Opinion
1 CA-CV 10-0742
01-31-2012
KEITH BEFORT and MICHELE BEFORT, husband and wife, Plaintiffs/Appellants, v. DAN SCHWARTZ REALTY, INC., an Arizona corporation, Defendant/Appellee.
Jackson White, P.C. by Roger R. Foote Attorneys for Plaintiffs/Appellants Mack, Drucker & Watson, P.L.C. by Dax R. Watson Carlotta L. Turman Attorneys for Defendant/Appellee
NOTICE: THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES. See Ariz. R. Supreme Court 111(c); ARCAP 28(c); Ariz. R. Crim. P. 31.24
MEMORANDUM DECISION
(Not for Publication - Rule 28, Arizona Rules of Civil Appellate Procedure
Appeal from the Superior Court in Maricopa County
Cause Nos. CV2008-090391 and LC2009-000503-001
(Consolidated)
The Honorable John R. Ditsworth, Judge
AFFIRMED
Jackson White, P.C.
by Roger R. Foote
Attorneys for Plaintiffs/Appellants
Mesa
Mack, Drucker & Watson, P.L.C.
by Dax R. Watson
Carlotta L. Turman
Attorneys for Defendant/Appellee
Phoenix PORTLEY, Judge
¶1 Homebuyers Keith and Michelle Befort ("the Beforts") appeal the summary judgment granted to Dan Schwartz Realty, Inc. ("DSR"), which dismissed their claims as untimely. They argue that their claims are not time-barred because the discovery rule tolled the two-year limitation in Arizona Revised Statutes ("A.R.S.") section 12-542 (West 2012). For the reasons that follow, we affirm.
Unless indicated otherwise, we cite to the current version of a statute if it has not undergone a material change since the court's order.
FACTUAL AND PROCEDURAL HISTORY
¶2 The Beforts signed a purchase agreement in September 2006 to buy a semi-custom home under construction in Queen Creek from Anthony Alfonso ("Alfonso"). When the Beforts first saw the property, it featured a sign indicating that it was available from Vineyard Homes and providing the contact information for John "Jay" Richard McKee, Jr. ("McKee"). McKee was a managing member of Vineyard Homes, L.L.C., and he and Alfonso were members of the Roman Estates Development Group. He was also a recently licensed real estate agent working for DSR.
¶3 McKee had listed the property for Alfonso, but the Multiple Listing Service ("MLS") identified McKee's company, Vineyard Homes, as the seller. The listing also indicated that Vineyard Homes was the builder even though Legend Construction, Inc. ("Legend") was the general contractor. The listing, however, contained a disclaimer that a buyer was responsible for "verify[ing] all information."
The disclaimer stated: "Information deemed reliable but not guaranteed. Buyer to verify all information."
¶4 The Beforts moved into their new home in February 2007 and the sale was completed the following month. After a summer rain storm, their basement flooded, which caused substantial property damage. Subsequent inspections revealed numerous construction defects and omissions.
¶5 The Beforts filed a complaint with the Arizona Registrar of Contractors ("ROC") in September 2007, and Legend subsequently lost its construction license. Some five months later, they sued Legend, Vineyard Homes, Alfonso, and numerous subcontractors. They amended their complaint a year later, added McKee and DSR, and alleged that DSR was vicariously liable for McKee's negligent misrepresentation and failure to disclose information, and directly liable because it had negligently supervised McKee. DSR answered and filed a motion for summary judgment. After briefing, the trial court agreed that the statute of limitation had run, granted the motion, and dismissed DSR from the lawsuit.
Legend, Vineyard Homes, Empire Earthworks, and Empire Basements were dismissed from the lawsuit without prejudice because the Beforts had not complied with A.R.S. § 12-1363(A) (West 2012) -the notice requirement in the Purchaser Dwelling Act. The Beforts then stipulated to the dismissal of Red Star Plumbing for the same reason.
The court therefore did not rule on DSR's other arguments.
¶6 The Beforts appealed and we have jurisdiction pursuant to Article 6, Section 9, of the Arizona Constitution, and A.R.S. § 12-2101(A)(1) (West 2012).
The Arizona Legislature recently renumbered A.R.S. § 12-2101. See 2011 Ariz. Sess. Laws, ch. 304, § 1 (1st Reg. Sess.) (effective July 20, 2011).
