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S Development Company v. Pima Capital Management Co.

8/30/2001

s last cite Wyatt v. Wehmueller, 167 Ariz. 281, 806 P.2d 870 (1991), in support of their position. In Wyatt, the supreme court departed from the general common law rule that the knowledge of an agent is imputed to the agent's principal because it determined that the legislature, by statute, had intended to abrogate the common law rule and require that the principal have knowledge-in-fact. Id. at 284-85, 806 P.2d at 873-74. The court reasoned that the statute at issue carried with it criminal penalties and the scienter element of a criminal act could not be imputed. Id. at 285, 806 P.2d at 874. In addition, the court determined that the available remedies were punitive in nature, and, therefore, outside the scope of the general common law rules. Id. at 285-86, 806 P.2d at 874-75. Here, we are not dealing with a statutory abrogation of the common law. Rather, we are evaluating a common law cause of action sounding in tort. Wyatt does not support the appellants' position.


The appellants also rely on comment b to § 275 of the Restatement (Second) of Agency, which states in part,


If knowledge, as distinguished from reason to know, is the important element in a transaction, and the agent who has the knowledge is not one acting for the principal in the transaction, the principal is not affected by the fact that the agent has the knowledge. (Emphasis added.)


This comment to § 275 does not support the appellants' position. Rather, the comment merely reaffirms that the knowledge of an agent who does not represent the principal in the underlying transaction cannot be imputed to the principal.


We see no reason to depart from the common law rule of imputed knowledge in the context of a negligent nondisclosure claim given that the law presumes that "the agent will perform his obligation to give his principal all knowledge relevant to the principal's protection and interest." Manley, 168 Ariz. at 572, 816 P.2d at 229. We are particularly reluctant to depart from the common law in this case because there was substantial testimony that the property management company, whose agents accompanied the appellees during the inspections of the buildings, was actually in partnership with the appellants concerning the purchase and sale of the buildings. "Each partner is an agent of the partnership for the purpose of its business. An act of a partner . . . for apparently carrying on in the ordinary course the partnership business or business of the kind carried on by the partnership binds the partnership . . . ." A.R.S. § 29-1021(1) (1998). The trial court did not err by giving the jury an imputed knowledge instruction.


IV. The Preclusion of Evidence of Payment For Repairs by Settlement Proceeds from the Plumbing Manufacturer


The appellants next argue that the trial court erred by granting the appellees' motion in limine that precluded the appellants from introducing evidence that the appellees had received settlement proceeds from a class action lawsuit involving the manufacturers of the defective plumbing. We review the trial court's ruling on the admission or exclusion of evidence for an abuse of discretion. Brown v. United States Fid. and Guar. Co., 194 Ariz. 85, 88, 7, 977 P.2d 807, 810 (1998). Here, we find no abuse of discretion.


The appellees argued, and the trial court appears to have agreed, that the collateral source rule precluded the admission of evidence relating to the proceeds of a settlement with the manufacturer of the PB pipe. "In general, the collateral source rule allows a plaintiff to fully recover from a defendant for an injury even when the plaintiff has recovered from a source other than the defendant for the same injury

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