Munger Chadwick, P.L.C. v. Farwest Development & Construction of the Southwest, LLC ( 2014 )


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  •                            IN THE
    ARIZONA COURT OF APPEALS
    DIVISION TWO
    MUNGER CHADWICK, P.L.C., AN ARIZONA PROFESSIONAL
    LIMITED LIABILITY COMPANY,
    Plaintiff/Appellee,
    v.
    FARWEST DEVELOPMENT AND CONSTRUCTION OF THE SOUTHWEST,
    LLC, AN ARIZONA LIMITED LIABILITY COMPANY;
    FARWEST PUMP COMPANY, AN ARIZONA CORPORATION;
    AND CLARK P. VAUGHT AND CHANNA R. CREWS-VAUGHT,
    HUSBAND AND WIFE,
    Defendants/Appellants.
    No. 2 CA-CV 2013-0113
    Filed May 7, 2014
    Appeal from the Superior Court in Pima County
    No. C20120575
    The Honorable Ted B. Borek, Judge
    AFFIRMED IN PART; VACATED IN PART
    COUNSEL
    Munger Chadwick, P.L.C., Tucson
    By John F. Munger and Thomas A. Denker
    Counsel for Plaintiff/Appellee
    Monroe McDonough Goldschmidt & Molla, P.L.L.C., Tucson
    By Karl MacOmber
    Counsel for Defendants/Appellants
    MUNGER CHADWICK v. FARWEST DEV.
    Opinion of the Court
    OPINION
    Judge Eckerstrom authored the opinion of the Court, in which Judge
    Espinosa and Judge Olson1 concurred.
    E C K E R S T R O M, Judge:
    ¶1           Appellants Farwest Development and Construction of
    the Southwest, LLC, Farwest Pump Company, and Clark P. Vaught
    and Channa R. Crews-Vaught (collectively “Farwest”) appeal from
    the trial court’s grant of attorney fees in favor of appellee Munger
    Chadwick, P.L.C. For the following reasons, we vacate that portion
    of the judgment.
    Factual and Procedural Background
    ¶2          Munger Chadwick filed an action against Farwest
    claiming breach of contract and unjust enrichment. After a jury trial,
    a verdict was returned in Munger Chadwick’s favor on both counts.
    Munger Chadwick then sought an award of attorney fees pursuant
    to A.R.S. § 12-341.01(A). Farwest objected, claiming Munger
    Chadwick had represented itself and was therefore ineligible for an
    award of fees. The trial court awarded attorney fees over Farwest’s
    objection. Farwest filed a motion for new trial, again claiming the
    award was improper, which the court denied. This appeal followed.
    Jurisdiction
    ¶3            At the outset, Munger Chadwick challenges this court’s
    jurisdiction, claiming Farwest’s motion for new trial was merely an
    improperly labeled motion for reconsideration that did not extend
    the time for appeal, therefore rendering Farwest’s notice of appeal
    untimely. The initial judgment in this case was entered on May 1,
    2013. Farwest’s motion was filed on May 3, 2013. The final
    1The Hon. Robert Carter Olson, a retired judge of the Arizona
    Superior Court, is called back to active duty to serve on this case
    pursuant to orders of this court and the supreme court.
    2
    MUNGER CHADWICK v. FARWEST DEV.
    Opinion of the Court
    judgment was filed on July 23, 2013, and Farwest’s notice of appeal
    was filed on July 30, 2013. Therefore, if Farwest’s motion was a
    proper motion for new trial that extended the time for appeal
    pursuant to Rule 9(b)(4), Ariz. R. Civ. App. P.,2 the time for appeal
    began to run on July 23 and Farwest’s notice of appeal was timely.
    See Ariz. R. Civ. App. P. 9(a).
