Hobson v. Chen ( 2023 )

NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.
IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
LAW OFFICE OF WILLIAM R. HOBSON PC, Plaintiff/Appellee,
v.
ANGELLEE CHEN, Defendant/Appellant.
No. 1 CA-CV 22-0196
FILED 2-7-2023
Appeal from the Superior Court in Maricopa County
No. CV2016-091045
The Honorable Rodrick J. Coffey, Judge
AFFIRMED IN PART, VACATED IN PART
COUNSEL
Angellee Chen, Clovis, California
Defendant/Appellant
Stanley R. Lerner, P.C., Phoenix
Counsel for Plaintiff/Appellee
MEMORANDUM DECISION
Presiding Judge Samuel A. Thumma delivered the decision of the Court, in
which Judge Cynthia J. Bailey and Vice Chief Judge David B. Gass joined.
HOBSON PC v. CHEN
Decision of the Court
T H U M M A, Judge:
¶1 The Law Office of William R. Hobson PC filed this case
against former client Angellee Chen for unpaid attorneys’ fees and costs. In
a prior appeal, this court reversed a dismissal for failure to state a claim,
noting “some interpretations of the complaint entitle Hobson to relief.” Law
Office of William R. Hobson, P.C. v. Chen (Hobson I), 1 CA-CV 20-0223, 2020
WL 7587113, at *1 ¶ 1 (Ariz. App. Dec. 22, 2020) (mem. dec.). On remand,
the superior court found Hobson provided Chen a benefit of $40,000, also
awarding Hobson $1,618.76 in costs and $6,000 in sanctions. For the reasons
stated below, the award of $40,000 plus $1,618.76 in costs is affirmed, and
the sanctions award is vacated.
FACTS AND PROCEDURAL HISTORY
¶2 In April 2012, Chen filed a wrongful termination lawsuit
against her former employer. A few months later, Chen hired Hobson to
replace her first attorney. Chen and Hobson discussed a fee agreement
where Chen would pay half of Hobson’s normal hourly rate and a
percentage contingent on the outcome. But no such written fee agreement
was ever signed by the parties. Nor was any other fee agreement reached
by the parties.
¶3 Twice -- in July 2012 and April 2013 -- Hobson invoiced Chen
for his work at his normal hourly rate and Chen paid the invoices. Hobson
later claimed that he did not provide Chen any more invoices because he
believed she could not pay. Hobson took various actions on Chen’s behalf,
including filing an amended complaint, participating in discovery, taking
depositions and defeating a motion for summary judgment. In January
2015, Chen fired Hobson. In June 2015, Chen settled her claims, receiving
$250,000 from her former employer. Hobson then filed this case, seeking
compensation for his time spent on Chen’s case on a quantum meruit
theory. Hobson’s complaint attached a third invoice that detailed time
spent on the case but that had not been sent to Chen.
¶4 After failing in numerous attempts to serve Chen at her home,
the court allowed Hobson to serve her by publication. After doing so, Chen
appeared and moved to dismiss, claiming insufficient process, insufficient
service of process and a failure to state a claim. See Ariz. R. Civ. P. 12(b)(4–
6). The court denied Chen’s motion.
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HOBSON PC v. CHEN
Decision of the Court
¶5 When Hobson failed to prosecute the case, it was placed on
the dismissal calendar and then dismissed in April 2017. Hobson moved to
reinstate and to vacate the dismissal, and when Chen filed no timely
opposition, the court granted the motion and reinstated the case. Chen later
unsuccessfully argued the case was improperly reinstated.
¶6 Chen then moved to dismiss, arguing Hobson’s claim was
barred by Levine v. Haralson, Miller, Pitt, Feldman & McAnally, P.L.C., 244
Ariz. 234 (App. 2018). The court first denied the motion, but reconsidering,
later found Levine barred Hobson’s quantum meruit claim. Meanwhile,
Chen filed other motions, again challenging personal jurisdiction and
claiming the case was improperly reinstated, which the court denied.
