Appendix — Levy v. Englund

App. 1

NOTICE: THIS DECISION DOES NOT

CREATE LEGAL PRECEDENT AND MAY

NOT BE CITED EXCEPT AS AUTHORIZED

BY APPLICABLE RULES.

IN THE COURT OF APPEALS

STATE OF ARIZONA

DIVISION ONE

ROBERT A. LEVY

and PHYLLIS B. LEVY,

husband and wife,

1 CA-CV 07-0260

DEPARTMENT E

MEMORANDUM

DECISION

(Filed Jul. 23, 2009)

(Not for Publication —

Rule 28, Arizona Rules

of Civil] Appellate

Procedure)

Plaintiffs-Appellants,

Ws

WILLIAM A. ENGLUND,

a single man,

)

)

)

)

)

)

)

)

)

)

Defendant-Appellee.

Appeal from the Superior Court in Maricopa County

Cause No. CV 2001-011987

The Honorable Patrick E. Eldridge, Judge

Pro Tempore

AFFIRMED AS MODIFIED, REMANDED

Robert A. Levy El Paso, TX

Phyllis B. Levy

Plaintiffs-Appellants Jn Propria Persona

Polsinelli Shughart, PC Phoenix

$y Leon B. Silver

Rebekah W. Francis

Attorneys for Defendant-Appellee

App. 2

KESSLER, Judge

Wil This is an attorneys’ fee case. It arises out of

the superior court’s decision to award $292,240.48

in attorneys’ fees, taxable costs, and expenses to

William A. Englund (“Englund”) pursuant to Arizona

Revised Statutes (“A.R.S.”) sections 12-341.01(A)

(2003), -341.01(C) (2003), -349 (2003), and Arizona

Rules of Civil Procedure (“Rules”) 11, 26, 37, 56 and

76, including the $5,000 statutory maximum sanction

against Robert A. Levy and Phyllis B. Levy (the

“Levys”) under A.R.S. § 12-349(A). The Levys appeal

from the court’s judgment awarding such sanctions

and its post-judgment order awarding additional

sanctions and from its denial of their motions for

new trial. For the reasons stated below, we affirm the

judgment and post-judgment order as modified, the

order denying the motion for new trial and remand

for further proceedings consistent with this decision.

FACTUAL AND PROCEDURAL HISTORY’

U2 The Levys leased a 4.8-acre property known as

Lot 9 to Englund on or about August 1, 1994 for

$13,250, payable in installments. England also agreed

to pay the Levys for the increase in annual property

This is the second time this case has been before us on

direct appeal. In Levy v. Englund, 1 CA-CV 04-0161 (memo. dec.,

Mar. 10, 2005), amended on motion for reconsideration, May 23,

2005 (“Levy I”), this Court affirmed the dismissal of the Levys’

action, but remanded the case to the superior court for a hearing

on the award of attorneys’ fees.

App. 3

taxes from the 1993 amount of $2,100 for tax years

1994-1998. The lease term expired on December 31,

1998.

W3 At the end of the lease term, Englund offered to

renew the lease and the Levys made a counter-offer.

Englund did not respond to the counter-offer. He did

mail two checks to the Levys, for $355 and $313.64,

which equaled the outstanding balance of $668.64 for

the 1998 tax year.

"4 After obtaining both checks by February 16,

1999, the Levys realized the amounts equaled the

taxes due and did not correspond to the amount of

their proposed increased rent payment. Nevertheless,

the Levys opted to sue Engiund on Juiy 13, 2001, for

breach of contract, seeking rent for two and a half

years since Englund had sent his last check. The gist

of the claim was that Englund had led them to believe

that he was continuing to lease the Levys’ property.

G5 In 1993, Englund also had acquired Lot 10,

property zoned as horse property and adjoining Lot 9,

from Dennis and Yvonne Hilker. The Hilkers had

leased the Levys’ iand prnor to December 1993 and

readily admitted that they had dumped horse manure

from their horse farm operation there, thinking they

could do so by paying the Levys $250 per month.

Nevertheless, after the complaint had been dismissed

in mandatory arbitration, the Levys filed a second

amended complaint against Englund, including their

breach of contract action but also alleging property

damage against Englund for dumping the manure on

App. 4

their property (including failing to keep the property

in good condition) and causing them to incur removal

costs to restore the property. The amended complaint

also alleged Englund was estopped from denying he

had vacated the property and requested punitive

damages. Exhibits disclosed during litigation show

the manure piles accumulated on Lot 9 prtor to

Englund’s purchase of Lot 10.

16 After delays stemming from the Levys’ motions

to change various judges, briefing on summary judg-

ment, and other issues, trial was set for November

19, 2003. See Levy I at TJ 2-5

17 On the morning of trial, the parties met with the

superior court to discuss Mr. Levy’s desire to testify in

the narrative. The court denied the request and the

Levys refused to proceed. Levy I at Q{ 6-7. Accord-

ingly, the court dismissed the complaint and assessed

fees and costs against the Levys on February 2, 2004

of $110,831.05 and $3,011.50, respectively, in addition

to $4724.42 in litigation expenses. Jd. The court later

entered several supplemental judgments awarding

Englund additional attorneys’ fees, costs and liti-

gation expenses, bringing the entire award to

$141,035.74.

78 The Levys appealed to this court, arguing that

the superior court erred in precluding narrative

testimony, denying the Levys their due process rights,

granting the motion to dismiss, denying the motion to

reconsider, and awarding fees. Levy /. We affirmed

the court’s rulings in all respects, except we vacated

App. 5

the fee award and remanded for a hearing on the

reasonableness of the fee request. Jd. at {| 28. We also

vacated the supplemental awards and remanded to

the superior court for a hearing.

79 On remand, Englund submitted an application

for an award of $236,068.75 in attorneys’ and para-

legal fees, $5,146.50 in computer-related research

costs and clerk costs, and $12,729.30 in litigation

expenses. Englund explained that the application

was for fees incurred during the entire litigation,

including the proceedings before this Court and the

Arizona Supreme Court.

#10 The superior court held a two-day hearing on

the reasonableness of the fee request. It heard testi-

mony from Englund’s original counsel, Barbara Ross

(“Ross”); his current counsel, Leon Silver (“Silver”):

and defense expert Mark Harrison (“Harrison”).

* After Levy I was decided, the Levys unsuccessfully moved

to have their supersedeas and cash bonds exonerated in the

superior court. Given the upcoming hearing on the application

for fees and costs, the court denied that motion without prej-

udice. After the court awarded Englund’s application for

attorneys’ fees, costs and litigation expenses, the court released

the bond funds to Englund in payment of the award on remand

over the Levys’ protest. The Levys filed a special action petition

in this Court challenging the superior court’s refusal to release

the bonds to them and refusal to automatically change the judge

assigned to the case on remand. We accepted jurisdiction of the

latter issue but denied relief and declined jurisdiction of the

former issue. Levy v. Swann, 1 CA-SA 06-0159 (August 31 and

December 7, 2006 orders).

App. 6

111 Ross testified that she billed for services at

$175 per hour, the low end of the spectrum and tried

to keep her billing tight. Ross testified that, from the

beginning, Mr. Levy would refuse to accept discovery

responses and would not comply with the arbitrator’s

rulings.

Wi2 Silver, who succeeded Ross as Englund’s coun-

sel, testified that he had been in practice for

seventeen years and had typically billed at the rate of

$250 to $350 per hour. He reduced the fee for this

case to $225 per hour until 2003, and then billed

Englund at $250 per hour when his regular billing

rate rose to $300 per hour. Silver tried to contain the

expense by using an associate, Greg Stanton, for the

early litigation and a paralegal. Silver’s usual rate

rose to $350 per hour when he joined Robbins &

Green in August 2005, but he kept Englund’s rate at

$300 per hour. Englund has paid all the bills except

for the Robbins & Green bill and expenses accruing

for the current representation now that Silver is at a

new firm. However, those additional billings are still

owed by Englund and he is obligated to pay those

bills.

213 During his testimony, Silver explained the

tortuous path of this litigation. He emphasized

admissions by the Levys that they knew Englund’s

checks were for taxes, not for rent, and yet pursued

the litigation, facts undisputed in the joint pretrial

statement. Silver cited this evidence as an example of

the Levys’ litigation behavior and their “refusing to

face the facts, refusing to give up claims even in the

App. 7

face of their own admission that the facts were

otherwise.” This phenomenon also was evidenced by

their refusal to accept (1) Mrs. Hilker’s declaration

that the Hilkers believed they were free to dump

manure, and (2) photos indicating that the debris

built up on the Levys’ property before Englund ever

leased it. Silver thus had to spend significant time

cross-examining Mr. Levy on the waste issue, and his

outline on the subject was fifty-one pages long.

114 Silver further testified that it became apparent

that the Levys were setting Englund up for suit from

the beginning. For example, they wrote Englund a

letter stating that if they heard nothing further from

him they would assume that Englund was continuing

to lease the property. Silver also pointed out that the

Levys filed suit one month after Englund’s daughter

complained to the City of Phoenix that the Levys’

property was “horribly overgrown with weeds.” Silver

testified that the Levys sued in part to retaliate for

this complaint. Gathering evidence to establish these

purposes also contributed to trial preparation costs.

115 The Levys’ litigation tactics also forced Silver to

engage in irrelevant discovery. Although a claim of

holdover allowing for recovery of rent was specified in

the lease, the Levys made a claim for the fair value

rental of the property. They disclosed Brent Boles

(“Boles”) as an expert, along with his opinion as to the

value of the property. During his deposition, Beles

told Silver that the document was not his opinion, he

was not qualified to give that opinion, and that he

App. 8

was afraid that the Levys would sue him if he failed

to cooperate.

716 The bad faith claim also required Silver to

incur significant fees. During a deposition, Levy

stated he would be happy with a jury award of $1

million in bad faith damages. Silver consequently

believed that he was litigating a $1 million case, not a

$30,000 case and that Levy would re-raise the bad

faith claim. Silver believed that the Levys had

committed perjury and fraudulently obtained evi-

dence to oppose summary judgment, and _ thus

devoted additional time to analyzing and proving

these theories. Silver also came to believe that the

Levys noticed a change of judge when trial was

imminent in order to needlessly delay the case.

W217 Silver also detailed how the Levys injected

their unrelated case against Swift Transportation Co.

(“Swift Transportation”) into discovery and voir dire

proceedings. Silver conducted due diligence to ascer-

tain why the Levys had implicated that company and

its Chief Executive Officer, Jerry Moyes (“Moyes”).

The Levys sought to explore alleged involvement by

Englund in a conspiracy between Swift Transpor-

tation, Moyes, and the CIA, along with Englund’s

alleged relationship with former Maricopa County

Assessor Kevin Ross. As shown by exhibits at the fee

hearing, the Levys had unsuccessfully sued Swift and

the CIA in federal court alleging a conspiracy arising

from a car accident between Levy and a Swift

Transportation truck. Levy apparently alleged the

accident was related to CIA drug activities with

App. 9

Swift. Meanwhile, the Levys were seeking to change

judges in this case, obtained a new round of discovery,

and claimed that Silver and a witness were con-

spiring against them, as were Englund and the

Hilkers.

18 Silver also pointed out that Englund repeatedly

attempted to settle with the Levys, offering to forego

any fee claim against the Levys if they would desist.

This unsuccessful effort continued even after Englund

had incurred substantial fees.

9119 Expert witness Harrison, a 46-year lawyer with

experience in about 400 cases involving professional

discipline, also testified in support of the award’s

reasonableness. Harrison’s review of the _ records

indicated that the Levys had initiated sixty-seven

actions in this case, necessitating a response, while

Englund had initiated about eighteen. About nine of

those occasions were efforts to seek reconsideration,

to which Englund did not respond formally. None-

theless, his counsel had to review those motions and

incur attorneys’ fees. Harrison opined that a great

many of the actions undertaken by the plaintiffs were

“superfluous or duplicative or unnecessary.” Never-

theless, Englund’s attorneys were required to respond

or risk default on the issues.

420 In undertaking his review, Ilarrison evaluated

the time Englund’s attorneys had spent on various

activities and pleadings, and found nothing out of

line. Harrison concluded that the fees Englund had

incurred were reasonable.

App. 10

121 The Levys introduced no contrary evidence

except for a narrative statement by Mr. Levy. Many of

Mr. Levy’s questions amounted to asking the witness

to reiterate prior testimony. He also used part of his

time to tell jokes, argue irrelevant points, and inquire

whether lawyers believe it is acceptable to “shoot at”

pro se litigants.

122 The superior court granted Englund’s applica-

tion for attorneys’ fees and costs after making

extensive findings of fact and conclusions of law. It

found that the award was justified under A.R.S.

$§ 12-341.01(A), (C) and 12-349, and Rules 11, 26, 37

and 76(f). The court granted Englund $253,265 in

attorneys’ fees, $5,000 in A.R.S. § 12-349 damages,

taxable costs of $1,825, and nontaxable litigation

expenses of $19,811. It later denied the Levys’ mo-

tions for new trial, and awarded Englund an addi-

tional $12,339.48 in attorneys’ fees, costs, and

expenses to compensate him for responding to the

motions. The Levys appeal from the initial award on

remand, the supplemental award and the denial of

their new trial motions.

DISCUSSION

Il. The Award of Attorneys’ Fees, Costs and

Penalty

423 ‘The Levy’s argue that the award of attorneys’

fees, costs and penalty was both legally erroneous

and not supported by the evidence. Specifically, they

contend: (1) The superior court could not award fees

App. 11

and costs as a matter of law because previous judges

had denied requests for fees and because the only

evidence submitted was hearsay; (2) The award was

factually erroneous because the findings of fact and

conclusions of law entered by the court were those

submitted by Englund and the Levys had filed

objections to those findings showing they were not

supported by the evidence; (3) There was no statutory

basis for an award under A.R.S. § 12-341.01(A)

because the matter did not arise out of contract and

an award of fees would be a substantial hardship to

the Levys or under Rule 76(f) because and there had

to be a trial de novo from the arbitration; (4) The

appellate courts had already denied Englund’s fees in

Levy I and Levy v. Swann; (5) The mandate in Levy |

was limited to holding a hearing on the first awards

of fees and costs prior to remand and precluded a

supplemental award of fees and costs incurred for

responding to the motions for new trial; (5) The fees

were inflated and a result of block-billing and double

billing; and (6) The court denied the Levys an ade-

quate opportunity to prepare for and conduct the

evidentiary hearing and erroneously denied their

motion for new trial related to that issue.

