Western Alliance Bank v. Jefferson

Filing 284

ORDER re 248 Motion for Attorney's Fees. Alliance's application for attorney's fees and non-taxable expenses at docket 248 is GRANTED IN PART AND DENIED IN PART. Alliance is awarded a total of $291,990.84 in attorney's fees, costs, and expenses. Signed by Judge John W Sedwick on 4/8/16.(JWS)

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UNITED STATES DISTRICT COURT

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DISTRICT OF ARIZONA

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Western Alliance Bank,

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Plaintiff,
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vs.
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Richard Jefferson,
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Defendant.
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Richard Jefferson,
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Counter-claimant,
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vs.
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Western Alliance Bank,
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Counter-defendant.
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Richard Jefferson,
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Third-party plaintiff,
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vs.
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Theodore Kritza & Michelle Lee
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Kritza,
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Third-party defendants. )
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2:14-cv-0761 JWS
ORDER AND OPINION
[Re: Motion at docket 248]

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I. MOTION PRESENTED

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The court entered judgment in favor of plaintiff and counter-defendant Western

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Alliance Bank (“Alliance”) at docket 246. At docket 248 Alliance applies f or attorney’s

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fees and non-taxable costs. Defendant and counter-claimant Richard Jefferson

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(“Jefferson”) opposes at docket 262; Alliance replies at docket 272.

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Oral argument was requested, but would not assist the court.

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II. DISCUSSION
A.

Attorney’s Fees
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Alliance’s entitlement to attorney’s fees

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After considering, but not explicitly addressing, the multi-factor standard outlined

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in Associated Indemnity Corporation v. Warner,1 this court ruled that Alliance is entitled

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to an award of reasonable attorney’s fees pursuant to A.R.S. § 12-341.01. 2 Jefferson

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now brings two challenges to the court’s ruling based on one of the Associated

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Indemnity factors: whether “[t]he litigation could have been avoided or settled and the

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successful party’s efforts were completely superfluous in achieving the result.”3

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Jefferson first argues that “a substantial portion of the attorney[’s] fees sought”

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could have been avoided had Alliance moved for summary judgment “at a much earlier

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point in the case.” 4 This argument rings hollow in light of the court’s findings that

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Jefferson’s litigation strategy was to delay for as long as possible the repayment of a

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debt he knowingly ratified. It was this litigation strategy, not Alliance’s reasonable

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efforts to obtain discovery and build its case, that prolonged resolution.

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Second, Jefferson notes that Alliance’s billing records show that in February
2015 third-party defendant Ted Kritza (“Kritza”) withdrew his offer to settle Alliance’s

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694 P.2d 1181 (Ariz.1985).

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Doc. 246.
Associated Indemnity, 694 P.2d at 1184.
Doc. 262 at 10.

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action against Jefferson for $535,000. Jefferson argues that “a substantial portion” of

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the attorney’s fees generated in this case could have been avoided if Alliance had

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accepted that offer.5 In response, Alliance states that this offer was not “serious”

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because “Kritza had no financial ability to pay a more than $500,000 settlement offer to

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Alliance and it was quickly withdrawn by Kritza.”6 Under the circumstances, Alliance’s

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decision not to accept Kritza’s settlement offer was reasonable.

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2.

Reasonableness of the requested attorney’s fees

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When analyzing attorney’s fees for reasonableness, the court must determine

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that: (1) the hourly billing rate is reasonable and (2) the hours expended on the case

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are reasonable. 7 Local Rule 54.2(c)(3) lists thirteen factors that courts should consider

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when determining the reasonableness of an attorney’s fee request. They are:

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(A) The time and labor required by counsel;
(B) The novel and difficulty of the questions presented;
(C) The skill requisite to perform the legal service properly;
(D) The preclusion of other employment by counsel because of the
acceptance of the action;
(E) The customary fee charged in matters of the type involved;
(F) Whether the fee contracted between the attorney and the client
is fixed or contingent;
(G) Any time limitations imposed by the client or the circumstances;
(H) The amount of money, or the value of the rights, involved, and
the results obtained;
(I) The experience, ability and reputation of counsel;
(J) The “undesirability” of the case;
(K) The nature and length of the professional relationship between
the attorney and the client;
(L) Awards in similar actions; and
(M) Any other matters deemed appropriate under the
circumstances.8

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Id. at 11 (citing doc. 248-1 at 34).

