CYPRUS BAGDAD COPPER v. Dept. of Revenue

• Decision Date: 22 April 1999
• Docket Number: No. 1 CA-TX 98-0008.,1 CA-TX 98-0008.
• Citation: 196 Ariz. 5,992 P.2d 5
• Parties: CYPRUS BAGDAD COPPER CORPORATION, a Delaware corporation, Plaintiff-Appellee, v. ARIZONA DEPARTMENT OF REVENUE and Yavapai County, Defendants-Appellants.
• Court: Arizona Court of Appeals

992 P.2d 5

196 Ariz. 5

CYPRUS BAGDAD COPPER CORPORATION, a Delaware corporation, Plaintiff-Appellee, v. ARIZONA DEPARTMENT OF REVENUE and Yavapai County, Defendants-Appellants.

No. -0008.

Court of Appeals of Arizona, Division 1, Department T.

April 22, 1999.

Review Denied January 4, 2000.

Fennemore Craig, P.C. by Paul J. Mooney and Kendis K. Muscheid, Phoenix, Attorneys for Appellee.

Janet A. Napolitano, The Attorney General by Michael F. Kempner, Assistant Attorney General and Linda D. DuMars, Assistant Attorney General, Phoenix, Attorneys for Appellants.

OPINION

TOCI, Judge.

¶ 1 The Arizona Department of Revenue and Yavapai County (collectively "ADOR") appeals from the tax court's award of $106,240.62 in expert witness fees to Cyprus Bagdad Copper Corporation ("Cyprus"). Restated, ADOR's issues are as follows: (1) on remand from our reversal of the tax court's ruling limiting the amount of expert witness fees, is Cyprus barred by the mandate or by laches from seeking additional expert witness fees, and (2) did the tax court abuse its discretion in determining that Schweiger v. China Doll Restaurant, Inc., 138 Ariz. 183, 673 P.2d 927 (App.1983), does not control expert witness fee requests and in finding that the additional expert witness fees were sufficiently substantiated and reasonable? We conclude that the trial court properly awarded such fees, and we therefore affirm.

I. BACKGROUND

¶ 2 After Cyprus prevailed at trial in a property tax valuation matter, it requested costs, attorney's fees, and "fees and other expenses," including $69,600.00 in expert witness fees for its testifying expert, Dr. Harry J. Winters, Jr., pursuant to Arizona Revised Statutes Annotated ("A.R.S.") section 12-348 (1990). The tax court ruled that the $20,000.00 cap on awards in section 12-348(E)(5) applied not only to attorney's fees but to all other awardable expenses and taxable costs and awarded Cyprus a total of $20,000.00 for all requested sums.

¶ 3 Cyprus appealed and this court held that the $20,000.00 limitation applied only to attorney's fees and not expert witness fees. See Cyprus Bagdad Copper Corp. v. Arizona Dep't of Revenue, 188 Ariz. 345, 347, 935 P.2d 923, 925 (App.1997)

("Cyprus I").

¶ 4 On remand to the tax court, Cyprus requested $58,000.00 in expert witness fees for Dr. Winters¹ and an additional $106,240.62 in expert witness fees for work performed by other individuals in the preparation of Cyprus's property valuation report. ADOR objected to the request for the additional fees, arguing that Cyprus's request was untimely under Rule 54(g) of the Arizona Rules of Civil Procedure, was barred by laches, and lacked sufficient documentation to make it reasonable. Following a hearing on the issue of timeliness, Judge Cates ruled that Cyprus's request was timely. Judge Cates then transferred the matter to Judge Schafer, who had presided over the trial, to determine the issue of the reasonableness of the requested fees. Following a hearing at which Dr. Winters testified, Judge Schafer found that the requested expenses were sufficiently substantiated and awarded Cyprus $106,240.62 in additional expenses. ADOR filed a timely notice of appeal.

II. DISCUSSION

A. The Appellate Court Mandate

¶ 5 ADOR first contends that the issue of the reasonableness of the additional expert fees was "outside the scope of the Court's mandate" in Cyprus I and that the tax court therefore erred in considering it. We disagree.

¶ 6 A determination whether the additional expense request is outside the scope of this court's mandate is a question of law. We review legal questions de novo. State ex rel. Miller v. Superior Ct., 189 Ariz. 228, 230, 941 P.2d 240, 242 (App.1997).

¶ 7 Under the mandate rule, a trial court may not consider on remand matters decided by an appellate court. The trial court, however, may address any issues that the appellate court "did not dispose of either expressly or impliedly." Pan-Pacific & Low Ball Cable Television Co. v. Pacific Union Co., 987 F.2d 594, 596 (9th Cir.1993). On appeal, this court decided that expert witness fees were not subject to the $20,000.00 cap in A.R.S. section 12-348(E). See Cyprus I, 188 Ariz. at 347,

935 P.2d at 925. We did not decide, either expressly or impliedly, the reasonableness of the expert fees claimed by Cyprus. We remanded the case to the tax court for a determination of this issue with no limitation on the amount of fees the tax court could consider. Hence, the tax court properly considered Cyprus's request for the additional expert expenses.

