[00:00:00] Speaker 04:
Good morning.

[00:00:01] Speaker 04:
Welcome to the Ninth Circuit.

[00:00:03] Speaker 04:
Judge Bumate and I would like to extend a special welcome to Judge Bennett from the United States District Court for the District of Maryland who is sitting with us.

[00:00:11] Speaker 04:
We really appreciate your willingness to come out and help us with our work.

[00:00:14] Speaker 00:
Thank you, Judge Miller, and it's always an honor to sit with the Ninth Circuit.

[00:00:16] Speaker 00:
I've done it on numerous occasions, and I'm just great to be back.

[00:00:21] Speaker 04:
All but one of the cases on today's calendar are submitted on the briefs.

[00:00:26] Speaker 04:
And our one argument is in Wine Education Council against Winthrop.

[00:00:31] Speaker 04:
Mr. Dre.

[00:00:31] Speaker 01:
Good morning, and may it please the court.

[00:00:40] Speaker 01:
I'm Dominic Dre.

[00:00:41] Speaker 01:
And with Matthew Hoxie, I represent Grant Winthrop.

[00:00:44] Speaker 01:
I'll endeavor to save three minutes for rebuttal.

[00:00:48] Speaker 01:
This case is about legal hostage taking.

[00:00:50] Speaker 01:
Grant Winthrop directed $175,000 in donations to the Arizona Rangers.

[00:00:56] Speaker 01:
The gifts had few strings attached, but the one they had required the Rangers to surrender any unused funds and remaining material to the Wine Education Council, WEC, upon the occurrence of a condition that no one disputes occurred.

[00:01:11] Speaker 01:
Rather than turn over the gift, the Rangers brought third-party claims against Winthrop

[00:01:16] Speaker 01:
The purpose, as the district court recognized, was to force Winthrop's father, Weck's general counsel, to betray his client in order to help his son.

[00:01:27] Speaker 01:
That plan failed because the Winthrop's refused to be bullied.

[00:01:31] Speaker 01:
But they also favor peace.

[00:01:33] Speaker 01:
Weck ultimately settled and obtained everything it sought, plus $400,000, more than twice the original gifts and attorney's fees.

[00:01:41] Speaker 01:
Additionally, Winthrop tried to settle, offering a walkaway settlement on January 27, 2020.

[00:01:47] Speaker 01:
Under Arizona law, that made him the prevailing party from that day forward.

[00:01:53] Speaker 01:
The district court, however, applied a completely different test.

[00:01:57] Speaker 01:
It departed from the statutory rule that designates a prevailing party as the one who offers a settlement that the other side rejects and then fails to do better in favor of a common law test that the statute has displaced.

[00:02:10] Speaker 04:
So you described the proposed settlement as a walkaway settlement, but it wasn't exactly walking away.

[00:02:17] Speaker 04:
One of the terms was that they had to provide a statement with mutually agreed upon wording saying that he had not committed any wrongdoing.

[00:02:26] Speaker 04:
And you didn't really get that, did you?

[00:02:29] Speaker 01:
Oh, sure we did.

[00:02:31] Speaker 01:
We got almost verbatim that.

[00:02:33] Speaker 01:
As Your Honor rightly quotes, the requirement was a statement with mutually agreed upon wording.

[00:02:38] Speaker 01:
saying that Grant Winthrop has not committed any wrongdoing.

[00:02:41] Speaker 01:
And here's the quote from the other side, quote, we're not alleging he did anything wrong.

[00:02:47] Speaker 00:
But the order that was ultimately entered in this case said, judgment is hereby entered in favor of defendant Arizona Rangers, correct?

[00:02:57] Speaker 01:
Indeed, that's correct.

[00:02:58] Speaker 00:
And that was not really consistent with the settlement agreement, apparently.

[00:03:01] Speaker 01:
That was not consistent with anything, Your Honor, including the court's own instruction to the law clerk or to the, excuse me, clerk of court, which we trace out the judgment point in some detail.

[00:03:14] Speaker 01:
But the short of it is that nobody asked for that form of judgment, including our friends on the other side.

[00:03:20] Speaker 01:
The court didn't order it.

[00:03:22] Speaker 01:
and recognized at 251 of the excerpts that it could correct it at a later date.

[00:03:28] Speaker 01:
Winthrop requested that it be corrected because it mattered immensely to him.

[00:03:32] Speaker 01:
And then eight months later, without any explanation, it's page nine in the excerpts, the court just says, we're not changing the judgment.

[00:03:39] Speaker 01:
I think that stems from the failure to understand how the fee statute works.

[00:03:45] Speaker 01:
If I kind of peek behind the curtain, I think what the court was up to was thinking, I need to have a prevailing party because I'm going to give fees.

[00:03:52] Speaker 01:
So in some ways, if you correct the fee error, it sort of helps to explain what went off the rails with the form of judgment.

[00:04:03] Speaker 00:
And am I correct in understanding that the matter of reimbursements that were claimed by your client remained open?

[00:04:08] Speaker 00:
Is that right?

[00:04:09] Speaker 01:
Yes, Your Honor, he took a voluntary dismissal of the last, I think it was about 500 bucks of reimbursement.

[00:04:15] Speaker 01:
Again.

[00:04:15] Speaker 00:
But that was not included in the summary judgment that was awarded.

[00:04:20] Speaker 01:
Well, it was a voluntary dismissal.

[00:04:21] Speaker 01:
So the court said enter a judgment on that.

[00:04:26] Speaker 01:
And I think what happened is the clerk of court said judgment in favor of the Rangers rather than judgment as prescribed in this court's rulings.

