Court Opinion

ID: 9959401
Source: CourtListenerOpinion
Date Created: 2024-04-11 17:02:35.832049+00
Date Added: 2024-06-11T08:18:38.144418
License: Public Domain

NOTICE: NOT FOR OFFICIAL PUBLICATION.
  UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
                  AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

                                     IN THE
              ARIZONA COURT OF APPEALS
                                 DIVISION ONE

  STACIE L. MARTINEZ and EDWARD MARTINEZ, a married couple,
                Plaintiffs/Appellants/Cross-Appellees,

                                         v.

                           HUBERT SCOTT BLAKE,
                       Defendant/Appellee/Cross-Appellant

                              No. 1 CA-CV 23-0398
                                FILED 4-11-2024

            Appeal from the Superior Court in Yavapai County
                         No. P1300CV202100609
               The Honorable John David Napper, Judge

    AFFIRMED IN PART; VACATED AND REMANDED IN PART

                                    COUNSEL

Goldberg & Osborne LLP, Phoenix
By John A. Musacchio, Marc A. Kamin
Counsel for Plaintiffs/Appellants/Cross-Appellees

O’Connor & Dyet, P.C., Tempe
By Andres Chagolla III, Shane P. Dyet
Counsel for Defendant/Appellee/Cross-Appellant
                       MARTINEZ, et al. v. BLAKE
                         Decision of the Court

                      MEMORANDUM DECISION

Judge D. Steven Williams delivered the Court’s decision, in which
Presiding Judge Daniel J. Kiley and Judge Kent E. Cattani joined.

W I L L I A M S, Judge:

¶1             Stacie and Edward Martinez appeal the superior court’s grant
of summary judgment on their tort claims against Hubert Scott Blake, as
well as its award of costs. Blake cross-appeals the denial of his request for
attorneys’ fees. Because the Martinezes failed to present any evidence to
establish an essential element of their claims, we affirm the grant of
summary judgment. We also affirm the court’s denial of Blake’s request for
attorneys’ fees because this action did not arise out of contract for purposes
of A.R.S. § 12-341.01. We vacate, however, the court’s award of all of Blake’s
requested costs, many of which do not qualify as taxable costs under A.R.S.
§ 12-332, and remand for further proceedings consistent with this decision.

           FACTUAL AND PROCEDURAL BACKGROUND

¶2           While moving out of a rental property Blake owned, Stacie
stepped onto wooden stairs leading from a raised porch to the ground.1 As
she descended, one of the steps gave way and Stacie fell through, fracturing
her ankle.

¶3             The Martinezes filed a complaint against Blake, alleging he
failed to properly maintain the rental property in a reasonably safe
condition, causing them injury (raising claims of negligence, premises
liability, breach of the warranty of habitability, and loss of consortium).
Blake denied liability and moved for summary judgment, arguing, among
other things, that the Martinezes had failed to produce any evidence that a
premises defect existed when they took possession of the rental property
six months before the incident or that he otherwise had reason to know of
any purported defect. In support of his motion, Blake pointed to the
Martinezes’ deposition testimony that they were unaware of a defect before
Stacie fell through the step. In response, the Martinezes countered that
Blake owed them, as month-to-month tenants, a continuing duty to inspect

1       For clarity, we respectfully refer to Stacie and Edward Martinez by
their first names.

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                       MARTINEZ, et al. v. BLAKE
                         Decision of the Court

and maintain the premises in a safe condition throughout their tenancy.
They also asserted that contested material facts concerning whether Blake
knew or had reason to know of an allegedly defective step precluded
summary judgment.

¶4            After briefing and oral argument, the superior court found the
Martinezes had failed to present any evidence that Blake “was aware of or
suspected any unsafe condition needing repair.” Given that finding, the
court determined Blake did not breach the duty of care he owed as a
landlord to his tenants.

¶5           The Martinezes moved for reconsideration, which the
superior court denied. The court then entered final judgment in Blake’s
favor, awarding him, over objection, all requested costs ($5,496.64) but
denying his application for attorneys’ fees.

¶6           The Martinezes timely appealed and Blake timely
cross-appealed. We have jurisdiction over this appeal under Article 6,
Section 9, of the Arizona Constitution, and A.R.S. §§ 12-120.21 and
-2101(A)(1).

