Kennedy v. Linda Brock Auto. Plaza, Inc
In Kennedy v. Linda Brock Auto. Plaza, Inc., 175 Ariz. 323, 856 P.2d 1201 (App. 1993), Kennedy leased a vehicle from Brock. Id. at 324, 856 P.2d at 1202.
The vehicle was defective, and Kennedy sued Brock under Arizona's Lemon Law, A.R.S. 44-1261 through 44-1265, which provides: "If a new motor vehicle does not conform to all applicable express warranties . . . the manufacturer, its agent or its authorized dealer shall make those repairs that are necessary to conform the motor vehicle to such express warranties." A.R.S. 44-1262; Kennedy, 175 Ariz. at 324, 326, 856 P.2d at 1202, 1204.
The trial court dismissed Brock as a defendant and granted its request for attorneys' fees under 12-341.01(A) against Kennedy. Kennedy, 175 Ariz. at 324, 856 P.2d at 1202. On appeal, this court reversed the award of attorneys' fees, finding the action did not "arise out of contract." Id. at 325-26, 856 P.2d at 1203-04.
The court held that, although a claim for relief under the Lemon Law "presupposes an express contract because it is based on express warranties," Brock had disclaimed the manufacturer's express warranties in its lease agreement with Kennedy. Id. at 326, 856 P.2d at 1204.
The court concluded that the action therefore did not arise out of the lease agreement but, rather, the "essential basis of the action was a statutory remedy designed to protect purchasers of new vehicles when defects cannot be corrected to comply with express warranties made by manufacturers." Id. at 325, 856 P.2d at 1203.
Because the basis of the action was statutory rather than contractual, the court found that no fees were permitted under 12-341.01(A). Id. at 325-26, 856 P.2d at 1203-04.