DISCUSSION
A. Standards of Review
¶7 We review the grant of summary judgment de novo, Keonjian v. Olcott, 216 Ariz. 563, 565, ¶ 7, 169 P.3d 927, 929 (App. 2007), review the evidence in the light most favorable to the party opposing summary judgment, and independently assess questions of law concerning the statute of limitation. Logerquist v. Danforth, 188 Ariz. 16, 18, 932 P.2d 281, 283 (App. 1996) (citations omitted). We will affirm summary judgment "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, 802 P.2d 1000, 1008 (1990). We will, however, affirm a grant of summary judgment if it is correct for any reason. Rowland v. Great States Ins. Co., 199 Ariz 577, 581-82, ¶ 6, 20 P.3d 1158, 1162-63 (App. 2001) (citation omitted).
B. Statute of Limitation
¶8 The Beforts challenge the trial court's determination that their claims against DSR are time-barred. Generally, negligence claims are subject to the two-year limitation in A.R.S. § 12-542. Kiley v. Jennings, Strouss & Salmon, 187 Ariz. 136, 139, 927 P.2d 796, 799 (App. 1996). The limitation period, however, may be tolled until a plaintiff knows or should have known that the harm was caused by negligence. Keonjian, 216 Ariz. at 565, ¶ 9, 169 P.3d at 929; see also Doe v. Roe, 191 Ariz. 313, 323, ¶ 32, 955 P.2d 951, 961 (1998) (claim accrues when a plaintiff has "a minimum requisite of knowledge sufficient to identify that a wrong occurred and caused injury"). The discovery rule is properly applied if "the plaintiff's injury or the conduct causing the injury is difficult for plaintiff to detect." Walk v. Ring, 202 Ariz. 310, 315, ¶ 21, 44 P.3d 990, 995 (2002) (quoting Gust, Rosenfeld & Henderson v. Prudential Ins. Co. of Am. , 182 Ariz. 586, 590, 898 P.2d 964, 968 (1995)).
¶9 Ordinarily, "damage or injury occurs contemporaneously with the [negligent act]." Commercial Union Ins. Co. v. Lewis and Roca, 183 Ariz. 250, 256, 902 P.2d 1354, 1360 (App. 1995); see also CDTr Inc. v. Addison, Roberts & Ludwig, C.P.A.r P.C., 198 Ariz. 173, 176, ¶ 10, 7 P.3d 979, 982 (App. 2000) (applying the "ascertainable harm" principle announced in Commercial Union to negligence claims against any professional). Here, the Beforts claim that McKee's statements concerning the builder and seller's identities induced them into buying the house. Therefore, they were harmed when they executed the purchase agreement. See Keonjian, 216 Ariz. at 566, ¶ 13, 169 P.3d at 930 (plaintiff whose attorney negligently drafted a deed that reduced her interest in property beyond what she intended was harmed when she executed the deed, even if the extent of her damages was uncertain at that time). Consequently, the point in time when the Beforts "became aware or should have been aware" of the cause of the harm is dispositive. See id. at ¶ 14 (quoting Commercial Union, 183 Ariz. at 256, 902 P.2d at 1360) (internal quotation marks omitted).
¶10 When the Beforts added DSR in their 2009 amended complaint, they alleged that the events which gave rise to any liability occurred in 2006 but argued that it was the flooding in July 2007 that put them on notice to investigate the cause of their injury. They did not allege that DSR was responsible for any part of the defective construction; rather, they argued that McKee, working for DSR, misrepresented the builder of the house and the seller of the house.
¶11 We agree that no one would buy a newly constructed house knowing that it would flood during the first major storm. The issue, however, as it applies to DSR, is not whether the home was negligently constructed, but whether the statute of limitation expired on any claims against DSR directly or vicariously by the time DSR was added as a defendant.
¶12 The Beforts claim that DSR was negligent because it failed to review and correct the MLS listing which identified Vineyard Homes as the seller and builder. The listing, however, specifically advised them to verify the information. And, the Beforts were free to inquire about the owner of the property as well as the name of the builder. In fact, they knew how to make an inquiry because they had canceled an earlier contract in the same subdivision when they discovered that the builder was experiencing financial difficulties.
