Donges v. USAA Federal Savings Bank

          ORDER

          Honorable Rosemary Marquez United States District Judge

         Pending before the Court is Defendant USAA Federal Savings Bank's Motion for Attorneys' Fees. (Doc. 86.) Plaintiff homeowners brought this action against Defendant seeking to enjoin the foreclosure and trustee's sale of their house. (Doc. 35.) Plaintiffs asserted, among other things, that Defendant had exceeded the statute of limitations to bring a foreclosure action stemming from Plaintiffs' default on a Home Equity Line of Credit (“HELOC”). (Id.) The Court granted summary judgment on all claims in favor of Defendant. (Doc. 83.) The Court, however, enjoined the trustee's sale of the home pending Plaintiffs' appeal to the Ninth Circuit. (Doc. 98.) Defendant requests an order awarding $114, 928.91 in attorneys' fees and nontaxable expenses. (Doc. 86.) Plaintiffs have filed a Response in Opposition (Doc. 94) and Defendant has filed a Reply (Doc. 95).

         A. Contractual Entitlement to Fees and Costs

         Defendant first alleges that the deed of trust securing Plaintiffs' loan requires the recovery of attorneys' fees and costs. (Doc. 86 at 2.) That deed of trust secured the first of multiple HELOC loans and provided that “[i]f Grantor breaches any covenant in this Security Instrument, Grantor agrees to pay all expenses Lendor incurs in performing such covenants or protecting its security interest in the Property.” (Doc. 65-3 at 4.) It specified that such “amount may include, but is not limited to, attorneys' fees, court costs, and other legal expenses.” (Id.)

         Arizona's statute governing the award of attorneys' fees arising from a contract does not “alter[], prohibit[], or restrict[]” a contract that otherwise “provide[s] for attorney fees.” A.R.S. § 12-341.01. Consequently, “when a contract has an attorney's fee provision it controls to the exclusion of the statute.” Am. Power Prods., Inc. v. CSK Auto, Inc., 396 P.3d 600, 604 (Ariz. 2017) (quoting Lisa v. Strom, 904 P.2d 1239, 1242 n.2 (Ariz. App. 1995)). Therefore, if a contractual provision settles the question of fees and costs, the Court need not conduct a statutory analysis.

         However, it is far from clear that the contractual provision cited by Defendant applies here. This action was brought by Plaintiffs in a collateral challenge to a trustee's sale of property. Plaintiffs based their arguments on A.R.S. § 12-548 and A.R.S. § 33-816, which together provide that a trustee's sale or foreclosure action must take place within a six-year statutory period. (Doc. 1-3.)

         As noted, the contractual provision cited by Defendant provides an entitlement to attorneys' fees arising from efforts to protect its security interest following a breach of any covenant in the agreement. (Doc. 65-3 at 4.) There is little doubt that Plaintiffs' failure to pay on their mortgage constituted a breach of a covenant. Defendant, however, has failed to establish that any fees it incurred defending this action were caused by that breach. Rather, it appears that any fees incurred in this action were proximately caused by Defendant's decision to postpone acting to preserve its security interest in the property until such time had passed that Plaintiffs had gained a colorable argument that the statute of limitations had run.

         Moreover, although this Court did ultimately decline to accept Plaintiffs' argument that the statute of limitations barred Defendant's foreclosure action, Defendant does not establish that Plaintiffs' conduct in bringing this collateral action constituted a breach of any covenant. Accordingly, the Court finds that the contractual provision cited does not govern, and so the Court proceeds to an analysis of the claimed statutory bases for an award of costs and fees.

         B. Costs

         Defendant claims that it incurred nontaxable expenses in the amount of $2, 672.41. (Doc. 86.) Defendant has provided an itemized statement of its costs. (Doc. 86-4.)

         In a diversity action, federal law governs an award of taxable costs. Felix v. Pic- N-Run, Inc., No. CV 09-8015-PCT-JAT, 2012 WL 551645, at *4 (D. Ariz. Feb. 21, 2012) (citing Aceves v. Allstate Ins. Co., 68 F.3d 1160, 1167 (9th Cir.1995) (applying federal procedure instead of state procedure to determine the amount of costs); see also 28 U.S.C. § 1920; Fed.R.Civ.P. 54(d)(1); LRCiv. 54.1(a).

         Although Defendant describes its request as one for “nontaxable costs, ” many of the listed costs are in fact taxable under LRCiv 54.1(e). Defendant requests costs for obtaining a copy of the complaint, which are taxable under LRCiv 54.1(e)(5), various filing fees, all of which are taxable under LRCiv 54.1(e)(1), costs of producing court copies of filings, which are taxable under LRCiv. 54.1(e)(5), and deposition costs, which are taxable under LRCiv. 54.1(e)(3). (Doc. 86-4.)

         Under LRCiv. 54.1(a), a party seeking taxable costs must, within fourteen days, file a bill of costs on a form provided by the Clerk of Court and attach documentation supporting the requested costs. The docket reflects that no such bill of costs was filed. The time for so filing has passed. Defendant will therefore not recover these costs.

         In addition to the above taxable costs, Defendant also requests costs that are properly considered nontaxable, including for postage, parking, and delivery fees. (Doc. 86-4.) Defendant relies on A.R.S. § 12-341.01 as a basis for recovery of these nontaxable expenses. But the Arizona Supreme Court has explained that, with limited exceptions, non-taxable costs cannot be recovered under § 12-341.01. Ahwatukee Custom Estates Mgmt. Ass'n, Inc. v. Bach, 973 P.2d 106, 107 (Ariz. 1999). The exceptions, including the cost of computerized legal research and the cost of ...