[00:04:34] Speaker 01:
And then the court had traced out

[00:04:36] Speaker 01:
This is at page 262 of the excerpts.

[00:04:39] Speaker 01:
The court had traced out a number of her prior orders that were to be included.

[00:04:45] Speaker 01:
Yes, he took the voluntary dismissal on that last remaining claim.

[00:04:49] Speaker 01:
The other side sort of oddly tries to leverage that, like that he should have, well, it's his fault.

[00:04:54] Speaker 01:
He should have pursued that 500 bucks to a jury trial in the District of Arizona.

[00:04:58] Speaker 01:
But that's a complete waste of time.

[00:05:01] Speaker 01:
And it's contrary to the purpose of the statute.

[00:05:02] Speaker 01:
I mean, this isn't me saying it.

[00:05:04] Speaker 01:
Countless Arizona courts have said the purpose of 12.34101 is to encourage settlement.

[00:05:09] Speaker 01:
So Mr. Winthrop offered, back in 2020, to everybody dismisses

[00:05:15] Speaker 01:
You say I didn't do anything wrong and the court decides fees and that's ultimately what happened at the end of the day Well, but again you're going back to the the statement.

[00:05:24] Speaker 04:
I mean a a statement with mutually agreed-upon wording Canotes a level of formality that doesn't really seem compatible with you know an off-the-cuff statement in the middle of a hearing about a discovery dispute on some other issue I

[00:05:37] Speaker 01:
I respectfully judge, I disagree.

[00:05:40] Speaker 01:
The settlement offer, which is at 241 of the excerpts, doesn't say a written statement, it doesn't say a statement on your letterhead or anything like that, it just says a statement.

[00:05:50] Speaker 01:
This was a statement.

[00:05:51] Speaker 01:
It was almost verbatim what the requirement was that Mr. Winthrop had done nothing wrong.

[00:05:57] Speaker 01:
the statement in court and the statement in the settlement offer, they are nearly verbatim.

[00:06:03] Speaker 01:
I would say that the formality of a statement made in open court on the record is better in many ways than

[00:06:10] Speaker 01:
some other form of a statement on, you know, on letterhead or whatever.

[00:06:14] Speaker 01:
And remember, the way that the statute works is the side who rejects the settlement offer has to do better.

[00:06:21] Speaker 01:
So even if this was merely barely satisfying the conditions in the settlement offer, Winthrop wins.

[00:06:29] Speaker 04:
But at the time that this statement was made or at the time of this hearing, they were still pursuing a breach of fiduciary duty claim, weren't they?

[00:06:37] Speaker 01:
I believe that's correct, Ronner, yes.

[00:06:40] Speaker 04:
So how is it compatible with, if what they really meant was we don't believe he did anything wrong, how is that consistent with continuing to pursue a claim for breach of fiduciary duty?

[00:06:54] Speaker 01:
You can ask my friends on the other side that question, but we got the statement that we needed.

[00:06:59] Speaker 01:
The mutually agreed upon language part, by the way, I don't think should give the court any pause because it's certainly agreeable to Winthrop

[00:07:06] Speaker 01:
Presumably that was an agreeable statement to the other side because they said it.

[00:07:09] Speaker 01:
And so it's hard for me to see how that could fail to satisfy the conditions of the statute.

[00:07:17] Speaker 01:
Now they say they rejected the settlement offer because it was premature or they were unable to accept it or something like that.

[00:07:23] Speaker 01:
That's basically just stating their reason for saying no.

[00:07:28] Speaker 01:
And as we note in the briefs, presumably everyone who refuses a settlement offer has a reason for doing so.

[00:07:34] Speaker 03:
Council, can I ask, under Arizona law, can we find no party prevailed and just everyone bear their own cost?

[00:07:41] Speaker 01:
I don't think under the statute, no.

[00:07:44] Speaker 01:
You could find that up to the moment that the settlement offer was extended, because for that, the traditional common law rule applies.

[00:07:51] Speaker 01:
Something that the other side blurs when they say that they're not mutually exclusive.

[00:07:54] Speaker 01:
I mean, that, yeah.

[00:07:57] Speaker 01:
So the court could say that up until September whatever, excuse me, January 27th, 20,

[00:08:03] Speaker 01:
Nobody had prevailed.

[00:08:04] Speaker 01:
Everybody bears their cause.

[00:08:06] Speaker 03:
But then under the statute, what if we said that that third provision, the mutually agreed language, was not sufficient, and then that doesn't kick in?

[00:08:14] Speaker 03:
So then what happens at that point?

[00:08:17] Speaker 01:
Correct.

[00:08:17] Speaker 01:
If the statute did not control, then you would revert to the totality of the litigation standard.

[00:08:21] Speaker 01:
And we brief that extensively.

[00:08:23] Speaker 01:
I don't particularly want to go down the many factor rabbit hole, although I think that's well laid out.

[00:08:29] Speaker 01:
And it's very clear to me that the Winthrop

[00:08:33] Speaker 01:
excuse me, the Rangers' primary purpose, as the court itself said on page four of the excerpts, was to obtain indemnity.

[00:08:41] Speaker 01:
They lost that claim.

[00:08:42] Speaker 03:
Well, is it really they lost it?

[00:08:43] Speaker 03:
It just was mooted.

[00:08:45] Speaker 01:
No, that one was dismissed.

[00:08:46] Speaker 01:
This is worth clarifying.

[00:08:48] Speaker 03:
Yeah, because my understanding is it was just mooted because WIC did not pursue that type of claim.

[00:08:55] Speaker 03:
They just wanted, they pursued it under the contract claim.

