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Britt v. Steffen - 12/26/2008

Arizona Court of Appeals, Division One, Holds that Trial Court May Award Attorneys’ Fees Under A.R.S. § 12-341.01(A) to Defendants in Contract Action That Is Dismissed Without Prejudice for Lack of Prosecution.


Plaintiffs sued Defendants for breach of contract and negligent misrepresentation.  In their Answer, Defendants requested an award of attorneys’ fees under A.R.S. § 12-341.01, which permits an award of attorneys’ fees to the successful party in a contract action.  The Superior Court dismissed the lawsuit without prejudice for lack of prosecution.  Defendants filed a timely application for an award of attorneys’ fees combined with a motion for Rule 11 sanctions against Plaintiff’s counsel.  Plaintiffs did not timely oppose the motions, but instead filed an untimely motion to strike, asserting that the court lacked jurisdiction to consider the motions.  The court denied the motion to strike and awarded Defendants their attorneys’ fees by a judgment against both Plaintiffs and Plaintiffs’ counsel.

The Arizona Court of Appeals upheld the judgment.  A defendant to an action dismissed without prejudice is considered a “successful party” for purposes of A.R.S. § 12-341.01(A) even though the dismissal does not operate as an adjudication upon the merits.  The Court of Appeals noted that recent changes to the Arizona Rules of Civil Procedure make clear that a dismissal of the case does not divest the trial court of jurisdiction to consider a timely filed, post-judgment application for attorneys’ fees, which makes prior cases on the issue inapplicable.  See Rules 54(b), 54(g), 58(g).  Finally, the trial court did not err by also holding the Plaintiffs’ attorney jointly and severally liable for the attorneys’ fees as a sanction under Rule 11.  Because the motion for Rule 11 sanctions was promptly filed following dismissal of the complaint, the trial court did not abuse its discretion in finding the motion timely filed and awarding sanctions. 

The Court of Appeals therefore affirmed the judgment and awarded Defendants’ reasonable attorneys’ fees incurred in connection with the appeal.

Judge Hall authored the opinion; Judges Ehrlich and Irvine concurred.

Posted On: 12/30/2008