New Arizona Case Decides Timliness of Request for Fees and Rule 11 Sanctions

Civil Procedure—Attys' Fees & Rule 11 Sanctions

Britt v. Steffen, 546 Ariz. Adv. Rptr. 12 (Ct. App. Div. I, December 26, 2008)(Justice Hall)

TRIAL COURT HAS JURISIDICTION TO CONSIDER APPLICATION FOR FEES AFTER ENTRY OF JUDGMENT OF DISMISSAL FOR LACK OF PROSECUTION AND SUCH JUDGMENT RENDERS DEFENDANT THE SUCCESSFUL PARTY UNDER A.R.S. 12-341.01.

Plaintiffs sued defendant for breach of a real estate contract but failed to appropriately react to the court's minute entry placing the case on the inactive calendar subject to dismissal for failure to prosecute. When the court's deadline ran the case was dismissed but judgment not formally entered. Twenty days later the defendant filed a request for fees and sanctions. Plaintiffs responded with an untimely motion to strike the request for lack of jurisdiction. The trial court disagreed and awarded over $30,000 in attorneys' fees.

First the Arizona court of appeals found as a matter of law that so far as a request for attorneys' fees under Ariz. Rev. Stat. Ann. 12-341.01 a dismissal without prejudice for lack of prosecution although not a “decision on the merits” nonetheless renders the defendant the “successful party” under the statute and entitled to fees.

Turning then to the central issue the court acknowledged that in Mark Lighting Fixture Co. v. general Electric Supply Co., 155 Ariz. 27, 745 P2d 85 (1987) the Arizona supreme court held that once there was a decision on the merits the trial court loses jurisdiction to consider an award of fees under Ariz. Rev. Stat. Ann. 12-341.01. However, since that decision Rules 54(b) & 58(g) were amended to allow for a motion for attorneys' fees within 20 days after a decision on the merits but before the formal entry of the judgment. The defense complied with this rule and its motion was properly considered.

Similarly, a motion for Rule 11 sanctions may be properly brought after the dismissal where the basis for the motion is that the complaint itself was groundless and frivolous.