintiff's claim for breach of the implied covenant of
good faith and fair dealing. Id. No objections were
filed and, on November 5, 2018, the District Court adopted
the Report and Recommendation, granted Defendant's Motion
for Summary Judgment, and ordered the case dismissed with
prejudice. Doc. 60.
motion before the Court, Defendant requests and award of
attorneys' fees under A.R.S. § 12-341.01.
Specifically, Defendant requests a fee award in the amount of
$38, 132.50 (36.17% of its total fees), which represents all
fees incurred in the preparation, drafting and finalizing of
its Motion to Dismiss and its Motion for Summary Judgment.
Alternatively, Defendant requests a fee award in the amount
of $3, 452.00, which is an approximated percentage of the
fees attributable to defending against Plaintiff's claim
of breach of the implied covenant of good faith and fair
dealing. The Court recommends that the District Court grant
the fee request in the amount of $3, 452.85.
Eligibility Under A.R.S. § 12-341.01
A.R.S. § 12-341.01(A), “[i]n any contested action
arising out of a contract, express or implied, the court may
award the successful party reasonable attorney fees.”
The Ninth Circuit has recognized that A.R.S. § 12-341.01
itself “makes clear that a fee award may not exceed the
amount necessary to defend against those claims for which
such fees are appropriate.” Harris v. Maricopa
County Superior Court, 631 F.3d 963, 972 (9th Cir.
2011). Defendant argues that it is entitled to fees for both
claims alleged in the Amended Complaint under § 12-
341.01(A) because both “aris[e] out of a
contract.” To determine whether a claim “arise[s]
out of a contract, ” the Court examines whether the
“claim could not exist ‘but for' the breach
or avoidance of contract.” Ramsey Air Meds, L.L.C.
v. Cutter Aviation, Inc., 6 P.3d 315 (Ariz. App. 2000);
see also A.H. By and Through White v. Arizona Property
and Cas. Ins. Guar. Fund, 950 P.2d 1147 (Ariz. 1997) (en
banc). A defendant is entitled to an award of attorney's
fees under the statute if the court finds that no contract
existed or if the plaintiff was unsuccessful in recovering on
the contract. Chevron U.S.A., Inc. v. Schirmer, 11
F.3d 1473, 1480 (9th Cir. 1993) (citation omitted).
first Plaintiff's claim alleging breach of the covenant
of good faith and fair dealing, the Court finds an award of
attorneys' fees appropriate. A breach of an implied
covenant of good faith and fair dealing can lead to liability
in either contract or tort depending on the circumstances.
See Wells Fargo Bank v. Ariz. Laborers, Teamsters &
Cement Masons Local No. 395 Pension Tr. Fund, 38 P.3d
12, 28-29 (Ariz. 2002). In the Amended Complaint, Plaintiff
asserts that the breach in this case occurred “when the
Defendant, through their agent and his supervisor, terminated
[Plaintiff's] employment for bad cause.” Doc. 13,
¶ X. As is relevant to Plaintiff's claim of breach
of the implied covenant of good faith and fair dealing, the
AEPA provides that an employment relationship is at-will and
severable by either party unless the parties “have
signed a written contract to the contrary setting forth that
the employment relationship shall remain in effect for a
specified duration of time.” A.R.S. §
23-1501(A)(2). “An employee has a claim against an
employer for termination of employment only if . . . (a) The
employer has terminated the employment relationship of an
employee in breach of an employment contract . . . . A.R.S.
§ 23-1501(A)(3). Under the requirements of the AEPA,
Plaintiff's bad faith claim was potentially viable only
if he could prove the existence of an employment contract.
See White v. AKDHC, LLC, 664 F.Supp.2d 1054, 1065
(D. Ariz. 2009) (the implied duty of good faith and fair
dealing “protects an employee only to the extent that
the employer denied the terminated employee benefits agreed
to in the employment contract.”). Here, Defendant
defeated the claim by showing that, in fact, no such contract
existed. See Doc. 59, pp. 12-13 (Report and
Recommendation), Doc. 60 (order adopting R&R). Therefore,
on the claim of breach of the implied covenant of good faith
and fair dealing, Defendant meets the threshold requirements
for an award of fees under A.R.S. § 341.01. See
Chevron, 11 F.3d at 1480 (fees available under §
12-341.01 because plaintiff's complaint alleged the
existence of contracts).
argues that it is entitled to an award of attorneys' fees
for work performed in relation to Plaintiff's
retaliatory-discharge claim because the claim is
“interwoven” with Plaintiff's claim of breach
of the implied covenant of good faith and fair dealing.
However, while the Court recognizes that the two claims
implicated many of the same ...