§ 3.9 DRAFTING THE ATTORNEYS' FEES PROVISION

• Jurisdiction: Arizona

Model attorneys' fees provisions are included in the forms for this chapter. These include more commonly negotiated prevailing party provisions (Form 3:1) and provisions more favorable to the drafting party (Form 3:2). Counsel should draft fee provisions with care, because inartfully drafted provisions frequently provide only nominal or limited benefits. See, e.g., Henry v. Cook, 189 Ariz. 42, 45, 938 P.2d 91, 93 (App. 1996) (distinguishing between "costs" and "fees"); see also Coury Bros. Ranches, Inc. v. Ellsworth, 103 Ariz. 515, 446 P.2d 458 (1968) ("legal costs" do not include attorneys' fees); Sweis v. Chatwin, 120 Ariz. 249, 585 P.2d 269 (App. 1978) (costs do not include attorneys' fees); Riley v. Stoves, 22 Ariz. App. 223, 526 P.2d 747 (1974) (limiting recovery of fees to specified parties). If the provision is drafted sufficiently broadly, it can encompass non-taxable costs and expenses that would not otherwise be awardable. Ahwatukee Custom Estates Mgmt. Ass'n, Inc. v. Bach, 193 Ariz. 401, 404, 973 P.2d 106, 109 (1999) (provision in covenants, conditions and restrictions authorizing court to award any relief or judgment deemed appropriate under the circumstances held sufficiently broad to permit court to award non-taxable costs such as messenger service charges, copying expenses, telecopier and fax charges, postage, and long distance charges).

In drafting the fee provision, counsel should consider whether to define "prevailing" or "successful" party, especially if the contract also includes a broadly worded choice-of-law provision that incorporates Arizona law. As discussed in § 3.4 supra, the Arizona Supreme Court held in Am. Power Prods., Inc. v. CSK Auto, Inc., that when a contract contains a fee provision that does not itself define "prevailing party" but incorporates Arizona law to determine the parties' rights and remedies, the second sentence of. A.R.S. § 12-341.01(A) will apply for the purposes of determining the prevailing party. The second sentence of A.R.S. § 12-341.01(A) states that if a party makes a written settlement offer that is rejected, and the final judgment is more favorable to the offering party, that party is deemed to be the successful party from the date of the offer. The court recognized, however, that the parties may "fashion all aspects" of a contractual fee provision and may tailor their own definition of prevailing or successful party. Am. Power Prods. at ¶ 22 (explaining that a contract could not only specifically define 'prevailing party' but [could] also either include or exclude certain aspects of Arizona law from applying.").

ABC Supply, Inc. v. Edwards, 191 Ariz. 48, 952 P.2d 286 (App. 1996) 3-8

Ahwatukee Custom Estates Mgmt. Ass'n, Inc. v. Bach, 193 Ariz. 401, 973 P.2d 106 (1999) ................ 3-9

Alaface v. National Inv. Co., 181 Ariz. 586, 892 P.2d 1375 (App. 1994) ............................................... 3-2

Am. Power Prods., Inc. v. CSK Auto, Inc., __Ariz. __; __P.3d __, 2017 WL 1090471 (Ariz. 2017) 3-3, 5, 9

Associated Indem. Corp. v. Warner, 143 Ariz. 567, 694 P.2d 1181 (1985) ............................................... 3-6

Ayala v. Olaiz, 161 Ariz. 129, 776 P.2d 807 (App. 1989)...