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Doc. 272 at 5.
Schweiger v. China Doll Rest., Inc., 673 P.2d 927, 931-21 (Ariz. Ct. App. 1983).
LRCiv 54.2(c)(3).

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“Once a party submits an itemized list of fees with sufficient detail and establishes

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entitlement to fees, the burden then shifts to the party challenging the fees to show that

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the fees are unreasonable.” 9

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Alliance has submitted an itemized list of fees that show its three shareholder

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attorneys and two paralegals billed 819.9 hours on this case, for a total attorney’s fee

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amount of $299,996.79. 10 The burden now shifts to Jefferson to show that these fees

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are unreasonable.

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Jefferson does not dispute that Alliance’s billing rates are reasonable. 11 Instead,
he identifies 111.8 hours and $45,381.65 in Alliance’s attorney ’s fees that he argues

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are unreasonable. 12 These arguments fall under the following four categories: (1) fees

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that were not incurred in this matter because they relate to a separate criminal

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investigation; (2) fees that were not necessarily incurred because of Rule 56(a); (3) fees

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that were not necessarily incurred because “the Power of Attorney was forged and not

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notarized in violation of Arizona law;” and (4) fees that have already been paid to

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Alliance pursuant to a court order.

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a.

Criminal investigation

Jefferson argues that Alliance’s attorney’s fees “incurred in connection with

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interviews of Alliance employees conducted by the FBI” are not related to this case, but

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instead an independent criminal investigation, and therefore should not be included in

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Essex Ins. Co. v. W.G.S., LLC, No. CV 08-1402-PHX-JAT, 2010 WL 3239393, at *6 (D.
Ariz. Aug. 16, 2010) (citing Nolan v. Starlight Pines Homeowners Ass’n, 167 P.3d 1277, 1286
(Ariz. Ct. App. 2007)).

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Doc. 248-1 at 13-60.

Shareholder John R. Clemency’s billing rate is listed as $494 per hour before 2015 and
$535.50 per hour thereafter. Shareholder Lindsi Weber’s billing rate is listed as $325 before
2015 and $346.50 per hour thereafter. Shareholder Janel Glynn’s billing rate is listed as $295
before 2015 and $346.50 per hour thereafter. Paralegals Felice Wortman and Rachel H.
Milazzo’s billing rates “ranged from $200 to $234” per hour, with “the majority of the hours billed
at $234 per hour.” Id. at 4 ¶¶ 8-11.
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Doc. 262-1 at 2-9.

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Alliance’s attorney’s fee award.13 Alliance responds by arguing that the FBI

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investigation is related to this case because it was “initiated at the urging of Jefferson

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who only used the FBI as a litigation tactic in this case.” 14 The court agrees with

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Jefferson that the time Alliance spent on the FBI investigation was spent on a related,

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but separate matter. Even if Jefferson contacted the FBI and asked them to investigate

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Kritza’s transactions, the FBI exercised its discretion by choosing to investigate.

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Alliance’s fees that relate to the FBI’s investigation are not recoverable in this case.

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The nineteen entries identified by Jefferson will be removed, for a total reduction of

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$6,317.55.

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b.

Fees not necessarily incurred because of Rule 56(a)

Jefferson repeatedly objects to Alliance’s time entries as follows: “Objection as

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not necessarily incurred. See Rule FRCP 56A.” 15 Jefferson does not explain the

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meaning of these objections; they are overruled.

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c.

