Designee v. Honda Aircraft

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

DESIGNEE LLC, Plaintiff/Appellant/Cross-Appellee,

v.

HONDA AIRCRAFT COMPANY LLC, Defendant/Appellee.

TOWER INDUSTRIES LLC, Defendant/Appellee/Cross-Appellant.

No. 1 CA-CV 19-0592
FILED 6-23-2020

Appeal from the Superior Court in Maricopa County
No. CV 2017-009441
The Honorable Roger E. Brodman, Judge

AFFIRMED

COUNSEL

Ahwatukee Legal Office PC, Phoenix
By David L. Abney
Counsel for Plaintiff/Appellant/Cross-Appellee
Bowman and Brooke LLP, Phoenix
By Travis M. Wheeler, David Lundmark
Counsel for Defendant/Appellee, Honda Aircraft LLC

Fredenberg Beams LLC, Phoenix
By Daniel E. Fredenberg, Christian CM Beams, Fredric D. Bellamy
Counsel for Defendant/Appellee/Cross-Appellant, Tower Industries

MEMORANDUM DECISION

Judge Jennifer B. Campbell delivered the decision of the Court, in which
Presiding Judge Paul J. McMurdie and Judge Kent E. Cattani joined.

C A M P B E L L, Judge:

Designee, LLC (“Designee”) appeals from the superior court’s
judgment in favor of Honda Aircraft Company, LLC (“Honda”) and Tower
Industries, LLC (“Tower”) (collectively, “the Defendants”). Tower cross-
appeals from the court’s denial of its request for attorneys’ fees. For the
following reasons, we affirm.

BACKGROUND

In October 2006, Designee contracted with Honda to purchase
a HondaJet Aircraft (“the aircraft”), still in development, for a base price of
$3,650,000, subject to escalators. Designee was required to pay four deposits
over time totaling $600,000, with the balance due at delivery.

The contract required Honda to provide Designee with the
aircraft’s final specifications, and delivery was tentatively set for 2012. As
relevant here, Designee’s deposit payments were non-refundable unless
Honda changed the aircraft’s performance specifications without
Designee’s approval.

At the same time, the contract permitted Honda to cancel if
Designee failed to make any of the scheduled payments or refused delivery
and allowed Honda to retain all deposits as liquidated damages.

Honda was unable to deliver the aircraft in 2012, and the
delay stretched into years. In 2015, Designee told Tower, the Honda dealer,

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that it no longer needed the plane and intended to sell it upon delivery.
Tower replied that the aircraft’s current market price far exceeded
Designee’s contract price, so Designee would not lose money if it decided
to sell the plane. According to Designee, Tower also offered to buy the
aircraft from Designee for at least the contract price if Designee did not
want the aircraft when it was finally delivered.1

In 2016, Honda changed the aircraft’s performance
specifications, which arguably would have allowed Designee to cancel the
contract and receive a refund of its deposits. But Designee did not assert its
right to cancel the contract, and instead made its third deposit.

Honda finally announced it would deliver the aircraft in July
2017 and made demand for the fourth deposit payment. When that date
arrived, Honda sent Designee a notice of default for failing to make the
fourth payment. In response, Designee notified Honda that it would not
take delivery of the aircraft and demanded the return of its $425,000 in
deposits. At that point, Honda notified Designee it was terminating the
contract and keeping the $425,000 as liquidated damages.

Meanwhile, Designee filed a lawsuit against Honda and
Tower, alleging that: (1) Honda “implicitly refused to reasonably cooperate
in any attempted sale” of the aircraft to a third party (breach of the covenant
of good faith and fair dealing); (2) Designee detrimentally relied on Tower’s
offer to buy the aircraft for at least the purchase contract price (promissory
estoppel); (3) the Defendants engaged in unfair and deceptive trade
practices (unfair and deceptive trade practices); (4) the Defendants
conspired against Designee (conspiracy); (5) the purchase contract’s
liquidated damages provision is an unenforceable penalty and Designee is
entitled to a return of the $425,000 in deposits (restitution); and (6) Honda
unfairly retained the deposit money (unjust enrichment). In response,
Honda filed a cross-complaint against Designee for breach of contract.

Eighteen months into the litigation, the parties cross-moved
for summary judgment (Honda sought summary judgment both on
Designee’s complaint and its counterclaim for breach of contract). After

1 In its second amended complaint, Designee alleged that Cutter
Aviation Southwest, LLC (“Cutter”) and Tower both offered to buy the
aircraft for Designee’s purchase price. Designee later stipulated to
dismissing Cutter from the case with prejudice.

