Valder Law Offices v. Keenan Law Firm – 3/9/2006

March 12, 2006

Arizona Court of Appeals Division One Finds Common Fund Doctrine Inapplicable on the Particular Facts in a Wrongful Death Case.

Denise Robinson died in 1997 after surgery. Her son James Robinson retained attorney James Hill and Valder Law Offices (“Valder”) to prosecute claims for damages arising out of Denise’s death. Her mother retained the Keenan Law Firm (“Keenan”) for the same purpose. Valder commenced a wrongful death action on behalf of James Robinson and the other statutory beneficiaries. Both firms, working on a contingency, contributed work to the case, with Valder handling the preparation and trial of the liability aspect of the case. The jury returned a verdict of $2.4 million. Dorothy refused to pay attorney’s fees out of the verdict to Valder, whom she had never agreed would represent her. Valder commenced a declaratory judgment action to establish that Dorothy’s share of the verdict was subject to a pro rata share of the attorneys’ fees incurred, on the basis of the common fund doctrine. Keenan filed suit against Valder, alleging conversion and unjust enrichment with respect to the fees. On cross-motions for summary judgment, the trial court ruled as a matter of law that the common fund doctrine did not apply, and awarded the funds to Keenan. On appeal, Division One first noted that no categorical bar to the application of the common fund doctrine was applicable. The Court noted that the equitable doctrine applies generally to effectuate “the equitable consideration that parties who benefit from the efforts of counsel in creating a common fund should pay for their fair share of the work required to bring about that benefit.” The Court also noted, however, that the doctrine may only be applied where (1) the class of persons benefited is small and easily identifiable, (2) the benefits may be traced accurately, and (3) the costs may be shifted to those benefited with some precision. The latter two circumstances were not present, the Court noted, as it was impossible to trace the benefits with any real accuracy or to shift the costs with “precision.” The Court accordingly concluded that on the particular facts presented, the common fund doctrine was inapplicable. The Court overturned the trial court, however, on the matter of awarding Keenan attorneys’ fees pursuant to A.R.S. 12-341.01. The statute did not apply, the Court observed because the litigation revolved around a wrongful death claim, rather than a contract claim.

The decision was authored by Judge Barker and joined by Judges Kessler and Sult.