B. Laches

¶ 8 ADOR next argues that because Cyprus applied for the additional $106,240.62 in expert fees "[m]ore than two years after filing their original application, and five months after this Court issued its mandate," the equitable defense of laches should have barred Cyprus's claim for the additional amount. We disagree that the trial court was bound to apply laches.

¶ 9 A finding of laches is within the sound discretion of the trial court. See McComb v. Superior Ct., 189 Ariz. 518, 525, 943 P.2d 878, 885 (App.1997). In order to bar a claim on the basis of laches, a court must find more than mere delay in the assertion of the claim. "The delay must be unreasonable under the circumstances, including the party's knowledge of his or her right, and it must be shown that any change in the circumstances caused by the delay has resulted in prejudice to the other party sufficient to justify denial of relief." Id. (quoting Mathieu v. Mahoney, 174 Ariz. 456, 459, 851 P.2d 81, 84 (1993)). ADOR has failed to demonstrate such unreasonable delay that the court was compelled to apply laches.

¶ 10 ADOR first argues in a footnote that under Rule 54(g) of the Arizona Rules of Civil Procedure, which became effective on December 1, 1996, and requires a prevailing party to submit an application for fees within sixty days of entry of the underlying judgment, Cyprus was foreclosed from filing the supplemental fee application.² We find Rule 54(g) inapplicable. As Cyprus points out, Rule 54(g) was enacted more than a year after the tax court entered judgment awarding Cyprus fees and other expenses and while this case was pending at this court.

¶ 11 Although Allen R. Krauss Co. v. Fox, 137 Ariz. 203, 669 P.2d 980 (App.1983), is not directly on point, we find it instructive here. In Krauss, Division Two reversed a summary judgment in favor of Krauss and directed the trial court to enter summary judgment for Fox. See id. at 203, 669 P.2d at 980 (citing Allen R. Krauss Co. v. Fox, 132 Ariz. 125, 126, 644 P.2d 279, 280 (App.1982)). After entering judgment for Fox, the trial court granted her request for attorney's fees. Krauss appealed from the attorney's fee award, asserting that the mandate called only for the entry of judgment. See id. On appeal, Division Two concluded that an award of attorney's fees was proper even though there was no express direction in the mandate for the award of such fees. Although Fox had requested fees in her answer, she did not submit a fee application prior to appeal because she had not prevailed in the trial court. See id. at 203-04, 669 P.2d at 980-81.

¶ 12 Here, similar to the situation presented in Krauss, Cyprus's right to expert witness fees did not exist until Cyprus prevailed on its appeal. Until Cyprus had convinced this court that expert witness fees were not limited by the $20,000.00 cap in A.R.S. section 12-348(B), there was no reason for Cyprus to expend the time and effort in compiling a request for the total sums expended for expert witness fees. Accordingly, after issuance of the mandate in Cyprus I and consistent with its holding, Cyprus was entitled to request the full amount of expert fees incurred in preparing and presenting its case for trial. Contrary to ADOR's assertion, the mere fact that Cyprus knew of the additional expert fees at the time of the first application does not demonstrate that Cyprus's delay in requesting them was unreasonable.

¶ 13 ADOR has also failed to demonstrate that it suffered prejudice by the purported delay. Mere speculation does not substitute for proof. See Cauble v. Osselaer, 150 Ariz. 256, 260, 722 P.2d 983, 987 (App.1986)

. In an attempt to show prejudice, ADOR first states that the tax court's decision is "contrary to principles of judicial economy since the trial court had to hear the issue of expert fees twice." Consistent with this court's directions on remand, however, the tax court was required to hear the issue of the recoverability of expert expenses twice whether or not Cyprus requested additional expenses. See Cyprus I, 188 Ariz. at 349,

935 P.2d at 927. The tax court never addressed the issue of the reasonableness of the expert fees request the first time because it determined that it had no discretion to award fees or expenses over the statutory $20,000.00 cap ¶ 14 ADOR next alleges prejudice because (1) "there is a potential for abuse as evidenced by Cyprus Bagdad's admittedly inadvertent request for some of the same [attorneys'] fees it had already recovered in its first request," and (2) the delay creates evidentiary problems in that "the trial court may not remember the proceedings" and "[d]ocuments and/or evidence may no longer exist." (Emphasis added.) These hypothetical, unsubstantiated statements fail to demonstrate the type of actual prejudice necessary to establish a defense of laches. See Cauble, 150 Ariz. at 260,

722 P.2d at 987.

¶ 15 Finally, ADOR argues that "failure to give timely notice of the entire request interferes with settlement. Unless each party is on notice before each stage of the lawsuit that its opponent will seek fees, the policy encouraging settlement will not be served." The record belies ADOR's intimation that it lacked notice in this regard. Cyprus requested fees and other expenses in its complaint. Further, Dr. Winters informed ADOR in his deposition and again at trial that the cost of putting together the...