    ¶4             Munger Chadwick is correct that “[w]e will look to the
    substance and not the form” in determining what type of motion has
    been made, Ray Korte Chevrolet v. Simmons, 
    117 Ariz. 202
    , 204, 
    571 P.2d 699
    , 701 (App. 1977), and that a motion for reconsideration does
    not extend the time for an appeal to be taken. Ariz. R. Civ. P. 7.1(e);
    see Ariz. R. Civ. App. P. 9(b) (listing motions that extend time for
    appeal and omitting motion for reconsideration); James v. State, 
    215 Ariz. 182
    , ¶ 12 & n.6, 
    158 P.3d 905
    , 908 & n.6 (App. 2007) (motions
    not enumerated under former Rule 73(b), now Rule 9, Ariz. R. Civ.
    App. P., do not extend time for appeal). However, a motion may be
    treated as a time-extending motion for new trial, whatever it is
    labeled, if it “refer[s] to rule 59 as authority for the motion and set[s]
    forth as grounds for the motion those grounds found in rule 59.”
    Farmers Ins. Co. of Ariz. v. Vagnozzi, 
    132 Ariz. 219
    , 221, 
    644 P.2d 1305
    ,
    1307 (1982). Farwest’s motion refers to the rule and argues that the
    decision to award attorney fees is “contrary to law.” Ariz. R.
    Civ. P. 59(a)(8). Furthermore, this court has approved of motions for
    new trial as a means to challenge an award of attorney fees. PNL
    Credit L.P. v. Sw. Pac. Invs., Inc., 
    179 Ariz. 259
    , 263, 
    877 P.2d 832
    , 836
    (App. 1994). Accordingly, Farwest’s motion for new trial extended
    the time for appeal under Rule 9(b) and its notice of appeal was
    timely filed. This court therefore has jurisdiction to hear the case
    pursuant to A.R.S. §§ 12-120.21(A)(1) and 12-2101(A)(1).
    2We  cite the version of the rule in effect at the time. See 
    214 Ariz. XLIV
    (2006).
    3
    MUNGER CHADWICK v. FARWEST DEV.
    Opinion of the Court
    Attorney Fees
    ¶5           In Arizona, it is the rule that parties who represent
    themselves in a legal action are not entitled to recover attorney fees.3
    Lisa v. Strom, 
    183 Ariz. 415
    , 419-20, 
    904 P.2d 1239
    , 1243-44 (App.
    1995); Hunt Inv. Co. v. Eliot, 
    154 Ariz. 357
    , 362, 
    742 P.2d 858
    , 863
    (App. 1987); Connor v. Cal-AZ Props., Inc., 
    137 Ariz. 53
    , 56, 
    668 P.2d 896
    , 899 (App. 1983). Farwest contends that, under this rule,
    Munger Chadwick was not eligible for an award of fees because it
    represented itself. We review this question of law de novo. See
    Saenz v. State Fund Workers’ Comp. Ins., 
    189 Ariz. 471
    , 475, 
    943 P.2d 831
    , 835 (App. 1997).
    ¶6            The trial court relied on Hunt in determining that
    attorney fees were awardable in this case. It specifically noted that
    “Munger Chadwick as a PLC could not represent itself,” drawing on
    the reasoning of the Hunt case, in which this court found that an
    attorney who was a partner in an investment partnership was
    eligible for an award of fees arising from his representation of the
    partnership, in part because the partnership could not represent
    itself in 
    court. 154 Ariz. at 362-63
    , 742 P.2d at 863-64.
    3We    note that a number of jurisdictions do not apply this rule
    where an attorney, as opposed to a lay person, represents him- or
    herself. See, e.g., Pratt & Whitney Canada, Inc. v. Sheehan, 
    852 P.2d 1173
    , 1181 (Alaska 1993); Winer v. Jonal Corp., 
    545 P.2d 1094
    , 1096-97
    (Mont. 1976); Weaver v. Laub, 
    574 P.2d 609
    , 613 (Okla. 1977); Colby v.
    Gunson, 
    238 P.3d 374
    , 376 (Or. 2010). But Munger Chadwick has not
    challenged the wisdom of this rule generally, only its application to
    the facts of this case. Furthermore, although our supreme court has
    not squarely addressed recovery of attorney fees for pro se attorney
    litigants, it has stated that “one who acts only for himself in legal
    matters is not . . . practicing law.” State ex rel. Frohmiller v. Hendrix,
    
    59 Ariz. 184
    , 190, 
    124 P.2d 768
    , 772 (1942). To the extent this
    statement supports upholding the rule forbidding awards of
    attorney fees to all pro se litigants, this court “is bound by decisions
    of the Arizona Supreme Court and ha[s] no authority to overrule,
    modify, or disregard them.” City of Phoenix v. Leroy’s Liquors, Inc.,
    
    177 Ariz. 375
    , 378, 
    868 P.2d 958
    , 961 (App. 1993).
