Court Opinion

ID: 9788486
Source: CourtListenerOpinion
Date Created: 2023-08-31 00:55:07.495731+00
Date Added: 2024-06-11T07:36:58.138603
License: Public Domain

NOYES, Judge,
Dissenting.
¶ 26 Appellees claim that “real estate agents owe duties only to those parties in a transaction with whom they have established a valid principal-agent relationship” (emphasis in original). Because that claim is over-broad, summary judgment on that claim is erroneous. I respectfully dissent from the majority’s holding that Appellees had no duty to Appellants. At a minimum, Appel-lees had a duty to deal fairly with Appellants.
¶ 27 Arizona real estate agents have a duty to deal fairly with all other parties to the transaction, and they have a duty to disclose certain material information, including any information that the buyer is or may be unable to perform due to insolvency or otherwise. See A.A.C. R4-28-1101(A) (quoted in ¶ 6, supra).
*346¶ 28 In Brown v. Arizona Department of Real Estate, this court concluded that R428-1101(A) imposed upon a real estate licensee a duty to deal in fairness with all other parties to a transaction. 181 Ariz. 320, 328-29, 890 P.2d 615, 623-24 (App.1995). Brown was a disciplinary action, but it agreed with the duty articulated in a case that “upheld a purchaser’s cause of action against a real estate broker in the absence of an agency relationship.” Id. at 329, 890 P.2d at 624 (referring to Ward v. Taggart, 51 Cal.2d 736, 336 P.2d 534 (1959)). The Brown court also cited Nguyen v. Scott, 206 Cal.App.3d 725, 253 Cal.Rptr. 800 (1989), for the proposition that “California imposes a similar duty of honesty and fairness to all parties in real estate transactions.” Brown, 181 Ariz. at 329, 890 P.2d at 624. In regard to Ward and Nguyen, the Brown court stated, “We agree with the California standard. Arizona should hold brokers to similar standards of open disclosure.” Id. at 329, 890 P.2d at 624.
¶ 29 As explained in Red Carpet-Barry & Associates v. Apex Associates, 130 Ariz. 302, 635 P.2d 1224 (App.1981), the real estate department’s disciplinary regulations establish a duty that applies in civil actions as well as in disciplinary actions:
The rules and regulations of the real estate department have the force and effect of law. A.R.S. § 32-2122(A) provides that it shall be unlawful for any person to act as a real estate broker without first securing a license and otherwise complying with the provisions of chapter 32. The Arizona courts have enforced these provisions. The purpose of the statutes is to regulate the conduct of real estate activities so the public may be protected.
Id. at 304, 635 P.2d at 1226 (emphasis in original, internal citations omitted).
¶30 In Alaface v. National Investment Co., 181 Ariz. 586, 596, 892 P.2d 1375, 1385 (App.1994), this court considered subdivision disclosure statutes and concluded that, because those statutes were enacted for the protection of the public, they imposed a duty and articulated the standard of care. The same is true here. The real estate department regulations in question were enacted for protection of the public, and they therefore impose a duty and articulate the standard of care.
¶ 31 In the trial court, Appellees came close to admitting that they had a duty to disclose certain information to Appellants:
THE COURT: Does a broker who knows that a person who is purporting to be a buyer has absolutely no way of obtaining financing have a duty to tell [the sellers] that there’s no way these people are going to obtain financing?
[APPELLEES’ COUNSEL]: On those facts, your Honor, I would most likely agree that an agent who basically knows they’re not presenting a willing buyer shouldn’t fool with the other side on the transaction.
What Appellees are really arguing here is that Appellants have facts that are much weaker than those in the court’s question, and those facts need not have been disclosed. But the strength of Appellants’ facts is relevant only to the breach issue; it is not relevant to the duty issue, the only issue before us at this time.
¶32 If Appellees had no duty to deal in fairness with Appellants, they had a license to deal unfairly with them. The very purpose of the licensing statutes and regulations is just the opposite; it is to regulate the conduct of real estate activities so the public may be protected from unfair dealing and other malpractices.
¶ 33 Summary judgment to Appellees on the duty issue should be reversed.