¶7 After entry of a final judgment dismissing the case, Hobson
timely appealed. Tacitly rejecting personal jurisdiction and improper
reinstatement arguments, Hobson I reversed and remanded, finding issues
of fact, stating “if there was no operative agreement between Hobson and
Chen, Hobson would be allowed to recover the reasonable value of the legal
services it provided.” 2020 WL 7587113, at *2 ¶ 9.
¶8 On remand, after a bench trial where Hobson and Chen
testified, the court found there was no binding agreement between the
parties and that Chen was liable for the reasonable value of Hobson’s
services. The court set that value at $40,000 and entered final judgment. In
February 2022, Hobson timely moved to amend the judgment, seeking
sanctions for an unaccepted offer of judgment it provided to Chen in 2018.
As Chen’s response noted, however, that motion relied on Ariz. R. Civ. P.
(Rule) 68(g) as amended effective January 1, 2022. Hobson then filed a
second motion, seeking sanctions for an unaccepted offer of judgment
provided to Chen in 2017. That second motion, however, was filed about 35
days after the entry of judgment.
¶9 Ultimately, the court issued an amended order, awarding
Hobson $40,000, $1,618.76 in costs and $6,000 as a sanction under Rule 68(g)
as amended effective January 1, 2022. This court has jurisdiction over
Chen’s timely appeal under Article 6, Section 9, of the Arizona Constitution
and Arizona Revised Statutes (A.R.S.) sections 12-120.21(A)(1) and -2101.
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HOBSON PC v. CHEN
Decision of the Court
DISCUSSION
¶10 Chen argues the superior court: (1) lacked jurisdiction to
reinstate the case; (2) lacked personal jurisdiction because process and
service of process were inadequate; (3) wrongly awarded Hobson quantum
meruit fees; (4) improperly determined that the quantum meruit value of
Hobson’s services was $40,000 and (5) erred in awarding Hobson sanctions
under current version of Rule 68(g). The court addresses these arguments
in turn, recognizing Hobson I resolves the first three.
I. Chen’s First Three Arguments Fail Under the Law of This Case.
¶11 Hobson I reversed the grant of Chen’s motion to dismiss and
remanded to the superior court for further proceedings. 2020 WL 7587113,
at *2 ¶ 13. Hobson I did so even though Chen had argued in that appeal that
“dismissal is appropriate because the court lacked personal jurisdiction
over Chen due to insufficient process and insufficient service of process.”
See id. Accordingly, Hobson I tacitly determined that the superior court did
not err in reinstating the case and that process and service of process were
sufficient to invoke jurisdiction over Chen. See id. Thus, under the law of
this case and the mandate in Hobson I, the superior court lacked authority
to reverse its decision reinstating the case or dismissing for lack of personal
jurisdiction. See, e.g., Tovrea v. Superior Court, 101 Ariz. 295, 297 (1966);
Ziegler v. Superior Court, 134 Ariz. 390, 393 (App. 1982).
¶12 In reversing the dismissal and remanding for further
proceedings, Hobson I directed that, “if there was no operative agreement
between Hobson and Chen, Hobson would be allowed to recover the
reasonable value of the legal services it provided.” 2020 WL 7587113, at *2
¶ 9. On remand, the superior court lacked authority to deviate from that
mandate. See Tovrea, 101 Ariz. at 297. Nor has Chen shown any exception
to the law of the case or the mandate that applies. See Dancing Sunshines
Lounge v. Indus. Comm’n, 149 Ariz. 480, 482–83 (1986). Thus, Chen’s first
three issues fail.
II. The Court Did Not Err in Reinstating the Case.
¶13 The superior court’s jurisdiction is an issue of law reviewed
de novo. R.A.J. v. L.B.V., 169 Ariz. 92, 94 (App. 1991). By rule, the court is to
place a case on the Dismissal Calendar if the parties have not filed a joint
report and proposed scheduling order within 210 days from the filing of the
complaint. Ariz. R. Civ. P. 38.1(d). “If an action remains on the Dismissal
Calendar for 60 days, the court must dismiss it without prejudice . . . .” Ariz.
