377 P.3d 360
Ariz. Ct. App.2016Background
- In 2006 Sirrah contracted to build a basement and exterior walls for the Wunderlichs; contract price was cost plus 15% and included a clause awarding attorneys’ fees to the prevailing party and a 1.5% per month contractual interest rate on amounts due.
- Sirrah invoiced during construction; the Wunderlichs withheld payments, alleging defective concrete work and improperly constructed walls. Sirrah completed work and sued for unpaid invoices; the Wunderlichs counterclaimed for breach of contract and breach of the implied warranty of workmanship and habitability.
- After trial the jury awarded Sirrah $31,374 on its breach-of-contract claim for unpaid balances, and awarded the Wunderlichs $297,782 on their breach-of-implied-warranty claim (majority for demolition, repair, reconstruction).
- The trial court awarded the Wunderlichs attorneys’ fees and costs as the prevailing party under the contract and A.R.S. § 12–341.01, and denied Sirrah prejudgment interest on its award, ruling the request untimely.
- On appeal the court affirmed the fee award (finding the implied warranty is a term of the construction contract and the Wunderlichs prevailed under the totality test) but reversed the denial of prejudgment interest, holding Sirrah had timely sought and was entitled to contractual interest at 1.5% per month from the verdict date.
Issues
| Issue | Plaintiff's Argument (Sirrah) | Defendant's Argument (Wunderlichs) | Held |
|---|---|---|---|
| Whether Wunderlichs are entitled to attorneys’ fees under the contract or A.R.S. § 12–341.01 for their implied-warranty claim | Implied-warranty claim did not enforce a contract term, so fees under contract provision do not apply; statutory fees preempted by contractual fee clause | Implied warranty is imputed into the express construction contract, so their breach-of-warranty claim enforces the contract and fees are recoverable under the contract (and statute as applicable) | Held: Implied warranty is part of the construction contract; Wunderlichs eligible for contractual fees; court did not err awarding fees under the contract |
| Which party is the prevailing party for fee award given mixed verdicts | Sirrah contends it prevailed on enforcement of the contract (recovered unpaid balance) and thus should be prevailing party | Wunderlichs argue they obtained vastly greater relief on the warranty claim (repair/rebuild costs) and under a totality/%-of-success test are the prevailing party | Held: Trial court reasonably found Wunderlichs prevailing under the totality of the litigation test; fee award affirmed |
| Whether Sirrah was entitled to prejudgment interest on its verdict amount and whether its request was timely | Sirrah says it timely requested prejudgment interest throughout and the contract mandates 1.5% per month interest on amounts due; the jury liquidated the amount on verdict date so prejudgment interest accrues from then | Wunderlichs argued the amount was unliquidated or itemization lacking; also asserted waiver by Sirrah for not making certain trial motions | Held: Reversed trial court — Sirrah timely requested interest and is entitled as a matter of right to contractual prejudgment interest (1.5%/month) from the verdict date when amount became liquidated |
| Appellate attorneys’ fees entitlement | Sirrah seeks fees on appeal for prevailing on prejudgment interest | Wunderlichs seek appellate fees as prevailing party on appeal | Held: Sirrah denied appellate fees (not overall prevailing on appeal); Wunderlichs awarded reasonable appellate fees and costs as prevailing party on appeal |
Key Cases Cited
- Woodward v. Chirco Constr. Co., Inc., 141 Ariz. 514 (Ariz. Ct. App.) (implied warranty of workmanship and habitability is imputed into construction contracts)
- Sullivan v. Pulte Home Corp., 231 Ariz. 53 (Ariz. Ct. App.) (distinguishes claims by subsequent buyers based on implied-in-law warranties from claims enforcing express contracts)
- Berry v. 352 E. Virginia, L.L.C., 228 Ariz. 9 (Ariz. Ct. App.) (trial court may use totality or percentage-of-success test to determine prevailing party)
- Precision Heavy Haul, Inc. v. Trail King Indus., Inc., 224 Ariz. 159 (Ariz. Ct. App.) (party with a liquidated claim is entitled to prejudgment interest as a matter of right)
- Scottsdale Ins. Co. v. Cendejas, 220 Ariz. 281 (Ariz. Ct. App.) (definition and timing for when a claim is liquidated and interest can be calculated)