Bennett Blum, M.D., Inc. v. Cowan – 7/3/2014

July 31, 2014

Arizona Court of Appeals Division Two Holds That A.R.S. § 12-1580(E) Prohibits an Award of Attorneys’ Fees and Costs Against a Judgment Debtor in a Garnishment Proceeding Unless the “Judgment Debtor Is Found to Have Objected to the Writ [of Garnishment] Solely for the Purpose of Delay or to Harass the Judgment Creditor.”

Rand Haddock represented Connie Cowan in a will contest matter that involved an issue of undue influence.  Bennett Blum, M.D., signed a contract with Haddock and Cowan to serve as a medical expert on the undue influence issue.  In 2011, Blum filed a complaint against Haddock and Cowan alleging breach of contract for nonpayment of fees.  After a bench trial, the court awarded Blum $18,708.74 in damages plus attorneys’ fees and costs. 

Blum then initiated a separate garnishment proceeding.  Haddock and Cowan filed a motion to stay execution of the judgment so they could obtain a supersedeas bond and appeal the judgment.  The trial court denied the motion to stay and entered judgment in favor of Blum in the garnishment proceedings.  The court also granted Blum’s request under A.R.S. § 12-341.01(A) for attorneys’ fees and costs in connection with the garnishment and other post-judgment proceedings.

On appeal, Haddock and Cowan argued that the trial court erred in awarding Blum attorneys’ fees and costs in connection with the post-judgment proceedings.  The Court of Appeals first noted that there were three possible bases for awarding fees and costs to Blum:  the parties’ contract, A.R.S. § 12-341.01(A) (applicable to contract actions), and A.R.S. § 12-1580(E) (applicable to garnishment proceedings).

The court addressed the post-judgment motions first and concluded that the “fees stemming from appellants’ Rule 60(c) motion and motion to stay fall squarely within the broad language” of the provision in the parties’ contract governing attorneys’ fees. 

The court then concluded that the trial court had erred in awarding fees in connection with the garnishment proceeding under A.R.S. § 12-341.01(A).  A garnishment proceeding is an original action, independent from the underlying lawsuit.  The garnishment statute, A.R.S. § 12-1580(E), allows fees and costs to be assessed against a judgment debtor only if “the judgment debtor is found to have objected to the writ [of garnishment] solely for the purpose of delay or to harass the judgment creditor.”  Because the trial court did not make such findings, it erred in awarding fees in connection with the garnishment proceeding.

The court also rejected Blum’s argument that the parties’ contract authorized fees for the garnishment proceeding, trumping A.R.S. § 12-1580(E).  The court concluded that “§ 12-1580(E) impliedly prohibits parties from waiving its requirements” because garnishment is a creature of statute.  Thus, the court held that “although either party as the ‘prevailing party’ in the garnishment proceeding may [contractually] agree to waive the right to attorney fees, appellants cannot waive the statutorily mandated limitation on the trial court’s authority to award attorney fees against the judgment debtor.”

The court remanded the case to the trial court to determine what portion of the fee award was related to the Rule 60(c) motion and motion to stay.

Judge Vásquez authored the opinion; Judges Howard and Olson concurred.