Zeagler v. Buckley (CA2 10/27/09)

This is an appeal from an award of attorneys fees in a contract case. The holding is this: just as fees may be awarded where contract and non contract claims are intertwined, they may be awarded where contract and non-contract actions are intertwined – at least where the fees would have been incurred anyway, at least where the “non-contract” action is a bankruptcy about which there is a strong smell of gamesmanship.

Zeagler sued Buckley for breach of contract. Buckley responded by filing for bankruptcy; she withdrew her petition months later, the day before a hearing on Zeagler’s motion to dismiss it for bad faith. The contract action resumed, Buckley lost at trial, the court awarded fees. The award included fees incurred in the bankruptcy action, which the trial court found – and Buckley apparently did not deny – were for “obtaining information and establishing contractual rights” that would have been obtained and established regardless of the bankruptcy.

Buckley appealed. Her only argument was that the court could not award the bankruptcy fees because bankruptcy is not a “contested action” as required by 12-341.01. Division Two decided that that didn’t matter, that the “intertwined” rule applies, and that if it didn’t then parties would file bankruptcy just to avoid fees.

We tend to think that the those-fees-would-have-happened-anyway aspect is important but the appeal wasn’t structured to emphasize that much. And while we agree that some would try to take advantage of a bankruptcy loophole to avoid a fee award, what does that say about the responsible-lawyers-will-never-do-this-bad-thing line we get from the courts whenever they decide to allow that particular bad thing to be done?

The Court of Appeals seems annoyed by the fact that Buckley based her appeal on an issue of law rather than on a factual debate about abuse of discretion. Why a lawyer would do that seems fairly obvious. The opinion nevertheless spends a long footnote whining that Buckley’s “scant” briefs fail to argue an issue she didn’t raise. We would have thought them a Godsend: briefs that really are brief and that present a clear question of law rather than rehashing facts disputing a forgone conclusion. Had Buckley’s briefs violated ARCAP 13, we bet that at least one footnote would have said so. Maybe her lawyer said something at oral argument to set the court off; if so, the footnote should have said that so as not to seem utterly clueless.