124 Since the superior court held that the award of

fees and costs was justified under various statutes

and rules, we will affirm if that holding is correct

under any one statute or rule, without having to

discuss other bases for the holding. We review de

novo the superior court’s determination whether a

statute awarding fees applies, but review the amount

App. 12

of the award under the abuse of discretion standard.

Ramsey Air Meds, L.L.C. v. Cutter Aviation, Inc., 198

Ariz. 10, 13, 712, 6 P3d 315, 318 (App. 2000)

(citation omitted). We hesitate to second-guess the

trial court on the amount of such fees “in view of the

[trial court’s| superior understanding of the litigation

and the desirability of avoiding frequent appellate

review of what essentially are factual matters.” Chase

Bank of Ariz. v. Acosta, 179 Ariz. 563, 574, 880 P.2d

1109, 1120 (App. 1994) (quoting Associated Indem.

Corp. v. Warner, 143 Ariz. 567, 571, 694 P2d 1181,

1185 (1985)). Because the trial court supported its

ruling with findings of fact and conclusions of law, we

review the factual findings for clear error and apply

de novo review to its conclusions of law. See Rule

52(a); Flying Diamond Airpark, LLC v. Meienberg,

215 Ariz. 44, 47, | 9, 156 P.3d 1149, 1152 (App. 2007).

125 Applying this standard, we find that the award

of fees was not erroneous under A.R.S. §§ 12-341(C),

-349, and -350 and do not discuss the other rules or

statutes upon which the superior court relied upon

except as discussed in relation to the award of fees for

any appellate aspects of this litigation. To the extent

that the award included amounts for any appeal, we

direct the trial court to modify the judgment and

post-judgment order awarding attorneys’ fees and

costs by reducing them by $79,759.39, but increasing

them by any fees and costs we award on appeal.

App. 13

A. Legal Bar to the Award

126 ‘The Levys argue that because other judges had

issued interlocutory decisions and had not awarded

attorneys’ fees to Englund, the superior court was

barred from now awarding such fees. In essence, the

Levys contend that such an award is barred under

the horizontal appeal rule. That rule discourages

judges assigned to a case from revisiting rulings by

previously assigned judges unless the prior ruling

was manifestly erroneous or there had been a sub-

stantial change in essential facts, issues, evidence or

the applicable law. Lemons v. Super. Ct., 141 Ariz.

502, 504, 687 P.2d 1257, 1259 (1984); Donlann uv.

Macgurn, 203 Ariz. 380, 385-86, {| 29, 55 P.3d 74, 79-

80 (App. 2002). This is not a matter of jurisdiction but

merely wise judicial policy. Lemons, 141 Ariz. at 504,

687 P.2d at 1259.

U27 #=We disagree with the Levys for several reasons.

First, the Levys never raised this issue in the

superior court as to A.R.S. §§ 12-341.01(C) or -349.

They only raised this issue as to interlocutory rulings

on summary judgment or discovery under Rules 11,

26, 26.1, 37 and 56. Generally we will not exercise our

discretion to consider arguments made for the first

time on appeal. McDowell Mtn. Ranch Land Coal. |

Vizcaino, 190 Ariz. 1, 5, 945 P2d 312, 316 (1997).

Contrary to the Levys’ argument, the issue of

whether a court should reconsider another judge's

decision in the case is not a matter of subject matter

jurisdiction. Lemmons, 141 Ariz. at 504, 687 P.2d at

App. 14

1259. We see no reason to exercise our discretion to

consider this argument in this case.

W28 Second, we cannot agree with the Levys that

there were no changed circumstances. When the

superior court issued various interlocutory orders,

any decision as to whether Englund would be entitled

to fees under A.R.S. §§ 12-341.01(C) or -349 had to

wait for the final decision in the matter. Thus,

changed circumstances would justify the superior

court rendering such an award in this case at the end

of the litigation.

129 The Levys also argue that the award was not

legally justified because the only evidence presented

in support of the fee application was hearsay by

Mr. Silver. This argument is not supported by the

record. A hearsay statement is “a statement, other

than one made by the declarant while testifying at

the trial or hearing, offered in evidence to prove the

truth of the matter asserted.” Ariz. R. Evid. 801(c).

Here, Silver testified in court and was subject to

cross-examination. Even if the statements qualify as

hearsay, an exception to the hearsay rule allows testi-

mony demonstrating the declarant’s state of mind.

Ariz. R. Evid. 803(3). Silver’s statements about what

factors influenced his judgment and dictated his

litigation efforts are not inadmissible hearsay. See

Public Serv. Co. of Oklahoma v. Bleak, 134 Ariz. 311,

320-21, 656 P.2d 600, 609-610 (1982). Such evidence

is relevant to prove the reasonableness of the conduct

of the person receiving the communication. See id. at

321, 656 P.2d at 610.

App. 15

1730 Additionally, the record shows the Levys

waived any objection to Silver’s testimony on hearsay

grounds. Silver did not state that his testimony was

hearsay, only that the third party declarations he

used to support the application would not be used to

show the truth of the matter, but what “it was that

we were learning that resulted in us doing what

might look like a lot of work given the nature of the

case.” The Levys never objected to Silver’s testimony

at the hearing as hearsay.

731 Furthermore, other evidence apart from Silver’s

testimony sustains the sanctions. The court also

relied upon Harrison’s testimony that attmbuted

Silver’s amount of time to the Levys’ excessive

number of baseless motions. Mr. Levy himself made

an admission, admissible under Arizona R. Evid.

801(d)(2)(A), that he was trying to run up fees to force

Englund to pay.

B. The Evidence Supported the Basis for

the Award

132 The Levy’s contend that as shown in their

objections to the proposed findings of fact and con-

clusions of law, the evidence did not support the

award and those findings and conclusions are not

entitled to any deference because the court simply

signed the proposed findings submitted by Englund.

We disagree.

W33 First, the record supports the superior court’s

findings for the basis of the award. The court found

App. 16

that the attorneys’ fees, costs, and expenses claimed

by Englund were reasonable under the circum

stances. It found that the work performed by

Englund’s attorneys was caused by the Levys’ own

misconduct:

the vast majority of the work billed was

billed as a result of the tactics employed by

the Plaintiffs, including but not limited to

raising issues and claims without legal or

factual justification, making claims that they

knew were false, re-raising issues that had

been previously decided, and engaging in or

attempting to engage in obstructionist or

“hide-the-ball” litigation behavior with re-

gard to the filing of joint documents like pre-

trial statements and in the submission of

exhibits.

134 In reviewing findings of fact, we view the

evidence in the light most favorably to support the

findings and will uphold the findings if there is any

reasonable evidence supporting them. Mitchell uv.

Mitchell, 152 Ariz. 317, 323, 732 P.2d 208, 214 (1987).

We are bound by the findings unless they are clearly

erroneous, giving due regard to the opportunity of the

trial judge to view the evidence and weigh credibility.

Lee Dev. Co. v. Papp, 166 Ariz. 471, 475-76, 803 P.2d

464, 468-69 (App. 19¥0). While the Levys contend

that the clearly erroneous standard does not apply if

findings are induced by an erroneous view of the law,

he provides no argument on that theory and we dis-

regard it. Phelps Dodge Corp. v. Arizona Elec. Power

Co-op., Inc. 207 Ariz. 95, 122, J 117, 83 P.3d 573, 600

(App. 2004).

App. 17

435 The record supports the findings. Silver, Ross,

and Harrison all testified regarding the need to incur

fees to respond to dozens of filings the Levys had

initiated. The superior court also specifically found

and the record supported that Mr. Levy had told

Englund’s counsel that he would make this case take

as long as possible and be as expensive as possible in

order to force Englund to settle the claim and pay the

Levys some amount of money. The record indicates

that the Levys knowingly asserted claims lacking any

basis, re-raised 1ssucs already decided, and abused

discovery. Englund was obligated to respond to these

arguments.

W36 Given this record, the award was justified

under A.R.S. §§ 12-341.01(C) and -349.° Section 12-

341.01(C) applies when clear and convincing evidence

establishes that a claim or defense (1) constitutes

harassment, (2) is groundless, and (3) is not made

in good faith. A.R.S. § 12-341.01(C). Good faith and

intent to harass are judged by the _ subjective

* As to the award of fees under A.R.S. § 12-349, the court

does not appear to have made express holdings under A.R.S.

§ 12-350. Nevertheless, some of its holdings appear to corre-

spond to certain factors in A.R.S. § 12-350. The court found that

the Levys’ claims were not grounded in fact or based upon a good

faith belhef formed after a reasonable investigation and the

Levys unnecessarily increased the cost of the litigation and

intended to harass Englund. Those correspond to A.R.S. § 12-

350(1), (2), (5) and (6). It also found no circumstances making

the award unjust. See A.R.S. § 12-350(4). Similarly, the record

was undisputed the Levys did not prevail on any claims. See

A_R.S. § 12-350(7).

App. 18

standard, while groundlessness requires application

of an objective standard. Gilbert v. Bd. of Med.

Exam rs, 155 Ariz. 169, 180, 745 P.2d 617, 628 (App.

1987), superceded by statute on other grounds as

stated in Goodman v. Samaritan Health Sys., 195

Ariz. 502, 508 n.7, J 25, 990 P.2d 1061, 1067 n.7 (App.

1999).

137 With respect to the findings, the Levys also

seem to argue that the superior court committed clear

error in not accepting their affidavits and ruling in

their favor. Such an argument does not render the

findings clearly erroneous. Because the court is in

a superior position to judge witness credibility and

make reasonableness determinations, we defer to its

findings. See Chase Bank, 179 Ariz. at 574, 880 P.2d

at 1120; Lee Dev. Co., 166 Ariz. at 475-76, 803 P.2d at

468-69. Since there is evidence supporting the

findings, we affirm. Mitchell, 152 Ariz. at 323, 732

P.2d at 214."

* The Levys’ attacks on specific findings fare no better

Finding No. 30 simply restates the Levys’ belief that a con-

spiracy exists between the superior court, Silver and others.

They complain that the finding should be overturned because

their conspiracy claims are warranted. There can be no doubt

that pursuin these theories increased the fees incurred in this

case. The Levys’ argument is not relevant and does not

demonstrate clear error.

Finding No. 31 lists the misrepresentations concerning wit-

ness testimony and the circumstances under which the Levys

obtained testimony. The record confirms that witnesses recanted

and clarified that they had no knowledge of the events or did not

(Continued on following page)

App. 19

138 The Levys also argue the findings are not

entitled to any deference because they were prepared

by Englund’s counsel and approved by the superior

court. We disagree. Findings prepared by the pre-

vailing party’s counsel “are not to be rejected out-of-

hand” if they are supported by evidence. United

States v. El Paso Natural Gas Co., 376 U.S. 651, 656

(1964). The findings are supported by the evidence

here.” Elliott v. Elliott, 165 Ariz. 128, 134, 796 P2d

939, 936 (App. 1990), does not support the Levys’

argument that we cannot rely on proposed findings of

fact approved by the court. It only held that a court

must exercise its independent judgment in making

findings. There is no evidence the superior court

failed to meet that standard.

support the Levys’ versions of events. The superior court did not

clearly err in making these findings. There is no doubt that the

Levys’ failure to be candid with the witnesses and opposing

counsel drove up the cost of Englund’s defense.

Finally, the Levys claim that the superior court erroneously

determined in Finding No. 33 that Mrs. Levy committed perjury

They misunderstand the finding. It provides that Silver testified

that he was prepared to demonstrate that Mrs. Levy had

perjured herself with respect to the foundation for a photograph

used to oppose summary judgment. Therefore, we cannot say

that the finding is clearly erroneous.

* The Levys also contend that their objections to the

proposed findings refute them. In fact, most of those object:ons

are simply alternative findings and conclusions. Some are

simply based on a conflict in the record which the superior court

resolved in England’s favor.

App. 20

1139 We agree with the superior court’s conclusion

that this suit was groundless, harassing, and brought

in bad faith because the Levys had no reason to

believe that Englund had held over on the lease or

was responsible for the manure accumulations. When

Englund would not accede to the Levys’ demands,

they filed suit with the purposes of forcing him to pay

amounts he did not owe and of injuring him

financially. Substantial evidence, including state-

ments by Mr. Levy, indicated that the Levys sought to

prolong the litigation in bad faith and for the purpose

of harassing Englund into paying. The groundless

nature of the Levys’ claims is underscored by their

pursuit of far-fetched conspiracy theories. at

Englund’s expense.

C. Fees Incurred in the Appellate Courts

140 Englund requested an award including all his

attorneys’ time and costs incurred in Levy I and Levy

v. Swann. The superior court granted almost all of

the fees, costs and expenses requested by Englund, so

we assume that included the appellate fees and costs.

The Levys claim that those fees were not awardable

because they had already been denied by the

appellate courts. This requires us to review each of

the holdings in the appellate matters filed by the

Levys.

W41 In Levy J, Englund requested an award of

attorneys’ fees under A.R.S. § 12-341.01(A) in his

answering brief. This Court denied Englund’s request

App. 21

for fees in denying his motion for reconsideration.

Our supreme court issued two orders in Levy I]

denying Englund’s request for an award of attorneys’

fees on the petition for review.

142 In Levy v. Swann, we denied Englund’s request

for attorneys’ fees in the special action with prejudice

to the extent the request was based on the special

action being frivolous, not brought in good faith and

constituted harassment. However, we denied the

request without prejudice to the extent on remand

the superior court determined the action arose out of

contract. We also awarded Englund $285 in taxable

costs. In a petition for review of that case, our

supreme court denied the petition, but did not

address attorneys’ fees.

