Moedt v. General Motors Corp.

• Decision Date: 24 December 2002
• Docket Number: No. 1 CA-CV 02-0038.,1 CA-CV 02-0038.
• Citation: 60 P.3d 240,204 Ariz. 100
• Parties: Jacque MOEDT, Plaintiff-Appellant/Cross-Appellee, v. GENERAL MOTORS CORPORATION, Defendant-Appellee/Cross-Appellant.
• Court: Arizona Court of Appeals

60 P.3d 240

204 Ariz. 100

Jacque MOEDT, Plaintiff-Appellant/Cross-Appellee, v. GENERAL MOTORS CORPORATION, Defendant-Appellee/Cross-Appellant.

No. -0038.

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

December 24, 2002.

Krohn & Moss, Ltd. By Marshall Meyers, Phoenix, Attorneys for Plaintiff-Appellant/Cross-Appellee Moedt.

Kimble, Nelson, Audilett, McDonough & Molla, P.C. By Negatu Molla and Lawrence McDonough, Tucson, Attorneys for Defendant-Appellee/Cross-Appellant General Motors.

OPINION

EHRLICH, Judge.

¶ 1 Jacque Moedt sued General Motors Corporation for an alleged breach of an automobile warranty. The matter was settled in substance, but Moedt appeals from the attorney's fees award, arguing that the trial court abused its discretion by failing to award her sufficient fees. General Motors cross-appeals the fee award; it challenges the court's finding that Moedt could even recover fees pursuant to certain statutory provisions. Because the court had the authority to award fees to Moedt and the discretion to award less than the fees she requested, we affirm.

BACKGROUND

¶ 2 Moedt sought relief for a claimed breach of warranty pursuant to two statutory provisions: the Magnuson-Moss Warranty Federal Trade Commission Improvement Act, 15 U.S.C. §§ 2301-2312 (1998)("Magnuson-Moss Act"), and the Arizona Motor Vehicles Warranties Act, ARIZ.REV.STAT. ("A.R.S.") §§ 44-1261 to 44-1267 (Supp. 2002), the latter also known as Arizona's "Lemon Law." Kennedy v. Linda Brock Auto. Plaza, Inc., 175 Ariz. 323, 324, 856 P.2d 1201, 1202 (App.1993). Both of these statutes authorize a court to award attorney's fees to a prevailing consumer in warranty actions, see 15 U.S.C. § 2310(d)(2); A.R.S. § 44-1265(B), and only these specific statutory provisions give authority for a fee award. See Kennedy, 175 Ariz. at 325,

856 P.2d at 1203.

¶ 3 Moedt hired the law firm Krohn & Moss ("K & M") to represent her against General Motors. As stated in her reply brief, K & M does not charge a client fees in such warranty actions but, instead, "[relies] solely on judicial enforcement of the [Magnuson-Moss Act] (and/or Arizona Lemon Law's) fee-shifting provision for compensation."

¶ 4 According to its attorney's fee application, K & M began representing Moedt on July 13, 2001. It filed a complaint a month later, having corresponded throughout that month with General Motors and its counsel regarding a possible settlement. On August 21, General Motors offered to settle Moedt's claim for $5000 plus $500 for attorney's fees. Moedt accepted the offer with respect to her claim but moved for more attorney's fees. ARIZ. R. CIV. P. 68(c). After a hearing, the trial court awarded Moedt $712 in fees instead of the requested $4041.50. Both parties appealed.

ANALYSIS

¶ 5 Moedt challenges the amount of the attorney's fees award, whereas General Motors challenges the trial court's authority to award fees. We first analyze General Motors's contention.

¶ 6 General Motors argues that, because this case settled without direct judicial involvement, Moedt is not a "prevailing party" and therefore not entitled to an attorney's fees award by either the Magnuson-Moss Act or the Lemon Law. The trial court did not specify the statutory basis for its award, nor was such specificity requested by either party. However, given that the Magnuson-Moss Act does not preempt state remedies, 15 U.S.C. § 2311(b)(1), the court in all probability awarded fees pursuant to the Lemon Law so we consider whether Moedt is a prevailing party according to the Arizona statute.¹

¶ 7 In no opinion has a court analyzed what constitutes a "prevailing party" within the meaning of A.R.S. § 44-1265. The statutory language is the best indication of the legislature's intent, though, Vega v. Sullivan, 199 Ariz. 504, 507 ¶ 9, 19 P.3d 645, 648 (App. 2001), and we give that language its usual meaning unless impossible or absurd consequences would result. Bustos v. W.M. Grace Dev., 192 Ariz. 396, 398, 966 P.2d 1000, 1002 (App.1997).

¶ 8 The Lemon Law authorizes a court to award attorney's fees to "a consumer [who] prevails in an action under this article." A.R.S. § 44-1265(B). In another context, an "action" has been well defined as a "`lawful demand for a legal right in accordance with the procedure prescribed by the statute,'" Chalpin v. Mobile Gardens, Inc., 18 Ariz.App. 231, 236, 501 P.2d 407, 412 (1972)(quoting Stephens v. Stephens, 17 Ariz. 306, 152 P. 164 (1915)), and we adopt that meaning. Given that definition of "action" and its focus on a simple "lawful demand for a legal right," a complaint filed in superior court qualifies and a party's successful settlement of litigation constitutes "prevailing" in an "action" as meant in A.R.S. § 44-1265(B).

