Derry chairman Hugh McDaid revealed that Fenlon's domestic situation was the sole cause of his departure.
"Things were going very well as far as we were concerned and we are very disappointed Pat is leaving," he said.
"His family will not move up here (from Dublin) for school reasons and whatever. It is not acceptable that he travels from 6.00 in the morning and stays away from home all week - it's not good for family life.
"Pat has a personal, private problem and we have to let him get on with life the best he can.
"He's very, very sorry for leaving and he's very down at the moment."
City lie 11 points behind league leaders St Pat's after a disappointing scoreless draw with basement club Longford Town on Saturday.
It is Hutton's third stint as caretaker boss and he has ruled out taking the job in a permanent capacity.
"I have agreed to take over in the short-term, emphasising the short," said the defender.
"We are very surprised at Pat's decision, it came out of the blue but it was for genuine reasons.
"We didn't do him justice - we could have done a lot more during his tenure."