Madrid v. Concho Elementary School District No. 6 of Apache County et al

Filing 92

ORDER granting 87 Motion for Attorneys' Fees. Gallagher & Kennedy is awarded $1,716.19 in arbitrator's fees; defendants are awarded $34,194.55 in attorneys' fees to reimburse Arizona School Risk Retention Trust, Inc. Signed by Judge David G Campbell on 9/30/2011.(NVO)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Plaintiff,

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No. CV-07-8103-PCT-DGC

Manuel Madrid,

ORDER

vs.
Concho Elementary School District No. 6
of Apache County, an Arizona political
subdivision; and Concho Elementary
School District No. 6 of Apache County
Governing Board Members Carl Dye,
Cecilia Roberts, Tracy Candelaria, Angela
Murphy, and John Rebello,
Defendants.

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Manuel Madrid worked as the superintendent for Concho Elementary School

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District No. 6 beginning in July 2005. His contract with the District provided for

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employment through June 30, 2008. The District’s Governing Board terminated his

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employment on September 18, 2007.

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Plaintiff filed a complaint against the District and individual Board members on

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October 3, 2007. The complaint asserted claims for injunctive and declaratory relief,

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breach of contract, violation of Arizona’s Open Meeting Law, violation of 42 U.S.C.

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§ 1981, discrimination in violation of Title VII of the Civil Rights Act of 1964, and due

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process violations under 42 U.S.C. § 1983. Doc. 1.

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On May 17, 2010, the Court granted summary judgment on all claims in favor of

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Defendants. Doc. 75. Defendants filed a motion for attorneys’ fees the next day.

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Doc. 77. Before briefing was complete, Plaintiff filed an appeal with the Ninth Circuit on

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June 16, 2010.

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Defendants’ motion without prejudice to re-file within 30 days after the Ninth Circuit’s

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disposition of the appeal. Doc. 85. See Fed. R. Civ. P. 54(d), Advisory Comm. Note

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(1993 amendments) (“If an appeal on the merits of the case is taken, the [district] court

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may rule on the claim for fees, may defer its ruling on the motion, or may deny the

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motion without prejudice, directing under subdivision (d)(2)(b) a new period for filing

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after the appeal has been resolved.”). The Ninth Circuit affirmed the Court’s grant of

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summary judgment and the appeal terminated on July 11, 2011. Doc. 86-1.

Doc. 81.

In the interest of judicial economy, the Court denied

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Pursuant to the Court’s order (Doc. 85), Defendants re-filed a motion for

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attorneys’ fees within 30 days of the termination of Plaintiff’s appeal. Doc. 87. The

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motion has been fully briefed. Docs. 87, 88, 89, 91. No party has requested oral

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argument. For reasons that follow, the Court will grant the motion.

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The arbitration clause in the parties’ contract provides: “For any dispute arising

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under the terms of this contract, the parties agree to use arbitration pursuant to A.R.S.

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§ 12-133(D).” Doc. 33-1, Exhibit A, ¶ 14. This language indicates that the parties

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intended to adopt the arbitration procedures set forth in § 12-133. Plaintiff’s appeal of

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the arbitration award confirms the parties’ intent. Doc. 50. The appeal notes that the

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parties chose to be governed by Arizona law, that Arizona law generally does not permit

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binding arbitration of employment disputes, and that contracts with the Arizona state

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government typically include non-binding arbitration procedures under § 12-133. Id. at

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2. Plaintiff’s appeal further states: “[I]t is clear that the reference to A.R.S. § 12-133(D)

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provides for appealable or non-binding arbitration as provided in A.R.S. § 12-133(E).”

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Id.

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Because the parties contractually chose the arbitration procedures provided in

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§ 12-133, the Court exercises its discretion not to award attorneys’ fees under 42 U.S.C.

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§ 1988(b) and A.R.S. § 12-341.01. Nor does the Court find that Plaintiff unreasonably

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delayed proceedings or that his claims were so lacking in substantial justification as to
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warrant attorneys’ fees under A.R.S. § 12-349. See E.E.O.C. v. Bruno’s Restaurant, 13

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F.3d 285, 287 (9th Cir. 1993) (“[I]t is important that a district court resist the

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understandable temptation to engage in post hoc reasoning by concluding that, because a

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plaintiff did not ultimately prevail, his action must have been unreasonable or without

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foundation.” (quoting Christianberg Garment Co. v. Equal Emp’t Opportunity Comm’n,

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434 U.S. 412, 421-22 (1978)).

