§ 11.2.1.1.1 Arising Out of Contract.

JurisdictionArizona

§ 11.2.1.1.1 Arising Out of Contract. Pursuant to A.R.S. § 12-341.01(A), fees may be recovered in actions “arising out of” an express or implied contract. When a contract is alleged by the plaintiff and the defendant successfully proves there was no contract, the action is one arising out of contract under A.R.S. § 12-341.01(A) and the defendant may seek attorneys’ fees. See Rudinsky v. Harris, 231 Ariz. 95, 101, ¶ 27, 290 P.3d 1218, 1224 (App. 2012); Lacer v. Navajo Cnty., 141 Ariz. 392, 394, 687 P.2d 400, 402 (App. 1984). The contract need not be between the parties to the action; for example, fees may be awarded pursuant to A.R.S. § 12-341.01(A) in an action between competing security interests in the same collateral. See Wollenberg v. Phoenix Leasing Inc., 182 Ariz. 4, 11, 893 P.2d 4, 11 (App. 1994).

Interpreting the term “implied contract” as used in the statute, the supreme court has distinguished between contracts implied in fact and those implied in law. See Barmat v. John & Jane Doe Partners A-D, 155 Ariz. 519, 521, 747 P.2d 1218, 1220 (1987). Contracts implied in fact, which are undertakings imposed by reason of promissory expressions, clearly fall within the statute. See id. A party prevailing on a quantum meruit claim also may recover attorneys’ fees under A.R.S. § 12-341.01(A). See Pelletier v. Johnson, 188 Ariz. 478, 482-83, 937 P.2d 668, 672-73 (App. 1996).

On the other hand, contracts implied in law are obligations that arise without expressions of assent by either words or acts. See Barmat, 155 Ariz. at 521-22, 747 P.2d at 1220-21. Because breaches of obligations implied in law are addressed by tort law, fees incurred in those actions are not recoverable under A.R.S. § 12-341.01(A). Id. at 522-23, 747 P.2d at 1221-22; see also Double AA Builders, Ltd. v. Grand State Constr. L.L.C., 210 Ariz. 503, 511, ¶¶ 44-45, 114 P.3d 835, 843 (App. 2005) (holding that A.R.S. § 12-341.01 does not apply to actions based on promissory estoppel, which is “an equitable remedy and . . . not a theory of contract liability”); In re Naarden Trust, 195 Ariz. 526, 530, ¶ 18, 990 P.2d 1085, 1089 (App. 1999) (suits arising out of a trust relationship are not suits arising out of contract for purposes of A.R.S. § 12-341.01(A)).

When a single act constitutes both a tort and a breach of contract, fees may be awarded under the statute “as long as the cause of action in tort could not exist but for the breach of contract.” Barmat, 155 Ariz. at 522, 747 P.2d at 1221...

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