[00:08:58] Speaker 01:
I'm glad for the opportunity to clarify, Your Honor.

[00:09:01] Speaker 01:
Yes, the indemnity claim was dismissed.

[00:09:04] Speaker 01:
It's docket number 176.

[00:09:06] Speaker 01:
And it is in the list that the court included when she said, enter judgment consistent with my prior orders, including

[00:09:14] Speaker 01:
and then there's a series of docket numbers.

[00:09:16] Speaker 01:
One of them is docket 176.

[00:09:17] Speaker 01:
I will try to find the record number for you, but that may take me a moment.

[00:09:24] Speaker 01:
That is important because that happened before the alleged grand mooting at the end of the case.

[00:09:31] Speaker 03:
You're talking about the general indemnity.

[00:09:35] Speaker 03:
There's one general indemnity claim which was dismissed pretty early, but then there was another indemnity claim that was only dismissed after the WIC complaint was mooted.

[00:09:46] Speaker 01:
I don't think so, Your Honor.

[00:09:47] Speaker 01:
There were a variety of contract claims and maybe a breach of fiduciary duty claim that were dismissed at that time.

[00:09:56] Speaker 03:
Well, let me clarify.

[00:09:56] Speaker 03:
The WIC only got the money from the Rangers because of the contract claim that's saying that there's a reversion if something happens.

[00:10:04] Speaker 03:
It wasn't because of a misuse of funds.

[00:10:08] Speaker 01:
Which, by the way, and I don't want to spend a ton of time on this, but WIC only ever sued over its reversionary interest.

[00:10:15] Speaker 01:
And we traced that out in the reply brief with what I called the restatement of the case.

[00:10:19] Speaker 01:
They never identify a misallocation of money.

[00:10:23] Speaker 01:
The donation instruments themselves don't provide any basis for that.

[00:10:28] Speaker 01:
The only thing they moved, the only thing that the Rangers moved for summary judgment on, this is back in 2020,

[00:10:33] Speaker 01:
was based on their, they said that you don't have a reversionary interest.

[00:10:40] Speaker 01:
Weck only responded on that ground.

[00:10:41] Speaker 01:
There's just no, there's no there there on this.

[00:10:44] Speaker 01:
This is a fig leaf to avoid the abuse of process claim, which may actually be a good thing to talk about for a moment, because your honor asked, could this end with us saying nobody gets their fees?

[00:10:54] Speaker 01:
The other way that that could come about, Judge Bimate, would be if we had a decision on the abuse of process claim, which was dismissed, saying that that was an error.

[00:11:03] Speaker 01:
Because then the fee statute, although I would appreciate the court clarifying its application, and the form of judgment would be mooted, and we would be back to try the, or at least proceed to summary judgment on the abuse of process claim.

[00:11:19] Speaker 01:
And that, of course, could change the attorney's fees calculation itself.

[00:11:24] Speaker 03:
Well, let me just put it this way.

[00:11:25] Speaker 03:
Assuming that the statute doesn't kick in, the settlement offer doesn't kick in, the way I see it is that the Rangers basically had their claims against your client mooted, and your client mostly lost his claims.

[00:11:39] Speaker 03:
And so therefore, under the abuse of discretion standard, that seems like we should just defer to the district court.

[00:11:43] Speaker 03:
So that's how I see it right now.

[00:11:45] Speaker 03:
Tell me why I'm wrong on that.

[00:11:46] Speaker 01:
OK, so first of all,

[00:11:49] Speaker 01:
I want to push back on the idea that the statute doesn't apply, because I think I've talked about that a little bit, but it's, I think, quite clear that you have the conditions satisfied.

[00:11:59] Speaker 01:
And of course, if the statute applies, and American Power Products gives us this, it doesn't matter if he lost on literally everything.

[00:12:07] Speaker 01:
Now, if you were to do the common law test, the four-factor test that the district court went ahead with, we point out that there's a number of errors in that, including

[00:12:20] Speaker 01:
The district court's opinion reads as if we were the plaintiff, that Winthrop stated, and it blows my mind that the other side never addresses rule 13 and the fact that these are mandatory counterclaims that we have to make.

[00:12:32] Speaker 01:
Their goal was to change the legal relationship between Winthrop and the Rangers, that somehow he would owe them something.

[00:12:39] Speaker 01:
He owed them nothing.

[00:12:40] Speaker 01:
They did not obtain their primary objective.

[00:12:42] Speaker 01:
Then they say in their briefing,

[00:12:44] Speaker 01:
Our primary objective was to defeat his counterclaims.

[00:12:47] Speaker 01:
That's ludicrous.

[00:12:48] Speaker 01:
No plaintiff's primary objective is to defeat the counterclaims from the other side.

[00:12:53] Speaker 01:
And yet that's what the brief, in fact, says.

[00:12:56] Speaker 01:
On the other factors, I agree that nobody obtained monetary judgment from each other.

[00:13:01] Speaker 01:
So that's a push.

[00:13:02] Speaker 01:
Although our guy did dismiss, as Judge Bennett pointed out, the last monetary claim that was alive voluntarily.

[00:13:08] Speaker 01:
The settlement factor, the district court said favors nobody.

[00:13:11] Speaker 01:
That's truly inexplicable.

[00:13:13] Speaker 01:
We're the only ones who offered a settlement.

[00:13:15] Speaker 01:
By definition, we have to win that factor.

[00:13:18] Speaker 01:
And then on the other claims that are related, again, our client successfully defeated all of the third party plaintiff's claims against him, which is what a defendant seeks to do.

[00:13:31] Speaker 01:
That's his primary objective.

