Tucson Estates Prop. Owners Ass'n, an Ariz. Nonprofit Corp. v. Estate of Jenkins

• Decision Date: 12 November 2019
• Docket Number: No. 2 CA-CV 2019-0023,2 CA-CV 2019-0023
• Citation: 451 P.3d 1201,247 Ariz. 475
• Parties: TUCSON ESTATES PROPERTY OWNERS ASSOCIATION, an Arizona Nonprofit Corporation, Plaintiff/Appellant, v. Estate of Ross E. JENKINS, Deceased, an Unmarried Man, Reputed Owner; Ross E. Jenkins Jr.; Patricia Boileau; and Kathryn Jenkins, Defendants/Appellees.
• Court: Arizona Court of Appeals

247 Ariz. 475

451 P.3d 1201

TUCSON ESTATES PROPERTY OWNERS ASSOCIATION, an Arizona Nonprofit Corporation, Plaintiff/Appellant,

v.Estate of Ross E. JENKINS, Deceased, an Unmarried Man, Reputed Owner; Ross E. Jenkins Jr.; Patricia Boileau; and Kathryn Jenkins, Defendants/Appellees.

No. 2 CA-CV 2019-0023

Court of Appeals of Arizona, Division 2.

Filed November 12, 2019

Carpenter, Hazlewood, Delgado & Bolen LLP, Tucson, By Jason E. Smith and Kaycee S. Wamsley, Counsel for Plaintiff/Appellant

Judge Eckerstrom authored the opinion of the Court, in which Presiding Judge Eppich and Judge Espinosa concurred.

ECKERSTROM, Judge:

¶1 Tucson Estates Property Owners Association ("Association") appeals from the trial court’s award of partial attorney fees and costs. The court ordered that award after entering final default judgment in favor of the Association. For the reasons that follow, we affirm.

Factual and Procedural Background

¶2 "We view the facts in the light most favorable to upholding the trial court’s ruling." Hammoudeh v. Jada , 222 Ariz. 570, ¶ 2, 218 P.3d 1027 (App. 2009). The Association is comprised of owners of real property within a subdivision in Pima County. The members are subject to the Association’s Covenants, Conditions, and Restrictions ("CC & Rs").

¶3 In April 2018, the Association filed a complaint against the estate of Ross E. Jenkins, a deceased individual who owned property subject to the CC & Rs, as well as Jenkins’s named and unnamed heirs and devisees (collectively, the "Estate").¹ The Association sought judicial foreclosure of the property to enforce an assessment lien imposed against the property, the principal balance of which totaled $5,367.56.² The Estate never appeared or contested the Association’s complaint.

¶4 In September 2018, the Association applied for an entry of default against the Estate. In November 2018, the Association requested attorney fees in the amount of $3,155.50 and costs in the amount of $985.71. It based its claim on A.R.S. § 33-1807(H)³ and the CC & Rs, which provide that the Association may collect reasonable monthly assessments against each owner; that delinquent assessments "shall become a lien" upon the property; and that if the Association employs attorneys "to enforce said lien," the property owner and other parties named in such an action "shall pay all reasonable attorney fees and costs incurred." The CC & Rs further specify that "in the event the Association receives judgment against any person for a violation or threatened violation," it "shall also be entitled to recover from such person reasonable legal fees and costs." The Association filed an affidavit based on its attorneys’ billing records in support of its application.

¶5 In December 2018, after a hearing at which the Estate did not appear, the trial court ordered default judgment in favor of the Association, but it reduced the fee award to $1,000. The court also reduced the cost award to $631.26. The Association objected and requested the court provide further detail as to the costs and charges it found excessive or unnecessary, which the court provided during the hearing.

¶6 Judgment was entered in December 2018. This appeal followed. The Estate did not file a responsive brief. When an appellant raises a debatable issue in a civil case, we may, in our discretion, treat the failure to file an answering brief as a confession of error. See McDowell Mountain Ranch Cmty. Ass’n v. Simons , 216 Ariz. 266, ¶ 13, 165 P.3d 667 (App. 2007). "It is, however, our duty to examine the record to determine whether there are debatable issues." Air East, Inc. v. Wheatley , 14 Ariz. App. 290, 292, 482 P.2d 899 (1971). Because we agree with the Association’s assertion that the reduction of fees and costs in similar default judgment cases is a recurring issue in our trial courts, we exercise our discretion to decide this case on its merits.⁴ We have jurisdiction pursuant to A.R.S. §§ 12-120.21(A)(1) and 12-2101(A)(1).

Discussion

¶7 The Association argues the trial court erred by awarding only a portion of the attorney fees and costs it requested. Specifically, the Association asserts that, "[a]bsent an opposing affidavit setting forth reasons why the billing rate or hours expended are unreasonable," it "is entitled to its attorneys’ fees and costs incurred in this matter" because it submitted a fees affidavit in accordance with Schweiger v. China Doll Rest., Inc. , 138 Ariz. 183, 673 P.2d 927 (1983). The Association further argues the court had no reasonable basis for reducing its fees by nearly seventy percent. And, it contends the court’s determinations that some of the requested fees were excessive "constitute clear error."

