Arizona Court of Appeals Division One Holds That Party Filing Third Party Complaint For Indemnification That Stipulated To Dismiss Complaint After Plaintiffs Clarified Basis for Liability Held Liable For Attorneys’ Fees In Trial Court and In an Appeal Challenging the Fee Award.

In connection with a construction defect action against it, Fulton filed a third-party complaint against BBP and Trojan, the concrete subcontractors for the construction project, alleging that they had a contractual duty to defend and indemnify Fulton if the court awarded damages arising from BBP’s or Trojan’s concrete installation. After the Plaintiffs stated that the basis for Fulton’s liability had to do only with design defects, rather than installation problems, Fulton stipulated to dismiss BBP and Trojan from the action. Trojan and BBP then moved for attorneys’ fees pursuant to Arizona Revised Statutes section 12-341.01 (2003). The court awarded each of them $6,054.75. Fulton appealed.

Judge Irvine, writing for a unanimous panel, upheld the award of attorneys’ fees and awarded BBP and Trojan attorneys fees and costs on appeal. The panel held that the trial court did not abuse its discretion in awarding attorneys’ fees to BBP and Trojan. “Assuming that Fulton’s third-party complaint was entirely proper under Rule 14 and that Fulton did not delay dismissing the complaint for even one minute longer than necessary, that fact would not protect Fulton from a fee award under A.R.S. § 12-341.01.”

The court found that BBP and Trojan were the prevailing parties on appeal and were entitled to an award of costs and reasonable attorneys’ fees on appeal.