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briefing and oral argument, the superior court granted the Defendants’
motions for summary judgment and denied Designee’s motion.

Having prevailed, Tower applied for its attorneys’ fees, and
both Tower and Honda requested their taxable costs. Finding Tower was
not entitled to an award of attorneys’ fees under any of the claims brought
by Designee (promissory estopped, unfair and deceptive trade practices,
and conspiracy), the superior court denied Tower’s request for attorneys’
fees but awarded the Defendants their taxable costs. Designee and Tower
timely appealed.

DISCUSSION

I. Summary Judgment Rulings

Designee raises numerous challenges to the superior court’s
summary judgment rulings. When reviewing a superior court’s grant or
denial of summary judgment, we view the facts and the reasonable
inferences to be drawn from those facts in the light most favorable to the
non-moving party. Normandin v. Encanto Adventures, LLC, 246 Ariz. 458,
460, ¶ 9 (2019). “We determine de novo whether any genuine issues of
material fact exist and whether the [superior] court correctly applied the
law.”2 Diaz v. Phoenix Lubrication Service, Inc., 224 Ariz. 335, 338, ¶ 10 (App.
2010); 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.”). In so doing, we will affirm the court’s rulings if they are correct
for any reason. Logerquist v. Danforth, 188 Ariz. 16, 18 (App. 1996).

A. Honda’s Contract Counterclaim and Designee’s Claims for
Unjust Enrichment and Restitution

Arguing the superior court improperly found the purchase
contract’s liquidated damages provision was enforceable as a matter of law,
Designee contends its challenge to the reasonableness of the liquidated
damages raised a question of fact that should have been submitted to a jury.
See Green Park Inn, Inc. v. Moore, 562 S.E.2d 53, 59 (N.C. App. 2002)
(“Whether a liquidated damages amount is a reasonable estimate of the
damages that would likely result from a default is a question of fact.”).
Whether a contract provides for liquidated damages or a penalty is a
question of law we review de novo. See Seven Seventeen HB Charlotte Corp.

2 The parties agree that the contract’s choice of law provision controls
and North Carolina law governs the purchase agreement.

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v. Shrine Bowl of the Carolinas, Inc., 641 S.E.2d 711, 714 (N.C. App. 2007)
(explaining the enforceability of a liquidated damages provision is a
question of law whereas a determination concerning the amount of actual
damages is a question of fact). The party seeking to invalidate a liquidated
damages provision bears the burden of establishing it is unenforceable. Id.
at 713–14.

The contract expressly set forth the remedies available in the
event of a breach. If Honda proposed a change in performance
specifications, Designee had the right to declare the change unacceptable,
cancel the contract, and demand the return of all deposits. On the other
hand, if Designee breached by failing to make a scheduled installment
payment or refused the delivery, as happened here, the contract gave
Honda the right to retain the deposit payments, “not as a forfeiture but as
liquidated damages.” In entering into the contract, Designee expressly
acknowledged:

“[I]t would be difficult to determine the actual damages
[Honda] w[ould] suffer because of a [Designee] default,
because [Honda’s] business model depends on high-volume
production to control its costs and overhead, including
volume-based pricing terms in contract with vendors and
suppliers, and because [Honda] would need to incur
remarketing and reconfiguration costs for the Aircraft. . . .
[T]he liquidated damages are an accurate, fair and reasonable
estimate of the damages [Honda] [would] likely [] incur as a
result of any default leading to termination of this
Agreement.

“Under the fundamental principle of freedom of contract,”
parties may stipulate to the amount of damages recoverable in the event of
a breach. Seven Seventeen HB Charlotte Corp., 641 S.E.2d at 713 (internal
quotation omitted). While “courts will generally enforce such an
agreement,” id., the amount of stipulated damages must be “reasonable in
light of the anticipated or actual harm caused by the breach, the difficulties
of proof of loss, and the inconvenience or nonfeasibility of otherwise
obtaining an adequate remedy.” N.C. Gen. Stat. § 25-2-718(1) (emphasis
added). In other words, a liquidated-damages provision reasonably related
to either anticipated or actual damages is generally enforceable, but “[a]
term fixing unreasonably large liquidated damages is void as a penalty.” Id.

Although conflicting evidence regarding the reasonableness
of estimated damages may present a jury question, here, Designee failed to

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demonstrate any genuine factual dispute. See Green Park Inn, Inc., 562 S.E.2d
at 59 (concluding party’s statement that there was no discussion regarding
the reasonableness of the liquidated damages provision at contract
formation was insufficient to create a genuine issue of material fact and
affirming the superior court’s summary judgment finding that the
contract’s liquidated damages provision was enforceable).