[00:13:32] Speaker 01:
So at the end of the day, those are errors.

[00:13:35] Speaker 01:
There are a variety of them that we trace out in the briefs that are chiefly legal.

[00:13:41] Speaker 01:
I would like to save a couple of minutes for rebuttal, if I may.

[00:13:45] Speaker 01:
Thank you.

[00:13:51] Speaker 04:
Mr. Ackerman.

[00:13:53] Speaker 02:
Good morning, Your Honors.

[00:13:54] Speaker 02:
My name is Justin Ackerman on behalf of the Arizona Rangers.

[00:13:57] Speaker 02:
Your Honors, this case is up on an abuse of discretion standard with regard to the attorney's fees award.

[00:14:03] Speaker 02:
Litigation of this case was very clear that the claims that were brought by WEC, Hawaiian Education Council, against the Arizona Rangers involved the misappropriation and misspending of grant funds.

[00:14:16] Speaker 02:
The complaint at issue didn't delineate

[00:14:18] Speaker 02:
or didn't establish a timeframe in which that occurred.

[00:14:22] Speaker 02:
It was broadly accused.

[00:14:24] Speaker 02:
In other words, it didn't say after Grant Winthrop left the Arizona Rangers, there was this misappropriation.

[00:14:30] Speaker 02:
It didn't say before, after, whatever.

[00:14:32] Speaker 02:
It just said there was a misappropriation of funds and that the Rangers used them for an improper purpose.

[00:14:38] Speaker 02:
And so by that account, the Arizona Rangers entirely properly named Grant Winthrop and his third party complaint to the extent

[00:14:46] Speaker 02:
it were ever found to be liable for any misappropriation of funds.

[00:14:50] Speaker 02:
And the moment in this litigation that that became clear that wasn't the case, the Arizona Rangers took the position that now it's third party complaint was mooted.

[00:14:58] Speaker 02:
That's not the position Grant Winthrop took.

[00:15:00] Speaker 02:
He took the position that summary judgment was still appropriate in his favor on the Arizona Rangers third party complaint.

[00:15:06] Speaker 02:
The trial court outright rejected that argument.

[00:15:09] Speaker 02:
It sided with the Arizona Rangers.

[00:15:11] Speaker 02:
And so the idea that there was some sort of

[00:15:14] Speaker 02:
victory by Grant Winthrop over the Arizona Rangers on its third-party complaint is a fallacy within the record.

[00:15:21] Speaker 02:
It's plain within the record.

[00:15:24] Speaker 00:
Mr. Ackerman, am I correct in understanding that the whole dispute here, the underlying dispute is all over $175,000?

[00:15:30] Speaker 00:
Is that right?

[00:15:32] Speaker 02:
That's correct, Your Honor.

[00:15:33] Speaker 00:
And the whole dispute was $175,000.

[00:15:36] Speaker 00:
And as I understand it, your clients agreed to pay the Wine Education Council

[00:15:43] Speaker 00:
$400,000, is that correct?

[00:15:46] Speaker 02:
That's correct, Your Honor.

[00:15:47] Speaker 00:
And return $36,000 in grant funds.

[00:15:50] Speaker 02:
That's correct, Your Honor.

[00:15:51] Speaker 00:
And return equipment acquired with grant funds.

[00:15:56] Speaker 02:
Yes, Your Honor.

[00:15:56] Speaker 00:
But your client was the prevailing party?

[00:15:58] Speaker 02:
Yes, as to the claims between the Arizona Rangers and Grant Winthrop, because Weck is not a party to this appeal.

[00:16:04] Speaker 02:
I understand.

[00:16:05] Speaker 02:
And he has nothing to do with those issues.

[00:16:07] Speaker 00:
Well, obviously what remained, which was just

[00:16:10] Speaker 00:
A pittance in comparison to all this is the approximately $500 in reimbursements that Winthrop also sought.

[00:16:15] Speaker 02:
Yes, and Winthrop also sought almost a million dollars in attorney's fees based on that $500 pittance.

[00:16:20] Speaker 02:
And so, why an education council, though, is an important background factor in this case, has nothing to do with the issue of attorney's fees as to who prevailed between Arizona Rangers and Grant Winthrop.

[00:16:33] Speaker 03:
Why did Rangers pay WIC over $400,000, then?

[00:16:38] Speaker 02:
It's a settlement, Your Honor.

[00:16:40] Speaker 03:
On what?

[00:16:41] Speaker 03:
On what basis?

[00:16:42] Speaker 02:
It was the remaining claims for the return of grant funds.

[00:16:46] Speaker 03:
But the grant funds were only a quarter of that.

[00:16:49] Speaker 02:
Well, of course, the risk that comes with whoever is the prevailing party on a breach of contract claim is attorney's fees.

[00:16:55] Speaker 02:
And they were significant in this case, as we saw when the fees were later briefed.

[00:17:00] Speaker 03:
So that was part of the settlement of the misappropriation claim?

[00:17:03] Speaker 02:
No, Your Honor.

[00:17:04] Speaker 02:
It was part of the settlement of the failure to return certain grant funds and property.

[00:17:09] Speaker 02:
So the misappropriation claim was the Arizona Rangers obtained summary judgment over Wine Education Council's misappropriation claim.

[00:17:16] Speaker 02:
The district court entered summary judgment in its favor on that ground.

[00:17:20] Speaker 03:
So I just don't understand.

[00:17:21] Speaker 03:
How did you get to 400,000 then from the 175 that was due?

[00:17:25] Speaker 02:
Your honor, that's to the party's negotiations.

