Sirrah Enterprises, LLC v. Wunderlich, 080917 AZSC, CV-16-0156-PR

Court:Supreme Court of Arizona
Attorney:John J. Belanger (argued), Bremer Whyte Brown & O'Meara, Tempe, Attorneys for Sirrah Enterprises, LLC. Jeffrey R. Adams (argued), The Adams Law Firm, PLLC, Prescott, Attorneys for Wayne and Jacqueline Wunderlich Stephen E. Richman (argued), Vail C. Cloar, Dickinson Wright PLLC, Phoenix, Attorneys...
Judge Panel:JUSTICE TIMMER authored the opinion of the Court, in which CHIEF JUSTICE BALES, VICE CHIEF JUSTICE PELANDER, and JUSTICES BRUTINEL, BOLICK, GOULD, and LOPEZ joined.
Opinion Judge:TIMMER JUSTICE.
Party Name:Sirrah Enterprises, LLC, an Arizona limited liability company, Plaintiff/Counterdefendant/Appellant, v. Wayne and Jacqueline Wunderlich, husband and wife, Defendants/Counterclaimants/Appellees.
Case Date:August 09, 2017
Docket Nº:CV-16-0156-PR
 
FREE EXCERPT

Sirrah Enterprises, LLC, an Arizona limited liability company, Plaintiff/Counterdefendant/Appellant,

v.

Wayne and Jacqueline Wunderlich, husband and wife, Defendants/Counterclaimants/Appellees.

No. CV-16-0156-PR

Supreme Court of Arizona

August 9, 2017

         Appeal from the Superior Court in Yavapai County The Honorable David L. Mackey, Judge No. CV 20070399

         Opinion of the Court of Appeals, Division One 240 Ariz. 163 (App. 2016)

          John J. Belanger (argued), Bremer Whyte Brown & O'Meara, Tempe, Attorneys for Sirrah Enterprises, LLC.

          Jeffrey R. Adams (argued), The Adams Law Firm, PLLC, Prescott, Attorneys for Wayne and Jacqueline Wunderlich

          Stephen E. Richman (argued), Vail C. Cloar, Dickinson Wright PLLC, Phoenix, Attorneys for Amicus Curiae Home Builders Association of Central Arizona.

          JUSTICE TIMMER authored the opinion of the Court, in which CHIEF JUSTICE BALES, VICE CHIEF JUSTICE PELANDER, and JUSTICES BRUTINEL, BOLICK, GOULD, and LOPEZ joined.

          OPINION

          TIMMER JUSTICE.

         ¶1 The law implies a warranty of workmanship and habitability into every residential construction contract. This Court has wrestled with application of this warranty on several occasions. We reenter the fray and here decide whether the successful party on a claim for breach of the warranty qualifies for an attorney-fee award under either a contractual fee provision or A.R.S. § 12-341.01. Because the warranty is imputed into the construction contract, it is a term of the contract. Any claim for breach of that term arises from the contract. The successful party therefore qualifies for fees under a controlling contractual fee provision or, barring that, § 12-341.01.

         BACKGROUND

         ¶2 Wayne and Jacqueline Wunderlich contracted with Sirrah Enterprises, LLC to build "a basement through exterior walls" at the Wunderlichs' home. Sirrah performed the work. The Wunderlichs partially paid Sirrah but refused to pay the full contract amount, claiming construction defects.

         ¶3 Sirrah sued for the unpaid contract amount. The Wunderlichs counterclaimed for breach of the implied warranty of workmanship and habitability (the "Implied Warranty" or "Warranty") and other claims. A jury found in Sirrah's favor on its claim and awarded it $31, 374. The jury further found in Sirrah's favor on the Wunderlichs' claims for breach of contract and breach of the covenant of good faith and fair dealing. But the jury found in the Wunderlichs' favor on their claim for breach of the Implied Warranty and awarded them $297, 782.

         ¶4 The trial court determined that the Wunderlichs were the prevailing parties and awarded them attorney fees pursuant to a contractual fee provision and § 12-341.01. The court of appeals affirmed the award as authorized by the contractual fee provision. Sirrah Enters., LLC v. Wunderlich, 240 Ariz. 163, 171 ¶ 25 (App. 2016). (The court variously stated that § 12-341.01 did and did not apply here, but ultimately rested its decision on the contractual fee provision. Id. at 168-69 ¶¶ 11, 15, 171 ¶ 24.)

         ¶5 We granted review because the recovery of fees under a contractual fee provision or § 12-341.01 for an Implied Warranty claim is a recurring legal issue of statewide importance. This Court has jurisdiction pursuant to article 6, section 5(3) of the Arizona Constitution and A.R.S. § 12-120.24.

         DISCUSSION

         ¶6 The parties' contract provides that if either party "is required to retain the services of an attorney to enforce any term or provision of this Agreement, the prevailing party shall be entitled to and the losing party shall pay all expenses and costs including reasonable attorney's fees incurred by the prevailing party." Sirrah argues that the Implied Warranty was not a "term or provision" of the...

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