Fees not necessarily incurred because the Power of Attorney
is illegitimate

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Jefferson also repeatedly objects to Alliance’s time entries as follows: “Objection
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as these fees were not necessarily incurred in this matter, as the Power of Attorney was
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forged and not notarized in violation of Arizona law.”16 Jefferson does not explain the
meaning of these objections; they are overruled.

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d.

Fees that have already been paid

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Finally, Jefferson argues that he has already paid various fees pursuant to this
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court’s order.17 Alliance effectively concedes that Jefferson is correct by not responding

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Doc. 262 at 11.

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Doc. 272 at 7.

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See, e.g., Doc. 262-1 at 2.
See, e.g., id. at 3.
Id. at 9.

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to this argument. The nine entries identified by Jefferson will be removed, for a total

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reduction of $1,688.40.

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B.

Non-taxable Costs

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1.

Alliance’s entitlement to non-taxable costs

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Alliance seeks an award of all non-taxable costs related to this case. It first

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relies on A.R.S. § 12-341.01, but this reliance is misplaced because that statute

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pertains only to attorney’s fees. Next, Alliance argues that it is owed non-taxable costs

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under the parties’ contract. W ith regard to litigation costs, the loan agreements that

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Jefferson ratified state as follows: “Lender may hire or pay someone else to help collect

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this Agreement if Borrower does not pay. Borrower will pay Lender that amount. This

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includes, subject to any limits under applicable law, Lender’s attorneys’ fees and

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Lender’s legal expenses . . . .”18

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Jefferson objects that his signature on these documents was forged.19 In light of

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this court’s ruling that he ratified them even if they were forged, this objection is

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overruled. Jefferson also objects that the contract limits recoverable costs to those

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allowed under applicable law. Because A.R.S. §§ 12-332 and 12-341 do not prov ide

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for recovery of non-taxable costs, Jefferson argues, they are prohibited by the contract.

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This argument lacks merit. The relevant statute, A.R.S. § 12-332, specifically provides

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that it does not prevent one party from contractually agreeing to reimburse another

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party’s non-taxable costs.20

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2.

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The Local Rules require Alliance to “identify each related non-taxable expense

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Alliance’s non-taxable costs

with particularity” and “attach copies of applicable invoices, receipts and/or

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Doc. 1-4 at 78.

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Doc. 262 at 14.

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ARS § 12-332(A)(6) (Stating that recoverable costs include “[o]ther disbursements that
are made or incurred pursuant to an order or agreement of the parties.”); Schritter v. State
Farm Mut. Auto. Ins. Co., 36 P.3d 739, 742 n.5 (Ariz. 2001).

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disbursement instruments.”21 “Failure to itemize and verify costs may result in their

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disallowance by the court.”22

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Although Alliance submitted an itemized list of its non-taxable costs, totaling

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$4,622.69, 23 it did not include any invoices, receipts, or disbursement instruments. This

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deficiency is fatal to Alliance’s request.24

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C.

Total Award Calculation

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Attorney’s Fees: $299,996.79 - $6,317.55 - $1,688.40 = $291,990.84.

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Non-taxable Expenses: $0.

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Total: $291,990.84.

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III. CONCLUSION
Based on the preceding discussion, Alliance’s application for attorney’s fees and

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non-taxable expenses at docket 248 is GRANTED IN PART AND DENIED IN PART.

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Alliance is awarded a total of $291,990.84 in attorney’s fees, costs, and expenses as

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set out above.

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DATED this 8th day of April 2016.

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/s/ JOHN W. SEDWICK
SENIOR UNITED STATES DISTRICT JUDGE

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LRCiv 54.2(e)(3).

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Id.

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Doc. 248-1 at 60-64.

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See Med. Protective Co. v. Pang, 25 F. Supp. 3d 1232, 1249 (D. Ariz. 2014) (“Pang
has failed to attach copies of applicable invoices, receipts, and/or disbursement instruments.
Without such documentation, the Court cannot verify these expenses. Accordingly, the Court
does not find the $4,701.23 in related non-taxable expenses reasonable, and will not award
these expenses.”).

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