¶ 9 Such an interpretation also comports with a primary justification for fee-shifting provisions: the promotion of settling disagreements without extensive litigation. Wagenseller v. Scottsdale Mem'l Hosp., 147 Ariz. 370, 391, 710 P.2d 1025, 1046 (1985). A second justification is to strengthen a purchaser's ability to enforce the consumer-protection laws. Id.; see also A.R.S. § 1-211(B) (2002) ("Statutes shall be liberally construed to effect their objects and to promote justice."). Certainly, the legislature has demonstrated its ability to restrict an award of attorney's fees when it chooses. See A.R.S. § 12-348(A)(Supp.2002); Lewis v. Pleasant Country, Ltd., 173 Ariz. 186, 195, 840 P.2d 1051, 1060 (App.1992)(absence of restrictive language in fee statute compared to others militated against restrictive application). These legislative demonstrations of policy— by inclusion and exclusion—guide us to hold that a party who settles a Lemon Law claim after a lawsuit has been initiated is a "prevailing party" entitled to an award of attorney's fees as provided by A.R.S. § 44-1265(B).

¶ 10 General Motors then argues that the nature of Moedt's agreement with K & M prevented the trial court from awarding attorney's fees. The premise of its argument is that K & M agreed not to charge Moedt fees, instead planning to obtain its compensation from the court's enforcement of a statutory provision. Thus, General Motors reasons, because Moedt was not liable for fees, any award for fees for which she was not financially responsible is unfair to General Motors.

¶ 11 At least two requirements are necessary for the recovery of attorney's fees: an attorney-client relationship between the party and counsel, and "a genuine financial obligation on the part of the litigant[ ] to pay such fees." Lisa v. Strom, 183 Ariz. 415, 419, 904 P.2d 1239, 1243 (App.1995). The court in Lisa addressed contingent-fee agreements, stating that "an agreement to pay attorney's fees out of the recovery itself is a genuine financial obligation." Id. at 419 n. 3, 904 P.2d at 1243 n. 3. ¶ 12 As a practical matter, the Moedt-K & M agreement is a contingent-fee agreement. Instead of a percentage of the amount of a settlement or judgment, Moedt agreed to give her attorney such fees as would be awarded by the court, if any. See Sparks v. Republic Nat'l Life Ins. Co., 132 Ariz. 529, 545, 647 P.2d 1127, 1143 (1982)

("We cannot agree that a contingency-fee agreement does not obligate a party `to pay attorney's fees from his own pocket'.... After obtaining a judgment, a client who has retained counsel on a contingency basis must surrender the agreed upon percentage of the judgment as remuneration."). Thus, the Moedt-K & M attorney's fee agreement created a financial obligation between Moedt and K & M.

¶ 13 Additionally, this court has interpreted statutory language permitting fees to be awarded to a "prevailing party," as was Moedt, as vesting the interest in the award in the litigant, not the attorney, regardless of what fee arrangement exists between the litigant and her counsel. Alano Club 12, Inc. v. Hibbs, 150 Ariz. 428, 434, 724 P.2d 47, 53 (App.1986). General Motors suggests that Alano Club should control our resolution of this case otherwise, claiming that the case stands for the proposition that an attorney does not have standing to request fees on his own behalf when the litigant has no obligation to pay the fees. Id. Aside from our conclusion that the fee agreement did obligate Moedt to pay K & M, an important factor distinguishing Alano Club from this case is that the Alano Club litigants had dismissed their counsel several months before those attorneys filed their fee application, id., whereas Moedt seemingly has authorized K & M to contest the attorney's fee issue.

¶ 14 We also reject General Motors' contention that Moedt is not an "aggrieved party," required by Arizona Rule of Civil Appellate Procedure 1, and therefore lacks standing. See Abril v. Harris, 157 Ariz. 78, 80-81, 754 P.2d 1353, 1355-56 (App.1987)

(A party is aggrieved if (1) interest is direct, substantial and immediate, (2) party would be benefitted by reversal of the judgment and (3) party's pecuniary interest has been directly affected.); Sedillo v. City of Flagstaff, 153 Ariz. 478, 481, 737 P.2d 1377, 1380 (App.1987)("A person who is dissatisfied with the amount of judgment is an aggrieved party entitled to appeal."); Chambers v. United Farm Workers Org. Comm., 25 Ariz.App. 104, 106, 541 P.2d 567, 569 (1975)("`Standing' focuses on the parties and requires that each party possess an interest in the outcome of the litigation."). Concluding that Moedt could recover fees,² we consider her challenge of the amount awarded.

¶ 15 Moedt claims that the trial court abused its discretion by awarding less than the total attorney's fees claimed. We therefore examine what power a court has to award fees according to the applicable statutory provisions.

¶ 16 Section 44-1265(B), A.R.S., states that, if "a consumer prevails in an action under this article, the court shall award the consumer reasonable costs and attorney fees." Although no opinion has considered an award pursuant to this provision, a case...