PHOENIX (Legal Newsline) - The Arizona Supreme Court has redefined the term “the
prevailing party," altering a lower court’s decision and allowing for attorney
fees to be awarded in a recent case.
Arizona law holds that a court “may award reasonable attorney
fees to the successful party in a contested contract action.”
However, if a
defendant offers a written settlement and the plaintiff rejects it and the
final judgment of the court is greater than what the defendant offered the
plaintiff, that party is, “deemed to be the successful party from the date of
offer," according to the Supreme Court's opinion.
American Power Products Inc. v. CSK Auto Inc., American Power was offered a
settlement by CSK in the amount of $1,000,001, which included attorney fees.
American refused the offer and won a trial verdict in the amount of $10,733.
American Power sued CSK in 2005 for breach
of contract and negligent misrepresentation and had sought $5 million in
damages. According to the court's opinion, American Power agreed to sell electric scooters to CSK on an open account in 2003, and the
master vendor agreement did not define the term prevailing party.
Because it refused the settlement offer from CSK, American Power became the unsuccessful party in the lawsuit.
The trial court had determined
American Power was the prevailing party. The Supreme Court overturned that decision.
The high court, in turn, remanded the case back to the lower court to determine fees and costs between
the plaintiff and defendant.
According to the Supreme Court, “Rather than respect
the parties’ intent to mandate a fee award for the single, prevailing party in
the lawsuit, the majority uses the second sentence from 12- 341.01(A) to
redefine 'the prevailing party' and require awards for each party. There are
now two prevailing parties -- American before the settlement offer and CSK thereafter -- and
each must be awarded attorney fees. This interpretation alters the MVA’s fee provision
in violation of the third sentence in 12-341.01(A).”