143 Based on this record, the superior court erred

in awarding Englund attorneys’ fees related to Levy I

because both this Court and the Arizona Supreme

Court denied Englund fees in that action.

144 As to Levy v. Swann, we indicated Englund

could request the fees on appeal on remand if he

could show the matter arose out of contract.” We hold

that the action did not arise out of contract for pur-

poses of an award of attorneys’ fees.

* The supreme court did not address any request for fees on

the petition for review from the special action. Accordingly, any

such request wa deemed denied as a matter of law. State uv.

Hill, 174 Ariz. 31 323, 848 P.2d 1375, 1385 (1993) (motion not

ruled on is deemed denied by operation of law).

App. 22

145 The application of A.R.S. § 12-341.01(A) to

Englund’s claim is a question of statutory interpre-

tation that we review de novo. Hampton v. Glendale

Union High Sch. Dist., 172 Ariz. 431, 433, 837 P2d

1166, 1168 (App. 1992). Section 12-341.01(A) grants

courts the discretion to award reasonable attorneys’

fees to the successful party in a contested action

arising out of an express or implied contract.

146 At least two of the amended complaint claims,

estoppel and property damage, do not appear to have

a contractual basis. This court has held that even a

promissory estoppel claim is an equitable remedy and

not a theory of contract liability. See Double AA

Builders, Ltd. v. Grand State Constr, L.L.C., 210

Ariz. 503, 511-12, 9{] 43-48, 114 P3d 835, 843-44

(App. 2005). Moreover, the property damage claim

with accompanying punitive damages request ap-

pears to sound in tort. The mere presence of a

contract in the underlying transaction does not mean

that these non-contract claims arise out of contract.

See Robert E. Mann Constr. Co. v. Liebert Corp., 204

Ariz. 129, 134, 16, 60 P.3d 708, 713 (App. 2003). See

also Marcus v. Fox, 150 Ariz. 333, 335, 723 P.2d 682,

684 (1986) (to award attorneys’ fees for torts in an

action involving a contract, the tort must not exist

but for the breach of contract).

147 The Levys did assert a “breach of contract”

claim for their first count and requested an award of

attorneys’ fees under A.R.S. § 12-341.01(A). However,

App. 23

this court looks to the substance of the claim and not

its label, examining the nature of the action and the

surrounding circumstances to determine whether the

claim is one arising out of a contract. Marcus, 150

Ariz. at 335, 723 P.2d at 684 (citation omitted).

148 In essence, the Levys sought holdover rent

based upon Englund’s alleged failure to vacate the

premises. A.R.S. § 33-342 (2007) supplies the basis for

a claim of “holdover” rent in Arizona:

When a lessee holds over and retains pos-

session after expiration of the term of the

lease without express contract with the

owner, the holding over shall not operate to

renew the lease for the term of the former

lease, but thereafter the tenancy is from

month to month.

When a claim arises out of statute, fees are not

recoverable under A.R.S. § 12-341.01(A). See Kennedy

v. Linda Brock Auto. Plaza, Inc., 175 Ariz. 323, 325-

26, 856 P.2d 1201, 1203-04 (App. 1993) (when a cause

of action is purely statutory, A.R.S. § 12-341.01(A)

does not apply and therefore a statutory lemon law

action did not arise out of contract even though a

lease helped form the basis of the dispute). Cf.

Keystone Floor & More, LLC v. Arizona Registrar of

Contractors, 1 CA-CV 07-0900, 2009 WL 2044422, at

*3, 7 12 (Ariz. App., July 15, 2009) (appeal arising out

of contractors’ failure to comply with statutory duties

App. 24

did not arise out of contract despite failure was

related to contract performance).’

149 No Arizona case squarely addresses whether

fees are recoverable under A.R.S. § 12-341.01(A) for

litigating a holdover rent claim.” Because the statute

creates the right to recover rent and the duty

breached is imposed by statute, we conclude that the

claim arises out of statute, not contract. As Division

Two of this court held in Pima County v. Testin, only

an express contract concerning holdover renders the

statute inapplicable. 173 Ariz. 117, 119, 840 P.2d 293,

295 (App. 1992). In this case, the statute controls.

The mere existence of the prior lease agreement does

not warrant a contrary conclusion.

While the Levys did not raise this statute on appeal, we

are not bound by the parties’ arguments if an issue of statutory

application is involved and if their arguments will reach an

incorrect result on the statutory issue. Maximov v. Maximov,

220 Ariz. 299, 301 n.4, 205 P.3d 1146, 1148 n.4 (App. 2009)

"In Berry v. Arizona State Land Dep’t, the Arizona

Supreme Court affirmed the superior court’s determination that

a state land commissioner had no authority to order holdover

rent for unlawful possession of state lands. 133 Ariz. 325, 327,

651 P.2d 853, 855 (1982). With respect to attorneys’ fees claimed

under A.R.S. § 12-341.01(A) and other statutes, the court

affirmed the trial court’s discretionary decision not to award

fees, stating: “We need not reach the arguments presented by

the parties on the question of whether the State, when

represented by the Attorney General, is entitled to attorneys’

fees.” Id. at 328, 651 P.2d 853, 651 P.2d at 856. The superior

court had found that even if the statute applied, it would

exercise its discretion to deny fees. Jd

App. 25

150 We thus hold that the superior court erred in

awarding Englund attorneys’ fees for Levy I and Levy

v. Swann. Englund requested an award of fees and

costs related to these two actions totaling $79,759.39.

On appeal, we may remand the matter with direc-

tions to enter such judgment as should have been

entered. A.R.S. § 12-2103(A) (2003); Acuna v. Kroack,

212 Ariz. 104, 115, 4 42 n.15, 128 P.3d 221, 232 n.15

(App. 2006) (section 12-2103(A) applies to court of

appeals). Accordingly, we direct that on remand, the

superior court shall enter a_ revised judgment

awarding the entire amount of attorneys’ fees, ex-

penses, and costs as it did below after the first

remand, but shall reduce that total amount by

$79,759.39, and increase that amount by any award

of attorneys’ fees, expenses and costs we award on

appeal.

D. The Award Exceeded the Mandate

751 The Levys contend that the superior court was

limited by our mandate in Levy J to hold a hearing on

and consider awarding only the attorneys’ fees and

costs contained in the judgments vacated by that

appeal and could not include any additional fees

or costs relating to the proceedings on remand. We

disagree.

In the original judgment awarding attorneys’ fees,

expenses and costs, as supplemented by the supplemental and

second and third supplemental judgments, which were vacated

(Continued on following page)

App. 26

152 Englund had requested attorneys’ fees and

costs at every stage of the proceeding. Furthermore,

Englund had provided the Levys with updates on fees

incurred in its first supplemental disclosure state-

ment on October 13, 2006. The Levys had an oppor

tunity to object to such fees at the two-day hearing.

1153 Nothing in our previous orders or decision in

Levy I precluded the superior court from awarding

fees and expenses beyond the judgment we vacated

in Levy I. In Levy I, we “vacate[d] the award of

attorneys’ fees and all related costs and expenses and

remandled] for a hearing on those issues.” Levy I

at {28 (emphasis supplied). In referring to “those

issues,” we did not preclude Englund from increasing

his fee request to include all attorneys’ fees, costs and

litigation expenses incurred prior to remand. Nor did

our order of August 26, 2005 in Levy J, vacating the

second and third supplemental judgments, change

that result. We entered that order by stipulation and

stated that by vacating the supplemental judgments,

we were “remanding the matters encompassed by

in Levy I, the superior court awarded $141,035.74. On remand,

the court entered a total award of $292,240.48, including the

judgment on remand and the supplemental award. As noted

supra, 450, the latest judgment award has to be reduced by

$79,759.39. Accordingly, the modified judgment on remand

(subject to the award of fees and costs on appeal) will be

$212,481.09. Thus, the difference between the total amount

which was vacated in Levy [ and the modified judgment prior

to any award of fees esd costs on appeal is $71,445.35

($212,481.09-$141,035.74)

App. 27

those judgments for determination by the trial court

at the hearing to be held on the issues encompassed

in our Memorandum Decision... .” Thus, the August

26 order merely ensured that the supplemental

judgments were vacated so they could be considered

along with all other fees and costs requested by

Englund. For this same reason, the mandate in Levy /

did not preclude the superior court from awarding

Englund attorneys’ fees and costs incurred after

remand.

154 Moreover, contrary to the Levys’ arguments,

the supplemental fee request on remand was not

untimely. The judgment authorized Englund to apply

for additional fees and provided for amendments to

that judgment to reflect fees and costs associated

with post-judgment proceedings. Englund filed the

First Supplemental Declaration and request for

additional attorneys’ fees ten days after the trial

court denied the amended new trial motion in a

signed order. Contrary to the Levys’ assertions,

Englund’s fee requests are not time-barred. The time

constraints of Rule 54(g) do not apply to attorneys’

| a J ~ o

fees and expenses sought as sanctions pursuant to

statute or rule. See Rule 54(g)(4). Moreover, the

judgment contained language pursuant to Rule 54(b),

which would also permit later filings of fee requests.

E. The Fees Awarded Are Not Excessive

155 The superior court found that the attorneys’

fees, costs, and expenses claimed by Englund were

App. 28

reasonable under the circumstances. It also found

that the rates charged by the lawyers, paralegals,

clerks, and expert witness Harrison were appropriate

for the legal community and reasonable.

W56 We give deference to the superior court’s find-

ings as to the amount of fees and costs and will not

reverse unless there is an abuse of discretion, that is,

either that there is no evidence supporting the

findings or the reasons given clearly are untenable,

legally incorrect or the award amounts to a denial of

justice. Charles I. Friedman, P.C. v. Microsoft Corp.,

213 Ariz. 344, 350, 917, 141 i°3d 824, 830 (App.

2006). The record supports the court’s findings and

conclusions. Silver, Ross, and Harrison all testified

regarding the need to incur fees to respond to dozens

of filings the Levys had initiated in this litigation

which has been unfounded from its inception. The

record contains no support for the Levys’ assertions

that the hourly rates were inflated, the time spent

was unreasonable or the billing improper.’

The Levys do make one argument which deserves

mention-that of block-billing. The Levys contend that the exhibit

detailing the time and fees spent by Englund’s attorneys contain

block-billing, meaning a single time entry summarizing numer-

ous things done without allocating the time within the block per

activity. The Levys argue that block-billing does not permit a

court to accurately analyze the reasonableness of the fees.

However, Harrison testified that block-billing in this case was

fair because it would have been difficult to separate out every

activity and allocate a specific time to it. The specificity of the

time and activities need only be sufficient to allow a neutral

(C ntinued on following page)

App. 29

F. The Levys’ Due Process Arguments Are

Meritless

457 The Levys contend the fee award should be

reversed because the superior court denied them due

process in not permitting them time to prepare for

the fee hearing and in conducting the hearing. They

also contend that the court erred in denying their

motions for new trial on these issues. We will sustain

the denial of a motion for new trial absent a clear

abuse of discretion. Hrickson v. Waller, 116 Ariz. 476,

479, 569 P.2d 1374, 1377 (App. 1977). We review a

court’s decisions to control its own calendar for an

abuse of discretion. State v. Harris, 152 Ariz. 150,

152, 730 P.2d 859, 861 (App. 1986). We reject the

arguments that the Levys did not receive due process.

158 The Levys raise a host of objeciions to the two-

day reasonableness hearing in November 2006. At the

conclusion of the first day, Mr. Levy wanted to con-

tinue the hearing the following day, but no courtroom

was available. At their request, the superior court

agreed to hold the hearing in Silver’s office and limit

it to one-half day. The Levys are not entitled to

judge to make a fair evaluation of the time expended and the

need and reasonableness of that time and effort. Metro Data

Sys., Inc. v. Durango Sys., Inc., 597 F. Supp. 244, 245 (D. Ariz.

1984). We have reviewed the details of Englund’s lawyers’ time

and activitics supporting the application and do not find it

abusive. The vast majority of the time entries and description of

activities are not block-billed and many of those that were so

billed involved trial preparation time which could not be

allocated.

App. 30

complain on appeal about the very arrangements Mr.

Levy had requested. State v. Logan, 200 Ariz. 564,

565-66, 7 9, 30 P.3d 631, 632-33 (2001)." Similarly,

while the Levys complain that the time for the second

day was only two hours, to accommodate the Levys,

the superior court permitted them to submit narra-

tive testimony in support of their case. They agreed to

such narrative testimony and cannot now argue that

was reversible error. [d. They also received a week to

prepare their submission. The Levys submitted the

response. We are satisfied on this record that the two-

day procedure provided procedural due process to the

Levys.

"59 The Levys further complain that their cross-

examination of Silver was prematurely terminated

and they were not given sufficient time for the

hearing. The record reflects, however, that the Levys’

terminated this examination:

MR. LEVY: [TO MRS. LEVY] Is there anything else

you wanted to ask?

MRS. LEVY: No.

MR. LEVY: Okay. I think we’re finished.

' The Levys complain that they had to park a distance from

opposing counsel’s office and thus could not bring their materials

with them to the November 8, 2006 hearing. They fail to identify

what they could not bring. There is no indication in the record

that they requested help in transporting the materials. In any

event, it is not the superior court’s fault if the Levys were

unprepared for the second day of the hearing.

App. 31

The Levys had sufficient time to present their case.

Nor have they shown how the length of the hearing

prejudiced them. We will reverse only when alleged

error prejudiced the parties. Bowling v. Stapley, 1 CA-

CV C€7-0745, 2009 WL 1014587, at *13 {52 (Ariz.

App., Apr. 16, 2009); Rule 61.

160 Finally, the Levys complain that the superior

court refused to grant their motion to compel pro-

duction of Silver’s tax filings, Silver’s compensation

earned as a pro tem judge, and billing information

regarding Silver’s other clients. They attach to the

appendices to their opening brief various document

requests which they allegedly had made for that

information. However, those requests are not part of

the record on appeal and we will not consider them.

Melgar v. Campo, 215 Ariz. 605, 609 n.8, 161 P.3d

1269, 1273 n.8 (App. 2007); Lansford v. Harris, 174

Ariz. 413, 417 n.1, 850 P.2d 126, 130 n.1 (App. 1992).

