ABC Supply, Inc. v. Edwards

• Decision Date: 17 December 1996
• Docket Number: CA-CV,No. 1,1
• Citation: 191 Ariz. 48,952 P.2d 286
• Parties: , 232 Ariz. Adv. Rep. 9, 255 Ariz. Adv. Rep. 22 ABC SUPPLY, INC., a foreign corporation, Plaintiff-Appellant, v. Thomas Hugh EDWARDS and Frances Ann Edwards, husband and wife, dba D & E Roofing, Defendants-Appellees. 96-0031.
• Court: Arizona Court of Appeals

Page 286

952 P.2d 286

191 Ariz. 48, 232 Ariz. Adv. Rep. 9, 255 Ariz. Adv. Rep. 22

ABC SUPPLY, INC., a foreign corporation, Plaintiff-Appellant, v.Thomas Hugh EDWARDS and Frances Ann Edwards, husband and wife, dba D & E Roofing, Defendants-Appellees.

No. 1 CA-CV 96-0031.

Court of Appeals of Arizona Division 1, Department D.

Dec. 17, 1996.

As Amended Oct. 30, 1997.

Opinion Granting Reconsideration

in Part Oct. 30, 1997.

Review Denied March 17, 1998.

Kevin John Witasick & Associates by Kevin John Witasick, William C. Knoche, Phoenix, for Plaintiff-Appellant.

Jennings & Haug by James L. Csontos, Phoenix, for Defendants-Appellees.

OPINION

GRANT, Judge.

ABC Supply, Inc.("ABC") appeals from the trial court's reduction in attorneys' fees payable by Appellees, Thomas Hugh Edwards and Frances Ann Edwards, husband and wife, dba D & E Roofing ("D & E") following final judgment.For the reasons that follow, we affirm and impose sanctions on counsel for ABC.

SUMMARY OF FACTS AND PROCEDURE

The underlying cause of action is a breach of contract claim to recover charges for materials sold on credit by ABC, a supplier of roofing materials, to D & E, a roofing company.ABC's claims also included late charges, accrued interest, and all reasonable attorneys' fees, as provided by the contract.The remaining disputes revolve around the procedural aspects of this case.

The procedural history of this case is as follows.On December 9, 1992, ABC filed a claim for the recovery of the principal sum of $7,302.63 with compound interest at a rate of 2% per month.D & E admitted owing the principal sum of $6,130.90 plus simple interest.An arbitrator awarded ABC the principal sum ($6,130.90), plus interest ($3,451.95) and attorneys' fees ($1,500.00).The arbitrator also imposed a Rule 11 sanction against ABC's attorneys of $1,500.00 for needlessly extending the case and thereby harassing Defendants, D & E.

ABC appealed the arbitration.On June 1, 1995, the trial court by minute order awarded the stipulated principal amount ($6,130.90), plus prejudgment interest ($4,105.95), costs and reasonable attorneys' fees in favor of ABC.There is no record of the trial court setting a date for the application for, or objection to, attorneys' fees.On July 18, 1995, D & E filed a Request for Extension of Time to File Objection to Application for Fees.This document was filed on the same day the trial court judge signed the judgment, but one week prior to the judgment being filed with the clerk of the court(July 25, 1995).The judgment awarded ABC the stipulated principal amount ($6,130.90) together with interest at a rate of 24% per annum, plus prejudgment interest ($4,105.95), costs ($170.00) and attorneys' fees ($22,892.00).

On July 27, 1995, the trial court granted D & E an extension until August 11, 1995, to file an objection to the application for attorneys' fees.On August 9, 1995, D & E filed a Motion for New Trial.D & E filed a timely Objection to ABC's Application for Attorneys' Fees on August 11, 1995.The Objection was accompanied by the Affidavit of Attorney David C. Tierney as an expert on legal fees.On August 24, 1995, ABC filed a Reply to Objection to Application for Attorneys' Fees.On August 29, 1995, the trial court, by minute entry, reduced attorneys' fees payable to ABC from $22,892.00 to $2,500.00 and denied D & E's Motion for a New Trial.The trial court specifically found $2,500.00 to be a reasonable amount for attorneys' fees in this case.

On September 14, 1995, ABC moved for a new trial on the issue of attorneys' fees.The trial court, under Maricopa County Superior Court Rule 3.7, ordered a hearing on the issue of attorneys' fees.On November 2, 1995, the trial court conducted a hearing at which ABC's counsel of record, Kevin John Witasick("Witasick"), testified for ABC.On November 6, 1995, the trial court entered formal written amended judgment which affirmed the original judgment of principal, interest and costs, but ordered attorneys' fees to ABC in the sum of $2,500.00, affirming the minute entry of August 29, 1995.

ABC timely appealed the judgment of the trial court.This court has jurisdiction under Arizona Revised Statutes Annotated("A.R.S.")section 12-2101(B).

DISCUSSION

The issues presented in this appeal are:

1.Whether the trial court is barred by the doctrines of res judicata and collateral estoppel from allowing new evidence in determining reasonable attorneys' fees after entry of final judgment.

