Arizona Court of Appeals Division One Holds That a Party Who is Contractually Entitled to an Award of Attorneys’ Fees Must Make a Prima Facie Case that the Fees Requested are Reasonable.

Earl Geller, Joyce Geller, Robert S. Aronson, Joan S. Brisk, Jack Lipton, Gerald B. Jackson, and Betty S. Jackson (collectively the “Geller Group”) sued Brian Lesk to recover the balance Lesk owed on a promissory note.  The note contained a paragraph providing that in the event of default on the note, Lesk would pay the costs of collecting on the note, including attorneys’ fees. After several months of litigation, the superior court granted the Geller Group summary judgment and awarded it $380,000 in principal, $320,394.92 in late charges, penalties and interest on the note, reasonable attorneys’ fees, costs, and interest on the note.  Because the Geller Group had agreed to pay their attorney a fee equal to twenty-five percent of the total amount of the judgment, the Geller Group requested a $175,098.73 fee award.  Lesk opposed the requested fees, arguing that the amount requested was unreasonable.  The superior court subsequently awarded the Geller Group the requested fees in full.  Lesk filed a timely notice of appeal.

On appeal, the Arizona Court of Appeals vacated the fee award and remanded the case for the trial court to determine the amount of reasonable fees incurred by and to be awarded to the Geller Group.  In Arizona, courts will generally enforce a contract provision for attorneys’ fees according to its terms.  Courts retain, however, their discretion to limit any such award to a reasonable level.  Once the prevailing party makes a prima facie case that the fees requested are reasonable, the burden shifts to the party opposing the fee request to establish that the amount requested is clearly excessive.  If the party opposing the award shows that the otherwise prima facie reasonable fee request is excessive, the court has discretion to reduce the fees to a reasonable level.  In this case, the Geller Group did not present any evidence to support the reasonableness of its requested fees and on which the court could base an assumption of reasonableness.  Because the Geller Group failed to make a prima facie showing of reasonableness, the Court of Appeals concluded that the superior court erred in awarding the requested fees. 

Judge Kessler authored the opinion; Judges Norris and Swann concurred.