R. Civ. P. 38.1(d)(2). Arizona courts, however, have the discretion to
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Decision of the Court
reinstate a case after it is dismissed without prejudice from the dismissal
calendar. See Jepson v. New, 164 Ariz. 265, 277 (1990) (construing prior rule);
Black v. Greer, 17 Ariz. App. 383, 385 (1972) (same); Campbell v. Deddens, 93
Ariz. 247, 250–51 (1963) (even after the case has been dismissed, the court
has discretion to grant relief from the order dismissing the case).
¶14 Chen does not argue any deficiency with Hobson’s motion to
reinstate nor does she challenge the court’s reasoning in reinstating the
case. Instead, Chen cites pre-Rules cases to argue that “nothing in the Rules
authorizes the court to reinstate the case after it has been properly
dismissed without prejudice for lack of prosecution.” At least since the
promulgation of Rule 38.1 and its predecessors, Arizona law is to the
contrary. See Jepson, 164 Ariz. at 277. Chen has shown no error in the
superior court reinstating the case.
III. Chen Has Shown No Reversible Jurisdictional Error.
¶15 Apart from the law of this case regarding jurisdiction, Chen
has shown no resulting prejudice for any alleged defect in process or service
of process. She had actual notice of the case, participated in the litigation
and is challenging a judgment on the merits. See State v. 1810 E. Second Ave.,
193 Ariz. 1, 6 (App. 1997) (where party had actual knowledge of the
proceeding and “took full advantage of it by contesting the matter all the
way through judgment,” any failure to provide the notice prescribed by the
statute caused no prejudice. “If an error is not prejudicial, it is not grounds
for reversal.”).
IV. Chen Has Shown No Error in the Court Determining Hobson Was
Entitled to Recovery Under Quantum Meruit.
¶16 Absent a written fee agreement, an attorney may not recover
the quantum meruit value of services provided “because unwritten
contingent fee agreements are void as against public policy.” Levine, 244
Ariz. at 236 ¶ 1. Hobson I, however, distinguished Levine, concluding the
proposed agreement would have been a hybrid agreement with a regular
fee component. 2020 WL 7587113, at *2 ¶ 9. Hobson I concluded that “[s]ome
interpretations of the complaint’s allegations would allow Hobson to
recover its fees,” adding that “if there was no operative agreement between
Hobson and Chen, Hobson would be allowed to recover the reasonable
value of the legal services . . . provided.” Id. at *2 ¶¶ 9 & 12.
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HOBSON PC v. CHEN
Decision of the Court
¶17 At trial, neither party presented evidence that they had
entered into an operative agreement. The superior court noted the
requirement that a contingency fee be signed by the client and found no
operative agreement between the parties. “[A] trial court must ‘strictly
follow’ the mandate of an appellate decision.” Bogard v. Cannon & Wendt
Elec. Co., Inc., 221 Ariz. 325, 334 (App. 2009) (quoting cases). Given this
finding that the parties had “no operative agreement,” which is not
challenged on appeal, the superior court properly looked to quantum
meruit and determined “the reasonable value of the services provided.”
Chen has shown no error.
V. The Court Did Not Err in Awarding $40,000 as the Reasonable
Value of the Services Provided.
¶18 The calculation of damages is reviewed for an abuse of
discretion. Solar-West, Inc. v. Falk, 141 Ariz. 414, 419 (App. 1984). Chen
argues the court’s award is not supported by reliable evidence. When
determining the reasonable value of the services provided, the court should
consider the following four factors:
(1) the qualities of the advocate: his ability, his
training, education, experience, professional
standing and skill; (2) the character of the work
to be done: its difficulty, its intricacy, its
importance, time and skill required, the
responsibility imposed and the prominence and
character of the parties where they affect the
importance of the litigation; [3] the work
actually performed by the lawyer: the skill, time
and attention given to the work; (4) the result:
whether the attorney was successful and what
benefits were derived.