2.Whether the trial court abused its discretion by reducing an award for attorneys' fees after entering final judgment.

3.Whether the reduction of attorneys' fees from $22,892.00 to $2,500.00 is reasonable.

4.Whether plaintiff's attorney should be sanctioned for improper conduct.

1.Res Judicata

ABC argues that D & E is barred from relitigating the trial court's original attorneys' fees award to ABC, embodied in a duly entered final judgment under the doctrines of res judicata and collateral estoppel.New arguments such as collateral estoppel and res judicata cannot be raised for the first time on appeal.SeeAldrich and Steinberger v. Martin, 172 Ariz. 445, 447, 837 P.2d 1180, 1182(App.1992).Only the theories expressly raised at trial are "properly preserved for appeal."Id.

In this case, ABC did not present the issues of res judicata or collateral estoppel to the trial court.ABC had the opportunity to raise these issues when it filed the Reply in Support of its Application for Attorneys' Fees and Response to Defendants' Motion for New Trial.Furthermore, ABC filed a Motion for New Trial and Reply in Support of its Motion for New Trial after the trial court reduced the attorneys' fees award, thereby clearly illustrating an intent not to be bound by the amended final judgment.We hold that ABC waived the arguments of res judicata and collateral estoppel by not expressly raising them in response to D & E's Objections to Application for Attorneys' Fees and affirmatively seeking to relitigate the matter after the trial court amended the July 25, 1995 judgment by reducing the award of attorneys' fees from $22,892.00 to $2,500.00.

2.Abuse of Discretion.

a. Finality of Judgments

ABC contends that D & E did not timely file the Request for Extension of Time to File an Objection to Application for Fees before the final judgment was entered.Arizona Rules of Civil Procedure ("ARCP"), Rule 58(a), sets forth three requirements for a final judgment: (1) it must be written; (2) signed by a judge; and (3) filed with the clerk of the court.Focal Point v. Court of Appeals, 149 Ariz. 128, 129, 717 P.2d 432, 433(1986)(holding that a judgment is not final until it is filed with the clerk of the court).

In this case, D & E made a timely Request for Extension of Time to File Objection to Application for Fees before final, written judgment was filed with the clerk of the court.The Request by D & E was filed with the court on July 18, 1995.The judgment, awarding ABC attorneys' fees in the sum of $22,892.00, was prepared and signed by the trial court on July 18, 1995, but was not filed with the clerk of the court until July 25, 1995.Therefore, in accordance with Rule 58(a), the judgment was not final until one week after the trial court received the extension request from D & E.Thus, D & E's Request for Extension was timely.

b. Modification of Judgment

ABC argues that the trial court cannot modify a judgment once the judgment becomes final.ARCP, Rule 60(c), provides:

On motion and upon such terms as are just the court may relieve a party or a party's legal representative from a final judgment, order or proceeding for the following reasons: (1) mistake ... or (6) any other reason justifying relief from the operation of the judgment.The motion shall be filed within a reasonable time, and for reasons (1), (2)[relating to newly discovered evidence] and (3)[relating to fraud by an adverse party], not more than six months after the judgment or order was entered or proceeding was taken.

The Rule further provides that "[T]his rule does not limit the power of a court to entertain an independent action to relieve a party from a judgment...."Id.

D & E argues that the trial court's discretion to reduce attorneys' fees after final judgment is governed by Hammond v. A.J. Bayless Markets, Inc., 58 Ariz. 58, 117 P.2d 490(1941).In Hammond, our supreme court recognized that under Rule 60(c)(formerly section 3859, R.C.1928, section 21-1502, note, A.C.1939)the court may modify a judgment within six months from the date of entry.Id. at 66, 117 P.2d at 493.The Hammond court reasoned that "when the proper amount to be allowed is wholly within the discretion of the trial court and dependent to a great extent on its own knowledge, the mere fact that the court does modify the judgment is sufficient to establish that it had good cause to believe the modification to be correct."Id.

ABC counters that the trial court erred by granting D & E postjudgment relief.ABC relies first on Roberts v. Morgensen Motors, 135 Ariz. 162, 659 P.2d 1307(App.1982)andRuck Corp. v. Woudenberg, 125 Ariz. 519, 611 P.2d 106(App.1980).In Roberts, we held that there was no abuse of discretion in the trial court's denial of a motion to set aside attorneys' fees when the dealer failed to file a timely response to purchaser's affidavits regarding fees.135 Ariz. at 167, 659 P.2d at 1312.In Ruck, we held that the trial court's decision to deny a post-trial motion for reduction in attorneys' fees was not an abuse of discretion since counsel did not make a prior objection to the procedure and because this issue was not raised until the motion for new trial.125 Ariz. at 522, 611 P.2d at 109.

Roberts and Ruck are distinguishable from this case because here the trial court granted post-judgment relief, rather than denying it.Further, if ABC accepts the proposition that the trial court has discretion to deny post-judgment relief,...