    4
    MUNGER CHADWICK v. FARWEST DEV.
    Opinion of the Court
    ¶7            However, the more properly stated rule is that a
    partnership, or a corporation, may not be represented by someone
    who is not authorized to practice law. See Ramada Inns, Inc. v. Lane &
    Bird Adver., Inc., 
    102 Ariz. 127
    , 128, 
    426 P.2d 395
    , 396 (1967); Anamax
    Mining Co. v. Ariz. Dep’t of Econ. Sec., 
    147 Ariz. 482
    , 485, 
    711 P.2d 621
    ,
    624 (App. 1985). When stated this way, it becomes obvious that a
    law firm is not barred from representing itself.
    ¶8            If, as Munger Chadwick asserts, it is not authorized to
    represent itself because a corporation or other legal entity must be
    represented by a natural person, the logical conclusion is that
    Munger Chadwick is not authorized to represent any corporation.
    But that conclusion would be contrary to the common practice of
    clients hiring law firms for legal representation. Indeed, our
    supreme court states that “[a]ny person or entity engaged in the
    practice of law . . . in this state” is subject to its jurisdiction. Ariz. R.
    Sup. Ct. 31(a)(1) (emphasis added).              It likewise defines the
    unauthorized practice of law as “engaging in the practice of law by
    persons or entities not authorized to practice.” Ariz. R. Sup. Ct.
    31(a)(2)(B)(1) (emphasis added). If the Arizona Supreme Court
    intended to allow only natural persons to practice law, the inclusion
    of the phrase “or entities” would be rendered meaningless. See
    Devenir Assocs. v. City of Phoenix, 
    169 Ariz. 500
    , 503, 
    821 P.2d 161
    , 164
    (1991) (court rules must be interpreted “to avoid rendering anything
    superfluous, void, contradictory, or insignificant”).
    ¶9            The rules governing attorney conduct also contemplate
    law firms representing clients. See, e.g., ER 1.10, Ariz. R. Prof’l
    Conduct, Ariz. R. Sup. Ct. 42 (governing when law firm is barred
    from representing client based on conflict of single lawyer). When a
    client retains a lawyer affiliated with a law firm, the firm normally
    “assumes the authority and responsibility of representing that
    client.” Restatement (Third) of the Law Governing Lawyers § 14
    cmt. h (2000); see also In re Kiley, 
    947 N.E.2d 1
    , 5-6 (Mass. 2011) (law
    firm had continued responsibility to represent client even though
    attorney primarily responsible for case had ceased practice of law);
    Adler, Barish, Daniels, Levin & Creskoff v. Epstein, 
    393 A.2d 1175
    , 1184-
    85 (Pa. 1978) (law firm was entitled to injunction preventing former
    associates from interfering with contractual relationships between
    5
    MUNGER CHADWICK v. FARWEST DEV.
    Opinion of the Court
    firm and its clients). Because Munger Chadwick is a law firm
    authorized to practice law, it is capable of self-representation.
    ¶10          Farwest points to several cases from other jurisdictions
    in which a law firm representing itself was barred from receiving
    attorney fees under the rule that pro se litigants may not receive
    such fees. See, e.g., Trope v. Katz, 
    902 P.2d 259
    , 262, 272 (Cal. 1995);
    Swanson & Setzke, Chtd. v. Henning, 
    774 P.2d 909
    , 909, 913 (Idaho Ct.