                              DISCUSSION

    I.    Entry of Summary Judgment

¶7             The Martinezes challenge the superior court’s grant of
summary judgment on their tort claims, asserting the court improperly
invaded the province of a jury by making a factual determination that Blake
did not breach the duty of care he owed them.2 As part of their evidentiary
argument, the Martinezes assert that the court improperly (1) disregarded
their photographic evidence of the subject step, and (2) faulted them for
failing to prove “what caused the step to fail” despite uncontroverted
evidence that Blake “disposed of [the step] approximately one week after
Stacie’s injury.”

2      Notably, the Martinezes do not contest the superior court’s summary
judgment ruling on their claim for breach of the warranty of habitability.
See Torrez v. Knowlton, 205 Ariz. 550, 552, ¶ 3 n.1 (App. 2003) (determining
an appellant abandoned any argument that the superior court improperly
granted summary judgment on one claim when, on appeal, appellant only
challenged summary judgment on a different claim).

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                         MARTINEZ, et al. v. BLAKE
                           Decision of the Court

¶8             “We review de novo [a superior] court’s application of the law
and its determination whether genuine issues of material fact preclude
summary judgment.” State Comp. Fund v. Yellow Cab Co. of Phx., 197 Ariz.
120, 122, ¶ 5 (App. 1999); see also Ariz. R. Civ. P. 56(a) (“The court shall grant
summary judgment if the moving party shows that there is no genuine
dispute as to any material fact and the moving party is entitled to judgment
as a matter of law.”). Summary judgment “should be granted if the facts
produced in support of the claim or defense have so little probative value,
given the quantum of evidence required, that reasonable people could not
agree with the conclusion advanced by the proponent of the claim or
defense.” Orme Sch. v. Reeves, 166 Ariz. 301, 309 (1990); see also
Grafitti-Valenzuela ex rel. Grafitti v. City of Phoenix, 216 Ariz. 454, 457, ¶ 7
(App. 2007) (“For a claim or defense to withstand a motion for summary
judgment and be presented to a jury, the proponent of the claim or defense
must present evidence from which a reasonable jury could find, directly or
by inference, that the probabilities favor the proponent.”) (citation omitted).
Under this standard, a “scintilla” of evidence that creates the “slightest
doubt” about the facts is insufficient to preclude summary judgment, but
“[i]f the evidence would allow a jury to resolve a material issue in favor of
either party, summary judgment is improper.” Id.

¶9            “To establish a claim for negligence, a plaintiff must prove
four elements: (1) a duty requiring the defendant to conform to a certain
standard of care; (2) a breach by the defendant of that standard; (3) a causal
connection between the defendant’s conduct and the resulting injury; and
(4) actual damages.” Gipson v. Kasey, 214 Ariz. 141, 143, ¶ 9 (2007); see also
McMurtry v. Weatherford Hotel, Inc., 231 Ariz. 244, 252, ¶ 22 (App. 2013)
(explaining a plaintiff must put forward evidence establishing all the
elements of actionable negligence to survive a motion for summary
judgment on a premises liability claim); Barnes v. Outlaw, 192 Ariz. 283, 286
(1998) (“[B]ecause loss of consortium is a derivative claim, all elements of
the underlying cause must be proven before the claim can exist.”) (citation
omitted). If a plaintiff fails to provide evidence to support each of these
requisite elements, the defendant is entitled to summary judgment. See
Orme Sch., 166 Ariz. at 310 (“If the party with the burden of proof on the
claim or defense cannot respond to the motion [for summary judgment] by
showing that there is evidence creating a genuine issue of fact on the
element in question, then the motion for summary judgment should be
granted.”).

