§ 2.5.1 EXISTENCE OF A LAWSUIT

• Jurisdiction: Arizona

To be a "contested action" under A.R.S. § 12-341.01(A), a lawsuit must have been commenced. McEldowney v. Osborn School Dist., 123 Ariz. 416, 418, 600 P.2d 29, 31 (1979). Thus, there can be no recovery for attorneys' fees incurred in negotiating and settling a dispute short of a lawsuit. Id. A "contested action" is one in which the defendant appears and generally defends. Assyia v. State Farm Mut. Auto. Ins., 229 Ariz. 216, 221, ¶ 18, 273 P.3d 668, 673 (App. 2012) (insurer contested plaintiff's breach of contract claim by filing an answer denying liability although insurer eventually tendered the balance of plaintiff's uninsured motorist coverage under her policy). An action is still "contested" within the meaning of the statute even though the defendant's answer admits "the essential facts underlying the contract claim." Morrison v. Shanwick Int'l Corp., 167 Ariz. 39, 46, 804 P.2d 768, 775 (App. 1990). In Morrison, the court also noted the party opposing the fee award had appeared, filed an answer, reserved the right to raise affirmative defenses, and contested the relief requested. Id. at 46-47, 804 P.2d at 775-76.

Due to the adoption by the Arizona Legislature of the Revised Uniform Arbitration...