Arizona’s rules for homeowner fee recovery have changed again due to the decision of Sirrah Enterprises, LLC v. Wunderlich (http://www.azcourts.gov/Portals/0/OpinionFiles/Supreme/2017/CV-16-0156-PR%20Opinion.pdf) wherein the Arizona Supreme Court ruled that homeowners pursuing claims based in implied warranty may now recover fees whether or not they are original parties to the contract.
In 1984 Arizona recognized and defined a special implied warranty right which can be enforced by subsequent purchasers of homes. Arizona has a fee-shifting statute, A.R.S. §12-341.01(A), which applies to all claims arising from an express contract. From 1984 to 2012, Arizona courts treated the implied warranty as a claim that would trigger the statute and allow a fee award. In the 2012 decision Sullivan v. Pulte Home Corp. (Sullivan I) the Court ruled that the implied warranty claim was “implied-in-law” and could not trigger the fee-shifting statute. In Sirrah the Court disapproved Sullivan I and other decisions that denied a subsequent purchaser homeowner the ability to seek fees. The Court ruled that the implied warranty is a term imputed by law into the original home purchase agreement, and so the implied warranty claim arises from an express agreement.
Arizona is now back to the old rule where attorney’s fee awards are available on construction defect claims by original purchasers and subsequent purchasers.
See previous articles regarding changes to Arizona’s construction defect causes of action here:
Blog by: Louis Horowitz, Associate, Arizona, New Mexico