On March 23, 2017, the Arizona Supreme Court, in a rare split decision authored by Vice Chief Justice John Pelander, changed Arizona law with respect to a litigant’s right to recover its reasonable attorney's fees under a contractual fee-shifting provision. The recipient of a favorable judgment in Arizona is no longer inevitably deemed to be the prevailing party under a contractual fee-shifting provision. Now there are additional considerations that go into the mix.
Division One’s recent decision in Geller v. Lesk, --- P.3d --- 2012, 2012 WL 4364241 (App. Sept. 25, 2012), will be of interest not only to litigators but also to corporate counsel. It imposes limits on the enforcement of broadly drafted contractual fee-shifting provisions — and, for the first time in the context of provisions that contain no express reasonableness limitation, shifts the burden to the applicant to prove the “reasonableness” of the fees.