McDowell Mountain Ranch Community Association, Inc. v. James F. Simons – 8/10/2007

August 15, 2007

Arizona Court of Appeals Division One Holds That Court’s Discretion Is Narrowly Circumscribed When the Parties Contractually Agree That a Prevailing Party Shall Be Awarded All Attorneys’ Fees.

Appellant challenged the trial court’s award of partial attorneys’ fees in its favor, arguing that its CC&Rs entitled Appellant to “all attorneys’ fees and costs incurred in enforcing compliance with the CC&Rs.” Judge Hall, writing for a divided panel, found that the trial court abused its discretion when it awarded Appellant only one-half of its requested fees. The Court of Appeals held that – pursuant to the plain language of the CC&Rs – Appellant was entitled to receive all its attorneys’ fees except those that were clearly excessive. The Court of Appeals further held that assuming the fees requested were facially reasonable, the losing party had the burden to show that they were clearly excessive. The Court vacated the award and remanded for a hearing on the reasonableness of the fees.

Judge Orozco dissented, noting that a review of the affidavits for attorneys’ fees supported the trial court’s implicit conclusion that the fees were “clearly excessive.” Judge Orozco felt that the trial court must examine the fees application and determine what is reasonable, regardless of whether the losing party objected. She concluded the trial court had not abused its discretion.

Judge Hall authored the opinion, in which Judge Weisberg concurred; Judge Orozco authored the dissent.