Klesla v. Wittenberg (8/18/2016)

September 19, 2016

Arizona Court of Appeals Division One holds that a trial court properly denied a motion to enforce an arbitration award that also sought attorney fees that were not included in the award.

Tenants brought suit against landlord for return of a security deposit, landlord counter-claimed for property damage, and the case was assigned to compulsory arbitration.  The arbitrator filed an arbitration award ordering the return of the security deposit less some damages.  The award did not include an award of attorney fees or costs to either party.  Neither party timely appealed the award.

After the time for appeal passed, tenants filed a motion in the Superior Court to enforce the award and also to award attorney fees and costs under a provision of the lease that required attorney fees and costs to be awarded to the prevailing party in any dispute.  The court denied the motion and entered judgment only on the amount in the award, holding that the award had not included attorney fees and that the time for appealing the award had passed.  Tenants timely appealed.

The Court of Appeals upheld the Superior Court’s denial of attorney fees.  Disagreeing with Keg Restaurants Ariz., Inc. v. Jones, a recent decision out of a different division of the court of appeals, the Court held that, because contractual attorney fees are part of a damage award for breach of contract, such fees must be pleaded and proved.  Since tenants did not seek attorney fees from the arbitrator and allowed the time period for appealing the award to pass, they waived their right to attorney fees.  Nor was the arbitrator able to amend his award after filing it with the Superior Court, as he was divested of jurisdiction as soon as he did so.

Judge Thompson delivered the unanimous opinion; Judges Portley and Norris concurred.