First, by executing the contract, Designee expressly and
unambiguously agreed that the actual damages suffered by Honda, in the
event Designee defaulted, were incalculable at signing and the deposits
represented a reasonable approximation of the losses Honda would likely
incur. Second, given the facts of this case, in which the aircraft had not been
fully designed, much less built, and no supply chain or market had been
established, it was difficult to predict with any certainty the damages
Honda would incur if Designee defaulted. Third, as found by the superior
court, the liquidated damages at issue, amounting to less than 10% of the
aircraft’s value,3 were a reasonable estimate of damages that could be
caused by Designee’s breach (including hangarage, remarketing, and
delivery expenses). See Aero Consulting Corp. v. Cessna Aircraft Co., 867 F.
Supp. 1480, 1482, 1493–94 (D. Kan. 1994) (finding a purchase agreement’s
liquidated damages provision, which permitted a plane manufacturer to
retain $425,000 in deposits upon the purchaser’s breach notwithstanding
that the manufacturer subsequently sold the aircraft to another customer
for nearly the same price, was enforceable given the deposits were “slightly
less than ten percent of the total purchase price of the aircraft” and “the
lengthy period of time required for production of such an aircraft and the
uncertainties associated with supply, demand, and costs for such aircraft”
made it “difficult to determine with certainty the actual damages”); see also
Rodriguez v. Learjet, Inc., 946 P.2d 1010, 1012–15 (Kan. Ct. App. 1997)
(finding a purchase agreement’s liquidated damages provision, which
permitted a plane manufacturer to retain $250,000 in deposits upon the
purchaser’s breach, was enforceable despite the manufacturer’s subsequent
sale of the aircraft for a greater profit). Finally, as Honda notes, Designee
neither produced evidence challenging the reasonableness of the estimated
damages nor “advance[d] any argument about how Honda’s damages
could have been calculated prior to completion of the aircraft.”

Although Designee asserts the liquidated damages provision
is inequitable because Honda subsequently sold the aircraft for a higher

3 Applying a consumer price index adjustment in accordance with the
express terms of the purchase agreement, by the time Designee defaulted,
the base price of the aircraft had risen from $3,650,000.00 to $4,334,073.50.

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price, liquidated damages may be awarded even when no actual damages
arose from the breach. Handex of Carolinas, Inc. v. County of Haywood, 607
S.E.2d 25, 37 (N.C. App. 2005) (because a liquidated damages provision is
enforceable if its estimation of breach-related damages was reasonable
when the parties executed the contract, liquidated damages may be
awarded “even if no actual damages arise from the breach”); see also Green
Park Inn, Inc., 562 S.E.2d at 58 (“The question whether damages are difficult
of ascertainment is to be determined by a consideration of the status of the
parties at the time they enter into the contract, and not at the time of the
breach.”). Because the actual breach-related damages were incalculable and
the anticipated damages were reasonable, even assuming the absence of
actual damages (a matter Honda disputes), Designee has failed to
demonstrate a genuine issue of material fact regarding the enforceability of
the liquidated damages provision. In sum, the superior court did not err by
holding, as a matter of law, that the purchase contract’s liquidated damages
provision was enforceable.

Having so found, the court correctly determined that Honda
was entitled to summary judgment on Designee’s claims for restitution and
unjust enrichment, as well as its counterclaim for breach of contract. See
Booe v. Shadrick, 369 S.E.2d 554, 555–56 (N.C. 1988) (explaining restitution is
a remedy for unjust enrichment, and the equitable doctrine of unjust
enrichment has no application when “there is a contract between the parties
that governs the claim”).

II. Claims for Promissory Estoppel, Unfair and Deceptive Trade
Practices, and Conspiracy

Designee contends the superior court improperly found that
Tower’s alleged oral offer to buy the aircraft was unenforceable as a matter
of law. Designee correctly concedes, however, that a contract for the sale of
goods over $500 must be in a signed writing. See N.C. Gen. Stat.
§ 25-2-201(1) (“[A] contract for the sale of goods for the price of five hundred
dollars ($500.00) or more is not enforceable by way of action or defense
unless there is some writing sufficient to indicate that a contract for sale has
been made between the parties and signed by the party against whom
enforcement is sought or by his authorized agent or broker.”). Nonetheless,
Designee argues the alleged offer was enforceable under a theory of
promissory estoppel, and that the disputed facts concerning the alleged
offer thus precluded summary judgment in Tower’s favor.