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Consistent with the parties’ chosen procedure, the Court applies A.R.S. § 12-133

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to determine whether to award attorneys’ fees and the amount of the award. Section 12-

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133(I) provides:

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If the judgment on trial de novo is not at least twenty-three percent more
favorable than the monetary relief or other type of relief granted by the
arbitration award, the court shall order . . . that the appellant pay . . . the
following costs and fees:

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1. To the county, the compensation actually paid to the arbitrator.

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2. To the appellee, those costs taxable in any civil action and reasonable
attorney fees as determined by the trial judge for services necessitated by
the appeal.

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A.R.S. § 12-133(I).

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Plaintiff did not obtain a judgment on appeal that was at least twenty-three percent

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more favorable than the monetary relief granted by the arbitration award. Plaintiff was

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awarded 30 days’ lost wages through arbitration proceedings. Doc. 48, Exhibit A, at 6.

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On appeal, the Court granted Defendants’ motion for summary judgment and dismissed

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all of Plaintiff’s claims. Doc. 75.

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Defendants incurred $1,716.19 in arbitrator’s fees based on invoices and

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disbursements records.

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Defendants by Gallagher & Kennedy, P.A., and therefore should be reimbursed to

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Gallagher & Kennedy, P.A. Section 12-133 provides for recovery of those attorneys’

Doc. 88, Exhibit 5.

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These fees were paid on behalf of

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fees “necessitated by the appeal.”

A.R.S. § 12-133(I)(2).

Defendants incurred

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$34,194.55 in attorneys’ fees after Plaintiff’s March 5, 2009 appeal of the arbitration

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award to the Court. Doc. 88, Exhibit 4. The Court finds that these attorneys’ fees are

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reasonable. The itemized charges are appropriate. Doc. 88-1, Exhibit 4. The rate

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charged by Defendants’ lead attorney was well below his normal billing rate. Doc. 88-1,

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Exhibit 6, ¶5.

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Section 12-133 does not require reimbursement of costs and fees in the event that

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“the court finds on motion that the imposition of the costs and fees would create a

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substantial economic hardship as not to be in the interest of justice.” A.R.S. § 12-133(I).

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Plaintiff has not made the requisite showing of substantial economic hardship. Indeed,

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Plaintiff does not address the economic hardship issue in his response. The response does

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mention in passing that Plaintiff has lost his house and his cars (Doc. 89, at 4), but

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provides no substantiation of this claim or any other explanation concerning economic

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hardship.

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Finally, third party payment of attorneys’ fees does not preclude recovery of fees

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incurred if Defendants assumed a contingent obligation to repay in the event of recovery.

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See Morrison v. Comm’r of Internal Revenue, 565 F.3d 658, 659 (9th Cir. 2009) (“[A]n

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individual may ‘incur’ fees even if those fees are paid initially by a third party.”). A

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defendant who must reimburse a third party insurer in the event that the defendant

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recovers attorneys’ fees has “incurred” compensable legal expenses as defined by the

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Ninth Circuit. Parenteau v. Prescott Unified Sch. Dist., 2009 WL 2169154 at *5-6 (D.

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Ariz. July 17, 2009). Here, as in Parenteau, Defendants are insured by the Arizona

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School Risk Retention Trust. The Trust initially paid for Defendants’ legal fees, and

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Defendants are obligated to turn over an award of attorneys’ fees to the Trust.

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Defendants may recover attorneys’ fees because they have assumed a contingent

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obligation to repay their third party insurer.

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IT IS ORDERED:

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1.

Defendants’ motion for attorneys’ fees (Doc. 87) is granted pursuant to
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A.R.S. § 12-133(I).

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Gallagher & Kennedy, P.A. is awarded $1,716.19 in arbitrator’s fees.

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Defendants are awarded $34,194.55 in attorneys’ fees to reimburse Arizona

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School Risk Retention Trust, Inc.

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Dated this 30th day of September, 2011.

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