Moreover, we do not see how the failure to obtain that

information in any way prejudiced the Levys in

preparing for the fee hearing.

II. The Levys’ Other Issues Are Not Properly

Before This Court

161 The Levys raise several other claims which are

not properly before this Court. First, they assert that

the superior court abused its discretion in not

sanctioning Englund for witness tampering. The

issue presented was whether certain witnesses were

misled by the Levys in rendering opinions for trial

App. 32

which they later recanted in sworn declarations. The

Levys presented no facts to support an allegation that

Silver did anything untoward with these witnesses.

162 Second, the Levys complain that Judge Baca

denied their request for a change of judge pursuant to

Rule 42(f)(2). This issue had to be addressed by a

special action. Review of denials of peremptory

requests for changes of judge must be reviewed by

special action. See Taliaferro v. Taliaferro, 186 Ariz.

221, 223-24, 921 P.2d 21, 23-24 (1996). We see no

reason why the same requiremen:z should not apply to

attempts to review notices of changes of judge for

cause. See Lepez v. Kearney ex rel. County of Pima, 2

CA-SA 2009-0024, 2009 WL 1874272, at *1, 7 1 (Ariz.

App., June 30, 2009) (accepting special action juris-

diction on change of judge request for cause in

criminal proceeding). The time for filing a special

action has expired. Relief is not available in this

appeal.

“63 Third, the Levys complain that the proceedings

were compromised because: (1) Judge Eldridge was a

pro tem judge and not a “regular” judge, and (2) Silver

also serves as a pro tem judge. Again, if tney wanted

to seek a change of judge on the basis si bias, they

should have filed a petition for special action, which

they failed to do. Moreover, none of the Levys’

authorities support the proposition that a pro tem

judge cannot advocate before another pro tem judge.

See Kay S. v. Mark S., 213 Ariz. 373, 377-81, {J 22-

38, 142 P.3d 249, 253-257 (App. 2006) (finding an

appearance of impropriety when the advocate worked

App. 33

as a judge pro tem for the judge hearing the case and

the judge’s staff identified the attorney as their

favorite judge pro tem); State v. Salazar, 182 Ariz.

604, 607-09, 898 P.2d 982, 985-87 (App. 1995) (finding

disqualification warranted when one of the attorneys

in the case undertook representation of the trial

judge’s former secretary in a wrongful termination

action against the judge).

164 Finally, the Levys complain that the super-

sedeas bond did not remain in place during this

appeal and they will be damaged if they prevail on

appeal. This issue is moot because the Levys have not

prevailed on appeal and even if there was error in the

payment of the bond proceeds to Englund, we cannot

offer any remedy for such error. Vinson v. Marton &

Assoc., 159 Ariz. 1, 4, 764 P.2d 736, 739 (App. 1988).

On remand, the superior court may determine if the

Levys are entitled to reimbursement from Englund

for any amounts released to Englund based on our

modification of the judgment.

III. Attorneys’ Fees on Appeal

1165 Englund requests attorneys’ fees and costs on

appeal pursuant to all of the statues and rules cited

by tne superior court and to sanction the Levys

pursuant to Arizona Rule Civil Appellate Procedure

25 on the grounds the appeal was frivolous. The

Levys have not responded to that request in their

reply brief.

App. 34

166 We conclude that Englund is entitled to attor-

neys’ fees on appeal pursuant to A.R.S. § 12-349(a)(1),

(3) and Arizona Rule of Civil Appellate Procedure

(“Ariz. R. Civ. App. P.”) 25. In Standage v. Jaburg &

Wilk, P.C., 177 Ariz. 221, 230-31, 866 P.2d 889, 898-99

(App. 1993), this Court awarded sanctions under

§ 12-349(a) finding that the appeal was spurious and

taken without substantial justification. It held the

appellant had failed to conduct formal discovery,

make reasonable inquiries and abide by former

rulings. It also found that the appeal was consistent

with the appellant’s groundless, vexatious lawsuits

brought to harass opposing parties. In Johnson uv.

Brimlow, 164 Ariz. 218, 222, 791 P2d 1101, 1105

(App. 1990), we awarded sanctions under Ariz. R. Civ.

App. P. 25 holding that the appeal was frivolous, that

is, it was either brought to harass the opposing party

or delay the effect of an adverse judgment or was so

lacking in merit that any reasonable attorney would

find it was not meritorious.

W67 We conclude that the Levys’ appeal meets these

standards for purposes of sanctions. This case ini-

tially involved a $16,500 claim for rent which itself

was frivolous. The record supports the superior

courts conclusion that that simple, nonmeritorious

claim has blossomed into an unending tale of liti-

gation gone amuck, fulfilling the Levys’ threat to

proiong this matter to attempt to wring money out

of Englund. The appeal itself for the most part is

simply a continuation of that conduct with the Levys

raising issues that are already precluded, raising

App. 35

nonmeritorious issues to attack the superior court’s

authority to rule on the fee request, and misciting of

authorities. Only one of the Levys’ arguments had

any merit; that the superior court erred in awarding

attorneys’ fees, costs and legal expenses for Levy I

and Levy v. Swann. The fact that one argument was

meritorious should not immunize the Levys from

sanctions for all of the rest of their nonmeritorious

arguments. At some point, this type of conduct must

be sanctioned. This is that point.

168 Accordingly, we will award Englund his reason-

able attorneys’ fees incurred related to this appeal on

timely compliance with Ariz. R. Civ. App. P. 21. Such

fees should not include any time Englund’s counsel

spent on briefing the issue of attorneys’ fees incurred

in the prior appellate matters We will also award

costs to Englund as the prevailing party pursuant to

A.R.S. 12-331 (2003) upon timely compliance with

Ariz. R. Civ. App. P. 21.

CONCLUSION

169 We affirm the judgment and post-judgment

order awarding attorneys’ fees, litigation expenses

and costs, as modified herein. On remand, the supe-

rior court shall enter a modified judgment awarding

Englund a total of $212,481.09 plus any attorneys’

fees and costs we award on appeal. We also affirm the

denial of the Levys’ motion for new trial. We remand

this matter to the superior court for further pro-

ceedinvs consistent with this decision. Nothing in this

App. 36

decision precludes the superior court on remand from

awarding additional attorneys’ fees, litigation ex-

penses and costs incurred by any party on remand

from this decision.

Isp | ee

DONN KESSLER, Presiding

CONCURRING:

/s/

PATRICIA A. OROZCO, Judge

/s/

MAURICE PORTLEY, Judge

App. 37

IN THE COURT OF APPEALS

STATE OF ARIZONA

DIVISION ONE

Robert A. Levy and ) Court of Appeals

Phyllis B. Levy, ) Division One

husband and wife, No. 1 CA-CV 07-0260

Plaintiffs-Appellants, : MARICOPA COUNTY

Superior Court

No. CV 2001-011987

DEPARTMENT E

vy

William A. Englund,

a single man, |

Defendant-Appellee. ORDER

) (Filed Sep. 04, 2009)

The Court has considered Appellants’ Motion for

Reconsideration, Appellee’s Motion for Reconsideration,

Appellee’s Declaration and Application for Costs and

Attorneys’ Fees on Appeal, Appellee’s Statement of

Costs Including Attorneys’ Fees, Appellants’ Objec-

tions to Appellee’s Declaration and Application for

Costs and Attorneys’ Fees on Appeal and to Appellee’s

Statement of Costs Including Attorneys’ Fees, and

Appellee’s Reply in Support of Declaration and

Application for Costs and Attorneys’ Fees on Appeal

and Statement of Costs Including Attorneys’ Fees.

IT IS ORDERED denying Appellants’ Motion for

Reconsideration.

IT IS FURTHER ORDERED denying Appellee’s

Motion for Reconsideration. Such Motion was untimely

and not well-taken. As discussed in this Court’s

memorandum decision filed July 23, 2009, this Court

App. 38

and the Arizona Supreme Court previously denied

requests for awards of attorneys’ fees and costs in

prior appellate matters in this litigation. Appellee’s

reference to an order of this Court in Levy v. Englund,

1 CA-CV 04-0161 (dated October 6, 2004) erroneously

assumes that in that order this Court permitted

Appellee to file an application for fees if he prevailed

in the litigation. That order was issued by a motions

panel of this Court and related to a motion for

reconsideration of a July 29, 2004 order denying a fee

request relating to a motion to quash a writ of

execution of the first judgment. The merits panel in

that appeal later denied any fees in that appeal.

IT IS FURTHER ORDERED that pursuant to

Arizona Rule of Civil Appellate Procedure (“Rule”) 3

and in the furtherance of the interests of justice, the

Court waives the requirements for timely filing an

application for an award of attorneys’ fees and costs

contained in Rule 21.

IT IS FURTHER ORDERED awarding Appellee

$19,349.50 in attorneys’ fees incurred in this appeal

and $215 in costs incurred in this appeal.

DATED this 4th day of September, 2009

s/ Donn Kessler

DONN KESSLER,

Presiding Judge

App. 39

Leon B. Silver #012884

Gary D. Ansel #020758

SHUGHART THOMSON &

KILROY, P.C.

Security Title Plaza

3636 N. Central Ave., Suite 1200

Phoenix, AZ. 85012

Telephone: (602) 650-2000

Facsimile :(602) 264-7033

Attorneys for Defendant

IN THE SUPERIOR COURT

OF THE STATE OF ARIZONA

IN AND FOR THE COUNTY OF MARICOPA

ROBERT A. and CASE NO.

PHYLLIS B. LEVY, CV2001-011987

husband and wife FINDINGS OF FACT,

Plaintiff, CONCLUSIONS OF

LAW AND JUDGMENT

W

: . . y Assigned to the Honorable

WILLIAM A. ENGLUND, ? | 8

VEAAADE A. Bi Patrick E. Eldridge)

a single man,

Defendant

This matter came on for hearing on November 7,

2006, after remand from the Court of Appeal

directing that the Court hold a hearing on the issue

of reasonableness of any amounts awarded as

attorneys’ fees as of right or as sanctions and the

reasonableness of any costs or litigation expenses

App. 40

The Court having read all of the submissions,

heard the evidence, reviewed the exhibits and the

arguments of the parties, and otherwise being fully

advised in the premises, hereby makes the following

Findings of Fact and Conclusions of Law

FINDINGS OF FACT

Facts Relating to the Underlying Dispute

lL. At all times relevant to this matter, Plaintiffs

Robert A. and Phyllis B. Levy, husband and wife,

owned a 4.8 acre parcel of vacant land referred to as

Lot 9, Mohawk Park, in the City of Phoenix, Arizona

The Levys own Lot 9 free and clear of any

3. In or about March, 2004, the Levys were

offered in excess of $940,000 for the purchase of Lot

9, the same offer made to adjoining property owners.

4. From December, 1993 through September,

2004 Defendant William A. Englund owned Lot 10,

Mohawk Park, in the City of Phoenix, Arizona.

5. Lot 10 adjoined Lot 9 on

borde ce

6. On or about August 1, 1994 Plaintiffs and

Defendant entered into an Agreement of Lease for Lot

¢)

7 The term of the Lease expired on December

31, 1998

App. 41

8. Rent under the lease was $13,250, payable in

53 installments of $250.00 each

9. In addition, Defendant agreed to pay any

increase in the annual property taxes from the 1993

amount of $2,100 on Lot 9 for the tax years 1994-1998

10. In November 1997, the parties agreed to

increase the monthly payment from $250.00 to $355.00

to cover increases in the annual taxes by equal

monthly payments.

11. In November, 1998, Defendant offered to

renew the Lease for five years. The parties dispute

the terms of this offer

12 On November 18. 1998. Plaintiffs counter-

offered to renew the Lease for five years for $60,000,

payable at $1,000 per month. Defendant did not

accept this offer.

13. On or about December 15, 1998, Plaintiffs

sent Defendant a letter stating

We received your check for December, enclosed

is a statement on your tax account, but you

haven't responded to our proposed renewal of

your lease.

If we don’t hear anything further from you,

we are going to assume that you are

continuing to use the property (Lot 9,

Mohawk Park). The monthly rent on a

month-to-month basis will be $550 for the

month beginning January 1, 1999. That

would mean that we would expect a payment

App. 42

of $550 plus the $105 tax payment, making a

total of $655 due on January 1, 1999. We will

give you 30 days notice of any changes in the

monthly rent.

Please let us hear from you.

14. Shortly after the original lease was signed,

Defendant built a chain link fence with a gate along

the south property line of Lot 9, which fronts on

Mohawk Lane.

15. Defendant kept the front gate padlocked at

least until December 21, 1998. The parties dispute

when Defendant removed the padlock.

16. On January 9, 1999, defendant mailed

Plaintiffs a check dated January 3, 1999, for $355.00.

17. On February 16, 1999, Plaintiffs received a

check from Defendant in the amount of $313.64.

18. After receiving the check for $313.64,

Plaintiffs realized that Defendant’s January check for

$355.00 plus his February check for $313.64 equaled

Defendant’s outstanding tax balance of $668.64 for

the 1998 tax year.

19. Despite having specific knowledge that the

January and February checks were for tax payments,

and were in an amount agreed to by Plaintiffs (see 410

above), and were not in the amount of the proposed

increase rent payment, (sec 413, above), Plaintiffs

pursued a claim against Defendant for Equitable

Estoppel based on an alleged reliance on the fact that

the payments were for rent, not taxes, filing a

App. 43

summary judgment motion on the issue and sub-

mitting jury instructions on the question.

20. Defendant purchased Lot 10 in December

1993 from Dennis and Yvonne Hilker.

21. The Hilkers leased Lot 9 from Plaintiffs.

22. The Hilkers used the Plaintiffs’ property to

dump substantial amounts of manure from their

horse farm operation.

23. Plaintiffs disclosed exhibits including photos

and videotapes that pre-dated Defendant’s ownership

of Lot 10, that clearly show the existence of manure

piles on Lot 9.