To prove promissory estoppel, a party must show he
reasonably relied on another party’s promise to his detriment. Bumpers v.

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Cmty. Bank of N. Virginia, 747 S.E.2d 220, 227 (N.C. 2013). Designee alleges
it detrimentally relied on Tower’s offer to purchase the aircraft at cost by
paying another $175,000 deposit and agreeing to performance specification
changes based on Tower’s assurances, notwithstanding that it could have
refused the amendments, terminated the contract, and demanded a return
of all deposits made. But Designee’s principal, Larry Barels, admitted in his
affidavit that he “did not bother to read . . . the revised specifications.” And
during his deposition, Barels acknowledged that after the alleged promise,
he sent Tower a “counteroffer.” Wanting to capitalize on its equity position,
Designee asked if Tower would purchase the aircraft for more than the
purchase contract price and “split the arbitrage value.” Absent such a
contract, Designee planned to “remarket” the aircraft and “move
aggressively” to find another buyer. Tower never responded to the
counteroffer. Designee also admitted it never demanded that Tower buy
the aircraft pursuant to the alleged promise.

Moving for summary judgment on Designee’s promissory
estoppel claim, Honda argued that North Carolina does not recognize
promissory estoppel as an affirmative cause of action. See Home Elec. Co. of
Lenoir, Inc. v. Hall and Underdown Heating & Air Conditioning Co., 358 S.E.2d
539, 542 (N.C. App. 1987) (explaining the doctrine of promissory estoppel
“has only been permitted in North Carolina for defensive relief”). Designee
countered that Arizona law governed the promissory estoppel claim
“because choice of law provisions are inapplicable to a claim sounding in
equity.” While ultimately finding the statute of frauds barred Designee’s
promissory estoppel claim, the superior court expressly noted Designee did
not “contest” Honda’s assertion that the claim was not cognizable under
North Carolina law.

On appeal, Designee abandons its claim that Arizona law
governs this issue, see Best v. Edwards, 217 Ariz. 497, 504 n.7, ¶ 28 (App.
2008) (issues not raised in opening brief are waived), and argues for the first
time that North Carolina law permits an affirmative cause of action
predicated on the theory of promissory estoppel. By failing to raise this
argument in the superior court, Designee waived it on appeal. See Trantor
v. Fredrikson, 179 Ariz. 299, 300 (1994) (failure to raise an issue in the
superior court waives the claim on appeal). Moreover, while Designee
contends the law “on this subject is somewhat confused,” it acknowledges
that North Carolina has only applied the doctrine of promissory estoppel
“in a defensive situation.” See Home Elec. Co. of Lenoir, Inc., 358 S.E.2d at 541.

Nonetheless, procedural bars notwithstanding, Designee
failed to present prima facie evidence of promissory estoppel. Taking

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everything Designee alleges to be true, Tower offered to buy the aircraft for
the purchase contract price, and Designee proposed a counteroffer and told
Tower it would find another buyer if Tower refused to share the aircraft’s
arbitrage value. Even if Tower initially offered to buy the aircraft for the
purchase contract price, Designee rejected that offer by making a
counteroffer, relieving Tower of any obligation to perform. See Quantum
Corporate Funding, Ltd. v. B.H. Bryan Building Co., Inc., 623 S.E.2d 793, 798
(N.C. App. 2006) (explaining one party’s offer is not binding when the other
party responds with a counteroffer).

Moreover, Designee only claims that Tower offered to buy the
aircraft for Designee’s contracted price. While Designee argues that Tower’s
offer relieved it of its obligation to pay the balance of the contract purchase
price at delivery, the undisputed facts reflect that Designee breached the
contract before delivery by failing to pay the third $175,000 installment.
Furthermore, although Designee contends it detrimentally relied on
Tower’s offer by paying the second $175,000 installment and executing
amendments rather than terminating the purchase agreement and
recouping the deposit monies, its purported reliance must be reasonable.
Here, it was not reasonable because: (1) Barels admitted he never
“bothered” to read the relevant documents, see Bumpers, 747 S.E.2d at 227
(“Reliance is not reasonable where the plaintiff could have discovered the
truth of the matter through reasonable diligence, but failed to investigate.”)
(internal quotation omitted), and (2) Tower’s alleged offer to buy the multi-
million-dollar aircraft was never reduced to writing. In contrast, Designee’s
obligation was the subject of a detailed written contract. Accordingly, the
superior court did not err by granting summary judgment in favor of the
Defendants on Designee’s claim of promissory estoppel.

