SDP Kyrene LLC v. Kyrene Shopping Center LLC
2:22-cv-00987
D. Ariz.Apr 14, 2025Background
- SDP Kyrene LLC and Kyrene Shopping Center LLC entered into an agreement to purchase a shopping center, with LA Laser Center as a tenant.
- The agreement (“PSA”) included an Arizona choice-of-law and attorney fee provision, granting fees to the prevailing party.
- The transaction failed prior to closing, leading SDP to sue for specific performance; Kyrene made a more favorable settlement offer which was rejected by SDP.
- The court found Kyrene liable for breach of contract, but denied SDP’s request for specific performance and found in favor of Kyrene on other claims.
- Both parties moved for attorney fees, triggering analysis under the PSA, Arizona statute § 12-341.01(A), and relevant procedural rules regarding "prevailing party" status.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who is the prevailing party for fees post-October 13, 2022 | SDP claims it should be the prevailing party as it won on breach of contract | Kyrene argues it is prevailing due to its better-than-judgment Rule 68 offer | Kyrene is prevailing party from Oct. 13, 2022 onward |
| Who is the prevailing party before October 13, 2022 | SDP argues it achieved its litigation objectives | Kyrene claims success defending some claims and offers made | No clear prevailing party; each bears its own fees pre-10/13/22 |
| Whether Kyrene’s Rule 68 offer was illusory due to tenant leases | SDP argues Kyrene could not convey as required due to Queen’s Bowl lease | Kyrene asserts offer was valid; evidence lease could be bought out | Court finds offer was valid, not illusory |
| Whether LA Laser can recover attorneys’ fees based on promissory estoppel | LA Laser says its claim arises out of a contract | SDP says LA Laser isn’t a party to the PSA and statute does not cover such claims | Court holds LA Laser not entitled to fees |
Key Cases Cited
- Schwartz v. Farmers Ins. Co. of Ariz., 166 Ariz. 33 (fee awards under § 12-341.01 are discretionary with trial court)
- Associated Indem. Corp. v. Warner, 143 Ariz. 567 (reiterating discretion in fee awards)
- American Power Products, Inc. v. CSK Auto, Inc., 242 Ariz. 364 (defines "prevailing party" status where a Rule 68 offer is made and rejected)
- Berry v. 352 E. Virginia, L.L.C., 228 Ariz. 9 (partial success may qualify a party as prevailing for fees)
- Clean Harbors Env't Servs., Inc. v. 96-108 Pine St. LLC, 286 A.3d 838 (no fee award when neither party is prevailing)
- Double AA Builders, Ltd. v. Grand State Const. L.L.C., 210 Ariz. 503 (fee statute does not cover promissory estoppel claims)