Lerner v. DMB Realty, LLC
231 Ariz. 297
| Ariz. Ct. App. | 2012Background
- Lerners bought a home next to a level-one sex offender; Curriers failed to disclose the neighbor’s status.
- Disclosure materials warned sellers were not obligated to disclose near sex offenders; dual representation between Lerners, Curriers, and DMB stated this explicitly.
- Purchase contract included an inspection period and a warranty that Buyer did not rely on verbal representations.
- Lerners later discovered the sex offender neighbor and sued Curriers and DMB for fraud, negligent misrepresentation, and breach of fiduciary duty.
- Superior court dismissed claims under contract terms and § 32-2156(A)(3); Lerners appealed challenging the statute and contract defenses.
- Court on appeal held: (1) fraud claim survives because materiality and reliance issues must be decided by a jury, (2) negligent misrepresentation is barred by § 32-2156(A)(3) as applied, (3) dual-representation contract limits fiduciary duties, and (4) the anti-abrogation clause analysis does not shield the negligent-disclosure claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does § 32-2156(A)(3) bar Lerners’ failure-to-disclose claim against Curriers? | Lerners contend the statute cannot abolish their common-law fraud rights. | Curriers rely on the statute and contract to bar the claim. | Fraud claim survives; statute does not bar as a matter of law. |
| Is the negligent misrepresentation claim barred by § 32-2156(A)(3)? | Lerners argue the claim arises from failure to disclose a latent fact. | Curriers argue the contract and disclosure materials preclude reliance. | Yes; negligent misrepresentation is barred by § 32-2156(A)(3) as applied. |
| Does the dual representation contract absolve DMB of fiduciary liability? | Lerners contend contract cannot relieve broker of fiduciary duties. | Contract limits duties but preserves obligation to disclose known material facts. | DMB breach of fiduciary duty claim is barred by the dual-representation agreement. |
| Does the anti-abrogation clause apply to these claims and the statute? | Lerners argue the clause protects their right to damages. | Statutory bar operates independently of anti-abrogation. | Antia-brogation analysis does not shield the negligent-disclosure claim; court upholds statutory bar as applied. |
Key Cases Cited
- Lutfy v. R.D. Roper & Sons Motor Co., 57 Ariz. 495, 115 P.2d 161 (Arizona 1941) (contract provisions barring fraud invalid; misrepresentation claims survive.)
- Hill v. Jones, 151 Ariz. 81, 725 P.2d 1115 (Arizona App. 1986) (materiality and reliance questions typically for jury.)
- S Development Co. v. Pima Capital Management Co., 201 Ariz. 10, 31 P.3d 123 (Arizona App. 2001) (as-is clauses and basic facts questions reserved for fact-finder.)
- Cronin v. Sheldon, 195 Ariz. 531, 991 P.2d 231 (Arizona 1999) (anti-abrogation clause not protecting actions that do not evolve from common law.)
- Hazine v. Montgomery Elevator Co., 176 Ariz. 340, 861 P.2d 625 (Arizona 1993) (evolution of common law actions under anti-abrogation clause.)
- Richardson v. Heney, 18 Ariz. 186, 157 P. 980 (Arizona 1916) (early disclosure duty in special relationships.)