A.R.S. 12-341.01(A) Interpretation

In In re Naarden Trust, 195 Ariz. 526, 530,18, 990 P.2d 1085, 1089 (App. 1999) the Court held that a trustee who successfully defended against a breach of fiduciary duty claim could not recover attorney's fees under § 12-341.01(A).

In Naarden, an express agreement created the trust. Id. at 528,9, 990 P.2d 1087. Nonetheless, the Court concluded:

The duties of a trustee stem from duties implied by law because of the relationships created by the trust, and that such relationships are not contractual.

Therefore, suits that arise out of a trust relationship are not suits arising out of a contract for purposes of A.R.S. section 12-341.01(A). Id. at 530,18, 990 P.2d at 1089.

In earlier cases involving breach of a fiduciary duty implied by law, this court approved fee awards under A.R.S. § 12-341.01(A). See Trebilcox v. Brown & Bain, P.A., 133 Ariz. 588, 653 P.2d 45 (App. 1982); Lake Havasu Cmty. Hosp., Inc. v. Ariz. Title Ins. & Trust Co., 141 Ariz. 363, 687 P.2d 371 (App. 1984).

But the holding that § 12-341.01(A) applied to these professional malpractice claims was explicitly rejected in Barmat. 155 Ariz. at 524, 747 P.2d at 1223.

In Jerman v. O'Leary, this court held that general partners of a limited partnership who successfully defended from a claim of breach of fiduciary duty could be awarded attorney's fees under § 12-341.01(A). 145 Ariz. 397, 403, 701 P.2d 1205, 1211 (App. 1985).

That case not only predated Barmat, but the explicit terms of a partnership agreement were essential to the result.

In Barmat v. John and Jane Doe Partners A-D, 155 Ariz. 519, 520, 747 P.2d 1218, 1219 (1987), the Arizona Supreme Court considered whether a successful party may recover attorneys' fees in a malpractice action in which a contractual relationship also had existed.

The court acknowledged that some "professionals owe special duties to their clients" that are implied by law rather than by contractual terms.

"Breaches of those duties are generally recognized as torts" and thus actions to recover for such breaches are not actions "arising out of contract." Id.

Accordingly, A.R.S. § 12-341.01(A) did not authorize an award of attorneys' fees. Id.

The Court approved the view expressed in Lewin v. Miller Wagner & Co., Ltd., 151 Ariz. 29, 725 P.2d 736 (App. 1986), that "where the implied contract does no more than place the parties in a relationship in which the law then imposes certain duties recognized by public policy, the gravamen of the subsequent action for breach is tort, not contract." Barmat, 155 Ariz. at 523, 747 P.2d at 1222.

In Barmat, the court distinguished contractual duties created by the express or implied assent of the parties and those duties "'created by the law without regard to expressions of assent.'" Id. at 521, 747 P.2d at 1220.