Arizona Court of Appeals Division One Holds That Arizona Rule of Civil Procedure 77(f) Permits Award of Attorneys’ Fees and Costs to Co-Defendant, When Defendant Unsuccessfully Seeks to Shift Fault to Co-Defendant at Trial De Novo Following Compulsory Arbitration.

Susan Fisher (“Fisher”) and Amy Edgerton (“Edgerton”) were involved in a three-car accident.  The individual in the first car filed a lawsuit against both Fisher and Edgerton, who were driving separate vehicles behind her.  After compulsory arbitration, the arbitrator found that Fisher was 100% at fault for the accident and awarded plaintiff damages against her. 

Fisher filed a notice of appeal in superior court, naming both the plaintiff and co-defendant Edgerton.  A jury determined that Fisher was 100% at fault but awarded plaintiff less in damages.  Edgerton applied for and was awarded attorneys’ fees and costs against Fisher pursuant to Arizona Rules of Civil Procedure 77(f) and 54(g).  Fisher timely appealed the award of attorneys’ fees to Edgerton.   

The Court of Appeals affirmed the award.  Fisher argued that the award of attorneys’ fees violated Rule 77(f) and several constitutional rights, including due process, equal protection and the fundamental right to appeal and have a jury trial.  The Court rejected each of these arguments.

Rule 77(f) governs the right of appeal from compulsory arbitration and provides that if a judgment after trial is more favorable by at least 23% then the appellant is to pay the appellee’s taxable costs and reasonable attorneys’ fees.  See also A.R.S. § 12-133(I).  Fisher argued that because she could only appeal from the entire award, and because the award after trial was more favorable by 23%, she should not have to pay a fee award under Rule 77(f).  The Court, however, held that a defendant may have to pay a successful co-defendant’s attorneys’ fees when the one defendant unsuccessfully tries to shift fault to the co-defendant.  With respect to Edgerton, Fisher was unsuccessful at trial in shifting any fault to her.  Fisher therefore did not receive a more favorable judgment as against Edgerton.  The Court further noted that the argument that Fisher could only appeal from the entire award was unpersuasive.  Fisher could have pursued a stipulation to dismiss Edgerton from the trial. 

Fisher argued that the award under Rule 77(f) violated due process because she did not have fair notice of the potential award against her.  The Court rejected this argument, finding that Rule 77(f) does in fact provide fair notice.

Fisher also argued that the Rule 77(f) award violates equal protection, because her case was treated differently than those not subject to mandatory arbitration.  The Court noted that this argument does not state an equal protection claim, but nonetheless further held that Rule 77(f) is rationally related to a legitimate state goal of reducing the high cost of litigation.  The Court further held that the possibility of fee awards on appeal from an arbitration award does not violate the constitutional right to a jury trial because it is not an unreasonable or significant burden.

Judge Kessler authored the opinion; Judges Jones and Downie joined.