Barton v. Boesen

• Decision Date: 09 June 2011
• Docket Number: No. 1 CA-CV 10-0756,1 CA-CV 10-0756
• Citation: Barton v. Boesen, No. 1 CA-CV 10-0756 (Ariz. App. Jun 09, 2011)
• Court: Arizona Court of Appeals
• Parties: BRADLEY R. BARTON, Plaintiff/Appellant, v. RANDY BOESEN and JOAN BOESEN, a marital community; BOBBY G. RHUDY and CATHY RHUDY, a marital community; RONALD J. BYRUM and MELVA BYRUM, a marital community; DAN SCHWARTZ REALTY, INC.; MARSHALL & ILSLEY BANK, a Wisconsin banking corporation registered as an Arizona foreign corporation dba M&I Bank, Defendants/Appellees.

BRADLEY R. BARTON, Plaintiff/Appellant,

v. RANDY BOESEN and JOAN BOESEN, a marital community; BOBBY G. RHUDYand CATHY RHUDY, a marital community; RONALD J. BYRUMand MELVA BYRUM, a marital community; DAN SCHWARTZ REALTY, INC.;MARSHALL & ILSLEY BANK, a Wisconsin banking corporation registeredas an Arizona foreign corporation dba M&I Bank, Defendants/Appellees.

No. 1 CA-CV 10-0756

COURT OF APPEALS STATE OF ARIZONA DIVISION ONE DEPARTMENT A

Dated: June 9, 2011

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(Not for Publication - Rule 28, Arizona Rules of Civil Appellate Procedure)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. CV2009-054294; CV2010-050165 (Consolidated)

The Honorable Harriet Chavez, Judge

AFFIRMED IN PART; REVERSED IN PART

W.R. Nichols & Associates, P.C.

By Wallace R. Nichols, Jr.

Attorneys for Plaintiff/Appellant

Scottsdale

Mack Drucker & Watson, P.L.C.

By Daxton R. Watson

Troy B. Stratman

Attorneys for Defendants/Appellees Boesen

Phoenix

McCauley Law Offices, P.C.

By Daniel J. McCauley III

Attorneys for Defendants/Appellees Rhudy

Cave Creek

Stoops, Denious, Wilson & Murray, P.L.C.

By Thomas A. Stoops

Attorneys for Defendants/Appellees

Ronald J. Byrum and Dan Schwartz Realty, Inc.

Phoenix

Greenberg Traurig LLP

By Brian J. Schulman

Julie R. Barton

Attorneys for Defendant/Appellee Marshall & Ilsley Bank

Phoenix

JOHNSEN, Judge

¶1 Bradley R. Barton appeals the superior court's order dismissing his complaint against M&I Marshall & Ilsley Bank FSB ("M&I") and Dan Schwartz Realty, Inc., Ronald and Melva Byrum, Bobby and Cathy Rhudy, and Randy and Joan Boesen. We affirm the dismissal of the claim against M&I, but reverse the dismissal of the claims against the other defendants.

FACTS AND PROCEDURAL BACKGROUND

¶2 In 2005 the Rhudys owned a parcel of undeveloped property in Wittman that lay within the Wittman Drainage Area.¹ On April 6 and 26, 2005, Cathy Rhudy attended meetings at which the Maricopa County Flood Control District discussed designating certain land within the Wittman Drainage Area as floodway orfloodplain. The Rhudys sold their parcel to the Boesens in a transaction that closed on or about April 29, 2005. In connection with that transaction, the Rhudys gave the Boesens a Seller's Property Disclosure Statement ("Rhudy Disclosure") in which the Rhudys denied any drainage issues. In response to a question in the Rhudy Disclosure whether the property "is located in a flood way or flood plain," the Rhudys responded only, "Wash along West side of property." They also stated that the wash floods when it rains.

¶3 The Boesens sold the property to Barton on June 2, 2005. Ronald Byrum, an agent employed by Dan Schwartz Realty, represented the Boesens in their purchase of the property and also represented them in selling the property to Barton. The Boesens' Seller's Property Disclosure Statement ("Boesen Disclosure") denied drainage issues and failed to note that the wash on the west side of the property was subject to floods. It was not until sometime between November 18 and December 4, 2005, that Barton discovered the land had been designated a floodway and was, "therefore, worthless and unable to be improved in any capacity."

¶4 Barton filed a complaint against the Rhudys, the Boesens, the Byrums and Dan Schwartz Realty on May 2, 2007. He alleged the Flood Control District announced at the April 26, 2005 meeting that Cathy Rhudy attended that the property wouldbe designated as floodway or floodplain. Barton alleged all of the defendants were liable for "fraud/fraudulent concealment," negligent misrepresentation, "breach of contract/breach of the implied covenant of good faith and fair dealing," unjust enrichment, consumer fraud and civil conspiracy. He also alleged Dan Schwartz Realty, Cathy Rhudy and Ronald Byrum were liable for negligence per se. In each of the claims, Barton asserted he had purchased the property not knowing it was in a floodplain or subject to floods and asserted the defendants were liable for misrepresenting or failing to disclose material facts about the land.