¶10           “Whether a duty is owed is a legal question decided by the
court.” Grafitti-Valenzuela ex rel. Graffiti, 216 Ariz. at 457, ¶ 8. A landlord
owes a duty of reasonable care to inspect rental premises “when he has reason

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                         MARTINEZ, et al. v. BLAKE
                           Decision of the Court

to suspect” a defect exists at the time the tenant takes possession. Piccola By
& Through Piccola v. Woodall, 186 Ariz. 307, 310 (App. 1996) (emphasis
added) (quoting Cummings v. Prater, 95 Ariz. 20, 26 (1963)). This duty of care
continues “throughout the lease period,” requiring the landlord “to
maintain [the] premises free from ‘unreasonably dangerous’
instrumentalities that could potentially cause injury.” McLeod By & Through
Smith v. Newcomer, 163 Ariz. 6, 8 (App. 1989) (quoting Presson v. Mountain
States Props., Inc., 18 Ariz. App. 176, 178 (1972)). Notably, actual knowledge
of a dangerous condition is not required to trigger the duty; rather, “[t]he
duty to inspect arises when the landlord ‘has reason to suspect’ a defect.”
Piccola By & Through Piccola, 186 Ariz. at 311 (emphasis added) (citation
omitted). In other words, mere “[i]nformation from which a reasonable
person could infer that a dangerous condition exists is sufficient to impose
liability.” Id.; see also Coventry Homes, Inc. v. Scottscom P’ship, 155 Ariz. 215,
219 (App. 1987) (explaining the phrase “’reason to know’ . . . denote[s] the
fact that the actor has information from which a person of reasonable
intelligence . . . would infer that the fact in question exists, or that such
person would govern his conduct upon the assumption that such fact
exists”) (quoting Restatement (Second) of Torts § 12(1) (1965)).

¶11           Here, the superior court correctly found that Blake owed a
continuing duty of care to the Martinezes throughout their tenancy. The
question is whether the Martinezes presented admissible evidence
substantiating their claim that Blake’s conduct fell below (breached) that
standard of care.

¶12            Determining whether a defendant acted reasonably under the
circumstances usually involves “factual inquiries,” which “are reserved for
[a] jury.” Gipson, 214 Ariz. at 144, ¶ 16. Nonetheless, summary judgment is
“appropriate if no reasonable juror could conclude that the standard of care
was breached.” Id. at 143, ¶ 9 n.1. While foreseeability may not be used to
determine whether a duty exists to a particular plaintiff, courts may
consider foreseeability in assessing breach. Id. at 144, ¶¶ 16–17; see also
Grafitti-Valenzuela ex rel. Grafitti, 216 Ariz. at 458, ¶ 14 (“The scope and
nature of the conduct required to satisfy a duty to keep premises reasonably
safe is limited to keeping them safe from . . . foreseeable harms.”).

¶13          To support their contention that a genuine dispute of material
fact concerning Blake’s knowledge or reason to know of a step defect
precluded summary judgment, the Martinezes rely on photographic
evidence and deposition testimony they produced. We first consider the
photographic evidence. Attached to their response in opposition to Blake’s
motion for summary judgment, the Martinezes submitted two

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                       MARTINEZ, et al. v. BLAKE
                         Decision of the Court

photographic exhibits labeled “Plaintiffs’ Exhibit B Photograph Depicting
Steps (Blake 000024)” and “Plaintiffs’ Exhibit D Photograph of Step (Blake
000026).” In a supplemental response, the Martinezes attached another
photographic exhibit labeled “Plaintiffs’ Exhibit I Photograph of Broken
Step.” Blake objected to all three photographic exhibits as generally
inadmissible and raised a specific objection to the “Photograph of Broken
Step” exhibit, noting it was “not accompanied by an affidavit” and
“lack[ed] foundation.” Without outlining its reasoning, the superior court
found the “Photograph of Broken Step” exhibit inadmissible. The court did
not address Blake’s objection to the other photographic exhibits or
otherwise reference them in its summary judgment analysis.

¶14           While we review a summary judgment ruling de novo, the
superior court has discretion to determine the admissibility of evidence in
a summary judgment proceeding. See United Ins. Co. v. Lutz, 227 Ariz. 411,
415, ¶ 19 (App. 2011) (citing Mohave Elec. Coop. v. Byers, 189 Ariz. 292, 301
(App. 1997)). “To be admissible, a photograph must be a reasonably faithful
representation of the object depicted.” Lohmeier v. Hammer, 214 Ariz. 57, 61,
¶ 8 (App. 2006). Although “the individual who took the photographs” need
not verify their accuracy, a verifying witness must “attest that the
photographs accurately portray the scene or object depicted.” Id.

