Connor v. Cal-Az Properties, Inc., CAL-AZ

• Court: Arizona Court of Appeals
• Writing for the Court: MEYERSON; HAIRE, P.J., and EUBANK
• Citation: Connor v. Cal-Az Properties, Inc., 668 P.2d 896, 137 Ariz. 53 (Ariz. App. 1983)
• Decision Date: 21 July 1983
• Docket Number: No. 1,CAL-AZ,CA-CIV,1
• Parties: James B. CONNOR, Kevin E. O'Malley, and Jon A. Titus, Plaintiffs-Appellees, v.PROPERTIES, INC., a California corporation; and Gary Malmstrom, Defendants-Appellants. 6406.

Page 896

668 P.2d 896

137 Ariz. 53

James B. CONNOR, Kevin E. O'Malley, and Jon A. Titus, Plaintiffs-Appellees, v. CAL-AZ PROPERTIES, INC., a California corporation; and Gary Malmstrom, Defendants-Appellants.

No. 1 CA-CIV 6406.

Court of Appeals of Arizona Division 1, Department D.

July 21, 1983.

James B. Connor, Tempe, Kevin E. O'Malley, Jon A. Titus, Phoenix, in pro per.

Wentworth & Lundin by William J. Reckling III, Phoenix, for appellants.

OPINION

MEYERSON, Judge.

The primary issue in this appeal concerns the propriety of an award of attorneys' fees to plaintiffs-appellees, three attorneys who appeared in propria persona in this matter. The trial judge found that conditions precedent to a real estate purchase contract were not fulfilled and ordered that plaintiffs be refunded their deposit and awarded them attorneys' fees. We affirm the ruling of the trial court with respect to the merits of this action, but reverse the award of attorneys' fees.

I. FACTS

Plaintiffs-appellees James B. Connor, Kevin E. O'Malley, and Jon A. Titus (buyers) brought this action against defendants-appellants Cal-Az Properties, Inc. and Gary Malmstrom (sellers) (as well as other defendants who are not parties to this appeal), seeking the return of $2,500 deposited as earnest money on a real estate purchase contract. The parties entered into a contract for the sale of real property on December 2, 1980. The contract provided that $100,000 of the purchase price would be paid "by [a] new conventional loan (renegotiable)." The contract further provided that it was "contingent on [the] property appraising for at least [the] sales price and buyers qualifying for and obtaining above loan. Buyer to pay for appraisal and cost of securing loan. Buyer to apply for loan within three working days."

Three days later, buyers met with a representative of Western American Mortgage Company (Western American) to arrange for the financing. Credit information was obtained and the mortgage company submitted the buyers' application for a renegotiable, conventional loan to Greater Arizona Savings and Loan Association which ultimately refused to extend credit to the buyers.

Western American also arranged for an appraisal to be done on the property. The first appraiser valued the property at $134,900 by the cost approach and $130,000 by the market approach. The sales price of the property was $164,500. The initial appraisal was not completed and submitted as a "formal" appraisal because it was below the sales price. A subsequent appraisal was arranged which reflected the value of the property at exactly the sales price. Because the initial appraisal was not at the sales price and because the buyers failed to obtain financing in the form of a renegotiable, conventional loan, they concluded that the conditions stipulated in the real estate contract were not met and demanded the return of their deposit. After the sellers refused, the buyers instituted the present action.

The trial judge granted the buyers' motion for summary judgment. Buyers were granted judgment in the amount of $2,500 and sellers were further ordered to pay $1,250 in attorneys' fees. Sellers then brought this appeal.

II. REFUND OF THE DEPOSIT

Sellers contend that the trial court erred in granting summary judgment with respect to their obligation to return the buyers' $2,500 deposit. Sellers contend that there were disputed issues of material fact which made the granting of summary judgment improper. We disagree.

The real estate purchase contract contained two contingencies--the property appraising for at least the sales price and buyers qualifying for and obtaining a renegotiable, conventional loan. Because we find that the first condition precedent--that the property appraise for at least the purchase price--was not satisfied, we need not reach the second condition concerning the renegotiable, conventional loan. The condition failed when the appraiser of the property valued it at $134,900 by a cost approach and $130,000 by a market approach, far less than the sales price of $164,500. ¹ When an express condition of a contract for the purchase of real estate fails the contract will not be enforced. Sam Levitz Furniture Co. v. Safeway Stores, Inc., 105 Ariz. 329, 332, 464 P.2d 612, 615 (1970).

Although a subsequent appraisal was secured for the exact purchase price, that would hardly have been much comfort to the buyers after the first appraisal came in far below the sales price. The condition pertaining to the appraisal was inserted for the benefit of the buyers who could legitimately conclude that based upon the initial appraisal the property did not appraise at the sales price. Likewise, it was not error for the trial judge to conclude that the property did not appraise at the sales price. ² Because the initial appraisal was less than the sales price, the buyers were entitled to enforce the condition and thereby cancel the agreement. Hence, the trial judge correctly concluded that buyers were entitled to the return of their $2,500 deposit.

III. ATTORNEYS' FEES

The buyers, all attorneys, represented themselves in these proceedings. According to Mr. O'Malley's affidavit, the three attorneys spent 45.7 hours in connection with the litigation and claimed that the value of their time was $60 per hour. Thus, they requested attorneys' fees in the amount of $2,742 which was reduced by the trial court to $1,250. Buyers sought these fees pursuant to A.R.S. § 12-341.01 and a provision in the real estate contract which provided that in the "event Buyer or Seller shall file suit against the other to enforce any provision of this contract, or for damages sustained by reason of its breach, all the parties prevailing in such action, on trial and appeal, shall receive their reasonable attorney's fees and costs awarded by the court."

The question before us is whether under the terms of the contract or the statute, attorneys who appear on their own behalf and who prevail in litigation, are entitled to receive a fee award. We need not consider, however, the claim for fees under the statute. Where "parties have provided in the contract the conditions under which attorney's fees may be recovered," A.R.S. § 12-341.01 is not to be considered. Sweis v. Chatwin, 120 Ariz. 249, 252, 585 P.2d 269, 272 (Ct.App.1978). Thus, we limit our discussion to the fee provision contained in the real estate contract.

Courts have split on the issue of whether attorneys who represent themselves can be awarded fees for such representation. In a case awarding fees to attorneys appearing on their own behalf, the Supreme Court of Oklahoma in Weaver v. Laub, 574 P.2d 609 (Okl.1977) summarized the policy considerations raised in other jurisdictions. Courts declining to grant fees under such circumstances have found that one should not become one's own client and charge for professional services and that attorneys representing themselves might be tempted to protract litigation for their own financial betterment. See, e.g., Westenberger v. Bernard, 160 So.2d 312 (La.App.1964); VanHooser v. Cunningham, 24 Tenn.App. 480, 146 S.W.2d 840 (1941). Other courts have denied fees based upon statutory construction. O'Connell v. Zimmerman, 157 Cal.App.2d 330, 321 P.2d 161 (1958). Courts which have awarded fees to attorneys representing themselves have found that the lawyers have expended their professional time,...