24. In anticipation of filing this suit, Plaintiffs

took a series of photographs of the locked front gate

to the property. ‘Two of these photos were taken before

the lease expired and showed Lot 10 in the back-

ground. The third photo was taken three months

after the lease expired but was taken facing away

from Lot 10. The earlier two photos were taken near

the end of the Lease term and were taken with the

intent of creating evidence to use in a Jawsuit the

Levys already intended on filing without regard for

whether Mr. Englund actually continued to use the

property or not.

25. Any hesitancy Plaintiffs may have had in

filing this suit disappeared when Defendant’s daughter,

Lisa Englund, made a complaint to the city of Phoenix

that Plaintiffs had failed to control the weeds growing

on Lot 9 almost two-and-a-half years after the Lease

App. 44

expired. Plaintiff was forced to cut down the weeds by

the city. This lawsuit followed, in part in retaliation

for that report.

26. Despite a rental agreement for rent at

$250.00 per month plus taxes and despite a high-ball

estimate of $14,000 to remove the manure and debris,

Plaintiffs at various times disclosed a desire to seek

additional bad faith or punitive damages of $100,000

to $1,000,000, thereby requiring Mr. Engiund’s counsel

to defend a much larger claim than is apparent from

the pleadings.

Facts Relating to the

Plaintiffs’ Litigation Tactics

27. Ina conversation with Defendant’s counsel,

Leon Silver that occurred just after a_ pre-trial

conference on December

—_

5, 2002, and in subsequent

phone conversations, Plaintiff Robert Levy stated his

intent to make this litigation take as long as possible

and he as expensive as possible in order to force

Defendant to settle the claim and pay money to

Plaintiffs. Mr. Levy further stated that, while he was

aware he could face an award of attorneys’ fees in Mr.

Englund’s favor, he had no fear that attorneys’ fees

would be awarded to Mr. Englund because the

arbitrator chose not to award fees.

28. Plaintiffs filed an unusually large number of

requests for extensions of time and for trial contin-

uances in the trial court, court of appeals, and Arizona

Supreme Court.

App. 45

29. Plaintiffs filed an unusually large number of

substantive motions in the trial court, the court of

appeals and the Arizona Supreme Court, at various

times had identical motions pending in the different

courts, and filed motions that had no relation to the

issues in dispute in the case.

30. Plaintiffs sought to needlessly and inappro-

priately expand the issues in the case, thereby raising

the fees incurred in defense even higher. These

actions included pursuit of a number of conspiracy

theories involving all manner of co-conspirators,

including but not limited to this Court (who Plaintiffs

alleged was installed as judge at the behest of the

Maricopa County Board of Supervisors and the

former Maricopa County Assessor solely to retaliate

against the Levys for a successful property tax

challenge), former Maricopa County Superior Court

Presiding Judge Robert Myers, Defense counsel,

Jamie Brody (a lawyer with whom the Levys con-

sulted), lay-witness Mark Manos, Mr. Manos’ counsel,

lay-witness Laura Manos, purported expert witness

Brent Bowles, lay witness Yvonne Hilker and non-

party Swift Transportation and its president Jerry

Moyes. (According to Plaintiffs, Swift and Moyes were

allegedly instrumental in having this judge appointed

to preside over this case in retaliation for a lawsuit

filed by Plaintiffs in federal court in New Mexico

accusing Swift of conspiring with, and running drugs

for the CIA, and intentionally running Plaintiffs off

the road in on-going attempts by the CIA to kill or

harass them.)

App. 46

The Court finds that the needless introduction of

these far-fetched conspiracy theories further increased

the cost of defending the case.

31. Plaintiffs falsely obtained and/or disclosed

lay and expert witness testimony; including:

a. Brent Bowles: In their disclosures, Plaintiffs

identified Brent Bowles as an expert witness who was

going to testify to his opinion on the fair rental value

of the property.’ In his deposition, however, Mr.

Bowles testified that the disclosure was not his

opinion and that he was not qualified to give such an

opinion. He further testified that he feared that he

too could become a target of the “sue happy” Plaintiffs.

b. Jim Wenger: In response to Mr. Englund’s

Motion for Summary Judgment, Plaintiffs submitted

the previously undisclosed testimony of Jim Wenger

to the effect that Mr. Wenger observed people coming

from the Englund property on to the Levy property

from 1994 through 2000, to dump manure. Mr.

Wenger subsequently submitted a declaration in

‘ The Court notes that “fair rental value of the property”

should never have been an issue in the case because the

allegation was that Mr. Englund “held over” from an existing

lease. In the case of a hold-over, the damages under Arizona law

are limited to the amount of rent called for in the pre-existing

lease. Alabam Freight Lines v. Stewart, 70 Ariz. 140, 217 P.2d

586 (1950) Despite this clear legal principal, Plaintiffs devoted a

great deal of effort to trying to establish a significantly higher

fair rental value, including having disclosed two different

experts to testify to this issue

which he recanted this testimony. Mr. Wenger

explained that Mr. Levy led him to believe that the

issue in the lawsuit was whether someone from the

Englund property had ever used the Levy property

for any purpose. He explained that had he known

that the issue in the case was whether the property

was being so used after a specific date, he would not

have signed the Declaration the way Mr. Levy drafted

it. Additionally his initial declaration stated that the

people from the Englund property were dumping

manure on the Levy property. In his subsequent

Declaration Mr. Wegner explained that this fact was

supplied by Mr. Levy and was not his observation. He

stated that had Mr. Levy disclosed to him that Mr.

Englund’s position in the case was that his people

had been taking the manure from the property to use

in the horse-boarding operation on the Englund

property, he would not have signed the Declaration,

as he could not tell what the people whom he ob-

served were doing other than that they were driving

tractors to and from the property.

ce. Laura Palmer a/k/a Laura Manos: Plaintiffs

twice disclosed Laura Manos as someone who would

testify regarding Mr. Englund’s additional usage of

Lot 9 after January 1, 1999. Upon examination in

deposition, however, Ms. Manos testified that she

witnessed this activity through only December 1998 —

the date the lease terminated — and that she did not

have any knowledge of this occurring after January 1,

1999. In response to Mr. Englund’s Motion for

Summary Judgment on this point, Plaintiffs obtained

App. 48

a Declaration from Ms. Manos in which she stated

that she had witnessed Mr. Englund’s tenants or

workers on Lot 9 after January 1, 1999. In a

discussion with Mr. Silver, Ms. Manos informed him

that while the Plaintiffs drafted the Declaration and

asked her to sign it, they never disclosed that the

issue in the lawsuit was whether the activity

occurred before or after December 31, 1998 as that

was the expiration date of the Lease. She stated that

had she known that the date was the issue, she would

not have signed the declaration the way it was

written, because she simply was not sure of when the

activity ceased.

d. Glen Ghormley: Plaintiffs disclosed Mr.

Ghormley as an “expert” witness who was going to

testify that the cost to remove the manure and debris

from their property was $14,000. Upon discussion

with Mr. Ghormley defense counse] learned that the

Plaintiffs did not disclose the fact that they sought

his testimony for litigation. Rather, Mr. Ghormley

thought he was bidding on a job, and therefore he was

engaged in a negotiation when he offered to clean up

the manure and other debris for $14,000. In fact, he

expected to be negotiated down by as much as several

thousand dollars. Upon learning of the issues in

dispute in the litigation and the anticipated use of his

App. 49

testimony, Mr. Ghormley refused to further cooperate

with Plaintiffs.*

ce. Brad Drenning: Plaintiffs disclosed Brad

Drenning as a witness who was going to testify that

the documents produced by Mr. Englund showing

that he paid Waste Management to haul off his

garbage, including the manure from the _ horse

boarding operation, were documents showing only

general waste collection and not manure collection.

Upon inquiry, Mr. Drenning disclosed that the Levys

never informed that there was even a _ lawsuit

pending in which he would be asked to testify, but

rather, they merely approached him as though they

were customers and asked about general billing

practices.

In light of this evidence the Court finds that the

Levys violated their obligation of candor to the

witnesses, to the court and to opposing counsel and

thereby needlessly and substantially increased the

cost for Mr. Englund to defend the case. The Court

finds that given what was discovered upon inves-

tigation of the disclosures, it was appropriate, if not

mandatory, for defense counsel to thoroughly inves-

tigate any evidence, claim or theory put forth by

Rather than accept that it would serve them better if

they were completely honest with their own witnesses, Plaintiffs

instead wrongfully accused defense counsel of witness

tampering

App. 50

Plaintiffs to determine the bona fides of the disclos-2:d

item.

32. In response to Defendant’s Motion for

Summary « ment regarding the manure pile issue,

Summary Judgment regarding the manure pil

Plaintiff submitted a still photograph taken from a

July 1994 videotape that, according to the sworn

Declaration of Plaintiff Phyllis Levy, purportedly

showed the exact spot on Lot 9 where the manure pile

at issue allegedly then sat.

33. Mr. Silver testified that based on a detailed

and careful review of the video tape from which the

still photograph was taken, along with an acrial

photograph of the property taken in April, 1995, he

was prepared to demonstrate at tral that the still

photograph was intentionally taken of an area to the

south and east of the then existing manure piles, and

therefore it was apparent that Mrs. Levy had

perjured herself in her declaration in opposition to

Mr. Englund’s Motion for Summary Judgment.

CONCLUSIONS OF LAW

34. The Court finds that Mr. Englund is entitled

to his taxable costs pursuant to A.R.S. §12-341 and/or

Rule 76(f), Ariz.R.Civ.P.

35. The Court finds that Mr. Englund is entitled

to recover his reasonable attorneys’ fees and expert

witness fees pursuant to Rule 76(f), Ariz.R.Civ.P. The

Court finds that the imposition of fees against

Plaintiffs will not create such a substantial economic

App. 51

hardship as to not be in the interests of justice,

particularly considering the findings in paragraphs 1-

3 above.

36. The Court finds that this matter primarily

arose oul of contract, namely the breach of, or hold-

over from a written lease and failure to clean up

debris as allegedly required by the contract. The

Court has weighed the factors established by Arizona

case law for the award of fees under this statute, See,

Wagenseller v. Scottsdale Memorial Hospital, 147

Ariz. 370, 710 P.2d 1025, 1049 (1985), Associated

Indemnity Corporation v. Warner, 143 Ariz. 567, 694

P.2d 1181, 1183 (1985), as follows:

a. The merits of the claim or defense presented

by the unsuccessful party;

b. Whether the litigation could have been

avoided or settled, and whether the successful party’s

efforts were superfluous in achieving the result;

c. Whether assessing fees against the unsuc-

cessful party would cause an extreme hardship;

d. Whether the successful party prevailed with

respect to all of the relief sought;

e. The novelty of the legal questions presented,

and whether such claims or defenses had previously

been adjudicated in this jurisdiction;

f. Whether such claim or defense had previously

been adjudicated within this jurisdiction; and

App. 52

g. Whether the award would discourage parties

with tenable claims or defenses from litigating or

defending legitimate contract issues for fear of

incurring liability for substantial amounts of

attorneys’ fees.

The Court finds that all of these factors weigh in

favor of an award of fees to Mr. Englund. As the

successful party in the action, Mr. Englund is therefore

entitled to an award of reasonable attorneys’ fees

pursuant to A.R.S. § 12-341.01(A).

37. Rule 11(a), Ariz.R.Civ.P. provides in part that

The signature of an attorney or party constitutes a

ar

certificate by the signer that the signer has read the

pleading, motion, or other paper; that to the best of

the signer’s knowledge, information, and belief formed

after reasonable inquiry it is well grounded in fact

and is warranted by existing law or a goood faith

argument for the extension, modification, or reversal

of existing law; and that it is not interposed for

any tmproper purpose, such as to harass or to

cause unnecessary delay or needless increase in

the cost of litigation.... If a pleading, motion or

other paper is signed in violation of this rule, the

court, upon motion or upon its own initiative, shall

impose upon the person who signed it, a represented

party, or both, an appropriate sanction, which may

include an order to pay to the other party or parties

the amount of the reasonable expenses incurred

because of the filing of the pleading, including a

reasonable attorney's fee.” (Emphasis supphied

App 53

The Court finds that Plaintiffs violated Rule

11(A) in a number of respects including:

a. Given the nature of the investigations per-

formed by Plaintiffs as reflected in the testimony of

witnesses they disclosed regarding the use of the

property by Mr. Englund after the termination of the

Lease (paragraph 31 above), the refusal of Plaintiffs

to acknowledge the evidence of the existence of the

manure piles on the property prior to entry of the

lease (paragraphs 22, 23, 32, & 33 above), and that

Plaintiffs appear to have intentionally misrepresented

or manufactured evidence regarding the manure and

the use of the property (paragraphs 31-33 above), the

Court finds that Plaintiffs’ claims were not well

srounded in fact and not based on a good faith belief

formed after a reasonable investigation, such that the

imposition of sanctions is appropriate under the Rule

b. Given the unusually large number of motions

filed, and particularly the unusually large number of

motions for extension of time and motions to continu

trial and other hearings, as noted on the various

court dockets, in the opimion of Mark Harrison and

the testimony of defense counsel, as found in para

graphs 28 and 2Y above, and considering Mr. Levy's

comments to defense counsel as described in para

graph 27 above, and Mr. Levy's comments contained

In his Declaration dated May 10, 2006, and the other

items stated in paragraph 30 above, the Court finds

that Plaintiffs repeatedly acted with an improper

purpose, namely to harass Mr. Englund or to cause

unnecessary delay or needless increase in the cost of

litigation, such that the imposition of sanctions Is

appropriate under the Rule

App. 54

For these violations of Rule 11(A), Ariz.R.Civ.P.

the Court awards Mr. Englund his reasonable

attorneys’ fees and all of his non-taxable litigation

expenses, including expert witness fees which will be

set forth below.