¶15           Despite Blake’s objections, the Martinezes failed to provide a
verified statement from a witness attesting to the accuracy of the
photographic exhibits. For the first time on appeal, they contend that the
record nonetheless contains sufficient foundation for the photographs
because counsel questioned Stacie and Blake about the photographs during
their depositions. See Odom v. Farmers Ins. Co. of Ariz., 216 Ariz. 530, 535,
¶ 18 (App. 2007) (“[A]rguments raised for the first time on appeal are
untimely and deemed waived.”).

¶16            “To satisfy the requirement of authenticating or identifying
an item of evidence, the proponent must produce evidence sufficient to
support a finding that the item is what the proponent claims it is.” Ariz. R.
Evid. 901(a). A proponent of evidence may satisfy foundation requirements
with identification testimony of a witness who has knowledge of the
exhibit. Ariz. R. Evid. 901(b)(1).

¶17           Here, facing a challenge to the admissibility of their
photographic evidence, the Martinezes needed to lay foundation for the
exhibits, either by submitting a verified statement or, at a minimum,
directing the court to the specific witness testimony they contend attested
to the accurate portrayal of the photographs. They could not meet their

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                         MARTINEZ, et al. v. BLAKE
                           Decision of the Court

burden as the proponent of the evidence by simply remaining silent in the
face of Blake’s objections and relying on the superior court to comb through
the record and piece together the portions of the deposition testimony
relating to the exhibits. See Tilley v. Delci, 220 Ariz. 233, 236, ¶ 10 (App. 2009)
(“In deciding a motion for summary judgment, the [superior] court
considers those portions of the verified pleadings, deposition, answers to
interrogatories and admissions on file which are brought to the court’s
attention by the parties.”) (emphasis in original, citation omitted). Given the
Martinezes’ failure to lay direct foundation for the photographic exhibits,
despite repeated objections, the court did not abuse its discretion by
disregarding their photographic evidence.

¶18            Moreover, the photographic evidence does not create a
genuine dispute of material fact concerning notice. A photograph of the
broken step, necessarily taken after Stacie sustained her injury, does not
provide any evidence of pre-incident notice to Blake. Simply put, the
disrepair reflected in the photograph of the broken step does not support
the Martinezes’ contention that Blake knew or should have known of a step
defect. As to the photographs taken before the incident, Stacie testified that
she inadvertently photographed the wooden steps while she attempted to
photograph “other things,” not because she suspected a defect. In fact, it is
uncontroverted that the Martinezes had no notice of a step defect, either
from the photographs or their repeated exposure to the appearance of the
steps throughout their tenancy. While the pre-incident photographs
arguably depict weathered steps, the Martinezes’ unwavering contention
that they had no notice of a step defect belies their characterization of the
wooden stairs’ condition before the incident as “visibly poor.”

¶19           Turning to the deposition testimony, as noted, each party
denied knowledge or notice of a step defect. Stacie testified that once she
and Edward moved into the rental property, they placed a stationary gate
across the top of the wooden stairs to pen in their dogs. With that barrier,
she explained, they “didn’t really use” the subject wooden steps other than
while moving in and out of the rental property. Accordingly, they never
discovered or reported any concerns about the wooden steps before she
sustained her injury. When questioned about the day of the incident, Stacie
recounted that she drove to the rental property and ascended the wooden
steps to reach the front door. She denied hearing any unusual creaking or
other noises suggesting buckling as she climbed up the stairs. After
unlocking the front door, Stacie returned to the stairs and proceeded down
the steps “when [her] foot went through” a stair and she “hit the ground.”

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                        MARTINEZ, et al. v. BLAKE
                          Decision of the Court

¶20           Largely consistent with Stacie’s testimony, Edward
acknowledged that he and others used the wooden steps while moving out
of the rental property. Like Stacie, Edward testified that he never noticed
any unusual cracking or creaking during use of the wooden steps.

