Joshua David Mellberg LLC v. Will
4:14-cv-02025
D. Ariz.Mar 31, 2022Background
- JDM, LLC and Joshua David Mellberg (collectively "JDM") challenged an attorneys' fee award entered in Defendants' favor and moved to stay entry of judgment, clarify/reconsider the fee order, file Exhibit A under seal, and for relief under Rules 59(e) and 60(b)(6).
- The Ninth Circuit mandate issued while the stay motion was pending, so the Court denied the stay as moot and granted the sealing request.
- The underlying dispute involved alleged trade-secret misappropriation and related tort and contract claims between JDM, Individual Defendants (Will, Fine, Godinez, Uretz) and Impact; defendants prevailed at trial and were awarded fees under A.R.S. §12-341.01.
- JDM argued the fee award improperly reached Mellberg personally, that claims did not "arise out of contract" (so fees were inappropriate), that claims were not interwoven (so apportionment was required), and that reconsideration was warranted for manifest error.
- The Court clarified it did not intend fees against Mellberg except in favor of Will, awarding Will $42,928.48 from Mellberg and reducing JDM, LLC’s award accordingly; it otherwise affirmed the fee awards and denied reconsideration and Rule 59/60 relief.
- Final amended awards: Individual Defendants — $409,179.99 from JDM, LLC (plus Will’s $42,928.48 from Mellberg; total $452,108.47); Impact — $1,394,418.82 from JDM, LLC. Motions to reconsider were denied.
Issues
| Issue | Plaintiff's Argument (Mellberg/JDM) | Defendant's Argument | Held |
|---|---|---|---|
| Whether attorneys' fees may be imposed personally on Mellberg | Fees were improperly attributed to Mellberg personally except as to claims he pursued | Defendants sought fees against Mellberg for work unique to Will and collective defense costs | Court clarified fees would not be broadly imposed on Mellberg; Will awarded $42,928.48 from Mellberg; JDM, LLC award reduced accordingly |
| Whether claims "arise out of contract" for A.R.S. §12-341.01 | Tort/statutory duties existed independent of contract, so fees not authorized | Claims centraly related to contracts, confidentiality agreements, and employment relationships | Court held the "essence" of the action arose out of contract (contract and statutory/tort claims intertwined) |
| Whether tort claims are interwoven with contract claims (and apportionment required) | Tort claims against some defendants not interwoven; apportionment practicable and required | Defendants argued claims were factually and legally intertwined and apportionment impracticable | Court found claims interwoven; apportionment not practicable; collective fee award appropriate |
| Whether reconsideration or relief under Rules 59/60 warranted (manifest error/new evidence) | JDM asserted manifest errors (arising-out-of-contract, unclean hands, hardship, Lanham Act fee analysis) | Defendants urged deference; no manifest error or extraordinary circumstances shown | Court denied reconsideration and Rule 59/60 relief, finding no manifest error or new grounds to alter fee order |
Key Cases Cited
- Associated Indem. Corp. v. Warner, 143 Ariz. 567 (1985) (supports reduction of fee awards under Arizona law)
- Barmat v. John & Jane Doe Partners A–D, 747 P.2d 1218 (1987) (tests whether claims arise from contractual relationships)
- Morris v. Achen Const. Co., 747 P.2d 1211 (1987) (evidence proving statutory misappropriation may also prove breach of contract)
- Skydive Arizona, Inc. v. Hogue, 238 Ariz. 357 (2015) (contract and tort claims interwoven permits fee award)
- Bennett v. Baxter Group, Inc., 224 P.3d 230 (2010) (apportionment impracticable when non-contract claims are factually connected)
- Testa v. Village of Mundelein, Ill., 89 F.3d 443 (1996) (defining the "prevailing party" for fee purposes)
- Christiansburg Garment Co. v. Equal Emp't Opportunity Comm'n, 434 U.S. 412 (1978) (standard and caution in awarding fees against unsuccessful plaintiffs)
- Barber v. Hawaii, 42 F.3d 1185 (1994) (district court discretion to reconsider prior orders)