[00:17:27] Speaker 02:
I don't think it's even appropriate to consider the $400,000 amount in this appeal.

[00:17:31] Speaker 03:
Well, it's relevant to me because, you know, WIC, Rangers sought indemnification against Winthrop, and then Rangers ended up paying almost half a million dollars to WIC, and then get no indemnification from Winthrop, which suggests that Winthrop kind of prevailed.

[00:17:52] Speaker 02:
Well, I struggle to see that because the claim that was settled was the failure to return property claim that it that occurred that arose after Grant Winthrop left the Arizona Rangers.

[00:18:03] Speaker 02:
So that whole issue never involved him.

[00:18:04] Speaker 02:
And Arizona Rangers were always clear in its third party complaint that those claims that it brought against Grant Winthrop only ever related to the claims that he helped them solicit, obtain and spend.

[00:18:15] Speaker 02:
And so whatever happened after he left the Rangers, which was that was the claim that was settled with whack, had nothing to do with him.

[00:18:21] Speaker 02:
And so how could he possibly prevail on a claim that had nothing to do with him?

[00:18:26] Speaker 02:
You know, with regard to the four-part offer, I'm sorry.

[00:18:29] Speaker 04:
Yeah, I was just about to ask you, why isn't the judgment that ultimately resulted equal to or more favorable than the offer that he made to you?

[00:18:38] Speaker 02:
Yeah, there's two points I'd like to stress to the court.

[00:18:40] Speaker 02:
One, 12.340.101, ARS section 12.340.101, still provides a court, regardless of the first sentence, which is the prevailing party sentence, and the second sentence, the offer sentence that they're relying on,

[00:18:53] Speaker 02:
The court still retains ultimate discretion to decide fees.

[00:18:56] Speaker 02:
May award is the key language in that statute.

[00:18:59] Speaker 04:
Right, but it doesn't have discretion to decide who the prevailing party is.

[00:19:02] Speaker 04:
Would you agree that the second sentence says that if those conditions are satisfied, then that is the prevailing or the successful party, right?

[00:19:09] Speaker 02:
Yes, but I suppose I'm just getting to the end here because even if it decides someone is a prevailing party, it still may say, but you get nothing.

[00:19:16] Speaker 04:
Right, but it can't... I mean, here they've been ordered to pay you, right?

[00:19:22] Speaker 04:
And that's not allowed if he is the successful party, is it?

[00:19:26] Speaker 02:
Well, it depends, Your Honor, because...

[00:19:29] Speaker 02:
First of all, the Hall case is very clear.

[00:19:30] Speaker 02:
It's our Court of Appeals case, which the American Powers case heavily relies on, very clearly says, we are the prevailing party up and until that offer is made.

[00:19:40] Speaker 02:
So just not to split hairs, but just to be clear with the record, we do have a prevailing party status up until that offer.

[00:19:46] Speaker 02:
And so then we get to the issue of, well, is the offer valid?

[00:19:48] Speaker 02:
And it's not.

[00:19:49] Speaker 02:
It's a four-part order.

[00:19:50] Speaker 00:
To follow up if I can, Mr. Ackerman, on Judge Miller's question, not only do you have the statutory section 12-341.01, but also the Arizona Rules of Civil Appellate Procedure 21, as referenced in the Bank One case, which I think has been briefed by the parties, the 1994 opinion of the

[00:20:11] Speaker 00:
Arizona Supreme Court, and essentially there the court, it is noted that the court can exercise its discretion as to whether or not to award attorney's fees in the event that there is no clear successful party.

[00:20:24] Speaker 00:
Is that not correct?

[00:20:26] Speaker 02:
Let me address that in a couple parts, Your Honor.

[00:20:28] Speaker 02:
RCAP 21 is not an independent source of attorney's fees.

[00:20:33] Speaker 02:
It has to rely on an underlying source for attorney's fees, which is 12 through 41.01.

[00:20:36] Speaker 02:
So you can't escape that.

[00:20:38] Speaker 00:
Yes.

[00:20:39] Speaker 00:
But that statute does provide that in terms of refusal to award attorney's fees to either party if it's determined that there's no clear successful party.

[00:20:51] Speaker 00:
Is that not correct?

[00:20:53] Speaker 02:
I think the court, as I just mentioned a minute ago, I think the court always retains ultimate discretion to say someone's entitled to fees, no fees, or no one gets any fees.

[00:21:01] Speaker 02:
I have no disagreement there whatsoever, but I think in this case, we clearly are the prevailing party as to the third party complaint

[00:21:08] Speaker 02:
and the counterclaims between Arizona Rangers and Grant Winthrop.

[00:21:11] Speaker 02:
But I'd like to address the four-part piece first, and then I'll get to that in a minute.

[00:21:16] Speaker 02:
With regard to whether the Rangers' third-party claims against Grant Winthrop were dismissed with prejudice, that was the first requirement.

[00:21:22] Speaker 02:
Our claims were never dismissed against him with prejudice.

[00:21:24] Speaker 02:
They were determined to be moot.

[00:21:26] Speaker 02:
In other words, if another issue ever arose again about grant expenditure funds relating to this time period, we would be able to name Grant Winthrop as a third-party defendant.

[00:21:36] Speaker 02:
That claim is not mooted.

[00:21:38] Speaker 02:
It's still alive.

[00:21:40] Speaker 02:
I'm sorry, not mooted.

[00:21:40] Speaker 02:
It was never dismissed with prejudice.

[00:21:43] Speaker 03:
Yeah, but if it's mooted, how can someone bring another claim?

[00:21:46] Speaker 02:
Mooted as to this case, Your Honor.

