Sirrah Enterprises LLC v. Wayne Wunderlich Et Ux
242 Ariz. 542
| Ariz. | 2017Background
- Wayne and Jacqueline Wunderlich hired Sirrah Enterprises to build a basement; a dispute arose over alleged construction defects and unpaid contract balance.
- Sirrah sued for unpaid contract amount; the Wunderlichs counterclaimed for breach of the implied warranty of workmanship and habitability (the Implied Warranty) and other claims.
- Jury awarded Sirrah some contract damages but found for the Wunderlichs on the Implied Warranty, awarding them $297,782; the trial court found the Wunderlichs prevailing and awarded attorney fees under the contract’s fee clause and A.R.S. § 12-341.01.
- The court of appeals affirmed the fee award based on the contractual fee provision; Sirrah sought review, arguing the Implied Warranty is imposed by law and thus not a contract term that could trigger a contractual fee clause or § 12-341.01.
- The Arizona Supreme Court granted review to resolve whether recovery of attorney fees is authorized when the prevailing party succeeds on a claim for breach of the Implied Warranty.
Issues
| Issue | Sirrah's Argument | Wunderlichs' Argument | Held |
|---|---|---|---|
| Whether a successful claim for breach of the implied warranty of workmanship and habitability permits recovery of attorney fees under (1) a contractual fee provision or (2) A.R.S. § 12-341.01 | The Implied Warranty is imposed by law, not a contract term, so a breach claim does not ‘‘enforce any term or provision’’ of the contract and thus cannot trigger the contract fee clause or § 12-341.01 | The law imputes the Implied Warranty into the construction contract, making it a contract term; a breach claim therefore arises out of the contract and authorizes fees under the contract clause or § 12-341.01 | The Implied Warranty is a term imputed into the express construction contract; breach sounds in contract. Prevailing party may recover fees under a controlling contractual fee provision and, alternatively, under § 12-341.01. |
Key Cases Cited
- Lofts at Fillmore Condo. Ass’n v. Reliance Commercial Constr., Inc., 218 Ariz. 574 (recognizing the implied warranty of workmanship and habitability and that it runs to subsequent purchasers)
- Woodward v. Chirco Construction Co., Inc., 141 Ariz. 514 (holding the implied warranty is imputed into the construction contract and breach sounds in contract)
- Richards v. Powercraft Homes, Inc., 139 Ariz. 242 (describing the implied warranty as imposed by law to protect purchasers)
- Barmat v. John & Jane Doe Partners A–D, 155 Ariz. 519 (distinguishing claims based on implied‑in‑law contracts and explaining limits on fee recovery under § 12-341.01)
- Wells Fargo Bank v. Ariz. Laborers, Teamsters & Cement Masons Local No. 395 Pension Tr. Fund, 201 Ariz. 474 (noting duties imputed by law are as much part of a contract as express terms)