38. The Court finds that Plaintiffs’ conduct as

set forth in paragraphs 13, 18, 19, and 22-33, above,

in each instance and taken in the context of the entire

action, Was unreasonable, groundless, abusive, or

obstructionist in violation of Rule 26(f), Amz.R.Civ.P

and therefore awards Mr. Englund his reasonable

attorneys’ fees and all of his non-taxable htigation

expenses, including expert witness fees which will be

set forth below. The Court notes that Plaintiffs sought

discovery regarding their conspiracy theories at the

very beginning stages of this litigation, indicating not

only that discovery was interposed for an improper

purpose but the lawsuit was as well, and therefore

determines that fees and costs for the entire litigation

may be independently awarded under this Rule. The

Court also finds that Plaintiffs actions were not

substantially justified and there are no_ other

circumstances which made the award of expenses

unjust

3° The Court finds that Plaintiffs mad

disclosures pursuant to Rule 26.1 that they knew or

should have known were inaccurate or incomplete

and thereby caused Mr. Englund to engage in

needless investigation or discovery Accordingly, the

Court finds that Plaintiffs are liable to Mr. Englund

for his reasonable attorneys’ fees, costs and litigation

App. 55

expenses, including expert witness fees pursuant to

Rule 37(C), Ariz. R.Civ.P.

40. The Court finds that Plaintiff submitted

declarations in bad faith as set forth in paragraphs

30, 31, & 32 above in response to Defendant’s Motion

for Summary Judgment, such that the imposition of

sanctions pursuant to Rule 56(f), Ariz.R.Civ.P. are

appropriate. Accordingly, the Court finds that Plaintiffs

are liable to Mr. Englund for his reasonable attorneys’

fees, costs and litigation expenses, including expert

witness fees for this violation.

41. For the reasons set forth in paragraph 37

through 40 above, the Court finds by clear and

convincing evidence that the claims brought by the

Plaintiffs constitute harassment, were groundless,

and were not made in good faith. The Court therefore

awards Mr. Englund, as a sanction, his reasonable

attorneys fees, expenses (including expert witness

fee) and the statutory maximum of $5,000 under

A.R.S. §12-349(A). For the reasons set forth in para

graph 37 through 40 above, and the paragraphs

mentioned therein, the Court finds that Plaintiffs

a Brought this claim without substantial justi

fication, meaning that the claim constituted harass

ment, was groundless and was not made in good

faith.

b. Brought the claim and filed many motions

solely or primarily to cause delay or to harass Mr

Knglund

App. 56

c. Unreasonably expanded or delayed _ the

proceeding, and,

d. Engaged in abuses of discovery and disclosure.

42. The Court finds that the attorneys’ fees,

costs and non-litigation expenses claimed by Mr.

Englund are reasonable in the circumstances of this

litigation.

43. The Court finds that the hourly rates

charged by the various professionals identified in the

biling spreadsheets are reasonable for lawyers,

paralegals and clerks of similar experience in the

community and that the time spent on the tasks

identified were reasonable.

44. The Court finds that the rates charged and

fees incurred by Mr. Englund’s expert witness, Mark

Harrison are reasonable.

45. The court finds that the vast majority of the

work billed was billed as a result of the tactics

employed by the Plaintiffs, including but not limited

to raising issues and claims without legal or factual

justification, making claims that they knew were

false, re-raising issues that had been previously

decided, and engaging in or attempting to engage in

obstructionist or “hide-the-ball” litigation behavior

with regard to the filing of joint documents like pre-

trial statements and in the submission of exhibits.

46. The Court finds that Mr. Englund is obligated

to pay all of the fees sought by his application and

App. 57

therefore an award of all of those fees against

Plaintiffs is appropniate.

47. The Court includes in its award, an award

of the reasonable attorneys’ fees and costs incurred as

a result of the several appeals and special actions

filed by Plaintiffs. The Court finds that these fees and

costs are appropriate under Rule 76(f), Ariz.R.Civ.P.

and A.R.S. §12-341.01 as Mr. Englund is the ulti-

mately successful party on all issues in the case. In

the alternative, the Court finds that Mr. Englund is

entitled to these fees and costs, along with his non-

taxable litigation expenses incurred on the various

appeals and special actions under Rules 11(A), 26(f),

37(C) and/or 56(g), Ariz.R.Civ.P. and/or A.R.S.§§12-

340.01(C) or 349(A). The Court also finds that these

fees are appropriate as they were incurred in post

judgment proceedings, which were accounted for in

the original judgment of this Court in this Matter,

and that part of the judgment was not overturned on

appeal.

JUDGMENT

IT IS HEREBY ORDERED, entering judgment in

favor of Defendant William A. Englund, and against

Plaintiffs Robert A. and Phyllis B. Levy as follows:

1. For reasonable attorneys’ fees in the amount

of $253,265.00

2. for additional damages of $5000 pursuant to

A.R.S. § 12-349(A).

App. 58

3. for taxable costs in the amount of $ 1,825.00

4. for non-taxable litigation expenses, including

expert witness fees, in the amount of $ 19,811.00

5. for post judgment interest on the above sums

at the rate of 10% per annum from the date of

judgment until paid in full.

IT IS FURTHER ORDERED that Plaintiff shall

be able to amend this judgment or seek additional

judgments from time to time to recover all after

incurred costs and attorneys’ fees associated with

post judgment proceedings, including collection.

THE COURT FURTHER FINDS that there is no

just reason for delay and that final judgment shall be

entered pursuant to Rule 54(b) of the Arizona Rules

of Civil Procedure.

DATED this 21 day of November, 2006.

/s)_ Patrick Eldridge

Hon. Patrick Eldridge

Judge Pro Tempore

App. 59

Leon B. Silver #012884

SHUGHART THOMSON &

KILROY, P.C.

Security Title Plaza

3636 N. Central Ave., Suite 1200

Phoenix, AZ. 85012

Telephone: (602) 650-2000

Facsimile :(602) 264-7033

Attorneys for Defendant

IN THE SUPERIOR COURT

OF THE STATE OF ARIZONA

IN AND FOR THE COUNTY OF MARICOPA

ROBERT A. and

PHYLLIS B. LEVY,

husband and wife

Plaintiff,

CASE NO.

CV2001-011987

)

)

) ORDER DENYING

) PLAINTIFFS’

: | AMENDED MOTION

: FOR NEW TRIAL AND

WILLIAM A. ENGLUND, ? AMENDING THE

a single man, ) NOVEMBER 21, 2006

JUDGMENT

)

)

(Assigned to the Honorable

Defendant.

Patrick E. Eldridge)

The Court has received Plaintiffs’ Motion for New

Trial, Defendant William A. Englund’s Response to

the Levys’ Motion for New Trial, Plaintiffs’ Amended

Motion for New Trial, Defendant William A. Englund’s

Response in Opposition and Motion to Treat Plaintiffs’

Amended Motion for New trial as a Reply Brief, and

App. 60

Plaintiffs’ Reply in Support of Amended Motion for

New trial, has considered the arguments therein and

for good cause appearing:

IT IS HEREBY ORDERED DENYING Plaintiffs’

Amended Motion for New Trial;

IT IS FURTHER ORDERED amending the Judg-

ment entered by this Court on November 21, 2006,

nunc pro tunc, as follows: striking the word “May”

from line 17 of page 10 and inserting the word

“March”; and striking the word “Plaintiff? from page

13, line 13 and inserting the word “Defendant.”

DATED: February 2, 2007.

/s/ Patrick Eldridge

The Honorable Patrick Eldridge

Judge Pro Tempore of the

Superior Court

App. 61

Supreme Court

STATE OF ARIZONA

January 6, 2010

RE: ROBERT LEVY et ux v WILLIAM A ENGLUND

Arizona Supreme Court No. CV-09-0270-PR

Court of Appeals Division One

No. 1 CA-CV 07-0260

Maricopa County Superior Court

No. CV 2001-011987

GREETINGS:

The following action was taken by the Supreme Court

of the State of Arizona on January 5, 2010, in regard

to the above-referenced cause:

ORDERED: Appellee’s Petition for Review =

DENIED.

FURTHER ORDERED: Appellants’ Cross-Petition

for Review = DENIED.

FURTHER ORDERED: Request for Attorneys’ Fees

(Appellee Englund) = DENIED

Record returned to the Court of Appeals, Division

One, Phoenix, this 6th day of January, 2010.

Rachelle M. Resnick, Clerk

TO:

Robert A. Levy

Leon B. Silver

Philip G. Urry

adc

App. 62

Robert A. Levy and Phyllis B. Levy

Plaintiffs pro se

1617-D North Mesa Street

El Paso, TX 79902-3576

(915) 533-6413

FAX: (915) 533-4327

IN THE SUPERIOR COURT OF

THE STATE OF ARIZONA

IN AND FOR THE COUNTY OF MARICOPA

Robert A. Levy and

Phyllis B. Levy,

No. CV2001-011987

PLAINTIFFS’ AMENDED

)

Plaintiffs, | MOTION FOR NEW TRIAL

v. ) (Assigned to The Honorable

William A. Englund, Patrick E. Eldridge)

)

Defendant.

Pursuant to Rule 59(a) and Rule 59(c)(1), Arizona

Rules of Civil Procedure, plaintiffs Robert A. Levy

and Phyllis B. Levy herewith file this their Amended

Motion for New Trial, and for grounds respectfully set

forth the following:

MEMORANDUM IN SUPPORT OF MOTION

On November 21, 2006, the court entered its

Findings of Fact, Conclusions of Law and Judgment

in an amount totaling $279,901.00 and entered its

Order exonerating plaintiffs’ supersedeas bonds

amounting to $201,452.10 to defendant; on that same

App. 63

date plaintiffs remitted to defendant $78,488.90,

thereby completing satisfaction of the judgment. On

December 5, 2006, plaintiffs filed their original Mo-

tion for New Trial. This amended motion for new trial

incorporates their original motion and includes addi-

tional material.

Pursuant to the amended Memorandum Decision

of the Arizona Court of Appeals entered May 28,

2005, on November 7, 2006, a hearing was held on

the issue of the reasonableness of the attorneys fees

awarded to defendant William A. Englund in the

original and three supplemental judgments of this

court vacated by the court of appeals. The attorneys’

fee hearing consisted of the following three parts:

1. A session in Judge Swann’s courtroom in the

Old Courthouse on Tuesday, November 7, 2006, from

1:30 p.m. to 5:05 p.m, Judge pro tem Eldridge presid-

ing (HEARING I).

2. A session in the conference room of Shughart

Thomson & Kilroy on Wednesday, November 8, 2006,

from 9:30 a.m. to 11:36 a.m., Judge pro tem Eldridge

presiding (HEARING II). A compressed copy of the

transcript of HEARING II is attached hereto for

electronic filing. A hard copy is enclosed with the copy

of this motion mailed to Judge Eldridge. Defendant’s

counsel have their own hard copy.

3. Testimony and argument in writing submit-

ted by plaintiffs in their OBJECTION TO DEFEN-

DANT’S NOTICE OF PROPOSED FINDINGS OF

FACT, CONCLUSIONS OF LAW, AND FORM OF

App. 64

JUDGMENT, WITH ARGUMENT AND TESTIMONY

BY PLAINTIFFS (HEARING III), filed and served

November 15, 2006, pursuant to agreement by the

parties and the court.

A. IRREGULARITIES IN THE PROCEEDINGS

OF THE COURT WHICH DEPRIVED PLAIN-

TIFFS OF A FAIR TRIAL.

1. The Court Erred in Failing to Provide

Sufficient Time to Complete the Hearing.

When the hearing ended at 5:00 p.m. Tuesday,

November 7, 2006, the court gave the parties two

choices, 1) wait until December and come back to

Phoenix again, or 2) have the hearing continue the

following day at 9:30 at the offices of defendants’

counsel (HEARING I, Transcript 148-150, Exhibit 1

of defendant’s response to motion for new trial,

HEARING WU, Transcript 10:8-12). Neither of these

choices was satisfactory. It was unfair to plaintiffs to

have the hearing in opposing counsel’s offices, where

defendant’s counsel had access to all their documents,

facilities, and support personnel, whereas plaintiffs’

materials were stuck in their vehicle in the parking

lot, about which they complained to the court,

HEARING I, Transcript 10:1-16. By not having their

]

When plaintiffs had previously been to the office of

defendant’s counsel, they parked either on the street or in the

service area and did not know how remote and inconvenient the

main parking lot would be when they arrived on November 8 for

the conclusion of the hearing

App. 65

documents in front of them, plaintiffs were hampered

in their cross-examination of Mr. Silver, as the follow-

ing examples illustrate:

51:1 Mr. Silver relies on the absence of

documents

51:24 Mr. Silver evades the question by

saying he doesn’t have all the documents in

front of him

53:22-54:3 Mr. Silver again relies on

the absence of documents.

54:25-56:5 Mr. Silver minimizes his

failure to tell the truth, which the documents

would have shown to be important.

The court erred in setting the hearing on “the

only afternoon open for quite a while” (HEARING I,

transcript 150:4-5, without insuring that more time

would be available. This is especially relevant since

plaintiffs had moved to change the hearing date

because it had been set too soon and the court denied

their motion. The court also erred in not leaving the

afternoon of November 8 open in case the hearing

lasted longer. These are errors made by the court, not

examples of the court using its inherent power to

control the proceedings.

And more importantly, although the court men-

tioned in passing that the hearing could not be held

on Wednesday afternoon because of a prior commit-

ment (HEARING I, ‘Tr. 149:18-19), the court erred in

failing to advise the parties that the court’s schedule

did not permit the hearing to last beyond 11:30 a.m.

App. 66

on the following day. The court erred in waiting until

11:05 a.m. November 8, 2006, after it had set a 10-

minute break, to advise the parties of its schedule

(HEARING II, transcript, p. 62). The court also erred

in stating that “we all agreed it would take about two

hours” (Tr. 62:16), when no such agreement had

occurred.

2. The Court Erred in Failing to Give

Plaintiffs the Opportunity to Complete

Their Cross Examination of Mr. Silver.

The court erred in denying plaintiffs a full oppor-

tunity to complete their cross-examination of Mr. Sil-

ver, instead pressing Mr. Levy to hurry up. Defendant

had the entire afternoon on November 7 to present

his case, from 1:30 p.m. until shortly after 5:00 p.m.

The court told plaintiffs that they could accomplish

their task in their own testimony or in closing argu-

ment instead of through cross-examination, HEAR-

ING II, Transcript, 65:14-16.

