Lerner v. DMB Realty, LLC
322 P.3d 909
Ariz. Ct. App.2014Background
- Glen and Robynn Lerner bought a Scottsdale house and later discovered a level‑one registered sex offender lived next door.
- Sellers (Jeff and Marissa Currier) provided a Seller’s Property Disclosure and a purchase contract containing printed warnings that sellers/brokers are not obligated to disclose proximity to a sex offender and that buyers must investigate during the inspection period; Lerners initialed they relied on none oral representations.
- Both parties executed a dual‑representation agreement with DMB Realty that acknowledged limited duties and stated, pursuant to A.R.S. § 32‑2156, the broker was not obligated to disclose that the property was located in the vicinity of a sex offender.
- Lerners sued the Curriers and DMB for negligent misrepresentation, common‑law fraud, breach of fiduciary duty, and related claims, seeking damages (not rescission).
- Defendants moved to dismiss under Rule 12(b)(6), arguing contractual disclaimers and A.R.S. § 32‑2156(A)(3) barred the claims; the superior court granted dismissal and Lerners appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Lerners stated a fraud claim against Curriers for lying about their reason for moving | Curriers falsely said they were moving to be closer to friends when really moving away from a sex offender; Lerners relied on that misrepresentation | Contract disclaimers and putative duty to investigate preclude materiality/reliance and thus fraud | Reversed dismissal: complaint plausibly alleges affirmative misrepresentation (answering a direct question falsely); materiality and reliance are jury questions |
| Whether negligent‑misrepresentation/failure‑to‑disclose claim against Curriers is barred by statute and common law | Lerners: nondisclosure of off‑site sex offender was material and not discoverable; seller had duty under Restatement §551 principles | Curriers: contract warnings and inspection allocation plus A.R.S. § 32‑2156(A)(3) bar liability; caveat emptor governs | Dismissed: claim for negligent nondisclosure is barred by A.R.S. § 32‑2156(A)(3) and not protected by Arizona’s anti‑abrogation clause because the duty did not evolve from common‑law antecedents |
| Whether A.R.S. § 32‑2156(A)(3) violates Arizona Constitution’s anti‑abrogation clause | Lerners: statute improperly abrogates right to recover damages for traditional common‑law wrongs | Defendants: statute validly precludes these disclosure claims | Court: statute constitutional as applied to negligent nondisclosure claim because seller’s duty to disclose off‑premises conditions (absent special relationship) is a modern development, not a common‑law antecedent |
| Whether Lerners’ breach‑of‑fiduciary‑duty claim against DMB survives given the dual‑agency agreement | Lerners: broker still had fiduciary duty; the agreement statement is an incorrect legal assertion and cannot waive duties | DMB: Lerners gave informed consent and contract expressly limited broker’s disclosure obligation regarding sex offenders | Affirmed dismissal: Lerners validly contracted to limit DMB’s duty; no allegation of fraud about the broker’s statement, so breach claim barred by the agreement |
Key Cases Cited
- Cullen v. Auto‑Owners Ins. Co., 218 Ariz. 417 (standard for Rule 12(b)(6) review)
- Coleman v. City of Mesa, 230 Ariz. 352 (de novo review and motion‑to‑dismiss standards)
- Lutfy v. R.D. Roper & Sons Motor Co., 57 Ariz. 495 (contract provision cannot excuse a party’s procurement fraud)
- Hill v. Jones, 151 Ariz. 81 (materiality and rescission principles; citing Restatement disclosure concepts)
- Wells Fargo Bank v. Ariz. Laborers, Teamsters & Cement Masons Local No. 395 Pension Trust Fund, 201 Ariz. 474 (liability for acts to conceal or mislead even absent a duty to disclose)
- Hazine v. Montgomery Elevator Co., 176 Ariz. 340 (anti‑abrogation clause protects actions that evolved from common‑law antecedents)
- Cronin v. Sheldon, 195 Ariz. 531 (wrongful termination not protected by anti‑abrogation where no common‑law antecedent)
- Marmis v. Solot Co., 117 Ariz. 499 (real‑estate broker occupies fiduciary relationship and owes disclosure duties)