¶21           For his part, Blake denied any indication of a step defect
before the incident. When asked whether he had ever repaired the steps
before the incident, Blake responded, “I might have tightened in a screw or
two” on the handrail, but he denied any repair work on the actual steps.
When asked whether he had a duty to “routine[ly] inspect” the rental
property, Blake testified that he believed landlords had such a duty and
asserted that he fulfilled that duty by visually inspecting the property
“[f]rom a distance,” noting that both he and his mother lived in neighboring
homes. Blake also testified that he used the wooden steps to reach the front
entrance of the rental property when collecting rent from the Martinezes,
stating “[t]here was nothing wrong” with the stairs when he used them.

¶22           Pointing to Blake’s deposition testimony conceding that he
had a duty to routinely inspect the rental property, independent of any
knowledge or suspicion of a defect or dangerous condition, the Martinezes
argue the issue of breach should have been submitted to a jury. But the
scope of a landlord’s duty is a question of law for the court, not a factual
matter that may be determined by stipulation or party admissions. See, e.g.,
Word v. Motorola, Inc., 135 Ariz. 517, 520 (1983) (“Parties cannot stipulate as
to the law applicable to a given state of facts and bind the court.”) (citation
omitted). To be clear, a landlord owes a duty of reasonable care to inspect
rental premises when he has reason to suspect a defect exists, not as a regular
course of procedure. Piccola By & Through Piccola, 186 Ariz. at 310 (citation
omitted).

¶23           Equally unfounded is the Martinezes’ contention that a
reasonable jury could infer that Blake breached his duty to maintain the
rental property in a safe condition because he failed to timely repair the
septic tank on the premises when it backed up. The Martinezes have not
cited any authority, and our research reveals none, holding that a landlord
may be found liable for breaching his duty to maintain safe premises and
cure dangerous defects, without knowledge or suspicion of a dangerous
condition, because he had knowledge and failed to timely repair a different,
nondangerous defect.

¶24          The evidence presented by the parties failed to establish any
genuine dispute of material fact sufficient to withstand summary judgment.
Considering the admissible evidence presented, no reasonable juror could

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                        MARTINEZ, et al. v. BLAKE
                          Decision of the Court

find that Blake knew of or had reason to suspect a step defect. See
Cummings, 95 Ariz. at 31–32 (“These facts taken with the depositions,
pleadings and affidavits show that no reasonable man could come to any
conclusion other than that there was no issue of fact to be tried.”). Because
the Martinezes failed to present any evidence to establish breach, the
superior court properly entered summary judgment in Blake’s favor.
Having determined, on this record, that no reasonable person could find
that Blake knew of or had reason to suspect a defective step, we need not
address the court’s additional determination that the Martinezes failed to
establish that the step was, in fact, defective.

   II.     Award of Costs

¶25            The Martinezes challenge the superior court’s award of costs,
contending that some of Blake’s requested costs are not authorized under
Arizona law. Specifically, the Martinezes contest the award of (1) $51.40 for
meal costs incurred during out-of-town travel for depositions, (2) $304.33
for mileage costs incurred for travel to depositions ($150.93) and a court
hearing ($153.40), (3) $1,485.34 for unspecified costs, “including travel,”
related to taking the Martinezes’ depositions, (4) $150.00 for the services of
a private investigator, (5) $378.99 for costs associated with obtaining
medical records, (6) $35.50 for unknown process server costs, and (7)
$2,885.00 for expert fees.

¶26            “By statute, a successful party to a civil action in Arizona is
entitled to recover ‘from his adversary all costs expended or incurred
therein unless otherwise provided by law.’” RS Indus., Inc. v. Candrian, 240
Ariz. 132, 137, ¶ 15 (App. 2016) (quoting A.R.S. § 12-341). “But the statutes
do not grant the prevailing party a right to recover every manner of
litigation expense.” Id. Instead, Arizona’s cost recovery statute, A.R.S.
§ 12-332, limits recovery to taxable costs - “expenses incurred for witness
fees, deposition expenses, certified copies, surety expenses, and other costs
incurred pursuant to an agreement between the parties.” Ahwatukee Custom
Ests. Mgmt. Ass’n, Inc. v. Bach, 193 Ariz. 401, 402, ¶ 6 (1999). We review de
novo “[w]hether a particular expenditure qualifies as a taxable cost.” Reyes
v. Frank’s Serv. and Trucking, LLC, 235 Ariz. 605, 608, ¶ 6 (App. 2014); see also
Ahwatukee Custom Ests. Mgmt. Ass’n, Inc., 193 Ariz. at 402, ¶ 7 (noting “the
legislature clearly defined which categories of litigation expenses a
prevailing party can recover from the opposing party” and “Arizona
decisions reflect a consistent refusal to expand the definition of taxable costs
beyond that provided by statute”).