[00:21:48] Speaker 02:
If another issue ever arose, we could resurrect that issue, as opposed to a claim being dismissed with prejudice.

[00:21:53] Speaker 03:
Yeah, but that's a different claim, though.

[00:21:55] Speaker 03:
You couldn't bring this claim again.

[00:21:57] Speaker 02:
I think if another case arose with similar facts, were they alleged that grant funds were... Then that's a different claim.

[00:22:03] Speaker 02:
Quite honestly, Your Honor, this is outside the record, but there are allegations that there are future litigation coming in this case.

[00:22:09] Speaker 04:
But both... Those are different claims, though.

[00:22:12] Speaker 02:
They would be, but they would be relating to the same acts, the same conduct.

[00:22:15] Speaker 02:
Issue claim preclusion is what I'm thinking of, Your Honor, here, because when a claim is dismissed with prejudice, you are entitled to make an issue or claim preclusion argument based on that once the final judgment's entered.

[00:22:24] Speaker 02:
And so you're talking about changing in the relationship of parties here.

[00:22:28] Speaker 02:
Grant Winthrop's claims were dismissed with prejudice, all of them, either by motion practice, the vast majority by motion practice, or with the one that he voluntarily dismissed, and it wasn't dismissal without prejudice, it was with prejudice.

[00:22:42] Speaker 02:
And so there's no way that they meet that first term of the offer that our claims were dismissed with prejudice, and for them to argue that, well, the end result of this case is now my claims are all dismissed with prejudice, and so that meets the voluntary factor that I was going to do beforehand, I think is ridiculous, Your Honor.

[00:22:59] Speaker 02:
And it's for this reason, if someone voluntarily offers a dismissive claim versus making somebody brief and argue and litigate a case for three years to obtain a summary judgment result, those things are far and away different from each other, especially when you consider the expenses of litigation.

[00:23:16] Speaker 02:
And so that piece is not met.

[00:23:18] Speaker 02:
And the court had already hit on the third factor.

[00:23:21] Speaker 02:
The comment during discovery dispute hearing, an off-the-cuff comment, where someone was just explaining the conditional nature of our complaint, is in no way mutually agreed upon language that says Grant Winthrop committed no wrongdoing.

[00:23:41] Speaker 04:
You've got a couple of different points there.

[00:23:42] Speaker 04:
But on the mutually agreeable point, I mean, you said it.

[00:23:47] Speaker 04:
He says he agrees with it.

[00:23:49] Speaker 04:
Why isn't that enough for an agreement?

[00:23:53] Speaker 02:
One, it's not saying he didn't do anything wrong.

[00:23:55] Speaker 02:
It was just explaining the nature of our claim.

[00:24:00] Speaker 04:
I thought you said we're not alleging that he said anything wrong.

[00:24:08] Speaker 04:
Our claim our claims against mr. Winthrop is we are not alleging he did anything wrong.

[00:24:12] Speaker 02:
That's that's pretty close to You know, we're not saying he committed any wrongdoing I think if the court were to take that broad of a view and interpreting a Contractual provision where the language is mutually agreed upon and that carries some weight here I think your honor because mutually agreed upon is two parties sitting down exchanging emails or communicating a certain specific language

[00:24:36] Speaker 02:
and then saying, yes, we both agree to that language, as opposed to someone explaining something in a discovery dispute hearing that had nothing to do with that, and then counsel now at the end of the case saying, aha, I gotcha.

[00:24:47] Speaker 02:
That term's satisfied.

[00:24:49] Speaker 02:
I think that's far and away what that was contemplated and the intent of the parties whatsoever, and I think that would be improper for the court to consider that being met here in this case.

[00:24:59] Speaker 00:
Mr. Ackerman, you've mentioned the four-factor test that dates back to an opinion of the United States District Court for the District of Arizona in, I think, 2009, correct?

[00:25:09] Speaker 00:
That was a federal court decision.

[00:25:11] Speaker 02:
Yes, Your Honor.

[00:25:12] Speaker 00:
Interpreting Arizona law.

[00:25:13] Speaker 00:
Yes, Your Honor.

[00:25:15] Speaker 00:
But the four-factor test has never been enunciated by the Arizona state courts.

[00:25:21] Speaker 00:
That was an interpretation by the federal court back in 2009, correct?

[00:25:28] Speaker 00:
There are no Arizona appellate authority for the four-factor test.

[00:25:34] Speaker 00:
The four-factor test that you've referenced in your materials is a list, and that is an interpretation made by the district court in 2009.

[00:25:41] Speaker 02:
Isn't that not correct?

[00:25:45] Speaker 02:
The citation in support of that factor test was an Arizona District Court case, but Your Honor, I believe that is still based on valid Arizona law.

[00:25:51] Speaker 02:
I don't have it directly in front of me.

[00:25:52] Speaker 00:
I believe that the List case referred to at least two appellate decisions by the Arizona State Court in terms of its interpretation.

[00:26:02] Speaker 00:
But it would certainly appear under 12341.01 that in terms of the analysis, the court can compare the settlement offer

[00:26:15] Speaker 00:
to the judgment finally obtained under the statute, can it not?

[00:26:19] Speaker 02:
Yes, it can.

[00:26:19] Speaker 00:
And as I just discussed, that was— And the settlement offer that you're arguing is the settlement offer specifically between Mr. Winthrop, a philanthropist and a major player in this overall event, and your client, correct?

[00:26:32] Speaker 02:
That's correct.

[00:26:32] Speaker 02:
Okay.

[00:26:33] Speaker 02:
That's correct.