¶5 After discovery, the parties filed cross motions for summary judgment. The superior court denied Barton's motion for summary judgment and dismissed his claims for unjust enrichment, consumer fraud and conspiracy. The court also granted the Rhudys' motion for summary judgment on the claim for negligence per se. The court dismissed the breach of contract/breach of implied covenant claim against all defendants except it preserved the breach of contract claim against the Boesens. The court also dismissed the negligent misrepresentation claim against the Boesens.

¶6 On April 29, 2009, for reasons not relevant to this appeal, the court dismissed Barton's complaint without prejudice for failure to prosecute. Over defendants' objections, thecourt on December 23, 2009 granted Barton's motion for relief pursuant to Arizona Revised Statutes ("A.R.S.") section 12-504 (2003). Its minute entry stated, "[P]laintiff is authorized to [file] a new action for the same cause within thirty days of the file date of this order."

¶7 On January 12, 2010, Barton filed a new complaint that alleged "fraud/fraudulent concealment" against all the defendants named in the original complaint; negligent misrepresentation against the Rhudys, the Byrums and Dan Schwartz Realty; negligence per se against the Byrums and Dan Schwartz Realty; and breach of contract/breach of implied covenant of good faith and fair dealing against the Boesens. The complaint also sought rescission and restitution against the Boesens on the ground that the purchase contract was voidable due to mistake, impossibility, frustration, impracticability or mutual mistake. Lastly, the complaint contained a claim against M&I, which had made Barton a purchase money loan secured by the property. The complaint alleged the loan agreement was voidable based on mistake, frustration of purpose, impossibility and impracticability.

¶8 All of the defendants moved to dismiss. After oral argument, the superior court granted M&I's motion to dismiss based on limitations and granted the other defendants' motionsto dismiss on the ground that Barton's new complaint was not "a new action for the same cause" pursuant to A.R.S. § 12-504.

¶9 We have jurisdiction of Barton's appeal under Article 6, Section 9, of the Arizona Constitution and pursuant to A.R.S. § 12-2101(B) (2003).

DISCUSSION

A. Dismissal of the Claim Against M&I.

¶10 Barton's claim against M&I arose from an appraisal the bank obtained while underwriting its loan to him. The appraisal, which Barton admitted he received in May 2005, contained a warning that flood issues may affect the land. In relevant part, it stated, "Per the Maricopa County Flood Control District, the subject's area is currently under study, it is strongly urged that the buyer research and confirm whether the subject will be located in a future floodplain/floodway." In his complaint, Barton alleged he did not read the appraisal until long after he purchased the property and that as a result, he was unaware that the land was the subject of a floodplain study.

¶11 We review an order granting a motion to dismiss for an abuse of discretion, although we review issues of law de novo. Dressier v. Morrison, 212 Ariz. 279, 281, ¶ 11, 130 P.3d 978, 981 (2006).

¶12 At oral argument, Barton conceded that a three-year limitations period applies to his claim against M&I. See A.R.S. § 12-543(1), (3) (2003). An action does not accrue until a "plaintiff knows or, in the exercise of reasonable diligence, should know the facts underlying the cause" of action. Gust, Rosenfeld & Henderson v. Prudential Ins. Co. of Am., 182 Ariz. 586, 588, 898 P.2d 964, 966 (1995); see, e.g., Coronado Dev. Corp. v. Superior Court, 139 Ariz. 350, 352, 678 P.2d 535, 537 (App. 1984) ("The statute of limitations in a fraud case begins to run when the plaintiff by reasonable diligence could have learned of the fraud, whether or not he actually learned of it.").

¶13 Barton did not file his complaint against M&I until January 2010, more than four and a half years after the loan transaction. His claim therefore is barred unless he can show that by "reasonable diligence" he could not have learned of the bank's alleged wrongdoing until January 2007, more than a year and a half after the transaction closed. We agree with the superior court that Barton's claim against M&I accrued no later than the May 2005 closing of his loan. The appraisal Barton received at that time put him on notice of the facts that underlay his claim against M&I. Although the appraisal advised Barton to investigate the potential floodway issue, Barton did not do so. Indeed, by his own account, Barton first read theappraisal in early 2007, "[a]pproximately two years" after he received the document.

¶14 Citing Darner Motor Sales, Inc. v. Universal Underwriters Insurance Company, 140 Ariz. 383, 682 P.2d 388 (1984), Barton argues that because he had no duty to read the appraisal, limitations did not begin to run when his loan closed. Darner offers no support for Barton's contention. That case held that Arizona courts will not enforce provisions in standardized contracts that are either contrary to the intent and understanding of the parties or contrary to the drafting party's representations regarding contract provisions. Id. at 393-94, 682 P.2d at 398-99. But Barton does not allege M&I made any representation that the property was not located in a floodplain. One of the purposes of the appraisal was to ascertain the property's unfavorable conditions; indeed, Barton's reasonable expectations with respect to the property should have been informed by the warning in the appraisal.²

¶15 Nevertheless, Barton contends the warning in the appraisal constituted a "boilerplate provision" similar to...