§ 2.6.2 ACTIONS INVOLVING NON-CONTRACT CLAIMS

JurisdictionArizona

While attorneys' fees under A.R.S. § 12-341.01(A) are restricted to actions "arising out of a contract," the Arizona Supreme Court has held this requirement is not limited to those cases in which a contract is entered into and subsequently breached. Marcus v. Fox, 150 Ariz. 333, 335, 723 P.2d 682, 684 (1986). Instead, in determining whether an action arises out of a contract within the meaning of the statute, the courts will analyze and consider "the essence of the action." ASH, Inc. v. Mesa Unified School Dist. No. 4, 138 Ariz. 190, 193, 673 P.2d 934, 937 (App. 1983). "The test to determine if an action arises out of contract is whether the plaintiff would have a claim 'even in the absence of a contract.'" In ML Servicing Co., Inc. v. Coles, 235 Ariz. 562, 570, ¶ 31, 334 P.3d 745, 753 (App. 2014) the plaintiff was not a party to a contract, nor stood in the shoes of a party to a contract, with the defendant and all of the claims sounded in tort or quasi-contract; however, the court held the case arose out of contract, because insurance policies owned by defendant's deceased husband were "at the core of the action." Similarly, in Deutsche Credit Corp., 179 Ariz. 155, 163, 876 P.2d 1190, 1198 (App. 1994), an action for conversion by a secured creditor against the buyer of equipment subject to a security interest, the court observed the Arizona Supreme Court has directed a broad interpretation of the kinds of transactions included within § 12-341.01(A); the court concluded that the claim fell within the statute because it involved the "rights, obligations, validity, enforceability and priority of rights arising out of contract." To the same effect, an action against an insurer alleging breach of contract for failure to pay uninsured motorist policy benefits arises out of contract for purposes of an award of attorneys' fees under the statute; "the tort committed by the adverse driver was simply the trigger for [State Farms'] contractual duty." Assyia v. State Farm Mut. Auto. Ins., 229 Ariz. 216, 221, ¶ 13, 273 P.3d 668, 673 (App. 2012). See also, e.g., Lohse v. Faultner, 176 Ariz. 253, 860 P.2d 1306 (App. 1992) (action by adjoining property owner as a result of forest fire arose out of contract because contract between owner and subcontractor was "an essential medium" for assertion of tort claim against property owner on theory that owner was third-party beneficiary of loggers contract with Forest Service, establishing non-delegable duty to prevent and suppress forest fires). Likewise, an action for fraudulent inducement arises out of contract when one contracting party sues the other contracting party for fraudulent inducement; the tort claim "only exists due to the fraudulently induced contract." Caruthers v. Underhill, 230 Ariz. 513, 526, ¶ 58, 287 P.3d 807, 820 (App. 2012). Conversely, when a party to a contract sues a nonparty for fraudulently inducing that party to enter into a contract with a third party, the claim does not arise out of contract. Id.

However, peripheral or tangential contractual contacts will not justify an...

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