[00:26:34] Speaker 02:
And with regard to that four-factor test,

[00:26:36] Speaker 02:
You know, they're right, nobody obtained a monetary judgment, but the remainder, they referenced the remainder of their $499 claim, but again, they dismissed that with prejudice.

[00:26:44] Speaker 02:
I don't know how they can rely on a dismissed claim now to say anything.

[00:26:49] Speaker 00:
But again, just, I don't mean to belabor the point, but again, you're referring to the four-factor test as something that being biblical perhaps, but I'm reading in preparation here, that opinion relied upon two Arizona appellate decisions, Schwartz and Naritos, and neither of those cases.

[00:27:07] Speaker 00:
articulated the totality of litigation tests, neither of them.

[00:27:12] Speaker 00:
The four-factor test is absolutely not established by Arizona state law.

[00:27:17] Speaker 00:
It's been by interpretation by the district court.

[00:27:21] Speaker 02:
And for clarity, Your Honor, no one's challenging whether that test applies or not.

[00:27:24] Speaker 02:
They haven't raised any issue on appeal saying that test is not a good test.

[00:27:28] Speaker 02:
They're just saying apply the settlement offer test of 12341, and if not, as they just conceded a minute ago, then yes, we apply the four-factor test.

[00:27:35] Speaker 02:
So I don't know if it's really at issue or not.

[00:27:37] Speaker 02:
Either way, we're really looking at the first sentence of 12341 as to whoever's the successful party.

[00:27:43] Speaker 02:
And I think success is here.

[00:27:43] Speaker 00:
What about the second sentence with respect to comparing the terms of the settlement offer to the judgment finally obtained?

[00:27:49] Speaker 00:
which is referenced in the second sentence.

[00:27:51] Speaker 00:
Is that not correct?

[00:27:52] Speaker 02:
Yes, but that's out if those four factors weren't met as I just discussed a minute ago.

[00:27:56] Speaker 02:
So once the court disposes of that, all that's left in front of the court is who is the successful party under the first sentence of 12341.

[00:28:03] Speaker 04:
And why isn't one view of that question?

[00:28:09] Speaker 04:
He was not involved in this case until you

[00:28:12] Speaker 04:
brought him into it by asserting claims against him.

[00:28:15] Speaker 04:
He then brought some counterclaims against you in response.

[00:28:19] Speaker 04:
None of you ended up getting anything.

[00:28:22] Speaker 02:
I would disagree with that, Your Honor.

[00:28:24] Speaker 04:
Well, so, I mean, either nobody is this successful party, or maybe he is, because he was the one sort of involuntarily brought into all this.

[00:28:34] Speaker 04:
So what's wrong with that view?

[00:28:37] Speaker 02:
A couple things.

[00:28:37] Speaker 02:
You know, if we're looking at changed relationships, right, a change in the legal relationship, he brought counterclaims that, again, are dismissed with prejudice via dispositive motion practice.

[00:28:45] Speaker 02:
And those counterclaims did seek significant monetary value for reputational harm,

[00:28:50] Speaker 02:
and for lost wages.

[00:28:52] Speaker 02:
And so again, those claims are dismissed with prejudice because we won at summary judgment on them.

[00:28:56] Speaker 02:
They're not even raised on appeal here because the win, I think, was so clear on those issues.

[00:29:01] Speaker 02:
And so there is a change in circumstances here where the Rangers have prevailed on those counterclaims.

[00:29:09] Speaker 02:
And our third party complaint that we won at summary judgment over Wecon was mooted.

[00:29:14] Speaker 02:
I struggle to see a situation where a party that obtains summary judgment on the main sort of liability claim and then their secondary indemnity claim is mooted as a result, has somehow lost or has somehow not prevailed because that's the ultimate goal of any indemnity claim is to first prevail on your direct liability and then never have to get to indemnity.

[00:29:36] Speaker 04:
But I guess it's complicated by the fact that there's three different parties involved in this.

[00:29:43] Speaker 04:
But as it relates to Winthrop, I mean,

[00:29:50] Speaker 04:
I guess you didn't lose to him on those claims, but you didn't really win anything from him either.

[00:29:53] Speaker 02:
And he didn't succeed either because, again, he sought to dismiss that third-party claim with prejudice, and the court rejected that argument.

[00:30:01] Speaker 02:
And he doesn't challenge that particular piece either on appeal.

[00:30:05] Speaker 02:
And again, so all you have is us prevailing over him at summary judgment on our third-party claim and the court accepting our position that that claim is now moot over his objection.

[00:30:15] Speaker 02:
And then you have us prevailing at every step on every one of his counterclaims.

[00:30:20] Speaker 02:
And he dismisses the one that piece that remains with prejudice.

[00:30:23] Speaker 02:
So he didn't win on a single thing.

[00:30:26] Speaker 03:
Can I ask one quick question?

[00:30:28] Speaker 03:
I don't understand Arizona's interest in, Ranger's interest in keeping the judgment the same.

[00:30:35] Speaker 03:
I mean, it's clearly inaccurate.

[00:30:37] Speaker 03:
What's the interest in making it not allowing the district court to fix that?

[00:30:44] Speaker 02:
I disagree with the court's characterization that it's clearly inaccurate because, as I just mentioned, we prevailed on everything as it relates to... You didn't prevail on the indemnification claim.

[00:30:53] Speaker 02:
A common law indemnification claim.

[00:30:55] Speaker 03:
We did not prevail on... And you didn't prevail on your other indemnification claim either.

[00:30:58] Speaker 02:
Well, no.

[00:30:59] Speaker 02:
It was mooted out.

[00:30:59] Speaker 02:
Exactly.