The court’s error is again illustrated by a passage

at 68:1 of the transcript:

Mr. Levy: I’m going to have to object to

the — the speeded up schedule of this — of

this proceeding.

The Court: Mr. Levy, please proceed.

You are wasting time.

But it was not Mr. Levy who was wasting time.

It was Mr. Silver, by his long-winded answers to

App. 67

Mr. Levy’s questions, and by Mr. Ansel’s constant

objections, alleging that Mr. Levy’s questions were ar-

gumentative. In so doing, defendant’s counsel suc-

ceeded in running out the clock, further contributing

to denying plaintiffs a fair trial.

Furthermore, the court erred in_ sustaining

objections to or objecting itself to questions to Mr

Silver which it labeled argumentative or inappro-

priate. These were leading questions which the court

should have permitted Mr. Silver to answer. Example:

The court erred in providing an answer for Mr. Silver,

HEARING II, Tr. 57:6-10. Defendant’s Response to

Plaintiffs’ motion for new trial, at page 7:14-18, listed

fifteen other such instances, all of which except the

one at 22:14-18 should have heen permitted. In

particular, at 65:8-13, the court prevented plaintiffs

from obtaining important information about Mr.

Silver’s wrongful activities.”

When piaintiffs said they were finished, it was not

because they had completed their cross-examination;

In his response to plaintiffs’ motion for new trial, defen

dant complained about Mr. Levy’s use of the phrase “shoot at” in

trying to explain the term “fair game” to Mr. Mark Harrison.

Defendant failed to grasp that Mr. Levy was simply employing a

figure of speech. And at the end of the proceedings, Mr. Levy,

trying to conclude on a friendly note, expressed a joke to Mr. Sil-

ver. This joke must have hit a raw nerve with Messrs. Silver and

Ansel, for neither of them wanted to hear the punch line after

the hearing ended. The court rightly made no effort to exercise

its inherent power to control the proceedings regarding these

trivialities

App. 68

it was because of the time-constraints imposed on

them by the court. They needed time for their own

testimony — it was only after Mr. Levy began his own

testimony that the court and defendant offered to

allow plaintiffs to finish their testimony later in

writing. If plaintiffs had been advised of this at the

outset, they might have been able to finish their

cross-examination during the remaining time availa-

ble. The following exchanges are instructive:

At 65:17-20 Mr. Levy: All right. All

right. Okay. Well, I have a lot of other things

I’d like to talk about, but maybe Id better

quit. I don’t know what to do. Just let me

make sure what I want to do.

At 67:25-68:5 Mr. Levy: All right. I

think I'll — I — I don’t know what to do. Your

honor, I’m going to have to object to the — the

speeded-up schedule of this — of this proceed-

ing.

The court: Mr. Levy, please proceed.

You are wasting time.

These statements immediately preceded Mrs.

Levy's statement that she had no questions for Mr.

Silver. Although Mrs. Levy had no questions, Mr.

Levy still had questions for Mr. Silver, and he ob-

jected to the speeded-up schedule of the hearing. Mr.

Levy was intimidated by the court’s constant insis-

tence on speed-up, urging Mr. Levy to substitute his

own testimony and argument for cross-examining Mr.

Silver, erroneously sustaining defendant’s objections,

App. 69

and itself objecting to legitimate questions by Mr.

Levy to Mr. Silver.

‘The court erred in using its power to control the

proceedings for these purposes and should allow the

matter to be retried.

3. The Court Erred in Not Giving Plain-

tiffs Sufficient Access to Court Facili-

ties.

Because of the court’s pro tempore status, a two-

tier system of justice has been created in the Mari-

copa County Superior Court. Had the court been a

regular judge of the Superior Court, there would have

been no problems with availability of a courtroom.

Nor would reliance on outside court reporters have

been necessary. The fees charged by outside court

reporters are not subject to control by the court. The

defendant’s counsel Leon Silver, also being a pre tem

judge of the Superior Court, also contributes to de-

feating the purpose of an impartial judicial system.

Mr. Levy was under pressure from the court,

from defense counsel, and from the clock, all of which

were unjustified. Such pressure constitutes an exam-

ple of how a two-tier system of justice operated to

deny plaintiffs a fair trial and is grounds for a new

trial.

App. 70

The Court Erred in Failing to Limit the

Hearing to Fees Generated in the Origi-

nal and Three Supplemental Judgments.

In addition to the mandate of the Court of Ap-

peals, this court, at the Status Conference on July 27,

2006, set the guidelines for the hearing, beginning at

page 8, line 17: “I believe that the issues are fairly

well teed-up, based upon prior applications and prior

supplemental judgments of the earlier assigned trial

Judge.” And again at page 9, line 3: “Now it is not

inconceivable that were you not to prevail in front

of whoever hears the matter ultimately, that the

defendants might seek fees in connection with those

proceedings. | would expect that they would. That

application would likely be premature at this point. It

would be subject to attack as merely speculative at

this point” (Emphasis added). Thus, the hearing

should have been limited to issues in the prior appli-

cations and prior supplemental judgments since the

other fees were speculative pending a determination

of which party prevails on the remanded issues.

The ultimate question at the hearing was which

party would prevail on the remanded issues. If the

amount of fees and costs awarded to defendant was

less than those awarded in the original judgments,

plaintiffs would be the prevailing parties, and defen-

dant would not be entitled to any additional fees

generated, either in this court or appellate courts.

But because the court allowed the hearing to encom-

pass every fee generated by defendant during the

entire course of the action, in this court and in the

App. 71

appellate courts, it could become impossible for plain-

tiffs to prevail, because even if the above-mentioned

fees were reduced, subsequent fees would obliterate

the difference.

B. IRREGULARITY IN THE PROCEEDINGS

OF THE PREVAILING PARTY; MR. SIL-

VER’S TESTIMONY SHOULD NOT HAVE

BEEN ADMITTED.

Defendant’s attorney Leon Silver presented his

testimony in the courtroom on November 7, 2006. His

testimony included a large amount of hearsay ma-

ternal relating to what was said to him by plaintiffs’

witnesses. This testimony formed the basis for defen

dant’s proposed findings of fact and therefore forms

the basis for granting a new trial.

Plaintiffs objected to defendant’s introduction of

Exhibits relating to the merits of the underlying case.

Defendant said it was only for the purpose to justify-

ing his time, but in effect it was a double edged

sword, enabling defendant to put on his case on the

merits, while preventing plaintiffs from doing so to

counter defendant’s defense.

The question of the admissibility of Mr. Silver’s

testimony is not to be determined by Mr. Silver’s

assertion. Mr. Silver’s testimony was in fact a double-

edged sword. Although the merits of the case have

been resolved. Mr. Silver chose to use the issues in

the case as a weapon to justify sanctions against

plaintiffs. As such his hearsay testimony is not

App. 72

admissible. See Trevizo v. Astec Industries, Inc., 156

Ariz. 320, 751 P 2d 980, 982 (App. 1987) Gntroduction

of a statement of belief to prove the fact believed is

prohibited). Mr. Silver was introducing statements

made to him by plaintiffs’ witnesses to try to show

that plaintiffs were engaged in fraud and therefore

subject to sanctions.

Furthermore defendant failed to notify plaintiffs

in advance that Mr. Silver planned to use hearsay

testimony to show state of mind, as required. More-

over, self-serving declarations are inadmissible, par-

ticularly when they come from the attorney himself

Mr. Silver’s state of mind was predetermined; he had

a “whatever it takes” attitude to find some way of

discrediting the plaintiffs. It is Mr. Silver who has

committed wrongful acts in this case, including per-

jury and witness tampering, and he should not be

permitted to hide behind a “state of mind” argument.

Plaintiffs were justified in questioning Mr. Silver

about these matters, and the court erred in sustain-

ing the objections to these questions

C. SURPRISE WHICH COULD NOT HAVE

BEEN PREVENTED BY ORDINARY PRU-

DENCE.

Although defendant emailed his Notice of Lodg-

ing of Defendant’s Proposed Findings of Fact, Conclu-

sions of Law and Form of Judgment with thirty-three

(33) Exhibits attached on November 6, 2006 to plain-

tiffs, his attorneys knew that plaintiffs were traveling

App. 73

to Phoenix on that date and would not receive them.

Defendant hand delivered these materials to plain-

tiffs at 1:30 p.m. November 7, 2006, in the courtroom.

Plaintiffs therefore had no way of avoiding the sur-

prise. Defendant had advised he would have his

exhibits at the status conference on July 27, 2006, but

he did not offer them for plaintiffs to examine. He

could have provided them to plaintiffs during the

intervening period but did not, and furthermore

defendant stonewalled plaintiffs’ request for produc-

tion of documents.

And as already pointed out, defendant failed to

advise plaintiffs of his intention to introduce hearsay

testimony.

D. EXCESSIVE DAMAGES

The original lawsuit in this case was subject to

compulsory arbitration because the amount at issue

was only $16,500. Even after appeal to the superior

court, the amount was only $74,000. Although the

court of appeals noted that fees in excess of the

amount in controversy were not prohibited, it pointed

out that the original judgment exceeded this by

approximately $44,000, which was one of the reasons

why the matter was remanded for hearing. The

decision of the court of appeals constitutes the law of

this case and must be followed.

Instead of reducing the fees awarded to defen-

dant, the court drastically increased the fees, to a

total of nearly $280,000, in addition to more than

App. 74

$16,000 paid by plaintiffs to satisfy the first supple-

mental judgment. Based on the evidence presented at

the hearing in plaintiffs’ Exhibit 37, the total should

not have exceeded $40,000, including the amount

already paid in the Ist Supplemental Judgment.

E. ERROR IN ADMISSION AND REJECTION

OF EVIDENCE.

As pointed out under Irregularities of the Pro-

ceedings of the Court, it was error of the court to

admit evidence of fees generated after the original

and three supplemental judgments. It was error to

admit evidence of fees generated, not only for the

hearing itself, but for all fees generated since the

third supplemental judgment. This limitation was

established by Judge Swann in the status conference

on July 27, 2006

And as also pointed out under irregularities of

the proceedings of the prevailing party, it was error

for the court to admit hearsay testimony by defen

dant’s attorney Leon Silver, Esq.

KF. THE FINDINGS OF FACT ARE NOT JUSTI-

FIED BY THE EVIDENCE.

1. The Court Erred by Entering a Ver-

batim Copy of Defendants Proposed

Findings of Fact.

3y entering a verbatim copy of defendant’s pro-

posed findings of fact and conclusions of law, even

App. 75

including a typographical error (Page 10, line 17: the

date of Mr. Levy’s Declaration was March 10, not May

10), the court indicated its failure to give due consid-

eration to evidence obtained at the three hearing

sessions. Each and every material proposed fact was

refuted by plaintiffs’ Objection to Defendant’s Notice

of Proposed Findings of Fact, Conclusions of Law, and

Form of Judgment, with Argument and Testimony by

Plaintiffs, filed in this court on November 15, 2006

(HEARING III), incorporated herein by reference.

The evidence presented by plaintiffs in the Declara-

tion of Robert A. Levy attached thereto shows that

defendant’s proposed findings of fact are not justified,

and that a new trial on all issues is required.

2. The Court Erred by Ignoring Evidence

of Witness Tampering by Defendant’s

Attorney.

Paragraph 23.b of the Declaration of Robert A

Levy, attached to Hearing IIl points out evidence of

witness tampering by Mr. Silver on plaintiffs’ witness

Jim Wenger. The cross-examination of Mr. Silver

illustrates his tampering with Mr. Wenger, Transcript

of HEARING IIT at 23:22 to 34:22. Mr. Silver keeps

trying to say that it was Mr. Levy who told Mr. Wen-

ger what to say in Exhibit 20 (Mr. Wenger’s affidavit’s

of July 25 2003), but a reading of the affidavit shows

that it was impossible for this to have been the case.

For example, how could Mr. Levy have told Mr. Wen

ger what to say in Paragraph 10 of Exhibit 20?

App. 76

At 27:24-25: “My chent claims they were taking

the manure from the pile.” and then he quotes Mr.

Wenger as saying “Well yeah they could have been

doing that.”

How preposterous! Mr. Englund ran a_ horse

boarding operation which generated large amounts of

horse manure continuously, and Mr. Silver is trying

to maintain that Mr. Englund’s people come over to

the Levys’ lot to pick up manure and take it back. Mr.

Silver is fabricating his testimony out of whole cloth.

Hie is the one who is telling Mr. Wenger what to say,

not the Levys, Transcript, HEARING II 26:9-26:15.

The hearsay statements made by Mr. Silver regard-

ing Mr. Wenger’s statements cannot possibly square

with what he said in his July 25 affidavit. Mr. Silver

could have obtained an affidavit from Mr. Wenger

saying these things, but he did not. Nor did he depose

or produce Mr. Wenger for testimony at the hearing.

See also Mr. Silver’s testimony at HEARING II

‘Transcript 34:8-34:12. Mr. Silver says he had a

lengthy conversation with Mr. Wenger before trial

Yet the second affidavit he obtained from Mr. Wenger

as the result of that meeting was signed on December

30, 2003, more than a month after the case had been

dismissed. Mr. Silver would have been able to tell Mr.

Wenger that the case had been dismissed and he

would be free to say anything that Mr. Silver wanted

him to say.

It is Mr. Silver who should be sanctioned in this

case, not the Levys, and plaintiffs should not be liable

App. 77

for time Mr. Silver spent engaged in these wrongful

activities.

G. THE JUDGMENT IS CONTRARY TO LAW.

1. This Court May Award Fees Generated

in an Appellate Court Only Upon Spe-

cific Authorization of the Appellate

Court.

