Murphy Farrell Development, LLLP v. Sourant
229 Ariz. 124
| Ariz. Ct. App. | 2012Background
- Murphy Farrell Development, LLLP sues Sourant over breaches of May and July agreements related to mineral rights near OX Ranch; Sourant retained surface mineral rights and later conveyed some to Murphy Farrell while omitting the Omitted Parcel.
- Rock Resources and Rock Source harvested minerals from the Mineral Land and Omitted Parcel, paying royalties to Murphy Farrell which were partly passed to Sourant.
- May Agreement granted Murphy Farrell exclusive harvest rights, a right of first refusal on the Quarry Property, and an option to participate in additional state-owned acres; royalty threshold triggered transfer of remaining boulders.
- July Agreement required Sourant to assign surface mineral rights to Murphy Farrell and included a five-year covenant not to compete; breach occurred when Sourant assisted others and engaged in related negotiations.
- Murphy Farrell sought equitable relief (constructive trust) and declaratory relief; Sourant sought attorney’s fees under the fee provisions of the agreements; trial court found breaches but denied constructive trust and fees, leading to cross-appeal and appeal.
- On appeal, the court affirms in part, reverses in part, and remands for declaratory relief on the Omitted Parcel and Quarry Property, and for determining prevailing party and awarding fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Rights in the Omitted Parcel | Murphy Farrell seeks equitable rights in the Omitted Parcel | Sourant argues no separate rights; constructive trust addressed, remand unnecessary | Remand to determine Murphy Farrell's rights in the Omitted Parcel |
| Size/location of Quarry Property | Murphy Farrell seeks declaratory relief on Quarry Property boundaries | Court had discretion; declaratory relief inappropriate if no justiciable controversy | Remand to resolve factual dispute on Quarry Property size/location |
| Constructive trust on 850 Acres | Murphy Farrell seeks constructive trust due to Sourant's breach | No equitable interest shown; not entitled to constructive trust | Constructive trust not available; affirmed denial of constructive trust on 850 Acres |
| Prevailing party and fees under fee provisions | Sourant prevailed; fees should be awarded to prevailing party | Murphy Farrell argued no prevailing party due to breaches | Sourant was prevailing party; remand to determine fee award under total-litigation approach |
| Attorney’s fees on appeal | Fees incurred on appeal should be awarded to prevailing party | No prevailing party on appeal yet | Denial on appeal affirmed; remand to award fees if there is a prevailing party on remand |
Key Cases Cited
- Ocean West Contractors, Inc. v. Halec Construction Co., 123 Ariz. 470 (Ariz. 1979) (net judgment rule; prevailing party may recover after setoffs)
- Berry v. 352 E. Va., L.L.C., 228 Ariz. 9 (App. 2011) (percentage of success/totality of litigation approach for determining prevailing party)
- Notaros v. Fine Arts Gallery of Scottsdale, Inc., 126 Ariz. 44 (App. 1980) (precedent on prevailing party and fees distribution)
- Drozda v. McComas, 181 Ariz. 82 (App. 1994) (taxable costs and prevailing party definition under ARS 12-341)