United States District Court, D. Arizona
HONORABLE STEVEN P. LOGAN UNITED STATES DISTRICT JUDGE.
Wells Fargo Home Mortgage Corporation and HSBC Bank USA NA
(together, the “Defendants”) move for an award of
attorneys' fees pursuant to A.R.S. § 12-341.01(A)
(the “Motion”). (Doc. 55) The Motion was fully
briefed on July 13, 2018. (Docs. 61, 65) The Court's
ruling is as follows.
Nelson Clayton (the “Plaintiff”) initiated this
lawsuit against HSBC Bank USA NA in Arizona state court
alleging causes of action for breach of contract and
declaratory relief, among other claims, related to the
Defendants' failure to modify his home loan agreement.
(Doc. 1) In April 2017, Wells Fargo Home Mortgage Corporation
was added as a defendant to the case, and the Defendants
removed the case to federal court in May 2017. Approximately
two weeks after removal, the Defendants filed a motion to
dismiss the Plaintiff's claims. (Doc. 18) The motion to
dismiss was granted on March 31, 2018, and judgement was
entered in favor of the Defendants. (Docs. 42, 43) The
Defendants now move for an award of attorneys' fees for
successfully defending against the Plaintiff's claims.
Analysis A. Eligibility For Fees Under A.R.S.
Defendants move for an award of reasonable attorneys'
fees pursuant to A.R.S. § 12-341.01(A). (Doc. 55 at 2)
A.R.S. § 12-341.01 provides district courts with
discretion to award attorneys' fees to the
“successful party” in actions arising out of
contract. Ariz. Rev. Stat. Ann. § 12-341.01 (stating
“in any contested action arising out of a contract,
express or implied, the court may award the successful party
reasonable attorney fees”); Med. Protective Co. v.
Pang, 740 F.3d 1279, 1280 (9th Cir. 2013). It is
undisputed that the Defendants were the successful party in
this matter. (Doc. 61 at 8) Furthermore, the Plaintiff does
not contest that this lawsuit arose out of a contract between
the parties, thus allowing A.R.S. § 12-341.01(A) to
provide the statutory basis for the recovery of
attorneys' fees. (Doc. 61 at 5)
Court must consider six factors when weighing a decision to
award fees to a successful party, including: (1) whether the
unsuccessful party's claim or defense was meritorious;
(2) whether the litigation could have been avoided or settled
and the successful party's efforts were completely
superfluous in achieving the result; (3) whether assessing
fees against the unsuccessful party would cause an extreme
hardship; (4) whether the successful party prevailed with
respect to all of the relief sought; (5) whether the legal
question presented was novel and whether such claim or
defense has previously been adjudicated in this jurisdiction;
and (6) whether the award would discourage other parties with
tenable claims or defenses from litigating or defending
legitimate contract issues for fear of incurring liability
for substantial amounts of attorneys' fees. Med.
Protective Co. v. Pang, 25 F.Supp.3d 1232, 1242 (D.
Ariz. 2014). No. one factor is determinative, and a court
should consider all six factors in its analysis. Wilcox
v. Waldman, 744 P.2d 444, 450 (Ariz.Ct.App. 1987).
Whether the Unsuccessful Party's Claim or Defense Was
Defendants argue that the Plaintiff's claims lacked merit
because they were premised on faulty legal theories that were
unable to survive the Defendants' motion to dismiss.
(Doc. 55 at 7) The Plaintiff reiterates the facts supporting
his claims in order to argue that his claims had merit, even
though he was ultimately unsuccessful. (Doc. 61 at 7) As
evident from the Court's Order (Doc. 42) granting the
Defendants' motion to dismiss, the majority of the claims
that the Plaintiff asserted against the Defendants were
without merit. The Plaintiff failed to allege sufficient
facts on his breach of contract claim against the Defendants
because the Plaintiff failed to meet the conditions precedent
to qualifying for a loan modification. (Doc. 42 at 3)
Furthermore, the Court found that the Plaintiff's
reliance on the “Trial Period Plan Notice” as a
basis for his estoppel claim against the Defendants was
unjustified. (Doc. 42 at 5) Accordingly, the Court finds that
this factor weighs heavily in favor of awarding the requested
Whether the Litigation Could Have Been Avoided or
Defendants argue that they could not have avoided this
litigation because they needed to defend their interests in
the Plaintiff's loan agreement. (Doc. 55 at 8) The
Plaintiff argues that settlement of this case was possible,
but the Defendants were inflexible and unwilling to provide
the Plaintiff with the loan modification relief he sought
prior to filing the lawsuit. (Doc. 61 at 7) The Court finds
that it was reasonable for the Defendants to defend their
interests under the loan agreement in this case, and the
Defendants' efforts in quickly bringing the motion to
dismiss helped efficiently expedite the resolution of the
case. Accordingly, the Court finds that this factor weighs
slightly in favor of awarding the Defendants their
attorneys' fees for their efforts in defending this case.
Whether Assessing Fees Against the Unsuccessful Party
Would Cause an Extreme Hardship.
Defendants argue that the Plaintiff has not provided
sufficient evidence to demonstrate that an award of the
requested attorneys' fees would cause extreme hardship.
(Doc. 55 at 8) The Plaintiff states that his ongoing
bankruptcy matter, his pre-bankruptcy tax liability, and his
ongoing spousal maintenance obligations are all factors that
help to demonstrate that the additional obligation of paying
an award of attorneys' fees would cause extreme hardship
on him as an individual. (Doc. 61 at 8) The Defendants'
requested fee award is in excess of $100, 000, which in most
circumstances, but especially under the present
circumstances, would cause an individual party an extreme
hardship. This finding is not only based on the amount of the
fees requested by the Defendants, but also the
Plaintiff's ongoing bankruptcy proceedings. Therefore,
the Court finds that this factor weighs against an award of
Whether the Successful Party Prevailed with Respect to