For the same reasons, Designee’s claim that the Defendants
engaged in unfair and deceptive trade practices also fails. To establish a
prima facie claim for unfair trade practices, a plaintiff must demonstrate:
(1) the defendant committed an unfair or deceptive act or practice, (2) the
action in question was in or affecting commerce, and (3) the act proximately
caused injury to the plaintiff. N.C. Gen. Stat. § 75-1.1; Bumpers, 747 S.E.2d at
226-27. To show the requisite proximate cause for an injury predicated on a
false representation, the plaintiff must demonstrate both actual and
reasonable reliance. Bumpers, 747 S.E.2d at 226-27.

Designee failed to demonstrate both actual and reasonable
reliance on Tower’s alleged offer. By failing to do so, Designee did not
establish a prima facie claim for unfair trade practices. Because North
Carolina does not recognize a separate civil action for conspiracy

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independent of an underlying tort claim against the alleged conspirators,
Designee’s conspiracy claim, which was predicated on its unfair trade
practices claim, fails as well. See Piraino Bros., LLC v. Atlantic Fin. Group, Inc.,
712 S.E.2d 328, 333–34 (N.C. App. 2011) (“It is well established that there is
not a separate civil action for civil conspiracy in North Carolina. Instead,
civil conspiracy is premised on the underlying act.”) (internal quotations
and citations omitted). Therefore, the superior court did not err by granting
summary judgment in favor of the Defendants on Designee’s claims of
unfair trade practices and conspiracy.

III. Claim for Breach of the Covenant of Good Faith and Fair Dealing

Finally, Designee argues the superior court incorrectly found
that North Carolina does not recognize a discrete claim for breach of the
implied covenant of good faith and fair dealing independent of a breach of
contract claim. Designee asserts that Honda breached the implied covenant
of good faith and fair dealing by enforcing the purchase agreement’s
liquidated damages provision―retaining the deposited monies and
refusing to excuse Designee’s non-performance under the contract.

Designee’s contentions are unfounded. First, Designee’s
claim for breach of the implied covenant of good faith and fair dealing, as
set forth in its amended complaints, was predicated on Honda’s alleged
refusal to facilitate Designee’s sale of the aircraft to a third party, not its
enforcement of the liquidated damages provision. By failing to raise the
enforcement argument in the superior court, Designee waived the issue on
appeal. See Trantor, 179 Ariz. at 300. Second, as found by the superior court,
a party does not breach the implied covenant of good faith and fair dealing
by enforcing the express terms of a contract. Rather, a party breaches the
covenant of good faith and fair dealing by preventing the other party from
receiving the benefits of the agreement. Bicycle Transit Authority, Inc. v. Bell,
333 S.E.2d 299, 305 (N.C. 1985) (internal citation omitted).

Here, neither Honda nor Tower entered an oral contract to
waive Designee’s performance under the purchase agreement. At most,
Tower offered to buy the aircraft for the contract price if Designee no longer
wanted it at delivery. As Designee concedes on appeal, a contract for the
sale of goods over $500 must be evidenced in a signed writing. N.C. Gen.
Stat. § 25-2-201(1). Accordingly, a claim alleging a breach of an oral offer to
purchase the multi-million-dollar aircraft is barred by the statute of frauds.
Finally, by making a counteroffer, which was not accepted, Designee
renounced Tower’s alleged offer. Therefore, the superior court did not err

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by granting summary judgment in favor of Honda on the claim for breach
of the covenant of good faith and fair dealing.

IV. Attorneys’ Fees

Tower cross-appeals the superior court’s denial of its request
for attorneys’ fees. Specifically, Tower contends the court improperly found
it did not qualify for a fee award under A.R.S. § 12-341.01(A).

Although the purchase agreement does not provide for an
award of attorneys’ fees, Tower requested attorneys’ fees under A.R.S.
§ 12-341.01 (providing for a discretionary award of fees for a matter “arising
out of a contract.”). Designee objected, asserting, among other things, that
North Carolina law governs the purchase agreement, and therefore A.R.S.
§ 12-341.01 is inapplicable. In response, Tower countered that it was not a
party to the contract and, therefore, not bound by its choice-of-law
provision.4

Without determining which state’s law applied, the superior
court denied Tower’s request, finding Arizona did not permit Tower to
recover attorneys’ fees on any claims asserted by Designee. We likewise
need not determine which law to apply because, in either case, Tower is not
entitled to an attorneys’ fees award.5

Under A.R.S. § 12-341.01(A), a court may award reasonable
attorney’s 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).

