Lee v. ING Investment Management, LLC
240 Ariz. 158
Ariz. Ct. App.2016Background
- Curtis F. Lee was an at-will chief credit officer for ING Investment Management, LLC (IIM) and signed a one-page severance letter promising a lump-sum (one year base salary plus average annual bonus over prior three calendar years) if terminated without cause and he signed a release.
- IIM terminated Lee without cause in 2010; Lee sued for breach of contract, breach of the covenant of good faith and fair dealing, and treble damages under A.R.S. § 23-355.
- The superior court granted partial summary judgment to IIM, rejecting Lee’s treble-damages claim and Lee’s proposed method of calculating the bonus average, but denied summary judgment on other claims.
- IIM made a Rule 68 offer of judgment for $900,000 (exclusive of any attorney fees Lee could recover); Lee accepted and the court entered judgment against IIM.
- Lee sought attorney fees and costs under A.R.S. §§ 12-341.01 and 12-341; the superior court found Lee the successful party and awarded $562,000 in fees and $18,021.21 in costs.
- Both parties appealed: IIM challenged the successful-party finding; Lee challenged (1) the denial of treble damages and (2) the reduced fees/costs award. The Court of Appeals affirmed.
Issues
| Issue | Plaintiff's Argument (Lee) | Defendant's Argument (IIM) | Held |
|---|---|---|---|
| Whether Lee was the “successful party” for attorney-fee purposes under A.R.S. § 12-341.01(A) | Lee argued he prevailed (accepted $900,000 judgment) and should be the successful party | IIM argued Lee’s recovery was substantially reduced by summary judgment on trebling and bonus calculation, so IIM was the prevailing party | Court affirmed trial court’s discretionary finding that Lee was the successful party under a totality-of-litigation test; no abuse of discretion |
| Whether the superior court erred in the amount of fees and costs awarded to Lee | Lee argued he was entitled to the full requested fees and costs (> $900,000 fees; $105,610.62 costs) | IIM argued Lee’s litigation conduct inflated fees; alternatively, the award should favor IIM as successful party | Court reviewed for abuse of discretion and affirmed the reduced award (fees $562,000; costs $18,021.21) as having a reasonable basis |
| Whether Lee can appeal interlocutory summary-judgment rulings (treble-damages and bonus-calculation) after accepting Rule 68 judgment | Lee contended the partial summary-judgment rulings were erroneous and appealable | IIM argued the Rule 68 offer/judgment resolved all claims and extinguished appeal rights; alternatively, Lee’s acceptance was not conditional | Court held Lee’s acceptance of the Rule 68 offer and entry of judgment resolved all claims encompassed by the complaint, extinguishing his right to appeal interlocutory rulings; conditional acceptance argument rejected |
| Whether either party is entitled to appellate attorney fees and costs for this appeal | Lee sought full fees; IIM sought fees for prevailing on appeal | Each party claimed prevailing status on appeal | Court found neither side prevailed on appeal and denied appellate fees and costs to both parties |
Key Cases Cited
- Berry v. 352 E. Virginia, LLC, 228 Ariz. 9 (App. 2011) (trial court discretion to determine successful party under § 12-341.01)
- Hawk v. PC Village Ass’n Inc., 233 Ariz. 94 (App. 2013) (standard of review and totality-of-litigation approach for fee awards)
- Ocean W. Contractors, Inc. v. Halec Constr. Co., 123 Ariz. 470 (1979) (monetary recovery is an important factor in prevailing-party analysis)
- 4501 Northpoint LP v. Maricopa County, 212 Ariz. 98 (2006) (accepted Rule 68 judgment is a substantive adjudication and preclusive)
- Douglas v. Governing Bd. of Window Rock, 221 Ariz. 104 (App. 2009) (Rule 68 offer need not be apportioned by claim; encompasses all claims unless specified)
- Cuellar v. Vettorel, 235 Ariz. 399 (App. 2014) (Rule 68 prevents collateral litigation of issues encompassed by accepted offer)