§ 2.6.0 ARISING OUT OF CONTRACT

• Jurisdiction: Arizona

Perhaps the most litigated issue under A.R.S. § 12-341.01(A) has been whether the action is properly characterized as one "arising out of contract." The opinions addressing this issue are numerous and not altogether consistent. Bennett v. Baxter Group, Inc., 223 Ariz. 414, 419, ¶ 20, 224 P.3d 230, 235 (App. 2010) ("Many of the decisions interpreting 'arising out of a contract' seem contradictory"); see also Modular Mining Sys., Inc. v. Jigsaw Technologies, Inc., 221 Ariz. 515, ¶ 23, 212 P.3d 853, 860 (App. 2009) (noting that the "arising out of contract" analysis is complex).

As a general rule, "[i]n determining whether an action arises out of contract, the court is not bound by the form of the pleading but looks to the nature of the action and the surrounding circumstances." Hiatt v. Shah, 238 Ariz. 579, 584, ¶ 18, 364 P.3d 1138, 1143 (App. 2015). The courts, for the most part, have liberally construed the requirement that an action arise out of contract. See, e.g., City of Phoenix v. Glenayre Elecs., Inc., 240 Ariz. 80, 33, ¶ 24, 375 P.3d 1189, 1198 (App. 2016) (third-party defendants properly awarded attorneys' fees on the basis of development permits that in turn "memorialized" indemnification agreement under city ordinance); Hiatt, 238 Ariz. at 584, ¶ 18, 364 P.3d at 1143 (action premised on receivership certificate, which in turn was premised on a settlement agreement, arises out of contract); ML Servicing Co., Inc. v. Coles, 235 Ariz. 562, 570, ¶¶ 30-32, 334 P.3d 745, 753 (App. 2014) ("[t]he meaning of 'arises out of contract' is broad for purposes of the statute" and thus, even when all of the claims sounded in tort or quasi-contract, the case arose out of contract, because a contract was "at the core of the action"); Smith v. Beesley, 226 Ariz. 313, 324, ¶ 44, 247 P.3d 548, 559 (App. 2011) (claim for interference with an easement arises out of contract, permitting an award of attorneys' fees under the statute); Wang Elec., Inc. v. Smoke Tree Resort, LLC, 230 Ariz. 314, 327, ¶ 47, 283 P.3d 45, 58 (App. 2012) (claim for unjust enrichment arises out of contract, at least when it is asserted as an alternative claim in a breach of contract action); Chaurisia v. Gen. Motors Corp., 212 Ariz. 18, 30,
¶ 47, 126 P.3d 165, 177 (App. 2006) (privity of contract is not required for award of fees under statute); California Cas. Ins. v. American Family Mut. Ins., 208 Ariz. 416, 422, ¶ 24, 94 P.3d 616, 622 (App. 2004) (equitable contribution claim arises out of contract within the meaning of attorneys' fee statute where carrier's defense is based upon the terms of its insurance contract with its insured); Pence v. Glacy, 207 Ariz. 426, 87 P.3d 838 (App. 2004) (action by borrower against lender under statute prohibiting false recording of lien when lender recorded deed of trust on residence absent signature of both spouses arises out of contract); Bentivegna v. Powers Steel & Wire Products, Inc., 206 Ariz. 581, 588, ¶¶ 27-28, 81 P.3d 1040, 1047 (App. 2003) (unlicensed contractor eligible for award of attorneys' fees under statute in defending against breach of contract claim even though contractor could not have sued to enforce contract because contract was voidable under A.R.S. § 32-1153); Title Ins. Co. of Minn. v. Costain Ariz., Inc., 164 Ariz. 203, 209, 791 P.2d 1086, 1092 (App. 1990) (action by title insurer as subrogee of purchaser for breach of warranty of title against seller arose out of contract); Nationwide Mutual Ins. Co. v. Granillo, 117 Ariz. 389, 394, 573 P.2d 80, 85 (App. 1977) (in declaratory judgment action brought by insurer, successful party defendant does not need to be a party to the insurance contract where issue was coverage under the insurance policy); but see Fire Ins. Exch. v. Thunderbird Masonry, Inc., 177 Ariz. 365, 370-71, 868 P.2d 948, 953-54 (App. 1993) (subrogation action by insurer against subcontractor whose negligence caused fire at construction project for which insurer paid lender for damage to property did not arise out of contract even though interpretation of insurance contract was involved); Navigators Specialty Ins. v. Nationwide Mutual Ins., 50 F. Supp. 3d 1186, 1199 (D. Ariz. 2014) (action between insurers seeking...