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                        MARTINEZ, et al. v. BLAKE
                          Decision of the Court

¶27          Although Blake acknowledges that costs associated with
private investigative services, medical records, and experts are not
recoverable as enumerated taxable costs under A.R.S. § 12-332, he
nonetheless contends that these costs are recoverable under the parties’
rental agreement.

¶28           We review de novo issues of contract interpretation. Grosvenor
Holdings, L.C. v. Figueroa, 222 Ariz. 588, 593, ¶ 9 (App. 2009). The rental
agreement provides, in relevant part:

       If suit be brought to collect rent or damages, to cause eviction
       from said premises, or to collect the costs of repairs to or
       cleaning of said premises, Resident agrees to pay all costs of
       such action, including reasonable attorney fees as may be
       fixed by the court.

(Emphasis added.)

¶29            Given a plain reading, the rental agreement requires the
tenant to pay “all costs” incurred by the landlord in an action to collect rent,
damages, repair, or cleaning expenses from the tenant. Blake contends that
the provision also requires a tenant to pay “all costs” incurred by the
landlord to defend against a tort claim or any other action brought by the
tenant. Nothing in the express language of the lease agreement supports
such an interpretation. Moreover, by its terms the lease agreement purports
to require the tenant to pay “all costs” incurred in litigation with the
landlord irrespective of which party prevails. We will not construe the
contract in a manner leading to such an absurd result. See Roe v. Austin, 246
Ariz. 21, 27, ¶ 17 (App. 2018) (“[C]ourts must avoid an interpretation of a
contract that leads to an absurd result.”). Because the lease agreement does
not provide for an award of costs in a tort action brought by the tenant, it
does not authorize an award of costs here, and Blake may not recover
litigation expenses as costs without statutory authorization. Ahwatukee
Custom Ests. Mgmt. Ass’n, Inc., 193 Ariz. at 402, ¶ 6.

¶30           While A.R.S. § 12-332 “does not specify which litigation
expenses are taxable as costs of taking depositions,” appellate courts “have
construed the statute as permitting the recovery of fees for the court
reporter and transcripts, reasonable travel expenses for attorneys and court
reporters attending the deposition, and costs of copies of deposition
transcripts.” Reyes, 235 Ariz. at 608–09, ¶¶ 8–14 (internal quotation omitted)
(upholding the characterization of travel expenses incurred by attorneys
attending out-of-town depositions, whether in-state or out-of-state, as

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                         MARTINEZ, et al. v. BLAKE
                           Decision of the Court

taxable costs – including mileage expenses). Additionally, “a party may
recover costs it incurs in deposing an opposing party’s expert witness,” but
“the fees it pays its own expert witness are not recoverable.” RS Indus., Inc.,
240 Ariz. at 137, ¶ 16.

¶31           Applying A.R.S. § 12-332 here, Blake’s expenses for
out-of-town meals, travel to court hearings, investigative services, medical
records, and his own experts are not recoverable as taxable costs. The $35.50
service of process fee, however, is recoverable as a cost of “officers and
witnesses” under A.R.S. § 12-332(A)(1). Likewise, expenses for depositions
are generally recoverable, including travel, but here, Blake largely failed to
itemize any of those costs ($1,485.34), or otherwise substantiate his request.
Accordingly, we vacate the superior court’s award of costs and remand to
the court to determine the appropriate taxable costs consistent with this
decision.

   III.    Denial of Attorneys’ Fees Request

¶32          Blake cross-appeals the superior court’s denial of his request
for attorneys’ fees. He contends the court improperly found the case
“sound[ed] in tort and did not arise under the contract between the parties.”