To determine whether a claim “is one arising out of a
contract,” we consider “the nature of the action and the surrounding
circumstances,” not the form of the pleadings. Marcus v. Fox, 150 Ariz. 333,
335 (1986) (internal quotations omitted). We also broadly construe the
statutory language, such that an action “arises out of contract when the

4 Tower also asserted, for the first time, that it was entitled to
attorneys’ fees pursuant to A.R.S. § 12-349. On appeal, however, Tower
expressly disclaims any challenge to the denial of its attorneys’ fees request
on that basis.

5 It is undisputed that North Carolina law does not provide for an
award of attorneys’ fees to the prevailing party in a contract-based action.

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claim would not exist absent the contract.” SK Builders, Inc. v. Smith, 246
Ariz. 196, 204–05, ¶ 28 (App. 2019), overturned on other grounds by 2019 Ariz.
Sess. Laws, ch. 145 (S.B. 1397) (April 29, 2019). Applying this broad
construction, an action is deemed to arise out of contract “when the plaintiff
asserted a contract and the defendant successfully proved that no contract
existed.” Id. (internal quotations omitted). Likewise, even a tort claim is
considered to “arise out of a contract when the tort could not exist ‘but for’
the breach or avoidance of contract.” Id. (internal quotations omitted); see
also Marcus, 150 Ariz. at 335 (explaining tort claims that are “intrinsically
related to [a] contract” arise out of contract for purposes of A.R.S.
§ 12-341.01(A)). Furthermore, a “defendant seeking attorneys’ fees under
A.R.S. § 12-341.01(A) need not be a party to the contract forming the basis
for the award.” Chaurasia v. Gen. Motors. Corp., 212 Ariz. 18, 30, ¶ 47 (App.
2006).

Tower contends it is entitled to an attorneys’ fees award
because Designee would not have brought claims of promissory estoppel,
unfair trade practices, and conspiracy against it but for the purchase
contract. This assertion is undoubtedly true; but to qualify for an attorneys’
fees award under A.R.S. § 12-341.01, “[t]he contract must be the essential
basis of the action and not merely a factual predicate.” Caruthers, 230 Ariz.
at 526, ¶ 57. Here, the purchase contract was the underlying subject of
Tower’s communications with Designee, but Designee’s claims against
Tower do not directly flow from the purchase contract. Instead, Designee’s
claims arise out of Tower’s alleged oral offer to buy the aircraft. While
A.R.S. § 12-341.01 extends to implied contracts, a promise made enforceable
by promissory estoppel, though similar to a binding contractual promise,
“does not arise out of contract” within the meaning of A.R.S. § 12-341.01.
Double AA Builders, Ltd. v. Grand State Const. L.L.C., 210 Ariz. 503, 511,
¶¶ 44–45 (App. 2005). That is, attorneys’ fees may be awarded under A.R.S.
§ 12-341.01(A) “for claims arising out of express and implied-in-fact
contracts but not for claims arising out of implied-in-law contracts.” Id. at
512, ¶ 47. Here, Tower is not entitled to attorneys’ fees under A.R.S.
§ 12-341.01 for successfully defending against Designee’s promissory
estoppel claim.

Likewise, “[w]hen the duty breached is implied by law or is
based on statute, that is, whe[n] the defendant would have a duty of care
under the circumstances even in the absence of a contract, the claim does
not arise out of a contract” for purposes of A.R.S. § 12-341.01(A). Caruthers,
230 Ariz. at 526, ¶ 57. As discussed, Designee’s conspiracy claim is wholly
dependent on its claim that Honda and Tower violated North Carolina’s
statute prohibiting unfair and deceptive trade practices. In the absence of a

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purchase contract, North Carolina’s statute barred Honda and Tower from
engaging in any unfair or deceptive acts or practices in or affecting
commerce. Therefore, Tower is not entitled to attorneys’ fees for
successfully defending against Designee’s unfair trade practices and
conspiracy claims.

CONCLUSION

For the foregoing reasons, we affirm. Designee requests an
award of its attorney’s fees and costs incurred on appeal, which we deny.
Tower requests an award of its attorneys’ fees and costs incurred on cross-
appeal, which we likewise deny. However, we award Honda its costs
incurred on appeal and Designee its costs incurred on cross-appeal,
conditioned upon compliance with ARCAP 21.

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

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