Geller v. Lesk
230 Ariz. 624
| Ariz. Ct. App. | 2012Background
- Geller Group sued Lesk for breach of contract on a promissory note and obtained judgment for principal, interest, and fees.
- Fees were sought under A.R.S. § 12-341.01 and a Lender’s Rights clause in the note; contingency fee of 25% of judgment was proposed.
- Geller Group’s counsel claimed >100 hours at $300/hour but did not keep contemporaneous time records.
- Lesk urged fee reasonableness; proposed either $15,000 or 50 hours at $300/hour as cap.
- The trial court awarded $175,098.73 (full contingency amount); on appeal, the award was vacated and remanded for reasonableness review.
- Court held contingency awards require evidence of reasonableness; contractual provision does not automatically control if it yields unreasonably high fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is contingency-based fees proper without reasonableness showing? | Geller argues contingency reflects risk and is valid under contract. | Lesk argues reasonableness must be proven; contingency alone is not evidence. | Remand required; contingency alone not presumed reasonable. |
| Can a lodestar analysis apply when a contingency is involved? | Geller contends lodestar not applicable due to risk adjustment. | Lesk contends lodestar or reasonableness review governs. | Court did not endorse automatic lodestar override; must assess reasonableness. |
| Does the Lender’s Rights clause bind court to the awarded amount regardless of reasonableness? | Geller argues contractually entitled to expended fees; must honor. | Lesk argues court may limit to reasonable amount despite contract. | Reasonableness controls; contract not binding to an unreasonable award. |
| Was there a prima facie showing of reasonableness given lack of contemporaneous billing logs? | Geller asserts no detailed logs required in contingency context. | Lesk emphasizes need for contemporaneous records or evidence of reasonableness. | No prima facie showing; remand to provide evidence of reasonableness. |
Key Cases Cited
- McDowell Mountain Ranch Community v. Simons, 216 Ariz. 266 (App. 2007) (contracts for fees may be limited to reasonable amounts when challenged)
- Elson Dev. Co. v. Ariz. Sav. & Loan Ass’n, 99 Ariz. 217 (1965) (agreed fee must be reasonable; stipulation governs only to reasonable extent)
- In re Swartz, 141 Ariz. 266 (1984) (contingency fee reasonableness requires evidence; not automatic)
- Timmons v. City of Tucson, 171 Ariz. 350 (App. 1991) (lodestar is presumed proper; enhancements reserved for exceptional cases)
- Spain v. Valley Forge Ins. Co., 152 Ariz. 189 (1969) (contingency context requires reasonable basis; not mere hours)