¶33            First, Blake argues he “is entitled to attorneys’ fees under the
express terms of the lease [agreement].” As noted, supra ¶ 29, the plain
language of the lease agreement provides for an award of attorneys’ fees
and costs only in actions brought by the landlord against the tenant to collect
rent or damages, to cause eviction from the leased premises, or to collect
the costs of repairs or cleaning of the leased premises. Contrary to Blake’s
contention, the lease agreement does not authorize, much less mandate, an
attorneys’ fees award in an action brought by a tenant.

¶34            Second, Blake asserts he “is entitled to attorneys’ fees under
A.R.S. § 12-341.01.” Under A.R.S. § 12-341.01(A), a court may award
reasonable attorneys’ fees to the successful party in “any contested action
arising out of a contract.” “Whether a cause of action arises out of contract
is a question of law we review de novo.” Caruthers v. Underhill, 230 Ariz. 513,
526, ¶ 58 (App. 2012).

¶35            To determine whether a claim arises out of contract, we
consider “the nature of the action and the surrounding circumstances.”
Marcus v. Fox, 150 Ariz. 333, 335 (1986) (citation omitted). A tort claim arises
out of contract “only when the tort could not exist ‘but for’ the breach or
avoidance of contract.” Ramsey Air Meds, L.L.C. v. Cutter Aviation, Inc., 198
Ariz. 10, 15, ¶ 27 (App. 2000); see also Sparks v. Republic Nat. Life Ins. Co., 132

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                        MARTINEZ, et al. v. BLAKE
                          Decision of the Court

Ariz. 529, 543 (1982) (“The fact that the two legal theories are intertwined
does not preclude recovery of attorney’s fees under [A.R.S.] § 12-341.01(A)
as long as the cause of action in tort could not exist but for the breach of the
contract.”).

¶36            Here, Blake contends he is entitled to an attorneys’ fees award
because the Martinezes could not have brought their tort action but for the
lease agreement. Without question, the lease agreement provided the
foundation for the parties’ relationship, but to qualify for an award of
attorneys’ fees under A.R.S. § 12-341.01, that “contract must be the essential
basis of the action and not merely a factual predicate.” Caruthers, 230 Ariz.
at 526, ¶ 57.

¶37            In a tort action alleging a breach of a duty either implied by
law or based on statute—a duty other than that imposed by contract—the claim
does not arise out of contract for purposes of A.R.S. § 12-341.01(A). Id. In
other words, an action arises out of contract only when the contract serves
as the “essential basis of the action,” creating a duty of care that would not
exist but for the contract. Id.

¶38           In this case, the lease agreement provided the factual
predicate for the cause of action, but the Martinezes’ tort claims flowed out
of Blake’s common law and statutory duties to maintain the leased premises
in a safe manner, see A.R.S. § 33-1324 (requiring a landlord to make any
necessary repairs and maintain leased premises in a clean and safe
condition unless the parties specifically “agree in writing, supported by
adequate consideration, that the tenant perform the landlord’s duties”), not
from any duty imposed by contract. In fact, the lease agreement imposes no
duty of care on the landlord; instead, it imposes obligations only on the
tenants. Likewise, “[A.R.S. §] 12-341.01(A) is not applicable to a breach of
implied warranty of . . . habitability claim.” Sullivan v. Pulte Home Corp., 231
Ariz. 53, 62, ¶ 49 (App. 2012), vacated in part on other grounds by 232 Ariz.
344, 347, ¶ 15 (2013). Accordingly, Blake is not eligible for an award of
attorneys’ fees under A.R.S. § 12-341.01 for successfully defending against
the Martinezes’ claims.

                               CONCLUSION

¶39           For the foregoing reasons, we affirm the superior court’s grant
of summary judgment and denial of Blake’s request for attorneys’ fees but
vacate its award of costs and remand for a redetermination of costs
consistent with this decision. Blake requests his attorneys’ fees and costs on
appeal under A.R.S. §§ 12-341, -341.01, and -342. We deny his request.

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                       MARTINEZ, et al. v. BLAKE
                         Decision of the Court

Because each side prevailed in part, the parties shall bear their own costs
on appeal.

                          AMY M. WOOD • Clerk of the Court
                          FILED: AA

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