¶13 Moreover, when the Beforts signed the purchase agreement in September 2006, it listed Alfonso as the seller. If the true identity of the seller of the home or the homebuilder was important to them, as it had been in their earlier contract, they had a duty to investigate the information once the factual discrepancy between the Vineyard Homes sign, the MLS listing, and the purchase agreement presented itself in September 2006. Consequently, the Beforts were aware or should have been aware of any inconsistencies in the MLS listing not later than when they signed the purchase agreement in September 2006, and could have confirmed the true identity of the home's seller or builder - or any other information they believed to be material - at that time. As a result, the two-year limitation period was not tolled until the July 2007 flood, and the statute of limitation precludes DSR from any liability based on the MLS listing.
¶14 The Beforts next allege that DSR failed to supervise McKee, its realtor, and, as a result, is liable for his negligent misrepresentations and omissions. Specifically, they claim that any statements or omissions about his involvement with Vineyard Homes, Vineyard Homes' experience and role, if any, in the sale of the home, as well as McKee's relationship with Alfonso were actionable. We disagree.
Arizona has adopted the definition of negligent misrepresentation outlined in the Restatement (Second) of Torts § 552. See St. Joseph's Hosp. and Med. Ctr. v. Reserve Life Ins. Co., 154 Ariz. 307, 312, 742 P.2d 808, 813 (1987).
--------
¶15 Because the Beforts had seen the sign on the property and the MLS listing that identified Vineyard Homes as the seller, once they received the purchase agreement in September 2006 - which listed Alfonso as the seller - they knew or should have known to make further inquiry to determine who Alfonso was, what Vineyard Homes' role was, if any, and, if important, the builder's identity. Because they had access to the information in September 2006, their attempt to add DSR in 2009 is precluded by the two-year statute of limitation.
¶16 The Beforts also allege that DSR is vicariously liable because McKee made false statements to them about the quality of the home's construction, the suitability of the warranty, and the fitness and habitability of the home. We disagree, but not because the claims are precluded by the statute of limitation.
¶17 Section 552 of the Restatement (Second) of Torts provides that if a person, in the course of his or her employment, "supplies false information for the guidance of others in their business transactions," the person is subject to liability for the "pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information." As a result, to defeat the summary judgment the Beforts had to demonstrate that McKee, the seller's real estate agent, owed a duty to them and breached that duty. See PLM Tax Certificate Program 1991-92, L.P. v. Schweikert, 216 Ariz. 47, 50, ¶ 18, 162 P.3d 1267, 1270 (App. 2007). Furthermore, they had to demonstrate that the statements were made in McKee's scope of employment. See Carrel v. Lux, 101 Ariz. 430, 442, 420 P.2d 564, 576 (1966).
¶18 Here, as the seller's agent, McKee had a duty to "deal fairly" with the Beforts. See Aranki v. RKP Invs., Inc. , 194 Ariz. 206, 208, ¶ 8, 979 P.2d 534, 536 (App. 1999) (citations omitted). His duty did "not include investigations to discover defects in the seller['s] property." Id. at ¶ 9. If, however, McKee "knew or should have known of the defects giving rise to th[e] litigation," he would be liable for failing to disclose the information. Id.
¶19 The Beforts failed to demonstrate that McKee, or DSR, knew or should have known of any defects in the construction of the home at the time McKee made the alleged statements, or that the statements were made within the scope of McKee's employment as Alfonso's agent. There is nothing in the record to demonstrate that McKee, or DSR, knew or should have known any information about the foundation when McKee made statements that expressed confidence in the construction of the home. The basement foundation had been completed before the Beforts first saw the property and looking at it did not reveal cracks or any other problems.
¶20 Moreover, there is no information in the record to suggest that McKee conducted any inspection during the construction of the basement or the house. The only information in the record is that the homebuilder, Legend, received mail addressed to it at Vineyard Homes, and McKee would deliver the mail to Legend. The fact that McKee ensured Legend received its mail does not establish that he should have known about any defects. In fact, the Beforts do not dispute the fact that McKee never opened or read any of the mail concerning construction matters. Consequently, the Beforts have failed to demonstrate that McKee, or DSR, knew or should have known any information about the construction of the home. Therefore, summary judgment was properly awarded to DSR on all of McKee's alleged misrepresentations about the quality of the construction or any resulting warranty.
CONCLUSION
¶21 Based on the reasons discussed above, we affirm the trial court's order.
_________________
MAURICE PORTLEY, Judge
CONCURRING:
______________________________
DIANE M. JOHNSEN, Presiding Judge
_______________________
PATRICIA A. OROZCO, Judge