    App. 1989); Jones, Waldo, Holbrook & McDonough v. Dawson, 
    923 P.2d 1366
    , 1374-75 (Utah 1996). Munger Chadwick has not cited, and this
    court has not found, any cases from those jurisdictions that forbid
    pro se attorney litigants from recovering fees that exempt law firms
    from the scope of this rule. Cf. Hall v. Laroya, 
    238 P.3d 714
    , 718
    (Haw. Ct. App. 2010) (finding “no relevant distinction” between
    plaintiff representing self and law firm doing same). We likewise
    can find no logical reason to draw any distinction between a law
    firm that represents itself and a sole practitioner that does so.
    ¶11           Munger Chadwick asserts that the members of the firm
    who presented this case, Munger and Denker, “worked on this case
    . . . in their own free time, in addition to and on top of their
    obligation to Munger Chadwick, P.L.C., to work on assigned cases.”
    However, a pro se attorney who works in her spare time on a case
    representing herself, separate and apart from her obligations to
    other clients, is nonetheless not entitled to an award of attorney fees.
    
    Connor, 137 Ariz. at 56
    , 668 P.2d at 899.
    ¶12          In applying the rule, our courts have expressed a core
    concern that all parties to litigation be treated equally in their ability
    to secure compensation for attorney fees. See 
    id. at 55-56,
    668 P.2d at
    898-99. This court has specifically reasoned that an attorney ought
    not be entitled to compensation for her time in representing herself
    when a lay person would not be able to do so. Id. at 
    56, 668 P.2d at 899
    . We likewise conclude it would be inequitable for a law firm to
    be able to obtain its fees through an arrangement that amounts to
    self-representation when a sole practitioner would be unable to do
    so. And, as we have previously observed,
    To grant fees to parties appearing pro se
    will . . . create incentives to protract and
    6
    MUNGER CHADWICK v. FARWEST DEV.
    Opinion of the Court
    delay litigation.     It may well foster
    litigation over specious claims and in many
    cases the prospect of a fee award could well
    be the principal motivating factor behind a
    lawsuit. In particular, the leverage which
    would be granted to attorneys appearing
    on their own behalf could easily become
    oppressive where the opposition is forced
    to incur legal expenses.
    
    Id. None of
    these concerns are mitigated by allowing a law firm to
    “hire” its own attorneys as if they were outside counsel.4
    ¶13          Although we do not here address the wisdom of the
    rule denying attorney fees to those attorneys who devote their time
    and expertise to representing themselves, Munger Chadwick has
    provided no reason that rule should be applied only to sole
    practitioners and not to law firms. Accordingly, we conclude that
    the rule forbidding an award of attorney fees when a party
    represents itself does apply to law firms, and that Munger Chadwick
    was therefore ineligible for an award of its fees. Accordingly, we
    vacate the trial court’s award of attorney fees to Munger Chadwick.5
    Attorney Fees on Appeal
    ¶14          Both Farwest and Munger Chadwick have requested
    their attorney fees on appeal. Contrary to Farwest’s assertion, an
    award of fees under A.R.S. § 12-341.01 is discretionary; it is not an
    entitlement, see Associated Indem. Corp. v. Warner, 
    143 Ariz. 567
    , 570,
    
    694 P.2d 1181
    , 1184 (1985). Farwest has not explained why fees
    4 We   do not suggest any such improper motivations on the
    part of Munger Chadwick in the case before us. To the contrary,
    Munger Chadwick prevailed on the merits of its claim before the
    trial court.
    5 Becausewe conclude Munger Chadwick was ineligible for
    any award of attorney fees, we need not reach Farwest’s claim that
    Munger Chadwick was ineligible for attorney fees under the unjust
    enrichment claim.
    7
    MUNGER CHADWICK v. FARWEST DEV.
    Opinion of the Court
    should be awarded, particularly given the background of this case in
    the trial court. And Munger Chadwick is not the “successful party.”
    § 12-341.01(A); see T.H. Props. v. Sunshine Auto Rental, Inc., 
    151 Ariz. 444
    , 446, 
    728 P.2d 663
    , 665 (App. 1986). Accordingly, in our
    discretion, we deny both requests.
    Disposition
    ¶15        For the foregoing reasons, we vacate the trial court’s
    award of attorney fees to Munger Chadwick but otherwise affirm
    the judgment. Both parties’ requests for attorney fees on appeal are
    denied.
    8