The judgment includes an award for attorneys’

fees generated in the Arizona Court of Appeals and

Arizona Supreme Court (see Paragraph 47 of the

Conclusions of Law). This court has no independent

jurisdiction to award any fees, costs, or other ex-

penses resulting from litigation in an appellate court,

Rule 21, Arizona Rules of Appellate Procedure

The Order of the Court of Appeals dated Decem

ber 7, 2006, supports this position. First of all, the

court of appeals’ order was entered on December 7,

2006, more than two weeks after entry of the Judg-

ment of this Court, and it denied defendant's request

for attorneys’ fees on the Special Action. It specifically

pointed out that only if the defendant is ultimately

the prevailing party and if the matter is shown to

arise out of contract, may he then apply for fees on

appeal in this court

Moreover, on the original Memorandum Decision,

if defendant thought himself entitled to fees, he

should have applhed for them within ten days of

decision pursuant to ARCAP 21, or at least ten days

from the amended decision, which he did not. He is

App. 7&

therefore not entitled to claim those fees either. And

as pointed out again in the Memorandum Decision,

he cannot claim these fees under a sanction statute

unless they are awardable under the rules pursuant

to a specific violation. It should be noted that in spite

of defendant’s repeated motions for sanctions in this

court prior to the trial date, all such motions were

denied by this court, as acknowledged by Mr. Silver

(HEARING II Transcript 53:10-12). Defendant has

failed to establish any independent basis for sanc-

tions. Moreover, the sanctions demanded by defen-

dant rely entirely on inadmissible hearsay testimony

by Mr. Silver; there is therefore no valid basis for

them to be awarded. As pointed out earlier, it is not

Mr. Silver’s state of mind which plaintiffs are being

sanctioned for; it is the prohibited hearsay state-

ments made by Mr. Silver.

Finally, the court lacks the inherent power to

sanction plaintiffs via appellate court attorneys’ fees

because the Court of Appeals, in ruling on the Special

Application, specifically denied defendant’s applica-

tion for fees based on sanctionable conduct. with

prejudice

App. 79

2. Plaintiffs Prevailed on the Original

Judgment, Thereby Precluding Defen-

dant from Entitlement to Any Fees and

Costs Following the 3rd Supplemental

Judgment.

The judgment entered on November 21 2006,

allowed costs to defendant of $1825.00. Since this

amount is less than the amount of costs ($3011.50)

awarded in the original judgment entered February

2, 2004, plaintiffs are the prevailing party on remand,

and defendant is therefore entitled to no fees, costs,

or other expenses subsequent to the 3rd supplemen-

tal judgment, since only the prevailing party may be

awarded fees or costs.

The hearing was held pursuant to the mandate of

the Court of Appeals, which provided that the origi-

nal, second supplemental, and third supplemental

judgments for attorneys’ fees be remanded for hear-

ing. This ruling was reinforced by the holding by

Judge Swann at the status conference. The “judgment

from nearly three years ago” is the controlling judg-

ment for this hearing, and the amount of costs

awarded to defendant was less than that awarded at

the hearing, thereby making plaintiffs the prevailing

party on remand. Thus the fee ceiling for defendant is

the sum total of the fees in the original, second sup-

plemental, and third supplemental judgments, with

the reduced cost total. Any other fees and costs gener-

ated are not allowable because only the prevailing

party may be awarded fees in any attorneys’ fee

statute.

App. 80

3. Non-taxable Litigation Expenses Are

Not Allowable.

In addition to attorneys’ fees and costs awarded to

defendant, this court warded $19,811.00 in non-taxable

litigation expenses, including expert witness fees. Since

there is no statutory basis for recovery of such

expenses, this award constitutes an error by the court.

4. No Basis Exists for Award of Damages

under A.R.S. § 12-349(A).

The court erred in awarding defendant damages

of $5,000.00 pursuant to A.R.S. § 12-349(A) because

defendant failed to establish any grounds for such

award, other than his own bare assertion.

CONCLUSION

Wherefore plaintiffs request that this court grant

a new trial on all issues. If a new trial is granted,

plaintiffs request that the funds paid to satisfy the

judgment be returned to plaintiffs and that any

attorneys’ fees generated in connection with the first

hearing be eliminated from any award to defendant

Respectfully submitted on this 2nd day of Janu

ary, 2007.

Robert A. Le VY

Robert A. Levy

/s/_ Phyllis B. Levy

Phyllis B. Levy

App. 81

Robert A. Levy and Phyllis B. Levy

Plaintiffs pro se

1617-D North Mesa Street

Kl Paso, TX 79902-3576

(915) 533-6413

FAX: (915) 533-4327

IN THE SUPERIOR COURT

OF THE STATE OF ARIZONA

IN AND FOR THE COUNTY OF MARICOPA

No. CV2001-011987

DECLARATION OF

JIM WENGER

(Assigned to the

Honorable Robert L.

CGottsfield)

Robert A. Levy and

Phyllis B. Levy,

Plaintiffs,

Vv.

William A. Englund,

Defendant.

[, Jim Wenger, declare as follows on personal

knowledge

l am over the age of twenty-one years and am

competent to test ily to the matters stated herein

2. My profession is that of horse trainer

3. I operated an independent horse training

facility at a 5-acre horse boarding facility located at

2735 E. Rose Garden Lane, Phoenix, Arizona (Lot 12,

Mohawk Park) from 1992 until August, 2000.

4. ‘l'his facility was named the Big Sky Equine

ranch from 1994 to 2000, when it was owned and

App 82

operated by Joyce Palmer, with her daughter Laura

Palmer.

r

5. Directly to the south of the Big Sky ranch isa

vacant 5-acre parcel of land that fronts on Mohawk

Lane

6. Directly to the east of the 5-acre vacant

parcel is another 5-acre horse boarding facility known

as the Be Lazy Ranch at the corner of Mohawk Lane

and 28th Street

ry

7. During the time that Joyce Palmer operated

sig Sky Equine, I saw individuals coming from the

Be Lazy Ranch with tractors and wheelbarrows full of

manure and dump the manure on the vacant parcel

5-acre parcel.

8. ‘They would dump the manure at a location a

few yards directly west of the gates opening from the

Be Lazy Ranch onto the vacant parcel

9. lI observed this manure dumping taking place

on a regular basis at least two or three times a week,

all during the time that Joyce Palmer operated the

Big Sky Equine ranch, including the time when she

was sick with cancer, and after she died in June of

2000. The dumping was still going on at the time I

left the ranch in August, 2000

10. I had mentioned this dumping to Joyce

Palmer, and she told me that she had been informed

by the people at Be Lazy that they had permission

from the owner of the vacant parcel to use it for

dumping manure.

App. 83

I declare under penalty of perjury that the

foregoing is true and correct.

Or

Executed on July 25, 2008.

s/ James L Wenger

Jim Wenger

4443 E. Michelle

Phoenix, AZ 85032

App. 84

Leon B. Silver, Esq.

The Silver Law Firm, P.C.

2700 North Central Ave., Suite 850

Phoenix, AZ 85004

(602) 279-1900

SBN 012884

Attorneys for Defendant William A. Englund

IN THE SUPERIOR COURT OF

THE STATE OF ARIZONA

IN AND FOR THE COUNTY OF MARICOPA

Robert A. and Case No.

Phyllis B. Levy, CV2001-011987

husband and wife, SUPPLEMENT TO

Plaintiffs, DECLARATION OF

JIM WENGER

Vv.

William A. Englund,

a single man,

Defendant.

(Assigned to

The Honorable

Robert L. Gottsfield)

Nee ee eee ee ee ee See”

Jim Wenger, subject to the penalty of perjury, and

on my own personal knowledge, hereby declare:

1. On July 25, 2003 I executed a Declaration in

this matter at the Request of Robert Levy.

2. The testimony in the Declaration was pro-

vided to Mr. Levy in a telephone conversation shortly

before the Declaration was signed.

App. 85

3. In that conversation I expressly told Mr. Levy

that I could not and would not testifly that the people

I saw dumping manure on the 5 acre vacant parcel

were the employees or agents of the Be Lazy Ranch.

DATED this 11? day of August, 2008.

s/ James L Wenger

Jim Wenger

App. 86

Leon B. Silver, Esq., SBN 012884

KELLER ROHRBACK, P_L.C.

3101 N. Central Ave., Suite 900

Phoenix, AZ 85012

(602) 248-0088

Attorneys for Defendant

William A. Englund

IN THE SUPERIOR COURT

OF THE STATE OF ARIZONA

IN AND FOR THE COUNTY OF MARICOPA

ROBERT A. and

PHYLLIS B. LEVY,

husband and wife,

Plaintiffs,

Case No.

CV2001-011987

DECLARATION OF

JIM WENGER

(Assigned to the

Honorable Robert

Gottsfield)

Vv.

WILLIAM A. ENGLUND,

a single man,

Defendant.

)

)

)

)

)

)

)

)

)

)

Jim Wenger, subject to the penalty of perjury

does hereby declare:

1. That on July 25, 2003, at the request of

Robert and Phyllis Levy, | executed a declaration.

2. Mr. Levy drafted the declaration, and pre-

sented it to me to review and sign shortly after a

phone conversation I had with him regarding my

potential testimony.

App. 87

3. In the course of my conversation with Mr.

Levy, Mr. Levy never informed me that Mr. Englund

at one time had a lease that allowed him and his

employees to make use of the Levy property. Rather,

Mr. Levy lead me to believe that the issue in the

lawsuit was merely whether someone from the

Englund property had ever used the Levy property. In

the time that I worked for Mrs. Palmer (on the

property directly north of the Levy property) I did in

fact observe people coming from the Englund property

on to the Levy property, and so stated in that

declaration.

4. Had I known that the issue in the case was

whether any of these uses occurred after a specific

date, namely January 1, 1999, I would not have

signed the declaration the way it was written.

5. Rather, I could not state under oath that any

of the occurrences that I witnessed happened after

January 1, 1999, and if called to testify in this matter,

I would limit my testimony in that regard.

6. Additionally, in that phone conversation, Mr.

Levy informed me that the Defendant had been

dumping manure on the manure pile on his property.

Mr. Levy did not disclose to me that Mr. Englund

claimed that his employees were not dumping

manure in the piles, but rather were taking manure

from the piles to use in their horse operation. Had

Mr. Levy disclosed this to me, I would have told him,

and would have testified to the fact. that I could not

tell from my observations whether the people I saw

App. Ss

on the property were either dumping or removing

manure. All I saw was people driving a tractor from

the Englund property to the manure pile and then

back to the Englund property.

Dated: 12-30-03 s/ James L Wenger

Jim Wenger

App. 89

AGREEMENT OF LEASE

Robert and Phyllis Levy and H Lazy K Equestrian

Stables, Inc. agree to enter into an agreement that H

Lazy K can have use of property located at 2700 E.

Mohawk (Lot 9, Mohawk Park) for equestrian

purposes at a rate of $200 per month. This agreement

is to remain in force as long as H Lazy K Equestrian

(or a similar equestrian operation owned by Dennis

and Yvonne Hilker) is operating at 28th Street and

Mohawk.

In the event that said equestrian operation is moved

and/or property (Lot 10 Mohawk Park) is sold, the

said lease would be terminated with a 60 day notice.

The effective date of this lease is January 1, 1990.

Beginning January 1, 1991, the monthly rent will be

$250.00

It also is understood that the Levys can terminate

said lease with 60 days notice.

In consideration of H Lazy K’s use of the property

since 1987, the Levys are guaranteed a minimum of

24 months lease from the date of the lease.

H Lazy K Equestrian agrees to hold Levys harmless

for any acts of negligence or other habilty occurring

on the property and will keep insurance protection in

force for this purpose with the Levys as additional

named insured parties, and will provide Levys with

copies of such insurance policies.

App. 90

The Levys may install underground utilities on the

property if they so desire, giving H Lazy K reasonable

notice of their intention.

Property cannot be sublet for any other purpose than

equestrian use without Levys’ written approval.

H Lazy K will not place any permanent structures on

7s

property without written consent.

Levys must give H Lay K 60 days notice if property is

sold and/or converted to any other use.

Upon termination of this lease, H Lazy K agrees to

return property to Levys in good order and condition.

August 2, 1990

s/ Robert A. Levy

Robert A. Levy

_ H Lazy K Equestrian Stables

Phyllis B. Levy By: s/ Yvonne K. Hilker, Secty

App. 91

AGREEMENT OF LEASE

Robert A. and Phyllis B. Levy (lessors) and William A.

Englund (lessee) enter into the following agreement

of lease whereby lessee shall have exclusive use of

lessors’ property, Lot 9 Mohawk Park (the Lot).

1. TERMS The term of said lease is for a period of

four years, commencing on August 1, 1994, and

ending on December 31, 1998.

?

2. RENTS The rent for said lease shall be the sum

of $13,250.00, payable in 53 equal installments of

$250.00 beginning at the signing of the lease and

thereafter monthly beginning September 1, 1994. In

addition, lessee agrees to pay lessors, as they come

due, any increases in the annual taxes on the Lot for

the years 1994-1998 above those of the 1993 tax year,

which amounted to $2100.

3. INJURY OR LOSS Lessce agrees to hold lessors

harmless for any acts of negligence or other lability

occurring on the Lot and will keep insurance protec-

tion in force for this purpose with lessors as

additional named insured parties, and will provide

lessors with copies of such insurance policies.

4. UTILITIES Lessors may install underground

utilities on the Lot if they so desire, giving lessee

reasonable notice of their intention. At the present

time no utilities are available.

5. USE OF Lessee may not sublet, place permanent

structures upon, or use the Lot for purposes other than

equestrian without written approval of lessors. Any

App. 92

improvements shall remain the property of the lessors

at the termination of this lease.

6. SURRENDER OF PREMISES Lessee shall, upon

expiration of the terms of the lease quit and

surrender the premises in good order and condition,

reasonable wear and tear and acts of God excepted.

7. RENEWAL OF LEASE Lessors agree to entertain

an intention by lessee to renew this lease at its

expiration thereof, provided the same is made at least

ninety (90) days prior to the expiration of this lease.

Such renewal shall be accomplished by an addendum

to this lease on terms mutually agreed upon.

8. NOTICE OF SALE Lessors shall extend to lessee

the “first right of refusal” if the Lot is going to be sold.

Lessors shall furnish lessee a copy of the offer that

they have received. If Lessee declines to meet the

offer, lessors may at their option, terminate the lease

and conclude the sale.

s/ Robert A. Levy s/ William A. Englund _

Robert A. Levy William A. Englund

s/_ Phyllis B. Levy

Phyllis B. Levy