Attorneys' Fees Part of Arbitration Award When Considering Sanctions

Civil Procedure-Award of Attys' Fees and Prejudgment Interest as Part of Arbitration Judgment

Aqua Management, Inc. v. Abdeen, __Az. Adv. Rep. __ 1CA-CV 09-0132 (App., Div. I, March 30, 2010) (J. Portley).

ARBITRATOR'S AWARD OF ATTYS' FEES AND POTENTIAL AND PREJUDGMENT INTEREST INCLUDED IN COMPUTATION TO DETERMINE IF APPELLANT BEAT ARBITRATION AWARD BY 23% TO AVOID SANCTIONS
In this breach of contract action the plaintiff prevailed before an arbitrator and was awarded attorneys' fees but denied prejudgment interest.

Defendant appealed to superior court where plaintiff won again but attorneys' fees were not awarded while prejudgment interest was. The net effect was that if the attorneys' fees awarded by the arbitrator and the prejudgment interest awarded by the superior court were to be considered in computing whether the defendant/appellant beat the arbitration award by at least 23% then under rule 77 of the Arizona Rules of Civil Procedure, the defendant/appellant would have to pay sanctions.

The Court of Appeals ruled that both attorneys' fees and prejudgment interest should be considered in making the computation based upon the express language in Rule 77 (f) but that interest on the arbitration award was not to be considered.

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