[00:31:00] Speaker 03:
So you didn't prevail.

[00:31:01] Speaker 02:
We did prevail because if our claims against whack on were not mooted or we didn't obtain summary judgment on them We'd be still litigating whether or not Grant Winthrop hadn't had indemnity through either a negligence claim or a breach of fiduciary duty And so we're using the term indemnity, but it all means the same thing and so the idea that his common-law indemnity claim was

[00:31:22] Speaker 02:
granted summary judgment, and that somehow impacted the case, there were three claims that all sort of characterized the same exact issue.

[00:31:30] Speaker 03:
He makes a fair point that the takeaway is if you prevailed is that he did something wrong, and that's clearly not right.

[00:31:35] Speaker 03:
Well, as they've defined prevailing, it's the change in legal relationships, and as I've mentioned... No, no, in the judgment, you were... you... you allege indemnification claims that said that Winthrop engaged in some sort of misconduct, and the judgment now says that you prevailed on that, but that's just incorrect.

[00:31:50] Speaker 03:
Well, the judgment doesn't articulate that, it just says judgments entered in favor of... Right, so I just don't understand why... why you can't... why... what's your interest in not making sure the judgment is more precise and accurate?

[00:31:59] Speaker 02:
Your honor part of it stems perhaps from a distrust between the parties because yeah, I know any change That's yeah, I think that's pretty clear from the record, but I think any change but as a legal matter It's totally inaccurate and I just don't understand why you just don't fix agree to fix it I again I take the position that we've we have prevailed on all the claims as between us and him and so in favor of Arizona Rangers to me is accurate Okay, thank you.

[00:32:24] Speaker 04:
You're over your time.

[00:32:25] Speaker 04:
We've taken your time.

[00:32:26] Speaker 04:
Thank you for their questions.

[00:32:27] Speaker 04:
I will hear rebuttal

[00:32:36] Speaker 01:
Three things, at least, that I'd like to take up while we talk.

[00:32:39] Speaker 01:
The first is, on the subject of dismissal with and without prejudice, which you hear a lot about, as a matter of state law, that does not count for 12.341.01a.

[00:32:51] Speaker 01:
Britt versus Stephan, we cited in our papers several times.

[00:32:55] Speaker 01:
The reason, by the way, that it doesn't count if something is dismissed with or without prejudice is because cases like this come along where things get mooted out.

[00:33:03] Speaker 01:
We didn't have a chance to prevail

[00:33:05] Speaker 01:
on all of their other half-baked theories because the Weck litigation was mooted out, which leads to a sort of broader point.

[00:33:13] Speaker 01:
The other side conflates Winthrop and Weck constantly in this discussion.

[00:33:19] Speaker 01:
Winthrop didn't control Weck.

[00:33:21] Speaker 01:
He had nothing to do with what they alleged.

[00:33:23] Speaker 01:
He got dragged into this by the Rangers, which brings us to the point about abusive process at which the district court, and that's a few years ago, the district court

[00:33:33] Speaker 01:
basically says, it's page 12 of the excerpts, basically says, and I can quote it to avoid the basically part, that they were using Winthrop as leverage to try and get to his father who was, you know, the GC at WAC.

[00:33:49] Speaker 01:
that the objective they had was, quote, get Weck to drop their lawsuit or they would bring him into the current suit.

[00:33:57] Speaker 01:
That's at paragraph 43 of the complaint.

[00:34:00] Speaker 01:
That's the use for which their process, the complaint itself and countless discovery actions was deployed, was to use him as a hostage in this litigation.

[00:34:12] Speaker 01:
The district court says in one sentence on page 12,

[00:34:16] Speaker 01:
misapplying this court's blue goose statement, precedent rather, says we can't base it on case initiating pleadings.

[00:34:24] Speaker 01:
That's just not true.

[00:34:25] Speaker 01:
And I commend the court's attention.

[00:34:26] Speaker 01:
And in addition to the Britt case I just mentioned about the with without prejudice business, the Crackle versus Allstate Insurance case and Nienstedt, both of which are Arizona cases explaining how abusive process works.

[00:34:39] Speaker 01:
And Crackle expressly rejects

[00:34:42] Speaker 01:
the argument that there is, quote, any limitation on the kind of process that can count for abuse.

[00:34:47] Speaker 01:
Because what's going on here is these guys wanted to hang on to the money.

[00:34:52] Speaker 01:
They didn't want to comply with the condition.

[00:34:54] Speaker 01:
When they got called out on it by WEC, they launched the salvo against his son to try and bring him in as if he had anything to do with it.

[00:35:02] Speaker 01:
But by all accounts, he had no ability to control the Rangers after he left, which is when they breached the East Valley condition.

[00:35:09] Speaker 01:
So there, again,

[00:35:11] Speaker 01:
And again, this issue probably obviates the need for decision on the other two.

[00:35:18] Speaker 01:
But it was wrong to dismiss the abuse of process claims, which these things tend to cycle back into each other because of the three parties at issue.

[00:35:27] Speaker 04:
You're over your time, so if you want to very briefly wrap up.

[00:35:31] Speaker 01:
I commend that to the court's attention.

[00:35:32] Speaker 01:
And the last point concerns the statement that we were talking about earlier, Judge Miller.

[00:35:39] Speaker 01:
not only was it the in-court statement, but that confirmed the 2018 audit that we point to in the briefs, where the Rangers recognized that Winthrop did nothing wrong.

[00:35:49] Speaker 04:
Thank you, counsel.

[00:35:50] Speaker 04:
I thank both counsel for their helpful arguments, and the case is submitted, and we are adjourned.