Schwartz v. Schwerin, 85 Ariz. 242, 246–47 (1959). The trial evidence
addresses these factors. William Hobson testified about his legal
experience, including with cases like Chen’s. He testified about the details
of the case which included amending the complaint and defeating Chen’s
former employer’s motion for summary judgment. Evidence also showed
that, after defeating that motion and a few months after Hobson’s
representation was terminated, Chen obtained a settlement for $250,000. See
Hobson I, 2020 WL 7587113, at *1 ¶ 4. The dispute over Hobson’s work was
detailed in the court’s decision and led to the court reducing the amount
requested by nearly 25 percent from $53,544.55 to $40,000.
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HOBSON PC v. CHEN
Decision of the Court
¶19 Chen argues the court erred in finding Hobson’s hourly rate
reasonable because she did not object to it when she paid the first two
invoices. Chen’s support for that argument is an ethics opinion stating it
would be unreasonable to charge a full hourly rate and collect a contingent
fee. See Ariz. Ethics. Op. 03-06. The award for Hobson, however, was not
for legal contract damages but an equitable quantum meruit award for the
court’s determination of the reasonable value of the benefit he provided to
Chen. See Schwartz, at 85 Ariz. at 246. Chen has not shown that the rate the
court used in making that equitable award was unreasonable.
¶20 Chen similarly argues that the court erroneously admitted in
evidence Hobson’s third invoice for services. Chen has shown no valid
objection to that admission under the Arizona Rules of Evidence,
particularly for a bench trial. Indeed, Chen cites no authority to support her
contention and therefore waives her argument on appeal. See Polanco v.
Indus. Comm’n, 214 Ariz. 489, 491 ¶ 6 n.2 (App. 2007) (where party mentions
an “argument in passing” in an opening brief, but “cites no relevant
supporting authority and does not develop it further,” the issue is waived).
For these reasons, Chen has failed to show that the court erred in making
the $40,000 equitable quantum meruit award authorized by Hobson I.
VI. The Court Erred in Awarding Hobson Sanctions Under the
Version of Rule 68(g) Effective January 1, 2022.
¶21 Chen correctly notes the superior court applied the wrong
version of Rule 68(g) in awarding sanctions. Hobson concedes, claiming an
entitlement to $10,320.67 in sanctions under the previous rule. Because
Hobson did not timely file a proper motion for sanctions under the prior
version of the rule, the award is vacated.
¶22 “A motion to alter or amend a judgment must be filed no later
than 15 days after the entry of judgment.” Ariz. R. Civ. P. 59(d). Hobson
timely filed a motion to amend the final judgment, but sought sanctions
under the version of Rule 68(g) effective January 1, 2022. Hobson sought to
correct that error in filing a new motion for sanctions citing the correct
version of Rule 68(g), but did so more than a month after the final judgment
was filed. Thus, the timely request for sanctions erroneously cited the
incorrect version of the rule, and the later motion for sanctions citing the
correct version of the rule was untimely. The superior court could not issue
the award of sanctions that it did because it applied a version of Rule 68(g)
that did not apply. And the superior court lacked jurisdiction to award
sanctions under the correct version of Rule 68(g) because the motion
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HOBSON PC v. CHEN
Decision of the Court
seeking those sanctions was untimely. Thus, the award of Rule 68(g)
sanctions is vacated.
VII. Attorneys’ Fees and Costs.
¶23 Each party seeks attorneys’ fees and costs on appeal under
A.R.S. §§ 12-341 and 12-341.01. Because Hobson is not the successful party,
its request is denied. And because Chen is self-represented, her request for
fees is denied. Chen is awarded her taxable costs contingent upon her
compliance with ARCAP 21.
CONCLUSION
¶24 The final judgment is affirmed in part and vacated in part.
AMY M. WOOD • Clerk of the Court
FILED: AA
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