ELM RETIREMENT CENTER, LP v. Callaway
226 Ariz. 287
| Ariz. Ct. App. | 2010Background
- Elm Retirement Center, LP contracted to buy a Scottsdale home in July 2005; the home allegedly has 3,792 square feet according to advertising.
- The purchase agreement does not specify square footage but contains a bold disclaimer: any reference to square footage is approximate and must be verified if square footage is material.
- Elm contends the home actually has 3,605 square feet and that the difference is material.
- Elm filed suit in April 2009 alleging breach of contract, breach of the implied covenant, fraud theories, and negligence claims among others.
- The superior court dismissed the tort claims as barred by the economic loss doctrine and dismissed contract claims based on the contract language; Elm timely appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court should have treated the motion to dismiss as a summary judgment motion | Elm argues the contract attached to the motion required summary judgment analysis | Sellers contend no conversion to summary judgment was necessary since the contract is central to the claim | Not reversible error; central contract may be considered without converting to summary judgment |
| Whether the tort claims are time-barred by limitations | Elm asserts discovery rule tolling applies | Defendants rely on standard two- to three-year limits and lack of timely filing | Yes; tort claims barred by limitations despite discovery rule applicability |
| Whether the contract claims were properly dismissed based on the verification provision | Elm contends the provision is not a warranty disclaimer | Court should give effect to the specific verification clause that any square footage reference is approximate and must be verified | Yes; verification provision bars breach-of-warranty claim regarding square footage |
| Whether denial of leave to amend was an abuse of discretion | Elm sought to amend to add theories consistent with contract interpretation | Amendment would be futile | No abuse of discretion; amendment would be futile |
Key Cases Cited
- Dressler v. Morrison, 212 Ariz. 279 (Ariz. 2006) (abuse of discretion standard for dismissal appeals)
- Mohave Disposal Inc. v. City of Kingman, 186 Ariz. 343 (App. 1996) (standards for dismissal and notice pleading)
- Strategic Dev. & Constr., Inc. v. 7th & Roosevelt Partners, LLC, 226 P.3d 1046 (Ariz. 2010) (document centrality permits consideration on motion to dismiss without converting to summary judgment)
- Ritchie v. Krasner, 211 P.3d 1272 (Ariz. 2009) (discovery rule and knowledge of wrongs assessment)
- Walk v. Ring, 44 P.3d 990 (Ariz. 2002) (limits tolling and discovery framework)
- Cullen v. Auto-Owners Ins. Co., 189 P.3d 344 (Ariz. App. 2008) (pleading standards; notice pleading sufficiency)
- Dube v. Likins, 167 P.3d 93 (Ariz. App. 2007) (amendment of complaint and futility standard)
- Chandler Med. Bldg. Partners v. Chandler Dental Grp., 855 P.2d 787 (Ariz. App. 1993) (contract interpretation; extrinsic evidence on ambiguity)
- Aztar Corp. v. U.S. Fire Ins. Co., 224 P.3d 960 (Ariz. App. 2010) (contract interpretation; specificity governs over general provisions)
- S Dev. Co. v. Pima Capital Mgmt. Co., 31 P.3d 123 (Ariz. App. 2001) (as-is and warranty disclaimer considerations)
- Salt River Project Agric. Improvement & Power Dist. v. Westinghouse Elec. Corp., 694 P.2d 198 (Ariz. 1984) (validity of warranty disclaimers in commercial contracts)
- Phelps v. Firebird Raceway, Inc., 210 Ariz. 403 (Ariz. 2005) (abrogated on other grounds)