¶8 "[A]n award of attorneys’ fees is left to the sound discretion of the trial court and we will not overturn such an award unless the trial court abused its discretion." A. Miner Contracting, Inc. v. Toho-Tolani Cty. Improvement Dist. , 233 Ariz. 249, ¶ 40, 311 P.3d 1062 (App. 2013). "To find an abuse of discretion, there must either be no evidence to support the superior court’s conclusion or the reasons given by the court must be ‘clearly untenable, legally incorrect, or amount to a denial of justice.’ " Charles I. Friedman, P.C. v. Microsoft Corp. , 213 Ariz. 344, ¶ 17, 141 P.3d 824 (App. 2006) (quoting State v. Chapple , 135 Ariz. 281, 297 n.18, 660 P.2d 1208, 1224 n. 18 (1983) ).

¶9 "We review de novo issues of statutory application and contract interpretation." Am. Power Prods., Inc. v. CSK Auto, Inc. , 242 Ariz. 364, ¶ 12, 396 P.3d 600 (2017). Our purpose in interpreting a contract is to determine and give effect to the parties’ intent. See Taylor v. State Farm Mut. Auto. Ins. Co. , 175 Ariz. 148, 152, 854 P.2d 1134, 1138 (1993).

¶10 "CC & Rs constitute a contract between the subdivision’s property owners as a whole and individual lot owners." Ahwatukee Custom Estates Mgmt. Ass’n, Inc. v. Turner , 196 Ariz. 631, ¶ 5, 2 P.3d 1276 (App. 2000). "[I]t is well-settled in Arizona that ‘[c]ontracts for payment of attorneys’ fees are enforced in accordance with the terms of the contract.’ " McDowell , 216 Ariz. 266, ¶ 14, 165 P.3d 667 (quoting Heritage Heights Home Owners Ass’n v. Esser , 115 Ariz. 330, 333, 565 P.2d 207, 210 (App. 1977) ). "Unlike fees awarded under A.R.S. § 12-341.01(A), the court lacks discretion to refuse to award fees under the contractual provision." Chase Bank of Ariz. v. Acosta , 179 Ariz. 563, 575, 880 P.2d 1109, 1121 (App. 1994) (emphasis added). However, "a contractual provision providing for an award of unreasonable attorneys’ fees will not be enforced." McDowell , 216 Ariz. 266, ¶ 16, 165 P.3d 667 (emphasis added).

¶11 Relying chiefly on the reasoning in McDowell , the Association asserts that "there is a presumption that attorneys’ fees and costs incurred by the Association are reasonable" and that, after it submits a fee application in compliance with China Doll , it is "entitled to receive its full attorneys’ fees" absent a "showing by opposer that fees were clearly excessive." The Association asks us to adopt a rule that would limit the trial court’s threshold discretion to evaluate the reasonableness of a fee application in the absence of an opposing party’s objection. We disagree that our jurisprudence requires such an outcome.

¶12 China Doll provides parties and trial courts with "specific guidance" for "calculating a reasonable fee," and its reasoning contemplates the computation of fees in the most common context—a dispute over fees between litigants. 138 Ariz. at 186-87, 673 P.2d at 930-31. But no reasoning in that decision divests a trial court of its broad discretion to assess the reasonableness of fees in the absence of an opposition. Rather, the opinion expressly recognizes that a trial court, in assessing the reasonableness of an attorney’s hourly rate, is not bound by the fee agreement between the lawyer and client—something that would be apparent in even an uncontested affidavit. Id. at 188, 673 P.2d at 932. And although China Doll authorizes a trial court to adjust a fee award "upon the presentation of an opposing affidavit setting forth reasons" why the fees are unreasonable, id ., it does not address the court’s authority when no opposition has been filed, see id . at 187, 673 P.2d at 931.

¶13 Nor does McDowell limit the trial court’s authority to consider the reasonableness of fees in the absence of an opposition. There, after citing with approval cases emphasizing the "broad discretion" enjoyed by our trial courts in assessing the reasonableness of fee requests, we held that "the trial court’s discretion is more narrowly circumscribed when the parties contractually agree that the prevailing party shall be awarded all its attorneys’ fees." 216 Ariz. 266, ¶ 21, 165 P.3d 667 (emphasis added). Under that circumstance, we agreed that once a prevailing party submits a facially valid fee application in comportment with the China Doll requirements, it "establish[es] its prima facie entitlement to fees in the amount requested" and the opposing party "ha[s] the burden to show that they were clearly excessive."⁵ Id. ¶ 20. That decision did not address a court’s discretion when the authorizing fee provision is expressly qualified by the requirement of reasonableness.

¶14 Opposition in the trial court generally is a precondition to any appellate challenge to a trial court’s fee award. Accordingly, we have affirmed a trial court’s assessment of a reasonable fee award on grounds that the opposing party failed to challenge a facially valid China Doll affidavit. E.g. , Cook v. Grebe , 245 Ariz. 367, ¶¶ 12-15, 429 P.3d 1161 (App. 2018) (rejecting cursory, non-specific challenge as inadequate); City of Tempe v. State , 237 Ariz. 360, ¶¶ 32-33 & n.9, 351 P.3d 367 (App. 2015) (same). And, we have affirmed trial court reductions in fees in part on grounds that they were triggered by detailed oppositions. In re Indenture of Trust Dated Jan. 13, 1964 , 235 Ariz. 40, ¶¶ 46-50,...