Hall v. READ DEVELOPMENT, INC.
229 Ariz. 277
| Ariz. Ct. App. | 2012Background
- Hall bought a previously-owned house in 1999 from Read Development, Inc. (RDI) and soon faced structural defects.
- Hall sued in 2004 for breach of the implied warranty of habitability, seeking rescission or damages.
- Trial court granted summary judgment denying rescission due to lack of privity between Hall and RDI.
- At trial, Hall won on breach of warranty ($30,000) and RDI prevailed on negligent and punitive claims; other claims resolved by jury and court.
- Both sides sought attorneys’ fees under § 12-341.01(A); court awarded Hall $225,000 in fees, final judgment included costs and damages, and the matter proceeded on cross-appeals about fee entitlement and rescission.
- Court analyzed whether final judgment includes attorneys’ fees for the purposes of comparing offers under § 12-341.01(A) and whether rescission is available to a subsequent purchaser.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether judgment finally obtained includes attorneys’ fees for § 12-341.01(A). | Hall contends final judgment includes fees; offers must be compared to this total. | RDI argues only the jury verdict (no fees) should be used for comparison. | Yes; judgment finally obtained includes fees, and fees are considered in the comparison. |
| How to apply the settlement comparison test under § 12-341.01(A). | Hall asserts she prevailed; offers exceeding the final judgment, including fees, determine the winner. | RDI argues offers should be compared to the jury verdict, excluding fees. | Comparison must be to the final judgment, including reasonably incurred fees as of the offer date. |
| Whether the trial court could consider fees incurred up to date of the offer or through final judgment. | Fees up to the offer date should be included in the judgment for comparison. | Fees through the final judgment should be considered. | Court must include only fees reasonably incurred as of the date of the offer in the comparison. |
| Whether rescission is available to a subsequent purchaser for breach of the implied warranty of habitability. | Richards v. Powercraft allows subsequent purchasers to sue for breach; rescission should be available. | Privity-based rescission is not appropriate for a subsequent purchaser; rescission not justified here. | Rescission cannot be properly requested by a subsequent purchaser. |
Key Cases Cited
- Berry v. 352 E. Virginia, L.L.C., 228 Ariz. 9 (App. 2011) (judgment may include more than jury verdict for § 12-341.01(A) comparison)
- Warner v. Sw. Desert Images, LLC, 218 Ariz. 121 (App. 2008) (guide for Warner factors in fee awards under § 12-341.01(A))
- Drozda v. McComas, 181 Ariz. 82 (App. 1994) (harmonizes Rule 68 with § 12-341; apples-to-apples concept)
- Hale v. Amphitheater School Dist. No. 10, 192 Ariz. 111 (App. 1998) (abuse of discretion standard in fee awards under § 12-341.01)
- Vega v. Sullivan, 199 Ariz. 504 (App. 2001) (construction of judgment in arbitration context; includes final judgment)
- Heatec, Inc. v. R.W. Beckett Corp., 219 Ariz. 293 (App. 2008) (further guidance on § 12-341.01 analysis)
- Richards v. Powercraft Homes, Inc., 139 Ariz. 242 (1984) (privity exception for implied warranty of habitability benefitting subsequent purchasers)
- Reed v. McLaws, 56 Ariz. 556 (1941) (rescission doctrine and restoration to status quo)
- Miller v. Crouse, 19 Ariz.App. 268 (1973) (rescission to justify due to failure of consideration)
- Chaurasia v. Gen. Motors Corp., 212 Ariz. 18 (App. 2006) (implied warranty of merchantability; privity-related discussion)
- Premiere RV & Mini Storage LLC v. Maricopa Cnty., 222 Ariz. 440 (App. 2009) (statutory interpretation and public policy guidance)