ARS 29-359 Interpretation
In Steer v. Eggleston, 202 Ariz. 523, 47 P.3d 1161 (App. 2002), the Court interpreted A.R.S. 29-359 (1998), a statute applying to limited partnerships that contains language nearly identical to that found in A.R.S. 29-833(A), and held as follows:
Section 29-359 . . . allows a limited partner to recoup fees from the limited partnership when the partnership benefits from the limited partner's successful derivative action. A.R.S. 29-359. the rationale supporting this statute is twofold.
First, both the claim and the award belong to the partnership; therefore, burdening the partnership with the expenses is fair and consistent. Edwin W. Hecker, Jr., Ltd. Partners' Derivative Suits Under the Revised Unif. Ltd. P'ship Act, 33 Vand. L.Rev. 343, 378 (1980). Second, limited partners with modest shares can bring legitimate claims without risk that their personal stake will be swallowed up by the expense of litigation. Id.
We hold that allowing the distribution of fees from the arbitration award in accordance with A.R.S. 29-359 is consistent with the prohibition of A.R.S. 12-1510 (1994). In fact, such an interpretation gives effect to both statutes. Section 12-1510 continues to prohibit the court or the arbitrator, absent agreement between the parties, from merely adding the responsibility of attorneys' fees to the loser's obligations.
Accordingly, the court is barred from simply increasing the overall value of the award. Instead, A.R.S. 29-359 allows the court to spread the burden of attorneys' fees among all of the partners, consistent with the purpose of a common fund.
Appellants are only affected insofar as the other partners are affected; that is, Appellants - along with the other partners - must contribute a pro rata share of the fees to Appellee on behalf of the limited partnership.
Moreover, the application of A.R.S. 29-359 does not circumvent A.R.S. 12-1510 because it does not unnecessarily lengthen or complicate the arbitration process itself. It merely ensures that the award is distributed equitably as part of the award approval process. 202 Ariz. at 527,19-20, 47 P.3d at 1165.